Myth..or not?

Have a look at home prices in Florida, parts of California and Arizona - just as examples.

A reduction of 55% in Greater Vancouver is not just a pipe dream.

It may well be a lead pipe cinch.

There's a myth for you Monte: That it CAN'T happen here.

Co-ops

"If only...government would get back into building co-ops"

Who said the government has to build co-ops?

As I mentioned in your last post's comments, all the government has to do is grant advantageous land leases and insure mortgages of co-operatives. The members of the co-operatives can do the rest. The government is already getting into the mortgage market, so why not help co-operatives gain access to financing too?

As more "mom and pop investors" lose their shirts in the speculative markets trying to secure a decent retirement, society will begin to realize that speculation (which is what investing has become) is not the mechanism through which to provide for an aging population.

As for providing for the working poor and others in poverty, your article's suggestion of only providing social housing for that segment of society will lead to urban ghettos.

Only through stimulating the growth of cooperative and non profit businesses are we going to be able to pool society's available capital to provide for all of us. The rest of the capital has been accumulated by the wealthy through the wealth transfer system of the speculative capital markets, including real estate; and the privatization of public monopolies, resources, infrastructure, and utilities.

The point is that the 85% of us who work for a living need to stop competing against each other and instead realize that we all have a common interest in providing affordable, quality housing. If we put our energies as much in to developing social capital like housing cooperatives as we do to trying to "get ahead", we would find that our needs are much more securely provided for.

Myth # x

"Everybody deserves to own their own home."

There are lots of countries in the world where that isn't so. Europe is especially instructive. Unfortunately, we have conflated owning our own home (arising from our historic myth of homesteading our way into occupation of the land) with the investment quality of a constantly-rising housing market. We're confused, and think we are owed the best of both worlds - tax-free guaranteed investment gains and private shelter - while ignoring the effect it has on those who weren't born as early as we were.

Whatever age you are.

Myths may become realities

I believe we will see a massive reduction in house pricesover the next 12-24 months. We have already see drops of 10 to 25% in different segments of the market in Vancouver, Victoria and Kelowna (yes 25% for Kelowna condos). This has largely occurred prior to the recession/depression taking full hold in our economies.

The bubble has popped, and its going to be an ugly spring for sellers. A 50% reduction from the 2008 peak seems like a certainty.

MOBILE HOME PARKS ARE PART OF THE SOLUTION

Cities and suburbs are prejudiced against mobile home parks (MHP) - and the people who live in them, but as part of an approach to reducing the housing gap, urban MHPs need to be revisited. As a combination of home ownership and pad-renting, or as co-ops, or even in fee-simple land purchase, modern mobile homes and MHPs are environmentally-sound, and affordable to a wider income spread than traditional built-on-site houses. Starting from liberalized zoning to permit MHPs in urban and suburban areas, and in combination with upgraded transit to the MHPs, this historically-important segment of housing could be expanded considerably.

The age for co-ops is

The age for co-ops is coming. I think it will happen at about the same time as when Generation Ys gain the strength to break free of the tyranny of their parents' dreams for/expectations of them, and become dropouts, a la Joaquin Pheonix, respectable society finds hard to love and is getting in the mood to want jetissoned. (It might be too late for many GenXers, who may have decided to accept the self-hate, while sticking with their diet-pepsis.) When they stop wanting to couch and undermine their independence with a clear demonstration that they, as much as their parents, ultimately seek ivy-league, professional, clean and green, onward and upward, relevance--note how the cool kids in Nick and Nora's Infinite Playlist and Superbad, for instance, despite whatever wavering, still make clear that they are or could go to the ivy-leagues--then I think they'll go for shared living environments as a way to spend the whole of their lives.

Right now, they have to endure, I think, some sense, that no one is there for good. It's not even a sexy possibility--instead, the cool kids do the bait-and-switch. Vanish, immediately, if offered the right ticket to somewhere . . .

Lots of Myths, No solutions

Myth #1
Not even the hardest hit regions of the United States have suffered an across-the-board drop in housing prices of 55 per cent. In California, for example, home prices appear to be bottoming out at about 40 per cent below the peak.

Appear is the key word here. Predicting market bottoms is an inexact science. You really cannot tell if a market has bottomed until quite some time afterwards. A 55% drop can easily occur, and it could stay that way for a while. My readings of those more expert than I say there are at least 2-3 more years of decline.

The major issue at play here is the debt game. The only way that the real estate market could attain an average $300,000 peak value in Canada is because money was easy to borrow at low interest rates. Interest rates can only be cut by a fraction of a percent at this point there is no real room left for further cuts. Not that a real bank will actually lend YOU money at those rates. Once the bailout trillions hit the fan, inflation will begin to really take off. We have just been through a period of record inflation of food and energy prices but the authorities are allowed to publish false inflation figures by excluding these items from the index.
The fed and the Bank of Canada will be faced with the choice of either controlling inflation by raising interest rates and putting more home owners and many governments and corporations over the edge or letting inflation continue to rise. Letting inflation rise is the default mode because in such a scenario debts can be inflated away, although it has the unfortunate side effect of destroying the dollar at the same time.
Either a new real estate game must be created or this one will have to crash. My guess is we will be offered a new game.

It can happen

If the TSX can lose 35% of its value, which nobody was predicting as recently as the summer then home prices can sink 55% in Vancouver. In these times anything is on the table.

If no one can afford these prices then who is/was buying? That's my question that no one seems to be able to answer.

I think Vancouver needs to learn some lessons from the Whistler Housing Authority. I know thins are different there than here but still, if Whistler can build affordable homes for residents to purchase why can't Vancouver? If we don't have affordable housing then families will continue to move elsewhere, schools will continue to have declining enrollment and our economic base will look pretty bad.

Coops are a good idea.

Even better if the coop members are involved in the construction. In order to lower costs homeowners must either do more of the work themselves or we have to find more labour efficient means to build houses. Our restrictive building codes have thwarted real innovation in construction.

Myth #2 ...

... is a myth. CMHC surveys exclude practically all privately owned rental units. Hence their nonsense statements that only 160 out of 54k rental units in Vancouver are available.

Take a look at vancouver.craigslist.ca. There are more than 3000 listings in the "for rent" category since Feb 9 alone! Even if half of them are scammers, the number of places listed in the last week is 10x CMHC's numbers.

As anyone who followed the housing story during the bubble years can tell you, the only useful thing you can do with CMHC housing stats is print them on nice soft paper and use them appropriately....

Also, trying speaking to anyone who's been looking for rental accommodation in the last 2-3 months. Prices have been falling noticeably. They might still be beyond the median income-earner's means, but they are in freefall at the moment.

