Real Estate Talks

I can't stress enough, no one is claiming the market is not dipressed or slow. Atleast from what I can gather from ETB and myself. I think ETB and myself have been advocation the bottom hasn't fallen out completely.

Its down but not at sensationalized as expected.

I personally feel the market is taking a breather, looking for a backstop in prices / confidence or something. I think this spring will be a good indicator.

I still believe we won't see a massive correction.. I don't think enough has happened to completely stop the trend and make it go the other direction


The market has three movements
(1) The "main movement", primary movement or major trend may last from less than a year to several years. It can be bullish or bearish. (2) The "medium swing", secondary reaction or intermediate reaction may last from ten days to three months and generally retraces from 33% to 66% of the primary price change since the previous medium swing or start of the main movement. (3) The "short swing" or minor movement varies with opinion from hours to a month or more. The three movements may be simultaneous, for instance, a daily minor movement in a bearish secondary reaction in a bullish primary movement.

Good points - we all could be saying the same thing so like I said, it's all about time-frame. 
I'm not sure what type of technicals you are using, please elaborate (it sounds like a mixture of Fibonacci Retracements and some other type) there seems to be a mix. 
I think what you're trying to say is markets are fractal. You have your main swing (higher time frame) and within the main swing you can have mini corrections that retrace by around 50% (60% in your words), but the general movement is the direction of the main swing. I agree with this.

What needs to be realized in this is that, there are higher timeframes than your yearly "main swing". You can have a time-frame of decades. If your "main swing" is in a time-frame of decades, your yearly time-frame becomes your "medium swing". In this case we are due for a correction in the decades time (we are due for a medium swing).
You can take it a step further also, in a 100-year "main swing", the decades time frame becomes your medium swing. The point is, markets are fractal - technical analysis 101. 
I would also argue that prices, or markets have two movements, an impulse (what you refer to as the primary movement) which is a movement to the direction of the trend. The second type of movement is a correction which goes against the direction of the trend, these typically pull-back around 50% to 60% (with a statistical edge in stocks, again not used in the housing market). Note that I did not put in sideways, because going sideways means the market price isn't changing.

Back to the original point, we are all bullish in Vancouver in the long run, but this impulse or main swing that you are speaking of has been happening in the larger time-frame. We have been going up since 2000, on a large time frame, it's due for a healthy correction which will bring us back to about 2008 - 2009 prices (purely from a technical analysis perspective). Also keep in mind, in technicals - higher time frame always trumps smaller time frame for the direction of the price.

I would be extremely careful applying technical analysis on the Vancouver real estate market. Although i love to use technicals for high volume stocks, commodities or forex - they don't work as well on markets where volumes are low (1000s of sales per month on realestate, vs hundreds of millions in the exchange). The human psychology is definitely still there, but it's hard to do this kind of analysis when you don't have the High, Low, Open , Close prices.

Best to use a mix of fundamentals and technicals in this market in my opinion - good points none the less.

This one represents about as good a deal as you're going to get.
Decent house - check
Lot size near std -check
Suite - check
Neighborhood - check

AND ITS CHANGED HANDS AT 1.3 MILLION.

Thats about the bottom line on a decent house folks...$1,300,000. And this one was original condition with no renos
Bigger house add $
Bigger lot add $
Renovated add $
Etc
An upgrade on the same block sold at 1.5M

2714 Graveley Street
1901sqft detached built 1937
33x113 RS-1 lot
Asking $1,298,000
Sold $1,295,000 on 31-January-2017

Quiet street across from Clinton Park just minutes away from DT! Long time owner has decided to sell! This 4 bedroom 2 bathroom gem sits on a flat 33.5' x 113.19' lot with views of Clinton Park and the North Shore Mountains. The home has been lovingly cared for and some of the most recent updates include brand new one bedroom in-law suite, furnace, hot water tank, windows and painting (roof approx 12 yrs old). There are 3 bedrooms up and one bedroom down. The living room has beautiful hardwood flooring that is in excellent condition and a wood burning fireplace. The basement has windows that sit above ground and is fully finished with separate entry, shared laundry and large storage room that could be turned into a den or 5th bedroom.

note the patented doubletalk  attesting that everyone wants up when they drool and want it down

Agree.
The market is slow. But picking up now after a 6 month hiatus.
If you're a realtor you still see the market as way too slow.
From the sales Im posting, I dont see very much discounting.
A decent house not needing renos, good neighbourhood, 33x122 lot, with suite is still going to cost you 1.5M.

Regarding the sales I post.
Those are not rare...like a couple per month. I can probably post a strong sale or 2 daily...over asking or high priced

Moreover, we lose detached properties to rezoning and development in the hundreds per year. Add the homes being scooped up by air b&bers and it wouldnt take much more to prop up the values.

Agree.
The market is slow.  But picking up now after a 6 month hiatus.
If you're a realtor you still see the market as way too slow.
From the sales Im posting, I dont see very much discounting.
A decent house not needing renos, good neighbourhood, 33x122 lot, with suite is still going to cost you 1.5M.

