Vancouver Condo Info

The age of bankruptcy in Canada is growing.

There’s a troubling move towards more debt later in life.  Many Canadians are now going through their 50s with an increasing debt load rather than using that time to pay off debt.

But between 50 to 59 is usually the time when a person is trying to reduce debt and prepare for the golden years, says Douglas Hoyes, a trustee with the Ontario-based bankruptcy and consumer proposal services firm.

“We found, nope, in fact it’s the opposite. It keeps building and building,” says Hoyes, referring to debt loads.

The surprising thing is that the majority of these bankruptcies aren’t occurring due to unemployment:

A common stereotype is that the average bankrupt person is unemployed, but the study shows that 81 per cent of insolvent debtors were employed at the time of filing. The average take-home pay for Joe Debtor was $2,366 per month on a net basis, while the average household income was $3,058.

Read the full article here.

Is the market picking up after last years slide?

Troll shared these numbers in the previous thread:

Here’s some facts for the navel gazers to vote down:

Apr 1-15: 115 sales/day
Apr 16-30: 127 sales/day
May 1-8: 137 sales/day

Sales are strengthening during a time that they usually begin to fall off. MOI is also falling. Like it or not bears, this market is beginning to show some signs of strength. Not so simple to just dismiss as a bull trap.

Then frank pointed out we’re still pretty high on the inventory front:

Here’s VMD‘s interpretation of the trend:

Been on vacay in remote areas without internet..
to further Troll #103′s stats:

So far in May: 137/d vs 133 (2012) vs 160 (2011)
Apr 16-30: 127 (2013) vs 140 (2012) vs 159 (2011)
Apr 01-15: 115 (2013) vs 154 (2012) vs 147 (2011)

Look at May vs Apr sales in last few years:
2012: 2853 2011: 3377 2010: 3156 2009: 3524

The statement that “Sales are strengthening during a time that they usually begin to fall off” is incorrect. Sales almost always fall off in June (except 2009), not May.

and here’s Trolls response to that:

I don’t like using monthly numbers because they are skewed by the number of business days, one or two extra days can skew the numbers. I think a better measure is sales/day. For example you show increasing sales for 2012 from April to May, but if you break it down by sales per day, you get the following:

Apr. 1-15: 154 sales/day
Apr. 16-30: 144 sales/day
May 1-8: 133 sales/day

Falling just as I said.

So what do you think? Are we seeing enough of a trend reversal yet to say the market is strengthening or is it a normal spring bump on a long hill down?

There’s another one of those semantics question articles in the Financial Post:

Canadian Housing: Bursting bubble or gentle landing?

Here’s one chunk of that article with a few asides that always seem to be missed:

Lewandowski believes Canada will not suffer a U.S.-style housing crash simply because policymakers had the benefit of watching it happen next door.

“What we experienced here in the U.S. with housing markets and regulators goes directly to the attitude and changes the minister of finance has made in Canada. A regulator who is being proactive is taking Step One in making sure the housing market doesn’t find itself in a bubble,” Lewandowski said.

So often it seems that ‘bubble’ is used as if it refers to the collapse in prices. It doesn’t. The ‘bubble’ is the inflation of prices beyond reason. By the time the collapse comes the damage is already baked in, falling prices are a correction of the problem, not the problem itself.

Both Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have been on the march against a housing bubble for years, aware how low rates and loose lending standards in the United States ignited a boom and bust there.

Well, Carney and Flaherty have definitely been ‘warning’ of consumer debt levels for a while, but government policies like following the US into 40 year zero down mortgages didn’t help to prevent a housing bubble.

The central bank has held rates low since the global financial crisis because growth remains tepid and global woes weigh on Canada’s export market, and Canadians can find a five-year mortgage rate below 3%.

Meanwhile in the states you can lock in to a 30 year mortgage for 3.35%. In fact, while house prices in the US were correcting, interest rates were falling as well.

But the government’s gradual tightening of rules for borrowers — a firm admission that the market was hotter than anyone was comfortable with — has taken some steam out of the market, and economists, like Carney, seem to believe a soft landing may be at hand.

“We’re encouraged by the fact the level of housing starts has come down to slightly below demographic demand, as we see right now, there’s still more adjustments to go,” he said in testimony to Parliament last week. “We’re encouraged by the evolution of house prices in a number of markets. We’re on the path to a balanced evolution of the household sector and we all have to continue to be vigilant.”

Ok, we’ll continue to be vigilant then.

When it comes to getting out of debt, Canadians have the best intentions.

But habits are hard to break.

PWC ran a survey last year where 64% of the people intended to cut their debt levels.

Unfortunately the follow up this year shows that only 23% had any success in doing so, 26% reporting that they were ‘completely unsuccessful’.

Noting that the current debt-to-income ratio sits at more than 160 per cent, the consulting firm called the trend to higher debt levels “unsustainable” for consumers.

“Similar with any diet, saying you’ll cut back and make better choices is one thing, while actually doing it is quite another,” said John MacKinlay, a national financial services consultant at PwC.

“We advise Canadians to take a hard look at their discretionary spending and prepare to make some tough choices on where to trim the fat.”

