Negativity in the news

Remember the good old days when all coverage of the Vancouver real estate market was positive? While you can still find some bright uplifting positive coverage it seems like its getting harder to find under the avalanche of negativity in the news recently.

In this weekends Globe and Mail the ‘financial facelift’ section is running with the title couple urged to pay off debts, forget about real estate, and includes a few negative swipes against our market.

“The couple’s goals are like many others,” he explains. “A house in a decent neighbourhood, kids and a solid retirement. In fact, there has never been a worse time in history to buy a house in Vancouver. It now takes 64 per cent of average pretax income to fund housing costs in Vancouver. House prices in Vancouver cannot rise forever.”

and

“Pay off those debts first, the planner urges, and forget about real estate for a while. House prices in Vancouver could decline within a few years. Waiting may be better than spending a great deal today when there are bargains tomorrow, he says.”

meanwhile over at the Vancouver Sun the front page article in the business section is New house supply outstripping demand, with the following gem:

“A large number of projects were launched over the summer in Richmond and it is taking time for the market to absorb all the units, she said. In New Westminster, Podmore added, sales have slowed because little new supply has been put out. In Maple Ridge, a large amount of the same type of housing is being built and it is taking more time for the market to absorb all the units.”

So if I understand that correctly, Sales are currently low due to the following factors:

– Too many houses on the market
– Not enough houses on the market
– Too much similarity between the houses

I think that about covers it, but lets try to stay positive huh? Where can we turn to for a little ray of sunshine? ReMax forecasts an increase in supply AND price, the best of both worlds! It sure is considerate of them to take the time away from the business of selling real estate and do an impartial study of the market reassuring us all of 8% gains. I think their positive outlook should be an inspiration for us all.

Just BUY something already!

You on the fence! Yes you! Hop down and buy something already! Octobers numbers are in and they don’t look good. Its only a one or two percent price drop in most categories so it’s not too late to stop everything from sliding downhill if we work together.

We’re a couple of months into price drops for single family homes on the west side, so thats where we’ve got to act fast. If you’re a move-up buyer or someone with a hefty down payment its time to take that leap of faith. Buy a place on the west side with no subjects now and then put your house on the market – hey it’s worked out ok for some people, now is not the time for hesitation, now is the time for bold action.

First time buyers: If you don’t start doing your part we’re going to have a lot of move-up buyers stuck in a precarious situation. CMHC will insure a zero percent down payment mortgage so you don’t even need to have any money, just BUY SOMETHING!

Look, I know its expensive out there but thats the price you pay for living in paradise. Just make do with a little less and we can keep the bottom from dropping out of this market. If we’re going to prevent whats currently happening in the US its time for everybody to pitch in and do their part. Now get out there and BUY something!

Burnaby is an incredible investment!

With sales dropping in Vancouver you may be looking for the next ‘sure-thing’ investment in lower mainland real-estate. Where can you get in and ride prices up-up-up and away?

Burnaby.

Seriously. If the Oma Developement on Madison Avenue is anything to go by this is a can’t lose investment. This 647 sq. foot condo was originally listed in May 2004 for a price of $207,900. It is still available for you to buy, but is now priced at $325,900! Thats nearly a doubling of value even without anyone buying it!

There are several reasons why you should consider buying this unit:

1) Its only 1 minute away from Vancouver!*
2) Price is going up. Buy now before you are priced out forever.
3) Buy it now before its gone. They’re not making any more land to build condos on and there are only 334 suites available.
4) Bob Rennie!®

*not downtown Vancouver, but the far east side of Vancouver that is one minute away from Burnaby.
® actual Bob Rennie not included with suite purchase.

Vancouver (un)Real Estate

Solipsist has created an interesting Vancouver Real Estate blog called Vancouver(un)RealEstate where he focuses on specific examples of properties that have been rotting on the market for more than a year. The fascinating thing about these specific examples is that they’ve been raising the price when the house doesn’t sell.

Now I’m not educated in the mysteries of economics or supply and demand, but if you can’t sell a house for your asking price in a year, does it really make sense to raise the price? Any theories (other than insanity) on how this happens?

Good work solipsist, I for one would like to see more of these example in the future if you’ve got ’em.

Vancouver Property Taxes increasing at double the rate of inflation

The city of vancouver is considering a property tax increase of up to 6.3 percent to cover spending over-runs according to this article in the Province newspaper. The increase would be necessary to cover the current budget including proposed Olympics funding and is above and beyond this years 4% increase.

“In operating-budget estimates going before council Tuesday, budget staffer Annette Klein says the city’s funding shortfall amounts to a 4.9-per-cent tax increase. And $7.1 million in new spending could tack on another 1.4-per-cent to the property-tax bill.

“If we don’t make any changes in the budget . . . this is approximately what it would be to run the city,” said Klein. “On top of it, we have these funding requests.”

In July, the NPA-dominated council voted to cap future property-tax hikes at four per cent. “Now, what we’re going to do is keep working on this, and come back with some options on how to get to that four [per cent],” Klein said. Next year’s inflation rate is pegged at two per cent.

Last year, council raised taxes four per cent after a gruelling budget process. It cut costs to social programs and community and arts groups. The city also eliminated the equivalent of 25 full-time jobs.”

There is more coverage in the Vancouver Sun, where Peter Ladner suggests that even though a 6% tax increase is a ‘goulish’ prospect, citizens may tell council they are willing to accept a larger tax increase for more city services. That article also looks at some of the numbers:

“According to the “preliminary estimates” for the city’s 2007 operating budget, the total revenues next year are expected to be $823 million. But, as it stands now, total expenditures are pegged at about $846 million in projected expenditures.

That’s a “potential funding shortfall” of $23.4 million. If council uses a tax hike to fill that massive gap between revenues and expenditures, it would have to impose a 4.9 per cent increase.

Then there’s $7.1 million in new funding requests. The most expensive request comes from the senior managers on the city’s “corporate management team.” Those managers propose that $5 million be allocated next year to a “legacy reserve fund” for the 2010 Winter Olympic and Paralympic Games.

According to the budget document, a total of $20 million would be set aside during the next four years to “provide for the involvement of communities, citizens and businesses; allow the city to meet sustainability objectives; and be host of visitors and residents participating in the Olympic experience.”