Macleans: The real problem with Vancouver’s outrageous house prices
Macleans has a post up on Vancouver’s real estate:
The international media have finally clued in to the wackiness on Canada’s west coast, otherwise known as the Vancouver real estate market. Last month Bloomberg noted that when compared to median household incomes Vancouver homes are more expensive than even New York. The story linked soaring prices to the influx of wealthy buyers from mainland China. Today the Wall Street Journal retraces the exact same material. The warning in both pieces is clear: Vancouver’s housing market has become disconnected from reality and is primed to crash.
This little 3 bedroom, 1 bathroom bungalow in Vancouver is priced at $1.5 million. The listing suggests buyers just tear it down and build a new home.
This is a well worn theme for many Canadian reporters. Here at Maclean’s we’ve reached the same conclusion several times going back to 2008, and, admittedly, we’ve been proven fully and completely wrong. I still think prices here in Vancouver are nuts, but each day as I walk to work past the high-end coffee shops and panhandlers I see more “For Sale” signs going up, along with plenty of “Sold” stickers, too.
But here’s the thing. The real threat to Vancouver isn’t that the housing market might crash. That’s happened here before. It undoubtedly will happen again. Such is the boom & bust nature of real estate in Lotusland.
Far more insidious is the impact housing unaffordability is having on employers and the broader economy. You hear stories of smart, young people leaving for jobs elsewhere. At the same time smart, young people from elsewhere aren’t coming here for jobs. The price of real estate and cost of living are too high, while pay is simply too low relative to other parts of the country.
I don’t know… Granville Island was pretty busy yesterday, hardly a sign of a floundering business climate! Maybe the problem with “outrageous prices” is that the earnings stink.
April 28th, 2012 at 8:02 pm
The people who are buying equity here can afford it and the American bubble was created by those living outside their means so its apples and oranges and when it comes to any economist then do and think the opposite of what they will tell you. Starbucks whats that? don’t buy that stock in 1980 for 3 cents a share as who drinks coffee outside their home anyways. Well if you did buy that crazy stock you’d be a millionaire and as long as china continues to terrorize their citizens and makes them live in squalor then our housing market in Vancouver will continue to be attractive at any price.
April 28th, 2012 at 7:52 pm
The reason real estate prices soar in Vancouver is because China is a such a terror to live in so many fear for their lives and come to live in Vancouver in a home that could never exist in china and would be 10 times the price. The irony is that these same ppl that fear for their lives in asia are the same individuals who live of the misery of others and have made fortunes in the manufacturing industry which their government allows and promotes. If it wasnt for manufacturing then none of these Asians would have a penny to their name as not one of them seems like they can even tie their own shoes let alone walk a strait line. So it really is an opportunity for many of us to sell our homes at outrageous prices to a bunch of suckers and if you are complaining you cant afford to live in Vancouver well dont worry because as pretty as it is, Vancouver is just about the dullest city on the planet which is far behind just about every other city in the world by about 50 to 100 years and makes a retirement home look like party central. I own two properties and i have done well for myself but i probably will not retire here in this no fun zone. Hey we just got food carts and hey the rest of the world got them in 1936!
February 26th, 2012 at 10:21 pm
The price of real estate has definitely got a little out of control. Ten years ago when i first immigrated to Vancouver you could buy a studio downtown for $180,000-$200,000 then after 5 years those prices shot up by 100k. But i guess that’s the price you have to pay for living in the worlds most desirable City.
February 15th, 2012 at 1:28 pm
@DEFAULT NAME: What's his status? Loser?
February 15th, 2012 at 1:27 pm
Does anyone know who moderates RET? I think it's Ozzie Jerkoff?
February 15th, 2012 at 1:25 pm
ETB over at RET is a loser. That forum is such a bull site. I've posted many times to argue ETB's comments, and it never made it to the boards. His individual sales threads are so cherry picked. He doesn't know about the Americans that bought in 2006 by outbidding each other to their death. By this time next year, he will be off the computer and will be crying "why, why"?
February 15th, 2012 at 10:16 am
@DEFAULT NAME: Is he ok? Hope he gets well soon.
February 15th, 2012 at 10:11 am
whoever the hell this VMD is, i feel sorry for his parents.
February 15th, 2012 at 10:08 am
all the loser bears are jealous of ETB's status.
February 14th, 2012 at 11:11 pm
123 Makaya: liesthebye has been shown Sauder data demonstrating Vancouver rents haven't even kept pace with caps too times to recall. Ever time LTB returns with the same distortions after a suitable 'memory hole' wait. You'll do better to preface all LTB posts with 'not'.
