Monthly Archives: June 2011

“If you’re willing to live in a home half or a third the size you could afford elsewhere, Vancouver is perfect.”

Dan Cooper at francesbula.com Jun 24, 2011 at 11:42 am-
“I live in a tiny condo in the Douglas Park neighbourhood, about halfway between the Mayor and the Premier if I have their locations correct. I can walk or at a pinch bike or bus to almost everything I could possibly want to do, be it stores, restaurants, sports venues, theatre and opera, shopping, parks, work, libraries or whatever else… Well, they did move the government map store from Broadway and Cambie out onto some such foresaken strip of road in the ‘burbs, but I’ve been managing somehow despite no longer having instant access to the latest geodesics. Anyway, my child continues to have a great experience in his local public school, again within walking distance. Did I mention the multiple community centres with all kinds of activity and sport options, ranging from a few blocks to a kilometre or so away? The youth sports teams? I would say that from a middle class perspective, Vancouver is a really good place to live, with the only drawback being the expense of housing. If you’re willing to live in a place half or a third the size you could afford elsewhere, Vancouver is perfect. For me, it’s been well worth that trade-off. As for visitors, as others have said they tend to go and do many of the same things I do when I’m relaxing: parks, seawall, Granville Island, theatre, restaurants…”

“If you’re willing to live in a place half or a third the size you could afford elsewhere, Vancouver is perfect.”
Hahahahaha? (Ummm… no..) Under normal circumstances, such a statement would produce a round of laughter, but Dan Cooper is serious. For him, the trade-off is worth it. For many others, not.
And, by the way, we co-incidentally agree with Dan’s math: Vancouver RE is overvalued by a factor of 2 to 3. – vreaa

CBC Runs Headline: “Canada’s ‘housing bubble’ deemed close to bursting”

CBC 29 June 2011[hat-tip ams] -
“Canada’s housing market is in a bubble that’s set to burst and prices could plunge by as much as 25 per cent, a major independent research firm warns.
“Housing valuations have lost all touch with fundamentals and household debt is at a record high,” economists at the research consultancy Capital Economics say in their most recent Canada Economic Outlook, issued Wednesday.
“Our fear is that, with the housing bubble now close to bursting and commodity prices retreating, Canada will go from leader to laggard.”
The report predicts a fall in house prices by as much as 25 per cent over the next three years.”

Many readers will already be familiar with the predictions from ‘Capital Economics': their economist David Madani made the 25%-drop prediction in a recent interview with Rob Carrick from the Globe and Mail.
We record the fact of the CBC story here, for the record, as it is noteworthy that they run a headline featuring the words ‘housing bubble’ and ‘bursting’. All part of the apparent steady increase in bubble-talk in MSM. – vreaa

UPDATE: This story was also run in the Vancouver Sun 29 Jun 2011, a similarly noteworthy occurrence. Interestingly, it isn’t featured on the online front page, or in the ‘Business’ headlines, but it was found second on the ‘most read’ sidebar.

“Dipped into the condo equity to the tune of $60K over the past four years; Won’t sell and rent because renting is just “throwing money away.” ”

TPFKAA at VREAA 23 Jun 2011 9:03am - “Got talking to a family I know. Two kids under five; a boy and a girl. The wife confided that they had dipped into the equity to the tune of 60,000 over the past four years just to make ends meet. 2 bedroom condo in 25 yo building, purchased in 2004 for 200k, now “worth” 350k, family income 3k/month net, mortgage payments 1500/month, strata fees 300, and special assessments rain down like riot debris. $900 last month, $2,000 a couple of months ago… She estimates a couple of k per year. A 2 br in same building costs $1200/month to rent. I asked why they don’t sell and rent for a while. She told me it is because the husband believes renting is just “throwing money away.” He wanted to sell and buy a house in Abbotsford about a year ago, but she did not want to leave the area they have lived in for 7 years. What is going to happen to this family if/when the equity disappears and no more RE_ATM? Even worse, their HELOCs may place them underwater.. and with a boy and a girl in a 2 br, that is no fun. What if rates rise? and the kicker… the sole income earner, the husband, works in construction. I don’t think they realise the dangers they are in thanks to being home”owners”.

