Monday, February 11, 2008

The Olympic$ effect

Lots of stories in the media lately about 2 years from yesterday being the opening day of the never ending real estate party that is a bunch of athletes contesting to determine who is the best amateur at your winter sport unless you play hockey in which case you get paid and the IOC doesn't care... anyway, you get my drift.

Before I go on, for the record, I like the Olympic$, I'm glad Vancouver won the bid, hindsight being 20/20 I still wouldn't change my mind. Yes, I see the health care before Olympic$ campaign material, but I'm an athlete, and I've also used way more than my fair share of publicly funded health care in my short 30 odd years and I'll likely use more than my fair share in the future. So I get it, I do. But I still think that people get inspired by athletic performances to get off their butts and participate in sports, thus, hopefully, leading to less chronic illnesses that are preventable by exercise. So disclaimer made, I like the Olympic$, glad they'll be in Vancouver.

So think about it. What if all those millions of people who will come to see the games and the half of those millions who are expected to buy a property or four when they are here, get disappointed by the fact that it doesn't snow in Vancouver often, it actually rains, almost the whole two weeks the games are on, and it's so warm up high on Whistler and Cypress, that the moguls and ski jumps start melting thus making the games rather dull and so they don't buy a house or four? Not even a condo? Why does this whole argument hold the traction that it does? Would an Australian trade sunny skies for winter grey? Will a Norwegianer trade a quaint fishing village for an endless stretch of concrete gridlock?

I don't understand why anyone thinks the Olympic$ will boost RE prices higher. If someone out there could point to any other host city where there wasn't a significant decline in RE property prices within 6-12 months of the games ending, I'd sure appreciate it. I can't seem to find one myself.


Mark said...

I think the reason that people think the value of RE will go up is that usually the Olympics usually bring in infrastructure upgrades. This is, of course, dependent upon the olympics actually being in the city and the city itself building things like subways.

DaMann said...

For everyone here that thinks the Olympics will bring the world here, ask yourselves two questions.

Do you think 2 weeks of coverage of rain and dull grey weather will bring people here?

Two, did you all rush and pack your bags for a trip or move to Turin?

Where is Turin and who cares? Exactly the point.

damann said...

"If someone out there could point to any other host city where there wasn't a significant decline in RE property prices within 6-12 months of the games ending, I'd sure appreciate it. I can't seem to find one myself."

Actually I saw a graph once about this and in fact prices declined in most host cities PRIOR to the games even starting. There were two exceptions, not sure the cities but both were summer games.

Let's not kid ourselves. The winter games are tiny compared to the summer games. The World watches the Summer Olympics, winter countires watch the Winter Olympics.

I personally perfer the winter games but as far as exposure goes there is no contest between the two. Once they are over they are soon forgotten.

Anonymous said...

I wonder how much prices declined after the winter olympics in Sarajevo?

talus said...

Totally OT (but I'll bring it around to housing)....

I have a confession. I love HGTV. There I said it. Don't get me wrong, if there is a hockey game on and Vancouver, Calgary or Edmonton are playing I'll watch that, but I still like HGTV.

So I was happy to see that HGTV now has a bunch of their shows online. You can check it out here...

So how is this relevant? Well, I have never seen the show "Big City Broker" until I started watching online (hey, Sarah Richardson is more my taste).

Anyway, Big City Broker is a 'reality type' show where they follow the Toronto real estate agent Brad Lamb and his staff around. You know the style, chronicling their lives, job, up's and down's etc.

Well after watching just one episode of Big City Broker, I am now convinced that Mr Lamb and his realtor's are self obsessed, insecure, shallow individuals with no personality. Seriously -- you have to check it out!!

I can't believe that this program would actually be promotional for him. As far as I'm concerned it shows realtor's in an incredibly negative light.

I want to know if it's just me or are these guys/gals the last people you would ever do business with after seeing them "behind the scenes".

VicREBear said...

I think that if any major network ran any reality show entitled, "Big City _____" (fill in the blank with the sleazy profession of your choice), we would see exactly the same caliber of human beings, doing the same hustling, all toward the same materialistic goals. It's all designed to titillate and elicit audience envy and scorn simultaneously, just like any other tabloid medium. If the time comes for me to buy a house, and I do so with the services of a real estate agent, I'll interview several and pick one I LIKE, and from whom I get a good intuitive impression.

talus said...

Maybe my perspective on sales people needs an adjustment.

We have bought and sold a few houses. We are comfortable with renovating a house and have had no difficulty researching and valuing our past houses using comparables and assessments. We are currently out of the market and loving the cheap rent (relative to risk).

