CBC’s The National – ‘Vancouver Housing: Bubble or Bust?’

CBC’s The National last evening [20 Sep 2012] featured a segment entitled ‘Vancouver Housing: Bubble or Bust?’. We’ll be transcribing and headlining one or two sub-stories from that piece. Until then, readers may want to view the whole thing at the CBC site:


UPDATE 22 Sep 2012: Care of ‘AP’, we now have a transcription of the whole piece and append it here [Thanks A.P.! -ed]:

PETER MANSBRIDGE: Welcome back. We’re heading to Vancouver now, home of the highest real estate prices in the country. And that’s our focus this evening, assessing the market there, what’s happening to it and what it means for the rest of Canada.

Would you be willing to pay more than $2 million for a home or say 1.4 million? Those are the average prices in one of this city’s trendier places, the West Side and Kitsilano. And believe it or not, that’s something of a bargain. The recent trend for prices across the Vancouver region is down. That doesn’t mean you’ll soon be able to pick up a gorgeous home for the price of a garden shed, but after years of buyers being at the mercy of forces beyond their control, the forces are with them. Not only are the houses going for less, they’re sitting for sale longer. Even bidding wars are becoming a memory.

Some say it’s the beginning of a correction, while some say it’s beginning of a crash. Our Chris Brown takes a look at what’s hitting home in Vancouver.

CHRIS BROWN: On a nice, sunny day the premium you pay to live in Vancouver seems to be worth every penny. It’s got the beach, the views, the trendy hangout spots and homebuyers have been prepared to plunk down a fortune to own a piece of it. Year after year after year prices in this city shattered once unthinkable ceilings. Until now.

GARTH TURNER: I see risk more than anything. I see a market that’s gotten beyond itself. The prices bear no real relation to the economics economics behind the market, so it’s only a matter of time and depth of how much destruction there’s going to be.

CAMERON McNEILL: Whenever the market goes near the top part of the cycle we always do hear pessimistic economists talking about bubble, et cetera. But the reality is that the fundamentals that are driving the market below the surface are just too strong for any sort of bubble circumstance to happen.

CHRIS BROWN: Whether Vancouver’s market has finally reached the tipping point after years of incredible gains has become the debate in living rooms and boardrooms across the city. The numbers provide ammunition for both sides.

At first glance Philip Chan’s property in in popular Kitsilano would seem to support those who believe the crash is upon us. It’s a very nicely finished 1,700 square foot newly built unit in a triplex. Back in March it came on the market for $1.79 million, including sales tax. It’s now 1.57 million. That’s an almost 12 percent price drop.

PHILIP CHAN: I think the market actually during the last six months has adjusted downwards. I think everybody know about that. And it went up too fast and it’s just taking a little bit of an adjustment.

CHRIS BROWN: Describing a $200,000 price drop as an adjustment is just the kind of thing those who believe the market is unsustainable seize on. They argue it tries to sugar coat the ugly reality that prices are tanking. Chan, who built this home is a realtor who’s also trying to sell it, doesn’t believe that.

PHILIP CHAN: Unit like this, I think you can find no more than 10 on the market at this moment. How much can it drop?

CHRIS BROWN: A lot more, argues Garth Turner. From his perch in Toronto the former MP writes a blog on real estate and has a big following in this city.

GARTH TURNER: People in Vancouver have to spend on average up to 70, 80, 90 percent in order to afford the average home. That is out of whack with every place else pretty much in the world. Beyond this façade of high prices is a great big steaming pile of debt and there’s a limit to how much debt people can get into. I think actually we’re at that limit.

CHRIS BROWN: Condo marketing specialist Cameron O’Neill argues Turner’s affordability statistics are misleading. He says they’re skewed by high prices for detached homes in a city where there’s no more room to build any. Many more people, he says, choose to buy condos or townhomes.

CAMERON McNEILL: We are in a, in fact, like a mini Manhattan and people want to live in this dense population.

CHRIS BROWN: There’s been a culture shift in Vancouver, he says. Living in smaller spaces is seen as okay. For many people, including families, getting along with less space is expected, even desirable.

CAMERON McNEILL: In Yaletown, one of the boroughs within downtown Vancouver over my shoulder here, just 10 years ago you wouldn’t see a baby carriage. Today they have six or seven daycare with waiting list and they’re happy to have the coffee shop as their living room, they’re happy to have the park as their backyard and they’re happy to have the seawall as their playground.

