“I have been contacted by two of my realtor friends in the past week both proclaiming that the market is turning and that this is a good time to buy.”

“I have been contacted by two of my realtor friends in the past week both proclaiming that the market is turning and that this is a good time to buy. One of them even mentioned that interest rates will be rising this Friday. When they tell me this I argue that they should look at the ten year average. Sales are still around 20% lower than the ten year average and this is with major banks advertising mortgate rates under 3%. If you compare stats between spring 2012 and 2013 it is like comparing chicken manure and cow manure. Yes cow maure is better than chicken manure but it is still manure. One of them had the audacity to say: “You better get in now I bet you five years from now people will say that Spring 2013 was the real estate bottom.” Hearing this I had to refrain myself and asked him to google “Asset bubble graph”. Where we are now is called the “Return to ‘normal’ phase aka “bull trap”; and guess what comes after next? As a matter of fact the Vancouver real estate market is following the graph quite closely. Never bet against human nature. I may be wrong but I highly doubt it. I think we will know for sure by this time next year. Unlike most bulls I know, I am putting my money where my mouth is. I am not buying now even though I have a down payment ready and could afford the mortgage without straining myself. In terms of real estate it will be an interesting rest of the year.”
– Waiting to exhale at VCI 7 June 2013

“Rogers Communications is expanding into RE; aiming to relaunch website; providing critical data that can help potential buyers assess the value of a property from the comfort of their home computer.”

“Rogers Communications is expanding into the real estate business.
The mobile and cable giant has applied to become a licensed real estate brokerage right across Canada and is aiming to relaunch its five-year-old website Zoocasa.com in May as a unique, one-stop-shopping site for homebuyers.
It’s aimed at going far beyond U.S.-based property listing services such as Zillow and Trulia which have revolutionized house hunting south of the border by providing critical data that can help potential buyers assess the value of a property from the comfort of their home computer.
… The rebuilt Zoocasa site will have “the most complete list of property information that can be provided to consumers, including neighbourhood and related information,” said real estate maverick Lawrence Dale who quietly folded his Realtysellers private sales online listings site a few months ago and started working with Rogers as Group Head, Real Estate Business.”
– from ‘Rogers to step into the real estate business’, thestar.com, 25 Mar 2013

We welcome any moves that result in availability of data regarding for-sale properties.
A Zillow-like system in Canada would represent a great improvement.
– vreaa

Vancouver RE Crash On Track

Expected weakness continues, sales remain low. Things are playing out as we’d anticipate. Very significant price drops to come (all in all, 50% to 66%, peak to trough). :

SALES ARE WEAK:
“The flicker of optimism that sparked in Canada’s housing market when January sales outpaced December’s has died out, erased by a notable drop in February.
Last month’s declines were significant enough to prompt the Canadian Real Estate Association (CREA) to cut its sales outlook for 2013 on Friday for the third time since last summer. …
“Vancouver remains the clear weak spot, with sales down a seasonally adjusted 9.8 per cent in February and 29.2 per cent in the past year,” Bank of Montreal economist Robert Kavcic wrote in a research note.But some feel that much of Vancouver’s weakness has played out.” [hahaha -ed.]
– from ‘Clouds gather over Canadian housing market’, Globe and Mail, 15 Mar 2013

SO ARE PRICES:
“The average MLS residential price in BC was $514,134 … down 8.1 per cent from a year ago.” – BCREA news release 14 Mar 2013

INVENTORY/LISTINGS ARE HIGH:
“I’m seeing big increases in New West, North Van, Burnaby SFH listings. Historical highs for this time of year. VW has stalled out; VE puttering along. Condos downtown nothing special on the inventory side. I don’t know what all that means except that our little crashlet is *not* a “Van has too many condos; it’s just condos; houses are safe from all this” thing. It is in fact inventory growth and sales declines are mostly a SFH thing, from what I see.” [price declines will effect all sub-sectors of the market. -ed.]
– VHB at VCI 15 Mar 2013 12:22pm

chart care of b5baxter at vancouverpeak.com

HOUSEHOLD DEBT CONTINUES TO GROW:
“The ratio of Canadian household debt to disposable income rose to another record last quarter, calling into question Bank of Canada Governor Mark Carney’s assertion that families are listening to his warnings about the risks of borrowing too much.
Credit-market debt such as mortgages rose to 165.0 percent of disposable income, compared with 164.7 percent in the prior three-month period, Statistics Canada said today in Ottawa.
In his previous two policy statements, Carney weakened language about the need to raise the central bank’s 1 percent policy interest rate, partly on evidence a housing boom was slowing and consumer debt burdens are stabilizing. Finance Minister Jim Flaherty tightened mortgage rules in July on concern some regional housing markets were overheating.
National net worth rose 1 percent to C$6.87 trillion ($6.73 trillion) in the fourth quarter, Statistics Canada said. On a per capita basis the increase was to C$195,900 from C$194,300.” [Watch the per capita net-worth plunge with RE prices over coming years. -ed]
– from ‘Canadian Household Debt-to-Income Ratio Rises to Record 165%’, Bloomberg, 15 Mar 2013