In that time we have gotten to know a few realtor's. For the most part they seemed to be honest people. Occasionally a bit pushy --- always looking for you to make an offer. But for the most part they seem to be reasonable people.

I find the people on "Big City Broker" to be truly heinous. I really think that anyone that is even remotely considering buying a property -- especially a condo -- should watch that show and see how these people operate. If you can't see thought them in the first episode maybe you shouldn't be buying.

I can understand the editing of "Survivor" or "Big Brother" and live with it. But this Lamb guy is over the top -- and he isn't acting! Neither are his staff!!

Julius said...

This is a very interesting short article, showing the most recent statistics on the US housing market.
I haven't seen all of these stats before, so it was interesting to read where the market is dropping, and where it is actually rising. Its rising in way more areas of the US than i would have thought.


DaMann said...

If you look at what areas are going up, they are almost all the areas that never boomed in the first place. So they had nothing to drop. All the markets that "boomed" are busting, and the markets that never boomed to begin with are slowly growing as they should because they have value. Unlike the other bubble markets that were way out of whack with fundamentals here.

Much like places liek Halifax. I'm not expecting a huge crash there cause it never really boomed to begin with anyways. prices are still well within rental yields.

Anonymous said...

A RE agent just told me that property won't fall but will stagnate in Victoria because it has never fallen in the past. It is immune from any downturns and has always been like that. I was going to point out that it has never reached highs like this before.


Anonymous said...

Tired of hearing stories. Name the realtor

beagle said...

A RE agent just told me that property won't fall but will stagnate in Victoria because it has never fallen in the past. It is immune from any downturns and has always been like that. I was going to point out that it has never reached highs like this before.


VREB's own stats

Looks like a dip in the 80's for several years and remember that inflation in those days was pretty high still. So house values definitely went down.

Pondering said...

I bought a townhouse in 2001 for 185k. It was bought in 1994 for 225k.

Anonymous said...

I thought the drop in the early-to mid eighties was 45 percent (inflation-adjusted). Maybe your agent is only referring to the past four years?

S2 said...

How old is your RE agent? How long has he been involved in RE?
Was he an agent here in the 1980s?

Anonymous said...

He is mid-40s and has been involved for 20 years. I think they are seeing the writing on the wall and are trying to be optimistic - like people who think they are immune from certain diseases because it does not exist in their family.

S2 said...

Canadian Real Estate Association news release of February 15, 2008

Anonymous said...

From the Globe & Mail


Anonymous said...

I would also take a look at the comments on this article. One guy hit the nail on the head and the other guy (or gal) was funny.

vg said...

The cats out of the bag,how can BC live in fanatsy land for much longer. Even the hottest areas in the US still have to tank 40% in order to meet historical averages of 6 to 7 times income. Just a matter of time,be patient.

Anonymous said...

I agree. we are in the final stages before the big drops

Bevin Rephuse said...

Are you people so lost in your simple-minded computer geek world to actually think that prices aren't going to rise before, during and after the olympics?? I have made a TON of money buying real estate here in Victoria and relisting it 6 months later after a coat of paint and resanded floors. People are going to buy here and in Vancouver because they enjoy the climate, fresh air, ocean, mountains and peace and quiet. Where else can you go suntan on the beach and ski in the same day?? As for using Sarajevo as an example just shows how out to lunch some people are. If you didn't buy a piece of real estate in 2 years ago, you've missed the boat. The lower mainland and southern Vancouver Island is going to turn out to be owned by the rich and worked by the proletarians. Bottom line snooze, you lose!

S2 said...

Ha, ha, ha. Someone is pulling our leg again. You guys are so funny. :)

Anonymous said...


That is an undeducated answer. Your view is purely speculation at this time.

I am neither bull or bear as I do not purchase RE as an investment. I buy it when I want to (up or down market).

I am posting because I wanted to address the Realtor comment. It truly does not matter if the Realtor was around in the 80's. I know people in their 20's and 30's that are just as smart as people in their 40's, 50's and beyond.
I know many people in every age category that are not very smart as well.

Anyway, when using a realtor you should be using him/her only for certain things. The main thing is to talk to them and let them know what you are looking, what you need, what you want, etc. They are there to do the leg work and find places for you, they are there to negotiate for you, they are there to find market comparables to support for/against certain properties in the current market. If housing to you is for investment it is best you take all this information and make your own decision.

I know a few realtors young and old that have done well because they listent to the customer and get the customer what they want and that is it. They do not care if the market goes up or down as long as they work for the customer in either market.

vg said...

"If you didn't buy a piece of real estate in 2 years ago, you've missed the boat. "

LOL Joke of the week. I think I will save this one for future reference.

