Vancouver Condo Info » news

House Price Index – start the count over

wreckonomics — Wed, 08 Feb 2012 05:41:43 +0000

Real estate can be tricky to track stats for. There’s so much variation between different properties. Average sales prices get pushed back and forth based on the sales mix.

There are two sources for a more consistent tracking of house prices. One is the Teranet House Price Index, which tracks only properties that have at least 2 sales. This ‘sales pair’ approach tracks the effect of specific properties changing price each time they’re sold. There are two drawbacks to this index: It doesn’t track improvements to a property and it’s delayed by about 3 months.

The other approach is the REBGVs MLSlink HPI based on a hypothetical property that is averaged to specific traits: number of rooms, finished basement etc. The MLSlink HPI has been a consistent gauge of the local market since the mid 90s.

That’s changing now. Vancouver was the only market with a House Price Index, but the old index has been thrown aside for a new one from the CREA that is consistent between Vancouver, Fraser Valley Calgary, Toronto and Montreal.

For data-hounds, this means that you’ll not be able to directly link trends in the new index to earlier data. January 2012 becomes the zero month of this new system. Ladies and gentlenerds, start your graphs!

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Piggington “capitulates”

patriotz — Thu, 02 Feb 2012 08:01:51 +0000

One of my long-time favourite bloggers, Professor Piggington of San Diego, has finally decided to buy:

After the recent leg down in interest rates, monthly payments are the lowest compared to incomes and rents than they’ve been in the history of the data, and are quite dramatically below their median historical levels:

But note another consideration, which applies only to the US where you can lock in rates for the life of the mortgage:

If this outlook is correct, as I believe it is, then today’s ultra-low rates make this an ideal time to take out a chunky 30-year fixed mortgage, and to sit back and let inflation hew away at the real value of the mortgage and the monthly payments over the years to come.

So even if the buy/rent ratio in Vancouver came down to what it is now in San Diego, buying would not be as favourable, because interest rates would certainly rise if we went into a period of long-term higher inflation.

Note that the graph above compares monthly payments against per capita income (not median household income). It would appear that it is now possible to buy a SFH in San Diego on a single median income.

But of course Vancouver can’t go the way of SD, it’s surrounded by ocean, mountains, and a border… um it has the nicest weather in the country and everyone wants to live here… um…

Well it’s just different here.

Piggington.com Jumps the Shark

This post was submitted by patriotz.

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CMHC takes responsibility for all mortgages?

Scott — Wed, 01 Feb 2012 16:43:25 +0000

Apparently it’s not just the typical less than 20% down mortgage that the CMHC insures. They’re currently almost at their government mandated limit of $600 billion in default insurance because banks are buying up insurance to cover even low ratio loans (ie greater than 20% equity). This removes all risk from the lender, so why wouldn’t they do it? I didn’t even know this was permitted.

Normally, every 3-5 years as the mortgage market grows, CMHC has asked for, and received, approval from parliament to raise this limit. It was last raised by $150 billion in 2008.

Now media frenzy has politicians scurrying to offload mortgage risk from the government back to the private sector. (The government guarantees CMHC’s liabilities, so public concern is certainly understandable.)

As a result, many question whether CMHC will get its $600 billion limit raised anytime soon.

Here’s some reaction on that:

TD Bank economist Sonya Gulati tells CBC that not increasing the limit “may serve to tighten the housing market.”
RBC economist Robert Hogue told Global News that increasing the limit “…would be, policywise, a very delicate balance to strike.”
The Post quoted an unnamed industry source as saying: “…What will the government do, not increase (CMHC’s) limit? This could kill the entire housing market.”

Read the full article here.

This post was submitted by Scott.

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A Brief History of the Housing Bubble

mojojojo — Tue, 31 Jan 2012 08:12:31 +0000

A really good overview and analysis of the U.S. Housing Bubble at OCHousingnews.com. The build-up, collapse, stimulus/supply mgmt. and current double dip all covered in detail.

^{http://ochousingnews.com/news/a-brief-history-of-the-housing-bubble}

From 2003 to 2006, American lenders and borrowers inflated a massive housing bubble. From 2007 to 2012, this bubble has been deflating, but the bottom is proving elusive. The housing market is closer to the bottom than to the top, and if a viable solution can be found to bring supply and demand into balance, the tremendous affordability from low prices and low interest rates will help a bottom form in the near term.

This post was submitted by mojojojo.

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Martin Armstrong lists Canada under “RE markets to avoid”

Mon, 30 Jan 2012 08:10:44 +0000

While some Canadian cities offer reasonable affordability compared to household incomes, Vancouver’s housing is, by any measure, highly overvalued and vulnerable to a sharp correction. Prices have risen 55% from their 2009 trough to a level 29% above their prior peak. The average home price reached nearly C$800,000 (according to CMHC).

