Vancouver Condo Info

The end of August is upon us, what will the numbers bring?  Will there be sunshine, will there be rain?  Whats happening here at home and economies around the world?  Its time for our weekly news round-up, here are a few stories I’ve noticed this week:

-Vancouver Sun: Bring on the real estate collapse!
-China’s Olympic sized Bust
-Will Vancouver be ready for the worlds attention?
-Economy grinds BC liberals
-18 earthquakes off BC coast in the last week
-Sawmills getting beaten to a pulp
-Canadian tourism gap expected to widen
-Zoom airlines shuts down
-Where did the summer go?
-Harper: We may be in a ‘technical’ but not ‘real’ recession
-UK prices falling at fastest rate in 18 years
-US builders get creative to lure buyers

So what are you seeing out there?  Post your news, links and thoughts here and have a great long weekend, you’ve earned it!

This info courtesy of Larry Yatkowsky of Yattermatters.com - Out of the 1015 listings for detached single family homes for sale in East Vancouver for the week of August 18th - 25th only one sold.  340 (one third) of those listings had their asking price reduced.  Things just aren’t moving like they used to.

Larry has all the info and a graph of the weekly data on his website along with these thoughts on the current market:

Vancouver East is in parallel with other areas of the general Vancouver market. With one third of the listings reducing their prices and only one sale resulting indicates that a continued price reduction strategy will be required in order to attract more buyers. Affordability continues as an issue.

The lack of sales should be a strong wake up call to sellers. Continue sharpening your pencil to reduce your asking price.

UPDATE: Larry’s numbers are being disputed by a number of people, but there’s not a consistent number of sales reported.  Is this due to different methods of filtering results for SFH sales in the MLS?

flip this claims there were four sales in this time period. Paul B says in the last ten days there have been 34 sales, while tjwappraiser says MLXexchange shows 3 sales since August 21st.

Vansanity posted a link to this story in the Vancouver Sun.  Two men have just been charged for one of the biggest financial frauds in BC history:

Gill’s method of operation — as described in the Benchers’ Bulletin (the law society’s in-house publication) — was to develop a property and sell it to one of his nominees. The nominee would arrange a mortgage on the property and then sell it to an innocent purchaser.

The purchaser, in turn, would arrange financing from his lending institution and forward the money to Wirick on his undertaking to pay off the original mortgage loan and register a new first mortgage. But rather than disburse the money as promised, Wirick simply paid the funds to Gill and his Vanview group of companies.

In many cases, Wirick would provide false discharge documents, and a portion of the purloined money would be used to keep the original mortgage payments current, so neither the purchaser nor the original mortgage lender would be any wiser.

The new mortgage lender, meanwhile, naturally assumed he had obtained a first mortgage against the property. But since the original mortgage hadn’t really been discharged, he was actually in second position.

In some cases, this process was repeated, enabling Gill to mortgage the property many times over and generate more money than it was worth. Eventually the scheme collapsed, revealing a tangled web of transactions, mortgages and competing claims.

When the scheme was uncovered, law society officials took over Wirick’s practice and audited his books and records. They also obtained access to Gill’s records through the court, which gave them a good idea of where the money went.

Real estate always goes up, but not fast enough for Gill & Wirick it seems..

Everybody likes to save money right?   When it comes to building maintenance one way to save money is to simply not have any work done.  Just ignore the condition of your building and hope for the best.  The only problem with this approach is that unless you can unload the unit to an unsuspecting buyer before disaster strikes you’ll be looking at a much larger repair bill.

And leaky condo problems aren’t exactly rare in Vancouver - just look at the recent news of repairs on two concord pacific towers downtown, or any other the other leaky condo repairs throughout the lower mainland.

Househunting.ca has a letter from someone whose strata opted for the ‘ignore it and hope for the best’ strategy:

Now our deferral has come back to haunt us. Each owner is faced with an average $19,000 assessment just to maintain and upgrade the exterior, not including the roof. Our windows have failed, our decks and balconies are in serious failure and the masonry detailing is in need of serious attention.

We have figured out that if each strata lot had paid an extra $30 per month over the past 34 years, our buildings would have been routinely repaired, the interest would have covered inflation costs, and we wouldn’t be doing this at a time when construction costs are at a record high.

Another problem with not getting basic maintenance done is that it will affect warranty coverage.  Even if your building is under a New Home Warranty or covered by a rain screen repair warranty, your coverage is affected by your buildings maintenance record.  Saving money in the short term can work out to be very expensive in the long term.  A year ago you may have been able to unload a leaky condo without much of a loss, but as our market softens and the number of listings for sale grows this is less of an option.

Putting the problem unit on the market and praying for a sucker with good credit isn’t as effective as it once was.

