Friday Free-for-all!
Friday is here once again, lets do our end of the week news and link round up. Here’s a few to get the conversation started:
-Vancouver Condo Wiki - supply updates!
-In unstable economy, renovate (don’t buy)
-Vancouver RE boom is over, more declines ahead.
-Vancouver guarantees $100 million for Olympic Village
-When should you start marketing your 2010 rental?
-City gives up 4.3 million in development fees
-Nanaimo hotel becomes election issue
-RRSP participation rates low
-Toronto real estate falls below 2006 levels
-Canadian building permits rise in September
-London Olympic village needs £1 billion bail out.
-Real Estate Downfall (youtube)
So what are you seeing out there? Post your thoughts, 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!
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November 6th, 2008 at 11:39 pm
November 6th, 2008 at 11:39 pm
Things look absolutely horrific. The annualized price drops are just absolutely shocking. And people are in denial about this… I heard people today talking about how our economy will remain strong. What is going to drive the economy? Infrastructure spending? Only if we need really need it, and even then it won’t add a ton of jobs. Our forestry industry? Of course not. Residential and commercial construction? Not a chance. Increased trade? No way.
What’s going to actually drive our economy now?
November 6th, 2008 at 11:45 pm
Can anyone else actually find the October stats package online? Seems to be much harder to find than usual. I found it yesterday and now that site is gone. But I have a copy saved on my HD for record…
November 6th, 2008 at 11:45 pm
November 6th, 2008 at 11:46 pm
It may sound corny, but you and I drive the economy by being more productive and innovating.
November 6th, 2008 at 11:48 pm
November 7th, 2008 at 12:27 am
It’s the speculators, of course, who have plenty to fear from an RE price decline. They are the ones who have actually bet their economic well-being on RE prices. As well prospective buyers get scared away when prices start falling.
November 7th, 2008 at 1:37 am
Don’t forget that next week, we will have a 40% liquidation sale on all townhouses on aisle 4.
Thank you for shopping at Kmart!
November 7th, 2008 at 2:51 am
That’s the first part of the total-collapse-story…
The second part of the story is the amount of Vancouver condo units (and SFH’s) that are owned by non-resident investors. Some of those non-resident speculators will need to dump their Vancouver investments to cover investment losses elsewhere… it’s a given… and when they do dump them, they will sell them for whatever price they will bear in a quick sale.
Oh baby, it’s gonna be a messy market as it comes crashing down. I can’t hardly wait.
November 7th, 2008 at 4:57 am
This applies to resident speculators just as much as non-residents really. They’re just as likely to be exposed to investment or income losses. If Joe the Plumber gets his work hours cut due to a building slump, that cash flow negative condo is going to have to go.
November 7th, 2008 at 6:26 am
I really hate cheeze whiz..
November 7th, 2008 at 6:39 am
That may be true, but how many non-resident speculators are there?
NOT MANY
The international investor myth may have slightly more substance than Ogopogo, but not much more.
The RE whores and pimps make vague reference to the illusive international specuvestors, but they never give out hard numbers to support the claim.
The non resident speculator is a lie perpetuated by every local real estate board in North America.
Remember these rich off shore investors were supposed to have deep pockets who pay cash,so they aren’t affected by the credit crunch.
So where have they all gone?
Don’t they know we are running out of land?
November 7th, 2008 at 7:04 am
A combination of the high CAD which gave them a golden opportunity to cash out and resistance to the “best place on earth” BC koolaid. They know the jig was up back home and knew it would soon be up here.
November 7th, 2008 at 7:59 am
http://tinyurl.com/6ag93n
For speculative investors, however, the drop in prices is lethal.
to add to the drumbeat……
November 7th, 2008 at 8:29 am
http://www.canada.com/theprovi.....496be6e721
Jobs numbers out today,here’s some articles on it:
BC loses 8,300 jobs in October, Canada adds 9,500 and defies expectations. Unemployment rate at 6.2% in Canada.
http://www.canada.com/vancouve.....f1620cbb9b
From the article above: “Also Friday, the U.S. Labor Department said the country lost 240,000 jobs in October - far greater than expected - and the unemployment rate jumped to 6.5 per cent from 6.1 per cent the previous month. That’s the highest rate since March 1994.”
