Cambie-fornia, Compare and despair.
Remember when a million dollars was real money?
It’s always fun to compare what your Vancouver home dollars will get you in less fortunate countries.
A commenter by the name of mortgage posted this delightful contrast.
Here’s what $2.5 million will get you on a major street in the Cambie corridor, walking distance from the world famous ‘Oakridge Center Mall’. This 1948 beauty is located near the vibrant heart of Vancouver, where the sun always shines:
Somewhat south of there is a place called Beverly Hills California. If you take your $2.5 million down there you’ll find something like Dudley Moores old digs:
..but you wouldn’t be walking distance to Oakridge Mall. They have a Zellers.
November 19th, 2012 at 1:21 am 1
Lapre!! Lapre!! Lapre!!
Where are you buddy, i haven’t logged in to see your morning greetings for awhile now. Sleeping in??
I just finished reading yesterdays posts and had some thoughts regarding the furnished apts. Any tax lawyers on the forum available to tell me if this is a remote possibility?
If those properties were owned by people who only used them occasionally and who also happened to be in a high earnings bracket, could they not be put into a rental pool and rack up losses all the time they sit empty? They don’t acutally want anyone to stay in there vacation home, hence the outrageously high prices. But come tax time their purpose-bought investment condo keeps losing money because nobody will rent it ……
Hot debate. What do you think?
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November 19th, 2012 at 2:25 am 2
New guidelines coming for mortgage insurers
- another round of tightening in a few months. We haven’t even observed the full impact of 2012 CMHC/OSFI rule changes yet! Looks like someone up top is antsy to … un-embiggen the bubble balloon.
Nov. 19 2012
“Canada’s financial regulator will release new guidelines for mortgage insurers early next year, including the government’s CMHC. – but they won’t drag down the housing market as much as the guidelines for banks have, says the country’s banking watchdog…
..Mr. Flaherty moved to put CMHC, which dominates the mortgage insurance business in Canada, under OSFI’s authority earlier this year.”
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November 19th, 2012 at 2:27 am 3
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November 19th, 2012 at 2:57 am 4
@G:
You’re not exactly a ray of sunshine, either.
Hot debate. What do you think?
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November 19th, 2012 at 3:17 am 5
Guys/gals:
Ever heard of a place called 17 Mile Drive? I was there last year (in January – to interrupt the never-ending BPOE grey/rain). It winds through the southerly portion of the Monterey Peninsula, adjoining hoity-toity haunts like Carmel and the Pebble Beach Golf Course. A stunning little road that hugs Pebble Beach and takes you right down to one of the most beautiful coastlines you’ll ever see. Windswept trees, massive rock outcroppings, super-soft sandy beaches, pelicans, sunshine, etc, etc. (They charge you something like $10 just to *drive* it.)
Anywho, there are private homes all along this rarified road, including a number of $20 million palaces – and I mean *true* palaces. Yet you can also buy on the Drive for under a million. And for the sum mentioned in today’s post, you get, well, this:
http://mls.carmel-realty.com/index.cfm?Fuseaction=Detail&MLS=81240090
Plus, you can buy a case of beer for $9. Same thing here runs $25. And don’t get me going about groceries, clothing, or cars. And of course, it was sunny just about every day.
Goes without saying that $2.5 mil for that hole in YVR is beyond lunacy, particularly when virtually everything else is such a damned rip-off.
You know, it’s little reminders such as this – coming at a time when local real estate has just begun to unwind – that makes one realize just how incredibly far this disgusting mess will have fallen when it’s all said and done.
Loving every minute of it. So glad I became a renter.
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November 19th, 2012 at 5:02 am 6
Flaherty’s rule changes will bite hard: mortgage brokers
The economy is at risk all right – the fake economy based on ever-increasing consumer debt which these people have been pushing. That’s what’s gone too far. Sure didn’t hear these jokers complaining when Jimbo fuelled the ride up in 2006.
Just leave the keys to the Bimmer on the counter guys.
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November 19th, 2012 at 6:47 am 7
Last week in The Daily Beast:
“Vancouver has been a popular destination for Chinese, driven in large part by its proximity to China and its spectacular feng shui,” notes Jamie MacDougal of Sotheby’s International Realty…But MacDougal notes that Chinese offshore buyers arriving in Vancouver spiked to truly unsustainable levels in 2011, during which bidding wars were regular events and property values rose by the week…
The current market, notes MacDougal, has changed from one in which Chinese speculators were trading among themselves to one in which the market is “flooded with inventory” and “mainly Chinese sellers” are responsible for the supply. MacDougal’s thoughts are backed up with hard facts. The Real Estate Board of Greater Vancouver notes that in September 2012, the number of transactions of detached, attached, and apartment properties fell 32.5 percent from September 2011. Further, the total number of residential property listings increased by 14.1 percent over the same period—with 4.1 percent of that increase occurring in August 2012 alone. Anecdotal evidence of waning Chinese interest appears to conform to the actual data.”
http://www.thedailybeast.com/articles/2012/11/12/vancouver-real-estate-market-unlikely-victim-of-china-slowdown.html
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November 19th, 2012 at 7:50 am 8
From Mish’s blog:
How Sustainable are China’s Copper, Cotton, Steel Imports? What About Chinese Purchases of Canadian and Australian Real Estate? Fresh Thinking on Balance of Payments
Bull!, do you have anything to add?
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November 19th, 2012 at 8:15 am 9
@Makaya
“I suggest demand for real estate is likely to plunge once real estate investment is no longer consider a safe haven.”
