Friday Free-for-all!
It’s friday and that means it’s time for our weekly news roundup and open topic discussion for the weekend. As I post this rain is falling against my window and it feels like its been gray and under 10 degrees for a week. I am assured summer is still scheduled to begin in a couple of weeks. In any case its the perfect weather to be stuck indoors in front of a computer – here’s a few stories I’ve noticed this week:
-BC: highest proportion of income on housing
-For Sale: $1,600,000 or best offer
-Lower mainland cities like to spend
-Real estate market returning to ‘normal levels‘
-Boomers own and owe more than ever before
-Sales sign super-stack challenge
-Mohican: shots from the bubblehood
-Cheap Calgarians
-Housing bust a boon for some renters
-US Records: foreclosures and low equity
So what are you seeing out there on this fine spring weekend? Post your news, links and anecdotes here and have an excellent 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!
RSS 2.0 comments feed. Both comments and pings are currently closed.
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-A- Says:
June 6th, 2008 at 5:31 am
Happy Friday to all, and may I greet you with a message which illustrates how desperate the pimps are getting.
http://www.newswire.ca/en/rele.....c7489.html
I got this link from: http://www.greaterfool.ca/
It’s such a fine spin I thought worth sharing.
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freako Says:
June 6th, 2008 at 6:10 am
Re: The U.S. drop in equity, it is at least one thing that I and other bears got right. From a 2005 RETalks thread:
http://tinyurl.com/3ttn88
Lets assume that homes gave back half their price gains (25% drop, ignore effect of compounding). That means that average home equity would roughly half to a little over 30%. The amount household wealth “destroyed” in such a case is mind boggling. It would have a huge impact on our economic well being. The tech collapse didn’t actually hit too hard because actual exposure was quite small. Not in this case. What is wrong with conclusion that we are failing to see the danger? Unless he is factually incorrect that is. What you call alarmist, I call alarming.
Many of the usual suspects had held their usual opinions in that thread. The chickens are coming home to roost.
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freako Says:
June 6th, 2008 at 6:11 am
The last paragraph above should not have been quoted.
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blueskies Says:
June 6th, 2008 at 6:51 am
Oil @$150 by July 4?
http://tinyurl.com/523h63
hmm backyard BBQ and a walk in the park…
just got me some new sandals.. timing is everything!
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Tony Danza Says:
June 6th, 2008 at 7:50 am
Nice Boomer/GenX intergenerational bashing going on in the comment section in the boomers in debt piece! Too bad comments are closed.
My favourite comments are when a boomer claims she’ll just work until she’s 80 to pay off her extra mortgage. Right. I’ve seen many a sexagenarian attempt this feat, they are the most miserable people that you can imagine working with/for.
I’m surprised that none of the GenXers raised a battle cry to privatize health care just when Boomers are going to need it most to avoid having to pay the massive tax increases that will come along with the need.
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formerprairiedog Says:
June 6th, 2008 at 8:04 am
Potential sign of the times observation: Is it just me, or does English Bay seem like it has had fewer container ships waiting to offload?
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richard Says:
June 6th, 2008 at 8:20 am
on the cnn website there is a story about evander holyfield. apparently his estate is about to be foreclosed.
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Anonymous Says:
June 6th, 2008 at 8:23 am
“Now is not the time to wait until the sale is
over and then decide to buy; after you read a headline, the best time to buy has passed,” cautioned, CREB(R) President, Ed Jensen.
Well gee Ed, thanks for the advice. That is disappointing news, I guess I missed out on my opportunity to get a good deal in the US since I saw those headlines of increasing inventory and decreasing sales TWO YEARS AGO.
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ProblemBear Says:
June 6th, 2008 at 8:29 am
Paul B. has not put up his June 5 stats yet, I wonder what gives?
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My Computer Says:
June 6th, 2008 at 8:30 am
Richard -The list of celebrity foreclosures keeps growing. Hollyfield joins Jose Canseco and Ed McMahon for big foreclosures in the last couple of months. But Michael Jackson still has neverland!
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My Computer Says:
June 6th, 2008 at 8:32 am
ProblemBear – Paul B. is on vacation in France, he said he’ll try to keep daily stats updated, but there will be a delay (for obvious reasons).
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Bubble Lad Says:
June 6th, 2008 at 8:53 am
re: Renters.
Screw lower rents and one lousy free month. I want to get PAID to live in one of those crappy places – living there and making sure scavengers don’t steal your copper pipes and aluminum siding and high school kids don’t party and trash the place. Tack that on to your monthly budget expenses.
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Raincouver Says:
June 6th, 2008 at 9:05 am
Paul has some rough numbers on his blog site.
Inventory up:)
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dosh Says:
June 6th, 2008 at 9:11 am
Everyone wants to make a big deal about inventory, but it only looks big compared to the last few years of low inventory. Don’t count on prices coming down just because we’re returning to a more normal market.
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blueskies Says:
June 6th, 2008 at 9:33 am
Don’t count on prices coming down just because we’re returning to a more normal market.
prices have to come down to be affordable.
$250 per sq. ft. is affordable downtown
does this work for you, dosh?
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Raincouver Says:
June 6th, 2008 at 9:40 am
That’s true, Dosh. Sales/Listings ratios are fairly inconsequential too.
Soft Landings for Everyone!
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dosh Says:
June 6th, 2008 at 9:51 am
$250 per sq. ft. downtown will never happen. Prices may soften slightly, but you’ll never see a drop like that.
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blueskies Says:
June 6th, 2008 at 9:55 am
$250 per sq. ft. downtown will never happen.
we paid $243 sq. ft in 2001 pre sale
at $650+ sq. ft. it is not affordable, very few buyers at that level so for sales to continue there has to be a significant drop in prices….
and 2001 pricing is very possible even desirable
just for the affordability aspects….
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Tony Danza Says:
June 6th, 2008 at 10:03 am
$250 per sq. ft. downtown will never happen. Prices may soften slightly, but you’ll never see a drop like that.
Prove it. Or are you just lying to make yourself feel better?
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/dev/null Says:
June 6th, 2008 at 10:06 am
Seriously, Dosh – “never”. You have to brave (or stupid) you use that word about anything. Perhaps you’re just a closed-minded fellow.
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Drachen Says:
June 6th, 2008 at 10:32 am
Dosh
“$250 per sq. ft. downtown will never happen. Prices may soften slightly, but you’ll never see a drop like that.”
Same old Dosh. You’ve been around this blog long enough to know our reasons why the prices will fall by that much yet you never once have given any substantiated cogent reason why they would not fall by that much.
Flapping your gums (or fingers) at the problem will not make it go away.
/dev/null
He’s a bias-minded fellow. He’s a real estate agent therefore it is not in any way in his best financial interest for the RE market to collapse. He’s kind of like Wyle E Coyote, hoping to suspend his disbelief and keep the market in the air in spite of the laws of physics. I don’t think he’s stupid so much as wilfully ignorant.
