Category Archives: 11. Regrets about Investing in RE

I thought I’d make a bundle……

“A relative of mine was at University, then left in second year, to become a realtor in North Van for the last two years. As of September, he’s returned to classes.”

“A relative of mine was at University, then left in second year to become a realtor in North Van for about the last two years.
As of September, he’s returned to classes. Before then, for several months, the number of facebook updates about multiple bidding wars, a balanced market, or open houses dwindled to zero.
To keep peace in the family, I specifically haven’t mentioned any of my heretical views on the Canadian housing market or asked why an English degree suddenly looked better than being a realtor in the “Best Place on Earth.”

UBCghettodweller at VREAA 29 Nov 2012 7:48am

The tides; the seasons; breathing in and out.
Trends tend to return to means.
– vreaa

“When I was in their office last week, I overheard the conversation of a realtor saying his friends have bought homes to flip and they are all stuck with them now. He said the market has fallen so fast, it’s so different from the actual stats.”

“He [a local realtor] says the market is good and he is busy. That’s not what I’m hearing from my realtor friends up at Macdonald realty. In fact when I was in the office last week, I overheard the conversation of a realtor saying his friends have bought homes to flip and they are all stuck with them now. He said the market has fallen so fast, it’s so different from the actual stats. So, by the time you see the HPI move downwards, the market has actual moved much more.”HAM at RE Talks 28 Nov 2012 10:57pm

“If I had bought when I was 20, I would likely be mortgage free right now. In 10 years, I’ll likely be glad I bought in 2011, as opposed to waiting an additional 5 years.”

“The sooner you buy, the sooner you’ll be mortgage free, and then the sooner you can retire/diversify your time with minimal monthly fixed costs. If I had bought when I was 20, I would likely be mortgage free right now. In 10 years, I’ll likely be glad I bought when I did (last year [2011]), as opposed to waiting an additional 5 years.”
gobigorgohome at RETalks 27 Nov 2012 12:54pm

Appropriate handle.
Timing can be a bitchallenging.*

People who bought near the top in 1981-1982 waited 25 years (yes, twenty-five, not a typo) to break-even in real dollar terms.
– vreaa

[* see what he did there? if only you were all as polite. -ed.]

Reno Flip Gone Rong – “Highly Motivated Seller.”

3955 Blenheim Street, Vancouver West Side
2,595 fin.sqft + 900 unfit.sqft 1927 SFH on 53×110 lot
Current owner paid $1,180,000 back in December 2009.
Listed for sale April 2012 $1,998,000
Listed for sale 14 Aug 2012 $1,699,000
Price reduction 26 Nov 2012 $1,599,000

Blurb extract: “ALERT!!! Investors/Contractors. Upper flat lot 53’x110′ on the Westside of Blenheim. … Easy to build a 4000 sqft mansion with a lane-way house. … New solarium extension 35’x15′ built from ground up by the Fourseasons with warranty. … Reno-permit and engineer drawings in place. Easy to show. Highly Motivated Seller.” [hat-tip ‘westsidefrank’; thanks to Village Whisperer for info re past pricing]

If we weren’t locked in the jaws of a speculative mania in housing, this house would very likely still be a simple, functional bungalow going about its business.
As it is, it’s highly likely that it will now be torn down, along with all the work that has gone into what were apparently planned to be flip-renos. Misallocation of resources, again.
I suspect Froogle Scott would have some thoughts on this.
Anybody know any earlier sales history on this property?
– vreaa

Larry Summers at Sauder – “The housing price graph here is every bit as bad as it was in the US. It looks like the same graph shifted four years over.”

“Larry Summers (former President of Harvard and former U.S. Treasury Secretary) was in town this week. He gave a brief talk to the UBC Sauder community (on Monday 19 Nov 2012)– it was largely directed towards the many undergrads in attendance about significant global economic trends. He did make an aside though about the Canadian housing market.
He noted that the growth in the U.S. economy since 2008 only accounted for population growth and productivity growth. He then remarked that Canada was doing better. Initially he said that this was because Canadian financial institutions fared better than their US counterparts due to the Canadian system of regulation. But he then immediately noted (and this is a rough quote): “I hasten to add yet — the housing price graph here is every bit as bad as it was in the US — it looks like the same graph shifted four years over.”
– this submitted by ‘Sauder Prof’, a Sauder professor, via e-mail to vreaa 23 Nov 2012. Sauder Prof adds “I have very bearish views regarding the Vancouver housing market. … I thought I would let people know that the range of views that get discussed and taught at Sauder is broader than someone outside the institution might think.”

Many thanks to ‘Sauder Prof’, both for the Summers’ quote and for the information about Sauder. We know there are some at Sauder that see what we see regarding the RE market. It’s a pity that the RE experts there didn’t see fit to warn the populace of the risks involved. Too late for that now, though. – vreaa

“I heard a proud father boasting to his son over dinner tonight that he had bought FIVE Vancouver condos recently.”

“I heard a proud father boasting to his son over dinner tonight that he had bought FIVE condos recently – including one in the MC2 for grandma (when she arrives) – not sure if it`s for her to OWN or actually live in.”
Liu Yunshan VREAA 24 Nov 2012 12:47am

Almost requires no comment.
Unless these condos are, on completion, immediately inhabited by family or tenants, this represents a misallocation of resources in the city.
Note he is too obvious a speculator to be classified in the “Spot The Speculator” collection, which is reserved for citizens who are speculating on RE prices largely without even knowing themselves, poor souls.
– vreaa

Spot The Speculator #91 – “I personally know of a young woman in her 20′s who just got her first job and refused to rent.”

“I personally know of a young woman in her 20′s who just got her first job and refused to rent. Her parents forked out the 25% down for a condo in South Surrey as she did not qualify for CMHC financing.
She purchased a one bedroom with a flex space, once she moved in she was astonished at the extra monthly fees she has to pay. She had her boyfriend move in to help with the payments and now has foolishly went out and got a dog.
6 months later from the original purchase she now finds herself in a space that is too small. Now she wants to rent (yes rent) a larger place (2 bedroom) closer to Vancouver.
To make all this happen she now has to find a tenant for her South Surrey condo.
It seems that Gen Y looks at condo buying as a fashion accessory and not a prudent financial decision. There is a serious lack of financial literacy amongst the marginal buyers of real estate.”

DJB at VCI 20 Nov 2012 9:21am

Why isn’t she selling the condo?
She’s holding on the assumption that its market value will rise.
– vreaa

“A friend of a friend bought with 0/40 at the last market top in an age restricted building. Then a baby came along. They’re underwater and cannot afford to sell. Strata started to ding them $200 a week.”

“A friend of a friend bought with 0/40 at the last market top in an age restricted building. You know how it is, “get in the game”, “build equity”, “throwing money away on rent”, “flip it in two years”, “a place to call your own”, “everybody’s buying”. Then a baby came along. Despite advances made in Van West and Richmond SFH, condo prices haven’t really recovered yet so they’re underwater and cannot afford to sell. Strata started to ding them $200 a week [penalty for breaking the age bylaw] and they are forced to move out and (gasp) rent elsewhere, while their condo sits there doing nothing except eating mortgage, strata fees and taxes. To add insult to injury, they can’t rent out the unit unless to their immediate family. They tried to sell this summer and the market was really soft and the price are weakening. Last I heard they are waiting for the market to bounce back next year.”
RaggedyRenter at VCI 12 Nov 2012 10:16pm [This story, or one very similar to it, also featured on local radio, 14 Nov 2012. -ed.]

Spot The Speculators #89 – “Rent our charming turn of century East Vancouver home. The basement has shared laundry and a suite where we, your prospective landlords, reside.”

Visualize the basement

“$2400 / 3br – 1400ft² – Lovely quiet home in great neighborhood Available December 1st (Mount Pleasant / Cedar Cottage)
Date: 2012-11-11, 1:44PM PST
Our charming turn of century East Vancouver home is for rent.
Newly (as in will be finished in a week!) renovated kitchen with white shaker cabinets, dove grey quartz countertops, breakfast peninsula, mini office / computer area, dishwasher.
Hardwood floors throughout most of the house, living / dining rooms with big picture windows.
Three bedrooms upstairs: master bedroom with two large closets (one walk-in with a window for natural light), two smaller bedrooms with one closet each and big windows looking out to back yard.
One bathroom with soaker tub and skylight.
Back deck for bbqing and entertaining, big nicely kept back yard.
Front porch ready for your rocking chair.
Basement has shared laundry (and a suite where we, your prospective landlords, reside).
One year lease.”

– craigslist ad, 11 Nov 2012 [hat-tip Chem guy at VCI]

You can imagine the ‘math’.
Upside: “In 25 years, our tenants will have paid off our mortgage!”
Downside: “We live in a smallish, dampish, darkish box, with people stomping on our heads.”

Another example of Vancouver homeowners as speculators: decisions to buy/hold property based almost solely on expected future price strength.
When these homes were first designed and built, was there ever any intention for people to be living in the basements?
– vreaa

“Just overheard my co-worker turned into an accidental landlord. Tried to sell his old property in Coquitlam after purchasing a big one in Surrey. 4 months passed without even 1 offer.”

“Just overheard my co-worker turned into an accidental landlord.
Tried to sell his old property in Coquitlam after purchasing a big one in Surrey. 4 months passed without even 1 offer.
He has been day-dreaming about selling for more next year.”

good-format at VCI October 17th, 2012 at 10:50 am.

“He accepted an offer recently, $12k less than he paid a few years ago but he isn’t calculating the RE fees, property transfer tax, and the work and cash he’s put into fixing the place up which is upwards of $50k.”

“Husband’s colleague recently listed his house, the wife is a bit of a shopping addict and they are debted-out. Accepted an offer recently, $12k less than he paid a few years ago but he isn’t calculating the RE fees, property transfer tax, and the work and cash he’s put into fixing the place up which is upwards of $50k. He’s hoping the house inspection won’t give the buyer further negotiating room.”
terminalcitygirl at VREAA 23 October 2012 at 7:33 pm

“In the fall of 2007, he closed on the Costa Rica lots, for almost a million dollars. He knew that the land was overvalued, but he expected it to become even more so.”

“Connaughton ignored the warnings. In the fall of 2007, he closed on the Costa Rica lots, for almost a million dollars. He knew that the land was overvalued, but he expected it to become even more so. “It was Greed,” he later said.”
– from ‘Washington Man’, a profile of the “public servant” and “rich lobbyist” Jeff Connaughton, by George Packer, New Yorker, 29 Oct 2012

Nine Out Of Ten Analysts Agree: House Prices To Drop, But Not By Too Much

“Canadian housing prices will fall 10% over the next several years and homebuilding will slow sharply in 2013, but the country’s recent property boom is not expected to end in a U.S.-style collapse, according to a Reuters poll.
The survey of 20 forecasters published on Friday showed the majority believe the Canadian government has done enough to rein in runaway prices, preventing the type of crash that has devastated the U.S. market for years.
“This isn’t a sharp correction, this isn’t a U.S.-style correction, it’s just simply an unwinding of the excess valuation that was created by artificially low interest rates for a long period of time,” said Craig Alexander, chief economist at Toronto-Dominion Bank.
“I would emphasize that while a 10% correction sounds scary, in actual fact, this would be a healthy outcome.”

