Depreciation fantasy

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.”

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OKAY, here is the BIG message. Vancouver real estate price will continue going up. The reasons are here: 1. Vancouver is open up straight to Asia. China and India people in this century will be making the big big money. However, people who live in Vancouver locally will continue to wonder why they have so much money. Well, they will have more and more money!! and they are not afraid of buying!! 2. Commodity price all over the world. “Everything” is going to cost more in this age. “Everything”, but money (currency). Drastically, the cost of building the same building will cost much higher. You have China having crisis with the earth quake. They are going to buy extra extra resource with whatever it costs. It will beat up the commodity price even more. US dollar weakness. The weakness is… Read more »


Sorry, that should have read "uranium" not "radiation". If commodity prices, including uranium, continue to rise, I guess you could always rip out the countertop and sell it.


"and the discovery of the unique health hazards caused by granite and stainless steel"

Not a fantasy. Granite contains small amounts of radiation. According to Wikipedia it's about 10 to 20 ppm.


3. Canada’s housing market is not overbuilt. COUGH… CHOKE… This is yet another one of those "Canada is not like the US" myths. Lets look at some numbers from the 2001 and 2006 censuses: 2001: Population – 30,007,094 Housing Units – 12,548,588 Population/Units – 2.39 2006: Population – 31,612,897 Housing Units – 13,576,855 Housing Units Required – 13,227,154 (Population/2.39) Overbuilt – 349,701 The population of Canada has been growing at about 321k/year. This means we need an additional 134k housing units/year. (2.39 people/unit) But we've been building over 200k/year for several years. In 2007 there were 228,343 housing starts, and in 2008 there should be about 214,650. If there is a need for 134k/year, it means 174k were/will be added to the excess supply in 2007 and 2008. Adding this 174k to the 2006 total of 349k brings the total… Read more »


why do you people think it’s going to drop in price. Any market has correction

Thats a contradiction. A correction is a drop in price and isn’t this a market? Would you consider a realtors view more educated? Rob Chipman is on record as expecting a ‘correction’ of up to 20%. How many thousands of dollars does that represent off the average house in Vancouver?


…why do you people think it’s going to drop in price. Any market has correction, but the assumption you guys make is simply unreasonable. So… please someone talk about real estate on a more educated ground.

I'm not sure what assumptions are so unreasonable. If you seriously want educated opinions why real estate in Vancouver is likely to crash, we can answer a lot of questions you may have. If you are just upset that this will happen and want to vent, we can't help you.


All the comments are quite uneducated
Yes, we need to be sent to a re-education camp, where we can learn obvious “truths” such as:
Nepal is truly better off under the generals rather than that terrorist radical the Dal Lama.

The smell in the misty air and the taste in the taste in the murky water is healthy.

If you can steal and loot the villagers property or children deservedly earn enough to come to Canada then the property market just won’t crash.


Jun said “please someone talk about real estate on a more educated ground.”
Jun, if that’s what you want, then STFU.


All the comments are quite uneducated. It is simply going to cost more to build as time. All the commodity price is going up, why do you people think it’s going to drop in price. Any market has correction, but the assumption you guys make is simply unreasonable. So… please someone talk about real estate on a more educated ground.


I wouldn’t be surprised if the W is a boondoggle. I hope not because I agree with the concept of “fixing” the DTES.

Patiently Waiting

More from the CBC story:

"I said to (Housing Minister) Rich Coleman, 'If we lose Woodward's, you can stick a fork in the Downtown Eastside forever, because no developer is going to take a chance of going in there," Rennie said.

After numerous discussions, Rennie said the province announced a $49.3-million contribution towards SFU's new art school in November of last year.


Excuse me, who the hell elected Bob Rennie to anything?

This is sick.



Hey, wasn't this VHB's 'favorite' project?

Woodward's redevelopment project came very close to collapsing.

A major redevelopment project envisioned to help revitalize Vancouver's Downtown Eastside almost fell through before construction even began last year, CBC News has learned.

