Monthly Archives: May 2010

“I was showing a couple of friends from London England around Vancouver during the weekend and they were shocked by the condo prices here.”

Van Renter at vancouvercondo.info 31 May 2010 9:39 am -

“I was showing a couple of friends from London England around Vancouver during the weekend and they were shocked by the condo prices in Vancouver. They had recently purchased a two bedroom condo for their daughter in a upscale area close to the upcoming Olympic [venue] in London for basically half the price as Vancouver.”

Say Goodbye To Debt Fueled Housing Bubble

The BoC meets tomorrow and will almost certainly increase interest rates. Even with all of this recent juice, Vancouver prices have flattened and likely already begun their descent. Some kind of extreme has been hit, and the rate hikes will add to downward pressures. Our estimation is that, over the next two years, prices will likely correct by >33%. Thereafter we will grind lower, and the eventual trough will represent >50% off current prices. -vreaa

This excerpted from ‘Mortgage debt surges as economy picks up steam’, G&M 31 May 2010 -

“Canada’s economy is on fire, surging 6.1 per cent in the first quarter at an annualized pace.”

“A Statistics Canada report also shows personal debts rising, as mortgage growth surged $76.4-billion annualized in the first quarter from $59.8-billion per cent in the fourth quarter of last year. People are using more credit for homes, but less for other items.”

“Household debt as a percentage of personal income probably rose to a record 148 per cent.”

“In speaking with people who are trying to buy land and others who are working in the business, it really appears there are a lot of “developers” who are paying top dollar for potentially developable property. If you do the calculations it is difficult to figure out how they plan to get a reasonable return.”

wpw at paul.kedrosky.com April 2010 -

“Having just sold my home in Vancouver, I can now comment. I cannot provide an objective opinion on whether it was overpriced because it was my home. But our annualized return was about 9% from when we purchased it at the bottom of the market more than a decade ago. Not a bad return on investment for a home we enjoyed for a long time.
There is a lot of supply, particularly condos, on the market now. So I would expect condo prices to be levelling off, especially with mortgage rates starting to creep up.
What is really moving is land that might be redeveloped. In speaking with people who are trying to buy land and others who are working in the business, it really appears there are a lot of “developers” who are paying top dollar for potentially developable property. If you do the calculations it is difficult to figure out how they plan to get a reasonable return. This will eventually come to an end but not until the buyers find they can no longer finance their projects.”

“I live in Vancouver and have been waiting patiently for over 8 years for housing prices to drop.”

RentingAt40 comments at Mike Shedlocks blog 30 May 2010 12:15pm -

“I live in Vancouver and have been waiting patiently for housing prices to drop for over 8 years. That’s just drop, not become affordable in my terms, but just start to go down. The closest they’ve come to doing that is at the beginning of the crash and it didn’t last long. I could tell you all things you’ve already heard, like how my friends who bought in 2000 have seen the price of their condo more than double, but you all know that. The only thing I’d like to say, is that I think this bubble won’t burst until interest rates start to rise, and more than 0.25-0.5 percent, but not much more. Even then I’ll need to see a real crash before I’m able to afford even a sh$@@ly little 700 sq foot condo here where the bedroom is too small to put a clothes dresser in, because the increase in interest payments will more than make up for the drop in price.

My cousin, who works for a large bank has just recently moved to Ottawa. He’s always thought the prices are crazy here and being recently married and eager to start a family, he decided to move on elsewhere. He knows, and has confirmed through his investment friends that international money is buying up everything here that can be classified a real-estate. He had waited as long as I have, and if there’s a crash, he’ll be on the first plane back here to buy a home.”

“I was out for beers the other night with an ex-pat American friend who has fallen under the illusion that the ‘correction’ will be softer in Vancouver than it was in the US, that ‘it is different here’. What really astounds me is that he is from Detroit, and should be cognizant of the realities of these situations”

cdnprairiedog commenting at Mike Shedlock’s blog 30 May 2010 10:36 am -

“I was out for beers the other night with an ex-pat American friend. He has fallen under the illusion that the ‘correction’ will be softer here than it was in the US, that ‘it is different here’. We are in Vancouver, Ground Zero of the madness. What really astounds me is that my friend is from Detroit, and he should be cognizant of the realities of these situations. The lessons that go unlearned…”

“If you look at Vancouver, no one understands why it’s so buoyant. But we have Asia, we’ve got China, we’ve got Iran, we’ve got Korea, we’ve got local rich guys.”

Excerpt from a May 2010 video interview given by Bob Rennie in Kelowna -

“If you look at Vancouver, no one understands why it’s so buoyant. But we have Asia, we’ve got China, we’ve got Iran, we’ve got Korea, we’ve got local rich guys… and that keeps the downtown market going.” … “Our market is separated into two markets… you’ve got local incomes, and you’ve got foreigners. … We still have China coming, we’ve got low inventories.” … “Vancouver is really stable on the inventory front” … [Does it hold true that buying property is a wise investment?] “In my own portfolio/… I just don’t think you should ever sell.”

Overextended Amateur Landlords – “I’ve seen over a dozen places for rent in the last month. In ALL cases the landlord had owned for 1-3 years.”

Amateur speculators buy anticipating ongoing price increases. The properties are all cash flow negative. They will be sold into the market as prices drop and the premise for holding them disappears. -vreaa

Devore at vancouvercondo.info 28 May 2010 10:46 am - “I’ve seen many places for rent in the last month, and one of the first things I ask the landlord is how long you’ve had the place. All the condos I looked at, over a dozen, ALL, the owner had between 1-3 years with the property. Many without even asking offered to drop price for a “good” tenant with 1 year lease. Uhm, thanks but no thanks. I don’t want to be getting a call 6 months from now begging me to break my lease and move out because they have to sell.”