Vancouver Sun Headline – ‘Five more Metro Vancouver homeowners hosed in a falling market’

“A recent report from Central 1 Credit Union suggests a rebound in Metro Vancouver’s housing market is coming. However, at the moment there are property owners losing hundreds-of-thousands of dollars on their investments.”
There follow examples of homeowners losing money, care of @mortimer_1:
1. Burnaby. Bought $1.9M May 2016, Sold 2019 $1.495M, Loss $405K + expenses (over 21%)
2. Burnaby. Bought $3.11M 2016, Sold $2.1M 2019, Loss $1.01M + expenses (over 32.5%)
3. Vancouver Westside. Bought $2.7M Feb 2016, Sold $2M 2019, Loss $700K + expenses (over 25.9%)
4. North Vancouver. Bought $2.36M Mar 2017, Sold $2.05 2019, Loss $310K + expenses (over 13.1%)
– from David Carrigg, Vancouver Sun, 5 Dec 2019 (image: Anselm Kiefer)

Seeing terms like “homeowners hosed” and “falling market” in top-of-the-page Vancouver Sun headlines is certainly worthy of note – particularly for those of us who have been following this long enough to have endured years and years of local media entranced with rising prices. (Anybody remember the well-known local TV anchor exclaiming “I love Real Estate!” ?)
However, note that the Sun still talks about homes as “investments” – perhaps that will have to change before we’re done.
Here and elsewhere, some discussion of ‘soft landings’ that is clearly based more on hope than observation.
As noted previously, our target prices should be determined by utility value of properties, not on imagined future sale prices. Current prices are still far above those levels.
It ain’t over.
– vreaa

46 responses to “Vancouver Sun Headline – ‘Five more Metro Vancouver homeowners hosed in a falling market’

  1. Place just in back of us sold for 4M in 2016, since then they built new one and its open today for first day, asking 6.6M. 2.6M wiggle room for profit.

  2. It’s been a very long time, and I don’t see rates going up anytime soon. Maybe someday a crash will manifest, but one must acknowledge it’s been a very long wait.

    • Um, crash is underway and, in some market segments, has been for three years.

      • Some, of course. This is not sufficient to be a useful development for the vast majority of buyers. Maybe prices will fall a lot, but at this point it’s at best a possibility, so I would recommend to plan accordingly.

      • Such a slow-motion crash that I’ll be retired and my kids long grown up before we have any chance of buying a permanent home. Very angry about this, but I try to enjoy each day with my family in our beautiful but insanely overpriced rental.

        Never would have dreamed we would be raising kids in a series of rentals and be forced to move repeatedly. Obviously had we realized there was infinite support for bubbles of every kind, we would have bought in 2010 like we had planned. We just could not imagine the stunning stupidity of Canadian and world central bankers to so destroy the world economy by currency devaluation and debt. The hangover from this party will last for decades.

        Sigh. No point in complaining – most here are likely in a similar situation. In spite of this, hope you are all enjoying happy times with your loved ones tonight – what’s truly important in life. Merry Christmas.

      • We never truly own property, anyway. We rent it from the bank. And from the state.

        Try not paying your property taxes and tell me you are an “owner”. Try opposing eminent domain and tell me you are an “owner.”

      • We never truly own property, anyway. We rent it from the bank. And from the state.

        Try not paying your property taxes and tell me you’re an owner. Try opposing eminent domain and tell me you’re an owner.

      • “We never truly own property, anyway. ”

        I am sorry for your children if you are lucky to have them . With your kind of mentality, the el Nino’s “deed of renter” legacy would just pass down for generations to come.

        I hope you know how to teach your kids to move up the society ladder, not crawling down to the bottom of the food chain.

      • Imagine thinking that being a good parent = gambling your family’s future on a piece of dirt in one of the world’s most overvalued real estate markets.