Ah! The weekend!  Make it through the next week and you get a long weekend as your reward.  The end of the week is also when we do our news link round up. Here are a few stories I’ve noticed:

-Weakness in economy helps home buyers
-Construction workers to be drug tested after accidents
-Gas and food drive inflation higher
-Global economic confidence at lowest level since 2001
-The slippery issue of oil market speculation
-Bailouts for Fannie and Freddie?

So what are you seeing out there? Post your news, links and anecdotes here and have an excellent 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!

Just a couple of BC housing market forecasts courtesy of Helmut Pastrick, the Chief Economist of the Credit Union Central of British Columbia. This first one from a CBC news story, March 17th 2008:

 A report by the Credit Union Central of British Columbia predicts housing prices will continue to rise by as much as 10 per cent this year and as much as seven per cent in 2009.

Lower mortgage rates, a tight labour market, high income growth and rising in-migration all point to continued high sales volumes and price rises, according the CUCBC’s chief economist Helmut Pastrick.

..and From today’s Globe and Mail, August 20th 2008:

The housing market will grow even weaker next year, Mr. Pastrick predicts.

The downturn in new construction will last through to the Olympics, and housing prices, down marginally from their peaks early this year, are likely to drop by 10 per cent before the market rebounds, he said. All told, British Columbia looks set to turn in weaker growth than the national average in 2009 after years of outperforming most of the rest of Canada.

A few weeks ago we posted a similar comparison of changing market outlook quotes from Cameron Muir, Chief Economist for the BC Real Estate Association.

Vansanity points out an interesting article comparing warning sign of economic downturn in the US and Canada:

Fifty-five thousand jobs disappeared last month. The shockingly large loss was the biggest monthly drop in 17 years. But the employment report shouldn’t be too surprising—warning signs abounded. Now, just like all the people who were partying it up around Noah’s ark when the rain first began to fall, some Canadians are finally beginning to wonder if a flood really is coming.

As Ignatius points out ‘The Trumpet’ is a religious publication, and if there’s one thing housing market bears and certain religious people have in common it’s predicting end-times where the righteous will get their reward and those that have succumbed to the sins of sloth and greed will get thier come-uppance.   Of course William Kamm and Nouriel Roubini have dramatically different track records at this point.

Regardless of your opinions on religion this article nicely sums up some recent economic news and may raise some red flags for anyone that believe that faith alone can maintain a market.

It’s Friday and that mean open-topic time! Here’s a round up of recent news stories:

-House prices drop nation-wide, Calgary leads with -10% YOY
-Western Canadian markets hit hard by housing downturn
-Market correction not a calamity
-Buy our BC home, we’ll give you cash
-Dreams of proper compensation for a huge inconvenience
-Olympic fever and the post games let-down
-New mortgage rules: Ignorance breeds contempt
-US foreclosures up 55% in July
-Higher inflation brings lower standard of living
-Home owners in denial about realty value?
-Another buy one new home get one free offer

So what are you seeing out there?  Post your news, links and anecdotes here and have an excellent 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!

Yesterday Vancouver Banker left a comment about a local developer having trouble selling a condo conversion and opting to rent it out as a temporary backup option.  Hot on the heels of that tidbit Pani Pani sent in this link to a story on the Seattle Bubble blog about a project where the ‘vast majority of buyers’ bailed on their presales and that developers decision to convert to rental units.

Some buyers found they could no longer get a loan, particularly for second homes or investment units, while others just got cold feet, Hoy said. “Because the vast majority have bailed out on us, we have no choice now but to turn it into a rental.”

Will we see more of this in a declining market?  I guess each developer has to do the math based on their margins to determine if its worth selling at market price in a dropping market or renting out at a loss while you wait for buyer demand to return.

Yeah, I know. August is far too early to be using an autumnal metaphor, but housing market cycles don’t run on a regular schedule like the seasons do.  You already know that our local real estate boom has withered on the vine, but did you know markets are slowing across the country?  I guess the big question now is how bad will our housing hangover be?

Anyone looking to sell in the next couple of years has to be hoping we don’t follow the US cycle, where one third of all new owners owe more than their house is worth and a quarter of homes sold in the last year were sold at a loss.  Of course thats on a national level, cities like Stockton California are in much worse shape with prices dropping 38% in one year.

Will demand return to the lower mainland real estate market or will we see modern day ghost towns in the burbs?

If you don’t believe in all this doom n’ gloom perhaps its time to buck the trend and invest in real estate.  Money is still cheap and sometimes big risks bring big rewards.  You could try Spain where prices are predicted to drop 20 to 30% over the next four years, or the UK where there’s lots of listings to choose from.  Some see bright spots in the New Zealand housing market if you want to go a bit further afield. They’re only talking about drops in the 10% range.

Feeling brave?