predictions on prices after the olympics
How much will a house or condo in Vancouver cost after the winter Olympics? Will prices crash or increase forever? Who knows. I’m not going to predict where Vancouver real estate prices will go in the next few years, but I did find some interesting info about one prior host city.
Apparently Salt Lake City Utah is a tremendous ground floor investment opportunity, currently undervalued compared to other US real estate. You may want to cash in on the ‘Olympic effect’ and the great exchange rate by buying property there now. According to this article in the Salt Lake Tribune (pdf) their housing market had a post games slump, but in 2006 they started to see price appreciation again.
Four years after the slopes around Park City attracted international attention for hosting many of Salt Lake City’s Olympic events, the area has shaken off the financial curse that has often hit host cities following the Games and is undergoing a real-estate boom.
So why won’t I predict where Vancouver prices are going and when? Because its too tough to get the timing right, and sometimes you get the timing dead wrong. Then you get quotes like this one from Bruce Benham, Chief Operating Officer of RE/MAX international posted on realestatevancouver2010.com:
We’re all aware of the dramatic headlines proclaiming the inevitable “housing bubble” that will reportedly cripple the real estate industry, and the entire U.S. economy, when it eventually bursts. But you know better. And I hope your clients do too.
That article was from july 29th, 2005. Anyone know how their market has done since then? hint: not great.
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January 23rd, 2008 at 10:36 pm
never mind the olympics
rapid transit is coming!
http://tinyurl.com/yvq4lg
January 23rd, 2008 at 10:37 pm
January 23rd, 2008 at 10:37 pm
The market will crash for the same reason the US and Alberta are crashing (fundamentals). Of course it’s impossible to tell when, but the longer it takes, the more likely it will be, and the bigger the crash will be.
If SLC is a “ground floor” opportunity for RE I guess it’s headed for the basement, because of course Utah is experiencing that same supply glut, foreclosures and falling prices as the rest of the US.
January 23rd, 2008 at 10:37 pm
“House prices across the UK tumbled in December at the fastest pace in more than 15 years as tighter mortgage lending and higher interest rates pushed the property market closer to the biggest crash since the early 1990s, the Royal Institution of Chartered Surveyors says today.
Surveyors are urging the Bank of England to cut interest rates without delay to attract buyers and help stabilise the market.”
Yes, anything to keep the party going, eh lads?
January 23rd, 2008 at 10:38 pm
Let me see, lower the rates, RE prices continue to appreciate…that’s good, ooops, we’re back to the equivalent level of un-affordability, so….lower rates again…..repeat, repeat….inflation, so what!….
January 23rd, 2008 at 10:38 pm
rapid transit is coming!”
I’d make one change to rapid transit here namely I’d make the trains one way only all the way back to Ontario or overseas to Asia and India. Then we wouldn’t need to fund projects like this that have totally ruined our once great way of life. It will not cut down on traffic and Vancouver will always be in a state of never ending construction. People here have some strange notion that growth is good but they can’t explain why. That’s called brainwashing by the “Best Place on Earth” fools.
Damn I hate this city….hear that Pattison you piece of trash?
January 23rd, 2008 at 10:38 pm
Must strongly disagree with this. It is the overdependence on automobiles that has, more than anything else, ruined the quality of life in Vancouver. I have heard that GV has more autos per capita than Los Angeles!
The biggest mistake ever made in the city was the shutting down of the interrurban system in the 1950’s. It should have been upgraded and expanded, and then the subsequent growth of the suburbs would have been transit not auto oriented. Like pre-war suburbs such as WPG and Kerrisdale. Another idiocy was putting SFU on top of Burnaby Mountain, instead of at the bottom (present Lougheed mall area) where it could have formed the nucleus of a university community.
The transit projects that we are building now are a bit like trying to put a square peg in a round hole, but I assure you that the quality of life in Vancouver would be WAY worse today if the freeway system that had been advocated in the 1960’s had gone ahead, and the mass transit projects (starting with the Seabus and Skytrain) had not been built.
Whether you think Skytrain is necessarily the most cost-effective transit solution (I don’t) is another issue. But it’s certainly better than freeways.
January 23rd, 2008 at 10:39 pm
UK property woes
January 23rd, 2008 at 10:40 pm
January 23rd, 2008 at 10:40 pm
January 23rd, 2008 at 10:40 pm
January 23rd, 2008 at 10:40 pm
I know.
Prices will NOT increase forever.
