July 2009: First timer frenzy!

The Vancouver Sun is spreading the news: July sales in the Lower Mainland lept up.  Prices in Vancouver and the Fraser Valley are still lower than they were a year ago, but a large number of first time buyers are said to be moving into the market:

Lured by the correction in home prices and low mortgage rates, first-timers are jumping into buy in numbers that are now rippling across the market as evidenced in July with record numbers of sales for the month in both Metro Vancouver and the Fraser Valley.

Proof that it’s different here?  Or are these people looking forward to the same disappointment many in the US are experiencing?

Tsur Somerville, a real estate expert in the Sauder School of Business at the University of B.C. said there are signs of more stability in the overall economy, but it is difficult to see the pace of sales continuing at such peak levels.

“This is a very, very high level, and [long-term mortgage] interest rates have already started creeping up,” Somerville, director of the centre for urban economics and real estate at the Sauder School of Business said.

“It’s a wonderful, positive statement about people’s outlook for where things are going,” he added, “but it’s hard to put together the set of circumstances where sales of this level are sustainable and persistent.”

Tsur also says he doesn’t expect prices to turn around and plunge without a substantial change in rates.

Full article in The Sun.

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Noz
Noz
11 years ago

This is hilarious! You Canadians are trying so so so hard to be like Americans…God knows why…I see a sh*tload of people being severely underwater in the coming years in BC….very sad. To use myself as anecdotal evidence, I've been looking for work up in BC for over a year and half now. I'm down in So Cal. I have a master's in engineer…work shouldn't be too hard to find relatively speaking at least to other professions right? Wrong. I make a quarter over 6 figures down here in LA….I'd be lucky to break 6 figures up in BC. How does that translate to buying a home in BC? Well..apparently BC homes are as expensive in most areas as in LA. Having seen what the job market is like there, how much people get paid there in BC, and how… Read more »

Franco
Franco
11 years ago

"Next year this time is going to be ugly",sort of like Zombie uttering,while the Van RE keeps its healthy appreciation,which is one of the supporting pillar of our Great and Beautiful British Columbia.We are tired of negative and resentful moaning from ppls from another Province.

Skye
11 years ago

Personally I'm glad the greater fools are rushing in and keeping the market propped up. If there was a real correction before the Olympics, there's a slim chance the visitors might actually want to buy here. Now they will leaving shaking their heads and thinking "what on earth are they smoking in that city? oh right….."

Next year this time is going to be ugly

Noz
Noz
11 years ago

Franco is a douche….just ignore this idiot.

He should go and buy a property TODAY if he's got the balls and wants to put his money where his dumb mouth is.

The shit he says is so nnonsensical it hurts.

patriotzed
patriotzed
11 years ago

We should be hoping these deluded bulls keep buying for as long as possible.

Remember: the more people who buy at inflated prices, the fewer people who will be able to buy at reasonable prices.

Right?

cashisking
cashisking
11 years ago

My daughter was just dressing Kurt Cobain on Stardoll … anything must be possible!?!

NO -LYMPICS
NO -LYMPICS
11 years ago

From Garth's latest post: In fact, a new study estimates that (are you sitting?), 48% of all mortgage holders in America will be under water by March. That’s 25 million households with mortgages larger than the total value of their homes. This is not a rogue number. There were already 11 million families in negative equity by the end of 2008 and 15 million four months ago. So if housing prices drop another 14% (on top of the 30% the country has already experienced over four years), 25 million houses will be unsalable by their owners, many of whom will chose to walk. (Sadly in Canada, walking is not an option. You’re still responsible for the mortgage amount, penalties and costs, even if you deposit the keys up your loan officer’s rear.) Of these underwater households, 41% are expected to… Read more »

pricedoutfornow
pricedoutfornow
11 years ago

It's just insane. I have a former co-worker who for years agreed with me about the housing market. Now, I hear through the grapevine she and her husband just put in offer in on a East Vancouver special (anyone wanna guess the price, $500k plus?) Um, did I mention that they are in their mid-50s? Immigrated to Canada about 15 years ago, both are professionals and never bought, always rented. Why now? Why, when one would *think* that retirement would be more of a consideration than racking up the debt (who wants to work until they're 80?) Their children are also in their early twenties-teens, so why the need for a house? I'm pretty sure they wouldn't have TOO much of a downpayment (though I suppose you never know) but given what I know, it seems unlikely. All I can… Read more »

NO -LYMPICS
NO -LYMPICS
11 years ago

Franco = Supraboy

Dirt Dog
Dirt Dog
11 years ago

Well if interest rates going up…eventually…don't kill this market I'm sure this new HST tax will pretty well kill any sort of commerce in BC. I would strongly urge everyone and I mean everyone in the province to write to their respective MLA to voice an opinion of this tax. This prov. govt has seen huge windfalls of tax with every property transfer (PPT) over the last 8 years, and they've pissed it away, the financial stewardship is abysmal. Save for a rainy day typical of the times. Get off your butts and send an e-mail or phone, write bug youe MLA. Google bcmlagov for email, phone etc.

Uncle Dog

RE$$$$
RE$$$$
11 years ago

Franco 31 "Internet stocks=House ownership come on Sir. go back to high school for econ 101 first."

ECON 101 is actually a university course. That tells me a lot about your level of education.