  3. This blog is dead, so I stirred up a bit here.
    Is JCH another victim of market timer and the misinformed bear housing blogs?
    Well done to vreaa blog and the likes by putting another family against the wall.
    Stay away from the negativity and the pessimistic anonymous. You would do yourself a big favor.
    Happy New Year to you all.

  4. Airhead Fred is back, even dumber than before.

    The market turned three years ago. Many, many families’ backs are against the wall. They borrowed to the gills and now their “safe investment” is shrinking. Living cheque to cheque or, worse, borrowing from new sources to cover previous liabilities.

    Vreaa warned.

    • Nothing new for El Nino except he is just getting older and more desperate. Life still as suck as before.
      Market turns all the time. This is the third since 2008, and the bears have missed it, again.
      Hope the new year will bring you some thing better than the last 12 years hanging out with vreaa blog.

      • Despite the loser trolls, this has been a great place for anyone who is genuinely interested in the bizarre intersection of economics and human behavior that is the Vancouver real estate market. I thank vreaa for making it possible.

        Best wishes for 2020, all.

    • “who is genuinely interested ”

      Just 12 years of misinformation. Look at the numbers of posts and posters…the results speak for themselves.

  5. Fred is the reason condoms were invented.

    • “…condoms were invented.”

      And you didn’t know how to use one, you misread the instructions. Your kids would wish you did though, so they wouldn’t have to inherit your legacy of a renter’s deed.

  6. LOL, Fred! Spoken like a true believer! Perhaps you have not heard of all the massively indebted Canadian families who have gone all in on real estate, telling themselves to do what common sense advised against – getting in over their heads because “real estate always goes up”!

    Although they can be forgiven for thinking this – even my dad who saw bare lots he was selling at the time go from $150k each to $30k for the last ones in early 80s now forgets that he directly experienced the pain of an RE collapse. (He also forgets to factor in opportunity cost and inflation but I love him anyway 🙂

    No, my husband and I are not victims at all – we made a conscious and completely rational decision in April 2010 to not buy into what was already a greatly overvalued Lower Mainland RE market. We did a great deal of reading on this, ran buy vs rent calculators, and actually did the math ourselves. (Yes, we’re well educated data junkies, with science/business/software/economics backgrounds).

    What really settled it for us is “why have houses in the LM historically cost around 3-4x average annual income, but since about 2005 have completely disconnected from local incomes?” Answers: 1. interest rates 2. fraud 3. money laundering 4. FOMO 5. speculation 6. tax evasion. Why even try to compete with all that? It will eventually all settle back to normal, ie 3-4x avg incomes. Just taking far longer than I thought, and I now think there are few interest rate increases ever coming, so that part won’t change back).

    So, now we’re sitting on a good pile of cash/investments and not a penny of debt beyond what we charged in the current month on our credit cards. It’s a financially-secure position to be in, and we sleep well at night.

    But, having come from family backgrounds of ownership, we did not expect to still be renting. We have owned previously and will again when the prices make sense, but will not risk our family’s financial security to buy a basic SFH for $1million in the Vanc suburbs.

    WTF is with people who would take such a risk as this? Even trading up, wouldn’t you wonder if it’s a stretch for you, and all of your friends are on edge financially too, that maybe something is wrong with the picture? Sure, many buying now are too young to have seen prices ever drop, and have been told by everyone how rich they’ll get, but wow, one job loss and that house is gone.

    El Ninja is right – just try not paying your mortgage and see how long you get to live in the house you “own”!

    Happy New Year everyone, and thanks again VREAA for some much-needed perspective on the situation on the ground.

    • +1
      That pretty much sums it up.

      And Happy New Year to everybody, Fred included…

    • I would not jump in here, but your Christmas day post summed up your true felling very well.
      Good luck with your ” pile of cash “.
      For me, what would a pile of cash do me any good if I had to move my kids disruptedly from one overpriced rental to the next.

      • Renting gave me geographic mobility and hassle-free living for 20 years, while allowing me to bank $$. Of all the rentals I’ve had, I was not evicted from a single one. I repeat, not a single one. Nor do I know anyone who has ever been evicted.

