Olympic Village Sold!

The city just took one big step towards getting out of their Olympic Village obligations with smaller losses.

Dozens of market rental units have been sold in one bulk sale to an investors group at an average of $350k a piece.

“This is our first multifamily rental investment,” said Malcolm Leitch, chief operating officer for investment management at Bentall. Mr. Leitch is listed as the only director of the limited company that was formed in July by Bentall to take ownership of the property, BK Prime False Creek Residences Holdings Ltd. “This is in our view one of the top rental projects in the city. And we’re very happy with [the price].”

That sale of the 119 units will reduce the City of Vancouver’s leftover debt from the Olympic Village financial mess by $41.5-million in one swoop and get it out of at least one part of its landlord business in the development.

The city still owns the 252 social-housing units in the 1,100-unit project.

We’ve seen some pessimism about the losses faced by taxpayers on this project, so it’s nice to see that number reduced by $41.5 million.

So where does that leave us now for those keeping score?  The city isn’t saying, but here’s an estimate:

It’s estimated by those close to the project that the city will lose between $240-million and $290-million in total – including the $170-million that was anticipated for the land, which it will never get.

There are still 90 unsold condos on the market and 26 more being rented.

Read the full article in the Globe and Mail.

159 Responses to “Olympic Village Sold!”

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    Son of Ponzi Says:
    1

    Wow,
    Another 125 rental units in the OV. And all sold way below market value.
    There are bound to be some very upset investors/owners who bought during the pre Olympic hype.

    Well-loved. Like or Dislike: Thumb up 34 Thumb down 3

    If I recall the city turned a bunch of units into rental units back in 2011 because they couldn’t sell them at the time (for the asking price). Now they sell them after turning them into rentals for $350K each. The big problem here is had they lowered the price back in 2011 they could have easily sold them for significantly more than the average price of $350K each. In addition to getting more money they would not have had these units bleeding money for the past few years. Just another buggled part of the project which adds to the City losses.

    On a side note it shows that if you must invest in real estate buying a REIT is going to get you much better value than going out and buying a mom and pop rental. Mom and pop would have paid 500K to 700K each for these places (and many did pay).

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

    Randy Randerson Says:
    4

    I wonder how much rent they would charge for those rental units. Using the rule of Price/Rent ratio lower than 15, monthly rent for one of these units would have to be higher than $1944 a month in order to make sense investment-wise.

    Seems like the rent will still be a little bit higher than the surrounding areas and downtown.

    Like or Dislike: Thumb up 4 Thumb down 2

    southseacompany Says:
    5

    Canadian real estate news in Hong Kong’s South China Morning Post;

    “Canadian home prices up, frustrating Hongkongers waiting to buy
    HK buyers hoping for a correction before diving into the Canadian market may just have to wait”

    http://www.scmp.com/comment/insight-opinion/article/1297937/canadian-home-prices-frustrating-hongkongers-waiting-buy

    Who knew there were bears in HK waiting for Canadian prices to tank before jumping in.

    Hot debate. What do you think? Thumb up 17 Thumb down 0

    Son of Ponzi Says:
    6

    Administrator,
    Could we have a Cantonese version of VCI for our fellow bears in Hong Kong?
    United we stand.

    Hot debate. What do you think? Thumb up 8 Thumb down 3

    I’m guessing these are the units: http://villagerentals.ca/plans.html

    Interesting data points for all the “investor” landlords out there.

    Bentall who itself isn’t even an experienced rental unit investor probably paid ~$500/sq ft for these units, outbidding more experienced institutional investors. There are some really dumb investors in the Vancouver market even on this kind of scale ($10-50 million rental buildings), they’re always local. No one outside of Vancouver would invest at these low cap rates. Experienced, smart real estate investors in Vancouver look elsewhere, even Toronto where cap rates are much more reasonable.

    Hot debate. What do you think? Thumb up 18 Thumb down 1

    taylor192 Says:
    8

    @#4 Randy

    The units are mostly 1 bdrm and will rent for much less than $1944/mn. IG has to be banking on appreciation as even at $350K/each the numbers don’t add up to a good ROI.

    Hot debate. What do you think? Thumb up 14 Thumb down 0

    southseacompany Says:
    9

    Today’s National Post:

    “‘A tale of two markets’: Condominium prices falling while low-rise homes continue to soar”

    http://business.financialpost.com/2013/08/20/condominium-prices-falling-while-low-rise-homes-continue-to-soar/

    “In the Greater Toronto Area, provincial government policy, which encouraged intensification, has helped foster the condo market. But it’s not just a Toronto issue — Vancouver’s condo market has had the same strength over the past five years.

    The Real Estate Board of Greater Vancouver says single family detached home prices are up 16.8% over the last five years while apartment prices have risen just 0.2% during the same period.”

    Like or Dislike: Thumb up 7 Thumb down 1

    taylor192 Says:
    10

    @#2 YVR

    I would be skeptical of REITs. People have been dumping huge amounts of capital into them which they use to buy more property driving up the price of commercial RE. No different than Canadians bidding up residential RE, just on a bigger scale with other people’s money.

    Take your money and run. Once free money stops flowing REITs will be in just as much trouble if not more than RE.

    Hot debate. What do you think? Thumb up 7 Thumb down 6

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

    Poorly-rated. Like or Dislike: Thumb up 2 Thumb down 22

    lazyrenter Says:
    12

    @#2 BBB

    Holy selective quotation Batman, finish the sentence… “landslides and liquefaction.” Look up Christchurch in case you don’t know what that means. Every single Richmond property totalled, would be my guess.

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

    B!B!B! seems to be as clueless about geology as he is about RE investing.

    Hot debate. What do you think? Thumb up 10 Thumb down 1

    Randy Randerson Says:
    14

    @#8

    WTF, it’s mostly 1 bedroom apartments? They don’t even rent for more than $1300 a month, so how are they suppose to have a good ROI in this situation. It’s like “Look, I got a bargain, I only paid $350,000 a unit from $500,000! But it’ll likely drop to $250,000 in the future.”

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

    $500/ft for Olympic Village actually seems reasonable. If going rents are $2.5/ft, that would put the price-to-rent ratio at 16.6.

    OTOH, condos are currently going for an average of $850/ft, putting the P/R ratio at a ridiculous 28.3.

    http://www.6717000.com/123w1st/listings/

    Like or Dislike: Thumb up 3 Thumb down 1

    Son of Ponzi Says:
    16

    A severe earthquake will cause the dykes in Richmond and South Delta to rupture resulting in catastrophic flooding.
    YVR will be out of action for a long time, which will seriously hamper rescue efforts.
    That’s why some experts are saying that we should stop expanding YVR and instead start expanding Abbotsford International.

    Like or Dislike: Thumb up 6 Thumb down 1

    Son of Ponzi Says:
    17

    India’s Rupee hits all time low!
    I think that this will affect RE in Surrey as investors will liquidate in order to keep their businesses in India afloat.

    Hot debate. What do you think? Thumb up 12 Thumb down 3

    Bo Xilai Says:
    18

    A Chinese insurance executive who allegedly took 500 million yuan ($US82 million) from her company and fled the country has been escorted back from Fiji by police.

    http://www.radioaustralia.net.au/international/2013-08-21/runaway-chinese-insurance-executive-chen-yi-escorted-home-from-fiji/1179072

    Guess where she was headed? Canada. Dollars to donuts she was headed for YVR.

    Well-loved. Like or Dislike: Thumb up 32 Thumb down 1

    Son of Ponzi Says:
    19

    # 18
    of course she was headed for Vancouver.
    Where else can you launder 82 million without any questions asked?

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 2

    Burnabonian Says:
    20

    http://www.cbc.ca/news/business/story/2013/08/21/pol-finance-flaherty-economists-summer-policy-retreat.html

    “Finance Minister Jim Flaherty said today he is satisfied with the measures his government has already taken to calm the housing market and has “no plans” to intervene any further.”

    Read: no more “engineering a soft landing” or whatever the bull(shitters) cling to.
    Flaherty’s gonna let ‘em burn.

    Maybe he became a VCI reader.

    [...]

    “Flaherty said he’s “not a big fan of so-called fiscal easing or whatever it’s called.”

    “We’re moving toward a balanced budget, I think that’s the best protection for Canadians,” he said.

    He said he anticipates the issue of quantitative easing will come up at the G20 meeting in September in Russia, and that it is contentious.

    “As you know, we in Canada have not been fans of quantitative easing unlike the United States and elsewhere,” said Flaherty.

    “The danger in the longer term, to me as a finance minister, is inflation.””

