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September 29th, 2009 at 1:54 am
Tim are you saying that averaage family income was only $37996 in 1993? I ask because $64000 is for families not individuals. For individuals its still down in the upper $30′s.
September 29th, 2009 at 1:13 am
Hmm… I appreciate the effort, but I worked up some stats from the sources that you indicated as well, and there are some major differences including how we interpret income. I don’t think that you can just add male and female income to get total “household” income. Similarly, I look for percentage changes in income vs. % changes in RE.
In terms of income, I pull figures from tax filings.
In 1993, the median income from taxpayers in Vancouver was $37996. In 2006, this value rose to $64172. That’s a 68.8% rise in earnings for reported taxpayers – (this isn’t quite the same as household income either, but imho, better than adding male and female numbers). Of course, this may not be quite accurate either. One can assume that some are able to purchase homes while paying little income taxes (cash rich foreigners), and by the same token, not everyone who pays taxes owns a home – we might assume that people in higher tax brackets are more likely to buy. Admittedly, there are lots of conflicts and interpretations in these numbers.
In terms of housing prices,
In 1993, Average Vancouver homes cost $279758. In 2006, $509876. A percentage increase of 82.2%
So, taken in large blocks, housing prices did “accelerate” faster than household income but not in the way seen by your original chart. In smaller blocks, there were periods when income rose (from 1995-2001), but RE prices didn’t change much at all.
Let me know if you’d like to have my excel spreadsheet.
September 29th, 2009 at 12:29 am
Strataman is probably busy patching up all those condos so they can limp along until the warranty expires…..
September 28th, 2009 at 11:42 pm
41 – “How many can stomach another 2 years of insanity? ”
————–
Why not? Does me no harm at all. Rents remain comparatively cheap, so in what way is it hard to stomach the sight of retards paying 2 to 3 times my monthly rent to their bank in interest in order to live in a smaller condo than the one I live in?
September 28th, 2009 at 11:30 pm
cutbacks coming. thank goodness we have the olympics!!! the mountains!!! RE!!! no property tax increases!!! really?
September 28th, 2009 at 10:57 pm
Is Strataman around? Didn’t he promise to do a write up on problems with some of the new buildings?
September 28th, 2009 at 10:57 pm
So judging by the graph we started the decade off with houses costing about 5-6 times a families income and now we’re what? 10X? Gee, I just don’t see how this could go wrong.
September 28th, 2009 at 10:49 pm
@!(EconomicsDegree): Been sampling the local crop a bit much?
September 28th, 2009 at 10:26 pm
@chumpdawg:
Excellent idea. Rebuild the olympic village into a prison after the event. They could even move some young criminals from the prison in the centre of Burnaby (next to BCIT) for better location. Definitely, our suffering young felons deserve some mountain view and convenient means of transportation instead of shoveling snow and digging uranic ore past the polar circle. Yeah, and don’t forget to rename this new Olympic Village station to Federal Prison. That will add the city some charm.
September 28th, 2009 at 9:57 pm
Post whatever graphs you may, but at this point incomes don’t matter.
As long as the attitude towards embracing debt persists, Vancouver prices will remain elevated.
It would seem that whenever we hit a ceiling on affordability, something comes along to smash through it.
0% down, low rates, 35yr AMTs, etc. have all played a role in pushing prices up over the past 8 years.
Now with the HST coming in next year, more panic buying is ensuing.
I don’t expect the market to correct until at least 2011.
By then, I’m not sure how many bears will be left standing.
How many can stomach another 2 years of insanity?
September 28th, 2009 at 9:52 pm
The “world will learn about us” ..
===================================
That’s what I am afraid of, too. They will learn about the endless rain, the grey skies, beggars and mentally ill roaming the streets, the drugs and the gang slayings, the inadequate public transit, the lack of culture, the missing and murdered women, the pathetic media; and when they go home, they will appreciate the place where they live just a little more.
September 28th, 2009 at 8:50 pm
@realpaul:
This is basically just ye olde “rent to own” scheme.
Executive summary: you pay above-market rent to get an option to buy at an above-market price.
Is that a deal or what?
The antidote is the same as always: just say no to excessive purchase prices.
September 28th, 2009 at 8:21 pm
Olympic games in Vancouver ? Where is that , in Holland?
September 28th, 2009 at 7:46 pm
Nah.
Unless, maybe, you lived in Charlottenburg.
September 28th, 2009 at 7:07 pm
The 1936 Olympics in Berlin worked out very well for Germany soon after.
Dontcha’ think?
