Friday Free for All!
At the end of each week we do an open-topic Friday free-for-all post here at VancouverCondo.info - this is our chance to recap some recent stories and share links and anecdotes on the local market and global economy. Here are a few links to start off the discussion:
- Eden Sophia superintendent comments on project losses
- Zillow Canada? David G says maybe eventually, but not this year
- You’re getting a raise! Wages predicted to grow in BC
- Fewer sales, more listings means more options for buyers
- Canada’s big banks can reclaim the risky loans market
- US foreclosures hurting neighbors refinancing efforts
- CNN video: Arson as a way out of housing debt
- The Feds worst nightmare
So what are you seeing out there? Post your news, links and anecdotes here!
RSS 2.0 comments feed. Both comments and pings are currently closed.
March 13th, 2008 at 9:16 pm
“The entry of higher-risk mortgage providers into the conservative Canadian market was an anomaly, and he’s happy to see things returning to the way they were.
I personally think … this is a good thing for the economy long term, because we’ve seen the devastating effect it’s had on the United States with mass foreclosures, mass evictions, great disruption. They thought they were doing a great gift for people letting them into a house with no money down. But I think in reality the disruption to society as a whole far outweighs that benefit.”
Good thing Canadians aren’t able to buy housing with no money down, otherwise we may have to face the same problems that US homeowners are facing at some point.
(BTW, the time stamp on the posts is an hour behind. Looks like you still need to “spring forward” an hr.)
March 13th, 2008 at 9:19 pm
March 13th, 2008 at 9:52 pm
Rebalance is the word alright. Picture a see-saw at the top of the peak of current housing price chart, “rebalancing” for a brief moment on it’s transition from an up market to a steep decline…
March 13th, 2008 at 11:04 pm
Many were single and/or low income people whose rent payments didn’t allow them to save. The real issue is buying a place you can afford to make the mortgage payments on. Of course, with today’s prices in Vancouver, that’s pretty much impossible now.
March 14th, 2008 at 12:09 am
But, somehow the greedy, ordinary folks, are still able to get risky loans to buy those grossly overpriced $5 million SFH homes (see Paul’s Numbers for Greater Vancouver, March 13, 12).
We know it’s the wannabees and poseurs buying because “the rich do not buy overpriced assets”. Also, “the rich are not rich because they are stupid” (whatever this negative proposition means).
And those wannabees have been buying those multi-million dollar homes everyday for weeks if you follow Paul’s numbers.
March 14th, 2008 at 2:23 am
Given that the monthly payments for buying are far above those for renting the same property, could you explain to us how both those sentences could be true for the same person?
March 14th, 2008 at 5:45 am
And such people had to buy because……….? If rent was a financial burden, taking on comparable payment levels (assuming this is even possible), plus the liability of a mortgage only makes sense if the asset is guaranteed to appreciate markedly over time.
March 14th, 2008 at 7:12 am
March 14th, 2008 at 7:38 am
March 14th, 2008 at 8:00 am
So in other words we have a load of subprime in Vancouver. Thanks, just as we suspected.
And those wannabees have been buying those multi-million dollar homes everyday for weeks if you follow Paul’s numbers.
Evergreen, having money is no guarantee of intelligence, why do you think Forbes updates the rich list every year? If rich people didn’t do stupid things with their money that list would never change. But you just keep pointing out how wrong the bears are and just maybe you can single handedly prop up this market.
March 14th, 2008 at 8:03 am
YES!!! We’re number one, we’re number one!
March 14th, 2008 at 8:55 am
We’re also:
Number one in property crime!
March 14th, 2008 at 8:56 am
March 14th, 2008 at 9:01 am
March 14th, 2008 at 9:05 am
Arson as a way out of housing debt?
March 14th, 2008 at 9:32 am
I’ve lived in Toronto, Ottawa, Montreal and Vanvouver. I can say historically this sounds about right. If I still lived in Toronto I’d be able to afford my old place on my current (Vancouver) salary, even though it’s a bit lower then what I made in Toronto.
