Vancouver Real Estate Anecdote Archive

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.

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.”

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.“ .

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!”

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! “

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.”

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”. “

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

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.”

This from doubter at Rob Chipman’s blog 05.29.08 6:51 pm -

“I’m on vacation in New York City. Several things strike me about this city in comparison to Vancouver that make me wonder if the Vancouver real estate inflation/bubble (depending on your bent) isn’t almost all psychology/delusion (ditto). The first thing I noticed within 24 hours of being in NYC is that Vancouver has become a pretty miserable place. People are much happier, friendlier, and more relaxed here in The Big Apple. A related observation is that the percentage of people talking on cell phones or listening to iPods seems to be much, much lower than in Vancouver. People here actually walk around and talk to one another. That “walking around” bit is the next thing that seems to be an obvious difference. In New York, people are out and about. Maybe that’s partly because there are, you know, THINGS TO DO. There are places actually open after about eight o’clock. And, next point, those places don’t all seem to be professional sporting events. In fact, and this really surprised me, pro sports seems to be far more low key here. Museums and art galleries and plays and such outnumber sports stadiums by an amount that would absolutely stagger any Vancouverite going on about “world class city status” only being achievable by building yet another stadium (or Olympics venue, for that matter; NYC is probably fortunate to have lost out on 2012).”

Another family moves. This from hiandre at RE Talks, 2008 May 26, 10:54pm -

“Having spent my first 22 years in Montreal, and the last 18 here, it is time for me to go back “home” to Montreal. Mostly family reasons, but also financial incentives for sure. Also having young kids snow is far more fun than the constant rain… I have many fond childhood memories: snowball fights, tobogganing, skating, snowmobiling, snowshoeing, snow forts, wood burning fireplace going while snow is coming down, etc… Can buy a new quality house with 24,000 sq. foot lot for under $258k, 30 minutes from Montreal. The quality seems far and away above any entry level home you would find in BC. Many homes in Montreal are commonly built using brick, stone, hardwood floors, etc… How many entry level homes have you see with these features in BC ?  Why the difference I wonder ?  Currently selling our home in Surrey, and will be able to buy house with almost no mortgage in Montreal. So am thankful for being lucky and building this equity in just a few years.  As much of an optimist I am, this market is coming to an end in BC in IMHO. Originally was planning on selling next year, but all the signs / my intuition are pointing to “get the hell out now” Hopefully will be a soft landing for those of you staying here.”

‘Investors’ are still being encouraged to buy Vancouver Real Estate in the hope of future price increases. Here’s an example of such encouragement from the MLS, V697723, culled 25th May 2008.

This property in Point Grey (3963 W 11TH AV, 2494 sq ft house, 6044 sq ft lot) has a price tag of $2,380,000. A mortgage at 5% rate amortized over 25 years would cost the buyer $13,800 per month.

The cheeky Realtor Blurb on MLS states: “Well maintained, but no arch master piece. 3 bdrms suite down. Definitely not a drive by. Tenanted. Buy & hold. Great opportunity! Tenanted up & down.”

Even in Point Grey, this can’t possibly be fetching more than $5,000-$6,000 per month rent. Thus the realtor is encouraging someone to ‘Buy and Hold’ this ‘investment’ at negative cashflow of over $7,000 per month. This is another bald-faced bet on property price direction, and another indicator of how far prices have become removed from fundamentals in the Vancouver RE market.

Another local condo developer has run out of money. In a comment on the CBC coverage, ‘Renews Boy’ (2008/05/22 at 2:08 AM ET) gives us further insight into the poor construction quality in the lower mainland -

“I’ve worked in construction in the lower mainland for about 12 years now. Honestly, I have never seen it so bad when it comes to craftmanship that is being done on the new developments. I never see a carpenter use a hammer and nail to built a proper wall or floor. It is all done by nail gun now. The faster they can put them up the more the profit. I know of one building where the exhaust fans were covered over by the drywallers in 100 units. I have seen alot of dangerous and unsafe acts going on at several construction sites. I know because I work as an Safety officer on these sites in the Greater Vancouver Area. The mess that will happen after 2010 will be make the leaky condos look like a joke.”

