Friday Free-for-all! Holiday Edition
Not only have you made it to the end of another work week, but you’re looking at a long weekend! Here’s a round up of a few news stories I’ve noticed this week:
-July 2008: Sales down, listings up
-Whistler is running out of Gas
-New Pattullo Bridge will have toll
-Bad realtors getting spanked
-CMHC expands bond program for banks
-GDP drop ‘a bit of a shocker‘
-Greenspan: US on ‘brink of recession‘
So what are you seeing out there? Post your news, links and anecdotes here and have an excellent long weekend!
note: any conversation on Vancouver, 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. Pasting a link will automatically create a clickable hot-link. Thanks!
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August 1st, 2008 at 3:02 pm
http://vancouver.en.craigslist.....58508.html
August 1st, 2008 at 3:03 pm
If you put rockets under the Lower Mainland and blasted off, Vancouver would no longer be the best place on earth, QED.
I wonder how that would affect prices….
I also note it seems to be shaping up to be another friggin’ cold summer. 19 degree high for AUGUST 01? Jesus.
August 1st, 2008 at 3:09 pm
So you believe that affordability drives corrections? I don’t. It is simply a measure of current valuation. Corrections are driven by other factors.
With respect to fundamental value, I assume you are referring to price to rental ratios. The rental rate component of the equation is biased low by a significant amount. Rents are calculated by only considering the low end of the marketplace (i.e. multi-story wood frame buildings constructed in the 60s/70s). Over time that rental product represents less and less of the actual marketplace. Rather, one off condo units are providing the new rental product.
You need to ask yourself why nobody is building multi-story wood frame buildings for rent anymore. You need to ask yourself why those woodframe buildings sell far below the cost it would take to rebuild them, never mind the actual land value. The reason is that rental rates are too low, rather than real estate values being too high.
I would suggest that a better measure of fundamental value would be to consider the cost of construction and value of land. The cost of energy and commodities needed for construction are unlikely to drop significantly. The cost of labour also rarely drops, especially in times of low unemployment, like we have now. The demand for land is only going to increase with the growth in our population. If you talk to any developer, they will tell you how difficult it is to find developable land. Empty lots just don’t exist anymore. On top of that, consider how low the vacancy rate is. Future demand for rental product will continue to grow. I expect rental inflation to be very high or the next decade and well above the core inflation rate.
August 1st, 2008 at 3:23 pm
If you were serious you could easily find a nice 600 sq ft place in yaletown or coal harbour for $1350 if you went to househunting.ca
I used $1500 so the trolls wouldn’t pick off the stats.
Your 4.2% mortgage rate is a joke too leading me to determine that you’re just trolling and have no real interest in this blog.
August 1st, 2008 at 3:23 pm
August 1st, 2008 at 3:26 pm
BENTLEY 1001 Homer, 1 Br, pkng. stor. gym, spa, ns/np, avail Sept 1, $1325.
New Listing
BENTLEY 1001 Homer, 1 Br, pkng. stor. gym, spa, ns/np, avail Sept 1, $1325.
1155 Homer St.
1 BR & DEN. Marinaside T/H! 11′ ceiling all appl, nr 700 sf, priv. patio opens to garden. Sauna, Pool. np/ns $1600 604-727-8872
$1,600
1 – 700 sqft
11
1 BR Yaletown New Condo Bright 1BR+DEN,HW Flr,ss appls,gym. Avail NOW. $1550 Balcony, Dishwasher, Eat-in-kitchen, Fireplace, Hardwood Floors, Laundry, Microwave, Near Public Transportation, Near Shopping, New Construction, Parking, Refrigerator,… (more)
$1,550
1 – 550 sqft
12
1BR YALETOWN marina view, 5 appls. park’g, pool, gym, Aug 1 $1500/mo
1 BR, 6 appls., gym, prkg., locker, lease. $1,450
August 1st, 2008 at 3:31 pm
August 1st, 2008 at 3:32 pm
..after starting with a HUGE mortgage that no
sane person would tackle….. you can not ignore affordability…..
