Archive for the ‘prices’ Category

Who wants a housing market crash?

Monday, July 14th, 2014

You might want a housing market crash (or ‘correction’ if the word ‘crash’ is too strong), but that’s likely because you want to buy a house.

It’s not hard to believe that the majority of Canadians don’t long for a housing market correction, especially those who own property.

It feels good when your equity rises right? What’s not to like?

The Financial Post looks at these feelings, and whether they are sensible or not.

They split home-owers into three categories: First time buyers, young owners with growing families and older owners thinking about downsizing.

They say the first two groups would actually benefit from a crash.

If you’re wondering why most homeowners should be begging for a housing market crash read the article here and let us know if you agree with their reasoning.

 

Could we get some big companies here?

Wednesday, June 25th, 2014

This is an interesting post over at medium- basically positing that high home prices in Vancouver threaten it’s future, and proposing a tax to try to change that risk:

The secret that no-one actually wants to talk about is that the quality of a city is mostly determined by a simple factor — the number of smart, ambitious people who live there. These people are the ones who want to drive that city forward by investing in opening businesses, donating their time to the arts & community, participating in city planning, etc… Without them, growth wouldn’t happen and you wouldn’t get all of the benefits that great cities enjoy.

The biggest contributor to the decline of a great city is simple — it’s the decline of those smart people. When they decide that the cost of living in a place outweighs the benefit, they move. They don’t just take their money with them, they take their intellectual and future capital with them. This is dangerous. When people aren’t willing to make an investment in a place to live any more, the city doesn’t just lose their taxes for the year, they lose a massive function of potential jobs created, culture added and future capital they can put to work.

There are two issues here: the generation of local business opportunity and an attempt to draw established business head offices to town.

What do you think of a proposal for a housing tax that attempts to encourage economic development?

A future based on past results

Thursday, June 5th, 2014

Here’s an extrapolation for you: Altus group does home appraisal and valuations.

They looked at the numbers and say if everything carries on as usual the average home price on the west side will be 7 million in 10 years.

“If [the current] trend continues, in the year 2024 the average price for older [detached housing] stock could be greater than $2 million on the Eastside and $7 million on the Westside of Vancouver. We are not saying this will happen, we are simply applying the math from the past decade and extrapolating forward to the next decade,” said Pedro Tavares, Altus Group’s director of research, valuation and advisory.

And as any investor will tell you, past performance practically guarantees future results right? So what are you waiting for? Get out there and buy something!

Vancouver no longer on planet earth?

Wednesday, May 21st, 2014

The Condo King has emerged from hibernation and seen no shadow: that means two more years of bubble.

“We no longer live in Vancouver. We live on the planet.”

With that remark, renowned Vancouver realtor Bob Rennie attempted to explain the evolution of this city’s exasperating housing market.

He made the comment last week to a conference of the Urban Land Institute, an organization representing realtors and developers who intimately understand what the condo guru was referring to.

Full article in the Vancouver Sun.

High prices: sign of a sick or healthy market?

Wednesday, May 7th, 2014

When you own something you might be delighted to hear that the price is rising.

Even if you don’t sell it to cash in, there’s a certain amount of psychological comfort to be found in owning something ‘valuable’.

So it’s not remarkable that many people are delighted by the rising cost of real estate in Canada.

But is this just the economic equivalent of a sugar high?  If all homes are rising in price you don’t really benefit from selling unless you leave the market or downsize to where the percentages are smaller.

Jonathan Miller, a US real estate appraiser posted an article comparing the US and Canadian markets.

He makes the point that sharply rising prices in US markets didn’t work out to be indicative of a markets health, rather they led to the inevitable hangover when the party was over.

Is it different here?

Hot at the edges

Monday, May 5th, 2014

Just in time for the spring buying season the Province newspaper has published a public service announcement about the hottest lower mainland markets.

What do the experts say are the hottest markets in BC?

1. Surrey
2.Maple Ridge / Pitt Meadows
3.Fort St. John
4.Dawson Creek

Surrey seems to do quite well with REIN – they took the number one investment spot in the province last year and also in 2012, 2011, and 2010.

Have you bought your surrey home yet?

CMHC: One home is enough?

Monday, April 28th, 2014

The CMHC has just ‘tightened’ their mortgage regulations again.

