– chart from b5baxter at vancouverpeak.com, who adds “Inventory is at record levels for this point in the year. The graph shows that it is at the highest point [for March] in 7 years. If other sources of data are included I believe it is actually at the highest point [for March] in 11 years.”
“Feb 2012 active listings were 17.9% higher than February 2011.”
– Vancouver RE Board
Vancouver Real Estate Anecdote Archive 
Good morning fellow doomers. 20k party is around the corner. But there are still idiots out there driving uP Van east prices.
Screw East Van. Home of the appalling Vancouver Special, and, up to a short time ago, an area people avoided. When the godlike BPOE is (wrongly) called a “resort town,'” images of some craphole neighbourhood in East Van, where the aforementioned Vancouver Specials mix so gloriously with industry, non-stop traffic, crime, no views, and, of course, rain, immediately spring to mind. Really, there are so many far nicer places to live.
Anyway, East Van is simply the flavor of the day. A year ago, it was Richmond. Then it was Van West. But the locusts have already turned those areas into wastelands, and now even the realtors/bulls/boldfaced liars can’t spin them back into trendiness. Now it’s – apparently – East Van’s turn. What’s next as this bubble blows apart? Anyone have a dart board?
Gord,
Hot spots in Van east are only for renovated character homes. The market is flooding fairly quickly.
respectfully Gord – the only area of E. Vancouver HAM is interested in is Fraserview. The sales you see east are part of the “sell west, buy east, pocket the difference” purchases. East Vancouver might be the flavour of the day because there isn’t anything else on the menu for these wealthy (former) west side diners.
And yes, I agree there are some horrid looking east Vancouver homes, areas – but the pace of regentrification is astonishing (three detached construction site just on my block).
Thanks Van Guy and F1 for the info. Much appreciated.
BTW, my cynical side is asking for a definition of “character home.” 🙂
“my cynical side is asking for a definition of “character home.”
pre-ww2, not a teardown, hardwood flooring, stained glass, fireplace, etc. etc. You know one when you see one – there seems to be consensus among buyers about what is and isn’t character.
Asbestos? Leaky foundation?
Character or not, a desirable home has ‘soul’.
There is a remarkably small percentage of homes with ‘soul’ in Vancouver, largely because of architectural limitations and build quality.
Some ‘character’ homes have soul, some are remarkably soul-less.
So these:
http://en.wikipedia.org/wiki/Vancouver_Special
Aren’t “character homes”?
No, those are utilitarian boxes; you can live in them, but they do not enhance your quality of life.
Before the RE boom, these homes were called “piece of sh!ts”. HAM does not have interest in these homes. Caucasians buy these homes.
Truth. The pre-WW2 Builders/Craftsman homes are not universally preferred.
I suspect that speculative money, of whatever origin, is now operating in the areas that have been (and speculators hope, still will be) treated as “areas of refuge” by locals, such as Kits and East Van. Interesting to be told that HAM is “only” interested in Fraserview, where one of the couples I know most attuned to what’s hip locally has chosen to rent in the past couple of years. Also, when the action shifts to an area like Fraserview, isn’t it harder to believe the argument that “immigant families are just looking for a house to live in, near good schools and a community that speaks their language”? Overt speculation is combining with local desperation to push prices up and the former seeks to capitalize on the latter. Some of the speculative element comes from within the real estate industry. It will be very interesting to find out, if we can, who overpaid for this house; remember the occupation of those who overpaid for the East Van basement we were talking about a few weeks ago.
Of course inventory is high. If I owned a soggy cardboard box in the ghetto worth a million bucks I would dump it YESTERDAY and put that money in stocks. But lets not start another stock bubble please.
Agreed.
Anybody who owns a Van East SFH who sees the recently posted $1.45M sale should consider launching their very own hail-Mary pass.
“Of course inventory is high”.
detached inventory is not high it’s low.
When you examine east and west inventory detached is a much smaller proportion of the total.
Total east and west:
detached = 31%
even in van west where blogging renters claim large inventory of unsold detached:
detached = 27.8%
if you’re looking for a correction in any property class look for attached (condo/towhouse/duplex)…I’d say your odds of getting a one bedroom condo for a steep discount is improving day by day.
Condos will always lead the way with price drops. There are more condos than any other property types. And with no land value, it’s simply more vulnerable to a correction. Developers will lead the way with reductions because they have more flexibility. Then resale owners are going to get screwed bigtime. TH and then sfh will follow. And boom, it’s all over.
