“So, if you want some Vancouver real estate should you buy now even if you pay a little more and get a little less than you had hoped? Probably. And should you sell your Vancouver real estate in the hope of buying it back later for less? Definitely, not.”

“Will the Vancouver housing market crash? Should I be waiting for a major drop in prices before buying a home in Vancouver? Should I sell my Vancouver home, rent for a while and then be able to buy an equivalent home for a lot less money? The answer to all of them is a resounding NO.” …
“Housing prices did crash in the 1980’s but a major difference is that at that time many homes had been bought by speculators on very small margins and interest rates soared well into double digit levels.
Now, very few homes are held on spec and any anticipated increase in interest rates is expected to be very modest. Mortgage rates may even go down. Canadian banks make a significant share of their profits from mortgage lending and it is a low risk part of their business since their prudent lending standards reduce the chance of default. Also, many mortgages are guaranteed by the Canadian Mortgage and Housing Corporation (CMHC).” …
“The cost of housing in Vancouver is not likely to change dramatically for the foreseeable future. It may soften a bit or it may even rise a bit.” …
“Prices are about 3 per cent lower than they were six months or a year ago, but are 4 per cent higher than they were three years ago. Prices for detached homes have been the softest, while apartments and townhouses have seen much less change, reflecting the trend to condos as a more affordable form of housing.” …
“There are two groups which would benefit from declining home prices. First are people in the Vancouver area who do not own real estate and whose income level does not enable them to afford the size and location of home to which they aspire. Many have adjusted by seeking a smaller home and/or one in a less costly neighbourhood. But some cannot afford even that.
A second group are the retirement age baby boomers across Canada who hope to spend their golden years in this small corner of Canada where you don’t have to shovel snow. They are frustrated because a home anywhere else in Canada buys much less home in and around Vancouver. They are also one of the main reasons why a housing crash will not occur. Any drop in prices will lead to retirees entering the Vancouver housing market, putting a floor under prices.
Those in the international community do not seem to mind our house price levels. When looked at in a global context, home prices in Vancouver are not unreasonable. Ask anyone from London or Hong Kong. And people from around the world see not only good value in our real estate, but also an open society, a pleasant climate and a stable political environment.
Finally, the majority of people in greater Vancouver already own real estate, benefit from current housing values and would be hurt by a crash or any serious drop. They do not want to see the value of their biggest asset decline. Home equity often forms a large part of retirement savings and people count on it in their financial planning.” …
“So, if you want some Vancouver real estate should you buy now even if you pay a little more and get a little less than you had hoped? Probably. And should you sell your Vancouver real estate in the hope of buying it back later for less? Definitely, not.”
- from ‘Little chance of correction in Vancouver real estate market’, Roslyn Kunin (‘Troy Media BC’s Business columnist; consulting economist’), Troy Media, 18 Mar 2013 [hat-tip ATP, who added, perceptively "same old, same old".]

If it really was a case of paying “a little more” and getting “a little less”, few would be discussing the matter. We fully expect that people will “pay a little more and get a little less” in the Vancouver RE market. Fact is they are paying a lot more and getting a lot less.
This “same old, same old” column archived here for the record. It will eventually be noteworthy that in March 2013 some people were still making ‘limitless demand’ arguments for ongoing endless price strength in the Vancouver RE market.
And it is remarkable that an economist would not give any thought to economic fundamentals in their discussion, and wouldn’t consider indicators such as price:rent or price:income ratios in their analysis.
- vreaa

2013 West Vancouver Sale At 2007 Prices

“Interesting data point out of West Vancouver. 4820 Headland Dr. sold last month [January 2013] for $1.17M. It sold in July 2007 for $1.2M. Poor location, corner of a 3-way stop, either way, they’ve done ‘well’ to have lost money over the past 5.5 yrs in Van RE. A few more of these coming I reckon….”
- NoBid at VCI February 26th, 2013 at 6:00 pm

“We live next door to a large new house that replaced a beautiful one in excellent condition. It has been empty since its construction about 2 years ago. The owners live in another house nearby.”

“We live next door to a large new house that replaced a beautiful one in excellent condition.
This new house, contrary to the bylaw, does not meet the requirement that the bulk and size of new developement is similiar to existing developement. Nor is it as required, compatible with the existing amenity and design of developement. City Planning approved this contrary to the neighborhood objections.
It has been empty since its construction about 2 years ago.
The owners live in another house nearby.
In this block there are now 3 houses that have been empty for several years.”
- B. Mcloughlin, commenting 2:58 PM on March 8, 2013 below the Globe and Mail article Kerrisdale preservationists lament a tide of bulldozers.

Misallocation of resources.
Speculation.
- vreaa

“Mere mortals could not afford housing in Vancouver even back in 2004.”

“Moved from Montreal to Vancouver, stayed six years, (got-the-hell-out-cause- I-didn’t-like-it), moved out to Ottawa. In each city I had a job waiting at 90K range.

Mere mortals could not afford housing in Vancouver even back in 2004. House was fully paid off in Montreal, even with that equity we realized we were going to have the largest mortgage ever. With wife and three kids, living in a condo was not considered, so we moved a little east of the city – Pitt Meadows, commuted into Vancouver for work. Wife gradually found self employment – accounting – in small businesses locally. Loved the views, hiking with kids in the mountains, crossing to Victoria by ferry.

Shocked by real estate prices. Stunned by the cost of everything else. Couldn’t believe that salaries in general here were Lower than Toronto, Ottawa and Montreal. Where in Vancouver would someone bring up a couple of kids on 60k? Where did the 35k salaries live? Was not impressed by the theatre and music scene. Good Chinese food, and Indian food, but otherwise, Vancouver does not hold a candle to Toronto/Montreal/Ottawa. Only place that made real bagels seemed to be Granville Island. Drove down Hastings Street one day. Remarkably like NYC of the seventies, down and dangerous.

Was slightly depressed by weeks and weeks of cloudy days. Missed the changing of the seasons. I love a sunny cold winter day, so bright with the sun reflecting snow. Came to realize that there were no advancement opportunities in my industry. (Like most other Vancouver industries, only a branch office in town.) A survey of some neighbours’ professions: Two teachers, one small business owner, four retired.
Realized that there would be nothing for my kids to do once they hit teenage years in Pitt Meadows. Take a 1.5 hour bus ride to see a band downtown? If would be a pain for them to go to either UBC or SFU.
And where would they live as adults? Love my kids, but after a degree, you’re out. Didn’t see a future for them here.

Moved to Ottawa. Housing is aprox 1/3 the Vancouver cost. We live 20 minutes drive from downtown and Parliament buildings – in traffic. Oldest attends Carleton U, also about 20 minutes away, by bus. High school is 4 minute walk for other two. We lucked out at Canterbury High.
Unknown to us when we moved here, it’s the city’s premier arts school. Incredibly motivated kids apply to attend Canterbury from all of eastern Ontario. We happened to move into its catchment area.
Ottawa has Carleton U and Ottawa U. Montreal (1.5 hour drive.) has Mcgill and Concordia U, if the kids want to adventure out to another city and/or immerse themselves in french language.
Ottawa has virtually no reports of grow-op busts, unlike west coast.
Ottawa has NAC, and host of other theatres, many museums, byward market. Rideau canal has pleasure boating in summer, and becomes world’s longest skating rink in winter. Hiking and cycling, cross country sking in Gatineau park is great. Montreal is 1.5 hours drive with major Jazz/music fest. Many of those acts come to Ottawa the week before or after.

Kids still facebook old buddies from the Pitt. Several bored buddies are serious dopers, dropped out, etc. We’ll go back to Vancouver to visit, but never to live.”

- Dadeedumer at VREAA 9 Mar 2013 11:57am

Thanks for sharing your story, Dadeedumer.
We bemoan the fact that RE prices have driven many from Vancouver.
And we agree that, by 2004, prices were already overextended beyond those supported by fundamentals.
- vreaa

“I explained that if the present rate of price appreciation continued that same house would be worth $92 million in 2051. He astounded me by responding, yes of course. That’s why he was buying a second house.”

“My idiot neighbour.
In his mind “real estate ALWAYS goes up”. When I tried to explain to him that Vancouver was in an unsustainable bubble situation and he said I was crazy. The example I used was a westside special that I know was purchased in 1969 for $38,900 and sold in 2010 for $1.89mm.
I explained that if the present rate of price appreciation continued that same house or 50×120 piece of dirt would be worth $91,800,000 (that is Ninety One Million Eight Hundred Thousand dollars) in 2051 and asked him if he thought that would be the case.
He astounded me by not even blinking and responding, yes of course. That’s why he was buying a second house. At that point I made the decision to leave Canada.”
- Bob at greaterfool.ca 12 Mar 2013 9:25pm

Vancouver Sun Profiles A First Time Buyer – “I just wanted to build equity and not pay rent.”

“Myles Wilcott, a single, 31-year-old general manager at Canadian Linen & Uniform Service, is among those who have met new financial requirements in order to buy a condo. He paid $412,000 for 705-square feet two-level loft in a 16-year old building in the Gastown district of Vancouver.

Wilcott had been looking at condos throughout the winter, waiting to find what he was looking for at a price he could afford.

By this spring, he had almost enough in his registered retirement savings plan to meet the minimum down payment set by the federal government. He had sufficient income to cover the monthly payments, even though new federal regulations meant he would be paying hundreds of dollars more each month than he would have been required to pay before the rule changes.

He was not concerned about reports of record high prices and talk of a possible crash in the real estate market. “A lot of people talk about getting into the market to make a quick buck,“ Wilcott said. “I just wanted to build equity and not pay rent.” …

Mr. Wilcott, who graduated from Simon Fraser University in business and human resources, said in an interview he had thought about buying a home a few years ago but did not qualify for a mortgage that was big enough to buy what he wanted.

He turned his attention to improving his credit rating, pursuing his career and putting aside some savings. “I was able to climb the ladder enough to the point where I qualified for a [25-year] mortgage.”

Mr. Wilcott started the home-buying process in December. The first step was to arrange for pre-approval for a mortgage. He had an agent to help him search in earnest for what he wanted – a loft-style condo in the downtown area. He looked at 12 different condos before finding what he was looking for.

He put down the minimum five per cent, which was about what he had saved in his tax-free registered retirement savings plan. A federal program called the homebuyers plan allows purchasers to use their RRSP as long as the money is paid back within 15 years.

His mortgage payments of $1,900 will be considerably higher than the rent of $1,200 he was paying before he bought the condo.

However it was his outstanding debts — not the monthly payments — that almost tripped up his mortgage application. Arrangements were finally confirmed at an acceptable rate with Vancity Savings Credit Union.

The whole process was a bit more stressful than he anticipated. The most difficult aspect of the purchase was evaluating the conflicting points of view he received on home buying. “I got too many people involved … there was such a wide array of opinions — buy now, don’t buy now; wait five years, don’t wait; don’t go into that neighbourhood, go over there.”

But once he met the qualifications and found what he wanted, he was ready to close the deal.”

