Vancouver Condo Info » prices

Hollywood North vs. Beverly Hills

The Pope — Thu, 29 Jul 2010 02:58:56 +0000

Here’s an interesting comparison that came up in in the discussion earlier comparing a couple of North American property markets. First off space889 pointed out this nice large lot on the west side of Vancouver that is up for sale asking $3,280,000 – the oil tank has been removed and this property could be used to build your dream home near Oak street, or you could just hold onto it and wait for it to appreciate.

Crabman then pointed out this property in a place called Beverly Hills on a slightly larger lot asking $3,200,000.

Here they are side by side for comparison:

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The flipper-free building

The Pope — Tue, 27 Jul 2010 08:57:17 +0000

Local developer Ian Gillespie is experimenting with the idea of building a downtown condo that is affordable to a couple making minimum wage. The tower would be located on Cordova between Gastown and the Downtown Eastside. To keep costs down it will feature simple finishes, no parking, and owners would do their own maintenance instead of paying strata fees to cover repairs. To try to keep out speculators and flippers they will require the units to be owner occupied.

The 108-unit project is a collaboration involving Vancity credit union, Habitat for Humanity and a Downtown Eastside housing group. Habitat will get four condos suitable for families in the building and will choose who gets them. Another eight units, to be managed by the PHS housing society, will go to local community workers.

The remaining 96 condos will go to buyers who will have to prove that they plan to live in the units and who agree to do some maintenance themselves instead of just paying standard condo-maintenance fees. According to the material submitted to the city, nearly three-quarters of the condos will sell for less than $300,000, and more than half will be affordable to people making between $29,000 and $36,000 a year. That’s the income of an individual earning $15-$19 an hour, or a couple in which each partner makes the $8-an-hour minimum wage.

One interesting point: one of the reasons they can build this condo development for cheaper is because the land got cheaper:

The land, previously owned by developer Robert Wilson, was repossessed by Vancity last year. He had purchased it for $7.9-million in July, 2007, shortly before the city’s real-estate market deflated. It’s now assessed at $5.4-million.

Read the full article in the Globe and Mail.

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Significant discounts in the Okanagan

The Pope — Thu, 22 Jul 2010 08:02:35 +0000

The boom has gone bust inland and we’re starting to see more and more of these news stories about it. Jimmy pointed out this link to some coverage over at news 1330:

Advertised prices on many new developments are down between 20 and 30 per cent, six-figure savings in some cases. And if you really hunt, developer Matthew Hay says deeper discounts can be had.

He says too much inventory was built up before the recession hit, and the newly imposed Harmonized Sales Tax is not helping the market either. “So now not only is there a surplus of product on the market, but you’ve got a whole buyer demographic that is nervous, cautious, sitting on their wallets, waiting to see how things shake out.”

Some of the developers are offering incentives on top of the discounts like covering the HST, or the GST. Hay says some developers are desperate to sell and that is putting downward pressure on the Okanagan market.

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Is there an echo in here?

The Pope — Thu, 15 Jul 2010 08:03:35 +0000

Jonathon sent in a link to this great ‘blast from the past’ interview with developer Sam Zell about whether there was a real estate bubble in Miami. He makes some very compelling arguments about why there is no real estate bubble, and some of them sound remarkably familiar somehow.

Q But U.S. home prices are up about 40% in three years. How can this not be a bubble?

A Econ 1001: Prices have gone up because the demand has been much greater than the supply. The country is producing all it can in terms of supply, but what you see is more demand. Over the next 10 years we’re going to add a million new household, much of that’s due to immigration.

Econ 1001 is very advanced, so you may not understand that. Here’s something you will understand:

Q How bad could it get?

A Worst-case scenario? A flat housing market. Look, all I can tell you is we’re the largest owner of apartments in the U.S. and among the largest converters of apartments to condos. If there was a danger of a bubble, would we be in this business? I’ve never been accused of being a Pollyanna, I’m the Gravedancer. Americans don’t understand that we have the cheapest housing in the world. London and Tokyo are more expensive than New York. Why do you think everyone is going to South Florida from Europe? It’s because prices here are cheap compared with there.

