Sorry Dave, rents are falling.

Actually rents are going both down and up, depending on which category. The CMHC report is out and in Metro Vancouver we’re seeing higher vacancy rates that seem to be having some affect on rents.

According to the CMHC, 3 bedroom rents are up, while 2 bedroom rents are down slightly.

The thing I found most dramatic is the vacancy rate. Last I heard this was around 1 percent, but now its 2.2%.

The increase, compared with 2.1 per cent last fall, represented opposing forces of higher levels of first-time home ownership and job cuts during the recession resulting in young tenants doubling up or moving back home. Both trends helped take renters out of the market, according to, Robyn Adamache, CMHC’s market analyst for Metro Vancouver.

Adamache added that an increase in the supply of rental housing — 2009 saw 915 new rental units added to the overall stock — also helped raise the vacancy rate.

Personally I moved at the beginning of summer and was able to very easily talk $100 off the monthly asking rent for my family, and this is in a professionally managed building with one owner. I’ve rented from amateur landlords before and I never will again after the difference I’ve seen here. It’s incredibly relaxing to have everything in the building well cared for and everything in the suite fixed at a moments notice.

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xyz
xyz
9 years ago

@N

In a nutshell no, you must pay your nanny min 30 hours a week @ minimum wage, then in some provinces you may deduct room and board

http://www.canadasbestnannies.com/questions.html

The information is under CAN I AFFORD A LIVE-IN NANNY?

xyz
xyz
9 years ago

@N

No its not:

http://www.canadasbestnannies.com/questions.html

The information is under CAN I AFFORD A LIVE-IN NANNY?

fixie guy
fixie guy
9 years ago

#166 Dave Says:"a) Every correction in Vancouver has been followed by a flat market for a number of years

Liar: http://cuer.sauder.ubc.ca/cma/data/ResidentialRea

What's it been, two days since I posted this hoary and familiar old graph? You might lack any integrity but you can't be faulted for lack of consistency.

Renting
Renting
9 years ago

Every correction in Vancouver has been followed by a flat market for a number of years

Yes and AFTER the 50% correction we will likely see the same thing again – flat for 10 years or so.

N
N
9 years ago

@xyz: is that legal?

jesse
9 years ago

@Dave: "Every correction in Vancouver has been followed by a flat market for a number of years"

A look at interest rates following previous market downturns shows part of the reason for "flat" prices: falling interest rates. This time around, I wish current mortgage holders all the luck they can find. They're going to need it.

xyz
xyz
9 years ago

Only in Van does your nanny/housekeeper have to pay rent…
http://vancouver.en.craigslist.ca/nvn/apa/2088662

jesse
9 years ago

@stagnate: "over ten years there will be an increasing population on a fixed land base."

This is indeed true. If you assume there is no more land to build (which there definitely is but let's assume the worst case), land prices will additionally increase by the population growth rate. That's about 1% or so which I suppose you could deduct from the 5.3%.

In practice condos see close to none of this benefit due to little to no future density gain.

Steady as she goes but getting sustained 5% annual wage growth sounds developing worldish.

Supraboy
Supraboy
9 years ago

Another month just went by, real estate prices are still holding steady. So we are now 10 months passed the olympics. No crash yet. I went to coal harbour with an agent to look for waterfront properties, they all range between 1.2million to 2.5 million. Square footage is around 1000. I've been listening to you jokers and yahoos here about an upcoming crash. When can I get that waterfront property for $600,000 or less? When you fools talk about a crash, I expect a 50% haircut. So a detached home near Kerrisdale needs to crash 50% to bring it back down from 2.5 million to 1.25 million.

Dave
9 years ago

@Yalie:

a) Every correction in Vancouver has been followed by a flat market for a number of years. It happened in the 80s and in the 90s and I predict it will happen again. The run-up in prices during this past bull market was roughly the same as in the 90s, but lower than the early 80s boom.

b) There is more to it than that. Rent isn't half. Some people just want to get on with their lives and own a place. Timing is a big factor as well. Nobody can predict the market 10 years out. If you want to compare costs, then you should also look at the full cycle. The guy who buys 10 years early is also done with his mortgage 10 years earlier.

stagnate
stagnate
9 years ago

rennie says: Olympian Marketing Task – “I’ve set a target of selling 100 units by June. Everything is now on the table. It has become a do-right or die effort.”

i thought bob looked nervous or edgy on tv the other night. he will be wrong on the olympic village again, i think the project is too tainted for sales at the proposed 25% haircut.

stagnate
stagnate
9 years ago

good post jesse, but remember over ten years there will be an increasing population on a fixed land base. the various factors should lead to a stagnant market, higher interest rates would put downward pressure on real estate values, especially higher real interest rates. on-going low real interest rates could continue to put some upward pressure on land values. dave is correct, steady as she goes for now.

vreaa
9 years ago

Olympian Marketing Task – “I've set a target of selling 100 units by June. Everything is now on the table. It has become a do-right or die effort.”

http://wp.me/pcq1o-1AU

Also:

Read about the Olympian project that took years of construction, gained cult focus, had short lived glory, suffered shoddy construction, and ended up a 'major tourist attraction'.

logic
logic
9 years ago

browntown!

we've missed you girlie man!

jesse
9 years ago

It's worth doing an exercise, taking existing prices, holding them flat for 10 years, and calculating nominal wage growth required to bring median price/median income to the levels seen in, say, 2000.

