Vancouver Condo Info

Friday has arrived, lets open up the weekend open topic discussion and news round-up.  Here are a few stories I’ve noticed this week:

-Olympic Security costs quintiple to $1 billion
-“Buy American” rule in stimulus package worries Harper
-Good time to bet on the loonie?
-IMF skeptical about Canadian governments rosy forecast
-Deep, long recession predicted by CME CEO
-A 42% mortgage rate on failed MacKenzie mill?
-Record number getting jobless benefits in US
-US New home sales fall to record low
-Hyundai offers job loss assurance on new cars

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 into your comment will automatically create a clickable hot-link. Linking to more than one external link within a single comment may cause your submission to get held up in the spam filter.

From the CBC:  Budget backs mortgage, vehicle lenders.

The 2009 federal budget extends a multibillion-dollar measure intended to make it easier for consumers to find a loan for the biggest purchase they will ever make — a house.

A second measure is aimed at making it easier to buy cars, trucks and equipment.

But neither plan will put money directly into the hands of buyers: both will operate by having the government purchase loans from financial institutions, making it easier for lenders to make new loans.

The measures are aimed at addressing the credit crunch, the reluctance of lenders in some markets to make loans amid the current financial turmoil.

Discuss.

Demographia has just released their 5th annual international housing affordability survey, and it puts Vancouver at the top of the list of ‘severely unaffordable‘ markets on the continent, and the 4th most ‘severely unaffordable’ market of all cities surveyed.  Here’s a PDF of their report, and here are some choice excerpts:

In recent decades, the Median Multiple has been remarkably similar among the nations surveyed,  with median house prices being generally 3.0 or less times median household incomes. This historic  affordability relationship continues in many housing markets of the United States and Canada.  However, the Median Multiple has escalated sharply in Australia, Ireland, New Zealand and the  United Kingdom and in some markets of Canada and the United States.
…..

…many of these severely unaffordable markets have experienced steep price  declines in the last year. Among the major markets, Vancouver is the least affordable, with a Median Multiple of 8.3, followed by Sydney (8.3), San Francisco (8.0), San Jose (7.2), Adelaide (7.1),  Melbourne (7.1) New York (7.0) and London (6.9).

This global recession seems to be picking up steam and getting harder to ignore.  It’s become normal to hear about a new round of layoffs each day.  Today alone 70,000 jobs have been cut across the US and Europe.

Among the largest cuts announced Monday:

+ Drugmaker Pfizer Inc, which is acquiring rival Wyeth, plans to cut 15% of the companies’ combined 130,000 workers – about 19,500 jobs.

+ Caterpillar Inc, the world’s largest maker of heavy equipment, plans to lay off 17,000 workers and buy out 2,500 others to cut costs.

+ U.S. mobile phone service provider Sprint Nextel Corp plans to reduce staff by 8,000, or 14% of its work force.

+ Home Depot Inc, the world’s largest home improvement retailer, said it would eliminate 7,000 jobs, or 2% of its work force, as it closes its Expo home design unit.

+ Amsterdam-based banking and insurance group ING said it plans to cut 7,000 jobs to save US$1.3-billion (1 billion euros) in 2009.

+ Dutch conglomerate Philips Electronics will cut 6,000 jobs after reporting its first loss since 2003.

+ Corus, Europe’s No. 2 steelmaker, said it would cut 3,500 jobs worldwide, 8% of its work force.

+ Spanish steel producer Acerinox said it may temporarily lay off workers at its Spanish factory, which employs 2,500 people, if demand does not improve.

Now if we can only create enough jobs here in BC, we could draw the unemployed from around the globe and drive condo prices through the roof!

I haven’t heard much about that old ‘decoupling’ theory lately, have you?

It’s Friday and if you’ve been here before you know what that means, it’s time for our end of the week news round up post and open topic weekend discussion.  Here are a few stories I’ve noticed lately:

STORMCLOUDS:

-Developer sues condo buyers who try to back out of contracts
-Canadian retail sales see biggest drop since 1998
-Ottawa to run huge deficits for next two years
-US jobless claims hit 26 year high
-Is this a recession or another great depression?

RAINBOWS!

-Optomistic central bank expects speedy rebound
-Vanoc believes unsold olympic village condos will be snapped up
-Why a buyers market is a first timers market
-CREA: Your home may be worth more than you thought!

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

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 into your comment will automatically create a clickable hot-link. Linking to more than one external link within a single comment may cause your submission to get held up in the spam filter.

According to CBC radio news a new trend is emerging in the Vancouver real estate market: Developers are suing condo buyers who try to get out of their pre-sales contract now that their unit is worth less than they signed up for.  CBC radio reports that over the last month local developer Amacon has sued 7 buyers for their deposit plus ‘damages’ which equal the difference between what they agreed to pay and the current market value.

Before the market peaked local economist touted our lack of ‘sub-prime’ as proof our housing market was different from crashing US markets.  Our lenders didn’t hand out loans to people without a proven ability to pay.  Unfortunately what we did have while the market was booming was a mania for condo presales.  Presales were supposed to be a ticket to easy money.  Anyone could take a credit card advance for the deposit and sign up for a presales contract, planning to flip the assignment before the building was even completed.

Unfortunately for speculators this game of financial hot potato came to a rather shocking end over the last half-year as real estate prices in the lower mainland began to drop rapidly.  You can now find many listings on craigslist for people all over the lower mainland who will give up their deposit if you agree to take over their contract.

