The tipping point?
March saw listings grow like crazy and April started off with a bang adding close to 500 listings on April 1st alone. The growth in inventory is being mirrored by a growing number of people who appear to be seeking out more information on a Vancouver housing bubble – traffic on this blog has nearly doubled in the last couple of months.
The following comment was posted just before the weekend by GregK71 regarding the growing number of bullish comments here and on other blogs. I suspect it may sum up the way many readers feel about the current state of the Vancouver real estate market and its likely future:
The bulls on this and other RE blogs absolutely see the writing on the wall going into Q3 and Q4 2010, and beyond. They’re not blind. Arrogant, yes. Foolish, perhaps. Blind, no.
Oddly enough for a group of people apparently content and smug in their asset class, bulls never turn down the chance for a satisfying faeces toss on blogs like VCI. They’re coming here to convince themselves to keep on believing house prices only ever go up. And it’s worked like a charm.
Now, although it doesn’t always seem to come across in their posts, bulls understand market forces. They’ve made money in RE. Big money. Like bears, bulls too sense danger. In their gut, bulls comprehend irrational exuberance. Heck, they’re the ones who’re listing their presales and resales en masse, soon to push listings onward to 25,000 and beyond.
Bulls know this thing’s running on fumes. Bulls know the time is short. Bulls know there’s no such thing as running out of land when you can build up. They know these things.
They also know the Kool-aid is starting to taste a bit, um, funny.
Vancouver bulls, you’ve had an amazing run. You’ve defied the fundamentals for longer than many thought humanely or economically possible. It’s been unreal. It’s been absurd.
To those of you over-leveraged on severely overpriced Vancouver real estate: relish these final few weeks on the upside. You may have a month and a half.
But the tipping point is here. It’s visible. It’s shocking. And it can’t be put off with another rate cut, loosened restriction, extended am or exotic mortgage product. That deck is exhausted.
The process just getting started ends only with utter revulsion and complete contempt for the asset class. Needless to say: it’s going to be a long, long way down.
April 5th, 2010 at 3:31 am 1
No they haven't. The only people buying post-2003 who've made money in RE are the people who've sold, and if you've sold, you're a bear.
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April 5th, 2010 at 5:24 am 2
Garth, is that you?
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April 5th, 2010 at 6:16 am 3
Finally, after more than half a decade of bears chanting the end of over valued real estate in Vancouver is just around the corner, it's now only a month and a half away….. excuse me if I don't make too many plans around that prediction.
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April 5th, 2010 at 7:17 am 4
You remember POGS back in elementary school? These things came out of nowhere and quickly consumed all our time. It felt like we couldn't buy them quickly enough. The person with the coolest Slammer had status and admiration. But one day, the good times suddenly dissapeared. It's as if we somehow all agreed in unison that POGS weren't cool anymore. A classic bubble and bust…
Just like Vancouver Real Estate, currently 40% overvalued based on the time-tested valution metrics. Housing is just as emotion-filled as POGS.
http://www.howestreet.com/articles/index.php?arti…
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April 5th, 2010 at 7:38 am 5
Completely agree, we are at the fulcrum.
The inventory is growing quickly, sales are still strong but that will change in the next few months as interest rates change and new rules are put in place. As soon as the sales drop off we will see Months of Inventory shoot way up like in 2008 and price drops will be forthcoming.
We will see if the price drops will be severe enough to change the bubble mentality. I expect they will be.
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April 5th, 2010 at 8:03 am 6
We were here to save the bears from disastrous loss.History is a witness that there is more than 100% increase in housing prices,Mortgate payment is down by 7 yr since the blogs comes to existance,rents are up almost 50%, and interest rates are halfway.It's like The Brick store that says"Nobody can beat the small lenders" in competition in the country of rich and wealthy nation with wealthy financial institutions.
We have had close to 600 units sale in four days of stat week without hitting the inventory of March peak of 14,772 this weekly sales level is greater than the 479 unit sales of five days in last week of febuary 2010.The Real estate board or sale to list ratio will never explain you this technical point,Only bulls can tell you that rebound is nothing more than month end adjustment.
This reference comment posted on the main post from GregK71 is not a one of it's kind but it is a another piece of entertainment among bears.There were many -many comments have been posted through history of VCI. most of comments made by Vhb,Mickey Finney,and Bdk. were always in line with the then circumastance but only time has proved them wrong.
Those who think that housing prices will stabilize or fall, they are not aware of new mortgage rules and rising interest rates.In bears case,the bears will end up paying more through increased interest rates and narrow minded new mortgage rules.
The bears will also lose their jobs in bears case.They most likely will never get into buying frenzy.They most likely to waste their time in missing the boat type of process and buying more of fool titles.
On the side note:Freako never returned because of vrengd.
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April 5th, 2010 at 8:26 am 7
Stating the obvious, as long as inventory continues to grow in the upcoming months the dominos will start to fall. There will be strong sales for the next 2 months – Since the mortgage rates were annouced to and went up, many many people have locked in quotes good for 90 days based on the old rate. They will be shopping aggressively to try and use this so called "advantage". Going around to various open houses and pre-sales, it's all the RE agents last and greatest pull: "nows a great time before rates go even higher". Can't tell you how many times I've heard that trying to sell people on panic and fear. Once this group of panicking buyers takes "advantage" of low rates, there will be no more government help through easy lending practices and interest to keep this train moving.
