Vancouver Condo Info » demand

The HST effect?

The Pope — Mon, 26 Jul 2010 14:56:00 +0000

Inventory shared some interesting data with us on Friday:
sales numbers going back to 1995.

Sales numbers for this month up to last Friday continue to be very low, almost reaching back to their 2008 lows, except when it comes to new unit sales, which are lower percentage wise than we’ve seen in the last 15 years. As of Friday new units sales are down at the 25% level.

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Significant discounts in the Okanagan

The Pope — Thu, 22 Jul 2010 08:02:35 +0000

The boom has gone bust inland and we’re starting to see more and more of these news stories about it. Jimmy pointed out this link to some coverage over at news 1330:

Advertised prices on many new developments are down between 20 and 30 per cent, six-figure savings in some cases. And if you really hunt, developer Matthew Hay says deeper discounts can be had.

He says too much inventory was built up before the recession hit, and the newly imposed Harmonized Sales Tax is not helping the market either. “So now not only is there a surplus of product on the market, but you’ve got a whole buyer demographic that is nervous, cautious, sitting on their wallets, waiting to see how things shake out.”

Some of the developers are offering incentives on top of the discounts like covering the HST, or the GST. Hay says some developers are desperate to sell and that is putting downward pressure on the Okanagan market.

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Treasure trove of mortgage data

The Pope — Mon, 19 Jul 2010 09:27:06 +0000

VHB pointed out this site on Thursday: Canequity provides actual data for their mortgages across Canada including here in Vancouver. One of the frustrations of anyone trying to study the housing market in Canada is the dearth of publicly available data compared to the United States, so it’s nice to find a source of some data when it comes to Canadian mortgages. Here’s their chart of product inquiries as one example:

Take a look through all the data they make available – here’s Toronto and here’s Alberta. Locally there’s info for BC and Vancouver. If anyone wants to do a breakdown of anything interesting that they find, we’ll be happy to publish that here.

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Wealthy foreigners drive US market

The Pope — Mon, 12 Jul 2010 08:42:32 +0000

Clearly the US could use a little Vancouverism. They don’t seem to understand that the exciting and nebulous ‘wealthy foreigner’ concept should be enough to drive a housing market to new highs, not rescue it from new lows. Perhaps the problem is that they have actual data on the impact of foreign buyers, instead of relying on vague hype from realtors:

Their purchases accounted for 4.6 percent of the residential market, or about $41.7 billion worth of US property from April 2009 through March 2010. That’s up from the 4.2 percent ($38.8 billion) of the residential market purchased by international buyers in 2008-2009. About 28 percent of American realtors reported having one international client this year, as opposed to 23 percent the year before, according to the report.

Many international buyers cited the emerging economic recovery as a driving force to buy, and most saw the US as a desirable location to own a home. A majority of international buyers purchased homes in regions most impacted by the housing bubble — including Florida, California and Nevada — perhaps in part because of the increased inventory available in these areas.

International buyers also spent significantly more than domestic buyers. They paid, on average, $219,400 on residential properties, as compared to $173,000 for existing home sales during the same period.

But financing continued to be a problem for foreign buyers. About 55 percent of international buyers paid in cash for their homes instead of taking out a mortgage.

Full article here.

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Royal LePage predicts falling prices

The Pope — Wed, 07 Jul 2010 15:27:03 +0000

realpaul pointed out this Vancouver Sun article. The day after we got the news that house prices are falling in Vancouver, Royal LePage has released a market survey predicting house prices and sales will ‘decline towards the end of the year’.

However, he pointed out, “This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.”

This outlook is at odds with the BCREA and CREA market surveys released a few weeks ago that predict flat or rising prices for 2010 and then falling prices in 2011.

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Downtown condo listings hit a high

The Pope — Wed, 30 Jun 2010 08:43:06 +0000

We may be running out of land, but we sure aren’t running out of apartments for sale. Just in case you haven’t noticed, VHB has been tracking downtown / False Creek North condo inventory in the forum and we’re seeing quite a number of places for sale there:

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Preparing for falling prices

The Pope — Tue, 29 Jun 2010 09:21:47 +0000

Canadian Mortgage Trends has an article about getting your mortgage approved before prices fall.

