Vancouver Condo Info

Newspapers love stories of human drama – something that will grab your attention and get you to buy the paper is ideal, particular if it’s something personal that connects with the readers experience or fear.  I remember seeing a headline story on the Province newspaper about ‘underwater’ mortgages in the mid-nineties, but I haven’t seen any front page stories on the Sun or Province yet about the human impact of the Vancouver real estate market crash.  Perhaps its too early, or perhaps I haven’t been paying attention.

So let’s have a poll – when do you think we’ll see a front page story on a local paper linking the Vancouver real estate market crash to hard times on the individual level?  I imagine this would be a story about families that owe more than their home is worth or have gone bankrupt on presale contracts that they can’t get financing for.

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Although it seems still far away from the bottom right now, the RE bears on this site are looking for the days to transition to bulls when Vancouver RE is restored back to fundamentals. A common understanding (or the RE bear sentiment) is that after another one or two years deep dip, the market is likely to level down for a while. The bears then may start shopping around.

To prepare for that, buyer’s strategy needs to be considered. One of the main issues is whether to use a buyer’s agent or not. There are around 10K local Realtors (can someone provides the exact number?) – some of them are very experienced professionals that would help buyers a lot on one’s biggest purchase in life, while some others may just be con-men collecting commission only, or even worse, misleading/pushing the buyer for quick commission. A buyer’s agent does not necessarily have their interest aligned with the buyer’s when it comes to commission. This leads to the question on the poll “Are you going to use a buyer’s realtor?”.

I have listed some pros and cons of using a buyers agent here to start our brainstorming.

Pros:

1. Inside information. Some of sales information are only available to realtors (this may be worth talking about as another topic).
2. Expert advice. Get advice on various aspects, such as pricing, RE trend, construction quality, history, surrounding info and neighbors. Assuming you are lucky with a good realtor.
3. Safety. Feeling that the deal is “verified “/”protected” by a professional – may be purely sentimental. But most likely you do get less speculation on the decision making. Realtor does have to adhere to the Code of Ethnics, dealing with them is supposedly to be secured and you may have opportunity for recourse if you suspect their behaviors.
4. Less hassle. Free you up on most of the hunting job, paper work and other formalities/hassles/complications.

Here’s an open question for discussion and a bit of a scientific experiment.  I noticed a recent story on the UBC election stock market and that reminded me of a few other stories I’ve seen on prediction markets and their accuracy.  It turns out that in many cases the aggregate of a groups prediction or estimation is more accurate than individual experts, particularly when money is at stake.

Last month we saw year-over-year price loss in many areas of the lower mainland.  These drops were seen across all types of housing: condos, townhouses and detached homes, but the most dramatic price drop was seen in Port Moody which saw an astounding year over year price decline of 20.4% for the benchmark price of a detached house.  That number is so large, I initially thought this may be a typo or error, but it has remained in place throughout numerous news stories and the original REBGV housing price index table.

So lets do a little experiment.  Lets see if the readers of this site, as a group, can accurately predict which area of the REBGV will see the largest percentage decline in the benchmark price of a detached home.  To clarify: Which area of the lower mainland will show the largest monthly house price decline during the month of October 2008?  Vote below and when October REBGV benchmark stats are release we’ll see how accurate we’ve been:

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Daily Dose suggested a poll on Vancouver rents, which seems like a natural extension of the discussion on rental prices started in the previous story. We’ve discussed the topic of rent in Vancouver before, but this poll will hopefully give a nice visual overview. Unfortunately this poll plugin does not give me the option to connect answers (i.e. 1 bdrm for $850 in Vancouver West) but please feel free to add detail in the comments section.

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Extra: Reductimat posted this link showing rent ratios in major American cities. This ratio is the purchase cost divided by the annual rent. This ratio ranges between 11.4 (currently in Columbus) and a peak of 34.5 (Bubble ratio in San Fran, currently down to 26.1). What’s your rent ratio?

RBC has released a report on the saving and spending habits of Canadians, apparently we’re saving less than ever, with more Canadians relying on credit cards, loans and mortgages.

Canadians are not prepared – and not preparing – for a rainy day, like an economic downturn, a major bank is warning.

The vast majority of Canadians admit they’re poor savers, with barely one-half having a rainy-day account. And of those, only half have enough to cover a month’s expenses, RBC said Wednesday in releasing results of a spring survey of the saving and spending habits of Canadians.

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“One need only look at the newspapers or television to see that North America is in an economic downturn,” said Ashif Ratanshi, senior vice-president, RBC Branch Investments and Banking.

“This is the time for Canadians to re-assess their own finances and ensure they are effectively managing their money so that they can withstand any sudden pitfalls or changes in their lives.”

