April 19th effect on presales
Well, April 19th is here and as most of you already know that means the new CMHC mortgage rules are now in effect and we’re about to see how fragile the Vancouver real estate market is at this price level.
We’ve talked a lot around here about the new rules and how they’ll affect interest rate approvals and how suite income is calculated, but there’s one aspect of the new rules that I haven’t seen anyone here mention until now. Paulb points out this lawyers bulletin that addresses the potential effect these new rules will have on presales. This is well worth the read, and the HST will only magnify these effects.
They point out some basic math in that PDF – a presales buyer of a $500k condo will now have to come up with an extra $30k in cash at closing to bridge the gap between what lenders will now finance. With a 15% market drop (remember a year ago?) that becomes an extra $93,000 in cash the buyer will have to come up with to bridge the gap.
It’s starting to look like the Vancouver presales condo is about to turn from moneymaker to albatross. We got a preview of that during the last minicrash when developers started suing buyers who tried to get out of their contracts. We may see a return to the bad old days sooner rather than later, particularly for those investors who rely on faith as the largest component of their investment strategy.
It also looks like today will coincidentally be the day we get our 16,000th place put up for sale.
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April 19th, 2010 at 3:17 am
From the link:
Nope, they certainly are speculators, just as someone who buys a futures contract on stocks is a speculator. Anyone making a bet on the future price of an asset is a speculator by definition.
April 19th, 2010 at 5:44 am
If you listen really carefully you can hear the world’s smallest violin playing a song.
April 19th, 2010 at 6:11 am
Feels like Christmas morning.
April 19th, 2010 at 6:55 am
I suspect as the new rules kick in, the line between criminal and “creative financing” will get a little more blurred.
Just because there are new rules, doesn’t mean there are no new ways to get around them.
The pumpers will keep getting more and more “creative” and we won’t know just how creative, or criminal they have become until the crash, and the subsequent need for scapegoats.
April 19th, 2010 at 6:59 am
@Keeping an Eye on the Pimps:
Sure there are ways to get around rules, but there is no way to get around higher interest rates. That’s what really matters. Loose borrowing standards cannot sustain a bubble here any more than it could south of the border. Fundamentals alway win.
April 19th, 2010 at 7:09 am
” Fundamentals alway win.”
True in the long run. I think we are quite close to the moment of truth, although there may be a couple more rabbits left.
Don’t forget the pimps have a radio station, and several newspapers!
April 19th, 2010 at 8:08 am
@buffates:
“Feels like Christmas morning.”
Ah, the fresh smell of BC pine on the way to work from Burnaby this morning. Wait, that’s not pine, it the good ‘o BC bud smell. Guess it’s blooming season. That speculator needs to come up with the $93,000 somehow.
April 19th, 2010 at 8:17 am
#6 said “Don’t forget the pimps have a radio station, and several newspapers!”
True, but the media also like to sell paper, which they do when people are panicking. Remember the H1N1 media splash.
April 19th, 2010 at 8:34 am
Very interesting, I hadnt thought of this either. Someone could have signed a presale agreement well over a year ago and had no idea that these changes were coming. Then again anyone signing over a year ago probably got a cheaper price and will now have a bit of ‘equity’ as wiggle room.
April 19th, 2010 at 8:41 am
@davers: Maybe. But remember that presales often price higher than the ‘spot price’ for condos–they bake in some appreciation.
April 19th, 2010 at 8:59 am
@davers:
“Now” is not going to last long.
April 19th, 2010 at 9:09 am
There will be no crash.
The revaluation of the Yuan will take care of everything.
April 19th, 2010 at 9:42 am
Old Rules:Revenue property =35% Down payment,TD Canada Trust.
New Rules:Revenue property =20% Down payments, All Canadian Banks.
Difference:Minus 15% down payments,now buyers can buy a revenue property on 15% lower down payments compare to the old rules.
April 19th, 2010 at 9:55 am
i don’t think prices will correct by much in the short term (5-10%, 6 months) because move up buyers already have enough equity (if one had bought >3 years) and will not be affected by the new cmhc rules for <20% down. for example, a friend of mine just sold her 1 bedroom condo after 5 years. i'm guessing after paying the balance off, she's sitting on $200k. her and her spouse are now looking to move up to sfh around $750k. they'll be limited a bit by the new rental income rules but they have enough income to qualify at today's rates (4.3% 5 year fixed?) . it's only when the pool of first time buyers completely dries up will we see any movement in the markets. i'm as bearish as they come but most people are fearless when it comes to debt so i think we'll see a gradual correction (~25%, 5 years); unless there's a black swan event.
April 19th, 2010 at 9:57 am
@EndGame:
A significant revaluation of the Yuan is likely to result in a serious correction in Chinese markets. Theirs is the only bubble larger than our own.
Some 50-60% of Chinese GDP is thanks to Real Estate construction. That should tell you all you need to know.
A significant Chinese correction would have the Chinese flipping their condos like Tech Stocks in 2000 and would decimate Van RE.
Don’t act surprised.
April 19th, 2010 at 10:13 am
Downtown False Creek North condo inventory (from public MLS) is >1000. chart here.
April 19th, 2010 at 10:28 am
“Downtown False Creek North condo inventory (from public MLS) is >1000. chart here.’
This is very dramatic and significant. The supply exposion seems to be amplified by a factor of 4 or 5 in the DT Penninsula.
This geography is the epicenter of Vancovuer RE speculation, where the condos with their lower prices(compared to SFH), ever increasing offerings (compared to SFH) were the perfect RE speculation vehicle for the last 10 years. They allowed the masses to play the game
VHB’s graph is evidence of a comming bullet to the heart of the Vancouver RE bubble and the consequential withering of the masses’ (phantom) net worth.
April 19th, 2010 at 10:29 am
@rig jockey:
And who is going to buy the properties that they are moving up from?
A ladder cannot stay in the air without its lowest rung.
April 19th, 2010 at 10:30 am
Girlbear:“Let the new rules kick in”
Old Rules:Mortgage term and downpayments 35 yr 5% down.
New Rules:Mortgage term and downpayments 35 yr 5% down.
Difference:?
No difference.
April 19th, 2010 at 10:57 am
Now back on topic. About April 19th: We have heard that it takes about 2 weeks for sales to make their way into the daily data.
So, we shouldn’t expect the sales numbers to drop off *today*, but within two weeks or so.
