Foreclosures double as market cools

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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umdesch4
Guest
umdesch4

But of course, the article ends with that same quote we've been seeing ad-nauseum:

"Observers say a U.S.-style housing market collapse here is unlikely, thanks to Vancouver's healthy job market, population growth and a location constrained by mountains, ocean and the U.S. border."

What is wrong with people???

Potato Hat
Guest
Potato Hat

One nugget that keeps coming up in the "everything's allright" stories that seem to be floating around these days is how Canadian banks didn't relax their mortgage standards as much as American banks did. Which is true, if you ignore 40 year am's, <5% down payments, and the blossoming mortgage broker industry.

But even aside from that, remember that the problems in the US mortgage market didn't really reveal themselves until house prices dipped for a year or so. Any of those "lax" mortgagees that got in trouble cold simply sell or refinance their way out of it – a door that was slammed shut once prices started to drop.

It will be really interesting to see what a year of flat or sinking prices reveals about the state of Canadian mortgage underwriting.

jesse
Guest
jesse

"Observers say a U.S.-style housing market collapse here is unlikely, thanks to Vancouver's healthy job market…"

Healthy job market? How many Realtors earning 25% less commission than last year does it take to screw in a light bulb?

betamax
Guest
betamax

“Observers say a U.S.-style housing market collapse here is unlikely, thanks to Vancouver’s healthy job market, population growth and a location constrained by mountains, ocean and the U.S. border.”

Thanks for the belly laugh on a rainy Monday afternoon.

blueskies
Guest
blueskies

umm you'll notice they didn't mention the "olympics"…..

oversight?

beatstreet
Guest
beatstreet

In June 2000, the Canadian stock market was climbing even as the US market was tanking. Therefore, I am not surprised that the Canadian RE market is lagging the US.

We'll see what happens over the summer, especially if mortgage rates have hit bottom, which I expect they have.

Peak Debt 7
Guest
Peak Debt 7

So sad Sam Sullivan won't be our mayor, he did so much for affordable housing for working families. No wait, the guy did nothing, and I hope I haven't infringed on any of his copywrights.

richard
Guest
richard

"We’ll see what happens over the summer, especially if mortgage rates have hit bottom, which I expect they have."

i think the BOC is cutting interest rates again tomorrow.

canrocks
Member

i think the BOC is cutting interest rates again tomorrow.

So they might but it doesen't mean that the banks will follow

Big Crash
Guest
Big Crash

Hey Bulls, so the two weeks of 2010 Olympics will save the day eh by bringing people to see our beautiful Vancouver and urge them to invest in them houses and condos…

Ha, ha, ha!!!!

blueskies
Guest
blueskies

Hey Bulls, so the two weeks of 2010 Olympics will save the day eh by bringing people to see our beautiful Vancouver and urge them to invest in them houses and condos…

hope springs eternal….

you can rent them your home for $25K for 2 weeks and sell them a $500K condo on their way out of town….

talk about your win-win situation

beatstreet
Guest
beatstreet

i think the BOC is cutting interest rates again tomorrow

Yes I expect so too (although the wisdom of such a move is questionable). So variable rates will probably hit bottom this week. Meanwhile, the longer end is being challenged already.

Vansanity
Guest
Vansanity

The question is: how long can you have a jobs market driven by construction?

The short answer is obvious. The mega projects should all be complete by end of 2009… I assume many of the condo projects that are currently being built will try to wrap up by then as well. Then what?

I'm really starting to look forward to 2010… not for the Winter Olympics but for the reality check people are in for…oh and this other little event happening… the World Cup in South Africa. Wonder if they're hyping Johannesburg as the best place on earth just yet?? T.I.A.

Big Crash
Guest
Big Crash

I had a heated discussion with a co-worker this afternoon. His theory is simple: investment in RE can never go wrong, 25 years from now he will reap the gain… I give up, there are too many naive home buyers in Vancouver. So go ahead people, buy, buy, buy!!!

Big Crash
Guest
Big Crash

If you haven't paid up your mortgage, DO NOT CALL YOURSELF A HOME-OWNER YET. Instead, call yourself a MORTGAGE OWNER.

Fair enough?

bcubbins
Guest
bcubbins

The Globe and Mail has an article about young condo buyers:

Eager to enter the market

Sadly, the same individual was quoted as making both of these statements, with no indication of irony:

"I don't buy anything," he says, "unless I have the money to pay for it."

"I'm working on paying off the down payment now, and if the building's closing were delayed, that could even be a blessing."

Thums up2
Guest
Thums up2

Hey every one get in right away!foreclosures are not big deal because tax and deaths are confirm so does tragedies happen in all aspect of life.some cars get total lost some can get repaired,lots of injuries happen some can sustain some can't but SHOW MUST GO ON to keep the life going.

"when there is a bank ruptcy in our life it doesn't matter if we are home owners or tenents anybody can pass out anywhere"-Thums up2

cheapskate
Member
cheapskate

From daily telegraph:

House sales fall worst in 30 years

"The drought in housing transactions is starting to cause substantial problems for the economy, the RICS warns, as estate agents, lawyers, mortgage brokers and removal men suffer their quiet­est period in a generation.

Even during the depths of the housing crash in 1991, agents sold 26 properties in any three-month period – almost 50 per cent higher than last month's figure."

Also a new word for me: GAZUNDER – the controversial practice of buyers dropping their offer price after they have agreed to purchase…

Does anyone know how much of the UK drop is driven by foreclosure?

Potato Hat
Guest
Potato Hat

Re: Big Crash

To be fair, if his time horizon is truly 25 years, he will reap a gain, even if he buys at today's prices.

He'd probably make a larger gain if he waited a few years before buying, but 25 years out is a long time for house prices to correct, stabilize and resume a normal and saner upwards progression.

tokyob
Guest
tokyob

when the winter olympics come to vancouver and it is raining everyday..as it does in vancouver..grey dark rain….yeah everyone is gonna wanna move to vancouver–that world class center–gimme a break…

world class centers (paris, london, tokyo) get the summer games…

patriotz
Guest
patriotz

Um yeah, but he is also paying carrying costs on the property, i.e. interest, taxes, maintenance, etc.

Which will exceed the rental value far into the future.

If the compounded accumulated deficit exceeds the gain at the time of sale, you've lost money.

Anonymous
Guest
Anonymous

Big Crash,

Your co-worker's a moron. He wants to wait 25yrs to realize a gain in his investment?

Does he know the definition of opportunity cost?

Tell him I've got a bag of magic beans to trade him for his cow.

You might as well not bother wasting your time with that discussion.

Talk about Euro 2008 instead.

patriotz
Guest
patriotz

Tell him I’ve got a bag of magic beans to trade him for his cow.

Better yet, ask to borrow $1000 from him and tell him you'll pay him back $1100 in 25 years.

alexcanuck
Guest
alexcanuck

Canada Unexpectedly Keeps Rate Unchanged on Inflation (Update1)

By Greg Quinn

June 10 (Bloomberg) — The Bank of Canada unexpectedly kept its benchmark interest rate unchanged on concerns energy costs may push inflation past the top of its target band later this year.
http://tinyurl.com/6lbx4a

blueskies
Guest
blueskies

The Bank of Canada unexpectedly kept its benchmark interest rate unchanged

unexpectedly?!

with the attention being paid to inflationary forces this move should not have been a surprise to anyone paying attention…. more of the same to follow

any bulls find that their coffee didn't taste so good this AM?

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