“Vancouver prices were forecast to fall 2.7% in 2012 and 3.8% in 2013, with an eventual decline of 12.5%.”
– from ‘Canada home prices seen falling, but not crashing’, Andrea Hopkins, Reuters via Financial Post, 9 Nov 2012

“Canada’s house prices are expected to drop and stay down for a decade, says a new report from Scotiabank that also warns of an “adverse shock” to the economy when the decline comes.
The bank’s latest housing outlook predicts a 10-per-cent price decline across Canada in the next two to three years, driven by larger declines in the Toronto and Vancouver markets, “where supply risks and affordability pressures have the potential to trigger larger price adjustments.”
The report notes that previous housing market downturns — in the 1970s and 1990s — took eight or nine years to bounce back to price levels seen before the decline.
“Historically, long cycles of rising home prices have been followed by extended periods of persistent softness, allowing affordability to be gradually restored and generating renewed pent-up demand,” the report stated.
The bank also warned that “balance sheets heavily skewed to real estate leave Canadians vulnerable to an adverse shock, including a sharp rise in unemployment and/or a sharp drop in home prices.”

– from ‘Canada House Prices To Drop, Stay Down For A Decade, Causing Unemployment, Scotia Says’, Daniel Tencer, The Huffington Post Canada, 8 Nov 2012.

Analysts in the industry are largely commentators, rather than instruments with any convincing positive predictive capacity. Their predictions are noteworthy to the extent that up until very recently there was a broadly held belief that housing prices would not fall at all. So, for the media to be announcing even the idea of coming drops is significant. But, from a quantitive perspective, their consensus about price drops being relatively benign reflects characteristic hope over substance.
Based on the size and all-consuming pervasiveness of the speculative mania, and on price levels determined by fundamentals such as rental incomes, we foresee larger than 10% drops for the nation and far, far larger drops for Vancouver (50%-66% real, peak to trough). Aren’t we already at about 10%-12%-off for most RE sub-types in Vancouver?
And another point: it took 25 years for real prices from the 1980-81 peak to be regained in Vancouver, not 10.
– vreaa

“Substantial declines in home sales are usually a precursor of home price corrections.”

“Our in-house investment managers in NYC have a global portfolio of around $300bn USD; this was their take on Canada sent to me yesterday:
“It is reported that home sales in Vancouver and Toronto metropolitan areas dropped by 20-33% in September from a year ago. Substantial declines in home sales are usually a precursor of home price corrections. While almost all high loan-to-value mortgages in Canada have guarantees from government backed entities, a housing correction will likely impact consumer finances and aggravate credit card ABS credit performance”
Word is getting out there pretty fast now. Housing market correction = recession in Canada.”

Toronto_CA at 7 Nov 2012 10:04am

Price follows volume. The weakness we are seeing in sales will be followed by similarly impressive price drops.
And, yes, a housing market correction will have profound effects on our economy, particularly in areas like the lower mainland where we are sorely overdependent on economic activity either directly or indirectly linked to RE.
– vreaa

Toronto Condo Seller – “I honestly never saw this coming. Never. It is very stressful. Sometimes, I am not sleeping well.”

“I honestly never saw this coming. Never. Because the boom has been now for a while, like 4 or 5 years?” [Announcer: “Maria has been trying to sell her (Toronto) loft near Square One for three months.”] “It is very stressful. Sometimes, I am not sleeping well.”
Maria Alvarez, CityTV, 6 Nov 2012 [hat-tip to VMD at VCI]

The downside of speculation. – vreaa

Remembrance Of Markets Past – “It was a bit of a scam going on, and somebody was left holding the pot at the very end.”

Helmut Pastrick, trapped in a Proustian cross-fade
“This is not, in my view, the beginning of a major correction, or recession, or decline in housing prices of 15% or 25% as some predict, mainly because we’re not seeing an economic recession play out at the same time.”
Helmut Pastrick, on Global TV News, 2 or 3 Nov 2012 (‘Deflating Vancouver Real Estate Bubble’)

We don’t need an “economic recession” for our speculative mania to collapse, it will do so, and is doing so, under its own weight.
Pastricks’s words of comfort are filed in the ‘It’s Only A Flesh Wound‘ sidebar collection. We fully anticipate that some market participants, like the Black Knight, will insist on the market’s strength all the way down, as it is hacked to pieces chunk by chunk.
– vreaa

Alleyway dashcam to prime-time
“Back then, it was more like a stock or commodity that you would day-trade… you’ve made a small percentage, pass it on to the next person, and they will make more, and they will make more, it always happened… (laughs) it was a bit of a scam going on, and somebody was left holding the pot at the very end…”
Ian Watt, local realtor, on Global TV News, 3 Nov 2012 (‘Death of the Pre-Sales Condo Market’)

Ian Watt might as well be describing the entire Vancouver market.
The horse-trading is less obvious with other property types, but the crucial buying-premised-on-future-price-appreciation, is identical.

[hat-tip to Greenhorn, as always, for the archived videos.]

Thirty Two Westside Sales and Relists

3725 37th Ave W

2,650 sqft 1915 SFH on 50x130lot
Sold 15 Dec 2011 $2,100,000
“Gorgeous heritage B house with many original old charm features along with modern updates. 9′ ceilings, wainscoting, stained glass, pocket doors, fir floors, large modern kitchen… High undeveloped attic awaits your creative ideas. New roof and a beautifully landscaped yard.”
Above home knocked down, and this now under construction:

4,086 sqft 2013 SFH on 50×130 lot
Listed for sale 7 Aug 2012 Asking price $3,890,000
“..a modern and sustainable custom Henry + Glegg designed luxury home located on a south facing property in the West Dunbar neighbourhood. Features include 5 bedrooms, 6 bathrooms, automated heating, cooling and lighting controls, temp controlled wine cellar, media room, nanny suite with a walk out patio and a three car garage. This home is available now with an opportunity for interior design customization and occupancy Spring 2013.”

3771 11th Ave W
2,946 sqft SFH on 50×122 lot
31 May 2011 Sold $1,958,000
23 Aug 2012 Identical house relisted for sale for $2,680,000
“..guest accommodation down, rented for $1,500 per month.”

4540 13th Ave W
33×122 lot
3 Mar 2012 Sold $1,844,000
25 Sep 2012 2769 sqft New Build Listed for $2,892,000
“Situated on a pretty, tree lined street on a 33 x 122 ft lot.”

3672 15th Ave W
2,520 sqft SFH on 33×122 lot
1 May 2011 Sold $2,099,000
23 Apr 2012 Identical house relisted for sale for $2,538,000
“Renovated to the stud in 1990..”
Now listed as 2,637 sqft

4063 16th Ave W
1,907 sqft SFH on 33×122 lot
2 May 2011 Sold $1,375,000
Painted and relisted 23 Oct 2012, ask price $1,488,000

3528 17th Ave W
2,240 sqft SFH on 33×110 lot
Sold 22 Feb 2011 $1,200,000
Resold 3 Mar 2012 $1,300,000

3804 19th Ave W
1,469 SFH on 33×122 lot
Sold 14 Jun 2011 $1,598,00
Resold 26 Oct 2011 $1,662,000
“This house hasn’t been spoiled by successive renovations and is ready for an update or a rebuild.”

3741 23rd Ave W
2,440 SFH on 33×122 lot
Sold 26 Oct 2011 $1,550,000
Resold 31 Mar 2012 $1,685,000
“Ideal for builders due to the desirable 33×122 lot and the highly rentable 2400 square foot house for investment, but also for family living-in…”
[Good for everybody in fact; especially good for punters wanting to take a chance at flippin’. -ed]

3475 26th Ave W
2650 sqft 20043SFH on 33×130 lot
Sold 26 Jun 2011 $2,410,000
Relisted 12 Sep 2012 $2,448,000
Price change 5 Oct 2012 $2,348,000
Price change now $2,248,000
Failed flip.
“Showing better than new..”

3383 27th Ave W
1,700 sqft 1931 SFH on 33×130 lot
Sold 5 Jun 2011 $1,601,000
3005 sqft new build listed 24 Sep 2012 $2,798,000
“Air conditioned throughout.”

1575 29th Ave W
3,544 sqft SFH on 66×150 lot
Sold 11 Oct 2011 $3,560,000
Relisted 22 Jun 2012, ask price $4,480,000

3677 30th Ave W
1,437 sqft SFH on 33×130 lot
Sold 9 May 2011 $1,651,000
3005 soft new build listed 23 Oct 2012 $2,990,000
“Fully equipped 2 bdrm legal suite with separate entrance in basement can be a mortgage helper…”

3985 30th Ave W
3,200 sqft 1981 SFH on 42×130 lot
Sold 14 Jul 2011 $1,950,000
‘Upgraded’ and relisted 15 Jun 2012 ask price $2,560,000
“Better than brand new! TOTALLY upgraded with high-end finish in 2012.”

3288 32nd Ave W
2,784 sqft 1938 SFH on 48×130 lot
Sold 12 Mar 2012 $2,250,000
Lot divided in two, and redeveloped into two SFHs:
(1) 3288 32nd Ave W
1,778 sqft SFH on 24×130 lot
For sale $1,988,000
(2) 3292 32nd Ave W
1,819 sqft SFH on 24×130 lot
For sale $1,988,000
“A Brand New Home at an affordable price.”

2574 33rd Ave W
1,874 sqft SFH on 66×127 lot
Sold 5 Jun 2011 $1,710,000
Sold 4 Dec 2011 $1,850,000

2753 33rd Ave W
1,500 sqft SFH on 33×133 lot
Sold 4 Nov 2011 $1,250,000
Relisted 18 Oct 2012 Ask Price $1,375,000

3441 33rd Ave W
2,556 sqft 1936 SFH on 56×130 lot
Sold 30 Jan 2012 $1,958,000
Relisted 12 Jun 2012 Ask price $2,080,000
Sold 25 Sep 2012 $1,933,800
“Investor or Builder Alert!”

2606 34th Ave W
3,378 sqft 1912 Craftsman SFH on 60×130 lot
Sold 28 Apr 2012 $2,600,000
Relisted 20 Jul 2012 $2,798,000

3341 34th Ave W
3,470 sqft 1925 SFH on 60×140 lot
Sold 7 Jun 2011 $2,550,000
Relisted 12 Apr 2012 Ask price $2,799,000
Ask price drop to current $2,680,000
“Basement has 2-bedroom suite. Hold, renovate or build your dream home up to approximately 5,800 SqFt.”