Could someone who knows about this explain why it takes two weeks? What are the steps involved? I will archive the answer over at the forum here so that we can refer to this easily in the future.
April 19th, 2010 at 11:07 am
http://www.yattermatters.com/n.....will-hurt/
….in case anyone missed this…
April 19th, 2010 at 11:12 am
@Girlbear: Kind of a dumb post. This yatter matters guy obviously has never taken a stats course. To claim prices are down over 20 percent based on such a small sample size is absurd.
April 19th, 2010 at 11:19 am
Wow, glad I don’t own a home, especially an attached one in the Cambie neighbourhood:
“A popular neighbourhood, Cambie townhomes, condo’s and apartments carved a remarkable downward path with a median price drop of $136,500 in the past 60 days”
http://www.yattermatters.com/n.....will-hurt/
This must be another Larry Yatkowsky in Vancouver, WA since prices always go up in Vancouver, BC
April 19th, 2010 at 11:51 am
@VanRod:
I am sorry dude, you have no clue on statistic obviously.
No matter what is the standard deviation , you can not discredit the sheer price move – its more then shocking. Its so shocking that I had to ask if he has a math error in his computations. You can not get these numbers easy…
beside the statistics issue you have, Larry never claimed that the prices are down 24%, read more carefully.
April 19th, 2010 at 11:52 am
@VHB: For the (now past) April 19th deadline the sale needs to have closed, i.e. removal of all subjects. Pending sales take some days due to removal of subjects and this may be the 1-2 week delay to which Realtors are referring. Any sales still pending are SOL for the old CMHC guidelines. I think closed sales are loaded into MLS relatively quickly but paulb can correct me.
April 19th, 2010 at 11:53 am
@patriotz:
i don’t think the new cmhc rules and interest hikes will turn off the flow of new homebuyers completely. as asking prices adjust downward, there will still be buyers for whatever reason (pre-approval expiring, nesting, peer pressure, fear etc…) people like my friend, who recently sold (sitting on $200k) are renting sort term until things simmer down a bit (no multiple bid situation) she believes the market will not crash, so she doesn’t see the point in waiting too long. i assume within the next few weeks she’ll pull the trigger allowing the seller to “move-up” to their next place. anyways my point is, there will be a transition period before the full effect of decreased fist time buyers is felt, whatever that may be.
April 19th, 2010 at 12:10 pm
@patriotz: Someone is not necessarily “certainly” a speculator just because they are investing on the basis of a change in price. For example, if I invest in a toll road in construction on the basis that discount rates decline as roads emerge from construction and then complete ramp-up, I am still an investor, not a speculator. The basis of my investment is potential capital gains, but I am investing on the basis the observed change in market risk perception as the risk profile of the asset changes.
“Speculation typically involves the lending of money or the purchase of assets, equity or debt but in a manner that has not been given thorough analysis or is deemed to have low margin of safety or a significant risk of the loss of the principal investment.”
“Financial speculation can involve the buying, holding, selling, and short-selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives, or any valuable financial instrument to profit from fluctuations in its price, irrespective of its underlying value.” – Wikipedia
In the example I discussed above, investing in a toll road on the basis of future price changes is investing on the basis of a forecast change in underlying value because of a previously observed change in asset risk profile for similar assets.
In contrast, those purchasing condo pre-sales are almost certainly price speculators, investing without considerable analysis, without knowledge of the underlying value, and on the basis that prices will likely deviate further from fundamentals in the future.
April 19th, 2010 at 12:15 pm
@asalvari1:
“No matter what is the standard deviation , you can not discredit the sheer price move”
Huh? If you have a high standard deviation the price data you get will be less reliable, so you CAN discredit it to some extent.
April 19th, 2010 at 1:00 pm
New Listings 127
Price Changes 108
Sold Listings 51
RE: 1-2 weeks for sales to flood in
Yes that’s about right. I would say in this hot market most of the subject removal periods would be less than 1 week. So 2 weeks is fair considering the info has to be submitted to the board for processing which can take a few business days.
April 19th, 2010 at 1:19 pm
@paulb:
But if there was a stampede to beat the new rules, then the two week period would be shortened as all subjects would have to be removed prior to today. No?
April 19th, 2010 at 1:27 pm
@paulb: so, till when do we expect to see the April 19 deadline effect? I mean by what time 75% of pre-apr19 sales would be completed.
April 19th, 2010 at 1:29 pm
@VanRod:
“…discredit it to some extent.”
Please enlighten me to what extent, and when that extent does not matter.
Are you ready to claim that despite these statistics, prices are raising there ?
What I am saying is the following:
We can argue what is the actual drop of the prices. I would never claim 24% is correct, neither Larry did that (if you read carefully)
what I read in your comment is that you are dismissing the numbers completely due to low number of samples. That’s my point, you can not dismiss them completely (but to some extent – i.e. percent down is probably wrong) due to huge downward slide. There is no question in my mind that the area has lower prices. (how much ? I don’t know and I don’t believe that we can get that number very quickly)
April 19th, 2010 at 1:41 pm
@Not much of a name…:
The paperwork still has to be sent in to the board and be processed. That’s after the Realtor fills in the required paperwork.
That said you are right, the subjects have to have been removed prior the 19th to dodge the new rules.
I personally don’t expect a surge in sales numbers.
Paulbfan: I woud think by this weeks end.
April 19th, 2010 at 2:06 pm
2:05pm update
15,978
April 19th, 2010 at 2:12 pm
Did anyone else listen to The Current radio piece on CBC. At about 12:45 I interpret Klump to imply that pre-approvals prior to today (he uses a hypothetical pre-approval on Sunday, the 18th) will no be subject to the new rules???
Thoughts?
Klump is not very clear nor a good speaker, Danielle Park delivers well.
April 19th, 2010 at 2:18 pm
@CbcParkKlump:
Good call. Here is the link.
http://www.cbc.ca/thecurrent/2.....-2010.html
April 19th, 2010 at 2:30 pm
uh-oh
New Listings 174
Price Changes 128
Sold Listings 55
April 19th, 2010 at 2:31 pm
@CbcParkKlump: Is this true? that would mean the nonsense would continue for another 3 months?
April 19th, 2010 at 2:35 pm
Ah, what a beautiful day this is – the first day of the real estate crash.
I love the smell of napalm in the morning.
