“I have none of my clients lock up. “

Many suspect that ultra-low borrowing rates are continuing to levitate Vancouver’s RE market. This from a ‘horse’s mouth’, Anonymous on vancouvercondoinfo June 12th, 2009 at 7:09 pm -

“I am lender and have first hand knowledge regarding speculators holding out. Most of them have VRM 0.75% to 0.90% below Prime. So currently their mortgage rate is between 1.35 to 1.50%. How many of them lock up into 5 year term when the rate was 3.5%? Very few. It is very hard for a person to lock up with a 2.0% rate increase rightaway especially if they are thinking short term to sell. I have none of my clients lock up. So if the Prime goes up next year by big numbers, you will see lots of blood.”

“And yet, he’ll still boast about what great RE decisions he’s made.”

This from DownTurnLiving on 2009 May  27, 1:35pm -

“A friend in early ‘07 bought a 2 bedroom in a development on Pender east of Cambie and fell for the buy now or be priced out forever, hook line and sinker. He thought by the time his building would be complete that somehow magically the neighbourhood would be gentrified in time, and the street wanderers would no longer be there.
He and his girlfriend have since had a child but found the street crowd hasn’t magically changed there; so realizing it’s not the best neighbourhood to raise a one year old, their only option was to move the family in with girlfriend’s mom into her west end rental apartment. Meanwhile, take out a mortgage on their 2 bedroom unit when complete and roll the dice by putting it into the furnished rental pool, while enjoying the benefits of negative cashflow. And yet to this day, he’ll still boast about what great RE decisions he’s made.”

Owners “Bleeding Money Every Month”

Now there are anecdotes emerging of sellers who are in debt:

This exchange on RE Talks:

Johnny Horton on Tues May 26, 2009 7:51 pm -

“I’ve heard so many stories of Sellers not having any dough.
It’s not getting any better, either.”

Greenhorn on Wed May 27, 2009 12:46 am -

“I know some investors who would love to sell, but won’t because there is no profit on the table. They are underwater on the deals. Now they are bleeding money every month, paying a tenant to live in their investment. They tell me the negative cash flow each month is like Chinese water torture. I wonder if there are any homeowners in this situation?”

meeeeep on Wed May 27, 2009 5:21 am -

“I think it’s a pretty common scenario. There is a newish house in Shaughnessy that the owner picked up in the fall of 2007 for $2.8m. He now can’t sell it even for $1.9m. While he waits (for what I’m not sure), he’s got it rented out for $4000/month.”

“A lot of Sellers are tapped out of equity…”

There’s been a bit of a ’spring bounce’ in sales and prices, in some areas. But all is not what it superficially seems. This from ‘Johnny Horton’ at RE Talks on Wed May 20, 2009 8:01 pm -

“My buddies in the business tell me that a lot of Sellers are tapped out of equity in the properties that they are selling.
Many of the mortgages are very close to the selling prices, ie…..no equity left.
Although there are a lot of first time Buyers purchasing these properties, the Seller’s don’t have the equity to buy “up” or buy “down”.”

“And I was wondering where all the greater fools were coming from, apparently they all work for the banks. . . ”

This from VanBanker at vancouvercondo May 12th, 2009 10:43 pm -

“(I) was having lunch with someone who works in another department and mentioned I was renting, they said I should jump in now since we’ve “hit bottom in Vancouver,” I said we’ve got a lot further down to go, they suddenly sat up defensively and said “I just bought last month”, very awkward, lol And I was wondering where all the greater fools were coming from, apparently they all work for the banks, and I thought my co-workers would know better…”

“It’s Now A Depression At My House”

This from ‘JeffSkilling’ on 2009 May 05, 1:27 pm -

“The saying goes when your neighbour loses his job it’s a recession, and when you lose your job it’s a depression. Well it’s now a depression at my house, my firm laid off 25 professionals this morning, including me . Anyone out there have any tips for the newly unemployed in terms of keeping up with mortgage payments, job search consultants, etc…

BTW my next door neighbour lost his job three weeks ago (architect) and the lady across the street (lawyer) has been unemployed for three months she is thinking of becoming a bus driver! Until these last 6 months I’ve never known a “professional” who had ever been unemployed, it’s kind of disturbing.”

Point Grey Spec Build: “They’re underwater $390K when all is said and done.”

This from Whybuywhenucanrent on 2009 May 02, 3:04 am -

“4597 W 14TH AV sold for $1.69M on April 1 (2009).
As of Feb 1 at a $1.79M list, I estimated they were $260K underwater. At 2 more months of $15K debt service and a $100K hit on the price, they’re underwater $390K when all is said and done. To drive this home, they bought the place 12 months previous for $1.25M, bulldozed a house, built a brand new house on the lot, and sold it for a whopping $1.69M. That’s only $340K more than they bought the lot for. And they paid $50K in Realtor fees if they did a standard contract. (And I left out landscaping costs in the original post, so subtract another $10K?)
Another way of looking at it — to break even, they would have had to have brought construction costs from $250/sf to $90/sf. “

“But he’s jazzed because he can buy a townhouse for $50k off peak price.”

This from betamax at RE Talks 2009 Apr 28, 8:27am -

“I know someone who’s buying right now, he and his girlfriend just put an offer on a place. The crazy thing is, he works for an IT startup company which has already laid off 1/3 of the staff and may not survive the year, and the people already laid off still haven’t found jobs again in IT, but none of that has deterred him. And his relationship doesn’t look too stable either. But he’s jazzed because he can buy a townhouse for $50k off peak price. People just don’t think things through very much.”

