Friday Free-for-all!
Put down that Vuvuzela, it’s free-for-all time! It’s Friday and that means it’s time for our open topic economic discussion thread, here are a few stories to kick off the weekend:
-No Canada housing bubble 2010
-No US housing bubble 2005
-Homeowners sell, start renting instead
-Rethinking the American dream
-Millions unclaimed in bank accounts
-Asia attempts to curb property bubbles
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So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
June 18th, 2010 at 9:18 am 1
First!!!!!!
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June 18th, 2010 at 9:30 am 2
Driving by marine drive to UBC yesterday, boy, there are a lot of for sale signs there. Whats going on?
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June 18th, 2010 at 9:39 am 3
Scary article about ex-home owners chosing to rent and skyrocketing rent prices. But if you think it through, once the sales inevitably slow down, many owners of multiple properties will be unable to sell and be forced to put their units on the rental market which will increase supply. No mater how you look at it, when there is an oversupply of housing both property values and rents are under downward pressure.
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June 18th, 2010 at 9:54 am 4
Third Wave of Buyers in Vancouver real estate:
http://www.theglobeandmail.com/real-estate/in-van…
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June 18th, 2010 at 9:56 am 5
HAHAHA…from "No Housing Bubble Trouble" January 2005:
""Housing bubble" worrywarts have long been hopelessly confused. It would have been financially foolhardy to listen to them in 2002. It still is."
Confused! We're confused, guys! Yup, don't worry be happy! Look how well that worked out in the States.
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June 18th, 2010 at 9:57 am 6
Our experience finding a rental was that there's lots of choice out there and we didn't experience any bidding wars. Too many amateur landlords asking too much for their skanky suites, which takes some time to wade through, but certainly no shortage of places to rent.
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June 18th, 2010 at 10:04 am 7
Ah, the pompous pontificating!
I love the blast from the past by Alan Reynolds, but here's the key sentence for me: "At the national level, what could possibly kick national home prices downstairs?" In 2005, almost nobody knew about the highly coupled markets for RE-based securities, along with various flavours of fraud, that ultimately kicked home prices down nation-wide. Few people knew about it because few people could see enough of the big housing finance picture. Now it all seems obvious, but back then the bears had only their intuition that the market did not make sense. The same thing is going on here in Canada right now. There is another shoe to drop, and I think the story a few days ago about BMO being accused of aiding money launderers might be the start of it. In 2005, US housing was floating on a sea of money from foolish investors. In 2007, Canadian housing was floating on … what? This is why I stay tuned.
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June 18th, 2010 at 10:05 am 8
If a homeowner sells and a renter buys isn't the end result the same?
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June 18th, 2010 at 10:06 am 9
So Rennie is trying to rebrand his line of bullshit to Mr Honest?
“We have to acknowledge that local incomes cannot compete with any foreign money,” says Mr. Rennie. “Housing supply is the one thing that cities and planners will have to watch closely to maintain any level of affordability.”
Meanwhile experts expect housing fall an additional 50%.
http://urbansurvival.com/week.htm
Are the big losses the Japanese overseas buyers experianced in the 80's going to play out with a new wave of sucker Chinese? History has a way of repeating itself and economics have a way of asserting themselves. In every bubble there is always one group that really sucks the big hose, it looks like time the uneducated Chinese get a schooling on international finance.
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June 18th, 2010 at 10:14 am 10
I went for a bike ride in the Como Lake area of Coquitlam yesterday. Lots of old bungalows torn down for new ugly monster houses. So much green space gone. Anyhow, it appears lots of little builders began their projects just before the market went sour. How many houses can you sell for a million dollars-plus this far out in the suburbs? I see bankruptcies to come.
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June 18th, 2010 at 10:18 am 11
I'd like to hear some opinions on Metro Vancouver Housing. They are advertising in the local papers, which is strange for a government entity such as this. Are they slums or a way to get decent, affording places to live?
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June 18th, 2010 at 10:18 am 12
Those articles are all depressing.
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June 18th, 2010 at 10:25 am 13
@realpaul: Every millionaire coming out of China is self-made. Do you really think they're suckers?
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June 18th, 2010 at 10:27 am 14
@Joe: Or is it just another article meant to scare FTB's into the market. "Oh noes the rental market is going to the moon, we better buy now or we'll be priced out and homeless!"
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June 18th, 2010 at 10:31 am 15
Here is my completely unscientific test that I have been doing since the end of the Olympics.
I go to craigslist rental section and test to see what amount is required for input into the minimum monthly rent field to produce less than 1000 listings.
When I first did this test it took a minimum value of $3,000/month to generate less than 1000 listings. A few weeks later the number had climbed to $3,200/month. It stayed there for a while before climbing again to $3,400/month.
As of today you need to type in $3,850 to get under a 1000 listings. Specifically, there are 979 listings for places to rent at $3,850 or more.
I know there are many duplicate listings and some are just typos in the rent amount but it is still a significant upward trend in the number of listings for high "value" places.
How many people out there are seriously looking to spend $3,850 or more a month on rent?
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June 18th, 2010 at 10:35 am 16
@realpaul:
"Without the consumer I'm out of business, my client is out of business."
I think he's been touting an need to look for more affordable places to sell for at least a year. He knows that he needs new developments to sell and developers just can't keep pumping out the "luxury" units without saturating the market.
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June 18th, 2010 at 10:38 am 17
The 2005 article from the CATO institute is a classic. What a smug prick the author is, just like our local cheerleaders.
"David Lereah, chief economist for the National Association of Realtors, notes the worst previous home-price declines on record were in Los Angeles (21 percent) and Houston (23 percent), but that was because of huge local job losses of 8 percent to 10 percent.
Matching that at the national level would require an unemployment rate of 8 percent 10 percent. If any housing bust zealot predicts the unemployment rate may double, we would certainly be amused to hear the explanation."
Duh, who could have known?
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June 18th, 2010 at 10:46 am 18
Unfurnished rentals Downtown (concrete buildings) get rented for ~$200 per sq. foot. I don't think there is unlimited supply of those who are leasing for 10k per month. HA! I just remembered, there was a greedy pig advertizing his condo in Grace during the Owe-lympics for 140k per month. Do you think he got that money? No, he did not. Anyway, what did they think – who was coming to the city for the Games? Sultan of Brunei? LOL Some people in this small city are definitely ridiculous and pathetic.
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June 18th, 2010 at 10:50 am 19
@Bob Lucas: That article about the tidal wave of Chinese pouring into the country like a swarm of locusts eating Canadians out of house and home is likely bullshit.
How can you tell? They use the "one-child policy" in China as one of the reasons the "hyper rich" are moving to Vancouver so they can have more kids. Bullshit, anyone who spends 5 minutes with Google can easily find out that the rich can have multiple children by paying fees to the government.
So who knows if they're knowingly lying or just too lazy to fact check but any RE article whose sources are solely developers and realturds is highly suspect.
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June 18th, 2010 at 10:51 am 20
#13 Bob, so where did all the Japanese, European and American millionaires comes from…..cereal boxes? I would suggest that the Japanese, European and American millionaires would have been far brighter and better educated because these groups had made their money in highly taxed and highly regulated markets (thats the smart money at work)whereas the Chinese market is like Russia, based on graft, corruption and short term fiscal pulses coming from markets outside their own economy. And yes…that would be the dumb money. If there has ever been a group of turkey farmers, pimps and gunsters (and the sons and daughters of the revolutionary cadre) that are ripe for the picking because of their naivite' and inexperiance in global markets, it's the Chinese.
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June 18th, 2010 at 11:05 am 21
@Bob Lucas:
"Every millionaire coming out of China is self-made. Do you really think they’re suckers?"
Running sweatshops and taking bribes is certainly a noble profession.
Al Capone was self made too.
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June 18th, 2010 at 11:08 am 22
@Bob Lucas: Third Wave of Buyers in Vancouver real estate:
This journalist seems to specialize in music concert reviews and real estate. Interesting mix.
http://labs.daylife.com/journalist/kerry_gold
Let's see who he/she spoke to for details for the story:
-"West Side realtor Ryan Dyer"
-"Magnum Projects’ George Wong"
-"Vancouver developer Robert Macdonald"
-"Marketer Bob Rennie"
-"Vincent Chen" ["Visas Consulting Group is one of the largest immigration consulting firms in China"]
-"Macdonald Realty VP Dan Scarrow"
-"Kelowna realtor Alexandra Rebagliati"
Nice.
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June 18th, 2010 at 11:08 am 23
@Bob Lucas: So, in any given year, 3,000 rich Chinese immigrant buyers control what 70,000 other buyers in BC pay? Sure, if you say so.
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June 18th, 2010 at 11:19 am 24
@/dev/null: Brilliant point re depth of industry sources for that story. I'll archive your analysis as a reflection of the still uncritical pumping going on in local media (even though we've seen one or two counter-examples recently).
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June 18th, 2010 at 11:27 am 25
@No Longer Looking:
I've also seen lots of listings by Metro Vancouver housing. Some of them seem like good finds (there was one which was at False Creek, a townhouse for $1200 a month or so?) I guess it depends who is living there. I know someone who rented an "affordable housing unit" near Champlain in Vancouver (it's run by a different society than Metro Vancouver). It was in decent shape, large unit with laundry hook-ups. The other people living in the complex seemed to be low to-middle-income earners, people with jobs in the service industry, lots of families etc. The one thing I've noticed with Metro Van housing is that you can't apply to live there if your household income is more than $66k. For two people, this limit might be exceeded quickly if you have two people making $36k each, which seems a bit low (to me at least?) A household with one-income earner could do it though, I suppose.
