It’s Where Nature Is – “We take a hit; it’s more expensive for us to live in Vancouver. We choose to live here because it’s where our family and friends are, and where nature is.”

“We take a hit; it’s more expensive for us to live in Vancouver. We choose to live here because it’s where our family and friends are and where nature is,” says one Vancouverite.
– from ‘Thousands of people leaving BC for other provinces’, news1300.com, 16 Aug 2012

The bubble RE has been fuelled by preposterous claims and beliefs about our fine city. People had to tell themselves ridiculous stories to justify overextending themselves into overvalued RE.
“Best Place On Earth” was one.
“It’s Where Nature Is” appears to be another.
– vreaa

Vancouver RE Invades A Citizen’s Dreams – “…and then I woke up!”

“Home.. is where I want to be. But I guess I’m already there”
– ‘This Must Be The Place (Naive Melody)’, Talking Heads, 1983

“I just woke from a nightmare. In it, I had a speckerfriend (a real person), come over yelling at me if I want to help make 12 million bucks. I said how? He replied building a mansion in Whistler. I face palmed and said haven’t you seen vancouverpricedrop? He’d never heard of it, I told him he would be lucky to get 8 mill in this market. A desperate look came over him, I asked how much to break even? He said 3 million, I told him I would think about it …and then I woke up !”
– Loon at VCI 15 Aug 2012 7:34am

“We’re staying in Vancouver because we’ve got 3 sets of grandparents for the kids nearby, and neither my husband or I has much interest in BC outside of Vancouver proper. But my subconscious has something else to say: twice this past week, I’ve dreamed of the relief of packing up and moving to Toronto or Montreal.”
– Absinthe at VREAA 15 Feb 2011 12:39pm

Misallocation of resources.
We’d be better off dreaming about flying and exploring jungles and sex and surfing and traveling and all sorts of other stuff.
As we all already know, RE has invaded our collective psyche.
It’s part of living through a massive spec mania in housing.
Any other home/RE dream*/nightmare* stories out there?
(*The kind that happen while you’re asleep).
– vreaa

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

JULY 2012 (compared with July 2011):
Vancouver Residential Unit Sales were down 18% (2,135 cf 2,614)
Vancouver Residential Sales Dollar Volume was down 28.4% ($1.43B cf $1.99B)
Vancouver Residential Average Price down 7.4% ($738K cf $797K)
BC Residential Average Price down 12.2%
– from ‘Home Sales Decline in Vancouver, but Surge in Rest of BC’, BCREA press release, 14 Aug 2012

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

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

– chart from CREA, via Ben Rabidoux

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

“Failed Flip
3129 E. 6th Ave, Vancouver
Sold – August 5, 2011 $715,000
Attempted sell as a pre-sale new-build house??? $1,068,000
Listed and cancelled multiple times
Finally listed the original tear-down – Abandoned the build – June 20, 2012 at $759,800
Sold for $700,000
With all those transaction and holding costs – this has to be a $50,000 loss and no success on the build.
Given the builder that owned it – it is probably a good thing that it never got built because it would have probably been a P.O.S.
This is getting boring – I could post stories like this all day. Richmond is going down!!!!!
Also – Most of the West Side sales (other than new) are going for 10% below assessed.”
– ZRH2YVR at VCI 14 Aug 2012 10:00am

“Far too many middle- and lower-income buyers threw borrowed money at real estate, then compounded the error with expensive upgrades throughout.”

“It might surprise you to learn that rich Americans, people who could pretty easily buy any make or model they like, tend to drive inexpensive cars. A study by car pricing site TrueCar found that eight of the 10 best-selling autos in the country’s 10 wealthiest ZIP codes averaged less than $40,000.”
…
“The takeaway is clear: Your money should work for you, not for the salesperson. If you buy a car beyond your means and, worse, finance that pricey ride, you are throwing good money after bad.
Exactly the same thing happened during the [U.S.] housing boom. Far too many middle- and lower-income buyers threw borrowed money at real estate, then compounded the error with expensive upgrades throughout. Granite countertops, stainless-steel appliances, fancy pools and outdoor decks, usually bought with illusory home equity loans.”
…
– ‘Which Cars Do Rich People Drive? Cheap Ones’, marketriders.com, 9 Aug 2012

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

“The cab driver said he thought people in Vancouver were unfriendly, because of the cost of living, which made people work too much and borrow too much, and as a result they were stressed out all the time.”

“I was in a taxi the other day and the cab driver was saying how he has lived in Vancouver for decades and the people here are much less friendly than Toronto etc.
I have not lived in Vancouver that long so I can’t say myself, but I did mention how one would expect the nicer weather to result in a more laid back, friendly attitude vs Toronto.
What he said then was very interesting to me: He said it was because of the cost of living, which made people work all the time and borrow too much, and as a result were stressed out all the time.”
– from ‘TI’, by e-mail to VREAA, 3 Aug 2012

A Riddle, Wrapped in a Mystery, Inside an Enigma

“In fact, most detached homes in my neighbourhood that had stagnated for two months are now sold, but data not posted.
Is real estate board deliberately holding these sales back so it produces data that makes the market appear in “buyers market” territory?”
– eyesthebye at RETalks 11 Aug 2012 7:33am

Hmmm. So, by this argument: Things are actually good but the realtors are conspiring to make them look bad in order to make them even better?
Let’s rather keep things simple: The market looks weak because it is weak.
– vreaa

Andrey Pavlov, Professor of Finance, SFU – “I think this debt accumulation engine of real estate price growth is now done. I don’t see where the future support for real estate can come from.”

“According to the Real Estate Board of Greater Vancouver (REBGV), home sales dropped 18.4 per cent in July, marking the lowest total in the region since 2000. In Coquitlam, the number of sales in July dropped 26 per cent from the previous year. …
“We’re seeing some areas that are quite flat and no changes, and some areas we still have pockets of activity,” said Sandra Wyant, president-elect of REBGV.
She suggested July is typically a slow month for real estate sales, noting buyers and real estate agents alike often tend to be on holidays. …
She said prices could start to come down as competition amongst sellers heats up.
However, Wyant said it often takes a while for sellers to make an adjustment in the marketplace.
“Right now it’s a fabulous time to jump into the market,” she said, adding there are many choices and no pressure to make a decision.
…
“But one financial expert believes Lower Mainland real estate has reached a turning point.
Andrey Pavlov, a professor of finance with Simon Fraser University, noted prices in Vancouver have rocketed past those in places like New York and San Francisco, and in the case of the Tri-Cities, are comparable to suburbs of those major cities.
He suggested the pace will not continue and predicts prices will likely drop in the Vancouver area.
Pavlov argued home prices rose dramatically in the Lower Mainland, not out of income or general economic growth, but rather debt accumulation.
With low interest rates and easy qualification terms, people have been taking on more and more debt.
“I think this engine of real estate price growth is now done,” Pavlov told The NOW in an e-mail.
“So I don’t see where the future support for real estate can come from.”
And he’s especially concerned for the condo market.
He explained that singlefamily properties would always hold their value to some extent because usable land in the Lower Mainland is limited.
But he contends condos have absolutely nothing that can support them. And in cases where the quality of a new development might be in question, he can see prices of condos in the suburbs dropping by half or more.
…
– from ‘Housing sales plummet, SFU professor believes price of some suburban condos could drop by half’, Jeremy Deutsch, Coquitlam Now, 10 Aug 2012 [hat-tip Gord and Alexcanuck]
—