“I’m ecstatic. My boomer parents called today to say they’ve finally sold our long-time house in cow town. Assessed $490k, listed last fall at $560k, no bite; re-listed at $490k last week, sold at $480k.” Says:
February 14th, 2012 at 10:46 pm
[...] “I’m ecstatic. My boomer parents called today to say they’ve finally sold our long-time house in cow town. Assessed was approx 490k, listed last fall at 560k, no bite after 3 months so took off market; re-listed at $490k last week, sold at $480k. According to the realtor (who only charged $3.5k in fees), these days most sales in the city (even near university / good high schools) are sold below-assessed value. They’ve heeded my advice and already signed a 1 year lease in a newly renovated 1200 s.f. 3BR upper floor of duplex in a convenient area in GVA at $1275/m (after a $125/m reduction due to them being desirable tenants). It’s complete with new stainless steel appliances, granite counter top, and brand new carpet/cabinets. The owner is an elderly gentleman who just moved into a nursing home, so his son took over, renovated, and rented the half of duplex out, aiming for long-term tenants. The duplex itself was assessed at $1.3M, so ~$650k for my parent’s side. I’m happy to have dissuaded them from buying in GVA (took me 2 years of nagging). My next goals are to keep them happily renting in next couple years, and to get them to sell their investment condo property in downtown cowville (currently rented out via an executive rentals company). That’ll take some more nagging.” – VMD at vancouvercondo.info 14 Feb 2012 3:30am [...]
February 14th, 2012 at 6:59 pm
@Makaya:
Arizona doesn't have any rent controls. How did the rent/price gap close there? Ditto Nevada, Florida, etc.
Alberta doesn't have any rent controls. How is the rent/price gap closing there?
Haven't cared to put on my hip waders and go to RET for a long time but I have to say ETB rates as one of my all time favourite ignoramuses.
But it's one thing for some idiot on the net to blame moot "rent controls" for the rent/price gap, it's another to hear it in the media from "experts" as you sometimes do.
“I’m ecstatic. My boomer parents called today to say they’ve finally sold our long-time house in cow town. Assessed $490k, listed last fall at $560k, no bite; re-listed at $490k last week, sold at $480k.” | Vancouver Real Estate Anecdote A Says:
February 14th, 2012 at 3:56 pm
[...] (currently rented out via an executive rentals company). That’ll take some more nagging.” – VMD at vancouvercondo.info 14 Feb 2012 3:30am Share:TwitterFacebookRedditStumbleUponDigg This entry was posted in 10. Demoralized Renters?, 14. [...]
February 14th, 2012 at 3:39 pm
@Makaya:
Thanks for posting the drivel here. Next time just respond on RET if you chose.
February 14th, 2012 at 1:53 pm
@Re-diculous: I never go to RET forum, but since you guys talked about it, I just went to have a look. And I found this gem from eyesthebye:
Well, as I said in a previous post, I've only been in Vancouver for 6 years and spent the rest of my life in Europe. I can only say that this is BS. The number of houses with secondary suites in Europe is actually limited there, except maybe in the UK. In continental Europe, this is very uncommon and you wouldn't find any houses valued at $1.8m with a secondary suite.
Well, she should know that most of the rents don't increase up to the limits every year… rent controls have nothing to do with the market value of rents. When a homeowner rent to a new person, he's free to charge anything he wants. Why doesn't he do so?
This statement is so ridiculous that it doesn't deserve any response. I'll just say that: how much have home values gained since last may (which is about 9 month ago)? How much does the market need to go up in the next 3 months to achieve the 10% return?
And last question to her. How much has she spent on property taxes, maintenance and interests on her mortgage since she become a rich homeowner? The poor renters that we are didn't pay any such things…
Guys, don't waste your time arguing with her. As soon as the market starts to really correct, she'll disappear.
February 14th, 2012 at 1:50 pm
@thetamax: "Is anyone else sick of that “eyesthebye” guy on RET?"
Why would anyone bother looking at RET? If you don't like irritating unsophisticated people who like to brag about real estate then don't go there. That is what the forum is set up for. The site owner is Ozzie Jurock and that is his target market. He peddles his courses, news letters and ghost town condos to people like this. Kind of like complaining about racists posting on the KKK blog.
February 14th, 2012 at 1:38 pm
"Vancouver ranked 37th most expensive city in the world which is very bearish for real estate."
What people need to realize is Vancouver is not the only place around the world still in a bubble. NYC has not corrected very much and is still expensive. No, not nearly as expensive as Vancouver all things considered but still in bubble territory and we will no doubt see values decline there in the coming years. Remember Wall Street is the only sector in the US not hurt (yet) by the latest economic troubles as the US government has pumped money into it and the stock market. Its time will come as will Vancouvers.
February 14th, 2012 at 1:29 pm
@thetamax
Couldn't agree with you more! I seldom do over to RET, but when I do, its comments by eyesthebye (a she by the way) that make me want to throttle her and want the market to crash just to wipe the smugness off her face.
February 14th, 2012 at 1:21 pm
@patriotz:
“I’m not guessing at all, I looked at the Metro North website. But since the fastest train is actually 31 minutes, I will admit to rounding error.”
Semantics then. We’re both right, depending on how you define things.
