Vancouver Condo Info

I got this suggestion from were1non, who writes in with the following note:

I was just looking at the webtraffic statistics for mls.ca, and realtor.com to see if there was any correlation between the housing collapse and traffic to these two sites (mls.ca being the biggest listing site in Canada, and realtor.com for the US). I think this is an interesting time because this is the first time we can use web statistics to gauge interest in the housing market.

If we look at the alexa graph for realtor.com we see traffic start a steady drop in 2006, almost mirroring the US housing market slump:

Oddly enough, when you look at the traffic graph for mls.ca it does almost exactly the same thing, and as we all know there was no Canadian housing market crash in 2006:

So is it a coincidence that traffic drops off at realtor.com in 2006? Or perhaps there are competition factors at work here - my initial thought was that sites like zillow in the US and individual realtor VOW sites in Canada may have siphoned off traffic from these two main sites, but looking at a graph for zillow.com we see the same drop:

So whats happening here? Are we seeing interest in real estate fade in North America as a whole, is the traffic more evenly distributed, or are there other factors at work? One thing seems likely to me: it really is different this time - this is the first real estate boom that has played out online and no matter what happens the sheer amount of data, analysis and opinions that are out there and easily accessible is unprecedented.

update: David G from Zillow left a comment about the unreliability of Alexa data, Zillow traffic is actually up 30% over the year despite the condition of the US market.  These graphs track daily percentage reach and not absolute numbers but I still view them as an interesting proxy in the absence of more reliable web traffic data.

Does the looney at par have you looking at homes in the USA? “America’s Builder” DR Horton is holding an ‘UnAuction Sale‘ in 23 southern California neighborhoods offering new homes for up to 50% off their peak value. In fact you can likely find deals like this in a lot of sunbelt states right now due to the current state of the US housing market.

The exchange rate and crashing house prices is making US property more appealing to many Canadians, but you’ll want to check into tax issues before you buy, even if you’re not planning on renting it out for cash-flow. Some states like Arizona charge the same property tax whether you’re a resident or not, while other states like California charge a much higher property tax to non-residents.

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Condohype just sent in this link to the main story in todays New York Times: Mortgage crisis spreads beyond sub-prime. This story will be of interest to anyone who believes that our local economy is affected by the US, our largest trading partner.

As home prices fall and banks tighten lending standards, people with good, or prime, credit histories are falling behind on their payments for home loans, auto loans and credit cards at a quickening pace, according to industry data and economists.

Chip posted this link to a government of canada site in the previous thread which I believe neatly ties into why US economy stories relate to Vancouver real estate prices:

Canada’s economy is less than a tenth of the US economy and it is highly dependent on the US economy. Eighty-five percent of Canadian exports are destined for the US and about fifty-nine percent of its imports come from the US.

Looks like the FBI is checking up on the whole sub-prime debacle:

America’s Federal Bureau of Investigation is investigating senior banking executives for insider dealing and fraud as part of a criminal inquiry into the sub-prime crisis, the agent leading the inquiry said yesterday.

Neil Power, the head of the FBI’s economic crimes unit, is heading the most far-reaching criminal investigation into the practices of the mortgage industry since it began to melt down last year, after years of increasingly lax lending finally fed through into an increase in defaults on home loans.

The FBI is investigating every level of the conspiracy that it believes perpetuated the housing boom and ultimately resulted in millions of Americans losing their houses, investment banks losing billions of dollars and the chief executives of Citigroup, Merrill Lynch, Bear Stearns and UBS resigning.

Some pretty strong language there: ‘economic crimes’, ‘conspiracy’, etc.  How much responsibility do lenders have for the housing bubble and crash in the US?  How much more conservative are lenders in BC?

Hat-tip to scullboy for the link.

Interesting commentary in MSN’s money central site:

With the 10-year U.S. Treasury bond yielding below 4% and 30-year mortgages available at 5.1%, there isnt a housing bubble

Mind you, I’m not saying that U.S. consumers don’t have too much debt, or that the U.S. economy isn’t dangerously dependent on the housing sector for growth, or that all the money sloshing around the globe isn’t encouraging dangerous speculation.

But those are different problems from the one getting all the headline attention at the moment.

It’s just that, for all the teeth-gnashing and pundit-moralizing, we really don’t have a housing bubble that’s anywhere near bursting. Current 10-year interest rates are just too low. And I certainly don’t see interest rates rising enough in the next year or so to burst a bubble, either.

