31% of apartments for sale are vacant
This is kind of amazing.
yvr2zrh posted this analysis of the percentage of property listings for sale that are vacant:
Across REBGV 19% of listed SFH are vacant and 31% of attached/apartments are vacant. So – 50% as the comment from Jesse is higher than actual but not completely out of reach for apartments. Some variations are noted.
SFH Vacant stats (number/%)(in order or highest to lowest)
Richmond 175 – 24%
Van West 148 – 23%
North Van 55 – 21%
Port Coq – 22 – 21%
Whistler – 39 – 21%
Van East – 87 – 20%
Burnaby – 71 – 20%
etc . . .
For Apartment/Attached, the following are the vacant properties
Whistler – 177 (42%)
Maple Ridge – 94 (34%)
Van West – 522 (34%)
New West 110 (33%)
Van East – 169 (33%)
Burnaby – 261 (31%)
Richmond – 298 (31%)
North Van – 115 (30%)
–
So, even if you have people who just want to hold back, why would they when there is cash outflows to carry the property and the future outlook is for price decreases?
Those who just hold off selling, where they are actually living in the unit, and are waiting for prices to increase, are bound to die living in that unit.
Later today, I will post my predictions for the 2013 market based on my model. What is really helpful is the MOI/monthly price change graph. That has been a really good indicator of price movements. Thus, I will post the projected MOI movements for 2013 and then we can see where the prices fall. It is important to know that listing volumes are down from last year. This is sufficiently so that we may see 2013 inventory intersect the 2012 inventory possibly at the end of the Spring and then track 2012 for the rest of the year.
This will be interesting to watch because once we are down 10-15% from peak prices – how can they continue to say things like prices are flat and this is a soft landing? I would say any decrease of 20% from the peak is not good as you immediately remove even more move-up buyers and put 1000′s of people underwater immediately.
January 16th, 2013 at 12:07 am 1
Great stats, yvr2zrh, although you should include in your post on your definition of “vacant”, which if I understand correctly include tenant-occupied (rental) units.
Hot debate. What do you think?
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January 16th, 2013 at 12:25 am 2
Immigration is a key demand component for housing. But as we have been seeing recently, the “Net non-permanent residents” category is taking up a bigger and bigger share of total immigration to BC. This is a change from 5 years ago (source link posted last topic).
That’s probably good news for all those vacant housing owners who are thinking of renting out their space because the non-permanent group usually start off as renters, at least in normal circumstances (whether they can afford asking rents is another issue).
Perhaps I am wrong and they instead buy even at current rich price-to-income valuation levels in the Vancouver market. Here is the definition of what a non-permanent resident is:
NPRs include foreign workers, foreign students, the humanitarian population and other temporary residents.
http://www.statcan.gc.ca/pub/91-002-x/2012003/technote-notetech1-eng.htm
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January 16th, 2013 at 12:47 am 3
Is there stats on the ratio of accepted price compare to listed price for the past few months?
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January 16th, 2013 at 3:17 am 4
“you should include in your post on your definition of “vacant”, which if I understand correctly include tenant-occupied (rental) units.”
You must be a fun guy on long airplane trips.
Hot debate. What do you think?
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January 16th, 2013 at 4:44 am 5
Each MLS listing is flagged with up to 4 occupancy codes.
1.) Owner
2.) Vacant
3.) Tenant
4.) Under construction.
You also can flag multiple items. For example, you could say “Tenant / Vacant” – which would imply it was a rental but now there is no tenant. You also could say “Owner / Vacant” which implies (for example) offshore owner who uses it 3 days every 5 years but it is essentially vacant and not tenant occupied. As a result, there is some double counting but this amounts only to 4% of the total listings.
As I decided to stratify all REBGV and FVREB I came up with the following data.
REBGV – Detached / Attached
1.) Owner occupied – 65% / 47%
2.) Vacant – 19% /31%
3.) Tenanted – 12% / 13%
4.) Under construction – 4% / 9%
Total – Non-Owner Occupied – 35% / 53%.
So – For REBGV – you have 53% of attached dwellings for sale are not owner occupied and 35% of detached.
FVREB – Basically similar split except you have higher tenanted SFH and Lower Owner occupied by approx 5%.
Some interesting sub-components. There are almost no under construction homes in the highest priced markets. This is as expected as for almost 24 months now, it has been difficult to sell a new home in Richmond, Van West and West Van. You do however have 8% in South Surrey. 13% of total Van East listings for attached are under construction compared to 4% on Van West.
45% of listed Van East SFH are not owner occupied compared to 32% van West.
74% of Whistler Condos are not owner occupied (no surprise there). We all now how well that market has performed.
So – - When someone tells you that someone will just not sell because they own it and will just keep living in it – - that’s great but we are now talking truly about a minority of the market in that position as if you then take the owner occupied properties for sale – it would only take a reasonable percentage to get up over the 50% mark for properties that are not able to just sit and wait.
