‘High-Volume Local Vancouver Realtor’ – “The appraisers told me they just don’t see the value in a lot of properties and want to make sure they do not over-value in view of an anticipated market correction.”

“As you are no doubt aware there has been a huge slowing in the market and predictions are that there will be a correction of approximately 25% on detached properties and up to 30% on condos. The other prediction is that we will not see any sort of recovery for another 2 years. How much of the above is true only time will tell. One thing I do know is that The Federal government has not helped by a) cancelling nearly 300,000 investor applicants who were already 2 years into their application process and b) Making it much harder to get a mortgage without proof of income and increasing the ratio of income to borrowing. This has directly affected the numbers of people looking to buy from outside our borders.
The other problem I have personally experienced is purchasers that bought properties I had listed have hit HUGE problems getting a mortgage, as banks would not appraise the property at what they paid for it even though it was sold on the MLS and in some cases at multiple offers! The appraisers told me they just don’t see the value in a lot of properties and want to make sure they do not over-value in view again of an anticipated market correction.
Good quality properties that are priced well are still selling and there have been some big sales, as you will see from my attached stats sheet. If you don’t have to sell then don’t, if you do then make sure you price it right, choose a Realtor who will promote it right and last but not least prepare now with photos, floor plans etc., so you can come to market as soon as there is a change – even if it is nominal.”

– this letter from a “high-volume local Vancouver realtor” posted by Simeon Garratt at his website allure.com 23 July 2012, in a post entitled ‘IS THE CANADIAN GOVERNMENT KILLING VANCOUVER REAL ESTATE?’.
Simeon Garratt himself adds:
“I think that the Federal Government is directly curbing the growth in the real estate sector. Canada -Vancouver specifically- has been on the ‘hot spot’ radar of people from all over the globe. We have been ranked the best place to live, the safest place to live and have an economy that is second to none. A huge amount of our economy’s growth is based on our need to grow as a population. Currently, Canada’s population is dwindling and without the support of a strong immigration system, it will get worse.
I believe that if we focus on creating good quality jobs and giving young people quality education, we will attract higher salaries, bigger companies and housing prices will become less of a factor. It is common in most metropolis cities around the world to commute an hour to work. For some reason, we think we are the exception.”

1. The appraisers are to be commended for their caution: it is currently very hard to reconcile ‘price’ and ‘value’ for local properties.
2. We do not foresee local economic strength so powerful and so sustained that it raises local incomes such that RE prices make sense by that fundamental measure. Incomes would have to double or more for that to happen. Can you imagine that happening without mortgage rates rising?
3. We don’t know what Simeon Garratt means when he says “(we) have an economy that is second to none”, or “a huge amount of our economy’s growth is based on our need to grow as a population.” We see lots of signs that our economy is over-dependent on: the RE industry, industries directly related to RE, and the other temporary knock-on wealth effects of a speculative mania in RE.
– vreaa

44 responses to “‘High-Volume Local Vancouver Realtor’ – “The appraisers told me they just don’t see the value in a lot of properties and want to make sure they do not over-value in view of an anticipated market correction.”

  1. “Making it much harder to get a mortgage without proof of income and increasing the ratio of income to borrowing” The nerve of the government, expecting people to be able to pay back a loan before approving it.

  2. Dimitri Tishchenko

    Grey text on a grey background, why????

  3. The 300,000 immigration applications cancelled weren’t “investors”, but federal skilled workers and their families.

    • Well we do know that concentration on English language proficiency is being given more weight than it was previously; the changes in immigration policy comprise one of the ways the CPC will be leaving its legacy over the coming generation.

  4. Vreaa, you seek meaning where there is none. These are just the usual, empty ramblings of a real estate agent. “Best place to live”, blah blah.

    Reminds me of the time I asked a realtor if she thought endless demand from China was sustainable given a possible RE bubble in that country, communist dictatorship, etc. She stared at me blankly, then replied: “Well, there are a billion of them.”