Full article

This post was submitted by Mansur al-Hallaj.

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Low rates forever

The Pope — Thu, 26 Jan 2012 16:21:39 +0000

Looks like the US fed isn’t very optimistic about the recovery. They say Japan style interest rates until 2014. Will this help a US house price recovery, or will buyers wait if they know there’s no rush for bargain rates?

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Carney cries wolf again.. will it come?

wreckonomics — Mon, 23 Jan 2012 08:45:44 +0000

Mark Carney is making new remarks about some Canadian real estate markets being “probably overvalued“.

It was the second time in recent days that Bank of Canada Governor Mark Carney voiced concern about property prices, which surged after the financial crisis as borrowing costs tumbled.
“We see that in a number of real estate markets in Canada, valuations are at a minimum, firm; in others, they’re probably overvalued. So there are risks there. We’re watching it closely. We’re working with our partners, the federal government, the superintendent of financial institutions,” he said in an interview on “Question Period” on CTV.

“Measures have been taken. They’ve been effective. We’ll keep up that vigilance. If more needs to be done, I’m sure the appropriate authorities will take those measures.”
The federal government has tightened mortgage regulations several times in a bid to prevent a property bubble from forming. Finance Minister Jim Flaherty said on January 17 that the government is watching the housing market closely and is ready to intervene if needed, but is not about to do so now.

Yes, the federal government has tightened mortgage regulations “several times”.. Here’s a timeline of those changes courtesy of Burbs Boy:

Jan 2006 – Minority Conservative Government elected
Feb 2006 – 25 year increase to 30 year on test basis
Jul 2006 – 30 year test affirmed and also increased to 35 year
Jul 2007 – 35 year increase to 40 year
Oct 2008 – 40 year decrease to 35 year
Mar 2010 – 35 year decrease to current 30 year

This post was submitted by wreckonomics.

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Vancouver Bubble from the Californian Perspective

mojojojo — Thu, 19 Jan 2012 20:44:09 +0000

A very good analysis form a leading Bubble Blogger in SoCal. The good Doctor began blogging about the US bubble years before the collapse. He has an interesting analysis of Vancouver’s bubble here along with some good comments.

http://www.doctorhousingbubble.com/canada-housing-bubble-ripe-for-popping-vancouver-housing-bubble-2012-pop-real-estate-canada/

In the last few years I’ve noticed that many of the cable finance and housing shows highlight families in Canada. Shows that talk about debt or home buyers are usually focused on families in Canada which is rather odd given that we are here in Southern California. Yet the funny thing about these shows is that they rarely identify that they are in Canada although I recognize locations like Vancouver. If one simply tuned into the show it would appear that a bubble was still going on in the states. This is probably the point. After all, the cable shows focused on flipping houses or making quick bucks on real estate started going off the air yet another bubble was still going on up north. Obviously these shows had an audience otherwise they would not be on the air. Now the focus is on the Canadian bubble and American audiences can swim in the nostalgic dreams of the glory days of domestic housing. Yet the shows rarely mention their location as if English-speaking families and cookie-cutter condos and homes are so easily interchangeable that they will fool an audience. Yet one thing the shows fail to acknowledge is that the Canadian housing bubble is even more pronounced than that in the United States.

This post was submitted by mojojojo.

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“In China, CMHC is quite important”

Meh — Tue, 27 Dec 2011 17:48:16 +0000

Yes, the Canadian Mortgage and Housing Corporation is helping to get homes built in China. If you’re frustrated with house prices here, maybe you should pick up a brand new high end 3000 – 5000 square foot home in Northern Beijing for around $300k.

As part of a little-known mandate to promote Canadian construction companies internationally, the federal housing agency helped local companies including Kryton International, a Vancouver-based concrete waterproofing provider, and local architectural firm Ekistics Architecture secure contracts in a $300-million residential development designed as a high-end, mini-Vancouver neighbourhood — with hundreds of planted trees — in northern Beijing.

Vancouver Forest, located 30 minutes from Beijing’s international airport, is being built in phases by China’s Beijing Capital Group.

The ongoing project, which was designed by B.C. architects and uses B.C. building materials including wood construction, will feature 900 Vancouver-style single detached homes ranging in size from 3,000 to 5,000 square feet on a 549,000-square-metre site that includes many natural landscape features.

It’s just one of many Chinese construction projects that CMHC has helped local companies get involved in.

This post was submitted by Meh.

