Friday Free For All!
Local Edition! Friday is open topic time at VancouverCondo.info, here’s a few story links to get you started:
-Rat hotel must stay open
-10% property tax increase next year?
-Immigrants face unreliable income
-UN Human rights complaint on Van housing
-Why Vancouver RE is safe and profitable
-Surrey homeless numbers up 15%
-Bob Rennie is pro-density
-$10 million to clean up Vancouver
-Kelowna condo project financial problems
So what are you seeing out there this week? Post your news, links, and anecdotes here and have a great weekend!
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April 10th, 2008 at 10:00 pm
Then I came home, watched this:
http://www.youtube.com/watch?v.....re=related
and came to my senses again.
April 10th, 2008 at 10:33 pm
April 10th, 2008 at 10:40 pm
April 10th, 2008 at 11:03 pm
http://www.economist.com/world.....d=11024646
April 10th, 2008 at 11:28 pm
He has a point… I’ve traveled all over the world, and can verify fisrt-had that there are few cities outside of Vancouver with both dining AND shopping.
April 11th, 2008 at 12:30 am
Sad but true. The west end is no more. Hasn’t been for about a decade. Can’t be saved. It’s gone, gone, gone.
April 11th, 2008 at 12:59 am
Rents are always justified. They are payment for current consumption of shelter, from current income. There is no speculative component.
Vancouver has always had a high rent/income ratio compared to other Canadian cities, which means that people really are willing to pay more to live here. Not a lot more, but the difference is there.
People don’t buy houses just to have a place to live. They are also speculating on future returns. Vancouver prices are totally out of whack with rents, and that has nothing to do with whether everybody, or more than the usual somebody, wants to live here.
Virtually the whole US is in a price bubble, and it can’t be true that everyone wants to live everywhere in the US at the same time.
April 11th, 2008 at 6:01 am
Excellent Economist article! Couple of gem quotes:
“…reluctant as mortgage lenders are to talk down the market…”
and my favorite:
“More important, once people begin to expect lower prices, it is very difficult to reverse a self-fulfilling downward spiral in the housing market.”…thus explaning Bill Good and Co’s efforts to fight this change in tide.
April 11th, 2008 at 6:57 am
April 11th, 2008 at 7:01 am
The inventory of unsold condo apartments is 92% higher than it was last year at this time, and the inventory of unsold townhouses is 55% higher than last year at this time.
Sales of completed condo apartments are 14% lower than last year at this time, while sales of completed townhouses are 48% lower than last year at this time.
OMREB March Statistics
With many condo projects completing in the near future, I expect the inventory of listings to increase dramatically.
April 11th, 2008 at 7:52 am
April 11th, 2008 at 7:53 am
April 11th, 2008 at 8:27 am
April 11th, 2008 at 8:43 am
Regarding “housing prices up 0.3%”, I wonder:
(a) new construction or existing homes
(b) SFH or condos
(c) Canada or Timbuktu
(d) B.C. or where?
(e) Vancouver or where?
(f) 0.3% over a 100-year period in real dollars? nominal dollars? or perhaps a shorter time frame like a month?
Regarding “mortgage rates drop to 11-month low”, so what?
(a) Is this historically high or historically low?
(b) What does it mean for people renewing? What rates did they buy at? Will the new lower rates still cause them pain?
(c) Have rates swung like from 11% to 4%, or just a teeny weeny itsy bitsy little bit that won’t really impact anyone at all?
(d) With regard to (c), how much will it save the average person on a $500,000 mortage?
Comments, context, significance, importance?
April 11th, 2008 at 9:00 am
OT - A colleague of mine and I were talking this morning about this change in attitude towards consumption from generation to generation. I’m 30 and I hate debt, I’d rather save and then buy out right without interest. Many people I know are like that. The new generation seems to have no issues incurring debt and leasing items to give off the illusion that they have money. I know this is being stereotypical.
When we talked I started thinking about why? Why is it that this new generation wants to look rich instead of be rich? My colleague went on about a PhD who wrote a paper on this as a net worth illusion. So I have to ask, what do you base someone’s net worth on? I too am guilty at times of thinking that a person’s net worth is judged by how they look, dress and drive. However, the richest people I know drive average cars, live in average homes, wear decent clothing and have millions in their portfolios and in the bank.
Not sure where I’m going with this, just like to throw stuff out there that’s on my mind.
April 11th, 2008 at 9:02 am
got up on the wrong side of the bed today, did we?
