“I asked our new landlords if they planned on selling. They said they considered it, but decided they were likely to end up as “wealthy land owners” if they just hung on. My husband and I are both born and raised here, and we’re never seen stranger times.”

“We’ve been in a big 100 year old fourplex near Main Street, virtually rent-controlled, for nearly 14 years. Our landlords, who are far from amateurs (a family business that includes an entire apartment building), felt that the market had “plateaued” and listed the house about six weeks ago for $1.4 M. It wasn’t exactly what I wanted to hear but I supported his decision and still do; they’ve been excellent, honest, non-gouging landlords.

I’ll admit the open houses were extremely unpleasant given how long we’ve been here; our kids have spent their whole lives here. It sold in a couple of weeks to I believe first time buyers, who have evicted us to take over our suite. After a bad couple of weeks, someone responded to one of the signs we put up in the neighbourhood and we’ve put down a deposit on a lovely place (albeit for more rent, but much nicer than we currently have, and still reasonable by Vancouver standards).

You couldn’t pay me to be in the new owners shoes. They just put down (presumably) $1.4 M for the privilege of living in a suite that rents for $1525 and on top of that have to manage 3 other suites. It’s an old house so the bedrooms broil in summer and freeze in winter, and running the microwave trips the fuse. The wood in the sunroom is rotting. The laundry is down 3 flights of stairs and around the back of the house (no joke in the middle of winter). I’m guessing the value of Vancouver houses over $1 M will drop fairly soon, given F’s new cap. Yet amazingly I’m guessing they’re over the moon at their opportunity to “get into” the market.

Our new landlords are in the their early 30’s with not particularly high-paying jobs. I’m guessing Bank of Mom and Dad had everything to do with them owning a house. I asked if they’re planning on selling it, and they said they considered it back in the spring, but decided they were likely to end up as “wealthy land owners” if they just hung on. So unless they have a material change of heart, it looks like we have some stability again.

My husband and I are both born and raised here, and we’re never seen stranger times.”

- Exile on Main Street at VREAA 6 Jul 2012 7:06pm

Globe & Mail – “Canada’s Housing Market At Tipping Point”

Canada’s housing market is now at a “tipping point,” with some cities still showing strong growth and others cooling down, Royal LePage says.
The study released today by the brokerage backs up anecdotal evidence from across the country, suggesting an inevitable slowdown for the housing boom.
It also comes amid fears of overheating in some regions, notably Toronto and Vancouver, and moves by the federal government to slow the fevered pace of borrowing among Canadians who have embraced record low interest rates.
“We have had three years of solid house price appreciation in almost all regions of the country,” chief executive officer Phil Soper said in the report.
“Confidence in Canada’s real estate market is sound, but home prices cannot grow faster than salaries and the underlying economy indefinitely,” he added.
…
“The most recent set of mortgage changes, the fourth in four years, is also the most aggressive,” Mr. Soper said. “The cumulative impact of these new regulations has created a significantly higher hurdle for young buyers seeking their first home and comes at a time when the market was slowing of its own accord.”
Mr. Soper described the timing of Finance Minister Jim Flaherty’s latest move as “unfortunate.”
Toronto-Dominion Bank also sees the housing boom likely ending next year, with “more pronounced declines” in British Columbia and Ontario, according to a study released yesterday.
“The expected housing pause will reflect stricter regulations on mortgages and lending and what we expect to be a gradual rise in interest rates,” said economists Derek Burleton and Jacques Marcil.
Separately today, Canada Mortgage and Housing Corp. said construction starts across the country climbed in June, largely because of condo development in Quebec and British Columbia.
- from ‘Canada’s housing market at ‘tipping point’, Michael Babad, Globe and Mail, 10 Jul 2012 [thanks to the readers who quoted, cited and e-mailed this article.]

Scientists Skip The Math – “No calculations or economic analysis are needed, my co-workers in the science/engineering/technology sector and my friends are always certain that buying is always a better choice. My choice to rent always seems to puzzle them.”

“My choice to rent always seems to puzzle other people. No calculations or economic analysis are needed, my co-workers and friends are always certain that buying is always a better choice. My friend just bought a house before the mortgage rule change, and didn’t take my advice. We all work in the science/engineering/technology sector (not in Alberta) but he is completely oblivious to what’s happening in the rest of the (economic) world. He’s the type that truly believe Canada entered and emerged from the 2008 recession unscathed. Actually, he didn’t even know there was a crisis in 2008 and there will (probably) be one from the next country exiting the Eurozone! It’s sad that these are the types of people that are trying to give me advice.. All I can do is be as humble as possible… but it’s frustrating… My point is – the herd thinking is a very strong force. One that I refuse to believe in.”
- Petr Syk at VREAA 8 Jul 2012 5:54am

“Now he’s gone and bought a place! Is the Anglo-American ownership obsession that strong that even when you know you shouldn’t be buying you do anyway?”

“My old boss recently got transferred to Toronto and has been providing a steady stream of Facebook updates regarding the RE market there – how he can’t believe he’s moving there at the peak of the bubble, how he’ll need to rob a bank, etc, and now he’s gone and bought a place! Is the Anglo-American ownership obsession that strong that even when you know you shouldn’t be buying you do anyway?”
- CanuckDownUnder at VCI 6 Jul 2012 7:21pm

Yes, the ownership obsession is that strong.
Also, people have poor understanding of how they will behave under different circumstances.
Those who ‘know’ they’ll not buy end up buying; those who are certain they’ll “sit pat through the downturn” end up coming to market at 30%-off.
- vreaa

Lady At City Hall: “We’ve been getting a lot of calls about stalled building lots lately. In this downturn, we’re seeing a lot of people go bankrupt.”

“One of my friends who has seen everyone on his street, except one set of neighbours across the road, sell to Mainland Chinese has recently called the COV about a halt in construction on his street. The backstory is the Mainland Chinese owner bought the house two years ago, let it sit empty, tall grass, weeds, problems with garbage, rats etc. And then about a year ago knocked down the house and left the lot empty.
About eight months ago construction started. For about four months. Then it stopped. Month after month, my friend wondered just what the heck is going on. He asked another neighbour on another block who is a retired developer what he thought was up. The developer said, “Well, when you have a project stall like that it’s one of 3 things. It’s either money, money or money.”
So two days ago my friend phoned the City to see if there were any neighbour complaints or any other reason why they were all stuck with a hole in the ground, some foundation and some wet, rotting plywood for these last four months. And the Lady from City Hall said, “Hmmmm… nope. Nothing here. They’re all clear but we’ve been getting a lot of calls like this lately. In this downturn (her words not my friend’s), we’re seeing a lot of people go bankrupt.”
- mac at VCI 6 Jul 2012 3:23pm

The downturn has barely commenced.
- vreaa

Spot The Speculators #86 – “My unemployed friend bought two townhouses in Langley, one for him to live in (20% down) and one as an investment (30% down). His retired father bought four townhouses in the same development, all of them bought with 20% down.”

