Friday free-for-all
Here it is, your rainy friday free-for-all open topic post.
Whats going on out there?
-City staff moves to protect rentals
-no byline column in the Sun says bad idea
-a critical look at the Liveable Region plan
-What boomer buyers might look for
-US economic growth at 4 year low
-Pacific NW & Texas not seeing the slump
What are you seeing? Post you news, anectdotes, links and what-have-you here!
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April 30th, 2007 at 10:15 am
exx- thats a lot of listings, but it’s not uncommon to see people trying to flip assignments around the lower mainland.. It really looks like we’re overbuilding at a time when prices are knocking demand back.
April 29th, 2007 at 10:19 pm
http://burnabycondo.com/displa.....038;id=772
Is it just me or is that a lot of listings for a year old condo…
April 29th, 2007 at 8:57 pm
Copperstone is in a fugly industrial area. There’s a skytrain station close by, but no other redeeming amenities…unless you consider crack whores amenities.
April 29th, 2007 at 4:28 pm
rentah,
There are a couple of Copperstone units on the MLS that the builder is trying to sell.
I’m sure all those Copperstone assignments are your typical assignments and are the tip of the iceberg. If you follow through the realtor links on the assignment site, you’ll find even more Copperstone listings (one agent has another site devoted to Copperstone).
Then there are few that get repeatedly listed on Craigslist.
After allowing for some crossover caused by people listing in more than one place, I think its fair to say that there are several dozen flippers in trouble over this one project.
The mind boggles at how many speculators have infested other New West projects like The Grove-Victoria Hill-Glenbrook. That is absolutely huge. I just drove through it today.
And than there’s the Queensboro mess.
New West taxpayers will take it on the chin for these thousands of new units in the various developments. The local government failed to get enough money (or other concessions) out of the developers to pay for all the needed new infrastructure and services IMHO.
April 29th, 2007 at 2:53 pm
Never once did I encounter someone so desperate to get out of a property
In other words, the people he talked to pre-2000 were not very distressed. No surprises there, given a booming stock market.
The only way to see prices depressed so steep is to see something along the line of the 80’s crash and hardship. Ahhh, let me rephrase. Much more severity of economic hardship and pain than the 80’s crash
The 80’s crash was clearly sufficient, so nothing more severe is required. However, achieving an 80’s-like crash (or worse) shouldn’t be a problem, given increased indebtedness, negative savings rate, and the increased macroeconomic reliance on RE for GDP and job growth.
But by then folks, your jobs would also be in question. At that time, you won’t be thinking of buying a home. You probably be thinking of trying to survive day to day.
There will be considerable job loss, though it won’t affect everyone equally. Young adults, entry level workers, suffered the most job loss. And, as in the early 80’s, people with cash will do very well for themselves.
My job is recession-proof, while my wife’s is not, which is why we’re now saving as much we can, with the expectation we may have to live on my income alone later. Similarly, we’ll buy with a mortgage we can afford on my income alone.
April 29th, 2007 at 2:52 pm
freako: The Vegas article is great, especially:
“There’s going to be a lot of depression, a lot of anger. A lot drinking, gambling, and desperate stuff going on.”
Isn’t that what Vegas sees every weekend?
April 29th, 2007 at 2:41 pm
patiently:
Thanks for the Copperstone post: Yikes!
I’d imagine there’s a flipper or two having a sleepless night or two.
Also: could these ‘assignments’ possibly represent developer product initially held back?
April 29th, 2007 at 2:25 pm
“At that time, you won’t be thinking of buying a home. You probably be thinking of trying to survive day to day.”
The old “we are all in the same boat” argument. Prices are set at the margins. Even if unemployment is at 10%, it means I have a 90% chance (likely more in non-construction and non-forestry industries) of keeping my job. I’ll take those odds any day.
Your comments about buying bank foreclosures are fair. There could be screaming deals out there but most I have seen are whittled back to near market prices. In a falling market nobody will really know what “market price” is so you might get a good deal if your timing is right. The more lowballs you throw, the better the chances of one sticking.
April 29th, 2007 at 2:24 pm
“Vegas flipping craze ends badly”
http://tinyurl.com/2xlko9
Many more stories like it to come. Anybody watched those flipper TV shows lately. Must be tough to make new shows now.
April 29th, 2007 at 10:33 am
A letter to John T. Reed from David Folster about Tom Vu which was sent around the year 2000 is very interesting reading. For once, this is from a guy who originates from British Columbia, Canada and who had attended the phony Tom Vu seminar a decade ago and wanted to duplicate his system. What he found were the realities of the BC real estate market. Consider this, he tried investing before this current boom ever happened and here’s what he found..