Prices will NOT plateau.
If you’re a betting person pick door #3.
That is what I know.
What I guess is that price appreciation will taper off this spring and summer, we’ll see a first downwards jolt sometime towards the middle/end of the year and then things will settle again at about 10% lower than current levels. Next year we’ll begin the real slide begin and it won’t end until we bottom out at approximately 30-35% (adjusted) of the current price. After that it will normalize around 40% (again adjusted) of current prices. If the recession in the US is as bad as some people say it will be things could go lower but I cannot see any circumstances where those numbers could be much higher.
January 23rd, 2008 at 10:41 pm
well no sh!t sherlock!
January 23rd, 2008 at 10:41 pm
In USA, the EB-5 investor visa gives permanent residence to aliens who invest $500,000 to $1 million in a new U.S. commercial enterprise that creates 10 full-time jobs. The spouse and minor children of the beneficiary are eligible for derivative status as permanent residents.
January 23rd, 2008 at 10:41 pm
If we see a flood of listings it will play havoc with our market like we’re seeing in bubble markets down south right now. So whats the best money making strategy for Vancouver real estate? If you’ve owned short term your transaction costs will eat up your gains, so you pretty much have to hold long term, hope for further gains and increased rental rates to offset your losses.
Incidentally, people that bought pre-sales in some US bubble markets are actually seeing rental rates falling along with home prices.
January 23rd, 2008 at 10:42 pm
January 23rd, 2008 at 10:42 pm
One zone employer transit card minus tax credit divided by salary and you get transportation costs around 1 - 2% of gross income for many of us.
This assumes you don’t need to own a car, but even if you do need a car occasionally, there are the car co-ops. Walking and biking are even cheaper, but you have to account for the higher food bill because of calories burned.
And you can put all that money saved on gas, insurance and car payments towards the mortgage. Suddenly a 25 year amortization goes down to 15 years.
They should have put the money into rapid transit twenty years ago when it wouldn’t have cost so much.
January 23rd, 2008 at 10:42 pm
January 23rd, 2008 at 10:43 pm
Recession down south……80 % of our goods goes down there…..but we’ll feel no pain on commodities etc………….please!!!
Prices are going up thanks to inflation
And Canadian banks are not going to lower rates!!!!!
The Vancouver housing bust will happen before 2010 and will fall yet again after the Olympics as another slap in the face………
Its better to face reality now then only push the Inevitable down the road, where it will only be worse.
January 23rd, 2008 at 10:43 pm
January 23rd, 2008 at 10:43 pm
January 23rd, 2008 at 10:44 pm
January 23rd, 2008 at 10:44 pm
What would happen if everyone stopped consuming at today’s level, stayed in their current dwelling (or even downsized to something smaller)and saved? We’d have a recession! These savings are supposed to stimulate growth in goods and services, a higher standard of living, a higher GDP, and all these things are supposed to be good for us because they’ll pull us out of the recession. But somebody has to buy the stuff to make it all happen. Here we go again. More growth.
Companies and investors no longer expect good returns, but higher returns than last year. We expect the prices of our houses to go up and our salaries to go up. One or two months of declining growth rates and the world goes into a panic.
January 23rd, 2008 at 10:44 pm
Every time a tenant moves out, the rent goes up.
If you can’t afford a house, you get roommates or rent an apartment. If the apartment gets too expensive, you get roommates, move into something smaller, move back in with parents or rent a room. If that gets too expensive, you sleep on the street or move out of town.
January 23rd, 2008 at 10:45 pm
For example, why are long-distance calls so cheap these days? Because investors poured billions of dollars into companies like 360 Networks who build far more fibre optic cables than there was a need for.
Similarly, people who invest in more housing than is actually needed, are subsidizing renters. And if price/rents are above historical norms (like right now, in spades) more housing will be build than is actually needed.
Take a look at Florida right now
January 23rd, 2008 at 10:45 pm
i am not a financial-scientician - just a guy who reads some sites and likes the internet.
i am pretty sure all the financial organizations know how much bad debt they have - i think they are working with the government to ‘cautiously inform the public’ - if they all came out and showed the public their cards…it would be like throwing gasoline on a fire.
i think that the number crunchers in the states have run all the simulations to see what the out-come will be and i am pretty sure that all simulations have led to dire scenarios. with that said - i am sure federal bank is trying to do its best to ‘minimize’ damage.
recession? maybe, most likely - i believe the ‘correction’ is inevitable.
prices going up? yes - inevitable.
canadian banks? i think the bank of canada releases a statement on the 22nd - my guess is either:
1. keep things the same
2. lower rates (smile and pretend that we dont notice the pain the american economy is in)
its impossible to time the market (housing or otherwise) but you are probably right that housing prices will come down before 2010.
reality is markets are cyclical, housing is cyclical, and bill cosby is still funny.
cheers,
spark
January 23rd, 2008 at 10:45 pm
Nonsense. Inflation is not inevitable because there is only one cause - central banks creating too much money.
