Vancouver ‘severely unaffordable’
News Flash! This just in, hot off the presses! Vancouver has become one of the most unaffordable cities in the world.
Vancouver not only has the least affordable housing of 28 markets measured in Canada, but of 272 metropolitan markets ranked in Ireland, the U.K., New Zealand, Australia, the U.S. and Canada, according to statistics compiled by the Winnipeg-based Frontier Centre for Public Policy.
We’re number one! We’re number one!
The numbers are calculated by dividing the median (or middle) residential house sale price from the third quarter by median annual gross household income. In Vancouver, for example, a median home price of $540,900 was divided by median household income of $58,200 to create a multiple of 9.3. The group describes as “severely unaffordable” any reading of 5.1 and over.
Not only that, it is “unprecedented in modern history,” the group said.
Ah! A brave new era! We’ve broken records and surely now prices have nowhere to go but up! Congratulations to everyone who took part in the contest by bidding up home prices, and a special thanks to the CMHC. I don’t think we could have done it without your generous support!
January 27th, 2010 at 7:58 pm
Tim – The Montreal Olympics didnt face an Global economic situation as there is now all over the globe. Also there wasnt a US housing crash where some of our US neighbours have lost so very much.
The Montreal Olympics went ridicuously over budget and Canadians got stuck paying the bill. Which will probably happen a second time around come Vancouver 2010.
Certainly some are hoping for a severe correction. Who knows when it will happen. You dont know and I dont know.
The people who are on this site arent suking and hoping for a huge drop. The people on this site are educated university debt laden grads who are trying to pay off their student loans after obtaining their degrees. Hey some kids dont have mommy and daddy big bucks waiting in the wings to help them out. They are the young employed professional couple trying to raise a family and have jobs (EXAMPLE: The first time homebuyer on this site). Think about those hardworking immigrants that are trying to pay down their mortages.
But your probably a crusty old fossil who doesnt give a shit about his fellow human beings. You just think because you bought your home ages ago, your smarter than the rest of the folks on this site.
January 27th, 2010 at 6:18 pm
First time homebuyer….I cant sit here and tell you I know whats exactly the right think to do for you and your family. I am in the same position.
My thoughts are to hold out. I have a large downpayment saved up. I have a great job..which I hope hold out until after the olympics and for many years to come.
Unfortunatley, many of my customers are losing their jobs and are skilled trades people, managers, business professionals etc. If your parents are going to be providing daycare service please think about what could happen if they become ill suddenly, etc. Its something my cousin had to deal with.
Whatever you decide to do I wish you all the best and everyone else whos out there thinking about making a big step into homeownership.
Let the bubble burst!
January 26th, 2010 at 11:38 pm
I wonder….Do you suppose that if you live in this city long enough, the constant rain eventually starts to short out those synapses responsible for logical deductive reasoning?
January 26th, 2010 at 8:36 pm
@patriotz:
Montreal Housing prices had started to fall in 1975 and the correction was around 23% from 179.1K to 138.2K by 1978. That's two years after the Olympics.
The Los Angeles stat that you mentioned, from 1984 to the early 90's… that's over 6 years of lag.
I think many here are under the impression that we just have to outlast the Olympics and there will be a sudden drop. If this study proves true, you should be thinking down a target purchase date of 2014-2018 for a… 20(?)% discount? Not that it's anything to sneeze at, but I'm willing to bet some have been on these sites for 3-5 years complaining about real estate prices and hoping that it'll drop to 40-50%.
Don't hold your breath.
January 26th, 2010 at 11:51 am
@bubbly: It must be because we're running out of land. Canada has more people and less land than the US right?
January 26th, 2010 at 11:27 am
@Vansanity said:
"9.3 times income? Again, I know it’s an average and plenty of homes have more than one income (spouses, mortgage helpers, grow ups, whatever) so it’s to be taken with a grain of salt, but it’s just so outrageous!"
No, it's not averages. It's much worse than you are suggesting.
It's medians. Further, it considers median HOUSEHOLD INCOME, so spouses and the lot are counted.
Quote from financialpost:
In Vancouver, for example, a median home price of $540,900 was divided by median household income of $58,200 to create a multiple of 9.3.