September 28th, 2009 at 6:29 pm
Whoa look at the size of that red graph. All that red sure dwarfs those other lines. That line, like, takes up the entire screen and fills it with red. Red, maaaaaannn, red. When is all this red going to stop.
September 28th, 2009 at 6:14 pm
I don’t see rents going up, at least in the West End. Comparable apartments rent for about the same I’ve been paying for years.
New condos are asking for 20-40% more in rent… for 20-40% less sq footage.
September 28th, 2009 at 5:10 pm
@Chilled:
18 X Chilled Says:
September 28th, 2009 at 12:07 pm
I’d be willing to bet the proliferation of grow ops in the GVRD would follow that graph precisely.
**************************************************
Vote it down all you want boys, but the facts speak for themselves;
http://www2.canada.com/nanaimo.....id=2041210
September 28th, 2009 at 5:00 pm
“… will at least double the number of people in the world that have heard of Vancouver …”
And after watching 17 days of rain and riots they are going to want to move here?
September 28th, 2009 at 4:05 pm
The Inevitable Collapse – North America’s Leveraged Economy and it’s Effect on Canadian Home Prices
http://americacanada.blogspot......-real.html
September 28th, 2009 at 4:02 pm
G20 – Trade Imbalances
http://americacanada.blogspot.com/
Manipulating currencies compound global trade imbalances even further. Exporting nations become completely dependent on the lower dollar to hide inefficiencies as they grow. Importing nations find it very difficult to export given the exchange rate.
Furthermore, trade imbalances result in huge current account deficits/surpluses. Exporters must lend to importing nations to keep the imbalance alive (it’s simply a mathematical calculation). This increases the supply of the creditor’s currency available for exchange, driving its exchange rate down. The transaction also creates more international demand for the importers currency, driving its exchange rate up.
This process also increases the supply of credit inside the debtor nation lowering interest rates. The lower interest rate stimulates borrowing, which some of it is then spent again on imports.
None of this is sustainable. The whole puzzle requires debtors to continuously indebt themselves at an increasing rate in order to support export growth in the creditor nation. Interest rates can’t go lower than 0%. Eventually you reach a point where the game can’t continue.
===========================
September 28th, 2009 at 3:23 pm
Family is sitting on Trillion of dollars.
http://ctv2.theglobeandmail.co.....tvBeta=yes
September 28th, 2009 at 2:43 pm
Rafe Mair column on The Tyee
Lessons from 1983
http://thetyee.ca/Opinion/2009/09/28/Campbell/
Many may not remember the election of 1983. Bill Bennett and his British Columbia Social Credit party had been in power since December 1975 and, against all polls, won again. The issue was “restraint” and it resonated with the public, many of whom had been badly burnt by the recession the country was in.
Many — myself included — saw their houses falling in value to the point it was worth less than the mortgage. Or mortgages, since many took out a second mortgage to fund daily living.
A lot of voters saw the bureaucracies, especially in Victoria, as being bloated with high-paid sloths. They looked upon many government agencies, such as human rights tribunals, as being boondoggles masking more three-piece wastrels we could do without.
=======
See? It happened back then and can happen again. The only difference I see is that Gov’ts now were a bit forewarned and didn’t let nature take its course (like rising interest rates) ie they keep interest rates low to lull all into a false sense of security.
However, thats all there is left at the bottom of their bag of tricks. Future events will be out of their control.
Bearish Since 2004, Looking For A Semblance Of Sanity in Vancouver RE « Vancouver Real Estate Anecdote Archive Says:
September 28th, 2009 at 2:36 pm
[...] September 2009 · Leave a Comment This extended anecdote and discussion from rentah at vancouvercondo.info on Sept 28th, 2009 at 9:28am [...]
September 28th, 2009 at 2:35 pm
Immigrants?
Top 10 countries of birth of recent immigrants, 1981 to 2006
http://www12.statcan.ca/census.....t1-eng.cfm
================================
It’s pretty clear that South East Asia has contributed the most immigrants.
However, the RE bubble has been a global phenomenon and lured a “United Nations” of Greater Fools. In BC ??….there is nothing special about BC except in the eye of the beholder.
IMHO, the longer the correction takes, the worse it will be.
Why anyone thinks we will be immune to what has happened globally is beyond comprehension. It is simply a Gov’t endorsed and subsidized Ponzi scheme.
September 28th, 2009 at 2:07 pm
I like how all the bullish arguments for Vancouver real estate are based on mysterious entities nobody can quantify or understand (sales pitches to catch fools). Salespeople result to this technique when a product does not do a good job on selling itself with its value or qualities.