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June 18th, 2010 at 11:34 am 26
@realpaul: Very astute and informed commentary.
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June 18th, 2010 at 11:37 am 27
@Best place on meth: Your characterizations make me feel good about my inherent superiority. Have you ever done business with Chinese entrepreneurs? Thank god xenophobia is alive and well in this country!
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June 18th, 2010 at 11:38 am 28
@jesse: I never said control. You did.
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June 18th, 2010 at 11:38 am 29
Does anybody know how much of the purchasing right now is being done to beat the HST? after all, it kicks in in less than two weeks.
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June 18th, 2010 at 11:40 am 30
Regarding the unclaimed bank accounts, I found one for my parents. Too bad it's just over $1 balance
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June 18th, 2010 at 11:41 am 31
@ProblemBear: About 27.548% give or take one one thousandth of a percent.
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June 18th, 2010 at 11:51 am 32
@jesse: Slight correction, out of the 3000 chinese families coming to Canada, 60% coming to Vancouver. So its 1800 controlling 70,000 = 3.88% sales to rich investor chinese
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June 18th, 2010 at 11:51 am 33
Riding around the city (west side) I've noticed that the listing seem to be clumping – you'll go by block after block with one or two listings, then you'll see five on a block.
That's gotta be a pisser when you're trying to unload one of your piece of sh*t properties and the price gets set by whoever on your block goes lowest.
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June 18th, 2010 at 11:54 am 34
I think what is truly interesting about the comment that Bob (the Bitch) Rennie said is that the development community fully realizes that the forces at work in city hall and the government of Canada have priced the local buyer citizen out of the market and are now worried about the blowback that will follow when Joe Six Pack wises up to the fact that they've been sold down the drain for the short term gains of tax hungry politicians and the parasites who pimp real estate. Its obvious now that rates have edged up slightly and the qualifications are only slightly more restrictive that the local market has fallen off the rails. They can build more cat boxes but as we all know it's impossible to have two point two kids in a 500 sq ft coffin and not revolt in very short order. This scam of selling locals up the creek for a few economic refugees and last gasp profits will be exposed and there will be political consequences. Unfortunatley people will realise thay can no longer buy a home. Whats amazing is the locals being so slow on the uptake with this. Especially the young buyers………doesn't any of them think ahead to the time when 'boopy' has a baby?
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June 18th, 2010 at 12:08 pm 35
@realpaul: For the price of a 500 square foot cat box, you can buy a nice house in the suburbs. Markets are subject to global forces, isn't that your main point?
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June 18th, 2010 at 12:11 pm 36
@realpaul: Do you have a "Final Solution" in mind?
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June 18th, 2010 at 12:33 pm 37
realpaul:
Thanks again for calling a spade a spade.
I laugh at Boobie as well, a sign of a hypocrite is deflecting blame. Realtors, developers and politicians are all pigs at the trough, and they got greedier and greedier and created an alternate economic universe. The Non bizarro universe usually had interest rates creep up to counter demand, to basically weed out the "greater fool" idiots who would inflate the market.
As we have discussed, I think that the pool of FTB's have been sucked dry, lured by a bogus economy, and now the SHTF.
The RE market should be a reflection of the overall domestic economy, not via an offshore market full of UNpredictable and fickle unknowns.
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June 18th, 2010 at 1:00 pm 38
@NO-LYMPICS: "The RE market should be a reflection of the overall domestic economy, not via an offshore market full of UNpredictable and fickle unknowns."
You mean like the price of oil?
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June 18th, 2010 at 1:00 pm 39
Kinda hits home…..
A friend of mine bought a house in Tsawassen, but still hasn't sold his current one. Seems to be getting BS offers .
A family member and their spouse sold a leasehold condo and paid $400,000 + for a house on a 33 ft lot in Ridge Meadows. The house had been on the market for a while, but I think they have hit the perfect storm where the market has peaked and they are now in negative equity.
A family members friend from England was visiting, and discussed how their son's 1st home is now in negative equity, ie dropped about 20% in value.
I see nothing but stagnation , lots of UNsold inventory.
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June 18th, 2010 at 1:09 pm 40
Bob Lucas:
Oil, like diamonds etc., is sold via a cartel dictated prices. The price is fixed, and doesn't reflect market demand.
Our RE market was pimped to lure suckers who have no concept of history into competing with offshore buyers. This trick has been used internationally, and now the SHTF.
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June 18th, 2010 at 1:14 pm 41
Give me a T! Give me an R! Give me an O! Give me an L! Give me an L! What's that spell? TROLL!
So many bear trolls on here, with their xenophobic views. Good for scrabble, especially the X on a triple word, but no place on RE blog.
Relax, go to wonderful Vancouver cafe, enjoy FIFA hifi, and accept many people actually like Vancouver.
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June 18th, 2010 at 1:21 pm 42
@#29 Problem Bear
My closing date is June 30th to beat the HST, and I suspect many sellers would want to do the same as HST on the commission and lawyer would add ~$1500 to my costs of selling.
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June 18th, 2010 at 1:22 pm 43
a friend of mine in his mid 20s (DINK) just bought a foreclosure property (townhouse) in Richmond, listed ~425k, bargained down to ~390k. He said he took advantage of the low interest rate (3.25%?) that he was approved of 2 months ago.
nice price cut, we can probably expect more foreclosure/distress sales coming soon
I suggested to him to wait until at least the end of the year to buy, guess family pressures / marriage can cause people to make hasteful decisions..
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June 18th, 2010 at 1:28 pm 44
@NO-LYMPICS: By oil cartel I assume you mean OPEC. How successful have they been at dictating prices over the past 5 years? Like farting in a hurricane.
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June 18th, 2010 at 1:40 pm 45
@Van MD:
How do you "bargain down" a foreclosure. I though you submit an offer to the court, it's either accepted or it's not?
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June 18th, 2010 at 2:09 pm 46
HST ?
That's the last red herring left for the RE pimps.
I'd rather hold out for price drops that will in all liklelihood
exceed the HST. Watch for boobie and his ilk start with ads that claim they will pay the HST.
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June 18th, 2010 at 2:16 pm 47
@Anoymous:
Hmm, I guess "bargain" is a wrong choice of word.. he said his initial lowball offer (~380k) was too low; they then "negotiated" to the final ~390k price, apparently there was no competing offer.
I'm not exactly sure what's involved in the process of buying foreclosure properties.. Apparently more stressful, maybe because you need to go to court..
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June 18th, 2010 at 2:23 pm 48
Looks like another bullish day is upon us
PaulB has not posted yet, which you guessed it, means that there is no new bear news….
Just like yesterday, another 80% list sell day is coming….
Looks like the buyers are coming out again….
I love being an owner in this city….real estate is unstoppable
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June 18th, 2010 at 2:23 pm 49
Larry's post today marking the surpassing of 10,000 real estate agents in GVREB area was quite interesting.
Looks like Armageddon really is here.
The post was entitled "exploding realtors" which sounds like it would make a very enjoyable Hollywood movie to watch, riveting and action packed.
Thanks Larry for putting a smile on my face.
http://www.yattermatters.com/real-estate/symmetry…
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June 18th, 2010 at 2:24 pm 50
My theory on rental rates and prices is that there are a whole lot of empty condos out there being paid for by speculators and foolish investors who refuse to charge less rent than their mortgage payment, and thus are paying the whole mortgage themselves. These units will not count in the vacancy rate, because that is a survey of purpose built rental apartments, and since the landlords aren't willing to rent them at the market rate they aren't really a viable alternative for people looking to rent.
But at some point, they're going to hit the market. Either the landlord will wise up and realize a $500 per month loss is better than a $2000 per month loss, or else they will sell or get foreclosed on and the new owner will rent them at the market rate. There's a huge shadow supply lurking off stage that eventually has to hit the market. At that point I expect rents to fall quickly, especially for good tenants who are willing to play hardball.
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June 18th, 2010 at 2:35 pm 51
Sure Bob, the Final Solution would to be regulate the sale of real estate as Australia has done so that foriegners are not a factor in displacing the local population out of the housing market.
2)stop government interferance in the business cycle and let the market become a reflection of the economy and not the taxable revenues projected by an overspending government and the greedy projections of the special intrests.
3) disallow advertisers that hide behind the media as opposed to the US model where ads are disclosed as advertising instead of being touted as fact to an unsuspecting and overly trusting population.
4) Instead of mandarin immersion in the schools , how about a course in financial literacy for the kids coming up so they don't fall into the same traps as this generation obviously has.
That a pretty good start…any more suggestions?
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June 18th, 2010 at 3:09 pm 52
New Listings 141
Price Changes 120
Sold Listings 85
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June 18th, 2010 at 3:18 pm 53
I don't see a problem in regulating foreign ownership of RE, at least residential RE.
The whole thing has gotten out of control.
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June 18th, 2010 at 3:21 pm 54
Re supply of realtors:
I recall a conversation with a realtor 20 years ago and he mentioned that of his RE class of 32, only 2 were still active realtors.