January 26th, 2010 at 11:05 am
I am raising my family in a small space – 944 sq feet to be exact. In this space I have a dog and a child with another one on the way. Do I feel guilty that I am raising my kid without a yard? Not on your life. I am walking distance to a kids waterpark, an outdoor pool, surrounded by playgrounds and dog parks and have only filled up my gas tank once in the last two months. I suppose some of you would say that I should have a little yard, but for what? So my kid can play alone? Forget it. I lived in the burbs, and I don't have fond memories specifically of hanging out in the yard as opposed to the park or lake with other kids. This North American concept of the big house and mortgage is our undoing. We don't need it to raise a family. Owning "stuff" doesn't make anyone a better parent, and that includes a stinky little yard.
January 26th, 2010 at 10:31 am
@mino3:
Disingenuous Dave trots out the CMHC numbers on a regular basis. He knows they are a very narrow subset of all available rentals but this is the only argument
he can come with.
There will be a great selection of units available after the Olympics. "Mortgage helper" basement suites as well as condos held by newly minted reluctant landlords. ….gonna be fascinating to watch this tank…….
January 26th, 2010 at 9:12 am
Dave is looking at CMHC rental stats for purpose built apartment buildings. There haven't been any built in decades (although some condos were converted to apartments due to lack of buyers) so of course they're in short supply (compared to the horde of lower-middle class stiffs) and rents aren't falling. CMHC tries to track the secondary market, but their methods are so flimsy as to be practically worthless.
So as usual, Dave is right on the money…
January 26th, 2010 at 8:17 am
@1st Time Home Buyer:
Sit tight until after the Olympics and rents come down a bit. Then enjoy your rental for a year or two until mortgage rates go up and force prices down.
Or not. Just don't count on those mortgage rates staying down this low for much longer.
January 26th, 2010 at 2:04 am
@tim:
The headline does not reflect the actual conclusion, which is:
Somerville is saying that there is no evidence that the Olympics cause a boom or bust after the event, not that such a boom or bust never happens.
For example, there was a RE bust in Montreal shortly after the 1976 Olympics, but it had a lot more to do with the election of the first PQ government than anything to do with the games.
Similarly, there was a RE boom (or should I say bubble, it crashed in the early 90's) in Los Angeles shortly after the 1984 Olympics, but that had nothing to do with the games either.
January 26th, 2010 at 1:44 am
@Dave:
No it wasn't. I have said on this board that the price/rent for houses was 100 in the mid-80's. As the other poster said, we saw a price/rent of 120 (or less) for condos as recently as the turn of the century.
Did I claim otherwise? What I said that what an asset is worth to a buyer, i.e. its economic return, is the present discounted value of its future income, unless he can sell it for more.
"Price is what you pay, value is what you get." Get it?
Straw man much?
January 26th, 2010 at 1:20 am
Are Canadians rubes?
http://www.howestreet.com/articles/index.php?arti…
January 26th, 2010 at 12:53 am
rents-thousands either negotiated a reduction or got more for less but tens of thousands saw the standard increase and ergo overall rents went up. for the first time in awhile new renters likely faired better than existing renters. a bit of even up. i anticipate a lot of renters were cranky when they got the 3% increase this year, psychologically may have pushed some into the first time buyers pool despite the renters premium.
January 26th, 2010 at 12:52 am
sweet "micro lofts" thats RE speak for broom closet
http://www.cbc.ca/canada/british-columbia/story/2…
January 26th, 2010 at 12:44 am
80 – "Only person ever moved to Los Angeles from Vancover"
———————
Don't. Be. A. Fucking. Retard.
Slow enough for you?
January 26th, 2010 at 12:19 am
"You need to be allowing the land on the fringe to be opened up to development without the planners telling where the development must occur."(paragraph from study)
Similar issue was introduced by Professor Robert Shiller in 2008 but Professor was unable to conclude desire to live in perticular place.
In result most of the pre-sale buyers in Dubai left their deposit with developers and their Cars on the Dubai Airport for free(nice building but no ass hemps in surrounding area).
Even some people who have thought that velley is within reach of Vancouver also withdrew their deposit from the left over Infinity Towers 3 hanging in the air 4th and fifth never commenced (Nice architect rendering on table but it was not close to Robson Street)in contrast to that Bessley in Vancouver was sold on cheated(artificial) low prices overnite.