Mobile homes

MOBILE HOME PARKS ARE PART OF THE SOLUTION
jnewcomb
36 minutes ago

Cities and suburbs are prejudiced against mobile home parks (MHP) - and the people who live in them, but as part of an approach to reducing the housing gap, urban MHPs need to be revisited. As a combination of home ownership and pad-renting, or as co-ops, or even in fee-simple land purchase, modern mobile homes and MHPs are environmentally-sound, and affordable to a wider income spread than traditional built-on-site houses. Starting from liberalized zoning to permit MHPs in urban and suburban areas, and in combination with upgraded transit to the MHPs, this historically-important segment of housing could be expanded considerably.

Having lived in mobile homes for many years, in MHP's, on residential lots and now on rural land. The best quality of life is on rural land IMHO but the pads or lots that are not rented but owned are very acceptable to me. Mobile homes have improved alot over the years but now prices for new ones are so high that you are on the hook with a mortgage for an asset that depreciates more rapidly than a stick- built home. The prejudice is class discrimination for sure.

Frebfab Homes are for Winners

The prejudice against mobile homes might change. Fabfrefab homes are all the rage in magazines of modern architecture like Dwell. Maybe they could be sold as part of the new cool, zoomer life, and really come to life in B.C. (it does seem as if they're real popular in west-coast U.S.A.--so maybe B.C., too?)

Subsidized housing

I feel truly blessed, being one of the lucky low-income few who managed to find subsidized housing through the Housing Foundation of B.C. -- not to be confused with B.C. Housing, the HFBC is a private foundation.
After I was evicted -- very gently, but nevertheless evicted -- from the apartment I had lived in for 14 years (my landlord's children wanted my suite), I moved into a cramped, dark suite in a 1920s-era building. It's advantages: I was able to keep my cat, and it was in the same neighbourhood I'd been living in for 20-odd years.
When the call came from the HFBC, and I was invited to view a spacious 2nd-floor, south-facing, hardwood-floored suite, I felt like I'd won the lottery.
Believe me, the only way I'll ever leave this place is feet first! (I'm 64, but you only have to be 55 to qualify for seniors' housing.)
Too bad most housing is built for profit.

Big myth

In my opinion, the biggest myth of all has to be that buying a house is always a good investment.

Many people have "invested" in real estate because the price had been going up, and they did not want to miss out on the fun. Now that the market has turned, there are many people who are trapped in their house. They are unable to sell, because the mortgage is now bigger than the selling price of their house. As houses continue to fall in price, their problem will become greater. As prices start to fall to pre bubble levels, many homeowners will be 300,000 or 400,000 underwater. They will likely carry the burden of their investment for the rest of their lives.

Missed myths?

I think one long-standing problem re housing in the Lower Mainland is our desire to own the patch of ground under our home.
This led to the development of pedestrian-unfriendly suburbs, such as the one I grew up in, Capilano Highlands in North Van.
Density has been a dirty word in this region for so many years. I think that's slowly starting to change as we run out of space to build single-family homes, but it's still a problem.
Many Vancouverites associate density with crime and bad health, which definitely does not have to be the case.

Another myth

All people deserve to own their own home.

Home ownership is a goal that many people strive for, yet many people would be better off if they do not own their homes. A house often involves a mortgage, (latin for death pledge), which is a commitment that is made for decades in the future.

If a persons financial circumstances changes, a house can be a big burden. A stock portfolio can be liquidated with a five minute phone call, and minimal commissions. Selling a house in a down market may take years.

Crown Lands

Perhaps we could develop new towns or cities outside the lower mainland. Why does everyone have to live crammed in the city? There's is all kinds of crown lands with no one visible for miles that is just sitting there. Canada is a huge landmass and we dont use it.

Its obvious monopoly government and business interests wants us herded in the city so they can mass market to a high density population, lowering their overhead costs.

Population policies = high housing costs

It's simple, really. British Columbia is the most urbanized jurisdiction in Canada. It also has experienced explosive population growth, about 3/4 of which is out of country immigration. Public policy has been to encourage mass migration and explosive urban growth. Public policy has also been to offer Canadian citizenship to "investor class" people, essentially encouraging them to speculate in real estate. It's entirely predictable that this would lead to higher housing prices. But that's the public policy choice we've made. Frankly, we have decided that mass immigration is more important than housing affordability. 35,000 housing starts annually is still less than the annual net migration to the province.

And on the seventh day

Its almost has biblical proportions to it like the Olympic logo this morning on the front cover of the metro and 24 as Good and Martin send of the Olympics with a logo that looks much like a stone cross. Ironic isn't it since its said many have been pushed to their deaths because of the Olympics. But back to the subject sorry you can write all you want about real estate prices because they are going down, down, down as your living in Gangster land that is Number One Gangster land in the world makes BC a place only gangsters want to come move to not regular folk so yeah the way things are looking 55% just may be possible.http://www.post-gazette.com/pg/06217/711185-30.stm

Affordable and Sustainable

Both words that have become meaningless in the 21st century!

Watch out when it all implodes and the hordes mass at the gated communities!

Its Shear Speculation

Thats right all that gambling going on with your house prices so some can net 18 million for a 2 bed condo as its not homeowners who have driven up the prices but land developers to make a quick buck. It has nothing to do with investment but rather high risks as homeowners find themselves paying prices they can ill afford as their home prices increase along with their property taxes and other expenses as costs get passed to consumers.

The only winning here is if you don't live here and own a home when market hot as out of towner's get people with licenses to pick up property for them. I know they are putting laws in place in United Kingdom as experts did study and found speculators blame for problem and want to discourage this behavior as citizens pay the price of the Greedy Land Developers and Governments as mass immigration and little homes is the strategy. It sure must help when you got one on the inside like a premier or something to really screw things up.

MONTE: Supply and demand ALWAYS function

"Much of the B.C. housing market simply remains so out of balance that market forces of supply and demand simply do not function."

There's no such thing as a market where supply and demand are not functioning. There are, however, many markets that are out of equilibrium compared to other markets, where the commodity in question is over-valued. Things may stay that way for years, even decades, but inevitably there is a correction.

A recent example was the US dollar which was over priced for many years, till perhaps the last three or four. Another was the Japanese urban land market, till the 1990s ended the long standing over-valuation.

Monte, I am not sure which experts you may have been talking to in preparing this series, if they are in academia or in industry, but I hope you will pin them down to a housing valuation method that they think is rational over the long term.

For a housing stock ownership market to be rationally priced, it needs to be in equilibrium with the rents charged on that same housing stock. Those treating housing units as an investment need a rate of return that, given risks, is comparable to what they could expect from more liquid and more secure investment vehicles.

Can we drop this unhealthy doomsday fantasy?

I'm a bit dismayed to read that some of us in this forum appear to be rooting for a 55 per cent drop in home values.

I suspect that such a massive devaluation would hurt working families.

Sure, some homes might fall to $250,000. (In fact, you can already buy a townhouse for that in Langley.)

But family incomes would fall too.

So most of the newly-cheap properties would not be bought up newly-poor workers. More likely they would be snapped up by well-heeled speculators. (As is happening in Florida.)

