What’s this, builders making a profit on new houses at $130k?
Apparently only in Vegas.
Yes, after a 60% drop in house prices builders are somehow still in business making new homes and selling them for under $200k.
“The single largest impact has been houses under $200,000,” Beville said. “Homes in the $130,000 to $190,000 (range) are getting a lot of love. The ones in the $200,000 to $300,000 are getting a little bit less.
Meanwhile in Vancouver even if you get the land for free it’ll cost you $270k to build a 500 sq foot laneway home.
Construction cost is high in Vancouver for a few reasons: permits, cost of materials, cost of labour.. but there’s really only one reason construction cost is so high: people are willing to pay for it.
It’s not like construction quality here is known for it’s quality (leaky condo crisis) and we even make use of unpaid illegal immigrant labour and still we pay these prices?
Even with all the recent warnings of a housing bubble that is no longer limited to just Vancouver and Toronto, you’ll still find lots of media coverage that dismisses bubble talk or explains it away as an ‘ownership premium’.
It’s not difficult to see why this is – there are thousands of people who’s incomes depend upon the housing market.
Whether its condo marketer Bob Rennie or a random realtor, they all have their day to day income tied to the health of the real estate
market and conveniently are given ‘expert’ status and quoted by the local media.
That makes an article opener like this all the more shocking to newspaper readers:
Is there a housing bubble in the Lower Mainland? Housing zeppelin is more like it. Bubbles, after all, are soft and cute and harmless. Zeppelins, conversely, hurtle into the ground, spewing flaming wreckage in all directions. And that’s precisely what we’re about to witness in Metro Vancouver.
That’s the intro to a rather dramatic editorial written by Gord Goble and published in a number of local papers.
Hi gang, I’m back for a tour of the BPOE. Driving though Greenwood, BC (population 600, 30 listings) I noticed a For Sale sign in front of this house. This very same house was on sale for about $435K around 2007 as I noted in this forum (or Vance’s, can’t remember):
For Sale: $239,900
1897 Heritage home! If only the walls could talk! Original RCMP headquarters and definitely has B&B potential. 4 BDRMS, 2 baths. Modern renovated kitchen wit all amenities-stainless steel appliances & cord flooring. This home has so much to offer that you must see it!
Now do you remember back in the days when you talked about those ridiculous prices along Highway 3, you were granted with chants of “BC Bud!” (interior HAM)? What happened? Did everyone stop smoking? Well maybe all the RE buyers stopped smoking!
However maybe the RE industry is using stronger stuff, because a bit further west on Highway 3 I saw the following:
It reminded me of one of those ghost developments in Florida, apart from the elevation and weather. A great expanse of local streets (each with its own theme statue) and the odd house here and there.
Now that prices are cratering in the nearby Okanagan Valley, where they have things like shopping and hospitals and mild weather, who’s going to buy up there?
Well, there’s a change in the air when it comes to Vancouver Real Estate. The ‘can’t lose’ investment is starting to look like the ‘must lose’ investment with reports of buyers walking away from deposits and waiting for prices to keep dropping.
“It happened twice in the last month. One [deposit] was $75,000 and one was a $20,000 deposit, the guys just walked away from it,” said Mr. Arora, who runs Oneflatfee.ca in Surrey, B.C. “They are going to wait it out. So they lost $75,000 and $20,000, but if the market comes down $150,000 on a $1.5-million house, that’s not uncommon.”
Vancouver’s once-overheated housing market has cooled sharply, with the average price falling nearly 10 per cent in April from a year ago to $735,315, according to figures released Tuesday by the Canadian Real Estate Association. That was the largest drop since the recession and it marked the fourth decline in the past five months.
In a market once famous for being overheated, Mr. Arora said he hasn’t seen a bidding war in months. “It’s totally a buyers’ market. Buyers are determining the price,” he said. “And sellers are surprisingly accepting it. They are taking it.”
Buyers always determine the price. If there are enough of them that want to pay more they will drive prices up. Sellers have no control if no buyer is willing or able to pay the asking price.
The problem with using averages is they can look terrific on the way up and horrible on the way down. Remember all that talk about the ‘average’ Vancouver house now being worth $1 million? One year later it’s apparently worth $735,315. What will it be worth next year?
The average home price in Canada in April was up 0.9 per cent from a year ago at $375,810.
“It bears repeating that the national average price was skewed higher last spring by record level high-end home sales in Vancouver’s priciest neighbourhoods, and that a replay of this phenomenon was not expected this year,” said Gregory Klump, CREA’s chief economist.
Sales in Canada’s largest markets are having opposite effects on the national average, with slowing sales in Vancouver dragging, and soaring sales and prices in Toronto exerting upward pressure.
The average selling price in Vancouver was down 9.8 per cent compared with a year ago at $735,315, while the average price in Toronto was up 8.4 per cent at $517,556.
Read the full article is in the Vancouver Sun.