Category Archives: BC

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.

TD: Toronto & Vancouver face 15% decline

It seems like one of these bank economist forecasts come out every week, but TD is calling for a 15% decline in house prices here and in Toronto over the next couple of years.

“There have been growing signs that the markets have been tilting towards excess supply of new multiples,” the bank said.

Indeed, condo prices in both cities have shown signs of slowing down much more than the price of single-family homes, the usual benchmark of a market’s overall health.

“In fact, looking at the trend in condo prices, you can see there has been essentially no increase in prices since the federal government first began tightening mortgage rules in mid-2008,” the economists said.

So if the average selling price on a Vancouver single family home is already down 12% year over year and the outlook for condos looks worse… maybe not the best time to buy a presale condo eh?

‘very clear signs’ of market slowdown

Is the Vancouver real estate market cooked?

Sales are plummeting and the lower mainland is choking on inventory.

Tsur Somerville decided it’s time to sound the warning bell in the Vancouver Sun:

“We’re getting this consistently now,” said Tsur Somerville, director, centre for urban economics and real estate, Sauder School of Business at the University of B.C., after a monthly report by the Real Estate Board of Greater Vancouver showed a continued rise in listings as sales drop.

“We’re in a market that’s much slower than what we’re used to and I think that will transfer into much more sluggish prices, at best.”

According to the board’s report, released Monday, May sales were the lowest total for the month since 2001 and 21.1-per-cent lower than the 10-year average for May sales. Local home sales in April were also the lowest total for that month since 2001.

…yeah, that’s right. ¬†Lowest since 2001. ¬†And the remarkable thing is that the word the real estate board has chosen to describe this market is ‘balanced’.

I guess it is very important to keep your balance while you’re sliding down hill.