Vancouver Condo Info

May 14th 2011 - Vancouver house prices have risen to a new record high for the month of April bringing the REBGV benchmark home price to $3,432,285.  Another record was broken last month as condo prices in the downtown core actually surpassed the SFH benchmark price in Vancouver.  A 5 year old 450 square foot condo in downtown Vancouver is now worth $3,458,998.

Vancouver Mayor Cam Muir has just announced plans for a mass-awards ceremony to award the ‘bravery and faith’ of Vancouver real estate investors.

“These are the people who have really kept this economy going while the rest of the globe stumbled” Muir explains.  “Not so long ago there was a real danger of all the naysayers drowning out the strong and reasoned voices of condo investors.  I recall the dark spring of 2008 when condo prices actually fell a small fraction and some assumed we would follow the US into the dark abyss of depreciation.  Of course as we all know now that was the perfect buying opportunity”

Many give at least partial credit for Vancouver’s eternally booming real estate market to the ‘minimum rent increase’ act that was brought into law just under two years ago.

Many residents spoke out against this law at the time claiming ‘rent is determined by what people can pay’.  Some believed that requiring a minimum rental rate increase of 20% per year for all rental units would wreck our economy as people moved away.  Clearly this has not happened as the increases have only improved our position on the world stage.  City planner Robn Adamache explains:

“Just like Prada or Gucci, smart people know that the more you pay for something the more it’s worth”

The awards ceremony will be held June 30th at the new BC place stadium. There will be free hot dogs for the kids and a special performance by Billy Ray Cyrus.

Are you priced out of the Vancouver real estate market? According to the Province, you’re not the only one.  The weekend the Province ran a series of articles on the costly local real estate market:

So who’s buying? 

The answer is anyone with one or more of the following: wealthy boomer parents, equity from previous real estate or extremely high double-income earnings.

But even with those prerequisites, many are stretching their limits.

“Everybody maxes,” says Marty Pospischil, a realtor with Dexter Realty specializing in the west side.

The profile of a typical buyer of a $1.3-million, three-bed, two-bath west-side home is a couple between 35 and 45 years old with one or two young children. They are both professionals who have ascended the ranks — think stockbroker, lawyer, doctor.

They will usually have a down payment of $400,000 to $500,000 — derived from a combination of personal equity, inheritance or a substantial gift from a wealthy boomer parent, says Pospischil.

That means they’re still borrowing between $800,000-$900,000.

Expectations clash with reality:

With the income-to-house-price ratio the highest it’s ever been in B.C., the overwhelming perception — particularly in Vancouver — is that the market has changed the definition of “middle class” and displaced the working poor.

It is increasingly common to see children raised in condos, married couples living in their parents’ basements, young professionals taking on second jobs, workers commuting long hours, the growth of the 40-year mortgage (which 65 per cent of first-time buyers are now using, according to a RE/MAX report) and the realization for some that an inheritance is the only way to a single-family home.

Tsur Somerville: its not a bubble:

“If you say bubble, then at some point it’s going to pop. And if you look at our price increases, they’ve been double-digit, but for the most part they’ve been between 11 to 15 per cent for the past few years. That’s high, but in a bubble you start to see 20-per-cent growth, 30-per-cent growth. Just really rapid acceleration, and we haven’t seen that. That’s what happened in 1981 and 1982 . . . That’s what a bubble looks like.”

Reader feedback:

John: There’s no point complaining about prices. I think people should focus their energy on how they can find new ideas/businesses/solutions to generate more income. If you spend all your time complaining you won’t have enough time thinking about new businesses that can work and make more money!

It’s Friday! Thats the next best thing to the weekend and it also means it’s time for our weekly news round up:

-Condo supply growing faster than population
-~600 new REBGV listings in first week of May?
-Coco’s Things you may want to know
-Welcome to the wild west
-Whats our number one industry?
-It’s good news on the job front
-Canadian housing market cools in April
-Vancouver residents love condo investing
-Beware of home reno ripoffs
-Forestry demand to soar
-Foresters warned to expect more blood
-Canadians fleeing to cash?
-BC exports contract for 3rd year
-The booming bust-vulture industry
-Americans feel gloomy

How ’bout you? How are you feeling as we head into a beautiful spring weekend? What are you seeing out there in the streets? 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!