I am not a RE bull, but I have something to add. What if Chinese rich people who are attempting to launder ill-gotten money out of China and park their money in Van RE view RE losses as the cost of laundering money? Let’s say Van RE goes down 50% in price. That means the Chinese investors still have the other 50% of their capital–that may be more than what they would have if they left their money in China and the Chinese authorities confiscated it or it was lost in a Chinese RE crash. Not even the most extreme RE bears are predicting a 100% drop in Van RE prices–bears ackowledge that Van RE will hold some value (just much less than today’s inflated valuations). The small amount of value that Van RE holds during this crash may be enough to saitisfy some Chinese who are looking to preserve capital derived from unethical/illegal means in China.
I don’t think your disagreement with Pettis is “slight” at all. This is a very significant disagreement. You seem to be saying any downturn in RE prices in Van will mean Van loses its “safe haven” status and Chinese investors walk away. But Pettis is saying that as the Chinese economy goes through tough times, Chinese investment in Canadian RE may **INCREASE** as the desire to get money out of China becomes more urgent. A 50% loss on Van RE prices may seem like a small price to pay for a Chinese rich person looking to preserve capital in such an environment. Ironically then, tough times for the global economy may actually be a boost to Van RE. I don’t like any of this any more than the next RE bear, but I am just trying to keep my mind open to the possibilities.
Hot debate. What do you think?
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November 19th, 2012 at 8:23 am 10
Correction to previous post:
“I don’t think your disagreement with Pettis is “slight” at all. This is a very significant disagreement.”
It was Mish saying they had a slight disagreement with Pettis, not Makaya. I misread where the quote from Mish’s blog ended. Sorry.
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November 19th, 2012 at 8:31 am 11
A quote from Pettis on Mish’s blog post linked to by Makaya:
“My point more generally is that growth in China is likely to be negatively correlated with Chinese demand for foreign real estate and positively correlated with Chinese demand for commodities.”
Stated differently, negative growth (ie. recession) or perhaps even just slowing rate of growth in China is **POSITIVELY** correlated with Chinese demand for foreign real estate and **NEGATIVELY** correlated with Chinese demand for commodities.
**IF** these correlations are true and **IF** the Chinese economy is in for a rough patch, then this argument is a BULLISH argument for Vancouver real estate and a BEARISH argument for commodities.
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November 19th, 2012 at 8:35 am 12
@Makayana
For once, I disagree with you. Those investors have the choice to invest in many other countries and the US is trying hard to attract them. Why buy an asset that is falling in value?
They became attracted to Vancouver RE after the Olympic media buzz. 10% appreciation of an expensive home, good schools, trendy destination, Mom could come over with the kids and make $100,000 by just staying home. I bet in the last 18 months they discovered high taxes, high prices for everything, continuous rain (2011 was a great one!), traffic congestion. The world class city, aka BPOE, appeared like a regional centre with nice Feng Shui and a lot of boredom. Some wives even called it ‘immigration’ jail. And I am not sure they felt welcome in all neighbourhoods. And, not to offend anyone, but the education system is nice, but not stellar (I was a lot more impressed by schools in Eastern Canada) and UBC is not considered ivy league beyond the borders of BC. Now they realize that the government is not as kind as it first seemed, chasing people who pretend to be here when they are in China, now talking about tracking those who immigrated in Quebec and moved to Vancouver. Meanwhile, the new PRC government is not gonna do anything drastic about corruption for the next 5 years.
For speculators: Vancouver is toast, so they will take their money and invest somewhere else.
For immigrants: they might consider other destinations. I remember a Chinese person on this forum saying we always underestimate the herd mentality of Mainland Chinese people.
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November 19th, 2012 at 8:39 am 13
Sorry , I meant ‘disagree with MM’, not Makaya…
I should drink my breakfast before typing…
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November 19th, 2012 at 8:52 am 14
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November 19th, 2012 at 8:56 am 15
@ Bull Bull Bull:
I hope they enjoyed the weather!
Hot debate. What do you think?
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November 19th, 2012 at 9:15 am 16
@Painted Turtle:
I hope you are right! I really detest Chinese investment in Vancouver real estate driving up prices and pushing out locals.
The argument I laid out that you are disagreeing with is not an argument I am married to. I was just getting my argument from the quotes by Pettis in the Mish article that Makaya posted. I don’t know which argument is right, Pettis or Mish. Both arguments seem logical to me.
It is interesting to point out though that your argument about why the Chinese may be turned off Vancouver real estate is all about individual Chinese subjective reactions to life in Vancouver. At this juncture, the arguments quickly depart from economic fundamentals/quantitative statistical stuff into subjective human experiences. The messy reality is that most people are not entirely rational economic actors. People make their decisions in part based on subjective experiences and not just numbers. Maybe you are right and the Chinese who have recently bought here will decide they just don’t like living in Vancouver–whether it be the rain, the schools, or the homeless people begging for spare change. But I can just as well see it going the other way. Maybe the Chinese who came to Vancouver in 2011 to buy real estate will fall ever more in love with the city as they get to know it. Maybe the rain will grow on them. Maybe they will learn to not let the rain bother them. Many many thousands of Chinese who immigrated to Vancouver for decades before them in the 20th and 19th centuries have become accustomed to living here. We’ve had Chinese immigration to Vancouver throughout our history and very few Chinese have endured one 10-month stretch of rain and decided to book it. They learned to live here. The most recent newcomers may learn as well. Or the rain could drive them to sunnier climes. It could go either way.
