Vancouver Condo Info

I’ve seen it argued that while it may be a poor time to buy investment property in Vancouver, it’s never a bad time to buy a home you live in because ‘your primary residence is not an investment‘. While its true that your home will never be as liquid as stocks or a high interest savings account, it seems disingenuous to claim that your primary home is not an investment, particularly when the next reason to buy now is often that ‘prices always go up in the long run‘.

If the hope for future price increases isn’t an investment than what is it?

According to this article the average house price in Vancouver for November was $519,294, down about $29,000 from the previous month. Now I don’t know about you, but anything I buy for more than a half million dollars is going to be a fairly major purchase in the grand scheme of things, and $29,000 represents some nice renovations, a chance to buy more space or a few really nice vacations.

Maybe I should be unconcerned about the historical ups and downs of the real estate market since my home is not an investment, but if its not an investment then why is it so much more expensive to buy then it is to rent the same property?

It looks like VHB has returned from his hectic vacation schedule of sipping margaritas by the pool and resumed normal postings on the Vancouver Housing Blog.

There’s a good roundup of top posts from 2006 there now, covering myth busting, quotes & market analysis. Welcome back VHB!

There’s an interesting interview in the TYEE with English architect Alain de Botton and his ‘first impression’ of architecture in Vancouver.

“Lots has gone wrong with these condominiums. There’s just too many of them. I guess it’s just a matter of people pulling the levers. The condominium structure is never going to be all that inspiring. The best of them are done with touches that are out of the ordinary. And I haven’t found any evidence of that. I found that they are standard-issue stuff. And I think it is ruining the city. I think as an outsider it is clearly, clearly wrong. It’s a real pity.”

I wonder how much demand there is for stand-out design in Vancouver. We do tend to have a ’sameness’ to our condo tower architecture, and there is something to his point that tourists tend to gravitate to the unique rather than the ’same’.

Here’s an updated list of condo price drops in Vancouver. The previous price drop list was for October 2006, all but one of those listings has been sold or expired and was removed from the market. This list is being updated on December 27th 2006.

Criteria for being included on the list: There must be a greater than $10,000 dollar reduction in asking price, extra points for listings over 90 days. If there is more than one unit with a price reduction above $10k in the same building I’ll list only the one that has been on the market for the longest. For instance: I see a minimum of 25 units listed with price drops ranging from $10,000 up to $70,000 located at 1082 Seymour st, but I’m only listing the one that has been for sale the longest.

There is only one listing from the original list that hasn’t sold or expired from active listing and thats the first one on this updated list.

1099 E BROADWAY - Original price: $349,900 | Asking: $308,000
“Faces Broadway but quiet inside”

4868 Fraser St. - Original price: $269,900 | Asking: $249,000
“Close to everything.”

2238 Kingsway - Original price: $305,000 | Asking: $289,000
“Hurry! All meas approx, buyer to verify”

1082 Seymour St. - Original price: $322,800 | Asking: $299,900
“Brand new 1 bedroom unit”

1328 W 73rd - Original price: $293,000 | Asking: $278,000
“unit on ground level with small patio”

1420 E 7th Ave - Original price: $368,000 | Asking: $310,000
“Short walk to popular commercial drive & skytrain”

5380 Oben St. - Original price: $349,900 | Asking: $319,888
“Oversize 1 bdrm & den, 722 sq ft.”

1155 Homer St. - Original price: $344,900 | Asking: $324,900
“Feels larger than 644 sq ft.”

711 E 6th- Original price: $349,000 | Asking: $319,800
“Recently renovated with new paint & laminate”

2388 Kingsway- Original price: $259,900 | Asking: $215,000
“Recently renovated with laminate floors”

Depending on who you talk to this could be your last chance to get a good deal, or it could be the beginning of further price drops in Vancouver real estate. I’ll leave the predictions up to you.

The Vancouver sun has an article about how the recent snow is set to create the right conditions for a turn-around in the tourism industry for local mountains. It may have meant snow, heavy rain and wind for Vancouver, but the wintery weather has been great news for the mountains.

“We had a few years of decline and flat business. But things are turning around because of the amazing snow,” said Tourism Whistler spokesman Michelle Comeau Thompson.

Whistler hotel bookings for New Year’s Eve are up 32 per cent over last year and up 16 per cent for the entire holiday period, she said. “It’s great to see the strong turnaround and definitely the early snow has been a huge factor,” said Comeau Thompson.

A record-breaking 684 cm of snow has fallen on Whistler and Blackcomb Mountains since Nov. 1. Hotel revenue in Whistler began declining in 2001 — largely due to the strength of the Canadian dollar — and continued to fall for the next three years.

But hotel bookings began to rise last winter and this past summer, said Comeau Thompson. Bookings rose five per cent last ski season and are projected to rise by three per cent this year. “It looks like Whistler is going back in the right direction,” said Comeau Thompson. “No snow in Europe and eastern North America works in our favour. Skiers go to where the snow is.”

It seems like just a year ago the US media was filled with positive stories about the housing market boom. It seemed like all you had to do was buy a house or a condo in a hot US market and you’d be on the road to riches. It’s looking so much gloomier now.

MSNBC has their top business stories of 2006, with the housing slump coming in at #2 (just after Wall Street surges).

CNN Money has an investors guide for 2007 with 6 strategies to survive the housing bust where they predict that 2007 will be bad, but 2008 will be worse.