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Bubble Lad Says:
June 6th, 2008 at 10:32 am
Condos to be sold “regardless of cost” – I thought “they only do that in the States…”
http://www.news1130.com/news/l.....12133_3712
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sheeplessinvancouver Says:
June 6th, 2008 at 11:11 am
Re: Boomers own more homes – and owe more – than ever before
I’m a boomer who didn’t buy my first home until my late forties. I will have the mortgage paid off before I retire or maybe earlier. My second mortgage, if and when I get one, will be for an income producing revenue property. I can guarantee that it won’t be in BC.
I’m not in the majority, but there are still a lot of us out there who, because we spent years travelling or attending university or just couldn’t afford to buy, didn’t participate in the housing market in the ’80s. We’re mostly women and not fans of the suburban lifestyle so condos are the preferred housing option. We’re not exactly struggling to make mortgage payments because this factor was accounted for when we went shopping for a home.
Here’s my theory. Because of low interest rates and prices in the late ’90s and the early 2000s, you had the children of the early boomers plus boomers who had never been homeowners entering the market at the same time.
This, along with an increasing number of households (smaller households = more households) due to divorce and other lifestyle changes, contributed to the increase in sales and the run up in prices.
Many of the boomer children out there looking for someone to blame for high prices should look across the Sunday dinner table. It just might be their mom.
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Patiently Waiting Says:
June 6th, 2008 at 11:34 am
My anger towards the boomers isn’t what it once was. Many of them are going to have a miserable old-age so I’m going to let it go.
My GenX generation hasn’t had it that bad. Sure our careers aren’t what they could be without the boomers and many of us are not happy with our housing situation. However, we are drowning in little luxuries. We have stuff that most of the world can only dream of.
Most importantly, almost none of us have been asked to make huge sacrifices for our country by going to war. We’ll have a high tax burden in coming years, but we’ll also see improved career opportunities and shockingly cheap real estate. Its up to us how we play it.
A good part of my generation and GenY has decided our fate already. With the internet at our finger-tips, very few of us chose to research the reasons behind high real estate prices. Instead, I’ve known many young adults who’ve obsessively combed the MLS drooling over granite and stainless steel crap.
If we want to blame someone we better look in a mirror.
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jesse Says:
June 6th, 2008 at 12:15 pm
“Because of low interest rates and prices in the late ’90s and the early 2000s, you had the children of the early boomers plus boomers who had never been homeowners entering the market at the same time.”
Maybe but all this means is the echo boomers have “bought” into the ownership story. They can rent for far less than what it costs to own. If they buy now they are speculating or fooling themselves that owning has intangibles that justifies it being more expensive than renting.
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Canuck99 Says:
June 6th, 2008 at 1:18 pm
Brace Yourself, Vancouver: GasBuddy Chart Indicates $2.25/liter Gas Price Is On The Way
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pricedoutfornow Says:
June 6th, 2008 at 2:35 pm
Jeez…anyone else feeling a bit glum about the price of gas?How depressing!
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RJ Says:
June 6th, 2008 at 4:01 pm
The think I don’t understand about the boomers is that they’ve lived through a bad housing bust, they’ve seen economic downturn and yet some of them seem to believe it can’t happen again.
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Anonymous Says:
June 6th, 2008 at 4:05 pm
I don’t mind seeing the price of gas go up, its still cheaper than bottled water. I think we need to start looking at alternatives and effieciency improvement in how we use energy.
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-A- Says:
June 6th, 2008 at 4:59 pm
Primed for Trouble: Pace of Mortgage Distress Shifts to Prime Borrowers
http://www.housingwire.com/200.....borrowers/
“Taking California, Florida, Arizona and Nevada together, the four states represented 62 percent of all foreclosures started on prime ARM loans, and 84 percent of the increase in prime ARM foreclosure, Brinkmann noted. ”
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Vansanity Says:
June 6th, 2008 at 8:11 pm
I loved Mohican’s photos! Hilarious! “Nothing to see here, normal levels of inventory are back, normal conditions are back too?… HAHAHA!! Oh man, this is killin me!
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franko Says:
June 6th, 2008 at 8:23 pm
It sounds like markets are starting to tank big time in the Okanagan and Vancouver Island, but we hear very little about the unfolding disaster in sawmill towns like Prince George, Quesnel, Williams Lake, and Port Alberni.
Today’s report by the US Labor Dept of the largest monthly unemployment jump in 22 years will further reduce any demand for our lumber along with hopes for a soft landing of our economy.
The RE inventory spike may even become evident on planet dosh.
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Bizznitch Says:
June 6th, 2008 at 8:59 pm
The news media is friends with Campbell and Co. They won’t publish anything bad about the current dictatorship…err…govt.
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Bubblishious Says:
June 6th, 2008 at 9:12 pm
Found this interesting Rent vs: Own comparison on the NYT website.
http://www.nytimes.com/2008/05.....gewanted=1
Also this real time utility for testing Renting vs: Owning figures.
http://www.nytimes.com/2007/04.....HIC.html?#
The interest deductible mortgage that our US friends enjoy seems to have a favourable impact on the owning side.
A Canadian calculator like this sure would be interesting.
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jun Says:
June 6th, 2008 at 11:10 pm
hahaha bunch of people think the price is going to drop. However, the thing is you guys can’t afford to buy. In a democracy, the power isn’t in your hands. Look at the reality.
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van-zee Says:
June 7th, 2008 at 12:46 am
Interesting little bit in the Sun about author Richard Florida commenting on Vancouver affordability and the creative class.
http://tinyurl.com/599jqw
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krissh Says:
June 7th, 2008 at 1:18 am
the reality jun is you are janitor and will nver buy i am grat buy three you buy les and prices go up relax your brain muscles price go up for decade to com
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patriotz Says:
June 7th, 2008 at 1:21 am
However, the thing is you guys can’t afford to buy.
Well prices are going to have to drop then, which is what we have been saying all along.
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Raincouver Says:
June 7th, 2008 at 6:32 am
17,857.
Another “meaningless” rise in inventory reported over at Paul’s blog.
Fortunately, there’s a whopping 27% S/L to soak it up.
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crabman Says:
June 7th, 2008 at 6:38 am
San Diego
Population: 3.15 million
Listings: 21,232
Ratio: 148
Vancouver
Population: 2.25 million
Listings: 17,857
Ratio: 126
We now have a 15% lower pop/listings ratio than San Diego. (Lower ratios are more of a buyers market.)
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Burden of Proof Says:
June 7th, 2008 at 7:39 am
Vancouer is the 15th best place on earth (out of 20 on the list).
http://www.monocle.com/Magazin...../issue-05/
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Brittanny Spears Says:
June 7th, 2008 at 7:46 am
krissh – I will buy your forclosures from the bank in 36 months.
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Anonymous Says:
June 7th, 2008 at 7:56 am
“hahaha bunch of people think the price is going to drop. However, the thing is you guys can’t afford to buy. In a democracy, the power isn’t in your hands. Look at the reality.”-excellent post.
jun that krrish above is not a genuine krrish bears are getting out of whack as prices are countinue going towards space.
