How much more will Vancouver prices drop?

Scotiabank is now warning about the housing market falling across Canada.

They are predicting a nationwide drop of 10% over the next two to three years.

That’s the national drop they predict, saying bigger drops are coming to Vancouver and Toronto.

But how much more overvalued are we on a national scale and what sort of drops will we see here and in Toronto to drive national prices down 10%?  They don’t say, but they do remark on how long it took earlier market declines to recover:

The report notes that previous housing market downturns — in the 1970s and 1990s — took eight or nine years to bounce back to price levels seen before the decline.

“Historically, long cycles of rising home prices have been followed by extended periods of persistent softness, allowing affordability to be gradually restored and generating renewed pent-up demand,” the report stated.

The bank also warned that “balance sheets heavily skewed to real estate leave Canadians vulnerable to an adverse shock, including a sharp rise in unemployment and/or a sharp drop in home prices.”

The report predicts a “spillover effect” into construction employment, which — thanks to the massive run-up in house prices — has seen employment grow twice as fast as the economy as a whole.

However, “the full impact of the slowdown may not become fully visible until mid-decade,” the report stated.

Read the full article here.

 

124 Responses to “How much more will Vancouver prices drop?”

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    Village Whisperer Village Whisperer Says:
    1

    Richmond Real Estate agent James Wong, who is out with his November 2012 market report and he makes no bones about his take October’s uptick in sales:

    The sale pace though improved, was not expected to have the momentum to turn the market around. There were some price discounting by motivated sellers, but most home buyers were reluctant to make their purchases.

    Wong also takes a moment to share with his readers what they should expect of the housing market for 2013:

    With the housing market sentiment dampened, absence of of home buyers and Canadian banks having to follow the new lending rules, 2013 will be a difficult year for home sellers, builders and housing developers. The decline in home prices will likely take many years to play out.

    In a market with abundant supply of homes, sellers will lose out. The health of the housing market is best tracked by following the months-of-inventory (MOI) number presented on this site. At current MOI level around 14, it will take some time for the number to improve. This MOI number has to get down from 14 to 10, 8 and then 6 before the market stabilizes.

    With the Canadian Government curtailing credit to deflate the real estate bubble, real estate prices can only decline. Unless the Government makes drastic changes to the new lending rules, home prices will continue to decline for some time.

    If the housing down cycle from 1995 to 2001 downturn is repeated, we could experience home price decline and slow sales for many years. The market is expected to have persistently high number of homes for sale, and below average buying interest.

    Well-loved. Like or Dislike: Thumb up 101 Thumb down 3

    Past upswings from previous busts (I’m not going to call them “recoveries” because it’s the bust that is really the recovery) were driven by a secular decline in interest rates over the past 30 years, the movement of boomers into peak lending years, and an increase in the employment rate (women joining the work force, relatively few retirees).

    All are going to reverse for the foreseeable future.

    Well-loved. Like or Dislike: Thumb up 57 Thumb down 4

    @patriotz:
    “peak lending years”

    I really meant “peak earning years”, but yes household debt can’t get any bigger either.

    :-)

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 3

    The continuing decline and the inevitable bottoming will be a very long process. Not sure if there is a historical precedent that provides us with some guidance regarding the magnitude and duration of The RE bubble collapse? That is, did any European countries or U.S. states ever approach Vancouver’s exuberance? Obviously, prices in places such as Ireland and Arizona were delusional, but when you take into account the miserable price to rent ratio, the exorbitant price to income ratio, and the pervasiveness of ownership were they as (more) mis- priced as the lower mainland? It must be a difficult career balancing for bank economists right now, be bearish enough not to look foolish, but not bearish enough rock the boat by predicting a large collapse.

    I have a gut feeling that things could get ugly, not just for housing, but the economy in general. And, at the end of the day I think that is what the banks are worried about. Also, I know a lot of renters who depend the RE industry for income, so it won’t be just homeowners that suffer. Moreover, the mining industry is also slowing down, if retail and the service sector begin to suffer the feedback loop becomes overwhelming.

    One of the underestimated benefits or renting is mobility, even the bears don’t give it the respect that it deserves. I’m not a doomsdayer and I certainly hope for an orderly decline, but I’m having trouble picturing how that might occur. All that said, my advice for renters is to start doing some due diligence about possible relocation spots. Even if prices drop 30% or more you would be foolish to buy unless you have a secure job.

    Well-loved. Like or Dislike: Thumb up 61 Thumb down 4

    Anonymous Says:
    5

    Not even one week after the US election and war is ramping up in the Middle East. This was predicted months ago in the blogosphere. Israel agreed to relative peace during the US election so Obama wouldn’t lose the anti- war vote. Now with the election over, it’s full steam ahead for war in the Middle East. Sometimes I am shocked by how accurate predictions in the blogosphere are. I totally read on blogs months ago that war would break out in the Middle East after the US election. Blogs are awesome– the only source of real news and impartial analysis/ educated prediction.

    http://www.cbc.ca/news/world/story/2012/11/12/syria-civil-war-assad-turkey.html

    Hot debate. What do you think? Thumb up 23 Thumb down 16

    Just a quick message to announce that I’m finalizing my second article on the Canadian Real Estate for LEAP/2020. As some of you might recall, in April I wrote a first article calling for the imminent collapse of the market. This article had quite an impact since I was interviewed by CBC radio (and declined an interview for CBC TV), and it had been referenced by quite a few publications around the world.

    I’ve been contacted again by LEAP/2020 a couple of month ago to provide an update on the market and anticipate the consequences on the overall Canadian economy, for which I’m saying “If the experience of the real estate collapses in other developed economies is any indication, the burst of the bubble will come at a huge social and economic cost for Canada.”.

    The final version of the article will be published on November 15. As it is copyrighted material, I’m not allowed to reproduce it on this forum, but I will gladly send a copy by private email to all interested VCI members. Drop me an email at fortunatefool00@gmail.com

    Well-loved. Like or Dislike: Thumb up 68 Thumb down 3

    Three potential segments underlie the ~30% decline in sales we’ve seen in 2012.

    a) speculative purchases decline.
    b) fundamental purchases delayed.
    c) fundamental purchases rendered infeasible because of credit tightening.

    If the 30% drop in sales is mostly a) or c) then the outlook for 2013 is for continuing weakness. However, to the extent that (b) plays a role some of 2012’s ‘missing’ demand may appear in 2013.

    We don’t have data to sort this out, so does anyone have personal anecdotes that slot into one of these three categories?

    Well-loved. Like or Dislike: Thumb up 22 Thumb down 2

    Bailing in BC Says:
    8

    @Makaya:

    Go Makaya, go. You are evangelical, spreading the word to the heathens!

    Hot debate. What do you think? Thumb up 14 Thumb down 2

    @Bailing in BC: Talking about Evangelical, here is the last sentence of the article:

    “This is the way the bubble ends, not with a bang but a whimper.”

    The wise man will recognize the reference to The Hollow Men poem from TS Eliot :)

    Hot debate. What do you think? Thumb up 21 Thumb down 2

    Some major wild cards for 2013:
    1. May 2013 provincial election….of NDP (undermining confidence).
    2. Slowing of local BC economy and increasing unemployment – especially in real estate sector of Lower Mainland.
    3. Capital flight from China due to change in leadership (probably drove 2011 bubble, but will we see another wave?)
    4. Momentum and perceptions of Gen Y first time buyers. If they start to believe prices will continue to fall then this is a major kick to the crotch for this market.
    5. As noted by others here as well: Baby Boomers bailing out at any price because they don’t have significant debt loads and can lead the market down. Gen Xers and Yers will probably freeze because they’re locked into negative equity mortgages.
    6. CMHC/OFSI regulations. If they allow “extend and pretend” mortgage renewals for people underwater then this will hold up the market and reduce distressed sales.

