Friday Free for All!
Easter Edition! Here’s our weekend open-topic posting to discuss anything related to economics and the real estate market. A few stories to get us started:
-Condo supply growing like crazy
-The disappearing first time buyer
-Oil, gold and the Canadian dollar drops
-Canada following US downturn
-More pain in store for Canadian banks
-Turner answers questions about ‘greater fools‘
-Condo marketer says Translink plan ‘prudent‘
-Vanoc opposes any Beijing boycott
-Price of gas has Americans cutting back elsewhere
-BBC: LA’s subprime shanty towns
So what are you seeing out there this fine holiday weekend? Post your news, links, anecdotes and comments here and have a great weekend!
March 20th, 2008 at 10:33 pm 1
Thanks for the great work. I must say the BBC shanty towns video smacks of a classic BBC April Fools prank. You can't afford a mortgage payment – OK, i accept that. But how about renting a one bedroom apartment? I don't believe it's common-place for someone to go from owner to tent dweller. May happen, but it's hardly typical of the subprime problem.
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March 21st, 2008 at 3:49 am 2
Looks like Infinity in Surrey has completed. Craigslist has 100 posts under apt rentals in this building. That can't be good.
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March 21st, 2008 at 7:30 am 3
Housing Crisis Deepens Across Britain, Europe
http://www.npr.org/templates/story/story.php?stor…
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March 21st, 2008 at 7:31 am 4
Saturday's issue of the Vancouver Sun has an interesting article about investors of Canaccord Capital Inc. It detailed how investors were told by their brokers that these ABCP investments were triple AAA safe! And that they are comparable with GICs and Canada Savings Bond and now having most of them finding out that their life savings are put on ice. They've been given an ultimatum. Accept the deal which means the money will be tied into the longer notes or get 60 to 80 cents on the dollar. These folks think that they could veto the bigger boys, so the big institutions would just buy their bonds back. How wishful thinking is that? Don't forget that these institutional investors represent a pool of ordinary investors who are in the same boat as they are now. This smells like BRE-X all over again I suppose..
My advise to them is simply this. Learn from the BRE-X shareholders and sell for whatever you could get for and just walk away, albeit a tad poorer.
A lady in the report said that, if this doesn't get resolved soon, she might have to sell her house to get some cash. She used to be a real estate broker too and wouldn't want to get involved in this mess if she knew it was ABCP.
Oh come on… ABCP offers attractive rates. ABCP invest in among other things mortgages in American housing which prices were going up like a space shuttle. Fundamentals were completely broken. And if she was a former real estate, shouldn't she know that the boom was unsustainable??
Scary prospects are unfolding..
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March 21st, 2008 at 7:34 am 5
Headline in today'a Province Money section:
"we're battling a headwind
The Economy: Canada's risk of falling into recesion sharpens"
…..so how's that Decoupling Theory coming along?
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March 21st, 2008 at 7:57 am 6
Housing Crisis Deepens Across Britain, Europe
"homeowners are worried that house prices might start to fall"
They call that a crisis? I thought the crisis was that houses were unaffordable. Falling prices are the return to normalcy.
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March 21st, 2008 at 7:58 am 7
Rob, aka Krrish/Satv;
I just got back from the USA, your counterparts from the NAR are really pumping the idea that boomers should be investing in farm land.
They hype goes something along the bio fuels boom, and anticipated food shortages pitch.
Any plans in the works for you guys getting on board this new scam?
Or do you think the Olympic BS has a little mileage left?
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March 21st, 2008 at 8:06 am 8
I've been following the infinity listings on craigslist too, as I watched the building go up (recently moved out of the neighborhood). It's beyond me why anyone would be willing to pay $1400/month just so they can "be guaranteed a seat on the skytrain!" Pulleaase…plus if no one has noticed, the whole place is still one great big construction site as they put up tower number 2. Thanks, but I don't like hearing hammering at 7am. Crazy!
Here we go! Soon enough those investors will realize they can't get the rent to pay the mortgage and dump the condos back on the market. Price declines, anyone?
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March 21st, 2008 at 8:11 am 9
Friday off…so nice. Too bad I can't sleep in.
Anyway, had a talk with a friend this morning who's talking about getting away from Van, he's a plumbing trade. Talking about Fort McMurray for a bit and then buying in the interior or island.
He knows a developer working on some land around Bear Mountain. He has a proposal for a new sub-division there and if it goes through he'll build it and retire. I talked to him about being careful buying anything on historic highs, he listened but wasn't concerned. Says that Bear Mountain has many foreign investors showing interest and he figures if he picks one up he will see some serious gains. His exact words were, I'll do better than my RRSP's. I know what you're all thinking, believe me, I do.
It's not worth wasting my breath trying to dissuade him, his mind is already made up. The longer this goes the more people will get sucked in. I'm still going to wait it out for two more years, job is going good, but if I don't see things change post-olympics or sooner, I'll be packing up and going somewhere else, somewhere affordable and sunnier.
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March 21st, 2008 at 8:13 am 10
Many Victoria RE agents are convinced that the industry here will be propped up by people from Calgary buying up the Island.
I would love to get stats on this.
Also, if it were true who wants to live in a city whereby one is the "poor" local while Victoria is ruled by 50 somethings from Calgary.
Any comments?
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March 21st, 2008 at 9:19 am 11
Anon:
Same kind of fallacies that are spread everywhere. One of the first rules of critical thinking is that the burden of proof lies with the person making an existential claim. In this case, "Rich Calgarians are buying up the island."
If the person making that claim cannot offer any proof then the statement has as much value as, "Unicorns live in Madagascar.", "George W. Bush is a really smart guy.", or "Aliens ate my pet cat and replaced her with a clone."
We get the same kind of argument here in Vancouver but it's Asians or Americans. It's just BS sold by the agents as a plausible explanation (if it's not examined too closely) for the possibility of future gains.
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March 21st, 2008 at 9:54 am 12
A,
10 over 10 man, The work force is busy till 2020 tonz of project in non residential construction.Unemployment rate is to fall 0 around 2010 to onwards then may be another olympics. British Columbia is going to creat 250,000 job from free trade with India and we have lots of job shortage in all other sectors.Raise after raise you can face the elimination challenge, Buy or move with the hammer of inflation or get in with full pocket,Best real estate on earth Vancouver,B.C.bpe.
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March 21st, 2008 at 9:59 am 13
FWIW…….I personally know 3 Calgarians who have bought property on Vancouver Island in the last 12 months.
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March 21st, 2008 at 10:31 am 14
"I personally know 3 Calgarians who have bought property on Vancouver Island in the last 12 months"
Tell us how their investments turned out in about 12 months from now.
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March 21st, 2008 at 11:00 am 15
Any comments?
Yeah, if the Albertans are so flush why is RE falling in Alberta?
The Californians were supposed to be propping up RE values in every outpost west of the Rockies. How did that work out?
The whole of southern BC is trolling for Alberta RE money, because its traditional economy (forestry, mining) is practically dead. That's spreading it way too thin.
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March 21st, 2008 at 11:07 am 16
"And if she was a former real estate, shouldn’t she know that the boom was unsustainable??"
well, current real estate brokers know re only goes up, up, up….
so ironic, isn't it?
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March 21st, 2008 at 11:10 am 17
First-time buyers disappearing but prices are expected to go up?
Lower demand + greater supply = price increases?!
Man, the industry is drunk on hype.
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March 21st, 2008 at 11:33 am 18
First time buyers disappearing not because they don't want to live here. They still do (hence demand is there), however they can't afford to because of prices. So someone else with deeper pockets are buying it up. Seems like an influx of wealth from other sources to push the market higher. I hope we don't end up like Whistler, where locals have to rent and foreigners are the landlords.
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March 21st, 2008 at 11:38 am 19
I missed this one the first time.
"And if she was a former real estate, shouldn’t she know that the boom was unsustainable??"
Do you think the secretaries at Enron knew what was going on? I can tell you for certain that the technicians at Nortel had no clue (I knew one who'd convinced everyone he knew to invest (except for me)).
Agents are just salespeople. Next time one of those annoying 'flat rate' natural gas salesmen comes around ask him if he knows what his company's stock is worth and where it's going in two years.
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March 21st, 2008 at 11:53 am 20
" Comment by SC
2008-03-21 11:33:27
First time buyers disappearing not because they don’t want to live here. They still do (hence demand is there), however they can’t afford to because of prices. So someone else with deeper pockets are buying it up. Seems like an influx of wealth from other sources to push the market higher. I hope we don’t end up like Whistler, where locals have to rent and foreigners are the landlords."
I guess we better beg, borrow, and steal, just to get in right? And couples should get a second job, buy a 2 bedroom leaky condo in East Vancouver, and rent out the second bedroom as a mortgage helper to 6 or 7 foreign students right?