“Last year the question was whether the housing boom would slow down. Now its how bad will it get.”

1) Sellers: lower your expectations.
“As painful as it might be to realize that your house isn’t worth what you thought, asking too much in a slow market is a mistake. “Trying to get last year’s price is wishful thinking,” says Hessam Nadji, managing director with real estate advisory firm Marcus & Millichap. “Often you’re unable to sell your house, which compounds itself, and you keep chasing the market down.”

2) Buyers: Drive a hard bargain.
“North of Sacramento, Pulte Homes recently agreed to part with a 2,700-square-foot four-bedroom home for almost 18 percent off the $497,000 list price, plus an additional $8,500 in credits. “I’ve never seen anything like it,” says Lance Pagel, the realtor on the deal. “I recently point-blank asked one developer’s agent what incentives she was offering, and she point-blank answered $80,000.”

3) Consider renting.
“Economist John Talbott, author of Sell Now!, applauds the notion of renting in a market like this - even if it isn’t part of the classic American dream of owning your own home. “Maybe you don’t live to the same standards, but don’t worry about it,” he says. “If we’re talking about the chance to bank $1 million, that’s real money.”

4) Step away from the exotic mortgage.
“ARMs have traditionally been the province of wealthy and sophisticated homebuyers. During the boom, however, banks went after anyone with a wallet. As a result, a lot of homeowners out there are living under a roof they soon won’t be able to afford.”

5) shop for a rate drop.
“In 2003 the mortgage industry originated $3.8 trillion worth of loans, according to the Mortgage Bankers Association. Next year it will hand out an estimated $2.1 trillion. “That’s nearly a 50 percent drop in volume, which means there’s tremendous pressure on company earnings,” says Doug Duncan, chief economist with the MBA. “They’re going to negotiate to get your business.”

6) Keep an eye on your equity.
“The good news, of course, is that reckless spending has kept the American economy chugging. But it has also saddled many American families with some major debt, which is particularly dangerous in a declining real estate market.”

I have a question for you. We live in a time of superb economic growth for the western provinces, Vancouver is a beautiful place to live and we’ve got two weeks of winter games coming in just 4 years. Interest rates are very low by historical standards and the CMHC will insure mortgages with absolutely no down payment.

So given all those positives WHY IS MY HOUSE WORTH $29,000 LESS THAN IT WAS A COUPLE OF MONTHS AGO?!?

I mean seriously, prices should be going up shouldn’t they? We’ve got nothing but positive economics here. I’m taking some solace in the fact that its the winter and the market usually slows down around now, but a $29,000 average drop in house prices!?

This has got me worrying about the liquidity of my house-riches. What if I can no longer put up some fresh paint and new laminate and increase value by $50k? What if something were to happen to our economic paradise? What then?! I mean if prices can go down when everything is going great what happens if everything stops going great. What if rates rise, more people move out of the province, or the job market starts to decline?

You people have turned me into a worrier, just BUY SOMETHING ALREADY!

Browse through blogs and forums with a local Vancouver focus right now and you’ll likely find a lot of skepticism about the current state of real estate prices in Vancouver. How many blogs are there out there now looking at the downside of our market? VHB, (Un)realestate, BC Housing, heck even investment realtor Rob Chipman seems to exhibit some bearish ideas*. Even over at the RealEstateTalks BC forum you don’t see much ‘vancouver is a great investment‘ sentiment these days.

There seems to be no shortage of people that think rent/price fundamentals are out of whack, or that the massive supply of new condos completing over the next couple of years will dramatically shift the supply/demand equation. People argue that as Vancouver gets more expensive people will move away to where they can get more for their buck reducing demand, and that if we (god forbid) see any real negative economic impact from the US housing market crash then we could be in for some big losses on real estate investments.

Through it all the common thread is people discussing the future of our real estate market, and that means one thing to me: they are interested in our real estate. And if they are interested that means they would like to buy it. They are our ‘reserve tank’ of demand.

So will the bears awake from hibernation in the spring and absorb some of the new housing stock? Will they buy some of those stale listings? Are there enough hungry bears out there to counteract all of the factors that hungry bears hold up as proof that our market is unsustainable?

*I’m sure the postings of ‘anonymous’ and ‘boombust’ will keep him from ever fully joining the bear army.

The affordability index for a detached bungalow in Canada’s largest cities:

• Vancouver 70.1%
• Toronto 43.8%
• Calgary 40.9%
• Edmonton 33.4%
• Montreal 36%
• Ottawa 30.8 %

“The higher the city is in an index, the more costly it is to afford a home. For example, a reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up half of a typical household’s monthly pre-tax income.”

report in the Globe & Mail

With predictions of a bumpy economy next year should we expect affordability go up or down?

I’ve had a request to turn off anonymous comments to fix the signal to noise ratio on this site, but for now I’m opting not to. I’m interested in both sides of the housing debate and I’d like to keep it easy to comment here.

The drawback is that we get some odd, possibly insulting and not well thought out comments. We see this from both sides of the debate, but I’m hoping for a sensible post about why our market is ‘worth it’ right now and not just incredibly overpriced. As long as the main argument in favor of buying right now is to ‘grow some balls’ and ‘move out of your mothers basement’ I’ll be steering clear of anything near ‘market value’ in the lower mainland. What you do is up to you.

I will keep an eye on the jerry springerfication factor and if the consensus among those of you that post reasonable well researched points is that easy comment posting just isn’t worth it, I’ll reconsider my position.