Category Archives: supply

Can it happen here?

Ulsterman commented yesterday sharing an exchange with a local radio host.  Will the current price drops end up the start of something bigger or a rehash of 2009?

I sent an email to Lynda Steele on CKNW because she stated that she was confused by the local market. Some say prices are down, and yet others say they’re going up. Then they quoted the BC Assessment report that came out today and is warning that assessments will be up 30-50%. I explained in my email that since prices peaked in Spring 2016, they had since made a fairly significant correction.

She responded and asked if i were a realtor. I replied with:

No, i just take a keen interest in the local market but i have no “official” expertise. But neither do i make my living from encouraging people to buy or sell a house, so I have no vested interest either. It’s always a good time to buy or sell according to BC Realtors, so when i hear they are guests on radio shows I don’t put much faith in their advice.

My understanding of markets before corrections is as thus. First sales collapse (check), sellers desperately hang on, refusing to make significant discounts – price stickiness ( check), eventually some people have to sell (job losses, moves, divorces, debt loads etc) and this sets the new price – already happening in the single family home market.

By Spring there will be a tsunami of houses hitting the market as people try to beat the price drops and of course buyers figure this out and wait for lower prices, compounding the problem for buyers. This has happened in all markets that have corrected, from the US, to Ireland, to Spain. Vancouver will feel the pain too. With all the new mortgage qualification rules, foreign buyer taxes, so-to-be reduced AirBnB gravy train, rising interest rates etc, I think you’d be foolhardy not to just wait and see before buying. There’s almost no upside potential, but a massive risk of watching hundreds of thousands of equity get wiped out in months.

Imagine someone who has moved from a condo to a townhouse over the years and just recently leveraged to the maximum to buy a house this Spring. Maybe they put $500,000 down and borrowed a million. With the already-happened 20% correction they’ve watched $300,000 disappear. It won’t take much more before a decade of equity accumulation is gone. Leverage is wonderful when prices are rising, but it’s brutal when they go down.

Vancouver House Prices Plunging

Get your hankies out, the unthinkable has happened.

Sellnoworbepricedin4evah shared this article at CTV news about Vancouver house prices ‘plunging‘.

It’s apparently gotten so bad that some houses are now selling for under one million. Horrors! What will become of housing in Vancouver!

Sutton West Coast realtor David Hutchinson has been tracking plunging prices and found several detached homes listed below $1 million, some of which had been recently renovated.

“If you want to sell, you have to be priced sharply, and you see a lot of price drops,” Hutchinson told CTV.

And even with price drops, he added, he’s seen many sale prices lower than what sellers are asking for. He said he knew of one home in the west side of the city that was initially priced at $3.9 million, but when it didn’t sell, the owners reduced the price. They kept reducing it in small increments, but eventually they couldn’t wait any longer, and had to drop the price by nearly $1 million.

Another home on West 8th in Kitsilano was listed for $2.5 million, but could only fetch $1.6 million.

“There’s not this crazy deluge of offers coming in like before, when you could price it below the market value and wait for all the offers to come in. That’s not happening anymore,” Hutchinson said.

“Buyers are being a little more picky now and you didn’t see that before.”

You know what this means right? Deal Time!

Anybody looking for a tear-down in a bad neighborhood for just under a million?

Read the full article here.

Get a job.

Some people wonder how people make ends meet in a very expensive city with very low wages, but there’s plenty of economic opportunity beyond grow-ops, you just need take advantage of one our exceptional local specialties.

Of course you could go to the source of the money fountain and flip condos or become a realtor, but if you don’t have the time for a 6 week course here’s another opportunity: Condo Lineups.

If you can be the manikin who pretends to be very excited about a new local development you can earn $1800 in less than a week, that works out to about $15 an hour less expenses!

This tiny job posting speaks volumes about the Vancouver real estate market. Developers have convinced speculators that demand is so high, there’s enough room for the average person to make an extra few dollars flipping condos to regular folks. Now that regular folks aren’t fighting to buy pre-construction, this may be the first sign that speculative capital is drying up.

Read the full article over at better

Houses selling at a loss

The great real estate market pause of 2016 seems to be creating some losses out there. Southseacompany pointed out this article that finds 3 homes selling for less than they were purchased for:

Vancouver real estate often gets hailed for excellent returns, but this one has us scratching our head. Three single family detached homes have listed for less than the owners paid for them. The kicker? They were all purchased less than 8 months ago. Is this the beginning of the end for Vancouver’s market or are we just insanely good at finding deals? Check out the listings and you can decide.

The rough estimated losses on those properties range from $73k to $125k if they sell for asking. View all three listings over at BetterDwelling.

Big Drop in October BC Housing Starts

Sales are down and prices have been flattish lately, but developers seem to be taking a ‘wait and see’ approach as BC housing starts saw a big drop in October.

CMHC says the pace of urban housing starts picked up in Ontario last month but there were declines in Quebec, the Prairies, Atlantic Canada as well as British Columbia

The annual pace of urban starts in B.C. fell to 25,517 in October compared with 46,294 in September.

Bank of Montreal senior economist Robert Kavcic said British Columbia was the big story.

“We’ll see if this level of activity, particularly in Vancouver where starts fell to the lowest since 2011, holds in the months ahead in response to softening demand conditions,” Kavcic wrote in a note to clients.

The drop in home starts in Vancouver comes as real estate sales in the region have also fallen sharply in recent months.

Read the full article over at BNN.