Here’s your open topic post for Friday June 1st:
- REBGV sales stats for May 2007 available soon.
- Olympic size taxpayer subsidies for developers.
- Loonie and mortgage rates going up.
- Business council of BC economic outlook (pdf).
- Flipping the truth.
What are you seeing out there on the streets and sidewalks of Vancouver? Post your news, links, rants & anectdotes here!
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Here’s your open-topic free-for-all post for friday May 4th.
-Canadian construction slowing.
-Where are the nice condos?
-Vancouver’s still cheap to saudi royalty.
-New condos don’t need parking?
-18,000 grow-ops suspected in BC.
What are you seeing out there? Post your news, links and anectdotes here!
RSS 2.0 comments feed. Both comments and pings are currently closed.
ReductiMat Says:
McCredie has either never shopped at Holt Renfrew in Vancouver, or never shopped in mecca’s such as LA or New York. I’m sure things will be better once they open their new flagship store, but the jet-set crowd will not be coming to Vancouver to shop.
How’s about all the marketers drop the crap:
“Vancouver is a pretty cool place. People, even the rich, would like to stay here every now and then.”
digi Says:
But if marketers dropped the crap it wouldn’t be marketing would it?
craigpbbrett Says:
Let’s make a guess of 25,000 homes, and consider that due to police raids, suspicious neighbours and knowledge of a grow-op’s location leaking out into the criminal community, that 30% of these homes are turned over annually. That’s 8000 home sales a year.
Now, let’s estimate that drug growers buy 1000-2000 homes a year for legitimate reasons such as investment, laundering or living.
So now we’re at 10,000 homes a year.
How many homes were sold in the Greater Vancouver area last year?
36,000.
Now, not all grow-ops are in Greater Vancouver but most are, and while these are just guesses on my part, I’d bet good money that I’m not too far off.
markx Says:
Clarke Says:
Here I thought Shangri La’s pricing was already pretty absurd, but it seems there are more competitors. I hope they have celebrity investors, because I doubt anyone else could be so foolish.
jesse Says:
patriotz Says:
I thought the growers rented houses. Putting 700K into a house that is subject to seizure doesn’t look like good risk-reward to me.
The grow-op stories that I see in the media all seem to be about rentals.
craigpbbrett Says:
As for renters, most of them work for the owner/dealer. They’re usually fresh off the boat, get free rent and a salary of a month.
When there’s a bust the owner pleads ignorance, and the renter doesn’t rat because A) they know the penalties are minor, and B) the owner is linked to the Triads and his penalty would be severe.
This is the reason the police are pushing for seizure of property. Whether our lenient judges approve is another question.
freako Says:
#1 Scapegoats
The Sun Sentinel. “Real estate agents across South Florida kept pointing to this week, hoping state legislators would revive the housing market with a bold plan to fix the property tax crunch.â€
“But now that legislators have pushed off the tax talk until June, dispirited agents say they have little hope of salvaging the spring selling season as they face at least another month of soft sales.â€
“‘It’s just terrible what they did,’ said Bob Melzer, an agent in Boca Raton.â€
“Many residents say they’re trapped, unable to buy larger or smaller homes because their tax bills would double or triple.â€
“‘The market is going to come back once we provide some equality and sanity to our tax structure,’ said Bob Goldstein, chairman of the Realtors Association of the Palm Beaches.â€
Yup, its official. The imploding Florida market is all a result of property taxes.
#2 Global bubble
“The ratio between house prices and rental rates in several of China’s leading cities has soared well above levels that often indicate a property bubble, the Xinhua agency said on Saturday.â€
“An increase in house prices not matched by a rising rental market can signal an unsustainable price spiral, the researcher said. ‘The international warning line is 1-to-200. Once the ratio goes over the line, the market is in danger of a bubble,’ the report quoted Shan Jingjing saying.â€
“In the downtown areas of the four cities Xinhua listed, however, the ratio had already reached between 1-to-270 and 1-to-400, the report added.â€
With the rampant speculation in Chinese stocks and real estate, the situation is precarious. Their bubble can pop spontaneously, or it can get help from a cooling U.S. economy. If Chinese bubble pops, infrastructure buildout will cool quickly, sending resource prices down.
rentah Says:
Also, the article implies that the hunch I have that Vancouver RE prices will reach a peak the very month that the Chinese stock market peaks, is not that crazy.