And every previous such market crash has been short lived. So unless one is rooting for a complete and permanent collapse of our economy, I don't see how even a deep market dip improves the systemic problems of affordability. Prices bounce back in 2010 or 2012, and the gap between what ordinary people can afford and ordinary homes cost is right back where it was in 2008.

Instead of clinging to this unhealthy doomsday fantasy, I propose we take advantage of this market pause to reexamine our assumptions about housing -- and perhaps figure out a more cost-effective and sustainable way to provide adequate homes for every Canadian.

More on that in the weeks to come. In the mean time, let me rephrase the challenge:

How do you think B.C. needs to rethink the supply of ordinary housing to ordinary people?

(The comments about rental and co-ops have been particularly useful.)

freedom 55

55% peak to draught if doable in BC given what is occurring in the states. Be prepared for a very hard landing.

Monte

Not the crash in Japan. And its genesis was pretty similar to the one we're currently starting into.

There is absolutely no sense anticipating this won't be a hard fall and a very attenuated recovery simply because it doesn't make one 'feel' good.

Suggesting that we're somehow 'immune' to the effects of the idiocy of the last 25 years is not spinning a doomsday scenario.

In my view.

It would be nice if local community action would make a difference and I certainly hope it will. On the other hand, how successful has the action of making suggestions and pressuring the current government to address housing shortages and the inadequacy of the minimum wage during the so-called boom years?

Suggesting that CEO government is likely to address these problems now is not doom saying, it is simply reading the writing on the wall.

I don't know if you heard the Premier on the Puffmaster's show this morning - the best he had to offer in terms of stimulus was the idea that we can ride the rings out of the recession.

That's doomsday talk.

#1 is no myth

"Home prices would have to plunge 55 per cent before ordinary families will be able to buy homes in this market. And if real estate sinks that low, so will family incomes."

Home prices will fall 50% from May 2008 levels. They doubled after all before and they can just as easily fall to the levels that they were at before the doubling occurred. Secondly, I have no idea where you get the idea that family incomes will also fall if real estate sinks that low.

I'm not rooting for prices to fall by that much. But it's going happen. So long as there are other investments that investors think will perform better than real estate, demand for real estate will fall. Combined with a huge supply thanks to over building in the past few years, prices can go nowhere but down.

How do falling asset prices affect current incomes?

Monte Paulsen
I'm a bit dismayed to read that some of us in this forum appear to be rooting for a 55 per cent drop in home values.

I suspect that such a massive devaluation would hurt working families.

Sure, some homes might fall to $250,000. (In fact, you can already buy a townhouse for that in Langley.)

But family incomes would fall too.

Monte, these passages essentially repeat a theme in your article that I didn't want to directly argue with. But since you restate them, I would like to ask for an explanation. How would falling house and apartment prices, a fall in asset prices in other words, affect current incomes?

I grant you there is some reason to believe that it would restrict consumption by reducing the amount of borrowing against equity in order to finance major purchases, and I can see that having some impact on sales and a small impact on employment, perhaps lasting a few months before the normal growth in underlying demand caught up. However, this kind of thing is not going to generate a significant fall in incomes.

I don't really see how declining housing prices would put downward pressure on the general wage level.

If falling house prices cause a major reduction in housing starts, there could be a big temporary fall in residential construction employment. This in turn which would reduce total disposable incomes and tend to lower the weighted average wage level in the economy, even if every employed person's own wage were unchanged. Please note, though, that all residential construction in BC is strictly non-union (in direct contrast to Ontario, incidentally), so the residential construction wages are not that far above average.

But, once the housing and land price adjustment is fully completed and builders have new properties to work on at the lower land price, building starts can start to increase again. And if prices stay down, the eventual residential construction volumes would ultimately be higher than before due to greatly increase affordability.

The key point is that the longer the price adjustment takes, the longer there is some excessive pricing left in the market, the longer new construction will be hung-up waiting for the price adjustment to run its course. Better a big drop soon that's seen by everyone as a credible, full adjustment, rather than a 15% drop that still leaves Vancouver with inexplicably high prices that are wisely seen as carrying a big downside risk.

After all, even if one swallows the Best Place On Earth line completely, it's still hard to presuade people to buy an asset that's falling or about to fall in price.

Bounce back to 2008

Monte,

You don't seriously believe that housing will be back at 2008 prices by 2012, do you?!
The middle of the biggest credit bubble the world has ever seen, which has caused the worst recession since the second world war, and you think we'll be back up there again in 4 years?

If that's really how you see housing in the lower mainland, then there are no solutions.

I would suggest, as others have pointed out, that an environment where housing prices are double what is affordable for the population is unsustainable.

It's not a question of rooting for one thing or another. It's a statement of fact. With housing prices as they are, we will drive the young, first-time homebuyer out of Vancouver. With no first-time homebuyers, housing prices will fall. With no young, upwardly mobile members of the population, the economy in the lower mainland will fall. Then housing prices will fall further.

We are already seeing that happen. You can choose to believe CMHC or GVREB, or you can choose to believe the evidence around you. The first step to rehabilitation is to admit there is a problem....

Ipsos Poll on BC Housing Price Attitudes

This was released today: http://www.ipsos-na.com/news/pressrelease.cfm?id=4279

42% expect housing prices in BC to be lower in 2009. That is lower than the 57% who thought that way in Nov 08.

Count me in on the 42%. Kelowna has about 40 months of inventory listed in the Real Estate Market right now, and that is after a large number of units let their contracts lapse this past fall. Combined with the recent release of the fact that housing starts in January were down 90% and this spring shapes up to be nasty. One: mom and pop investors and builders alike are going to be looking to unload the inventory they kept on hand last fall in hopes of a price/demand uptick in spring 09.
Two: All those construction guys who bought a home on the way up are starting to look long term layoffs straight in the eye and they aren't going to make thier mortgage payments. The local EDC quotes '06 Stats Can as saying about 2500 full time jobs in Kelowna are construction labour. It will take a some time for those guys to show up in the unemployment stats because so many were self employed contractors.
Individual annual wages won't succumb to downward pressure immmediately. But in the aggregate as unemployed contractors hit the rolls, BC's average income is going to plummet.

Housing Price declines, and affordability

The world is adjusting to the biggest unsustainable housing bubble that this planet has ever seen. It was brought on by easy credit standards and low interest rates.

The world in now in a massive debt crisis, which is creating a vicious spiral of asset deflation.

Asset deflation causing declining real estate values is not necessarily a bad thing, but when assets deflate and debts do not, the situation becomes a nightmare for homeowners who wish to or have to sell.

How low can property values go? If credit tightens up to the point where the only people who have the cash in hand can buy a home, housing will get incredibly cheap.

Job losses are just starting to affect the economy.

Rents will start to drop as unsold housing inventory starts to skyrocket, and homeowners try to compete with each other to attract renters.

This is going to get really ugly.

monte paulsen

I'm a bit dismayed to read that some of us in this forum appear to be rooting for a 55 per cent drop in home values.