This post from ‘Jordan’ as a comment (21 May 2008 at 10:29pm) in the recent “Anybody else here know people leaving Vancouver” thread. The importance of these kinds of losses to BC merits a front-page post:

“My wife is leaving this week to see Toronto for the first time, looking for an area we could raise our family in. We’re both 26, born and raised in BC and now have 2 young kids. She’s never been away from them for more then a night so this week is going to be hell for both of us, but we don’t see any practical alternative. It’s a heart wrenching decision leaving our families here, but we want to raise our kids in a house with a yard without selling our souls to the bank. We can get a house there for 50% less and have the mortgage paid off in about 10 years. This will help us to fulfill our dreams of early financial independence instead of mortgage servitude.”

Mohican runs the superb Vancouver RE blog, ‘Langley Financial Planning‘. In his latest post (Wedn May 21 2008 ) he gives an account of his own recent RE experience, and his first hand observations of a bubble preparing to unwind. VREAA can’t resist archiving it here:

“My wife and I bought a condo in 2004 for a reasonable price that made our mortgage payments plus strata and property taxes less than the cost of renting. We were happy with our purchase and paid down our mortgage quickly, starting with a 15 year amortization and making double payments until we sold the unit last August for nearly double what we paid. Needless to say we were happy with the profits and would have gladly purchased a reasonable townhouse to accomodate our growing family but no such suitable unit was found after a fairly extensive search. We are now renting a larger condo in a brand new smaller building and we enjoy our location close to work and amenities. Our cost of renting this unit is half the cost of purchasing on a monthly basis and we are socking away our savings for an even larger down payment once we find a suitable home at a reasonable price. This extra monthly savings combined with the earnings from our extracted home equity is very substantial by any account and make these renters quite satisfied with our lowly renting status!”

“Now I find myself at Vancouver Housing Bubble Ground Zero. The building we live in has 32 units and currently 20 of these units are listed on the MLS website. Yes, that is right, no typo - 2/3rds of the units in our building, including the one we rent are for sale at this very moment. My landlord was hoping for quick profits by flipping this condo and realizing no quick sale he franticly sought a renter to help cover his costs while trying to sell the unit. His asking rent was ridiculous but was easily bid down by 25% with some fairly convincing arguments and some stiff competition. The parking garage is empty and we have watched the poor realtors hold open houses all spring long with no traffic and no bids. Reluctantly the sellers lower their prices by $2000 and $4000 at a time but still no takers. Nobody realizes the game is over yet and there are a declining supply of greater fools to buy mediocre houses at inflated prices. I am happy with my spectator status.”

At what point will sellers start competing with each other in the rush to the exits? This from Drachen at Vancouver Condo Info  May 21st, 2008 at 10:42 am -

“A friend of mine owns two condos right now and can barely pay the mortgages. Her realtor, who she swore was a close friend and had her best interests at heart, is suddenly moving to Australia, and has apparently sold off all their local holdings.”

People are leaving Vancouver because “the economics don’t make sense to them”. This from Digi at Vancouver Condo Info May 16th, 2008 at 8:48am -

“Anybody else here know people leaving Vancouver? Over the last week I’ve found out about several people leaving. Two Americans, a Kiwi, and a family of Australians are all returning home - they all like it here, but the economics don’t make sense to them, they’re work has finished or they’re homesick. Then there are the locals born here, one moving to Europe, one to the US (cash out tiny condo and get a house in the sun with a pool), and a few moving elsewhere in Canada. This could be just an anomoly in my group of friends and coworkers, but I wonder if the already underwhelming population growth graph is about to take a downturn?”

Yes, Vancouver is a beautiful city. This from ‘distraction’ at Vancouver Condo Info My 16th, 2008 8:20am -

“I had a friend in town for the day - they had a half day layover at the airport so I took them out for lunch. They saw the Richmond BC “Better in Every Way” banners and the Vancouver “Best Place on Earth” license plates and thought they were hilarious. It’s rather embarrassing, like having an attractive friend that keeps shouting “I’m beautiful! I’m the most beautiful person on Earth!”

Asking-price reductions do not a peak make, but they certainly appear to suddenly be more common. This from ‘romeo jordan’ at Rob Chipman’s blog 05.16.2008 4.33pm and 4.53pm -

“(I) just got off the phone with a realtor.. a false creek condo that was listed for $588K sold for $495K. Also note: the 50K price reduction on the coal harbour studio - sold for 299K originally listed at 359. (Also) note: 1189 howe - 1 bedroom listed at 339K - original list north of 379K. duplex in north van - reduced by 40K on 3rd street. and a 3 plex in burnaby reduced by 50K on moss street.”