Over the last couple of months, heres what I and numerous others are noticing while doing the rounds in metro vancouver:
1) Outside of Van/Burnaby/Richmond (coquitlam, surrey, etc), the discounts are coming! Half a year ago people would be snatching this up. Now, every development you look at seems to be offering "incentives". For example, Rennie's "Best value ever" in the Grand Central condos in Coquitlam – condo prices have dropped anywhere from 30-70k for the units they havent been able tp sell in Tower 1 – and this is before Tower 2 is even up! So many projects in that area sitting at only 60-70% sold only with other towers coming up. Notice how many "free mortagage payments for 2-3 years" incentives there are? You don't think the developers know something?
2) Another example – In burnaby, had this been half a year ago all new condos wouldve been sold out in a matter of weeks. Luma had the advantage of coming out early and are close to selling out with about 10 units left. Perspectivs and Affinty towers which opened later, arguably much better than Luma, are both sitting at 65-75% for the last couple of weeks after a hot start. Half a year ago this never would've happened. Now they are sending out desperate emails saying to hurry in before the selection is gone. I don't ever remember receiving emails to hurry in for other presales in the past year – they were gone. This is especially troubling for Affinity who has a phase 2 tower that is about to be released soon.
3) In East Van Downtown, the revival of the area is starting but not really going as fast as expected. If the market starts going down, do you think any developer will continue to try and continue fixing the area? Down the road, surely yes, but it'll stay put for the next coming while. Just take a look at the excess inventory – Rennie's much overhyped Woodwards with so much inventory, Smart Gastown, Ginger, V6A, etc. also with not much inventory moving there. Check out the 4 spectrum towers – 35 units for sale and 60 rentals available.
4) Noone can remember when's the last time there has been so much rental inventory. It's obvious it's from the Olympics, but the effects are coming. Craigslist for example a 1 bedroom in Yaletown for under $1800 and see what you get. Even if half of them or more are duplicate listings, the number of vacancies is absurd. Owners who took "advantage" of the Olympic renters now face the same dilemma. Those who can't weather the storm of a empty unit or can't afford to rent it out for a much lower rate will soon flood the market trying to get out.
SO next time an agent sells you on fear and panic – Quick! before the rates go up! Remember, would you rather be paying a low interest on a high loan overpriced property or a decent rate on a property that costs what it should. Yes, the market has defied all odds and it's been a crazy run. However, this time around there is no more help on the way.
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April 5th, 2010 at 8:30 am 8
Good examples – lets see how fast the Olympic Village units will be snatched up. Or won't be.
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April 5th, 2010 at 8:47 am 9
What happened to that quoting feature on VCI?
dan says,
You've got a bit of a point; the last time I looked at RE in vancouver probably was about 5 years ago, and I decided I wasn't buying in at those prices and with that sort of multiple bid, no conditions feeding frenzy. Things looked crazy to me even then, but I certainly wouldn't have tried to short the market. As the man says:
"The market can stay irrational longer than you can stay solvent." – Keynes
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April 5th, 2010 at 8:52 am 10
Just one thing you forgot to add – the guy who buys today at a high price and low rate will be paying a high rate on the same high price when renewal time comes around.
How come people can't figure this out?
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April 5th, 2010 at 9:05 am 11
Canada 5 year up about 10 beeps today. link.
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April 5th, 2010 at 9:31 am 12
@cashcow
I do remember Pogs… they were great times. The main difference between RE and Pogs is that Pogs were banned from my school (something about the slammers hitting people in the face and the big kids taking all the little kids Pogs.
RE however looks like it needs to burn itself out as no authority is going to take our RE away. Then again who knows, maybe carney will jack rates at 2% a year until RE is as uncool as Pogs are now.
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April 5th, 2010 at 10:00 am 13
Real estate bears in Vancouver are the most arrogant little turds around especially since they've been WRONG WRONG WRONG WRONG WRONG WRONG WRONG WRONG again and again.
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April 5th, 2010 at 10:01 am 14
Anyone have the current inventory numbers?
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April 5th, 2010 at 10:19 am 15
Only anecdotal but in the last couple of weeks I've talked to two different Vancouver homeowners who asked me when we are going to buy a place of our own in Vancouver. My starting position in these conversations is "we don't want to buy in a bidding frenzy so we are waiting for things to calm down a bit". If this doesn't generate a major argument I punt a "and there could be a drop of oh 20%" across the bows. There has been a definite change in response compared to previous conversations with others. On both occasions these homeowners have replied that they think there will be more than a 20% drop. Bizarrely though one of these homeowners is currently looking to sell and move up. Go figure!
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April 5th, 2010 at 10:20 am 16
Wow, bond yields taking off like kite toward moon – 5 year up to 3.02 today.
This real estate market will be self destructing before Carney even gets a chance to raise rates.
He must be sad.
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April 5th, 2010 at 10:36 am 17
Had dinner with a friend on the weekend who has just decided to jump into the market. He just bought a new condo in Coquitlam for 320k as if he just bought a bag of chips from the local IGA. While we were discussing his new purchase I asked him if the upcoming interest rate hikes played any part in his decision to buy. His answer? "Umm…. no I can't say it did…." – there we have the long-term thinking of the average buyer these days. I could only sit there politely smiling but thinking that he just doesn't know what he has set himself up for in the future.
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April 5th, 2010 at 10:37 am 18
I would be excited by a real estate burst in Vancouver. Why? I am not excited to see people lose their money or their homes, I feel sad for them. I am not sure I would buy a home if prices crashed even 40% (for several reasons).
I am excited because for ten years I felt it was amoral that people would make more money speculating on houses than working hard. Speculators were making home prices more and more unaffordable, meaning working people had to go deeper and deeper in debts. The impact of this moral shift could be felt everywhere. Students did not value education any more, over extended families were going through traumatic experiences, people were losing sleep over buying a home, the streets were full of people who could not resist taking equity our of their home to buy expansive cars, investment was becoming a central topic in parties, etc. Gambling had replaced sweat and intelligence. I felt like living in a giant casino. The resentment against speculators was mounting, and I have heard it turned into very racist views. This whole mess was wearing the human capital of this city.