    Flaherty no like easy money.

    Probably has long hard talks with the Big 5 CEOs about not giving away so much goddam money to specuvestors anymore.

    Hence this year’s 41% increase in mortgage rates.

    Hot debate. What do you think? Thumb up 8 Thumb down 3

    Madashell Says:
    21

    @ Bo Xilai

    Suitcase full of money going in the opposite direction – back to China!

    http://www.cbc.ca/news/canada/british-columbia/story/2013/08/12/bc-blessing-scam-immigration-hearing.html

    Hot debate. What do you think? Thumb up 11 Thumb down 1

    Son of Ponzi Says:
    22

    @ Madashell
    Of course, once the money has been laundered it is being “repatriated”.
    What a joke!

    Like or Dislike: Thumb up 7 Thumb down 1

    @Madashell

    Vancouver police say suspects in the so-called blessing scam convinced Chinese seniors that they would need to have a large sum of money and jewelry blessed by a spiritual doctor to ward off the bad luck.

    They would be better off if they invested in a new hospice instead of bringing stupidity to the next level.

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

    Best place on meth Says:
    24

    “Guess where she was headed? Canada. Dollars to donuts she was headed for YVR.”

    Guess where she’s headed now?

    Firing squad. :)

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 5

    Son of Ponzi Says:
    25
    Unplugged Says:
    26

    How accountable are the residents of this city? Sure there is some serious blame to pass around here to governments, politicians etc.. but have we blamed ourselves individually for any of our own personal circumstances whatever they might be?

    See here: http://mayer320.wordpress.com/2013/08/21/being-accountable/

    Like or Dislike: Thumb up 2 Thumb down 1

    Son of Ponzi Says:
    27

    @ unplugged.
    Completely agree with you.
    It’s time for the money laundering offshore RE speculators to take responsibility and admit that they are the causes of the high RE prices in Vancouver.

    Hot debate. What do you think? Thumb up 11 Thumb down 2

    Guys, unlike previous rate hikes
    RBC increased its 5 year Posted Rates in addition to special discounted rates.

    If I’m not mistaken, that is The Qualifying rate that all applicants (whether variable or fixed mortgages) need to qualify at.

    http://www.newswire.ca/en/story/1213475/rbc-royal-bank-changes-residential-mortgage-rates

    Well-loved. Like or Dislike: Thumb up 25 Thumb down 0

    So the city gave away prime land for free. Then it gave free money to the developer, who had trouble finishing the job. (I am sure there was enough energy and money for manager bonuses, though). Now, the taxpayers have to clean up the 290+ million dollar mess.
    And nobody goes to jail. Beautiful…

    Well-loved. Like or Dislike: Thumb up 35 Thumb down 0

    NJ Expel Llc Member Says:
    30

    Mario Puzo in The Godfather put it this way: “We are all honorable men here, we do not have to give each other assurances as if we were lawyers.”

    Like or Dislike: Thumb up 7 Thumb down 0

    Beuller Says:
    31

    @ Bo Xilai

    Suitcase full of money going in the opposite direction – back to China!

    http://www.cbc.ca/news/canada/british-columbia/story/2013/08/12/bc-blessing-scam-immigration-hearing.html

    Lovely, lovely people. From this to wealthy Asian seniors pulling up in new Mercedes to hop in the food bank line to wealthy Asian kids getting free hand outs intended for underprivileged kids. And we continue to open our arms to them… wow.

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 2

    space889 Says:
    32

    So why can’t the city take back the land and lease it to the strata corporation if they didn’t receive payment for the land??

    Like or Dislike: Thumb up 4 Thumb down 1

    Vote up if you would NOT move to Richmond in the future.

    Vote down if you would.

    Well-loved. Like or Dislike: Thumb up 65 Thumb down 6

    Anonymous1 Says:
    34

    Son Of Ponzi:

    India immediately last week put a limit on how much money could leave per person last week. Was $200,000, now $75,000. The limit was originally raised to 200K a few years ago. Then every Taminder, Dickinder, and Harinder started selling assets backhome and buying homes in Surrey/North Delta. Hopefully that slows down.

    Also, companies could buy 4 times their book value of assets overseas. Now 1x.

    BTW, no businesses in North India Punjab (where most Surrey Residents are from)…its all a big Land Ponzi scheme there. Farmland there going for $100,000 an acre…population growth uncontrollable.

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

    Aggregator Says:
    35

    @Anonymous1

    What’s going to happen when there’s a mortgage meltdown in India? http://www.tubechop.com/watch/1421656

    Like or Dislike: Thumb up 7 Thumb down 0

    Interesting developments for the US mortgage lenders. A sign if things to come?

    http://www.cnbc.com/id/100979154

    Like or Dislike: Thumb up 4 Thumb down 0

    patriotz patriotz Says:
    37

    “$500/ft for Olympic Village actually seems reasonable. If going rents are $2.5/ft, that would put the price-to-rent ratio at 16.6.”

    That isn’t reasonable at all. What’s reasonable for apartments (and what REIT’s want) is a cap rate (i.e. net rental yield) of 8%, which means a price-to-rent of about 10.

    And from the article:

    “It doesn’t leap out that this price is too low,” said Tsur Somerville, director for the UBC Centre for Urban Economics and Real Estate.

    Well I certainly have to agree with Tsur on that one.

    “And, as an economist, I would say there’s no reason on earth why governments should own market rentals.”

    And as an economist, you would say there’s no reason on earth why governments should own or guarantee mortgages. Right, Tsur?

    Well-loved. Like or Dislike: Thumb up 29 Thumb down 1

    patriotz patriotz Says:
    38

    “So why can’t the city take back the land and lease it to the strata corporation if they didn’t receive payment for the land??”

    Because the land had already been sold to the stratas.

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

    patriotz patriotz Says:
    39

    “So the city gave away prime land for free. ”

    The reason the city ended up giving the land away is that it made a deal to sell it to an incompetent developer for well over the market price, which the developer ended up unable to pay.

    It was simple greed, just like every other RE player who gets burned.

    And remember folks, the voters of Vancouver had a chance to kill this beforehand.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 2

    Burnabonian Says:
    40

    @25 RBC hikes mortgage rates

    BAM!!

    EXAMPLE 1

    GVRD “benchmark” (r) home price = $920,500
    20% downpayment = $184,100
    other debt = null
    amortization = 30 years

    April rate (2.79%) = $3,015.63 monthly
    Today’s rate (3.89%) = $3,456.03 monthly

    EXAMPLE 2

    Income = $100,000
    Downpayment = $184,100
    Other debt = null

    Maximum affordable house according to RBC:

    April rate (2.79%) = $607,208
    Today’s rate (3.89%) = $564,585

    Well-loved. Like or Dislike: Thumb up 40 Thumb down 0

    fixie guy Says:
    41

    @Burnabonian : “As you know, we in Canada have not been fans of quantitative easing unlike the United States and elsewhere,” said Flaherty.

    Canada engaged in the equivalent to QE for a decade, except in our case the liquidity was laundered directly through mortgages. Flaherty the used car salesman.

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 0

    “It was simple greed, just like every other RE player who gets burned”

    I doubt the City was aware the risks they were taking. They engaged a hedge fund to put up the financing; the thing stunk from the beginning but the City — councillors from both major parties, and staff — thought they knew better.

    I’d add incompetence to the list as well.

    I agree with you, culpability goes deeper than City Hall. Citizens voted to host the Olympics with scores of warnings from past Olympic venues on the propensity for cost overruns and scandal: Sydney, Salt Lake City, Montreal. Vancouver assumed they could pull it off, which they did, but got stuck with a $300 Million balance sheet adjustment.

    Hot debate. What do you think? Thumb up 18 Thumb down 2

    Best place on meth Says:
    43

    I voted no in the referendum and then boycotted the Olympics.

    It’s too bad the 60% who voted yes can’t be made to pay for this.

    Well-loved. Like or Dislike: Thumb up 39 Thumb down 7

    Son of Ponzi Says:
    44

    The OV, the Canada Line and the OWAL were all rushed through to be ready way before the deadline.
    We had to show the World how efficient and competent we are.
    This short term thinking willl soon become obvious, first with the Canada Line which will have to upgraded at substantial costs.
    I think it will be about 2 or 3 years until the first condos in the OV will start to leak.
    And it will become obvious pretty soon that the City of Richmond gambled and lost on the White Elephant that is the Richmond OWAL

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

    Burnabonian Says:
    45

    GVRD median family income in the GVRD = $55,000

    If that family (somehow) saved up a $100,000 downpayment, affordability would be as follows according to RBC:

    April (@2.79%) = $318,228

    August (@3.89%) = $296,386

    BAM!

