friday free for all!
It’s Friday so that means we do our open topic thing here at Vancouver Condo info – This is the place to post your links, news, and the things you’re noticing in our crazy-go-lucky real estate market.
A few random things:
-Vancouverites more willing to live in condos.
-Is the US housing market a tsunami waiting to hit?
-Frauds adding to foreclosure pain in the US.
-Rennie temporarily loses ‘crackberry‘ connection.
-Can Seattle and Vancouver learn from each other?
What are you seeing? Post it here!
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April 24th, 2007 at 9:57 pm
the article deals with the assertion of a real estate market collapse resulting from the sudden exit of retiring boomers.
excellent point. from the article:
“The bust theory says people sell their homes and move into a nursing facility at age 65.”
the ‘bust theory’ (is there only one?) supposedly refers to demographics as a first cause, which few here would agree with.
And no one ever claimed that 65 yr-olds immediately sell & check into a rest home. It’s a ridiculous ’straw man’ argument.
It’s a pumper piece, nothing more.
April 24th, 2007 at 2:30 pm
Wow, Benjamin Tal said that … better go out and buy as real estate prices can only go UP from here. NOT!
Read his report and the article carefully. Note that rates are average and of course averages always factor in the business cycle.
Further, the article deals with the assertion of a real estate market collapse resulting from the sudden exit of retiring boomers. NOT the top of any secular bull.
ahkenaten
April 24th, 2007 at 2:25 pm
2 things about that story you just gotta love;
“As well, the biggest influence on housing prices is real incomes, not demographics”
First
A great argument for stability in housing prices… EXCEPT that it hasn’t been true for the last 5 years. And if you take this tidbit of information with a grain of sense between your ears it should be telling you that housing prices must return to pre-bubble normal precisely because there’s no upwards trend in incomes.
The second thing I love about this article is it’s so sycophantic that the author refused to put his name on it. When was the last time a REAL journalist refused to take credit for a story that he felt he’d done a good job on?
In fact the lack of a byline often just means that the newspaper just cut and pasted a bit of corporate propaganda off their press release page.
April 24th, 2007 at 11:40 am
The Vancouver Sun sets up a straw-man and knocks it down:
Real estate collapse not looming, after all.
The bust theory says people sell their homes and move into a nursing facility at age 65. The opposite is true
http://tinyurl.com/ytnbby
April 24th, 2007 at 2:15 am
Bloomberg: Subprime Bondholders May Lose $75 Billion in U.S. Housing Slump
http://tinyurl.com/yt6o4c
More pain to come.
April 23rd, 2007 at 11:13 pm
Yes, it’s a small change given current prices. It can only lead those who have the deposit to leverage even more…..devastating for personal finances, but then again people tend to like it.
April 23rd, 2007 at 10:27 pm
The mortgage deposit change is marginal: it makes for a 2500 dollars a year difference on a 250k mortgage.
From what people in the mortgage industry have reported, few FTBs have anywhere near 20% saved.
April 23rd, 2007 at 8:28 pm
The mortgage deposit change is marginal: it makes for a 2500 dollars a year difference on a 250k mortgage.
Price have gone up by 30k a year in that price range….so, all it can do is increase the leverage a bit, which will only amplify the crash when it comes.
April 23rd, 2007 at 7:54 pm
Vancouver Sun story…
Mortgage insurance changes will help buyers
…
Ottawa is reducing the cost of home buying by raising the threshold for compulsory mortgage insurance.
An amendment to the Bank Act allows borrowers to access conventional financing with a 20-per-cent down payment.
In addition to insurance savings, the change will make it easier to obtain a bigger mortgage.
“This will have a big impact on our lenders in providing more flexible guidelines for financing up to 80 per cent,†Regan-Pollock said. “In the past lenders were required to follow more stringent guidelines set by high-ratio mortgage insurers for financing above 75 per cent.â€
April 23rd, 2007 at 7:11 pm
In Vancouver, parts of the market will sag more than others…
This is if the housing stock has gone up faster than rate of new household formation.
