Monthly Archives: April 2011

Open Reply to Rusty – “Just because you perceive a bubble does not make it so. Bubbles are only identified after they’ve burst.”

Rusty at VREAA 30 April 2011 8:47am
Just because you perceive a bubble does not make it so.
Bubbles are only identified after they’ve burst.
Or do you define a bubble as a real estate market where you personally cannot afford to buy?
What is your “pre burst” definition?”


Dear Rusty

Thanks for your question.

It is a myth that “Bubbles are only identified after they’ve burst”. The myth is propagated by those directly or indirectly benefiting from the bubble, and also by vested interests in postions of responsibility, who could make a difference, but decline from so doing. An example of this is Alan Greenspan keeping monetary policy too loose through the tech and US housing bubbles, claiming that you can’t identify a bubble in advance. Greenspan is simply wrong on this point, and many observers saw those bubbles for what they were during the process of them being inflated. Yet, we still hear this myth perpetuated (as in your bold claim). This is closely related to the ‘hoocoodanode’ responses you’ll get from various players after a bubble inevitably bursts. It’s also a way of those guilty of policies and actions that perpetuate bubbles to claim innocence after the fact.

A speculative bubble can most definitely be identified while it is inflating. Such a bubble occurs when prices of any asset lose contact with fundamental values of the asset and start rising higher and higher simply because they are rising higher and higher. All buyers in such a market buy with the expectation of higher prices, some buying solely for the expected higher prices.
Almost all bubbles are supported by fallacious arguments citing ‘reasons’ for differences between bubble price and fundamental value. For instance, during the tech bubble, we heard the argument that P/Es of 1000 were merited because “we’ll be able to sell to everybody” (neglecting to take into account the fact that everybody else will be able to sell to everybody, too).
Bubbles are also facilitated by large quantities of easily available cheap capital.
They are all versions of Ponzi schemes, where, essentially, the late-comers are left holding the bag after prices collapse, and the only players who profit are those who get out early enough (surprisingly few), and those who sell ‘shovels to the prospectors’ (brokers; some developers, some in construction, etc).
All bubbles deflate, no exception (If you can think of any, let us know). Prices return to levels that make sense according to fundamentals. In fact, as we see now happening already in some areas of the US housing market, they often drop well below fundamental value, and may remain depressed for the better part of a generation. Bubbles are very, very destructive to a community, both through the terrible misallocation of human effort & resources on the way up, and through the tragic financial, social, and psychological consequences of the aftermath.

In Vancouver currently, median housing prices are about ten times median income, and rental yields are extremely low, much lower than one would expect even at current low interest rates. Thus, prices are far, far removed from those merited by fundamental value. By our calculations, prices are 2 or 3 times fair value, meaning that we’d expect price drops of well over 50% when the bubble deflates. But people continue to buy believing that prices are only going to go up (or, a slightly different version, that prices couldn’t possibly drop by more than 5% or 10%, before continuing higher). Higher and higher prices are ‘supported’ by fallacious arguments (“we’re running out of land/best place on earth/never-ending demand/foreign buyers”). Capital is very freely available, along with low deposits, long amortization periods, and government loan insurance.
By all measures, we are in a massive speculative bubble. Massive in terms of both the percentage of citizens involved, and the size of the overvaluations. This is not an opinion, it is a fact.

You have suggested that we may define ‘bubble’ as a market in which we, vreaa, cannot afford to buy. That is a fair thought for you to have. We could claim that this information it is neither here nor there to this discussion, but it is fair for you to know if we’re just ‘talking our book’. So, we’ll share with you that we can indeed ‘afford’ to buy, even at current prices, and definitely by all Vancouver standards. But we choose not to, because of the massive disconnect between price and fundamental value; because of the RE bubble. There is a very small minority of prospective buyers in this position in Vancouver. It is never easy to be on the wrong side of a bubble, but what else can you do but call it as you see it?

Say we had to reframe your statement to read: “Bubbles are only identified by the vast majority after they’ve burst.”
That we’d agree with. By definition, once even a minority start bailing, the bubble bursts. We haven’t reached this point yet in Vancouver’s remarkable market, but we will get there, and after we do, there will be a very broad consensus that we have indeed been through a very large bubble.


“I would be content with a house like this. My dream has been shattered.”

unicas at RE Talks 26 Apr 2011 9:24pm“I will be content with a house like this, doesn’t have to be in Vancouver. This is the kind of upper middle class housing we expect to see in most parts of North of America. My dream has been shattered.”

4,351 sqft SFH; 0.46 acre lot; built 2006
Ask Price: $479,999
Price/sqft: $110/sqft
On market 180+ days
MLS/ID: 11490706
Shady Shores, Texas, 76208
[Median household income: $94,746 – ed.]

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9c: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9c: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

8. Water — the enemy

Remember this mantra: Water is a house’s worst enemy. — Tom Silva, This Old House

Vancouver was carved out of a temperate rainforest. The forest is gone, but the rain is still here. It’s what keeps everything green and allows the remaining trees to grow large, but it also represents a constant assault on the integrity of houses. The frequency and duration of rain in Vancouver is the real problem for houses and wood-frame condos, rather than the total amount of rainfall. Instead of intermittent cloudbursts that dump a lot of water in a short time before the sun reappears, drying out everything, rain in Vancouver tends to be an all-day or all-week affair. Drizzly, misty, fine rain alternating with overcast skies means that buildings can stay damp for long periods of time, which coupled with mild temperatures is exactly what promotes mould growth and rot.

One way of looking at a house is as a water-resisting structure, or perhaps more accurately, a water-management system. Most of us would think first about the roof, but in some ways roofs aren’t the main problem. They’re specifically designed to resist and shed water, and if properly built and maintained, do their job well. Problems that do arise tend to be with roof penetrations for vents, chimneys, or skylights, and improperly installed or poorly maintained flashing and caulking. But everything’s exposed, so finding and fixing problems is usually straightforward.

If you’re buying a house, one thing to be cautious about is a roof with insufficient overhang — the part of the roof that extends beyond the house wall. Overhangs are important because they prevent water from rain and roof runoff saturating house walls and potentially working its way into the house. Deep overhangs are best. Anything less than a foot won’t be that effective, and even a foot isn’t that much. A roof with little or no overhang may once have had one, but poor maintenance of the roof allowed the edges to rot, and instead of repairing the damage, someone doing a quick roofing job just buzzed away the rot with a saw and re-roofed what was left. Be cautious about buying a house with a compromised or missing roof overhang. In subsequent years water may have penetrated the walls, and rot may have spread through the sheathing and framing. At the very least, rebuilding a roof overhang should be one of the first things you do.

Less straightforward are problems associated with water penetration through walls, through concrete foundations, and around windows and doors — the elements that along with the roof make up the building envelope. One of the veteran house builders who worked on our reno maintained that flawed building envelope design was at the root of the leaky condo crisis. A number of years ago, the BC building code and the Vancouver building by-law were amended to require that all new construction incorporate a vapour barrier on the inside of exterior walls — typically a layer of heavy poly between the drywall and the studs and insulation. The idea was to improve heat retention and energy efficiency, and protect the cavities of exterior walls from condensation, by preventing water vapour from warm interiors meeting cold exterior air inside the wall. However, no change was made to the code regarding the outside of exterior walls. A typical assembly remained wood siding or stucco over a single layer of black building paper over plywood or OSB sheathing. The result was that any water that made its way into a wall from outside, because of a leak, or wind-driven rain, or was present in the wall framing materials during the construction process, now became trapped behind the vapour barrier. Walls could no longer dry to the inside, and given the Vancouver climate, drying to the outside might not happen for days at a time. The veteran builder likened the results to “leaving wet salad in a polythene bag.” It’s why the exterior walls of thirty-year-old condos might be rotting, whereas wood-frame apartment buildings built in the 1940s or 1950s, or hundred-year-old houses, with plenty of air movement through walls that can dry to both the inside and the outside, might be virtually rot-free. (Although being dry because of draftiness isn’t really a solution.)

Once government and industry realized the problem, they came up with the response: the rainscreen, the missing half of the wall assembly equation. A rainscreen is a drainage and air drying layer immediately beneath the exterior siding that cuts off the passageway for water, and drains any buildup to ground. Drainage mat against concrete foundation walls is another development that serves the same purpose — cut off the seepage of water through the foundation and move it to ground. Several other factors contributed to condos rotting in coastal BC, including California-style architecture (flat roofs, no roof overhangs, architectural adornment) inappropriate for the climate. And I’ve omitted some of the more esoteric building science details, because I don’t yet fully understand them. However, sealing up the inside of exterior walls without considering the outside was probably the most egregious of various design issues.

If you’re house hunting, be alert for signs that water is causing problems for a structure. Check the exterior closely for spongy-looking areas, flaking or bubbling paint, or crumbling stucco. Understand that vinyl siding may be have been installed over the original wood or stucco siding, covering up evidence of rot. In preparation for a sale, a house may have been freshly painted, hiding signs of water incursion. Inside, look for water staining on walls, dark, discoloured bottom corners, and tiny black dots of mould. Again, take into consideration a recent paint job. Pay special attention to the basement or lowest level of the house. Spend lots of time there. Breathe in deeply while walking throughout. Does it smell musty or damp? Trust your nose. Put your hands on the walls, especially below the foundation line, where drywall may cover concrete. Does the drywall feel firm and dry, or damp with a hint of softness? If the basement is unfinished, look for white powdery marks on the concrete. This is efflorescence, the salts left from water that has seeped through the foundation and evaporated. It’s not critical if you intend to leave a basement unfinished, but a problem if you intend to finish a basement, potentially trapping moisture that had previously been able to evaporate. If possible, tour a house during a rainy period, when any signs of water incursion are likely to be most noticeable. One of the reasons the peak house selling season is during the months of good weather is that the various symptoms associated with a leaky building envelope are going to be much less noticeable. Lastly, make sure that as part of a thorough home inspection, the inspector goes over the house with a moisture meter.

If it becomes apparent that a house has been losing the battle with water? Flee.

[Further resources/reading, general]

“Weathering the storm”, The Vancouver Courier, no date.

[Further resources/reading, advanced]

“Understanding Vapor Barriers”. Building Science Corporation, 24 Oct, 2006.

9. Find a good home inspector

While learning the basics about a house’s systems is a good idea for any home buyer or homeowner, most people don’t have the time or the inclination to truly delve into the hundreds of details that these systems represent. And even if you do learn a lot from books, or other sources, it’s not the same as years of experience gained scrutinizing the inner workings of hundreds of houses. For that kind of expertise you need a good home inspector, or some other kind of knowledgeable construction industry professional.

During the height of the bidding war frenzy that gripped the Vancouver real estate market in the mid 2000s (with sporadic outbreaks ongoing), it was common to hear of people putting in over-asking offers without any subjects. In a more normal market, a typical subject would be the requirement of passing a home inspection. Incredibly, during this abnormal market, formulating a competitive bid might require that you waive the right to look closely at the most expensive thing you were ever likely to buy. Step in to a massive financial commitment, and do it blind. Foregoing a home inspection is risky behaviour, to put it mildly. It’s rolling the dice, with ten of thousands of dollars, or more, potentially riding on the outcome. In the subsequent years, some of these buyers will have discovered they’ve been burned. Basement walls full of mould, foundations crumbling, whole sections of house frame or roofs rotted out, failing building envelopes, plumbing and wiring systems at the end of their lives, plugged or non-existent drainage, even major structural deficiencies associated with unpermitted work. Big dollars to fix, and after spending those dollars, the house still looks the same on the surface. The stove is still harvest gold, the toilet’s still blue (which may be cool, depending on your aesthetic, but doesn’t do much for resale value), and 1970s paneling still prevails. You don’t feel any closer to achieving your vision for the house, but a big chunk of your budget is already spent. A good home inspection can save you a lot of grief by alerting you to expensive liabilities in advance, allowing you to make a more informed purchase decision, or avoid some purchases altogether.

Unfortunately, the story that’s been emerging in the last couple of years is that there are a lot of incompetent or even unethical inspectors operating. In Ontario, what regulation there has been of inspectors is toothless. British Columbia has only recently started qualifying and licensing inspectors (as of 31 March 2009), which means that previously anyone could hang out their shingle and call themselves a home inspector. And the barrier to entry may still not be that high.

Generally speaking, you shouldn’t use an inspector recommended by a realtor. Either the listing realtor, or the buyer’s realtor. Realtors on both ends of a sale only make money when they close a deal. Deals get closed when subjects such as home inspections are removed from offers to purchase. Home inspectors who find lots of problems with houses are themselves a problem for realtors who want to close deals and get paid their commission. As a buyer, if the problems are legitimate, those are the inspectors you want. Some realtors may be inclined to recommend a ‘realtor-friendly’ inspector with a reputation for passing houses that another inspector might fail. You need to ask yourself which inspector is likely to best serve your interests.

That said, when I asked a realtor during our house hunting in 2003 about a well-known local home inspector, he was scathing. In this realtor’s opinion, this inspector manufactured reasons for failing houses in order to generate additional business for himself. According to the realtor, he’d fail two or three houses, collecting his inspection fee on each one, before finally passing a house for a client.

As well, realtors who are interested in repeat business, good word of mouth, or surviving as realtors once a real estate boom has run its course, know better than to make a quick and easy sale by foisting a piece of junk on an unsuspecting buyer. You need to know whether the realtor you’re dealing with is ethical, or a quick-buck artist who’ll be closing up shop once the easy money is gone.

It’s hard to know where the truth lies. Do your homework. The time and effort required to find a competent, ethical home inspector is time and effort very well spent. And do it early, well in advance of any offer to purchase. Rushing to find an inspector while the clock is ticking on an offer makes it less likely you’ll find a good one.

