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Category Archives: BC Housing

Vancouver Real Estate Bubble Popping Chart

 

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This chart needs very little explaining as I have  talked about the Vancouver Real Estate price bubble this summer already. Now we have a chart to show us the result of taxes created by the government, who will get blamed for it. Somebody or some event will always get the blame, as even a fire in Alberta, crashed the real estate market.

All this is no different than any other real estate bubble we have seen. Every major country in the world will experience or have experienced price bubbles in real estate. Now it’s Vancouvers turn. They will come up with a multitude of reasons why it will just be temporary, but this is going to last much longer due to the charts vertical nature.  Looks more like a Tulip Mania chart, and we know what happen to tulip prices after the Tulip Bubble crash.

This is not going to be over and done with in a few short years, as we are sure to get a counter rally or two before it hits a major bottom. Even after it hits another major bottom it will not go back to the bubble mania path anytime soon.

I see the potential for 3 price level support ranges for the years 2012, 2009, and 2000. Can prices fall back to the 2009 price level, before it smooths out or starts to go sideways again?  They sure can but it will take a long time to do it.  People are going to learn the hard way how leveraged real estate can act when buyers no longer show up.

Many people have been calling for this bubble to pop as there is lots of evidence on Twitter.  

Vancouver Real Estate: Did You Hear That Popping Sound?

 

August, 2, 2016 was the cut off date to get in all the real estate deals before the sales tax was due to be implemented. 

Many did not make it, and news about deals collapsing shortly after have started to come out. This tax was created by the government, and now we have to see what other dominoes will be falling. 

With over 4000 deals failing and others just walking away, because they are not willing to pay the extra.  They are walking away because they are not as rich as the public media makes them out to be. 

Rich foreign investors not being able to afford an extra 15% tells me it is not smart money that has been doing all the buying, but, dumb money that thinks the trend will always be up.

  August, 2016 may go down in history as the month when the Great BC Housing Bubble Burst. 

 

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  Source  Canadian Housing Price Charts 

This chart shows us what has happened until the end of  July 2016. This trend cannot continue, and to help confirm that we eventually should see this chart turn down. No wonder why prices have shot up if the listings have imploded like the green trend line shows.  These are some major imbalances and the listings trend may explode if the entire real estate complex takes a hit. Everybody will try and sell at once, as fear takes over while at the same time, buyers dry up and refuse to show up in ever declining numbers. 

The fires in Alberta have already devastated the real estate market there, so now it’s BC’s turn to do some more damage.  Some say that buyers are running to Toronto, because the Foreign Buyers Tax has not kicked in. This is more evidence that it is hot money moving and not smart money. Running into, or out of something because of fear will never work for very long. Only dumb money moves under pressure of fear as they are the least disciplined.  

In my area landlords have been on a rent raising spree, because their costs have all escalated as well. I’m sure prices will get hit all the way up and down the Frazer Valley as real estate, is worth only what another is willing to pay for it.   

Some figure that at least a 60% price correction is coming, but the herd will always be too late to react on time. They say real estate is a safe investment, but in fact the leverage is far more that any futures contract. 

If we look at the 30 year cycle, 2016 would be the anniversary of Expo 86 in Vancouver. The mood in 1986 was about the same as the mood in early 2016, so this would make for a very good fit.  We are still 15 months away from the 30 year anniversary date of the 1987 crash, so the fundamentals of Canada should continue to deteriorate in the next few years.  

Profile on BC Housing Bubble!

 

VH-May-18-2016

 

When I saw this chart I was pleasantly surprised, as it showed far more wave detail into this Vancouver Housing Bubble. Only people that are in the market don’t know that they are in a bubble, otherwise they would not be in it. The public still has the RE Fever! 

The two red arrows are my only edits and the main idea is to get you to focus to this wave positions as it sure looks like a 4th wave flat or even an expanded flat. This came to a screeching halt right at my bottom red arrow. Once this 4th wave was completed the bull market pattern changed.  This change came in overlapping waves no longer showing the normal  impulse type waves,  I take this as a diagonal 5th wave possibly ending in April, about three weeks ago.

We can never be exactly sure when this may pop, but I am sure it will. What needs to happen is for the price to start stalling or slow dramatically. Volume starts to increase and the flipping wars are on.  Flipping will be a race against time as sooner or later less and less buyers show up.  Many offers of higher bids would have to dry up as well. If and when the news breaks that buying with higher bids has dried up, then panic can set in as people find themselves in an upside down mortgage, and falling Vancouver house prices.  

Let’s say that sometime in 2016 this chart clearly pops, then if another future price leg is going to come quickly, then it will depend on the type of decline it makes.  Bubbles have a really nasty habit of crashing very deep and with most of them, they completely retrace their entire bullish phase.   I sure don’t expect a full retracement but we could look at three main areas that can supply us with a potential  support range.  My bottom red arrow is one of these first support areas with the other two, falling between 2000 and 2010. In the long run when this bubble bursts, then I would be very surprised if the average prices are “not” sold for under a million.  

Any major decline in prices can be stopped or halted when the next solar cycle bottom arrives.   Prices and the economy will eventually follow the sun, which can be about a 4-5 year up cycle.  This solar cycle should end close to the 2021 time period, which is still 5 years away.  

I think it was 1926 when the Florida real estate bubble burst, and at that time it only took months and all the buyers refused to show up for the spring of 1926. Needless to say prices crashed. This scenario may not happen exactly as described, but all it will take is a little price correction which can turn into a big price correction at any time.

I think any turning will be more secular in nature and will take much longer to play out so don’t expect this to happen overnight.  

Fort McMurray Fire

My friend and I were having breakfast at our favorite local “ABC” restaurant,  when he brought the fire news to my attention. I was already reading some news about it, but this fire is bigger than many think, and they are saying it can impact oilsands production and even the GDP. 

It will remain to be seen if this fire affects real estate prices across Canada, bursting the great Vancouver real estate bubble. Sometimes events like this can be so large and psychologically important that it marks certain time periods. 

 

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No wonder nobody wants to buy stocks, why should they as the SFD are rising 1.4% per month.