Vancouver Condo Info » demand

Racist marketing and fact-free media

RTYT — Tue, 24 Jan 2012 08:34:17 +0000

Look at this garbage. It’s an article submitted by “The BC Real Estate Convention” and printed as if it’s actually news in the Vancouver Sun. First off, the writing is atrocious. Don’t they even have an editor read these advertorials before they’re printed? Second, there are lots of statements presented as fact that have absolutely nothing to back them up:

Experts claim that the Chinese Mainland buyers and investors will continue to seek for overseas investment opportunities, in Vancouver.

Which ‘experts’ are these? Oh never mind, we’ll just take your word for it then.

As it is more cost efficient to purchase a property rather than renting, and considering the long term returns of the investment, purchasing properties in Vancouver become high on demand.

Yeah, somebody is ‘high on demand’ if they really believe that current prices in Vancouver make buying ‘more cost efficient’ than renting. There are many many markets around the world where buying is ‘more cost efficient’ than renting, Vancouver ain’t one of them.

However, as much as Feng shui is a well respected practice by many Chinese immigrants and potential home buyers and investors, there are always those “intelligent” ones that seek to obtain the optimal economic value from their investment in Vancouver’s real estate.

Wow. I don’t even know how to respond to that.

If you go to the The BC Real Estate Convention web site you’ll see that this trade show is sponsored by The Vancouver Sun and Province.

Then there’s this piece over at 24 hours:

Metro Vancouver will receive an influx of businessmen from mainland Chinese this week, intent on spending their two-week Lunar New Year holiday with family, as well as scooping up significant amounts of real estate.

Julia Rowell, sales manager at downtown Vancouver’s Maddox development, said this phenomenon has been going on for over 25 years, but 2012 looks to be especially busy.

Yeah? I think TPFKAA says it best:

HAHAHAHAHA! That’s absolutely hilarious!!

So in 1987, (a full five years before Deng Xiaoping’s reforms that enabled creation of individual fortunes) HAM from mainland China was increasing sales just after CNY.

/facepalm.

The hype seems to be working on the listings side. This year started off with the second highest number of listings in the last ten years and has grown at a faster rate than any of those years, especially on the west side:

I’m sure those sellers are hoping this hype pays off, and maybe it will, but then again maybe our market isn’t driven solely by wealthy offshore buyers. Most local first time buyers aren’t in the market for multimillion dollar homes anyways, so how would this even affect them?

Blaming ‘Chinese buyers’ for out of control prices is simplistic and racist. This city is nearly half asian so of course ‘Chinese buyers’ have an impact, but what about easy credit, low rates, CMHC pumping and local speculators?

Just for comparison, the city of Monterey Park in California has the highest percentage population of Chinese Americans of any US municipality. Here’s what home values there look like over the last few years:

This post was submitted by RTYT.

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Historical Sell List Ratios

TDK1138 — Wed, 04 Jan 2012 08:40:01 +0000

VHB has a post over at Housing Analysis looking at the last few years of sell / list ratios in Vancouver. He’s got two charts there, one based on daily data in the VCI forum and one going further back to 2001 based on REBGV data. Interesting to see the difference in years like 06, 08 and 2011.

This post was submitted by TDK1138.

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The month with no sales.

wreckonomics — Mon, 03 Oct 2011 18:15:03 +0000

Inventory says.. Not a single new home sold on the west side in September, first zero sale month going back to 1994. Here’s the historical data:

Vancouver West New Home Sales September
YEAR = SALES / LISTINGS
1994 = 15 / 79
1995 = 16 / 157
1996 = 9 / 173
1997 = 12 / 126
1998 = 4 / 90
1999 = 4 / 35
2000 = 6 / 30
2001 = 2 / 35
2002 = 4 / 25
2003 = 14 / 43
2004 = 8 / 48
2005 = 15 / 43
2006 = 5 / 43
2007 = 4 / 42
2008 = 4 / 93
2009 = 11 / 74
2010 = 9 / 61
2011 = 0 / 77

Even the minicrash of 2008 saw four sales of new homes on the west side. The worst September for new home sales was back in 2001.

