Vancouver Condo Info

Mish Shedlock has an interesting post comparing the alarming jump in Canadian credit delinquency to the situation in the US.  More than 500,000 Canadians are now at least 90 days behind on credit payments, hitting a delinquency rate of 1.52% (compared to a US rate of 1.32%).

The Federal Reserve Bank of New York has Dynamic Maps of Bank Card and Mortgage Delinquencies in the United States that some may wish to consider.

In regards to mortgages, Canada has some “catching down” to do, and it will. All the bubble areas such as Vancouver, Calgary, Toronto, etc are going to get hit hard.

Hat-tip to Adrian for the link.

Pani sent in the link to this article at the Wall Street Journal blogs about a recent study claiming that not only are renters happier than owners, they’re also less fat.

The average homeowner, however, consistently derives more pain (but no more joy) from their house and home,” writes Grace Wong Bucchianeri, an assistant professor at Wharton.

The report says that homeowners spend, on average, less time on leisure than those who don’t own homes. And the average homeowner is around 12 pounds heavier that those who rent.

The basis for the research comes from a survey of women in Franklin County, Ohio, which includes Columbus, the state capitol and Ohio’s largest city. And, interestingly, the research took place in 2005–so the recent drop-off in home prices wasn’t an issue.

The study controls for factors including household income, housing quality and health to draw it’s conclusion.  The full paper is available as a PDF on the Wharton School of Business website.

The Vancouver Sun is reporting that the housing market in the lower mainland has struck a balance point, with sales and price rebounding from their winter lows.

The decline of Lower Mainland real estate markets, which started with falling sales more than a year and saw prices drop as the global recession developed, levelled out in May.

Metro Vancouver recorded its best year-over-year sales increase in May since February 2008 with 3,524 sales reported through the Multiple Listing Service, 17 per cent higher than the 3,002 sales recorded in the same month a year ago.

The so-called benchmark price in Metro Vancouver, averaged across property types, hit $506,201 in May, which is still 11 per cent below the same month in 2008, but higher than the $484,211 recorded in January.

Metro Vancouver’s inventory of unsold homes in May stood at 13,641, a 16-per-cent decrease from a year ago.

At the risk of repetition, I’m just going to post one of our favorite charts from Sacramento Land(ing) showing their market going through the seasons over the last three years:

And here’s the up to date version they just posted:

Patriotz points out that Phoenix Arizona has just become the first US city on the S&P Case Schiller index to have house prices drop below 50% of their peak value.  Prices in Phoenix have now dropped 50.8% from the June 2006 high followed closely by Las Vegas.

Could it happen here?

Here’s an interesting new twist on ’staging’ houses for sale: Instead of paying a staging company to rent furniture to give homes that ‘lived in’ look, some US builders are now cutting deals with renters to temporarily move into new homes in an attempt to get them sold.

OCEANSIDE, Calif. — The fragrance of sage-scented candles and sounds of jazz fill the air of a 2,600-square-foot house a block from the beach. Tiger-striped chairs flank tables crafted from exotic woods. Photos of a chubby baby hang on the walls. Whoever occupies 211 Windward Way, they seem to live the good life.

Too good to be true, in fact. The house is owned by a builder, who hasn’t been able to sell it for more than a year. And while someone really does live here, it’s as part of an elaborate bit of stagecraft aimed at moving Southern California’s echoing inventory of luxury vacant homes.

This $1.2 million seaside pied-a-terre is occupied by Johnna Clavin, a 45-year-old Los Angeles event planner and decorator who has seen business slow. In exchange for giving the townhouse a stylishly lived-in look, she gets to stay there at a steep discount and stands to earn a bonus if the house sells fast.

Full article is at the Wall Street Journal website.  Hat-tip to BC buds for the link!

Zai sent in a link to this Reuters article showing the dismal result of condo speculation in American cities.

MIAMI (Reuters) – Rust pokes through the peeling paint on the railings, pest control has been curtailed and the palm trees are no longer being fertilized at the 1940s-era Miami Modern condominium building in Miami Beach.

The condo association has been forced to cut expenses because the owners of 11 of the 28 apartments in the modest two-story building are delinquent, victims of a mammoth U.S. real estate collapse that has hit Florida especially hard.

With so many cash-strapped owners failing to pay their monthly fees for upkeep, the condo board last year had to raise $40,000 with a special levy to fill a giant hole in the $80,000 annual budget, but only managed to collect $19,000 from the owners who are still able to pay their bills.

Florida’s condominium and homeowners’ associations are facing what experts call a trickle-down disaster from the property crisis. Dozens and perhaps hundreds of condo buildings have budget shortfalls as thousands of owners, under water on their mortgages or in foreclosure, stop paying monthly fees.