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Chinese housing bubble collapse

xct — Tue, 20 Dec 2011 08:45:34 +0000

The controlled collapse of the Chinese housing bubble seems to be proceeding right on schedule. If HAM is a factor in BC what affect will this have here?

Home prices nationwide declined in November for the third straight month, according to an index of values in 100 major cities compiled by the China Index Academy, an independent real estate firm. Average prices in the Shanghai area are down about 40% from their peak in mid-2009, to about $176,000 for a 1,000-square-foot home.

Sales have plummeted. In Beijing, nearly two years’ worth of inventory is clogging the market, and more than 1,000 real estate agencies have closed this year. Developers who once pre-sold housing projects within hours are growing desperate. A real estate company in the eastern city of Wenzhou is offering to throw in a new BMW with a home purchase.

The swift turnaround has stunned buyers such as Shanghai resident Mark Li, who thought prices had nowhere to go but up. The software engineer closed on a $250,000, three-bedroom apartment in August, only to watch weeks later as the developer slashed prices 25% on identical units to attract buyers in a slowing market.

Outraged, Li and hundreds of others who paid full price trashed the sales office, scuffled with employees and protested for three days before police broke up the demonstration. Walking away now would mean losing the $75,000 down payment that he borrowed from his working-class parents.

“I still haven’t told them,” Li, 29, said of his home’s plummeting value. “It will just make them worry, and it’s already too late.”

Full article in the LA Times.

This post was submitted by xct.

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New Strata Rules

jeff — Mon, 19 Dec 2011 08:41:08 +0000

There are new strata regulations in BC, here’s the PDF and here’s an article with an overview:

In October 2009, the B.C. government passed the Strata Property Amendment Act, Bill 8. Under the act, many of the changes taking place were to be introduced by implementing regulations. Unlike Bill 8, which required the approval of the legislature, regulations are approved by provincial cabinet as an order in council. Within Bill 8, there were provisions that affected long-term planning and information certificates. Part 15 of the bill, applied to long-term planning, has just been adopted through the regulations as mandatory depreciation reports.

A depreciation report is basically a planning tool used by property owners (the strata corporation) to clearly understand what the strata is responsible for maintaining and repairing as part of its building system (a physical component inventory); the age of the building system; the projected life expectancy; when it should be planned for renewal; what it will cost when the time comes to renew the component; and how the strata will pay for it.

The new regulations provide a two-year window for strata corporations to comply with the mandatory requirement – by Dec. 13, 2013. Strata corporations of less than five units will be exempt, and strata corporations of five strata lots or more that wish to be exempt from the requirement must essentially pass a ¾ vote at an annual or special general meeting for each one-year period the depreciation report is required to be obtained.

Read the full outline in the Province newspaper.

This post was submitted by jeff.

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TD: mortgage rules should be stricter

Eddie — Thu, 15 Dec 2011 08:22:15 +0000

The CEO of TD bank has said in an interview that he thinks the government should make mortgage rules stricter.

Mr. Clark believes cutting the maximum length on federally insured mortgages to 25 years, from 30 years, would be a good step to slow rising household debt, which hit a new record this week, surpassing that of the United States and Britain.

“If you thought the Canadian economy was strong enough to take another adjustment, then we would say take the 30 [year amortization limit] down to 25 and get this back to where it originally was,” Mr. Clark told The Globe and Mail.

“It’s hard to know whether the economy can take another crank like that,” he said, referring to Ottawa’s last round of changes. “But my own gut would tell me that it may turn out that we do have the absorption capacity.”

Now why would a bank that spends tonnes of money on advertising mortgages and essentially makes risk-free income on insured mortgages want the government to tighten up the rules? Could they be seeing consumer debt levels starting to pose a risk to uninsured loans?

This post was submitted by Eddie.

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Canadian household debt hits new record

wreckonomics — Wed, 14 Dec 2011 08:49:08 +0000

It keeps going and going.. Canadian household debt has risen yet again to a new record level of 152.98 per cent of annual disposable income.

Debt continues to rise, per capita net worth is falling and incomes are flat.

How’s this going to end?

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Mortgage discounts turn to premiums

Karl Marx Carney — Thu, 08 Dec 2011 08:16:27 +0000

For those that missed it, there’s an interesting article over at Canadian Mortgage Trends – the major banks have done away with their variable rate discount mortgages and are now charging a premium over prime.

Prime + 0.10% (i.e., 3.10%) is an interesting number. A few months ago consumers thought that fat variable-rate discounts were here to stay. Variables above prime will now come as a shock to some people.

The banks are well aware of that. They know that pricing above prime impacts consumer psychology.