“I had dinner with a good friend of mine last night. He got back from Korea five months ago after four years working there. We were discussing about his work situation as he can’t find a job here and is now considering moving out of Vancouver.
The trick? He bought two townhouses in Langley, one for him to live in (20% down) and one as an investment (30% down). His father bought four townhouses in the same development (“his retirement plan”), all of them bought with 20% down. He told me: “we got them under market value, the developer gave us a discount”…
I asked him the question:”if the market goes down by more than 20% in the next 5 years and the bank asks you to put more money into the houses at refinancing time, will you be able to do so?” Puzzled answer: “no”.
He and his dad have basically put all their savings into that development. These are not the type of people you would imagine being RE speculators (they don’t see themselves as such), but they just don’t have a clue of what’s going on in the RE market here. They’ve bought into what the developer told them…
So here we are: one unemployed and one retired putting all their savings into RE. How strong can the market be when people like them are so over-leveraged in real-estate? How many people like them on the market?”
- Makaya at VREAA 6 Jul 2012 10:41pm

These guys are gamblers who don’t even see themselves as such. They think they’re ‘investing’. They’d be better off taking their down-payments, walking up to the roulette table, and putting everything on black. In that scenario the close to one in two chance of doubling their money is better than their current set up, where there is a close to 100% chance of losing it all. Seriously… Gambling is not raised here as metaphor nor as hyperbole… they statistically would be better off with a two to one bet. Even at this extremely late stage of the cycle, we have buyers entering who cannot imagine Vancouver prices dropping. Truly mind-boggling.
And the “got them under market value” line is just so pathetic that hearing it induces cataplexy, a state where, overcome by emotions, your muscles lose tone and you collapse to the ground.
As Makaya says, how many like them in the market?
- vreaa

Don Campbell, ‘Real Estate Expert and Educator’ – “We can’t ride that emotional roller coaster thinking that it’s about making money.”

Don Campbell: “We’re probably 12-15% above what the underlying economic fundamentals should say the prices are in Vancouver… so it’s not a bubble, but it is overpriced.”…

Don Campbell: “Go through Kits, go through the Westend, you start to see a lot more properties up for sale. It’s a psychological thing… people are thinking ‘oh my goodness I have to get out now’… even though they probably bought it for 300, it went up to 600, it’s probably now 550.. they’ve still made their 300 grand… but as we’ve talked before there’s fear and greed, fear and greed, the greed gland goes (inaudible).. you haven’t lost any money, you’re still living in a place.. The important thing is that in Canada, owning your own home is the only.. the only tax shelter that we have left.”…

Don Campbell: “I’ve been doing this for 20 years, the values go up, and the values go down… we can’t ride that emotional roller coaster thinking that it’s about making money.”

Interviewer: “Right, so, get into the market if you can, but, what about the interest rates?”
Don Campbell: “Interest rates will not be moving. .. Love them or hate them, what they did with these changes was brilliant. .. They put a 1% targeted interest rate [hike] on the housing markets.”

Interviewer: “Now, it is ridiculously expensive to get into the market if you’re looking to buy a detached home..”
Don Campbell: “Mmmhmm [agreement]“
Announcer: “..anywhere in…”
Don Campbell: “…anywhere!..”
Announcer: “…except in the States! … You get way more for your money than in Vancouver… So, are we ever going to see the prices come back to reflect reality here?”
Don Campbell: “Yes, we’re starting to see a slowdown in the market, we’re going to see a bunch of listings, but you’ve got to realize that what happened in the Phoenixes and the Palm Deserts isn’t going to happen here.. down there it was.. really.. it was a bubble.. a pure and clear bubble.. here it’s not.. it’s just the pendulum has swung towards overvalued… it’s not to the point of going all the way around… so, we’ll see a slowdown, and we are witnessing that, but we will not see a slowdown where job creation is occurring, the Dawson Creeks, the Albertas, the southern Saskatchewans, there’s none of these rules there, there’s nothings going to happen there other than pressure up..”

- Don Campbell, ‘Real Estate Expert and Educator’, on Global TV, 30 Jun 2012. Archived on youtube by Campbell’s own ‘Real Estate Investment Network’. [hat-tip Ben Rabidoux and jesse]
—

Thoughts:

1. We are not “12-15% above what the underlying economic fundamentals should say the prices are in Vancouver”. It’d be interesting to see on which numbers Campbell is basing that assertion.
We are actually more close to being greater than 100% overvalued; 100% above what underlying economic fundamentals such as rents and incomes say the prices should be in Vancouver. This means that we’d need a price drop of 50% or more to attain fair value. If that sounds preposterous to any reader, remember that the publication ‘The Economist’ calculates that housing prices for the whole of Canada are 75% overvalued as calculated by rents (perhaps the most valid fundamental).

2. No, the Kits owner in Campbell’s example has not “still made their 300 grand”. Their 300K paper profit has dropped to 250K, and is threatening to fall further, quite possibly to zero ‘grand’ (if prices were to drop 50%).

3. Homes are not “the only tax shelter we have left”. TFSA’s are another tax shelter, admittedly smaller and far less broadly used.

4. It is to the interviewer’s credit that she asserts that Vancouver homes are “ridiculously expensive” and that prices do not “reflect reality”. Campbell does not convincingly respond to these challenges, however. His last quoted statement above, for instance, shows him taking a question about Vancouver RE overvaluation and answering it with reassurances that job creation in Dawson Creek and Saskatchewan will support those markets. Huh?

5. Campbell is on record repeatedly reassuring market participants that there is no bubble, but it’s not clear he even knows how to define a bubble. In this interview he seems to express the fuzzy opinion that it’s “(when the pendulum) is to the point of going all the way round”.

6. Imagine the thousands of homeowners heavily dependent on the value of their RE holdings for their future financial health. As those holdings begin to plummet in price, tell them not to worry, that “it’s not about making money”. Take note of the responses you receive.

- vreaa
—

Prior posts featuring Don Campbell:

BNN Don Campbell Interview Transcript – “The Apocalypse Is Not Coming” – ‘Plateau’ As Worse Case Scenario
[VREAA 30 Oct 2010]

Don R. Campbell, President of REIN, In His Own Words – “Bubble, bubble boil and trouble! I just keep hearing this whole thing about bubbles this and bubbles that… It’s not a bubble. It is a very readable cycle.”
[VREAA 17 Nov 2011]

—
UPDATE:

In comments on this and another thread, Ben Rabidoux added:
“I am SHOCKED that no one caught the unbelievable error in Don’s discussion of the new mortgage rule changes. Apparently, according to this “real estate expert” you used to be able to avoid CMHC insurance by putting 15% down and now that has changed to 20%. What an unbelievable oversight!!!!! How is that excusable for someone who claims to be an expert? +80% LTV mortgages have required CMHC insurance for years!” …
“Oh and as a kicker, after I pointed the mistake out to Don via twitter, he removed the blog entry on his site that contained this video and then messaged me asking me to be more discreet when I correct him in the future by direct messaging him instead. I guess he can’t afford to have the REIN flock lose faith in their infallible leader.”