    This is of course a median family with a credit card balance of 0.00, both cars paid off, no line of credit, and no other liabilities who have somehow managed to save up two years’ gross salary for a house downpayment. (Or get it from the relo’s.)

    Har har. I might as well use the easter bunny as an example. My guess would be that more than half of the families in the lower mainland are WORSE OFF than the example above. Think about that.

    In brighter news, aside from the obvious downside of hastening the catastrophic crash in the GVRD and GTA, this rate hike does seem to have had the silver lining of getting Softy and his ilk to shut the fuck up.

    Well-loved. Like or Dislike: Thumb up 32 Thumb down 3

    It's simple Says:
    46

    BURNABONION YOUR DA MAN

    Like or Dislike: Thumb up 6 Thumb down 2

    crabman crabman Says:
    47

    @patriotz – Vancouver condos have never had a P/R ratio of 10 – the current ratio is 27. Anyone that waits for 10 will be renting the rest of their lives, IMO.

    Hot debate. What do you think? Thumb up 13 Thumb down 13

    Cool stuff Burnababy.

    Some projected affordability when rates hit 5 and 6% would really put things in perspective.

    Looking forward to another big sales day. The sooner those pre-approvals are fed through the shredder, the sooner we’ll get to the edge of the cliff.

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    A Chinese woman in Richmond is accusing McDonald’s of discrimination because staff could not understand her English and mistakenly gave her a coffee instead of a hot chocolate. The woman is claiming a “second language right” (interesting idea, I don’t think a right to retail/restaurant service in Mandarin is in the Charter of Rights). If McDonald’s starts requiring employees to speak Mandarin then it will just mean more impoverishment of white people because of Chinese. Already so many jobs in Vancouver area require Mandarin skills. Quote from CBC:

    “She said, ‘You don’t know English,’ and then she returned my order. She said, ‘We are very busy, don’t stay here,’” Hai Xia Sun told CBC News.

    Sun called the incident discrimination.

    “This is my second language right. And this is discrimination. Yes maybe I speak not very good English but she can’t not service to us.”

    Sun’s son David Zhao wants McDonald’s to take action by hiring Mandarin speakers at local restaurants.

    “In Richmond, how come they don’t hire a person who can communicate in Mandarin. All right? That’s not a big deal,” said Zhao.

    http://www.cbc.ca/news/canada/british-columbia/story/2013/08/21/bc-macdonalds-language-barrier.html

    Well-loved. Like or Dislike: Thumb up 23 Thumb down 2

    Son of Ponzi Says:
    50

    @crab man
    I owned a condo in the Residences (Seymour & Hastings) which I bought in 2001.
    26th floor, fully furnished for 125k.
    Rented it out for 1,400 a month.
    Those were the days my friend.
    Before it all got crazy.

    Hot debate. What do you think? Thumb up 21 Thumb down 3

    Son of Ponzi Says:
    51

    The first English word that new Chinese immigrants are learning is “discrimination”

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 6

    It's simple Says:
    52

    English should be the only language if you don’t learn it in 5 years of coming here you should be sent back to which ever hole you crawled out of

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 11

    Randy Randerson Says:
    53

    “Second language right”? WTF is that? Seriously if you live in a foreign country, at least learn to speak the local language. If your English is poor, improve it. I’m so sick of people wanting special treatments for no logical reasons.

    I’d like to see the reverse situation with her being the cashier taking orders from a fluent English speaker. If she gets fired for not taking the right order, I wonder if she’ll pull the same stunt.

    Well-loved. Like or Dislike: Thumb up 31 Thumb down 2

    Best place on meth Says:
    54

    ““In Richmond, how come they don’t hire a person who can communicate in Mandarin. All right? That’s not a big deal,” said Zhao.”

    Because this is Canada you stupid piece of shit!

    Fuck off and go back to China!

    Well-loved. Like or Dislike: Thumb up 51 Thumb down 11

    crabman crabman Says:
    55

    @Son of Ponzi – Just checked sales history for that building. Looks like your place was 553 sq ft. Not a chance that thing rented for $1,400 unless it was a short-term furnished rental which is a completely different situation.

    I also bought in 2001 for $208k. It was just under 800 sq ft and would have rented for between $1,100 and $1,200 – for a P/R of 15. Considering 2001 was about as cheap as RE in Vancouver has been in several decades, I wouldn’t wait for a P/R of 10.

    Hot debate. What do you think? Thumb up 9 Thumb down 2

    Son of Ponzi Says:
    56

    Popular joke circulating in the Chinese community:
    New Chinese immigrant when interviewed by Canadian Immigration Officer asks the Officer to jump.
    The Officer replies “How high?”.
    Sounds funnier in Mandarin.

    Hot debate. What do you think? Thumb up 17 Thumb down 8

    Son of Ponzi Says:
    57

    @crab man
    Mine was the last unit, and the agent just wanted to get rid of it.
    That’s why he threw in the Furniture which was very good hotel quality.
    My understanding was that a unit that high up would command extra dollars in rent.
    In any case the young couple who worked downtown paid 1,400 rent.
    They did not have a car, so as an extra bonus I rented out the parking space for 100.

    Like or Dislike: Thumb up 5 Thumb down 2

    Village Renter Says:
    58

    FYI I live in a 700 sq ft Village rental now owned by Bental, 1800 a month plus 75 parking, so they got a good deal,

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

    Randy Randerson Says:
    59

    @58

    I’m glad you like your rental. How do you think of the quality in those OV apartment? I’ve never been inside, so I’m curious.

    Like or Dislike: Thumb up 4 Thumb down 0

    New Listings 197
    Price Changes 95
    Sold Listings 65
    TI:17525

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 95 Thumb down 0

    Son of Ponzi Says:
    61

    Village Renter,
    Glad to hear that you like your rental in the OV so much that you are willing to pay that kind of rent.
    I’m sure all the amenities are worth the money.

    Hot debate. What do you think? Thumb up 8 Thumb down 3

    Son of Ponzi Says:
    62

    Sold listings 65.
    This gotta be a new record.
    Softy, where are you?

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 2

    RateHikes Says:
    63

    Sold Listings 65

    …Wow

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

    The reason the city ended up giving the land away is that it made a deal to sell it to an incompetent developer for well over the market price, which the developer ended up unable to pay.

    I doubt the City was aware the risks they were taking. They engaged a hedge fund to put up the financing; the thing stunk from the beginning but the City — councillors from both major parties, and staff — thought they knew better.

    I’d add incompetence to the list as well.

    I love how easy it is for the government (and it’s voters) to blame any major screw-up on mistakes and incompetence. It’s a win-win for the politicians. And Canadians can pat themselves on their backs because there is no corruption in their country.
    A few millions lost here or there are just minor oopsies. Nobody is to blame, right?

    I don’t buy it.

    Hot debate. What do you think? Thumb up 10 Thumb down 0

    FYI I live in a 700 sq ft Village rental now owned by Bental, 1800 a month plus 75 parking

    That is *very* expensive.

    Hot debate. What do you think? Thumb up 17 Thumb down 0

    Crabman:

    Vancouver condos have never had a P/R ratio of 10 – the current ratio is 27. Anyone that waits for 10 will be renting the rest of their lives, IMO.

    As one example I bought a 1 bedroom in Coal harbour (1 year old at the time) in 1996 for 166K. The previous owner paid 209K in a presale a few years prior. There was a renter in it at the time I bought it paying $1200 per month. That is a price to rent of 11.5. For the next few years prices for Van RE went down and I could have bought the same unit for 145K by 1998 which would have brought the PR to 10. In 2003 prices spiked up with the Olympic announcement and I sold it for $225K. At that time it was rented for $1350 per month. That is a price to rent of 13.8 even after a big jump in price. That place is now selling for 450K and would only get about $1500 per month rent or a PR of 25. Insane. I have been around long enough to see several booms and busts in Vancouver and I think we will see 10 to 1 price rent for condos again.

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 0

    Son of Ponzi Says:
    67

    I know fhis is a simple calculation.
    But let’s assume that ~ of 60 sales becomes the trend.
    Then, with an inventory of ~ 18,000, the DOM will be ~ 300, or ~ 10 months.
    Pretty scary if you are a seller, but good news for buyers.

    Hot debate. What do you think? Thumb up 8 Thumb down 3

    Son of Ponzi Says:
    68

    YVR,
    I agree, it’s a tough stretch, but a 10 to 1 ratio is a possibility.

