What’s happened to condo prices?

With all the media focus on rising real estate prices in Vancouver you’d think all market segments must be doing pretty well right?

Well it sure looks like condo prices have been languishing.  First we had the CIBC world markets report showing Vancouver condo prices barely budging in the last five years, and now Ulsterman points out the following:

It’s easy to only see the big gains SFH’s have made over the past 5 years and overlook the many “homeowners” of condos who have not made much or even lost money (what!?!, but i was told it only goes…).

I noticed 303-1333 W 7th Ave (V1088944) listed in the Georgia Straight p72 of Nov 20-27 issue). It’s a 1bd/1bath unit listed for $355,000. The key detail was of course, “Amazing deal, listed $20,000 below where it sold in 2009.”

So after paying $70k in interest, $15k’ish in taxes and strata fees, $20k capital loss, CMHC fee when buying (10k) (3%?), $13k selling fees. This gets expensive really fast ($128,000 over 5 years or $2133/month). It probably rents for $1300/month.

Not such a slam dunk.

Are condos just hitting a price ceiling at the entry level? Shouldn’t condo prices be going up more in this market?

Joe Mainlander points out that the REBGV HPI paints a similar picture.

Even the REBGV HPI stats point to a sinking condo market (not 20% though);

Metro Van Apartment HPI;

July 2008 = $367k
July 2014 = $380k

There’s been 10% inflation since then, so HPI would need to be $403k just to keep up.

A 6% drop in real dollars.

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Royce McCutcheon
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Royce McCutcheon

@patriotz: tongue firmly in cheek with my word choice.

history
Guest
history

There has been some stealth consolidation between credit unions on the west coast.

http://richardhughes.ca/cowichan-conversations/island-savings-credit-union-merger-is-unsupportable-bigger-is-not-better/

Eastside Ted, you might want to give this article a once over because this credit union capitalized Got Junk.

patriotz
Member

@65: “And there is a bit of irony to watch for in the prospect of on-paper millionaires who shrugged about foreign investment during the run up possibly being angry about getting preyed on by foreign investors later.”

Nobody is being “preyed on” by foreign investors or any other buyer. If the high bidder was not there the seller would have to settle for less or not sell.

paulb
Member

New Listings 165
Price Changes 52
Sold Listings 112
TI:13849

http://www.paulboenisch.com

history
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history

I have a business idea to offer Time Share residents to foreigners. Does anyone know if this is being offered in Vancouver right now?

history
Guest
history

There can never be a condo glut as condos and apartments are interchangeabe. There can only be fluctuasians in occupancy rates. What are the occupancy rates in Vancouver by neighbourhood?

Royce McCutcheon
Member
Royce McCutcheon

@AppearingWealthy: [shrugs] I’m a content Vancouver renter with a low opinion of the housing bubble that’s been engineered in Canada and a pretty low regard for real estate hypsters too. So, I’d say your assessment is just a touch wide of the mark.

I just think it’s an interesting to consider what may happen in the event of a correction. And there is a bit of irony to watch for in the prospect of on-paper millionaires who shrugged about foreign investment during the run up possibly being angry about getting preyed on by foreign investors later.

ostritch
Member
ostritch

What’s the problem today? Condo prices barely budging. And over a period of five years. Isn’t that good news bears? Is that not exactly what you wanted? For housing prices to come down? Well, now they’re down. Maybe you should buy. How much longer could they stay down? Another five? If they are flat, and you continue to wait, that will net you nothing with rates so low. If they decline 10%, will it really have been worth waiting a decade for? No.

If you look at the new areas of town, and the new buildings, you will see that (even though the units are smaller… and therefore more expensive as one poster has pointed out)… buy/rent is really the same ballpark. Time to step up to bat, bears.

AppearingWealthy
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AppearingWealthy

@Royce McCutcheon

Yawn…Yes just like when the US crashed and our Dollar was high thousands of Candians bought down there. This isn’t a big news. They would have to have Cash as they can’t get a mortgage up here of course. Timing the market is not easy though so good luck to your “friends”. Hopefully they’re $$ is in US equities for the time being like myself. Do you think this is actually news worthy or are you a just trying to use common realtor scare tactics? Anytime something corrects is a good buying opportunity my friend. This is called smart investing. Just don’t follow the hurd..like buying Nortel at its peak or Gold at $1900/oz or Can housing….now!

southseacompany
Member
southseacompany
“Housing markets in U.S., UK, Canada set to cool even if rates stay low for longer” Reuters. http://blogs.reuters.com/macroscope/2014/11/25/housing-markets-in-u-s-uk-canada-set-to-cool-even-if-rates-stay-low-for-longer/ “Even as the expected date for an eventual interest rate rise in the U.S., Britain and Canada keeps getting pushed further into the future, the outlook for residential housing markets in these countries is also starting to cool.” “While all three of these property markets have been following trajectories of their own since the financial crisis hammered the industrialised world after the collapse of Lehman Brothers and brought about zero, or near-zero, interest rates soon afterward, they all are expected to generate less lofty price rises” “Which brings us to Canada, where property prices have been moving almost exclusively in one direction — up — for the better part of a generation, leaving some people with no understanding or experience of a… Read more »
Royce McCutcheon
Member
Royce McCutcheon

FWIW, if people in this region think foreign ownership is bad now, it will be interesting to see what happens if/when there is a correction in prices. I have multiple friends and colleagues in the US who have earmarked funds to use here should prices return to sanity.

