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July 5th, 2008 at 10:08 am
editorial from the Van Sun:
http://tinyurl.com/6op77t
the next six months:
sphincter tightening adventures in CDN markets
July 5th, 2008 at 10:00 am
http://www.canada.com/vancouve.....mp;k=74813
There are stories going back for years about these people.
July 5th, 2008 at 9:58 am
Stagnate, you are correct.
You can still rent a studio on Barclay for $740 downtown right now. The units with 7 appliances,pool,concierge, U/G parking, insuite laundry.
in 2001 the same 615 sq ft one bedroom rented for $1100 and are now $1300, the unit is 7 years older. The tenants who moved in 7 years ago are paying approximately $1320 with the legal increases.
The newer units haven’t increased too much but the older buildings with no amenities or security have.
If you google Hollyburn Properties they have taken a lot of flack for kicking out tenants and “renovating” and then jacking the rents up for old buildings as high as the newer buildings.
A 2 bedroom in Sunset Plaza, on Beach and Bute, was $2000 8 years ago and you’d be paying $2250 if you were to rent it today. Why someone would pay that when they could go to Parkwest 2 for $2300 and have new appliances, laundry, security, pool, gym etc. who knows.
July 5th, 2008 at 9:14 am
Why not make transit free?
As right wing as I am, I agree with that. Build it out and subsidize the hell out of it. People who take transit instead of driving confer external benefits on society. In doing so they incur costs of their own (inconvenience, increased commuting time). The LEAST we could do is to remove their monetary commuting expenses to token amounts. If we include externalities, public transit commuters are the ones subsidizing drivers.
July 5th, 2008 at 8:51 am
Warren: Read more carefully.
The Tyee is from 2004, the second link is this year. I chose one older, one newer, one left wing, one right wing. I really try to get a balanced view from multiple and diverse sources. Far too easy to stay in a comfortable bubble, only listening to those voices who reinforce your views. One ends up either like krish or bullish Dave (Hillary) like that.
July 5th, 2008 at 8:24 am
a big part of the rent doubling is due to the rental stock changing (ie new investor owned condos). more upscale rental stock creating sizeable increases in median rents. probably accounts for half the doubling, i would think a generic one bedroom rental apartment in mount pleasant 8 years ago would have rented at 650, now would probably go at about 950. the west ender did not get very technical in their assertions.
July 5th, 2008 at 8:21 am
alexcanuck,
I’m no liberal defender, but that article says debt is up 8.2% in 7 years. That’s less than inflation. Our income taxes have decreased dramatically since the liberals came in to power. I’m pretty sure budgets have been balanced for the last few years. I’d like to see some debt repayment myself.
As usual, the Tyee has a pretty slanted take on the issues.
July 5th, 2008 at 8:13 am
Hey Matt you drunken head rat,
B.C. Economy countinue to grow above the current level because Goods and Services are interdependent so most of you domestic idiots can not harm our economy you fucked up idiot the pace you guys are experience- is already at the bottom for this decades,
If you did not lose your job already most likely you will never lose it again for decades to come,Any body who feel the fear of job loss can buy a job loss insurance got it?
btw i knew you are a bear but your own counterparts attacked you to burn your ass you dum head i suppose to correct them but #84 tells me you deserve that shh you got from every one else.
July 5th, 2008 at 8:12 am
but Matt, the job losses in the US are starting to mount well after the peak of the housing market – prices simply got too high and started to correct when future demand dried up. A house price decline can simply indicate that prices where too high. If people have been relying on overpriced homes for extra debt based spending and recalibrating their view of economic reality based on bubble prices THATS when the fallout becomes a problem.
I suspect in this regard Vancouver is not that different from the US bubble cities. It’s a matter of semantics, but it seems reasonable to say the unsustainable price rise is as much to blame as the inevitable price decline.
July 5th, 2008 at 7:53 am
My links to support my Liberal “Fiscal responsibility” rant. I don’t make this stuff up, or get it from press releases and advertisements.
http://tinyurl.com/5tysmd
The Tyee from 2004
http://tinyurl.com/5efe5d
The Vancouver Sun from February this year
They haven’t changed their spots much.