US has 1.2M now unemployed. The job losses are starting to mount, while gaining momentum. A sure sign of a recession. Ford announced Q3 loss today of $129M and said they will be cutting North American workforce by 10%.
http://money.cnn.com/2008/11/0.....2008110709
November 7th, 2008 at 9:32 am
According to her calculations, it will take about 17 months for the market to absorb the high-rise condo units under construction. That is close to double the nine-month equivalent figure from this time last year. More to the point, however, the 17-month time frame roughly coincides with the time it will take to actually build those high-rises. If Ms. Podmore Russell is correct, the industry will have avoided overshooting the market and creating a destabilizing glut.
Holy #### 17 months is a lot! Isn’t a balanced market 6 months?
She also ignores the fact that there’s already 15 months of inventory out there, so wouldn’t that make her prediction 32 months?
November 7th, 2008 at 9:39 am
Concert Properties Podmores(top management)
so there is some bias in the “don’t worry be happy” scenario…..
November 7th, 2008 at 10:09 am
What is the BIG Picture?
If one connects the dots, it appears Surrey has a master plan to create a downtown core which also involves the possible moving of Surrey City Hall to the same area.
Perhaps they are using this as a means to gentrify the area and displace the less attractive elements and facets.
Of course, they will try and use the same old pablum -mantra of building hi -density adjacent to SkyTrain. I think Surrey is rather misguided, unless the aim is to force drug dealers to ” go - green ” and use SkyTrain instead of armour - plated Hummers. I think Surrey’s zeal to build hi-rises simply exacerbates the problem…it is more political than practical, hence another inevitable mess in the making.
If and when the Evergreen line gets going , the same formula for failure will be set in motion.
SkyTrain has a limit to its capacity and perceived efficiency, it could end up as gridlocked as a highway, but SkyTrain has far less options to remedy. This will then start to have a bearing on the hi -rise condo market.
November 7th, 2008 at 10:29 am
In my view, if you own any residential property and do NOT live in it, that is “speculation”…it is surplus to your basic needs. You may call it an ” investment “(short term or long term ), “future retirement home “, hedge against inflation, whatever .
There is nothing wrong with that, it is “legal” and perhaps a prudent decision for the given “speculator” .
However, if you relied on this speculation investment for your overall portfolio….in all likelihood you are seeing a lot of red ink.
Living close to a City Center littered with Hi - Rises, (and with daylight savings just having kicked in, the number of dark/UN-lit hi rise units is enormous) . My guess is the average is 8 UNlit condos - for 1 condo unit with Lights on. I was in False Creek /Yaletown area twice in one week recently…same thing.
It’s not just a matter of oversupply, but ” once bitten twice shy” may kick in aka consumer confidence. If someone came up to me with a desperate look and offered me a condo at 50 % off , I’d say thanks but no thanks… who wants to buy during free-fall with an unknown bottom ? (I am not even talking about the crap that is built full of deficiences that is often the norm in boom times, of which I am sure we will see soon, but that’s another story ).
November 7th, 2008 at 10:31 am
November 7th, 2008 at 10:34 am
November 7th, 2008 at 10:45 am
“Speculators have entirely left the market,” says Jennifer Podmore Russell
Not true at all. There are still many speculators left in the market. They’ve just moved from the buy side to the sell side. Like this Flagship flipper for instance, now facing a $100k loss…
http://vancouver.en.craigslist.....32046.html
November 7th, 2008 at 10:51 am
November 7th, 2008 at 10:52 am
November 7th, 2008 at 10:59 am
1.ignorant
2.illiterate fool
Probably works at Canadian Tire and has six assignments
November 7th, 2008 at 10:59 am
Hey Anonymous, did you see the link I posted?
http://vancouver.en.craigslist.....32046.html
Waterfront bought for $798,000 two years ago, now going for 13% off (or best offer).
p.s. I own property, but that does not alter my views of the current real estate market.
November 7th, 2008 at 11:00 am
I agree re: Berezan and their so-called expertise. Local Gov’ts love condo’s much quicker cash flow for all parties concerned. …commercial is more a long term, less demand.
Berezan is perhaps simply promoting…trolling the market. If he is planning on building a 70 storey building, that’s a BC record is it not? …..are they trying to create a Manhattan ?.
However, SkyTrain still has limited capacity, all things do , and eventually a tipping point occurs where even their own ridership pursues other options. It is a transit system most of the world has refused to purchase, it’s purchase for B.C. was mostly political, it has been pimped as a pork barrel project by various Gov’ts,… Developers piggybacked and rode the SkyTrain “gravy train” via OCP pimping, ….’nuff said.
November 7th, 2008 at 11:12 am
We are not talking about being myopic and focussing on niche’s. We are talking about the overall condo market.