  5. “One thing I do know is that The Federal government has not helped by…”

    One small correction. This should read:

    “One thing I do know is that The Federal government *has* helped by…”

    That’s better.

  6. Yes, yes, yes…the appraisers are finally seeing some of these properties for what they really are!

  7. “I believe that if we focus on creating good quality jobs and giving young people quality education, we will attract higher salaries, bigger companies and housing prices will become less of a factor.”

    Great plan. How’s it going so far?

    http://vancouverpeak.com/groups/general-chatter/forum/topic/2012-layoffs-tracking-thread/

  8. I do so enjoy how we should support producing “high paying jobs” without specifics as to why it’s so difficult to pull off. High paying jobs will come when productivity increases (but maybe that’s a bit too simplistic; oh well, the bar was already set!).

  9. IS THE CANADIAN GOVERNMENT KILLING VANCOUVER REAL ESTATE?

    Really? Mildly restricting the free binge that was initiated by the Canadian government and always “sponsored” by Canadian taxpayers equals killing the RE market?

    Simeon G is a bigger joke than I thought…

    • Just a big enough joke to get your attention. That’s all. That whole piece was written to spur conversation. I don’t think the realtor was in the right nor do I think there is one simple solution to this problem, but I do think there are measures that could be taken to help balance the spectrum.

      The core of the problem is WHO are WE as the city of Vancouver trying to accomodate? Everyone? That never works. Low-income rental units and shafty density policies aren’t going to escalate business on an economic level. Why not draw jobs and offices from Toronto?

      As of current, a large majority of the money that comes into Vancouver is coming from overseas. Property prices are a secondary matter. We need to focus on other core problems and let the RE sort itself out as a result.

      • Hello Simeon. You seem to advocate for no government intervention in the RE sector, true capitalism as it were, and I agree, let the homeowners and banks assume the risk for the decisions they make. Please explain why then the RE industry does not advocate for the closing down of the CMHC, the single largest source of government interference in our market? Why would you want tax-payers to assume this risk? If you want to argue for a free-market in RE, I feel you must be consistent.

      • As of current, a large majority of the money that comes into Vancouver is coming from overseas.

        Prove it!

      • The core of the problem is WHO are WE as the city of Vancouver trying to accomodate? Everyone? That never works.

        You are full of shit. As long as the government accommodates YOU, everything is fine, right?

      • The solutions are pretty obvious to many people except for those with vested interests (like you).
        * the government should stop all direct and indirect incentives for the real estate industry
        * get rid of CMHC (and leave insurance business to the private industry)
        * no bailouts for irresponsible lenders, EVER. Too big to fail = bullshit.
        That’s just the basics.

        Btw, if you are in real estate, anywhere in Canada or the US, your livelihood depends on government support.

      • joe_blown_away_by_high_housing_costs

        Hi Simeon. I lambasted your blog entry over at Vancouvercondo.info last Friday.

        http://vancouvercondo.info/2012/07/friday-free-for-all-214.html#comment-167135

        You may be able to speak Cantonese and Mandarin but your English writing skills are like a first year undergrad.

        “I legitimately agree” –Odd use of the word “legitimately”–whether one agrees or disagrees one has the right to one’s opinion so any opinion one may espouse may be considered legitimate. How could one “illegitimately agree”? Maybe if one were under duress?

        “I think that the Federal Government is directly curbing the growth in the real estate sector.”–New mortgage regulations getting in the way of the real estate ponzi scheme.

        “Canada -Vancouver specifically- has been on the ‘hot spot’ radar of people from all over the globe. We have been ranked the best place to live, the safest place to live and have an economy that is second to none.” –So they go straight from talking about how the federal government wants to take gas out of the real estate bubble into the real estate pumping talk. It’s almost like suggesting the market is strong by virtue of the fact that we are in a bubble.