Are you a realtor? or bad at math?
Do you know it is impossible to get price out of the market indefinitely?
As for Whistler… if the locals accept the conditions they live in, it proves that eventually a high consumption of pot is bad for analytical thinking.
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March 21st, 2008 at 12:25 pm 21
I didt't say they were investments. In each case they are primary retirement residences.
Don't confuse me with a RE bull….for I am not.
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March 21st, 2008 at 12:38 pm 22
CC:
It just seemed that way to some people I guess. Anecdotal evidence is a nice snapshot of things but it's really useless for building an argument.
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March 21st, 2008 at 1:45 pm 23
"Looks like Infinity in Surrey has completed. Craigslist has 100 posts under apt rentals in this building. That can’t be good."
Richmond has so many buildings under construction I can't count them. New West has about 4 or 5 high rises completing soon, UBC, etc, etc. It's everywhere overbuilding to the extreme for the rich Albertans.
Sorry, but there aren't really that many rich Albertans, the wealth, like everywhere else is concentrated in a few hands. I'm off to Calgary next month to see my retired in laws, and my friends none of whom are overly wealthy. Like Californians, they are not buying up all the land, and those that do will loose on it soon.
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March 21st, 2008 at 1:50 pm 24
Mortgage broker friend said business is best he's seen pretty much ever. Most people that are buying are first time buyers getting 40 year mortgages but using big down payment gifts from their boomer parents.
We'll see how this turns out!
My guess, the boomers are throwing their money away by betting on their kids ability to pay. A 30 year old getting a 40 year mortgage is still paying for it at 70!
The one thing going for the banks here is that there is at least some skin in the game. Zero down isn't a very big part of my friends business. Neither is 5%.
Prices will drop, but they may not walk like in the US; depends on how much more mommy and daddy are going to pony up to keep up the payments for their kids.
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March 21st, 2008 at 1:59 pm 25
This is a paragraph from a montly RBC economics email report i get. I like the part starting at "However most of the increases came from the volatile urban multiples"
Does this mean condos/housing are subject to risk?
Housing starts rose a phenomenal 15.4% in February to an annualized 256,900 units from 222,700 in January. However, most of the increase came from the volatile urban multiples component. Despite the surge in February starts, however, some moderation in activity for all of 2008 is expected from the slightly under 230,000 housing units started in 2007.
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March 21st, 2008 at 2:11 pm 26
Travel to Canada hits lowest level since 1972: StatsCan
http://www.cbc.ca/consumer/story/2008/03/20/janua…
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March 21st, 2008 at 5:37 pm 27
I hope we don’t end up like Whistler, where locals have to rent and foreigners are the landlords.
If you rent a house to someone who can't afford to buy it, you are losing money. The reason is simple: the tenant is not covering your costs of ownership. If he were, he could afford to buy it.
Li Ka-Shing probably builds more condos in Vancouver than anyone else. Does he rent them out, or sell them? Why is that you think?
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March 21st, 2008 at 3:04 pm 28
[...] 21 March 2008 · No Comments This from Vansanity on Vancouver Condo Info 2008-03-21 08:11:25 [...]
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March 22nd, 2008 at 4:24 am 29
Imagine it's 2011. The olympics are over. All the hype and every other person's justification for high real estate prices has come and gone. We have a ton of empty condos because the foreigners who were renting them have gone home. And they will go home because everyone gets homesick. Everyone misses their own bed. The party's over. Yeah Vancouver is nice but now I've seen it and I want to see something else. I've never been to Rio. Where's the NEXT winter olympics being held. I'm sorry but the world is a pretty big and BEAUTIFUL place. Are you so sure that we are "The Best Place On Earth"?
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March 22nd, 2008 at 6:07 am 30
MC_V said:
Prices will drop, but they may not walk like in the US; depends on how much more mommy and daddy are going to pony up to keep up the payments for their kids.
I say.
Well, I don't think they can. Canadian mortgage bearer is responsible for paying off the mortgage or the difference of it when it gets sold plus transaction costs. This is different from the Americans where they could actually mail back the keys, hence the term "jinglemail", back to the banks and walk away, although I heard that in some American states, walking away endures similar penalties. Besides, I suspect that if their parents provides the downpayment for the loan, they too may provide some guarantees to the bank. So that is why, your friend's bank isn't too worried. The question really is, will these kids simply walk away?
I've seen some many people in the work force nowadays that come in to work whenever they like, when they like and when they leave, they sometimes don't even give a darn of a notice either. If they do, it's a couple of days and then they vanish like Merlin.
The Carpe Diem's website actually described the US subprime mortgage as being as very small part of the overall mortgage lending practices. It's the 40 year AMS that Canadians are signing up for that is troubling me. This I will have to agree with Mr. Turner for once.
If the Vancouver real estate does fall, the overbuilt condo market will go first, because it doesn't take a lot of condos to bring prices down in the same neighborhood. Good neighborhoods with established home ownership won't suffer that much as a previous poster had posted. This is because, once the mortgage is paid for, a 50% price drop won't matter. West Vancouver in the 80s is different from the West Vancouver of today. 25 years had passed and many of these residences had already paid off their mortgage. However, residences in new condos with 40year AMS haven't! That is the difference! So, expect significant prices drops in areas where there are condo overbuilding.
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March 22nd, 2008 at 7:39 am 31
If you think that SFH in high-priced neighbourhoods aren't being bought with toxic financing today, you're kidding yourself.
The 80-81 boom lasted for a far shorter time than the current bubble, which means a much smaller % of the housing stock carried shaky financing. When the bubble pops all categories are going down. Just like south of the border, and just like previous Vancouver bear markets.
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March 22nd, 2008 at 7:44 am 32
Are you so sure that we are “The Best Place On Earth”?
Ofcourse,People like to spend money on future of the city not on Olympics or Fifa,for example few year back there was World Cup in West Indies two month's long there was nothing up,the spectators left the tournament half way because place and length of tournament was boring.
E2 Since the annocement of 2012 olympics home prices are falling in most cities of UK but VANCOUVER IS UP while Juggernaut across the border has fallen on it's knee.
In Vancouver you can CATCH all the action of life,we are not just ol but bpe.
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March 22nd, 2008 at 8:23 am 33
People situations are always changing and even older people with no mortgages have to die or move to assisted living. Eventually all neighbourhoods are sold and new families with vast mortgages move in. So I don't think that any area is exempt from a correction. It is getting so crazy that parents are using HELOC's to allow their children to get into the housing market. Thus putting themselves in jeopardy. This will be very messy spanning all generations… Mom and Pop could lose their homes also. Don't spend your false equity. It's just common sense.
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March 22nd, 2008 at 8:41 am 34
Fine…I've risen to the bait. Can no one make Krrish2 STFU? He wouldn't know a "world class city" if it jumped up and bit him on the arse. Initially I thought he was one of those experiments in artificial intelligence that get put on the web, where an attempt is made to pass off a program as a human is made, but now I just think he's an inarticulate mortgage broker with lots and lots of time on his hands.
I've attached a list of amenities required to make the big league of cities.
http://www.thisislondon.co.uk/standard-mayor/arti…
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March 22nd, 2008 at 9:32 am 35
Price of gas has Americans cutting back elsewhere
Of course it would. Call me Austrian, but I have long argued that rising gas prices is not a CAUSE of inflation. Inflation occurs when there is too much money chasing to few goods. In this case there is ONLY a shortage of gasoline (compared to demand). Since demand for gasonline is inelastic (people will buy similar amounts at almost any price) there is less money to spend on other goods. Thus demand and price for non-gasoline items will drop. One price up, another down. Not inflation. Our MEASURE of inflation, CPI uses FIXED baskets and may be impacted by a shift in consumption. Thus CPI has gone up, but inflation has not. At least from an Austrian point of view (which is th correct one IMHO).
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March 22nd, 2008 at 9:45 am 36
I watch a debate of finance professionals from France.
People start to default on their mortgage because of variable interest rates contracts: when form 3.5% up to 6.2% in 2 years. (Banks increase rates to cover their los in the sub-prime mess).
Mortgage rejection went from 3% to 10% in the past few months (banks not willing to take risks anymore).
They also said that in the UK one mortgage out of 2 is rejected at the moment.
They also said the financial crisis should hit Europe with a lag of 6 to 9 months and that they are ready for the worst. They were worried that Trichet would not act like Bernake did, so that the hit would be even more painful.
They believed the world is many months from the end of the global crisis.
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March 22nd, 2008 at 10:17 am 37
Since demand for gasonline is inelastic (people will buy similar amounts at almost any price) there is less money to spend on other goods….Freako
That depends if money supply is inelastic. In our current system it is, though in others, such as the Weimer republic printing presses, the money supply was elastic.
