Canadian housing boom ‘definitely over’
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.
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September 16th, 2008 at 10:58 am
I wonder what conclusions the study would come to if it is assumed the todays prices are way out the norm.
September 16th, 2008 at 11:05 am
Err, rent is a moving target, just like in Florida. Once the constructio boom is over and realtors, mortgage brokers, and construction trades stop making the easy cash, we can expect rent to fall A LOT further. Plus the huge amount of speculator owned condos coming online.
The fact that downtown rent has not gone up a lot proves that rent will go on a free fall once all the condos complete. If the presale prices give rediculous price/rent ratio at today’s rent, imagine what it would give when rental market crashes.
September 16th, 2008 at 11:08 am
Now they’re going to start playing this like they saw it coming all along.
September 16th, 2008 at 11:21 am
“I wonder what that study would show if you included data from the price/rent ratio of condo stocks.”
I wonder indeed. vancouverguy has provided us with some approximate, but reasonable, numbers for downtown condos. Housing busts happen slowly — not over a weekend
— so we have the luxury of time to properly do the math.
September 16th, 2008 at 11:23 am
“I wonder what conclusions the study would come to if it is assumed the todays prices are way out the norm.”
Ahh Alan, you found one of the fatal flaws. Congratulations.
September 16th, 2008 at 11:28 am
According to insider developer friends in Vancouver:
“no new developments planned until after 2010 – and the ones that are going ahead are generally smaller developments, higher end or resort…”
just an msn conversation but interesting to hear.
September 16th, 2008 at 11:36 am
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.”
Real prices in Toronto are higher then they were in 1989 before a major bust. But of course this time Ontario won’t see a recession like it did in the early 90’s, right?
http://cuer.sauder.ubc.ca/cma/.....oronto.pdf
Somerville’s study was cooked to make Vancouver look mildly overpriced, and this resulted in all sorts of absurdities, like Toronto having “normal” prices, and Ottawa being twice as overpriced as Vancouver, which is absolutely ludicrous.
September 16th, 2008 at 11:43 am
http://www.thestar.com/Federal.....cle/499952
What’s next from Harper? $600 economic stimulus cheques?
Is he trying to make Bush like he know’s what he’s doing?
September 16th, 2008 at 11:48 am
These guys are paid to feed us crap.
Just like the Sun when they are printing the story about line-ups for rental apartments. “with the home values going down and home values not increasing as they did anymore owners cannot afford to keep rental properties, hence the shortage of rentals is looming… I haven’t seen a bigger pile of sh*t in ages…
But I guess people will believe it. They are THAT stupid.
September 16th, 2008 at 11:48 am
These guys are paid to feed us crap.
Just like the Sun when they are printing the story about line-ups for rental apartments. “with the RE market going down and home values not increasing as they did anymore owners cannot afford to keep rental properties, hence the shortage of rentals is looming… I haven’t seen a bigger pile of sh*t in ages…
But I guess people will believe it. They are THAT stupid.
September 16th, 2008 at 11:49 am
Sorry about the double-trigger
September 16th, 2008 at 11:57 am
“Somerville’s study was cooked”
I don’t think the “cooking” was intentional but merely a product of making certain assumptions, realized or not, that may or may not be realistic. At first glance I agree it looks to be the latter.
September 16th, 2008 at 11:59 am
One can spellcheck posts and comments using google toolbar. It works for post titles as well…
September 16th, 2008 at 12:08 pm
That’s “definitely”, not “definately” (in the title). Not to nitpick.
September 16th, 2008 at 12:13 pm
Huh, and just last May Tsur said house prices dropping isn’t necessarily the way it will work out:
http://www.canada.com/theprovi.....83ff0a9d32
“With housing markets, it doesn’t have to be that a correction happens by prices dropping and magically being affordable,” says Somerville. “They can work by things growing flat or very slowly for an extended period until population and incomes catch up.”
My favorite quote from that article is from Helmut ‘whiplash’ Pastrick who said:
“If you’re holding off because ‘Why should I buy now if it’s going to drop 20 per cent next year?’ I think that’s a bit of a gamble. A person’s well within their right to do that, obviously, but just bear in mind the general view is there will still be a price increase this year and another next year,”
Well yes, but as most of you know Pastrick has changed his tune from prediction of a 10% rise in prices to a 10% drop in prices, maybe more.. Thats a 20% shift in his forecast in about 3 months!
September 16th, 2008 at 12:18 pm
What’s next from Harper? $600 economic stimulus cheques?
Is he trying to make Bush like he know’s what he’s doing?
Well he couldn’t resist copying the US strategy of picking the taypayer’s pocket to try to prop up RE prices, could he?
One more reason not to vote for that gang. Every economic move they’ve made since they took office has been wrongheaded.
September 16th, 2008 at 12:57 pm
Yup best to vote NDP because Jack Layton knows economics and rich asians.
September 16th, 2008 at 1:12 pm
These guys are paid to feed us crap.
