Vancouver Condo Info » USA

Piggington “capitulates”

patriotz — Thu, 02 Feb 2012 08:01:51 +0000

One of my long-time favourite bloggers, Professor Piggington of San Diego, has finally decided to buy:

After the recent leg down in interest rates, monthly payments are the lowest compared to incomes and rents than they’ve been in the history of the data, and are quite dramatically below their median historical levels:

But note another consideration, which applies only to the US where you can lock in rates for the life of the mortgage:

If this outlook is correct, as I believe it is, then today’s ultra-low rates make this an ideal time to take out a chunky 30-year fixed mortgage, and to sit back and let inflation hew away at the real value of the mortgage and the monthly payments over the years to come.

So even if the buy/rent ratio in Vancouver came down to what it is now in San Diego, buying would not be as favourable, because interest rates would certainly rise if we went into a period of long-term higher inflation.

Note that the graph above compares monthly payments against per capita income (not median household income). It would appear that it is now possible to buy a SFH in San Diego on a single median income.

But of course Vancouver can’t go the way of SD, it’s surrounded by ocean, mountains, and a border… um it has the nicest weather in the country and everyone wants to live here… um…

Well it’s just different here.

Piggington.com Jumps the Shark

This post was submitted by patriotz.

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A Brief History of the Housing Bubble

mojojojo — Tue, 31 Jan 2012 08:12:31 +0000

A really good overview and analysis of the U.S. Housing Bubble at OCHousingnews.com. The build-up, collapse, stimulus/supply mgmt. and current double dip all covered in detail.

^{http://ochousingnews.com/news/a-brief-history-of-the-housing-bubble}

From 2003 to 2006, American lenders and borrowers inflated a massive housing bubble. From 2007 to 2012, this bubble has been deflating, but the bottom is proving elusive. The housing market is closer to the bottom than to the top, and if a viable solution can be found to bring supply and demand into balance, the tremendous affordability from low prices and low interest rates will help a bottom form in the near term.

This post was submitted by mojojojo.

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Low rates forever

The Pope — Thu, 26 Jan 2012 16:21:39 +0000

Looks like the US fed isn’t very optimistic about the recovery. They say Japan style interest rates until 2014. Will this help a US house price recovery, or will buyers wait if they know there’s no rush for bargain rates?

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Young Americans don’t care for home ownership

Kingston — Wed, 21 Dec 2011 08:49:21 +0000

Do echo boomers have different attitudes towards home ownership than generations that came before them?

The lack of assets isn’t the only encumbrance to housing: Echo Boomers value education, people and leisure more than other American generations. Of the Echo Boomers I spoke with, 13% were homeowners, yet less than a third reported interest in owning a home someday (with female Echo Boomers wanting homes more than male Echo Boomers). They preferred graduate degrees, living in social areas (not suburbs) and freedom instead of homeownership. A few of these Echo Boomers will need a decade to pay off their student loans after which another large loan, like a mortgage, might lack appeal.

From Forbes.

This post was submitted by Kingston.

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Compare and Despair

Eddie — Mon, 12 Sep 2011 07:49:01 +0000

Here’s a couple of million dollar houses.

This first one is in West Palm Beach. It’s a modest 6,898 sq. foot 5 bedroom home on 2.5 acres with a guest house and five car garage:

But for just $50k more you can get this beauty in South East Vancouver, conveniently close to Burnaby. It’s a 1958 sq. foot old timer with a basement and all windows are double glazed:

This post was submitted by Eddie.

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Global Price to Rent Ratio

Starving Artist — Mon, 22 Aug 2011 08:19:29 +0000

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

© Starving Artist for Vancouver Condo Info, 2011. | Permalink | 111 comments | Add to del.icio.us
Post tags: Canada, compare

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Hawaii 50% Off Sale

The Pope — Sun, 10 Jul 2011 08:58:57 +0000

Ready to Pop pointed out this article about Canadians buying property in Hawaii now that the Canadian dollar is strong and some homes and condos are selling for half what they were worth in 2008:

“In some areas prices have dropped 40 to 60% and it’s as bad as Phoenix.”

He gets calls and emails from Canadians daily.

“Some are waiting for a bell to ring that says we have hit absolute bottom,” he jokes. “Others have pulled the trigger because in Maui we’re having a half-off sale.”

The loonie, valued at 62 cents US almost a decade ago, hit $1.05 in April. That means a million-dollar property in Hawaii, that would have cost a Canadian about $1.6 million in 2002, is now under a million.

The best values are on the big island.

“In Maui, you need two wallets — on Hawaii you can survive on one,” Dinits says. “You can get a nice house on Hawaii today, six blocks from the ocean, for $66,000. That would be a bank owned foreclosure, or REO (Real Estate Owned) deal.”

