“Nothing Wrong Here!”

Maple Ridge: Lougheed Highway and 223rd [image and post title care of Aldus Huxtable]

Trump on Vancouver – “Your people, they go to New York, they go all over the world, and they speak so highly.”

“I love Vancouver. I have had so much experience with Vancouver and with people who live here. You don’t even realize how important it is in terms of a destination and also your people they go to New York, they go all over the world and they speak so highly.”
– Donald Trump, as quoted in ‘Trumps announce exclusive tower deal in Vancouver’, CBC.ca, 19 Jun 2013 [hat-tip jesse/YVR]

Did he try to say that people in New York speak highly of Vancouver, but just couldn’t?
– vreaa

“My best guess: this property is now an ‘investment hold’ and will be built ‘when prices recover’. Good luck on that!”

“The dominos start to fall: SFR Project on indefinite hold in Van West!
This is a property I have been watching for some time: 4988 Chancellor Boulevard in University, Vancouver West. A 7,700 square foot lot with an old house in an exclusive area of mostly older homes, with a few new builds. Sold under MLS V951758 in June 2012 for about $2,600,000 listing was at $2,688,000; by June 2012, properties in Van West were already coming under some price pressure. After it was sold, a sign appeared on the site, advertising a new 4,500 square foot modern architectural home to be ‘built in 2013′ with completion by 2014, priced at $5,188,000 under V989612 still active, but listing now says ‘completion in 18-24 months’. However, after about 6 weeks the sign disappeared and from June 2012 through last week the house was vacant and there were no signs of construction. Then last week April 10, several large U-Haul trucks arrived and a pickup toting a boat. Now, there is furniture in the house, a new ‘beware of dog’ sign on the front and from the shoes outside the front door, it appears it has been rented to a family plates on vehicles are BC. Normally, a family doesn’t move lock, stock and barrel into a house on a month-to-month tenancy, so I’m guessing they have a longer lease, but I cannot find a rental listing. The developer of the new house, Natural Balance Premium Home Builders, does not list this house on its website and the purported architect, Frits de Vries’, website does not mention this project.
My best guess: this property is now an ‘investment hold’ and will be built ‘when the prices recover.’Good luck on that!”
– RFM at VCI, April 15th, 2013 at 7:37am

“They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours.”

“I was in a Starbucks in Kits today listening to two very Vancouver ladies talking RE. They were talking about two couples they knew who had recently bought a lot and planned to each build a house on it and live as neighbours. These ladies were concerned because one of the couples were heavy pot smokers. They wondered how the other couple would feel having clouds of dope smoke wafting in through the open windows on warm summer evenings. I just looked at my wife, who had been listening intently as well and whispered TWEB (This Will End Badly).”
– lexlimo at VREAA 4 April 2013 7:17 pm

“He’s sold all his properties except his current one, which is now for sale. He explained that the market’s currently in crash mode, worst that he’s ever seen.”

“Just spoke to someone in the neighbourhood, real estate came up and it came out he’s invested in real estate over the last 15 years, buying dumps and fixing them up and flipping them. Has done this multiple times I was thinking oh no, this is going to end badly, then he told me he’s now retired and I thought even worse… Then continued to say he’s sold all his properties except his current which is currently for sale and explained that the market’s currently in crash mode, worst that he’s ever seen. He talked about 2008 and thought we were in for something far worst this time. Talked about previous declines he’s seen and thought this is going to be worst. Doesn’t follow any of these blogs. He’s getting close to selling now for about a 40K loss, and thinks he’s close to sealing the deal, but I got the impression he’d be happy taking even more of a loss just to get out.
He’s moving away from the lower mainland and buying farmland to retire on. Mentioned there are a couple others a few streets away that bought/reno’d/now trying to sell, thinks they’re already listed at breakeven and that they need to come down quite a bit more before selling. …
This was in South Surrey, I should add. Was a guy that seemed to have had some very good days in his life and has seen some very tough times…. Sounded like he was in the midst of a tough time job wise in his life in the late 90′s and is a pretty good handyman and kind of fell into the real estate thing, rode it up, and jumped off when he realized he had gained enough money to live out his life without worrying any further about money.
I was taken aback by this guy… Good for him.”
– groundhog at VREAA 1 April 2013 at 4:10pm and 4:39pm

Sturdy, With Views – “Calling Froogle Scott!… Is Dr. Scott ‘In The House’?” [Not In This One, Certainly]

Poster ‘DNAspark99’, [on the forum bcsportsbikes, 22 Mar 2013 and onwards; hat-tip RE Lurker] has posted images of a ‘building’ that is under construction, with this commentary: “So, my landlord has taken it upon himself to build a ‘toolshed’. For a roto-tiller. At least, that’s the entirety of what he told us – there are, however, some inherent communication issues. (He’s Korean, and not yet well versed in English (though certainly much better than my Korean)). There’s one door so far, and a lawnmower will not even fit through it. (I don’t think he knows that yet though)
So, this is the ‘project’ thus far. For one, the ground it’s being built is mushy moist marshland – your feet sink with every step. Which is always ideal for a good foundation – or complete lack thereof.
It may not be immediately obvious, but I don’t think this man has a background in construction.
It appears he owns a hammer and saw, perhaps a measuring tape, perhaps not. Certainly nothing like a square, straightedge, or level.
I guestimate that he has seen no more than 3 episodes of various home improvement shows, and maybe at best he’s driven by a construction site atleast once in his life. After all, “How hard could it be?”

And now, in time-lapse video:

More:

A second time-lapse video [posted 2 Apr 2013], worth the watch for casual efficiency, for the horse, for the stuff falling off the roof, and for the paint-job:

Kits Notes – “I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen in the 5 years I’ve lived here that is priced below $700K.”

James writes [via e-mail to VREAA, 12 and 14 Mar 2013]:
“A couple of properties that I’ve been watching in my neighborhood with interest...

Unit #1 2482 W 8th Ave; 1132sqft; Ask $699K
Granted this is a garden suite (but a nice one at that), I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen since I’ve lived here (5 years) priced below the 700K mark in Kits. MLS blurb states: “NO HST & PRICED $146K BELOW ASSESSED VALUE!”
History:
Nov 2012 list price: $810K
Dec – price reduced: $799K
Today’s price: $699K -> -14% in 4 months! ouch!”

“Two other units in the same heritage-tear-down-and-subdivide Kits special..

Unit #2 2488 W 8th Ave; 1331 sqft; Ask $899K
This one is great because it’s a 2 bedroom and yet priced at a full $200K above the one above…but still “PRICED $106K BELOW ASSESSED VALUE & NO HST!”
Previous list price: $950K -> I wasn’t able to find a date on this…
Current list: $899K
Price Reduction: -5.4% in 4 months. Though I bet any money that the $950K price was an interim price drop given the obvious desperation on the other units.”

“Third still listed on one site but not Realtor.ca which means that some poor sucker paid too much money or they are in the process of relisting it:

Unit #3 2486 W 8th Ave; 1197sqft; Ask $950K
3 bedrooms but $250K more than the “garden suite”. “PRICED $79K BELOW ASSESSED VALUE & NO HST!”
La piece de resistance as they say.
Previous list price November: $1,050,000 (!)
Dec price reduction: $998,000
End of Feb price reduction: $950K
-9.5% haircut on a property that the city has deemed to be worth $1,030,000.
If it did sell, I would bet money it was NOT at $950K and therefore was probably -10% below assessed value at the time of sale. I’m sure all the other people on that street that are trying to sell , and there are a number of them, are not thrilled with this…”

“So, total $110K + $100K + $50K = $260K of assumed profit vaporized in 4 MONTHS.
Further, I managed to stumble across cached web pages with original purchase price of the property that was sold in May 2008 and subsequently torn down and replaced with the 3 “heritage style” Kits units above.
The original house looks like it was sold back in 2008 for $1.388M. Here it was then:

“I’m certainly not well versed in what it would cost to tear down to the foundations and then some, rebuild, subdivide and then flip a ~4K sq ft home like this, but an educated guess would be somewhere around ~$2-2.3M total for the 3 units once it’s all said and done including costs to sell each unit.
For the original list prices that WOULD have worked out to ~$500K profit. I didn’t consider cost of carrying the original mortgage since I’m not sure how these things work for developers, but 5 years of interest would be significant on a $1M+ mortgage.
Current list prices that profit drops to ~$200K.
And that’s with an assumed 1 out of 3 units sold and the nicest unit at that. No wonder they are getting desperate.”
—

Thanks to James for the above info and thoughts.
Anybody else got ideas on the math on a development such as this? -vreaa

Border Services raid on migrant workers on Vancouver Eastside construction site; Reality TV camera crew in tow.

