Vancouver Condo Info

The $700 billion US bailout plan has been defeated for the time being and the markets are in turmoil.  So far today the Dow has plunged by more than 770 points and the TSX is down 840.93 points.  Anyone out there concerned about retirement? Are you starting to bottom fish for stocks or stockpile canned goods?

In a stunning vote that shocked the capital and worldwide markets, the House on Monday defeated a $700 billion emergency rescue for the nation’s financial system, ignoring urgent warnings from President Bush and congressional leaders of both parties that the economy could nosedive without it. The Dow Jones industrials plunged nearly 800 points, the most ever for a single day.

Democratic and Republican leaders alike pledged to try again, though the Democrats said GOP lawmakers needed to provide more votes. Bush huddled with his economic advisers about a next step. The House was to reconvene on Thursday instead of adjourning for the year as planned.

Want to make your lawn look lush and green all year round?

A Stockton man sees the growing number of dead brown lawns of foreclosed homes in the area and sees nothing but green.

Nick Terlouw has launched the Greener Grass Co., which amounts to a service in which he sprays dead lawns with a deep green, water-based dye that makes the turf look good enough for a golf course or a professional football stadium.

For between $175 and $225 per yard, Terlouw uses a motor-powered 50-gallon insecticide sprayer designed for treating orchard trees. He waves his magic wand and in broad sweeps, a la painting a house, makes tired, if not expired, turf sit up and sparkle like Shirley Temple.

Full article here.

It’s Friday and that means open topic time at VancouverCondo.info.  Here are a few stories I’ve noticed this week:

-Long term mortgage rates rise
-Luxury home sales to slow
-Canada: at risk for housing market meltdown
-Scotiabank: no risk for housing market meltdown
-Canada’s central bank braces for US recession
-Flaherty: Serious consequences if US bailout fails
-Washington Mutual: Biggest US bank failure yet
-TD: No worries of a great depression

So what are you seeing out there? Post your news, links and thoughts 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!

Realbiz pointed out this story in the Globe and Mail this morning: A recent report from Merrill Lynch Canada is warning of a Canadian housing market crash and mortgage meltdown similar to the one currently eating away at the US economy:

Canadian households are more financially overextended than their counterparts in the United States or Britain, a report issued by Merrill Lynch Canada economists David Wolf and Carolyn Kwan says.

“We’re just now starting to see house prices fall in Canada, and sharp rises in unsold home inventories increasingly imply that this will not be a transitory phenomenon … From this perspective, the absence of a Canadian credit crunch to date may be cause for concern, not comfort,” their report says.

They say it’s only a matter of time before the “tipping point” is reached and the housing and credit markets crack in Canada.

Stephen Harper was asked to comment on this at a campaign stop in Vancouver, where he rejected the economists conclusion:

“Firstly, we have seen that the housing market and the construction market are much stronger in Canada than in the United States. We don’t have the same situation here with mortgages as was the case in the United States with the subprime mortgages there. And so therefore I think our market is in a much stronger position.”

Merrill Lynch Canada says the main concern is the way Canadian households have overextended themselves and carry a large quantity of debt.  The housing and construction market may currently be stronger than it is in the US, but there’s no guarantee that it will stay that way:

“What worries us is that Canadian households have been running a larger financial deficit than households in either the U.S. or the U.K.,” the Merrill report says. “… After 40 years of net saving, Canadian households moved into sustained deficit in 2002. In 2007, household net borrowing amounted to 6.3 per cent of disposable income, a wider deficit than in the U.K. and not far off the peak U.S. shortfall seen in 2005.”

The economists say the data imply that Canada’s household sector is now overextending itself as much as the United States or Britain ever did.

Surreyjoe posted a link to this article in the Vancouver Sun about incentives designed to lure condo buyers.  The article covers a number of projects in the lower mainland that are using a variety of incentives to try to get units sold:

Bosa said the summer was also a slow period for sales, and “we figured we would do a bit of an advertising blitz” to spark more interest, which has worked to drive more traffic to its sales centre.

Developer Ledingham McAllister is offering different incentives on a couple of its projects — a $10,000 decorating allowance on units in its Silhouette project and five-per-cent cash back on September sales in its Perspectives building near Lougheed Town Centre.

Ledingham McAllister president Ward McAllister said incentives are offered during slow sales to encourage buyers “to get off the fence” so the company can meet its sales targets, but he hasn’t seen more than minimal discounting.

“I don’t think there’s much discounting going on in the market at all,” McAllister said. “People are thinking that prices are going to come down, and we don’t believe they are.”

It may or may not be true that theres ‘not much discounting going on’, but there certainly are a lot less sales happening.  Perhaps I’m missing something here, but aren’t incentives just an attempt at hiding price drops?  If you throw in a “$10,000 decorating allowance” or a “free honda fit” isn’t that just a price drop of that amount?

For the first time in a long time it looks like the economy may be the top issue in this election.  With big price increases in food and fuel, house and condo prices dropping, unemployment edging up and incomes stagnant (except for public service executives) more and more Canadian voters are looking for answers and comfort in times of increasing economic uncertainty.

Strangely enough, most Canadians were feeling pretty good about the economy until the summer, even with a severe downturn in the U.S. battering some key Canadian industries.

While big manufacturing industries like automakers and lumber mills have felt a brutal squeeze as U.S. consumers slashed purchases of homes and cars, other parts of the economy picked up the slack because Canadians kept on spending.

