Archive for the ‘prices’ Category

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.”

Should you just move to an island?

Tuesday, March 25th, 2014

Skook has a post over at VancouverPeak.com about an island dream gone sour.

A BC couple purchased land on Mayne island and started building their dream home only to run into a confluence of cost overruns and real estate market downturn.

Today, their house is only a wood frame shell that looks out over one of B.C.’s most dramatic views, with the Lower Mainland in the distance, and regular sightings of ferries, whales and seals. The tiered wooded lot is only a five-minute drive to the ferry.
It is the idyllic best that B.C. has to offer, and yet the Klingsats won’t even break even on the near $1-million they spent on the property and construction. They have relisted it for $539,000, after previous listings at $649,000 and $699,000 didn’t get any offers. “Everybody loves the place, but the people don’t want a house that’s not finished,” says Mr. Klingsat, who gave up on the project six months ago. “And I can’t do it. I haven’t got any more money to put into it. “The whole economy everywhere is lousy – nothing is gangbusters. There are places for rent all over here on Vancouver island.”

The original article in over at the Globe and Mail. Skook adds some extra thoughts and information.

RFM has also added some information summarizing other properties in that particular island market.  There are 113 properties for sale on an island with a population of 900.

Pimco talking down Canada again

Monday, March 3rd, 2014

The worlds biggest bond fund seems to think there’s some sort of an issue with the Canadian real estate market.

Ed Devlin sees a decline somewhere in the range of 10-20 percent for home prices across the nation.

“And if you get that kind of 10-, 20-per-cent real correction, that should alleviate some of the stresses,” he added in an interview with our real estate reporter.

“And so that’s kind of what what we’re seeing. It will start this year, it could be bumpy along the way.”

To be clear, Mr. Devlin is not forecasting a sudden crash, but he joins a chorus of voices, from Deutsche Bank to the Organization for Economic Co-operation and Development, in raising red flags.

Deutsche Bank, for example, believes the Canadian housing market is the most overvalued in the world.

Read the full article here.

Excess of rental units in Toronto and Vancouver?

Thursday, February 13th, 2014

A new report from CIBC is warning of an excess of rental units in Toronto and Vancouver.

They are basing this outlook on the large number of condos being built in both cities and predict a less than half point rise in vacancy rates, so ‘warning’ sounds a bit strong.

The concern is that increased competition for good renters could drive owners to sell their condos, leading to a further downturn in the condo resales market.

Economists and policy makers have worried that an “increased supply of rental units will flood the market and will lead to a wave of sales by disappointed investors with no bargaining power,” Mr. Tal writes in the report. The Bank of Canada highlighted concerns about the condo market in December when it outlined the key risks to the economy.

“A sharp correction in the condominium market could spread to other segments of the housing market with stretched valuations, as buyers and sellers adjust their expectations of the future path of house prices,” the central bank warned. “Such a correction could also have significant repercussions on the real economy, since the construction sector is an important component of economic activity.”

Read the full article here.

TD: Houses 10% overpriced nationally

Wednesday, February 5th, 2014

Somebody over at TD bank looked in their crystal ball and saw interest rates rising.

They say that a combination of factors including increasing supply, softening demand and the expectation of rising interest rates mean that home price across the nation are overvalued by about 10%.

It says markets such as Toronto, Vancouver, Montreal and Ottawa are likely more overvalued than markets in the Prairie and Atlantic regions, and will likely see more of an impact.

The national housing market and worries about a real estate bubble have been key concerns for policy-makers for several years.

Recent indicators have suggested the market may be headed for a soft landing instead of a bubble bursting, but concerns have persisted.

Full article here.

Map of assessment changes from 2013 to 2014

Thursday, January 30th, 2014

VMD pointed out this interesting zoomable map of assessed property value changes over the last year in Vancouver.

Anthony Smith at HealthyCityMaps created this map using BC assessment data.

At his site you can click and zoom in to see whats happened to values in different neighbourhoods.

Interesting to see how tax assessments vary from micro area to micro area.

Dark purple represents a large increase, yellow is neutral and dark orange is a large decrease from 2013 to 2014.

Screen Shot 2014-01-30 at 10.42.02 AM

View the full map here.

What’s holding back the BC economy?

Monday, January 20th, 2014

BC’s economy is tepid, with some pessimistic outlooks from business leaders.

So what’s holding us back? Why don’t we have a higher rate of innovation and a broader growth economy?

That’s the question asked by this BC Business article:

Tamara Vrooman, president and CEO of Vancouver City Savings Credit Union, said complacency about the allure of B.C.’s climate, geography, and lifestyle may be one of the greatest risks. “Snow and mountains do not a business strategy make,” she warned. “I see for the first time in a decade, young people between 25 and 34 moving en masse to Alberta, Saskatchewan, and Manitoba, because that’s where the jobs are,”  Vrooman said. “I’m quite concerned about our ability to grow our economy for the next generation if they can’t find gainful employment here.”

The numbers back her up. Statistics Canada figures show B.C. lost 18,900 full-time jobs in 2013. Yet even with fewer spots to fill, companies are finding themselves unable to find workers with the skills needed to grow their businesses. There aren’t enough graduates in high-demand fields, and B.C. wages for even those workers are often insufficient to offset the high cost of living.

Is this a chicken and the egg problem?  Businesses can’t afford to pay enough to bring in the talent that would grow business?  Or is there a complacency problem here, where the environment was always supposed to be enough to draw people in and they’d take a paycut to live here?

Down is the new flat in Vancouver and Victoria

Monday, January 6th, 2014

A ‘flat’ market sounds good right?

Not too up, not too down, but just right.

It means if you buy a condo now you won’t have to suffer the indignity of someone buying the unit upstairs from you for $100k less in the future.

So flat is comfortable and we’re starting to see that word a lot more these days.  This article uses it in the headline: Vancouver condo market stays flat.

So you might be surprised to read the following directly under that headline:

Although Vancouver has a reputation as one of the most expensive cities in North America for housing, condo prices stayed flat or even dropped last year, according to recently released assessment numbers.

That follows several years of the same pattern, which means overall condo prices are now seven to eight per cent lower in inflation-adjusted dollars than they were at the recent peak of the condo market in 2009, says one analyst.

Meanwhile in the capital city they’re using the same word: Flat forecast for Greater Victoria home prices.

And here’s what they say:

Although the number of homes sold for the past year rose by four per cent to 5,998 from 5,747 in 2012, the benchmark price for a single-family house slid by 3.2 per cent. That benchmark, representing a typical house, was $479,599 in December, down from $495,400 during the same month in 2012, the board said Thursday.

The benchmark price has dropped from three years ago when it was $515,500, the board said. And it’s lower than the $483,400 price recorded five years ago.

So here’s the cheat sheet:

Vancouver ‘flat’ = 7-8% drop over four years.

Victoria ‘flat’ = $35,901 drop over three years.

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