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Friday Free-for-all!

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123 Comments

It’s the end o’ the week, let’s get right to the news round up and weekend open topic discussion!  Here are a few recent stories to kick things off:

–Royal LePage: Home prices to jump 7.2% in 2010
–Canada to surpass US residential mortgage debt in 2010
–Happy times for interest rates cant last
–Fasten your seatbelts homebuyers
–TD: who wants 5% back on your 5% down?
–Bottom line may trump social housing agenda
–US Apartment vacancy rate at 30 year high
–BCs leading economists predict 2010

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

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Drachen

@Dave:

So, Mr Wizard, what SHOULD the price ratio for Vancouver to Montreal be given the difference in legislation and such.

So far you've been trying to poke holes without taking a position yourself, it's time to put your cards on the table.

And I definitely want comparables.

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Lilypad

US predicts Olympic flop:

http://cosmos.bcst.yahoo.com/up/player/popup/inde…

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California

The land availability argument has felt a bit tepid to me in Vancouver. Prior to this, I lived in Silicon Valley and there was that same debate. Land locked by mountains and water, endless supply of knowledge and talent from Stanford and Berkeley. Plus, they have zoning laws to keep dwellings under some relatively low height due to earthquake danger. Home prices went up in the late 90's because there were tons of jobs. Then it seems to have leveled off over the last 5 years. There is some truth to the land availability affecting costs, but it's not the driving force.

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Arwen

Re: density in housing. – I've been looking at the stats: it's true, we're a tightly packed little city compared to the mean of all cities in N.America. It's also true that we're not THAT packed compared to big cities – our density falls between Chicago and San Fran. We got a long way to go to take on New York, and longer still before we're anywhere approaching Seoul, or (hah!) Delhi. Of course, I get claustrophobic thinking about Delhi, and I'm quite sure no one has any room from a Western perspective. But we're not approaching some maximum after which the city is full, and we're not approaching some level of densification that makes us SO MUCH DIFFERENT than any other North American city. We're *not* Delhi. It is true that SFH on nice bits of land get harder… Read more »

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Vansanity

http://www.househunting.ca/buying-homes/story.htm… '"If you're somebody in a situation that you have only five per cent down and you're stretching to get in the market with a 35-year amortization, I think that would be a very precarious situation right now," said BMO Capital market economist Robert Kavcic. Conversely, he said, "if you're sitting on a pile of cash and looking to move into the real estate market, it would almost be a no-brainer to just wait for lower prices."' '"We're certainly urging people to error on the side of caution," said Bruce Cran, president of the Consumers' Association of Canada. "If you're paying an amount of money, whatever that might be, that you couldn't sustain if interest rates rose by say 25 or 30 per cent – I can see that being a problem for a lot of people."' 'In the meantime,… Read more »

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SD92129

Densification allows for ever increasing housing supply and downward pressure on rents. but for those in the market for SHFs, available raw land which can be developed easily/profitably has to be decreasing. the best land (profit-wise) is always built on first (hence the phrase: location, location, location). If you look in the papers at the housing section where they have a map of all the new developments, the available supply of new SFHs vary proportinately with the distance from downtown meaning that you have to go further from downtown to find land. ie. if you were a developer looking to build a development or you are in the market for a house on a 1/2 acre. I believe this is Dave's point (which pertains to low density housing).

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SD92129

A realtor acquaintance said sales in the first 9 days were shockingly low. I countered with "statistical significance" just to see the strength of his arguement. He says a couple days maybe, but not this many days. Very interesting conversation, lots of good insight, some real nuggets of wisdom. I see why lots of realtors do blogs, talk shows and things like this. I have to admit he broke my stereotypes of realtors and there are some good bright people out there in the real estate business. You just have to get to know them. I can't wait to see chipmans numbers.

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vreaa

blueskies: thanks for the GM info.. I've changed the post to reflect this fact.

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Cynic

To those of you that think real estate agents are acting in the best interests of the buyer, I have a story to tell you. My cousin recently listed her apartment in Yaletown (Marinaside) for $739,000. She was offered $710,00 the first day and decided to think about it when the agent called with another offer, but only $685,000 this time. The agent told my cousin she would try to squeeze the people that made the first offer by telling them there was another offer "out there". Of course, agents can't divulge the offer but the implication was clear, it must have been higher. Long story short, the first buyers offered $740,000 and my cousin had a sale. She stills feel somewhat sleazy about it but, hey, that's Vancouver.

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squidly77

thought you guys might like to book mark this

http://www.cba.ca/contents/files/statistics/stat_…

albertas getting close to crisis and i believe will crash first, but you here in vancouver will witness a gargantuan bust also (bigger dollar loss's)

its close now !!