“An ordinary day on a condo construction site in east Vancouver took a turn for the dramatic Wednesday when Canada Border Services agents burst in searching for illegal migrant workers — all while being shadowed by a camera crew apparently recording footage for a reality TV show.
The raid, which took place at the Porter development on Victoria Drive near 20th Avenue, was one of about 10 that reportedly occurred throughout the city Wednesday.
A site foreman for the condo developer Cressey said two CBSA officers arrived around noon hunting for two Honduran nationals who were quickly located. A short time later, as many as 17 officers surrounded the building and began sweeping the construction site floor by floor, checking identification.
The site foreman, who did not wish to be named, said he was shocked and had not seen anything like it before. He said the raid began with two people who seemed to know who they were looking for, then there were 15 more, as well as camera crews.
He said about eight people, all of whom worked for a subcontractor, were taken away from the site.
Other witnesses reported seeing between five and eight workers handcuffed and removed by CBSA agents while a film crew circled. Many also heard workers speaking of 10 to 15 other raids occurring the same day.”
– from ‘CBSA raid on migrant workers, complete with TV camera crew, raises concerns in Vancouver’, Jessica Barrett, Vancouver Sun, 14 Mar 2013 [hat-tip Nemesis and proteus]

Allegedly ‘illegal’ migrants working a Vancouver construction site; all wrapped up with reality TV. Archived for the chronological record.
We don’t even want to begin to think of the ethical issues involved with the TV show. Who is directing who?
– vreaa

Comment below the article above:
“I know where there is an entire building that was constructed with American workers. I called CBSA and they didn’t even care. I told them that if you went there, there is an entire crew of Americans working on site right now. The agent basically said it didn’t matter. To top it off, the construction didn’t even have a construction permit. No fire inspection. Nothing. They open for business and didn’t even have a business license. Yeah trust me. This is just one case. There has got to be dozens or maybe even hundreds happening all the time.” – Henry Wang, comment at Vancouver Sun

Housing Makes Up 20% Of Canadian GDP – “This heavy reliance is not healthy. We basically borrowed our way out of this recession. Now, it’s payback time.”

“If the city is any indication of what’s going on in the country, it’s over-reliant on its housing sector.” – Herbert Crockett, a retired World Health Organization executive who lives in France says of Toronto.

“We basically borrowed our way out of this recession. Now, it’s payback time. We will be in for a period of long, slow growth.” – Benjamin Tal, deputy chief economist at the investment-banking unit of Canadian Imperial Bank of Commerce.

“It did seem a little unusual to have every policy maker in Ottawa hectoring Canadians about their excessive debt levels and yet the economic incentive for the average Canadian was completely slanted to taking on debt and not saving. The realist in me would admit it was the only tool the Bank of Canada had. The reality was, they really could not lift interest rates.” – Douglas Porter, chief economist at Bank of Montreal.

“As an economist working for a Canadian bank, I can’t go into a client meeting and have someone not ask me about housing in Canada. For U.S. investors, they are still a little gun-shy about what happened in the U.S., and I think they worry the same fate will happen to Canada.” – Tom Porcelli, chief U.S. economist at RBC Capital Markets LLC, Royal Bank of Canada’s investment-banking unit, in New York.

Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S.
“This heavy reliance is not healthy,” CIBC’s Tal says. “I expect to see some softening.”

– excerpts from ‘Canada Losing Debt Halo as Bull Market Housing Peaks With Carney’, Bloomberg, 26 Feb 2013 [hat-tip Nemesis]
—

As we have been saying here for years.
What percentage of Vancouver’s GDP is linked to housing?
– vreaa

Home Inspector Oversight – “It’s been a nightmare, like I wish I’d never set foot in this house. I just wanted a place to live.”

“Buyers like Lindsay Denton, a 39-year-old single mother, are finding out the hard way they have little recourse if they believe a home inspector misses an obvious, visible defect. Complaints to the inspectors’ association might cost an inspector the loss of his or her license for a week, but financial settlements are only awarded through the courts.
Denton was battling breast cancer when she bought a $750,000 home in East Vancouver after an inspector’s report found no structural defects.
“It’s been a nightmare, like I wish I’d never set foot in this house. I just wanted a place to live,” Denton said.
“It doesn’t mean anything that they have a license or that they have errors and omissions insurance.”
Denton has filed a lawsuit against inspector Christopher Stockdale, who used to be the president of the Canadian Association of Home and Property Inspectors of B.C.
In her notice of civil claim, she alleges Stockdale failed to follow the standard practices of his association.
Denton claims he missed the fact that her home was structurally unsound, with extensive water damage, a hole in the roof, asbestos in the air ducts, and visibly rotten sill plates and posts.
She also claims Stockdale examined her one-storey roof with binoculars instead of climbing up with a ladder and failed to carry a tool to prod any potentially rotten wood.
Denton said she discovered some rot in the structure after the tenants in her basement suite moved out.
“I went downstairs to paint and I touched the wall and it was wet and soft and the wood on top of the foundation was rotten,” she said. “It was crumbling away.”
The crumbling wood Denton refers to is the sill plate, which sits underneath the posts that hold up the structure. She said the inspector should have seen rotten posts next to the furnace he inspected.
Inspections ‘do not constitute a guarantee’
In her claim, Denton says Stockdale of Home Sweet Home Inspections returned to her house, looked at the problems and offered to refund her the $565 inspection fee.
She claims she told Stockdale he also should have seen rot on the side of her house.
“I’ve borrowed $40,000 and I’ve spent more, and I’m looking for another $100,000 to fix my suite because it’s been 18 months without being rented.”
Denton says she’s struggling to make her mortgage payments and is waiting for another inspector’s report to assess the defects allegedly missed in her home, a report which will go before a judge in her civil case.
…
It’s almost impossible for homeowners to get compensation if something is missed during a home inspection, despite new regulations introduced by the B.C. government in 2009 requiring all home inspectors to be licenced and insured.”
– from ‘Buyers left with big bills when home inspectors miss defects’, CBC News, 21 Feb 2013[hat-tip 4SliceofCheese]
…

During a speculative mania, construction and inspection standards drop, as the abnormal pace of price gains paper over shoddy work. People are forgiving of all sorts of deficits as long as they know they are accumulating equity at a rapid pace. When the tide goes out, they look for people to blame. Ironically, that often leads to standards being tightened at the very time when such measures are least needed.
As an aside: If you “just want a place to live”, why buy a house where you need to rent out your basement to make the mortgage payments?
– vreaa

Large Abandoned Richmond SFH Construction Site For Sale – “Assessed value is $2,300,000. Asking $1,888,888 for quick sale.”

“Ad posted in Richmond News Feb 15.
10111 Sidaway Road, Richmond
4 Acre Estate Property, located in area of multi million dollar mansions and is adjacent to Mylora Golf Course.
The property was under construction in 2011 but construction was stopped.
House plans currently include a permit to build a 16,000 square foot house, but buyer can change the plans and build on the Engineer approved foundation that is on site.
Value of foundation is in excess of $300,000 and the assessed value of the property is $2,300,000.
Asking firm price of $1,888,888 for quick sale.
Call 604-abc-defgh.”
– posted by ‘Real Estate Tsunami’ at VREAA 18 Feb 2013 7:41pm

Filed under ‘Misallocation of Resources’; the central tragedy of a speculative mania.
– vreaa

Update – Westside Old Favourite Sells For Same Price As In Feb 2011

Here’s an update on a Westside SFH we’ve featured here before:

4411 W 11th; 4,696 sqft SFH; 63×121 lot (7,623 sqft; 0.175 acres)
(Old Timer; Backs onto alleyway behind 10th Avenue stores.)
Listed 9 Oct 2010 $2,980,000
Price change 6 Dec 2010 $2,890,000
Sold 15 Feb 2011 $2,830,000

Listed August 2012 with $3,180,000 ask price
Remained on market for rest of 2012, unsold

Relisted 24 Jan 2013 with $2,998,00 ask price
Sold 24 Jan 2013 $2,850,000

Anybody care to calculate carrying and transaction costs over the last 2 years?
We can’t verify this, but we are told that nobody has lived there over this period.
Will this property now be utilized as a residence, knocked down for a new build, or is it being purchased to sell again later at a hoped-for higher price?
– vreaa

—
This house was first featured at VREAA 6 Dec 2010 when we noted that, at an “Ask Price of $2,890,000”, “10% downpayment ($289K); 4% rate; 25yr amortization” would result in “Monthly mortgage payments: $13,681.79”
In a later post, 5 Jan 2010, we cited it as the kind of house that would sell for less than $1M in the coming trough.
This house was also featured representing our fair city in ‘Unashamed House Porn: Seattle Vs Vancouver’, VREAA, 11 Aug 2011.

“J.J. Miller and his brother William made their fortunes in real estate, and built giant houses in East Vancouver in 1908. They then lost everything in the crash of 1913.”

