Vancouver Condo Info

There’s an article over at CNBC talking about the National real estate market, it’s warning signs and various slumps.

They revisit Vancouver Real Estate agent Keith Roy’s very public decision to sell his house last year and say prices have dropped 3.9% in Vancouver, 5.6% in West Van.

They also talk about lending practices in Canada and recent efforts to return CMHC amortization terms to their historical norm.

Some of the loopholes people use to avoid the mortgage restrictions are quite extraordinary. For example, although the government requires buyers to purchase private mortgage insurance on mortgages with 100 percent loan-to-value ratios, eHow says this can be avoided just by getting two mortgages, each for 50 percent of the home value.

Canadians are also allowed to borrow against pensions and life insurance policies to fund their down payments. Even credit cards can be used to fund down payments. So it’s very possible that the total housing debt is actually much higher than the official mortgage debt numbers.

If this sort of thing is being openly discussed even after the government has launched its efforts to curb lending excess, just imagine what kind of shenanigans were going on before the crackdown. The quality of the mortgages made in 2011 and 2012 may turn out to be much worse than is commonly suspected.

Read the full article here.

So is the Canadian market falling apart at this point?  Vancouver has certainly fallen over the last year and this is starting to have an effect on developers as well – the Alba has been put on hold due to a ‘challenging real estate market‘.

Is the market picking up after last years slide?

Troll shared these numbers in the previous thread:

Here’s some facts for the navel gazers to vote down:

Apr 1-15: 115 sales/day
Apr 16-30: 127 sales/day
May 1-8: 137 sales/day

Sales are strengthening during a time that they usually begin to fall off. MOI is also falling. Like it or not bears, this market is beginning to show some signs of strength. Not so simple to just dismiss as a bull trap.

Then frank pointed out we’re still pretty high on the inventory front:

Here’s VMD‘s interpretation of the trend:

Been on vacay in remote areas without internet..
to further Troll #103′s stats:

So far in May: 137/d vs 133 (2012) vs 160 (2011)
Apr 16-30: 127 (2013) vs 140 (2012) vs 159 (2011)
Apr 01-15: 115 (2013) vs 154 (2012) vs 147 (2011)

Look at May vs Apr sales in last few years:
2012: 2853 2011: 3377 2010: 3156 2009: 3524

The statement that “Sales are strengthening during a time that they usually begin to fall off” is incorrect. Sales almost always fall off in June (except 2009), not May.

and here’s Trolls response to that:

I don’t like using monthly numbers because they are skewed by the number of business days, one or two extra days can skew the numbers. I think a better measure is sales/day. For example you show increasing sales for 2012 from April to May, but if you break it down by sales per day, you get the following:

Apr. 1-15: 154 sales/day
Apr. 16-30: 144 sales/day
May 1-8: 133 sales/day

Falling just as I said.

So what do you think? Are we seeing enough of a trend reversal yet to say the market is strengthening or is it a normal spring bump on a long hill down?

BC goes to the polls again May 14 so I took another look at the parties’ platforms to see what they have to say about one of BC’s major economic issues – the housing bubble.

I thought the BC Liberals might be on to something when I saw a section called “Building a Safe, Clean, Healthy and Affordable B.C.” However by “affordable” they don’t mean consumer and RE prices being in line with BC wages. Actually they are talking about taxes, which they correctly state are among the lowest in Canada. But since this is hardly making BC affordable for the average person today, I don’t see what it has to do with making BC affordable going forward.

“Over 1 million low-income British Columbians pay absolutely no income tax today in British Columbia— an increase of 400,000 since our government was elected.” Um, is a big increase in the number of low-income people paying no income tax a good thing or a bad thing? Want to think that over?

“The (forest) industry has been hit by unforeseeable impacts – the pine beetle epidemic, the U.S. housing crash.” The US housing crash was unforeseeable! Now you should just forget about what you thought Paul Krugman, Nouriel Roubini, Peter Schiff and others said. It was only in your imagination.

What the Liberals actually say about housing is that they spent some money on low-income units. Yawn.

BC Liberal platform

On to the NDP. “We’ve seen deep cuts to programs and services that help at-risk children, income assistance rules that claw back modest earnings, and an ongoing crisis in affordable housing.” Aha! The NDP recognizes that housing is too expensive!

Well no. What they mean is that they think there isn’t enough non-profit and co-op housing and they will build more. Which isn’t a bad thing, but it misses the main issue.

“Strengthen and rebalance the Residential Tenancy Act and Manufactured Home Act to better protect tenants and landlords.” Sounds nice, but how do you better protect both sides at the same time?

BC NDP platform

The BC Green Party has basically copied and pasted their housing policy from the previous election, including this gem: “Mandate that BC Housing purchase existing units of market housing that are in current or stalled projects to provide an immediate and expanding pool of permanent below market and market rental housing.” They want to use your tax dollars to bail out developers!

I also think they are confusing the issues by titling the section “Homelessness and Housing Affordability”. These are distinct problems with distinct solutions.

The Greens say more about housing than the other parties but they can’t bring themselves to say that RE prices are simply too high. Their platform starts off by saying that BC needs more voices like Elizabeth May – who I think has actually talked about Canada’s housing bubble. So if she can do it, why can’t they?

BC Green Party platform

And what does the BC Conservative platform say about housing? Nothing. I like that. As Mom said, if you can’t say something good, don’t say anything at all.

