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July 21st, 2008 at 5:32 pm
ala the recent NewYorker Magazine cover with Obama dressed up as a muslim
Dressed up as a Yemeni, I would think. What you said is sort of like saying someone wearing a cowboy hat, boots, etc. is “dressed up like a Christian”.
July 21st, 2008 at 5:14 pm
Hey, John.
That was Olympic Boat Center you stopped by, wasn’t it? I thought I saw you there. You were in a pretty heated discussion at the time, I didn’t want to but in. About that deposit on your new yacht you were talking about with the manager? Bad news I’m afraid: http://tinyurl.com/6movl2 Bankrupts don’t refund deposits, do they?
Still, to walk away from that deposit money and know they won’t be coming after you for the rest must be a good feeling compared to your presale condo deposits now that you can’t flip, can’t close and can’t carry!
July 21st, 2008 at 3:29 pm
John, they might like the smell of a new condo but they sure like the smell of a bargain even more !
July 21st, 2008 at 3:27 pm
I stopped into the boat yard today and was told my new boat has already apreciated 5% because of the rich albertans and the celebration of lights. The condos are looking nice and pristine. I checked them out today. I like to keep them empty because rich asians like new condo smell.
July 21st, 2008 at 2:24 pm
there’s a guy in my office w/ 7 condos.
if purchased recently and leveraged i know i’d be losing sleep….
July 21st, 2008 at 2:23 pm
Anon #85
Friend who Bought for $320K and up for sale at $378K. Is he living in the unit? Paying the bills? Because if so, the carrying costs of that house may have already put him in the negative. An excercise anyone buying or selling should do.
Here’s an example with your friend, assuming he lives there:
2005 – 2008 – 36 months (this is likely off, so we’ll use 30)
Mortgage on $300,000 – $1,800 (plus expenses, taxes, etc.)
We’ll say monthly payment $2,000 to be kind.
Total carrying costs to date – $60,000
If he were to sell at current list he would be net $2,000 lost. And we’re being very conservative here, just in case he threw down more than $20,000.
Just out of curiousity, what are the rest of the details to his situation?
(PS – Anons – you guys should really create a name, easier to reply to for the rest of us)
July 21st, 2008 at 2:14 pm
Drachen: there’s a guy in my office w/ 7 condos.
July 21st, 2008 at 1:42 pm
Anecdote: I hear from a realtor that he was the only one at the office on Sunday. They’ve had a couple agents quit and leave clients in the lurch. Everyone is booking holidays and not even in the office.
July 21st, 2008 at 12:39 pm
“Actually, I think John is a pretty good satirist… many/most do not see the satire that was intended.”
That’s a contradiction. If he were a good satirist most people would be able to see it as satire. How can it be good if it’s unclear? I think he’s more of a troll than a satirist. A true satirist would push the envelope a bit further when he realized that he wasn’t creating a caricature so much as an extreme example of reality.
Sadly I’m sure there ARE people who own 5 condos and a new boat in Vancouver and expect their real estate ‘investment’ to be their ticket to everlasting wealth. There are probably dozens of people if not hundreds in similar positions.
July 21st, 2008 at 12:23 pm
Actually, I think John is a pretty good satirist (ala the recent NewYorker Magazine cover with Obama dressed up as a muslim etc). Unfortunately, as in the case of this recent cover, many/most do not see the satire that was intended.
July 21st, 2008 at 11:32 am
john: you are wasting bandwidth.
July 21st, 2008 at 11:17 am
The vancouver real estate market remains stable and steady. Prices are high and continue to appreciate in smaller increments than in the past. The celebration of lights is attracting a lot of interest from foreign investors and oil soaked Albertans. I just bought 5 condos and a new boat. I’ve refinanced my second mortgage on my million dollar east side house to buy a smart car and a prius for the wife. We like hanging out in Kits though.
July 21st, 2008 at 11:13 am
browntown Says: yeah acanucknut, don’t forget best time to buy is when no one else is buying!oh yeah and “the best time to sell is totally opposite”-Browntown and Cindy ROCKS.
July 21st, 2008 at 10:29 am
SATV, please remember to post under one of your silly names so I can avoid your drivel.
