Vancouver Condo Info

Every friday we do a weekly news link round up and have an open topic discussion. Here’s a few stories I’ve noticed this week:

- Man charged for craigslist rent scams
- BC only province to see increase in EI claims
- Robert Zoost the Super-Realtor
- Tips for first-time house sellers
- Bad week for Canada’s banks
- Do recessions cause a birth-dearth?
- UK follows US into housing bust

So what are you seeing out there? Post your news, links, thoughts and anecdotes here and have an excellent weekend!

From the ’sun predicted to set’ department of todays Province comes this article: BC developer warns of cooling condo market.

B.C.’s development industry must be nimble, disciplined and well-financed to survive the cooling of the provincial market, a veteran developer says.

The Lower Mainland has yet to experience the full impact of the U.S. housing slowdown and the troubles sweeping the Interior’s forest sector, Concert Properties president David Podmore said yesterday.

“I do think you’re going to see a continued slowing of our economy as . . . what’s happening in the Interior and the U.S. spill over,” Podmore told a conference on the future of B.C.’s housing industry.

“You’re going to have to really sharpen your skills to be successful and to compete effectively.”

Podmore said developers should stop relying on pre-sales, which he called a phenomenon of the past eight to 10 years.

The market is heading into a period where projects may take half-a-year to sell out, he said.

Disciplined developers will pull the plug on projects if it becomes clear they can’t succeed, he said.

There will be opportunities for well-financed developers to take over idled projects - but they must be fast on their feet, he said.

The ‘pulling of plugs’ has already started to happen on some projects like the Eden group Elyse.  Those that don’t pull the plug when they can get it pulled for them and go into recievership Sophia, H+H, Gardencity, etc.  There’s good news though, as the US housing slowdown continues it’s forecast that material prices will moderate.

Daily Dose suggested a poll on Vancouver rents, which seems like a natural extension of the discussion on rental prices started in the previous story. We’ve discussed the topic of rent in Vancouver before, but this poll will hopefully give a nice visual overview. Unfortunately this poll plugin does not give me the option to connect answers (i.e. 1 bdrm for $850 in Vancouver West) but please feel free to add detail in the comments section.

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Extra: Reductimat posted this link showing rent ratios in major American cities. This ratio is the purchase cost divided by the annual rent. This ratio ranges between 11.4 (currently in Columbus) and a peak of 34.5 (Bubble ratio in San Fran, currently down to 26.1). What’s your rent ratio?

Even after years of falling real estate prices in Miami it’s still cheaper to rent than to buy according to this article in the Wall Street Journal, sent in by bcbuds.  As prices are falling so are rents.

It’s a dilemma for owners, do you try to wait out a recovery and pour money into the condo you’ve got rented out at a loss, or do you stop the bleeding and sell in a down market?  Many are choosing to wait out the market and hoping for a recovery soon.

…But that has created a new, predictable situation. “Rents are falling,” says Miami broker Leslie Cooper. “You and your brother and everyone else is trying to rent your new condo out. So no wonder. But the rents won’t even cover your costs.”

I looked a number of fabulous condos in new developments on Brickell Avenue in downtown Miami. Their prices had been slashed drastically from peak levels. Some are now in forced sales.

You can get a two-bedroom condo in some places for $400,000 or less. And that’s considered a great deal.

Of course the problem is that even these reduced prices aren’t justified by the rental income.  The article goes on to examine the numbers- even if you aren’t renting the money and have the $400k cash interest free to buy one of these condos it’s still a losing proposition in a post-boom era of property depreciation.

It’s open topic time here at VancouverCondo.info, here’s a few stories I’ve noticed this week:

- Homeowners face increasing financially strain
- Harper: Canadian economy in good shape
- Price Hikes starting to hurt
- Foreclosures can be jackpots
- Congresswoman walks away from mortgage
- Oops. I meant ‘forward’ not ‘reply all’!
- Largest ever US house price decline
- Flip this house. Please!
- Florida for sale.

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

Another lower mainland condo project in trouble, this one in New West. Story at the CBC:

United Properties, the developer behind The Anvil in New Westminster, has run out money, and that means pre-sale buyers are being asked to pay an additional $20,00 to $40,00 if they want to keep their condos.

Pre-sale buyers have received letters from the developer saying they have 14 days to decide whether they want to pull out and get their deposit back or pay the additional costs. The project needs an additional $4 million to meet its financial obligations.