VMD also notes Burnaby sales are not looking so hot:

[Confirmed: Burnaby Sept/11 SFH Sales Lowest in 5+ years. 60% of last year, 1/3 of 2009, lower than 2008 levels]
2011: 46 (I predicted 45 on post #2)
2010: 75
2009: 127
2008: 51
2007: 81

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Zero west side new home sales

The Pope — Mon, 26 Sep 2011 13:11:10 +0000

It hasn’t happened yet, but it’s possible that this could turn out to be the first month on record to ever have zero new home sales on the Vancouver west side. Check out the comment from inventory:

Worst New Home sales in September in Vancouver West?

Where are the buyers? Currently there are NO sales of “NEW” HST Homes. there are 71 units available. Five more days to go for a sale. There has never been a ZERO New home sale in Van West since 1994 (Records only go back to 1994).

Vancouver West
New home sales
Sept 2010 / 2011
Listed 61 / 71
Sales 9 / 0 ***As of Sept 25, 2011

Van West Sept new home sales:
2008 = 4
2009 = 11

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Compare and Despair

Eddie — Mon, 12 Sep 2011 07:49:01 +0000

Here’s a couple of million dollar houses.

This first one is in West Palm Beach. It’s a modest 6,898 sq. foot 5 bedroom home on 2.5 acres with a guest house and five car garage:

But for just $50k more you can get this beauty in South East Vancouver, conveniently close to Burnaby. It’s a 1958 sq. foot old timer with a basement and all windows are double glazed:

This post was submitted by Eddie.

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The Fall

The Pope — Wed, 07 Sep 2011 07:32:20 +0000

Well, It’s back to school and back to work time.. unless you can cash in a Vancouver property lotto ticket and retire.

Looks like a lot of people have decided its time to try to cash out, yesterday saw a big listing day, Paulb says 356 new listings with only 103 sales.

Inventory posted numbers by area and a lot of places, including west van, burnaby, Vancouver West and white rock saw a sales to list ratio of 25% or lower.

Is this the start of a slow sales autumn or just a post holiday blip? Is it the right time to try to sell, or should you be buying investment properties in hopes of future gains?

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HST and House Prices

jesse — Thu, 01 Sep 2011 15:58:25 +0000

Poor Helmut Pastrick is at it again, (HT Raize on Realestatetalks) providing insight into how markets will react with BC voters laying the smack down on a harmonized sales tax. So let’s assume for a moment what’s done is done and look again at how the HST affects house prices. According to Pastrick:

According to Pastrick—chief economist for Central 1 Credit Union, the association of credit unions in B.C. and Ontario—some buyers, especially of new homes, may delay purchases and save themselves some extra money.

“Will it hurt?” Pastrick asked in a phone interview with the Georgia Straight. “I think that impact will be temporary. The activity would be made up under the new system shortly, and indeed under the new system, the demand for housing is somewhat improved given the lower costs that will be in effect. So that would provide some lift to the housing market.”

A housing-market analyst with the Canada Mortgage and Housing Corporation in B.C. before joining Central 1 in 1997, Pastrick said that the changeover period will also likely see postponements in the planned construction of new homes.

“It depends on the transition rules, but in general I would expect to see some delay into the new tax system for some new construction,” he said.

Ah so demand will improve under the new system. Well that’s good news. But let’s remember a few things about the housing market:

Most housing stock is not taxed and often competes directly with new stock.
A large part of total costs are associated with land prices.
Developers want to make money.
Rational investors have other competing investment choices.
It is true that Realtor and other transaction fees will be taxed less under the new regime.

I do not pretend to be a professional economist, but I’m trying real hard to figure out how, as an investor, I would hold off a purchase solely due to the repealing of the HST. After all, I can factor the tax into my ROI calculations. Please help me out, readers!