If i was not in Vancouver i should have move to New Delhi because i can't comporomise with anyother place in this world other than Vancouver.
But Brent Gilmour, acting CEO of the Canadian Urban Institute, said the report oversimplifies other factors that affect housing affordability, such as regional real estate markets and economic conditions.
The report also fails to include the financial, social and environmental benefits of "smart" urban planning. They include lower infrastructure costs, reducing the need for long commutes and cities designed for people who don't or can't drive cars, he said.
"You have to look at the quality of life in a neighbourhood. The ability to walk, to bicycle. Are there parks and recreational facilities that are nearby?" Gilmour said from Toronto.
"This study doesn't take into consideration any of those things."
January 26th, 2010 at 12:15 am
For what it's worth, I have heard several (many) people I know well saying that rents are going down. In particular, a guy just moved to a different apartment in the same building (cool, hip place). The new apartment is larger and 10 floors (!) above the old: price difference? He is saving around $50 per month with respect to the old price.
Some rent inflation, uh?
January 26th, 2010 at 12:12 am
Fart-iculous * adverb
- a combination of indigestible bullshit that has by-passed the colon and stinks up an entire town. Causes mental fatigue, disgust,delerium, inflammatory speculation.
-origins
see: Bob Rennie, Tony Parsons, Ozzie Jerkoff , REBGV, CREA, and acilliory commentators and pretend economics professionals of Credit Unions and Banks.
history
pending mass insanity and screaming 'I buy treeeeee, my huzba buy treeeeeee!
First postulated by Realpaul, Vancouver Condo Info.Expected to enter Wikipedia very soon and become common venacular for the mental state of real estate fools.
Ex: BOC governor says real estate is no where near farticulous in price, but we're keeping an eye out due to 'excitement' in the Otttawa region.
January 25th, 2010 at 11:44 pm
@VRENGD:If seatlle or los angeles were more attractive then Vancouver.
Why American people move here to live in Vancouver BC?
Only person ever moved to Los Angeles from Vancover was Re-Esteven (1st ever r.e. number publisher)He has sold his house in West Vancouver in 2007 for Two million Dollars and the place that he have bought in los Angeles is going down,down,down,and down.I am 100% sure that he has lost entire gain he has earned from West Vancouver Home and he had loss half of the principle amount as well.Now he don't have any other credit card to fly back to Vancouver.
Those who don't understand Vancouver economy can double check article for restriction of land,There is demand of more than 21,500 in Vancouver every year in normal time it ended up at 35000 unit sometime goes upto 60,000 unit.
Just buy and hand it over to next batch.
Intentional loss in emergency exit:$0-$10,000 on condo 0-25,000 on house.
Profit:$5,000-25000 yr on condo and $ 10,000 -$100,000. on House.
What is economy:Just buy starbucks,subway eat fresh and chill out.
January 25th, 2010 at 11:37 pm
@1st Time Home Buyer:
Check this out:
http://www.gailvazoxlade.com/resources/guide_to_b…
2…The financial rule of thumb says you shouldn’t spend more than 35% of your net income on housing. (That includes mortgage/rent, condo fees/maintenance, property tax and utilities.) If you’re spending more than 35%, either you can look for ways to cut back on your housing costs, you can make more money, or you can trim in other areas (like transportation) so you end up balancing at the bottom line.
January 25th, 2010 at 11:25 pm
Suburban Rents: As someone who has been renting out a basement suite in Burnaby for the past 18 months i can confirm rent deflation. I was able to get 900 + bills in Sept 08 and by Sept 09 i was lucky to re-rent for 850 all inc. I checked Craigslist and 850 was the going rate.
OtherTed: In 2001/02 one bedroom rentals off Commercial & 7th/8th sold for 90k and rented for 600 (150 times rent). I remember at the time that based on a 5 year fixed the rent almost covered mortgage, tax and strata.
January 25th, 2010 at 11:08 pm
@bestplaceonmeth:
"950K is the average, benchmark is 766K, just 5K below the May 2008 peak."
Yes, that's the average detached. The 'average' Turner was referring to was the housing average ie. averaging all types of housing together, condos, attached AND detached.