        “an economy second to none” –Not sure if this refers to Canada as a whole or Vancouver as the author seems to be moving between geographic scales. Okay, let’s look up both. In terms of GDP per capita (which controls for differences in population), Canada ranks 12th among countries of the world. Rather than “none”, actually 11 countries have higher GDP per capita than Canada: Qatar, Luxembourg, Singapore, Norway, Brunei, Hong Kong, USA, UAE, Switzerland, Netherlands, Austria, Kuwait.

        If we just want to think about Vancouver as a city, according to Pricewaterhouse coopers GDP ranking of cities, Vancouver ranks in 68th place (#1 is Tokyo, Japan) (Source: http://en.wikipedia.org/wiki/List_of_cities_by_GDP#List_of_cities.2Fmetropolitan_areas_in_the_world_by_GDP_.282008.29)

        This does not qualify as “an economy second to none”.

        “our economy’s growth is based on our need to grow” –My head is spinning!

        “Currently, Canada’s population is dwindling” –This is what Statistics Canada has to say about Canada’s population:

        “The population of Canada increased 5.9% between the 2006 and 2011 censuses, compared with a 5.4% increase during the previous five-year period.” (Source: http://www.statcan.gc.ca/daily-quotidien/120208/dq120208a-eng.htm)

        “I believe that if we focus on creating good quality jobs and giving young people quality education, we will attract higher salaries, bigger companies and housing prices will become less of a factor.” –What does this even mean? How can housing prices become less of a factor? Prices (at whatever level they may be) are always going to matter. In terms of good quality jobs–if you look at all the headlines about tech companies closing down in Vancouver the prospects don’t look good.

        “It is common in most metropolis cities around the world to commute an hour to work. For some reason, we think we are the exception.” –Justification for stratospheric property prices in the City of Vancouver because the working stiffs can just move out into the burbs. Take a look at the stats for the real estate market an hour outside of the City of Vancouver and say there isn’t a bubble there too.

        I have to shake my head when I think someone who could write this crap has made cash hand over fist during this real estate bubble.

    • Hello Simeon. You seem to advocate for no government intervention in the RE sector

      His livelihood depends on government intervention. This monstrous bubble would not exist if not for government intervention.

      • Agree bubbly, I just hope he realizes how fortunate he is to have as much government support as his industry does and that a little prudence is better for all of us in the long-run. I’m wasting my time aren’t I?

      • I’m wasting my time aren’t I?

        Yes 🙂

      • My livelihood isn’t actually very dependant on Vancouver real estate as all. Personally I wouldn’t care if prices took a hit, maybe I could afford to buy then. I actually focus on real estate in other parts of the world much more than locally. The government doesn’t accomodate me, but that doesn’t mean I can’t think about the big picture.

        You don’t have any concrete solution to the argument, you just banter. Come up with a viable solution and then I’ll have a proper conversation. Perhaps you’d like to guest-blog on Allur? No bias here.

        I would just like to see the city think long term instead of immediate affordability. This article was written purely to take ONE stance on immigration from ONE realtor. I do agree with some points, but not all. I think government intervention is needed, but if they are going to stop an easy source of potential income (investor immigration), at least have better reasons than ‘workload’.

      • “if they are going to stop an easy source of potential income (investor immigration)”

        I have two questions, if you don’t mind:
        – how much income do you think is coming from the investor immigrant program?
        – income for whom?

      • Hi Jeff —

        As per your questions, currently there is almost NO income that is made by the government from the investor immigration programs. On average, $800k per immigrant application is taken by the Canadian government and held interest free for 5 years. After which, it is returned. I think the govt. should just keep it and use it to offset any so-called ‘damage’ done by foreign investment.

      • Simeon, you are just getting funnier with every post.

  10. “High paying jobs will come when productivity increases.” – Dr. J.

