Vancouver Condo Info

Plans to build a 20 story tower in the west end met some resistance yesterday, as local residents held a protest against the proposal.

The rezoning would allow developers to build a 20-storey tower on the site and take advantage of the city’s Short Term Incentives for Rental Housing (STIR) program, which includes incentives such as faster permitting process, parking requirement reductions and increased density of the rental apartments.

“It’s completely out of sync with what works in the neighbourhood,” said Godfrey Tait, a spokesman for the concerned residents. “You could maybe have some mixed-market, family-oriented housing, maybe something that wouldn’t exceed six levels, but certainly not another tower.”

The full article is in the Vancouver Sun.

Those heretics over at Canadian Business magazine have a cover article this month called Why Buying a House is a Bad Investment.

The euphoria around home ownership crowds out some of the unpleasant truths about real estate: mainly, that long-term returns are often modest at best. Some studies have found that stock indexes actually outperform housing. More worrying is that real estate prices can and do fall — and they can take a long time to recover. Canada has not been immune to severe price corrections in the past, and we could be on the verge of another one now. With interest rates set to rise and curb affordability, and with economists speculating about a bubble, staking one’s entire financial future on a home is not necessarily a wise bet. In fact, a house just might be one of the most overrated investments around.

..and it goes on and on.

“There’s a unique confluence of factors that has driven house valuations up this sharply,” says Derek Holt, vice-president of economics at Scotia Capital. “They’re all temporary, and that’s a house price bubble that could be pricked as we go off into the next year.” The rate of growth in home prices for the past 10 years has in fact been out of line with prior decades, pointing to lofty valuations today, according to Holt. Prominent Canadians such as money manager Stephen Jarislowsky and former Bank of Canada governor David Dodge have also sounded the alarm recently on today’s unusually rich home prices.

You can read the full article at the Canadian Business website, but these people clearly don’t know what they’re talking about.  After all, real estate prices never go down, everybody knows that.

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.

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The BOC is holding interest rates at a record low .25% for now, but hinting that may change soon.  BC is doing some belt tightening now that the games are over, but in the rest of Canada the economy is growing surprisingly fast.  So when do rates start going back up, and how fast should they be raised to reign in inflation?

The C.D. Howe institute is recommending that they be raised sharply for every rate announcement for the year after their conditional July commitment.  This would mean the overnight rate would move from its current .25% to 2.0% at the end of 2011.

Well that was fun.  The games have wrapped up, but we’re not completely done yet – the Paralympics are up next, so still a chance to partake in some Olympic fun before 2012.  Hopefully everyone out there had a good couple of weeks, whether you stayed in town or skipped out to some holiday destination.

Despite a bad start to the games, we had some unseasonably beautiful weather and wrapped up with a nice amount of Gold for Canada. Overall a positive experience with an upbeat ending.

So now what? We’ll find out what bills are due soon, but what will be the long term economic result of hosting the games? Are there people out there that have just discovered Vancouver and now must move here and buy at any price?

A recent UBC study found that host cities see no measurable boom or bust in real estate values due to the Olympics, but maybe it’s different here.  Do you think the next few years will see an economic boom or bust in BC?

At the end of last year we had a post about contacting your Member of Parliament to find out their stance on Canadian Housing Economics and the role of the CMHC.  Did any readers out there contact their MP and get a response back?  If you did get a response, were there any suprises or did they see keywords ‘housing’ and ‘economy’ and send you back an unrelated form letter?

Are there any MPs out there that are actually looking at the Canadian Mortgage and Housing Corporation and the role they play in pumping up housing markets?

If anyone feels like contacting their MP, here’s a contact list for Vancouver area Members of Parliament.

Don sent in the link to this commentary on the mortgage market in the US and [the economy in] Canada.  Dave Rosenberg points out that there are some strange things happening in the spread between treasury bond yields and mortgage rates.

Once again, this Houdini recovery has involved a situation where mortgage rates have plunged and yet Treasury bond yields have been rising — 30-year fixed rate mortgages have fallen to 4.93% and are sitting are record-tight spreads over long Treasury bonds (see Chart 7). Historically, the average spread is 150bps and this differential is now 20bps. This is remarkable and our concern is that investors who may be exposed to mortgages are at serious risk because there is a considerable chance that these rates will be moving higher over the intermediate term — notwithstanding continued support from Uncle Sam’s pocketbook.