Let’s be clear – Listing volumes are slower than last year. Inventory will not rise this year as fast as last year (and thus, we may even cross over last year’s inventory rather than massively surpassing it). However, MOI may not go below 6 in any month this year and otherwise should not trend lower than last year in any month. With this pattern, 7%-10% accross the board decrease in the REBGV combined HPI is within the reasonable range of outcomes. This is a quantitative view but qualitative aspects are not working in the opposite direction so I am willing to make this prediction.
I will build a full list of the listing stratification as of now and then at the peak of inventory at the end of July/Oct – we could revisit and see how it has evolved. Let’s see how unmotivated sellers really are!!
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January 16th, 2013 at 5:12 am 6
One last series of stats before I call it a day.
When we talk about Vacant properties, why are they vacant? I selected a very specific (unnamed neighbourhood) – Let’s just say it was briefly visited by Yellow Helicopters with news cameras rolling.
This micro-area has 20 vacant SFH for sale. What are the stories on each?
7 are new or yet unsold by the builder.
4 are sales of long term investors which were formerly tenanted but vacant
3 are owned by Realtors who are flipping them (note that realtor owned property always has to be disclosed)
3 are flips of HAM
2 are estate sales
1 was a failed flip by non-HAM.
—
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January 16th, 2013 at 5:23 am 7
@Patriotz comment #143 yesterday:
“It is obvious from the list of topics that it is aimed at sociological/anthropological fields and is completely irrelevant to an area such a finance where you have hard numbers on asset prices and earnings.”
Sociology and anthropology are NOT IRRELEVANT to the study of real estate bubbles. A real estate bubble is fundamentally a SOCIAL phenomenon. Think about the herd mentality of the masses of people who bought real estate because they think the price goes up forever. Think about all the social tension that results between renters and owners and between different races due to the HAM aspect. This is pure gold for sociologists to analyze.
Hot debate. What do you think?
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January 16th, 2013 at 5:47 am 8
“Sociology and anthropology are NOT IRRELEVANT to the study of real estate bubbles. ”
Of course they are relevant to why people buy for excessive prices but they are not relevant to whether the prices are excessive. That’s strictly a matter of numbers.
Many bubble deniers claim that you have to look at the psychology of the buyer to see whether there’s a bubble or not. You don’t – you just look at the prices.
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January 16th, 2013 at 5:51 am 9
@zhr2yvr
Great stuff as usual.
Let’s be clear – Listing volumes are slower than last year. Inventory will not rise this year as fast as last year (and thus, we may even cross over last year’s inventory rather than massively surpassing it).
I think it’s a bit too early to make that statement. Listings are definitely lower this year, but so are sales. At this pace, we would have the same additional listings in January this year as we had last year. The whisperer had a post on it today.
http://whispersfromtheedgeoftherainforest.blogspot.ca/?m=1
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January 16th, 2013 at 6:04 am 10
Patriotz, it is simply not true that you can determine whether or not someone is a bull or bear by whether they are using quantitative or qualitative methods.
Lots of qualitative thinkers like myself are in the bear camp.
Lots of quantitative thinkers are in the bull camp. The real estate cartel is always coming out with statistics, the much-criticized HPI, for example. Those people have been trained to think quantitatively and they pump real estate.
I don’t see how the question of why people buy is irrelevant to this forum. It may be irrelevant to whether or not prices are inflated, but it is not irrelevant to the general topic of Vancouver real estate and real estate bubbles that we discuss here.
Hot debate. What do you think?
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January 16th, 2013 at 6:07 am 11
yvr2zrh / others
where do you see the occupancy code. i could not find it anywhere?
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January 16th, 2013 at 6:18 am 12
A perfectly reasonable comment (#148) by Ludvig von Mises that was voted into foreclosure by the quantitative groupthinkers of this blog:
“If you focus exclusively on numbers you might well lose sight of “qualitative” change, such as change in values and attitudes which affect the market you are trying to predict.
LVM is also bang on with this:
“To predict the direction of the Vancouver real estate market based exclusively on your ratios and charts is impossible.”
Patriotz followed up with a hubristic comment that essentially says he CAN predict the RE market based solely on charts and numbers. So you are saying you can predict HUMAN behaviours and HUMAN systems based solely on numbers. The classic mistake you are making is assuming that people are RATIONAL ECONOMIC ACTORS who make calculated economic decisions based on self interest. The problem with that assumption is that human beings are not always rational. When it comes to real estate, very often people act irrationally and out of emotion. People are notoriously unpredictable.