When home prices do fall, it makes it tougher for certain people to qualify for a mortgage—especially for refinances. When prices start dropping, appraisals come in lower, insurer valuation systems become more conservative, and lenders tighten up in general.

Vince Gaetano, a broker with Monster Mortgage, tells the Financial Post that people are already trying to get approved “before there is a correction in the real estate market.”

Of course prices may fall in the rest of Canada, but we all know they won’t fall here in Vancouver right guys?

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Backing away from the Bid

The Pope — Mon, 28 Jun 2010 09:00:35 +0000

We posted this in the free for all, but it’s worth taking a closer look: Eleven pre-sales buyers at the Vancouver Olympic Village are unhappy with their units and are trying to get out of their contract. They complain about changes to plan and faulty fireplaces. Presales contracts of course always favor the developer, and these issues aren’t enough to break the agreement, so the approach their lawyer is taking is to claim that the City of Vancouver took over as developer. Since they aren’t listed on the paperwork this would be a technicality that could nullify the contract. If they manage to make this argument work and other buyers want a way out of their purchases it could be more trouble for the O.V.

The buyers put down deposits of between $60,000 and $300,000 for False Creek condos priced from a low of $550,000 to units that sold in the millions of dollars.

They’re being asked to close their deals by the end of the month.

On Thursday, Baynham filed writs in B.C. Supreme Court against developer Millennium Water on behalf of six of his clients, who have addresses in Vancouver and West Vancouver.

Baynham says the City of Vancouver is the owner of the property, after bailing out Millennium when it couldn’t get financing. But that’s not disclosed in the sales agreements, he says, so the contracts are invalid and should be rescinded.

The city argues that Millenium still owns the project and is the developer, the city is simply the bank.

We saw a lot of pre-sales buyers try to walk away from their contracts during the mini-crash a few years ago, and developers suing the for the difference between their deposit and the current market value. It’s interesting that these buyers are trying to get out of their contracts while the stats still show that Vancouver property prices are still at an all-time record high.

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Vancouver RE Price Reductions

The Pope — Thu, 24 Jun 2010 09:22:08 +0000

Yesterday we posted a link to an article about the high number of properties for sale in Vancouver. What’s possibly more interesting than the sheer number of listings in the very high number of price reductions we’re currently seeing. Yesterday Paulb shared numbers that showed 232 new listings and 56 sales, but nearly 3 times that number of price changes at 162.

We’ve seen many days where price changes have exceeded 200. Even with listings for the REBGV area nearing 19,000 Mclovin points out that we’re consistently seeing about 1% of total inventory drop their price every single day. That means about 5% of all listings in Vancouver are reducing their asking price each week.

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River Green sells out

The Pope — Mon, 21 Jun 2010 09:16:03 +0000

River Green, The massive planned housing development advertised as Richmonds ‘very own coal harbor’ sold out this weekend, setting a new record for Richmond presales.

The biggest purchase was by a family who bought four suites valued at $5 million. Four penthouses also sold on the opening weekend at over $3.4 million. The 150 condo complex set Richmond sales records for individual condominium sale price and price per square foot.

Condo developer George Wong says this proves the once down and out real estate market is back. “It does set the tone for Lower Mainland real estate strengths. Certainly hope this is a shot in the arm for real estate in the province.”

The 28-acre luxury waterfront community is expected to take 15 years to build.

In fifteen years those buyers will either be thrilled they bought now before they were priced out forever, or potentially not so thrilled if the housing market fails to thrive. You’re going to have to wait 15 years to find the answer to that one.

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US Home building slump

The Pope — Thu, 17 Jun 2010 09:59:10 +0000

US incentive programs for home buyers have expired and it looks like the real estate industry hasn’t got enough momentum to lift the US economy. Even with rock-bottom interest rates the industry is slumping.

WASHINGTON – Homebuilders are sending a message: They won’t be able to contribute much to the economic recovery now that government home-buying incentives have vanished.

Home construction and applications for building permits sank in May, overshadowing favorable reports on manufacturing and wholesale inflation.

Fewer homes mean fewer jobs. Construction fuels a broad swath of industries across the economy. Yet double-digit unemployment is among the main reasons people have passed on buying new homes.

The solution is simple. Government must take on more debt and pour more stimulus dollars into the economy, then the problem will be solved and everyone can get back to living the good life.

