Tag Archives: buyers

“Things have changed, we are not doing that type of mortgage. We are not interested at all.”

“I am currently interested in a piece of property in the burbs; a unique property which is why I would be willing to move on purchasing now at today’s prices. This is land, no house. I am eminently mortgagable… credit scores at almost 900, dual income, large amount of assets. Approached M-Cap, BMO, Enbridge, People Trust, CIBC, TD, and a couple of others for financing. Still waiting for 1 or 2 answers to come in.. but.. 5 institutions say “things have changed, we are not doing that type of mortgage, we are not interested at all” (without even inquiry into our situation). 3 institutions say “we would only consider a higher interest builders mortgage”. And by higher they really mean higher… Wow. Remains to be seen if financing can be had.”
- Burbs Boy at VCI 24 May 2013 4:51pm

Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”

“I am currently renting in West Van. It has been difficult to find decent, “affordable” rental accommodation on the North Shore. For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted.
Went for 23% below the list price. Owner been in the place for 11 years, and over that time, the value of the property increased on average 5% a year. I negotiated hard, walked away twice, and eventually the seller caved, just like I knew he would.
I’ve been renting for 5 years now, ever since a health crisis with one of my young children moved me back here. I was the bear amongst all my peers who are all “owning”. I still think there will be a crash in the Lower Mainland – but I think it will be an uneven crash. Certain areas will crash worse than others. I don’t think the entry level house market in West Van will crash. I think it will take a 10-15% drop and then move sideways or at inflation for a generation.
There is some value in staying in one place.”

- chumpy le chump at VREAA, 2 Jun 2013 4:36pm

All the best with your purchase, chumpy.
Does the “few hundred more per month” include all expenses (and assume no downpayment?). Share the math if you care to.
Further:
That’s 70% increase over 11 years (5% p.a. compounded)? Is that representative of the price increases on similar properties?
As we’ve said before, we expect all property types to revert to long term means; we don’t expect any to somehow be exempt.
- vreaa

Greater Vancouver Home Builders’ Association Annual First-Time Buyer Seminar Attendance Plummets

“The Greater Vancouver Home Builders’ Association presented its 19th annual free seminar for first-time homebuyers in Surrey on March 19. This event is the largest of its kind in North America, drawing aspiring homeowners from virtually all Metro Vancouver municipalities – and beyond.
Attendance over the years has averaged 800. One year, registrations were cut off three weeks before the event, as 900 eager people had already signed up. Last year, attendance dipped to a tad under 600.
This year, despite significant promotion and a top-notch panel of speakers, about 500 prospective first-time buyers registered. Moreover, an audience head count revealed less than 300 attendees.
Mind you, I believe a number of external factors contributed to the attendance drop – March break, heavy rain, traffic and a Canucks game. Also, it appears the wealth of information available at folks’ fingertips kept some of the registrants at home that night.”

- from ‘A world of advice’, Peter Simpson, The Vancouver Sun, 6 Apr 2013

Thanks to RG, who sent the above link to VREAA by e-mail, and who adds:
“The interesting bit is Mr. Simpson’s rationalization that the marked drop in attendance may be attributable to, “March break, heavy rain, traffic and a Canucks game” …
Seriously? … “rain” and “traffic” resulted in far less than half of the typical numbers of potential first-timers from seeking critical purchasing information? Wow.”

Mom and Pop Get It Wrong In All Markets, Time And Again

“Villa and White felt “sucker punched” when stocks collapsed in 2008, he reports. The crash “wiped out half their savings.” They sold out of stocks, put their money in the bank, and “swore off stocks,” presumably forever.
Last month, as the Standard & Poor’s 500 index surged to new highs, they hired a new financial adviser and plunged into the stock market again.
The problem with Villa and White isn’t that they are unusual but that they are absolutely the typical American investor. Both of them are doctors, meaning they are presumably intelligent and educated. And yet they insist on investing like absolute fools.”

“They buy high, sell low, and the ending is predictable.”
“Share prices fall because there are more sellers than buyers. They rise because of the reverse. So mom and pop investors like the Villa-Whites rush to dump their stocks because they see the market plummeting, oblivious to the fact that the only reason it’s falling is because people like them are rushing to dump their stocks.”
- from ‘Mom and pop: The world’s worst investors’, WSJ Marketwatch, 4 Apr 2013

And so it is with all markets.
Regular folks (in the case of RE, the vast, vast majority of market participants) fell in love with Vancouver RE when prices started running up, became more and more adoring as they ran up more, and were most infatuated at the frothy peak (at the very time they should have been most wary). It is this crescendo of infatuation that drives speculative manias to their ridiculous heights.
As prices fall folks will become less enamoured, then discouraged, then disgusted by local RE, and when the most people are the most disgusted, it’ll be a sensible time to buy.
It’s not rocket-science, but it is emotionally very, very difficult to be a contrarian, and to take a position that is the opposite of that of the crowd.
- vreaa

“My buddy was looking to upgrade to a house in the Coquitlam area. With 200k extra for a home, that’s half of lifetime saving between him and his wife.”

“My buddy was looking to upgrade to a house in the Coquitlam area. Currently they own a apartment. Not sure if they even have than 10% down payment for a “used” single family home. The other day we were chatting and he mentioned how he wants to upgrade to all new appliances and do a bunch of renos when he buys a place. He said that I bought a house without a mortgage so I could upgrade all the fancy appliances at my place. Here is my thought: my place is in Surrey, which is 500k, for a single house. He wants to buy a house for 700k. His household income is not more than mine. If he is not overextending himself, he could easily do the upgrades. With 200k extra for a home, that’s half of lifetime saving between him and his wife. I guess no more trips and fancy toys.”
- from klin1022 at VREAA 18 Mar 2013 9:41am

Remember the good ol’ days when people used to think about an amount of money in terms of how long it would take to earn or save it?
- vreaa

2013 West Vancouver Sale At 2007 Prices

“Interesting data point out of West Vancouver. 4820 Headland Dr. sold last month [January 2013] for $1.17M. It sold in July 2007 for $1.2M. Poor location, corner of a 3-way stop, either way, they’ve done ‘well’ to have lost money over the past 5.5 yrs in Van RE. A few more of these coming I reckon….”
- NoBid at VCI February 26th, 2013 at 6:00 pm

Vancouver Sun Profiles A First Time Buyer – “I just wanted to build equity and not pay rent.”

