Monthly Archives: March 2011

Realtor DashCam Gallery

“Take Realtors’ self-promo, for example… Is it just me, or has anyone else noticed that a preponderance of these clips (I think it’s de rigueur for the genre) are recorded in their automobiles (often while driving)?”Nemesis at VREAA 31 Mar 2011, who refers to them as “cultural artefacts”. No, it’s not just you, we share interest in these clips, and have featured a few before. A collection is a good idea. Still-shots, links to videos, and occasional quotes from Realtor DashCams will be archived in this Gallery post, which will be linked in the sidebar. We will update with any new material that becomes available; please send along dashcams you stumble upon. -vreaa

“If you’ve ever been to Winnipeg, you realize that Vancouver is ten times better. Our average price should be 2.5 million dollars for an average house in Vancouver.” – Ian Watt, Vancouver condo realtor, undisputed King of the DashCam, 600+ uploads at his VancouverPenthouse youtube channel, previously featured at VREAA 9 Nov 2010. Great production values; Specializes in back-alley shoots.

“I don’t see a bubble happening right now”– Barry Connerty, New West Realtor, self posted video at youtube, 15 Jan 2010

“If you are waiting for the Vancouver real estate market to go down – don’t hold your breath.” – Lisa Gibson, Vancouver Realtor, self posted video at youtube, 18 Nov 2010

Lisa Gibson, making video, while driving, in rain, with eyes closed, 17 Dec 2010. [Lucky she’s not simultaneously using cell-phone, that’d be illegal. -ed.]

Rob Balasabas, Vancouver realtor, self posted video at youtube, 2 Feb 2010

Rudy Balasabas, Vancouver realtor, self posted video at youtube, 29 Nov 2009

Roland Lewis, Vancouver realtor, self posted video at youtube, 25 Nov 2008

Shamus Baier, Victoria realtor, self posted video at youtube, 8 Jul 2010

“Hi, today we want to talk about how the low number of recent sales is affecting our market” [Victoria market, Sep 2010. -ed.]… “Sellers became quite panicked when they realized that their houses might not sell. I mean, people in Victoria are used to their homes selling right away… People are now faced with marketing their homes knowing that it may very well not get an offer, even though it’s in a good location, in good condition, priced well.” – Aaron Hall, Victoria realtor, self posted video at youtube, 20 Aug 2010 and 14 Sep 2010

Updates; ongoing:

Darin Chamberlain, Vancouver realtor, self posted video at youtube, 13 Jan 2011. Daring into-the-sun shots; Broody, reality-cop-show delivery; Nice work.

Dave Burch, Whistler realtor, self posted video at youtube, 12 Nov 2008. Yeah, you guessed it, filmed while driving the Sea-To-Sky.

Kevin Hardy, Vancouver realtor, self posted video at youtube, 9 Nov 2009. Impressive. Agent Hardy makes a video while staying cool at the wheel, at moderate speed, in rain.

Paul Albrighton, Vancouver loft specialist, self posted video at youtube, 6 Sep 2009. The dashcam avant-garde? Through the wheel camera angles, messing with focus, obscured view. Adventurous, but is it true to the story?

More to follow…

“I had a client who was convinced that the Vancouver real estate market had finished it’s run and the bubble was about to pop. Now, prices are even higher and he cannot afford to purchase.”

From Lisa Gibson, Vancouver Realtor, self posted video at youtube, 18 Nov 2010“Hi, I’m Lisa Gibson, with MacDonald Realty, I help people buy and sell homes in Vancouver.
“Should I buy now or should I wait until the market slows down?” – This I get asked a lot. Generally, as most of you know, any of you who have waited more than a couple of years, have been outpriced by the market. So, I guess, overall the answer is, if it’s your home, you’re better off to buy when you can afford to buy, than [to] wait.”

From blurb accompanying the video:
“If you are waiting for the Vancouver real estate market to go down – don’t hold your breath.
Three years ago I had a client who was convinced that the Vancouver real estate market had finished it’s run and the bubble was about to pop. Three years later, prices are even higher and he now cannot afford to purchase.
The Vancouver real estate market has seen a steady increase for the last 10 years. This is in large part due to two factors: one, the fact that we have very limited land space in which the city can grow; two, we have a steady stream of immigrants from China who keep pressure on the market which in turn keeps our Vancouver and Richmond real estate prices from collapsing.
Generally, if you are buying a home it is always a good time to buy in Vancouver. Even if the market drops slightly, you are paying down a mortgage and building up your equity.”

This is always the story in a bubble, those on the sidelines look stupid until the whole things comes crashing down, then they look wise. Still, painful for the prudent in the meantime.
Also noteworthy for the “building up your equity”  and “(real estate always goes up (don’t hold your breath variant))” chestnuts.

Addendum: This honest impression from another Lisa Gibson video 18 Nov 2011[excerpted from video and blurb] – “How Do People Afford Homes In Vancouver? I don’t know! If I did, and there was some secret I would definitely share it here. I see some young people either getting money from parents, or the money is coming from overseas, or.. I just have no clue.. because they certainly are not making the money that can afford the prices that these homes sell for in Vancouver. [emphasis ours. -ed] Frequently I see young couples purchase an $800K plus home, in Vancouver or Richmond, and they are only in their early 30’s. I have no idea how they can afford it. I often wonder if they are just completely maxed out on credit.”

Seattle RE – Down 30% From 2007 Peak; Back To Sept 2004 Prices; Still Dropping

Down 29.6% since 2007 peak; prices back to Sept 2004 levels.
[from, hat-tip Don]

Our run up has been greater and our fall will be greater. – vreaa

Marketwatch Features Canadian RE – “It’s a crazy, crazy market”; “We just wanted to get in as soon as possible.”

Excerpts from ‘Housing Booms North of the Border‘,, 29 Mar 2011 [hat-tip Don] –

“Alex Kuzhel, a 27-year-old, first-time buyer, closed on a two-story home north of Toronto this month, after losing out in several bidding wars. He put down just 5% on the C$400,000 purchase price, all that he could afford. He and his wife earn more than C$100,000 a year. In addition to his 30-year mortgage, he is paying down an outstanding student loan and a car loan. “We just wanted to get into the housing market as soon as possible,” he says.”

“David Madani, Canada economist at Capital Economics, an independent research consultancy based in London, says Canadian housing prices could be in for a 25% drop in the next three years, a correction he says is warranted by the now-inflated ratio of house prices to income. House prices have risen to almost 5.5 times disposable income per worker, well above the long-term historical average of 3.5, he says. “We’ve been through a fairly hefty housing boom over the last 10 years, and the next three years is going to be an unwinding of that,” Mr. Madani says.”

“One of the things buoying Canada’s market is a global trend that has seen Asian—particularly Chinese–buyers snap up homes in places from Europe to Australia and to Canada, particularly on the West Coast. Chinese buyers have stampeded in to Vancouver and to Toronto, two of Canada’s hottest markets.Cam Good, a real-estate marketer in Vancouver, said he has sold 700 homes in the Vancouver area so far this year, 60% of them to Chinese immigrants. “That’s probably consistent for the whole market,” he said. “They’re the biggest group for everybody.” Mr. Good has seen so much business out of China that his company, The Key, opened an office in Beijing last month and is planning another. One of his strategies is to arrange chartered jets to bring potential buyers from China.”

“In the hottest markets, like Toronto, bidding wars are common. On a recent day, half a dozen agents for would-be buyers converged on a quiet residential street in the Toronto borough of East York. A 1,200-square-foot, semidetached home, listed at C$449,000, sold for C$526,000 that night. “It’s a crazy, crazy market,” says Sylvia Smith, a realtor with Re/Max Premier Inc. in Toronto.”

“The debt-to-disposable-income ratio for Canadian households rose to 148.9% last fall, according to Canadian government statistics, surpassing American borrowing for the first time since 1998. At the same time, the Bank of Canada has recently pointed out that the amount of home-equity loans has risen as much as 170% in the past decade and now represents about 10% of overall household debt.”

“Canada’s market is not in the midst of a bubble,” says Sal Guatieri, senior economist at BMO Capital Markets.

[We’ve pretty much heard all of this before, some of it looks like ‘churnalism’ (the Cam Good paragraphs seem verbatim from CTV or CBC or the Sun or the Province… where exactly…?). But the Alex Kuzhel anecdote is new (and thus it scores the bold typeface). Twenty-seven yr old FTB; “wanting to get into the housing market ASAP”; 5% down; $400K mortgage; other debts; now infinitely leveraged to RE (net-worth less than zero, ‘value’ of condo $420K). Bubble is alive and well. Imagine if/when that TO condo crashes 40%, they’ll be about 200K in the hole. We barely need to point out that the Kuzhels are another example of speculators disguised as fresh-faced, clean-scrubbed, well-meaning young citizens. Gamblers!
And Sal Guatieri is still wrong. We’ll archive his statement (again) in the Bubble-denier sidebar. – vreaa

Spot The Speculator #32 – “I feel working for a living is a waste of time after reading this. 200k gain in a little less than a year, it’s insane.”