Regarding the sales I post.
Those are not rare...like a couple per month. I can probably post a strong sale or 2 daily...over asking or high priced

Moreover, we lose detached properties to rezoning and development in the hundreds per year. Add the homes being scooped up by air b&bers and it wouldnt take much more to prop up the values.

yes the housing market is SLOW. Real estate is suppose to follow inflation, of course not all areas are the same and Vancouver is more sought of than any normal real-estate market. A 5% increase over a year is considered a big change. 25% over a year is abnormal to say the least. The decrease of 15 to 20% over 6 months is a big move.
I don't think the detached market is picking up - condos have found support because it's the locals supporting those prices. For detached to pick up, we need more flooding of foreign money.
Canadians have the highest debt to income ratio in history (around 1.65) that's why CMHC and banks are starting to tighten up (de-risk).  This means Canadian households on average held $1.65 in debt for every dollar of disposable income. The total household credit market debt in Canada at the end of 2015 was 1.923 trillion and 1.262 trillion (65%) of that is in mortgage debt.

CMHC is afraid (hence the stress test), people are over-extending themselves over mortgages. Nobody can predict the future, but unless sometime changes, we are still headed downwards.

anyone with experience knows born in Canada Canadians prefer a yard and a place for kids

he second type of movement is a correction which goes against the direction of the trend, these typically pull-back around 50% to 60%

WTF?
Where do you get your info from?
Corrections of 50% are exceedingly rare...anywhere. And in Vancouver we're talking about never.

Real estate is suppose to follow inflation

This here is one of the biggest myths you'll hear about real estate.
If property prices followed inflation, you'd have the same values in Brandon, MN as Vancouver since the inflation rates are the same. There is no consideration given to immigration, land shortage, demographics.
And do you know what the biggest contributing factor in inflation is? It's the cost of buying a home. Bank of Canada only uses rental costs when calculating inflation.

Real estate is suppose to follow inflation

This here is one of the biggest myths you'll hear about real estate.
If property prices followed inflation, you'd have the same values in Brandon, MN as Vancouver since the inflation rates are the same. There is no consideration given to immigration, land shortage, demographics.
And do you know what the biggest contributing factor in inflation is? It's the cost of buying a home. Bank of Canada only uses rental costs when calculating inflation.

You're miss-informing, quote the full sentence.

 Real estate is suppose to follow inflation, of course not all areas are the same and Vancouver is more sought of than any normal real-estate market.

Please understand the whole post

Real estate is suppose to follow inflation

This here is one of the biggest myths you'll hear about real estate.
If property prices followed inflation, you'd have the same values in Brandon, MN as Vancouver since the inflation rates are the same. There is no consideration given to immigration, land shortage, demographics.
And do you know what the biggest contributing factor in inflation is? It's the cost of buying a home. Bank of Canada only uses rental costs when calculating inflation.

Some people don't understand what licenced people have access to.

he second type of movement is a correction which goes against the direction of the trend, these typically pull-back around 50% to 60%

WTF?
Where do you get your info from?
Corrections of 50% are exceedingly rare...anywhere. And in Vancouver we're talking about never.

Correction of 50% is completely healthy and normal, in fact it's closer to the 60% mark.

Please be clear as well and not filter out my message. The context is using technical analysis on commodities/forex/stocks. 50% is extremely common, and if you don't believe this, do some research for yourself. Look up any ticker on a monthly time frame for Oil(WTI), gold(XAUUSD), silver(XAGUSD), even the dollar index (DXY) and you will see that 50% is being generous, it's usually a deeper pullback. Again this is stocks 101, a 50% pullback is EXTREMELY COMMON.

As for applying technical analysis on the housing market, I hope you read that I did not advice it. This is because there isn't as many market participants, you're better off using fundamentals with some technicals on the side.

I don't understand what is so difficult about fully reading and understanding a post in its entirety. 

It's like when we say "The Vancouver housing market is down in the short run, but it will go up in the long run". The only thing that gets into your brain is "The Vancouver housing market is CRASHING!". 

It really shows lack of comprehension.

Real estate is suppose to follow inflation

This here is one of the biggest myths you'll hear about real estate.
If property prices followed inflation, you'd have the same values in Brandon, MN as Vancouver since the inflation rates are the same. There is no consideration given to immigration, land shortage, demographics.
And do you know what the biggest contributing factor in inflation is? It's the cost of buying a home. Bank of Canada only uses rental costs when calculating inflation.

what is colloquially known as the unwashed masses assume a lot. that things are too high, things must come down etc. its not known well among the public that realtors are required (its the real term used) to be of good reputation, and not to mention the other background checks as well

Ok I need to be clear, what I have been talking about is called "Dow theory" from Charles Dow. As in Dow Jones

He has six basic tenets of Dow theory

1. The market has three movements (1) The "main movement", primary movement or major trend may last from less than a year to several years. It can be bullish or bearish. (2) The "medium swing", secondary reaction or intermediate reaction may last from ten days to three months and generally retraces from 33% to 66% of the primary price change since the previous medium swing or start of the main movement. (3) The "short swing" or minor movement varies with opinion from hours to a month or more. The three movements may be simultaneous, for instance, a daily minor movement in a bearish secondary reaction in a bullish primary movement.