Understand? South Florida is cheaper than other places, and everyone wants to live there. Ergo, there is no housing bubble in Miami condos. All of those arguments just happen to be applicable to Vancouver BC as well.

Here’s the ‘flat market’ in Miami since that argument was made, but always remember: ‘it’s different here’.

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The Big Difference

The Pope — Thu, 08 Jul 2010 09:14:29 +0000

What a difference a few months can make in the Vancouver real estate market. Inventory is high and prices are falling, no longer are we seeing the bidding wars of the past. In fact, it’s starting to look like reverse bidding wars as sellers compete for sharper pricing to snag the last of the boom-buyers. We’re starting to see some big asking price discrepancies on similar units in the same building.

Girlbear pointed out this first example in Arbutus walk:

MLS V837889 vs MLS V839019 – both penthouse units.

847 sq feet asking $494,900 vs. 950 sq feet asking $439,000.

Anonymous pointed out this second example down near gastown:

MLS V831995 vs. MLS V831904 – both 5th floor townhouse units.

1,236 sq feet asking $548,000 vs. 1,202 sq feet asking $649,000.

Buyers who bought before the big run up in prices can afford to sell at a much lower price and still make money compared to those who bought more recently. I guess this is what they mean when they say ‘buy low, sell high’.

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Royal LePage predicts falling prices

The Pope — Wed, 07 Jul 2010 15:27:03 +0000

realpaul pointed out this Vancouver Sun article. The day after we got the news that house prices are falling in Vancouver, Royal LePage has released a market survey predicting house prices and sales will ‘decline towards the end of the year’.

However, he pointed out, “This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year.”

This outlook is at odds with the BCREA and CREA market surveys released a few weeks ago that predict flat or rising prices for 2010 and then falling prices in 2011.

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Buy a house, get a free car.

The Pope — Tue, 06 Jul 2010 08:01:09 +0000

The REBGV stats for June 2010 are now available. If a month ago was a good time to buy some Vancouver real estate, than right now is an even gooderer time! If you were shopping for the benchmark home a month ago, you can now buy that same house and get a FREE CAR with it! Best Place on Meth pointed out some of the more dramatic drops and we’ve put together this handy guide for suggested cars you can get with the price difference.

The overall REBGV benchmark price for all housing in all areas is down just over 1 percent which is a little over $10k. You’re not going to get a brand new car for that much, but you could get this sweeeet 1992 Toyota Supra replete with go-fast fin and still have enough left over for a great little road trip:

The big drop for the month was in the benchmark house price on the west side. You’re not going to want to drive that supra up to your west side bungalow, but with about $90k extra to spend you can arrive in style with this 2005 Aston Martin DB9:

The dramatic percentage drop prize goes to West Vancouver Apartments, where the one month drop saw a loss of $77,664 or 11.5%! Go pick yourself up an apartment and a 2007 Maserati:

Crashcow pointed out that there’s even more drama in the West Van Apartment benchmark if you go back another month to the April Peak.

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Preparing for falling prices

The Pope — Tue, 29 Jun 2010 09:21:47 +0000

Canadian Mortgage Trends has an article about getting your mortgage approved before prices fall.

When home prices do fall, it makes it tougher for certain people to qualify for a mortgage—especially for refinances. When prices start dropping, appraisals come in lower, insurer valuation systems become more conservative, and lenders tighten up in general.

Vince Gaetano, a broker with Monster Mortgage, tells the Financial Post that people are already trying to get approved “before there is a correction in the real estate market.”

Of course prices may fall in the rest of Canada, but we all know they won’t fall here in Vancouver right guys?

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Backing away from the Bid

The Pope — Mon, 28 Jun 2010 09:00:35 +0000

We posted this in the free for all, but it’s worth taking a closer look: Eleven pre-sales buyers at the Vancouver Olympic Village are unhappy with their units and are trying to get out of their contract. They complain about changes to plan and faulty fireplaces. Presales contracts of course always favor the developer, and these issues aren’t enough to break the agreement, so the approach their lawyer is taking is to claim that the City of Vancouver took over as developer. Since they aren’t listed on the paperwork this would be a technicality that could nullify the contract. If they manage to make this argument work and other buyers want a way out of their purchases it could be more trouble for the O.V.

