Archive for the ‘BC’ Category

Sunshine coasts largest developer files for Bankruptcy

Wednesday, January 28th, 2015

Last week over at VancouverPeak Skook posted about the bankruptcy filing of Wakefield Construction.

We missed that posting here at VancouverCondo.info, but it’s got some interesting details about the impact to the economy and a number of subcontractors on the sunshine coast, Vancouver, Whistler and Bowen Island.

There are no winners in this situation – not the employees, not the subcontractors, not the local businesses nor suppliers, not the community and not Lance Sparling. As the list of “Unsecured” creditors shows, he borrowed from himself, too, to keep the ball rolling. His waterfront home was put on the market a year ago and remains unsold despite a -25% drop in the list price; but, as we know those million dollar plus properties have been slow to move on the Sunshine Coast – only 17 sold in 2014 out of a total of 123 listed – that’s barely 14%.

Skook also relates a personal memory:

Like so many others living in and north of Sechelt I wondered what would replace the old “Wake-in-the-Field” Inn and then was fascinated by those uniquely curved roofs of that replacement – the Wakefield Beach development. When I moved down to Sechelt, I had the opportunity to walk through the project and it is a very special and attractive development. The company, Wakefield Construction, was born from that development and at least in this instance the company name lives on.

While Skooks posting is almost nostalgic in tone, the first major media to pick up this story is Business in Vancouver. In their story the Realtor is surprised:

“They ruled the world up here,” said Sechelt realtor Susanne Jorgenson,” “I don’t know how they could have failed.”

..The chamber of commerce is shocked:

“I was shocked,” said Kim Darwin, president of the Sechelt and District Chamber of Commerce. “[The Coast] has a number of new construction projects coming up, so I hope our smaller contractors can step up.”

And the customer is angry:

“They screwed a lot of people,” said Brad Copping, general manager of South Coast Ford Sales Ltd., which had hired Wakefield Construction to complete a 9,000-square-foot addition to its Sechelt dealership. Copping is now paying three of the former Wakefield employees to continue work that is now half complete.

“This will cost a couple of hundred thousand dollars,” said Copping, whose company is not on the creditor list. “They [Wakefield Construction] over billed us and then didn’t pay their sub-contractors. So we are paying twice for the same work.”

Read the full article over at Business In Vancouver.

 

BOC chops rate in race for bottom

Wednesday, January 21st, 2015

If you’ll recall you’ve been warned many times by a number of government talking heads that rates could go up at any time.

Today the Bank of Canada finally took action and cut rates by a quarter from 1% to 0.75%.

Speaking to reporters, Mr. Poloz said the oil price drop is “unambiguously bad” for the Canadian economy, prompting the bank to take out what he called an “insurance policy” against future risks, such as weak inflation and a household debt squeeze. But he denied the move was calculated to send the Canadian dollar lower.

“Market consequences will be what they are,” he said.

The rate cut sent the loonie plummeting below 81 cents (U.S.).

Mr. Poloz, who acknowledged that oil dominated the bank’s discussions leading up to Wednesday’s rate decision, said he’s ready to cut rates again if prices fall further.

“The world changes fast and if it changes again, we have room to take out more insurance,” he said.

The rate move, which few analysts anticipated, is an attempt by Mr. Poloz to shield highly indebted Canadian households from an oil-induced hit to their jobs and incomes – signs of which are already evident in Alberta.

In the comments section here, Dave asked the question: How much of the BC economy is tied to Oil and Alberta?

I would like to know how much of a hit the damage to Alberta will be to BC. It seems to me that everybody underestimates the economic impact. I think our statistics don’t capture the role of Alberta in our economy. I think I read that Westjet estimated 5,000 people in the Okanagan work in the oil patch. And that’s just them trying to estimate things for their benefit (i.e. people who buy plane tickets). How many work from home on their computers? Or only make a few trips per year and don’t get picked up the radar? How many work in the Okanagan but for companies that service the oil patch? Add it all up and there is a LOT of employment related to Alberta.

 

Investors bet against Canada

Thursday, January 15th, 2015

Why is everybody picking on us?

Investors are betting against our dollar, equities, even our bank stocks.