Another article of interest because it involves named locals coming out publicly with bearish predictions.
We agree with Pavlov that the home price rises have been the result of a debt fuelled bubble, and that future support is tenuous.
As for the quantitative aspect of his prediction: we’d agree that “condos in the suburbs” will drop by more than 50%. However, so will condos in the city, and, contrary to Pavlov’s apparent suggestion, so will SFHs, in all areas.
During the speculative mania, it was argued that SFHs were something particularly special, and they received that much more speculative juice as a result. During the descent, that speculative component will be wrung out, and prices will return to those of the early 2000’s. For the vast majority of SFHs that means drops of greater than 50%.
– 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

Financial Institutions Underestimate The Downside – “Metro home prices will slip, not plunge”

“Canada’s hot housing market is beginning to cool off, Scotiabank said Wednesday in a new report, with average home prices expected to decline by about 10 per cent over the next two to three years.
Scotiabank economists warn that the housing price correction will largely occur in the Toronto and Vancouver markets.” …
“The Scotiabank report says that the balance sheets of Canadian households remain in good shape, with real-estate equity sitting at an average of 67 per cent. However, Canadians are still carrying high personal debt loads, and with their balance sheets so heavily skewed to real estate, they are vulnerable to a sharp price correction.”
– ‘Canada’s housing market cooling: Scotiabank’, CTVnews.ca, 8 Aug 2012

Metro Vancouver home prices may slip a bit over the next year, but don’t expect them to drop sharply, according to a report released Wednesday by Central 1 Credit Union. …
“Right now, we’re undeniably in a sales slowdown with substantial declines in sales over the past several months,” said report author and Central 1 economist Bryan Yu. “But we’ve also seen positive employment growth and continuing very low interest rates.
“We believe the supply side will adjust substantially. When prospective sellers see weak sales and pricing, they pull their listings. [Most] don’t have to sell. This balances out the supply side environment.”
Yu’s report maintains home prices in Metro Vancouver should drop more than five per cent this year before rising 2.9 per cent in 2013 and 2.0 per cent in 2014.
“A recent tumble in home sales coupled with a drop in headline prices have some wondering (hoping?), whether Canada’s longtime poster child for a potential housing price bubble is set to burst,” the report concluded. “While a weakening state of demand in Metro Vancouver makes short-term price drops a near certainty, we expect that declines will be both modest and temporary.
“Prospective sellers are expected to respond to weaker market conditions by curtailing listings activity, which will limit excessive inventory in the housing market. Short of another recession and large-scale job losses, market activity in the Lower Mainland is expected to be characterized by a relatively low sales and a flat-to-weak pricing environment.”
– from ‘Metro home prices will slip, not plunge: Central 1 Credit Union’, Vancouver Sun, 8 Aug 2012

As numerous savvy web-based analysts have already observed, these are the same guys who had previously reassured us that any falls at all were unlikely. Now that we’ve already had the falls they’re ‘anticipating’, they ‘predict’ they’ll happen. This is rear-view mirror commentary, and they’ll chase the market all the way down with their non-predictions.
– vreaa

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

“Know of a couple purchased 1 one bedroom in Vancouver for $430s.
This was back in 2010 and they were just getting married at the time.
I know the wife and told her I didn’t think it was a good idea since they didn’t even have a downpayment.
They were so worried about “buy now or be priced out forever”, went to his family for a loan for the 20%.
Fast forward to this week. Couple now has a 1yr old and the place is feeling too cramped. On top of that her job situation is changing and she needs to work in Burnaby.
Now they want to sell and buy a bigger place closer to her job.
They will list the unit for $419K to start.
They’ll be lucky to get $400 and minus the transaction costs, will be down tens of thousands.”
– kansai92 at VCI 9 Aug 2012 12:08pm

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

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

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

Mark Carney – “Invest in productive capital, not in houses or condos”

“And there’s a variety of things that European authorities can do, that the IMF can do, others can do to contain it so that Canadian business and Canadians can get on with their lives and focus on how we’re going to grow our economy, which is largely going to be investing in productive capital, not in houses or condos, and in growing our economic relationships with the major emerging markets,” Mr. Carney, the Bank of Canada governor, said in an interview with CTV.
– from Globe and Mail, 9 Aug 2012

Excellent point; a reference to the dire misallocation of resources that occurs during speculative manias in housing.
At the same time, it’d be fair for many to retort:
“But, Mr Carney, thanks to your low interest rates, my money is not attractive to potentially productive business concerns; as a result I’ve been drawn into high risk speculative activity, such as buying over-priced RE, with leverage, for presumed future price increases.”
– vreaa

“I met a realtor today at an open house. He was totally convinced that this was a quite summer lull and that there would be a feeding frenzy come September.”

“I met a realtor today at an open house. He was totally convinced that this was a quite summer lull and that there would be a feeding frenzy come September. He also mentioned that other realtors were very worried that this is the end of the good times, but not him. Essentially he was saying that we should buy now because prices will be shooting up again. I told him good luck with that.”
– Loon at VCI 4 Aug 2012 6:47pm

“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

“I just heard of someone who bought a house in East Van with 7 other people! Dude, you’re signing up for a mortgage with roommates? Yeah that ought to work out, good luck with that!”

“I don’t live in Vancouver, but I read ‘vancouvercondo.info’ for the same reason I read the US bubble blogs. The insanity is entertaining. I just heard of someone who bought a house in east van with 7 other people! Dude, you’re signing up for a mortgage with roommates? Yeah that ought to work out, good luck with that!”
– Nex at VCI 6 Aug 2012 2:24pm

“I agree. I think it’s crazy that roommates would purchase property together. I’ve had lots of roommates in my day and it never seems to work out. I can’t imagine being stuck to a roommate for 25 years for a mortgage!
Vancity Credit Union actually has a mortgage product specifically designed for roommates. It’s called the “mortgage mixer”. From the Vancouver Sun:
“Vancity also has a “mixer mortgage” where roommates can go together to buy a home they wouldn’t be able to buy otherwise. ‘It also works well for parents and children, because the parents can own part of the home as an investment, while it helps the child get into the market,’ McKinley said. “It definitely helps people get into the market younger.’”
– Joe_Blown_Away_By_High_Housing_Costs at VCI 6 Aug 2012, in part quoting from Vancouver Sun 19 Apr 2012

