Vancouver Condo Info

When you’re in the middle of an investment mania it’s hard to imagine things ever being any different. A couple of years ago a number of Americans thought investing in real estate in cities like Las Vegas, Miami or San Diego was a great idea – if the market stopped going up it would simply stop appreciating as quickly, prices would never go down.

Well after two years of lower sales and slowly dropping prices pessimism has started to overtake the US housing market with a growing majority showing no interest in buying a home anytime soon:

In a vivid sketch of how the sputtering real estate market is causing distress throughout the country, the Associated Press-AOL Money & Finance poll found that more than a quarter of homeowners worry their home will lose value over the next two years. Fully one in seven mortgage holders fear they won’t be able to make their monthly payments on time over the next six months.

“This is a great time to buy, but not necessarily to sell,” said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can’t because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.

…

Sixty percent said they definitely won’t buy a home in the next two years, up from 53 percent who said so in an AP-AOL poll in September 2006. At the same time, just 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.

The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling — good if you’re buying a house but bad if you have to sell one.

The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago. Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.

Underscoring the public’s unsettled feelings, the number saying local housing prices are about right has fallen to 35 percent. Half say homes are overpriced — especially in the Northeast — while those saying housing is underpriced have doubled to one in 10, particularly Midwesterners.

Here in Vancouver with our run-up in house prices it’s hard to imagine the majority of residents having an overall negative outlook on investing in local real estate, but it’s happened here before and I wouldn’t be surprised to see it happen again when the market corrects.

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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!

Look at these chicken littles at the International Monetary Fund:

The world has a 25 per cent chance of tipping into recession this year and next, and countries in trouble should pull out all their policy stops to make sure it doesn’t materialize, the International Monetary Fund says.

The global expansion which has endured for years is now at risk because the U.S. slowdown will likely stick around well into 2009, the IMF projects in its latest global economic forecast.

Canada’s economy will muddle through, however, with sub-par growth, the forecast suggests.

“The global expansion is losing speed in the face of a major financial crisis,” the IMF warns in its global economic outlook, released Wednesday morning in time for this weekend’s high-profile meeting of economic policy makers in Washington.

You know what you need to do. Go out there and buy more stuff! Take on more debt, get all the credit you can and together we can keep this thing from falling off the rails. Why are you just sitting there? Get out there and buy something!!

This last month saw small gains in the REBGV benchmark price which now stand at the following levels:

Detached (Single family home): $764,616
Attached (Row + Townhouses): $473,543
Apartment (Condominiums) : $389,609

The big change is in the elevated number of listings and lower number of sales we’re seeing at the beginning of the spring selling season. Housing sales in greater Vancouver have dropped to 2001 levels as the credit crisis and financial problems in the US seem to be affecting buyer psychology.

New listings in Greater Vancouver grew by four percent this month, while sales dropped by sixteen percent. In the Fraser Valley listings dropped off by about three percent, while sales dropped by twenty five percent.

Mohican has a great post of current supply and sales data graphed out at Financial Planning and Personal Sanity showing the dramatic shift in listings to sales ratio we’re currently seeing, while Paul Boenisch provides current REBGV statistics broken down by area if you want to keep track of this market going forward.

BC’s unemployment rate edged up a bit in March from 4.1 to 4.3% but the ‘participation rate’ rose to a 13 year high at the same time.  The ‘participation rate’ is the measure of working age people who either have jobs or are seeking them.

The amazing thing about these recent employment stats are how many jobs are in construction:

“The increase from the previous month came in construction and manufacturing, and in some services sectors, but there was a drop in financial and real-estate services,” Service Canada economist Rod Smelser said in an analysis.

Year-over-year, B.C. has created about 55,000 jobs. The province’s robust construction industry, which generated 28,000 jobs over this period, has been the main engine of that growth.

Employment in that sector stands at a record 219,000.

“There have been significant year-to-year employment declines in two areas — financial and real-estate services, down by 15,000 jobs, and manufacturing, down by 22,000 jobs,” Smelser said.

It’s curious that those building condos have plenty of work, while those funding and selling them are seeing job losses.  It would be interesting to see employment stats by sector during other boom/bust cycles to determine if there is any pattern that precedes a bust.  Certainly you have to wonder, can we have an economy primarily built on building?

It’s time for our regular open topic Friday Free-for-all post here on VancouverCondo.info!