And here is a fabulous example that demonstrates IRRATIONALITY and HUMAN CULTURE are very big drivers of real estate markets (human culture is what anthropologists study, using qualitative methods like ethnography/participant observation):
“No matter what happened to real-estate prices in this superstitious Chinese city, the one surefire way to get a cheap apartment was to move in with a ghost. Websites track “haunted houses” or hongza, as they are known in Cantonese, which typically sell or rent for discounted prices.
But the latest boom in real-estate prices has nearly wiped away Hong Kong’s haunted-house discount.”
http://online.wsj.com/article/SB10001424127887324669104578208181761763650.html?mod=WSJ_hp_EditorsPicks
The fact that there ever was a “HAUNTED HOUSE DISCOUNT” in Hong Kong demonstrates that real estate market participants act irrationally and are influenced by human cultural traditions of the kind studied by anthropologists.
Hot debate. What do you think?
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January 16th, 2013 at 6:25 am 13
By the way, Patriotz et al.. all you quantitative group thinkers I keep criticizing.
I want you to know that I do think you are smart. I do think your quantitative analysis of Van RE is genius. I appreciate what you have to contribute to the realm of knowledge. Thank you.
I just wish you would recognize the limitations of quantitative methods and the value that others who are trained to think more qualitatively or who are trained in sociology/anthropology might be able to add to this discussion on Van RE. Jesse asked yesterday what’s my beef. That’s basically it.
Hot debate. What do you think?
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January 16th, 2013 at 6:34 am 14
So out of good will, I am going to keep posting qualitative anecdotes and things that I think are interesting from a sociological perspective on our real estate bubble.
You guys should love this. Chief Theresa Spence has admitted that the Attawapiskat First Nation has invested $20 million in 45 condos in Downtown Toronto. The chief says they did this because they did not want to invest in “settler banks” (great way to avoid the white man’s bank–just invest in real estate–ouch banks have their hands in that pie too!) and they expect Toronto condos to go up in price 10% a year FOREVER!!!
Priceless quote from the Chief at the forefront of the Idle No More protests:
“After doing some research and talking to some Toronto realtors, we decided to make a strategic investment by using the cash to purchase 45 condominium units in downtown Toronto. This was a no-brainer for us, as there has been a stratospheric rise in real estate prices over the past decade. The great thing is that we do not even need to spend money on a property management firm to rent out the units; we anticipate the properties to rise in value 10% annually in perpetuity, which is much higher than our rock-bottom 3% mortgage interest rate.”
http://canadanewsnetwork.wordpress.com/2013/01/15/chief-spence-attawapiskat-money-spent-on-toronto-condo-investments/
Hot debate. What do you think?
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January 16th, 2013 at 7:16 am 15
I just want to sum up what I was trying to say in too many posts a couple of days ago re WHY RENTS ARE DROPPING. As long as there is this standoff between buyers and sellers and activity is way down – and with time the threat that the economy will suffer and owners want to limit their cash burn-rate, rental stock in the city will tend to be maximized, thus increasing supply, thus dropping prices. All those units which would otherwise sit empty because they expect to be sold, or are in the transition between last/next occupation, as well as new completions, are tending towards maximum city rental stock. As a renter/potential buyer it doesn’t bother me to see low sales listings because that equals high rental listings. And low home prices will get there in the end.
Thats my purely QUALITATIVE theory and I’m sticking to it!
Hot debate. What do you think?
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January 16th, 2013 at 7:18 am 16
Regarding my post on the Attawapiskat First Nation being invested in Toronto condos. It turns out that is from a satire news website, similar to The Onion. So basically the whole thing is BS. Sorry. I was duped into thinking it was true.
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January 16th, 2013 at 7:27 am 17
@13 anonymous
btw I guess we can start referring to the Patriotz, Jesse’s, yvrz2rh as the QUANTS and us as the QUALS? I’ve heard the term quant used commonly in banking. However, while I have zero statistical ability (everything I’ve learned re economics/RE I’ve learned here on VCI) thus will never be producing graphs, etc, I think everyone should find value in both qualitative and quantitative info here from both bulls and bears, unless their data/arguments are flawed of course.
Hot debate. What do you think?
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January 16th, 2013 at 7:34 am 18
A comment on listings rate and inventory increase. The higher inventory goes, the more downward pressure there is on the inventory. consider the following:
One thing to note is that the rate of churn on active listings is pretty constant year to year at approximately 0.005% of active listings per day. Thus, the more inventory you have, the higher the absolute number of daily expirations / cancellations will occur. This leads to the need to have even a higher number of excess of listings over sales in order to keep the inventory level higher. Starting with a higher inventory means that we have to have higher excess of lists over sales in order for inventory to increase at the same number as last year. If the market overall slows down, the higher number of expirations will trend the inventory down towards what we had last year.
Not sure if that makes any sense but one way to look at it is the higher the absolute number of listings, the worse the market has to be in order to sustain the high inventory.
Hot debate. What do you think?