Anecdotally, some really whacky prices being acheived in westside properties this past week. Some individual cases represent a 40% increase over Summer 2006.
rentah Says:
The Chinese stock market WILL collapse, but who knows when. Current pace simply unsustainable, and lots of stock-naive worker-speculators who are late to the party are going to get annihilated. Same old bubble story.
But 75% in 4 months is absolutely crazy.
This excess beats the Nasdaq 2000.
By the way, this shouldn’t be confused with predictions about the long term health of the Chinese economy.
jesse Says:
I think there is still a lot of money available, looking for something to do.
Any word on what banks are lending out these days? If a family earns 120K/year with no debt, what can they borrow?
Streel Says:
I think we all take solace in the belief of the natural order of things but this is just baffling. This could be the biggest bust maybe ever and it feels strange to be an armchair observer. Should I be constructing my tinfoil hat or am I just crazy and this is the new reality?
Streel Says:
Bastard.
freako Says:
Good point. It is very common for people to use strong fundamentals to justify excessive valuations.
An assets valuation should be proportional to its fundamental outlook. But I hear many non-proportional arguments that do not take the RELATIVE valuations into account. This is not just by laymen but by the local real estate economists and analysts that we quote from time to time.
Typical statement:
“Price will continue to rise because we have low rates and strong economy”
They view fundamentals as an absolute on/off switch, like a foot on the gas pedal. It isn’t so. Or rather, it ought to not to be that way. Sooner or later, the ooncept of relative value will return. I know I have harped on this enough, but I still can’t believe that grown men with fancy degrees continously spout such simplistic (and wrong) arguments.
freako Says:
On REtalks, I pointed out that according to ING’s calculator, a household income of $143K would be required to buy the median GV detached. With zero other debt, and with 20% down. Fun&mental who is a mortage broker explained that those rules of thumb no longer apply. Only about $90K income would be required.
That is the funny thing. We make much ado about the fact that we don’t have exotic lending here, but yet our lending standards have eased dramatically. Like a bunch of alkie bums who think the world has gone to sh*t because they spot a businessman snorting a line of coke. Hiding behind semantics that is.
rentah Says:
..and get paid obscene amounts to do so!
Agree re fundamentals/markets.
Count me currently as one bear that’s beginning to feel light-headed and punch-drunk as a result of the relentless barrage we’re getting/….. there seems no limit.
$2Million+ homes on the westside sold 3 or 4 months ago that are standing empty.
Isolated examples of 40% in 6 months spikes.
I’d ask if my emotional state was “Sign of a top?” but I’m beginning to get sick of my own repetition.
Perhaps THAT’s sign of a top.
—
Then this occurred to me:
“Now when all the clowns that you have commissioned
Have died in battle or in vain
And you’re sick of all this repetition
Won’t you come see me, Queen Jane?
Won’t you come see me, Queen Jane?”
Perhaps THAT’S what Bob meant!..
Perhaps ‘Queen Jane’ = ‘2007 Market Top in Vancouver RE’.
Obviously, now it all makes sense.
Man, I never cease to be amazed by his prescience.
digi Says:
jesse: I just plugged those numbers into the ing “how much can I borrow” calculator - With no debt and no down payment they say they’ll lend $498,032.78. Thats a hefty debt load!
digi Says:
freako Says:
As I posted earlier, according to Fun&Mental, those guidelines are not used. Add about 35% to that amount.
jesse Says:
I think this is a bit light too. The brokers in Vancouver assume you have a basement suite or sublet so they tack on another $100K without blinking. Truth is if you pauper yourself you can afford a pretty nice house even today. Problem is, 1) if you lose your job you are screwed and 2) mortgage payments do not substantially fuel the local economy (though MEW does), which leads to problems down the road.
freako Says:
I don’t know if schadenfreude is your thing, but reading the U.S. housing news can be very satisfying.