I suspect that such a massive devaluation would hurt working families.

Working families have already been hurt. Family budgets have been skewed toward housing for more than three decades to the point that the "investment-grade" of your house is more important than where your kids go to school, how they or you as parents participate in activities or society through social causes, or how you as parents live healthy and whole lives yourselves, not worrying every minute about whether your retirement is assured through your RRSP, pension fund or house.

Notwithstanding the "outliers" that are reported on as successes every day in our sensationalist press, total family wealth has not gone up as fast as the various markets - housing, capital, investment - and today's working families as a class are poorer than they were a decade ago, and even poorer than two decades ago.

The doomsday correction is not a good scenario, but unless you can construct a more appropriate recourse for our society along the lines of what GWest reminded us of in Japan, it's the only one most of us can see coming. And you're right, speculators who benefitted from the last round of rule changes will benefit again - unless we change the rules again.

Hopefully we won't follow down the path of the US and legislate that certain additional debts will survive bankruptcy. Bankruptcy law is a necessary evil as a safety valve of last recourse for people or families who simply can't adjust fast enough to changes. To remove it as has been done in the US with medical expenses is Darwinian in the extreme.

Time to change the tax system. I certainly hope this is one of your next pieces on the housing market.

short replies...

I could be wrong, as you have all so kindly observed.

Nonetheless, two quick replies:

1.) One out of ten BC workers is employed in construction/real estate. Probably more indirectly. This is why I fear a massive devaluation would lead to employment losses.

2.) Home prices have risen over any given historical five year period in B.C. This includes previous price slumps. I think we're in a recession, but I don't think we've hit the end of days. Therefore, I think its safe to assume that homes purchased at the 2008 peak will restore that value by 2013.

Actually Percy

Percy
5 hours ago

It's simple, really. British Columbia is the most urbanized jurisdiction in Canada. It also has experienced explosive population growth, about 3/4 of which is out of country immigration.

Actually Percy, BC has only sustained an average of 5% pop. growth in throughout the 21st century. This is hardly explosive. Vancouver's pop. growth has been even less.

economic crisis

.) One out of ten BC workers is employed in construction/real estate. Probably more indirectly. This is why I fear a massive devaluation would lead to employment losses.

Employment losses are most likely in the cards and when that happens even fewer people will have the ability to pay higher real estate prices. Prices will fall accordingly.

2.) Home prices have risen over any given historical five year period in B.C. This includes previous price slumps. I think we're in a recession, but I don't think we've hit the end of days. Therefore, I think its safe to assume that homes purchased at the 2008 peak will restore that value by 2013.

There has never been a recession exactly like this one. I have been through the recessions of the early 80's and 90's but this one is shaping up to be much worse. Should I bank on your prediction of higher prices by 2013? My study of the economic situation leads me to think that any rising prices by 2013 will be simply due to inflation and of no real value to anyone.

Trivia Question

How many people here know that a housing bubble preceeded the 1929 depression. The housing market peaked in 1925, four years before the stock market went bust in 1929. In Florida, the housing market went completely and insanely nuts.

Construction Industry and Demographics

Monte Paulsen
1.) One out of ten BC workers is employed in construction/real estate. Probably more indirectly. This is why I fear a massive devaluation would lead to employment losses.

I agree that about 9% of BC employment is in construction. But that includes industrial, commercial, institutional and engineering construction as well as residential construction. I am not sure how much of the finance and real estate sectors one would link to the building industries.

The residential portion is not measured separately by StatsCan, but a very rough rule of thumb is that a "typical" dwelling unit involves about two person years of construction industry work. If prices prove to be "sticky downwards", and do not adjust quickly, the most pessimistic scenarios around project housing starts falling to under 20,000 units, a drop of roughly 15,000. Using the two person years rule of thumb, that would mean losing 30,000 jobs, a serious loss to the BC economy.

My point is that the sooner the price drop is over and done with, the sooner the buidling industry can recover. And if prices stay low its eventual volumes should be well above what we've seen in recent years because of greater affordability.

Another factor to remember is demographics. Construction, like many industries, has many people who are on the verge of retirement. If they go, they will remain consumers by spending pension incomes. Meanwhile the industry they retired from can continue to employ it's younger people even at a reduced production level if retirements are great enough to make up the difference.

Monte please explain

For arguments sake, say I earn $25/hr now and purchase a home for $400k, which I wouldn't or couldn't do, and it sinks in value to say $200k how will my income be any less? In the end I'll still be earning my $25/hr salary.

Now, if and when that house price sinks to $200k I could now afford it, with affordable mortgage payments which means I'd have more money to put back into the economy by being able to go on vacations, go out for dinners and so on. So the money in mortgage savings will simply go to another sector of the economy.

In a capitalist economy there are always winners and losers. In a real estate bubble it's those that bought at the top that are the losers if they sell below purchase value. The winners are those that buy in when low.

Construction in the Burbs

The amount of new units that are going to hit the market in the Surrey/Langley area in the next 6 months is unbelievable. When they come on line they will either sit vacant or if someone purchases or has pre-purchased they will move in and leave another home / rental empty. Prices are going to drop for quite some time. The Real Estate Board of Greater Vancouver and the B.C. Real Estate Association will always tell us that things are improving or that the downturn will be less than it will be. That is their job! People that I know are losing their jobs or working less hours. My daughter has had her sick days off reduced to zero, no overtime and all holidays must be taken and cannot be banked. This will have a huge effect on spending which will continue to shrink the economy. I think the next few years are going to be devastating. My in-laws spend six months of the year in Phoenix. They tell us that everything is dead, restaurants and malls. Places are being boarded up and the only game in town is Wal-Mart. Hold on folks, this is going to a wild ride!

Was listening to Suze .......

The financial guru......

Well guess what is happening down south,so many foreclosures,600.000.00 homes sitting empty are so common.
The banks have started selling once 500.000.00 600.000.00 homes for 100.000.00 to 150.000.00 to 200.000.00...sounds like a reasonable plan,or does it?

Every action has an equal opposite reaction,well,people who have jobs and are still capable of making their payments on their 600.000.00 plus homes are walking away,credit rating be damned,the reason?....

The neighbors moving in next door,up the block,down the block have paid a fraction of what some have paid...
Just what would you do if you owe 600.000.00 and have a big nut to crunch each month and all of a sudden your neighbors have the same home for 1/5 th of the price you paid?
Thats what is happening,so everyone is walking away,and I mean everyone.

The big correction is coming and until wage levels triple up for the masses the prices aren`t going back up.

There will always be individual properties worth more,but Vancouver specials and ho-hum condos are coming a crashin,and they ain`t going back up ever.

Home Ownership Rate 70%

"The truth is that there really are tens of thousands of potential homebuyers sitting on the sidelines, hoping for home prices to fall within their grasp."

I know a lot of young adults, and if there is one discussion topic that is fallen out favor lately, it is real estate.