In fact, on my current Vancouver salary I could easily afford a home in ANY Canadian city other than Van.
Oh and Evergreen, a little clarity for you:
THe rich keep their money by investing in assets that will increase in value over time. If they purchase on overpriced asset that plummets in value, they lose their money and cease to be rich, QED.
Clear enough for you?
All those bazillion dollar homes you go on about: Has it occured to you they are a small piece of the pie? Or perhaps that that’s essentially a different market?
March 14th, 2008 at 10:06 am
March 14th, 2008 at 10:28 am
If I remember I’ll post the video (BNN) when it comes out in their archives in a couple hours…EVERYONE should listen to this, it ends the debate for good about whether home prices are rising or falling
March 14th, 2008 at 10:30 am
“The median price paid for a Bay Area home was $548,000 last month, down 0.4 percent from $550,000 in January, and down 11.6 percent from $620,000 in February last year. Last month’s median was 17.6 percent lower than the peak median of $665,000 reached last June and July.”
They are already 17.6% down from the peak.
March 14th, 2008 at 10:43 am
The piece was on Market Call
March 14th, 2008 at 10:45 am
I mean we have Finning (a Caterpillar reseller), and…a division of EA, and a division of Kodak, and…well you can always work for BC Hydro…
March 14th, 2008 at 10:53 am
March 14th, 2008 at 11:10 am
Well of course it’s totally bogus. How on earth could anyone spend 74% of their income on housing? Not even people on welfare do. Have you even heard of anyone, never mind met anyone, who spends that much?
The 74% number is calculated by dividing two statistics which have nothing to do with each other. What statistics they are is left as an exercise for the reader.
BTW the numbers for other cites are equally bogus for same reason.
March 14th, 2008 at 11:14 am
“Who’s the speculator?” he asks. “The guy who buys or the guy who doesn’t? To not buy – provided you are able – because you think the market is about to go down, that’s speculation. It’s sheer speculation.”
Hahah I’ve heard it all now. Unbelievable. Why does ANYONE HAVE to buy RE. Some actually chose not to at all, period.
March 14th, 2008 at 11:28 am
I’m not sure how you can say that Patriotz. Obviously no one pays 74% of their pretax income on shelter, but to say that income statistics have nothing to do with house prices in the long term seems unrealistic.
March 14th, 2008 at 11:46 am
Comming back to the discussion, position yourself for recession, BoC is doing that!
March 14th, 2008 at 12:00 pm
What I’m saying, and everyone else on this blog is saying, is that income has nothing to do with house prices right now.
Which is why that 74% number is bogus.
March 14th, 2008 at 12:16 pm
I think you’re missing the point. That 74% shows how little RE prices have to do with actual earnings and thus it’s highly relevant to the discussion as the number simply can’t remain that high for very long. Especially when the banks start to pull the plug (I can hear the gurgling already).
March 14th, 2008 at 12:41 pm
I think Patriotz is pointing out how deluded/irrational folks in Vancouver are vis-a-vis the sanity of our current house prices.
March 14th, 2008 at 12:41 pm
Oh my God, now you KNOW the market’s turning! Someone should remind Rennie that kind of “speculation” doesn’t involve going to the bank and asking for half a million dollars, therefore if it’s speculative, it’s more rational.
Hey, I’m a speculator in Vancouver Real Estate!
March 14th, 2008 at 1:48 pm
http://www.sfgate.com/cgi-bin/.....TL&o=1
Prices in San Francisco proper edged 0.1% higher yoy (yes, falling in real terms, but not the heralded 15% decline for the entire Bay Area).
March 14th, 2008 at 2:19 pm
A bit off-topic here, but I have to ask. Am I the only one who finds those new towers near GM Place, with the primary colours streaming down the sides,completely ugly? I hate driving by them every morning. Those are God awful! They look institutional.
Plus, one of my co-workers was recently inside one and noted that they are cheap, cheap, cheap. All materials inside are crap. Industrial grade carpet and lino to boot. Where’s the stainless steel and granite?? What’s happening to this place?
