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!
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June 9th, 2008 at 1:58 pm
Renters Profit from Owner’s pain
http://www.cnn.com/2008/LIVING.....index.html
June 9th, 2008 at 1:58 pm
Van-zee
yeah i just seed that!
good thing i dint shoot the messenger
my bad!
June 9th, 2008 at 1:43 pm
HP is in Vancouver Washington.
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.
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?
June 9th, 2008 at 12:55 pm
Did someone already post these stories:
Foreclosures heat as market cools
and
B.C. jobless rate rises
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.
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.
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.
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.
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).
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.
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
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?
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.
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
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?
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.
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.
June 8th, 2008 at 2:11 pm
sorry for the double post, dind’nt notice that we were on page 2.
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.
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.
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.