Group Anecdote: “How Exposed Are You To The Vancouver Real Estate Market?”

(1) “What percentage of your net worth is currently in RE?”
(2) “To what extent is your equity in RE sensitive to changes in the RE market?”

These are important questions for all RE owners and RE investors, and we are here collecting ‘group anecdote’ information in this regard. Raw dollar numbers are likely too personal. Rather, you are invited to share the answers to the two questions above. Posters on other Vancouver RE blogs are also being invited to participate in this survey. Results will be collated on VREAA.

First, establish the following variables -
x = Total current market value of owned RE
y = Total outstanding mortgage debt on owned RE
z = Value of all other your assets, including savings, RRSPs, etc.; minus non-mortgage debt.

Now, calculate -

(1) “What percentage of your net worth is currently in RE?”

Percentage of net worth in Real Estate = ((x-y)/(x-y+z)) X 100

Then calculate -

(2) “To what extent is your equity in RE sensitive to changes in the RE market?”

Leverage ratio = x /(x–y)

[Illustrations regarding leverage -
If RE prices go up (or down) by 10%, someone with a ‘leverage ratio’ to the RE market of 1.0 will have their equity in RE move by 10%.
If their leverage is 1.2, it will move 12%; and if their leverage is 4.0, by 40%.
A negative leverage ratio occurs when there is more owing on the mortgage than current market value.]

At the very least, these are numbers with which all RE owners and RE investors should be familiar.
This is an invitation to do the math, and to share answers if you feel comfortable doing so.

Post your answers to questions (1) & (2) as a comment below.

“He is scared as hell because the company has absolutely no jobs lined up.”

Some are only now starting to anticipate the post-2010 hangover. This from betamax at RETalks 2009 Apr Tues 07, 9:16 am -

“A neighbour of mine is a project manager on one of the multi-million dollar development projects currently due to complete in the fall. He is scared as hell because the company has absolutely no jobs lined up when this big project completes. He’s now sending out resumes to other companies, with no takers. He even started talking about applying for jobs in the US, seemingly unaware that things are even worse there. I was actually a bit shocked by how little he knew about the larger economic picture.”

“30% is the average vacancy rate in a couple of dozen towers in Yaletown.”

The rental market is softening in Vancouver, with both more vacancies and lower rents. These anecdotes from a thread at RETalks, 2009 Apr 03 -

wtm notes: “Very interesting developments these days west of Denman in the west end. Normally at this time of year, i.e., start of the summer, very few vacancies are posted. Take a walk in the this hood tomorrow — I saw close to TWO DOZEN vacancy signs today — studios, one bedrooms, two bedrooms, even a 3 bedroom place. Either tenants becoming owners or people leaving the city because they lost their jobs? I have lived down here off and on for 10 years — I have NEVER seen this many vacancies in this neighbourhood.”

Strataman adds some first hand information: “I am exposed to well over 2000 rentals in YALETOWN as a service company for the strata corps. The rents are dropping and have dropped substantially. 30 % is the average vacancy rate in a couple of dozen towers in Yaletown.”

kansai_92 reports: “I’m starting to see vacancy signs around the Broadway/Cambie corridor now. These are older rental stock. One of my colleagues live in one and his rent is an amazing $775/month for around 750sf. He’s surprised to see vacancies popping up as well.”

Visual from Kits – “Due To Financial Difficulty, Must Sell!”

“The 493K will not happen in my lifetime” – “Nobody wants them yet they will still sell for minimum 500K.”

Some are frantically calling the bottom in the Vancouver RE market, in word or in deed. This from eyesthebye on 2009 Feb Wed 25, 6:05pm & 10:21pm who seems to believe that the market can’t possibly deteriorate further from here -

“He’s saying the price of a single detached in Vancouver should be 493,000? I just bought a place – a character 1 and half story at over 600K and I had to line up for it – in fact, every decent home I looked at was sold in the first week for high 500’s to 700K. I’ve even see substandard locations sell for 500K in the first day offered. If you’re in the market for a single detached expect to pay 600K for a decent place. The 493K will not happen in my lifetime.”

“Buying a decent house in Vancouver for under 500K is a pipe dream. Trust me, I’ve just been through it – searched for a HOUSE for six months and every time there was a decent 1.5 or 2 storey character house for under 700K it was gone. Go look for yourselves – mls is littered with Vancouver specials and bungalows – nobody wants them yet they will still sell for minimum 500K. Anyone who doesn’t believe this can continue to live in their rented apartment or owned condo”

“I’m 79 years young … I should have known better with all these years of experience.”

This is a second anecdote from the article by Kerry Gold in the  Globe and Mail, February 19, 2009 -

“Lou Skoda and his wife Donna purchased their two-bedroom Port Moody apartment in Onni’s Aria 2 building in September, 2007, for $456,000.

However, a year later, when they tried to sell their smaller condo unit to finance the purchase, the market had collapsed. Mr. Skoda, 79, a retired cartographer, lives on a fixed income and couldn’t obtain a mortgage to finance the Onni condo. He attempted to renegotiate with the developer, he says, but was turned down. By January, he learned that his new condo would be sold for 25-per-cent less as part of a liquidation sale of 375 units. Mr. Skoda offered to buy the condo for the reduced price, but was offered a 6-per-cent discount instead. Onni is now suing Mr. Skoda for backing out of the deal, which means the Skodas could lose their $68,350 deposit and be stuck for damages such as the loss in property value.

“We bought at the height of the real-estate-market wave and we were trying to sell when the real estate went through the floor kind of thing,” says Mr. Skoda. “We definitely didn’t see this coming, so we signed on the dotted line. Of course, we made a decision without consulting with a lawyer, which my lawyer now tells me was a dumb thing to do, and I agree.