Thank you.
July 21st, 2008 at 9:57 am
“he’s definitely getting desparate to sell.”
that does not mean he has lost 42k that’s the price he want to sell his place for,if multiple units have different value buyer will be rewarded with 42k plus the remaining appreciation value need to get added after july-jan,09.
July 21st, 2008 at 9:30 am
A friend of mine is trying to escape the market right now and go back to renting. He bought his place in 2005 for $320k, in November he showed me his place was worth about $420k based on sales in his building. Now he has it up for sale for $378k and he can’t sell. So his place has already lost $42k in seven months and he’s definitely getting desparate to sell.
July 21st, 2008 at 2:36 am
That’s as much as any US market in its first six months of declines, and far more than most of them.
Exactly. My socks stay on until this thing really gets rolling.
July 21st, 2008 at 2:22 am
That’s only $45K less than my friend’s November price; about 6% less, I guess.
That’s as much as any US market in its first six months of declines, and far more than most of them.
And keep in mind the market top in Vancouver was later than last November.
http://seattlebubble.com/blog/.....#more-2090
July 21st, 2008 at 12:45 am
As much as I’d like to see that “Sales have vitually dried up. The only stuff moving is acceptance of ridiculously low offers. July price drops are gonna knock our socks off!” , I think this is a bit of reverse irrational exuberance. A friend bought an East Van house with a bit of character needing a bit of work for $750K in November. The adjacent house just sold for $705K about 2 weeks ago after being listed for only 3 weeks. It had less character, but probably needed less work. My friend and I debate whether it’s a comp. (I say it is) That’s only $45K less than my friend’s November price; about 6% less, I guess. The previous owners had it for quite a few years, so they could have gone lower. But they didn’t and it sold in just 3 weeks. Good for them.
So, while the market is changing — and will change alot more I believe — there are still buyers and prices are still high.
I don’t think my socks will be knocked off any time soon. Then again, I’m wearing sandals in this awesome weather, so I’ve got no socks to knock off…
July 20th, 2008 at 10:27 pm
“Sales have vitually dried up. The only stuff moving is acceptance of ridiculously low offers.
July price drops are gonna knock our socks off!”
I think what I’m seeing out there is long-time owners cutting flippers off at the knees. Savvy sellers with bucket loads of equity can totally undermine the market and still walk away counting massive profits. Goodbye comps!!!
July 20th, 2008 at 7:13 pm
vanguy, great work on the stats; bdk’s point is very valid on the craigslist ads also. jr, no doubt a huge amount of properties are vacant and appear to represent wealthy vacation homes or stagnant money or money laundering, etc. i’m not sure what to make of that trend and where it goes from here. hard to assess.
July 20th, 2008 at 4:49 pm
van-zee
Could be the 18,000 figure from BC Hydro is a red herring. On the other hand, even the biggest RE cheerleaders admit that 50% or more of the condos and townhouses in the DT/FC area are owned by investors and that only around 1/3 of them are rented. Don’t know what percent of investors there are in other parts of the lower mainlaind but I suspect its quite significant. All this suggests to me that there are many thousands of units sitting empty in the GVRD. Take even half of 18,000 and you’d still have 36,000 units complete and empty or under construction. We do know that 27,000 units under construction is an all time high for the GRVD. I’d still be interested to learn if anyone has historical statistics on total supply levels.
July 20th, 2008 at 4:43 pm
The price drops in June followed the first hint that our market was changing, but now that the cat’s out of the bag, prices are dropping at an atonishing rate.
Sales have vitually dried up. The only stuff moving is acceptance of ridiculously low offers.
July price drops are gonna knock our socks off!
July 20th, 2008 at 4:21 pm
Another Canadian Bubble?
St. John’s up 23% in the last year!
My favourite quote from the article:
“The zero down and 40-year mortgage make it easier for the younger people to get mortgages,” she says.
Sigh.