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sales down, prices up and set to flatten

The Pope — Tue, 15 Jun 2010 09:18:12 +0000

Home sales in BC are down 11 percent in May 2010 compared to April, but prices are up and set to flatten according to the BC Real Estate Association.

The survey also concluded that, year-to-date, B.C. residential sales dollar volume increased 50 per cent to $17.5 billion, compared to the same period last year. Residential sales rose 31 per cent to 34,619 year-to-date, while the average price climbed 14 per cent to $505,468 over the same period.

The BCREA said in another recent survey that it expects sales to rise next year by about four per cent.

A separate survey by the Canadian Real Estate Association (CREA) recently forecast that prices would rise 2.3 per cent this year across the province before slipping back by 3.5 per cent in 2011.

Full article in the Vancouver Sun

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What are they smoking?

The Pope — Mon, 14 Jun 2010 09:16:09 +0000

One reason Canadian cities can never have a housing bubble like they had in the US is that our lenders are much more diligent and properly manage risk. At least that’s what I heard, so you can imagine my surprise when I read this article where two different Canadian banks gave mortgages to a grow op owner with no proof of income:

Alarm bells should have gone off the moment Hai Le walked into the Bank of Montreal and asked to refinance the mortgage on his million-dollar home in Vancouver’s up-and-coming Marpole area.

His alleged inability to provide proof he had the means to make the hefty monthly payments of about $4,000 should have been reason enough to crumple up and toss the application into the nearest trash can.

Le, a “sales manager,” was also asking the bank to mortgage the property for its full value, a strategy that authorities say marijuana growers often use to minimize their losses should and when they get busted.

Yet despite these blatant red flags, the bank approved Le’s application for a $976,000 mortgage on Oct. 22, 2008, some 15 months after he’d bought the house from a Viet Van Truong for $980,000.

Ten months after the purchase, in August 2009, Vancouver police raided Le’s West 63rd Avenue home and uncovered a massive grow-op. Two days later, Le sought and received a $70,000 mortgage from the Royal Bank of Canada.

The Forefeiture Office is now seeking to have the mortgage proceeds seized from the bank. Read the full mind-boggling article in the province. Thanks to Jimmy for the link!

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Robson Street ’surprisingly affordable’

The Pope — Thu, 10 Jun 2010 09:19:22 +0000

Surprisingly affordable to lease retail space that is. Colliers has released their global survey of retail space lease rates and the most expensive places in Canada are in Toronto and Montreal at about $300 us per square foot.

Robson street in Vancouver came in 51st in the survey at a surprisingly affordable $196.08, which looks even cheaper when compared to what I like to refer to as our ’sister cities’ New York and Paris (which are cities just like Vancouver, but bigger with more money.) Both those cities topped $1,250 per square foot, but then they don’t have the HST.

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2010 a BC market speedbump

The Pope — Tue, 08 Jun 2010 09:05:58 +0000

The BC Real Estate Association has generously released to the public their market forecast for the near future so that all investors may partake of their wisdom. As they look ahead, they see a slowdown for 2010 before sales grow again in 2011. Even closer to home this is what they foresee for Vancouver:

For Metro Vancouver, sales are forecast to drop 7.9 per cent this year and rise 4.5 per cent in 2011 to 34,900 units. Prices are expected to increase 10.7 per cent this year in Greater Vancouver to $655,900 and 0.4 per cent in 2011 to $658,800.

For prices across BC the BCREA is predicting a rise of 6% this year and 1% next year. Evidently they use a different brand of Crystal Ball than the Canadian Real Estate Association:

..a survey by the Canadian Real Estate Association (CREA) released last week forecast that prices would rise 2.3 per cent this year to $476,900 before slipping back 3.5 per cent in 2011.

The CREA survey also predicted that sales across the province would decrease almost six per cent to 80,000 transactions this year.

Read the full article over at the Vancouver Sun.

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BC quarterly sales drop more than 25%

The Pope — Thu, 20 May 2010 08:36:08 +0000

Landcor data is out and in the first three months of 2010 both the number and value of BC real estate transactions dropped more than 25% from the previous quarter.

The results quantify the trend economists such as Cameron Muir, chief economist for the B.C. Real Estate Association, have observed occurring since January.