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“Myles Wilcott, a single, 31-year-old general manager at Canadian Linen & Uniform Service, is among those who have met new financial requirements in order to buy a condo. He paid $412,000 for 705-square feet two-level loft in a 16-year old building in the Gastown district of Vancouver.

Wilcott had been looking at condos throughout the winter, waiting to find what he was looking for at a price he could afford.

By this spring, he had almost enough in his registered retirement savings plan to meet the minimum down payment set by the federal government. He had sufficient income to cover the monthly payments, even though new federal regulations meant he would be paying hundreds of dollars more each month than he would have been required to pay before the rule changes.

He was not concerned about reports of record high prices and talk of a possible crash in the real estate market. “A lot of people talk about getting into the market to make a quick buck,“ Wilcott said. “I just wanted to build equity and not pay rent.” …

Mr. Wilcott, who graduated from Simon Fraser University in business and human resources, said in an interview he had thought about buying a home a few years ago but did not qualify for a mortgage that was big enough to buy what he wanted.

He turned his attention to improving his credit rating, pursuing his career and putting aside some savings. “I was able to climb the ladder enough to the point where I qualified for a [25-year] mortgage.”

Mr. Wilcott started the home-buying process in December. The first step was to arrange for pre-approval for a mortgage. He had an agent to help him search in earnest for what he wanted – a loft-style condo in the downtown area. He looked at 12 different condos before finding what he was looking for.

He put down the minimum five per cent, which was about what he had saved in his tax-free registered retirement savings plan. A federal program called the homebuyers plan allows purchasers to use their RRSP as long as the money is paid back within 15 years.

His mortgage payments of $1,900 will be considerably higher than the rent of $1,200 he was paying before he bought the condo.

However it was his outstanding debts — not the monthly payments — that almost tripped up his mortgage application. Arrangements were finally confirmed at an acceptable rate with Vancity Savings Credit Union.

The whole process was a bit more stressful than he anticipated. The most difficult aspect of the purchase was evaluating the conflicting points of view he received on home buying. “I got too many people involved … there was such a wide array of opinions — buy now, don’t buy now; wait five years, don’t wait; don’t go into that neighbourhood, go over there.”

But once he met the qualifications and found what he wanted, he was ready to close the deal.”

- image and text from ‘First-time homebuyers adjust to federal changes; For those who can afford it, home ownership still a viable option’, Robert Matas, Vancouver Sun, 15 March 2013 [hat-tip OH YAH]

“$700 per month more outlay for accomodation plus condo fees, taxes, legals, move etcetera, etcetera (you all know the drill) and no mention that all his savings were wiped out during the purchase. Live and learn. Got to get on that ladder even if it only leads to a periscope.”
- Farmer, commenting on the above story, at VREAA 16 Mar 2013 3:22am

Agreed, we don’t think Myles really did the math on this.
He says “I just wanted to build equity and not pay rent”.
Even if he’s not fully conscious of it, he’s speculating on future RE price strength.
We’d bet the math shows that he wouldn’t “build equity” without that.
- vreaa

First Time Buyers – “I have spent several years saving up enough for a reasonable down payment, but have now determined that in the current market, it just makes more sense to rent.”

“The biggest challenge I face is affordability,” said Dustin Strong, a 34-year-old Vancouver renter looking for a home in the $500,000 range. “I have spent several years saving up enough for a reasonable down payment, but have now determined that in the current market, it just makes more sense to rent.”

When the Globe and Mail asked readers in an online poll whether Ottawa should make it easier for first-time buyers to enter the real estate market, only 40 per cent of the nearly 2,500 respondents said yes, first-time buyers deserve a break.
“First-time buyers have all-time low rates, realistic 25-year terms, and minimum 5-per-cent down payments,” one reader wrote in our comments section. “If they can’t afford it, then the prices are too high. The hurdle is low enough for Canadians.”


Market uncertainty and bubble-talk are also holding buyers back, said James Ellis, a 26-year-old looking for a house in Kingston, Ont., with a $250,000 budget. His biggest challenge, he said, is “determining if the value of a house now is inflated or not, and whether resale value in a few years will reflect the current value once the housing market equalizes.”
“Our main challenge is beating the fear of home prices falling on us,” added Joseph, a 28-year-old looking for a detached house in Calgary. “That is what has kept us renting.”


- from ‘What first-time buyers really need: affordable housing prices’, Dianne Nice, Globe and Mail, 12 Mar 2013

There is absolutely no reason that anybody anywhere in Canada should be rushing to overextend themselves into RE, least of all First Time Buyers, and especially in Vancouver.
Prices are headed down.
Interesting statement from Joseph in Calgary: Instead of fearing being priced out, he is fearing buying and having prices drop.. this represents a change.
- vreaa

Vancouver Secretary’s Urgency To Buy Condo At 7.7x Annual Pre-Tax Income – “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up.”

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[photo Rafal Gerszak, The Globe and Mail]

“Alice Soo is developing a case of spring fever for real estate.
In 2011, five years after graduating from university, she made a final payment to erase $25,000 in student loans. At the same time, she has been a disciplined saver, with $30,000 now socked away. Ms. Soo, a clinical secretary at Vancouver General Hospital, is eager to use it for a down payment on a condominium in the suburb of Burnaby, and soon.
Why the urgency? Condo prices in Greater Vancouver have slipped 3 per cent over the past year, but Ms. Soo believes the softness in the market won’t last. “I’m worried about keeping pace. I’m worried that no matter how long I keep saving, the prices will keep climbing and I’m never going to be able to catch up. That is my main concern.”
Such is the psychology of the first-time buyer in Vancouver, the country’s most expensive property market. Prices here have soared 24 per cent since the summer of 2009, according to the Teranet-National Bank house price index, and the price of a typical detached home is still about $900,000. But prices have cooled and sales activity is way down – there were nearly 30 per cent fewer transactions this February than a year earlier – so Ms. Soo’s concern about missing out may be unwarranted….
“For every first-time buyer, there’s an owner who`s looking to sell and trade up, and for every upgrade, there`s a retiree looking to cash out. The “trickle-up” effect can make the difference between hot and cold in the market.
This year, the big question is: Will the first-timers come back?”
For Ms. Soo, who is now renting the basement of her sister’s home, the first choice is to buy a Burnaby condo priced at roughly $300,000, preferably close to a SkyTrain rapid transit station. Given her modest annual pretax salary of $39,000, Ms. Soo is excited by the prospect of moving into her own place by the time she turns 30 this summer. But price remains the sticking point for buying a condo this spring. She and her agent, Eddy Shan of Homeland Realty, are finding that sellers aren’t budging much from their asking prices.”

