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A sustainable housing market.

Many people have pointed out this CBC news video about a couple of recent sales in Vancouver and VREAA has a good breakdown transcript of the story and some opinions on it.

This story has everything you need to kick off another year of real estate mania in Vancouver BC: a dilapidated tear-down selling for half a million over asking price, hundreds of thousands in profit for holding a house for a couple of months, whispers of wealthy foreigners and a grinning salesman hoping it never ends.

So what do you think? Can the multi-year rise (pretend 2008 didn’t happen) in Vancouver house prices carry on indefinitely? If you’re bearish on the local market are you starting to doubt your outlook? Does the current market have you thinking about moving to a different economy or just taking on a giant CMHC backed mortgage and buying here? How is the Vancouver real estate market affecting your day to day life and outlook?

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Guest

blueskies

5 years 8 months ago

an irrational market can remain irrational
longer than you can remain solvent…..

YVR RE is completely irrational
you jump in at your own peril…..

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JordanClark

5 years 8 months ago

This market is insane, the longer it goes on the worse off everyone here will be in the long run. The prices just flat out don't make sense, there is no justification and people need to realize huge debt comes with real risks. People who got in at the right time might be better off but they do so to the detriment of the younger generations, who will be relied on to pick up the economic torch some day. What will happen when they aren't there or still up to their eye balls in debt? We've been waiting for years… Read more »

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patriotz

5 years 8 months ago

@JordanClark: people here are extremely stubborn about the eternal value of real estate and will take nothing before reducing prices. Like they weren't stubborn in the US, Ireland, etc? RE prices are always determined by the buyers, not the sellers, because someone always has to sell (including builders of new stock), but nobody has to buy. RE busts happen because the market runs out of buyers at current prices. The reason prices usually fall slowly is that buyers (and the governments that enable them) are slow to get real. And I don't care how soon prices become reasonable because I… Read more »

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Bizznitch

5 years 8 months ago

http://www.timescolonist.com/business/Locals+boug…

So much for rich Asians snapping everything up left and right by the thousands!

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Vancouverite

5 years 8 months ago

Count me among those who have had enough. I was born and raised in Vancouver. I am at the very top of my very high earning profession here, like my husband. We own a SFH on the west side (it is respectable by Vancouver standards but pretty modest by the standards of any other city) and we are almost mortgage-free. While we would like to buy a bigger house since our kids are getting older, we won't. This bubble is certain to burst sooner or later and we work way too hard to throw our money away competing with buyers… Read more »

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Guest

5 years 8 months ago

if rich asians immigrated to Canada and bought a house, they will be under the first time buyer or locals category and not in the 3% "buyers from outside Canada" category. Many of the buyers I met when I was checking out open houses in Vancouver are immigrants from Asia and not foreigners. And they prefer to live in Greater Vancouver than Victoria. I rented for 5 years in Richmond waiting for house prices to correct. Everytime its about to go down, the gov't will intervene. As long as mortgage terms in Canada are lax and rich immigrant's money continue… Read more »

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"A-Sharp"

5 years 8 months ago

@LY:

I've stopped trying to predict the housing market…

and begun trying to predict debt growth/decline, which is not any easier BTW. As long as debt continues to grow faster than income, everything will feel fine.

If we shoot the Debt-income % to 170 this year, we could see house prices rise by 10%. This is within the outliers on the realm of plausibility.

If debt levels flatline then we will see prices drop.

The truly scary thing is that 2010 showed very moderate house price growth (canada wide) and still showed high debt growth.

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jesse

5 years 8 months ago

That CBC article ignores that particular prop was listed well below market. We see these all the time on the west side; it's almost a strategic play to drum up a fear and greed fueled frenzy just in time for the spring buffalo jump. The media are more than willing to abet.

Don't fall for it. When was the MSM ever in tune with an impending crash?

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Renting

5 years 8 months ago

@JordanClark:

The condo life sucks. Luckily I’m a dual citizen so I’m in the process of sponsoring my wife and moving down to Washington State. I wish this was an easier option

There is an easier option – RENTING

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Renting

5 years 8 months ago

That CBC article ignores that particular prop was listed well below market.

Exactly. Tear down houses (lot value) in Vancouver West have been selling for 1.5 Mil since 2007. This is nothing new. Just a staged news story that sucks in the masses to thinking prices just went up 30%.

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Ridiculous

5 years 8 months ago

if 1.6M = 3x the annual family income of the family that bought that place and the cost to rent a comparable property >$10,600 month, I guess it was a good deal.

