Vancouver Condo Info

The latest issue of Business BC is all about the property market rebound and they focus on 5 ‘hot pockets‘ to watch for and invest in for 2010.

What goes down in B.C. real estate must, apparently, come up. And quickly: by the end of 2009, the average home price in the province had risen to $463,000, back to where it was in 2007. Interest rates are, at least for now, at record lows, and increasing consumer confidence has spurred the market’s recovery beyond expectations. Barring the usual unforeseeable mayhem, things are looking good.

Just for fun, let’s see if we can predict which of those five markets will do best by January 2011.  Below are the BC markets they focus on, vote for the one you think will have the best percentage return by the end of 2010.  In the event of a housing market crash, best performance would be the market that lost the least amount of value.

 Loading ...

You know how when company is coming you shove everything into closets and close the door, pretending that the mess doesn’t exist?  Well some busybodies have been opening up our closed doors instead of just enjoying the fruit punch:

VANCOUVER, British Columbia – Five blocks away from the venue for Vancouver’s Olympic opening ceremonies, four grizzled addicts huddle in the rain, injecting themselves with heroin behind a trash bin.

Welcome to Downtown Eastside. Here, life is gritty, volatile and the slightest misstep can invite brutal retaliation.

“It’s a jungle,” said Glen, a 49-year-old heroin addict who goes by the street name Trouble. “You want to get out of here.”

That’s from an article over at MSNBC, and it doesn’t really improve after that:

As Vancouver prepares for the Olympics and the descent of the world’s media, the Downtown Eastside remains a huge problem — 15 square blocks of despair, squalid rooming houses and alleys populated by thousands of addicts, the homeless, the mentally ill and the drug dealers who prey on them.

This neighborhood is the most concentrated drug and poverty ghetto in North America, with high use of heroin, cocaine and methamphetamine, according to criminologist Benedikt Fischer of Simon Fraser University. It’s also the only place in North America where drug addicts can shoot heroin into their veins at an officially sanctioned injection site.

Now why would a US news outlet want to make our city look bad?  I have a theory.  MSNBC is a joint venture between Microsoft and NBC.  I suspect that Bill Gates is jealous of our property values, particularly since the Seattle market has dropped so much, and he’s pulling some strings to make us look bad.  Everyone who lives here knows you don’t go down to Main and Hastings unless you want to score some junk or catch a hot new disease, so what’s the big deal?

Well that theory explains the yanks anyways, but what’s with the British?  They’re taking their potshots too, and we’re supposed to be on the same side!  We’re part of the commonwealth!  We’ve got the queen on our currency!

Conservative estimates now speculate that the games will cost upwards of $6bn, with little chance of a return. This titanic act of fiscal malfeasance includes a security force that was originally budgeted at $175m, but has since inflated to $900m. With more than 15,000 members, it’s the largest military presence seen in western Canada since the end of the second world war, an appropriate measure only if one imagines al-Qaida are set to descend from the slopes on C2-strapped snowboards. With a police officer on every corner and military helicopters buzzing overhead, Vancouver looks more like post-war Berlin than an Olympic wonderland.

That’s from the Guardian article Vancouver’s Olympics are heading for disaster.  You know what I think?  I think everybody is just jealous.

Thanks to G and jjss for the links!

According to this article on househunting.ca, the Canadian desire to own a home was the key to the quick recovery in the real estate market.

“While low interest rates were a principal factor driving home-buying activity, no one can discount the value that Canadians place in owning a home,” says Polzler.

Because of the increase in first-timer interest, the real estate industry was able to shrug off initial forecasts of a totally bleak year.

By the time the year-end national tally is complete — something that should come in the next week or so — 465,000 homes will likely have changed hands in 2009 in Canada, a seven-per-cent increase over 2008, predicts a Re/Max report.

“Some of the greatest percentage gains were reported in Western Canadian markets in 2009, demonstrating the higher the peak, the lower the valley,” says Elton Ash, executive vice-president of Re/Max of Western Canada.

“That said, the recession barely registered on year-over-year activity in most major centres — and the economic fundamentals in place going forward ideally positions the 10 provinces and the sector overall for further growth.”

“While low interest rates were a principal factor driving home-buying activity, no one can discount the value that Canadians place in owning a home,” says Polzler.

Because of the increase in first-timer interest, the real estate industry was able to shrug off initial forecasts of a totally bleak year.