it is cheaper to rent than buy
August 1st, 2008 at 3:32 pm
1BR YALETOWN marina view, 5 appls. park’g, pool, gym, Aug 1 $1500/mo
1 BR Yaletown New Condo Bright 1BR+DEN,HW Flr,ss appls,gym. Avail NOW. $1550 Balcony, Dishwasher, Eat-in-kitchen, Fireplace, Hardwood Floors, Laundry, Microwave, Near Public Transportation, Near Shopping, New Construction, Parking, Refrigerato
1 Br @ Mira luxury w/patio, cat okay, gym, $1300
1155 Homer St. 1 BR, 6 appls., gym, prkg., locker, lease. $1,450
BENTLEY 1001 Homer, 1 Br, pkng. stor. gym, spa, ns/np, avail Sept 1, $1325.
There we go Ahandle, so did you actually have a point or were you just making dumb innaccurate statements to take the blog off topic?
Dave, are you saying interest rates will never go up in the next 40 years? and what about strata fees when the building leaks? Tell me you aren’t that stupid.
August 1st, 2008 at 3:34 pm
Official vacancy rates are determined through rental stock, which does NOT include one-off condos. You claim vacancy is low, yet you ALSO claim one-off condos are replacing traditional stock. So which is it?
Anyone who has spent any time at all on the Skytrain knows there’s tons and tons of available land for development, just not in the immediate downtown.
Do you have *anything* to back up your expectation of rental inflation to be very high, or is this something else you pulled out of your hat?
Rents here are already fairly high relative to incomes. What’s going to happen if rental rates skyrocket, as you suspect?
Renters will move.
What happens if renters move? The pool of people who can migrate from renters to owners dries up.
No matter how you slice it, Vancouver is at an inflection point. Either prices drop in line with incomes, or low to middle income earners leave for less expensive cities.
August 1st, 2008 at 3:35 pm
August 1st, 2008 at 3:41 pm
August 1st, 2008 at 3:43 pm
http://www.ingdirect.ca - look under mortgage rates. Having dealt with them myself I can say that you can actually get a small discount if you have a good downpayment and good credit.
August 1st, 2008 at 3:45 pm
Would you mind posting links?
August 1st, 2008 at 3:52 pm
It is both. With respect to average RENT, I am simply pointing out where the data comes from and explaining why it is biased low. With respect to VACANCY, the data shows tight supply. Two different metrics.
Anyone who has spent any time at all on the Skytrain knows there’s tons and tons of available land for development, just not in the immediate downtown.
Please show me on a map where this land exists.
Do you have *anything* to back up your expectation of rental inflation to be very high, or is this something else you pulled out of your hat?
It’s not possible to prove a future prediction by definition. It is simply my opinion of which I have explained my rationale. If you don’t agree, then that’s where you need to start.
Rents here are already fairly high relative to incomes. What’s going to happen if rental rates skyrocket, as you suspect?
Renters will move.
Rents are not high relative to income. The ratio is low relative to past decades! Up until a few years ago, rent had not kept up with wage inflation.
There will be no shortage of renters in Vancouver. Our population growth is positive and the GVRD will continue to expand.
August 1st, 2008 at 4:04 pm
You’re kidding right? Here’s the thing - rents are based on what people are willing/able to pay. They don’t fluctuate like house prices because you can’t take a loan out at a variable rate to pay for it. It’s a better representation of where housing prices SHOULD be because its not prone to speculation or fluctations in credit markets.
BTW, It’s pretty silly to take Craigslist ‘wishing rents’ of amateur landlords and hold it up as a reasonable market rate. ‘Market price’ is what the market will pay, not what a seller wishes the market would pay. I’ve seen some of those units advertised month after month while the owner bleeds cash, slowly bringing their asking rent down hoping someone will bite.
August 1st, 2008 at 4:05 pm
Anyone who has a brain and is actually interested in this blog would be best to ignore this guy.
Next thing he’ll be claiming tobacco hasn’t actually killed anyone and referencing studies.
