Bloomberg on Vancouver housing slump

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?

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Octagonian
Octagonian
11 years ago

Even as the probability that Vancouver housing sinks at least 50% peak to valley, I have an anecdote, a silver lining of sorts, that refutes conventional negative expectation. The going wisdom is, that as homes rapidly depreciate, the "wealth effect" is lost and these homedebtors stop buying consumer goods, thus hurting the local retail economy. But in my experience — four friends with expensive homes in West Van, now down 20 – 25 per cent — negative equity won't affect their spending because all four couples were maxed out on their resources to even be in those homes to begin with; they have not been spending like good little profligate consumers since Day One. So where is the loss? I suspect Vancouverites as a group have been so overly invested in their inflated homes that they have not been big… Read more »

anonymous
anonymous
11 years ago

#131 – seeing the price per square foot drop is more likely a reflection of the mix of sales changing (favoring cheap small units over those missing west side homes). I believe Maggie's blog had a good breakdown of the changing distribution of closures (at least downtown):

http://www.vancouverreflections.com/2008/10/21/fi

I'm not saying it isn't going down, but I have a hard time believing it's falling that fast.

jesse
jesse
11 years ago

Here's a sneak peak at a story you might be seeing in the next few weeks: a friend of mine who rents in Spectrum 4 told me one person rented close to 30 suites in the building and sublet them. He pocketed 2 months of sublet rent, not paying rent himself of course, before skipping town.

If the story is true, let's hope the MSM picks it up. Sounds like a great leader. Remember: you heard it at VCI first.

patriotz
patriotz
11 years ago

LOL. Well said, except that Mish is not a lunatic gold bug.

Well he is actually, but he has still been right about a lot of other things.

That's one reason I read his blog actually. If someone with such a different macro perspective from me agrees with me on things like RE we must both be right. 🙂

BBY
BBY
11 years ago

PaulB's latest stats for SFH have the median price less than $600K for the last 4 days. Three days are in the low $500K range. Here's the numbers from the last 5 days: Nov 20 $538,500 Nov 19 $510,000 Nov 18 $536,000 Nov 17 $585,000 Nov 14 $785,000 Admittedly, low sales volume makes analysis difficult, but the trend is showing. A month ago a sub-$600K day was rare. Three months ago a sub-$700K day was rare, and sub-$600K never occurred. When do we hit our first sub-$500K day? These are the prices that are selling now. Only a few $M places sell to the uber-rich. And there are very, very few of those. And they're not gonna buy in East Van. It's gotta be the most difficult and painful thing for the east van flipper to realize this. The realtor.ca… Read more »

Keeping an Eye on Th
11 years ago

GTA home resales crash in November

Toronto has its own Maggie

http://www.thestar.com/Business/article/540073

"Toronto Real Estate Board president Maureen O'Neill."

"I think we're into a real consumer confidence problem. All the economic fundamentals are sound, but people are watching CNN and having a wait-and-see attitude. When they're listening to all the bad press they're bound to, we have kind of a collective herd mentality.

"People will start to buy again, and we'll see the numbers go back up."

Yes, everything would be just fine, if the media stopped reporting the bad news.

Alexcanuck
Alexcanuck
11 years ago

Re: 124 lunatic gold bug blog

LOL. Well said, except that Mish is not a lunatic gold bug. Mish called this deflation/meltdown/crash/whatever you call it very, very well. Mish is well worth listening closely to, unlike our least favourite lunatic gold bug.

And Mish is NOT calling for gold to the mooon!

Tom Vu
Tom Vu
11 years ago

Bankruptcy houses in West Van mean it is good time for smart investors to buy. At least 20 good deals in just one small area. That means many good deals across GVRD in total. The early doer gets the worm!

Anonymous
Anonymous
11 years ago

Hee Hee

Now which one of you posted this on Craigslist? Abbygirl?

http://vancouver.en.craigslist.ca/reb/927875816.h

RennieWhereRU?
RennieWhereRU?
11 years ago

This is unreal. Hope Pete made all those bulls eat humble pie, if not i'm sure they've lost a shit load of their of their client's $$$$ to make up for it.

http://www.youtube.com/watch?v=2I0QN-FYkpw

MickeyFinn
MickeyFinn
11 years ago

I heard the rumor from a friend of mine who is a stockbroker… he is a serious and outspoken Vancouver real estate bear. He was asking me if I could verify.

There are a few people that I can inquire with but I suspect that even people "in the know" (e.g. the banks etc.) would not exactly be forthcoming with information.

Randallbard is a too
Randallbard is a too
11 years ago

Jesus H. Christ! Go away Randallbard you tool! This is a Van RE blog, not a lunatic gold bug blog. Go post your "money is worthless paper" crap over on Mish's site with the other tools!

patriotz
patriotz
11 years ago

Mish is young and doesn’t have the wisdom that… others who have been in the game for awhile have.