The attrition rate is huge….
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June 18th, 2010 at 3:41 pm 55
Here a comment from Chipman on the Globe and Mail article about the Mainland Chinese buying up Vancouver property…
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V-Dog:
What would stop it? A collapse of the Chinese economy, or a collapse of Canadian society.
There are a lot of people in China.
There is a lot of money being made.
Vancouver is relatively close to China, and has good connections with it.
Vancouver is a small enough pond that an infinitesimal number (relatively speaking) of moneyed Chinese can have a big impact on the market.
In my experience Asian buyers have not had the same motivations or the same practices as local buyers. They don’t mortgage as much and aren’t searching for return as much. They make money in Asia and store some of it ( “some”) here.
It would not be uncommon, for example, to be unable to get an answer from an overseas client on a million dollar offer simply because they’re too busy doing something else that’s more important than their real estate in Vancouver.
Two things that might be interesting to talk about. One, how much does the value of an Abbotsford or Maple Ridge house go up as a result of 30% of Westside houses being sold to Mainland Chinese?
Second, not all Mainland Chinese come directly from Mainland China. I ran into one Westside investor who’s business income was derived from…Rwanda! You’ve heard that the Chinese are very interested in Africa, right, so that’s not surprising.
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June 18th, 2010 at 3:43 pm 56
Someone already posted this on Grath's blog, but I think it deserves re-posting here by virtue of comparing Seattle (a place that has actual companies like Microsoft and Boeing) and Vancouver (that has…whale watching?)…
http://seattlebubble.com/blog/2010/06/08/goldman-…
Apologies to everyone who reads both blogs (I'm guessing most of you!)
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June 18th, 2010 at 3:46 pm 57
That article on "bidding wars" for rentals is so far from reality it's laughable.
I recently moved to a new Yaletown apartment, which I rented after asking for and receiving a discount on the asking price.
The agent said that a year ago my unit would have easily rented for $120/month more, but that suddenly there's a huge supply of rentals and demand has fallen rapidly.
I rented from a large rental agency, and it is obvious just looking at Craigslist which rentals are from agencies and which ones are from over-their-heads amateur landlords. The difference in asking prices is huge – agencies know the market rent, and generally set the asking price about right, while similar units rented by mortgage debtors ask anywhere from $100-$500/month more. Of course, these go unrented month after month until the price comes down to the market price in the real world.
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June 18th, 2010 at 3:51 pm 58
Changing the CMHC rules to only insure primary residences would do a lot more to prevent future bubbles than any restriction on foreign ownership. The number of units being bought by the Chinese is miniscule compared to locals buying "investment" properties with barely any money down. Blaming foreigners is pure xenophobia.
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June 18th, 2010 at 3:54 pm 59
Well thanks for the Vancouver Sun link, I just found my parent's had a dormant account for $650. It feels like treasure hunting!
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June 18th, 2010 at 3:59 pm 60
Money coming from outside the country to invest in Canadian real estate is similar to an export. It draws wealth into Canada. Not such a bad thing. Money going between Canadian residents to buy/sell houses does not do this.
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June 18th, 2010 at 4:10 pm 61
@Reasonfirst:
How about if we start exporting people to countries where they can afford to live. Ain't that would be a bad thing either?
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June 18th, 2010 at 4:11 pm 62
@Loving Vancouver: Chimpman is one the biggest BS'ers around.
How many mainland Chinese are going to go to Chimpman for an agent, how many Canadians of Chinese descent are going to go hire that clown? There's hundreds if not thousands of realtors in the LM who speak Cantonese or Mandarin and know the customs of the mainlanders and have familial/business connections to China and Rob ain't one of them.
So where does he get this inside information on what effect hot money from China is doing? From the Vancouver Sun or his wet dreams.
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June 18th, 2010 at 4:12 pm 63
@Aleks: I agree, CHMC only insuring primary residence is a good soln for future bubles. Infact they should only insure FTB's
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June 18th, 2010 at 4:23 pm 64
#60
"Money coming from outside the country to invest in Canadian real estate is similar to an export. It draws wealth into Canada. Not such a bad thing. Money going between Canadian residents to buy/sell houses does not do this"
Sorry, but absentee landowners are not beneficial either economically or socially, and in fact often contribute to increased tangible and intangible costs for local tax paying residents.
During the 1980s and early 1990s we had the wonderful “latchkey kids” phenomena, where wealthy Hong Kong residents would buy a house and drop of their teenage kid(s) to fend for themselves. This allowed their parents, who had “passports of convenience” to continue to work in Hong Kong and avoid paying any income taxes in Canada. As a result, these kids placed a strain on our social services, from everything from requiring tax payer funded ESL classes because of a lack of integration, to increased police and court costs, as many fell prey to local gangs and/or street racing.
Having foreign owners that fail to occupy or rent out homes: distorts the local supply of houses, adversely affecting prices for locals; undermines any spirit of “community” in affected neighbourhoods (e.g. community volunterism); and frequently leads to an increase in vandalism/property damage, which of course leads to an increase in policing costs and insurance premiums.
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June 18th, 2010 at 4:26 pm 65
Fluuusssshhhh!
My " educated " guess is that far too many units, especially condos, were bought under the 1st phase scenario, whereby the view was RE never goes down, and flipping was the way to go.
Now that the SHTF, 2nd phase is to rent out the investment in the hope to pay the mortgage . These buyers have run out of wriggle room. Being a landlord is work, it ain't for the faint hearted ( especially if the strata limits the number of rentals ).
I can foresee con artists galore, sensing desperate "owners" who are forced to be landlords.
If RE goes down, the general economy is going down, especially in BC which has tied its economy to RE. Rent will hit a baseline, and tenants will ultimately set the rent price.
It's a vicious Catch 22, but one oh so predictable. IMHO, if you are a condo owner stuck in this mess, get out now before it's too late.
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June 18th, 2010 at 4:33 pm 66
64 community Watch
holy cow you are good with the assumptions….
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June 18th, 2010 at 4:34 pm 67
Where's the 19K party?
Where's the cake??
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June 18th, 2010 at 4:48 pm 68
#64
I guess we all can't support our assumptions of "Not such a bad thing" as well as you…..
Do a little research – all the information I posted is out there, on both the Latchkey Kid situation, to the sociological and economic impacts of absentee landowners.
If the example of the Hong Kong kids made you feel uncomfortable, we can take perhaps another more "socially acceptable" example. Radium Hot Springs has over 50% of its properties owned by "rich" absentee Albertans that only come for a couple of weeks a year. As a result, the local government has had to increased its servicing costs, as officers and local government staff have to monitor the empty houses to stem the spate of vandalism. The community has also, in part, had a difficult time attracting residents and fostering any sense of community because the village is effectively half empty with the absentee owners.
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June 18th, 2010 at 5:31 pm 69
@Community Watch: Radium also had massive layoffs of forest and mill workers, those jobs aren't coming back anytime soon.
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June 18th, 2010 at 5:45 pm 70
69
That is why I said "in part" – I would not negate the impact of the decline of the resource sector.
"The community has also, in part, had a difficult time attracting residents and fostering any sense of community because the village is effectively half empty with the absentee owners."
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June 18th, 2010 at 5:54 pm 71
@Community Watch: I'm not disagreeing with you in any way. Just pointing out how F'd many/most towns and cities in this province are.
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June 18th, 2010 at 6:00 pm 72
@realpaul: "nstead of mandarin immersion in the schools , how about a course in financial literacy"
Well judging by the spelling on this blog, maybe an additional English course as well. Just because it's a requisite in school doesn't mean the material will sink in.
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June 18th, 2010 at 6:23 pm 73
New Listings 201
Price Changes 170
Sold Listings 116
18,790
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June 18th, 2010 at 6:25 pm 74
Most landlords in this city are already so fucked they don't even know it yet since they are living day to day on credit cards and tuna salad sandwhitches. So stupid so stupid it's not even funny! I smile every time I give these turds my rent cheque. Thanks guys pretty soon I'll own this whole appartment block for pennies on the dollar fools! Just got promoted to chief greeter too.
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June 18th, 2010 at 7:09 pm 75
Sales for the week are low 700s, same as last week. At this rate there will be just over 3000 for June. MOI = 6.
Expecting to see MOI = 9 by September (based on Mohican's data), which puts prices firmly into a downtrend.
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June 18th, 2010 at 7:16 pm 76
By the way, to those bears here with 'anecdotes' of crickets at mortgage centers: what happened? Are those 700+ sales per week all cash deals? It seems like the immediate rental income rule change has had little effect.
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June 18th, 2010 at 7:28 pm 77
@Loving Vancouver:
Chipman's global warming blog still exists?
For real?
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June 18th, 2010 at 7:52 pm 78
Community watch:
Good points
Offshore investment should be relegated to long-term job creation. Investing in residential RE inflates the market and excludes the locals .
I can't see how anyone benefits long-term when profits from sweatshops is laundered in another country.
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June 18th, 2010 at 8:05 pm 79
Paulb, why is inventory stationary even though listing outnumber sales by 100 each day? We have been at or around 18,800 for over a week now. Any idea?
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June 18th, 2010 at 8:37 pm 80
@paulb: domus has a good question, if you know the answer I'm interested too.
