Category Archives: 16. Missed The Boat?

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

Overheard At A Cafe On South Granville Strip – “We didn’t get out like them. They got out at the top of the market. Oh well. We’re still happy.”

“Last weekend we stopped in at a cafe in S. Granville near all the hot high-end shops and I overhead these two women talking about their condo. Of the things overheard was…
: “We didn’t get out like the [Name]‘s. They got out at the top of the market. Oh well. We’re still happy.”
: “We did the roof, we did [something else] so there’s only a few more major jobs to do..”
: “I guess that’s the best thing you can do when your condo goes down in value is just make sure that it’s well maintained and all the building work is done. That way it will pick up value in the long run.”
And then tons of bitching about everyone else on the strata or who lives behind a door. Clearly not much love in this building wherever it is.”

mac at VCI November 20th, 2012 at 7:00 pm

Wake Me Up At 50%-Off – “Buyer’s market, home prices fall? When homes go up a million % and then come down 3.8%…that’s not much of a bargain.”

“Vancouver home sales and prices were lower last month as Canada’s third-largest city continued its role as one the nation’s hardest-hit centres in an ongoing housing market slump.” …
“While Canada’s market continues to look balanced overall, there are clear pockets of strength and weakness,” BMO Capital economist Robert Kavcic observes in his analysis of the CREA results. The BMO report described Vancouver, Victoria, Regina and Saskatoon as buyers’ markets — where supply markedly outstrips demand and dampens asking prices.”

‘Vancouver a buyer’s market as home sales, prices fall’, The Province, 16 Nov 2012

“Buyers market, home prices fall? When homes go up a million % and then come down 3.8%…that’s not much of a bargain.”
‘Tom Anderson’, commenting below The Province article, 16 Nov 2012

We’re with Tom on this one.
These ‘Buyer’s market’ cries are recurrent, closely akin to premature bottom calling but not quite the same thing.
Similarly, charts showing a ‘Buyer’s market’ when inventory rises against sales are misdirected and mislabelled (see example below). ‘Months of Inventory’ (MOI) and the ‘Ratio of Sales to Active Listings’ are ways of expressing inventory in terms of sales. High inventory and relatively weak sales are indicators of likely future price direction, but such circumstances don’t say anything about how market prices compared to fundamental value. MOI can “go to the wall” for a long period before a market bottoms. Years, actually.
To clarify: A true ‘Buyer’s market’ emerges when a buyer gets good, or at the very least reasonable, value for his or her money.
– vreaa


– Inventory:Sales Ratio Abuse, as evidenced in this chart from Fraser Valley RE Board data, posted by local realtor ‘silverman’ at RE Talks, 3 Oct 2012

Expect to see the term ‘Buyer’s market’ a lot in coming years:

‘It’s a buyer’s market for greater Vancouver’, The Province, 2 Oct 2012

‘Vancouver sales hit 10-year low, real estate board declares a buyer’s market’, The Vancouver Sun, 4 July 2012

Vancouver Sun Calls Current SFH Prices “Rock Bottom”


$598,000: 3023 E 1ST AV Vancouver


$669,900: 5638 ABERDEEN ST Vancouver.


$638,000: 4848 KILLARNEY ST Vancouver.

– from the ’20 Vancouver homes at rock-bottom prices’, Vancouver Sun, 14 Nov 2012[hat-tip JoeQ, who adds “Given the house quality to price ratio in these photos, methinks we are quite far from “rock bottom”. (We’d agree. Prices have barely commenced their fall. -ed.)]

“There is a place in Lynn Valley for sale, asking price 860k 2 months ago. My friends made an offer for 760k, less than assessment. It was rejected back then, but seller appeared last week and said that they are now ready to sell for 760k. My friends took a look again and decided that they don’t like it anymore.”

“My friends are looking for a house in North Van and they’re lowballing all the time. There is a place in Lynn Valley for sale and asking price was 860k 2 months ago. They made an offer for 760k less than assessment. It was rejected back then, but seller appeared last week and said that they are ready to sell for 760k now. My friends took a look again and decided that they don’t like it anymore. So, 100k discount in 2 months… There are motivated sellers out there!”
Aleksey at VCI November 13th, 2012 at 5:44 pm.

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

Sellers Offer Incentives – Cars, Cash, ‘Price Drop Guarantees’

“I drove by a new development in North Van over the weekend called the Kimpton. They’re offering crash insurance – a $100k price-drop guarantee.”
crabman at VCI 5 Nov 2012 6:20am [This story also headlined at VCI 7 Nov 2012. Visiting the Kimpton website, one is rewarded with walls of muzak, but no ‘guarantee’ info. Fortunately, ‘Not much of a name’ at VCI has done some work on this: “Just called the Kimpton’s sales office to get clarification on how the price drop guarantee works. The $100,000 gets paid into trust and at the end of the two year period, an appraiser is brought in to value the property. If the value drops (ya, like it won’t) you get refunded that amount by up to $100,000. Oh, and apparently today is the last day for this promotion and guess what…there will be a “blowout sale” this weekend to move the final five units. I was told that five sold last week so I should hurry and buy. Funny how there were only four units left prior to putting up the price drop guarantee on the sign.” -ed.]

“Just received an e-mail from Bosa (this is the new building in false creek) and seems like all the developers started to promote cash credits or other price guaranties. This is what it says :
$5,000 credit on all One Bedroom Homes
$7,500 credit on all Two Bedroom Homes
$10,000 credit on all Larger Two Bedroom Homes
They started selling in May but apparently must be having a hard time with current pricing so giving some discounts maybe will push a bit faster.”

piklishi at VCI 7 Nov 2012 7:07am

“There are other schemes too. Care to help me formulate a list? Here are some to start:
– “Fire sale” prices, a giant weekend sales push well below market price
– 2 for 1 deals (buy a condo, and get another condo in Ohio for free)
– Developer pays your mortgage and strata fees for the first year”

jesse (YVRHousingAnalyst) at VCI 7 Nov 2012 9:56am

And, of course, let’s not forget:
“A brand new 2012 FIAT 500 Pop is a present to you if you purchase 2575 W7th Ave!”
Philip Chan, realtor selling a Kits townhome he owns, Oct 2012

“Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse. And buyers are saying ‘It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”

“While the national housing market appears to be retreating in an orderly way, the data show pockets of sharper slowdown, particularly in the western Canadian cities of Vancouver and Victoria, which once led the hot housing market.
“Personally I don’t see any revitalization of the market in the near future,” said Victoria real estate agent Tony Joe, noting that investors have left the market.
Residential sales fell 8.3% in September from a year earlier in Victoria and were down 32.5% in Vancouver, according to the local real estate boards. Prices were down 2.6% in Victoria and 1.4% in Vancouver on the year, according to the Teranet report.
The price declines are far smaller than the plunge that hit U.S. homeowners during the crash. Still, buyers are hesitant, wondering if they should wait until next year to purchase.
“Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse,” said Joe. “And of course buyers are saying ’It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”’
Joe, a 21-year industry veteran, does not foresee such a drastic decline, simply because Canadian lenders have been prudent and interest rates are not going up soon. Sellers will pull houses off the market rather than accept a price drop.”

– from ‘Canada braces as housing slowdown takes hold’, National Post, 5 Nov 2012

“My uncle, a retired nurse, bought a 2br condo in Coquitlam last year and is now renting it out for $1500 a month, which will barely cover his mortgage plus fees. He is convinced that he can sell it for a profit at anytime. He knows nothing about real investments.”