“It’s a natural that the conversion of big old mansions into multiple-unit housing can boost density and protect our heritage in the process.
As one of Vancouver’s developers found out the hard way, one of the biggest sticking points is if the neighbourhood will allow it.
Developer James Evans and architect Timothy Ankenman, who are old friends, are also responsible for two recent conversions: one in the hotbed of community activism, Commercial Drive, and the other in the polar opposite prestigious hood that is Kerrisdale.
Anybody who’s lived around Commercial knows the Jeffs Residence at 1240 Salsbury Dr. It’s a hulking three-and-a-half-storey, 1907 house that’s provided rental housing to the area since the 1920s. It was built as both residence and doctor’s office for Dr. Thomas Jeffs and his wife Minnie and their kids. The popular doctor, also a city council alderman and police commissioner, moved out of the house shortly before he died in 1923. It may be considered an old working-class neighbourhood now, but in the early part of the 20th century the Commercial Drive area was a rich person’s enclave, and the Jeffs Residence was surrounded by many other Queen Anne Revival grand houses with turrets, pitched pyramid roofs and hipped dormers.
Mr. Evans lives about a block away, so he’d walk by the house all the time and think about restoring it. One day, he contacted the owner.
“We put together a deal and went through a rather painful approvals process, ended up buying the site, and here we are today,” says Mr. Evans, standing on the job site.
The painful process he is referring to is community reaction against the loss of rental stock.
“It’s a pretty reactionary neighbourhood with anything that smells like development, so here I am, getting launched in the middle of the thing,” he says, sounding dismayed at the memory. “A lot of people in the neighbourhood know who I am, and so I was walking around the neighbourhood with a bull’s-eye on my back over the course of the year I went through it.
“Loss of rental continues to be a sensitive issue,” he adds. “And I looked into trying to use this as rental and I figured the only way I could do it was to spend $1-million on the site, which would have bumped everybody’s rents by about 30 per cent, and that’s not affordable housing anymore.”
Instead, he and Mr. Ankenman went through the process of getting the house added to the heritage registry in exchange for density and other variances. The result is a seven-unit house comprised of mostly two-bedroom units, except for the top unit, which will be one bedroom, with an amazing view from the turret. The price starts at $400,000 for a 750-square-foot condo, and Mr. Evans says he’s already pre-sold three of the units. It’s about two months away from completion.”
…
I ask him if he would do the Jeffs Residence project over again, having gone through a year under the hot spotlight of contention. He pauses.
“This one is unique,” he finally says. “There’s only one of these in Vancouver. And I’ll be able to walk past this thing in 10 years and it will look great and continue to look great, and I will get some personal satisfaction out of that.
“Will I make any money out of it? I don’t know yet. Time will tell.”
– from ‘Vancouver developers of heritage properties convert homes and hearts’, Kerry Gold, Globe and Mail, 10 Feb 2013

Thanks for the link to the above article goes to regular reader and commenter Aldus Huxtable, who adds:
“I used to live right by this development and have watched it for some time.
It’s a fun story we can watch play out over the next few years.
Down the block is J. J. Miller’s Kurrajong, a heritage house [photo below].
It’s also really important to read the heritage waymarker [see below].
J.J. Miller and his brother William made their fortunes in real estate, and built this giant house on Salsbury in 1908. They then lost everything in the crash of 1913.”

Reader Opinion On Construction Trades – “It takes a 2-year trade diploma, a 1 year co-op, and a 4 year apprenticeship to become a fully licensed plumber. This skews the supply and demand curve and allows older workers to bid up their wages.”

DonDWest, a 31 year old Canadian, left this opinion post regarding construction standards as a comment at VREAA 9 Feb 2013. Headlined here as food for thought and fodder for debate:

“Shoddy and overpriced construction/engineering is a big problem in Canada, but I have a different take on what’s the cause. Not to sound like a Republican, but I believe corrupt unions have played a large part. I’ve experienced this first hand from a “young” person trying to enter the trades and then realizing the traditional route to getting in the trades is now economically infeasible at my age (31 years old).

Speaking of leaks, for example, it takes a 2-year trade diploma, a 1 year co-op, and a 4 year apprenticeship in my province just to become a fully licensed plumber. That’s the equivalent of a PhD equivalent level education in terms of time spent. No offense to the plumber, but you’re just a plumber, it shouldn’t take over 7 years to get licensed.
I don’t know about you, but starting a plumbing career at age 40, considering these are physical jobs where the retirement age is much sooner, doesn’t seem economically feasible. I laugh at people who tell guys now entering their late 20′s to early 30′s to “just get a trade” if you’re having difficulty breaking out of the low wage service sector mould.

What the unions have done is significantly convince the government to raise the barriers of entry into the trades for our young. This skews the supply and demand curve and allows older workers (who are mostly baby boomers) to bid up their wages. Ironically, this doesn’t result in better quality work, as there’s less competition coming from the young pressurizing the older workers to back up their wages. The older workers know their jobs are secure and this reflects in their work that’s poorly completed at a snail’s pace.

Oddly enough, due to the incidents of shoddy construction that result from this corruption, this is used by the unions as further leverage that the government needs to increase the levels of qualification in order to enter the trades. The unions created the problem, and their solution is to further reinforce the problem by upgrading credentials on the young, because perpetuating the problem is profitable for the unions and their workers. If the government just took a look at the average age of a construction worker and engineer today – they could easily see that the problem isn’t newbies coming on the scene messing things up.

I’ve come to the conclusion that if a young person wants to enter the trades, he is better off taking the small business route right away. He could start small by restoring old houses in rural Canada for example. I doubt it will take him 7 years just to figure it out, and he won’t be in so much debt due to education requirements, nor will he have to spend years upon years listening to condescending baby boomers that will only serve to hurt his confidence.”
—

Whatever measures are being taken to ensure sound construction standards in the lower mainland, they don’t appear to be working very well. Witness the tarps, even on buildings constructed after the leaky-condo scandals.
Obviously there have to be some basic standards to which the trades adhere. Over and above that, it is ironically likely that fewer restrictions to entry, and more competition (along with greater consumer expectations, and greater accountability for work quality), may well result in a better quality of construction than we are currently having to tolerate.
– vreaa

“Over 6k of the announced 16K job losses in BC were due to real estate development slowdown in the Lower Mainland.”

“Labour Minister Pat Bell was on CBC radio earlier today. He said that over 6k of the announced 16K job losses in BC were due to real estate development slowdown in the Lower Mainland.”
– Patiently Waiting at VCI 8 Feb 2013 3:37pm

It does seem that things are slowing down on various fronts.
These are the kinds of self-perpetuating downward-spiral/vicious-cycle factors that will cause lower prices to beget lower prices still.
Our recollection is that we have roughly 7%-8% of the work-force directly involved in RE construction, whereas more normal levels are 3%-4%.
– vreaa

SFH Developers Cutting Prices

2808 W 21st Ave, Vancouver Westside (V971425)
New build 2800sqft SFH on 33×123 corner lot
Offered now for $2,888,000

Hat-tip to Rob for this example of shrinking profit margins. He also writes: “Another good example of west side drop‏. This had been listed at 3.3 million for about the past 8 months…..now this week dropped to 2.88 million.”

It sounds like the plan was for two new builds on one old ‘double’ lot, a project where we’d imagine projected profit margins were quite generous. Even at $412K ‘off’, $2.888M still represents preposterously poor value for a buyer.
At what price levels does this deal become untenable for the developer?
– vreaa

Now THAT Is A Laneway House

– found at http://imgur.com/a/ny4uA, by proteus (the poster with many names).

Somewhere in Europe, it seems.
Inexpensive, but sound workmanship. ($280K? We think not.)
Pleasant interior.
Non-leaking tiled roof.
Soul.
– vreaa

“We bought in 2005 for $698K, we sold in 2011 for $2.1M and were looking for the Punk’d cameras as we faxed the agreements back and forth. The new owner was adamant that he was tearing down the second we moved out, but still hasn’t done so.”

“We bought in 2005 for $698k (I was 33) we sold in 2011 for $2.1m and were looking for the Punk’d cameras as we faxed the agreements back and forth.  We rented back for 6 months (for 1$) so the kids could finish school with no disruptions. The new owner was adamant that he was tearing down the second we moved out. Had surveyors, architect dudes coming by to measure stuff, lot was marked out and trees surrounded as we were getting ready to leave. We moved out and a couple of months passed…. nothing. We went trick-or-treating in the old hood and low and behold he’s rented the house out to two students for a year. How fast things change.”
– Double Down at VREAA 28 November 2012 at 9:58 am & 10:02 am

A $1.4M gift, care of somebody else’s debt commitment.
– vreaa

Still Leaky After All These Years – “Our landlord, who bought new in 2008, is in a tough spot. Bought as an investment for about $450K, could sell for about $380K today.”

“[I’ve been] living in Vancouver as a renter in the same building for 7 years. Have seen since moving in telling signs the building had moisture issues. Finally are going through rain-screening right now. It is costing each owner $120,000. So glad I am a lowly renter, and not the couple who moved in 2 years ago who were in a bidding war and decided to waive inspection.”
– machino at greaterfool.ca 30 Nov 2012 1:43pm

“We have friends that spent low six-figures in special assessments and had their buildings shrouded in green wrap for up to a year. Now many stratas are only able to get insurance with $100K deductibles (or more) and guess who pays the deductible when your sink leaks?
In our building (supposed high-end, granite, SS – etc) our landlord (who bought new in 2008) is in a tough spot. Bought as an investment for about $450K, could sell for about $380K today – not to mention their mortgage payments, strata fees, taxes and maintenance. At least they can write-off their losses, at least until CRA figures out there is no ‘expectation of profit’.
Their maintenance costs are high because of shoddy construction and cost-cutting.
No question renting is a ‘steal’ compared to ownership and certainly less risky.”
– Snowboid at greaterfool.ca 30 Nov 2012 12:27am

“Vancouverites labor under the delusion that we live in Southern California and not southern British Columbia. For this reason, we tend to build structures that would be appropriate in the Mojave Desert but certainly not in a rain forest such as the West Coast of Canada.
For the last 20 years, the landscape in the lower mainland has been covered with envelope reconstruction projects galore. Some are being done for the second time. We simply can’t get over our infatuation with Adobe stucco.
It’s absolutely appalling to see the soggy rot underneath these porous exteriors. Toronto has nothing on us when it comes to building inappropriate structures. We have hundreds upon hundreds of them in varying stages of repair.
On the bright side though, it does keep a lot of construction trades busy.”
– Mister Obvious at greaterfool.ca 30 Nov 2012

Reno Flip Gone Rong – “Highly Motivated Seller.”