When one goes for one's citizenship ceremony, one is reminded that what makes a valuable citizen of Canada is not owning a 1 million$ house, but volunteering for her/his community. Where is that spirit gone lately?
Kite Toward Ditch, believing in economics fundamentals is not a sense of entitlement. It is just a belief that there is nothing new under the Sun, that economics go through cycles and will always do.
There is also nothing new under the Sun went it comes to greed or herd mentality. Usury was forbidden by religions at times in the past… may be there is a reason why.
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April 5th, 2010 at 10:39 am 19
Wait and see all the buyer incentive goods that will soon be offered. New cars, televisions, trips etc. This will be a big hint that the tide has turned.
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April 5th, 2010 at 10:40 am 20
Kite towards moon Says:
April 5th, 2010 at 8:03 am
"We have had close to 600 units sale in four days of stat week without hitting the inventory of March peak of 14,772 this weekly sales level is greater than the 479 unit sales of five days in last week of febuary 2010.The Real estate board or sale to list ratio will never explain you this technical point,Only bulls can tell you that rebound is nothing more than month end adjustment"
Everyone is indeed well aware rebounds are month end adjustments – however, the staggering number of rebounds is what tell the tale. And yes, as I mentioned in my post after yours – correct sales will likely be good this month, but due to those who on the basis fear from RE agents "advising" to quickly hop onto the runaway train. And yes, maybe it will continue to next month due to those who have locked in quotes for 90 days based on the mortgage rates before they went up. I remember my broker friends and friends in the bank telling me it was frenzy when they announced the mortgage increase – so many people were sending in forms so they can have a 90 day rate lock on the old rates "just in case".
However, how many people will actually use it? We'll see. Many of my friends, myself included, got these quotes as well – but there's really only a small percentage chance we'll use it with the way the outlook is.
Sales is one thing, but don't forget – many are discounted, many prices have dropped, incentives and the broken record "do it before rates go up" are in full force, and once this last wave of panic induced buyers holding onto to good rates have left the market, here we go.
Surely you must know many sellers waited until now as peak season to sell is starting. This is the calm before the storm.
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April 5th, 2010 at 10:43 am 21
This is for painted turtle.
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April 5th, 2010 at 10:55 am 22
"Yes, the market has defied all odds and it’s been a crazy run. However, this time around there is no more help on the way."
.
It's not the market that has defied all odds but the interventionist policies of the govt/CMHC/banks that has defied all odds. Without their "help" the market would have continued its downward slide from '08. Now, there are even more people that have taken on insane levels of debt – prolonging the inevitable. That kind of manipulation shouldn't be confused with a market.
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April 5th, 2010 at 10:58 am 23
supersogs,
One month then another month will take you towards month of September that's the time when Government,Banks,Buyers,and Seller slow down their activities to setup new Strategies for the market.I believe you have had nice experience through existance of the game from past to present.
What did you get?
If you want your wish to come true you must work hard and hit the market with solid hammers(arguments) otherwise run buddy run.
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April 5th, 2010 at 11:05 am 24
oh yeah nutlaps! bear shakeout as tide come in! remembers
you might find a printing press but you will not find
"a land making machine"
mr. Market getting ready for lunch
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April 5th, 2010 at 11:05 am 25
The link above was meant for buyers to get in the market,If they believe that crash is not imminent.
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April 5th, 2010 at 11:06 am 26
"Naimeth economic indicator" sez sell and head for cover
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April 5th, 2010 at 11:10 am 27
Hello Dear VCIites!,
I would like to elaborate a bit on:
"traffic on this blog has nearly doubled in the last couple of months."
Which Google search would lead you to find this housing bubble blog in Vancouver? Obviously, anything along the lines of "Vancouver housing bubble blog" will get you there.
So, we are seeing a significant increase of bulls searching for a Vancouver Bubble.
This is akin to the cold sweat realization you get just after the oyster is lifted and the little rubber ball is NOT there. How can it be? The gentleman next to you just won 500 dollars! And you just bet 100 dollars, and, and, you are SURE the little ball is under the middle oyster, you saw it yourself!
The feeling of "I might have just gotten scammed" leads to the search for Vancouver bubble. They land here, and let it all out. "Permarenters, it's all your fault", "Vancouver Real estate never goes down", "Rich Chinese, no land making machine, the Olympics" (aka the 'Holy trinity of Vancouver RE').
This post excludes the professional RE people who show up here. They come to discredit the bears because it is in their own financial interest to do so.
Regards
arit
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April 5th, 2010 at 11:11 am 28
On another note, speaking to numerous people and doing the rounds personally you have to love the tactics used in the industry.
- Many agents/banks on calculating monthly payments based on today's pricing:
Something Fishy: "See – With today's historically amazing rates, this is what your monthly payment would be: $1,700.00! Now that's the same amount as your rent!
Us: "Yes, that would be same amount as my current rent. Am I getting my strata fees for free and are you paying my property tax?"
Something Fishy: "Well… yes, there is that too. But for $500 extra a month for taxes and strata fees at $2,300.00, you can own instead of rent!"
Us: Sounds wonderful – I see you've calculated this based on a short term fixed at great rates. So how much does my monthly payments go up WHEN the rate changes based on the cost of the condo?
Something Fishy: Who knows! Maybe the rates won't go up much at all. But let's say the rates go up later, even at now $2,700 a month you ARE A HOME OWNER! So maybe you should put as much into your principle as much as possible during this time. But be scared – places are selling fast, buy now before the rates go up and take advantage.