“There is a flagship building in North Van., The Talisman 145 St. Georges.. my data shows.. someone bought a one bedroom couple months ago for $320K. now there are some offered at $285k. I’d bet you will be able to pick one up for 269K by the end of the summer. What will the guy or girl do who bought it for 320K?…. It is actually really sad. Some poor souls who do not have the skills to place a Fair Market Value on an asset will be in a lot of trouble.”

One of the results of the housing price run-up has been people becoming landlords out of necessity. After buying a house for over $1 Million they end up tippy-toe-ing across their living room floors every day so as not to disturb the tenants in their basements. This from ‘Tony Danza’ at Rob Chipman’s Blog 05.15.2008 at 8:17am -

“FWIW I have noticed a lot more new basement suites in my hood (PG near Byng) and from some of the convos I’ve had with my neighbours and acquaintances who’ve put in new suites they are basically in a rent out or die scenario (one guy on my soccer team said if he misses more than a months rent from his two suites he’ll be screwed). A lot of these folks received early inheritances or no interest loans from their parents to get into their places in the early 2000’s.”

This from bdk at Vancouver Condo Info 2008-05-14 12:27:12 -

“Just talked to a realtor who I’ve known for decades and he said it’s getting ugly, that the sellers haven’t figured out they need to lower their asking prices and the few buyers out there are low balling like crazy, he mostly works in the westside and yaletown.”

This from Anonymous at Rob Chipman’s blog 05.14.08 at 2:43 pm -

“Well I did my part to save a RE shopper last night. The ditzy realtor & her serious sidekick asked if I would fob them in the elevator (their fob wasn’t working) - “it’s okay, we’re realtors” she says. I replied that I was always happy to help realtors - the sarcasm was only a tad thick. The poor sucker -em I mean propsective RE Millionaire -said I was helping him too to which I replied “Not a very good time to be buying real estate is it?” He sheepishly looked at his shoes. C’mon it was two on one and clearly the guy needed a lot more help than my fob could provide! I thought a simple serious query the responsible thing to do under the circumstances (or I was just being mean to the realtors, yah, actually, probably that). Oh, You could have heard a pin drop for the rest of that elevator ride.”

Things are changing in Vancouver RE markets. Inventory is climbing, and we seem to have crossed an important psychological threshold. Bulls are starting to acknowledge that price pullbacks may be possible. Some are acting on that realization. This from exx at Rob Chipman’s blog 05.13.08 at 8:55 pm -

“My coworker + (wife, 3 young kids) is selling his 3bed townhouse in poco, pocketing his ~120K gains and renting a house. He looked at buying in North Van, but a similar townhouse would cost him 70% of his net income AFTER putting the 120K down. That’s for 25 years. He did the math on the 40 year mortgage… enough said. Funny thing is, he has always been very bullish on Van RE and we’d always get into the typical arguments. I think even he can’t deny that something stinks.”

This bizarre but arguably apropos image from scullboy at Vancouver Condo Info, 2008-05-12 18:53:56 -

“Many of us have tried to warn family an friends, only to be looked at with a mixture of pity and scorn. I have two friends who are considering buying another place. One of them works for VANOC and has been self-waterboarding with the RE koolaid. He’ll quote occupancy rates for 2010 like… well like they’re relevant, actually. After a couple of conversations I told myself I’d done my job and I don’t bring the subject up any more.“

This ‘group anecdote’ from Lisa MacIntosh, an Eastside realtor, quoted in The Province, May 11, 2008 -

Lisa MacIntosh, a realtor specializing in first-time buyers on the east side, says her clients fall into two categories. One is the single buyer — often female — in their 30s purchasing a condo in those three-storey walk-ups from the 1970s. MacIntosh’s other buyer is the young professional couple in their 30s with one, possibly two kids, looking to buy a detached house for between $600,000 and $800,000. Like their west-side counterparts, they are “trust-fund kids” who have received help from boomer parents. Some got in the condo market a few years ago and made a healthy profit. “It is definitely a stretch,” says MacIntosh. “Most of them, 90 per cent of the time, there’s a need for a basement suite to help cover the mortgage costs.“

This ‘group anecdote’ from Marty Pospischil, a Westside realtor, quoted in The Province, May 11, 2008 -

