Vancouver Condo Info

It’s the end of the week and the start of a long weekend!  Lets do our regular end of the week news round up and open topic discussion thread, here are a few recent links to kick things off:

-How to filter out the foreclosed comments on VCI
-August stats from the REBGV
-Crashcow tracks the benchmark changes from April peak
-Fraser Valley market sags
-Housing will be banks next sore spot
-Bubble case-studies: Ireland and Canada
-Yatters average nears a million again
-Still lots of room in Olympic Village
-Nova Scotia realtors send threatening letters to FSBOs
-Huge sales drop in Victoria
-US: Feeling the pressure of life ‘underwater’

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

The ‘increasingly wobbly’ Canadian housing market is getting a boost from the Bank of Montreal with a mortgage rate cut and aggressive news release.

The term is all over the news right now: Canadian Housing Bubble.

All because some nerds at the CCPA issued a report saying the six largest Canadian markets are in bubble territory.

Even the trust-worthy local Vancouver Sun is obscured by dark clouds and using headlines like “Vancouver real-estate ‘bubble’ an accident waiting to happen“.   The Globe and Mail has pretty pictures charting different scenarios of home price collapse and there’s more coverage at Canadian Business Online.

The steep rise in house prices in so many cities points toward an “accident waiting to happen,” Macdonald said.

In the past 30 years Canada’s housing market has undergone three bubbles. Bubbles occur when housing prices increase more rapidly than inflation, household incomes and economic growth, according to the report.

Each of Canada’s previous bubbles was punctured by only a one per cent rise in interest rates over two years, Macdonald warned.

It would take only a one per cent to 1.25 per cent mortgage rate increase by Canada’s big banks to cause a housing crash similar to the one the U.S. is grappling with, he added.

Vancouver saw housing bubbles in 1981 and 1994 and another one burst in Toronto in 1989. In Canada’s other major markets — Calgary, Edmonton, Ottawa, and Montreal — prices remained stable from 1980 to 2001 at around $150,000 to $220,000 in today’s dollars.

“The concern today is all six major markets, not just Vancouver and Toronto, are out of that comfort zone,” Macdonald said. “All six major markets now have an average price of over $300,000.”

Judging by the recent signal to noise shift in the comments section on this blog, some people are getting a bit edgy about all this negativity.  Even the CMHC is predicting falling sales and dropping prices for pete’s sake!

But take heart! There’s good news – a conflicting report from the C.D. Howe institute says no problem, there’s little likelihood of a national Canadian housing bubble.

..and if there isn’t a US style national housing bubble, then there can’t be a housing bubble here in Vancouver right?

Also! August is over and I hope you got all that yard work done because there are some houses out there to buy.  We’re breaking records for low sales this month of new units in Vancouver West as well as units in Port Coquitlam and Maple Ridge.

It’s not just buyers who want a better system than the MLS. – a group of large brokerages including Century 21, Royal LePage and ReMax are meeting with the intent of building an alternative to realtor.ca that is more technically advanced.

The meeting comes a day after Yahoo Canada announced it will offer listings on its main search page using database and real-time search technology from Toronto-based Zoocasa.com.

Zoocasa has been criticized by the industry for scraping listings off the MLS, but Zoocasa president Butch Langlois said it is operating within the industry’s rules, with each agent voluntarily offering to post their listings in exchange for the advanced features offered on the site.

It’s a slick offering that is comparable to services in the United States such as Zillow, which has become a major hub for listings and a major headache for the brokerages that used to control the flow of information. “People have embraced the site but we need to increase awareness that Realtor.ca isn’t the only place to go when looking for a home,” Mr. Langlois said.

While Zoocasa, backed by Rogers Communications Inc., (RCI.B-T37.52-0.19-0.50%) is the highest profile competitor to take on the MLS to date, there are several private networks under development across the country that want to compete with MLS.

The brokerages intend to build their own site that would run parallel to Realtor.ca and be governed by the same rules, using listings from their offices across the country. They would be able to control what features are offered, and upgrade the technology as they see fit without having to go through CREA, the trade association that represents the country’s 100,000 agents.

“We support organized real estate and this has nothing to do with pulling out of what they are doing,” Mr. Lawby said. “But the consumer wants to see as much data as they can and we want to make sure they are able to do that effectively.”

Will the MLS be overturned as the dominate listings engine in Canada? Read the full article over at the Globe and Mail.

Thanks ready to pop for the link.

Remember when all you had to do was buy a house and live in it as the price went up? It’s only been a few months of dropping prices here in Vancouver, but in the US it’s getting harder to remember the good old days.

Call it the American dream that died. The slump in U.S. housing, now more than three years old, is the most severe since the Great Depression. A move by the government to revive the market – through a tax credit for first-time home buyers – met with some success earlier this year, but after the credit expired, sales collapsed in July. Now economists fear further declines in home prices, which have already fallen 30 per cent since their peak in 2006.

The days when Americans could count on their homes as the pillar of their financial affairs – a seemingly magical asset, bought with borrowed cash but steadily increasing in value, tapped to fund college tuitions, second homes, and retirement travel – are past. Even if the market eventually recovers, as many expect, the era of the home-as-nest-egg is over for the foreseeable future.