What do you mean “if”? It most certainly has. Never in living history has the housing stock been growing so much faster than households.
Other areas will stay strong. Single family homes, downtown condos.
Didn’t happen in 1981. All of GVRD went down 45% give or take. Didn’t happen in late 1990’s either. So why is it different this time?
Hint: food chain.
April 23rd, 2007 at 2:09 pm
“I used to think this until yesterday. I struck up a conversation with a builder with I think about 5-6 years experience (you see where this is going). “
I agree that many builders seem oblivious to downside. But I was referring to the U.S. I didn’t mean to suggest that they know what will happen in the future. What I meant was that once they are in doodoo, they know that they are in doodoo and are open to cutting margins to move inventory. Unlike hereto stubborn sellers who want x amount of money because a house sold for that amount in May 2006 or because they want to cover their costs plus y percent.
April 23rd, 2007 at 10:54 am
“Builders are realistic with regards the situation, and unlike sellers of existing homes, open to price reductions (albeit in the shape of incentives).”
I used to think this until yesterday. I struck up a conversation with a builder with I think about 5-6 years experience (you see where this is going). They have done well. But the scary scary thing I realised was they had no clue about downside price risk. They are buying land on spec and complaining about high building costs but seem impervious to the possiblity of price declines. Holy crap. Some of these greenhorn builders will get burned bigtime. The smart ones that can handle customers will presell; the on spec suckers will die a miserable death unless land prices keep increasing.
April 23rd, 2007 at 10:17 am
I wouldn’t buy a Queensborough townhouse for half of what they’re asking, if at all. If they’re lucky, the Fraser River will free them from their bad investments.
LOL. I drove by there on the weekend, still can’t believe that people are buying those townhouses within spitting distance of the highway. Plunked down in an industrial park, with pollution galore (autos and nearby plants) and bridge-bottleneck traffic right outside their driveway.
I wouldn’t live there for free.
April 23rd, 2007 at 9:04 am
“Keep in mind that American builders are hiding price declines with incentives, including cash back. They are doing anything to protect the prices in their subdivisions and not have to deal with angry underwater customers from previous months.”
True, and also a very temporary phenomenah. Builders are realistic with regards the situation, and unlike sellers of existing homes, open to price reductions (albeit in the shape of incentives). Thus new homes were relatively more attractive than existing, which would result in more new home sales, and fewer existing, giving them an outsized influence on price statistics.
Sellers of existing homes may wake up to new market realities and price accordingly. But even if they don’t there are growing numbers of foreclosures going on the market, and they are discounted on price, not incentives.
April 23rd, 2007 at 6:52 am
Keep in mind that American builders are hiding price declines with incentives, including cash back. They are doing anything to protect the prices in their subdivisions and not have to deal with angry underwater customers from previous months.
Auctions in places like Florida have shown price declines of 40%. In the rust belt, they are practically giving houses but nobody is buying.
My prediction is simply a YOY price decrease for the Lower Mainland later this year. Nothing dramatic yet. That’s for next year.
I’m keeping my eye on the Queensborough townhouses. Too many built at way too high prices (400K plus), and now they are flooding that small market. New and almost new are competing against each, and we will see some serious price declines there. Already, some asking prices have dropping by tens of thousands.
I wouldn’t buy a Queensborough townhouse for half of what they’re asking, if at all. If they’re lucky, the Fraser River will free them from their bad investments.
April 23rd, 2007 at 6:08 am
“In the US, home prices, even in the most vulnerable areas, are only down 10-20% overall since the peak. “
Only? Everyone knows that the stock market goes up and down dramatically from time to time. Many homebuyers see only a one way escalator upwards.
If you include leverage, 20% would mean that anybody who bought in the last 18 months or so is under water. Once such a chain of events is set in motion, it may not stop for a while.
Though I agree that it may play out as you suggest. Depends on how the U.S. situation wrt housing and general economy turns out.
April 23rd, 2007 at 2:38 am
I don’t think the market will tank this year. It might even rise 10% or more this year.