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The “Running out of Land” Club

patriotz — Mon, 04 Jul 2011 08:01:34 +0000

You often hear of high price/rent for SFH in the City of Vancouver being justified because of the scarcity of land. I thought I would do a comparison with the City of San Francisco, which is slightly larger than the CoV and has a population of about 800,000. But the really big difference is that it comprises a little over 1/10 of the metro population compared with 1/4 for the CoV. So you’d expect San Francisco to have a higher scarcity premium. Well no.

Take a look at this listing for the West Portal neighbourhood in San Francisco’s west side for $1,075,000:

http://www.redfin.com/CA/San-Francisco/2531-14th-Ave-94127/home/662192

And here’s the same house for rent for $5200/mo:

http://sfbay.craigslist.org/sfc/apa/2471867467.html

The rest of the neighbourhood:

http://sfbay.craigslist.org/search/apa/sfc?query=west+portal&srchType=A&minAsk=&maxAsk=&bedrooms=3

Price/rent for this property would be 207.

What about the comparable numbers for, say, Dunbar? Maybe $1.5 million and $3500/month? That’s a price/rent of 428.

Now you might say yes but property taxes are higher in SF. That’s true so let’s see how much higher.

This property is assessed at $402,019 and has property taxes of $4,836 /year. That’s because of California’s looney property tax system which taxes at the most recent sale price, not market value. If you bought the house for $1,075,000 you’d pay $1,075,000/$402,019 * $4,836 = $12,931/year.

Total property taxes in CoV are 4.21377 mills, so a $1.5 million property would pay $6320/year.

Calculate price/(rent-property tax) and you get 261 in SF versus 504 in Vancouver.

And I didn’t factor in mortgage interest and property tax deductibility and the ability to lock in low rates long term in the US.

You’d pay more for just a lot in Vancouver than the whole house in San Francisco. What sense does that make? In which city is land really more scarce? What do the rents tell you?

This post was submitted by patriotz.

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Is there an echo in here?

Karl Marx Carney — Mon, 20 Jun 2011 08:56:53 +0000

BOC Governor Mark Carney has made some comments on the Canadian housing market being overheated lately. The first paragraph of this Vancouver Sun article sounds kind of familiar:

The Canadian housing market is overheated, but everything is in place for it to moderate naturally with no further need for government intervention, according to the governor of the Bank of Canada.

It was Patriotz that pointed out this Washington Post article from 2005:

Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve.

Of course where those two articles differ is the comment on local markets. Bernanke specifically did not address local market bubbles, where Carney calls them out specifically:

“Given such developments, one cannot totally discount the possibility that some pockets of the Canadian housing market are taking on characteristics of financial asset markets, where expectations can dominate underlying forces of supply and demand,” Carney’s notes say. “The risk is that expectations become extrapolative, prompting the classic market emotions of greed and fear – greed among speculators and investors – and fear among households that getting a foot on the property ladder is a now-or-never proposition.”

But monetary policy is Canada-wide, Carney said.

“We can’t manage monetary policy for a specific housing market or specific province. We’ve got to manage it for the country as a whole to achieve the inflation targets.”

This post was submitted by Karl Marx Carney.

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‘Perfect storm’ for buying in the USA

wreckonomics — Wed, 16 Mar 2011 08:01:30 +0000

Anybody planning on selling high and buying low? Financial Post says its the perfect time to buy some property down south if you’re a Canadian.

“It’s hard to pick the bottom” says Brian Wruk, a partner in Transition Financial, a cross-border planning firm with offices Arizona. He’s telling clients not to rush to buy, but to have their Canadian dollars converted to U.S. dollars now — at today’s sweet rates — if they’re even thinking of buying.

“You need to get that currency risk out of the picture — get Canadian dollars into U.S. dollars now, so you’re ready to move.”

In Phoenix, Mr. Andersen estimates that about 70% of the mortgages are underwater, which means the amount outstanding on the loan is actually greater than the current value of the house. Competition for these units is fierce and almost everything is bought ‘‘as is’’ and most likely with cash. There are about 40,000 listings in the area, up from a more typical 10,000 units, but still banks generally won’t negotiate the price so most deals are done at list price or higher.

While Western Canadians often buy in Arizona and California, Eastern and Central Canadians favour Florida. And the housing situation is the same there.

“With prices like this it’s crazy not to buy,” says Diana Carter, an Ontario retiree who just had an offer accepted on a single-family house in Florida. Ms. Carter had spent four intense months looking at properties. “We looked at places for US$23,000 or US$24,000 but decided on something so much nicer for US$43,555.”