Us: Thank you!! I am now nervous and heading straight to the bank!! (Thinking: see you in a couple of months when you are put out a good incentive)
I rent for $1,700 and save $1,000 every month during my renting times now. By buying a similar place at today's prices and rates, my mortgage payments + tax + strata would be $2,500. My loan would be say $450k. Let's say due to great interest rates in 1 year I pay off 15k of principle – equity right?? Only 435k left. However, I lose $700 of my savings every month now – 1 year it's over 8k. You take that away from the 15k of principle paid and it's only realistically 7k. I would bet quite a lot that this path we're on right now would allow me to buy the same place for 400K or less.
Bottom line – prices have stabilized already, so the argument prices will keep going up is already out the window. Noone out there can confidently (without lying straight to your face) that based on facts they believe prices will keep increasing. And prices have stabilized even during excellent rates. So let's say inventory stays relatively the same and so does pricing initially – but with a much dryer buying pool what do you think is going to happen?
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April 5th, 2010 at 11:14 am 29
VHB, Very nice picture for painted turtle! I wonder when it was drawn. Very relevant today. Only I find myself on the right side of the picture and far from rich
Regards
arit
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April 5th, 2010 at 11:18 am 30
Kite towards moon Says:
So you're suggesting the RE industry is a criminal syndicate that wants to hunt down anyone who knows their evil secrets? Interesting.
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April 5th, 2010 at 11:25 am 31
Inflation in insanity as well as everything else. According to this article insanity levels were :
In 1931, on Aug. 2, the Province newspaper had this startling lead to a story: “One person in every 300 in British Columbia is insane.”
Now I would say that the ratio is something like 1-1
There goes the neighborhood.
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April 5th, 2010 at 11:26 am 32
Kite towards moon – you're hilarious! Yes, thank you for teaching us that one month + one month + one month + so on eventually will lead to September.
The outlook is 1 month, maybe 2 of good sales due to those who wanted to "utilize" the old rates. Maybe 2 months tops. It's April. Worst case sales go decent until July. That's not September. I didn't know Bulls hibernated in July and August.
And even if sales are decent in those months, that's not the number to focus on. It's inventory. You can have your steady sales numbers throughout the summer. I'll have my increasing inventory. We'll see what happens. I love how every pre-sale condo coming up in the next while is going to add +150 units on the market here and there. Fun.
And FYI, yes i rent now. I sold my house 2 months ago (maybe not the absolute peak, but smart nevertheless) making a fun fun margin on the property I bought in the downturn of 08. Before that, I bought in 02 and sold nicely in 07 and rented for a year until 08. So no, I didn't miss any trains or am bitter about anything. My circle of information isn't just realtors and bank associates – its educated from all sources and haven't been wrong yet.
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April 5th, 2010 at 11:29 am 33
Don't forget that you may lock in the old rate with the bank, but will have to qualify under the new rules in two weeks. Will it make a difference? Maybe, maybe not. But it sure will be interesting.
I've already got the popcorn ready for the show.
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April 5th, 2010 at 11:32 am 34
What's the inventory at and where can we see the updates?
Thanks in advance
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April 5th, 2010 at 11:37 am 35
@31 — "..In 1931, on Aug. 2, the Province newspaper had this startling lead to a story: “One person in every 300 in British Columbia is insane.”
Now I would say that the ratio is something like 1-1.."
– Only an insane person would say that.
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April 5th, 2010 at 11:38 am 36
http://finance.yahoo.com/news/Office-vacancy-rate…
Nothing says recovery like a failing economy right? No jobs, profits and spiralling increases in persoanal and national debt. Its like burning the house down because its cold instead of getting off your ass and chopping wood.
Dummy intrest rates and debt based consumerism is the house burning while a dumbstruck government breaks out the marshmallows.
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April 5th, 2010 at 11:39 am 37
Hey Nero–it's a holiday. Nothing in the stats has moved since Thursday and nothing will move until Tuesday. Relax, grab a soda, and chill!
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April 5th, 2010 at 11:50 am 38
Conspiracy theory:
When the HST was announced "with plenty of warning"…in my view Harper and Co. knew the RE market was due for a collapse err " correction " . Given any RE collpase err "correction" could affect Gov't revenues, the Feds were proactive and pre-emptive in their revenue stabilization. HST will add revenue, and the Feds can always go into deficit.
Hence, the HST was a warning sign the Bubble was on its way to burst, as well as the banks "stealth" in ratcheting up interest rates.
The Feds don't give a rats ass of the impact on the homeowners, they never did. Its always between the banks and the FEDS , and the citizens will be left dazed and confused in WTF happened.
Divide and conquer…
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April 5th, 2010 at 11:53 am 39
Last Year – Interest rates are excellent, inventory is low, price is increasing, buy now! But really, we don't care if you don't, there is a lineup of people willing to overextend themselves and buy high.
Early this Year – Interest rates are going up, inventory is increasing, price is stabilizing, but quick buy now on fear before it's too late due to Olympic visitors buying in droves later! (it's not secret that visitors laughed at our ridiculous prices. unless they really are moving here, any smart investor is not investing here)
Now – Interest rates have gone up, surprise surprise where are the Olympic buyers? more inventory, buy now before umm.. last attempt… rates go even higher!
Next few months – Interest rates are up. Inventory is up. I would like to offer incentives. I can even offer discounts to offset new lending rules and rates. buy now before…
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April 5th, 2010 at 11:56 am 40
recoveryordeathrattle? – 36
Yes, it makes one wonder how making credit easier and cheaper so people can go further into debt will solve a crisis that was mostly due to credit and debt.
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April 5th, 2010 at 12:25 pm 41
I love all the exact predictions of an impending demise of the market from long-time and new bears. This month, May 13th, etc.