This applies to our province, so take note!
He said…
1. Even with distressed properties, offering to buy a property that far below market value was a joke (I was trying 80%). I was laughed out of most negotiations. Never once did I encounter someone so desperate to get out of a property that they would bend over to accept that kind of deal. However I have no idea if this kind of thing works in very depressed real estate markets, as I am an ignoramus when it comes to real estate. All I know is that it didn’t work for me in my area. (His area is BC, Canada)
He said….
2. Many of these properties were over financed, and even if they weren’t, there was no desperate bank mandate to unload these non performing assets at all costs. Generally, even in foreclosure sales, the owner or later, the bank, wanted fair market value.
(Nowadays, everything else are now super dangerously and overly financed). If pre-internet boom, people aren’t willing to bend over to kneel down over the past decade, then what do you think this crash will do? I don’t think they will ever bend over. People are overly arrogant, especially when past market performances did not lend themselves to super cheap properties even during several downturns in the mid-90s. Most to all BC homeowners are really in a negative cash flow situation, except maybe for some who bought properties during the last RE crash of the early 80’s. You can only be in positive cash flow in BC if you buy into the depressed and no hope RE market and usually there’s only a small window of opportunity say about 6 months to 1 year. After than, prices go up and then stagnate. If past performances are of any indication, we get a big dip followed by years of stagnation where banks and individuals themselves foreclose their homes at fair market value. That fair market value is 1 million for a home and $500,000 for a condo.
Unfortunately, during these times of stagnation, rent prices will go up higher, because people aren’t buying homes when home prices are ever falling slowly every year and sellers are as stubborn as bulls on the pen. They still need somewhere to live, so the demand of rental properties will increase. And if that’s the case, then eventually rent prices will equalize the number of newly available rental units and you will then reach an equilibrium. In the meantime, property prices will stay stagnant.
The only way to see prices depressed so steep is to see something along the line of the 80’s crash and hardship. Ahhh, let me rephrase. Much more severity of economic hardship and pain than the 80’s crash, where banks and individuals both capitulate and throw properties into the market at cheap cheap prices. But by then folks, your jobs would also be in question. At that time, you won’t be thinking of buying a home. You probably be thinking of trying to survive day to day.
April 29th, 2007 at 10:23 am
http://www.assignmentscanada.ca/wdirc22774623
I’m putting the Copperstone, in New West Sapperton, on official Flipper Bloodbath Watch. Way too many assignments not getting sold.
April 29th, 2007 at 10:11 am
patriotz – I read Campbell for some interesting comments here and there, but totally keep myself aware of his huge bias. He is there to speak for the landlords, developers, bankers, employers etc.
That comment shows his bias. He must be aware of how the inventory growth in condo units will effect rents, and what will happen when the boom inevitably goes bust. Lots of tenants will leave Vancouver once construction jobs disappear. I understand that even the Olympics can’t keep many of these workers employed.
rentah – I noticed the date after I posted it when went back to read it thoroughly, and was wondering if anyone else would discover it.
I don’t know how I would have reacted to those arguments in Summer 2005. I wasn’t quite there yet, but had a vague notion that something was wrong. The prices and the mania were making me wonder.
I came across Ben Jones Blog and VHB during the XMAS holidays at the end of 05, and finally converted to a bear around February 2006.
I want McCarthy to write another article so we can see where he is now.
April 29th, 2007 at 9:44 am
As far as the talking point that texas is not
feeling any preasure I just saw this on
Ben Jones blog.
http://tinyurl.com/262w2x
Sounds like things are “going soft” in some
areas of Texas as well.
April 29th, 2007 at 7:34 am
Patiently waiting: thanks for the Burnaby article, but did you spot this at the bottom of the piece?:
“published on 08/10/2005″
So this McCarthy fellow, a property manager, has been bearish since 2005.
He was right then, as he is now (even moreso).
And he’s in good company.
April 29th, 2007 at 3:01 am
Campbell doesn’t seem to understand that landlords’ costs only get passed on to tenants in the long run. Otherwise all rentals would be cash flow positive, wouldn’t they?
Or maybe he does. Decide for yourself which option is most likely.
An increase in property taxes is not going to change the market rent in the short run. Landlords are already charging whatever the market will bear, if not rent controlled. And new entrants to the landlord business are (obviously) not motivated by cashflow considerations.
Taxes will be reflected in market rents when (and only when) other fundamentals (you know what) are.
