Category Archives: hype

Get a job.

Some people wonder how people make ends meet in a very expensive city with very low wages, but there’s plenty of economic opportunity beyond grow-ops, you just need take advantage of one our exceptional local specialties.

Of course you could go to the source of the money fountain and flip condos or become a realtor, but if you don’t have the time for a 6 week course here’s another opportunity: Condo Lineups.

If you can be the manikin who pretends to be very excited about a new local development you can earn $1800 in less than a week, that works out to about $15 an hour less expenses!

This tiny job posting speaks volumes about the Vancouver real estate market. Developers have convinced speculators that demand is so high, there’s enough room for the average person to make an extra few dollars flipping condos to regular folks. Now that regular folks aren’t fighting to buy pre-construction, this may be the first sign that speculative capital is drying up.

Read the full article over at better dwelling.com

Vancouver Down, Toronto Up.

House prices never go down in Vancouver, except when they do.

But what about Toronto? The city that seldom thinks about BC?

Prices are up 11.8 per cent from a year earlier.

“In fact, there’s anecdotal information that suggests that foreign investors … are now turning to other cities that are not as expensive as Vancouver, because even that market’s gotten out of reach for wealthy foreign buyers.”

A separate report from real estate agents showed a 2.4 per cent monthly rise in sales in October and a 14.6 per cent surge in annual prices as buyers rushed to get into the market before tighter mortgage rules could take effect.

Taken together, the data showed Canada’s market cooling in most markets outside of Toronto, where a building boom and rising household indebtedness have spurred fears of a U.S.-style collapse if borrowing costs, already rising, spike further.

“Almost all seems to be well in Canada’s housing market, with most regions enjoying moderate sales activity and price gains, Alberta’s hard-hit market stabilizing, and Vancouver’s zany market returning to earth,” Guatieri said in a research note.

“However, accelerating prices in Toronto and its surrounding areas will only increase the chance of a correction if interest rates rise too sharply … and the chance of that happening is now somewhat higher under a new U.S. president.”

Read the full article over at BNN.ca

Realtors warn of dramatic sales slump for September 2016

Do you feel like someone should have warned you that Vancouver real estate sales slumped dramatically in September? Well now you have been.

VANCOUVER — Real estate agents say home sales continued to fall dramatically in the Vancouver area last month and even hit a 10-year low in some neighbourhoods.

Agents say the high-end detached home market is seeing the most substantial losses, while the condominium and townhome market remains active.

The Real Estate Board of Greater Vancouver, which covers a large swath of Metro Vancouver but excludes several large suburbs including Surrey, is set to release its home sales data for the month of September tomorrow.

Read the full article over at the Vancouver Sun.

The ‘cry wolf’ club

There are a few organizations that have raised a public alarm over the state of the Canadian housing market, with particular focus on Toronto and Vancouver:

The IMF, The Bank of Canada, The Canadian Mortgage and Housing Corporation, The Office of the Superintendent of Financial Institutions, Most of the big banks, The OECD, and more.

It seems that everyone is freaking out about the Canadian housing market.

Despite industry assurances that the hottest housing markets in Canada, particularly Vancouver, will always remain hot, and that it is physically impossible for prices to decline in this miracle economy, Canadians are now becoming aware that those assurances have just been another load of industry hype. And a larger share of them are starting to grapple with a new reality – a reality in an over-leveraged, inflated housing market where prices have come to rest on the edge of a cliff.

In Vancouver’s once white-hot commercial real estate market, the hunt is now on for Chinese buyers as big institutional investors are trying to unload.

And yet, despite years of warnings here we are near record high house prices. If you bought a few years back and sold a month ago, you’ve done quite well.

So it seems we’re now entering another down phase, with reports of softening sales and prices, especially at the high end. The warnings are getting louder, but of course there are always people who propose that this market is different and will never truly crash.

Sometimes the number of warnings and lack of crash almost seems to prove it – Just like the boy who cried wolf, we start to get desensitized to all the warnings.  Unfortunately for some of the villagers we all know how that story ends.

Vancouver Market Summary so far for August 2016

yvr2zrh wrote a good summary of what the market looks like currently, how media headlines can get it wrong and where we might go from here:

With about 9 market days remaining in the month, we can start to look forward to how the month will end up. During the past two weeks, we have seen so many numbers in the media which highlights not only is the market falling but also that the intricacies of the underlying data are not well-understood by so many people.

The message (although correct in that the market is bad) is so poorly explained and supported and thus the true state of the market is not clear to people. So – here is the summary of what is really happening.

1.) Sales volumes will be down around 25% for unit sales but 33% for dollar volume. My model predicts a 10% decrease in condo sales (which is not much).
2.) The decrease in average price across the entire market is driven primarily by mix at this stage. It is not known how much is driven by actual price movement. Likely little so far.
3. ) Detached home sales are down significantly. This is likely more than a 50% decrease from July volumes and could be more than 65% down from August 2015.
4.) It is not clear what the benchmark price will do but we would expect that the condo price is probably almost unchanged. This market is mainly suffering from supply issues which will take time to resolve. Detached benchmarks are likely to fall in the higher-priced markets. The reason is that there will be buyers but only low-ball buyers testing sellers.
5.) The stats will be partially supported by the month-end date cutoff issues at REBGV. They report sales based on the date they get paperwork. Many of the sales recorded to beat the tax will actually show as an August sale, while they are actually July sales. Since these are from a period with a “different regulatory and tax framework” they are not really comparable and should perhaps be shown separately for accuracy purposes.
6.) Inventory will be up a bit but we still have a supply shortage in condos. Detached house MOI will increase to 10 or more.

Ultimately, this tax is taking money out at the top. It will take a couple months to see how it all plays out but the top of the market will now need to rely on move-up buyers and bona fide immigrants who are permanent residents.

We can already see the headlines coming but some of the intricacies of the stats will not really be understood.

I also have some stories from the front lines which I will get more info on next month and then write a more detailed update.

And – let’s try to keep the discussion on topic as much as possible – we have started to waiver a bit in the past few weeks.

Posted by yvr2zrh on Friday August 19th 2016 in the comments section.