Mish is a boomer in his early 50's. He sometimes talks about the differences in consumption between when he was a kid in the 60's and now.

RennieWhereRU?
RennieWhereRU?
11 years ago

Please keep us posted Mickey Finn. Inevitable this would happen but didn't think so until early next year. Will ask around at work tomorrow.

Not a bad paper on debt deflation. Sorry about link. In a hurry.

http://www.debtdeflation.com/blogs/2008/11/20/has

Anonymous
Anonymous
11 years ago

What's the source of that rumor?

MickeyFinn
MickeyFinn
11 years ago

42 foreclosure listings in West Vancouver…

This is a rumor that I am trying to verify. Can anyone shed some light on this?

The story goes that various banks gave all the listings to one agent to not cause panic. None are offered at under 2M (for now).

Alex Curylo
11 years ago

@Randallbard: "it is becoming obvious that inflation is at our doorstep in a big way, a big Weimar way." Well, I don't think it's obvious, but I'll agree with you that it's one of the two things one should be actively preparing right now to be dealing with inside a decade, yes. The other alternative, which I deem more likely, is a Soviet-level regime of wage and price controls with the foreseeable consequence of the functioning economy being pushed underground. "the price of gold will rocket much faster than the nominal prices of stocks." If you figure that's a sure thing, you've got to explain why from 1980-2001 prices in general doubled but gold fell from $850 to $257. The only inflation hedge worse than gold was silver. I'm with the theory that gold is a hedge against and predictor… Read more »

Michael Randallbard
11 years ago

2 days ago it price was 915.00CAD. You can follow it on Kitco However you made my point. The Canadian dollar is losing purchasing power now but as it goes down the POG goes up. It coasts more CAD to buy an ounce of gold. In the US it costs less dollars. So if the CAD is going lower where would you rather be? Now what if…the USD tumbles and gold goes up in terms of USD AND the CAD doesn't rise at the same time? This is a distinct possibility in the weeks and months ahead. Still, show me one "commodity" or asset class that is outperforming gold right now besides the USD which generally means higher consumer prices coming. So the choice the way I see it is between holding USD and gold. This is a no brainer… Read more »

Anonymous
Anonymous
11 years ago

"There isn't a sector of the economy that won't feel the impacts but because we have diversified our economy, I think we won't see nearly the impacts that we might have expected. We're still expecting to see some small economic growth this year." Premier Gordie!! For god's sake where in the crap does this guy live? obviously not in BC we are the most un diversified economy in North America! Construction of Condos and Houses Baby that's all we are and all we'll ever be! You wanna see the worst bust in North America we're gonna put Las Vegas and Miami to shame they won't hold a candle to us! And how come the Premier lives somewhere else other than BC? He has too cause NOBODY is that damn stupid!

Anonymous
Anonymous
11 years ago

"BTW gold went up again today in CAD to 963.00/oz" And what would that be in YESTERDAYS Canadian dollar? It's irrelevant if gold goes up in CDN $ if the CDN dollar went down for cryin out loud!!!! ARRRRGGGGHHH!

Michael Randallbard
11 years ago

read on…..Mish is talking about deflation. So, tell me what kind of deflation is he talking about? Price deflation? Monetary deflation? It's a big debate and even the experts are stymied. I read Mish's blog all the time but he's not right all the time either. Mish is young and doesn't have the wisdom that say Jim Sinclair, Peter Schiff, Puru Saxena, Steve Saville, Maund, and others who have been in the game for awhile have. But I still read him, he's sharp. I don't think hes making an argument for monetary deflation because with the constant stream of past and future bailouts and rescues it is becoming obvious that inflation is at our doorstep in a big way, a big Weimar way. I don't think that price deflation we are seeing now has anything to do with fundamentals. We… Read more »

Greenhorn
11 years ago

Here is a link to the video on this house:

http://www.youtube.com/watch?v=V1ED4ohCZNk

Anonymous
Anonymous
11 years ago

Bearette: You are brave; and a much better person than I am. When in the same circumstance just recently, I said that the market meltdown is actually favourable for Real Estate. As I go on, and feed them the BS line that as investors become more disillusioned with the stock market they will gravitate toward real estate, and given that Vancouver is the most desirable place on earth, many of the rich Asians are set to buy in Vancouver, and now may be the last chance for some to get into the market before the world wide exposure we are about to get thanks to the great team at VANOC for bringing the world to us in 2010. Then I lay it on really thick….. With the rest of the world in chaos, interest rates will drop further, and that… Read more »

NO -LYMPICS
NO -LYMPICS
11 years ago

I was listening to Diane Francis on the radio.

She stated Warren Buffet in bottom feeding mode has no idea of how "low" low is going to be.