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

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

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

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

“For me, it’s boring to the point where I don’t feel very motivated to post. As I said a few days ago, it was more fun as a contrarian fighting a uphill battle in early 2011. Now even the bulls are adapting their stance to “we all know it’s falling, but I guarantee it won’t fall too much for too long, sellers should wait it out” (Their stance used to be “UPUPUP to the Moon!” lol)
I used to get a good share of jeers and typical bullish trash talk, but since a few months ago the resistance almost completely stopped.
It’s not that fun for a bloodthirsty warrior to walk onto the battlefield finding most of the enemies already deserted or defected.”
– VMD at VCI 1 Aug 2012 11:11am

“It all seems so easy. We are no longer fighting a rear guard action in Dunkirk we are 200 miles from Berlin with no Germans in sight.
Where have all the Bulls gone? I guess they are finally realizing that we can be wrong for a very long time but we only need to be right once.”
– McLovin at VCI 1 Aug 2012 9:06pm
—

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

“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

“If she were to sell now, the price she would get would cover the remaining balance on their mortgage, resulting in zero equity gained. Once she factors in strata fees paid, she figures they would have been better off renting.”

“I was at a party on the weekend, a house-warming one in fact. One of the guests told me about how she lives in a ground floor apartment with no yard in Pitt Meadows. She has 2 kids, and she’s glad they’re both girls so they can share one of the apartment’s 2 bedrooms. She would love to live in a house with a yard. But she knows that they can’t afford it. She also told me that if she were to sell now, the price she would get would cover the remaining balance on their mortgage, resulting in zero equity gained. Once she factors in strata fees paid, she figures they would have been better off renting.”
– chibidani at VREAA 1 Aug 2012 2:14pm

“I moved away in 2002 and returned to Vancouver in 2008. As a specialist physician, I have a nice income, allowing me to buy a house in the Oakridge area. I grew up here in the 80s and 90s and remember a gentler, quieter town.”

“I moved away in 2002 and came back to Vancouver in 2008. As a specialist physician in this city, I have a nice income, allowing me to buy a house in the Oakridge area.
However, I have to echo some of the others here that the city is not the same one that we all grew up in. I grew up here in the 80s and 90s and remember a gentler, quieter town. All Vancouver wants to be right now is with the big leagues–the New Yorks, San Frans, Londons, etc. However, it is not in the same league as the above. Vancouver is nice to live in, yes, but it does not have the culture that true world class cities have.
The other thing is, people here are so obsessed with buying. I suppose it has to do with ego. And that is one thing you’ll notice. After a decade or more of being told by the mainstream media, the government, and ourselves that we’re the best place in the world to live, we have bought into that craze. Fact is, Vancouver has problems, lots of it. I’ve lived in many other major cities in the US and have been to Europe and Asia and Vancouver has the same problems that other big cities have..
The other thing here is, nobody wants to rent. People complain they are priced out of the city, but in actual fact, you can rent a nice basement suite in a nice part of town for dirt cheap compared to San Francisco or NYC. If you want the lifestyle and the good schools in Vancouver, and the short commutes and can’t afford to buy, then rent. It is not throwing your money away. Most people in the big city rent anyway.”
– Brian at VREAA 1 Aug 2012 12:42pm

“There are over 5,000 homes in Vancouver for sale for over $1 million. In comparison, in April, just over 7,000 homes sold in the entire US (135 times the population) for over $1 million.”

“There are currently over 5,000 homes in Vancouver metro area for sale for over $1 million according to MLS.ca. In comparison, the NAR reports that in April, just over 7,000 homes sold in the entire US were sold for over $1 million. And this despite the fact that the US population is 135X greater than the metro Vancouver market, the average personal disposable income in the US is 20% higher than the Vancouver average ($37,100 vs. $30,800) while US per capita GDP is higher than the average for all of BC.”
– from Vancouver housing in full correction mode: Implications for Canadian banks, Ben Rabidoux, The Economic Analyst, 3 Aug 2012

Truly remarkable. Thanks to Ben for that insight.
– vreaa

‘Vancouver Real Estate Market In Full Retreat’

Chart by Ben Rabidoux, hat-tip jesse.

“…the latest statistics show Vancouver’s housing market is mired in a 10-year low for sales with no immediate end in sight.
Each month is starting to look worse than the previous one for Canada’s most expensive housing market as property sales in July dropped 11.2% from June — marking a decade low for activity.” …
“… the Real Estate Board of Greater Vancouver reported the worst July since 2000, and 31.2% below the 10-year average for the month of 3,051 sales.
The board said there were 2,098 residential property sales of detached, attached and apartment properties in July — off 18.4% from a year ago.
“People appear to be cautious about making significant financial decisions right now. While our local economy appears to be quite robust, there may be some concern about the impact of international markets and the federal government’s tightening of mortgage regulations,” said Eugen Klein, president of the board.
Prices continue to hold with the board saying the composite benchmark price for all residential properties in Greater Vancouver rose 0.6% to $616,000 from a year ago but dropped 0.7% from June.”
– from ‘Vancouver real estate market in full retreat’, Garry Marr, Financial Post, 2 Aug 2012 [hat-tip allen]

“July home sales in Vancouver, once the country’s hottest real estate market, continued to slide and hit their lowest total for the month since 2000.”
– from ‘July home sales in Vancouver drop to lowest level since 2000’, Globe and Mail, 2 Aug 2012 [hat-tip Dimitri Tishchenko ]

Greater Vancouver Average Prices:
DETACHED – $1,041,300
– Down 15.7% in 5 months from all-time high in Feb, 2012 ($1,235,200)
ATTACHED – $538,300
– Down 9.2% in 4 months from all-time high in Mar, 2012 ($593,100)
APARTMENT – $406,400
– Down 15.9% in 15 months from all-time high in Apr, 2011 ($483,400)
– adamtheman at his Vancouver Bubble thread at redflagdeals, 1 Aug 2012 [hat-tip ScubaSteve]
[Simple averages are vulnerable to outlier effects, volatile in illiquid markets, and of questionable statistical value, but, with those caveats, they’re still one number everybody watches. When the detached average drops through the $1M mark, for instance, it will make local and national headlines, and will have further psychological effects on the market. -ed.]