Lastly, The Residence at Georgia, oh my God, that is going to look so stupid, the way they are going to tie in the new with the old, it’s just wrong. The Woodward building as well, but not as bad I think. The building on pender where the Jolly Taxpayer was, same thing, they’re keeping the face of the old building and tying in new… these architects… for shame.
There are exceptions to the above, I do like the look of the Shaw Tower and several others, but come on, some of these shoe box condo buildings are so tacky!
March 14th, 2008 at 2:20 pm
Assume that it is true that it takes 74% of the average local pre-tax income goes to buy the average local bungalow. Presumably, this takes into account 40 year mortgages.
After federal and provicial taxes of 26%, the average local income cannot buy the average local bungalow. Unless locals are buying food and clothing on credit card (which is possible because the savings rate in BC is something like negative 5% - going by memory). Therefore, this level of real estate prices is not driven buy locals. It is driven by those who have a higher income that locals.
Remember, the Rich Foriegner does not have to be fabulously rich. He just has to be richer than a Vancouverite and that is very easy - heck, we are something like 14th (going by memory) on the national average income list. That probably means that most Canadians can buy Vancouver RE much easier than a Vancouverite.
Sure Vancouver sucks compared to London, Rome, Paris, Tokyo, Madrid, Geneva, New York, LA, SF, Berlin, and a dozen others. However, it does have the best weather and scenery in Canada. And if a few people from outside of the country kick in their demand - presto! You have a big boom.
When will the local bubble collapse? When it takes 74% of the income of the top 5 Canadian cities on the average income list to buy an average Vancouver bungalow. That could take a couple of years.
I look forward to your responses.
March 14th, 2008 at 2:21 pm
March 14th, 2008 at 2:25 pm
IF that’s the case then that blows your theory out of the water. That theory by the way is the one the bulls have been clinging to. “Rich Foreigners”
March 14th, 2008 at 2:29 pm
It it possible that 10-15% foriegn buying can drive prices? Remember prices are set at the margin. A marginal number like this (especially if then have deeper pockets than locals) could function as a “price-maker”. I’m not economically sophisticated enough to know what percent of a market is necessary for a market segment to set the price for everyone else.
Can anyone lend a hand on this point?
March 14th, 2008 at 2:30 pm
Such a negative and losers type of thinking. You really think this will do any good?
Very bias information filled up.
March 14th, 2008 at 2:33 pm
Precisely, which means that (a) most homeowners in Vancouver bought before the run-up in prices, and more importantly (b) most could not afford to buy the house they own today.
I’m reminded of this fact every time I walk my dog in Burnaby and see Civics and Corollas parked outside of dumpy old homes worth $800k. Except for the new kid on the block, of course — he/she has a BMW or Lexus SUV parked outside their 70’s-era shack with no garage.
March 14th, 2008 at 2:38 pm
http://www.gvrd.bc.ca/growth/keyfacts/popest.htm
I appreciate the thoughts in your argument for a bull case. Like many of us have said, we’ve been waiting for a correction for a while and it hasn’t occurred. There are new products on the market today making borrowing easier, low interest rates and a construction boom with a lot of stories of people making a lot of money quickly, have increased demand and speculation. Who knows when things will start trending in the opposite direction? Judging by inventory, it may have already started. Prices are still high, demand is there, not as high as it once was, we’ll see what happens over the next year or so.
I’m just curious though, what’s your real estate portfolio (that sounds funny even to type) look like? What are you holding Bullcase? Or Satv and Krrish1? Or any other bulls. What are you guys holding? If you don’t mind sharing.
March 14th, 2008 at 2:50 pm
We aren’t hoping for a recession. We see what’s happening in the world and we’ve made our bets, as home owners have made theirs.
I refer you to a story that every Vancouverite should read.
Winter comes. Winter ALWAYS comes.
March 14th, 2008 at 3:04 pm
I’ve lived in the top 5 Canadian cities. I can assure you in all my time I never heard a single person who wanted to buy a second home in Vancouver.
Ever.