Industry Responses To Mortgage Rules

The new mortgage rules become active tomorrow. For the record, here are a few recent responses to the changes:

“We should caution the minister to avoid precipitous actions that would undermine the stability of housing markets. We have stressed the important role our industry continues to play in Canada’s economic performance. There is a clear linkage between stable markets and Canadians’ financial well-being, for both homeowners and home purchasers. …
Having made these changes to mortgage rules, the minister has an obligation to monitor their impact very closely, in all housing markets across Canada. These regulatory actions paint all markets with the same brush, whether they are currently strong, balanced or weak.
We need assurances that the minister of finance will reconsider the new mortgage rules if the evidence shows the result in market instability.”
- from ‘Do the feds really ‘get’ new mortgage rule?’, Stu Niebergall, executive director of the Regina and Region Home Builders’ Association, Regina Leader Post, 23 Jun 2012

“History may look upon this pronouncement and call it Flaherty’s Folly. In the interim, many buyers will see it as more blood drained from their rosy dream of owning a Vancouver home.”
- Larry Yatkowsky, Vancouver Realtor, yattermatters.com, 23 Jun 2012

“These changes, together with new OSFI underwriting guidelines… may precipitate the housing market downturn the government so desperately wants to avoid.”
- Statement, Canadian Association of Accredited Mortgage Professionals (CAAMP), 21 Jun 2012

“A change in the amortization period down by five years is going to affect most people’s buying power by $10,000, $20,000 or $30,000. In today’s housing market, that can be the difference between a really nice place and an average place. Most first-time homebuyers are trying to get into something they really like by pushing their limits.”
- Jeff Trounsell, Vancouver mortgage broker, Vancouver Sun, 22 Jun 2012

“Will this be enough to dampen the market? Maybe, but by own analysis not very much. I expect Flaherty’s move will prevent some on-the-edge buyers from making the leap too soon — but will do little or nothing to address affordability.”
- Don Cayo, Vancouver Sun, 21 Jun 2012

—

For a measured analysis, read Robert McLister at Canadian Mortgage Trends, 23 Jun 2012:
Excerpt:
“Despite the short-term pain and critical comments, it is clear that housing volatility will be reduced by these moves, over the long term. And that’s a positive…if you look far enough out.
The questions are, how long is long-term, how unpleasant are the side effects, and could those side effects have be minimized by a more incremental implementation?
Whatever the case, credit is due to the DoF, OSFI and Bank of Canada… they want to do the right thing.”

RBC Research – Meetings Discussing the Canadian Housing and Mortgage Market

Thanks to Zerodown for forwarding ‘Canadian Housing & Mortgage Industry, Highlights from Meetings Discussing the Canadian Housing and Mortgage Market’, a research document from RBC Capital Markets, authored by Geoffrey Kwan and Sean Adamick [RBC, 29 Jun 2012]. Excerpts:

“We had meetings this week with senior management teams from across the Canadian housing and mortgage market, including banks (Scotiabank), non-bank lenders (Home Capital Group, First National Financial, Equitable Group), mortgage insurers (Genworth Canada, Canada Guaranty), condo developers (Tridel), real estate investment firms (Tricon Capital), real estate consultants (RealNet) and housing economists (RBC Economics).”

“Key meeting highlights include:
• Canadian government changes to mortgage insurance rules and OSFI final mortgage underwriting guidelines announced last week were generally viewed as prudent, but unlikely to cause a housing downturn.
• Housing is already slowing in Canada with certain markets moderating earlier than others (e.g., Vancouver has been moderating for many months whereas Toronto more recently is showing signs of cooling) with general expectations that housing going forward is likely to continue moderating but that a housing downturn scenario appears unlikely for now.
• Key risks to the housing market include: (1) declining consumer confidence; (2) rising unemployment; (3) within the condo market, a surge of supply into the market; (4) deteriorating global macro developments; and to a lesser extent in the near term (5) rising interest rates.
• Toronto and Vancouver housing markets are overvalued with some suggesting the degree of overvaluation to be about 10%–15%.
• Lenders have tightened mortgage loan underwriting (beyond what was required due to mortgage insurance rule changes) likely reflecting the more uncertain macro environment and OSFI’s new mortgage underwriting guidelines.”

Some (excerpted) entity specifics of possible interest:

1. Scotiabank
- Condo exposure in Canada is $13 billion.
- A stressed housing scenario is unlikely to be a significant credit issue for Scotiabank’s mortgage loan book, but potentially could be meaningful for other parts of the bank’s loan book. Small business owners tend to be relatively more resilient, but credit card loans are where there would likely be relatively higher losses.
- Loan loss provisions are low at 0.01% of loans.

2. RBC Economics
- See strong immigration going forward to help housing demand.

3. Genworth MI Canada
- MIC estimates that the high LTV market is about 35% to 40% of the market, having peaked closer to 45% during the current housing cycle and might have bottomed at 30% during the recent downturn in late 2008/early 2009.

4. Tricon Capital (North American real estate investor and asset manager [primarily multi-unit/condos in Canada])
- Tricon is cautious on the Toronto and Vancouver condo markets (only 3 deals done in Toronto since 2007/2008).
- The company sees much better investment opportunities in U.S. housing vs. Canada on a risk-adjusted basis.

Giant 2000 Condo Arch Proposal For False Creek North

“James K. M. Cheng Architects Inc. submitted a rezoning application to the City of Vancouver that outlines a plan for a multi-use site at 750 Pacific Blvd., known commonly as the Plaza of Nations. Commercial use would include small-scale retail, hotel, office, restaurants and cafes, while community use would include a sports-science centre, a daycare and an ice rink that could serve as a part-time practice arena for the Canucks.
The proposed pièce de résistance is a residential structure, with between 1,700 and 2,000 units, that takes the form of a giant arch. The development would provide a mix of housing types and include private ownership and purpose-built rentals for residents of various ages and income levels, according to the application.
James Cheng said the arch-shaped building will serve as a window through to BC Place. “Vancouver has been criticized for having so many towers, and everything looking the same,” he said. “What we tried to do is create an urban piece that is strong enough to stand up to the stadium, but still have a relationship to it.” —
“The developments in that section of our city, which is our largest and last big waterfront property, should be a special place,” said Councillor Raymond Louie. “For a long time, it sat empty. This is an opportunity for us to develop it in a sustainable fashion where it is able to serve the people who will eventually live there, but the wider community as well.”
- from ‘Proposed complex would pump life into dead zone’, G&M 4 Jul 2012 [hat-tip Joe]
—

A tad reminiscent of Paris’ ‘Grande Arche de la Defense’ (above), only even more poorly proportioned and even less pleasing on the eye.
Bad sci-fi design. (“Could I get my star-fighter through that?”)
- vreaa

Vancouver RE Makes The Globe and Mail News Quiz – Question #6: “How is Vancouver’s housing market performing?”

