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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beta
beta
13 years ago

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.

Akhen
Akhen
13 years ago

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

Drachen
Drachen
13 years ago

2 things about that story you just gotta love;"As well, the biggest influence on housing prices is real incomes, not demographics"FirstA 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… Read more »

M-
M-
13 years ago

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 truehttp://tinyurl.com/ytnbby

beta
beta
13 years ago

Bloomberg: Subprime Bondholders May Lose $75 Billion in U.S. Housing Slumphttp://tinyurl.com/yt6o4c More pain to come.

-\/-
-\/-
13 years ago

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.

beta
beta
13 years ago

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.

-\/-
-\/-
13 years ago

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.

bcubbins
bcubbins
13 years ago

Vancouver Sun story…Mortgage insurance changes will help buyersOttawa 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.”

patriotz
patriotz
13 years ago

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.

freako
freako
13 years ago

"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.

jesse
jesse
13 years ago

"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.

beta
beta
13 years ago

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.

freako
freako
13 years ago

"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.

Patiently Waiting
Patiently Waiting
13 years ago

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… Read more »

freako
freako
13 years ago

"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.

whybuywhenucanrent
whybuywhenucanrent
13 years ago

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… Read more »

M-
M-
13 years ago

For that Craigslist posting, the 2007 assessment says:Land value: $871,000 (in 2006, $659,000)Improvement value: $37,100.Total: $908,100If 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.

blueskies
blueskies
13 years ago

I find it highly amusing that his first instinct is to blame it on the building. Freudian slip of the first magnitude! good catch!

condohype
condohype
13 years ago

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.

Patiently Waiting
Patiently Waiting
13 years ago

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.

C
C
13 years ago

Attempting to make the numbers work…http://vancouver.craigslist.org/apa/316447396.html

freako
freako
13 years ago

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. "

rentah
rentah
13 years ago

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: V6423214509 W 8thNew 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… Read more »

casual observer
casual observer
13 years ago

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.