@superfly: there hundreds of bank branches in vancouver. About 30 CIBC, 40 RBC, and 30 Scotia branches in a 10km radius. I'd say at least 200 branches. Not counting those who take mortgage from credit unions or ING.Direct, nor all-cash deals, that's less than 4 mortgages application per week per branch. So yeah, they probably hear crickets. Some branch probably had 0 applications last week.
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June 18th, 2010 at 8:39 pm 81
@jesse:
Actually, to go even further, there is good evidence to suggest that financial education just doesn't work at all. It really is all about self-control and discipline rather than knowledge.
http://www.psyfitec.com/2009/10/financial-educati…
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June 18th, 2010 at 8:43 pm 82
@domus: not to be blunt, but this has been answered like a bazillion times. Cancellations and expiries. As simple as that.
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June 18th, 2010 at 8:43 pm 83
@domus:
Removed and/or expired listings.
There have been more than usual the past couple of weeks.
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June 18th, 2010 at 9:03 pm 84
In support of mohican's comment, a rather edutaining piece from TED a few years back
http://www.ted.com/talks/lang/eng/joachim_de_posa…
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June 18th, 2010 at 9:29 pm 85
@specuskeptic:
SNL did a PSA skit once with Steve Martin called "don't buy stuff you can't afford". Worth a good laugh (less than 3 minutes)
http://consumerist.com/2007/04/snl-skit-dont-buy-…
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June 18th, 2010 at 9:51 pm 86
I love the Gazette piece justifying Canada's price. It sounds like everyone here in Vancouver.
I agree with teaching kids some basic finance in school, and how about some basic math. I'd start with what "compounding" means. It's obvious this journalist/paid shill doesn't know what it means. I mean if Jay figures 8.4% price gains year over year can be considered moderate…..well, I think someone needs to teach him the rule of 72 (72 divided by interest rate = years to double). So if the average Canadian house is now $340K, all you have to do is wait 9 years, and it will be $680K. Hold on for another 9 years and it will be $1.36 million.
Maybe the second lesson I'd teach is that you have to WORK and SAVE in order to create wealth. It seems to me that for the past decade, everyone has looked for the ticket to riches with no work involved. First the dot coms (where people were telling me that 20% to 30% a year was a reasonable rate of return), then commodities where even Goldman was predicting $200 oil, and finally houses. Don't even have to work, just borrow a bunch of money and make free money.
I mean, has everyone lost their minds? I believe that in Canada we are at roughly 70% house ownership. So by CREA logic, the majority of us can expect to be millionaires in 18 years by doing…..wait for it…….nothing but buying a house!
I can't wait for this stupidity to end. I wish there would be a huge backlash against CMHC and the Real Estate industry, but I'm pessimistic because there is just too much vested interest.
KK
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June 18th, 2010 at 9:53 pm 87
@joycer
Remember that skit well. Truthiness = funniness!
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June 18th, 2010 at 10:15 pm 88
@Mohican
Yeah but so many people in our society believe that buying a house is using self control and discipline, no matter what the price. A lot of people on this site (and others) talk about greedy people buying homes, but a lot of people I talk to who consider buying a home are truly just trying to be responsible.
To me the key to that article was this:
I think critical thinking and problem solving are what need to be taught more in school. Our education system spends way to much time teaching through memorization.
Oh and learning more languages can never be a bad thing.
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June 18th, 2010 at 10:22 pm 89
From Calculated Risk: Lumber Prices off 30% since April
Great news! Housing will be cheaper to build! Bad news! Taxes and sawmill employment drops. I'm confused.
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June 18th, 2010 at 10:36 pm 90
@VHB: it is the magnitude that worries me. With the latest numbers I would have expected to se 19k a month ago.
There must be a lot of expiries and cancellations, more like a wave of them. It would be good to have a sense of how sellers are reacting, in terms of quantity of stock being withdrawn.
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June 18th, 2010 at 10:52 pm 91
Domus, check out Agent Will's site. He has a graph of weekly removed units. His area is different than Inventory/PaulB so the numbers won't quite be the same but you can compare to 08/09.
I think we will see pretty stagnant inventory like in 2008. We plateaued a little earlier this year but we were higher sooner as well. My guess is we'll bounce around between 19-20k until November and then trail off a little lower.
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June 18th, 2010 at 10:53 pm 92
Whoops, here is the right address:
http://agentwill.com/weekly-stats/
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June 19th, 2010 at 12:31 am 93
I'm going to end my years of lurking tonight. I've followed this blog ~4-years.
After diligently working to eliminate nearly $70K in student loans, my wife and I are beginning our third debt free year. Demographically we both hold graduate degrees and our household income fluctuates between $140 – 170K per year. We live below our means:
- rent a car when we need one
- remained in a one-bedroom apartment after our daughter was born
- brown bag lunch most days
- follow a simple, cash-only budget
- brew our own coffee in the morning
In the time since eliminating debt, we've saved almost $150K. We began looking to buy real estate. We wanted to maintain our faux bohemian lifestyle, and Vancouver West seemed the best option. We began looking, and our finding was that a ready-to-live-in single family home in Vancouver West (North of 16th) began around $1.1M. We looked and crunched and after three months decided that we didn't want to make the sacrifices required to own a home, including:
- becoming landlords
- sacrificing professional mobility
- staying home during vacation
- paying consumption taxes
We are not bitter that the sacrifices of home ownership in Vancouver are greater than we wanted to make. For us, the benefits of flexibility outweighed the pride of homeownership.
We are moving to a larger rental space in the building we've lived in for seven years. It is a professionally managed rental tower downtown. We have a positive relationship with the supers. In negotiating the move, we wanted a number of updates made to the suite. Ownership didn't want to expend the capital. As such, we offered to pay for the renovations for a reduction in rent. Ownership agreed. The break even works out to ~42 months, and we've picked out the styles we wanted.
I write this because we are now the second couple in our circle that have negotiated a similar arrangement. As a business person, I know when dealing with another business (read, not an individual), I am working with known strategies that dictate margin, capital and cash flow. Thus, I was able to negotiate a mutually beneficial arrangement that distributed the risk such that I (the tenant) and the owner were happy. On July 1, we will move into an updated 1050 sq ft, 2 bed, 2 bath, 2 balcony apartment on the 22nd floor with unobstructed views of English Bay. Rent = $1700. I've taken a few stabs at comparing the rent to the hypothetical cost if we were to buy. My amateur numbers validate we made a good decision for us.
What I often don't understand is the venom with which homebuyers / marketers are often attacked on this blog. From my perspective, they are making the best decision for them. I realize many of the comments speak out against the onslaught of homeownership messaging. Yet, I heard the messaging, searched and decided that renting was the best option for us. However, the numbers were less of a factor than the soft benefits. I believe the soft benefits trumping the numbers will become more pronounced as more first-time buyers begin choosing what they need over what they can afford.
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June 19th, 2010 at 1:04 am 94
@generation y: Welcome to the blog, gen y, and thank you for the informative post and the measured tone with which it was written.
So you're planning on staying in your new apartment for at least 3.5 years. Will your rent be constant throughout?
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June 19th, 2010 at 2:23 am 95
"I agree with teaching kids some basic finance in school, and how about some basic math."
I think about this all the time now that I have kids. I suspect the reason we don't teach them something so fundamental to their future is that the bureaucrats and teachers unions are dominated by people with a vested interest in NOT having people understand how it works.
This ignorance extends to so-called business journalists as well. Here's Bloomberg on the Euro crisis recently:
"German-led northern Europe, with its zeal for budget discipline, is attempting to fix the mistakes made by the euro’s founding fathers in the 1990s."
Germany has had one budget surplus in the last 15 years.
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June 19th, 2010 at 3:53 am 96
Gen Y:
I can't answer for every poster here, but my sense is that most of them are angry because the homebuyers and marketers (along with the government/CMHC) are collectively leading us all down a path towards certain economic doom.
Personally, I wouldn't care about what they did if it weren't for the fact that we will ALL end up paying for the mess they've created once the bubble bursts – which it so clearly will.
The bears on this site can see what's coming, yet they are frustrated by the complete willful ignorance of those around us who refuse to open their eyes see what is so evident to anyone with an open mind. We lament the loss of the work ethic that's been replaced with a get rich quick mentality. Again, this would not be a big deal if it weren't for the enormous pain and suffering the coming economic fallout will cause for both those who enabled this mess as well as those who rail against it.
If that makes it look like we're spewing venom out of hatred or spite, then you haven't been paying attention. We are here because we have found an oasis of sanity in a desert of ignorance and greed. We can see the writing on the wall, yet somehow, the vast majority can not. The iceberg has hit the ship; we have done the calculations and we know with certainty that it will sink, and there are not enough life boats.
But nobody will listen to our warnings. And the band plays on.
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June 19th, 2010 at 8:29 am 97
Sleepless – we listened. Read "We looked and crunched" as this blog influenced. In regards to paying for it – I'm not able to influence, but I can do my best to prepare my family for the crash. Chances are, those with capital will be in a position to benefit upon a sharp devaluation (through asset or equity acquisition).
Oneangryslave2 – i anticipate rent to increase the max it can each year. Our supers like us, so there may be a year where it does not. However, I am not counting on it. We don't plan on moving in five years, but the future is not predictable. Regardless, we are on the hook for $4200. The rent reduction was $100 and assuming a 3% increase ~$113 in year five.