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M- Says:
June 7th, 2008 at 8:16 am
Crabman: don’t forget to include the FVREB’s listings (10,407 per Paul’s blog). Do you know if San Diego’s listings figure is for the entire area, or is there a listings figure for the suburban areas also?
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Anonymous Says:
June 7th, 2008 at 8:19 am
THERE ARE NOT MUCH LISTINGS IN VANCOUVER
The board does not update solds too often,Sell list ratio is down because of low list=low sales that’s why prices are going UP.
PAUL’B did not go to france,He got another job learning how to drive pallet jack,He is a rockie warehouse worker starting $9.35 per hour- because of less listings and less sales there was no income as real estate rating agent.
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Drachen Says:
June 7th, 2008 at 8:23 am
Jun
“bunch of people think the price is going to drop. However, the thing is you guys can’t afford to buy.”
I suppose it never occurred to you that IF you are correct that we can’t afford to buy (a group of mostly very intelligent and educated people who likely earn well above the Vancouver average) then there is no alternative but for the market to correct. If nobody’s left to buy what keeps the prices up?
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Drachen Says:
June 7th, 2008 at 8:28 am
Anon
“THERE ARE NOT MUCH LISTINGS IN VANCOUVER
The board does not update solds too often,Sell list ratio is down because of low list=low sales that’s why prices are going UP.”
Umm even if you were correct your reasoning does not explain the inventory spike.
Prices are going up because they’ve been going up for so long and it becomes a habit with consumers/sellers to assume they’ll go up. Happens in every bubble. Think of it like a toy rocket, even after the motor runs out of fuel the rocket will continue to climb for a little while before crashing down to earth. That is where we are right now. Price declines will begin in the summer/fall
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umdesch4 Says:
June 7th, 2008 at 8:46 am
Price declines are already starting in some areas. One SFH we saw two weeks ago (in Port Moody) dropped the listing price from $719K to $688K overnight. Just in the time we were looking, a couple of other places in Coquitlam fell off the MLS listings, only to re-appear cheaper. Otherwise, all of the couple dozen or so listings we started looking at between a month and 6 weeks ago are still up.
Oh, and did I mention the open houses? Two weekends ago, we had the surreal experience of going to 4, and being the only ones there.
I’ll admit that this is only anecdotal, based on a small sample (of SFHs only), and in the outlying areas of the GVA…but I can’t help thinking it might be a sign of things to come.
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miracle Says:
June 7th, 2008 at 9:10 am
JUN:
“In a democracy, the power isn’t in your hands. Look at the reality.”
What are you talking about? You are conflating democracy with capitalism. Unfortunately typical.
Not that I want to confuse you further, but democracy does not equal possessing commodities. Are you saying that the rule of the moneyed elites is a good thing? When only moneyed interests get a say in how society is run, you’re skirting with fascism brother.
That might be an aspect of our social reality, but I was hoping for a bit more from my neighbors. Potluck anyone?
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browntown Says:
June 7th, 2008 at 9:19 am
yeah dracken i think it will be awhile before the n.d.p come back so you can get your hospital cleaning job back! yeah, you are super intellegent rocket boy! good for laugh dick slap! your wife say rocket coming down! ha ha ha
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blueskies Says:
June 7th, 2008 at 9:19 am
if anybody runs across some “pent up demand” this weekend please take a picture of it, i’d love to see this rare bird.
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Anonymous Says:
June 7th, 2008 at 9:24 am
“your reasoning does not explain the inventory spike.”
Chart shows inventory spike to encourage more sellers in fear=more bussiness to stop agent going out of jobs.
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patriotz Says:
June 7th, 2008 at 9:58 am
Vancouver
Population: 2.25 million
Listings: 17,857
Ratio: 126
But that’s the listings for REBGV which does not include N. Delta, Surrey, White Rock or Langley (c/t) (FVREB). Take them out and your population drops to 1.63 million, and the correct ratio is 91. Looks even worse compared to SD’s 148 doesn’t it?
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jesse Says:
June 7th, 2008 at 10:08 am
Vancouver pop-listings ratio is way worse than San Diego. Sales in July and August are usually not good and June is not starting off well at all. Look for MOI to be absolutely atrocious in the Summer. I’d be surprised if we don’t see the benchmark starting to fall by September.
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franko Says:
June 7th, 2008 at 10:46 am
Here’s how I see it:
The slight inventory slowdown at the end of May was actually much less than normal for the Victoria Day long weekend, which is usually the biggest selling time of the year.
Our market has come close to the cliff a couple of times in the last 2 years, only to be revived by greedy idiots and driven to ever greater levels of insanity. But fundamentals have so overwhelmingly deteriorated that the few remaining illiterate bulls at the bottom of the evolution chain will be entirely helpless to stave off the looming disaster.
All the ducks are finally in a row, and we’re a tiny sliver away from panic that will drive inventory to levels that will knock your socks off.
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Brittanny Spears Says:
June 7th, 2008 at 11:00 am
I can’t believe that anyone is buying now. It just amazes me how uninformed so many people are. I especially feel sorry for the uninformed youth who are getting sucked in by the spin sharks and will have to live with the results actions for a long,long time.
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Anonymous Says:
June 7th, 2008 at 1:52 pm
Franko says… “It sounds like markets are starting to tank big time in the Okanagan.”
I have a place there and on my street there are 5 houses for sale from $399,000 – 549,000 and 3 lots going from $149,900 – 229,900. 8 signs at the bottom of my street has never been seen before!!
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Vansanity Says:
June 7th, 2008 at 2:06 pm
Oh man,the bulls are seriously killin me lately!! I’m making an effort to check in on this site at least once a day, solely for a good laugh!! Thank you bulls!! Hahaha!! Please continue to “wow” me with your “expertise” in the subject matter!! Hahaha!!
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Raincouver Says:
June 7th, 2008 at 2:08 pm
Our market has come close to the cliff a couple of times in the last 2 years, only to be revived by greedy idiots and driven to ever greater levels of insanity.
Actually, that would have never happened except for what has been referred to as “bankers mischief”. If not for 40 year amorts, zero down, CMHC extension to ‘investment’ properties, this thing would have died the ignomious death it so deserves – at least a year ago. Our financial gurus are enablers.
But, you’re right, ultimately. Greedy idiots…greater levels of insanity.
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Asun Says:
June 7th, 2008 at 2:40 pm
Wow, I just checked out buildingdigger.com based on Condohype’s article. Thousands of assignments are listed there. Hmm.. if we add that to Paul B’s number, yeah.. the end is near. Or perhaps we’re already at the beginning of the end
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franko Says:
June 7th, 2008 at 2:41 pm
Yu’re right Raincouver, this thing would have died an ignominous death if not for innovative bankers mischief. That justified death would have been much easier to survive than the enormous massacre that we are now faced with.