“I’m 79 years young … I should have known better with all these years of experience.”

“The market changed so quickly, no one could anticipate it.”

This from an article by Kerry Gold in the  Globe and Mail, February 19, 2009 -

“Computer programmer Riaz Kassam purchased a two-level penthouse in the trendy Yaletown district of downtown Vancouver last June for $1.5-million, with a down payment of $80,000. Compared to comparable units, the H + H unit should have been priced at $1.6-million, so Mr. Kassam thought he was getting a bargain. By the time the condo was completed earlier this year, Mr. Kassam was shocked to see it appraised at $1.2-million. In order to close the deal, he says his bank requires that he pay a bigger down payment of 25 per cent. However, his current condo has also dropped by more than $170,000 in value, which has made that impossible. Mr. Kassam says the developer is now threatening to sue.

“We even asked our broker to get third-party funding for us, with 10 or 12-per-cent interest – but no one is willing to do that because they need equity,” he says. “The market changed so quickly, no one could anticipate it.”

“The cycle will come back but I don’t want to wait until it gets better.”

These excerpts from ‘A building boom goes silent’, an article in the Globe and Mail, February 19, 2009 -

Lynn Harrison has lost her job twice now in the boom-bust home building industry. This time, she’s getting out for good. The former marketing manager at British Columbia’s Vesta Properties Ltd. was laid off as the slump in the residential construction sector took hold late last year. She lost a job the first time during the 2000-2001 downturn, and now she’s looking for a senior marketing position in a completely different industry. “The cycle will come back but I don’t want to wait until it gets better,” said Ms. Harrison, who was laid off in December at Vesta, which is based in the Vancouver suburb of Langley. “No one wants to build a bunch of homes no one wants to buy. There are just times when you have to cut people.” Ms. Harrison was part one of the greatest job creation booms that drove employment in the sector to 1.2 million from about 800,000 at the beginning of the decade. And now she’s among those leaving as construction plummets.”

“Damn Those Pumpers!”

Regrets from Waitingtobuy99 at RETalks on 2009 Feb Tue 17, 11:23 am -

“We (young business professionals) bought in 06 and thought oh, it’s never coming down; we sold our 700sq/ft condo and lost a lot of our down payment. Damn those pumpers! It’s not the older generation who are getting screwed here, its the first time home buyers in the past 2-3 years. They (pumpers) should be on trial for some kind of conspiracy.”

“That’s GOTTA’ hurt.”

Report on a telling sale from thinktom at RETalks 2009 Feb Mon 16, 2:20 pm -

“Unit 2701 at 1455 Howe. Purchased Feb 1, 08 for $1m even. Just sold for…. $725k. That’s GOTTA’ hurt.”

“I guess paying close to a half a million bucks for 720 square foot condo doesn’t seem like such a great “investment” now.”

Are we already back to 2005 price levels for some Vancouver RE? This from meeeeeep on RETalks on 2009 Feb Sun 15, 6:36 pm -

“1201-1005 Beach Avenue (the Alvar) just sold for $375K after 28 DOM. In 2005, the going price was $350K for the same unit on a lower floor. 501 sold for $345K in Oct. 2005 and 601 sold for $352K in Dec. 2005. In May 2007 one of these units (1601) sold for $438K. Considering current interest rates, it is astonishing how fast the price has fallen. I guess paying close to a half a million bucks for 720 square foot condo doesn’t seem like such a great “investment” now.”

“I look forward to selling real estate in a market where I can more easily see value for the dollar.”

Respected North Shore realtor Paul Boenisch has decided to move from Vancouver to PEI for reasons of affordability and consequent improved lifestyle. This extracted from his blog, Wednesday February 11, 2009 -

“My wife Sandra and I have made the decision to move our 1.5 (one on the way) kids to Charlottetown, PE. Why? We initially were interested in Charlottetown because we have some family there, and after researching it and visiting PEI, the vastly improved quality of life is what convinced us. Sandra and I want to have the time to be very involved in the lives of our children, and PEI is affordable as well as being beautiful.” -
“I look forward to selling real estate in a market where I can more easily see value for the dollar. Selling first-time home buyers into a 200k house will feel good compared to the recent speculative mania that has infested BC real estate. And when you toss in beautiful beaches and the best golf in Canada it all made a tough decision a little easier.”

“The Other 30 are Completely, Utterly and Totally Empty.”

The rental market is not as tight as many would have one believe. This from vomitingdog at Rob Chipmans blog 05.Feb.2009 at 1:04pm -

“I am renting in a 12 story Vancouver tower in the South Granville neighbourhood. Of the 40 brand-spanking new units in this building exactly 10 of them are rented. The other 30 are completely, utterly and totally empty with craigslist ads posted several times a day to try to fill them up. And the craigslist ads have been running for 5 months now. If you said that they are over-priced and the landlord is not open to actual market values, I would be hard-pressed to disagree. But it seems to me that landlords, even of big rental buildings, have drunk from the same kool-aid as owners. Anyone who says that the rental market is tight must be referring to bachelor’s and 1-bedrooms at the lower end of the market. But even those are now widely available and sitting empty for 1-3 months in beautiful old heritage walk-ups in this neighbourhood when they never were as available before.”

“Would You Like A Mortgage With Those Fries?”

grantness at RETalks Thu Feb 05, 2009 4:44 pm writes -

“A year ago we faced a staffing crunch in my restaurant. But since December, we’ve had several realtors applying to be waitresses.”