Just like the Sun when they are printing the story about line-ups for rental apartments. “with the RE market going down and home values not increasing as they did anymore owners cannot afford to keep rental properties, hence the shortage of rentals is looming… I haven’t seen a bigger pile of sh*t in ages…
But I guess people will believe it. They are THAT stupid.
-
Do you have a link to that article?
I called up a Coal Harbor apartment complex this weekend to check for availability and was told to call back on the last day of the month for availabilities, and be ready to view it and sign a lease on the spot if I liked the place. Sounds like major BS to me – that’s not how apartments are rented out. Vacancies are known for at least a month ahead of time, no reason for a “feeding frenzy” on the very last day. There’s either massive amounts of demand letting them get away with this (unlikely) or this is typical salesman pressure tactics to drive up rents. I can’t see how or why they would even want a mad scramble on the last day of every month. Anyone? Either way, the article sounds worth a laugh so please link it if possible, thanks.
September 16th, 2008 at 1:24 pm
Actually, is this it?
Vacant suites draw lineups of up to 50 people
http://www.canada.com/vancouve.....4a&p=1
The situation is only going to get worse if the real estate market continues to slow down and rental properties become even less appealing to own as property appreciation declines, Gordon said.
“Landlords are at the point where they can’t afford to be landlords anymore,” she said.
Murray Richardson owns three properties in Vancouver and says he’s losing money because rents aren’t going up as fast as his costs, adding “nobody wants to hang on to rentals.”
If there are 50 people viewing per suite, then I could see them having an open house at the end of the month.
September 16th, 2008 at 1:27 pm
jwepo, thanks for the nitpick, I’ve corrected the spelling.
September 16th, 2008 at 1:31 pm
minotaur3, it sounds like if there are lineups, they’re not charging enough rent or maybe they’re trying for a bidding war. “Caveat Rentor”.
September 16th, 2008 at 1:33 pm
minotaur3: He was probably talking about checking at the end of the month for vacancies one month in advance. Many people wait until the last day of the month to give notice, so the property manager wouldn’t know what units will be vacant until then.
September 16th, 2008 at 1:58 pm
Source: REBGV Dynamic stats
Sept 1-15 WEST VAN SFH
Gross Sales 13,331,500
Units Listed 88
Units Sold 9
Sale Success Ratio 20%
% Sales to Listings 10%
Avg Price/Unit 1,481,277 (-18%)
Active Listings 560 (+63%)
Sept 2007 WEST VAN SFH
Gross Sales 97,940,700
Units Listed 137
Units Sold 54
Sale Success Ratio 56%
% Sales to Listings 39%
Avg Price/Unit 1,813,716
Active Listings 343
Sept 1-15 COQUITLAM SFH
Gross Sales 11,734,700
Units Listed 112
Units Sold 18
Sale Success Ratio 23%
% Sales to Listings 16%
Avg Price/Unit 651,927 (-2%)
Active Listings 780 (+52%)
Sept 2007 COQUITLAM SFH
Gross Sales 58,740,650
Units Listed 185
Units Sold 88
Sale Success Ratio 57%
% Sales to Listings 47%
Avg Price/Unit 667,507
Active Listings 510
Sept 1-15 NEW WESTMINSTER SFH
Gross Sales 1,373,000
Units Listed 34
Units Sold 3
Sale Success Ratio 21%
% Sales to Listings 8%
Avg Price/Unit 457,666 (-19%)
Active Listings 157 (+52%)
Sept 2007 NEW WESTMINSTER SFH
Gross Sales 16,403,303
Units Listed 44
Units Sold 29
Sale Success Ratio 70%
% Sales to Listings 65%
Avg Price/Unit 565,631
Active Listings 103
Sept 1-15 NORTH VAN SFH
Gross Sales 15,068,000
Units Listed 109
Units Sold 16
Sale Success Ratio 25%
% Sales to Listings 14%
Avg Price/Unit 941,750 (+8%)
Active Listings 412 (+72%)
Sept 2007 NORTH VAN SFH
Gross Sales 70,467,290
Units Listed 166
Units Sold 81
Sale Success Ratio 72%
% Sales to Listings 48%
Avg Price/Unit 869,966
Active Listings 239
Sept 1-15 RICHMOND SFH
Gross Sales 22,950,900
Units Listed 118
Units Sold 29
Sale Success Ratio 39%
% Sales to Listings 24%
Avg Price/Unit 791,410 (0%)
Active Listings 996 (+68%)
Sept 2007 RICHMOND SFH
Gross Sales 115,209,600
Units Listed 205
Units Sold 147
Sale Success Ratio 62%
% Sales to Listings 71%
Avg Price/Unit 783,738
Active Listings 592
Sept 1-15 VANCOUVER EAST SFH
Gross Sales 21,095,398
Units Listed 149
Units Sold 31
Sale Success Ratio 31%
% Sales to Listings 20%
Avg Price/Unit 680,496 (0%)
Active Listings 1,025 (60%)
Sept 2007 VANCOUVER EAST SFH
Gross Sales 116,199,540
Units Listed 250
Units Sold 172
Sale Success Ratio 61%
% Sales to Listings 68%
Avg Price/Unit 675,578
Active Listings 637
Sept 1-15 VANCOUVER WEST SFH
Gross Sales 40,993,388
Units Listed 166
Units Sold 27
Sale Success Ratio 33%
% Sales to Listings 16%
Avg Price/Unit 1,518,273 (-4%)
Active Listings 1,000 (+98%)