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

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

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

‘The State Of Construction In Vancouver’ – “The townhouses are for sale for $2M to 6M, they are unsold, and, it seems, already in need of repair.”

“I live on the top floor of a high rise in the South Granville area and can see the roofline of the new townhouses at 16th & Granville from my living room. Yesterday, in the teeming rain, I spotted someone tossing a white sheet of plastic over the edge of the facade in what appeared to be an attempt at blocking a leak. The townhouses are for sale from $2 to 6M, they are unsold and, it seems, already in need of repair. This is the state of construction in Vancouver.”
– Observer at VREAA 1 Nov 2012 9:59am

When a market rewards workers more for quick, shoddy work than it does for genuine honest craftsmanship, building quality will obviously drop. That’s human nature.. why do it right when you can get paid the same (or even more!) for doing it poorly, and doing it quickly?
– vreaa

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

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

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

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

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

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

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

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

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

Gord Goble – A Glimpse Of Our Future?

These photos from Gord Goble, following up on ‘South Surrey Building Blitzkrieg; Thoughts and Images’, March 2012. Gord writes: “I took a little time late this afternoon to grab some more pics of the crazed (and horrid) construction going on in my insane little neighbourhood (and the telling signs of a real estate bubble pop). Pretty eerie. A glimpse of the future.”
Sombre images. Many thanks, Gord.

—

The Mayor – “This is further evidence that Vancouver’s economic action strategy is working to create highly skilled and high-paying new jobs” [… in RE related industries.]

“While the news is full of warnings about a national housing slowdown and shaky global economic future, the Vancouver region has had a building boom almost equal to pre-recession years.” …
“Some cities are crowing about their success, as Vancouver did last week, noting that it has processed building permits worth $1.1-billion in construction value for the first six months of the year.” …
That prompted Mayor Gregor Robertson’s office to issue a statement about the encouraging numbers and the reasons.
“After keeping taxes low, and maintaining permit processing times despite higher volumes, this is further evidence that Vancouver’s economic action strategy is working to create highly skilled and high-paying new jobs,” he said.
– from ‘B.C. building boom nears pre-recession levels’, G&M, 3 Sep 2012

We’re hearing innumerable stories about existing condo stock that isn’t selling, and yet there seems to be more construction going on than ever before. It appears our city has become even more overly dependent on the RE industry in recent months; it’s almost the only game in town.
Throw gasoline on a waning fire and things look bright for a few seconds more.
– vreaa

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

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

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

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

Cartoon – Royal Mortgage Helper

– David Sipress, The New Yorker, 30 July 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So long; Adieu.

City of Vancouver’s re:THINK HOUSING Competition Submissions

“As part of the work being done by the Mayor’s Task Force on Housing Affordability, re:THINK HOUSING, an open ideas competition, has been launched to generate a broader discussion of possibilities for Vancouver’s affordable housing crisis. Aimed at everyone who has an interest in affordable housing, from the general public, to designers, planners and architects, to philanthropists, non profits and financial institutions, the Ideas Competition seeks to create the space for provocative, bold new ideas that address Vancouver’s affordability challenge head-on.”

Submissions closed on 29 June, 2012, and can now be viewed HERE. [Hat-tip ‘terminalcitygirl’.] Images above are from two of the submissions.

We note there are no “Educate-the-public-about-asset-manias-and-thus-crash-housing-prices” submissions.
– vreaa

Lady At City Hall: “We’ve been getting a lot of calls about stalled building lots lately. In this downturn, we’re seeing a lot of people go bankrupt.”

“One of my friends who has seen everyone on his street, except one set of neighbours across the road, sell to Mainland Chinese has recently called the COV about a halt in construction on his street. The backstory is the Mainland Chinese owner bought the house two years ago, let it sit empty, tall grass, weeds, problems with garbage, rats etc. And then about a year ago knocked down the house and left the lot empty.
About eight months ago construction started. For about four months. Then it stopped. Month after month, my friend wondered just what the heck is going on. He asked another neighbour on another block who is a retired developer what he thought was up. The developer said, “Well, when you have a project stall like that it’s one of 3 things. It’s either money, money or money.”
So two days ago my friend phoned the City to see if there were any neighbour complaints or any other reason why they were all stuck with a hole in the ground, some foundation and some wet, rotting plywood for these last four months. And the Lady from City Hall said, “Hmmmm… nope. Nothing here. They’re all clear but we’ve been getting a lot of calls like this lately. In this downturn (her words not my friend’s), we’re seeing a lot of people go bankrupt.”
– mac at VCI 6 Jul 2012 3:23pm

The downturn has barely commenced.
– vreaa

Giant 2000 Condo Arch Proposal For False Creek North

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

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

“About a year ago someone bought the house and did a total reno. Then the house went on sale for months with no takers. Then off the market. Then on sale again. Now they are tearing it down. No attempt to salvage anything.”

“Talked to an old friend in Burnaby today. About a year ago someone bought the house next door and spent several months doing a total reno. Then the house went on sale for months with no takers. Then it went off the market. Then it went on sale again.
And now they are tearing it down. No attempt to salvage anything. Remember in decades past you could drive around the city and go to the demo sales where they spent a week or two selling off the fixtures and stuff first.
This is wholesale destruction of wealth. Question is who took or will take the hit – the previous owner, the builders, or the next owner, or some combination of the above.
It’s doesn’t get any crazier than this.”
– patriotz at VCI 29 Jun 2012 1:01pm

“Wholesale destruction of wealth”, agreed.
Part of the terrible misallocation of resources that is part of a speculative mania.
It should be obvious to all that this is bad for our society.
– vreaa

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

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

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

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

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

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

– Gord at VREAA 20 Jun 2012 9:33am

Spokesman for Homebuilders of BC: “This industry is a massive contributor to British Columbia’s well-being and future success, as well as a huge indicator of the province’s economic climate.”

“Here are some facts about residential construction.
Nine per cent of all employment in British Columbia is in the residential construction field. That’s 192,400 jobs related to new home construction, home renovation and home repair. The home building and renovation community earned $10 billion in wages last year, while $22.7 billion in investment value was created by residential construction.” …
“We can easily see that this industry is a massive contributor to British Columbia’s well-being and future success, as well as a huge indicator of the province’s economic climate. Just think: For every single home we build, 3.5 person years of employment are created and more than $60,000 is generated in spinoff spending.” …
“The next time the housing market in B.C. comes up in conversation – and we know it will – let’s try to remember that without such a successful industry, our economy would be in much rougher shape.”
– excerpts from ‘Benefits of home buying’, M.J. Whitemarsh [CEO of the Canadian Home Builders’ Association of B.C.], The Province, 17 Jun 2012

We fully acknowledge BC’s dependence on residential construction — when you add in other aspects of the RE industry, and knock-on spending in household goods, a very substantial percentage of our economy is driven by real estate. Under normal circumstances we would celebrate a robust construction industry, and we certainly wouldn’t wish for anything other than prosperity for BC Homebuilders.
It must be realized, however, that this sector of the economy has ballooned unnaturally with the speculative mania in housing; an example of the misallocation of resources that results from a massive asset bubble. In BC, if 9% of employment is in residential construction (as Mr Whitemarsh reports), this is strikingly large compared with 7.5% for the whole of Canada, and 3.5% for the US currently (they hit 6% at the peak of their bubble) [see chart below].
This overgrowth will shrink back with the demise of the bubble. We don’t ‘wish’ for this, and we don’t point to it to be difficult to the builders; it simply is part of the inevitable boom-bust cycle that comes when speculative manias in RE develop and then dissolve. Unemployment as a result of loss of jobs in this sector will be part of the unfortunate fallout.
– vreaa

[Chart source: BNN interview with David Lepoidevin, 8 Jun 2012.]

“Talked to a friend tonight who just moved into a $700K rental apartment at UBC. The wood-framed building, on leased land, is two years old and floors are already sagging.”