Most people in the top 5 Canadian cities can barely afford their principle residences. Those that can afford a little more, especially in Ontario, buy cottages in lake country, which is a few hours drive away… not several hours’ flight.
You *must* be a local. Only a local would come up with “Our natural scenery and the city of Vancouver are so irresistable, people from the rest of the country must be buying places more expensive than their principal residences in order to spend 2 weeks a year here.”
That is, without question, one of the stupidest arguments I’ve heard.
What the heck is WRONG with Vancouverites? Do they think the whole rest of the country is built on a toxic waste dump, or doesn’t have nice weather in the summer? Do they REALLY think people will pay through the nose to deal with rain rather than snow in the winter?
Actually I guess they do.
The real estate boom is drivien by irrationality, period. It isn’t “rich foreigners”. It isn’t “rich Canadians”. It’s stupid locals who really believe every soul in the universe wants to move here because the mountains are pretty… when you can see them.
It’s Dosh and Krrish and Andrew and people like them… people who aren’t smart enough to see they’ve been cheated.
March 14th, 2008 at 3:05 pm
Along with easy credit I think fear and greed has been a strong motivator for first-time buyers, no one wants to get ‘priced out’ or lose out on a ’sure thing’. I believe that local first time buyers have started settling for a lot less with the belief that increases will continue and they can move up in a few years. There was a ‘what a wacky world’ type story on the CBC news a few months back that profiled a new family that had just moved into a 515 square foot condo downtown.
The question is when will credit become harder to come by? It’s already happened in the states and there are signs of trouble in credit markets around the globe as well as in Canada, just read the fifth link on this story - two ‘high risk’ mortgage lenders in Canada just shut down because they couldn’t get money to lend out.
Whenever this market does turn it’s the ‘last in’ that will be crushed first, people who have owned for years will do fine as long as they haven’t over-extended themselves.
March 14th, 2008 at 3:14 pm
Welcome back SATV/Krish/Krish1/Krish2/Andrew, where you been, hanging out in the friendly waters of Chipmans blog?
March 14th, 2008 at 3:14 pm
I think the bubble pops when you run out of fools to stuff in the telephone booth. In this case, the booth must be like the TARDIS to fit them all in…..
March 14th, 2008 at 3:19 pm
So maybe a better question would be to ask the bulls/banks/RE agents/Mortgage brokers/Developers etc…, and yourself, why you were so stupid to allow things to get to the point where everyone will end up losing.
March 14th, 2008 at 3:20 pm
I just don’t think it’s going to happen that way…
March 14th, 2008 at 3:34 pm
Good job, I agree with what you said. The thing is people follow trends. Buy when other people are buying and sell when other people are selling. Right now gold and oil is hot, poeple are rushing in to buy. If RE in Vancouver starts a selling trend then you get the idea of what will happen.
March 14th, 2008 at 3:42 pm
It is definately possible that Vancouverites are stupider than the average Canadian city. I believe Vancouver is very low on the post-secondary education statistics for Canadian cities.
Nevertheless, is it not possible that 10-15% foreign buying could set the prices in this market? Of course, not everyone in the wold wants to move here. But some oviously do. For example, there was an article in the recent vancouver magazine of a british developer buying multimillon dollar Arthur Ericson house in West Van and demolishing it. Also, that ultra expensive condo in downtown was bought by a Portland Oregon business man. Some rich foriegners obvously buy here. If remax is right it is 10-15%. My point is that it may be enough to set the market price.
It may even be reasonble to add another 10% on to remax’s numbers to account for the local households who are financed by a non-resident Father (who lives and works in HK or China for tax and business reasons). The Vancouver house he buys would be in the names of his Vancouverite wife and kids but it is foriegn money that buys it.
Simply citing irrationality to explain the market is not good enough. Someone is making those insane mortgage payments, after all.
March 14th, 2008 at 3:45 pm
You asked what I’m holding? Nothing. I can’t afford these insane prices.
March 14th, 2008 at 3:47 pm
Cheers! Hang in there mate!