Sept 2007 VANCOUVER WEST SFH
Gross Sales 178,496,540
Units Listed 247
Units Sold 112
Sale Success Ratio 67%
% Sales to Listings 45%
Avg Price/Unit 1,593,719
Active Listings 504
Sept 1-15 LADNER SFH
Gross Sales 840,100
Units Listed 14
Units Sold 2
Sale Success Ratio 40%
% Sales to Listings 14%
Avg Price/Unit 420,050 (-36%)
Active Listings 137 (+117%)
Sept 2007 LADNER SFH
Gross Sales 12,655,600
Units Listed 33
Units Sold 19
Sale Success Ratio 82%
% Sales to Listings 57%
Avg Price/Unit 666,084
Active Listings 63
Sept 1-15 PORT MOODY SFH
Gross Sales 2,753,500
Units Listed 31
Units Sold 4
Sale Success Ratio 21%
% Sales to Listings 12%
Avg Price/Unit 688,375(-9%)
Active Listings 187 (+74%)
Sept 2007 PORT MOODY SFH
Gross Sales 14,388,100
Units Listed 39
Units Sold 19
Sale Success Ratio 65%
% Sales to Listings 48%
Avg Price/Unit 757,268
Active Listings 107
September 16th, 2008 at 2:04 pm
Harper is hilarious. Tax credits for FTBs! Doesn’t he know we can’t afford to buy at these ridiculous prices and $750 in my pocket isn’t going to make a bit of difference? Duh.
September 16th, 2008 at 2:16 pm
The situation is only going to get worse if the real estate market continues to slow down and rental properties become even less appealing to own as property appreciation declines, Gordon said.
“Landlords are at the point where they can’t afford to be landlords anymore,” she said.
Murray Richardson owns three properties in Vancouver and says he’s losing money because rents aren’t going up as fast as his costs, adding “nobody wants to hang on to rentals.”
I’ve come to the conclusion that a majority of people, even those with really high IQ’s, have a disability when it comes to seeing the consequences of things that happen now leading to bad/good later. Either that or us bears are just gifted with something that a majority of people don’t have…
A lot of us on these blogs saw the implosion of Lehman, Merill, Fan & Fred, etc, a loooong time ago (2004.) It’s been a long time coming. It didn’t really take a high IQ, just the capability to be open to a lot of different opinions and the patience to read millions of blog posts / comments.
This guy can’t put two and two together. He states that “Landlords can’t afford to be landlords anymore” but from that point he reaches the conclusion that: rents will go up because there will be fewer landlords. What?
Let’s think this through:
- More “landlords” losing money on rent every month
- means more landlords trying to get out
- means more people selling because they don’t want to hold a money-losing property
- which means even more inventory
- which means even lower prices
- which means even more people selling & fewer people buying
- which (positive feedback loop, you get the drift)
…
- final conclusion: reduced construction, higher unemployment, bankruptcies, foreclosures, waay lower prices, banks reselling at even lower prices, fewer high-income renters and more properties, and hence, much lower rents.
I recently got in a really heated discussion at work about prices in Moscow. My point of view is that since it is THE most expensive place in the world now, and with a recession looming which will impair the demand for oil, it HAS to drop. The other point of view was of course “OIL”, “OLIGARCHS”, “it’s high so it’s going higher”, “god is always making more billionaires”. (Looks like I was right – Russian stockmarket down 17% today)
Thank god for these blogs and the freaking common sense of those that post on them.
BTW I’m posting this from Sweden. Still a renter, but the number of people pestering me to buy a place here has gone down dramatically in the last few months.
September 16th, 2008 at 2:46 pm
I think this article has a very simple message, actually.
I think it’s trying to convince all the prospective studio/1br renters to go out and buy something NOW.
Before the prices go down.
So all the scammers can try and make some money.
That’s it.
September 16th, 2008 at 2:47 pm
Publishing this kind of crap should be illegal, BTW. Isn’t this in essence a fraud???
September 16th, 2008 at 2:53 pm
So… Been looking for a month to rent a bigger place now, really annoying! That Sun story irked me even more! Here’s my interpretation of hitting the pavement:
There is a shortage of affordable rental housing in Vancouver but there is not a shortage of available rental housing in Vancouver.
I am looking for a bigger 1 bdr + den around 1000sqft and am willing to pay $2/sqft; basically, my budget is $2K/month. What I have found at this price is that there are not too many people that are willing to pay upwards of $2K/month. If you hold the rent at $2K and shrink the sqft to say 700, there are very few people willing to fork out the dough. Lower the rent to $1500 and you get lineups.