“Perhaps THAT’S what Bob meant!..”
We were on the topic of song meanings last year. Speaking of Bob, was convinced that A Hard Rain’s A Gonna Fall was about innocence lost in Vietnam. But the song was written in 1962, when the escalation of the conflict was but a twinkle in Kennedy’s eye.
I presume meaning could be read into anything. Maybe Hard Rain is really about the housing boom?
“Oh, where have you been, my darling young one?
I’ve stumbled on the side of twelve misty mountains,
I’ve walked and I’ve crawled on six crooked highways,
I’ve stepped in the middle of seven sad forests,
I’ve been out in front of a dozen dead oceans,
I’ve been ten thousand miles in the mouth of a graveyard,”
Meaning:
A parent ask what their young adult offspring has been up to. They have been going to open houses all over the place.
“Oh, what did you see, my blue-eyed son?”
Meaning: Did you find any you liked?
“I saw a newborn baby with wild wolves all around it”
Meaning: If I get priced out, my kid will have to grow up in a rental!
“I saw a highway of diamonds with nobody on it,”
Meaning: Coal Harbour condos are owned by offshore investors who don’t rent them.
“I saw a black branch with blood that kept drippin’”
Meaning: If prices go any higher, I will be bled dry.
“I saw a room full of men with their hammers a-bleedin’,”
Construction everywhere.
“I saw ten thousand talkers whose tongues were all broken,”
Meaning: Lying realtors everywhere.
“I saw guns and sharp swords in the hands of young children,”
Meaning: I may have to buy in a crappy neighbourhood.
“And it’s a hard, and it’s a hard, it’s a hard, it’s a hard,
And it’s a hard rain’s a-gonna fall.”
The market is seriously f*cked up.
“I heard the sound of a thunder, it roared out a warnin’,”
Meaning: The U.S. is already f*cked.
“Heard the roar of a wave that could drown the whole world,”
Meaning: The global impact of the housing bubble can sink the world economy.
Alternate meaning: The Fraser will flood, wiping out a lot of crappy condos.
“Heard one hundred drummers whose hands were a-blazin’,”
REBGV clerks are working overtime entering listings.
“Heard ten thousand whisperin’ and nobody listenin’,”
Meaning: The truth is out there in the blogosphere if you look for it.
“Heard one person starve, I heard many people laughin’,”
The U.S. market doesn’t affect us.
“Heard the song of a poet who died in the gutter,”
VHB had enough and packed it in.
“Heard the sound of a clown who cried in the alley,”
Meaning: Cam Muir got his pink slip.
“I’m a-goin’ back out ‘fore the rain starts a-fallin’,”
Meaining: Like I said, the market is f*cked up, but I need a damn house now.
“I’ll walk to the depths of the deepest black forest,
Where the people are many and their hands are all empty,”
Meaning: Whalley is not out of the question.
“Where the home in the valley meets the damp dirty prison,”
Meaning: The new townhome development across the road the maximum security penitentiary in Matsqui looks nice.
“Where the pellets of poison are flooding their waters,”
Queensborough looks OK too.
The last verse is about reflection:
“Where the executioner’s face is always well hidden,”
We did this to ourselves, but we will never admit it.
“And I’ll tell it and think it and speak it and breathe it,”
In the bubble of 2032, I will remind people of 2007.
rentah Says:
Thanks freako!
tennis77 Says:
Ulsterman Says:
May 31st, 2007 at 10:05 pm
What I found interesting was when they talked about the lack of inter-provincial migration of workers to BC they ignored the main reason for it.
Why can’t they just come out and say it? The reason why young families avoid BC is primarily because of our high real estate prices. Two other factors are low wages and relatively poor health care compared to Central Canada.
Why can’t we finally acknowledge that high real estate prices are actually BAD for the economy? They undermine the kinds of businesses that can build a strong economy in the longterm.
The only “good” thing the bubble does is temporarily boost such housing and consumer spending. But that will exhaust itself and the personal debt will come back to haunt us.
June 1st, 2007 at 6:59 am
Great, but what happens when the mega-projects complete?