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pricedoutfornow Says:
June 7th, 2008 at 3:43 pm
Anonymous-re Okanagan
Kelowna’s a real bubble town if I’ve ever seen one. I go there quite a bit and went to a hockey game over the winter where everyone was congratulating my friend for buying his condo ($350k) “Whoohoo!” They all said. “RE’s only going to go up! Everyone wants to live here! It’s KELOWNA!” Though I just talked to a realtor there last week who confirmed it’s been slower this year. I wouldn’t be surprised it we saw similar declines as California, it is after all “California north” isn’t it?
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Vanman Says:
June 7th, 2008 at 4:56 pm
It is not uncommon for Vancouver boomers in general to buy late or never buy at all. Vancouver for the most part was never a good place to buy in the first place. It’s always expensive and even if it’s discounted, it’s still always expensive. Higher wages here in Vancouver are not always as competitive as wages elsewhere nationally which undoubtedly exacerbate the cost of home ownership even more.
Let’s say you buy a condo today for $500,000. You go with a 40 year AMO. Your total equity after 40 years is really not $500,000, though I’m sure a lot of people thought that! In reality, your adjusted cost base will be your principle $500,000 + cumulative interests + 40 year of taxes paid + 40 year of maintenance cost that will increase forever as long as you own your property. Yes, even if you own your property and not sell it, the cost of maintaining that property needs to be factored in your ACB (Adjusted Cost Base). Otherwise, you’ll simply be throwing money into an endless bottomless pit and not realize you did so!
Sadly, many boomers thought the total amount paid of their mortgage for 25 years is what the cost of the home itself. Then they rent this out using this asset value and thinking they are getting a nice 5% to 8% YOY return on their investment. But not knowing that, the home is more than 25 years old. It’s an old timer which as many of you and myself know will probably need a new roof soon, new that and new what. A paid off home is never going to stay paid off. You as a home owner WILL ALWAYS pay to get it in good shape.
So it comes to this question. Is owning a home a good idea in Vancouver? I posed that question to people who are working in the industry (not builders or agents or anything like that). Veterans investors in apartment buildings and architects. And they all told me that renting has historically been the best choice for people living in Vancouver, unless you got leads buying distressed or foreclosed properties. MLS is NOT a good way to buy cheap property btw.
If a person who is renting a home in Vancouver gets a 3% to 4% YOY rate of return after factoring the landlord’s management time, expenses, taxes and insurance, then the landlord is basically loaning his or her home to the tenant at a 3 to 4% interest rate. If you have to buy a home, you have to pay much more than that. What’s the incentive to buy? And I believe that’s what happened during the early 90s to early 2000s, a span of 8 to 9 years where Vancouver home prices went pretty much no where.
Why would someone be stupid enough to be buying into a real estate market that is going sideways and be paying more in mortgages rather than rent? This situation is happening right now on the US equity market in general (Nasdaq), where for the past 8 years, investors who are fully vested in the index starting in the year 2000 to 2008 not only made no money at all, but lost money to inflation, taxes (some companies pay dividend) and carrying costs. Remember Nasdaq during the last 1990s. That was where everybody was. Now, pay attention to the Vancouver real estate of today.
As I said before, Vancouver historically has been a good place to buy unless you want to settle down permanently or raise a family. Otherwise it makes no sense. Would you rather have the landlord loan you a house lower than the mortgage rate? You would and spend the difference traveling abroad or even invest the difference in stocks or bonds? This is exactly what a number of boomers were doing!
Some did well in stock in the late 1990s and were simply exercising their funny money wealth and bought homes. To give you an idea of the history of the S&P/TSX index spanning from 1956 to 2007. The index market went through 3 boom cycles lasting up to 90 months. The recession cycle lasted on the maximum of 17 months and that’s in between 1956 to 1960. In general, the market did really well. Well, the Vancouver real estate market can go into the doldrums for up to 120 months (10 years). Where do you want to be? Home or stocks.
I say, my odds is better in stocks.
Warren Buffet and Charles Schwab had both pointed out that houses do not increase in intrinsic value. They never do. The reason why they rose in prices is simply that salaries went up along with it.
That was in the past. Today, salaries are going sideways and sometimes even DOWN if you’re working in retail. Good manufacturing and high paying jobs are being cut. Look at the auto industry to see the carnage. And the unions want to stop companies from cutting more jobs. The problem isn’t with the companies that are laying off people. The problem is with the competition against foreign makers.
Just wait when China (Geelee) and India (Tata) gets into the domestic game.
To justify higher home prices, either people’s wages must rise significantly or asset prices must fall significantly, but this in itself is a double edge sword. If wages go up, inflation will surely go up too (as we are experiencing now), which means BOC will raise rates. Not too good for home owners who are already tapped out right now. If asset prices deflate like it does in the states, it will be a long pro-longed process which then makes buying a home unappealing for the masses.
The potential downside of the Vancouver market. After the oil bust in the 1980’s, Colorado’s condos lost 90% of the value they had at their peak. Our situation in the 80’s wasn’t great either.
Should we see something similar?
My thought has always been, home prices will fall but probably not as dramatic as condos will, but will they fail quickly? Probably not since Canadians are not allowed to walk away from their mortgages without any financial repercussions. So, probably the bleeding will be slow. Japan went through a 14 year down cycle, has a severe land shortage even worst than we do here and prices there are now at the same level as they were 23 years ago.
Vancouver prices only went sky high because of easy credit and cheap money.
If the rich Chinese, Europeans and Russians were buying them up, they had already dumped them and moved on to cheaper assets. Rich people does not become rich by being dumb. There’s a reason why they are smart.
There’s a saying. What goes up must always come down.
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John Says:
June 7th, 2008 at 4:58 pm
Kelowna’s RE market is hilarious. I was seriously shocked when I found out that it’s as high as it is. How can a town with no industry other than tourism justify this?
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stagnate Says:
June 7th, 2008 at 5:34 pm
good post vanman, but keep in mind the twin powers of population growth (immigration) and monetary debasement (inflation). there is not one (well there may be a few) persons who bought real estate 25 years ago who regrets it now. people will mention japan, but remember that japan’s population has actually been decreasing. also japan (to its credit) hasn’t resorted to currency debasement beyond a correlated range.
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Raincouver Says:
June 7th, 2008 at 6:22 pm
…there is not one (well there may be a few) persons who bought real estate 25 years ago who regrets it now.
Are you trying to be serious, Stagnant? Or are you just blowing hot air out of every orifice?
Most people talk about the market *now* … not a quarter century ago. It must hurt to be you.
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patriotz Says:
June 7th, 2008 at 6:29 pm
there is not one (well there may be a few) persons who bought real estate 25 years ago who regrets it now.
Er, 25 years ago was 1983, which was at the bottom of the early 80’s bust. It was a fantastic time to buy.
Turn the clock back two years to 1981. Lots of people lost their shirts buying at that time. A lot of people lost money (particularly in condos) buying in 1995 too.
It’s all about the price you pay.Buying at rent equivalence, which is where the market was in 1983, is a complete no-brainer. And it will be a no-brainer when the market hits rent equivalence again.