    I think #2 is the big one to watch in the near-term. If housing construction starts decline then everyone drinking the Cool Aid in the sector who speculated on condos will be forced to dump them at the same time.

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 3

    Patiently Waiting Says:
    11

    @604x: Two big international wild cards: Syria and the China Seas.

    Filipinos are abandoning nationalism and inviting back the US navy because they are so scared of China. Australia also has a new American base near Darwin. Japan is also nervous.

    Story just released:

    “We cannot fight China. America can. That’s why we need them,” was how 47-year-old Joe Garcia Jr., who sells souvenirs to U.S. sailors on the harbourfront, saw the situation. “The islands China says belong to them are much closer to us. That is why we like President Obama so much. He has recognized our problem and is trying to help us.”

    Read more: http://www.canada.com/Philippines+some+dream+military+glory+days+nationalist+feelings+fade/7535476/story.html#ixzz2C28M2xJf

    This is sounding too much like the pre-WW2 but with China, not Japan, facing against the United States. Meanwhile, unlike back then, Canada is disentangling itself from its tradition Southern ally.

    “Canada is a Pacific nation, too, as Prime Minister Stephen Harper has recently become fond of reminding his countrymen. But his government’s only interest so far is in increasing trade with China. There has been no talk whatsoever of even a modest version of Obama’s military pivot towards Asia to guard Canada’s growing interests there. Unlike the U.S., which is raising its regional military posture while pushing for greater trade, the Royal Canadian Navy maintains a strong Atlantic focus, the Canadian army continues to have more troops in eastern and central Canada than in the West, and the Royal Canadian Air Force uses a base in Ontario as its global hub.”

    The drums of war beat far in the distance, from different directions, but myopic Canadians don’t hear them. Instead we live like its five years ago.

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 3

    @604x: I agree your number 2 is important. While sales have tanked, we really haven’t seen record-busting numbers of new listings. For example, so far in November we are actually under the average amount of new listings for November.

    There simply is no flood of ‘need to sell’ people.

    However, if your #2 comes through, things change. Balancing huge mortgage and credit card payments while employed is one thing–doing so when unemployed is impossible. If #2 happened, then there would be a lot more ‘need to sells’ and things would start to change more quickly.

    Hot debate. What do you think? Thumb up 20 Thumb down 2

    @604x: 3. Capital flight from China due to change in leadership (probably drove 2011 bubble, but will we see another wave?)

    I think #3 will work against the market. People flocked to get their money out before the change in leadership in fear of a crackdown on corruption and money laundering. This crackdown is most certainly happening now. Actually, I believe there will be considerable investigations into the thousands of fraud cases and money laundering with the assistance of the Harper Government to the new regime. Does anyone think that was not discussed in the last visit? Think again.

    In short, if I was HAM in the last 10 years. I would be very nervous.

    Hot debate. What do you think? Thumb up 21 Thumb down 2

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 7 Thumb down 15

    Extend and Pretend Says:
    15

    @604x. Extend and pretend. What a great phrase!

    Extend CMHC insured loans to people who will overpay with the money and pretend this practice won’t cause a huge price bubble.

    Extend immigrant investor visas to “wealthy” applicants from dodgy countries like China and pretend they aren’t crooks.

    Extend EI benefits beyond defined contributions and pretend the unemployed person didn’t have a phony baloney makework job in the first place.

    The RE economy in Canada is all we’ve got, so it’s all extend and pretend 27 by 7 and 365 days a year. Can anybody think of some other ones?

    Hot debate. What do you think? Thumb up 18 Thumb down 4

    Patiently Waiting Says:
    16

    @titanium: I’m torn on these matters, and admit to not knowing enough to figure out where Canada should stand. Trouble is brewing, is all I know, and I don’t think being “neutral” is an option for a small nation (population-wise) with so many resources. What I find most disturbing is how the typical Canadian is going about their consumer lifestyle, digging deeper in debt, blissfully ignorant of these dangers.

    Hot debate. What do you think? Thumb up 18 Thumb down 3

    @Patiently Waiting:
    How about securing the home front against Chinese subversion (spying, corporate takeovers, income tax evasion, indentured labour) before we talk about sending troops to the other side of the Pacific.

    Well-loved. Like or Dislike: Thumb up 49 Thumb down 6

    OT:
    Something to watch closely, Canada may follow this path in a few years:

    “Mariano Rajoy, the Prime Minister, said that the Government would ask banks to halt evictions temporarily and pledged to find a solution … By law families must pay the balance of their mortgages even if they lose their homes”

    http://www.thetimes.co.uk/tto/news/world/europe/article3596859.ece

    Yes, recourse mortgages, same as we have here in Canada. Sounds like a first sign of the Great Spanish Bailout. Now the question is who is going to subsidize the debtors: the banks or the taxpayers? Hint: this year was not stellar for Spanish banks:

    http://www.bloomberg.com/news/2012-06-25/moody-s-downgrades-28-spanish-banks-on-sovereign-risk.html

    Like or Dislike: Thumb up 9 Thumb down 0

    I saw Margin Call last night. It’s OK, a bit thin. But there is a great comment on the responsibility of ordinary joes in the US bubble.
    http://www.youtube.com/watch?v=JvaTjJpoQlg

    (Warning, includes profanity.)

    Like or Dislike: Thumb up 7 Thumb down 1

    @N
    How did you watch it? I can’t find it on Netflix.

    Like or Dislike: Thumb up 1 Thumb down 1

    @Patiently Waiting:
    “This is sounding too much like the pre-WW2 but with China, not Japan, facing against the United States”

    It’s way more complicated this time, everything gone global since Pearl Harbor. And (thinking one step ahead) I wouldn’t hold my breath for those home auctions here in Vancouver (see “Restriction of property rights” section at http://en.wikipedia.org/wiki/Japanese_Canadian_internment).

    We live in interesting times though. Indeed.

    Hot debate. What do you think? Thumb up 8 Thumb down 4

    @VHB:

    I think that “fundamental purchases delayed” might be a bit of an oxymoron. If it really is fundamental, then it cannot really be delayed. If they are delaying it, then the fundamental need must be being met by another means (such as renting or sharing).

    Also, it might not be possible to find any non-speculative purchases in the lower mainland. That is, all RE purchases are currently more expensive than renting. It follows that all purchases are motivated by a hope for future capital gain (or avoidance of future higher prices, which is the same thing). No RE purchases in the lower mainland represent a rational choice to acquire housing in order to satisfy housing needs at the best possible value. Because this is the case, there is no genuine demand to be pent up.

    In addition, as there is an oversupply of housing in the lower mainland, it is easily possible to continue to meet the needs of those who delayed buying by way of rental stock for the foreseeable future.

    In short, in the current situation, speculation alone is capable of driving further price increases. If you believe that speculation is over for the time being, you must also believe that price appreciation is over.

    Hot debate. What do you think? Thumb up 16 Thumb down 2

    @Chivas:

    I have US Netflix (www.unblock-us.com, and a US address/credit card).