- image and text from ‘First-time homebuyers adjust to federal changes; For those who can afford it, home ownership still a viable option’, Robert Matas, Vancouver Sun, 15 March 2013 [hat-tip OH YAH]
—

“$700 per month more outlay for accomodation plus condo fees, taxes, legals, move etcetera, etcetera (you all know the drill) and no mention that all his savings were wiped out during the purchase. Live and learn. Got to get on that ladder even if it only leads to a periscope.”
- Farmer, commenting on the above story, at VREAA 16 Mar 2013 3:22am

Agreed, we don’t think Myles really did the math on this.
He says “I just wanted to build equity and not pay rent”.
Even if he’s not fully conscious of it, he’s speculating on future RE price strength.
We’d bet the math shows that he wouldn’t “build equity” without that.
- vreaa

Vancouver RE Crash On Track

Expected weakness continues, sales remain low. Things are playing out as we’d anticipate. Very significant price drops to come (all in all, 50% to 66%, peak to trough). :

SALES ARE WEAK:
“The flicker of optimism that sparked in Canada’s housing market when January sales outpaced December’s has died out, erased by a notable drop in February.
Last month’s declines were significant enough to prompt the Canadian Real Estate Association (CREA) to cut its sales outlook for 2013 on Friday for the third time since last summer. …
“Vancouver remains the clear weak spot, with sales down a seasonally adjusted 9.8 per cent in February and 29.2 per cent in the past year,” Bank of Montreal economist Robert Kavcic wrote in a research note.But some feel that much of Vancouver’s weakness has played out.” [hahaha -ed.]
- from ‘Clouds gather over Canadian housing market’, Globe and Mail, 15 Mar 2013

SO ARE PRICES:
“The average MLS residential price in BC was $514,134 … down 8.1 per cent from a year ago.” – BCREA news release 14 Mar 2013

INVENTORY/LISTINGS ARE HIGH:
“I’m seeing big increases in New West, North Van, Burnaby SFH listings. Historical highs for this time of year. VW has stalled out; VE puttering along. Condos downtown nothing special on the inventory side. I don’t know what all that means except that our little crashlet is *not* a “Van has too many condos; it’s just condos; houses are safe from all this” thing. It is in fact inventory growth and sales declines are mostly a SFH thing, from what I see.” [price declines will effect all sub-sectors of the market. -ed.]
- VHB at VCI 15 Mar 2013 12:22pm

chart care of b5baxter at vancouverpeak.com

HOUSEHOLD DEBT CONTINUES TO GROW:
“The ratio of Canadian household debt to disposable income rose to another record last quarter, calling into question Bank of Canada Governor Mark Carney’s assertion that families are listening to his warnings about the risks of borrowing too much.
Credit-market debt such as mortgages rose to 165.0 percent of disposable income, compared with 164.7 percent in the prior three-month period, Statistics Canada said today in Ottawa.
In his previous two policy statements, Carney weakened language about the need to raise the central bank’s 1 percent policy interest rate, partly on evidence a housing boom was slowing and consumer debt burdens are stabilizing. Finance Minister Jim Flaherty tightened mortgage rules in July on concern some regional housing markets were overheating.
National net worth rose 1 percent to C$6.87 trillion ($6.73 trillion) in the fourth quarter, Statistics Canada said. On a per capita basis the increase was to C$195,900 from C$194,300.” [Watch the per capita net-worth plunge with RE prices over coming years. -ed]
- from ‘Canadian Household Debt-to-Income Ratio Rises to Record 165%’, Bloomberg, 15 Mar 2013

MEDIA STILL PUMPING:
“Global TV just ran two RE spots (within an hour of each other) on this morning’s news featuring Joannah Connolly, editor of the highly acclaimed BIV and holder of a BA in Eng Lit.
In segment one, she commented on the 0.1% rise in the Cdn new HPI (for Jan) and implied the housing market had “reversed a downtrend”. She also mentioned the Cdn$ and how “it rose five cents” yesterday. How sad. Colorful, animated bar graphs (a la CNBC) were used in the presentation to drive home the point that home prices are still way higher than they were in 2009. The year 2012 was conveniently omitted from graph #1 so as to mislead the public into believing the upward trajectory is still intact. graph #2 was equally laughable with price chg’s in Vanc, Vic, Wpg and Cda average all appearing to be gains with upward pointing bars.
In segment two, she talked about how hot the commercial RE was, that land was in limited supply and that investors were “snapping up anything and everything”.
- from bullwhip29 at VCI 15 Mar 2013 9:55am

..AND MASSAGING:
BTW, they changed the headline of the Tara Perkins article in the Globe from this…
“Real estate market outlook cools as home sales plunge”
To this…
“Clouds gather over Canadian housing market”
There….that’s better.”
- from kabloona at VCI 15 Mar 2013 11:01pm

REALTORS STILL PUTTING ON BRAVE FACES:
“BC home sales continued at a modest pace in February,” said Cameron Muir, BCREA Chief Economist. “Despite improved affordability, many potential buyers and sellers remain in a holding pattern. With pent up demand now becoming latent in the market, it’s not a matter of if, but when home sales rise above their current pace.”
- BCREA news release 14 Mar 2013
—

Former PM Kim Campbell Sues Vancouver Condo Developer For Market Weakness

Former prime minister Kim Campbell is suing the redevelopers of the Hotel Georgia in downtown Vancouver, alleging her condo wasn’t ready on time, and now she wants her money back.
In her statement of civil claim filed in B.C. Supreme Court Campbell says she paid a $368,000 deposit on a condo in the new residential high-rise at the Hotel Georgia in 2007.
Former prime minister Kim Campbell is suing the developers of the Hotel Georgia in Vancouver. (AP )
Her lawyer Bryan Baynham says the pre-sale agreement with Georgia Properties Partnership was that that the condo would be finished December 2011.
“The project wasn’t finished on time. They were more than a year late and not surprisingly the people don’t want to complete and they want their deposit back.”
- from ‘Former PM Kim Campbell sues Vancouver condo developer’, CBC, 15 Mar 2013

EVERYBODY speculates on Vancouver RE, it seems.
If prices were up, these claims wouldn’t be occurring.
- vreaa

“I have continuing conversations with a friend who spent just under 1 million for an East Van home…”

“I have continuing conversations with a friend who spent just under 1 million for an East Van home.
6 months ago he thought prices would never come down for detached homes in Vancouver.
3 months ago he admitted that West side home had come down but not on the east side. After all, the west side was overvalued compared to the east.
This month he talked about re-financing their mortgage so they could take on more debt and do more renovations on their home.
sigh.”
- b5baxter at VREAA 12 Mar 2013 10:28am

Ongoing Hope For Soft Landings – “Growth should actually gain momentum this year rather than crashing as it did the U.S.”

“Some observers became panicky about a serious collapse in the market, perhaps because they believed that Canada was just like the U.S. had been in 2006.
But what we’ve seen in the ensuing months says that this interpretation was entirely wrong. Housing really is somewhat overpriced and it will indeed be the weakest part of Canada’s economy this year, notes economist Arlene Kish at IHS Global Insight, a big economics consulting firm, but it “will not be following in the footsteps of the U.S. housing downturn.”
Instead, it will be more of a typical cyclical downturn, with housing investment — including new construction, renovations and all sorts of related spending — dropping by a significant, but hardly catastrophic, 1.7 per cent. With others sectors of our economy picking up a little steam, growth should actually gain momentum this year rather than crashing as it did the U.S.”
- from ‘Canadian housing market finds its feet’, Jay Bryan, The Montreal Gazette, 15 Mar 2013
[hat-tip to 'Ryan' who told us about this story via e-mail]

Added to the ‘Premature Calls Of A Bottom‘ sidebar collection.
- vreaa

“Over the years, we refinanced our home a few times to pay off our debts. Now we’re selling our home as we can’t keep up with mortgage payments. In this market, we’re not sure if we’ll break even.”

Q: “Over the years, we refinanced our home a few times to pay off our credit cards and other debts, but we never actually got ahead. Now we’re faced with selling our home as we’re having a hard time keeping up with our first and second mortgage payments. With the market the way it is, we’re not sure if we’ll break even. What can we do?”

A: “… With over a decade of extremely low mortgage rates and fast-rising home values, many homeowners refinanced their mortgages to access the equity in their homes. Unfortunately, this can work against you if you aren’t living within your means.”

- from ‘Evaluate all options before selling your house’, Scott Hannah, The Province, 11 Mar 2013 [hat-tip Alexcanuck]

Savings rates in BC have been negative for years.
The average BC consumer debt is a remarkable $38,837, the highest in the country (up 6.2% in the last year!).
Whether by means of low downpayment or large HELOC, a significant percentage of owners are woefully over leveraged to the RE market.
All of this information represents downside risk for the RE market.
- vreaa

Sold One In Vancouver; Bought Three In Prince George – “It seems that Vancouverites just can’t get out of the real estate mindset even when they have the best chance to get off the ladder.”

Announcer: “In 2011 Prince George’s population grew by 1.4% over a five year period. [sic. ROTFL. -ed.]. Developers have had to keep up with demand, not just from new families, but from investors, like this couple, who moved here from Vancouver 5 years ago.”

Shauna Harper: “For the cost of our house in Vancouver, we could buy three rental properties here..”
Mick Harper: “..three houses.”
Shauna Harper: “.. and that’s what we did. We sold our house in Vancouver and we own three properties up here.. and.. they can cash flow.”

Announcer: “Prince George’s population is supposed to get even higher over the next few years.” [Yeah, watch out for that 0.2% per annum parabolic growth. -ed.]
—

Announcer: “A more affordable lifestyle is making living here more attractive, especially to those from the lower mainland. Take this house for example: 2200 sqft, 5 bedrooms, 3 baths.”
Realtor: “And we’re looking at $299,900.”
Announcer: “And how much do you think a home like this would cost in the Vancouver area?”
Realtor: “In the Vancouver area it would be over a million dollars, for sure.”
—
- from ‘Prince George Revival’, Global TV, 14 Mar 2013

Hat-tip to E.G., who comments:
“The report gets into the fact that house prices are quite reasonable in Prince George. Fair enough…
Then the reporter interviews some Vancouver transplants who sold off and moved to Prince George with money in their pockets. Do they buy one house and invest the rest wisely? Nope… they buy several houses and rent out the spares. Seems that Vancouverites can’t get out of the real estate mindset even when they have the best chance to get off the “ladder.”

First Time Buyers – “I have spent several years saving up enough for a reasonable down payment, but have now determined that in the current market, it just makes more sense to rent.”

“The biggest challenge I face is affordability,” said Dustin Strong, a 34-year-old Vancouver renter looking for a home in the $500,000 range. “I have spent several years saving up enough for a reasonable down payment, but have now determined that in the current market, it just makes more sense to rent.”
—
When the Globe and Mail asked readers in an online poll whether Ottawa should make it easier for first-time buyers to enter the real estate market, only 40 per cent of the nearly 2,500 respondents said yes, first-time buyers deserve a break.
“First-time buyers have all-time low rates, realistic 25-year terms, and minimum 5-per-cent down payments,” one reader wrote in our comments section. “If they can’t afford it, then the prices are too high. The hurdle is low enough for Canadians.”
—
Market uncertainty and bubble-talk are also holding buyers back, said James Ellis, a 26-year-old looking for a house in Kingston, Ont., with a $250,000 budget. His biggest challenge, he said, is “determining if the value of a house now is inflated or not, and whether resale value in a few years will reflect the current value once the housing market equalizes.”
“Our main challenge is beating the fear of home prices falling on us,” added Joseph, a 28-year-old looking for a detached house in Calgary. “That is what has kept us renting.”
—
- from ‘What first-time buyers really need: affordable housing prices’, Dianne Nice, Globe and Mail, 12 Mar 2013

There is absolutely no reason that anybody anywhere in Canada should be rushing to overextend themselves into RE, least of all First Time Buyers, and especially in Vancouver.
Prices are headed down.
Interesting statement from Joseph in Calgary: Instead of fearing being priced out, he is fearing buying and having prices drop.. this represents a change.
- vreaa

“He said that he is currently managing about 337 foreclosed/court ordered sale properties in Mission and Maple Ridge.”