    As it happens, Dr. J… Not necessarily. But!… occasionally, for the fortunate few, a dinner ‘Party’ invitation may ensue…

    “I want to treat several migrant worker brothers to dinner.” – Chen Li, Deputy Director, Shaanxi Provincial Public Security Department

    [ChinaDaily] – Free dinners battle bias against migrants

    …”It’s not just dinner, it’s a social movement to fight against discrimination,” said Sun Liping, a professor of sociology at Tsinghua University and one of the people who started the campaign: Treat Migrant Workers to Dinner [which aims to organize 10,000 dinner parties in 100 cities nationwide in a year].”…

    http://tinyurl.com/bvfvnzg

    [NoteToEd: Responding to critcism in StateMedia and notably embarassed by his inability to personally entertain more than eight migrant workers, Deputy Director Chen Li – in an uncharacteristic ‘fit of pique’ – remarked, “Well, there are a billion of them!”]

    • …A 23-year-old young man in Zhejiang province has built himself and his girlfriend a home out of a worn out minibus in order to save rent.

      The young man surnamed Zhang, together with his girlfriend Zhao, arrived in Songmen county, Wenling city of Zhejiang province several months ago to look for jobs. After failing to find an affordable accommodation to rent, Zhang accidentally stumbled upon an old minibus and came up with the idea to convert it into a “house”.

      Despite the difficulties [inadequate water supply and living on a ‘sanitary’ land fill], the couple feels happy and satisfied since they have a warm home of their own.”…

      [ChinaDaily] – http://tinyurl.com/csk95ep

    • “Not necessarily. But!… occasionally, for the fortunate few, a dinner ‘Party’ invitation may ensue…”

      The fellow seems serious about ensuring value propositions are more than just about salary. A good friend of mine opined about his time in The Valley: “Those guys have their sh!t together.” He also, when living in Vancouver, was employed by a company located in the US because, well, the salaries in Vancouver were about half.

      Follow the money. BTW I’m kinda glad I can’t see my own back side, it’s the way nature intended things.

  11. anonymous guy

    Wow,
    What a bunch of Bullshit RE Pumping Propaganda.
    The appraisers won’t rubber stamp a sale price, because, unlike realtors they can be sued for putting lies on paper.

    An economy second to none? Are you kidding me, Vancouver’s economy pays less than every major city in Canada, offers little to no room to move up in large companies as management positions are almost always back east. Not to mention the specker condos or McMansions are going up everywhere and then sitting empty leaving the economy with big dead zones.because of the very “investor” immigrants that Simeon is crying about.
    Hey Simeon, Maybe the government finally listened to Canadians (radical idea, I know), and realized that we’re not benefiting from someone swooping in from China and stashing their treasure in our real estate, sending their family over here to enjoy our education and healthcare, meanwhile claming no income, as Pops is back China making his millions before the ink is dried on his Immigration Docs..
    Us Vancouverites are here footing the bill for these immigrants, the Federal, and even often times Quebec government gets a cut of the interest on the “investment” which is reality is a deposit, not an investment.
    Meanwhile the BC and especially Vancouver taxpayer gets hit with the cost in the form of inflated property values, and higher strain on public services.

    The government is only guilty of taking their time to fixi a broken immigration system. A system which, to any rational person is meant to bring immgrants to work in Canada, NOT blow up our housing market.

    Why does Canada need to sell citizenship I ask? When they can issue bonds with interest below inflation and international capital will still flock to buy it up?

    The answer is they don’t. The only immigrants we need are the hardworking ones who come to Canada for a better life, to work, and to raise a family. Not to cherry pick what aspects of Canada they will exploit, before fleeing the CRA through loopholes.

    Canada is not for sale, nor is Vancouver a tourist resort for the well heeled or a backup plan for those who may be up to no good overseas. I think Vancouver will do fine with legitimate immgration, and do without these part time Canadians who have nothing invested in this place escept for some Yuan.

    I usually leave the comments to the regulars, but seeing that Simeon has crawled out from under his rock in Cam Good’s fung shui garden and posted this drivel, I couldn’t resist expanding on his main talking points.