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Troll

5 years 8 months ago

@jesse: Assessed value was $1.35M.

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Junius

5 years 8 months ago

#5 Vancouverite, Great post. Your comments on the difficulty of attracting professional talent ring true to me. As someone who has to do this in his job it gets harder and harder every day. It is also tragic the number of young, bright people who gave up jobs in more traditional industries such as teaching, engineering or even law to go into Real Estate on the promise of greater riches. Where will they be when the market has crashed and Real Estate is a dead end for a decade? We have been very short sighted in this City. It cannot… Read more »

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Steve

5 years 8 months ago

@jesse: The US media predicted their housing bubble collapse years in advance giving everyone lots of warning..

Oh. They didn't?

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Mr 4 / bad luck re 4

5 years 8 months ago

Could this be also about CBC saying to Global:

" we can buy advertising business , just as well as you"?

Or:

Are the CBC reporters as retarded as the global/ cknw/ 24hrs etc etc?

This to me looks like a staged event.

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Member

patriotz

5 years 8 months ago

@LY:

if rich asians immigrated to Canada and bought a house, they will be under the first time buyer or locals category and not in the 3% “buyers from outside Canada” category.

And in 2009 there were 5,558 such people (including dependents) arriving in BC, which is probably about 1,500 households or so, or about 1/5 of 1% of existing households in metro Vancouver.

http://www.bcstats.gov.bc.ca/data/pop/mig/immLand…

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patriotz

5 years 8 months ago

@jesse: When was the MSM ever in tune with an impending crash? http://www.nytimes.com/2005/08/08/opinion/08krugm… This is the way the bubble ends: not with a pop, but with a hiss. Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust. So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to… Read more »

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Troll

5 years 8 months ago

@patriotz:

And in 2009 there were 5,558 such people (including dependents) arriving in BC, which is probably about 1,500 households or so, or about 1/5 of 1% of existing households in metro Vancouver.

That's flawed logic, because you are assuming that immigrants are buying in the same year that they arrive. How do you know that's the case?

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french

5 years 8 months ago

The RE is not affecting me in anyway yet, but this rainy foggy never ending wheather is making me depressed. Last time we had some sunshine was last year around December 28. I dont know what people find attractive here, especially during winter it sucks.

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patriotz

5 years 8 months ago

@Troll:

That’s flawed logic, because you are assuming that immigrants are buying in the same year that they arrive.

No I'm not, I was simply pointing out the actual number of "rich immigrants", which is much smaller than most people think.

It was the previous poster who was talking about purchases by such people.

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fixie guy

5 years 8 months ago

18 Troll Says: "That’s flawed logic, because you are assuming that immigrants are buying in the same year that they arrive. How do you know that’s the case?"

That's flawed logic, because it implies buyers from 'other years' are hidden in the 2009 stats when the data clearly shows mid-5K is peak for any year going back to the mid-Nineties. The latter is interesting in itself.

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DaMann

5 years 8 months ago

What a great fear mongering pump piece by the CBC. As other posteres have mentioned there was no mention of lot size or anything. It looked from the vid that it was a 50 foot lot. They have been going for $1.5 million for a long while now. What was more disturbing was the other house that flipped for a $300k profit in 3 months, that one left me scratching my head. Things get more irrational closer to the pop, but I do have to admit that I have given up on this city. It's a whore to RE.

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Troll

5 years 8 months ago

@patriotz: Point is, just as bulls are guilty of overstating the effect of foreign money, bears are guilty of understating it. Those stats of immmigration rate or number of foreign buyers doesn't really tell us much. What we need to know is how much money not derived from local incomes is pouring into Vancouver RE and particular sub-markets. That would settle the debate immediately. Until then, bears and bulls will continue to point to numbers that suit their bias, neither painting a convincing picture.

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Troll

5 years 8 months ago

@fixie guy: Have you compeleted your homework yet and learned the difference between real and nominal? Or how interest rates work? Or anger management?