BC Conservative platform

Frances Bula has a good summary of the current state of debt on the Olympic Village.

The City of Vancouver hasn’t made it terribly easy to find out where we are in terms of paying for that mess, but with a little sleuthing it would appear we’re actually making good progress to pay off the $750 million construction loan the city took out.

Just $300 million left to pay on that debt.

Both Mr. Meggs and city manager Penny Ballem say it’s impossible to predict whether the remaining 181 condos (as of Dec. 31, 2012) and transferred Millennium properties will do more than cover the last $300-million of the outstanding debt (that figure was $462-million at the end of 2011).

If so, the remaining $171-million the city expected to get from Millennium for the land will never materialize.

So the city may never see any money for the land the Olympic Village was constructed on but hey, look at that beaver!

Allright, Let’s talk about the election.

You know you want to.

So who’s going to win, the good guys or the bad guys?

What does the future economy of BC look like in your crystal ball?

You might as well use this thread to convince people to vote for your team, what kind of leadership do we really need right now and do you think we’ll get it?

And to keep it on the topic of this site how much of a factor does the housing market play in your voting day decision?

It’s not just Vancouver.

Across Canada the condo market is looking a little peaked.

If this is a party the keg has run dry.

Toronto and Montreal are slamming the last of the jager and slurring. Vancouver is puking in the corner.

The last time we saw Whistler they were snorting white powder on the roof and screaming they could fly.

The hang-over for this one is gonna be a bitch.

It’s evident that the condo markets in Canada’s largest cities are in the midst of some sort of correction. That final chapter on this has not yet been written.

Here’s some advice. For investors, now that the condo party appears to be over, it’s worth wondering if anyone will be left with a hangover. If history is any guide, a hard landing in the condo market tends to hit those holding the financing on condo projects first and foremost.

That’s from this Globe and Mail article by Ben Rabidoux.

If you’re flustered by the Paywall at that site and you have some time downtown in the afternoon you may be able to hear it from the author himself.

Ben is doing a talk from 4 – 5pm at Canada place today on the future of the Canadian real estate market. Free pre-registration is required and we haven’t heard if there are still tickets left, but it’s worth a try if you’re interested in this subject.

Last October a building in North Van offered a $100,000 price drop guarantee.

Yesterday a reader with the handle Not much of a name updated us on how that’s working out:

I just got an update from one of my favourite condo buildings in North Van, The Kimpton. This is the development that was offering the $100k “Price Drop Guarantee” back in October. Fast forward six months and a unit came through as a sale yesterday.

Original asking price – $750k
Listed price in Jan – $650k
Sale price – $575k

That’s $175k in six months.

If you’re looking to buy a condo these days would a ‘price drop guarantee’ soothe your worries about overpaying or would you rather just have a ‘free’ car?

Submitted by Nom

A few of you have already pointed out this article, but it’s worth a read if you haven’t seen it.

It’s a problem when Vancouver condos sell but the lights stay off

There are a number of ways you could address the problems created by a speculator driven housing market, but no move to do so yet.

Here’s one point from Sandy Garossino about the kind of units we’re building downtown:

“I think we are creating a form of housing that is perfectly suited to speculation. It couldn’t be more suited to speculation.

“They are completely interchangeable, one suite is like another suite. This is the kind of thing that drives easy trading. It’s not completely liquid, but it is a lot more liquid than say a house on a lot. So, from a policy standpoint, what we should be doing is looking at the kind of housing that speculators don’t like.

“The public policy from my perspective should be to cool that market, because it’s driving market confidence. Market confidence should match market conditions.”

According to this article in the Financial Post signs of a Canadian housing downturn are everywhere.

They don’t pull many punches as they discuss the national home sales decline, overvalued housing and semantics:

Let’s not argue over whether Canada is the proud owner of a pretty pink housing balloon or a black bubble because either way, they both can pop.

They report some interesting numbers that the general public is likely not aware of. Did you know that housing related industries currently make up 27% of the Canadian economy? For a little bit of perspective that compares to 24% of the US economy at the height of their housing bubble.

Then of course there are the predictions for the future:

“Overall, we think existing home sales will continue to decline with negative implications for the elevated level of home building and broader knock-in implications for domestic demand growth,” David Madani, an analyst with Capital Economics, wrote in newsletter Friday.

And Mr. Ben Rabidoux, what do you think?

“Typically when you have a distortion in the economy, it is rarely painless to rebalance it. We’re in for a relatively painful period.”

Read the full article here.

The Vancouver Observer has some good articles from the Real Estate trenches.

This one looks at what it’s like to shop for your first apartment in Vancouver.

What does $350k get you?

Not insuite laundry.

She lined up four apartments, all under $350,000. The cheapest is $250,000. None of them have ensuite laundry. If you think that giving someone a third of a million dollars would get you a washer/dryer, then clearly you’ve never apartment-shopped in Vancouver.

East Vancouver is heating up, because nobody who works for a living can afford to buy in the West End anymore. Rising rents make an investment property in East Van a more viable option than it once was, though proper houses remain out of reach for anyone on a Canadian wage. This keeps the pressure up in the apartment/condo market.

My Realtor says that the sales market is slower than it’s been in a long time: properties will sit for an average of 70 days. Still, there are vacant units that she won’t touch with a ten-foot pole: “I’m afraid to sell in Olympic Village, to be honest. I steer my clients away.” Dead neighborhood, small units, renovations that “probably won’t stand the test of time”.

Read the full article here.