And it took only $49M to grease the wheels:)


Why so grumpy nyc? People don't like being warned of upcoming crashes. John Kenneth Galbraith wrote about this phenomenon. …leading on as it does to wonder at the increase in values and wealth, to the rush to participate that drives up prices, and to the eventual crash and its sullen and painful aftermath. There is protection only in a clear perception of the characteristics common to these flights into what must conservatively be described as mass insanity. Only then is the investor warned and saved. There are, however, few matters on which such a warning is less welcomed. In the short run, it will be said to be an attack, motivated by either deficient understanding or uncontrolled envy, on the wonderful process of enrichment. More durably, it will be thought to demonstrate a lack of faith in the inherent wisdom… Read more »


Realtor wife says

25 year vets saying – vancouver westside SFH most listings they've ever seen and being run off there feet for appraisals

People not buying until they sell … build while you own your old residence has stopped

Great spec building property – now showings!

It's never different

relax, be patient and enjoy


That's a big 10/4 scullboy, I am in an $800 studio in a central Van location, real hardwood, no taxes or strata to worry about, landlord fixes all the broken stuff, leading to massive accumulations of cash, >50% of net … and the best part, 2 blocks from work. Can't imagine commuting, change jobs, changes of apartment, easy and no prob.


Not me buddy, if it were me I'd be posting as yer mom offering bears "super-double-happy good luck rusty trombone gorrila masks" in order to cover your mortgage, or something like that.

Oh and I don't know about the others, but I love my rental life…. awesome refinished REAL wood floors (no crappy laminate), the windows are getting washed this aft, GREAT view on a very quiet little street near the park, close to the beach. I'm downtown close to all the cafe's! And I'm only paying $1320.

Someone else takes care of everything, the garden ouside's gorgeous and if I need to move for a new job… no worries. What's not to love?


NYC You wouldn't be on this blog if you had any confidence in your decision…real BULLS don't ever visit this place…but hey you made a friend Krrisssh same intellect same peers right? Scullboy give NYC a slap upside the head if you meet him! From me! 🙂


Krissh is just kidding, he knows as well as everyone else that the market is tanking. If he's not joking he'll be in for quite a shock when his Mum puts her primary residence up for sale in July. NYC, if you're so sure the market isn't in the process of tanking call any realtor in the book and ask what you could get for your place and how fast it'll sell. If it's downtown then you have 8,000 other units available and another 10,000 new ones which will either be for sale or for rent in the next year, a lot of the speculators will not be able to obtain a mortgage so they'll be people willing to assign a brand new unit for the original selling price plus 50% of their original 10% deposit. This is exactly what… Read more »

Rob Pinocchio

I found this on Garth Turner's blog Here’s an article from the Washington Post in 2005 (about Ben Bernanke in the U.S.) that sounds eerily familiar to what we’re hearing now: Bernanke: There’s No Housing Bubble to Go Bust Fed Nominee Has Said ‘Cooling’ Won’t Hurt By Nell Henderson Washington Post Staff Writer Thursday, October 27, 2005; Page D01 Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve. U.S. house prices have risen by nearly 25 percent over the past two years, noted Bernanke, currently chairman of the president’s Council of Economic Advisers, in testimony to Congress’s Joint Economic Committee. But these increases, he said, “largely reflect… Read more »


Sorry for my ignorance, new around here ! Is there any way to find out where and when condo completion dates in BC for this year?


Au contraire, Rennie has cooked up an affordable housing strategy that makes the NDP look like pikers.

Just wait.

i can see craigslist ads from upside down speculators…."MUST RENT"…..please

read on

so rennie wants the city to pick up 25% of the cost (and risk) of a huge amount of new RE. So, when prices decline and the city's balance sheet gets hammered by paper equity losses, the taxpayers pick up the bill yet again. What a f-king stupid idea.


You are no authority on creating affordable housing.

Au contraire, Rennie has cooked up an affordable housing strategy that makes the NDP look like pikers.

Just wait.

Patiently Waiting

I can't believe the way the media quotes every stupid thing that comes out of Rennie's mouth, but ignores universities full of professors.

Rennie, shut up and stick to your knitting…condo marketing. You are no authority on creating affordable housing.

Rob Pinocchio

Make perfect sense to me. Rising inventory, slowing sales = a forecast of rising prices.

I am learning quickly, I just have a few more concepts to grasp before I can fully comprehend the part where negative cash flow and negative equity is a good thing.

If only the dogs at Rob's blog could help me out.