2633 36th Ave W
4,808 sqft 1995 SFH on 60×134 lot
Sold 24 Jun 2011 $3,420,000
Relisted 23 Jul 2012 Ask price $3,660,000

3657 36th Ave W
2,200 sqft SFH on 50×130 lot
Sold 21 Nov 2011 $2,210,000
Relisted 25 Sep 2012, after apparent reno:
3,455 sqft SFH
Ask price $2,698,000
“Beautiful Dunbar Home! Completely restored to its original charm & elegance!”

3692 36th Ave W
2,393 sqft SFH on 50×130 lot
Sold (or ? taken off market) 30 Jul 2011 $2,200,000
Relisted 3 May 2012
Sold 19 My 2012 $2,165,000

3981 36th Ave W
4,123 sqft 1937 SFH on 66×130 lot
Sold 3 Aug 2011 $3,100,000
Relisted 14 May 2012 at $3,798,000
Price reduced $3,698,000
“The owner paid $400K to completely renovate the whole house with high quality material such as granite counter, real hardwood floor, stainless appliances. Better and more beautiful than new. Looking out from the master bedroom you can view the ocean, Gulf Island, trees and flowers. All other houses are below yours, south-facing bright home and hardly found big 66’x130′ lot make it more worth buying it, living in for a long time, enjoy the designer’s gorgeous work and it never loses the value. Decade trees circle the yard and makes it more private. Close to all famous schools, UBC, community centre, library, shopping and transit.”

3025 39th Ave W
2,830 sqft SFH on 50×130 lot
Listed 11 Jun 2012 Ask Price $2,180,000
Sold 30 Jul 2012 $1,800,000
Relisted 17 Sep 2012 Ask price $2,237,000
[Relisted with identical MLS blurb/copy, but different realtor. -ed.]

3175 39th Ave W
3,650 sqft 2005 SFH on 50×130 lot
Sold 12 Mar 2012 $2,528,000
Relisted 24 Sep 2012 Ask price $3,080,000
“Owner spent over $200k to upgrade outside & inside, with City Permit.”

2972 42nd Ave W
2,818 sqft 1993 on 35×135 lot
Sold 20 Dec 2011 $1,970,000
“This is not a drive-by.”
Relisted 29 Feb 2012 at ask price $1,980,000
Sold 14 Mar 2012 $1,850,000
“Great value! Move in anytime!”

2005 43rd Ave W
3,545 sqft 1898 SFH on 50×118 lot
Sold 12 Apr 2011 $2,205,000
Relisted 23 Jun 2012 Ask price $2,298,000

2828 43rd Ave W
5,449 sqft 1997 SFH on 66×120 lot
Sold 18 Oct 2011 $3,258,000
Relisted 30 Oct 2012 Ask price $3,598,000
“Beautifully renovated kitchen faces south out over a private landscaped yard.”

2540 45th Ave W
3,901 sqft 2004 SFH on 49×122 lot
Sold 1 Mar 2012 $3,100,000
Relisted 2 Oct 2012 Ask price $3,380,000

1139 46th Ave W
4,345 sqft 1994 SFH on 59×122 lot
Sold 9 Jul 2011 $3,680,000
Relisted 28 May 2012 Ask price $3,680,000

1307 46th Ave W
4,660 sqft SFH on 62×122 lot
Sold 28 Jun 2011 $2,968,888
Relisted 21 Aug 2012 Ask price $3,280,000
Reduced to current $3,180,000

1455 46th Ave W
3,899 sqft SFH on 59×122 lot
Sold 15 Jan 2012 $2,530,000
Relisted 29 Aug 2012
Current ask price $2,588,000

[many thanks to ‘westsidefrank’ for gathering the data -ed.]

“About a third of Baby Boomers plan to sell their home to fund their retirement. They shouldn’t be relying on their homes. Even if prices don’t plunge, big increases in property values are a thing of the past.”

“About a third of Baby Boomers plan to sell their home to fund their retirement, according to a study that questions whether buyers will dry up as that massive segment of the population downsizes.
Bank of Montreal is warning Boomers not to count on that nest egg, while other observers suggest that even if prices don’t plunge, big increases in property values are a thing of the past.
“They shouldn’t be relying on their homes because there are risks,” says Marlena Pospiech, a retirement strategist at the BMO Retirement Institute.
The bank suggests the following risky scenario: As Canada’s population ages, more Boomers will be retiring and selling their homes, putting downward pressure on prices.”
– from ‘Boomers warned using home sale to fund retirement could backfire’, Garry Marr, Financial Post, 31 Oct 2012

Gee, now where have we been hearing this warning, for, umm, the past 4 or 5 years?
As we said on an earlier post today: “Opinions previously held only by lunatic bears-on-blogs are being expressed mainstream.”
Note how the possibility of price “plunges” are now also entering the mainstream discussion.
– vreaa

Distressed Condo Owners – “So many owners have spent all but their last dime buying the place. Some already spend half or more of their income on mortgage payments and strata fees. The special assessment was defeated because more than half said they couldn’t afford it.”

“It’s often difficult to get the majority of owners to agree to the appropriate monthly fees to cover ongoing maintenance, operation and replacement.
It’s difficult because so many owners — especially in the Lower Mainland — have spent all but their last dime buying the place.
But it only gets worse as buildings age and expensive repairs become inevitable. The Condominium Home Owners Association of B.C. estimates that 10 per cent of the province’s condos are now between 30 and 45 years old and in need of major renewal.
Some are in such disrepair that owners are openly discussing how to liquidate the strata corporation so they can sell the property for redevelopment.”

“Until 2009, big-ticket repairs such as replacing plumbing, decks, windows, elevators, roofs and renovating common areas had to be financed through special levies, which require approval by three-quarters of the owners at a general meeting.
They’re difficult to get passed.
Some owners are tapped out, with some already spending half or more of their income on mortgage payments and strata fees.
There’s also a cultural gap, Tony Gioventu, CHOA’s executive director, says.
“It’s a foreign concept for some ethnic groups to repair and maintain buildings … There are some specific ethnic groups who will run a building to failure rather than maintain them to longevity.”
He declined to name the ethnic groups.
There is also an increasing number of owners on limited pensions.
Gioventu cited a recent case where the mainly retired owners in one North Vancouver condo all agreed that balconies and decks in the aging building had to be fixed. But the special assessment was defeated because more than half said they couldn’t afford it.”

– from ‘Condo life is rife with conflict’, Daphne Bramham, Vancouver Sun, 26 Oct 2012

More stories of people who can’t afford their own homes.
– vreaa

“73% of homeowners can’t afford their own homes”; “Mark Carney admits to ‘droning on in public about the dangers of household debt'”; “They offered me close to a million last year (25 years old) just because I’m in Fort McMurray.”

“Canadians will learn an ugly lesson if they keep piling on debt the way they are at the moment.
The Bank of Montreal report that came out Monday and noted that almost three-quarters of homeowners would feel a significant squeeze from even a small rise in interest rates shows just how close Canadians are to falling over the edge of their finances. What it means, in essence, is that 73% of the people surveyed can’t afford their own homes. And a lot of them are already feeling the pinch.”

“This is at a time when interest rates are at historic lows, which means they can only go up from here. That they will rise, eventually, is inevitable. Yet 16% of the people in the survey said they might not be able to make their payments if rates rose by even a tenth.
You don’t have to think hard to imagine what the fallout would be from an event like that. You can picture the headlines — “Canadians driven from their homes by rise in interest rates” – and the panic in Ottawa. The papers – well, some of them, anyway – would be full of stories about innocent families who insist they had no idea they were getting into such a mess when they took out the mortgage on their “dream home.”

“Mark Carney, the Bank of Canada governor, has wagged his finger at big borrowers so often he seems almost sheepish about it.
“Me droning on in public about the dangers of household debt is a way of reminding households that: don’t assume that current levels and the current situation will be there forever,” he said on one recent address.

“As the housing market cools and home prices slip, a lot of people could find themselves making monthly payments they can barely cover for a house that isn’t worth what they thought it was. If you can’t cover the mortgage, you just have to pray the roof doesn’t start leaking or the furnace fail.
And borrowers won’t really have anyone to blame but themselves. The warnings are out there. The examples are rife: all anyone has to do is examine the experience of U.S. homeowners over the past few years. The dangers aren’t a secret, they’re just being ignored.
But people keep borrowing, because it makes them feel good to spend, because they’re too busy to think about it, because they figure they can cover the payments in the short term and will deal with the future when it comes. And because they can always blame it on someone else when the roof caves in.”

– from ‘Hard-pressed homeowners just close their eyes and borrow some more’, Kelly McParland, National Post, 24 Oct 2012

And from the comment section below that article:

“When I was shopping for a house in 2010, the bank told me I could afford $850k. I am a compulsive budgeter, with detailed spreadsheets, played with various amortizations, and incorporated all of my expensive, housing-related and otherwise, and the amount I concluded that I could afford was $500k. That’s a huge difference.” – Jc

“They offered me close to a million last year (25 years old) just because I’m in Fort McMurray. Didn’t go anywhere near that mark.” – doodles

“I was also offered a $750K loan 10 years ago, and only borrowed $500K upon my own analysis (based on property costs < 30% of gross income). The Scotia loan officer told me that I was smart, and that she feared for others that were borrowing all they could get." – cash0

“We wanted to move a year ago and decided we could afford about $400K. Bank offered us $750K. We spent $362K fully expecting to pay higher interest rates eventually.” – chmilz

No surprises; Lenders have allowed borrowers to overextend.
Headlined for the record.
– vreaa

Mortgage Prisoners – “Something like that will never happen in Canada”

“How it happens
Here is a fictional but typical example:
A shop owner moved home in 2006, after being offered a mortgage without needing third-party corroboration of their income.
The interest tracked base rate at 1% over bank base rate for five years, after which the rate would revert to the lender’s standard variable rate (SVR).
The lender was happy to lend the money on an “interest-only” basis, where the repayment of the loan would come from future profits in the business, or from an inheritance, or from the sale of the property itself.
With the Bank rate at 5%, the interest stood at 6%, so the householder had to pay £2,000 a month.
In 2007, the Bank rate increased to 5.75%, so repayments increased by a further £250 a month.