From a thread started by eyesthebye at RE Talks 28 Mar 2011 1:24pm
“An easy 200K flip. 45 east 48th Ave.
Purchased in June/2010 for 665K; no recent work done.
Now on the market again for 849K.
Less than one year later – easy money.”

Taipan 2:05pm – “Its gambling isn’t it!? That’s not investing it’s plain and simple gambling.”

eyesthebye 2:27pm – “On the contrary, it looks like Vancouver real estate is the opposite of a gamble.”

FuturePorscheOwner 4:51pm – “I feel working for a living is honestly a waste of time after reading this. 200k gain in a little less than a year, it’s insane. Does anyone have a million dollars they want to lend out? I wanna buy a crappy vancouver special.” [Speak to your bank manager, they’ve helped out thousands of others! -ed.]

The sentiment expressed by the last commenter, that honest hard work for regular income is a “waste of time”, represents one of the most sinister effects of a broad speculative bubble on a community. – vreaa

US Housing Prices 1890-2010: Tracking CPI And Nothing More

from The Atlantic, 24 Mar 2011

“One argument I hear a lot is that foreign demand for local real estate has grown substantially in recent years, and that such foreign demand will be supportive of prices in the future.”

We have long suggested that foreign buyers of Vancouver RE are largely unsophisticated momentum driven speculators, who, along with similarly unsophisticated local specs, will be prone to dumping their RE holdings when prices head south. ‘No Money Down’ at 25 Mar 2011 9:09am pointed to a 2006 San Diego Professor Piggington post on the phenomenon; so pertinent to the Vancouver RE market today that we reproduce it here :

The Dumb Money
Rich Toscano December 20, 2006 – 8:45pm
One argument I hear a lot is that foreign demand for local real estate has grown substantially in recent years, and that such foreign demand will be supportive of prices in the future.
Unfortunately, this argument puts the cart squarely in front of the horse. Investors from other countries are well known to be the very last participants to arrive at the scene of a financial bubble. They are the last to hear about all the riches to be made, the last to buy in, and the last to realize that the party is over.

Bearish Buyers: Capitulation, Of Sorts – “Yeah, if there was ever a clearer signal of the top of the market. I’m also the guy who enters the shortest cashier line-up at the grocery store but still manages to exit after everyone in the longer ones.”

Bear capitulation occurs when a long term RE bear gives in and buys.
Yelling “That’s it, I’ve had enough, this market is absolutely crazy, I resign myself to renting for life!” doesn’t count. Also, leaving Vancouver may seem like capitulation but it isn’t. The bear has to give in and buy. One of the laws of bubblology states that the bubble is over when the very last bear that is going to buy throws themselves on the frenzied pyre of the market and is consumed in the flames. When that happens, we can get on with the crash, already.
Here are two (rare) anecdotes of bear capitulation, but they are both ‘qualified’ capitulations, and we thus don’t present them as evidence of a top. Our brief comment follows at the end of this post.
We don’t see very many stories of bear capitulation: if you know any, please send them along. – vreaa

Lost Soul gave an account of their purchase on two threads at RE Talks, 8 Mar 2011 and 25 Mar 2011. Excerpts from Lost Soul’s comments:
“This loooooong time bear likely will be an owner soon (accepted offer).
Please don’t categorize me as a bull. I’m buying with the expectation that we will take a financial hit for it.
We didn’t all of a sudden grow horns and start snorting. But something did grow and popped out after nine months and we needed more space. It’s not all about money. 😉
Could we have just found a bigger rental? — I suppose, but we just wanted a place to settle into and be able to do what we wanted with it without worrying about what the landlord would think.
Do we think this is a wise *financial* decision? — not a chance — this is pure consumption in our view. If by some bizarre happenstance the value of our place goes up 50% in the next year, we will not all of a sudden start crowing about how we were so brilliant to buy.
What if the market gets halved? — Bring it on! The loss on this purchase of course will be unpleasant but it also means that the next place we buy will have dropped twice as much in absolute dollars so net we’d still be ahead (if not by so much as not purchasing at all now). And ‘No’, the loss on the current place would not wipe out our dp for the next one — contrary to the beliefs of some here, bears are not necessarily on welfare living in their parents’ basement.
(Still) My advice to others: *We* are fortunate to have the savings and income to pull this off. If *you* are purchasing a place you’re not happy to live in for the next 35 years and buying it means Kraft Dinners, you might as well wait and pray for a crash — the “buy small and climb the property ladder” approach isn’t going to work.”

[In response to a comment “Lost Soul Buying…”] “Yeah, if there was ever a clearer signal of the top of the market. I’m also the guy who enters the shortest cashier line-up at the grocery store but still manages to exit after everyone in the longer ones.”

And a related story from enki at RE Talks 26 Mar 2011 8:47pm“I totally sympathize; I am a longstanding bear (and still am), and finally bought a townhome in Abby in August [2010]. I didn’t want to buy, but I was tired of waiting, and wanted some stability. Living across the street from some very good mountain biking didn’t hurt either. I bought the cheapest thing I could tolerate, and resigned myself to losing some equity while keeping my wife.”

These stories don’t really qualify as complete capitulation, as the protagonists remain mentally bearish, and actually anticipate a drop in prices. In complete capitulation the bear overextends themselves as much as other current buyers, and emerges from the experience as a born-again bull.
The anecdotes above are perhaps best seen as stories of ‘partial capitulation’. They are of interest, because, for a prospective buyer, the ‘partial buy’ and ‘renting’ are both compromises, but with different inconveniences.
For the record, we don’t think ‘partial buying’ is a good idea. Moving up during a crash may be more challenging than one expects. – vreaa

[Update: An exchange on 29 Mar 2011 between posters at RE Talks turns ugly, and Lost Soul confirms they paid cash for the above deal. Screen caps here and here.]

“These numbers are easy when you are writing on paper, but they are not easy when you have to pay from your pocket.”

Anecdote excerpted from ‘Customer fee to pay out mortgage doubles’,, 22 Mar 2011 [hat-tip] –
“A Vancouver man is speaking out about how Scotiabank charged him $25,000 to pay out his mortgage early — nine months after telling him the fee would be half that much.”
“Mohsen Movahed is an engineer who moved to Canada from Iran in 2006 and landed a job at BC Hydro. The following year, he and his wife bought a condo in North Vancouver with a mortgage of well over $400,000. Then they had a second child, his wife stopped working and he said the payments became unaffordable.”
“My income seems not enough. We have a baby,” said Movahed. “So I thought, I have to do something. Let’s contact the bank and see what I should do.”

[see article for full details regarding the mortgage penalty – in Nov 2010 when he sold his home, he was told the penalty for extracting himself from the fixed-term mortgage would be $34K]
“These numbers are easy when you are writing on the paper, but they are not easy when you have [to] pay from your pocket,” he said “I am financially in trouble. I just want to sell the property.”
“I can’t forget that day,” said Movahed. “Thirty four thousand dollar penalty! One of the guys at the bank said it was the biggest penalty he’d seen for that size of mortgage.”

[As he got closer to the end of the mortgage term, the penalty got bigger!]
“When he spoke to us in July, we would have used the four-year rate because he had about 45 months left on his mortgage. At the end of the year, he had 39 months left, so we apply the three year [lower] posted rate to the calculation,” said Scotiabank spokesperson Ann DeRabbie in an email.
“The three-year rate is lower than the four year rate, so the interest rate differential and the corresponding charge is higher.”

Movahed said he came out of it with less than a quarter of his original down payment. He said he now works at a second job — delivering pizzas — to make up for the money his family lost.
“I just want to let Scotiabank knows that how much that $25,000 is worth to me. I had to deliver pizza to the people — get dollar by dollar — to try to recover that,” said Movahed. “I was really hurt.”

We have seen relatively few of these types of stories thus far, because rising prices have tended to bail people out. Once prices start dropping, these tales of misfortune will become commonplace.
“These numbers are easy when you are writing on paper, but they are not easy when you have to pay from your pocket.”
Exactly, very well put. You can say the same thing about local prices. Impossible for the vast majority of buyers to actually consider earning and saving the purchase price. -vreaa

Spot The Speculator #31 – “My neighbours (late 60s, early 70s) have decided the way to fund retirement is to go into the RE development business.”

vancouverite at March 22nd, 2011 at 9:37 am“My neighbours (late 60s, early 70s) have no retirement plan other than the government so have decided the way to fund the rest of their lives is to go into the development business because, as they say, real estate only goes up. They HELOCed the hell out of the teardown they’ve been living in for 30 years (never had the money to maintain or fix up) and purchased a house down the block for $1.5M ($150,000 over asking and they were the only offer). They were in a panic to get the money before March 18th because they needed the full 95% of assessed value of their own house to be able to do their deal. They are expecting to sell the development for over $3M when it’s completed – the lot they bought is 33′ x 120′ half a block in from a busy street on the west-side. I see a world of pain in their future – they were scrambling to find cash to pay for liability insurance on the development site.”