July 5th, 2008 at 7:43 am
Pesky statistics are raining on Liberals’ economic parade
http://tinyurl.com/652f9t
From Vaughn Palmer in Thursday’s Sun. Not exactly new news, but well told and in MSM on how thin and lonely our “Booming Economy” actually is.
Resource and goods-producing industries down. Exports in decline. Private sector investment stagnant. So what accounts for the good news on the economic front?
Provincial growth is mainly a result of the boom in residential construction, the thriving service sector and government spending, according to BC Stats.
Matt especially may want to read this. If he doesn’t want to be unfairly painted as a bull he should know how and why an economic downturn could possibly take place here. Take out construction and HELOC supported frivolous consumption and we are in a serious recession.
I hate booms. Booms are terrible for the real and longterm economy. It’s just like those wild house parties that happen when the parents go away. Spend years building a nice place, well stocked wine cellar, respect from your neighbors, beautiful yard, etc. Go away for one weekend and the place is trashed, windows smashed, fine french wine flavoured vomit on the carpet, stereo stolen, tv smashed, etc. In the case of BC you can add that the savings account looted to pay for the party.
The liberals boast of the budgetary surplus all the time, it’s just accounting smoke and mirrors. Total taxpayer supported debt is the figure that matters, it includes such things as crown corp. debt, P3′s future payments (to be fair, add fees you’ll be paying directly to those P3′s). Using that figure, total taxpayer supported debt, the Liberals have been spending your money like drunken sailors, all the way spending more of your taxes to proclaim their fiscal responsibility. And sending me a hundred dollars of my own money (add shipping and handling) as a bribe! Also selling off assets and spending the capital. You’re not supposed to sell assets to support consumption during good times. Fiscally responsible, my ass!
Yes, it feels good to whip out the Visa card and throw a party, but just wait for the bill and hangover to arrive.
I don’t think the NDP are much better, BTW. I throw my vote away on the Greens, they are the only ones who would plan based on what is best for the grandchildren, not the next election. At least until they take power!
July 5th, 2008 at 5:59 am
Mtt says: “The market is relaying information to you that something is drastically wrong.”
Yes, this is true. It’s relaying the same message when prices become completely detached from economic fundamentals, which is exactly what the bears have been saying all along: “Something is drastically wrong with home prices in Vancouver”
July 5th, 2008 at 2:20 am
patriotz, I believe there is evidence to support my claims. The job loss statistics are starting to mount in the US.
http://www.baltimoresun.com/bu.....3839.story
“More job losses are coming through the remainder of the year. The economy has lost just over 400,000 jobs since the start of the year and will lose another 400,000 by year’s end,” said Mark Zandi, chief economist for forecaster Moody’s Economy.com. “Behind this pessimism are the broad-based job declines across most industries and regions of the country.”
http://www.economist.com/marke.....d=11543614
The surge in the oil price followed figures showing that America’s unemployment rate had risen from 5.0% in April to 5.5% in May, the biggest monthly rise for 22 years.
http://www.ft.com/cms/s/0/c8bb.....07658.html
The US lost jobs in June for the sixth month in a row and jobless numbers remained elevated, signalling an continuing deterioration in the labour market and helping to push back thoughts of an increase in interest rates.
“The net number is grim,” said Ian Shepherdson, an economist at High Frequency Economics, adding there was “worse to come”.
I have no idea what’s happening in Alberta. Thanks for the hint by the way.
July 5th, 2008 at 1:13 am
Hint: market prices are determined by those who are buying and selling, not those who aren’t.
July 5th, 2008 at 1:10 am
there’s a couple reasons why I think home owners are unlikely to sell in a bear market without job losses.
They haven’t been selling in the US (or Alberta) either. So how come prices crashed?
July 5th, 2008 at 12:16 am
Comment #23, VancouverBanker,
Are you sure that your schadenfreude isn’t premature?