April 28th, 2007 at 8:11 pm
Another quote from the same Campbell column:
“Many renters don’t seem to understand that the rise in landlord’s property taxes gets passed on in the form of higher rents.”
April 28th, 2007 at 7:47 pm
In other words, you can be in the top 10 per cent of income earners in the country and still not qualify for a mortgage to buy an average detached home in Vancouver or Victoria.
So has our guru Michael made the logical leap to conclude that therefore prices must come down?
Or is he just advocating demand-side subsidies (including tax cuts) to improve “affordability”?
April 28th, 2007 at 4:09 pm
Gutsy of the Burnaby News to print such an article…
Just to add to the news pile c/o CKNW…
I can’t wait for Bob Rennie to come out with a nice glossy ad showing these neighbors…
http://tinyurl.com/ytddmu
Massive weapons cache found in downtown condo
Apr, 28 2007 – 3:30 PM
VANCOUVER – Forty residents of a downtown high-rise condo have been evacuated while police clear an alarming number of guns and explosives ingredients from a suite.
Police first came to the suite on the twenty-first floor of a building in the Citygate complex on Thursday after a dropped 911 call.
Police say the man who answered the door was behaving suspiciously, and they found guns on a desk.
It was the tip of the iceberg – since then, police have found more guns, including machine guns and ingredients for explosives.
Inspector Bob Chapman says he doesn’t think it’s a foiled terror plot.
Residents were told to leave while police cleared the suite.
An asian male in his thirties has been arrested.
April 28th, 2007 at 3:21 pm
Anyone else think it’s interesting that Concord Pacific is putting all their inventory on the market? TV Towers, Max, Coopers Point – All previously sold out?
April 28th, 2007 at 2:00 pm
Burnaby bubble article:
http://tinyurl.com/3aaoch
April 28th, 2007 at 6:59 am
High taxes impact paycheques in many ways
Michael Campbell, Vancouver Sun
Published: Saturday, April 28, 2007
Just as amazing is the fact that to qualify to be in the top 10 per cent of earners, all you have to make is a meagre $64,500. In other words, you can be in the top 10 per cent of income earners in the country and still not qualify for a mortgage to buy an average detached home in Vancouver or Victoria.
April 28th, 2007 at 12:05 am
I have to back the comments about rentals. Its getting ugly. My wife and I are looking for a nice large rental in the New West area and are shocked at the asking prices. They are sometimes negotiable but only to a small degree.
Sometimes when it says 1br and seems like a deal, its actually just a bedroom and you share the rest of the house or condo with the owner or other tenant(s).
Most units we’ve looked at in our “price range” have been depressingly bad for one reason or another. Sigh…we are going to have to adjust upwards. It looks like $1000-$1250 for a 2br or nice large 1br in freakin NEW WEST.
No wonder we have a labour shortage in this city.
April 27th, 2007 at 9:24 pm
Patriotz:
What you said.
I must be simple, cause I never understood ‘cash-flow negative’ investing. Sounds like risky speculation to me.
April 27th, 2007 at 8:22 pm
A paper prepared for the Greater Vancouver Regional District last year illustrated why more rental units are not being built.
Well of course lots of rental units are being built. It just a different business model than before, where a developer would build a complex and then rent out the units.
Now the developer builds condos, sell them to suckers, er, “investors”, pockets the money and lets them bleed cash renting them out.
April 27th, 2007 at 3:07 pm
Price per square foot is a very good argument. Prices in Vancouver should probably average $350 per square foot after the market corrects. Most major centres in Canada and the US can sustain about $350 per square foot. Vancouver is about 2 years away from returning to this level. Rents will probably rise in the short term but will also return to more normal levels within a year or two.
April 27th, 2007 at 2:56 pm
If you wonder why Texas is not seeing price declines check out the prices there. To the north of Dallas new homes sell for about $100/square foot. They are not seeing a rapid decline because they did not experience the bubble that much of the country did.
April 27th, 2007 at 2:29 pm
I currently have 4 downtown listings and very few calls to show them. I see the market slowing down… maybe.
April 27th, 2007 at 2:17 pm
“even in the US where prices are down they’re still up in the northwest. How do all the naysayers account for that? “
The Northwest never appreciated like the in the South. Late to the party. Portland RE is HALF the price of Vancouver. How do the non-naysayers account for that?
April 27th, 2007 at 2:13 pm
” I believe currently it’s 3.8% for a MTM tenancy. “
But it goes to market rent during tenant turnover. The numbers we see on Craig’s list are market numbers.