Maybe rich Chinese people looking to launder money out of China are not really so focused on economic fundamentals. Maybe they don’t care about losing money in a down RE market because they can see it as the cost of laundering money, as I argued earlier. Maybe then the subjective irrational emotional stuff matters even more in this scenario. In essence then, the Vancouver real estate market is at the mercy of the fickle and subjective tastes of Chinese millionaires who derived their wealth through shady/unethical means. Who knows which real estate market will be the taste of the year next year? Economic analysis stops to matter at a certain point.
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November 19th, 2012 at 9:38 am 17
Why would Chinese invest and move to US or anywhere else but Vancouver? They have dim sum restaurants here, their paper, TV, radios, their elected officials, even houses are built with Chinese kitchens. even ATM machines are programmed in Mandarin. Why would you move somewhere else ?
Hot debate. What do you think?
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November 19th, 2012 at 9:39 am 18
I know, it’s great fun, and so easy, to find ridiculously overpriced old bungalows in Vancovuer and compare to the fancy mansions you get for the same money somewhere else. But, to be fair, look at what else you can get for 2.5 millions in and around Vancouver:
http://www.realtor.ca/propertyDetails.aspx?propertyId=12479913&PidKey=211628913
http://www.realtor.ca/propertyDetails.aspx?propertyId=12124001&PidKey=898338562 (a leasehold, I know, but darn nice)
http://www.realtor.ca/propertyDetails.aspx?propertyId=12588105&PidKey=904102069
Hot debate. What do you think?
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November 19th, 2012 at 9:46 am 19
@MM: So before we get into the “Chinese will favour real estate assets over anything else” maybe we can take a step back and ask a few things:
1) Is real estate still seen as a safe investment in the long run when prices are seen to be falling at (say) 5% per year?
2) Are there times in history when certain Asian economies known for propensity for real estate investment (say Hong Kong) have turned sour?
3) Why would an offshore bank account with government securities be any less safe than a real estate deed whose funds are traceable?
4) Do we have a history of the behaviour of investment-driven Asian economies’ propensity to liquidate foreign-held assets vis-a-vis locally-held ones?
The statement Pettis made is in direct opposition to Vancouver’s experience over the past year, and in opposition to the accumulation of “luxury” items like wine and art that had been the hallmarks of Chinese wealth diversification in years’ past. I’m not one to argue with Pettis too much because I respect his arguments and am nowhere near as versed in the issues in China but his real estate comments are a bit of an enigma to what I’m seeing on the ground.
Hot debate. What do you think?
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November 19th, 2012 at 9:48 am 20
@MM: “What if Chinese rich people who are attempting to launder ill-gotten money out of China and park their money in Van RE view RE losses as the cost of laundering money?”
You need to look up the definition of money laundering. Buying real estate does not launder money in any way, shape or form. If they are looking for a ‘safe haven’ why not just put the money in a Canadian bank or even better a Swiss bank account? Much more liquid. Real estate can be easily confiscated and all transactions are public record. It is not a good place to hide money. Regardless of where you get the money there is no reason to put it into something that is declining in value when there are so many better options out there.
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November 19th, 2012 at 9:58 am 21
@MM: Also on Canada as a “safe haven” for foreign wealth, consider some of the actions undertaken in the past year or so by our much-hated governments:
- Hold on investor immigrant applications
- Requirement to declare income for mortgage qualification
- Kenney complaining about provincial nominee program loopholes
- BC suspending “suspicious” provincial nomination applications
- Quebec getting severe pressure to curtail its nominee loopholes
- No interim HST rebate for houses $1mm+
- Removal of MI for $1mm+ homes
- Rejecting residency applications, apparently mostly to middle-eastern immigrants
Not that these have quenched the flow of foreign capital but they are all things that make investment in Canada less fertile. There may be more to come over the next year, we’ll have to see how closely Harper is willing to work with China’s Xi on his nation’s potential anti-corruption salvo.
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November 19th, 2012 at 11:13 am 22
This seems to rest on the premise that wealthy Chinese favour real estate over everything else, even when it is falling in value. Will they double down, or will they fold? Why wouldn’t they redeploy their money to safe heaven banks (Swiss, Cayman, etc), or into western government bonds, which are not losing value, are not costing them 1000s of dollars every year, and where foreign immigration and tax authorities aren’t hassling them constantly? By all indications, the really wealthy aren’t very keen on leaving China, it is only the upstart “middle class” of unconnected and uncorrupt, who are of modest means by western standards, who want to leave China so they, or at least their children, can get ahead.
Hot debate. What do you think?
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November 19th, 2012 at 11:17 am 23
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November 19th, 2012 at 11:18 am 24
Here’s a quick Rob Carrick interview about how the new regulations will behave with dropping values.
There are some stats thrown around at the outset, including:
“Only 4% of Canadians have less than 5% equity in their houses.”
That’s a weird stat. I suspect he means Canadian households, and it’s not clear whether he’s including renters instead of just mortgage-holding households, which would of course make the proportion of high-LTV mortgages sound lower than it actually is.
(That’ll teach me for trying to get useful stats out of a face-to-face interview, but the guy really could’ve tried harder to make some sense…)
Anyway, he does point out that high-LTV in combination with a HELOC might well put borrowers offside with the regulator if house prices dropped. In that case the bank would freeze the LOC until the homeowner could pay it down sufficiently.
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November 19th, 2012 at 11:31 am 25
Yeah, Vancouver is over priced. But Cambie street was re-zoned as high density so these houses will soon be torn down and replaced with sky boxes that fetch 300-400k each. So the comparison is not valid.
Has this blog turned into what it hates most? Mindless droning of one side of the story?
It seems that rational discussion here is becoming more and more rare. This place is turning into an echo chamber for bears.
Hot debate. What do you think?