- this anecdote from ‘Will nervous first-time buyers make this spring housing market bloom?’, Tara Perkins and Brent Jang, Globe and Mail, 9 Mar 2013 [hat-tip OH YAH]

We agree that this FTB’s “concern about missing out may be unwarranted”. She is still living in the not too distant past, and continues to suffer from the “buy now or be priced out forever” fever. It’d be interesting to know more about her knowledge of current market conditions, and to understand her sources of information.
The current market action is precisely what one would expect through a topping process: sales declining, prices sticky but beginning to give, buyers waiting and watching. Sales volumes always lead prices.
And there will always be some buyers, at any point in the descent, thinking they have “bought the dip”.
The most vulnerable owners in the coming downturn will be the over-leveraged, the latecomers, and the retirees with far too much RE for their life-stage. If Ms. Soo buys, she’d be both over-leveraged and a latecomer.
- vreaa

————————-

Some further excerpts of interest from the same article:

“Will McKitka, a real estate agent with Macdonald Realty, said the spotlight has turned on the slump in property sales in February, but prices haven’t collapsed. “People use the B-word, in terms of a housing bubble. Vancouver isn’t in one,” Mr. McKitka said. Monthly sales volumes are being crimped by stalemates over pricing, he noted.
Two of his clients watched negotiations fall apart last month, even though the asking and offering prices were tantalizingly close. “Not close enough,” he said. But Mr. McKitka insists that buying into the Vancouver area’s cooled-off housing market makes sense. Gone are the days of huge jumps in home values, but for those able to save for a down payment in 2013, it will be a better financial decision to own than rent, he argues.”

“It still seems that the much greater risk is that sales weaken further, not that they surprise to the high side,” BMO Nesbitt Burns economist Douglas Porter said in a research note this week.
Prices remain stubbornly high in most urban markets. Fitch, a ratings agency, said this week that prices nationally are about 20 per cent too high. Such headlines add to the fear among first-time buyers that, even if they can afford to get into the market, now might not be the time.”

“Large marketing campaigns and incentives on the part of mortgage lenders are likely to play a significant role in driving the market this spring. “People buy payments, they don’t buy house prices,” says Toronto-based mortgage planner Calum Ross. “There is a huge psychological impact of five-year mortgage rates dropping below three per cent.” Mr. Ross adds that he’s now seeing “massive” amounts of marketing by mortgage lenders.”

“Phil Soper, CEO of real estate agency Royal LePage, said the slowdown is a good thing, because the market was too hot, but he thinks that the changes that Mr. Flaherty made in July went too far. “It pushed things for young people, for first-time buyers, to a place it didn’t need to be,” he said.
Now, he says, the impact of the change has largely been felt. “Young people have had eight months to either save up a larger down payment or look farther afield for a home,” he says. “As long as the cost of mortgage financing remains very low, we’re going to attract financially stable young people, first-time buyers, into the housing market. The desire to own one’s home hasn’t changed one bit.”

Will McKitka’s comment added to the ‘What Bubble?’ sidebar collection of bubble denier quotes.
We agree with Doug Porter’s observation that “surprises” are more likely to be to the downside.
- vreaa

Canadian In Hong Kong Aims To Buy In Vancouver – “I plan to be another guy coming from Hong Kong buying your property and renting it out to you, even though I’m a white Canadian guy.”

“Let me share my story. I moved to Vancouver with my family when I was a teen from Eastern Canada. I went to UBC and graduated with a science degree. The jobs available to me were $12/h lab work on temporary contracts or sales at small supply companies, which at least had the potential for a career. How am I supposed to build up any substantial net worth $12/h? I opted for the latter; 100 applicants for every position. Needless to say, I did not make it to the 2nd round of interviews; a few interviewers asked to photograph me (kind of illegal) because it was hard to remember who’s resume belonged to whom.
I did some research and found work online that required my degree. I thought it’d be a side job until I found a “real” job. That ended up being a modest but living income. All of that money was from East Asia; not a dime from Canada.
Yesterday, I got a job offer in Hong Kong, and I’m going to take it. I’m going to make several times more here than I could in Vancouver. I’ll make incredible connections. Interestingly, although I’m not Chinese, many of my peers from UBC born in HK have returned for work because there’s simply more opportunity here. Yes HK is crazily expensive; it’s rents are easily double those of Vancouver! However, I can actually afford to live here without squeezing by. I’m going to be able to save a lot of money, which I hope to use towards a property in Vancouver. Ironically, I plan to be another guy coming from Hong Kong buying your property and renting it out to you, even though I’m a white Canadian guy.
I love Vancouver and do not want to settle down anywhere else. I see the huge appeal of living there from the perspective of Hong Kongers and Mainland Chinese. However, there’s just far fewer opportunities to grow in Vancouver; combine that with high costs, and you’ve got a losing combination. It’s good to end your career in Vancouver, not start it. I really feel Canadian employers treat young employees like trash in the name of economics and wonder why we jump ship at the next opportunity that comes along.”

- twelvis commenting on a reddit thread ‘Some Vancouver workers have been priced right out of the country’, 22 Feb 2013 [hat-tip proteus]

Cowboys Will Be Cowboys – “I just opened up an account with National Bank to trade Over The Counter stocks… I know it’s super risky but I need the money to buy a condo.”

Don writes by e-mail [2 Feb 2013]:
“A friend of mine who lives in lives downtown YVR posted this on Facebook complaining about Bank Investment people:
“I do my own research beforehand. I never buy their shitty products. I just opened up an account with National Bank instead to do OTCs… I know it’s super risky but I need the money to buy a condo this year”.
So here they are trading OTC BB stocks (aka Pump and Dumps) to make money to buy a Condo!…no risk here!”

You Bought It, Congratulations – “They spent Sunday going to open houses in and around their Kits hood in Van, then fell in love with a place listed just under a million.”

