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Friday Free-for-all! December 9th, 2016

It’s another work week wrapping up and that means it’s time for another Friday Free-for all!

This is our regular end of the week news round up and open topic discussion thread for the weekend, here are a few recent link to kick off the chat:

Negative game changers in real estate
Vancouver a victim of its own success
Better off in Cape Breton?
Fed set to raise rates again
Average house price down 15% or more
West van detached falling $6300 per day
BCREA: Expect $1730 /week losses in 2017

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

Can it happen here?

Ulsterman commented yesterday sharing an exchange with a local radio host.  Will the current price drops end up the start of something bigger or a rehash of 2009?

I sent an email to Lynda Steele on CKNW because she stated that she was confused by the local market. Some say prices are down, and yet others say they’re going up. Then they quoted the BC Assessment report that came out today and is warning that assessments will be up 30-50%. I explained in my email that since prices peaked in Spring 2016, they had since made a fairly significant correction.

She responded and asked if i were a realtor. I replied with:

No, i just take a keen interest in the local market but i have no “official” expertise. But neither do i make my living from encouraging people to buy or sell a house, so I have no vested interest either. It’s always a good time to buy or sell according to BC Realtors, so when i hear they are guests on radio shows I don’t put much faith in their advice.

My understanding of markets before corrections is as thus. First sales collapse (check), sellers desperately hang on, refusing to make significant discounts – price stickiness ( check), eventually some people have to sell (job losses, moves, divorces, debt loads etc) and this sets the new price – already happening in the single family home market.

By Spring there will be a tsunami of houses hitting the market as people try to beat the price drops and of course buyers figure this out and wait for lower prices, compounding the problem for buyers. This has happened in all markets that have corrected, from the US, to Ireland, to Spain. Vancouver will feel the pain too. With all the new mortgage qualification rules, foreign buyer taxes, so-to-be reduced AirBnB gravy train, rising interest rates etc, I think you’d be foolhardy not to just wait and see before buying. There’s almost no upside potential, but a massive risk of watching hundreds of thousands of equity get wiped out in months.

Imagine someone who has moved from a condo to a townhouse over the years and just recently leveraged to the maximum to buy a house this Spring. Maybe they put $500,000 down and borrowed a million. With the already-happened 20% correction they’ve watched $300,000 disappear. It won’t take much more before a decade of equity accumulation is gone. Leverage is wonderful when prices are rising, but it’s brutal when they go down.

Vancouver House Prices Plunging

Get your hankies out, the unthinkable has happened.

Sellnoworbepricedin4evah shared this article at CTV news about Vancouver house prices ‘plunging‘.

It’s apparently gotten so bad that some houses are now selling for under one million. Horrors! What will become of housing in Vancouver!

Sutton West Coast realtor David Hutchinson has been tracking plunging prices and found several detached homes listed below $1 million, some of which had been recently renovated.

“If you want to sell, you have to be priced sharply, and you see a lot of price drops,” Hutchinson told CTV.

And even with price drops, he added, he’s seen many sale prices lower than what sellers are asking for. He said he knew of one home in the west side of the city that was initially priced at $3.9 million, but when it didn’t sell, the owners reduced the price. They kept reducing it in small increments, but eventually they couldn’t wait any longer, and had to drop the price by nearly $1 million.

Another home on West 8th in Kitsilano was listed for $2.5 million, but could only fetch $1.6 million.

“There’s not this crazy deluge of offers coming in like before, when you could price it below the market value and wait for all the offers to come in. That’s not happening anymore,” Hutchinson said.

“Buyers are being a little more picky now and you didn’t see that before.”

You know what this means right? Deal Time!

Anybody looking for a tear-down in a bad neighborhood for just under a million?

Read the full article here.

Moving to Seattle

JustMe‘ posted this article from Bloomberg about wealthy buyers moving from Vancouver to Seattle after the foreign buyer tax was implemented.

“Just a few days after Vancouver announced a tax on foreign property investors, Seattle real estate broker Lili Shang received a WeChat message from a wealthy Chinese businessman who wanted to sell a home in Canada and buy in her area.

After a week of showings, he purchased a $1 million property in Bellevue, across Lake Washington from Seattle. He soon returned to buy two more, including a $2.2 million house in Clyde Hill paid for with a single cashier’s check.”

Read the full article here (warning autoplay video).

Friday Free-for-all! December 2nd 2016

It’s the end of another work week, are you ready for the weekend?

It’s also time for another Friday Free-for-all, our regular end of the week news round up and open topic discussion thread, here are a few recent links to kick off the chat:

David Dodge calls for higher rates
Things probably pretty bad
A ‘disorderly’ correction for Vancouver & Toronto
CIBC exposure to real estate correction
Co-housing lite
Data: 2008-2015
BCREA: prices and sales to drop in 2017

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!