The buyers put down deposits of between $60,000 and $300,000 for False Creek condos priced from a low of $550,000 to units that sold in the millions of dollars.

They’re being asked to close their deals by the end of the month.

On Thursday, Baynham filed writs in B.C. Supreme Court against developer Millennium Water on behalf of six of his clients, who have addresses in Vancouver and West Vancouver.

Baynham says the City of Vancouver is the owner of the property, after bailing out Millennium when it couldn’t get financing. But that’s not disclosed in the sales agreements, he says, so the contracts are invalid and should be rescinded.

The city argues that Millenium still owns the project and is the developer, the city is simply the bank.

We saw a lot of pre-sales buyers try to walk away from their contracts during the mini-crash a few years ago, and developers suing the for the difference between their deposit and the current market value. It’s interesting that these buyers are trying to get out of their contracts while the stats still show that Vancouver property prices are still at an all-time record high.

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Vancouver RE Price Reductions

The Pope — Thu, 24 Jun 2010 09:22:08 +0000

Yesterday we posted a link to an article about the high number of properties for sale in Vancouver. What’s possibly more interesting than the sheer number of listings in the very high number of price reductions we’re currently seeing. Yesterday Paulb shared numbers that showed 232 new listings and 56 sales, but nearly 3 times that number of price changes at 162.

We’ve seen many days where price changes have exceeded 200. Even with listings for the REBGV area nearing 19,000 Mclovin points out that we’re consistently seeing about 1% of total inventory drop their price every single day. That means about 5% of all listings in Vancouver are reducing their asking price each week.

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Lots of property to choose from

The Pope — Wed, 23 Jun 2010 08:40:28 +0000

The news is getting out there about the rising real estate inventory in Vancouver:

“We are close to that level where the seller either has to discount or lower the price or take the listing off the market,” said local realtor James Wong of Sutton West Coast.

The Vancouver-based Malaysian who sells properties in the neighboring city of Richmond told Xinhua that not all sellers were desperate to sell and could possibly delist their properties.

“They just want to catch a good price for what is perceived to be the value of their home. But most of them at this point have already missed the peak,” said Wong.

Full story in the english version of Peoples Daily Online.

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sales down, prices up and set to flatten

The Pope — Tue, 15 Jun 2010 09:18:12 +0000

Home sales in BC are down 11 percent in May 2010 compared to April, but prices are up and set to flatten according to the BC Real Estate Association.

The survey also concluded that, year-to-date, B.C. residential sales dollar volume increased 50 per cent to $17.5 billion, compared to the same period last year. Residential sales rose 31 per cent to 34,619 year-to-date, while the average price climbed 14 per cent to $505,468 over the same period.

The BCREA said in another recent survey that it expects sales to rise next year by about four per cent.

A separate survey by the Canadian Real Estate Association (CREA) recently forecast that prices would rise 2.3 per cent this year across the province before slipping back by 3.5 per cent in 2011.

Full article in the Vancouver Sun

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2010 a BC market speedbump

The Pope — Tue, 08 Jun 2010 09:05:58 +0000

The BC Real Estate Association has generously released to the public their market forecast for the near future so that all investors may partake of their wisdom. As they look ahead, they see a slowdown for 2010 before sales grow again in 2011. Even closer to home this is what they foresee for Vancouver:

For Metro Vancouver, sales are forecast to drop 7.9 per cent this year and rise 4.5 per cent in 2011 to 34,900 units. Prices are expected to increase 10.7 per cent this year in Greater Vancouver to $655,900 and 0.4 per cent in 2011 to $658,800.

For prices across BC the BCREA is predicting a rise of 6% this year and 1% next year. Evidently they use a different brand of Crystal Ball than the Canadian Real Estate Association:

..a survey by the Canadian Real Estate Association (CREA) released last week forecast that prices would rise 2.3 per cent this year to $476,900 before slipping back 3.5 per cent in 2011.

The CREA survey also predicted that sales across the province would decrease almost six per cent to 80,000 transactions this year.

Read the full article over at the Vancouver Sun.

