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Baby, we got a bubble!?

With my very first condo purchase, back in 2002 I was given money back for not using a agent. I was green back then and didn't know anything about the whole process. I never asked, it was just given to me (this was with the Pemberton Group BTW).
 
I got 1% back as well on 1 purchase. And as an insider, I got 3% off the price and agents were then offered 3% by my developer in another project.

But still most get 1% if they are lucky with no agent and the developer gladly keeps the 3% difference to the 4% quoted by Renwick in the business piece. Note, it goes to 3% when they actually launch to the public in alot of cases she says as well (when they are 70% sold or so) and have their construction financing.
 
In the thread "How is the market in your neighbourhood" R/E Willy Wong has listed average prices. In the area C1 (core downtown), average price in February 2011 was 6.8% higher than January 2011. Figures seem to be unreal. Could someone with experience in analysing r/e data, please, have a look at the figures and post conclusions here.

Thanks in advance.
 
In the thread "How is the market in your neighbourhood" R/E Willy Wong has listed average prices. In the area C1 (core downtown), average price in February 2011 was 6.8% higher than January 2011. Figures seem to be unreal. Could someone with experience in analysing r/e data, please, have a look at the figures and post conclusions here.

Thanks in advance.

No analysis necessary. Its normal seasonal variation. Jan to Feb is typically 5%. Look here http://guava.ca/
 
So... if it IS foreign investment from China that's driving our market in the big cities, especially Vancouver, as is often claimed:

http://imarketnews.com/node/29203

BEIJING (MNI) - Prices of new homes in China's capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city's Housing and Urban-Rural Development Commission.

Average prices of newly-built houses in March fell 10.9% over the same month last year to CNY19,679 per square meter, marking the first year-on-year decline since September 2009.

Home purchases fell 50.9% y/y and 41.5% m/m, the newspaper said, citing an unidentified official from the Housing Commission as saying the falls point to the government's crackdown on speculation in the real estate market.

Beijing property prices rose 0.4% m/m in February, 0.8% in January and 0.2% in December, according to National Bureau of Statistics data.

The central government has launched several rounds of measures since last year designed to cool the housing market, though local government reliance on land sales to plug fiscal holes mean enforcement hasn't been uniform.

The NBS is expected to release March house price data on April 18.

So, there goes the foreign money.

What now for Canada?
 
So... if it IS foreign investment from China that's driving our market in the big cities, especially Vancouver, as is often claimed:

http://imarketnews.com/node/29203



So, there goes the foreign money.

What now for Canada?

Exactly the issue I would worry about. However, BC clearly has a bigger problem:

One would think that it would really be hit as will TO but the market here is more than just China buying so while affected one would think, it depends on how much demand this pulls away. As well, they say that alot of those empty properties in Bejing are fully paid for and if that is the case, the question will be will the psyche be that all property everywhere is bad. That is the big unknow but a definate risk.

http://www.moneyville.ca/article/975541--national-home-sales-fall-in-march?bn=1
 
Actually, the Chinese government crackdown on speculative housing is what is encouraging Chinese investors to purchase in Vancouver and Toronto. The decline in Beijing house prices translates to higher Vancouver prices.

http://www.reuters.com/article/2011/04/14/us-china-property-overseas-idUSTRE73D46220110414

Yes for now and further inflating prices. The question is: if the Chinese decide at a later date that BC or for that matter investing in TO is not the best bang for their Yuan,if they stop purchasing is there enough "other demand" to sustain prices because clearly as the article points out and we know Canadians cannot afford these prices, especially if they continue to rise. Basically, in Canada for the real estate market at least, China is exporting its inflation to us. As a rule, that which inflates, ultimately will have to deflate back to the norm.
 
The concern I have is that a large proportion of China's growth in the last couple years has been the inflation of several bubbles, the most obvious of which is their real estate bubble. If it corrects, it will hurt the Chinese economy pretty badly.

The result is that those wealthy investors have less cash to send overseas. More importantly, even the locals in Vancouver use the Chinese investor theory as a reason to justify paying that much for a house and it is arguable that the locals are as responsible for the runup as the investors. If the locals lose confidence in their ability to sell to a Chinese, the market will correct. The last time a bubble burst in SE Asia, about 14 years ago now, Vancouver corrected by about 20%. The exact same rationalization - investors seeking safe haven, albeit from Hong Kong rather than the Mainland - was present in the 90s as well, and it turned out ot be a time bomb then. Today there is much, much further to fall.

The Chinese Investor element is largely absent from our lowrise market and present, although yet minor, in the condo market. It is hard to describe just how ingrained into the local culture the investor is out there.

The more important factor among this is simply that as a resource exporting country we stand to suffer significant economic consequences were demand and/or prices for commodities to significantly decline, as would be expected if China experiences a major recession.
 
My experience when I look at it is that governments are not very good about handling the economy as evidenced by repeat boom / bust cycles in various locations.

I have little confidence the Chinese government can handle an economy that is growing 10%/year to sustain itself that has to provide for all those elderly and the one child policy for almost 2 decades and has reported inflation of 5.4%. Similarly, Europe has now started to raise interest rates. The US economy is a big question mark if there is no QE3. Inflation is picking up everywhere. Eventually, unless we are going to rewrite all economic theory, inflating the value of all assets (stock market, real estate etc) either means that there will be an asset value correction or that the currencies will all become Fiat currencies or like the German mark during the Weimar republic when there was hyperinflation which the German's all remember only too well and hence their "strong determination" to control it in Europe.

Ka1, I hope I end up being a dreamer. the point is saying it for "years" as you say does not make it any less right. Unfortunately I believe I will ultimately be proven right and when it happens, a lot of people are going to suffer terribly. Mainly all those people who have debt. It is wonderful to enjoy having become "wealthy on paper" in the past decade at a rate which never occurred in the past (at least for that portion of the population participating in it) but the inflation of assets, especially leveraged assets, disappears very quickly if prices deflate. And for a significant amount of the population, real estate is the only and most significant levered asset they have. You see the disaster in the US market. By some accounts, there are 5 million more homes to go into foreclosure and fully 1 in 4 or 5 homes in the US with a mortgage is underwater. Yes, they tripled in price in 6 years in some locations vs. doubling over 10 years here, so I grant it won't be as severe, but none the less, painful it will be.

Those coming in now may well prove me wrong. My point is simply upside potential vs. downside risk is now totally skewed towards the latter.

I prefer taking bets where the odds favour me, not in the reverse.
 
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from the article above, does that mean bubble already burst in China? Or is it just normal seasonal month-month average?

something to think about: if bubble burst in China, will there be a selling wave for investors who bought TO/VAN properties, and try to buy low again in China?
 

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