“I had an informal conversation with a Burnaby accountant who has been very busy working as a debt manager. He said most of his clients are so ridiculously over-invested in GVRD real estate – significantly negative cash flow returns, average mortgage debt per client of $600K, etc – that he fully expects a hard landing for Vancouver.”
- Airedales at VREAA 27 Mar 2012 2:10pm
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- 21. Vancouver RE-Verse [Found Poems] (8)
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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
- 08 Canada Bubble
- 09 Rob Chipman's blog
- 10 YatterMatters
- 11 condohype [retired; archives available]
- 12 vancouver (un)real estate
- 13 Agent Will's Stats [retired]
- 14 Landlord Rescue
- 15 The Economic Analyst
- 16 Canadian Housing Price Charts
- 17 Hoodsurf [retired Jun 2011]
- 18 World Housing Bubble
- 19 Vancouver Price Drop
- 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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The property ladder has an illusion of worth, but only if you pay the balance owing. Start with a 200k mortgage, reinvest, and suddenly it’s a 600k mortgage. Now we find out who the real ‘homeowners’ are.
When the fur and feathers fly we will finally know who was truthful with us and who was just talking bullshit and bluster. We will see. When the tide goes out. So sick of all the posturing and bragging about how much houses went up blah, blah, blah. Anyone else nauseated by it yet/
Absolutely nauseated by it – and by the constant blustering by the real estate agents and developers, as well as the building frenzy that’s resulted from this speculative environment.
I believe Vancouver may experience the 1930′s all over again. Bankruptcies and foreclosures are likely to begin soon. Too many of the people who have been buying real estate in this City have over-extended themselves, and when they find out their properties can’t be sold because most people can’t afford or won’t pay the outrageous prices they’re asking, they’ll be left holding the bag. Then they’ll either face foreclosure and/or bankruptcy, or they’ll leave the country so they don’t have to face the consequences.
Since Vancouver has no real economy outside of residential construction, we may just re-experience another 1930′s type Great Depression, with many “owners” of condos and homes are forced to give them up or turn them over to the City for outstanding taxes.
Perhaps however there is a bright side to the potential collapse of Vancouver’s housing market. At least it would extinguish the myths parroted by the developers and our City politicians that Vancouver has a shortage of land and/or housing and so we must build high density condo towers everywhere to make the City affordable.
“Perhaps however there is a bright side to the potential collapse of Vancouver’s housing market”
Of course there is. Those who are left standing might actually be able to buy a home. I call the “collapse of the Vancouver housing market” the great CORRECTION. That is the medicine this city needs. Those who are hurt the most (multi-dwelling owners/speculators like so many I’ve talked to and heard about) will have earned it.
The consumer errors by assuming value is capacity for leverage. They are about to be schooled in economic application. God bless the renter because they will save some buyers from default and provide a base line for market stability.
Yes. Appalled by the building frenzy. How many unnecessary condo towers have been built, are being built, or are in the planning stages right now? Plus all the conversion of forrest and farmland out in the valley into more housing, just because of pure speculative frenzy. I think Vancouver is going to have a real estate hangover that will last at least a decade if not more.
http://www.canadianbusiness.com/article/77314–bmo-survey-suggests-2-interest-rate-hike-worries-4-in-10-homeowners
Four-in-10 Canadians would be unsure about whether they could afford their homes if their mortgage rate went up by as little as two percentage points, according to a new study from the Bank of Montreal.
4 in 10, my god. At least they built up a lot of equity?
Even if they built up a lot of equity, most of them, once prices start to slide and sales to crater, will follow the market down with insignificant price reductions as their equity dribbles away over a year or three, instead of getting out in front of it, cutting aggressively and selling early.
Do you ever get the sense that those same people have no sense of how equity evaporates when interest rates rise so that even while debt burdens grow wealth withers? If they really knew then almost nobody would ever buy with 5% down at our current valuations.
I was looking at some condo sales data that Greg put up over at The Economic Analyst by the way and Yikes does that ever tell a story of falling prices. Virtually all the sales are coming in below ask. The underwater sounds of glub, glub, glub do come to mind.
Stories of falling prices abound:
Richmond home sells for $960,000 off the original asking price (40% )
http://tinyurl.com/87bfsmf
The sellers were lucky to get what they did, if you ask me.
Told-you-so-in-2007, good post.
I shall first blame governments for not doing enough, then when they do, blame them for doing too much. This is the way of things.
“Four-in-10 Canadians would be unsure about whether they could afford their homes if their mortgage rate went up by as little as two percentage points”
Well they won’t have to worry about that for many, many years.
True, but when prices fall they will not be able to sell without writing a (big) check and their credit rating will be toast. All this is while making regular mortgage payments! Plus, there will be a reckoning as re-fi day approaches which will weigh heavily on the psyche.
The scary part of that statistic is that a 2% rise in interest rate is still way below the historical average. Since the early 80′s we’ve seen rates at 21% and rates at near 0%. The notion that rates will never rise is embedded in the psyche of the house-horny. The Titanic was thought to be unsinkable too.
Actually the notion that rates will never rise is embedded in US policy and promises by the US fed, and the Bank of Canada following the US fed like a lap dog. Free money caused this whole thing, nobody values a million dollar loan anymore, a million dollars is nothing in this city: What the F**K??? That is how free money causes hyper inflation, for example in house prices. Ending free money would end this bubble hard, and we need an end to it. Sub 3% mortgage rates are STUPID low.