We’ve got lots and lots of land to build condo towers on, so as long as demand keeps up we can move construction jobs there, but what if prices cut back on demand?
June 1st, 2007 at 7:24 am
It was a presentation FROM the business council of BC TO Deliotte and Touche. I was wondering at the rosy slant to everything because I hear D&T has a very good reputation.
Good facts and figures, I don’t agree with a lot of the analysis, especially the “forecasts” coming from the federal govt. Seems more like selective filtering than forecasting.
June 1st, 2007 at 7:50 am
June 1st, 2007 at 8:50 am
The traffic falloff for mls in Canada is amazingly similar to that of “realtor.com” - the US NAR site - over the past 12-13 months.
Probably means nothing, but I was surprised to what extent traffic to mls has fallen off!
June 1st, 2007 at 8:55 am
In drumming up support for the games there was a slogan being floated, and it turned out to be right - Millionaires for the 2010 Olympics.
Like nobody saw that coming.
June 1st, 2007 at 10:38 am
New data is always fun. What are some superficial observations?
-The biggest caveat is that these stats are compiled from Alexa toolbar users - how representative is this sample? (Probably not very.)
-Hits are down to 2002 levels. Are there alternative sites bleeding away users? (realtylink.org shows a similar decline.)
-One would expect that today more people have access to the internet and an awareness of sites like mls. Does that add significance to the drop to 2002 levels?
-Page hit counts can be deceptive or misleading. Someone could be automatically scraping the website to generate summaries. (In violation of the terms-of-use agreement.) Or changes in site layout can alter numbers.
Still, I wonder how correlated this series is to sales?
June 1st, 2007 at 10:38 am
It definately means something but it looks like it has nothing to do with real estate.
amazon.com, ebay and CBC.ca all show similar trends, a peak in 1st Q 2006 sharp falloff and then a gradual decline to now.
It looks more like a trend in the way people use the internet rather than anything specific.
June 1st, 2007 at 10:40 am
Probably has more to do with Alexa users dropping off than anything.
June 1st, 2007 at 10:40 am
June 1st, 2007 at 10:54 am
http://tinyurl.com/38ocro
“..while living under democratic rules which ensure the majority prevails is one source of acute stress, the forging of those rules-and the attached costs-can also be a hugely contentious issue.
In new buildings, there’s typically a rough template for governance and by-laws that’s passed along from the developer. But refining the regime can be a messy business.”
June 1st, 2007 at 10:57 am
June 1st, 2007 at 11:32 am
June 1st, 2007 at 1:02 pm
People want to believe, they pay him money to make them believe more strongly. It’s very much like organized religion that way…
June 1st, 2007 at 3:18 pm
http://www.matthewgood.org/200.....me-street/
June 1st, 2007 at 3:48 pm
http://tinyurl.com/284f7u
June 1st, 2007 at 4:13 pm
A few hours ago I was driving down Knight st and saw two orangey-yellow coloured minivans driving one behind the other, with all sorts of camera equipment mounted on them. There was something written on the trucks that clearly identified that they were taking street-level pictures, but I can’t remember exactly what it was.
I’ll have to check that Google service sometime to see if I made the cut!
June 1st, 2007 at 7:59 pm
Somewhat more interesting than Alexa is Google Trends. In particular what are those folks on the island doing checking up on Van RE? Hoping to move back? Or wondering if they sold too soon? Interesting also that the second language is Korean.
June 1st, 2007 at 8:42 pm
June 1st, 2007 at 9:42 pm
“V South Miami Condos Just Sign & Drive. Zero down & no money at closing.Call for details!
http://www.vsouthmiami.com“
“Daytona Beach Waterfront Intercoastal Condos Starting 90k $25,000 in Closeout Discounts
http://www.FloridaCondoRelease.com“
And the first story?
“As Condos Rise in South Florida, Nervous Investors Try to Flee”
June 2nd, 2007 at 2:44 pm
The same person that posted that link, asked Chipman about the high winter like inventory levels in the hot May selling season. He just ignored the question.