“Bought a court ordered sale in Mission…
Property manager for the Banks came by, wondered why we were in the house…
Bank had not told him it sold… two weeks ago.
He removed the lock key holder.. we talked a bit…
He said that he is currently managing about 337 foreclosed/court ordered sale properties in Mission and Maple Ridge right now… that’s right… I asked three times just to make sure he didn’t mean 37… 337 is what he said.
… said he was not able to provide a list of the properties as the banks had forbidden him to disclose the list as part of his contract…, that’s in Maple Ridge and Mission… alone…
Yikes…
That was Three Hundred and Thirty Seven property’s in just the two districts…
WOW…Don’t see that in the news… or the real estate/assessment tax vultures sales lists…”
- Silver at VREAA 14 Mar 2013 10:08am

Border Services raid on migrant workers on Vancouver Eastside construction site; Reality TV camera crew in tow.

“An ordinary day on a condo construction site in east Vancouver took a turn for the dramatic Wednesday when Canada Border Services agents burst in searching for illegal migrant workers — all while being shadowed by a camera crew apparently recording footage for a reality TV show.
The raid, which took place at the Porter development on Victoria Drive near 20th Avenue, was one of about 10 that reportedly occurred throughout the city Wednesday.
A site foreman for the condo developer Cressey said two CBSA officers arrived around noon hunting for two Honduran nationals who were quickly located. A short time later, as many as 17 officers surrounded the building and began sweeping the construction site floor by floor, checking identification.
The site foreman, who did not wish to be named, said he was shocked and had not seen anything like it before. He said the raid began with two people who seemed to know who they were looking for, then there were 15 more, as well as camera crews.
He said about eight people, all of whom worked for a subcontractor, were taken away from the site.
Other witnesses reported seeing between five and eight workers handcuffed and removed by CBSA agents while a film crew circled. Many also heard workers speaking of 10 to 15 other raids occurring the same day.”
- from ‘CBSA raid on migrant workers, complete with TV camera crew, raises concerns in Vancouver’, Jessica Barrett, Vancouver Sun, 14 Mar 2013 [hat-tip Nemesis and proteus]

Allegedly ‘illegal’ migrants working a Vancouver construction site; all wrapped up with reality TV. Archived for the chronological record.
We don’t even want to begin to think of the ethical issues involved with the TV show. Who is directing who?
- vreaa

Comment below the article above:
“I know where there is an entire building that was constructed with American workers. I called CBSA and they didn’t even care. I told them that if you went there, there is an entire crew of Americans working on site right now. The agent basically said it didn’t matter. To top it off, the construction didn’t even have a construction permit. No fire inspection. Nothing. They open for business and didn’t even have a business license. Yeah trust me. This is just one case. There has got to be dozens or maybe even hundreds happening all the time.” – Henry Wang, comment at Vancouver Sun

Their Children Have Left Vancouver – “One of the rarely discussed consequences of the huge RE price inflation in Vancouver has been the separation of the extended family.”

“Cheaper housing, follow me.”

“One of the rarely discussed consequences of the huge RE price inflation in Vancouver has been the separation of the extended family.
My own adult children have left their home city (Vancouver) partly because of better opportunities elsewhere, but mainly because of the ridiculous cost of housing. The dream of raising a family in a single family home in Vancouver is an illusion. Their options are to commute hours a day or live in a box.
Well over half my friends are in the same boat. Their children have left Vancouver. They are raising their own families in other cities and other countries. My neighborhood looks nothing like it did even ten years ago. The neighbors don’t say hi to each other and the traditional cultural events in the community are gone.
I loved my city. It’s still beautiful (when the sun shines). But now, I find it kind of lonely and hollow.”
- Uwinsome at greaterfool.ca 11 Mar 2013 11:23pm [hat-tip Bob G]

Excellent comment.
A city does best when RE is reasonably priced; when the cost of shelter is not an excessive hurdle to young industrious individuals either remaining here or moving here.
The speculative mania has pushed RE to prices that are two to three times reasonable values, and has consequently forced people away from Vancouver; it has been a deeply destructive force.
- vreaa

A related anecdote, previously headlined here:
“I think about my own home that I bought in 2000, it’s worth about four times what I paid for it now. … I have four kids, three in their twenties and one in their thirties, and they’re never going to be able to afford to live in Vancouver because they’re not already in the market.”
- Peter Ladner (former candidate for mayor), Shaw cable TV interview, 25 May 2011

“I phoned ING and they said that they definitely were still issuing mortgages. What had changed is that they were no longer dealing with mortgage brokers.”

“Last week, I received a letter from a mortgage broker that I had used to secure a small mortgage from ING. She told me that ING would not be in the mortgage business any longer, so that she would be contacting me before the maturity date to find me a new lender. Very considerate. Today, I phoned ING and asked them about the situation. They said that mortgages were a huge part of their business and that they definitely were still issuing mortgages. What had changed is that they were no longer dealing with mortgage brokers. Surprise, surprise. The agent then proceeded to offer me an early renewal blended rate that was quite competitive.”
- from M, via e-mail, 28 Feb 2013

The Unshakeable ‘Running Out Of Land’ Meme – Vancouver Mentioned In Tokyo ‘Coffin Apartment’ Article‏

Young people in Tokyo are living in 50-75 square feet rooms paying between $500-$1000 a month in rent.

“How much do you want to live downtown? It’s an important question. Because young people in the world’s greatest cities are juggling unaffordable rents and sometimes working several jobs just to live in a glorified closet with four other people.
We often get the bulk of our nightmare apartment stories from places like New York City and Vancouver, where “micro suites” are now popping up everywhere, allotting people 350 sq. feet of living space for significantly more money than you’d imagine. If you can get a table a bed and a sofa in there, you’re pretty much a black-belt in efficiency.
But no matter how unpleasant you think our situation sounds, these micro suites are positively palatial compared to the way some people live in Tokyo and Hong Kong.
In Tokyo there is something known as “coffin apartments”. These dwellings are essentially share houses that consist of communal bathrooms and locker-sized sleeping quarters stacked on top of one another. These lockers, which in a disturbing way sort of resemble morgue refrigerators, run anywhere between 50 to 75 square feet.”
- from ‘Tokyo’s ‘coffin apartments’ are more expensive than you’d think’, Jordana Divon, Shine On, a Yahoo Canada blog, 1 Mar 2013 [hat-tip 'terminalcitygirl']

The Vancouver mention in this article occurs for the sole reason that the author is Canadian (a journalist from the Toronto area). Nobody else would dream of unquestioningly comparing apartment size in Japan or NYC with that in a Canadian city.
Japan, Population 127.3 Million, Area 378,000 km², Density 336 persons/km²
British Columbia, Population 4.4 Million, Area 944,700 km², Density 4.7 persons/km²
The idea that anybody should have to live in a cramped space in Canada is patently absurd. Unless, perhaps, if they were in jail.
One meme of the RE cult is that we have no land, whereas in actual fact we have even more land than we have rain.
See the Doug Coupland video below.
- vreaa

Frame from video

“I grew up here, in a suburb just across from Grouse Mountain, overlooking the city. On one side of the fence there is home; and on the other side wilderness until the North Pole.” – from ‘Douglas Coupland’s Vancouver’, a promotional video for Canadian Tourism, 2012.

Two House-Warmings In South Surrey – “One thing I noticed is that no one talks about home prices going up anymore. They talk about how expensive Vancouver is and how prices will drop there, but not where they live.”

“Went to two house-warmings this week. Both in South Surrey.
While we were there we were bombarded with how great Surrey is and we should consider moving there. With close to an hour commute each way to downtown, no thanks.
Even though the townhouses were cheap (in today’s market anyways: you can get a brand new 3/4 br for the price of 1 br in the city), I was not at all enticed.
Previously, after a house warming I would feel like wow maybe I should just bite the bullet and go buy, not anymore. After the new house smell goes away, I realized how house poor all these people have become, and really their lifestyles are not any better than mine, perhaps even worse with all that extra commuting.
One thing I noticed is that no one talks about home prices going up anymore, that was different from a year ago. They now talk about how expensive Vancouver is and prices will drop there, but not where they live because it is so cheap already how can it drop. I guess they think it will always be other people’s problems.”
- 4SlicesofCheese at VREAA 10 Mar 2013 10:04am

TD Bank: “Home prices will be essentially flat for the next decade” [Therefore Vancouver Prices Will Crash]

“A TD Bank research report is warning that Canada’s real estate bonanza has come to an end and predicts home prices will be essentially flat for the next decade. The TD report forecasts average house prices will move lower over the next few years before modestly rebounding after 2015. But even with the rebound, TD predicts that home price increases will only rise about two per cent annually — essentially keeping pace with inflation.”
- from ‘The value of your house may remain flat for 10 years: TD Bank’, CTV News, 11 Mar 2013 [link defunct at time of press] [hat-tip E.G.]

“Just to be clear, most observers expect a soft landing, rather than a U.S.-style crash. But, according to TD, don’t bet on prices appreciating to any great extent.
“The housing market is prone to cyclical ups and downs, and Canada is expected to embark on a gradual, modest, downward adjustment over the next three years,” the TD economists said.
“A string of lacklustre performances will mean that the annual rate of return for real estate in nominal terms will be roughly 2 per cent over the next decade,” they said in their report.
“In other words, real estate gains are set to match the pace of inflation.”
- from ‘Home prices to gain ‘measly’ 2% a year over next decade: TD’, G&M, 11 Mar 2013

“The report does not predict a collapse in house prices as some analysts have suggested. In fact, it sees prices rebounding after a few years of a correction to as high as eight per cent.
However, the longer term trend is for home price gains to average about two per cent over the next 10 years — flat once inflation is taken into account, says TD chief economist Craig Alexander.
“I do not think we have a housing bubble in Canada,” said Alexander. “We have had abnormal strength in the market during a period of low interest rates and when rates go up over the next three years, you will get a cooling and weaker prices, but not a permanent shock and not a sharp correction.”
- from ‘Vancouver house prices to will outpace national average, TD report says’, Vancouver Sun, 11 Mar 2013

The vast majority of buyers of Vancouver RE, for many years, have been speculators in that they have been buying with the expectation that prices would continue to rise at an abnormally high pace (for instance, 7% per annum, or even more).
Once it becomes clear that prices will not continue to behave like this, the massive central engine for demand will disappear. Buyers will not overextend to a ridiculous degree to chase prices that aren’t going anywhere. The fear of being “priced out forever” will no longer propel their behaviour; the greed that previously encouraged buyers to “jump on the RE train” will disappear.
This is why a speculative mania never, ever, ends with a flat market.
Once the speculative component of prices evaporate, prices will fall to those supported by fundamentals, far below. In Vancouver’s case, these levels are 50% to 66% off peak.
- vreaa

“I am a boomer. I am appalled at some of the financial situations that my contemporaries have gotten themselves into. I can’t stand it, it is all around me.”