I have found that the price point that the market is ready and willing to pay is $1500-1600 for a 2 bdr or big 1bdr den downtown, at this price you get hoards of renters. If you price over $2K, you get nobody. What this tells me is that a lot of “investors” suffer from the human condition of greed and are illogically holding units vacant for higher rent. This holdout can only go on for so long before they either drop rent and bite the bullet of long term negative cash flow or they sell. If they sell, who will buy unless:
1. It is cheaper to own then rent (assuming a downpayment is available)
2. The price is low enough such that those without the downpayment will rent off you and that rent will cover your costs
So anyway, the gf and I each have our own places and our combined rent right now is less than $2K so we will keep looking until we find the right place.
September 16th, 2008 at 3:07 pm
I hear you YLTNBoomerang! Hubby and I aren’t interested in a suite less than 800 sq feet and $1500 – $1600 is what we are comfortable paying. We will go $1800 – $2000 for a larger place but that is our limit. I too see the same places listed $2200+ month after month… I emailed Prompton a while back to let them know their listings are all about $300 p/mo over priced IMHO. Actually, I’ve come to think all the rental agencies do this on purpose, they’re trying to push the ceiling on the rental market to “maximize” profit for their clients who are still likely cash-flow negative even at that rate!
September 16th, 2008 at 3:15 pm
Ooops, forgot purpose of original rant..
We actually found a place we wanted to rent, good size, fair price and we put in an application. Turns out it was us vs. a retiree and they went with the retiree! I know credit isn’t the issue as I could have bought the place outright but I told the truth that market prices were too high and we wanted to rent… they saw us as not wanting to rent long term where the pensioner with fixed income would be there until death, DOH!
This was very annoying and I have decided to no longer tell the truth to landlords; what I need is a good story to tell them to make them think we are there for a long time, any ideas? Bear in mind my gf has rental references, I don’t as I have always either owned or rented from family.
September 16th, 2008 at 3:17 pm
YLTNBoomerang, eeeenteresting and well observed. It lines up with my experience with basement suites. The asking rent doesn’t move around that much and if you price at market you get tons of applicants. $100 above and it’s crickets. Probably indicative of what is effectively a commodity.
September 16th, 2008 at 3:22 pm
YLTNBoomerang, all you can do is put on a grey wig and talk about The War a lot. Put yourself in the landlord’s shoes and decide why s/he would pick you as opposed to someone else like the pensioner. More money is an acceptable answer.
September 16th, 2008 at 4:12 pm
Hmmm, I should offer $25/month more rent if I really like the place, it’s not much but greed is powerfull… $300 annual investment vs. the opportunity cost of my time raking through craigslist and viewing shoebox apartments. I suppose the risk to this is they could go back to the first choice and ask for more.
How does it work with rentals? If you sign an agreement to rent you can be held to the deposit, generally up to a month, but what if the landlord agrees verbally then comes back saying somebody has offered more, can you hold them to the agreement?
September 16th, 2008 at 4:49 pm
This is kind of funny after the report from BCHydro of the insane number of vacant properties.
http://communities.canada.com/.....ility.aspx
That would imply that a large number of properties are vacant to just hold for appreciation wihtout having to deal with the problems of being a landloard. In Edmonton this was a problem and now we our Vacancy rate has doubled.
September 16th, 2008 at 4:52 pm
Yaltown Boomerang.
Are you looking for suites downtown?
did you try downtownsuites*com
Bruceward*com
promptom*com
husehunting*ca (the best place to find actual market value rentals)
September is probably tricky but you should be able to negotiate rents down starting October 1st.
From my experience working in a real estate office that did property management old people are not good because they complain a lot , especially if you raise the rent or if a tap drips more than once an hour and they ignore the no smoking and no pets rules and what if they go into the hospital long term or die?
They also stay so a retiree that moved into a place in yaletown in 1994 is still there and paying $1080 for a 2 bedroom and starts shouting if the rent goes up $40.
September 16th, 2008 at 5:06 pm
Dear Tsur;
It is better to keep your mouth closed and let people think your an idiot. Than to speak and confirm the fact.
September 16th, 2008 at 5:09 pm
Textbooks of the future will discuss the past decade as an absolute classic in world economic history. Tens of thousands of History and Economics graduate students will choose various aspects of the 10-year orgy as thesis topics. We are watching the unfolding of history on a grand scale.
September 16th, 2008 at 5:32 pm
The Fed is getting set to bailout AIG with an 85 billion dollar loan, taking 80 percent of the company. What a bunch of commies. I guess the lesson here is that if you’re going to fuck up, fuck up big!
September 16th, 2008 at 5:57 pm
dosh Says:
April 27th, 2007 at 11:40 am
Well it looks to me like the west coast is the place to buy – even in the US where prices are down they’re still up in the northwest. How do all the naysayers account for that?
September 16th, 2008 at 5:59 pm
i don’t agree with Somerville. I think Toronto Re is very expensive, too. Why are those people obsessed with the idea that “falling real estate prices are bad”. In fact It is very good. Rising re prices are very bad. How come are majority so stupid? I am asking this question last three years. Economic life of a house is around 30 years. You need to spend as much as your purchase price in 30 years. Half million dollars home costs you 1 million dollars plus inflation plus interest for your mortgage in 30 years. My roughly estimate, you can pay in 80 years iy you have an average income. 2-3 years ago it was $25K. It was mentioned on Rob Tv. It wwas interesting to hear that it was 25K 15 years ago. Let’s say $40K. ohh man this is crazy.
the people who made a big purchase deserve a big F and everything.