January 25th, 2010 at 10:43 pm
"News Flash! This just in, hot off the presses! Vancouver has become one of the most unaffordable cities in the world."
Aha? ahan? excuse me please!
When bulls have been telling their bears friends that Vancouver real estate never goes down they mean it while bears were predicting crash!!!!!
What else on earth will convince the bears instead of truth itself?
None other than this Article,This news is a proof that hey…..@V R E N G D:
January 25th, 2010 at 10:16 pm
@Dave: "The latest CMHC report showed that rents were increasing at faster than inflation"
… for the City of Vancouver. The suburbs are seeing rent deflation. Anecdotal reports from property managers, and what I am observing, seem incongruous with the CMHC report. FWIW.
January 25th, 2010 at 10:05 pm
“It’s the poster child for the entire housing bubble,” said Daniel Alpert, managing partner of Westwood Capital. “There’ll be some other spectacular blowups, but this will be at the top of the pecking order.”
Mr. McIlwain said it may take a decade or more for the prices to reach the levels they did in 2006.
Housing Complex Goes to Creditors
(New York…the Big Apple…but not here? RTP)
January 25th, 2010 at 9:53 pm
@patriotz:
No, the market price is the price that both sellers and buyers are willing to accept.
January 25th, 2010 at 9:23 pm
@Drachen:
950K is the average, benchmark is 766K, just 5K below the May 2008 peak.
http://www.rew.ca/marketstats.htm
January 25th, 2010 at 8:55 pm
http://www.nytimes.com/2010/01/25/nyregion/25stuy…
January 25th, 2010 at 8:47 pm
@realpaul:
"The average income has been 57,000 for several years and recently it was announced with some farticulous fanfare that the ‘average price’ had hit 950,000 and set to broach the ‘psychologically important one million mark’."
$950k is the SFH average (actually I think it's median). He's talking about housing as a whole, the average of Detached, Attached and Condos.
January 25th, 2010 at 8:39 pm
@Vansanity:
I'm envisioning Ozzie Jurock hastily fleeing back to Germany as hordes of pitchfork-wielding first time buyers chase him out of town.
January 25th, 2010 at 8:34 pm
Garth Turner should be banned ! This truth telling shouldn't be allowed. What happens to the expensive propaganda machine if the sheeple are told the truth?
"The current housing bubble has been caused by emergency interest rates engineered by the central bank. It’s the result of government-backed mortgage insurance which lets people without money buy houses. It has been pumped, promoted and pimped by the mainstream media, populated by home-owning producers and editors and run by advertising-starved, indebted corporations. It’s been desperately promoted by the feds through tax incentives and blanket approvals by the minister of finance. And it’s been fueled by self-dealing lenders, realtors, developers, real estate boards and huzzah-huzzah marketers who have told people, buy now or buy never.
In contrast, it has not been the result of an increase in disposable incomes, an influx of new investment and jobs or economic growth. And that’s why the thing cannot last."
Now, I actually have a bone to pick with garth T, in that he has said the price/income ratio in Vanshitstain is 9.3.
The average income has been 57,000 for several years and recently it was announced with some farticulous fanfare that the 'average price' had hit 950,000 and set to broach the 'psychologically important one million mark'.
Doesn't that make the price/income ration 16.6666666666666 ? Devilish time to be 'getting into the market' isn't it?
January 25th, 2010 at 8:27 pm
there is increased leverage for renters currently, but rents aren't falling. tens of thousands of tenants would have received rent increase notices last year. it's a market, good deals can be found. a blanket statement stating that rents are falling is conveniently simple.
January 25th, 2010 at 8:03 pm
For those who like to reference UBC – Sauder for stats, here's another one for you. I assume this is backed by empirical evidence.
No evidence of a post-Olympics boom or bust for host city real estate prices: UBC study
January 25th, 2010 at 7:46 pm
@Dave:
That's what they are worth to the seller. What they are worth to the buyer is the present discounted value of net rental income, i.e. fundamental value, unless a greater fool is willing to pay more. And greater fools always run out.
"Price is what you pay, value is what you get"
- Warren Buffett
January 25th, 2010 at 7:32 pm
dave 63. I don't think that is true. I know its not scientific but the small sample of friends and acquaintances tells me otherwise. I knew of more than one person who owned an apartment that cost in the $100,000 range that could have rented out the places for $1000 a month in the early part of the decade.
