Archive for the ‘data’ Category

Moving up in Vancouver Real Estate? Not so much…

Wednesday, October 15th, 2014

CIBC World Markets has released research that looks behind the average price moves in Canadian real estate. How are prices moving in Vancouver?

Astonishingly enough it looks like properties under the $1.1 million mark have moved less than a GIC in the last four years.  Here’s a graph from the original PDF:

Screen Shot 2014-10-15 at 2.50.16 PM

 

That boggles the mind. Even Toronto which has prices going up at the high end looks like its been a much better investment at the lower and middle end:

Screen Shot 2014-10-14 at 2.38.45 PM

 

So essentially that idea you have in your mind that Vancouver real estate has been a good investment over the last four years with prices just rising and rising? Not so much.

Prices up, incomes down

Monday, October 6th, 2014

Pete McMartin is on a roll over at the Vancouver Sun with a series of articles that looks at actual data on the Vancouver economy and housing.

The most recent article looks at local income levels.

Vancouver stands out as an unusual case around North America: Our house prices rose as our incomes fell.

But those high house prices, and our utter preoccupation with them, have become a distraction to a greater problem, and they are only a part of Vancouver’s economic malady. At any rate, those high housing prices are largely beyond the jurisdictional abilities of Metro Vancouver’s municipal governments to have any real effect on them. Meaningful change — in immigration numbers, for example — would reside with the federal and provincial governments, but not at the municipal level.

No, the persistent, year-over-year problem has been in income decline, and this has been a long time coming.

“This is not a new story,” said Tsur Somerville, director of the University of B.C. school of urban economics and real estate. “We have lagged behind the other major metropolitan cities since the 1980s, and even before the period of rising home prices.”

Read the full article here.

TD outgoing CEO wants tighter lending rules

Thursday, September 18th, 2014

Ed Clark is the CEO of Canada’s 2nd largest lender: TD Bank, but he’s heading out in November.

He has some interesting things to say about mortgage lending in Canada:

“It’s just not realistic in a competitive marketplace to say, ‘Why doesn’t one bank lead the way and change the rules?’ It won’t happen. This is a responsibility of the government,” he told Reuters.

“I get why they keep worrying about doing it. But I think you have to just keep touching this brake. As long as you run low interest rates, you then should be continuously leaning against asset bubbles.”

Why is it not realistic for an individual bank to change lending rules? Because they would be the chump to leave money on the table.  If your business had an oppourtunity for income which the government would insure against loss, how much sense would it make to not take advantage of that business?

And you’ve got to love this seemingly prerequisite paragraph that comes next in all of these articles:

Canada’s Conservative government has stepped in four times since 2008 to tighten mortgage lending rules to cool a real estate market that flourished as the financial crisis ebbed.

It is accurate to say that the government has stepped in four times since 2008 to tighten mortgage lending rules, but it omits the change before 2008. For those of you just tuning in they look something like this:

•March ’06: CMHC change to allow 0% down, 30 year Amort.

•June ’06: Allow 35 year amort & interest only payments for 10 yrs

•Nov. ’06: Aw heck, lets go all out and allow 40 year amorts!

•April ’07: Insured min. down payment moved from 25% to 20%

•Oct. ’08: 5% down allowed, amort moved back to 35 years

•April ’10: Require approval at 5 year fixed rate

•March ’11: Drop back down to 30 year amorts.

•July ’12: Drop back down to 25 year amorts.

Shouldn’t we take into account how much gas was applied before we started tapping the brakes?

Politicians shouldn’t meddle with housing market

Wednesday, September 17th, 2014

This is probably the first housing editorial in The Province that most readers here can agree on.  Well, the headline any ways:

Politicians shouldn’t meddle with the housing market.

Imagine a world where the government didn’t meddle with the housing market.  There would be no CMHC insuring close to $600 Billion in mortgages, instead lenders would loan based only on their own assessment of risk.  There would be no HBP, no HOG. In 2006 there would not have been the rule change that allowed zero down 40 year mortgages with interest only payments for 10 years. After 2008 the CMHC wouldn’t have purchased $69 billion of mortgages off bank books.