“I am a boomer. I am appalled at some of the financial situations that my contemporaries have gotten themselves into. They have borrowed against their homes while saying “that’s just a line of credit, the house is paid for”. They have counted on the run up in real estate without selling and now owe more on the house than when they bought it TWENTY years ago! When renewing their mortgages they roll in their latest credit card debt. Then they keep the amortization high so the payments are as low as possible. These people owe hundreds of thousands of dollars and now are having health issues, divorces, and want to retire. How can you do all that and not have a thought as to paying off your debt? Time is not on their side.
When the lender they started with is cautious and turns them down, they go elsewhere, get the loan and a promise of more if needed and then bad mouth their first lender. They never miss a chance to go somewhere warm for a month and love the casino and the lottery. Their cars are new, Friends, family, acquaintances, I can’t stand it, it is all around me.”
- camper at VREAA 8 Mar 2013 11:05am

… and then prices start to descend, and the whole debt expansion process goes into reverse (as is occurring just about… now). Ghastly implications for the individuals involved; not good for the group, either.
- vreaa

Vancouver Secretary’s Urgency To Buy Condo At 7.7x Annual Pre-Tax Income – “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up.”

[photo Rafal Gerszak, The Globe and Mail]

“Alice Soo is developing a case of spring fever for real estate.
In 2011, five years after graduating from university, she made a final payment to erase $25,000 in student loans. At the same time, she has been a disciplined saver, with $30,000 now socked away. Ms. Soo, a clinical secretary at Vancouver General Hospital, is eager to use it for a down payment on a condominium in the suburb of Burnaby, and soon.
Why the urgency? Condo prices in Greater Vancouver have slipped 3 per cent over the past year, but Ms. Soo believes the softness in the market won’t last. “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up. That is my main concern.”
Such is the psychology of the first-time buyer in Vancouver, the country’s most expensive property market. Prices here have soared 24 per cent since the summer of 2009, according to the Teranet-National Bank house price index, and the price of a typical detached home is still about $900,000. But prices have cooled and sales activity is way down – there were nearly 30 per cent fewer transactions this February than a year earlier – so Ms. Soo’s concern about missing out may be unwarranted….
“For every first-time buyer, there’s an owner who`s looking to sell and trade up, and for every upgrade, there`s a retiree looking to cash out. The “trickle-up” effect can make the difference between hot and cold in the market.
This year, the big question is: Will the first-timers come back?”
For Ms. Soo, who is now renting the basement of her sister’s home, the first choice is to buy a Burnaby condo priced at roughly $300,000, preferably close to a SkyTrain rapid transit station. Given her modest annual pretax salary of $39,000, Ms. Soo is excited by the prospect of moving into her own place by the time she turns 30 this summer. But price remains the sticking point for buying a condo this spring. She and her agent, Eddy Shan of Homeland Realty, are finding that sellers aren’t budging much from their asking prices.”
- this anecdote from ‘Will nervous first-time buyers make this spring housing market bloom?’, Tara Perkins and Brent Jang, Globe and Mail, 9 Mar 2013 [hat-tip OH YAH]

We agree that this FTB’s “concern about missing out may be unwarranted”. She is still living in the not too distant past, and continues to suffer from the “buy now or be priced out forever” fever. It’d be interesting to know more about her knowledge of current market conditions, and to understand her sources of information.
The current market action is precisely what one would expect through a topping process: sales declining, prices sticky but beginning to give, buyers waiting and watching. Sales volumes always lead prices.
And there will always be some buyers, at any point in the descent, thinking they have “bought the dip”.
The most vulnerable owners in the coming downturn will be the over-leveraged, the latecomers, and the retirees with far too much RE for their life-stage. If Ms. Soo buys, she’d be both over-leveraged and a latecomer.
- vreaa
————————-

Some further excerpts of interest from the same article:

“Will McKitka, a real estate agent with Macdonald Realty, said the spotlight has turned on the slump in property sales in February, but prices haven’t collapsed. “People use the B-word, in terms of a housing bubble. Vancouver isn’t in one,” Mr. McKitka said. Monthly sales volumes are being crimped by stalemates over pricing, he noted.
Two of his clients watched negotiations fall apart last month, even though the asking and offering prices were tantalizingly close. “Not close enough,” he said. But Mr. McKitka insists that buying into the Vancouver area’s cooled-off housing market makes sense. Gone are the days of huge jumps in home values, but for those able to save for a down payment in 2013, it will be a better financial decision to own than rent, he argues.”
…
“It still seems that the much greater risk is that sales weaken further, not that they surprise to the high side,” BMO Nesbitt Burns economist Douglas Porter said in a research note this week.
Prices remain stubbornly high in most urban markets. Fitch, a ratings agency, said this week that prices nationally are about 20 per cent too high. Such headlines add to the fear among first-time buyers that, even if they can afford to get into the market, now might not be the time.”
…
“Large marketing campaigns and incentives on the part of mortgage lenders are likely to play a significant role in driving the market this spring. “People buy payments, they don’t buy house prices,” says Toronto-based mortgage planner Calum Ross. “There is a huge psychological impact of five-year mortgage rates dropping below three per cent.” Mr. Ross adds that he’s now seeing “massive” amounts of marketing by mortgage lenders.”
…
“Phil Soper, CEO of real estate agency Royal LePage, said the slowdown is a good thing, because the market was too hot, but he thinks that the changes that Mr. Flaherty made in July went too far. “It pushed things for young people, for first-time buyers, to a place it didn’t need to be,” he said.
Now, he says, the impact of the change has largely been felt. “Young people have had eight months to either save up a larger down payment or look farther afield for a home,” he says. “As long as the cost of mortgage financing remains very low, we’re going to attract financially stable young people, first-time buyers, into the housing market. The desire to own one’s home hasn’t changed one bit.”
…

Will McKitka’s comment added to the ‘What Bubble?’ sidebar collection of bubble denier quotes.
We agree with Doug Porter’s observation that “surprises” are more likely to be to the downside.
- vreaa

VanCityBuzz – Vancouver vs. NYC – “If Vancouver wants to keep waving the world class flag, she’d better get used to being compared to those with a few hundred years experience, because beauty and access to a lot of natural resources can only take her so far.”

“Vancouver is often touted as a world class city by local boosters. While the costs of living and real estate prices are certainly indicative of that caliber, our culture (or lack thereof) and the locals’ inability to get to know themselves without making a big stink about how dissatisfied we are with one another, leaves us to question whether or not our very young city is really ready to step up onto the global stage. There’s only so many years a city can ride on having hosted the lesser of the Olympics, no matter how many gold medals were won by locals. Only so many venues can close before the so-called ‘creative’ class finally throws in the towel and leaves everything to the mercy of developers, corrupt political parties and their sycophant friends. So since I’ve just returned from a five month stint in New York, I’ve been asked by the good people at Vancity Buzz to write up a piece comparing some of the finer points of life in both cities.” …
“Housing and Real Estate Development
I’m no expert when it comes to discussing the finer points of housing and real estate, however as someone who at this point can never even hope to think of one day dreaming about the mere thought of buying a property in or around Vancouver, it’s important to mention that many New Yorkers are in the same boat. I was warned that everything is much more expensive in NYC, but this isn’t true at all. If anything, prices for lodging are almost exactly the same. My trendy, 1500 square foot loft cost close to, if not slightly less, than what you’d end up paying here, which is about three grand per month. And just like here, it pays to have roommates.
There are always new development projects happening all over the city, with walk-ups and high rises popping up all over New York, like zits on a teenager’s chin, boasting deals “starting at only 500K!” The difference between there and here is less of a marketing push. Of course, there are the requisite flyers falling out of every free weekly, but I didn’t notice such an in-your-face attempt as Vancouver’s to get me to sign over the next 30 years of my wages in exchange for a tiny, poorly built shoebox in the sky. Nor did I see any buildings wanting to have sex with the handsome new 12 story about to go up just off Bedford. Maybe it’s because I wasn’t looking, or there was a lack of real estate focused billboards, I don’t recall.
New Yorkers, while dealing with various gentrifying forces, are less likely to complain about being priced out of their neighborhoods thanks to fairly rigorous rent control initiatives, which, like the subway, place the rich and poor side by side, often in the same building. Still, just like Vancouverites, there are grumblings among Gotham locals about everything going condo and being sold to absentee foreign investors. But boy did they have a laugh when I showed off CrackshackorMansion.com.” …
“Conclusion
If New York is a grand dame of the urban world, gaudy, spackled with lights and experienced in the ways of love and war, then Vancouver is like a naturally beautiful teenage girl: not sure of what she yet wants or what she’s capable of, only that she’s good looking enough to, for now, have her pick of suitors at the expense of those who really have her best interests at heart. …
All in all, these are two different places, with their own unique styles, so is it even really fair to compare the two? Well, if Vancouver wants to keep waving the world class flag, she’d better get used to being compared to those with a few hundred years experience, because beauty and access to a lot of natural resources can only take her so far.”
- from ‘A Tale of Two Cities: Vancouver vs. New York’, by Hipster Designer, VanCityBuzz, 6 Mar 2013 [hat-tip proteus]

Attaining Escape Velocity For The Constructive Evolution Of Imbalances In Order To Leverage The Opportunity And Break Through In Thought Leadership ["You know what I'm saying?"]

“..and that’s one of the things that I enjoy most, ah, about this convention… It’s not so much, as so little, as to do with what everything is… but it is within our self interest to understand the topography of our lives unto ourselves. The future states that there is no time other than the collapsation of that sensation of the mirror of the memories in which we are living. Common knowledge, but important nonetheless. As we face fear in these times, and fear is all around us, we also have anti-fear… it’s hard to imagine or measure… the background radiation is simply too static to be able to be seen under the normal spectral analysis. [Accent alters from British to that of deep-voiced American soul singer] But we fuse though there are times when.. a lot of us.. you know what I’m saying? cos, like, as a hip-hop thing, you know what I’m saying, like TED be rocking, like, you know what I’m saying?.. so I wrote a song, and I hope that you guys dig it… it’s a song about people, and sasquatches, and other French science stuff… Okay, here we go.”
- Reggie Watts, TED, March 2012, Long Beach, California. This piece was preceded by a passage in Spanish and then one in French.
—-

“Escape Velocity” – measure of the amount of newly concocted liquidity required to allow Canadian RE to cast off the bounds of gravity and remain afloat; coined by BOC Gov. Mark Carney

“Constructive Evolution Of Imbalances” – [household debt increasing at a slower rate; the tap on the brakes that presages a housing price crash]
“With a more constructive evolution of imbalances in the household sector, residential investment is expected to decline further from historically high levels.” – Bank of Canada statement, March 2013

“Breaking Through In Thought Leadership” – [over-reaching optimism, with a twist of Orwell]
“This is a game-changer for Vancouver. We’re known as a world-class tourism destination but this shows we’re breaking through in thought leadership. I’d like to explore how we can best leverage the opportunity to vault Vancouver into the spotlight and endear us to the leading thinkers who come here.” – Mayor Gregor Robertson, commenting on Vancouver buying the TED conference, March 2013
—

Who writes this stuff?
The above three samples added to our growing bubblexicon.
PS: We Love the subversive Reggie Watts. He was in Vancouver recently.
- vreaa

Lower Mainland Couple In Their 70′s; RE Makes Up 216% Of Net-Worth; Desire To Buy More – “My friend is getting worried about his parents’ financial situation.”