They could have priced at prime. Spreads are not that horrendous. But pricing above prime makes more of an impact. It makes higher-profit fixed rates more appealing and it mentally prepares consumers for potentially higher VRM premiums down the road.

That said, banks are not just arbitrarily sticking it to borrowers. The main reason variable rates are worsening is that banks’ costs are rising, and they want to recoup those costs.

Read the full article for more on the factors at play in this move.

This post was submitted by Karl Marx Carney.

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Victoria Crashing

teekay — Wed, 07 Dec 2011 09:05:11 +0000

FishyRE points out that the latest housing market numbers out of Victoria look bad. Really bad.

House prices are down YOY for two years now. Condos are down YOY and flat over two. Attached is down 15% over two years. Yikes.

This post was submitted by teekay.

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Mayor announces panel on housing affordability

Jackson — Tue, 06 Dec 2011 04:03:58 +0000

Not just any panel.. a “Blue Ribbon” panel to look at the underlying issues of housing affordability in Vancouver. I hope it’s a Pabst Blue Ribbon panel.

Saying that the high cost of housing is threatening to make Vancouver unlivable, Robertson said he wants the panel to come up with short and long-term solutions, including using more of the city’s own lands.

But he also acknowledged that the seemingly intractable issues around why Vancouver’s housing remains among the most expensive in Canada likely means his Vision Vancouver-led council won’t find solutions quickly, even within their three year term of office.

He said the “task force”, which will be named within weeks, will include advocates, architects, developers, building owners, financiers and citizens.

“They’ll identify ways we can increase Vancouver’s supply of affordable homes — both immediately, for the most urgent needs, and for the long term,” he said.

Why would they include advocates and citizens on this panel? Don’t architects, developers, building owners and financiers have all the knowledge this panel needs.

I’m no expert, but I’m guessing the advice will be something like this: Spend lots of money designing and building low income housing on city land, provide incentives to developers and building owners and encourage a system whereby financiers can skim a little more from the average Vancouverite that feels they just must get into the can’t lose housing market.

Likely not to be addressed: anything that discourages people from buying with as little down payment as possible backed up with CMHC insurance that removes risk from the lender.

This post was submitted by Jackson.

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Canadian economic expansion

Adam — Thu, 01 Dec 2011 08:09:43 +0000

Good news! Markets are up! Money is flowing! and the Canadian Economy expanded more than expected in the third quarter:

The energy sector led the way and notable increases also occurred in manufacturing, construction, wholesale trade and the transportation and warehousing sector.

On a monthly basis, real gross domestic product by industry increased 0.2 per cent in September.

Some analysts cautioned against overestimating the strength of the Canadian economy. Much like the second, the third quarter was also driven by temporary factors that won’t be sustained, they said.

Full article over at the CBC.

This post was submitted by Adam.

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Problems with too much suckage at OV

Spork — Wed, 30 Nov 2011 07:16:57 +0000

It looks like money isn’t the only thing being sucked up by Vancouvers Olympic Village. This Global News segment is about complaints from residents about negative pressure in the ventilation system leading to health concerns.

This post was submitted by Spork.

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Mish facepalms over Vancouver RE yet again

Sun, 20 Nov 2011 09:41:11 +0000

http://globaleconomicanalysis.blogspot.com/2011/11/vancouver-real-estate-bubble-in.html

A million dollars can buy you a ‘liveable’ house in deepest east van..

This post was submitted by Mansur al-Hallaj.

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Candidates on Vancouver house prices

Drippytown — Thu, 17 Nov 2011 09:01:13 +0000

One candidate in the upcoming election is focusing on the issue of house prices in Vancouver. Independent Sandy Garossino thinks that Foreign buyers are driving up Vancouver property prices and pushing out young families.

Garossino said that if the average median income in Metro Vancouver is $67,500 and the average price of a house in Vancouver stays at around $800,000, then it’s locals who will be forced out.

Garossino said she knows placing ownership restrictions is not an easy solution and that there are complex and sensitive issues involved. Still, she said, local affordability needs to be addressed.

“This is such a concern to me. Where are families going to raise their children?”

Garossino says other cities facing similar problems have have workable solutions.

“Singapore has zoning requirements that allow certain areas to be freely available to the international investor and other areas are only available to domestic buyers.”

Two Mayoral candidates seem to have noticed that this issue is getting attention and added their own thoughts. Gregor Robertson sort of thinks it might be an issue, but see’s the next couple of years as the time to look at the problem and figure out what to do about it.

Gregor Robertson told CBC News Sunday that the city needs to understand the role foreign ownership is playing before taking any steps to change it.

“I see these next couple years as assessing what the problem is, how significant it is, and what best tools are that might address it,” Robertson said.