Landcor’s numbers “certainly support the data we’ve been looking at that shows that obviously the pace of sales have slowed since the last quarter of 2009,” Muir said in an interview.

Last year’s “fourth-quarter peak is unlikely to reoccur in 2010.”

Landcor president Rudy Nielsen said B.C. home sales typically slow at the beginning of the year, but the first-quarter of 2010 slowed more than usual compared with the last decade of results. This is in part, he believes, because of the Olympics.

Nielsen added that consumer uncertainty over a host of issues, ranging from the global economic situation to unknown effects of the harmonized sales tax, have consumers sitting on their wallets.

Meanwhile in Canada, the CMHC is predicting that prices will rise ‘moderately’ in the next couple of years:

The agency, which insures almost $500-million of Canadian mortgages, said the average cost of a home by the end of 2011 should be $350,000. That would be a gain of 1.4 per cent over April’s record high of $344,968.

Forecasting higher prices next year puts the agency at odds with the Canadian Real Estate Association and Toronto-Dominion Bank, both of which are calling for prices to drop by 1.5 per cent and 2.7 per cent respectively in 2011.

The Globe and Mail might want to check their numbers. Canadian taxpayers are responsible for HALF A TRILLION DOLLARS in CMHC mortgages, not ‘$500-million’.

It has been difficult to accurately make forecasts on the housing market through the recession, however. Its forecast for 2009 housing starts was off by 19.4 per cent. The agency was only off by 1.5 per cent the previous year, and its goal is to always be within 10 per cent of the actual figures.

“For the first time in several years, our forecast accuracy was not within the 10-per-cent range because of volatile market conditions,” it said.

A ten percent margin of error eh? Coincidentally Dan in Calgary points out that the phrase ‘CMHC is forecasting’ is a perfect anagram for ‘Comic things, farces‘

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Olympic Village Field Report

The Pope — Mon, 17 May 2010 08:36:26 +0000

Crashcow posted this comment over the weekend: a field report on the opening sale of the very lightly used Millennium Water Olympic Village condos:

Field Report of Millennium Water
May 15, 10

I woke up this morning with a massive hangover. Wow, what an 18K party that was! But with the weather so nice today, I decided to checkout my first open house in a long time to get a feel for what’s happening in the trenches. And not just any open house, an entire open village. Little did I know how much of a treat it would end up being.

On the way to Millennium Water, I passed by an abnormal quantity of For Sale signs. I kept asking myself how Rennie is going to pull off a 474 condo sale when inventory is exploding and sales are faltering. But soon after I walked into the gates of the Olympic Village, I knew I had stepped into a dream world of magic.

If Vancouver ever had a ground zero for Irrational Exuberance, Millennium Water is it. And if Bob Rennie is ever the King of anything, it’s hype. The man has carefully orchestrated a circus of clowns, bands, tents, treasure hunts and euphoria. When bands are cheering on lined up speculators and the King himself is handing everyone cookies, what is being witnessed is the last “hurrah” of a heavily inflated market.

I lined up to view a condo and couldn’t help but overhearing what the herd was chanting. One of my favourites was, “I don’t know if I like this area, but I love the wave pattern on the wall.”

I followed the crowd into a staged 1 bed, 2-den condo at slightly over 1,000 sq. feet. I overheard some lady asking an agent the price and he replied with a straight face:
“One-point-three-million.”

The lady’s jaw dropped, she shook her head, and moved on. I couldn’t contain myself and had to keep the conversation going.

- Me: “The miracles of record low interest rates. So that’s roughly $1,200 per sq. ft?”
- Agent: “Yes, but I’m also selling units down the street for $500 per sq. ft”
- Me: “So why, in your opinion, does this place come at a $700,000 premium?”
- Agent: “It’s an opportunity to be a part of this famous community and the proximity to the water.”
- Me: “Not only are you asking for an outrageous premium, you’re doing it at a time when there are over 18,000 units on the market, CHMC rules are tightening and mortgage rates are climbing.”
- Agent: “You should then really consider the units we have listed down the street.”

So I followed the yellow brick road down the street and into another Rennie building called “The Maynard’s Block.” And sure enough, studios were priced at half a million.

Buy now, or be priced out forever.

