Tuesday Free-for-all!
Lets break the rules – its not Friday, but lets do an open topic post anyways..
-US house price decline accelerates
-Canadian ownership increasing despite high cost
-I believe there will be an article in the National Post this week about the high cost of housing in Vancouver and how professionals in this city are able to afford it with relatively low local incomes.
What are you seeing out there? Post your news, links and ideas here..
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September 26th, 2007 at 9:48 pm
Is the renewal gap that big an issue?
I do not see how interest rates will increase dramatically in the near future. The macro conditions do not seem to be present. A one to two percent interest hike will hurt people with big mortgages, but not nearly as much as the fact that many people will be stuck with property worth less than their mortgages.
September 26th, 2007 at 7:50 pm
MORE 50% OFF CITIES
September 26th, 2007 at 7:48 pm
“95832″ — this will be the new answer to those who don’t think 50% reductions are possible. Hear that East Van?
September 26th, 2007 at 7:36 pm
COMING SOON TO YOUR NEIGHBORHOOD
September 26th, 2007 at 7:24 pm
“Sure it’s the burbs, but it’s Steveston so there is some demand to live there. They have already lowered their price by $25k.”
I live in Steveston and can verify this. The MOST desireable part of Richmond has a huge amount of listings that aren’t selling. People are tryinng to get out now and still asking big money but the bloom is definitely off the salmon.
September 26th, 2007 at 7:17 pm
“A friend of mine is trying to buy a house on the North Shore right now, and still lots of places are getting multiple offers above list price which is already inflated.”
Michael, I can GUARANTEE that these fools are 95% young yuppies who aren’t seasoned investors nor have they ever seen a typical Vancouver style housing decline. They WILL have their heads handed to them and you will get a chance to sit back and laugh at them as they grow up and start experiencing the REAL world. it has to happen, it’s universal law.
September 26th, 2007 at 7:10 pm
Peter Grandich
September 26th, 2007 at 5:20 pm
The fire is spreading quickly. I hope nobody is hurt.
September 26th, 2007 at 5:03 pm
It looks like the nearly complete Copperstone in New West is on fire. There are worries it will spread to the Royal Columbian Hospital.
September 26th, 2007 at 4:58 pm
“And Richard beat me to the punch!”
You snooze, you lose…
There is a condo development on fire in new west. a creative way to get out of develoment headaches, maybe?
September 26th, 2007 at 1:24 pm
And Richard beat me to the punch!
September 26th, 2007 at 1:19 pm
David Dodge thinks the growth in vancouver housing prices are to be expected because of our economy and population growth…
link
the article mentions how he met with cmhc last year to “complain” about 35 year amortizations. at the end it notes we now have 40 year amortizations. way to go cmhc!
September 26th, 2007 at 10:53 am
“Not this generation. They are taking out mortgages and upgrading. Upgrading cars, harleys etc’. It was cheap money. Many have not saved enough for retirement but they keep on spending.”
Oh the weeping and wailing we will hear. That is not a generation accustomed to self-restraint. They’re so far into their sense of entitlement that they may get the bends when they have to come back to reality.
September 26th, 2007 at 10:45 am
This $89K figure got me thinking about all the things we who frequent the housing blogs know, the data, the graphs and how someone should put a one-pager fact sheet together that brings all the info re: immigration stats, average income, housing booms & bust cycles, etc, etc… something that takes on & dispels so many of the msm & realtor myths… has anyone thought of doing something like this?
September 26th, 2007 at 10:33 am
/dev/null – funny you should mention the renewal gap graphic – I updated it on the weekend and I plan to post it tomorrow. Stay tuned!
September 26th, 2007 at 9:12 am
Good point, beta. I wonder if someone (mohican?) could update VHB’s old “renewal gap” graph.
September 26th, 2007 at 8:17 am
Then I guess we have to ask:
then who are the dolts that bought their old places?
In any event, a 20% drop in values would be really painful for a lot of these moving uppers. A drop of 40-50% or more, which seems increasingly likely, would be crushing.
LOL. Good question. Still a lot of FTB’s out there, but also many long term owners are ‘liberating their equity’ to buy ‘investment condos’ and the like…a realtor I know sees it a lot.
And yes, due to over-extending leverage, even a 20% drop will be extremely painful.
While Canada may not have the resetting 2-yr ‘teaser rates’ of the US, most will re-mortgage within 5 yrs. I wonder what degree of pain will be felt then, when many owe more than the place is worth and have no cash to bring to the table. We may have our own foreclosure crisis, merely time delayed.
September 26th, 2007 at 8:10 am
Purely anecdotal but a place up the road from me just dropped nearly 10%. This is the first time I’ve seen this kind of move in Kits and there’s a lot of properties stagnating on the market right now. Given the “market price” in the area the original price on this 1500Sq ft detached house was a pretty reasonable 939 (I haven’t seen detached in my neighbourhood for under a million in over a year). No bites after 2 months and they dropped to 858 (V660574 if anyone is interested).
2 years ago my wife and I were in a place just up the road which was a smaller lot and a 1,000 sq ft house that sold in no time with an asking price of 750k.
footnote; In the area I commonly walk there’s approximately a dozen places for sale that I keep an eye on and nothing has sold in at least 3 months.
