“I was living in San Diego in 2007 when the market had just started to fall. Everyone said it was the best time to buy in years (I didn’t). A small home was going for around $1M. Within 2 years prices had fallen another 35-50%. Those in the most expensive homes said luxury houses wouldn’t drop, there were always wealthy buyers around; there weren’t.
You can now buy a home in SoCal for far less than in Vancouver, in 2007 it was the reverse. Many who bought for investment were wiped out, a lot were real estate agents caught in the downdraught.
Investors here won’t buy now if prices are going to drop, the smart ones are unloading already. All of this adds up to a spiraling drop in prices, same as the increases we’ve seen over 12 years.
It’s been stated Canadian (not Vancouver) prices will drop 15%. In the most overpriced Canadian market, we’re sure to drop by a lot more than 15%… my guess is prices will drop at least 30%. Once it starts, it is very hard to stop.“
- herewegoagain at vancouversun.com 22 Jun 2012 10:25pm
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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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Also regarding California:
If you didn’t catch this article in yesterday’s Sun, it’s worth a read. It’s an object lesson regarding the madness of crowds,the phenomenon of the “virtuous cycle”, and “recency bias” … Stockton, California … from real-estate-driven boom to real-estate-driven bust …
“Due to its massively inflated housing market and soaring debts, Stockton was hit by a freight train when the recession came after the 2007 sub-prime crisis. Its home foreclosure rate was the highest in the U.S., property values dropped by up to 75 per cent and businesses went under. Unemployment is 19 per cent. The council’s revenues from property and sales taxes collapsed. In addition, it had given sumptuous benefits to city employees, including medical care for life for each public employee and their spouse.”
“Waiting for one box (in a food bank line-up) was Denene Howland, 45. She bought a two-bed-room house in 2005 for $215,000 with her husband Ralph, a labourer. The house was foreclosed in 2009. “We couldn’t make the payments,” she said. “When we lost it, someone then bought it for $60,000. The realtors had just taken advantage of idiots like us. “For a while it was like the gold rush back then, and then people were cut-ting each other’s throats.”
Read more: http://www.vancouversun.com/business/City+streets+paved+with+misfortune/6830464/story.html#ixzz1ykUnWk3e
Interesting article, and VERY interesting that it’d be in the Sun. Sad that they blame the spike in murders on the PD layoffs, though. I’d be more inclined to blame severe financial stress and foreclosures. Who checks police employment stats before committing murder?
Just drove by a couple of open houses today on the North Shore (Pemberton Heights) 1.1M and 1.3M… Crickets…
Crickets in East Van opens around Nanaimo area.
Yup. Nothing around Hastings-Sunrise seems to be moving very fast.
On a completely unrelated note, San Diego market is on fire again, though starting from a lower pricepoint.
You can say that again, Dr. J!
[LA Times] – Brush fire in San Diego County 90% contained
“A brush fire in eastern San Diego County that has burned 995 acres is now 90% contained with full containment expected Thursday, Cal-Fire officials said Wednesday.”…
http://tinyurl.com/6vdnqde
As I was saying yesterday…the bigger they are the harder they fall. And you know who is least affected?…..Well it’s the people who stayed out of the market and can walk away. Lower priced properties also see little real impact. They are already cheap and there is generally a ready market of buyers who can afford them. Buying of homes does not stop even at the worst of times. But buying of executive mansions and highly inflated properties can grind to a complete standstill and thus prices are much more vulnrerable to sharp corrections, foreclosure, default and all the associated repo actions. Parts of Vancouver are a disaster waiting to happen.
I think that it is and will be a “Catch 22″ situation from now on..fear begets fear
Its like selling a tulip. It may only be worth a hundred dollars but most people will buy it for a thousand dollars if they are convinced in their minds that it will be fifteen hundred when they sell it.
Once the value starts to fall, no one is going to buy any unless they are convinced that the value will not depreciate once they buy it.
Fear and greed …always get you down
It is for the same reason that I will not go out and buy a $ 400,000 car tomorrow (or any bank will loan me 80 percent to buy it). It is a depreciating asset. Unlikely that I will be able to sell it for $ 450,000 after a year.
From a comment on Garth’s Blog:
http://www.vancouversun.com/business/City+streets+paved+with+misfortune/6830464/story.html#ixzz1ykUnWk3e
Written by the executive director of the Regina and Region Home Builders’ Association. They aren’t happy with the new mortgage rules.
http://www.leaderpost.com/homes/feds+really+mortgage+rule/6829158/story.html
I think you meant this link.