Changed circumstances
It is now 2012, the High Street is suffering, and the shop owner’s current income is only £50,000. The property might be worth only £570,000.
From April 2008 until March 2009, his mortgage costs dropped from £2,000 pm to £500 a month as the Bank rate fell to a record low.
All appeared well until the end of the five-year Bank rate tracking product in November 2011.
Now, payments have gone from 1.5% (£500 a month) to the current SVR of 4.25% (£1,416 pm).
Traditionally over the last 25 years or so the answer to this issue of increasing costs would be have been to remortgage to another lender.
However in the current environment things are different, with lenders being much more conservative.
The shop owner would find it difficult to find a new loan on an interest-only basis.
The loan is now at 70% of the value of the home, so almost every lender would require him to take a repayment loan.”

– from ‘Mortgage prisoners’ are locked in to home loans, Simon Tyler, BBC, 25 Apr 2012

Hat-tip Erebus at VREAA 25 Oct 2012 for this link, and who added:
“My co-worker’s response to this: “Something like that will never happen in Canada” “.

Note that in the above example, problems have arisen even with property prices rising.
Yes, there are some differences between UK and Canadian mortgages, but the broad principles of those in debt coming under increasing pressure, as the virtuous cycle turns vicious, are the same.
– vreaa

Westside SFH Example – Sold May 2011 For $2.47M; Back On Market Oct 2012 Ask Price $2.48M

4550 Blenheim St, Vancouver Westside (McKenzie Heights)
Built 2009
3,370 sqft SFH, 46×122 lot
6 bedrooms, 4.5 bathrooms, 3 car garage

Listed 12 Mar 2011, Ask Price $2.59M
Sold 15 May 2011, Sale Price $2.47M

Now, Listed 12 Oct 2012, Ask Price $2.48M

1. Motivation for sale?
2. One (of many) to watch.
– vreaa

“I used to go to the parking lot with my co-workers, point at the realtor section and say: “See these cars? They’re bought though fees and commissions you paid when you took out the mortgage. When you buy property, you purchase a BMW as a gift for somebody else.”

“My name is Stan. I live in Vancouver, BC. I’m 30. I rent and plan on doing so for as far into the future as my eye can see. I carry no debt. Have enough diversified savings to last about 2 years if I happen to lose my $65K / year job. I’m the sole bread winner in my 3 member family, which may become 4-member family if my mother doesn’t find a job soon.

I keep hearing about boomerang kids and those that live in their parents’ basements into their 30s. To me, a fall back option such as this, would be a luxury. I face the possibility of housing “boomerang parents”. Each time the media mentions someone returning to someone else’s house, I cringe.

Despite being told all my life that renting meant throwing money away, I could never bring myself to invest in a mortgage. Signing a contract that amounted to a promise to remain in good health and financially stable for 30+ years never made sense (regardless of the premise). Not knowing what the next year might bring, how could I commit to anything forcing such obligation?

My previous place of employment shared the building with a realtor firm. Their parking lot was always full of top of the line BMW’s and Porsche’s. My young friends were all starting families and jumping into mortgages at that point. They thought they could afford the $1 mil homes they were going for (while earning roughly less or as much as I did).

I used to go to the parking lot with my co-workers, point at the realtor section and say: “See these cars? They’re bought though fees and commissions you paid when you took out the mortgage. When you buy property, you purchase a BMW as a gift for somebody else.” My friends laughed, but they’re not laughing now… neither are they my friends anymore.

Yet with many of my, now underwater, former friends no change has taken place. They still occupy the properties, having missed out on the blessing of a faux recovery. Not everyone gets a second chance to get out of the market and they totally blew it. I still cannot understand what pushed most of them into “ownership”. I had no data, no projections when making my decisions, just a simple set of observations. The parking lot and my own clunker told me more about the state of the housing market than all of the mainstream economists, university professors, and TV newscasters combined.”

Stan from Vancouver, as relayed by Garth Turner at 21 Oct 2012

The BlackBerry and Vancouver RE – “You can’t do anything with it. You’re supposed to, but it’s all a big lie.”

“Rachel Crosby speaks about her BlackBerry phone the way someone might speak of an embarrassing relative.
“I’m ashamed of it,” said Rachel Crosby, a Los Angeles sales representative who said she had stopped pulling out her BlackBerry at cocktail parties and conferences. In meetings, she says she hides her BlackBerry beneath her iPad for fear clients will see it and judge her.
The BlackBerry was once proudly carried by the high-powered and the elite, but those who still hold one today say the device has become a magnet for mockery and derision from those with iPhones and the latest Android phones. Research in Motion may still be successful selling BlackBerrys in countries like India and Indonesia, but in the United States the company is clinging to less than 5 percent of the smartphone market — down from a dominating 50 percent just three years ago. The company’s future all depends on a much-delayed new phone coming next year; meanwhile RIM recorded a net loss of $753 million in the first half of the year compared with a profit of more than $1 billion a year earlier.

As the list shrinks of friends who once regularly communicated using BlackBerry’s private messaging service, called BBM, many a BlackBerry owner will not mince words about how they feel about their phone.
“I want to take a bat to it,” Ms. Crosby said, after waiting for her phone’s browser to load for the third minute, only to watch the battery die. “You can’t do anything with it. You’re supposed to, but it’s all a big lie.”
The cultural divide between BlackBerry loyalists and everyone else has only grown more extreme over the last year as companies that previously issued employees BlackBerrys — and only BlackBerrys — have started surrendering to employee demands for iPhones and Android-powered smartphones.

Out in the world, the insults continue. Victoria Gossage, a 28-year-old hedge fund marketer, said she recently attended a work retreat at Piping Rock Club, an upscale country club in Locust Valley, N.Y., and asked the concierge for a phone charger. “First he said, ‘Sure.’ Then he saw my phone and — in this disgusted tone — said, ‘Oh no, no, not for that.’ ”
“You get used to that kind of rejection,” she said.
“BlackBerry users are like Myspace users,” sneers Craig Robert Smith, a Los Angeles musician. “They probably still chat on AOL Instant Messenger.”
BlackBerry outcasts say that, increasingly, they suffer from shame and public humiliation as they watch their counterparts mingle on social networking apps that are not available to them, take higher-resolution photos, and effortlessly navigate streets — and the Internet — with better GPS and faster browsing. More indignity comes in having to outsource tasks like getting directions, booking travel, making restaurant reservations and looking up sports scores to their exasperated iPhone and Android-carting partners, friends and colleagues.
“I feel absolutely helpless,” said Ms. Gossage. “You’re constantly watching people do all these things on their phones and all I have going for me is my family’s group BBM chats.”
Ryan Hutto, a director at a San Francisco health information company, said he frequently depended on others, often his wife, for music playlists, navigation and sports scores. “After two or three questions, people start to get irritated,” Mr. Hutto said.
His wife, Shannon Hutto, says with a sigh: “Anytime we go anywhere, I always have to pull up the map. If we’re searching for a restaurant, I pull up the Yelp app. If we need a reservation, I pull up OpenTable. I kind of feel like his personal assistant.”

RIM’s most recent efforts to hold on to loyal customers, as well as software developers building apps for its next generation of phones scheduled to be available next year, have elicited universal cringes. In a recent promotional video, Alec Saunders, RIM’s vice president for developer relations, is shown belting out a rock song titled “Devs, BlackBerry Is Going to Keep on Loving You,” a riff on the 1981 power ballad by REO Speedwagon “Keep on Loving You.”
“This is the sign of a desperate company,” said Nick Mindel, a 26-year-old investment analyst. “Come on, BlackBerry, I always had some faith, but you just lost a customer. Frankly, I don’t think they can afford to lose many more.”
After eight years with a BlackBerry, Mr. Mindel said he just joined the wait list for the iPhone 5. When it arrives, he said, “I’m considering removing my BlackBerry battery, pouring in cement, and using the BlackBerry as an actual paperweight.”

– from ‘The BlackBerry Stigma, J. Emilio Flores, The New York Times, 15 Oct 2012

Hero to Zero, in 60 months.
Sentiment changes, and products that seem bullet-proof fairly rapidly can become objects of derision.
Five years ago, who would possibly have believed that the ubiquitous and proudly paraded BB would be giving up death rattles? How many believe that Vancouver RE prices can drop over 50%?
“But what function will Vancouver RE be struggling with?”, some may ask.
The function of being a powerful financial instrument, is the answer.
“Damn, this 7%-10%-per-annum-price-appreciation key is broken!”.
You’re supposed to be able to sell it, anytime you like, at a steady and ever increasing profit, but you can’t.
“It’s all a big lie.”
– vreaa


September 2012 Numbers – “Clear reduction in buyer demand; Steep decline in sales activity to 41.6% below the 10-year average.”

So far, so good.

“Vancouver home sales fell 32.5 per cent in September compared with a year ago, says the Real Estate Board of Greater Vancouver.
Sales of residential properties totalled 1,516 for the month, down from 1,649 in August and 2,246 in September 2011, according to the board.
“There’s been a clear reduction in buyer demand in the three months since the federal government eliminated the availability of a 30-year amortization on government-insured mortgages,” board president Eugene Klein said. “This makes homes less affordable for the people of the region.”

– from Vancouver Sun, 2 Oct 2012

“The Real Estate Board of Greater Vancouver maintains that prices remain stable overall in its market. It says its benchmark price index is $606,100, a 0.8% drop from a year ago and a 2.3% decline over the last three months. But there is no mistaking the steep decline in sales activity which in September was 41.6% below the 10-year average.”
– from Financial Post, 2 Oct 2012

“SFH Stats Sept 2012: (ranked by worst sales decline)
Sales:-50% YoY, -10% MoM
Ratio: 22% vs 32%
HPI: -4.2% YoY, -1.3% MoM
Median: -9.8% YoY, -1.4% MoM
Sales -49% YoY, -10% MoM
Ratio: 18% vs 35%
HPI: +4.2% YoY, -0% MoM
Median: -13% YoY, -6.3% MoM
Van East:
Sales:-48% YoY, -6% MoM
Ratio: 30% vs 51%
HPI: +3.2% YoY, -1.1% MoM
Median: -2.5% YoY, -0.6% MoM
Sales:-37% YoY, +16% MoM
Ratio: 30% vs 51%
HPI: +3.6% YoY, -0.2% MoM
Median: +0.4% YoY, -3.7% MoM
Van West:
Sales:-17% YoY, +15% MoM
Ratio: 27% vs 27%
HPI: -6.5% YoY, -1.3% MoM
Median: +1% YoY, +0% MoM”
VMD at VCI 2 Oct 2012 1:17pm

“As an aside, looking at the Average Prices and number of Sales for REBGV, my spreadsheet shows the TOTAL DOLLAR VOLUME for the three housing types has PLUNGED from a high of $3.21 Billion in March 2011 to a low of $1.20 Billion in August 2012. Looks like September 2012 could be even lower.”
lookoutbelow at yattermatters 1 Oct 2012 9:57pm

And in the “Keep Calm and Carry On” (also known as the “It’s Only A Flesh Wound”) category of opinions:
“Clearly my prediction of offshore buyers returning in the fall is coming true. The high average is a reflection of the fact that large amounts of high end housing is selling and selling well.
Like I’ve said all along, this is just a brief pause before the Mainlanders return again. Clearly the high end of the market has not been impacted.”