We have almost 4000 new condo units due to be completed in the downtown core alone this year, and buyers are hard to find.  So now the question is how many people are out there that either don’t want to, or are unable to get financing to complete their presales purchase.  Are condo presales the local version of the subprime problem, driving some into bankruptcy and contributing to supply in a crashing market?

There are a lot of quotes in the media these days from local developers and politicians with variations on the theme ‘nobody saw the Vancouver housing bust coming‘.  This is surprising when you consider how many blogs we have out there dedicated to the concept that Vancouver house prices got way out of hand and are in for the mother of all corrections.

But lets not blame the experts too much, perhaps the extent of their research was a Google search for the term ‘Vancouver house prices‘ which yields this reassuring CBC article as the first result: Vancouver house prices expected to rise 9 percent in 2008.  If you’re expecting a 9 percent increase in house prices, I suppose a 15% drop from market peak could really catch you off guard.

So this is my ‘told you so‘ moment.  Not that the real estate market would see a sharp correction.  Nope, I certainly wasn’t the only one to predict that. Most of the long-time readers here at vancouvercondo.info made the same prediction, as did many other local bloggers, so that’s no unique feat.  I do believe however, that I was the only one to correctly call the Vancouver Bubble Blog Bubble at the beginning of 2007.  Here’s the updated version of that chart along with my count of local bubble blogs:

1. March 2005: Vancouver Housing Blog – the original, closed in Feb 2007
2. Nov 2005: Rob Chipmans – gets a half point for being moderately bearish
3. June 2006: VancouverCondo.Info – Hey that’s us right here!
4. Oct 2006: Vancouver Unrealestate – Looks to be closing down January 2009
5. Dec 2006: BC Housing -Uncertainbuyer closed down end of 2008
6. Jan 2007: Financial Planning and Personal Sanity -now Housing Analysis
7. March 2007: Condohype – Still disowning the lifestyle
8. Dec 2007: North Vancouver Homes – stats and housing market data
9. Feb 2008: Vancouver Real Estate Anecdote Archive – just as the title says
10. Jan 2008: Fishy Real Estate – FishRE closed down the blog in 2008 Q3
11. Feb 2008: Coco News – shared economic news stories, closed 2008 Q3
12. Feb 2008: Vancouver Housing Crash – last post September 2008

Have I missed your favorite Vancouver housing market blog?  Add it to the Wiki!

Our good huckstersfriends at Royal Lepage have issued a press release titled, “Correction, not crash for Canadian real estate market in 2009; Average house prices forecast to fall 3.0 per cent”

You can find the reassuring news here.

Up next, why Joe the Used Car Salesman says it’s a great time to buy a car.

-ReductiMat

The end of the week has arrived and that means it’s time to round up the news and start up our open topic week-end discussion thread.  Here are a few stories I’ve noticed lately to kick things off:

-No Canadian real estate crash? Who are they kidding?
-Canadian housing sales fell 17% in 2008
-Calgary price drops lead nation, volume declines trail only Vancouver
-Top city official in charge of Olympic Village resigns
-Olympic village scandal grows and grows
-Premier rushes to give city power to borrow $458 million
-Gary Mason, if I bought at Millenium Water can I get out of the deal?
-“Rewarding failure” may not be the best course of action
-A bankrupt Nortel would still support the games
-BC forecast to lose more than 42,000 jobs in 2009
-Office vacancies on the rise
-US foreclosures up 81% in 2008

Quick! Someone find a forecast for a strong spring recovery in the Vancouver real estate market, we need some sunshine and rainbows to counteract all this doom n’ gloom!

So what are you seeing out there?  Post your news links, thoughts 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 into your comment will automatically create a clickable hot-link. Linking to more than one external link within a single comment may cause your submission to get held up in the spam filter.  Operation of this website under the influence of kool-aid is not recommended.

Over the last week or two on this site readers A1 and Macchiato have posted rumors that a local developer was getting ready to announce big price cuts to clear out unsold condo units..  According to the CBC it looks like those rumors may be coming true.  Developer Onni has 375 condo’s that aren’t selling and the CBC is reporting that they will be liquidating these units in a ‘dutch auction’, which could potentially set a new low price point for the thousands of condo units still to be completed over the next couple of years.

The CBC is reporting that Onni will be holding a media event on Thursday to announce details.  If you find a link to more information on this story, please post it in the comments section.

update: Lilypad posted a link to this PDF advertising the sale, it does not appear to be a ‘dutch auction’ as CBC radio reported, but the PDF does not include a lot of detail.  It does include the following as part of a FAQ:

Is it auction??
No. It is a bulk purchase. There is no extra contract work of any kind required.

What are the homes being discounted??
Aggressive speculators lined up overnight at launches to scoop up prime units and then could not flip them before completion. Many could not afford to complete and lost 15% deposits. Much of the available inventory is made up of these homes. They are 375 completed, fully warranted, brand new, never occupied homes featuring the latest finishings and amenities.

Where??
Spread over seven projects located across the Lower Mainland.

They also include the following comments on prices:

How inexpensive will they be??
These homes will sell under assessed values, current comparables and independent market appraisals at prices that get buyers very, very excited.

Why is the developer selling for such low prices??
These homes are standing inventory and costing the developer strata fees, property taxes, capital carrying cost and other costs. Also, many of these homes have been partially paid for by the abandoned deposits of speculators.