A Drove Of Price Drops

A thread on REtalks started on Saturday 31st January 2009, resulted in a series of anecdotes about price drops -

“Assessed: 1.42M; Orig list: 1.35M; Sold: 850k. This is not uncommon.” (Paulb quoted by freako). Update 01 Feb 2009 -> “Paul B missed the mark by $10K. I purchased the WV house for $840K with a $1,426,600 assessment. The market is collapsing regardless of pricepoint ($100K or a $1,000,000) and will continue to for likely the next 2-3 years, perhaps longer.” (westvanbuyer)

“I am not a realtor but there was a house on Capital Hill my wife and I were looking at. Beautiful home, quality built. A year ago it was listed for $1.15M and an offer was made (according to the realtor) for full asking but the sellers got cold feet. Fast forward a year. House sold after being on the market for a second time. Was listed at $1.05M but sold for $860K.” (poundcruncher)

“Buddy builds homes in Point Grey. Last year he was buying 33′ ft lots for $1.1M. One sold two weeks ago for $823 (w/ view of d/t). ” (poundcruncher)

“Ambleside home. sold 1.57M March 08; sold 1M Jan 09.” (Paulb)

“Sales at significantly below list are becoming common place now. A house three blocks down from me just sold for $1m below assessment. The listing agent said the sellers were very pleased with the sale price, given the state of the market.” (kingroland)

Some suggested that these anecdotes exaggerate declines, citing possible lesser drops as evidence:

“My Abbotsford townhouse, confirmed by to recent sales in Dec and Jan is worth 300-310k. Last May it would have sold for 330k” (pianoexcellence quoted by Thompson)

“It consists with what I observed, such as the highrize buildings in Lougheed Mall where is worth about 250K now, down from 280k since last May.” (Thompson)

vreaa would appreciate the posting of any first hand anecdotes of 2008 versus 2009 sales price changes in the comments section below.

“They’re already crying — They’ll go bankrupt, I think.”

This from concerned father joe2 at RETalks on 2009 Jan 29, 10:15 am -

“My daughter, with her boyfriend, bought a house last year in Prince George for $270,000. They’re already crying, and tried to sell privately but can’t even get a $170,000 offer. They’ll go bankrupt, I think.”

(quote paraphrased by vreaa editor)

“I make $52,000 a year and I own two large townhouses. I bought the last one a year ago.”

Apparently some people haven’t heard the news about the ongoing worldwide RE bust. The CBC reported that people literally lined up to buy condos in Vancouver on the 19th January 2009.

The comments on the article at the CBC website included this one from  ‘johnny’ Posted 2009/01/20 at 3:41 PM ET:

“It really annoys me when greedy, lazy people complain about the cost of housing.
Yes, it is expensive!
Vancouver is the #1 place to live in the world.
Prices are not inflated tho. The price that homes sell for is exactly what buyers are willing to pay – and that is always how it will be. If you are not willing to pay those prices, then either give up on wanting to buy, or move somewhere cheaper. The prices will not drop drastically just because you want them to. Vancouver will ALWAYS have lots of foreign investors. That is the way things are here.
I make $52,000 a year and I own two large townhouses. I bought the last one a year ago. I have never been given any money from relatives or won anything. I dont have any special knowledge or opportunities. I simply wanted to buy a home, and made it happen. And then I wanted to buy a second one, and made it happen. Its not about how much money you make, because really, I dont make all that much! Its about your priorities and the decisions you make. If you really want something, go and get it!
Why buy now instead of waiting till “the bottom” has been hit? Well, we never know when the bottom has been hit until its already gone and prices have started to rise. Also, do you realize how many people are waiting for “the bottom”? Once someone declares that the bottom has been hit, the market is going to be flooded with buyers and there will be lots of competition and prices will rise. Right now there is a huge supply of homes and great interest rates, so even if prices do drop a bit more, you still may get a better deal now, just because there is so few buyers.
Even if prices do drop a bit more, unless you are intending on selling in the near future, it wont affect you. Most people are buying a home, not an investment, so even if prices do go down a bit in the short term, that has no affect on the value of your home say 10 years in the future.
If you want a home, and you can afford one, buy one.“

“Owner” of 20 Investment Properties Can’t Sleep

This from IC4 at RE Talks on Wed Jan 14, 2009 4:08 am -

“Some of my family members attended (the Real Estate Investment Network) seminars a few years ago and now are up to their necks in debt. Maybe a couple of million in one case, and no idea as to the others. Probably more than that.
One of my siblings “owns” more than 20 investment properties and has a hard time sleeping, worrying about how to keep the places tenanted. Somehow they have always found other investors to help them buy more property. One of the big purchases was a building which needs millions to be refurbished and probably can’t be resold until it is—but my worry is, what if the original co-investors start asking for their money back? If that is the case then I see ruination ahead. And that makes me feel very scared for their sake.”

Sold! (For 10% Below 2006 Price)

This from Thomasina Barnes, in the Globe and Mail, January 9, 2009 at 2:08 PM EST -

• 428 BEACH CRES., UNIT 2102
• ASKING PRICE: $1,998,000
• SELLING PRICE: $1,600,000
• PREVIOUS SELLING PRICE: $1,780,000 (2006)
• TAXES: $8,258 (2007)
• DAYS ON THE MARKET: 162
• SELLING AGENT: Nicolas Blachette, TRG Realty

“A lot can change in six months. The list price of this 1,713-square-foot suite was reduced twice before its sale. It was originally listed at $2,298,000, then cut to $2,198,000, and finally $1,998,000. It sold for almost $700,000 below the original price — and $180,000 less than the home was purchased for in 2006.”

