Condo holes across Vancouver
Much has been made about the huge number of condo towers under construction in Toronto, but here in much tinier Vancouver we’re not doing so bad.
There are currently 16 towers in progress and 67 more in the works.
With population growth and prices on the retreat will there be enough buyers for all these new units or are we over-saturating the condo market?
Cameron Muir says don’t worry:
“Prices have been pretty flat since 2009,” Muir said. “There’s ample supply in the market place, but we are seeing prices at a steady pace.”
The fact more condos than single-detached homes are being built in Greater Vancouver is nothing new, said Muir, as condo starts have consistently made up about 75 per cent of all housing starts in the last several years. “It’s a function of land supply.”
Consumer demand during the last several months is trending on a 10 to 15 year average, he added.
One indicator, says Muir, of the demand-and-supply balance in the marketplace is the sales-to-new-listings ratio.In Vancouver last month, the ratio, at 15.3 per cent, inched closer to a buyer’s market – but sits within the balanced range of between 15 to 20 per cent.
There hasn’t been a sustained buyer’s market since the recession hit, between late 2008 to early 2009.
..And of course it’s starting to smell like 08/09 again with the Eurocrisis and global economic sluggishness, but is it different this time?
Here’s one thing that’s different: Out in Burnaby yet another condo presale had a lineup, but what a waste of time for the participants according to VMD:
re: polygon’s “MODA” presale in Burnaby that opened today, with some people camping since Monday…
sold today: 138
total units: 249
ratio: 55%yawn.
Wow. Can you imagine waiting in line for a week for something that sells only 55% of inventory?
Fizzle.
June 25th, 2012 at 12:22 am 1
“Can you imagine waiting in line for a week for something that sells only 55% of inventory?”
Drift by Aberdeen Centre fountain, the sales office for the new commercial development wing is still there — after several years — despite there being big lineups when first opened. I thought it was sold out, but apparently Colliers still sees fit to keep the office open.
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June 25th, 2012 at 12:30 am 2
re: polygon’s “MODA” presale in Burnaby
Additional details:
1. The first 150 units are offered 2% VIP discount. I guess so far, everyone is V.I.P.
2. Anecdotal info from a realtor: some buyers who “got” the units are still hesitant and are considering opting out during the opt-out period.
- Also, re-post from late Sunday:
Someone has been busy spam-faxing the following letter to Greater Vancouver households lately (posted in Chinese RE forum):
http://s8.postimage.org/sn9o3b4h1/housing_crash_fax.jpg
methinks the communication medium is a little outdated.. a billboard might work better?
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June 25th, 2012 at 12:36 am 3
a lot of 138 units sold were months ahead of time.
so the amount sold told was far below 100 I would expect.
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June 25th, 2012 at 12:44 am 4
How many % units need to be pre-saled in order for the construction to begin?
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June 25th, 2012 at 2:39 am 5
@G:
news from 3/22/12 – I guess roughly 70%?
“Some of the country’s biggest banks have “shut the door” on lending to less established real-estate developers, said Brad Lamb”
“Less well-established companies may have difficulty getting loans from the top Canadian banks, even if they have pre-sold 70% of the units, collected 20% of the total purchase price in deposits, and can offer 15% of the project’s value in equity, Lamb said.
Efforts by federal regulators to slow the condo market will prove fruitless, since smaller developers should still be able to tap “tier-two” lenders and foreign institutions for capital, he said.”
http://www.bloomberg.com/news/2012-03-23/canada-banks-tighten-condo-lending-amid-bubble-fear-mortgages.html
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June 25th, 2012 at 5:00 am 6
The writer of the article is apparently unaware that RE buyers need to get financing, as well as developers.
If the developers can get financing to build but buyers can’t get financing to buy, what happens?
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June 25th, 2012 at 6:11 am 7
Muir’s economic analysis always reads like forecasting the weather by looking out a window: trends with no fundamental analysis.
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June 25th, 2012 at 7:06 am 8
Is there any way to quantify, current pending and historical inventory of new product? There seems to be some ability to do this in Toronto.
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June 25th, 2012 at 7:08 am 9
The sad part is that the units for pre sale are not added to the inventory while pre-sold units are recorded as sales. The combination of two is skewing inventory/sales statistics to make them rosier for the industry and the gullible buyer.
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June 25th, 2012 at 7:20 am 10
@patsan:
Presales don’t go through MLS in the first place, so I don’t think that’s correct.
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June 25th, 2012 at 7:43 am 11
One industry insider mentioned once that they do. Is there anybody in the room who can illuminate the issue in question? Many thanks!
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June 25th, 2012 at 7:49 am 12
@Anonymous: I believe TREB books presales in its sales figures, I don’t think REBGV does this. Tweeter @CanadianWatchdog would know
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June 25th, 2012 at 8:13 am 13
@patriotz: “If the developers can get financing to build but buyers can’t get financing to buy, what happens?”