July 20th, 2008 at 2:56 pm
Jr said
“Accordingly to BC Hydro, there are roughly 18,000 units……”
This 18k number was pretty much claimed to be an urban myth by hydro
according to this now ex Vancouver Sun reporters blog.
http://tinyurl.com/5rbv9n
July 20th, 2008 at 2:52 pm
225 -A- { 07.20.08 at 1:47 pm } Vomitingdog
“We must look at both sides, right?”
For sure, but I do think that the stickier prices are, the more spectacular the bursting will be.
To some extent I do believe that RE markets are local, so there maybe some “local eccentric” force at play, in the markets that have shown resilience, but with fundamentals so far out of whack as they are in Vancouver, I’ll take my chances and stay out of the market.
However, the old yarn spins of the shortage of land, rich international investors, and “no credit worthiness problems here” and it’s different here this time, seem universally overused pitches buy the RE pushers around the world, and so far in the USA, UK, Spain etc seem to be proving to be just hype.
It may well be that whether it is Vancouver Wash. Or Vancouver BC, the locals may have overdosed on the Kool-Aid, and it may take a while longer for them to come “down”, but the hangover may be painfully long.
Your comment is awaiting moderation.
Is anyone else being censored at Rob’s blog?
July 20th, 2008 at 2:09 pm
Johnnyrent: regarding overbuilding, see my comments in this post on Mohican’s site: http://langley-financial-plann.....using.html
July 20th, 2008 at 2:02 pm
VancouverGuy – I like your analysis. I do the same thing everytime I come across a listing on mls.ca that reads “currently rented at $x/month.” My results are always similar, I’d estimate 3.5% is the average I’ve seen.
July 20th, 2008 at 1:11 pm
Nice Site VancouverGuy.
Another point that supports what you wrote is that those are craigslst asking rents, in reality anyone can pick up a vancouver sun (or househunting*ca) or downtownsuites*com or bruceward, prompton and get an even better rate.
I saw Palisades 2 bedroom for $1800 in yesterdays sun, 590 nicola “bauhina” , 1220 sq ft loft, on the water for $1900 on downtownsuites and this is mid month and in the peak summer months.
For some reason craigslist attracts rookie landlords trying to get max rents which then attracts the lowest class of renters, the big PM companies usually rely on CL as a last resort, I’m told.
They tend to prefer good tenants who’ll stick around as opposed to transient construction types who’ll pay a bit more but are much more likely to break the lease, get complaints etc.
July 20th, 2008 at 12:46 pm
Stagnate,
It is VERY true that people are probably inclined to hold onto their real estate right now because they don’t know where else to put their money and they think real estate holds value. But when real estate stops holding value, and people really see that, they will rush to exit their investments.
I was inspired by this discussion to put some analysis of cap rates. You can see it if you click on my name.
July 20th, 2008 at 12:42 pm
” I heard a lot of people say the Bay Area was never going to see prices fall, San Francisco was untouchable; in San Mateo, it was impossible; San Jose, not with all the tech money, blah, blah, blah. But prices at the peak relative to people’s incomes never made any sense.”
Real estate believers are truly loyal to their retarded views; it might appear that the Rob and the rest of the dogs are just taunting the bears with the nonsense spewed by their verbal caricatures as represented by Rob a, Satv etc but the reality is that they actually believe in what they say, regardless of the many references made to actual documented data on currently unwinding RE bubbles as well as the many previous real estate crashes.
July 20th, 2008 at 12:11 pm
From the San Francisco Chronicle: Bay Area home prices plunge 27% in last year (hat tip Vijay)
Affluent areas such as Marin County and San Francisco, which until now had resisted most price erosion, saw existing single-family home median prices fall by about 11 percent.
…
“This is pretty grim; double digits across the board,” said Christopher Thornberg, principal at Los Angeles’ Beacon Economics. “It was eminently predictable if you had a realistic view of the world. I heard a lot of people say the Bay Area was never going to see prices fall, San Francisco was untouchable; in San Mateo, it was impossible; San Jose, not with all the tech money, blah, blah, blah. But prices at the peak relative to people’s incomes never made any sense.”
July 20th, 2008 at 12:08 pm
60anonymous Says:
July 20th, 2008 at 2:37 am
The benchmark for a detached SFH DROPPED BY $5,596 in June. Multiply $5,596 by 12 months, and that’s a loss of $67,152.