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January 16th, 2013 at 7:41 am 19
@No Noise:
Thank you. It’s nice to know I am not alone in terms of being more of a qualitative thinker who frequents this site.
You said: “I think everyone should find value in both qualitative and quantitative info here from both bulls and bears, unless their data/arguments are flawed of course.”
I agree 100%.
Hot debate. What do you think?
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January 16th, 2013 at 9:24 am 20
[Who’s losing in the housing slump? Real estate agents]
1/16/2013
“Home sales continue to plummet in most parts of the country, and with the decline has come a new reality for organized real estate: a drop in how much money everybody is making.”
“It’s not just realtors feeling the pinch. Lawyers, renovators and even the government can expect to feel some sort of impact from a decline in sales. ”
“..one of issue for agents is they get used to a certain sales level so any pullback seems catastrophic even if it just puts them back to where they were in 2010 — when, at the time, many would have been satisfied with their sales volume.”
http://business.financialpost.com/2013/01/16/whos-losing-in-the-housing-slump-real-estate-agents/?__lsa=064f-b554
Hot debate. What do you think?
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January 16th, 2013 at 9:27 am 21
Thanks for the stats. But this vacancy stats means nothing if we don’t have anything to compare to, ie: last year’s vacancy?
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January 16th, 2013 at 9:31 am 22
@19 Anonymous
Your welcome. I suspect you have a lot of good info to add here – now pick a name so we can follow what you have to say over time. Otherwise we never know if it’s you or one of the many other anons.
Hot debate. What do you think?
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January 16th, 2013 at 9:34 am 23
@yvr2zrh
I’d be interested in knowing the % inventory listed by Real Estate agents. I know quite a few who have multiple properties. I know most bears have quite a bit of contempt for RE agents and their unprofessionalness during this bubble, but a lot of them truly believed the nonsense they were spewing.
I imagine as this is the industry where incomes will be pinched first from the declining market, that these will be one of the first groups that start selling aggressively.
Hot debate. What do you think?
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January 16th, 2013 at 9:43 am 24
hey sociologist: drop the snotty attitude and watch the downvotes magically disappear!
Surprising that a contextually-sensitive sociologist would entirely miss that kind of dynamic.
Bring it with the anecdotes. Those are valuable. But please consider stopping with the “I’m the only one bringing anecdotes to the table” banter because it is condescending, not to mention not true.
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January 16th, 2013 at 9:46 am 25
For the quant-minded, some numbers!
So, if this January follows the pattern we can expect about a 50% increase in sales in the 2nd half of the month. This would mean we should average around 80 sales/day in the 2nd half of Jan2013. Listings might tick up a bit, but not by 50%.
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January 16th, 2013 at 9:53 am 26
…..I imagine as this is the industry where incomes will be pinched first from the declining market, that these will be one of the first groups that start selling aggressively….
Where did you think those 60 listings per day are coming from?
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January 16th, 2013 at 9:56 am 27
A little math to help clarify what owners of vacant properties are experiencing. Let’s say fictitious property X is valued at $500,000 and let’s give it a cap rate of 5% ($2000/month rental income) – or $25K/year. Said owner must then be banking on AT LEAST a 5% nominal price increase over the next 12 months in order to recover lost rental income. After two years they would need about an 11% immediate price appreciation to recover lost rental income. My guess is that somewhere between 1-2 years (2-4 “selling seasons” (Spring/Fall)) of re-listing without getting their Spring 2012 peak price and people will capitulate in droves.
Throw on the fact that condos are down over 10% (REBGV HPI benchmark) in less than a year and that adds another layer of opportunity cost to the owner for holding rather than selling.
Let the fun begin!
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January 16th, 2013 at 10:17 am 28
“Great stats, yvr2zrh, although you should include in your post on your definition of “vacant”, which if I understand correctly include tenant-occupied (rental) units.”
Not sure why you get picked on for this observation, because it is a good question. When we hear “vacant”, the word has an accepted meaning. To later find it is used in another way makes us feel deceived. If the GVREB released vacancy numbers based on the presence of furniture in the living room, we’d cry foul, because vacant units that are staged get miscounted.
In yesterday’s post ZRH said he gets the “vacant” flag from the listing itself, which is not a field available publicly afaik, so this would be based on data compiled by an MLS insider. I’m still waiting for a BC Hydro insider with info on apparently vacant units based on electricity usage, but one has not materialized yet.
Hot debate. What do you think?
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January 16th, 2013 at 10:19 am 29
@patriotz
“you should include in your post on your definition of “vacant”, which if I understand correctly include tenant-occupied (rental) units.”
You must be a fun guy on long airplane trips.
=========================
Ha, never thought I see the day patriotz sniping someone because they patriotz-ed another post.
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January 16th, 2013 at 10:21 am 30
Burnaby city hall may legalize secondary suites 1/16
not sure how big the impact will be as it’s difficult to enforce..