“The Months of Inventory (MOI) metric for Westside Vancouver houses rose for the fifth consecutive month in June. It has risen from 4.39 in February to 12.51 in July.
Active listing volumes for detached Westside houses are still over 1000 listings and sales dropped to only 83 homes this month.”
– good-format relaying info from Sam Wyatt at VCI 1 Aug 2012 9:31pm

“I went for a bike ride in the westside just now.
Up and down at least 40 blocks.
Many, many blocks had two to three for sale signs.
I must have counted a sixty or so in total.
And get this muppets….NOT A SINGLE SOLD SIGN….NOT ONE….NADA…ZIP…ZERO…ZILCH
Holy truck, it’s begun.
Still, we have a way to go before we hear widespread screams in the night.”
– Romeo Jordan at VCI 31 Jul 2012 8:24pm

“Richmond’s MOI is currently at 22 for detached homes. To put it bluntly: In August, only 1 out of every 22 homes in Richmond will sell. The other 21 will sit there with for sale signs up. Imagine if you were trying to sell your house and had to compete with 21 other homes, knowing only one of yours would sell.”
– ScubaSteve at VCI 1 Aug 2012 12:16am

2785 Chelsea Cr, West Vancouver
“I just had an email sent to me regarding the home in West Vancouver, Chelsea Park – Residential Detached – 2785 CHELSEA CS, V7S 3E9. It sold July 27th for $1,610,000. Assessed at $2,154,000. Interesting to say the least!”
– designer69 at vancouverpricedrop 30 July 2012 4:17pm [hat-tip Zerodown]

“They are shocked/angry that there was no bidding war. They were hoping for $3.7M, they had some offers around $3M. They are now taking it off the market to relist when the market improves.”

“My best friend’s hot sister’s boyfriends’s parents listed their Vancouver house three months ago. They are shocked/angry that there was no bidding war (they were hoping for $3.7million at least, they had some offers around 3 million).
They are now taking the house off the market to list when the market improves and they can get what the home is “worth”, at least in their view.”
– ‘Happy NOT to be Smoking Man’ at greaterfool.ca 31 Jul 2012 8:43 pm

Next year they’ll be rejecting offers of $2.25M and wondering how they could have passed on the $3M offer. And so on.
– vreaa

Westside Renter – “Am I doing financially OK compared to others? Because I feel poor and worry about money all the time.”

“I am 41 years young living in Vancouver. I earn $100K a year and I have $275K cash, $20K TFSA, $200K in RRSP. I have no debt, but renting a place on the west side. My question is, am I doing financially OK compared to others? Because I feel poor and worry about money all the time.”
– Finally at greaterfool.ca 1 Aug 2012 12:10am

41 years old; $100K income; $500K net-worth; no RE exposure.
Important unknowns:
Dependents?
Guaranteed pension?
Capacity to save?
Level of investment savvy?
Target age at retirement?
– vreaa

“We purchased the West End condo in 2006 for $640K and sold it in 2012 for $699K.”

“The sale of our condo closed yesterday afternoon. ..
Did we make out like bandits by buying into the Vancouver real estate game? …
Not so much. The actual result, after crunching the numbers, is decidedly underwhelming.

Real Estate purchase info is publicly available, so I’m not giving away anything particularly personal when I share that we purchased the condo in 2006 for $610,000 plus 5% GST ($640,500 total) and sold it in 2012 for $699,000. A gain of $58,500 over 6 years, or just over 9%. And if you want to get really silly, you could call it a gain of 45% on our original 20% down-payment. Not bad, right?

Not so fast. Take away from that the selling costs we paid of realtor fees, repairs (new paint & floor), staging, legal fees, and we barely made away with $20,000 profit. And of course that doesn’t take into account all the costs of holding that investment: property taxes, condo fees (including a couple special assessments), and mortgage interest.
Putting all those numbers in, we spent about $1750/month “rent” (those holding costs) for 55 months to make that $20,000.

What would renting for the same period have cost?
We know the mirror-image unit across the hall was charging just about $3000/month rent. They’ve got a few more square feet, and an amazing view of English Bay, so say ours would have rented for $2500/month. It would have cost us an extra $41,250 (plus the $20,000 we wouldn’t have made) to live in the same suite.

More realistically, we’d have stayed in our previous rental. Accounting for the maximum 4% annual rental increase, we would have averaged $1855/month in rent. At $100/month difference ($5500 over the 55 months we lived there) it’s almost enough to call it a wash.

So, the real question becomes, could we have done something different with our down payment of $130,540 to make $25,000 in 55 months? Maybe. The markets were absolute shit during those few years, so getting 5% a year wasn’t likely, but I think in the right investments it was probably possible.

So there you have it. Renting vs. Buying, in our particular situation, had no clear winner.

I did love our condo and really enjoyed both the space and the location. It was a great place for us to live, so I’m happy the numbers didn’t show it was a financially terrible idea to have done so.
But, considering renting isn’t bankrupting us either, I’m really enjoying the freedom and flexibility of non-ownership, and am in no hurry to buy property again any time soon.”

– from ‘Homeowners no more. Thank goodness!’, by Jen Watkiss, at her blog ‘WorldWideWaterCooler’, 27 July 2012

“PermaBull dad whips out the latest print copy of some housing classified and shows me a 30 year old townhouse just off Lougheed Highway, I just roll my eyes and said haven’t you watched the news lately, prices are going down.”

“Visited the parents for dinner yesterday.
PermaBull dad whips out the latest print copy of some housing classified and shows me a 30 year old townhouse just off Lougheed Highway, I just roll my eyes and said haven’t you watched the news lately, prices are going down. I could pay cash for the place, but I would never want to live in that neighbourhood.
He replies you shouldn’t listen to news reporters and agents, they all have an agenda (about recent bearish news stories).
Yet he listens to the same exact people when they say prices are going up x% this year and x% next year etc.
Oi….”
– 4SlicesofCheese at VREAA, 31 July 2012 12:23pm

“I never thought I would actually hear the words spoken, but I did: “It’s different here!” and, “EVERYONE wants to live here; that’s why prices will never go down.”

“I never thought I would actually hear the words spoken flat out. But, I did. “It’s different here!” and, “EVERYONE wants to live here; that’s why prices will never go down.”
This was yesterday afternoon at a Port Moody BBQ. People in their late 60′s-early 70′s.
So, the meme is still alive and kicking. (I think it’ll take quite a while time to steer public perceptions in the other direction).”
– Boombust at VCI 29 Jul 2012 9:42pm

“Second friend turned around and said that there is no way it’s going to crash in Vancouver, since San Francisco never crashed.”

“Was at a friend’s wedding last night, with a group of friends. One asked me if I am going to up-size from my current place to a bigger one. I said no, since market is crashing, and gave him most up to date stats -50% in sales compared to last year and -10% in price in last 5 months. Second friend turned around and said that there is no way it’s going to crash in Vancouver, since San Francisco never crashed. I was bit a buzzed from gin and tonic so couldn’t remember exacts stats for San Francisco. Then the first friend jokenly said that second one bought a third property not too long ago and is waiting for it to be built.
At that point I told them that lets not talk about real-state since it’s an emotional topic and I didn’t want to upset anyone, and lets enjoy the wedding.”
– SunBlaster at VCI 29 Jul 2012 10:33pm

Increased Density Features Prominently In COV Affordable Housing Contest – “It brings down the cost of housing through sub-division and shared equity.”