The buyers don’t need financing for a presale contract. They will need the financing 2 to 3 years down the road when the place is built. My guess a lot of speculators will not be able to finance these places based on new mortgage rules and the fact prices have dropped significantly from what they are locked into pay. There will be lots of assignments at below cost is what will happen. Possibly some bankruptcies if the buyers can’t afford to eat the difference.
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June 25th, 2012 at 8:15 am 14
@patsan:
Pre-sold units are recorded as sales upon completion of the building. So some sales today are those presold 2 years ago.
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June 25th, 2012 at 8:33 am 15
In the interests of encapsulating this point in the city’s history, it might be a nice idea for someone to go and photograph all the condos under construction. It would be a photo essay with a nice mix of vacant plots with hype hoardings, holes in the ground with diggers at the bottom, skeletal concrete towers, and finished product with the grass yet to grow and hype hoardings still all around the sales office. Just driving around you see them everywhere…. it doesn’t look balanced to me. Looks quite unhinged, in fact.
I would do it myself if I had the time…. Gord, are you busy this weekend?
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June 25th, 2012 at 8:36 am 16
@TPFKAA:
“it might be a nice idea for someone to go and photograph all the condos under construction…Gord, are you busy this weekend?”
LOL!!!
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June 25th, 2012 at 8:47 am 17
@patriotz: they all pack up and move to ottawa?
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June 25th, 2012 at 9:20 am 18
@Anonymous: Awww. Somebodies got a crush on Patriotz.
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June 25th, 2012 at 9:22 am 19
@fixie guy:
Muir, like his comrade-in-arms, Pastrick, are both former CMHC employees and neither seems to have the credentials (masters or PhD) to be considered a ‘real’ economist.
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June 25th, 2012 at 9:43 am 20
These “presale” lineups are nothing but old school marketing gimmicks done by the pros for the sole purpose of generating some MSM buzz, photo ops etc. I’m surprised they haven’t planted strategic celebrity buyers into the lineups like they do at nightclubs. Obviously, the public has smartened up somewhat…or maybe they are being deliberately lied to by industry pro’s and their MSM schills? (Remember Telus Gardens, Marine Gateway, Ora Richmond Oval and of course the Olympic Village…uh, I mean the Village on False Creek? Better ask fast before they’re all gone!) With the introduction of the new mortgage rules, I wonder how many of these so called buyers at MODA will opt out after sleeping on it for a couple of nights? Of course, anyone who just purchased units in any of the above-mentioned projects in recent months are $hit out of luck on that front.
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June 25th, 2012 at 9:53 am 21
@Anonymous:
“The buyers don’t need financing for a presale contract. They will need the financing 2 to 3 years down the road when the place is built.”
Yes, I know some people who bought presales at the Olympic Village. When time came to complete on the sale, they were SCRAMBLING to get financing to actually buy the units. They’d planned on a quick flip but were then left holding the bag, and now are reluctant landlords. Underwater I think…what’s the story on the Olympic Village these days?
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June 25th, 2012 at 10:08 am 22
@VMD: We should “crowdfund” a series of bus station advertisements stating something like. “The Biggest Financial Mistake you could make in your life would be to buy real estate in Vancouver in 2012.” With a picture of a bubble about to pop.
A little public service announcement to help prevent people from getting screwed.
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June 25th, 2012 at 10:13 am 23
@pricedoutfornow: “what’s the story on the Olympic Village these days?”
Hey I’ve been asking the same for a while now. Maybe someone needs to push the City for an update. Rennie claims sales were doing well but… the sales centre is still open.
vreaa has asked for people to comment on developments supposedly “sold out” with sales offices still open. If anyone has any insight into this, shoot a comment over on their blog, or just email them.
The Aberdeen extension was one where it was claimed it was sold out in 2010. The sales centre is still open. Hm.
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June 25th, 2012 at 10:32 am 24
@900kCrackHouse: Public service announcements are usually free.
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June 25th, 2012 at 10:37 am 25
VMD, I love your reports from the Chinese forum trenches.
I think I really *am* too busy this weekend to grab pics of the RE war zone. But I’m not too busy right now to relay the latest update on my little on-the-border neighbourhood – the same one I photo-essayed over at VREAA. Anywho, there’s currently 90 units (townhouses, disgusting row homes, SFHs) up for sale in this little patch of land. Lots of open houses this weekend as usual, and essentially no potential customers. As usual. My GF went by some event Saturday where they were out on the street serving coffee and pastries, hitting on any likely mark in the vicinity, etc, etc. She went by at 2PM, which I assume is peak time. There were, she says, four people there – undoubtedly including a teary-eyed realtor or two.
The construction continues unabated here – perhaps even more urgently than ever. They’ve just cleared the bush, opened up some new roads, and installed infrastructure on a new hunk of previously unused land that seems like it’ll accomodate another 80 or so residences. At the same time, I conservatively estimate there are another hundred homes already on the go throughout the rest of the area. Combine that with all the finished homes already on the market, and you have one hell of a massive supply. And our neighbourhood, might I add, can be circumnavigated, on foot, in less than a half hour. It is *not* big.