“Talked to a friend tonight who just moved into a rental apartment at UBC. Building is two years old and floors are already sagging, so much that her closet doors keep opening by themselves, and drawers have a hard time staying closed…
Market value? $700,000, for a wood frame condo on leased land.”
– jumpin in at VCI 30 may 2012 10:48pm

“What’s the Difference Between A Shed And A ‘Laneway House’?” [Drum-roll] “About $268,000!” [Cymbal]

“Alexis Lum is building a laneway house in his parents’ backyard for three reasons: It’s more affordable than a two-bedroom apartment; he can rent it out if he decides not to live there; and he can have privacy and independence from his parents, while being close enough for regular family dinners.”
“I do love mama’s cooking,” he said, adding that he’s sharing the investment with his brother, Antoine, 31. Lum, 28, is a French secondary school teacher at Southpointe Academy in Tsawwassen.
Lum’s situation is pretty typical: laneway houses have been allowed in Vancouver since 2009, and usually they are built as a way for parents to help their adult children get into the pricey Vancouver housing market.
Lum grew up in the Dunbar house behind which he’s now building the laneway house for about $270,000, and he’s really excited to get the keys.
“I love it. It’s absolutely fantastic — it’s a beautiful, small house,” Lum said of the two-bedroom home in his parents’ backyard.
Michael Lyons, vice-president of marketing for Smallworks, a builder of laneway homes in Vancouver, said that at least half of his customers are building these small houses at the back of their lots for the next generation.
“They can’t afford to buy in the neighbourhood where they grew up. People want to stay close to their family,” he said.
The cost to build a laneway home averages between $250,000 and $270,000; that price includes preconstruction costs of $11,500, excavation and site work of about $30,000 to $35,000 and another $175,000 to $200,000 for the construction, Lyons said. “By the time the dust has settled, you’re in the $250,000 to $270,000 range.”
…
“With the benchmark price for all residential properties in Greater Vancouver sitting at $679,000 and housing affordability a significant problem in the Lower Mainland, a laneway house could be considered a bargain.”
…
“We made a decision to support laneway homes as a way to make home ownership more affordable and also to build up the city’s rental stock,” said Colin Lawrence, mortgage development manager at Vancity.
…
The next generation can get the financing themselves and pay the mortgage, Lyons said, adding that right now a laneway house adds about $300,000 to the value of a property.
For homeowners looking for rental income, a laneway home would also be a good investment.
The mortgage on $250,000 would cost about $1,200 a month, Lyons said, but laneway homes can rent out for as much as $2,000 a month on the west side, or $1,700 a month on the east side.
“Basement suites are renting out for $1,600 or $1,700 a month for a two bedroom on the west side of Vancouver,” he said. “It’s not surprising that a detached house — where you don’t have to live below someone with their kids running around or playing piano above your head — would rent for more.
“You’ve got lots of light, you’ve got two floors and you’ve got two bathrooms. Of course it’s going to be valuable.”
…
– from ‘Laneway eases path to ownership’, Vancouver Sun, 7 May 2012 [hat-tip Yalie at vci]
—

All part of the ‘This Is Vancouver; Accept Less For More’ ethos.
We dare anybody to attempt to justify the $270K cost for that structure, sans land costs.
Entire actual houses cost that or less all over the continent.
We’ve collectively gone completely insane.
Group hysteria. Emperor. Clothes.
And it goes without saying that the vast majority of these 500sqft structures will be built with ‘equity’ ‘extracted’ from the fantasy value of the main house, via HELOC.
“Adds about $300,000 to the value of a property”?
Let’s talk once “the dust has settled”.
– vreaa

“There were two houses on his street built last year and have been sitting for sale for about 6 months. The one without the wok kitchen just sold.”

“Just chatted with a co-worker over a cup of coffee. He lives in a not-so-distant suburb of Vancouver and he said that there were two houses on his street built last year and have been sitting for sale for about 6 months. Both priced over a mil, slightly different in size, but equal by $/sf, curb appearance etc. The catch is that one has a wok kitchen, while the other doesn’t.
One of the houses was sold last week. The one without the wok kitchen.”
– Patsan at vancouvercondo.info 27 Apr 2012 11:16am

“I figured they’d be asking maybe $800,000 for what’ll likely be a $500,000 house in a post-bubble world. Turns out I was $300,000 under. That’s right: $1.1 million. Mind-blowing. Just mind-blowing.”

“Some of you might remember my photo essay from a few weeks ago, re: the non-stop construction insanity in my South Surrey neighbourhood. Well, one of those 200-plus new homes just came on the market. 3000 sq ft and a decent sized yard (one of the few new homes around here that does). But I tells ya, it sure *seemed* like it was slapped together in a month. If it’s like everything else they’re puking up down here, it’ll be looking pretty rough within a year. And don’t get me started on the landscaping. Does “dirt” count as landscaping?

Anywho, the place is just seven or eight doors down from our $1600 rental on Zero Ave. In other words, we both face the US. Thing is, we face a forest. They face low-rent apartments (including the obligatory crappy looking exteriors, broken cars, etc, etc) in a lousy neighbourhood of Blaine. A neighbourhood that won’t be upgraded in any of our lifetimes. They’re also close enough to the Pacific Highway border crossing that they’ll awake to the sound of long-haul semis shuffling around night after night after night.

I figured they’d be asking maybe $800,000 for what’ll likely be a $500,000 house in a post-bubble world. Turns out I was $300,000 under. That’s right: $1.1 million. Mind-blowing. Just mind-blowing.”

– Gord, at VREAA, 15 Apr 2012 5:25pm

For backstory, be sure to read:
‘Gord Goble – South Surrey Building Blitzkrieg; Thoughts and Images’
We share Gord’s fascination with the market.
– vreaa

West-Side Street Level Analysis – “I walked Arbutus to Macdonald from 19th to 22nd Ave. These homes are empty. Some have been bought and sold 3, 4 and 5 times in the last 6 years.”

“Trafalgar Park has been torn down and has been rebuilt with these large homes that are never lived in – owned and flipped by people that don’t live here. I lived near here for 9 years. I saw some of the same houses listed and sold up to 5 times… 2 within blocks of me. We have a real problem and people simply don’t believe it has happened and continues to happen.”…

“I took pictures of the kind of “tear downs” that are being taken down and pictures of the kind that is replacing them…. The streets are dead in there- no kids playing. Some of the houses are beginning to mold and sink – just built within the last 5 years!!! It’s so sad and depressing… just 10 years ago it was a middle class ‘hood with nice homes for 500k, now they are all pieces of crapola and are “listing” for $3.5 – 5 million.” …

“Type of homes that have been torn down…lot value now 2.3 million:

“Lot value 2.3 million – if sold , would be torn down:

“This is what is replacing the 1950’s homes…these list between 3.5 – 5 million:

“Lot value only- $2.3 million- will be torn down if sold- I rented one similar:

“Beautiful!!!!:

“West-side has been ruined – it’s soulless. My fear is that unless people stand up and make their feelings known – this city is done for. I refuse to just sit back, have a glass of red……as Cam Good would say…… and watch the destruction. The people are in charge, not the developers, realtors and politicians.” …

“I suggest people stand up for this city and let the politicians know that they want change. if we just sit back and do nothing it will get much worse. Politicians work for us not the other way around.” …

“I’m just pointing out empty houses near where I rent, is all. I have no obsession with the westside. I’m sure there are 1000′s of empty condos downtown and soon the houses that sell for 1 million around Nanaimo street will be bought and torn down only to sit empty as well.” …

“Go for a walk through the neighbourhood I told you about..16th to 33rd / Arbutus to Dunbar or Macdonald to make it really obvious. I am not exaggerating one bit. There you will find 4 or 5 homes per block that sit empty… New homes are empty not old homes… I lived there, I saw it- go see for yourself. Not only do they sit empty but they are being bought and sold many times (flipped) and still never lived in. It has nothing to do with me being a renter… the facts are the facts. No kids playing in the yards, nothing. I’m being told one of our city’s reporters is doing a piece on the specific issue, stay tuned. But go for a walk and see for yourself.” …

“Here is a list for you all- I walked Arbutus to Macdonald from 19th Ave. West to 22nd Ave. West. I lived in this ‘hood and have for 8 years- some of these homes listed below have been bought and sold 3, 4 and 5 times in the last 6 years. One day there will be 50 listings for sale , the next week there will be 20 listed and none will have sold- they are being pulled and placed for sale to manipulate the market in this particular area. I have been obsessed with watching this for years -odd, I know, but I hate how the city is being destroyed. There are more than this -this is just 4 streets… On a side note… I have watched these houses for years and they all have gardeners to keep grounds looking good; so don’t think they are occupied because the lawn is mowed.”

Macdonald to Arbutus:

19th ave
2789 2788 2765 2745
2642 2519 2505 2483 2450 2448 2402
2403 2395 2365 2356 2325 2315 2265

20th ave
2203 2206. 2255 2286 2285 2299 2396 2408 2411 2417 2475 2718 2730 2715 2755 2772

21st ave
2749 2690 2683 2471 2428 2335 2369 2396 2386 2375 2225 2193 2151

22nd ave
2118 2128 2328 2345 2376 2375 2457 2491 2663 2677 2749

“Just watching over the years. Never any lights on, old papers on some, gates always locked down -the ones on the front doors, no shoes out front… Christmas decorations in the windows, never any lights on, no cars out front or driving into garages..the list goes on. Living there for so long, I know. It is a very serious problem. My wife worked for a firm in the city that was mainly chinese workers. They asked where she lived …when she told them the area they said ohhhhh i know it -the chinese housewives trade those homes like stocks from China. I saw so many of the homes listed so many times and each time for approx. 500k more than the last buyer that had never moved in. I have a few friends that are left in the area -they all say the same homes are empty. The area has been destroyed and it will continue to move across the city. I had a good chat with Andrew Hassman last year (a west-side realtor)… he told me 90% of his sales were to Chinese that fly in, buy and leave. He told me not to buy.”

– vancouverbubbleman, via e-mail and series of comments at VREAA, 10 & 11 Apr 2012

“It was a big gamble at the time but I had more guts than brains. Sometimes being too smart is not going to get you there. If you study things too much you’re going to miss out. If you know too much about a deal chances are you aren’t going to buy it.”