MEDIA STILL PUMPING:
“Global TV just ran two RE spots (within an hour of each other) on this morning’s news featuring Joannah Connolly, editor of the highly acclaimed BIV and holder of a BA in Eng Lit.
In segment one, she commented on the 0.1% rise in the Cdn new HPI (for Jan) and implied the housing market had “reversed a downtrend”. She also mentioned the Cdn$ and how “it rose five cents” yesterday. How sad. Colorful, animated bar graphs (a la CNBC) were used in the presentation to drive home the point that home prices are still way higher than they were in 2009. The year 2012 was conveniently omitted from graph #1 so as to mislead the public into believing the upward trajectory is still intact. graph #2 was equally laughable with price chg’s in Vanc, Vic, Wpg and Cda average all appearing to be gains with upward pointing bars.
In segment two, she talked about how hot the commercial RE was, that land was in limited supply and that investors were “snapping up anything and everything”.
– from bullwhip29 at VCI 15 Mar 2013 9:55am

..AND MASSAGING:
BTW, they changed the headline of the Tara Perkins article in the Globe from this…
“Real estate market outlook cools as home sales plunge”
To this…
“Clouds gather over Canadian housing market”
There….that’s better.”
– from kabloona at VCI 15 Mar 2013 11:01pm

REALTORS STILL PUTTING ON BRAVE FACES:
“BC home sales continued at a modest pace in February,” said Cameron Muir, BCREA Chief Economist. “Despite improved affordability, many potential buyers and sellers remain in a holding pattern. With pent up demand now becoming latent in the market, it’s not a matter of if, but when home sales rise above their current pace.”
– BCREA news release 14 Mar 2013
—

Realtor On Marketing Deceit – “They could have just found a waitress or whatever, somebody who didn’t obviously work for them.”

“Amazing quote here [in this article in ‘The Vancouver Observer’], regarding the MAC Marketing scandal, from a Vancouver realtor:
“It’s not just what they did, but that they did it so badly. They could have just found a waitress or whatever, somebody who didn’t obviously work for them.”
– Nick at VREAA 5 March 2013 at 10:00 am [Thanks Nick. -ed.]

[For those readers unfamiliar with the “Mac Marketing scandal”, see VREAA 13 Feb 2013.]

Interesting that a realtor would make this kind of comment after such a scandal.
It strongly suggests that he sees deceit in marketing as simply being part of the game.
– vreaa

“It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004.”

“It was a chance conversation with a seasoned realtor that tipped me off to the whole bubble back in 2004. When I met my wife she had just purchased a condo in Surrey for $135k. We moved into it and met a tough-as-nails older woman who had been a realtor for 30 years and lived in the building. She shared the history of the building with us. Units had originally sold for $170k but a leaky condo adventure had dropped the value down to $70k, many lost their homes but those that were left were holding out for the prices to return to $170k. I asked her how long that would take. She pondered it, referred back to her 30 years of experience and said. “Probably 10 years.”

Almost exactly one year later in mid 2005 she came to us to tell us she could get $160k for our unit if we wanted to sell and move to a larger unit. We took her up on it and bought a larger unit in the same building. We got an over ask offer of $164k and bought a bigger unit for $170k. A year later and I was now working in Burnaby, a crappy commute. The condo needed a new roof and we had an assessment of $5000 that we had to take HELOC to pay for. We got a call to check out a place in a co-op in Burnaby near my work. It was perfect for the family we wanted to start. When we returned from checking out the co-op there was a flyer under our door. Our friendly realtor had just sold a comparable unit to ours for $240k.

Our families told us we were nuts to sell and rent. I smelled a rat, this experienced realtor had predicted 10 years to appreciate from $135k to $170k. And two years later the value had skyrocketed to $240k. My sister explained that I didn’t understand because I didn’t have kids yet how important it was for us to have real estate holdings to leave them. I decided that when I did have kids, they would be better served having me home for the two hours I would have been commuting then having a condo in Surrey 50 years from now. We pulled the trigger, the realtor actually sold the place to the same people who had bought our previous unit and we are now renters in Burnaby.