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March 22nd, 2008 at 10:47 am 38
emile
"They were worried that Trichet would not act like Bernake did, so that the hit would be even more painful."
I think that's a backwards way of putting it. Bernake's morphine was just helping the market walk on broken legs for longer, in the end the pain is greater than just letting it break, waiting until it hits bottom and THEN start picking up the pieces. If you're already overextended in trying to prevent an inevitable crash you have nothing left to start rebuilding with.
The BOC, the Fed and the CMHC are just trying to put the fallout off until after the next election cycle, it's 99% politics and 1% economics IMO.
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March 22nd, 2008 at 11:37 am 39
Can no one make Krrish2 STFU?
Don't be fooled. I suspect that the shape shifter in question is actually a well-educated and "successful" RE guy who is bored with life and who is somewhat annoyed with the ideas expressed on this and other RE blogs. He's just "having a little fun" as he would put it, while he degrades the nature and quality of posts on the blog. This in itself suits his purpose because he doesn't want the blog taken seriously. Some day he will truly be "outed" and he will be embarrassed when that happens, at which time he will proclaim "Oh No! I'm-bare-assed!"
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March 22nd, 2008 at 12:27 pm 40
That depends if money supply is inelastic. In our current system it is, though in others, such as the Weimer republic printing presses, the money supply was elastic.
I view them as two separate eventualities. Overexpanding money supply (the provervial printing presses) IS inflation. Rising gasoline prices are a possible RESULT of inflation, but not inflation itself. If gasoline prices rises in the absense of excess liquidity IT IS NO inflation, even if CPI ticks up a notch (it does this because the CPI basked is fixed, and cannot account for economy wide changes in the basked).
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March 22nd, 2008 at 12:32 pm 41
In our current system it is, though in others, such as the Weimer republic printing presses, the money supply was elastic.
Not sure what you mean by "inelastic". Elastic supply literally means that the amount supplied drops if market prices drop. The "price" of money is the interest rates, and money supply sets interest rates, this statement does not make sense. I presume that you merely mean that the money supply is somewhat fixed, or not. Our money supply is ever expanding (our economy grows), and the BoC has a straight inflation target. If inflation (as measured by CPI) ticks above their threshold (2%?) the shut off the taps for a while.
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March 22nd, 2008 at 12:37 pm 42
Condo supply growing like crazy
Now this is interesting. It means that builders and lenders also believe it is different here. Maybe the builders think that they can limit their exposure through presales but what about the lenders? Where does the buck stop? My guess is with the tax payer (c/o CMHC) and some unwitting creditors such as Norwegian fishing villages (as happened with U.S. subprime). I doubt that our major banks are stupid enough to leave skin in this game. In any case, the lenders are the achilles heel in this shell game.
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March 22nd, 2008 at 1:30 pm 43
“Can no one make Krrish2 STFU?
Don’t be fooled. I suspect that the shape shifter in question is actually a well-educated and “successful” RE guy who is bored with life and who is somewhat annoyed with the ideas expressed on this and other RE blogs”
I am not so sure how successful he really is. I drive by his place of business on my way to SFU, and it doesn’t exactly exude success. And the bald guy he has working for him looks like somebody who just got out prison.
As for educated…. he seems to parrot superficial knowledge retargeted superficial knowledge from illiterate Surrey housewives calling in the Bill Good Show.
I think his character Kiingi, Krissh and Satv are his attempt at reproducing some character from Mordecai Richler writings but fails miserably and is quite banal really.
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March 22nd, 2008 at 2:28 pm 44
Erase this if it was already posted. Below is a link on Van RE (what else?) bearish, Schiller was on ROBtv (or bnn) recently talking about Vancouver, I didn't know that, anyway, check it out, Happy Easter!
http://www.bclocalnews.com/business/16872171.html
"Don’t feel too ‘bubbly’ about real estate"
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March 22nd, 2008 at 3:26 pm 45
I wonder if I could buy the small piece of land in the middle of pacific & richards and charge realtors a fee for littering my lawn with open house signs… there must be at least 20 of them. I've lived in the area for 4 years now and the amount of signs this year is extraordinary.
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March 22nd, 2008 at 4:04 pm 46
Freako- this is the discussion that is going on forever on Mish's blog.
How does one define inflation? Some use simple price increases…core/ producer/ over-all… define it as you will.
Or money supply, again define it as you will.
Depending on the definition one can show inflation running at almost double digits or near deflation. I suspect we have both.
Inflation in things that have relatively inelastic supply..oil and wheat..and deflation in other categories such as housing in the US and UK and cars.
I think we agree in that further inflation in the first category will likely lead to more deflation in the second. However so much hot money has gone into the commodities that I suspect we are due for a good shake out.
As to my second statement. Our money supply is inelastic because our Central banks have inflation targets (however they define it) which they are supposed to at least aim for.
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March 22nd, 2008 at 4:42 pm 47
How does one define inflation? Some use simple price increases…core/ producer/ over-all… define it as you will.
Or money supply, again define it as you will.
I thought I clarified that with the "call me Austrian but" and "from an Austrian point of view". It is indeed an unresolvable debate, and I gave one particular point of view (and identified it as such).
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March 22nd, 2008 at 4:44 pm 48
"Some use simple price increases…core/ producer/ over-all"
This is not a good measure. It is used as a proxy but, in certain cases, can lead to extraneous results. As a theoretical example, imagine if all prices rise by 5% but consumers scale back spending by 10%.
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March 22nd, 2008 at 4:47 pm 49
However so much hot money has gone into the commodities that I suspect we are due for a good shake out.
And where did that hot money come from in the first place? If it was created as part of fractional reserve banking system, then it was inflation. If it was diverted from other goods, then not inflation. Again, as per the Austrian view.
Our money supply is inelastic because our Central banks have inflation targets (however they define it) which they are supposed to at least aim for.
I guess you could look at it that way, but the term does not sit well with me. Money may be created or destroyed as part of attempts at regulating the economy, but it is not produced or consumed in the traditional sense. Hence I don't think the term "inelastic applies". Taken literally, inelastic supply means that the same amount would be supplied no matter what the price. That obviously isn't the case.
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March 22nd, 2008 at 5:32 pm 50
Where is the oversupply of condos d/t? I can beleive there will be an oversupply in the burbs but d/t?
Over the last few years and the next few years we are looking at about 3-4K completions/year in Vancouver. With an average of 1.5 people per condo that'll house 6K people hmm that's the same figure Vancouver's been growing at for a long time. That is also assuming all those condos are occupied which we know they won't be. So I can't see this oversupply, it's not like Vancouver is expanding, all new supply is only condos/townhouses, knocking down old houses for new houses doesn't increase supply.
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March 22nd, 2008 at 5:57 pm 51
"knocking down old houses for new houses doesn’t increase supply"
Densification=an increase in the density of something
If you want specific best place on earth term then google "ecodensity"
http://www.vancouver-ecodensity.ca/content.php?id…
I agree with your stats on completions, but it's speculation and not immigration that's driven the prices up.
There were also the same amount of people coming here between 1989 and 2004 and there was minimal appreciation in resale values of condominium units.
If you saw the same stats canada immigration numbers you'll agree we have the lowest immigration right now since 1994?
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March 22nd, 2008 at 6:13 pm 52
bdk,
I agree with what you've said maybe I didn't explain it clearly, what I meant is knocking down old houses and rebuilding a new one does not add anything to supply. Only when you upzone is there an increase in supply, we know there is no vacant areas getting new sfhs home in the city proper so really all new supply is coming from those condo completions. Within the city proper I don't beleive we are seeing an oversupply. Wether those 6K new residents each year can continue to afford the every growing prices is the valid arguement.
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March 22nd, 2008 at 7:17 pm 53
Where is the oversupply of condos d/t? I can beleive there will be an oversupply in the burbs but d/t?
Over the last few years and the next few years we are looking at about 3-4K completions/year in Vancouver. With an average of 1.5 people per condo that’ll house 6K people
Do you know what the population is for DT Vancouver? These are huge numbers in the relative sense. It was 80K as of 2007 (doubled from 40K 20 years ago). Six thousand a year is 7.5 percent of current population. Downtown is growing, but currently houses only about 3-4% of the Metro Vancouver poulation. If the area grows by 30K a year, based static on static proportions, DT would get about 1200 far below the 6K capacity. Of course things aren't static, and DT is growing fast. But don't scoff at 6K, it is probably far more than fundamental demand. Second, it remains to be seen whether living downtown is fad or a long term shift.
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March 22nd, 2008 at 7:30 pm 54
Within the city proper I don’t beleive we are seeing an oversupply.
Maybe we are and maybe we aren't. But just what is so magical about the city proper anyway? The region is essentially one market. Does it matter what side of Boundary Road you're on really?