See you all at the 16,000 party tonight.
April 19th, 2010 at 2:35 pm
@CbcParkKlump:
No he is talking about the effects of the rising mortgage rates only, not the new investor rules and assumes someone gets their pre-approval April 18th. lol!
April 19th, 2010 at 2:36 pm
@paulb fan:
Not true, ALL mortgages insured starting today must use the new rules to qualify from the CMHC. Pre approvals have nothing to do with it.
April 19th, 2010 at 2:37 pm
@CbcParkKlump:
Any deal that was not signed by yesterday is subject to the new rules.
Pre-approvals mean nothing now, other than locking in an interest rate for 90-120 days.
April 19th, 2010 at 2:37 pm
Thanks for the CBC Radio link, great stuff.
CREA economist Klump sounded like he was blustered and on the defensive. “Demand driven decline” with “sticky prices”.
We have saved this quote with the other bubble denier quotes:
Anyone expecting a massive price decline like you are seeing in the US is going to be sorely disappointed.
Gregory Klump, Chief Economist with the Canadian Real Estate Association, CBC Radio, 19 Apr 2010
http://www.cbc.ca/thecurrent/2.....-2010.html
April 19th, 2010 at 2:50 pm
@VanRod: Lary’s not making any claims of statistical significance (and nor am I). He’s just posting the same ole straight up numbers the same way he always does. It’s interesting thought as at a glance it would seem the tides are changing. Time will tell.
April 19th, 2010 at 2:50 pm
thank guys. what a relief.
April 19th, 2010 at 2:51 pm
@paulb:
Hi Paul,
Question for you: Do you know, or can you tell me how to find out myself how many total properties there are in Greater Vancouver?
SFH/Condos/Attached.
Thanks,
BPOM
April 19th, 2010 at 2:55 pm
At my big 5 bank we’re using the new 5 year posted rule on ALL applications, cmhc AND conventional. Also prequals have to requalify unless there is a signed offer prior to Apr 19th
April 19th, 2010 at 2:58 pm
Danielle Park absolutely OWNED Klump on that CBC radio interview. Klump stumbled from one non sequitir talking point to another and I can’t believe the CREA picked him to represent them.
April 19th, 2010 at 2:58 pm
I am at our western approval center (big 5 bank) and all I hear right now is crickets compared to years past except for one year and I’ve been here since 2004
April 19th, 2010 at 3:01 pm
Vancouverguy this published definition may help
“Investment Value: The specific value of a property to a particular investor or class of investors based on an individual investment requirements; distinguished from market value, which is impersonal and detached.”
2nd Canadian Edition – The Appraisal of Real Estate. 2005
-Just thought I’d help. A lot of people on the blog seem to have a difficulty with what an investment is or isn’t
April 19th, 2010 at 3:09 pm
@Best place on meth:
I’m told 4448 for just Van East and Van West. Inventory will know for sure.
April 19th, 2010 at 3:11 pm
3:11pm
15,999
April 19th, 2010 at 3:13 pm
************* 1/1/2010 / 4/19/2010 / % change
Bowen Isld 46 / 106 / 130.43%
_Bby East 68 / 154 / 126.47%
_Bby North 345 / 732 / 112.17%
Bby South 362 / 689 / 90.33%
Coquitlam 531 / 1086 / 104.52%
Van.&Gulf 215 / 261 / 21.40%
___Ladner 65 / 151 / 132.31%
MapleRidge 575 / 970 / 68.70%
_New West 262 / 568 / 116.79%
_North Van. 412 / 906 / 119.90%
OutofTown 105 / 74 / -29.52%
_Pitt Mead 121 / 189 / 56.20%
_Port Coq. 237 / 442 / 86.50%
PortMoody 213 / 421 / 97.65%
_Richmond 893 / 1722 / 92.83%
_Squamish 402 / 492 / 22.39%
Sunshine C. 656 / 1021 / 55.64%
_Tsawssen 98 / 181 / 84.69%
__Van East 767 / 1358 / 77.05%
_Van West 1396 / 3087 / 121.13%
_West Van 386 / 634 / 64.25%
__Whistler 569 / 755 / 32.69%
_____Total 8724 / 15999 / 83.39%
April 19th, 2010 at 3:13 pm
@Inventory: BRING IT BABY–ONE MORE TIME–PAPA NEEDS SOME RELEASE–ONE MORE BABY
April 19th, 2010 at 3:14 pm
@Inventory: F*CK IT. I’m starting the party NOW! C’mon over!
April 19th, 2010 at 3:16 pm
@paulb:
Sorry, I meant total properties. Not just the ones for sale.
With 2 million people and an ownership rate in the 65% range I’m guessing there could be 500,000 properties in Metro Van with about 2.5 people per residence.
I’m just wondering how high inventory could get if 5% or 10% decide they want to sell in the next year or two.
April 19th, 2010 at 3:22 pm
Klump is right. We will not have the same melt down as the US. It will be worst. The longer we wait, the higher we climb, the greater it will fall!!!!!!
Vancouver housing crash will be steep and fast. Recovery will not be for a decade. And no more low interest rates.
April 19th, 2010 at 3:23 pm
@Best place on meth:
Looks like 817,225 households in GVRD from the 2006 Vancouver census.
http://www.tol.ca/files/web_fi.....-_GVRD.pdf
April 19th, 2010 at 3:26 pm
@paulb:
Thanks Paul,
500K should be a reasonable guess then for households that are owned.
April 19th, 2010 at 3:28 pm
@Best place on meth:
Wouldn’t they all be owned? If a person is renting it owned by someone else.
April 19th, 2010 at 3:37 pm
@Not much of a name…:
It’s not that simple when it comes to renter occupied dwellings.
You have apartment buildings and co-ops that cannot be put on the market like condos/houses.
Then there are SFH’s with multiple residences.
April 19th, 2010 at 3:59 pm
New Listings 231
Price Changes 159
Sold Listings 69
April 19th, 2010 at 4:26 pm
Cheap credit. Why is it so hard for some people to figure out the effect cheap credit has on prices?
April 19th, 2010 at 4:27 pm
@Best place on meth:
Which is an oxymoron, but in Vancouver, logic always takes a back seat.
April 19th, 2010 at 4:31 pm
***BREAKING NEWS***4:31PM 16K PARTY!!!
16,037
April 19th, 2010 at 4:41 pm
@paulb: April 19th – sold/list as of Paul B’s latest is 30%!