They could do this largely because prices remained sky-high for Canada’s resource exports — petroleum above all, but also things like metals, coal and potash, a key component in fertilizers. There was also a boom in the value of grain and other agricultural commodities.

As a result, the cash flowing in from trade kept Canada’s domestic economy much stronger than the GDP numbers suggested. True, manufacturing slashed 67,300 jobs in the 12 months ending in August, but even so, total employment grew by 224,000 jobs in this period, thanks to gains in areas like construction, professions and services.

However, the looming problem for the Harper government was that the gusher of money from exports of high-priced resources tapered off as oil, grains and other products dropped in value by late in the summer. Yet many Canadians continued to feel the lingering impact of food and fuel inflation.

By July, job creation had stalled and gone into reverse, leaving unemployment a little higher than it was last winter. At the same time, July’s inflation rate, at 3.4 per cent, was the highest in five years.

Are you concerned about inflation / deflation / stagflation and is the economy a key issue for you in this election?  Do you think that any Canadian politician has the ability to improve our economy while our largest trading partner is going through major financial difficulties of its own and facing ongoing fallout from a burst housing bubble?

Every Friday we do an end of the week news round up here at http://vancouvercondo.info and have an open topic discussion to share thoughts on the local market and global economy.  Anything related to real estates and economics is welcome.  Here are a few stories I’ve noticed this week to get us started:

-Politics and the Vancouver affordability crisis
-Agent Wills Realty Reality check
-Vancouver auto thefts on the rise
-Steeper drop in Canadian house prices
-The Canadian deflation threat
-National Bank: US faces year long recession
-Bush concerned about financial crisis
-30 Year deregulation era dies sudden death
-Financial crisis enters dangerous new phase

So what are you seeing out there? Post your news, links, thoughts 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!

..Well, best local blog in Vancouver anyways, according to the Georgia Straight readers choice survey.

Yes, that’s right ladies and gentlemen, http://vancouvercondo.info has been voted as the ‘best local blog‘ in the 2008 Georgia Straight Best of Vancouver Readers Choice awards.  As you can probably tell, I’m pretty hyped about that.  Pardon me for a moment while I shake my arms over my head and make crowd cheering noises. We’re number one! We’re number one!

A hearty congratulations to Paul Boenisch who won for ‘Best Realtor’, and a big thanks to Condohype for pointing out that the Straight was running this survey and who posts brilliant deconstructions of condo advertising at the Condohype blog.

Thank you to everyone who voted for this blog, and all the readers that have contributed ideas, conversation and information – you’re what really makes this site worthwhile.

If you’re new here, welcome!  Take a look around and join in the debate – is Vancouver real estate over valued? Are property prices set to crash like they have in California, Florida or Nevada?  Does the Vancouver leaky condo problem concern you?  Are you touching Vancouver real estate with a ten foot pole?  Buying? Selling? Holding fast? Your thoughts and anecdotes are welcome here.  Cheers!

Thats according to UBC Sauder School of Business professor Tsur Somerville.  Its not just the Vancouver housing market that’s taking a dive – all across Canada things are slowing down, listings are high and many markets are seeing price drops.  Calgary and Vancouver have seen some of the largest price drops, but Toronto also saw a 1 percent price drop in August for the first time in ten years.

“The boom in the housing markets is definitely over,” Tsur Somerville, a professor in the Sauder School of Business at University of British Columbia said in an interview. “Depending on where you live, you can likely expect prices to fall further.”

Somerville, in a study released this month, looking at the relationship between house price and rents estimates that housing prices in some Canadian cities such as Regina, Winnipeg, Ottawa and Montreal, would have to drop as much as 20 per cent to be in balance. The professor found only Toronto and Edmonton house prices were not overvalued in the first half of 2008.

Put another way, average Vancouver house prices would have to fall by $85,000, in Winnipeg it would be $74,000 and Ottawa $81,000.

Just because homes are overpriced doesn’t mean the market will plunge to equilibrium, Tsur said.

Toronto housing prices are not out of line because they have not had the explosive growth of other cities, Sommerville said. “Some cities look way out of line when you run the numbers, but Toronto is bang on.”

Sommerville cautioned that the study was based on existing detached home prices and rents and did not include condo stocks.

I wonder what that study would show if you included data from the price/rent ratio of condo stocks.. We do have quite a few condos in this fair city of ours, with thousands more currently under construction.

At the end of July we posted an excel spreadsheet that YLTNBoomerang is using to track the market for Downtown waterfront Vancouver townhouses.  YLTN just sent in the updated data so I’m posting it here for anyone interested in this part of the market.  There are a few empty spots in this update as summer is vacation time.

The information in this spreadsheet includes square footages, new listings and price changes from January 10 until September 15th 2008 (today).  The entire database is color-coded, with red indicating price increases and green indicating drops.  There have been a few increases since the original posting, and a flurry of price drops over the weekend.

Click here to download the XLS document.

I’m posting this data with the same challenge as the original post: If you can graph this data in an interesting and informative way I’ll post it here, just email it to me.

update: bcubbins has added selling price data from land titles to this spreadsheet and posted it here.  Most of it seems to be going for 5 to 10% less than listing price, the shocker is a unit at 1280 Richards that went for 32.8% less than listing price.  Is that correct bcubbins?