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Vancouver slowdown in the Globe and Mail

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A reader sent in this link to this story in the Globe and Mail about Vancouvers current real estate slow-down.

When Stephen Webber and his wife put their Vancouver-area townhouse up for sale in September, they expected to close a deal within a month.

After several open houses, nearly a dozen private showings and two price cuts, they’re still waiting.

“We have been surprised by the lack of activity,” Mr. Webber says. “It seems there is a lot of supply out there. Buyers have more choices. There is not that rush. And there might be hesitation because of what’s going on in the States.”

If buyers are not rushing, it may be because they don’t have to. The frenzy that characterized the Vancouver housing market since 2004 is disappearing, replaced by one in which buyers have more than mere hours to make a decision. Instead of multiple offers, bidding wars and homes being snapped up virtually overnight, the current market is characterized by growing number of listings, a slower rate of price increases and even price cuts.

The article is a bit confusing – it lays out all the reasons for the current slowdown: Lack of affordability and drying up of speculative activity, and how thats led to less buyers and price drops, but then goes on to relay the same old reliable quotes from Bob Rennie and Rick Valouche saying everythings great! I found the following particularly confusing:

But anybody hoping that prices may come back within reach for first-time buyers is likely to be disappointed. Slowdown or no, Vancouver real estate remains too expensive for many. A search for a single-family, detached home under $600,000 on Vancouver’s west side yields three listings, all on land leased from the Musqueam Indian Band. (A fight over lease rates between leaseholders and the band in the 1990s led to a court case and a plunge in market value for homes on band land.) A heritage home in Mount Pleasant is listed at $799,000, despite having suffered a fire last year.

“Affordability is a big issue in Vancouver. And affordability is likely getting worse at a [September] rate of increase of nearly 17 per cent. Because there’s very little chance that the income growth will grow at the same rate,” says Craig Alexander, deputy chief economist with TD Economics.

So if I understand that correctly, prices can’t come down because they are too high and affordability is getting worse? Very strange that those very factors seem to be the only thing that caused the price drops currently happening all over the US, and yet here they will only cause prices to rise slower. Well, I guess they’re the experts.

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Anonymous

in some 3rd world countries when you buy a house its not really yours because the country owns the land and it can sieze your house at whim. In China this is a possibility. Rich foreigners is a misnomer its more like rich investors from rough parts of the world, looking for a place to park their money and family while they go off and make more $$$ someone from the states, western europe or the caymen or bermuda with old money flowing would not find this place very enticing.On why investors would go somewhere else better? I feel the Chinese in particular like Canada and Vancouver alot. The media in China treats Canada in a different light than Aust or US. Canada seems more like Switzerland, a nice quiet safe place to live with a culturally cosmo population….other than… Read more »

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the pope

So.. Who here is buying real estate in Beijing because of the 2008 olympics?

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the pope

You know where the 'rich foreigner' meme is also at work?ChinaThe Beijing 2008 Olympics is a giant magnet for real estate investment, but how far-reaching is its pull? Is it a good time to buy real estate in second-tier cities? And could a ballooning worldwide real estate bubble have ramifications for China?

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WoodenHorse

Further to the above: I wonder how strong the place of origin (Vancouver Y/N?) is a predictor of Bull vs. Bear wrt to Real Estate?

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WoodenHorse

dingus said… Ah, the rich foreigner meme raises its head once again.I've heard this one batted around a few too many times as well.You know, there's really only one group of people that I've met that think Vancouver is such a world class, reasonably priced place: Dyed in the wool vancouverites.Think about it. Who else do you met, ever, that thinks that the market is anywhere near sanity? Ever foreigner I've met says "nice place but there's no way to make real money and the weather is nice only half the year"

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dingus

"rich Asian immigrants looking for a safe home"Ah, the rich foreigner meme raises its head once again. EVERY city that has had colossal runups in the past few years has cited the rich foreigner as a driver of price inflation. To the extent that's true for Vancouver, if there is a source of global demand from "rich foreigners", wouldn't there also be an aggregate global supply and therefore competition among "safe havens"? That is, as property drops off a cliff in Cali, Fla., Aus., etc., wouldn't those rich foreigners, who presumably didn't get rich by being stupid, start looking at better values in these markets? Vancouver property is no bargain for what you get. Canada has desirable features among "safe haven" countries, but that doesn't mean it isn't vulnerable to a global downturn in property markets.