But of course you’ve probably figured out that this Province editorial isn’t about that. No, this editorial is about someone suggesting we should levy a tax on vacant properties, likely the tiniest possible example you could find for ‘meddling’ in the housing market.

Wong is not alone in unfairly blaming foreign investors for Vancouver’s high housing prices. The reality is that real estate is a commodity whose price is set in a free market, appropriately, through the forces of supply and demand. No one has a “right” to own a house in a particular city or neighbourhood, and it’s about time that people like Wong and her COPE and NDP pals stopped promoting such notions, especially when it involves taking money from one group and giving it to another. You want a house? Work hard and buy one — or move somewhere cheaper.

Read the full editorial here.

 

I Believe the Children are our Future

Thursday, September 4th, 2014

The middle class is doomed.

You may have heard of that internal Conservative Government report on the middle class prepared by Employment and Social Development Canada even though it was never released.

The Canadian Press used the Access to Information Act to get a copy and it’s mostly remarkable due to some of its blunt take-aways:

“The market does not reward middle-income families so well,” says the report. “As a result, they get an increasingly smaller share of the earnings pie” compared with higher-income families.

The report also refers to debt, saying “many in the middle spend more than they earn, mortgaging their future to sustain their current consumption.”

“Over the medium term, middle-income Canadians are unlikely to move to higher income brackets, i.e., the ‘Canadian dream’ is a myth more than a reality.”

Well it turns out that there’s another way to look at the same data, as Finance Canada has just done.

“Their analysis arrives at conclusions — namely that middle-income families have stagnant wages, are unlikely to move to higher income groups, and are increasingly indebted — which appear to conflict with the general message in Budget 2014 and previous internal briefings,” says an accompanying briefing note for Oliver.

The new report points out that moving from single earner to double earner households as more women have joined the workforce has acted to keep the middle class afloat.

The Finance Canada report estimates about 70 per cent of the increase in middle-class household incomes since the mid-1990s can be attributed to higher workforce participation rates, primarily by women workers.

“There is no second wave of women, spouses, entering the workforce,” said New Democrat MP Nathan Cullen, the opposition’s finance critic.

Of course the MP is being overly pessimistic without cause, there’s an obvious next wave of income for households and it doesn’t require polygamy.

The children are our future.

It’s time for Canada to get in line with global economic trends and fully utilize the productivity of the available workforce.  We have a large population of potential workers that remain untapped.

Instead of wasting tax dollars and time in school, children could be gaining valuable experience cleaning homes, mining coal or any number of other jobs to help support the household. Lets not squander this bright future opportunity, let’s put the kids to work!

Most ‘overvalued’ housing markets

Tuesday, September 2nd, 2014

The Economist magazine has named the Canadian housing market among the most overvalued in the world. (Even though they love our cities)

Measured using price-to-rent and price-to-income ratios, the Economist says housing markets are at least 25 per cent overvalued in nine of the 23 economies it tracked.

When comparing the relationship between the costs of buying and renting, it cited Canada, Hong Kong and New Zealand as “the most glaring examples” of overheated markets.

“The overshoot in these economies and others bears an unhappy resemblance to the situation that prevailed in America at the height of its boom, just before the financial crisis,” the magazine states.

Read the full article here.

Hat-tip to kabloona for the link.

Buy in the suburbs, prices dropping like crazy.

Sunday, August 24th, 2014

Astute reader ‘reveal the truth‘ pointed out a few similarities between a recent Business in Vancouver article about people buying in the suburbs and an earlier article published in June:

Millenials Decamp to Suburbs”, published August 20, 2014, sure sounds a lot like “First Time Homebuyers Driving Surrey Market”, published June 24th.