Such a profoundly illustrative story it is hard to know where to start:
– Many are relying on RE for their retirement funds.
– Many believe that RE is the way to quick wealth. This couple are aiming to get ball-park 50% return over less than a year (assuming about $750K cost of build). That kind of return only comes with high risk, but the risk appears to be invisible to Vancouver RE players.
– Local speculators are buying westside properties.
– Banks are forwarding large HELOCs for dodgy projects.
– HELOCs are fuelling RE speculation.
– At least some of the pre-18-March demand was mortgage deadline related.
– Current sentiment includes urgency.

Vancouver Construction Industry Slowing?

Vansanity at March 23rd, 2011 at 10:36 pm“My buddy works for a company that specializes in a particular component of building material used in all construction. They had been busy recently, he was working 6 days a week. Well, that industry can be feast or famine and he’s being laid off as of April 3. He’s been with the company 15 years. In my opinion companies like his are the equivalent of canaries in the mine shaft and it shows that a slow down is coming. I think a lot of construction jobs are going to start getting lost. The fortunate ones will be able to get onto ongoing projects and the rest will ride some EI and maybe look at moving away eventually if nothing turns up over the next 12 months.
In my employment I deal with a lot of developers, contractors and the like, a lot. Many of the ones you all know by name. Recently, I’ve noticed a shift of their focus on redeeming lines of credit and payments that are outstanding… I can sense that for some of them the purse strings are starting to tighten. Again, this is another sign for me that construction is going to start winding down.”

Spot The Speculator #30 – “Friends of friends just bought a new place in North Van”; Old Home $500K; New Home $1.3M

Flip Flop at March 25th, 2011 at 9:12 am“Friends of friends just bought a new place in North Van. She’s a teacher who is about to get laid off, he just got a new sales job about 10 months ago. There have a 6 month old baby. List price on the house was $1.3M. 500 block of east 5th, if anyone wants to pull the close price. Granted they had made a little on the last place they owned, which probably sold around 500K. You’re only priced out if you want to be priced out. Still people out there getting in well over their heads.”

Another example of rampant speculation disguised as a wholesome family modestly climbing the property ladder. Their buying leans very heavily on the premise that RE prices can only go up. Aside from problems with being overextended month to month if income drops, they will very likely be completely wiped out in the coming crash. This kind of speculative buying is what is driving our market, and it is a far, far more important factor than foreign money. Like foreign momentum speculators, this kind of buying will disappear once price declines are well and truly established. -vreaa

“I worked my ass off to earn money in Europe, and saved up enough to buy a house in Vancouver. I’m ‘long’ Vancouver- political stability, bank stability, food security, fresh water security, good natives and immigrants, climate stability.”

LAF at VREAA 25 Mar 2011 at 8:32am“Folks, part of [all this] might be Asian money, but part of it is just, heck, Vancouver is a great place to live and people are becoming more aware of it (thanks Economist and Forbes surveys). I worked my ass off to earn money in Europe, and saved up enough to buy a house- in Vancouver. I still live in Europe, but I’m “long” Vancouver- political stability, bank stability, food security, fresh water security, good natives and immigrants, climate stability. C’mon guys, don’t blame the Chinese, realize the long term prospects of Vancouver and you’ll understand why so many of us foreigners/Expat Canadians see it is a very positive place in a highly uncertain future.”

We also like Vancouver, a lot, but we think Vancouver RE is disproportionally very overvalued, and in a bubble.  Those are not incompatible thoughts, to like Vancouver but see the bubble.
Two questions for LAF:
Did you take fundamentals into account at all when you made your purchase?
What percentage of your net-worth is represented by the current market value of your house in Vancouver? 20%? 50%? 100%? 400%? Ballpark is okay. Please share. -vreaa

“Lesson To All” From A Vancouver Realtor: “Ignore My Prior Lessons”

thinktom (local realtor) at RE Talks 24 Mar 2011 3:20pm“Funny enough, my buddy is a firefighter and lives in Richmond. He said the same thing. Many ‘For Sale’ signs and no buyers, unlike a month ago. If true, this should be a lesson to all of Vancouver East and West about how fickle the market can be, even with the ‘Asian invasion’ as it is often described.”

Gee, thanks for the heads up and ‘lesson’, Tom, but isn’t that the complete opposite of your breathless panicked warnings of just two months ago? [23 Jan 2011]:

thinktom at RE Talks 23 Jan 2011 4;38pm“One of the owners of a large west side RE company has a friend in Hong Kong who’s been living there 20 yrs. He says that the ‘official travel destination’ status from the Chinese government, combined with a restriction on investing in China RE, has opened the flood gates to dumping money into Vancouver real estate. He says ‘it’s only the beginning’.”

Well Grounded Or Not? – Fears Of Earthquake Suddenly Affects Richmond Buyer Behaviour

LY at 24 Mar 2011 at 6:48 am“One of my friend who rents in Richmond was so thankful that she lost in a multiple bid for a house a week before the Japan earthquake. She plans to look for a house elsewhere, [anywhere] except Richmond and Delta.”

SethM at RE Talks 23 Mar 2011 5:45pm“Anecdotal information from some Richmond realtor friends. The Mainland Chinese were spooked by the Japanese earthquake and Tsunami and have dropped Richmond like a hot potato. Their new stomping grounds are Burnaby.”

zrhdude at RE Talks 23 Mar 2011 10:00pm“I would agree that the Richmond Froth seemed to end as fast as it started as you are not seeing the crazy pricing of land values and fewer transactions. Because many people have seen the sales amounts, many have now listed (my parents are there and believe me – the numbers being received have prompted them to basically list now after 30 years). After the next two weeks of stats posting and the impact pushing a lot of sales into the beginning of the year to beat the mortgage rules, we are going to see some interesting market moves now through end of year.” and 24 Mar 2011 7:26pm“Definitely slower and you are seeing it in the daily stats. Listing are exploding and the sales are not keeping up like in February. Not seeing the same crazy bidding wars to push the prices up as well. So – The February month may mark the top in Richmond for a long time now.”

[Richmond was experiencing a market blow-off and would have reversed viciously at some point, earthquake in Japan or not. – vreaa]

“I wrote my MP and told him a nice story of a guy I know: $900k mortgage care of CMHC; 80% of the property rented to make the mortgage payments; less than $50k per year income.”

pricedoutfornow at March 23rd, 2011 at 10:56 am“I wrote my MP and told him a nice story of a guy I know who has a $900k mortgage, thanks to the CMHC and the government of Canada. I pointed out that this guy has to rent out 80% of the property to make the mortgage payments, and still managed to qualify for a loan, despite the fact that he’s never made more than $50k per year in his entire working life. Problem? Nahh….Of course, if this same guy had approached a bank for a business loan in the same amount he’d be shown the door so fast. But because it’s a HOUSE he bought, the bank welcomes him with open arms, since who cares if he defaults? CMHC will take care of it. No problem! Of course no politician wants to admit that this could be a problem. But I’m sure they all see the writing on the wall.”

“Met a Kelowna mortgage broker who said that many of her drug dealer clients are being foreclosed on.”

McLovin at March 24th, 2011 at 9:12 am“Met a Kelowna mortgage broker who said that many of her drug dealer clients are being foreclosed on. She said even the drug dealers in K-town are hurting. The strange thing is she thought this was funny because they were “DD’s” and “they deserved it”. What she didn’t find ironic was that she arranged their mortgages and obviously and willfully lied on their applications.”

Hot Asian Money (‘HAM’) Tales – “One buyer bought a house for $22M after viewing for just 5 minutes. He’s bought 10 houses here and has told his agent to keep on looking.”

unicas at RE Talks 22 Mar 2011 2:00pm“This house [on the westside] was listed for 1.99 mil, got 18 offers, and sold for 2.8 million. Some buyers told their agent to add 80K on top of next best offer regardless how much it is. The strange thing is the buyer requests completion in 2 weeks but offer to allow the seller to stay free for 8 more months? Anybody knows why?
Per today’s Ming Pao, one buyer from Fujian province bought a house for 22 million after looking at the house for just 5 minutes. He already bought 10 houses here and told his agent keep on looking. Another guy was quoted to have just bought 7 houses on the Westside. Including 3 in Shaughnessy.
There is a war going on between Chinese buyers to outbid each other. In the same article, it says one buyers pass by a house being renovated and asked the owner if he wants to sell, the owner says yes, the buyer paid 500k deposit on site.”

