Vancouver Condo Info

Over at the CBC they’re talking about the expectations of lower sales across Canada, but a magic kind of lower sales that doesn’t really lead to much in the way of price drops:

“It comes down to the different psychology that exists between buyers and sellers. Buyers are very quick to adjust to a down market and sellers are very slow to adjust to a down market. Sellers stubbornly hold onto their perception of what their home is worth, whereas buyers turn on a dime.”

Soper expects to see sales decline dramatically from last July’s near-record activity, but predicts there will be little change in home prices when the Canadian Real Estate Association releases its monthly sales figures Monday.

Seasonally adjusted home sales fell 8.2 per cent in June from the month before and shrunk 19.7 per cent compared to June 2009. However, the average Canadian home price sat at $342,662 compared to $326,689 in 2009.

“You would think prices would come down more rapidly given the drop in sales,” said Sal Guatieri, senior economist with BMO Capital Markets.

Guatieri expects to see as much as a 35 per cent year-over-year drop in July home sales. He projects monthly sales figures will be around 32,600 homes, which would represent the weakest July since 2001. However, he says price increases will weaken just slightly, and only because they were so high last year.

“It’s only in a so-called buyers’ market, where there are lot more listings on the market than sales, that buyers have some bargaining power and sellers are more willing to ease up on price, that we would see prices actually falling,” he said.

Both Jimmy and Patriotz pointed out this story: real estate markets around the globe are slumping once again, but the change is most dramatic in Canada.

Canada led in the global housing recovery in the first quarter of 2010, but moderating global growth, heightened financial market volatility and sluggish job creation have led to a “dramatic” slowdown in Canada, according to the Global Real Estate Trends report released Tuesday from Scotia Economics.

“Global real estate markets entered 2010 with a renewed sense of optimism, piggybacking on the broader economic recovery underway,” Adrienne Warren, senior economist at Scotia Economics said in the report. “Housing demand and pricing improved in the first quarter of the year in the majority of the advanced nations we track, benefiting from ultralow interest rates, improved affordability, and in some cases, government purchase incentives.”

Australia and Canada, with inflation-adjusted average home prices rising at double-digit rates, led the pack, echoing their relatively favourable employment and lending conditions. Sweden, Switzerland and the U.K. also saw home price increases, while U.S. and French markets reported small declines.

..of course that ‘most dramatic’ change in Canada means the gains are a lot smaller than they used to be, here in Vancouver we’re just starting to see small losses – mostly less than 5% so far.

ReadytoPop posted a link to this Financial Post article that portrays what it looks like when a real estate bet turns bad:

Erica and Jeff Manger never thought the price of their house could drop.

The Alberta couple bought a condominium in the Rockies resort town of Canmore three years ago and when they decided to move in 2008 to Sylvan Lake in Alberta, where they could afford a detached home, they kept the condo as an investment.

“It never occurred to us that we wouldn’t be able to sell for what we paid,” says Ms. Manger. “People were making $100,000 [on paper] a year on their condos.”

Now they’d be lucky to get the $315,000 they paid for their condo, even though it may have fetched $345,000 in 2008 when they were thinking about selling it to help pay for their new home. Instead, they’re getting $1,100 a month in rent for an investment that costs them $1,800 a month to carry and isn’t going up in value.

It gets worse. They have to sell the house in Sylvan Lake because Jeff, who is a helicopter pilot, is looking for a better location for work. They paid $375,000 for the house and fixed it up. Not even counting Jeff’s labour, the couple spent another $30,000 on supplies.

“We tried to sell it and put it up for $409,000. We lowered it to $385,000 when we hired a realtor, but that didn’t work,” says Ms. Manger.

Read the full article over at the Financial Post

The hot summer is not so hot for the Vancouver real estate market which seems to be withering on the vine. July saw the third month of price declines that started at the April peak. If this keeps up how much longer will we be able to hold on to our coveted ‘most overpriced real estate in North America’ status?

Here’s the story in the Sun: Sales plummet in July

Lower Mainland real estate markets saw their slowest or near slowest July in a decade, the region’s real estate boards reported Wednesday, with sales down by almost half from July 2009’s red-hot markets and prices slipping from the previous month’s levels.