“Everybody maxes,” says Marty Pospischil, a realtor with Dexter Realty specializing in the west side. The profile of a typical buyer of a $1.3-million, three-bed, two-bath west-side home is a couple between 35 and 45 years old with one or two young children. They are both professionals who have ascended the ranks — think stockbroker, lawyer, doctor. They will usually have a down payment of $400,000 to $500,000 — derived from a combination of personal equity, inheritance or a substantial gift from a wealthy boomer parent, says Pospischil. That means they’re still borrowing between $800,000-$900,000. To make ends meet, the couple will rent out the basement for $1,500 a month. The rest — monthly mortgage payments of $3,500 to $4,000 — must be covered by income. “These are hefty mortgages. So they’re scraping for every penny that they can get,” says Pospischil. “

With inventory climbing and more on the way, some sellers are starting to get motivated. This from mflat at Vancouver Condo Info 2008-05-09 10:17:53 -

“The carnage is just beginning. We took a 1-year lease on a downtown 2-bdrm, 950 sq ft condo. Our rent is very affordable, and we really enjoy it here. The owner has decided to sell, and has priced VERY sharply. A unit like this went for around $620 K in late 2006, and the owner is asking for less than a 10% profit on that price. Yup, the party is over. Either he’s under huge financial pressure (which I doubt, since he purchased this place on completion), or he recognizes that the gig is up and wants out FAST!”

During a building boom, what happens to construction quality? This from somebody who sounds like they may have a valid insider perspective, Strataman at RE Talks 2008 May 10, 10:23 am -

“(You ask) “How do these guys compete with the newer stuff on the market? ” In one way I agree with you the newer stuff is more attractive to the inexperienced vendor. However to be absolutely honest I would not buy much of anything built in the last three years as the quality of workmanship has degraded considerably. As a person who does a lot of warranty work for the first year that downtown developers cover the building systems, I have my hands full trying to keep buildings running till the developer can get out of the warranty period. Elevators, mechanical systems, fire systems are substandard and incompetently assembled. Personally if I was going to hold something for more then five years I would steer clear of the “stuff” built in the last three.”

It has been painful for renters awaiting price drops. This from bc buds at Langley Financial Planning, mohican’s blog, 9:49 PM, May 09, 2008 -

“I’m a bear and have been for the past two years. In that time I have spent 40K on rent and missed out on at least 100K of appreciation (2 bedroom condo downtown). If I had bought a place for 500K with 50K down my mortgage would have been paid down by just under 10K by now. If the place is now worth 600K a 20% drop brings it back to 480K. 20K under what I would have paid two years ago, a loss of 4%. I hope the bears get it right soon!”

It should be said that many have done well with their real estate investments and are not considering changing their positions. This from Rob Chipman at his own blog, 09 May 2008 9:16am -

” ‘Rob Chipman is Homeowner’? You bet I am. I also own other property, and I’m not motivated to sell. I will buy more when the numbers make sense for me. That means that either rents rise/prices drop or my OSBs drop enough that I can re-finance and buy more at less favourable metrics. I’m no genius, but I do know that I haven’t sold my properties and they’ve still performed better (i.e., I have more real money in my jeans) than my non-real estate investments, which are professionally handled. I know this isn’t the experience of everyone, and I’m the last guy to say that it is. Still, I own real estate because I believe in it, and my belief in it has been rewarded handsomely over the years. I’ve made more money owning real esate than I’ve ever made working or in other investments.”

Realtors continue to imply bullishness, or at the very least attempt to sit on the fence. This from Rob Chipman at his blog 02.May.2008 -

1280 Rupert Street, East Van. $725,000 asking price, May 2008. 2,596 sqft.

“We’ve reduced price on 1280 Rupert Street and will be having an open house Sunday. This is a excellent house in a great location, and if you’re looking for an East Van family home it would be hard to do better. If you think the market is imploding, stay away. But, if you think the market is just taking a breather, this is great value. Compare what you get for $725,000 with what you get for $650,000 and I think you’ll agree.”