“Talking with my dad the other day. He speaks a lot to my uncle, a retired nurse who really is clueless about a lot of things. He bought a 2br condo in Coquitlam last year and is now renting it out for 1500 a month, which will barely cover his mortgage plus fees.. He is convinced that he can sell it for a profit at anytime. Wonder if he can make any profit on it. Meanwhile, my dad says my uncle knows nothing about real investments (my portfolio is up 40% this year not including dividends that are reinvested) and is just buying into this bs about how real estate never goes down. There are still idiots out there.”
Dave at VREAA 18 Oct 2012 at 7:06pm

A large percentage of the local population have been led by recent experience to believe that RE is the only asset class that is safe and performs well. Contrarians know that this is a reason for caution.
– vreaa

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

Afterthought:
Crackshackberry?

“It’s funny how quickly things change. Just a year ago, I was ridiculed during a conversation for just mentioning that maybe the RE market was over-inflated.”

“One of my friends is currently on a 1-year long maternity leave. Hubby is a realtor and has not closed a deal for quite some time now (and being very frustrated about it). I don’t know if this is because they can no longer pay the mortgage or because he sees the writing on the wall (probably a bit of both), but they’ve just put their 2-br-$800K condo up for sale (good luck with that one in this market!).
It’s funny how quickly things change. Just a year ago, I was ridiculed during a conversation for just mentioning that maybe the RE market was over-inflated, that maybe a correction might eventually occur, and that flipping a property at this point might not be a good idea. Oh well, I may not sound so stupid anymore, I guess…”

Makaya at VCI 16 Oct 2012 2:47pm

Awareness of the bubble is going mainstream.
– vreaa

“One of our best friends thought her house would sell at over $1.2M. She was really pissed when the realtor told her bluntly that it would not sell for over $999K, as nothing was moving over $1M, and that at under $1M it would take 6 months if she was lucky.”

“Interesting comments from one of our best friends today. They had a realtor “evaluate” their house for sale. Looks like my constant bubble talk is “perhaps” getting through? You guys may remember that they were featured in my post a while back [VREAA 8 May 2012], about the wine soaked Calgary dinner party I attended at their place a few months ago, where RE was the topic of discussion over cocktails.
She told my wife today that she thought her house would come in at over $1.2MM. She was really pissed when the realtor told her bluntly that it would not sell for over $999K, as nothing was moving over $1MM, and that at under $1MM it would take 6 months if she was lucky. Now she doesn’t want to list as the market “will come back” and RE only goes up. Well, they only owe about $200K. And in 5 years from now it will be paid for, but probably only worth $500K.
They are my dear friends and a hit of that magnitude would not dent their net worth by >10%. But still, “a fool and their money”…”.

Carioca Canuck, at VREAA, 12 Oct 2012 6:47pm

REW’s ‘House Hunter Chronicles’ – “I had wanted my dream house right away. I wanted to skip the steps. But now I’m thinking short-term house and long-term house.”

A serialized story called ‘House Hunter Chronicles’ was posted through the summer at the website REW.ca. Here it is, for the record:

“Follow local house hunters as they experience the highs and lows of buying a home in the intense Vancouver real estate market. Elaine L. is the first to share her search with us. We’ll check in with her every couple of weeks to see how it’s going.”

Elaine L
Family size: Two — a single woman and her mom
Currently: Own a condo
Budget: $800,000 – $ 1.1 million
Neighbourhoods Collingwood, Fraserview, Renfrew, Renfrew Heights, Killarney
Looking for 2000 – 2500 sq. ft. newer detached house with rental suite down, move-in condition

1. Meet Elaine L. (June 16, 2012)

Elaine L. is only in her twenties, but she’s already a veteran in the Vancouver real estate game. She and her mom, Patty, sold the first condo they lived in back in 2004. They rented for a while, thinking Vancouver house prices would go down, but when that didn’t happen they bought their current condo in 2008.

Since then their condo has appreciated by $40,000, and its 880 square feet are starting to feel a bit cramped for the two of them and their dog. When one friend bought a rental property and another bought a house, Elaine was inspired to start house hunting again.

So she’s contacted the same Realtor they worked with before and asked her financial advisor what kind of price she can afford, and the house hunting is on! She hasn’t put her current home on the market yet, and there’s no deadline for buying, but she’s started doing a lot of online research and visiting open houses.

Elaine and Patty would like to stay in southeast Vancouver, where they are now. Finding the right neighbourhood involves researching crime and average income statistics and using Google Maps Live View to check out the look and feel.

Her ideal house is at least 2000 square feet with a mortgage helper in the basement, living area on the main floor and bedrooms upstairs. Elaine says that it’s mostly older houses that offer that layout, and they tend to be out of her price range. But more affordable Vancouver specials, both the classic ones and the newer versions, have suites on the main floor and living and sleeping areas up, all on the same floor.

Chinese traditions also play a part in her search for a good house; for instance, if you need to go down a couple of stairs to get to a house, it’s off the list.

Is she looking for a fixer-upper? Definitely not. “I can build IKEA furniture — that’s about it.”

Elaine credits her friends with keeping her on course. “My emotions get the best of me sometimes,” she says. “I look at a house and I don’t really like it, but I talk myself into it, and then I have to get my friends to talk me out of it.”

2. Elaine Loves and Lists (June 22, 2012)

Follow local house hunters as they experience the highs and lows of buying a home in the intense Vancouver real estate market. Elaine L. is the first to share her search with us. We’ll check in with her every couple of weeks to see how it’s going.

It was a bit like falling in love. The house ticked all of Elaine’s boxes: 2300 square feet, 3 bedrooms on the top floor with the kitchen and living area downstairs, and a 2 bedroom rental suite on the same floor that would cover $900 of the mortgage. It was built just last year, so it’s like new but without the HST. Her mom, Patty, liked it too.

Perfect.

But alas, her love was unrequited. When her Realtor inquired about putting in an offer subject to the sale of the condo the seller said, Don’t bother. “No one wants to sell to you if they have to wait for you,” Elaine says.

That’s why every day last week Elaine and her mom were hard at work — lugging a heavy elliptical trainer down to the storage locker, taking boxes of bric a brac over to a sister’s garage and removing all traces of Elaine’s Hello Kitty collection. They’re staging their condo, and by next week they hope to be able to get their Realtor in to take pictures and put the condo up for sale.

“I don’t want to go through that again,” says Elaine about having her subject-to-sale offer rejected. “We have some places where we can stay for a few months if we don’t find anything. And when we sell we’ll try to set a really late possession date.”

Meanwhile, “It’s a great feeling to be tidy. We’ve decluttered and depersonalized it to get an open, contemporary look. We had the floors redone with a dark laminate and it really opened up the space. We’ve cleaned all the walls. The place looks fantastic.

“A friend warned me not to fall in love with it and decide not to sell. But I want to live in a house.”

The house she fell in love with — actually a half-duplex — has been sold. But the good thing is that there are lots of similar places in the same neighbourhood, so Elaine’s optimistic that something with the same appealing layout will come up… after she’s sold the condo.

“It’s around $900,000, and at first I thought it was expensive for a half-duplex, but it feels just like a detached house. The two halves barely share a wall. Only the rental suites connect. I haven’t seen anything like it in Vancouver.”

Though Elaine was looking to buy a house in Vancouver, this place is in Burnaby, which hadn’t been on Elaine’s radar until a friend alerted her to the listing. It turns out, it’s just across the Burnaby border, only two minutes from where she is now, so she’d still be close to friends and family.

Of course, that’s if all this works out.

The upheaval is stressful. Elaine says “I’m always worrying. What if we sell this and don’t have another place to live? What if the market crashes and my house ends up not being worth what I paid for it?

“But then I remind myself that I’m not biting off more than I can chew. I’ll be living comfortably, even if the market crashes. I always plan for the worst case scenario, so I’m planning everything as if the suite isn’t rented. We’ll be okay.”

3: Keep it Clean (July 18, 2012)

Now comes the hard part: living in a home that has to be clean, shiny and spare at all times.