The market will crash worse than Florida here, there are lots of links on this site.
August 1st, 2008 at 4:06 pm
Correct: rents have not been increasing even at the allowable rate that was legislated by rent control. Any idea why landlords would not increase rent by the maximum allowable every year?
August 1st, 2008 at 4:12 pm
As I said before, jump on the skytrain, or use Google maps. From what I can see there’s quite a lot of available land, actually. Mind you, there’s very little in the downtown core.
You make a lot of assertions like “rents are not high relative to income” but you don’t have stats to back ‘em up.
Rents are comparable to other cities, but the cost of owning is several times higher than anywhere else. There is a massive oversupply of home stock being built in the city. MOI is piling up. Sales have stopped. Vancouver is the only Canadian city with net OUT migration of head offices. Tourism is down. Software lumber has fallen off a cliff.
This story has been played out over and over. California. Florida. Spain. England. Connecticut. Australia. It is in the process of playing out here. There’s no point in either of us arguing, you need only look at the pattern.
All this has happened before, and all this will happen again. Who know the realtors were all Cylons?
August 1st, 2008 at 4:13 pm
“The Japan real estate bubble started in about 1986, as did the run-up on the Nikkei. Neither of your examples is even close to a decade.”
http://www.excel-consultant.com/Nikkei_Bubble.html
1975 - 1989 arguably longer, with 14 years of losses afterwards for a total market cycle of 28 years! How can one person be so consistently wrong Dave? I really want to know!
“So you believe that affordability drives corrections? I don’t. It is simply a measure of current valuation. Corrections are driven by other factors.”
Wow, well since you’re a world renowned economist I respect that your opinion differs from the rest of the economic community (and common sense). No… Wait, you’re a nobody who constantly spews loopy theories. More of your voodoo economics? Pray tell us oh mighty Dave, what factors drive the market that have eluded all mortal economists?
“The rental rate component of the equation is biased low by a significant amount.”
As always in debates with you, I’d like a source other than your ravings to go on. Even if that were true I doubt they’re biased low by 60% or so and I can do comparables that show at least a 50% discrepancy.
“a better measure of fundamental value would be to consider the cost of construction and value of land.”
You don’t understand how fundamentals work do you? You’re not calculating the fundamental value to MAKE something you’re calculating the fundamental value the market will PAY for something. You’re bass ackwards.
You did give me a good laugh though, I’ll give you that!
August 1st, 2008 at 4:17 pm
Supply and demand.
August 1st, 2008 at 4:18 pm
August 1st, 2008 at 4:21 pm
August 1st, 2008 at 4:27 pm
“am simply pointing out where the data comes from and explaining why it is biased low. With respect to VACANCY, the data shows tight supply. Two different metrics.”
But the data is all gathered using the same method. You’re saying the method is poor for the metrics you don’t like and accurate for the metrics you do like? Have I called you a cherry picker lately?
“Please show me on a map where this land exists.”
HERE
“Rents are not high relative to income.”
Wait are you talking about the rental statistic? The one you believe is skewed low? Or where you believe (without evidence I might add) rents actually are? Because the affordability rating is 101 (in 2007) with a 100 being 30% of family income consumed on rent (which is seen as normal and healthy). But you believe it’s what? 50%, 80%, 100% higher than that? You’re ignoring your own made up ‘facts’ Dave, that’s a bit of a stretch even for you.
August 1st, 2008 at 4:37 pm
sorry, you’ve lost me. i’m just asking you to point me to the research you cited. can you do that? thanks.
August 1st, 2008 at 4:37 pm
“is the SFU report so far fetched or does it scare you in some way?”
Why would it scare us, we haven’t seen it, you refuse to provide any way for us to find it (authors, link on the web etc.). One is left with the conclusion that you’re just making it up (certainly with the details you’ve provided so far it sounds pretty made up).
“ever hear of “freedom of information” law?”