    Hot debate. What do you think? Thumb up 7 Thumb down 4

    @N
    I guess i have “Canadian” Netflix :(
    feel like I am in China behind the firewall now :)

    Hot debate. What do you think? Thumb up 17 Thumb down 4

    boogeybear Says:
    25

    Why just a 10% correction nationally?

    Because Scotiabank believes that investors will jump in to save the market when they can rent the properties for a positive cash flow.

    My opinion, won’t happen. Investors are strapped for cash too. And they would also wait for a better deal.

    When dealing with market forces, you can’t estimate bottom. You know the trend, but you won’t know bottom. And it has always been true, that the bigger the upward trend the more severe the downward trend.

    Now if you could somehow short CMHC, because it’s going down.

    Hot debate. What do you think? Thumb up 9 Thumb down 1

    Agree with some previous comments re 2013. Here’s my most likely scenario:
    1) Credit is tighter compared to 2012, which in turn was tighter than 2011. OSFI guidelines will be in full force for the spring buffalo jump.
    2) A rebound in the Chinese economy may be more favourable for certain areas of the city.
    3) Supply supply supply! Look at CMHC’s starts and completions numbers. There will be much more product on the market in 2013 than in 2012 and this will be relatively bearish for prices.
    4) Population growth… I’m looking for it to tread water over the next year or so. That means below-average growth but no major drop like in the early 2000s.

    I expect worse sales than 2012, probably rivaling 2008’s ear-end sales count. In my estimation that means Teranet prices will be down 6-7% YOY in 2013. This is all finger in the wind stuff. Who knows, really!

    2012 was Bad. 2013 will be like Weird Al Yankovic’s album: Even Worse. Loins should be gird’d. Just in case.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 3

    Over here in the OV, I have noticed that “West”, which sold 70% of their units opening weekend (yeah, right) in the summer has gone quiet. They knocked down the building where Phase 1 will be built over a month ago and so far nothing else has happened. I hope they’re not changing their mind?! Certainly the 280 folks they sold condos to would be disappointed not to have their units built by 2015, not to mention if they didn’t follow the correct paperwork in warning of project delays, these folks could sue to get out of their contracts. Now that would be disappointing.

    Hot debate. What do you think? Thumb up 16 Thumb down 1

    Bs2300@hotmail.com Says:
    28

    @titanium:

    Titanium is the wu mao dang – we are with Rome, good or bad

    Like or Dislike: Thumb up 2 Thumb down 4

    Galactica Says:
    29

    @Bs2300@hotmail.com
    Rome is burning.

    Like or Dislike: Thumb up 2 Thumb down 5

    patriotz patriotz Says:
    30

    @C.Junta:
    “Yes, recourse mortgages, same as we have here in Canada.”

    Not quite, because in Spain mortgage debt cannot be discharged in bankruptcy.

    Hot debate. What do you think? Thumb up 15 Thumb down 3

    @patriotz: Spain was in the news looking to avoid foreclosures of the “most vulnerable” homeowners, prompted after a woman’s suicide over a bailiff eviction.

    If Canada’s in for some pain over the next few years, look for similar stories and lip service attempts by governments to “do something”.

    Like or Dislike: Thumb up 7 Thumb down 0

    Waiting to exhale Says:
    32

    Despite the uptick in sales during October (which surprised me) the writing is on the wall and the picture is getting clearer and clearer. If you look at the general economic analysis of all property bubbles in the past few decades they tell the same story.

    First comes a dramatic drop in sales followed by an increase of listings. Then comes what some people refer to as a “dead cat bounce” which occurs when motivated sellers are willing to drop their prices to levels inconceivable while the bubble was being inflated. I was actually expecting this bounce to come in the early spring of 2013 but since it happened last month just goes to show how fast things are progressing.

    After the dead cat bounce comes a dramatic decrease in prices. This ranges from a 15 to a 60 percent price drop. This usually occurs 12 to 24 months after a peak in prices. Then comes a period of leveling off where prices slowly melt away. This whole process can take many years (sometimes a decade or more) before a new housing cycle begins anew.

    How long and how severe this process will be for Vancouver is anybody’s guess. This all depends on many macroeconomic factors that nobody can predict. Personally, I would not even think of looking for a property until prices have dropped at least 25%.

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 1

    #21 @C.Junta: “It’s way more complicated this time, everything gone global since Pearl Harbor”

    Globalization is cyclical and prior to WWI the world was a very globalized place. It ended with the great depression bookended by two world wars. As the British might say, that was “a low point”.

    Like or Dislike: Thumb up 6 Thumb down 0

    Anonymous Says:
    34

    @Makaya: “The wise man will recognize the reference to The Hollow Men poem from TS Eliot”

    Actually, a real wise man would have avoided TS all together!

    Hot debate. What do you think? Thumb up 9 Thumb down 10

    Anonymous Says:
    35

    Hidden due to low comment rating. Click here to see.

    Poorly-rated. Like or Dislike: Thumb up 2 Thumb down 14

    @Anonymous: Actually, a real wise man would have avoided TS all together! or not! I’m not the one who awarded him the Nobel Prize in Literature in 1948, or said about him in 2009 that he was “arguably the most important English-language poet of the 20th century.”

    If you have some reservations about his art, good for you!

    Like or Dislike: Thumb up 7 Thumb down 2

    Naked Official #9000 Says:
    37

    @Makaya:

    the nobel prize is for splittists and traitors like lu xiaobao!

    Hot debate. What do you think? Thumb up 2 Thumb down 8

    “Strata president David Edmonds and strata member Cameron McFee both refused to talk to The Vancouver Sun about the matter.

    idiots…

    http://www.vancouversun.com/business/give+your+home+give+your+child+Couple+with+baby+asked+leave/7537148/story.html

    Hot debate. What do you think? Thumb up 5 Thumb down 10

    ” Thandi Schweitzer with their four-month-old Taylor Monday in Vancouver. The couple have been asked to leave their condo since Taylor’s arrival due to a no kids policy in the building.

    Photograph by: Ian Lindsay , PNG

    When Thandi Schweitzer and her partner Deb Rousseau bought a two-bedroom unit in a condo at 36th and Main six years ago, they were aware the building had a bylaw restricting tenants to the age of 19 or older.

    They weren’t too concerned.

    After all, they had no immediate plans to start a family.

    When they did decide to have a baby — little Taylor was born July 5 — they still felt confident: for years, the complex, Magnolia Gate, had been home to several families with children, and the bylaw had never been enforced.

    The new parents received a rude awakening in early September when their strata gave them six months’ notice that a $200-per-week bylaw enforcement fine would be levied against them because they now had someone under 19 living in the building.

    The strata also threatened to take the couple to B.C. Supreme Court over the issue.

    “It’s give up your home or give up your child,” Schweitzer said of the ultimatum.

    She added that until her baby was born, the age restriction went unenforced.

    “It feels personal.”

    She believes the age bylaw is a violation of her human rights.

    “I think it’s extremely unfair. I feel really marginalized. It’s just so un-Canadian.”

    Age restriction bylaws are legal in B.C. under the Strata Property Act and the B.C. Supreme Court has historically upheld adults-only bylaws, in part because the Human Rights code does not protect from discrimination on the basis of age.

    Although age restrictions are enforceable, in a challenging real estate market, they could become untenable.

    The soft market and changing demographics in the Main Street area could make it very difficult for Schweitzer to sell her condo.

    With five units in the building already sitting on the market, she’s not sure she can move her unit before March, when the fines kick in. Two-bedroom units at Magnolia Gate have been listing for between $450,000 and $480,000, Schweitzer said.