“Jason and Maria are young thirtysomethings who, like most, lust for a house. Four weeks ago they did something they instantly regretted, which this time had nothing to do with blue berries or udder cream.

Per usual, they spent Sunday going to open houses in and around their Kits hood in Van, then fell in love with a place listed just under a million. Of course they couldn’t really afford it, but that never stopped coursing hormones. By the next night they’d contacted the listing agent, drafted an offer and submitted it. The deposit was $15,000 – part of a downpayment they figured would be $50,000 – and they handed over a cheque when the realtor asked for one. Make it certified, he suggested, since it shows you’re serious. They did.

A day later they’d done some heavy budgeting, gone to the bank to visit their loans officer and, most seriously, emailed me [Garth Turner]. “Maria really, really wants this house,” Jason explained, “but after thinking about this and doing the numbers, we’re a little scared. Do you think we should just walk away and, like you say on the blog [greaterfool.ca], wait a year?”

Of course you should walk, silly hormonal, self-destructive, irrational people, I said, letting my feminine side show through. Just tell the agent to stop payment on the deposit cheque before it’s cashed and before the vendors have a chance to sign back.

Unknown to me, the sellers immediately accepted the deal, and the deposit cheque had been certified. So when Jason called the agent – less than 24 hours after signing the offer, thinking that he could back out during a “cooling off’ period – as is the case in BC and other provinces with condos (usually seven days to exit) – he was shocked. “You bought it,” he was told. “Congratulations.”

And they did. Closing’s in seven weeks. They’re freaking.”

- as told by Garth Turner, at greaterfool.ca, 27 Jan 2013

Condo Ad Booklet – “The Provincial Government will send you a tax free cheque for $10,000 if you buy a qualifying condo by March 31, 2013 and you are a first-time home buyer.”

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- above from a set of images sent by ‘Ordinary Average’, via e-mail, 22 Jan 2013, and who adds:
“Today in my mailbox I found the following booklet. Pages 4-5
state “Borrow the down-payment from your favourite uncle and pay him back when you get the $10,000!”. Condo advertisements have become a weekly occurrence in my mailbox lately, this one blows me away.”

UPDATE [hat-tip bullwhip]:

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Doug Bigg and his daughter Krista check out a condo developer’s brochure that makes unauthorized use of the provincial logo.

“A major condo developer has been reprimanded by the B.C. government for the unauthorized use of the provincial logo in a promotional brochure for a new development in Langley.
Quadra Homes agreed Thursday to delete all references of the government’s registered logo from its website and to destroy the remaining promotional brochures for the development, named Yorkson Creek, which carried the B.C. logo on its front and back page.
The issue came to head on Wednesday after The Province contacted the Ministry of Finance asking about the 28-page, glossy brochure, which began arriving on doorsteps in the Langley and Abbotsford areas within the last two weeks.
“British Columbia [the logo is used] is handing out $10,000 in cash … ” read the cover and back of the brochure.
“Borrow the down payment from your uncle and pay him back when you get the $10,000,” read another page.
Another read: “We have the qualifying condos and will fill out the paper work for you.”
The $10,000 refers to the government’s first-time homebuyer’s bonus, which was detailed in the first few pages of the brochure. The rest of the pages are dedicated to the benefits of buying at Yorkson Creek.
“It is not just misleading, it is wrong,” said Doug Bigg, who received the brochure last week. “I interpreted it as taxpayers’ dollars being used to advertise condos for a multi-million dollar corporation. If I thought that, then I’m sure most other people would think that.”
But the government had nothing to do with the brochure, the Ministry of Finance said. And on Thursday, the company was ordered to remove all unauthorized references of the logo.”

- from ‘Major developer reprimanded over unauthorized use of provincial logo to help sell condos’, The Province, 24 Jan 2013

“I personally know of a friend who was offered the moon from the bank to buy a home in October. This month the same bank is reconsidering the mortgage. Nothing has changed for my friend’s finances.”

“Sadly, I’ve been hearing lots of stories of financing falling through. Banks have done a 360 degree turnaround. They are still lending, but on their terms. Not so attractive terms. I personally know of a friend who was offered the moon from the bank to buy a home in October. This month the same bank is reconsidering the mortgage. Nothing has changed for my friend’s finances.”
- enlightened at VREAA 16 Dec 2013 3:36am

“I was approved for about 420k in the spring I only made a little more than 50k last year. I looked at a few condos in Vancouver and decided to keep renting.”

“I was approved for about 420k in the spring I only made a little more than 50k last year. I looked at a few condos in Vancouver and decided to keep renting.
I sold my house on Vancouver island for about 40% over assessment also about 20k more than I thought it was worth. I don’t know if a human came to appraise it.
My experience of the past year from looking at condos to selling a home and getting pre-approved I see so many holes in our system.”

- Funky Monkey at VREAA 23 Dec 2012 9:27am

“Five years ago my girlfriend and I were pre-approved for over 400k on a mortgage, without showing or proving any income.”

“Five years ago my girlfriend and I were approved for over 400k on a loan. You know, the kind that get pre-done before you shop. Well, that was without showing or proving any income. This was by word of mouth at a mortgage broker’s office. I said I have the papers to back my claims, she said doesn’t matter, we trust your word.
Why would phoney valuations made by a computer surprise anyone in today’s environment?
We never pulled the trigger on a place… good thing too!”

- kc at VREAA 23 Dec 2012 9:12am

Overheard On Robson – “They were talking about how prices had dropped. One said she was looking to buy, and was weighing up whether this would be a good time to do so.”

“My wife was walking on Robson Street last week. She doesn’t look out for this kind of thing as much as I do, but she couldn’t help overhearing two women, aged about 30, dressed smartly, talking about RE. They were talking about how prices had dropped. One said she was looking to buy, and was weighing up whether this would be a good time to do so.”
- via e-mail from westsidefrank, 17 Dec 2012

“I’m hoping I can buy my daughter a decent size condo in Vancouver when she graduates from UBC next year. Even if she finds a good job, she will never be able to afford home ownership without my help.”