I knew nothing about real estate when I met my wife, she had bought into the market with an inheritence and had a bit of trouble walking away from ownership. But strata drama had shown her that she didn’t really own much of anything, she couldn’t rent her place out, she couldn’t decorate the way she wanted, she could have the pets she wanted, it was really a lot like living in a co-op. Except your crazy neighbours are toying with a massive chunk of your equity when they make silly rules. (They tried to make the building a 55+ while we lived there).

But ultimately it was that chance conversation with the realtor when she genuinely predicted a slow, steady increase in value that paced with inflation that tipped me off to the anomaly that was this price increase. I watched it shoot up and I was not prepared to sit back and watch it drop back down, taking my windfall with it. My wife is glad we made the move too, now she tries in vain to explain to her friends and family that they are headed for financial ruin if they continue their real estate delusions. But we all know how that goes.”

– lexlimo at VREAA 27 Feb 2013 9:42am

Thanks for your story, and for all your other comments on the blog, lexlimo.
– vreaa

Realtor Tries To Sell Own Home But Can’t – “Buyers are very skeptical, very hesitant because they think prices may go down.”

Hoda Seraji is experiencing Vancouver’s housing slowdown firsthand. A real estate agent, she took her own family’s two- story house in Canada’s third-largest city off the market after failing to get a single bite for the C$2.39 million home overlooking the Pacific. Cutting the price for the five-bedroom, four-bathroom residence didn’t help.
“Buyers are very skeptical, very hesitant because they think prices may go down,” she says.
Seraji blames fading interest from foreign investors, especially in China. Changes to Canada’s mortgage rules designed to cool the market have accelerated the sales drop, she says.
– from ‘Canada Losing Debt Halo as Bull Market Housing Peaks With Carney’, Bloomberg, 26 Feb 2013 [hat-tip Nemesis]

Agreed, “buyers are hesitant because they anticipate prices are going to drop”.
The problem is not with the buyers, but with prices that are still very, very overinflated.
What was that “C$2.39 million home” selling for just ten years ago? Less than $500K, most likely.
Because of the very large speculative component to price in Vancouver, price drops will not draw in demand, but rather beget further drops.
– vreaa

Realtor Stories – “A close friend of our family has been a Westside realtor for nearly 20 years. A few weeks ago, he suddenly asked if we knew anyone who might be interested in his $2 million listing. Never before has he done this.”

“A close friend of our family has been a Westside realtor for nearly 20 years. A few weeks ago, while talking about a completely unrelated matter, he suddenly asked if we knew anyone who might be interested in his $2 million listing. Never before in 20 years has he tried to drum up business from us. We know a total of zero people with a spare $2 million, so this was completely ridiculous and seemed rather telling.”
– Sheesh at VREAA 19 Feb 2013 11:16am

“A friend of mine 3 years ago quit a well paying full-time job to dabble in RE. When the slowdown started about a year ago, she was lucky to get her old job back.”
– Real Estate Tsunami at VREAA 19 Feb 2013 9:25am

“My land-lady who is a very good friend of [a Vancouver realtor] tells me that there are no buyers coming – she says market is very bad… very obvious to anyone who actually uses their brain… but quite an admission from someone who has been a part of this giant scam.”
– vancouverbubbleman at VREAA 14 Feb 2013 3:30pm

“Sitting at YVR waiting for my flight to Calgary tonight. Had a pleasant ride with a taxi to the Nanaimo airport with a driver who has sold real estate in the Nanaimo/Parksville area for 29 years. This is the 3rd downturn in his career and the first time he has had to find another income stream. “

“Sitting at YVR waiting for my flight to Calgary tonight. Had a pleasant ride with a taxi to the Nanaimo airport with a driver who tells me that he has sold real estate in the Nanaimo/Parksville area for 29 years.
He is driving cab to supplement his income. Says he had plans to retire and bought a house 5 years ago on one of the islands. Ready to retire and move in and he ends up with his granddaughter on his doorstep 4 years ago. She is now 14 with no sign of leaving until she graduates. Gotta take care of family, he says, but I miss my island property which he gets to once a month without his wife who hasn’t quite accepted their present personal financial state.
He says this is the 3rd downturn in his career and the first time he has had to find another income stream. Says he’s not sure when this slide will end….. here’s my card he says, just in case you decide to buy anytime in the future.”
– Anonymous at whispersfromtheedgeoftherainforest.blogspot.ca at 2:34am [hat-tip Whisperer]

RE Mentions In Popular Culture – Realtor Wins Canucks 50/50 Draw – “The last quarter of real estate was the toughest in 24 years, there were periods where we spent more than we made.”

