Vancouver Condo Info

It’s the end of the work week and that means it’s time for the Vancouver Condo Info end of the week news round up and open topic discussion.  Here are a few links and stories that have come to my attention this week:

-Thank you VHB & everyone who’s contributed to the Wiki!
-Guess the next 3 years: Vancouver Condo Games
-Tips on how to be a home-buying vulture
-2 mortgage brokers in Duncan say there is no housing bubble
-Would-be homebuyers may want to wait
-BC mills take downtime in “world awash in pulp”
-Video: Tom Barracks economic outlook
-What will work to kick-start global economies?
-Ottawa chops $4.3 billion, predicts small surplus for 2009
-US sinking deeper into recession, dragging Canada with it.
-US home prices hit 2004 levels, predicted to get worse
-US commercial mortgage crisis looms
-Chinas economic crisis worsens
-Affordable places to ride out the downturn

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!

According to the Organization for Economic Cooperation and Development, Canada is in a recession and heading for a deficit. And who’s to blame? Ontario and BC.

Across Canada EI claims actually dropped month over month, except for in Ontario and BC where they surged 14% over the year in Ontario and 11.5% in BC. Ontario has the auto manufacturing sector to blame for the downturn, while here at home we’re seeing an alarming decline in forestry revenues not to mention the sharp downturn in the housing market where prospects are looking more grim with each passing month, particularly when it comes to downtown Vancouver condos.

Meanwhile in the financial sector Canadian banks have started asking Ottawa for a major cash injection to help stem a rising tide of bad loans.  BMO figures show bad loans have already exceeded the peak reached in 2001 after the dot com crash, and are well on their way to levels seen in the last recession almost 20 years ago.

The bright side? If you’re looking for temporary office space to sublease in Vancouver, it looks like you have lots of options right now.

From the Vancouver Condo Wiki – Expert Quote-tracker

From the Globe and Mail:

The commercial market for apartment buildings in British Columbia has “come to a near standstill,” according to a report issued Monday by real estate firm Avison Young (Canada) Inc.

“There is now a standoff between purchasers, who in the wake of the global credit meltdown have changed their pricing expectations, and vendors, who are looking for yesterday’s pricing in a much more challenging market,” Avison Young principal Rob Greer said in releasing the report.

The number of real estate transactions in British Columbia’s “multi-family market” has dropped to 76 so far this year, down from 153 in the corresponding period of 2007, according to a survey by Avison Young.

“The total value of multi-family investment transactions year-to-date … amounts to $270-million – approximately 52 per cent of the $519-million recorded in all of 2007,” Avison Young said.

Local private investors accounted for the majority of buyers and sellers in 2008.

Prices for apartment buildings are likely to fall even more next year, Mr. Greer said.

“Should financing troubles continue through 2009, we may see values move as much as 20 per cent as investors re-evaluate their required returns on investment,” Mr. Greer said.

Avison Young said in its report that the “once prevalent multiple-offer situations have shifted to ones of price reductions and lingering listings.

“Of the current 130 listings on the market, approximately one-quarter have received at least one price reduction in recent months. This does not include any recent sales that involved a price reduction to induce the sale,” according to the report.

Better late than never, it’s time for our open topic discussion post.  Here are a few stories I’ve noticed this week:

-Bring on the real estate crash
-BC Expected to barely avoid recession
-BC economic stimulus package: an extra $70 for you
-Scotiabank: Canadian housing market slide overstated
-Canadian banks: longest profit slide in two decades
-You can still get a zero down mortgage
-What will happen to luxury condos?
-Harper will ‘do what it takes’ to fight economic crisis
-Fears of deflation
-Economics 101: everything you know is wrong
-67,000 Chinese factories closed in six months

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!

It looks like Vancouver’s housing slump is starting to get attention from outside Canada. Several people pointed out this Bloomberg article about our declining real estate market.

West Vancouver builder Sean Hanley thought Canada’s real estate market would be immune to the housing recession that sent values tumbling in the U.S. Then the economy slowed and oil prices fell.

The price of a detached house in this upscale community fell 22 percent in October from a year earlier, helping to drag the average residential price in Canada down by 9.9 percent, the biggest decline in 26 years, according to the Real Estate Board of Greater Vancouver and the Canadian Real Estate Association. For Hanley, that’s meant nary a buyer for his five-bedroom home.

“It’s been a little bit surprising the consequences of the subprime crisis have been so far-reaching,” said Hanley, 48, who has cut his asking price to C$3.99 million ($3.26 million) and is now offering a C$100,000 bonus, on top of regular fees, to the agent who delivers a buyer.

This isn’t the first time we’ve seen offers of a bonus to the buyers agent instead of a price reduction, but I’m a bit suprised that it’s acceptable to openly pay the buyers agent to represent the sellers interest.  Is this even an effective technique?