I see this type of scene, perhaps not quite so insane, throughout my travels. Unless there’s some population influx I’m not aware of, the overbuilding in the B to the P to the O to the E is bordering on the psychopathic. Even without all the new mortgage/lending regs, the shifting public perception, the fact that nobody has any f’ing money, etc, overbuilding alone is enough to deflate this market.
I’m curious…do you folks see the same thing I do?
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June 25th, 2012 at 10:41 am 26
Muir said it has been flat since 2009? All I have heard from them was that everything is going up since 2009, now suddenly he admits that has been flat. How much speculation can we handle?
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June 25th, 2012 at 10:42 am 27
Re Olympic Village
They have not even released any units on at least 2 of the buildings. These are the Arthur Erickson designed buildings with massive units which will be priced from 2.5 million and up. Most are over 2000 sf and they are the ones on the waterfront. Since these have not been released yet we can assume there are still lot of units left in the other buildings. The City has their head in the sand. They need to drop the prices if they want to sell them.
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June 25th, 2012 at 10:46 am 28
@watson: Yes, but unfortunately I can’t see this type of public service announcement getting posted for free.
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June 25th, 2012 at 10:46 am 29
Muir said that “Prices have been pretty flat since 2009″, all I have heard since 2009 is a hot market with prices rising every day. Now he is admitting that has been flat? How much speculation can we handle?
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June 25th, 2012 at 11:17 am 30
@piklishi
I think compared to Van West SFH, or SFH in lower mainland in general, condos are pretty flat.
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June 25th, 2012 at 11:27 am 31
@RaggedyRenter: I guess the point is these perma-bulls only use terms like cooling / flat / etc in the context of opposing new (restrictive) government policies.
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June 25th, 2012 at 11:37 am 32
Here’s an example of an MLS booked property slated for completion in 2015. This one’s in T.O.
http://i48.tinypic.com/2eb4eh3.png
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June 25th, 2012 at 11:51 am 33
@900kCrackHouse:
Along the lines of a public service announcement – Would anyone feel like contributing figures to a “Vancouver Bubble in a Nutshell” document? People hate reading. How about a few graphs that explain the situation, all contained in one place.
Historical price
Historical price to rent
Historical price to income
Population growth
Inflation rate
TSX
Interest rates
Inventory
I am sure we could think of more.
I think that this would really help (me anyway) to explain the perils of the current Vancouver RE market when talking to friends who are thinking of buying.
We could start up a group over on Vancouver Peak for submissions.
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June 25th, 2012 at 12:04 pm 34
@900kCrackHouse: The media has to allocate a certain percentage of airtime, ad space etc to not for profit public service – ie Canadian Blood Services, Canadian Cancer Society etc. I think the current state of the housing market is almost as serious. It would never happen but it would be nice to see the pendulum swing the other way for a change instead of seeing the relentless pumpers and cheerleaders get free airtime on Global for their “expert” opinions.
Think about something – how far does the local real estate market have to fall in order to come in line with historical fundamentals?
A long fricken way, that’s how far.
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June 25th, 2012 at 12:19 pm 35
@Simple: You can find a few price/rent and price/income graphs here:
http://northamericaneconomics.com/2012/01/06/vancouver-housing-valuations/
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June 25th, 2012 at 12:27 pm 36
@gordholio: Gord, you should see all the building along 2nd Ave just North of “The Village”, they’re popping up like mushrooms! These places are truly thrown up in a hurry; I looked at one to rent and the workmanship was so poor I couldn’t sign the lease despite a fair rate.
I’ve always wondered what the developers are thinking building right next to the village that has not been able to sell 2+ years on.
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June 25th, 2012 at 12:29 pm 37
@Simple: Good idea, just started a thread here:
http://vancouverpeak.com/groups/data-hounds/forum/topic/vancouver-housing-bubble-in-a-nutshell/
I think those graphs speak for themselves.
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June 25th, 2012 at 12:33 pm 38
@Simple: Don’t forget ever tightening mortgage rules
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June 25th, 2012 at 12:34 pm 39
@Chem Guy:
“I’ve always wondered what the developers are thinking building right next to the village”
My guess is that they’re thinking that if they pay 1/2 the land and construction costs of the OV they should be able to underprice it and still make money.
Prior to Jimbo’s surprise, they odds were pretty good that they could, and they still have a fair chance.
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June 25th, 2012 at 12:49 pm 40
@36 Chem Guy:
If they’re building them, that means they’ve already found suckers that bought. No bank is going to finance any construction unless the vast majority of units are pre-sold. They’re building ’cause they’re sold. These developers have nothing to worry about.
It’s the developers who invested in buying land and getting re-zonings and have not pre-sold that need to worry.
Unless, they’re Concord Pacific or British Pacific Properties, who bought their land years ago for a song. They’ll just go back to selling at lower prices and still make money.
