Vancouver Condo Info

There’s an article in the Ottawa Citizen about a recent study sponsored by the Bank of Montreal that found a large number of people between the ages of 30-34 living with their parents.

Adult children are returning to their parents’ homes in unprecedented numbers, with rosy dreams of saving for their own first homes — yet few are socking away enough cash for an adequate down payment, according to a recent survey.

“These kids have to get a reality check,” says Cid Palacio, vice-president, BMO Bank of Montreal, which commissioned the poll of 1,205 people, conducted by Decima Research in six Canadian cities. Ottawa was not included.

“They have unrealistic ambitions and will be chasing this rainbow of homeownership without a tangible or practical plan on how to get there.”

The article goes on to mention that in those 6 cities: Halifax, Montreal, Toronto, Winnipeg, Calgary and Vancouver the ‘stay at homes’ have an average income of $43k and have been saving about 12% of their pretax income for about 18 months. The average expectation is to have a 25% down payment in just under 4 years.

No way, says Ms. Palacio. “They should be saving twice as much money or realize it will take them eight years, not four.”

Those not living at home are saving about 10% of their pretax income. The bank suggests that “with rising house prices” potential buyers should “consider that they won’t be able to save 25 per cent of a house price for a down payment”. There is no mention of the possibility that prices will stop rising or drop as they have in the past.

There’s an article in the sun about insurance companies not wanting to insure buildings with rooftop gardens, also known as ‘green roofs’.

The plans of dozens of developers poised to put green roofs on their condo buildings — the Olympic village being the most prominent among them — are now in limbo after the province’s Homeowner Protection Office sent out a letter to all municipalities warning that local insurance companies are mostly unwilling to insure green roofs on multi-unit residential buildings that will be sold as condos.

So are there extra risks posed to building integrity from rooftop gardens? Probably not:

No one who works in the green-roof industry had heard of any other jurisdiction in North America or Europe where insurers were refusing to insure green roofs.

But in B.C., where problems with leaky building envelopes in condo buildings provoked a major crisis among consumers and the construction industry, anything involving water in proximity to residential building walls provokes nervousness.

What a shame to have the leaky condo crisis prevent us from creating rooftop greenspace. Hopefully this is something that developers and insurance companies can work out, particularly since it doesn’t seem to be a problem in any other city.

Here’s your open topic for friday the 13th!

-Is Vancouver the 3rd best place in the world?
-or is Vancouver the 69th best place in Canada?
-Bank of Canada has problems predicting the future.
-US bubble commentary on Bloomberg

What are you seeing out there? Post your links, anectdotes and news here.

Have at it!

*hat tip to swirlyman and cailin for link suggestions

Here’s an excellent Buy/Rent comparison calculator on the New York Times site. It lets you enter rent value / purchase value, interest rate, property taxes and then adjust sliders for house appreciation and rent increases.

What with recent complaints about ‘affordability’ in the lower mainland I was curious about how some local real estate would compare, so I entered some number for this house I found on craigslist since it listed a selling price and current leased rental income.

With rental income of $1170 and an asking price of $419,800 you get some interesting results by playing with sliders on that calculator. for instance: 25% down payment at 6.25% interest rate – if the house appreciates by 10% a year over 30 years you’re better off buying after just one year, but if the house appreciates an average of 5% a year over 30 years you’re better off renting.

There are a lot of variable there – if you have some numbers from the local market its worth plugging them in and checking out the results.

Note: Since this is a US site I assume they are taking into account the mortgage tax write off, which we don’t have here in Canada.

UPDATE: dingus points out this Canadian buy/rent calculator.

There’s an in depth 4 page report on MSNBC about the US subprime mortgage / housing market problem – There are some astounding statements in that article: One in every 92 US households in foreclosure for 2006, Mortgage fraud reports doubling in the last two years, threats and bribes for appraisers to push up assesments.

This is looking like a bigger and bigger problem for the US, with some comparison being drawn to the savings and loan debacle of the late eighties.