“I was talking to a friend earlier today, He’s getting worried about his parents’ financial situation…
Get this:
$2.6 million invested in real estate… all in the Lower Mainland.
$1.4 million of mortgage debt (54%). Dad is over 70, mom not much younger.
Imagine a collapse of 50% of the market in the LM. The entire family’s net worth would be wiped out. Really scary. The irony? They want to invest even more in real estate (because they lost so much money in mutual funds…).”
- Makaya at VREAA 6 March 2013 8:22am

We still believe that the (90 minus age)% guideline for maximum percentage of net-worth that should be in RE makes sense.
These guys should have less than 20% in RE, their actual number is 216%… and they want to increase it!
We’ve heard enough of these stories now to extrapolate that there are a significant number of people in this position. They are very vulnerable to price declines, and they make the market that much more vulnerable, too.
- vreaa

“Forty percent of homeowners over age 65 had mortgage debt in 2010, compared with just 18% as recently as 1992, Reuters reports.
The Investor Education Fund recently found that 24% of Canadian homeowners surveyed expect to have debt on their principal residence after they retire. Of those who expect to owe money on their homes when they retire, more than one-quarter said they don’t know how they will pay it off.”
- advoc8 at VREAA 6 Mar 2013 at 2:12pm, quoting from ‘How Baby Boomers are rewriting the rules of retirement’, Financial Post, 6 Mar 2013

Bank Of Canada’s New Euphemism For Contraction – “Constructive evolution of imbalances”

“With continued slack in the Canadian economy, the muted outlook for inflation, and the more constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required,” the Bank of Canada said Wednesday. …
“With a more constructive evolution of imbalances in the household sector, residential investment is expected to decline further from historically high levels,” the central bank said in its policy statement. “The bank expects trend growth in household credit to moderate further, with the debt-to-income ratio stabilizing near current levels.”
- from ‘Battle of housing bubble won, Carney focuses on economic growth’, Kevin Carmichael, The Globe and Mail, 6 Mar 2013

Somehow the Globe and Mail concludes that “concern about a housing bubble” has “deflated” and that the “battle of the housing bubble is won”.
We fail to follow the logic.
What is happening is that, as debt hits limits, the entire economy, overly dependent on debt spending, is slowing.
This is precisely what one would expect at this point in the cycle.
The housing bubble hasn’t even really begun to unwind yet, let alone any battle being “won”.
It is not at all surprising that there is no intention to raise interest rates.
As we have said before repeatedly, we don’t need rising interest rates for the bubble to implode; it will do so by collapsing under its own weight.
We look forward to the “constructive evolution of imbalances” that will come with 50% to 66% price drops in Vancouver.
Viva La Constructive Evolution Of Imbalances!
- vreaa

Realtor On Marketing Deceit – “They could have just found a waitress or whatever, somebody who didn’t obviously work for them.”

“Amazing quote here [in this article in 'The Vancouver Observer'], regarding the MAC Marketing scandal, from a Vancouver realtor:
“It’s not just what they did, but that they did it so badly. They could have just found a waitress or whatever, somebody who didn’t obviously work for them.”
- Nick at VREAA 5 March 2013 at 10:00 am [Thanks Nick. -ed.]

[For those readers unfamiliar with the "Mac Marketing scandal", see VREAA 13 Feb 2013.]

Interesting that a realtor would make this kind of comment after such a scandal.
It strongly suggests that he sees deceit in marketing as simply being part of the game.
- vreaa

“Talked to a Vancouver man who sold all his assets in Vancouver. He told me he bought a newer house in Arizona for $105K that has a renter that pays $850 a month.”

“I went to a real estate seminar in Phoenix and the prices to rent ratios were awesome for investors. Talked to a Vancouver man who sold all his assets in Vancouver. He told me he bought a newer house in Surprise Arizona for $105,000 that has a renter that pays $850 a month. I guess Canadians have higher incomes for higher price real estate.”
- happy renter at greaterfool.ca 4 Mar 2013

“There’s a townhouse up for rent in a new(ish) development near my place that is owned by a realtor. After several unsuccessful attempts to sell he gave up and is offering it for a long term lease.”

“There’s a townhouse for rent in a new(ish) development near my place that is owned by a realtor and after several unsuccessful attempts to sell he gave up and is offering it for a long term lease.
The place is fairly expensive to rent, but still a fraction of what it would cost to buy.
Now get this – when I inquired about it, the reply I got stated that “the owner will pay property taxes, but I would be responsible for maintenance and strata fees” at around $350 a month on top of the rent.
OMFG, I still cannot stop laughing…”
- vanpire at VCI 2 Mar 2013 2:05pm

The owner was unsuccessful in their attempt to sell.
This simply means that the owner has an overinflated idea of the value of the property.
Drop the price steadily until it hits a bid. That’s the market value.
And, yes, the statement regarding the addition of the strata fee is indeed laughable.
Trying to make a high rent sound lower. Unlikely to draw anything other than laughs.
- vreaa

Fitch Ratings – Canadian RE 20% Overvalued; BC 26% Overvalued

“American-based agency Fitch says house prices are overvalued by approximately 20 per cent in real terms across Canada, with regional variations.
But in releasing its ratings on Monday, it said Alberta’s market is overvalued by 15 per cent.
“Because of the effects of inflation and price momentum, it is not expected that prices would drop by this amount,” said the Fitch report. “If growth halted and prices began to drop, it would be expected to take several years for home prices to revert to their sustainable values, depending on a number of factors such as government support and credit availability. With this time frame, the actual observed decline in prices could be as low as 10 per cent.”
It said rises in prices have continued with small corrections since 1996, and specifically since 2008 have risen when underlying fundamentals suggest that growth is unsupportable.
It said the Ontario market is overvalued by 21 per cent, Alberta by 15 per cent, British Columbia by 26 per cent and Quebec by 26 per cent.”
- from ‘Canadian housing prices overvalued by 20%: Fitch Ratings’, Calgary Herald, 4 Mar 2013 [hat-tip Nemesis]

“There are up to 40,000 illegal suites in the city of Surrey — nearly double the 20,000 previously reported.”

“The appraiser stands at the foot of the empty lot, asked to assess its value — as if the home to be is already built.
He comes armed with floor plans sent to the city for approval.
In his eight years on the job in Surrey, he’s now seen thousands just like this.
The plans show an outlying deck and a basement with rec rooms, kids rooms, sewing rooms — “all these rooms that make no sense,” he tells The Province.
He is then handed another set of floor plans, either by the builder or homeowner.
“The revised floor plan? They show secondary suites going in,” says the appraiser, who estimates there are up to 40,000 illegal suites in the city — nearly double the 20,000 previously reported.
“The day (homeowners) get their final occupancy, the day it’s done — they enclose the rear patio and now you’ve just added another 1,000 square metres to your house.”
Not only are thousands of Surrey’s homeowners collecting undeclared income, he says, they are also saving on taxes when the suites are popped into place after city approval.
The owner of an in-demand design firm in Surrey says he’s aware of the illegal suite issue, but insists his company creates plans in accordance with zoning requirements.
“We discuss with the homeowners/ home builders as to their requirements and then prepare house plans,” he said.
“Our design company plays no role during or in the construction of the homes.”

“Of the nearly 4,000 residences developed in Surrey in 2012, 1,500 were single family units, namely in Newton and South Surrey.
The city issued permits for 427 secondary suites at 67 coach houses in 2012.
Surrey’s manager of bylaw enforcement, Jas Rehal, says his staff and the city’s building department communicate their bylaws and policies to developers.
“Generally, they’re abiding,” he said.
“These suites in Surrey, they’re all over the city,’ said Rehal. “When brought to our attention, we go out there, state the fee … once a suite is identified, we start billing.”
Annual fees for a secondary suite range between $500 and $1,300, which includes infrastructure costs such as garbage pickup and water use.
It can cost a homeowner up to $10,000 to properly outfit a home with separate piping, wiring and a firewall to make a suite legal.”

- from ‘Surrey’s illegal suites look like an epidemic to some’, Mike raptis, The Province, 4 Mar 2013

Jesse (YVRHousing) calls these suites ‘townhouses rotated 90 degrees’, and we think that’s spot on.
They are products of high prices: owners build and manage them to allow themselves to over-reach on price in the hope of further price increases.
This is an inefficient, clumsy and ugly way for a city to increase density.
- vreaa

Overreach For The Stars – “We didn’t just buy a conference, we didn’t just lure a conference to Vancouver”; “This shows we’re breaking through in thought leadership.”

[image G&M]

“When the TED Talks people came knocking at Vancouver’s door last December looking for a new home for their signature event, the city’s tourism officials didn’t just see another small conference on the horizon.
Instead, they viewed the visit as their chance to promote a kind of intellectual Olympic Games for the next two years, where they could sell Vancouver to the world via an international elite of thought leaders.
In return, the organizers of TED – which stands for technology, entertainment and design and brings together innovators of assorted stripes – saw Vancouver as a city whose ethos matched that of the TED Talks: future-focused, green, creative.
“I think the spirit of the city is wonderful for TED. We’ve met so many people who are dreaming big here,” TED “curator” and owner Chris Anderson said Monday from New York, where he announced the signature event would move from Long Beach, Calif., to Vancouver for 2014 and 2015 – and possibly beyond.
…
“None of us see this as a simple convention coming to town. It’s an opportunity to tell our own story through TED,” said Greg Klassen, a senior vice-president with the Canadian Tourism Commission. “We’ve negotiated the rights to leverage their brand, using the kinds of things we learned from the Olympics.”
So Vancouver will be able to market itself as the TED host city and Canada as the TED host country. And tourism planners are looking at ways to spin off other city events and draw top companies to Vancouver for meetings, using attractions such asextra speeches from some TED presenters.
They hope the strategy will make Vancouver synonymous with creative thinking, the way Austin is now the city of independent music as a result of South by Southwest, and Davos means serious talk about international finance because of its association with the World Economic Forum.
The Monday announcement caused a visible bubble of euphoria among city officials. “This is a game-changer for Vancouver. We’re known as a world-class tourism destination but this shows we’re breaking through in thought leadership,” Mayor Gregor Robertson said. “I’d like to explore how we can best leverage the opportunity to vault Vancouver into the spotlight and endear us to the leading thinkers who come here.”
- from ‘TED Talks choose Vancouver as host’, Frances Bula, The Globe and Mail, 4 Feb 2013

“Watching over and participating in these proceedings at the Long Beach Convention and Entertainment Center is a small vanguard of Canadians preparing to help TED’S once-improbable exodus from a state considered both the bedrock of American technological innovation and the birthplace of TED’S innovative brand for putting ideas in front of the people with the power to make them happen.
There are folks here from the Canadian Tourism Commission, Tourism Vancouver, the Vancouver Convention Centre, Mayor Gregor Robertson’s office, even hoteliers whose ringside five-star hotels will host attendees whose names are synonymous with power, influence and change. Over the next five days these visitors will try to figure out how to capture the magic of an intimate theatre setting TED concocted to make that idea transfer happen.
“Our relationship with TED is a partnership. We didn’t just buy a conference, we didn’t just lure a conference to Vancouver, we developed an alignment of our brand of Vancouver and Canada with the brand called TED,” said Greg Klassen, senior vice-president of marketing for the Canadian Tourism Commission.”
- from ‘Canada gets ready to host global tourism leaders. TED head to Long Beach to find ways of replicating success in Vancouver’, Jeff Lee, Vancouver Sun, 24 Feb 2013
—

Years ago, we liked much of TED a lot.
Since its size and offerings have ballooned, its content has altered, such that we now like bits of it a lot, and lots of it a bit or not at all.
Regardless, it is not a bad thing for Vancouver to host a conference/convention such as this one (provided the price hasn’t been outrageous.. more about that below).
The attempt to link the announcement with claims that Vancouver is “breaking through in thought leadership” are laughably funny, but at the same time, familiar to those who have noted the hopeful (embarrassing?, desperate?) over-reaching that is characteristic of recent Vancouver rhetoric. (Example: Eco-friendly city? Green Leader? – Despite our bike lane preoccupation, just 1.8% of trips taken in Vancouver last year were by bicycle. Also see: Garbage per capita; Airline flights per capita; etc.)
And, bringing the discussion home, this over-reaching is, of course, manifest in our home prices, and we see a relationship there. “Dreaming big”; Talk vs Walk.
Regarding the TED conference funding: Do any readers have access to details of the exact deal struck between TED and Vancouver/BC/Canadian representatives? How much is this going to cost us?
When the CTC representative says: “We’ve negotiated the rights to leverage their brand”, what were the details of the negotiation?
When they say “We didn’t just buy a conference, we didn’t just lure a conference to Vancouver”.. Okay, fine, but we’re curious as to how much it’ll cost us, anyway.
- vreaa

—
Thoughts from TED critics:

“According to a Financial Times story last fall, Mr. Wurman [architect and urban designer Richard Saul Wurman started TED in 1984] thinks the TED concept has become too orchestrated and too slick. Other critics have complained that the talks have become intellectually pretentious and almost industrialized in their production. A recent New Yorker article described them as appealing to “college-educated adults who want to close the gap between academic thought and the lives they live now.” But that hasn’t made a dint in their phenomenal popularity, with over 1,200 cities having hosted spinoff TEDx talks.”
- from the same G&M article above.