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June 19th, 2010 at 8:33 am 98
@generation y: "From my perspective, they are making the best decision for them.
That is always true but we know decisions involving large amounts of capital, saved or borrowed, are made with a relatively short term time horizons. Based on experiences in the US and elsewhere this is in aggregate is bad for the economy in the long run.
I have no problem with anyone overpaying if they get value from doing so. But from a strict financial sense it's still a bad investment.
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June 19th, 2010 at 8:57 am 99
@generation y:
Hi Gen Y,
Congrats on your wise financial moves. For me here's a few reasons why I am so pissed at the Realtors/"the establishment"/society.
1) The Realtors have an outsized "voice". When there's a tax break or credit on the table, it always seems to be geared to Real Estate. Now don't get me wrong, Canada isn't as bad as the US where it seems the really powerful interests (like the NAR…National Association of Realtors) can pretty much buy their influence, but still. Realtors here "represent" that 70% of us that "own" our houses. So in effect, they screw the renters with policy that favors the "owner".
2) related to #1, all this money is going into Real Estate and not into solving the truly big problems. Global warming? Health care with costs increasing many multiples of inflation? A wave of irresponsible baby boomers getting ready to retire with no assets? Canada's lack of productivity/competitiveness when compared to the US? Nah….none of that matters. We need to figure out a way to keep house prices unaffordable. And pull out all the stops (like letting CMHC increasing their liabilities a factor of 4 in something like 5 years) because this is ALL that matters.
3) The Realtors and our policy makers are encouraging irresponsibility, and telling us it's the responsible thing to do. In their minds, it's responsible to buy a house with almost no money down, and to buy way more than has historically been considered prudent. This behavior caused the near crash of our economy, and their solution is to borrow more. They had the experience of the US to learn from, and took nothing away from it.
4) This fiasco is going to impact all of us (including you, even though you were wise). My belief is that these people doomed us to 5 to 10 years of muted growth. I can't see any way this ends well for anyone. If house prices crash, the same wealth effect that made our consumers spend like drunken sailors will operate in reverse. That would be a huge hit to our GDP, and would feel like a double dip recession even if the rest of the world muddles through. If house prices stagnate for 20 years while incomes catch up, then there would be a smaller hit to our GDP as the consumer realizes that houses don't in fact keep going up. However, in this scenario we have a huge anchor to growth in that the cost of living is too high. It becomes an impediment to business. Why are there so few major industries in Vancouver? I would point to stupid Real Estate prices as one reason. Finally if house prices keep going up, no one will have money for anything except housing. Not even food!
I don't mean for this to be an attack on anyone specifically. I just think that the policies of the last decade were beyond irresponsible. I hope that we learn the folly of our ways. Hey, I can dream, can't I?
KK
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June 19th, 2010 at 9:23 am 100
@generation y:
Welcome gen Y,
That was a well written post and congratulations on figuring out that renting makes the most sense for you.
I can only speak for myself regarding the "venom" on this site but for me it's nothing against homeowners or home buyers, it's strictly the pumpers/marketers/cheerleaders and the constant lies that they spew that I have zero patience or tolerance for.
The constant bleating of "real estate never goes down", "it's different here", "they're not making more land", "rich Asians are snapping up everthing", "buy now or be priced out forever", yadda, yadda, yadda….
I would treat these scumbags the same in person as I would online, with contempt and disdain because quite simply, I hate liars.
As for the buyers themselves, they fall into 2 categories. The ones who are buying for their own satisfaction, while I may disagree with their overpaying I wouldn't begrudge them a home of their own. Some of them have been sucked in by the cheerleaders, some not so much.
Then there is the 2nd group of buyers, the speculators. The I buy 3 my husband buy 3 crowd. As much as these people disgust me for using a a basic human necessity like shelter for their get-rich-quick scheme, I'm not as bothered by them as I am by the cheerleaders because the speculators will get what's coming to them. Financial ruin.
Thanks for adding your intelligent thoughts to the discussion and I hope you have more to contribute in the future.
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June 19th, 2010 at 9:33 am 101
@generation y: 140-170k bear? You should have paid more attention in school loser. What sad life you little bear have. 1 bed appartment with kids? What kind of ugly woman marry man like this? Can't even get good job? Amazing woman even talk to you.
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June 19th, 2010 at 9:47 am 102
More weak ass Ad hominem Troll bullshit.
How fucking dull.
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June 19th, 2010 at 11:02 am 103
Civil service suck the system dry as the number of parasites grows exponentially.
http://www.vancouversun.com/business/Number+publi…
Only this city council could lose money on a gold mine. I guess this proves the old adage 'Hire a retard . get a retards report card'.
http://www.vancouversun.com/business/Cambie+Stree…
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June 19th, 2010 at 11:03 am 104
@superboomtime: Amazing woman even talk to you…
Your mother is far from being an amazing woman but I did her last night while being a bit drunk, no big deal.
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June 19th, 2010 at 11:11 am 105
The truth finally comes out in spite of the RCMP's bullshit campaign to hide it. RCMP, incompetant, murderers, criminals, ill suited for the work. Braidwood inquiry outs the reality of the psycho's hiding their childhood inadequacies behind a badge. Drunks and liars who should be booted out of BC and replaced.
Thank you Mr.Braidwood. Now that the AG has reopened criminal proceedings against these shits, lets reopen all the other RCMP murders that they have whitewashed with their own 'investigations'. When this happens in any other field, the coroners findings scandals for example, it nessesitates that all past cases be rexamined. The same should happen here. I'd like to see the hundreds of RCMP criminals who think they got away with murder marched into the pen for life sentences. Only then will justice have been served. The Air India case is one example of incompetance on the part of the RCMP left 300 murders unsolved. Why does anyone think these idiots should be on the public payroll.
http://www.vancouversun.com/news/Braidwood+inquir…
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June 19th, 2010 at 11:20 am 106
Go Argentina Go
It was not long ago when bears were denying the collapse of mls listing but now everyone seems to believe in it,It's like come late but come correct.There are three things this world always like forever,Those three things are Vancouver Real Estate,Sexy Lingerie,and fifa world cup.Now back to FIFA in high definition.
Go Argentina Go
Run Buddy Run
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June 19th, 2010 at 12:36 pm 107
realpaul:
The civil service always has and always will protect its own.
They should be held to a higher standard and held more accountable.
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June 19th, 2010 at 12:53 pm 108
If Cambie Street grows as hoped, City of Vancouver will lose big bucks
Canada Line corridor merchants can expect to get clobbered, again
http://www.vancouversun.com/business/Cambie+Stree…
Interesting story which break down the consequences of displacing businesses and/or adding more residential construction.
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June 19th, 2010 at 1:54 pm 109
I just got back from Hong Kong! It's great to get away from the summer heat of HK. Now that I'm back, I noticed that property prices are higher than when I left 3 months ago.
There's one thing that I missed about Vancouver when I left, the nice weather and the nature. Nothing beats the nice comfy environment here.
Now that I'm back, I'm ready to destroy all the bears and their doom and gloom. Bears, you've lost your battle year after year, even a broken clock is right once or twice a day yet you bears are worse than broken clocks.
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June 19th, 2010 at 2:07 pm 110
@NO-LYMPICS: The story is interesting but the conclusion is most likely wrong as it rests on a faulty assumption.
So, to summarize, the author–via his interlocutor–that rezoning the Cambie corridor for mixed-use residential/retail will cause the city to lose money? How is it possible for the city to lose money via rezoning if there are more taxpaying entities and the hypothetical tax revenue generated increases by more than five-fold? The claim is that because residential properties are cost-ineffective in terms of total taxes taken it compared to total city dollars spent on services, any rezoning that produces more residential means more red on the city's bottom line.
The author's logic: take the total generated in taxes by residential properties (T_r) and divide it by the total number of residential properties (N). Take the total amount spent by the city to service residential properties (S_r) and divide this by N.
So you get an average tax assessment per residential property–T_r(mu)–and an average cost of services per residential property–S_r(mu).
AS of today, the author claims that T_r(mu) is only about 2/3 the amount of S-r(mu). And here's the critical–and in my opinion, faulty–assumption of the article that makes the conclusion unsupportable: that the cost of servicing these new developments will rise (!) let alone remain the same.
So you're telling me that building a six-story mixed commercial/residential and combining a few businesses with up to 60 or so residences will make providing services to these areas more expensive than if they were 60 single-family residences?!?
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June 19th, 2010 at 2:43 pm 111
Supraboy, I know of two families that have up and left Vancouver to go back to Hong Kong because the weather is so gloomy here. One family is already back in Hong Kong and they are going to put their house on the market soon. The other family will most likely be selling as well.
Nice try though.
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June 19th, 2010 at 3:51 pm 112
oneangryslav:
The whole system is rather perverse.
I read a while back that the Cambie corridor was being set up for hi-density residential, as Vancouver was running out of land for hi – density( and avpid the NIMBY factor)
Many cities displace commercial and light industrial areas to rezone to residential. IMHO, its simply a cash grab and the long term consequences are ignored.
The way I read the article, the property tax system is skewed so that each residential unit created is "subsidized" and even if one redevelops a commercial site and replaces the commercial space as well as add residential space, the fact that new residnetial units have been created, a deficit is created, which apparently the non-residential tax base has to continually make up.
A vicious cycle. Eventually, business will leave and residential property taxes will have to shoot up .