Michael Geller, Opinion – “While Vancouver prices are high by Canadian and North American standards, as evidenced by a recent photo essay on the most expensive streets in the world, they are still less than some European and Asian cities.”

Very occasionally we will headline the opinion of a local commentator, for the record. Hat-tip to jesse for alerting us to this recent comment on the Olympic Village and the Vancouver market by Michael Geller at 21 March 2011 3:39pm. Geller describes himself as “a Vancouver based architect, planner, real estate consultant and property developer with four decades’ experience in the public, private and institutional sectors.”

We’d characterize Geller’s outlook as “sunny and clear, with unexplained brief patches of drizzle”. He’s a complacent bull, he is not warning of an overheated market. He sees $700/sqft as a fair price for a condo in Vancouver. Comparisons of local pricing with “the most expensive streets in the world”, and the presence of mainland Chinese buyers, have soothed his concerns that prices may have gotten too high. At the same time he sees some westside/Richmond SFH lot prices as “outrageous”, and he notes the poor quality of construction (“the construction quality is not any worse than what one has come to expect in the Vancouver market”).
He plays the very tired and very wrong “stopped clock” card (roulette-betting version) and, in a rearview fashion, points to past price appreciation as a reason to not be bearish (“anyone who followed [Garth Turner’s] advice in the past has probably missed out on some significant property appreciation”). Both of those arguments are classic bull-blinkers during bubbles. Michael Geller is not warning of a bubble; in fact, the headlined quote classifies him as a bubble-denier. -vreaa

Here’s the recent comment from Michael Geller, in full, for the record:
I will offer a few thoughts on OV and the housing market as a whole.
I do not think anyone should attempt to generalize about the Vcr real estate market based on what happened at OV. The fact that prices were reduced by 30%in this project is not a reflection of a drop in the market. It is a reflection of the overly aggressive pricing for this development when it first went on sale, and in May 2010 when it was re-launched.
I think it is fair to say that most developers and real estate analysts in Vancouver always considered this project to be over-priced, given the location (it’s not yet Coal Harbour, or even the North Shore of False Creek); the general site and building designs which reduce the number of units with views and result in many contorted layouts, and the overall standard of finishes. I would also add that given the extent of exterior walls, which are included in the floor space calcualations, the effective interior area is often less than for a comparable unit in a more conventional building form.
That being said, I do believe that many of the units are now much more fairly priced. Indeed, I did encourage a friend of mine to purchase a penthouse unit at what I thought was a very attractive price.
As for concerns about construction quality, while there have been problems, including water pouring out of at least one light fixture, and problems with the heating system, I am told by people in the industry that the construction quality is not any worse than what one has come to expect in the Vancouver market. I understand that some of the green features have ‘bugs’ that need to be worked out, but this happens with many innovations. One day, they should offer increased livability and other benefits.
There is no doubt that some of the finishes are below the standard one might expect for a $1000 a sq.ft. plus product, but they are in line with $700 a sq.ft. product.
As for the unit layouts, there is no doubt that many of the plans are quite odd, and not always as furnishable as they should be. As to why this is, I too would like to hear from the marketing team, since this is something they usually go over with the developer and architects. (Sadly, too many architects are more concerned with the overall look and appearance of a building, than whether a bedroom is properly dimensioned to accommodate the required furniture.)
It is my view that the plans were not as good as they should have been because of the very large number of units being built at once; the many different unit types resulting from the many, non-standardized building forms; and the shortage of time due to the rush to get permits issued and construction underway.
(As an aside, I have spent weeks trying to perfect 3 unit types for a small project I am doing in W.Van, and am still fretting about certain details!)
But is the OV signaling a potential drop in the Vancouver market? No. Is the Vancouver market going to drop? Well, some of us have thought prices were too high for quite a long time. But now that many buyers are coming here from Mainland China, prices have remained high, especially in certain areas. (Personally, I find the prices being paid for West Side Vancouver and Richmond single family lots outrageous.) And to some degree, this indirectly influences the prices being asked for other properties.
While Vancouver prices are high by Canadian and North American standards, as evidenced by a recent photo essay on the most expensive streets in the world, they are still less than some European and Asian cities.
Two final thoughts. In my opinion, the adverse publicity resulting from the lawsuits from disatisfied purchasers has to be having some effect on the current sales program. How can it not? At the same time, I too find it hard to be too sympathetic towards someone who probably devoted less time purchasing a very expensive apartment than they would devote towards the purchase of a new car.
In this regard, I would urge future purchasers to review the floor layouts and unit outlooks carefully, both in the daytime, and at night.
Finally, as for Garth Turner….well, he has been predicting significant corrections in the market for a long, long, time. One day, he’ll be right, of course, just like the person who keeps betting on the same number on a roulette table. But in the meanwhile, anyone who followed his advice in the past has probably missed out on some significant property appreciation, especially in Vancouver.”

Avoiding Vancouver, Ongoing – “Businesses are starting to move out of Vancouver. The cost of living is too high to justify the salaries for employees.”

From the comment section of the G&M 17 Mar 2011 article ‘Vancouver’s new fleet of cargo tricycles’: ‘General Ham’ 18 Mar 2011, 4:15pm“Businesses are starting to move out of Vancouver. The cost of living is too high to justify the salaries for employees. We have already moved some of our operations to Vaughn and the remaining jobs will be moved to Texas this fall. Total loss will be 20 professional jobs.”

G&M readers were voting that comment down. Hard to imagine exactly why.  – vreaa

Realtors Confide: “Sales have slowed!” and Ask: “Was the spring market over before spring arrived?”

Larry Yatkowsky, local realtor, recounted the main points from a chat with fellow realtors 21 Mar 2011 [thanks Larry] –
“# March 18th’s end of the 35 year amortization may have a greater affect than previously thought
# Sales have slowed!
# Early outlook, expect March numbers to retrench
# Happened fast prompting the question – was the spring market over before spring arrived?
# buyers are indecisive
# interest rates are not an issue
# listing inventory is becoming a factor in slowing the market
# seeing solid buys on condo’s as some sellers are getting anxious”

House On Market 9 Months? -> Drop Price By One Tenth Of 1%

3641 West 14th Ave (at Alma); 2,496 sqft; 33×122 ft lot; Built 1974
Listed 1 June 2010, MLS V834521, Ask Price: $1,799,800
[Headlined here 9 Sept 2010, ‘Sellers Awaiting Divine Intervention’]
Now listed as MLS V862927, Ask Price: $1,798,000
On the market for 9+ months
Price drop $1,800 (0.1%)

Macleans: ‘The Canada Bubble’ – “Housing has gotten crazy, it’s a bubble. Prices are set to plunge at least 25 per cent.”

From The Canada Bubble‘, Macleans, 16 Mar 2011.
Read the whole article.
Excerpts –
“[David] Madani, a New Zealander, spent a decade with the Bank of Canada as a forecaster and policy analyst [and is an] outsider with an acute understanding of the inner workings of the Canadian economy. [His outlook] tends to get drowned out amid the Canuck euphoria. Last fall, he joined Capital Economics, a prominent U.K. investment research firm, to cover the Canadian market from Toronto. He says the boom in commodities is due for a reversal. More importantly, Canada’s red-hot housing market has soared into the danger zone. By his estimates, house prices are set to plunge at least 25 per cent, and will drag the economy down with them. “Housing has gotten crazy, it’s a bubble,” he says. “These things always have an unhappy ending, and Canada is not going to be any different.”

All of those benefits have fed directly into Canada’s apparently Teflon housing market. When the Great Recession hit, prices dipped briefly, but quickly rebounded as home­buyers borrowed heavily to get into the market. In fact, relative to incomes, house prices in Canada are now nearly as overvalued as they were in the U.S. at the peak of that country’s housing bubble, notes Madani.

[The] housing boom has also gone hand in hand with Canada’s household debt boom. Over the last decade, Canadians have doubled their consumer and mortgage debt loads, to more than $1.5 trillion. For every dollar of disposable income households earn, they now carry $1.50 of debt, a level higher than in the U.S. That’s a worrying stress point that could undo the high-flying Canadian economy if it hits turbulence—in exactly the same way heavy debt loads left American households exposed. “Canada’s success story is uncomfortably similar to the U.S. success story,” says Robert Shiller, a professor at Yale University who accurately predicted the real estate crash in the U.S. “It might be offensive to Canadians, but we’re like two peas in a pod.”