By the time the year-end national tally is complete — something that should come in the next week or so — 465,000 homes will likely have changed hands in 2009 in Canada, a seven-per-cent increase over 2008, predicts a Re/Max report.

“Some of the greatest percentage gains were reported in Western Canadian markets in 2009, demonstrating the higher the peak, the lower the valley,” says Elton Ash, executive vice-president of Re/Max of Western Canada.

“That said, the recession barely registered on year-over-year activity in most major centres — and the economic fundamentals in place going forward ideally positions the 10 provinces and the sector overall for further growth.”

The higher the peak, the lower the valley?

This article is a few days old, but still interesting and worth discussing.  It seems that if you haven’t rented out your home or condo yet for the winter games, you may be facing a lot of competition and have to ramp down your expectations of getting rich off the games.

Metro Vancouver homeowners desperate to rent their properties to Olympic Games visitors have scaled back their golden expectations.

An abundance of Games-time accommodation rental options has forced asking prices down and increased the likelihood that many properties won’t attract any Olympic renters.

“Don’t base your food budget on the prospect of renting your home,” said Mark Szekely, site administrator for listing service rent2010.net. “It’s still a realistic possibility but if you’re outside downtown Vancouver or Whistler, you might not find a renter. It’s an oversupplied market.”

Anyone out there subletting their owned or rented house or apartment for the games (or trying to)?

The Chinese economy is on fire, with some calling it healthy growth and some calling it a bubble,  particularly in the Real Estate market where a building boom has coincided with rapidly rising prices.  Property prices in Beijing are now higher than in Dubai, despite the latter having a higher per capita income.  So when it comes to China and its relation to the global economy are we talking ‘Noahs Ark’ or ‘Titanic’?

Speaking of Dubai, here’s a dubious but interesting theory: The Skyscraper Index proposes that the nation with the worlds tallest building suffers an economic downturn sometime around its opening.  The worlds tallest building is now opening in Dubai, where some property values have dropped in half over the last year as their debt ridden economy falters.  Previous record breaking buildings have been the Empire State Building (US Great Depression), Sears Tower (70’s stagflation) and the Petronas tower in Kuala Lumpur (East Asian global financial crisis).

The next record breaking building is set to be the Shanghai Tower which is scheduled to open in 2014.

Yessir, the good old days are back in the Vancouver condo presales market and the Province has the news.  This weekend buyers lined up in the rain, some reportedly sleeping on the street over night to get a chance to buy a presales contract.  The development located at Pacific and Seymour is set to be completed in 2013, and is called ‘The Mark‘.

I am NOT making that up.

Mayur Arora, who told The Province he hoped to land a top-floor unit, and his realtor K.D. Dhaliwal, said location and scarcity make the site an attractive investment.

“I’m here because they are selling Yaletown at today’s prices, but the speculation is [that] prices will go up after the Olympics,” Arora said.

Here’s an open challenge: can anyone tell me how many host cities saw real estate prices rise after the Winter Olympics vs. those that saw prices rise before hosting and fall afterward?

Steve Dhana was amazed by speculator interest as he watched investors rushing to place bids on units.

“The prices went up $50,000 last night,” Dhana said. He hoped to buy a unit in the $500,000 price-range, and also expected prices to surge in February 2010.

Well now, with prices going up at a rate of $50k a night how can you lose?

Hat-tip to Donald for the link.

Rock bottom interest rates are working their magic as real estate sales leap up to record levels. Was that the shortest correction ever? Even as unemployment levels creep up, house sales are brisk and prices are rising, leading some to believe we’re in a housing bubble.  Scotia Capitol is the latest to use the ‘B’ word in public:

“Is Canada in a housing bubble? Probably, but low rates, mortgage innovation and a relative shortage of new supply are likely to keep it going for a while yet,” Scotia Capital analysts wrote in a report.

And as CREA economist Gregory Klump points out, when it comes to people losing their jobs it’s more of a glass-half-full scenario:

“If we have 10-per cent-unemployment, that means 90 per cent of people are employed,” he said. “People are re-entering the market – they have the confidence to take advantage of bargain-basement prices. There’s been a release of pent-up demand, and that has a long time to play out. Prices have gone as low as they are going to go.”

