This by e-mail to VREAA from MarKoz 20 Oct 2010 - “A co-worker has a house in Coquitlam which she listed for sale in the spring. It lingered for sale without an offer for 3 months. She just re-listed and it sold in a week and a half. I have a creepy feeling things are heating up again. Open houses and “sold” signs all over Kerrisdale as I drove through on the weekend. I live in the Main area and am surrounded by holes in the ground where older houses (which were listed at $750K+) were demolished to make way for new builds.”
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- Brian on “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
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Latest Anecdotes:
- “The bank encouraged her to take the equity in her home to purchase another home. She bought a 2nd home at the peak.”
- “Let’s remember how we got here” – Looser and Looser CMHC Limits
- Don’t Worry, I’m Sure Somebody Will Sort This All Out – “Policymakers now know better and will be a lot more proactive in preventing a collapse.”
- “Things have changed, we are not doing that type of mortgage. We are not interested at all.”
- “We are noticing our target type of housing in price decline, albeit slow, as our money increases in value, slowly as well but outpacing housing.”
- Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”
- A Bed in the Bathroom, Why Not? [Let Us Count The Reasons...]
- “My husband and kids are pretty happy in our rental house within cycling distance of work that we could never have afforded otherwise. We’re doin’ pretty dang well, thank you, for median income earners in this expensive city.”
- “I Wish Them Bad Luck.” – Jim Flaherty, on those who wish to profit from Canadian RE price drops
- “We asked why he doesn’t just rent the whole house. He said he can’t, it wouldn’t cover his mortgage – he’ll get more to rent it out as two suites. These new landlords are hilarious, thinking that rent will cover their mortgage!”
- “My neighbours, in their late 60s, just put their house on the market. They had said they would die in that house, but now they are worried that with the housing market going south they may be losing a lot of equity and they better sell now before it gets worse.”
- Chat Thread
- Taking A Break
- “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%.
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As I mentioned last week, this market is far from dead for those that have bags of cash just sitting around collecting dust. For all the others still recovering from debt overload incurred in the last 10-20 years, the nightmare is only beginning. In my neighborhood there are at least a dozen new homes (all McMansion style with min starting price of $1.25M) being built within a 2 block radius by either Chinese or E. Indians. We are not talking HGTV Flip This House here. (this type of activity is still appears to be non existent for the most part). Most of my associates in the RE or financial industry would confirm that these two ethnic groups in particular are literally scared $hitless about runaway inflation. Those that are cash poor and/or in debt up their eyeballs could wind up being priced out the market forever (for all the wrong reasons) and/or crushed by rapidly rising interest rates and costs for food, basic materials, fuel, utils etc. if these folks are correct. Of course, if they are wrong and we are ultimately headed for many years of Japanese style deflation, then many of these same folks will end up being underwater and stuck having to service a massive debt load until the end of time. Either way, the gap between the HAVE’s and HAVE NOT’s widens.
The thing to keep in mind with these reports is that a lot of times people make these plans a few years out. Even something that only NOW breaks ground could have been in the works (and financially comitted) for much much longer.
As such, the current building activity is not really an indication of a healthy / working market, it could just be the “breathing out” or “long tail”.
A future indicator would be building orders and land sales as well as the difference between asking and selling price.
But as others have pointed out. Markets are sticky on the way down, mainly because many sellers hold out as long as they can to limit their losses.
I still believe the real pain will not start showing until spring and by 2012 onwards (when a lot of mortgages will start resetting) we will truly see how different it is here.
If hyperinflation is really going to be the problem, they should live in a tent, buy shotguns and use their lot to grow a garden and keep chickens.
And meanwhile, in the outskirts and the outlying areas of Vancouver, things are so clearly on the way down. Listings are languishing for months and entire seasons in spots like Chilliwack, Abbotsford, Squamish, and even as close as Langley, and price reductions of 10% and 20% are not at all uncommon – in both “good” neighbourhoods and bad. Add to that what’s happened in the Okanagan and Vancouver Island over the past year or so, and it’s easy to see the humungous contrast between the utter insanity of Vancouver/Richmond/North Shore and anything that lies more than thirty miles away from Robson Street.
Update: My co-worker tells me she dropped her price substantially from what she listed it for in the spring. She is selling to buy new smaller place so she is in good shape. She wasn’t concerned about lowering her price since everything she is looking at buying has gotten cheaper too.
Squamish, Van Isle, OK, and a lot of points in between are overbuilt, over leverged, and on the downslope.
The first time I realized we entered a new age, was 2007, when I saw tracts of homes in Nevada being built, and I thought….” who will live here, in this miles from nowhere place…”?
Well, the answer became clear – no one.
There is a creeping feeling that all is not well under the floorboards, and people are really worried about D E B T, here in BC.
Bueno suarte amigo.