“Having to clean up after myself all the time is making me want to get it over with,” says House Hunter Elaine L. “I want someone to buy it so I can leave”

The condo she and her mom share has now been on the market since the beginning of July. After hauling out everything that wasn’t nailed down, and getting new flooring installed, she’s thrilled at how great the place looks. But it has to be kept that way.

“I gave my dog a haircut!”
The dog was the worst culprit in the keep-it-clean campaign. Elaine’s mom, Patty, had been spending part of every day vacuuming up the dog hairs that showed up particularly well against the dark wood of the floors — one of the new selling features of the condo.

A canine cropping took care of that problem. Now it’s a matter of always putting things away, dusting and doing the dishes.

All that upkeep is worth it. Their Realtor says that it shows really well, and he’s had favourable comments from people viewing it. Considering there are three other condos for sale in the same building, that’s hugely important. Elaine and Patty indulged in a little spying, going to the open house at one of the other condos to check out the competition, and they’re satisfied that their efforts have given them the upper hand.

The other side of feng shui
They’ve even had some serious interest. A mom and daughter came to look at the condo twice, but they rejected it because the mom said that the ensuite bathroom door facing the bed was bad feng shui. Elaine and Patty are Chinese too, and they have a few criteria based on feng shui principles. But not that one.

“The bed can be moved.” says Elaine. “We’ve lived here for four years and haven’t had bad luck!”

As her Realtor — and every Realtor the world over — says: It’s just a matter of finding the right person.” There are three showings coming up; three chances to find that right person. And with all those prospective buyers coming through her home, Elaine’s decided not to spend the week constantly keeping everything spotless. She’s going to Vegas instead. She’s got a phone with a US number, so anything that needs to be handled can be handled from there.

Let’s hope Elaine and Patty’s luck holds.

4: Elaine’s Las Vegas Luck (July 27, 2012)

Last time we talked to House Hunter Elaine L., she was off to Vegas with a group of friends. She was fed up with having to keep her condo spotless and ready to show at a moment’s notice, so she figured she couldn’t make a mess if she wasn’t there. Problem solved.

So there’s Elaine enjoying a delicious lunch in Sin City when her phone rings. It’s her Realtor. He’s got an offer. Can she look at it now?

They talk a bit and work out a counter offer and the Realtor sends it off. Lunch is interrupted several more times as offers and counter-offers fly back and forth. Finally, when Elaine is in the back of a cab on the way to an outlet mall, the Realtor calls with the final offer. He scans it to her phone and Elaine signs it, gets it witnessed, returns and continues to the mall… with considerably more to spend than she had when she set out.

Jackpot!

Digital transactions like this are more and more common with the advent of wi-fi, tablets and smartphones. So far there’s never been a problem. Digital signatures are informally accepted as valid, although the real estate industry has not yet had occasion to test them in court. The Realtor also took the contract to Elaine’s co-owner — her mom, Patty — for an ink-on-paper signature.

The condo was on the market for exactly two weeks before the offer, with one open house and 10 private viewings. The buyers saw it in one of the private viewings. The time on market is bang-on for Elaine’s Collingwood neighbourhood. Since May, the majority of comparable condos there have sold within 18 days.

Elaine says the condo had numerous advantages that helped it sell so quickly. First was all the work she and Patty put into it.

“We took so much time to clean it up perfectly,” she says. “We got rid of every trace of our everyday life. It was completely staged. I don’t think other people go to that extreme. We saw other places, and they weren’t as perfect as ours.”

It was also listed in the mid-400,000s — a price that appealed to people getting into the market. Elaine says she’s seen more expensive condos sit ounsold. “A friend of mine has a sub-penthouse that’s selling for $150,000 more than mine, and she’s had it on the market for a year now.”

On top of that, the location is perfect: it’s right by the SkyTrain and close to an elementary school.

The couple who bought have two young daughters. At 880 square feet, the condo will be a tight fit, but in the Vancouver market, condos have replaced fixer-upper detached houses as the first rung on the property ladder for first-time buyers and new Canadians.

The buyers’ bank sent an appraiser, the home inspector did a report and the subjects were removed a little over three weeks after listing. The completion date is August 23. That’s too soon to find a house and move in, so Elaine and Patty are staying with Elaine’s sister for a bit.

“It’s nice not to have a set date for leaving. We can look around until we find the right place. But it’s a motivation as well. We don’t want to impose on my sister for too long.”

Elaine’s excited and a little apprehensive now that the deed is done. “It’s kinda scary. I don’t know where I’m going to live, and I’m going to be taking on a big mortgage. Plus, I’m worried that the market might go down and I will have paid more than the house can sell for,” she says.

But, “Mom believes that in the Vancouver market things won’t go down that much unless something big happens.” So even if the market starts to dive, that’s not going to keep them from looking… or buying

The search is on in earnest now.

5: Know the Market (August 16, 2012)

“I had wanted my dream house right away. I wanted to skip the steps. But now I’m thinking short-term house and long-term house.”

Elaine L. is finding the search to buy a house in Vancouver more frustrating than she had expected, now that she’s in serious search mode. She and her mom, Patty, are camped out at her sister’s place, and they don’t want to be an imposition for too long. On top of that, Elaine was recently promoted at work so her days are super busy. Her evenings are almost entirely occupied with searching online for new listings and going out on viewings or drive-bys.

She’s no longer thinking about a duplex. “It doesn’t feel like the responsible thing to do. I think it’s better to buy a whole piece of land because that’s where the money is, that’s where the resale value is. It just seems more secure.”

But even though she can buy a house up to $1.1 million, she’s finding it tough to find her dream home in Canada’s priciest real estate market.

There was one perfect house made even better by the fact that it was priced in the $840s. She found the listing as soon as it was posted and jumped on it, but despite her quick action, the house was sold before she got to it.

Then there was new Vancouver special that looked more like a heritage house. Not only did it have a unique look, it had the layout she’s after. But by the time she found it, the owners had taken it off the market.

The capper was the three-storey house with an above-grade basement suite downstairs. It was quite new and priced at $799,000. It looked like a steal… until she found out it was a former grow-op.

Lesson learned.

If it sounds too good to be true, it is, and for Elaine that includes any house priced under $800,000. With all the research she does, she knows house prices in her chosen neighbourhoods inside out, and she’s learned to distrust any listing with a price that seems too low for the area.

So the dream house is just going to have to stay in the future. “For now we’re going to look for one with lots of rental income and save up for the one we ultimately want,” she says.

The decision has lightened her load at a highly stressful time. It’s broadened the range of acceptable houses. She can look at the new Vancouver specials that she used to reject because they always had a rental suite on the main floor, and she wanted the main floor and upstairs for herself.

Now that first-floor rental suite is a desirable feature. The income from that will help her get to her ultimate goal, to buy a house in Vancouver that’s exactly what she wants.

[As of 6 Oct 2012, no apparent further updates. -ed]

The final chapter sounds like a dangerous recipe: a rationale for overpaying for a property that is very suboptimal for the owner (a house with the (necessary) rental suite on the main floor!). If Elaine takes the plunge, she could be regretting the decision for a decade or two. – vreaa

“Just Sign Here.”

These images from our indomitable correspondent, Nemesis, who also writes:
“They’re such strange cultural artifacts – the MassProduced “ManufacturedHomes” [and by extension the identikit developments marketed as “communities” comprised entirely of these structures].
These examples are to be found on the grounds of EagleHomes.ca PresentationCentre… adjacent to the TransCanada Highway on the outskirts of SalmonArm.
There’s something vaguely disturbing about the whole tableau…. the “WhyRent” signage… as though, tacitly, we could expand upon the marketing enticement, “Home & Land Packages”… to read, “Home, Land & Family Packages!”…
Id est – it’s all right here… just waiting inside… for you.
Boxed. ShrinkWrapped. BarCoded.
The husband/wife, child, job, ‘life’ that you always wanted but which, until today, had somehow eluded you…
“Just sign here.”