[After discussion on our dependence on commodity prices]. How secure should we be in assuming the commodity boom won’t turn into a bust? Not very, says Shawn Hackett, a commodity analyst in Florida who has dug into the sector’s long history of booms and busts. He analyzed the 10-year average annual rates of return for commodity prices dating back to the early 1800s. At no time have prices risen as fast and as high as they have over the last decade without being followed by a sharp decline. “If history is any guide, we’re higher than the 1980 top and much higher than the 1950 top,” he says. “Unless we are going to do something right now that defies 200 years of the way the rules of engagement have been in commodities, we’re due for a nasty spill.”

[It’s] Canada’s housing market, and those who have overextended themselves with massive mortgages, that stand to lose the most. The housing sector has become inextricably tied to the broader story of Canada’s elevated standing in the world. It’s a powerful and psychological link, says Shiller, who explored how bubbles form in his book Irrational Exuberance. “Bubbles are mediated by price increases and new-era stories,” he says. Any time you hear talk of a new era—such as Canada becoming the envy of the world, or that soaring commodity prices are here to stay—and it’s used to justify rising prices, it’s a good sign you’re in bubble territory. If a commodity bust does occur, one of the key foundations of the housing bubble would crumble along with it.

Commodities will not have to collapse for the Vancouver RE Bubble to implode but, if they do, it could be an absolute rout. We have ourselves been anticipating another deflationary wave since late last year.
The eventual price drops in Vancouver will be far greater than the headlined ‘25%’, with or without a commodity bust.
For Macleans to dedicate so many column-inches to bearish noises is noteworthy, not least of all from the perspective of sentiment. This may not evoke fear immediately, but it ‘primes the pump’ and puts that many more fingers on sell buttons.
– vreaa

“Vancouver is perhaps the most bubbilicious, distorted real estate market in North America right now. It’s as bad as anything that happened in America. Maybe even worse.”

‘tincup’ sent us the following by e-mail : “Thought this might be worth archiving.  On episode #145 of the KunstlerCast [24 Feb 2011] with James Kunstler (noted but controversial American author [* for context, see addendum. -ed.]) he says the following in response to a listener’s call regarding Vancouver Real Estate (The listener’s call starts at 24:48 and his comments start at 26:50 in the itunes podcast, or at his website KunstlerCast_145_Listener_Mailbag):
“Yeah, Vancouver is perhaps the most bubbilicious, distorted real estate market in North America right now.  It’s as bad as anything that happened in America. It’s as bad as anything that happened in the San Francisco Bay area, or Los Angeles, or Florida, or Las Vegas. Maybe even worse.”
He goes on about drug money and Asian investors too.
Regards, Tincup” [Thanks, tincup. – ed.]

Expanded version of exchange tincup refers to::
Caller: “Hello, Michael King calling from Vancouver BC responding to the podcast on Australia… it got into the issue of.. there’s a trend in Anglo-American countries for young people to look for housing in city centres as a response, a revolt, against the suburban lifestyle unfortunately, here in Vancouver, in the Lower mainland, which is the greater suburban area, there is move for people under the age of 35 or so to go to the suburbs and this has become quite a noticeable trend here.. … it may have something to do with the fact that in Vancouver, which may or may not be in a real estate bubble, you’re looking at about 400,000 Canadian dollars for a 600-700 sqft 1 bedroom condo in the downtown core. So, for many people, this is absolutely unattainable, for that amount of money, or even less, you can have your suburban palace…”
Kunstler: “I’ve been to Vancouver about 4 times in the last 6 years or so, and I got a very very substantial tour of the suburban outlands there, I saw a lot of them. And, there’s a couple of things going on… Vancouver is perhaps the most bubbilicious distorted real estate market in North America right now. It’s as bad as anything that happened in America. It’s as bad as anything that happened in the San Francisco Bay area, or Los Angeles, or Florida, or Las Vegas. Maybe even worse. … [comments about condo development and ‘new suburban stuff’] … What I was seeing when I was there, was real estate near the centre being hideously overpriced, and what was probably going to turn into an over-supply of suburban stuff way outside the city … you’re paying a premium to be close to the centre … for the most part they’re pretty car dependent … They do have some light rail out there but not nearly on the European level … and simply not adequate to serve this vast suburban outland. It’s an extremely distorted market…”

Kunstler (and the caller) argue that prices near the core are forcing people away from the city centre, into the lower mainland suburbs. Our perception, however, is that value (what you get for your money) is poor all over the area,  and, if anything, the bubble has caused some to leave or avoid the area entirely (rather than acting as a local centrifugal force). At this very moment, it is true that some peripheral markets have started dropping (Okanagan, Vancouver Island) and some have stalled (Northshore), but this is likely the effect of the beginnings of the bubble implosion, rather than a lasting effect. In other words, we wouldn’t see the bubble as having a sustained, longterm influence over choosing urban or suburban homes. Value is poor everywhere. We also expect eventual price percentage drops to be pretty much the same in all areas. – vreaa

* Addendum: Here’s what Ben McGrath had to say about Kunstler in The New Yorker [‘The Dystopians’, 26 Jan 2009] James Howard Kunstler, whose 1993 book about suburban sprawl, “The Geography of Nowhere,” is a staple of collegiate urban-studies curricula, and whose weekly blog column, Clusterfuck Nation, can be read as a sustained critique of the cheerful globalism championed by Thomas Friedman. His latest contribution to the doomersphere is an engaging novel, “World Made by Hand,” set in the post-collapse future, and while it’s not apocalyptic by the standards of, say, Cormac McCarthy’s “The Road,” it is comprehensive in its imagination of the disasters that await us: dirty bombs and race wars and dengue fever and flu epidemics and forced shavings by religious fanatics and hurricanes in New England in June. (Kunstler resists the doomer label-“I’ve never been a complete collapsitarian,” he says-but the fact that one of his bombs detonates in Washington on “twelve twenty-one” is likely to please superstitious adherents of the Maya calendar, which concludes its first cycle on what is now the Internet’s most popular day of reckoning: December 21, 2012.) “World Made by Hand” is set in a small town north of Albany, where the residents have no oil, no coffee, no spices, no mail delivery, and only sporadic electricity, but marijuana cultivation is booming and they’re growing “buds the size of plums.” Capitalism and human ingenuity persist; it’s only the economic incentives that change. “The action is going to be in smaller towns in the years ahead, because the cities are going to be so problematic,” he told me.

“Trusty” Toronto Real Estate Reality TV Star Contractor Charged With Extortion

From the National Post 14 Mar 2011
“The co-host of an HGTV show about turning unsightly properties into attractive real estate has been charged with extortion.
Barrington Anthony Sayers — who co-hosts The Unsellables and was also the featured carpenter on the W Network series Me, My House and I — was arrested on the weekend, Toronto police announced Monday.
Mr. Sayers, 41, was charged with two counts of criminal harassment, attempted fraud under $5,000 and extortion.
The saga began last month, when a woman hired Mr. Sayers, who also owns a general contracting company, to complete renovations at her home.
“The accused provided substandard work, criminally harassed and extorted the woman,” police alleged in a news release.
A graduate of George Brown College, Mr. Sayers has worked in the building trades for 17 years and has a large client base in Greater Toronto, according to a bio on HGTV’s website. A promo for The Unsellables describes Mr. Sayers as a “trusty contractor” who provides tips “for turning real estate lemons into lemonade.”

From video at
Announcer: “She says that when she refused to pay him more than he had quoted her, for work that he had allegedly not done, things went from bad to worse.”
Client: “He started harassing me, every day, he started making phone calls, he showed up at my house when I wasn’t here, went to my neighbours asking for my whereabouts, and at that point I started to feel very afraid to be at my house”.
Police detective: “We believe that this isn’t the first time that someone has been victimized by this individual.”

Price to Monthly Rent Ratio, 1000 to 1

1562 West 440th Ave, MLS V872582
3,910 sqft old-timer, on large 93x100ft lot
Listed 25 Feb 2011; Ask Price $2,485,00
Price change 17 Mar 2011; Ask Price $2,350,000

From realtor blurb: “Tenants occupied, rental at $2,600/per month, on a month to month tenancy. Extremely well maintained. Great potential to build your dream home on this 93′ frontage.”

Okay, actually the ratio is 904. It was 956 with the original ask price. We just couldn’t resist the ‘1000 to 1’ headline. Is this a world record? Investors like ratios in the 150 to 175, perhaps 200, range, to put this into perspective.
And, yes, yes, we know that this is obviously a land value sale and thus you can argue that the ratio doesn’t ‘mean’ anything. (Aside: Another perfectly adequate functional building gets destroyed). The fact remains, however, that people are renting in this city for a very modest fraction of ownership costs.
If they understood and considered opportunity cost, wouldn’t almost all landlords sell, right now?
And, if they then added a consideration of market risk… hmmmm.
Stir in steadily falling prices… kaboooom!  (all speculators exit left) -vreaa

‘Nobody Loves You When You’re Down 30% And Out’ – “This is not my fault. All I did is I just paid one point three million for this unit”

From Olympic Village Lawsuit‘, 16 Mar 2011,
“A lawsuit by a group of very unhappy condo owners.”