Vancouver Westside Sales Drop Over 60% In One Month

Vancouver Westside, Month over Month:
SALES dropped over 60%:
28 April – 27 May 2011: 359 sales
28 May – 27 June 2011: 138 sales.
PRICES were pretty much flat through the period:
Average about $2.42M
Median about $2.15M
LISTINGS decreased from 1013 to 764

[numbers from yattermatters.com, thanks to Larry]

Start of seasonal summer slowdown, or beginning of buyer drought?
Who will be stepping up to take the über-jumbo-mortgages necessary to ‘buy’ these properties when prices start falling? – vreaa

Example of a median priced Westside property:
3261 W 38th Ave, V888979
Sold 27 May 2011; $2,098,000
2,580sqft SFH on 33x130ft lot

Poll: Vancouverites Overwhelmingly Agree Vancouver ‘Nicest City’ In Canada – “95 per cent of those living there convinced there’s nowhere better in Canada.”

Excerpts from‘Vancouver ranked ‘nicest’ city in Canada’, Vancouver Sun 28 Jun 2011 [hat-tip 'calguy'] -
“[A] survey of more than 1,500 Canadians, commissioned by the Montreal-based Association for Canadian Studies and carried out during the week of June 21, presented respondents with a list of nine major cities from coast to coast and asked them to name their first and second choice for “nicest city in Canada.” …
Twenty-five per cent of all Canadians picked Vancouver as No. 1. Quebec City drew the second most votes as Canada’s nicest city, with 20 per cent of respondents nationally. …
The overall results, noted association executive director Jack Jedwab, partly reflect the fact that Vancouver residents themselves overwhelmingly named their own city the nicest — with 94.7 per cent of those living there convinced there’s nowhere better in Canada.”
“…such “hometown patriotism,” while evident to some degree among residents from each of the cities offered as choices, was strongest in Vancouver.”
“63 per cent of B.C. residents in general chose Vancouver.”


This comment below the article from an individual representative of the 94.7%, full-patch cult member ‘len2′ 28 Jun 2011 2:34pm“excuse me, I don’t need polls to tell me what a Garden of Eden I live in, of course this is utopia. have you ever seen the moon on the rise standing by prospect point? how about from the cap river looking west, the string of pearls across the Majestic Lions Gate with a full moon in the background or underneath the Lions Gate looking south at the beautiful span, as it disappears into a forest of green. I have had the pleasure of living in this place of breathtaking beauty for over 40 plus years and I am still in AWE and THANKFULNESS when I look around me. nothing compares. I say to all you Vancoverites get out and explore your paradise, don’t just drive around, walk around the sea walls at night, visit the parks through out the lower mainland. to me this will always be heaven on earth. biased, of course I am, who would not be.”
[Note to self: Avoid getting into a bidding war on a Vancouver property with 'len2'. -ed.]

Comment:
Yes, it’s another one of those almost innumerable polls/surveys/ratings.
We don’t have access to the methodology or raw data; the actual poll results themselves doesn’t appear to yet be publicly available. The poll was “conducted last week via web panel by the firm Leger Marketing”. A “web-panel” is a group of people who have previously agreed to participate in such polls. ‘1500 Canadians’ were each presented with a list of 9 cities (Vancouver, Quebec City, Ottawa, Montreal, Toronto, Halifax, Calgary, Edmonton and Winnipeg) and asked to rank them by ‘niceness’. There also appears to have been an ‘Other’ choice.
It looks like almost all Vancouverites polled voted Vancouver #1, and that is “partly reflect[ed]” in the “overall result”. We take this to mean that the pollster is pointing out that part of the reason that Vancouver did so well is that it got all of its home-town votes. Perhaps Vancouverites actually are more invested in their city than most?
Anybody with access to the actual poll publication, please share it with us. It’d be interesting to know more about the methodology, if only for curiosity sake, and we’d like to see the actual numbers.
And, by the way, what is the rationale for funding such a study? – vreaa

Shoe-Shine Moments – “With Chinese money flooding into the city, the pizza guy offering to broker homes, and people approaching homeowners with suit cases full of money, it is fair to say that the situation is getting a little crazy.”

