BC, debt, economy, opinion, predictions, prices, supply

Condos pulling down Vancouver home prices

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Dropping prices on condos are being blamed for pulling down home costs in Vancouver.

..because what could be worse than more affordable housing?

Prices on all housing types are falling with forecast for more price drops, Royal LePage is forecasting a 3% drop overall in 2013 but the largest drops so far are being seen in the condo market, which have fallen 3.6%.

“Buyers are waiting for that big decrease to happen but I think if they’re going to keep waiting for that, chances are they aren’t going to see it,” said Todd Talbot, realtor and host of W Network’s Love It or List It Vancouver.

That’s because industry experts say some sellers aren’t interested in making significant price reductions, and are taking their homes off the market.

“They don’t have to sell,” said Brendon Ogmundson, an economist with the BC Real Estate Association.

“You don’t find a lot of extra listings unless people need to sell quickly because of some financial catastrophe, and that simply isn’t in the cards, so what we’re going to see is normal demand and supply dynamics.”

Now I’m curious – what’s you best guess.  Does the BCREA economist really believe that prices are set by people taking their property off the market, or by the properties that are sold?

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Joe Blow

The guy is just pain wrong. “People don’t have to sell”. Right, you’re paying the mortgage at boom valuations and you keep seeing your property value drop but you just decide to keep paying hoping for an increase in the future. One problem, this bubble isn’t related to correction in the condo market, its connected directly to the true state of the economy. It won’t be long before the drop in value correlates with a huge slow-down in the economy. When people are unable to pay their mortgage, and the choice is sell extremely low or default and lose everything, you will see the buyers market emerge just as it did in the US. Unfortunately, the value of the dollar will also decline, so unless you have a larger stockpile of cash than your buying budget, you will lose your… Read more »

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yvr2zrh

I’m just asking but – – does it appear that the listings have slowed? We have barely had any 300 days and definitely no 400 days yet. Are we talking a 20-30% decrease in listings pace? How do we compare against 2009?

I don’t have my model up and running at this point but may get it going again next week so any thoughts would be helpful.

We should all take note however that one of the most relevant pictures shown right now is the pace of decline of the market from peak in the first 6 months. It is faster than any other US city during the US crash. That trajectory does not look good for Vancouver.

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yvr2zrh

Regarding the Il Giardino site – the property taxes alone on that site make it extremely expensive to run a business at. (it’s in the multiple 10’000’s per year) I always wondered how long that could go on for. Look at the block next door on Pacific where all the restaurants there for the past 7 years have gone bankrupt and now it is empty. The block with Il Giardino is prime for development of some type so if I was him – I would do it.

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HAM Solo

All’s quiet on the Western Front. Is it really true that Umberto has sold the Il Giardino site to a condo developer?

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VHB

2013

2-Jan	96	178	53.9%
3-Jan	50	227	22.0%
4-Jan	33	211	15.6%
5-Jan			
6-Jan			
7-Jan	63	254	24.8%
8-Jan	70	245	28.6%
9-Jan	34	221	15.4%
10-Jan	47	210	22.4%

2012

3-Jan	45	259	17.4%
4-Jan	65	288	22.6%
5-Jan	30	231	13.0%
6-Jan	76	217	35.0%
7-Jan			
8-Jan			
9-Jan	43	376	11.4%
10-Jan	94	351	26.8%
11-Jan	59	266	22.2%
12-Jan	48	232	20.7%
13-Jan	55	218	25.2%

2011

4-Jan	88	267	33.0%
5-Jan	76	250	30.4%
6-Jan	40	165	24.2%
7-Jan	86	177	48.6%
8-Jan			
9-Jan			
10-Jan	98	266	36.8%
11-Jan	44	261	16.9%
12-Jan	73	186	39.2%
13-Jan	74	200	37.0%
14-Jan	58	171	33.9%

Average sales over first 7 workdays:

