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?

Costco comes to Yaletown

Remember when you had to drive all the way out to richmond for your 30 litre containers of Tang? It would take $15 bucks worth of gas and by the time you got there your latte would be cold?

Total drag man.

Well if you live downtown your life is about to change for the better with the new Yaletown Costco.

The cheese selection has been expanded to bring in products that might appeal to shoppers who aren’t just looking for cheese to slap on a school sandwich.

In clothing, a popular area for Costco shoppers, the brands will include such upscale names as Louis Vuitton, Ross said.

“This is a place where you can buy tires and a two carat diamond ring for $19,699,” he said.

Ross said the decision to open a store in the downtown core was made to meet the demands of “one of the most densely populated areas in North America.

“I think sometimes there is a misconception that Costco is always about bulk food products,” he said. “Coming into a Costco, the first thing you hit is major appliances and electronics, plasma TVs, iPods and high end electronics.

“I think that fits very well into the downtown market.”

Awesome! But where am I going to find room in my 500 square foot condo to store all that cheese?

Getting the boom going again in Texas and California

So what do you do when house prices are slowly dropping and demand has stagnated? Create more demand! According to this article on MSNBC there’s a proposal in the states to change the way that credit scores are calculated to enable those that lack social security numbers or legal status as US citizens to get mortgages based on evaluating a prospective client’s utility bills, rent checks and other payments.

Should the new reporting methods gain wider acceptance on Wall Street and among secondary mortgage lenders like Fannie Mae, housing markets in places like California’s Central Valley would stand to gain the most, the National Association of Hispanic Real Estate Professionals said.

“Gateway states like California and Texas will disproportionately benefit from the housing boom because so many of their residents are immigrants,” said Gary Acosta, the association’s co-founder, speaking from the group’s annual convention in Las Vegas. “Boosting home ownership among these populations is a positive contribution to the overall fabric of our society and our economy.”

So with the current slowdown here, where can we turn to get more demand? Zero percent down and 35 year mortgages don’t seem to be doing it.