For those who own, its a touchy subject. For those who still rent, they feel they may have dodged a bullet and are not considering buying in the near term.

Between 2003-2007, there was an unusual amount of buying. Young folks were buying years, even a decade, before they normally would. Even youths just out of high school.
This is called borrowing demand from the future.

Add to this, the looming recession and increasing urbanization, and the home ownership rate is set to drop from its current record high of 70% in BC. Just a few years ago, it was in the low 60%s and will likely return there.

Particularly in Vancouver, you are going to see a retreat from home ownership. This is normal in a growing large city, and more so in a recession.

I honestly believe that many of these new towers in the suburbs will become strictly rental housing. You may even see one owner for these buildings, maybe government or maybe private landlords, who will buy them from the banks after all the speculators and owner-occupiers get foreclosed.

Once this market bottoms out, around 2012, nobody will want to own.

Myths are myths (1)

Re: Myth #1

You write as if every family was an' ordinary family' that made exactly the median income, and that once prices reach the magical mark that meets the capacity of this ordinary family, prices will suddenly be affordable for everyone.

In reality, all families make different incomes and every time prices drop, more families can afford to buy. And no matter how far prices drop, some people won't be able to afford to buy.

Your myths are myths (2)

Re: Myth #2 & 3

You're using some bad stats here, as others have pointed out.
Last time I looked for a place, I must have considered almost 160 units just in my own search!

I'm not sure what rapid increase in rental rates you are talking about either. Rents haven't really increased that much in Vancouver over the years as the stats will show (especially for market rent apartments).

Finally, rents will fall when all the empty condos get dumped on the market. City TV had a person in this morning talking about how to rent your condo, we're just getting started here with this process. Furthermore, the financial downturn will lead to people 'doubling up' in apartments which will increase supply leading to more falls in rent.

Ultimately, supply and demand rule, and the massive increase in supply will make itself felt when units are no longer kept empty on the back of capital gains.

The fact that condos rent for more than non-condo rentals has no effect whatsover since prices are set by supply and demand. Every market in the world charges more for nicer newer places than for older places but some of these markets are expensive and some are cheap.

Your myths are myths (3)

Re: Myth #4

Here you're pretty much talking pure nonsense. The only reason supply and demand hasn't kicked in yet is because of all the empty units (although the units are built, they are not on the market). Once these start to fill up with people you'll see prices drop. It's a sad day for the left if it abandons the notion of supply and demand as a 'right wing concept'

Re: Myth #5,

You seem to be confusing the current cost to *buy* a house with the cost to the government to *build* a house

You're also confusing a multi-year purchase (buying a house) with a single dollar figure (i.e. if you spent $50 billion building houses that last 50 years, that's only $1 billion/year).

You also seem to be suggesting that it would be good if the government would build houses for everyone who currently rents which doesn't make any sense (would we leave all the rental buildings empty? what about people who prefer to rent?)

Government could spend the money it costs to *build* a few more houses and this increase in supply would depress prices throughout the housing market.

---
The only way to make housing prices lower is to increase the supply of houses and to reduce the cost to build a house.

The one good thing about the housing bubble is the big increase in supply we got out of it which will keep prices low for years to come. If we'd had a bubble, but no increase in supply like they did in the U.K. or in Australia we'd really be in trouble.

Good Point Declan

Declan
The one good thing about the housing bubble is the big increase in supply we got out of it which will keep prices low for years to come.

I like it! They may have needed some people to finance the boom at unrealisticly high prices, but once the product is there, it's not going anywhere.

To some degree I think the Vancouver condo market for the past two or three decades has tended to be dominated by a "high-grading" approach, developing all the best, waterfront locations first. When they're done with that, they'll start building affordable, family-sized apartments in regular, mid-town locations, but only if the BC Govt steps in, through amalgamation or some other instrument, and forces a widespread change to zoning.

There's no need for highrises everywhere but there is a need for seven and eight storey concrete apartments with large floorplates and average quality finish over much of inner city and midtown areas.

Unaffordable homes?

In the words of RBC Economics: “Nationwide housing affordability deteriorated in every consecutive quarter throughout 2007 to end up at its most unaffordable level since the housing bubble peaked in 1990. Back then, soaring interest rates and a recession sparked much of the trouble. Today, however, a long upward trend in house prices driven by sounder macroeconomic fundamentals like job growth is primarily responsible. Adding more fuel to this housing cycle is mortgage product innovation that has expanded the market to more potential buyers since mortgage insurance liberalization began two years ago. Only Alberta bucked the trend in the latest quarter. Outside of Alberta, affordability deteriorated in every single market and for each type of housing.”

The RBC commentary is

The RBC commentary is garbage on par with the quality of so much Vancouver real estate, especially most of the downtown highrises. The quality of construction is abominable.

When values plummet, and they still have a lot further to fall, we could see sustained devaluation based on the fact that many downtown highrises are already disintegrating, and that trend will only accelerate.

People may find it hard to believe now, but downtown Vancouver could easily become a slum as people abandon their properties instead of spending vast sums of money repairing buildings that are rotting from their cores.

Imagine having a property worth half the value of the mortgage, that is suddenly assessed with a $120,000 repair bill, that you must pay because the whole building needs substantial renovations. This is becoming ever more common not just in buildings only 10 years old, but in brand new buildings where developers cut corners substituting cheaper materials everywhere during construction.

Now I want to be clear that I'm not cheering this on. But I suspect the greed that infests Vancouver is going to do serious, lasting damage to this city, including the outlying suburbs.

you're right James

I only posted it as a kind of purgative relative to the suggestion that home ownership was actually growing.

The statistics on that subject are fraught - sliced and diced into age segments scores which make it extremely difficult to understand what the actual situation is.

The quoted figure of 70% home ownership certainly doesn't ring true to me....

Source for 70% Home Ownership rate in BC

http://cmhc.ca/en/corp/about/cahoob/data/data_003.cfm

To be exact it was 69.7% in 2006 for BC, up from 65.2% ten years earlier. I think its fair to assume its increased since then.

Vancouver was 65.1% in 2006, up from 59.4% in 1996.

Canada was 68.4% in 2006 up from 63.6% in 1996.

Calgary and Toronto, in particular, had even bigger jumps in home ownership rates.

Vancouver had that extra bit of wild speculation, but it appears the housing bubble is in most Canadian cities.

I guess this also explains the pressure on the media and politicians to pump real estate. So much of the population have gone all in. There is going to be a lot of ruined and upset people across the country.

Patiently Waiting

I'm still dubious about that figure. Notice how it's arrived at:
"1. Ownership rates are computed as owners divided by total of all tenure types. Census Metropolitan Area data for 1971–1986 are based on 1986 CMA boundaries. All other data for Census Metropolitan Areas have not been adjusted for boundary changes.

Source: CMHC, adapted from Statistics Canada (Census of Canada)"
I think that's a pretty rough and ready measure; it appears to take no account of multiple ownership; joint ownership and actual ownership registrations.