CBM at yattermatters 1 Oct 2012 9:26pm

Inventory high enough, Sales very weak, Prices modestly down from peak.
Price will follow volume, as it always does.
Further drops ahead.
– vreaa

“A colleague bought a SFH home in the spring in the hopes of flipping it for a quick profit. She now finds herself amongst the ranks of the accidental landlords. She is not happy.”

“A colleague bought a SFH home in the spring in the hopes of flipping it for a quick profit.
She pulled it off the market after the financing from a prospective buyer fell through. With the market having weakened significantly since then, she now finds herself amongst the ranks of the accidental landlords. She is not happy.”

– Manna from heaven at VCI 27 Sep 2012

‘Wealth’ That Isn’t Really There – “We live in a world where people have increasingly lost the distinction between ‘making money’ and ‘producing wealth’. Most people out there would be perplexed by the notion that there is even a difference at all.”

Andreas Conrad: [background] “I can’t do anything … unless I’ve sold.”

Announcer: “Andreas Conrad knows the market pain all too well… he’s trying to downsize, but can’t sell his duplex, originally priced at just over $2M, now $300K cheaper…
It’s been on the market for five months and Conrad says, without a sale, he’ll be forced out of retirement.”

Conrad: “For me now it means I will definitely have to go back to work… at the, at the end of the summer.. ah.. if nothing moves.”

Announcer: “This homeowner is just hoping his duplex sells, and fast. If it does, he’ll be back in the market to buy a condo right away.”

– anecdote extracted from ‘Vancouver residential real estate plunges’,, 5 Sep 2012 12:47pm [hat-tip Jeff Murdock]

Many Vancouverites are overdependent on their RE holdings for their financial health, and for their retirement plans.
This gentleman appears to have retired early based on the paper ‘value’ of his RE holdings, and already his plans are awry.
It is noteworthy that this is occurring very early in the down-cycle. We anticipate that many more will find themselves in similar situations once price descents become significant.
– vreaa

Here follow comments posted regarding this CTV piece, from CTV and VCI:

“Am I suppose to feel sorry for a guy who has a home valued around $2 mill and can not sell it and have to return to work. I do not know the age of this man but he looked like he wanted to retire early off his home.”
– leo, at, 6 Sep 2012 2:42pm

“Yeah, Andreas…people elsewhere have to actually work to make money, cuz their dwelling-place doesn’t actually generate income so they can retire at 50…”
kabloona at VCI 5 Sep 2012 6:57pm

“I saw that guy on CTV news too. Crying that he’s going to have to get a job soon if he can’t flip his crack shack for 2 million. He didn’t look old enough to be retired to me. I said out loud to the TV, “Good, you should get a job.” Why would anyone feel entitled not to work for a living? Why would anyone go on the news and expect sympathy that they might have to get a job to earn an income?”
Joe_Blown_Away_By_High_Housing_Costs at VCI 5 Sep 2012 7:09pm

“I would like to be the first in line to order a latte from Andreas when he starts his new job.”
Best place on meth at VCI 5 Sep 2012 8:53

“Andreas seems like a perfectly nice guy to me; just having a hard time adjusting his expectations.”
Anonymous at VCI 5 Sep 2012 10:37pm

“We live in a world where people have increasingly lost the distinction between ‘making money’ and ‘producing wealth’. Most people out there would be perplexed by the notion that there is even a difference at all. There is no less admiration for someone who becomes a millionaire by picking the right stocks than someone who gets rich building a real business or producing a tangible service that creates real wealth.
In fact, given the choice, the overwhelming majority of people would rather get rich without working at all, which is a big part of why we currently have the most morbidly obese housing bubble in history.
Sadly, I don’t think people will wake up to the distinction even after the bubble bursts. Since so many people will be negatively affected (70% of home owning Canadians), expect to see a whole lot of resentment and bitterness at all the ‘lost wealth’ rather than a realization that it was never there in the first place.”

Yalie at VCI 5 Sep 2012 7:59pm

The CTV piece was also noteworthy for these two quotes:

Andrey Pavlov, SFU: “The time on the market has tripled since 2 months ago, so that’s a crash by any measure.” [We’d agree with the sentiment but disagree with the semantics. A crash will only be said to have occurred when prices plunge. -ed.]

Cameron Muir, RE Association: “It wasn’t too long ago that we had the greatest financial crisis since the great depression, followed by a global recession. If that wasn’t the tipping point or a trigger for a deflation of an asset bubble, I don’t know what is.” [In 2008 Vancouver RE was rescued by emergency low interest rates, which it sorely did not need. This delayed our hour of reckoning, but it seems now upon us. -ed.]

UPDATE, 1 Oct 2012:
Headlined property price has since been reduced to $1,599,000
[hat-tip Van guy].
Click on image to enlarge:

Handcrafted Spam


The following 18 comments all appeared on VREAA over a 4 hour period last night [26-27 Sep 2012], each on a different thread, and all from a commenter using the handle ‘Joe Manhas’. They all attempt to promote ‘’, a site that sells BC RE. Impressive work. The comments are distracting, particularly once one takes note of their motivation, and they have all been removed from the respective threads. But they are preserved here en masse as an example of what folks are doing to promote Vancouver RE related activity at this stage in the cycle. ‘Joe’ now joins ‘Fred’, up to now the only poster specifically cited on our spam filter. – vreaa

Submitted on 2012/09/26 at 10:19 pm
Sounds crazy, but Vancouver is one of the most livable cities in the world they say…

Submitted on 2012/09/26 at 10:23 pm
I understand that there are 5005 units coming downtown.. these developers wouldn’t be investing so much money into these projects unless they were confident that they could sell them…

Submitted on 2012/09/26 at 10:29 pm
What happen to the days when people lived within their means? Vancouver isn’t cheap however if you want a nice house, maybe you can spend a little less on the cars.. Tough to live a steak and champagne lifestyle on a beer – Mac N’ Chess budget..

Submitted on 2012/09/26 at 10:32 pm
Make sense.. we all love things that are free..

Submitted on 2012/09/26 at 11:37 pm
They say money don’t grow on trees… Not for these anymore..

Submitted on 2012/09/27 at 12:30 am
The bubble is only bursting because the Government wants it to burst.. It’s not hard to slow down the machine when you got this wrench that that keeps tightening and tightening… Also when the government turns off the immigration tap, if only a trickle is getting through wouldn’t expect things to slow down? Once that wrench is gone and the tap is turned on full blast we’ll be back to a blazing hot market… Buy Now!!

Submitted on 2012/09/27 at 12:34 am
Sounds like the property was bought to high and sold to low… Next time be a little more aggressive negotiating a better deal and work the deal harder on the selling side..

Submitted on 2012/09/27 at 12:41 am
Your poorer than you think? People in Vancouver have made huge money in real estate.. Do you think all those millionaires around Vancouver made it by working 9-5.. We’ve had an incredible run.. still big money to be made..

Submitted on 2012/09/27 at 12:46 am
Your House Is A Big Fridge, a place to store stuff?? Its a place to live and a place to retired after it builds equity for 20 years… Houses go up in value over time, fridges depreciate..

Submitted on 2012/09/27 at 12:48 am
Sugar Coat sorta… As they say what goes up must come down… the flip side is also true what goes down must come up.. Buy Now ..

Submitted on 2012/09/27 at 12:55 am
The sale of you own person home is one of the few tax free opportunities we have as Canadians, downsizing, upsizing or other, just remember not to do it too often as the government might see this as a business of re-selling property apposed to selling for personal reasons..

Submitted on 2012/09/27 at 12:58 am
know the rules, play by the rules.. if your going to break them don’t get caught

Submitted on 2012/09/27 at 1:04 am
If don’t like “Honda” can you take a Toyota instead?

Submitted on 2012/09/27 at 1:10 am
I agree.. the government is intentanally killing the market.. what ever happen to the Adam Smith theory of letting the market take care of it’s self… Too much government interference ..

Submitted on 2012/09/27 at 1:17 am
I bet in the 3 house sales the profit was enough to take ten trips.

Submitted on 2012/09/27 at 1:24 am
In for the long haul… Real Estate in most places is for the long haul.. Vancouver real estate market has given the average investor (with money) to make huge gains in short periods of time. Huge money can be made on the down slide as well. By now

Submitted on 2012/09/27 at 1:29 am
Vancouver as a safe, long-term place to park some money when it comes to real estate. We owe a lot to those around the world that have help Vancouver residents become millionaires by buying holding and selling..

Submitted on 2012/09/27 at 1:40 am
As rough as the stats might show, Vancouver will rebound.. this is the time to buy while real estate is cheap…

Unexpected Call From Long Time Friend – “They bought a $240k townhouse and are moving in next month, and he is afraid that they don’t make enough to pay for 2 cars and a mortgage.”

“I had an unexpected call from long time friend that i havent talked with for in a long time. He was asking if i could help him in selling his car, i wondered why he wanted to sell he replied that his wife’s parents pre approved them for a mortgage recently thru a realtor friend who only charges $5k for the pre approval and other helper services. And now they bought a $240k townhouse and moving in next month and he was afraid that him and his wife don’t make enough to pay for 2 cars and mortgage. So he was considering selling one car or find a second job. I was speechless. There are just so many things wrong with this story that it left me speechless, he is really nice guy and a good long time friend, and i could tell he was emotionally concerned at this point. All I offered was to help him move and a bit of encouragment that its nice to have your own place (i didn’t really know what else to say).”
SunBlaster at VCI 21 Sep 2012 6:22pm

Vancouver Sun’s Ironic Advice – “It’s clear real estate investors should look beneath these pleasing green exteriors and sunny media reports and do their own due diligence before they invest.”

“In 2008 and 2009, Vancouver property developers Michael Knight and Jeff Wiegel were riding a wave of upbeat publicity over their condo project in the Delbrook area of North Vancouver.
“The Brook” was being built to LEED platinum standards, the highest certification for environmentally friendly residency, and was being financed by equity investors, rather than pre-sales, which allowed the developer and his partners to share in future price gains.
The project garnered favourable publicity in The Vancouver Sun, the Globe and Mail and the North Shore News. What these media outlets didn’t know was Knight had had a history of run-ins with the Financial Institutions Commission (FICOM) and the B.C. Securities Commission (BCSC), and had been slapped with cease-and-desist and suspension orders and financial penalties.”