Massively bearish territory in that number.
Whoot!!!
April 19th, 2010 at 4:45 pm
Nice to see price changes double the number on sales. Telling.
Almost reading to break out some bubbly!
April 19th, 2010 at 4:49 pm
@Inventory:
KC and the Sunshine Band:
“Do a little dance,
Make a little love,
Get down tonight!
Get down tonight!
Wooooo! Baby!!!!
April 19th, 2010 at 5:03 pm
Life is good
New Listings 273
Price Changes 183
Sold Listings 81
Nice day for a 16k party
April 19th, 2010 at 5:08 pm
Is this now that point of the roller coaster where the front car disappears as it starts to head down the first big hill??? Could be.
April 19th, 2010 at 5:12 pm
@Inventory: On May 20th@20K (aka milestone 2020)…
As the Horde and Alliance of specuvestors race to the epicenter of the cataclysm, the kingdoms of Vancouver will witness seismic shifts in power, the kindling of a war of the fundamentals, and the emergence of the rates and regulations who will rise up to protect their scarred and broken world from utter devastation.
Cataclysm is a trademark, and World of Warcraft and Blizzard Entertainment are trademarks or registered trademarks of Blizzard Entertainment, Inc.
April 19th, 2010 at 5:13 pm
@rig jockey:
“i don’t think the new cmhc rules and interest hikes will turn off the flow of new homebuyers completely. as asking prices adjust downward, there will still be buyers for whatever reason (pre-approval expiring, nesting, peer pressure, fear etc…) people like my friend, who recently sold (sitting on $200k) are renting sort term until things simmer down a bit (no multiple bid situation) she believes the market will not crash, so she doesn’t see the point in waiting too long. ”
Your reasoning is sound – but I wonder how much the psychological side of house prices dropping will compound the numbers getting out of the leaky vessel.
Reason and principles were bypassed over the last 3 1/2 years. I wonder if emotions (fear for example, ironically a driver on the way up) will start to drive the market.
I know three people in over their head if there’s a 2 point change in interest rates. I think they are all locked in for 5 years – so I wonder if there will be several shelves of drop off as mortgage rates get renewed.
April 19th, 2010 at 5:23 pm
any guess when we’ll hit 20,000? 30,000?
April 19th, 2010 at 5:24 pm
************* 1/1/2010 / 4/19/2010 / % change
Bowen Isld 46 / 106 / 130.43%
_Bby East 68 / 154 / 126.47%
_Bby North 345 / 732 / 112.17%
Bby South 362 / 687 / 89.78%
Coquitlam 531 / 1084 / 104.14%
Van.&Gulf 215 / 261 / 21.40%
___Ladner 65 / 153 / 135.38%
MapleRidge 575 / 969 / 68.52%
_New West 262 / 567 / 116.41%
_North Van. 412 / 915 / 122.09%
OutofTown 105 / 74 / -29.52%
_Pitt Mead 121 / 190 / 57.02%
_Port Coq. 237 / 443 / 86.92%
PortMoody 213 / 424 / 99.06%
_Richmond 893 / 1733 / 94.06%
_Squamish 402 / 495 / 23.13%
Sunshine C. 656 / 1031 / 57.16%
_Tsawssen 98 / 181 / 84.69%
__Van East 767 / 1366 / 78.10%
_Van West 1396 / 3091 / 121.42%
_West Van 386 / 636 / 64.77%
__Whistler 569 / 757 / 33.04%
_____Total 8724 / 16049 / 83.96%
**5:24pm
April 19th, 2010 at 5:36 pm
20,000 I’ll say late May/early June. 30,000 who knows.
April 19th, 2010 at 5:42 pm
“MARKET SENTIMENT” ahhhh GREED TURNS TO FEAR.
April 19th, 2010 at 5:52 pm
Gotta agree with Dude that our melt down will be “worst” than the US. In fact I think it will be MORE WORSER.
We got a lot of catching up to do, and it looks like we’re getting our second wind.
April 19th, 2010 at 6:09 pm
Just saw Vancouver’s real estate market featured on a Discovery Channel show called “Destroyed in Seconds”.
It was riveting programming.
April 19th, 2010 at 6:12 pm
If the Bank of Canada raises rates by a total of 75bps (0.75%) by the end of the year, that means that mortgage rates will be into the 7% range.
You can expect a sustained period of 25000+ listings at that point, and it will be an unholy bloodletting.
Wow, this could really get nasty.
I just hope our government (cash-strapped as it is), doesn’t try to meddle with the market and start offering a bunch of taxpayer funded incentives (like in the US) to temporarily stem the flow.
That kind of stuff simply doesn’t work.
April 19th, 2010 at 6:14 pm
Can anyone post inventory stats from the Fraser Valley?
I’d love to see their % listings increases as well.
Thanks very much in advance.
April 19th, 2010 at 6:22 pm
@Nero:
I’ll second that request for the Fraser valley numbers!
April 19th, 2010 at 6:27 pm
New Listings 314
Price Changes 200
Sold Listings 89
I call 17k by April 30th
April 19th, 2010 at 6:36 pm
Happy 16,000 Vancouver!
http://www.youtube.com/watch?v=jl-o5LsYtKU
Sixteen and never been kissed…but somehow very pregnant.
April 19th, 2010 at 6:49 pm
CBC has some guy claiming that the 20% DP for investors will have little effect:
So the government isn’t stupid enough to lend greedy investors the money so they start going after relatives instead. This is nothing more than the age old pattern of a serious gambling addiction.
April 19th, 2010 at 6:52 pm
@Joycer: I third. dying for FV numbers guys.
April 19th, 2010 at 6:58 pm
***UPDATE*** 6:58pm
16,071
April 19th, 2010 at 7:30 pm
@Limey:
“I know three people in over their head if there’s a 2 point change in interest rates. I think they are all locked in for 5 years – so I wonder if there will be several shelves of drop off as mortgage rates get renewed.”
i think you are right. i agree the market will correct slowly in stages instead of crashing >20% yoy. the new cmhc rules and higher interest rates will reduce mortgage amounts for first time buyers but not enough to stop current sellers with large amounts of equity from selling and climbing the property ladder.
as prices continue to contract people who bought in the last few years will not have as much equity. as their 5 year terms expire some may be underwater when it comes time to renew. the ones who panic or have no choice and have to sell at a loss, will dictate price movement. others may decide to re-amortize again at 35 years if the interest rates are too high and can’t manage the increased mortgage payment (similar to teaser loan, no?), will essentially become lifelong renters, but i digress.
anyways, one factor that may hasten the correction will be the speculators. with the new cmhc rules of 20% down, interest costs and potential market correction, will they abandon ship en masse or hold out. if speculators flee, at least we’ll see what the true housing demand is in vancouver.