Dear lord bears, you have been so wrong for so long you should have learned not to make these specific predictions. Just keep to, "the market does not make sense so SOME TIME down the road prices MAY correct."
You must all be clicking your heals collectively now, and wishing and hoping for the collapse of the market – "there is no place like a cheaper Vancouver, there is no place like a cheaper Vancouver."
The only difference of course is that this is real life and nothing happens when you click your heals together…
is real life and not some
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April 5th, 2010 at 12:25 pm 42
Ironically, my oldest nephew ( early 30's ) and his wife just sent an e-mail yesterday saying they had bought their 1st house after finally selling their leasehold condo.
I sense they bought at the worst time…..given all the bad things are converging.
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April 5th, 2010 at 12:32 pm 43
OK … which is it?
Bears have been wrong so long, OR human nature knows NO bounds ?
Like patriotz, I can recall the RE market from the 1970's through till now. Each boom has resulted in a bust. This latest boom however, tops them all, and is thus due for the biggest bust we have ever seen. Bears being wrong re the timing?…..or moreso we have ventured into previously uncharted territory of HUMAN STUPIDITY fueled by the Feds, CMHC and Bankster mafia.
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April 5th, 2010 at 12:34 pm 44
no-ohlympics remember, canuck dollar pulling a gretzky, intrest rate still lo pos. cash flo and nephew couldnt find land making machine! plan parade for nephew as no luongo meltdown in forcast for land and gold.
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April 5th, 2010 at 12:40 pm 45
Note the "railroad bubble". This happened in the late 19th century US and was its very first technology bubble. All sorts of railroad companies were chartered and raised capital – some of them even built railroads which were subsequently abandoned for lack of demand.
In the early 20th century the Canadian government decided to get in on the act and sponsored a huge expansion of the railway system. The Canadian Northern and Grand Trunk Pacific went bankrupt and were incorporated into the CNR.
Nothing new under the sun.
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April 5th, 2010 at 12:59 pm 46
A note of appreciation to the many well informed posters on this blog, especially the very erudite patriotz, as well as the pope who makes it all possible. Your commentary has provided an education that could not have been obtained elsewhere, as well as much amusement. Thank you!
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April 5th, 2010 at 1:02 pm 47
There may be a bit of a rush from pre-qualified greater fools to get in before rates shoot up, but the rush to sell before it's too late will more than offset that.
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April 5th, 2010 at 1:10 pm 48
Wow, so many new posters on the blog. That's got to mean something.
Almost every potential FTB I talk to doesn't know anything about interest rates, BoC statements, supply & demand, inventory, the Spring market, strata fees, property taxes, leaky condos, NOTHING. All they know is "my monthly payment is close to rent – I'm throwing money away!". The stupidity is breath-taking.
REBGV hasn't released their March newsletter yet. Must be the long weekend..?
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April 5th, 2010 at 1:16 pm 49
arit, 29, said: "Only I find myself on the right side of the picture and far from rich."
VHB's picture does not say that wealth is measured in dollars only. You might be richer than you think
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April 5th, 2010 at 1:30 pm 50
Some interesting Vancouver-related comments from Greater Fool:
"Right now I can say – based on some personal conversations over the past week – the number of price sensitive investors could be very high. I have now heard 3 stories in the past week of investors who have had to list properties because they cannot find a rentor in their price range. All 3 have had a vacant apartment now for more than 30 days and no one yet for April so they are faced with the dilemma of dropping their rent price or selling.
All 3 said they cannot keep the mortgage payments up for long OR drop the rent because the rent supports nearly their entire mortgage payment. Two properties rent in the $2K range and one in the $4K range."
and
"It has turned. There is no question that the tipping point is near. People are talking about it more and more in the circles that I travel in. I was at a kids egg hunt on Saturday and many of the parents were discussing the change in conditions here in Vancouver. Everyone is concerned about how much the economy has slowed since the Olympics and they can see the writing on the wall for the Re industry with rates rising."
I don't think this Spring market is going to prop up the market for long. Makes sense that outlying markets would be hit first, less "best place" delusion and also that's where a lot of construction guys commute in from. Almost all our job growth in the last 10 years is construction and RE related (look it up on BC stats)
I think buildings like Spectrum ("low" cost, gentrified area, lots of speculators, shoddy construction) will really be the canary in the coal mine for the City proper, is anyone tracking numbers for those towers over time?
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April 5th, 2010 at 1:37 pm 51
4 Spectrum towers = rental city.
http://vancouver.en.craigslist.ca/search/hhh?quer…
That's spectrum on craigslist with a max rent of $2500. Factor in duplicates and you have good 50 for rent. Currently and consistently on MLS for the past month and today – 31 units for sale. Not a pretty picture.
I almost bought there!
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April 5th, 2010 at 1:40 pm 52
Not only there – the much talked about woodwards is also struggling. 30+ rentals, 25+ for sale. That's Rennie marketing for you.
This is just the beginning. I'm thinking of renting downtown for now and its impossible to sift through the hundreds of listing for 1 or 2 bedrooms.
Some owners can give discounts while other won't. That's the Olympic effect I guess. Depends on if you bought thinking – well I can just rent it out if I can't flip it.
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April 5th, 2010 at 1:44 pm 53
I wonder how the new Olympic Village will do?
I know the outlying areas like Surrey, New West, Coquitlam, etc. there is already a big surplus and not to mention more coming. Every one of them presents the same picture – near transit, near this, near that, great value, etc. etc.
It's funny bc all the presales I've gone to they ask if its for primary or investment and they have a pitch for each. Investment is easy, just rent it out! It's close to a skytrain/college/etc. etc. Maybe they need to see how much rental properties there are these days.
