“We went to an Open House this weekend to gauge whether there was a rush to beat the July 9 deadline. Open House was on West 33rd and it was dead. We attended with approximately 1/2 hour to go and we were only the second name on the sign in sheet. Even the realtor admitted it was dead and asked us if he could send us some similar listings as “he had lots of time on his hands”.
Nice change from the 30 pairs of shoes and multiple offers you would have seen not too long ago.”
– MEM at VCI 25 Jun 2012 at 1:52pm
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Latest Anecdotes:
- “I’m surprised that everyone else is so surprised to hear anyone talk about a housing bubble” – “Canadian RE 2021 worse than U.S. bubble at 2006 peak” – David Rosenburg
- “Always the Right Time to Buy!” – Cheap Rope For Vancouver RE Buyers
- Mortgage Squeeze Anecdotes – “Two days ago my mortgage holder called and told me that, after 22 years, they would not renew my mortgage.”
- Wow! – CMHC CEO Evan Siddall Points To Unsustainable Debt & Calls For 18% Drop In Housing Prices – [which of course would mean a lot more off]
- Prediction: Vancouver RE Prices Will Not Crash… Unless They Crash
- Pre-Existing Disease – COVID Economic Stress Uncovers Longstanding Vulnerability in Vancouver RE Market
- COVID-19 the Pin for the Highly Debt-Leveraged Vancouver RE Bubble?
- Vancouver Sun Headline – ‘Five more Metro Vancouver homeowners hosed in a falling market’
- Vancouver RE Prices – Where is the Support?
- Money Laundering & Vancouver Home Prices
- “Psychologically, They’re Ill-Prepared” – “Canadian Chaos Looms”
- Keeping Up With Other Bubbles – Australia Suddenly Not Running Out Of Land Anymore – “Aussie House Prices Could Halve”
- Watershed? or Dam-Collapsing? – Mainstream Media Quoting Vancouver RE Bear-Tweets, and Predicting Shrinking Realtor Numbers – “What they’re used to is not what real estate is typically like.”
- “Within artistic communities in Vancouver it’s hard to spend more than 15 minutes at a social gathering without talking about the cost of rent or knowing of someone who is being evicted.”
- Macleans Wakes Up – ‘This is how Canada’s housing correction begins’ – “We’re not ready for what happens next”
- Vancouver Detached – Sales Down, Prices Down
- Bloomberg Calls Vancouver ‘The City That Had Too Much Money’
- “Our family loves Vancouver, but we’re leaving because the struggle to live here is simply too hard”
- Tendency Towards Corruption Is Inevitable – How Do We Minimize Its Existence?
- Hard Earned Home Savings? Hardly.
- “You know your real estate is in bad shape when there is a game app that displays Vancouver’s Science World and teaches you how to be a money hungry real estate developer.”
- “It’s sinking in that Vancouver is sinking” – “Westside prices have fallen 17% from 2016 & 11% this year; sales volumes down by 80%; 3 years worth of >$3 Million inventory”
- The Carrion Have The Carcass – “I’ve lived in Vancouver since 1968; my wife was born here; we are about to leave; this town has priced us out. All that is left are the investors and the very rich visitors.”
- All Time High, And Climbing… $251 Billion Personal Debt Borrowed Against Canadian Homes
- “I asked a group of young people how many of them thought they’d be in Vancouver in two years, and 17 out of 18 said that they would be moving.” – Mayoral Candidate Shauna Sylvester
- Off-The-Charts Unaffordable – Greater Vancouver Price-To-Income Ratio 28 (average home price: $1,071,800, median one-person income: $38,164)
- Conflicts of Interest – BC MLAs Heavily Invested In RE Making Laws About RE
- File Under Tags: ‘Tolerant Vancouver Renter’ and ‘YouGottaBeKiddinMe’
- Vancouver “an international housing-affordability basket case” with “RE bubble risk the worst in the world” – Maclean’s
- Vancouver Economy Over-Dependent On Debt Spending
- Vancouver City Councillors Wake Up To ‘Fierce Speculative Demand’ – “There is significant evidence speculative investment has the biggest impact on housing costs in the city.”
- The Dance Around Foreign Ownership of Vancouver RE
- Information From Outside The Vancouver RE Bubble – U.S. Senator Lives In (don’t laugh) $500K Home
- “The Position Remains Unfilled”
- Jessica Barrett – ‘I Left Vancouver Because Vancouver Left Me’ – “Like Living On An Abandoned Film Set.”
- “I’ve thought since early 2010 that Vancouver housing was in a bubble, and have refused to buy a house for this reason. I’ve felt that the risk of mean-reversion was far higher than the risk of missing the upside.”