The City of Vancouver recognized thirteen entries from a competition launched in May.
The designs set out a variety of plans to increase density while dropping real estate prices, from building long houses in lanes to constructing bridges of housing atop existing buildings.
…
Christina DeMarco’s Thin Streets concept, which pitches narrowing streets and adding row units, took home an award.
“I came up with the idea by cycling to work across the city every day and I realized there was a lot of under-used road space in the city,” she said. “There’s still enough room for a sidewalk, a road, and street trees.”
…
“UBC student Andrew Neuman won an award for his shared equity concept, which divides properties and adds housing where residents would buy shares in co-ownership.
Neuman says it could reduce the price of a dwelling on a $1-million lot to as little as $100,000.
“So it brings down the cost of housing through sub-division and shared equity.”
Neuman said the issue of affordability in Vancouver hits close to home.
“Unless something like this sorta comes about, I will not be able to afford to live here,” he said.
“I’ve been an architect student … my wife is a teacher. We have three kids and on those salaries alone, based on … the cost of housing in the neighbourhoods that we’re currently living in, in a small basement, we won’t ever be able to afford to buy anything like that or move up in that way.”
…
– from ‘Vancouver eyes new affordable housing ideas’, CBC, 31 Jul 2012
[hat-tip Jeff Murdock]

—
Let’s not forget that we’re still near the peak of a speculative mania in housing prices, and that most current ‘increase density’ plans also have the effect of maintaining the high relative cost of housing; they amount to “pay a bit less; get a lot less” plans.
– vreaa

Cartoon – Royal Mortgage Helper

– David Sipress, The New Yorker, 30 July 2012

S&P Downgrade Outlook On Canadian Banks – “A prolonged run-up in housing prices and consumer indebtedness is contributing to growing imbalances, applying negative pressure on economic risk for banks.”

Ratings agency Standard & Poor’s has revised its outlook downwards on seven Canadian financial institutions, citing high housing prices and consumer debt.
…
“A prolonged run-up in housing prices and consumer indebtedness in Canada is in our view contributing to growing imbalances and Canada’s vulnerability to the generally weak global economy, applying negative pressure on economic risk for banks,” the rating agency stated in its decision. “Growing pressure on banks’ risk appetites and profitability arising from competition for loan and deposit market share could also lead to a deterioration in our view of industry risk.”
…
House prices have roughly doubled over the past decade while, relative to GDP, consumer debt has risen from about 70 per cent to more than 90 per cent, S&P pointed out. And it suggested that Ottawa’s actions have not done enough to stem what could be a significant problem for the economy. “Successive government efforts since 2008 to counteract the stimulative effect of low interest rates on consumer borrowing and home prices have done less than we expected to counteract the growing level of consumer leverage and housing market risk in Canada,” S&P said. The agency is now watching to see if the most recent moves that the government has made will have better results.
…
– from ‘S&P cuts outlook on 7 Canadian banks’, G&M, 27 Jul 2012

‘High-Volume Local Vancouver Realtor’ – “The appraisers told me they just don’t see the value in a lot of properties and want to make sure they do not over-value in view of an anticipated market correction.”

“As you are no doubt aware there has been a huge slowing in the market and predictions are that there will be a correction of approximately 25% on detached properties and up to 30% on condos. The other prediction is that we will not see any sort of recovery for another 2 years. How much of the above is true only time will tell. One thing I do know is that The Federal government has not helped by a) cancelling nearly 300,000 investor applicants who were already 2 years into their application process and b) Making it much harder to get a mortgage without proof of income and increasing the ratio of income to borrowing. This has directly affected the numbers of people looking to buy from outside our borders.
The other problem I have personally experienced is purchasers that bought properties I had listed have hit HUGE problems getting a mortgage, as banks would not appraise the property at what they paid for it even though it was sold on the MLS and in some cases at multiple offers! The appraisers told me they just don’t see the value in a lot of properties and want to make sure they do not over-value in view again of an anticipated market correction.
Good quality properties that are priced well are still selling and there have been some big sales, as you will see from my attached stats sheet. If you don’t have to sell then don’t, if you do then make sure you price it right, choose a Realtor who will promote it right and last but not least prepare now with photos, floor plans etc., so you can come to market as soon as there is a change – even if it is nominal.”
– this letter from a “high-volume local Vancouver realtor” posted by Simeon Garratt at his website allure.com 23 July 2012, in a post entitled ‘IS THE CANADIAN GOVERNMENT KILLING VANCOUVER REAL ESTATE?’.
Simeon Garratt himself adds:
“I think that the Federal Government is directly curbing the growth in the real estate sector. Canada -Vancouver specifically- has been on the ‘hot spot’ radar of people from all over the globe. We have been ranked the best place to live, the safest place to live and have an economy that is second to none. A huge amount of our economy’s growth is based on our need to grow as a population. Currently, Canada’s population is dwindling and without the support of a strong immigration system, it will get worse.
I believe that if we focus on creating good quality jobs and giving young people quality education, we will attract higher salaries, bigger companies and housing prices will become less of a factor. It is common in most metropolis cities around the world to commute an hour to work. For some reason, we think we are the exception.”
—

1. The appraisers are to be commended for their caution: it is currently very hard to reconcile ‘price’ and ‘value’ for local properties.
2. We do not foresee local economic strength so powerful and so sustained that it raises local incomes such that RE prices make sense by that fundamental measure. Incomes would have to double or more for that to happen. Can you imagine that happening without mortgage rates rising?
3. We don’t know what Simeon Garratt means when he says “(we) have an economy that is second to none”, or “a huge amount of our economy’s growth is based on our need to grow as a population.” We see lots of signs that our economy is over-dependent on: the RE industry, industries directly related to RE, and the other temporary knock-on wealth effects of a speculative mania in RE.
– vreaa

600,000 square feet is to be dedicated to office space packed in around Rogers Arena and BC Place – “We have our work cut out for us to fill that space.”

“The city’s planning department, concerned about the loss of key office sites on Vancouver’s small downtown peninsula to the condo boom of the 1990s and 2000s, decided several years ago that the last bit of undeveloped former industrial land that was the site of Expo 86 – Northeast False Creek – should include 1.8 million square feet of commercial space.
Of that, 600,000 is to be dedicated to office or, as the planners call it, “job space,” packed in around Rogers Arena, the home of the Vancouver Canucks hockey team, and BC Place, the government-owned stadium where the B.C. Lions play football and Whitecaps play soccer.
That 600,000 square feet is the equivalent of a whole Park Place tower in Vancouver’s business district or the new PricewaterhouseCoopers tower on York Street in Toronto.
Now, landowners in that area are trying to figure out who they’ll get as tenants.
“We have our work cut out for us to fill that space,” says David Negrin, president of Aquilini Development, one division of the Aquilini family empire that includes the Canucks, Rogers Arena and a host of other businesses and development projects. “It’s just a tough location because it’s on the edge of the [central business district].”
– from ‘Canucks owners gamble on new office district in Vancouver’, Globe and Mail, 30 Jul 2012

Dunbar House Moved To Vancouver Island – “Everyone asked if we really were knocking the old home down. We said we’d rather not, but to make money in the development world, you have to build a new home.”