I’ve already run a poll on savings and income that indicates most readers here are in the minority, but since the RBC reports refers specifically to a rainy-day account I’ll pose this question:

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I thought the topic on what people pay for rent in Vancouver generated some interesting and informative discussion, so I’d like to do something similar on the topic of income and savings. As the majority of visitors here are… let’s say ’sceptical’ about the Vancouver real estate market and likely financially cautious I don’t expect the results here to reflect the city at large, but I’m curious to see how much people are saving.

One argument for home ownership is that it acts as a forced savings plan, because the average person doesn’t have the willpower to save on their own. If you’re sitting out of the market waiting for a correction and renting for less than a mortgage would cost are you saving the difference? If loans disappeared and real estate in Vancouver was suddenly only available for cash would you be ready to swoop in?

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When you’re in the middle of an investment mania it’s hard to imagine things ever being any different. A couple of years ago a number of Americans thought investing in real estate in cities like Las Vegas, Miami or San Diego was a great idea – if the market stopped going up it would simply stop appreciating as quickly, prices would never go down.

Well after two years of lower sales and slowly dropping prices pessimism has started to overtake the US housing market with a growing majority showing no interest in buying a home anytime soon:

In a vivid sketch of how the sputtering real estate market is causing distress throughout the country, the Associated Press-AOL Money & Finance poll found that more than a quarter of homeowners worry their home will lose value over the next two years. Fully one in seven mortgage holders fear they won’t be able to make their monthly payments on time over the next six months.

“This is a great time to buy, but not necessarily to sell,” said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can’t because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.

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Sixty percent said they definitely won’t buy a home in the next two years, up from 53 percent who said so in an AP-AOL poll in September 2006. At the same time, just 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.

The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling — good if you’re buying a house but bad if you have to sell one.

The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago. Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.

Underscoring the public’s unsettled feelings, the number saying local housing prices are about right has fallen to 35 percent. Half say homes are overpriced — especially in the Northeast — while those saying housing is underpriced have doubled to one in 10, particularly Midwesterners.

Here in Vancouver with our run-up in house prices it’s hard to imagine the majority of residents having an overall negative outlook on investing in local real estate, but it’s happened here before and I wouldn’t be surprised to see it happen again when the market corrects.

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It’s Friday and that means open-topic time at VancouverCondo.info – here’s a few stories I’ve noticed this week:

- Local RE blogs in Vancouver Magazine
- Credit still easy to get in BC
- Vancouver most expensive for business
- Local business optimism high but dropping
- Little relief in sight for condo buyers
- Craigslist rental price drops
- BC retail sales rank last in Canada
- Rising Loonie hurting our competitive edge
- Foreclosure bus moves across the USA
- The 25% dissolution

What are you seeing out there? Post your news, links and anecdotes here and have a great weekend!

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BDK posted a link to this article in Vancouver Magazine titled ‘sitting out‘ which shines some light on the hidden world of real estate bears and bulls that lurk online in the lower mainland.

Its quite a good article, outlining the basic points that go back and forth on both sides of the Vancouver boom/bust argument and profiling a local couple that recently sold:

In 2002 Felicity Stone and Jim Patton stumbled onto the real-estate mother lode, trading up from a house in rural Langley to a thoughtfully designed home on two acres in the Elgin Chantrell area of South Surrey. Patton, a communications consultant, and Stone, who works in public relations, were happy to pour work and money into the place, expecting to live there the rest of their lives. Then their outlook began to change. Much as they loved the 1962 gem, they also saw what nearby property was selling for. In August 2007 they decided to list, and by November they’d accepted $1.616 million—a 240 percent increase from the $475,000 they’d paid a half-decade earlier. Now they’re renting a house in the Bayridge area of West Van, paying $2,500 a month while they watch the market and wait for prices to drop.

They even link to several of your favorite blogs (VancouverCondo.info included) – my only complaint is they seem to have munged up the link to this site and they left out three interesting and useful sites which I’ll link to here:

Paul Boenisch and his amazing REBGV statistics

Mohicans analysis at langley-financial-planning

and the interesting new Vancouver RE anecdote archive

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Paulb posted a link to this surprisingly negative article in The Toronto Star this weekend – I say surprising because we’re used to seeing a much rosier outlook in the mainstream media. That kicked off a discussion on media bias that I think is worth continuing. As suggested by ‘burden of proof’ I’m going to post this as a few poll questions. Feel free to elaborate on your opinions in the comment section.

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Extra: Conjuration_imbeciles sent in this link to another article in the Toronto Star. One of the authors that predicted the US housing crash warns Canadians thinking about buying a property in the US that it’s still too early to buy. He predicts that there are more losses to come, particularly in markets favoured by Canadians (ie. Arizona & Florida).