- “It is very difficult to live here.”
- “We want young people to buy Real Estate.” – Vancouver’s Mayor
- “Vancouver RE Balloon Pricked; Median Price Detached Home Down >$500,000 to $1.7 million; Prices Need To Be Slashed”
- Detached Price Trend Remains Up, For Now. Speculators Hold Their Breath?
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Nothing a lower price can’t fix
people vote with their feet
Just spent the past week in Vancouver. It’s interesting talking to “normal” people there. Absolutely no one sees this coming… yet.
Either that, or it’s complete denial.
Maybe a bit of both. They have been very conditioned by the echo chamber.
So true EG. Nobody sees “it” coming….weird isn’t it?
Those of us who follow this drama closely heard thunder claps and saw lightening the day the announcements were made. We just kind of assumed others would see the significance. They did not.
Most still fail to recognize the danger. Nothing connected. Or if that, just a lazy yawn and a puzzled look asking why we are still on THAT subject. The thing is that we just had a major shift in attitudes towards inflating the economy via cheap credit and household debt acquisition. It was a big deal. A huge deal.
I believe it was also a landmark event and is one we will probably all remember as the moment when the various bubbles across the country peaked and a slow deflation in prices began.
Some few did “get it” though. You know who?…..First time buyers that’s who. And Realtors and Brokers and the Trades and Speckers and Flippers and Government agencies everywhere.
The man on the street is still oblivious despite the news reels but everyone who is even vaguely connected to the pulse of the market saw the signals change right away. And now they are rushing to compensate for the actions, meet deadlines, make last minute sales, get sold out of a spec property or even to prepare for the outfall in other ways.
Joe Bloke is still watching TV and ruminating on a bowl of Cheeto’s.
Most Vancouver market participants (owners with a great deal of their financial security riding on the market value of the real estate they own) haven’t yet heard of the mortgage rule changes.
Also, my most oft-heard cliche when people were talking about it… something along the lines of:
“Well, yeah, prices can’t go up forever. But you gotta live somewhere, right?”
True enough, but “living somewhere” does not necessarily mean:
a) living in the Lower Mainland or,
b) maintaining your shelter via an over-leveraged mortgage.
But, again, in the Vancouver area the thoughts of either moving away or of not owning your house (“if I get out now, I’ll never get back on the property ladder”) are anathema.
It is crazy isn’t it. But then, I suppose that is what makes bubbles so mystifying and why so few (with all the opportunity in the world) never actually benefit from the easiest money the market ever handed them. On a damn platter no less.
It’s almost inconceivable, but most are about to miss the top altogether. They would not hear the warnings all the way up. Too pigheaded. Now it looks like they will be equally blinded all the way down.
What’s that expression again? Oh yeah……..You can’t teach stupid.
(I admit, I foolishly thought they would all start to wake up)
That’s different from my experience. There were lots of traffic in the open house across the street from us this past weekend. Quiet East Van neighbourhood. Steady flow of people right up until the end. Realtor looked happy as he drove off.
Vancouver family couples’ median income posted the highest decline in Canada. http://www.statcan.gc.ca/daily-quotidien/120627/dq120627b-eng.htm?WT.mc_id=twtB2554
Congrats.
Thanks…?
LOL!
Those data are from 2010
How much of that is skewed by families ** minus the income earner ** moving to Vancouver. It’s also a huge reason why we have so many children “living in poverty” in their multi million dollar homes since that is also measured in Canadian declared income.
I wouldn’t put too much weight into it although I’m also not saying that things are great here from a family income perspective but imagine how much worse this is going to get in job losses and lower income when real estate comes back down to normal levels.
Interesting stat watchdog. You know, it has occurred to me that the decline represents about one weeks work. There are 261 work days in a year (excluding stat holidays from the equation) and so a 2.4% decline in median household income works out to 6 days work …..more or less.
As a 2010 stat it might actually be reflecting unpaid time away from work as people burned through their Helocs and extra credit acquired from equity gains. Just a theory of course. What I am thinking is that the decline in earnings is partially a result of people putting in fewer compensated hours by choice.
Did it not just seem like everyone was taking extra time off work to do a reno, build a new house, shop for a cabin, holiday in Europe or take the vacation of a lifetime to somewhere else?
The drop in earned income might just be reflecting the destruction of real wealth as owners skinned the extra benefit right out of their homes inflated value.
I’m not sure that it was such a big announcement. Yes, going from 30 to 25 years equates to an almost 1% increase in mortgage rates but we have historic lows in rates right now. That means it equates to about a 4% rate which is what we had when the market was flying just a couple of years ago.