Joe Segal’s first foray into real estate came when he had a surplus $100,000 from his retail business that he used to buy a building.
And from there he’s developed a multimillion-dollar real estate portfolio. One property he bought for $600,000 is now worth $150 million, he said.
Segal looks at each project and measures the risk/reward ratio.
“If I can digest the risk I’ll take a shot and I’m entitled to the reward,” he said.
But you have to be able to make a decision, he said.
“If you can make a decision and make it quickly you’re at an advantage,” Segal said. “If you dilly-dally and your banker won’t listen to you, you’re at a disadvantage.”
…
Natale Bosa, the president of Bosa Development Corporation, the company behind projects like Citygate near the Telus World of Science and Newport Village in Port Moody — jumped at the chance to get involved in Citygate, buying one of the parcels in 1988.
He then bought a second piece before being offered the rest of the development.
“It was a big gamble at the time but at the time I had more guts than brains,” Bosa said.
And he was able to find a banker who would lend him the money on short notice.
“You’ve got to have a nose for it,” the 68-year-old Bosa said. “You’ve got to really believe in what you’re doing. You’ve got to feel it’s going to work. And fortunately it’s worked for me.”
And a little ignorance can be a good thing.
“Sometimes being too smart is not going to get you there,” he said.
“If you study things too much you’re going to miss out. Because if you know too much about a deal chances are you aren’t going to buy it.”
…
– excerpt from ‘Vancouver’s real estate moguls share trade secrets’, Vancouver Sun, 12 Apr 2012
[Hat-tip Nix]
—

All credit to people who know to make hay while the sun shines.
These guys were fortunate with their timing, and one of them basically admits to getting lucky with at least one ‘big gamble’.
Translating this into advice on how to behave in the current Vancouver RE market would be ridiculous. It’d be a bit like taking investment tips from somebody who’s just hit their colour five times in a row on a roulette wheel.
But we know that won’t stop some people from taking this as advice all the same; the “Be bold or move to Podunk” crowd. For many it’s attractive to know that you can make a killing in Vancouver RE by not studying things too carefully.
– vreaa

Bob Rennie – ‘Real Estate is a Sport’; ‘No Parking’; ‘I Love My Prius’; ‘Buy-Downs’; ‘Emerging Communities’; ‘Ghost-Town’; ‘Front-Row-Seats’; ‘Condo-Watchers’; ‘69% Of Buyers Own Homes’; ‘Repatriating Money’; ‘Passive Investment?’; ‘Like Trading Baseball Cards’

Bob Rennie, Vancouver condo marketer, on the ‘Bill Good Show’, CKNW 980AM, Vancouver Radio, 9am Friday 16 Mar 2012 [hat-tip Keith] –

Bill Good:  ‘Marine Gateway’ is the first major development along the Vancouver portion of the Canada line. And 11,000 people have registered to buy one of the 414 condos that will be up for sale this weekend. It hasn’t been since ‘Woodwards’ in 2006 that a condo project has created this level of early interest. Bob Rennie, of Rennie Marketing Systems is with me in the studio. This seems.. hard to believe..

Bob Rennie:  Yeah, it’s hard to believe what we go through in Vancouver, compared to almost any other jurisdiction in North America, other than Toronto.

Good:  So, 11,000 people?

Rennie:  11,000.. but you have to look, at a certain level, that in Vancouver, real estate is a sport, everybody wants to know what’s new, so half those people are interested in what’s the latest and greatest steel refrigerator, and going to see new lay-outs, and then you’ve got a core group of real buyers that are lined up there right now,

Good:  And there’s a line-up as we speak?

Rennie:  There’s a line-up, of 60 to 100 people.. you know… everybody wants the best and the cheapest on any project, so that’s just sort of an expectation in today’s market… everybody wants the top with the views, and everybody wants the cheapest for their daughter.

Good: (laughs)

Rennie: … and that’s where you get that initial interest from.. We’ve been open now for a couple of months, and everybody has been coming down and previewing, and they understand what floor plan they want, they understand what view they want, they understand they’ll live with or without parking, because .. the whole thing that…

Good:  Where exactly is this?

Rennie: Right at the SE corner of Marine and Cambie, and it’s right on the Canada-Line… so you’re not going across the street, you’re just coming down and walking out… but it’s retail, and it’s office, and it’s residential, so it’s a new emerging community..

Good:  What’s the price range?

Rennie:  There’s two hundred homes under three ninety-nine… so, that’s the attraction, is that affordability

Good:  So, under 400 thousand, and you can get on a sky-train and be downtown in 15 to 20 minutes.

Rennie:  Yes, downtown.. and.. what is your producers name?, I’m sorry, I forget…

Good:  Jessica…

Rennie:  I was just telling Jessica, that if you look at the difference between Jessica, and Bob, 55, that at 55 we’re looking at do we let go of one car in the household… we understand the cost of insurance, and running a car, and depreciation, and payments… Whereas Jessica, and Jessica doesn’t have a car…

Good: No, she’s ahead of you… she gave up her car and walks to work..

Rennie: Jessica, and Jessica doesn’t need to drive to the local drive-in to find out what’s happening tonight, she has an iPhone, and that difference in communication, that difference in that generation, that they’re not addicted to the car the way the baby-boomer generation is.. So, as I’m telling developers, we can build without parking,.. they’re going ‘No, nobody’s going to buy without parking’.. but we’re here, so, juts over 100 units there without parking. We did the ‘Capital Residences’, downtown, the old ‘Capital Theatre’ site, with 102 units without parking… Peter Wall did the ‘Scotia Bank Centre’.. we did about 115 units there without parking. Jessica and her younger friends have no desire to own a car… not just because of the overhead but they don’t need it for lifestyle.

Good: They also know that they can get a car share program, or can rent a car for a weekend, and they seem to be satisfied with that..

Rennie: ..and the zipcars and the modo cars, they work in the city where there’s a concentration of cars to pick up… when you get into the suburbs and you say we’ll have one car for 300 condominiums, it doesn’t really work, because you don’t have a concentration… that’ll all change. But my thing is… the Mayor is looking at affordability.. you know, Telus has announced it’s building an office building… I think it’s phenomenal for the city.. but that’s going to be filled with employees that don’t want to drive an hour and a half home… so we start really having to look at these emerging neighbourhoods…

Good: So, you’re seeing a real transformation..

Rennie: Absolutely.. I think this year we’ll bring out 1800 to 2000 homes transportation oriented.. so Marine Gateway, and then we’re doing at Boundary we’re doing 3 towers later in the Fall, and then we’re just going to start previewing in Richmond, ‘The Mandarin’, which is the very first Canada-Line station. Not only that, you’ve got a million square feet of shopping and restaurants. Somebody told me, if you’re going to buy in New York, find an area that’s the least inconvenient to your lifestyle, not the most convenient, but the least inconvenient… so the fact that you’ve got restaurant shopping, dry-cleaners, not just a telephone store, but real usage downstairs.. and the transportation is the big win.

Good: Well, you talked about the cost of the car, the cost of insurance, the cost of gasoline,.. but another huge factor, downtown, is the cost of parking…

Rennie: The cost of parking but the inconvenience now of being in a car driving down Hornby, or driving down Granville, where do I turn right or where do I turn left?.. and if you hit the wrong time, you’re in your car for 20 minutes, as opposed to being on the Canada line, on your laptop, on your iPhone, and just walking 5 minutes. So, this under 35 and over 45, there’s sort of purgatory inbetween there… the different ways that we look at the vehicle..
… [commercial break] …

Good: You think you’ll come close to selling out the 400+ condos, in a weekend?

Rennie: I would think, with the level of activity, and people lining up, that we will sell 90% of it on Saturday…

Good: You just told me you gave up your big fancy car, for a Prius… Are you trying to move into a generation below you?

Rennie: I’m trying to understand.. when I turned 50, I wanted a fancy car, I’ve always promised myself I would, I still get up 4:30 and work seven days a week.. but, after 2008, I was self-conscious of a fancy car, and was only driving it once a month, I thought, let’s let it go… and, my son didn’t think I’d last with it, but they got me a Prius, and I love it

Good: And you actually drive yourself?..

Rennie: I drive myself, yes (laughs)

Good: Because the last time I saw you you were getting into a great big black Mercedes, with a driver…

Rennie: The company has a Mercedes hybrid, that my assistant, Sylvia, stays with me 7 to 7, ‘cos all my business is running from boardroom to boardroom, from developer to developer in the downtown, and, when you look at driving and you look at parking, it’s just.. I like my assistant with me… so she stays until 7 o’clock and then, after that, I’ve got my Prius, I love it..

Good: But I thought it was interesting, you’re talking about a generation, and Jessica is among that generation, she gave up her car, a year ago, she walks to work… and you’re talking about people buying on the Canada line and using the transit system and being reliant on that.. and they don’t really need a car except on occassion…

Rennie: We’re building all our new developments on affordability – Jessica -, and then, the baby boomer – Bill and Bob – and, you know, this baby-boomer generation, which is 47 to 66 years old, they don’t have as much money to play with as they thought they had, they’re not taking the risks that they used to take..

Good: Interesting..

Rennie: And, for Jessica, they have this 500sqft 1 BR with no parking on transportation, 3/4 of the building still has parking, because we can’t shift culture that fast…

Good: The baby-boomer, I suspect, is thinking of driving less.. perhaps having one car instead of two..