        “Risk of eviction” may apply to delinquent tenants like Fred, but rarely to the financially stable and responsible. Landlords like to keep good tenants.

        It’s a handy ploy for RE promoters, though, who use it to scare folks into buying…

      • “Renting gave me geographic mobility and hassle-free living for 20 years,”
        What will happen in the next 20 and next next 20? You have no vision, do you! Or, you just want to keep moving from one rental to the next while using a four-wheeled walker.

        “Risk of eviction” may apply to delinquent tenants like Fred, but rarely to the financially stable and responsible. Landlords like to keep good tenants”
        Read the comment from JCH here “Never would have dreamed we would be raising kids in a series of rentals and be forced to move repeatedly.”
        What part of this comment don’t you el nino understand!

        “Nor do I know anyone who has ever been evicted.”
        You would not know until it makes to the news.

      • Oh, I own property. Just not in the deflating gasbag of Vancouver.

        I can’t speak for JCH. Maybe she needed to upsize as her family grew. She would’ve had to do that had she owned, too. So you have no point.

        I always left rentals voluntarily, moving to the location and dwelling that best matched my career and family circumstances at the time. I let the owners worry about repairs, taxes, insurance, etc., while I banked coin.

        Now, if you are delinquent in paying rent, and get evicted, that’s another story. That must be the source of your bitterness. Try not to harbour those feelings. Not good for ya.

      • “you are delinquent in paying”

        Thanks to you and the likes, monthly rent payments keep mortgage in arrears at sub zero percent. Nothing to worry about.

        “A painful -20.8% in 20 months for those buyers”

        You can never be a home owner if you manage micro-thiking like this. A home is a security shelter long term for your family once purchased. Year over year up and down means nothing for home owners and long term investors. Assessment means nada, it’s just a tool for the cities to calculate taxes.
        No wonder, you couldn’t strike your purchase ten years ago when you were ready and able.

  7. Seeking Knowledge

    Happy New Year everyone.
    The BC Assessments are out. Word is that they are down up to 16%. Kinda wonder what happens to a HELOC when the value of the collateral drops precipitously, but the lender is still able to pay the minimum monthly payment.

    • Seeking Knowledge

      …I mean “borrower”.

      • There’s lot of cushion for the banks. They fund a HELOC based on the lesser of 65% loan to value, or 42% total debt service; and net of any mortgage outstanding. From talking to mortgage brokers, banks don’t recall HELOC if the holders meet their obligation.

    • Some anecdata:
      1. House three doors down sold April 2018 for $1297k, over the then-current assessed. New assessment $1027k. A painful -20.8% in
      20 months for those buyers. And, in chatting to the sellers of that house as they were moving out – the sellers were upsizing!
      2. Gulf Islands acreage (property which was in our family for 70 years until 2016): current assessment YoY -13.5%
      3. Of the dozen SFH assessments I looked at today in the Surrey/Langley area (family, friends, neighbours), most are down about 8.5% YoY; one -5%, one -6%, one -11.6%.

  8. Happy New Year Bulls and Bears!

    Two things to watch:

    1. Because of the drop in assessments, 2020 might be the year we hear about underwater mortgages more and more.

    2. Homeowners and recent buyers have become way more condescending for the last few months. Projection? I’m starting to spread the term “Homeowner Supremacy” when I’m confronted to that.

    • 1. FYI, as at Aug 31 2019, mortgage in arrears in Canada was 0.23%, and BC was 0.14%. Yes, you read it right, sub-zero percentage. Fear-mongering is at its finest.

      2. Never heard that term before, but the term “Tenant Power” has been around for ages. What kind of power is there actually?

      And Happy New Year to you too!

      • Are you trying to convince me or yourself?