Example, rich foreigners. Let’s think about this logically. Rich people who can just decide to plop down for a get-away place in Vancouver have already heard about Vancouver, and they will not be swayed to buy here when they see a guy blasting down Whistler in a spandex suit. However, some worker at the McDonald’s in Moscow will now suddenly know about Vancouver, but he is not coming here anytime soon.
Second, immigrating to Canada is complicated; wait times are long, people need a good reason to relocate, and the government controls how many people come in. Tell me how the Olympics will convince tens of thousands of extra people to apply for PR status in Canada?
September 28th, 2009 at 1:53 pm
realpaul:
I have a relative that was working in England.
He is a Canadian-born citizen and they will NOT let him back to work until he applies for the proper VISA from outside England(apparently this changed last past summer 2009).
He now has to fly back to Canada, apply and hope for the best.
I understand there is a bit of upheaval in Europe, and especially England, about foreigners having jobs.
September 28th, 2009 at 1:47 pm
# 13 realpaul:
@SD92129:
Coincidentally I listened to a speech by the Labour Party Minister of Olympics here in Britian today. Reading off the song sheet she was. Almost all the same catchphrases .
=========
Unfortunately, the world will never learn…
IMHO, The Olympics is simply a sales pitch by a multi-national corporation (IOC) to egomaniacal local politicians. There is nothing special about the Olympics, each sports has its own yearly championships, the Olympics is not much different than the PNE bringing a bunch of different entertainment together for a short time frame.
I can still recall way back when when BC tried to get the 1976 Olympics. How many are aware Whistler almost got an Olympics by default when Colorado voters vetoed hosting them?
The only blessing is after hosting them we won’t have to worry about getting them again in our lifetimes. All the other future host cities can worry about it.
September 28th, 2009 at 1:23 pm
@chumpdawg: Hey don’t diss Sarajevo real estate in the ’90s, it was a great place to look for a breezy “open concept” space. Complete with lead lined micro-windows and if you were lucky enough to find a spot in a building it was nearly guaranteed that there wasn’t much to block your view!
I never made it to Sarajevo but did see some of the surrounding terrain in that time period, it probably would have been an excellent time to pick up some property on the cheap for an investment. If you didn’t mind buying booby-trapped rubble with the previous tenants buried beneath…
I suppose it’s figuratively similar to what the situation in 3-5 years here will be.
September 28th, 2009 at 12:41 pm
7 No Longer Looking :
Good link:
My guess is these people pre -purchased and then were stuck with the results. Unbelieveable amount of defective workmanship. Where does one begin ?. The resale market for such shit that will become quite well known ie “notorious” , hence avoided,
, given a predictable oversupply of also much better product.
September 28th, 2009 at 12:39 pm
#8 don’t forget Lake Placid and Sarajevo!
Lake Placid now has a prison where its Olympic facilities were, and we all know what happened to Sarajevo.
September 28th, 2009 at 12:10 pm
Google translated update on Sochi.
“MOSCOW, September 16 – RIA Novosti. Sochi real estate market seems to have recovered from Olympic fever – both for the crisis year average cost of housing in the city has been halved, to 44.5 thousand rubles per square meter, wrote Wednesday in the newspaper “RBC daily “with reference to the data municipality of Sochi.”
http://www.rian.ru/crisis_news.....46010.html
September 28th, 2009 at 12:07 pm
I’d be willing to bet the proliferation of grow ops in the GVRD would follow that graph precisely.
September 28th, 2009 at 12:01 pm
“Real estate is selling like hot cakes in Sochi, where prices have been growing annually by 20%-30% in the last few years. Unlike local residents, who buy housing seldom and cheaply, rich Russians from Moscow, St. Petersburg and the country’s oil-bearing provinces view real estate on the Black Sea coast as good investment. Before the IOC chose the venue among three candidates – Sochi (Russia), Salzburg (Austria) and PyeongChang (South Korea) – one hectare (2.5 acres) of land in Sochi cost approximately $10 million, and flats were sold at $3,000 per square meter in block houses and $7,000-$8,000 in elite housing.”
2007
http://russia-realestate.blogs.....sochi.html
September 28th, 2009 at 11:33 am
Take the average income/home price comparison back to the mid ’80s if you want to see something really scary.
September 28th, 2009 at 11:26 am
Has anyone checked real estate is Sochi, Russia to see how the Olympics affects prices?
September 28th, 2009 at 11:25 am
American “Rich Asians” lead decline in home ownership
“snip…
Nevertheless, as a population group, Asian homeowners fared far worse than others.
That revelation surprised some experts such as Edward Wolff, an economist at New York University.