“When prices become unaffordable, demand should come down. At least that is what I’m hoping for, in the short to medium term, so I can buy my daughter a decent size condo in Vancouver when she graduates from UBC next year. Even if she can find a good job after graduation she will never be able to afford home ownership without my help. Renting is obviously a viable alternative if condo prices in Vancouver don’t come down. Or she can just return home and stay with me, my wife and our dog :)”
- comment by Simple Living at The Globe and Mail, 11 Dec 2012, 12:54am

Later on in the same thread ‘Simple Living’ adds:
“If I can afford to pay cash up to $1 million for a condo for my only daughter, it’s my choice and it still is simple living by my standard.” &
“$200,000 a year combined income will not buy you much of a condo in Vancouver at present, let alone a house. That’s why property prices in Vancouver right now are beyond what most working class people can afford. As soon as mortgage rates go up, a lot of over extended home owners will be in serious trouble.”

I Was Literally Shocked By Her Lack Of Knowledge Of Current Conditions – “Aren’t prices still going up in the lower mainland? I mean look at all those sold out presales in the news recently.”

“Last week I had a conversation with one of my co-workers, who recently got engaged, about her RE plans. Her fiance and her have fairly good paying jobs and are currently renting. She is a SFU grad and her fiance is a recent UBC grad. She told me she desperately wants to have a place of her own and is thinking about diving into the market. I advised her to wait at least a year and see what happens in spring of 2013 before taking the plunge. She then gave me a confused look and stated: “But aren’t prices still going up in the lower mainland, I mean look at all those sold out presales in the news recently.”After hearing that I knew she has not done any research at all. I then told her to check out this blog [VCI], Garth’s blog, and a few other RE blogs before she makes her final decision. I was literally shocked by her lack of knowledge of current conditions. In the last few months even the MSM has been reporting on the emergence of a “buyers market”. But for some reason she has filtered all those bearish reports and concentrated on the sensational stories of presale sell outs with people lining up just to get a chance to snap up a few units. Sometimes I just don’t get it. People are making financial decisions that will effect them for the next 25 years in some cases even more, and they base their decisions largely by their emotions sometimes irrational and the message being spewed by the highly biased MSM. In my opinion RE blogs are providing a great service to the general public by providing a different perspective of the RE debate and hopefully they can save a few sheeple from becoming the greatest fools of all.”
- Waiting to exhale at VCI December 8th, 2012 at 7:40 pm

The average Vancouver RE market participant continues to view the market as robust.
We expect this to change profoundly in 2013-2014, as price weakness becomes obvious.
- vreaa

“The sales in the $725K-$800K range caused cries of disbelief and anger from my close family who bought a house down the street for almost $1M, in June.”

“Sellers in Burnaby North, like many markets, are busy chasing the market down, with very few getting out in front of the declines. I’m fortunate to have access to MLS, and I’m seeing many listings that were priced >$1M as late as August now well in to the $800k range.”

v972997_1
“This one, V972997, a foreclosure, is particulary extreme: original list $1.8M in Dec 2011, now listed at a fire sale price of 900k.”

“A couple of decent houses (V967123, V981232) in Brentwood Park area just sold for <725k. V967123 was originally listed for 988k in May! The sales caused cries of disbelief and anger from my close family who recently bought a house down the street for almost $1M in June. Their lot/house is nicer but still, you can see the doubt creeping in, even as they vociferously defend their investment.Things are changing in that market, and fast.”

- CashedOut At VCI December 3rd, 2012 at 7:47 pm .

A Big ‘Thank-You’ To The Insanity Of The Vancouver RE Market – “I sold my loft in a seedy part of Gastown that I bought for $168K in 2005 for $520K in 2011. Paid $220K for a nice 600sqft 1bdrm in downtown Halifax, and now I’m debt free, with $200K in the bank, at 26.”

“I recently moved to Halifax from Vancouver for grad school and its amazing how much more enjoyable life is when your debt free. I sold my loft in a seedy part of gastown that I bought for 168k in 2005 for 520k in 2011. Paid 220k for a nice 600sqft 1bdrm in downtown Halifax, and now I’m debt free at 26. I’ve got 200k in cash in the bank too, how many 26 year olds can say that?! and I have all of this thanks to the insanity that is the vancouver real estate market! I feel for these people though, our generation really got the shaft when it comes to the economy and real estate. I’ve got plenty of friends who did everything they were supposed to do to succeed in life and are working temp jobs to pay off 100k in grad school debts. If I didn’t have supportive parents I don’t know where I’d be right now.”
- jj at VREAA 27 Nov 2012 9:22am

Well done, jj. You were fortunate with the timing (because 2008 could just as easily have taken you back to pre-2005 prices), but that is now not material.
jj saw that $520K cash was of far, far higher value than a “loft in a seedy part of Gastown”. Anybody who cashes out in the vague vicinity of a top, by virtue of luck or skill, will do fine.
The point is that the person who overextended to allow jj to cash out, and all the thousands of other Vancouver buyers over the last 3, 4, 5 years who have done the same, are left holding the other side of the deal: A property that is worth far, far less than the future earnings that they have promised to pay to buy it.
- vreaa

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

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

Appropriate handle.
Timing can be a bitchallenging.*

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

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

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

Spot The Speculators #90 – And So Ad Infinitum – “Three transactions were all stuck in limbo because no one was willing to budge on their price in order to sell their place and let the dominoes fall.”

“Here’s an interesting game of chicken that illustrates what’s happening in the market right now:
I was talking with a colleague who just sold their home. They had an offer made on it a couple months ago which was subject to the sale of the buyer’s townhouse. The owners of the townhouse received an offer, you guessed it, subject to the sale of the potential buyers condo. These 3 transactions were all stuck in limbo because no one was willing to budge on their price in order to sell their place and let the dominos fall.
In the end what ended up happening was the couple at the bottom (owners of the condo) decided to take on two mortgages. They used that as leverage on the person who owned the townhouse to lower their price (use the difference to carry the second mortgage for a few more months). The person with the townhouse agreed and used that as leverage on the homeowners. So everyone dropped their price to move their properties and the condo owners are now left with two mortgages… hope their strata allows for rentals.”

- Anonymous at VCI, November 16th, 2012 at 8:12 am.

And the speculators here are… 1. the guys who end up with two properties, and 2. the move-uppers from the townhome to the (I presume) SFH.
The buyers create apparent wealth from nowhere by borrowing and promising pay-back over 25 years, the only seller who is actually cashing out runs with the money.
If home prices go up, those who have increased their RE exposure do well to okay… if prices drop, they are BBQed.
Anybody who doesn’t see how this is all directly related to musical chairs and Ponzi schemes really isn’t paying attention.
- vreaa

“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.