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November 19th, 2012 at 11:39 am 26
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November 19th, 2012 at 11:50 am 27
@Many Franks: “That’s a weird stat. I suspect he means Canadian households”
Complicated even further by the fact that not every household has a mortgage (some have clear title). Here’s a link to some more stats :
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/06/caamps-spring-mortgage-report-2012.html
They say: ‘Homeowners with less than 10% equity: 5% (Among homeowners with mortgages, the number is 9%. This can change quickly, of course, depending on home price movements.)’
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November 19th, 2012 at 12:00 pm 28
@Ok, But: “It seems that rational discussion here is becoming more and more rare. “
You mean how many of those Cambie lots were bought at prices well above what can be recouped after the City charges CAC? I agree the comparison isn’t fair because of redevelopment potential but the other side is how dumb some of the recent purchasers of these properties were. Developers were LOLing at the prices they were paying and even former planning poobah Toderian stated he thought the purchases were ill-advised.
If anything the focus on Cambie should be on how “dumb money” is, as was put aptly in the comments yesterday, alive and well in Vancouver.
Is that too “echo chamber” for you?
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November 19th, 2012 at 12:06 pm 29
@Anonymous: ….Buying real estate does not launder money in any way, shape or form….
Small scale development can.
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November 19th, 2012 at 12:07 pm 30
Cambie corridor: Not much sale activity there lately… Houses for sale sitting for many months…
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November 19th, 2012 at 12:09 pm 31
@Potomac:
Have you traveled much? You could get the same thing in a lot of American cities. Definitely LA, Bay Area, Seattle even.
Theres “hot chinese money” everywhere, not just Vancouver. The only difference is in Vancouver, a larger amount of sheep bought into the notion of Buy Now or Be Priced Out Forever. There’s a gambler mentality and culture here. Remember this is where the VSE was, and still a hotbed for scams, stock fraud, drug production, and yes HAM. Point is that, its not just HAM. People of all races, have bought into real estate, as a game. For example, your standard Yaletown yuppie probably owns 2 DT condos.
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November 19th, 2012 at 12:11 pm 32
Dunno what all the fuss is about wealthy Chinese driving up property values. That was a year and a half ago. They’re now pulling out in droves.
Just take a look at all the “for sale” signs in the British Properties which probably has a higher percentage of Chinese than Richmond.
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November 19th, 2012 at 1:03 pm 33
@MM: “What if Chinese rich people who are attempting to launder ill-gotten money out of China and park their money in Van RE view RE losses as the cost of laundering money?”
This is probably a very accurate assessment, and losing some money as the “cost of doing business” is exactly the thinking behind one of the most common money laundering schemes here in BC.
Drug dealers here in BC have people to go to local casinos with to gamble the drug proceeds and turn illegal drug money into legit cash. Here’s how:
- drug dealer has $10,000 brought to casino to be gambled
- money is turned into $10,000 in chips in any way that is untrackable
- chips are brought back to cashier in exchange for money and a RECEIPT
- illegal money is now legit
So say the chips lose value of a few thousand in the cost of the exchange of chips for money, it is just ‘the cost of doing business’.
Vancouver RE is a great way to get money out of China, and I agree with Pettis over Mish on this one.
Hot debate. What do you think?
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November 19th, 2012 at 1:07 pm 34
CBC: Credit reporting errors costing Canadians
Canadians are being shafted from taking out even more credit than they already are? Scandalous. Top of the agenda for the finance standing committee meeting.
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November 19th, 2012 at 1:08 pm 35
The problems with getting legitimate businesspeople to come here, as we see from the suspension of Visas, speaks to the our economic problems. There isn’t much real opportunity here. Vancouver is on the decline and in a region that is getting the money sucked out of it by multinationals. Once HAM comes to terms with the BC’s lack of an economic future, they will have their kids begin their careers elsewhere.
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November 19th, 2012 at 1:09 pm 36
The article doesn’t mention that the Cambie Corridor will mostly be re-zoned for high-density residential developments up to six stories and these prices are for the land-value. It’s definitely a windfall for all the lucky owners, as their houses probably doubled or tripled in value in a matter of a few months.
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November 19th, 2012 at 1:10 pm 37
@Many Franks:
““Only 4% of Canadians have less than 5% equity in their houses.”
That is a large number considering:
1. The 0/40 was eliminated long enough ago that those who bought with it would have paid off 5% of their principal by now.
2. The only part of Canada which has seen a sustained decline over the last few years is BC outside of Vancouver and Victoria. Alberta is still down from the 2007 peak but the rise and fall (and partial bounce) were rapid enough that not many buyers would be down >5% from what they bought for.
3. No major Canadian market east of Alberta has started falling yet.
I find it comical that anyone would interpret such a statistic to mean that things are fine, when it really only means we’re just past the peak collectively. I’m sure the number for the US in early 2006 was smaller.
Hot debate. What do you think?
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November 19th, 2012 at 1:13 pm 38
@All quiet on Snob Hill:
“Just take a look at all the “for sale” signs in the British Properties which probably has a higher percentage of Chinese than Richmond.”
How do you know it’s the Chinese who are selling. Maybe it’s old white folks who think they can sell to Chinese buyers who aren’t there.
Same effect on the market though.
Hot debate. What do you think?
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November 19th, 2012 at 1:24 pm 39
More Chinese in BP than Rmd? Nope.
http://www.vancouversun.com/Vancouver+maps+ethnic+makeup+Metro+Vancouver+interactive/5553001/story.html
Why say “probably”, info is available on line quickly.
Hot debate. What do you think?