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BC drags down national forecast

The Pope — Thu, 03 Jun 2010 08:56:04 +0000

Ladies and gentlemen, please bear with us for a moment, we seem to be experiencing technical difficulties with the Crystal-rear-view-mirror ball. For whatever reason it appears that BC house prices have not continued their ever upward climb to the stars. This temporary setback has caused the CREA to readjust the national forecast in a downward direction.

Here is a CBC news video about the local Vancouver market ‘cooling’. It features many pretty faces such as Cameron Muir, Jake Moldowan and Larry Yatkowsky.

Thanks to Anonymous and Jesse for the links!

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Interest rates up, prices down

The Pope — Wed, 02 Jun 2010 08:30:10 +0000

That’s right, the Bank of Canada just DOUBLED the overnight rate, which would be oh so much more impressive if we weren’t starting at .25%

The overnight rate is now one half of a percentage point. Was it in anticipation of these new dramatically higher interest rates that the Average Vancouver house price dropped by about $45,000 last month?

And how are the banks reacting? By dropping mortgage rates to give you “one last chance” at the easy money. But Check out Mr. Mark Carney, he’s all “caution this and caution that“. Rock bottom rates may be with us for some time yet!

I know many bears out there are dreaming of the American bubble situation, where house prices plummet AND interest rates stay near record lows. Could it happen in Vancouver?

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Reviews of the Rollercoaster

The Pope — Tue, 01 Jun 2010 09:22:30 +0000

Tickets are still available to the Vancouver Real Estate Roller Coaster. Critics are calling it the Summer blockbuster that’s not to be missed!

“..a useful image when thinking about asset prices in general today and always. Human behaviour and leverage drive our asset price cycles. If we always keep the roller coaster image in mind, we will never be able to relax and fall asleep after a period of very steep climbs; nor will we be as inclined to throw in the towel after a period of very steep falls.”

Danielle Park – Juggling Dynamite

“..a wonderful illustration of financial storytelling. Metaphor can be a wonderful tool, the reason this one works is that it takes an over used cliché and makes it real.”

Stewart Marshall – Financial Storyteller

“A vomit inducing ride.”

The Georgia Straight

“The only thing I had a problem with is that [it implies] what really is going to happen is we’re going to fall off the roller coaster and sink into the water. Investments are volatile. If you want low volatility then buy low-volatility GICs.”

Tsur Sommerville – UBC Center for Urban Economics and Real Estate

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Field Report from UBC condo projects

crashcow — Mon, 31 May 2010 08:54:26 +0000

May 29, 2010
by Crashcow

I woke up this morning with a massive hangover. Wow, what a 40% sales-to-list party that was! But with today being Alumni Weekend, I decided to check out my Alma Mater and tour the empire of new condos she’s been feverishly building.

Even though we’re now essentially in June, the day was cold, wet and wintery. But as any Vancouverite will tell you, this only a small sacrifice to live in the Best Place on Earth. A minor inconvenience, if you will.

As I entered into UBC and drove passed some new buildings, I became confused. My navigation sense turned dismal. If you haven’t visited UBC in over 5 years, chances are you will not recognize this place either. Entire communities the size of the Olympic Village have recently been built multiple times over. According to U-Town, there are now eight emerging communities, with Wesbrook Village being the largest. Talk about inventory glut.

The Sales office at Wesbrook Village sat empty. Balloons walloped in the wind. I saw no people and no amenities, except for a Save-on-Foods. The villages felt like ghost towns; it was quite the sobering contrast to Rennie’s sunny and euphoric circus at the Olympic Village. But then we ran into a friend that I hadn’t seen in ages. It turned out she was living in one of these new communities and had an interesting story.

She is a first-time buyer that entered the market a few months ago during the climax of the buying frenzy. After getting bruised several times in bidding wars, she toughened up to outbid the hounds. Victory was hers, as were the keys to a new UBC condo for over $600/sq.ft on leased land. The conversation was very insightful:

Me: “What shaped your decision to buy in UBC?”
Her: “I bought this condo as an investment. UBC is quickly becoming a world-class university and is increasing its student capacity. There is always going to be strong housing demand from students and families. My goal now is to build a portfolio with as many condos as possible. You should really take this opportunity to own here.”
Me: “Actually, I’m really enjoying renting at the moment. I did own a condo, but then sold it in fall of ‘07.”

