Category Archives: equity

Vancouver Flippers in Trouble

Some of you may recall various ‘flippers in trouble’ blogs during the US bust.

They were popular in California, Nevada and Miami.

These chronicled various sales or attempted sales of real estate that didn’t work out as a road to easy riches.

They were the Nelson laugh of the housing bear.

Well in case you missed it Vancouver now has it’s own version.

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Vancouver Flippers in Trouble chronicles local sales or listing prices that work out as a loss. Here’s what they say on their ‘about’ page:

A website dedicated to following the bursting of the Vancouver Real Estate bubble by documenting real-life losses on properties purchased during the bubble.

Know of any flippers in trouble? Enter the details in the comment section or in the contact form below and we’ll try to feature them on an upcoming post.

It’s not just the flippers either, sometimes those have held for a while look to be trying to squeak out without too much of a loss.

Like this place that six years later is asking $100k less than it was bought for, or this place in Spectrum that looks like it’s up for its second sale at a loss!

If you’re looking for the antidote to ‘real estate always goes up’ you’ll find it there!

Battlemap: My God, it’s full of blue.

VMD has updated his Vancouver Real Estate Battle Map.

Here’s the May 2013 SFH edition:

Now that tax season and vacations are over and done with, we head back to the Battlefield!

– Fraser River turned crimson with Bovine blood as the REBGV Bulls failed to defend their Last Stand in Coquitlam. The Bear Army pressed forward and took control of North Surrey for the first time in this War.

– The Bears diverted their main attack forces in Van West & Richmond to solidify control of outskirts such as West Van, Burnaby, Ladner, Poco & Tsawwassen.

– The following Bull Territories are facing imminent defeat: Surrey.

February 2013: The ‘underwater’ point.

Looks like statistics from last month are starting to show up now.

Over at the Vancouver Sun they’re leading with the headline stat that YOY sales are down almost 30%.

The REBGV Home Price Index (HPI) is now down 5.6%, which Aleksey points out means that people who bought last May with the minimum down payment are now ‘underwater’ on their mortgages.

It’s been quite a while since we’ve seen this happen, but we’re now at a point where a small number of recent Vancouver home buyers owe more for their property than their property is worth on the market.

How long till we see the term ‘underwater’ or ‘upside down’ when it comes to Vancouver mortgage holders in the news?

With sales and prices down, REBGV president Eugene Klein did find one market indicator that is up: Realtor anecdotes of visitors to open houses.

Sales in February followed recent trends and were below seasonal averages, though our members tell us they saw more traffic at open houses last month compared to the previous six to eight months.

Somebody should tell the Vancouver Observer so they can correct this article again: What does it mean when nobody shows up to an open house in Vancouver?

“Well, this is a bit odd.” The Realtor checks his phone again, but it’s not saying anything new.

It’s been an hour, and nobody has shown up to the open house. We’re standing on the ground floor of a townhouse.

The Downtown East Side, but it’s silent except for CBC Radio 3: classical music plays quietly from tiny, beautiful speakers that can probably only play classical music. Top-40 would cause them to implode.

The Realtor walks out the door, across the long, wide patio, to the front gate of the courtyard. He’s making sure his phone number is correct on the open-house announcement. It is.

A bright, sunny Saturday in Vancouver. Just after lunch, and there’s nobody here but us.

Is financing getting tougher for the self employed?

It seems that more and more Canadians are self employed.

The self employed tend to have less steady income then full time employees and as a group it can be more difficult to get a mortgage or refinancing.

As a self-employed website developer who had recently restructured his business, Greg Schmidt knew that refinancing his mortgage wasn’t going to be a piece of cake.

“I had a little bit of a line of credit built up from shifting the focus of the business and my car lease had come up for being bought out, so I needed money to take care of that,” said Mr. Schmidt, a single 42-year-old who owns a home in Toronto that includes an apartment for income. “It turned out the best way to go was to do a new mortgage, increase the amount of the old one and take care of those costs.”

However, when he approached his bank, he was told “the numbers didn’t work for them.”

Read the full article in the Globe and Mail.

Is Emili smart enough to know your house price?

Now that the Canadian housing bubble appears to be running out of steam we’re starting to hear concerns that automated appraisals have helped push prices up higher than they ought to be.

This article in the globe and mail was linked in fridays free-for-all post, but is worth a closer look.

Automated appraisals save time and money but have such a big margin of error that they are practically worthless.

Now people involved in lending are starting to worry about the fall out of relying too much on an automated system:

Introduced in 1996 as a way for the CMHC, banks and other lenders to quickly and inexpensively determine how much money can be lent against a residential property, the database known as Emili is relied upon too heavily by lenders, the documents suggest.

Emili is an automated system that uses figures such as recent sales of nearby homes to gauge values, without sending an actual appraiser to the address. However, the potential margin of error in calculations may pose significant problems. For home buyers, or homeowners with home-equity lines of credit, an inaccurate valuation by the database could allow them to overpay or borrow much too heavily for the home, industry members argue.

For banks, it could mean the collateral they have against the mortgage is not worth as much as believed.

Ooops!  But as a comforting side effect, it appears that appraisals that came in too high in a hot market did enable the CMHC to collect higher fees.  Read the full article here.