[Further resources/reading]

Inspecting a House: A Guide for Buyers, Owners, and Renovators
, by Alan Carson and Robert Dunlop. Toronto: Stoddart, 1999.

The Holmes Inspection: Everything You Need to Know before You Buy or Sell your Home, by Mike Holmes. Toronto: Collins, 2008.

“Think you’re safe from problems when you buy a new home? Think again”, CBC Marketplace, 9 Jan, 2009
“Can you trust your home inspector?”, CBC Marketplace, 8 Jan, 2010

“Homeowners out thousands despite warranty”, CBC News, 16 Nov, 2010.

Coming soon: Part 9d: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 10 – 13.
Part 9 subsections are posted every Tuesday and Friday.
Read them all before you dig up the foundations. -ed.

“He asked: “Why haven’t you bought in this hot market? Banks are practically giving money away for free.” It turns out that he has a no-money down NINJA mortgage.”

bubbly at VREAA 26 Apr 2011 11:07am“This morning, I talked to this guy, let’s call him Joe, [who I’ve known] for a few months. He has been living in his house for some time now and I always assumed that his parents paid for it.
Today, Joe asked me why I haven’t bought in this hot market. I told him that I think that the market is overpriced and I don’t want to go too deep in debt. He asked “Why not, banks are practically giving money away for free”. I asked him to elaborate and it turns out that he has a no-money down NINJA mortgage! Here in our best place in Galaxy, where banking is supposed to be sound. And as if that was not enough, the bank gave him more than what he actually paid for the house – for “renovations”. Since he is a NINJA, I assume that he is using this “extra” money to pay his monthly payments. This is just a speculation on my part, but I can’t see any other way how this scheme could work.”

On The Other Hand – After The Plunge, Nobody Wants To Buy

From ‘Americans Shun Cheapest Homes in 40 Years as Ownership Fades’,, 19 Apr 2011
“Victoria Pauli signed a one-year lease last week to stay in her rental home in Fair Oaks, California. She had considered buying in the area, where property prices have slumped 57 percent since a 2005 peak.
In the end, she decided it wasn’t worth it.
“I know people who have watched their home values get cut in half, and I know people who are losing their homes,” said Pauli, 31, who works as a property manager for a real estate company. “It’s part of the American dream to want to own your own home, and I used to feel that way, but now I tell myself: Be careful what you wish for.”
The most affordable real estate in a generation is failing to lure buyers as Americans like Pauli sour on the idea of home ownership. At the end of 2010, the fourth year of the housing collapse, the share of people who said a home was a safe investment dropped to 64 percent from 70 percent in the first quarter. The December figure was the lowest in a survey that goes back to 2003, when it was 83 percent.
“The magnitude of the housing crash caused permanent changes in the way some people view home ownership,” said Michael Lea, a finance professor at San Diego State University. “Even as the economy improves, there are some who will never buy a home because their confidence in real estate is gone.”

Sky-rocketing prices -> “Where do I line-up to sign?”
After the plunge -> “Sorry, not worth it..”
Amazing, eh? Aren’t we humans fascinating?
Not only because this happens once (which would be fascinating enough), but because this happens time and again, in all markets, during and after all speculative manias. Groups have no memory.
– vreaa

Things Change In Victoria – 200 days on market; Ask price drop from $1.8M to $1.3M; Nobody biting

Slow Learner at 21 Apr 2011 12:26am
“Things look like they are cooling fast in Victoria. Seafront place down the street from our (rented) home, an ordinary 20-year old house with the original appliances, faded carpet, and a bad roof. It has been up for sale for over 200 days, started at 1.8 million, which was high for last summer but seemed possible as real estate was white-hot then.
Walked through a couple of weeks ago, lonely realtor was friendly, and slightly desperate. The price was down to 1.3 million, no bites. Seems insane, dropped the price half a million dollars, HALF A MILLION DOLLARS, rather than do some basic upgrades to make it more presentable. Shows contempt for the buyers, trouble is , nobody is biting. Sellers are out of step.”

The RE market in Victoria has softened with a 17.5 per cent drop in the number of sales in March 2011 compared with March 2010 and the dollar volume off 21.8 per cent. Prices are down 2.8%. [, 19 Apr 2011].
The article contains some informative quotes regarding how buyers start to act in a flat to falling market. Excerpts:
“Carol Crabb, president elect of the Victoria Real Estate Board, said locally there was no one factor affecting monthly statistics. Instead, she noted several factors – confusion over the harmonized sales tax, interest rates and changing borrowing rules – likely played a role.
“Personally, I’m finding in working with my buyers that there’s so much selection out there they are taking their time to make a decision. Having 4,100 listings in a market the size of Victoria is a lot,” she said. That will likely mean flat growth for the next few months at least. “There’s nothing to push prices up because there’s so many properties and there’s nothing to push buyers into making a decision as there’s lots to choose from and lots of time to make decisions.”

PostCardsFromTheBlastRadius #5 – The Okanagan Bust – CrewMan#6 – WhenTheWriterDoesn’tGiveYouAName… & “NewRules!” for ‘NowSelling’…

I’ll bet you thought Nemesis was kidding when he told you there was a development in the HillBillyRiviera that proudly boasted “Lavish” not “Luxury” ‘ResidentialCondos (is there any other kind?) in its promotional signage.  Well, “Ha! Ha! I say to to you!”  Because here it is.  Atypically, the Developer and or their marketing team neglected to ‘name’ this project – opting instead merely to refer to it by its street address.  Now, Nemesis doesn’t know much about the business of property development – but when it comes to ‘story development’???  Let’s just say that if a writer doesn’t think it’s worth assigning a name to a character; that character is normatively ‘toast’ well before the conclusion of ‘ActOne’.  As in the fabled ‘CrewMan#6‘ of any early StarTrek episode (see also Sam RockWell in GalaxyQuest!)…

In the splendid tradition of BillMaher’s, “NewRules” (and the EponymousCondoHype! of YVR BloggingHall ‘O Fame) – Nemesis proposes a ‘NewRule’ of his own for developer’s project signage…  1. When you’ve been flogging it for more than 3 months… all references to “NowSelling” must be eradicated.

Oh yes, 240 WadeWest, to the best of Nemesis’ occasionally faulty recollection, has been in ‘NowSelling!’ mode for well over 2 years…

Now, “Don’tTouchThatDial!”  DearReaders… for a VREAA/Nemesis RoyalConnubialDoubleHeader! is coming to a certain ExistentialistsEssential&Quintessential YVR RE BlogNearYou!… ThisFriday!…
FeaturePresentation: ” ‘RegalRidge’ Meets Harry&TheEricksons!”  And!  A BonusTreat (or is that TrickOrTreat?) FollowUp, Boyz ‘N Girlz with Sunday’s FeaturePresentation:  “TheAtlantisVernon! – AddamsFamilyValues or KeepingUpWithTheMunsters?”  So,StayTuned!

Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]

[Readers (including ‘Fred’) who are perturbed, flabberghasted, demoralized, infuriated, or overwhelmed by Nemesis’ ‘BlastRadius Series’, are, of course, welcome to simply skip these posts.
We will point out, however, that, in extraordinary times, people are driven to produce extraordinary things. And, also, that it is not unusual for that which is closest to the truth to come disguised in words of bizarre jest. – vreaa

“When I bought a new condo in 2001, I negotiated a price of ~$271k, because with GST, that was the limit the CMHC would insure at the time with 10% down.”

Ahab at April 23rd, 2011 at 1:54 am“When I bought a new condo in 2001, I negotiated a price of ~$271k, because with GST, that was the limit the CMHC would insure at the time with 10% down. I don’t know exactly when they went ‘no limit’, but I’m certain that is a major component of what has driven this market to such obscene levels.”

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9b: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Part 9b: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]

4. Don’t mistake a tear-down for a fixer upper

As much as I dislike the notion of tearing down any house and sending its materials to a landfill, in some circumstances tearing down may make better financial sense than fixing up. Finances aside, many home buyers, with tastes and expectations formed by our culture of affluence, will judge the more mundane among older Vancouver houses completely inadequate by modern standards.

The line between a tear-down and a fixer upper is hazy, and changes with the market. In a rising market flush with ballooning home equity, speculation of various types, and large profits realized through sales, tearing down and building new becomes a more attractive and financially feasible option. In a falling market with shrinking home equity, speculation at a low ebb, people selling at a loss, and money generally tight, people are much more likely to mend and make do. But regardless of the particular market conditions, different people have different amounts of money they can bring to bear, different goals and aspirations, and different notions of what a house should be. One person’s tear-down can be another person’s fixer upper.

The key point is not to mistake what the majority of people would consider a tear-down for a fixer upper. If you plan to live in a house for twenty years, it may not matter, but resale considerations should factor in to most people’s purchase and renovation decisions. Pouring a lot of money into renovating a house of questionable value — for example, one with bad lines, a really small footprint, or small rooms that are hard to enlarge — is not a good use of renovation dollars. You may never get your money back out, or even a portion of it. And think how galling it would be to invest a lot of time, sweat, and money into renovating a place, only to have it torn down by the next buyer. I recently heard about just this scenario in a North Vancouver neighbourhood.

5. Don’t renovate

That’s right, avoid renovating or fixing up altogether, or at least keep it to a minimum. Some people enjoy renovating because they have the manual skills, the knowledge, and the time to do good quality work themselves, and they get a lot of satisfaction from the process. But for many people, renovating is a stressful, unpleasant passage they endure to get to somewhere better. Depending on the circumstances, the stress and unpleasantness can be extreme.

We bought our fixer upper in 2003 for $355K, and so far have spent another $300K renovating it. But we missed out on a well-maintained, attractive 1950s bungalow that sold in a bidding war for $402K. This bungalow is located on one of the nicest, traffic-calmed streets in the Grandview area we live in, has a big rear deck with a view of the mountains, a basement suite with a full eight-foot-high ceiling, and on the main level, well preserved oak floors, a stylish brick fireplace, and a kitchen with the original 1950s-style tiled counters. Not the ideal house for everyone, but it would have been perfect for us. And the $47K difference in purchase price now looks like a pittance compared to the amount of money we’ve spent renovating.

Of course, even a well preserved 55- or 60-year-old house is going to need some work. But I suspect the work in the case of this house would have been far less onerous, and far less expensive, than what we’ve done with our place. On the several occasions I’ve walked by this house in the intervening years, it doesn’t look like much has been changed. By all appearances, the owners just bought it, moved in, and have proceeded to live in it. Judiciously spending more up front may in fact be cheaper in the long run, and less stressful, than buying a place that seems like a deal, because the price is lower and “it only needs a bit of fixing up.”

If initially spending more isn’t an option, another way to avoid renovating is to accept less house. Instead of a detached, single family home, consider a well-built duplex, townhouse, or condo over a house, or choose a less expensive location. (For those aspiring to the West Side, know that the world doesn’t end at Main St.). You may feel that compromising in this fashion is not in the cards for you personally, but after weighing the alternatives, and costing out various scenarios, you may find that one of these compromises allows to you get into a home that doesn’t require significant work and further expense, which could be a better approach for you personally.

6. Educate yourself

So how do you know which houses warrant paying more for up front, and which are money pits masquerading as a deal? You educate yourself — before you start house hunting.

I suspect the people who won the bidding war for that 1950s bungalow had a very good idea about the relative merits of the house, and that knowledge and understanding gave them the confidence to formulate the winning bid out of nine offers. Which isn’t the same as saying that the house, in a more universal sense, was worth $402K in 2003, or is worth $800K now, in 2011. Just that the more experienced and knowledgeable you are as a buyer, the more likely you’ll be able to assess value in relation to current market conditions, and act accordingly.

Unfortunately, for first time buyers, the best teacher is experience. Having owned a house for seven years, and having gone through reno hell, we are now far more experienced and knowledgeable than we were in 2003. When Marco, the lead on the concrete crew that installed our new basement slab, was considering the house he eventually bought, he got the owner’s permission to dig a hole beside the foundation, so he could check if the foundation walls had a footing. No footing, no offer to purchase. How many first time buyers even know what a footing is, or why it’s important? How many would have the moxie to show up at someone’s house with a shovel?

What can you do to educate yourself? Talk to people who’ve bought, owned, sold, and enjoyed houses, and suffered through home ownership and renovation. Family members, friends, builders and tradespeople, architects, co-workers. Talk to landlords, and tenants in basement suites (who live closer to the heart of the matter). Most people enjoy talking about their houses, and you’ll learn a lot. Also, read. The Web has some fantastic resources, but ultimately books are a better bet. Information can be fragmented on the Web, and hard to find. Well-written, well-illustrated books about houses, renovation, and construction, are worth the money and the investment of time because they’ll be comprehensive, do a good job of explaining the technicalities, and organize the information in a logical manner.

[Further resources/reading, general]

Make It Right: Inside Home Renovation with Canada’s Most Trusted Contractor, by Mike Holmes. Toronto: Collins, 2006.

The Holmes Inspection: Everything You Need to Know before You Buy or Sell your Home, by Mike Holmes. Toronto: Collins, 2008.

I realize Holmes is a TV-star-contractor with a certain on-screen persona and shtick. White knight rides in and outs the bad guys, or at least their sorry handiwork. It makes for entertaining TV. Holmes also has his detractors and there’s some anti-Holmes backlash out there. None of that really matters when it comes to the books. I feel the books are pretty good, especially for the price, have solid information, are very well illustrated, and are written at a general level without dumbing things down too much or omitting important details. Whether Holmes wrote every word himself, or whether they were ghost written, or committee written, again doesn’t really matter. All that matters is whether or not they are good information sources for someone getting into the home-buying, home-fixing game.