April 19th, 2010 at 7:41 pm
200 price changes = PANIC.
Sellers are wetting themselves, it’s like tech stocks in 2000.
April 19th, 2010 at 7:43 pm
Just 17 sales in Vancouver today.
So much for the 2 week lag in reporting.
Vancouver East & West*
New Listings – 111
Back On Market Listings – 0
Price Changes – 54
Sold Listings – 17
Vancouver All Areas*
New Listings – 314
Back On Market Listings – 9
Price Changes – 197
Sold Listings – 88
*Attached & Detached @ 04/19/2010 19:35 PST YatterMatters.com: Courtesy REBGV.
April 19th, 2010 at 7:48 pm
Where is superdooperdumbasskitetojupiter? He better start buying to help these sales numbers!!
April 19th, 2010 at 7:49 pm
“***UPDATE*** 6:58pm
16,071″
On the plus side, the canucks are playing quite well today.
April 19th, 2010 at 7:50 pm
Nero said: “I just hope our government (cash-strapped as it is), doesn’t try to meddle with the market and start offering a bunch of taxpayer funded incentives (like in the US) to temporarily stem the flow. That kind of stuff simply doesn’t work.”
I wouldn’t count on them not trying that stuff. The government has proven it has no idea what is going on by fueling the bubble so far, why would they do anything logical by letting is deflate on it’s own? Hell what’s a couple more billion deficit if it keeps things looking good a bit longer – like maybe until the next election?
April 19th, 2010 at 7:54 pm
@ED: “The government has proven it has no idea what is going on by fueling the bubble so far..”
I disagree. The powers that be knew EXACTLY what they were doing in fueling this bubble. They stalled it on purpose…deal with tomorrow what you don’t want to deal with today. But eventually you have to pay the piper!
April 19th, 2010 at 7:56 pm
New Listings 327
Price Changes 200 Holy crap!
Sold Listings 89 Bwaaaahhhhaaaha
Listings are just trickling in now. Should be good for another dozen lsitings or so. Took 16k today with authority!
We started the month with 14,600 listings. 17,000 by month end would cement the end of the Vancouver market as we know it.
April 19th, 2010 at 8:23 pm
Paulb: You just want to see a crash out of spite and jealousy for your failed career and associates success. It’s really pathetic. You do realize that any future employer looking upon your character here would sure be dismayed by your behaviour. Hope you plan to be self-employed again.
BTW How’s the wife? Or is she still back East with her family?
PS: Go ahead sheepish supporters and bury me. Foreclosed comments probably get read more anyways.
April 19th, 2010 at 8:27 pm
The beginning of the end of the bull run is near. Listings are on the way up and sales on the way down. Game over for the bulls.
April 19th, 2010 at 8:30 pm
@No Insight:
Wow, so much rage.
But I do love the amateur psychological assessment. Can you do one for me now?
April 19th, 2010 at 8:34 pm
@No Insight: Absolutely classless to insult Paul, and in the same breath mention his wife. Amongst all my male friends, anything goes but referencing family and especially significant others. You may have meant no malice, but best to steer clear.
April 19th, 2010 at 8:35 pm
He’d get my business, I would definitely feel comfortable wuth Paul as my buyer’s agent.
April 19th, 2010 at 8:40 pm
An honest realtor is rare. A quality I demand in my agent not easy to find. People here will remember those who are and remain honest and true to themselves. Try this when any realtor says it’s a great time to buy ask them how many places they’ve bought it the last 6 months. Do as I say not as I do bullshit. Timing is everything and buying at the top and the most expensive on the earth. I can name 10 cities that are better than Vancouver and cheaper.
April 19th, 2010 at 8:41 pm
@No Insight: I’m all for free speech but that type of comment has no place on this blog.
I’m sorry you’re so angry. Where’s that smile? I know you can smile! Come join the party at the 16K party lounge! Everyone’s invited and there’s no cover charge!
April 19th, 2010 at 8:50 pm
Van. real estate: stick a fork in it..it’s done!
April 19th, 2010 at 8:52 pm
Now I just watch from the comfort of my rental unit ($780 a month new condo) that sold for 280k.
…but if you run into my landlord tell him I’m paying his mortgage off for him.
I sold my paid off townhouse (similar market value as the place I’m renting)and with my money invested I will rent mortgage free (assuming 3% raise annually in rent price) for the rest of my life with a fair amount of extra monthly cash flow.
LOL it seems backward…but in order to get cash flow from a property, you have to sell yours and take the equity out. Then you can invest in a favorable investment and rent for much less, or on the flip side, you could rent a much nicer home with the earnings from the same equity, even on an after-tax basis.
April 19th, 2010 at 8:58 pm
@No Insight:
disgruntled realtor?? I love realtors “cat fights”.
April 19th, 2010 at 9:07 pm
@No Insight
When one doesn’t like the message…shoot the messenger.
April 19th, 2010 at 9:10 pm
paulb, I’d making you my realtor in 2014. We’ll vulch together, in style.
April 19th, 2010 at 9:13 pm
Can you say good bye to future demand? Bye, Bye!
How about Bye, Bye to pre-sale line ups? Bye, Bye!
What about all the specu-pigs? Bye, Bye!
F##k’n stupid people rushing to buy right now! WTF.
April 19th, 2010 at 9:17 pm
Wow is no insight’s name ever bang on?
This clowns messages keep getting more nasty as the days go by. He must feel pretty threatened by what I have posted. Pathetic.
April 19th, 2010 at 9:17 pm
as much as i’m enjoying this, i still think we will see some very solid sales numbers in the days ahead
sip your celebration drinks, don’t start pounding the crystal just yet – but keep it on ice, the real party starts at 20,000!