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Vanman Says:
June 7th, 2008 at 7:45 pm
Stagnate,
8 years ago (year 2000), the average PE ratio of most US major corporations was at 44x earnings. That’s very expensive even after the post-dot.com bubble.
Today, it’s a little better at 18x earnings. Some of them like Starbucks and Johnson & Johnson are in very attractive valuation territory as we speak. Would it pass Warren Buffett’s value test — maybe. But the fact of the matter is, it took 8 LOOONNNG HAAARRRDDD and sometimes gut wrenching years to reach those lowly PE levels, even lower than during the mid 90s. We are almost back to the mid 70s to 80s era where Warren made his fortune with his Berkshire Hathaway stock buying up undervalued companies, crunching double digit growth (20% percent YOY) for 20 years afterwards and made a lot of BS shareholders extremely happy.
As Patriotz said very eloquently — it’s all about the price you are willing to pay. In the stocks market, it’s the PE ratio multiple. In the RE market, it’s the near rent equivalence. But the question will be, will you be the person to buy like you did in 1983? Some maybe if given the chance. But you know that if condos do drop in price significantly, what makes you think you won’t wait. Like Nasdaq, when it does fall, it’s got a long way to go!
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Thums up Says:
June 7th, 2008 at 8:55 pm
“As Patriotz said very eloquently — it’s all about the price you are willing to pay. In the stocks market, it’s the PE ratio multiple. In the RE market, it’s the near rent equivalence.”
BEARS GIVE AWAY YOUR SELF MADE GIBBRISH
If prices have to adjust according to income and rent ratio why do price have to go up on the first place?
If prices have to go up first then down then buyers and sellers life will be like monkeys jumping in and out.
What it takes to buy a home is your personal income not your neighbours income,Rental yeild is not a requirement to buy a house because buyer must think of a period where he or she can’t find renters but yeah rental yield provide extra help to run your mortgage smoothly.buying a home is the way to accomodate your family not to make a rental income out of it.
If a SFH accomodate 10 person there are definitley multiple income earners are involved not just single persons income.
Buying a appartment for your self nowhere require any rental yield unless you are buying it for rental yield purpose.
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Patiently Waiting Says:
June 7th, 2008 at 11:10 pm
Local editor slams 40 year mortgages:
http://tinyurl.com/53dchz
“After all, owning a home is supposed to be about financial freedom, not financial slavery. How else would you define being in debt for 40 years?”
The tide turns…
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Patiently Waiting Says:
June 7th, 2008 at 11:24 pm
By the way, the 40 year mortgage piece ran in various local papers including the New Westminster Record, Coquitlam Record and North Shore News.
Also check this story from the Langley Advance:
http://tinyurl.com/4vhat9
“Real estate continues to see prices stagnate”
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beatstreet Says:
June 8th, 2008 at 12:07 am
Local editor slams 40 year mortgages:
In particular:
It only makes sense, though, if you’ve looked at the entire cost, including interest, you’ll pay for the privilege of renting that home from the bank before you finish paying off your mortgage.
What a common sense piece. It even raises the issue of heating costs! Two years from now you may even read the same thing on the MSM front page.
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beatstreet Says:
June 8th, 2008 at 12:21 am
What it takes to buy a home is your personal income not your neighbours income
Unfortunately, the average family income in the lower mainland cannot afford a SFH. That leaves rich foreigners who are motivated to buy here due to family or social reasons (not safety, Olympics and all the other nonsense).
Are they a big enough group to support the market?
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patriotz Says:
June 8th, 2008 at 12:28 am
There’s nothing wrong with 40 year mortgages, or even interest-only (infinite amortization), if the fundamentals make sense. That is, the financing costs are less than the rental value of the house. That means you are making an operating profit on the property, and there is no net cost to you from the interest payments.
What makes 40 year mortgages toxic is when they are used to purchase properties at prices far above fundamental value. Your operating loss is effectively compounded for 40 years. It’s crazy.
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stagnate Says:
June 8th, 2008 at 12:42 am
raincouver:
indeed you have a very short attention span, which explains why you couldn’t read vanman’s lengthy post and why you didn’t understand why i referred to the 25 year time increment. you idiotic bafoon.
patriotz and vanman:
good points, i don’t see it quite the same way but would agree there is no comparison between 1983 and now, or that the current market represents value cash flow opportunity. unfortunately i don’t see that changing much in the near to mid future.
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patriotz Says:
June 8th, 2008 at 5:04 am
i don’t see that changing much in the near to mid future.
Well you know that’s what they were saying in 1981 too.
And in the US two years ago.
And in Alberta a year ago.
And in the UK six months ago.
“This time it’s different”. Sorry it’s not.
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-A- Says:
June 8th, 2008 at 5:53 am
<<<<>>
“Because so many people are making money from them while they last, bubbles are notoriously hard to control. As Bagehot so rightly wrote in 1873:
All people are most credulous when they are most happy; and when much money has just been made, when some people are really making it, when most people think they are making it, there is a happy opportunity for ingenious mendacity. Almost everything will be believed for a little while.”
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Re-diculous Says:
June 8th, 2008 at 5:57 am
Dear Diary,
…yesterday I saw two “Price Reduced” signs in the False Creek area. There was a time I thought I’d never see those again on a real estate signs in this town.
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Warren Says:
June 8th, 2008 at 7:00 am
I wouldn’t go so far as to call all buyers stupid right now. There are always deals happening and money to be made, in any market. The rapid bears out there need some moderation.
Prices to $250/sf downtown and 2001 price levels? Might be nice, but don’t hold your breath. $400/sf would be what, a 40% drop? I’d be jumping in at that price, unless the downtown core is a smoking crater from a meteor.
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Thums up Says:
June 8th, 2008 at 7:14 am
“Are they a big enough group to support the market?”
GOOD POINT
Now we need to find the total numbers of homes in Vancouver minus the numbers of homes built after 2005 to 2008 divide them between group of people by class.
1.rich were getting rich-they can buy multiple properties anytime and rich who were and who are flying to buy in vancouver through migration and immigration
2.Percent of over $100k earners increased by 26 percent.
3.percent of over 150k earners increased by 30 percent.
If we look at the numbers of home built during 2005 till further we can easily find a group of income earner to support the prices trend.you can address your opinion beatstreet?
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blueskies Says:
June 8th, 2008 at 7:44 am
1.rich were getting rich-they can buy multiple properties anytime and rich who were and who are flying to buy in vancouver through migration and immigration,/i>
the rich immigrant story has been beaten to death already…..
rich people are not stupid, they will not buy overpriced properties anywhere even in good ol’ Vancouver
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umdesch4 Says:
June 8th, 2008 at 7:57 am
Maybe somebody can explain this to me…
Lets say I buy a house that would cost me $2K a month to rent, and my mortgage and taxes on it end up costing $3K a month.
If I pretend that rent would never go up on this place in 30 years (an assumption that would hopefully offset the other simplification of taxes not going up, etc.), then at the end of it, I’ve actually paid a $360K “premium” to own this place (that’s the extra $1K/month I could have been investing elsewhere).