[Further resources/reading, advanced]

Home Renovation, by Francis D.K. Ching and Dale E. Miller. New York: Wiley, 1983.

Canadian Wood-Frame House Construction. Ottawa: Canada Mortgage and Housing Corporation, 2006.

7. Bottom up, inside out

Think about houses from the bottom up and the inside out, not from the top down and the outside in.

What you can see when you look at a house online, or tour it in person, is relatively unimportant — at least from a financial standpoint — because it’s easy to get at and easy to change or fix. You’re looking at décor and finishings, and these are not the things on which you should primarily base your purchase decision. Typically, house flippers looking for quick profit are all about décor and finishings, because they can be quick and cheap to replace, and the shiny replacements can dazzle the inexperienced or the unwary. A new IKEA kitchen, fancy-looking countertops, and lower end stainless steel appliances can probably be installed for $25K, and will look good for a couple of years. How many flippers would spend that $25K on badly needed drainage and foundation work? They’d just sell the house in the summer, when it’s dry, and the unwary buyer is unlikely to encounter problems like a damp basement.

What you can’t see is typically the important stuff, the stuff that can do your personal finances grievous harm: the foundation, the drainage, the sewer pipe, the water service, the plumbing, the wiring, the gas lines, the furnace and heating duct system, the building envelope, the insulation, the attic ventilation, the frame, the roof. In other words, all the systems that in combination make a house habitable and comfortable to live in — or, if they’re compromised, less comfortable or even miserable.

Learn the basics of these systems. A damp basement, if not dealt with at the source, will rot any framing, drywall, or flooring installed over top of the concrete substrate. Old galvanized steel water pipes will be full of corrosion on the inside, and will progressively choke off the water pressure in a plumbing system. Before we replumbed, if a tenant turned on the water in the old rental suite, our upstairs shower dropped to a trickle. Do-it-yourself modifications and extensions to the electrical system may have created a fire hazard. After we’d gutted our basement in preparation for rebuilding the rental suite, I found a scorched patch on a stud beneath a wire that had obviously been overheating. I saw the same thing in my sister and her husband’s former house.

Beware of surfaces. Look deeper. Which isn’t bad advice for life in general. Metaphorically speaking, show up with a shovel.

Coming soon: Part 9c: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 8 & 9
Part 9 subsections are posted every Tuesday and Friday.
Our advice is to leave the tools in the garage until you’ve read them all. -ed.

“Recently, we went to look at a $1.6M tear down on the Westside with a lot of great neighborhood attributes. Ten days after listing and after receiving offers, the price was raised around $400k and it still sits for sale 4 weeks later.”

lils at VREAA 24 April 2011 at 10:42 am“Recently, we went to look at a 1.6m tear down on the Westside with a lot of great neighborhood attributes – across from a park, etc. 10 days after listing and after receiving offers, the price was raised around 400k (!) and it sits for sale 4 weeks later. This has been happening with increasing frequency all over the Westside and in West Van, where properties are listed with no intention of selling, but only to determine their market value plus profit. At the other realtors’ expense of preparing offers and having clients genuinely interested in buying a home or land, the selling realtor sits back and lets the market tell them what it’s worth. They make only a marginal commission for raising the price, so what is the incentive? If you were an offshore seller, and an agent came back with 33% over list price, you’d be pretty happy. You might even financially reward them for their incredible abilities above and beyond the agreed (and legal) commission. This is an entirely plausible marketing tactic aimed at offshore sellers and buyers who are not well versed in the market. “Here, I made you an amazing profit” only to turn around to similar clients and say “Look here, what a deal”.

PostCardsFromTheBlastRadius #4 – The Okanagan Bust – TheColossusOfWestBank & TheTerrifying&Pityless ProtoRealtors™ of OgoPogo!

Observed from a distance… at first glance I thought – perchance – Tosh! mere EarthWorks… but upon careful reflection… I realized. Realized the astonishing Truth!… It was a BurialMound! ‘THE’ BurialMound!… of the fabled Terrifying&Pityless ProtoRealtors™ of OgoPogo!

And what!?? Yes! What?… was that strange edifice on the distant horizon????

And then… I saw them… Faded HieroGlyphs of the fearsome ProtoRealtors of OgoPogo!…
If I wasn’t worried before, I was certainly WORRIED now. What next, I speculated… what next?

Fluff! Fluff? WTF?….
Standing upon… the ThreshHold of AncientRuins? Ruins of a LostCivilization? ‘Nemesis’ momentaril​y reflected, “To what bestial purpose?” – and then.. TheGrandStartle!
Yes! Startled! by the sound of distant drums!!!
And then they came!

Chanting!​ Gyrating! Naked!
The Terrifying&Pityless ProtoRealt​ors of OgoPogo!!!​… together with their sacrificial offerings to TheGreatSerpentOfTheLake.
Untold legions of captive FTB’s! Bound&Marinaded!
How they screamed!.. Begged for mercy!…
Frantically Struggling and Straining to free themselves from the DebtBondage of onerous PSA’s & 0Down VR ClosedMortgages… With obligatory HELOCS!
But – Alas, ToNoAvail.​..
TheHorror. TheHorror. TheHorror.

A gruesome spectacle ensued… of such blood-curdling malevolent, hideous violence that even today, sometimes in the darkest recesses of night… Nemesis still awakens in a cold sweat..,
The victims’ screams echoing… echoing…
Altogether, more terrifying than ANYTHING you could possibly imagine! Anything.
TheFluff. TheFluff. TheFluff… of ‘stuff’…
Whey will they learn?

And now, a brief ‘homage’ to the RealArtistes of TheColossusOfWestBank…
‘primitiveWannabe’ Banksies…
You know who you are…
Keep Spraying. For truly, it is ‘Opus Dei’…

More seriously, all this was the prelude to a failed BluffTop housing development…. and the Ruins were apparently the ‘staging’ for what must surely have been the GrandestOfTheGrand of ExtravagantPreSales Offerings…
All Brought to you by ExciteHomes. The Principals of ExciteHomes are gone now and out of respect for their sorrow/shame, ‘Nemesis’ will not reveal (albeit he does know) their current whereabouts/circumstances… But RestAssured, VREAA readers… it is a CautionaryTale of the UtMostMagnitude!…

Ah… Some of you were wondering about Nemesis’ veracity… re: TheDrums… the ThunderousBeatingDrums of OgoPogo!
Well, here they are. And, Yes – They’re Toxic.
and, apart from the GrandStaging… these are all that remain…
‘Nemesis’, having neglected to come equipped with HAZMAT gear did NOT venture too closely…
Ergo, for the time being – at least – the contents of TheDrums of the Terrifying&PityLess ProtoRealtors of OgoPogo shall go unremarked…

And so, our tale concludes… But, TruthBeTold – TheColossus is (Sacreligiously & CockPosterously!) ACTUALLY situated adjacent to the GenuineArticle…
A real – sacred – burial ground.
Well, Boyz&Girlz…
It all ends like this. If you’re lucky, your loved ones (& others you never knew were ‘loved ones’) will remember you fondly…
So… please strive for excellence and try to FightTheGoodFight!
In between, have some Fun… and do what you can…


Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]

Prospective-But-Waiting Buyer Sentiment – “My brain is fighting my heart. Holding this type of conflict is really hard on a person.”

Kelli at 21 Apr 2011 12:53am“We could buy a 2 million dollar home with no debt. I struggle with this every day. Garth [Turner] helps me rationalize renting. My brain is fighting my heart and holding this type of conflict is really hard on a person.”

Vancouver RE Demand – Immeasurable or Simply Unmeasurable?

thinktom (a local realtor) at RE Talks 19 Apr 2011 7:20pm“We just called a Shaughnessy listing, currently showing as ‘active’ on MLS, for our buyers. It’s listed in the $2.9 million range. It has already sold. It had 11 offers, only one of which was the asking price apparently and the rest over asking. The final sale price was $3.7 million. Amazing that there are at least 11 groups searching for $3 million dollar homes. This also means there were probably 3-4 waiting in the wings but not willing to bite due to too many competing offers.”

silverman (another local realtor) 19 Apr 2011 7:29pm“Shhhhh… there are many wounded bears in here.”

poundcruncher 19 Apr 2011 7:41pm“Yep, no $3M + listings on the westside….
Wait, only 180 of them.
Wait… only 120 of them listed for more than 30 days.
Wait… where are all the multiple offers on those ones?
I’ve got 120 anecdotes of homes not selling.”

eyesthebye 20 Apr 2011 5:01pm“It’s puzzling how little bears know about the demand for a detached home in this city. It’s almost like they know nobody here – work alone, and have no family. If they had an ounce of social skill they’d have heard all the stories about folks living in a condo/townhouse or renting that wanted to buy a detached property. Maybe it’s healthy to deny the truth – they sleep better at night. I’ve been saying all along that we have no more than 10-15% to shed at the very worst here in Vancouver – and likely less than this, or zilch. Remember my “itchy trigger finger” theory.” [The theory that buyers on the sidelines will jump in at any small pullback in prices. -ed.]

Immeasurable – Too large, extensive, or extreme to measure.
Unmeasurable – Impossible to measure

Very common Vancouver RE logical fallacy:
Vancouver is a very nice place to live; therefore many, many people want to live here; therefore demand is essentially limitless; therefore prices will never drop in any significant way.

Demand is hard to measure. More like raindrops than bricks, it can evaporate in a single afternoon.
We are of the opinion that, when prices do next start dropping in earnest, the speculative component of the market (those buying and those holding largely because prices are going up) will create supply that will completely overwhelm any demand from sideline buyers.
But this is just an opinion; again: Demand is hard to measure.
– vreaa

BC Realtors Who Are Federal MP Candidates

CelicaMan at April 21st, 2011 at 12:44 pm“I just found out that the Green Party candidate here in the Quadra federal riding is a realtor by day. Yikes! They’re everywhere, they’re everywhere!”

Some examples of BC Federal MP candidates who are also realtors:

Laura-Leah Shaw – Green Party – Vancouver Quadra
“Laura-Leah is a realtor with RE/MAX, is a Hall of Fame Award Winner, Medallion Club Member, and has been licensed since 1988.”

Alice Hooper – Green party – Kelowna – Lake Country
“Alice Hooper is currently a Real Estate Representative for Royal LePage Kelowna.”

Louise Boutin – Green Party – Vancouver Kingsway
“She works as a REALTOR for RE/MAX Crest Realty Westside and sells in the Vancouver, Burnaby & Richmond areas. She recently bought a home in the Kensington area and is already very active in the community.”

Pam Dhanoa – Liberal – Fleetwood Port Kells
“Pam has been a realtor in Surrey for the last 16 years.”

More International Coverage Of Our Bubble – US National Public Radio – ‘Where The Housing Bubble Lives On’

More international coverage for our bubble: ‘Where The Housing Bubble Lives On’, National Public Radio blog, at 22 Apr 2011, featuring this recent Vancouver westside sale from the G&M –

ASKING PRICE $1,895,000
SELLING PRICE $2.55-million
[npr’s comment]: “Sure, the pool slide is awesome. But would you pay $2.55 million to live here?”

From the reader/listener comments that followed:

“I’m Canadian, and I have lived in several parts of Canada. I currently reside in Burnaby, a suburb of Vancouver. To characterize the Canadian housing market by the prices in West Vancouver is like estimating national home fire rates based on Malibu. You can get a really nice townhouse in Toronto for money that wouldn’t buy you a vacant lot in Van., so yes, the prices on W. coast are ridiculous. Since the housing market in the USA still is toxic, if you are in Asia and have money to invest in N. America real estate, Canada is the only choice. The Vancouver area is attractive due to publicity from Olympics, a large asian pop’n, mild climate, min. from USA/Canada border, easy to get back to Asia.” – Chris Parker

“I live in New Westminster, a suburb of Vancouver. Vancouver has the most expensive (read: insane) housing prices in Canada; my wife and I bought a house here in 2006 because it was relatively affordable. My guess was that the bubble would burst after the Olympics were over in 2010…I was wrong.
The case of the house flipping in 11 days is an extreme one, but the rise in prices overall has been pretty steady. We’ve watched prices rise in our neighbourhood, and I don’t think we could afford to buy a house now…we did well to buy when we did.
I do worry about the bubble bursting. As you say, there is always an explanation of why this time is different, and I don’t find those stories convincing. I hope we’ll come out of it okay: our plans are to be here for a long time, and we’re in a nice neighbourhood close to schools and other amenities. I hope that will cushion the blow for us.”
– Hugh Brown

Median US Real SFH Prices Retreat To 1970’s Levels


Investor Income Rates On Vancouver Apartment Buildings – 2001: 5%-9%; 2011: 2%-4%

This perspective from vanpro at RE Talks 22 Apr 2011 6:17am
“In 2001/02: you could buy (woodframe, 3 storey, 1960’s/1970’s built) rental apartment buildings in Greater Vancouver and parts of FV from about 5% to close to 9% cap. rate depending on location, quality of building, deferred cap ex etc…So 5% would be in absolute best location (say Kits or West End), 7%+ in prime North Vancouver, Lower Lonsdale with city views (yes, its true – this was pre-bubble pricing), 8% – 8.75%+/-% in Surrey or other parts of FV. As pricing got higher, cap. rates fell significantly from 2003 onwards to today where we are at 2% in prime areas (on true operating income) to perhaps 4%-5% MAX in outer suburbs and FV.”