June 2nd, 2007 at 2:53 pm
Larger loonie means local loss
by Brooke Larsen
Staff Reporter
Jun 01 2007
A soaring loonie could spell trouble for the Peninsula’s retail and tourism industries, a local economist predicts.
On Friday, the Canadian dollar was sitting at 93¢ against the U.S. buck, but forecasters say it could surge to 96¢ this summer and trade at par by 2008.
That means more Canadians will do their shopping in Blaine and Bellingham, even though border lineups are long, says economist Michael Levy.
Canadians are already heading south to stock up on TVs, computers, gas and groceries, Levy said, adding local retailers may have to drop prices to stay afloat.
“It’s quite a serious situation,†Levy said. “(Canadian retailers) can’t keep marking things up.â€
But it’s good news for merchants south of the border.
“When someone is spending $200, it’s usually a Canadian,†said Janine Bailey, manager of Finish Line, a sporting goods store in Bellingham’s Bellis Fair.
Bailey said the store has seen a surge in Canadian shoppers since January – most are bargain hunters from Surrey and Vancouver.
Bellis Fair is even seeing stores pop up targeting Lower Mainland customers.
Daiso, a Japanese dollar-style store, opened its first North American store in Richmond in 2004. In April it opened in Bellis Fair to attract visiting Chinese-Canadians, manager Jun Kato said.
They get a good deal – even though the Canuck buck is strong, Richmond Daiso sells most of its wares for $2 or $3; most at the Bellingham location sell for $1.50.
“Weekends we have a lot of Asian people from Vancouver,†Kato said.
While the soaring loonie lures Canadians south, it keeps American tourists away, Levy said.
“It’s not a bargain anymore. There’s no lure for Americans to come across the border and spend on the Peninsula,†he said.
Dan Higgins of the White Rock South Surrey Chamber of Commerce said less American cash has flowed into the till at his Canadian Tire store since 2000.
“They’re not getting the same bang for their buck,†Higgins said.
“(The effect) is a tough thing to measure, he added. “It’s going to make a difference.â€
June 2nd, 2007 at 3:34 pm
June 3rd, 2007 at 1:13 am
The Worst Investment Ever
June 3rd, 2007 at 3:29 am
That’s right — a house clearly produces negative cash flow. Mortgage payments, maintenance, and taxes add up to a lot of money heading out and none coming in.
is nonsense of course. You have to include the imputed rent, because if you didn’t own the house, you’d have to rent something, duh.
The correct approach is to include imputed rent in net cash flow, which of course is the same as asking if it would be cash flow positive as an investment.
June 3rd, 2007 at 7:35 am
If you read to the end of the article he does mention that you need to plug rent into your calculations…
June 3rd, 2007 at 8:45 am
It borders on bizarre to neglect imputed rent as a benefit of owning, and in the very next paragraph say that investment property is a good investment if rent exceeds expenses. Indeed the parameters for owner-occupancy are more favourable due to tax advantages.
June 3rd, 2007 at 10:03 am
One question. What’s up with VHB??? Is anyone a signed in member? What’s going on in there?
June 3rd, 2007 at 2:00 pm
Ah, Vancouver - we’re slow but we’re special.
June 3rd, 2007 at 2:22 pm
June 3rd, 2007 at 3:15 pm
June 3rd, 2007 at 4:03 pm
If you guys are preparing for a real estate market correction and the US currency is also currently going down at the same time. Where do you guys recommend to invest someone’s savings while they are waiting for the bubble to happen?
Thanks,
Rathole
June 3rd, 2007 at 6:37 pm
Anymore?
June 3rd, 2007 at 8:04 pm
Who did? Ever?
June 3rd, 2007 at 8:36 pm
Not chinese stocks!
Seriously though, Europe should be more insulated if you want safety (Not England or the Scandinavian countries though). Try Poland or either of the former Czechoslovakias.
If you only have a little money just do your research and get a good mutual fund that’s well hedged.
But don’t take my advice if you have lots of money, pay a professional.
