Bryce Roxburgh going crazy buying shares of Exeter.

https://www.canadianinsider.com/node/7?menu_tickersearch=Exeter+Resource+Corporation+%7C+XRC

A few companies have missed but actually 74% of the companies that have reported have beat estimates. Earnings season is actually going pretty well.

I’m guessing Rick is not bullish on energy short to mid- term?

Great show guys. There is a lot to say about Vancouver real estate of course. But I won’t bore you with the details Cory. In a nutshell I would only say to keep in mind that asset prices rise and fall but debt endures. Before buying ask yourself this one important question…..

Will this house be worth what was paid in 5 years, in 10 years, in 15 years…and will you regret buying if the bottom falls out a few years down the road?

That is probably all that matters. As long as you plan to stay and can afford the monthly nut it might not really matter what it costs if you can justify the outlay over a reasonable portion of the mortgage life. If you pay cash then keep in mind the lost opportunity of having a lot of money tied up in an asset that may or may not ever yield a return.

For me? I would not buy there now. Price to rent is so severely skewed that it makes no sense and it is just better to rent until the cows come home. Rent inflation has been miniscule over the last decade.

Look at it this way for some perspective ……. the cost of a fairly typical home in the West side can run upwards of two million dollars (or much more) but rental costs are usually well below 5000 per month for a very decent home in a good location.

For the sake of argument though lets say rent is 5000 dollars (high) for a two million dollar home near Point Grey and the ocean. Well at 5k per month without considering inflation you could rent there for 400 months and keep your investment capital in whatever other instrument you prefer.

Four hundred months is equal to 33 years! And THAT tells you how stupid prices are.

Who the hell in his right mind would buy when those kinds of ratios are the norm? Certainly I would not invest in housing near the termination of what is undoubtedly the biggest credit bubble in history and one which is now global. Indeed, we should anticipate that as the Fed and other Central Banks take their foot off the pedal that assets of all kinds risk returning to their deflationary trends.

There is a third point as well. Vancouver has an uncanny correlation to Hong Kong real estate prices and parts of mainland China, Keep that in mind as the end of the housing boom over there continues that it is an omen for the city of Vancouver (if the correlation holds).

On the other hand, not all housing in Van is really all that overpriced. The key postal codes are what make the news but those are just a handful of areas like West and North Vancouver, the West Side, Killarney and parts or Richmond. Other areas have seen much more modest price growth and don’t get the attention. Guess it depends on where you like to live.

Hey, I have a place for you if you don’t mind small. Two bedroom suite in a house in Shaughnessy. Just a block off Granville and walking distance to Van Dusen and Queen E. Park. It even has a big garden space and parking included. The price is fair enough but the big drawback is that its small at 750 sq feet. Its the amenities and neighborhood that count.

Shaughnessy apartment for rent for 1250.00 dollars.
http://www.kijiji.ca/v-house-rental/vancouver/prestegious-shaunessey/1020098924?enableSearchNavigationFlag=true

if you buy a house wait for lower prices and lower rates.

you might need to wait a very very long time

housing is fine in my neck of the woods, real estate is local.

price always trumps opinion

birdman – very well thought out article. you are very right.

one thing is certain this is no longer your grandfathers real estate market

you can lose money in real estate

Rick nailed it regarding how the Chinese are affecting Vancouver’s housing market.

In the USA, most of the purchases are cash investors. Hard to save up a down payment working part time flipping hamburgers or bouncing of the wall working for Wal Mart. Thus only in those regions where ‘new’ money comes in is there much hope for single family housing–ie, where there’s lots of government and or land grant universities, for examples.

A warning for those considering buying into certain West Coast real estate markets in Canada and the US. How a home asset deflation in China is about to wreak havoc on GDP numbers and why it could result in a hard landing there (like we did not see this coming from a mile away….. HA!!)

Burst Chinese Housing Bubble Leads To First Annual Price Decline Since 2012; Prices Drop In Record 69 Cities
http://www.zerohedge.com/news/2014-10-24/burst-chinese-housing-bubble-leads-first-annual-price-decline-2012-prices-drop-recor

How about radio isotopes from Fukushima contaminating the west coast and western half of north america rendering all real estate radioactive. What is radioactive waste posing as real estate worth? Nothing? Get a Geiger counter and use it before you buy or rent.

Ive been waiting for quite sometime up here in toronto and rates don’t seem to ever want to go up. Every time I think the bubble will pop, up we go again. Everyone here is in this buy buy buy mode. It’s at functions, gatherings and on the dinner table. Im not sure how much longer I can hold of before getting divorced lol. But seriously when will the bank of canada begin to raise rates as majority of people are up to there heads with debt and 3 out of 5 are using credit to purchase. How much longer can this go? Semi detached house going for 500,000-650,000. Sometimes I wonder that miners have performed poorly compared to realstate. Could it have been or is it a opposite trade? Maybe when rates finally go up that will be the money that will go into assets of safe haven?

We’ve had a continent-wide bubble in housing that has spread to the world since the soldiers of World War Two came home and made the Baby Boomer generation. How can you build a house for $35,000 on a plot of land that cost $30,000, and have the local government come along and declare the house is now worth $160,000? Only by collusion between the banks and government similar to what has happened in the stock market. “The stock market always goes up”, just like “Housing always goes up”. The builder wants the profit, the banks want the profit, and the government wants the revenue. It is the buyer who pays, pays, pays, and when the government subsidizes housing, it is the taxpayers who pay.

In America housing prices fell to 1.7x a person’s annual salary in the early 1970s, and have never looked back since, culminating in today’s 8x or 10x annual salary. Who can afford a house at these prices? Did we really need to turn to low-quality homes called trailer units to make housing affordable? Or can we take away the profit of the house builder, who only cares about how fast he or she can build a housing community and move on to the next project? You know what happens when a $160,000 home falls in value to $30,000 despite government’s best efforts at keeping those prices (and property tax) high. The house becomes a gutted-out dilapidated shack in a crime-infested neighborhood that no one would want to live in. Tear it all down and start over – the “broken window” fallacy, which is no solution, no matter how politicians love “urban renewal” for votes and under-the-table deals.

So yes, I agree we need to get rid of the central bank subsidizing the stock market in collusion with the Federal government, and we need to do the same thing to the housing market, just to bring things back to reality. This is what a fractional fiat currency does to a country, and a world.