suddenly poorer, condo prices to fall furthest.
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.
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November 14th, 2008 at 7:44 am
Liars Poker:
Excellent Book !
That cemented my skepticism of how the system really works.
Shows how history repeats itself and much of the bubble’s genesis
November 14th, 2008 at 12:19 am
93: “Your neighbour must have overpaid.”
Ya think?
November 13th, 2008 at 10:21 pm
It is true that the provincial government will pay public servants to work for the Olympics, with their salaries not accounted for in the tally of the games’ cost.
GORDO, traitor to free enterprise.
November 13th, 2008 at 10:11 pm
The key to making money in real estate is to know how to locate bargain properties. Bargains are everywhere right now. To buy you have to be a doer, not a loser. Vote green for doer and red for loser!!!
November 13th, 2008 at 9:54 pm
I found this cool graph of the tsx from 1981 to 2007
http://www.cbc.ca/news/interactives/map-tsx/
November 13th, 2008 at 9:50 pm
Does anyone know if it is true that the Provincial Government will pay pablic servents to volunteer?
That’s an oxymoron. If they’re paid, they’re not volunteers.
It is true that the provincial government will pay public servants to work for the Olympics, with their salaries not accounted for in the tally of the games’ cost.
Thank you Gordo.
November 13th, 2008 at 9:37 pm
Speaking of Ponzi Schemes (and Ponzi sailed to America on the aptly named S.S. Vancouver, no sh*t)…
This excellent Michael Lewis (of Liar’s Poker fame) article will scare the hide off the craggiest stock market bear. Did me. We ain’t seen nothing yet. One of the best things I’ve read all year in my near ADD-level of house and stock bubble article browsing
http://www.portfolio.com/news-.....print=true
“But he couldn’t figure out exactly how the rating agencies justified turning BBB loans into AAA-rated bonds. “I didn’t understand how they were turning all this garbage into gold,” he says. He brought some of the bond people from Goldman Sachs, Lehman Brothers, and UBS over for a visit. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number. “They were just assuming home prices would keep going up,” Eisman says. ”
… ““You have to understand this,” he says. “This was the engine of doom.” Then he draws a picture of several towers of debt. The first tower is made of the original subprime loans that had been piled together. At the top of this tower is the AAA tranche, just below it the AA tranche, and so on down to the riskiest, the BBB tranche—the bonds Eisman had shorted. But Wall Street had used these BBB tranches—the worst of the worst—to build yet another tower of bonds: a “particularly egregious” C.D.O. The reason they did this was that the rating agencies, presented with the pile of bonds backed by dubious loans, would pronounce most of them AAA. These bonds could then be sold to investors—pension funds, insurance companies—who were allowed to invest only in highly rated securities. “I cannot f**king believe this is allowed—I must have said that a thousand times in the past two years,” Eisman says.
His dinner companion in Las Vegas ran a fund of about $15 billion and managed C.D.O.’s backed by the BBB tranche of a mortgage bond, or as Eisman puts it, “the equivalent of three levels of dog sh*t lower than the original bonds.” ”
November 13th, 2008 at 9:14 pm
Sorry Bdk at 105,i forgot to tell you that your answer is located in the handle please double check it.
November 13th, 2008 at 9:01 pm
“Larry Yatkowsky is an active realtor in Vancouver”
Damn another one to join one in Florida,Wrap up your office Yatokowsky or join your brother on the front page in florida. Your Job Yatokowsky your job is going to leave your soul hold it tight.
November 13th, 2008 at 8:58 pm
I never forget what my grandfather told me: There are two kind of people in life: the doer and the loser. Which one are you?
November 13th, 2008 at 8:35 pm
CZ,
Do you think this site will help you to sell your home?
In your own words The suffering unparalleled, cried out for Buyers.
Then Why did you list your home? Take it out off market or else your realtor will ask you to Reduce asking prices If there is no buyer what’s the point of price reduction? Simply take it off before you go also tell us why were you selling this home, WHYYYYYYYY?
November 13th, 2008 at 8:06 pm
See YatterMatters: no sell in 12 days of van west side:
http://www.yattermatters.com/
We regret to inform you.
In the past 12 days, the Vancouver west side detached real estate market died.
Say It Ain’t So
Each day, the blushing love for Vancouver’s west side real estate faded. A total of twelve days evidenced statistical blood lying on the floor of high priced glories past. The suffering unparalleled, cried out for Buyers.
November 13th, 2008 at 7:27 pm
Macronomics Says:
> “My next door neighbour has been trying to sell their condo for 4 months now. He bought it last year at $410K. He first listed it at $420K, then cut to $400K, then cut to $370K, then cut to $330K, and now it’s at $300K.”
> “Your neighbour must have overpaid.
> I don’t think we’ve hit 26.8% decline yet.
> Did they destroy the unit or something?”
This is a misunderstanding of how markets work. You are comparing price changes on an individual home vs aggregate price changes in the market as a whole. The two do not necessarily track that closely. You should not be surprised if individual homes or neighborhoods deviate significantly from the average or median numbers.
For example, even though the DOW is “only” down 35% for the year, some individual stocks within the DOW like GM are down over 75%. People who bought GM 12 months ago paid “fair market value” at the time, since it was not possible to buy those shares for less at that time.
Likewise, in the current housing market, many home prices in West Van and Van west have already dropped by more than 33%, even though the aggregate numbers for greater Vancouver are “only” down 9% YTD.
November 13th, 2008 at 7:07 pm
Sorry about the spelling, I am working with a old version of Wordperfect and the spelling file is corruptedsked.