RE Owner/Speculator Distress

This from Marco911 at RETalks Thu Jan 08, 2009 9:55 pm -

“..It was disturbing to hear an old friend (one who I haven’t spoken with in years) tell me they had contemplated jumping out of the window of the new condo they just took possession of. She’s a wonderful person who has always been a hard working character and got wrapped up into this recent real estate phenomenon. She works two jobs and purchased two pre-sale units in Vancouver with the hope of making some serious money. She’s never been wealthy even though her parents tried to do everything they could for her. I met her in private school growing up. .. She’s a nurse and also works part time at a pub generating a decent amount of income. Very low spender when it comes to luxury items. All her hard work is about to be wiped out. She has worked a few years almost 7 days a week every week. She is trying to sell one unit along with just about everyone else in the building and it’s not going to go. She’s dropped the price past her break even point and even beyond what her deposit was. Still no bites. The other unit which is completing soon is going to have such a huge mortgage, that 2 months will wipe her out. She is unable to sell her contract at a loss.”

Into The Psyche Of The Real Estate Seller

Many RE owners have been planning their futures based on what they imagine their home is worth. The market has barely turned, but already we are hearing of the consequences of the disconnect between reality and fantasy. This portrait of what is going on in the minds of thousands of sellers, from stprdi at RE Talks 2008 Sep Tues 30, 11:48am -

“We’ve been researching and planning a move to the Maritimes for a couple of years now. Doesn’t it figure that now we can’t sell our property. We’ve got a beautiful “cottage” type home in the Okanagan. It’s been listed since July. We’ve had I think 6 open houses and an army full of people through. Recently we dropped the price by $20,000. It was already fairly priced. No bites. I understand buyers are really careful right now but does anyone have any thoughts or ideas on how we can move forward. We would be able to sell up here and buy a home in the Maritimes for cash or with a small mortgage.”

and in a later post (2008 Sep Tue 30, 1:00pm -

“If any home sells in our town/area it seems to be between 300-400,000. Ours is currently priced 430,00. We could keep dropping it but we really want to have none or very little mortgage when we buy back east. Is it too early to try to second guess the market for spring after all these bank problems?”

“There Is No Way In Hell I Am Reducing It 10%, That’s $30 Grand!”

This from exx at RE Talks 2008 Sep Thu 18, 10:35pm -

“I was speaking to a co-worker this afternoon who listed his property 3 weeks ago and has rented a house – he has enough saved for 3 months worth of rent. He has had 3 open houses and no showings, and the Agent has contacted him asking if the price can be reduced. He is PISSED that the Agent is not doing their job right because they want a reduction when they haven’t had any showings (no traffic = 100% agent’s fault). He’s willing to wait 3 months before he “panics” and reduces his price. I couldn’t believe what I was hearing. I told him to remember that he has DOUBLED the value in his property, and that it is better to reduce it now and get the sale, even if you need to reduce by 10%, than to wait longer and risk losing even more. His response? 10%? There is no way in hell I am reducing it 10%, that’s $30 grand!”

“The Sense Of Urgency Is Completely Gone.” (Buyer Urgency, that is).

This in the trenches note from realtor thinktom at RE Talks 2008 Sep Mon 08, 2:00pm -

“So my wife and I had an open house this weekend in Kits. Beautiful home, listed at $1.749m, easily multiple offers 6-8 months ago for SURE. We had a HUGE turnout, lots of lookers but serious buyers as well…..and no offers (maybe one today). I guess I just wanted to say it’s a very interesting market when there are still lots of buyers….but they are definitely in no rush. The sense of urgency is completely gone. Interesting indeed.”

“She’ll Make About Exactly Half What She Made Last Year.”

RE prices may not yet be down much, but Vancouver realtors are feeling the downturn in sales with large drops in personal income. This from betamax at RE Talks 2008 Sep Tues 02, 9:45am -

“My sister’s a realtor and if she can sell a few more houses in the fall (best case) she’ll make about exactly half what she made last year. That’ll still be a six-figure gross, but unfortunately she has no savings and has created an extravagant lifestyle for herself with massive monthly payments that will exceed her net income this year. I suspect she’s hooped.  I’m not looking forward to the call in which she asks to borrow money.”

“Bleak” Market For “Greedy Pig”

This honest account of the market quiet from realtor Jeff at Rob Chipman’s blog 24 July 2007 5:29pm -

“Times are certainly changing. My phone didn’t ring at all today. I currently have 6 active listings on MLS, another 1 that should get processed by tomorrow, and possibly another 3 listings to hit within a week.
I was chatting with one of my colleagues today who has 26 active listings and she told me that she was doing a lot more showings last year while carrying 8-10 at a time.
From a Realtors perspective this is bleak. I had to laugh earlier this week when a prospective client thought it was “bleak” that I suggested $449k on his property that he bought for $138k in 1999 and it traded in 1992 for $131k. Greedy pig!”

