New home prices fall for 9th month
We’ve now seen nine consecutive months of falling new home prices, mostly driven by the drop out here in the west. Despite predictions the drop was over, prices fell nationally in June by .2 percent on the month for a year over year drop of 3.3 percent. This is the sharpest national decline in new home prices since the early nineties.
The biggest drop in one month was right here in Vancouver where June saw a .9 percent drop in prices as builders tried to clear out inventory. Right now Saskatchewan, Alberta and British Columbia are driving prices down, while the east coast is pulling them up. St. Johns saw the largest yearly gains of 10.3 percent, while Vancouver is showing losses of 9.1 percent.
If you’re looking to buy a new condo, it’s probably a good time to haggle.
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August 12th, 2009 at 8:48 am
No matter how the media and real whores try to spin the story, the facts are bashing down the bullshitters, if only for a day. The fact is that prices are weak, sales are weak and intrest rates are creeping up. As Garth said recently, this will end badly.
http://www.vancouversun.com/bu.....story.html
August 12th, 2009 at 8:53 am
realpaul: WTF? you just linked to the same story that this posting linked to. A bit redundant don’t you think?
August 12th, 2009 at 9:51 am
If the HST comes in as proposed and adds extra tax to the sale of new buildings in 2010 that’s just going to clobber those prices. It looks like new buildings are going to lead this correction.
August 12th, 2009 at 10:39 am
Summer is winding down…kids gotta go back to school soon.
Buyers will take a breather.
August 12th, 2009 at 11:20 am
Hey look.
Bob Rennie in California !
Last Warning* If You Buy A House – You Are Going To Get Killed!
http://www.youtube.com/watch?v=nBirV0Z_aXc
August 12th, 2009 at 11:45 am
Wreckonomics: If the HST comes in as proposed and adds extra tax to the sale of new buildings in 2010 that’s just going to clobber those prices. It looks like new buildings are going to lead this correction.
I thought the HST was supposed to result in some savings for the builder. Isn’t it all just gonna be a wash, with total prices staying relatively the same after tax? On the other hand, whoever can afford property over $400,000, like say a million dollar Coal Harbour condo, is probably not going to hurt them too much (if they really want it).
August 12th, 2009 at 12:04 pm
i guess its one of those ymmv type of things.
From what I see in my neighbourhood in the fraser valley…
A new housing development which months back was advertised at 499k starting is now advertised at 519k starting.
The 2 remainders of a near complete housing development as advertised at 442k each since feb. They finally sold one weeks ago..and now the older has been relisted at 449k.
August 12th, 2009 at 12:29 pm
I have here across the street (near Royal Oak Skytrain in Burnaby) a complex of 1,000 sqft townhouses for $600,000 and they ARE selling. Despite of what the consensus from “reasonable, objective and well informed” analysts/observers seems to be, 99% of shoppers (and ultimately buyers) here ARE Asian. I cannot tell if they’re foreigners or locals, but they’re definitely Asian. I know, I live here, I see them every day. This entire neighborhood is turning into a minority-majority kind of thing, where in my kids’ high school whites form now about 20% of school population. This maybe the reason why a general perception is that Chinese are buying up local real estate. It simply looks like they are.
And if the old saying about strength in numbers is right, sadly we stand no chance, not by any stretch and the correction we are all wishing for seems further away every day…
August 12th, 2009 at 1:50 pm
Shanghai has as many multi millionaires as the entire lower mainland population. If a lot of them decide Vancouver is where they want to buy……
August 12th, 2009 at 2:01 pm
Perhaps if I were a wealthy foreigner I would buy property in Vancouver in order to acquire eventual residency status and access to health care.
Although if that were my only reason I’d just by a 400 sq ft condo or, better, an appartment in Okotoks. I just love saying Okotoks.. sorry, I digress.
August 12th, 2009 at 2:20 pm
Anecdotal: Recently I was driving through Richmond from the airport towards 3 Road. I could not believe the number of warehouses and commercial/retail spaces available for lease/sub-lease or sale.
About a year ago I was in the new Rona on Bridgeport, and was told by staff that it was closing. Surprised, I asked why as it was such a new store. The answer was business taxes had skyrocketed to pay for the new Olympic Oval.
