Saturday, March 27, 2010

Where are we now?

Actually, we are at a very unusual spot.

We have by all accounts, rather panicky and anxious action from buyers; multiple bids, back up offers etc. all leading to (mostly) higher prices in Vancouver. So you would logically think that we have the same very hot parameters.

That would be low MOI and low inventory and high sales.

However that is not the case!

Our total listings are running above 2008's numbers and our MOI are 4-5. Not bearish by any means but not in the psychotically low levels we saw in 2007.

So the price action is hard to explain. Why would buyers be in such a panic when the inventory is rising? I don't have any explanation for it, but here are some ideas (some serious and some not):

1) The HST fear is driving them to buy
2) They are worried about having to put that extra 5% down when mortgage rules change
3) They think the BoC, having been completely irresponsible for the last few years, will suddenly find religion and increase rates to where they should be (2%-3%)
4) They think Mark Carney will borrow Ben Bernanke's helicopter and take it for a money-dropping ride around the country.
5) They think we are on the threshold of another big boom which will lead to higher wages and bridge that affordability gap.
6) The country is about to split up and there will be a long caravan of anglophones leaving Quebec for the west coast.
7) Alberta will make an unsolicited offer to buy BC, in return for paying off our Olympic debts.
8) they are selling their stock options in Gold and Potash companies to buy property.

I have trouble thinking of many other reasons why everyone is diving in head first, except herd action drives the herd. Ie the more people that panic, the more the rest panics- like the stock market. People rarely buy when it is dropping, but sell along with everyone else.


BTW- I encourage you to read this article. It is about life in the Shangri-la and sounds like the Titanic has been reproduced in Vancouver. Here's a great quote:

“I had a wealthy corporate citizen in Vancouver who wouldn’t buy in the Shangri-La because it didn’t have separate elevators for the staff,” says Mr. Rennie, who was shocked."

I agree. What an absolute affront to have to ride the elevator with the peasants who clean up after you. I hope that he found somewhere else, where he felt comfortable in our fair city. We need more discerning people like that in Vancouver - A$$-HOLE.