Priced out?
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:
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.”
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!
May 15th, 2008 at 1:10 pm
http://tinyurl.com/5rtbkc
Collateral Foreclosure Damage for Condo Owners – NYT
Everybody should read this article regarding the damage that depreciating condo values does to the strata's financial health. Really eye opening…
May 14th, 2008 at 7:20 am
Link on american economy home prices etc:
http://www.nytimes.com/2008/05/14/business/14leon…
May 14th, 2008 at 6:41 am
In response to John's comment on the front page: BC's politicians should have provided incentives to companies that were able to produce a finished good from all these raw materials we're blessed with here. Rather than export raw logs, lets make better than ikea crap, how hard could that be? Of course our products will be more expensive, but hey, there's no shortage of cash in BC apparently.
Second more controversial idea: legalize marijuana. Here is a $7.5 Billion dollar industry,right now, in BC. This is just through smoking it. Think of tourism for a second and the local economy if this homegrown BC product were opened up and taxed. Also, the other products that would undoubtedly become more popular through hemp. I once watched a program on TV where they were showing hemp fibers used to create a type of plywood and regular lumber that was superior to wood. The beauty of it, most sawmills wouldn't need to change too much in order to start using it. Same said for pulp form hemp fibers vs. wood chips. They could do it now, but there's no where near enough being grown. Talk about sustainability.
May 14th, 2008 at 2:44 am
Addendum: I mean they're not income in an economic sense. What the taxman considers them is another thing.
May 14th, 2008 at 2:43 am
I don’t know if gains from personal residence flips are included in GDP.
Capital gains, whether they be from personal residences, investment RE, stocks or whatever aren't included in GDP because they're not income. They are capital transactions.
May 13th, 2008 at 9:32 pm
And this weekends best place on Earth is………
Google Earth Tasmania
May 13th, 2008 at 8:56 pm
m:
the tax reassessment gig is hard to believe, who are they to say someone got too good a deal. makes me wonder if they would consider refunds for people who pay too much or for those whose condo's decrease in value from the pre-sale. contrary to what peter wall might say, developers do not leave money on the table.
May 13th, 2008 at 8:34 pm
Betamax,
I can understand since the boom has begun numbers of realtors are increased as the sales to slide downward lets say 3300 units are selling now you can divide them between number of realtors.
Her office staff need to find another job as sales countinue to go lower from approximately 35,000 units in 2008 to 33,000 units in 2009.
Prices countinue to keep upward trends that's why i have ask you to clarify your motive if there was no intention behind- second job is a answer.
May 13th, 2008 at 8:09 pm
As for that Sun article on property tax reassessments, I'm inclined to lean with the tax man on both counts:
1) Leonard Schein isn't just your average-Joe. He's a major local investor, and has been involved in developments, as I remember from when I was a kid. It wouldn't surprise me in the slightest if he was one of those inner-circle types who get their choice of the best units in a new development at the best price. Think of the H&H and Sophia developments where industry insiders had gotten some sweet deals on condos… One of those sweet-deals wouldn't be an arms-length transaction, and could be subject to reassessment. Leonard was hoping that his sweetheart condo deal would be an even better deal by claiming back some of the GST…
2) Family probate. Probate was done in mid-2007, presumably using the property assessment they received in Jan 2007, which represents the Aug 2006 market value. They may well have had a realtor make a market assessment on the home in the summer of 2007, but didn't like the number and stuck with the BCAssessment. Everything went tickety-boo, and they thought they made out like bandits. Then this past January they received their new BCAssessment (theoretical value for August 2007), which better-represented the mid-2007 value than the previous year's assessment. Guess what? The tax man is looking out for this. That family has benefited from the rise in property values; they are much better-off than they would have been if property values hadn't risen at all, or than they would have been if last year's assessment was correct. The poor kids…
I'm happy to see that the CRA is watching out for honest taxpayers, by ensuring that frauds and borderline-frauds don't get away with it. All too often we hear of people getting away with tax fraud, be they underreporting rental income or otherwise. People cheating on their taxes increases the tax burden on honest people.
May 13th, 2008 at 8:01 pm
"She wasn’t expecting it? Really? Is she illiterate or simply stupid?"
She can read & write, and is reasonably intelligent. The considerable success she's had in the past few years have blinded her to other possibilities.
Krisssh or whoever — it's not just her. Everyone in her office, including several other previously successful realtors, are doing lousy business right now.