“Based on their income and relatively low debt, one would expect that they would have a smaller decline in homeownership,” Wolff said.
The median annual household income for Asians was just over $70,000 last year, higher than for any other racial group.
“It’s possible that it’s a regional effect,” Wolff suggested. “There’s a high concentration of Asian-Americans in California, and California got particularly hard hit by property (price) declines and high foreclosure rates.”
http://seattletimes.nwsource.c.....ers27.html
September 28th, 2009 at 11:08 am
@SD92129:
Coincidentally I listened to a speech by the Labour Party Minister of Olympics here in Britian today. Reading off the song sheet she was. Almost all the same catchphrases .
She went on for half an hour about history and Olympic cheerleading about regeneration, profits and blah blah blah, but not one word about Vancouver/Whistler 2010. There hasn’t been a single poster or advert regarding Vanc 2010. So I’m not sure if the world is coming. As far as I can see from a European perspective , no one knows about the Canadian games here.
One thing Britian is doing is pouring money and effort into kids sports programs. Campbell and the BC Libs are doing just the opposite. Aside from closing the schools, the kids are cannon fodder in BC.
September 28th, 2009 at 10:48 am
Boombust,
How poetic that you forgot to mention Sarajevo (1984). From hosting the games to civil war in less than a decade. The IOC sure made a good call there. I’ll bet you know one was thinking of it as a RE hotbed in the 90′s.
For all those that have lived in Montreal, how do you feel that after their olympics and the creation of the related olympic debt, the city went into the crapper resulting in the mass departure of numerous corporate headquarters and operations, further plunging the city into a state of limbo. They are still trying to deal with its effects and that only helped Toronto’s cause.
How did 1988 work out for Calgary?
Problem is that they say that kind of stuff to sway the opinion of the uneducated.
September 28th, 2009 at 10:22 am
i did not know that contractors can place a lien after the purchaser completes a deal with the developer..
i thought if my lawyer tells me there are no leins at the time of completion, the purchase is safe..
am i wrong???
September 28th, 2009 at 9:59 am
Check out this video by Peter Schiff in 2006 saying how the housing market in the US is starting to collapse and why. Reminds me of Vancouver
http://www.youtube.com/watch?v=jj8rMwdQf6k
Basically the price you pay does matter, you value a stock by how much dividend it gives and if the dividend is too low then the stock is usually overvalued. Same with real estate you value a property based on how much it can get you in rent even if you’re going to live in it, it has to be cash flow positive and you need to get at least 5% a year on your down payment in cash flow not appreciation. You have to work to be rich not buy a house and live in it and then you’ll be rich, that’s how most real estate owners in Vancouver think buy a house sit on it and by the time you pay the mortgage off you’ll be a millionaire. The truth is you’re paying for any appreciation in the money you put in the house, interest, maintenance etc…
Check out my blog http://oitb.blogspot.com/
September 28th, 2009 at 9:51 am
The “world will learn about us” meme derives directly from the mythology of Expo 86. Of course Expo lasted for 6 months and had 22 million visitors, plus it just randomly corresponded to the inflection point on the immigration boom from HK. A 2-week winter Olympics in the middle of the greatest recession since the 1930s just isn’t going to see the same after-effects.
September 28th, 2009 at 9:32 am
Oh. So now that we have all heard of Salt Lake City, so what now?
Or Nagano? Or Lillehammer? Or Squaw Valley?
Dipsticks.
September 28th, 2009 at 9:31 am
Latest naughty developer: Omni Pacific
Even after the poor homoaners of The Village at Kanaka have surrendered their lives for half million mortgages, the torture continues:
Here come the liens
http://www.ctvbc.ctv.ca/servle.....lumbiaHome
for shoddy workmanship
http://cedarskyliving.net/
September 28th, 2009 at 9:28 am
From the Maggie Chandler puff-piece that Don Lapre (#4) helpfully referenced:
“Vancouver is the Swiss Bank account of International Real Estate”.
“The Olympics will at least double the number of people in the world that have heard of Vancouver and this will result in the growth going forward. The next 10 years will be more exciting than the last ten as we see escalating demand. Five to seven years out you’ll be glad you bought today.”
—
I’ve been a bear since at least 2004: A prospective buyer, looking for some semblance of sanity in RE valuations in Vancouver.
I see the profoundly out-of-whack fundamentals, the price/income and price/rent ratios that suggest prices should correct by >50% at some point.
My technical analysis of the price chart suggests we’ve had a sucker bear market rally into a double top. We’re still below July 2008 prices despite money being free. We were ironically & temporarily rescued by the fall 2008 economic crash and the resultant low interest rates.