Question #6. How is Vancouver’s housing market performing?

a) Declining prices, reduced activity

b) Stable prices, activity off sharply

c) Declining prices, heavy volume

d) Rising prices, thin volume

- from ‘Quiz: Questions from the week’s news’, Globe and Mail, 6 Jul 2012

When we last checked, only 26% of respondents to the G&M quiz got the answer that the G&M was seeking, namely (b). This is almost precisely the result you’d expect from completely random guessing (25%), meaning that one could be led to conclude that respondents know absolutely nothing about the Vancouver RE market. Statistically, they appear to know as much as chimps making random choices. Actually, the poor results are not random, they are due to a ‘little-knowledge-being-a-bad-thing’ effect, as most respondents would probably guess that prices are declining, given all the press. Prices are almost definitely declining, but not yet by enough for ‘official’ numbers to reflect any substantial decline.
Ultimately, the question was a bit more complex than the Globe intended.
We’ll file the event under Category 22 ‘RE References In Popular Culture’.
- vreaa

Naïve Buyer Logic – “We probably wouldn’t have been able to afford to mortgage a house, or at least not the house we wanted, if we hadn’t jumped on it.”

“Bruce and Denise Perrett, of Port Coquitlam, B.C., got married last year and wanted to buy a house, but they weren’t in a rush.
That all changed when the couple heard Ottawa was tightening mortgage rules.
For the Perretts, locking into a 30-year term as opposed to 25 years meant an extra $300 a month that could go to strata fees or property taxes.
They sprang into action and called their mortgage broker.
“She was right on it, she got us the approval and the next day we were rolling,” said Denise Perrett. “Then we found out we had to have an accepted offer by [July 9] and then we panicked and called our realtor.” …
The Perretts spent 48 hours looking at homes and put an offer that was accepted last week on a property in Maple Ridge that has everything they want.
The best part is that they qualify for a 30-year mortgage.
“We probably wouldn’t have been able to afford to mortgage a house, or at least not the house we wanted, if we hadn’t jumped on it,” Bruce Perrett said.”
- from ‘Home buyers scramble before mortgage rules change’, CBC News, 7 Jul 2012 [hat-tip specialfx3000 at VCI, and jesse]

1. When market rules tighten, you won’t be able to afford ‘x’.
Why stop thinking at that point? ->
2. Others like you won’t be able to afford ‘x’, either.
Therefore ->
3. Prices will have to drop to ‘x-y’.
- vreaa

“I really hope for there to be a big crash. That would probably be the only way to get a place for myself.”

Deborah Cheng has resigned herself to staying with her parents for a few more years unless Vancouver’s housing bubble bursts.
“I really hope for there to be a big crash. That would probably be the only way to get a place for myself,” said Ms. Cheng, a 30-year-old administrative assistant.
She’s saved $90,000, hoping to put a 30-per-cent down payment on a home. But in Vancouver – where the average price of a detached house this year is $732,736, according to the Canadian Real Estate Association – her options in the $300,000 price range are older-studio and one-bedroom units in high-rise buildings.
“You find out that the building is pretty run-down and you might have to pay a lot for repairs in the near future.”
- from ‘For many, new mortgage rules put home ownership out of reach’, G&M, 21 Jun 2012

Patience.
- vreaa

“I was a RE agent in Los Angeles when the market crashed circa 1987. Here’s a brief true story of riding the market down.”

“I was a RE agent in Los Angeles when the market crashed circa 1987. I had a listing with a seller who had a well-kept home but essentially unchanged since it was built in 1962. She was a widow who had bought the house with her husband for about $50,000 new. She wanted to list for $650,000 which was about $50,000 over the comparables. I could only get her down $10,000. She was sure the house would get her asking and more.
The crash seemed to happen overnight although, of course, it had been building for a while.
A week later we got an offer for $590K. I advised taking it and got a tongue lashing from her boyfriend. He accused me of wanting to rob her of $50K.
This scenario played out several more times. Each time I managed to get her to lower her asking but never by enough. We became mutually frustrated with each other and I willingly gave up the listing.
Months later she sold her house. She got $390K. That was $200K cash she lost out on by “refusing” to sell.
How many Vancouverites afflicted with the same resistance to selling for a good margin will make the same mistake? More than don’t I wager.”
- Patz at VREAA 5 July 2012 10:15pm

“This weekend I was hit with a notice to end Tenancy. The owner has claimed they will be moving in. I know that they also own at least 4 other places in Vancouver and that they reside in China.”

“This weekend I was hit with a notice to end Tenancy. The owner has claimed they will be moving in. I know that they also own at least 4 other places in Vancouver and that they reside in China. How many of these other 4 investment properties have also been given notice? Will the owner also be “moving in”?
I knew this was going to happen as I believe fear has hit East Asia. If I do find out the landlord has sold and not moved in as promised I’m privy to some compensation. However, with a owner out of this country will I ever see the money?
Will renters in Vancouver be forced to move as a record number of speculators love their money out of the market?”
- via e-mail to vreaa, from ‘please withhold my name’, 3 Jul 2012

It is highly likely that plunging prices will be disruptive to many renters.
Amateur landlords will be bailing, and that will often involve renter eviction (legal or not).
At the same time, as we approximate prices supported by fundamentals, where good old-fashioned cash-flow makes owning properties good investments, we will increasingly achieve a situation that is good for renters seeking long-term stability.
- vreaa

“Has this not been anticipated for months or years?”; “Of course but let’s not spill the beans. We can act like it is a surprise.”

vanpro: “WOW! 14% plunge in SFH avg price in 120 days (-13% since June/11)!! Sales at 10 yr lows and unsold inventory continues to climb. This is now an established downtrend.”

BubbleBoy: “I thought prices weren’t tanking?”

Larry Yatkowsky (realtor): “Tanking – does that mean adjusting?”

bbcoq: “Tanking? Trending lower is more accurate. Markets go up, down and sideways. Has this not been anticipated for months or years?”

Larry Yatkowsky: “Of course but let’s not spill the beans. We can act like it is a surprise.”

[exchange in comments section at yattermatters.com 1 July 2012]

“I moved to Vancouver in 2008 and despite being able to purchase, have held off due to the insane RE market. For now, I will continue to rent.”