Those who bought high compared to those who bought at a reasonable price still ask for the same rent – so how does that even cover your mortgage with today's prices?
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April 5th, 2010 at 1:47 pm 54
recipe for mortgage fraud … sound familiar? http://tinyurl.com/ycxq475
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April 5th, 2010 at 1:48 pm 55
It's also going to be quite the show when some presale buildings are complete. Of those projects that "SOLD OUT", how many are for primary residence? I can bet a good number of buyers were looking to flip once the product was complete.
So keep a watch on developments that just finished and see how many are for sale – lots of people trying to run for the exits.
I was looking at MacPherson Walk in Burnaby. It was Sold Out back during pre-sale and I thought I missed out. Today, there are over 20 brand new units for sale with sellers open to offers. I'm close to being able to purchase a final product of my choice for less than the pre-sale cost.
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April 5th, 2010 at 1:54 pm 56
Don't even get my started on rentals!
The downtown picture is BAD. My current lease is up and I want to upgrade to bigger rental downtown. I know craigslist is a big rental postings site, any others? I can't even sort through the amount of listings. Every owner seems so desperate to have me come in, take look and sign a lease.
I guess that's what happens post olympics. I assume so many people bought before then thinking they can make a fortune renting out and then either continue renting or selling after.
I used to have give lots of references and history just to have a chance at renting a nice play downtown. Now I can probably wear slippers and no shirt and have 10 vacancies wanting me to stay there
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April 5th, 2010 at 2:07 pm 57
http://twitter.com/Allaboutcondos <- this realtor has a good twitter page that updates on new developments. lots of marketing but good info as well.
Can't believe how many developers are releasing presales and new homes. It's like one big rush – lol I think they know something. Just scroll down – in the last year I've never seen anything like this. The amount of incentives, the amount of new buildings, new catches, no GST, new pricing, positive cash flow, etc etc.
I was SO CLOSE to buying a condo last year. One of them was one in Coquitlam near Coquitlam center. Last year's price was $510k with "excellent" rates. I went in over the weekend and new "2010" pricing is $450k. I'd have to use the increased mortgage rate, but dang 60k difference I don't care how good the rates were.
I actually lined up for Affinity in burnaby as well. Almost bought there too thinking it'd be sold out in 2 weeks. Had this been last year it would've been. Just went there on Sunday – 165 units per building, and after selling 70+ in the first week they still have 30-40 units left. Tower two with an additional 165 new units will be released next month or so.
I have a feeling I am going to wait for these and incentives and more
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April 5th, 2010 at 2:25 pm 58
Re rentals: I was reading that Pacific Palisades has 230+ units coming up for rental after the hotel-apartment conversion. That's a huge addition to downtown rental inventory.
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April 5th, 2010 at 2:30 pm 59
My Dad walked past a SFH being built in Richmond and talked to the framers. The foreman said they were from PoCo area. They were saying things are really slow and are grabbing work WHEREVER they can.
Reminds me of year 2000….a father and son team were framing a house in White Rock……things were so slow and they were so desperate for work they were only making $10 hour , and this was not a cheap house.
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April 5th, 2010 at 2:38 pm 60
All the framers who are putting up new duplexes around where I leave (South Burnaby) are straight from Punjab. I guess that doesn't help things, does it? How much do you think they make? $5/hr cash? Less then that?
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April 5th, 2010 at 2:42 pm 61
My god, this city is infested with unwanted condos.
Speculators really outdid themselves this time.
Tomorrow I expect to report downtown condo listings on MLS topping 1700 after bottoming at 850 just 3 months ago.
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April 5th, 2010 at 2:44 pm 62
Keep in the mind the JAMESON project.
It had stopped when the Shit -hit- the -fan with the economic meltdown in the fall of 2008.
Those with deposits had gone to court to get them refunded. The developers won the court case and kept the deposits. Then the developers partnered with BOSA and the project is apparently being resurrected, given the ads I see.
Now these poor sucker pre – sale buyers are stuck with something in limbo, at peak prices and will likely be completed as the market collapses. My guess is their deposits have been locked up for 3 + years.
There is enought legal precedents whereby the " One year " date is used to determine a fair time for a contract to have a shelf life. As the shit hits the fan…the Gov't should use the inevitable economic downturn to fine tune legislation to protect the interests of the buyers, NOT the developers, who have enough protection with the current laws.
The current " status -quo " protects mainly the developers, and simply contributes to excess inventory which ultimately hurts the overall market.
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April 5th, 2010 at 2:47 pm 63
#60…
That a WHOLE other discussion.
Suffice it to say…..thats a whole other cultural thing whereby 90 year olds are employed to keep the bottom line LOOOOWWWW.
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April 5th, 2010 at 3:06 pm 64
COV taxpayers are F*cked.
The Olympic Village will go down as the biggest boondoggle.
High – end product in a collapsing market. City will have to firesale them, as the carrying costs will overhelm and ppereived profit and in the process piss off the private developers and others trying to sell their units. The loss will have to be coverd by increased taxes . COV current leftie council makeup with "Herr Ballem" as the top bureaucrat is already shooting all dissenters at City Hall and couldn't give a rats ass about the public…..
Also, the COV as the developer is protected by the Community Charter, whereby any legal case against a Local Gov't has to be filed within 6 months once the issue has been quantified. In my view, when the Olympic Village project has problems…COV is not protected by any 2-5-10 year warranty, but has its own ass covered under the legislative condom. Also, given they boner they all had with making the project "green", it likely has all sorts of dumb design and engineering that will create black holes in the contingency funds when the fail and prove to be a liability and not an asset.
Good luck COV….