“Suites should be there to provide affordable housing,” Johnston stressed. “If the process gets too expensive it kind of defeats the purpose.”
“..In the past, the city’s legal department has also advised there are liability issues with legalizing suites that have not been built up to B.C. Building Code standards, he said. And if city hall were to demand all existing suites had to be up to code, many wouldn’t pass inspection.”
“Dan Mulligan, Burnaby’s assistant chief building inspector, said the city deals with about 100 complaints a year related to illegal suites. All complaints must be in writing and can’t be anonymous.
Burnaby only allows in-law suites which must be inhabited by family members and be easily accessible from the main part of the house, especially the kitchen, in case of a fire on the stove, for instance.”
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January 16th, 2013 at 10:26 am 31
Hidden due to low comment rating. Click here to see.
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January 16th, 2013 at 10:56 am 32
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January 16th, 2013 at 10:57 am 33
Off topic warning:
This is of only tangential relevance to real estate if considered superficially… but if the implications are accurate, the impacts will be profound.
http://www.zerohedge.com/news/2013-01-16/guest-post-really-really-big-picture
This is bearish for Van RE because it will accelerate credit contraction, raise non-housing costs of life significantly, and result in loss of jobs in the near term. It may well be bullish for Edmonton and Fort Mac real estate.
Hot debate. What do you think?
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January 16th, 2013 at 11:22 am 34
“I’d be interested in knowing the % inventory listed by Real Estate agents. I know quite a few who have multiple properties. I know most bears have quite a bit of contempt for RE agents and their unprofessionalness during this bubble, but a lot of them truly believed the nonsense they were spewing:
I always thought any listing that’s older than a couple of days and STILL has no pictures and an insulting description (“everything must be verified by the buyer if important” etc.) must be owned by an agent…
Hot debate. What do you think?
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January 16th, 2013 at 11:50 am 35
Have you guys noticed the recent line by the real estate industry types saying that the market will be on pause until “wage inflation” catches up?
Well, then we hear headlines about teachers getting wage freezes/cuts, doctor getting wage freezes/cuts and now this from the feds today – Vic Toews saying police office will be getting wages freezes/cuts.
Rather than “wage inflation”, I think the more realistic way that the housing market will get back to fundamentals is through a good ol’ fashion price crash
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January 16th, 2013 at 11:58 am 36
“When we hear “vacant”, the word has an accepted meaning. To later find it is used in another way makes us feel deceived.
The vacancy code is describe in comment #5 and it means that nobody lives there. Isn’t that the accepted meaning of ‘vacant’?
I dont’ see what the issue is.
Hot debate. What do you think?
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January 16th, 2013 at 12:02 pm 37
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January 16th, 2013 at 12:11 pm 38
does anybody knows if properties listed with http://comfree.com/ are visible in MLS database?
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January 16th, 2013 at 12:29 pm 39
Many buyers of new units leave their units empty when completed rather than rent them out to the odd damaging tenant. They don’t want this risk. However, this only applies in a rising market.
If the market plateau’s/falls, then vacant units must be sold because the numbers don’t work out, unless the owner thinks another boom is just on the horizon.
Hot debate. What do you think?
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January 16th, 2013 at 12:33 pm 40
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January 16th, 2013 at 1:04 pm 41
I noted someone commenting on real estate commissions. The data is grouped in Statcan’s free cansim gdp tables, if you drill all the way down to “ownership transfer costs” under residential. Q3’12 is the latest data. As you can see, Q3’12 is down only 6% from Q3’11 and follows a record Q2 in 2012. Data goes back to 1981 if you choose to look it up. http://www.statcan.gc.ca…click on CANSIM… bottom right under popular picks.
Table 380-0068 Gross fixed capital formation, quarterly (dollars x 1,000,000)
Survey or program details:
National Gross Domestic Product by Income and by Expenditure Accounts – 1901
Geography Canada
Prices Current prices
Seasonal adjustment Unadjusted
Estimates Ownership transfer costs
Q3 2012 5261
Q2 2012 7654
Q1 2012 5388
Q4 2011 4537
Q3 2011 5590
Q2 2011 7179
Q1 2011 5039
Q4 2010 4083
Q3 2010 4628
Q2 2010 6442
Q1 2010 4825
Q4 2009 4457
Q3 2009 5560
Q2 2009 6006
Q1 2009 2812
Q4 2008 2436
Q3 2008 4432
Q2 2008 6036
Q1 2008 4191
Q4 2007 4014
Q3 2007 5115
Q2 2007 6642
Q1 2007 4430
Q4 2006 3468
Q3 2006 4298
Q2 2006 5604
Q1 2006 4016
Q4 2005 3349
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January 16th, 2013 at 1:18 pm 42
“everything must be verified by the buyer if important”
Why would you find that insulting?
