Thursday, December 8, 2011

Vancouver House Prices Continue Slow Slip

June 2011 continues to be the peak month for detached prices. And this month the overall price slipped more than detached, which did slightly better than holding firm.

The odd vacillating pattern continues. It's strange enough, I wonder if it's not some manifestation of the HPI calculation.

Vancouver House Price Chart, Detached and All 2010, 2011
On the price change chart, you can see that the overall prices are pulling down harder this month, as the year on year for detached increased.

Year on year change in house prices, Vancouver, Detached and All
We are running right on the five year average for inventory and sales.
House for Sale Inventory Vancouver over 5 years

House Sales Detached Vancouver over 5 years


George said...

We are in December and Vsncouver real estate has gone up another 7%. When is bubble going to burst? China still continue to feed this boom. When will it end? I am waiting for a 35% drop in the real estate market within next 3 years. You think this will happen? I think it will with the world's economy the way it us.

The Wall Street Ranter said...

You will likely be right George.

I have a acronym for the Real Estate markets in Canada, China and Australia......CaCA.

GG said...

The Chinese are starting to request extradition help to track down their runaway bosses and money. Development loans are getting cut off, leaving projects unfinished. The cash crunch is starting. That should help staunch the outflow of funds.

That said, no one knows when it will end. Something has to trigger it, and for every bubble it's been something different. The government of Canada intervened pretty heavily to avert the decline triggered by the GFC. I don't think they will go back to 5% or 0% down mortgages and they can't adjust rates down. They *look* like they are out of bullets.

Trouble is, the second leg of the GFC could also help prop up Canadian real estate. If the appetite for Canadian 5 year bonds and Canadian dirt continues to be good, then money will keep pouring in to fund ever increasing mortgage debt.

Once the outsized gains are clearly gone (and one can watch Australia right now to see the psychology of that 10 months on, the tone of the discussion is finally changing) then the outsized risk appetite goes with it. In the end, the bubble is cause by Canadians taking on debt, even if they are inspired by foreigners.

Honestly, holding your dollars close to the chest is not a bad idea. Given that the systemic risks from the last crisis were not addressed, we are more like this chart than not. If you are liquid, you can scoop up bargains in all asset classes.

knowledge is power said...

I have heard of the bubbles in vancouver and china, but i dint know about australia. How do you profit from these situation since americans have to trade from american accounts would it be better to short the currency of this countries? since they are likley to lower their interest rates which will weaken the currency ( atleast theoretically), or should i short the an etf that trackes the market. I dont believe that they will raise interest rates which could be a trigger to look out for they will probably be something more subtle. how do you find the rent mortgage ratio for these different markets?

I am trying to track them to see how dire the situation so that i can figure out the most profitable approach as well as the ripple effects that it will have on the world markets, and mainly the insolvent financial instuitions that are likely to have exposure to it as well.

how will it effect gold? Oil? and commodities in general? I would imagine that if either of the 3 countries collaspe it would cause the other 2 to collaspe since china imports a glut of commodities and canada and australia exports commodities. i have also been thing of buying some junior mining stocks but i believe i will what for the crash and buy when the market is down, since any collaspe will be a buying opportunity. after i short it ofcourse

GG said...

Shorting the Australia markets is difficult as the hedge funds got there a long time ago. Even Jim Chanos who runs a 7 billion $ hedge fund, some 6 months ago complained that when they went to short the Aussie banks, there wasn't a single share left to borrow to do that.

Some things should follow the pattern of the U.S.. Interestingly REITs did well in the U.S. after the crash since they are heavily invested in rental units and what do foreclosed upon families have to do after moving out? So you could look for one weighted heavily with rental units, not builders. Of course, all of this isn't advice, just random noise on the internet.

Also, retail will take a hit. And the margins on retail have been squeezed in Australia already, so there must be a lot of borderline franchises and stores out there. Not sure how you would play that as an individual investor/gambler.

I think Australian builder stocks have already taken a beating and the upcoming drop is priced in. Basically, everyone long saw this coming except the Australian homeowner.