“Strip away the hype and you’re left with a reasonably good video podcast with delusions of grandeur. For most of the millions of people who watch TED videos at the office, it’s a middlebrow diversion and a source of factoids to use on your friends.” – from ‘Don’t mention income inequality please, we’re entrepreneurs, Why TED Is a Massive, Money-Soaked Orgy of Self-Congratulatory Futurism’, Alex Pareene, Salon, 21 May 2012
—

[image Salon]

From Prices Soaring Towards The ‘Stratosphere’, To The Limits Of A ‘High-Water Mark’ – “Could these maps be a snapshot of the real estate market’s high-water mark?”

“For the last three years, Andy Yan, a researcher and urban planner with Bing Thom Architects, has been mapping the assessed values of single-family residences in the city of Vancouver.
You see his latest efforts here today. …
The question is, could these maps of Yan’s be a snapshot of the real estate market’s high-water mark?”
- from ‘Pete McMartin: The high-water mark of Vancouver real estate?’, Pete McMartin, Vancouver Sun, 2 Mar 2013

Perhaps of interest because this is the same Vancouver Sun columnist who just one year ago wrote:

“Vancouver, of course, will always be the centre of things in the Metro area. It has history and critical mass on its side. And by its very nature, it is going to attract people who want to come here and live in the city.
… the market will propel any kind of property here into the stratosphere.”
- from ‘Short commutes and easy access to an Ethiopian restaurant are not the natural order of things’, Peter McMartin, Vancouver Sun, 22 Mar 2012, as headlined at VREAA 23 Mar 2012

“Vancouver Island real estate is crashing.”

“Mid Vancouver Island real estate is crashing.
So many listings have been reduced 4-5 times and over $100,000 in price reductions, and still no greater fools buying.
Nanaimo to Courtney is kapoot!
Someone turn out the lights and end their misery.
This is not ending well!”
- unbelieveable at greater fool.ca 1 Mar 2013 10:13pm

“Central Vancouver Island is kaput is almost an understatement. Comox Valley: MLS Inventory, 874. February sales, 36. MOI, 24.4. This is a total wipe out.”
- Ford prefect at greaterfool.ca 1 Mar 2013 11:13pm

“I train automotive dealership employees how to use my employer’s software for a living.
Yesterday, one of my clients was a woman who used to be a realtor for 6 years on Vancouver Island……and last week I had another ex-realtor on Vancouver Island with 20 years of experience. Both left the RE industry recently, and just entered the car business.
That’s about 4 of them I have encountered in the last month alone.”
- Carioca Canuck at VCI 2 Mar 2013 10:35am

The Blast Radius moves closer to the epicentre.
(cue Jaws theme)
- vreaa

Canadian In Hong Kong Aims To Buy In Vancouver – “I plan to be another guy coming from Hong Kong buying your property and renting it out to you, even though I’m a white Canadian guy.”

“Let me share my story. I moved to Vancouver with my family when I was a teen from Eastern Canada. I went to UBC and graduated with a science degree. The jobs available to me were $12/h lab work on temporary contracts or sales at small supply companies, which at least had the potential for a career. How am I supposed to build up any substantial net worth $12/h? I opted for the latter; 100 applicants for every position. Needless to say, I did not make it to the 2nd round of interviews; a few interviewers asked to photograph me (kind of illegal) because it was hard to remember who’s resume belonged to whom.
I did some research and found work online that required my degree. I thought it’d be a side job until I found a “real” job. That ended up being a modest but living income. All of that money was from East Asia; not a dime from Canada.
Yesterday, I got a job offer in Hong Kong, and I’m going to take it. I’m going to make several times more here than I could in Vancouver. I’ll make incredible connections. Interestingly, although I’m not Chinese, many of my peers from UBC born in HK have returned for work because there’s simply more opportunity here. Yes HK is crazily expensive; it’s rents are easily double those of Vancouver! However, I can actually afford to live here without squeezing by. I’m going to be able to save a lot of money, which I hope to use towards a property in Vancouver. Ironically, I plan to be another guy coming from Hong Kong buying your property and renting it out to you, even though I’m a white Canadian guy.
I love Vancouver and do not want to settle down anywhere else. I see the huge appeal of living there from the perspective of Hong Kongers and Mainland Chinese. However, there’s just far fewer opportunities to grow in Vancouver; combine that with high costs, and you’ve got a losing combination. It’s good to end your career in Vancouver, not start it. I really feel Canadian employers treat young employees like trash in the name of economics and wonder why we jump ship at the next opportunity that comes along.”
- twelvis commenting on a reddit thread ‘Some Vancouver workers have been priced right out of the country’, 22 Feb 2013 [hat-tip proteus]

“It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004.”

“It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004. When I met my wife she had just purchased a condo in Surrey for $135k. We moved into it and met a tough-as-nails older woman who had been a realtor for 30 years and lived in the building. She shared the history of the building with us. Units had originally sold for $170k but a leaky condo adventure had dropped the value down to $70k, many lost their homes but those that were left were holding out for the prices to return to $170k. I asked her how long that would take. She pondered it, referred back to her 30 years of experience and said. “Probably 10 years.”

Almost exactly one year later in mid 2005 she came to us to tell us she could get $160k for our unit if we wanted to sell and move to a larger unit. We took her up on it and bought a larger unit in the same building. We got an over ask offer of $164k and bought a bigger unit for $170k. A year later and I was now working in Burnaby, a crappy commute. The condo needed a new roof and we had an assessment of $5000 that we had to take HELOC to pay for. We got a call to check out a place in a co-op in Burnaby near my work. It was perfect for the family we wanted to start. When we returned from checking out the co-op there was a flyer under our door. Our friendly realtor had just sold a comparable unit to ours for $240k.

Our families told us we were nuts to sell and rent. I smelled a rat, this experienced realtor had predicted 10 years to appreciate from $135k to $170k. And two years later the value had skyrocketed to $240k. My sister explained that I didn’t understand because I didn’t have kids yet how important it was for us to have real estate holdings to leave them. I decided that when I did have kids, they would be better served having me home for the two hours I would have been commuting then having a condo in Surrey 50 years from now. We pulled the trigger, the realtor actually sold the place to the same people who had bought our previous unit and we are now renters in Burnaby.

I knew nothing about real estate when I met my wife, she had bought into the market with an inheritence and had a bit of trouble walking away from ownership. But strata drama had shown her that she didn’t really own much of anything, she couldn’t rent her place out, she couldn’t decorate the way she wanted, she could have the pets she wanted, it was really a lot like living in a co-op. Except your crazy neighbours are toying with a massive chunk of your equity when they make silly rules. (They tried to make the building a 55+ while we lived there).

But ultimately it was that chance conversation with the realtor when she genuinely predicted a slow, steady increase in value that paced with inflation that tipped me off to the anomaly that was this price increase. I watched it shoot up and I was not prepared to sit back and watch it drop back down, taking my windfall with it. My wife is glad we made the move too, now she tries in vain to explain to her friends and family that they are headed for financial ruin if they continue their real estate delusions. But we all know how that goes.”

- lexlimo at VREAA 27 Feb 2013 9:42am

Thanks for your story, and for all your other comments on the blog, lexlimo.
- vreaa

“He had friends who wanted to sell, but who ‘couldn’t afford to sell’. They had withdrawn their properties from the market.”

“I was talking to a young professional who rents in Vancouver. He said he had friends who had purchased in the last few years and, given the soft market, he expressed genuine concern – fear even – for their financial well-being. More interesting, he talked of people he knew who owned RE in Vancouver, who wanted to sell, but who he said “couldn’t afford to sell”. Consequently, they had withdrawn their properties from the market. He seemed to think this made sense, and he didn’t see how the market could possibly drop by enough to put them at risk, or to force them to sell.”
- from ‘westsidefrank’, by e-mail to VREAA, 25 Feb 2013

See: ‘The Myth of the Discretionary Seller‘ sidebar.
- vreaa

Housing Makes Up 20% Of Canadian GDP – “This heavy reliance is not healthy. We basically borrowed our way out of this recession. Now, it’s payback time.”

“If the city is any indication of what’s going on in the country, it’s over-reliant on its housing sector.” – Herbert Crockett, a retired World Health Organization executive who lives in France says of Toronto.

“We basically borrowed our way out of this recession. Now, it’s payback time. We will be in for a period of long, slow growth.” – Benjamin Tal, deputy chief economist at the investment-banking unit of Canadian Imperial Bank of Commerce.

“It did seem a little unusual to have every policy maker in Ottawa hectoring Canadians about their excessive debt levels and yet the economic incentive for the average Canadian was completely slanted to taking on debt and not saving. The realist in me would admit it was the only tool the Bank of Canada had. The reality was, they really could not lift interest rates.” – Douglas Porter, chief economist at Bank of Montreal.

“As an economist working for a Canadian bank, I can’t go into a client meeting and have someone not ask me about housing in Canada. For U.S. investors, they are still a little gun-shy about what happened in the U.S., and I think they worry the same fate will happen to Canada.” – Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC, Royal Bank of Canada’s investment-banking unit, in New York.

Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S.
“This heavy reliance is not healthy,” CIBC’s Tal says. “I expect to see some softening.”

- excerpts from ‘Canada Losing Debt Halo as Bull Market Housing Peaks With Carney’, Bloomberg, 26 Feb 2013 [hat-tip Nemesis]
—

As we have been saying here for years.
What percentage of Vancouver’s GDP is linked to housing?
- vreaa

‘CMHC seeking to hide foreclosure information from home buyers’ – “CMHC just told us that pricing will stay strong and now they want to keep information about foreclosure secret. Where there is smoke there is fire.”