This comment stirred a puzzled reaction in her.

Her: “Why? Do you think the market is going to…”

For some reason, she had trouble finding the next word. Any one of “drop”, “fall”, “correct”, “tank” or “crash” would have done just fine. Instead, she silently motioned a dive with her hand. This was clearly a fragile person.

It utterly amazes me that someone with higher education would consider leveraging themselves to the moon in order to snap up as many condos as possible without even seriously considering a drop in prices. It’s no surprise to us that politicians, real estate agents, brokers, bankers and developers have failed us. But it’s sad that our academic institutions have not equipped us with the most basic of financial street smarts.

I look forward to The Great Cleansing ahead.

-crashcow

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BC quarterly sales drop more than 25%

The Pope — Thu, 20 May 2010 08:36:08 +0000

Landcor data is out and in the first three months of 2010 both the number and value of BC real estate transactions dropped more than 25% from the previous quarter.

The results quantify the trend economists such as Cameron Muir, chief economist for the B.C. Real Estate Association, have observed occurring since January.

Landcor’s numbers “certainly support the data we’ve been looking at that shows that obviously the pace of sales have slowed since the last quarter of 2009,” Muir said in an interview.

Last year’s “fourth-quarter peak is unlikely to reoccur in 2010.”

Landcor president Rudy Nielsen said B.C. home sales typically slow at the beginning of the year, but the first-quarter of 2010 slowed more than usual compared with the last decade of results. This is in part, he believes, because of the Olympics.

Nielsen added that consumer uncertainty over a host of issues, ranging from the global economic situation to unknown effects of the harmonized sales tax, have consumers sitting on their wallets.

Meanwhile in Canada, the CMHC is predicting that prices will rise ‘moderately’ in the next couple of years:

The agency, which insures almost $500-million of Canadian mortgages, said the average cost of a home by the end of 2011 should be $350,000. That would be a gain of 1.4 per cent over April’s record high of $344,968.

Forecasting higher prices next year puts the agency at odds with the Canadian Real Estate Association and Toronto-Dominion Bank, both of which are calling for prices to drop by 1.5 per cent and 2.7 per cent respectively in 2011.

The Globe and Mail might want to check their numbers. Canadian taxpayers are responsible for HALF A TRILLION DOLLARS in CMHC mortgages, not ‘$500-million’.

It has been difficult to accurately make forecasts on the housing market through the recession, however. Its forecast for 2009 housing starts was off by 19.4 per cent. The agency was only off by 1.5 per cent the previous year, and its goal is to always be within 10 per cent of the actual figures.

“For the first time in several years, our forecast accuracy was not within the 10-per-cent range because of volatile market conditions,” it said.

A ten percent margin of error eh? Coincidentally Dan in Calgary points out that the phrase ‘CMHC is forecasting’ is a perfect anagram for ‘Comic things, farces‘

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Olympic Village Field Report

The Pope — Mon, 17 May 2010 08:36:26 +0000

Crashcow posted this comment over the weekend: a field report on the opening sale of the very lightly used Millennium Water Olympic Village condos:

Field Report of Millennium Water
May 15, 10

I woke up this morning with a massive hangover. Wow, what an 18K party that was! But with the weather so nice today, I decided to checkout my first open house in a long time to get a feel for what’s happening in the trenches. And not just any open house, an entire open village. Little did I know how much of a treat it would end up being.

On the way to Millennium Water, I passed by an abnormal quantity of For Sale signs. I kept asking myself how Rennie is going to pull off a 474 condo sale when inventory is exploding and sales are faltering. But soon after I walked into the gates of the Olympic Village, I knew I had stepped into a dream world of magic.

If Vancouver ever had a ground zero for Irrational Exuberance, Millennium Water is it. And if Bob Rennie is ever the King of anything, it’s hype. The man has carefully orchestrated a circus of clowns, bands, tents, treasure hunts and euphoria. When bands are cheering on lined up speculators and the King himself is handing everyone cookies, what is being witnessed is the last “hurrah” of a heavily inflated market.

I lined up to view a condo and couldn’t help but overhearing what the herd was chanting. One of my favourites was, “I don’t know if I like this area, but I love the wave pattern on the wall.”