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ReadyToPop

The end of free money

Long-term interest rates – for funding of more than five years – have returned to somewhat normal levels. Last week the yield on the U.S. 10-year Treasury note rose to 3.9%, its highest level since early June.

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Anonymous

Played golf this weekend. No doubt the Olympics visitors will love our warm balmy winter, buy up overpriced real estate and the blow out GM sale.

When Vanoc suggested that others would mime to the prerecorded music of our own Symphony Orchestra, I thought that was a no brainer. Having Taiwanese dance group performing during the Olympics will make foreign visitors feel so at home. Yeah best place on earth, world class city and we're so ashamed of our local artists.

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blueskies

GM supplied about 4600 vehicles for the Olympics

not all are SUV's I see a lot of pick up trucks

and some smaller Impalas….. big blow out sale from

GM after the games…..

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Dave

@Drachen:

No, just showing that your 10 to 20 times ratio is way out to lunch.

Of course Vancouver land is more expensive. You can't compare Halifax to Vancouver. Montreal at least makes for a better comparable.

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oneangryslav2

@Bdk toll: Real rents are definitely NOT rising in Vancouver. So you think that landlords getting 4 or 5 times normal rental income for the monts of February and March 2010 means that real rents in Vancouver have risen? Really?

I'd hate to have an employee with your level of economic acuity.

"Gee, boss, I don't understand it. Real rents in Vancouver had risen about 400-500% since January 2010, I used to get $1500 for that 1-BR in Yaletown, and I rented it out for $6000 in February and March 2010. Now (April 2010) I'm offering it for $1400 and nobody's even inquired about it. I just don't understand. I really thought that real rents in Vancouver had risen. I wish there was some explanation for what I've witnessed, but I'm stumped!"

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vreaa

observer. 'Yes' on all counts, except perhaps the Fed audit, and Chinese growth sustainability.

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observer

It will be interesting to see what happens after the olympics are over. Will the supply of unused rentals crash the market? Will shadow inventory flood the market? Will prices hit new glass ceilings and cause buyer fatigue? Will our economy get crowded out by the drug trade and increase tenant risk above Canadian norm? Will the fed stop buying MBS and push up mortgage rates? Will it get audited more closely to see what assets it is actually holding? Will China's growth be sustainable at this rate without stimulus? 2010 will be an interesting year, perhaps even more so than 2008.

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Drachen

@Dave:

Ok, so you're saying land is equally expensive between Halifax and here?

Is that your premise?

You're losing it Dave, completely losing it.

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logic

98:

"Real estate is a chees game"

————–

A cheese game? WTF now?

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vreaa

PS

My claim above that "Ten thousand volunteer drivers will be giving Olympic participants free limo service in twenty thousand GM vehicles supplied especially for the games." is thus far hearsay .. is there anyone who can confirm or refute that claim?

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vreaa

Posts by rp (on reading the markets and being sensible) and oneangryslav2 (on Cabs and Hotels, Olympic Canaries) have been archived at VREAA. Thanks guys. Here's my own recent related experience – "Olympic exuberance and Vancouver RE market fantasies are joined at the hip, so we are following the Games with interest. Recently a local cab driver told vreaa that he expected 30% LESS business through the Games. Why? Just a few reasons: 1. The lower mainland has been opened to all BC cabs for the duration of the games; 2. Eight hundred buses imported from the prairies will shuttle people to and from Whistler; 3. Cabs are not allowed to take people from the airport to Whistler; 4. Ten thousand volunteer drivers will be giving Olympic participants free limo service in twenty thousand GM vehicles supplied especially for the… Read more »

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vreaa

patriotzed knows this, but I'll answer his rhetorical question regardless: Vancouver properties are overvalued by as much as 50% based on rental yields.

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patriotzed

Another bubble warning from The Economist, which was spot on with its critique of the global housing bubble in 2005: http://www.economist.com/opinion/displayStory.cfm… For all the panic last year, asset values never quite reached the lows that marked other bear-market bottoms, and now the rally has made several markets look pricey again. In the American housing market, where the crisis started, homes are priced at around fair value on the basis of rental yields, but they are overvalued by almost 30% in Britain and by 50% in Australia, Hong Kong and Spain… Today the prices of many assets are being held up by unsustainable fiscal and monetary stimulus. Something has to give. No mention of Canadian RE, but take a guess where bubble Canada (West, big city Ontario) would place in the above ranking. How do Vancouver's prices compare to say, Seattle,… Read more »

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