Rennie: They’re driving the Prius; they’re driving a hybrid, because it’s socially acceptable… you don’t have to say “I don’t want to spend $150,000 on a car, I only want to spend $32,000 on a car”, and it’s socially acceptable to be green.. and if you look at the shift with the baby-boomer, they’re protecting the money that’s left.. you know I can throw the Olympic Village into here, we’re just launching Canada House, the Arthur Erickson inspired.. on the water.. it’s 40 homes, they’re a million dollars plus, but, the homes that are selling for one point five to three point four million are ‘buy-downs’… it’s people who are selling their West-side home that foreign money happens to be buying, it’s not for the local market anymore, and then that money is being repatriated to a ‘buy-down’ in a place like the Olympic Village. Ten years ago, the West-side buyer thought “it goes Granville to Province of Alberta”, there was nothing in-between.. and now, that baby-boomer, everybody’s thought pattern has shifted.. the Olympic Village is an emerging neighbourhood, Canada Line is an emerging neighbourhood, Woodwards is an emerging very conscious mixed-use diversified community, but it’s emerging…

Good: Now, the whole Olympic Village, that was such a controversy a couple of years ago.. it has really emerged, I saw the story the other night… 65% sold now…

Rennie: We relaunched it with the receiver, February 17th of eleven, and we invented this name ‘ghost-town’.. we went out to the media and we said “it’s a ghost-town, let’s be really transparent”.. there was a perception about the Village that it was failing.. and so we thought that if we put the ‘ghost-town’ on it.. Now, I’ve always though that, that community being on the sea-wall would stabilize and it’d be okay.. and there was 472 of the 737 condominiums sold.. you go down there it’s hustling-bustling.. Terra Breads has opened, you can’t get a seat in it.. Urban Fare we expect to open before the summer.. London Drugs is coming… the community is being built out.. so now that the asset is stabilized we recommended to the receiver that we can now bring on the front building, which is two small buildings, one with 40 units, one with 20…

Good: This is the high end.

Rennie: This is the high end… front-row seats right on the sea-wall.. starting tomorrow, Saturday, for two weeks it’s open to the public, after that it’s by appointment… You know, this one million to seven million dollar inventory really isn’t an open-house inventory.. but there’s a lot of real estate sport condo watchers and Olympic Village condo watchers, and where did Sidney Crosby speak condo watchers.. sleep.. condo watchers that’s where our Olympic team stayed was in Canada (House)..

Good: So where is the market for that.. is that a local market.. off-shore market, or both..

Rennie: it… we can tongue-in-cheek say it’s not.. it’s not off-shore… it is a local market..

Good: People downsizing?

Rennie: People downsizing.. they’re selling their West-side homes and they’re repatriating that money.. which is breathtaking (laughs).. to other jurisdictions, such as the Olympic Village. And, the Olympic Village, I needed 2.5 to 3 years to sell it, stabilize it, and earn the brand back.. when we bring on a Marine gateway, you go down, you put 10% down, and within a year you’ll have a 25% deposit and 33 months from now you’ll pay for it. So Bill and Georgie can figure out do we need it to live in?, do we put the kids in it?, are we going to spend more and more time on the coast?, do we just keep it as a passive investment?

Good: He’s trying to sell me!

Rennie: ..but I can’t get you ahead of the line!.. But you’ve got that 33 months to figure it out… But if you buy at the Olympic Village, within 60 days I want all your money. So you have to have been selling your home or selling your home (sic). Stats, if you’d like them, Bill, is that 69% of all homes sold in Greater Vancouver, are to people that already own a home. The other 31% are to first time buyers.

Good: So there’s still a first time buyer market?

Rennie: There’s still a..

Good: There has to be.. doesn’t there?

Rennie: But I think the deception, after my recent address, putting the numbers together.. I think the part we have to understand, is that this first time buyer, when we say we’re the most expensive place to live, is based on incomes, but the 69% of buyers already own a home, it’s an equity play, they’re just trading baseball cards.. But the 31%, I’m trying to understand.. so, I’m putting the figures together.. of the over 55 year population that owns their homes clear title, and that 55 to 74 year old, when they’re selling their home, they’re helping the kids and the grand-children… they’ve… (my stats guys) and I were joking the other day that we’re gonna make t-shirts that say “My grandparents bought a home in 1978, and alls I got was a lousy one bedroom condominium”… because that money is being repatriated down to help the kids..

Good: OK, we’re almost out of time..
—

Transcribed here, for the record. -ed.

 

“When I look at the actions of governments, I cannot figure out whether they are mostly stupid or mostly dishonest.”

“For most of us, housing is our biggest expense. One out of every five dollars we earn goes to build, buy, rent and run our homes. Facing high home prices, large personal debts, and an uncertain economy, fewer Canadians can buy a new home today than in the past, and they are choosing to rent instead.
Unfortunately, in many cities finding an affordable place to rent is nearly impossible. The most immediate problem is supply. Vacancy rates under 3 per cent push rents up. In Vancouver and the Greater Toronto Area, it’s 1.4 per cent.
Vacancy rates this low force our young people to move out of the city, threaten seniors on fixed incomes, and have a negative impact on local businesses.
That’s why this spring’s federal budget must put Canada’s rental housing market on solid ground, by pursuing low-cost, high-leverage policies that get jobs on the ground and build housing Canadians can afford.
Building and renovating rental housing will give cash-strapped Canadians more affordable housing options at a time when they’re being increasingly priced out. It will also create thousands of construction jobs to replace the 50,000 lost to slower new housing starts.
We’re calling on the federal government to use its spring budget to introduce cost-effective market incentives to encourage private-sector investment in rental housing.
These include:
• Low-interest loans underwritten by the Canada Mortgage and Housing Corporation (CMHC) to finance new rental construction.
• Tax reform to encourage owners to renovate and retain rental properties, providing an incentive to preserve affordable rental housing.
• Help for landlords to make rental housing more energy efficient, reducing costs and easing pressure on rents.”
– Gregor Robertson, Mayor of Vancouver, in an article co-authored with Joe Fontana (Mayor of London, Ontario) in the Toronto Star, 7 Mar 2012
—

This from the discussion at vancouvercondo.info 12 Mar 2012:

“Why build apartments when developers can make quick and obscene profits on shabbily built condos and walk away even before the expiration of their faux warranties?
The only thing that will truly encourage construction of rental stock is a return to sanity in housing prices.”
– chilled, 12 Mar 2012 10:30am

“…“they” will start building affordable, quality rentals when people stop buying high-priced, crappy condos.
The construction industry is simply doing what makes them the most money. If you want someone to blame, blame the buyers and the governments which enable them.”
– patriotz, 12 Mar 2012 5:02pm

“Right, like the current government that decided to give ten grand to people buying a first home, which is to say, they decided to give ten grand to any developer who sells to a first time buyer, which is to say that they arranged for it so that rentals would have to bring in ten grand more to be competitive with sales. As often happens when I look at the actions of governments, I cannot figure out whether they are mostly stupid or mostly dishonest.”
– N, 12 Mar 2012 5:45pm
—

By the way: A plan for “tax reform to encourage owners to renovate and retain rental properties” means that tax-payers will be subsidizing landlords; this will apply even more government-backed upward-pressure on housing prices in Vancouver.
Governments can really make a hash of markets. Case in point: the CMHC itself was created with the idea of making housing affordable; by mis-pricing the risk of lending, they have supported a speculative mania in housing and made housing less affordable.
Frequent readers know our position very well:
No government can design a solution for Vancouver’s dilemma; we are trapped in a monstrous speculative mania, there is no way through but price collapse.
Government policies may precipitate the collapse, or they may give cocaine to the dying racehorse and let it limp along for a while longer (drawing in even more buyers for the slaughter), but, whatever a government does will not put off the inevitable outcome of a bubble.
– vreaa

Westside ‘Ridge Theatre’ & ‘Varsity Ridge Bowling Alley’ To Be Demolished For Condos

“A Vancouver cinema which has shown movies in the Kitsilano neighbourhood for decades looks set to be torn down after housing developers purchased the land it stands on.
The Ridge Theatre has screened movies at Arbutus Street and 16th Avenue since 1950, but the Cressey Development Group plan to level the landmark and the Varsity Bowling Alley next door.
The group intends to build a mixed use development on the property with ground floor retail and concrete condominiums above.
President of Festival Cinemas Leonard Schein has leased the Ridge Theatre for 34 years but believes the fate of the single screen theatre seems sealed.
“That will be the end of the Ridge when they do it. I’m not sure if they’ll do it in 2012 or 2013. It’s been a long time and I’m sad to see it ,” he said.”
– CBC News, 12 Mar 2012

Found on ‘flickr’:
Ridge Theatre – 1949
3131 Arbutus Street, Vancouver, BC.
When it opened its doors in April 1950, the Ridge Theatre was hailed as “A miracle of modern architecture and construction” boasting the latest in projection equipment and creature comforts. In the late 1970s the Ridge became a repertory or “second run” theatre, a role that continues to this day.