Point Grey SFH Inventory (MLS):
2011-Feb-26: 41 units
2012-Feb-26: 67 units
That’s an inventory increase of, hmmm, 63% YOY for Vancouver high-end SFHs. (Small data set, granted, but apparently a growing one…)
van guy,
do you know how many detached homes are for sale in Vancouver?
total = 1280. And 64% of these detached are west – owned by those that are less effected by market conditions. When prices fall inventory disappears – this is a well known pattern for this city. I’d say the chance of a sfh significant correction is slim and none.
To re-iterate, formula1 is on record as saying that SFHs can’t possibly drop by more than 10%-15%, and now that the chance of even that occurring is “slim to none”.
on west side detached, cruise some of the ham RE rags. there are sale ads for stuff with no official listing. impossible to say but i do know of offshore realtors holding multiples ppties.
“When prices fall inventory disappears – this is a well known pattern for this city.”
Like in late 2008 and early 2009?
Well prices did bounce off that 2008 dip and made all time new highs. So indeed he probably does mean like then, but lets hope he’s wrong this time.
I don’t think we need to remind anyone here what happened then with stimulus, rates, loosening, buying of mortages from banks etc. Had nothing to do with the behavior of sellers.
As I said lets hope he’s wrong, but I don’t see money tightening or mortgage rates rising any time soon to any significant degree.
“When prices fall inventory disappears”.
Until prices fall further.
Then, when folks dependent on the market value of their Vancouver SFH for their entire financial future (read: for their comfortable retirement) start seeing that future evaporate, they rush to market to try to realize at least some of the thus-far-paper profits.
Savings rate in BC is, what, minus 9%?
What percentage of net-worth does the average Vancouver SFH owner have in their home? Answer: Way too much.
How will owners respond as prices fall 10%, then 15%, then 25%?
“…those individuals with total debt service ratios over 40% and equity under 20%. Those people comprise 3.2% of total mortgages, a number he says would grow to 4.5% if rates soared 300 basis points”.
“Yet, even in this high-debt/low-equity group, defaults have been “well below 1%,” Tal adds (which is a positive reflection of Canadian lending standards). By comparison, 8.1% of U.S. mortgages are 90 days delinquent or in foreclosure”.
“Thus, short of a huge macro shock,” says Tal, “there does not appear to be the risk of large scale forced selling that would typically be the trigger for a precipitous plunge in the national average house price.”
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2011/07/down-payment-size-a-housing-bear-market.html#tp
We’re not talking about the risk of “forced selling”; we’re talking about voluntary selling to attempt to lock in paper profits.
Don’t you see that the majority of Vancouver SFH owners have very large percentages of their net-worth tied up in their homes? Many (most?) have under-saved, and they are over reliant on RE prices for their financial futures. Our hypothesis is that a modest percentage of them will try to realize those gains, once prices declare that they are dropping significantly. It will only take 6-7% of those owners to then crash the market.
The same thing will happen to condos, too, of course, but the trajectories down will likely be different.
We’d not be surprised if the total peak to trough drops for condos and SFHs end up being almost identical, once all is played out.
Remember, SFH ‘exclusivity’ has led to them being pumped that much higher by the mania.
From Garth Turner’s post at greaterfool.ca yesterday, 15 Mar 2012:
“I went to a party tonight,” says a well-connected [Vancouver] realtor, “and you can tell most people don’t believe that it can ever fall here. They sure don’t get out much.”
gotta love Garth Turner
…we asked Garth where he got his figures. He said he “doesn’t have a source.” He apparently derived that number from some industry executives he spoke to a while back”.
http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/12/garth-turner-the-housing-crash-liar-loans-more.html
Garth Turner’s site is so full of misinformation it’s astounding. There are also far too many hidden “plants” posting phoney comments and anecdotes. Most sensible people don’t believe a word that’s posted on that site.
Part of the reason that so many mortgages in the USA are in default vs our very low rates of default is simply market sentiment.
In the USA many homes are underwater so making your mortgage payments during time of financial hardship is not a priority. Food, cars, just about anything else comes first. Good luck trying to borrow from friends or family to make payments.
In Canada because real estate sentiment is totally out of whack and “real estate is such a great investment”, you’ll do whatever you have to to make your payments. Beg borrow or steal you’ll do it. Bank of Mom & Pop no problem…
in the US owning your home is considered a business. You can remain personally solvent while declaring bankruptcy on your home only, write off your monthly mortgage payments, renovation expenses, etc.
Big reasons why US market has been in the dumps while Canada remains strong
Sorry, your logic doesn’t follow.
Canada remains ‘strong’ because it is still in the grips of a speculative mania in housing.
The mechanisms to which you allude will only be tested on the way down.
You’re actually implying that “the dumps” may be even worse for Canadians.