Too many condos drive down prices?

There’s an article in the Globe and Mail from the end of last week about the lackluster performance of Vancouver condo prices over the last several years.

Many people seem surprised that condo prices have stagnated or fallen over the last few years, and the extra cost of fees and maintenance tend to turn that into a loss.

…interest and principal payments on the median condo in Vancouver last year were a full 20 per cent more than payments in Toronto. For that reason, Mr. Hynes, who’s become a father since he purchased his 620 sq. ft. condo, will rent out his condo and use the money to rent another place, in an area with better value. Mr. Hynes paid $182,000 for his condo, which was $7,000 below the asking price. He was thinking of selling the unit until he saw that his neighbour on the same floor, with the same suite, has just listed for $179,000.

“I thought it would at least keep its value, so I’m surprised,” Mr. Hynes says. “If it had kept its value, I definitely would have sold right now.”

He says his work colleagues, friends and relatives are facing the same situation. His cousin just sold her condo after renting it out for five years, and she lost money on it.

“It was for the exact same reason I’m losing out,” Mr. Hynes says. “Because there are so many condos in the area.”

Fortunately for Mr. Hynes, the Conference Board of Canada is forecasting lower starts in the future and increased demand for condos.   They are predicting a slight rise in prices between 2014 and 2017.

Mr. Hynes says he’ll hang onto his condo long enough to see that happen.

“I’m in a situation where I cannot afford to sell it, so I’m going to be renting it out, probably next month.

“For me, it feels as if I am moving backward in life, but I have no choice, because I need to move on because I have a family now. I am going to move out and go rent a basement suite in Coquitlam.

“I know a lot of people can’t afford their mortgages because there are tons of cheap basement suites in Coquitlam.”

Read the full article in the Globe and Mail.

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Many Franks
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Active Member

Anyone have any idea what the realtor is doing on this listing? It shows maintenance fees as $1,081.16/month, and states in the description that this includes the mortgage payment. Besides obscuring the actual maintenance fee, what possible good is this to anyone?

Son of Ponzi
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Son of Ponzi

The Shoe Box salesman, formerly known as The Condo King, has been conspicuously absent from the RE circuit lately.
Probably realizes that the jig is up.

rp1
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rp1

We built lots of condos in the past decade and prices went up. Maybe prices are going up.

Son of Ponzi
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Son of Ponzi

Phase 1 of The River Green monster condo development is nearing completion.
Touted as The Coal Harbour of Richmond.
Can’t wait to count the windows without lights at night.
Ah, the pleasures of an RE bear. 🙂

mac
Member
mac

You guys are delusional. Rennie is probably flying in his private jet to the capitals of Europe to either buy art or advise museums curators. And dark windows don’t mean a thing ‘xcept no need to find anyone to pay the rent. Wake up. Life isn’t as you see it. Strive to be balanced at least.

robert james
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robert james

I will try this again,, I know that Garth is not that popular with some but his blog today is pretty interesting regarding a triple listing of a house and then a triple sale is reported jacking up the sales .. Is this possible?? http://www.greaterfool.ca/

Son of Ponzi
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Son of Ponzi

Mac,
Who mentioned Rennie?
And watching empty condo towers at night makes me feel balanced.

HAM Solo
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HAM Solo
Just perusing the deep detail of the banks q3. As usual, I come away thinking “where are the losses”? This is what I think I know: – There are an awful lot of BC houses and condos which, if they were sold into the market as it exists now, would be sold at 5,10,15% lower than purchase prices from the period of 2007 onwards. We can see the details on sites like Vancouver price drop. -In BC, at least, the general cost of living combined with mortgage service has resulted in pile-ups of non-mortgage consumer credit. So the weaker households from the class of 2007 onwards probably has revolving debt issues in addition to the disappearance of equity. -The local landscape for full-time employment is pretty weak. Not to say that there are no jobs, but fancy pants CEO’s from… Read more »
Son of Ponzi
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Son of Ponzi

I heard a guy on CKNW today say that the average age of the cars on the road in BC is 9 years.
This is unprecedented.
It appears that many homeowers are postponing car purchases in order not to fall behind on their mtg.payments.
Sooner or later these clunkers will have to be replaced, and then things will get interesting.

crabman
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crabman

Many Franks,

That listing is for an “undivided interest” property.

http://vancouver-properties.ca/blog.html/legally-speaking—undivided-interest-2463658

Many Franks
Member
Active Member

@crabman: Interesting, thanks. I’ve never run across one of these before. I’m no fan of strata structures, but this sounds like throwing the baby out with the bathwater.