As prices fall, some renters will be displaced when their speculator landlords decide to sell. This from kansai_92 at RE Talks 2008 May Wed 07, 8:10pm -

“My landlord stopped by today and indicated that she’s selling the condo that we are leasing. The thing is I signed a 1yr lease and it does not end until October 2008. Our lease agreement contains a clause in there that indicates either party can terminate the lease with 60-days notice. I always thought this is referring to giving notice 2 months prior to the end of the lease to indicate to the other party that there will be no renewal. I’m not that familiar with BC tenancy laws as I only own property in Alberta. What are my options?
..She was panicked because she told me that the market is crashing and that her realtor thought she should get out now while she can. She also mentioned that last year her realtor said she could sell for $879K, but now she has to list at $839K.“

Despite ballooning inventory, decreasing sales, and the beginning of downward pricing pressure on sectors of Vancouver Real Estate, most people are still convinced that Vancouver RE is a good investment.

This from markoz at mohican’s Langley Financial Planning blog 1:08PM May 04, 2008 -

“Most people are still oblivious. A co-worker, who is a long-time homeowner, mentioned to me the other day that she wished she could afford an apartment downtown as an investment. I told her about the 18,000 empty units and preponderance of 40 year mortgages amongst first time buyers and she said, “A 40 year mortgage isn’t so bad, at least you own the place.” Sigh.”

Local speculators have driven the housing bubble in Vancouver. This from ‘Lardy Boy’ at Mohican’s Langley Financial Planning Blog May 02, 2008, 8:56 PM -

“I was at the Real Estate Forum in Vancouver this week. This is the big event of the year for the real estate industry, with all the big players in the development industry in attendance. It was a decidely gloomy affair, by its normally upbeat confident standards (in recent years at least), with comments from some of the more candid major players, about the market( both commercial and residential) having ground to a halt over the last 60 days. Reasons identified, were the tightening of lending practices to both developers and consumers, and a change in market psychology. I heard an interesting comment from a major residential developer (Bosa) that they had totally underestimated the number of speculators who had purchased into their condo developments. The true number, which was shocking, was only evident following completion of the buildings. To use their words “the elevators were hardly being used”.”

People continue to purchase properties in the Vancouver area with the primary intention of selling them later at higher prices.     ‘adamcory’ at BC RE Talks 2008 May Thu 01, 12:30pm answered the question “What was your last housing purchase and for what reason?” thus -

“Jan 2008 I purchased a fixer upper, 2000 sq ft house, w/ 800 sq ft shop, on 1.1 acres. In Cloverdale for $ 850 . A highly developed area that continues to sprawl rapidly. It is our principle, and hopefully will be for 5 years or so. Renos have consumed my life… so has the stupid yard. Plan to develop in the future.”

Easy lending has fueled the price run-ups in Vancouver RE. This relevant anecdote comes from dimon at Vancouver Condo Info 2008-04-29 15:04:35 -

“I’ve lived in Canada since 2001. When we started looking for a mortgage, the rules were quite strict. With our verified!!! dual income we could not get mortgage more than 200k. As first home buyers we needed at least 5% downpayment. Within this price range we could not find a suitable SFH, so we went for a townhome in decent area.
To my big surprise, just a year or so later, my family was severely bugged by mortgage brokers and financial advisors recommending us to get a fatter mortgage. And even our income did not change much, we were offered 400+k mortgage. I now feel lucky I did not go for it.”

The Vancouver Sun article ‘15 Real Estate Myths and Realities’ is getting an appropriate amount of coverage and an even more appropriate amount of criticism in the local blogosphere.

See the links at RE Talks, condohype, vancouvercondoinfo & the Sun itself for this discussion.

vreaa harvested this anecdote from ‘BUY MY CONDO!’ at Vancouver Sun ‘Soundoff!’ Tue, Apr 29, 08 at 01:05 AM -

“I am selling a condo because I am getting transferred. When giving the listing out, my realtor tried to low ball me for a fast sale. I priced it competitively and less than recent sales on a lower floor. To date I have no offers and only excuses from my realtor that the market is slowing, that it is changing, there are more listings and that I need to reduce the price. I’ve paid property taxes, strata fees, mortgage payments and I have to pay a realtors commission so I don’t want to lose money on this purchase. I feel like I live in a different city than what was described in the article because people are not lining up to buy my place. The realtor tells me that it is too expensive for an owner user and investors want presales where they don’t have to pay for the condo for 3 years. Anyone have relatives in Alberta that want a downtown condo?”