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June 25th, 2012 at 12:53 pm 41
@Simple: How about something short and sweet (although I’m not sure I’ve got it correct here):
Vancouver Bubble in a Nutshell:
1. The value of a home is reflected in the cost to rent it. By this measure, Vancouver real estate prices need to drop 30-50% to be good value.
2. Home buyers set the sale price, not the sellers.
Ergo: if every potential buyer in Vancouver was given a calculator and remedial lessons in personal finance, real estate prices in Vancouver would drop 30-50% overnight.
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June 25th, 2012 at 12:55 pm 42
@Apocarypse Mao:
“They’re building ’cause they’re sold. These developers have nothing to worry about.”
No, they’re not sold. What actually happened is that a bunch of people promised to buy them when they’re finished.
Which means that both these people and the developers have plenty to worry about.
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June 25th, 2012 at 1:04 pm 43
The idea that the chinese coming here with bags of money is just superficial. How would you know the cash they brought here were not backed up by tons loads of debts back at home?
Let me give you an example. There were a speculator from Wenzhou China who purchased an apartment in West Kowloon, HK 2 years ago at a price which set record at the time ($5000/sf). He needed to sell his apartment several months ago at a loss to make up for his margin calls amid all the troubles in the private lending business in Wenzhou.
It’s the must-sellers and must-buyers who set the price in the market. It’s true that a lot of chinese bought Westside SFHs with cash only but there just needs to be a portion who bought with questionable collaterals back home and bam, you have a margin call and a must-seller.
That said. This latest news regarding amortization pales in comparison to the latest news from China that it is relaxing its lending standard again after 1.5 years of restrictions. This, IMO, will means more to West side SHFs in the immediate future.
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June 25th, 2012 at 1:06 pm 44
Social activist and former Vancouver councillor Jim Green dies
Whether or not you agreed with his political stances, nobody can deny Jim Green’s heart, tenacity, and personality.
These are qualities that are getting increasingly scarce in the Vancouver of today. Anyone who’s met Green in person, like myself, will miss him.
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June 25th, 2012 at 1:15 pm 45
@rksleung: “news from China that it is relaxing its lending standard again after 1.5 years of restrictions.”
I don’t think China’s latest stimulus is absent from discussions in Ottawa. Note China has apparently relaxed some internal real estate curbs in areas it deems to have adequately corrected. A cursory analysis might suggest that somehow diverts money away from Canada but delving a bit deeper reveals that’s likely not the case.
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June 25th, 2012 at 1:27 pm 46
#44 patriotz
True, no title sold yet. But, they didn’t just promise to buy, they signed a contract to buy. Those contracts seem not easy to get out of. In ’08 there we’re a few news stories of people trying to get out of contracts because their units dropped in value, trying to renege, angry OV pre-sale buyers trying to sue the developer for the difference. Didn’t seem that they could.
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June 25th, 2012 at 1:28 pm 47
“news from China that it is relaxing its lending standard again after 1.5 years of restrictions.”
There you have it folks. Ottawa curbs the mortgage rules for the poorest Canadians. When coupled with this news from China, it means exactly what mortgage brokers and real estate agents have been saying since the introduction of the new mortgage rules last Thursday – locals get displaced from a market that is now free to cater to rich Mainlanders.
With the reigns lifted, more wealthy mainlanders will flock to the westside and richmond and locals are SOL. Good thing we all wished and hoped for this 25 year rule. Once again, just when bears think things are going their way, bam, unintended consequences of what they wanted.
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June 25th, 2012 at 1:35 pm 48
@/dev/null:
I would argue a drop would be 50 to 70% is more appropriate. Currently where I am renting, a 70% drop would reflect the same payments as what I pay in rent. And we are not even considerating correction over shoot on the way down.
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June 25th, 2012 at 1:36 pm 49
@Told Ya Says
Even when China had lax lending standards, and Vancouver home prices were going up, under 10% of the homes bought in Vancouver were by investment immigrants.
It was a story to hype up local buying, which it did. But now the prices are so unaffordable it won’t make a difference.
You can listen to all the local realtors and mortgage brokers you want. If you believe them like I said, go buy a few places so you could make a fortune, no one’s stopping you.
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June 25th, 2012 at 1:45 pm 50
@Apocarypse Mao: Seeing condo pre-sales buyers try to sue the developer for the condo being a lower price than they paid is pathetic. It’s always a good idea to read a contract you sign – the developer has the right to come after you for the difference between the price you contracted to pay and the current unit value if you try to walk away from your pre sales deposit, you don’t have any right to go after the developer just because the market price went down between contract signing and completion.
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June 25th, 2012 at 1:45 pm 51
“It’s the must-sellers and must-buyers who set the price in the market. It’s true that a lot of chinese bought Westside SFHs with cash only but there just needs to be a portion who bought with questionable collaterals back home and bam, you have a margin call and a must-seller.”
i.e. financial assets are priced at the margin. I bet 90% of the people do not understand this fundamental economic concept when they tout “oh there are xx amount of cash-rich HAM buyers supporting the market and have no need to cash out”.