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Vancouver drug economy and house prices

Spork — Mon, 29 Aug 2011 08:01:43 +0000

How much does the drug economy in Vancouver drive up prices? I was sceptical about it’s impact until I read this recent article in Vancouver Magazine:

Cam Hui was stunned when he moved back to his hometown after a stint on the East coast. “This city is not overrun with the super-rich,” he says. “But you can’t get into the Vancouver West Side for less than $1.5 million for something that’s not falling down.” In Stamford, Connecticut, where Hui, an investment counsellor, lived previously, prices were just as high. But there it was understandable. The place was infested with people working in the investment business. Stamford has the head office of GE Capital, and, with Swiss bank UBS, the world’s largest trading floor.

Hui doesn’t see that level of financial activity here; nor does he buy the standard explanation for Vancouver’s real-estate prices: that offshore investment or Asian money is largely responsible. In a private blog, he argues that there has to be a connection to the drug industry. “And just putting my economist’s hat on, if it winds up back in the local economy, it creates inflation.” He, by the way, has not bought here because Vancouver’s market is so crazy. He rents instead.

Read the full article here.

This post was submitted by Spork.

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Avg house price dropped $10k in July

The Pope — Thu, 18 Aug 2011 08:47:11 +0000

The CREA has released stats and a forecast.. Apparently house prices are down and the expect them to stay that way.

“Earlier this year, the national average price was being skewed upward by sales in some expensive Vancouver neighbourhoods, but this factor is now diminishing,” CREA’s chief economist Gregory Klump said. “Upward skewing of the national average price is also shrinking due to overall sales trends in Vancouver, and most recently in Toronto.”

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Blame it on the fruit stand

Van MD — Mon, 15 Aug 2011 16:09:46 +0000

We all know you can Blame Canada and obviously you can also blame it on the rain, but did you know you can blame it on a fruit stand? That’s what one west van wannaseller is doing. He claims his house is not selling due to the fact that fresh fruit and vegetables have been available just down the street for the last seven years:

Paul Marshall, whose home is selling for about $6.5 million, has filed documents in BC Supreme Court arguing the city cannot issue a permit to sell fruit on a residential street.

He says the stand is scaring away potential buyers from the roughly 7,400-square-foot home, which has five bedrooms and six full bathrooms.

Typo in that first line.. Shouldnt it be “whose home is not selling..”. I guess it’s a slippery slope, first it’s apples, then its crack cocaine and nobody wants to buy a mansion near a crack cocaine stand. For the love of all things holy, can’t we just leave the produce in Safeway where the good lord intended it to be sold?

This post was submitted by Van MD.

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Has inventory peaked?

The Pope — Thu, 11 Aug 2011 16:20:36 +0000

As of yesterday inventory was a few hundred over 16,000. Will we see 17,000 places for sale again this year or has inventory peaked?

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Hawaii 50% Off Sale

The Pope — Sun, 10 Jul 2011 08:58:57 +0000

Ready to Pop pointed out this article about Canadians buying property in Hawaii now that the Canadian dollar is strong and some homes and condos are selling for half what they were worth in 2008:

“In some areas prices have dropped 40 to 60% and it’s as bad as Phoenix.”

He gets calls and emails from Canadians daily.

“Some are waiting for a bell to ring that says we have hit absolute bottom,” he jokes. “Others have pulled the trigger because in Maui we’re having a half-off sale.”

The loonie, valued at 62 cents US almost a decade ago, hit $1.05 in April. That means a million-dollar property in Hawaii, that would have cost a Canadian about $1.6 million in 2002, is now under a million.

The best values are on the big island.

“In Maui, you need two wallets — on Hawaii you can survive on one,” Dinits says. “You can get a nice house on Hawaii today, six blocks from the ocean, for $66,000. That would be a bank owned foreclosure, or REO (Real Estate Owned) deal.”

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The “Running out of Land” Club

patriotz — Mon, 04 Jul 2011 08:01:34 +0000

You often hear of high price/rent for SFH in the City of Vancouver being justified because of the scarcity of land. I thought I would do a comparison with the City of San Francisco, which is slightly larger than the CoV and has a population of about 800,000. But the really big difference is that it comprises a little over 1/10 of the metro population compared with 1/4 for the CoV. So you’d expect San Francisco to have a higher scarcity premium. Well no.