September 26th, 2007 at 7:26 am
misanthropic curmudgeon said…
http://tinyurl.com/2247zw
who you callin’ poor?
thanks for the link!you are better than last month.keep it up.
September 26th, 2007 at 6:15 am
http://tinyurl.com/2247zw
who you callin’ poor?
September 26th, 2007 at 5:58 am
Solopist,
Or laster tatto removal businesses. That will be big business when everything starts to go south or becomes very un-trendy.
Anyway, stats Can said that only 5% of Canadians earn 89K or more. That is not much. My husband was speaking with our banker in Toronto and she said in 25 years she has never seen mortgages this high. Young people, Rich Bay Street types buying huge homes and taking our mortgages.
One of the things she was amazed was that the baby boomers just can’t stop spending. Usually when people are close to retirement you downsize and put your ducks in a row. Not this generation. They are taking out mortgages and upgrading. Upgrading cars, harleys etc’. It was cheap money. Many have not saved enough for retirement but they keep on spending. One of the economists at one of the Big Banks pointed out that this is going to be a huge problem.
September 25th, 2007 at 9:26 pm
“Double-digit home price drops coming”
Correction: double-digit price drops have already arrived.
“Three quarters of housing markets – many in crashing Sun Belt areas – face price declines over next few years”
Correction: All US markets face price declines over the next few years, with the worst hit declining up to 50%.
This article is laughable. It “predicts” declines in the CA central valley, Las Vegas, Phoenix, and Florida among others that have already happened.
Yawn.
September 25th, 2007 at 8:44 pm
I was wondering tonight about something… a lot of the new condos going up have strata laws that are supposed to not allow rentals to a certain percentage of units. So, is this taken into account for the number of units that are out there… if so many people are buying to rent out… how can they? or this is rule just bs and no one actually enforces it?
September 25th, 2007 at 7:59 pm
“Seems like a lot of move-up buyers, eager to trade their newly won equity for a bigger place and a lot more debt.”
Then I guess we have to ask:
then who are the dolts that bought their old places?
In any event, a 20% drop in values would be really painful for a lot of these moving uppers. A drop of 40-50% or more, which seems increasingly likely, would be crushing.
September 25th, 2007 at 7:57 pm
Fewer buyers in the future. Will extrapolating “researchers” see it this way? I doubt it.
I posted a link (somewhere) which illustrated the population of N.A. declining significantly (by some 100 million souls) over the next 40 years. As the boomers begin to die off, there will be less and less demand for housing – especially huge, rambling SFH.
Anyone buying over-priced RE today, with a look to future value that will give them a comfortable retirement, better think twice.
Buy nursing home stock.
But that’s just what I think.
September 25th, 2007 at 7:42 pm
beta said: “It may be cynical, and perhaps a gross generalization, but it occurs to me that some people are taking on hundreds of thousands in debt for the dubious privilege of storing used consumer goods which are worth much less than the square footage required to store it.”
So true. You are not the only one who thinks this. I have seen 1000 sq ft basements full of junk where the total value of the junk is less than $2000 but the space is worth $100,000.
September 25th, 2007 at 7:28 pm
And it’s also worth considering what the absolute ceiling is on percentage owners.
It’s not 100%. It’s likely closer to 70%. There is a significant percentage of the population who, because of credit risk and income will never own.
Oh, we have definitely borrowed from the future. My theory (as always) is that the increase in ownership isn’t so much that the propensity for ownership has increased as the fact that renters have “sped up” their buying timeframe in order to beat rising prices. Which of course causes prices to rise further.
In other words, I am not arguing that the number of lifelong renters has decreased. Instead I argue that the average age of FTB has decreased. The consequence? Fewer buyers in the future. Will extrapolating “researchers” see it this way? I doubt it.
This entire bubble could simply be marginal price pressure and related extrapolation. Totally reversible factors.
September 25th, 2007 at 7:12 pm
bearclaw,
I know what you’re saying. I’ve read Brent’s posts from southside…and, of course, there is no comparison between U.S. houses and Canadian houses.
When you can buy a great place, in a great climate for a fraction of the cost of what Western Canadians pay…then you begin to suspect that you’re being taken for a stooge.
There sure as to hell is no logic in this neck of the woods
September 25th, 2007 at 7:11 pm
Statistics Canada said about 68.4 per cent of Canadian households were owned by their occupants, up from 65.8 in 2001
freako added: If there are say 13 million households in Canada, that means that were roughly 300,000 renter household became owners.
And it’s also worth considering what the absolute ceiling is on percentage owners.
It’s not 100%. It’s likely closer to 70%. There is a significant percentage of the population who, because of credit risk and income will never own.
Thus, that move from 65.8% to 68.4% could represent almost all other current possible owners being sucked into the market.
September 25th, 2007 at 6:12 pm
exvan,
I think people buying property in the states is bad news for Vancouver.
Why would an oil rich Albertan buy in Vancouver? Firesale prices in Miami right now as Canadian dollar maintains par. These waterfront condos appear high-end and inexpensive whem compared to Edmonton.
