19 months since the peak of house prices in Vancouver

b5Baxter posted the following comment, an update to prices for the end of November 2013:

REBGV stats are out.
We are now into month 19 since real estate peaked in Vancouver.

We are down 3.54% in nominal terms since the peak and 5.83% in real (inflation adjusted) terms.

If you bought a house in Vancouver in November 2009 (4 years ago) you would have been better off putting your money in savings account (before transaction costs).

In fact if you bought a house back in April 2007 (over 6 years ago) you would have been better off putting your money in a savings account.

So Vancouver Home Prices are basically back where they were in 2007 compared to a savings account.

 

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ILoveCharts
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ILoveCharts

Lots of people seem to be getting laid off for Christmas.
BC Hydro layoffs. BMO layoffs. Any others?

RealityCheck
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RealityCheck

Why do you keep quoting this ???

“….and 5.83% in real (inflation adjusted) terms.”

TOTALLY ERRONEOUS!

Unless you have $1 Million in cash (average value of SFD) and it grew by 5.83% since the peak. Otherwise, totally meaningless and misleading.

Let the downvoting start from the mathematically challenged.

paulb
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Active Member

New Listings 142
Price Changes 45
Sold Listings 98
TI:14417

http://www.paulboenisch.com

RealityCheck
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RealityCheck

Taylor (previous day comment):

Looks like CMHC forgot to charge me the premium a second time when I flipped a house. Yes I had less than a 20% downpayment…and had a previous mortgage that I ported that I paid CMHC fees on. What is required is a new appraisal if you change lenders. If changing the loan amount to a higher amount, you would only pay additional fees on the extra amount. But banks will appraise correctly to avoid that.

Make sure if you ( and the 8 upvoters you had) are ever in that situation that you donate additional fees to CMHC. Tell them that you want to even if they refuse.

George
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George
A transportation planner out of SFU is calling on the government to implement a $5 toll at all border crossings in Metro Vancouver. From CBC: “A local transportation planner thinks the time has come to toll all of our border crossings as a way of keeping more gas tax revenue in B.C. Eric Doherty, principal of Ecopath Planning, made the suggestion at SFU’s recent Moving in Metro summit on mobility pricing. He suggests that a $5 toll on Highway 99 might be enough to dissuade people from going south, as well as to make up some of the lost revenue from those who continue to make the trek. “A very logical thing to do is put a toll on the roadways to all the border crossings using the same system as we’ve now got on the Port Mann bridge and… Read more »
RFM
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RFM

The VANCOUVER REALTOR HUNGER INDEX for November 2013 was 65%.

Details and comparison data for 16 years at: http://vancouverpeak.com/Thread-Vancouver-Realtor-Hunger-Index

b5baxter
Member

RealityCheck, thank you for your question.

Adjusting changes in house prices for inflation is the standard way things are done.

That’s the way some guy who just won the Nobel prize does it:
http://www.multpl.com/case-shiller-home-price-index-inflation-adjusted/

And some magazine that is somewhat influential:
http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

BasementKing
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BasementKing

“In fact if you bought a house back in April 2007 (over 6 years ago) you would have been better off putting your money in a savings account.“

And if you rented a basement suite since 2007 you would have been better off living in a tent and buying gold with the money instead of wasting it on rent…

😉

Son of Ponzi
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Son of Ponzi

Cancelled/Expired: 49

fleetwoodboy
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fleetwoodboy

Down and falling in the Fraser Valley….

http://www.fvreb.bc.ca/statistics/Package%20201311.pdf

NoBid
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NoBid

All, i think everyone here agrees that on any metric the Van SFH market is overvalued. What I don’t see factored into any comparison is the fact that in the current environment, in a ‘ normal’ mortgage scenario, every month half of your payment goes to interest and the other half to principal. So for todays post, to not factor this in seems like bear math. Surely you’re paying down some principal over 6 years, no? Maybe an apples (deposit) to apples (unlevered house purchase) is what you are trying for, but in practice there is usually some leverage involved….

b
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b

Renters can never buy,they are watching from the sidelines waiting for a correction but the prices keep going up.

fleetwoodboy
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fleetwoodboy

@b…..tell that to condo owners in Vancouver. Prices haven’t moved upwards in 5 yrs!

With the supply that’s coming on stream, the pressure on prices will only be downwards.

Pls don’t mention the immigration factor!

b
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b

@fleetwoodboy

I know Surrey condos have dropped in price but not here in Burnaby(metrotown).I have been waiting for a correction so I could upgrade to a larger townhouse but that hasn’t materialized.
And yes as far as Burnaby is concerned the immigration factor does play a big role.