Don’t like it? Ignore it. Easy as pie.
April 11th, 2008 at 9:11 am
April 11th, 2008 at 9:20 am
I have seen statistics posted on this board and on VHB although I don’t know of any site for them (the Canadian Cities Housing & Real Estate Data Site has rental price growth but not prices).
But there is really no secret - Vancouver rentals are among the highest of any Canadian metro, on a par with Toronto, Calgary, and Edmonton, but median household income is among the lowest of any metro. Put x and y together and you’ve got it.
BTW there was a local hit song in the 1960’s called “The Vancouver Song” by Rolf Harris (reference), and one of its lines was “they take away half your pay for rent”. Nothing new under the sun.
April 11th, 2008 at 9:24 am
The funny thing is that I live in point grey, and while there’s no shortage of expensive cars here I see the same number of BMW’s etc in grungy east van neighborhoods. There are many many million dollar homes over here with 15 year old cars parked out front. Many of my older friends are quite comfortable specifically because they’re content to drive an older cheaper car and have extra cash to invest sensibly. They’re doing well, but not concerned with the flash that makes sure everyone else knows it.
April 11th, 2008 at 9:27 am
Just to re-assure you all, buying a pre-sale is still a good idea. Thanks Mr. Rennie!
April 11th, 2008 at 9:28 am
April 11th, 2008 at 9:37 am
“Turn your home equity into debt!”
April 11th, 2008 at 9:38 am
April 11th, 2008 at 9:47 am
“They guaranteed us they wouldn’t sell those homes for less than market value”
Interesting how they interpreted ‘market value’ as ‘what you paid during a housing boom’, and not what people are currently willing to pay.
April 11th, 2008 at 10:06 am
April 11th, 2008 at 10:09 am
The sales agent there told me that Toronto condo’s cost half what the same coal harbour unit costs but rents for 50% more.
Ohh, I just realised I’m a freaking hypocrite for quoting a realtor as an expert!
April 11th, 2008 at 10:34 am
If the goal is the signs of wealth, why not skip to the end without spending time and work on accumulating the means.
Read “The Murder of Reality” by Jean Beudrillard for a desciption of how this is merely a symptom of a larger, all pervasive aspect of our culture.
April 11th, 2008 at 10:58 am
I’m more concerned that they’ll be bailing out the banks. As I’ve said before I hope that each and every home owner who can’t make their payments has their mortgage application reviewed for fraud. If they committed a fraud they should be ‘flipped’ against any bank agents who encouraged them to fudge the numbers, those agents should be flipped against their higher ups who encouraged them to bend the rules and so on. Everyone in the chain except the home owners should do jail time. Home owners with multiple fraudulent applications should do jail time. The rest should get community service. There are literally thousands if not tens of thousands of people in Vancouver who are guilty of fraud and I don’t think they should be allowed to skate.
April 11th, 2008 at 11:03 am
I’m 26 and I don’t want to be in debt. I grew up with boomer parents who are nowadays 500,000 in debt.
April 11th, 2008 at 12:04 pm
Isn’t that equivalent to:
“They guaranteed us they wouldn’t sell those homes for less than what they would sell them for”?
April 11th, 2008 at 12:07 pm
“Will”?
The banks have been bailed out in advance. Their mortgage loans (the ones that really matter anyway) are CMHC insured. CMHC’s obligations are unconditionally backed up by the taxpayer.
Canada’s banks have taken, and will take, a far greater hit on US mortgage securities than they ever will on Canadian mortgages IMHO.
April 11th, 2008 at 12:50 pm
Via - Good on ya, learn from their mistakes, it’s what we should all be doing. The one thing you don’t hear about is the total cost at the end of the amortization period. ie:
Average of 6.5%
$500,000 - 25 years - total paid $1,004,735
$500,000 - 40 years - total paid $1,212,000
Interest is a killer! The only real winner is the bank, provided you don’t default on the loan.
April 11th, 2008 at 1:13 pm
They will be limited on downside exposure but this does not necessarily mean they will continue to lend with profligacy. There are interesting and competing arguments for what Canadian lenders and CMHC/PMIs will end up doing if Canadian house prices fall.
April 11th, 2008 at 2:50 pm
I think your numbers are off, 40 year is much worse.
1,390,363 @ 40 Years 6.5%
1,004,376 @ 25 Years 6.5%
April 11th, 2008 at 3:41 pm
1) What percentage of houses had private mortgage insurance in US markets?