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June 25th, 2012 at 1:52 pm 52
We went to an Open House this weekend to gauge whether there was a rush to beat the July 9 deadline. Open House was on West 33rd and it was dead. We attended with approximately 1/2 hour to go and we were only the second name on the sign in sheet. Even the realtor admitted it was dead and asked us if he could send us some similar listings as “he had lots of time on his hands”.
Nice change from the 30 pairs of shoes and multiple offers you would have seen not too long ago. Anydody else with a similar experience this weekend?
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June 25th, 2012 at 2:01 pm 53
@Dude: I would argue a drop would be 50 to 70% is more appropriate.
To the average Vancouverite, saying 30-50% already makes them assume you’re a foaming-at-the-mouth lunatic. At some point they’re just going to ignore you.
Our rent-to-price is just over 600, so we’re in a similar circumstance to you.
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June 25th, 2012 at 2:02 pm 54
@Told Ya: I though it was the introduction of those restrictions that caused them come here in waves last year. Can you bulls make up your minds?
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June 25th, 2012 at 2:17 pm 55
“It’s the must-sellers and must-buyers who set the price in the market.”
There is no such thing as a must-buyer, just various degrees of want-to-buy.
Prices are set by marginal buyers and sellers, who are the people willing to buy or sell at the market price. Of course some people really do have to sell, which means that they are willing to sell at any price.
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June 25th, 2012 at 2:21 pm 56
53 Anonymous Says: “Can you bulls make up your minds?”
Fervently believing every change pushes the market higher reduces the complexity for them by half. Dualism was too hard.
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June 25th, 2012 at 2:27 pm 57
Thanks wreckonomics and crabman. Those graphs are awesome.
Keep ‘em coming!
http://vancouverpeak.com/groups/data-hounds/forum/topic/vancouver-housing-bubble-in-a-nutshell/
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June 25th, 2012 at 2:56 pm 58
@jesse: I heard from another resident in the Village that there are only 100 units left to sell. Canada House (the Erik$$on one) went on sale a few months ago and there is activity there but not throughout all the units. The top floor was asking $18M, that’s eighteen million. The lower units were sold starting 1.3M. I heard mostly to offshore buyers who were toured through there in March. Someone complained to me that they wanted to buy one of the 10 inside units but they weren’t showing them to local people. Don’t shoot me! I’m just the messenger. You asked what people who live here have heard.
Sometimes units that are occupied for months, suddenly become unoccupied in the middle of the month and stay that way. And a bunch of them at once. It’s as if they’re used periodically and then all the furniture disappears but the blinds sometime still go up and down. I know you hate me saying it but… dunno… foreign buyers who use the home as a hotel? Then close up? I don’t know but it’s it’s weird.
The city is just like the developers. They’re not going to give the final tally to the public. It’s opaque. I’ve contacts the writer for 24 Hours who covered the whole Olympics marketing fiasco and he said the city is very tight-lipped about it and the whole thing is a mystery to him.
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June 25th, 2012 at 3:00 pm 59
@Anonymous: They’ve been released. Aquillini’s kid bought the one on the ground floor.
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June 25th, 2012 at 3:02 pm 60
If you think the housing price in Vancouver is primarily driven by easy credit and change in mortgage rules, this chart by Taipan (of RET fame) might interest you:
http://i12.photobucket.com/albums/a232/taipan74/RETalks/c337b39b.jpg
You can probably superimpose the numbers against the policy/interest rate change to see their (lagged) effect to house prices. This means we can forecast a guide to house price given a policy/interest rate change.
Further policy change, credit tightening would really hurt this market and if there’s any external shock, look out below!
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June 25th, 2012 at 3:29 pm 61
As of 3:30 there was only 12 sales made in all of Port Coquitlam, Pitt Meadows, Maple ridge, Cloverdale and Langley. Hopefully we have terrible sales day.
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June 25th, 2012 at 3:44 pm 62
@rksleung: Can you explain this again?
“That said. This latest news regarding amortization pales in comparison to the latest news from China that it is relaxing its lending standard again after 1.5 years of restrictions. This, IMO, will means more to West side SHFs in the immediate future.”
Which way do you mean this? More money coming to SFH West side or less? I think Jesse is interpreting your comment one way and I am interpreting it another way.
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June 25th, 2012 at 3:44 pm 63
@RaggedyRenter:
Terrific Graph by Taipan…
There is a footnote missing however, and that is that people have to qualify at the posted 5 year rate… which is something like 5% and change from what I understand, so we aren’t far from the bottom of that chart… Just need the sellers to figure it out
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June 25th, 2012 at 3:45 pm 64
@Anonymous:
oops that was me re: Taipan Graph… new work laptop… last thing we need round here is more Anon’s
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June 25th, 2012 at 3:48 pm 65
@mac:
There will be more wealthy Chinese move to this city and their attention is on the eastside;soon eastside teardown will cost white folks a fortune.Don’t underestimate China economic power which has already surpassed tiny and stingy US and has become number one.