July 5th, 2008 at 12:13 am
I think you are all unfairly painting me as a bull. I have no aspiration to promote real estate market participation in Vancouver. I have great disdain for posters such as Thums Up, Krrrish, dosh (who are all probably the same person anyway) and all the other assholes who are deliberately posting nonsense for the purposes of their own (perceived) financial gain.
With respect to VHB’s question about employment, there’s a couple reasons why I think home owners are unlikely to sell in a bear market without job losses. First, homes are an extremely emotional purchase. For some people it symbolises an important stage of their lives where they can lay down roots and start a family, much as their parents and grandparents did. For others, it is a symbol of material status and a significant reason that led to their decision to purchase real estate included impressing their friends.
I consider these two extremes the dichotomy of the market psychology of Vancouver. (Indeed, there are speculators however many of these people live outside the country and make their money in real economies.) In both cases, the impetus for buying real estate was irrational therefore it seems to me that it would be unlikely that an irrational home owner would be keeping an eye on the market, planning for the long term benefit of his financial well-being.
Indeed I believe it is the case that these people have no intention of selling simply because it would mean an end to their idyllic lots in life. Negative equity is meaningless to them. They bought homes they could barely afford, knowing full well they could barely afford them.
So what is left that could crow-bar are naive Vancouverites from their homes? It certainly isn’t good financial sense. That leaves us with money, or rather the lack of it. Besides death, terminal illness or divorce, unemployment is probably one the most cataclysmic family malaise. None of the preceding three events are affected directly by the performance of the economy. A sudden loss of income/unemployment obliges one to take a long gaze into the abyss. At this point, the home owner must decide whether to keep living in a dream or take appropriate measures to escape financial ruin.
A few job losses here or there are unlikely to cause a precipitous decline. I think it would take something dramatic, such as an Asian recession to bring Vancouver’s real estate market down to a 50% decline. I do hope I’m wrong.
Another reason why I don’t think that we’re likely to see large declines in housing prices is that banks simply don’t want to deal with foreclosures and will do everything in their power to keep the mortgager paying for their now worthless home. It costs them too much money to take away a house from someone who’s just lost their dream. The property is likely to end up vandalized requiring costly cleaning fees or even renovation. There is also an additional cost to the bank to hire an agent to sell the home, in a market trough of sales.
The point which I keep trying to get across to the bears on this blog is that a massive decline in real estate prices hurts all of us. It’s an indicator that some economic event is taking place that will make all of our lives harder. The market is relaying information to you that something is drastically wrong.
July 5th, 2008 at 12:06 am
This city has created a real dual society of have’s and have nots.
That’s what Robert Toll said about the US before housing crashed and his company’s stock crashed more.
Keep dreaming.
July 4th, 2008 at 11:38 pm
essentially rents have now doubled since 2000
You mean places like $1300 / 2br – Bedroom Suite for Rent (Kits) would have rented for $650/month in 2000?
I don’t think so.
July 4th, 2008 at 11:30 pm
Soft landing is what will happen.
Hmm.. that sounds familiar, where have I heard that before?
.. Oh yeah! They said that in EVERY OTHER CRASHING MARKET! Thats where I’ve heard it before!
July 4th, 2008 at 11:28 pm
I agree with SCC on the carbon tax issue – if the goal is to get people out of their cars its time we improve transit and alternatives. Why not make transit free? This city has an embarrasingly bad transit system and lack of bike lanes. Most other cities I’ve been to in North America and Europe best us on both those fronts.
July 4th, 2008 at 11:26 pm
essentially rents have now doubled since 2000.
Begging rents on craigslist or actual rent people are paying? Statscan figures don’t agree from what I’ve seen and reality doesn’t either. I’ve moved 3 times since 2000, each time further west and though I’m paying twice the rent I have more than twice the space / view / amenities / etc – in fact no one I know has seen their rent double for equal space in that time. At most It seems to be around 20% increase which is in line with inflation. With the way prices have moved rent should have gotten MUCH more expensive.
July 4th, 2008 at 10:57 pm
interesting article in the west ender today about rental rates in vancouver, essentially rents have now doubled since 2000.