I did some napkin math using “rule of 72″, and some conservative estimates of the potential value increase of this property over 30 years, and seem to keep landing on numbers in the range of 4.25% +/- .25% compounding interest rate on that investment.
I guess what I’m asking is, how much of a difference between the monthly rent payment vs. mortgage payment does there have to be before it becomes a bad investment? Just saying “if it costs more to buy than to rent, it’s not worth it”, is definitely oversimplifying.
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Thums up Says:
June 8th, 2008 at 8:11 am
Umdesch4,
Buying or renting is a choice not a comparision because the term is based on indefinite period and moving to multiple locations more on that is principle resident vs investing in other assets where you must pay tax according to income. in conclusion buying a principle residence is best than investment in any other assets.
Blueskies,
Oh Really?
So why do you still see properties are being sold worth over millions?
are they poor buying in speculation?is there still a speculation to flip a home or condo?
what about checking the years bski- if your income does not support in 2005 who are these 3200 buyer every month still buying in 2008 and entering on almost same pace in 2009?
if you can not construct solid argument in hurry always take your time
Rock Solid and Eye Catching-Vancouver,B.C.
“THE BEST PLACE ON EARTH”
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stagnate Says:
June 8th, 2008 at 8:21 am
patriotz:
depends how you want to define bubble. when thinking bubble i think tulips or nortel or 1981 or miami condos. i don’t think corn, oil, gold, seattle condos or burnaby houses. they can go down, but i don’t see bubble. i know a doctor who thinks a new sars outbreak is coming that will wipe out 10% of the population. that indeed would be a demand shock needed to make it look like a bubble had occured.
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stagnate Says:
June 8th, 2008 at 8:25 am
i mean gold currently, not 1981 gold. ha ha.
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blueskies Says:
June 8th, 2008 at 8:34 am
a person buying an $18 million apartment is not value oriented, this is a discretionary purchase and has little to do with housing or shelter.
on the other hand some poor dimwit holding an assignment in TV Towers 2 is not going to be rescued by a rich immigrant “greater fool” because rich people aren’t stupid…..
Vancouver… the last place on earth!
August 2008 YOY price decreases on YVR RE hits MSM…
are you ready?
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stagnate Says:
June 8th, 2008 at 8:47 am
tv towers sold in 2005, moreso persons who bought pre-sales in the last year or two are the ones who better make sure they have a decent job!
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patriotz Says:
June 8th, 2008 at 9:29 am
I wouldn’t go so far as to call all buyers stupid right now.
I would.
There are always deals happening and money to be made, in any market.
Making money in a market like this can be done only by selling to a greater fool. You are depending on someone stupider than you to make money. Unfortunately at some point somebody has to be the stupidest buyer.
Prices to $250/sf downtown and 2001 price levels?
Strawman alert! The bear consensus seems to be 2003 real, although I would expect some of the crappier condos to go lower. 2001 nominal? Nope.
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slade Says:
June 8th, 2008 at 9:41 am
Never mind the people who bought pre sales that are about to come on market in the next year or so, I stopped in at the sales office for a new east side condo project that just opened for previews(morbid curiosity?)At least 35/40% of the inventory was reserved! This at $600 a square foot and up. I presume the buyers are expecting a huge rebound after the crash/correction!
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Tayman Says:
June 8th, 2008 at 10:10 am
First off I would like to say that I really enjoy reading this forum and would like to thank everyone who posts their thoughts on the market, bear or bull.
As I am a Vancouver resident who rents I am obviously a bear and thus waiting for the right time to purchase. To be honest, I really don’t mind renting at all (I get a good deal on a nice place) and am more than willing to continue until the time is right.
I do have a question though. Should there be a significant drop in Vancouver prices, how much do people think other markets in the province would be affected. I’m referring to places like the Sunshine Coast, Vancouver Island and the interior as opposed to the extremely over-priced markets of Victoria and Kelowna (I have a feeling how things will pan out there). I realize this is a Vancouver condo forum so if this question is too far off-topic then please ignore. Thanks.
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patriotz Says:
June 8th, 2008 at 10:28 am
I’m referring to places like the Sunshine Coast, Vancouver Island and the interior as opposed to the extremely over-priced markets of Victoria and Kelowna
They will get clobbered. The Interior and the Island are even more dependent on RE and tourism than Vancouver and Victoria. The resource industries are practically dead.
BTW I think a lot of smaller cities are almost as out of whack with fundamentals as the big cities.
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The Van Man Says:
June 8th, 2008 at 10:43 am
Tayman,
If you do want to find this out, go to http://www.foreclosures.ca where you will find sale of distressed properties of various age and built all over the provinces. I think the default page will begin listing Vancouver properties if you so wish to choose.
Here’s an interesting property that was sold not too long ago. I’ve been monitoring this place at Yew street (in the Kits area) through MLS or here too (property listed at the bottom of page 5) and was listed at less than $500,000. For the square footage, it represented roughly $482/sq ft, whereas comparable property elsewhere would be asking about $700 or more. Is it a good deal? I guess who bought it thought so. There aren’t a lot of listings so far, but you can bet your horses that more will follow in not a too distant future. Buying from this list may represent a better value than buying from MLS. Sometimes, properties may be listed cheaper but without any warranties implied or expressed. If you’re a fixer upper, this will represent even better value.
Keep in mind that Vancouver has historically been expensive during the down market. Foreclosed properties are never deeply discounted as you would see in some American states historically speaking. However, the places you are looking at could represent some value, good value to rent ratio. You just need to know where the overbuilding and the over inflating occurs and you need to know what you want. Why do you think Victoria and Kelowna are not poised for a major correction? In fact, that’s where the overbuilding and over-inflating are occurring now.
You can’t really be too choosy buying foreclosed properties. You just need to know where you want to live, then anything that pops up in the foreclosures.ca website represent possible acquisition target.
Renting is still a viable option, but what you can do is if you somehow found a nice property say in Victoria or Kelowna, buy it and then rent it out. If the property is so distressed, your rent equivalence of that property will always yield positive cashflow. Then, you just let your renter pay for your property, taxes, expenses and interest payments. When you retire, re-possess your property on the island or in the interior and then live rent free with minor expenses. That was exactly what we did in 1983. We took a leap of faith and bought 2 properties in Kelowna. Now, we never regretted it one bit!
Hope this helps.
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Montery Says:
June 8th, 2008 at 11:03 am
I looked at 2008 dollar adjusted graphs based on the Sauder data here: http://cuer.sauder.ubc.ca/cma/van_res.html. I drew some slope lines of the real dollar decline from the 1995 peak to the 2002 trough and applied it to the anticipated peak coming in 2009 (my guestimate), then I took the resistance line (defined as a line drawn through the trough of 1985-1987 and the 2002 trough) and extended it into 2025.
The intersection between the 2009 slope line and resistance line landed on 2020. That’s the year when the real RE price declines would stop and start climbing again.
Yikes!