Take a look at this listing for the West Portal neighbourhood in San Francisco’s west side for $1,075,000:

http://www.redfin.com/CA/San-Francisco/2531-14th-Ave-94127/home/662192

And here’s the same house for rent for $5200/mo:

http://sfbay.craigslist.org/sfc/apa/2471867467.html

The rest of the neighbourhood:

http://sfbay.craigslist.org/search/apa/sfc?query=west+portal&srchType=A&minAsk=&maxAsk=&bedrooms=3

Price/rent for this property would be 207.

What about the comparable numbers for, say, Dunbar? Maybe $1.5 million and $3500/month? That’s a price/rent of 428.

Now you might say yes but property taxes are higher in SF. That’s true so let’s see how much higher.

This property is assessed at $402,019 and has property taxes of $4,836 /year. That’s because of California’s looney property tax system which taxes at the most recent sale price, not market value. If you bought the house for $1,075,000 you’d pay $1,075,000/$402,019 * $4,836 = $12,931/year.

Total property taxes in CoV are 4.21377 mills, so a $1.5 million property would pay $6320/year.

Calculate price/(rent-property tax) and you get 261 in SF versus 504 in Vancouver.

And I didn’t factor in mortgage interest and property tax deductibility and the ability to lock in low rates long term in the US.

You’d pay more for just a lot in Vancouver than the whole house in San Francisco. What sense does that make? In which city is land really more scarce? What do the rents tell you?

This post was submitted by patriotz.

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Luxury sales set to climb

thenonymous — Thu, 23 Jun 2011 08:35:25 +0000

Here in Vancouver a ‘luxury home’ is one that costs more than 3 million and looks like a $300k house in Tampa. And that’s just the market segment that is set to soar this year.

The 2010 total has already been surpassed, with 384 homes over the $3-million price point sold so far in 2011, according to Macdonald Realty.

There have also been 66 homes over $5 million sold so far, and a predicted 132 over$5 million by the end of the year.

A total of 40 condos over $3 million have so far been sold, including seven over$5 million.

However, the trend partly reflects price increases that have pushed previously cheaper homes over the $3-million luxury home threshold.

The trend is your friend, get in now while prices are going up.

This post was submitted by thenonymous.

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Paul Is Back with the Data

The Pope — Tue, 21 Jun 2011 08:43:24 +0000

Realtors. Some of you love them, some of you hate them and some of you are them. But there’s one thing that it seems we can all agree on: We appreciate it when a realtor takes the time to share market data with us.

One Realtor that has consistently shared market data with Metro Vancouver residents is Paul Boenisch. Paul has been sharing daily sales and listing numbers with us for a while and is now establishing a market data section on his site along with a new partner.

At the moment their market trends section is in its beginning stages, but Paul has a well established history of reliably providing data and promises to continue posting daily numbers here as well.

For more Metro Vancouver market data you may want to also check out the Realtor sites of Agent Will and Larry. For the bigger picture there’s CUER/Sauder at UBC and for great analysis check out the Economic Analyst. Lauren and Paul will be posting local real estate market data here.

Do you have a favorite source of market data that isn’t listed here? Drop it in the comments below!

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OSFI: How many foreign buyers?

TJ — Tue, 07 Jun 2011 08:01:39 +0000

The OSFI is going to try to figure out just how much foreign investment is going into Canadian real estate markets these days.

Canada’s top banking regulator is on a fact-finding mission to gauge the scope of foreign investment in residential real estate.

Industry sources say the Office of the Superintendent of Financial Institutions is sizing up the market, most likely as part of its active campaign to “stress-test” the country’s big banks to measure how they would be affected by volatility in various market segments.

OSFI is taking a broad look at bank exposure to household debt and how the financial institutions are monitoring loan portfolios amid growing concerns over the ability of Canadians to handle their debt load.
In the case of the housing market, sources point to global trends that could affect investment in Canada — such as China’s recent policies to curb speculative real estate investment in that country — as evidence that Canada is operating in a fast-changing market that could be adversely affected by decisions made in other countries.

They suggest OSFI wants to know how big a factor foreign investment in Canada’s housing market is, and how big it is likely to become, so the regulator can measure the potential impact on banks if demand were to dry up.