April 27th, 2007 at 12:50 pm
mold city said…
you can ask all you want for rent, but that doesn’t mean that anyone will give it to you. Especially with free craigslist listings and amateur specuvestors you see a lot of overpriced properties now, but that doesn’t necessarily represent reality.
Yes, and just like our overpriced real estate market, people are paying it.
April 27th, 2007 at 12:48 pm
dosh – it’s called ‘last in, last out’. Troll on, dude.
cape: I’ve been apartment hunting and can assure you that rents are way up in Vancouver as a result.
Apartment rents downtown are insane but have always been grossly overpriced, even before the bubble.
Don’t even look at apartments, instead rent for less from some poor sap who bought an ‘investment condo’ whose mortgage is twice your rent. Or rent a suite in a house.
Despite the press about a supposed rental shortage, there’s lots of private rentals available, and the owners are desperate for good tenants.
April 27th, 2007 at 12:44 pm
“The market was on steroids and now it’s going through a much-needed correction”
“The speculators completely dried up”
“There’s going to be a lot of depression, a lot of anger. A lot drinking, gambling, and desperate stuff going on.”
Excerpts from this article on Marketwatch today:
Flippers flop as hot housing markets cool
April 27th, 2007 at 12:39 pm
The northwest simply hasn’t been hit yet.
Patience.
April 27th, 2007 at 11:40 am
Well it looks to me like the west coast is the place to buy – even in the US where prices are down they’re still up in the northwest. How do all the naysayers account for that?
April 27th, 2007 at 11:36 am
you can ask all you want for rent, but that doesn’t mean that anyone will give it to you. Especially with free craigslist listings and amateur specuvestors you see a lot of overpriced properties now, but that doesn’t necessarily represent reality.
April 27th, 2007 at 10:31 am
Paul said…
Rents also can only be raised legally by a small percentage each year. I believe currently it’s 3.8% for a MTM tenancy. So even with a drastic change is perceived value rents will take many years to increase substantially. I fell prices can correct down much quicker. The exploding inventory right now is proof.
Landlords can set rents arbitrarily once a unit is vacant. So, while your current landlord can only raise rents at a few % per year, units around you may be going up much faster than that due to churn in the market.
I’ve been apartment hunting and can assure you that rents are way up in Vancouver as a result.
April 27th, 2007 at 10:24 am
Thoughts while watching inventory rise on a rainy Friday:
On an earlier thread, blueskies said: i spend a couple hours every day with my cup of coffee (americano) reading Ben Jones’ blog..
Hypothesis:
Bulls’ latte/americano ratio
is greater than
Bears’ latte/americano ratio.
Anybody want to do the leg work on this?
April 27th, 2007 at 10:18 am
….rather than a problem, i would call rising inventory a blessing…..
April 27th, 2007 at 10:01 am
Inventory going up right now wouldn’t be a big problem, but we’ve got a lot less selling going on as well. I think we’re about 40% up over last year while sales are more than 20% lower.
April 27th, 2007 at 9:22 am
Rents also can only be raised legally by a small percentage each year. I believe currently it’s 3.8% for a MTM tenancy. So even with a drastic change is perceived value rents will take many years to increase substantially. I fell prices can correct down much quicker. The exploding inventory right now is proof.
April 27th, 2007 at 9:10 am
Is is usual for the MLS office to have to stay open late to get through a backload of listings at this time of year?
Did anyone else see this over at chipmans?
“Due to the volume of listings being received the MLS Department will be entering listings daily as late as 7 pm until further notice. Please resist the urge to call looking for your listing until 2 full business days have passed. Higher call volumes result in less listings being processed. Please note that in order to serve our members equally, all listings received by the Board will be entered in the order tht they are received regardless of how they are delivered to the Board. Thank you for your patience during this very busy timeâ€.
Looks like we’ve got some people hoping to cash out – probably not a bad idea.
April 27th, 2007 at 9:02 am
“A paper prepared for the Greater Vancouver Regional District last year illustrated why more rental units are not being built. On a pro-forma comparison, the rate of return on equity for apartment condo construction was 57 per cent; for rental apartments 1.7 per cent.”
With rents that far off from purchase prices its ridiculous to even compare them – do they seriously think that all rents in Vancouver could be raised to match current monthly purchase cost without a huge leap in wages?
Here’s the big difference: You can borrow money to buy, but you can’t borrow money to rent. Rents will stay at the price people can afford to pay no matter how high the ‘purchase premium’ goes.
April 27th, 2007 at 8:51 am
Interesting to see ‘affordable’ housing defined in that rent article:
“Gray notes the low-end rents of $1,300 are what is considered affordable — 30 per cent of gross income — for someone making $52,000 a year.”