I followed the crowd into a staged 1 bed, 2-den condo at slightly over 1,000 sq. feet. I overheard some lady asking an agent the price and he replied with a straight face:
“One-point-three-million.”

The lady’s jaw dropped, she shook her head, and moved on. I couldn’t contain myself and had to keep the conversation going.

- Me: “The miracles of record low interest rates. So that’s roughly $1,200 per sq. ft?”
- Agent: “Yes, but I’m also selling units down the street for $500 per sq. ft”
- Me: “So why, in your opinion, does this place come at a $700,000 premium?”
- Agent: “It’s an opportunity to be a part of this famous community and the proximity to the water.”
- Me: “Not only are you asking for an outrageous premium, you’re doing it at a time when there are over 18,000 units on the market, CHMC rules are tightening and mortgage rates are climbing.”
- Agent: “You should then really consider the units we have listed down the street.”

So I followed the yellow brick road down the street and into another Rennie building called “The Maynard’s Block.” And sure enough, studios were priced at half a million.

Buy now, or be priced out forever.

-Crashcow

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Money for the middlemen

The Pope — Tue, 11 May 2010 08:28:39 +0000

This list of commissions for The Brook in North Vancouver is courtesty of thinktom over at Real Estate Talks:

This is a new building with an open house every Saturday and Sunday. You can call them to book a viewing appoint at other times OR you could pay a 3rd party salesman $50 – $100k to show you the unit. Perhaps they’ll even drive you there in the new Porsche.

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Crackshack or Mansion? The Answers.

The Pope — Mon, 10 May 2010 09:05:27 +0000

A week ago we had a community driven interview of Petr and Ola, creators of the instant classic Vancouver Real Estate quiz “Crackshack or Mansion?”. You asked your questions and voted up the comments you wanted to hear answers to. Well we’ve sent the highest rated questions on to Petr and Ola and here are their answers:

How long have they lived in Vancouver?
PETR: I have lived here since 2002 and Ola has lived here since she was about 10 years old.

Do they rent or own? (wouldn’t want to presume even the obvious!)
PETR: haha. We rent.
OLA: …one of these “special” 1950’s bungalows.

If they rent, have they been tempted to buy?
PETR: Ola had considered buying a place with her friend in about 2007. I thought the bubble was pretty much at its peak back then and strongly encouraged her to wait. A lot of her friends were getting into the housing market (or thinking about it) and I think the mob mentality almost got the best of her. It didn’t take long to convince it’s a crazy idea (to buy with a friend, and at these prices).
OLA: I shudder when I think about it now. Even if prices kept going up and interest rates stayed low, it’s insane to tie yourself down with other people like that.

Have they considered leaving Vancouver because of RE prices?
PETR: Even though we are convinced this is a bubble that will have a severe correction, the prices will probably still be too high for us. I wouldn’t pay 200,000 for most of those million dollar mansions. The city is nice but it has a lot of competition for the pretty city of the month award. The bubble will pop everywhere so the interior of BC will look pretty good.
OLA: I must admit, owning my dream home has been a fantasy since I was 8. However, my dreams are extensive and require many acres and handcrafted woodwork. It would be a trophy for career success. It would be a frivolous indulgence when I have excess cash flow. Enslaving myself to a peach-coloured 80’s built condo isn’t really a replacement for that.

(...)
Read the rest of Crackshack or Mansion? The Answers. (1,221 words)

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TD: House prices will drop

The Pope — Thu, 06 May 2010 09:00:30 +0000

TD Bank is the most recent pessimistic soothsayer when it comes to the Canadian housing market, with a prediction of falling house prices in 2011.

While income and employment seems to be recovering quickly from the recession, the number of listings to hit the market and the number of new housing starts has caught the bank by surprise. It had previously expected prices to gain 1.6 per cent in 2011 in inflation adjusted terms, the bank now is calling for a 2.7-per-cent drop.

Ontario and British Columbia are expected to bear the brunt of the decline, seeing their markets drop 3.4 per cent and 3 per cent respectively.

Ah! They’ve been paying attention to listings growth. Don’t they know that just means more options for buyers and that makes it a great time to buy?