“The (mortgage) industry was trying to create additional home ownership,” said Donohue. “And that’s very nice, and I think that’s a great thing to allow people home ownership. But at what cost? And to what end does that happen? I think what happened is that people — unscrupulous people — took advantage of that and what they did was go out and solicit prospective buyers.”

Some enterprising fellows are now offering to put a short-range radio transmitter in your ‘for sale’ sign to broadcast a commercial to anyone on the block interested in your house or condo.. Its an interesting idea, but most people don’t bother to put a price on their sign, so what (besides music and sound effects) are they going to put in their custom commercial? And would this marketing system have any advantages over the good ol’ world wide web?

I’m still cringing from the last Rennie Condo ad I saw in a theatre, I wonder if these audio commercials feature soft jazz and lots of talk about ‘lifestyle’.

There’s an interesting article in The Star about discount brokers in the real estate business and the impact they may have on the cost of buying and selling.

While other industries, such as travel agents and stock brokerages, have gone the discount route, the real estate industry has largely held steadfast.

Realtors have been successful at holding their commissions at a standard 5 per cent in recent years, although that is already down from 6 per cent a decade or more ago.

But in a market where homes are selling in record numbers and at record prices, some consumers are wondering why commissions are still so high in the real estate business.

They also mention the Competition bureaus investigation of the Canadian Real Estate Association:

The Canadian Competition Bureau, meanwhile, is investigating the Canadian Real Estate Association to see if the CREA’s guidelines discourage discount brokerage houses from using the Multiple Listing Service, which the association owns.

CREA officials say they are simply protecting their trademark.

I’ve noticed a lot of discount broker signs on condos recently, I wonder how much of an impact they are having here in Vancouver. As the article points out – in a hot market it may be easy to sell through a discount broker, but what happens when the market slows?

So what do you think- Are discount brokers the way of the future and would you feel comfortable using them to sell a property in a slower market?

The Surrey Council has put a stop to the rezoning of industrial land – it looks like they’re having a similar problem to Vancouver: Condo’s just don’t bring in the taxes like business do:

The city has only 1,300 acres of vacant developable industrial land, a figure which had been dwindling. Surrey put a stop to that Monday afternoon.

“An interim policy to protect the city’s current supply of industrial designated land is considered to be a first step in curtailing any further erosion in Surrey’s employable lands base,” the staff report says.

The latest housing boom hasn’t helped Surrey’s imbalance of taxation, Gill said.

“When you put residential everywhere, you’re not covering your costs of your infrastructure, in terms of your policing, your fire, your city costs,” said Gill, also the chair of the city’s finance committee.

Gill wants to see a plan beyond the industrial lockdown that would include enticements for industries “that would have a very high ratio of employment.”

Digi pointed out this commentary on risks in the Vancouver ‘real’ estate market from this weekends Globe and Mail. Its an entertaining read as well as some food for thought:

Nature is logical, but people are not. They seem to think that the laws of physics won’t apply if they spend enough money. Sometimes this works for a while, but you can hold back the tide or suspend the forces of gravity for only so long, before they boomerang and thwack you in the puss.

When imaginary value meets real water and real mud, all that pretend money washes away. You can build on the supposition that nothing bad will happen, even put your house on a sandbar in the middle of a river, thinking the river won’t ever rise, but that’s what rivers do, always have done. Why should they spare you and your big-screen TV?

It’s Friday! ..and what a Good Friday it is! This is the open topic thread for Friday April 6th. Here’s what I’ve seen in the news recently:

-Young people: buy first, think later.
-Flood of used cars flow into Canada
-Economist Micheal Shedlock commments on Canadian Building Permit Plunge:

When things go bad blame the weather. I suggest this is the beginning of the end of the housing boom in Canada. Canada seems to be about 18 months or so behind the US and has a lot of catching up to do. It will be a painful process especially for recent buyers and trapped sellers, just as it played out in the US.

What are you seeing in the news? Post your links, anectdotes, comments and news stories here!