Here’s a more bullish counterpoint to ‘Chicken little’ Lereah’s opinion that the US housing market is in for more pain - The Wall Street Journal is declaring that after 3 years of decline the US housing bust is over.

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won’t happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what’s going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.

Thanks to BCbuds for the link (which will expire in 7 days)

Looks like a couple of years can really change a guy.  According to this article in Newsweek David Lereah, the former chief forecaster for the National Association of Realtors now says the US housing market is nowhere near the bottom.  This is the same guy that published a book in 2005 (awkwardly close to the peak of the US market) titled “Why the Real Estate Boom Will Not Bust - And How You Can Profit From It“.  Around the same time he gave a housing presentation where he called anyone who thought homes were overvalued and in danger of correcting ‘Chicken Littles‘.  Lereah gathered quite a bit of notoriety online for his steady flow of rosy forecasts as the housing market crumbled around him.

It’s been more than a year since Lereah left NAR, so I called this week to check in. It turns out he has recently set up a new firm called Reecon Advisors, which is advising Wall street firms and institutional investors about the real estate market. “Wall Street has an intense interest in [this], because they’re looking for when is the recovery going to come, and at what point does the cycle turn,” Lereah told me.

His answer: not yet. “We’re not at the bottom,” he says. “[People] want it to be near the bottom, but we’re not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low … There’s still supply out there in abundance … This thing is going to get worse before it gets better.”

Lereah says that the industry may begin to see a slight uptick in sales later this summer, which could signal the start of the recovery. Home prices, however, will continue to fall. According to the latest numbers from the Case-Shiller index, the average U.S. home has lost around 15 percent of its value since the market’s peak. “We’re probably going to end up with a 20 percent [decline], but if I’m wrong it will be even more than that,” he says.

Spring is here and the listings are blooming like crazy. Both Vancouver and the Fraser Valley are being hit by a combination of fewer buyers and a greater number of owners looking to cash out. Here’s the REBGV listings chart for the last 4 years courtesy of Paul Boenisch:

Clicking the graph above will bring you to his blog which has additional graphs for sub areas- we’re seeing rapid inventory growth on the west side and north shore. Paul also tracks daily statistics on sales, price and listings on his website.

In the Fraser Valley listings are growing as well - They now have a near record amount of inventory. The following sales and listings chart for the FVREB was created by Mohican at Langley Financial Planning. Check out his site for more charts and detail on the Fraser Valley market.

It looks like growing inventory is starting to put some pressure on prices. Prices in all categories are up year over year, but the month over month figures look unusual for the spring selling season. The Benchmark price is down in all categories in North Vancouver, slightly up for houses and townhouses in Vancouver, but Vancouver condo’s and apartments saw their benchmark price drop by 3.16% in April. The spring market so far this year is looking markedly different from the last few years, we’ll see how this trend holds up into the summer.

It’s time for our open-topic link round up from the past week - here’s a few stories to get us started:

-April REBGV listings grow dramatically
-Coco closes her daily economic news blog
-Caps owner has ‘no plans’ to build condos
-Coal Harbour is a weekend ghost-town
-Richmond RONA closing on Olympic tax hikes
-Forestry slump bites Prince George prices
-Live in a shipping container in Whistler
-Immigrants to Canada struggle financially
-Carney: ‘a lot of strength‘ in this economy
-Bank of Canada needs more power
-Soft landings are for the Moon
-US prices drop at fastest rate ever
-US foreclosures up 112%

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

update: The Sun finds some missing comments

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!

Thanks to ‘exx’ for posting the link to this story - According to statscan the median income in BC has been steadily dropping despite the ‘boom’ we’re currently in.  Younger Canadians in general are now earning much less than their parents did and paying a greater percentage of their income for housing.

New census data this morning shows the median income for full time workers in BC is a little over $42,000 a year, which is a drop of over 3% since 2000 and it’s down 11% since 1980 when you take inflation into account.

That’s surprising given BC’s higher than average employment growth. Statistics Canada says young people seem to be having a harder time finding full-time work after getting out of school, and those who do tend to make lower wages.

So more people are at work, but they’re earning less money at a time when housing, energy and food costs are spiraling out of control. How is this going to all work out and what effect will it have on future real estate prices in Vancouver?