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March 22nd, 2008 at 8:05 pm 55
It matters because in all honesty it isn't one market, it is made up with dozens of small markets. Let's say there were hundreds of empty condos d/t and a shortage of sfhs on acreages, those condos wouldn't put downward pressure on the price of those homes. We need to compare apples to apples. I'll agree that if there are an abudance of condos in the burbs that will probably restrain price increases in the city as more and more people would look at them as an alternative. My arguement was really only that there is not an oversupply in Vancouver. There is high prices which will curtail demand. But supply is under control.
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March 22nd, 2008 at 8:42 pm 56
My arguement was really only that there is not an oversupply in Vancouver
Could you explain how you arrive at that conclusion?
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March 22nd, 2008 at 8:52 pm 57
"knocking down old houses and rebuilding a new one does not add anything to supply"
That's not what's happening in my neighbourhood where every time they tear down an old house they replace it with two or three townhouses and a carriage house. Or else they jack up the basement, put in a new foundation with at least eight foot ceilings and turn it into a two bedroom basement suite. One three bedroom house has been replaced with four townhouse/carriage house units.
The zoning on most of the lots is multifamily. So far they are all quite attractive and blend in well. If this is ecodensity, I'm all for it.
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March 22nd, 2008 at 8:58 pm 58
There is no oversupply in Vancouver as follows please keep in mind I am speaking of Vancouver proper not the Metro.
New supply=3000-4000/condo units a year.
Average household for condo 1.5-1.6
So new supply can house ~4500-6400people/year.
We know Vancouver has been growing at a rate of 6000/year. So there is no oversupply of units.
In fact we could argue that the city is undersupplied as we know a certain percentage is bought as second homes/vacation/no used at all.
If I'm missing something let me know.
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March 22nd, 2008 at 9:15 pm 59
"We know Vancouver has been growing at a rate of 6000/year. So there is no oversupply of units." How would you explain the massive number of vacant units advertised for rent? If the people moving in can't afford to rent how could they buy at three to four times the monthly cost? It's a total renters market if you are in the $1400/month plus bracket, you have a thousand to choose from in Vancouver West alone. And most of those are vacant ie: no income is coming in, the ads are plaintive begging, few come to look anymore.
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March 22nd, 2008 at 9:28 pm 60
New supply=3000-4000/condo units a year.
Average household for condo 1.5-1.6
So new supply can house ~4500-6400people/year.
I think you grossly underestimate construction. For example, what about the Parklane East Fraser lands development below marine drive. What about all the densification (duplexes etc). CHMC showed 65 deteached and 700+ condo starts in February 2008. If se assume 2 per unit, that is capacity for over 1500 people IN A SINGLE MONTH. Sure not all months have starts like that, but you need to go beyond your assumption that a simple condo unit estimate multiplied by 1.5 equals added housing capacity in Vancouver.
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March 22nd, 2008 at 9:34 pm 61
This pdf doesn't go past end of 2006, but it does show 4K starts and up per quarter for most of the boom. http://www.vancouvereconomic.com/tools_programs/p…
<a href="http://www.vancouvereconomic.com/tools_programs/pdfs/Housing%20Starts.pdf
">link
Slightly smaller than the roaring early 90's, but population growth was much higher then.
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March 22nd, 2008 at 9:35 pm 62
rents are looking high. $1400 for 500 sqft and $2100 for 900 sqft. Are these reasonable for DT?
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March 22nd, 2008 at 9:38 pm 63
I think it is rather arrogant to assume that every single immigrant would want to "buy" a house when they come here. As far as I know, buying a house is not a mandate in their immigration policy, nor it is stipulated as such. They are NOT FORCED to buy to qualify for membership in the Vancouver community.
When you buy a home, you are literally buying a membership into the community that you will be living in. Renting, however, differs from buying in that, you do not need to participate in the community. You can try out the community. If you don't like it, you simply leave and go rent in another community. That's the flexibility. I think for most immigrants, that's what they will do first.
Imagine you are in a clothing store. You go there to buy clothes, but before you buy it, wouldn't you want to try it out and make sure it fits you before you buy? It's common sense that we do this. We try things out before we make a full commitment. Buying a house is a serious commitment. So if these 6000/year people are coming and buying a house outright without even knowing the neighborhood, I would assume that these are the same people who would drink gasoline without even reading the label, buying clothes without needing to try or jaywalking across the busy Highway 99 without bothering to look for oncoming traffic.
Granted that some may have just bought the house the minute they landed from their 747, but I suspect that numbers are very few and far in between.
Many friends of mine who were immigrants of the past, whether they landed in the early 80s, 90s and today all had rented in the beginning to see which communities serve them well for themselves and their kids, before plunking down some major cash.
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March 22nd, 2008 at 9:51 pm 64
You can disagree if you like, those are the numbers, I didn't make them up. I stand by what I said there isn't an oversupply in vancouver. No one has said those 6K new residents we get a year are owners, I'm sure a very large portion of those are in fact renters that rent those thousands of units you say are for vancant.
Vancany rates are quite low in this city so I'm not so sure there is this abudance of rentals you speak of. And yes I am aware of how the vancany rates are calculated and that not all units are included in the tally.
We will see an oversupply only if demand drops and it might due to high prices.
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March 22nd, 2008 at 9:54 pm 65
When those 6K buy isn't the issue, they need to live somewhere so the housing still needs to be added.
Besides the 6K that came in 2000 might be the ones buying today. It all washes out in the end.
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March 22nd, 2008 at 9:55 pm 66
"I just got back from the USA, your counterparts from the NAR are really pumping the idea that boomers should be investing in farm land."
The next bubble. I hope they've heard of crop insurance. And have read the reports of climate change projections for the US midwest.
Are they recommending this as an investment or is this a head for the hills because it's going to get scary recommendation? If the former, we're going to see lots of farms being flipped because no one is going to make a killing on biofuel crops unless they're willing to take risks and get large bank loans for equipment. If it's the latter, well, you can feed yourself on an acre or less.
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March 22nd, 2008 at 10:17 pm 67
"Maybe we are and maybe we aren’t. But just what is so magical about the city proper anyway? The region is essentially one market. Does it matter what side of Boundary Road you’re on really?"
For a few people, it matters which side of Main you're on. Others have to live near the beach, or the mountains. Many of us have a preference for walkable neighbourhoods close to downtown. Little neighbourhood enclaves like Kits, the West End, etc., are what make Vancouver attractive to many of us. The suburbs are our idea of hell.
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March 22nd, 2008 at 10:57 pm 68
If you're looking at Craigslist, it really makes it tough to gauge what's going on. It's too bad the postings don't get updated as rented. Through a bit of sleuthing it's easy to find a ton of reposts/price drops… a few examples below.
$1450 500sqft in yaletown: http://tinyurl.com/2r8gj7 – has been posted on a daily basis since March 4th. Time for a price drop?
2bed in yaletown: http://tinyurl.com/32y5u6 – originally posted for $1900 March 10th, now posted for $1750 http://tinyurl.com/2sdbaf
2bed in Coal Harbour: http://tinyurl.com/2rkqqa originally posted for 2900 Feb 28th. Asking 2500 now http://tinyurl.com/3dcxqp
1bed in Coal Harbour – http://tinyurl.com/36d84d posted for 1400 Feb 27th – reposted for 1300 http://tinyurl.com/33k5yf
2bed Downtown – http://tinyurl.com/35hwbb
posted for 2450 Feb 26th – reposted for 2200 http://tinyurl.com/2lxt9z … maybe this time the !!! exclamation marks will sell it!!!
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March 22nd, 2008 at 11:21 pm 69
"There were also the same amount of people coming here between 1989 and 2004 and there was minimal appreciation in resale values of condominium units."
The interest rates were high for a good part of that period which kept a lot of people out of the market. There was also a drop in resale value in the mid-90s which would have wiped out any appreciation since 1989.
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March 22nd, 2008 at 11:36 pm 70
Obviously utility of RE varies by location. That's exactly why some neighbourhoods are more expensive than others.
But calling them different markets is another thing. All neigbourhoods in a metro are substitutable. They all go up and down together. People always claim otherwise of course ("my neigbourhood is special"), and they are always proven wrong.
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March 23rd, 2008 at 2:34 am 71
My understanding is a bubble starts in the most central, desirable neighbourhoods, and then spreads out to the far edge of the Metro area. It then retreats back, in the opposite direction. This is certainly what we're seeing in California. So Mission will pop a while before Kits, but both will eventually decline by the same amount (relatively).
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March 23rd, 2008 at 6:03 am 72
Anti-Pesto,
Numbers means absolutely nothing, unless you know exactly each of the 6000 immigrants are rich. You assumed they are, but that's a dangerous assumption. Just like a couple of my friends assumed that sub-prime mortgages accounted for the majority of US mortgages. The reality is further from the truth as illustrated by the Carpe Diem's website. The media made it sound like it was.
