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.

107 Comments
newest
oldest most voted
Inline Feedbacks
View all comments
elvince
elvince
7 years ago

@ComingBoom: Wow, you’re one racist bigot. Not only are you almost completely uninformed about Quebec’s “charter of values”, but you manage to show off your grand scale bigotry against both Quebecers and immigrants.

You should go fill the talkback of thestar.com with your hate. You’d fit right in.

Melba
Melba
7 years ago

….Applying physics to analyze the vancouver housing market is the stupidest thing I have ever heard…..

Clearly soft-in-the-head has never heard himself.

ComingBoom
ComingBoom
7 years ago

Yet Quebec accepts 65,000 Immigrants a year under their OWN program…hypocrites.

ComingBoom
ComingBoom
7 years ago

Now that Quebec has started to ‘kick out’ visible minorities, they will end up mostly in Toronto. Expect prices to boom there.

Time to stand up to Quepeckers, I want the French language out of my face…not in our BC schools, not on Breakfast cereal boxes.

Maybe the Jewish company Seagram’s should pull all business out of that rogue proviince.

Skook
Skook
7 years ago

#22

George, VCI is a forum for intelligent discussion of real estate issues. Over the last few weeks, a growing number of posts were veering from that path . My post on the 10th was to remind everyone how such “musings and statements” could be interpreted and therefore have a detrimental impact on this forum’s reputation.

Your post on the 10th (#65) despite the fact it was an issue raised in the Vancouver Sun was likewise far “off topic” as it relates to the purpose of this forum and therefore we (at VCI) do not have to “deal with it”. The issue has relevance and a place somewhere else, but not here.

Loon
Loon
7 years ago
Softy
Softy
7 years ago

“So identifying bubbles has an analog in fundamental quantum mechanics principles.

I don’t know if applying flawed logic has much place in the company of physics.”

Applying physics to analyze the vancouver housing market is the stupidest thing I have ever heard. Prices are not physical phenomena. Try thinking about economics instead.

George
George
7 years ago

There has been an increase in the rat population of Shaughnessy and Point Grey this year:

http://www.cbc.ca/news/canada/british-columbia/story/2013/09/11/bc-rats-vancouver.html

John B.
John B.
7 years ago

I think it has some positives as well. All the former condo habitants who will be moving from condoes to basement suites will increase the RE market activity in the next months. Honestly, I think it is already happening – August Housing Market.

Son of Ponzi
Son of Ponzi
7 years ago

#96
This is the dilemma.
In order to observe the state of the cat (RE in Vancouver) you have to open the box.
There are two possible observations.
1.The cat is alive.
2. The cat is dead.
And a third that can only be inferred.
3. The cat is alive, but it could be a Dead Cat’s bounce.
Ditto,
Quantum mechanics meet Vancouver RE.

ILoveCharts
ILoveCharts
7 years ago

Re Many Franks.

That is an excellent article. Should be mandatory reading for anyone looking at a house right now.

jesse
7 years ago

So identifying bubbles has an analog in fundamental quantum mechanics principles.

I don’t know if applying flawed logic has much place in the company of physics.

Many Franks
7 years ago

Rob McLister is coming out somewhat bearish on home prices, mostly on the back of higher rates, in advance of tomorrow’s live chat.

Son of Ponzi
Son of Ponzi
7 years ago

Jesse,
See Schroedinger’s cat.
http://en.wikipedia.org/wiki/Schrödinger's_cat

Aggregator
Aggregator
7 years ago

I won’t even watch it and will tell you that none of them will peep one word about new homes sales, cause when you add resales and new homes sales, this is what Toronto looks like. http://i.cubeupload.com/sA61Ao.png

I said it many times.. Canadians have the wrong analysis for measuring our housing market that now includes a presale market that sells homes like a barrel of wheat with leverage on the COMEX futures exchange.

Indicators are flashing red while pundits say “there’s no crash coming.” All of them have no clue what they’re talking about.

jesse
7 years ago

Then we can state the only way to absolutely confirm a bubble is to have a crash. Doesn’t mean that a bubble that hasn’t yet crashed isn’t a bubble.

Being in the process of petting a specific bear is not a confirmation that said bear isn’t dangerous.

Bull! Bull! Bull!
Bull! Bull! Bull!
7 years ago

>Because no bubble in the history of the world has led anything but a crash. It has never, ever happened.

this is a tautology. bubbles are always followed by crashes by definition. if there was no crash, then there was no bubble.

your irrational argument is what is known as “bear logic”.

Spec
7 years ago

Tonight’s CBC “Bottom Line” session http://www.cbc.ca/thenational/content/analysis/thebottomline/where_canadas_economy_stands.html
At around 5:30, housing chat. Preet makes a comment to the effect that the sales surge is a “blip” because of 90/120 lock-ins running out. He went there on national TV……

It's simple
It's simple
7 years ago

hydro going up close to 30% in the new year, mortgage rates going up like a rocket ship, house prices at record levels, debt levels at record highs, car insurance, house insurance, property tax, etc. etc. etc. maybe its a soft landing but maybe its a time bomb ready to go off. I think I’m gonna go with the bears on this one

Softy
Softy
7 years ago

It’s a soft landing.

paulb
7 years ago

New Listings 240
Price Changes 109
Sold Listings 139
TI:17203

http://www.paulboenisch.com

Burnabonian
Burnabonian
7 years ago

LOL at “passive income”

Who is this passive landlord and what can I rent from him?

I’m going to not pay my rent, chain two pitbulls to the front porch, and then cover the living space 18″ deep with potting soil.

Being all passive, he won’t even notice.

Or, err, wait. That can’t be right. Being a landlord SUCKS and tentants are a NIGHTMARE.

The only passive landlord is a grave digger.

jesse
7 years ago

“Passive income”

Yep. No additional tax overhead, no handling of vacancies, repairs, and strata decisions, no renegotiation of financing, and no depositing the rent cheques at the beginning of every month.

Passive. 😉

Nix
Nix
7 years ago

“The drop off in mortgage activity was dramatic and rapid”

http://www.cnbc.com/id/101022916

patriotz
7 years ago

@81 Best comment:

Sossij

“We’re no longer a nation of shopkeepers – we’re becoming a nation of estate agents”

Not a nation of engineers, scientists, inventors or manufacturers then? No, just a load useless unproductive bullshitters selling the same houses over and over at ever inflating prices. How sad.