Crash at vancouvercondo.info 12 Oct 2010 8.20am – “My sister in law related a brief story to me: a work colleague of hers who is in her mid 20s and still living at her parents home just bought a two bedroom condo downtown for over $600K TO FLIP! The place is now worth less than she paid for it and she thinks she will actually have to live in it (with a room mate to cover part of the mtg payments). I don’t know where downtown the condo is located or the exact purchase price, but this must be the type of naive buyer driving sales now.”
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- 01 Vancouver Condo Info
- 02 AmericaCanada [retired, no archive]
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Latest Anecdotes:
- Chat Thread
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- “My best guess: this property is now an ‘investment hold’ and will be built ‘when prices recover’. Good luck on that!”
- Man Loses $745,000 Vancouver Condo Deposit
- Graphic – Degrees of Housing Overvaluation in Canada
- The Rare Individual With A Negative Ownership Premium
- Advice Regarding Renting In Vancouver, Please – “Unfortunately, the Vancouver rental stock is absolutely atrocious. It just seems like every landlord is looking for someone to pay 100% of their mortgage on a crappy place through rental income.”
- “I just visited Manhattan for a week, and happened to snap some real estate ads on both the Upper West and Upper East sides of the island. Compare to Vancouver. It simply doesn’t compute.”
- Ben Rabidoux In Vancouver Next Week
- “The mortgage company told me they were calling in my 40-year, 0-down mortgage. I have paid nearly sixty thousand dollars towards it, but, nearly five years in, I have yet to touch the principal.”
- ‘Vancouver City Hall: Housing Report Card 2012′; Plus Revised Version
- “My folks find themselves at 65 still owing half the value of their home and recreation property to the bank. After almost 30 years of ownership in the BPOE and a number of boom markets, they have very little to show for it.”
- “Rent for $2,200 a month or buy and have a mortgage of $4,310 per month. Why would anyone buy?”
- “They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours.”
- Greater Vancouver Home Builders’ Association Annual First-Time Buyer Seminar Attendance Plummets
- Mom and Pop Get It Wrong In All Markets, Time And Again
- The average British Columbian homeowner is not going to pay off their mortgage by the time they retire.
- “He’s sold all his properties except his current one, which is now for sale. He explained that the market’s currently in crash mode, worst that he’s ever seen.”
- “One of my old high school buddies finally got her mother to sell the family home in Kitsilano – sold for over $1M, monies realized after debt paid off $185K.”
- “I know someone who just declared bankruptcy because her condo was assessed at $150k and she bought it presale north of $250k in 2005 or 2006.”
- Sturdy, With Views – “Calling Froogle Scott!… Is Dr. Scott ‘In The House’?” [Not In This One, Certainly]
- “She said the market was dead in Victoria and that it would remain so for a very long time. I asked how she knew. Her answer was fascinating and should scare the pants off the real estate crowd.”
- Kits Notes – “I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen in the 5 years I’ve lived here that is priced below $700K.”
- “A beautiful Belfast home, in the equivalent of 1st Shaughnessy, bought at their RE peak in 2007 for £3.5 million, has now sold for £800K, almost 80%-off. The market didn’t suffer any significant economic shocks. Rates & unemployment didn’t skyrocket. They didn’t build more land. Sentiment just changed and the prices fell and fell.”
- “Two family members of hers are trapped, underwater, in condos on the East Side.”
- “Interprovincial migration is not saying good things about BC’s economy.”
- Vancouver RE: Not As Expensive Provided You Don’t Think – “It’s clear that our perception of affordability has been coloured by living on a continent where housing is unusually inexpensive.”
- More Undisclosed RE Industry Insiders Publicized As Clients – “In 1995, Allan and Karin Hoegg were mortgage-free. But no more. Today their Vancouver home is a valuable source of income as they plan for full retirement.”
- Rumor that some OV units will be reduced by 20%.
- Downside Weights On The Vancouver RE Market – “One of the older guys (over 60) mention to the guy beside him that he and his wife were thinking about selling their family home, and renting, in order to get some of the money that was locked up in the house.”
- “My buddy was looking to upgrade to a house in the Coquitlam area. With 200k extra for a home, that’s half of lifetime saving between him and his wife.”
- “I was walking in the Fraser neighborhood yesterday, I noticed that the population, on average, seem to be composed of workers. I belong to the top 5 percent in terms of income. Nevertheless, I cannot afford any of the houses for sale in that neighbourhood.”
- “Vancouver is an urban resort whose value mostly resides in its real estate and not much else.”
- “Rogers Communications is expanding into RE; aiming to relaunch website; providing critical data that can help potential buyers assess the value of a property from the comfort of their home computer.”
- I’m only 50 and I can just about retire if I want to, all because of a single simple decision – “When prices rebounded to their former highs, then rocketed another 30% higher to what I considered to be totally unsustainable levels, I decided that only a fool would pass up a second opportunity to harvest such a massive non-taxable capital gain, and in 2011 I sold my place.”
- The Vacant Lot of Versailles, Richmond.
- “I don’t think that most people think things are going to crash, just that there is going to be a slight correction, but it was amazing to me how sentiment has changed, and the fact Vancouver RE is too high was just understood.”
- “The ‘investor’ who purchased our house put it up for sale two months later, in January 1981, but the bubble had burst.”