September 16th, 2008 at 7:26 pm
re #39 – i can’t understand that comment. is that person quoting himself? and where does the quote start/end? is there a problem with the comment handling of the site? that’s not the first one i couldn’t make heads or tails of, notwithstanding the usual gobbledygook from the usual suspect.
September 16th, 2008 at 7:34 pm
Dosh, What is your point, that you were horribly wrong? Northwest markets are all falling now, not just Vancouver. Check out seattle:
http://seattlebubble.com/blog/.....inking-in/
September 16th, 2008 at 7:40 pm
vancouverguy has provided us with some approximate, but reasonable, numbers for downtown condos.
Jesse do you have a link for that?
September 16th, 2008 at 7:55 pm
richard, I’ve noticed the same thing – since the quotes from the past are always bullish and wrong I’m assuming someone saved them and are reposting them. It would be helpful if they picked a handle instead of using the original posters name if that is whats going on.. I dunno, pope? is there something weird going on with the comment system?
September 16th, 2008 at 8:45 pm
I recently got in a really heated discussion at work about prices in Moscow. My point of view is that since it is THE most expensive place in the world now
Except for housing, which is bad value but still way cheaper than London or New York, Moscow is actually cheaper than Vancouver. A bus or Metro ride is 70 cents, you can see a hockey game for $8, a beer at a cafe is $2.50, etc.
September 16th, 2008 at 8:53 pm
“Landlords are at the point where they can’t afford to be landlords anymore,” she said.
Murray Richardson owns three properties in Vancouver and says he’s losing money because rents aren’t going up as fast as his costs, adding “nobody wants to hang on to rentals.”
Really now? So what are landlords going to do? Blow the properties up?
The rental market does not care whether any landlord can “afford” the property or not. If a landlord decides to sell, who’s going to buy the property? Another landlord of course, or a new owner-occupier, who vacates his old rental.
Next the specuvestors will be asking for government handouts to “keep them providing rental accommodation”, or to help unload their properties to a buyer. Oops, Harper already promised the latter.
Things are getting ridiculouser and ridiculouser.
September 16th, 2008 at 8:57 pm
The situation is only going to get worse if the real estate market continues to slow down and rental properties become even less appealing to own as property appreciation declines, Gordon said.
Holgs already ripped this one apart, but allow me to pile on:
If there are fewer landlords, there is BY DEFINITION more owners (percent owners + percent renters = 100%). If more people own, there is less rental demand.
September 16th, 2008 at 9:13 pm
46 patriotz,
“or to help unload their properties to a buyer. Oops, Harper already promised the latter.”
Can you send me a link on this? I would like to read more.
September 16th, 2008 at 9:37 pm
For those who remember crazy tile house from the last thread, the asking price was an insane $669K.
http://tinyurl.com/5zjyas
Well check this much cheaper house in another nice part of New West:
http://tinyurl.com/6qn9sl
It was recently reduced by 16% from over $555K to $469K. That’s $200K or 30% cheaper than crazy tile house. This cheaper house is on a larger lot and hasn’t had a bizarre renovation. Those statues would have to go though.
But no, I wouldn’t buy either house for much more than $300K (well, I wouldn’t buy crazy tile house at all).
September 16th, 2008 at 9:40 pm
(percent owners + percent renters = 100%)
This is so incredibly basic, yet we have these moronic stories run in our daily paper.. As if ‘landlords’ count purely on price appreciation. ‘landlords’ count on rent, ’speculators’ count on rapid property appreciation. Morons.
It would make me embarrased to live in a city where the newspaper prints this garbage, but I know the media in other cities is just as bad.
September 16th, 2008 at 9:43 pm
Patiently waiting, that first house you linked to looks like somebody watched too many episodes of ‘flip this house’.
September 16th, 2008 at 9:50 pm
“or to help unload their properties to a buyer. Oops, Harper already promised the latter.”
Can you send me a link on this? I would like to read more.
Already posted in #8 but here it is again:
http://www.thestar.com/Federal.....cle/499952
September 16th, 2008 at 9:50 pm
kinglankrat,
Yes, I hate it, and you notice the same tiles from the kitchen floor are used as siding. Totally insane.
September 16th, 2008 at 9:57 pm
ted: here you go
September 16th, 2008 at 10:04 pm
PW, looks like they got a great deal on tile and couldn’t help themselves.
September 16th, 2008 at 10:19 pm
Why are people buying? Are they that stupid? The market is crashing, can’t they see?
September 16th, 2008 at 10:26 pm
Anonymous,
Very few are buying now. Myself, I’m just spectating (not speculating). The first 2006-priced listings are showing up. But I’m strictly a 2003 guy.