    Like or Dislike: Thumb up 6 Thumb down 0

    Speaking of prime land for free,
    9acres of land in False Creek is now valued at $1

    Like or Dislike: Thumb up 5 Thumb down 0

    Village Renter Says:
    70

    Quality is soso, rents are high because they allow pets and don’t hassle you for smoking dope or making noise, gold medal club and air conditioning also

    Like or Dislike: Thumb up 6 Thumb down 2

    RateHikes Says:
    71

    I guess all 2.XX% rate holds are almost truly all gone…

    nubs….chase rate hold more….

    Like or Dislike: Thumb up 3 Thumb down 0

    Burnabonian Says:
    72

    @VMD #28 quote “Guys, unlike previous rate hikes
    RBC increased its 5 year Posted Rates in addition to special discounted rates.

    If I’m not mistaken, that is The Qualifying rate that all applicants (whether variable or fixed mortgages) need to qualify at.”

    Anyone? Anyone?

    This should be looked into. If this is true, it would be quite the thing as the “fixed rate posted rate” is 5.34%.

    That means that to buy the “benchmark” GVRD SFH, ($920,500,) you would need to declare an income of $215,000/year — if and only if you have a 20% downpayment of $184,100 cash money as well.

    Jesus christ the numbers are so big that they don’t even mean anything. You and your wife both make six figures, you are debt and liability-free, and have 200k liquid cash, and that allows you to buy the very definition of an ordinary house.

    Yeah we’re in for a soft landing alright — I believe that our pilot is Captain Sum Ting Wong.

    PS hey softy. Go fuck yourself.

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

    Get a load of this. Under new federal US elementary school curriculum, 3 x 4 = 11 (as long as you can orally explain how you arrived at that answer). OMG America is toast!!!

    http://news.yahoo.com/obama-math-under-common-core-3-x-4-151805230.html

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

    Aggregator Says:
    74

    TD is expected to announce a rate hike tomorrow.

    Like or Dislike: Thumb up 8 Thumb down 0

    Interest Only Says:
    75

    WOWOW that 100% List to sell ratio didn’t last long. We are soundly into bearish territory again

    Those two or three strong data points actually had me nervous for a bit. But not to worry, this fall is going to be ugly.

    On a side note, any calls on tomorrow’s retail sales figures? My call: YoY decline of 1%!

    Hot debate. What do you think? Thumb up 19 Thumb down 1

    Anonymous1 Says:
    76

    Math Lesson #2:

    Rate last year –> 2.5% (most people took variable)

    Rate next year —> 5.0% (5 yr DISCOUNTED fixed rate)

    Mortgage taken out $400,000

    last year —> monthly payment $1792
    next year —> monthly payment $2326

    Increase of $534 per month or 30%.

    Total housing costs = mortgage payment + Property taxes ($300) + Bills ($300)

    Last year —> $2392
    next year —> $2926

    Increase of 22.3%.

    **** Using these metrics, housing is overvalued by 22.3% assuming rates rise to 5%. Additional percentages can be added due to psychology and the absence of speculators.

    —> Expect a 25-30% correction if rates rise to 5%.

    Example: $600,000 house for $420-450,000.

    Well-loved. Like or Dislike: Thumb up 22 Thumb down 1

    Anonymous1 Says:
    77

    Now for the double whammy!

    The analysis above only assumes a 25 year amortization was taken out last year. If one uses a 40 year “Flaherty” amortization mortgage at 2.5%, then housing is overvalued by a whopping 52.4% if rates go to 5% next year. Today we are at 3.4%.

    1.6% more and it could get ugly.

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

    patriotz patriotz Says:
    78

    “Vancouver condos have never had a P/R ratio of 10 – the current ratio is 27.”

    You could buy a house for a P/R of 10 in the 1980′s.

    “Anyone that waits for 10 will be renting the rest of their lives, IMO.”

    You’re talking as though that’s a bad thing rather than a good thing. If people are willing to pay excessive prices for condos then it’s the renter who is getting richer at the expense of thr buyer.

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

    patriotz patriotz Says:
    79

    Discount mortgages dry up as Canadian borrowers face tough test

    “I think this is the real thing,” said Benjamin Tal, deputy chief economist at CIBC World Markets. “This is the end of extremely low interest rates. They’re simply unsustainable.”

    What a shock. Except to us.

    Speaking with reporters Wednesday outside a policy retreat in Wakefield, Que., Mr. Flaherty indicated that he sees no need at the moment for further intervention.

    Of course F is using a different meaning of “intervention” than us. Every time the government guarantees a new mortgage, that’s intervention. “Intervention” to F actually means less intervention, i.e. fewer guarantees.

    “There are some bumps along the road in Toronto and Vancouver, in particular in the condo markets, but overall, I’m satisfied that the measures we’ve taken over the last several years have adequately calmed the markets.”

    Translation: I need scapegoats for the upcoming bust.

    Well-loved. Like or Dislike: Thumb up 20 Thumb down 0

    silver,

    all McDonalds needs is a plastic coated picture menu for customers to point at. Would work for the deaf who have poor speaking skills too. Surprised McDs don’t have one already.

    Like or Dislike: Thumb up 2 Thumb down 1

    fixie guy Says:
    81

    crabman Says: “Considering 2001 was about as cheap as RE in Vancouver has been in several decades, I wouldn’t wait for a P/R of 10″

    Hell no. Using Sauder’s data, in real dollars Vancouver slid to ~$375K in 2001 from the $500K 1995 peak caused by the repatriation-induced panic of Hong Kong immigration. Population growth in the 1990′s was massive.
    Sauder only goes back to 1974. Save for 1981′s short spike of madness, the market hovered around $250K inflation-adjusted prior to 1988.

    http://www.sauder.ubc.ca/Faculty/Research_Centres/Centre_for_Urban_Economics_and_Real_Estate/~/media/Files/Faculty%20Research/Urban%20Economics/CMA/housing-pri-vancouver.ashx

    Like or Dislike: Thumb up 7 Thumb down 0

    Randy Randerson Says:
    82

    Not a word from Softy eh? He’s probably crying in fetal position while wallowing in his own filth, after seeing the huge rate hike.

    Hot debate. What do you think? Thumb up 14 Thumb down 5

    Burnabonian Says:
    83

    Anyonymous1 not so good at math.

    If you want to see how 5% rates affect prices, a better predictor would be looking at prices the last time we had 5% rates.

    Which decade was that in again?

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

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

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

    Poorly-rated. Like or Dislike: Thumb up 6 Thumb down 28

    @YVR – According to Statistics Canada, Vancouver rents have gone up 49% since 1996. So something that rents for $1,500 today would have probably rented for $1,000 in 1996 – putting that P/R ratio just under 14.

    I will agree that 10 is a possibility, I just don’t think it’s likely. That didn’t happen in any of the comparable US cites like Seattle or San Diego. For the place I’m renting to sell for a P/R of 10, it would have to fall 60% and sell for 2002 prices.

    @patriotz – Do you have a source for a P/R of 10 for a house in the 80′s? According to the 1986 census, the average dwelling cost $130k and the average rent was $562. It’s probably not a perfect comparison, but that would be a P/R of 19.

    http://www.bcstats.gov.bc.ca/Files/ae86fafe-7f7a-4d4c-9fd6-e4938f985cbc/Census1986-Profiles-GreaterVancouverRD.pdf

    @fixie guy – Real estate in growing coastal cities like Vancouver goes up more than inflation.

    Like or Dislike: Thumb up 2 Thumb down 2

    Burnabonian Says:
    87

    Old bull refrain: “Bond yields blah blah blah; rates will not go to 5% for many years which means that we’re safe.” (Implication: if rates go to 5% we’re screwed, but that won’t happen so we’re not screwed.)

    New bull refrain: “Umm, err, rates did go to 5% but never mind the Ho Lee Fuk comments; we’re safe for other reasons which I will not specify here. PS The only thing that matters is prices.” (Implication: When I can’t get ahold of glue, I hang out behind gas stations with a brown paper bag.)

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

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

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    Burnabonian Says:
    89

    Bear refrain: If you make an educated guess on the timing of something, and guess wrong, then it is guaranteed to never happen.

    Kind of like how people said that the stock market was a ponzi scheme in the mid-2000′s. They timed their prediction wrong so the market never collapsed.

    Hot debate. What do you think? Thumb up 12 Thumb down 3

    re: Richmond McDonald’s
    that store on #3 Rd just can’t seem to get get a break.