April 19th, 2010 at 9:23 pm
Girlbear,
Any change in listing price and sold price stand for nothing as long it is different than market price.Imagine a units assessment value is $100,000.Once owner is ready to sell he will call the listing realtor.The listing realtor will assess the unit market value at $150,000.Owner is agree to sell on that prices but did not recieve enough response compare to other units.Listing realtor will approch back to sellers to change the prices.Perticular unit will process through same type of provision at the time of offers, buyers and sellers will throw those changing offers on each other to setup final prices.Even if unit sell for $100,005. unit prices are up despite 50k down from the listing prices.You can check any realtors stats there is always a margin of minus 1-2% in listing vs sold prices but avarage prices are up in monthly rebgv stats.
Larry is looking for response since Paulb is back,Larry got oppertunity in Paulb’s absence.Larry is just trying to impress bears and buyers but what about Paul? Real estate board and their team always at work!Run buddy run!
April 19th, 2010 at 9:24 pm
Today I met this guy who just bought a condo and says to me:”I am glad I bought a month ago, it was a really good time to buy, unlike now”
?!?!?!?!??!
April 19th, 2010 at 9:27 pm
So, how much will this do in the economy?
Consumer sentiment has in large part been driven by the wealth effect of appreciating housing. Give the media around a month to catch on and then when the average joe figures out that their place isn’t worth as much as they thought, people will slow down their spending – big time.
Better hope that our resource industries start doing well, or the current deficit isn’t going to seem like much.
Unfortunately for the politicians, voter sentiment follows consumer sentiment, so watch out there too.
April 19th, 2010 at 9:28 pm
“paulb, I’d making you my realtor in 2014. We’ll vulch together, in style.’
Who is going to pay his bills till 14 ?
April 19th, 2010 at 9:29 pm
kite your a total loser
April 19th, 2010 at 9:32 pm
oh yeah nutslaps! larry working paulb turf! paulb dont give up next leg coming! some nutslap hire u in 2014! you have car?
April 19th, 2010 at 9:35 pm
“Who is going to pay his bills till 14?
A just question for ALL Realtors.
April 19th, 2010 at 9:36 pm
“Unfortunately I don’t have good numbers for the bears tonight. In fact, V-Dog’s words should be ringing in more than a few ears”
According to Chipman, it’s bad news for the bears.
can anyone square this circle please.
April 19th, 2010 at 9:42 pm
yeaah jesse paulb ahead of his time! paulb looking good nice haircut! maybe cut it as chippendale!
April 19th, 2010 at 9:42 pm
@Anonymous: Chipman is a chimp pretending to be human. So dont bother.
April 19th, 2010 at 9:45 pm
Paulb fan, please don’t insult chimps.
April 19th, 2010 at 9:46 pm
I think sales are still gonna remain high till the end of the month, we haven’t run out of all the retarded FTB’s yet.
All the specuvestor’s are dumping their inventory right now.
April 19th, 2010 at 9:49 pm
@paulb: Hi Paul, you are the “Bear God”. Dont pay attention to assholes. Their desperation is showing up. Did you notice the change in Tommy’s tone on RET. Now he has brought up a property which he has not sold in last 4 months to show that he is being fair and rationale.
Unlike them, nobody is “uber bear” here as suggested by those of the clowns at RET. We are bunch of rational people and so we remain.
April 19th, 2010 at 9:50 pm
@paulb fan: oops, pls ignore my grammar. Its all in excitement you see. LOL.
April 19th, 2010 at 9:50 pm
327 listings make the canucks loss almost tolerable.
We’l get em next game with 527 listings.
April 19th, 2010 at 9:51 pm
@Anonymous: Yes, calling robbie a chimp is insulting chimps. Message taken. hahaha.
April 19th, 2010 at 9:59 pm
Jeremy Grantham – “If they do not go back to the old trend line price multiple of family income, which is what should drive house prices, it will be the first time in history that such a bubble has not broken.”
Extracts from FT.com interview:
http://wp.me/pcq1o-KA
April 19th, 2010 at 10:13 pm
Woah, I feel like I woke up in ’08. Paul/Inventory, you guys rock!
I was on the elevator a few days ago and a girl I work with got in on the next floor. Her husband also used to work with us and is a huuuuuge hockey fan, so I asked her if they watched the game (the one where the canucks won, sigh…) and she said “No we didn’t! We were busy looking for a condo to buy!” I was stunned, I didn’t think anything could stop him from watching playoff hockey. Today I found out they bought a place over the weekend, just before the deadline. WHEW!!!
April 19th, 2010 at 10:17 pm
@Anonymous:
Chimpman is a fucking idiot.
April 19th, 2010 at 10:19 pm
10:18pm UPDATE
16,088
April 19th, 2010 at 10:22 pm
Well said, Danielle Park, CFA, LLB
A rational voice in a largely irrational world.
http://www.cbc.ca/thecurrent/2.....2010.html#
Clip #2
April 19th, 2010 at 10:23 pm
Ladies and Gentleman. We have just witnessed the most exuberant blow off top in Vancouver housing history.
In the US, things kinda just whimpered to a close in 2006. Listings grew; sales tapered off. Eventually, prices started to drop.
But, there was no single day; no month when you said THIS IS IT.
We, on the other hand, have just experienced a concisely identifiable top.
April 19th.
We shall remember this day. For it is on this day that the citizens of Vancouver have begun to take their city back from the pumpers, the speculators, and the charlatans.
As of today, Vancouver again will have a future.
But first, there must be pain. Let the pain begin so that we may live again!
April 19th, 2010 at 10:32 pm
@VHB:
Are you saying the housing bubble actually popped today as we speak?
April 19th, 2010 at 10:32 pm
http://www.russianclimb.com/ma.....summit.jpg
April 19th, 2010 at 10:33 pm
Long way to base camp!
April 19th, 2010 at 10:38 pm
@VHB:
Bravo! lol, great post.
April 19th, 2010 at 10:43 pm
@Best place on meth: Did he pee in your coffee?
April 19th, 2010 at 10:44 pm
From Garth Turner at greaterfool.ca:
[regarding the hidden cost of a $600,000 mortgage with a prime VRM]
“At 2.25% (on a 25-year amortization), over five years you will pay $62,076 interest on this mortgage. At 5%, the interest payable mushrooms to $140,450. So, while mortgage rates hike less than 3%, the interest burden soars by 126%, costing an additional $15,674 per year.”
—
Remember that Elvis Costello song ’5 Gears In Reverse’ ?