If you want to know the cure for inflation, Google “Paul Volcker”.
The problem is not that inflation is inevitable, but it will be induced in a vain attempt to hold off the recession, which really is inevitable.
January 23rd, 2008 at 10:46 pm
Well how can we predict a future?Answer is learn from the past.
*When you know your city is your life time destination, that’s what it takes;…
*When you are able to keep up with monthly payments look no further;…
*buy a house or appartment no matter where the world goes you are better;…
*better than those who are just good!or very good!but;…
*yes you are better!better! for sure.
*USA is going into unofficial recession that’s mean “two quarter of slow negetive growth” then what? jump again.
*main while Canada will tick up with slow growth b.c. is expected to gain 4-6% till the end of 2008.
Easy to learn this way when there is still growth in Canada while otherside is in unofficial recession then what else can turn the tide otherway around?[open for vulnerable response]
but go ahead ,GRAB IT without fear and join the cheer leading club for Vancouver, MIND IT. if you are looking for suitable location, FIND IT.If some one forgot, REMIND IT.When ever you get your dream home,LIVE IN IT and enjoy.
Comment by sheeplessinvancouver
2008-01-16 16:01:44
Actually, it’s a step towards getting wealthy
Well Said sheep.
January 23rd, 2008 at 10:46 pm
January 23rd, 2008 at 10:46 pm
Ok, here it is in simple terms. This is the innovation that has caused so much trouble.
In the past a bank would just bundle up hundreds or thousands of loans and sell them on the market. People would buy based on the rate of return. But, a lot of investing (publicly owned organizations like UBC and pension plans etc.) is required to be at the most secure AAA level. Home loans don’t fit into AAA.
Here’s the innovation. Take 1000 home loans, sell 100 to someone willing to take some risk, they get a high rate of return. Take the other 900 and have them AAA rated by saying, “Any loans to go bust come out of the 100 high risk loans before they touch the 750 low risk ones.” But this is all done in a sort of double blind so nobody really knows which loans they have until (or unless) the loans start defaulting. All of a sudden you’ve created a nearly unlimited appetite for home loans, banks give them out like candy because they know they can sell even the riskiest loans, prices spiral upwards into a housing boom.
Now we realize that maybe it IS possible for more than 10% of the loans to go bad, both due to the lack of risk assessment done by the banks and the collapse of the bubble.
But NOBODY knows how many loans will default. Nobody knows whether they have sub-prime loans or prime loans or alt-a loans in their portfolio. Everyone is still just guessing and crossing fingers at this point, from the highest CEO on down. The system was purposely built so that nobody could know.
January 23rd, 2008 at 10:47 pm
He’s obviously not right in the head or he is of average intelligence but his brainwaves are altered by a crack addiction.
January 23rd, 2008 at 10:47 pm
Unrelated note…. the number of apartments for rent on Craigslist has increased by orders or magnitude. I count almost 500 places for rent listed yesterday. That’s a HUGE increase! I also notice that many places are not getting rented very quickly.
With all the news of recession, at the very least people are going to tighten their belts. I think everyone who can/will buy in this market are now in, and locked down. Even if you had the money and wanted in right now, you *have* to be looking at the continuing news down south, and you *have* to know what’s coming.
We’ve passed the top of the market and now comes the fun part. Well… fun for those of us who saw what was coming some time ago and prepared.
Ants, grab your popcorn. It’s getting chilly out there and believe me you’re going to want to watch what happens to Vancouver’s grasshoppers!
January 23rd, 2008 at 10:47 pm
He and all the other fools have chained themselves to their homes FOREVER! because they believe the Bullshit (hee, maybe that’s where the term comes from!)about RE in Van going UP!UP!UP! because of OLYMPICS! and MOUNTAINS! and OCEAN!
We had to put up with him and every other idiot in this city driving the prices to absolutely insane levels. We had to put up with sooooo much crap.