    It’s the site of double murder few years ago

    Like or Dislike: Thumb up 3 Thumb down 1

    fixie guy Says:
    91

    crabman Says: “Real estate in growing coastal cities like Vancouver goes up more than inflation.”

    Mathematical impossibility over the long run. An asset price can’t perpetually increase at a higher rate than the wages to afford it. Excel can be a friend.

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

    Upvote Softy. His comments are hilarious.

    Hot debate. What do you think? Thumb up 11 Thumb down 1

    Son of Ponzi Says:
    93

    @FIxie
    An asset price can’t perpetually increase at a higher rate than the wages to afford it.

    In Vancouver it can, because fundamentals don’t apply here. :)

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

    @fixie – You are mistaken in a couple of respects.

    1 – Because of productivity, incomes grow faster than inflation.
    2 – As Vancouver grows, the metro area moves east, making existing homes on the west side more desirable and more expensive.

    Here’s a thought experiment. In 1891 the population of Vancouver was 13,709. Do you think west side land values have only gone up with inflation since then?

    Like or Dislike: Thumb up 3 Thumb down 6

    Crabman:

    According to Statistics Canada, Vancouver rents have gone up 49% since 1996. So something that rents for $1,500 today would have probably rented for $1,000 in 1996 – putting that P/R ratio just under 14.

    I will agree that 10 is a possibility, I just don’t think it’s likely. That didn’t happen in any of the comparable US cites like Seattle or San Diego. For the place I’m renting to sell for a P/R of 10, it would have to fall 60% and sell for 2002 prices.

    Well all I can tell you is the place was rented for $1200 and that was market rent. The condo I was referring to renting for $1200 in 1996 was brand new. Today it is 18 years old. As condos get older you can expect less rent (inflation adjusted). If the place was brand new again then maybe it would get $1700 per month rather than $1500 but then it would sell for more than $450K if it was brand new and you would have a similar price to rent. The other thing is condo fees and property taxes also rise which eats away at the small rent increases. In this case the net rent in 1996 at $1200 was similar to net rent today at $1500.

    Regarding the PR in the US keep in mind in as prices were correcting mortgage rates were also falling so that helps keep prices up higher than they would be otherwise, especially when you can lock in for 30 years. If mortgage rates were increasing as they are now in Canada and we expect them to increase in the future as prices continue to correct the price to rent will go back to 10 to 1 or at least very close to it. I fully expect condos to go back to 2002 prices once mortgage rates are in the 6% range.

    Like or Dislike: Thumb up 4 Thumb down 1

    Crabman

    Here’s a thought experiment. In 1891 the population of Vancouver was 13,709. Do you think west side land values have only gone up with inflation since then?

    You also have to consider the amenities. In 1891 Vancouver didn’t have much so not a fair comparison to today. But in 1998 or even 1985 the Westside was not much different than today so prices should not outpace inflation. On the other hand there are areas in downtown and East Van which maybe are nicer today so maybe you could argue it is reasonable for some places to go up more than inflation since 1998 but the Westside no. If you haven’t already you should check out Shillers data. Coastal communities do not outpace inflation in the US so why would they be different in Canada?

    Like or Dislike: Thumb up 4 Thumb down 0

    “So something that rents for $1,500 today would have probably rented for $1,000 in 1996″

    Statscan “rented accommodation” is not apples-apples measure, it adjusts for quality and other factors as do other CPI measures. If you rented out a condo for $800 in 1996 that same condo, now aged 17 years, will likely be renting for higher than its CPI adjusted value would imply.

    The dataset I typically use is the CMHC survey rents that uses purpose-built rentals as its major gauge, and they show rents outpacing CPI over the 1996-present period.

    Now, as a unit ages its maintenance costs will increase. That means net operating income could be degrading as the building ages, even with rent increases. In other words, the price-rent ratio isn’t necessarily fixed over the asset’s useful life.

    Like or Dislike: Thumb up 2 Thumb down 0

    “Coastal communities do not outpace inflation”

    wrong.

    Like or Dislike: Thumb up 3 Thumb down 1

    To follow up on my post yesterday commenting on Qualifying rate:
    via CMT
    August 21, 2013
    “If a few more banks follow RBC’s lead, the benchmark qualifying rate will rise accordingly. That would mark the first increase in the benchmark rate in more than 500 days (since April 2012).

    A higher benchmark rate makes it tougher to qualify for a variable, HELOC or 1- to 4-year fixed term.”

    Like or Dislike: Thumb up 8 Thumb down 0

    Son of Ponzi Says:
    100

    Crab man
    As for wages growing faster than inflation:
    I worked as a teller at a bank 35 years ago. My wages then were 20k.
    Now a teller makes about 32k.
    Increases in productivity have mostly benefitted the owners of businesses, not the workers.

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

    crabman crabman Says:
    101

    @YVR – Shiller was wrong about that.

    http://www.calculatedriskblog.com/2013/04/shiller-and-upward-slope-of-real-house.html

    And since 1985, the population of the Vancouver metro area has grown about 70%. I would argue that the west side is *very* different today than it was then. Look at Yaletown, for example.

    @Son of Ponzi – You are correct that the average worker has been getting screwed the last 30 years. Productivity has gone to the top (and to corporate profits). That’s why both the US and Canadian economies rely on increasing household debt. But at some point that will have to change.

    Like or Dislike: Thumb up 7 Thumb down 0

    BWilson Says:
    102

    Let’s have a little fundamental reality check.

    Canada’s economy likely shrunk in June (consensus is -0.5% m/m)

    Over the first 7 months of the year, employment in Canada grew by 42k or 72k annualized. Trailing 12 month population growth in Canada is +388k. Over the last 2 months employment has declined.

    BC continues to lose people to inter-provincial migration

    Rates are rising (driven by the US market and capital flowing out of Canada)

    The Vancouver market really peaked in spring 2011, since then rates have declined dramatically. (5 year went from ~2.75% to a low of 1.14% this spring) Despite this material decline in rates the market is still flat to down, just wait until we see the effect of rising rates in the face of (near) record high prices, inter-provincial outflows, and a weak economy.

    The summer spike in sales has been a sugar high, which is usually followed by what?

    Well-loved. Like or Dislike: Thumb up 27 Thumb down 0

    “the west side is *very* different today than it was then”

    Agreed, given the area’s desirability it will mean either well heeled migrants who can afford land at its current use will move in or developers looking to upgrade the property will buy. Either way, it should not be a surprise prices have outpaced inflation in Van West in the long run. Areas of Toronto have seen similar stresses so it’s not just a Vancouver thing.

    On the other hand buyers who bought in Van West years ago paid a premium then, and forewent cash flows for capital appreciation. They have done well, but would have missed out on some not-so-bad returns in other investment vehicles. Their only problem now: it’s difficult to sell only part of the property.

    Like or Dislike: Thumb up 5 Thumb down 1

    Son of Ponzi Says:
    104

    @crab man
    That’s why I think that we’ll see a revival of the Labour Unions.
    The current issue of the New Yorker has an article which highlights the fact that 30 years ago most workers working for McDonald’s were housewives and students.
    Now 40% of the workers are actually bread winners of families.
    They are also more educated. Of course, there’s also the shift from manufacturing to service jobs.

    Like or Dislike: Thumb up 3 Thumb down 1

    Best place on meth Says:
    105

    “They are also more educated.”

    And yet they still can’t speak Mandarin for the love of god.

    This is an outrage. I’m shaking my hot chocolate in anger.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 0

    Son of Ponzi Says:
    106

    Fast forward 5 years:
    Mandarin language skills required for all McDonald’s workers.
    What is BigMac in Mandarin anyway.
    And what is it with those elderly Chinese these days?
    Drinking Hot Chocolate instead of tea.

    Like or Dislike: Thumb up 6 Thumb down 1

    fixie guy Says:
    107

    crabman Says: “In 1891 the population of Vancouver was 13,709. Do you think west side land values have only gone up with inflation since then?”

    Don’t know, do you have any data? It’s not really an apples-to-apples comparison and the growth curve is well known: slow-fast-slow-saturation. Try studies done in Europe – Denmark if I recall – that considered urban locations with sales numbers going back over 500 years. Adjusted for inflation RE showed no unambiguous appreciation over that period. It’s common sense, if RE truly appreciated at better than inflation cities as old as Rome or Jerusalem would be in the millions per square foot.

    Like or Dislike: Thumb up 6 Thumb down 0

    crabman crabman Says:
    108

    “That’s why I think that we’ll see a revival of the Labour Unions.”