Prime rates:
2001 April: 6.5%; 2011 April: 3.0%

The Froogle Scott Chronicles: Mortgaging Our Souls In Paradise – Part 9a: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Market participants, bull and bear, are all running around like chickens without heads. Folks who sold out are changing their minds and frantically buying back in. Even those taking profits are freaked out by the sums they are realizing. In this hectic environment, where do we turn for focus, for measure, for calming effect?… Who you gonna call?…
Well, he’s back: Froogle Scott has re-emerged bearing a comprehensive guide to being sensible about a vital aspect of Vancouver housing: ‘Fixing-It-Up’. Amidst the helicopters, the lawsuits, the line-ups, the panic-buying, it’s precisely what we all need to set our feet on the ground again. Those of you who don’t know Froogle, we recommend you put aside the better part of an evening and read through his Chronicles… the remarkable story of a Vancouver couple buying and renovating a Vancouver house. That’ll put the current episode into context, even though it also stands extremely well on its own. We’ll be posting ‘Part 9’ in 10 (yes, ten) sub-parts, over 5 weeks. It’ll also be available as a pdf download thereafter.

Froogle’s perspective stands in stark contrast to the prevailing fast-and-loose Vancouver RE ethos. He approaches houses as artefacts that matter to us as humans. He cares for quality, and is aware of history; he pays attention to the bones of houses and the souls of the people who use them.
We are grateful to him for sharing this all with us. We’re also very pleased that he continues to use this blog as a conduit for publishing his work. Here’s the first of the ten sub-episodes, Part 9a.
Careful with those powertools…  – vreaa

Part 9a: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival

Those fateful words . . .

My wife and I learned a lot of things the hard way during the renovation of our house. If we had to do it again, there are definitely some things we’d do differently.

Let’s assume there is a significant correction in Vancouver real estate prices over the next few years, or even a crash — similar to what’s happened in a number of American cities, and in a number of other countries. Let’s say it’s on the order of 35 to 50 percent, which would be huge, and catastrophic for a certain segment of those who currently own houses and condos. And yet, even with an event of this magnitude, the fixer uppers pictured above would still be in the $200K to $300K range. Add a 50 or 75 percent premium for a similar place on the West Side, like the Kitsilano house above — the cheapest house in Kits on the 31st of August, 2010, the day I gathered this sample of properties from RealtyLink. In other words, still expensive by national standards, assuming price deflation in Vancouver would be accompanied by some degree of price deflation in other large Canadian centers. In a comment on a local real estate bear blog, ‘Renting’ put it succinctly: “A million dollar home in Vancouver is a piece of shit. At 60% to 70% off it will still be a POS and will still be priced higher than buying a POS anywhere else in the world.” (“NYC Condos for 80% off,” Vancouver Condo Info, November 11th, 2010 at 1:57 pm. While I agree with the key point Renting is making about pricing, I don’t completely agree with his assessment of quality, and have more to say about it later.) The majority of new houses, or houses with good quality renovations, would still be in the $300K to $800K range, depending on the size and quality of the house, and the location. Still beyond the means of many people, especially if lending is tightened because of societal debt problems (Credit Crisis II), and wages stagnate because we’re in a recession. In the City of Vancouver, and the more expensive surrounding suburbs, the notion that prospective buyers currently sitting on the sidelines will just waltz into perfect houses in the aftermath of a crash probably isn’t very realistic. There would be a few, with large amounts of cash, for whom this could be the case. But for many, home ownership would still entail buying something sub-optimal and fixing it up — those fateful words…

Regardless of what happens with the local housing market, the character of Metro Vancouver’s housing stock is what it is. There are large numbers of older, smaller, tired, even dilapidated houses, with outdated décor and finishings. They were built in an era of more rudimentary building codes, in a time when basements weren’t designed to be lived in, when heating a house was relatively cheap, so building envelopes were less critical. Many of these houses have been ‘remuddled’ — made worse, and often ugly, by amateurish renovation and remodeling. Occupying the next rung up the property ladder are 1970s Vancouver Specials, but even these houses are now 30 to 40 years old, and will be starting to have the problems associated with age. Many people will find themselves considering houses that require a lot of work, not because they really want these particular houses, but because they want to own rather than rent, and it’s what they can afford.

With that in mind, I’ve compiled thirty suggestions for survival. (I wish there were fewer…) I’m not a renovation expert, but I am someone who, along with my wife, lived through a difficult renovation, and I have thought quite a bit about the process. I’m also drawing upon the experience of friends and neighbours who’ve undertaken majors renovations, and kindly shared a range of information, from practical matters to financial details.

I’m not trying to persuade people one way or another when it comes to buying or renovating a house. I’m sharing some insights that may make the process less fraught if you do embark on a renovation, or confirm you in your decision to avoid renovating, or perhaps even ownership, altogether. If you’re someone who intends to own a house eventually, in Vancouver or elsewhere, but you’re waiting until prices make more sense to you personally, you can treat the waiting period as a great time to learn at your own pace about houses and fixing them up, rather than acquiring information piecemeal in the panicky fashion I was forced into because I was doing it on the fly, mid-renovation. (Note to self: plan better next time. If there is a next time…)

First, some of the positives

When I look over the suggestions I’ve compiled here, it occurs to me that any sane person might run screaming from the prospect of undertaking a major renovation. It isn’t my purpose to scare people or turn them off. I’m trying to provide a realistic account of what it takes. And what it takes runs completely counter to the magic-wand renovations that happen in the space of a week on reality TV shows. Most of these TV projects are a combination of redecorating and light renovation, which is fine for what it is, but it distorts the true nature of major renovation — applying makeup versus major internal surgery.

My neighbour ‘M’, a renovation veteran along with his wife ‘S’, thought I should mention some of the positives, the reasons why some people are willing to undergo the difficulty of a major reno, and suggested some of these positives himself:

•    You’re preserving a piece of your city’s architectural heritage in an age of disposability, in which a knock-it-down, throw-it-up ethos, and bigger and newer, mask the often cheap and shoddy.
•    You’re preventing older and often superior materials, such as the dense, strong Douglas fir in the frames of older Vancouver houses, from being needlessly destroyed and dumped in a landfill.
•    You have the opportunity to control exactly what happens with your house, and you can ensure that everything is done to your specifications, and done right.

To which I would add:
•    Incremental renovation may allow you to afford the size and type of house you want, in the area you want. Even if house prices come down dramatically, a good quality new or fully renovated house may still be beyond your reach in the areas you favour. With a fixer upper, you may be able to at least gain entrance to specific neighbourhoods.
•    You’re going to learn a lot about houses, depending on the extent of a renovation and your involvement with it, knowledge that will serve you very well as a homeowner and home maintainer in the years ahead. If at some point you sell and buy a different house, you’ll really know what to look for the second time around.
•    You’re going to feel the satisfaction of creating something good, a feeling from which too many have become disconnected in a profit-driven world.

A word about condos and townhouses

My experience is primarily with detached houses, so that’s what I write about here. However, Vancouver is a city that has been rapidly and aggressively condo-izing — in the core, and in various pockets across the metropolitan area. For many Vancouverites, real estate prices, with or without a crash, dictate that home ownership means condo or townhouse ownership, at least as an entry point to the market, and often beyond. Although a number of my suggestions apply fairly exclusively to resale houses, some of them are also applicable to condos and townhouses.

1. Think about the renovation before you buy the house, not after

If you’re planning to buy a house, and your budget puts you solidly in fixer-up territory, prior to making an offer, you should think about the particular renovation possibilities and constraints that apply to any house you’re considering. If you’re planning a major renovation, you should find out what zoning and building code regulations apply, and how these might affect your plans. Over the years, many houses have had unpermitted extensions, additions, and large decks added, which increase the square footage of the house beyond the maximum allowable, or extend the structure too close to the property line. You don’t want to buy a house only to find out that your local building and development department requires you tear down a third of it as part of making any improvements.

Your forward thinking at this stage need only be general. Is the house easily and legally expandable? Is the interior layout reasonably close to one that suits your lifestyle, or will it require extensive, and expensive, changes? Are the house’s various systems — drainage, plumbing, electrical, heating, and so on — near the end of their life, requiring tens of thousands of dollars to bring them up to modern standards? More subtle and detailed renovation requirements will only emerge after you’ve lived in a house for a year or more, during all four seasons, and discovered the shortcomings that most affect you.

Thinking in vague terms about ‘fixing it up’ is risking disappointment, frustration, and expense. Much better to know in broad terms how you’re going to renovate the fixer upper you’re about to purchase, what the municipality will allow you to do, and roughly how much the renovation will cost. That kind of knowledge requires educating yourself, which you can do well in advance of entering the market, and probably getting expert help, which I discuss in more detail below.

2. Look for the lines

Houses are basically boxes, or assemblages of boxes, with roofs, if they aren’t flat, that are typically some version of a pyramid or triangular prism. Some assemblages are more pleasing to the eye than others. Learn about the most common styles of houses in Metro Vancouver — the Edwardian box, the Edwardian builder, the Craftsman, the California bungalow (Craftsman bungalow), the Voyseyesque cottage, 1920s and 30s builders specials, post-war and 1950s bungalows, 1970s Vancouver Specials, on so on. Go for walks in the neighbourhoods you’re considering and look at lots of houses — both fixer uppers and nicely renovated houses that appeal to you. Over time, your eye for the lines of a house, and for the lines of a particular style of house, will develop. You’ll be able to more easily distinguish the lumpish, the ugly, and houses with the distorted lines of poorly designed additions, from those with aesthetically pleasing lines, even if the lines have been somewhat obscured by the subsequent application of stucco, or vinyl or asphalt siding. Ideally, you want to get good at spotting the fixer upper with good lines, and good potential. This skill will allow you to quickly work your way through long lists of houses on real estate sites, and spot which houses may be modest diamonds in the rough, and which aren’t worth the bother. I say modest, because according to my architect neighbour, all the true diamonds in Vancouver have already been plucked, and fully renovated, and command full price.

An example of a modest diamond could be the builders special in the Willingdon Heights neighbourhood of Burnaby, the first house in the picture above. It holds good possibilities and would probably be a good candidate for raising, and pouring a new foundation, because in addition to creating a full-height lower level, raising would make it look more elegant, rather than top heavy. Our neighbours M and S raised their 1922 builders special, a house almost identical to the one pictured, and the result is very good. A rear addition can also be easily integrated with the existing roof lines of this style of house — as people on our block recently did with their builders special, again, with good results.

Compare these possibilities with the remuddled Lynn Valley house above, which would be hard to do much with, without significant alteration of the existing lines. Here’s a good example from another major reno that recently kicked off in our neighbourhood, a similarly proportioned house that’s hard to expand without radical alteration of the existing lines. In this case, the entire second storey had to be lopped off.

Altering a house’s lines

And then there are the outright bad lines. The East Vancouver house pictured below was listed in the fall of 2010 at $649K. The original house may have been a small cottage, forming the center portion of the current structure, with poorly integrated front and rear additions added later. The net result is a messy jumble with an unappealing roof line. Although it’s priced $50K higher than the Willingdon Heights house, it’s probably a tear-down (although the original center section may hold some heritage value), whereas the Willingdon Heights house isn’t necessarily.

Old house with additions

New houses can also have bad lines. For example, this Burnaby horror show looks like it was conceived by a first-year architecture student after a heavy night out at the campus pub.

New house, Burnaby

Paying for the gigantic twin pillars perhaps didn’t leave enough for twin stair railings. Might it be possible that, coming home drunk, one could fall from either the left or the right side of a set of stairs?

You can change the lines of a house, but it costs money — often lots of it — that could be spent on other renovation items, like systems replacement. Why not start with good lines, or easily expandable lines, to begin with?

3. Consider various styles of house

At different points growing up, I lived in a couple of hundred-year-old character houses in Victoria — one, a beautiful, half-timbered Craftsman (rented), the other Italianate. I always felt that if I eventually bought a house, it would be a character house that I’d fix up. I hated post-war bungalows, the kind that were covered with pinky-brown, beer-bottle stucco. Whenever I pictured one of these houses, it was raining, and the stucco was sodden.

Now the thought of renovating a character house, the ongoing maintenance burden, the heating bills for a large space, fills me with dread. I like looking at beautiful character renovations on the street, but I don’t want to own one. Or at least, I don’t think I do. Occasionally, when I go inside one, I’m struck by the sense of serenity and comfort.

My wife grew up in an early model Vancouver Special, probably built in the 1960s. Growing up, she hated Vancouver Specials — their depressing uniformity, their raw, immature, unadorned feel, the utilitarian approach to home ownership taken by their occupants, in her Trout Lake neighbourhood primarily other members of the Chinese community. Ironically, she felt these houses expressed a lack of community. In contrast to my feelings about stucco bungalows, my wife loved them. The Italians and Portuguese — around Trout Lake, more settled, earlier waves of immigrants — lived in the bungalows. With mature gardens, lower profiles, and less obvious uniformity, these houses felt cozy to her, more like comfortable homes.

In 2003, my wife and I bought a post-war, stucco bungalow. During our house hunting period I underwent some kind of conversion. I wanted a character house, quickly realized they were well out of our range, but also realized that I now liked 1950s bungalows. I’d come to appreciate their solidity, their low, horizontal lines, their quiet practicality. The one we bought is an early model, built immediately post-war, in 1946. I prefer the more generous, more spacious versions that evolved with increasing North American prosperity in the 1950s. However, I’m reasonably content.

The one type of house my wife and I agreed we hated, and wouldn’t consider, was a 1970s Vancouver Special, or any of the more recent variants. Now, seven years later, and in the aftermath of battling headroom issues in our basement suite during the renovation, the wheel has turned again. We might consider a Vancouver Special, were we ever to move. (I do have one reservation, which I explain in the section on seismic upgrading below.) The characteristics that originally made Vancouver Specials attractive to working class and immigrant families on the East Side, and elsewhere in the city, are still attractive today to an even more diverse demographic: maximum, or close to maximum, square footage for the lot size; open layouts; big rear decks, often covered; a full-height lower level, making installation of a rental suite, or setting up a separate area for teenagers, much easier; and a minimum of architectural adornment, which although bland, means less maintenance and upkeep. Add to these original enticements a price point that can be significantly lower than a renovated character house or a new house. For these reasons, Vancouver Specials remain popular, are shedding some of the stigma long associated with their utilitarian nature and prosaic form, and renovating them in interesting or unexpected ways has become somewhat trendy.