-Crashcow

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TD: House prices will drop

The Pope — Thu, 06 May 2010 09:00:30 +0000

TD Bank is the most recent pessimistic soothsayer when it comes to the Canadian housing market, with a prediction of falling house prices in 2011.

While income and employment seems to be recovering quickly from the recession, the number of listings to hit the market and the number of new housing starts has caught the bank by surprise. It had previously expected prices to gain 1.6 per cent in 2011 in inflation adjusted terms, the bank now is calling for a 2.7-per-cent drop.

Ontario and British Columbia are expected to bear the brunt of the decline, seeing their markets drop 3.4 per cent and 3 per cent respectively.

Ah! They’ve been paying attention to listings growth. Don’t they know that just means more options for buyers and that makes it a great time to buy?

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Waiting for the right price

The Pope — Tue, 04 May 2010 08:01:20 +0000

Paulb and paintedturtle pointed out this article in the Globe and Mail – Housing Affordability: the great quandry. Why there’s time to wait for the right home at the right price.

The one city to worry about if you’re a homeowner is Vancouver, where normal mortgage rates would have resulted in the typical household spending 78 per cent of its income to carry a bungalow, just shy of the peak level.

History shows that it’s impossible to accurately predict short-term movements of house prices – markets regularly overshoot rational levels both on the way up and the way down. What we can say is that based on current affordability, if house prices do continue to escalate, at some point they’re almost certain to correct back down.

That means there’s no rush to buy and time to wait for the right home at the right price – and that for the next while at least home buyers should evaluate houses as places to live rather than on their potential for appreciation.

Ok. I see what’s going on here. The Globe and Mail has worked themselves into a jealous rage because our properties are worth so much and are trying to talk down our market. It won’t work guys. We know better than that, we evaluate property purchases based on how much a month they cost with record low interest rates and pencil in 12% increase in prices each year. Everybody knows prices never drop in Vancouver.

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Quit your job and start flipping

The Pope — Tue, 13 Apr 2010 08:34:31 +0000

Here’s a handy financial planning tip: Quit your job and start flipping condos.

You can not go wrong with this simple plan my friend, just look at the facts:

1. BC Jobs don’t pay well. look at this chart, just look at it. Our incomes have gone up, but not by as much as in Alberta or Ontario, both of whom get paid much better than us. At least our houses cost more.

2. Your job may leave you. Quit it before it quits you. In January 2009 the Metro Vancouver unemployment rate was 4.9%. Now it’s 7.8%. See which way that’s going? hint: it’s the opposite of house prices. Make your own secure future in the real estate biz today!

3. The Government wants you to. If the government didn’t want you to be speculating on real estate they wouldn’t hold interest rates at .25% and insure your mortgage with just 5% down (which the bank will give back to you in cash!) would they? It’s a pretty clear message, the only real road to riches is REAL ESTATE baby! We can all be Donald Trump!

4. Real Estate Never Goes Down. This is self explanatory. Prices have risen tremendously in Vancouver which clearly means it’s a hot sector whose track record is proven. In March 2010 the REBGV benchmark house price dropped by $455 to only $800,341. I smell a buying opportunity!

Does this sound exciting to you? Then YOU are the kind of financial intellect I’d like to work with!

I’m willing to offer you a very special deal for a limited time only. Send me $15,000 and I will send to you, absolutely free, a handsome inkjet print of these words on a 8.5 x 11 inch piece of paper suitable for framing. This will empower you to REMEMBER and BELIEVE the words so that they may bring you happiness day after day, even in the event of a completely unforeseeable market collapse.

Now go quit your job and start flipping condos.

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The tipping point?

The Pope — Mon, 05 Apr 2010 09:34:38 +0000

March saw listings grow like crazy and April started off with a bang adding close to 500 listings on April 1st alone. The growth in inventory is being mirrored by a growing number of people who appear to be seeking out more information on a Vancouver housing bubble – traffic on this blog has nearly doubled in the last couple of months.

The following comment was posted just before the weekend by GregK71 regarding the growing number of bullish comments here and on other blogs. I suspect it may sum up the way many readers feel about the current state of the Vancouver real estate market and its likely future:

The bulls on this and other RE blogs absolutely see the writing on the wall going into Q3 and Q4 2010, and beyond. They’re not blind. Arrogant, yes. Foolish, perhaps. Blind, no.