Materialize? Why don’t you materialize a loss of $67K and get your head checked!
Your frothing, wide-eyed tone exemplifies my point. When i see 67k wiped out in a year i will certainly believe that the correction will be deep and profound. Will it drop a 620 place to 220? No one knows. I’d suggest that the odds are against such a drop. Until then it is only sensible to temper your apocalyptic frothings.
July 20th, 2008 at 11:46 am
I am of the view that the GVRD has and is currently experiencing a significant, perhaps massive amount of over-building. I’d appreciate some comments, however, on my math and thinking. Maybe I’m missing something.
Accordingly to BC Hydro, there are roughly 18,000 units in the GRVD occupy-able but not occupied. They know this through the existence of hydro accounts where there is either no power consumed or only enough to run a refrigerator. While I can’t think of a reason BC Hydro would overstate this number, it has been open to debate, but for illustrative purposes I’ll use it. The other figure that is not under debate is units under construction in the GVRD which stands at roughly 27,000. The third figure which is solid is the GVRD’s past five year, current and projected growth rate of 28,000 persons per year. Finally, we have the metric still used by the GVRD and Stats Canada for persons per dwelling at 2.4.
So, with 18,000 units currently empty but occupy-able and 27,000 units under construction, the total of both represents housing for (18,000 + 27,000 = 45,000 X 2.4) 108,000. At 28,000 persons per year, this represents 3.86 years of supply. The average single family house can be constructed in nine to 12 months. The average condominium project, according to my sources, takes two years to complete. Of course some projects, like Shangri-La, can take more than three years to construct. “Under construction” can mean a unit or a complex will be complete next week, next year or three years from now.
In any event, if I use two years as the average time to complete all units, by my calculations we have 1.86 years of surplus supply. If I use 2.5 years as the average time to complete, we have 1.36 years of surplus supply. Finally, at three years we have .86 years of surplus supply.
Regardless of the timeframe used for completion, this seems to me to be an enormous over-build situation. Is something wrong with my math or my assumptions? Does anyone have historical statistics on housing unit supply in the GVRD?
July 20th, 2008 at 11:19 am
vanguy, your example shows the importance of interest rates to the market. cap rates were in this territory in the 82 and 90 busts also, but in those years you could walk into a bank and get a double digit g.i.c.. the competition for money left real estate in the dumper. many would argue that at this time there is a lot less money to compete for so it’s a moot point. we’ll have to see.
July 20th, 2008 at 11:08 am
or some other fable..smile..because you know better! T
yes indeed i do know better
if it sounds too good to be true……
the end is nigh!
July 20th, 2008 at 10:34 am
While I agree that the market will drop, and that we are fundamentally overpriced, and that there is massive anecdotal evidence of the market crashing, and that it does seem as if the end is nigh, the end has not actually been reached yet. Someone I know listed their downtown condo at $660/sf, about the highest anyone ever listed in her building, and sold it in after one showing to someone from Calgary who then rented it back to my friend at just over a 3% cap rate.
Not everyone is as educated about fundamentals, which is why we ended up here in the first place. There is so much built-up positive sentiment about Vancouver housing that it will likely take some hard drops in the benchmark numbers to make people really believe, but when that occurs the things will really turn south. We’ll see what happens next month and if we can start the congratulations.
I’m not sure how fun this will be for most people though… a poor economy and crashing real estate will likely exacerbate the poor economy. We’ve seen the vicious cycle in the US. While I can always move around the world to somewhere else in the company that’s stable if the economy here tanks, a lot of people don’t have that option.
July 20th, 2008 at 8:23 am
Cindy – Lol!! Yes, smile, that’ll work! Everything in that statement is completely backwards.
I’m just going to go back to biting my tongue on the whole subject. No point in arguing with the likes of people like Cindy.
July 20th, 2008 at 4:25 am
The anti-capitalism crowd is screaming and begging for the market to take a down turn
Um Cindy, capitalism is based on the idea that the value of an asset is determined by the income that it yields to the owner and that its market price should reflect this, and indeed must inevitably adjust to this.