Because it usually follows the “all measurements are approximate” clause, which suggests the “Real Estate Professional” is too lazy to whip up the measuring tape or look up the measurements if available, snap up some pictures and perform any work whatsoever to help and sell the listing. Which makes sense, because any listing in any condition in any neighborhood would have sold for most any price imaginable for a long time. Not anymore, it seems. And yet they still refuse to perform any work in exchange for a hefty commission.
That is why I find this sort of stuff insulting.
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January 16th, 2013 at 1:23 pm 43
Re: #28 Devore
Ya, not sure why I got picked on – maybe I didn’t phrase the question in more politely as I was getting lazy at late night – but whatever. I didn’t want to make ASSumptions as I did’t think the definition is as clear-cut as some might think. For example, new-builds that are never lived in are defined as “vacant” per comment #5 instead of being placed in a separate category say “new build”.
Re: #36 BulbsForSale
That’s exactly my point. If I didn’t comment it in #1, you may not have seen a response in #5.
P.S. Yes indeed I am a fun guy in general.
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January 16th, 2013 at 1:27 pm 44
Re: #41 bobdoe
Nice stats. So if the market merely goes back to 2006 level of activities, the realtors will collectively take a 20%+ cut in commissions.
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January 16th, 2013 at 1:30 pm 45
“Because it usually follows the “all measurements are approximate” clause, which suggests the “Real Estate Professional” is too lazy to whip up the measuring tape or look up the measurements if available”
I always assumed it was some standard legal disclaimer, nothing to do with lazines. As a buyer I’d want to confirm all that information myself anyway, so I wouldn’t find it at all insulting.
Hot debate. What do you think?
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January 16th, 2013 at 1:44 pm 46
@Anonymous #7:
All human activity is by definition sociological events including real estate bubbles. Your argument that is a fundamentally a social phenomenon I believe is incorrect.
First merely defining a real estate (or any bubble) is done in respect to the historical and fundamental value and not through any kind of social metric. I claim that any social metric cannot correctly identify a real estate bubble or ANY bubble for that matter since a bubble is defined in respect to some fundamental value (as agreed on by all the participants, in most cases money) that can be ascribed to the ‘bubbly’ item.
Second any kind of social or psychological bubble mechanism present in human minds would presumably apply to any real or imagined item yet only certain bubbles seem to have a noticeable impact on national economies. While there are and has been bubbles in things like baseball playing cards, comic books, tulips etc. they are either very rare and/or do not have the economic impact of real estate and stock market bubbles of late. Why is that?
My pet theory is that it has to do with the availability of credit to inflate the prices of these assets beyond what is its fundamental value. So while you can easily get a large loan to buy real estate you’d be hard pressed to get a government guaranteed loan to buy collector stamps. This makes this real estate bubble a regulatory issue created ON PURPOSE by the current laws and regulations and not some kind of fundamental social issue.
Hot debate. What do you think?
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January 16th, 2013 at 3:01 pm 47
My apologies if already posted, don’t think it has been.
One of her clients is trying to sell a house they bought for $6.98-million in 2009. They initially listed it $15.5-million in September of 2011, then pulled it and relisted it at $12.98-million in March of 2012. It is now listed at $13.898-million with an assessed value of $8.778-million.
“Like art, it is hard to value. The assessed value is too low for a unique property,” said Sydney.
http://www.theglobeandmail.com/news/british-columbia/west-side-vancouver-sellers-holding-out-for-deep-pocketed-buyers/article7381772/
Hot debate. What do you think?
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January 16th, 2013 at 3:32 pm 48
….“everything must be verified by the buyer if important”
Why would you find that insulting?..
Ya, I have a car for sale. You can figure out what model it is, how many miles are on it, the colour and where I live yourself if you care. Otherwise you can pick it up now.
Hot debate. What do you think?
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January 16th, 2013 at 3:35 pm 49
….If the market plateau’s/falls, then vacant units must be sold because the numbers don’t work out,….
Didn’t you hear? ‘Losing money’ is the new ‘making money’ The new long term RE investment strategy: hold long and maximize losses.
Hot debate. What do you think?
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January 16th, 2013 at 3:38 pm 50
Hidden due to low comment rating. Click here to see.
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January 16th, 2013 at 3:48 pm 51
@RealityCheck
“The only people getting raises are the small business people that can have a gazillion deductions and as a result a low income. This gets than all the gov benefits (MSP, Child benefits, free gym passes, etc).”
Wow, you have no clue. If you want a real reality check, try starting your own small business because apparently it’s so easy!
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January 16th, 2013 at 3:54 pm 52
@An Observer –
I read that comment by RealityCheck and shook my head. Good for you for calling them out. I was too lazy.
Do people actually believe this BS? It is sooooo easy being a small business onner – LOL !
These governement employee types have no f*cking clue.
VC
Hot debate. What do you think?