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June 19th, 2010 at 3:53 pm 113
@a href="#comment-81275">nonymouse: Listen little bear I'm not one who come here to brag about my little pathetic life get reinforcement. Actually worse one of you retards is skullboy. Actually proud to live off poppa teet. Sad sad life you all live.
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June 19th, 2010 at 3:56 pm 114
Long time lurker first time poster. I have three doctorates and just paid off 300,000 in student loans living in a box with my kids down by the river eating government cheese. Now I saved up a whole $150,000 by working a dead end job and living in studio appartment with wife and kid! It's a dream life being a bear!!!!
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June 19th, 2010 at 4:17 pm 115
House #1 on the original "crack shack or mansion?" quiz has dropped in price from $1,180,000 to $948,000. MLS#835171
The realtor's website not only gives an incorrect MLS listing number, it also states the house is "Next to Simon Fraser University". Love the attention to detail – working hard at earning those commission fees!
It's sold though – only took a $232,000 drop in price from the original listing. (20%!)
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June 19th, 2010 at 4:43 pm 116
I saw a really great vanity license plate on a convertible Mercedes today down by the beach.
The plate said "wy rent" and underneath the plate it said "I sell houses".
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June 19th, 2010 at 5:10 pm 117
Bulls showing up here to stir it up on a nice day in June? The tide must be turning out there. It's too bad they indirectly prey on Senior Citizen's savings by sucking the teet of easy money created by immoral monetary policy. In comparison, I guess it's just as moral to live off Welfare.
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June 19th, 2010 at 5:18 pm 118
@Lurker:
Wow, what a steal! So if I happen to win one of those million dollar prizes on the Lotto Max I can buy that house. I can't wait to live life as a millionaire in Vancouver with choices like that!
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June 19th, 2010 at 5:49 pm 119
@superbulltime:
I think you meant "worst" and "scullboy". I find it interesting you think I'm "bragging". I've been relating some of what's happened to me after leaving Vancouver because God love you Vancouverites, many of you have no idea what goes on east of the rockies.
You'll note I don't talk about making bagloads of cash or granite countertops, I talk about how the quality of my own life has improved since leaving.
I've been asking myself why I keep checking out this blog and the only answer I can give is that I find the phenomenon of real estate in Vancouver fascinating. It's all anybody seems to talk about, bull or bear. It's distorted the fabric of life in the city until there's nothing left to discuss.
My recent trip to Washington really opened my eyes. You can't compare Vancouver to a true world class city, and there are only four or five: Washington, NYC, London, Paris, Tokyo and Shanghai I would say.
When you're in one of those cities you KNOW you're at one of the world's crossroads. You can sense it in the energy. YOu can attend world famous cultural events and see some of the world's greatest museums, often for free. Washington's amazing, the architecture makes you gasp. It feels like someone transplanted Rome at its height, then made it more magnificent. I was truly impressed.
And say what you will about Americans, the people I encountered were friendly to a fault. EVERYONE was in a shirt and tie, which is probably to be expected.
I thought about how many people mention Vancouver in the same breath as NYC and it just made me laugh. Van's got the ocean and the mountains and a bunch of super leaky buildings but that's it, I'm afraid.
So… if that's bragging, then I'm a braggart I suppose. I just don't fit the mold of the smug "I'm a paper millionaire" vancouver home owner. It's probably best I live in a quiter, more afforable city that so many in the West sneer at. I think I prefer it that way.
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June 19th, 2010 at 7:27 pm 120
@generation y: "What I often don’t understand is the venom with which homebuyers / marketers are often attacked on this blog. From my perspective, they are making the best decision for them."
Regarding some homebuyers and all marketers, are you suggesting that the incredible greed and deceit that has dominated the current housing market is OK?
Are you really proposing an ethics-neutral position along the lines of "just do what you think is right", which taken to its logical conclusion means we can't complain about anybody doing anything, ever?
I assume you are, because (a) you hold a graduate degree and (b) you've been following the blog for many years now, so you would seem to be intelligent and well-informed regarding the facts.
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June 19th, 2010 at 9:19 pm 121
"Bulls showing up here to stir it up on a nice day in June?"
Let's be fair now, look at he mess you made of Chimpman's blog.
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June 19th, 2010 at 9:59 pm 122
Here's an article most of the readers here will get some fun out of reading:
Real Estate Agents = Multi-level Marketers
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June 20th, 2010 at 12:21 am 123
@vibe: Just a question: on your graphs of inventory, your sampling is weekly for this year but half month for previous years, right? I was trying to visualize what this year's graph would look like if it were only sampled every half month so as to reduce the effects from delays in processing, daily noise, etc. By the way, love the graphs, it has been a great way to follow the market.
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June 20th, 2010 at 1:05 am 124
@Dan in Calgary: Very good point. I wasn't proposing an ethical position, but my own deontological leanings were assumed. I do not ascribe to cultural relativism. The statement assumed the described subset acts with justice, beneficence, non-maleficence, self-improvement, reparation, gratitude and promise-keeping (which may or may not be the case). Especially relating to homebuyers, the intent was that I respect a homebuyer making the choice to purchase because the homebuyer is sacrificing a number of benefits (and benefits are somewhat subjective) in order to own (an assumption here is that the homebuyer does not have a greater household income/savings than I – I do not have experience with the available options with the greater income/savings, so I am unable to comment).
Also, I'm not a bear. I am guilty of being an optimistic investor. What I am uncomfortable with is debt. I've considered numerous sources, and I am aware of both healthy debt and unhealthy debt. I would vote that current debt levels are unhealthy. Is it possible that an injustice will occur? Will those who maintain a healthy debt standing be forced to subsidize those holding unhealthy debt? Will there be individuals who profit by participating in the creation of this unhealthy debt? All probable. All I can do is consider that assumption and plan as best I can within the aforementioned ethical rules.
Regarding the venom, my lack of understanding relates to the effort expended on venom rather than this community collaborating on ways (using available vehicles) to plan for an uncertain future. The bears and bulls can both participate in this conversation.
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June 20th, 2010 at 7:48 am 125
@generation y: The words "optimistic investor" are close to describing a major underlying problem. An "optimistic investment" for real estate is often accompanied by assuming "healthy" debt (using your definition of healthy). Even "healthy" debt will experience fallout — through misfortune or poor understanding of fully accounted ownership costs — and I think many are oblivious to this, consciously or not.
I agree much of the vitriol here is misplaced. Anyone buying or selling property knows of landmines littering the landscape, in the form of salespeople with their old tired tricks, dangerously coupled with buyer and seller emotions surrounding their respective families' futures. There is room for strong and direct language when combating in this environment. I would try to resolve the sharp words with the bluntness of reality.
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June 20th, 2010 at 7:52 am 126
@VanRant:
Driving by marine drive to UBC yesterday, man, there are not many of for sale signs only few sold signs there. Whats going on;it is because Chinese either from local or abroad are willing to pay a reasonable premium for settling in this heaven,Vancouver;once the China Expo has folded up,Chinese RE tour group will flock to this city for RE shopping;to them money is not a problem,but supply is not enough.Van RE would never meet the same fate as us's coz we have China as supporter.
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June 20th, 2010 at 8:41 am 127
@generation y:
what makes you bullish on this market? Really curious.
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June 20th, 2010 at 9:51 am 128
@generation y: What "venom" are you talking about? I've been following these sites for years. I'd actually say the venom has been a lot less lately. Bears are pretty happy with the current trends
The only venom right now is coming from the troll.
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June 20th, 2010 at 9:59 am 129
Asking prices have begun to drop at some of the downtown condos that have a lot of units. Asking price per square foot is down about 3% from March until now at the units that I track. In addition, the gap between the highest priced and lowest priced units has widened considerably, with sharply priced units now below $500/sqft, whereas those who are still living in a dreamworld are still asking in the range of $800/sqft. Where is the market actually at? I'm betting it's closer to the bottom end of the asking range, especially given some of the units asking $500/sqft stay on the market a few weeks at a time.
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June 20th, 2010 at 10:11 am 130
"rent a white guy"
http://www.theatlantic.com/magazine/archive/2010/…
I found this story an odd sort of parallel to the "rich foreigner" spin that seems to be popular at the moment.
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June 20th, 2010 at 10:26 am 131
Can you imagine where the price level for real estate would be if both provincial and federal government were not allowed to run a deficit. When you look at the public payrolls in BC listed in VancouverSun yesterday and people bitch about the HST.
That's why they are bringing the HST in to keep these bloated payrolls going. I say can the HST, dramatically lower public payrolls, lower taxes and let the private economy create wealth. This has been nothing more than a huge misallocation of capital to real estate & government coffers that will all end up in money heaven. The end result is that BC we will be left with no private sector wealth creation companies that provide an annuity of income.
That's when you will see condos selling for 40K, 50K just like in Florida. Vancouver condos could easily fall 70 to 80% if we hit the wall financially. That's why 600K condos in Florida now sell for 200K, no real economy to support price level.
FTB are getting screwed, and it won't be long before our rich friends from Asia smell the coffee, wake up and say the hell to subsidizing Canadian governments. Asian capital will leave just as fast as it came as continued change towards greater taxation in BC and Canada will help speed this process toward a repatriation of monies to friendlier jurisdictions like Singapore, Hong Kong, etc.
