Had a nice Sunday having spent the afternoon in Whytecliff Marine Park. We didn’t plan to go there, it just sort of happened. Nice place to stumble across.
What was interesting was the drive along Marine Drive in West Vancouver. It seemed like 20% of the homes out there are for sale. While the number couldn’t be that high, there were pockets where it was nothing but realtor signs. That’s gotta be good news for the bears.
I have watched the credit crisis take its toll on the global economy with some interest. Like you, I have equity investments and my outlook has not surprisingly swung from cautiously bullish a year a go to full on bearish as the crisis took hold.
When it comes to real estate, particularly in Vancouver, I’ve been a bear for years. It’s unrealistic, unsustainable and frankly ridiculous. “$600/sf for a studio in Gastown? SIGN ME UP!!”
I liken real estate price to the dotcom bubble of the late 90’s. Stocks unrealistically rise by 25% a year for several years and everyone expects that this is the new normal. You will note that the stock market eventually reverted to historical norms. I’m quite sure that real estate market will too. See my last post for where that might take us.
So I have come to visit Garth Turner’s blog more and more as the real estate market has tanked. He too, is a massive bear on the economy and real estate so it’s easy for me to nod in agreement with most of what he is saying. Now obviously he has a couple of books to push and everyone has their own agenda but mostly I’ve been drinking his kool-aid.
He has backed off on his Depression talk and to date, has stopped with some of his more over the top, gloom and doom predictions for post apocalypse economic colapse.
In early March, Turner was on the Allen Gregg show on TVO. He was talking about the Canadian economic outlook and it was a great listen. I would encourage you to listen and come to your own conclusions.
With the recession deepening, many Canadians are worried about how bad it will get and what they can do to survive it. In a new book, financial expert and former MP Garth Turner offers practical advice on how to deal with falling house prices, shrinking investments, and more. It’s called After the Crash: How to Guard Your Money in These Turbulent Times. Link to show
While this image from the New York Times speaks to the rise in American home values since 1997, one has to wonder how far certain Canadian cities *cough*Vancouver*cough* are from this sort of spike in values.
When a purchaser requires over 70% of their gross income to buy a house in Vancouver, I think it’s not that far off. I noticed an open house on my way to work a few days ago. Typical Vancouver condo, on Georgia St. where they were asking in the area of $550 per square foot. Not surprisingly there were no line ups of condo crazed people bidding the price higher.
Yeah, me thinks we’ll keep saving our pennies and renting a while longer yet.