It doesn't accord with my personal, admittedly anecdotal, knowledge of at least three age cohorts...

I'm from Missouri I guess.

James Burns: Nightmare on Homer Street?

People may find it hard to believe now, but downtown Vancouver could easily become a slum ...

James, this is a vision of downtown Vancouver's possible future that you should post on Mr Gordon Price's blog.

http://pricetags.wordpress.com/

BTW, my co-worker and I have noticed that work seems to have ground to a complete halt on the grandiosely named project The Beasley at the corner of Homer and Smithe. The sign still says "Yaletown's last opportunity!", but it looks more like the first sign of a different trend.

%age of home ownership

One would expect the percentage of home ownership to be greater now than at any other time: the baby boomers have aged, and they haven't been replaced by younger people. Canada's fertility rate continues to be well below replacement, and it has been for some time.

The gen xers and ys will continue to have a surplus of houses available to them as baby boomers start dying off and downsizing. Personally, since they are close to hospitals, I think many of the newer Vancouver condos should be redeveloped into senior's assisted-living quarters. That, is the new market. How many 65-100 yr-olds have the need to live in or the energy to take care of the obscenely large detached homes that have been built in the last 20 years. Many of these larger homes with 3 and 4 bathrooms could realatively easily be converted into townhouse-style duplexes that younger families could afford.

Boomers all own

From my own anecdotal reflections, every boomer, that I can think of, owns.

Most young adults own. The ones that I know who are renters either a) are new in town or b) facing serious personal issues (one has severe credit problems, a couple of others drink/toke excessively etc.). Neither group is what I see as potential owners. Another anecdote is people I knew from back East seem to be moving back lately (disappointed by jobs and COL here).

The renters I know live right in the City of Vancouver. When you count just the COV - take out all suburbs - the ownership rate is just a slight majority IIRC.

Multiple ownership is an interesting issue too. While I don't personally know many amateur speculators, I've heard from others about people with very average incomes buying multiple investment condos. That won't end well.

Monte, the main myth is the

Monte, the main myth is the one revealed in this statement of yours:

"There is simply no way any government could afford to build homes for the majority of its residents."

With respect, you say this because you don't know where money comes from, you don't understand banking, and you think there's a shortage of money. This myth, mostly unobserved and therefore unacknowledged, is what gives the power elite control over human activity. In reality, there is no shortage of money. How can there be a shortage of numbers, most of which are produced by tapping a keyboard?

Money is produced by banks. Unfortunately, private banks produce over 95% of our money by loaning it into existence, but print up only the principal and make no provision for the payment of interest, thereby holding us in perpetual debt slavery. The myth allows for this incredibly pathetic situation to persist. Fortunately, we have the publicly owned Bank of Canada with full authority to print money, debt-free.

Resist the knee-jerk reaction and investigate the money myth. Learn where money comes from. Then the path to the end of poverty and homelessness becomes clear. Cheers!

Patiently waiting

Ummm, the cohorts I'm familiar with are three:
(1) Retirees - parents/grandparents etc.;
(2) tag end boomers;
(3) Gen X;
(4) Gen Y

I haven't done the research but, as I said, anecdotally these are my observations:
Group 1:
No more than 10% - 15% owners;
Group 2:
Probably about 65% including a goodly number of folks who own more than one address, several as many as three or four – one who owns more than 50 individual properties in Toronto and Victoria and is not incorporated (no indication how that affects the stats - and no indication how sole/joint ownership affects CMHC numbers) ( are spouses being counted as owners twice or even more often? );
Group 3:
Among my acquaintances these are virtually all professional couples and ownership would not even approach 50% - too much student debt, prices too high;
Group 4:
Virtually no ownership.

I'm still very doubtful about the figures. They just don’t add up – in my mind.

Others say 70% too

There was a small article in the Sun today that was a partial reprint from Newsweek. It was comparing Canada to America and how both countries are weathering the meltdown.
It painted Canada in glowing terms(American author) primarily because of a more consertative banking system. What was interesting was how it was shown that the American way of letting you deduct your Mortgage interest off your Income tax had led to housing overconsumption, which helped lead to todays crisis.
The author then went on to say that even with this Mortgage helper, American house ownership was around 65%.
Canada was reported as 70%.

Problems with the numbers

I know that's what some of the sources claim, but I think there's a real problem with those numbers and I bet you'll agree when I point out a couple of things.

The 2006 census puts the population of the country overall at 31,612,897. It also says that there were 12,435,520 ‘private’ dwelling places occupied by the 'usual' residents at that time.

I don't know what the typical 'household' consists of any longer and I have no idea what the breakdown between owner occupied and rented premises is but I can't see any way in which home ownership can possibly reach a level of 70% of individual discrete owners.

Can you?

It just ain't kosher my friend - not matter how much we'd like to believe it. Clearly that figure has to be counting a lot of the same residences more than once or a lot of owners own way more houses/suites than one. Either that or somebody is lying to the statisticians.

I don't know if the numbers are cooked or not

It doesn't matter to me one way or another. Just throwing it out there for the sake of discussion.

I was more interested in the tax deductions and banking issues that have driven our southern friends - and Europe - to a (reportedly) far worse situation than we are currently experiencing.

The article implied Canada is a country to be envied for its more prudent policies.

another myth is that the

another myth is that the high prices were caused by construction worker salaries going up. I work for Builders Of Some Authority and we are getting a 10% pay cut now because of the economic crisis. The owner made hundreds of millions in the boom time and now saves a few hundred thousand off of the backs of his workers. People in the industry for decades make the same hourly wage now as they did in the 80's

Yes very true

The wage argument,indeed,it was part of the phoney hype.

Remember the media and talk about the red hot or white hot real estate market,the same was said about wages,demand was forcing wages up,well in 1998 as a journeyman with an IWA card wage was 29.00 per hour,other construction jobs in the 90s my wage was between 20 and 30 per hour.

Talking to people,nephews,colleagues to find out that therecent wage levels weren`t even as much as I used to make,labour rate for rookies went from starting at 14.00 to 16.00 to 17.00 range.
All hype,and in terms of actual buying power,far less money,I have a brother in law that made 18.00 per hour 24 years ago,he still has the same job today and gets paid 22.00 per hour.

I would gather he has lost about 40% in spending power.
The big hype,this province is ready to cry,in the last few months on the sunshine coast there now seems to be about 10.000 thousand rental unit houses,(stubborn sellers who think the price might go back up)
I think they be mistaken.

Great post Miracle(good points) although I think your mistaken about my freind MONTY Paulson

extended family households

"and perhaps figure out a more cost-effective and sustainable way to provide adequate homes for every Canadian." -- Monte Paulsen

One thing I don't hear talked about often is multiple generations sharing a household. Our society tends to paint a big "L" for loser on the heads of people over the age of 25 who live with their parents. And then there's the jokes about in-laws -- visiting for a couple of days is bad enough, so forget about living in the same house.

