Greater Vancouver boil water advisory.

As I’m sure you’ve noticed the tap water in vancouver is running a murky yellowish brown right now, so there is a boil water advisory in effect. This means any water you consume should be fancy expensive bottled water, or cheap tap water that you have boiled to avoid risk of gastro-intestinal illness.

VHB
has this topic covered with a request that comments stay on the topic of water and remain free of unsubstantiated rumours.

I’d like to stake my claim as the irresponsible vancouver real-estate blogger, so post info, conspiracy theories and unsubstantiated rumours below.

Just keep it cleaner than the water.

Story in the Sun

Is the media to blame for US housing market problems?

There’s an interesting article in Newsweek about US real estate woes. The National Association of Realtors just had their annual meeting and the mood and topics up for discussion were decidedly different from last year. One of the topics discussed is the difficulty in predicting how hard of a crash the US housing market will experience:

That uncertainty stems from the fact that the current housing slowdown isn’t like the more typical real estate busts of the early 1980s or early 1990s. Those downturns followed a traditional pattern: mortgage rates rose, job growth faded and the economy weakened, pinching people’s ability to buy homes. Today, in contrast, mortgages are still near 45-year lows and unemployment is down, yet many buyers are reluctant to make offers. Lereah attributes this to high prices reducing the number of people who can afford homes, falling demand by investors and the public’s psychological shift from celebrating the boom to worrying about a bubble. Those forces make this slowdown an anomaly, which makes it hard to predict where things will head next. Says Lereah: “You’d have to go back to the Great Depression to find a housing period that is this unique.”

The Great Depression? Geez, thats encouraging. So if it wasn’t rising mortgage rates or high levels of unemployment that caused the problem, who’s to blame for the real estate slump? The media of course!

..many crowded into the convention center to attend seminars on how to adapt to the slowdown. In nearly every session, speakers spent a few minutes blaming the media for hurting the market. All those headlines about a bursting real estate bubble have a lot of potential buyers really freaked out, industry officials say, which is one reason they’ve begun running full-page newspaper ads reminding would-be sellers that despite slowing sales, conditions aren’t really so bad.

So if you work in the media in Vancouver, please take heed: The future of our real-estate market is in your hands. If you run any stories reporting negative signs in our condo market you very well may destroy our economy.

But you don’t really care do you? And why don’t you care? ..because you’ll be making money selling ad space to realtors telling everyone everything is going to be ok.

You greedy bums.. How could you?!

Real estate investing for retirement?

According to the Rob Carrick at the Globe and Mail Relying on your home to spit out cash is a recipe for disaster. With increased living expenses people have a lower percentage of their income to invest in their retirement, but increasing property values have led some to believe that their mortgage could be their retirement plan.

The average house price nationally in September was $277,470, which is about 50 per cent higher than it was five years ago. In cities like Toronto, Calgary and Vancouver, the average price was between roughly $350,000 and $527,000. It’s rapidly becoming clear that certain financial sacrifices are inevitable when you buy a home at those prices, and one of them may be putting enough away in a registered retirement savings plan.

The average price for a house in Canada is under $300k? Isn’t that quaint? With our high real estate values, I bet we all get to retire early! Unfortunately the article goes on to outline some of the reasons that housing is not the best bet for retirement planning:

Everyone loves the housing market during a boom — it’s no big deal as long as you regard your home primarily as a place to live. The harm is in getting grandiose ideas about how your home will help finance your retirement. In the Investors Group survey, 51 per cent of participants said they are relying on their home as one of their sources of retirement income. Among the baby boomers in the survey, 55 per cent said their home will be a source of funds in retirement (a total of 2,170 people participated in the survey, which was conducted last month).

The problem with using your home as a source of retirement income is that it’s a very inconvenient source of funds — you can’t take cash out unless you either sell or incur some debt through a home-equity line of credit or a reverse mortgage. “You have to be realistic,” Ms. Ammeter said. “The question to ask is, how are you going to realize on your investment in your home?”

Rent it out to the luge team for two weeks! Sell it to wealthy foreigners! Take out a giant home-equity loan and pass the debt on to your kids! I mean come on, it’s not rocket science, what with global warming I’m sure it will be quite comfortable to sleep in the parks year round in 10 or 20 years, so you sell the house and live for free in Stanley Park! If you hunt and trap squirrels for food you can probably live quite comfortably off the interest from your nest egg and have the confidence and joy that comes from being self-sufficient.

Vancouver slowdown in the Globe and Mail

A reader sent in this link to this story in the Globe and Mail about Vancouvers current real estate slow-down.

When Stephen Webber and his wife put their Vancouver-area townhouse up for sale in September, they expected to close a deal within a month.

After several open houses, nearly a dozen private showings and two price cuts, they’re still waiting.

“We have been surprised by the lack of activity,” Mr. Webber says. “It seems there is a lot of supply out there. Buyers have more choices. There is not that rush. And there might be hesitation because of what’s going on in the States.”

If buyers are not rushing, it may be because they don’t have to. The frenzy that characterized the Vancouver housing market since 2004 is disappearing, replaced by one in which buyers have more than mere hours to make a decision. Instead of multiple offers, bidding wars and homes being snapped up virtually overnight, the current market is characterized by growing number of listings, a slower rate of price increases and even price cuts.

The article is a bit confusing – it lays out all the reasons for the current slowdown: Lack of affordability and drying up of speculative activity, and how thats led to less buyers and price drops, but then goes on to relay the same old reliable quotes from Bob Rennie and Rick Valouche saying everythings great! I found the following particularly confusing:

But anybody hoping that prices may come back within reach for first-time buyers is likely to be disappointed. Slowdown or no, Vancouver real estate remains too expensive for many. A search for a single-family, detached home under $600,000 on Vancouver’s west side yields three listings, all on land leased from the Musqueam Indian Band. (A fight over lease rates between leaseholders and the band in the 1990s led to a court case and a plunge in market value for homes on band land.) A heritage home in Mount Pleasant is listed at $799,000, despite having suffered a fire last year.

“Affordability is a big issue in Vancouver. And affordability is likely getting worse at a [September] rate of increase of nearly 17 per cent. Because there’s very little chance that the income growth will grow at the same rate,” says Craig Alexander, deputy chief economist with TD Economics.

So if I understand that correctly, prices can’t come down because they are too high and affordability is getting worse? Very strange that those very factors seem to be the only thing that caused the price drops currently happening all over the US, and yet here they will only cause prices to rise slower. Well, I guess they’re the experts.

Buy now before the price goes up!

How do you KNOW that the price of this condo will go up? They tell you! Right now they are ‘only’ asking $319,000, but:

Open House Saturday November 11, 12-2pm. If not sold by Dec. 31, 2006 price will increase to $329,000.

Hoo-hah! What a deal! Buy now and save $10,000 bucks! How many other gauranteed investment deals like that can you find?