Markets also see further declines for the loonie, which was quoted buying 84 U.S. cents at 11:35 a.m. and has dropped 8.4% against its U.S. counterpart over the past year. Wagers against the currency outnumbered those for it — so-called net shorts — by 17,087 positions as of Jan. 6, the most since Dec. 5,  according to data from the Washington-based Commodity Futures Trading Commission.

For Merrill Lynch, the risk is the slowdown in the oilsands will seep into a housing market “already saddled with near-record levels of household leverage.”

Canada’s ratio of household debt to disposable income rose to a record 162.6% between July and September, according to data released last month. Benchmark interest rates of 1% have fanned a house-buying frenzy that sent 2014 sales up 6.7% in Toronto and 16% in Vancouver.

Read the full article in the Financial Post.

How to prepare for interest rate hikes.

Tuesday, January 6th, 2015

We should be well and deep into the ‘boy who cried wolf’ territory by now.

How long have you heard warnings that interest rates may be going up?

We’ve all become so used to hearing that it’s going to be a big surprise if they do.

The CBC has an article that says interest rates will go up this year and here are 4 ways Canadians should prepare.

#3 is ‘don’t rush to buy a home':

Higher interest rates could also lead to a correction in the housing market.

“The big issue as far as I can see is that people panic and think they have to get into the housing market before interest rates climb. But they have to recognize the overall long-term impact of interest rates actually climbing,” says Laurie Campbell, CEO of Credit Canada Debt Solutions.

Homebuyers who rush out to purchase homes to beat a spike in rates could end up with homes dropping in value.

“I think people have to be vigilant about any big purchases they may be making in the next little while. Housing in particular,” Heath says. “If someone is considering purchasing a house, they have to really look at more normal interest rates during their budgeting.”

Read the full article here.

House prices driving away key workers?

Monday, December 29th, 2014

High housing prices in Vancouver are driving away the key working demographic of 25-40 year olds – more are moving to other provinces than moving in from other provinces.

This article was pointed out by crikey.

Despite the challenges, numerous companies interviewed by Reuters said most of their staff are willing to make sacrifices — like long commutes or raising kids in shoebox condos — for the benefit of Vancouver’s mild climate and outdoor lifestyle.

But those same companies, such as Vancouver-based retailer Mountain Equipment Co-op, also had examples of key hires who ultimately turned down jobs because of the high home prices.

It’s an issue Craig Hemer, an executive recruiter with Boyden, has been grappling with for the better part of a decade.

Hemer has learned ways to soften the blow — selling older executives on the idea of downsizing to a luxurious downtown condo and convincing those with families that suburban life offers more amenities for kids.

And how do the companies react to this challenge?

Companies too are shifting their policies, with some offering car allowances and transit subsidies. Others are opening small suburban offices or allow staff to telecommute from home.

But that isn’t always enough, especially in Vancouver’s start-up scene. Executives say it is easy enough to hire junior staff, but a dearth of experienced engineers and technology workers makes it hard to grow past a certain point.

“There’s just not enough high calibre people here. They all leave when they realize they can make more money in other cities and live there for cheaper,” said Simeon Garratt, chief executive of Spark CRM, a property-focused tech start-up.

“We debate at least once a month whether we should just move to Toronto.”

Read the full article here.

Does the Bank of Canada Think Real Estate Buyers are Suckers?

Wednesday, December 10th, 2014

Some of you are under the impression that Bank of Canada Governor Stephen Poloz does nothing but sit around all day eating Doritos and watching The West Wing on Netflix, but you are sadly mistaken.

He also issues reports that freak out Realtors.

Consumer debt loads and house prices that could be as much as 30 per cent overvalued are the two biggest risks to Canada’s economy, the Bank of Canada warned in its semi-annual Financial System Review on Wednesday.

Yeah, but “up to 30 percent” includes zero percent over-valued too you know? Surely not everyone is overpaying for Canadian real estate.

The bank says it’s about 95 per cent sure that house prices have been overvalued by an average of about 10 per cent since 2007. That’s based on a new forecasting model the bank says it created, which incorporates existing data from private banks and other government institutions.

Huh. 95% Sure? really? I bet it’s all a’cause of those wealthy foreigners right?

And a lot of those inflated house prices are coming at a cost of rising debt loads. About 12 per cent of Canadian households are considered to be extremely indebted — which means they have a debt-to-income ratio of at least 250 per cent. That ratio has doubled since 2000, the report notes.