June 3rd, 2007 at 8:48 pm
there was a story of a realtor in 19th centuary.
when his client approach to him to sell his house realtor had a look at his house and it was like love at first site,that realtor loved that house so much and plan to buy that house for him self.
but he was not able to afford that house because that was so expensive.
so what to do now how can I afford that realtor banging his head over night and creat an idea.
he list that house through his source,but in the same time he install music system inside house.
when ever some one go to see that house, while showing that house to his client,some how he use to turn the music on.that music he played was sound of devils,client got more scare when he manage to turn the lights off too.then make those client scream to say !ghost!ghost!ghost.
while reviewing the status with owner he almost succeed to convince the owner to come down bit by bit ,time by time unless realtor was able to buy that house.
suddenly owner found out that music system, that was installed under ground.
then what ghost disappear and dream of realtor was broken.
I want to say people do not blindly beleive in bubble this chemistry does not seems like working.
bubble producer,director(vhb)has long gone,so does ghost and bubble.
June 3rd, 2007 at 8:59 pm
June 3rd, 2007 at 9:20 pm
June 3rd, 2007 at 9:49 pm
That’s about 12% off all time (recent) highs.
China could pullback 50% in total, over months.
At some point, the US markets (and the TSX) will move down with the emerging markets.
When the Chinese stocks crash, the top will be in for Vancouver RE.
(Note: I say this not because I believe that Chinese folks rich from stock winnings are buying Vancouver homes (very small effect), BUT rather that the China peak will represent a turn in global liquidity).
June 4th, 2007 at 12:48 am
I think it had something to do with having one opponent called “Jim Green” and another called “James Green”.
Just like the NDP being funded by major public unions, the Liberals are funded by private business
This is a common misconception. In fact the NDP gets by far the majority of its funding from individual donations. If you don’t believe me, check the Elections BC website.
If contributions were limited to individuals, the Liberals would be hurt far more than the NDP. The Doer government in Manitoba did just this some time ago (and was recently re-elected), but apparently this reasoning was lost on Glen Clark, who didn’t.
June 4th, 2007 at 5:35 am
That’s about 12% off all time (recent) highs.
China could pullback 50% in total, over months.”
Hit limits of 10% for the day, total drop now 15% since Tuesdays peak. However, other markets are shrugging it off.
June 4th, 2007 at 5:38 am
If I recall correctly, teachers had a skirmish with the Dosanj NDP government before the shift of power. There may even have been a strike.
June 4th, 2007 at 5:43 am
I agree. I remember a lot of the same talk when the C$ made a run from the 65 cent range to the 85 cent range.
June 4th, 2007 at 7:25 am
Wasn’t that a Scooby Doo episode?
June 4th, 2007 at 7:51 am
Teachers did had a skirmish with Dosanj NDP, (last minute deal). Support workers for schools had a full week strike. But my impression is, the Liberals seem tougher in that aspect, not giving in to demands even when the public treasure is not that tight. Overall, public union membership is not as big a deal in Liberal’s time as NDP’s time. In the 90’s, it feels like being a member of a public union, whether it’s teachers, school cook, hospital cook, or other staff, is extremely desirable, compared to any non-union career.
June 4th, 2007 at 7:56 am
June 4th, 2007 at 8:26 am
As the US dollar is declining against other currencies, don’t infer too much from a rising loonie.
Ditto re. rising rates as absolute indicators of economic strength.
June 4th, 2007 at 11:46 am
I find that highly improbable given the dire state of the forest industry, the high C$, and construction employment that has nowhere to go but down.
Just where are all those new jobs supposed to come from?
June 4th, 2007 at 12:18 pm
But my impression is, the Liberals seem tougher in that aspect, not giving in to demands even when the public treasure is not that tight.
Depends what you consider “not that tight”. The liberals inherited a budget in pretty severe deficit. I have family members in unions and I’ve been in one myself. But as a taxpayer I had no problem with the liberals giving them nothing. Times have been better lately and the unions were rewarded with an increase and a signing bonus.
Now, the MLA pay & pension hike is another story.
June 4th, 2007 at 1:57 pm
I was referring to jobs created in the past year or two, mostly in construction and forestry, including pine beetle salvage harvesting. We can expect rent to go up at least for a year or two, as rental demands tend to lag employment changes.