I really doubt that apples for apples market rents have doubled.
July 4th, 2008 at 10:43 pm
interesting article in the west ender today about rental rates in vancouver, essentially rents have now doubled since 2000. provincial rent controls have saved some, with others left with percentage increases comparable or higher than ownership values. i would say rents and market values have both hit the affordability ceiling at this point and could not go higher irrespective of demand. those that could afford to buy have, and will continue to do so (with some exceptions of course, ha ha).
July 4th, 2008 at 10:02 pm
Translation of Patriotz take on Totroll’s post:
Why do these liberal rules and physical beauty only affect prices, but not rents?
July 4th, 2008 at 9:53 pm
Yet another person who simply does not understand asset valuation.
House prices like stock prices must, repeat must, be supported by earnings.
July 4th, 2008 at 9:48 pm
It’s really funny how people in this forum are so keen of prices going down, Get Real folks, thanks mainly to your liberal immigration rules and the beauty of Vancouver people will keep coming and guess what, prices will not go down for years to come. Soft landing is what will happen.
This city has created a real dual society of have’s and have nots. The rest of Canada, may be a different story, not Vancouver.
July 4th, 2008 at 7:08 pm
Externally, it appears that they just following what the other MBS and insurers market participants were doing. If they didn’t play ball, they would have no market (as they should have). I liken this to the telecom companies during the bubble conducting untraditional/risky business in an effort to keep pace with Worldcom only to find out worldcom’s results were a sham.
Well if the private sector is doing your job for you, get the f*ck out of dodge and let them do it.
July 4th, 2008 at 7:07 pm
Sorry I almost let the troll drag the real topic off post:
The Market has crashed, 50% drop overall and 70% at TV Towers
Satv/krissh/informer/browntown/thumsup=
http://vancouvercondo.info/for.....3&t=48
Back to the real topic, the market is finished and anyone who thinks otherwise has a surprise coming. Read the links trolls, it’s indisputable.
July 4th, 2008 at 7:04 pm
If the tax revenue was applied to car insurance, it might be revenue neutral, but it would be giving the money directly back to polluters. By giving EVERYONE money back on income tax and
True. Why not do both? They are not mutually exclusive.
July 4th, 2008 at 6:49 pm
@Mr. Simpleton
I will find it very hard if not impossible to show compassion towards anyone who fell into the trap of buying in Vancouver the last few years (people upgrading aside… kind of) and goes negative home equity or loses their home. Everyone makes their own bed, this includes silly family members whom I warned.
I may actually in some cases ask them how they didn’t see this coming while shaking my head at them. I may even blame them in some part for my not being inclined to buy in the early 2000′s because they were a part of driving up the cost of home ownership.
As far as job loses goes, it will be very sad and no I do not wish this on anyone. Losing a good paying job is different than losing an overpriced, unfordable home. The sad part is everyone here will know someone affected by the coming job losses.
July 4th, 2008 at 6:38 pm
@VancouverBanker We’ve been waiting to buy since we came back to Vancouver in late 2005, and suffered through millions of comments from idiots who told us prices would never drop, so I look forward to buying something when we bottom in late 2009 or 2010.
Those same idiots will be telling you you should not be buying too!
The thing is, this downturn will not be a U-shaped recession, it will be an L-shaped one. Expect prices to not bottom out until 2012 at the earliest.
Of course that does not mean buying in 2010 is a bad move if the price/property is right, but once prices bottom, it will be a long, long time before there is any movement up.
July 4th, 2008 at 6:33 pm
@James Ok I don’t have hundreds of thousands saved but I have a tiny mortgage (by today’s standards less than 200k), a new fuel efficient car that is payed for and several months salary in the bank along with RRSPs and some equities outside of RRSP. What can I do now to get ready? Am I screwed?
What do you think?
Most who bought in the last few years are in a totally different ballpark than you. They bear their fair share of the blame for prices going through the roof.
The biggest culprit of course is Alan Greenspan who will be vilified in future history books.
July 4th, 2008 at 6:17 pm
Vancouver is in a unique position with some 85% of new jobs created in BC over the last several years occurring in construction.