I think you have it ass backwards,anyone buying in the last 2 years will be losing all their profits plus more and those who bought with nothing down are toast. Pay attention to the big picture,the credit problem will be accelerating shortly and the overpriced big ticket items like homes,new vehicles and big screen TV's will be the first to get smoked. Read the financial news sometime,you might learn a few things.

greg said...

vg -

after big screen TVs get smoked and US consumers vaporize, I look forward to some even better deals next boxing day.

vg said...


agreed,Boxing Day next year will have some great bargains....we can only buy so many of those big ticket items then every one has one,well almost. ;)

BTW, I am having trouble accessing your site the past few days. Can't see any problem on my end. help !

Anonymous said...

Hey bevin, So let me get this straight:

a. Prices are going to rise before during and after the olympics

b. But if you didn't buy in the last two years, you've missed the boat

Just out of curiousity, how do you reconcile those statements so they aren't logically inconsistent? If prices are going up forever, then why isn't buying this year just as good as buying two years ago?

Oh, and about suntanning and skiing on the same day -- which day is that? Isn't ski season typically early December through mid-April?

greg said...

vg - try now, I have been experimenting with access rules due to my server being hit by spammers from Russia, if it is working now, I will have to be even more careful on the access rules. Sorry.

talus said...
This comment has been removed by the author.
talus said...

I love reading Mish's Blog.

It's like reading 1 to 2 years into our future. Unless of course your drinking the Victoria Cool-Aid.

Here's a bit from his post titled "Housing Bottom No Where In Sight"

Flashback March 26 2005

* Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors says that "South Florida is working off of a totally new economic model than any of us have ever experienced in the past." He predicts that a limited supply of land coupled with demand from baby boomers and foreigners will prolong the boom indefinitely.

* "I just don't think we have what it takes to prick the bubble," said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the 90's. "I don't think prices are going to fall, and I don't think they're even going to be flat."

* Gregory J. Heym, the chief economist at Brown Harris Stevens, is not sold on the inevitability of a downturn. He bases his confidence in the market on things like continuing low mortgage rates, high Wall Street bonuses and the tax benefits of home ownership. "It is a new paradigm" he said.

phil said...

Suntan and ski on the same day! That's hilarious! Just make sure to drop by the hospital for your hypothermia treatment in between.

Climate isn't saving Florida's real estate and it won't save ours. Leaky condos anyone?

Anonymous said...

I wonder how the people who bought condos in the Tuscany, Radius, Bear Mountain, etc, etc feel about prices always going up and never losing on real estate.

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patience said...

Could a fellow bear more articulate than I please send a response to the infuriating letter in todays's TC "letters to the editor" page that was titled something like "If you can't afford housing in Victoria why not move?"

There are so many things to say to this, but I would start with pointing out that this smug homeowner would probably have a hard time receiving many services in this city such as health care if all of us who can't afford a house here moved away! And, I bet when this guy bought his home, it did not take %60 of his income! And I bet he didn't graduate with $30,000 in student loans - Arrgggg!

Anonymous said...

VG said: "....I think you have it ass backwards,anyone buying in the last 2 years will be losing all their profits plus more and those who bought with nothing down are toast....."

Yup, but the ones with nothing down are better off. They would have lived in 'their' homes for the equivalent cost of rent. BUT:

I pity the ones whose 25% downpayment will be lost. Anybody with equity in their homes will suffer when lower prices wipe out their investments, and they'll STILL owe their mortgage companies the same amount they did when they first bought.

It MUST be harder to walk away from hard-earned savings, than from zippo.

sourgrapes said...

ATTN: Bevin Rephuse.....

I'm glad you believe in yourself. Hopefully you're on a roll, having flipped at a profit every six months!

THEREFORE: I challenge you to buy 6 houses NOW, if your credit is that good and your bank account is hefty with profits.

All I ask is that you hold on to those 6 houses for 2 years without selling. I hope I don't have to wipe the smirk off your face.

Stick a tenant in each property with a 2-year lease each. Then we'll see.........

Anonymous said...

Baby boomers and Albertans are buying retirement and vacation homes where the climate is truly warm and sunny year round such as Phoenix, Florida, etc (where prices for a SFH with an in-ground pool is less than $200K). None of this miserable grey rainy weather there. I talked to some friends from Calgary recently and that's what they did (they bought in Phoenix). They also told me that the few Albertans who are buying in Victoria are those with criminal records and cannot enter the US to buy the reality priced real estate there. No wonder we see so many roughnecks, and vernim driving about here with 40 year old diesel spewing pick up trucks.