You might not have know that the CMHC would provide mortgage insurance on second homes, but they won’t anymore:

Canada Mortgage and Housing Corp. is cutting the types of mortgage insurance it offers, meaning the era of tighter rules for home buyers hasn’t come to an end.

The Crown corporation said late Friday it will stop insuring mortgages on second homes, effective May 30. Anyone who has an insured mortgage will no longer be able to act as a co-borrower on another mortgage that CMHC insures. In addition, it will stop offering mortgage insurance to self-employed people who don’t have standard documents to prove their income.

Gotta love that first sentence: The era of tighter rules hasn’t come to an end?  I guess by tighter rules they mean doing away with the most absurdist bubble policies in the form of zero down 40 year mortgages.

What’s next? Banks not being able to offload risk for mortgage lending?

Here’s the amazing bit for those just tuning in:

The Crown corporation has been offering insurance on second homes since 2005. It has been offering insurance to self-employed people without strong income validation since 2007.

Remember NINJA loans in the states?  Good thing we never had those here!

How badly would a correction hurt you?

Wednesday, April 23rd, 2014

The Globe and Mail now has a housing price correction calculator so you can see what kind of effects a rise or drop in the market would have on your home:

Much larger price declines happened long enough ago that the most recent crop of buyers may not have any recollection of them. In Calgary, troubles in the oil patch caused a house price decline from $107,739 on average in 1981 to $80,462 in 1985, or about 25 per cent. After a few years of rampant speculation in Toronto, the average resale home price fell from $254,197 in 1989 to $195,311 in 1995, or 23 per cent. Vancouver, always a volatile market, plunged more than 25 per cent in a year in the early 1980s and has a couple of times fallen more than 6 per cent in a year.

Want to see what a 25-per-cent decline would look like in today’s market? Our Correction Calculator shows you the numbers for the Canadian market as a whole, as well as the Big Three markets of Vancouver, Calgary and Toronto.

Here’s the original article and here’s the calculator.

Taxpayers funding condo flippers?

Monday, April 14th, 2014

By now everyone knows about the high cost of the Olympic Village project.

Current estimates are that it will cost taxpayers between $400 – $600 million to pay this off.

There are 68 units still left unsold over the last six years, but over at the ‘Canada House’ building it looks like a number of units have been bought and flipped, at least one for more than $400k profit in a month.

Hat tip to Mac who pointed out this article in the Province.

So whats going on here? Should these units have been priced higher or considering the tough sales across this project were they right to unload them quickly even if there were buyers willing to pay more?

Renting: The last, best real estate bargain?

Tuesday, April 1st, 2014

Somebody at the Sun has started looking at rent / buy ratios.  

Many Franks posted this in the comment section yesterday:

Barbara Yaffe discovers renting. Contains a few groaners. Renting a place may be the last, best real estate bargain and a majority of the city’s residents are taking full advantage

Vancouver rents have remained reasonable in part because of a 2.2-per-cent limit on annual increases imposed by the provincial government.

NO! Bad Barbara.

In a recent bulletin, [David and Mark Goodman] report Canadian Mortgage and Housing Corporation numbers that demonstrate it’s 32.5-per-cent cheaper to rent rather than own a one-bedroom unit in Vancouver.

“The gap increases considerably once strata fees, maintenance costs and taxes are taken into account.”

WTF kind of buy/rent comparison EXCLUDES strata/maintenance and tax?

Apartment building owners in Vancouver since 2007 have faced a municipal moratorium on the demolition of rental housing stock, and are reluctant to evict tenants in order to do needed upgrades.

Renoviction. When a phenomenon is popular enough to coin its own term, “reluctant” might be overstating the case.

The Goodmans are predicting that landlords of these older, minimally upgraded buildings soon may find themselves confronting tough new competition.

They report as many as 49 rental buildings, with 5,849 suites, could come on stream in the region within the next three years.

And the popularity of renting in Metro Vancouver may grow, says the Goodman Report, because of an increasing wariness about Canada’s possibly overvalued real estate.

“We live in a very special place with abundant resources and continuing investment from abroad,” says the newsletter. But with all the housing-bubble talk, “as a B.C. real-estate owner you’re wise to be cautious.”

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