Have some of the markets in the states with 50% discounts near bottomed? Can’t be bears forever. Winning an auction in Miami may be better than winning a bidding war in Vancouver.
September 25th, 2007 at 5:54 pm
Who are the dolts still buying?
Seems like a lot of move-up buyers, eager to trade their newly won equity for a bigger place and a lot more debt.
It may be cynical, and perhaps a gross generalization, but it occurs to me that some people are taking on hundreds of thousands in debt for the dubious privilege of storing used consumer goods which are worth much less than the square footage required to store it.
September 25th, 2007 at 5:48 pm
bearclaw says:
‘The strength of Vancouver’s market scares me…’
No foolin’ man. Tonight’s news on Global was running multiple stories about, not just cross-border shopping for goods; but Canadians are heavy into buying property in Washington State. WTF? Sure, it’s cheaper than here (what isn’t), but is this a new legion of knife-catchers?
Gotta wonder, like other posters have asked, who are these idiots?
September 25th, 2007 at 3:57 pm
I have seen lots of for sale signs out in the burbs, and none too few in Vancouver itself, but it seems like things are still selling here in my area. Who the idiots are that are still buying is a big mystery. They do not look like wealthy foreigners though…..
September 25th, 2007 at 3:42 pm
linky
September 25th, 2007 at 3:37 pm
http://www.youtube.com/watch?v.....38;search=
This is pure gold. Someone on that other blog posted this. So I take no credit for the find. These are the “experts” giving their prediction on the US housing market for 2007 at the start of 2007. Too funny
Fabio couldn’t have been more wrong.
September 25th, 2007 at 3:21 pm
Interesting that it’s still hot in Vancouver, according to some. It seems to be slowing on the outskirts. We have friends who are selling their house just up the street from us. Sure it’s the burbs, but it’s Steveston so there is some demand to live there. They have already lowered their price by $25k. Open houses are steady but no one is buying. Their agent said a few times now that no one is buying anything. In just under one month they have had 5 open houses.
Who the heck is still buying? The people I talk to who haven’t bought all seem to take the stance that they missed the boat and waited this long that they will keep on waiting for a crash.
Who are the dolts still buying?
I really wonder how many places still have multiples and selling over list. I just can’t see it.
September 25th, 2007 at 3:06 pm
Statistics Canada said about 68.4 per cent of Canadian households were owned by their occupants, up from 65.8 in 2001
And that is a partial cause of the bubble right there. A 2.5% increase in owners is a heck of a lot. If there are say 13 million households in Canada, that means that were roughly 300,000 renter household became owners. Such numbers would totally jam up something relatively illiquid as real estate. Supply of RE is near inelastic in the short term, so no wonder prices shot up. And then we can add the amateur speculators who piled on for a piece of the zero sum action.
September 25th, 2007 at 2:57 pm
The strength of Vancouver’s market scares me. I imagine if/when the downturn hits West-coast bears will be battle-hardened unforgiving and cold. I hope the shows some weakness or I fear the possiblility of an Edmonton bounce.
Here when I pass by an apartment complex with a ridiculuous number of for sales signs I am full of shaudenfrued (sp?). They need to build mini billoard structures on some new complexs just so the flood of signs appear neat and tidy.
Edmonton Inventory MLS 9600
Comfree 3100
Sales continue at 5 year low
This happened very suddenly even to resident bears.
September 25th, 2007 at 2:47 pm
Well, I would love to read how professionals afford houses here, so the Post article should make for interesting reading.
The lunacy continues in the market though. In my complex in east Vancouver, we had a two bedroom apartment and a two bedroom townhouse have open houses this weeekend. The apartment’s asking price was $429k and the townhouse was $500k. Apparently, the open houses were well attended, and both places received multiple offers.
September 25th, 2007 at 2:44 pm
Double-digit home price drops coming
Three quarters of housing markets – many in crashing Sun Belt areas – face price declines over next few years.In Vancouver minimum 40% drop I think based on what realtors are saying privately
September 25th, 2007 at 1:27 pm
A friend of mine is trying to buy a house on the North Shore right now, and still lots of places are getting multiple offers above list price which is already inflated. He’s seeing people pay for an inspector before they even make a bid, so they can make an offer with no subjects. Still crazy out there. I might even be dumb enough to finally move out of my rental and get a place because I’m sick of the rental place.
September 25th, 2007 at 10:49 am
I’m on the dark side of the planet, not the dark side of the floor. The net connection is iffy here, but life is good.
I’m looking forward to the Post article as well.
September 25th, 2007 at 9:51 am
Glad to see you back. I was beginning to wonder if you had crossed the floor to the dark side…
By stepping out of the norm (free-for-all on Tues.), you may well bring this market down! Fly in the ointment.
September 25th, 2007 at 9:00 am
There’s also the articles yesterday regarding that only 5% of Canada’s population make $89K a year… thats a small percentage country wide (not just Vancouver which I think only made up 10% of that – I could be wrong) but even with that, you still could not actually afford anything reasonably here…
Be interested in seeing this Post article though hopefully it shows the insanity and does not give people ideas…