2) If any other countries have something similar to the CMHC?
3) If the CMHC insures the full value of the mortgage, or only a certain percentage (say 25%?)
The way I see it, even if the banks knew prices were about to correct by 20%, they might as well still write mortgages since they have nothing to lose when prices go down. Not sure what affect this will have when things do turn.
April 11th, 2008 at 6:37 pm
There’s no article at this point, just a video on http://www.cbc.ca/bc/ under BC Audio & Video (On the right under the weather).
41 Condos, building 80% complete. Sounds like this development was a disaster from early on.
April 11th, 2008 at 6:46 pm
Sweet find. Another crack in the RE foundation. Thanks for the link.
April 11th, 2008 at 8:07 pm
April 11th, 2008 at 8:12 pm
April 11th, 2008 at 8:44 pm
This ship is sinking. Its weird, though, I mean we’ve been talking about the “crash” for so long, and now its actually happening.
Feels somehow less satisfying than I had imagined
April 11th, 2008 at 8:59 pm
A lot still do. Why would anyone buy in this crazy market if that wasn’t the case?
The rapid appreciation in RE values over the last few yeas is a new phenomena for most. Future appreciation is probably not the main motivation on the day you buy, especially if you’re an FTB. Once the prices go up, you might start looking at your home as an inflation-proof asset, but in the majority of cases, it’s still just a place to live.
April 11th, 2008 at 9:04 pm
Because they are expecting capital gains, silly bunt. They already had a place to live before they bought the house.
April 11th, 2008 at 9:08 pm
If your monthly outlay for buying is twice the cost of renting the same property, there can simply be no other motivation than price appreciation. People just don’t toss away that much money without expecting something back for it.
April 11th, 2008 at 9:09 pm
April 10 - EconoPlay.com (Gary Rosenberger): “Housing took another bad turn in March as the realities of recession dawned on buyers - and no amount of discounting could get things up-righted for the launch of the spring selling season, residential builders say. The best intentions from the Fed and Congress to restore confidence in banking and housing came to naught… Indeed, government moves to fix the housing mess may have set off even more alarms, opening more sinkholes on the path toward recovery. Any glimmerings of a bottoming in January and February dissipated in March, leaving builders to extend their recovery window further out - by as much as two years into the future. Buyers are not responding to lower home prices… Average 30-year fixed-rate mortgages dropped below 6.00% for the second time this year…but aggrieved builders see banks lathering on ‘risk premiums’ that in reality raise the cost of a loan. The only improved markets are those tied to the boom in energy and agricultural commodities, with Texas and Iowa among the markets that appear to be inoculated.”
April 11th, 2008 at 9:18 pm
I would agree that there are a lot of signs that oil reserves might be peaking, but
- it’s too early to know for sure
- it will probably take a lot longer than September before it will affect the local economy, and
- there’s a possibility that it will have a positive effect on the local economy, at least initially.
It might even push RE prices in the central core higher, as some people move out of the suburbs to be closer to work, or move to the Lower Mainland to save on heating costs. There are a lot of places in Canada where oil is still the primary heating fuel.
The province as a whole has a lot to gain from rising fuel prices and can probably weather the storm better than the rest of Canada.
We have hydro power, the capacity for wind power, the govn’t will probably open up the coast to off-shore drilling. Shipping costs are much lower for ships and trains and Vancouver is a port and rail terminus. And there are all those pine beetle infested trees that can be turned into wood pellets.
It won’t be an easy transition, but I’d rather be here than a lot of other places when this happens. I’d be interested in hearing why you think oil prices will bring the economy to a standstill.
April 11th, 2008 at 9:51 pm
What work? Been downtown lately?
or move to the Lower Mainland to save on heating costs.
Yep, that Windsor auto worker is going to sell his house and come to work in Vancouver and work at Starbucks, so he can save on heating costs.
One more time: Vancouver has by far the highest housing costs of any Canadian metro, yet among the lowest incomes.
The fact is that apart from energy producers like Alberta, high energy costs are bad for just about everywhere. The BC economy is highly dependent on discretionary spending from the US and elsewhere. There is very little that BC produces that anyone really needs to buy.
Do note that the last big jump in oil prices, in the mid and late 70’s, was followed a few years later by BC’s biggest recession and RE bust since the 30’s.