This from ‘wtm’ at RE Talks Wedn Apr 23, 2008 4:10pm -

“I am renting in the West End, West of Denman in a “boring/somewhat unsightly walkup”. Common areas are nothing to write home about either….but I have a beautiful, approx 700 sq ft 2 BR for $1380 a month, which includes heat, hot water and covered, secure parking. I have hardwood floors and reno’d kitchen and bathroom. The suite is very very clean and quiet. Owner’s have live-in landlord couple who take care of every little problem within a couple of hours. Given the assumption that material capital gains in RE are off the table for at least the next 5-7 years (this is my view), there is no way it makes sense to buy when I can rent on a tree lined street in a beautiful quiet neighbourhood, a couple of blocks from the beach and Stanley Park, for such a low monthly cost. No taxes, no strata fee, no unexpected costs or assessments. When I can get in the market, in this neighbourhood, for something less than $375 a sq ft, that is when I will consider buying (I think that is possible btw, but will take 3-4 years of downward price drift). In the meantime I am saving and investing…..I have no problem being a renter in this ridiculously overpriced market.”

This gem from Lady Luck at RE Talks, Tue Apr 22, 2008 9:29am -
“We used to rent a suite in our home. A new tenant came home blind drunk. Let himself into our part of the house (door was unlocked). I went to check on the baby at 3am. He was passed out on her bedroom floor, had vomited and pissed his pants. I recognised who it was and called the police. They ran his name and it turned out there was a warrant out for his arrest. Police came with guns drawn and removed him from the house. We called the RTA and were told that this was not grounds for eviction. The police let him go the next day, he returned to the suite and physically threatened my husband. Luckily “Uncle” is a biker and brought a few buddies to pay him a visit. The tenant was convinced that it was not in his best interest to stick around. Since then we have never rented a suite in our home. I always lock my doors. And I always do a police record check on new tenants.”

This from asha at RE Talks Thu Apr 17, 2008 8:29am -

“We bought at Christmas.
We sold our condo too early at the end of 06 in December, but what the hey!
We went walkabout for a year and watched as prices climbed and climbed.
But we were buying a smaller cheaper house in a small town.
So we bought a nice 1950’s home in Powell River. 2000 square feet, a nice backyard, some fruit trees and a view of the ocean.
We waited and waited for the downturn which didn’t happen during that time and then stumbled upon this house which was just the right one for us.
Because it is cheaper it seems that it all works out. We could have made more money, we could have saved more money, but i have learned that is you are buying for your home timing the market is probably not worth it.
We got a great place out of it and in the end, it can’t be all about money.”

This story of a renter (who could be an owner but chooses not to) from Markoz at vancouvercondo.info 2008-04-12 07:01:05 -

“One stat I found very interesting is “shelter cost to income ratio” (STIR) which they split between renters and owners. Curiously, in Vancouver from 1990-2001 owners spent an average of 20% of their income on shelter while renters spent an average of 30%. Presumably this is due to the fact that average owners make (a lot) more money than average renters. Anecdotally, anytime I personally have considered getting into the market my STIR would have increased dramatically. Due to my income, I guess I am not an average renter. It has always been the huge disparity between the cost of owning and the cost of renting that has deterred me. (That, and shoddy workmanship/design). Currently that disparity between the the cost of owning and the cost of renting is worse than it has ever been. I rent an old house just west of Main for $2050 per month. A virtually identical property just 2 doors down recently sold for $700,000. With 10% down my mortgage payments and property tax would be $4,335 per month (based on 6% and a 25 year term). The house is over 50 years old and will soon need a new sewer line (already cost estimated by a plumber at $4,200) and roof. We are in the midst (end?) of an unprecedented run up in house prices but owning has always seemed to me to command a much greater premium in Vancouver than other cities I have read about.“

Will be archived here: 09. Delaying Buying (archive)

This from pricedoutfornow at vancouvercondo.info 2008-04-08 19:11:57

“It won’t crash here. This is Vancouver. We are different. So said my co-worker today at work. I said “oh ya? they said that in Florida too. And California. And Spain. Because “everyone wants to live in (fill in the blank)” He looked bewildered and stared at me like I was one of those weirdos seen talking to themselves on the Skytrain.”

Will be archived under 01. He said, She said, I said (archive).

