“Take it from a born and bred Westsider, who has owned more than one house on the Westside. A lot of people have made a lot of money in residential real estate on the Westside. A lot of people think that they have a lot of money because they own a house on the Westside. Some of them are right, depending upon their equity levels, some of them are wrong for the same reason. Some of them will get out while the getting is good, some won’t care or don’t need to. Many of them on the lower end of the scale, however, will hold out and be absolute toast. What I can tell you from long, direct experience is that the Westside of Vancouver is now and always has been ground zero for real estate corrections as it has been the same for price increases. A whole generation of property virgins have grown up and bought in without having a clue about this, even when their Kool-Aid drinking parents ought to know better.”
- JR at vancouvercondo.info 26 Jan 2012 9:13pm
ADDENDUM:
Point Grey SFH Inventory (MLS):
27 January 2011: 34
29 January 2012: 79 [Up 132% YOY]
It’s not clear what the magnitude of the Vancouver correction will be. Interest rates are staggeringly low for the foreseeable future and generally homeowners are still gainfully employed. There is no reason to sell unless you can’t make a payment. It seems that only the speculators and marginal buyers will bail.
Anyone buying real estate at prices not supported by fundamentals is a speculator.
The bubble will probably deflate slowly due to the low interest rates. However, if owners start to see that they are underwater with no end in sight, it will be avalanche breakdown, especially with the global economy in the ruts. Yah, sounds messy.
anyone purchasing a property under bank and CMHC qualifying is indeed supported by theirown fundamentals. The system demands it.
Formula1 misses the point completely. An asset’s investment merit has nothing to do with whether or not you can afford it.
Job transfers, divorces, estate sales, growing families needing more space…
Besides, all real estate busts everywhere are characterized by dramatically reduced volumes. As long as the buyers outnumber the sellers, prices go down.
It only takes a small percentage of owners (5%, 7%) to try to sell into a low volume market for prices to crash.
So, even though most owners may be very happy with their positions, and very secure in their RE/debt ratios, it’ll only take one SFH seller every one to two blocks to crash the market.
Given interest rates aren’t fixed for the life of the mortgage, it should have only the tiniest bearing on affordability. Crazy crazy crazy for it to swing things the way it has. THIS is what crashed the U.S. except we called it teaser rate, so there was at least some truth in advertising.
I didn’t grow up on the west side, but I do remember at prof at UBC who was desperate to get a house in 1993 and complaining about getting stuck in bidding wars. Then prices just did nothing… from about ’97 to about 2001.
When I bought my house in Arbutus in 2002, no one wanted it. That is, the market is not ALWAYS hot. One must also remember that in 2009 things were DEAD and it corrected – no one wanted houses then for about 6 months. A house across the street on a 50 foot lot, 15 years old sold for $1.45 million. Now they’d ask $2.5 million.
I am reminded of 2009 again. Right now in Arbutus, there are 25 homes in Arbutus asking $3.5 million plus. The one across the street from me has been on the market since Sept 1. It started at $3.8 million. I don’t think they’re going to get the $3.5 it’s currently listed at…. nor are the other 24 houses going anywhere fast… it did have a showing yesterday though. Haven’t seen one for a long while.
This poster is right, to think that the west side won’t correct, after this run up, is not looking at what has happened previously. I think prices easily have 30%+ to correct. At current prices, 50% wouldn’t shock me or be unfathomable. It would be very foolish to buy at current prices. I cashed out early in 2011.
In 2009 there was a minor correction, but nothing to come close to correcting for the already insane prices runup over 9 previous years. Things may have appeared dead for homeowners, but for buyers, prices were still a total ripoff even after the minor 2009 downtick.
Dear Admin, this is urgent. Please get in touch with me as soon as you can.
Mr Nicholas Cage, I take it?
http://en.wikipedia.org/wiki/Nicolas_Cage#Real_estate_and_tax_problems
I think they’re missing a seventh
http://housing-analysis.blogspot.com/2007/03/house-prices-always-rise-over-long-term.html
The westside has appreciated faster than other areas for a variety of reasons. Whether that trend continues or regresses is for discussion.
VREAA- Agree with that.
There are always a number of true sellers and these sellers selling into a low volume market will start to move the whole market down. When you have low volume, this is what typically characterizes a down market.