The classic is Ontario running massive deficits each year, everyone in government is on the take. Ontario is running a deficit three times greater than California, why doesn't the Globe and Mail report this???
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June 20th, 2010 at 10:40 am 132
A word on inventory:
Everyone here is always celebrating about how high the inventory is, but I think we need to think differently about inventory numbers.
A number of properties are listed whose owners only want to fetch a certain price and won't accept any offers that are market value or won't reduce their price. These owners also are not forced to sell their places as they are in good financial positions and don't need to move for a job. They are basically testing the market.
So basically, there is inventory that is out there that will NEVER sell because the owners are wanting much more than the market prices and shouldn't be included in inventory numbers.
How much 'phantom inventory' is really out there?
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June 20th, 2010 at 10:52 am 133
@generation y:
Hi Generation Y,
I think the best way to plan for an uncertain future is to do as you do and live below your means and not accumulate all kinds of debt.
Regarding the Cambie controversy. It's almost like our politicians are anti-business. If you want to attract business, why would you charge them 5 times the tax rate of a homeowner? Like the author said "Vancouver is more a place to live than work". What the hell!? The scary thing from my perspective is it's true.
City planners and politicians and many Vancouverites seem to have a really impractical attitude towards problems. I'm an engineer, and I work with a large group of other engineers. The stereotypical engineer is boring, practical, conservative. You would think we would be logical people wouldn't you?
During sustainability week, I was dragged into a "socially responsible investing seminar" over lunch. So the presenters launch into a tirade against the big evil corporations. The steel mills are bad because they pollute, so are the cement mills. Oil companies are bad of course, and car companies. Monsanto, Dow, Dupont….they make franken food and all kinds of nasty chemicals. Defense companies, distilleries & breweries, tobacco, big pharma, you name it.
So after attacking the big bad corporations, they trot out their "socially responsible" fund. It had things like renewable power producers and organic food companies. To be honest I tuned out here because they (and my enthralled coworkers) typify those who I believe should not be running business. Now, I'm not anti environment, and I don't believe I'm a big business shill (The CEO's and upper management piss me off….but that's a rant for another day), but in my opinion these people have no sense of perspective.
If we stop producing concrete and steel, how are we going to put up the wind turbines they (rightly) love? The skyscrapers for dense urban living?
Without intensive farming (franken food and pesticides), are they OK with clearing more Amazon rainforest to support the decreased yield per acre?
These people like our city planners never do what they should: look at a problem, weigh all the pros and cons, and come up with decision based on data. It's all driven by emotion and short term gain.
KK
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June 20th, 2010 at 10:58 am 134
"A number of properties are listed whose owners only want to fetch a certain price and won’t accept any offers that are market value or won’t reduce their price."
Later, they'll have stunned looks on their faces and say, "Wha_ happened?"
Just like every other time.
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June 20th, 2010 at 11:03 am 135
@G: "How much ‘phantom inventory’ is really out there?"
There is usually a healthy mix of the so-called "testing the water" sellers and those who need to sell (because they have bought another property, divorce, death, etc.). To wit, there is a definite (negative) correlation between price drops and the combination of high inventory and low sales (i.e. high months of inventory). You can second guess that most listings don't need to sell but the reality is there will always be a healthy churn of those who need to sell, and as a result they set the market price.
Another point is the majority of home owners can handle significant price drops and still have their houses valued more than what they paid for them. From that point of view, prices can come down significantly and still give many sellers a warm fuzzy feeling they made a good investment. Besides — and this is a fundamental point made by other commenters on this blog — sellers don't set the market price, buyers do.
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June 20th, 2010 at 11:17 am 136
@generation y: "Regarding the venom, my lack of understanding relates to the effort expended on venom rather than this community collaborating on ways (using available vehicles) to plan for an uncertain future. The bears and bulls can both participate in this conversation."
——–
Well-meaning folks may sincerely hope that there is perhaps some 'collaborative' way through this, but, so long as the market remains so perversely distorted, their really isn't any way of putting lipstick on the pig.
The problem is the bubble market in RE.
We can't 'converse' our way out of that fact. The bubble has to implode; the market has to return to more normal dynamics; our society has to recover from a decade of 'RE-centricity'.
"The effort expended on venom" is one of many examples of how this asset bubble has misallocated human energies. In the aftermath of the bubble there will be no need for that venom, and the energy will be available to be spent elsewhere.
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June 20th, 2010 at 11:24 am 137
@Observer
Here you go, check the second chart. The one I've been posting is daily since March.
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June 20th, 2010 at 12:26 pm 138
@vibe: Thanks, that was quick. I see that the trend has been consistently almost a straight line so far but we are now hitting fluctuations due to expires/cancellations (this was a significant factor in 2008 compared with boom years).
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June 20th, 2010 at 12:33 pm 139
@vreaa:
I guess I sort of disagree that the bears "venom" is a form of misallocated energy. When irresponsibility is encouraged, and the responsible forced to bail out the reckless after this thing implodes, the anger will be reasonable and healthy. I also think the conversation is helpful for myself both as education and entertainment
Anyhow, when this blows up the irresponsible will say "who could have know?" and "but it's not my fault", and I hope the bears stay angry and rub their noses in it with hard data. If not, the "victims" will start to believe their excuses and not change their behavior.
The boomers and us gen Xers have really screwed things up, and it appears that gen Y (as a group) are following us blindly.
KK
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June 20th, 2010 at 1:06 pm 140
@kwl:
Hey, there's nothing wrong leaving Vancouver. That's why I have another home in Hong Kong. Property prices and yield from rentals are way better in HK than in Vancouver. Having said that, it's hard to give up the good weather and the comfort of enjoying good HD TV watching the world cup. In Hong Kong, what I don't like is that the world cup coverage sucks there.
btw, nice goal by Ivory Coast just now.
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June 20th, 2010 at 1:37 pm 141
“Vancouver is more a place to live than work”.
Truer words were never spoken, were there? It perfectly encapsulates what's wrong with Van. If you're running a grow op or a brothel or you're some kind of trust fund baby then Van's great. If on the other hand you're trying to stay in the middle class there aren't very many opportunities. God help you if you're in the underclass, and don't kid yourselves, there's a real underclass in Van.
It also explains some of the weird undercurrent you detect in Van sometimes. I've never seen a city with so many "no public restrooms" signs in restaurants, or buildings with encoded elevator systems that don't allow even the residents to all floors in the building.
And then of course we have Supra, a man who previously admitted to living in his parents' basement. Now all of a sudden he's pretending that he owns two properties, one in Vancouver and the other in hong kong.
Dude, if that were even remotely true you wouldn't be calling yourself Supraboy, now would you? If you were anything other then a cube – dweller with delusions of grandeur you'd at least be leasing a Bmer. You're a sad little creature dude. You should go back to configuring routers in the basement with the rest of the Aspy's kids.
Keep dreamin' those dreams and pretending dude. Someday, someone will be fooled and it'll probably be someone who lives in Vancouver.
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June 20th, 2010 at 2:25 pm 142
# 134 krazy kanuk:
Well said.
Don't waste time thinking logically, the inmates have taken over the asylum/s.
There is no long term thinking/planning.
We have 2 cults in a symbiotic relationship….the "go green' at any cost and the politicians/bureaucrats that see hi density as an ATM to fill Gov't coffers ( and of course continually reward themselves with pay increases).
We are being pushed around by idiots on both sides of the equation
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June 20th, 2010 at 3:03 pm 143
A bit off topic, but a bit of insite as well.
At dinner last night, talked to a couple of school administrators and we talked about Vancouver School Boards problems.
Thier school doistrict policy is that principals use 3 weeks of the summer holiday to get ready for the new school year. VSB's principal's were allowed to walk out the door JUNE 30. However VSB then said the VSB principals were allowed 5 days off in the rest of the school year if they worked during the summer.
Other discussions lead one to beleive that VSB is too staff friendly and out to lunch and out of step with school districts elsewhere.
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June 20th, 2010 at 4:22 pm 144
@G: The market testers are always part of the market though, so it's useful to watch inventory numbers. Like Jessie says, the sellers don't set the price, the buyers do.
Not only that, but when I think phantom inventory I think of all the new buildings that don't list all units on MLS. These are for sale, but not included in inventory, and the developers just need to sell at the best price they can get, it's pure business. They won't hold on like a homeowner that is just testing the water.
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June 20th, 2010 at 4:47 pm 145
@Krazy Kanuk: "I guess I sort of disagree that the bears “venom” is a form of misallocated energy. When irresponsibility is encouraged, and the responsible forced to bail out the reckless after this thing implodes, the anger will be reasonable and healthy. I also think the conversation is helpful for myself both as education and entertainment"
—————–
I should clarify. When I say that the venom is another example of 'misallocation of energy', it doesn't mean I don't think it's justified. I think that venom towards the parties that have aided and abetted the bubble is entirely justified. I'm just pointing out that it's energy that could have been better and more productively spent elsewhere, were it not for the bubble.
I resent being distracted and inconvenienced by this bubble.
At the same time I think I'm giving it the attention it deserves!
That's not a paradox:
In unusual times, normal folks have to do unusual things, just to protect themselves.
