Vancouver: underbuilt, overbuilt or just right?

There were a few interesting articles in the sun this weekend about the Vancouver housing market: The first article action urged for affordable housing talks about the cost of renting in vancouver and the squeeze put on older low cost rental stock as it is converted into condos for sale. The second article is one from last friday and is titled developers face threat of oversupply.

Over the last four months sales have dropped and listing have risen prompting some to ask if we’ve reached a tipping point in the Vancouver real estate market. With thousands of new condo units to be finished in the next couple of years, sales levels dropping off and low levels of immigration to the Lower Mainland are we in danger of being over-supplied in the condo market?

If current rental rates are putting the squeeze on renters, but still can’t cover the average mortgage cost on a equivelent unit, what happens to rent prices? What happens to sale prices?

Silver lining: Sounds like its about time for everyone in Vancouver to get a healthy pay raise! Go let your employer know!

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DENNIS07
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DENNIS07

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costa rica
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raconteur49
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raconteur49

RE sales usually peak early September just before kids go back to school, when parents scramble back to hectic timetables and routine. Those houses not sold will be taken off the market until next Spring school break.Rob's last post suggests readers to guesstimate the number of invetory as at October 16 – see <a href="http://rireb.blogspot.com/.http://rireb.blogspot.com/.<br />My guess is it'll be pretty quiet now through winter, until next spring when sellers come back with more urgency.

Anonymous
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Anonymous

I agree with digi, the current rental crunch is a result of houisng shuffle and condo conversion. Same thing happened in Florida, occupancy shot to 99% while condo market crashed. Specifically, Orlando, Florida is full of new, freshly converted condos that renters can't afford, and flippers can't sell.

wannaget2calgary
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wannaget2calgary

"My favourite statistic on Rob's blog is his 14-month rolling sell/list ratio".OOPS! I meant 14-DAY rolling sell/list ratio.

wannaget2calgary
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wannaget2calgary

the pope asked, "How are the months of inventory calculated? Is that inventory at the sales rate of the most recent month"I've always assumed that to be the case. On Rob's blog and the Calgary blog I've simply assumed it was current listings divided by some estimate of current rate of monthly sales.My favourite statistic on Rob's blog is his 14-month rolling sell/list ratio, which he calculates almost daily. His most recent calculation is 41.79%. On September 6th it was 64.18%.

the pope
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the pope

I just recently discovered robs blog: http://rireb.blogspot.com/ I'll add it to my mainpage links soon, but in the meanwhile it's definately worth checking out.How are the months of inventory calculated? Is that inventory at the sales rate of the most recent month, or is there a benchmark inventory number that is normaly sold each month?

Anonymous
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Anonymous

I don't think we're overbuilt. There seems to be plenty of room but the big money developers and realtors would like to scare us into believing there is a housing shortage. Give me a break. Hopefully people aren't falling for these lies and we can return to a reasonable RE market.

wannaget2calgary
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wannaget2calgary

ken said…… Have they overestimated the boom, or do they just have to be more patient to find a buyer?Ken, you should look at the Vancouver Housing Blog (link is on home page of this blog) and from there also go to Rob Chipman's blog (on home page of Vancouver Housing Blog). Read posts for past 30 days and you can decide for yourself. To give a rough idea of the market, Rob Chipman (a realtor) estimates Vancouver has 5 months inventory now, versus 3 months in June.

ken
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ken

I personally know of two people that have purchased property with no subjects, but as of yet have been unable to get their asking price for their previous home. Have they overestimated the boom, or do they just have to be more patient to find a buyer? Buying can be stressful enough with the extra expense of carrying two mortgages.

Anonymous
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Anonymous

Sounds like its about time for everyone in Vancouver to get a healthy pay raise! Go let your employer know!This is the best news I've heard in a long time! I knew something had to happen to fix this affordability problem.

digi
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digi
I wonder how much the rental market is impacted in the short term by the housing shuffle created in a booming market. If you buy one place and have to sell another you're occupying 2 housing units, but this is only a short-term effect.If you have enough equity in one you may be able to rent one out, but if you're counting on rent covering todays prices you're out of luck without a hefty amount of cash in. You'd probably get better returns on a high-interest savings account anyways.Renters can usually only afford a certain cost, so if rent prices rise above affordability renters are more likely to move out of the city or rent further out. Wouldn't this cause reduced demand lowering rental prices, particularly if there are thousands of new condos being finished in the next year?
broncoli
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broncoli

How fast can the transition from underbuilt to overbuilt happen? I'm guess we might find out soon. I'm willing to bet that 2007-08 will be interesting years in the housing market.