“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

Thirty Two Westside Sales and Relists

3725 37th Ave W

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Spot The Speculators #88 – “My girlfriend and I just put an offer on a condo by Gilmore station for 430K. It looks like we’re going to get it. We plan for this condo to be both an investment and a home for at least the next 7 years.”

“I graduated last year and got a stable government job and my gf is a chef. We’ve saved up about 50K for downpayment, and we just put an offer on a condo by Gilmore station for 430K. It looks like we’re going to get it. We plan for this condo to be both an investment and a home for at least the next 7 years.
We both grew up in Richmond, and as much as we love the place, there are inherent issues with the city. Most importantly, its housing market is based on one factor – Chinese investors.
The housing market in Vancouver is strongly influenced by investors from overseas, mainly China, Hong Kong, Taiwan. Earlier this year, policies were tightened for foreign investors, in most cases from China. Money was actually returned to them. This means that the development on River Road in Richmond by the Olympic Oval is undersold. Now housing prices are dropping like crazy in Richmond after a 5 year boom, not to mention the crawling speed of the market as well.
My company will be moving next to Brentwood mall soon, and this is one of the reason why we’ve decided to move there.
More importantly, the plan to develop and rebuild and revamp Brentwood mall is a good sign, including the three phase project – the first of which includes an ultra high rise. Needless to say, with an increase in population in the area, housing prices are expected to go up in the future.
We almost bought a similar place for 20K more last month, I’m so glad we didn’t because the prices has dropped a little. But there are not a lot of options because sellers who are not in rush simply took their property off the market.
Here are the questions I have:
Is it possible that there will be too much property for sale that dilutes the value of property as a whole in the future? For example, both Brentwood and Oakridge malls have plans for a ton of new homes in the future (both 3 stage projects).
What are other factors that might affect property value in Burnaby and in Greater Vancouver as a whole?
Finally, I’ve heard that housing in Vancouver, as long as it is close to Downtown, UBC, or Vancouver itself, will always be saturated. Can this always remain true if there is such an abundance of developers creating new condos?
Everything considered – what do you expect a 400k-ish condo in Burnaby to be worth on the market in 5-10 years?”

- ‘Reddit, I need your opinion about something as I’m about to make the biggest purchase of my life’, shaozhen, reddit.com, 31 Oct 2012

The fact that they see the home, even in part, as “an investment” makes them speculators.
They are buying on the premise that prices will rise or at the very least remain strong.
To answer their last question: I would say that their $400K condo will touch a market price of $220K (real) well before it ever hits $440K.
Would they be buying if they saw that possibility?
Precisely.
- vreaa

Almost All Buyers Are Very Leveraged – “41% have less than 10% down-payment, a further 21% less than 20% DP. Only 39% put down more than 20%.”

“According to the latest data from Will Dunning, Chief Economist of CAAMP, less than 4 in 10 buyers have 20% down payments.
For those purchasing from 2010 through spring 2012:
41% had less than a 10% down-payment
21% had a 10-19.99% down-payment
Only 39% put down 20% or more.
(This survey included both first-time and repeat buyers. First-time buyers accounted for 56% of the dataset. Totals don’t add to 100% due to rounding.)”

- jesse (‘YVR Housing Analyst’) at VREAA 8 Oct 2012 10:55am, quoting from a Canadian Mortgage Trends article on the recent CAAMP released figures.

Headlined for the chronological record.
The vast majority of buyers are very leveraged to RE prices.
The Vancouver subgroup is likely worse, given our price levels.
This flies in the face of those who claim that Vancouver is supported by vast numbers of cash buyers.
And, as we all know, if an owner has less than 20% equity in a house, they lose it all when prices drop 20%.
- vreaa

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

Buy Now At 20XX Prices!

441 E 38th
Asking $899K, then $829K. Sold for $820K.
Purchased in December of 2010 for $810K.
“Are we at Dec/10 pricing already?”

- timber2012 at RE Talks 4 Oct 2012 1:40pm

There is valid ongoing debate regarding which price measures to use to best monitor the decline.
Not a simple task: Mean, Median, Teranet, Benchmark?
Teranet, using (by our understanding) Case-Shiller-type sale-resale single-property methodology, is likely the most valid price to track.
At the single example level, time1 to time2 anecdotes will always be powerful.
A house that sold for ‘x’ in 20XX, now selling for ‘y’ in 201X, doesn’t necessarily reflect the whole market, but still grabs the attention of prospective buyers.
“Gee, I could buy that now for less than I’d have paid in 20XX!”.
- vreaa

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

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

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

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

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

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

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

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

“My friend, a top-selling realtor on the North Shore, told me he’s able to spend a lot more time at home with the kids now, because the market is so slow. He feels that this is the reckoning for which the Vancouver market has been long overdue.”

“My friend is a top-10 best selling realtor on the North Shore. Told me on the weekend that he’s able to spend a lot more time at home with the kids now, because the market is so slow. He doesn’t see any change on the horizon, and feels that this is the reckoning the Vancouver market has been long overdue for.
Reminds me that we shouldn’t assume all realtors are market pumping dolts. The best of them understand that the market comes and goes in cycles, and that they need to have a different strategy to extract the most value out of each part of the cycle.”

- Rocker Guy at VCI 10 Sep 2012 10:14am

Victoria – “The ‘next wave’ of first time buyers is when housing drops to where the 30k-40k salary can purchase. A 10% correction has gone unnoticed”

“My social group is mostly 100k/yr co-workers and 30k/yr friends. Of my 15 co-workers all but me have bought, many in the 2007 mania in Victoria. None will have to sell but all took mortgages for as much as they could get and will be paying out 40% of take home for the next 25-35 years.
The 30k/yr friends would love to own, but accept that it’s impossible in this market without moving west out of Victoria and a couple trips through the Colwood crawl usually puts that to rest (for the smart ones anyway).
I won’t be buying, I like winter travel and early retirement too much. So the ‘next wave’ of first time buyers in my world at least is when housing drops to where the 30k-40k salary can purchase, a 10% correction would (and has) gone unnoticed to anyone who doesn’t have an assessment to look at each year.”

