Category Archives: BC

Condo holes across Vancouver

Much has been made about the huge number of condo towers under construction in Toronto, but here in much tinier Vancouver we’re not doing so bad.

There are currently 16 towers in progress and 67 more in the works.

With population growth and prices on the retreat will there be enough buyers for all these new units or are we over-saturating the condo market?

Cameron Muir says don’t worry:

“Prices have been pretty flat since 2009,” Muir said. “There’s ample supply in the market place, but we are seeing prices at a steady pace.”

The fact more condos than single-detached homes are being built in Greater Vancouver is nothing new, said Muir, as condo starts have consistently made up about 75 per cent of all housing starts in the last several years. “It’s a function of land supply.”

Consumer demand during the last several months is trending on a 10 to 15 year average, he added.
One indicator, says Muir, of the demand-and-supply balance in the marketplace is the sales-to-new-listings ratio.

In Vancouver last month, the ratio, at 15.3 per cent, inched closer to a buyer’s market – but sits within the balanced range of between 15 to 20 per cent.

There hasn’t been a sustained buyer’s market since the recession hit, between late 2008 to early 2009.

..And of course it’s starting to smell like 08/09 again with the Eurocrisis and global economic sluggishness, but is it different this time?

Here’s one thing that’s different: Out in Burnaby yet another condo presale had a lineup, but what a waste of time for the participants according to VMD:

re: polygon’s “MODA” presale in Burnaby that opened today, with some people camping since Monday…

sold today: 138
total units: 249
ratio: 55%

yawn.

Wow. Can you imagine waiting in line for a week for something that sells only 55% of inventory?

Fizzle.

An isolated unfriendly town?

When you smile and say hello to people do they glare back at you?.

A recent study says Vancouver is not a very friendly city:

Talk to people in Metro Vancouver about their interactions with others, and similar stories abound. Newcomers to the city talk about going weeks without anyone offering to show them around or invite them for dinner. Apartment dwellers talk about distrusting their neighbours to the extent that they’re afraid to let their children play unsupervised outside.

And because this is Vancouver, everything comes down to real estate:

Significantly, more than half of respondents agreed that Vancouver is becoming a resort town for the wealthy and that there is too much foreign ownership of real estate. This view was particularly common among people aged 25-34, a group whose responses to many survey questions revealed a marked cynicism about the state of their communities compared with other age groups.

And it’s not just desirable to the wealthy with a longing for rain, it’s also irresistible to the homeless. But how do we house them?

A handful of people, including Vancouver assistant director of housing policy Abi Bond, sketched out a plan to transform a cargo ship into a green-roofed utopia. They proposed a kayak co-op for commuting to and from the shore, filtered seawater to drink, and occasional rotation of the hull so the container-homes on both sides could get southern exposure.

Other suggestions ranged from tweaking property tax laws to building tiny apartments atop warehouses. The prevailing attitude seemed to be that the current crunch in the least affordable city in North America was caused not by a lack of housing supply, but by a dearth of creativity.

I’ve heard housing bubbles justified by a lot of things, but I must admit ‘a dearth of creativity’ is a new one.

Homebuilder says it’s a great time to buy

Before I make a major investment, I always like to do a bit of research and consult an expert.

Before I buy a new car I always ask a car salesman if it’s a good time to buy. They’re the experts after all.

And when it comes to real estate, who better to ask than a builder if it’s a good time to buy?

Looking at 2011 numbers related to the economic impact of residential construction in B.C., we can easily see that this industry is a massive contributor to British Columbia’s well-being and future success, as well as a huge indicator of the province’s economic climate. Just think: For every single home we build, 3.5 person years of employment are created and more than $60,000 is generated in spinoff spending.

Ah yes, it’s not just a good time to buy, it’s the right thing to do for the economy. Without Real Estate our economy would be in the crapper. What could possibly go wrong?

Why you shouldn’t demand lower prices

I’ve been reading this site for a while and I see a lot of people that are hoping for lower house prices in Vancouver without fully thinking out the repercussions.

Its human nature to be greedy and want ‘something for nothing’ but we should draw a line at actively wishing ill on others so that we may benefit.

A drop in property prices would cause a lot of harm across the lower mainland, affecting not only home owners but a whole economy of construction workers, real estate agents, lawyers, lenders and architects.

Instead of selfishly wishing prices would drop, you should try to realize the benefits of home ownership:

1) A tangible solid investment that can help you retire
2) Homeowners have a lower crime rate creating safer neighborhoods
3) Pride of ownership creates more civic responsibility

Here’s a useful editorial in the Telegraph on how home ownership benefits everyone:
http://www.telegraph.co.uk/comment/3644666/Everyone-benefits-from-home-ownership.html

They make a very strong argument for why governments should come to the aid of homeowners who have suffered from a house price drop or interest rate increase and are unable to pay their bills.

But there is something more fundamental about the housing market that should inform policy. Housing markets are different from lots of other markets in that actions by individuals affect not only the actors, but neighbourhoods and even society as a whole.
Allow your personal appearance to deteriorate, and you pay the price in lost job opportunities and a reduction in the number of people willing to be seen with you. The cost is yours. Allow your house to deteriorate, and your neighbours pay the price. Innocent bystanders get hurt when things go wrong in the housing markets.
First, the value of all homes declines as the neighbourhood becomes dotted with vacant houses and takes on a less attractive appearance. Second, society pays a price.

IF you are someone who is hoping for a real estate decline I urge you to read the full article and rethink your position.

Even if you think you would be unaffected you should remember that a decline in house prices effects the whole economy:
http://www.vancouversun.com/business/Home+price+drop+could+mean+less+spending/6773895/story.html

And it doesn’t take too much of a drop to put buyers in a position where they owe more than a house is worth. With a normal 5% down a 15% drop like that predicted by TD would be a disaster.

Using the Real Estate Board of Greater Vancouver’s benchmark price – the price of a typical home – for all residential properties in Metro Vancouver of $625,000, and the minimum down payment of five per cent, a homeowner would need $43,850 including property transfer tax and legal fees to close the deal. The total mortgage amount would be $593,750 plus $17,515 for the high-ratio fee. If the market value dropped 15 per cent over three years, the value would be $531,250, while the outstanding mortgage after three years would be $574,805.64.

A decline in house and condo prices affects real people who care for the neighborhoods they live in, is it fair to wish them bad luck simply because you feel prices are too high?

FREE BEER!

All over BC the decline in real estate is in full swing. When you’ve got more sellers than buyers it takes a little extra to stand out.

And when that extra is FREE BEER! it does stand out.

Allen has had his three bedroom condo on the market for just over a month and says only two prospective buyers have stopped in.

“I have two houses, one in Kelowna and one in Kamloops and I just can’t afford to keep both going.”

The condo located on Springview place in Kamloops, was being rented, but after the tenants moved out and the house went on the market, Allen knew he had to be creative or he could be stuck paying two mortgages.

“I was sitting around thinking, this house is a real pain, it’s not getting nearly as many views as I would like. How am I going to attract people to this house? Well I was drinking a beer at the time and I thought why not just give away beer for a year.”

Allen hopes the free beer initiative will be the final push to get people thinking about buying.

“This place is geared towards students, and that is who I am marketing with this campaign of free beer for a year.”

Here’s the full article.