Replace Roof Once Every 120 Years – But Not In Vancouver

Anecdotes about Vancouver construction quality often involve disbelieving visiting foreigners. Are locals blinkered in this regard? This from Partisan Spectator at Vancouver Condo Info July 11th, 2008 at 1:29pm -

“My relative, a professional construction engineer from Poland with 40+ years of experience, was here visiting my family for the first time (his first time in North America). Once he saw a few construction sites (SFH, lowrise and highrise ones) he wholeheartedly LOL about house quality and the building code. He could not imagine people throwing away massive amounts of money to get a house that has a warranty for max 10 years. He and his family are living in an apartment building that was built about 140 years ago. For the whole lifecycle, the roof has been replaced once about 20 years ago, and there was no structural repairs. Sewer is still original and will be replaced in 10 years. Water pipes were re-done about 30 years ago. The 4-storey building still has the original stucco that have been painted every 6-7 years and the original wiring. Inside the apartment, all doors and hardwood (oak) and stucco are in the same shape as 140 years ago. Anybody can say something similar about their dwelling in Van? “

Psychology Changing? – “Hmm, maybe that wasn’t such a dumb move after all…”

This from Drachen at Vancouver Condo Info on July 11th, 2008 at 12:26pm -

“Psychology seems to be shifting too. I just had a chat with a friend of mine who sold last spring (after I pointed her here (Vancouver Condo Info) and to several other blogs). For a year she’s been enduring, “You’ll be priced out of the market forever.” and similar comments from friends and family. Now she says for the first time some of them are starting to say, “Hmm, maybe that wasn’t such a dumb move after all…” Another friend who was so confident in the market a year ago she bought a second condo is panicking over whether she can sell it in time (it needed rain shielding and is waiting on a couple more fixes before it can be certified). She’s hoping to have it on the market by mid July. Both of those represent a 180 turn in psychology from a year ago, if this is normal we’re about to see that “rush for the exits”.

“Renting From Amateurs Sure Sucks” – “He wants out of our one year lease so he can sell”

This from pricedoutfornow at mohican’s Langley Financial Planning blog 10:02 PM, July 09, 2008 -

“The party’s over. My landlord called today, panicking because the neighbour has dropped her asking price by $20k or so. (Two open houses in a row, no bites). He wants out of our one year lease so he can sell, he offered to sell it to me (ya right). Rush to the exits, don’t get trampled!!! Renting from amateurs sure sucks at times…”

Accepting That One Is Living In Unusual Times – “What Can Ya Do?”

Many renters who under more normal circumstances would have been owners have found the RE market in Vancouver singularly challenging. They have had to be philosophical about their predicament. And they are now getting some relief from signs that change is afoot. These anecdotes from Joshua on Rob Chipman’s blog July 08, 2008 at 10:23pm and 10:26pm -

“I’m 37 and a renter, never owned. Whaddya know, life got in the way – grad school, kids, more grad school, finally got kickass job, looking to buy but … prices outta control… wish I’d got my new job 5 years earlier but what can ya do? I’m waiting for prices to correct, and they will… in the meantime, I’m not too worried. My rent is less than half the cost of owning, I’m banking the rest, there are plenty of ways to build wealth, but buying in the current market is not one of them.”

” Was out in the yard (of the house I happily RENT)… neighbour’s boyfriend’s buddy was yakkin – hey this place I saw at blah blah blah, it was like 539 a couple months ago, now its 499, its awesome… Other neighbour leans across the fence – ya, prices are droppin, you should wait a year… Other guy – totally, I hear ya…the word is out, its on the street.”

Trapped Seller – “You knew this was going to happen?”

This exchange reported by blueskies at Rob Chipman’s blog July 7 2008 at 10:47am -

“Ran into an ex-neighbor in my favorite coffee shop this AM -
me: sell your place yet?
xnabe: no, kind of slow right now
me: i see there are 6 others for sale too
xnabe: yea,but i can wait
me: what are you looking for?
xnabe: we want one in H&H
me: something will come up i’m sure
xnabe: you guys were pretty smart getting out a year ago
me: thnx but we were warned
xnabe: you knew this was going to happen?
me: yea, we had two years warning so we dumped it
xnabe: you are kidding! right?
me: nope just watching California market screaming GET OUT!
xnabe: shit!”

Market Players In Trouble – “Developers Realize The Market Is About To TANK!”

Suddenly there are people talking about ‘getting out’ of pre-sale assignment contracts in Vancouver developments. Flippers are in trouble and headline prices haven’t even dropped yet. This story of an ‘owner’ vs developer standoff from cuba108 at RE Talks on 2008 Jul 07, 9:55pm -

“I have a client who has purchased a pre sale with a clause preventing him from assigning his unit until the developer has sold all the inventory. Though the sales people have told him that he supposedly has one of the most desirable floor plans and that they would have no trouble reselling it, permission to assign was denied. He was prepared to assign at a substantial loss, pay the developer for the extra commissions involved and some other concessions, to no avail. They also pointed out that not only would he lose his 15% (90K) they would sue for the balance plus interest. Developers realize the market is about to TANK! He is now so angry he is going to list his unit at 25% under market, with the condition it is assigned when the development is sold out (if ever). If nothing else he may bring sales to a stop until someone bites. Fortunately he has the money and the stones to carry this out, but I’m afraid the majority of pre sale purchasers ( Woodwards anyone? ) are hooped.”

Falling Asking Prices And Rising Pressure To Sell – “He’s VERY Motivated”

This update from the frontlines from exx at Rob Chipman’s Blog July 6 2008 at 9:44 pm -

“I went to 6 open houses in Port Moody & Coquitlam today, some in the same buildings that I looked at last month. The prices just keep tumbling down. The best one being a unit we looked at last month going for $379,800. Today? $345,900 (10% haircut). The realtor’s reason for the big drop? The ‘local’ investor is nervous about the market. I asked her if she thought he’d consider an offer 10% below the asking price (~$310,000) and her response, as expected, was “Yes, make an offer, he’s VERY motivated.” I don’t blame him, nearly 20% of the units are for sale.”

Spec-Builders Feel The Heat – When Escaping With “A Small Loss” Is The Same As Having “Won The Lotto”.