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Anonymous

prices going up or down? what about the US slowdown, etc? I think this article in the states relates to whats happening in Vancouver. Van is a "Superstar City" prolly only 2 or 3 in Canada and Van is most likely the biggest superstar. Dont' forget that rich homeowners come from Alberta, rest of Canada, and rich Asian immigrants looking for a safe home. In the long run the price of a home in Vancouver will always go up even though there is a pause here and there. Check out this BusinessWeek website: http://www.businessweek.com/the_thread/hotproperty/archi...

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Anonymous

businessweek.com/the_thread/hotproperty/archives/2006/08/san_francisco_b.html

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Anonymous

prices going up or down? what about the US slowdown, etc? I think this article in the states relates to whats happening in Vancouver. Van is a "Superstar City" prolly only 2 or 3 in Canada and Van is most likely the biggest superstar. Dont' forget that rich homeowners come from Alberta, rest of Canada, and rich Asian immigrants looking for a safe home. In the long run the price of a home in Vancouver will always go up even though there is a pause here and there. Check out this BusinessWeek website: http://www.businessweek.com/the_thread/hotproperty/archi...

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Anonymous

I personally do believe that there are still lots of buyers out there. And the ones that have the money (seems most are getting the DP put up by their parents – who most of the time own their own home and take the money from equity)None the less, i have 2 friends that JUST BOUGHT.. we're talking last week!Whats worse is that both when they were buying were told by their agents that there are multiple offers… whats funny though is that they bought below asking price.. so how low were the other offers?Are Agents now saying "Multiple-offers" even though most of those offers are low-balls?interesting no?

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Anonymous

Hey snap, there was a good sized decline in prices in the late 1990's without any economic downturn at all, and with higher population growth than today. How did that happen? Oh of course, it was all Glen Clark's fault. And may I remind you that prices started falling in 1981 while all world economies were going strong. Sort of like how prices started falling in the US last year. Guess this time it's different.

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Anonymous

Hey snap, there was a good sized decline in prices in the late 1990's without any economic downturn at all, and with higher population growth than today. How did that happen? Oh of course, it was all Glen Clark's fault. And may I remind you that prices started falling in 1981 while all world economies were going strong. Sort of like how prices started falling in the US last year. Guess this time it's different.

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wannaget2calgary

It will take a major slide in the Canadian, British Columbia, and Asian economies to bring prices down in Vancouver.A proclamation?

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dingus

"Has speculation actually dried up? Haven't people bought property for the long haul, say after the 2010 Olympics."4 years is a "long haul" for property? I think you've been misusing the word "long" for too long. "It will take a major slide in the Canadian, British Columbia, and Asian economies to bring prices down in Vancouver. "Did you forget "American" in that litany or studiously avoid it? The proportion of our trade with the US compared to Asia is something like 5 to 1. And there is a serious likelihood of a US recession. Are we isolated from that? Doubt it.

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Anonymous

Has speculation actually dried up? I doubt it. I think most of the purchases in BC are based on the speculation that prices will at least continue to increase moderately, thats why a few months of price drops could actually cause a bigger problem. No one knows whats going to happen for sure though, we're just going to have to wait and see.

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ken

What does 'prices are thriving' mean? We all know that they are the highest they've ever been, is that what that means?How does the old saying go? Buy high, sell low? Hmm.. No, that doesn't sound right.

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Anonymous

I think realtors already use sleazy tactics. Will they up their 'sleaze'? I count on it.RE agents rely on sales. Does anyone think they're going to sacrifice profits/$ for ethical practice? One of my friends is thinking of buying a condo. I suggested she do some research because prices are 'correcting'. She said her realtor told her that prices are thriving and they should buy now. How sad. My friend is a newly-wed and it sounds like this agent is taking advantage of them…what do all of you think???

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USA!USA!USA!

What kind of pressure is this market putting on the numerous agents out there? Used to be all you needed was a phone and website and you could sell anything in Vancouver. With less and less sales are we going to start seeing stories about realtors using sleazy tactics used to move condos?

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Snap Up Real Estate

Has speculation actually dried up? Haven't people bought property for the long haul, say after the 2010 Olympics. It will take a major slide in the Canadian, British Columbia, and Asian economies to bring prices down in Vancouver.

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bc_cele

So if I understand that correctly, prices can't come down because they are too high and affordability is getting worse? Very strange that those very factors seem to be the only thing that caused the price drops currently happening all over the US, and yet here they will only cause prices to rise slower. Well, I guess they're the experts.That's right, they are the experts, and you are had better be sure to buy right now before that DTES crack-shack hits $1 million. Then you really will be up the river without a paddle.

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