And – Ralph C – I think you meant to say sellers outnumbering buyers. . .
The “perfect post-industrial economy”:
http://www.edmontonjournal.com/opinion/Lamphier+Vancouver+seductive+unreality+life+goes/6064489/story.html
I thought that article was great, but then perhaps thats because of one’s perspective.
Does the author really believe that Vancouver’s model is sustainable?
I don’t think so.
When he talks of the “seductive unreality of daily life in Lotus Land”, doesn’t he imply that many here are deluded?
Most commenters (below the article) see the article as a “love letter” to Vancouver.
Do you?
Interesting article.
However, this part is suspect:
“In the end, that’s what makes Vancouver so different from other Canadian cities. And it’s why many West Coasters can’t understand the need for such things as Enbridge’s proposed Northern Gateway pipeline, which would transport oilsands bitumen to the West Coast, for eventual export to Asia.”
It would perhaps be better stated “…many Lower Mainlanders can’t understand…” But even that is gross simplification.
First, many in the interior of BC with much less of a horse in the real estate race – and of all political stripes – oppose the pipeline for many other reasons. For instance, opposition stems from the obvious environmental hazards of the pipeline and the tankers; but also extends to the fact that we’re are shipping raw, unprocessed materials to a market whose totalitarian government is not friendly to our democratic ideals.
Second, I’d submit that many Lower Mainlanders who don’t own (I mean, about half of the households in the GVRD are renters, right?) are also opposed.
To try to ascribe all anti-pipeline sentiment in this province to real estate prices in Vancouver is absurd.
That said… it’s ironic that many opponents are opposed due to factors involving enriching China at the expense of our raw materials, but don’t see a problem with using our land (real estate) to do the same.
I would think most Vancouverites would understand well the importance of an oil pipeline to the west coast in order to serve Asian markets.
And those that don’t understand, probably don’t know that they are already sitting on a major crude oil pipeline from Alberta through BC to Vancouver.
Lastly, double hull oil tankers are virtually spill proof so what’s the problem? HAM and RE may be able to temporarily prop up the Vancouver economy but they do little for rest of BC.
This is Canada where we dig stuff up out of the ground for export. If you don’t like it, then go to the buy side.
“Buy a home, and watch it soar in value, year after year after year, as wealthy immigrants from China and elsewhere flock to your little patch of seaside paradise”.
Yeah, that’s what I’m talking about: Do you think he says this in seriousness or in jest?
Is it to be expected to continue or does it represent “seductive unreality”?
Trolololololol
Article from 2004: All Real Estate, All the Time
Describes Vancouver pretty well.
Interest rates are now irrelevant. BC areas with large price gains are toast. Low interest rates were suppose to stabilize the RE market, but it only worked for some Canadian markets. The Feds didn’t think Van and GTA RE would be as hot as it got. But that’s what happened. Now there’s no more tweaks of lending rules as Canada could tighten even more. These peak prices will not be seen again for a long long time.
The stats of the increase in listings in 2 days just shows the hype. People are hoping for “lucky money” coming from China. It will be interesting to see how things go in the next couple of weeks. I doubt you will see many price reductions as people will be delusional, and be comparing the west side to last year.
@Airedales: “This is Canada where we dig stuff up out of the ground for export. If you don’t like it, then go to the buy side.”
Undoubtedly, yes. And there’s nothing wrong with that if done wisely. We need food, shelter, clothing, heat, transportation. We get that from our resources.
But, the question is, how do we do that wisely?
Shipping raw material overseas instead of processing it here AND (no matter what you say, there are risks to this Enbridge venture) taking large risks to do so cannot be done without due care and attention.
…and perhaps it should not be done at all. What are the benefits? What are the risks? Who is taking the risks, and to whom to the benefits accrue?
Absent from most of this conversation is the fact that the risk:benefit ratio for Alberta is very low (low risk, high benefit), but is very high for BC. I think that more British Columbians would get onboard with this if something were done to fix that.
I imagine that the folks in Kitimat also believe the benefits far outweigh the risks. Besides, the incremental risks are far less than you might think given the current infrastructure (which you may not know) and, especially, the alternatives. A much better understanding of the Canadian and BC economy by Vancouverites is what is needed – not more HAM and real estate speculation.