If after the peak of this current market it’s going to take 10+ years for the market to stop bottoming out, that’ll mean this bear will be in his early 50’s. At that point, it will be ridiculous to “buy” in the Vancouver market. By that age, I hope to be facing retirement within 60 months! Bad time to take on a 25 yr mortgage!
So I’m wondering how does one buy in a declining market? Even if one plans to stay here for 15 years, you won’t be making money on your primary residence. In fact, I would be better off renting for the next 15 years because it’s cheaper in the long run.
I want to buy a place — really I do! But the forecast for the next 15 years paints a picture that just doesn’t make financial sense to me. I think my only hope is for a rapid ear-popping decline in prices, or continuously unbelievably good luck in the market for a number of years.
In either case, if I want a comfortable retirement from 55 to 75, I’m going to have to do it outside of this country. Panama, here I come!!
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jesse Says:
June 8th, 2008 at 11:05 am
“Just saying ‘if it costs more to buy than to rent, it’s not worth it’, is definitely oversimplifying.”
How do landlords make money if it costs more to buy than to rent? Only by selling to a greater fool. It’s that simple.
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jesse Says:
June 8th, 2008 at 11:06 am
“At least 35/40% of the inventory was reserved!”
Are you sure? They may well be reserved as you say but beware tactics that inflate the % sold value.
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The Van Man Says:
June 8th, 2008 at 11:30 am
Montery and Stagnate,
If you look at the decline of the Nasdaq index, it was vicious. If you look at the decline of the average US North American companies PE ratios, it is also vicious.
Back in the late 1990s, AIC under Michael Lee Chin popularized the notion of Buy Hold and Prosper, which was a slightly messaged message by Spock of the original Star Trek.
Dollar cost averaging was the theme then. Basically, to smooth out the ride during the bubble years and convince people to stay fully invested, while the market is gyrating nowhere but down. Unfortunately, in the span of just 2 years after the bubble popped, a lot of people lost a lot of money. PE ratios of 100x suddenly went down to about 44x and then during the span of 8 long years of decline, it shaved yet another 50%. Ah, but don’t forget about taxes, carrying costs and inflation. Factored that in and those people who still stayed fully invested in the same portfolio 10 years ago have virtually lots all their money. But they still remember that message — Buy Hold and Prosper and they will stay the course even after 10 years of carnage.
Unfortunately, when people decide not to face the truth, they will continue to linger until they realize they have no time left to continue with the lie.
The buy and hold message has always been a lie. It’s a way for mutual fund people to keep you from selling or switching out the dog funds. It gets them commissions by people doing dollar cost averaging. The Vancouver real estate market is somehow recreating the mania of the Nasdaq. Nobody sees this yet, because they don’t want to believe it. Let the good times roll, because that’s all they want to see.
If you start to making justifications for this market, you know you are in a bubble because like the AIC message of the past, it keeps people fully invested in the asset class.
Montery, if you do want to buy a place, decide if it’s going to be your primary residence or primary retirement residence. The latter is a better choice. Why? Because, while buying through a down market is a gut wrenching experience, because you know you may overpay. Prices may go down even further. But think nothing of that. If you do plan to buy, think location, location, location! There’s going to be only 1 unique place you want to buy and live in. That unique place is what you want. If you paid foreclosed price on it, all the better. If the price goes down further, think nothing of it, because you’ll be renting this place to someone. In this kind of the down market, most people want to rent, not buy so you will have no problems finding willing tenant to finance your valued prized possession.
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Anonymous Says:
June 8th, 2008 at 11:55 am
Van Man,
I totally agree. If you look at an successful investor, the first thing the do is to not invest in hight P/E ratio companies. The second, they exercise the cut-loss rule. It’s been 7 years since Nortel tanked.
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Tayman Says:
June 8th, 2008 at 12:56 pm
Vanman,
Maybe I was a little unclear in my post in regards to Victoria and Kelowna. What I meant was that I am already aware that a correction is more than likely in these two places but I’m curious what people think about possible outcomes in towns outside Vancouver other than Victoria or Kelowna. Thanks for your response though. And thanks to you as well, Patriotz. Btw, prices in smaller towns seem almost as skewed as Vancouver to me also.
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franko Says:
June 8th, 2008 at 1:19 pm
Warren said “I would’nt go as far as to call all buyers stupid right now”
The only reason I’m reluctant to disagree is because “stupid” would be inadequte to describe someone considering plunging into this market. It would take someone with the mental capacity between an insect and a plant.
In case you have’nt noticed, the world is in a major economic transition, the RE meltdown is global, and Vancouver, as the bubbliest city on the continent is undergoing an unprecedented inventory spike.
Case Shiller stats clearly show that cities which managed to delay the collapse are falling faster than the first ones to decline. As the last holdout, we’re in for a helluva ride. Although it could take many years for the market to start trending up again, most of the damage will be confined to the first 18 months.
Hunker down folks, the jig’s up!
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blueskies Says:
June 8th, 2008 at 1:52 pm
but I’m curious what people think about possible outcomes in towns outside Vancouver other than Victoria or Kelowna.
on the ride up a lot of people pulled equity out of their existing homes to buy into the market in smaller centres
(equity locusts). as the market deteriorates some of these owners are stuck with high debts against their principal residence and a marginal holding in a remote location.
these types will ultimately have to bail out if the downturn is protracted, leaving you with good choices from motivated sellers. so the pain is widespread.
Sunshine Coast would be an excellent example of this.
a patient bear could do well in this scenario.
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franko Says:
June 8th, 2008 at 1:57 pm
Tayman,
Re: towns outside Vancouver:
I would expect inventory to grow in places like Whistler and other recreational areas that have benefited from US investment, as these investors have made substantial profits from the currency change over the years and can now pursue bargains on the home front where markets have already crashed.
Any towns that are even remotely dependent on the forest industry are also flirting with disaster….check out post #32 about sawmill towns.
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stagnate Says:
June 8th, 2008 at 2:06 pm
i still know quite a few people who are looking to buy, i tell them the landscape has changed and to find motivated vendors and make low ball offers. they don’t quite get it as they have been so conditioned the other way. nonetheless smart people who are committed to buying will hopefully figure it out and not leave money on the table.
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franko Says:
June 8th, 2008 at 2:08 pm
Tayman,
Re: Towns other than Van, Vic, and Kelowna:
I would expect inventory to grow in places like Whistler and other recreational areas that have benefited a lot from US investment, as Americans have made substantial profits from the currency change over the years and are now starting to look for bargains on the home front where markets have alreay crashed.
Any towns that are even remotely dependent on forestry are also flirting with disaster….check out post #32 about sawmill towns.
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franko Says:
June 8th, 2008 at 2:11 pm
sorry for the double post, dind’nt notice that we were on page 2.
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Tayman Says:
June 8th, 2008 at 2:11 pm
Thanks for the replies, people. FWIW, I plan on buying on the Sunshine Coast someday. I am not in a rush though and am willing to wait and see how things develop (while I save up a very nice down payment!). This forum (and others I’ve linked to through it) has been very helpful in providing some enlightenment on the RE market, so thanks again.