There are a huge number of houses and condominiums for sale in Vancouver and the Lower Mainland with fewer and fewer buyers who have the desire and/or ability to buy.  Recently we got the alarming news that in the first 12 days of November not a single west side Vancouver house was sold out of 968 listing. 

So how can you make your house, townhome or condo stand out from the crowd and snag a buyer that still has access to credit?

There’s a saying: you can’t make money without spending money. So with that in mind we offer the following tips to increase foot traffic at your open house and sell your Vancouver property in a falling market:

1. Paint your roof gold.  This will really make your house stand out amongst your neighbors, particularly if you use real gold-leaf, not that cheap fake gold stuff.

2. Hire underwear models. Want foot traffic at your open house? Hire a few underwear models to lounge around the yard and entry way.

3. Offer free beer and weed. Or if you want to be family-friendly coffee and cookies, etc, but the underwear models will prefer the beer and weed.

If these techniques don’t work for you, the market may have gotten worse.  In that case you have two options that may still work as a last resort:

A. Pray to the money god for a buyer with great credit and a lousy eye for value
or
B. Lower your price.

Hey, it just might work!

No-lympics pointed out this article in todays Province.  Apparently two BC condo strata councils have lost substantial amounts from their reserve funds by putting that money in higher risk /higher return investments than the legally allowed bonds, GICs or bank accounts.

“It’s been going on for years,” says Gioventu. “The first time I had to deal with it was nine years ago. People get greedy and look for shady deals. But nine years [ago], we had a pretty big drop in mutual funds and we had stratas investing in mutual funds. That was probably the first time it popped up on the radar screen.”

Legislation limits the type of investments in which condo reserve funds can invest.

The Strata Property Act Regulations, Section 6.11, says permissible investments include government bonds, GICs or simply holding the money in a bank account.

In most cases, investing in equities is not permitted.

The strata council in the Okanagan, however, alleges it was misled by an investment adviser.

“Our strata council has done something rather stupid,” wrote one strata member to Gioventu’s Condo Smarts column, published every Sunday in The Province.

“In 2005, our treasurer invited a broker from an investment firm to talk to our council about managing reserve funds. We took advantage of the advice and decided to place our contingency funds with the investment broker to gain the highest yield possible. Unbeknown to us, the funds were extremely risky.”

While the strata earned more than 10 per cent in 2006, the portfolio is now worth half its value, said the strata member.

Friday means the weekend is almost here, and that means it’s time for our end of the week news round-up and open topic discussion.  Here are a few stories I’ve noticed this week:

-Work comes to a halt at Jameson House
-Construction halted on Victoria Hill Building
-Municipalities urged to increase residential property tax vs. business tax
-Vancouver west houses: 968 listings, 12 days, zero sales
-Builder Association: The Vancouver property market will bounce back
-Condo Wiki: ‘expert’ Quote-tracker
-BC #1 in job losses since September
-Vancouver fund’s cash reserves ‘tapped out’
-When politicians treat voters like bumpkins
-Entire city council agrees to lie-detector test on $100 olympic leak
-Ottawa boosts mortgage buy-out by $50 billion
-Canada to consider selling national assets
-US Foreclosures up 25% year over year

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

It looks like the ‘correction’ phase of the Canadian real estate market cycle is picking up steam and Vancouver is strapped to the front on the locomotive.  Homeowners who relied on property values to boost their net worth are discovering that they’re suddenly poorer than they were a year ago:

When Pat Webb moved to Vancouver a year ago, she didn’t think twice about buying a condo in tony Kitsilano, among the hottest neighbourhoods in the city’s booming real estate market.

But in August, the 70-year-old retiree decided to move back to the United States. She had sensed Vancouver’s market was slowing, but a neighbour’s condo had sold a week earlier, so she too tried to sell.

She listed her one-bedroom, 705-square-foot condo for the price she paid – $509,000 – on Aug. 30. Ms. Webb has since reduced that to $485,000. It still hasn’t sold.

And condo owners in downtown Vancouver are predicted to suffer the most in coming years:

Condo owners in downtown Vancouver are at greater risk for price depreciation than single-family homeowners in the suburbs, a BMO Capital Markets economic analyst said Tuesday.

“Condo prices could drop faster because of overbuilding,” Robert Kavcic said in an interview. “When you have excess in the market, that pushes prices down.”

A BMO survey released Tuesday suggested B.C.’s housing starts have to fall by about 25 per cent from current levels to return the market to sustainable numbers.

For those wondering why people would hold on to an investment that by all measures is set to decline for years, you can blame denial, which can be an incredibly strong force.  For an example of denial at work just look to the US where prices have been falling for two years and realtors still struggle to get the message to owners who believe that their property is different and is actually gaining value.