“Canada Mortgage and Housing Corp. has been asking realtors for months to keep consumers in the dark about whether the properties it sells are part of a foreclosure, according to a document obtained by The Financial Post.
The move, said to be part of CMHC national policy, upset Quebec realtors who refused to play ball, worried about an ethical breach. …
Some real estate industry insiders wonder whether the Crown corporation is simply being prudent, not letting potential buyers know a property is part of a distressed sell so they can put in a low-ball bid.
Others question whether the Crown corporation is just getting things in order in case home prices collapse and they are forced to sell properties that are backed by government insurance. …
“Look at what is going on right now in financial institutions and everybody is ratcheting up their loan-loss provisions,” said Ben Rabidoux, a Canadian analyst for California-based Hanson Advisors, a market research firm whose clients are institutional investors. “Everybody expects loan losses to rise. I can’t imagine CMHC is in the dark on that. My suspicion is they want to limit any loss on that hits their books.”
By limiting the information on whether a property is part of foreclosure, the Crown corporation would potentially avoid a situation in which a buyer knows it has to sell. In the United States, foreclosed properties have sold at huge discounts.
“CMHC is trying to get the better price,” said Don Lawby, chief executive of Century 21 Canada, who had not heard of the new policy. “You know something is repossessed, you low-ball the offer. You know you are not dealing with a homeowner but an investor.”
- from ‘CMHC seeking to hide foreclosure information from home buyers’, Financial Post, 27 Feb 2013
[hat-tip Reader #4]

“If the price of a house is good or someone is putting a low ball price and the seller is ok with that…I call it the market. CMHC just told us that pricing will stay strong and now they want to keep information about foreclosure secret….When you have smoke…fire is not very far…” – ‘luckyluc’, commenting on the above article at the FP site
—

Is it within the CMHC mandate to take active measures to hide information from the public?
Aside from that, the need for deception is massively telling – the market is at risk from normal price discovery processes, and the CMHC obviously now sees that.
- vreaa

Realtor Tries To Sell Own Home But Can’t – “Buyers are very skeptical, very hesitant because they think prices may go down.”

Hoda Seraji is experiencing Vancouver’s housing slowdown firsthand. A real estate agent, she took her own family’s two- story house in Canada’s third-largest city off the market after failing to get a single bite for the C$2.39 million home overlooking the Pacific. Cutting the price for the five-bedroom, four-bathroom residence didn’t help.
“Buyers are very skeptical, very hesitant because they think prices may go down,” she says.
Seraji blames fading interest from foreign investors, especially in China. Changes to Canada’s mortgage rules designed to cool the market have accelerated the sales drop, she says.
- from ‘Canada Losing Debt Halo as Bull Market Housing Peaks With Carney’, Bloomberg, 26 Feb 2013 [hat-tip Nemesis]

Agreed, “buyers are hesitant because they anticipate prices are going to drop”.
The problem is not with the buyers, but with prices that are still very, very overinflated.
What was that “C$2.39 million home” selling for just ten years ago? Less than $500K, most likely.
Because of the very large speculative component to price in Vancouver, price drops will not draw in demand, but rather beget further drops.
- vreaa

Failing Westside SFH Flip

Before $200K Upgrade

After $200K Upgrade

3175 39TH AVE W, Vancouver Westside (Kerrisdale)
3,650 sqft SFH; built 2005; 50×130 lot

Listed 8 Feb 2012 Ask Price $2,799,000
Sold 14 Mar 2012 $2,528,000

Listed 23 Sep 2012 Ask Price $3,080,000
Price Change 13 Nov 2012 As Price $2,980,000
Price Change 25 Feb 2013 Ask Price $2,798,000

Latest promo blurb: “Owner spent over $200k to upgrade outside & inside, with City Permit.”
—

Of course, in Vancouver, people have only been buying properties for personal use. (/sarcasm).
This reno-flip is on the brink of being underwater, probably already there.
Imagine what’ll happen when buyers collectively realize that houses like this are worth about a million bucks and change, tops.
This is just one example that jumped out. View many other descending ask prices on VancouverPriceDrop. Check that site out if you haven’t yet seen it.
- vreaa

“For almost 20 years, I have had close friends who are realtors. In the past month, I have seen serious changes in behaviour indicative of desperation. Commissions are down 50%, and for those on the fringes, this is pretty much poverty.”

“I’ve been following this market for a long time. Also, for almost 20 years, I have had some close friends who are realtors (and did it in the years when real estate was just something that people needed to live in – – without all the BS hype).
In the past month, I have seen serious changes in behaviour indicative of desperation. There was also a quote that “Everyone in my office has had to take a second job to ensure steady cash flow.”
I don’t think we are here to gloat in the misery of others but with sales numbers like we have now, commissions are down 50% in the past 2 years and for those on the fringes, this is pretty much poverty. . .
Quick tidbit – – Attached is showing listings declines with some areas even failing to have rising inventory. SFH however is very slow with the high end of the market completely stopped . . . .”
- yvr2zrh at VCI 25 Feb 2013 10:36pm

Vancouver Reddit Boards – ‘Paid Shills In Our Midst?’ – “Does anybody else find there are too many real estate/property development posts on the /r/vancouver sub-reddit?”

“Does anybody else find there are too many real estate/property development posts on the /r/vancouver sub-reddit?
Moderators, and fellow /r/vancouver-ites: Can we consider banning/pruning the number of real estate submissions as a new rule? It’s rather frequent that I can come to /r/vancouver and see 4-5 posts on the page that certain individuals have posted.” – pfak at reddit.com 16

From the comment exchanges on that thread:

“I’d say the number of posts are in perfect proportion to the frequency Vancouver real estate comes up in conversation and the local media… “- [nutty buddy]
—

“The price of real estate in Vancouver is too high. This isn’t controversial, I don’t know why you are suggesting it is, everyone I know down here agrees about this, and some of my buddies overseas, the ones who are familiar with real estate/finance, agree completely.” – [MyFavouriteAxe]

“The fact that it’s subjectively “too high” might not be controversial, but this notion (that almost all of OP’s articles are pushing) that the housing market is about to crash any day now is a complete fabrication, and it’s one we’ve been hearing for at least a decade now.” – [Niyeaux]

“Obviously not everyone agrees the prices are too high, there are people buying houses for those prices, and there are others desperate to join them if the prices drop. Supply and demand my friend.” – [idspispopd]
—

“In a community as small, as easily accessible, and as geographically centralized as this one, it would be pretty surprising if there wasn’t at last a few paid shills in our midst. I’ve always assumed the aforementioned user /u/derpaderpe (formerly /u/proudbedwetter) is one of them.” – [Niyeaux]

“Paid by whom to sell what?” – [Smallpaul]

“Either the shitty “news” outlets who are peddling these crappy real estate articles, or someone with an interest in making people think the price of real estate in Vancouver is too high. I imagine the list of people who fit the latter description is quite lengthy.” – [Niyeaux]

“Oh, really? Like who exactly?
Agents want people to believe their property is valuable, worth it, and selling well. Developers want to charge as much as possible and make everyone think demand is high. Construction people want as much development as possible. Governments want high assessments so they can charge owners as much tax as possible. Banks want to collect as much interest as they can get on long-term mortgages. Owners want reassurance that their property isn’t losing value…
So, I guess you’re referring to mid to low-income renters and young people who don’t work in a field related to real estate. Yeah, they’ve got a lot of clout. Damn propagandists.” – [FellSwoop]

“Or, y’know, any prospective investor who is waiting for the market to crash so they can pick properties up for cheap.” – [Niyeaux]
—

Real Estate infiltrates every discussion about Vancouver, so it certainly won’t surprise any of us here that the subject comes up frequently on the Vancouver reddit boards.
We don’t know whether there actually are any “paid shills” on Vancouver sites (other than the recently publicized OlympicVillage/VancouverIsAwesome ‘arrangement’, of course).
The idea that there are “prospective investor[s] who [are] waiting for the market to crash so they can pick properties up for cheap” is relatively new to the Vancouver RE discussion. It’s an interesting idea to ponder. These ‘vultures’ would have to be people who consider Vancouver RE to currently be appropriately priced, and who are hoping for ‘bargains’ at prices lower than this, such that when the properties recovered what they see as fair price levels, they would profit. We don’t ourselves know any prospective buyers of that stripe; we would certainly be interested to hear about any. All the prospective buyers we know (and there aren’t many of them) see prices as currently being far above fundamental values, and simply have a desire to buy themselves a stable shelter arrangement at a vaguely reasonable price.
- vreaa

High Paid Vancouver Workers Choosing To Live In The U.S. – “The cost of housing is four to five times what they are accustomed to; He did not want to move because he can have his $400,000 mansion in the U.S., versus getting a little home for $1-million in Vancouver; There are other really pretty places out there.”

Eric Murray is chief executive officer of growing clean-tech company Tantalus Systems, based in Burnaby, B.C. Mr. Murray, however, lives in Raleigh, N.C., where he owns a 3,500-square-foot house and puts his three kids through private school.

He is a Canadian, with several family members in Vancouver. But when his career trajectory sent him to Raleigh, he decided to stay put. Mr. Murray is one of a growing number of workers in the Lower Mainland who live in the U.S. You could call them cross-border jobbers.

“My father’s entire family is in Vancouver, so for our relationship, it would be great if I lived there,” he says in a phone interview. “But for me to pick up and move from Raleigh, where I have a fully wooded lot, and a very nice home, and I can send my kids to private school, this sort of stuff – to do that in Vancouver, I just can’t swing it economically. When we looked at this whole thing, we knew we would have to compromise on housing.

“Absolutely, I would live in Vancouver if I could afford it.”

Technology is the third-largest contributor to B.C.’s gross domestic product, says Bill Tam, president of the B.C. Technology Industry Association. He says there is demand for about 4,000 more employees in the industry, and the majority of qualified people come from the U.S.

“Especially in the Vancouver area, technology has been one of the faster growing industries,” he says. “So when companies have had to expand and recruit managers to come here from the U.S., some have relocated to places like Blaine, Wash., close enough to commute on a daily basis. That’s the level of creativity they’ve had to resort to.”

Others, he says, fly in from more distant U.S. locations, like Mr. Murray. Mr. Murray used to fly into Vancouver every other week. These days, he’s flying in every third week.

“When they come across and recognize the cost of housing is four to five times what they are accustomed to, they end up being commuters,” says Mr. Tam.

Sierra Wireless CEO Jason Cohenour, who was travelling and couldn’t be reached for comment, works in Burnaby and lives in the U.S. Tom Ligocki, CEO of Richmond-based Clevest, says he has several employees who live in a golf course community at Semiahmoo Resort, near Blaine. One of his engineers, Jeremy Westbrook, commutes from his home near Blaine to work in Richmond. It takes them about 30 to 40 minutes to make the drive.

“None of the folks in the U.S. want to move to Vancouver,” he says. “The simple example that I heard from one gentleman is that he did not want to move because he can have his $400,000 mansion in the U.S., versus getting a little home for $1-million in Vancouver.” …

“There’s no point in even talking about the Vancouver market. We are just talking to them about directly moving to the Semiahmoo resort,” he says, on the phone from a conference in New Orleans. “If you can’t bring them to Vancouver, that’s the only option we have.

“And they do certainly make very good wages,” he adds. “These are high-end experts that we are hiring.

“But all these folks are used to living in a house. They are used to American comforts, and they are well paid, and they can afford to have a nice luxury home wherever in the U.S.”
…

“I get into this discussion all the time with guys. Vancouver is great. The mountains and ocean are super. I get that. I would love to live there. I have a lot of family there. But I don’t see how the economics would work for a young person trying to do both of those things, unless they had a similar opportunity in another really pretty place.

“And I have been in a bunch of different countries and there are other really pretty places out there.”

- from ‘Some Vancouver workers have been priced right out of the country’, Kerry Gold, Globe and Mail, 22 Feb 2013 [hat-tip Aldus Huxtable]
—

Smart business people know: Vancouver RE is woefully overpriced.
- vreaa

“Where in the world would you pay $888,000 to live in this beauty?”