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January 16th, 2013 at 4:06 pm 53
@ Reality Check – taxes on the middle class have been decreasing in Canada since the mid-90s, when Paul Martin tackled the deficit and national debt. Middle income earner base rates have dropped from 28% to 22% for people earning $40-80K per year. Not exactly “death by taxes”…
You’re having a bad couple of days on this site, aren’t you…?
Hot debate. What do you think?
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January 16th, 2013 at 5:07 pm 54
This market is so F*cked. Ain’t it fun?
Hot debate. What do you think?
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January 16th, 2013 at 5:09 pm 55
@Manna from heaven Says:
“It isn’t very urgent for these kinds of sellers. They have the power to hold onto the property. It is for the right buyer who appreciates the mountain and water views,” Ms. Deng asserts. “Like art, it is hard to value. The assessed value is too low for a unique property.”
What an enlightenmental bullshit, like we plain folks can’t fathom power of those Chinese speculators and crocks. And abow all we have realwhore explaining sophistication and high-class, bastards. Off to a bathroom, got diarrhea…
http://www.theglobeandmail.com/news/british-columbia/west-side-vancouver-sellers-holding-out-for-deep-pocketed-buyers/article7381772/
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January 16th, 2013 at 5:11 pm 56
Wow… Reality Check needs to get a Reality check. I actually work both sides of this equation and can say that the small business tax breaks are not all that they are chalked up to be. Sure there are some benefits here and there, but not much (perhaps more if it is a really small business run out of your home?? but that is not my case). I have an Accounting background so I don’t think I am missing much when it comes to getting my 0.50 back in HST on something
… not saying I am cheap.. just.. you know, I watch the nickels. On the other half of the equation I certainly see wage stagnation as a key feature in private industry and I don’t see that changing for at least 3-4 years. I don’t see any method by which wages can absorb the asset inflation that we have seen. Most of the people in the private company that I work for are lucky if they are seeing 1.5%/year averaged over the last 5 years. That is a looooootttt of years of house prices holding steady for that to catch up.
Hot debate. What do you think?
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January 16th, 2013 at 5:12 pm 57
Not sure if its new years hang over but one of the places i own that deals with high ticket items of mass consuption is expirencing very little business this first few weeks. As much as i want to think its due to ‘holiday broke mode’ same time last year was better. Certainly people are very causious about spending large sums, even though there is no competition in my market place. If it goes on like this into February then the is higher pressure for downward price adjustment.
Hot debate. What do you think?
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January 16th, 2013 at 5:14 pm 58
Hidden due to low comment rating. Click here to see.
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January 16th, 2013 at 5:28 pm 59
there was some chart (can’t find it now) that showed 40% of Vancouver RE market driven by speculators, so it’s reasonable to assume that about 40% of apartments are not ‘primary home’ for anybody, they are just chips in Vancouver RE casino.
It looks like there will be a problem to cache them out (if everybody getting jackpots in Casino – it goes bankrupt:)
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January 16th, 2013 at 5:45 pm 60
ugh that Globe and Mail article is so irritating.
I hope that listing makes it over to http://vancouverpricedrop.wordpress.com/
in the next few months
greedy f@@KS
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January 16th, 2013 at 6:10 pm 61
Kind of sums up what Vancouver has turned into doesn’t it? Smaller parasites feeding off of larger parasites… I hope they go broke waiting in a long, agonizing, painfull and tormented wait.
http://www.theglobeandmail.com/news/british-columbia/west-side-vancouver-sellers-holding-out-for-deep-pocketed-buyers/article7381772/
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January 16th, 2013 at 6:17 pm 62
@veej: if they wanted it to sell for double what they paid they shouldn’t have bought a place where the address starts with a 4
Hot debate. What do you think?
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January 16th, 2013 at 6:34 pm 63
New Listings 239
Price Changes 48
Sold Listings 52
TI:13035
http://www.paulboenisch.com
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January 16th, 2013 at 6:36 pm 64
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January 16th, 2013 at 6:37 pm 65
Happy 13K everyone!
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January 16th, 2013 at 6:44 pm 66
Avg daily inventory growth this month: 125
Projected month-end inventory: 14,406
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January 16th, 2013 at 6:45 pm 67
Time to get your party hats on, VCI! Here is the 13,000 inventory party thread:
http://vancouverpeak.com/Thread-13K-party-for-2013?pid=236#pid236
Hot debate. What do you think?
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January 16th, 2013 at 6:50 pm 68
Conversation overheard in Point Grey. Two men in their late 50s.
- (tensed) Have you heard that the number of sales is dropping?
- (smiling) relax! Nothing can happen, it is Vancouver. Last year, prices went up as soon as the Chinese arrived for the CNY, in April. Just wait for February this year, believe me prices will pick up again.
They however looked like “informed citizens,” but I guess they only listen to Global.