“Water dripping from the ceiling into toilets, or through light fixtures…”

“This owner’s apartment was without heat for 4 months after the heat and cooling system in the ceiling ruptured.”

Owner One voice over: “This is not my fault. All I did is… I just paid one point three million for this unit.”
Announcer: “That’s right, one point three million. He and owners have had enough.”

Owner Two (Mary Fines) “It’s not what we bought. [No, you bought something selling for about 50% more than it’s selling for now. -ed.] We’ve been lied to.”

“Lawyers say that it’s a first for Vancouver real estate, so many people, 62, wanting out of so many buildings, 5 in total.”
“It’s not just shoddy construction, like windows leaking when it rains…”

“…it’s about master bedrooms with no room for a queen-size bed…”

“The lawyers say, as owners of the land, and the lender, the City of Vancouver has an obligation to step in and fix these problems, or give the owners their money back.”
[Lawyer for Plaintiffs, Bryan Baynham]: “The product isn’t there. They were promised world class luxury and they got delivered something far far less.”

“The lawyer representing Marketer Bob Rennie suspects the recent price reductions of unsold condos may have something to do with this civil suit:
[Lawyer for Marketer, George Macintosh]“The arguments which are advanced officially… right?.. are.. are just attempts… right?… to get a complaint, when really what they’re upset about is the market price has changed.” [Agreed. -ed.]

“While the lawyers were talking today, Bob Rennie the marketer, mayor Gregor Robertson, and city staff, declined to comment or were unavailable to do so.” [Now that’s newsworthy… -ed.]

Owners love real estate when it goes up, but ruthlessly lose feeling for it when it becomes a leaking, cash-bleeding, price-dropping albatross. Expect more litigation in coming years. – vreaa

White Rock Condo – Paid $315K (2008), Sold $170K (2011), Loss $145K

Garth Turner at 16 Mar 2011 relays an anecdote from White Rock – “Garth we have accepted an offer on my mom’s condo.
Here’s the details:
– March 2008 – bought new condo in retirement complex. Total $315 taxes in.
– Currently 5 comparable units for sale in the same complex and 1 has been sitting 12 months.
– Jan 2011 – listed 229K – 30 days 1 showing, no offer. Price reduced to 209K – 30 days no showing, no offer. Price reduced to 199K – 1 showing, 1 offer, sold for 180K (minus move, commission, legal = 170K)
– Paid $315, Sold $170, Loss $145K”

Fundamentals – “When would you buy?”

We haven’t mentioned the actual word  ‘fundamentals’ here for a while, probably because they seem so, well, passé for Vancouver. But the concept remains alive and well, if a little dormant, in the minds of the few remaining prospective buyers who see the market as bizarrely overvalued. Sometimes such folks are asked: “When would you buy?”
On a recent thread, ‘matt’ pointed us all to a 2008 NYTimes article on this very subject, a useful reminder in these frothy times. It’s worth the re-read, if just to keep oneself in touch with the reality of the extra-Vancouver universe:
‘As Home Prices Drop Low Enough, a Committed Renter Decides to Buy’, by David Leonhardt, NYTimes, 28 May 2008. A few excerpts: –

“One of the big lies of the real estate business is the idea that renting a home is tantamount to throwing money away. It’s a useful fiction for real estate agents, because they make vastly bigger commissions on house sales than rentals. But the comparison isn’t nearly so straightforward for the rest of us. Renting involves one obvious, recurring cost that can never be recouped: the monthly rent check. Buying, on the other hand, involves multiple expenses, some of which aren’t so obvious. On top of closing costs, there are repairs, property taxes, mortgage principal and mortgage interest. When you own, you also lose the ability to invest your down payment elsewhere, like the stock market.”

“Over the last several years, I’ve come to like a simple, back-of-the-envelope way to compare the costs of renting and owning. You find two similar houses, one for sale and the other for rent, and divide the sale price by the annual rent. You can call the result the rent ratio.
It’s the real estate market’s version of a price-earnings ratio — a measure of how expensive an asset is, relative to the underlying economic fundamentals. Like a P/E ratio, the rent ratio provides something of a reality check.
Throughout the 1970s, ’80s and ’90s, the average rent ratio in the US hovered between 10 and 14. [In the mid 2000’s] it broke through that historical range and hit almost 19 by the time the housing market peaked [in the US], in 2006.
And while home prices — and rent ratios — have always been higher on the coasts, they reached whole new levels recently. In the Washington area, the ratio went above 20. In Boston, New York, Los Angeles and south Florida, it topped 25. In Northern California, it approached 35, higher than it had been in any city, at any point on record.
In concrete terms, a rent ratio above 20 means that the monthly costs of ownership well exceed the cost of renting.”

“The question facing my wife and me was whether we were entering the market before the correction had gone far enough. I really didn’t know what the answer would be. So as we looked at houses, I started calculating rent ratios. In the neighbourhoods where we were looking, two-bedroom condominiums were selling for $400,000 and being rented for about $2,100 a month, which makes for a rent ratio of 16. Four-bedroom houses were selling for $700,000 and being rented for almost $4,000, which makes for a rent ratio of 15. No matter the price range, pretty much every apples-to-apples comparison produced a similar ratio. Historically, this is still a bit high.”

Using similar calculations, ‘rent ratios’ [sales_price/annual_rent] for SFHs in Vancouver are currently commonly in the 40-42 range. -vreaa

Former Surrey Town Planner Charged With Taking ‘Secret Commissions’ Regarding Development Application, And Use of City Funds To Buy Own House

From 15 Mar 2011 [hat-tip Nemesis] – “Criminal charges have been laid following a year-long investigation of a former Surrey city planner. Akonyu Akolo is facing charges of breach of trust, secret commissions and fraudulent concealment, Surrey RCMP said Tuesday. The allegations involve several thousand dollars.
The charges relate to a development application, but there was no allegation or finding of wrongdoing on the part of the applicant, police said.
The City of Surrey has also filed a civil suit against Akolo, alleging he used misappropriated city funds to buy a home in Delta. [From 8 Mar 2011 article: “The city alleges Akolo used the city’s money in the purchase of a house on Chateau Wynd in Delta with an assessed value of $624,000.”]
None of the charges against Akolo have been proved in court.”

From the video: “His house is in a quiet upscale neighbourhood, and the city alleges he may have defrauded the city of enough money to pay for it”.

“My office mate just bought a house WAYYY above his means in Vancouver.”

Trollette at March 14th, 2011 at 1:34 pm“My office mate just bought a house WAYYY above his means in Vancouver. He did not come to work this morning. You know why? His breaker blew up!!! He could not believe how much he had to pay to have it fixed by an electrician. Apparently the wiring had been done in a rush during the pre-sale renos, and was not to code…”

CREA’s Ongoing Backcasts – Predicting What Will Happen Last Month

From the G&M 15 Mar 2011“Gains in house prices are likely to “recede” starting next month as shorter mortgage terms keep some buyers out of an already softening market, the Canadian Real Estate Association said Tuesday.”
“When you take Vancouver out of the equation, the year-over-year increase in the national average price drops to 3.4 per cent,” said Gregory Klump, the association’s chief economist. “While that’s still stronger than in the past six months or so, national average price gains may recede after tighter mortgage regulations take effect in March.”

Alex at VREAA 15 Mar 2011 pointed to the CREA prediction above and asked “Didn’t they just finish telling us prices would RISE throughout 2011?”

Yes, they did, in this CREA press release at, 8 Feb 2011 – excerpts:
“The Canadian Real Estate Association (CREA) has revised its 2011 forecast for home sales activity via the MLS, and extended it to 2012.”
“The national average home price is forecast to rise 1.3 per cent in 2011 and 2012, to $343,300 and $347,900 respectively. Average price is expected to rise modestly in most provinces, reflecting the continuation of a healthy balance between supply of, and demand for, homes listed for sale.”

The two reports are not completely mathematically contradictory, but they are very different in spirit, going from optimistic to guarded based on very recent price action. We have discussed this phenomenon before. [CREA ‘Forecast’ Is Actually A ‘Backcast’ – “Plus 13.3%… No… Make that Plus 5.5%… Actually, scrap that… Let’s go with Minus 1.2%.. No, wait.. wait.. it’s coming to me..!” (VREAA 4 Aug 2010)] The CREA reports are commentaries of things past, and they have absolutely no predictive value whatsoever. What is frustrating is that they don’t simply admit it. -vreaa

Private Moment: Vancouver RE; World Events – “The Contrast Is Astonishing”

We’re sure ‘painted turtle’ [ 15 Mar 2011 9:46am] is not alone in having this kind of experience in recent days“I am sitting in a coffee shop right now. The TV shows the nuclear troubles in Japan, stocks going down, and turmoil in the Middle East. Right below the TV set, 4 men talking real estate: the lower mainland will continue to see price increase, forever, an express train will be built to Squamish and Mission, I am going to buy a rental property there, etc… The contrast is astonishing.”