YLTNboomerang
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Aggregator
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Aggregator
Below is a broad measure of how much equity a potential move-up homeowner in Van would have gained at the end of a five year mortgage term, expressed as a percentage of SFH prices at the end of the term. The calculation uses average annual mortgage rates at MLS-HPI benchmark prices. The initial purchase is based on attached/condo HPI prices averaged into one benchmark as a starter home and assumes a 20% deposit with no CMHC. The move-up purchase is based on SFH/one-story/two-story HPI averaged into one benchmark. Equity = (initial 20% Deposit + Mortgage Principal + Capital Gain) closing outstanding balance at 5 year end. Total Equity % of SFH Benchmark 2005-2010__24.5% 2006-2011__18.7% 2007-2012__14.9% 2008-2013__13.2% This widening gap between starter and move-up owners is a perfect liquidity storm for SFH owners if rates move up or, with any economic… Read more »
southseacompany
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southseacompany

China Mainlander blames China Mainlanders for higher Lower Mainlander prices.

Hong Kong’s South China Morning Post;
http://www.scmp.com/comment/blogs/article/1372813/born-china-joy-mo-blames-rich-mainlanders-vancouvers-housing-woes

Of course prices doubled in Winnipeg, too. No asians buying there. Hmmmm.

http://theeconomicanalyst.com/sites/default/files/article_inside/2011/05/winnipeg_price_rent.jpg

tedeastside
Member
tedeastside

so do ham parents wants their kids to start a career in vancouver..
or do they know vancouver is a career graveyard

patriotz
Member

@11:

So what if you’re paying down the principal? If I buy a stock on margin, and it goes down over say 3 years, does it make any difference to the performance of the stock as an investment whether I’ve paid off any or all of the margin loan?

George
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George
Wow! That article in the South China Morning Post says it all! This Chinese immigrant who is struggling with high housing costs in Vancouver does not want to be “painted with the same brush” as investor class Chinese immigrants who are driving up real estate prices. Here we see more diversity–not all Chinese people are HAM real estate investors–and Chinese people are resentful of HAM too. It’s the HAM-deniers like Garth Turner who would never recognize this level of diversity in Vancouver’s Chinese community as they see criticism of HAM as equivalent to criticism of all people of Chinese descent. Really, it’s the HAM deniers like Garth Turner who are racist because they cannot recognize diversity within the Chinese community. Too bad we would never see this in Canadian media: “She cannot understand why Canadian politicians do not recognise a… Read more »
patriotz
Member

@20: ” But after (2008), all of a sudden, there are a whole bunch of investor-category immigrants…”

This is simply not true. The proportions of family class,skilled and investors have not changed significantly since then. IMHO the person quoted is trying to blame the housing bubble on investor immigration rather than on loose credit.

http://www.cic.gc.ca/english/resources/statistics/facts2012-preliminary/01.asp

“I don’t understand why they don’t pay income tax”

Because our “tough on crime” Harper Government® is not willing to commit sufficient resources to enforce the legal obligation of Canadian residents to pay tax on global income.

” Nevertheless, a 2011 regional study of luxury-home purchasing records by Datacorp found that 74 per cent of buyers had mainland-Chinese style names ”

As relevant to the general RE market as who’s buying Porches is relevant to the general auto market.

registered
Member
registered

@7 b5baxter Says: “Adjusting changes in house prices for inflation is the standard way things are done.”

That this still has to be explained is astounding. Do they really believe chocolate bars have increased in intrinsic value 800% since the early Seventies, or today’s minimum wage earners are better paid than UAW members of the same period?

George
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George

@ Patriotz:

Yeah, it does sound like she is blaming investor class immigration. I agree with her–I think investor class immigration is one of the reasons why we have high real estate prices–I mean this is the result of courting international investors–they actually invest!!!

Yes, she may be wrong to single out 2008 as a point when investor class immigration from China increased (or she may be right, I don’t know). This one potentially incorrect detail does not invalidate everything this woman is saying and it does not invalidate the fact that there are some Chinese people who are upset about HAM driving up real estate prices. I think you should try to focus on the overall message this Chinese immigrant was delivering, instead of nitpicking about one potentially incorrect detail.

Bull! Bull! Bull!
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Bull! Bull! Bull!

@b5baxter

so, you’re saying that someone who rented in vancouver since 2009 did the best, someone who bought a vancouver house in 2009 with cash did second best, and someone who bought a vancouver house in 2009 with a 20% down payment did the worsts?

is that your position?

>“…how much of a down payment are these calculations assuming? as we all know, unless you pay cash, real estate is leveraged…”

>100% down payment. If you assume that you are financing your real estate purchase you would be even worse off. Because now you have to make back all the money you are paying in interest as well.

Newcomer
Member
Newcomer

Rent control (kinda) for Vancouver, as a way to address stupidly high purchases prices. (I’d say the market is doing that very well without help from city call.)

“He cited the example of a two-bedroom unit on the east side renting at $1,445 per month. A renter would need an annual income of $58,000, while the average two-bedroom condo in the same area would require a person to have an income of $102,000 and a sizable down payment.”

Read more: http://www.vancouversun.com/news/Vancouver+sets+maximum+initial+rents+rent+only+buildings/9243510/story.html#ixzz2mWVhomXI

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