Now about a year later, so many businesses have closed/moved, that the net result to me is potentially proving the laffer curve:
http://en.wikipedia.org/wiki/Laffer_curve
Not to mention causing a large loss of jobs in Richmond.
August 12th, 2009 at 2:21 pm
“if I were a wealthy foreigner I would buy property in Vancouver in order to acquire eventual residency status and access to health care.”
if i were a wealthy foreigner, i could probably BUY BETTER health care in my own country than what i could get in canada. that’s what happens when you have money. why do you think certain people are trying to push for private health care? because they can make money off it, of course.
August 12th, 2009 at 2:36 pm
Off Topic: US deficit for July 2009: $180.68 Billion
Based on a population of 306 Million, that is about $590 per citizen. A family of 4 for one month of EXCESSIVE Government spending `owes` an extra $2360.
Average family income in US for 2007 was $4186 per month before taxes:
http://wiki.answers.com/Q/What.....S_for_2008
August 12th, 2009 at 2:45 pm
Anonymous: Shanghai population 2008: 18.8 million:
http://en.wikipedia.org/wiki/Shanghai
Lower mainland population 2.2 million. Your saying that 8.5% of the population of Shanghai are multi-millionaires?
The entire world economy, China included, is dependent on a US recovery in order to return to previous growth. Argue it however you want, fact stands in your way. That said, even if there were 2.2 million multi-millionaires in Shanghai, they are disappearing at an astonishing rate due to the US slowdown.
Many foreigners buying property will not be able to afford payments soon enough.
August 12th, 2009 at 3:36 pm
“And if the old saying about strength in numbers is right, sadly we stand no chance, not by any stretch and the correction we are all wishing for seems further away every day…”
I suspect these are lower-middle immigrants. They don’t have the history here to know that prices are out-of-whack and are facing great social pressure to show they’ve made it. Why do think you see people in Beemers rummaging through recycling bins? They aren’t really rich. That’s the only logical conclusion when rent is so much cheaper.
And I don’t think they are buying with cash. Average down-payments significantly declined, and a population of cash-paying immigrants would have prevented that.
A new Canadian has an advantage. They can walk away and return home if they get in trouble financially. That’s happened with international migrants elsewhere in the world, like in the Middle East.
August 12th, 2009 at 3:37 pm
Sorry lower-middle “class”.
August 12th, 2009 at 4:40 pm
#15
Excellent observations. Conspicuous consumption amongst this community stems from the cultural need to maintain face and demonstrate success. The trend of being “house poor” is prevalent within this community, to the point that large McMansions only have IKEA furniture, if any furniture for that matter, and the same tired BMW and Mercedes models sit in every drive way.
I do not know how many times visitors to this city have commented on the fact that everyone drives the same BMW or Mercedes. I simply laugh, and say, there is only the appearance of affluence, and that these vehicles are the favourite within one community.. There is no true wealth in this city. This is not New York, this is not London….this is simply Vancouver.
August 12th, 2009 at 5:13 pm
Way off topic but oh so pertinent….
“Olympic Gold”
farther! faster! greedier!
Olympic rentals slow off the mark
The website “rent2010.net” has so far rented only 15 per cent of the 1,200 properties listed
sell your condo NOW!!!!
August 12th, 2009 at 5:20 pm
since we’re throwing stereotypes around… aren’t asians supposed to be good at math? So, whytf would they be buying?
Culture and face maybe. Many of my genXtoY age asian friends are still on the property always goes up bandwagon. Some aren’t so sure anymore though.
August 12th, 2009 at 5:58 pm
Olympic rentals slow off the mark
The website “rent2010.net” has so far rented only 15 per cent of the 1,200 properties listed
I caught that story on Global early news. They said the reason for that is greed, and went on to point out a Burnaby apt. owner asking $12,000 for two weeks. They then went on to say that visitors might not have a choice because all the Vancouver hotels were booked up. So I went on Expedia and checked it out. I randomly picked a few days in February and there were 8 pages of hotels still booking rooms. WTF?
August 12th, 2009 at 6:13 pm
Raincouver: As much as I would like to believe that I checked Expedia myself and very few hotel rooms left, if any.