Read the full article here.

Frances Bula has a good summary of the current state of debt on the Olympic Village.

The City of Vancouver hasn’t made it terribly easy to find out where we are in terms of paying for that mess, but with a little sleuthing it would appear we’re actually making good progress to pay off the $750 million construction loan the city took out.

Just $300 million left to pay on that debt.

Both Mr. Meggs and city manager Penny Ballem say it’s impossible to predict whether the remaining 181 condos (as of Dec. 31, 2012) and transferred Millennium properties will do more than cover the last $300-million of the outstanding debt (that figure was $462-million at the end of 2011).

If so, the remaining $171-million the city expected to get from Millennium for the land will never materialize.

So the city may never see any money for the land the Olympic Village was constructed on but hey, look at that beaver!

It’s not just Vancouver.

Across Canada the condo market is looking a little peaked.

If this is a party the keg has run dry.

Toronto and Montreal are slamming the last of the jager and slurring. Vancouver is puking in the corner.

The last time we saw Whistler they were snorting white powder on the roof and screaming they could fly.

The hang-over for this one is gonna be a bitch.

It’s evident that the condo markets in Canada’s largest cities are in the midst of some sort of correction. That final chapter on this has not yet been written.

Here’s some advice. For investors, now that the condo party appears to be over, it’s worth wondering if anyone will be left with a hangover. If history is any guide, a hard landing in the condo market tends to hit those holding the financing on condo projects first and foremost.

That’s from this Globe and Mail article by Ben Rabidoux.

If you’re flustered by the Paywall at that site and you have some time downtown in the afternoon you may be able to hear it from the author himself.

Ben is doing a talk from 4 – 5pm at Canada place today on the future of the Canadian real estate market. Free pre-registration is required and we haven’t heard if there are still tickets left, but it’s worth a try if you’re interested in this subject.

Last October a building in North Van offered a $100,000 price drop guarantee.

Yesterday a reader with the handle Not much of a name updated us on how that’s working out:

I just got an update from one of my favourite condo buildings in North Van, The Kimpton. This is the development that was offering the $100k “Price Drop Guarantee” back in October. Fast forward six months and a unit came through as a sale yesterday.

Original asking price – $750k
Listed price in Jan – $650k
Sale price – $575k

That’s $175k in six months.

If you’re looking to buy a condo these days would a ‘price drop guarantee’ soothe your worries about overpaying or would you rather just have a ‘free’ car?

Submitted by Nom

Well here’s a counterpoint to the huge number of Canadians that own homes:

According to RBC, the number of Canadians planning on buying a home in the next two years has dropped to a record low.

Sean Amato-Gauci, senior vice-president of Home Equity Financing with RBC, says current economic and industry trends are consistent with this bleaker homebuying forecast.

But an overwhelming majority of those polled (84 per cent) still see real estate as a sound investment. While 52 per cent say now is a good time to get into the market.

Nearly half of those surveyed (49 per cent) say they expect mortgage rates to be same this time next year, while 43 per cent admit they believe home prices will continue to climb.

All clear? Fewer people than ever are planning on buying, but a majority still see ‘real estate’ as a sound investment and more than half of them think now is a good time to get into the market.. but only 15% are actually planning on buying.

Will they still be planning to buy if prices keep dropping?

Canada hasn’t got a Zillow yet, but that might be changing.

Rogers is making moves into the Real Estate business now:

The mobile and cable giant has applied to become a licensed real estate brokerage right across Canada and is aiming to relaunch its five-year-old website Zoocasa.com in May as a unique, one-stop-shopping site for homebuyers.
It’s aimed at going far beyond U.S.-based property listing services such as Zillow and Trulia which have revolutionized house hunting south of the border by providing critical data that can help potential buyers assess the value of a property from the comfort of their home computer.

Read the full article in The Star.

Interesting article over at the Globe and Mail…

According to adjunct UBC planning professor Andrew Yan a mind boggling 25% of condos in some areas of downtown are either vacant or occupied by non-residents.

[edited to reflect reality - the 25% is NOT vancouver wide]

This was revealed at an SFU talk wednesday night that sought to look at the issue of foreign investment in Vancouver real estate.

Picture a 20 story condo tower.

Now picture 35 of those condo towers.

That’s how many vacant units are said to be in the downtown core alone.

Mr. Yan, who specified that it’s not possible to know exactly why so many apartments were empty, said data indicate Vancouver is creating neighbourhoods that appear to be very dense, but actually don’t have an active full-time population.

That gives a skewed picture of, for example, the amount of commercial activity they can support.

In Coal Harbour, where up to one in four condos is empty in the tower-dominated waterfront neighbourhood between Stanley Park and the downtown convention centre, the scattered shops in the area often struggle to stay in business. By contrast, the West End, which has a low rate of empty residential units, is bounded by three streets – Davie, Denman, and Robson – that are packed with busy small shops and restaurants.

Mr. Yan said that the high numbers of empty apartments don’t prove there’s a problem with foreign investors, but they do indicate that Vancouver has a large proportion of general investor buyers, be they offshore or Canadian.