What does that have to do with anything? You’re barely more literate than ThumbsUp, you throw out some made up sounding “study” which you refuse to provide any real information on and you’re simply dismissive to anyone who brings up legitimate concerns with your arguments. Unless you care to have an actual debate or provide useful data you’re just a waste of space here.
August 1st, 2008 at 4:44 pm
August 1st, 2008 at 4:45 pm
1.Prices in Vancouver will fall 20% this year.
2.Krissh is the source.
3. Bob Rennie has sold off all of his holdings.
4.Prices will go down for decades to come
August 1st, 2008 at 4:51 pm
Bottom line is… prices are too high for the average buyer without suicide financing. This is why the prices have to come down. It’s economics 101, nothing to do with interviews on the CBC.
In the US, since the market peaked in 2006, the TV was filled with people saying the “market is sound” and “high prices are based on fundamentals”, including people like Ben Bernanke, Henry Paulson, and other influential figures. It did not prevent economic reality for causing the market to collapse.
August 1st, 2008 at 4:55 pm
come on now, be nice. all i asked you to do is point me to the research. maybe you could save me some time & give me a name of someone involved in the project?
and if this isn’t published work — or even a working paper by the sound of things — how do you know about it?
August 1st, 2008 at 5:04 pm
August 1st, 2008 at 4:17 pm
Any idea why landlords would not increase rent by the maximum allowable every year?
Supply and demand.
Wow. You can say that and still assert that rents are abnormally low? You’ve got your doublethink down.
August 1st, 2008 at 5:09 pm
“Now, did you see me mention anything about a report?”
Well then, now we’re getting somewhere. So, assuming that you’re not lying, you are either;
A) One of the members of this ‘group’ you talk about. If this is true one doubts the validity of anything coming from the group as you apparently don’t possess the logical skills to assimilate data (at all, never mind correctly).
B) This information is coming to you second or third hand as word of mouth. If B is true there are many places along the chain where facts could be distorted or misrepresented entirely.
August 1st, 2008 at 5:13 pm
August 1st, 2008 at 5:15 pm
August 1st, 2008 at 5:16 pm
Study after study shows that historically (circa past 40 years) having a variable rate mortgage vs. a 5 year fixed mortgage will save you thousands of dollars in interest approx. 80% of the time. So, no, you are not guaranteed to save money and no, history does not confirm future events, however, it really comes down to your risk tolerance, just like any investment. You also have to be comfortable with your payment (or the amount which goes to principal if your payments are set) going up and down. But, as many have mentioned in this forum, no one can predict the future so rather than guess at what’s going to happen, ask yourself whether you (and your finances) can afford for your variable interest rate (and payment) to go up 1 or 2%? If the answer is yes, and you don’t mind some instability with your payments - go for variable. If not, fix it and forget it!
August 1st, 2008 at 5:19 pm
August 1st, 2008 at 5:26 pm
yeah, i’m really interested. it’s a funny thing about academics: we’re curious. that’s why we do research in the first place.
anyway, way to bolster your credibility. good job!
August 1st, 2008 at 5:32 pm
Supply and demand.”
You mean the same supply given “how difficult it is to find developable land” (your words), and demand given Vancouver’s population growth, which is only half what it was 15 years ago? Time will tell, but to say there is lots of supply that has kept rents low then turn around and say supply is restricted is too rich.
Add to that the record units under construction and it’s unlikely rents will rise as you say. Construction costs have nothing to do with it. Rent will be based on “supply and demand” so land value plummets to compensate.
This is going to be a 300+ comment weekend at this rate. Let’s hope patriotz and freako don’t show up or we could break 400 easy.
August 1st, 2008 at 5:37 pm
August 1st, 2008 at 5:38 pm
1 Price to rent multiple is bad even when using apples to apples: MLS listing plus Craigslist asking rent for identical/similar unit.
2. Rents increase but mortgage payments stay the same. No argument there. But it isn’t the free ride you make it out to be because inflation is priced into long term rates.
3 The cost of construction does not DIRECTLY influence prices. Second, you forget that a large component of housing (SFH at least) is land. That is where the adjustment will take place if the costs of construction spiral out of control. Overall, the cost plus argument is totally flawed.