- Lee at VCI 7 Sep 2012 1:23pm

A 10% correction from a bubble top is just noise, and doesn’t do very much to reconcile prices with fundamental values. It may, however, be enough to cause most buyers to take pause, and thus ensure future price descent.
- vreaa

“Vancouver RE talk I overheard at a BBQ on the weekend.”

“THINGS I OVERHEAD AT A BBQ OVER THE WEEKEND
-we finally sold the townhouse, we lost a lot of money
-prices are starting to soften
-wait to buy
-condos are down 15-20% already
and my personal fav
-all the people that didn’t go to university after high school became realtors and made a lot of money.” … “For once I did not bring up the topic at all, I just sat back and observed.”

- 4SlicesofCheese at VREAA 28 Aug 2012 8:30am

“Things I overheard at my BBQ:
- we sold our loft for full ask after one showing
- we just bought a house in Burnaby, ended up at asking price. The house was expensive, but we really like it and the location, so it was worth it to us.
- we thought about waiting to buy, prices might go lower, but they’re at a point right now where we can finally afford what we want so we’re looking.
Sounds like a different BBQ…”

- nuxfan at VREAA 28 Aug 2012 9:56am

“She got three offers but the first two couples who put in an offer didn’t get approved for financing.”

“I had a chat with a colleague yesterday at lunch. She’s just relocating in Calgary and managed to sell her house pretty quickly. Interestingly, she got three offers but the first two couples who put in an offer didn’t get approved for financing.”
- Makaya at VCI 23 Aug 2012 2:28pm

CIBC – “Demographic forces will be as supportive to real estate markets in the coming decade as they were in the past decade.”

“Demographic forces will be as supportive to real estate markets in the coming decade as they were in the past decade,” CIBC economist Benjamin Tal says in a report. …
“The growth in the number of Canadians in the age group 25-34, which accounts for the vast majority of first-time buyers, is projected to be much stronger. In other words, the group that is most likely to buy a house will grow faster in the coming decade,” Tal says. …
“The housing correction in the 1990s came with a softening in demographically-based housing demand, CIBC says, which dropped from an average annual rate of more than 2 percent in the late-1980s to 0.2 percent during the 1990s.” …
“Assuming that any upcoming adjustment in housing market activity will occur in a non-recessionary environment, demand for housing in the coming decade should be more than four times stronger than it was during the dreary market of the 1990s,” Tal says.
An increase in immigration is also expected to boost the housing market, according to CIBC, as home ownership rates for immigrants ten years after they have arrived are higher than among those born in Canada.
“So, while housing market activity is projected to soften in the near-term, the good news is that any adjustment will not be aggravated by negative demographic forces,” Tal says. “In fact, at least for the next decade, demographic forces will be strong enough to mitigate the damage and probably shorten the duration of the upcoming market adjustment.”

- from ‘Housing crash fears overblown: CIBC’, bnn.ca, 23 Aug 2012

Real demand for housing supports fundamental-derived prices, not speculative-derived prices.
Perhaps the weakness in the Canadian market in the 90′s came from waning demographic demand.
The weakness now commencing is the result of a cresting speculative mania. Fundamental-derived price supports (based on rent yields or local incomes) only come in at prices far below current market prices. A slight increase in demand due to demographic factors will not substantially change the reconciliation that is going to be occurring.
- 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

“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

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

“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

“My wife doesn’t want to buy, not just because of prices, but also because she doesn’t want to anchor us to Vancouver. But my family will lay on the pressure as prices decrease.”

“I’m starting to feel a bit of angst. My wife (from the East Coast) doesn’t want to buy, not just because of prices, but also because she doesn’t want to anchor us to Vancouver. But my family will lay on the pressure as prices decrease. Could get dicey.”
- Patiently Waiting at VCI 29 Jun 2012 8:32pm

Scientists Skip The Math – “No calculations or economic analysis are needed, my co-workers in the science/engineering/technology sector and my friends are always certain that buying is always a better choice. My choice to rent always seems to puzzle them.”

“My choice to rent always seems to puzzle other people. No calculations or economic analysis are needed, my co-workers and friends are always certain that buying is always a better choice. My friend just bought a house before the mortgage rule change, and didn’t take my advice. We all work in the science/engineering/technology sector (not in Alberta) but he is completely oblivious to what’s happening in the rest of the (economic) world. He’s the type that truly believe Canada entered and emerged from the 2008 recession unscathed. Actually, he didn’t even know there was a crisis in 2008 and there will (probably) be one from the next country exiting the Eurozone! It’s sad that these are the types of people that are trying to give me advice.. All I can do is be as humble as possible… but it’s frustrating… My point is – the herd thinking is a very strong force. One that I refuse to believe in.”
- Petr Syk at VREAA 8 Jul 2012 5:54am

“Now he’s gone and bought a place! Is the Anglo-American ownership obsession that strong that even when you know you shouldn’t be buying you do anyway?”

“My old boss recently got transferred to Toronto and has been providing a steady stream of Facebook updates regarding the RE market there – how he can’t believe he’s moving there at the peak of the bubble, how he’ll need to rob a bank, etc, and now he’s gone and bought a place! Is the Anglo-American ownership obsession that strong that even when you know you shouldn’t be buying you do anyway?”
- CanuckDownUnder at VCI 6 Jul 2012 7:21pm

Yes, the ownership obsession is that strong.
Also, people have poor understanding of how they will behave under different circumstances.
Those who ‘know’ they’ll not buy end up buying; those who are certain they’ll “sit pat through the downturn” end up coming to market at 30%-off.
- vreaa

Naïve Buyer Logic – “We probably wouldn’t have been able to afford to mortgage a house, or at least not the house we wanted, if we hadn’t jumped on it.”

“Bruce and Denise Perrett, of Port Coquitlam, B.C., got married last year and wanted to buy a house, but they weren’t in a rush.
That all changed when the couple heard Ottawa was tightening mortgage rules.
For the Perretts, locking into a 30-year term as opposed to 25 years meant an extra $300 a month that could go to strata fees or property taxes.
They sprang into action and called their mortgage broker.
“She was right on it, she got us the approval and the next day we were rolling,” said Denise Perrett. “Then we found out we had to have an accepted offer by [July 9] and then we panicked and called our realtor.” …
The Perretts spent 48 hours looking at homes and put an offer that was accepted last week on a property in Maple Ridge that has everything they want.
The best part is that they qualify for a 30-year mortgage.
“We probably wouldn’t have been able to afford to mortgage a house, or at least not the house we wanted, if we hadn’t jumped on it,” Bruce Perrett said.”