    • I would take the time to respond to this but the last comment about ‘crawling out from Cam Good’s rock garden’ is just ridiculous. I worked for Cam 2 years ago. Old news. And whether you believe it or not, Vancouver has already been sold. It’s not a matter of whether or not it is for sale.

      Canada doesn’t sell citizenship either, however we should. If we’re good at something, at least make money off it. Our housing market is only ‘blowing up’ if you look at it internally. Compare it to some other booming cities around the world. We’re still cheap.

      All this affects me and I’m priced out of the market so I’m just as ‘in it’ as you, in fact probably more. The biggest culprit of inflating prices are developers with government ‘sway’ power building too many units and then resorting to any means necessary to sell them. The demand for Vancouver isn’t going to slow down. Prices will go up and down but people are still going to come here in droves. All I can say is we should figure out a way to benefit from this demand, not hate on it.

      • “It’s not a matter of whether or not it is for sale… Vancouver has already been sold.”
        And now it’s a matter of at what price levels it continues to change hands.

      • “Compare it to some other booming cities around the world. We’re still cheap.”

        Oh dear, back to the Vanhattan argument. Been there, done that:
        https://vreaa.wordpress.com/2011/09/05/vanhattan-vancouver-the-next-new-york-these-ludicrous-comparisons-have-to-stop/

        “Canada doesn’t sell citizenship either”

        I suppose you’re correct. Technically the Canadian government only sells permanent residency status, for the price of about $120k.

        I recommend reading this link:
        http://www.cic.gc.ca/english/immigrate/business/investors/apply-after-invest.asp
        In particular, this is an important sentence:
        “Your facilitator will be able to help you if you want to finance your investment.”

      • anonymous guy

        I Agree Simeon,
        We need to implement a pigovian tax on speculators and non residents that offsets their negative impact on our city.
        On top of that, Citizenship and Immgration Canada and the Canada Revenue Agency need more bite, because clearly no one is scared of them. Also, offshore investors don’t deserve a home owners grant, need to be taxed at the business rate and should be forced to take commercial loans instead of residential loans for financing.
        If the people who came here in droves were fully engaged in our economy and contributing citizens, their presence would be neutral as they would generate economic activity in addition to draining on public services. But from what I see, most of the “investor immigrants” have no intentions of bringing their money over, as it would be subject to Canadian Taxation, which they have no intention of paying. Most don’t work or seriously invest here from what I see, so I agree with the Government’s decision to kill the program.
        The program was not meant to bring idle rich to our cities but rather to spur investment and job creation. The Government miscalculated, when they assumed the immigrants would prefer to bring their money to Canada, as a safe jurisdiction rather than leave it behind. Clearly these immigrants only wish to invest in Real Estate in certain pockets, distorting the market in the process. Since there are no capital gains on owner occupied properties it’s a straight forward investment for a newcomer to Canada with more cash than investor sophistication.
        Vancouver’s job market should be the benchmark for Vancouver’s property values! Vanouver is no New York or London as far as salaries are concerned, and this bubble has been inflated soley by using debt to augment the mediocre incomes offered in Vancouver. We are all going to be affected by the crash, not just those with exposure to Real Estate Debt.

        I’m not hating on the demand, I like Vancouver a lot, but we are really naive as British Columbians and Vancouverites when it comes to giving a free pass to anyone who wants to come here. I can’t buy property as a foreign national in most countries nearly as easy as they can buy here and that has to stop now. On top of that, the tax paid by a Vancouver resident will be no different than that paid by somone who barely inhabits the property, and is out of the country working all the time.

      • Gotta be honest with y’all, in some of the areas I track immigration isn’t much of an issue at all

  12. 4SlicesofCheese

    Visited the parents for dinner yesterday.
    PermaBull dad whips out the latest print copy of some housing classified and shows me a 30 year old townhouse just off Lougheed Highway, I just roll my eyes and said haven’t you watched the news lately, prices are going down. I could pay cash for the place, but I would never want to live in that neighborhood.