242 E 48th Ave, East Vancouver
2619 sqft [really? -ed] Old-timer SFH, 33×140 lot
For Sale: Ask price $888,000
MLS®: V988743. Blurb: ‘Amazing property including legal basement suite. Some updating to electrical, and plumbing. Over 2600 sq ft of living space. Some hardwood floors, wood burning fireplace, newer deck, garage, 9 bedrooms [surely not! -ed.], 5 baths on 3 levels. ***close to all amenities and all levels of school including Langara College. All these on a great southern exposed, oversized lot. Well Priced,ASSESSED VALUE $865K.GREAT INVESTMENT WITH REVENUE POTENTIAL****NEEDS A LITTLE TLC’

Hat-tip to ‘Pretzels…thirsty’ for popping this example up in a recent thread and who added: “I think there should be an open web survey for this.
“Where in the world would you pay $888,000 to live in this beauty?”
—

This entire house looks like a bad basement.
One can only imagine the threat to one’s morale if you ended up an occupant of one of those 9 bedrooms.
- vreaa

Realtor Stories – “A close friend of our family has been a Westside realtor for nearly 20 years. A few weeks ago, he suddenly asked if we knew anyone who might be interested in his $2 million listing. Never before has he done this.”

“A close friend of our family has been a Westside realtor for nearly 20 years. A few weeks ago, while talking about a completely unrelated matter, he suddenly asked if we knew anyone who might be interested in his $2 million listing. Never before in 20 years has he tried to drum up business from us. We know a total of zero people with a spare $2 million, so this was completely ridiculous and seemed rather telling.”
- Sheesh at VREAA 19 Feb 2013 11:16am

“A friend of mine 3 years ago quit a well paying full-time job to dabble in RE. When the slowdown started about a year ago, she was lucky to get her old job back.”
- Real Estate Tsunami at VREAA 19 Feb 2013 9:25am

“My land-lady who is a very good friend of [a Vancouver realtor] tells me that there are no buyers coming – she says market is very bad… very obvious to anyone who actually uses their brain… but quite an admission from someone who has been a part of this giant scam.”
- vancouverbubbleman at VREAA 14 Feb 2013 3:30pm

South China Morning Post Headlines MAC Marketing Deceit – “Bogus Buyers”; “Scam”; “Teetering Market”; “Steadily Falling Prices”.

Supposed homebuyers Chris and Amanda Lee were exposed as employees of MAC Marketing Solutions in Vancouver [image and caption accompanying the SCMP article]

“A senior executive at a Vancouver marketing firm was forced to resign after employees of the company were caught posing as the daughters of rich Chinese property buyers in interviews with TV reporters.
The deception was intended to create the impression that Chinese buyers were still queuing up to buy into Vancouver’s teetering real estate market, which has long been fuelled by money from China and is now rated as the second least-affordable city in the world, behind Hong Kong, according to the Demographia consultancy.”
…
“The scandal erupted after a series of news reports this month, sourced to MAC Marketing, suggested that an influx of Chinese buyers would give the Vancouver property market a boost over the Lunar New Year period. That would have been in contrast to statistics from the local real estate board showing that prices have been steadily falling in Vancouver for the past eight months.”
…
“TV news crews at an open house for the new Maddox apartments in downtown Vancouver on February 9 were introduced to two buyers supposedly from China to support the notion of a Lunar New Year boost, who identified themselves as sisters Chris and Amanda Lee. In an interview with CTV, Chris Lee said: “I’m from China, and that is my sister, Amanda. So, we are looking for a place together.”
She told the reporter their parents were visiting Vancouver for Lunar New Year and were bankrolling the sisters’ purchase of an apartment. “So, if we like this place, we have to tell them and they make the decision. Yes, really, Chinese people like to buy at this time [Lunar New Year].”
A similar story was carried by CBC, featuring Chinese house hunters Chris and Amanda Lee.
Two days earlier, a story predicting a Lunar New Year boost in property sales was carried by The Vancouver Sun newspaper, quoting McNeill.
However, an anonymous local real estate blogger known as the Rainforest Whisperer last week questioned whether the sisters were authentic Chinese buyers, after another internet posting showed that an “Amanda Lee” worked for MAC on the Maddox project.”
…
“MAC was eventually forced to admit that both the “Lee sisters” were its employees, and that they weren’t even sisters. MAC hasn’t revealed the true identity of “Chris Lee”.
“We regret we did not do a better job at ensuring full transparency with those interviewed and apologise for any misunderstanding this may have caused,” MAC said last week.
McNeill told the newspaper : “I don’t know if it was an overzealous employee or if this happened in a formalised way.”
In announcing the resignation on Wednesday, McNeill refused to reveal the identity of the executive who quit.
“McNeill owes an explanation to the media [whom MAC duped], to the broader real estate community [whose reputation MAC has irrevocably damaged], and to the general public [the ultimate targets of this fraud],” the Rainforest Whisperer wrote.”
…
“The average price of a detached house in the core district of Vancouver West topped out at C$2.25 million (HK$17.13 million) last May. It has since fallen by more than 11 per cent.”
…
- from ‘Bogus buyers exposed in scam to boost property market in Vancouver’, South China Morning Post, 22 Feb 2013 [hat tip to numerous readers who alerted us to this via comments or e-mails]

The SCMP article carries some big messages, regardless of veracity:
1. The Vancouver RE market is falling.
2. Sellers are desperate enough to attempt subterfuge.
3. Buyer beware (moreso than usual).
This fiasco is turning out to be a spectacular back-fire for MAC Marketing and will quite probably have deleterious effects on the entire Vancouver RE industry.
Ongoing kudos to Whisperer for detecting the blatant deceit.
Regular readers know that we have always maintained that off-shore buyers of Vancouver RE, along with the vast majority of local buyers, have been buying on the premise of ever rising prices.
Now news is getting out that prices are falling.
And the knowledge of the seller desperation implied by this marketing deceit could have a more profound negative effect on buyer sentiment than any of us had initially guessed.
Do you see why we maintain that falling prices will beget falling prices?
- vreaa

Original story covered here:
CTV TV News Featured ‘Condo Buyers’ Actually Marketers Of Very Same Condos!
VREAA 13 Feb 2013

Crazy Rubs Off – “At that time, strangely, I recognized this was expensive, but did not consider it absurd. My expectations had been subconsciously adjusted to account for the fantastic/abnormal circumstances.”

“Just started reading your blog, after a brief foray into the 1-bedroom condo market.
I’m 28, a professional, and earn a high 5 figure salary. I moved to the city 3 years ago.
My anecdote is viewing condos on Fraser, considerably south of broadway in a new building. The building is nice but the street and surrounding area looks awful, particularly at night. Grimy, damp, rundown. Nondescript small business with algae growing on vinyl awnings. Saw a series of small single bedrooms (350k) and one slightly larger single bedroom (375k). At that time, strangely, I recognized this was expensive, but not absurd. My expectations had been subconsciously adjusted to account for otherwise fantastic/ abnormal circumstances. Crazy rubs off.
I started reading more and I havn’t looked at ‘property’ since. I don’t intend to buy in this city at anywhere close to current asking price. I’ll move before I do. That’s not said in a righteous or defensive way, its just true. Two weeks after the viewing I was contacted by the real estate agent with an adjusted price list. 350k was reduced to ~340k, 375k was reduced to 350k.”
- Poorprofessional, via e-mail to VREAA, 21 Feb 2013

I have no doubt that we have all been ‘conditioned’ by the absurd prices.
Even the most ardent and insightful bear has been desensitized to the actual meaning of the large figures.
How long does it take a Canadian to save $400K?
- vreaa

“Just came back from Miami. Quite shocked when I saw ok-looking houses go for $150K-$300K. I used to be the kind of guy who would not stop talking about BPOE, but my mindset has definitely changed recently.”

“Just came back from Miami, Florida, I was quite shocked when I saw ok-looking houses in Coral Gables that resembled what you see Commercial Dr to go for $150K-$300K. It’s 30 C degrees in February, city is not as nearly congested as Vancovuer is (hello North Shore), and in all honesty, there were much less signs of homelessness and poverty that you’ll see in your average lower mainland neighbourhood. … I used to be the kind of guy who would not stop talking about BPOE, but my mindset has definitely changed recently…”
- Knight at VREAA 22 Feb 2013 9:02am

Thanks, Knight, for the story. If you like, tell us more about the mindset change.
Why should it change now? First time in Miami? Traveling changed your perspective? Economic comparisons?
Or something changing for you here in Vancouver? Has the stalling market influenced you?
- vreaa

Home Inspector Oversight – “It’s been a nightmare, like I wish I’d never set foot in this house. I just wanted a place to live.”

“Buyers like Lindsay Denton, a 39-year-old single mother, are finding out the hard way they have little recourse if they believe a home inspector misses an obvious, visible defect. Complaints to the inspectors’ association might cost an inspector the loss of his or her license for a week, but financial settlements are only awarded through the courts.
Denton was battling breast cancer when she bought a $750,000 home in East Vancouver after an inspector’s report found no structural defects.
“It’s been a nightmare, like I wish I’d never set foot in this house. I just wanted a place to live,” Denton said.
“It doesn’t mean anything that they have a license or that they have errors and omissions insurance.”
Denton has filed a lawsuit against inspector Christopher Stockdale, who used to be the president of the Canadian Association of Home and Property Inspectors of B.C.
In her notice of civil claim, she alleges Stockdale failed to follow the standard practices of his association.
Denton claims he missed the fact that her home was structurally unsound, with extensive water damage, a hole in the roof, asbestos in the air ducts, and visibly rotten sill plates and posts.
She also claims Stockdale examined her one-storey roof with binoculars instead of climbing up with a ladder and failed to carry a tool to prod any potentially rotten wood.
Denton said she discovered some rot in the structure after the tenants in her basement suite moved out.
“I went downstairs to paint and I touched the wall and it was wet and soft and the wood on top of the foundation was rotten,” she said. “It was crumbling away.”
The crumbling wood Denton refers to is the sill plate, which sits underneath the posts that hold up the structure. She said the inspector should have seen rotten posts next to the furnace he inspected.
Inspections ‘do not constitute a guarantee’
In her claim, Denton says Stockdale of Home Sweet Home Inspections returned to her house, looked at the problems and offered to refund her the $565 inspection fee.
She claims she told Stockdale he also should have seen rot on the side of her house.
“I’ve borrowed $40,000 and I’ve spent more, and I’m looking for another $100,000 to fix my suite because it’s been 18 months without being rented.”
Denton says she’s struggling to make her mortgage payments and is waiting for another inspector’s report to assess the defects allegedly missed in her home, a report which will go before a judge in her civil case.
…
It’s almost impossible for homeowners to get compensation if something is missed during a home inspection, despite new regulations introduced by the B.C. government in 2009 requiring all home inspectors to be licenced and insured.”
- from ‘Buyers left with big bills when home inspectors miss defects’, CBC News, 21 Feb 2013[hat-tip 4SliceofCheese]
…

During a speculative mania, construction and inspection standards drop, as the abnormal pace of price gains paper over shoddy work. People are forgiving of all sorts of deficits as long as they know they are accumulating equity at a rapid pace. When the tide goes out, they look for people to blame. Ironically, that often leads to standards being tightened at the very time when such measures are least needed.
As an aside: If you “just want a place to live”, why buy a house where you need to rent out your basement to make the mortgage payments?
- vreaa