- For A City To Have That Kind Of Vacancy, It’s Like Cancer – “Downtown, the vacant unit rate is so high that it’s as though there were 35 towers at 20 storeys apiece – all empty.”
- “What’s the worst that can happen? You can’t pay your mortgage, so sell your house! No fear.”
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Anecdotes Banks Bears blogs British Columbia Bubble Bulls buyers Canada Capitulation China CMHC Construction Debt Economy Employment Fear Foreign buyers Fundamentals Government Housing Interest Rates Landlords Life Media Mortgage brokers Okanagan Olympics Ownership Prediction Real Estate Realtors Relationships Rent Retirement RE_ATM sellers Sentiment Speculators Toronto US Vancouver Victoria Visual Anecdote Whistler
I found this article from the Irish time that everybody thinking of buying now should read:
“(…) those aesthetically beautiful Grand Canal Square apartments are being offered to first-time buyers for a sickening €190,000.
Two years ago, with help from my parents, I bought into the same sought-after riverside location in Dublin 2, but for the horrifying sum of €525,000.”
“I am so worried, I can hardly think of anything else.”
“And the most depressing thing is the value of my apartment will not rise in the foreseeable future and may fall more, so I am stuck.”
“Yesterday the bill for the management fee came in. It is for €1,600 – another figure I carefully choose to ignore back then. And come December 7th, I will probably have a property tax on top of this.”
Think twice before buying…
http://www.irishtimes.com/newspaper/property/2010/1014/1224281058402.html
As a yank, I’m still a bit confused about how such people are getting loans. Supposedly, Canada hasn’t been doing subprime lending. So is this person in her 20′s a doctor or lawyer or something? I doubt it if she is living with her parents.
What size of downpayment is required in Canada? How much of your monthly salary will the lender allow you to put towards your house payment?
On this site, I keep hearing simultaneously about young people, community college students, etc. buying at these ridiculous prices, but that Canadian lending has somehow been more prudent. I know that average incomes up there are basically the same as my city in the US. So what gives?
No subprime lending in Canada is a lie. And no, it didn’t start with Flabberties 0/40 scheme, that has been going on way longer.
Back in the early 2000s when I was in my mid 20s the bank tried to get me to get a mortgage too. Even back then they were “gaming the books” so to speak. The way they offered to do it for me?
“We give you a loan for the sum you would need for the downpayment, once the mortgage is approved / active, we roll this loan into your mortgage and you’re set.”
I passed, it struck me as a stupid idea to buy something for several hundred grand in my mid 20s, but apparently I am one of the few who doens’t have the “house” gene or some such.
As I understand it technically NONE. Though if you want (and many banks insist) on CHMC coverage then you have to bring 5% to the table (after they realized that 0% is not really a good number). But as described above, there are ways around that.
Simply put: The Prudency is a lie.
What happened is that the banks were just as carelessly write the mortgages as their US counter parts, after all, free money.
Then back in early 2009 the BoC decided that the banks could give them all their mortgages for “cash”, so the banks did that, shifting the risk of the assets onto the BoC while at the same time polishing up their books.
The lesson they took away from this is that they should write more mortgages in a similar vain.
The ones that claim that “Canadian Banks are sound” are politians like Flabberty who have a track record of being really horrible with numbers, which is fine, what Finance Minister needs to be able to do basic math, that’s just for intellectuals like Ignatieff, just ask Ontario, it works like a charme (not).
Excellent. Thank you for your detailed and thoughtful reply.
I was in BC for a conference and even when people would admit there might be a bubble, they would insist the “banks are safe” from the fallout. I just wasn’t buying it. I suspected something like you describe here.
Snats-
The banks are indeed safe, because anyone who cannot provide 10% down requires insurance from our Federal Government. If these students default on their mortgage, the bank will get paid out by Canada Mortgage and Housing Corporation, ostensibly from the pile of money they collect as “insurance”.
Thus, there is no risk to the bank of not getting paid, unless of course CMHC goes belly up due to too many defaults.
Do you think our banks would lend money to people without any money if they were on the hook for it?
“Do you think our banks would lend money to people without any money if they were on the hook for it?”
Ours didn’t think they were on the hook either because they were selling mortgages on as mortgage backed securities. Didn’t work out that way. They were bailed out by the taxpayer however, which is what you guys have coming I suspect.
Yeah, Canada being “communist” we bypass the open market to sell debt to and just put the tax payer on the hook.
I wonder if I can walk into any of “my” houses when TSHTF, after all I get to pay for this idiocy with my taxes.
On second thought, maybe we can just make Flabberty and Harper personally responsible for this, they can then pay back the banks…. Yeah, I am dreaming.
Considering the leverage at CHMC the question is if they could actually pay the banks out. I guess the BOC could intervene and “give” the CHMC the money ata discount rate but I seriously hope they aren’t that stupid (but then again, so far they have proven me wrong several times).
Just to add my own experience with how easy it is to get a mortgage: we moved here from overseas, no credit record in Canada and am self employed (no hope for a decent paying job in Vancouver). I could only get a HSBC Mastercard with a $1000 limit. HSBC which is a very conservative bank, could see our international bank balance and offered us a mortgage, even though we weren’t looking for one. “But how can we get one considering our circumstances?” we asked. We were told “don’t worry, if you put 40% down we don’t ask any questions”.