Vancouver Condo Info

Huh. A strange thing is happening in the back-to-school season. Lots of people are putting houses up for sale, but the buyers aren’t springing up in the same numbers.

Best Place on Meth points out where we are this month:

Sept. is on pace for 6008 listings, 2286 sales and 38% ratio.

Yep, that’s right. A 38% sales to list ratio.

Paulb says total number of listings available for sale has hit 16,775. We just might see inventory hit 17k this month.

Inventory shared numbers by area- the north shore numbers are tiny. There were 3 sales in North Van yesterday, and only a single sale in West Van.

This post was submitted by Avalanchero.

According to fundamentals, Canadian RE ownership continues to be significantly overvalued compared to rental cashflow. Even the bubbly Australian market has started to correct, but with interest rates low for at least 2 more years, who can predict how long the plates can continue spinning?

You can play with The Economist’s house prices chart yourself here:

http://www.economist.com/blogs/freeexchange/2011/03/global_house_prices

Paulb, that friendly local realtor who provides daily sales stats on this blog points out that it’s that time of year again: the last couple of days of voting in the Georgia Straight Best of Vancouver Contest.

This blog has been voted as the readers choice for best local blog before, and Paul Boenisch took home the readers choice as best local realtor that year. Paul suggests we repeat that this year, so lets see if we can.

You can vote here, and we’re humbly suggesting you vote for http://VancouverCondo.Info as the ‘Best Local Blogger’ and Paul Boenisch as the ‘Best Local Realtor’.

It’s a way to thank Paul for all the market data he’s provided here, a way to draw new voices to argue with and a way of saying thanks to all the good people that make this site go. You’ll have to fill in an answer to at least 25 of the questions, so it’s your chance to speak out about other opinions you have on Vancouver as well.

Feel free to make your case for any other votes in the comments below.. who is the Vancouverite closest to hell and whats the best example of local city planning?

Thanks!

it’s the end of the week and that means its time for our regular weekend news round-up and open topic discussion thread. Here are a few recent links to kick things off:

-Bubble talk reignites debate on house prices
-Collapsed US housing bubble doesn’t destroy demand
-Vancouver housing market set to underperform?
-BC prices set to rise?
-Pizza delivery guy with real estate advice
-The HST referendum numbers game
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So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent long weekend!

So where are these higher interest rates anyways?

Here was Mark Carney in December 2009 (ht “Anonymous”):

The governor of the Bank of Canada warned Wednesday [Dec 18 2009]  that consumers and banks should not be lulled into a false sense of security because of low interest rates.

In a speech in Toronto, Mark Carney, said both parties have a responsibility not to take risks that could derail the recovery.

Consumers are helping Canada’s economic recovery outpace that of its G7 partners, Carney said, but that the recovery remains vulnerable to over-indulgence.

“When risks are still manageable is precisely the best time to act,” Carney told a business audience. “We must be vigilant, and all parties must fulfill their responsibilities.”

Bank of Canada Governor Mark Carney is again urging homebuyers and banks to be prudent warning that not only will interest rates rise, but over the life of any mortgage, rates could be “much higher” than they are now.

“With monetary policy continuing to be set to achieve the inflation target, our institutions should not be lulled into a false sense of security by low interest rates,” he said in the speech Wednesday to the Vancouver Board of Trade. “Similarly, households will need to be prudent in their borrowing, recognizing that over the life of a mortgage, interest rates will often be much higher.”

And don’t bank on housing prices rising much further, he added, noting that Canadian home prices as a share of income have climbed well above their historical average and that investment in residential real estate has reached what in the past have been peaks.

“The average level of housing prices nationally now stands at nearly four-and-a-half times average household disposable income,” he said. “This compares with an average ratio of three-and-a-half over the past quarter century.

I’m sure rates will rise but from what I see there is

• a lack of private investment
• a looming house price bubble in Canada and parts of Asia
• chronically high unemployment
• an environment where all levels of government seem focused on balancing budgets.

Not exactly what one would call an environment for positive real rates. At some point in the future, when unemployment drops and the economy is running on all cylinders again, interest rates will rise, but it doesn’t look like it’s today. So when Carney barks at people for taking on too much debt and worrying households about rates going up, does he not think that people read Aesop’s Fables as children?

Are they allowed to print stuff like this in the Globe and Mail?

The current consensus is that Canada’s real estate market has achieved a “soft” landing and that prices will flat line but not decline substantially over the next several years. I disagree. The housing market in Canada is already in bubble territory. Average house prices have doubled in the last 10 years, while rents have risen by only about 30 per cent. The ratio of house prices to rent is now higher in Canada than in any other developed country.

An even more powerful indicator also points to a severe housing correction in Canada. Residential housing investment as a percentage of GDP was 6.48 per cent in 2009, down slightly from 6.76 per cent in 2008, after peaking at 7.13 per cent in 2007. The previous peaks were at 7.26 per cent in 1976 and 7.18 per cent in 1989 – and we know what happened to the housing market in Canada in the early 1980s and early 1990s. After residential housing investment as a percentage of GDP peaked in the previous two cycles, the housing market crashed within a few years.