Whatever is in that glass, it’s working.  Sales in BC hit record levels in October.  And every real estate sales organization and mortgage broker seems to think that it should pretty much carry on indefinitely, and this enthusiasm seems to have been absorbed by the population in general:

According to the CAAMP report, Canadians are increasingly confident that the value of their homes is rising and optimistic about their local housing markets. It also said that the Canadian mortgage market is rebounding and will surpass the $1 trillion mark in 2010.

Scotia Capitol economist Derek Holt points out the obvious when it comes to record low interest rates:

Mr. Holt expects the average mortgage to creep toward 5 per cent within three years, which could mean hundreds of dollars more a month for the average mortgage holder.

For example, a five-year variable rate mortgage at 2.25 per cent on $300,000 would carry a monthly payment of about $1,300, assuming a 25-year amortization period. A move to 5 per cent would boost the payment to $1,750.

“I think that causes a slight pullback on prices,” he said. “Right now, you have conditions that only come around once in a century and it can’t stay that way forever.”

But it’s not like Canadians aren’t used to dealing with heavy debt loads, and we have a distinctly Canadian way of dealing with debt-based money problems: more debt.

Ottawa is going to extend their $125 Billion* mortgage buy-back program because it makes everyone happy.

The banking industry has been pressing the Finance Minister to extend the length of the program because they continue to benefit from it and because there is still the possibility that liquidity pressures could re-emerge.

The move comes amid a global debate among political leaders, central bankers and economists about when to scale back various measures that have been put in place to boost the flow of credit and stimulate economies.

This news has caused the soothsayers at RE/MAX to wriggle with excitement and predict ‘significant growth‘ for Canadian real estate markets in the final quarter of this year. From a press release reprinted as an article in the Globe and Mail:

“While there may still be some challenges down the road, the worst is definitely behind us in the housing industry,” Elton Ash, executive vice-president of the firm’s Western Canada region said in releasing a report on Canadian home sales and prices.

“The bounce-back that began in early spring has made this recession one of the shortest on record for real estate,” the firm said in its report. “Low interest rates, pent-up demand, and improved affordability levels have all played a role in the recovery now under way,” Re/Max said.

*Corrected. Several people pointed out my $125 million error.

From the Vancouver Sun: Home sales this August were up 117% from last year.  Things were certainly booming again this summer, the Vancouver real estate market appears to defy all common sense.  Something in the water? A rush to beat the HST?  A huge underground economy?  Or are things just different here, this time?

“Canada’s housing market has taken its cue more from the Great Houdini than the bear (economist Noriel) Roubini, fully escaping from the clutches of a potentially lengthy, harsh downturn,” said BMO Capital Markets deputy chief economist Doug Porter.

“Record-low borrowing costs combined with the growing realization that the economic storm is passing have fuelled the remarkable turnaround. However, the gaudy sales growth will be tough to maintain now that prices are moving higher again.”

Resale activity rose from year-ago levels in about three quarters of local markets. Year-over-year gains of 117 per cent in Vancouver, 27 per cent in Toronto, 17 per cent in Calgary, and nine per cent in Montreal contributed most to the national increase in activity.

Well, there you have it.  Mr. Porter has declared the good news: we’ve fully escaped from the clutches of a potentially lengthy, harsh downturn.  Now we have nowhere to go but up!

Time to capitulate?

This column in the Financial Post argues that you should BUY NOW because the HST is coming and will drive prices up.

Economist Benjamin Tal, of CIBC World Markets, predicts the tax will have an impact on housing sales. “It’s not like something you can brush under the carpet,” says Mr. Tal. “There will be reduced demand.” He predicts the industry will build more houses without all the finishings. That will leave the consumer to do work on the black market with contractors to avoid the HST. That’s what happened in the Maritimes where the HST has been in play for years, said Mr. Tal.

“This will give a boost to the under-the-table transactions. Is that an optimum thing?” says Mr. Tal.

It’s no wonder British Columbia’s housing industry is fighting the HST tooth and nail. It’s not interested in the Ontario compromise of an exemption on the first $400,000 of a home. B.C.

will provide a $20,000 tax break on the first $400,000 of a purchase, the amount being lower because the province has a 7% sales tax.

“There is no single family home here you can buy at that price,” says Peter Simpson, chief executive of the Greater Vancouver Home Builders’ Association.

Could higher taxes lead to higher demand and higher prices?  If only they had the foresight to enact this policy in Las Vegas they could have prevented house prices from dropping in half!