VHB is taking time out for real life and shutting down the Vancouver Housing Blog for now. I just wanted to thank him for all the work he’s put into his site, and all the analysis and info he’s shared over that time. I wish him the best and hope he comes back to blogging soon should the urge strike.
Todays Sun has an article about the municipal tax system in vancouver and the disproportionate load it puts on business owners. From that article:
Over on Burrard, not far from the bridge, Henry von Tiesenhausen of Commercial Electronics notes that, in a five-year period when the tax on his home increased 16 per cent (and when his company’s sales were flat) his business taxes rose 102 per cent.“I have to ask the question,” von Tiesenhausen said in a letter to Mayor Sam Sullivan, “is it worthwhile even operating a business in the City of Vancouver?”
A growing number seem to be asking the same thing — and answering in a way no one wants to hear. While commercial growth in the city has long trailed residential, the last two years have seen a disturbing new trend. For the first time, more businesses closed than opened.
In general a condo tower consumes more in services than they pay for, while businesses pay more than the services they consume. With the huge number of condo projects downtown, and businesses shutting down should we expect property taxes to increase greatly to take up the slack, or should we expect the city to adapt its budget to spend less on services?
Ouch. Todays CNNMoney has an article about the fourth quarter report from the National Association of Realtors showing the largest price drops on record with price declining US markets now outpacing those with gains.
The most recent median prices are down even more: 3.4 percent since hitting record highs in the second quarter. Almost three-quarters of the markets, reported on by the group, saw declines in median prices over the past six months, with eight reporting double-digit declines.
Vacation markets, where investor-buyers had driven up prices during the building boom of 2005, were particularly hard-hit.
The Sarasota-Bradenton-Venice, Fla., market saw the biggest year-over-year decline in the fourth quarter, with prices plunging 18 percent.
When looking at the change between the fourth quarter and the second-quarter peak, the Palm Bay-Melbourne-Titusville, Fla., market saw the biggest drop, with median prices plunging 19.5 percent.
Wow. Those are mind-boggling price drops in a time of super-low interest rates and a strong economy. It remains to be seen how bad the US housing slump will get, and what effect this will have on the economy as a whole. For now the NAR is repeating their mantra “I think the worst is over”.
There’s a strange article in the Vancouver Sun today – Its a very short writeup:
Now that the condominium craze has changed the Vancouver landscape and used up virtually all available space, condo fever is sweeping the suburbs and it’s there we’re finding the biggest percentage increases in condo prices.
They then publish the following list of benchmark condo price changes from January 2006 to January 2007. Prices in every area are up year over year, but I was curious to see how much of those gains came early in 2006 and how they’ve faired since September 2006 (the GVRD benchmark peak so far). I’ve added the September to January price changes below each area, with the dollar figure of price losses or gains:
New Westminster: +24.8
Sept 06: $256,336 Jan07: $260,959 [ + $4,623 ]
M. Ridge/P. Meadows: +21.5
Sept 06: $227,176 Jan07: $234,041 [ + $6,865 ]
Port Coquitlam: +18.8
Sept 06: $223,563 Jan07: $226,235 [ + $2,672 ]
North Vancouver: +17.6
Sept 06: $341,575 Jan07: $350,037 [ + $8,462 ]
Richmond: +17.5
Sept 06: $280,581 Jan07: $275,108 [ - $5,473 ]
Coquitlam: +17.3
Sept 06: $260,559 Jan07: $259,815 [ - $744 ]
Burnaby: +15.5
Sept 06: $298,821 Jan07: $292,816 [ - $6,005 ]
West Vancouver: +14.7
Sept 06: $601,004 Jan07: $549,203 [ - $51,801 ]
Vancouver East: +14.3
Sept 06:$271,469 Jan07:$273,808 [ + $2,339 ]
Vancouver West: +12.7
Sept 06: $426,810 Jan07: $422,896 [ - $3,914 ]
Port Moody: +10.6
Sept 06: $274,392 Jan07: $272,974 [ - $1,418 ]
South Delta: +6.7
Sept 06: $310,184 Jan07: $295,320 [ - $14,864 ]
Wow. A local developer has taken to marketing their building in Yaletown with an episodic web video that is kind of, how should I put this? .. dismal. Maybe I’m just not in the right target market, but I’m really not seeing the appeal of this low budget sit-com about stalking neighbors and the ‘Yaletown lifestyle’.