For the uninitiated, Nemesis is responsible for the indispensable ‘Postcards From The Blast Radius‘ photo essay/poems. Since his last post, the periphery has marched further towards the centre.
Thanks, Nem!
(We highly recommend that you click on the photos to view them in large format glory.)
– vreaa

[Images Ⓒ​2011 ‘Nemesis’ – All Rights Reserved]

Builders Could Not Possibly Have Timed This Any Worse – “As I’m writing this, I can hear the hammers on some of the seven new luxury single-family houses being built within *one block* of my own West Side rental.”

“As I’m writing this, I can hear the hammers on some of the seven new luxury single-family houses being built within *one block* of my own West Side rental. Indeed, there are not only For Sale signs on literally every block near me, there are often multiple houses/apartments for sale. Furthermore, there seems to be at least one SFH going up on nearly every block near me, sometimes more.

Builders still don’t seem to be getting the message about the housing market slowing down. After I read the Mayor’s excited comments a few weeks ago about a billion dollars’ worth of new building permits, I wrote to someone on City Council saying that what was being built near me, just as one example, didn’t look like it was selling well at all.

It’s the same old story: formerly affordable (some of it admittedly not in good shape) housing going down in favour of new builds that are way out of reach (statistically even!) for Vancouver incomes. I predict the West Side will have tumbleweeds rolling through it by next summer.”

epte at VREAA 13 Sep 2012 9:28am

ADDENDUM:

Ben Rabidoux, at ‘The Economic Analyst’ posted a ‘quick note’ [3 Oct 2012] that documents Vancouver’s current sales weakness, making the excellent point that the weakness was present in Vancouver sales by April 2012, but that new mortgage rules were instituted in July – thus attempts by commentators to blame the low sales on the new rules are just dead wrong. Ben’s post also contains the following chart, which nicely complements epte’s anecdote above:

As Ben says: “High existing inventory and weak sales will only be compounded by rising new unit completions set to begin in early 2013. Builders could not possibly have timed this any worse.”

In most markets, insiders are a leading indicator of future market direction.
In real estate and construction, however, developers appear to be consumers like everybody else, and their analysis of market conditions is no better than the man or women in the (noisy) street.
When any RE bubble deflates, there are scores of late-to-the-party builders left high and dry; it appears ours will be no different from the rest.
– vreaa

“We are in fact like a mini Manhattan/.. Yaletown, one of the boroughs within downtown Vancouver/.. Vancouver is the Swiss bank account of international real estate/.. Just too strong for any sort of bubble circumstance to happen/…In Vancouver you can today buy a condo, and have 40 people lining up to try to rent that condo.”

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

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

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

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

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

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

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

– excerpted from ‘Vancouver Housing: Bubble or Bust?’, The National, 20 Sep 2012. [Transcription generously provided by ‘AP’.]

Other excerpts from this CBC previously archived.
These quotes headlined here, for posterity.
– 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)
Richmond:
Sales:-50% YoY, -10% MoM
Ratio: 22% vs 32%
HPI: -4.2% YoY, -1.3% MoM
Median: -9.8% YoY, -1.4% MoM
Burnaby:
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
Coquitlam:
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

Handcrafted Spam


Yuck!

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 ‘bchomez.com’, 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… http://bchomez.com

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… http://bchomez.com

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.. http://bchomez.com

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

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

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!! http://bchomez.com

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.. http://bchomez.com

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.. http://bchomez.com

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.. http://bchomez.com

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 .. http://bchomez.com

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.. http://bchomez.com

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 http://bchomez.com

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

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 .. http://bchomez.com

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

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 http://bchomez.com

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.. http://bchomez.com

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… http://bchomez.com

Globe and Mail Columnist Uses ‘Home Of The Week’ To Advertise Sale Of Her Own House

“The Listing:
90 Massey St., Toronto
Asking price: $599,000
Taxes: $3030.95

Over the years I painstakingly improved the house – insulating the attic, building firewalls, rebuilding the front porch, updating appliances, painting and landscaping – but all my work was minor compared to the change in the neighbourhood. Since the mid-2000s, the Bellwoods Park area has gone from shabby chic to super chic, establishing itself as the beating heart of downtown Toronto’s rapid west-end gentrification.

After more than half a decade of being the proud owner of this magical city house it’s time for me to move on. Like the neighbourhood, my life has undergone massive change in the past few years, all of it for the best. My partner has a son from a previous marriage and we recently had a baby of our own. His work is based overseas and I’m spending more time abroad. As a freelance writer I need a home office cut off from the hubbub of family life. As much as I hate the idea of leaving 90 Massey, a more suitable home must be found. I’m saying goodbye to my urban worker’s cottage and hope to do safe in the knowledge that the next owners will love to the place as much as I did. Honestly, how could they not?”

– from ‘Home of the Week: A worker’s cottage built for family life’, Leah MacLaren, G&M, 20 Sep 2012

“In what seems to be a pretty significant conflict of interest, Globe and Mail columnist Leah McLaren has listed her own house for sale in The Globe and Mail’s Home of the Week section.
In the article, McLaren waxes poetically, in 700 or so words, about her “charming red brick Victorian row house.”
By doing so, it would seem as though she is abusing her position of authority in the press to further her own economic interests: selling her house. Unless, of course, her home happened to be the most interesting home for sale that week.
Though she admitted the shameless self promotion on Twitter, the journalistic faux-pas has not gone unnoticed by her audience.”

– from ‘Globe and Mail columnist Leah McLaren tries to sell own house in column’, Michael MacDonald, o.canada.com, 26 Sep 2012

We’ve seen some bald-faced conflict-of-interest behaviour here in Vancouver through our RE bubble, but we can’t recall anything quite like this yet happening here.
– vreaa

False Creek – “My neighbour in the Olympic Village counted up all the condo towers under construction. He counted 14 projects in various stages. Developers are really going for it over here.”

“My neighbour in the Olympic Village counted up all the condo towers under construction. He counted 14 projects in various stages. Fourteen!! Plus I think there’s a new one at Cambie & 7th. Plus another new one on West Broadway just west of Cambie…
It’s amazing. Plus there are lots of lots with crap old buildings just waiting to be torn down in the same vicinity and then the real “last waterfront development” directly West of the OV, which will block everyone’s view of the city.
Double plus the slope between W. Broadway/Cambie/Main/W 2nd Ave is a natch to be developed just like the Armoury District was. Developers are really going for it over here.”

mac at VCI 18 Sep 2012 9:15pm

There will never be a shortage of condos in Vancouver.
– vreaa

“Free Car With House In Richmond.”

– image submitted with comment from ‘derp’, VREAA, 23 Sep 2012 11:12pm, who noted: “Free car with house in Richmond”.

16-Year-Old High School Kid Offers RE Advice – “There’s a lot of money to be made in Vancouver. Just buy a house, rent it out, and in a few years you can buy another one, or maybe a condo. It’s a great investment. You should definitely look into it.”