Lance Berelowitz, in Dream City, had this to say about Vancouver Specials:

“There is a certain irony in the fact that while the Vancouver Special has long been an affront to the Vancouver architectural establishment, that same establishment frequently finds itself designing and living in equally kitsch architectural clichés and is increasingly involved in replicating a new pseudo ‘Heritage’ aesthetic for housing. The pitched roofs, cutesy wood detailing and fake-traditional architectural geegaws are now the de rigueur language of contemporary residential design. It almost makes the Vancouver Special seem refreshingly honest in comparison.”

Classic 1970s Vancouver Special in the Renfrew neighbourhood, East Vancouver

The houses don’t change, it’s we who change. The way we see things evolves. The more you expose yourself to a full range of house styles, and analyze their benefits and drawbacks in relation to your particular situation, the more options and flexibility you’ll have. Most of us have emotional responses to different styles of houses, unanalyzed, probably rooted in childhood experience, and it’s often these emotional responses that drive our purchasing decisions, rather than a careful weighing of the appropriateness of this functional object we’re buying.

Some common Vancouver house styles, 1900 to 1980

[Further resources/reading]

To read more about Vancouver house styles throughout the 20th century, see the following:

Exploring Vancouver, by Harold Kalman (later with Ron Phillips and Robin Ward). Vancouver: UBC Press, 1974, 1978, 1993 (three editions).

British Columbia Houses: Guide to the Styles of Domestic Architecture in British Columbia, by Graeme Chalmers and Frances Moorcroft. Vancouver: UBC, 1981.

Vancouver and Its Region, edited by Graeme Wynn and Timothy Oke. Vancouver: UBC Press, 1992.

Dream City: Vancouver and the Global Imagination, by Lance Berelowitz. Vancouver: Douglas and McIntyre, 2005.

The Story of Dunbar: Voices of a Vancouver Neighbourhood, edited by Peggy Schofield. Vancouver: Ronsdale Press, 2007.

“House Special”, The Vancouver Courier, 11 Sep, 2009. Story related to Vancouver Heritage Foundation 2009 tour of renovated Vancouver Specials.

“Heritage tour of Vancouver Specials shows why they are special”, The Vancouver Sun, 5 Oct, 2010. Story related to Vancouver Heritage Foundation 2010 tour of renovated Vancouver Specials.

“Your Old House Encyclopedia”, Vancouver Heritage Foundation. Once it goes live, this will be a fantastic online resource for identifying and learning about specific styles of Vancouver residential architecture. The advertised launch date of summer 2010 has obviously come and gone. I sent the Vancouver Heritage Foundation an email asking when they expected the online encyclopedia to be available, and they told me Spring 2011. Nothing yet. If you’re interested, I guess the best advice is to bookmark the link, and periodically check back.

Coming soon: Part 9b: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 4, 5, 6, & 7
Stay tuned. -ed.

Cam Good in the Vancouver Sun – “If you suffer from real estate impotence, stop feeling sorry for yourself, pick up the phone to call a realtor or a mortgage broker. Real estate is the best investment you’ll ever make.”

Excerpts from ‘The new real estate protectionism is misguided’ by Cam Good, Vancouver Sun 21 Apr 2011. Mr Good is president of a real estate sales and marketing company. –
“In the last two months, we’ve sold over 700 condos in Toronto. Sixty per cent went to Mainland Chinese buyers. In meccas like Richmond, 98 per cent of the hundreds of homes we’ve sold are to buyers who are Chinese.” …
“Buyers from Mainland China are a driving force in our real estate market. The staggering truth is we’ve seen just the tip of the iceberg.” …
“A recent story in the Wall Street Journal reported that Chinese are “stampeding to Vancouver and Toronto, two of Canada’s hottest markets.” For that, we should be grateful. Chinese have made owning real estate in Canada more rewarding than any of us expected and they have made our society distinctly richer by bringing their values and culture to Canada and sharing them with us.” …
“But instead of gratitude, I see growing fear and resentment that foreign buyers are inflating prices and pricing “us” and “our children” out of the market. I recently hosted a helicopter tour of White Rock for a select group of Chinese realtors. In response to the media coverage of that event, my office was inundated with emails from people who think this will cause a Chinese takeover.” …
“Let’s look at what this global trend is doing to benefit us: It’s driving demand and creating a real estate industry that is the envy of the entire world. Our land, homes and businesses have become more valuable and Chinese investment is a big reason we weathered the global economic storm as well as we did.” …
“If you suffer from real estate impotence, don’t blame Chinese people. Besides, getting all worked up about it will only make it worse. Have a glass of wine. Relax. Stop feeling sorry for yourself and pick up the phone to call a realtor or a mortgage broker, either of whom will be more than happy to show you how easy it can be to get your real estate groove on.
Real estate is the best investment you’ll ever make, but don’t take my word for it. Ask any of the 70 per cent of Canadians who are already owners. Or a Chinese person.”

The fact of this article, and its contents, preserved here for the record.  – vreaa

Westside Couple Do An ‘Isaac Newton’ – “This afternoon we are putting in an offer on a 1979 boxy Vancouver Special in the same neighbourhood as where we sold. I can’t believe we are doing this, never did I think I would get caught in this frenzy of bidding wars. I’m scared and confused about our decision.”

Anna’s story as told by Garth Turner at 20 Apr 2011
“Two years ago Anna and her husband decided to sell their house on the west side of Vancouver. “At the time it seemed like a good idea,” she says, “because interest rates were forecast to rise and we were seeing a housing recovery here after the global recession. Our goal was sell high and buy low, anticipating a decline in the market.” The five-year-old house went for $1.2 million. They were ecstatic. That was $1.1 million more than they had the day before. But joy has turned into gut-wrenching, debilitating stress.
The same house today sells for $1.4 million. Meanwhile Anna, her husband and 15-month-old daughter have been living in a 500 square foot suite for $1,100 a month – with $1.2 million sitting in cash in the bank. Idling. Coiled. Waiting to pounce. In their minds only one asset class exists – a house.
“We are getting very claustrophobic. My husband is getting anxious and wants to re-enter the housing market.  I want to wait.  However I am also very scared because it seems the market keeps rising.  There seems to be no end in sight for increased prices.”
The ‘buy now, or buy never’ fear has etched their minds and strained their lives. The clear logic they felt before – sell high, buy low – has been replaced with an icy, pervasive terror that real estate will rise forever, and a confused couple with only $1.2 million in cash will be locked eternally in a basement suite. Deprived. Wanting.
Yesterday Anna wrote: “This afternoon we are putting in an offer on a 1979 boxy Vancouver Special listed for $1,328,000, in the same neighbourhood as where we sold. We already have the inspection lined up before the offers are presented.  I can’t believe we are doing this, never did I think I would get caught in this frenzy of bidding wars.  I’m scared and confused about our decision.  Not able to sleep, so here I am writing my thoughts to you.  I’m really confused what to do. And how long will we have to wait before the market comes down.  Any ideas?   We are already at a loss of $200,000,000 and can’t afford any bigger loss. Anna.”

Isaac Newton held shares early in the South Sea Company Bubble. In April 1720, seeing and understanding the nature of the bubble, he sold his £7,000 holding of shares. The bubble continued to inflate. Newton couldn’t resist, he bought back in, heavily. The bubble collapsed. When all was said and done, he had lost £20,000.
Anna and her husband made a wise decision two years ago. They are about to reverse that. They are buying out of fear of being ‘priced out forever’. They are, also, speculating on ongoing rising prices, even though most would not label their buying ‘speculative’.  -vreaa

“You gotta love a city where $1.5mill is considered a “starter home”!”

4533 W 14th Ave; V883037; Asking Price $1,498,000
1,590 sqft, ‘oldtimer’, 33x122ft lot.
Realtor blurb starts: “Well maintained starter home or build your dream home on this level 33′ x 122′ lot…”

“You gotta love a city where $1.5mill is considered a “starter home”!” Girlbear at 17 Apr 2011 10:42am

PostCardsFromTheBlastRadius #3 – The Okanagan Bust – “Life Revolves Around You!”

From the WebSite:
“Welcome to Centre Point, where Life & Style are perfectly in sync.”
[NemNote: When you allow that the developer’s market timing was apparently rather less than ‘in sync’ with condo-newbie appetites – it’s just as well that they got the ‘Life&Style’ thing right. Nemesis wonders though, which elements of life are ‘synchronous/analagous’ with/to vinyl extrusions and particle board? The Coprological?]
“Located in Kelowna’s ‘picturesque’ South Glenmore, this idyllic setting means you don’t have to compromise location for convenience.”
“Only moments from everywhere you want to be, but away from what you leave behind – never before has there been an address that offers it all.” [unlike, say – Buckingham Palace?]
“A true urban [!?] retreat. Centre Point brings new, affordable and ‘luxurious’ rental apartment living to the centre of Kelowna.”
[‘Nem’Note: Do WagCondoCopyWriters/Hypers contest amongst themselves to see who can weave the most glaring oxymorons and cliche into ‘ThePitch’?]

Have a close look at that signage, Boyz ‘n Girlz – you’ll notice that the rental offer is, in fact, a recent vinyl ‘appliqué’ – the obvious intent, to camouflage (or mask, if you prefer) the development’s quasi-mystical transubstantiation from ‘ownership’ to ‘rental’. What will they think of next!?

For a development purportedly nearing completion and with a projected tenant occupancy timeline of ‘June-ish’… there was an astonishing dearth of visible activity on the CentrePoint site. But never mind, as the wind generated opening and closing of the unsecured double-glazed UPVC balcony doors more than made up for all that with some delightful – if random – melodies remniscent of the haunting Japanese ‘Shakuhachi’.

Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]

Spot The Speculator #34 – “I was talking to a guy I know who has about $700k in mortgage debt on rental properties at a variable rate of 2.85%. I told him that rates are going up. He has this attitude that whatever happens, he will be ok.”

pricedoutfornow at VREAA 18 Apr 2011 12:07pm
“People just do not believe (or don’t know) that interest rates ARE going up. They have not sat down and done the calculations. I think there are going to be a lot of people crying to their brokers and banks “But but you never told me that my payments could go up 50%/100%!!! Why didn’t you tell me?” This is exactly what happened in the US-people just got a letter one day from the bank that next month, their teaser rate is expired, and the mortgage payment is now much higher. I was talking to a guy I know last week, who has about $700k in mortgage debt (rental properties) at a variable rate of 2.85%. I’ve told him time and time again that rates are going up. I really don’t think he has a clue, he has this attitude that whatever happens, he will be ok. But I know for a fact that he has not sat down and done the calculations. He just carries on lalala….life is good-I have paper equity!”

“My uncle and aunt have decided to sell their long-time home in Quilchena. They can get about $3.5 million just for their large lot. That’s way more cash than they’ve ever had and they don’t really know what to do with it.”

‘Advice?’ at April 15th, 2011 at 8:31 am“My uncle and aunt have decided to sell their long-time home in Quilchena. My cousins have all moved out and in the current market they can get about $3.5 million just for their large lot. They are well to do but it’s a lot of money even for them. $3.5 million, after tax, would have been at least a couple of decades worth of earnings for them when they were still working.
They are looking for ideas about where to invest the proceeds SAFELY. They may [now] rent in which case they will have $3+ million to invest or they may buy something relatively modest in which case it will be more like $2.5 million. Either way, that’s way more cash than they’ve ever had and they don’t really know what to do with it. They’re worried about inflation but also very worried about a burst of the China/commodities bubbles. These seem like contradictory worries. I’m going to suggest that they buy a winter home in Arizona to start but that’s not going to cost much so it won’t solve their investment problem.”

Reader Makes ‘Simple Supply and Demand’ Argument For Ongoing Vancouver RE Market Strength – “This is not a short term phenomenon. This is the rise of Asia as the new economic superpower. Vancouver is/will be an Asian city, and will benefit from being an Asian city.”

yaotai at VREAA 19 Apr 2011 2:45am“During the 20th century, there was a huge shift in wealth from the old financial center (London) to a new financial center (New York), as the US took its rightful place as the global economic superpower. Now a new shift is happening. The wealth is flowing toward Asia. If we look at this geographically, then we see where Vancouver sits in this global picture. Vancouver has been a recipient of this shift and will continue to be. This is not a short term phenomenon. This is the rise of Asia as the place for future growth, and the new economic superpower(s) (YES at the expense of Europe and North America). Vancouver is/will be an Asian city. Vancouver will benefit from being an Asian city.”
and at 1:56am
“It’s simple supply and demand. The fact that this city is a desirable place to live is exactly why people have to pay a premium to live here. Is it any different in Paris? [It] doesn’t matter that there is no “industry” to speak of. People like living in Vancouver and Paris, because they are great cities to live in. They are willing to pay a premium, put up with crappy construction because they have made a conscious decision to live in a place that is better in many other ways. In Paris, people will put up with a tiny, crappy dark apartment and pay a fortune for it. Why? because they have access to a gorgeous city. Why can’t that apply to Vancouver? Maybe the city isn’t as gorgeous (actually butt ugly) but the overall surroundings are a huge draw.”

“In Vancouver, I can’t afford to buy in an area where I would actually WANT to live. Guess what? There are lots of other highly desirable places to live, especially on the west coast of North America.”