“Acting on complaints, FICOM conducted an investigation and found Knight had committed multiple breaches:
He had provided real estate services without being registered under the Real Estate Services Act.
He had marketed the units without preparing and filing a disclosure statement with the B.C. Superintendent of Real Estate.
He had received money from at least two people to secure an interest in a unit, but did not deposit those funds in a trust account, contrary to the Real Estate Development Marketing Act.”

“Beneath the technical breaches are heavy financial losses and much investor grief. The Brook was delayed, ran into financial problems and ended up in receivership. The other two projects never got off the ground. Investors in all three projects have lost most if not all of their money. Many have filed lawsuits.
I think that it’s clear real estate investors should look beneath these pleasing green exteriors and sunny media reports and do their own due diligence before they invest.”

– from ‘Baines: Green property developers charged with multiple offences’, David Baines, Vancouver Sun, 21 Sep 2012

Hats-off to David Baines for the article, and for pointing out that the Vancouver Sun itself had promoted a shifty RE project.
Recent stories of unsavoury players in the Vancouver RE business can’t be helping sentiment.
– vreaa

“At the in-laws this weekend in Richmond, they had a friend of theirs over who is a well-connected realtor in the Chinese community. She said nothing priced above assessment value was selling. Prices off 15% from peak.”

“Was at the in-laws this weekend in Richmond. They had a friend of theirs over who is a well-connected realtor in the Chinese community.
She said nothing priced above assessment value was selling. Prices off 15% from peak.
This is someone who was invited to one of Harper’s trade missions to China, so in a position to know if an influx of HAM was just waiting to be unleashed. Aggressive sellers are driving prices lower to attract the few buyers in the market.”

Just looking… at VCI 9 Sep 2012 8:17pm

Mission SFH At 16%-Off The 2007 Sale Price

“34463 ROCKRIDGE PL, Mission
2165sqft SFH on 7212sqft lot.
Now on the market:
04-Jul-12 $469,900.00
28-Jul-12 $464,900.00 -2%
01-Aug-12 $459,900.00 -3%
03-Aug-12 $458,900.00 -3%
09-Aug-12 $457,900.00 -3%
10-Aug-12 $456,900.00 -3%
15-Aug-12 $455,900.00 -3%
17-Aug-12 $454,900.00 -4%
23-Aug-12 $453,900.00 -4%
25-Aug-12 $452,900.00 -4%
31-Aug-12 $451,900.00 -4%
02-Sep-12 $450,900.00 -5%
07-Sep-12 $449,900.00 -5%

This home was purchased in 2007 for $540,000!
Thats 16% below the 2007 price!”

Groundhog at VCI 15 Sep 2012 11:24am

Armstrong Cheese II – “Looks like they’re a wee bit late to the party.”

Above photo from Gord Goble [via e-mail, 15 Sep 2012], who writes: “Not the best photo (totally against the sun, taken from a long distance while in my car), but I found the subject pretty interesting nonetheless. Armstrong Cheese = Vancouver real estate. Looks like they’re a wee bit late to the party.
I like the other elements too – the guy walking away disgusted and another billboard that’s also all about fantasy.
Anywho, thought you’d like it. Taken at the Highway 99 – 8th Ave interchange near the border.”

[Thanks Gord, nice shot. We particularly like the fantasy and disgust components. A companion piece to subterranian’s photo near Lion’s Gate Bridge, 14 Sep 2012. Looks like these guys have the North and the South covered. – vreaa]

“When the price of a certain commodity or asset has already risen multiple times, it will decline even when inflation comes.”

“I often receive questions on why property prices shouldn’t continue to rise with inflation. The difference is in the past. When the price of a certain commodity or asset has risen multiple times, it will decline even when inflation comes.
Let’s say that inflation in the future would double the general price level in a decade. Any commodity or asset that has seen its price more than doubled already may not be a good inflation hedge. The bubble phenomenon has made many commodities and assets bad inflation hedges.”

Andy Xie, in his article ‘The Rise of Inflation Nations’,, 6 Sep 2012

For those who claim that, if we see an inflationary period, Vancouver RE would be a good hedge. – vreaa

“The Canadian housing market is poised for a deep and profound correction.”

“When we look at the Canadian housing market we realize how insane things have gotten. I’m amazed by how many of the debt rehab or home flipping shows have migrated to the Canadian market. Of course they rarely mention this thinking the American audience will mindlessly assume they are in some other US city to prime the consumption pump. Yet when we look at the metrics, Canada is poised for a deep and profound correction.”
– from ‘Canadian housing bubble goes into full mania mode – Canadian debt-to-personal income ratio near 145% while US at peak of the housing bubble was at 125%’, Doctor Housing Bubble, 5 Sep 2012

“Société Générale believes Canada still doesn’t have a handle on a frothy real estate market.”
– from ‘Housing bubble is not yet under control,’ SocGen warns Canada’, G&M, 5 Sep 2012

“Owning a home in Ontario – or anywhere in Canada, for that matter – is getting more difficult as affordability, particularly anything larger than a condo, deteriorates each year. …the steady increases are not sustainable. Eventually, this housing bubble will pop, and the economy will suffer.”
– from ‘Housing danger signs’,, 5 Sep 2012

All three articles published today. -ed.

Detached From Reality – “My cousin is a Mortgage broker in White Rock who bought a condo 2 years ago for 265K that she has now listed for 245K with no takers. But she’s sure that her 2 detached houses won’t suffer the same fate!”

“My cousin is a Mortgage broker in White Rock who claims that detached homes are motoring ahead in WR but agrees that Condo prices are down. She bought a condo 2 years ago for 265 that she has listed for 245 with no takers. But she is sure that her 2 detached houses won’t suffer the same fate! Detachment from reality or what!”
Signs of the End at VREAA 3 Sep 2012 6:39pm

The ‘Detached-Is-Different-From-Attached Premise’, commonly used to argue for never-ending strength for detached prices, often stridently expressed on these and other pages, it is, however, false.
By the trough, prices of all property types will have dropped by roughly similar percentages.
– vreaa

Financial Post Headline – ‘Vancouver home sales plunge, posting second-worst August since 1998’

“Sales activity in the country’s most expensive housing market continues to tumble but the Real Estate Board of Greater Vancouver maintains prices are not being impacted.
The board says sales of detached, attached and apartment properties were 1,649 in August, a 30.7% drop compared to the 2,378 sales in August 2011 and a 21.4% decline compared to the 2,098 sales in July 2012. It was the second worst August since 1998 for sales and 39.2% below the 10-year average.
“Home sales this summer have been lower than we’ve seen for most of the past 10 years, yet we continue to see relative stability when it comes to prices,” Eugen Klein, REBGV president said.

– from ‘Vancouver home sales plunge, posting second-worst August since 1998’, Financial Post 5 Sep 2012

“Overall MOI approaching 11 as Aug/12 is 2nd lowest sales in the last 15 years (since 1998).
Benchmark prices now flat or down YoY and down MoM (inc. detached Van West, Van East down MoM).
Only 75 sales of SFH in Van West in Aug/12: DOWN 42.3% YoY!!
Only 79 sales of SFH in Van East: DOWN 46.6% compared to Aug/11 !!!”

vanpro at RE Talks 5 Sep 2012 10:04am

“East Vancouver detached benchmark down from 863K to 859K August to Sept.
How does this help you?”

eyesthebye at RE Talks 5 Sep 2012 6:43pm

1. Noteworthy for another bearish headline in the MSM.
2. How does this “help”? Well, this is how crashes look when they start, and, depending on one’s perspective, a large decrease in Vancouver RE prices may be seen to be ‘helpful’ in many respects.
– vreaa

“Here’s my sorry tale. May 2007, broke and broken, yet still find myself buying a condo just to stay near my kids and g-kids. Bought 248K+10K cmhc (0/40/5.04%). May 2012, time to renew mortgage, owe 244.5K, panic. Sold Aug 2012, 228K.”

“An 8% price drop thus far sounds pretty accurate, from my own experience here in the burbs outside Vancouver.
Here’s my sorry tale…
◆ May 2007: broke and broken, yet still find myself buying a condo just to stay near my kids & g-kids, 248K+10K cmhc (0/40/5.04%)
◆ May 2012: time to renew mortgage, owe 244.5K, panic at being trapped in an impossible negative equity situation w shaky career, in desperation drop Garth Turner a note, blew off the (so nice, but so persistent) broker, swung into default open 6 mos @ 6.2%
◆ June 2012: tidied up, listed at 238K, added my red dot to the many for similar props @ ~245K, had about 10 showings, no offers
◆ 1st 1/2 July: no showings this month at all, decluttered like crazy, rented a storage locker & filled it, moved ‘puter desk out of LR, replaced faucets, carpet, light switches. Started buying fresh flowers weekly, learning fast how to really stage, working hard at keeping strong presence & interest on CL and KJ… and DS borrowed a wide-angle lens, took great pix
◆ 2nd half July: increased mortgage payments and started making’m weekly, dropped price to 233K, realtor hosted open house w 6 visitors, I put out good coffee & cookies, stopped shy of offering free beer for a year
◆ 1st half Aug: did up my own colour flyer, spread it around, had a handful of showings — hooray, they were repeats! Getting really good at cleaning, noticing and cleaning every smudge, repairing every little crack and crevice, spit’n polishing for >2 hrs before each showing (yes, productivity at work suffered, but they understand. My spirit’s still strong, careful to eat well, exercise, etc.)
◆ mid Aug: Realtor (who promised a commission cut) leaves on vacation w a note saying he’s back at end of month, another guys covering in his absence, and to expect an offer from last viewers this Saturday. Narry a call or text or email from anyone on yay Saturday. Sucked into a few days of despair, palpitations, nightmares, losing it…
◆ THEN: another viewing (again a repeat), followed by an offer
◆ ….and SOLD at 228K; subjects lifted on Aug 25, completion end Sep.
◆ NEXT: Selling scheit on CL, moving into a little basement rental @ $500, much closer to work, further from family, nose to grindstone to pay down closing costs debt (>20K). Learning to drive the money road, will be moving my truly pathetic little RRSPs out of GICs, starting up a TFSA, when I have enough, start looking at things like REITs and bank preferreds… strange new lingo for me, new territory, trepidation and HOPE and FAITH that things will all work out in the long run.
Cheers, you know this story; it’s just one of many idiot ones you’re hearing — worse ones to come in the not-distant future.
And to you dear newcomers, especially pathetic idiot (but not hopeless) single women like me: Listen and LEARN. Believe that there is no one perfect answer, that we’re living in somewhat unpredictable times. Be liquid enough to be able to adapt to sudden changes in our economic, political, military, and climatic (earthquakes anyone?) environment.
It’s all starting to make such perfect sense.”

aggie, at 31 Aug 2012 11:27pm [hat-tip ‘AP’]

“The agent in China was caught off guard as well – the brochure showed trees and ocean!!!”