“I was in Vancouver last year and we went hiking near Deep Cove (lovely area). During our hike, we met two 16 yr old kids from Van who were hiking on the same trail. We hiked together for over an hour, just chatting. We ended up giving them a ride all the way back to Van because they didn’t have a car, or a drivers licence, they were going to take 2 or 3 buses to get back. Anyway, in the car the most talkative and assured of the two told us : “There’s a lot of money to be made in Vancouver. Just buy a house, rent it out, and in a few years you can buy another one, or maybe a condo. It’s a great investment. You should definitely look into it.” The kid was great but I couldn’t help seeing this as a perfect “shoeshine boy” moment. When a high school kid is giving you unprompted investing advice, just do the exact opposite and you’ll do just fine.”
Nick at VREAA 20 Sep 2012 12:20pm

Agreed, a shoeshine-boy moment.
In fact, this is the most extreme such example we’ve heard from our bubble.
(Who is there left to recommend housing? Toddlers? Pets?)
– vreaa

This comment followed Nick’s:
“This is pretty much how most under-25 born and raised in Vancouverites seem to think. Conceptually, they can’t ever imagine leaving Vancouver (best place on earth syndrome) but they also recognize it’s far too expensive a city to live in, especially if you’re starting out in life (even with rich boomer parents to subsidize a real estate purchase.) They have to buy in to the real estate bull mindset otherwise prospects are very depressing.”
Cranston Snord at VREAA 20 Sep 2012 3:39pm

Realtor/Speculator On ‘The National’ “Trying To Sugar Coat The Ugly Reality That Prices Are Tanking”

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

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

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

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

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

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

– excerpted from ‘Vancouver Housing: Bubble or Bust?’, The National, 20 Sep 2012. [Transcription generously provided by ‘AP’.]

Noteworthy for the following:
1. Another realtor who is also a real estate speculator. (How many people in Vancouver have their livelihood and their investments all tied up in the RE sector?).
2. Strongly biased commentator being presented by the media as a potentially valid source of information about the market.
3. “It’s just taking a little bit of an adjustment.” = ‘It’s Only A Flesh Wound’. Price drops thus far are significant because, along with high inventory and dropping sales volumes, they herald far larger price drops to come.
4. “How much can it drop?”. Well, triplexes like this in Kits will perhaps sell for about 500K-600K in the trough, so the answer is “more than 66%”.
5. “Nobody can predict the future…” Faux market agnosticism, and weasly self-contradiction. He’s already predicted the future by saying “How much can it drop?”, now he says “Nobody can predict the future”. Thinly veiled CYA?
6. “…so if you see that the market is healthy enough and you can afford to do it, do it.” What does ‘afford’ mean? Afford the monthly payments? Or afford to watch your net worth drop by $1,000,000?
7. “You can either sit by the ballpark and you watch the game or you can go down and play the game.” Noteworthy for:
(i) the sporting metaphor (Vancouver RE is, after all, “a sport“), and
(ii) the kind of bravado that has been very common amongst the bulls all the way up. (Have you got what it takes to play the game?) It’s looked silly to those of us who saw what it was on the way up. It is now an appeal of last resort.
8. “You might get hurt or you might win.” Love the lottery innuendo (“Hey, You Never Know!”). Quite alright for a couple of bucks on a flight of fancy; less so for a $1.57M bet.
– vreaa

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(BROADCAST CONCLUDED)

“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

Canadian Business Declares Beginning Of Canadian “Housing Crash” – “What’s surprising about the weakness in Vancouver is the absence of any change in economic fundamentals to explain it. The market was cooling even before the latest round of mortgage tightening by Ottawa.”


A sombre picture

“In just one year, Vancouver house prices have dropped by 12%, and unit sales are plummeting…”

“The Real Estate Board of Greater Vancouver chalked it up to a “summer lull,” but the numbers suggest a trend that can’t be dismissed as simply seasonal. Last month, unit sales were the lowest for any August in the past dozen years, and nearly 40% below the 10-year August norm. Even more worrying, the average home price in Vancouver is now down more than 12% from a year ago—a worrying sign for the country’s priciest city.”

“David Madani, an economist with Capital Economics, concludes: “The Vancouver market has cracked.”

“It’s clear that trouble is ahead. The weakness… marks the start of a reversal in the long boom for Canadian real estate. The doubling in home prices that happened over the past 10 years is not likely to repeat itself. Royal LePage even conceded in a July report that the Canadian housing market has reached a “tipping point.” Forecasts from private economists vary widely. Some are calling for relatively flat prices, while Madani at Capital Economics predicts a 25% decline in Canada’s major cities over the next few years. No markets will feel the slowdown more than Vancouver and Toronto.”

“What’s surprising about the weakness on the West Coast is the absence of any change in economic fundamentals, such as a spike in unemployment, to explain it. The Vancouver market was cooling even before the latest round of mortgage tightening by Ottawa, which took effect in July.”

“A change in buyer psychology may also be occurring, says Madani. “I don’t think there are enough people now who believe we can continue these outsized price gains we’ve seen over the past decade,” he says. “As those expectations change, potential buyers step back.” With Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney constantly warning about Vancouver real estate, it’s not surprising their pleas for restraint are being heeded.”
“If this change in mindset truly takes hold, the entire Vancouver market will be affected, not just the multimillion-dollar homes. The city’s real estate has always been mind-boggling to outsiders, but reached a particularly confounding peak this year in terms of affordability. The median house price in Vancouver is 10.6 times greater than the median income, according to urban policy consulting firm Demographia. That makes it the second-most-unaffordable major city on the planet after Hong Kong. The only way to account for the market becoming so detached from fundamentals, in Madani’s view, is a pervasive belief among buyers that prices will keep rising. “Vancouver is far, far beyond what anyone would expect, based on trends in immigration, income or interest rates,” he says. “That’s just not sustainable.”

“If home prices rise substantially above income growth, the only way you’re bridging that gap usually is through mortgage debt,” says Ben Rabidoux, an analyst with boutique research firm M Hanson Advisors.

“It seems like Vancouver is past the tipping point,” says Sonya Gulati, a senior economist with Toronto-Dominion Bank. Gulati estimates the market is overvalued by 15% to 20%, and says prices could fall by an equivalent amount over the next two to three years. Rabidoux foresees an even greater decline, perhaps a 30% to 40% fall in average price.

“Typically, investors are concerned about “cash flow,” the money earned through rental income. But prices for new units in Toronto are so high that it’s tough for investors to use rental income to cover the mortgage and maintenance fees and still have something left over for themselves. They’re essentially banking on one thing: price appreciation, which is more akin to speculation. “They’d be better off going to a craps table at Casino Rama,” says Charles Hanes, a Toronto real estate agent for more than three decades.” …
Don Campbell, founder of the Real Estate Investment Network, a membership-based education and research outfit for individual investors, says those in his network who have purchased new condos tell him they’re financially sound enough to deal with monthly losses until prices rise and they can make an exit. Campbell himself is dubious. “They’re going to be disappointed because the market is not going to perform as well as it has over the last four years,” he says. “The incredible number of units that are going to be coming on the market over the next little while will really start to put a damper on the average sale price of the new condos.”

What’s happening in Toronto and Vancouver today marks the start of a much broader slowdown in housing. Affordability is becoming an issue in other cities, especially Montreal, Kelowna and Abbotsford, B.C., according to Demographia. Nationwide, the average home price is 5.6 times the average income, says Madani, whereas the norm stretching back to 1975 is 3.5. He admits the price-to-income ratio is not a perfect measure, but says it’s one clear warning sign the market is overheated. Prices ultimately have to fall in line with income.

After past housing booms in Canada, the subsequent hangovers lasted many years. The average price in Vancouver fell by more than 20% in real terms between 1995 and 2001 after a steady run-up.

– from ‘Canada’s housing crash begins’, Joe Castaldo, Canadian Business, 14 Sep 2012 [hat-tip Renters Revenge]

As we’ve been saying…
Bubbles don’t need anything to precipitate their demise, at some point they turn and collapse under their own weight.
– vreaa

Westside Land Price Drops – Example: 2011 $1.7M for 33′ lot; 2012 $1.45M for 44′ lot

Sold in 9 days; 3449 W 23rd
Assessed 1.864M; Asking 1.78M; 44′ lot.
1.78M is good for Dunbar for a 44′ lot (based on last year’s sales of 1.7M for 33′ lot)
This one sold 1.45M tho.
22% below assessed; Great deal in today’s market.
Good building lot. 5 lots in from Collingwood. South facing.
Market is very slow. People still asking 1.8M+ for similar lots in other parts of Dunbar. Seems like people lowballing here and there and once in awhile somebody bites. Not sure how other sellers would react.

gse36 at RE Talks 31 Aug 2012 11:07am

This particular example represents a 36% drop in the cost of Dunbar land: from $422 per sqft to $270 per sqft.
Lesser price drop example (but of possibly dissimilar lots) from the same source:

“4060 w19th 32.68×122 sold 1.656 in march land value
4034 w19th 33×122 sold 1.519 in sept
8.3% decline in 6 months.”

gse36 at RE Talks 8 Sep 2012 6:10am

“The house across from us in Point Grey is up for sale. It has been for a month. Today they had an open house. Not one person came. I am watching the sad and lonely realtor sitting in his Mercedes looking quite forlorn.”