Son of Ponzi
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Son of Ponzi

HAM solo,
I agree.
Credit Unions with their concentration of mortgages in the Lower Mainland will be feeling the pain.
I’m sure that the regulators and auditors are already asking them to increase capital and Loan loss provisions to prepare for the flood of foreclosures.

Melba
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Melba

…..You guys are delusional. Rennie is probably flying in his private jet to the capitals of Europe to either buy art or advise museums curators. And dark windows don’t mean a thing ‘xcept no need to find anyone to pay the rent. Wake up. Life isn’t as you see it. Strive to be balanced at least….

Get back to work Bob!

Given that ‘East Van is the new Shaughnessy’, there must be lots of high end homes to sell.

paulb
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Active Member

New Listings 317
Price Changes 130
Sold Listings 88
TI:17174

http://www.paulboenisch.com

Best place on meth
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Best place on meth

+143

franko
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Active Member
franko

Nice to see the flood of new listings, but I’m surprised at the sudden decline in sales. The real draught should start in a month or two when the last of locked in mortgage crowd is exhausted and int rates are up a couple more bumps.
Should be the slowest winter in a decade.

robert james
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robert james

Whoa !! 88 sales.. That is a stinger !!! Thanks Paul !! I have been watching you data for quite sometime just for curiosity sake..

Best place on meth
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Best place on meth

@franko

The rate holds for 2.79 to 2.99% are expiring right about now.

The next few weeks will see the end of the low 3’s.

Yes, it will be extremely quiet after that.

Best place on meth
Member
Best place on meth

Many Canadians are rushing to buy homes, afraid that rising rates will price them out of the real estate market. Higher interest rates often bring lower housing prices, however; so does it make sense to wait?

Thursday at noon (ET), Robert McLister will take your questions in a live online chat. Robert is the editor of CanadianMortgageTrends.com and a mortgage planner at Verico IntelliMortgage, a mortgage brokerage.

http://www.theglobeandmail.com/globe-investor/investor-community/mortgage-expert-robert-mclister-takes-your-questions/article14184712/?cmpid=rss1&utm_source=dlvr.it&utm_medium=twitter#dashboard/follows/

Prepare to be bombarded, Rob.

Saver
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Saver

from the lead article: “I thought it would at least keep its value, so I’m surprised,” Mr. Hynes says. “If it had kept its value, I definitely would have sold right now.”

What are you talking about Mr. Hynes. Ozzi Jurock said that is not true. LOL

VanRant
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VanRant

88’s will be the highs a month from now.

George
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George
This comment of mine on the previous thread was voted into oblivion: Study shows 25% of Asian men have raped a woman at least once in their lives. http://www.vancouversun.com/health/Study+Asian+countries+have+raped+most+they+were+sexually/8892429/story.html Skook described my comment as “Neo-Nazi”, “Pro-Aryan”, “xenophobic” and “racist”. Skook and the people who upvoted him/her should really take that criticism to the Vancouver Sun. My quote was paraphrasing something I read in the Vancouver Sun. I had no intention of being racist. I thought it had some relevance to the discussion others on VCI were having about Quebec’s new policies on multiculturalism. If you think I am racist, take your complaints to the Vancouver Sun. Instead of paraphrasing, I will give you precise quotes from the Vancouver Sun article (note a “quarter” of men are rapists if you include rape against wives/girlfriends…so 25% of Asian men as rapists is… Read more »
Absinthe
Member
Absinthe

It seems to me that sometimes Tuesday is reporting low and the two day average with Wednesday is more in line with the rest of the week? I have wondered if there’s a data entry person who works a half day Tuesdays, or there’s a closed office or weekly meeting or something!

jesse
Member

“I’m in a situation where I cannot afford to sell it, so I’m going to be renting it out, probably next month.”

Witness the birth of an accidental landlord.

condoland
Guest
condoland

i’m still waiting for someone to tell me what i did wrong, or why what i did is a bad idea… thus far the only response i’ve gotten is “LOL”, “you work?”, “that makes sense if you’re sniffing glue”.

N Says:
September 10th, 2013 at 6:02 pm 100
” individuals are FREE to CHOOSE how they live and what they spend money on”

Sure, but you are missing the point. We are not discussing whether or not it is allowed, but whether it is a good idea.

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