“I moved to Vancouver in 2008 and despite being able to purchase, have held off due to the insane RE market. I rent a large beautiful home with a pool in the Dunbar area. Landscaping and pool maintennace are included in the rent, so needless to say, I have a very nice life style here. For now, I will continue to rent. If I ever consider purchasing a house here, I will offer well below market value. For now, I am having too much fun and can’t be bothered to look at the crappy homes listed for so much money.
The reason that I came to Vancouver is that my two children are attending UBC. They are now close to graduating and will likely have to leave Vancouver for a place with a more reasonable cost of living/RE. I will likely leave as well so that I will be in a better position to help them financially. This is too bad, as I like Vancouver, the people and lifestyle. I am afraid that many people are going to be seriously hurt by the artificial RE market here and will end up losing everything or become slaves to the bank for the rest of their lives.”
- DR, via two e-mails to VREAA, 24 Jun and 2 Jul 2012

Keith Roy, Revisited – “I’m a REALTOR and I sold my own home 4 weeks ago. I think its time to cash out!”

Two and a half years ago we headlined and sidebarred the story of a young Vancouver realtor named Keith Roy who was the subject of a National Film Board of Canada short-film documentary series. As we said of the films: “Keith, who works the Marpole area of South Vancouver, shows remarkable confidence and even more remarkable candidness as he describes his dreams & strategies, and tells us what it takes to muscle in as a RE ‘professional’. Dressing for ‘gravitas’, becoming a celebrity, poaching assistants, ‘taking it up a notch’, quick profits, bribing tenants.“  [For links to the documentaries and transcriptions thereof, see “I am Realtor. Nothing Realtorian is Alien to Me.”, VREAA 10 Dec 2009]

Fast-forward to the present and Keith Roy has apparently come to see the Vancouver RE market for what it is. And, to his credit, in the spirit of his aforementioned candour, he has penned a very bearish entry on his blog. He describes how he sold his own home 4 weeks ago, analyses the high inventory and low sales of Westside homes, and advises clients to “cash out”. He doesn’t make it clear what magnitude of price drops he’s anticipating [see comments section for more on his understanding and intentions], and he advertises for sellers when he probably should be ardently seeking buyers. Regardless, this is the first time we have seen a local realtor go this public with this bearish a prediction.

See:
‘Time to Cash Out: Is the Vancouver real estate market heading for another crash?’, Keith Roy at keithroy.com, 4 July 2012 [hat-tip E.G.]

Excerpt:
“I’m a REALTOR and I sold my own home 4 weeks ago. It wasn’t too big or too small. It’s only 6 years old and still feels new. I sold because in 6 months my home will be worth less than it is today. I think its time to cash out! Let me explain…..
To ignore the truth doesn’t change the truth. And so it is in the Vancouver real estate lately. Far too often the real estate industry, of which I am obviously a part, makes excuses for slow sales periods, declining prices and difficult negotiations. These excuses are self serving. The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look. However, the good times pass like the bad ones do. I would suggest that good times have passed in the Vancouver real estate market, at least for the foreseeable future.
Here is a great example of where the real estate industry loses the public trust. The headline of the June 2012 Real Estate Board of Greater Vancouver Newsflash is “Greater Vancouver housing market favoured buyers in June”. The opening line was a bit more accurate: “The number of residential property sales hit a 10-year low in Greater Vancouver for June, while prices remained relatively stable.” But what does “relatively stable” mean in a market as hyper sensitive as Vancouver where real estate is a hobby, sport, profession, retirement plan and cocktail party conversation all rolled into one?”…
“There is still lots of opportunity to sell your home. I’m just not sure how much longer it lasts. Prices have started to fall but demand is nowhere near the levels it dropped to in fall 2008. … If you are on fence about selling your home, thinking of cashing out, nearing retirement or need your equity to buy your next home, now might be the right time to call a REALTOR. Otherwise, I’d plan to hold on for another rough ride. I think 2012 will be another one of those years where Summer is better than Fall.”

Vancouver Economy Under Strain

“Lay-offs from Nokia (Burnaby), CBC, Sears, Rogers, game development companies, paper mills, banks, teachers, public sector staffs thus far in the first half of 2012.”
- VMD, who posts the very informative ‘Layoff tracking thread’ at Vancouver Peak

“The evidence of reduced dicretionary spending is starting to mount; last weekend wife’s running-shoe store had eviction notice; going to island tonight and BC Ferries saying that despite recent trial price cuts traffic still at 21 year lows. So has something changed on the island that people don’t go anymore, was the weather worse than last year? No, they are spending everything on re and food presumably.”
- market stats at VCI 29 Jun 2012 8:56am

“Speaking of high property taxes for businesses in Vancouver, it’s pretty impressive how many shops have shut down just recently downtown. One of the Starbucks on Robson is gone (along with the White Spot next to it) as is the bag shop across the street from them, Payless Shoes on Robson and Bute gone, Odoul’s is gone, after the American Appeal shops combined there’s another space sitting empty, Book Off just closed up down near Dunsmuir, of course the old HMV has been sitting empty for a while now. It certainly feels like business is drying up downtown very quickly given how many places have closed up in rapid succession.
I did smirk a bit at the Dollar Store that just opened near Shangri La, though. Doesn’t seem quite as upscale as what I think developers were aiming for in that areas.”
- Lord Huggington at VCI 29 2012 at 11:53am

“The federal government’s efforts to cool the overheated housing market are raising concerns among Canada’s biggest banks that the changes might hit the economy harder than intended.”
- from ‘Banks warn Ottawa over lending rules’, G&M, 2 Jul 2012

“The rate of insolvency for those over 65 soared by 1747 per cent from 1990 to 2010.”
- from ‘Are bankrupt seniors harbingers of things to come?’, G&M, 29 Jun 2012 [Partly due to poor preparation; partly to low interest rate monetary policy. - vreaa]

“Not that this has much to do about anything … but I could not help but notice that the new Rush tour is not performing in Vancouver this year. I guess they are too. busy playing in world class cities like Columbus, Buffalo, San Jose and many other important hubs around North America and couldn’t squeeze in a stopover.”
- condo paradise at VCI 29 Jun 2012 12:53pm

Related:
“Groceries have been trucked in from Calgary to help the Kelowna food bank weather an unexpected surge in demand. Nearly 11,400 kilograms of non-perishables were delivered this week to the Ellis Street depot, where applications for assistance are up 12 per cent from this time last year.”
- News1130, 30 Jun 2012 [hat-tip Patiently Waiting at VCI]

Perhaps related:
“The Chinese economy is slowing and is likely to slow a lot more. Get ready for a hard landing.”
- from ‘Falling Star’, Jonathan Laing, Barron’s, 30 Jun 2012

Realtor CEO – “What we are going to see is a resistance to a reduction in price. I think if they’ve been reading the media they expect prices to drop dramatically. I don’t think they will.” [We Disagree]

It’s just a house.