The real estate pumpers (as I call them) look to use the immigration argument since the day real estate bubbles exist. John Talbot wrote a book about this in the 2003, describing the immigration was a myth in driving up house prices.
Here are the problems with immigration.
1, Immigrants are one of the highest mobile people. They immigrate. The word "immigrate" means they move from one community to another. They are not residents of the community yet.
2, Past immigrants may be rich from Taiwan and Hong Kong. These days, immigrants come from a modest social class. And somehow, they could all afford million dollar homes?!?
3, Immigrants are not forced to stay in Canada. In fact, many immigrants had came into Vancouver, stayed for awhile and was really pissed at the Canadian Government for misleading them about an abundance of high paying jobs (some of these are doctors, nurses, engineers, etc) on their website. One short hop over to Seattle after they are approved by the US government and they're gone. I'm sure Seattle gets a sizable amount of people coming in every year and so are a lot of Western states like Montana, Oregon etc… Why are their housing market crashing since the end of 2006?!?
4, Immigrants don't always buy a condo. They want at least a single family home.
Their mentality is different from us in a way that owning a piece of land under the home is better than owning a strata shoebox unit in a possible leaky condo! Historically, condos have never appreciated as much as a SFH does. Most of the time, it doesn't appreciate significantly at all. The immigrants I know and talked to all agree that they won't buy a condo, but they have been the driving force of this overbuilding.
5, Strata council in some condo establishment can be overly self-serving to certain individuals and some may have an agenda that may be contrary to the ideals of the immigrants who bought into the units. Some immigrants don't want the hassle of dealing with the politics of others. Owning a SFH in this case is a better option.
And before you start babbling away how our rental market is tight, maybe you should do yourself a favor and do better due diligence instead of relying on a few keystrokes on your computer to google certain data. Maybe talk to a few property managers first. While the rental market is tight, it is not as tight as you might think. The problem with people these days is that, they want to find places they can live closer to their work place. Gas prices are high and bus passes are expensive. Both of them can eat up a significant amount of your pay and if you can save these by commuting less or even walking to work, all the better. That is why, certain condo communities are in hot demand. But what if the long awaited recession hits? Production of most things will be cut down to serve a smaller crowd. It means less need of transportation, which leads to more job cuts. Less need for fuel to transport goods lead to lower fuel prices. Lower fuel prices will allow people to live further away from their work place in communities that have a lower rent to price space ratio. This has happened before in many of the busts we went through in Vancouver. So, do you think this time will be different Anti-Pesto.
And how long had you lived in Vancouver and are you living with your parents still?!?
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March 23rd, 2008 at 6:19 am 73
“There were also the same amount of people coming here between 1989 and 2004 and there was minimal appreciation in resale values of condominium units.”
The interest rates were high for a good part of that period which kept a lot of people out of the market. There was also a drop in resale value in the mid-90s which would have wiped out any appreciation since 1989.
But interest rates were in double digit in the early 1980's housing boom. That certainly didn't keep people out of the market at all.
I think the reason why the mid 90s bust in real estate has to do with the technology bubble that was developing then. You see, a bubble is when you have mad money chasing just one specific asset class when the fundamentals do not justify it.
Before the bust of the dot.com bubble, the TSX was literally propped up by just 2 companies — Nortel and JDS Uniphase. I remembered that the analysts at ROBTV said that Transcanada Pipelines was a widower stock and told viewers to simply sell it and buy the 2 strong ones. It was $9 then. Today, other analysts at ROBTV are recommending a buy on TRP at $39/share!
When hot money is chasing commodities are houses, no rational explanations can be given. The question is, when will the bubble pop and how bad will it be.
If you had lived through the 1980's housing crash, you should know how it feels like. If you haven't, then it'll be an interesting experience for you.
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March 23rd, 2008 at 6:50 am 74
Touchy subject for some. Good debate on here for once, without all the name calling.
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March 23rd, 2008 at 7:09 am 75
Anti-Pesto,
Well done and very well said thanks for the deep look inside the core.
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March 23rd, 2008 at 7:11 am 76
Let's add some facts to this debate.
In the past several decades the structure of immigrations has changed. In 1980, new immigrants were earning the same as Canadians. In 2000, they were earning 80% of Canadians.
This is because the government widened the scope for bringing in family members. Today, while the government says 55% of immigrants are economic immigrants and the rest are family, the fact is that among that 55% are the immediate family of the skilled worker.
As a result, only 18% of immigrants into Canada are in fact skilled.
A report by the Fraser Institute in 2005 suggested that only 23% of immigrants are net fiscal contributors to Canada at a cost to the taxpayer every year of more than $18-billion.
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March 23rd, 2008 at 7:19 am 77
The Vanman,
You are so funny every time you pick some theme you just like to keep on rolling your own thread,oh come on you are talking about immigrants like to rent but how do the get those units for rent where those unit comes from or become available and when ever extra 6k shows up then extra 6k units become available again. do you think housing stats are not going up in number? so oneway or another Pesto is right try to understand.
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March 23rd, 2008 at 7:32 am 78
And we can all trust the Fraser Institute.
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March 23rd, 2008 at 7:51 am 79
"We know Vancouver has been growing at a rate of 6000/year. So there is no oversupply of units."
As already mentioned it is not proper to look at Vancouver city proper. The entire region needs to be taken into account and if this is done there are indeed more dwellings spaces being built than the population is increasing. A few points added to this:
Vancouver prices are higher than in the outlying regions and this is so partly due to its location. If other GVA cities drop in price it would be silly to think that Vancouver could maintain its price level. There will not be a significant "step function".
It is ultimately affordability that will determine prices. I do not disagree that housing is difficult to find in Vancouver for an affordable price. One must always trade off lifestyle and location to cost. It is possible that supply remains tight and prices drop in certain situations — ultimately wages need to support prices and if total wages do not keep pace with total rents something has to give eventually, especially with condos.
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March 23rd, 2008 at 8:04 am 80
For anybody who thinks there is not much to rent do a search on the dozen or so rental websites for a condo with max rent at 2500, which would be approximately what your payment would be with 25% down. Pretend your an immigrant and you want to see what a neighbourhood or building is like until you buy. The only problem you will have is trying to figure out which of the several hundred you will have time to look at.
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March 23rd, 2008 at 8:21 am 81
Not good news for the bears.
Did anyone read the article in the New York Timmes in which Roabert Shellier fially admits that the housing bubble will not affect Vancouver and makes referemce to R Chipman for reasons to support the idea that Vancouver is not in a bubble, and furthermore, there is fundamental justification for a 30% price appreciation between now and 2010.
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March 23rd, 2008 at 8:38 am 82
"And we can all trust the Fraser Institute."
All of those facts except for the last paragraph came from the government's own data. So if the government says that only 18% of immigrants are classed as skilled workers, how is it a reach for the Fraser Institute to say that only 23% of immigrants are net fiscal contributors?
However you slice it, immigrants to Canada have been getting steadily poorer, and that has to be taken into consideration if immigration is assessed as a factor in rising house prices.
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March 23rd, 2008 at 8:43 am 83
No one has said those 6K new residents we get a year are owners,
Yes I agree that it is inconsequential whether newcomers are renters or owners.
I tried posting a link to document that showed housing starts from 1990 to 2006. Starts have slowed a bit since the heyday of the early 90's. They were about 5500 a year then. The recent boom has starts slightly less on average, but with 2004 over 6000. The population growth of Metro Vancouver is much lower now, so I'd imagine that the city proper is down too. Where do you get the 6K a year from? Sounds reasonable, but I am just curious. Finally, I think the 1.5 per unit of new construction is a tad low. The long term overall average is about 2.6, but I think the weighting towards high density will bring this down to 2 or so. IMHO. Thus Vancouver proper has been adding anywhere between 8000 and 12000 over the past4 years or so.
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March 23rd, 2008 at 8:51 am 84
Vancouver Sun's latest disgrace:
http://tinyurl.com/3ctxr8
"Young adults find creative solutions to purchase first homes / Today's investment-savvy buyers aren't put off by sky-high prices"
Right. And this from the front "News" section.
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March 23rd, 2008 at 8:56 am 85
krrish2 – You never answered me before. Tell us about your "holdings". What do you currently own? What's in your real estate portfolio? And what are you buying lately?
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March 23rd, 2008 at 9:34 am 86
“Young adults find creative solutions to purchase first homes / Today’s investment-savvy buyers aren’t put off by sky-high prices”
Yeah, and Casey Serin was a sophisticated investor. The marginal buyers cum foreclosee we read sobstories about were savy and creative. Clearly this article is a plug for the book mentioned in the story. A book which attempts to capitalize on the poor affordability young buyers face. Tragic, all of it.