August 1st, 2008 at 5:43 pm
August 1st, 2008 at 5:45 pm
did i say i was a professor? read my posts. in any event, i don’t share my opinions because they’re worth no more than yours.
and yes, i’m working while i do this … i have time to kill while simulations run.
August 1st, 2008 at 5:45 pm
I guess since I’m not getting the joke he’s a troll and I didn’t get it until now.
August 1st, 2008 at 5:47 pm
August 1st, 2008 at 5:48 pm
http://www.revnyou.com/About_Us.html
(my site)
August 1st, 2008 at 5:54 pm
The source: I don’t know what your game is, but you certainly seem to be playing one.
August 1st, 2008 at 6:05 pm
August 1st, 2008 at 6:06 pm
August 1st, 2008 at 6:11 pm
From your account to pay increased rent!$3400 / 2br - EXECUTIVE 2 BR SUITE in UBC Chancellors Place (UBC)PostingID: 778516148.
best ever eclipse,best real estate anywhere,month over month year over year,decades after decades ladies and gentlemens vancouver british columbia,“the best place on earth” http://www.istockphoto.com/fil.....id=3725499
MIND IT.
August 1st, 2008 at 6:27 pm
the source signs off and Krissh pops right up.
hmmmmmmmm
The market is going to go down for decades and TV Towers will become a homeless shelter for all the junkies
August 1st, 2008 at 6:37 pm
I’d consider paying $350/sqft for a unit in there when the time comes.
August 1st, 2008 at 7:15 pm
“I think bears tend to be guilty of believing this data when it claims that rents have not risen, and bulls tend to be guilty of believing this data when it claims the vacancy rate is 0%.”
But there’s actually solid logic behind the bear side. If there were a genuine upwards pressure on rents then it would be a Vancouver wide phenomenon and all rentals including the ones studied would rise. However most tenants (this is speculation but I believe it’s accurate) would prefer to live in managed property rather than rent from the owner and managed properties are generally run in a more businesslike fashion so they’re more likely to be occupied than condos and the like, thus skewing the vacancy rate.
August 1st, 2008 at 7:21 pm
Ahh, well I see from your website you have no reason at all to be biased in your opinions.
Enjoy bankruptcy dude. Think of it as a zen-like experience where you can get back to the essentials of life and forget about the consumer driven world we live in.
August 1st, 2008 at 7:22 pm
Who cares if the vacancy rate is 0.5% or 1.0%? It’s low no matter how you want to measure it.
Yes, I am sure most people would rather live in a 40 year old building with a pink bathtub and shag carpet rather than live in a high end modern condo. LOL
August 1st, 2008 at 7:33 pm
August 1st, 2008 at 7:38 pm
“Drachen, rents have been going up across the board and at rates above inflation. I happen to believe this will continue.”
As I’ve said to you before, it’s better to bring real facts to an argument than made up ones. Go look at a graph. Then come back and say that again.
“Yes, I am sure most people would rather live in a 40 year old building with a pink bathtub and shag carpet rather than live in a high end modern condo. LOL”
Yes, I am sure most people would rather have a landlord who doesn’t know the rules, is likely to try to sell the place from under them and is way too emotionally attached to the property over the peace of living some place where you never even see the landlord unless your rent is over a week late or something needs fixing.
There are arguments for both sides. But as usual you don’t even have black and white vision. Just one colour for you! Anything that doesn’t fit your world view is wrong and should be ignored!
August 1st, 2008 at 8:18 pm
http://tinyurl.com/trustmeimyourkid
Climate Cops, which encourages children to monitor and report on their domestic energy crimes to their classrooms.
August 1st, 2008 at 9:48 pm
August 1st, 2008 at 10:29 pm
Long Term tenants $945./month, unaware of sale, great for investment future develop I-2 zoning.
You could be a long term investor with this one… a really really looong term investor.
August 1st, 2008 at 10:35 pm
You’ve got some interesting articles on that site of yours.