Now it’s our turn. We get to watch as the housing market in Vancouver collapses. We can enjoy seeing him and every other speculator get a nice, bloody haircut (they used to call it a scalping)
Remember Return of the Jedi? Think of Rennie et. all as Jabba the Hut, and Krrsh as that weird little critter he kept on a leash.
Krrsh, I *REALLY* want you to stick around. You know what’s coming, don’t you? C’mon admit it….
January 23rd, 2008 at 10:47 pm
Sofia,
That’s what i was writing in my comment told ya, what’s Up and Coming.
“the number of apartments for rent on Craigslist has increased by orders or magnitude”
That could be sign of how many people have bought a place for them self.
Anyway Sofia,This chilco,white house,pendral,Comox,B-ave,and park does not help there should be dress-code and time i.e.thursday 930-10.30 am…least for 150 second.would you like to do it?….
January 23rd, 2008 at 10:48 pm
Check out the ‘secrets of the self made millionaires‘.
January 23rd, 2008 at 10:48 pm
I agree that people eager to overpay for a product will temporarily drive up the supply of that product, but thats different than a subsidy.
January 23rd, 2008 at 10:49 pm
January 23rd, 2008 at 10:49 pm
Well yeah, why would you go through the hassle of building and maintaining rental units when
suckersbuyers will jump at the chance to pay you more AND take over the hassle of management for their ‘negative cash-flow investment’?The interesting thing about rental stats is that they don’t include individual owners renting out their condos or suites in their houses. How many of these do we have? I wish there was a stat for that.
January 23rd, 2008 at 10:49 pm
Then what is the point of being a millionaire? Drooling over bank statements over a hearty KD dinner?
Let’s not confuse the lifestyle of a millionaire with having assets over a million. It is the former most people desire but can’t have.
January 23rd, 2008 at 10:49 pm
The ads on Craigs list are for condos people are renting out, not for apartments. Good God man, is there ANY data point you won’t try to interpret as bullish news?
I’m trying to figure out what the hell you’re talking about in that last post. There’s an apartment called the White House on Comox and Chilco (I know becuase I live nearby). YOu’re going to have to be a little more clear, dude….
January 23rd, 2008 at 10:50 pm
But it’s a capital subsidy because the investors are providing capital at an uncompetitive rate of return. It’s much the same as if the government provided financing for rentals at 3% or whatever, which everyone would consider a subsidy. And the end result is that the market rent is depressed below the value it would be if the capital were earning a competitive return.
January 23rd, 2008 at 10:50 pm
I cna vouch for that. My parents are wealthy, and I think part of it is because frankly my dad’s pretty cheap.
Well…. really cheap.
Well… really, really REALLY cheap.
January 23rd, 2008 at 10:51 pm
can’t wait for the friday free for all
satv i envy you… the only person i know that can turn a keyboard into a WMD …
January 23rd, 2008 at 10:51 pm
January 23rd, 2008 at 10:52 pm
January 23rd, 2008 at 10:52 pm
Basically what you’re saying is that anyone buying now is speculating. And seriously, who would be stupid enough to speculate in this market? You’d actually have to believe that prices can go even higher is the face of news headlines like these (which are the top three headlines currently running at CBC.CA
Market gloom shows no sign of lifting
Bush and Bernanke back stimulus package for battered U.S. economy
U.S. housing starts post biggest drop in 27 years
I mean c’mon buddy. Seriously. The US economy is now in a total freefall. do you REALLY believe the expectation of sky high prices due to the Olympics will sustain the market for the next 2 years? Wow. Just…. wow.
And for the rest of you…. is this a common feeling in Vancouver?
January 23rd, 2008 at 10:52 pm
so bus loads and plane loads of tourists snapping up over priced RE… i don’t think so
february can be a bleak month in Vancouver, not conducive to RE shopping.
January 23rd, 2008 at 10:53 pm
Well, what if a bunch of owners agreed with you and decided prices would drop after the olympics? Wouldn’t they all try to sell before? That would be funny.
How did Salt Lake do just before the olympics, anyway (i don’t really know, i’m just asking)?
January 23rd, 2008 at 10:53 pm
January 23rd, 2008 at 10:53 pm
blueskies, as your name suggests we don’t always have bad weather here, sometimes we get beautiful sunny days, even in February.
January 23rd, 2008 at 10:54 pm
January 23rd, 2008 at 10:54 pm
It’s the desire for the former than that prevents people from achieving either.