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June 25th, 2012 at 3:57 pm 66
Wait to the NDP get elected provincially and NDP Federally – significantly higher taxes ahead will certainly not make Vancouver a prime safe haven for capital. A lot of talk about immigration, but what about wealthy families who leave Canada for good. I know of two wealthy families personally who have left Vancouver and gone back to Hong Kong and Mainland China along with their money. Capital flight going forward.
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June 25th, 2012 at 3:57 pm 67
@Anonymous: Anonymous, you’re funny. I’m not exactly going to fall for your fear mongering am I? I’m in enough trouble with this blog. I wanted to hear what rksleung originally meant. Not you.
Even though I am, let’s say, a believer in the HAM effect. I also know that they have incredible and irresponsible borrowing and leverage over there that is very dangerous to them, and because of my belief in their net effect on our RE market, to us.
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June 25th, 2012 at 5:49 pm 68
New Listings 278
Price Changes 204
Sold Listings 124
TI:19386
http://www.laurenandpaul.ca
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June 25th, 2012 at 6:01 pm 69
Moody’s warns on Mortgage Debt
http://www.theglobeandmail.com/report-on-business/moodys-warns-on-mortgage-debt/article4369806/
a choice quote:
“….but Moody’s worries Ottawa may have waited too long, and that a soft landing may be difficult to engineer now.”
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June 25th, 2012 at 6:07 pm 70
RE OV,
According to the latest Rennie full page advertisement in Saturdays Sun ther are 192 units left to sell, so aprox 25% left.
I live here in the Village nice area poor craftsmanshit of the buildings truly were rushed and it shows.
Cheers
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June 25th, 2012 at 6:11 pm 71
@Tacky Tocker: Heya! I live here too. That’s good to hear. I had heard from someone in the gym that only 100 units left. Nice to know Rennie says there are more and much closer to the original amount he had to move after the Olympics.
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June 25th, 2012 at 6:25 pm 72
@Re-diculous:
“….but Moody’s worries Ottawa may have waited too long, and that a soft landing may be difficult to engineer now.”
If I may say so, I predicted this would come. Ottawa is getting tough on mortgage debt because the bond rating agencies have told them to get tough or else. There’s really no other interpretation of that kind of language from Moody’s.
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June 25th, 2012 at 6:26 pm 73
@Apocarypse
“angry OV pre-sale buyers trying to sue the developer for the difference. Didn’t seem that they could.”
actually 68 buyers of the OV are still fighting within the courts to have their purchases annulled –looks like they may win—something called–REDMA–Real Estate Development Marketing Act–
–developers must provide a disclosure statement setting out material facts about a project, and if those facts change, an amended disclosure statement must be provided—don’t know what occurred with the OV but 4 of the 22? purchasers of Sutter Brook in Pt Moody, who sued Onni Developmentsp won their case after occupying their purchases for over 4 years–apparently they lived in their condos for the entire time and now can get their money back and do not have to pay rent to Onni for the entire stay—all about consumer protection
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June 25th, 2012 at 6:30 pm 74
@trash crash alert:
“Wait to the NDP get elected provincially and NDP Federally – significantly higher taxes ahead will certainly not make Vancouver a prime safe haven for capital.”
But I thought these people didn’t report their foreign income anyway, and they came for the social services. Seems to me an NDP government would be just the right fit for them (1/2 sarcastically).
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June 25th, 2012 at 6:40 pm 75
@wreckonomics
“Seeing condo pre-sales buyers try to sue the developer for the condo being a lower price than they paid is pathetic. It’s always a good idea to read a contract you sign”
remember it doesn’t always work that way–here’s what happened to many unsuspecting pre sale buyers when prices went up -not down- after they had an air tight contract (or so they thought)
http://www.ctv.ca/CTVNews/CTVNewsAt11/20070507/BC_homeowners_070507/
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June 25th, 2012 at 6:42 pm 76
@wreckonomics
buy the way—the homeowners LOST
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June 25th, 2012 at 6:59 pm 77
@patriotz: Interesting take.
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June 25th, 2012 at 7:18 pm 78
China’s Officials Forced to Sell Luxury Cars
http://www.cnbc.com/id/47955924?utm_medium=twitter
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June 25th, 2012 at 7:30 pm 79
@76 condo watcher
Re: The “homeowners” lost”. They weren’t homeowners if they didn’t have title yet. And if they lost, then the contract, which was written by the developer, allowed them to lose.
You mention disclosure in regard to the OV buyers. Not, sure what wasn’t disclosed, but a change in market value wouldn’t be a case of non-disclosure. And a change in market value is not a material fact. If the value of your pre-sale goes down, after you purchase, I would find it hard to believe there is a court in the land that would allow you to back out for that reason alone. Sounds like they using some other issues to get out.
You could sell me anything at today’s market value; a house, a car, a pair of sneakers. If next year the market value goes down, I don’t think there’s not much I could do about it.