CBC Announcer: “Moving is often a hassle, but moving a whole house takes some special expertise.”

Announcer: “And so the journey begins for a 97-year-old Dunbar heritage house, picked up, put on a trailer and [taken] out of town. It’s quite the sight for all the neighbors.”

Neighbourhood Lady 1: “I love these old houses. I really wish that we could keep it.”

Announcer: “However, it’s that typical Vancouver real estate story of a small house on a big lot. But, rather than the usual tear-down, this one was saved.”

Neighbourhood Gentleman: “It’s fabulous moving it..”
Neighbourhood Lady 2: “Nice to save it … Very good to save it.”

Neighbourhood Lady 3: “I wish it was in the neighborhood, I would feel less annoyed about having my power out if I’d known it was staying. It would have made a dandy lane-house.”

Announcer: “It’s too big for that, almost too big for this journey. Boulevard trees had to be cut back, Hydro had to down power lines to make way.”

Mover: “We have a lot of obstacles on the way, wires to drop and raise back up, and it is a little slower with all of the pedestrians that are here.”

George Puusepp, Former Owner: “You wouldn’t be able to afford to reproduce it that’s for sure. You can’t find the timber that they’ve got in it now.”

Ben Ford, New Owner: “We figure it’s about $140,000 for the house.”

Announcer: “That is some deal. Inside, stained-glass, old-growth fir moldings & floors. Only one room upstairs is painted. Jean Rouday’s grandfather built the house in 1915. She grew up there.”

Jean Rouday: “I painted the woodwork, so I’m the culprit… the nerve of me, right?! (laughs)”

Announcer: “The 4 km trip to the Fraser River took 5 hours. Next week it gets barged to Union Bay on Vancouver Island where, let’s face it, it will be a welcome sight.”

– from ‘Entire house moved out of Vancouver’, CBC News, 26 Jul 2012 [hat-tip to Nem]

—
The same story covered by the Vancouver Sun, with further perspective:

Heritage home makes incredible journey
Dunbar house transported by truck and barge to its new location on Vancouver Island
Shawn Conner, Vancouver Sun July 27, 2012

When George Puusepp heard the Dunbar house he had lived in for almost two decades was being moved, he travelled from his new home in Kamloops to witness the event.
On Thursday, Puusepp was among the onlookers who watched as the pine green heritage house, which had been freed from its foundation at 3725 West 37th Ave., was loaded onto a transport truck to make its way to the Fraser River where it would be placed on a barge.
“It’s very strange, but very gratifying,” said Puusepp, as the 1,800-square-foot home inched through the streets of Dunbar.
“I’m really glad they didn’t tear it down,” the 69-year-old retired high school teacher told The Sun.
The house, built in 1915, was the first home in the area to be built out of lumber. “The inside is all first-cut fir – wide planks, no knots,” said Puusepp, who lived in the home between 1986 and 2003. “You never see that any more.”
Dozens of neighbours came out to watch the slow journey of the sturdy structure, which has original stained-glass windows on the side and a veranda out front. Crews from BC Hydro and Telus, as well as from moving company Nickel Brothers, came out to ensure that power and phone lines did not interfere with the truck and its cargo, which measured more than 10 metres at its height.
The salvation of the house is a triumph for all involved, said Guy Taylor, of Averra Developments, which purchased the house and lot in December.
“When we said we were going to build a new house on the site, everyone asked if we were really knocking [the old one] down,” said Taylor. “We said we’d rather not, but to make money in the development world, you have to build a new home.”
Averra contacted Nickel Brothers, who agreed to take it off their hands. As luck would have it, co-owner Jeremy Nickel knew just the right buyer.
Ben and Jen Ford had hired the company to move a house before, and had helped with a few others. The Dunbar house was exactly the kind of classic home the professional renovators were looking to purchase for their family.
“This is the kind of house we’d been hoping they could find for us for years,” said Jen Ford, who had come in to watch the move from Gabriola Island, where the couple now lives with their four daughters.
The family will move into the house once it reaches the community of Union Bay on Vancouver Island.
“It’s got all the period features and the character,” said Ford. “It’s in such good shape for its age. Usually at this stage a house is pretty rundown.”
Nickel Brothers sold them the house for the cost of the move, she added, an estimated $130,000. “You couldn’t build it for that, that’s for sure.”
The move wasn’t without its snafus. Spectators and technicians waited patiently in the July heat Thursday, while crews lowered a power cable that stretched across an intersection so the house could get through.
“I’ve been doing this about 25 years,” said Rick Picard, sales manager at Nickel Brothers. “It’s one of the most complicated moves I’ve been involved with.”
BC Hydro field inspector Bob Coulter was at the site to sign off on the temporary removal of power lines by a contractor. As the house once again began its westerly progress Coulter remarked, “Sure is a beautiful home.”

So long; Adieu.

“We will buy a house in Spain in 2014. We would be happy to pay $150K Canadian for a detatched Villa with Ocean views and a pool. I have to disagree with the predictions for a housing crash here in Vancouver.”

“I’m waiting to buy a house in Spain. A country house 5 to 20 K away from the drab concrete settings of the coast. I used to live in Gibraltar in the mid 80s when the Costa Del Sol was pretty much sand dunes and an acre of waterfront was $40,000.
We will buy in 2014 which is when we would be happy to pay $150K Canadian for a detatched Villa with Ocean views and a pool. I have no idea if the market would be at the bottom then but that is one hell of a deal and we would be very happy to purchase at that price. We have duel Citizenship .
I have to disagree with the comments about a housing crash here in Vancouver.
It’s pretty solid on all fronts. There may be a level or even a 10% correction but there will be no crash.
I used to think there would be a crash (since 2004) but after much thought I became aware that as crappy as Vancouver is during the winter etc its still the warmest and most interesting place in the entire country to live. Our banking system is tight. Commodities + resources are in abundance.
Canada is rocking on the business front as is evident in the real estate prices across the country. If you have cash its a very safe country to bring your treasure to.
It’s just not comparable to Spains economic woes and the parallel is stretching it a bit.”
– comment by ‘a different fred’* at VREAA 29 Jul 2012 3:50pm [*’fred’ is not the same fred who posts many trollish comments. ed.]

Vancouver RE Discussed On CBC, Again – “Patti Croft recommends cashing out and is thinking about it herself”; “Patricia Croft kept insisting Canada would be the *only* country to engineer a soft landing in real estate.”