April 19th, 2010 at 10:45 pm
Conservatively speaking, lets just say the market only crash by 40%, how many people will be in negative equity?
April 19th, 2010 at 10:45 pm
@Bystander: Yes. The bubble popped at precisely 8:01am this morning, when Rob Chipman asked the gimp Aaron to fetch his messages and Aaron said, “But uncle, there aren’t any!”
The sound of the burst bounced from Hastings and Boundary in a northward direction until it hit Mount Seymour. It reverberated, growing in strenght. Now headed back south, the growing wave of sound rebounded off the ‘W’ building in gastown, bidding a hasty retreat northward. Growing, ever growing in magnitude. Again North! It was a deafening roar. The gentle forest creatures in the approaches to Grouse looked up from their morning activities to see what was coming. They shuddered as it passed and bounced off the mountain and again headed South. The crescendo was deafening. Off the Shangri-La it went and returned north, quickening and gathering in strength. From there, to Cypress, and from there passed quickly over West Van across English Bay toward the promised land–Van West. Across spanish banks, up the hill, through Point Grey it roared. Rippling across Kerrisdale; racing to southlands and marpole; passing quickly over the airport and from there out to sea and then . . . .
silence
April 19th, 2010 at 10:49 pm
Is there any practical way to short the canadian housing market? Are there any options trading based on the teranet indices?
April 19th, 2010 at 10:51 pm
@VHB:
Great, let’s drink to it. Cheers!
April 19th, 2010 at 10:54 pm
@VHB:
“We”
Are you even Vancouverites?
there is no mother fucker on earth ever born to put his city in pain,however it’s not even 11 o clock yet, so hold on to your breath.
April 19th, 2010 at 11:03 pm
@Kite towards ground:
No need to be rude, have a drink on me, tonite. There will be plenty of time ahead of us for blood, sweat & tears and maybe something else…
April 19th, 2010 at 11:10 pm
@Bystander: Thanks but i don’t drink.however, you keep your drink and your scores,those are the only few items you will ever take away from this forum.
April 19th, 2010 at 11:13 pm
I am a long time reader of this blog but never took the time to post until today.
I have never quite understood why so many people get so giddy when the market seems to be headed down? For myself, a homeowner, I am more than happy to see the real estate scene here stablize but to crash? Not sure why so many want it to crash? I have plenty of friends who live in the USA and trust me, the housing market crash has not done any of them any good, realestate owner or renter. All are doing much worse than they were several years ago.
Anyways, I think the new mortgage rules are a mixed bag of good and not so good but I really don’t think that the unintended consequences of these new rules have been thought out very well.
A few thoughts;
If real estate investors (as defined by their RE not being occupied by the owner)are driven out of the market, and it looks like they will be, new construction will surely take a huge hit.
I fully expect RE prices to decline somewhat over the next year or two…..but once the market absorbs all the ‘extra’ housing units available, which is anybodys guess, housing demand will start to pick up, and due to lack of new housing being built in the next few years, will once again drive up RE prices. If this holds true then rental prices will also start to increase. I say this because there is currently, and hasn’t been to my knowledge any real incentive for rental housing to be built by large developers. The proof is that there has not been any large rental buildings put up in decades and the private sector has provided nearly all new housing stock in this area.
So yes, prices are way to high and they will start to come down but eventually they will head back up due to lack of supply. The main difference I see with the next upward movement in prices….say in about 3 years, is that unlike today, rental prices will also move up, perhaps even more than housing prices.
The bottom line is that the fed surly has popped this bubble, but doubt they have seriously considered the consequences of their actions say 3 years up the road.
I also personally believe that this economy is entirely way too fragile for the fed to stomp on it in such a severe way. With increased interest rates, the CAD will start trading much higher than it currently is and there goes the rest of the exports that are already considerably down. Also, Canada is producing far too few jobs as it needs to create to maintain the employment/un at a constant or lowering percentage….
My job is not in anyway connected with the ‘real economy’ however most peoples jobs and careers are. I just hope all the bears in the room are confident that they can ride out potential unemployment if the housing bubble goes crash instead of slowly letting off steam and if it brings down the rest of the fragile enconomy down with it.
April 19th, 2010 at 11:34 pm
@vanhattan:
Vanhattan, people can’t get a loan to pay for rent. Unless people start making more money, rent will not go up.
And you needn’t worry about vacant rentals. We should have the next ten to fifteen years covered with this recent build-up.
April 19th, 2010 at 11:48 pm
ReductiMat:
I agree but the main reason why rents have been so low around town in relation to what housing costs are is due to the constant building that has gone on for the past 10 years.
Take the supply away, demand will go up. Rent prices are like everything else, higher demand, higher prices.
Of course, it is almost impossible to say with any certainty, what the housing supply actually is because no one has taken the time to make serious efforts at finding out. I agree, if there is an actual huge glut of overbuilding that has occured than you will of course be correct.
My own anecdotal evidence is that most of the buildings in DT/FC/WE and CH are mostly full with the exception of the higher priced units >1M. Most people in the rental pool are looking to rent basic 1/1 or 2/2 that are moderately priced in the < 2k/month price range.
Lastly, I do not expect that many folks here in Canada will default on their loans as we did not have the lending practices here that they did in the USA. Most homeowners will sit still that will only contribute to further stagnation in the markets, and not just real estate.
April 20th, 2010 at 12:05 am
@Don Lapre:
No.
I don’t think so, but even if there were, that is not the same as shorting the market. Index options trading is making a bet with someone about the future direction of the market. IOW you would have to find someone to bet with who thinks the market is going up. With stocks you can do that because the underlying asset is liquid in both the long and short directions so the option can track the asset. With RE you can’t. Everyone who would be interested in trading such options in RE would likely be a bear, so there would be no bulls to bet against.
April 20th, 2010 at 12:06 am
Well, you can’t steal a march on Garth Turners blog tody, as usual he’s right on the money. The timing of a macro is hard to pin down and market cycles, especially those held up by a sleazy government incentive program can have a way of deceiving the impatient and the young. But macro trends never lie and always come around, ain’t never been one fail.
My antique crystal balls are telling me that we’re in for a nice ride. It is not only in Canada that rates are rising, they are in China as well. A 10% drop in prices will wipe out 90% of the specuvetors.