People who don’t think that prices of assets should be determined by yield of income – like you apparently – are supporting something called “central planning”.
July 20th, 2008 at 4:13 am
Just needed to post a copy here of a comment after the Vancouver Sun story, linked to by Re-diculous above. It’s courtesy of a CINDY:
Sat, Jul 19, 08 at 11:37 PM
There are absolutely no fundementals whatsoever why the real estate market in western Canada should slow down let alone slide at all! The only way at this point in time is if the morons in the left wing media here in lala land keep screaming that the proverbial sky is falling..something they have been doing for the past 6 years! The sky is not falling and owning your own home in Canada is the best investment you can every make..period. So, the next time so anti real estate “person” tells you the market is crashing or there is a bubble or some other fable..smile..because you know better! The anti-capitalism crowd is screaming and begging for the market to take a down turn..oh yes and the fools that were crazy not to buy years and years ago and if you cannot afford to buy here..that is your fault..no one elses. I’m buying real estate and renting it out to the west coast slackers that don’t or can’t buy..
______________________________________________________________________________
Could it be that Cindy is a bit agitated about some negative cash-flow that looks unlikely to improve anytime soon. Nah, she’s mad at you anti-capitalists.
July 20th, 2008 at 2:37 am
>ulsterman Says
>Wouldn’t it be prudent to restrain the backslapping until
>significant price drops materialize?
The benchmark for a detached SFH DROPPED BY $5,596 in June. Multiply $5,596 by 12 months, and that’s a loss of $67,152.
Materialize? Why don’t you materialize a loss of $67K and get your head checked!
July 20th, 2008 at 2:02 am
Yeah well maybe that has something to do with all the smugness directed at the bears over the last four years.
This is the end, my flipper friend, the end.
This is the end, my realtor friend, the end.
I’ll never see your smirking face again.
And asking 600 for 225 homes is getting really old, really fast.
July 20th, 2008 at 1:19 am
There is a great deal of smugness on this blog right now. Wouldn’t it be prudent to restrain the backslapping until significant price drops materialize?
All the talk of offering 225 for 620 homes is getting a little old.
July 19th, 2008 at 8:32 pm
…and the exits are increasingly plugged with RE professionals attempting to get out also…
your average warehouse worker will be left in the dust as it is already too late to get out….
RE Darwinism or “road kill”
July 19th, 2008 at 8:14 pm
We’re almost at 20,000 units for REBGV inventory. It’s a PANIC to the EXITS but nobody is able to get out. This is going to be ugly.
July 19th, 2008 at 7:53 pm
“The benchmark GVREB uses will lag as usual for 6 months”
Really? Please explain your reasoning. There certainly seems to be a bit of a disconnect between the benchmark and anecdotal stories I am hearing (not just from this blog either).
July 19th, 2008 at 7:09 pm
someguy “Um were down 0.5% MoM and still up quite a bit YoY” Yes but your out of touch with the front lines, had a great gabfest with three realitors who seem to be permanent residents in my Yaletown lobby. All different companies, they said there is stuff selling but all of it is at early 2006 pricing, NONE of the sales are equal to or above 2007 pricing. All these agents are telling their clients to list at early 2006 prices now, as by September they will have to drop to 2005 prices. The benchmark GVREB uses will lag as usual for 6 months
July 19th, 2008 at 6:00 pm
“Negative Equity and a bad investment is good to me”
- Slappy Thumsup Krish Browntown.
http://vancouver.en.craigslist.....02579.html
July 19th, 2008 at 5:14 pm
Blueskies – lol!! Nice! The better half and I have been contemplating hitting some open houses to mess with some of the realtors, might as well get some entertainment out of this “temporary lull in the market”.
July 19th, 2008 at 4:59 pm
Oh the property is listed for 650, but would you entertain 225?”
No seriously, I want to try that… but I’m afraid they’d say YES and I’m not in a position to take them up on that!!
Would you entertain $225K subject to financing and inspection?
we talked to one realtor about a listing at $620K we suggested that if the price was lowered it would sell….. we were informed that there already was a price drop from $629K….
we suggested $520K would certainly attract attention in a faltering market….
din’t fly