“With regards to ‘Yu Living’ green condo at UBC south campus, my in-laws in China bought a place site unseen. They are furious now that the view overlooks a future BC Liqour store and Save on Foods. The agent in China was caught off guard as well – the brochure showed a trees and ocean!!!
They should not bought a place with so little advance research; they come from a generation that respected universities and assumed that they were buying into a quality life style for future grand kids.”

‘Not too happy’ at VCI 27 Aug 2012 6:02am

It’s easy to be happy with almost any property when prices are barrelling upwards.
When prices stagnate or start falling, owners become more critical of a property’s shortcomings.
Expect lots of stories like this in the downturn.
– vreaa

“People come to town and say it is a bubble, but what do they know?”

As Vancouver’s real estate market cools, losses on the troubled Olympic Village development could soar above $225-million unless condo king Bob Rennie quickly drops prices on unsold units that have languished on the market for too long.
That’s the view of developer and architect Michael Geller, a former NPA council candidate, who suggests flawed pricing and weak marketing is turning the fiasco on False Creek from bad to worse. …
Geller said he fears the city will be unable to sell many of the remaining condos at current prices, as Vancouver’s real estate market seems to have peaked “a year ago when there was a lot of fervour from Asian buyers.”
Geller says better to cut prices and stop losses as competing developments and resale units start to hit the market at prices below Village units, than continue to pay carrying costs for years in hopes of seeing a big real estate rebound. …
“A lot of people in the real estate community are saying this project shouldn’t be taking years to sell out. Everybody knows the market has softened over the last year, and is going to continue to soften.”

“The problem with arm chair gossip that the Michael Gellers of the world have, is they don’t sit in the board room with the decision makers and the stake holders … and we have fine-tuned the pricing all the way through,” Bob Rennie said. …
“People come to town and say it is a bubble, but what do they know?” Bob Rennie said.

– from ‘Developer Michael Geller says city should cut losses by discounting Olympic Village units; Condo marketer Bob Rennie dismisses Geller as ‘politically motivated’, The Province, 24 Aug 2012

People from out of town have… perspective.
– vreaa

“He has decided to put one of his 2 townhouses back on the market. If he loses quite a bit on it, I wouldn’t be surprised if he and his dad put the other 5 units on the market as well.”

“As the negative real estate headlines are now appearing daily, it seems that I’ve become the “go to” guy when it comes to discussing real estate with the people around me (friends or at work).
A couple of anecdotes showing that panic among sellers has already started…

#1. I told you about a good friend of mine who bought 2 townhouses, along with his dad who bought 4 of them, in Langley earlier this year. They bought these places because dad’s very good friend advised them to do so (great location (Langley???), great price, great potential for future price increase, and all the usual BS…). It turns out that the “good friend” is also a realtor and “helped” them close the deals (they didn’t even got discount on the realtor fees!!!).
After talking to me a few times, and I guess after countless of sleepless nights (my friend is currently unemployed and has not been able to get a new job in the past couple of month), he has decided to put one of his two townhouses back on the market, hopeful that he can get a good price for it. We’ll see what happens, but if he loses quite a bit of money on it, I wouldn’t be surprised if he and his dad put the other 5 units on the market as well… How many people are there like them in the lower mainland?

#2. A colleague at work (late 20s) bought a townhouse in Ladner a couple of years ago (5%/35y) with his wife. After several discussions with me, he’s decided to put his property for sale (for $10K more than they paid for…) and move to a condo in Richmond, closer to work, bigger, cheaper. I think they’ll lose quite a bit in the process, but all in all, it’s a wise decision to make and they’ll recover fast. What made them change their mind? The fact that so little of their monthly payment went to pay for the principal and so much went to pay for the interest. I could see the disgust on his face when he saw the numbers after I did a simulation for him…

I’m really surprised at people’s ignorance regarding the costs involved when buying a property and how little they know about the market in general when they decide to speculate.
Anyway, I can see the general mood is shifting. I no longer hear around me the classic “market only goes up in Vancouver” and that alone is good news!”

Makaya at VCI 21 Aug 2012 1:44pm

Lower prices will beget selling, and lower prices still.
– vreaa

Vancouver’s Remarkable Price:Rent Fundamentals – “About to sign a lease, at a 420 price:rent ratio, on 1 year new house built by Asian owner, 1800+ sf, pulled off MLS recently due to no buyer.”

“About to sign lease on 1 year new house built by Asian owner, 1800+ sf, pulled off MLS recently due to no buyer. Now about to be rented to yours truly at ~35 years Price-to-Rent ratio after talking down rent by $100/m. [Thus 420 monthlyrent:price ratio. -ed.]Landlord still has a couple houses near completion. Who knows what happens to the tenant if the landlord goes bankrupt?”
“I’m moving from a 1Br+den 670 sq ft condo at 283 months (23.6 years) rent, to (the aforementioned) 3Br newer house at 415 months (34.6 years) rent. Definitely makes more financial sense to rent than buy. Viewed a 3Br 1000sq ft newer condo few days ago at 305 months (25.4 years) rent, but passed (interesting to note that property manager is a realtor, guess managing client’s property might be what’s keeping them busy these days!)
VMD at VCI 17 Aug 2012 10:00pm and 18 Aug 2012 11:22am

An example of a ‘speculative hold’. The owner believes prices will rise in future and is holding the property not for rental yield, but for assumed future price increases.
We are of the opinion that a good percentage of this kind of inventory will be put on the market at significantly lower prices, as it becomes clear that a downward trajectory for prices is establishing itself.
And, yes, this will be disruptive to tenants. The rental market is less stable through a speculative mania in housing, and the unwinding thereof.
– vreaa

Other current sky-high Price:Rent ratio anecdotes from the same VCI thread:

“I am living in Richmond with an (assessed value) : (rent) ratio of about 285.
Strata fees and property taxes not included, why buy now?”

– Anonymous 18 Aug 2012 10:04am

“I’m renting a house in SE Burnaby. Price to rent is somewhere between 350-370 on the conservative side. My best friend is the landlord and I’ve urged him to consider selling. But he will have nothing to do with it. Already has over $1.5mil RE exposure with little other savings. Oh yeah, still looking to buy another investment property because “RE does so much better than the stock market”. Just can’t save people from themselves.”
– How much?? 18 Aug 2012 10:27am

Here is a unit that has been listed on CL for months (available now) for $2650 per month. The same units are listed for sale at $839K to $879K. So even if they get their asking rent the PR is 316 plus.”
– Anonymous 18 Aug 2012 12:36pm

“Beat you all. 4br house on Ontario. 2012 sale $1.35M. Monthly rent $2850, 2 yr lease. Price/rent 474. I love living here but wouldn’t buy at half the price.”
“Our landlord purchased the property earlier this year as an “investment”. I really can’t understand their business model. The house is an original, nicely-maintained bungalow. New paint, new dishwasher etc.
It’s not a quick flip (we have a 2-year lease) and it’s not a tear down and rebuild, which might make sense. The landlord is shelling out $3k or whatever per month to hold the property. They seem to be invested for the long term.
Of course the potential downside for us is a forced move if the house is sold. We figured that by the end of our lease the house will likely be underwater so that the landlord would not be in a position to sell. We will see how that goes.
I should add the landlord couple are very nice people and I don’t wish them any financial hardship.”

– No Money Down 18 Aug 2012 12:37pm and 19 Aug 2012 10:10am

“I have a whole house (unlike many, home owners, I have no tenants in the basement to worry about) on a nice street off The Drive, assessed at a little over 410 months’ rent.”
– N 18 Aug 2012 1:56pm

“I’m in a 3 bedroom house (we have the place to ourselves), 5 year lease for $1600/mo. House is worth $750,000 based on comps for a ratio of 468.”
– Vulture Fun 18 Aug 2012 11:34pm

“I pay $850 a month for a condo in Surrey. Same unit 2 floors up sold for $253,000 in late 2011. So a ratio of 297:1. You guys are insane with your 400′s ratios.”
– ScubaSteve 19 Aug 2012 12:39am

“I am the winner. I pay 4,400 for a 3,800 ft 6 bedroom (or is it 7?) house in west side.
Assessed close to $3.0 million. For now this is a 660 multiplier.
At the higher price points, it gets more and more un-economic to own and rent these houses out.”

– Van Coffee 19 Aug 2012 8:48am

“I’m at 489 but if I take off the huge strata fees that my landlord pays I go to 696. Strata and ppty tax eat up exactly 50% of my rent cheque. Not a lot left to pay the mortgage and occasional special assessment.
BTW…for all you haters who think we renters are basement dwellers who are broke, I’m writing this poolside in Osoyooss. Thanks landlord!”

– McLovin 19 Aug 2012 11:01am

“For the record – we are in a $1.5M Condo. Strata and taxes are over 1,000 per month and the rent is 3,500 gross (2,500 net of landlord costs). This give you 600.
Property value is no more than the day we moved in.
This represents a $200,000 plus savings and building of equity by renting (we built equity by renting – – – sounds strange).”

– ZRH2YVR 19 Aug 2012 4:52pm

Everything Redolent Of RE Prices – “You spend $1-million on a house, you don’t want it to smell like fish”

“You spend $1-million on a house, you don’t want it to smell like fish,” East Vancouver resident Lenore Newman told Postmedia News this week.

As a late-summer heat wave bathes Vancouver with the stench of rotting compost and chicken parts, municipal officials have set to work drafting plans to rein in the city’s rankest offenders. …
“It’s kind of a chickeny, fishy, boiled-up stink,” said a Wednesday caller to Vancouver’s CKNW radio. “You don’t want to be at home at all,” East Vancouver resident Renata de la Parra told a CTV camera crew. Previous accounts have identified the smell as anything from “hideous” to “revolting” to “a combination between vomit and diarrhea.”
Despite the breakdown, West Coast Reduction’s signature stench is nothing new. As the region’s primary animal waste processing facility, it brings in truckloads of animal parts and used grease every day to cook them into tallow and protein meals. Notoriously, the plant is also where serial killer Robert Pickton admitted to disposing of barrels containing the remains of his victims.
The plant began spewing foul odours onto adjacent working-class homes almost immediately after its 1964 opening. At the time, the plant only generated a paltry 25 complaints a year.
Things have not gotten worse. It’s just a matter that expectations have changed
By 2007, residents in the newly gentrified district were picking up the phone almost twice a day to complain, urged on by “stop the stink” posters pinned up on utility poles. “You spend $1-million on a house, you don’t want it to smell like fish,” East Vancouver resident Lenore Newman told Postmedia News this week.
“Things have not gotten worse,” Ray Robb, Metro Vancouver’s manager of regulation and enforcement, told Vancouver radio on Wednesday. “It’s just a matter that expectations have changed.”