November 7th, 2008 at 11:20 am
Evidently the guy from the CMHC was predicting a 10% fall in prices for Vancouver in 2009. He identified the various reasons prices go up and down (population, rising incomes, etc…) and observed that the primary reason prices were dropping now is because they simply got too high.
He wouldn’t speculate when a bottom would occur. He pointed out that the past two slumps (1981 and the 90’s) both had different slopes and trends on the graph, and observed that predicting a bottom based on past trends wasn’t possible.
He also observed the somewhat surprising trend that prices were dropping faster in West Vancouver and the westside, instead of the suburbs, which is the reverse of the trend seen in California, Florida, etc…
When pressed further about the more general question “when would be a good time to buy” he said that he was a renter himself, and he certainly wasn’t buying any time soon.
Very interesting tidbit from the guy from BMO. Apparently they are demanding 35-40% down payments now, even for people with acceptable income and good credit. No-one in the group asked for a further explanation of this, whether it was a simple tightening of lending capital, or more an attempt to rachet up the quality of mortgages on their books.
All in all, it sounded like the CMHC guy was quite frank and open about the current state of the market, and quite knowledgable about the characteristics of the bubble in the states. I would have liked the chance to bounce a couple questions off him.
November 7th, 2008 at 11:21 am
as of 10:20 AM
“pent up supply” anybody?
November 7th, 2008 at 11:26 am
http://www.canada.com/vancouve.....f1620cbb9b
November 7th, 2008 at 11:29 am
Another friend bought two suvs and a boat after he SOLD his condo at a PROFIT to a rich asian. It’s the Obama factor at work here folks. As soon as you have hope you get spare change.
November 7th, 2008 at 11:29 am
Way way way overpriced and nice to see reality kick in and a good 20-30% drop in coming months.
No Canada, you are not immune to the global economic crisis.
November 7th, 2008 at 11:34 am
Ah krrrrrish/nobody/brownstreak…..
Why aren’t I surprised that you are part of a union. It makes perfect sense, really. I imagine you bitterly resent paying union dues, don’t you? Yet the union is the only thing standing between you and Wal-mart type wages.
OF COURSE you’re in a union! I mean who on God’s earth would hire you? Your English is appalling. I know preschoolers who can write better then you can. I think most people here would agree that you couldn’t possibly hold down a white collar job for longer then.. 15 minutes tops.
And of course you dream of “capitalism” and being the next Donald Trump. Of course you’re a cheerleader for “the free market”. Your betters filled your head with silly notions of getting rich; they appealed to your greed and knew your stupidity would blind you. They knew how easy it would be to brainwash you, so they bought a little advertising time on the radio and put up some billboards. They knew you’re far too stupid, venal and greedy to question the possibility of getting rich not through brains and work, but through laziness and greed.
And now they have your hard work, and your money. They sold you a shitty box in Tranny Towers at a wildly inflated price. That means they control you now. You don’t have to resources to educate yourself or to go out and change your career or start your own business. You’re going to be working in that warehouse for the rest of your life…. for whatever shitty wage they can push on you.
Your family will rarely see you, as you’ll have to work double shifts to make ends meet. Your wages won’t go to them.
Those will go to:
- The condo developer, for that shitty little box they sold you
- Bob Rennie, for figuring out how to sucker you through your own greed and stupidity
- the City of Vancouver , for convincing you that you live in “The Best Place on Earth”
- The mortgage broker, for arranging the abolute highest payments you can possibly make without literally starving you to death.
God, I see it all so clearly now and it makes me laugh. You poor sucker, you dumbest of fucks. You and how many other blue - collar chumps have willingly …. EAGERLY and literally sold your working lives to your economic betters because you naively thought they were on your side. Meanwhile you bitterly resent the unions who, while imperfect, are the only ones who ever bothered to look out for you.
I want to thank you dude, and I mean that sincerely at this moment. I’ve had a tough go of it recently but thanks to you, I’m reminded of the one gift nobody can take from me: My intelligence. I was smart enough not to get caught up in foolish and greedy dreams of unearned wealth.
Thanks to my intelligence I saved as much money as I could, and invested it conservatively. That left me with the resources I needed to change careers when my own industry began to collapse and last night after months of puzzling it out, I came up with a business model that will work, is flexible, can be started with almost no capital and has an excellent change of succeeding.
Thank you Krrish / Nobody. I believe you have fulfilled your life’s one great purpose: You have served as a warning to others.
November 7th, 2008 at 11:41 am
Yes, I think 70 stories would be a record.