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January 16th, 2013 at 8:11 pm 69
hey Pope, the Vancouver Peak registration page isn’t working properly. The Image Verification image does not pop up, so we can’t validate info to get access. I tried a few browsers including IE.
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January 16th, 2013 at 8:29 pm 70
http://www.economist.com/news/finance-and-economics/21569396-our-latest-round-up-shows-many-housing-markets-are-still-dumps-home
“Overvaluation is especially marked in Canada, particularly with respect to rents (78%) but also in relation to income (34%). Mark Carney, the country’s central-bank governor, who is soon to jump ship to join the Bank of England, where he takes over from Sir Mervyn King in July, may have shown good market timing with his move to London as well as a deft hand in negotiating his lavish remuneration. Singapore and Hong Kong also look vulnerable to a correction, given the overvaluation on their price-to-rents ratios.”
Hot debate. What do you think?
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January 16th, 2013 at 8:30 pm 71
I see a regular image verification captcha on an android tablet, are you sure it’s not something wrong with your connection?
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January 16th, 2013 at 8:52 pm 72
Teranet December data should be out any day now – perhaps even this week!
Unfortunately, the current weakness in sales won’t be reflected in prices until March data which will come out in April
.
I am certain, without empirical evidence, that a smoothing of average sales is a leading indicator of the sales pair based index.
In which case: http://www.chpc.biz/vancouver_chart.html
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January 16th, 2013 at 9:56 pm 73
A mid-range $650,000 detached house in the suburbs like Surrey is going to lose 20% of its value in 2013? Yes(Up), No (Down)
So ends up $130,000 less.
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January 16th, 2013 at 10:51 pm 74
Schiller was on BNN today and his thesis is that house prices rise at the same rate as inflation
I wonder what rate of inflation he means
Inflation as reported (which I think is lower than actual inflation), wage inflation or actual inflation?
I would think it would be wage inflation (perhaps a couple of percent a year)
Next question what would be the starting point for calculation? At the beginning of the bubble? The mid point? Or after the crash?
He also said he would not recommend anyone buy a second house as an investment in Vancouver he said use your imagination and diversify
But he also stated “I suppose it’s okay to own the house you live in” when asked about Vancouver real estate
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January 16th, 2013 at 10:53 pm 75
@RealityCheck
I think will be more than that, with confidence I would say 35%. It will be around 227K down so a bit above 400k which is a more reasonable price. I still would not not buy in Surrey but that’s my preference.
BTW the prices were slashed by Bosa too. Just received an e-mail saying that: IT’S A GOOD THINK YOU WAITED now 20K off. Take that bulls. Start listing your properties now for 20% less, before it’s too late.
Hot debate. What do you think?
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January 16th, 2013 at 11:03 pm 76
@Chabar #55
Disloyal cadre! Your disharmonious, splittist, ideological cynicism has no place amongst the unique trees and mountain views! There are only 9 million mountains in this concessionary area known as “Canada,” but keep that to yourselves. We’ll work on the name later.
(you know what i think about all this, i just wanted an excuse to use my catch phrase)
if you need me, i’ll be getting my phony LV leather Galaxy Case fitted to my belt and shopping for black Audis you’ve never heard of.
Hot debate. What do you think?
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January 16th, 2013 at 11:07 pm 77
You know too many Canadians are home owners when the story leads with the fact that a concierge was a must have for the 25 year old hairdresser when they bought their first condo:
http://www.theglobeandmail.com/life/home-and-garden/real-estate/what-women-want-in-a-condo/article7442398/
Really? 25 year old hairdresser buying an overpriced condo in TO…you know rhere’s less than 5% down there.
Hot debate. What do you think?
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January 16th, 2013 at 11:10 pm 78
@Anonymous #74
US & Norway since 1890
http://www.frbsf.org/publications/economics/letter/2012/el2012-19.html
Inflation would be CPI for the last couple decades, not sure about prior to that.
I’ve also seen Australia has grown with inflation since the 1870′s
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January 16th, 2013 at 11:12 pm 79
National media is really starting change tone:
http://m.theglobeandmail.com/globe-investor/personal-finance/mortgages/flaherty-will-face-heat-if-home-prices-cool/article7446934/?service=mobile
It starts off sounding like a Flaherty witch hunt but then basically spells out that he’s just undoing the loosening previously done and the inflated market needs it.
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January 16th, 2013 at 11:15 pm 80
“I am certain, without empirical evidence, that a smoothing of average sales is a leading indicator of the sales pair based index.”
fing QUAL
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January 17th, 2013 at 12:01 am 81
[...] As of last night the inventory count hit 13,035. [...]
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January 17th, 2013 at 8:48 am 82
….west-side-vancouver-sellers-holding-out-for-deep-pocketed-buyers….
I say: let em hold out! See ya, wouldn’t want to be ya!
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