    I agree. But first North Americans will need to understand why unions are still necessary. Most are under the false impression that tax-cuts, union busting and deregulation are the answer. But those solutions only work when you have a supply-side problem. Today, we have a good old-fashioned demand-side problem, just like the 1930′s.

    Like or Dislike: Thumb up 2 Thumb down 5

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    Best place on meth Says:
    110
    patriotz patriotz Says:
    111

    “Do you have a source for a P/R of 10 for a house in the 80′s? According to the 1986 census, the average dwelling cost $130k and the average rent was $562.”

    A $130K house most certainly did not rent for $562. The average rent you are quoting is for all rental accommodation.

    In the mid-1980′s you could rent the main of a house for $750 and the basement for $500. There’s your P/R of 10.

    I know because I was in the market then.

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

    Tech Support Says:
    112

    Softy,

    Please update your bookmarks. I believe that you intend to be posting on this site:

    http://batshitcrazyblog.wordpress.com/

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

    I would not expect to see any 5% interest rates anytime soon. We will see the impact of the current increase over the next few months but I doubt the global economy can handle much higher rates anytime before 2015.
    This is no reason for bulls,or sheep, to rejoice as a weak global economy is not going to be supportive of rising RE prices. New CPI numbers out tomorrow so we will see if we are still negative in BC. How much of our deflation is due to a weak economy and how much due to the removal of the HST I don’t know, but I do know it is not a good sign for increasing property prices.

    Like or Dislike: Thumb up 1 Thumb down 2

    everyone's a little bit racist Says:
    114

    “What is BigMac in Mandarin anyway.”

    A; bigi macki

    Like or Dislike: Thumb up 3 Thumb down 5

    yvr2zrh Says:
    115

    Ahh – - rate increases. As a finance executive, the bond market and yield curves (of various countries) are a part of my everyday work. For my Yahoo finance screen, the most important number now is the USD 10-year treasury. From this medium term benchmark, we can tell a lot about market expectations as well as what may happen to Canadian bond yields.

    Today I did some computations. It is important to note that the value of house that someone can purchase (especially at the lower income levels) when changing from 2.79% to 3.89% rates, 25y am, 5% down, is about 10% lower. This is a very significant decrease. Either prices will fall immediately to match this new financing reality or we will see sales stop / stall / fall until prices do reduce to meet this new reality.

    I have some ideas that the summer “blip” is really driven by old rate holds being exercised. A lot of people who had rates sub 3% were feeling very pressured to make a decision. I believe that as of the end of July, most of these very low rates have now expired. Pretty soon, we will be in the next wave of rate hold purchases – - then – come October, I would say sales will drop off a cliff – more than normal for the season.

    I feel bad for recent buyers. They either will suffer from declining real estate values or suffer for many years of a misallocation of resources and sacrifices in other consumption areas (which would not have been necessary had they been renters). . . .

    All the best for the weekend everyone. Just over a week until we hear about yet another big month from the Real Estate board – - just wait until September . . .

    Well-loved. Like or Dislike: Thumb up 36 Thumb down 0

    @ paulb

    three sold property how much those went for ?

    1)401B – 3680 RAE AVE Vancouver – V1011905

    2)2 – 862 EAST BROADWAY Vancouver – V979484

    3)304 – 3624 fraser st Vancouver

    Thanks in advance
    ———————————————
    anybody have use this site and it works ?

    http://iverify.com/index.php

    Like or Dislike: Thumb up 0 Thumb down 3

    crabman crabman Says:
    117

    @fixie – The reason desirable RE can appreciate faster than inflation is because incomes increase faster than inflation. In 1900, Real GDP-per-capita in Canada was $2,911 in 2008 dollars. In 2008, it was $25,267. Over that time, incomes increased 8.7x more than inflation.

    @patriotz – I would still like to see a source if you know of one. I haven’t seen a good long-term P/R graph for Vancouver. And for the record, I would love to see a P/R of 10. Unlike most people I think low prices are good, not bad! Rich Toscano has data for San Diego going back to 1977. The lowest P/R was 12.5 and the average has been 16.6.

    http://piggington.com/shambling_towards_affordability_may_2013

    Like or Dislike: Thumb up 0 Thumb down 4

    Burnabonian Says:
    118

    @Pdub “I would not expect to see any 5% interest rates anytime soon.”

    Umm, they are here right now today.

    Not that people are paying 5% yet, but they now need to QUALIFY at 5%.

    Right now today, if you apply for a residential mortgage at RBC, for instance, they will QUALIFY you at ~5.34%. That means that you need to be capable of servicing your proposed debt at ~5.34% interest.

    You then have the choice of selecting a discount rate if you like, which means that you will probably pay less. But only if you qualified at the higher rate.

    So don’t kid yourself: as of now our million-dollar crack shacks are only purchaseable by people with some combination of multi-hundred-thousand-dollar incomes and multi-hundred-thousand-dollar down payments. No shit.

    I keep waiting for a Bull to explain to me how housing will continue to trade hands at current prices given this new reality.

    Because thanks to this change, VERY FEW PEOPLE ARE ELIGIBLE FOR FINANCING to buy a SFH in Vancouver, North Van, West Van, Burnaby, Coquitlam, Richmond, and many points east. Can’t get financing = can’t buy even if you wanted to.

    Bubble over? Could well be.

    Imagine a seller who wants or needs to get out. He will have to keep dropping his price until a member of the buying pool is able to get financing and buy his property.

    It only takes one to devalue an entire block; even an entire neighborhood. That’s how it went up and that’s how it will come back down. The few percent marginal transactions revalue BILLIONS of dollars’ worth of assets.

    Sadface for those who gambled their futures on this shit, but happyface for those who have been patiently waiting for the mania to pass.

    Hot debate. What do you think? Thumb up 19 Thumb down 2

    Crabman: “Look at Yaletown, for example.”

    Yaletown is considered part of downtown and not usually referred to as Westside although yes it on the Westside of Main. I said parts of downtown have improved and could appreciate more than inflation based on the improvements. Yaletown would be a good example although there was not much there for residential pre 1995. 80% of what is there today was built after that. Kits, Kerrisdale, Point Gray which are Westside are similar IMO with no substantial improvements. Some may say they were nicer in the past.

    Like or Dislike: Thumb up 3 Thumb down 0

    “A; bigi macki”

    That’s Korean. Japanese would be Bigo Macko. In Mandarin and Vietnamese, its still Big Mac.

    Hot debate. What do you think? Thumb up 3 Thumb down 10

    Marpole flair:

    http://thethirtiesgrind.com/2013/08/15/absurd-vancouver-property-august-15-2013/

    Also, I talked to an insurance broker last night – he told me I’d be really surprise how many folks come to him with a mortgage during retirement – it’s shocking. The normal is for folks to load up on more debt as they get older – he said I was part of the exception demographic (I’m not even 40 so time will tell).

    Like or Dislike: Thumb up 6 Thumb down 0

    crabman crabman Says:
    122

    Softy – In Japan, it’s a Bigu Maku. Is there *anything* you aren’t wrong about?

    http://www.flickr.com/photos/marta_suplicy/5641765687/

    Like or Dislike: Thumb up 6 Thumb down 1

    crabman crabman Says:
    124

    YVR – There have been countless redevelopments on the Westside over the last 30 years. Look at what’s happening along the Cambie corridor right now. Arbutus Walk in Kitsilano was industrial land in 1985. Today there are over 1,000 homes there. Look at all the new condos along 4th or Broadway.

    Like or Dislike: Thumb up 2 Thumb down 1

    New Listings 136
    Price Changes 65
    Sold Listings 142
    TI:17455

    http://www.paulboenisch.com

    Well-loved. Like or Dislike: Thumb up 51 Thumb down 4

    Anonymous1 Says:
    126

    Burnabonian,

    You keep saying this n that about rates and how people are not going to qualify. The people (several dozen) I have personally seen buy $600,000+ dollar homes DO so with “multi-hundred thousand dollar down-payments’.

    People are not stupid to carry $500,000+ mortgages as evidenced by CMHC stats. Someone buying a $900,000 home DOES NOT CARRY a 95% mortgage!

    The coming correction will only benefit those with large down payments as interest rates will rise. A $600K house will be had for $450K. But make sure you have at least a $200K+ downpayment. Otherwise, your monthly costs are going to be just as high as before the correction.

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

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    Son of Ponzi Says:
    128

    The property virgins that have rushed out to cash in their pre-approves will be in for a nasty surprise when they actually take possession a few months from now.
    Just like new car, they will own an asset that has depreciated by 10 to 20% right off the bat.
    And it will get worse from there on.
    Welcome to the new reality of depreciating RE in Vancouver.