From a sentiment perspective there is a surfeit of hubris in the bull camp. On some bull sites the bulls are running around like drunken soccer fans after a European Cup victory, kicking around the bears with impunity.
There are also stories of bears capitulating. There have been confessionals regarding folks buying, and major bear voices on the bull sites have fallen quiet.
All of the above suggests a double top is in place.
The most likely outcome now is price weakness as interest rates rise (next summer?) and listings start outstripping demand again. This will all occur through a time of ongoing weak economy and high unemployment. And once prices drop below the trough prices of winter 2008-2009 (15% off peak), the wheels will come off and we will see the really significant drops. My targets remain at least 50% off peak prices (real)
HOWEVER, when you read stuff like the Chandler claims (above), any bear is remiss if they do not consider the bull case. IMHO, the only things that could keep this bubble going are:
1. Cheaper than free money.
By this I mean ongoing very low interest rates, PLUS a series of government incentives to buy houses. This includes any further stimulus packages that rob from general taxpayers to support the housing market, in any form. This would be fundamentally very, very unfair on prudent citizens who don’t own property. Any such moves would lead me, personally, to consider taking this battle public. One could very vocally take to task any politician who moved to keep this asset bubble afloat at the cost of the general taxpayer base, and at the inevitable cost of FUTURE Canadian taxpayers. I don’t think we’d be alone in such a fight, but we would be in the minority, as homeowners make up a strong lobby group.
2. Some kind of freaky ‘safe-haven’ status for Vancouver.
The fact that housing prices have crashed just about everywhere in the whole world except in Vancouver, may just make rising prices here a self fulfilling prophesy. This is the argument that Vancouver will become the new Monaco, with wealthy folks attracting each other and higher prices driving even higher prices (a la the Chandler suggestion). I personally believe that the chances of this happening are very, very low, but not quite 0%. I also believe that these arguments continue to simply be stories that local speculators are telling themselves, and each other, as they continue to buy, buy, buy. But, one has to prepare for all possible eventualities. What I wouldn’t do, if this came to pass, is chase the bubble prices and buy. I’d likely move, or just keep renting and investing.
September 28th, 2009 at 8:38 am
from ol’ maggie’s site:
It’s a good time to be buying the right deal now.
Five to seven years out you’ll be glad you bought today.
The above photo is taken from my listing at Shangri-la, on the n.e. corner of the 53rd floor, 4500 sq.ft., listed at $5,890,000.
presented w/o prejudice……..
September 28th, 2009 at 8:04 am
I think we all know why price/income does not matter, as the entry below clearly points out.
“Vancouver is the Swiss Bank account of International Real Estate.”
http://www.vancouverreflection.....e-outlook/
September 28th, 2009 at 8:04 am
@cashisking:
I read where they now have a mortgage scheme in Britian where you can now buy a fraction share of a property while the lender/government holds the balance of the shares.
The purchaser pays the mortgage on the primary loan and pays ‘rent’ on the outstanding square footage held in shares by the lender. The purchaser may buy more ‘shares’ over time. Ownership rights to sell are restricted to the lender. The first mortgage is extended to a maximum age of 75 years reached by the borrower. The scheme allows the hairdresser to ‘get on the ladder’ without being able to qualify for a mortgage…..ever. Very sneaky.
This manipulation puts a floor under prices by the action of the subsidy I suppose by which the prices can not get too high it is only the percentage of ownership that one can have in their own property will decrease with ‘affordability measures. Just insane really. It takes the ‘market’ out of real estate market. Its just a grandiose money sucking scheme to keep people pouring their money into a market which would falter other wise.
Paying a mortgage when you’re 75, holy shit.
September 28th, 2009 at 7:51 am
If we could overlay monthly servicing costs taking into account the extension of amortization and interest rate declines I think it would be very telling.
We all know which way interest rates will be going and now that amortization periods have been stretched to 40yrs I can’t imagine they can go any further out ie you have to buy your house at age 25 to finish paying it off by retirement!
September 28th, 2009 at 7:37 am
Oh Boy, the clowns will be howling today.
Another death by cop, how many is that this month. I’ll bet its more dangerous to be arrested by the RCMP than to be in Afghanistan. This assertion is at least correct statistically.
http://www.vancouversun.com/ne.....story.html
Deadly bacteria on the beaches? Gee really? Pouring untreated hospital waste into the enviornment is a bad thing?
http://www.vancouversun.com/he.....story.html
Lets hear from the deniers on how we shouldn’t voice the truth.
Bring on the clowns