2013: 56
2012: 59
2011: 72

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VHB
Jan-2013	
Total days	21
Days elapsed so far	7
Weekends / holidays	3
Days missing	0
Days remaining	14
7 Day Moving Average: Sales	49
7 Day Moving Average: Listings	228
SALES	
Sales so far	393
Projection for rest of month (using 7day MA)	692
Projected month end total	1085
NEW LISTINGS	
Listings so far	1546
Projection for rest of month (using 7day MA)	3195
Projected month end total	4741
Sell-list so far	25.4%
Projected month-end sell-list	22.9%
MONTHS OF INVENTORY	
Inventory as of Jan 10, 2013	12565
MoI at this sales pace	11.58
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paulb

New Listings 210
Price Changes 49
Sold Listings 47
TI:12565

http://www.paulboenisch.com

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ReadyToPop

WASHINGTON — Federal regulators for the first time are laying out rules aimed at ensuring that mortgage borrowers can afford to repay the loans they take out.

The rules being unveiled Thursday by the Consumer Financial Protection Bureau impose a range of obligations and restrictions on lenders, including bans on the risky “interest-only” and “no documentation” loans that helped inflate the housing bubble.

Lenders will be required to verify and inspect borrowers’ financial records. The rules discourage them from saddling borrowers with total debt payments totaling more than 43 percent of the person’s annual income. That includes existing debts like credit cards and student loans.

New federal rules aim to curb risky mortgages

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crashcow

Too early to draw conclusions, but this year is shaping up to be very interesting:

– inventory is rising faster than the record-setting pace of Jan ’12
– MOI is now 11.4 vs. 9.1 in Jan ’12
– Crash curve graph shows Van is falling faster than any US city (http://vancouverpricedrop.files.wordpress.com/2013/01/graph.jpg)

hat tip b5baxter, PCinWA, observer

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Yalie

Well, apparently we don’t have to worry about a “hard crash” any more…

Canada’s housing market: Expect soft landing, not hard crash

http://ca.finance.yahoo.com/blogs/insight/canada-housing-market-expect-soft-landing-not-hard-163039553.html

The article is hard to fault, as it cites a number of unbiased, objective sources:

CMHC
CIBC
BMO
Royal Lepage
TD

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ReadyToPop

“Buyers are waiting for that big decrease to happen but I think if they’re going to keep waiting for that, chances are they aren’t going to see it,” said Todd Talbot, realtor and host of W Network’s Love It or List It Vancouver. That’s because industry experts say some sellers aren’t interested in making significant price reductions, and are taking their homes off the market. “Some sellers”, how about the rest that DO list….don’t they determine the market? “They don’t have to sell,” said Brendon Ogmundson, an economist with the BC Real Estate Association. That would include everyone in Vancouver who doesn’t have their place listed. “You don’t find a lot of extra listings unless people need to sell quickly because of some financial catastrophe, and that simply isn’t in the cards, so what we’re going to see is normal… Read more »

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No Noise

@#19 Goukou3

In that free rag 24 Hours they did a poll yesterday of 3 things which readers think would happen in 2013 including whether real estate values would drop – only 50% of responders agreed. Very unscientific poll I’m sure but shocking if 50% of locals are still drunk on the kool-aid..

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chilled

Brian Says:
January 10th, 2013 at 2:29 pm

“But what if you HAVE to move? Or get divorced? Or have overextended yourself buying luxury goods you don’t need and can’t afford and just lost our job? ………..”

Or had a couple successive crop failures due to an infestation or police raid??

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RaggedyRenter

If they don’t want to spook current buyers, the lie they should have tell would be “yes there was a correction but it is over, outlook is rosy, the sellers expectation has realigned and now is a good chance to pick up property for less than what you would pay 6 months ago and build your equity.” They need to consistently send this message instead of the mixed message of denial we’ve seen. If I am a seller why would I trust a realtor who ask me to cut list price when her association’s economist recommended otherwise? @VMD As much as I like the benefit of high dollar, it’s tough for manufacturing industries when the dollar is at par. I think that long term the loonie will devalue against the greenback. Like it or not, Right-to-work will come to Canada.… Read more »

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Vote Down The Facts

“By the way, Whistler condos took a 10% dive in 2012… not news but still ouch!”