There an old saying in the RE trade “First and fastest , last and least.” meaning that if you take the urban center as the ‘epicenter’ of a market you have the sharpest spikes in price at the center but also the most extreme drops in price when the market tanks. The market farther out of the price and proximity rings will react much more slowly, last to rise and less volitile in price fluctuations.
However I am goinf to go out on a limb and say the dreaded phrase “This time it’s differant”. Why? Because in a traditional market the buyers were proving up a higher percentage of the overall equity in the fringe markets and lowering the risk, where as this time the borrowing has been much more frenzied and misunderstood throughout the spectrum this time and now EVERYBODY has taken out unsustainable mortgages which makes them ALL speculative. Lets face it …5% down is not a downpayment.
I see major moves down in all markets as intrest rates rise. Look for another round of dead duck condo flippers very soon.
April 20th, 2010 at 12:31 am
Mar 1, 2010 = 12255
Mar 2, 2010 = 12324
Mar 3, 2010 = 12459
Mar 4, 2010 = 12670
Mar 5, 2010 = 12775
Mar 8, 2010 = 13019
Mar 9, 2010 = 13244
Mar 10, 2010 = 13439
Mar 11, 2010 = 13551
Mar 12, 2010 = 13609
Mar 15, 2010 = 13755
Mar 16, 2010 = 13779
Mar 17, 2010 = 13870
Mar 18, 2010 = 14042
Mar 19, 2010 = 14103
Mar 22,2010 = 14258
Mar 23, 2010 = 14312
Mar 24, 2010 = 14322
Mar 25, 2010 = 14446
Mar 26, 2010 = 14558
Mar 29, 2010 = 14635
Mar 30, 2010 = 14721
Mar 31, 2010 = 14679
Apr 1, 2010 = 14,667
Apr 6, 2010 = 14,832
Apr 7, 2010 = 14,915
Apr 8, 2010 = 15,221
Apr 9, 2010 = 15,399
Apr 12, 2010 = 15,462
Apr 13, 2010 = 15,595
Apr 14, 2010 = 15,779
Apr 15, 2010 = 15,858
Apr 16, 2010 = 15,822
Apr 19, 2010 = 16,088
April 20th, 2010 at 12:33 am
Site C dam project “The [Site C dam project] project is expected to generate 7,000 direct jobs and about 28,000 indirect jobs during its construction.”
See, the job picture will improve drastically in BC as this mega project creates employment. These rich construction wages will allow Vancouver households to maintain current mortgages and allow more FTBs entry to Vancouver’s hotly desirable RE market.
Oh wait. The project is in Fort St. John. Oh. How much of a commute is that? Is it closer to Langley? or to Richmond?
Read more: http://www.cbc.ca/canada/briti.....z0lceFHcb0
April 20th, 2010 at 12:59 am
@BBY:
Not only is Fort St. John closer to just about every place in Alberta than it is to Vancouver, it’s even closer to Saskatoon.
April 20th, 2010 at 1:22 am
@vanhattan: you allude to a potential stagnation in the market along the lines of prices are sticky going down, which is possible, but like many other you are already forgetting what happened in the most recent correction of 2008. Prices started going down fairly sharply starting in spring 2008, pre-crises.
So, it’s hard to understand your conclusion when affordability is being stretched near peaks and the economy as a whole is much weaker in an environment of rate hikes from historic lows. If it came crashing down quick under relatively better economic conditions, a more plausible conclusion would be that it will be at least as fast to come down this time around … further, I’ll also mention that supply is piling up faster and higher than 2008.
Strata: Whose bills are you paying? | Vancouver Condo Info Says:
April 20th, 2010 at 1:24 am
[...] Forum « April 19th effect on presales [...]
April 20th, 2010 at 1:30 am
Yeay, 16,000!
April 20th, 2010 at 4:31 am
@IgnoreTrolls:
Let me put this more concisely.
A house cannot sell for more than someone is able and willing to pay for it. If a year from now the highest price that someone is able and willing to pay for a given house is 20% less than today, prices must go down 20% from today. Regardless of what the sellers want or the sellers do. Because buyers always determine what a house can sell for, not sellers.
April 20th, 2010 at 6:52 am
BoC has dropped its conditional commitment to leave rates low until June 1, 2010. Sets things up for an early rise.
http://www.rttnews.com/Content.....Id=1274391
I just wanted to recap The Current episode. Some of Danielle Park’s points were:
1) Interest rates are heading up;
2) Canadian Household debt is now 149% and heading higher;
3) Typically during recession people pay down debt, we’ve done the opposite in Canada;
4) Prices are at record level of unaffordability, prices 200% higher, income 13% higher;
5) 6-7% of buyers are precariously positioned, more than US pre-bust;
6) This will not end well.
Klump’s points:
1) Rates not going up too much in short term (he thinks 1% by end of 2010 and 2% by this time next year);
2) No significant drop in price as it will be a “demand driven price decrease”;
3) Prices across Canada only 6% too high in his opinion;
4) We’re not in a bubble.
Listening to Klump was painful at times. He sounded nervous, unsure of himself and very defensive. His points were muddled. It almost sounded as if he was trying to convince himself of what he was saying. Danielle Park is always very articulate.
Similar to what we see on this blog, the bearish commentator presents us with stats, facts, numerous similar opinions. The bullish commentator presents opinion and attacks the stats and credibility of the bear.
It was interesting, if you haven’t heard it yet, you should.
April 20th, 2010 at 7:04 am
@vanhattan:
On the topic of new condo construction: the last time the condo construction market faltered, in the very late 1990s, units under construction dropped way down, until around 2001, when people started buying again.
Developers don’t need prices to be in the stratosphere in order to build a profitable development, but they do need people who are willing to buy. A significant portion of what you pay for a condo is the land value– if that portion of the price drops (ie, if land values drop), then a developer can buy cheaper land and build developments with a lower purchase price.
April 20th, 2010 at 7:06 am
@Vansanity_:
In plainer language, the bond markets have told the BoC to get serious about inflation or else. The bond markets now control the qualifications for all mortgage borrowers, whether for fixed or floating rates, as those taking the latter must qualify under for former.
April 20th, 2010 at 7:11 am
@M-:
You have the causality backward – land prices are determined by what builders are willing to pay, which in turn is determined by buyers of the condos (and correspondingly SFH) are willing to pay.
Land prices are high because people are willing to pay ridiculous prices for SFH and condos. Not the other way around.