Is the Vancouver market falling apart or taking a breather?

There’s an article over at CNBC talking about the National real estate market, it’s warning signs and various slumps.

They revisit Vancouver Real Estate agent Keith Roy’s very public decision to sell his house last year and say prices have dropped 3.9% in Vancouver, 5.6% in West Van.

They also talk about lending practices in Canada and recent efforts to return CMHC amortization terms to their historical norm.

Some of the loopholes people use to avoid the mortgage restrictions are quite extraordinary. For example, although the government requires buyers to purchase private mortgage insurance on mortgages with 100 percent loan-to-value ratios, eHow says this can be avoided just by getting two mortgages, each for 50 percent of the home value.

Canadians are also allowed to borrow against pensions and life insurance policies to fund their down payments. Even credit cards can be used to fund down payments. So it’s very possible that the total housing debt is actually much higher than the official mortgage debt numbers.

If this sort of thing is being openly discussed even after the government has launched its efforts to curb lending excess, just imagine what kind of shenanigans were going on before the crackdown. The quality of the mortgages made in 2011 and 2012 may turn out to be much worse than is commonly suspected.

Read the full article here.

So is the Canadian market falling apart at this point?  Vancouver has certainly fallen over the last year and this is starting to have an effect on developers as well – the Alba has been put on hold due to a ‘challenging real estate market‘.

 

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Joe Sitting On Cash
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Joe Sitting On Cash
I used to own 2 condo’s. Sold them both. One was bought in 2002. Primary residence. Sold in April 2011. Sold for double the purchase price. No tax. Another was bought as a presale in April 2004. MAC Realty was the marketing company. $40,000 Down payment was borrowed from bank. Sold it 2 weeks before completion date in March 2006. Made almost $80,000 profit. Today, I am renting and waiting for the housing market to collapse. And when it does, like a vulture, I will attack. Yes, there are a lot of people who are upto their eyeballs in debt. But there are also a lot of people (teachers, taxman, longshore men, govt. employees, political cronies and bureaucrats, professional such as nurses, etc.) with healthy bank accounts, who like me are waiting for the collapse. When that time arrives, they… Read more »
patriotz
Member

“eHow says this can be avoided just by getting two mortgages, each for 50 percent of the home value.”

What? You can get a 50% 1st and a 50% 2nd? I don’t think so. Also, their use of the term “private mortgage insurance” sort of gives me the idea they don’t have in-depth knowledge of Canadian mortgage financing.

“Canadians are also allowed to borrow against pensions and life insurance policies to fund their down payments.”

You cannot borrow against a pension. Nor can you against an RRSP, although you can take money out via the Home Buyers Plan. Maybe that’s what they were talking about, in a very garbled way.

Loud Howard
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Loud Howard

@#1 Joe Sitting On Cash = FATHER Returns

BWilson
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BWilson

Teranet’s Vancouver HPI was down in April

March 2013 level = 166.98
April 2013 level = 165.63

southseacompany
Member
southseacompany

China’s CCTV reports on Canada: “Canada’s Hot Housing Market is Cooling”

http://www.youtube.com/watch?v=cJESXXlSi7Q

Some Guy
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Some Guy

@4 BWilson

The Teranet index for Vancouver was lower in April than in February – that’s a weak reading for the spring market. Last tear the Teranet index climbed from February to June before tailing off – definitely looking weaker so far this year.

Last year May was the strongest month of the year for the Teranet index in Vancouver so it will be interesting to see how this year compares.

Meanwhile, Victoria is down 5% in 3 months, with the index back at a level first reached in August 2007, almost 6 years ago. I thought Victoria might bounce back a little upwards this month after last month’s deep plunge in its Teranet index but it was down again.

mac
Member
mac

Not much is on hold over at the OV. They’ve just completed a tower at the Pinnacle development site and it’s 14 floors with maybe 3 people in it?! Whatever. I’m tired of speculating on causes. Maybe Rennie’s Dr. Ko bought it all. Who cares. He has three more buildings to snap up in front of it. And the one old building left on the block, with a chop shop in it, has a rooster living on the roof. So enjoy.

RVW_0824
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RVW_0824

http://business.financialpost.com/2013/05/06/cmhc-robert-kelly-karen-kinsley/?__lsa=352e-5ab6

Finally – F is getting serious about oversight of the CMHC. In addition to a new board chair there is also a new CEO. And while now publicly reported….a new CFO as well.

Village Whisperer
Member
Village Whisperer

@ MAC (Comment #7)

“Maybe Rennie’s Dr. Ko bought it all.”

Have seen this comment about “Dr. Ko” before. Can anyone provide background and data on this?

village_whisperer@live.ca

Captain Picard
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Captain Picard

RE Market falling apart?
without a doubt, we have MNBC and MacLeans magazine, plus many other Mainstream Media outlets, plus the Bank of Canada, and Government of Canada saying it is so

hard hat
Guest
hard hat

Duncan city workers are operating a Jack Hammer in front of the Cowichan Green Party headquarters. What does this tell you?

Dirty tactics are what makes British Columbia the best place on earth!!

Anonymous
Guest
Anonymous

Anyone have an update on Wall centre central park? Is it sold out?