Here’s the Globe and Mail: Vancouver Homes Market goes cold

And there’s a lot of supply on the market, threatening to pull prices lower, with inventory levels 33 per cent higher than this time last year, according to the Real Estate Board of Greater Vancouver.

“With the pace of home sales and listings easing off in our market, we’ve begun to see a levelling of home prices from the record highs seen in the spring, creating greater affordability,” said Jake Moldowan, the board’s president. “Activity in today’s marketplace is clearly trending in favour of buyers.”

Here’s the PDF stats package and Crashcow rounded up the following list of benchmark price slippage since April:

Residential (GVRD)
Greater Vancouver: -3%

DETACHED
Greater Vancouver: -3%
Burnaby: -2%
Coquitlam: -5%
Maple Ridge: -3%
New Westminster: 3%
North Vancouver: -3%
Pitt Meadows: -7%
Port Coquitlam: -7%
Port Moody: -3%
Richmond: -3%
South Delta: -5%
Vancouver East: -3%
Vancouver West: -4%
West Vancouver: -3%

ATTACHED
Greater Vancouver: -2%
Burnaby: 0%
Coquitlam: -5%
Maple Ridge & Pitt Meadows: -2%
North Vancouver: -4%
Port Coquitlam: 0%
Port Moody: -6%
Richmond: 1%
South Delta: -1%
Vancouver East: -8%
Vancouver West: -4%

APARTMENT
Greater Vancouver: -2%
Burnaby: -2%
Coquitlam: 0%
Maple Ridge & Pitt Meadows: -2%
New Westminster: -3%
North Vancouver: -2%
Port Coquitlam: -1%
Port Moody: 0%
Richmond: 0%
South Delta: -2%
Vancouver East: -5%
Vancouver West: -3%
West Vancouver: -12%

Last month we showed you what kind of car you could get for the monthly drop in benchmark house prices in some Vancouver neighborhoods.  Along a similar theme, reader Avatar points out this round up of 8 condos in the US that cost less than a new car. This one bedroom 770 sq foot condo in Florida is going for $25k:

The condo is spacious and has a half bath, a screened porch, wood floors and is in move-in condition, according to agent Jana Brittenum of Keyes Real Estate. The corner location in the complex gives it nice garden views.

The condo community has good recreational facilities with a swimming pool, clubhouse and exercise area, but maintenance charges are a modest $180 a month.

The last time the unit sold was in 2005 when it went for $115,000. Why so inexpensive now? For one thing, it’s a short sale, which the lender will have to approve. Also, the condo association’s bylaws prohibit renters, so any buyers would have to want to live there.

See the Full article at CNN.com

Local developer Ian Gillespie is experimenting with the idea of building a downtown condo that is affordable to a couple making minimum wage. The tower would be located on Cordova between Gastown and the Downtown Eastside. To keep costs down it will feature simple finishes, no parking, and owners would do their own maintenance instead of paying strata fees to cover repairs. To try to keep out speculators and flippers they will require the units to be owner occupied.

The 108-unit project is a collaboration involving Vancity credit union, Habitat for Humanity and a Downtown Eastside housing group. Habitat will get four condos suitable for families in the building and will choose who gets them. Another eight units, to be managed by the PHS housing society, will go to local community workers.

The remaining 96 condos will go to buyers who will have to prove that they plan to live in the units and who agree to do some maintenance themselves instead of just paying standard condo-maintenance fees. According to the material submitted to the city, nearly three-quarters of the condos will sell for less than $300,000, and more than half will be affordable to people making between $29,000 and $36,000 a year. That’s the income of an individual earning $15-$19 an hour, or a couple in which each partner makes the $8-an-hour minimum wage.

One interesting point: one of the reasons they can build this condo development for cheaper is because the land got cheaper:

The land, previously owned by developer Robert Wilson, was repossessed by Vancity last year. He had purchased it for $7.9-million in July, 2007, shortly before the city’s real-estate market deflated. It’s now assessed at $5.4-million.

Read the full article in the Globe and Mail.

