Lessons to learn.

December 1st, 2014

No matter how much you know, there’s always something new you can learn.

From this article in the Vancouver Sun there are at least 3 lessons we can learn:

1) Shaughnessy is a ‘tony’ neighborhood:

Laura De Munain moved into her family’s Oak Street house on the outskirts of the tony Shaughnessy neighbourhood in April. While working from home, the pregnant lawyer soon noticed groups of two or three people regularly stumbling around her back alley in a daze.

2) You can’t force absent owners to evict partiers from their property:

Police answered her first call to their non-emergency line and toured the property, but they “said they didn’t see any evidence of consistent living here,” according to De Munain. She says city staff referred her back to the police when she complained about drug users and squatters in June and asked the city to force the owner to board the home up properly.

3: Government hears you, but they’re not sure you mean what you say:

In the weeks leading up to this month’s civic election, a blog showcasing “beautiful empty homes” of the west side and a proposal from COPE mayoral candidate Meena Wong for a vacant home tax gained support from residents simmering with anger over Vancouver becoming a “hedge city” for foreign real estate investors.  A poll last month showed 72 per cent of respondents thought such a tax a “very good” or “good” proposal, and only 18 per cent deemed it “very bad” or “bad.”

Vision Vancouver Coun. Geoff Meggs said he, like many, finds it offensive when a perfectly good home is held empty for speculative reasons, but he doesn’t know that such a tax is “legally possible or even desirable.”

You’ve either learned something new from this writeup or it’s been a complete waste of your time. In either case you can read the full original article here.

Here we are, Friday again!

And you know what that means?

Friday Free-for-all time!

This is our regular end of the week news round up and open topic discussion thread for the weekend.  Here are a few recent links to kick off the chat:

-Housing debate continues
-IMF can’t stop worrying about Canadas bubble
-Hike interest rates in May? not so fast.
-spiking prices, but more affordable
-Cable bills fine, help with the mortgage?
-Canada largest industry is real estate
-Zombie neighborhoods

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

We’ve played this game before.

When you compare what you get in Vancouver for your housing dollar vs. some other locations you get some interesting comparisons.

The CBC has an article looking at the cheapest houses in Vancouver and how they compare to some US locations.

A new CMHC report says Canadian home prices are moderately overvalued in some cities, but Vancouver is labelled as low risk by the Crown corporation in its latest housing market assessment.

One measure used by economists is the amount of income earned by the average family compared to house prices. By those standards, prices in Vancouver are some of the most expensive in the world.

See their gallery here.

With all the media focus on rising real estate prices in Vancouver you’d think all market segments must be doing pretty well right?

Well it sure looks like condo prices have been languishing.  First we had the CIBC world markets report showing Vancouver condo prices barely budging in the last five years, and now Ulsterman points out the following:

It’s easy to only see the big gains SFH’s have made over the past 5 years and overlook the many “homeowners” of condos who have not made much or even lost money (what!?!, but i was told it only goes…).

I noticed 303-1333 W 7th Ave (V1088944) listed in the Georgia Straight p72 of Nov 20-27 issue). It’s a 1bd/1bath unit listed for $355,000. The key detail was of course, “Amazing deal, listed $20,000 below where it sold in 2009.”

So after paying $70k in interest, $15k’ish in taxes and strata fees, $20k capital loss, CMHC fee when buying (10k) (3%?), $13k selling fees. This gets expensive really fast ($128,000 over 5 years or $2133/month). It probably rents for $1300/month.

Not such a slam dunk.

Are condos just hitting a price ceiling at the entry level? Shouldn’t condo prices be going up more in this market?

Joe Mainlander points out that the REBGV HPI paints a similar picture.

Even the REBGV HPI stats point to a sinking condo market (not 20% though);

Metro Van Apartment HPI;

July 2008 = $367k
July 2014 = $380k

There’s been 10% inflation since then, so HPI would need to be $403k just to keep up.

A 6% drop in real dollars.

Friday Free-for-all!

November 21st, 2014

Its the end of another week and that means its Friday free-for-all time!

This is our regular end of the week news round up and open topic discussion thread for the weekend.

Let’s kick off the chat.

-links to come soonish

So what are you seeing out there? Post your news links thoughts and anecdotes here and have an excellent weekend!

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?

Think of the money the government could save by closing down the Trans Canada highway! No more expensive road maintenance, and the land could be sold off to build more condos!

…Of course there may be some negatives associated with closing that highway.

Here on the coast much of our province is across water, which means the transportation system we rely on is BC Ferries.

An economic analysis shows that the expected $725k savings from recent cuts is actually causing a loss of $870k in tax revenues as tourism plunges $3.9 million following deep service cuts.

About one in five tourism- ism-based businesses in the Coast-Chilcotin region report foreclosure is a near-term possibility.

More than 40 per cent report losing most or all of their tourist bookings when agencies couldn’t sell the Discovery Coast package due to worries over ferry service.

And three in four businesses report decreased income in the year after the service cuts, according to the report by Larose Research Strategy.

Read the full article here.

Posted in BC, economy | 55 Comments »

House prices up across Canada

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?

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?

FFFA! Election Time

November 14th, 2014

Hey! It’s the end of another work week!

That means it’s Friday Free-for-all time here on VCI. This is our regular end of the week news round up and open topic discussion thread for the weekend.

Depending on when you read this, you may already know who’s mayor.

Alrighty, let’s get to the links to kick off the chat!

-BC leads decline in starts
-Mayor race neck and neck
-All about geography and weather
-BC vs Ontario economy
-Former city planner says..
-Ready to move to an island?

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

VCI Network

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