“I still say no crash in Vancouver in regards to single family homes.” [We Disagree]

“I still say no crash in Vancouver in regards to single family homes.
Sure real estate sales are slow – it’s December!
Spring will bring a flurry of sales in single family homes -don’t forget that “Real Estate is emotional”
As soon as the price dips a bit (maybe 10-20%) and there are lots of listings – people will flock to the market.
Vancouver is like the San Francisco of Canada. Prices never dipped there more than 20% from the peak and have rebounded to almost peak values . Check Zillow if you don’t believe me.
Vancouver has the mildest climate of any major city in Canada and is the most attractive major city in Canada.
Definitely no “crash” in Vancouver in regards to single family homes.”

- western observer at greaterfool.ca 11 Dec 2012 12:26am

Keep chanting “no crash in SFHs” and perhaps that will have some kind of buoyant effect.
We disagree with this ‘argument’, which is little more than an expression of hope. It also sounds like the seeking for reassurance.
SFHs are as overvalued as any other Vancouver property type, and we fully expect them to plunge in price to pre-spec-mania levels.
- vreaa

43 responses to ““I still say no crash in Vancouver in regards to single family homes.” [We Disagree]

  1. sf cannot be compared with vancouver, the earning capacity gap between the 2 cities cannot fit into any chart. gdp of sf is 300B and of vancouer is 95B . the coming housing bust will drop the gdp of vancouver to 50B.

  2. also forgot to add.. the pop is sf is 800k and vancouver 600k so they are comparable in population

    • Not on the Boat.

      Lower mainland is 2.5M, Bay area is 7M… the economic ability of the Bay area to generate high income earners to maintain the San Fran core RE area vs ours are two different things…

  3. Do we have high-salary employers in Vancouver like they do in the tech and biotech industries in SF?

  4. UBCghettodweller

    >most attractive major city in Canada.

    Based on the people who have moved here because they find it the most attractive city in Canada.

    What a “Best Place on Earth” circle jerk!

    • A friend once told me: “In summer, Vancouver is the most beautiful city in the world. But when it’s raining, it’s the ugliest city in the world.”

      After many rainy years in Vancouver, my friend has moved to Phoenix…

      • Real Estate Tsunami

        Bubbly, agreed.
        Once my kid completes high school, I’m gone.
        SAD is killing me.

      • Aldus Huxtable

        According to the website currentresults.com; Vancouver gets on average 1928 hours of sunlight per year. A number which doesn’t even crack the top 50 in American cities… Seattle? Yes, beats the BPOE with 2170.

        http://www.currentresults.com/Weather/US/average-annual-sunshine-by-city.php

      • Why not move to LA? You’ll be able to appreciate the extra sun light whilst you’re stuck on the freeway for 3 hours a day.

      • Ralph Cramdown

        Re: Move to LA. And you won’t get homesick, because you’ll see a lot of Vancouver’s architecture in its native locale.

        But seriously, I don’t think Vancouver has much to brag about over LA when it comes to traffic, especially considering metro LA is 4x the people of GVRD.

      • UBCghettodweller

        ” considering metro LA is 4x the people of GVRD.”

        I think people forget that although LA is a urban sprawl nightmare, it actually has moderately high density. The real shame is that truly good public transit was killed off generations ago and car culture took off. SO much frittered away potential and a lesson to us all.

      • @bubbly – as opposed to Phoenix which is just an ugly city all the time, despite sun.

        @UBC ghettodweller-LA actually has a pretty good transit system again and its being expanded.
        http://www.metro.net/riding_metro/maps/images/System_Map.pdf

        The smart money would take LA over Phoenix (and Vancouver)

  5. “Western observer’s” analysis is on par with what I would expect from a 12-year old.

  6. 4SlicesofCheese

    I have some friends who feel the same way, but at first it was, anywhere Van West and Richmond will never go down, then downtown condos will never go down, now its SFH will never go down.

    • Now you are just making up stuff! ;)

    • CS includes the Bay Area, I believe. I think this guy’s point stands when it comes to SF proper: mission, north beach, cow hollow, etc. 20% down and now almost back to highs. It’s not good news IF indeed Vancouver follows in SF’s footsteps. Lots of Chinese in the market in Cali too.

      • Ralph Cramdown

        Yeah, SF proper is only about 6% below nominal highs, 5 years on, so 16% below or more in real terms. So IF this guy’s right and Vancouver proper mimics SF proper, buying at about 20% off would be the move?

  7. More MSM realty boosting! Happy happy news!

    AND more incontrovertible evidence about the shortage of land in Vancouver!

    (sarc off)

    http://www.vancouversun.com/business/commercial-real-estate/Greater+Vancouver+developers+back+land/7689081/story.html

    • From the article…”In Richmond, what you’ll see is a transformation from a light industrial area to a vibrant residential neighbourhood.”
      Sounds like an economically sustainable transformation.
      /sarc

  8. This is my favourite part of the bust, maybe. When sentiment changes from “Everything gonna go up forever. me buy two. Husband buy two” to a realization that it isn’t so rosy, and people start sacrificing areas (like 4Slices was saying above) that get bigger and bigger, ’till finally it’s “Yeah, my idiot neighbour sold at a $400,000 loss, but he picked a poor time of year, a bad agent and he didn’t stage it well. I could still get what I put into this place.”

  9. Sales and prices have at least a good chance go up in the spring as the author suggested. A bit. The problem is, next November will be down another 10%, the November after that 10%, until pretty soon the average SFH will be about 600K in Vancouver metro. It would only take 5 YOY drops of 10% to get there from today’s prices. Is that so unbelievable, considering the YOY gains in the last nine years? Seasonal swings mean nothing against the might of a full-fledged housing price collapse.