1. “Anyone else catch The House on CBC radio this morning [14 Jun 2012]? Tsur Somerville [UBC Sauder School Of Business RE economist] and Patti Croft [Bay Street analyst], mostly falling over one another with the usual “not-a-bubble”, but with some pretty bearish sentiment lurking beneath the conciliatory tones (considering the sources):
– Nationally speaking, they see a 10-15% overvaluation.
– They openly admit that this national number is mostly be driven by Vancouver and Toronto, implying enough overvaluation there to significantly sway national numbers.
– Patti recommends cashing out and is thinking about it herself.
– Tsur seems to have given up on recommending metrics and now suggests “if you like it, buy it”.
– Even though there’s no bubble, Canada will earn a feather in its cap by successfully engineering a soft landing.
Also, apparently you now need 50% overvaluation to have a national bubble.”
– Many Franks at VCI 14 Jul 2012 11:28am

2. The CBC financial roundtable discussion on The National [CBC TV] last night focussed heavily on debt. The same four folks appeared that were there last time. Patricia Croft kept insisting Canada would be the *only* country to engineer a soft landing in real estate. She said it twice.
– Dr. Nick Riveria, VCI, 25 Jul 2012 10:22pm

“We got sick of the ridiculousness of the market. People overbidding on shacks and financing some 90yr-old’s retirement by buying her house which she bought for $90K in 1952 for $1.2 Million.”

“My fiance and I both have good professional jobs in health care. We are in our early 30s. He owns a condo in east vancouver that could probably go for 250,000 to maybe 300,000. He bought for 180,000 5yrs ago and renovated. I am renting. We have enough in the bank for a sizeable downpayment on a home in North Vancouver. We are looking to finally consolidate homes and start a family in the next few years. We’ve been looking for 7months and have just been on a 2month hiatus as we got sick of the ridiculousness of the market and people overbidding on shacks and financing some 90yr olds retirement by buying her house which she bought for 90,000 in 1952 for 1.2 Million$ ..you know, the recent Vancouver usual. The market is changing. The new mortgage rules actually suit us favourably as the interest rates haven’t, yet, changed and the other restrictions don’t apply because with our cash flow we could have a Million dollar home paid off in 15 yrs with a 25percent downpayment. My question is, what do we do? If I were to buy a home right now, we’d plan to stay there for at least 10 to 15 yrs. Rental homes on the North Shore are few and far between. And at some point you want to start your life and settle down. I try to stay informed on housing and the economy. Lots of signs pointing in the direction of not buying. Should we sell the condo and rent? Should we keep the condo, rent it out and rent a home? Should we buy something if we can lowball and get a home that was 1Million earlier now for 850,000??”
— from Amber, via Garth Turner, at greaterfool.ca, 26 Jul 2012

This couple will likely be buyers quite soon, as the market softens a little more.
They’ll tell themselves they’ve “lowballed” and gotten a “deal”.
They seem to harbour at least some belief that one can’t “start your life” until you own your home.
– vreaa

Sherry Cooper, BMO – “There is already about a 15% to 20% correction in Vancouver, thanks to the overbuilding during the Olympics. And that’s still manageable, given that much of it is at the very high end of the market.”

Interviewer: “What is the possible worst case scenario that the Canadian consumer would look at from a housing deflation?”

Sherry Cooper (BMO Chief Economist): “Well, it wouldn’t be in general everywhere; that’s because we haven’t seen a pumped up situation, in most of the cities of Canada, with the exceptions, possibly, of Vancouver and Toronto. There is already about a 15% to 20% correction in Vancouver, thanks to the overbuilding during the Olympics. And there, uhmm, that’s still manageable, given that much of it is at the very high end of the market.”

– from BNN Market Sense, 16 July 2012, Part Five: Canadian June Home Sales.

Run That Buy Me Again – “I’ve been in and out of three properties in Whistler since 2001 and that market has been very good to me, because I’m very bullish, in real estate in general.”

“While he is becoming more of a household name as one of the dragons on TV’s Dragon’s Den and has a venture capital firm helping smaller entrepreneurs, you might not necessarily think of Bruce Croxon as a real estate investor. And yet, while living in Whistler, BC in the late 1990s, Croxon took it upon himself to get into the real estate game after having realized the value real estate can bring.
…
“I’ve been in and out of three properties in Whistler since 2001 and that market has been very good to me, because I’m very bullish, in real estate in general, and more specifically on the resort real estate market,” he says.
Croxon is an avid skier and while living in Whistler for about two years he decided to educate himself about the real estate market there. “I learned the market well enough so I thought I could be safe in terms of buying a place to stay and so I added a couple of more places just as pure investment. It turned out to be right for a period of time.”
The first purchase was a personal residence. But with the growth in confidence of the local market, Croxon added on to his holdings with a so-called “ski-in, ski-out” condo. He rented that out to a business he owned in the area.
“The third was more for speculation but I ended up renting it out, and at the end of the day, when I was back in Toronto, I decided to sell that one as well – that was a single family residence on a very nice piece of land,” he recalls.
Croxon explains that the resort market is of interest to him because of the limited supply of land and development potential for areas that people are interested in visiting. For example, he says Canada, specifically Whistler, has some of the best skiing opportunities in the world. “I think there is limited supply and if you want that terrain you’ve got to go there and there is a limit on how much you can build. So it was the right combinations to have an asset grow.”
…
With all the asset classes that have made their way in and out of Croxon’s portfolio over the years, real estate has served an important niche, especially given his investment strategy.
Says Croxon: “I’m an operator and have not been an investor until recently. [Real estate] was a way to be passively involved in an investment I developed some confidence in. You really don’t have to work that asset too much,” he explains.
“It will either go up or down on its own. For me that’s the attractive part of it. In general, I just think real estate, over a long period of time, has performed quite well. People need a place to live and it seems to be one of those asset classes that survive,” he adds.
…
– from ‘Dragon’s Den star reveals why he’s still bullish on real estate’, Joel Kranc, Globe and Mail, 27 Jul 2012, an article reprinted “from Canadian Real Estate Wealth Magazine, a monthly publication focused on building value through property investment”.
—

This has to be the hand-waviest article we’ve seen on RE investing for quite some time.
There really is no substance to it at all.
The author tells us that a guy who made money trading Whistler properties over the last 10 years is kinda sure it’s possible to make money in RE.
Why RE? Land is limited. “People need a place to live”. RE “seems to be one of those asset classes that survive”.
There is perhaps nothing that any potential RE investor could take from this article that would be of any use to them whatsoever.
There is certainly no information about the current state of the Canadian market.
Should an investor be buying or selling RE? How has the RE market actually been doing, in Whistler, or anywhere else, for that matter?
Perhaps the one lesson gleaned could be that to make money in RE, you have to buy and sell.
And that fortunate timing is crucial for many participants.
– vreaa

“A 27 year old colleague of mine bought in Whalley in late 2009, claiming that it would be the new Yaletown.”

“A 27 year old colleague of mine went out and bought in Whalley in late 2009, claiming that it would be the new Yaletown.
My other bearish colleague and I almost laughed when she said this during a staff meeting, as he actually lives in Surrey. She was so proud that she wrote in the office log “off to get my mortgage approved for my first place – smiley face”
She is married to a guy that works at the bank, and they have since bought another place. They are renting the Whalley place, and claim that their rent covers their mortgage payment. When questioned further, they didn’t factor in property taxes, insurance, and strata fees..
I cannot wait till this twit gets burned…”
– SKS at VCI 25 Jul 2012 8:12am

“i wish vancouver would go back to how it was when i was growing up. i’m 35. there was some freedom. now, the love is gone, rules abound. complainers run everything. we have to compete with the entire world to buy a house.”