Joe Sitting On Cash
Guest
Joe Sitting On Cash

@ #12 Anonymous Says:

“Anyone have an update on Wall centre central park? Is it sold out?”

I Live close by. Either tomorrow or Thursday I will go and check it out. If you or anyone here have any specific questions that you would like me to ask, post the questions here and I will ask.

@ #3 Loud Howard Says:

“@#1 Joe Sitting On Cash = FATHER Returns”

Wrong. Not a Daddy…….yet.
No children that I know of.

taylor192
Member

Ah, I thought the 2nd (or even 3rd) mortgage trick was only a US thing… looks like we aren’t much better.

taylor192
Member

@patriotz

You can “borrow against” your RRSP. I have a LOC at below prime cause it is secured against my RRSP.

Yellow Helicopter
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Yellow Helicopter

@Anonymous #12,
It’s not sold out. According to a newspaper ad in the Metro or 24 Hours a couple of days ago, they’ve sold 268 units. (Not sure how many are available?) They’re also offering $5-10k discounts off the price as an ‘early buyer’ special.

Friday’s edition of the 24 Hours Newspaper had an ad for one of the condo developments along the river in New West – offering discounts and for the developer to pay mortgage payments for a full two years, for the next 12 buyers. (Obviously targeting people who don’t realize it’s much better to get $20-80k off the unit, rather than this offer.)
Anyway, condo developers are getting desperate.

minotaur3
Member

RE: Wall centre

Wow, it’s not sold out yet? Rennie promoted the bejeezus out of this thing for months, and it does seem well priced for today’s market. Rennie always sells out his “flagship” condos. Anything less than an instant sellout is an unmitigated disaster…

real_professional
Member

Hey guys –

The Pacifica Partners Real Estate Chartbook is updated for May 2013.

http://pacificapartners.ca/blog/2013/05/14/canada-us-real-estate-chartbook/#.UZJ7KbXa8Qh

Only read this if you really like charts! Warning, chart explosion.

Thanks

Yellow Helicopter
Guest
Yellow Helicopter

Looks like there’s 632 units. And only 268 sold, even with the draw of a whole $25 metrotown gift card! 😉 Ouch.

Data from ‘Waiting for the sales pitch at the Wall Centre Central Park’:
http://www.vancouverobserver.com/real-estate/selling-future-edge-vancouver-affordable-living-moves-south

PS – Same writer who reported on the dead open houses a while ago – he’s definitely a fellow bear. 🙂

Best place on meth
Member
Active Member
Best place on meth

Ternanet Vancouver prices already turning down in April?

That was sooner than expected.

It’s all downhill from here.

midnite toker
Member
midnite toker
May 14 (Bloomberg) — Canadian home resale prices rose in April at the slowest annual pace since 2009 as Vancouver posted declines, according to the Teranet-National Bank Composite House Price Index. Prices rose 2.0 percent in April from a year earlier, based on an 11-city composite reading, according to a report today by Montreal-based National Bank Financial, the slowest year-over-year pace since November 2009. Prices in Vancouver recorded a 2.9 percent annual decline, according to the report. The Teranet data adds to evidence Canada’s housing market is becoming a drag on the economy, a slowdown that’s been encouraged by policy makers amid signs of overbuilding. Prices rose 0.2 percent during the month, according to the index. That was the slowest monthly increase in April since 2009, when the country was in a recession, and the second slowest in at least… Read more »
Don't get it
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Don't get it

Re: Teranet price declines

But the realtor franken-number shows prices increases. The realtors have better data since they sell real estate. They know what the selling prices are.

jesse
Member

“Ternanet Vancouver prices already turning down in April?”

I think the Vancouver March HPI was on the high side, at least compared to the prevailing sales-inventory conditions. I’m thinking March had some additional noise, a consequence of Teranet having chosen to release its data less than one month after the data are available. Case-Shiller, the sister index in the US, averages over more months but is likely less noisy. Another clue was the MLS-HPI from Jan-Feb showed seasonal weakness in March that somewhat went against Teranet. The two indexes tend to be reasonably correlated.

Agree with some guy above, this is weak, but not unexpected!

jesse
Member
Here is the graph adapted from mohican’s work before the recession that shows the best correlation between 6 month Vancouver Teranet HPI change and months of inventory (3 month average). The two brown outlierish dots on the right are the last two months, March on the top and April on the bottom. Not that I put a ton of faith in any empirical model but this one’s done well in the past and, lo, the April HPI was closer to the trendline. In the coming months, with reduced MOI, we can expect more points around the 0% level. One small difference though: most of the points from May-July are way up on the top left; this year they’ll be alongside points from November-March of past years. So if sales remain weak (and that’s an “if”) we can expect another leg… Read more »
Many Franks
Member
Active Member

From Banks, CMHC to feel housing slowdown: Morningstar:

Another day and another bearish report on the Canadian housing market – this time from analysts at Morningstar, the Chicago-based research group.

The analysts warn that if housing prices fall by just 10 percent, the country’s largest banks and the government-backed Canada Mortgage and Housing Corporation (CMHC) face a “significant risk of losses or impairment to capital levels.” The analysts add that the loan-to-value ratio of mortgages at Canadian banks is at the same level it was in the U.S. prior to that country’s collapse in real estate values.

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