West Side housing boom loses its sizzle

The Globe and Mail has a suprising headline: Sky-high housing prices in Vancouvers west side short lived.

Both sales and prices are down at the top end even more markedly than in the rest of the region, which has also seen a general slowdown this spring.

A house on the 3000 block of West 24th Anenue, first listed at near $4.5-million six months ago, sold on April 15 for $3.35-million.

Fresh statistics from the Greater Vancouver Real Estate Board show the number of sales on the west side is down by nearly 40 per cent for the first four months of the year. Only a third of the nearly 400 homes listed in April have sold – one of the lowest rates in the region.

Realtors say the slowdown appears to have resulted from a combination of tighter lending practices by local banks, which now want proof of income to service large mortgages, more restrictions on how much capital can be taken out of China, and fewer immigrants.

“Banks are now requiring borrowers to disclose incomes and assets before mortgages are approved, as of the last six weeks,” said west-side realtor Marty Pospischil, who specializes in selling single-family homes owned by long-term residents. Last year, he says 90 per cent of his 100 house sales were to “offshore buyers” – people not living here yet, who flew in to buy. This year, it’s less than a tenth of that. “We’re now seeing a 50-per-cent collapse rate in deals, when it’s usually more like 5 per cent,” he said.

Read the full article here.

Sort by:   newest | oldest | most voted
rp1
Guest
rp1

So what did they do before? Chuck money out the door?

pricedoutfornow
Guest
pricedoutfornow

Proof of income? That’s ridiculous! Don’t they know this is Canada? No need to bother with just pesky details, we are different!

jesse
Member

Seems like lenders are pulling back a bit. This is just the beginning in my view. 2013 will be even more strict.

registered
Member
registered

3 jesse Says: “Seems like lenders are pulling back a bit.”

The Canadian government is pulling back real estate stimulus, lenders are adjusting business practices accordingly.

patriotz
Member

@fixie guy:
To put it more bluntly, the majority is in and it’s time to throw the fools under the bus.

yvr2zrh
Member
It is interesting to see Realtors state that the top is in and prices have to fall. I can understand why however because they only make money on transaction volume. With volumes off 40%, that’s a problem for west side home sellers. Thus – they have to get the word out that prices are coming down to change the seller’s expectations and close the price gap from seller to buyer. This will be interesting to watch over next 3 months because this will be where we see quite a change potentially. This property in the article actually went for sale last year at $5M. It cost it’s HAM owner $3.0 of original purchase plus build-out costs. This makes it quite a small gain for holding it 5 years. In fact, if it was financed, this likely will sell for a… Read more »
Patsan
Guest
Patsan

Perhaps it’s time for government/banks to introduce requirements for a 6-year saving history (like financial institutions in Germany do) before approving for a mortgage. That would effectively wipe out all 20-somethings from the ranks of mortgagors for the years to come.

patriotz
Member

@Patsan:
Which means it would wipe about 50% off prices overnight.

There was no bubble in Germany for good reasons.

N
Guest
N

The article makes it sound as if the banks were financing five million dollar loans to non-residents without checking whether they had any money. I wonder if it is sloppy journalism or they are trying to paint that picture.

Vansanity
Guest
Vansanity
http://www.cbc.ca/news/business/story/2012/05/07/building-permits-march.html “Building permits rise to $6.8B high The value of Canadian building permits increased by almost five per cent to $6.8 billion in March, its highest point since June 2010. The gains came on top of a 7.6 per cent increase the previous month, and Statistics Canada said Monday higher construction intentions for both institutional and commercial buildings in Ontario were the main factor in the rise. Building permits are calculated by adding up the value of construction permits submitted to munipical governments. They are considered a leading economic indicator because they signal people have enough optimism to undertake large construction projects. Overall, the value of permits was up in every province except B.C. and Quebec. British Columbia posted the largest decline, as a result of lower construction intentions for industrial and commercial buildings and multi-family dwellings.” So does this… Read more »
jesse
Member

@Vansanity: “So does this mean that the BC leading indicator is saying that people are pessimistic because they are not taking on large construction projects?”

Builders are pessimistic. It’s an interesting stat to follow for sure. There was a severe recession in Vancouver for construction but that recovered. Builders are likely more cautious now, and they should be given the lackluster population growth and units under construction. There could also be a bit of lender aversion to BC.

xyz
Guest
xyz

“Banks are now requiring borrowers to disclose incomes and assets before mortgages are approved”

