“Vancouver is back in boom times… Unlike anything in the world… The speculation is that prices will go up after the Olympics”

Speculators continue to bet on rising Vancouver RE prices, and some still appear to be anticipating that the effect of the Olympics is not yet priced into the market.

Here are extracts from a report by Sam Cooper in The Province 29 Nov 2009 -

“The buzz is back. In scenes rarely seen since the Vancouver real-estate market peaked in early 2008, a horde of hungry investors lined up for hours in a downpour Saturday [28 Nov 2009] to get first dibs on pre-sale condo units in a tower to be erected in Yaletown. Cam Good, who is heading up marketing for “The Mark” by Onni, said some investors even slept outside Friday night to ensure prime line-up positions. “We’re blown away by the turnout,” Good said from inside the downtown pre-sale centre as about 50 investors scrambled around a model of the building.”

“While the global debt and credit crisis continues to haunt developments in former real-estate hotspots like Dubai in the United Arab Emirates, Good said Vancouver is back in boom times.”The [real-estate] strength in Vancouver is unlike anything in the world,” Good said.”

“Mayur Arora, who told The Province he hoped to land a top-floor unit, and his realtor K.D. Dhaliwal, said location and scarcity make the site an attractive investment. “I’m here because they are selling Yaletown at today’s prices, but the speculation is [that] prices will go up after the Olympics,” Arora said.  Steve Dhana was amazed by speculator interest as he watched investors rushing to place bids on units. “The prices went up $50,000 last night,” Dhana said. He hoped to buy a unit in the $500,000 price-range, and also expected prices to surge in February 2010.”

“In my neighbourhood, for the last 3-4 years, the amount of housing which is unavailable due to renovation is about 10%”

Has the boom resulted in a larger ‘reservoir’ of housing that is off-market because of renos?  A very interesting idea from Drachen at vancouvercondo.info 23 Nov 2009 4:51 pm -

“I think part of what is supporting the market is that turnover of housing is so fast that a decent chunk of available housing is constantly in a state of renovation/pre-renovation/post-renovation. In my neighbourhood, for the last 3-4 years, the amount of housing which is unavailable due to renovation is about 10%. Right now the duplex next door is without tenants and awaiting planning approval, there’s another two in the same state within a block of me and a rental complex of 8-10 units that was bulldozed 2 1/2 years ago and has sat empty ever since. This is a consistent pattern throughout the neighbourhood and it’s been at about that level for years now. Because of the inflation in prices, owners aren’t in any rush and really don’t care much if the renovations take 2-3 years to complete because it just means the place will be worth more when they finally sell. There was a big rush of activity last year around this time when prices were falling though, which indicates to me that there will be a lot of properties listed in a relatively short time once a consistent downwards (or even neutral) trend emerges.”

“I just don’t get it… why the rent is so low, or why the sale price is so high?”

Gloria, at robchipman.net, on 16 Nov 2009, 9:27 am, discovers that Vancouver RE price to rent ratios make no sense. The unit that she describes has a price:rent ratio of 390, and that’s before any talk of maintenance fees (which would put the ratio well above 400).  These ratios would imply that, from a historical perspective, the sales price is over twice what it should be.

“Luxurious ‘O2′ on Davie / Denman St. has several units for sale, and one of them (2bdr/2bthr, 975 sq.ft)  is both for sale and for rent. The sale price is 975k, and the rent is $2500 per month.  I just don’t get it… why the rent is so low, or why the sale price is so high?”

“What I have seen going on in the renovation and home construction industry, in electrical work, carpentry, and plumbing, is disgusting beyond words”

In what is potentially an industry shaking case, the BC Supreme court has found in favour of a home buyer who sued a negligent home inspector for $192,000, despite a contract that limited the inspector’s liability to $450. Sean Wiens, home inspector, comments in the article at the CBC website, 11 Nov 2009, 7:46 pm -

“The average inspector is only there for three hours or less. I’m of the view, and I don’t represent the majority, by far, that a good inspection is a full day.”

In the comments section, an insider chills prospective buyers. Here’s J.Mustwrite CBC.ca 12 Nov 2009 7:26 am -

“I have been in the building construction and service industry as an electrician for over 30 years and I have found that most [home inspectors] in this so-called regulated agency have no construction experience at all. I have done a number of home inspections and found many serious issues. I warn all my clients when offering to purchase a home with a finished basement, [or any] evidence [that] the house has had some structural changes made to it, [that] if the sellers cannot produce building permits, electrical permits, plumbing permits along with contractors names phone numbers and business licences and insurance certificates, that [means that] $50,000.00 to $100,000.00 dollars minimum must be negotiated off the price of that home no matter how pretty it looks. And that is before I even look at it. Why? What I have seen going on in the renovation and home construction industry in electrical work, carpentry, and plumbing is disgusting beyond words. Is the system broken? Pretty much, in my opinion, because, really, if some building inspector has not swung a hammer for at least 5 years, or been connected to the construction business as an electrician or plumber, he really has only read a book, and that is not what constitutes a ‘qualified person’ in construction, no matter how many degrees or letters one may have behind [one's] name. There is a structure of regulatory municipal and provincial agencies is in place but bureaucrats seem to chew up resources that would otherwise put people out in the field. “Buyer beware” is all I can say for now, until these agencies are set up to actually work.”

Update - This discussion of this issue at Mohican’s Housing analysis blog article Home Inspectors’ Rotting Frames’ 20 Nov 2009

“The real story is how many jobs in hi-tech did this real estate boom kill? How many startups never bothered?”

Home owners have experienced paper and emotional gains from rising RE prices, and the construction industry has obviously experienced a period of boom. What is less obvious is that, for many, real estate prices have made Vancouver a less attractive city in which to live and work. Business have left Vancouver, or avoided it in the first place. Recent job cuts have people talking about this effect -

This from other ted at vancouvercondo.info 9th Nov 2009 11:11 pm -

“Let’s face it Kodak Canada is what is left of Creo. The [major] job cuts were in 2002 and 2003. There is almost nothing left there now. I don’t think I know anyone left working there, maybe a few. It won’t make a difference. The real story is how many jobs in hi-tech did this real estate boom kill? How many startups never bothered? How many real jobs vanished or were never created? The damage is done. Seriously, crash or no crash I can’t see myself moving back to Vancouver.”

This from patriotzed at vancouvercondo.info 10th Nov 2009 4:49 am -

“I took a high-tech management program from SFU back in the late 80’s when it looked like Vancouver had a real future in high tech. Our focus companies were Glenayre and Creo. For a metro to be a growth centre for high tech, it must be attractive to professional families. Vancouver was in the 80’s and 90’s and that’s the major reason why capital and workers were attracted here for the many startups. Make the metro unattractive, and you kill high tech. Housing in Seattle is a good deal cheaper than in Vancouver, and it is and has always been a major high tech hub – why on earth would anyone locate here instead of there, except to employ a few peons who couldn’t get H1B’s? Inside Canada look at Ottawa, or Waterloo, which are even cheaper. If housing gets down to and stays at 80’s real prices, high tech may get going again, but it looks like we’ve slipped back 20 years or more.”

“Over 3 out of 4 open houses we’ve gone to in the past year have been vacant properties. Up until 2006 or so, the majority were occupied.”

This from Lost Soul at RE Talks on Tue Nov 03, 2009 8:39 am -

“Over 3 out of 4 open houses we’ve gone to in the past year have been vacant properties — I remember up until 2006 or so, the majority were occupied. Read into that what you will.”