I believe we are running out of time. By way of a comparison, this ratio peaked at about 6.1 per cent in the U.S. in the mid-2000s at the height of its housing bubble, and toward the end of the 1980s in Japan, when that country was nearing the end of its own property boom. Both countries experienced sharp declines in housing prices soon afterward. (I should mention that the ratio stands at 6.0 per cent in China at the end of 2010 – no wonder there is talk of a bubble in the Chinese housing market.)

Huh. I’m guessing this message wasn’t approved by the Canadian Real Estate Association.

This post was submitted by The Ant.

Stories abound of weakening housing markets. Except Vancouver. Here are some examples, some a bit closer to home than you might think:

fishyre: periphery not selling

househuntvictoria: staleness in the spring air

worldhousingbubble: Oz not strong

huffpo: new record prices in US cities (the percentages cited are DECREASES, not increases, just to be clear.)

The Vancouver market, otoh, is hot, unfortunately the “frenzy” quickly fades to a state of ennui as we move farther away from the “core”.

It’s probably nothing…

This blog has highlighted many of the stories surrounding the Vancouver housing market with a bearish tinge. But often I find myself cheering for the other side, most notably with the sad state of affairs over at the Millennium Water Village at False Creek development, where thaumaturgist Bob Rennie and a maniple of marketeers have been tasked with selling the remaining units to recoup some of the money the City borrowed to complete the project. I provided some estimates of projected losses a few months ago, based on average price per square foot. Hoodsurf provides the quicksheet of the approximate pricing.

Well wonder of wonders, it looks like the opening weekend was a stupendous success. The BC forum/Gong Show Realestatetalks has filled in some anecdotes from the front lines. Apparently over 70% sold over the weekend with an additional waiting list of 100.

Is this a bullish sign for Vancouver? Well I don’t know about that. A look across the water from the development yields well over 1000 condo units for sale. Here’s a map search of a small smidgen of the downtown core courtesy MLS map search:

Why aren’t these units selling? Was the Village at False Creek well-priced, or was it simply the red “30% off” stickers on the unit doors? What we do know is that there are now over 100 fewer people who will be available to buy these units already for sale. The weekend was marvelous for showing, a crisp sunny weekend, and that couldn’t have hurt.

It’s useful to pay attention to the tactics employed by Mr. Rennie, including

• Withholding specific price information, only ranges
• Pre-selling certain units to “insiders”, giving the pricing some semblance of acceptability
• Blitzing the print and TV media in the week leading up to the event
• Telling City Hall to go into a room and talk to nobody

Heavens knows what went on behind closed doors…

I commend Bob Rennie for ostensibly pulling this matzo ball out of the fire, at least in part. The discounts were significant and apparently “aggressively priced” compared to comps. That certainly helped, along with his ability to tap into the local media and his many years of experience punting real estate. In my view, based on cap rates alone, even at current price the development is significantly overpriced, as are most if not all condos in Vancouver these days.

This development was facing off the taxpayers of Vancouver — and the public services it offers — versus individuals who can afford to buy expensive real estate. In speculative bubbles like this one, for me it’s not about who wins and who loses, it’s the depraved entertainment of seeing wild animals fight over scraps of meat. But on this specific occasion, I was rooting for Bob from day one and, for today, to him I tip my hat. Well done.

Sincerely,

A bearish blogger

It’s the end of the week, so lets do our economic news round up and open topic discussion. Here are a few stories I’ve noticed lately:

-September new home prices up more than expected
-Canada vs. USA – the new realty
-Putting all your retirement money into your house?
-Home improvement stores fear end of tax credit
-Metro builders ease off discounts in hot market
-Olympic rental scams on the rise
-Canadians are slaves to credit
-Canada Line on track to lose millions over next 15 years
-Conference Board: BC to get gold in 2010.
-The Conference Board prediction from 2008 is here.
-Critics blast condo / stadium mix
-Limp demand will create weak Canadian market
-The carry trade and ‘bubble like conditions’
-only 5% of Americans plan to buy a home in 2010

So what are you seeing out there?  A boom reborn or a double dip recession?  Post your news links, thoughts and anecdotes here and have an excellent weekend!

It’s open topic time!  Every Friday we do a round up of recent economic and housing related news stories and discuss these topics through the weekend.  Here are a few stories I’ve noticed lately to kick off the discussion:

- A Canadian CMHC driven housing bubble?
- Canadian Gov now the biggest subprime lender?
- The growth of Canadian mortgage debt loads
- BOC expresses ‘some concern’ over housing boom
- Canadians would sacrifice vacations to buy home
- US commercial real estate bust looming?
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So what are you seeing out there?  Post your news links, thoughts and anecdotes here and have an excellent weekend!