Let’s just cut to the chase and ‘condo’ everything from UBC to Boundary Road (Endowment Lands included); interspersed with oases of coffee shops and high end fashion stores, of course.
– vreaa

—
Postscript:
It seems the Ridge does have a history with real estate:

– image from ‘Macdonald Realty Asia Typhoons Charity Event’, Macdonald Realty Blog, 26 Jan 2012

‘Frontier Centre’ Opinion – “High home prices can only be solved from the supply side. Open portions of the Agricultural Land Reserve, but only to high density development.”

“Vancouver is in desperate need of new solutions to ease its worsening housing affordability crisis. The 8th annual Demographia housing affordability survey released by the Frontier Centre found that Vancouver has the second least affordable housing market next to Hong Kong. On average, and assuming zero interest, a house in Vancouver would cost the median family more than ten years income. Three years is the threshold after which a market is considered unaffordable.
Mayor Robertson recently announced the launch of a new task force to tackle the housing affordability crisis. The only way to tackle this problem is to focus on getting more housing units on to the market.
Much of the debate around housing affordability descends into discussions about manipulating housing prices by freezing out market mechanisms.”
…
“In order to balance the concerns of housing affordability and urban sprawl, the city of Vancouver should strike a compromise: open portions of the ALR, but only to high density development. This may not be the optimum solution for families that would prefer to purchase single dwelling homes, but a significant influx of new units would be a countervailing force against runaway home prices. This would also put downwards pressure on housing in the rest of Greater Vancouver. Though opening up broad swaths of the ALR may be the ideal, this seems like a reasonable compromise.
This type of solution would rile people on both sides of the political spectrum, but it would be a dramatic improvement over the status quo. High home prices can only be solved from the supply side. The choice between maintaining the ALR as constituted or opening up portions should be obvious. Infill development can only go so far towards solving Vancouver’s housing crisis.”
…
– from ‘Time for Real Solutions to Vancouver’s Housing Affordability Crisis’, by Steve Lafleur, New Geography, 9 Mar 2012. Lafleur is a Policy Analyst with the Frontier Centre for Public Policy.
—

Assuming that “high home prices can only be solved from the supply side” leads most looking for a solution to consider ways of building new supply, and Lefleur offers a version of such a plan. But we note that, like almost every other commentator wrestling with Vancouver housing affordability, he leaves out the most obvious and necessary next step – an implosion of the bubble.
When the mania ends and prices begin their long descent, supply will come from what we’ve referred to as ‘speculative holders’ – not just the obvious flippers and developers, but all Vancouver owners who have been holding property because prices are rising. Most don’t even see themselves as speculators, but they are just that. And, when prices start their relentless decline, their reason for holding will evaporate and they will come to market. There will be lots and lots of supply, without any need to actually create more product. Seems counter-intuitive, but, there it is.
Vancouver will still have sore need for a sensible housing policy thereafter, but the milieu in which it will have to be made will be very different from that which faces us today.
– vreaa

“My parents toured a show home in a recently constructed, $1 million+ development, and my dad, a former contractor, was shocked at the shoddy construction and low-quality building materials.”

“My parents live in South Surrey and my dad is a former contractor. They toured a show home in a recently constructed, $1 million+ development, and my dad was shocked at the shoddy construction and low-quality building materials.
My spouse and I have been looking at condo rentals in Vancouver and we would not even rent, let alone buy, most of the newer ones. I can’t tell you the number of doors askew, floorboards creaking on uneven floors, and paper thin walls we have encountered.
Not to mention the ridiculous floor plans–why do people need 2.5 bathrooms when there no space for a kitchen table? The condos seem to be designed for roommates or childless couples, not families.”
– Sheesh at VREAA 2 Mar 2012 9:52am and 12:28pm

“We bought a house with some family help and moved out, but decided to keep the condo because we couldn’t sell it while it was tarped up.”

“My wife and I bought a two bedroom condo (Vancouver suburbs) when we had our first child. Had a second child, things were fine. Had a third child, and things went off the rails. The third ended up having a laundry/pantry room as a nursery with a portable crib. At the same time the condo (our building, but not our unit) sprung a massive multi-million dollar leak.
We bought a house with some family help and moved out, but decided to keep the condo because we couldn’t sell it while it was tarped up. We rented it out (for less than the mortgage payment) to a family that burned every countertop, the carpet and the vinyl balcony deck with a hot pot. They moved out and another family moved in – with a cat, and with a kid that drew on walls. All while we were paying out an ever growing series of special assessments for the building repairs.
We finally decided to cut our losses and sold the condo for half of what we paid for it. Net net we LOST an amount equivalent to the original purchase price.
Moral of the story: Don’t buy a home that doesn’t match your stage of life and that you don’t plan to be in for a good 10-15 years. And don’t buy a leaky condo.”
– Leaky Condo Hell at VREAA, 29 Feb 2012 at 7:59am

Basement Suite In East Vancouver Sells For $590K

“You can’t make this sh*t up. I posted a week ago about the insanity of the East Vancouver market giving the example of a builder who converted a 33×120 lot into a house with a strata titled main floor and basement, as well as a lane house.
Main house – V930752 – 1.2 mil
Basement suite – V930763 – $590K for 1,175 sq ft
Laneway home – (still completing) – +$900K
So, some guy thinks that a fully developed lot near one of the noisiest intersections in Vancouver proper (Kingsway & Knight) should be fetching him 2.7 million dollars. Another funny piece of info was that the stereo was pumping in the basement to drown out the sound of walking from the upstairs unit. Quality is job one.
Well, the basement of the main house has sold:
MLS # V930763
1262 East 19th Avenue
2 BR ‘Garden’ Suite; Strata
1175sqft
SOLD; Ask price $590K” [sales price yet to be verified]
– mflat at vancouvercondo.info 13 & 24 Feb 2012 10:02am

mflat is right, you can’t make this up.
It’s going to be ironic when the price of entire houses in East Van return to less than the price of a bubble basement.
– vreaa

UPDATE 8 Mar 2012:
This basement suite was featured on Global TV News, 7 Mar 2012
Video archived by Greenhorn; [story at 2:20]

“Crazy Land” – 9% of the working population employed in construction.

Chart via Kevin at saskatoonhousingbubble, who also points out “The long term average of the Canadian labor force employed in construction is just under 6%. Right now it is over 7%. … BC is in absolute crazy land with almost 9% of the working population employed in construction.” [Thanks Kevin.]

More misallocation of resources.
Sheds light on why the Provincial Government would want to keep this going.
After the housing mania ends, by the next price trough, about 40% of those construction jobs will have evaporated. Possibly 50%.
(Aside, for TA lunatics: Failed double-top.)
– vreaa

“You’ve Got A Bubble, Canada” Article #47 – Bloomberg – “Canada Housing Poised for ‘Severe’ Drop”

The chart above from Bloomberg shows Canada’s housing investment as a percentage of gross domestic product, and the declines in inflation-adjusted house prices that follow when this ratio tops 7 percent.

“Canada may be on the cusp of a “severe” housing correction as real estate investment surges above a tipping point relative to economic output, according to George Athanassakos, professor of finance at the Richard Ivey School of Business. “Eventually, everything boils down to demand and supply,” Athanassakos said in a telephone interview from Western University in London, Ontario. “Whenever this ratio goes over 7 percent, it signifies overinvestment in housing and two or three years later, we have a severe correction.”
Canada’s housing market is booming as historically-low interest rates fuel purchases, driving up home prices and adding to record household debt. Canada’s ratio of housing investment to GDP has averaged 5.8 percent over the last 50 years and is currently at about 7 percent, based on Statistics Canada figures as of the third quarter of 2011, Athanassakos said. Housing investment includes spending on new homes, renovations and real estate transaction fees.
U.S. housing prices plunged by a third between the peak in July 2006 and November 2011, according to the S&P/Case-Shiller Composite-20 Home Price Index. By comparison, Canadian housing prices rose 30 percent in the same period, according to the Canadian Real Estate Association.
“We have experienced bubbles and busts before in Canada, it’s nothing new,” Athanassakos said. “I don’t know why this time would be different.”
– from Canada Housing Poised for ‘Severe’ Drop, Doug Alexander and Ilan Kolet, Bloomberg, 17 Feb 2012 [hat-tip ‘Told-you-so-in-2007’]

We’re joking a bit about the “#47” thing — but there do seem to be an awful lot of articles in the US and international press about a Canadian housing bubble.
We haven’t been headlining all of these articles, but this one is noteworthy because of its focus on the ‘third’ fundamental, namely ‘price’ to GDP. (The other two fundamentals, of course, are price:rent and price:income). By all of these measures Vancouver RE is overvalued, likely by a factor of 2 to 3.
– vreaa

“Nice house… if you’re a serial killer.”

“I have repeatedly sent MLS listings of $1m+ houses to people in the UK who reply with comments like “looks like a nice house, if you’re a serial killer.” (Example, MLS#V898254 1723 Napier Street, $1.21M.)”
– Aldus Huxtable at VREAA 3 Feb 2012 4:00pm

And, an obliquely related comment regarding contemporary build quality:

“I don’t get it. How can a house made from woodchips and glue cost [so much] to build? In Europe, a house like this would only be used as a movie prop to blow up.
Could someone explain this to me: Why do Canadians insist on using the shittiest building materials even on high end properties? Can’t a multimillion house be built using a real building material, like reinforced concrete?”
– bubbly at VREAA 3 Feb 2012 at 11:26am