Archive for the ‘supply’ Category

Builders stop building in a bubble?

Thursday, November 20th, 2014

Markoz left this comment in yesterdays thread, but it got held up in moderation because it had more than two links:

My wife works at a bank and her boss sent a link to this BIV article entitled, “Nobel economist housing bubble formula shows Vancouver resistant.

Here is a copy of my response (unfortunately the charts I clipped won’t paste into the comment section):
His theory (as presented by the article’s writer at least) is that builders are smart enough to stop building before/when a bubble pops. I’m not sure if he means that a slow down in building is a precursor to a bubble popping or if he means that when sales drop so do housing starts. In Vancouver, housing starts only dropped off significantly well after sales did in 2008.

Vancouver sales began to tank in March or April of 2008.

Residential property sales in Greater Vancouver totalled 2,997 in March 2008, a decline of 16.3 per cent from the 3,582 residential sales recorded in March 2007, and a decline of 25.7 per cent compared to the 4,033 sales in March 2006.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled 3,218 in April 2008, a decline of five per cent from the 3,387 sales recorded in April 2007, and a 3.8 per cent drop from the 3,345 sales in April 2006.

VANCOUVER – The Greater Vancouver housing market continued its re-balance between sales and listings last month. The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver declined 30.7 per cent in May 2008 to 3,002 from the 4,331 sales recorded in May 2007.
All of the above is from the REGBV website: http://www.rebgv.org/monthly-reports?month=May&year=2008
It just kept getting worse:http://www.huffingtonpost.ca/2012/07/04/vancouver-home-sales-10-year-low_n_1649539.html

“This summer, sales went off a cliff,” added Somerville, who is director of the centre for urban economics and real estate at the Sauder School of Business at the University of B.C.:http://www.canada.com/vancouversun/news/business/story.html?id=e6e0c211-fddd-413b-9a94-3564e20567d8

The financial crisis did not start until Lehman Bros failed on September 15, 2008.

Here are the housing starts specs:

Apparently our builders aren’t as smart as the Nobel Laureate. Starts for all types of homes stayed above the average for 2004-2008 till the end of 2008. They plummeted after the fact. Perhaps the writer is putting his own spin on what Smith said. I wasn’t there so I don’t know.

The other thing to note is that the writer never actually asked Smith if he thought Vancouver was in a bubble. He did a follow up interview with him but seems to have avoided asking the question directly. He says, “Using Smith’s formula for housing bubble-burst scenarios, B.C. and Vancouver do not appear threatened, despite record-high prices in the latter. B.C. housing starts this year are up 3.1% from 2013 and forecast to rise a further 1.4% in 2015, according to Canada Mortgage and Housing Corp.” Why not just ask him what he thought instead of making a supposition?

House prices up across Canada

Tuesday, November 18th, 2014

The 45 basis point reduction in interest rates at the start of the year has done wonders for real estate in Canada.

The average house price is up 7% and Calgary prices have gone up by nearly double the national rate.

With the October numbers by CREA, the average Canadian home has never been worth more than it is now.

In volume terms, the actual number of homes sold rose by the same amount — seven per cent. “This marks the sixth consecutive month of stronger resale housing activity compared to a quiet start to the year, and the strongest activity for the month of October since 2009,” CREA said in a release.

October isn’t typically one of the strongest months for home buying, as activity tends to be strongest in the spring and summer.

TD Bank said in a note to clients after the CREA numbers were released that in sales terms, the housing market is hotter than it normally is this time of year.

Of course most of these gains are driven by the three cities: Toronto, Vancouver and Calgary.

Will wonders ever cease or this the economic miracle that keeps on giving?

An offer you can’t refuse?

Monday, November 17th, 2014

The house of Vito Corleone from the film “The Godfather” is for sale on Staten Island, New York.

Every so often it’s interesting to see what sort of premium you pay for being within walking distance of 14 different coffee shops and a handful of grow ops here in Vancouver.

We’re not sure how many grow ops are within walking distance on Staten Island, but we know there aren’t 14 different coffee shops nearby, so the asking price is ‘only’ $2.9 million.

For that much here on the west coast you’d probably still get the ‘man cave’, gym and maybe even the ‘english pub’, but probably not the saltwater pool.

Any film history fans thinking of moving to the east coast?

CMHC: Lower house sales in lower mainland over next 2 years

Monday, November 3rd, 2014

The CMHC is predicting declining house sales in the lower mainland over the next couple of years due to higher mortgage interest rates.

“Total housing starts will edge higher as resale market conditions remain balanced and the supply of completed and unabsorbed (unsold) new homes trends lower,” said CMHC B.C. regional economist Carol Frketich.

“Housing demand will be supported by employment and population growth, but tempered by gradually rising mortgage interest rates.”