    • Where “Spring” is defined as the second week of February. Woe betide market sentiment if the annual Chinese New Year rally fails again in 2013.

    • UBCghettodweller

      If I had to pick one model of the housing price deflation process to wager a beer or six on, it would be the one you just described.

      Although it really doesn’t add much to this blog, I find it reassuring that at least one other person is predicting something similar to what I think will happen.

      This process will truly bugger a lot of people, but not satisfy the bloody, greasy, smouldering wreck crash speculators either.

      • Ralph Cramdown

        It’ll answer the question “Was excess demand dominated by speculators hoping for capital gains, or offshore money looking for a safe haven and willing to tolerate a bit of deflation in exchange?”

  10. “no crash in Vancouver in regards to single family homes”

    I have to disagree but not for why the author intended, I think. First, there are very very few “single family” homes built in Vancouver any more. Any new builds are multifamily. Statscan recognized this a while ago. They did a survey of households and noticed that a great many homes in Vancouver were filing multiple family census forms. Hmmm…. went some bright light, and upon closer inspection determined that a great number of Vancouver “single family” houses have suites or are otherwise subdivided into multiple dwelling sections. This is why Vancouver has seen a sharp rolloff of single family houses over the past 20 years as “single family” houses are demolished and replaced with houses with suites. I pwned an RET lurker on this a while ago. I’ll try to pull up the post.

    Second, “single family” homes in Vancouver are, for the most part, NOT at highest and best. They have been appreciating for a while but have most of their value tied up in both speculative premium or conversion into multifamily units (houses with suites). The speculative premium is enough that prices will fall. But that does not mean that prices will fall back to 2002 levels (though they might). There IS a positive bias to land prices in cities like Vancouver, and that means if one wants a true “single family” house they will likely need to dish out a premium for that right. If you can afford it, no problem, but you’re still likely going to be paying a premium. I’ve tried to estimate what the premium will be at the nadir of a market correction but gave up. Instead, as a proxy, I’m looking at condo prices. Those will likely put in a more “fundamental” bottom with price-earnings aligning with other similar investments. (Maybe some smart finance guys can give us some hints as to what similar investments (on a risk basis) would be for condos.)

    Ben hits the nail, though. I heard through an anonymous source that people speaking out about a housing correction have been muzzled by bank executives wanting to carefully control communications on the subject of housing overvaluations. We hear very bland but pertinent language in many reports, only the reports unaffiliated with banks or other FIRE industry players use more colourful language. I guess colour is what many people need, but to be honest when I read bank reports they have been calling Vancouver gonzo for years now. People have chosen not to understand their carefully-worded reports.

    • It’s a bit of a long (painful) read but I dug into the demographic numbers regarding single family dwellings in Vancouver on RET. (Warning: going to RET has been known to cause cancer in rats)
      http://realestatetalks.com/viewtopic.php?f=8&t=60428&start=15#p231549

      • Will head over once hazmat gear back from cleaners.

      • The Poster Formerly Known As Anonymous

        Yes, retroactive refitting is always a lot uglier and messier than ground-up design. A good Cascadian shake’n’raze would make it easier to put the density that nature intended for small fertile river deltas with temperate climes!

    • The Poster Formerly Known As Anonymous

      I’ve been thinking along the same lines about SFHs. It really is a fading Canadian dream North of the Fraser and West of the Pitt river that an ordinary Joe can buy a real SFH.

      • Cyril Tourneur

        Don’t worry, when Surrey becomes downtown you’ll be able to buy a nice house in the burbs. ;)

      • It’s amazing, compared to other “landlocked” cities, that Vancouver has lots as large as it does. This is a product of its humble beginnings, I suppose, but the legacy is having to infill to internationally-accepted cosmopolitan densities. I think it’s getting there but like most things of which I’m optimistic, the path looks downright pessimistic.

      • The Poster Formerly Known As Anonymous

        oops that was supposed to be here:

        Yes, retroactive refitting is always a lot uglier and messier than ground-up design. A good Cascadian shake’n’raze would make it easier to put the density that nature intended for small fertile river deltas with temperate climes!

      • The Poster Formerly Known As Anonymous

        Not sure if you’d find it as popular after that, though, so you wouldn’t need the density after all!

    • UBCghettodweller

      Seriously, is this the 90s?

      “pwned”?

      I thought l337s934k was dead?

      I have expect to see a thread mentioning the philosophy of “The Matrix” next and the Y2K bug.

      [seriously, all in jest here. That usage just made my night]

  11. Anyone see the print REW today? Cover story encouraging speculation and flipping. “..except for the bottom of the market in 2009 – and so far this year – it has been profitable to flip in the Metro Vancouver market since 2004.” http://issuu.com/rew1/docs/es-dec14 Disgusting. Oh, and that woman they’ve been following finally bought something.

  12. It’s actually about food security. A yard is like your own personal ALR.

  13. Not on the Boat.

    You can’t compare San Fran to Vancouver.. we have a fraction of what is there on all fronts… the values we see here in RE especially in places like the West side is so out of whack… someone who is looking at buying a 3-4M property is either locally wealthy (and our economy can only spew a finite amount of those people) or out of towners.. people buying second home in that price range are mobile and have lots of choices.. IMO they started looking else where about a year ago.. leaving the run over of horny locals goosed by free money and sleazy banks and the stragglers of out of town money chasing a dream of speculation…

    S

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