“After two years of convincing my friend of a housing bubble, my friend decides to list his 1 br Burnaby condo.
Open house over the weekend, no one came.”
- 4SlicesofCheese at VREAA 27 Feb 2012 11:47pm
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Blogroll
- 01 Vancouver Condo Info
- 02 AmericaCanada [retired, no archive]
- 03 Housing Analysis
- 04 RealEstateTalks BC
- 05 Vancouver RE and then some
- 06 Whispers from the Village on the Edge of the Rainforest
- 07 Greater Fool
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- 20 North American Economics
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Latest Anecdotes:
- 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%.
- 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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- Chat Thread wp.me/pcq1o-5vD 3 weeks ago
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Tri-cities were like that last winter
Some Tri cities condos and TH are selling less now than they were in 2008. So far for the REBGV, the Tri cities seems to be the hot spot for a attached property correction.
If you own a condo right now you’re better off holding onto it. This is why its critical to buy something you can afford and enjoy for the long term. Unfortunately, the long term in North American terms seems to be 3-5 years.
I think its too late for most condo owners to do anything, can’t hurt to try and list but I wouldn’t expect a strong sale. There is a lot of inventory out there, and much more coming online soon in the way of new completes.
Its hard for me to understand why people are still signing pre sale agreements, to me this does not seem like the market to do that in.
Hold the condo? Are you drinking koolaid? Condos will drop 40% when all said and done. Condos are extremely overbuilt and will never regain its value after the correction. That’s the dumbest advice you could give. Drop the price and pray.
My thoughts too Van Guy. I could see condos plopping 40% in Vancouver with ease. They are vastly overpriced relative to incomes and historical measures. Honestly, by the time it is all said and done, Vancouver Condos will be half what they cost today on average. I do not doubt that for a moment. Unless that city of yours can keep it pumped up with millionaire immigrants or a boom in employment and rising incomes then prices are set to decline for a long, long time to come. A decade is just a start.
Im on record ad nauseam stating we topped via the “prices high forever” capitulation last summer. I posted it then, I’m posting it again now.
It all depends on the persons personal financial situation, but selling now may not be the best plan especially if you consider how long this all may take to unwind. Its not unreasonable to say this will take up to a decade to settle. If the owner has significant equity and is satisfied living in the unit, why sell? Speculating on a crash is no better than speculating on price increases, if you have a enjoyable place to live, use it as such. If its an investment unit with poor cash-flow, I too would probably look to liquidate it.
Vancouver has been a boom-bust town since day 1, the speculative vehicle of choice has always been RE. This won’t change, as much as I am sure we are headed for years of RE being out of favour I am just as sure that this will not be the last major bubble this city endures.
Have you ever heard of “buy low, sell high” Burt? This is high.
What crazy thinking is involved in your thought process that tells you hanging on till the bottom is a good strategy?
I hate to have to break it to you buddy but this is not our garden variety correction that is coming. Oh no. Not even close. What we are seeing now is a once in a lifetime opportunity for most people to cash out at the top and live like royalty for many, many years to come while you “others” slave away paying down bank debt and credit card obligations and sink lower and lower on the ladder till you own nothing at all.
You need to get liquid and fast, friend.
While your loyalty to the banks is beyond reproach it is also totally misplaced. Your logic has so many holes in it I barely know where to begin arguing with you tonight.
Screw your head back on and write back to me later. We need to talk.
…..and before you even object that you did not mention anything about banks, Burt, I will admit I took the liberty of assuming you are holding a mortgage. Your comments regarding significant (but not total) equity told me so.
What is annoying me here is that you seem to know a major correction is coming and yet do not see the easy opportunity to harvest profit and build upon that gain longer term.
What the hell is the real difference between a house and a stock anyway? Loss is loss. I am bugged more by people who “get it” but fail to act than I am by the idiots who see no hazard coming and go down with the ship without life jackets.
(Rant off)
RE: Farmer
What you say is largely true, unfortunately its a little simplistic when considering real life situations. I’m also not suggesting anyone buy anything Van RE related right now, I do think that could prove to be a very expensive lesson.
However, if your home is a principal residence bought few years back with some unused paper equity, and costs to carry as much as it does to rent, than why sell? I advocate that its not the brightest move to speculate on a 40% price depreciation just as it isn’t the smartest to buy expecting 7% YoY gains. Even in that instance one has a much longer history of coming true than the other.
The owner will be forced to relocate and pay rent at a similar or even higher cost to ownership (this is assuming this unit hasn’t been bought in the last few months.)
I am bearish, I realize we are near a major correction. However, the trend is your friend. Take a look at the Vancouver average price graph, ups and downs. Each down is still a higher low, I don’t think its a wise proposition trading in expectation of a paradigm shift.
