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Logic has left the housing market

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Our bubbly market has been featured in Macleans again: In Vancouver, logic has left the housing market.

And so it is with Greater Vancouver’s real estate market. People are indeed clinging by their fingernails as they try to meet their mortgage payments. The anecdote archive tells an all-too-typical story of a couple who bought a $1.2 million house with a $700,000 mortgage. The husband was laid off last month and the wife isn’t sure if her job is secure. Others like Pospisil despair of ever getting into the market. Certainly if you have to fall $700,000 into debt, why would you want to?

But in some parts of the Lower Mainland those sorts of mortgages are the price of admission. North Vancouver, the poor cousin of the three highest cost areas, had a benchmark price in March for a typical detached home of $927,122. A similar benchmark or typical house in neighbouring West Vancouver sold for $1,440,747. And in Vancouver’s west side it went for $1,656,986, according to the latest figures from the Greater Vancouver Real Estate Board. True, there was a dip in housing prices in late 2008 and much of 2009, but it was temporary, and relatively minor in nature. It was certainly not the burst housing bubble that many predicted, and still predict, will hit. By rights the housing prices should have peaked, but logic has long since left the market place.

Read the full article at Macleans, and congrats to VREAA for the mention in that article!

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doug r

@patriotz:

And how many years have we been hearing the horror stories coming out of the US, where price/rent and price/income in markets like LA were about the same at peak as Vancouver is now?

Watching the US market a few years back helped me realize I was the sane one in a pile of delusion.

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Gordon C.

Fractional Ownership may not be what you hoped it would be: A lot of hotel chains are opting for this type of ownership in resort areas. It's good for the hotel as the cost of construction are recovered immediately and the hotel becomes profitable sooner. But how about you. Is it wise to buy a quarter ownership where you get the right to occupy or rent out the condominium for a specific 3 months of the year. I spoke with one young energetic fellow who was determined that buying a fractional ownership was going to make him rich as the suites rent for $250 a night. That was until we looked at the vacancy rate for hotels, costs and taxes. Seek professional advice before buying into a fractional ownership. They are very difficult to re-sell. Comparing what one condo sold… Read more »

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Coco

Re #141

I just read the article you linked to and I can't help but wonder if this 'hotel' tax won't eventually filter down to all the 'Furnished, short-term rentals' that have sprung up on Craigslist since the Olympics. It almost seems as if there are more of those than unfurnished suites – at least in the downtown core.

Like the judge in the article said, "If it looks like a hotel, and smells like a hotel it gets taxed like a hotel".

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Superfly

I need to see sales cool before getting overly optimistic over price declines. 200+ sales per day is still a blistering pace. In the next week or two we'll know whether the rule changes had any effect on the greater cash renters.

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Drachen

I think we'll see an all time high soon enough at the rate things are going.

500 in four days! That could put us at 17,500 by May 1 and the 20k party might come before the end of May!

Any bets on whether or not we hit 25k this year? That would be a huge milestone.

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Kite towards moon

@reknab: Since 2008 housing numbers might have increased by 100,000 more units.based on that current listings percentage is at least 10% lower than 1998 .In 1998 5yr fixed rates were between 5.50%-7.50% depend on credit or high ratio mortgage and 25% down to avoid cmhc.

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Chilled

Yesterday, in the course of my job I worked in a new, funky condo in the south False Creek area. I'd love to live there, but would not ever pay a Kings ransom to do so. In dealing with a strata person who bought in, pre construction, I gained some insight. This very optimistic and intelligent professional person said to me; "there is nothing wrong with renting, I wish I still rented." "I so overpaid for this place, similar units are currently selling for 100K less than I paid" "I believe the market is going to crash." I was working, so I lent a sympathetic ear and displayed empathy while quenching my urge to say, "I've been saying that for the last 5yrs."

Can I now have my title changed from "bitter renter" to "spiteful vulture?"

