“It’s unfortunate but everywhere I look I still see and hear of people looking for homes to renovate and flip. I’m a mortgage broker and I’ve spoken to other realtors, mortgage brokers and so called “real estate investors” who all still believe that now is a great time to buy a teardown and rebuild OR renovate.
I just don’t get it. When will the madness end? Listings are up but the market just isn’t getting the message.
I was at a bar recently (blarney stone) where a girl was telling me about her recent purchase of a flip. She purchased for $800,000, plans to put $400,000 into it and flip it for a cool $1.6 million. When I asked her what contingency plans she had if the market went sour she looked at me like I was speaking a foreign language.”
- Anonymous at whispersfromtheedgeoftherainforest 12 Apr 2012
[hat-tip Makaya]
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- Brian Ripley on “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.”
- Nemesis on “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.”
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Latest Anecdotes:
- “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%.
- 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.”
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It ends, usually with someone barfing or starting a fight. It is Vancouver after all.
Curious if you also asked her who financed this?
At the beginning of the cycle, people who talk about such schemes are considered nuts. At the end of the cycle, same deal. Different people, though, and a different kind of nuts.
What the wise man does at the beginning, the fool does at the end.
..
And, as you say, at the beginning of a cycle, the wise (in other words, the contrarian) is seen as “nuts”.
This is the beginning of the end
sometimes you look like a nut. sometimes you don’t.
Then there’s us skeptics who sit there calling people nuts until we’re finally right. Our day is coming…. soon.
Found poem, made easier, for my untrained eye, by no wanting of reversing
http://vancouvercondo.info/2012/04/friday-free-for-all-200.html/page-1#comment-151334
My brother in law just bought a brand-new single family home in Fuchu, Tokyo where is 30km away from downtown Shibuya. And yes, it is a DETACHED house. Guess how much it costed him? Less than $400,000CAD. Compared to super overvalued housing in Vancouver, a detached and brandnew house built with concrete and bricks for 400k in Tokyo, one of the top three most populated financial and ecomoical city in the world makes sense. Whoever is driving the market up to this point or helping in anyway so most young people can’t afford a proper home should suffer big time financially when the market explodes.
Vancouver is the new Tokyo?
Japan is a closed society and does not permit immigration – the major source of our house appreciation.
Besides, 30km from Vancouver gets you to Cloverdale. You can buy a brand new 2700sq/ft home with coach house for around 500k. I doubt your Tokyo example is anywhere close to this size.
F1, I have to call you out yet again on your immigration argument. I’ve provided official statistics showing, a). That growth rates in immigration have been falling for decades, and b). That Vancouver’s population has grown at less than 1% annually over the past 10 years. Where was the massive appreciation in earlier decades in which immigration and population growth rates were higher? Please don’t answer with “supersaturation”…
Skytrain is the new bullettrain.
Fuchu is the new Cloverdale.
And Vancouver a new world financial capital… what a joke! F1, you’re embarrassing yourself.
Tokyo has a hell of a lot more sprawl than the Vancouver area. I’m sure Fuchu is a lot more urban than Cloverdale.
I will go with “Capital of Financial follies” for ten points.
“Name a bubbly oil tanker port just north of the Skagit tulip fields”
Immigration policy was exactly the same back when just the palace grounds in Toyko were worth all of Manhattan (or whatever insanity measure was going around at the time).
ZIRP sunk Japan.
Exxon Valdez?
Speaking of which, that notorious ship has just been bought by a company in India and is slated to be broken up into the usual bits for recycling.
http://www.goskagit.com/news/local_news/article_6f3bb561-9caf-5226-b231-e57890b228fd.html
If you are sitting around with a little time to kill, you have got to check out this video produced by Al Jazeera on the ship-breaking business. Totally amazing what they are doing there and the clips are eye-opening. It is part of a series called “Working Man’s Death” that looks at hard labour conditions in the Third World.
Working Man’s Death – Brothers by Al Jazeera — 22 minutes
http://www.aljazeera.com/programmes/workingmansdeath/2012/01/201211013514810663.html
Actually, the whole series is brilliant.