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June 25th, 2012 at 7:32 pm 80
@Anonymous:
It’s nice to see the corrupt communist filth have to give up their luxury cars by force (because you know the scumbags would never do the right thing on their own) but look what else popped up on the same page you linked to.
http://www.cnbc.com/id/47950697
Yes, Norway. They’re as stupid as we are!
I wonder if they’re telling each other that rich Swedes and Finns are buying up everything in sight with suitcases full of cash.
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June 25th, 2012 at 7:39 pm 81
@Best place on meth: “corrupt communist filth”
Well “communist” is a stretch. Norway looks like Alberta in 2007: tons of oil revenues bursting at the seams and low interest rates. I don’t think they allow foreign ownership the way Canada does but I could be wrong.
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June 25th, 2012 at 7:47 pm 82
This from Garth’s blog. Anyone now if its true?
“Vancouver is down 3 months in a row. This has only happened 1 time in 10 years, and it was in 2008. If Vancouver goes into the red for June, it will be 4 months in a row, which will set a new record. My eyes are on July 1… let’s see if this bubble is going to deflate rapidly, or simply explode. Those are the only two options at this point.”
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June 25th, 2012 at 7:55 pm 83
@Best place on meth: Norwegians are bubble specialists: http://www.guardian.co.uk/world/2011/dec/14/norwegian-butter-crisis-shortage-christmas
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June 25th, 2012 at 8:08 pm 84
“Yes, Norway. They’re as stupid as we are!”
The housing bubble is global. There are still many bubbles to pop including Norway and Canada. Everyone is at rock bottom interest rates and the result is similar.
You would have a hard time finding a Chinese person in Norway BTW. Most of their immigrants are Polish.
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June 25th, 2012 at 8:14 pm 85
@ BPOM
Chinese must be selling their cars to free up cash for Canadian RE purchases. LOL!
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June 25th, 2012 at 8:30 pm 86
June will be the fourth month in a row that prices will be down.
July will be the fifth.
Get used to it.
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June 25th, 2012 at 8:30 pm 87
The Chinese will sell these cars and buy fancier ones.
Rinse and repeat.
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June 25th, 2012 at 8:32 pm 88
@Apocarypse now
“Re: The “homeowners” lost”. They weren’t homeowners if they didn’t have title yet. And if they lost, then the contract, which was written by the developer, allowed them to lose.”
the homeowners were no different than pre sales purchasers today–they have no title also—it wasn’t the contract that allowed them to lose –it was the lack of consumer protection laws that allowed them to fail
the Riverbend purchasers got screwed–did you read the article
The price upon completion has nothing to do with the OV purchasers seeking legal remedy–the developer can change the original disclosure statement all they want ie: extend the occupancy date etc, but it’s the method in which the purchaser is notified that is under dispute–google REDMA– the developers have not been doing it legally
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June 25th, 2012 at 8:46 pm 89
Anon 83 wrote: “You would have a hard time finding a Chinese person in Norway BTW”
Don’t know about the rest of Norway, but in Oslo, there are quite a few.
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June 25th, 2012 at 8:46 pm 90
Here’s some bearish gossip for you as you wait for the decline. A friend of mine, who used to work in banking, called his old boss who is now in Alberta. He called her about the mortgage changes because he is gleefully waiting for prices to deflate and wanted to solicit her opinion. She said something along the lines of hang onto your hats. The banks (like hers) may choose to no longer offer 30 year mortgages on non-CMHC-insured mortgages. They are intending to comply not just with the letter of the OFSI guidelines but with the spirit of what Flaherty is trying to achieve. That’s because…
Apparently, the word on the street is Flaherty got wind that BMO was about to launch a 5-yr mortgage at 2.09% and he flipped. He was already pissed at the endless development he was seeing in the Toronto condo market and the high level of speculation. He called all the bank heads into a meeting and told them to cut out all the shenanigans. Then the next day, to everyone’s surprise, he announced the end of the 30-yr amortizations.
This nice-lady-at-the-bank has been declining HELOCs and mortgages ever since. Everything iffy that comes across her desk is getting kaiboshed. She thinks Alberta will get creamed if other banks are doing what she’s doing.
Have a happy Monday, bears.
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June 25th, 2012 at 8:47 pm 91
@Romeo Jordan:
Really,liar
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June 25th, 2012 at 8:48 pm 92
@mac: “The banks (like hers) may choose to no longer offer 30 year mortgages on non-CMHC-insured mortgages. ”
You can still find 35yr mortgages…
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June 25th, 2012 at 8:52 pm 93
@Romeo Jordan: No we handle our finance much better than white folks who squander their meager income in drug and hard spirit…………that is why Van belongs to us no for whites anymore.
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June 25th, 2012 at 9:03 pm 94
@Anonymous: “Don’t know about the rest of Norway, but in Oslo, there are quite a few.”