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pricedoutfornow

5 years 8 months ago

How has RE affected me? Well, for one, I have a whole pile of cash that could potentially be used for a healthy downpayment, if prices were what they were in 2001. If I were to drop that on a downpayment today, it wouldn't get me very far. Plus the cost of carrying the mortgage would make my living costs go up by over $1000 a month (more when interest rates rise!). For another thing, every family gathering with my SO ends with questions from the inlaws as to why I haven't bought yet, why am I throwing money away… Read more »

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Vansanity

5 years 8 months ago

@pricedoutfornow: I'm in the exact same boat. My inlaws saw that piece on CBC and they called up in a panic, "oh my God prices are going up again, what are you waiting for?" I told them, hey, if you want to buy us a place for $1M I won't stop you. In other words, put your money where your mouth is, cuz I have, that's why it's in the bank. My wife and I ideally would like to have a place in East Van or Burnaby but we refuse to live "house poor" as some of our friends and… Read more »

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jesse

5 years 8 months ago

@Troll: "Assessed value was $1.35M."

And it was listed for just over $1MM. The property was in pretty rough shape, though. I doubt the assessment accounted for its sorry state. The lot was wide and bordering a park. The Realtor knew what he was doing.

Mission accomplished. I tip my hat to him.

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fixie guy

5 years 8 months ago

24 Troll Says: "Have you compeleted your homework yet and learned the difference between real and nominal? Or how interest rates work? Or anger management? " Good questions Dave, and wonderfully illustrative of your complete lack of argument. I point out (again) the trivial flaw in your reasoning, you (again) dodge it and respond with an unrelated ad hominem. Better yet, one that childishly tries to spin my insistence on real, inflation adjusted numbers as the opposite. Or better yet as somehow fundamentally incorrect, yet another challenge for demonstration you can't meet. And come on, rational adults shouldn't be angered… Read more »

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Troll

5 years 8 months ago

@fixie guy: Hey dipshit, I'm not dave. My name is TROLL. DEAL WITH IT.

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Best place on meth

5 years 8 months ago

@pricedoutfornow: If you had a dog, it would also provide you with more intelligent conversation than your typical Vancouver home owner – like those pinheads who keep asking you why you haven't bought yet. As for today's question: has my bearish outlook changed because of a handful of desperate, impatient whackjobs who just have to buy something today at any price? Hell no. Sales are still weak and listings are strong. With a home-ownership rate of 70% the remaining pool is quite shallow. This little news story just may encourage more sellers to come to market, as I noted last… Read more »

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Guest

5 years 8 months ago

my post is just in response to an article posted by Bizznitch and his comment "So much for rich Asians snapping everything up left and right by the thousands" just because house buyers in Victoria from "out of country" constitute only around 3%. I am making a clarification that purchases by immigrants whether rich or not would be under the Canadian house buyers category and conclusion by Bizznitch is inaccurate. If 1500 rich investor households came to BC in 2009 and they decided to buy houses in Vancouver West, North and west Vancouver for themselves and for investments, thats quite… Read more »

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french

5 years 8 months ago

The problem with bears on this blog is that they all have one track mind : RE prices are about to crash any time now. While this may be one of possibilities, nobody seems to think of other alternatives. First, comparing Canada with US and Ireland or Spain is simply not credible. A more reasonable comparison would be Australia, with similar resource economy and RE prices, same debt levels, house ownership and average income. Yet, mortgage rates in Australia are in the range of 8 to 10% compared to our ridiculous 3% and no pop there yet. Why? And please… Read more »

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AlmostPerfect

5 years 8 months ago

@Troll: Hi Dave, it is clear who needs anger management lessons.

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Nero

5 years 8 months ago

It absolutely will not continue. You know how people say that there never is a "magic formula?" Well there is a Magic Formula when it comes to Real Estate. It's the relationship between rates and prices. As rates neared zero, prices exploded as the idiots all rolled in to push affordability back to extremes. Well now the formula is about to invert. A rising interest rate environment will put an end to the madness and there will be many regrets from those who think they can question the laws of basic economics. And the only thing that can prevent a… Read more »

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DaMann

5 years 8 months ago

@LY:

Go and frequent a Victoria Housing blog. Everyone spews the same bullshit about rich Asians buying everything up. "Everyone around the world wants to live in Victoria."

that's the point, they believe the same thing, stats say different.

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AG Sage

5 years 8 months ago

Will it continue forever?

No, but I think the market will bifurcate, if it hasn't already. The West Van crazy sales will continue, but the ordinary buyer will have been locked out and sellers of would-be starter homes will be slow to drop their prices to match so sales will tank on the "lower" end. There will continue to be a lag in the price decline actually showing up in the monthly average price as a result.

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Best place on meth

5 years 8 months ago

@DaMann:

Rich Chinese don't want to live in Victoria – too many dying people there.