They’ve got the Sun & Chicago Tribune to write up articles about it, so it may just work as marketing. They’ve done everything they can to make yaletown look appealing with the ideal of selling a ‘lifestyle’ instead of just a condo, but it all just looks kind of cheap and as far as I can tell this is the lesson:
Buy a 500 sq foot condo in Yaletown to prove that you can. There are friendly people there. You will have fat grumpy neighbors to complain about, but they will move to Spain. You will then be free to spend the rest of your time trying to guess the sexual orientation of the other beautiful people that live in your building. Your condo is fabulous! Yaletown is a lifestyle!
..or something to that effect.
And now you really want to see it don’t you? Alright, I’m going to play right into their diabolical marketing plan and give you the link, but don’t come crying to me when you feel all dirty and underwhelmed.
No, not in the walls of your condo – in the air on the West Coast. Apparently global warming has turned the west coast into a breeding ground for a deadly fungus whose spores have caused the death of 8 people. From the globe and mail article:
Dr. Kibsey said some health officials have been “reluctant†to publicize the potential risks for fear of hurting tourism on the island, which receives more than seven million visitors a year.
In the summer of 2002, for example, those investigating the outbreak had put up a number of signs warning of the potential risk of fungal disease in the popular Parksville area of the island’s east coast. But they didn’t last past the season. The signs, Dr. Kibsey recalled, had prompted a “huge number of campers to cancel their reservations en masse.
“They were taken down because the chamber of commerce put pressure on the medical health officer to remove them.â€
I don’t think the chamber of commerce should worry so much. Clearly the mold problems in condos hasn’t caused demand to go down for them so why would it negatively affect tourism?
Stocks for financial groups and builders got hit pretty hard today with a round of bad news from the US housing slump and mortgage defaults from overextended borrowers. HSBC announced that their bad debt charge from last year is $1.8 billion more than expected due to US mortgage lending. Hey, a billion here, a billion there, pretty soon you’re talking about real money!
Subprime lender New Century Financial saw their stock drop by an astounding 36% today as a wave of rising defaults and late payments is making itself apparent across the US. Many smaller subprime lenders have closed down over the last few months and there are concerns that the combination of dropping home equity, higher mortgage rates and record low levels of personal saving could lead to more trouble for the US economy as a whole.
Meanwhile in Vancouver scientists have announced the discovery of a tiny hole in the Bozone layer that insulates our economy from the US. The CMHC says that this should not be a concern as it is a very tiny hole that at the very worst it may cause a “soft feathery plateau” in our once hot housing market, and “hey, who doesn’t like soft feathery plateaus?”
Marco sent in this link to todays Globe & Mail. Monthly house prices are flat in Canada for the first time in six years, possibly signaling a slow-down in our once hot real estate market. The largest monthly drop was in Alberta, with a slide of 0.9 percent, the biggest drop in eleven years. The largest monthly increase was seen in Saskatoon followed by Regina and London. Across Canada it added up to flat prices.
Home prices didn’t budge between November and December, Statistics Canada said Thursday. It was the first time since June, 2000, that its monthly new housing price index was unchanged.
That easing will help keep inflation under wraps, an economist said.
“The rise in new house prices that feeds directly into the consumer price index for shelter, is expected to put less upward pressure on core services inflation in the coming months,†said Ted Carmichael, chief economist for J.P. Morgan Securities Canada.
As regular readers here know, the REBGV benchmark price in Vancouver has actually been dropping each month since September 2006, losing almost $20,000 in that time. Prices in Vancouver are still very high by historical standards, so it remains to be seen how far prices will correct or if spring will bring more buyers with more credit.
Ahoy there! This building at 1201 Lameys Mill Road has great views out to false creek near Granville Island and a somewhat nautical / pirate theme to the way its scaffolding and tarpaulins drape. Going by the name ‘Alder Bay Place’ these condos use a mix of traditional Vancouver green mesh and white tarps.
send your leaky tarp covered condo pictures for the repair photo album to: vancouvercondo.info@gmail.com
Paul sent in this link to an article in the Globe and Mail about Decembers unexpected drop in building permits across Canada. Economists had been expecting a drop of about 2 percent, but permits actually pulled back 7.8 percent.
Most experts expect construction activity to ease from last year’s 2006 blistering pace amid higher mortgage costs, though overall activity is expected to remain strong.
“The data is in line with our view that the residential sector is likely to continue to cool…although only modestly in 2007,†wrote Dawn Desjardins, senior economist at Royal Bank of Canada, adding that “non-residential investment will continue at a solid clip backed by firm corporate balance sheets and decent profits.â€
The article points out that last year saw a huge number of permits in western canada, so it will be interesting to see what happens when the record number of projects under construction complete in the next year or two.