September 17th, 2008 at 8:03 am
I think it’s pretty obvious why people are buying:
They see a listing they like, they gather their courage and offer 10% below asking (they believe the “experts” and assume this is how much value of their new asset might POSSIBLY go down this year – after that is UP, UP, UP forever, again) and if the seller is smart (or his agent knows how to convince him), he accepts – BAM, sale done! This was unheard of a year or two ago, when bidding wars and pre-sale lineups were a daily occurrence. 10% below asking – WOW, what a deal!
So everyone is happy and feeling smart about themselves.
Look, even Mohican bought. And he’s not stupid, is he?
You and I do not believe the “experts” crap, but majority of people could easily be guided over the edge of the cliff by lies and deception, as long as it’s in print.
September 17th, 2008 at 8:06 am
Jesse, thanks! Thats some detailed research, interesting way to watch values fall. On the rental front, I believe this is the tightest month of year as students going back to school are generally looking around this time.
September 17th, 2008 at 12:35 pm
For YLTN and others interested in downtown townhouses, I’ve added selling prices to YLTN’s data. The selling prices are from Land Titles. Green means it sold for less than the last asking price…
http://spreadsheets.google.com.....7CSzuLhyBw
September 17th, 2008 at 12:46 pm
I recently got in a really heated discussion at work about prices in Moscow. My point of view is that since it is THE most expensive place in the world now
Patriotz said:
Except for housing, which is bad value but still way cheaper than London or New York, Moscow is actually cheaper than Vancouver. A bus or Metro ride is 70 cents, you can see a hockey game for $8, a beer at a cafe is $2.50, etc.
I meant real estate only. I’ve been to New York, been to London, but never Moscow… In any case, I don’t remember where I read the stat, but Moscow has the highest price/sq. ft of any city in the world (real value, not relative to anything.)
Let’s see… I’ll try to find a linky…
Nope… I guess I could be wrong. Anyway, it’s up there among the top ten, if not #1, for price/sq. ft.
September 17th, 2008 at 12:54 pm
What’s up with this:
http://vancouver.en.craigslist.....83437.html
92 Rental units available at “The Rise”? Is this a developer that decided to go all rental?
September 17th, 2008 at 1:01 pm
I think ‘the rise’ was always intended to be rentals, but they’re very expensive and they’ve been trying to rent them for months. If they still have 92 units available I guess its not going so well.
September 17th, 2008 at 1:07 pm
5000$ per sqft in Moscow.
meant real estate only. I’ve been to New York, been to London, but never Moscow… In any case, I don’t remember where I read the stat, but Moscow has the highest price/sq. ft of any city in the world (real value, not relative to anything.)
Let’s see… I’ll try to find a linky
September 17th, 2008 at 1:16 pm
The Rise is a Grosvenor property.
Grosvenor is the largest commercial landlord in the world, for example Annaccis Island is his. It’s a Duke.
September 17th, 2008 at 1:32 pm
Hey Patiently Waiting,
I love the line “Bring your investors” in that ad. It’s so….. ominous!
September 17th, 2008 at 1:43 pm
The financial crisis in the US and Europe just means that more rich people will be moving to Vancouver to escape the crisis and RE will go higher from here.
September 17th, 2008 at 3:18 pm
“more rich people will be moving to Vancouver to escape the crisis ”
And what will they do once they find we have a CRISIS here as well?
regards
arit
September 17th, 2008 at 3:26 pm
Who pays 2050 for a 1 bedroom place??? Has their research shown that there are people in Vancouver willing to pay that much, or is this based on various calculations to achieve a particular rate of return?
September 17th, 2008 at 3:52 pm
The ‘calculation’ appears to be a rent of $2.50/ft2 (based on $2050 for 820ft2, which would imply they’re looking for $3625/mo for the largest units).
September 17th, 2008 at 3:57 pm
re: the rise rent rates – i think they’re going by $/sqft – their 1 bedrooms are large compared to yaletown.
I thought Prompton was their property manager.
…yep, they still are – they’re going for $2.34/sqft (based on 1 of the units) – 1 bed, 2 bath. Bit high for that side of the creek?
Though, still lower than Spectrum’s wishing rents (based on vancouverguy’s stats)
Also, 1 bed 2 bath – what demographic is that? Perhaps dinks? Young ppl who like to entertain?
September 17th, 2008 at 3:59 pm
i’m talking about the 2200/month, 942sqft unit.
September 17th, 2008 at 4:00 pm
oh, and not Prompton… Gateway Property Management
September 17th, 2008 at 6:02 pm
even thums up2 realises the market is going to go down for the rest of our lives
September 17th, 2008 at 6:10 pm
#
14
dosh Says:
June 16th, 2007 at 9:15 am
We may have the ‘least affordable’ real estate in canada, but so far I havent seen that keep prices from going up.
September 17th, 2008 at 6:15 pm
satv Says:
May 29th, 2007 at 10:23 pm
“and the next station is”
where ever you go what ever you do I will be (not here)right there waiting for you.
price up has changed the lyrics of richard marx.
if you leave 11.5% up you will find 29.5 % up on next station.