Spec builders have become aware of the slowing market. This from Bob at Vancouver Condo Info July 4th, 2008 at 10:35am -

“In Abbotsford I’ve heard from two different sources that there’s a developer.. that just dropped the prices on his new houses 70-80K to $499,000.”

And franko (July 4th, 2008 at 12:28 pm) adds the following -

“As an ex-spec builder who keeps in touch with the gang that’s still active, let me assure you that the same thing is happening in Coquitlam and on the North shore. During the last coffee break with a bunch of builder buddies, I learned that most of these guys are not proceeding with new projects and are letting recently acquired permits expire. Unlike developers of large multi-unit projects, that could take a couple of years from commitment to completion, small-time house builders sometimes have the advantage of bailing out at the first sign of trouble. Although most of these guys with unsold new houses are scared $hitless as not even price drops are generating much interest, one of the guys FINALLY had the subjects removed from a recent sale that enabled him to escape with only a small loss…or so he claims. Anyway, this guy was so happy, you’d have thought he just won the lotto. Needless to say, he sprung for the coffee and doughnuts.”

Vivid Example Of Zero Sum Real Estate Game – “He Can’t Sell It For What He Wants”.

There is always somebody on the other side of the deal, as this example from Slanty2D at Rob Chipman’s blog July.03.08 at 11:04am so clearly illustrates -

“I’m 35, bought my first house in 2000 (primary residence) in East Van for $290k, with a buisness partner bought another East Van house in 2004 for $420k (so I’m only 1/2 owner of second house). Saw the market SKYROCKET, so decided in fall of 2006 to sell the primary house. Sold for $840k (after everything about $600k profit). I made an agreement with the new owner that I’d rent the house back, so didn’t have to move. It’s now closing in on 2 years since I sold the primary house. I’ve invested my capital and done well, and I’m keeping one finger in the punchbowl with the 1/2 ownership of the rental house. The owner of what was my primary residence (where I am still currently renting) has tried to sell the house twice, and both deals have fallen through. He now says he’s resigned to keeping the house, even though it’s cash flow negative because he can’t sell it for what he wants. I’m watching the market, and am prepared to sit on cash for a couple more years to see what happens…maybe in a while if prices drop enough I’ll buy my house back and never have to move.”

And, if that comes to pass, the current owner will have lost an amount equal to the profits that Slanty2D gained.

Seller Tries To Get Cute – “In fact, there were no offers at all”

At this stage of the RE cycle, sellers can’t afford to pass over offers. This from Greenhorn at RE Talks 2008 Jul Wed 02, 12:21am -

“A friend of mine put in an offer on a home. For round numbers, the deal went something like this. The property was listed at $1,000,000. My friend offered $950,000. The vendor countered at $975,000. The realtor said take the deal at $975,000 because there are 5 back up offers at $975,000. My friend walked. Guess what? There were no back up offers. In fact, there were no offers at all. The realtor then begged my friend to take the property and demanded that he write an offer at $950,000 as the vendor would accept this price and this is what was initially offered. My friend passed as listings were increasing. Guess what? The property is now on the market at a list price of $925,000. This is what happens when you have stupid vendor and unscrupulous realtor.”

“Very Frustrated” – Pressure Builds On Sellers

As inventory builds further, those wishing to sell are feeling the pressure.

This from annew at Paul Boenisch’s blog July 1, 2008 5:10pm -

“I have 2 friends trying to sell properties right now and feeling very frustrated. One is a small cheap unit downtown, the other is a very high-end large unit. Multiple showings, open houses, staging, the whole 9 yards, and no nibbles yet. The only factor left to change is price… and so the pressure is on.”

This from octagonian at Paul Boenisch’s blog July 1, 2008 5:21pm -

“On-the-ground reports routinely tell of SIGNIFICANT price reductions in West Van. These numbers ARE already impacting prices. West and North Van are tarpits — no way out for anybody who bought after ‘05…

And, in a related vein, this from betamax at Vancouver Condo Info July 1st,2008 3:16pm -

“I just talked to a realtor who said he didn’t sell a single thing in June. Zip, zilch, zero. This is a realtor who made $300k last year.“ .

“Not a Single Offer!” – Change in the Vancouver Real Estate Trenches

This from realtor Jeff at Rob Chipman’s blog 06.22.08 at 10:10pm -

“No open houses for me this weekend. Why bother, no one would show anyhow. I have 8 listings sitting on the MLS and I got 1 phone call for a showing for Monday evening. The seller did 2 price drops on that particular listing and the 2nd price drop got processed on Friday. Time and time again, I have proof that price is the single biggest factor influencing the sale of a property. If any Realtor tells you they have a 20 point marketing plan… it’s BS. If they tell you they have a full marketing program and promise significant exposure… again it’s BS. I’ll tell you what sells properties… MLS and PRICE.”

This from house browser Anonymous at Rob Chipman’s blog 06.22.08 at 9:41 pm -

“Went to total 10 open houses this weekend. Most were recent listings (2 weeks or less) and the prices were “reasonable” (priced sharply!). With at least four of the openings, we were the only family there at the time. At all of the openings we attended, the real estate agents were extremely courteous and took their time showing us place and answering our questions. (One called me back today with an answer to a question I had from a showing yesterday!). There were 2 homes where the real estate agents said the sellers were very motivated and would like to see an offer. I just may put an offer on one of the homes.”

This from house browser exx at Rob Chipman’s blog 06.22.08 at 9:46 pm -

“We went to 6 open houses today in Port Moody, completely at random but all 2bed/2bath, which is what we’re looking for. They ALL had 3 things in common: 1. 60+ DOM, 2. Motivated Sellers, 3. Prices reduced repeatedly (20-40K). Another thing in common, though with the realtors, was the acknowledgement of a very different market. A couple of them pushed the “It’s a buyers market now, you have room to negotiate” line. Room to negotiate? Yes. Buyer’s market? Not yet, but it’s getting there! I got to talking with one of them who went off about how last year at this time there would’ve been multiple offers. Now she’s insisting to people, us included, to just MAKE an offer.”