Oddly enough for a group of people apparently content and smug in their asset class, bulls never turn down the chance for a satisfying faeces toss on blogs like VCI. They’re coming here to convince themselves to keep on believing house prices only ever go up. And it’s worked like a charm.

Now, although it doesn’t always seem to come across in their posts, bulls understand market forces. They’ve made money in RE. Big money. Like bears, bulls too sense danger. In their gut, bulls comprehend irrational exuberance. Heck, they’re the ones who’re listing their presales and resales en masse, soon to push listings onward to 25,000 and beyond.

Bulls know this thing’s running on fumes. Bulls know the time is short. Bulls know there’s no such thing as running out of land when you can build up. They know these things.

They also know the Kool-aid is starting to taste a bit, um, funny.

Vancouver bulls, you’ve had an amazing run. You’ve defied the fundamentals for longer than many thought humanely or economically possible. It’s been unreal. It’s been absurd.

To those of you over-leveraged on severely overpriced Vancouver real estate: relish these final few weeks on the upside. You may have a month and a half.

But the tipping point is here. It’s visible. It’s shocking. And it can’t be put off with another rate cut, loosened restriction, extended am or exotic mortgage product. That deck is exhausted.

The process just getting started ends only with utter revulsion and complete contempt for the asset class. Needless to say: it’s going to be a long, long way down.

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Worry over rates and prices

The Pope — Thu, 25 Mar 2010 13:44:45 +0000

According to this article in the Globe and Mail, a majority of Canadians are fretting over fears of rising mortgage rates and high prices. Some going so far as to lose sleep over the issue.

Meanwhile, as many as one-third indicate that talk of rising house prices and higher interest rates has influenced their buying decisions, according to a Bank of Montreal survey conducted by Harris-Decima.

“There’s definitely a sense of urgency among home buyers,” said Lynne Kilpatrick, senior vice-president of personal banking at BMO.

The same survey found 71 per cent of current and future homeowners think house prices are too high. It also found about 33 per cent of respondents complained they have lost sleep due to the stress of trying to buy a new home.

On Tuesday, Bank of Nova Scotia forecast in its real estate trends report that home sales are expected to rise 10 per cent to 510,000 this year, while average prices are expected to jump 8 per cent to a record $345,000.

Like most economists’ expectations, Scotiabank said the housing market in the spring should see a flurry of activity, particularly ahead of new sales tax regimes in Ontario and British Columbia and tighter qualifying criteria for insured mortgages.

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Real estate went up

The Pope — Tue, 23 Mar 2010 04:23:55 +0000

Here’s an interesting quote from Kamloops-North Thompson MLA Terry Lake about the economic benefits of hosting the winter games:

“Already we know that real-estate in Vancouver went up shortly after the Olympics from people that had visited the area,”

Is there a word missing here? Did buildings actually elevate into the air due to some anti-gravity effect that visitors had, or are we referring to a specific aspect of the real estate market.. Prices? Interest? Sales? Listings?

Yep, one of those went up.

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14,027 places to choose from

The Pope — Fri, 19 Mar 2010 03:11:42 +0000

Its March 18th and inventory numbers for real estate listings in the REBGV greater Vancouver area just rolled over the 14k barrier. People are talking about this milestone in the forum and drawing comparisons to 2008 which was the last dramatic -though brief- market correction.

Inventory is now 14,027 and growing at a faster rate than it was then, with interest rates at record lows and forecast to rise soon. On March 15th 2008 inventory was at 12,482 and grew to reach 12,851 by April 1st 2008. Listings continued to grow through that year until they reached a high of 20,542 on October 15th.

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New mortgage rules April 19th

The Pope — Tue, 16 Feb 2010 15:22:58 +0000

The Federal Government has just announced their anticipated changes to insured mortgage rules to prevent a Canadian housing bubble (which they see no evidence of yet).

The key changes are:

- borrowers must qualify for the 5 year rate even if they opt for a shorter term.

- on refinancing, the maximum amount of equity withdrawal is reduced from 95% to 90%.

- non owner occupied residences bought for speculation now require a 20% down payment.

More info in this Reuters article. There’s still time to buy (or sell) under the old rules, but you better hurry!

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