This was posted to the ‘9. Delaying Buying’ thread by ‘lousyspellr’ -

“Married 10 years, my wife and I have both been working and saving while renting our home. We live in a fantastic suite in an older, but well-maintained house. We’re in a great location and love everything about it. We had our first child 2 years ago and are expecting another in a few months. We hope to be able to make it work, but it’s starting to feel a little tight. We have been in a position to buy for many years, and have watched in dismay as prices have soared beyond our reach. I try not to have regrets, we have been very happy in our rented suite, and haven’t EVER seen a rent increase. Our savings are good and we have no debt. Have made some good investments, but lately other investments (mutual funds mostly) have not performed so well. I find myself at a loss as to what to do with our saved downpayment. I do not want to risk it, but would of course like it to earn as much as possible while not tied-up in RE. It’s hard to believe the there won’t be a market correction at some point given what we’re seeing: US economic crisis, the forestry sector downturn, an Olympic world party that will come and go leaving the province significantly in debt and Olympic ’speculators’ sadly disappointed (I hope), ever increasing housing supply with little change in demand, the completion of many large construction projects leading to increasing unemployment in that sector… I’m sure you can think of many more.”

This remarkable story from M- at rob chipman’s blog (04.04.08 at 11:50 am) -

” I have some friends who recently bought a house. Their annual combined income is $80-90K. They had a ~$250K down payment. In order to finance their house, they took out a $900K loan, secured against the house. Loan, not a mortgage. Interest-only. Since they are calling their house an “investment,” they will deduct the loan interest off of their incomes (never mind that this is illegal in Canada– you can deduct interest incurred for investments, but not for your primary residence). The house does not have a rental suite, and they are not planning on installing one.

To summarize: 90K income, $900K loan, so no principal payments. $50K per year in interest payments. $10K remaining after legit taxes will likely go towards taxes, insurance, heat, electricity, maintenance. Living expenses will come from illegal tax writeoffs.

And did I mentioned they’re planning on having kids soon? That was the whole reason behind the purchase of a house…”

M- later (04.04.08 at 5:10 pm) added -

“One of their parents has a fair bit of savings– when they run into financial problems, they could probably call on part of their inheritance early. …So the downside risk of buying now probably looks limited. There was a lot of pressure from their parents to buy a house. I don’t know why they didn’t buy something a little more modest, though.”

This from DaMann at rob chipman’s blog (04.04.08 at 10:30 am) -

“My wife and I bought 3 years ago, a very modest TH out in Steveston. It was only $270 k at the time, which for us was more than we wanted to pay. We had only one child at the time and my wife was working part time. Now we have two kids and my wife is not working. I make above the average household income for Vancouverites, not by much but definitely more, and we are barely living above the poverty line. I’M serious! We haven’t bought clothes for ourselves in almost a year. All we do is pay a mortgage, strata and taxes. I’ve never been more poor in my life. Now the place is worth $380k and I honestly don’t think we will see these prices again for 10 years ( after the crash comes). There will be no more Olympics to hype things up, we have borrowed most of the young buyers for the next 10 years to service the current boom. So many people are going to be hurting that have bought at the peak that RE will be a dirty word in Vancouver. So yes we will probably sell and get out of this insanity and just rent or move to the island and rent and wait. Then maybe we can start living again. (Keep in mind this was a $270k place. I have no F#$%^ clue how people are buying $500k places. I know people doing it and they are barely getting by, but they will certainly not be able to have families or change their income levels ( 2 people working). They are mortgage slaves.)”

This from Strataman on Rob Chipman’s blog 04.01.08 at 6:41 pm:

“(That’s) assuming that CMHC treats the same applicant in different areas the same. It doesn’t. My son is pre-approved for a CMHC mortgage in Vancouver and has been for some time, he had the offer of an equivalent job/pay in Williams Lake. Same down payment half the mortgage in Williams Lake..turned down by CMHC…probably because CMHC is basically a speculator and WL properties are expected to stagnate. Interesting isn’t it? Half the debt (roughly) same income, same downpayment (much larger percentage) and no go? If CMHC really believed Vancouver properties would stagnate, a lot of approved financing would dissappear, so in effect CMHC is creating the bubble and feeding it, the minute they have to admit or are forced to admit that prices will stagnate, watch out! Freeze on lending bigtime.”

[Will be archived under ‘Where Do They Get The Money?’.]