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Anonymous Says:
June 8th, 2008 at 4:11 pm
Tayman, I would take most everything you read on this blog with a large grain of salt. There are a few who provide reasoned, practical information on occasion, but, most are here to simply fan the flames of RE Armageddon as they’ve been doing for years. The Chicken Little syndrome runs rampant here, hence the hostility and personal attacks directed at anyone who disagrees in the slightest.
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Patiently Waiting Says:
June 8th, 2008 at 4:37 pm
“hence the hostility and personal attacks directed at anyone who disagrees in the slightest.”
You’re not one to talk. Do you have anything worthwhile to add to the conversation, or are you just lashing out as you sit alone in the middle of an empty house?
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Tayman Says:
June 8th, 2008 at 4:59 pm
Anon,
I understand what you’re saying and appreciate the advice. When it comes to debating important topics, I always try to keep an open mind about what both sides have to say. People often become very emotional when presenting or defending their position (understatement of the year, I know) and I usually find that, inevitably, the answer is somewhere in the middle. So a large grain of salt goes with me wherever I go, I suppose.
Obviously, as a person who does not own, I am hoping for as big a decline as possible in the market, but I do realize a large correction may or may not happen. In the meantime I would like to educate myself at least a little so that in the event things do unfold in such a manner I will be able to take advantage.
You know, thinking about it, I realize some types here may go a little over the top with their rhetoric, but try as I might I simply can not put my trust in what realtors, bankers or people involved directly in Vancouver RE have to say. They all have ulterior motives for having me think positively of buying at the current rates. Here, at least I can see some data and glean some info while getting a different perspective. Anyway, time for a beer. Cheers. Tay
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patriotz Says:
June 8th, 2008 at 7:18 pm
Then, you just let your renter pay for your property, taxes, expenses and interest payments. When you retire, re-possess your property on the island or in the interior and then live rent free with minor expenses. That was exactly what we did in 1983. We took a leap of faith and bought 2 properties in Kelowna.
Buying an investment property when it’s cash flow positive is not a leap of faith, it’s just common sense.
Note the date 1983 again.
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patriotz Says:
June 8th, 2008 at 7:27 pm
Want to know how nutty things are in the Interior? Take a look at this link that popped up on the sidebar:
http://www.kootenaylakevillage.com/index.htm
This is in Procter, 35 km east of Nelson, accessable only by ferry. As an added attraction you have the CPR trains to the Trail smelter rolling past your dream house.
The whole southern interior and Island are full of stuff like this. Where are all the people going to come from?
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blueskies Says:
June 8th, 2008 at 7:48 pm
As an added attraction you have the CPR trains to the Trail smelter rolling past your dream house.
i noticed that all the images and maps studiously avoided show those tracks… Marketing 101
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beatstreet Says:
June 9th, 2008 at 12:45 am
Thums up
If we look at the numbers of home built during 2005 till further we can easily find a group of income earner to support the prices trend.you can address your opinion beatstreet?
According to the GVRD, greater van population should grow by about 70,000 over the next two years (to 2009).
http://www.gvrd.bc.ca/growth/keyfacts/popproj.htm
Given that the average household size is 2.6, if all these people decided to buy a house (being conservative here), we would need a supply of about 27,000 new homes. Perfect, we have about 26,000 homes under construction now according to Mohican’s blog.
So far so good. But, we have 17,000 on the market right now according to Paul’s blog. So then you have to assume that all these sellers are just trading up and down the market (no empty fixer ups, condo flippers etc). Highly unlikely.
Even so, there is still this problem of affordability. Given that the average household income is about $63,000, the whole bullish case assumes that the typical newcomer will have the means and be happy to take out a 40 year mortgage to buy a tiny condo (which would be cheaper to rent).
We’ll see, but right now I am betting that the market can’t clear given the fundamentals.
And while I used to think that condo’s were the most vulnerable to a downturn, I am beginning to think it will be the SFH price that is most at risk, at least in the early stage.
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patriotz Says:
June 9th, 2008 at 3:16 am
I don’t think it will be one or the other. Fundamentals are so out of whack for both condos and SFH that I think whichever one shows weakness first will pull the other down very quickly.
There was no discernible difference in the speed of decline in the 1981 bust, you saw both abandoned condos and SFH (including a whole 1/2 block around 29th and Slocan).
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Thums up Says:
June 9th, 2008 at 8:54 am
Beatstreet,
Thanks for your attempts to provide round the clock update,yes that’s where we are right now.sorry because of short on time i am going to avoid writing any other response,there is nothing much to ignore your point only the inside detail can turn the puck towards your post or my post thanks and
yes we’ll see where the road goes after the forth coming intersection.
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jesse Says:
June 9th, 2008 at 11:48 am
Tayman, I think there is significant variance between towns and cities depending upon the local employment situation and their reliance on tourism. The US saw secondary residences come under pressure first as owners tried to protect their primary residence from default so the same could start happening in BC communities with high levels of vacation homes. Likewise towns with recent mill closures will have lots of supply. It really depends upon the locale.
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betamax Says:
June 9th, 2008 at 12:43 pm
Van Man: home prices will fall but probably not as dramatic as condos will, but will they fail quickly? Probably not since Canadians are not allowed to walk away from their mortgages without any financial repercussions. So, probably the bleeding will be slow.
Agreed, but wait till these people have to renew their mortgages and discover they owe more than it’s worth. They’ll walk away then because they have to.
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betamax Says:
June 9th, 2008 at 12:47 pm
Tayman,
Re: Towns other than Van, Vic, and Kelowna:
They’ll fall into an economic black hole, just like in the early 80’s. And you can include Vic & Kelowna in that group.
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Via Says:
June 9th, 2008 at 12:55 pm
Did someone already post these stories:
Foreclosures heat as market cools
and
B.C. jobless rate rises
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Patiently Waiting Says:
June 9th, 2008 at 1:06 pm
Mastercard: Vancouver loses economic influence
http://tinyurl.com/5blopu
“Toronto was the top-ranking Canadian city at 13th, down one spot from last year. Montreal was 32nd, down five spots. At No. 37, Vancouver was down nine notches from 2007’s rankings.”
Last year we were almost tied with Montreal, but now we’ve slipped behind. I wonder why?
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blueskies Says:
June 9th, 2008 at 1:34 pm
more people leaving our fair climes:
http://tinyurl.com/3e9z8w
Former HP employees say opportunities for advancement have dwindled. And in the past 30 days, more employees have been told they will be laid off if they can’t find work elsewhere in the company.
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Van-zee Says:
June 9th, 2008 at 1:43 pm
HP is in Vancouver Washington.
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blueskies Says:
June 9th, 2008 at 1:58 pm
Van-zee
yeah i just seed that!
good thing i dint shoot the messenger
my bad!
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Re-diculous Says:
June 9th, 2008 at 1:58 pm
Renters Profit from Owner’s pain
http://www.cnn.com/2008/LIVING.....index.html