    Strata president David Edmonds and strata member Cameron McFee both refused to talk to The Vancouver Sun about the matter.

    According to realtor Maria Werbicki, who has shown units at Magnolia Gate and other buildings in the neighbourhood, comparable condos without age restrictions are valued at up to $50,000 more than those in age-restricted buildings. Value gaps of 10 to 20 per cent are the norm.

    “Age-restricted buildings are very difficult to sell because the buyers’ segment has changed drastically since April,” she said.

    With new mortgage restrictions putting single-family homes out of reach for many, a condo is now a common market entry point for young families.

    “A lot of younger professionals with families are buying into condos. They are (in their) late 20s to early 40s and still looking to have children.”

    The Canadian Mortgage and Housing Corporation does not offer insurance to buyers who purchase in age-restricted buildings, precisely because they are more difficult to sell.

    Magnolia Gate condo owner Brent Schieman, who has a two-year-old, also received a notice to vacate or pay. He has seen the neighbourhood and the real estate market change drastically since he bought in the complex eight years ago.

    Schieman said he and his wife had every intention of using the condo as a first rung on Vancouver’s real estate ladder, and planned to move once they started a family. But the enormous cost of a single-family home now has had them looking as far away as Ladner.

    “We work in Vancouver, we have friends in the area, the playground next to our building is littered with toys. It’s become a family neighbourhood, and I’ve seen it change.”

    He was shocked to get the notice. “The elderly neighbour upstairs, who would be most affected by our having a child just loves him and wants to see him every day.”

    Mike Hawkshaw, who has two kids and rents in the building, said he isn’t interested in pursuing a lengthy legal battle, but he’s not happy. “Discrimination based on age is ridiculous and unfair. If it were a seniors’ building, I would understand, but it’s 19-plus.”

    “Vancouver has changed,” Hawkshaw continued. “We can’t afford a starter home in this neighbourhood, a teardown starts at $600,000. It’s frustrating.”

    Schweitzer said the issue has pitted the strata council members against the few owners that have children.

    “A woman cornered me the other day saying ‘you’re flaunting your baby.’ ”

    What saddens her the most, she said, is how unpleasant it has become to live in the 144-unit complex.

    “A lot of people that have children are very nervous, they are afraid to speak out. They sneak in and out and don’t come to the block parties. It’s no way to live.”

    Hot debate. What do you think? Thumb up 24 Thumb down 9

    Vote Down The Facts Says:
    40

    @vangrl:

    So they liked the bylaw when it suited them. I fail to see their argument, but I do see their selfishness.

    Well-loved. Like or Dislike: Thumb up 33 Thumb down 6

    not so sure they “liked” the bylaw, they probably never thought it would be an issue for them.

    “for years, the complex, Magnolia Gate, had been home to several families with children, and the bylaw had never been enforced.”

    and obviously continued to believe it wouldn’t be an issue for them when they decided to have a baby.

    Hot debate. What do you think? Thumb up 19 Thumb down 4

    @vangrl: “idiots”

    If a strata is adult-only and if a resident has a child they can make the resident move out. Sorry if their feelings were hurt but it’s business.

    What sucks even more than an a-hole strata? Having to sell right now.

    Hot debate. What do you think? Thumb up 21 Thumb down 4

    @vangrl: It’s odd they aren’t (apparently) universally enforcing the bylaw…

    Hot debate. What do you think? Thumb up 9 Thumb down 3

    Anonymous Says:
    44

    @vangrl:

    “for years, the complex, Magnolia Gate, had been home to several families with children, and the bylaw had never been enforced.” and obviously continued to believe it wouldn’t be an issue for them when they decided to have a baby.

    So if the rules were enforced before they would not have had the baby? What difference would that have made?

    Sometimes rules are not enforced until someone complains. Maybe they have a screaming bratty kid that bothers the neighbors where the other kids in the building were never a problem. It sound like they screwed it up for the others with well behaved kids.

    Hot debate. What do you think? Thumb up 15 Thumb down 10

    Anonymous Says:
    45

    @jesse: “What sucks even more than an a-hole strata? Having to sell right now.”

    Having to sell in 1 or 2 years from now would suck even more.

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 1

    Extend and Pretend Says:
    46

    @Vote Down The Facts: re: Poster Child

    You are 100% correct, sir!

    Not only did they not bother to figure out exactly what they were buying, they overpaid for it too (thus now they are balking at “slow market” or “not getting their price”).

    These morons are the same as all the rest – trying to change rent into an investment by bidding any and all condos to the Moon with CMHC money. This story points out the greed more than anything else. Strata regulations be damned, they wanted to “get in the game”.

    Well-loved. Like or Dislike: Thumb up 22 Thumb down 2

    Vote Down The Facts Says:
    47

    @vangrl: “not so sure they “liked” the bylaw, they probably never thought it would be an issue for them.”

    Then they’re a little dumb as well as selfish. They moved into the building with full knowledge of its bylaws, then chose to break the one that probably enabled them to originally buy at a discount (that’s the part they probably liked)

    And it’s not as if they didn’t have 9 months advance notice of their situation. Did they even approach the strata council at the point they realized they were expecting, I wonder?

    Well-loved. Like or Dislike: Thumb up 30 Thumb down 1

    @patriotz:

    it’s the bust that is really the recovery

    Post of the day!

    Hot debate. What do you think? Thumb up 19 Thumb down 0

    Hidden due to low comment rating. Click here to see.

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    @vangrl:

    “Discrimination based on age is ridiculous and unfair“

    They should use this argument in a liquor store or a casino…

    They knew the rules before they bought. They have no right to complain.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 1

    Patiently Waiting Says:
    51

    @Extend and Pretend: “bidding any and all condos to the Moon with CMHC money”

    Just to clarify: (from the story) “The Canadian Mortgage and Housing Corporation does not offer insurance to buyers who purchase in age-restricted buildings, precisely because they are more difficult to sell.”

    The failure to consistently apply the bylaw may undermine the strata’s case. As the story says, owners and renters previously got away with having children. This isn’t a case of where people didn’t know about a bylaw being broken. Its pretty obvious when there are kids in the building.

    Reading between the lines, I’m assuming homophobia might be at the root of this dispute. Some people don’t bother with what two adults do in the bedroom, but suddenly have a reaction if they are raising a child. Interestingly, the lesbian couple never discusses this in the story. Maybe because they are trying to make a common cause with all parents.

    As an interesting sidenote, a while back I looked at a listing for a New West townhouse where it announced (in caps) that the strata just dumped age restrictions. I expect more of this as the market softens, and owners look at some way to minimize their loses if they have to sell.

    Hot debate. What do you think? Thumb up 20 Thumb down 5

    Chem guy Says:
    52

    Recipe for financial disaster

    http://vancouver.en.craigslist.ca/van/apa/3402767958.html

    Landlords living downstairs…if you can only afford to buy by renting out the majority of the house, maybe you shouldn’t buy! Enjoy bankruptcy in your POS East side dump that should be knocked down rather than renovated.

    Well-loved. Like or Dislike: Thumb up 26 Thumb down 4

    Patiently Waiting Says:
    53

    @Chem guy: Every time the old floor boards creak beneath your feet, you’ll be reminding your landlords of their foolishness.

    Well-loved. Like or Dislike: Thumb up 30 Thumb down 1

    “It’s odd they aren’t (apparently) universally enforcing the bylaw…”

    yes, hence me calling the president an “idiot”…bylaws have to be enforced.