Vancouver is definiely NOT the new Tokyo. Japanese make/design many of world’s finest goods, cars, electronics… I can’t really think what people in Vancouver make/ design that is world famous. 30km from Vancouver also gets you to Coquitlam and Port Moody, where a 40 year-old plywood built dump is 700k. That brand new detached house in Tokyo consists of 5 bedrooms, 1 kitchen, 1 living room, small yard enough for a bbq grill and sun tanning chair, and a front spot for parking up to 3 cars (maybe 3 Fit’s or 2 camry’s). I happened to see a few of those houses in Cloverdale, where is surrounded by miles and miles of farm lands.
Sorry F1, we deal with hard facts here, not deluded homeowner anecdotes of invading Chinese. Show me the Vancouver immigration numbers. Oh, we already have them, they suck.
Vancouver is a tiny provincial backwater town, by any international metric. 30km in Tokyo (or any actual world-class city) is spitting distance, especially with the transit options available.
# of mainland Chinese immigrants has doubled since the late 90′s and now stands at about 9K/year. Reached as high as 13K in 2005.
You can continue with the immigrant denials if you wish, but all the mainland Chinese coming to Vancouver and buying real estate is not insignificant.
Also noted, US immigration is up nearly 2x from 2004-2010 compared to 1997-2003
See “immigrant landings” chart
http://www.metrovancouver.org/about/statistics/Pages/KeyFacts.aspx
Brick houses don’t blow down. Good choice.
But stick built is generally a better choice in earthquake zones (said the big bad wolf, talking his book…)
I was rather impressed with the poor man’s earthquake proof in Central America. 8 steel rods through every column of concrete block and roofs made of corrugated glass fiber. Light weight, light transmissive and after the earthquake you just re-sparge the outside walls to hide the cracks.
Straw huts have appeal in earthquake zones. Not good for highrise construction but they let the air in (you really notice the nice change if you have stinky feet)
Commute from Fuchu to Shibuya is 45m by train. Awesome.
http://maps.google.com/maps?saddr=Shibuya,+Tokyo,+Japan&daddr=Fuchu,+Tokyo&hl=en&ll=35.660923,139.592628&spn=0.16625,0.276375&sll=35.67008,139.59261&sspn=0.166231,0.276375&geocode=FbYgIAIdssRTCCkZ9JG-XosYYDHkYMgM5V_gFw%3BFe5DIAIdnUJQCCkf0Qlj-uQYYDFmFQPR2dCv-w&oq=shibu&ttype=dep&date=04%2F13%2F12&time=11:21am&noexp=0&noal=0&sort=def&mra=ls&t=m&z=12&start=0
Pretty easy commute as far as Tokyo goes. I remember having to take several trains to get out to Hachioji (going through Fuchu) for work some mornings which took over well over an hour. Can’t beat Japan’s trains for reliable and relatively stress-free commuting.
I agree, my “Awesome” comment was not sarcastic. A 45m commute in to Tokyo would be very pleasant. And it only costs 270 yen.
It would certainly end if real interest rates ceased to be negative. These schemes have been massively subsidized. The interest paid on one million dollars is a little under 30k per year. The subsidy from negative real rates has been as high as 20k per year or 2%, and if the cost of living is used instead of the CPI the subsidy has dwarfed any amount paid for several years.
You can’t blame people for speculating when your economic system subsidizes it and burns the fuck out of anyone not doing it. We faced a crisis caused by moral hazard and too much debt, and we addressed it by adding more moral hazard and more debt. Why stop now?
Next up could be -5% on savings accounts and 150% mortgage loans. That would undoubtedly stave off recession for a few more years. It’s very hard to care anymore about what they do.
You might have seen the following story in the Financial Times last August, RP1. It discusses why Canadian Banks would eventually start charging to hold cash deposits in a similar way as New York Mellon and others are already doing.
http://business.financialpost.com/2011/08/05/only-a-matter-of-time-before-canadian-banks-charge-for-deposits/
Ok, that was an awesome article – thanks! I can’t say I’m surprised.
If they’re going to charge for savings, why not have a safety deposit box full of gold? The fees will be lower and companies like Brinks could offer the service too. Question: in what kind of world is fiat money a liability for the holder? Answer: the ones in which you want a safety deposit box full of gold.