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April 5th, 2010 at 3:22 pm 65
@Arit,
If you're one of the guys in the picture on the right, it means you're not getting trampled in the chaos like that dude on the left!
Years ago I posted this to VHB's blog. It's from "Nicholas Nickelby" and just goes to show there really is nothing new under the sun:
"-Mr Nickleby looked about him for the
means of repairing his capital, now sadly reduced by this increasein his family, and the expenses of their education.
'Speculate with it,' said Mrs Nickleby.
'Spec–u–late, my dear?' said Mr Nickleby, as though in doubt.
'Why not?' asked Mrs Nickleby.
'Because, my dear, if we SHOULD lose it,' rejoined Mr Nickleby, who was a slow and time-taking speaker, 'if we SHOULD lose it, we shall no longer be able to live, my dear.'
'Fiddle,' said Mrs Nickleby.
'I am not altogether sure of that, my dear,' said Mr Nickleby.
… Think of your brother! Would
he be what he is, if he hadn't speculated?'
'That's true,' replied Mr Nickleby. 'Very good, my dear. Yes. I WILL speculate, my dear.'
Speculation is a round game; the players see little or nothing of their cards at first starting; gains MAY be great–and so may losses. The run of luck went against Mr Nickleby. A mania prevailed, a bubble burst, four stock-brokers took villa residences at Florence, four hundred nobodies were ruined, and among them Mr
Nickleby."
Charles, Dickens is the Catalina Wine Mixer of literature based economics lessons… AND he's a talented zombie fighter too, if Doctor Who is to be believed…
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April 5th, 2010 at 3:47 pm 66
http://www.theglobeandmail.com/globe-investor/per…
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April 5th, 2010 at 3:49 pm 67
are you sure that there is no Vancouver inventory update? there was a whole bunch of new listings showing up on MLS for Victoria today…
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April 5th, 2010 at 3:51 pm 68
56.
For rentals
http://www..com
downtownsuites
uniqueaccomodations
bruceward
prompton
househunting
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April 5th, 2010 at 4:52 pm 69
Crybaby scullboy is still here weeping. Go check the stock markets, it rocketed to new highs. The same goes for all of you. I'm in Hong Kong now and all I see is people spending and lineups are getting longer at LV and Chanel stores. Feels good to see the Canadian dollar on par. You bozos still think the real estate markets will tank? Better check out asia before being a bear.
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April 5th, 2010 at 5:19 pm 70
Supraboy at the business trip in HK giving a fast blow to those in lineups.
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April 5th, 2010 at 6:04 pm 71
If using lineups at LV stores as a guage for the strength of RE, Japan must be booming. On a recent trip to Hawaii, the Japanese were tripping over each other in the store.
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April 5th, 2010 at 6:06 pm 72
"Inventory" buddy, first you get hooked us on your stats and then leave us dry
we want more
let's get this party rolling!!!
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April 5th, 2010 at 6:13 pm 73
Leave Inventory to enjoy his Easter long weekend in peace.
We're all feeling good after lots of food, drink and chocolate Baby Jesus'.
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April 5th, 2010 at 6:51 pm 74
Dude the board is not open today.
Board not open = no listings added.
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April 5th, 2010 at 7:24 pm 75
A month or so ago I predicted that the price of the Vancouver average detatched would hit $1,075,000 in around June or July before prices started to fall.
At that price and at the rates before the big jump, the 2008 monthly payment limit would be reached once again. At that point prices would begin to crash.
Well rates went up and lending is going to get tighter. Prices won't likely get to $1,075,000 before crashing. I'd say we have another six weeks of price appriciation before we hit the cieling and the market drops like a ton of bricks.
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April 5th, 2010 at 7:28 pm 76
true. I have not eaten so much chocolate in my life in the last 2 days!!
so Dude the board must be pretty religious and takes this holiday seriously after taking Friday and Monday off.
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April 5th, 2010 at 9:04 pm 77
dream on bears, dream on!
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April 5th, 2010 at 9:09 pm 78
painted turtle Says:
April 5th, 2010 at 10:37 am
""I would be excited by a real estate burst in Vancouver. Why? I am not excited to see people lose their money or their homes, I feel sad for them. I am not sure I would buy a home if prices crashed even 40% (for several reasons).
I am excited because for ten years I felt it was amoral that people would make more money speculating on houses than working hard. Speculators were making home prices more and more unaffordable, meaning working people had to go deeper and deeper in debts. The impact of this moral shift could be felt everywhere. Students did not value education any more, over extended families were going through traumatic experiences, people were losing sleep over buying a home, the streets were full of people who could not resist taking equity our of their home to buy expansive cars, investment was becoming a central topic in parties, etc. Gambling had replaced sweat and intelligence. I felt like living in a giant casino. The resentment against speculators was mounting, and I have heard it turned into very racist views. This whole mess was wearing the human capital of this city.
When one goes for one’s citizenship ceremony, one is reminded that what makes a valuable citizen of Canada is not owning a 1 million$ house, but volunteering for her/his community. Where is that spirit gone lately?
Kite Toward Ditch, believing in economics fundamentals is not a sense of entitlement. It is just a belief that there is nothing new under the Sun, that economics go through cycles and will always do.
There is also nothing new under the Sun went it comes to greed or herd mentality. Usury was forbidden by religions at times in the past… may be there is a reason why.""
+++++++
In a decade of so, there will be documentaries filmed, books written, thesis developed and very little debate about the damage this current Ponzi scheme will have done to our society.
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April 5th, 2010 at 9:27 pm 79
Anon 77…
I would rather be a bear "dreaming" of falling prices rather than a bull praying that they don't.