- from ‘Home buyers scramble before mortgage rules change’, CBC News, 7 Jul 2012 [hat-tip specialfx3000 at VCI, and jesse]

1. When market rules tighten, you won’t be able to afford ‘x’.
Why stop thinking at that point? ->
2. Others like you won’t be able to afford ‘x’, either.
Therefore ->
3. Prices will have to drop to ‘x-y’.
- vreaa

“I really hope for there to be a big crash. That would probably be the only way to get a place for myself.”

Deborah Cheng has resigned herself to staying with her parents for a few more years unless Vancouver’s housing bubble bursts.
“I really hope for there to be a big crash. That would probably be the only way to get a place for myself,” said Ms. Cheng, a 30-year-old administrative assistant.
She’s saved $90,000, hoping to put a 30-per-cent down payment on a home. But in Vancouver – where the average price of a detached house this year is $732,736, according to the Canadian Real Estate Association – her options in the $300,000 price range are older-studio and one-bedroom units in high-rise buildings.
“You find out that the building is pretty run-down and you might have to pay a lot for repairs in the near future.”

- from ‘For many, new mortgage rules put home ownership out of reach’, G&M, 21 Jun 2012

Patience.
- vreaa

Don’t Confuse A ‘Buyer’s Market’ With A True Buyer’s Market.

“The number of residential property sales has hit a 10-year low in Metro Vancouver leading the Real Estate Board of Greater Vancouver to declare a buyer’s market.
The announcement is significant since the board has in recent months been calling the market “balanced.”
According to the board’s June report, sales of houses and apartments dropped to 2,362 last month, a 27.6 per cent decline compared with 3,262 sales in June 2011, and a 17.2 per cent drop over the previous month of May.
“Overall conditions have trended in favour of buyers in our marketplace in recent months,” said Eugen Klein, the board’s president, in a news release on Wednesday. “This means buyers are facing less competition and have more selection to choose from compared to earlier in the year.”
June sales were the lowest total for the month in the region since 2000 and 32.2 per cent below the 10-year June sales average of 3,484, the report shows.”

- from ‘Vancouver sales hit 10-year low, real estate board declares a buyer’s market’, Vancouver Sun, 4 July 2012 [hat-tip Loon]

One will be hearing much talk of a ‘Buyer’s Market’ in local media in the near future, and Vancouver Sun/REBGV news release is an example. Most readers on the Vancouver RE blogosphere are very familiar with the difference we refer to, but, for sake of the newbie reader, we thought we’d pop up this post in an attempt at clarification.

The RE Board of Vancouver uses the ratio of sales to listings to decide whether to call the market a ‘seller’s market’, ‘balanced’, or a ‘buyer’s market’. Thus, if listings are high and sales are low (as they are at present), it is automatically deemed to be a ‘buyer’s market’.
This ratio can also be expressed as MOI (or ‘months of inventory’), the theoretical number of months that sales at the current pace would ‘clear’ the inventory (total listings). There is a good correlation between high MOI and downward pressure on prices. See jesse’s articles at ‘Housing Analysis’ for eloquent  discussion of that relationship.
Thus, when the REBGV refer to a ‘buyer’s market’, they mean one where sales are low compared to total listing. Note that this in no way refers to absolute price levels. Yes, it is better for a buyer if there is a low sales:listing ratio and downward pressure on prices (more homes to consider, less time pressure, more bargaining strength) BUT it is immediately apparent that absolute price levels are far, far more important to a buyer. The buyer gets more for their money when prices are lower.
In our own terms, and from the perspective of the vast majority of prospective buyers, it is far better to buy a property that is priced at fair value than it is to buy a very, very over-priced property that happens to be falling in price from very, very over-priced to merely very over-priced.
A true buyer’s market is one where the buyer receives good, or at least fair, value for their money.

Vancouver prices have only recently begun to weaken from their stratospheric heights.
By fundamental measures, they ran up, in the speculative mania of 2003-2011, to levels that are two to three times fair value. Prices have weakened by about 3%-14% since the 2011 peak, depending on which sector you look at, and which price measures you use.
This is not by any sensible measure now a true buyer’s market. It’ll be a buyer’s market when prices hit the vague vicinity of fair value; they still have a long way to go downward prior to that.
– vreaa

“Two things happened. Amount the buyer will qualify for is now lower, so not sure if they can afford same place. And, the buyer said they should really wait as things will get cheaper.”

“My good friend’s wife is realtor on the North Shore. She was about to close on condo purchase (she’s the buyer’s agent). Two things happened – – amount the buyer will qualify is now lower, so not sure if they can afford same place – and – the buyer said they should really wait as the market will now fall so things will get cheaper. That’s one grass-roots feedback.”
- ZRH2YVR at VCI 28 Jun 2012 7:49am

Two of many things that happen when markets start falling.
Note how someone who considers themselves an imminent buyer takes a step towards the sidelines. Demand does not behave in a linear fashion.
- vreaa

“It means my total family income would have to be an exorbitant amount to afford an $800,000 house.” [Bizarre Idea!]

Another new rule announced by Mr. Flaherty sets the maximum gross debt-service ratio – the percentage of household income being used to pay for housing – at 39 per cent so buyers will be less likely to take on mortgages that are too big and could leave them floundering if rates increase.
That’s the one that Andrea Benton, a 37-year-old entrepreneur in North Vancouver, B.C., said hits her family of four hardest.
“It means my total family income would have to be an exorbitant amount to afford an $800,000 house,” she said.
The changes in mortgage rules over the past few years have made owning a house less desirable, she said. While she understands the government’s intent is to bring prices down eventually, she said, “It feels a little Big Brotherish to me,” and questions whether it will have its intended effect on the hot North Vancouver market.
“We’re probably going to be long-term renters,” she said. “The closest I’ll probably own anything is a condo when I’m 65.”
– from ‘For many, new mortgage rules put home ownership out of reach’, G&M, 21 Jun 2012

The speculative mania in RE has desensitized Vancouverites to the actual meaning of large numbers.
- vreaa