I mean to say if anybody think of moving you will be broken.
anybody think of price fall the june numbers will disturb the picture.
what can you take out of shoe box if you are a developer.
Colleen said
This is a case of the ridiculously rich and the rest of us. Why are we not considering the quality of life in Vancouver for its citizens as well as its development? Where are our elected, well paid politicians? We do not live in London, New York, Tokyo or Hong Kong. This is not Europe. We are Canadians-with our own histories, roots and expectations about how we live. This is what makes Vancouver such a beautiful and special place.
Sincerely,
Colleen
sir I beg your pardon but country’s self strength measure through on its self dependentness, issue is to decide if canada is self dependent to supply our needs,
I don’t think so
chinesenoodles,italian pasta,indian curry canada is multicultural socaity.most of stuff being import from all over the world so our canadian value can not control price’s and architectural structure.
if we can produce cunstruction matterial,and grocery we can reserve our value.
this is not to hurt any sentiments but this post I found suitable answer from best what i can think.
but related thing you can count like we have most jobs in communication not in any original production.so we are dependent on other.
in comunication people can only sell lottery.
September 17th, 2008 at 7:43 pm
I received a flyer in the mail recently from a realtor that sold a house in our area. House was listed for 469k and sold for 440k. The strange thing was that the DOM was 3 days. Why would they sell almost 30k less than asking after being on the market for only 3 days??? Another interesting thing is that I haven’t seen a house sell for less than 500k in our area for a long time (even the little tear down ones on small lots). What’s missing in this picture?
September 17th, 2008 at 9:08 pm
In any case, I don’t remember where I read the stat, but Moscow has the highest price/sq. ft of any city in the world (real value, not relative to anything.
This statistic is probably for new development in the central (expensive) area. All such development is high end or ultra high end, and this skews the statistics. Existing Soviet-era stock is much cheaper, although not cheap by any standard.
You read all sorts of crazy “statistics” about costs in Moscow that are actually for luxury lifestyles and have nothing to do with the other 95% of the population.
5000$ per sqft in Moscow.
Nope, even the Western standard stuff is way cheaper than that. Take a look:
http://www.evans.ru/search/?ty.....diately=on
Take a look at #9 and #10 at the bottom. $675/sq ft. Now that’s pricey, but they don’t compare too badly to Infinity really (with which they are comparable). Those apartments would rent for $1500/month or more so price/rent, although high, is not as crazy as Vancouver. Rentals:
http://www.evans.ru/search/?ty.....diately=on
September 17th, 2008 at 11:13 pm
Well there’s a new record in town. 20,333 inventory at Paul’s, surpasses July’s peak of 20,280. So much for sales picking up in the fall huh?
September 17th, 2008 at 11:14 pm
Where have all the bulls gone? Too busy trying to sell?
September 18th, 2008 at 12:08 am
To Drachen,
Maybe they have a life? How’s the basement suite?
September 18th, 2008 at 12:32 am
How’s the basement suite?
Really easy on the net worth and disposable income, thanks.
September 18th, 2008 at 7:36 am
Where have all the bulls gone?
Welcome to the running of the bulls
YVR RE style…
exit stage left!
September 18th, 2008 at 8:14 am
You bears make me laugh. This is just a hickup on the way to a soft landing for real estate followed by many more years of steady appreciation and good times for all.
September 18th, 2008 at 8:28 am
for real estate followed by many more years of steady depreciation and good times for all.
yesss! affordability…..
a bears’ wet dream!
September 18th, 2008 at 10:22 am
The Chinese stock market is now down over 70% from its high of the past year. Chinese authorities are taking measures to restore calm in the markets.
The Russian market has been shut down by the authorities after absolutely plunging this week (down 25% in a single day).
The US government has just bought 79% of AIG (the global insurnace giant) by providing an $85 billion loan all in the name of enabling an “orderly liquidation” of AIG’s one trillion in assets. And that on top of the bail-out of Fannie Mae and Freddie Mac and after having issued cheques to every US citizen to kick-start the US economy.
What does this all have to do with Vancouver real estate?
Plenty.
First, it shows just how easy it is to deflate a bubble… and to do so very fast.
Second, and more importantly, Vancouver is not sheltered from the world economy. In fact, Vancouver is highly connected to the rest of the world’s economies by the simple fact that surprisingly large amounts of our real estate is held by non-Canadians.
I have been a bear as regards the Vancouver real estate market for a number of years as I have watched every guy and his dog get into the development game. I have been even more of a bear when I look at the disconnect between rents and selling prices of identical units (how about investing in real estate with a cap-rate of 2) but I have wondered aloud just what would be the catalyst that would finally crash the party. Well, the devastation of the global stock markets combined with – and caused by – the global credit crunch could be just that catalyst.
Just imagine what it will be like for real estate sellers here in Vancouver if any sizable portion of the off-shore holders decided that now would be a good time to sell that Vancouver condo/house to repatriate the money back home to cover a trading loss or take advantage of the depressed price of an investment closer to home.