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But, it’s different here!

crashcow — Tue, 15 Feb 2011 08:00:07 +0000

Why did Canada’s housing market not suffer (yet) as much as the US? The media will tell you it’s our top-notch banks, prudent lending system and strong fundamentals. But take a close look at the graph below:

The US and Canada both had an uninterrupted housing boom that lasted 7 years, with US starting and ending roughly 2 years before Canada. After US banks began failing and world stock markets collapsed in Oct 2008, unprecedented stimulus measures were taken simultaneously by Canada and US.

The key point the above graph illustrates is that by the time stimulus was started, US home prices had already been falling for 3 years while Canada had just started their decline 1 year prior. As a result of the shorter stimulus response time in Canada, our housing prices and banks took a smaller hit.

Notice how similar the effects of this stimulus have been to home prices in both countries. By slamming interest rates to the floor, injecting $110 billion into Canadian banks ($65B from the Insured Mortgage Purchase Program and $45B from Bank of Canada) and creating home buyer incentives (US), housing demand was dragged forward and created a temporary rally in home prices. Even more interesting is how the stimulus effects have started to wear off at the same time in both countries.

And are our banks really more prudent than those in the US? As Ben Rabidoux noted on his blog, take a look at the bank leverage ratios (courtesy of Eric Sprott):

The media is right – it’s different here. It’s worse.

submitted by: crashcow

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The luxury of renting in Manhattan

The Pope — Wed, 05 Jan 2011 09:47:23 +0000

You hear a lot about the US housing bubble and crash, prices are down all over the US since the peak, but in Manhattan luxury home prices have risen since last year. So what are the wealthy doing? Renting.

Adam Neumann and his wife set out in 2008 to buy an apartment in lower Manhattan, hoping to get a bargain on a 2,500-square-foot (232-square-meter) luxury unit.

Failing to find a deal, they chose an increasingly practical option for the city’s wealthiest residents: renting. They’re paying $300,000 upfront on a five-year lease for an empty TriBeCa loft with almost twice the space that the landlord will outfit to their design.

A price crash does funny things to perception. So why would the well-to-do choose to rent instead of own?

The money he’s not spending to buy “can go into my business,” said Neumann, co-founder of We Work, a New York firm that rents shared office space by the month. “In my business, my cash brings a much higher return than purchasing an apartment,” he said.

“The good times we saw in the past are not coming back anytime soon,” he said. “People are not going to buy a home for $1 million and see it worth $2 million in five years. I see the market going up but nothing like in the past.”

But what about here in Vancouver? Is that $1 million dollar home going to be worth $2 million in five years or are there potentially more lucrative sectors to invest in at this point?

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The wealthy move from owning to renting.

The Ant — Thu, 02 Dec 2010 09:57:05 +0000

This is interesting. In the US, the luxury rental market is seeing a bit of a boom as the wealthy move from owning to renting:

So in March he sold the Manhattan apartment he bought in 2008 for about the same price he paid and moved — along with his wife and child — a few steps away into a luxury, two-bedroom rental unit in a brand new building.

Lee wouldn’t disclose what he’s paying, but similar two-bedroom apartments in the building usually rent for $11,000 a month.

“I wanted to protect ourselves from prices going down,” says Lee, who is a managing director at a major bank. “I didn’t want to be an owner anymore.”

Lee has company. Demand for luxury rental units has increased as wealthier individuals who can afford to buy are deciding not to, according to brokers and real estate analysts in affluent areas of the country such as New York City, Chicago and San Francisco.

“More affluent Americans are opting to rent as oppose to buy,” says Jack McCabe, an independent real estate analyst and CEO of McCabe Research and Consulting in Deerfield Beach, Fla. “Within the last year, so many people have seen their family and friends get burned in real estate. They don’t see it as being a risk free investment as they used to.”

Uh… better late than never, eh guys?

This post was submitted by The Ant.

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The new rentership society.

The Pope — Tue, 16 Nov 2010 08:23:51 +0000

Wired has an editorial about ‘rentership society‘, the growing inclination for people to rent items ranging from houses to cars to music instead of owning.

For renters today, finding a new apartment on craigslist is almost as easy as streaming a movie. (OK, not quite, but you get the point.) Homeowners don’t reside in this frictionless economy: They’re stuck in one place, unable to quickly downgrade to a cheaper residence when times are lean (or upgrade when times are flush). And it costs thousands of dollars in renovations to beat the depreciation curve.