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Waiting for the right price

The Pope — Tue, 04 May 2010 08:01:20 +0000

Paulb and paintedturtle pointed out this article in the Globe and Mail – Housing Affordability: the great quandry. Why there’s time to wait for the right home at the right price.

The one city to worry about if you’re a homeowner is Vancouver, where normal mortgage rates would have resulted in the typical household spending 78 per cent of its income to carry a bungalow, just shy of the peak level.

History shows that it’s impossible to accurately predict short-term movements of house prices – markets regularly overshoot rational levels both on the way up and the way down. What we can say is that based on current affordability, if house prices do continue to escalate, at some point they’re almost certain to correct back down.

That means there’s no rush to buy and time to wait for the right home at the right price – and that for the next while at least home buyers should evaluate houses as places to live rather than on their potential for appreciation.

Ok. I see what’s going on here. The Globe and Mail has worked themselves into a jealous rage because our properties are worth so much and are trying to talk down our market. It won’t work guys. We know better than that, we evaluate property purchases based on how much a month they cost with record low interest rates and pencil in 12% increase in prices each year. Everybody knows prices never drop in Vancouver.

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USA bubble peak vs. Canada today

The Pope — Mon, 03 May 2010 09:56:11 +0000

Vibe posted an interesting comparison of the 2006 US bubble peak to the present day Canadian situation in the forums this weekend. The local Vancouver market is bubblicious, but is there a national Canadian housing bubble?

Everyone pretty much agrees about Vancouver, but here are a couple of points that were made about the national scene:

1.It is reasonable to claim that there is not a housing bubble in Canada because only certain areas are over inflated.

2.Vancouver’s very high prices skew the national average and cause Canada to look worse than it really is.

One thing I think we can all agree on is that the US did have a housing bubble. Well I put together a spreadsheet that I feel shows that affordability is about as bad across Canada as it was in the US at their peak. It also shows that Vancouver is not skewing our national data any more than the most overpriced cities in the US were skewing their data.

In order to measure affordability I used house price to personal income ratios. I compared the 20 cities used in the Case Shiller Housing Index to the 6 cities used in the Teranet Housing Index. The US data is from 2006 while the Canadian data is from 2009.

I think the following graph most clearly illustrates my point:

Vancouver is the only Canadian city with a ratio over 9, while the US had 3: LA, San Fran and San Diego. Toronto is the only Canadian city with a ratio between 5 and 9, the US had 9 in this range. The under 5 range looks bigger for Canada but we have more population covered by our index than they do by theirs. The important thing is that the percentage of each nations population living in cities with elevated ratios is similar.

The distribution and average ratios for both countries are almost identical. I did a population weighted average of the ratios and this gave a higher value for the US than Canada, 6.3 versus 5.6. Keeping in mind that the Canadian data comes from 3rd quarter 2009, during our recent price dip, I don’t think this is a huge difference.

Now I don’t know what the future holds, but to me this data suggest we are in a very similar situation to the US at their peak. We might not take the same path down (we already had a double top) but I don’t see why our eventual bottom should be much, if any, higher than theirs. And any price drops should be distributed across the nation in a similar fashion as well.

Here is a link to the data for anyone interested.

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Yes, there’s a housing bubble

The Pope — Thu, 29 Apr 2010 08:51:10 +0000

Painted turtle pointed out this article in the Vancouver Sun: Yes, there’s a housing bubble in Canada – but only in three cities. You read that correctly. The Vancouver sun printed an article calling the Vancouver market a bubble. I hope Beelzebub has some of those left over Olympic mittens.

According to a national study released last year by Pitney Bowes Business Insight, the average household income level in Calgary topped $113,000, while the average in Edmonton exceeded $90,000.

Vancouver was well behind both Alberta cities, at $82,300. That’s about $2,000 higher than Windsor, Ont., which has some of the lowest house prices in Canada. Toronto boasted average household incomes of $101,400.

Let’s look at it another way.

When U.S. house prices got to their most extreme levels during the U.S. housing bubble, the ratio of average household income levels to average local house prices got to 10 times or more in overheated markets like Los Angeles and Phoenix.

In Vancouver, the average detached bungalow now costs roughly 11 times the typical average local household income level, based on the data above.

Read the full article at the Vancouver Sun website.

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