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Foreclosures double as market cools

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A couple of economic bad news stories posted by Via on this weekends Friday Free-for-all post: The spring selling season so far has us looking at a very different market from previous years. Sales have dropped and inventory has risen dramatically, at the beginning of June we’re looking at close to 18,000 listings for sale in Vancouver. As it becomes harder to sell the number of foreclosures have doubled in the lower mainland:

Kap Hiroti, who tracks Lower Mainland foreclosures at ForeclosureList.ca, says foreclosures stand at 20 per week, up from 10 per week in 2006.

“For one reason or another, they didn’t pay the mortgage, or insurance, or property tax,” says Hiroti, who advises real estate owners looking to foreclose or prospective buyers looking to buy a foreclosed property. “Or they get behind in their strata or condo fees, or face a one-time cost such as a roof or a leaky condo, which might set them back 40, 50 or 60 thousand dollars.”

…

Hiroti believes the Lower Mainland real-estate market has “flatlined,” meaning investors who were counting on making a profit no longer see an upside.

As a result, some have chosen to lose their investments through foreclosure rather than hanging on with no sign of a significant upside return.

“They were kind of speculating that the market would go up, but when the market flatlines, some people just choose to get out. Local people are getting priced out of the market.”

At the same time BCs unemployment rate has been creeping up – the jobless rate is now at 4.5% as positions are lost in trade, transportation and agriculture. The unemployment rate is particularly high for young people at 8.8% and for recent immigrants with an unemployment rate of 9.8%.

The bright point in the jobs data remains construction which has been the key driver in the BC jobs market for the last 5 years. The question is: how long can you have a jobs market driven by construction?

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[…] Foreclosures have doubled since last year. […]

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Rocker Guy

I'm traveling in Europe at the moment. What a different world. In Zurich, Switzerland (rated as the best city in the world in 2003 – http://news.bbc.co.uk/2/hi/europe/2815625.stm), about one third of resident own their homes. The rest rent. Why? I asked someone from Zurich. "We choose not to own because it would be too expensive. Property taxes are high, and there are many problems in maintaining a property. Why would you want to own?" Let's remember that Switzerland has an unemployment rate of only 3.1% (and Zurich's rate is even lower). House prices in Switzerland have only increased 19% since 1997, and that's despite the fact that in Switzerland you can write off your mortgage interest. Interesting. And you know what really blew me away? My friend from Switzerland said, "In Zurich, you can rent very nice flats. Why would you… Read more »

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Tayman

Oh, yeah, sure. Listen, I didn't say I was an idiot, I said I was new at this.

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Thums up2

"I am new to this but, for me, there seem to be a lot of similarities to the UK and Canadian housing markets. Is this so?"

Tayman,

The answer is no that's not true unless you make a list of similarities hmm?unless you reach up to that point i would like to mention some facts that makes Canada different.

1.Foreign Policy and Governing Body

2.Structure of Streets and Highway

3.Beauty and Livablities

4.Bordering with USA

5.Whistler,Black Comb,Squamish is in b.c.-Canada

0(priceless).Mountain,oceanic views,clean air,quality of life,best scenic drive"THE BEST PLACE ON EARTH"

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blueskies

Tayman;

people tend to grasp at any straw available, whether it is here or across the pond……

but it would seem we are fighting for the same "rich immigrants" as they are…..

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Tayman

Apologies for the double post. And spelling Canadian wrong. Oops.

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Tayman

Here's an interesting, and sarcastic, quote from a poster following Shedlock's article. Sound familiar?

"But it's okay, because London is different. All the Russians will buy up all the housing. The City makes trillions. Britain is a small island where they are not making new land."

I am new to this but, for me, there seem to be a lot of similarities to the UK and Canadain housing markets. Is this so?

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Tayman

Here's an interesting, and sarcastic, quote from a poster following Shedlock's article. Sound familiar?

"But it's okay, because London is different. All the Russians will buy up all the housing. The City makes trillions. Britain is a small island where they are not making new land."

I am new to this but, for me, there seem to be a lot of similarities to the UK and Canadain housing markets.

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Drachen

Warren "I can say that RE will experience huge gains and get laughed at, but maybe some time in the next 4-5 years I’ll be right too. Then you’ll be wrong!" Being right for the wrong reasons has little value though. There is a science to these things, most of us bears here are following scientific methods to determine the outcome. This kind of methodology has value. Most of us know that guessing the timing of the collapse until graph features like the current inventory spike occur is futile. However we CAN tell you when the market is in a position beyond it's sustainable maximum. Once a market has reached beyond it's sustainable limit it is a fool's market, intelligent investors got out in the '90s (which is why there was a slight dip in prices) when prices started to… Read more »

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blueskies

all of this once in a lifetime boom, perhaps even more

once in a lifetime!!

my sentiments exactly

sometime to tell your grandchildren

"when i was your age i had to walk to school past many houses that were worth more than a million dollars each … ahh the good ol' days" 🙂

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alexcanuck

My belief is the global housing bubble is going to retrace all of this once in a lifetime boom, perhaps even more.

