Vancouver Condo Info

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!

The Vancouver Sun is spreading the news: July sales in the Lower Mainland lept up.  Prices in Vancouver and the Fraser Valley are still lower than they were a year ago, but a large number of first time buyers are said to be moving into the market:

Lured by the correction in home prices and low mortgage rates, first-timers are jumping into buy in numbers that are now rippling across the market as evidenced in July with record numbers of sales for the month in both Metro Vancouver and the Fraser Valley.

Proof that it’s different here?  Or are these people looking forward to the same disappointment many in the US are experiencing?

Tsur Somerville, a real estate expert in the Sauder School of Business at the University of B.C. said there are signs of more stability in the overall economy, but it is difficult to see the pace of sales continuing at such peak levels.

“This is a very, very high level, and [long-term mortgage] interest rates have already started creeping up,” Somerville, director of the centre for urban economics and real estate at the Sauder School of Business said.

“It’s a wonderful, positive statement about people’s outlook for where things are going,” he added, “but it’s hard to put together the set of circumstances where sales of this level are sustainable and persistent.”

Tsur also says he doesn’t expect prices to turn around and plunge without a substantial change in rates.

Full article in The Sun.

Laid off? Downsized? Turn that frown upside down with the latest hit buzzword in this recession: FUNEMPLOYMENT!

What is funemployment?  Why that’s the positive way to look at losing your job.  It’s not just a downturn, it’s an oppourtunity!  (Just don’t try this at home with a onerous debt load).

But out of the smoldering ashes of lost jobs, a burgeoning scene of independent, arts-loving entrepreneurs are turning unemployment on its head and ushering in a new era of “funemployment.” The term became an overnight viral sensation thanks to a widely-circulated June 3 article in San Francisco’s SF Weekly, chronicling the experiences of recently laid-off people who were collecting unemployment benefits and using their newfound time to reassess their career goals, and then launch their own creative businesses.

With the proverbial pink slips piling up and EI lines wrapping around city blocks, more and more Vancouverites are facing similar challenges, leading to our very own funemployment phenomenon.

Full article in this weeks Westender.

RE/Max has just released a report that the Vancouver housing market is surging – I think the gist is that NOW is a FANTASTIC time to buy the product that they are selling.

According to the report, the surge in resale activity can be attributed to three key factors: pent-up demand, low interest rates and greater affordability. “The combination — in conjunction with declining inventory levels — has created heated market conditions in hot pocket neighbourhoods, prompting a resurgence in multiple offers in June. Average prices are holding steady or climbing, days on market are down, and inventory levels continue to tighten, especially at entry-level price points.”

The report stated that while average price is still significantly lower than a year ago, declining inventory levels have been placing greater upward pressure on values.

“First-time buyers are driving freehold housing sales at the $600,000 price point, while those looking at more affordable alternatives are considering condominiums starting at substantially less,” the report said. “Pent-up demand has also been building, with local purchasers and international investors both active in the market.”

I believe this blog and its readers are an example of ‘pent up demand’. Anyone out there bought a house or condo recently?

Remember all that talk about how Canadian Banks were the envy of the world?  Well it turns out to be maybe not so true, at least according to a ranking by The Banker magazine.  No Canadian bank made it into the top 30 banks in the world in terms of capitol strength.  Our friends at CIBC did however manage to make the list of banks with the worst losses, coming in at number 15.

The bank posted losses of C$1.46-billion and C$1.1-billion in the first two quarters of 2008 alone as CIBC took the brunt of the U.S. credit crunch.

The bank did come in 71st in the overall rankings, down two spots from last year.

Still, CIBC’s losses pale in comparison with the mammoth US$59.3-billion shortfall suffered by the Royal Bank of Scotland that landed it the dubious honour of top spot on the list.

Rounding out the top three is a pair of American banks, with Citigroup down US$53-billion and Wells Fargo & Co. close behind at US$47.8-billion.

Well, you know what they say: Flaherty will get you nowhere.

Juraj sent in this link to a suprisingly negative travel review of Vancouver by a Frommers travel guide writer.  I’m just going to quote the whole paragraph so that no one can accuse me of taking parts out of context and making it appear worse than it is:

Vancouver. “Blandcouver” looks great on TV, where it often masquerades as other, more interesting cities. This Canadian metropolis is indeed like many other places, just duller. I actually heard a Vancouverite call their city “diverse” and “cosmopolitan” when what they mean is “we have some Chinese people as well as the Anglo-Canadians.” Anyone who thinks Vancouver is cosmopolitan has never been south or east of Portland. Most of Vancouver’s other attributes, meanwhile, are seen in better form in either Portland, Seattle, or San Francisco. Spend your time in Victoria instead, or Whistler, or, heck, Nanaimo. If you insist upon going, try our much more enthusiastic destination guide.