    If they had never seen any children living there they might have decided to move/sell much earlier.

    Hot debate. What do you think? Thumb up 8 Thumb down 2

    RaggedyRenter Says:
    55

    @vangrl:
    A friend of a friend is in the same condition. They bought with 0/40 at the last market top in an age restricted building. You know how it is, “get in the game”, “build equity”, “throwing money away on rent”, “flip it in two years”, “a place to call your own”, “everybody’s buying”. Then a baby came along. Despite advances made in Van West and Richmond SFH, condo prices haven’t really recover yet so they’re underwater and cannot afford to sell. Strata started to ding them $200 a week and they are forced to move out and (gasps) rent elsewhere, while their condo sits there doing nothing except eating mortgage, strata fees and taxes. To add insult to injury, they can’t rent out the unit unless to their immediate family. They tried to sell this summer and the market was really soft and the price are weakening. Last I heard they are waiting for the market to bounce back next year.

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    Whoops. Shoulda started reading at the bottom not the top of the thread. $200 for baby. That’s expensive! Please vote my previous comment down. Hell vote this down too. Declutter me!

    Hot debate. What do you think? Thumb up 10 Thumb down 6

    RaggedyRenter Says:
    58

    @VHB:
    Exact same story as the article, baby came along. They didn’t do anything in the nine months preceding the baby because the market price was in the gutter and there was another family with a baby who threaten to bring it to court. They were hoping for a resolution or change in strata rule. When that didn’t happen, strata ding them $200 a week.

    Well-loved. Like or Dislike: Thumb up 21 Thumb down 0

    @bubbly: What about setting an upper age limit? Or maybe medical conditions? Employment status? Nationality? Sexual orientation?

    Having children is a normal life event, not some lifestyle choice.

    The government sets rules around access to alcohol and gambling for minors for their protection, not based on the preferences of those businesses.

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    @MM: Would you take your children to a strip club?

    If you know the rules before you fork over the money, you should not complain.

    This reminds me of the idiots who have bought in Coal Harbour next to the float plane airport and then petitioned to have the airport closed because it is too loud.

    Well-loved. Like or Dislike: Thumb up 53 Thumb down 3

    Anonymous Says:
    62

    @vangrl: “seriously who wants to live in a building that doesn’t allow anyone under 19.”

    I wish there were more buildings that had that restriction. I personally would prefer it. Reason being kids make noise and in a condo that is a big deal if you end up below a kid running in circles all day. Places like coops that have lots of kids are a nightmare.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 7

    Anonymous Says:
    63

    @ Chem guy,

    I actually feel sorry for them, for getting suckered into buying a home when they couldn’t afford it. This is the result of the realtors saying buy now or priced out forever and the media showing stories of bidding wars.

    Unfortunately most people in society can’t think for themselves and are always following the herd. It makes no sense to buy if you’re in a worse off position, but the thought of not being able to own something gets people to make dumb decisions.

    Hot debate. What do you think? Thumb up 15 Thumb down 2

    #55 @RaggedyRenter: Now that’s a mess. Buffet’s advice comes to mind: “if you don’t want to own it for 10 years, don’t own it for 10 seconds.”

    Hot debate. What do you think? Thumb up 16 Thumb down 1

    #17 @patriotz: How about if we simply stop selling out to China in the deluded hope that they will fix our self-inflicted problems. I would like to believe that at some point, “sell the mess to the Chinese” for primo $$$ isn’t going to work. But China is something of a kleptocracy so there may in fact be infinite demand to hide dirty money.

    Hot debate. What do you think? Thumb up 12 Thumb down 1

    #18 @C.Junta: “Now the question is who is going to subsidize the debtors: the banks or the taxpayers?”

    In a banking crisis the household sector always pays. Banks deploy money, they don’t store it. If banks blow up they can’t pay. And if they blow up the household sector too, well then nobody can pay :)

    When a whole country can’t pay, they will be devalued. You can choose some combination of currency devaluation and wage deflation. Rejecting both brings wage deflation through high unemployment, as we see in Spain.

    Like or Dislike: Thumb up 3 Thumb down 1

    Waiting to exhale Says:
    67

    I put the blame completely on the couple. They knew exactly what they were getting into when they bought the place. Now that the bylaw does not suit their circumstances they go on the local newspaper seeking public support so their problem can be solved. Talk about first world problems.

    It must have taken at least a few months to bring that child into their home. In that time they could have sold their place and moved to a family friendy property. But nooooo, they decided to snub the bylaw and hope that they will receive some sympathy from the strata since this involves a baby. I bet you they would have moved a long time ago if they could have sold their property at THEIR desired price.

    Bottom line, this is an issue because the couple does not want to take a financial hit from their decision of buying into this building in the first place.

    I say suck it up, take the hit, and stop complaining whenever the world is not revolving the way you like it.

    Well-loved. Like or Dislike: Thumb up 72 Thumb down 2

    patriotz patriotz Says:
    68

    @RaggedyRenter:
    ” They bought with 0/40 at the last market top in an age restricted building. ”

    Does CMHC insure age-restricted properties or doesn’t it? Not a rhetorical question, I’m reading two different answers and I’m really curious about which one is right.

    Also note that it’s only condos which can exclude children. Non-strata rental properties (houses, duplexes, multi-unit rentals) cannot, unless it’s a 55+ complex.

    Hot debate. What do you think? Thumb up 15 Thumb down 1

    Anonymous Says:
    69

    @Makaya:

    You have a way with words. That poem brings to mind the one below apologies to Robert Frost.

    Some say the Bubble will end in fire,
    Some say in ice.
    From what I’ve tasted of greed
    I hold with those who favor fire.
    But if it had to perish twice,
    I think I know enough of fear
    To say that for destruction ice
    Is also great
    And would suffice.

    On another note, I read in the paper this morning that T.S. Elliot’s widow Valerie has passed away.

    Hot debate. What do you think? Thumb up 15 Thumb down 1

    @Waiting to exhale:

    I’d agree with you if the rule had been equitably applied to all tenants but it sounds like the strata is only selectively applying the rule which is tantamount to discrimination.

    I also personally think 19+ is a stupid rule. I don’t disagree with the strata’s right to enact it – just find it a bit of a ridiculous cut-off point for age restrictions.

    Hot debate. What do you think? Thumb up 12 Thumb down 5

    RaggedyRenter Says:
    71

    @patriotz:
    Yeah it was CMHC insured. Pretty sure they bought with 0/40. I don’t know the specifics of CMHC policy regarding age-restricted buildings.

    Like or Dislike: Thumb up 6 Thumb down 1

    Veni Vidi Vci Says:
    72

    @RaggedyRenter: I’m surprised, because usually when you see co-op or age restricted places for sale they specify that you need a larger downpayment.

    Others say CMHC will not insure mortgages on age restricted buildings:
    http://forum.calgarypuck.com/showthread.php?t=76191

    Like or Dislike: Thumb up 3 Thumb down 1

    Can't Wait Says:
    73

    Hidden due to low comment rating. Click here to see.

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    Patriotz' No. 1 Fan Says:
    74

    They bought the condo six years ago.

    There should be plenty of appreciation tied up in that condo for them to be able to under cut the competition and not lose money (compared to the original purchase price).