“Development is a tough game and United Properties has been at it for some time, so it is quite unique to have such a developer run into this kind of difficulty,” said real estate lawyer Ron Usher.

Apparently the Anvil is currently 18 months behind schedule. Insert appropriate Wile E. Coyote comment here.

Thanks to Macchiato and Exx for the story link.

RBC has released a report on the saving and spending habits of Canadians, apparently we’re saving less than ever, with more Canadians relying on credit cards, loans and mortgages.

Canadians are not prepared - and not preparing - for a rainy day, like an economic downturn, a major bank is warning.

The vast majority of Canadians admit they’re poor savers, with barely one-half having a rainy-day account. And of those, only half have enough to cover a month’s expenses, RBC said Wednesday in releasing results of a spring survey of the saving and spending habits of Canadians.

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“One need only look at the newspapers or television to see that North America is in an economic downturn,” said Ashif Ratanshi, senior vice-president, RBC Branch Investments and Banking.

“This is the time for Canadians to re-assess their own finances and ensure they are effectively managing their money so that they can withstand any sudden pitfalls or changes in their lives.”

I’ve already run a poll on savings and income that indicates most readers here are in the minority, but since the RBC reports refers specifically to a rainy-day account I’ll pose this question:

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Umdesch4 posted this updated REBGV inventory chart this weekend, showing the dramatic listings activity we’re seeing this spring in Vancouver. That purple line shows how inventory is building beyond levels seen at any point in the last few years.

The monthly inventory graph comes from Paul Boenisch, who shares monthly inventory graphs for the entire REBGV and sub areas. This graph has been updated to the 15th of May based on the daily stats Paul makes available on his website. Pauls blog is here.

It open-topic time, here are a few news stories to kick off the discussion:

- Rennies ‘simple solution‘ for affordability
- Greatest gangland on earth
- Home market flooded by sellers
- Woodwards redevelopment stumbles on
- Another blow for BC forestry industry
- Boom over, no bust predicted
- Home sales falling fast
- Canada, sucker nation
- RBC writedown only $855 Million
- Canadians invade Florida
- 9 foreclosures + bankruptcy = mistake
- Bernankes bubble laboratory

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

note: any conversation on real estate or economics is allowed, please keep it civilized. when posting articles please only quote pertinent points and link to the original instead of pasting the entire article here. Thanks!

May 15 2011 - Vancouver house prices have fallen for the 35th continuous month as the fallout from the global credit crisis continues to hit the metro area hard.  In April the benchmark price for a single family detached home dropped an additional 9% bringing the year over year losses to 74%.  The benchmark price for a detached home now stands at $47,034.

While prices have dropped dramatically across the entire spectrum of housing no market has been hit hard as downtown condos, where prices have dropped to zero and many speculators have simply walked away from their debt never to be heard from again.  Supply continues to increase as some condo towers started during the building boom are completed, but many others have been abandoned by bankrupt developers in a state of partial completion.

The sad state of the downtown core can be blamed on a confluence of factors: the credit crisis, the exodus of jobs and population, multiple bank collapses, oversupply and the discovery of the unique health hazards caused by granite and stainless steel.  The elimination of the CMHC and the requirement for 70% down payments certainly isn’t helping the local market.

While many speculators have been financially destroyed by this market, not everyone is unhappy with the collapse.  Local teacher Sandy Ursus just bought three homes in Vancouvers southlands neighborhood and is quite happy with the purchase.

“The minute I saw this house I fell in love.  We’ve been saving for years, but when this and the neighboring homes came on the market for a combined price under $200k I knew it was time to take my money out of the bank and buy” Ursus explains sipping champagne on her sunny deck. “Since we had the two neighboring homes torn down it’s almost like living in the country here.  Its funny thinking that just a few years ago people were fighting to pay more than the next guy for a house in Vancouver while these days the seller will throw in a new car and a years worth of gas just to get you to buy.”

Is she concerned about predictions of further depreciation and economic woe?

“Not at all, this is a place to live, a place to raise a family, not an investment. We’re debt free and maxing out our RSPs so the price of the house is really not a concern for me.”

Local economist Rusty Summervile disagrees “She should really get rid of that house as soon as possible. History has shown that real estate is a massive wealth destroyer.  The most sensible course of action is to rent and save as much as you possibly can, let someone else shoulder the depreciation.”