January 23rd, 2008 at 10:54 pm
But i wouldn’t worry too much if i were them. After all, since re always goes UP UP UP, their parking lots and storage lockers will be worth millions soon enough.
January 23rd, 2008 at 10:55 pm
well, makes sense to sell BEFORE the drop, doesn’t it?
January 23rd, 2008 at 10:55 pm
Have you ever lived in any Canadian city east of Vancouver? I’m guessing the answer to that is “no”.
The reason you would sell before the Olympics rather then after is that you believed *everyone* was going to sell afterwards. You’d want to sell just before what you believed was the top of the market.
At this point, why would you buy in Canada? You could just a much nicer place in the Northwestern US for about half the price.
So far you’ve been right, and that’s lovely. There’s something touchingly naive about Vancouverites. They’ve managed to convince themselves the price of real estate here is worth what they’ve paid.
I’m sorry, but it isn’t. The rest of the country laughs when they hear about how expensive real estate is. Nobody in this country is going to move to Van and buy real estate… they think the prices are just nuts.
You can love living in Vancouver without paying a zillion dollars for a home.
Yes, we’re a different country. That’s great. But how many Canadians are working in jobs tired into the American economy? How many have investments in American companies? Do you *seriously* think that in a situation like this, where 2 economies are so tightly integrated, that Canada can’t suffer? if Canadians lose money in the stock market because the American economy tanks, don’t you think that will make them think twice about buying a place here?
The whole Olympics thing is kind of interesting. Quick, tell me, how clearly do you remember:
Albertville, France
Torino, Italy
Salt Lake City
I am guessing not at all. Seriously for all the hoopla, you get 2 weeks of free advertising. People seem to forget the world tunes in to watch skiing championships, *not* Stanley Park or the sea wall or whatever.
And even if they say “Gosh honey it’s beautiful in Vancouver” do you think they’re going to uproot themselves to come live here?
They’d have to go through the immigration process which is hell. They’re have to learn a new language in many cases. They’d have to uproot their kids from school. They’d have to find work and honey, there isn’t a lot of work to be had here.
And even if they DID want to uproot and move, how many of them have the kind of money needed to buy real estate? Precious few I should think. How many of them could get jobs that pay well enough? It’s not like the banks have head offices here.
If that actually happened in Vancouver it would be a first for Olympic cities.
I could certainly see people saying “Wow honey, Vancouver’s beautiful. Let’s go for a 2 week vacation this summer!” But to pack up your life and move just because a city looks good on TV?
I mean Dosh… honestly… do you believe what you’re saying? I admit it, I’m kind of fascinated. You don’t seem all that interested in the avalanche of information that indicates the party’s over.
The market here hasn’t collapsed. many people have a great deal of skin in the game now, so obviously they have an interest in keeping the party going.
The problem is the *world* is running out of money and credit. No doubt there are greater fools out there. The problem is, nobody’s going to lend them money for an overpriced condo.
January 25th, 2008 at 7:00 pm
Builders and speculators tipped the supply/demand balance in the direction of too much inventory, which hurt the markets in the short term. It took until about 2 years after the games for that excess inventory of properties to be absorbed.
Overall gross sales volume in Park City was relatively flat at about $700 million from 2002-2004. Then, in 2005-2006, volume pushed the $2 billion mark.
As real estate markets around the USA are suffering, the Park City and Deer Valley real estate markets have remained stable, with fewer units being sold, but for higher average prices.
We wish you a similar period of success!
January 27th, 2008 at 9:08 pm
* Who are you selling to? The number of new buyers entering the market at high prices is diminishing.
* Calgary has more offices than Vancouver. Vancouver lost many head/regional offices in the 90’s and has yet to recover. This translates into average paying jobs - not high income positions.
* We are all connected. The world is teetering on a slowdown. Vancouver is not an island.
* It doesn’t make sense for older Canadians. Retirees love the West Coast, but cannot afford high prices.
* Yanks staying home. Rise in USD translates into fewer Americans buying in Vancouver (Coal Harbour)
* Our prices are ridiculous. Quality areas will always drive quality prices. But a home on The Golden Mile - Point Grey Road falling 40% from $8 million to $5 million is still $5 million.
* Overstating the obvious. The Olympics are only 16 days.
March 29th, 2008 at 5:59 pm
If you find one please email me the link and I will gladly snatch it up!