Kitsilano Versus Hollywood Hills

This comparison discussed at other sites, reproduced here thanks to Nick:

2165 W 8th Ave, Kitsilano. MLS V868142.
3962 sqft house, 50x120ft lot [6,000sqft], multifamily zoned.
4 suites, gross revenue $70Kpa, ‘Oldtimer’
$2,250,000. Cap rate less than 3%

Not apples to apples, we know, but, regardless, compare with:

Ashton Kutcher’s 3235sqft house on 0.9 acre lot [39,204 sqft] in Hollywood Hills, L.A.
$2,600,000. [That’s $2,524,271 Canadian. -ed. 😉 ]

Spot The Speculator #29 – “Alice Zhang, who moved from Hangzhou, China, to Vancouver two years ago, now lives in one of six properties that she and her husband have purchased in Vancouver since moving here.”

From ‘Vancouver’s luxury home sales surge, largely due to influx of offshore money‘, Vancouver Sun, 14 Mar 2011“Alice Zhang, who moved from Hangzhou, China, to Vancouver two years ago, now lives in one of six properties that she and her husband have purchased in Vancouver since moving here. Zhang, who has two children, is waiting to move into a new home they’re constructing on a Shaughnessy lot that they bought for about $3.1 million. The house is expected to cost another $3 million, which Zhang believes is a good deal.
“We moved from the most beautiful city in China to Vancouver, which we consider more beautiful,” said Zhang, whose family owns hotels and a real estate development company in China.
“I think that compared to other Canadian cities, Vancouver is expensive. But, China is more expensive [than Vancouver].
“And the air is very fresh here and it’s very green. You feel like you’re in a garden.”

As we’ve said before, SPECULATION is driving this bubble. Watch as speculators of every stripe dump their properties during the coming meltdown. -vreaa

“Crazy But Also Real”? – Foreigners Bringing In 4 Million, 30 Million, 100 Million…

This story is archived here, for the record, without judgment regarding its veracity. Regardless of whether it is true or not, it is at the very least of interest as being reflective of current talk. -vreaa

unicas at RE Talks 10 Mar 2011 9:56pm“Just to share what I see in this market, it is crazy but also real. I met a young girl today at a client’s office in Richmond. The girl’s parents are in China and are close friends of my client who told me the family is rich and girl needs some tax advice. When I walked into the meeting room, the girl was playing her iphone. she is in her early 20s, no make up, no LV handbag etc. We started to chat, she said her family is facing a big problem. She said when they landed in Canada, they only declared they have $4 million dollars worth of overseas assets, meaning they can only bring up to $4 million into this country without paying tax. She said her family did that because the immigration consultant told them not to declare too much. But in fact they need to bring into Canada a lot more. I asked how much more, the girl said at least $100 million. I asked what happened with the 4 millions that you can bring in tax free, she answered she got the money already and she bought condos. She did not say how many, but said one is in coal harbour. She said her parents will only get the maple card but have no intention to move to Canada. She is going to college here. She said she will get her citizenship and leave Vancouver in 3-4 years , mostly likely return to China. I asked why you bring that kind money here if you have no intention of living here. she said money is safe here. And she can manage it even she lives in China. I asked what you do with the $100 million here, she said they will invest, may be buying land, house etc. She asked in great details what other way they can bring the money in Canada and told me her mom will come to Vancouver in April and will discuss with me more.  When the girl left, I saw her drive a BMW X5, not a big deal in Richmond, but $100 million? I now regret I married too soon. Since I became independent accountant, |I have dealt with two other clients who are worth over 100 mil, one is about to leave Canada as non resident this coming May and go back to China when their daughter graduates from UBC.  You don’t meet this kind of rich people everyday. The most money I was consulted to bring into Canada was $30 million before I met this girl. But new comers with a few million dollars? There are tons…..”

Another story, in a similar vein:
Marco911 at RE Talks, 12 Mar 2011 8:25am “Had dinner with a good friend of mine who works in immigration and said that there is a waiting list of approx 46,000 mainland Chinese with an individual liquid net worth of no less than $4.5 million. He works closely with a few realtors, one of who was also with us at dinner. That realtor said that the only people buying right now for the most part, are mainland buyers.”

“I lived in Houston for 5 years, and it is indeed amazing what you can buy there compared to pretty much anywhere in Canada.”

Krazy Kanuk at March 8th, 2011 at 12:28 pm
“Texas is a subject near and dear to my heart. I lived in Houston for 5 years (left about 6 years ago), and it is indeed amazing what you can buy there compared to pretty much anywhere in Canada.
I agree with
[previous VCI poster] patriotz regarding property tax keeping a lid on prices. It’s roughly 3.25% a year in Texas. There do exist million dollar houses there, but it’s rare. You would pay almost $3K a month in taxes on it. I think it’s a better system. The high (percentage wise) property tax rates help keep prices stable. You can get a nice house there for $150K, and pay about the same taxes (in dollar amounts) as here in Vancouver. You can get a very liveable small older house for $70 to $80K. Oh, and you could rent out that house for $1200 to $1500 a month.
Having said this, I guess nothing can completely fix stupid. During the early 80′s, even Texas had a property bubble because “we have oil” (sound familiar??). If I remember correct, real prices still haven’t recovered.”

“Self-employed colleague pre-approved for a mortgage 6x his gross declared income. Same guy couldn’t get a mortgage more than 3.3x his income back in 2003, when he had a stable job.”

gse36 at RE Talks 11 mar 2011 10:35am“Just got off phone with a colleague of mine. Pre approved for a mortgage 6x his GROSS income — from one of the big 4 banks. All it took was a single notice of assessment (haha I guess it could be faked — and could be a stated income mortgage). The guy is self employed. Some of the income is not stable (stock gains, side income, etc), but the NOA does not differentiate. You could easily fabricate income through realizing stock gains one year to bump up the income. He was never asked how long he’s been self employed, etc. Basically told to provide 1 year of NOI and how much he wants to put down (this isn’t a CMHC mortgage either — you would think the banks would actually care). His Net income is much smaller due to RRSP contribution. If you take Net income, its 7.2x net income! Looks like the party will roll on. Nothing has been done to ease the credit lending practices in Canada. Same guy couldn’t get a mortgage more than 3.3x his income (he had a regular stable government job back then) back in 2003.”

Vegas Versus Vancouver, 1987-Present

Following up on the last post, and as a weekend diversion, here’s the REBGV average nominal price chart 1977-2011, for detached, attached and apartments, overlaid with a semi-opaque insert of this Las Vegas house price chart, for the purpose of absolute price comparisons 1987-2009 (scales are the same; but there is no correction for currency exchange fluctuation):

One interesting aspect of this comparison is that, in 1987, when a loonie was worth about 70c US, the average detached home in Vancouver cost roughly the same as the average house in Las Vegas. Now, in 2011, the house in Vancouver costs more than 6 times the house in Vegas.

Speculation Drives The Bubble – “This boom was driven not by a sense that it was temporary, it was driven by a sense of a new reality, that home prices would just always go up at 10% a year.”

From video excerpt of a talk by Robert Shiller on the US housing market, at the Schwartz Center For Economic Policy Analysis, 18 Feb 2009. [full talk here].

[at 3:41min] “All of a sudden, in the early 2000s there is this huge boom, and then sudden collapse. Now, it’s partly due to the sub-prime lending revolution, and that’s why the low tier homes went up the most. But I wouldn’t blame it on the sub-prime revolution, because sub-prime primarily effects low price homes, and you see the high priced homes in the same boom. Moreover, I think the sub-prime revolution is in some sense a consequence of the housing bubble… people got so excited about housing, the lenders believed it too.. thinking they were doing these low income borrowers a great favour by getting them into a mortgage. .. They all believed that home prices were going to just go up and up… I know they believed this because [we did questionnaires about expectations]. The mean [home buyer] expectation in LA at the peak of the market was 23% per year for the next ten years.. that’s what people told us… about a third of the people were just wacko about this.. you know it just can’t be right. [comment on compound interest].
This boom was driven not by a sense that we were in a temporary boom, that you want to get out of, it was driven by a sense of a new reality, that home prices would just always go up at 10% a year… it ain’t so, prices don’t do that… people got this crazy idea…”

“This is Las Vegas… isn’t that amazing?… Las Vegas, which is the gambling centre of the country… All of a sudden, wham… In a lot of the cities, the prices are back.. the bubble is over.. the concern now is whether we’ll overshoot.”