Let’s see:
June 24th: Shayna Thow, director of sales for BLVD Marketing Group – which handles marketing for two Surrey developments for Vancouver’s Fairborne Homes Ltd. – said Surrey has become a viable option for first-time homebuyers who can’t afford to buy in Vancouver. While the average price for a single-family detached home in Greater Vancouver has soared to more than $1.36 million, the average price in the Fraser Valley is still under $655,000.

August 20th: Shayna Thow, director of sales for BLVD Marketing Group – which handles marketing for two Surrey developments for Vancouver’s Fairborne Homes Ltd. – said Surrey has also become a viable option for first-time homebuyers who can’t afford to buy in Vancouver. While the average price for a single-family detached home in Greater Vancouver has soared to more than $1.36 million, the average price in the Fraser Valley is still under $600,000, she noted.

Uh-oh. The only thing that stayed the same was the word for word structure. The PRICE however showed a DROP of nearly 10%! Yikes!!

!

The Real Estate Agent Bubble.

Monday, May 12th, 2014

Does this stat surprise you?

About 1 in 245 Canadians over 19 is a Real Estate Agent.

We have almost as many people in the country selling real estate as we have building it.

This according to an article in the Financial Post

Royal LePage chief executive Phil Soper blames this increase on what he calls ‘speculative’ agents.

“This is a real regional story. If you look at Quebec, where they took a different approach to licensing and professionalism by increasing the length of time and difficulty to get your licence, their ranks have shrunk,”

So who’s out there getting their real estate license?  Sounds like this is the easy path to riches and as long as we get enough churn in the market there should be plenty of commissions to go around, right?

Read the full article here.

New CMHC rules: How much impact?

Tuesday, April 29th, 2014

At first glance the new CMHC rules sounds like a minor tweak rather than a major change, and it might be just that.

When the CMHC announced the change they specified that the products being eliminated made up less than 3% of their insured mortgage products by number of mortgages.  What we haven’t seen anywhere are numbers in mortgage value, and BOM pointed this out yesterday:

Read this:

“The Crown corporation has been offering insurance on second homes since 2005. It has been offering insurance to self-employed people without strong income validation since 2007.”

And then read this:

“CMHC says its second home program and its self-employed-without-third-party-income-validation programs combined account for less than 3 per cent of its insurance business volumes in term of the numbers of mortgages insured.”

CHMC has a pool of mortgages insured accumulated over the last 25 years. They have only offered the products they are cancelling for 7 to 9 years but they make up 3% of that pool. Simple math indicates over the last 7 years about 10% of mortgages would have been part of the program they are cancelling otherwise it could never reach 3% of the total pool which was already significant prior to the program starting.

So how much demand was there for insured mortgages on second homes and mortgages for the self employed without income verification?  The numbers may be higher than we first thought.

Should you just move to an island?

Tuesday, March 25th, 2014

Skook has a post over at VancouverPeak.com about an island dream gone sour.

A BC couple purchased land on Mayne island and started building their dream home only to run into a confluence of cost overruns and real estate market downturn.

Today, their house is only a wood frame shell that looks out over one of B.C.’s most dramatic views, with the Lower Mainland in the distance, and regular sightings of ferries, whales and seals. The tiered wooded lot is only a five-minute drive to the ferry.
It is the idyllic best that B.C. has to offer, and yet the Klingsats won’t even break even on the near $1-million they spent on the property and construction. They have relisted it for $539,000, after previous listings at $649,000 and $699,000 didn’t get any offers. “Everybody loves the place, but the people don’t want a house that’s not finished,” says Mr. Klingsat, who gave up on the project six months ago. “And I can’t do it. I haven’t got any more money to put into it. “The whole economy everywhere is lousy – nothing is gangbusters. There are places for rent all over here on Vancouver island.”

The original article in over at the Globe and Mail. Skook adds some extra thoughts and information.

RFM has also added some information summarizing other properties in that particular island market.  There are 113 properties for sale on an island with a population of 900.

VCI Network

  • Take a Peak.

    The Vancouver Peak Discussion Forums are now open for collecting stats, sharing data, etc. Please register at the new site and let us know what you think.
Leap to comment form