HomelessinSD at REtalks 14 Apr 2011 1:02pm“I couldn’t afford the Dunbar home 7 years ago and I can’t afford the Dunbar home now. You can’t buy what you don’t have money for… [In 2004], I was a few months away from getting married and my future wife was homesick.
At the time, I was working in southern California and would only consider moving back to Vancouver if the situation was right (like having a chance to own a home in a good neighborhood). I saved lots of money from 2004 and I bought in San Francisco in 2007 and we are quite happy here. I’m not bitter about not owning in Vancouver and I have absolutely no desire to live anywhere east of Main – there are better options elsewhere in the lower mainland.
So, it’s 7 years later and I like Vancouver considerably less than I did in 2004 – to the point where it’s likely I’ll never move back. You might argue that I won’t move back because I can’t afford to. That’s partially true: While I could purchase a shit-shack on the east side, I can’t afford to buy in an area where I would actually WANT to live in Vancouver. Guess what? There are lots of other places to live, especially on the west coast of North America that are highly desirable.
Homes tripling in value in 7 years is not healthy or sustainable.”

“We’re stretching it on the cost, we can do it, we can do it, but we’re gonna have to cut pretty much all the frivolous spending. I just don’t know how anyone can make money on a house these days.”

This from ‘anonymous’, via e-mail to VREAA, 16 Apr 2011 –“On the bus-ride  home today,  just listened to a mid-late 30s office type guy talking to some ladies about how he and his s/o put an offer in on a Coquitlam condo last night. “We’re stretching it on the cost”, he says, “we’ve looked at the budget”, “we can do it, we can do it,” he boasts, “but we’re gonna have to cut pretty much all the frivolous spending” …(Okay, so interest rates not on the radar, or did he factor this in ?). Then the conversation continues, “I just don’t know how anyone can make money on a house these days, ..” Then goes on to list every tax, fee, and expense he can think of…HST, etc.”

[Note to 30’s guy: The house is for living in, not making money on. -ed.]

Recent Arrival – “To say there is a bubble in Van city is an understatement. And condo construction material and workmanship is disgusting.”

Dclipse at 16 Apr 2011 12:15am“My wife and I just moved here from Mississauga ON. Sold our condo there and renting now in North Van. 2 year old building. Nothing is falling apart yet… but the material and workmanship is disgusting. And btw, it’s a 760 sq. ft. unit worth $450,000 according to similar ones on mls. We sold our 1015 sq.ft 2bed 2bath for $278.000. To say there is a bubble in Van city is an understatement. At least our old place [in Ontario] was excellent quality. And for 6 years we lived there it was as new. If you’re paying big money for a place you should at least have good quality (you would think). Met a guy 2 weeks ago that works for a company fixing leaky condos. Says they’re making a killing. And right now they’re working on a 3 year old building in Yaletown. Can you believe that?”

Employment Verification Letter Requests Spike Up After Recent Deadline

This from ‘anonymous’, via e-mail to VREAA, 16 Apr 2011 – “I work for a company that employs just over 20,000 people in BC, the bulk of whom live in the lower mainland. I work in a department that deals with the types of requests I will describe to you.  Basically, in the weeks that followed the week of March 18 [2011] (mortgage rule change date) We were INUNDATED with request to supply letters for employees to bring to banks to verify employment, wages and such (for mortgages, of course, and yes I ask what the letters are for to distinguish what needs to be written). We usually get maybe 10 or so requests a week, but for that week AFTER March 18, woah! Major increase in general, and for a few days we were getting 20-30 requests a day. It has slowed down a lot now, maybe just a little above the norm.  I just don’t get it, why the increase after the deadline?  I realize that out of 20 000 people 20-30 requests a day might not sound major, but it still caught my attention.”

“My buddy in Florida had high hopes that his home was his retirement cash cow, that he was going to sell it in a few years, and buy a mansion on a 100 acre ranch.”

Jsan at 15 Apr 2011 9:04pm“My buddy in Florida had high hopes 5 years ago that his home was his retirement cash cow, or at least he was going to sell it in a few years, move his family to a cheaper state and buy a mansion on a 100 acre ranch. His house had skyrocketed in price and there was nothing I could say that would convince him that the price would not last. After all, “It was different in Florida”. Fast forward 5 years and his house price has plummeted back to the point of what he paid for it in the late 90′s. Just another person who foolishly bought the idea that house prices doubling, tripling or more in only a few years was somehow a normal occurrence that would last. Sort of like 90% of all homeowners in Canada……for now! My guess is there will be a lot of people in certain overpriced neighborhoods in Vancouver (Toronto, Calgary, Edmonton, etc. to a lesser extent) that will be absolutely kicking themselves in a few years time for not cashing out while they could.”
Exactly. -ed.

“I just sold my west side house. 9 bidders. 7 Asians. Sold to a white entrepreneur and his wife.”

Jim at 15 Apr 2011 8:04pm“I’m in Vancouver. I just sold my west side house. 9 bidders. 7 Asians. Sold to a white entrepreneur and his wife. I think the Asian Invasion is driving the market frenzy for detached West Side and Richmond homes. But Chinese are buying specific properties right now. Typically lot value properties or new construction. They are buying “place holders” for a future retirement here, or a nest egg if needed. I think the frenzy is real, but I think the actual number of Asian buyers, except in those specific property types, is small.”

“It is impossible to get honest information on the RE market. Even the analyses coming from a reputable university are manipulated by people who have vested interests in that industry.”

El Magnifico at VREAA 15 April 2011 3:21am. Excerpts – “I had a very interested conversation yesterday with the “boss” of Tsur Summerville (the RE guru at UBC). I asked a few questions about the RE market in Vancouver and his views are interesting:
– He [the “boss”] genuinely doesn’t believe that a RE crash will happen in Vancouver. He definitely thinks that the RE won’t go up anymore but he said we can expect a slight correction (maybe 5-10%) and then a flat market for years (basically until salaries/economy catch up)
– He acknowledges that there has been a massive inflow of mainland Chinese buyers in Vancouver but also told me there are no serious studies conducted regarding their impact on the market (like say % of transactions made by mainland Chinese). He said such a study won’t be conducted because it is too politically sensitive…
– The most interesting thing he said is that Tsur is definitely aware that the RE market in Vancouver is in bubble territory. He issued a few statements about that and got some heat back from the RE industry (who by the way finance most of his research). So anything that comes out of his office is being made not to offend the RE industry at large, and his sponsors… It is sad that it is impossible to get honest and genuine information on the RE market. Even the analyses coming from a reputable university are manipulated by people who have vested interests in that industry…

PostCardsFromTheBlastRadius #2 – The Okanagan Bust – ‘The Conservatory’ Becomes ‘The Reformatory’

TheConservatory!  Look On My Works, Ye Mighty and Despair!
Kathy[Michaels] “If there’s ever been a project that highlights the inherent risks of putting money down on something that doesn’t yet exist, it’s The Conservatory in Glenmore. Developers broke ground for the 99-unit luxury residential condominium nearly [nine] years ago…  It sat for several years as a big, yawning hole in the ground, the subject of neighbourhood jokes… Shortly after ground broke in October 2002, work came to a halt and it took until 2005 before financing issues were resolved and crews headed back to the site again [albeit, only temporarily!]. Further exacerbating the issue was that there was no means to recoup costs from investors who purchased their suites at a cost of  $240 a square foot. The most developers could increase prices was by 27 per cent, but by the time the property went into receivership, the costs were more in the range of  $470 and $550 a square foot…”

Quick, call CentralCasting! All we need are a few emaciated ‘Rent-A-Refugees’ and we can ‘wrap’ that Bosnian MovieOfTheWeek under budget/ahead of schedule! Just imagine the LineProducer’sBonus we’ll score on that one, Boyz ‘n Girlz!

Alternatively, given TheConservatory’s resemblance to the kind of ‘WorkersParadise’ housing so ubiquitous in the former SovietUnion/EastBlox – perhaps we could resuscitate SCTV’s inimitable CCCP TV and gift it this lovely ‘new’ OkaNaganProduktionComplex!

Nix the foregoing!!!  Because: Bingo!…  Nem’s had another epiphany!.. Here’s the thing, with all the recent controversy regarding the cost/location/siting of a new regional provincial correctional facility – why not ReBrand ‘TheConservatory’ as…
After all, they already have a secure perimeter and more than enough ‘luxury suites’ to accomodate hundreds of new guests! Best of all, harness those very same ‘new guests’ to complete the project and you’ve got a vocational rehabilitation programme at ‘pennies on the dollar’!…
A ‘WinWin’ all around! – for BC Taxpayers and Provincial ‘GuestWorkers’ incentivized to finish their lodgings before Winter’s chill arrives!

Of passing interest, an actual ‘CrimeScene’ adjacent to TheReformatory’s SecurePerimeter.

Cleaned out and ironically emblematic of the TheReformatory’s financial woes – a petty cash box most likely taken from one of numerous abandoned ‘Atco’ construction offices/trailers nearby.  Further proof, if any were needed, that the villain who does his ‘RE Homework’ first needn’t waste time forcing entry to unproductive venues.  ‘Nemesis’ neglected to bring his CSI toolkit on this occasion – so instead, notified on-site security who were demonstrably pleased to finally have something to ‘observe & report’ besides the sado-masochistic exhibitionism of self-flagellating RemorsefulRealtors™.

Now as CrimeScenes go, this ain’t just any old Reformatory – nope, it’s a Reformatory with a view!… Albeit, this PrisonersPanorama features a vanquished pastoral idyll.  Where once orchards predominated – sadly, now rise the HousingTractsOfTheDamned™.
‘Nemesis’ is feeling biblical…  nay, not CrefloDollar ‘ProsperityGospel’ Biblical [aside to audience: google that one, cause I swear you can’t make up/write s**t like that]!  But OldTestament, CharltonHeston, CecilBDeMille – WrathfulBiblical!…  Accordingly, time for a little apropos Jeremiah…
Prophecy Of Jeremias (Jeremiah) 6:4-5 [Douay-Rheims]
[4] Prepare ye war against her: arise, and let us go up at midday: woe unto us, for the day is declined, for the shadows of the evening are grown longer. [5] Arise, and let us go up in the night, and destroy her houses.

Sometime soon, in the not terribly distant future, Nemesis ‘prophecies’ that authentic indigenes (aka FirstNations) will doubtless refer in passing to all this as, “The ‘hallowed burial grounds’ of a greedy, foolish and primitive people.”.. Speculative fiction or prescient forecast? We’ll see… 😉

What’s worse, this view to the hills from The Conservatory, or the reverse? Thanks to Nemesis, for illustrating the desolation of a housing collapse,  already commenced in our periphery. -ed.

Photos and commentary for the ‘BlastRadius’ series by ‘Nemesis’.
[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]

Peter Ladner On CBC – Foreign Buyers; Eroded Communities; Resort Towns; Avoiding Unaffordable Vancouver – “A chief financial officer from a mining company could not afford to move to Vancouver because of housing prices.”

Peter Ladner, former Vancouver councillor and former mayoral candidate, made the news recently by calling for some form of restrictions on ‘foreign’ ownership of local RE. The story was covered widely, at CBC [11 Apr 2011], News 1130 [11 Apr 2011], and discussed in the blogosphere.

Broadly, we are opposed to excessive government intervention in markets that affect the daily lives of citizens. We feel this way because markets are highly complicated, governments are highly limited & inefficient, and measures always have unintended consequences. Things seldom go as planned. Witness the government interference regarding the existence of the CMHC: Though mandated to make housing more affordable, the CMHC has very definitely fuelled the price bubble by artificially distorting the price of risk, and drawing many more into ownership than would be there under free-market conditions. The CMHC has paradoxically made house-ownership less affordable. If there is a  significant chance of doing more harm than good with an intervention, government should stay out.

Having said that, we do live in a country where governments are very involved with many markets: transport, education, health care, gambling, car insurance, alcoholic beverages, interest rates, our currency, etc etc. So, one could argue, why should foreign RE investment remain relatively untouched by government restriction? We wouldn’t let foreign interests take control of our water, our energy, or our food supply, why let them distort our access to accommodation? And, with restrictions on property ownership in countries like Australia and China, there is the possibility that speculative money runs to the last markets that allow them access, increasing the risk of our houses becoming the play-things of international speculators.

For the record, we don’t think that having the government step in here is essential or particularly desirable. We strongly suspect that any such restrictions would be slow-coming, ham-fisted, and easily circumventable. In other words: “too late, folks; let’s let this all play out”.  As often occurs with calls for restrictions, the calls come at the wrong time in the cycle. We believe that the Vancouver RE market will sort itself out regardless of any such measures; the bubble will implode without such restrictions. Once the inevitable initial price drops establish themselves (10%?, 15%?), speculative buying of all types (foreign, local, and, our personal favourite, local-speculative-buyers-disguised-as-normal-folks) will evaporate, speculators will become sellers, and prices will plummet. The issue of foreign RE ownership will very rapidly become an absolutely moot point. Any social concerns about foreign ownership will disappear (just watch). In a RE crash, the community will welcome any buyer of any description (witness the US, circa 2011).

Here follows a transcript of a CBC radio interview with Peter Ladner, in discussion with Rick Cluff and Tsur Somerville, from The Early Edition, 11 Apr 2011. [ thanks to Angela for the transcript. -ed.]
Foreign buyers are discussed, of course, but the piece is at least as interesting for mention of changing communities, Vancouver as a ‘resort’ town, local non-resident owners, and businesses & individuals avoiding Vancouver directly because of RE prices.
Note that they all dance around the elephant in the room, the massive speculative bubble that must inevitably implode. They simply don’t see any possibility of this outcome. All of the ‘problems’ that they wrestle with will eventually be resolved with RE price deflation and a return to fundamental values. – vreaa

RICK CLUFF:  It’s no secret that real estate is expensive in our part of the world.  The popular consensus is that the market is being driven by Chinese buyers.  Is that cause for concern?  How expensive is too expensive?
To debate those questions we’re joined by two guests:  Peter Ladner, former NPA councillor and columnist for Business in Vancouver newspaper, and Tsur Somerville is the Director of the UBC Centre for Urban Economics and Real Estate.