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November 19th, 2012 at 1:38 pm 40
@jesse:
“1) Is real estate still seen as a safe investment in the long run when prices are seen to be falling at (say) 5% per year?
2) Are there times in history when certain Asian economies known for propensity for real estate investment (say Hong Kong) have turned sour?
3) Why would an offshore bank account with government securities be any less safe than a real estate deed whose funds are traceable?”
Good questions, however if you look at this from a diversification/getting money out of China point of view, that answers your first 3 questions. And we are obviously talking about a huge amount of hidden money; see second paragraph of each link:
http://www.businessweek.com/articles/2012-03-01/the-chinese-communist-partys-capitalist-elite
http://world.time.com/2012/09/04/how-a-ferrari-crash-may-have-unsettled-chinas-leadership-transition/
“4) Do we have a history of the behaviour of investment-driven Asian economies’ propensity to liquidate foreign-held assets vis-a-vis locally-held ones?”
Don’t really see the point/relevance of your 4th question when dealing with the uber rich, they tend to have a better track record of holding onto their wealth.
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November 19th, 2012 at 1:41 pm 41
I’m looking for a house in Denver right now, around 650 to 700K price range.
For shits and giggles type that range into this web site.
http://www.denverrealestate.com/
It will make a Vancouver house hunter spew.
If you really want to see some crazy stuff, type in a million dollars.
The houses actually look like you would think a million dollar home would look like, not like crack shacks, lol.
Hot debate. What do you think?
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November 19th, 2012 at 1:46 pm 42
@ Franks
I think one of the best-kept secrets of the housing bust is the under-reporting of insolvency of marginal home-owners.
The house finance industry needs to report that there is a solid equity cushion “on average” in order to continue to write new mortgages where the is very little in the way of equity.
The low reported percentage of low-equity / negative-equity homeowners is skewed by the following factors:
a) Over-estimation of the value of homes at the time of purchase. Every multiple offer westside home sale of the spring 2011 was deemed to have been made at least at “fair value” by the lender. In reality, a lot of the goofier home purchases of 2010-11 should have been counted as negative equity from day one.
b) Non-consolidation of the home buyer’s financial liabilities. OK, I borrow $20,000 from a line of credit and plunk that down on a $400,000 condo in Whalley. How does that give me a real 5% equity position? Well, it does if the mortgage broker and the bank loan officer says it does.
c) Not marking-to-market the value of the house. The 10% down purchaser of 2010, just might be in a -5% negative equity position today, despite what the HPI says.
d) Not keeping track of additional consumer debt build-up. Last year I might have had $50,000 in equity, but if you deduct the $25K for Mazatlan HELOC withdrawal.
The banks know the real score, however, using the techniques above, they can stretch out another year of loan underwriting before TSHTF.
First they say that real estate only goes up. Then they say, well it goes down sometimes in the US but it’s different here. Then they say, it’s a balanced market. Then they say the correction, but we can handle it because there is so much equity built up. Then they just shut up. We’re almost there!
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November 19th, 2012 at 2:59 pm 43
@metalhead: ….It will make a Vancouver house hunter spew….
Come on! Look a the great weather Vancouver has compared to Denver(try to do that without spewing).
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November 19th, 2012 at 3:15 pm 44
@spit: ” however if you look at this from a diversification/getting money out of China point of view, that answers your first 3 questions”
The articles you cite provide no evidence to support a continuous flow of capital out of the country, rather they include some large numbers and you are using this as evidence how the outflow of money cannot abate. I see no relationship there.
“Don’t really see the point/relevance of your 4th question when dealing with the uber rich”
We have had several examples in Asia over the past several decades of significant slowdowns in economic output. The result of this has been a retrenchment of capital to cover outstanding debts on local soil or to cover up other problems in attempts to maintain power.
If we are going to make the argument that Asian capital can continue to buoy real estate values not only in Vancouver but also in other areas there needs to be either some decent argument why capital flows can continue even during a significant slowdown in GDP or an acknowledgement that the process is going to be messy and there are downside risks to cities like Vancouver.
All I’ve heard is “the Chinese elite are rich beyond our comprehension therefore will continue to buy real estate”. I can’t validate that, but maybe it’s phrased in a way that it’s impossible to validate.
Hot debate. What do you think?
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November 19th, 2012 at 3:42 pm 45
LOL, good one Anonymous.
Denver does no thave Southern Cal. weather but it does average 300 days a year of sunshine.
btw, this is one I’m thinking about. Need to find out more about the HOA first.
http://www.denverrealestate.com/property/17068949/1686-SOUTH-WILLOW-CT-Denver-CO-80231
it’s amansion compared to anything in the lower mainland for 700K.
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November 19th, 2012 at 3:43 pm 46
Thanks for the map Apocrap.
I stand corrected.
Couldn’t help noticing that the map shows Richmond broken up into many small pockets of different colors whereas the BP area covers everything from the Cap river to Chairlift Road.
Most of the Chinese population in the BPs is concentrated in the newer Chartwell/Canterbury/Whitby areas, and the older established area to the east not so much.
Patriotz could be right that the sellers might be old white folks. Could be a combo of both, but it seems to me that the FS signs are the heaviest in the Chartwell area and west. What I know for sure, is that not much is moving, despite all the “price reductions”.
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November 19th, 2012 at 3:55 pm 47
Hold on now guys.
Do you think it might be remotely possible that the price of the Cambie place could be a misprint and was intended to be $1,548,000?
although even that sounds too high, but at least believable.