The boom has gone bust inland and we’re starting to see more and more of these news stories about it.  Jimmy pointed out this link to some coverage over at news 1330:

Advertised prices on many new developments are down between 20 and 30 per cent, six-figure savings in some cases. And if you really hunt, developer Matthew Hay says deeper discounts can be had.

He says too much inventory was built up before the recession hit, and the newly imposed Harmonized Sales Tax is not helping the market either. “So now not only is there a surplus of product on the market, but you’ve got a whole buyer demographic that is nervous, cautious, sitting on their wallets, waiting to see how things shake out.”

Some of the developers are offering incentives on top of the discounts like covering the HST, or the GST. Hay says some developers are desperate to sell and that is putting downward pressure on the Okanagan market.

Like that battery-marketing bunny, the leaky condo crisis keeps going and going.

Owners in a 71-unit building in Cloverdale say their builder repaired some leak problems a few years ago. At the time, the work was covered by warranty.

But recent testing found moisture in the building’s walls, and homeowners learned that they would be hit with a bill of about $45,000.

For some owners, that was too much to handle, and they just walked away. Eight owners have yet to come up with the necessary cash.

“They’re going to be foreclosing. I have until the end of December to come up with any monies,” owner Shirley Hall said. “I guess I have to walk away from it.”

The building was built in the 90s, at the height of the leaky condo crisis. For 11 years, the province gave interest-free loans to those facing massive repair bills.

A 2008 report done for the government said that after 2012, anywhere from 14,000 to 24,000 leaky condos would still near repairs, and that the demand for loans would be high until 2017.

..but as you all know, that interest free leaky condo repair loan program has been axed.  Housing minister Rich Coleman suggests taking out equity to pay for repairs saying “Even seniors can get reverse mortgages — they’re pretty economical”.

Hat-tip to Bizznitch for the link.

Clearly the US could use a little Vancouverism.  They don’t seem to understand that the exciting and nebulous ‘wealthy foreigner’ concept should be enough to drive a housing market to new highs, not rescue it from new lows.   Perhaps the problem is that they have actual data on the impact of foreign buyers, instead of relying on vague hype from realtors:

Their purchases accounted for 4.6 percent of the residential market, or about $41.7 billion worth of US property from April 2009 through March 2010. That’s up from the 4.2 percent ($38.8 billion) of the residential market purchased by international buyers in 2008-2009. About 28 percent of American realtors reported having one international client this year, as opposed to 23 percent the year before, according to the report.

Many international buyers cited the emerging economic recovery as a driving force to buy, and most saw the US as a desirable location to own a home. A majority of international buyers purchased homes in regions most impacted by the housing bubble — including Florida, California and Nevada — perhaps in part because of the increased inventory available in these areas.

International buyers also spent significantly more than domestic buyers. They paid, on average, $219,400 on residential properties, as compared to $173,000 for existing home sales during the same period.

But financing continued to be a problem for foreign buyers. About 55 percent of international buyers paid in cash for their homes instead of taking out a mortgage.

Full article here.

The REBGV stats for June 2010 are now available. If a month ago was a good time to buy some Vancouver real estate, than right now is an even gooderer time! If you were shopping for the benchmark home a month ago, you can now buy that same house and get a FREE CAR with it! Best Place on Meth pointed out some of the more dramatic drops and we’ve put together this handy guide for suggested cars you can get with the price difference.

The overall REBGV benchmark price for all housing in all areas is down just over 1 percent which is a little over $10k. You’re not going to get a brand new car for that much, but you could get this sweeeet 1992 Toyota Supra replete with go-fast fin and still have enough left over for a great little road trip:

The big drop for the month was in the benchmark house price on the west side. You’re not going to want to drive that supra up to your west side bungalow, but with about $90k extra to spend you can arrive in style with this 2005 Aston Martin DB9:

The dramatic percentage drop prize goes to West Vancouver Apartments, where the one month drop saw a loss of $77,664 or 11.5%! Go pick yourself up an apartment and a 2007 Maserati:

Crashcow pointed out that there’s even more drama in the West Van Apartment benchmark if you go back another month to the April Peak.