TSUR SOMERVILLE:  Good morning.

PETER LADNER:  Good morning, Rick.

RICK CLUFF:  Peter, you’ve expressed concern that the market is being driven by foreign, specifically Chinese ownership.  Why does that matter?

PETER LADNER:  Well, it doesn’t, actually.  It doesn’t matter where the foreign ownership comes from, but if our prices are being driven up by people who are simply investing in our community and not living here, there are a whole lot of problems that result.  We have difficulty — actually, I got onto this when I was at a meeting of the Business in Vancouver Editorial Advisory Board and somebody from the mining industry said that a chief financial officer from a mining company could not afford to move to Vancouver because of housing prices.  And that’s just one indicator of how high housing prices, when we’re now the third most unaffordable housing city in the world, can undermine the economy, people can’t find people to — employees to work here, even managers can’t afford to live here.
So it erodes the economy, it erodes the community when people come here and buy homes they don’t live in and it makes the neighbourhoods unsafe and — and less vibrant, it splits up families.  If you want to — if you’re already living here and somebody squeezes you out of your — you can’t afford to buy a home in your neighbourhood, you can’t live with — near your children, your parents, your grandparents, and it blocks social mobility for people who are — a whole generation of people who can’t afford to buy here, new immigrants who want to come here and work here and live here and pay income taxes here can’t afford to buy homes.  So it — it — and it adds to the division in the community between the rich and the poor and you end up with a resort community that’s unlivable, in spite of all our great reputation for being the most liveable city in the world.

RICK CLUFF:  Tsur Somerville, how do you respond to that?

TSUR SOMERVILLE:  I’m really worried about the government sticking its hand on these issues which are based, to a great extent, on perception.  I mean, part of it is if you want to be an international city you can’t really stop sort of international people from — from being here, even if they want to be here and investors and so I think we kind of have to decide what kind of city we want to be.
I think the other thing is, is that this is really driven by sort of what’s going on on the West Side of Vancouver, which is not the whole Lower Mainland and there’s some really unusual dynamics on the West Side and in Richmond that aren’t matched anywhere else in the entire Lower Mainland.  So I think this is a little bit of navel gazing.  It doesn’t mean that there aren’t some issues for concern, but it would be hard to walk around the West Side of Vancouver and say, “Gee, there’s all these empty houses and no one living here.”

RICK CLUFF:  Peter, in your recent article you suggest that we should consider foreign ownership restrictions in Vancouver real estate.  Why?

PETER LADNER:  Well, just for the reasons I said, Rick, that if you have — if you have a community where so many people are priced out of the market by people who are not living here and not paying income tax here and not contributing to the community here, you have a more unliveable community.  And I agree with Tsur that — that government meddling in this kind of thing is a big — it’s not easy and it’s not simple and it’s fraught with political landmines and all sorts of bureaucratic problems.  It is done, however, in some countries and we do — we meddle in the housing market in other ways, by massive public spending on subsidizing people with rent supplements and social housing and so on.  And so it’s a question of just where do we spent that public money?  Are we content with that kind of a city?
And in spite of the recent flare-up in the West Side of Vancouver, the whole Lower Mainland is nine times more than the average income to — to live here.  The whole place is unaffordable.

RICK CLUFF:  Tsur, is there evidence to suggest that restricting ownership might in fact help cool prices?

TSUR SOMERVILLE:  Well, I mean, there’s cooling — there’s — it’s not going to make this place, you know, affordable.  So, you know, if your — if your concern is affordability, you know, this is not the issue that’s driving unaffordability and I think it’s important to separate those two out.  I mean, there are places in the world that — that do treat non-residents differently.  Florida has a different property tax rate on non-residents and on residents.  You know, China makes it very difficult to — for foreigners to buy property.  I don’t know if sort of the government model we want is the Chinese government model, though.
So I mean, I — I think that the notion about — the notion about affordability should not be mixed with the notion of the issues about what kind of neighbourhoods we want.  These are actually somewhat separate and I — I do think that, you know, if you go back to the 1980s and the sort of worry about Hongcouver and all these kinds of things, I mean, Hong — Vancouver’s been through this story before about, you know, foreigners coming in and changing the character of our neighbourhoods and pushing up prices and making it unaffordable and hard for families.  I mean, that was all the arguments that people used in the last 1980s and I think most people think that the city is better off now than it was in 1987.

RICK CLUFF:  Peter, do you restrict ownership or do you change the taxation structure so that foreign owners have to contribute more to the community in which they own the property?

PETER LADNER:  Well, I would start, Rick, with just looking at the options.  I don’t hear any public discussion of these options.  The only person I know — the only study I have ever heard of that’s looked into this issue is Bing Thom, the architect, on his own dime commissioned a study to find out what really is going on, what really is the impact.  And is Tsur is right, is it foreign ownership that’s — do we have empty places that are just sitting idle, just somebody speculating on the property or what is going on?  And if we want to look at the options, okay, if it’s not restricting foreign ownership what are the options?  You can increase supply and — and we’re trying to do that, but that’s — that’s a big problem, too.  So let’s look at this thing and let’s have a discussion about it.

TSUR SOMERVILLE:  Rick, if I could just, you know, pop in.  If we go down this road what we’re going to discover is a place that isn’t really happening, it’s not sort of, you know, Chinese capital buying houses on the West Side of Vancouver, but it’s all the downtown condos that are mostly owned, you know, all — most of the new buildings are owned by people who aren’t residents in those — in those buildings.  But that’s also an important part of our supply rental housing.  So, you know, it’s — it’s not a sort of simple bullet that you can sort of target, you know, what — you know, Chinese multi-millionaires who are buying houses on the West Side and not living in them.  I mean, that’s not our sort of non-residency ownership issue or non-residency ownership issue, which is what [indiscernible] looked at.  It’s really condos downtown, but those are also where we get a lot of rental units from.  So it’s — this is not — not simple.

RICK CLUFF:  I’d like you both to respond to this question.  I mean, we always hear that Vancouver is the best city in — one of the best cities in the world to live in, certainly the best in Canada.  So what consequences are housing prices having on the character of this city?  Peter, you first.

PETER LADNER:  Well, I mean, it just — it changes who can live here.  People who can live here, the rental that Tsur’s talking about for sure, there’s an increased supply but it’s all at the high end.  And the people who are trying to work here and — and raise families here cannot do it, so they end up having to move to another — another town or another city.  If they’ve been educated here they don’t — they go away somewhere or they end up living right at the — way out in the fringes of the region and we spend billions of dollars building transportation infrastructure to move them around.
So I think there are a lot of downsides and if the biggest upside is we get some more luxury condos downtown, well, that’s — to rent, that people can rent for uncertain lengths of time because the owners might come back one day or sell them, we should look at that.


TSUR SOMERVILLE:  I think that it’s — it’s complex.  I mean, one of the things that people do do is they trade off the amount of housing that they’re going to consume in order to live here, but that’s no different than what people do in New York City or London or San Francisco, or a whole bunch of expensive cities.  I mean, you know, there is a dynamic that way.  I think there is concern, there’s certainly certain types of businesses that aren’t going to locate here, which is why we have so few, you know, corporate headquarters because of the high housing prices and there is a point where housing prices can really restrict productivity and growth.  You know, it’s not clear that we’re at that point yet and while housing is expensive here, you know, we’re not the only city in the world that has absurdly expensive housing prices, it does manage to thrive.

RICK CLUFF:  Thank you both for your time this morning.

PETER LADNER:  Thanks, Rick.

TSUR SOMERVILLE:  It’s a pleasure, Rick.  Thanks, Peter.

RICK CLUFF:  Tsur Somerville, Director of UBC Centre for Urban Economics and Real Estate, and Peter Ladner, former NPA city councillor and columnist for Business in Vancouver.

“I won’t say never, but it will be a long time before I would be able to afford a home on the street I grew up on.”

Eli at VREAA 15 Apr 2011 5:45am“Vancouver, my beautiful home… I won’t say never, but it will be a long time before I would be able to afford a home on the street I grew up on. I feel ripped off! Who made life unlivable for native Vancouverites? Was it speculation and investors? I remember a time when it was totally safe to cruise the streets, even at night as a kid. Now as a full grown man I wouldn’t take the chance… Looks like since the 3 years I’ve left things have gotten even worse. Now I live in Alberta and make 3-4 times what I made back home, and no, not on the rigs. And I can buy a nice HOUSE for 250k here, with a yard!”

[In their posted comment, Eli gave their url link as that of an Albertan ‘full service painting and restorations company’, which means their current economic health is likely closely tied to the RE bubble. – vreaa]

Social Effects Of A Real Estate Cult – “We’ve created a generation of young people whose sole ambition is to have a piece of property under their name”

Extracts from ‘For Many Chinese Men, No Deed Means No Dates‘, NYTimes, 14 Apr 2011 [hat-tip both Nemesis and Nick] –
“In the realm of eligible bachelors, Wang Lin has a lot to recommend him. A 28-year-old college-educated insurance salesman, Mr. Wang has a flawless set of white teeth, a tolerable karaoke voice and a three-year-old Nissan with furry blue seat covers. “My friends tell me I’m quite handsome,” he said in confident English one recent evening, fingering his car keys as if they were a talisman. But by the exacting standards of single Chinese women, it seems, Mr. Wang lacks that bankable attribute known as real property. Given that even a cramped, two-bedroom apartment on the dusty fringe of the capital sells for about $150,000, Mr. Wang’s $900-a-month salary means he may forever be condemned to the ranks of the renting. Last year, he said, this deficiency prompted a high-end dating agency to reject his application. In recent months, half a dozen women have turned down a second meeting after learning that he had no means to buy a home. “Sometimes I wonder if I will ever find a wife,” said Mr. Wang, who lives with his parents, retired factory workers who remind him of his single status with nagging regularity. “I feel like a loser.”

Working-class buyers have been frozen out of the market while an estimated 65 million apartments across the country bought as speculative investments sit empty.

Han Han, one of China’s most widely read bloggers, frequently assails the government policies that he and many economists say have contributed to rapidly rising prices. In an interview, he said one consequence of the single-minded focus on real estate, or on earning the money to make mortgage payments and repay family loans, is that young people have little time for anything else. “We’ve created a generation of young people whose sole ambition is to have a piece of property under their name,” he said.

While the social ramifications of the owner/renter divide in Vancouver is less extreme, it’s not a million miles from that described in this article. – vreaa

“We love it in Vancouver but are making plans to move within the next couple of years as we’ll never be able to afford to buy a reasonable home here. People move here, stay for a few years, then inevitably leave as it’s just too unaffordable.”

“My wife and I are in our early 30’s and are both professionals, all of our friends generally fit the same description. We love it in Vancouver but are making plans to move within the next couple of years as we’ll never be able to afford to buy a reasonable piece of property home here. Believe me, we don’t want a ridiculous McMansion and just want something basic, but that simply doesn’t exist in Vancouver anymore.
Almost all of our friends are making similar plans; a couple we know moved to Nanaimo last year as they could both find equivalent work and could buy a detached home for the less than the price of a one-bedroom condo in Vancouver.
There’s a reason this city feels so transient compared to places like Toronto and Ottawa; because it is. People move here, stay for a few years, then inevitably leave as it’s just too unaffordable.”

mizike,, 13 Apr 2011
[hat-tip matt, for alerting us to this reddit discussion]

Related comment from same thread:
“[I will be] moving from BC to ontario or quebec in the next few years. This actually makes me happy to know I’m going to be in a kick ass home once I switch markets.”monolithdigital,, 13 Apr 2011

‘Bob’s Note’ – “I have lived here for 60 years and found it a wonderful area to grow up in. It is now time for me to move.”

Note seen next to a “sold” sign in West Point Grey…
“I have noticed many people stopping to look at the “sold” sign and I feel an explanation is due.
I have lived here for 60 years and found it a wonderful area to grow up in.
We knew every person in the hood and to this day I still have many friends that I grew up with in this area.
Unfortunately, time marches on, and these huge houses have replaced the bungalows that once dominated the block.
I don’t know one person that lives in them, and I’m not sure if I have ever actually seen anyone in them.
To me that is not a neighbourhood.
It is not their fault as I have said times have changed.
It is now time for me to move to a small town on the west side of Vancouver Island.
I hope to regain the warmth and friendship that I once had here.
Here’s hoping.

[The above images and transcription posted at by ‘No Money Down’ in early April 2011. Thanks to Nick for bringing the post to our attention.]

