BC, debt, economy, equity, Open Topic, prices

Hardships for BC Realtors

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141 Comments

The Globe and Mail has a ‘financial facelift‘ featuring a realtor couple from BC.

If you thought real estate was always the road to riches you might be surprised by some of the numbers in this article.

She is 52, he is 66. With commission income sagging, they are revisiting their retirement plan, which is to pay off their real estate loans and sell their two rental properties when the market recovers. The rentals are operating at a loss.

This couple has a cash flow problem, and this while the market has been flat as Dave would say.

What happens if we see a sharper correction in our high prices and how many other salespeople are in the same boat?

Read the full article here.

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oneangryslav2

Willie McDougall Says: July 23rd, 2013 at 3:48 pm 107 “In economics 101 terminology that’s a “consumer surplus”. I have no qualms with people overpaying for lifestyle reasons. ” Welcome to Vancouver. As far as I’m concerned, it begins and ends there. Want cheap housing? Try the Skeena. Welcome to the blog, Willie. I’ve been voting your comments up, not because I agree with you but because I appreciate a contrary opinion once in a while. I was intrigued with this comment of yours… Want cheap housing? Try the Skeena. Why the Skeena? I have cheap housing right here in Vancouver (a 1400 square foot, three bedroom place where my rent hasn’t increased in two years. Oh, and get this: my wife and I are able to paint the walls any colour we want, and make as many changes to… Read more »

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chilled

Son of Ponzi Says:
July 23rd, 2013 at 10:47 pm 135

It’s funny that Garth Turner now uses the Franken numbers produced by the Real Estate Boards.

+++++++++

Simply because he has been all over the map on virtually every argument. The classic politician. He was labeled ‘Turncoat Turner’ long before most of this blogs followers were out of their ‘Huggies’™

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Son of Ponzi

It’s funny that Garth Turner now uses the Franken numbers produced by the Real Estate Boards.

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gt

GARTH TURNER IS A TRUE CANADIAN

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Son of Ponzi

Best place on Meth.
It’s only getting better.
Pollution and smog is getting worse by the day.
Just look east towards the Valley.
Beijing on the Fraser, not quite yet, but a possibility.

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chilled

STOP voting DAVE down simply for the act of voting Dave down. Some of his arguments are valid and lets face it, not every Realturd is a ‘turd. Some are actually Realtors®

If not, rest assured this blog will become/is becoming a replication of GT’s blog in which “group think” prevails and the same message is repeated incessantly to a cheering crowd.

I read GT’s blog intermittently, based on what my stomach will allow. I can only take so much of boot licking, self aggrandizing proselytizers. Let’s not replicate that here.

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Best place on meth

Wow, look at the stability of this market – so balanced, so perfectly calm.

Inventory at almost exactly 18K and MOI at a perfect 6.0 for nearly 3 months now.

It’s almost like Vancouver’s unusually perfect weather this summer with sunshine every day and the temperature at the optimal, ideal and balanced 24 degrees which is not too hot and not too cool but just awesomely right.

Wait, what the fuck – is that a storm coming this way?

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Aggregator

I like these HAM stories. Very entertaining, but here’s reality.

As of June, YoY YTD sales dollar volume: Vancouver down 8%, Victoria down 7.3% and Fraser Valley down 17%.

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jesse

“I was referring to your 60 to 65% overvaluation metric” So then “hence my point that it’s risky for consumers to use [historical price-rent ratios]. Rather, it is more appropriate to consider one’s internal economy…” So it’s a risk that someone forgoes buying in case yields stay low for a prolonged (ie for as long as we can imagine) period and price-rent will remain elevated. The only thing I submit here is that, in the broader historical context extending beyond the past few years, interest rates — even unchanging interest rates — are not strongly correlated with house price-rent ratios. People who think affordability is currently the primary driver of investor demand may be right — marginal investors may be heavily payment focused — but that is not always the norm from studying history of previous asset price bubbles. While… Read more »

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jesse

“what is left is a globally desirable city where properties in the most desirable areas exceed potential rental yields.”

A desirable city’s real estate sees investors accept poor returns because it’s a desirable city. Got it.

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It's simple

#123
I had a feeling it was less than 10%. So that tells us we are buying and selling to ourselves and it won’t take long to be like Ireland

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Willie McDougall

“Welcome to Vancouver”

After we peel the onion that’s all that’s left. A tautology.

No. When we peel the onion, what is left is a globally desirable city where properties in the most desirable areas exceed potential rental yields. *shock* Nobody is stopping you from moving to Langley or Maple Ridge where you can get your property that is in line with “historical data” or whatever system you use.

I’ll check back in about 12 months from now to see how you’re doing with your 65% decline wager for Vancouver condos. I actually hope you’re right as I’ll be lining up to buy a Yaletown Condo for my retirement nest-egg! 🙂

Until then,
Willie McDougall

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Van RE suckers

So I have viewed about 6 rentals at the newly completed Wall Center False Creek, all were aprox 375$ condos, all were newbie landlords who bought on a whim and are now forced to rent them as they would loose if sold, BTW these 350-375$ investments are grossing 1500$ monthly, yikes

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Madashell

Over at Garth’s “Currently 88% of all real estate buys in the region (Vancouver) are being made by people who live there. About 6% come from elsewhere in Canada, and only 6% don’t live in the country.”

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paulb

New Listings 211
Price Changes 121
Sold Listings 128
TI:18043

http://www.paulboenisch.com

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Dave

jesse, I think you confused what I meant by ‘such a metric’. I was referring to your 60 to 65% overvaluation metric (i.e. price to rent ratios).

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mosesupposes

My general message to realtors is that if you want to see sales (and your income) rebound, you’d be a lot better off spending your energy on convincing owners that they need to reduce their expectations as opposed to convincing bears that HAM is returning, or Vancouver is special or whatever other pro-bull argument they might have.

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omfgitslikegrouponbutforcondosftw

YVR I agree that if it is possible to pass the costs to the buyer, they will be priced into the land. This is what I believe is happening. And in a normal market like the rental market I do not think this would be possible (like your property tax and rent example.) However in a credit-driven speculative bubble like housing ownership where people are betting on future price increases and are able to borrow money from lenders who are indifferent to people overpaying vs. fundamental value (thanks to mortgage insurance), I worry that it now becomes easy to pass on costs such as these to the buyers. Basically I just think that some local governments have been very wise to position themselves to get a piece of the CMHC action. An indirect way to get transfers from the federal… Read more »

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YVR

“I would agree that in a normal market these costs would be paid for by the developer (or land owners by reducing the value of developable land to account for these costs). However, in the past decade of speculation and easy government-backed credit, my gut just tells me it would have been pretty easy to pass these costs on to the foolish buyers lining up overnight to buy.”

If you could just pass the development costs off onto the buyer that would be priced into the land making the land worth more.

It is just like property taxes and rent. Property taxes have no impact on rent. They only have an impact on the value of the property (higher taxes = lower property value = same rent).

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jesse

“absolutely it has everything to do with the low cost of capital and existing low yield environment. That can last for decades, hence my point that it’s risky for consumers to use such a metric. Rather, it is more appropriate to consider one’s internal economy, or simply affordability”

It’s risky for consumers to use cost of capital as a metric, but they should more appropriately consider their “internal economy” of affordability? I couldn’t make this up if I tried.

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