“Sales in Canada’s most expensive housing market continue to plummet with the Greater Vancouver area hitting a 10-year low in June for activity.” …
“There is the beginning of a trend,” said Benjamin Tal, deputy economist with CIBC World Markets, about the steep decline in Vancouver sales from May. “We see significant softening in investment, we see reduced penetration of Chinese money into the city. I’m not surprised by this. Prices will fall. It’s just a question of time.” …
“There is no real change in unemployment and the economy isn’t changing,” said Don Lawby, chief executive of Century 21 Canada. “People are not being forced to reduce price to just sale. What we are going to see is a resistance to a reduction in price. I think if they’ve been reading the media they expect prices to drop dramatically. I don’t think they will. For that to happen, you are going to have to have combination of people not being able to meet mortgage payments because of increased interest rates or not having employment any more.”
- from ‘Vancouver home sales plunge to 10-year low in June’, Garry Marr, Financial Post, 4 Jul 2012 [hat-tip 'no debt, no stress']

No, it’s not going to be necessary for “people to not be able to meet mortgage payments because of increased interest rates or not having employment any more” for prices to drop. Those factors would speed a descent, but they are far from necessary for a price implosion.
At the end of a speculative mania, all you need is for psychology to change, and you rapidly find out there is nothing supporting prices except lots and lots of fresh air. Once they see that prices can fall, people stop overextending themselves to buy. Falling prices beget lower prices still. 
That’s all it takes. Supports as determined by fundamental values are far below current price levels.
- vreaa

Calgary – Recent Arrival; Now Carrying Two Homes – “I told him about 1982, the ’90s, and 2009. He blanched and left my office immediately.”

“A colleague dropped by my office the other day to announce that he had recently bought a new home in Calgary with a $400k mortgage. (Better school catchment area) A recent arrival from India, he asked about selling his old place that has a $300k mortgage. He thought he should keep it and rent it for a net monthly loss of $200.
I asked how long it would take him to pay off $700k and he had to think about it for a while, but it worked out to about 30 years or more. He obviously had not considered this and seemed surprised at the result. I launched into a lesson about Calgary’s fortunes being tied to oil prices and told him about 1982, the ’90s, and 2009. He blanched and left my office immediately.”
- armourb at VREAA 22 Jun 2012 8:32am

Don’t Confuse A ‘Buyer’s Market’ With A True Buyer’s Market.

“The number of residential property sales has hit a 10-year low in Metro Vancouver leading the Real Estate Board of Greater Vancouver to declare a buyer’s market.
The announcement is significant since the board has in recent months been calling the market “balanced.”
According to the board’s June report, sales of houses and apartments dropped to 2,362 last month, a 27.6 per cent decline compared with 3,262 sales in June 2011, and a 17.2 per cent drop over the previous month of May.
“Overall conditions have trended in favour of buyers in our marketplace in recent months,” said Eugen Klein, the board’s president, in a news release on Wednesday. “This means buyers are facing less competition and have more selection to choose from compared to earlier in the year.”
June sales were the lowest total for the month in the region since 2000 and 32.2 per cent below the 10-year June sales average of 3,484, the report shows.”
- from ‘Vancouver sales hit 10-year low, real estate board declares a buyer’s market’, Vancouver Sun, 4 July 2012 [hat-tip Loon]

One will be hearing much talk of a ‘Buyer’s Market’ in local media in the near future, and Vancouver Sun/REBGV news release is an example. Most readers on the Vancouver RE blogosphere are very familiar with the difference we refer to, but, for sake of the newbie reader, we thought we’d pop up this post in an attempt at clarification.
—
The RE Board of Vancouver uses the ratio of sales to listings to decide whether to call the market a ‘seller’s market’, ‘balanced’, or a ‘buyer’s market’. Thus, if listings are high and sales are low (as they are at present), it is automatically deemed to be a ‘buyer’s market’.
This ratio can also be expressed as MOI (or ‘months of inventory’), the theoretical number of months that sales at the current pace would ‘clear’ the inventory (total listings). There is a good correlation between high MOI and downward pressure on prices. See jesse’s articles at ‘Housing Analysis’ for eloquent  discussion of that relationship.
Thus, when the REBGV refer to a ‘buyer’s market’, they mean one where sales are low compared to total listing. Note that this in no way refers to absolute price levels. Yes, it is better for a buyer if there is a low sales:listing ratio and downward pressure on prices (more homes to consider, less time pressure, more bargaining strength) BUT it is immediately apparent that absolute price levels are far, far more important to a buyer. The buyer gets more for their money when prices are lower.
In our own terms, and from the perspective of the vast majority of prospective buyers, it is far better to buy a property that is priced at fair value than it is to buy a very, very over-priced property that happens to be falling in price from very, very over-priced to merely very over-priced.
A true buyer’s market is one where the buyer receives good, or at least fair, value for their money.
—
Vancouver prices have only recently begun to weaken from their stratospheric heights.
By fundamental measures, they ran up, in the speculative mania of 2003-2011, to levels that are two to three times fair value. Prices have weakened by about 3%-14% since the 2011 peak, depending on which sector you look at, and which price measures you use.
This is not by any sensible measure now a true buyer’s market. It’ll be a buyer’s market when prices hit the vague vicinity of fair value; they still have a long way to go downward prior to that.
– vreaa

“For my parents to be getting a 500K+ 25yr mortgage at age 62 with 51K income seems to me completely ridiculous and crazy. How could they have been pre-approved for this?”

“There’s been a recent development within my family that is causing me a lot of distress.  My parents are 62. My father takes in 40K after tax as he gets disability payments for the rest of his life and my mom does not work. They also take in 11K a year from renting out the basement of their Vancouver special which they bought in 1989 for 179K. On Friday, they told me they bought a 800K+ house in Burnaby using a 300K downpayment from a condo they sold in 2010. I don’t think the deal is final as they are getting a house inspector to look at the place on Monday. However, they claim they were preapproved for a 25 year mortgage. They plan to rent out the top suite to my brother, sister-in-law and their newboard for $1200 a month, and they also will rent out the basement suite.

To me, getting a 500K+ 25yr mortgage at age 62 with 51K income is just completely ridiculous and crazy, especially with the recent developments and current malaise of the market. They always spout the same nonsense about how house prices can’t go down, running out of land, house prices being propped up by mainland Chinese & drugs, Canadian banks more prudent than Americans.

So my question is how could they have been pre-approved for this mortgage 10x their income at age 62? It just seems impossible to me. Am I missing something or is there some loophole where a financial institution would actually lend this couple this much money? I am desperately trying to convince them not do this but this ‘can’t lose’ Vancouver real estate mentality is just too hard to break.”

- tektite at VCI 24 Jun 2012 8:53pm [hat-tip 'AP']

“We’ve always used our line of credit to pay our bills and credit cards. We’d then refinance our mortgage to pay off our line of credit. We’ve never had trouble making our mortgage payments so we were a little surprised when the bank told us we don’t qualify for our usual refinancing.”