..Interesting because it was published in June of 2005, right about the peak of the US market. Since that time prices and sales have dropped by record amounts and foreclosures have gone up 79%.

To make that monthly debt burden onerous enough to trigger a burst in a housing bubble, you have to look for a big drop in family income so that while monthly debt payments remain the same, they take up a bigger chunk of a diminished family income.

Huh. And yet mysteriously prices peaked in 2005 and started falling without a big drop in family income. Very strange!

The other trigger would be a big increase in interest rates that would push the monthly debt burden up on average and would strike especially hard at those home buyers who used an adjustable or no-interest mortgage to buy more house than they could really afford.

This trigger was also a no-show. There was no big increase in interest rates, but for some reason the buyers stopped showing up. Can housing markets collapse under their own weight? And if there is no housing bubble what happened in the USA?

Well, as the saying goes, prediction is hard, especially when its about the future!

update: On the local market front, Ella points out this article in 24hours that shows buying in Vancouver may make more sense than renting as long as you use some very questionable math, disregard half the numbers and base the rest of the figures on silly assumptions.

I’m submitting the title of this post for the understatement of the year award. The United States of America is the worlds largest economy and Canada’s largest trading partner. With recent US job data not looking so hot, problems in the credit market and a housing slump that has left vacant eyesore properties in the hands of banks, 2008 is not looking like a really great year for the US economy.

Bank of Canada governer David Dodge commented earlier today on the potential fallout for the Canadian economy:

“The downside risks to Canada from slower U.S. growth in the first half of 2008 are probably greater than we estimated in October,” he told reporters on the sidelines of a meeting of the Bank for International Settlements in Basel, Switzerland.

The big question is how bad those downside risks turn out to be. If the US enters a recession (or is already in one) will Canada be able to avoid the same fate? What sectors of the economy are likely to thrive, where will we hurt and what happens to our super-hot housing market? It’s shaping up to be an interesting year.

Here’s a feel-good story for the holiday season. People that bought at the peak of the market in Santa Cruz California are finding that slumping property values have reduced the amount of property tax they pay!

The single father, 41, bought his two-bedroom, two-bath condo on Everson Drive near Neary Lagoon Park at the beginning of 2006. He paid $575,000.

Because his purchase date came at the height of the market and condos have proved particularly vulnerable to the slip, Muller later realized his home value had fallen.

“I got my property tax bill and felt there was a discrepancy between what I owed and what the market has done,” he said.

So in September Muller wrote the county. He claimed his condo, which had a listed value of $586,000 in January, was now worth $568,000.

It turns out, he was right — and then some. Last week, he got a call from Hazelton’s staff saying the new value of his home was $550,000. That will save him $300 to $400 a year in taxes, he figures.

Lose $25,000 in property value and get free money, $300 or $400 dollars for the year is a nice little extra windfall!

Foreclosures are running so thick in Stockton California that a real estate broker has started a tour bus service to bring prospective buyers to view foreclosed homes. If you’re interested in touring the foreclosed homes of Stockton you can sign up at RepoHomeTour.com

As expected the Fed just cut interest rates to try to stem problems in the US housing market:

Faced with a widening mortgage crisis, the Federal Reserve Tuesday cut a key interest rate for the third time in three months.

“Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today’s action, combined with the policy actions taken earlier, should help promote moderate growth over time,” the central bank said in a statement released with the announcement.

Story on MSNBC.

Many analysts believe the current quarter and the early part of next year will represent the period of maximum danger for a possible recession.

“I think a full-blown recession can be avoided but just barely,” said David Jones, chief economist at DMJ Advisors. He predicted that the Fed will follow up with three more rate cuts at its first three meetings of 2008.

Who wants a brand new house for 40% less than its book value? Welcome to the slumping American housing market.

Lenar Corp has agreed to shift 11,000 properties to Morgan Stanley for 40% less than book value to get them off their balance sheets:

“The deal was done on the last day of the company’s fiscal year, partially in an effort to generate tax-loss carry backs,” said Eric Landry, a Morningstar Inc. analyst. “The fact that it closed so late [9:30 p.m. on the last day] in the year and was priced at only 40% of book value may indicate just how eager Lennar is to slim down its balance sheet — and the degree to which it will go to do so.”

While details remained sketchy on Monday, a multimillion-dollar deal to shift 11,000 properties off the books of the nation’s largest home builder raised concern among analysts that the mortgage meltdown was continuing to spread.