*Cough* BS
*Cough* BS
11 years ago

"48000 is a lot of money for you guys? My Chinese clients with modest household income 35000 to 55000 can pay it off in two yrs" What a troll. Take a second and read what you wrote. Lol. You just discredited any anecdotal "information" or stories you have provided in the past, present, and in the future. And don't even try to say that those incomes are based on each person of the HOUSEHOLD making 35-55k, or that the 35-55k is aftertax income. I guess when you have an illegal grow op or human smuggling operation in effect you can throw 50k at your mortgage every two years if your entire household only makes 35k. Hey why not, keep your legitimate income below the radar to reduce taxes, and max out your income from illegal operations. So that's how they… Read more »

Soggy
Soggy
11 years ago

They can pay off more than one years after-tax income in two years? Do they eat out of dumpsters and own nothing but hand-me-downs and real estate?

Franco
Franco
11 years ago

Internet stocks=House ownership come on Sir. go back to high school for econ 101 first.

Franco
Franco
11 years ago

48000 is a lot of money for you guys?

My Chinese clients with modest household income 35000 to 55000 can pay it off in two yrs.

NO -LYMPICS
NO -LYMPICS
11 years ago

Asian buyers: Granted, it appears that many of the buyers are Asian, but that is not an endless supply. My guess is many of them have help from family /in-laws. 30 + something types driving $ 40,000+ vehicles and "owning" $ 400,000 + condos just doesn't add up. (I don't see this demographic owning SFH). tapping into family is not hgoing to sustain the economy….its a crutch, not a stand alone indicator. Watch the family feuds when the prices drop and they start to go underwater Bulls versus Bears ? Bulls require B.S. which is provided by other Bulls and thier ilk. Bulls like to pick and chose their facts and figures, and if that fails, simply proclaim "RE never goes down", "buy now or forever be priced out" and other such mantra. On the other hand: Bears know history… Read more »

oneangryslav
oneangryslav
11 years ago

Franco: Franco I asked you if you could provide "the percentage" of homes being bought by Chinese (and by this, I mean residents/citizens of China) not Chinese-Canadians. "Most" is not an appropriate answer. And an anecdote is not data. As for your friend, congratulations to him. I hope that he's smart enough to understand that he did his buying and selling over the course of the largest real estate bubble in the history of humanity (that's not a hyperbolic statement, by the way).

I know friends who, in January 2000, considered themselves savvy investors because they had "made" (all unrealized gains, by the way) boatloads of money on Internet stocks. They didn't feel so savvy about a year later.

An observer
An observer
11 years ago

Franco,

Your friend must be doing well to be able to plow over $45,000 per year into a mortgage to pay it off in 4 years (2004-2008).

read on
read on
11 years ago

war between canada and iran? wtf?

and yes, it is a well-known fact that past performance = future performance. quick, go borrow some more money and buy more RE.

Franco
Franco
11 years ago

MR. oneangryslav Most of those buyers are Chinese immigrants from China in early mid 90,early 2000 and newly arrived in past months. Friend of mind who is penniless bought his first apt at North RD,PoCo in 2001 for 48 grands borrowed from in-laws,and sold it three yrs later for close to 70000.This smart guys again used the earned money as down payment bought a new single house along Boyd ST, Rich,for 250000. Amazingly again, he sold it in 2008 yr ago for 420000 . Once again,after he had paid off the mortgage and the money borrowed from in-laws few yr back ,he used the earned amount as down payment for a 5 bedrooms 12 yrs old single house at Wilson court Rich for 580000 again and now the house is assessed at 638000.So my friend, that is a ,successful story… Read more »

cashisking
cashisking
11 years ago

Franco

I rent in Shaughnessy – have gardeners, a pool etc and I'm paying 50 cents on the dollar if you take (and you should) the full price my house would sell for on a cost of capital basis. I can easily prove (b4 large capital expenses ie repairs) that it puts 75k a year in my pocket before depreciaton/appreciation.

Please explain why I should buy? If 75k is about 3.5% of the house and inflation is 2% then the house has to appreciate at least 5.5% for me to break even …

WTF
WTF
11 years ago

With the exception of Dave, why is it that every real estate "bull" cannot string together two coherent sentences, or write anything that resembles proper syntax and grammar?

betamax
betamax
11 years ago

I can see China from my window.

And what I see there is a couple of big freaking bubbles just itching to go full Hindenburg. Oh, the humanity!

squeak
squeak
11 years ago

I have a feeling .. that those that are holding off buing anything real estate now are the down to earth frugal people and not impressed by bling and asks who is beind the curtain. I question and am not impressed by bling . And as a frugal mousie I am also hell bent on that I am not paying more than 650 in rent, no matter what, I will even go as far as sharing or relocating in order to stick to my principle. And relocation is not moving far out into the subs (unless close to work)but a reasonalble town or province. Still my income, and nobody elses either has gone up substantially, so paying more rent is not making sense. So those those that are wishing and hoping for a nice tennants in their basements or condos… Read more »

oneangryslav
oneangryslav
11 years ago

Franco: Ok, Franco. For now I consider you to be a sincere, but brainless, bull. You can change my mind (and the minds of others, possibly) by answering this question: what percentage of sales this spring have been from buyers living in China?

Thank you,

OAS