“The Loneliest sight in the world” – The house across from us in East Pt. Grey, 2 blocks from the beach on a 50 x 120 lot is up for sale. It has been for a month. Today they had an open house. I was able to watch from my living room…… not one person came. A few Porsche Cayenne’s flashed by and slowed down a bit, but NO ONE stopped. 18 months ago 2 houses at the end of our block both sold for $500K over asking…that’s ask $1.9mil and get the first person in a long line-up, to offer $2.4 mil. I am watching the sad and lonely realtor sitting in his mercedes looking quite forlorn.”
Westsider at VREAA 8 Sep 2012 4:02pm

“I like taking a walk around Point Grey and Kits at about 4 pm on Saturday and Sunday afternoons just to see the rather forlorn Used-House Salesmen pack up the open house signs and drive off in their expensive cars. Never have I seen them so depressed and never have I seen so many “For Sale” signs stay up for so long in this part of Vancouver.”
UBCghettodweller at VREAA 8 Sep 2012 6:41pm

There are more than 11,000 realtors in the Greater Vancouver area, up from 6,500 in 2002, and the highest number on record. – ed.

“The woman suggested to the realtor they list her Westside home at assessment value to start. No way said the realtor, they told her 200K below assessment was much closer to market.”

“I was at a function on the weekend and spoke with a woman who just listed her West side home. She had just met with one of the ‘Super Star Realtor to the Stars’ (which is another sign of how nuts this place is).
The woman had suggested to the realtor they list at the assessment value to start. No way said the realtor. They told her 200K below assessment was much closer to market.
What is fascinating in Vancouver is that the common belief is that the assessment is lower than the actual value. This, of course, helps us all stomach the high taxes. Except in many cases it is obviously not true or at least not true anymore.”

Junius at greaterfool.ca 27 Aug 2012 9:55am

Throughout the mania it was indeed ‘common knowledge’ that properties were ‘worth’ more than ‘assessed value’.
We’ve noted, too, that this has now changed.
– vreaa

“A couple of weeks ago I hung out with a guy who doesn’t have a day job, he just renovates and flips. He was oblivious to the shift in the market, and quoted Global as saying prices were up.”

“A couple of weeks ago I hung out with a guy who doesn’t have a day job, he just renovates and flips. He was oblivious to the shift in the market, and quoted Global as saying prices were up (HPI). Another friend, who took out a home-equity loan to cover his daughters downpayment was even less aware (basically unaware that there is such as thing as a market that can change). When the truth gets out to the masses, we are going to see sales grind to a near dead stop.”
N at VCI 15 Aug 2012 6:18pm

When the “truth” of the falling market becomes obvious to the vast majority, all buying premised on rising prices will stop.
In Vancouver’s case, that describes the majority of the buying in recent years.
– 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

Canadians Planning On Selling Homes To Fund Retirement

“Peter and Mary are in their mid-50s and earn two incomes. They are wondering whether they can retire at 60.
It helps that their three children have grown up. The two oldest are “off the payroll” and the youngest is expected to become self-supporting after he completes university in three years.
Their retirement dreams aren’t extravagant. The couple plan to sell their house and live six months of the year in their condo (where the youngest child is now living rent-free until university is finished).”

– from Financial Facelift, Globe and Mail, 10 Aug 2012

“In Alberta, a couple we’ll call Lars, 57, and Phyllis, 56, waited until their late thirties to have children. Not long after, Lars lost his job with a multinational company, forcing him to retrain for a new profession. Phyllis had an illness that curtailed her career and made her a stay-at-home mom doing part-time work. But they adapted.
Today, one child is in university and one is about to start. The couple has six figures of debt and no capacity to save after paying all their bills out of $7,450 in monthly combined take-home income.
With no more than eight years to go to Lars’ planned retirement at 65, they wonder how can they finish paying the university bills and retire with financial security. …
They plan to boost retirement income by taking advantage of high real estate prices in Alberta. They want to sell their $450,000 house and move to the Maritimes, where, they think, they can buy a similar house for $225,000. The difference would add to their retirement capital.”

– from Family Finance, Financial Post, 10 Aug 2012

Many Canadians are planning to sell their homes to help fund their retirement needs.
There appears to be a significantly sized group of them intending to do this at much the same time.
The majority will be disappointed by falling, in some cases plummeting, home prices.
– vreaa

Realtor Warns Of “Inevitable Price Collapse; In Excess Of 30%” For Richmond Detached

“In Richmond, there is a high probability of a price decline for detached homes in excess of 30%.”
“Sellers who need to sell will have to cut their prices more deeply to attract buyers. This could be the beginning of a real estate down cycle. The momentum will pick up when more sellers realize that a real estate downturn is in motion.”

“The cascading effect of declining home prices will snowball, causing more home sellers to sell before home prices drop further… The in-balance in supply and demand is massive for million dollar homes in Richmond. A price collapse in Richmond detached homes looks inevitable!”
– James Wong, Richmond Realtor, Monthly report, as cited and discussed by ‘The Village Whisperer’ in the article ‘Richmond realtor warns:”price declines in excess of 30% coming, price collapse looks inevitable!”, at Whispers From The Village On The Edge Of The Rainforest, 9 Aug 2012. Read Whisperer’s whole discussion. Headlined here for the chronological record.

Needless to say, we agree (but believe that ultimate price drops will be >50% from peak).
It is of interest that a realtor is voicing these opinions, and advertising the notion that “price drops will beget price drops”. This will likely stir sentiment.
– vreaa

“The one bedroom in my building that has been listed for about 6 months now, with two price reductions, has now been taken off the market, realtor took the sign down this weekend.”

“The one bedroom in my building that has been listed for about 6 months now, with two price reductions, has now been taken off the market, realtor took the sign down this weekend. The one bedroom kitty corner to my building that had a reduced sticker on the sale sign was also taken off the market in the last few days, just noticed this morning that the sign was gone.
The one bedroom down the street that has been on the market for about a month has sold. It was priced at just below $300,000, a whole $104,000 cheaper than the almost identical place in my building (granted the place in my building was a corner suite and had a so-so reno, maybe $10,000 worth of reno’s).

I’m thinking that if you price wisely that you can still get out of this market.”
vangrl at VCI 5 Aug 2012 10:00am

Off the market but shadow inventory, still waiting to be sold.
Will likely come back onto the market at lower prices.
– vreaa

“He told the receptionist that he wanted to talk to the doctors about having their senior patients informed about the housing options available in such a convenient location on West Broadway.”

“I was waiting in my GP’s office Monday when a man came in looking like a drug rep. He identified himself to the receptionist as a representative of Mosaic wanting to talk (he had packages in the two doctors’ names) to the doctors about the new development at Broadway & Bayswater. The receptionist put him off but he became quite insistent – he was asked why and told the receptionist that he wanted to talk to the doctors about having their senior patients informed about the housing options available in such a convenient location on West Broadway (btw, it is not assisted living, merely small condos over retail). He was sent on his way but I smelled desperation in the man – did he really think that he would be able to have doctors shill his development..?”
local observer at VCI 1 Aug 2012 12:30pm

“There is a 2 BR unit for sale at Shangri-La. A signboard in front of the building said “MUST SELL TODAY!!”, $1.08M. Two days later the same signboard had the price crossed out with a handwritten price of $998K.”