HEY! The amount of my welfare check is between me and my case worker… its nobody elses danged business…
/Sarcasm

jesse
Member
@N: “I wonder if it is sloppy journalism or they are trying to paint that picture.” It was an anecdote from “Realtors” that is justifying why sales are bad. Who knows if reporters are paid enough to bother checking with their bank sources to see if that’s correct. No hard facts but… I know that lenders, up to March anyways, took liberties with (low ratio) loan approvals for certain clients. As long as the downpayment was high enough the bank viewed itself as, er, covered. I think that’s going to change start 2013 for sure, and maybe even sooner. I had a conversation with a westside builder over the weekend. Not surprisingly was upset with changes in immigration laws to the investor immigrant program, especially raising required net worth to $1.6MM. Felt that was going to reject a lot of… Read more »
900kCrackHouse
Guest
900kCrackHouse
Ok, this is scary… “Banks are now requiring borrowers to disclose incomes and assets before mortgages are approved, as of the last six weeks,” said west-side realtor Marty Pospischil, who specializes in selling single-family homes owned by long-term residents. Last year, he says 90 per cent of his 100 house sales were to “offshore buyers” – people not living here yet, who flew in to buy. This year, it’s less than a tenth of that. “We’re now seeing a 50-per-cent collapse rate in deals, when it’s usually more like 5 per cent,” he said. What the… “Banks are now requiring borrowers to disclose incomes and assets before mortgages are approved” does that mean that before the last 6 weeks they were not asking for income disclosure? What kind of down payment do they look for from foreign buyers before giving… Read more »
N
Guest
N

@jesse:

“Wanted to see the program expanded, said the BC economy is shot; it doesn’t need more skilled workers, it needs money.”

That’s the thinking that is causing the trouble all over the globe: the idea money of without work.

N
Guest
N

“We moved from Vancouver for economic reasons,” Fox line producer Joe Caracciolo told media in Sydney, Australia, according to a report by Screen Daily. “More and more there is pressure on the costs of pictures and the numbers were not adding up [in Canada.]”

Read more: http://www.vancouversun.com/entertainment/movie-guide/Wolverine+shot+Australia+Vancouver/6575477/story.html#ixzz1uCiuVPn8

Best place on meth
Member
Best place on meth

@900kCrackHouse:

“What kind of down payment do they look for from foreign buyers before giving a mortgage?”

35%.

Now they also require proof of income to support the remaining 65% that is mortgaged.

Patiently Waiting
Member
Patiently Waiting

@900kCrackHouse: “If we drop so much that these foreign buyers start walking a lot of people are going to be pissed myself included.”

There will be a lot of abandoned near-new Beemers and Benzs at YVR. Dealers will be oversupplied, so we can cool our anger with sweet deals for sweet wheels.

Anonymous
Guest
Anonymous

“Banks are now requiring borrowers to disclose incomes and assets before mortgages are approved”

I recently asked for a $2000 overdraft with RBC on a new chequing account. As an RBC customer for 20 years I have overdraft on other accounts already, a line of credit for 40K, a credit card at 20K all with no balance on them. I also have about 80K in the bank with RBC. RBC wanted proof of income and did a credit check on me before giving me the 2K overdraft. Had I been applying for a 1M$ mortgage it probably would have been easier.

The Leak
Guest
The Leak

*NEWSFLASH* It’s the time we bears have all been waiting for. A slow erosion of BC’s Real estate is now fully underway. We all know this thing is driven by psychology. Who knows how long it will drop, but now that the main stream news stories are out there folks will be thinking completely different. Rather than “it always goes up, up, up!” it’ll be more like “how far will it keep falling before we can take the plunge?”

Patiently Waiting
Member
Patiently Waiting

Bankster Bears

“Many companies, including the Bank of Nova Scotia, whose Bay Street office tower is expected to sell for a billion dollars, are selling their real estate to raise money. The companies prefer the flexibility being a tenant allows, and older buildings can be expensive to maintain.”

http://www.theglobeandmail.com/report-on-business/cbc-moves-to-find-tenants-for-extra-space-in-toronto-headquarters/article2424330/

Madashell
Guest
Madashell

Wow the bubble had popped loud and clear. Please remember the supporting casts who made it possible:
– J. Flaherty who had introduced the 0 down/40 year mortgages and also dished out hundreds of billions in secret bailouts.
– CMHC who guarantee closed to 600 billions to speculators and panic buyers and let the people of Canada holding the bag.
– M. Carney who lower interest rates to below inflation.
– Big Banks who dished out billions in toxic loans and made near record profits.
Local medias who reports Real estate (propaganda) news release as headline news.
Last but not least, Cam Good flying over White Rock with a bunch of real estate agents who looked like Asian investors.

Anonymous
Guest
Anonymous

Anybody who has ever applied for a mortgage in Canada knows that proof of income is required. Perhaps the specific form that takes has changed, but to pretend that banks have been dishing out a million bucks with no background checks is laughable.

Anonymous
Guest
Anonymous

@Anonymous:

Fact remains it’s easier to apply for, and get a mortgage, than it is a $10k line of credit. I know someone who was turned down for a $10k LOC but were approved for $500k mortgage. That’s asinine

DaMann
Member
DaMann

Whoops, last comment was mine. Now that I think about it it may have been a $15k LOC, but that’s still insane

wpDiscuz