Japan Struck By 8.9 Earthquake And Tsunami

“My wife and I earn nearly 4 times the median household income in Vancouver. We can’t afford to buy a decent home for our family. This thing either starts crashing or we are out of here.”

Cognizant at 9 Mar 2011 12:33am [hat-tip to Nick] – “My wife and I earn nearly 4 times the median household income in Vancouver. We can’t afford to buy a decent home for our family. This thing either starts crashing or we are out of here. I can’t live with the rage I feel towards all of the greedy realtors and house porn addicts who don’t see that the crazy RE prices here are DESTRUCTIVE and dangerous. I am so crazy mad at all of this. …
Everyone is so blinded and irrational about this that it is pretty lonely being a RE bear these days.”

Destructive and dangerous. Agreed. – vreaa

“There is a suite for sale in my building” – Rent vs Buy Comparison

taylor192 at March 8th, 2011 at 9:19 am
“There is a suite for sale in my building for $310K. 10% down for 30 years @ 4% is $1300/mn plus $150 condo fee and $150 property tax == $1600/mn for 480 sqft without a bedroom. Similar units rent for < $1200/mn.
A 900sqft 2bdrm just rented for $1750/mn. There was a young couple looking at buying it, I couldn’t fathom it. I would probably kill my partner if I had to live in such a small space, with less money available to do things outside of the space.”

Economy; Employment: BC Film and TV Production Industry Business Down 23% YOY

From G&M 10 Mar 2011“British Columbia’s Film Commission says 2010 was a strong year for the province’s film and television production industry, despite figures that show an overall drop in spending from 2009. A total of 246 productions were shot in B.C. last year – a slight increase from 2009 – but overall spending fell from $1.3-billion in 2009 to just over $1-billion in 2010.”

Interesting that the G&M headline was “Strong year for B.C. film and tv industry, despite slight drop in spending” -ed.

Update on West-side House – Sold For $2.83M

4411 W 11th; 4,696 sqft; 63×121 lot
Listed 9 Oct 2010 $2,980,000;
Price change 6 Dec 2010 $2,890,000
Headlined here 6 Dec 2010
Sold 15 Feb 2011 $2,830,000

We stand by our estimate/guesstimate predictions that properties like this will sell for less than $1M in the coming RE bear market. -vreaa

Mortgage Brokers Protecting People From Mortgage Brokers

Angela Calla (Mortgage broker, & host of ‘The Mortgage Show’ on CKNW), on Global BC TV, 9 Mar 2011: [regarding mortgage rule changes] “It’s not a bad thing. When you have 30 percent of borrowers in the last three years since they’ve been available going into longer amortizations you have to look at the reason why people get home ownership is for security and affordability, and if a market changes you want to ensure that people can still have control of their home, and that’s why they have their home in the first place. So this protects people.”

And on ‘The Fox’ Jan 2011 (discussing the same mortgage rule changes)

Interviewer: “Jim Flaherty changed the rules this week, and… the truth is, there’s probably a lot of Fox listeners out there paying $1600 in rent and that could easily be going to a mortgage, right?”
Calla: “Oh, easily.. I mean, you want to own a condo for $300,000? It’s going to cost you about 1,120 bucks a month, and you own a condo… for 300,000.” [recites numbers of listings at these prices in different parts of the city]
Interviewer: “What do you get in Vancouver for $300,000.. you get a shoebox, right?”
Calla: (shrugs) “Ah – You gotta start somewhere… You may be renting that shoebox for a thousand twenty bucks a month, so there’s options out there…”

Global BC TV: New Mortgage Rules In 9 Days – “Sales surge; Move Quickly; Deadline; Compromise; Buy Lesser Property Right-Away”

Global BC TV, 9 Mar 2011
CHRIS GALUS: “One factor that’s fuelling the real estate market right now is the change in lending rules that will take effect in a week and a half. That’s when mortgages will get a little tighter and you’ll have to pay them back faster. And a sales surge was expected as many first time buyers move quickly to meet that deadline. Ann Drewa explains why…”
ANN DREWA (REPORTER): “Vancouver real estate doesn’t seem to be cooling down, and for first time homebuyers it’s about to get even more difficult to plunge into the market. On March 18th new lending rules will apply. The federal government will reduce the maximum amortization period for government insured mortgages from 35 years to 30.”

ANGELA CALLA (Mortgage broker, & host of ‘The Mortgage Show’ on CKNW): “It’s not a bad thing. When you have 30 percent of borrowers in the last three years since they’ve been available going into longer amortizations you have to look at the reason why people get home ownership is for security and affordability, and if a market changes you want to ensure that people can still have control of their home, and that’s why they have their home in the first place. So this protects people.”

ANN DREWA: “The new rules apply to potential buyers who are only able to put down less than 20 percent on a down payment. For example, for a $300,000 property with a fixed rate of 3.79 percent, under a 35-year amortization monthly payments would be $1,285. Compare that with a 30-year amortization, monthly payments rise to almost $1,400. That works out to an extra $106 a month.”

ANGELA CALLA: “It might not take them out of the market completely, but they’ll certainly have to have some consideration to the lifestyle that they have and possibly won’t be able to have that extra dinner out a month.”

ANN DREWA: “The reason why the federal government is scaling back is to keep Canadians from swimming in debt and to avoid the economic catastrophe south of the border. In addition, the move is likely to prepare for higher interest rates.”

ANN DREWA: “For real estate agents like Carsten Love clients are trying to beat the looming deadline. For those that don’t make it, they’ll have to make some tough decisions.”
CARSTEN LOVE: “They’re going to have to decide that are they going to wait and try to save up more money, wait for their income to rise so that they can again afford the property that they wanted to buy, or do they buy right away but the lesser property, a property that they weren’t expecting to buy.”

ANN DREWA: “It may seem like a compromise now, but it could mean avoiding a financial disaster in the future.”

[thanks to GreenhornRET for the video, and to Angela for the transcription]

Animal Spirits, Primitive Superstitions – “Address numbers could hold key to fortune”

From CBC news article (online and video), 9 Mar 2011 [hat-tip Nemesis] –

“Leah Hendry now with how changing your house number, could help you get lucky. An increasing number of Vancouver homeowners are changing the numbers in their property addresses — to attract either good luck or Chinese homebuyers. For $676 you can apply to change your address.”

“The number four may seem innocuous, but for some cultures the word sounds similar to the word for death. “In Chinese, it is pronounced as sssss, and the Chinese [word for] death is zssss,” said Vancouver realtor Alec Zhang. “That is why people do not like the four.” A number ending in four is especially avoided, he said.”

Linda Wener had her home on the market for five weeks before it sold for well below her asking price. Her house number was 3364. “I just never even thought of it,” said Wener. “Somebody said it was ‘bad.’ I said, ‘It’s what it is.'”

The number could have been a factor in how the sale went. “If you keep this number, it may reduce your house value by two, three, even five per cent. If you can change the number to 3468 or 3466, that would be a perfect number for Chinese buyers. “

Vancouver realtor Wayne Hamill says spending $676 to change his house number was a good investment. “8s tend to get a little more attention than houses that don’t, they get a lot more attention than houses with 4s in them”

“We’ve had 8 (address change requests) just in the first week of March.” [That’s gotta be a good sign! -ed.]

Comment: We’ll call this what it is: Primitive superstition; magical thinking; false belief.
Just the kind of lunacy one would expect to make the news and alter behaviour when the herd is running crazy. Animal spirits are pulsing.
Next up: Exorcise your basement. -vreaa

“Westside sellers are getting a comparable house on the Eastside, are putting huge sums of dollars in their bank accounts and still drive to work in 12 minutes.”

SethM at RE Talks 7 Mar 2011 10:04pm“My high school buddy is a west side realtor. His listings are selling to Mainland Chinese. The vendors are longtime Vancouver residents. Guess where they move to when they want to be equidistant to their downtown office? They move to East Van. Mainland Chinese are pushing westside locals to West Van and to East Vancouver. Westside sellers are getting a comparable house on the Eastside, are putting huge sums of dollars in their bank accounts and still drive to work in 12 minutes.”

The majority of people who substantially decrease their RE holdings during a bubble will do fine. -vreaa

20-Something Chat: “I bought a house in Kits last week” .. “Did you win the lottery?” .. “No, I’m just in debt for 60 years. I better get a job after school.”

painted turtle at March 7th, 2011 at 7:28 pm
“I am done wondering about this real estate market after what I overheard today. I almost choked:

Person A (20 something): “I bought a house last week”
Person B: [silence]… “Do you like it?”
A: “Oh yes. It’s in Kits, and 1400 sqft!”
B: “….. Did you win the lottery?”
A: [laughing] “Oh.. no… I’m just in debt for 60 years. …. Well, I guess it means I better get a job when my education is completed.”