“There is a 2 BR unit for sale at Shangri-La. On Thursday or Friday a signboard in front of the building said “MUST SELL TODAY!!” and the price was approximately $1.08M. On Sunday the same signboard had the price crossed out with a handwritten price of approximately $998K. The “MUST SELL TODAY!!” was unchanged, though.
I say “approximately” because I can’t remember the exact numbers with 100% certainty. But those figures are correct or very close to correct.”

Kermodei at VREAA 23 Jul 2012 2:20pm

“We recently let our recreational property listing lapse because we could not get what the property was worth to us. We will try again in 5 or 6 years.”

“We recently let our recreational property listing lapse because we could not get what the property was worth to us. We will try again in 5 or 6 years.
We sincerely want to sell, but on our own terms. I wonder how many listings are driven by expectations of windfalls and not need.”
Jim at yattermatters.com 20 Jul 2012 7:33pm

In 5-6 years time, that property will almost definitely have a market value substantially less than it does now. If the proceeds from this sale are important to retirement plans, Jim should sell now.
– vreaa

“I said that if I was him I’d drop the price steadily until his Eastside SFH sold, but he didn’t seem to like that suggestion.”

“I was doing some errands last week that involved dropping in at a number of retail spots. At one, the very friendly guy assisting me commented on the weather and then spontaneously started telling me about having a SFH for sale east of Main. It’d been on the market for 4 weeks and he’d gotten very little interest and no offers. He seemed puzzled by this. I said that if I was him I’d drop the price steadily until it sold, but he didn’t seem to like that suggestion. I didn’t ask him when or for how much he had purchased.”
– from westsidefrank, via e-mail to VREAA, 16 Jul 2012

“A friend is leaving Squamish and has to sell, but not a single viewing. They are looking at drastic price reductions, below their existing mortgage, or holding it as a rental until the ‘market turns around’.”

“A friend in Squamish is trying to sell his place…..not a single viewing even after an open house. They are leaving Squamish and so have to sell. Now they are looking at drastic price reductions (below their existing mortgage) or holding it as a rental until the ‘market turns around’ (his words, not mine). I feel for the guy and his family, but this is an example of what happens when you buy at the peak of a bubble. The Aqua development in Squamish still has units available, even after the significant price reductions. There are early purchasers in there that paid nearly a 100k more for the privilege of ownership than a present day buyer.”
Anonymous at VCI 14 July 2012 10:29am

Sensible Words From Sam Wyatt, Westside Realtor – “This is a very serious situation. If you plan to sell, you will need to price BELOW the most recent comparable sales prices. If you don’t do this, your listing will stagnate.”

“Last month I pointed out that the active listing volumes for detached Westside houses actually exceeded the highest volume during the credit crisis. In June the number of houses actively listed was even higher at 1078. During the credit crisis, the active listings of detached homes on the Westside never exceeded 1053 houses. Keep in mind also that the three year average number of active detached homes listed on the Westside between January 2009 and December 2011 was only 589. This is a very serious situation.” …
“Vancouver’s real estate market is getting and is going to get hit from both ends. So, now that you are thoroughly depressed, here is the bright light: IF YOU SELL NOW, YOU WILL STILL BE SELLING NEAR THE TOP OF THE MARKET. If you plan to sell, you will need to price BELOW the most recent comparable sales prices. If you don’t do this, your listing will stagnate.”

– Images, and text excerpts, from ‘July Market Update: Am I Too Late to Sell?’, by Sam Wyatt, Vancouver Westside realtor, at samwyatt.com 5 July 2012

Sensible stuff.
Sure, Sam Wyatt stands to gain if his sellers price sharply, but we happen to agree with his take on the market.
Prices are headed down, and the only way for sellers to get to the front of the queue is to lower their prices.
This is the process by which price drops progress.
This also demonstrates why it’s impossible for anything more than a relatively small number of sellers to get out near a top.
Those who do so will look very fortunate in coming years.
– vreaa

“If my friend sells his Coquitlam Townhouse for what the same units are going for in his complex he will lose money. He pulled it off the market.”

“My friend was trying to sell his Coquitlam Townhouse as he’s changed jobs and leaving town. If he sells it for what the same units are going for in his complex he will lose money (he’s sunk over 45k into it on Reno’s over the last 5 years). He pulled it off the market, and is now trying to rent it for more way more than the equivalent units in his complex because his has be heavily reno’d.
Methinks there are many stories just like this out there, in the suburbs especially.”

Anonymous at VCI 11 Jul 2012 7:10pm

“Overheard someone was trying to sell his condo in New Westminster recently. He wanted $370,000 because a 20,000 cheaper unit sold $350,000 early this year. But his realtor told him to list for $320,000.”

“Overheard someone was trying to sell his condo in New Westminster recently. He wanted $370,000 because a 20,000 cheaper unit sold $350,000 early this year. But his realtor told him to list for $320,000 in order to make it saleable.
This is about 20% drop in price.
He disagreed, so pull the condo off the market. But by the end of the year, I guess his condo will worth less than $300,000.”

good-format at VCI 8 Jul 2012 9:14am

Kelowna Realtor Selling His Vancouver ‘Rooming House’ – “Listed it at 1.4M, no bites, then 1.2, no bites and then withdrew the listing.”

“I went to an open house in Kelowna today… Talked to the listing agent… Nice guy who says he’d rather be in Vancouver because it fits his lifestyle better… He was trying to sell his 10 unit “rooming house” in Vancouver’s West end… Listed it at 1.4M, no bites, then 1.2, no bites and then withdrew the listing. I guess he needs the money to make up for a bad “real estate deal” which soured in the Okanagan. He said I should buy two houses – one for personal use and one to rent out. Told him I don’t see real estate as an investment… I’d rather buy a bank stock with a 4-5% dividend yield…”
Bo Xilai at VCI 7 Jul 2012 10:27pm

Giant 2000 Condo Arch Proposal For False Creek North

“James K. M. Cheng Architects Inc. submitted a rezoning application to the City of Vancouver that outlines a plan for a multi-use site at 750 Pacific Blvd., known commonly as the Plaza of Nations. Commercial use would include small-scale retail, hotel, office, restaurants and cafes, while community use would include a sports-science centre, a daycare and an ice rink that could serve as a part-time practice arena for the Canucks.
The proposed pièce de résistance is a residential structure, with between 1,700 and 2,000 units, that takes the form of a giant arch. The development would provide a mix of housing types and include private ownership and purpose-built rentals for residents of various ages and income levels, according to the application.
James Cheng said the arch-shaped building will serve as a window through to BC Place. “Vancouver has been criticized for having so many towers, and everything looking the same,” he said. “What we tried to do is create an urban piece that is strong enough to stand up to the stadium, but still have a relationship to it.” —
“The developments in that section of our city, which is our largest and last big waterfront property, should be a special place,” said Councillor Raymond Louie. “For a long time, it sat empty. This is an opportunity for us to develop it in a sustainable fashion where it is able to serve the people who will eventually live there, but the wider community as well.”
– from ‘Proposed complex would pump life into dead zone’, G&M 4 Jul 2012 [hat-tip Joe]

A tad reminiscent of Paris’ ‘Grande Arche de la Defense’ (above), only even more poorly proportioned and even less pleasing on the eye.
Bad sci-fi design. (“Could I get my star-fighter through that?”)
– vreaa

For The Record: Bob Rennie said “This is speculation by spineless, signature-less individuals on a blog that in most cases has less than 500 followers. Vancouver’s RE fundamentals cannot be captured in a 90-second elevator conversation, a sound bite, and especially not on a blog or 140-character tweet.”