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March 23rd, 2008 at 9:37 am 87
-A-: Do you have a link to that article? I can't find anything like what you described on the New York Times website.
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March 23rd, 2008 at 9:50 am 88
From the Sun article"
Ironically, young buyers taking advantage of these relatively new long-term mortgages are keeping the heat on in the very market they're struggling to break into, says Craig Alexander, deputy chief economist for TD Bank Financial Group. He and his colleagues have been forecasting a cooling housing market for some time, he says, but it never materialized because they didn't expected 40-year mortgages to create a whole new crop of potential buyers. "It never occurred to us that it would have such attraction, particularly to first-time home-buyers," Alexander says. "And probably that was very foolish of us."
1. Foolish? No, the fools are the morons abandoning fiscal responsibility to chase prices higher.
2. Going to 40 from 25 results in a 15% reduction in payments. This is improvement in affordability is a ONE TIME shot that gets eaten up through price increases in a SINGLE YEAR at recent rates of appreciation. This will not end well.
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March 23rd, 2008 at 9:53 am 89
-A- , that has to be the single biggest piece of BS I've read on this blog to date
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March 23rd, 2008 at 9:59 am 90
-A-
Who on earth is "Roabert Shellier"?
Are you trying to say Robert Schiller but completely incapable of spelling it? That would seem to be at odds with your claim that you'd just read an article quoting him. It would also be at odds with ANOTHER recent article which said "Professor Schiller, interviewed recently on Report on Business television from his office at Yale University, went on to pick out Vancouver, B.C. as having one of the most out-of-line real estate prices in the world."
Full story
If you can't link to the article I'm going to just have to assume you're lying.
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March 23rd, 2008 at 10:04 am 91
Freako
"Going to 40 from 25 results in a 15% reduction in payments. This is improvement in affordability is a ONE TIME shot that gets eaten up through price increases in a SINGLE YEAR at recent rates of appreciation. This will not end well."
Not to mention that because of the much slower payment on principal with a 40 year mortgage the market only has to take a very little dip for 40 year mortgage holders to be in a net negative equity situation. Which brings about a situation very similar to the neg am mortgages in the states and people walking away from their homes.
It is just adding fuel to the fire and will actually make the fallout worse.
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March 23rd, 2008 at 10:26 am 92
"“There were also the same amount of people coming here between 1989 and 2004 and there was minimal appreciation in resale values of condominium units"
I'm sorry i wrote that, I know the prices went up and down during this time but I wanted to point out the basic point that not much happened if you bought in '89 and sold in'04.
I've met bulls who're are blissfully unaware that real estate sales even took place before 2002, since they lived with their parents before that and since buying a base unit all they've seen is (paper)gains.
They missed the the rounds of people walking away from their condos ten years ago and don't want to believe it happened.
The rental market isn't tight downtown, any potential renter (who doesn't repeatedly swear while bragging about how high his drug consumption is to his buddy on a cel phone during the viewing) with a beacon score of 650 and up can get a nice place downtown for around $2/sq ft through a property management company.
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March 23rd, 2008 at 10:52 am 93
Drachen:
“Who on earth is “Roabert Shellier”?”
I made it up! I was being mischievous.
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March 23rd, 2008 at 11:27 am 94
Just came back from a few pre-sale showing. Even the agent admits it not the same. It's taking quite a bit longer to sell. Not only that, the pre-sale price has not gone up from prior year. This is an indication that the R/E market is not going up.
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March 23rd, 2008 at 11:44 am 95
People are just seeing that that the market shills and the
master marketers(Bob Rennie etc.) have been pumping RE and in effect raising prices via the MLS and Realtylink. I am in sales and if I had the opportunity to have total control of the numbers. I don't trust realtors as far as I can throw them. They are and can manipulate and mislead as they wish and you know what they say about absolute power and corruption.
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March 23rd, 2008 at 11:53 am 96
Comment by sheeplessinvancouver
2008-03-22 22:17:23
The region is essentially one market. Does it matter what side of Boundary Road you’re on really?”
For a few people, it matters which side of Main you’re on. "
Very true. A property can be on the other side of a main street and be priced about $20,000 less. We are all in the same area, however it is certain pockets of neighbourhoods where people value more than others.
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March 23rd, 2008 at 12:00 pm 97
"Comment by Anonymous
2008-03-23 11:27:30
Just came back from a few pre-sale showing. Even the agent admits it not the same. It’s taking quite a bit longer to sell. Not only that, the pre-sale price has not gone up from prior year. This is an indication that the R/E market is not going up"
Which area did you go to?
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March 23rd, 2008 at 12:54 pm 98
The number of 1.5-1.6 per condo unit comes from the city of Vancouver metro core study.
I am also aware that the burbs will play a factor, it would be naive to assume the oversupply there won't affect prices in the city. But it would also be naive to assume they are not different markets either. Cheap condos in bby will have more effect on d/t condos then cheap condos in surrey, and cheap condos in abbotsford really won't have any effect on those same d/t condos, but they might have an effect on Langley condos. I am concentrating on the d/t market as that is where a lot of people claim supply is exploding. It is that statement I disagree with.
While people can point to stats that in a downturn all markets come down the same percentage, I am confident that won't happen this time around, I do not have anything to prove it, just intuition. We will see soon enough. I beleive there will be a slowdown, even a pull back in some markets, but not in every market.
Been a while since I've seen a good discussion on here. Thanks for everyone being civil.
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March 23rd, 2008 at 1:25 pm 99
With the recnt inventory buildup and shrinking sales, it looks like the few remaining fools have circled the wagons on
http://www.realestatetalks.ca
in desparation.
Some of their nonsense is hard to believe, including a couple of realtors that could rival Chipman for biased BS.
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March 23rd, 2008 at 1:37 pm 100
Chip says: "This is because the government widened the scope for bringing in family members. Today, while the government says 55% of immigrants are economic immigrants and the rest are family, the fact is that among that 55% are the immediate family of the skilled worker. As a result, only 18% of immigrants into Canada are in fact skilled."
According the BC Stats, in 2006, the non-economic class made up 36.5% of the total of 42K immigrants into BC. Of the economic class, skilled workers made up 44.2% of the total followed by investors/entrepreneurs with 12.5% (the remainder is composed of live-in caregivers and the self-employed).
The federal government has immigration targets for the economic and non-economic classes of roughly 60-40, respectively. However, because of a chronic shortfall in the number of economic class applications, they lump accompanying family members of economic class applicants into the same pile. With an average number of accompanying family members of 1.3, roughly 19% (44.2%/2.3) of immigrants into BC are skilled workers.
Source:
http://www.bcstats.gov.bc.ca/pubs/pr_immig.asp
(Sorry, but not open to non-subscribers until 04/01)
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March 23rd, 2008 at 2:41 pm 101
"Cheap condos in bby will have more effect on d/t condos then cheap condos in surrey, and cheap condos in abbotsford really won’t have any effect on those same d/t condos, but they might have an effect on Langley condos"
ummm … cheap condos? in the lower mainland? are you kidding? how do you reconcile that with vancouver having the most unaffordable housing in all of canada?
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March 23rd, 2008 at 2:56 pm 102
Vancouver has had the most expensive housing in the country for well over 20yrs. I think everyone here agrees that isn't going to change anytime soon. Why it's more expensive then Toronto where wages are higher is best left for the academics.
In relative terms bby is cheap compared to vancouver.
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March 23rd, 2008 at 3:05 pm 103
Antipesto,
This discussion hopefully has been informative to you as I suspect that you hadn't actually lived through the 80's and early 90s housing crash before. That's ok.. A lot of young kids out there who have 40 AMS haven't seen a housing recession yet. Soon I think they will, but they will soon adapt like we all did 25 years earlier. Life goes on.
The media and the stats are good at pumping out excuses. The stats are only current to what we are now. We had true stats about the capacity of what Nortel and JDS Uniphase could provide in the past. After the bubble, stats or not, they both collapsed. Stats can sometimes become their own undoing.
In the early 80s, it was the Chinese from Hong Kong who caused the housing bubble or so they said. The monster house syndrome. Oh yeah.. I could remember that time when I was working in the company and my Asian work mates were taunted and teased by some of my "white" colleagues that they were the sole cause of the bubble and the reasons they were having a tough time paying off the mortgage. Blame this on them! We knew now that there wasn't any truth to the BS, but I don't see the news media apologizing for it later on.
It's easy to make scapegoats out of the immigrants for our run up in prices, but I think we need to be fair to understand that immigrants today are a lot less wealthier than immigrants of the past. Still, I see the "immigrants" excuse being used even till today. I guess after 25 years, things get forgotten really quickly.
A free quick refresher course is coming soon, compliments of course from your Bank.