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Mike

5 years 8 months ago

The best part of the original write up was "pretend 2008 didn't happen". That may be the most idiotic statement I've seen from bears who I already think are inbred (have thought so for over 5 years).

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Junius

5 years 8 months ago

#32 French, Soft landings almost never happen. Rarely if ever are rapid and exponential asset rises followed by a period of going sideways. This is the lesson that most of us Bears expect to be learned again in Vancouver. Over time prices revert to the mean and long term economic fundamentals return. Canada is more like the US, UK, Ireland and Spain than we are unlike them. Yes, our gov't started juicing our market much later which is why it has held up. The only real difference is time. And Australia's bubble is on its last legs. This is now… Read more »

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Guest

5 years 8 months ago

Damann "Go and frequent a Victoria Housing blog. Everyone spews the same bullshit about rich Asians buying everything up. “Everyone around the world wants to live in Victoria.” I am sure there are also some rich Asians buying properties in Victoria. But I believe majority of them would be buying in the Greater Vancouver area. Whether they are enough in number to push housing prices much higher, I don't know. I can only speak in terms of my past experience house hunting in Vancouver, Richmond, Burnaby, Coquitlam, of which many prospective buyers are Chinese immigrants. Housing prices in Shanghai, Hong… Read more »

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mattymatt

5 years 8 months ago

Attn. french: your statement: "I don’t think prices will crash from those levels, nor will they be much different in 10 to 15 years, but your wage would be much higher."

How much higher? Enough to afford the price of a house in Vancouver. Don't dream! Wages aren't much higher than they were 20 years ago… Actually I know that most positions at Air Canada haven't seen wage increases for 8 years… actually wage reductions.

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mattymatt

5 years 8 months ago

#32 French

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fixie guy

5 years 8 months ago

35 DaMann Says:“Everyone around the world wants to live in Victoria.”

"Everyone around the world wants to live in California" is how family there rationalizes the 'temporary' market softening in that state. The real estate industry world wide has done a spectacular job selling the fantasy of a no-effort road to fabulous riches.

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VANCOUVER_RE_SUCKS

5 years 8 months ago

Let's poll how many would have said:

I wish I bought a property a few years ago.

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Royce McCutcheon

5 years 8 months ago

@AG Sage:

Any post using the word "bifurcate" deserves a response. 🙂

A question: has the sort of split you mentioned happened with real estate markets in the past? I can accept the idea that higher end properties may lose a smaller % on prices, but has there ever been a market that saw the bottom drop out on the lower end while the higher end went unscathed?

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Anonymouse

5 years 8 months ago

@Best place on meth:

"With a home-ownership rate of 70% the remaining pool is quite shallow."

That's 70% Canada-wide, isn't it? I doubt the rate is 70% in Vancouver.

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Junius

5 years 8 months ago

#41 MattyMatt, This is the fundamental Bull flaw. They have to believe that wages will catch up and sustain Re values. This is how fundamentals will come back in line over time. However there is no evidence that this is happening or will happen. It is even more likely that affordability will be further eroded with rising taxes, energy prices and other inflationary costs. Meanwhile interest rates will rise. Anyone who stops to do the math on the impact of a simple 2 or 3% rise in rates on monthly payment will know that wages will have to rise exponentially… Read more »

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scullboy

5 years 8 months ago

There's no way to predict when the RE bubble will pop, only that it will pop eventually. That being said, it must really suck being a bear in Vancouver. You hear the same tired, make-no-sense argument everywhere (and really, do Vancouverites talk about anything other then RE?). The market gets more and more stupid, people make crazier and crazier bets. Bears watch the whole thing go on around them, which a bit like being the only sober person in a bar. It's no fun at all. As I said before even if there were universal agreement the top ended *today*… Read more »

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Junius

5 years 8 months ago

#40 LY,

Markets are incredibly complex systems. It is impossible to guess a bottom. However long term fundamentals do hold. It is just a matter of time.

The important thing to remember is that Vancouver is so far out of line that even a drop of 20-30% would still leave it higher than a normal 3 – 4 times wage to price ratio.

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Junius

5 years 8 months ago

#48 scullboy,

Why does it suck being a Bear? Any smart Bear knows better than to sit on the edge of their seat waiting for a crash.

Better to be wrong for a few years and right for decades than the reverse.

What I think must really suck is being in the Re industry and knowing it is all coming down shortly and you will need to find a new career. Now that must really suck.

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Vancouver Condo Info

A sustainable housing market.

Bubble? What Bubble?