    He replies you shouldn’t listen to news reporters and agents, they all have an agenda (about recent bearish news stories).
    Yet he listens to the same exact people when they say prices are going up x% this year and x% next year etc.

    Oi…..

  13. Carioca Canuck

    What Simeon Garratt means when he says “a huge amount of our economy’s growth is based on our need to grow as a population” ……..is that the entire Vancouver “economy” is one big PONZI scheme.

    Everyone else living outside of BC knows full well that Vancouver has no real “legitimate” above ground economy to speak of.

  14. @bubbly

    Get rid of the CMHC? And you want to ensure that there are “no bailouts for irresponsible lenders, EVER?” You sir obviously don’t know how the CMHC actually prevents us Canadians from getting into a situation like the US and why the US is currently in a worse situation than Canada is. It is directly due to the CMHC’s involvement that we will never have to deal with a mortgage meltdown and foreclosure frenzy to the extent that the US has gone through. The US has no CMHC or government-backed home insurance program (basically no back-up plan), so guess what happened when all of these regional banks (and some of the big boys) had customers who could no longer afford their mortgages and were defaulting on their payments? No insurance, no help. Furthermore, the FED had to step in to ensure that some of the BIG BANKS don’t go bankrupt. Sit there for a second and imagine if you’re bank (such as BMO, RBC, or TD) went bankrupt. What happens to any company when they file for bankruptcy? They are no longer in business. And to make things worse, the US didn’t have a contingency plan (such as our CMHC) so the Fed had to bail them out directly using taxpayer money anyways. So much for your argument against bailouts for irresponsible lenders. Shit happens, whether due to decisions made out of greed or the average person thinking they can afford to take on more debt when they clearly can’t. If the bailouts hadn’t occurred, believe me bubbly, you’d see a far bleaker situation for the US than what it is today. You want home insurance to go to the private sector? So you’re pretty much wanting higher premiums for those who want home insurance because I’m sure everyone can agree, no one can lend or borrow, let alone set rates at the same level as the government of a nation.

    And what good would come out of getting rid of all direct and indirect incentives for the real estate industry. Why not just more thought-through and thorough solutions rather than trying to find the fastest and easiest way to get immigrants and their wealth into the country? For instance, I’m a big fan of BC’s new revisions to the PNP (Provincial Nominee Program). Go read up on it, it’s an excellent way to attract high-calibre business and skilled individuals who would directly contribute to the growth of our economy.

    • @bubbly … pfffft! … shit happens and other people should have to deal with it … priceless

      • Yup, that seems to be the common “wisdom”. Government creates moral hazard, banks become irresponsible, then “shit happens” (hoocoodanode, right?) and taxpayers are supposed to clean up the mess.

    • You write many words with little substance…

      The banks always assumed that they will be bailed out and thus acted accordingly (=irresponsibly). CMHC is a permanent bailout facility backed by taxpayers. It should be abolished.

      Bailouts are criminal = theft of the century.

  15. OhOh! I just knew it! That one day… ‘they’ would come…

  16. JMP

    You’re confused. Google Fanny Mae and Freddie Mac. Better yet…

    Freddie Mac;

    – Freddie Mac works with mortgage lenders to help people get lower housing costs and better access to home financing

    Fanny Mae;

    – Fannie Mae’s mission is to provide funding to the housing market, help families and communities, and create value – we’re committed to doing even more.

    Sound familiar?

    Guess what happened to Fanny and Freddie?

    CMHC has got us into precisely the same situation that Fannie and Freddie did the Americans.

  17. omg, i like that jmp comment so much i think i need to get a dog on principle … let eat all my goodies … then i’ll just let shit happen, clean it up and see how long it takes for the problem to go away

  18. Mansour al-Hallaj

    >> A huge amount of our economy’s growth is based on our need to grow

    Can people seriously utter this… this… This? And be ever listened to again? God almighty, how hideous were my crimes against you that you made me live on this planet?

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