Not that unique, Piggington has pointed out a similar situation for San Diego and I’m sure the same applies to Phoenix, etc.
http://www.voiceofsandiego.org.....ection.txt
But 85% of new jobs in BC is half again as much as San Diego, which means that BC is probably headed for an even bigger bust.
And as for the root cause of the US bust, Chris Thornberg has (true to form) pointed it out – the prices were just too damned high relative to rents and incomes. That’s all there is too it. Everything else is just details.
July 4th, 2008 at 5:52 pm
Don’t worry guys my job at the cafe is safe LOL LOL
July 4th, 2008 at 5:37 pm
re:carbon tax
The issue I have is that these taxes pretty much go into general revenue. These taxes should be going into improving our transport infrastructure and technology (and for environmental protection in the case of the new carbon portion). If you want people to drive less, alternatives need to be funded. How about letting people write their bicycles off if they don’t have a car insured for to/from work and all transit fares? Sounds sane to me if they’re already letting you write off political contributions.
re:CMHC
As a crown corp selling insurance backed by taxpayers offering zero down and 40yr product poured gas on the hot housing market. If their mandate was to facilitate sustainable and affordable housing, they have failed.
Externally, it appears that they just following what the other MBS and insurers market participants were doing. If they didn’t play ball, they would have no market (as they should have). I liken this to the telecom companies during the bubble conducting untraditional/risky business in an effort to keep pace with Worldcom only to find out worldcom’s results were a sham.
July 4th, 2008 at 5:17 pm
This is still a sellers market…because if you can sell you should! If you can buy, you should hang tough.
July 4th, 2008 at 4:38 pm
Rob A.
Why should you care….you’re moving to Toronto….remember?
July 4th, 2008 at 4:23 pm
I think that a soft landing in the housing market will be good for downtown. There are a lot of construction workers hanging around in my favorite cafes taking up space. It will be good when they are gone, they don’t dress very well IMO.
July 4th, 2008 at 3:46 pm
Freako
“Including insurance in gas pricing solves all these AND discourages EXCESSIVE auto use.”
You’re missing one obvious problem. What about the family or individual who decide to trade in a car for a bike or public transit? They should get no benefit for that?
July 4th, 2008 at 3:37 pm
I think part of the problem is referring to it as “the subprime mortgage crisis” in the US. The problem was loose lending standards due to the securitization of the debt which encouraged mortgage originators to sell as many loans as possible without having to keep any cash on hand to back them. Subprime was the first segment to fall, but the problem is not even remotely isolated to subprime. Alt-A is already crumbling and there are a lot of so-called “prime” loans that are going to go into default.
And on top of that, existing homeowners took out HELOCs or refinanced as their home’s assessed value increased, driving their debt ratio up. Even the old adage that the majority of owners bought before the bubble and will be fine after the crash may prove dramatically wrong. Watch the debt counselling shows, there are people who refinanced multiple times in the last five years on top of running up credit card bills and now can’t refinance. Meaning, one assumes, that even though they bought before the bubble, they don’t have any equity left in the house to borrow against.
If the problem really was limited to subprime, then a case could be made for Canada being different. However, the problem is loose lending practices, and we have that in spades. Ever seen the posters for Coast Capital that say “We’ll approve just about anyone”?
July 4th, 2008 at 3:33 pm
*A buyer’s market in Vancouver still no bargain*
http://tinyurl.com/6gd9ly
According to The Real Estate Board of Greater Vancouver, Canada’s most expensive market is in “a buyer’s phase,” but the cost of an average detached home is still $305,878 higher than the national average.
July 4th, 2008 at 1:38 pm
“The other worry is access to credit.”
CMHC reversing DP requirements would be a devastating shock. The only way for them to do it without excess carnage is to raise requirements 1-2% per year to bring it back. I can’t see how CMHC WON’T be required to change if they are haemorraghing money. The question to me is how they go about regaining fiscal autonomy.