I think sales will slow.
Inventory will rise by Christmas, to 15K or 20K, but prices won’t tank.
In the US, home prices, even in the most vulnerable areas, are only down 10-20% overall since the peak. In Vancouver, parts of the market will sag more than others–sardine-housing in Langley, maybe some of the East Side condos. This is if the housing stock has gone up faster than rate of new household formation.
Other areas will stay strong. Single family homes, downtown condos.
Why?
The expectation of Vancouver’s increased prominance as a world-class city. The continued inflow of exotic $–money earned elsewhere. Possible decline in the Loonie to Asian and European currencies. All of those are more likely than a mass exit of investors from Vancouver RE, or a big interest rate hike.
It might sag by the end of this year, but it won’t tank, and probably not until after the Olympics, if at all.
So, if you’re trying to buy, rethink. You’ll be stuck with insanely high housing costs. For a long time.
You’ll save thousands of dollars per year by renting. And it’s no-risk. Settle into a place you like with reasonable management and a good location. Save your $ for a down-payment in 4 years, or take extra trips to Hawaii while your friends are slaving away to make their payments.
The US market is on a slow decline, the high cost of housing is a huge tax–emotionally, financially and physiologically, on people struggling to make they payments on houses they bought in the last couple years.
Whybuywhenucanrent?
April 22nd, 2007 at 7:33 pm
For that Craigslist posting, the 2007 assessment says:
Land value: $871,000 (in 2006, $659,000)
Improvement value: $37,100.
Total: $908,100
If they have 25% down, and they paid the 2007 assessment price, their monthly mortgage payment is $4,000.17. Not including taxes, maintenance, etc. And of course not taking into account the risk of tenant problems, or not receiving any interest on the $227K down payment!
Based on other rentals I’ve seen in the area, I figure it’s worth ~$3,000/month.
April 22nd, 2007 at 7:09 pm
I find it highly amusing that his first instinct is to blame it on the building.
Freudian slip of the first magnitude! good catch!
April 22nd, 2007 at 6:12 pm
Looking at that Province story about Bob Rennie losing his crackberry connection, I find it highly amusing that his first instinct is to blame it on the building.
April 22nd, 2007 at 4:13 pm
That $4000 rental has a for sale sign in front and they are looking for longterm tenants. You’ll have realwhores and lookee-loos wandering through the house while you’re trying to eat dinner or put your kids to bed. What a deal!!!
My parents rented a house on Dunbar in the late 60s for about $150 a month. They subletted(?) a bedroom to a friend to cut down on costs.
April 22nd, 2007 at 3:19 pm
Attempting to make the numbers work…
http://vancouver.craigslist.org/apa/316447396.html
April 22nd, 2007 at 11:00 am
On the topic of bailouts, I like this quote from the San Francisco Examiner (hat tip Ben Jones)
“Dumb: Buying a house you can’t afford with no down payment and a loan whose monthly payments will explode in a few years.
Dumber: Lending money to people who can’t afford a traditional mortgage, especially when they have lousy credit ratings and don’t substantiate their income.
Dumbest: Bailing out dumb and dumber, especially with taxpayer money.
”
April 22nd, 2007 at 7:37 am
Well, some folks are throwing Hail Mary passes with their Westside asking prices, and, by the sounds of this, some are getting caught for touchdowns.
Here’s an example:
V642321
4509 W 8th
New house in Point Grey.
2230 sqft, 33×113 lot.
Asking price a whopping $2,148,000.
(Comparable properties last summer sold for $1.5-1.7).
Given recent bizarre market conditions, there is a high chance that this property will sell for near ask.
—-
Is this the flick in the tail, the blowoff, that we’re watching?
I can’t see these rarefied levels of pricing being sustained.
Talking of unsustainability, has anyone looked at the graph of the Chinese stock market recently?
Up about 75% THIS YEAR.
Nailspike graph.
Peasants borrowing to buy stocks, usually sign of an imminent top (but in China there are lots of peasants…).