Mike "Mish" Shedlock
http://tinyurl.com/6gg6y7

Mish on UK housing collapse.

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beatstreet

beatstreet is a commercial tenant, and in many commercial leases the tenant is responsible for property taxes.

This is correct.

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Time

"I’m looking for advice on where to buy in in the lower mainland."-Moonman.

Moonman,

You should buy in dtes at Powel,Water or Alexander.R.E on these streets virtually poised to never go down,minimum listing area in Vancouver, constantly going up from centuaries,easy convenient location for office,shopings,outlook,cafe resturants,night life pubs etc.

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patriotz

Another good read titled “B.C. recreational property market stabilizes

As we all know, "stabilizes" actually means "the bust is on".

Oh BTW a lot of locals have remortgaged their residences to buy BC recreational property. How does that strategy turn out when the market tanks?

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patriotz

when bears are wrong year after year for 4-5 years now

Bears have not been wrong for 4-5 years, except those few who have predicted a specific date for a market top.

The bears are saying that there will be significant decline in real prices to restore fundamentals with respect to real rents and incomes. This will almost certainly involve a fall in nominal prices as we are seeing in the US, Alberta, etc. This is open ended, but quantitative. It is not just a "prices will go down some time in the future" prediction.

Oh BTW just who was bearish about Vancouver RE in 2003?

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umdesch4

Interesting thought:

If the number of listings reaches 20K soon (which could even be by the end of this month), and the average listing price across all categories is roughly $500K, then that's $10 billion in available inventory.

Geez…

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holgs

20 foreclosures per week – how many thousand condos are there in the Lower mainland? Geez, at least the title wasn’t “Foreclosures up 100%”

It was only 2 years ago that I was telling some of the bulls at work about the 200% or 300% increase in foreclosures in some of the major housing bomb cities in the USA (think Miami, Tampa, Phoenix, etc.). At that time, the argument was "yeah, but foreclosures are at a record low… going from 10 per month to 30 per month is 200%, but that's only 20 more per month. Well… Follow the trend, my friend, we're where they were 2 years ago.

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Vansanity

Another good read titled "B.C. recreational property market stabilizes":

http://www.canada.com/vancouversun/news/story.htm…

Excerpt:

"He also said the availability of bargain U.S. real estate properties has clearly reduced the number of buyers looking at Canadian recreational properties.

"We see U.S. owners of Canadian properties putting them up for sale now so they can take their profits and reinvest them in the U.S sun belt," Ash said."

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browntown

hey stratastud! i have assignment for you nutslap, sign up first for get rich rental scheme course! turkey slop collapsing on you building managr man!

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freako

it was the first thing to drop, since it wasn’t affected by sales mix considerations.

We have benchmarked and indexed prices here, so price per square foot is not really required.

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Vansanity

Crazy story:

http://www.canada.com/vancouversun/news/story.htm…

Excerpt:

"For the past 17 years, "Zino" has lived a seemingly ordinary life in Saskatchewan and B.C. By the age of 40, he'd bought houses, opened bank accounts and collected credit cards. His real estate holdings across B.C., and more than 14 credit and bank cards, gave him assets and credit in excess of $1 million.

The only problem – "Zino" doesn't exist. He's been dead since 1968 when, as a four-month-old baby, he was killed by a drunk driver in Saskatoon."

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freako

I love this vague reference to "observers". Who are these people (not that I doubt they exist, they are everywhere)? But are they "experts"? Industry mouthpieces?

Not as bad as the infamous Ashley Ford article of 1981 though:

Ashley Ford sources,

March, 4 1981:

"While Real Estate prices have apparently reached a benchmark, there is no decline in house prices – and there won't be, according to industry analysts"

"Both agreed there is not a hope of falling prices and there is a terrific underlying strength to the market"

I wonder if the 2008 "observers" are related to the 1981 "analysts".

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Warren

Drachen: "It’s not a beauty or a personality contest, one group is right, the other wrong."

I'm certainly not a bull, and not buying any RE right now, but when bears are wrong year after year for 4-5 years now, you've already lost on huge gains. Sure you'll be right eventually… the market is cyclical. I can say that RE will experience huge gains and get laughed at, but maybe some time in the next 4-5 years I'll be right too. Then you'll be wrong!

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patriotz

beatstreet – it is illegal for your landlord to make you pay his property tax.

beatstreet is a commercial tenant, and in many commercial leases the tenant is responsible for property taxes.

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yeah right.

What a waste of time on these boards. Yes, eventually, you might be right – but it'll never be to the extent that you think. 25 year investment for money that probably won't be used elsewhere is not a bad idea. People have jobs… they diversify. There's no opportunity loss!

Prices will probably just stabilize, maybe fall a few dollars, but not the 20/30/40% that you wish. 20 foreclosures per week – how many thousand condos are there in the Lower mainland? Geez, at least the title wasn't "Foreclosures up 100%"

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