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November 19th, 2012 at 4:02 pm 48
@HAM Solo:
Consumer debt outside the mortgage isn’t relevant to equity on a property because the lender’s lien trumps it. Equity represents the lender’s cushion against price declines. It’s not the same as the borrower’s net worth.
I agree that the net worth situation is a lot worse then what you’d get just looking at RE equity.
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November 19th, 2012 at 4:04 pm 49
Interesting discussion on the RE market on Beauty and the Beast, CBC 6:48pm local time.
Amanda and the talking head describe a situation that looks a lot like the US in 2006 but avoid using the “B” word.
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November 19th, 2012 at 4:09 pm 50
A couple of interesting Renniestats in this Globe&Mail article:
http://www.theglobeandmail.com/life/home-and-garden/real-estate/slow-market-but-some-vancouver-condo-projects-still-selling-quickly/article5417301/
…
…
If what Rennie says can be trusted, this seems to back the view that a lot of the madness is being caused by young Canadians with no money (and no assets to sue for if they back out of a presale contract.)
Hot debate. What do you think?
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November 19th, 2012 at 4:14 pm 51
@Apocarypse Mao:
That was from the 2006 census – things are obviously much different in certain areas, like British Properties, Shaughnessy etc, now compared to 6 years ago
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November 19th, 2012 at 4:16 pm 52
@BLISTINGAGENT:
“The second- or third-generation Chinese buyer is a big driver of the condo market”
Should we assume that when no racial information is given, they are talking about white people?
Reports like this leave me scratching my head. Would we ever see something that says “Steveston, with it’s well established Caucasians community, is very desirable to white people.”
Hot debate. What do you think?
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November 19th, 2012 at 4:22 pm 53
@HAM Solo: “OK, I borrow $20,000 from a line of credit and plunk that down on a $400,000 condo in Whalley. How does that give me a real 5% equity position? Well, it does if the mortgage broker and the bank loan officer says it does.”
Even if you used $20K from savings, it will wouldn’t be 5% equity due to CMHC insurance which is usually added on top of the mortgage.
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November 19th, 2012 at 4:23 pm 54
@BLISTINGAGENT:
“28 per cent of our buyers answered in an exit survey that they were receiving down payments from mom and dad, and grandparents.”
A large number of whom are using HELOC’s I think.
Which means that if house prices fall, this supply of funds will be cut off. Which means fewer people who can buy condos at current prices, which means lower condo prices, which means fewer condo owners who can sell and move up to houses, which means still lower house prices.
Rinse and repeat.
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November 19th, 2012 at 4:30 pm 55
Jesse,
Investor Immigrant applications were frozen last year.
What they fail to tell you is that there is a 6.5 year backlog. 165,000 millionaires/dependents are in the waiting to get their application approved .
Hot debate. What do you think?
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November 19th, 2012 at 4:36 pm 56
Hidden due to low comment rating. Click here to see.
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November 19th, 2012 at 4:37 pm 57
Imagine this happening when the mortgages for preseales close in vancouver.
“One mortgage company asked me, ‘How could I give you a mortgage on a property that is losing money every single day?” said one devastated buyer, a blue-collar worker who borrowed the $175,000 down payment from his immigrant parents and owes $750,000 at month’s end.
http://www.thestar.com/business/article/1289698–trump-tower-developer-suing-7-disgruntled-investors-to-close-deals-they-now-regret
Hot debate. What do you think?
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November 19th, 2012 at 4:50 pm 58
@Moreinfo: What is it about Canada and immigration backlogs? Do other countries do this?
We make promises to people all over the world that we can’t keep and shouldn’t keep. Why is our system so dysfuctional in this way?
Hot debate. What do you think?
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November 19th, 2012 at 4:55 pm 59
New Listings 134
Price Changes 135
Sold Listings 108
TI:17311
http://www.paulboenisch.com
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November 19th, 2012 at 4:58 pm 60
@s: ““One mortgage company asked me, ‘How could I give you a mortgage on a property that is losing money every single day?” said one devastated buyer, a blue-collar worker who borrowed the $175,000 down payment from his immigrant parents and owes $750,000 at month’s end.”
That’s hilarious! How do you spell: ‘Looser Trap’? C-O-N-D-O P-R-E-S-A-L-E-S.
I love the smell of foreclosures in the morning.
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November 19th, 2012 at 5:02 pm 61
Here’s another example of a West Vancouver Loser.
4454 Regency Place, West Vancouver
List Price = $5,980,000
http://www.ecorealtyinc.ca/listing?id=259577824
They can’t sell the place, so they have now listed it for rent at $12,000/month – http://www.uniqueaccommodations.com/viewproperties.asp?txtprop=3631
It’s been listed for over a month and hasn’t rented yet. Even at a 500:1 rent-to-price ratio they can’t rent it out.
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November 19th, 2012 at 5:17 pm 62
Thanks Observer.
Didn’t notice that the map was based on 2006 census.
Six years is a long time, so maybe I was right about the Chinese population in the BPs afterall.
Many of those “for sale” sings are in Chinese.
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November 19th, 2012 at 5:19 pm 63
Hidden due to low comment rating. Click here to see.
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November 19th, 2012 at 5:19 pm 64
@Moreinfo: Check out investor immigrant intake. It is down in 2012 compared to previous years.
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November 19th, 2012 at 5:27 pm 65
@Conrad:
Yeah, one day is a really good sample to build a case around, especially when all the days around it show wildly different numbers.
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November 19th, 2012 at 5:28 pm 66
@spit: “Drug dealers here in BC have people to go to local casinos with to gamble the drug proceeds and turn illegal drug money into legit cash. Here’s how:”
The difference is you can buy casino chips with cash with no transaction record. If you want to buy real estate you can’t just hand over a briefcase full of cash anonymously. The cash has to go through a bank. If you can get the money in a bank the money is already laundered. Buying real estate can only be done with laundered money. Very different from casino chips.