Speaking of interest rates……I just saw this piece tonight on the CBC. It is a recommendation from Nomura Bank of Japan to Mr Carney to raise rates 50 basis points if there is going to be hope of slowing the credit bubble. The Japanese have a lot of experience on this subject. They might just know the right prescription. “Basement” will appreciate this hopefully.
http://www.cbc.ca/news/business/story/2012/04/12/rate-hikes-housing-nomura.html
buy for $800k, sell for $1,600k… anonymous whispers…
not sure where you get your info from El Ninja. We are steady at approx 40K immigrants per year and mostly to lower mainland.
BC Stats show:
http://www.bcstats.gov.bc.ca/StatisticsBySubject/Demography/Mobility.aspx
2001 – 38,483
2002 – 34,058
2003 – 35,233
2004 – 37,028
2005 – 44,771
2006 – 42,084
2007 – 38,963
2008 – 43,994
2009 – 41,441
2010 – 44,176
so where have we lost immigrants? Please show your stats again with your source.
Also, I don’t consider adding 100,000 additional Vancouverites every 15 years insignificant (1% annual incrase). This is the growth rate for this city.
I don’t consider adding 100,000 additional Vancouverites every 15 years insignificant (1% annual incrase)
Tokyo adds a Vancouver every 10 years
http://www.city-data.com/world-cities/Tokyo.html
Metropolitan Area
Population: 28,025,000
Description: comprised of the four prefectures of the Kanto region: Tokyo, Kanagawa, Saitama, and Chiba
World population rank1: 1
Percentage of national population2: 22.2%
Average yearly growth rate: 0.8%
ah yes, so Vancouver actually is the new Tokyo. thanks for clearing that up
btw,
2011 saw Tokyo condos down 7.2% and detached up 2.4%.
You’re looking at Vancouver’s 2012 trend
So Tokyo @ 28 million people hasn’t hit its saturation point but Vancouver at 2 millions people did?? Also a house in Cloverdale @ $500K Canadian is 25% higher than the $400K Japan house example with poor construction quality and shorter useful life. So I think price is at best on an even footing and probably lower/better value going to the Japan house. Also, what’s your transportation option in Cloverdale? How about culture and all those other city life factors in Cloverdale?
You forgot 2011: 34,787
Peter Griffin: …yeah…
My source F1? Statistics Canada.
btw, the source you provided shows net international immigration to Vancouver of 27,845 in 2010/11. Same as the late 90s.
Note also that the percentage of immigrants as a percentage of Vancouver’s population was lower in 2006 than in 2001:
http://www12.statcan.ca/census-recensement/2006/as-sa/97-557/table/t3-eng.cfm
“percentage of immigrants as a percentage of Vancouver’s population was lower in 2006 than in 2001″
I think the 2011 census will show an uptick again. This is “percentage of recent immigrants”, the 2001 census tracked immigration from 1996 to mid-2001, while the 2006 census tracked immigration from 2001 to mid-2006. The 2006 to mid-2011 will be higher than reported in the 2006 census, but not by a whole lot.
It’s good to distinguish between “immigrants” and “landed immigrants” or “recent immigrants”. An immigrant is only an immigrant for a time instant, then becomes something else: she or he does not remain an immigrant after immigrating.
Agreed, Jesse. Although the same table shows that “recent” immigrants as a percentage of total population was also higher in 2006 than in 2001.
the #’s I gave you above from BC stats are net migration.
2010 is 44,176 – not sure how you can’t see this.
Stats show these numbers consistently between 34 and 44K for many years now.
So your statement as quoted below is completely false. In fact, BC international immigration was a mere 12K for each of 1985 and 1986 – then since 1991 we’ve been on a tear.
“That growth rates in immigration have been falling for decades”
You crack me up, F1. 100,000 new Vancouverites per year? Try 6,000.
http://vancouver.ca/commsvcs/planning/stats/poptrends/index.htm
learning disability El Ninja?
This is my quote:
“Also, I don’t consider adding 100,000 additional Vancouverites every 15 years insignificant (1% annual incrase). This is the growth rate for this city”
Personal insults don’t help your case, F1.
The number of immigrants arriving to BC each year is unchanged relative to 1993. Some “tear”.
The massive runup in RE prices is due to a speculative mania fueled by debt, misinformation, and greed.
For those who have been keeping up with the markets : http://www.theprovince.com/business/fp/Markets+plunge+China+growth+cools/6455989/story.html