CHRIS BROWN: It’s true that Vancouver’s average detached home price are staggering. Even with this dip average house prices in the city proper average over a million dollars and in the more expensive western part of the city they’re twice that much. But townhomes are cheaper and condos even more so. In other words, it’s only in certain parts of the city for certain types of housing the prices really went berserk. Those who believe the fundamentals here are sound argue are there are lots of housing options. But Garth Turner believes the gap between wages and prices remains too great.

GARTH TURNER: No market is sustainable when the average consumer can’t afford the product. In downtown Toronto, where you’ve got very expensive real estate, it’s at a multiple of about eight times what the average income is to buy the average home, which most people can’t afford. The U.S. collapsed at 4.6. Well, you know what? In Vancouver right now we’re 11.5.

CAMERON McNEILL: The fact of the matter is in Vancouver you can today buy a condominium, you can rent it out and you will have 40 people lining up to try to rent that condominium. They’ll be paying a very, very high and a fair rent. If you have that much desire for people to — to live in a condominium, you know, I think that the market’s got no problem sustaining itself.

CHRIS BROWN: At his Kitsilano property owner and realtor Philip Chan is sounding confident the market won’t slip much further from the 10 or 12 percent it already has.

PHILIP CHAN: Nobody can predict the future, so if you see that the market is healthy enough and you can afford to do it, do it. You can either sit by the ballpark and you watch the game or you can go down and play the game. You might get hurt or you might win.

GARTH TURNER: We see people, particularly in Vancouver, with 80, 90, 95, a hundred percent of their net worth in one asset at one address on one street in one neighbourhood. To me that defines risk.

CAMERON McNEILL: I always say Vancouver is the Swiss bank account of international real estate. It’s a — it’s a funny little quote that I say because sophisticated people, whether they live in Vancouver or they’re international, they — they recognize Vancouver as a safe, long-term place to park some money when it comes to real estate.

CHRIS BROWN: In the months to come that assertion will be tested. Are we looking at a bubble that’s bursting or a boom that’s just had a little hiccup?

(BROADCAST CONCLUDED)

37 responses to “CBC’s The National – ‘Vancouver Housing: Bubble or Bust?’

  1. Philip Chan’s property that he couldn’t see dropping more than 12%

    http://vancouverpricedrop.wordpress.com/2012/09/10/the-weekly-drop-september-10-2012/

    March 09 V933326 $1,790,000 $0 0%
    September 09 V969843 $1,373,000 $-417,000 -23%

    No offense to any Cam’s here but is everyone named Cam automatically a [expletive deleted, given specific target. -ed.]?

  2. “The fundamentals that are driving the market below the surface are just too strong for any sort of bubble circumstance to happen. The fact of the matter is, in Vancouver today, you can buy a condominium and you can rent it out and you will have 40 people in line trying to rent that condominium. If you have that much desire for people to live in a condominium, I think the market’s got no problem sustaining itself.” – Cameron McNeill [Condo ‘Marketer’]

    [CBC] – Big drop predicted for Vancouver real estate prices

    http://tinyurl.com/d278crw

    [NoteToEd: What are the chances CameronMcNeill is mistaking FoodBank queues for PresentationCentre ‘PreSales’ SuccessStories? I suspect he thinks the shopping bags all those practically dressed people are clutching are filled with CashDeposits? Regardless, we can now thank Cameron for introducing a new phrase to the Lexicon ‘o CondoHypery… BSMDF™ – “Below Surface Market Driving Fundamentals”.]

    • Something else that Cameron McNeill did in The National piece was attempting to further the Vanhattanization process by referring to Yaletown as a ‘borough’. ROTFLMAO.

      • This sort of thing pisses me off greatly. Do they think they’re fooling people? London and New York might have boroughs, Vancouver does not and will not.

        This shit just makes them seem as creepy as greased-back-hair-in-a-cheap-suit used car salesmen.

      • You’d be surprised how much ‘burrowing’ goes on in Yaletown!

      • Also a gem is Vancouver condos are as safe as a Swiss bank account. It doesn’t matter if the guy has drunk his own Kool-Aid, but I for one like to think he has — It will make for better viewership ratings down the road.

      • Renters Revenge

        I ROTFLMFAO’d on that one too!
        I actually cringed for him a bit as he spoke. That interview will come back to haunt him (and all of us) in the very near future.