March 14th, 2008 at 3:56 pm
I suppose that depends on whether you think whatever is driving the market is temporary or permanent. If you’re buying as an ‘investment’ right now the numbers don’t cashflow, so you’ve got to be counting on continuing appreciation. You can bet most people buying in Miami or Las Vegas or California in 2005 didn’t think the market in those places would do what its done over the last couple of years. Unfortunately they were irrational and the market is correcting itself out from under them.
There are ‘wealthy buyers’ in every market, what would make ours different enough that it would sustain our bubble prices long-term? If you believe ‘wealthy’ people only just discovered Vancouver and will be constantly buying whatever is on the market than it’s a great time to leverage yourself to the max and buy as much real estate as you can. As you can probably tell, I don’t personally believe this is the case at all.
March 14th, 2008 at 4:01 pm
Much simpler than that. The median household does NOT buy the median SFH. Basically those in the lower half of incomes buy townhomes and/or apartments.
March 14th, 2008 at 4:30 pm
Well, I don’t have a college degree and I haven’t lived all over the world, but where I work as a secretary in a law office, 3/4 of the staff and lawyers were not born in Vancouver. Most of them are from Ontario, Saskatchewan, and Alberta. A locally born vancouverite is hard to come by in my experience. The people at the office say that its not like that where they are from.
It sure looks like everyone wants to move here. Take, Sullboy, she lives here but why? Why not go back to Ontario and get an affordable house and a better job. Why does she want to live here? The same reason everyone else does: it is the best place on earth.
I’d like to see a poll on this issue: how many of the posters were born in Vancouver?
March 14th, 2008 at 4:46 pm
“Prices for new homes in Vancouver rose at the national average of 6.5 per cent between January and the same month last year, Statistics Canada says.”
Single digit YOY increases is the first step to single digit YOY decreases to be shortly by double digit YOY decreases. This is further evidence that the market is turning.
March 14th, 2008 at 4:49 pm
March 14th, 2008 at 4:51 pm
I agree that Vancouver has the best weather, and is the best city to live in in Canada. And it’s not exactly easy to just pick up and move to LA or London.
However, I think the point alot of people make is that incomes here are not relative to housing prices. I’ve lived in San Francisco, London and Toronto. In all three places, I could understand the high cost of houses; lots of people were earning lots of money. That doesn’t exist here. San Francisco has huge corporations, innovative small firms, literally tens of thousands of people earning higher than 200,000/yr which is the income you require to buy a house there.
There is nothing like that here. Our incomes are low but we are willing to spend more than anyone else on our condos/townhomes/SFH/lottery tickets.
Anyway…housing depresses me. In London, and SF it’s all people talked about (probably less now as prices decline) and here is no different. Everybody on this site (myself included) needs to get a life.
March 14th, 2008 at 4:52 pm
For you Stupid Vancouverite: I’m from the Kootenays (born and raised, on the playground is where I spent most of my days). I like Vancouver, but its all about work, I’ve moved away because the local economy was shite in the late 90’s and moved back when a position tured up. If my work dried up, I’d be off again. The scenery in the city you live won’t pay the bills unfortunately, where people live is often dictated by their employment.
As for your frustration though, seriously, what do you care what a bunch of “doom and gloomers” say? Aren’t we the ones who are stupid? We haven’t been right…yet.
March 14th, 2008 at 4:54 pm
It’s scullboy, and I’m a dude.
I’m not surprised you haven’t travelled. It’s kind of apparent. People who have since when. They hear the whole “best place on earth” thing.
Here ’s the point. Van is. Nice a d bad a lot going for it but the locals have had way too much of the kool aid. Not everyone wants to live here and real estate is laughably overvalued. K?
March 14th, 2008 at 5:26 pm
Don’t shoot the messenger. Just trying to stay objective on here.
No mention of increase inventory or recession, inflation looming etc. This place is the yang to MSM’s ying.
March 14th, 2008 at 5:27 pm
No, it is still in the double digits. These statistics are for new homes and as far as I can tell have little to do with changes in market prices of homes.