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November 19th, 2012 at 5:29 pm 67
Anonymous,
That’s “loser trap” not “looser trap”. Sorry for that one coming from a typo-error king myself
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November 19th, 2012 at 5:33 pm 68
Here’s another good sign o the times:
2107 W 36TH AV, V6M
MLS# V96002
60 ft frontage
Original ask was $2.098m
Sold after 110 days for $1.350m
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November 19th, 2012 at 5:43 pm 69
Sell-newlist from
November 2011
November 2010
Month-end average for both years: 85%. Average for first 12 days: 69% and 73%.
CAAMP is getting mighty agitated about next year. What’s up with that.
Hot debate. What do you think?
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November 19th, 2012 at 5:44 pm 70
@Patiently Waiting:
There are three big ethnic special interest groups each with a phalanx of associations and lawyers and “consultants” – then there is the corporate interest – they want cheap labour and a death to unions – then there is the government, they want an expanding tax base – though the Fraser institute study said they are a net drain for many years.
Kenney wants grandparents to secure votes for their horrible little gang.
Then there is this to chew on:
“If Rome had not engulfed so many men of alien blood in so brief a time, if she had passed all these newcomers through her schools instead of her slums, if she had treated them as men with a hundred potential excellences, if she had occasionally closed her gates to let assimilation catch up with infiltration, she might have gained new racial and literary vitality from the infusion, and might have remained a Roman Rome, the voice and citadel of the West.” – Wil Durant
Did you read that, kenney? “occasionally closed her gates” – what a concept, eh?
I spend a lot of time with immigrants and they are fond of telling me they are equal in character and ability as my Scottish and English settler ancestors. I didn’t know collecting subsidies and washing dishes was equal to clearing and farming the land and hewing your own home out of the timbers, but that’s another story. Remember, we’re “a nation of immigrants” now. Tell that to the millions wirhof first nations
Hot debate. What do you think?
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November 19th, 2012 at 5:45 pm 71
Too many fly by night bulls have equated capitalism with the easy flow of credit and printed money. Too bad those in authority have made it easy for them. All of the various sundry and hangers-on who have ridden too long on that easy street are now spread all over this week’s financial broadsheets. Schadenfreude.
Hot debate. What do you think?
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November 19th, 2012 at 5:46 pm 72
Sell-list average for first 12 days of November 2012 (one day missing): 58%.
Hot debate. What do you think?
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November 19th, 2012 at 5:46 pm 73
Another 108 idiots removed from the potential buyers list.
Hot debate. What do you think?
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November 19th, 2012 at 5:59 pm 74
I’ve been tracking South Surrey (specifically Morgan Creek, Elgin, Ocean Park and Grandview) for a while in the 1.2M+ range and things are getting ugly…
* 2 sales this month on an inventory of 205 so projecting totals for the month it is roughly an MOI of 60… yeah, 5 years…
* Out of 134 properties in the > 1.5M range there have been 0 sales this month.
* Both sales this month were just above assessment (2% and 4% above). Over the last couple of months, just about all of the sales have been near or below assessment compared to nothing within 20% of assessment as recently as this summer.
* In Ocean Park / Crescent Beach 1 of 45 listings are priced less than 5% above assessment
* In Elgin 6 of 74 listings are priced less than 5% above assessment
* In Morgan Creek 6 of 48 listings are priced less than 5% above assessment
* In Grandview 1 of 46 listings are priced less than 5% above assessment
So we have a place where almost nothing is priced reasonably and nothing is selling. Once the sellers clue in things will get interesting. I’m expecting White Rock to be the new Richmond shortly
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November 19th, 2012 at 6:19 pm 75
You just can’t underestimate the stupidity out there.
I fully believe a lot of sellers still think the market will be much better in the Spring and will list then.
The RE industry has really been pounding the MSM table on the “soft-landing” scenario and many still believe it.
It’s going to be nice to watch people wake from their delusions.
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November 19th, 2012 at 8:00 pm 76
Spain should ask Kenney for advice how to perfect this proposal. We are ultimate “whore” country in giving up citizenships.
“Reuters reports that Spain is considering offering rich investors from countries such as Russia and China the right to settle in return for them buying up property in the stagnant housing sector. ”
http://www.zerohedge.com/news/2012-11-19/spanish-casa-and-residency-es-su-casa-200000
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November 19th, 2012 at 8:13 pm 77
@an observer
White Rock condos have already taken a large drop and will continue to do so. The amount of supply of new condos coming down the pipeline is unbelievable. The old condos, a lot from the 70′s, have no value and will have lots of repairs needed down the road. #1 on your weekly drop this week is a perfect example. I haven’t noticed the same drops in SFH, but very low sales as you mentioned. The few homes that have dropped to more reasonable levels I have seen sell quickly, but most of what I see matches what you say, homes sitting for months on end with ridiculous asking prices.
Hot debate. What do you think?
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November 19th, 2012 at 8:14 pm 78
According to this site, Point Grey has 32.4% immigrants. Fewer are from China, after UK, Hong Kong and USA:
http://www.blocktalk.ca/vancouver/point-grey/lifestyle/
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November 19th, 2012 at 8:16 pm 79
@lurker
so trying to sell at 1 888 888 did not help?
http://www.ecorealtyinc.ca/listing?id=259606107
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November 19th, 2012 at 8:31 pm 80
@Lurker:
Actually they’ve been trying since the spring, originally listed at $2.298M on March 19. Those were some seriously delusional sellers.