“People are getting older and some want to cash out of their ‘million dollar homes’ for various reasons but the young potential buyers can barely afford the cheap rent here”

“I live in mid Vancouver Island (on one of the Islands). People are getting older and some I talk to want to cash out of their ‘million dollar homes’ for various reasons but the young potential buyers can barely afford the cheap rent here… I rent a $700K home for $1200 a month and there is a lot of rental inventory to choose from. Americans aren’t coming back for a long time and Asians don’t seem to like living on rural ‘islands off islands’. The Alberta people might come back but for these prices they could go to the US and get castles… Vancouver Island north of Victoria seems to have a minimum of 25-50 years supply of million+$ homes. No MSM or local paper will even touch this story but it’s obvious we here are in a very depressed market.”
JPG101 at 14 Apr 2011 1:18pm

1. Rents are still relatively low.
2. The price/rent fundamental ratio on properties like these indicates a massive, massive speculative price bubble. The ratio is 583/1 in this case, indicating this house’s market price is about three times over fair value.
3. The US comparison remains very important: Sell your BC home, buy 4 or 5 equivalent homes in California, live in one and retire off the rent from the others. Such market irregularities can’t last. Only when that kind of cross market osmotic-pressure returns to zero, will our market have finally equilibrated. It’ll occur at prices far below current levels.
4. Most interesting, note the older home owners who are expecting to be able to cash out of their ‘million dollar homes’ whenever they like. These shadow speculators will add their homes to the market once prices have dropped 10% or 15% or 20%, as their paper profits (and their retirement plans) evaporate. That added supply will take prices below the 2008-2009 trough lows and then the wheels will really come off. We’d be very surprised to see BC price lows higher than 50%-off, and they could well go lower.
– vreaa

Chinese Real Estate Bubble Pops – Beijing Prices Plunge 27% In ONE Month

From ‘Chinese Real Estate Bubble Pops: Beijing Real Estate Prices Plunge 27% In One Month’,, 14 Apr 2011 [hat-tip Nemesis] –
“Prices of new homes in China’s capital plunged 26.7% month-on-month in March, the Beijing News reported Tuesday, citing data from the city’s Housing and Urban-Rural Development Commission.
Average prices of newly-built houses in March fell 10.9% over the same month last year to CNY19,679 per square meter, marking the first year-on-year decline since September 2009.
Home purchases fell 50.9% y/y and 41.5% m/m, the newspaper said, citing an unidentified official from the Housing Commission as saying the falls point to the government’s crackdown on speculation in the real estate market.”

“For all intents and purposes a drop of this magnitude levered even 2 times (assuming 50% or so equity down) means that China is on the verge of a complete bubble implosion.”

Headlined for the chronological archive because of global importance.
It is hard to predict the immediate effect on us in Vancouver, which could be anything from instantly freezing up foreign buyers, to an injection of final buyers running from a falling Chinese RE market into what they perceive to be one of the only apparently ‘healthy’ ones left (Vancouver). Thus, possibly another example of the narrowing that occurs towards the end of speculative manias.
Regardless, the Vancouver RE market is far from healthy, and we’ll see the crash here too, sooner or later. We’re not anticipating 27% drop in the first month, but >50% drops by the trough.
We’ve been anticipating a broad global deflationary wave since late last year. Stock markets appear to have topped; now Australian and Chinese RE. -vreaa

“I’m Quite Happy Here, Thanks”

Some folks have jobs, live in Vancouver/surrounds, and are quite happy with all the goings on, regardless of the RE market. For the record, these stories from a discussion thread at [hat-tip matt]:

“I work for a Vancouver-based biotech, this is our only office. Most of the people I know working for tech companies here work at a company with < 30 people, all of which are based here. There is an active tech meetup scene, and new startups cropping up all the time. I’ve not heard of such a culture in Halifax or Mississauga, mostly because it’s difficult to attract talented developers to places that don’t have a reputation for being livable. While I personally live in Vancouver / Burnaby right now as I don’t yet have a family, if I did have one I would probably move to Surrey (it’s where I grew up before high school). A lot of it is very transit accessible, and it’s not terribly expensive to live fairly close to one of the skytrain stations.”kislek, 13 Apr 2011

“I’m also in biotech in Vancouver, hubby is in web development. Any companies we’ve worked for are ONLY in Vancouver. Ontario isn’t the centre of the universe. Living in Surrey means having a ~30min commute and an affordable mortgage with a yard. Most haters haven’t actually lived in Surrey before.”solace76, 13 Apr 2011

Rent Is Still Relatively Low – “Just moved to Vancouver. The place I’m renting in the West End is nearly identical to my Toronto rental, only it’s 100 dollars cheaper and it’s right downtown, instead of 8km away in High Park.”

“I found Toronto’s rental prices to generally be higher than in Vancouver. Just moved [to Vancouver] a month ago. The place I’m in is in the West End and it’s nearly identical to my previous, only it’s 100 dollars cheaper and it’s right downtown, instead of 8km away in High Park. It’s also has a wicked view of English Bay.”megapickles,, 13 Apr 2011 [hat-tip matt]

Real demand remains modest. The rent/price ratios prove we are in a massive speculative price bubble. -vreaa

Global News Switch – ‘Real Estate Bubble?’ Story Becomes ‘Steady Climb’ Story

Global BC TV, 12 Apr 2011, Noon news –

Randene Neill: “Vancouver’s real estate market continues to lead the country in terms of price. the latest survey by Royal Le page shows detached homes in vancouver sold for nearly three times the national average but as Tanya Beja reports some analysts are suggesting that these prices can’t be sustained for much longer.”

Announcer: “It takes just over a million dollars to put a ‘sold’ sign on the average Vancouver home. It’s a little less if you’re buying east of Main Street, and 50% more on the westside. Those figure released today by Royal LePage, showing that prices of homes rose 10% in the first quarter of this year, compared to last.”

Chris Simmons, Royal LePage Realtor: “The vast majority of buyers on the westside and Richmond buying single family homes are from mainland China.”

Announcer: “Royal LePage says strong demand from overseas and low interest rates helped push the price of Vancouver homes three times above the national average.
It’s cause for concern say analysts, who warn buyers are taking on too much debt:”

AJ Sull, Pacifica Partners: “[inaudible]..income concerns, especially here in BC. The debt to income ratios are quite lopsided. We’ve exceded the US averages at the peak of the US bubble. So, that to us is not very comforting.”

Announcer: “The average Canadian household debt reached a record $100K last year, more than one and a half times the average income. Experts warn with rising interest rates, Canadians will no longer be able to service their debts and their mortgages. They say a correction in housing prices is inevitable.”

Sull: “We do think about a 25% price decline would start to balance incomes and housing prices off, quite well.”

Announcer: “AJ Sull says with a federal election looming, it’s time for politicians to weigh in on real estate prices. But unless there’s a drop in demand for Vancouver housing, some realtors say they don’t see prices going anywhere but up.”

Realtor: “We have people who want to live in Vancouver, people from Toronto want to live here, people from China want to live here, people from Iran wish to live here, people from all over the world want to live in Vancouver. So it’s a place where there’s an awful lot of demand.”

Okay, so that was the Noon news on Global, 12 Apr 2011.
Noteworthy for having the words ‘Real Estate Bubble?’ heading the piece, for mention of the word ‘bubble’, and for having an analyst on camera suggesting that 25% price drops are possible, perhaps even desirable, in the Vancouver market. (A concept familiar to bear blog readers. FWIIW, we would tease AJ Sull that he is being overly optimistic. If he’d suggested a 50% price drop, however, he’d likely not have gotten air-time, so “hats-off”, it’s a start).
The realtor, of course, gives the perennial “demand, demand, demand” argument for never ending price increases. -vreaa

The message is softened somewhat on Global between the Global Noon and 6pm news slots [hat-tip to Brian via Garth at for alerting us all to this]. Here is the later version, also verbatim, for the archive record:

Global BC TV, 12 Apr 2011, 6pm news [archived by Greenhorn here]-

Announcer: “And even as you ponder how much cheaper your car insurance could be, the price of real estate just keeps going up. According to the latest industry report, a typical home in Vancouver sold for nearly three times the national average in the first quarter of this year, and three things appear to be at work here: low interest rates, a limited supply of houses, and increased pressure from foreign buyers.”

Announcer2: “Putting down roots in Vancouver is getting more expensive, especially if you’re shopping for property in some of the cities most desirable neighbourhoods.”

Simmons, Royal LePage Realtor: “You know you’re probably looking close to two million dollars for an average sale price of a SFH on the westside of Vancouver, and maybe not quite so high in West Vancouver”

Announcer2: “A new survey by Royal LePage shows that vancouver housing prices are now three times the national average, with condos going fro a half a million dollars and bungalows about double that. It’s an increase of almost 10% from the first quarter of last year. according to realtors, it’s fuelled mainly by low interest rates, and demand from abroad.”

Realtor: “There is a large demand for properties in Vancouver and Richmond amongst the Chinese population, and they’re looking to immigrate.”

Announcer2: “While the focus on Chinese buyers has prompted some to push for restrictions on foreign ownership, some analysts say the bigger concern is whether Canadians are taking on too much debt, without having the income to match rising prices.”

AJ Sull: “Canadians had a little bit of complacency, saying that in Canada we don’t incur debt like Americans do..well, we’ve started to trade places with the Americans.. the Americans are paying down debt at a fairly rapid clip, and Canadians have yet to face that and bite the bullet on that.”

Announcer2: “Historically housing prices are three and a half times Canadian’s income levels, they’re now almost six times higher [sic], the average family has a debt of almost $100K, and, unless wages keep up, AJ Sull says, the real estate bubble could soon burst.”

Sull: “… concern is that, as interest rates go up, and they will eventually, will people be able to service that mortgage and the credit card debt that’s been piled on.. and that will have an impact on the economy over time, because people’s ability to spend is going to be more and more constrained.”

Announcer2: “Sull says a market correction of between 12 and 25% could be in Vancouver’s future. For potential buyers, it could just be a matter of being patient.”

Between Noon and 6pm, the segments ‘Real Estate Bubble?’ headline has become ‘Steady Climb’, and AJ Sull’s self-stated “25%” becomes voice over “12 to 25%” mentioned by the announcer. The realtor drones on about foreign demand in both segments, using different words but saying the same thing.
Global have, however, in the second segment, introduced the idea of ‘patient buyers’, which we’ll give them credit for. That can’t be something the RE industry wants to see. Buyers becoming VERY patient will be part of the coming crash. -vreaa

Australian Housing Market Strikes Out; Canada Is Last Batter Up

From 13 Apr 2011“We have a very overvalued housing market and even a small adverse shock can be magnified by a large adverse impact on property values,” said Gerard Minack, Sydney-based global developed markets strategist at Morgan Stanley, who asserts Australian home prices are as much as 40 percent overvalued. “We’re seeing that now in parts of Queensland.”
Australia’s housing is the most overvalued in the world, the Economist newspaper said last month. The country had the most unaffordable homes among English-speaking nations, with the Gold Coast and Sunshine Coast markets near the top, according to a Jan. 24 report by Belleville, Illinois-based consulting company Demographia, which compared 325 housing markets in seven developed economies.”

Guess who was second to Sydney in the ‘Severely Unaffordable Housing Markets’ category of the Demographia study? Yeah, your home team, Vancouver.
Canada and Australia have been moving lock-step: Resource based economies, strong dollars, and housing bubbles with off-shore buyers. We expect Canada to follow Australia with respect to RE weakness. This could herald the beginning of our crash. -vreaa

The Aussie RE turn is also covered in recent posts at Mish’s ‘Global Economic Trend Analysis’, ‘Australian Home Sales Sink, Luxury Units Sell for Half Cost; New Home Loans at 10-Year Low; Australia Retailers in Deep Trouble; Party Officially Over’, 10 Apr 2011

New West – “I tried to sell my condo last fall for less than my cost, and a renovation, but in spite of some compliments, had no serious buyers.”

“I tried to sell my condo last fall for less than my cost, and a renovation, but in spite of some compliments, had no serious buyers, and it seemed like it was the area people didn’t like.” John Connolly,, 8 Apr 2011 [hat-tip Patiently Waiting at VCI]

$4.680M, No Sale -> Price Change to $4.888M

5570 McMaster Rd, near UBC V868818
1948 Rancher; 2,543 sqft; 80x165sqft lot
Listed 8 Feb 2011; Ask price $4,680,000
Price change 11 Apr 2011; Ask price $4,888,000

“I know a couple waiting for 5 years for prices to come down so they can afford a house with a garden and have a baby. Finally they gave up on Vancouver and moved to Seattle.”

paradox April 11th, 2011 at 2:14 pm“I know a couple who has been waiting for 5 years for prices to come down so they can afford a house with a garden and have a baby. They both work in manufacturing industry and have decent jobs. Finally they gave up on Vancouver and moved to Seattle. They are expecting a baby now. We don’t need more immigrants. Make life affordable for people already here and they will certainly have more kids. We will pay a dear price in the future.”

That’s another three people lost to Vancouver directly because of the RE bubble. -vreaa

Mindless Consumption – “Spending money we don’t have, on things we don’t need, to create impressions that won’t last, on people we don’t care about.”

“Having your entire financial worth wrapped up in a house and living on its nominal value is a risky situation. But in a way, [this] is only following cultural norms. Homes today fulfill much more than a need for shelter. They are physical representations of our tastes and the lives we lead — or wish we led. Last year, Los Angeles Times columnist Meghan Daum chronicled a lifetime of housing lust in a memoir whose title sums up a common attitude: ‘Life Would Be Perfect if I Lived in That House’. “Few things in this world are capable of eliciting such urgent, even painful yearning,” she writes.from ‘Housing: Real insanity’, Canadian Business magazine, April 25, 2011

“We are being persuaded to spend money we don’t have, on things we don’t need, to create impressions that won’t last, on people we don’t care about.”Tim Jackson, economist, from talk at

New Home Virgin? Get Deflowered! – Commit To ‘Own’ A New Condo For An Initial $500/Month

Image from 7 Apr 2011

Vancouver Couple in 50’s; 100K in RRSPs; 300K in cash from the sale of their home; Plan to buy soon – “We save nothing, and we are very risk averse.”

Anecdote extracted from Garth Turner’s headline article at 10 Apr 2011 “Sara is 51, lawyer, pushy. Makes $225,000 a year. Husband (about to retire on 24K a year pension), one bratty teenager, two new BMWs, rents a mini-mansion on Vancouver’s hot west side. Plans to buy soon. Assets: a hundred in RSPs (mutual funds) and three hundred in [cash] from the sale of their home. “We save nothing, and we are very risk averse.”