The ire is palpable, it’s sad that extensive lobbying of OSFI was a diversion from the nutshot of the CMHC rule changes. The summer will see extensive implementation planning meetings for OSFI’s guidelines.
The news is so bad I’m thinking prices can only go up. It is, after all, Vancouver.
It’s only a flesh wound…
I often get to talking about the real worries we all face in the future as a result of all the excess of credit and our overwhelming debts. There is much written and said on-line. Plenty of it is outright crazy though.
Black swans, hyperinflation, squirrel recipes and gun toting lunatics living in the woods near your house with their stash of canned tuna and water. That kind of talk could turn anyone off.
And yet some of the worry is quite legitimate and there is no question we (virtually all Western Democracies including Canada) face a very difficult future as an outcome of living beyond our means.
At some stage the piper will have to be paid and unfortunately most people simply have no idea how much economic pain lies ahead if it cannot be contained. We are just not ready. Most of us seem blithely unaware that there is even trouble brewing and that is unfortunate for those that do take steps to prepare.
Living standards will fall, pensions will be reduced, health care and associated services will have to be cut back and in some cases programs eliminated altogether. This is certainly the outcome that is expected in the US but we are not necessarily immune in Canada to what transpires down South.
We must always keep this in the back of our minds. The US fate is also our own as our economies are simply too intertwined and connected for one to get sick and the other to stay healthy.
So here is an interview you should all take time to watch. It is a talk with Lacy Hunt of Hoisington Asset Management in the US and it is a very sober rational discussion of the troubles that lie ahead. Lacy addresses some of the major concerns in a very straightforward and candid way without veering off into crazy talk like popular commentators on other sites do.
Our living standards are dropping and will continue to drop. This is the central theme that each of us needs to be aware of. We need to get out of debt before crisis strikes and get productive again as the “bang point” is now approaching.
Here’s Lacy…..
Great interview, thanks for posting.
Measured and sensible; not at all alarmist but the conclusions of the analysis is somewhat grim (because the facts lead us there).
There have been prior periods of debt spending and consequent implosions but nobody remembers them.
Worth the listen, all.
Also, you can bet Lacy Hunt would say the US RE market hasn’t seen its lows yet.
CalculatedRisk has opined the US has put in a nominal price bottom. I will state that certain parts of the US have not dropped anywhere close to what is recorded in Case-Shiller regional data. And — though I’m a HAM denier — HAM has contributed to some large purchases in the US recently. Of course when I deny HAM it doesn’t mean I deny its existence, only its overall impact, and I do drive east of Oak… from time to time
. But whatever, I’m probably wrong but I’ll stick to my guns on this. You can mock me after the market crashes.
No problem. Glad you enjoyed it. The evidence is mounting and as you mention the facts are leading us to an inescapable conslusion that a considerable period of adjustment lies ahead. It is not even bearish to recognize how those outcomes might affect us and our families. It just seems imperative that we all try to do our best to prepare now in whatever way we know best and hope the worst never happens. Getting out from under the burden of debt is critical and having quick access to liquid assets just makes good sense. The future is going to be rocky…..
This isn’t Kansas anymore.
…”squirrel recipes and gun toting lunatics living in the woods.”… – Farmer
Hey, everbody likes BBQ
Need I admit we have eaten Gophers out here, Nem? Quite frankly, they are delicious. Taste a bit like beef. I think it is because they are mostly grass fed. We didn’t BBQ though. Stewing with potatoes and carrots is the more popular way to go.
Thanks Farmer.
Capitalism requires trust, and trust is built on fairness. What we have is a very unfair system, made more unfair by the actions of policy makers. I think until a sense of fairness is restored, we won’t get back to normal.
I worry that it may not be possible.
The new ‘normal’, RP1… is characterized by endemic squalor in the midst of JubileeRoyales! and ‘OlympianFunFests’… or, closer to home, MillionDollarCrackShacks and the indentured TFWs of Denny’s, VinCorp et al…
[UK Guardian] – BreadLineBritain: Demand for food parcels explodes as welfare cuts and falling pay hit home – Early-warning indicator should set alarm bells ringing about poverty levels, government told
“Falling incomes and welfare spending cuts have triggered an explosion in demand for emergency food parcels as Britain’s poorest families struggle to put a meal on the table, say charities. FareShare, a charity that supplies millions of free meals to charities, food banks and breakfast clubs using food donated by supermarkets, said it could not keep pace with demand, which it expected to continue growing for at least five years. “We are experiencing ridiculous growth. The only brake is how much food we can get out of the industry. We have the operational capacity to deliver more food and the charities that want to take that food,” said Lindsay Boswell, chief executive of FareShare.”…
http://tinyurl.com/7ds7vhn
An afterthought with a RE ‘twist’….