Anybody know the current MOI for Whistler condos -or even better, some sort of average throughout the year?

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VMD

[Maclean’s on Tiff Macklem: End of household debt binge will leave $50bn gap in the economy] 1/10/2013 “Bank of Canada Deputy Governor Tiff Macklem, the favourite candidate to replace Governor Mark Carney when he takes off for England in the Spring, is speaking right now at Queen’s University in Kingston, Ont. Below is the integral text of his remarks, and here are a few pointers: – We can’t count on the housing market and overstretched consumers to keep propelling economic growth. – Eliminating Canadians’ private net debt alone would leave a $50bn gap in the economy. – What’s going to help us plug the hole? Our traditional engine of growth, exports, has been underperforming for over a decade. -Two-thirds of this is because we’re exporting to the wrong markets (too much of the U.S., too little of the emerging economies),… Read more »

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Makaya

December 2012 Year End Housing Market Update, ft. your REBGV Comedian in Chief Eugene Klein.

My favourite quote: “And began a modest decline in the later half of the year.” Which is totally contradicted by what is shown on the graph!

By the way, Whistler condos took a 10% dive in 2012… not news but still ouch!

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Brian

But what if you HAVE to move? Or get divorced? Or have overextended yourself buying luxury goods you don’t need and can’t afford and just lost our job? Realtors are now spinning things every which way.

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PCinWA

Per VHB’s posts the last three years:

01/10/11 Inventory: 9863 Months of Inventory: 6.36
01/09/12 Inventory: 11582 Months of Inventory: 9.07
01/09/13 Inventory: 12466 Months of Inventory: 11.37

Inventory is up 7.6% year-over-year, and months of inventory is up 25.4% year-over-year (since sales have slowed).

2013 is going to be ugly…

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Anonymous

…..its not about the comfort of sellers, it’s about not scaring away buyers. You can bet realtors are trying to talk sellers into lowering their listing price so they can get their commission and move on…..

I think you’re giving them too much credit. The reason they don’t want to admit to lower prices is that they’re all trying to dump their own overleveraged holdings before the Tsunami comes ashore.

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gokou3

Re #21:

I am sure the dark side will spin it as “xx% increase m/m!”

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painted turtle

Let’s keep in mind some realtors are also speculators.
They need some time and a few greater fools to unload before the collapse.
Also I am wondering in which ways they have shared interests with developers. The panic mode is not in the interest of realtors for the time being, it seems, but it will come.

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VMD

From comment #107 on garth’s site today:
“While it is still early in the year, sales show a 35% year over year drop in January, and a month over month drop of 49%”

FVREB STATS – as of January 10, 2013
6 of 22 Working Days
JANUARY 2013 Listings 656 Sales 124
DECEMBER 2012 Listings 363 Sales 244
JANUARY 2012 Listings 731 Sales 191

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gokou3

Re #10:

“One of the things we learn as skeptics of the great Canadian housing boom is how seemingly unsustainable market dynamics can go on longer than one ever imagines.”

As economist Keynes said, Markets can remain irrational longer than you can remain solvent. Of course, most of us don’t have the means to short the RE market, so solvency is not a problem.

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gokou3

RE #17:
“However, I think they are fighting to keep the “Dumb Money” in the market. As soon as it becomes painfully obvious to even the dumbest segment of RE speculators that it will not be a good time to put money into the local RE market for many years, that proportion of buyers will start to dry up. ”

Agree. It may be obvious to many of us reading this blog that the market is falling, but to the masses (read: majority) the market is still stable / mildly positive.

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