No-one knows for sure just how many units that have sold in the past five years have been sold to off-shore investors but we all know that it is a large enough number to be able to swamp the local market if Vancouver real estate should fall out of favor.
I get downright giddy at the thought of those same off-shore investors being “forced to sell” should they be experiencing margin calls or having bank loans called.
We could see an outright glut of real estate in our market and an outright collapse of prices.
Yeehaw.
September 18th, 2008 at 11:21 am
Regarding speed of bubble deflation – not sure if we can draw this parallel, since stocks are more liquid than real estate.
Re: foreign investors
based on a landcor study posted previously – foreign investors were never a big part of the vancouver housing market.
So although in tune with the direction “we” want the housing market to move in, i don’t think we should use foreign investors bailing as the main reason.
We do not need external reasons when the numbers speak for themselves – when renting is cheaper than owning, owning real estate is over valued.
September 18th, 2008 at 11:24 am
+/- some intangibles that are hard to put a value too:
- pride of ownership, etc… (owners)
- stability (renters)
- mobility (renters)
Plus a bunch of other qualifiers to make my statement more grey and reasoned.
September 18th, 2008 at 11:25 am
i mean
- stability (owners)
September 18th, 2008 at 12:18 pm
Yeah, I would agree that stocks are more liquid than real estate… then again, we have seen 150 year-old Wall Street investment banks go from having a $50 billion market cap to bankrupt within the space of a year. You’ll probably agree that investment banks (and global insurance giants) aren’t exactly a liquid asset. It doesn’t strike me that an asset has to be liquid for it’s implied value to tank in very little time.
As far as the amount of foreign ownership of Vancouver real estate. I’ll have to diagree with you there. I was involved in the purchase of an extremely large tract of land in downtown Vancouver which had some developments in-progress that we as the purchaser had to complete (I.e. projects that had already been pre-marketed and sold). The number of units sold to non-Canadian was shockingly high.
You are right that “pride of ownership” is a real factor. There is plenty of real estate that will never change hands outside of certain families because it is irreplaceable. That’s not going to make much difference to general price levels when there’s 10,000 too many condos in Vancouver’s West side. It only takes some of the stock of real estate to change hands for prices to plummet. Capitulation happens to the few but affects the general mind set of many.
Oh and one last thought… when markets go through upheaval, they frequently overshoot the point of FMV. In the same way that markets get over-heated they also get way to pessimistic. My guess is that by the fall of 2009 people may be predicting that it will take 10 years for the Vancouver market to recover.
September 18th, 2008 at 1:08 pm
MickeyFinn, sounds like we’re agreeing on the same bits except for the foreign ownership thing – though i have no numbers/anecdotal evidence to contribute except for pointing at the landcor study posted recently.
I guess it doesnt matter – there will be a forced sale by the over leveraged – foreign or otherwise.
I just don’t want MSM watchers bleating that it was wall street that killed vancouver’s re market. And politicians calling for a foreign speculator tax.
September 18th, 2008 at 2:03 pm
“It doesn’t strike me that an asset has to be liquid for it’s implied value to tank in very little time.”
Best sentence I read today. Other than the misplaced apostrophe, I mean.
September 18th, 2008 at 3:00 pm
Increased liquidity will always result in the possibility of greater turns, just as lower liquidity will always cause slower turns.
In just one week many major stock markets have lost up to 10%, I defy you to find a real estate market that drops that quickly.
The average selling time for a house is measured in months, for stocks it can be minutes, it’s like comparing a blue whale to a dolphin for it’s turning ability. Sometimes the dolphin will turn more slowly than the whale but even a moderately quick turn by the dolphin cannot be matched by the whale.
September 18th, 2008 at 3:35 pm
Just as housing markets take longer to tank than stock markets they can take a lot longer to rise again as well. I think I read that anyone who bought at the peak of 81 didn’t see their vancouver house hit that price again until 1996, that’s 15 years! And thats just break even, never mind the fact that transaction costs are much higher on real estate, and generally you want an investment to return a profit, not just break even.
September 18th, 2008 at 5:02 pm
Checked out “The Rise”. Seemed good at first, then counted all the stairs that are “not included in sqft calculations” – BS, they are and with three sets in the tiny units you can dream on. Next, the decent sized units have no storage space or one tiny closet in the bedroom and none by the door – they are decent sized because they left no room for storage. Speaking of storage, if you want a locker, that’s extra. Oh, and the place is zoned live/work so if you want to rent, you have to pay GST on the workspace regardless of whether you are using it as live work – extra 50-75/month, cha-ching. Then parking, oh yea, $100+gst/month for parking; cha-ching. Oh I thought, at least they have nice big balconies for bbq’s, something you don’t see anymore…oh, NO BBQ allowed, not even gas, you can use the common area one. Speaking of common area, heh heh, this is the best, they have a common party room that consists of a couch, chair, table and chairs, sink, and the excercise equipment (5 machines) WTF????? “Hello, I’d like to book the party room for a wine and cheese but do you think you could get the sweat stink out or ask the people exercising to not perspire”.
Good luck Grosvnor!