[UK Guardian] – The Shard is the perfect metaphor for modern London: Expensive, off-limits and owned by foreign investors – the Shard extends the ways in which London is becoming more unequal
…” its owners and occupiers will have very little to do with the area, which for all its centrality is also home to some of the worst deprivation and unemployment in the entire city. The building is 95% owned by the government of Qatar and its developer, Irvine Sellar, talks of it as a “virtual town”, comprising a five-star hotel and Michelin-starred restaurants. It will also have 10 flats that are on sale for between £30m to £50m, and from where on a clear day it will be easier to gaze out on to the North Sea, 44 miles away, than at the beetle-sized locals 65 floors down below. “We won’t really market these apartments,” the PR man cheerily told me. “At this level of the market, there are probably only 25 to 50 possible buyers in the world. The agents will simply phone them up.”…
http://tinyurl.com/7kf4vc5
It is cold there too, Nem. Britain is like Vancouver as you probably already know. Lots of rain and cool nights. When I was last there some years ago the news headlines were all about people making a tough choice between heating their homes and buying food. And that was even before the credit crisis happened. It seems it has gotten so much worse since then.
IMHO, in Canada HAM was an ignition in a very inflammable conditions of the low and relaxed mortgage rates. Similar to a Russian money invasion in Spain, when they started bying properties about 10 years ago and the locals joined the game in big numbers, Russian buers left when the prices grew and lost their appeal – to go elsewhere. Their housing construction industry overgrowth ruined their agriculture. Now there are no jobs and the banks are ruined by the rotten mortgages.
Capitalism does not require fairness; it requires that many people BELIEVE it is fair.
rp1; Robert Dudeck ->
Fair topic (haha).
rp1 makes a good point.
‘Regulators’ should perhaps focus on ‘fairness’ above all else.
Excellent video. Should be required watching for EVERYONE. This is happening in Europe as well as North America, and we’re hitting what he referred to as the “revulsion” point where everyone with any brains is yanking their cash.
Any thoughts on the fallout after 2007, in San Diego from a career/job perspective.
ie: what can we do in Vancouver to prepare for a coming housing collapse, both directly related to housing, and indirectly from trickle down economic hardship. We can assume that certain careers such as building, real estate, mortgage brokering will be hurt directly, and consumption based businesses will be hurt indirectly, but were there any industries that prospered after the US housing meltdown?
A PropheticHint, DP…
[FT] – High-rise to low rice: Groups of Hong Kong residents are exchanging the high life for a sustainable existence on small farmsteads
“Hong Kong has long enjoyed a love affair with high-rises. Its citizens positively aspire to the perpendicular and prefer to live at a great height and walk from one air-conditioned building to another on elevated, covered walk-ways that protect them from the elements and the traffic fumes below. But one group has its feet firmly on the ground. A small but growing number of urbanites are turning their backs on this efficient but artificial environment. Instead, they have chosen to live off the land, a rare choice in a city where agriculture makes up less than 0.1 per cent of the economy and where most of the foodstuff is imported from mainland China.”…
http://tinyurl.com/7tgpp7h
[NoteToEd/DearReaders: This is also happening in Detroit]
Yup. Bankruptcy trustees, collection agencies, repo men, storage yards, debt relief consultants, home staging, moving companies, second hand shops, dollar stores, private security services, alarm companies, home remediation services, coffee shops, rentals of all kinds but especially apartments and vehicles, liquor sales, legal services, notaries, charity food drives and recycling to name just a few.
All the stuff normal people never want to be part of (except the booze and the coffee)..
Look at parts of California that recovered quickly from the GFC, tech experienced a renewed boom starting 2009, and San Diego has a decent amount of tech but was swamped by its reliance on FIRE industries. To wit parts of the Bay Area are, I believe, not down significantly from peak owed to higher salaries, low unemployment, and to a lesser degree density increases.
Debt collection?