This post was submitted by TJ.

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UBC Hospice approved despite fear of ghosts

wreckonomics — Mon, 06 Jun 2011 08:15:45 +0000

The UBC hospice has been approved at it’s current location despite neighboring condo owners fear of ghosts driving down property values.

UBC’s board of governors has approved plans for the 15-bed Order of St. John facility, which some Chinese-born residents of a nearby condo tower say will bring bad luck to the community.

“I want to know where does humanity go for residents living in this building, when 80 per cent of them highly oppose the site — not oppose this idea, just oppose this site?” condo owner Jane Ni asked reporters at a press conference Friday.

She denied claims that neighbours’ opposition is based on superstition about ghosts.

“This is 5,000 years of culture and religion. We are not superstitious,” Ni said.

Some Chinese community leaders are offering their support to the hospice’s opponents, arguing that their concerns aren’t being taken seriously.

“You must consider whether proceeding under these circumstances is the best, or is there an alternative that can further lessen the negative human impact?” said David Choi, chairman of the National Congress of Chinese Canadians.

The university says that it understands the residents’ worries, but that the site is ideal for a hospice.

“A hospice is not to be put away in an institutional setting; it is meant to be in a community, because it’s very much a part of the life and death of a community. When people are at their end of lives, they should be close to their families,” said Stephen Owen, vice-president at UBC.

The school is planning to put up trees around the hospice as a screen and help neighbours who wish to move to new units on campus.

The full article is available at CTV. There are a few remarkable things about this story.

First, that two of the three people quoted appear to be realtors, yet the article doesn’t mention that fact.

Second, that they’ve decided to place the justification for this particular bit of nimbyism in purely racist terms.

Third, that if you’re looking to buy a condo at UBC the owners at Promontory have just said that their units are now worth a lot less than they used to be.

And regarding the David Choi comment “is there an alternative that can further lessen the negative human impact?”. This is an interesting question because the whole purpose of a hospice is to lessen the negative human impact when people are at their weakest. Perhaps a more important question is what values do we want to hold as a society? Which do we value more: human life and caring for the elderly and sick or property values?

I’m afraid that we already know the answer to that question for at least some people.

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Dear Vancouver

John — Thu, 02 Jun 2011 08:00:02 +0000

Dear Vancouver,

If you’re reading this, I’ve already left. Please don’t try to follow me. We’ve had some wonderful years together, but lately the relationship has felt like a chore. I’m sorry to put it so bluntly, but I really think it’s time I saw other cities.

It’s not you, it’s me.. Well that’s not entirely true, it’s a bit you. When we got together you were young and beautiful. You knew it, but you had a humble side too, you never tried to be something you weren’t even though I know you’ve always looked up to the larger cities and wanted to run in their crowd.

Unfortunately just because you’ve seen a supermodel smoking crack doesn’t mean that smoking crack will turn you into a supermodel.

Lately it seems like you’ve lost the magic that makes you special, I hope that you can find it again and I hope that we can still be friends. I would like to come back and visit you someday, maybe I’ll find you older and wiser. I hope you forgive me for leaving in this way but I’ve found another city and we are in love, it just didn’t feel right to carry on the charade any longer.

Sincerely,

John

This post was submitted by John.

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3rd times the charm, no new mortgage rules

wreckonomics — Wed, 11 May 2011 08:29:34 +0000

Jimmy Flaherty has just announced that there will be no new mortgage rules announced as there is already “softening” showing up in real estate markets across Canada:

Flaherty said he’s already intervened to toughen mortgage rules three times in the last few years and there’s no need for further action as conditions in the market are finally moving in the right direction.

Flaherty said he does not believe there were any unintended consequences in the housing market resulting from government intervention in the mortgage business during the financial crisis to keep banks lending money.

Still, he said his government keeps a close eye on the housing market and subsequently stepped in three times with changes to mortgage rules when there were concerns about risk.

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A strategy to beat rising interest rates

wreckonomics — Wed, 06 Apr 2011 08:23:47 +0000

RE/Max has released a report saying that the Metro Vancouver real estate market is being driven by first time buyers looking to avoid higher interest rates down the road. Did we get US style mortgages where you can lock in low rates for the entire mortgage term? Maybe I haven’t been paying enough attention.