“This is speculation made by spineless, signature-less, individuals on a blog that in most cases has less than 500 followers. Vancouver’s real estate fundamentals cannot be captured in a 90-second elevator conversation, a sound bite, and especially not on a blog or 140-character tweet.”
– Bob Rennie on negative market commentary, in the current ‘New Condo Guide’, a free RE-promotion document available at corner dispensers throughout the city.
[hat-tip RaggedyRenter at VCI 29 Jun 2012 11:32pm. See that VCI thread for discussion.]

Vancouver RE bulls are forced to contend that the market’s fundamentals “cannot be captured” for the simple reason that the metrics simply do not withstand an scrutiny whatsoever. That can readily be demonstrated in brief posts, and has been done so repeatedly on the bear blogs. In fact, we suspect that, if pressed, one could indeed make a convincing bear argument in 140 characters or less.
Bulls need to resort to hand-waving and magic to argue for ongoing market strength.
It is noteworthy that Bob Rennie has seen fit to even mention the existence of bear blogs. This likely reflects the market’s increasingly precarious health.
– vreaa

Call For “Unity Of Sellers” To Prevent Further Price Drops

“Richmond RE Pumper “GreatChina” writes on a local Chinese Forum calling for “Unity of Sellers” to prevent further price drops:
“A brand new house in good area of West Richmond, 8111 Dalemore Rd, was just sold for $1.58M, $170k lower than assessed price of $1.75M. It’s a shame that the buyer went through so much to purchase this property and build a new house, hoping to earn some money while doing a service to the community, only to have the buyer recklessly slashing price. I call on the sellers to withhold giving in to under-asking offers. We should all pull our listings and wait until a better market to sell in a bidding war situation”
Current listing: MLS® V953065
Purchase price: $533,000 Oct 2006 (old timer, was torn down and rebuilt as luxury mansion)”

VMD at vancouvercondo.info 28 Jun 2012 12:07am who also commented “HAHAHAHAHA”.

Sellers don’t “unify”; sellers compete with each other for buyers.
The “hoping to earn some money while doing a service to the community” passage earns our disdain.
– vreaa

[Ding!] Point Grey SFH Inventory Tops 100

The high-end west side market is ground zero for our bubble.
Point Grey SFH Inventory on MLS today vaulted from 98 to 107.
This is, according to our very informal records, an all-time high.
Examples of (ballpark) peaks in previous years:
47 (2006), 77 (2008), 78 (2010), 81 (Oct 2011)
This time last year, inventory was 61.
Also, an apparent dearth of sales in recent days.
Current asking price range: $1,298,000 to $19,800,000
Median current asking price: $2,598,000

They say that a single bell doesn’t ring at a market top, but there have been numerous bells of minor sorts all over the city in recent weeks, and this is probably one of them.
Our peak has passed, and descent begun.
– vreaa


Update:
In related news, Richmond and Westside Detached June sales at all-time lows.
This from two posts by ‘Inventory’ at VCI 29 Jun 2012 9:46pm:

“Richmond Detached Sales June
1995 = 112
1996 = 114
1997 = 144
1998 = 105
1999 = 135
2000 = 128
2001 = 160
2002 = 139
2003 = 166
2004 = 147
2005 = 248
2006 = 170
2007 = 198
2008 = 115
2009 = 204
2010 = 139
2011 = 158
2012 = 73 **June 28
RICHMOND SALES AT AN ALL TIME LOW!”

“Vancouver Westside Detached Sales June
1995 = 108
1996 = 133
1997 = 140
1998 = 126
1999 = 152
2000 = 125
2001 = 189
2002 = 150
2003 = 180
2004 = 154
2005 = 185
2006 = 181
2007 = 177
2008 = 108
2009 = 200
2010 = 147
2011 = 213
2012 = 99 **June 28″

“Vancouver East Detached Sales June
1995 = 145
1996 = 175
1997 = 185
1998 = 136
1999 = 233
2000 = 185
2001 = 269
2002 = 203
2003 = 282
2004 = 243
2005 = 303
2006 = 396
2007 = 244
2008 = 139
2009 = 238
2010 = 145
2011 = 180
2012 = 107 ***June 29
Sales at an all time LOW!”

“We went to an Open House on West 33rd this weekend to gauge whether there was a rush to beat the July 9 deadline. Even the realtor admitted it was dead.”

“We went to an Open House this weekend to gauge whether there was a rush to beat the July 9 deadline. Open House was on West 33rd and it was dead. We attended with approximately 1/2 hour to go and we were only the second name on the sign in sheet. Even the realtor admitted it was dead and asked us if he could send us some similar listings as “he had lots of time on his hands”.
Nice change from the 30 pairs of shoes and multiple offers you would have seen not too long ago.”

MEM at VCI 25 Jun 2012 at 1:52pm

White Rock – “Who the hell do they think will buy this stuff at these prices? Especially when so much more is being readied every single week? “Overbuilt” doesn’t begin to describe it.”

“It was so interesting biking through White Rock the other day. Even if I wasn’t an ardent bear, it would have been hard to miss the sheer number of For Sale sings. I have no idea if the official totals reflect it, but there sure seems like a ton of them when you’re on the street, sometimes several in the same block. Three or four carried the “New Price” message.

But on top of that, the flood of new product and new developments just…doesn’t…stop. We rode past at least a half-dozen new condo/townhouse/SFH developments that day alone. Meanwhile, back here in my own between-the-border-crossing neighbourhood, construction continues unabated. They’ve opened up a whole new section of land since my photo essay a couple months ago (building roads, infrastructure, etc) that looks big enough to handle a hundred townhouses and dozens of row houses.

You gotta remember that there are already 90 (!!!!) listings just in this mini-neighbourhood alone, nearly all of which are new. And unloved, apparently. These places were being snapped up a year ago, but not now. The weekend open houses here are seemingly drawing nothing but flies.

There’s one house in particular that bears mentioning. It’s situated where prospective buyers can’t miss it when they drive into the area, and it’s been in a constant state of “open house” for the last two months. Yet there it sits today, un-purchased, while dozens more just like it are nearing the final stages of completion.

Honestly, who the hell do they think will buy this stuff at these prices? Especially when so much more is being readied every single week? “Overbuilt” doesn’t begin to describe it.”

Gord at VREAA 20 Jun 2012 9:33am

Same Property Sale/Resale Price Drops

Example 1:

“Land Value Property for sale – 5038 Arbutus Street [V955311; 52×108 lot; Quilchena area of Westside]– listed for $998,000 now 13.2% below last sale price of $1.15 million on April 15, 2011- assessed value is $1,227,900.
This is where you will see the 1st cracks in the Westside housing market – big lot on busy street in Westside. In a few years, this lot will be worth $300,000+. Is this a speculator who is bailing, perhaps someone who put 5% down last year, never made a payment and is walking away? It definitely sounds like a foreclosure but I have not confirmed that. Is this the Canary in the Coal Mine?”

airborne canine at VCI 19 Jun 2012 10:53am

Regarding 5038 Arbutus. Listing agent is one of the owners.
Should know soon how their Offer Party on June 18 went.
Definitely priced below “market” to get the buyer in. Should sell for over asking based on current market. Still – this is a big loss in 12 months. Could be $200,000 after all costs and taxes are factored in.

ZRH2YVR at VCI 19 Jun 2012 at 11:26am

Example 2:

“59 West 21st. Livable house
Paid $1.303M. May 2011
Sold $1.281M Jun 2012.”

BubbleBoy at VREAA 19 Jun 2012, quoting gse36 at RE Talks 18 Jun 2012 10:33am

“Confirmed – was a failed flip at 1.49M asking.
Seller is a relative of the Listing Realtor that sold.”

zrh2yvr at VREAA 19 Jun 2012 6:38am