January 25th, 2010 at 7:26 pm
@patriotz:
Condos are worth what the market deems them to be worth. Condos has been valued at more than 120 times for quite a long time. I believe it was you who said we have to rewind all the way to the mid 80's to get back to this valuation. You might be happy sitting out of the market for a quarter century, but not every has that kind of time.
January 25th, 2010 at 7:24 pm
This is soooo stupid.
I keep telling people that BC/Vancouver are the last in and the last out of any boom/recession.
Seen it all before.
Anyone who has bought in the past few years will regret it.
January 25th, 2010 at 7:22 pm
@patriotz:
No, rents are not falling. The latest CMHC report showed that rents were increasing at faster than inflation.
January 25th, 2010 at 7:04 pm
@Anonymous: I understand that when you have kids the nesting instinct kicks in and makes you want to 'own' instead of 'rent', but you don't really ever need to buy a place.
My parents rented up until I was 8 years of age and only bought when prices crashed in the early eighties. They got a house for less than half the price it had been just a couple years before, so it finally made sense to buy. I remember the 'renting' years as being completely happy, in fact if anything, my parents stress level went up when they bought (it was a fixer-upper).
January 25th, 2010 at 6:50 pm
CIBC's calculator said I was eligible for a mortgage in excess of 6 times my annual income at their 5 year variable rate.
Talk about financial suicide. Unless….it's different this time!
January 25th, 2010 at 6:45 pm
The most overpriced real estate in the world, and yet the worthless local cheerleaders keep telling is it can and should go higher because wealthy leprechauns and warlocks are oh so desperate to buy our million dollar shitshacks and we'd all better get in the market or we'll never get another chance.
Honestly, these douche bags should kill themselves. Cockroaches are more useful than our real estate cheerleaders.
January 25th, 2010 at 6:41 pm
@Bubble Lad:
In the majority of US states (the recourse ones) mortgage lenders have essentially the same legal recourse to the borrowers' assets as they do here. The reason people seem to be getting away with it (for the time being) is, as I said, the banks are either too busy or are trying to defer realizing the losses. Note also the "slice and dice" securitization of so many loans in the US creates legal and administrative problems with foreclosure and deficiency recovery. That is not the case here as CMHC is the direct creditor of securitized loans.
Of course it's an estimate because it hasn't happened yet. But nowhere else in Canada have prices been so inflated for so long as in BC, nor has so much of the economy become dependent on RE. We are Canada's Florida – I don't think a comparison even to California is appropriate.
Note also, the Alberta bust which began in mid-2007 and was reversed at the same time as BC's by the low interest rates, i.e which ran for over a year, has already flushed out some of the weakest buyers. The bubble in Toronto and more recently Ottawa has not been around for long.
Take a look at this chart. Every city has higher household incomes than Vancouver, except Montreal.
http://www.chpc.biz/Major_Cities_Chart.htm
January 25th, 2010 at 6:35 pm
@crabman: good one
January 25th, 2010 at 6:32 pm
I'm not the most articulate person but I think I get my point across. What does it say when your bank is willing to lend you a "severly unaffordable" mortgage? How can that possibly go right?
Welcome to Vansanity.
January 25th, 2010 at 5:58 pm
bank* (although "back" works too)
January 25th, 2010 at 5:57 pm
49 – vansanity:
I know what you mean. Last time I talked to someone at the back (about RRSP stuff) they asked me about buying and said I could borrow (according to their computer thingy) over $550k. Seriously, who wants that kind of debt as a single person? I told them thank you no.
January 25th, 2010 at 5:55 pm
#17. Purp makes a good point about unaffordability since 1989. But there was a correction in the late 90's. I have not analyzed the numbers but I do feel the correction wasn't deep enough. But I always figured there was a discrepancy between incomes for the different generations. The boomers made good money in Vancouver. Mine made squat. So if you looked at the Boomers who were doing most of the buying price to cost of owining probably made more sense.
January 25th, 2010 at 5:45 pm
Sorry that should read 'Vanoc is bringing in 3000 (thousand with a T) to scurry the Vanco princes around town all with US drivers – zero Canadian content.