    I guess if they do that, and would like to maintain their standard of living they would have to fork out extra money for another condo purchase or GOD FORBID, they might have to RENT like the rest of us. Somebody, please think of the baby!!! They baby cannot grow up in a rental condo! There must be a by-law against that somewhere…

    /sarc

    Jeeesh, you’d think that the introduction of a child would come with some perspective for people regarding what’s truly important but I guess this does not apply in Vancouver. Seriously, this couple should give their head a shake and focus on ensure that they get on with life and focus on what’s truly important. Owning a condo is NOT one of them…

    Patriotz’ No. 1 Fan

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    Veni Vidi Vci Says:
    75

    @Patriotz’ No. 1 Fan: Actually condos have not appreciated much. The hype over the market for the last few years has helped to hide that fact, but it’s not unusual to have a condo bought 6 years ago be underwater, especially considering the only stuff selling has to be priced ‘sharply’ (i.e. low). Strata fees and transaction costs quickly drive RE yield into the negative.

    But at least they own their own home and don’t have anyone telling them what they can and can’t do.. except, you know, have a child. Little things like that.

    Well-loved. Like or Dislike: Thumb up 33 Thumb down 1

    Vote Down The Facts Says:
    76

    @RaggedyRenter: “Yeah it was CMHC insured. Pretty sure they bought with 0/40. ”

    Is it possible they used a private mortgage insurer, not CMHC?

    Like or Dislike: Thumb up 6 Thumb down 0

    Regarding the women with the baby in the age-restricted condo, I don’t have any sympathy for them.

    1) They knew the building was age-restricted when they moved in, and they assumed that since they saw kids there, it’d be OK for them to have their kid(s) there, too. I have a child, and it influenced where I live, and previously where I bought.

    2) The rule is being applied fairly: the Vancouver Sun article interviewed another guy in the building who also received the no-kids letter, so it can be assumed that all owners with children in the building are affected.

    3) Presumably the strata received a complaint, and had to act. They can’t enforce the rule for one owner and not for another, so all the families with kids are being forced out. That may be why there are a number of condos up for sale in that building.

    4) The strata is being very reasonable: they took no action until the kid was 2 months old, and then they gave them 6 months’ notice. Even with a young child, that’s plenty of time to get yourself in gear.

    5) Heck, if things take a bit longer (eg, they manage to sell their unit after 5.5 months, and closing isn’t until 7 months), they can probably make an application to the strata for a time extension, being able to show that they have been working in good faith to make the move happen.

    6) Assuming the strata doesn’t allow rentals, they can always make a hardship application to the strata (eg, if they’re underwater and can’t sell) to allow them to rent it to somebody until they’re in a position to sell it.

    Well-loved. Like or Dislike: Thumb up 38 Thumb down 2

    @Vote Down The Facts: It’s also possible that CMHC used to insure age-restricted rentals, and has since changed that policy. After all, during the 0/40 days, pretty much anything was OK…

    Note: I haven’t researched it, I’m just guessing.

    Like or Dislike: Thumb up 4 Thumb down 1

    @Can’t Wait:
    “I think it’s extremely unfair. I feel really marginalized. It’s just so un-Canadian.”

    “Un-Canadian” – what does this mean?

    Like or Dislike: Thumb up 8 Thumb down 1

    painted turtle Says:
    80

    “un-canadian” means the model work hard/buy a home-sell/it for retirement is broken. These people felt they were doing the right thing because they were following the herd and believed in the stuff pumped by the media. Now is the day of reckoning: the media are sold to developers, the government does not necessarily have your interest at heart, the herd can be fooled. We are in for a cultural shock.

    Hot debate. What do you think? Thumb up 14 Thumb down 1

    @M-: “I don’t have any sympathy for them”

    The way I read the article is as follows:
    1) They knew the bylaws but saw they were not being enforced
    2) They thought they would not be enforced when they had a child
    3) They are upset because they were wrong about (2)
    4) They are upset because they do not want to move
    5) The article’s author laments about the plight of families in Vancouver and how child-averse strata are making things even more difficult for families with children, something that’s a hot-button issue for city council members.

    The only sympathy I have is if the bylaw is being inconsistently applied. The strata is potentially in a bit of hot water if that’s the case because of this particular family’s situation. It’s no accident the Sun chose this particular family IMO.

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    Vote Down The Facts Says:
    82

    @jesse: “It’s no accident the Sun chose this particular family IMO.”

    Maybe the family chose the Sun….

    Hot debate. What do you think? Thumb up 9 Thumb down 1

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    @Vote Down The Facts: “Maybe the family chose the Sun”

    Lots of families choose the Sun, not all are published. I agree with M- that there isn’t much here, it more shows the danger of a strata selectively choosing which of its bylaws are to be enforced.

    I saw this BTW in one strata where a member claimed discrimination, and it went all the way to the BC human rights tribunal before it was dismissed. This cost the strata tens of thousands of dollars in legal fees. It could have been mostly avoided if they had shown consistent application of their bylaws.

    Hot debate. What do you think? Thumb up 16 Thumb down 2

    boogeybear Says:
    85

    @vangrl:

    CMHC regulations may say that they do not offer insurance in age restricted buildings, but that regulation has never been followed. I bet this young couple had CMHC insurance when they bought into the building 6 years ago.

    An age restrictions of 55 may make sense. But there are a lot of men who have started second families and have young children. I think the only age restriction should be for 67 years and older.

    Why would you put an age restriction of 19 years on a building. What the heck do you think 20 and 30 somethings do every night – play bridge. Shame on BC regulators for allowing such an arbitrary regulation to be legal.

    Hot debate. What do you think? Thumb up 9 Thumb down 4

    @jesse: I think the couple is most upset by the fact that they need to sell at an inopportune time, when the RE market is stone cold.

    Hot debate. What do you think? Thumb up 14 Thumb down 1

    boogeybear Says:
    87

    @jesse:

    The family likely has a counter suit against the strata complex for not consistently applying the bylaws. The strata council should have to pay the agents commission and moving costs.

    Like or Dislike: Thumb up 3 Thumb down 4

    boogeybear Says:
    88

    @M-:

    They still insure age restricted buildings. Simply because they don’t ask the question on any form. Don’t Ask – Don’t Tell.

    Like or Dislike: Thumb up 4 Thumb down 2

    BoomerNation Says:
    89

    This is just another way of boomers keeping prices down for themselves, also in the best buildings, in the best neighborhoods, under the guise of “age restriction” which was initially set up for retirement/senior homes that provide services in addition to the condo purchase.

    I mean, take a look on the North Shore – if I were a boomer, I could even buy a trailer next to Park Royal for $24,000. The nicest, quietest streets in North Van have only age restricted buildings, at a much lesser cost than those that are not. Edgemont Village, Upper Lonsdale, Lynn Valley. Look outside Vancouver – if you are 55 plus you can buy under $100,000 in a trailer complex/condo complex. Not so for Gen X/Y.

    It’s pretty much a given that all of the buildings I’m looking at that are not age restricted have a much higher price tag, given that I’m now competing with offshore investors, as well, it will be on a major traffic route, next to a cell phone tower, with the crappiest “made in China” flooring, cabinets, and fixtures, AND be a shoebox. Perhaps this was not a conscious plan by the boomers, but I myself feel discriminated against, in that not only do boomers own the majority of single family homes, but also, through the age restrictions, keep condo prices down = for themselves.

    Again, age restrictions were, from what I’ve read, supposed to be in conjunction with some kind of services, ie. in a building that provided meals, as they were originally set up to be for seniors.

