Vancouver Sun: at least a year till ‘collapse’
The Vancouver Sun ran an editorial this weekend about the ‘firm foundation’ of the local real estate market. The gist of the piece is that people should not panic over last weeks declaration that the Canadian housing boom is ‘officially over‘.
Compare Canada’s situation with the horror show south of the border and beyond. American homeowners from Blaine to Maine have witnessed the value of their property go down almost as quickly as it went up. The median price of a single-family resale home fell 8.7 per cent in February from a year earlier, the most in four decades of record keeping, according to the Chicago-based National Association of Realtors. Some cities, including Miami and Las Vegas, have reported declines approaching 20 per cent, which is widely expected to be the U.S. national average price drop in 2009.
Let’s not compare too closely to the American market though, because if we did we might worry about the recent increase in listings. In the US prices continued to increase as listings grew, unfortunately as soon as the trend changed and appreciation stopped people were less interested in buying and the bottom fell out of the market.
I do appreciate the assertion that the ‘firm foundation of the local market lets it weather boom-bust cycles’. What else is the local market supposed to do, disappear? We’ve weathered many boom-bust cycles and we’ll weather many more, the only problem is that ‘firm foundation’ can turn out to be a lot further down than some people expect. We survived 50% drops in the early eighties and lesser drops in the nineties but that doesn’t mean that buying at those peaks was a great investment.
I guess the point of the editorial is this: Don’t panic, because the local market won’t crash for at least a year:
The bad news, according to the IMF, is that real house price movements tend to lag cyclical peaks and troughs — generally by one or two quarters, but in Canada’s case as many as six quarters. In other words, the collapse here may be a year to 18 months away. According to the Canadian Real Estate Association, sales dropped 13 per cent in the first quarter of 2008 from a year earlier and the ratio of new listings to sales stands at a nine-year high.
April 28th, 2008 at 11:49 am
Oh you flat market theorists, you make me laugh! You say you expect that the market can continue on a "soft landing" course after 7 years of record gains, at a time when we have reached historic lows of affordability. So, you expect that the market can count on a continuous supply of new buyers ready to commit 50% and more of their net salary to purchase teeny tiny homes on 40-year mortgages, when no-one expects them to see an real price appreciation for the next few years. You actually expect them to kiss goodbye thousands monthly on interest with no expectation of gain to make up the gap between renting and owning costs — even when CNN reminds them on a daily basis the kind of risk they are taking.
Really, you guys. You're so nutty!
April 24th, 2008 at 11:32 pm
"What is the design/expected life of a high rise condo building?"
That depends on the quality of construction. There are high rises in the West End that have been there since the '60s and buildings in European cities that have lasted for centuries.
"Is there value left after the building collapses?"
Yes. Each strata unit has a share in the common property which includes the land. There's something called an entitlement upon destruction that outlines what share each strata lot owns.
"Do all the owners have to agree on what to do with the land?"
A decision like this would require a 3/4 vote of those present (in person or by proxy) at the meeting where the vote was held.
"Does the 500 sqft owner get as big a say as the 1500 sqft penthouse owner?"
Yes, assuming they each own one unit. You get one vote per unit.
Generally land values increase over time while building values decrease. This applies to condos, townhouses and single family homes. Some of those houses sitting on million dollar lots on the West Side are worth less than $10,000. However, in last year's assessment the building values went up in some cases. I'd guess it has something to do with higher construction costs.
April 24th, 2008 at 8:31 pm
Average tax filer income has jumped quite a bit in Vancouver over the last 5 years. In 1999 it was $30,830 while in 2003 (latest stats) it was $47,358 according to CRA. That surprised me and likely accounts for a good deal of the real estate jump. However, time will tell if that kind of income increase can continue. Income can fall too………. …in 1993 it was $37,130 and 5 years later was $29,664. Hmm….Boom and Bust?
See: http://www.gvrd.bc.ca/growth/keyfacts/avincpertxf…
April 24th, 2008 at 3:23 pm
http://vancouvercondo.info/forum/viewtopic.php?t=…
April 24th, 2008 at 3:12 pm
but how can you make 50 working at same job-the case discribe housing market prices justify as rate of pay has been tripled so the market turn around tripled now…….
"for the market to drop @50%to 100% rates of pay must get back from $50.00 to $13.00 per hour and from $25.00 to $7.45 per hour"-TIME
April 24th, 2008 at 2:26 pm
if friend start his carrier at 7.45 and making 25 now. it means nothing. Everybody make far less money in the beginning of their carrier.
April 23rd, 2008 at 10:50 am
Anonymous
2008-04-23 10:07:55
A friend start working @7.45 per an hour in 1995 he is now making $25.00 per an hour almost tripled.
A friend start working @$13 per hour in 2001 is making now $50.00 per an hours more than tripled.
People who have paid off their mortgage since 2001 or further but still making highest rates of pay are owning multiple properties.
Population difference is huge between 2001 and 2008.
Hello?Hello??Hello???
Are you still there?
April 23rd, 2008 at 10:38 am
Off topic but relevant…
Think speculation on housing is dangerous and unethical for the greater good? How about speculation on food?
http://www.washingtontimes.com/apps/pbcs.dll/arti…
Just when you think you'd seen the apex of greed in the land of plenty….