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

    “Kits, Kerrisdale, Point Gray which are Westside are similar IMO with no substantial improvements”

    That is simply not true. Any drive through those neighbourhoods will show significant rebuilding from the mid-1980s and continuing through today. pre-WW2-era houses, and in some cases newer houses are torn down for higher-quality and larger houses. The area has been gentrifying for a long time, but the process is a long one due to older incumbents remaining in their properties for decades. As they sell the marginal owner has higher income than they could hope to have earned.

    I know it may be a difficult message to accept, but Vancouver will see prices in many neighbourhoods appreciate above inflation. It won’t be a straight line but citing 1980s price-rent as the endgame is in my view unrealistic.

    Like or Dislike: Thumb up 5 Thumb down 3

    Son of Ponzi Says:
    130

    Yesterday’s sales were 65.
    Today’s are 142.
    Softy are you fudging the numbers again?

    Hot debate. What do you think? Thumb up 7 Thumb down 3

    Devore Says:
    131

    ““A; bigi macki”

    That’s Korean. Japanese would be Bigo Macko. In Mandarin and Vietnamese, its still Big Mac.”

    Big Mac can be written and pronounced by Koreans just fine, as it forms neat syllable packages, no need to add extraneous vowels.

    Stick to astroturfing.

    Like or Dislike: Thumb up 3 Thumb down 1

    Son of Ponzi Says:
    132

    Jesse,
    “are torn down for higher quality houses”
    I owned a 50 year old home. It was not a beauty, but built like an ox.
    Not like the pieces of crap with the faux stone facades that are replacing them.

    Like or Dislike: Thumb up 8 Thumb down 1

    August statistics
    2012
    REBGV sales listings
    average 76.8 186.8
    stdev 20.1 35.8

    average_Aug1-15 83.4 206.8
    average_Aug16-31 71.3 170.1

    2013
    REBGV sales listings
    average 124.9 211.4
    stdev 26.5 41.3

    average_Aug1-15 126.2 222.1
    average_Aug16-22 122.6 192.2


    Sales are significantly better YOY and the second half of August has so far shown a smaller drop than was the case in 2012: the market so far is “holding up” better than last year.

    August listings are higher in 2013 than 2012.

    The conjecture is that as rate holds work their way through the system sales will eventually fall. There is good precedence for this: since 1999 a >7% monthly move in the 5 year bond corresponds to a seasonally adjusted month-over-month sales spike, coincident or delayed by one month, of at least 14% in 7 of 8 occurrences. In 5 of these 8 occurrences sales then dropped in subsequent months. The times that this did not occur was twice in 2009 (post-GFC recovery) and this year, which hasn’t yet fully materialized.

    Given that 5 year rates have continued to rise it may be the case that sales will continue to show month-over-month (seasonally adjusted) sales increases for a while longer.

    Conclusion: data are sparse however it is possible to find reasonable evidence over the past 14 years that sharp increases in 5 year GoC bond rates do lead to sales being “brought forward” as people attempt to purchase before rates rise, and this often, but not always, leads to a drop in sales in subsequent months.

    If I have time I might put up a few graphs on mohican’s housing-analysis site outlining the data and cursory analysis.

    Like or Dislike: Thumb up 9 Thumb down 0

    Son of Ponzi Says:
    134

    I think it should be macki bigi.
    I Mandarin the noun comes first.
    White Devils, better learn Mandarin if you want to order your favorite burger a few years from now.

    Like or Dislike: Thumb up 5 Thumb down 1

    Burnabonian Says:
    135

    @Anonymous1 “The people (several dozen) I have personally seen buy $600,000+ dollar homes DO so with “multi-hundred thousand dollar down-payments’.”

    What does that mean?

    First, (if you are not just making this up,) it means that you have tipped your hand and self-identified as a Realtor (r) or other industry “professional”. Nobody else would know the financial details of “several dozen” home purchases.

    Second, it means that you have not been reading. Sure, dedicated flippers right now will have a few hundred k in equity. Hell, a homeowner who has been in a coma for three years or even just one who stays home and drinks by himself will have that. Rising tides float all boats. But you did not read the part about actual INCOME now being required as well.

    Statistics Canada knows exactly how much declared income (and declared income is the only figure you can use) that British Columbians have, and it’s barely enough for a cheeseburger and a can of coke.

    And you can’t get income by flipping.

    Third, it means that I get a trophy!

    =====
    Trophy bagged!

    Trophy: Permabulls capitulate and concede that a significant correction is actually inevitable “The coming correction will only [blah blah blah] A $600K house will be had for $450K. ” (Genus: Bull)
    Spotted: http://vancouvercondo.info/2013/08/olympic-village-sold.html#comment-213008
    Last Bagged: (n/a)

    Scoreboard/Rules: piratepad.net/ep/pad/view/ro.SXqM61It83r/latest
    =====

    Like or Dislike: Thumb up 4 Thumb down 2

    UBC in Crisis Mode Says:
    136

    Owner bought this condo in 2005 for $280,000, now rented for $1,700 a month (non-furnished), listed for $459,000 (reduced $20,000) for the current listing.

    http://www.realtor.ca/PropertyDetails.aspx?PropertyID=13343123&PidKey=-103844103

    When being asked if the owner would sell it at assessed value of $426,000, the realtor said no, he thinks market value is way higher. The condo has been on the market for 67 days.

    Like or Dislike: Thumb up 7 Thumb down 0

    Son of Ponzi Says:
    137

    It’s rather simple.
    If there is general anticipation that the price of a product will go up, people will go out and buy before the price goes up.
    As we know quite well, most RE buyers do not care about the cost/price of the property.
    If they can afford the monthly payments (and qualify) they will buy.
    So the cost of the property is mostly irrelevant in most cases, and the price of the monthly payments is the price of the product.
    Therefore, if there is a general anticipation that the rates will go up and the product will cost more, people will rush out to buy.
    This is just “herd mentality” in action.

    Like or Dislike: Thumb up 9 Thumb down 0

    135: I’d rephrase the trophy as: “price drops correspond to higher rates so affordability doesn’t improve”

    It is true that if prices drop and rates rise that mortgage payment drops will be less. There is however one slight (ahem) hiccup. Anyone care to guess what that might be?

    Like or Dislike: Thumb up 2 Thumb down 2

    Bull! Bull! Bull! Says:
    139

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

    Poorly-rated. Like or Dislike: Thumb up 0 Thumb down 13

    “future density is priced in”
    wrong.

    Like or Dislike: Thumb up 3 Thumb down 4

    Clockbike Clockbike Says:
    141

    “future dense-ity is priced in”
    right.

    Like or Dislike: Thumb up 3 Thumb down 4

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

    Poorly-rated. Like or Dislike: Thumb up 3 Thumb down 16

    Bears of future past Says:
    143

    then:

    jesse Says:
    August 18th, 2013 at 11:21 pm 118
    When was it ever about what residents want? Density is coming, the prices have been signalling that for decades.

    and now:

    jesse Says:
    August 22nd, 2013 at 7:21 pm 140
    “future density is priced in”
    wrong.

    Like or Dislike: Thumb up 2 Thumb down 0

    calvin Says:
    144

    You read jesse and then do the oposite. Its kind like george constanca way.

    Like or Dislike: Thumb up 4 Thumb down 0

    143 “Bears of future past”

    Condos have no meaningful future density premium. Cap rates are very low. SFH have density premium. Cap rates are very very low.

    I’m a self-declared idiot, and even to me it’s obvious you guys can’t get it right, even when you go to the effort of finding week-old comments from a self-declared idiot.

    Like or Dislike: Thumb up 4 Thumb down 3

    Best place on meth Says:
    146

    “White Devils, better learn Mandarin if you want to order your favorite burger a few years from now.”

    This round-eye doesn’t give a fuck about McDonalds or mandarin.

    Hot debate. What do you think? Thumb up 16 Thumb down 6

    Son of Ponzi Says:
    147

    Meth,
    Reality Check.
    We just met my son’s soccer team for the next season.
    13 players, 6 Asians who don’t speak English.
    And the they are 12 years old.

    Hot debate. What do you think? Thumb up 14 Thumb down 3

    kabloona kabloona Says:
    148

    Wow, real estate broker recommends condo purchase…who’d a thunk it?