Many Franks
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Active Member
Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

“COCs buy condos and townhouses.”

also known as 仆人的房间

Joe Mainlander
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Joe Mainlander

Re: #54 Limiting data to a small area would not support any conclusion. If one follows that logic, one could limit data to one neighbourhood, or one block, or one house and prove whatever one wanted to prove. That is the point, one should not limit one’s data, but look at the context, so as not to be manipulative.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

HAMs buy detached houses.

COCs buy condos and townhouses.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

benchmark price for detached SFH

van east: $954,200
van west: $2,305,700
richmond: $1,006,600
port moody: $904,600
north van: $1,040,100
burnaby north: $994,300
greater vancouver: $995,100

http://www.rebgv.org/sites/default/files/REBGV%20Stats%20Package%20October%202014%20%281%29.pdf

does this mean that half the homes sold do not use CMHC financing?

Joe Mainlander
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Joe Mainlander

Re: #50/51 Out of interest, here’s some stats on CoV only. Can’t find yearly stats, but here are some snapshots for March 2012 and February 2013.

http://issuu.com/jefffitzpatrick

Summary CoV;

March 2012
Totals Sales; 952, sales over $ 1mil; 255 (27%)

February 2013;
Total sales; 385, sales over $ 1mil; 112 (29%)

So, if typical, in City of Van vast majority of sales seem to be for homes less than $1million. Still, this needs to be looked at within Metro context.

If one zoomed in to West Vancouver only, vast majority of sales would be over $ 1mil. But, but that info would not prove or disprove a bubble without looking at Metro context. Or Canada context for that matter;

Joe Mainlander
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Joe Mainlander

Re: #50/51 Out of interest, here’s some stats on CoV only. Can’t find yearly stats, but here are some snapshots for March 2012 and February 2013.

http://issuu.com/jefffitzpatrick/docs/february_2013_sar
http://issuu.com/jefffitzpatrick/docs/03_mar_2012_-_sales_absorption_report/1?e=6607087/7744375

Summary CoV;

March 2012
Totals Sales; 952, sales over $ 1mil; 255 (27%)

February 2013;
Total sales; 385, sales over $ 1mil; 112 (29%)

So, if typical, in City of Van vast majority of sales seem to be for homes less than $1million. Still, this needs to be looked at within Metro context.

If one zoomed in to West Vancouver only, vast majority of sales would be over $ 1mil. But, but that info would not prove or disprove a bubble without looking at Metro context. Or Canada context for that matter;

http://www.torontocondobubble.com/p/canadas-housing-bubble.html

@joe
Guest
@joe
Again Joe you are being curiously vague. Your own REBGV link provides such far flung places as Bowen Island, Pitt Meadows, Port Moody, Squamish, Sunshine Coast, Twsawwasen..I could go on. NONE of which will have a single condo sale above $1 million and not many SFH house sales above $1 million. These prices are MASSIVELY different (like $Million plus different!) than other places in the same region! The huge price differential is NOT typical of other municipalities as you claim and when factoring in our very low average wage the inter-greater-Vancouver price differential is even more absurd. And I haven’t even started on the over-supply of condos which are increasing the lower priced sales of your 28,000 -thus further diluting the $1 million plus vs sub $1 million ratio – and by extension your subsequent ‘$1 million purchases aren’t really… Read more »
Westside Realtor
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Westside Realtor

Hey Joe,

I agree.

That said, some air is coming out of the sfh mkt on Vancouver’s westside.

Same thing is happening in 69 out of 70 cities in China (which are tracked and reported monthly) .

I wonder what happens next..my guess is that prices further erode going forward.

Joe Mainlander
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Joe Mainlander
Re: #50. REGBV stats are only for municipalities north of Fraser. South of Fraser is Fraser Valley Real Estate Board. 28,500 sales were only for north of Fraser. Total South and North is somewhere over 45k sales last year, I believe. Southeby’s quotes the 2500 figure as being for “Greater Vancouver”, and I assume that means REGBV area. If all of Metro Vancouver, than the % of $1 million homes sold would be even less. As you correctly point out, higher priced homes or condos would be located closer to the City centre, and lower priced ones at the periphery… as they would be in any metropolis. Not sure how that disproves class wide, region wide, and Canada wide asset inflation, caused by handing out cheap money. Those locational differences existed before the bubble, and will continue to exist after… Read more »
space889
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space889

@george – I guess $500K/year just isn’t enough to help find a cure for cancer or helping those dying from it. I guess the guy just forgot all the answers he gave during medical school interviews about why he wants to get into medicine.

But on the other hand, $500K/year @ 4x max borrowing easily qualifies for a $2m+ mortgage.

@joe
Guest
@joe
As soon as anyone dares question the impact CMHC out comes Joe Mainlanders with his old using Metro Vancouver / REBGV trick to try and play down the impact of $1 million plus sales for ‘normal’ houses. So it’s ‘only’ 2505 out of 28,500 sales is it Joe? Well guess what, there’s a vast chunk of the REBGV area where there are Zero 1million plus condo sales and hardly any Milliom plus SFH sales. So you are diluting the City of Van and immediate areas impact by lumping them in region wide stats. But I suspect you already know that. There is no condo bubble anywhere and no $1 million plus SFH bubble in many parts of the outer REBGV areas. We get it. So Joe, I ask you, simply provide the 2505 $1 million plus SFH sales as a… Read more »
Joe Mainlander
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Joe Mainlander

@#48 Not quite. In your link it doesn’t say that Poloz confirms any rate rise, just that the OECD (an int’l organization) predicts that “Canada’s central bank will raise its key interest rate in May to contain inflation pressure.”

Loon
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Loon