Re/Max said the prospect of higher mortgage rates has prompted many of those determined to get into the market to act in the early part of this year.

It also noted the federal government’s newly implemented conditions for mortgages that reduced the maximum amortization period for government-insured mortgages to 30 from 35 years, and limited the amount people can borrow when refinancing their mortgages to 85 from 90 per cent of the value of their homes.

Led by the Bank of Canada’s relatively low benchmark rate of one per cent, homebuyers continue to enjoy mortgage rates that are low by historical standards. However, it’s not expected to last.

Just this week, most of Canada’s major banks hiked their mortgage rates, with standard five-year, fixed rates moving up 35 basis points to 5.69 percent a year.

Locking in for 5 years on 25-30 year debt because you expect interest rates to rise sounds like an interesting strategy.. Be sure to get as much as you can afford, because by the time you have to renew at a higher rate your income is sure to have risen tremendously right?

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OV Buyers sued for wanting out

The Pope — Tue, 22 Feb 2011 15:40:54 +0000

What weird times we live in.. As people lined up to buy Olympic Village suites at firesale prices others are being sued for not wanting to complete their pre-sales agreements. A few years ago the lawsuits against pre-sale buyers went not only for their deposits, but for the difference in sales price of the unit as well. Fortunately for OV presales buyers they only seem to be going after the deposits, which are generally less than $100k.

In one of the lawsuits just filed, Port Coquitlam resident Cordelia Lins and her husband had put down $50,090 in May of 2008 for a unit they originally agreed to buy for $500,900. Problems with records make it difficult to determine the assessed value. Ms. Lin said she couldn’t say anything about the lawsuit because she was “in negotiations.”
Vancouver resident Gee Lim, who paid the largest deposit for a unit he originally agreed to buy for $1.4-million, did not answer his phone. He originally agreed to buy his unit in April 2008. Last July, the province’s land-assessment authority valued that unit at only $1.172-million.
The third buyer, who also put down his deposit in April 2008, has no phone listing at the Richmond address provided in the suit. Tian Qi had agreed to pay $516,000 for his unit in the Kayak building that is now being marketed. It was assessed at $504,000 by B.C. Assessment Authority last July.

Please note these are different cases than the six buyers who sued over building deficiencies, most of those cases have been settled. Read the full article over at the Globe and Mail

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Why is Ottawa picking on Vancouver?

The Pope — Wed, 19 Jan 2011 09:15:24 +0000

According to the Vancouver Sun our market will be hit hardest by the new tighter mortgage rules for the CMHC:

The new rules will disproportionately affect first-time homebuyers and people who live in B.C., home to the country’s highest housing prices, said Tsur Somerville, director of the UBC Centre for Urban Economics and Real Estate.

“The sense is, there are more first-time buyers in the Lower Mainland who have been using the 35-year mortgage,” he said in a phone interview. “Either those people have to come up with a slightly higher down payment, or they just can’t bid the same price on a house.”

The longer amortization periods have become popular among Canadians since they were introduced.

As of November, 30 per cent of all new mortgages in Canada had a 35-year amortization period, according to the Canadian Association of Accredited Mortgage Professionals. While B.C. numbers are not available, that percentage is undoubtedly higher here, Somerville said.

Ottawa discontinued the 40-year mortgage amortization and the zero down payment in October 2008, two years after the controversial features were introduced. About six per cent of existing mortgages have a 40-year amortization.

Read the full article over at the Vancouver Sun website where they also have a collection of photos comparing what you can get across canada for the average Vancouver house price and maps of where you’ll most likely run into bedbugs in the Metro area.

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Help Wanted: Okanagan Real Estate Math Expert

Alpha_Bear — Wed, 12 Jan 2011 18:52:47 +0000

This is a follow up to an earlier posting about discrepencies in dollar sales figures released by the Okanagan Mainline Real Estate Board.