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Inventory

************* 1/1/2010 / 4/22/2010 / % change Bowen Isld 46 / 109 / 136.96% _Bby East 68 / 159 / 133.82% _Bby North 345 / 747 / 116.52% Bby South 362 / 715 / 97.51% Coquitlam 531 / 1134 / 113.56% Van.&Gulf 215 / 265 / 23.26% ___Ladner 65 / 156 / 140.00% MapleRidge 575 / 988 / 71.83% _New West 262 / 570 / 117.56% _North Van. 412 / 941 / 128.40% OutofTown 105 / 73 / -30.48% _Pitt Mead 121 / 192 / 58.68% _Port Coq. 237 / 463 / 95.36% PortMoody 213 / 440 / 106.57% _Richmond 893 / 1797 / 101.23% _Squamish 402 / 502 / 24.88% Sunshine C. 656 / 1055 / 60.82% _Tsawssen 98 / 183 / 86.73% __Van East 767 / 1400 / 82.53% _Van West 1396 / 3192 / 128.65% _West Van… Read more »

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jesse

Mid '90s listings were higher, true. I assume the data covered the same geographic area. Any data on the number of sales? We know population growth was high through the mid '90s so a high level of property transfers isn't that unreasonable.

Inventory around 20K with strong sales around 3-4K puts MOI at around 6 or so. That seems to roughly line up with price declines during that period.

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paulb fan

@VHB: quite possibe vhb, but 10 years ago, real estate was least of my concerns, so for mesep 2008 is all time high ;-).

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paulb

Edward Jones on the Canadian Housing Bubble

"What Should You Do?

We believe investors concerned about the possibility of

house price declines should consider two key actions:

1. Avoid investing more money in housing. Instead, use this

opportunity to review and possibly reduce your housing

investment exposure, if necessary. Because we don’t

consider home ownership part of an investment portfolio,

we aren’t advising you to sell your house. In fact, many

investors may need to take no action.

2. Call Eddie J asap!

http://www.edwardjones.com/groups/ejw_content/@ej…

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reknab

Prime looks to have been at "least" 6 at that point '98 so one can correlate the two potentially.

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reknab

@paulb:

I think that was Apr '98

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paulb

ya, that's what I meant. Thx

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ReadyToPop

Interest rates in year 1999/2000 when inventories were comparable.

http://www.primerate.ca/

No matter what happens, have fun and hang on for the ride.

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Kite towards moon

@paulb:I believe at the rate of sales numbers around 3000 per month the current pool of motivated sellers will dry very soon.The current market buyers already knew very well what they doing in regards to new rules,qualification,and the possibility of interest rates increase.they also knew the difference to afford monthly cost on highest point.so they won't be joining the sellers pool for long term.Seasonally sales and listings looks very normal,most of the listings are double counts when expiry and price change hit back in the market.In a results: listing gain is not that large compare to numbers of listing seems to be hitting in a shape of flood.I believe sell list ratio is also very high but just because of tripple count of listings it looks like 52% only.Once the sellers start measuring the sale strength they will join the… Read more »

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bubbly

@paulb: 20k in April 98

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Superfly

Bubble crash article here:

http://www.canada.com/topics/news/story.html?id=0…

but 18 month old

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paulb

@VHB:

Wow! 20k in April of 08. Nuts

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anonymous

Re: 108 – Fractional Fees being insane

I don't know, but I suspect the fees are so high because fractional Real Estate in Whistler gets business property tax rates, not residential. I believe Vancouver's rates Business property tax rates are about 5 times as high as residential – I suspect Whistler is the same. For example:

http://www.juneconway.com/market_update_391.html

Some condos aren't worth purchasing at any price.

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crashcow

the creator of Crack Shack or Mansion tells me he will post part II in about 30 mins 🙂

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VHB

@paulb fan: That's likely the biggest in 10 years, but in the mid-late 90s inventory got over 20K as well. I don't know where it peaked out, though.

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Animal Spirit

me thinks @me was pulling people's legs after having one too many glasses of wine. I couldn't find anything through Google News. Unless @me works as a copy editor for the Sun, that is.

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VHB

@paulb: Watch this, paulb!

Apr 1995 19298

Apr 1996 19374

Apr 1997 18969

Apr 1998 20578

Apr 1999 16958

Apr 2000 15823

Apr 2001 14921

Apr 2002 12275

Apr 2003 10213

Apr 2004 9913

Apr 2005 11637

Apr 2006 9638

Apr 2007 12135

Apr 2008 15216

Apr 2009 15332

Source was 'inventory' a few weeks ago.

These were END of April numbers.

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bubbly

@me: No such headline.

Not funny!

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