P = current median price

I = current median income

r = annual income growth rate

P(2000)/I(2000) = P(2010)/I(2010)/(1+r)^10

r = exp(ln(P(2010)/P(2000)*I(2000)/I(2010))/10)-1

Now compare r to average wage growth in the past 10 years.

To throw up approx. numbers:

P(2010)=850K

P(2000)=400K

I(2000)=49940

I(2010)=70000

r = 5.3%

A study of Vancouver's real income growth of the past few generations will give some indication how likely that is. Any bump in the road… one wheel's off and the axle's broken.

Yalie
Yalie
9 years ago

Dave,

So your prediction is basically "flat" for the next 10 years. Got it. You do realize that:

a. No RE market has ever been flat for 10 years following the peak of a massive multi-year increase (aka a bubble).

b. Even if you're right, you're basically saying that buying now is a terrible idea, since you can buy today and sell for the same price in 10 years, OR you can rent for the next 10 years and pay half as much over the same period. And yes, I realize that with the buying option you will build some equity in that time, but simple math shows that you'd be far better off investing the difference over the same span.

browntown
browntown
9 years ago

oh yah nutbaggers! high end rents on lunch break! next leg up in 2011!

scullboy
9 years ago

@XYZ:

When *I* Googled her I got a photo. It turns out she's a mortgage broker for some shady seeming firm! She's really pretty though and if a gay dude is saying it, then she's probably smokin' hot.

Poor thing… sounds like she spent too much on the much vaunted "vancouver lifestyle".

browntown
browntown
9 years ago

oh yeaah nutslaps! wife agree with dave so moving to kelowna!

scullboy
9 years ago

@XYZ: Your experiences reflect my own. Five years ago I was making about 75K in Toronto. I had to spend around 15K (counting living expenses) and around 3 months prepping for the PMP exam. I eventually found a job as a project manager in Van for 50K, then found another for 60K + bonus. That job didn't work out, and when I shifted careers again I wound up spending a good 30K (again counting expenses) and 6 months to get a culinary diploma. I got a job right out of school, which was seasonal. Extrapolating annually I would have made maybe 55K, but hourly I was making about 8 – 10 bucks. When I returned to Van I got a job managing one of the most popular coffee shops in Van (Cafe Artigiano on Pender), but that paid the big… Read more »

Devore
Devore
9 years ago

@Dave:

I can’t argue with your math. I don’t think that tells the whole story though. I would be interested to see the demographics of the median buyer. I wonder what their income level actually is. What happens to the numbers when we take out students, retirees and low income people who will never buy? Obviously, it goes up quite a bit. From my observation, the average income for a typical household buyer is much higher than $65k. A couple people working an entry level job should be making far more than that.

Yes, it would be interesting, but affordability is not only about people who buy a house, since they can obviously afford them. If only the top 1% of population can afford to buy a house, prices are still fine since they average buyer can afford it? Hmm?

Dave
9 years ago

@fixie guy:

Different guy. I don't get paid well enough to post there.

Junius
Junius
9 years ago

#151 Dave,

Get real and welcome to the future. This is getting silly. Sometimes when you split hairs you end up with an axe stuck in your skull.

Vancouver is in for a rough ride. Get used to it.

fixie guy
fixie guy
9 years ago

Anyone else notice how accurately Dave channels RET's eyesthebye? Same lack of respect for logic, same cool affirmation of rank idiocy, same 'I foretold, I foretold, I foretold' without examples? Probably coincidence.

Dave
9 years ago

@Yalie:

It's not far off from my prediction. End of the decade is a little longer than I would imagine, but not by much. I wouldn't rule out surpassing the June 2010 peak, but if we do, I don't think it will by a large margin.

Likewise, I don't see that we are going to pass the prior 2009 bottom in this period of time.

I also think we might see markets diverge a little bit. I could see some segments passing their peaks more quickly while others will drop below their previous bottoms. I think 'core' areas (e.g. Vancouver) will fare better than outlying areas where inventory can be easily and quickly added (e.g. Chilliwack).