In this brave new world, housing prices don’t always go up, and if they do, the pace is more likely to be in line with inflation. People can find themselves trapped in their homes, unable to sell because their house is worth less than what they owe on their mortgages, a condition now shared by one in four U.S. homeowners.

Read more about the fundamental shift in the US housing market over at the Globe and Mail.

Well, you made it to the end of another work week. Lets do our regular weekend news round up and open topic discussion thread. Here are a few recent stories to kick things off:

-Two charts for the Canadian housing bubble
-Realtors launch ad campaign to buff up their image
-Here’s the creepy ad in question
-Teranet: rising home prices set to stall
-The spirited things Vancouverites say about home prices
-More US housing market dismay detail
-Looking back at rear-view mirror forecasts

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

I see that David Philip just posted this in the forum – A music video for that oh-so-Vancouver scene: the leaky condo.

From the video description on YouTube:

This just might be the world’s first Leaky Condominium Music Video. Repairing a leaky condo building can take months and months and months. So why not set it to music! Take it away, Rossini! Starring Jacob Breen.

The big news of the day yesterday was the ongoing misery of the US housing market that seems to continually surprise and astound economist and journalists everywhere.  July sales dropped a record 27% to their lowest pace in 15 years.  Soft landing anyone?

“This is a worrisome report and while it reflects the volatility caused by the end of the (government home-buyer) tax credits, it also indicates a deterioration in the underlying trend for housing demand,” said Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch in New York.

“For the overall economy, the dangerous link to housing is home prices and this report signifies that home prices should fall considerably faster, which could tip the economy back into a recession. We are, however, not quite there yet but this is a worrisome report.”

Those that complain about the Vancouver Sun only printing pro-real estate fluff should read the latest Don Cayo article about the costs of home ownership and government influence over prices.  It brings up some interesting points about land management issues, tax incentives and speculation:

The impact of speculators on the market, at least as judged by visibly vacant homes, seems focused on condos, and mostly in just a few neighbourhoods such as Coal Harbour.

But property tax consultant Paul Sullivan, who with his wife, a builder, keeps a particularly close eye on West Side transactions, says almost half of condo pre-sale buyers won’t ever live there, and almost a quarter flip the properties before they’re ready to occupy.

Andy Yan, an analyst and researcher at Bing Thom Architects, sees this kind of speculation as hurtful to the economy, and suggests taking a leaf from places like Hong Kong, Singapore and Australia, which have found ways to curb it. Yan suggests more focused use of the Property Transfer Tax, exempting the kinds of transactions people make as they move through a normal life cycle, but nailing speculators. And then there’s a final policy area where it’s what governments don’t do that influences housing costs in two contradictory ways. It’s the issue of the ubiquitous “mortgage helpers” — basement suites that, legally or illegally, allow buyers to purchase much more home than they could otherwise afford. These both drive up the cost of residential property (though the net result is greater affordability), and provide low-cost rental units to those who can’t afford to buy.

There’s no way to know how many of these escape the taxman’s notice. But to the extent that neither income tax collectors nor property tax assessors aggressively track these suites down, they enjoy a degree of tacit official blessing.

Read the full article over at the Vancouver Sun

The Vancouver Sun has an interesting series of articles starting up on the myths of real estate which so far falls a little short of the promised “2 million reasons for the high price of Vancouver real estate” but has some interesting stats courtesy of the groundbreaking research out of the UBC Centre for Urban Economics and Real Estate.

“Depending where you draw the circle,” Somerville says, “70 per cent of the land isn’t developable. It’s mountains or water or the United States.”

Now I caution you all that this is preliminary data fleshed out with our best guess-work, but it’s ground breaking stuff to be sure. This new paradigm may be the difference we need to make the ‘running out of land’ meme have the holding strength that is hasn’t had in so many global real estate bubble markets before.

We suspect that this data may also come as a surprise to many of you who live on the north shore mountains, or who were under the impression that the “United States” was an entirely different country rather than a chunk of land to be considered in the development of the city of Vancouver. Some newcomers may also be surprised to see water mentioned as “undevelopable land” but most people who’ve been to Granville Island or Coal Harbor know it’s important to differentiate between water that is developable and water that is undevelopable.

In the end those are all just details. The important thing is the math:

“The higher the population of a city, the higher the house prices,” he says. “If we lose 70 per cent of the land, our metropolitan area of two million will have the same house prices as a seven-million metropolitan area. Because people have to commute the same distance.”

This simple equation makes determining the true value of a Vancouver house simple. Because of Mountain/Water/USA land, our prices should be much higher than a metropolitan area with a population of only 2 million and equal that of a population of 7 million. Chicago has close to 8 million people and a median listing price of $229,900.

*Graph neither endorsed nor condoned by the REBGV, UBC, The Mayors Office, The Illuminati or the wookie-busker. Please take with a giant grain of salt. If rash develops, discontinue use. See a physician before taking any expired prescription medications you may find in second-hand stores.