Liberty

For the price of one crack shack in vancouver, I can retire elsewhere on the income generated by that money. I know which one I'd pick.

I still wouldn't pay 1-2 million for a tiny parcel of land surrounded by other crack shacks, only to then have to pay a ton more to build a new house (because new-building construction has to be overpriced there too, right?).

Yeah, that site is probably pretty old, I doubt it has been updated. I bet these crack shacks are selling for much more now.

The argument that this has been going on for a long time always reminds me of the turkey story. The longer an untenable situation has been going on, the closer we are to thanksgiving. Vancouver's nice and everything, but there's a difference between some wealthy foreigners coming in and nabbing some luxurious properties and increasing prices in some neighbourhoods and the whole city going nuts with real-estate fever and starting bidding wars over decades-old unrenovated crack shacks going for $1-2 million.. http://www.crackshackormansion.com/

Reminds me of the Globe & Mail article a few months ago about how some agents can flip a house 2-3 times before closing, taking a cut each time. Here it is, fascinating stuff: http://www.theglobeandmail.com/news/investigations/the-real-estate-technique-fuelling-vancouvers-housing-market/article28634868/ http://www.theglobeandmail.com/news/national/article28634862.ece/BINARY/w940/image.jpg

Anecdote from Vancouver, FWIW, shows some of the mindset going on and the way people get houses they can't really afford:

Agreed.

Politicians could make the market way more rational by regulating the RE industry so that there's more transparency and realtors are prevented from at least the worst kind of shenanigans (some of what goes on would put those in the financial industry in jail). RE in Canada is super opaque, anti-competitive and anti-consumer (I guess it's like many other industries in Canada..). In fact, it's so opaque that most people don't even realize how opaque it is. You have to go see how it is in some other countries to realize that buyers and sellers have a lot more info about what's going on and don't get all their info funneled through salespeople organizations.

It's because when 3/4 of people own homes/mortgages, and most of these people have their whole net worth tied to those assets (even when the net worth is deeply negative), you don't win votes by doing anything that might stop the rapid inflation of that asset. All the timid measures are to hope for a slow leveling off and plateauing, but the longer they kick the can down the road (hopefully to the next government, is their thinking), the more delicate things become. A few more years of this and the median house in Canada will be $600k+, an then what? A few more years and it's $800k? $1m? How fast are incomes rising? How fast are debt levels rising? I'd say that over 98% of home owners in Canada are decidedly not wealthy chinese princelings, so what next?

Very sad news, he was a great man. I read 'Only the Paranoid Survive' years ago and it was very good. He was one of the builders of the modern world in many ways.

I'm renting. Would you ever buy? Under what condition in this country would you enter the RE market? Sure. I'll buy when I find a house here at a price that I think makes sense. I'm just buying one house, so I'm not basing this on broad market indicators or anything like that.

I'm renting.

Source? don't need one - just look around in my own family, their friends, high school friends, university classmates and you can confirm what everybody knows here. mom and dad are in a group of oversea chinese - there are a few exceptions but most are extremely wealthy. we are the poor ones... i don't see asian taxi drivers , do you? Anecdotal. Okay.

Source?

BC's saving rate is interesting: Between 1999 and 2010, BC's average saving rate has been -4.2%: I suppose that they can keep putting everything on their HELOCs forever... I'm sure incomes are really high to be able to afford these million-dollar bungalows. Let's see: http://www.bcstats.gov.bc.ca/Publications/Infoline/15-11-10/Issue_15-74.aspx

There was a RE crash in Toronto in the late 80s-early 90s. It took until about the mid 2000s for prices to reach their previous peak, and I'm not even sure if that was in real terms. But if you believe that there's no risk and prices will always go up, I suppose the way to play that is to buy a bunch of properties using borrowed money. That's what everybody else is doing, and I'm sure they'll all turn out to be right. BTW, I don't believe Vancouver is London, Paris, New York, etc.

I think that what will turn out to have been part of the problem in Canada is that there's a real lack of transparency in the market. My understanding is that in the US, you can get info on almost any house, see what it sold for in the past, how long it's been on the market, etc. There are sites like Zillow and such that allow access to everyone. In Canada, most of that info is held by the realtors associations, and they release their own frankennumbers that are heavily massaged, and their press releases are republished as fact by the media. The average person has very little insight into what actually goes on in the market, and since a large part of the current market is driven by sentiment, the realtor-distorted reality helps keep that sentiment strong and prolongs things.

Too late to avoid damage if defaults rise, but not necessarily too late to affect the marginal buyer going forward and make banks tighten their lending standards. This might not be the thing that does it, but could be one more step in that direction.

The alternative universe was Paulson who was late to the trade but much, much, much better at managing investors and made the biggest profit ever in the history of hedge funding. Touché. Paulson deserves a lot of credit for managing the trade. Pellegrino (his analyst) probably doesn't get enough credit for coming up with it and convincing him, though.

http://www.moneysense.ca/spend/real-estate/cmhc-banks-should-pay-deductible-on-mortgage-insurance/

Burry could always have scaled down his bet if things went on longer. He could have sold part of his CDS and still have had a very large payout if things took longer. His biggest risk was his investors bailing, and that's always a risk if you temporarily underperform with other people's money, that's not specific to Burry. There's probably also another alternate universe where his investors supported him more and put even more money in his fund and his winning bet was even bigger. We'll never know.

I agree: he was correct on the fundamentals and probably lucky on the timing. Im sure others were correct on the fundamentals but unlucky on the timing. To be clear, I don't think he was just lucky on the timing. He studied when mortgage rates would reset for teaser mortgages and such, so he bet on the highest probability that he could see, but I'm sure some exogenous event could have taken place and stretched things out a bit and made him unlucky in that regard. In other words, even if something has an 80% chance of happening, sometimes you fall in that remaining 20%.. But it gets hard to imagine the situation in the US in 2007 going on for 5 more years, for example.

Burry could have been wrong in that the "music could have played for a few more years" and his investors could've yanked their money before the bets paid. But he couldn't have been wrong in that the situation wasn't something that was sustainable, so it had to stop at some point, from one shock to the system or another, or just crumbling under its own weight.

Meecham's 2015 letter: http://www.valuewalk.com/2016/03/arlington-value-capital-2015-annual-letter/?all=1

Sorry if already posted elsewhere, but here's a feature in Variety: https://variety.com/2016/tv/features/john-malone-liberty-media-charter-communications-1201729414/