I would expect 25-30% down in nominal terms and years of further deterioration in real terms. I don’t think we will see the nominal price devaluation that some American cities have.
Its impossible to live life in hindsight, its neat to ask Vancouverites who owned during the 80′s crash what their thoughts are. 4 or 5 different people have shared the same sentiments. All 5 thought that prices would never return to such highs, all 5 capitulated at some point, all 5 regret it and think they should have toughed it out.
As for my personal situation, no investments, only principal residence mortgage outstanding at 2X our income. I do plan to hold on for the long term. Long term being indefinite, not plans of selling. If I should need to move it will become part of the renting stock.
“Its hard for me to understand why people are still signing pre sale agreements, to me this does not seem like the market to do that in..”
Because if it worked in the past, in their (the speculator’s view) it should work in the future. Though, to be fair, it wasn’t too long ago that even the local news was reporting horror stories of pre-sale owners who had backed out of closing being sued by developers.
Anyone who ever buys a presale is a moron. At least if I buy futures in pork bellies, I know what I’m getting. Futures in real estate… no such guarantees.
Exactly, like the story recently about the “luxury” condos with leaking light fixtures, hallway ceiling cracks, and all around shoddy construction, which is probably the norm. Developers have no incentive to do right by you, once they have your money, and you can’t get that hole in the sky inspected before you buy.
“There is a lot of inventory out there”
I’ve seen stats on other forums saying MOI for condos is still very low, at least in Vancouver – not sure about Burnaby.
Condos are flooded. I have access to realtor tools and I will post preliminary numbers here on March 1. Not pretty last I checked on Feb 22. 10 moi last checked which includes Van east, van west, and DT van.
Looking forward to it. I am expecting the MOI number to rise sharply into the spring. This market has officially rolled over. Let us know if you have the up-to-date numbers as they appear.
Hell, even Realtors are bailing out now. What does that tell us?
What’s the MLS #? Maybe I can get a couple of my investor friends to take a look. At least you will have someone coming in to the open.
I can ask my investor friends too, right after they finish making my latte!
I screwed up big listening to my lady when I bought a presale in 07 @ Brentwood Gate. Bought a 1 bdr for $305k, possession was in late 08. 08 scare the crap out of me so luckily the rebound in RE, got me a buyer for $309k. I still ended up losing like $15k. I’m happy though. Those units are still at the price I sold for. And they will be much cheaper soon.
“I still ended up losing like $15k.” Shame about that, but a decent experiment at fifteen grand. Underlines even a slight risk is worrisome. I wonder what the bliss/pissd ratio is generally.
$15K is a victory considering what’s going to happen to the price of those units in the future.
The lonely realtor who camps out in a vacant unit in my building every week seems to be getting more desperate.He’s taken to stuffing the property specs sheet under everyone’s door-New Price! Sorry, 10k off doesn’t exactly entice for a 1 bed plus closet (aka den that won’t fit a single bed).
Months of inventory is signalling certain areas are going to find the spring rather difficult conditions. Look at it this way: the average MOI in the spring is going to be between 4-5 (my guess). Some areas will be lower, others higher. The higher ones are going to start making the vreaa headlines as “bad news”. If MOI fails to drop below 6 in some areas, price drops are likely. Something to watch.
“New Price! Sorry, 10k off doesn’t exactly entice for a 1 bed plus closet (aka den that won’t fit a single bed).”
I know, you gotta shake your head at these “Reduced Price!” that are a whopping 1 or 2% off a condo that is overpriced by maybe 100 to 200%. 2% off, where do I sign!
+1
“buy the dip!”
Don’t take it personally. There were other factors; apparently academy awards parties kept people indoors.
E.G. – - Sorry to break it to you but Pork Bellies got delisted last year after 50 years on the CME I belive – so I would probably go with something like wheat or corn if you like agriculture.
Pre-sales are more like forward purchase agreements than futures and I wuold not be touching them at all right now. Look at the people on completion right now. The only ones who have really made serious money were those that took the bankrupt projects in 2009 and bought those.
Given the cost to carry a house, why is it that our “Pre-sale” market is always in contango. I would believe we should have some serious backwardation if this was an efficient market with full information and liquidity.
Barley. That way I can have a beer next year.
Some MOI Stats – Estimated last weekend based on 18/21 days.
Van-West Attached – Over 6 compared to Mid 3′s last year
Van-East Attached – approx 4 compared to low 3′s last year
Richmond Attached – high 6′s compared to Less than 3 last year.
As I posted last week – depends on price as well with Van West Condos under 500K being approx 4.5 months while those over 500K were 8 months plus.