I remember somebody telling me the SkyTrain could double capacity easily with the current technology. That’s still a lot of population growth available.
November 7th, 2008 at 11:51 am
This is my latest Price Reduced Sales to Assessment Comparison. Interestingly, compared to benchmark drops these have come very close. September benchmark -1.6%, AS/SP -1.9%. October benchmark -4.4%, AS/SP -4.6%. Coincidence? Maybe. Guess we’ll see how this month compares.
Keep in mind that the only sales I’m keeping track of are those that have been previously reduced, and even then I’m sure I don’t manage to capture all of them - but I try to get at least 15 for any given day.
November 7th, 2008 at 11:57 am
November 7th, 2008 at 12:14 pm
November 7th, 2008 at 12:25 pm
In my view, if you own any residential property and do NOT live in it, that is “speculation”
That’s wrong.
Speculation means buying an asset because you are expecting a capital gain (note the common root of the word). If you are buying an asset for the income yielded, you are not a speculator. What that means in RE terms is positive cash flow.
Cash flow positive investors, like all true investors, perform a useful service by providing capital and taking on risk from renters, who in return pay more than the cost of capital. They also keep people in the construction business employed when demand from owner-occupiers drops.
Anyone who buys RE expecting to sell it for more than they paid for it is a speculator. And yes, that includes owner-occupiers.
November 7th, 2008 at 12:28 pm
LOL. I heard this fallacy many times about areas in the US —which have all tanked since. Yet another version of the “It can’t happen here” myth, being trotted out by myopic dunces who used to say it can’t happen at all.
November 7th, 2008 at 12:31 pm
Just because everyone laughs at you and thinks you’re an idiot doesn’t make it okay to accuse me of writing something that was obviously written by you.
If you don’t work in a unionised capitalist warhouse, or whatever it was you said yesterday, then where do you work?
November 7th, 2008 at 12:50 pm
email: jennifer@mpcintelligence.ca
” Market Intelligence Subscriptions
British Columbia
Vancouver Lower Mainland: $ 5,950.00
BC Interior: $ 4,250.00
Greater Victoria: $ 2,350.00
BC Province (includes all submarkets): $ 10,500.00″
http://www.thetrac.ca/about
November 7th, 2008 at 12:51 pm
“Hey Anonymous, did you see the link I posted?
http://vancouver.en.craigslist…..32046.html
Waterfront bought for $798,000 two years ago, now going for 13% off (or best offer).”
We have been following that “Platinum” unit for 3-4 months, with its Kayaks and bowling alleys LOL
I can only say one thing: If you are ’smart’ enough to buy a 1!, BEDROOM!, CONDO!, for EIGHT-HUNDRED-THOUSAND-DOLLARS!!!, bankruptcy is imminent.
“Resistance is futile!”
Best regards,
arit
November 7th, 2008 at 12:52 pm
http://www.concertproperties.c...../main8.htm
November 7th, 2008 at 12:55 pm
“He also observed the somewhat surprising trend that prices were dropping faster in West Vancouver and the westside, instead of the suburbs, which is the reverse of the trend seen in California, Florida, etc…”
I’ve noticed this as well, and going by the Fraser Valley Real estate stats and the Greater Vancouver area, the alarming trend is that this fact becomes more and more event as the days wear on. We have always said that we mirror the US and their decline, but there appears to be no explaination for this, as this seems to be the reverse of what is/was happening in the States.
I’m personally thinking that the “perceived” value for the homes in the valley is higher (McMansion’s with higher square footage)than for the tiny old Vancouver 1950’s box or condo.
I;m disappointed becayse I figured there would be the price drops out here, and so far we have not seen the same ones that Vancouver is experiencing…maybe the Valley is different?!
November 7th, 2008 at 1:08 pm
http://www.strangeloopnetworks.....biv949.pdf
“My passion — more from blood than osmosis from my dad [Real estate developer David Podmore] being in the industry — is that I love development.”
November 7th, 2008 at 1:23 pm
Founder and managing partner, MPC Intelligence
Age: 28
“She spent four years tracking real estate development and its associated trends with Colliers International before a conversation with a friend would provoke Podmore Russell into action.”
November 7th, 2008 at 1:36 pm
But there is an explanation, which is that the “subprime” and liar loans made to low-income buyers in the US were much less prevalent here. In other words low-income buyers found it harder to overextend themselves. And there was less speculation in the burbs because everyone knows rich people don’t want to live there.