    Are there any kinds of services, ie. meals, being provided for these people in these buildings that are age restricted for only 19 plus? If my strata were to enact a bylaw going the other way – No plus 40’s allowed in my building – this would be outright seen as discriminatory. Because for what reason could a person possibly justify that no one under the age of 40 be allowed to live in a building, so, would it not be the same for no one over the age of 19, in a building that is clearly not earmarked for seniors retirement?

    Only is the Strata Act more outdated than the Tenancy Act, where as a renter, housing based on your age cannot be discriminated against.

    One of the first bylaws my own strata tried to put in place in my NON-age restricted building was a “no using your kitchen after 9pm because of noise” rule. (This was specifically because of 12 hour a day job and coming home late.)

    Just because the strata council puts into effect bylaws, doesn’t mean that they are right. And, hopefully, with the strata civil resolutions tribunal coming into place in 2013, strata bylaws can be questioned without having to make it into a Human Rights Case.

    In regards to the owners fined the $200 a week – these people need a strata lawyer. From the research I’ve done, a strata fine has to be reasonable, and if the amount is not reasonable, and you go to court, the judge can throw out the whole amount.

    Hot debate. What do you think? Thumb up 11 Thumb down 9

    Patiently Waiting Says:
    90

    @boogeybear: At least, they have a list of known buildings that they won’t insure. Some older condo buildings in New West aren’t insurable, but I’m not sure of the exact reasons.

    Like or Dislike: Thumb up 4 Thumb down 1

    Not much of a name... Says:
    91

    Looks like the “Price Drop Guarantee” at The Kimpton in NV has had an immediate impact. The one private listing in the building has now dropped the price from $739k to $699k. It’s only $40k, but hey, it’s a start. I’m sure there will be more to follow.

    Hot debate. What do you think? Thumb up 20 Thumb down 1

    Patiently Waiting Says:
    92

    @BoomerNation: Keep in mind, by having these restrictions, owners of these condos have limited their real estate appreciation. The moment they lift these restrictions, their units would probably shoot up in value. So its not totally a great deal for them.

    I also notice many of these age restricted buildings appear to be from the leaky condo era. Somehow, I think you aren’t missing out on much.

    Do you really want to be leaping out of the way of speeding electric scooters every time you step outside?

    Like or Dislike: Thumb up 7 Thumb down 2

    Just got a call from a youngish sounding girl inquiring about my interest in their pre-construction development Riva, in Richmond.

    I was in a hurry and hanged up before gleaning any more info. Apparently I signed up for their “VIP list” before and they are preparing to sell their units soon (they just had a VIP preview last Saturday).

    http://www.onni.com/new-homes/metro-vancouver/coming-soon/riva/

    So, are such cold calls an indicator that the pre-sale market is red hot? I am doubtful.

    Like or Dislike: Thumb up 6 Thumb down 1

    Veni Vidi Vci Says:
    94

    @Patiently Waiting: “by having these restrictions, owners of these condos have limited their real estate appreciation. The moment they lift these restrictions, their units would probably shoot up in value”

    Actually that sounds like a pretty good deal. If you were to buy in an age restricted building and then get the restriction dropped you’d stand more of a chance of ‘buying low, selling high’.

    Seems to me that an investor group could buy into a building with age restriction, take over strata to remove the restriction and then sell for more than they bought.

    Like or Dislike: Thumb up 7 Thumb down 1

    Sidelines Says:
    95

    Anyone else notice that this Scotia report came out quite some time ago? At least as far back at August, 2012, from what I was able to gather via a bit of Google sleuthing. I’m not commenting on the quality of the report, just that I’m surprised Huffington seems a bit tardy in regards to this piece… Apologies, btw, if someone else already pointed this out.

    Like or Dislike: Thumb up 5 Thumb down 0

    patriotz patriotz Says:
    96

    @BoomerNation:
    “Only is the Strata Act more outdated than the Tenancy Act, where as a renter, housing based on your age cannot be discriminated against.”

    Oh yes it can. Rental buildings can be 55+.

    At least condo owners can vote on it.

    Like or Dislike: Thumb up 4 Thumb down 1

    New Listings 163
    Price Changes 163
    Sold Listings 104
    TI:17501

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 101 Thumb down 3

    BLISTINGAGENT Says:
    98

    Gordon Price has some notes on his blog from a CMHC presentation about BC housing that he went to. Might be of interest to some:

    http://pricetags.wordpress.com/2012/11/13/outtakes-from-an-outlook-cmhcs-annual-housing-confab/

    Like or Dislike: Thumb up 3 Thumb down 1

    Bailing in BC Says:
    99

    @Anonymous:

    Sorry that was me. I forgot to sign in. I don’t want to be Anonymous. Anonymous is an idiot.

    Like or Dislike: Thumb up 4 Thumb down 4

    “I saw this BTW in one strata where a member claimed discrimination, and it went all the way to the BC human rights tribunal before it was dismissed. This cost the strata tens of thousands of dollars in legal fees. It could have been mostly avoided if they had shown consistent application of their bylaws.”

    yes the bylaws must be enforced, exceptions are not allowed.
    Allowing children previously was not wise of council, and this could potentially cost them….I’ve seen it before as well

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    Aleksey Says:
    102

    @paulb:

    104 Sold Listings after the looong weekwnd with a loooot of open houses. It is happening.

    Hot debate. What do you think? Thumb up 12 Thumb down 8

    are those sales all since last Friday, or did I miss yesterdays stats?

    Like or Dislike: Thumb up 1 Thumb down 1

    @vangrl: “exceptions are not allowed”

    Exceptions are allowed however they’re difficult to justify in certain cases.

    Like or Dislike: Thumb up 2 Thumb down 1

    @Conrad: If by ‘coming back’ you mean down by 30%, then yes, sales are coming back very nicely.

    Hot debate. What do you think? Thumb up 15 Thumb down 1

    Aleksey Says:
    106

    BTW another bearish anecdote.
    My friends are looking for a house in North Van and they’re lowballing all the time. There is a place in Lynn Valley for sale and asking price was 860k 2 months ago. They made an offer for 760k (less than assesment). It was rejected back then, but seller appeared last week and said that they are ready to sell for 760k now. My friends took a look again and decided that they don’t like it anymore. So, 100k discount in 2 months… There are motivated sellers out there!

    Well-loved. Like or Dislike: Thumb up 59 Thumb down 2

    Ahem.
    Daily sales from November 2011:

    116
    120
    167
    106
    136
    118
    87
    107
    141
    137
    98
    125
    105
    135
    102
    101
    91
    91
    106
    130
    107

    Well-loved. Like or Dislike: Thumb up 43 Thumb down 1

    Extend and Pretend Says:
    108

    @Not much of a name…: $739K to $699k vs $100K 2 year insurance.

    Please post more of these if you find them. This is very interesting.
    It is rare to find identical properties priced by two mathematically comparable methods. This situation affords estimating buyer beliefs about price decline as a probability number.

    The private seller offering $40K today is giving the so called “certainty equivalent” value of the $100K insurance. The private seller believes that there are some buyers for which $40K today is worth more than the expected payout of the $100K insurance policy after 2 years for the developer property. Another way to write this is that the expected payout of buyers is less than $40K out of $100K after the unknown events including price declines and recovery bounces after 2 years. Therefore, the private seller thinks that there are some buyers today who believe there is less than a 40% chance of getting the full $100K payout. To the extent that the private seller’s percent of insurance incentive amount changes to get sufficient buyer interest is in fact a direct reading of buyer beliefs in the matter of likely price declines.