This story got wide coverage in the media. Some saw it as a ‘shoe-shine-boy moment’ for the market….
From ‘Vancouver pizza boy: Sell your house now!’, Steve Ladurantaye, G&M, 24 Jun 2011 -
“As far as anecdotes go, it’s pretty damning: A pizza delivery boy knocks on the door of one of Vancouver’s best known money managers and tells him that he should sell his house to a property hungry Chinese investor.
And he doesn’t stop there — apparently the well connected pizza boy has contacts in China and has even seen Chinese buyers show up at the very houses he delivers pizzas to with briefcases stuffed full of money.
The story comes from the latest research note from Odlum Brown Ltd.’s Murray Leith. While the pizza boy’s connections may be questionable, it is an interesting snapshot into the way real estate has taken over the city’s psychology.
“With Chinese money flooding into the city, the pizza guy offering to broker homes, and people approaching homeowners with suit cases full of money, it is fair to say that the situation is getting a little crazy,” Mr. Leith says.

“Mr. Leith suggests that tightening credit in China could curtail its citizens’ investing activities abroad. And with Canadian household debt at all time highs, he said prices could soon moderate or start to decline.
That sounds a lot like calling the market’s peak, but that doesn’t mean he’s going to sell at the top. Even if the pizza boy thinks it’s a good idea.
“To take advantage of the high prices, someone fortunate enough to own a home has to downsize, relocate to a region with lower real estate prices, or rent,” he said. “Those options do not appeal to my family.”


Individuals with higher net-worth, where the value of their home makes up only 25%-40% of their net-worth, may very well be more comfortable sitting put through the coming price crash. Most of them will be able to tolerate a downdraft in paper wealth of 10%-20% of net-worth. All other owners may find the price drops harder to stomach. – vreaa

Michael Geller on Living in Vancouver – “I think there are many better places to live… where you are not worrying quite so much about whether you will ever be able to buy a home, or how to pay such large mortgage payments… and even whether you can afford to have kids…”

Michael Geller (‘a Vancouver based architect, planner, real estate consultant and property developer with four decades’ experience in the public, private and institutional sectors‘) in a comment at Frances Bula’s blog, 24 Jun 2011 12:00am. Excerpts -
“I´m currently ´living´in Javea, on the Costa Blanca about 75 minutes from Valencia on another house exchange. …
Last night, my wife and I were discussing just how our house exchange partners are enjoying life in Vancouver, compared to how we are enjoying life here.
[In Spain gas pricier; wine cheaper] From our modern villa we can walk to town, buy an incredible variety of fresh fish at a fraction of the price in Vancouver, or when eating out, enjoy a string of seafront restaurants where you can get a nice 3 course meal, with wine for 9 to 12 euros…no worry about drinking and driving… [In Vancouver drive to restaurant for meal at twice the price] Then again, unemployment is 22% in the Valencia region and although there seems to be so much more industrial activity than in Vancouver, the region is spending more than it takes in and is reportedly on the verge of bankruptcy. …
I would conclude by saying that one´s enjoyment of Vancouver as a place to live is obviously a function of where and how you live…whether you worry about money…and how satisfying your work/life balance is….

There is no doubt that Vancouver is beautiful to look at, but every time we do a house exchange we realize there are many plusses to life in other cities and countries…New Zealand and Australia both come to mind….But we don´t move because we are ‘established’ in Vancouver… our friends are there… etc.
However, if one could feel free to choose, I think there are many better places to live… where you are not worrying quite so much about whether you will ever be able to buy a home, or how to pay such large mortgage payments… and even whether you can afford to have kids… this one really troubles me whenever I hear it from young Vancouver couples…

I agree with [the opinion] that if you can resign yourself to renting, Vancouver may be a better place to live than for those struggling to buy…although those who bought homes for $100,000 that are now worth $2 million and can sell and move elsewhere and retire on their nest egg… would probably not think this way!

So my advice, start doing house exchanges as a way to enjoy relatively inexpensive holidays, and a way to experience life in other places…go to homelink.org to see what´s available.
I must admit that while I am tempted to move to another place, if only for half the year…I do always come back to Vancouver… but I´m not sure it´s because it´s better… just because it´s where I live and it might be too much effort to change!”

[Earlier comments by Michael Geller were headlined at VREAA 23 Mar 2011.]