This from gse36 on Real Estate Talks Thu Mar 27, 2008 1:31 pm

“Case in point. friend’s house (fully paid) went from 400->800k.
he took out LOC 600k (75% of value), and purchased some $3M of presales (8 of them) (only put 10-20% down) and it only cost him 500k or so of that LOC.
He pays interest on the 500k @ prime so around $2k/mo for hanging onto them.
Thats cheaper than buying 8 right now and renting them out (will bleed more than $2k/mo). And much cleaner (no tenants to have to deal with etc), and he can write off the interest.
He made some money already on the earlier purchases, but the later ones. i don’t know.
In either case, its quite risky. if prices slide, he risks losing the farm.”

[Will be archived under 'Where Do They Get The Money?'.]

This from Vansanity on Vancouver Condo Info 2008-03-21 08:11:25

“Anyway, had a talk with a friend this morning who’s talking about getting away from Van, he’s a plumbing trade. Talking about Fort McMurray for a bit and then buying in the interior or island. He knows a developer working on some land around Bear Mountain. He has a proposal for a new sub-division there and if it goes through he’ll build it and retire. I talked to him about being careful buying anything on historic highs, he listened but wasn’t concerned. Says that Bear Mountain has many foreign investors showing interest and he figures if he picks one up he will see some serious gains. His exact words were, I’ll do better than my RRSP’s. I know what you’re all thinking, believe me, I do. It’s not worth wasting my breath trying to dissuade him, his mind is already made up. The longer this goes the more people will get sucked in. I’m still going to wait it out for two more years, job is going good, but if I don’t see things change post-olympics or sooner, I’ll be packing up and going somewhere else, somewhere affordable and sunnier.”

And morefrom the same poster 2008-03-26 14:58:20 -

“Two people I know are leaving Vancouver. One is moving to New Mex and the other to LA. Both love the sunshine and the prices up here made their decisions much easier.”

This from jmb at ‘nobody important’, a local blog:

“Let’s consider this house below, currently for sale. I know this house very well, for I lived in the house two doors to the left of it for 14 years before moving to the larger house where I live now. The grey house you see to the right is owned by someone in my Thursday walking group.

The house itself is over 60 years old and very ordinary. A tiny 800 square feet stucco bungalow with two bedrooms and an unfinished basement. Not a family home, maybe for a couple, as lived there when we were neighbours. The lot is not bad, 53 by 130 foot. It’s been rented so probably not in great condition. It’s a nice location but a fair way from the bus and the shops. The school is very close but then you can’t have children in this house for it’s too small. In fact it is probably a knock down. Why they even suggest it. Build your dream house.

So the asking price is $1,700,000. Yes, ladies and gentlemen, one million seven hundred thousand dollars, for basically a standard block of land, about 9 km from downtown. Now how is that for a downside to this city? One of the most expensive cities in North America for real estate. In fact prices have almost doubled in the last five years.

$1,700,000.00

4035 W 37TH AV, Dunbar, Vancouver West,

Excellent location, steps to Pacific Spirit Park, close to UBC. Build your dream house on large 53 x 130 south facing lot. Needs 48 hours to show as tenanted. All sizes and ages are approx only, buyer to verify if important to buyer.

Finished Floor Area: 800.0 sq ft. Property Type: House, Lot Frontage: 53 ft. Basement: Unfinished, Lot Depth: 130 ft. Bedrooms: 2, Age: 66, Bathrooms: (Full:2, Half:0)

Update: Today I found out from my friend who lives in the grey house next door that the above house has just sold for $1.8 million dollars, $100,000 over the asking price. It will continue to be rented for two years when it will be demolished to make way for a new one.“

———————————————————-

vreaa comment:

This will now be a markedly cash-flow-negative property. One presumes that the new owner is very confident that house and land prices will be going up over the next two years. We also presume that the new owner plans to demolish and build in 2 years.

The property’s numbers look roughly like this: Purchase price $1.8 million, Rent (estimated) $1,800-$2,200 per month. Cost of $1.8 million mortgage, at 7.3%, 25 year amortization, 5% down: monthly payment >$13,000. Thus the property will be costing about net $11,000 per month to carry, or $254,000 for the 2 year period. To be more accurate, one would also have to add property taxes and maintenance costs to that.

This purchase is a bet on property price direction.

This from your moderator, vreaa on ‘3. Changed My Life’.

“A professional who was a longstanding resident of North Vancouver told me in the Summer of 2007 that he was selling his house and moving with his family to a city on the Canadian prairies. The market value of his house had reached a point where this move was irresistable to him.”
Quote: “I’ll never have to work another winter in my life”.