As a society, we need to accept people who live in an extended family household and stop placing the expectation that the next generation must leave the farm and get their own place. Those expectations are purely derived from historical reasons.

It's not a lifestyle suited to everyone, but it would help reduce the demand. Instead of paying rent to some landlord, how about paying rent to family? Or co-owning?

GWest

You write :

"We talk pretty frankly. The consensus (from this source) is that Canadian banks are not in much better shape than the American cousins...."

Perhaps that may be true re exposed risk, but I suggest you've overlooked the presence of the Bank of Canada and the CMHC, both publicly owned.

As I understand it, In '06 Harper authorised the CMHC to back sub-prime mortgages held by mortgaging companies (which presumably were in turn backed by the private banks) and also had the Bank of Canada loan these banks "real" monies to help them weather their losses in the derivatives market.

So, while as your friend notes, Cdn banks might not be in much better shape than others, they may be being envied for having their hands held by "nanny government", keeping their precious bums from bouncing off the pavement.

It would be interesting to know what your friend thinks of this.

selene

Selene, it's increasing sanity, not historical necessity, which drove people out of their extended families. So long as it's true for many people that even as adults, when you're amongst your parents, you regress and find yourself reacting to them as you did when you were a little kid, we have to be very wary of romancing the idea of extended family households--at least of the old version (in Titanic, weren't you a little bit happy the daughter found a more appropriately aged partner and would no longer be taking care of her "greatest generation" Mother--I was). What I would like to see romanced, though, are the idea of extended households where Gen Yers can be the rule makers, in charge. Bunches of them in their own houses. Some might be xbox houses, where they can xbox their lives away (and god bless them!--perfect way to do the old sixties bit and drop out in preparation of doing good), or do their own version of the Whole Earth Catalog Community thing.

50b to build housing?

Most of the cost of a house in Vancouver is in the land value. Various governments, city, provincial and federal have land in the area which could be used for housing. In other words we own it already and its paid for! E.g. Little mountain area on Main Street. This is huge source of wealth which we all own but are not using for our needs. The problem is that in the past few decades governments have been telling themselves that they have to sell these lands to developers like those brilliant developers of the olympic village. Look at the plans for little mountain: instead of increasing the housing stock for those that need it most, the majority of the land is going to the private sector with it's crazy market. We need to use the lands that we own for housing and not give it away to the market.

ME2

Remember the $50 billion that Flaherty pumped into mortgages during the campaign....there's been more since the election.

Market Failure

All of the assumptions about values are based on the "Market". We now see the consequences of this reverence for a market which encourages greed, inequality and environmental destruction. Now is the time to pressure governments to create housing for all. Neo-liberal objections to government created housing are all based on the argument that this will screw up the market. Well the market has screwed itself. Why should the people give up any more assets to the market so that developers can get rich while others go homeless?

Subprime Canada, ME2

High-ratio and no-downpayment mortgages came to Canada in 2006 and were stopped in 2008. The big difference between Canada and the USA was that in Canada borrowers had to have an income to qualify and the mortgages had to be insured, which added a couple of points to the rates. In the US mortgage brokers were over inflating values and giving borrowers more money than their properties warranted, and in some cases these people didn't have any, or sufficient, income.

The government didn't back these mortgages and didn't 'pump' money to the banks. What they did do is buy good mortgages from the banks, thereby injecting liquidity into the system at a time when it was needed. If you recall, after the collapse of Lehman Bros. the flow of money stopped worldwide and Canadian banks needed cash for good clients so that they could pay their working men and women and feed their families.

Silly statements like those about 'pumping' cash to the banks during the recent election campaign are just selective and dishonest twists, as usual.

These were huge differences from what was going on in the US.

As for affordability in Vancouver, scale is the overwhelming factor. Little developments on chunks of land will never be cheap. Large projects have to be less expensive per unit. Vancouver will have to accept that taller buildings, all over, are the only way to reduce net costs to buyers, or renters. Vast swaths of central Vancouver are single or two storey, it will have to go up to 8, 10, 12 or more.

sorry monte

I suppose that shill comment was out if line, so I apologize. I should be better behaved on these boards. Sorry.

So many people have so much invested in real estate, it's hard not to look for irrational possibilities, when the most likely rational outcome is so unsavory.

At the same time, I knew it was a bubble back in 2003, and that it would crash eventually. -- and who the hell am I? I don't have any special education in economics, or a crystal ball. I just looked at the numbers and the behavior of my friends and neighbors. They all got caught up in the hype, and now they are having a hard time letting go. Monte seems to be no exception here.

Is still stand by the poor analysis and poor editorial comment however, because I think The Tyee has an editorial mandate to present a rational and balanced view of things. This article is so full of holes it's embarrassing. The Tyee can do better!

Monte, the main myth is the

Monte, the main myth is the one revealed in this statement of yours:

"There is simply no way any government could afford to build homes for the majority of its residents."

With respect, you say this because you don't know where money comes from, you don't understand banking, and you think there's a shortage of money. This myth, mostly unobserved and therefore unacknowledged, is what gives the power elite control over human activity. In reality, there is no shortage of money. How can there be a shortage of numbers, most of which are produced by tapping a keyboard?

Yes for sure, there is no shortage of money, it is about power. But the idea that we can print money to build homes for everyone is ridiculous.

Money is produced by banks. Unfortunately, private banks produce over 95% of our money by loaning it into existence, but print up only the principal and make no provision for the payment of interest, thereby holding us in perpetual debt slavery. The myth allows for this incredibly pathetic situation to persist. Fortunately, we have the publicly owned Bank of Canada with full authority to print money, debt-free.

Money is backed by debt, period. Debt creation caused the housing bubble and printing money and creating more debt will not resolve the issue.

Resist the knee-jerk reaction and investigate the money myth. Learn where money comes from. Then the path to the end of poverty and homelessness becomes clear. Cheers!

This is the best line yet. I encourage everyone to try to find out how money is created. You might try, moneychangers.com for a start. When it becomes clear that the issuers of debt backed money cannot pay it back, it will become worthless. Would you invest in a mortgage backed security after the recent collapse. Dollar bills are just another mortgage backed security.
After the government of Canada has returned to deficit spending, wiping out all those years of surpluses do you still think they will be better able to pay it all off? Someone has to buy the government debt or it must be turned directly into printed money by monetizing the debt. A sure recipe for high inflation. But why listen to me? There are far better minds out there who know the truth. The question is why don't you know who they are?

No need to touch ALR

There are many neighbourhoods in Vancouver that are begging to be up-zoned. Vancouver Specials taking up every possible square inch of land and multiple suites in almost every house. The pretense of Single Family Housing should be ended. These areas want to be, and should be, townhouses and apartment buildings.

The problem with subdividing old houses is you have housing that doesn't meet safety codes, is prone to conflict because of poor sound insulation, and you have "deadzone" spaces between structures that don't serve any purpose.