I speak from experience. My wife and I bought and sold two condos during the latter stages of the real-estate boom, escaping both as break-even propositions (after transaction costs). When we moved into a rental apartment a couple of years ago, we realized that ownership had been a burden, a time sink, and a money pit. Now we ask the landlord to fix things when they break, and we don’t mind that the floor is not the one we would have chosen. We pay less each month than we would on a mortgage, and we bank money that once would have gone into installing central air.

As many markets see asset deflation on houses and condos does that affect a societal preference for owning or renting?

..Oh and I’d be very interested in a Vancouver style car rental. If anyone can find out where I can rent a car for half the cost of owning it and leave all the maintenance responsibility up to the owner please let me know!

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NYC Condos for 80% off

The Pope — Thu, 11 Nov 2010 08:23:51 +0000

Apparently there’s a city called New York on the East coast of the US that some claim is ‘world class’. Please… Like they could hold a flame to our shops, restaurants and cultural events.

One thing they did have in common with us is some expensive real estate. Did have, because it appears to be getting cheaper. Units in a ‘historic’ upper west side condo conversion are selling for more than 80% off their original prices.

Sounds like they need Bob Rennie.

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Aerial view of Florida housing boom and bust

Wed, 06 Oct 2010 08:12:48 +0000

From a collection of aerial views of Florida real estate development.

A section of a housing development with two houses in place. More images on Boston.com

This post was submitted by Mansur al-Hallaj.

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The death of the American Dream

The Pope — Mon, 30 Aug 2010 08:30:40 +0000

Remember when all you had to do was buy a house and live in it as the price went up? It’s only been a few months of dropping prices here in Vancouver, but in the US it’s getting harder to remember the good old days.

Call it the American dream that died. The slump in U.S. housing, now more than three years old, is the most severe since the Great Depression. A move by the government to revive the market – through a tax credit for first-time home buyers – met with some success earlier this year, but after the credit expired, sales collapsed in July. Now economists fear further declines in home prices, which have already fallen 30 per cent since their peak in 2006.

The days when Americans could count on their homes as the pillar of their financial affairs – a seemingly magical asset, bought with borrowed cash but steadily increasing in value, tapped to fund college tuitions, second homes, and retirement travel – are past. Even if the market eventually recovers, as many expect, the era of the home-as-nest-egg is over for the foreseeable future.

In this brave new world, housing prices don’t always go up, and if they do, the pace is more likely to be in line with inflation. People can find themselves trapped in their homes, unable to sell because their house is worth less than what they owe on their mortgages, a condition now shared by one in four U.S. homeowners.

Read more about the fundamental shift in the US housing market over at the Globe and Mail.

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US Housing market continues plummet

The Pope — Wed, 25 Aug 2010 08:26:21 +0000

The big news of the day yesterday was the ongoing misery of the US housing market that seems to continually surprise and astound economist and journalists everywhere. July sales dropped a record 27% to their lowest pace in 15 years. Soft landing anyone?

“This is a worrisome report and while it reflects the volatility caused by the end of the (government home-buyer) tax credits, it also indicates a deterioration in the underlying trend for housing demand,” said Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch in New York.

“For the overall economy, the dangerous link to housing is home prices and this report signifies that home prices should fall considerably faster, which could tip the economy back into a recession. We are, however, not quite there yet but this is a worrisome report.”

Have we mentioned that this is a worrisome report? It’s not all bad though, national median prices are actually UP!

With home sales tumbling, the inventory of previously owned homes for sale rose 2.5% to 3.98 million units from June, representing a supply of 12.5 months — the highest since at least 1999 and up from June’s 8.9 months.

The jump in the supply of homes was almost double the six to seven months’ supply considered to be a healthy level.

Last month foreclosed properties accounted for 22% of sales while short sales made up 10%. First-time buyers accounted for 38% of transactions, the lowest in 12 months.

The national median home price rose 0.7% from July last year to $182,600.

Wait a minute.. median home prices under $200k?!? I’ll take three!

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US condos for less than a new car

The Pope — Wed, 04 Aug 2010 09:26:18 +0000

Last month we showed you what kind of car you could get for the monthly drop in benchmark house prices in some Vancouver neighborhoods. Along a similar theme, reader Avatar points out this round up of 8 condos in the US that cost less than a new car. This one bedroom 770 sq foot condo in Florida is going for $25k:

The condo is spacious and has a half bath, a screened porch, wood floors and is in move-in condition, according to agent Jana Brittenum of Keyes Real Estate. The corner location in the complex gives it nice garden views.

The condo community has good recreational facilities with a swimming pool, clubhouse and exercise area, but maintenance charges are a modest $180 a month.

The last time the unit sold was in 2005 when it went for $115,000. Why so inexpensive now? For one thing, it’s a short sale, which the lender will have to approve. Also, the condo association’s bylaws prohibit renters, so any buyers would have to want to live there.