This from Anonymous at Rob Chipman’s blog 06.23.08 at 10:05 pm -

“Spoke to our realtor yesterday (Master Medallion 7 years, sold our house in a week last year). He has 12 houses posted on MLS and not a single offer!”

“Three Anecdotes From My Workplace”

Wonderful anecdotes of RE excess and greed from Anonymous (at Vancouver Condo Info June 21st 2008 at 8:11am) :

“#1) A self-proclaimed ‘flipper’ has been trying to flog a SFH in Pt. Moody for the last six months. He finally took it off the market 3 weeks ago. He made no price reductions cause he can’t afford to; he ‘owns’ a BMW M3, a Harley and a ‘08 f150, and he was working on his taxes at work and he had borrowed extensively from his RRSP to just maintain his ‘lifestyle’. When I asked him if his house had sold he replied that he was taking it off for a couple of months and he’s going to put it back on when the Market ‘heats up’ again. In the meantime, he is trying to rent it out because he kicked out the previous tenants to do some renos before selling. No luck there either; few calls, and very little interest.

#2) Two guys I work with bought an older townhouse together in North Burnaby for a quick flip. They felt that it was underpriced and with a few quick reno’s and some sweat equity, they could turn it over for a tidy profit. After a kitchen and bathroom reno, they put the POS on the market for 60,000 more than they paid. Open house after open house the thing just sat. They took it off the market, and decided to do a major gutting of the rest of the place, and then rent it until things heat up again. They are a little worried because the strata is one unit away from reaching the rental limit. They are just hoping that they can get the reno finished before someone else in the complex decides to convert their place to a rental.

#3) Another dude sold his house in Pt.Moody, just up the Hill off the Barnet for the High 900’s. They bought a lot in Coquitlam and are in the midst of building a new hoouse, which will be worth 1.3 million (his estimate). The builder is building a spec home beside their lot, which he plans to sell. The guy I work with is watching that closely as he wants to buy a Porsche 911 with a HELOC ( if the house sells for significantly higher than his estimate of his home’s worth, then, by extension, his home is worth a lot more money and he can afford the car). Well, the other house is sitting. Interestingly, this guy and I were talking with a consultant that we use from Santa Barbara. He bought his house for 1.2 million two years ago, and it overlooks the pacific and is just gorgeous. When my workmate heard that, I think he started to understand how f’ed up things are when homes in Coquitlam are more expensive than homes in Santa Barbara! “

Empty Open Houses – “The surreal experience of being the only ones there”

The slowdown has very definitely commenced. Here are some observations from umdesch4 at Vancouver Condo Info June 7th, 2008 8:46am -

“Price declines are already starting in some areas. One SFH we saw two weeks ago (in Port Moody) dropped the listing price from $719K to $688K overnight. Just in the time we were looking, a couple of other places in Coquitlam fell off the MLS listings, only to re-appear cheaper. Otherwise, all of the couple dozen or so listings we started looking at between a month and 6 weeks ago are still up. Oh, and did I mention the open houses? Two weekends ago, we had the surreal experience of going to 4, and being the only ones there. I’ll admit that this is only anecdotal, based on a small sample (of SFHs only), and in the outlying areas of the GVA…but I can’t help thinking it might be a sign of things to come.”

Realtorese – “House Renovated by European Craftsman”

This gem from Orcbait at RE Talks 2008 Jun Sat 07, 10:35 pm -

“Some years ago, a colleague of mine at the office drywalled his basement by himself in his “Vancouver Special”. He happened to be born in Montreal. When it was time to list the house, the realtor asked him about his name, “Hey, that’s French, isn’t it?’, “Well, yes” said my friend.
“And you did this work yourself, right?” the realtor asked.
“Right”, my friend said.
Ok then, and no, I am not making this up at all, when the ad comes out, it says “House renovated by European craftsman”. “

Visual Anecdote – No Doubt That Easy Lending Fuels Vancouver RE Market

This Canada Trust billboard from the window of the TD branch at 10th Ave West and Tolmie -

Vancouver RE Assessment

This from Boom and Bust at Rob Chipman’s blog 05.30.08 at 2:43 pm -

excerpts -

“I’ve lived in San Francisco and New York. I recently returned to Vancouver, where I was born and raised. I don’t think the NY and SF markets can be compared to Vancouver. The former are major financial and industrial centres. NY and SF are full of high paying, professional jobs. Both centres attract immigrants and investors from around the world. Both are bigger, have better dining and entertainment. Vancouver is a place I’ve come back to because I’ve made enough money in the U.S. that I can afford to. Vancouver is a lifestyle city for which you pay a lifestyle tax. I think San Diego and Miami are more comparable cities.”

“This, make no mistake, is a bubble. At the root of this bubble are very encouraging long term fundamentals. Vancouver is a nice place, it is growing, immigrants and Eastern migrants like to live here. However, at the root of every bubble is a good story. I’d bet that 20% of the recent run-up is due to real economic fundamentals. 80% of the recent run-up can be attributed to the great credit boom. Lower interest rates, longer amortization terms, lower credit standards, stated income practices, pre-sales and access to debt led to an amazing run-up in property values. Values have now stretched affordability to its limit even in this low rate environment. Property values, if all else constant, should only increase at the rate of income increases.”