- But why are they really selling?
- Vancouver sales slow to 2001 levels
- Keep building stuff and they’ll keep coming
- Canadian prices (except Edmonton) rising
- 40 years terms add fuel to the fire
- TD Chief Executive gets all gloomy
- AAA rating not what it used to be
- Bernanke: Housing crash not Feds problem
- An eye out for mortgage fraud

So what are you seeing out there?  Post your news, links, and anecdotes here and have a great weekend!

I found this shocking bit of info over at Rob’s blog posted by Awum:

Here’s something I was wondering about. I heard anectdotally that Vancouver east side condos seem to be on a downhill slide as far as price goes. This morning I was reminded of http://www.landcor.com/market/housing_price_index.aspx to check it out, typed in Vancouver East, apartments, pushed refresh graph. Waited. Looked at the graph. Wow.

Other areas really don’t show so much weakness (I looked at a few) but Van East apartments looks like its in bust mode already. Looks like a 15% drop in HPI from peak. That’s a big deal.

Now before anyone accuses me of going all “Chicken Little” over this one piece of data, let me be clear about my point: The only reason for this drop in HPI that I can ascertain is plain old supply & demand. Too many properties for sale, not enough buyers with the required $$.

I have to admit I was very suprised to see that graph as well – I’ve always looked to the MLS Housing Price Index which doesn’t show any such correction underway. I tried to find information on the Landcor site on where they get their data and why it would vary so much from the MLSlink data and the found this page on their site which is heavy on buzzwords, but light on specifics:

The accuracy of Landcor™’s AVM is further enhanced by the quality of our data. We update our copy of BC Assessment Authority property information on a weekly basis. There are typically between 3,000 and 9,000 property information and sale changes each week. Our competitors in BC and across the nation typically update data stores once a month. Landcor™ has the most up-to-date information on property in BC.

So are East Vancouver apartment prices crashing as shown by the landcor data or are they remaining fairly steady as shown by the MLSlink data? I suspect the truth lies somewhere in between – It’s pretty tricky to ‘benchmark’ housing based on all the variables, but I’d be interested in hearing your opinion on this data.

According to an article in the Globe and Mail the CMHC is partnering with Genworth and US based Countrywide financial to offer innovative new insurance products in Canada:

The new insurance products offer coverage for a range of situations beyond the current batch of taxpayer based financial products that cover zero down and 40 year mortgage terms.

“The CMHC is proud to be able to offer these new products to help to fulfill our mandate of ensuring every Canadian can buy their own home” says Chuck U. Farley, VP of marketing “Where ever there are markets with affordability concerns the Canadian Mortgage and Housing Corporation will be there to lend a hand.”

Along with the new products the CMHC will relax limitations further when it comes to down payments and mortgage approvals.

“Today’s sophisticated investors know that credit is the best way to acquire the ‘pride of ownership’ without paying in advance.  This is an obvious improvement over the inefficient older style of ‘saving’ to pay for a major purchase.  For this reason we will now permit down payments to be made on credit cards and we are excited to announce a new CMHC ‘buyers pride card’. These ‘scratch and win’ style cards will not only give buyers a chance to save on mortgage interest rate, they will also give buyers a chance to win loan approval without the the lengthy and demeaning traditional process of a credit check.”

Chuck U. Farley points out that this will be a positive boon to hot western housing markets where ‘unaffordability has reached record levels’.

The crashing US housing market and the high price of metal has led to a bizarre situation: Some houses are now worth less than the scrap metal in their pipes.

Real estate brokers and local authorities say once-proud homes coast-to-coast are being stripped for copper, aluminum and brass by thieves. Much of it ends up with scrap metal traders who say nearly all copper gets shipped overseas, much of it to China and India.

In areas hit hardest by foreclosures, such as the Slavic Village neighborhood of Cleveland, copper and other metals used in plumbing, heating systems and telephone lines are now more valuable than some homes.

“We’re in an incredibly unfortunate time where the nonferrous metals commodities market for scrap is at an all-time high. Houses are getting stripped pretty quickly once they go through the foreclosure process,” Cleveland City Councilman Tony Brancatelli said.

“We’re seeing houses sold for $100 that are distressed houses that should not be recycled,” he said. Some boarded-up homes in his Slavic Village community have “No copper, only PVC” painted on the boards to stop would-be thieves.

I’d guess that for things to get this bad in Vancouver not only would we need to see an absolutely horrible housing market crash, we’d also need to see a boom in the price of scrap stainless steel and granite.