    For the purpose of this analysis, I assume that buyer’s rent outlay expense during the intervening period before purchase is not a factor. This is a good assumption if prices are declining faster than rental outlay and prices will decline for in forseeable future. This seems to be the current situation.

    The insurance payout as compound rate is as follows. Two years at 7% decline each year, compounded yearly, is almost exactly $100K less than $739K.

    On the other hand, a modest 10% per year decline compounded over the same 2 years, amounts to a $140K discount from the original $739K. I chose 10% as it appears to be a good estimate from various sources. You can use a different number, but it only matters that the actual decline might be larger that the insurance payout.

    Neglecting buyer’s rental outlay, the big question is why the developer’s insurance policy is calibrated to 7% rather than the higher implied 10%. Aside from being a round number ($100K) and a marketing gimmick, the developer would still seem to be pricing in some sort of recovery bounce(s) that will erode part of the 10% down to 7% or less per year. Therefore, if a bounce doesn’t materialize in 2013 like it did in 2009, the insurance policy is too small. Buyers seeing a smooth decline in Spring 2013 would be wise to demand a 10% ($140K) policy – or even more considering there may be no bounce for years!

    Similarly, without a 2013 Spring recovery bounce, the private seller offering $40K immediate discount will probably see that buyer interest will weaken until the discount is increased to say 70-150% of the insurance amount rather than the 40% presently offered.

    Changes to the exact insurance percentage of the private sellers’ cash discount would very interesting to follow. Please post!

    Like or Dislike: Thumb up 5 Thumb down 1

    @Aleksey:

    None of those sales will have resulted from this weekend’s open houses. Even imagining that the buyer’s offer were to be accepted at the open house, there are things that need to be done before it shows up as a sale. It takes at least several days.

    Hot debate. What do you think? Thumb up 12 Thumb down 0

    Total days	21
    Days elapsed so far	8
    Weekends / holidays	5
    Days missing	0
    Days remaining	13
    7 Calendar Day Moving Average: Sales	82
    7 Calendar Day Moving Average: Listings	143
    SALES	
    Sales so far	650
    Projection for rest of month (using 7day MA)	1063
    Projected month end total	1713
    NEW LISTINGS	
    Listings so far	1190
    Projection for rest of month (using 7day MA)	1853
    Projected month end total	3043
    Sell-list so far	54.6%
    Projected month-end sell-list	56.3%
    MONTHS OF INVENTORY	
    Inventory as of November 13, 2012	17501
    Current MoI at this sales pace	10.22
    

    Well-loved. Like or Dislike: Thumb up 34 Thumb down 0

    patriotz patriotz Says:
    111

    http://www.cbc.ca/news/canada/story/2012/11/13/pol-flaherty-fiscal-update-fall-economic-statement.html

    A weakening global economy will result in a dramatic increase in Canada’s deficit this year, Finance Minister Jim Flaherty said Tuesday in his fall economic statement. That weakness will be persistent enough to push his goal of eliminating the deficit another year down the road.

    Nothing to do with consumer debt hitting a wall and falling RE prices?

    OK Jim.

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 2

    Vote Down The Facts Says:
    112

    @patriotz:

    Probably more to do with commodity prices and falling global demand, IMHO.

    Like or Dislike: Thumb up 8 Thumb down 1

    @bubbly: I wouldn’t take children to a strip club, and they wouldn’t allow us in if I did. The rules are there to protect the children, because strip club owners would likely welcome underage paying customers, but they would get in deep trouble with whoever licenses these establishments if they did.

    But what does that have to do with housing?

    And what about the idea of a Strata that puts an upper age limit on tenants? I’m sure it would appeal to some.

    Like or Dislike: Thumb up 1 Thumb down 0

    @MM: What about one that only allows hot chicks? (Oh, and me and my carefully selected buddies get to live there too–and we buddies have veto power in case the hot chicks start letting themselves go.)

    I’m not serious–just trying to point out how interesting it is that we allow discrimination on one dimension (age) but not on others (sex, race, language, hottitude, etc.)

    Hot debate. What do you think? Thumb up 12 Thumb down 2

    @Extend and Pretend.

    Thanks!

    My interpretation on “extend and pretend” relates to an expectation that CMHC will find a way to roll over underwater mortgages and allow renewals even when clearly on negative equity housing. They’ll extend the loan for another 5 years and pretend everything is just fine. They’ll all hope it all sorts itself out by the next renewal. And the poor suckers stuck with the house will be frozen in place – unable to sell and on a debt payment treadmill.

    Like or Dislike: Thumb up 6 Thumb down 0

    @BoomerNation

    Great comments. The Boomers have rigged this game.

    Like or Dislike: Thumb up 3 Thumb down 1

    Dan in Calgary Says:
    117

    @MM, “And what about the idea of a Strata that puts an upper age limit on tenants? I’m sure it would appeal to some.”

    Don’t know if it would be legal or not, but there is a news story that new research shows ageism is widespread and tolerated in Canada, so it would probably fly OK with everybody.

    Like or Dislike: Thumb up 3 Thumb down 0

    I think the only listing in the entire GVRD that has not dropped its price is Larrys $8.5m haunted house. That ones gonna take a spanking when it finally sells.

    Like or Dislike: Thumb up 5 Thumb down 0

    patriotz patriotz Says:
    119

    @604x:
    “My interpretation on “extend and pretend” relates to an expectation that CMHC will find a way to roll over underwater mortgages and allow renewals”

    CMHC insurance does not get renewed. It’s paid for at the time the loan is made and is valid for the entire amortization period. It’s the banks which renew mortgages, and if they are insured the banks don’t care if they’re underwater. The OSFI changes which were first floated would have required banks to call underwater mortgages, but that was dropped.

    Like or Dislike: Thumb up 6 Thumb down 0

    patriotz patriotz Says:
    120

    @Vote Down The Facts:
    “Probably more to do with commodity prices and falling global demand, IMHO.”

    Remember that Canada was already running a trade deficit before commodity prices started falling.

    Like or Dislike: Thumb up 8 Thumb down 0

    […] like it anymore. So, 100k discount in 2 months… There are motivated sellers out there!” – Aleksey at VCI November 13th, 2012 at 5:44 pm. Share: This entry was posted in 09. Delaying Buying, 16. Missed The Boat? and tagged Anecdotes, […]

    Like or Dislike: Thumb up 1 Thumb down 0

    @patriotz:

    If CMHC agrees to roll over its guarantee on negative equity loans then the banks will extend and pretend…..and skim a fee for administration of this game.

    Like or Dislike: Thumb up 2 Thumb down 0

    […] “My friends are looking for a house in North Van and they’re lowballing all the time. There is a place in Lynn Valley for sale and asking price was 860k 2 months ago. They made an offer for 760k less than assessment. It was rejected back then, but seller appeared last week and said that they are ready to sell for 760k now. My friends took a look again and decided that they don’t like it anymore. So, 100k discount in 2 months… There are motivated sellers out there!” – Aleksey at VCI November 13th, 2012 at 5:44 pm. […]

    Like or Dislike: Thumb up 0 Thumb down 0

    […] are weakening. Last I heard they are waiting for the market to bounce back next year.” – RaggedyRenter at VCI 12 Nov 2012 10:16pm [This story, or one very similar to it, also featured on local radio, 14 Nov 2012. -ed.] Share: […]

    Like or Dislike: Thumb up 0 Thumb down 0

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