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November 19th, 2012 at 8:34 pm 81
Whoa, did I miss something? When the help did we have another 17k party, werent we at 16 and change last week?
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November 19th, 2012 at 8:36 pm 82
Help should be help,….. stupid tablet
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November 19th, 2012 at 8:53 pm 83
@Troll: And assessed at over 1.9M
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November 19th, 2012 at 9:09 pm 84
@Can’t Wait:
No, because Chinese is not a race. It is perfectly reasonable to say a recent arrival to a foreign country would prefer to purchase in an area with a well established community of his brethren. Whether that’s Chinese or Persian or Portugese.
Hot debate. What do you think?
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November 19th, 2012 at 9:12 pm 85
@an observer: / That was from the 2006 census – things are obviously much different in certain areas, like British Properties, Shaughnessy etc, now compared to 6 years ago///
Would that be the new Thaughnethy or the old Thaughnethy?
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November 19th, 2012 at 9:15 pm 86
@Devore:
“It is perfectly reasonable to say a recent arrival to a foreign country would prefer to purchase in an area with a well established community of his brethren.”
Ok, but what’s that have to do with the price of tea in China? The article isn’t talking about immigrants, it’s talking about second and third generation Canadians of Chinese ethnicity.
“The second- or third-generation Chinese buyer is a big driver of the condo market”
Also…
“Chinese is not a race.”
when people talk about Chinese people they are talking about the Han Chinese ethnicity. That’s the common every day usage in North America. And considering that over 90% of the people in PRC are Han, it seems very reasonable to me.
Hot debate. What do you think?
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November 19th, 2012 at 10:02 pm 87
Hidden due to low comment rating. Click here to see.
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November 20th, 2012 at 12:04 am 88
@Can’t Wait:
it’s a little higher than that:
https://en.wikipedia.org/wiki/Han_Chinese
https://en.wikipedia.org/wiki/Han_Chinese_subgroups
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November 20th, 2012 at 12:09 am 89
@Anonymous:
i never get tired of this joke
today i saw a woman wearing a black jacket and toque actually J-WALK on commercial – in the rain, in the dark – pushing a stroller. i honked as i passed, only to meet her in a store about 20 minutes later. i asked her if that was a good idea, j-walking in the dark, in the rain, wearing black, with her baby in a stroller, and she said:
“It’s actually not that bad.”
you can’t argue with that kind of dumb, no point.
and yeah, she was white, and from what i could tell, buying organic.
Hot debate. What do you think?
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November 20th, 2012 at 12:11 am 90
@Con-Rad:
you know the sell list ratio is skewed LOWER because so many properties have been taken off the market and are now SHADOW inventory, probably waiting to be listed “when conditions improve in the spring”..
you really are a testament to the stupid arrogance of the bulls. i’d think you were trolling if you weren’t so sincere in your pomposity.
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November 20th, 2012 at 12:19 am 91
Regarding Canadian and Australian currency being accepted as reserves:
http://www.bloomberg.com/news/2012-11-19/imf-may-classify-aussie-canadian-dollars-as-reserve-currencies.html
If this happens it could be very supportive for the US and world economies long term. For a country to have the world’s reserve currency is both a rare privilege and a great burden, which the US has shouldered for a long time. The US has to print money (= issue debt) in line with world economic growth. The system is easily gamed by building up excess reserves. Everyone needs reserves, right? But it distorts the US economy, which is a major engine of growth.
One advantage of a gold-backed system is that gold changes hands so trade imbalances must be settled. The problem with a gold-backed system is that anyone who buys gold gets a risk-free claim on world economic growth, because the world’s gold supply usually expands at a much slower rate.
So the hope is to distribute the reserve currency burden more fairly. This means the Canadian and Australian governments might be permitted to run up much higher debt, because that debt is money that the world economy uses to function.
How will it impact Canada? I think the days of an 80 cent loonie being the norm are gone. We should face far more competitive pressures, but reserve status will also help stabilize the value of the CAD and work to flatten out the prices of consumer goods. Canada and its economy may receive more scrutiny than it previously did.
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November 20th, 2012 at 12:32 am 92
#87 @Naked Official #9000: “It’s actually not that bad.”
I’m speechless and horrified.
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November 20th, 2012 at 12:36 am 93
#85 @Can’t Wait: “The second- or third-generation Chinese buyer is a big driver of the condo market”
The second or third generation Chinese is also a big driver of the census. More yellow fever? Beware: we got these people to build a railroad for this nation and now their grandchildren which you went to school with in the 80′s are buying all the condos?
Can we keep the focus on the criminals embezzling dirty money from the PRC? Please?
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November 20th, 2012 at 5:42 am 94
@Naked Official #9000: Yeah sell list skewed lower because of shadow inventory. Makes sense, bears.
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November 20th, 2012 at 7:54 am 95
@Naked Official #9000: I think I saw her in a line up to buy a condo a few weeks ago. She really stood out as she was the only non asian with her parents money.
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November 20th, 2012 at 7:55 am 96
@rp1:
That quote is from Bob Rennie. Direct your criticism at him, not the person commenting on it. Once again, the RE pushers play the “Chinese” (however defined) card on every hand.
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November 20th, 2012 at 9:27 am 97
@rp1:
I agree with patriotz – cool your jets
At the same time – remember your history – Chinese came here of their own volition, believing in new t’ang colonies and “gold mountain” – they also only built the railway in BC – no easy feat, but impossible without the Canadian, English and Scottish engineers and labourers, too.
Do it, you know you want to..
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