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June 20th, 2010 at 5:13 pm 146
Stealth Supply Waits In The Wings
http://wp.me/pcq1o-10Q
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June 20th, 2010 at 5:33 pm 147
@Community Watch:
Your post doesn't make much sense. Radium is a resort community, like Whistler, and wouldn't exist AT ALL if not for absentee owners.
The answer to absentee owners (or resident owners for that matter) not taking care of their properties is to fine them for not doing so and empower the municipality to undertake necessary maintenance. And add the bill to the property taxes which would result in a tax sale if unpaid. Which any BC municipality has the power to do.
So why doesn't the village do something about it if it's such a big problem? Maybe they're afraid of scaring away all of those nasty absentee owners?
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June 20th, 2010 at 10:34 am 148
[...] nonymouse at vancouvercondo.info 19 Jun 2010 4:43 pm – [...]
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June 20th, 2010 at 6:40 pm 149
The great Canadian bank bailout
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June 20th, 2010 at 6:42 pm 150
suck it bears:
http://www.news1130.com/news/local/article/68508-…
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June 20th, 2010 at 7:14 pm 151
@Vanrod:
Our wealthy Chinese buyers will piss Vancouver bear off once more time and again and again.Their ain't no resistance to turn the tide of Van RE well and solidly supported by trillion and trillion Chinese money.
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June 20th, 2010 at 7:25 pm 152
@Vanrod: re River Green: "The biggest purchase was by a family who bought four suites valued at $5 million."
—–
One each, and one for the dog.
Good to know that the market isn't driven by rank speculation, and that buyers have become sensible again.
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June 20th, 2010 at 7:27 pm 153
That Richmond project selling out amazes me, even in this giant bubble, as the prices they were asking seemed like Downtown Vancouver pricing.
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June 20th, 2010 at 7:37 pm 154
The final nail in the coffin as the greatest fools get in before the tide turns. Just when you think you've seen a moron along comes another one. Richman will be the next frontier. The new Asian riviera.
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June 20th, 2010 at 7:52 pm 155
W@acefupn</a
150 of a proposed 2600. Good luck with that Richmond.
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June 20th, 2010 at 7:59 pm 156
Oh bears…
Once again you jinxed yourselves and every other individual hoping to buy a place because of your premature celebration…
You cheered on 15, 16, 17, 18k inventory parties and professed the end had started..
Many of you "went on record" as stating that the collapse started in April…
Now we see increasingly strong sale/list ratios despite the increase in mortgage rates and the new April 19th rental income rules…
You cling to May stats of 5% price declines for Vancouver SFHs, but ignore the increases in attached and condos…
On bears, you have been wrong for so long that it has become boring listening to your constant
Face it, Vancouver is different – who cares if its rich asians, drug trade money, retires, leveraged gen y' ers….
There is some validity in all of these "explanations"
Such a sad existence checking the daily stats because even IF there was some correction (and this is not any indication I believe it is coming) it will take many many years to unravel…
An 8 year bull market will take more than a year to decline…
So you will still be here in many many years professing the end is near…
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June 20th, 2010 at 8:00 pm 157
@vreaa
http://www.bclocalnews.com/news/96514714.html
as much as I wish it was all speculation buyers, "To this point, no purchase offers containing subjects have been accepted. That means people are paying in cash." I think this means the people buying are just that stupidly rich, I can assume majority would be asian. Lets be honest only asians would pay that much for richmond. If they were non-asians and wanted "luxury" waterfront condos, they could have just bought in oly village.
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June 20th, 2010 at 8:13 pm 158
@Premature Bear Ejaculation:
Good commentary. I remember last month looking at these bears and there formula on how much inventory would go up and I knew it was full of shit. No point saying anything it will just get voted down. This blog is turning into the biggest joke of the internet. Day after day, year after year (soon to be decade after decade) of being wrong. Its like the movie groundhogs day up in here! But I will keep coming back for a laugh…so funny to see these guys get all jazzed up and cocky over nothing and then fall back to earth over and over
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June 20th, 2010 at 8:21 pm 159
@Vanrod
Inventory is what it is. Not far off 2008 levels. The numbers don't lie. You have a problem with that?
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June 20th, 2010 at 8:50 pm 160
@Vanrod
I remember last month looking at these bears and there formula on how much inventory would go up…
Vanrod, here's an English lesson for you from Wiktionary:
It is important to distinguish “their” from “there” and “they’re”. “Their” signifies ownership.
***************************************
A bull who doesn't know how to use a basic English word that signifies ownership. How funny is that?
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June 20th, 2010 at 9:23 pm 161
@4slicesofcheese:
A no-subject offer doesn't necessarily imply payment in cash.
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June 20th, 2010 at 9:27 pm 162
Laugh it up Bulls!
Prices are dropping 3-5% per month and none of your snide remarks or cheerleading can stop it. In 2008 you were saved by 0% interest rates and 40 yr. mortgages. That is the only thing that stopped Vancouver from dropping 40%. Those bullets have been used up and the gun is empty.
I'm quite sure there were a lot of wealthy Asian's in Dubai who "didn't have to sell" when the prices there dropped 50%.
The writing is on the wall and only fools will disagree. Vancouver is toast and the multi year grind down has started and won't stop until prices drop or incomes rise by 40%.
Property Tax is due in 12 days!!!! Foreclosure proceedings begin Sept 3rd if you haven't paid. Thanks so much for the new roof on BC Place. Shame you won't be able to enjoy it because you are a slave to the bank owning an asset declining 3% per month.
PS – I am in Italy right now renting a villa because I rent a place for 34% of the cost of owning it. (Opps – 33% Taxes just went up!)
McLovin
PPS – I meant what I said about property taxes, don't forget to pay for me!
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June 20th, 2010 at 9:28 pm 163
Central 1 Credit Union on the Housing Market
http://tiny.cc/sq3a9
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June 20th, 2010 at 9:49 pm 164
@4slicesofcheese: "as much as I wish it was all speculation buyers, “To this point, no purchase offers containing subjects have been accepted. That means people are paying in cash.” I think this means the people buying are just that stupidly rich.."
_____
I know that speculation usually implies use of leverage, but that is not necessarily so.
Say a 'family' buys 4 units for $5M, with cash. I'm assuming they don't require 4 units for personal use.
So, why are they buying? As an 'investment'. But what's the current yield on these units? 1%? 2%?? (after taxes, maintenance, etc etc)…
So, why are they buying? Only one reason: expectations of price appreciation.
Thus, they are speculators.
They are buying because they think they'll get price appreciation.
And when the premise of their purchase proves to be incorrect, many will bail, regardless of how wealthy they are.
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June 20th, 2010 at 10:06 pm 165
@anon1: That Central 1 report is definitely bearish. I think they have called the market relatively accurately. Looks like at least one economist is reading local blogs!
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June 20th, 2010 at 11:37 pm 166
McLovin,
The 40 year mortgage expired in October of 2008…it did not "save" the market in 2009/2010…
Please try to keep you Gen Y angst to yourself…there are plenty of Gen X'ers ahead of you still waiting and complaining about the market…
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June 21st, 2010 at 12:13 am 167
I see that the new condo complex in Richmond sold out in minutes
I saw it on the news
What I also saw was a room full of Chinese and not a single white person.
I'm sick of the politically correct MORONS on this site that say our real estate is not being sold offshore to foreigners and that it doesn't affect the prices here.
I'm not interested in debating this with the industry shills here like Patriotz who are against controls similar to what Australia just brought in.
When all you FOOLS here unite against the industry then let me know. If you are still at the debating stage then all is lost.
Man this city SUCKS along with most of the retards who live here.
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June 21st, 2010 at 12:24 am 168
@Vanrod:
This one condo doesn't reflect what's going on in the market as a whole. I guess these people missed the memo. Vancouver real estate is on it's last leg.
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June 21st, 2010 at 12:51 am 169
@No More Gordocracies:
Think about it – the Japanese housing crash, the slowdown in China.
Who's behind both of these?
Asians.
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June 21st, 2010 at 1:17 am 170
The Chinese will continue to buy everything and bid everything up right until it completely blows up in their faces.
Chinese GDP (what their Government tells us, anyway) is apparently at 10.5% and they acknowledge a slowing (as well as the IMF) to 9.5% or less. Most independent economists believe that a drop to 6-8% is likely, and there are a growing number of analysts who believe those numbers are seriously cooked (of course they are, but we won't know how much until years later).
Yet RE prices have grown at over 30-40% per year. 100% per year in some places. People are forced to put more "cash" down but the source of that cash is also very likely to be borrowed.
It's a bubble there, and when it pops, it will be extra painful for the speculators who have bought here. Doesn't matter if they're "savers" – that will not buffer a collapse. In fact, could make it worse as these guys have been saving all their lives.
It's going to get pretty ugly folks. And hot sales of this River Green project means absolutely nothing to the guaranteed upcoming collapse in local property values.
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June 21st, 2010 at 1:28 am 171
Look at casinos…they exist because there are always people who think that they can beat the odds. Most end up losing money…and there are lots of them in Richmond too.
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June 20th, 2010 at 7:37 pm 172
The final nail in the coffin as the greatest fools get in before the tide turns. Just when you think you’ve seen a moron along comes another one. Richman will be the next frontier. The new Asian riviera.
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June 21st, 2010 at 10:31 am 173
@McLovin:
Hey, you pay property taxes too – they're just hidden in your rent. What? You think your landlord doesn't pass those costs on to you?
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