April 11th, 2008 at 10:09 pm
Try the CMHC web site. I couldn’t find the document I was looking for - way too much stuff on that site, but have a look at the one in the link below.
http://tiny.cc/7gKw3
April 11th, 2008 at 10:18 pm
True, but that’s only recently. Anyone who bought when the prices were low and when renting versus buying wasn’t such a clear cut issue wouldn’t have had that motivation. I know people with mortgage payments that are half the current rents. And even if interest rates double, they’ve paid off enough of the principal to negotiate reasonable mortgage payments.
You wait until the prices hit the bottom of the cycle and, if interest rates are favourable at the time, buy just as prices start to go up again. Now is not the time to buy because we’re near or have already reached the high end of the cycle.
April 11th, 2008 at 10:43 pm
You’re partially right. A variety of factors contribute to decisions about where to live. That 50-something auto worker is probably going to stay put, but a lot of younger people are more mobile and, if there aren’t any jobs in the auto plant, might move where life is better.
“The fact is that apart from energy producers like Alberta, high energy costs are bad for just about everywhere.”
There’s an oil patch in Northern BC. I’m not a fan of the tar sands, but they’re currently doing exploration work north of Fort St. John to see if they can replicate what’s happening in Alberta. To be fair, exploration work for uranium and gas is going on in Saskatchewan, New Brunswick and Nova Scotia as well.
“Do note that the last big jump in oil prices, in the mid and late 70’s, was followed a few years later by BC’s biggest recession and RE bust since the 30’s.”
Part of the blame can be laid on the National Energy Program which made it unprofitable for the oil companies to do business in Canada. It was one of the quickest exits I ever saw. Oil prices dropped worldwide in the ’80s. It just might not happen this time.
I’m not saying that we won’t experience a recession, but I think the long term outlook for BC, and by extension Vancouver, is good.
April 11th, 2008 at 10:53 pm
I’ve got news for you: aside from the poseurs who are attracted to Vancouver like flies, “life is better” means people can afford the things they want on the jobs they can get.
Vancouver, and other BC bubble cities, combine the highest housing costs in Canada with a dearth of well-paying jobs. That just might have something to do with the historically low levels of domestic migration.
April 11th, 2008 at 11:28 pm
Twenty bucks says that McGarry paid about that to plant his “analyst” piece on the newswires.
April 11th, 2008 at 11:29 pm
April 12th, 2008 at 12:08 am
I’m not sure that explains why Vancouverites continue to stay despite the high housing costs. A better life means different things to different people. If well paying jobs were the main attraction, we’d all be living in Fort McMurray.
At today’s RE prices, I will not be surprised if some people leave, but I still think the long term outlook (ten years or more) for the West in general is looking much better than it is in the East.
The historical dependence on trade with the US in Central and Eastern Canada puts them in a precarious situation. Working in Vancouver and BC’s favour are the geographic proximity to Asia, the large population of Asian immigrants with ties to their country of origin and our resource base.
April 12th, 2008 at 12:36 am
There was an article in one of the local papers where they asked local “experts” (politicians, social workers, etc.) why the homeless were moving to the suburbs. All gave different reasons, including unaffordable housing. Then they interviewed a homeless man in Surrey. His answer was that everyone was going where the resources (drugs) were.
April 12th, 2008 at 1:20 am
The point is that historically high numbers are not staying. That’s precisely why net domestic migration is so low. Now of course people who bought before the bubble are OK and have no reason to move, unless they want to cash out.
And the issue is not whether we “all” are going to live in Vancouver or McMurray or whatever. The issue is the direction of migration and comparison to historic trends. People really are moving to Ft. McMurray, and they really aren’t moving to Vancouver in anywhere near the historical numbers. Jobs and affordability really do matter.
April 12th, 2008 at 7:01 am
April 12th, 2008 at 7:21 am
I’m not sure what effect this will have either but banks DO lose if prices go down. CMHC may insure the balance but the bank is out the foreclosure costs which would make it a money-losing deal. Also — food for thought — banks will also start to lose if prices drop by more than 20%, since MI is now not required for down payments above this amount. Also I don’t know if home equity lines of credit are insured and apparently such LOCs are being tapped to some degree.
April 12th, 2008 at 8:17 am
I mean it!
We won’t ever be below 13,000 again this year!
Strataman
April 12th, 2008 at 9:00 am
No, it’s due to the fact that the average owner bought their first property (which may or may not be the current one) a couple of decades ago.
I frankly don’t understand why this isn’t obvious to everyone.
April 12th, 2008 at 9:29 am