On a different note, I agree with a few others above….this rich Asian argument is getting old. Seriously. San Fran as same Asian population levels as percentage as Vancouver does. Their real estate was not saved.
August 12th, 2009 at 6:21 pm
Had drinks with a friend the other night. She lives in Kerrisdale/Shaughnessy area. Neighbours got busted by RCMP – apparently pretty big drug dealer. All assets siezed. House has been put up for sale – in foreclosure. Apparently bank put it up for sale at $1.6M. She was quite shocked as it sold a couple of years ago for $2.6M.
Hhhhhmmmmm.
August 12th, 2009 at 6:31 pm
Do you know why only a small percentage of units have been rented from the Rent2010 site? Simple – price gouging!
I was completely taken aback by the rates being demanded on the site. I sifted through the first 20 ads, and all I saw were people charging several thousands to several tens of thousands for 2-4 week stays! This city has truly shown itself through this site!
If they are charging 26k for a month long stay in a 2 bedroom Shrangra La unit, then I am going charge 10k for a month stay in my 1960s 1 bedroom kits condo. I might as well get in on this “Olympic fever” – tis an event to gouge, because the government will be gouging us with increased taxes and decreased services for years to come!
Alternatively, I will start my own bidding war, which we all know we are famous for in this city! I am going to create an ad whose title reads – “Non-Gouging Vancouver Unit For Rent – 500 a Month”, and then sit back and watch the offers roll in! Or maybe keep the same title, charge 1000, and make comparison to other units being offered on site as price gouging.
Hey, if free speech has been officially suspended during the Olympics, we might as well use alternative mediums to highlight the true nature and meaning of the games for Vancouverites.
An athletic event that was once a worthy endeavour has been reduced to its bare dollar value for greedy Vancouverites. After all, we are the best place on earth, and certainly apt at showing it!
August 12th, 2009 at 6:37 pm
Anonymous: So Shanghai has over 2 million multi-millionaires in a city of 13 million people?
Really?
REALLY?
August 12th, 2009 at 6:38 pm
“aren’t asians supposed to be good at math? So, whytf would they be buying?”
Maybe “they” know something you don’t. Cap rates in Taiwan are around 2%. How’s that for a return on investment. It ain’t just Vancouver that has horrible fundamentals but “they” keep on buying. Truth is, many people who grew up in Asia are so used to other types of investment being so unregulated that they put a huge premium on real estate. It’s fatally flawed because most are levered despite the “briefcases of money” myths I keep hearing about. Without rental income, the cash flow root system rots away and prices tumble. Happens every time, even in Asia, but the smell o’ money is just too good so here we go again.
Enjoy the rental subsidy, I say. If you want, sign a 3-year lease if you want stability. It beats buying by a country mile.
August 12th, 2009 at 7:15 pm
Video..Vancouver price crash
August 12th, 2009 at 7:53 pm
best place on meth: No, not really.
Shanghai actually has a population closer to 20M, and according to the Hurun Report dated May 2009 (a China based luxury business portal), there are 116,000 millionaires in Shanghai. This uses 10M Yuan as the cut-off, which equates to about $1M GBP.
Facts are cool.
August 12th, 2009 at 8:08 pm
Gregg:
That video is a year old. But it does show exactly how much experts know…nothing!
August 12th, 2009 at 8:15 pm
Girlbear:
116,000 is a far cry from 2.1 million, ain’t it?
Or am I wrong about the population of the lower mainland?
August 12th, 2009 at 8:27 pm
116,000 millionaires? Let me guess: that includes property and stocks on the Shanghai exchange. Not very liquid.
The vast majority are buying houses by incurring debt. It’s as simple as that.
August 12th, 2009 at 8:29 pm
So Shanghai has over 2 million multi-millionaires in a city of 13 million people?
Yes,One third of the population have assess around that figure but in RMB,not USD,still enough for down payment here.
August 12th, 2009 at 8:35 pm
Interesting…
There are approx 7M millionaires in the US.(not including primary residence)
There are approx 825,000 in China.
All those millionaires in the US couldn’t save their real estate bubble. How can we expect the scant few from China who move or invest here to save ours??