– from ‘Can Vancouver’s anti-stink bylaw pass the smell test?’, National Post, 16 Aug 2012

In most cities, you’d be complaining of the smell.
In Vancouver, you complain of the smell:RE_price ratio.
– vreaa

As oneangryslav2 [at VCI 17 Aug 2012 3:17pm] points out, the Post story is a little misleading. Lenore Newman is both an East Van resident and a professor at the University of the Fraser Valley, a ‘researcher in food security and the environment’. One would reasonably assume from the article above that she was a house owner, but she herself posted the following [Apophenia, The Province, 10:51AM 15 Aug 2012]:
“…I should clarify that they edited what I said. I don’t own a house there, I rent, but I commented that the high housing prices are likely why people are complaining more. But if we get down to it, the plant is the newcomer; Commercial Drive is one of Vancouver’s oldest neighbourhoods, and the rendering plant arrived in 1960 during a period when the area was in decline and big business ruled the roost. If you read my blog, Sand and Feathers, you will see that I’m not actually against the plant, though it is becoming clear that they need to bring their technology up to modern standards. And in case people are wondering, I wouldn’t buy a house in East Van, or Vancouver in general; too expensive for what you get. But I understand why people who work hard to buy into the market expect a 2012 level of environmental protection.”

“I wouldn’t buy a house in East Van, or Vancouver in general; too expensive for what you get.”
Bravo, Lenore; agreed.
Another example of the increasing tendency for sensible RE-bearish sentiment to be stated plainly and publicly.
– vreaa

On the bracing subject of odours, the following links regarding air quality around a well known condo development (Marine Gateway) near the ‘Vancouver South Transfer Station’ (‘Dump’) forwarded to us by Aldus Huxtable:
1. ‘Addressing Waste Transfer Station Odour’, ,
2. ‘Dispersion Modelling of Vancouver South Transfer Station Odour Emissions’, RWDI, Dec 2009

Where Are We Now? – jesse’s Thoughts on the Vancouver Market

“Most years since 2005 have seen September inventory at least as high as Octobers but not by much. This year looks to be on balance a hybrid 2008-2010 scenario: inventory is off its highs but still elevated, sales are lackluster, and prices are starting to drop, but nothing as of yet that as yet looks as acute as 2008. So what can be expected for the rest of this year and next for sales and inventory?

We can first compare to 2008. 2008 saw Vancouver get hit by a freight train, most likely in part because lending was becoming difficult, with higher mortgage rates than today’s, but early 2009 saw such a dramatic decrease in price-payment ratios there was an immediate response to housing activity, in part buoyed by robust population growth. Both these shots in the arm are for the most part no longer present.

Nonetheless we are still in a mode where low interest rates are allowing some households to reduce their payments as their pre-2009 financing terms expire, and this tailwind will be mostly spent in a year or so (and as of now it’s mostly spent already). Rents are increasing and have been on the tight side in the past 2 years or so.

A slowdown in China’s investment spending has likely led to less capital flows being invested in Canadian real estate this year compared to 2009-2011. And this is not only because of so-called “HAM” but also indirectly through a recent boom in hard commodity prices that has subsided somewhat this year — look at how BC-headquartered resource company equities have been doing since 2009.

The Chinese central government has already approved a significant stimulus spend to come into place in Q4 of this year. That will lead to additional economic activity but this is unlikely to have the same impact as previous stimulus efforts as much of the spend will go into servicing existing outstanding nonperforming loans. I would expect some uptick in capital flows into Canada in 2013 but nothing like was seen in the past couple of years and will likely be short-lived.

Mortgage rate spreads have increased for a variety of reasons since 2011, which has partially offset falling interest rates seen earlier this year. Going forward we can expect further crimps on lending through increased spreads and increased loan rejections for Vancouver-area mortgages.

Population growth has continued to slow, in part due to unemployment still being elevated. This looks to be a cyclical trend that is highly dependent upon residential construction activity. It is the nature of BC’s economy that construction boom leads to population growth but as completions mount, population growth subsides, as it is doing now. This cycle looks to be on roughly a 10 year period and it looks 2012 and 2013 lie in a downdraft.

Units under construction are elevated relative to population growth and still appear to be increasing. As completions mount later on this year and into 2013 this will provide an additional headwind for the housing market.

Are there factors that could produce a renewed bout of strength? Well some navel gazing is in order — I for one did not anticipate the veracity of the stimulus from governments and how strongly they affected house prices. I am, now, trying to keep an open mind as to what could come to the rescue this time round, though any insight into what this might plausibly be would be greatly appreciated. A markedly improved US economy in 2013 would be a positive for Canada as a whole.

Aside any additional strength from factors not considered above, I see continued elevated inventory and lower sales continuing through the rest of 2012 and likely through 2013: we need only look at the early part of this century to see the effects of lower population growth. I think the months of inventory levels will be enough to put a downwards pressure on prices as measured on a year-over-year basis. This will not mean that prices are monotonically going to fall — seasonality sees prices buoyed in the spring for a variety of reasons — but any bouts of strength are likely to be muted before renewing their descent in the second half of the year. How much? I’ll say -5% by the end of 2012 and a further -10% by the end of 2013. And that is only a guess based on what I can see based on the factors above. If factors I considered above combine in some way to exacerbate effects, or if some real sh!t starts going down in, say, Asia, things could get worse.”

jesse (YVRHousingAnalyst) at VCI 17 Aug 2012

jesse’s price drop estimates are conservative but we reckon they’re sensible: they’re the high probability outcomes for the next two years.
We’d add that at any point buying could slow more rapidly, via the effect of sentiment change. If it suddenly becomes ‘common knowledge’ that prices are dropping (this is not yet the case), buyers would lose the desire to overstretch to buy, and the market could freeze up.
– vreaa

Market ‘Breather’ or ‘Last Gasp’? – Vancouver July Residential Sales Dollar Volume Down 28% YOY

JULY 2012 (compared with July 2011):
Vancouver Residential Unit Sales were down 18% (2,135 cf 2,614)
Vancouver Residential Sales Dollar Volume was down 28.4% ($1.43B cf $1.99B)
Vancouver Residential Average Price down 7.4% ($738K cf $797K)
BC Residential Average Price down 12.2%

– from ‘Home Sales Decline in Vancouver, but Surge in Rest of BC’, BCREA press release, 14 Aug 2012

“Some potential homebuyers in Vancouver are taking a breather over the summer months”
– Cameron Muir, BCREA Chief Economist, in the press release cited above

Sales volume leads prices. We anticipate more price weakness ahead.
– vreaa

– chart from CREA, via Ben Rabidoux

Failed Land Flip In East Van – “This is getting boring – I could post stories like this all day.”

“Failed Flip
3129 E. 6th Ave, Vancouver
Sold – August 5, 2011 $715,000
Attempted sell as a pre-sale new-build house??? $1,068,000
Listed and cancelled multiple times
Finally listed the original tear-down – Abandoned the build – June 20, 2012 at $759,800
Sold for $700,000
With all those transaction and holding costs – this has to be a $50,000 loss and no success on the build.
Given the builder that owned it – it is probably a good thing that it never got built because it would have probably been a P.O.S.
This is getting boring – I could post stories like this all day. Richmond is going down!!!!!
Also – Most of the West Side sales (other than new) are going for 10% below assessed.”

ZRH2YVR at VCI 14 Aug 2012 10:00am

“Now they want to sell and buy a bigger place closer to her job. They will be down tens of thousands.”

“Know of a couple purchased 1 one bedroom in Vancouver for $430s.
This was back in 2010 and they were just getting married at the time.
I know the wife and told her I didn’t think it was a good idea since they didn’t even have a downpayment.
They were so worried about “buy now or be priced out forever”, went to his family for a loan for the 20%.
Fast forward to this week. Couple now has a 1yr old and the place is feeling too cramped. On top of that her job situation is changing and she needs to work in Burnaby.
Now they want to sell and buy a bigger place closer to her job.
They will list the unit for $419K to start.
They’ll be lucky to get $400 and minus the transaction costs, will be down tens of thousands.”

kansai92 at VCI 9 Aug 2012 12:08pm

“If I decided to sell, no way am I taking a loss, regardless of what they say the market is doing. The market may cool, but hopefully housing prices won’t go lower than what the home is worth in today’s market.”

“We bought our house 2 years ago. We put 25,000 over asking just to be able to get the house since there were bidding wars going on in the area. If I decided to sell, no way am I taking a loss, regardless of what they say the market is doing. The market may cool, but hopefully housing prices won’t go lower than what the home is worth in today’s market.”
dorri, comment at 8 Aug 2012 2:57pm

“The market may cool, but hopefully housing prices won’t go lower than what the home is worth in today’s market.” – We’d like to see a logician dissect that statement.
Many shadow sellers in this position will end up selling their properties at much lower prices, in psychological distress.
– vreaa

Ben Rabidoux Reviews the Status and Implications of the Vancouver RE Market

Ben Rabidoux, at his website The Economic Analyst, has recently reviewed the Vancouver RE market in an article entitled ‘Vancouver housing in full correction mode: Implications for Canadian banks’ [3 Aug 2012].
We earlier headlined a single paragraph from Ben’s article (comparing Vancouver and the US with regard to $1 Million homes), but we’d also emphasize that the entire article is worth the read. Check it out.
– vreaa

“It was more fun as a contrarian fighting a uphill battle in early 2011”; “I don’t even talk about housing anymore with the friends that have bought”; “Where have all the Bulls gone?”

“I don’t even talk about housing anymore with some friends. These are the friends that have bought 800k to 1 million dollar homes and are in their early thirties. Being close friends, it is disconcerting how badly they will be hurt when this bubble falls apart. So I don’t talk about it. Tried to warn them though.”
900kCrackHouse at VCI 1 Aug 2012 10:45am

“For me, it’s boring to the point where I don’t feel very motivated to post. As I said a few days ago, it was more fun as a contrarian fighting a uphill battle in early 2011. Now even the bulls are adapting their stance to “we all know it’s falling, but I guarantee it won’t fall too much for too long, sellers should wait it out” (Their stance used to be “UPUPUP to the Moon!” lol)
I used to get a good share of jeers and typical bullish trash talk, but since a few months ago the resistance almost completely stopped.
It’s not that fun for a bloodthirsty warrior to walk onto the battlefield finding most of the enemies already deserted or defected.”

VMD at VCI 1 Aug 2012 11:11am

“It all seems so easy. We are no longer fighting a rear guard action in Dunkirk we are 200 miles from Berlin with no Germans in sight.
Where have all the Bulls gone? I guess they are finally realizing that we can be wrong for a very long time but we only need to be right once.”

McLovin at VCI 1 Aug 2012 9:06pm

We’ve also noticed the sudden silence of the bulls.
It can only mean that they are experiencing various aspects of the slowing.
– vreaa