There is a total of 8,458 Chinese immigrants in the whole of Norway. That is just behind the number of Eritrean and Moroccan immigrants in Norway.
http://en.wikipedia.org/wiki/Immigration_to_Norway
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June 25th, 2012 at 9:08 pm 95
@Re-diculous:
Honestly, when has a soft landing ever been engineered.
Just doesn’t happen.
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June 25th, 2012 at 9:24 pm 96
@Anonymous: Good… hopefully next the douchebags will be forced to sell their Canadian real estate.
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June 25th, 2012 at 9:38 pm 97
“the word on the street is Flaherty got wind that BMO was about to launch a 5-yr mortgage at 2.09% and he flipped.”
Thanks BMO! Let’s hope another bank comes up with something equally ridiculous and Flaherty ups the downpayment requirement. I’m actually hoping the TO market continues to go climb and Flaherty goes on a hulk-like rampage.
From that G&M article…I still can’t believe that a 10% DP is considered such a drastic measure that it would sink RE. Shows how leveraged this house of cards is.
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June 25th, 2012 at 9:40 pm 98
@900kCrackHouse: Crowdfunding is a good idea – pop the psychological/information bubble as a precursor to the RE one. Like. I believe there is a wiki connected to this site? *cough….
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June 25th, 2012 at 9:45 pm 99
@mac: thanks for the juicy gossip. Promptly translated and broadcast into Chinese forums.
If the non-CMHC loans are going to be conforming to Flaherty’s new rules, then even the people with higher DP will be affected (well, except those paying 100% cash.. but how many people do that these days?)
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June 25th, 2012 at 10:05 pm 100
Curious, anyone know what the allowable percentage of rent increase is this year? As long as mine doesnt exceed 30% its still cheaper to rent.
If you know please do tell!
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June 25th, 2012 at 10:08 pm 101
Why is everyone downvoting the statement that you can still find 35 year mortgages? They are easily available form numerous sources primarily provincially regulated lenders such as credit unions. Call Coast Capital or Vancity and you’ll understand how little has actually changed.
https://www.coastcapitalsavings.com/Personal/Borrowing/Mortgages/First_Time_Home_Buyers/Mortgage_Glossary/
“Amortization Period
The number of years over which you will repay the entire amount you borrowed. The most common mortgage amortization period is 25 years, but it can be as long as 35 years. It should not be confused with the term of your mortgage.”
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June 25th, 2012 at 10:09 pm 102
@VMD: The TD mortgage calculator is still allowing 30 years. We’ll know for sure when it won’t allow amorts greater than 25 years
Last time max amortizations covered under government-underwritten MI were dropped the banks followed, though they still offer longer terms on a small scale.
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June 25th, 2012 at 10:12 pm 103
@Tacky Tocker: The allowable increase is 4.3%.
Some landlords will be raising it at the maximum because they bought buildings with tenants who have been paying below market for years. This will go some way to recovering the difference. And landlords who have tenants moving out can raise the rent to whatever they want for the new tenants.
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June 25th, 2012 at 10:18 pm 104
@Tackey Tocker
rent increases were covered here a few weeks back — try here
http://www.tvslandlordblog.com/tips/british-columbia-announces-rent-increase-guideline-for-2012/
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June 25th, 2012 at 10:29 pm 105
A report from the front lines of the Okanagan RE meltdown. I spent the weekend there and saw a flood of “For Sale” signs all around–Kelowna, Vernon, Penticton, etc. I spent a night in Keremeos and on just one street (about five blocks long, with maybe 75-80 homes in total) I must have seen about 15 for sale signs, all of which had “price reduced” (or “price reduction”–can’t remember) on them. Yikes! It’s going to get even uglier there.
I picked up the G&M on Saturday and the articles regarding the change in mortgage rules were quite a sight for this RE bear. One of the articles, however, was pure gold.
Here’s the link
I didn’t know there was so much HAM in Labrador City.
In order to be able to afford a house that costs over three-quarters of a million dollars, your family income should be exorbitant! It should be north of $200K annually, Ms. Benton.
Then she goes on to add:
A little “Big Brotherish”?!? The government is not preventing you from buying that home. Go out and put more than 20% down or find a private insurer for your mortgage. Problem solved. Oh, and Ms. Benton, the changes will have an effect on the N. Vancouver market. Don’t you worry!
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June 25th, 2012 at 10:54 pm 106
@Anonymous: “Why is everyone downvoting the statement that you can still find 35 year mortgages?”
Because they’re morons. Firstline are still advertising 35yr “extended amortization” too.
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June 25th, 2012 at 11:42 pm 107
@Anonymous: “Firstline are still advertising 35yr “extended amortization” too.”
Firstline is shutdown. Moron.
BTW the new mortgage rules have not taken effect yet. Check when they are in effect for a month or so.
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June 26th, 2012 at 7:21 pm 108
[...] from the 30 pairs of shoes and multiple offers you would have seen not too long ago.” – MEM at VCI 25 Jun 2012 at 1:52pm Share: This entry was posted in 08. Overextended Buyers, 09. Delaying Buying, 11. Regrets about [...]
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