The Feb 9% drop in a day is a distant memory.
It may seem unrelated, but I have a hunch that once the emerging markets collapse, liquidity will have a severe setback across all sectors, and that’s when we may see a top in our RE market.
April 21st, 2007 at 2:47 pm
I wonder whether RE agents are buying or selling at this stage in the cycle? OOPS, I forgot, there are no more cycles, only upwards movement in prices, or at worst “price stabilization”.
When we sold our condo unit, it was to a realtor. He was busy buying several units in our building. Each time he would buy one, he would pay a higher price.
This had the effect of increasing the value of all of the previous units that he had bought, as each unit is valued in relation to recent sales history.
With the higher values, his “equity” would increase in relation to the mortgages, allowing further borrowing to purchase more units at higher prices.
Thus, an asset bubble, funded with debt.
April 21st, 2007 at 10:54 am
Re: 1981 RE crash.
I bought a half acre lot near Nanaimo, for a quarter of what the next door neighbor paid for his lot a year before. I bought it from a real estate agent who was holding a mortgage on the property for twice what he sold it to me for. I don’t know if the same price drop was happening here in Van, but is was crash and burn around Nanaimo.
April 21st, 2007 at 8:23 am
check out the description on page L8 in Vancouver Sun RE section..
somebody blew it or there is a new low in flowery phrases….
“deck 16 pt Lorem ipsum dolor sit amet, consectetuer adipicing elit, sed diam nonummy nibh euismod tincidunt ut laoreet dolore magna aliquam erat.”
boiler plate indeed
April 21st, 2007 at 8:00 am
“Panic buys by people who fear being priced out forever.”
The speculative U.S. markets had some of this right before the end. Sales well above comps. Some of these were mortage frauds no doubt.
April 21st, 2007 at 7:53 am
“As one of our preferred realtors, I would like to extend a personal invitation to join us for the unveiling of Le Germain Residences Calgary.”
Sounds enchanting, but I am too busy saving up the 300k I need to buy into the Main and Hastings lifestyle. I love that condohype blog!
I have an acquaintance that just bought a family home in Vancouver for “only” 1.1 mil. He was happy because they were on the verge of being priced out forever.
I did not see the 81 crash here, but with all the over supply and goofiness, I think we are in for the mother of all crashes. My bet is the fall will be a very scary time.
April 21st, 2007 at 7:23 am
Calgary is continuing to go crazy and I wonderwho the hell pays $1000 per foot in that dump?
As one of our preferred realtors, I would like to extend a personal invitation to join us for the unveiling of Le Germain Residences Calgary.
Over the following weeks, Groupe Germain, the company behind the award-winning Le Germain Hotels and MAC are preparing to unveil the details of Le Germain Residences Calgary. We invite you to be the first to see for yourself what this revolutionary Calgary development entails.
Le Germain Residences Calgary promises to redefine luxury living with distinctive architecture and contemporary European-style design. Located in the heart of downtown’s cultural centre at 9th Avenue SW and Centre Street, these luxury Penthouse Residences will offer access to the renowned world-class services, amenities and personalized care of the award-winning Germain Boutique-Hotels including a full-service spa, housekeeping, linen service, valet parking and catering.
Only 40 Penthouse Residences will be built with prices starting from $1,000,000 and plans ranging from 1,000 to 3,850 square feet. Each Penthouse Residence will feature 9-foot ceilings with floor-to-ceiling windows and is impeccably designed to meet Germain’s meticulous standards with elegant contemporary features and ultramodern finishings including custom-designed Miele kitchens and the latest Kohler bathroom fixtures.
This presentation is only available to a very select few. If you want to learn more about this exclusive offering, please join us on Wednesday, April 25th to learn more about these luxury Penthouse Residences:
April 21st, 2007 at 2:07 am
These were bidding wars, I guess.
Does anyone have any info on the kind of people who are paying these extremely crazy prices?