They are predicting price growth of 1.2 and 1.7% (unclear if this is before or after inflation) and they forecast this based on an assumption of a shift to ‘lower cost housing’.

Which might be good news for anyone trying to sell ‘lower cost housing’ since prices on Vancouver homes under $1.1 million have gone essentially nowhere over the last four years.

 

Is Vancouver lost without a Compass?

Thursday, October 30th, 2014

In Vancouver everything is about real estate.

Yes, EVERYTHING.

Even that bus you take to get to your weed dispensary before yoga class.

Thats why it’s so disappointing that our world class fare gates are still not working.  This is the system that was supposed to be ready in 2008 but has been delayed over and over again. It’s a $194 million dollar solution that isn’t quite a solution yet.

Once in place this system should put a stop to fare evasion which is currently estimated to be a loss of at least $10 million per year. Well, hopefully it’s at least $10 mil per year, since we’ll be paying $12 million per year for operating costs once the system is working.

Fortunately this is all happening in Vancouver which means whether the transit system is losing money in fare evasion or through operating costs it can always make that money back in real estate.

Historic accord splits control of properties

Thursday, October 2nd, 2014

They’re not making any more land, but we still seem to be finding some to build on.

The 21 hectare Jericho lands in Point Grey is part of an agreement to split control of three Vancouver properties between a crown corporation and three First Nations – the Musqueam, Squamish and Tsleil-Waututh Nation.

David Eby, MLA for Vancouver-Point Grey, said he was heartened to learn that a deal had been made regarding the Jericho Lands.

“There had been a lot of people in the community, myself included, that believed this land would be tied up in negotiations – potentially in court – for many years,” he said. “There’s a very clear and well-established traditional use of this land by First Nations. They were certainly entitled to it and it sounds like they received a fair share of their lands. It was certainly a surprise to hear that it has happened at all, let alone so quickly.”

Mr. Eby said the significance for the community he represents is that development will proceed faster than many anticipated.

“I would not be understating it to say that many members of the community that are neighbours to this property are incredibly concerned about the type of development that could potentially be located at this site,” he said.

“I can tell you everybody from affordable housing advocates to environmental groups … to the West Point Grey Homeowners’ Association has weighed in with different perspectives about what should happen here. That consultation will be challenging, but it’s critically important that it happen.”

Read the full article here.

 

Beautiful Empty Homes of Vancouver

Tuesday, September 23rd, 2014

A group of about 20 concerned west side residents have started posting a photo collection of vacant abandoned homes in Vancouver.

For some of these homes the term ‘beautiful’ is a bit of a stretch, but it’s interesting to see the growing resentment of abandoned and vacant properties in a town with high house prices.

There’s an article in the Province about that site as well:

The blog is “a documentation of what happens when Vancouver real estate enters the global real estate market,” but there may be factors other than absentee owners that contribute to the rubble-strewn yards and the decaying homes it showcases, Yan said.

As aging baby boomers begin downsizing to condos in other parts of the city “perhaps a good number” of their single-family homes are sitting empty between real estate deals, Yan said.

Still, this phenomenon could be the “edge of the new normal,” as Vancouver becomes a “resort city” where people from around the world invest their money in home ownership.

Regardless of why they are emptying, these neighbourhoods were centred around public schools and built for families, Yan said.

Read the full article here and visit the site here: Beautiful Empty Homes of Vancouver.

 

Rent to own?

Thursday, September 11th, 2014

At least one local developer has struck on an ‘innovative’ way to rent out their property: rent to own.

Just like TV and Furniture in the 80s, you can rent to own a condo.

Under the plan, 15 per cent of a tenant’s monthly rent goes into a credit account. That money can then be used in the future for a down payment on a new Bosa home purchase, to a maximum of three per cent of the home’s value.

This should appeal to someone who is having difficulty finding a unit for 15% less and putting the money away themselves.

Swimming with ideas

Wednesday, July 30th, 2014

Looks like there may be another chunk of land that will give developers that claim they love: the last waterfront development available in Vancouver.

The 40 year old aquatic centre is up for grabs, but the city does want a new one built – they’re looking for bids and ideas for a big chunk of land downtown:

News of the potential arrangement — still a long way from reality — caught many off guard Wednesday, even though it’s contained in a city information package that has been available to potential buyers since May 12.

The city has invited offers on 12 parcels of land contained within the Granville Bridge’s northeast off-ramp and loop, which will be decommissioned and removed.

The land has a total assessed value of $36.14 million and bids from potential buyers are being accepted until Aug. 15.

The city’s “invitation for innovative offers” on the site notes it wants a “renewed” Vancouver Aquatic Centre on the property, to be built by a developer and transferred back to the city for a nominal fee of $10.

Read the full article here.

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?

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