I’ve taken another look at the OMREB statistics, and have come across yet another anomaly. Their own numbers for the inventory of unsold single-family residential listings do not agree with one another. If you get the inventory from their monthly statistics releases, the number is different from their monthly statistics graph releases.

The numbers match up until July of this year, and then they diverge, with the monthly statistics numbers being reported as 5% to 8% lower than those in the statistics graphs reports. It sure looks like they were trying to make the inventory increase this summer appear less bad than it really was. You’ll notice that they did not include a number for December’s inventory in the just-released statistics graph report. (typical sloppiness!)

I have emailed OMREB previously regarding other discrepancies, and received a less than forthright answer. I’ve basically written them off as incompetent at best. I also have another graph showing the same problem in the Central Okanagan, if you’re interested.

This post was submitted by Alpha_Bear.

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What does your MP think?

The Pope — Mon, 10 Jan 2011 09:32:04 +0000

As you’ve probably heard, the Canadian Real Estate Association is asking it’s 100,000 plus members to send in a form letter to their MPs in reaction to rumored changes to mortgage finance rules. In the form letter they say:

In particular, we are concerned about the negative impact modifications to the allowable amortization period or minimum down payment requirements would have. These changes would create affordability problems, especially for first-time buyers. First-time buyers are the first link in a chain reaction of real estate activity.

But let’s be clear – the ‘allowable amortization period or minimum down payment requirements’ are not proposed rules that will prevent private lenders from offering any deal they want, they are a reduction of excess government credit pumped into the housing market over the last few years. What the CREA seems to be proposing is the conflicted idea that our housing market is stable and not in a bubble, but that minor changes to down payments or amortization terms on government insured mortgages could cause a collapse (of that non-existent bubble).

Also from the CREA form letter is this justification:

The housing sector played a key role in Canada’s economic recovery. In fact, a report published by Altus Group in 2009 found the typical MLS® home sale and purchase between 2006 and 2008 produced $46,400 in spin-off spending. Based on this research, forecast annual sales in 2010 generated an estimated $20.5 billion in spin-off economic activity and over 185,000 jobs.

Sounds like a good spin off, but according to this article in the CBC, the issuance of CMHC mortgage backed securities in 2010 is estimated to be $100 billion. Are we really getting the best sustainable economic spin off from that money?

For all the CREA claims to care about first time buyers, they are who would be most protected by adjustments to government backed mortgages. If you can’t afford a down payment right now maybe you shouldn’t be buying. As we’ve seen all around the world from the US to Dubai to Ireland, Spain and Portugal, rocketing property values without income growth is not sustainable, no matter how much governments or real estate associations would like them to be.

This is a small local blog, we get less than 4000 readers a day which is far less than the CREA’s 100,000 plus members, but that doesn’t mean your voice shouldn’t be heard. If you want to make your views known to your MP you are welcome to use this form letter written by Jesse in the forums. You can find contact info for your MP here.

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The luxury of renting in Manhattan

The Pope — Wed, 05 Jan 2011 09:47:23 +0000

You hear a lot about the US housing bubble and crash, prices are down all over the US since the peak, but in Manhattan luxury home prices have risen since last year. So what are the wealthy doing? Renting.

Adam Neumann and his wife set out in 2008 to buy an apartment in lower Manhattan, hoping to get a bargain on a 2,500-square-foot (232-square-meter) luxury unit.

Failing to find a deal, they chose an increasingly practical option for the city’s wealthiest residents: renting. They’re paying $300,000 upfront on a five-year lease for an empty TriBeCa loft with almost twice the space that the landlord will outfit to their design.

A price crash does funny things to perception. So why would the well-to-do choose to rent instead of own?

The money he’s not spending to buy “can go into my business,” said Neumann, co-founder of We Work, a New York firm that rents shared office space by the month. “In my business, my cash brings a much higher return than purchasing an apartment,” he said.

“The good times we saw in the past are not coming back anytime soon,” he said. “People are not going to buy a home for $1 million and see it worth $2 million in five years. I see the market going up but nothing like in the past.”

But what about here in Vancouver? Is that $1 million dollar home going to be worth $2 million in five years or are there potentially more lucrative sectors to invest in at this point?

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