Even with CMHC banks will not lend to anyone with a pulse. They make money off charging interest and if payments stop they need to eat the spread. If CMHC defaults become more common I am sure banks (and I believe CMHC too) will scrutinise borrowers that much more carefully.
July 4th, 2008 at 1:25 pm
AS long as we’re on the same wavelength, I’ve also thought that car insurance should be based on km driven — a simple odo check by the broker isn’t a huge deal. I believe some insurers in the states have this. A tax on that component? Why not.
Also, perhaps more options in terms of temporary insurance would be nice. You could own a full time commuter car and a weekend SUV for hwy trips. Or a 12 pack of single day insurance etc. Once you insure a vehicle full time, it tends to get used.
July 4th, 2008 at 1:24 pm
it depends what your definition of subprime is.
It is common sense that we have shaky lending. How else could we have THE most expensive RE in North America with incomes below that of Windsor, Ontario? Only fools would be assuaged by semantic manipulation of reality.
July 4th, 2008 at 1:22 pm
Freako…
I totally agree with your #52 post… the CMHC was out to lunch or had other motives during this boom. They ran things extremely irresponsibly. Your suggestion would have helped people like me who were saving as hard as they could for a down payment as opposed to jumping in with a bigger mortgage (which I could have done.. at a risk)
however, I disagree with your post #53. The point of the carbon tax is to get people to pollute less (drive less). If the tax revenue was applied to car insurance, it might be revenue neutral, but it would be giving the money directly back to polluters. By giving EVERYONE money back on income tax and letting them decide how to spend it is better for the environment and more fair for all as it doesn’t benefit drivers only. I know I can’t wait for my income tax breaks… it’ll make my bike ride to work that much sweeter.
July 4th, 2008 at 1:19 pm
“I blame the reduced down payment requirements.
I am in total agreement.”
And this goes to the whole “there is no subprime in Canada so all is good” meme. B*llsh*t, though to be Clintonesque, it depends what your definition of subprime is. At it’s broadest, it means lending to borrowers who until recently wouldn’t have qualified, and who are at risk of either default or of having to sell short in order to relieve financial pressure. I think 40 yr ams and 5% down fall into this category. How many 22 year olds have bought air space parcels with long term, high dollar mortgages with minimal dps? My guess from water cooler talk with the junior ‘business analysts’ fresh out of Cap College at my work is tons and tons. How many of these folks use HELOCs and credit cards to finance living expenses? Probably lots.
The problem is not limted to negative amortization loans. It is too much leverage to buy overpriced assets by those that should not be in a position to do so, and how that ultimately shakes out. If the economy, job market and housing prices stay relentlessly positive, and interest rates stay low, all is good. Obviously all of these conditions cannot persist indefinitely.
July 4th, 2008 at 1:14 pm
OT Oh, I have floated this idea before, but it is topical with the carbon tax.
I suggest that the tax should be made revenue neutral by applying the tax towards basic auto insurance instead of income tax reductions.
It could cover a fair portion of basic insurance (perhaps all for a small older car). Insurance that was charged by size of car, miles driven and manner of driving is more efficient AND fair. Including insurance in gas pricing solves all these AND discourages EXCESSIVE auto use.
A few problems of course, such as out of province “smuggling” but overall I think it would be a positive.
July 4th, 2008 at 1:07 pm
I blame the reduced down payment requirements.
I am in total agreement. Skin in the game is key. As I have stated before, if CHMC worked with a formula that required larger downpayments when price/rent multiple exceeds some threshold, this situation would never have gotten this bad. And ironically, it would have actually FULFILLED their mandate of improving affordability for those potential owners who have been prudent enough to squirrel away a down payment.
July 4th, 2008 at 1:04 pm
The difference being that some of the investment during the tech boom did go to productive uses.
Yes, just like sh*t is a meal to flies, there is SOME value in everything. However, on the net worst excesses of the Nasdaq bubble fell into to the misallocation of resources domain.
With housing there are just more houses, unless you consider stainless steel appliances an innovation.
Well there are net benefits to those who stayed out because housing will be cheaper (renting and owning), but I agree otherwise.