Still, either way it’s a fairly easy commute, equivalent to Surrey or Langley for Vancouver, but for a community nearly ten times larger, with much higher wages and a top world economic power among cities, compared to our rinky-dink little burg.
February 14th, 2012 at 1:15 pm
@DEFAULT NAME:
“Ya, Vancouver is really wide open and uncrowded. ”
If you think Vancouver is crowded then you honestly can’t have travelled much. Relatively, Vancouver is pretty quiet with the exception of the shopping areas on a weekend.
February 14th, 2012 at 1:11 pm
………has launched a new round of control measures against the real estate market, featuring curbing speculation, restricting mortgage loans and accelerating construction of affordable homes.
Firm Hold:Housing market control will not loosen in 2012
Not in Canada, you say? Pity!
February 14th, 2012 at 12:46 pm
Is anyone else sick of that "eyesthebye" guy on RET?
I mean, it's one thing to have made paper profits on a home purchase during a credit-infused boom; but quite another to constantly be such a smug-ass acting like they're the best RE investor of all time…
I sorta want the market to crash not for anyone else, but only for that dumbass to lose asset value
February 14th, 2012 at 12:42 pm
It's like someone farted on the Westside, no one wants to go out and check out all the Open Houses, it's like a curse was cast or something.
Hopefully we an uptick in listings this month on that part of town, let's put fear into the Chinese neveau riche.
February 14th, 2012 at 12:26 pm
PaulB, is there anyway to let me know whats been going on in Tsawwassen? How many sales have occured in the last month or so?
February 14th, 2012 at 12:13 pm
@Troll: Why are you and other tenaciously arguing that it’s not 31 minutes…he’s just defending himself against you guys. It’s you that needs to let it go.
February 14th, 2012 at 11:59 am
"Look how pathetic these fucking realtors are, they just can't stand the thought of a local market for local people and spend their days dreaming of Chinese buyers to come and fill their pockets with commissions. They're absolutely sickening."
totally with you…
February 14th, 2012 at 11:46 am
@ZRH2YVR:
Downtown condo market at the higher end (600K+) is getting busy with a lot of new listings and slow sales.
This is one segment to watch as spring unfolds.
February 14th, 2012 at 10:39 am
>>What are these dirtbags going to do when the crack cocaine of foreign money dries up?<<
Find themselves another job… selling cars may be?
I am, too, seek of the greed and the whoring.
February 14th, 2012 at 10:36 am
@Guy Smiley: "Terribly written article overall. They mention that 5 australian cities were in the top 20 and cite their increased purchasing power as an underlying cause. Once again, bravo Vancouver Sun, bravo."
Hey, consider yourself lucky the article actually came with words. Most of their stories these days seem to be "Top 10" lists in photos.
February 14th, 2012 at 10:27 am
Hulkmania hits the 'couv? http://kiddynamitesworld.com/sp-500-completing-a-…
Money quote: "The Hulkamania formation can continue for longer than you can remain solvent."
Tee hee. Looks like the 2008-Present RE formation.
February 14th, 2012 at 9:48 am
@jumpin in:
>>>“We’re only seeing maybe half as many Chinese buyers as we did last year thus far, but I think that will grow,” he said.<<<
Look how pathetic these fucking realtors are, they just can't stand the thought of a local market for local people and spend their days dreaming of Chinese buyers to come and fill their pockets with commissions. They're absolutely sickening.
What are these dirtbags going to do when the crack cocaine of foreign money dries up?
February 14th, 2012 at 9:42 am
New Listings 281
Price Changes 85
Sold Listings 147
TI:14273
http://www.laurenandpaul.ca
February 14th, 2012 at 9:37 am
@Troll: The ownership rate in NYC is 24%. Van, at 70%+, is simply not comparable. Only the very wealthy compete to buy in NYC. In Van, everyone does.
February 14th, 2012 at 9:32 am
@N
Vancouver ranked 37th most expensive city in the world which is very bearish for real estate. The survey uses rent, not housing prices, to derive their numbers. Considering where we rank in terms of housing price it shows once again how out of whack the price to rent ratio is in Vancouver.
Terribly written article overall. They mention that 5 australian cities were in the top 20 and cite their increased purchasing power as an underlying cause. Once again, bravo Vancouver Sun, bravo.
February 14th, 2012 at 8:55 am
The new flood of foreclosures will depress prices, and more and more people will figure out they are sunk and will stop paying for a submerging investment. I say the fall will not be temporary. Declining prices will be the prevailing trend, especially when interest rates begin to rise. Mortgage interest rates cannot remain at these cut-rate levels forever and won’t. The Huffington Post reported last week, “. . . Amherst Securities Laurie Goodman noted that with our current housing trajectory, we can expect up to 10 million more defaulted mortgages over the next decade. These foreclosures impact housing values, reduce consumer purchases, and cost municipalities money.”
Mortgage Settlement Will Plunge Real Estate Values
….but it won't happen here……will it?
February 14th, 2012 at 8:34 am
http://www.vancouversun.com/business/Zurich+most+…