April 21st, 2007 at 1:48 am
These last few red hot deals seem to be classic ‘blow-off’, I don’t think you have to invoke anything too extraordinary to explain them. Panic buys by people who fear being priced out forever.
Imagine the prolonged pain of overextending to buy at an historic top.
April 21st, 2007 at 1:21 am
When the market is cooling, does anyone view the last few hot transactions with a bit of suspicion? 100k, 200k , even over 300k above the asking price. Could this be drug money laundering or fraudulent mortgages with cash pullouts? Is my imagination running wild?
April 21st, 2007 at 12:55 am
The moment we have YOY price decreases on average for the entire Lower Mainland, it will be a bust. That’s when it was considered a bust in the US.
This will happen here later this year. Probably in the Fall.
April 21st, 2007 at 12:10 am
I have a question to throw out here.
I know its crazy talk and it will never happen
lets just say if it ever did.
At what point do you say a bubble bursts,
how far do prices have to slide and over what
time period for the bubble to be called bust?
April 20th, 2007 at 10:47 pm
We just hit 11k listings over at Chipman. Inventory is rising and it’s spring…..are we still in Vancouver?
April 20th, 2007 at 7:05 pm
I know someone who rented a condo downtown circa ‘89. She had to move because the family who owned this “investment” property had to move in because they sold their Westside house. Is it plausible that those who have bought condos financed with equity from better quality properties will be forced to sell the principle home in order to avoid taking a financial hit? This is a worst case scenario assuming the supply glut materializes on the horizon.
April 20th, 2007 at 6:27 pm
I agree with Solipist. It’s almost over.
It will be a fast burn this spring.
Those who have bought into “it’s now or never” have jumped in, and there are very few left of the fools.
The upshot is that when the market finally goes cold, it will be for a long time.
I prefer that it does so while the macro conditions are excellent.
Real interest rates in my view are actually negative.
Unemployment is less than the natural rate, so when the bubble bursts, even the usual suspects will have a hard time spinning.
Demand will have finally been exhausted.
Tick Tock, Tick Tock.
April 20th, 2007 at 4:31 pm
/dev/null -
I have been noticing the same thing – plus, increasing tear-downs. I’m also seeing houses flipping from last spring without much apparent work.
My “neighbour” (you can read about that at my place last Oct.- Nov.) has just put his monstrousity up for sale. It’s not completed yet. I know (and meanly, hope) that he will take a pounding on it. He has at least $850k into it, not including financing, prop. taxes, RE fees, PTT, etc. He’s going to have to sell if for $900k just to break even. In Renfrew Heights.
It’s almost over…
April 20th, 2007 at 10:51 am
So, I’ve noticed that there is an apparent increase in the number of homes undergoing reno’s and exterior “face lifts” this spring. I’m on the west side of Vancouver (renting, of course) and it seems like every block has a house getting a new fence, new roof, new paint or new deck. All those hated but long-ignored hedges are getting ripped out. Gardens that have been neglected for years are getting some professional love.
Is it just me, or has anyone else noticed this? Or am I just seeing what I want to see (signs of an impending listings flood)?
(Yes, I am fully aware it is spring and, yes, I am fully aware that everyone does fix-ups in the spring. It just seems like a lot more that usual this year.)
April 20th, 2007 at 8:36 am
Time to raise rates?
http://www.thestar.com/Business/
article/205299
Christopher Ragan, associate professor of economics at McGill University in Montreal, said, “My over-all concern is that things are tighter than they look.” … “I think we should be raising rates so the forces are in place to avoid high inflation a year from now,” he said.
I have a feeling that a quarter point rate hike would actually push the market a bit higher here. After all, if rates are going to start increasing the current greater fools better get into the game or be priced out forever, right?
My newest theory is that current market activity in Vancouver will run directly contrary to the prudent course. Granted, it’s only based off the last couple years of data, but it fits the data rather well.
I’d love to be wrong about this, but I fear I am not.
April 20th, 2007 at 6:37 am
comment deleted
This post has been removed by the
author.
hmmm? gonna be a tough Friday