Investors must be reminded time and again that mortgages are callable, Treasuries are not; and we are now in a situation where net of fees, which average 70bps, anyone buying mortgage paper today is receiving a rate that is less than what the borrower is paying, How nutty is that?

He also comments specifically on the health of the Canadian housing economy:

All of a sudden, the Canadian economic data are coming a tad below expectations, including the 0.4% MoM advance in December retail sales, which just came up short from recouping the 0.5% decline the month before (revised from down 0.3%). Excluding autos, sales are running at a 2.1 % annual rate over the past three months, which can only be described as tepid in view of all the rampant monetary and fiscal stimulus percolating through the system.

Not only that, but the supply response in the Canadian housing market is beginning to, at the margin, alter the inventory balance. The number of new listings surged 4.0% in January and has risen sharply now in three of the past four months. After outpacing new listings over 90% of the time between January and October of 2009, sales has now lagged in each of the past two months and this has taken the sales-to-listing ratio down to 0.614x from 0.634x in December and the nearby October high of 0.683x (and now stands at its lowest level in eight months). Pricing is sure to follow suit. Better buying opportunities lie ahead for the fence-sitters, in our view.

David Rosenberg is the Chief Economist and Strategist at wealth management firm Gluskin Sheff.  Read the rest at Mish’s Global Economic Analysis.

Paul Jenkins, the senior Deputy Governor at the Bank of Canada has joined Flaherty and Carney in declaring that there is no Canadian housing bubble.  So many officials seem so desperate to make comments about this subject right now, but why are they so desperate to reassure us?  Of course there is no Canadian housing bubble, just look at house prices in Windsor.  What I’d really like to hear them say is that there is no housing bubble in Vancouver, then we could all relax.

The federal government said last week it will bring in new mortgage rules to cool the housing sector and prevent home buyers, tempted by record low interest rates, from overextending themselves.

At the same time, it said there was no housing bubble, a point echoed on Monday by Jenkins, who was speaking at a panel discussion at the Government of Canada and Financial Times Global Business Leaders Day in Vancouver, where the housing market is especially hot.

“At the moment, we are certainly seeing a certain amount of the recovery in the Canadian economy coming from the housing sector” he said.

“I would certainly not say we are looking at a housing bubble,” he added.

Article in the Vancouver Sun.

Several people have posted a link to this article on the German news site Bild.com: Some athletes and coaches have complained about accomodations at the Vancouver Olympic Village, which is pertinent for this site since those units are set to be sold by the city after the games are over.

One of the complaints is that the walls of the rooms are so thin that the athletes are struggling to fall asleep – not a good time to have snorers nearby…

Ski jumping trainer Werner Schuster compared the Olympic Village with a boy scout camp. The 41-year-old said: “The living standard is very poor. Five, six people have to share a bathroom and the walls are as thin as curtains.”

I wonder if the complaints regard temporary walls or actual walls between units?

The size the accommodation has also been criticised. A particularly sore point is that there isn’t enough space for athletes to dry their clothes.

Don’t they know this is Vancouver?  We pioneered the art of small living in North America.  They should just be glad we didn’t stick them six to a room in a 270 square foot micro condo in the Downtown eastside.

A German functionary said: “The Village is good for summer. But now in winter with this weather it’s a problem.

“The German team have especially bought heaters to dry their things which are always getting wet due to the relentless sleet.”

It’s all about location, location, location.  That’s why we located the Athletes village walking distance from Canadian Tire, where they can buy heaters to dry their clothes.

UPDATE: Nope. We didn’t locate it near a Canadian Tire. Many people pointed out that this is about the Whistler Olympic Village, NOT the Vancouver Olympic Village.

Don sent in this bit of bear food from Business Insider in case you’re running out of things to worry about in the global economy:  We are so screwed.

“Our immersion in the details of crises that have arisen over the past eight centuries and in data on them has led us to conclude that the most commonly repeated and most expensive investment advice ever given in the boom just before a financial crisis stems from the perception that ‘this time is different.’

“That advice, that the old rules of valuation no longer apply, is usually followed up with vigor. Financial professionals and, all too often, government leaders explain that we are doing things better than before, we are smarter, and we have learned from past mistakes. Each time, society convinces itself that the current boom, unlike the many booms that preceded catastrophic collapses in the past, is built on sound fundamentals, structural reforms, technological innovation, and good policy.”

- This Time is Different (Carmen M. Reinhart and Kenneth Rogoff)

For more crisis fear read the whole article here.