August 12th, 2009 at 8:39 pm
Franco: 1 Chinese yuan = 0.159095283 Canadian dollars
So $150k CAD is a millionaire in your world.
Not really the picture of the uber rich Asian.
That’s a household number to boot.
August 12th, 2009 at 8:59 pm
I was shocked to read in Telegraph.co.uk (August 11th 2009)that, “China’s ratio of property prices to incomes is seven times higher than in the US. It costs 3 months’ salary per square metre of space – though tower blocks are sitting empty.Prices are being propped up by state enterprises, abetted by local Commmunist bosses.”
August 12th, 2009 at 9:08 pm
SpitfireS,
Dude, the laffer curve is not constant. And who said the slope is zero right now. When the economy goes bad, government gets more taxes by increasing tax. Increase consumption tax is a good thing. People should spend less.
August 12th, 2009 at 9:11 pm
http://www.debtclock.ca/
Spitfire posted the US debt is $590 per person, ours is $14K per person… and growing.
Nope, still nothing to see here.
Re: Olympic rental prices, I don’t blame people for being greedy, its human nature, plus those mortgages must be gauging their wallet and savings. If somone was stupid enough to spend that, fuck them! I hope they discover what bankruptcy is like eventually.
Its been a while since I posted so I had to bring some bitterness, it’s how I role.
August 12th, 2009 at 9:39 pm
arbitrage: since we’re throwing stereotypes around… aren’t asians supposed to be good at math? So, whytf would they be buying?
**********************************************************
I used to think the same thing until I real Outliers.
Good read.
http://www.gladwell.com/outliers/index.html
Available at your public library, for those of us to choose to stuff consumption and taxes.
August 12th, 2009 at 10:14 pm
#8-drugs “r” us
You are right on. I am telling you all, Canadian passports are for sale, cheap. All it takes is the price of a condo or whatever real estate. Chinese, Koreans, etc, etc. are buying up Vancouver and all Gordo wants is more property transfer tax and now HST.
August 12th, 2009 at 10:16 pm
for all u dum shits out there who think rich asians r gonna save the hongcouver real estate market, NOT!
“oh but this asian family paid 2.1M for some fixer upper down the street”.
your little anecdotes are just dat… anecdotes!
look at the landcor data u friggin numb nutz. 2% of bc real estate is purchased by foreign buyers. TWO PERCENT!
and half of that 2% is probably albertans.
so u all either retarded or in denial.
either way its an insult to retards and egyptians.
August 12th, 2009 at 10:41 pm
Chilled:
i wrote “…stereotypes… good at math…they…” to point out that “we” were stereotyping / noticing outliers / etc… – apparently i was too veiled or too clumsy. i guess whipping out my own “them” anecdote doesnt help
Re: anonymous #25 – you seem to be saying they (i assume the taiwanese):
1) know something i dont (that cap rates in tw stink and they have no good alternative), and
2) that the they are wrong to believe in yvr real estate, in spite of (1).
Summary: they invest in real estate cause they don’t know any better. Which is what a lot of “us” are saying.
Back to “asians” – i always wonder if the stereotypically asian posters (crap ass grammar, spelling, constant references to rich asians, pepperoni, suvs, etc…) – are asian. not that it matters. they’re idiots, first and foremost.
August 12th, 2009 at 10:41 pm
hongcouvercrackhead
Have you seen the ethnicity of the students in our Vancouver schools. What does that tell yah.
August 12th, 2009 at 10:45 pm
Anybody been out to Roberts Bank lately?
I have never seen such low stockpiles of coal. They look like mole hills.
There was only one ship docked…The container cranes were sittng at the 12 o’clock position, AKA NOT ONE IN USE…not one ship was being loaded or offloaded, the docks looked deserted.
Why are the coal stocks so low…IMHO its not due to demand, its lack of demand….why have big inventory of coal if you can’t sell it?
Re China….one economist was interviewed and his view is that the Chinese economy is one big myth. Only a communist country is able to fudge the obvious global economic slowdown. The Chinese have been stockpiling materials in the hopes of a turnaround. He suspects they have tons of inventory of product being stored in China and will be forced to unload it soon and flood the markets.