“i wish vancouver would go back to how it was when i was growing up. i’m 35. i liked living on the westside. it’s too expensive now. kits beach used to be empty on a satuday in july. it was nice. now it’s full of douches, and the culture is more transient than anything, lots of people from australia or just arrived from out east. ick. there were lots of small stores in cute old buildings on 4th and on robson. it was nice. now it’s just the same old crap that can be found in any generic mall or cruise ship port. people were mellow, cleaned up after themselves, and would congregate on the beaches at night during the summer, and were free to have a fire and drink a beer. there was some freedom. now, the love is gone, rules abound. complainers run everything. we have to compete with the entire world to buy a house. everyone wants to come here, but what about the people who lived here before? pushed aside, a humble cuture, overrun. who cares about the money! let’s stop whoring our city out to the world. i propose limits on foreign property ownership. if your not canadian, you can’t buy land in vancouver. good ruloe i think. we wouldn’t be the first place to do it, and for the same reasons..good reasons.”
– ‘go love your own city’, at straight.com, ’29 Jul 2012′ [hat-tip Adam]

“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

Olympics, Redux – “Part of the reason that people get grumpy about the games is inflated expectations: the Olympics are always mis-sold.”

“Part of the reason that people get grumpy about the games is inflated expectations: the Olympics are always mis-sold. First, host governments say that the economic benefits of the games will greatly outweigh their costs. Second, they claim that the games will inspire people to exercise more. Third, they predict intangible benefits from being in the global spotlight for a couple of weeks. The first two claims are rubbish; the third does not apply to London.” [Nor did it to Vancouver. -ed.]
– from ‘Rewards of the rings’, The Economist, 21 Jul 2012

“Finally in 1987 my parents afforded an old house built in 1916 for $87K. That’s all they could afford. Over the past 30 years the house value has gone up to over $700K and they haven’t even done anything to increase its value.”

“My family immigrated to Vancouver in 1981 from the Philippines with $200 and 4 suitcases. We rented basement suites from 1981-1987 when the housing market was so bad, and finally in 1987 my parents afforded an old 1916 house for $87K. That’s all they could afford given they were also sending my brother and I to private schools. I had a very modest upbringing to say the least. Over the past 30 years my parents’ house value has gone up to over $700K and they haven’t even done anything to increase the value of their house.
MANY Vancouverites are immigrants from developing countries even poorer than China. MANY Vancouverites are extremely hard workers who would like to continue living in a home they can call their own. We would also like to ensure our children and their children can do the same.”
– val at The Thirties Grind 11 July 2012 7:07pm

“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

One Note, Three Anecdotes – Unplanned SFH Flipper; Dual Property Stress; Realtorship Declined

“The young colleague who was approved for a massive mortgage, on a smallish income, and bought a SFH in Coquitlam, is now listing it for sale in the hopes of eking out a profit. Another colleague still hasn’t had any luck offloading his North Van duplex. In the meantime he has to service a $1.2 million loan that he used to purchase his new North Vancouver SFH. He hasn’t received a single offer since it was listed over two months ago.
Had lunch with a pal today that I hadn’t seen in several months. The last time I saw him he was thinking about becoming a real estate agent. I disabused him of the notion with all of the usual arguments. I asked him today if he was still thinking of becoming a real estate agent, “No, not with everything that I’ve been reading and hearing.”
– Manna from Heaven at VCI 10 July 2012 2:01pm

“We ARE serious to buy, but on our own terms”; “The buyer and seller would not agree on a $2500.00 difference of value opinion.”

“A recent coffee shop story from a Vancouver Realtor® pal claimed that a sale on a east side $950,000 home never concluded when the buyer and seller would not agree on a $2500.00 difference of value opinion.
Worthy of calculation, the $2500.00 equates to a 0.26% difference of dollar opinion which in this case was big enough to kill the deal. If you are scratching your head wondering why then there is perhaps a reason within that tells us there is more to this market than we might suspect – a reason I believe that won’t be accountable in market fundamentals.
A sentence in an email from a buyer helped clarify this 0.26% conundrum. Stated was:
“We ARE serious to buy, but on our own terms.”
– local realtor Larry Yatkowsky, at yattermatters.com, 18 Jul 2012, who described this stubbornness as ‘Mule Talk’.

There are periods during a downturn when prices are ‘sticky’; where buyers and sellers stare each other down; where sellers are reluctant to “let go” of properties where they have gotten attached to the idea of them being worth ‘x’ and now the buyer is asking them to “give it away” for ‘x-y’. Then comparables sell for less and expectations are reset.
– vreaa

Song: ‘A House in Vancouver’ – Daily Dancer sings about the Vancouver housing market

“Will housing prices ever go down?
Well, there’s a hopeful crowd that’s stickin’ around
And there are many like me, with good job and good pay
Who can not afford a house in Vancouver

[C’mon, even a small condo is priced at half a million]
[I suppose I could buy, and not see a spare cent for the rest of my life]

From the heart of Vancouver all the way to New West
On our fine Earth, this place is the best
So say those ads, to us, every single day
All those tricks just to get us to pay

Now is always the best time to buy
Never let an opportunity go awry
But even in the ‘burbs, the prices are still high
Guess I have no hope to own in Vancouver

[I guess I’ll have to start looking elsewhere]
[Like Saskatchewan… Saskatoon… nice house for a quarter the price]

Foreign money is always what is blamed
But the racists here are never shamed
What about the locals and all their greed?
Who make every want into a need

But some out there are smellin’ the rat
In this land where the realtors get fat
Yet it won’t be me who’s caught in the trap
With an outrageous mortgage and no funds to tap

[Yep, I’d *be* the tap… that’s for sure]
[But, hey! I’d be livin’ the American dream!]

Decades of debt just for a house
But no one is as poor as a church mouse
I say the poison is all the borrowed wealth
But, how could that be bad for your health?

The interest rates are bound to go up
And many a wallet will feel the hiccup
But, it won’t be me who buys in today
And risk a worthless house long before I get to old age

[If I don’t die first]

So don’t be house rich and cash poor
Take your well-earned cash and go on a tour
See all that the world has to offer
Listen not to what the admen proffer

[You don’t need it… live life, have fun]
[Go and buy that new toy… because you can]

So, will I ever buy a house in Vancouver
[Not at this this rate]
I guess I’ll be forever paying rent in Vancouver
[Unless the bubble bursts]
‘Til then, I’ll keep paying rent in Vancouver
[And if I win the lottery?]
Then I’ll buy a tiny house in Vancouver”

– from ‘A House in Vancouver’, ‘Daily Dancer’, self posted youtube video, 2 July 2012

Excellent sentiment.
The housing market really has thoroughly saturated our psyches.
– vreaa