“I call it a death spiral,” Miami Beach city commissioner Jerry Libbin said. “It’s a catastrophe in the making.”

Fortunately for them things can’t possibly get worse because Florida is running out of land and has many wealthy foreigners that want to live there.  Some people consider it ‘the best place on earth‘.  I also hear that they have an illegal drug trade that pumps a lot of undeclared income into the economy – that should help keep property values from falling further.

On the same topic the radio series This American Life has an interesting episode titled Scenes from the recession that touches on the same issue happening in Chicago.  There’s a horror story in that episode about a ‘luxury’ condo development with hardwood floors and granite countertops where the owners can no longer get in touch with the developer and have recently discovered that the building was built directly on unpacked dirt.  The entire show runs about an hour and is worth a listen if you have the time.

On the front page of Canada.com this morning is a big headline that says “Now is the time to buy: study“, though the actual linked content uses the less definitive “Time to buy?”.  The content of that article is about a recent study that shows a majority of people across the country think NOW is a good time to buy real estate.

As an interesting aside, a US Gallup poll in April 2007 showed that a majority of Americans felt THAT was a good time to buy there.  For those not following the news, it turns out that wasn’t such great timing.

So what do you think? Now that prices have dropped more than 10%, is buying a house, townhouse or condo in Vancouver a ‘good investment’ or ‘catching a falling knife’?

This global recession seems to be picking up steam and getting harder to ignore.  It’s become normal to hear about a new round of layoffs each day.  Today alone 70,000 jobs have been cut across the US and Europe.

Among the largest cuts announced Monday:

+ Drugmaker Pfizer Inc, which is acquiring rival Wyeth, plans to cut 15% of the companies’ combined 130,000 workers – about 19,500 jobs.

+ Caterpillar Inc, the world’s largest maker of heavy equipment, plans to lay off 17,000 workers and buy out 2,500 others to cut costs.

+ U.S. mobile phone service provider Sprint Nextel Corp plans to reduce staff by 8,000, or 14% of its work force.

+ Home Depot Inc, the world’s largest home improvement retailer, said it would eliminate 7,000 jobs, or 2% of its work force, as it closes its Expo home design unit.

+ Amsterdam-based banking and insurance group ING said it plans to cut 7,000 jobs to save US$1.3-billion (1 billion euros) in 2009.

+ Dutch conglomerate Philips Electronics will cut 6,000 jobs after reporting its first loss since 2003.

+ Corus, Europe’s No. 2 steelmaker, said it would cut 3,500 jobs worldwide, 8% of its work force.

+ Spanish steel producer Acerinox said it may temporarily lay off workers at its Spanish factory, which employs 2,500 people, if demand does not improve.

Now if we can only create enough jobs here in BC, we could draw the unemployed from around the globe and drive condo prices through the roof!

I haven’t heard much about that old ‘decoupling’ theory lately, have you?

Looks like our largest trading partner is now ‘officially’ in a recession as declared by the National Bureau of Economic Research.

WASHINGTON – A panel of the National Bureau of Economic Research said Monday that the U.S. economy fell into a recession last year.

The NBER says its group of academic economists who determine business cycles met and decided that the U.S. recession began in December 2007.

Many economists believe the current downturn will last until the middle of 2009 and will be the most severe slump since the 1981-82 recession.

It looks like the ‘correction’ phase of the Canadian real estate market cycle is picking up steam and Vancouver is strapped to the front on the locomotive.  Homeowners who relied on property values to boost their net worth are discovering that they’re suddenly poorer than they were a year ago:

When Pat Webb moved to Vancouver a year ago, she didn’t think twice about buying a condo in tony Kitsilano, among the hottest neighbourhoods in the city’s booming real estate market.

But in August, the 70-year-old retiree decided to move back to the United States. She had sensed Vancouver’s market was slowing, but a neighbour’s condo had sold a week earlier, so she too tried to sell.

She listed her one-bedroom, 705-square-foot condo for the price she paid – $509,000 – on Aug. 30. Ms. Webb has since reduced that to $485,000. It still hasn’t sold.

And condo owners in downtown Vancouver are predicted to suffer the most in coming years:

Condo owners in downtown Vancouver are at greater risk for price depreciation than single-family homeowners in the suburbs, a BMO Capital Markets economic analyst said Tuesday.

“Condo prices could drop faster because of overbuilding,” Robert Kavcic said in an interview. “When you have excess in the market, that pushes prices down.”

A BMO survey released Tuesday suggested B.C.’s housing starts have to fall by about 25 per cent from current levels to return the market to sustainable numbers.

For those wondering why people would hold on to an investment that by all measures is set to decline for years, you can blame denial, which can be an incredibly strong force.  For an example of denial at work just look to the US where prices have been falling for two years and realtors still struggle to get the message to owners who believe that their property is different and is actually gaining value.