      • Fred, delinquency rates are considered a trailing indicator of financial stress, as one has to be some kind of incompetent to get very far in arrears in a rising or hot market. Those in trouble sell quickly and get out of it.
        As the market drops, recent buyers will struggle along until something pushes them over the edge. It may well take another few years of drops until we see delinquencies rise significantly.

      • -was the past two years a rising hot market? I thought it was in a correction mode.
        -another year of drop? The stats since July indicated otherwise. Those who waited just missed the third opportunity since 2008.
        -no need convincing anyone. Just offering something to counter the misinformation.

  9. Most people have only two scenarios in mind: It’ll go up forever and ever or a great crash (-50% in a year or so).

    Because Canadians pay their debts and they can’t walk away from their house easily, we might see a third one: the perma-collapse. We could see home prices go down like 2019 over and over for the next few years. So technically, bulls will be right saying that they’ll be no crash. Just be patient.

  10. Funny how Fred has suddenly gone from snide troll to measured real estate analyst, full of stats and insights on the banking sector. Fooling no one.

    Fact is, assessments are used by banks in approving new mortgages. If private appraisals deviate too much from government numbers, you’re in trouble.

    They also exert a strong psychological influence on the market.

    • Amen. If assessments were meaningless, every homeowner would sue the province to have it lowered to 1$.

    • Oh dear, banks used assessment value to appraise mortgage? Really now? You think like a renter, oh yes, you are one!
      Do you know assessment value is based on July 1 ? By the time BC assessment mails out the letters on Jan 1, the data dated by six months. I don’t expect you to know it anyway, but now you do. Banks do use actual appraisal to lend money, or computerized system to compare market value for condos. I don’t expect you to know it either as you don’t have a property to appraise.

      Again, assessment is a tool to calculate property taxes. Actual value will be determined by contract between buyer and seller. Again, I don’t expect 🐻 to know this.
      By the way, lower assessment value doesn’t mean lower property tax.

      • I meant appraised value, not assessed. However, assessments and appraisals are determined on the basis of similar if not identical considerations (unique features of property, etc.), and they each have the same purpose: to determine “market value.” Typically they align but not always.

      • “assessments and appraisals are determined on the basis of similar if not identical considerations”
        I don’t disagree with that. My experience is that bank still hires appraiser for high value property. Bank gets nothing to lose by doing this, as the buyers have to bear for the cost of appraisal.
        Like I said, the assessment values are outdated by 6 months once released. Both bank and the buyer seem to want appraisal done to get the current market value.
        Anyhow, I need to get back to my busy reality. Will be back to visit you bears once a while to see if any of you grow up.
        Pay your own mortgage – don’t pay someone else’s mortgage. Good luck!

  11. What do you guys thing about weaponizing the homeless against homeowners? Portland is going to do that:

  12. white_angelo_4hk

    greatest slave plantation in history … … and if you’re doing business, just means you want in on it

  13. Well it looks like the worst of everyone’s worries have finally come to pass after many, many years of discussion on this blog. A virus and economic shut down of all things is what will pop Vancouver’s housing bubble. And a great many other bubbles will be bursting at the same time. I have charted the REBGV single family homes graphic and its very bad news. Prices are going to collapse once the average Vancouver SFH drops below 1.2 million and the declines will not end until we hit half that amount near 600k. If prices break that level we are truly going to be experiencing a disaster of unknown dimensions. This is a terrible outcome but there is nothing anyone can do about it now that the wheels have been set in motion. As of now if you have not already sold then you are going to be trapped in a cycle of falling prices. I am already hearing of price concessions of as much as 15% out of Ontario and that is a concern as some are already reading the writing on the wall and discounting just to save their own skin and get out before its too late. Funny that this blog has gone so quiet this year. I guess nobody has the stomach to talk about what is now coming since it will affect everyone whether renter or owner. Just watch prices once we get through the lock down and see the country reopen though. I suspect its going to come as a big shock to homeowners.

  14. Pingback: Vancouver Sun Headline – ‘Five more Metro Vancouver homeowners hosed in a falling market’ - Finance Library

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