Re Asian buyers…..In my observations, they seem to be some of the most easily herded. If they are so smart and rich, why didn’t they take advantage of the bargains last Fall and Winter ? Answer = they are as leveraged as most other buyers.
One realtor we know said that many of them will pool funds and share in a purchase.
I will often see a group of 6-8 stalking a For Sale sign . I really don’t think they are sophisticated purchasers by and large, but have bought into the real estate mythology and not only delay the inevitable correction, but may in fact make it worse with their panic buying no different than the other greater fools out there.
August 12th, 2009 at 10:50 pm
#41 spewed -
hongcouvercrackhead
Have you seen the ethnicity of the students in our Vancouver schools. What does that tell yah.
wut R U saying white kids like to skip out?
u racist basturd.
another anecDOH! those r local kids dumbass.
August 12th, 2009 at 11:15 pm
#42
That is just it, if they keep buying, there won’t be a correction. They will not stop coming, they haven’t before, why should they stop now. Vancouver will always be a top destination for Asia.
August 12th, 2009 at 11:18 pm
#43
Those local kids’ parents did not go to school here(Canada), dumbass.
August 12th, 2009 at 11:45 pm
Why is 1/2 of Richmond, Chinatown? Why is the busiest store in Metrotown T&T? Why is there a T&T even in Coquitlam? What is H Mart doing in Burnaby Lougheed? Why did RC Superstore buy T&T? Is it because everyone loves Asian foods?
August 13th, 2009 at 12:39 am
It’s funny how this blog is full of people hoping to get a piece of real estate. I can feel that most of the bears hear are in desperation to have a home.
I went to Holt Renfrew today on a WEEKDAY with NO sale going on, guess what, it was jammed packed. I looked at the LV store and there was a lineup, I thought there was a sale, when I walked by, I saw people lining up to pay for fully priced items.
I really wonder where this money is coming from. I realized that we are really in a booming economy. It has been +5 yrs of people bashing real estate, but guess what, in 5 yrs, the markets have rocketed in Vancouver.
My friend was looking at a property near killarney today. Sold for $565,000 in February, now he’s going to buy it for $650,000. Nothing was done to the house.
I stick with what I see rather than the KOOL-AID that the bears are trying to feed here. Open your eyes and see what’s going on.
August 13th, 2009 at 1:07 am
LV favorite of Asians.
August 13th, 2009 at 2:53 am
I have been going to open houses in Burnaby for the last couple of months and I do notice a trend. I notice a lot of young families looking for homes. Young families with toddlers and infants who feel a condo isn’t a place to raise a child. Sure… I see the occasional immigrant but I see 3x more young families than affluent asian immigrants.
As for #47….if you open your eyes…and turn your head to the east. Things aren’t looking so good. Take Ontario — auto industry = dead. Look north — BC Forestry = almost dead. And if you look a little furthur…Ireland and Iceland are experiencing a crisis that makes the US Depression look like a speed bump. I am not too sure about you but things don’t look too rosy.
August 13th, 2009 at 7:44 am
Vic: isnt that who you would expect to be shopping for a house? for the average entry level home thats your support market.
August 13th, 2009 at 7:55 am
Vic
That’s Burnaby, check out Vancouver,esp westside.
August 13th, 2009 at 12:46 pm
To be honest, I am doing research on the market and my future home purchase. I can’t just go out a buy a house on the spot — location, size of house, size of lot, price tag, schools…all need to be in the right balance. Its a home for me…not a 10% to 20% per year yielding bond. I use open houses as a surveying tool…with out getting an agent involved. When I bought a home with my parents in 1999, it took 3 years of research to find the right home for them. Today…with my family, I expect the same and I only started looking this year.
August 13th, 2009 at 7:55 pm
#47 – I saw oil going up for a long time as well, did you jump into the market? I mean – did you see what was going on? Oil was going up, all this crazy talk of a bubble and speculation were garbage, i’m sure you just looked at what was going on and piled your dollars into a sure investment. Hmm… But then what happened?
Do some research of market cycles and bubbles, japan, the tulip bulb manaia, dot com, US housing… The one thing about 100% of the people that said “This time it’s different”? They were all wrong.