“We’ve always used our line of credit to pay our bills and credit cards. We’d then refinance our mortgage to pay off our line of credit. We’ve never had trouble making our mortgage payments so we were a little surprised when the bank told us we don’t qualify for our usual refinancing. Now we’re not sure what to do because our credit line is maxed and it’s only a matter of time before we can’t afford the payments. Help!”
- from ‘Living within your means; Deal with debt by budgeting and consulting a professional’, The Province, 3 July 2012 [Hat-tip Alexcanuck and too much debt]
See the whole article for the suggestions from the credit counsellor. Excerpts:
“Anyone with a mortgage insured by Canada Mortgage and Housing Corp. cannot owe more than 80 per cent of the value of their home when they refinance their mortgage. This change will affect countless people who have been relying on their home as a money tree.” …
“If you don’t have enough money to make all of your payments, start seeking help to consider other debt consolidation options. There are a number of debt consolidation options our credit counsellors discuss with clients every day. These include loans, mortgage refinancing when possible, credit counselling repayment programs, settlements and consumer proposals.
If clients have assets they can sell it may be worth cashing in some investments. They may also be able to use their home to generate a little extra income.”

These guys have been living off ever increasing debt, and now they are puzzled and perplexed when they hit the inevitable wall. Are there really “countless people” out there this foolish?
Also, note that the advisor doesn’t mention selling their home and renting or downsizing. Probably because they have so little equity in it, it’d not solve anything.
- vreaa

“About a year ago someone bought the house and did a total reno. Then the house went on sale for months with no takers. Then off the market. Then on sale again. Now they are tearing it down. No attempt to salvage anything.”

“Talked to an old friend in Burnaby today. About a year ago someone bought the house next door and spent several months doing a total reno. Then the house went on sale for months with no takers. Then it went off the market. Then it went on sale again.
And now they are tearing it down. No attempt to salvage anything. Remember in decades past you could drive around the city and go to the demo sales where they spent a week or two selling off the fixtures and stuff first.
This is wholesale destruction of wealth. Question is who took or will take the hit – the previous owner, the builders, or the next owner, or some combination of the above.
It’s doesn’t get any crazier than this.”
- patriotz at VCI 29 Jun 2012 1:01pm

“Wholesale destruction of wealth”, agreed.
Part of the terrible misallocation of resources that is part of a speculative mania.
It should be obvious to all that this is bad for our society.
- vreaa

“My mom has to get a certain price before she will sell. We are waiting for prices to turnaround.”

“Co-worker’s mom bought two units a year ago in a presale that is slated for completion next autumn. She bought 2 two-bedroom 1100 square feet units for around $500k each. One for her and one for her son. At the time they figured they would sell their 20 year old Richmond house for $1 million plus and pay off their brand new “upscale” condos. In the meantime they would rent and move into their new digs when it is completed.
So they put their house on the market about six months ago and I was getting updates from my co-worker. In the beginning they were showing the house to three or four interested parties during every open house. After about two months they got a low-ball offer ($150k under asking) but they rejected it.
Yesterday, I got another update and I asked how the house selling was going. He told me nobody came by to look for “a couple of weeks”.
I then asked if they were considering to lower their price. He responded, “Nope, my mom has to get a certain price before she will sell and we are WAITING FOR PRICES TO TURNAROUND.”
He continued to tell me that the completion date for their new condos was pushed up to early summer of next year; therefore, I asked: “What if you can’t get the price that your mom wants before your new condos are completed?”
He then gave me a (priceless) blank stare for about three seconds and said. “I don’t know, my mom will figure it out.”
So it seems there are still people out there that have not seen the light despite all the warnings out there. They turn into ostriches and just hope for the best. I figure by next spring they will start to panic and jr. will end up with at least a $200K mortgage instead of having his new pad all paid off.
I have been patiently waiting for a bubble popping moment but it seems like we won’t see that for at least a couple more months. I figure it takes at least 12-18 months from price peaks before the average joe realizes that the tide is actually turning and this massive bubble has actually popped.”
- Waiting to exhale, at VCI 30 Jun 2012 7:32pm

Prices are initially sticky on the way down partly because sellers just can’t believe that a property that they have come to cherish and believe and trust to be worth ‘x’ should possibly be ‘given away’ for ‘x minus y’. Especially when Mr and Ms ‘uvw’, got ‘z’ for their property, which obviously wasn’t as nice, and, besides, they didn’t even have a ‘qrst’. Not to mention that we need to get ‘x’ for the property, or else plans ‘efg’ don’t work out.
For some wonderful examples of sellers who are working to overcome their innate price inertness, see ‘Vancouver Price Drop’. A few specific case cited below.
- vreaa

Example 1:

# 206 1477 FOUNTAIN WY, False Creek, Vancouver West
1400 sqft 2BR condo
Original ask: 9 Mar 2012: $568K
Last ask: 1 Jul 2012: $320K (-44%)

Example 2:

2656 W 41ST AV, Kerrisdale, Vancouver West
New build SFH on 33×134 lot
Original ask: 9 Mar 2012: $2,488K
Latest ask: 29 Jun 2012: $1,880K (-24%)

Example 3:

3346 W 10TH AV, Kitsilano, Vancouver West
Kits bungalow on 50ft lot.
Original ask: 7 Jun 2012: $1,850K
Latest ask: 29 Jun 2012: $1,488K (-20%)

- above three examples from Vancouver Price Drop 2 July 2012

Law Student Posts Vancouver RE Bubble Summary At lawstudents.ca

“I’ve found a post at vancouverpeak.com that has several relevant graphs located in one convenient place that captures the precariousness of our current predicament. I thought I would post them here, add some other graphs and lay out why our run up in house prices is essentially a bubble (unsustainable run up in prices, fuelled by speculation rather than fundamentals).”
- ‘Another Hutz’, author of ‘Vancouver Real Estate Crash’, a distillation of charts and bearish facets, at lawstudent.ca 3 Jul 2012

Young lawyers are being informed.
- vreaa

“Two things happened. Amount the buyer will qualify for is now lower, so not sure if they can afford same place. And, the buyer said they should really wait as things will get cheaper.”

“My good friend’s wife is realtor on the North Shore. She was about to close on condo purchase (she’s the buyer’s agent). Two things happened – – amount the buyer will qualify is now lower, so not sure if they can afford same place – and – the buyer said they should really wait as the market will now fall so things will get cheaper. That’s one grass-roots feedback.”
- ZRH2YVR at VCI 28 Jun 2012 7:49am

Two of many things that happen when markets start falling.
Note how someone who considers themselves an imminent buyer takes a step towards the sidelines. Demand does not behave in a linear fashion.
- vreaa

For The Record: Bob Rennie said “This is speculation by spineless, signature-less individuals on a blog that in most cases has less than 500 followers. Vancouver’s RE fundamentals cannot be captured in a 90-second elevator conversation, a sound bite, and especially not on a blog or 140-character tweet.”