The ideal would be more efficient use of land with denser housing that is actually well built (Sadly nobody builds anything well anymore). You could still maintain green-space in these neighbourhoods too, and probably better quality instead of divided by yard fences.

Other problems...

Everything has been done to jack up housing prices. Consider when you flood the market with 4000 sq. ft. McMansions on 10,000 sq. ft. or more lots, rather than building say 1500 sq ft houses on 4000 sq. ft. lots. Design is another factor. Older houses were built near the street so you would get a decent size back yard from a typical 35 by 110 lot. Today they are plunked into the middle of the lot, requiring a larger lot to have a reasonable size back yard. Building houses that are only one story adds to the cost. It is cheaper to build a one and a half story house than to build the same square footage on one floor, since extra roof and foundation are more expensive than four feet of extra wall. One and a half story houses also fit on a smaller lot. Then there are the speculators. They could be eliminated by imposing a 100% capital gains tax if you sell a house before say, four years ownership.

Several people have mentioned the debt racket. For those who want to know more about this question go to http://www.youtube.com/watch?v=vVkFb26u9g8

High ownership rate -> low mobility -> long recovery

As a pure amateur observer here, I can't help but notice that Monte has based his entire 2013 proposition on past patterns and not details of those patterns. The current housing bubble/fiasco occurred independently of the current recession - but more of a cause than an effect. The bubble was created by an echo chamber of hype here locally, fueled by looser lending (40 yr mtg anyone?) nationally, and is not unique in many significant ways when compared to international markets.

The current recession will invariably amplify the downward pressure on housing prices as will the current high rate of "ownership". Ownership in the LM often translates to renting from the bank.

Unfortunately, unlike true rental situations, one must sell and move if they lose their job and need to seek one elsewhere. If only 30 percent of those who lose their jobs in the LM need to sell, what kind of effect that will have on supply? Both in raw numbers and in motivation/pricing there will be consequences. Unemployed people will be very motivated sellers taking lower offers putting additional downward pressure on prices. Increased supply and increased motivation to sell will get this ball rolling downward. 50% is not an unreasonable possibility.

It will be a long time before demand will return to get prices up to the 2008 levels as fundamentals (price:income) are coming back with a vengeance. The demand that was borrowed from the future to inflate this bubble will return along with those prices at that same future point well past 2013 where incomes justify the prices and no sooner.

Prudence please!

No one knows how long this recession/depression will last. Aside from Monte, most of the people who claim it will be relatively short are the same folks who promoted the mess we are in now. Should we trust them given their track record? It could be as bad as what Japan has gone through for the past 18 years, for all we know. Acting as though it is going to be better soon is not a good idea. We should be prepared for the long haul. It's like fire alarms, you don't buy one because you are sure your house is going to burn down, you buy one just in case...

As for the "experts" who claimed it wouldn't happen. Like another commentator here, I saw it happening in 2003 (and sold all my real estate investments by 2006.) I also dumped my mutual funds Spring 2008. I say this not to pat myself on the back, but just to show that an ordinary working Joe who just does a little reading on economic history and follows the news can keep ahead of the racket. (and part of that is knowing it IS a racket!)

Quote from Bobby Peru: ...

Quote from Bobby Peru:

... Ultimately, more land from the ALR must be released for development. While it may be nice to preserve farmland and green belts, this desire must be weighed against the need for affordable housing ...

Holy sufferin' pete ... here's somebody who thinks food comes from grocery stores by magic.

That's the most alarming statement ever.

ALR land?

Right on BC Mary! We sure as heck don't need to destroy our farmland. Just use what we have in a saner and more efficient manner, as I have suggested above. (See "Other Problems") I estimate that at least one third of the land used in suburban development is wasted. With better design you could house a lot more people in the present space without sacrificing having a back yard for SFD's and providing allotments for condo and apartment dwellers.

It's important to note that

It's important to note that no money reformers are advocating that governments print money willy-nilly or imprudently. What we are saying is that private, debt-based, interest-laden money creation is the root cause of most of our social ills. Private banking guarantees and manufactures poverty and homelessness. The answer is for government to regulate and restrict private money printing while increasing its own contribution to the money supply, debt-free.

It is beyond the pale that any private corporation should control our means of exchange. Until our government ends this essentially fascist situation, and as long as our progressive media refuse to look deeply at this root cause, we can forget about any notions of democracy or justice or ending poverty.

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks." Lord Acton

You need to do your homework!

Monte needs to do some serious research before he write an article like this. You simply did not do your homework. I think your just another shill for the realestate people.

"Not even the hardest hit regions of the United States have suffered an across-the-board drop in housing prices of 55 per cent. In California, for example, home prices appear to be bottoming out at about 40 per cent below the peak."

There are some regions in Cali that have fallen more than 60%. I wish I could post the chart that shows the drop in some the regions.

" As long as demand for rental apartments continues to outstrip supply by such a large margin, B.C. rents will continue to rise without any relationship to unit costs."

Fact: You should have spoken with some property managers because they would have told you that rents are coming DOWN! In fact my rent has come down this month. All these speculators who can no longer sell their condos have no choice but to try to rent so that means excess inventory.

Logical fallacies always!

"It's important to note that no money reformers are advocating that governments print money willy-nilly or imprudently."

Exactly. But those who favor the bankster dominated status quo will always trot out a straw man or two to try to undercut any move toward a rational monetary system.

Where did you get your data?

Monte, you made this comment in your response, "short replies": "Home prices have risen over any given historical five year period in B.C. This includes previous price slumps." Where did you get the data to back up this statement?

If you look on the Sauder School of Business website, on the page where they post real estate data on Canadian cities, you'll see that this simply is not the case for Vancouver, not in nominal terms, and certainly not in real terms - by no stretch of the imagination. You claim this it is the case for B.C. Where did you get this data?

davidrocky

Monte needs to do some serious research before he write an article like this. You simply did not do your homework. I think your just another shill for the realestate people.

Sigh. Your assignment is to go back and read some of the comments above before you post.

Here's the direct link from Vancouver-based MacDonald Dettwiler Associates based on SALES where you can see that SoCal prices (that is, 65% of the California market) have dropped by 40%.

http://www.dqnews.com/News/California/Southern-CA/RRSCA090119.aspx

I know you've got a story about an imaginary friend who bought a place for $5,000 in the middle of the desert, but it's a sure bet that his wasn't the only sale in SoCal this year.

http://3.bp.blogspot.com/_wFW

http://3.bp.blogspot.com/_wFWqWIH-WFU/SYXrN1qk-wI/AAAAAAAAJGs/j9C9HerVA3M/s1600-h/CAR-%25decline-2009-01.png

Looks like some regions are down more than 60%.

Fii

Only because I am 64 and don't feature waiting ???? years till the economy rebounds. I lost all my gains in 1998 thanks to the Asian Tigers debacle and it took 3 years to get back in the money again. No one knows how things will go this time round. At any rate I am not willing to gamble on it.