On the other hand the West Side and West Van saw a huge wave of speculation, funded by God knows how many sources of hot money, on the idea that since these were the rich parts of town prices could never go down. Price/rent of some properties in these areas went past 400, while few in the valley hit 300. Well of course we all know that in the last few months a lot of hot money has gone “poof” and we can see the results.
November 7th, 2008 at 2:00 pm
I love this! Those are the exact areas I am tracking on my spreadsheet and they have totally been affected!
November 7th, 2008 at 2:01 pm
bs
Last Updated: Friday, November 7, 2008 | 2:14 PM ET Comments1Recommend3
CBC News
As construction of the Olympic oval nears completion, B.C.’s unemployment rate remains a full percentage point below the national average, despite rising half a percentage point in September. (Rafal Gerszak/Canadian Press)
Unemployment in B.C. has risen to its highest level in almost two years, according to fi Statistics Canada figures released Friday.
The numbers show 8,300 jobs disappeared in B.C. last month, pushing the jobless rate up half a percentage point to 5.1 per cent, an increase from 4.6 per cent in September.
But the province’s unemployment rate was more than a full percentage point lower than the national average, which climbed one-tenth of a point to 6.2 per cent.
November 7th, 2008 at 2:34 pm
So ignore the stress, disruption, and potentially devastating effect on all the individuals and families involved but rejoice in the fact this might have some effect on prices. Utterly charming.
Anyway, to the poster above - I have a number of friends (resident in BC and other provinces) who own in Coal Harbour and False Creek and several have units on the market. Not a sniff at the prices they are asking apparently so many intend to take them off the market as they have no need to sell. Several others, however, are hanging on for dear life as there are insufficient local renters to cover costs. So Coal Harbour is definitely in play in all this.
That said - many of the unoccupied units are not intended to be rented so unlit units are not a reliable indicator of anything. Many offshore owners buy to hold. Cash flow is nice but not necessary and some prefer not to earn income in Canada. Whatever the prices are (or perhaps were is more apt!) in Vancouver, they looked fairly attractive as against NY, London or Paris psf. Notwithstanding the surprising number of people on here who seem to revel in denigrating the city, there are many, many people around the world who view it as a pretty special place to own a property. I am one of them.
Cheers all.
November 7th, 2008 at 2:40 pm
yes. we’re all vewy vewy bad people. does that mean we have to go to bed without any supper?
you’re such a wanker.
November 7th, 2008 at 2:45 pm
Look at this quote from todays NY Times
“They are the most aggressive buyers in the market right now,” said Kevin McBride, an agent with Atlanta Fine Homes Sotheby’s International in Atlanta. In international hubs like Atlanta, overseas clients now account for anywhere from 10 to 30 percent of sales, industry experts say.”
An international hub in Atlanta?
November 7th, 2008 at 2:55 pm
Notwithstanding the surprising number of people on here who seem to revel in denigrating the city, there are many, many people around the world who view it as a pretty special place to own a property. I am one of them.
Someone call the Poison Control Center we have a Kool-Aid OD victim here!
November 7th, 2008 at 3:14 pm
could it also be for the case of vancouver that newer properties are located in the burbs. A lot of properties in Vancouver proper are older then my grandparents.
Also the burbs have a bigger pool of recent buyers so the prices will “stick” longer. A theory anyways.
November 7th, 2008 at 3:32 pm
Blogger Dave said…
Patriotz, thanks for clarifying the concept in the formula for Drachen. It looks like his ‘155 IQ’ was on autopilot.
Oh no, Dave does not make personal attacks! What an ass Dave is.
November 7th, 2008 at 3:33 pm
We’re not cheering job losses. Part of analyzing this market involves discussing a number of areas including job losses. Any one of us may be affected by a job loss, we would be naive to think otherwise. Just like we think it is equally naive to ignore these facts (nudge, nudge).
I’d rather anticipate what’s coming down the road through my windshield, not my rearview. Too bad if you don’t like the current road we’re on, get off at the next exit.
November 7th, 2008 at 3:50 pm
You seem to understand that the current collapse in the Vancouver market was unavoidable, so why do you argue that discussing ALL of the local economic factors that affect a housing market is ‘cheering on’ the misery of others? How could unemployment rates NOT fall when the boom ceases? Everyone here seems to have been arguing that you should prepare for times like these, and this proves them right.
If there’s a bit too much schadenfreude in some comments, perhaps you should think about how a housing bubble negatively affects those that don’t partake in it as well as those that foolishly do.
November 7th, 2008 at 3:52 pm
http://www.reportonbusiness.co.....7.wagf1107
November 7th, 2008 at 4:14 pm