There is something called "Fibonacci retrenchment" for what ever reason, prices always follow this rule.
38% / 50% / 61.8 % is not of total price, not saying 1,000,000 -50% you would apply these % to the last time where support was found.
Every time it dips for instance 2008, 2013. You can actually see it hitting the 38% / 50% 61.8% which indicates a upward trend. So what I am saying is that a upward trend has been established, in order for the current trend to stop it would need to break through the Fibonacci "resistance" barriers in order to establish a new overall downward trend.

I believe at the moment we are at a downward trend, we will find resistance sooner or later, it will never free fall. If it can avoid breaking through all resistance barriers the market can go down but overall market direction is still upwards.

I hope this make sense, we are in a down period looking for support. HOWEVER not enough of a drop has happened to establish that we are in a overall falling market. The market is looking for direction by trying to find support. Until proven otherwise a market will continue as it was before.

Trends exist until definitive signals prove that they have ended Dow believed that trends existed despite "market noise". Markets might temporarily move in the direction opposite to the trend, but they will soon resume the prior move. The trend should be given the benefit of the doubt during these reversals. Determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Dow Theorists often disagree in this determination. Technical analysis tools attempt to clarify this but they can be interpreted differently by different investors.

Ok I need to be clear, what I have been talking about is called "Dow theory" from Charles Dow. As in Dow Jones

He has six basic tenets of Dow theory

1. The market has three movements (1) The "main movement", primary movement or major trend may last from less than a year to several years. It can be bullish or bearish. (2) The "medium swing", secondary reaction or intermediate reaction may last from ten days to three months and generally retraces from 33% to 66% of the primary price change since the previous medium swing or start of the main movement. (3) The "short swing" or minor movement varies with opinion from hours to a month or more. The three movements may be simultaneous, for instance, a daily minor movement in a bearish secondary reaction in a bullish primary movement.

There is something called "Fibonacci retrenchment" for what ever reason, prices always follow this rule.
38% / 50% / 61.8 % is not of total price, not saying 1,000,000 -50% you would apply these % to the last time where support was found.
Every time it dips for instance 2008, 2013. You can actually see it hitting the 38% / 50% 61.8% which indicates a upward trend. So what I am saying is that a upward trend has been established, in order for the current trend to stop it would need to break through the Fibonacci "resistance" barriers in order to establish a new overall downward trend.

I believe at the moment we are at a downward trend, we will find resistance sooner or later, it will never free fall. If it can avoid breaking through all resistance barriers the market can go down but overall market direction is still upwards.

I hope this make sense, we are in a down period looking for support. HOWEVER not enough of a drop has happened to establish that we are in a overall falling market. The market is looking for direction by trying to find support. Until proven otherwise a market will continue as it was before.

Trends exist until definitive signals prove that they have ended Dow believed that trends existed despite "market noise". Markets might temporarily move in the direction opposite to the trend, but they will soon resume the prior move. The trend should be given the benefit of the doubt during these reversals. Determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Dow Theorists often disagree in this determination. Technical analysis tools attempt to clarify this but they can be interpreted differently by different investors.

Great explanation.

I read up a bit on DoW, it looks extremely similar to the Elliott Wave principal but without the corrective waves that follow. 
A few thoughts - in DoW theory, it uses Volume to confirm the trend. This is something the Vancouver market is currently lacking. It also believes in reversals, however the reversal is not confirmed as per your analysis until prices go down even more - fair analysis. Right now you're still bullish because this drop is not enough to confirm the trend is "reversed" or broken.
This is the equivalent of channeling. as far as you're concerned the bottom channel hasn't been broken to confirm the down-trend.

To use fib retracements, you need the extreme values which the average chart will not give. It's really tough with that average chart, but i get that it's the best we got.

However like I said, be careful using TA on real-estate. The market psychology is there, but the volume is low - the lower the volume the less applicable TA will be.
It's good to see someone applying some TA none the less.

https://vreaa.wordpress.com/2010/09/11/ ... -analysis/

These charts were done in 2010, we can look forward 7 years and if you compare to what actually happened its quite accurate.

No one decides market direction but when the market chooses a direction it follows rules. There is no to the moon and there is also no strait up crash.

if you guys don't know who Fibonacci is or what the golden rule is you guys should read up. It's just part of nature.



Technical analysis can be applied to RE but data is slow, and lots of external factors. War, policy change, natural disasters. All of these things can influence the market, the lack of liquidity also plays a major a big factor.

Having said that, no one can call the top of RE, impossible and no one can time the bottom. I don't think anyone is investing in RE at the moment. We have some guys who have already bought a while ago and we have the other party waiting for prices to drop before buying.

There is no wrong time to buy when you can afford to buy and live in it long term. If you meet that criteria you can afford for the market to go down, however you can't afford for the market to go up and be priced out. Investing in RE is not about timing, its about cash flow and does it make sense. RE investing is 2 fold, can cash flow cover outstanding liabilities. Upside on price is a bonus, if you invest in RE and the numbers don't work out monthly and upside price appreciation is all you are banking on that just more guts and balls then brain. May have worked in the past but its not a sound strategy. 

woooooww