I would have imagined that the last big mortgage rules change regarding basement suite apartments would have had a much bigger impact. Prior to that change if you were getting $1000/mo (potential) rent from a basement suite they just added that to your mortgage. Then the rules change said that the suite was income and therefore would equate to $12,000 more income which was applied to the debt ratio to give you the equivalent of only $4000/yr or about $300/mo more in mortgage room. The result is a drop in affordability by almost $200,000!
I guess when that really didn’t have the impact they wanted they just kept having to pile on the rules changes.
Let’s look at an “average” example.
Couple has combined pre-tax income of $72,000 with $50,000 to put down on a property. We’ll use a traditional debt ratio at 32% for convenience meaning employment income affords $1920/mo. The property has a basement suite with potential for $1000/mo. Current rates are 2.99% for 5yr and we will use that for convenience throughout the whole process.
40yr Amort (they still put $50k down even though 0 down is available): Can afford $1920+$1000 for a total of $2920/mo which grants them a mortgage of $819,000 plus $50k for a total purchase of $869,000.
35yr Amort: They still have $2920/mo and that gets them $761k of financing for a total purchase of $811,000.
30yr Amort – suite added to income: Suite is now $1,000/mo added for a total income of $84,000 and a monthly debt ratio value of $2240. They can now afford only $533k plus their 50K for a total purchase of $583k. This rule change wiped out 28% of affordability!
25yr Amort – suite added to income: They can now afford $473k plus 50k for a total purchase of $523k.
Yes, there are other factors like CMHC insurance premiums that affect this but for simplicity sake we can clearly see that the same couple operating under different rules have gone from purchasing a home leveraged at over 10:1 to 6:1 and the government wiped out 40% of potential debt from households. We also see that the biggest change they made was the way to treat suite income and that that had the biggest impact that never was.
We all panicked and said “the party’s over” when that rule came in. It wasn’t. What makes everyone so sure these rule changes will be the final nail in the stucco coffin?
All properties have suites. Oh no wait they don’t.
rob ->
Nobody can be sure.
But those of us who watch the market carefully had already seen the recent signs of weakness (increasing inventory, weak sales, slight pullback in prices in most sub-sectors) and knew that this move (driven more by developments in Ontario than the Westcoast, it seems) would have further downward effects on the market. So, in that context, the move was seen as significant; it came when the market was already losing balance slightly.
You could liken this to an old boxing match, where a blow is landed that, to 90% of the audience just seems like another blow, but to the 10% present who really follow boxing closely, the blow is instantly known to be a game changer (and a little gasp is heard from that 10%).
The rule changes were a bit like that. Sure, not necessarily the ‘final nail’, but definitely something significant.
We shouldn’t forget that payment ratios are still accommodative, even with a retrenchment to 25 year amortizations
jesse -> What does ‘payment ratios’ refer to, exactly?
The price to payment ratio is the price divided by the mortgage payment with a typical downpayment
Thanks.
Vreaa, your insights and your analogies are awesome. Reading Vreaa is more enlightening than any MSM Canadian news source that I know of.
“…..the blow is instantly known to be a game changer (and a little gasp is heard……)”
So well said. And Nem, your video was the perfect compliment.
A drop from $869k to $523k sounds pretty significant to me. IMHO, this is the difference between being able to buy a place with a suite and one without.
“You could liken this to an old boxing match, where a blow is landed that, to 90% of the audience just seems like another blow, but to the 10% present who really follow boxing closely, the blow is instantly known to be a game changer (and a little gasp is heard from that 10%).”
Good example. The proverbial “tipping point”
The knockout will occur when Canada gets downgraded by the ratings agencies next year.
“Nice change from the 30 pairs of shoes and multiple offers you would have seen not too long ago.”
try east side sub 900K if you’re looking for a shoe count.
i hope you go broke
Try counting shoes in se van.
East side sub 900K, the savior of the market.
Last beacon of hope and safety in these tumultuous times.
East side ewwwww…it’s like living in Squamish or Abbotsford…or Coquitlam. But I guess it’s still better than toilet challenged India or anywhere in China 😀
East is the new black.
I have to be honest here, while some eastside houses are “solid” for the most part the construction quality isn’t as high as further west. I went to view a few a couple of years ago; the finishing was nice and the furniture was nice but it was obvious the original builders of yore had cash constraints. Nothing wrong with that, of course. Rustic is the new black. And austerity too.
Vancouver Specials are the new black.
Hell yes. Being “in the black” is the new black too.
http://vancouverspecial.com/all.php
Kinda like finding those camo pants in the back of the closet and thinking, what’s the worst that could happen?
http://www.contemporist.com/2009/02/02/vancouver-special-renovation-by-iconstrux-architecture/
So much untapped potential!