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April 5th, 2010 at 10:56 pm 80
Bears everyone agree that stock market over long term always go up and so does real estate. Same goes for rent. So it only makes sense to buy. Over long term impossible to lose money buying but renting you always lose no matter what. Always remember bear Vancouver real estate never go down Now circle around and vote this down.
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April 5th, 2010 at 11:14 pm 81
superboomtime,
I think you should tour the US giving conferences about economics, especially in those places where people had to sell their home for less than half price.
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April 5th, 2010 at 11:20 pm 82
painted turtle,
I think your are totally misrepresenting yourself,You think you work so hard and 72% home owners are not working so hard.you are accusing someone else for just being in your position.You are not working hard to buy a house, may be it is hard work after all, but writing your favourite lines in hope for crash looks easy to you.
Imagine you or your parents have spend big chunk of money on your education,When you got a job you are trying to settle up your life.You find it hard to believe rental situation that is so expensive and buying a place to live is more expensive,however,with your hard work you manage to borrow a mortgage for yourself,You just have bought a place for yourself and few days later you go online to search what other people are doing according to your situation.You find it surprising that there are some people having shats on your property.Also you find it surprising that a poster name Painted Turtle is behaving like he works hard and 72% of home owners aren't.
Lesson:Speculation have two faces,bears and bulls.Please re check graph at #21.If you are not one of them how would you buy and how would you speculate? Then there is no choice for you other than to speculate on crash and enter into tenure.
MrBear,
There is no secret Canadian r.e. industries and realtors are better than realtors in any other country.however, I am not one of them.
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April 5th, 2010 at 11:28 pm 83
The situation around RE (and the bigger picture) is a pure magic warfare.
In the red corner, weighing in 800 pounds, main stream media, political establishment, and industries with vested interest. They keep chanting "What you see is good and getting better. Act now to make things better sooner. Look at our shiny ads, look! Don't wink!"
In the blue corner, weighing a bit less in terms of circulation numbers, media and people who think to themselves "This can't be happening for long. It's like defying gravity."
The magic part about this clash is that the outcome is defined in the heads of the audience. It's self-fulfilling.
TL,DR: When everyone knows what "RE" stands for, reason doesn't work – it's all about faith.
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April 5th, 2010 at 11:28 pm 84
By 2015, the residential real estate sector will decline as Boomers retire and downsize. This will be somewhat offset by a demand for country homes. New family formation will decline, resulting in reduced demand for new housing. In sum, demographics will negatively affect the residential real estate brokerage sector. The forecast is for a slow decline that will place pressure on the realtor’s value proposition, push for service innovation, and place downward pressure on agent fees.
from http://network.nationalpost.com/NP/blogs/fpcommen…
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April 5th, 2010 at 11:48 pm 85
JWayne Says: "My circle of information isn’t just realtors and bank associates – its educated from all sources and haven’t been wrong yet."
Good man,So first of all they had to cinvince you to exit then to your neighbour,later they will convince you to buy then they will convince your neighbour to buy.JWayne,Go sit with three mens,Strataman,Damman,and Crabman.They are here since five years,four,and three years and still counting………
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April 6th, 2010 at 12:06 am 86
I was sure we had reached the tipping point in the summer of 2008, and ended up being amazed how many legs this mania had.
In the last few months, I have also been surprised at how many new buyers I have run into, and it has been painful to act happy for them. I wonder how many of these new buyers will still be so excited in the next 6 to 12 months.
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April 6th, 2010 at 1:09 am 87
No offense Kite towards Moon… but I can't understand what you're trying to say.
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April 6th, 2010 at 3:51 am 88
JWayne … kite is a troll, he uses the faux-ESL technique to troll, it's quite obvious when some of his posts are nonsense and another seems almost native speaker level. Show offence, f£$% him! The only people more retarded than him are those who take him serious and answer his posts.
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April 5th, 2010 at 9:42 pm 89
[...] painted turtle at vancouvercondo.info 5 Apr 2010 10:37 am – [...]
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April 6th, 2010 at 9:16 am 90
Where are you getting the daily inventory numbers from?
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April 6th, 2010 at 11:48 am 91
"Starving Artist" & "Jewelzy":
Newbie here – where are you getting the 'shoddy construction at Spectrum' reference? I know someone that bought there last fall – was wondering why those places were so much cheaper than others of it's ilk.
And yes, Pacific Palisades Hotel is being renovated into apartments – a friend of mine works there & the last ballroom function is in two weeks.
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April 6th, 2010 at 2:40 pm 92
Just wanted to say how honoured I was to have my first-ever post on VCI singled out for further discussion. So you're not left wondering, I'm actually not a resident of Vancouver but have been following the conversation here for some time now. I have visited your fair city on several occasions, and have certainly enjoyed my time there.
As far as I'm concerned, the Rest of Canada is watching you guys because the Vancouver area is Canada's canary in the RE coalmine. (Not too long ago, some would have argued Calgary, but that horse already left the barn.)
The pattern is simple: the fissures develop beneath the feet of damp Vancouver residents before spreading eastward to infect other urban centers. This was the precisely what started in spring 2008 before Carney saved the economy. I remember it well. And because history rhymes, I expect we are about to witness something quite similar this spring, which will intensify into summer and fall.
But don't despair. The maddeningly low mortgage rates are still here, and they will no doubt ensure a steady supply of April fools for sellers. Possibly some May ones too.
For those who haven't sold by June, you'll definitely want to fasten your seatbelt. That distinct downward movement you'll be sensing is likely to induce feelings of disorientation, nausea and regret.
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April 6th, 2010 at 3:28 pm 93
Check out this post that deconstructs the bears:
http://vanhousingbull.wordpress.com/2009/08/04/mo…
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