May 13th, 2008 at 7:29 pm
Sorry Gah, thats a hell of a theory, but I'm pretty sure it's not Larry, I don't see the similarity in posting style.
May 13th, 2008 at 7:27 pm
Looks like the CRA is already doing some retroactive re-pricing of condo purchases based on current assesments, and then charging penalties based on the re-assesment: Horror story in today's sun: http://www.canada.com/vancouversun/news/business/…
If they start going after flippers and undeclared rental income while the market is tanking it will be salt-in-the-wounds time.
May 13th, 2008 at 7:20 pm
Of course if most of the strata units were seized by the CRA then the CRA would be the strata and would owe themselves the money!
May 13th, 2008 at 7:20 pm
"How about Option 3? Sit back, relax a bit and watch as prices fall month after month."
How about a fresh perspective from a very unique businessman in Steveston who bakes bread in a home made brick oven he made that burns wood and he sells for 10.00 a loaf and sells out all the time? People really need to go and talk with Nick…even if they don't buy his bread because this Romanian (who I suspect is a gypsy although he denies it up and down) has the right attitude, rich, wants nothing, has no TV, reads no newspapers, you get the picture. This is what we need to do..get away from consuming what we don't need and go back to a simple life.
People stop in to chat with him all the time…a REALLY unique person. You can see his tiny Romanian bakery on Google Earth
49 degrees 7'30.60" N
123 degrees 11'00.39" W elev 7 ft eye altitude 400 ft.
May 13th, 2008 at 7:19 pm
Anyone ever wonder if SATV/Krrish is local realtor Larry Yatkowsky with a little babelfish thrown in? Check out his posts on Garth's blog – http://www.greaterfool.ca/2008/05/08/the-lobby/#c… and his own blog – http://www.yattermatters.com/
Just looks a little familiar, that's all. He does post under his own name on other blogs, but I've never seen him here on VHB…
May 13th, 2008 at 7:18 pm
read on "strataman – does the strata even supercede the CRA" well say the CRA ended up with the property, to sell it either they or the buyer would have to pay the strata, so yes in effect. The strata cannot legally write-off a debt as it is a form of municipal government so to speak. Just like a property seized by the CRA in the city the strata fee's are the equivalent of a property tax. The buyer from the CRA would have a lien against them immediately on property transfer.
May 13th, 2008 at 6:35 pm
"After bankruptcy maybe Krrrsh will be forced to go back home wherever godforsaken land he came from once and for all"
My guess is he makes no frickin' sense in Punjabi, Cantonese or krrshish either.
May 13th, 2008 at 6:34 pm
“Dope will get you through times of no money better than money will get you through times of no dope”
See, now I've taken away some useful insight. Thank you for that.
May 13th, 2008 at 6:07 pm
http://tinyurl.com/3u85bf
Gas, oil prices hit record highs
kiss the 'burbs good bye!
May 13th, 2008 at 5:21 pm
“What’s interesting is, despite the fact that the West is booming, it’s the only place in Canada starting to show housing price softness, because in fact it is the one place in Canada where housing prices went up too fast,” he said.
What? A bank president gets it? Better buy some TD stock.
…grow weed, obviously.
"Dope will get you through times of no money better than money will get you through times of no dope"
- Fabulous Furry Freak Brothers
May 13th, 2008 at 5:21 pm
strataman – does the strata even supercede the CRA? I'm wondering in case of units "owned" by speculators who have not been declaring capital gains on previous pre-sale flips… I'm sure CRA is going to have a field day with audits as this thing plays out.
May 13th, 2008 at 5:14 pm
I have mentioned that earlier in this decade when financial markets were “awash in liquidity,” bubble-like conditions emerged in many areas of the economy, including housing. During this period, housing construction was very strong and housing prices soared. In fact, the ratio of house prices to rents—a kind of price-dividend ratio for housing—reached historical highs by early 2006, suggesting that house prices might be well above those that could be justified by fundamentals. Since then, housing markets have “hit the skids."
Janet Yellen, President, Federal Reserve Bank of S.F.
May 13th in Vancouver BC.
http://www.frbsf.org/news/speeches/2008/0513.pdf
And just what were those "historic" price-to-rent highs in the USA? About 27.
What are they today in Vancouer? Well, CUCBC estimated it was just north of 35 in 2005 (they have other measures in their report that may counter the "bubble" theory).
http://www.cucbc.com/publications/economics/pdf/b…
I have seen a lower estimate of price-to-rent at the Langley Financial Planning blog of about 27:
http://langley-financial-planning.blogspot.com/20….