Suzanne Anton believes that people shouldn’t have to leave Vancouver to buy a home, but doesn’t think foreign buyers are the problem. ~~Dave~~ Anton says the solution is to cut development costs so that builders can pass on the savings to buyers.

“Market-based solutions to housing supply are the only effective means of creating real affordability,” Anton said.

“Everything else is a gimmick.”

This post was submitted by Drippytown.

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No (more) bailouts

The Pope — Wed, 16 Nov 2011 16:10:35 +0000

Mark Carney says things are gonna change, your bank fails you go out of business. No more bailouts.

“I’m saying no bailouts,” Carney told the CBC’s George Stroumboulopoulos in a recent interview. “The objective [is] ending ‘too big to fail’.”

Carney was recently named head of the Financial Stability Board, a recently formed international agency with a mandate to oversee the international financial system. In the interview, he says the goal is to bring global rules closer to Canada’s model.

“We’re going to change the rules so the system as a whole is more resilient,” he said. “If a big global bank fails, the system goes on. [Just] that company goes away.

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It feels so normal here

patriotz — Tue, 08 Nov 2011 14:25:33 +0000

Another warm sunny day in Ottawa. Here’s what I get for having given up on the “best place on earth”:

- more cultural activities
- people who are polite and say hi to you on the street
- neighbourhoods that feel like neighbourhoods
- ethnic diversity but not segregation
- no homeless people outside of downtown
- breakins are regarded as newsworthy
- much better job opportunities

I can break the RE market into three sectors:

- Gatineau, Quebec
Prices that are actually reasonable. $200K gets you this in the English-speaking community of Aylmer:

http://passerelle.centris.ca

- Generic Ottawa
Overpriced but if you really want to buy, you won’t become a debt slave. $300K gets you this in Silicon Valley North:

http://www.realtor.ca

- Trendy Ottawa
Definite bubble territory, but still more for your money than Vancouver. This $1.2 mil house in the Glebe likely would not rent for more than $3500/month:

http://www.realtor.ca

Compare with this rental:

http://ottawa.en.craigslist.ca

Or you can rent, there’s lot of quality stock, the landlords aren’t psychos and people don’t treat you like a leper.

Enjoy the rain.

This post was submitted by patriotz.

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Vote

The Pope — Mon, 07 Nov 2011 16:35:53 +0000

If you live in and around Vancouver you probably know its election time. Voting day is on the 19th.

This is an open topic political thread. Who do you feel is best suited to lead this city and why?

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Ambitious people leaving Vancouver

Jackson — Wed, 02 Nov 2011 04:02:17 +0000

The economy in this city is broken. I can no longer count on two hands the number of friends and coworkers who have left to find better opportunity elsewhere in the last few years. As Vancouver Magazine points out, it’s what young ambitious people are doing right now. Vancouver is squeezing the middle class out.

Around January 2002, the average price of a detached house in Metro Vancouver was $390,000. That has since nearly tripled to $1.1 million. For those who couldn’t or didn’t buy in—who were outbid, came late to the party, or sat it out waiting for a massive market correction—real estate has been a dismal science. This July, the MLS listed only 24 two-bedroom condos for sale under $300,000. That’s the maximum mortgage available to a household earning the median family income; Vancouver proper has about 30,000 renter households in that category. The story of real-estate affordability here can be told in that one stat: in a city of over 600,000 people, two dozen bottom-of-the-barrel starter condos available for sale to the middle class.

This post was submitted by Jackson.

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Property estimates now public

Adam — Wed, 26 Oct 2011 07:01:25 +0000

Zoocasa.com is now giving public access to home appraisal values for free.

Carefully guarded data on home appraisal values – once the private preserve of real-estate industry insiders – has been posted by a listings website backed by Rogers Communications Inc., which has tapped private databases to give people an instant estimate of a property’s value.

That’s from an article over at the Globe and Mail where they go on to talk about how moves like this weakens the position of Real Estate agents who’ve used privileged access to market information to justify their commissions.

The argument against such a move has always been that it impinges on personal rights to privacy, which isn’t such a long shot when the president of Zoocasa pitches it as a fun way to find out the value of friends and neighbors houses.

By entering any address in the country and providing a few additional details, such as the number of bedrooms and bathrooms in a house, a user can get an instant price estimate. It can give them a better idea of what their own house is worth – or something to gossip about around the dinner table as they discuss the net worth of friends, family members and neighbours.

“That’s one of the fun things about this service,” says Butch Langlois, president of Zoocasa. “It’s not necessarily your own home that you are interested in pricing.”

This post was submitted by Adam.

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