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March 23rd, 2008 at 3:13 pm 104
From the Vancouver Sun article:
"Others become small-scale landlords, renting out basements or extra bedrooms to tenants whose rents offset the mortgage."
Perhaps I am naive, but renting out the basement or extra bedrooms to offest high mortgage payments for 40 years is not my idea of home ownership.
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March 23rd, 2008 at 3:30 pm 105
Anti Pesto
"While people can point to stats that in a downturn all markets come down the same percentage, I am confident that won’t happen this time around, I do not have anything to prove it, just intuition. We will see soon enough. I beleive there will be a slowdown, even a pull back in some markets, but not in every market."
Well your intuition vs all of economic history AND the economic intellectual community. Hmm, which one weighs more. I reserved judgement on you the first time around because until now you hadn't really said anything monumentally stupid but do you really THINK that the opinion of someone who knows nothing and just has a "gut feeling" has any value whatsoever?
EVERYONE has gut feelings, INTELLIGENT people when confronted with contrary stats and opinions of people who spend a lifetime studying the subject at hand tend to re-evaluate their positions.
You, apparently, do not. Ergo, in a sweep of logic, you are not intelligent AND your 'opinion' is a waste of space.
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March 23rd, 2008 at 3:47 pm 106
So stating I have a gut feeling we won't see a major correction d/t is stupid? Would it be better if I were to quote historical stats that show it should correct? We all know that past performance is no guarantee for future performance, both on the upside or on the back downside.The truth is not one of us is sure what will happen.
Just for the record I've been in Vancouver since the mid 70s so I've been around longer then a good portion of the people on here have been alive. The only knowledge that has provided me is our population keeps increasing, and each economic cycle is different then the one before.
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March 23rd, 2008 at 7:35 pm 107
Ergo, in a sweep of logic, you are not intelligent AND your ‘opinion’ is a waste of space.
wtf?
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March 23rd, 2008 at 7:35 pm 108
I reserved judgement on you
wtf?
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March 23rd, 2008 at 7:36 pm 109
opinions of people who spend a lifetime studying the subject at hand tend to re-evaluate their positions.
You?
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March 23rd, 2008 at 8:16 pm 110
You, apparently, do not. Ergo, in a sweep of logic, you are not intelligent AND your ‘opinion’ is a waste of space.
That is a little over the top. As far as I can tell, AP is just sharin an honestly held belief based on factual data. This is not a battle of good versus evil, but a discussion forum for people who want to (hopefully) understand the true state of the market. What will happen will happen and everyone is entitled to hold and share their take on the situation. What I truly do not like are intentional attempts to spin or skew reality through fallacious reasoning or outright falsehoods. I truly despise the subtle ones who pretend that they are neutral. You know who I am talking about.
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March 23rd, 2008 at 9:13 pm 111
Anti Pesto
"So stating I have a gut feeling we won’t see a major correction d/t is stupid?"
No, but believing that your gut feeling has value greater than reasoned contrary opinion is stupid.
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March 23rd, 2008 at 9:40 pm 112
I drove out to Burnaby today on 1st ave, same that I've been doing for ~3 years now. At the peak of the selling season last year there were 20 for sale signs that I could count – not a single one was 'reduced'. Today, 17 so far, 4 reduced.
Maybe it's nothing… or maybe this party is winding down. At this rate there may be 30+ for sale, with even more reductions.
And my coworkers coal harbor condo, after $15K reduction, is still for sale.
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March 23rd, 2008 at 10:30 pm 113
Check out Garth Turner's response to a question of whether or not to buy a condo in Toronto: "High Carb Condo" here
http://www.greaterfool.ca/
I found it rather cute
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March 23rd, 2008 at 11:26 pm 114
Seriously, ease up on the invective. I don't think your glass walls are rock-proof.
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March 24th, 2008 at 9:44 am 115
Anti-Pesto: "I am concentrating on the d/t market as that is where a lot of people claim supply is exploding. It is that statement I disagree with."
BTW thanks for commenting here. I agree the pure statement that downtown has an oversupply is incorrect. I think a better way of putting it is that there is an oversupply at current prices. I am certain if Vancouver's housing were more affordable that there would be less "oversupply".
"While people can point to stats that in a downturn all markets come down the same percentage, I am confident that won’t happen this time around"
It's worth pondering your point and fleshing out some more tangible reasons. I can certainly see a situation where a central core would maintain its value more than other areas for reasons such as: quality of life that comes with controlled densification, increased commuting costs, income stratification, etc.
On the flipside, condos cannot densify any more and prices have gone up quite a bit in the past few years. The areas with significant densifaction, like Yaletown, have not yet developed amenities like other areas and this could contribute, in the long term, to a less desirable area. Take a look at the West End for what happens after 30-40 years; the chiqueness factor of the new buildings fades.
As mentioned, affordability ultimately determines prices, especially for high density. Rental yields are extremely low for downtown condos so there is the "greater fool" mindset that is keeping prices high. The likely situation out of this, IMO, is that either incomes increase to cover rents or prices drop. My bet is on the latter.
It's been over 10 years since the last slowdown in real estate in Vancouver and even then it was not a prolonged slump and prices were not increasing significantly beforehand. A significant chunk of homeowners have never experienced a true bear market. My sense is there is an air of impermeability in prices that seem arrogant and naive.
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March 24th, 2008 at 11:18 am 116
I think a better way of putting it is that there is an oversupply at current prices. I am certain if Vancouver’s housing were more affordable that there would be less “oversupply”.
That's a tautology. Oversupply of anything is due to prices being pushed higher than market clearing level due to speculation, hoarding or price fixing.
An exception for housing is if local demand goes dead like in Detroit and the market can't clear, since housing can't be moved to where the demand is.
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March 24th, 2008 at 12:57 pm 117
"Take a look at the West End for what happens after 30-40 years; the chiqueness factor of the new buildings fades."
The West End has been dense and living there popular for the last 30-40 years.
Although there have been downturns in some years, I don't see that changing in the long term unless more jobs start moving out of the downtown core. Even then, there are people out there (some of them retired "immigrants" from the US) who consider downtown Vancouver living attactive. And dense urban cores with a lot of activity will always be a draw for young singles. Having Stanley Park nearby doesn't hurt either.
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March 24th, 2008 at 1:11 pm 118
"Vancouver has had the most expensive housing in the country for well over 20yrs. I think everyone here agrees that isn’t going to change anytime soon. Why it’s more expensive then Toronto where wages are higher is best left for the academics.
In relative terms bby is cheap compared to vancouver"
I completely agree, but I wouldn't leave the why to academics because the academics that follow real estate trends are not usually the ones interested in human behaviour.
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March 24th, 2008 at 1:28 pm 119
"That’s a tautology. Oversupply of anything is due to prices being pushed higher than market clearing level due to speculation, hoarding or price fixing."
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March 24th, 2008 at 1:30 pm 120
"Even then, there are people out there (some of them retired 'immigrants' from the US) who consider downtown Vancouver living attactive."
There was a time when the 30 year old buildings in West End were new and demanded an additional premium. Yaletown has the location and newness cachet; the newness will disappear and with it the newness premium.
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March 24th, 2008 at 1:42 pm 121
I get what Jesse is saying. Although all nice and shiny now, the towers in Yaletown will become thought as all drab and dingy as much of the West End is perceived today by some.
What else explains the rent differentials between the two? The WE has better access to the beaches and Stanley Park, a generally nicer vibe from the residents, and rents which are somewhere in the range of 25% cheaper (depending on how you price in things like W/D, underground parking, etc.).
Given how quickly and homogenously the towers have gone up in the past few years, we'll probably have a severely outdated skyline in 20 to 30 years time. Fads and fashions exist in architecture, not just popular culture.
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March 24th, 2008 at 1:46 pm 122
No, but believing that your gut feeling has value greater than reasoned contrary opinion is stupid.
Your "gut" has been wrong for years – yet back you come and come and come – with ever more batches of "facts" explaining why it will be different this time.
Lighten up, dude. This is a west coast blog, not the Jerry Springer show.
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March 24th, 2008 at 2:45 pm 123
Anon:
"Your “gut” has been wrong for years"
Well, that's wrong on several levels.
1: My opinion that RE is due for a correction is not based on gut feelings but rather research, many complimentary opinions and the complete lack of an intelligent counter argument.
2: If I may use an analogy it is not "wrong" to say, "The sun will come up tomorrow morning." for 12 hours and then suddenly when the sun comes up it's right. That's pure lunacy. I am right now, I was right yesterday and I will be proven right when the market does finally correct.
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March 24th, 2008 at 3:22 pm 124
Just a couple of thoughts on the "drab" West End:
1) THe trees and flowers and plants have all been there for a while, so it's lovel most of the year. Yaletown is all steel and glass. It's nice in it's way but the WE has a very comfy "lived in" feeling.