See the Full article at CNN.com

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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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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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Wealthy foreigners drive US market

The Pope — Mon, 12 Jul 2010 08:42:32 +0000

Clearly the US could use a little Vancouverism. They don’t seem to understand that the exciting and nebulous ‘wealthy foreigner’ concept should be enough to drive a housing market to new highs, not rescue it from new lows. Perhaps the problem is that they have actual data on the impact of foreign buyers, instead of relying on vague hype from realtors:

Their purchases accounted for 4.6 percent of the residential market, or about $41.7 billion worth of US property from April 2009 through March 2010. That’s up from the 4.2 percent ($38.8 billion) of the residential market purchased by international buyers in 2008-2009. About 28 percent of American realtors reported having one international client this year, as opposed to 23 percent the year before, according to the report.

Many international buyers cited the emerging economic recovery as a driving force to buy, and most saw the US as a desirable location to own a home. A majority of international buyers purchased homes in regions most impacted by the housing bubble — including Florida, California and Nevada — perhaps in part because of the increased inventory available in these areas.

International buyers also spent significantly more than domestic buyers. They paid, on average, $219,400 on residential properties, as compared to $173,000 for existing home sales during the same period.

But financing continued to be a problem for foreign buyers. About 55 percent of international buyers paid in cash for their homes instead of taking out a mortgage.

Full article here.

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The Black Swan

The Pope — Tue, 22 Jun 2010 09:44:39 +0000

Every so often a market takes a dive, but they usually turn around. After a while it it starts to look like it’s hit bottom and a recover is just around the corner. The people with their livelyhoods tied to the market hold out hope of a turn around. Then oil starts washing up on the beach.

The phone call was short and to the point: A buyer who had agreed to spend $500,000 (U.S.) on a beachfront home with a stunning view of the Gulf of Mexico was backing out.

The cancelled sale was a blow to real estate agent Linda Henderson, but it wasn’t a surprise. Globs of thick, pungent oil are washing up on the shores of Alabama’s Dauphin Island, and the smell on some days is enough to drive the island’s predominantly senior population back into their homes.

It’s also enough to drive real estate agents to despair. “I can tell you that things have pretty much dropped to dead,” she says. “We were on track for our best year since Katrina. This is devastating – you can say that the spill killed the real estate recovery.”

Full article in the Globe and Mail.

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US Home building slump

The Pope — Thu, 17 Jun 2010 09:59:10 +0000

US incentive programs for home buyers have expired and it looks like the real estate industry hasn’t got enough momentum to lift the US economy. Even with rock-bottom interest rates the industry is slumping.

WASHINGTON – Homebuilders are sending a message: They won’t be able to contribute much to the economic recovery now that government home-buying incentives have vanished.

Home construction and applications for building permits sank in May, overshadowing favorable reports on manufacturing and wholesale inflation.

Fewer homes mean fewer jobs. Construction fuels a broad swath of industries across the economy. Yet double-digit unemployment is among the main reasons people have passed on buying new homes.

The solution is simple. Government must take on more debt and pour more stimulus dollars into the economy, then the problem will be solved and everyone can get back to living the good life.

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A new word for “bubble”

The Pope — Wed, 16 Jun 2010 08:26:53 +0000

Over at the LA Times Walter Murch and Lawrence Wechsler make a convincing argument that it’s time to retire the term ‘bubble’ when it comes to speculative excess:

The word “bubble” just has an inescapably happy feel to it, conjuring up kids and parties and sudden iridescent poppings, screams of laughter, the giddy clapping of happy hands and an overall lack of consequence. That was fun; now where’s the cake?

Even more so when the word gets paired with “tulip” or “South Sea.” Where could the harm possibly be in such blithe and fragrant things? Certainly not in the words themselves: exotic petals, swaying grass-skirted maidens, spheres of trembling insubstantiality.

So what do they suggest as a more appropriate term?

What if, instead of that playful word bubble, we tried something a bit more accurately descriptive when growth at any cost became the goal. Say, “tumor”: “the dot-com tumor,” “the subprime tumor,” “the derivatives tumor.”

Would anyone seriously gainsay the highest possible vigilance over the proper functioning of their own body or doubt the need for strong regulation? Who, facing the prospect of a tumorous outbreak or living with a body demonstrably prone to such outbreaks, would entrust that body to a band of physicians blithely committed to laissez faire regarding these fatal bubbles of flesh?

Words matter. Metaphors frame thought. Pay them heed and tend them well.

Read the full editorial over at the LA Times website. The Vancouver housing tumor?

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