“This is speculation made by spineless, signature-less, individuals on a blog that in most cases has less than 500 followers. Vancouver’s real estate fundamentals cannot be captured in a 90-second elevator conversation, a sound bite, and especially not on a blog or 140-character tweet.”
– Bob Rennie on negative market commentary, in the current ‘New Condo Guide’, a free RE-promotion document available at corner dispensers throughout the city.
[hat-tip RaggedyRenter at VCI 29 Jun 2012 11:32pm. See that VCI thread for discussion.]
—

Vancouver RE bulls are forced to contend that the market’s fundamentals “cannot be captured” for the simple reason that the metrics simply do not withstand an scrutiny whatsoever. That can readily be demonstrated in brief posts, and has been done so repeatedly on the bear blogs. In fact, we suspect that, if pressed, one could indeed make a convincing bear argument in 140 characters or less.
Bulls need to resort to hand-waving and magic to argue for ongoing market strength.
It is noteworthy that Bob Rennie has seen fit to even mention the existence of bear blogs. This likely reflects the market’s increasingly precarious health.
- vreaa

Call For “Unity Of Sellers” To Prevent Further Price Drops

“Richmond RE Pumper “GreatChina” writes on a local Chinese Forum calling for “Unity of Sellers” to prevent further price drops:
“A brand new house in good area of West Richmond, 8111 Dalemore Rd, was just sold for $1.58M, $170k lower than assessed price of $1.75M. It’s a shame that the buyer went through so much to purchase this property and build a new house, hoping to earn some money while doing a service to the community, only to have the buyer recklessly slashing price. I call on the sellers to withhold giving in to under-asking offers. We should all pull our listings and wait until a better market to sell in a bidding war situation”
Current listing: MLS® V953065
Purchase price: $533,000 Oct 2006 (old timer, was torn down and rebuilt as luxury mansion)”
- VMD at vancouvercondo.info 28 Jun 2012 12:07am who also commented “HAHAHAHAHA”.
—

Sellers don’t “unify”; sellers compete with each other for buyers.
The “hoping to earn some money while doing a service to the community” passage earns our disdain.
- vreaa

[Ding!] Point Grey SFH Inventory Tops 100

The high-end west side market is ground zero for our bubble.
Point Grey SFH Inventory on MLS today vaulted from 98 to 107.
This is, according to our very informal records, an all-time high.
Examples of (ballpark) peaks in previous years:
47 (2006), 77 (2008), 78 (2010), 81 (Oct 2011)
This time last year, inventory was 61.
Also, an apparent dearth of sales in recent days.
Current asking price range: $1,298,000 to $19,800,000
Median current asking price: $2,598,000

They say that a single bell doesn’t ring at a market top, but there have been numerous bells of minor sorts all over the city in recent weeks, and this is probably one of them.
Our peak has passed, and descent begun.
- vreaa

—
Update:
In related news, Richmond and Westside Detached June sales at all-time lows.
This from two posts by ‘Inventory’ at VCI 29 Jun 2012 9:46pm:

“Richmond Detached Sales June
1995 = 112
1996 = 114
1997 = 144
1998 = 105
1999 = 135
2000 = 128
2001 = 160
2002 = 139
2003 = 166
2004 = 147
2005 = 248
2006 = 170
2007 = 198
2008 = 115
2009 = 204
2010 = 139
2011 = 158
2012 = 73 **June 28
RICHMOND SALES AT AN ALL TIME LOW!”

“Vancouver Westside Detached Sales June
1995 = 108
1996 = 133
1997 = 140
1998 = 126
1999 = 152
2000 = 125
2001 = 189
2002 = 150
2003 = 180
2004 = 154
2005 = 185
2006 = 181
2007 = 177
2008 = 108
2009 = 200
2010 = 147
2011 = 213
2012 = 99 **June 28″

“Vancouver East Detached Sales June
1995 = 145
1996 = 175
1997 = 185
1998 = 136
1999 = 233
2000 = 185
2001 = 269
2002 = 203
2003 = 282
2004 = 243
2005 = 303
2006 = 396
2007 = 244
2008 = 139
2009 = 238
2010 = 145
2011 = 180
2012 = 107 ***June 29
Sales at an all time LOW!”

“Wages are just not enough to entice anyone to Vancouver. Everyone we’ve interviewed so far says “Hey, I need at least $X to get the same thing I already have”. And no company here that I know of can afford to pay $X.”

“I have to agree on the difficulty in attracting good, well skilled, engineers or technicians here… our company is looking to hire at least 3-4 people right now (pneumatics, electronic, electrical, PLC… that kind of stuff) and wages just are not enough to entice anyone to Vancouver… everyone we’ve interviewed so far says “hey I need at least $X to get the same thing I already have”… and no company here that I know of can afford to pay $X. Tough spot for companies in Vancouver.”
- BurbsBoy at VCI 28 Jun 2012 10:20pm [hat-tip jesse]

It is best for a society and for its economy for housing to be priced near fundamental value, as judged by local incomes and price:rent ratios. Vancouver prices are two to three times higher than those determined by fundamentals.
- vreaa

TD Chief Economist – “Vancouver prices just seem insane.”

“Vancouver home prices, to me, make no sense relative to local employment and income gains,” Alexander said. “Vancouver prices just seem insane.”
- Craig Alexander, chief economist at the TD Bank, as quoted in ‘Forecaster says home prices may fall soon’, Montreal Gazette, 28 June 2012 [hat-tip penny saver at VCI]

We agree with Alexander. Prices are indeed “insane”.
Well put; that is not hyperbole.
This opinion stands in stark contrast to those of local economists, who are uniformly sanguine regarding our price levels.
And surely it must affect the readiness of TD to lend to buyers in our market.
- vreaa

“It means my total family income would have to be an exorbitant amount to afford an $800,000 house.” [Bizarre Idea!]

Another new rule announced by Mr. Flaherty sets the maximum gross debt-service ratio – the percentage of household income being used to pay for housing – at 39 per cent so buyers will be less likely to take on mortgages that are too big and could leave them floundering if rates increase.
That’s the one that Andrea Benton, a 37-year-old entrepreneur in North Vancouver, B.C., said hits her family of four hardest.
“It means my total family income would have to be an exorbitant amount to afford an $800,000 house,” she said.
The changes in mortgage rules over the past few years have made owning a house less desirable, she said. While she understands the government’s intent is to bring prices down eventually, she said, “It feels a little Big Brotherish to me,” and questions whether it will have its intended effect on the hot North Vancouver market.
“We’re probably going to be long-term renters,” she said. “The closest I’ll probably own anything is a condo when I’m 65.”
– from ‘For many, new mortgage rules put home ownership out of reach’, G&M, 21 Jun 2012

The speculative mania in RE has desensitized Vancouverites to the actual meaning of large numbers.
- vreaa