1: So where are you from?
2: Vancouver, BC
1: That’s in Canada right? Do you guys have the really tall tower?
2: You mean the CN tower? no, thats Toronto.
1: Oh.
1: Which is taller that one or the one in Seattle?
Don’t let anyone tell you Vancouver isn’t special - According to this article in Forbes we’ve got the 6th most overpriced real estate in the world!
The rankings were compiled by calculating an effective annualized rate of return on a property based on annual cash flows derived from renting and adjusted for capital gains tax, transaction fees, operating costs and maintenance, appreciation and inflation. We then flipped the return rate to resemble the more familiar price-to-earnings (P/E) measure.
…Representing North America in the world’s top 10 were Los Angeles (5th place at 26.88) and Vancouver (6th at 26.81).
Thats a .07 difference between us and LA, almost seems like a currency fluctation could switch up those places and give us the coveted title of MOST OVERPRICED real estate in North America!
And tell us Forbes, why does the relationship between rental yields and housing costs matter?
The relationship between rental yields and housing costs matters because a low rental yield is a good indication of a stretched market–one that has a bubble–since these markets are more likely to face downward price pressures or grow at a slower rate.
Things aren’t quite looking up state-side yet: Countrywide Financial is starting to layoff employees and Capitol One is closing its mortgage unit, but things are certainly different up here.
The Canadian Real Estate Association has just announced that its product will sell very well this year predicting record home sales for 2007.
Klump said the home-financing market in the U.S. and in Canada are completely different.
“(Canadians) have to pass tighter credit standards in order to get home-mortgage financing,” Klump said. “So, there’s no unwinding in Canada as there has been in the States.”
Its good to know that here in Canada we’ve got higher standards for our No-Doc zero-down Neg-am 40 year specu-vestor mortgages.
Sounds like a tourist got stuck staying near the downtown eastside.. From todays Star Phoenix:
Somewhat less beautiful is Vancouver. We stayed this time on the periphery of the city’s notorious Downtown Eastside, where the beggars and crackheads roam. Crack addicts are easy to distinguish from the other vagabonds. They’re constantly scanning the sidewalk around their feet, as if looking for cigarette butts. That’s what I thought at first they were doing. But no. What they’re really looking for is crumbs of crack that some careless addict might have dropped in the night. Any little bit of white detritus, they pick up, carefully examine and then discard. This is how they spend their days. I was reminded of the zombies in George Romero’s Living Dead films.
The entire review isn’t that bad - Despite its rotten core Vancouver is ranked by that visitor as among the greatest cities, and they really enjoyed Quadra Island.
There’s interesting commentary in the Globe and Mail about Vancouver’s obsession with real estate. The author Timothy Taylor proposes new benchmarks for tracking the market:
The last, and arguably most important, statistic we should have is what I like to think of as the personal humiliation sustainability index. This number would be derived by dividing the value of the house itself by the tax assessed value of the house and property. The crazier the market, the tinier this number becomes, as the structure itself, the thing you were planning to live in, disappears into financial irrelevance.
To illustrate, I went to see a place recently and the agent proudly showed me the tax assessment proving the value of the land. Looking over his shoulder, however, that allowed me to value the actual physical structure at about 9 per cent of the asking price. He was selling dirt, folks. A few metres of turf and a rhododendron. And he was smiling.
Reductimat sent in a link to this article on News1130 about the recent Angus Reid poll on home prices. I don’t think I’ve ever seen an article that lays down so many giant day-glow dots and then refuses to connect them. From the photo of several condo towers under construction downtown (supply) to the demand side economics “three-quarters of current home owners say they could not afford the prices currently being charged for real estate in their neighbourhood.”
Its tough to pick the best gem from this brief article, but I like this paragraph :
Lucas Marshall from Angus Reid says waiting could cost you even more money. “It’s dangerous…chances are prices aren’t going to be more favourable, and most people who do own homes say they’re very lucky they got in when they did.” In fact, 95% of current owners who took part in the survey said they’re happy they bought when they did.