    ;-)

    http://www.theglobeandmail.com/life/home-and-garden/real-estate/with-toronto-rents-spiking-condo-ownership-looks-appealing/article13912770/?service=print

    “With Toronto rents spiking, condo ownership looks appealing

    Ricky Chadha

    Published Thursday, Aug. 22, 2013 12:46PM EDT

    Last updated Thursday, Aug. 22, 2013 01:01PM EDT

    Question: My boyfriend and I are hoping to move from renting to buying a condo. We don’t mind renting, but prices are getting kind of crazy in Downtown Toronto and we figure now is the time to take the plunge for a condo. Do you think condo prices have bottomed out?

    Answer: While I can’t see into the future, nor would I try to speculate on whether condo prices have bottomed out (I’ll leave that to the expert economists) – I do believe there may be a compelling case to buy if you can afford to do so.

    It is very true that rents are getting pretty crazy these days, yet demand doesn’t seem to be slowing down. Just earlier this week The Globe published an article about the increasing rent prices in Toronto.

    Consider that the average one-bedroom rental in the second quarter of this year was approximately $1,600 a month in Toronto, and even more in the downtown core – $1,730. For a few hundred dollars more a month and a reasonable down payment, you could own a place for yourself.

    And why wouldn’t you?

    Well, for one – many experts have been predicating a condo crash, but they have been doing so for the last 15 years! Suppose there is a crash, as a homeowner who intends to reside in the condo versus an investor who is looking at it solely from an economic perspective, you wouldn’t be too adversely affected.

    This is because most people will live in a home about 4 to 5 years, and assuming their monthly costs are fixed, they should be able to weather a dip in the market. Historically the housing market has been cyclical and it bounces back within that timeframe.

    In the second quarter of 2013, the average condo price in Toronto proper (i.e. 416 area code) was $372,805.

    Let’s say you decide to buy something slightly above the Toronto average at $400,000 as an example. With today’s mortgage offerings, you could hypothetically get a 5-year closed mortgage with a 25-year amortization for 3.5 per cent interest. Assuming you put the minimum 5 per cent down payment required, and factor in CMHC mortgage insurance, you would be paying about $1,955 a month.

    Of course, the monthly figure above does not factor condo maintenance fees, which can vary widely among different buildings. I advise my clients to stick within the 50- to 70-cent per square foot range for maintenance. Also carefully consider what amenities you are paying for and if they provide value to your lifestyle.

    One final factor to calculate into your costs of purchasing would be Land Transfer Tax (LTT). As a first time homebuyer you will be eligible for a rebate of up to $5,725 in the City of Toronto (only $2,000 for the rest of province due to double LTT in Toronto) . In the $400,000 example above, you will be paying $2,475 out of pocket after rebates.

    The decision to continue to rent versus buying may not be so black and white. Careful analysis of your finances, particularly your ability to come up with a down payment will help guide you in the right direction.

    Finally, asking yourself how your lifestyle may change in 3 to 5 years is of equal importance in the decision-making process: Will you outgrow your place? Are you planning on starting a family? Where will you be in your career?

    These are just some of the questions you need to be asking yourself when making the decision whether to rent or own.

    Ricky Chadha is a broker with Royal LePage Estate Realty in Toronto, and specializes in applying social media and other digital tools to the business of real estate. You can find Ricky on Twitter @your416 or at his website RickyChadha.com.”

    Like or Dislike: Thumb up 1 Thumb down 1

    http://www.vancouversun.com/business/affordability/Mortgage+rate+hikes+squeeze+Canadian+homebuyers/8822907/story.html

    On an unrelated note, if you cannot speak a language, don’t pretend you can. It makes you look like a goof, Son of Ponzi.

    Like or Dislike: Thumb up 1 Thumb down 0

    Burnabonian Says:
    150

    @Kabloona article “Well, for one – many experts have been predicating a condo crash, but they have been doing so for the last 15 years! Suppose there is a crash, as a homeowner who intends to reside in the condo versus an investor who is looking at it solely from an economic perspective, you wouldn’t be too adversely affected.

    This is because most people will live in a home about 4 to 5 years, and assuming their monthly costs are fixed, they should be able to weather a dip in the market. Historically the housing market has been cyclical and it bounces back within that timeframe.”

    I love it. This guy is proposing putting out $25k plus $2k/month just for the privilege of living in a condo that you could rent for $1730/month.

    Risk? What risk! When the crash comes, you’ll wait half a decade or so and probably hopefully not have lost anything.

    The upside is apparently self-evident, I guess — namely that you will not be debasing yourself like the renter scum who are living in an identical property next to yours and paying tens of thousands (and risking a hundred thousand) less than you.

    Come to the church of the holy debtor, my children, and have your souls cleansed of the sin of having a landlord! All you’ll have to tithe is everything you’ve got…plus your soul.

    Like or Dislike: Thumb up 3 Thumb down 0

    patriotz patriotz Says:
    151

    “@Anonymous1 “The people (several dozen) I have personally seen buy $600,000+ dollar homes DO so with “multi-hundred thousand dollar down-payments’.”

    What does that mean? ”

    Um, I think it means they have sold one property that they bought years ago and bought another.

    And a lot of them are probably starting with a higher mortgage on the new property than the outstanding balance on the old one.

    Like or Dislike: Thumb up 0 Thumb down 0

    patriotz patriotz Says:
    152

    “@patriotz – I would still like to see a source if you know of one”

    If you don’t want to believe me go down to UBC or VPL and read the want ads for 1985 or thereabouts.

    The fact is that house prices have increased massively more than rents since that time.

    Like or Dislike: Thumb up 3 Thumb down 1

    fixie guy Says:
    153

    crabman Says: “The reason desirable RE can appreciate faster than inflation is because incomes increase faster than inflation.”

    Contrary to statistics for the past two generations.

    Like or Dislike: Thumb up 2 Thumb down 0

    crabman crabman Says:
    154

    Fixie – Look at your own link from comment #81. The upward slope in real prices is pretty obvious.

    And here is the inflation-adjusted Case-Shiller index. Also with an upward slope.

    http://1.bp.blogspot.com/-CaN_wK0nNos/Ucnufq8GXmI/AAAAAAAAa04/zfJaKB5QXqU/s1600/RealHPIApr2013.jpg

    Like or Dislike: Thumb up 0 Thumb down 0

    Crabman:

    There have been countless redevelopments on the Westside over the last 30 years. Look at what’s happening along the Cambie corridor right now. Arbutus Walk in Kitsilano was industrial land in 1985. Today there are over 1,000 homes there. Look at all the new condos along 4th or Broadway.,

    You consider building condos in a neighborhood as an improvement? Yikes. Anyway, in the areas there were no ‘improvements’ prices still went up the same amount. That proves prices didn’t go up due to so called improvements. The prime areas on the Westside don’t have condos. It is a bubble.

    Like or Dislike: Thumb up 0 Thumb down 1

    fixie guy Says:
    156

    @154: Please do look at it. Vancouver was flat until the exceptional population boom caused by Hong Kong’s repatriation. The instant that stopped prices fell, though I understand locals love to blame the provincial government for that. In the 2000′s prices started rising again in concert with the rest of Canada and the feds pumping dollars into the market through the CMHC.

    “And here is the inflation-adjusted Case-Shiller index. Also with an upward slope.”

    Get serious. Shiller’s curve earned him global acclaim for demonstrating the exact opposite. It shows no upward trend going back to the 1800′s. It’s posted on these sites time and time again. Editing out the first 120 years isn’t cricket my good man.

    Like or Dislike: Thumb up 1 Thumb down 0

    Crabman:

    And here is the inflation-adjusted Case-Shiller index. Also with an upward slope.

    That is over a 15 year period where mortgage rates were cut in half. Wait to see what it looks like once interest rates go back to normal levels in the next 5 years. If you are invested there I wish you luck now they are talking about getting rid of Fannie and Freddy which provide the 30 year mortgages. The US has not bottomed yet.

    Like or Dislike: Thumb up 1 Thumb down 0

    crabman crabman Says:
    159

    My grandparents lived in Santa Monica, California. Doing some genealogy, I noticed that the 1930 census had property values and addresses, so I tried to look for some homes in the area that haven’t been torn down yet. I found these two:

    725 Navy Street – worth $3,500 in 1930, sold for $690k in 2011.
    729 Navy Street – worth $3,000 in 1930, latest “Zestimate” is $1.035M.

    Adjusted for inflation, the first one should have only sold for $46,573. You’re theory is off by a factor of 15.

    The second one should be worth $40,758 if RE only goes up with inflation. You’re off by a factor of 25 on that one.

    Like or Dislike: Thumb up 2 Thumb down 1

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