  3. I posted this in VCI, not sure why the realtor was lying but he was. It was never listed at $1.57 million:

    In the CBC interview Philip Chan lied about the current price and the current drop. The reporter also said that the original price was including tax but that’s also false unless he has a habit of listing new homes with HST included and not mentioning that huge point in the description. I happen to have all of the old descriptions for this unit and HST being included was never mentioned. This is the description back in May:

    “Brand new front unit with south facing yard. Feels like a half duplex. Great spacious floor plan with 1,721 SqFt living area, 3 bedrooms, 2.5 bathrooms, and a heated garage with 1 underground parking and a unique turn table parking feature! This home, built by a German builder features quality luxury finishes and excellent craftsmanship & woodwork throughout, such as high coffered ceiling, Wainscot panelling in living room, and rich hardwood wide plank flooring. A gourmet dream kitchen features double thick granite slab countertops and stainless steel Viking appliances. Strata Plan shows 1,629 SqFt. Under 2-5-10 Warranty, easy to show. Must see to appreciate!”

    Looks like he lost 1 square foot in the strata plan and the kitchen has been relegated to “Gourmet Kitchen” down from “Gourmet Dream Kitchen”

  4. “…mini-Manhattan…”

    “…Swiss…”

    Why can’t Vancouverites just be happy with being Vancouverites? Do they really think that it makes their city more cool if they *try* to compare it to actual well-known places? Well, it doesn’t. It just makes them look desperate for relevance.

    • Looking desperate for relevance? Most Vancouverites I know are obsessed with being seen as equivalent to established European cities. They at least need to feel superior to the rest of Canada.

  5. Also, this bearish stuff in the really MSM is a complete herald of the end.

    It’s so weird living in California again… without the good weather.

  6. Have no idea how CBC can call on a counter argument from someone so blatantly biased. So you have some facts and trends on one side and then the reported just “procured” the opposite side of the argument as opposed to to researching and presenting a proper rebuttal. Sickening.

  7. Hey folks, let’s try not to get too riled up. This is actually pretty good theatre and it’s quite entertaining watching realtors and condo marketers squirm as they try to justify their existence!

  8. Having rented numerous condos in Yaletown over the past four years, I’ve yet to see 40 people vying for the same suite. Every landlord I’ve met sees maybe 5-10 applicants over a period of a few weeks for really nice condos in the $1,500 to $2,200 range.

  9. Cameron McNeill will be fired from his job for being too stupid. He believes everything keeps going up forever and needs a lesson on economics. What goes up must come down. 40 people looking at one unit..WHAT A CROCK OF LYING SHIT..

  10. vancouverbubbleman

    its finally here……………most vancouverites have no idea……yet

  11. http://bc.ctvnews.ca/video?playlistId=1.967138 Tsur takes out the trash.

    Garth: prices goin down yo
    Tsur: Nuh-uh. Yo mommas so ugly she asked the time and your watch stopped in fear
    Garth: Winning…

    • UBCghettodweller

      Given that Tsur is funded by the Real Estate Foundation of BC and does not make any other sources of funding readily apparent I have to call bullshit simply because of conflicting interests. This would be like a basic physical sciences researcher being funded by a Pharmaceutical company that is having one of it’s drugs reviewed for safety problems and the researcher saying “hey, the drug isn’t all bad, it helps a lot of people, the safety issues are minor.” The media would be all over it and rubbing shit on the situation. Apparently, although economists like to consider themselves scientists they are not held to the same rigorous peer reviewed standards nor are they expected to remove themselves from conflicts of interest so that they can best provide balanced analysis and opinions.

      In two years, when things have obviously started to slide, who here wants me to personally deliver a dog shit to Tsur’s office?

      • Consider things from Tsur’s perspective. He is a tenured prof making > $240K annually, with generous funding from the local BC real estate industry. He has nothing to lose by expounding his pro-RE position…. He publishes enough semi-objective research to maintain his true academic status, while keeping his sponsors happy with his pseudo academic analyses. So it doesn’t matter what he REALLY believes in.

        He plays his game very very well. Congrats!

      • Renters Revenge

        If he wants to call himself an academic then Tsur should be held to a higher standard and should be professional enough to form an honest opinion. We can’t tolerate this sort of intellectual dishonesty, especially from someone on the public payroll.

  12. Esmerelda Fitzmonster

    a boom with just a little hiccup…
    like a kitten thats sneezed…
    awwwwww….

  13. We must
    We must
    We must deny the bust

  14. checked out craigslist{rea lestate for sale} sept 22 450 postings.the race is on. thanks cbc for the pin

  15. Canadian Real Estate is on fire inflated due to lowest interest rate, US economy and natural resources.For average Canadian the appreciation from past 13 month’s is not sustainable.When the interest rat start rising by 1 or 2 points we may have to go thru the worst bust in Real Estate.Check past several Canadian booms and busts.
    My two cents!!

    • ++ read elsewhere commentary (was it brother ben?) that cdn bust is happening further along in the cycle than us … i.e. at lower lending rates … so there is less room down and greater risk of reversal back up … this will tend to make the turn and adjustment more abrupt

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