Are you kidding me? How many people holding an asset that’s shot up in value are going to be unhappy with their purchase? 5 percent apparently. And since when did past performance create any sort of guarantee for future results?
Lucas says the overall message from the survey is do your best to buy now because prices are not likely to drop.
So when was the last time a poll indicated a price drop, and if we reach the point were %100 percent of owners couldn’t afford the house they’re living in at current prices where are we going to find buyers? The move-down crowd?
Looking for a condo? Looking for a condo previously owned by Axl Rose? This could be the one for you!
Vancouverites may be getting used to house prices that break the $1-million mark, but a new condo listed this week proves that the sky’s the limit when it comes to luxury living. The penthouse apartment at 1000 Beach Ave. is on the market for a cool $18.2-million.
Situated downtown at the northeast corner of the Burrard Bridge, right on the Seawall, the property has never been lived in - former owners reportedly include Axl Rose, front man for rock group Guns N’ Roses, and the Russian Rocket himself, Canucks star Pavel Bure. Until the current owner, a low-profile, White Rock-based businessman, took possession in 2004 (for an estimated $7-million), it was an empty concrete shell. Nevertheless, it’s proved a remarkable investment.
Congratulations Vancouver!
I wondered aloud on the previous post whether Vancouver had taken the crown of ‘least affordable’ in North America yet - Well I don’t know about the GVRD, but according to Century 21 our downtown peninsula now has the most expensive real estate of all downtown neighborhoods in North America.
Not only are we number one in North America according to this report, we’ve got the fourth most expensive downtown core in the world! Coming in at $577 per square foot Vancouver ranks only behind Paris, Moscow and Seol for the most expensive downtown real estate on the planet. We’ve got London beat and those sad little towns of Tokyo and New York City only come in as number 9 & 8 on the most expensive cities list.
Can we do better? Is there any reason that our thriving metropolis shouldn’t be number one on that list?
Here’s the story in the Calgary Sun and here’s a bullish version of the story on news blaze.
So it looks like its not just first-time home buyers that have it hard in this real estate boom - Developers are seeing rough times as well. Look at CB developments for example, they recently had to cancel all buyer contracts on their coquitlam housing development due for completion April 2006 since they could make more money by reselling them today. CTV has an article about a disappointed buyer that was all ready to move into his new house:
However, he was told by the developer that at current prices, there was no way the company could break even by selling the homes for the original price.
CB Development’s operator, Craig Lochhead, said “that the only choice that they had was to sever the contracts with all the existing homes and re-list the homes at current market value,” said Bulat.
Bulat was also told that he would not be given the rights of first refusal — meaning he’d have to compete with other buyers to repurchase his home.
So now the original buyers have to look for new homes and the developer has to look for new buyers. And if that wasn’t bad enough it sounds like this whole thing is really going to cut into the developers family time as well, since his wife is the real estate agent listed to sell these homes the second time around. Its tough all over!
David Lereah - the head economist for the National Association of Realtors in the US is stepping down to take a job with an online real estate service. So far his sunny outlook on the US housing market has failed to be reflected in reality with foreclosures up, inventory up and prices down in many many markets. He’s been accused of ‘cheerleading’ the US market and dubbed ‘David Liar-ah’ by bloggers who feel his reports have been biased and misleading.
The economist who prodded investors into the U.S. housing boom and has been skewered by bloggers during the bust is leaving a top real estate trade association, the group said Monday.David Lereah, the author of “Are You Missing the Real Estate Boom?” will leave the the National Association of Realtors by the middle of next month after serving as the head economist for seven years, a spokesman said.
Lereah was the Realtors’ analyst through the five-year run-up in home values that ended in 2005, and he has continued to deliver the group’s outlook through the current downturn.
Here’s a link to the full article about the ‘anti-chicken-little’ lereah on CNN.