Oh.

But that’s ok because younger buyers are building equity right?

Young homeowners, the bank added, have become even more vulnerable to negative shocks to income and to higher interest rates.

Wow. What a buzzkill.

*For those who followed the foreigner link we would like to offer our sincerest apologies.  If you are a glutton for punishment, here’s a video of our prime minister singing Guns n’ Roses “Sweet Child o’ Mine“. If you watch the whole thing you earn a cookie! If you cut it off at 3:33 you have to go to work at a Tim Hortons in Fort Mac. You have been warned.

 

New Record $1.513 TRILLION in Canadian consumer debt

Thursday, December 4th, 2014

Just how fat can this debt pig get before it’s stomach explodes?

You thought this nation had impressive debt levels before? It’s now topped One and half trillion dollars and an astounding 65% of that is mortgage debt.

In one report, Equifax Canada said that “Canadian consumers have yet again tipped the scales setting a new benchmark of over $1.513-trillion in debt.”

That third-quarter figure marked an increase from $1.448-trillion in the second quarter and $1.409-trillion a year earlier, according to Equifax, whose numbers are based on more than 25 million unique consumer files.

Excluding mortgages, average debt held by Canadians has increased 2.7 per cent to $20,891.

The good news is that 27% of Canadians apparently don’t believe that a mortgage is debt, so we shouldn’t really even count that part.

Vancouver Realtor Hunger Index November 2014

Wednesday, December 3rd, 2014

RFM has updated the Vancouver Realtor Hunger Index for November 2014 over at Vancouverpeak.com

The index is creeping up from its mid levels, but nothing too dramatic at this point.

The VANCOUVER REALTOR HUNGER INDEX for November 2014 was 62%. How does this compare? The 17-year average for November is 54%. At 62%, the 2014 November VRHI equaled 1999’s figure and was higher than 10 years and lower than 5 years since 1998.

Details and comparison data for 17 years at:http://vancouverpeak.com/showthread.php?tid=64

Lessons to learn.

Monday, December 1st, 2014

No matter how much you know, there’s always something new you can learn.

From this article in the Vancouver Sun there are at least 3 lessons we can learn:

1) Shaughnessy is a ‘tony’ neighborhood:

Laura De Munain moved into her family’s Oak Street house on the outskirts of the tony Shaughnessy neighbourhood in April. While working from home, the pregnant lawyer soon noticed groups of two or three people regularly stumbling around her back alley in a daze.

2) You can’t force absent owners to evict partiers from their property:

Police answered her first call to their non-emergency line and toured the property, but they “said they didn’t see any evidence of consistent living here,” according to De Munain. She says city staff referred her back to the police when she complained about drug users and squatters in June and asked the city to force the owner to board the home up properly.

3: Government hears you, but they’re not sure you mean what you say:

In the weeks leading up to this month’s civic election, a blog showcasing “beautiful empty homes” of the west side and a proposal from COPE mayoral candidate Meena Wong for a vacant home tax gained support from residents simmering with anger over Vancouver becoming a “hedge city” for foreign real estate investors.  A poll last month showed 72 per cent of respondents thought such a tax a “very good” or “good” proposal, and only 18 per cent deemed it “very bad” or “bad.”

Vision Vancouver Coun. Geoff Meggs said he, like many, finds it offensive when a perfectly good home is held empty for speculative reasons, but he doesn’t know that such a tax is “legally possible or even desirable.”

You’ve either learned something new from this writeup or it’s been a complete waste of your time. In either case you can read the full original article here.

CBC discovers the fun of ‘Compare and Despair’

Wednesday, November 26th, 2014

We’ve played this game before.

When you compare what you get in Vancouver for your housing dollar vs. some other locations you get some interesting comparisons.

The CBC has an article looking at the cheapest houses in Vancouver and how they compare to some US locations.

A new CMHC report says Canadian home prices are moderately overvalued in some cities, but Vancouver is labelled as low risk by the Crown corporation in its latest housing market assessment.

One measure used by economists is the amount of income earned by the average family compared to house prices. By those standards, prices in Vancouver are some of the most expensive in the world.

See their gallery here.

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