2) As far as I know, most of the people there are renters and have been for a while. They seem to be some of the last holdovers of the pre bubble frenzy. They're still easy going. You never hear the terms "Strata" "special levy" or "flipped it for 15K in 4 months, dude" there.
I'm not sure I'd put a premium on newness, especially in Van. The older buildings have units that are much larger. You can buy your own portable dishwasher and washer dryer for one of those apartments and still be way ahead on living expenses compared to, say renting a shoebox in Spectrum.
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March 24th, 2008 at 3:29 pm 125
Interesting, in this article the MSM presents both sides of the argument rleated to Canadian House Prices
http://news.sympatico.msn.ctv.ca/TopStories/Conte…
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March 24th, 2008 at 3:48 pm 126
scullboy,
Totally agree with you.
I think the realtors (TM) will be shocked when the bears come out of hibernation and demand NO GRANITE OR STAINLESS STEEL. Not only because it is cold and impersonal but because it represents real estate that is cramped and overpriced.
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March 24th, 2008 at 3:54 pm 127
Scullboy, are you sure about your numbers?
it seems to me the west end rent prices are way too high and it if weren't for international students they'd be vacant.
Exhibit A
http://www.rentersguide.com/hotlist/
1 bedrooms for $1500, with no concierge,no free gas f/p and stove, no restricted floor access, bedbugs etc.
I can site several examples where it's cheaper to rent in the newer buildings in the west end. The George and The Lions are two examples where you can rent a 550-590 sq ft unit for $1200-1350. meanwhile 1460 Barclay they want the same price and have filthy persian carpets in the hallway and really basic suites.
For two bedrooms it'll cost you $2250 to rent a 2 bedroom at 1111 beach but you can rent in one of the nicest buildings in vancouver, Parkwest 2 at 583 beach, for $2300 and that includes gas, parking, concierge, really nice facilities, no bedbugs.
I can ramble on about this for awhile. I know some of the west end buildings are much nicer than others but overall it seems the rents are just too high.
Spectrum is a joke, they were giving away 1 bedrooms for $1100.
Don't get me wrong. But an old stinky shoebox with no amenities or insuite laundry isn't worth the same price as a newer shoebox with amenities.
People have told me for years that the old units are bigger but they aren't. the renters guide has floorplans that indicate the sq ft.
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March 24th, 2008 at 5:25 pm 128
Scullboy "You can buy your own portable dishwasher and washer dryer for one of those apartments and still be way ahead on living expenses compared to, say renting a shoebox in Spectrum" Nope your wrong!
They found an 8!!! eight bed massage parlour in Spectrum c/w bins of new condoms, bins of USED condoms, fun stuff ..me thinks they are paying their rent!
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March 24th, 2008 at 5:58 pm 129
"They found an 8!!! eight bed massage parlour in Spectrum"
Do you have any links for this? If true, all I can say is I am not surprised, but glad that I didn't live next door.
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March 24th, 2008 at 6:15 pm 130
I have a gut feeling we won’t see a major correction d/t is stupid?
not stupid but misguided….
more along the lines of "wishful thinking"
the over supply problem would be swiftly taken care of at $300 sq/ft(pent up demand
) while at $700 sq/ft the market remains stagnant.
w/o easy cheap credit this pig won't fly!
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March 24th, 2008 at 6:19 pm 131
hughz "Do you have any links for this?" Sorry hughz can't give you that, however it was a contractor I know who was doing strata work on an emergency basis, thus had access to the unit from the property manager. It's true; I know the unit number and building but they (that contractor)would be in a mess if I told.It was confirmed by other sources.
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March 24th, 2008 at 7:08 pm 132
If You Don’t Buy Now, You’ll Hate Yourself Later
http://tinyurl.com/3doqlo
In B.C. we have a strong local economy and good job growth, coupled with strong market fundamentals and sustainability, which result in no real estate bubble.
there! you been told!
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March 24th, 2008 at 7:31 pm 133
No bubble eh? I guess she doesn't really look at the pretty graphs on her page: http://tinyurl.com/2nqpel
Aside from the price graph (which only goes up, btw) the small graphs are also very interesting, especially when comparing Feb 07 to Feb 08. Why is there more blue, but not more red?
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March 24th, 2008 at 9:09 pm 134
My opinion that RE is due for a correction is not based on gut feelings but rather research, many complimentary opinions
By complimentary, do you mean "free" or kind of like "flattering"?
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March 24th, 2008 at 10:21 pm 135
By complimentary, do you mean “free” or kind of like “flattering”?
Obviously he meant "complementary".
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March 24th, 2008 at 10:29 pm 136
Yeah, I guess you're right. Wish such a clear-thinking individual such as hisself wouldn't confuse a befuddled old fart like me. Gotta admit, I have a hard time following his impeccable logic and bomb-proof opinions such as of hisself.
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March 25th, 2008 at 8:42 am 137
House Price Change 6-Month Annual Rate
Phoenix – AZ -28.21%
Los Angeles -26.70%
San Diego -27.17%
San Francisco -23.01%
Denver____ -12.76%
Washington -17.29%
Miami___ -27.59%
Tampa – FL -21.21%
Atlanta – GA -12.83%
Chicago__ -11.09%
Boston__ -9.89%
Detroit – MI -18.15%
Minneapol – MN -15.35%
Charlotte – NC -4.90%
Las Vegas -29.68%
New York -8.38%
Cleveland – OH -15.94%
Portland – OR -7.34%
Dallas – TX -12.12%
Seattle – WA -10.45%
Coming soon…
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March 25th, 2008 at 9:54 am 138
from the Van Sun:
http://tinyurl.com/yvhmsc
good read!
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March 25th, 2008 at 11:40 am 139
Hey, a listing was just posted for the Residences on Georgia, by Downtownsuites.com, they call it coal harbour but it's right on the border of the west end.
$1250.
That unit has a really nice layout.
******This Rental has nothing to do with me***********
Located in the Coal Harbour area at West Georgia and Jervis Street. It is near Robson Street, restaurants, shops, transit, Canada Place, Stanley Park and the seawall
* Residences on Georgia – 1 bdrm & den 685 square foot apartment
* Northwest corner, city view
* Marble, granite countertops and designer appliances
* Pantry off kitchen
* Insuite laundry
* Parking available for 1 vehicle, extra storage
* Building offers a Gym, Conference room and 12 hour Concierge
* One year lease required
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March 25th, 2008 at 11:48 am 140
From blueskies' article: "She does not wish death upon Mom and Dad, but she can't deny, either, that she's looked far down that road to the day when they cash out and she, finally, can take her first easy breath of cashing in."
What a wonderful and uplifting read, indeed! Put in context of real estate, there is TONS of underutilised housing out there and more on the way. Prices will be sticky because sellers are not all that motivated. My parents' next door neighbors are in their 80s and still living in a 5 bedroom SFH.
It is almost ironic that the baby boomer generation was so good about paying down debt and saving for retirement through savings and pension contributions that there is no longer an incentive to sell their homes.
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March 25th, 2008 at 12:11 pm 141
Damn Dan
I find it interesting that someone who is so offended by ad hominem attacks as you seem to be posts exclusively ad hominem attacks without even the slightest hint of an opinion on the subject at hand.
Mocking me and my opinions without providing any complementary (thanks for the correction Freako) arguments or data about the state of the local market seems to be just misplaced anger on your part. Are you angry because you're afraid of losing your shirt in the crash or do you have some personal issues on the go right now?
Perhaps I went over the top on AP but I am just sick of the sub moronic level of brain activity that people like him pass off as a valuable opinion on Real Estate in this city. If gut feelings have value equal or greater than reasoned thought then Creationism is a valid idea, the Iraqis WOULD have welcomed the Americans with open arms and UFOs would be regularly visiting our planet.
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March 25th, 2008 at 3:01 pm 142
Van Man
Don't be so quick to judge those holders of ABCP as stupid greedy investors. I sold my condo last year expecting the market to turn much earlier and asked my broker to put my savings in something guaranteed as I do not want any exposure to real estate. He put me in ABCP in July at 4.35% telling me it is a AAA guaranteed savings instrument (T-bills were offering the same at the time). I thought nothing of it as I wanted to park my $$$ for a couple months while I determined what to invest in – two weeks later I was frozen.
I am not a naive investor and asked the right questions, but when told it was a guaranteed money market investment I felt satisfied, had it offered me a premium over T-bills, I would have had more questions and doubted its "guaranteedness". At this point I am just thankfull that I only have him a chunk of my assets to manage and am not looking forward to the lawsuit.
If Canaccord does not make me whole as the other banks have with their clients, I will be voting against Purdy Crawfords proposal.
I will also be never use Canaccord again for anything other than as an example of how not to do business.
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