“Phil Moore was in the stands on October 9, 2008, and when Candice, joined by Roberto Luongo and Alex Burrows, presented the Bourdon family with Luc’s jersey, he came up with a plan.
When – not if – but when I win the Canucks For Kids Fund 50/50, I’ll give back.
“I just knew I was going to win sooner or later,” said Moore, a real estate agent and Canucks season ticket holder. “I visualized it over and over again, winning and handing out this big cheque.
“If you’re in the shootout and you’re skating down the ice, you have to visualize your move and visualize scoring. If you visualize something over and over again, it just happens.”
And, wouldn’t you know it, it happened.”…
“The last quarter of real estate was the toughest in 24 years, there were periods where we spent more than we made,” explained Moore. “The majority of the winnings will go to pay bills, but it was a unanimous decision within the family that we didn’t want a vacation or anything, we’d rather give a chunk back to help out as much as possible.”
– from ‘Giver’s gain’, canucks.nhl.com, Derek Jory, 19 Feb 2013 [hat-tip rob]

Nice of him to give some back.
Interesting word from the trenches regarding market conditions.
Also, noteworthy for the magical thinking, something common to a good percentage of market participants.
– vreaa

“My friends who are westside realtors are cutting spending budgets and dipping into savings now to keep things going.”

“My conversations with friends who are westside realtors over the past few months (I know a few – hey everyone wanted to be a RE agent for a while, it seems) [reveal that things] are not good (for them). Telling me they are cutting spending budgets and dipping into savings now to keep things going.”
– Girlbear at VCI 11 Feb 2013 2:51pm

CTV TV News Featured ‘Condo Buyers’ Actually Marketers Of Very Same Condos!

Village Whisperer, over at ‘Whispers from the Village on the Edge of the Rainforest’ has unearthed a remarkable story of RE-marketing shenanigans.

Sisters Amanda (left) and Chris Lee (right) are scouting for condos before their parents visit from China to help them buy one. (CTV photo)

“The CTV-TV story [CTV 9 Feb 2013] featured two sisters who were looking to buy a condo at the Maddox condo development in downtown Vancouver: Chris and Amanda Lee.
Curiously MAC Marketing Solutions has an Administrative Assistant named Amanda Lee who not only works for MAC Marketing Solutions – but her current background says she’s attached to the Maddox Downtown condo development profiled in the CTV-TV story. ..
It wasn’t just CTV-BC that ran coverage of the MAC photo op. So did CBC-TV.”
– Whisperer, 13 Feb 2013

MAC Marketing Solutions, once caught out in this subterfuge, on Wednesday [13 Feb 2013] published an apology for the ‘misunderstanding’, in the form of a facebook page comment:

– facebook screencapture, posted by Whisperer, 13 Feb 2013

Whisperer has followed up with a review of the entire incident:
‘MAC Marketing admits they mislead CBC-TV, BC-CTV and all their viewers/customers’
Whispers from the Village on the Edge of the Rainforest, 14 Feb 2013
—

Clearly this represents far more than a ‘misunderstanding’, but the exposure of this deceit will barely cause a ripple. We have, sadly, come to expect ridiculously poor standards from local media regarding the coverage of the local RE market.
Well done, ‘Whisperer’, many thanks for the uncovering.
The episode is very reminiscent of similar deceit that we ourselves spotted in April 2012, where a ‘sales representative’ selling condos for Cam Good’s ‘The Key’ was presented by Global TV news as a ‘White Rock Investor’ and apparently interested buyer.
– vreaa
—

UPDATE 14 Feb 2013:

“MAC president Cam McNeill later confirmed that both women filmed in the segment are in fact MAC employees – and aren’t even sisters.
“I don’t have a full explanation of how things went down, I deeply regret for the fact that it didn’t make it more clear to you that the two women in the story were MAC employees,” McNeill told CTV News.”
– CTV News, 14 Feb 2013

Of course, as the two women in the story are MAC employees, and aren’t even sisters, the story itself doesn’t even exist!
– vreaa
—

UPDATE 15 Feb 2013:

The story of the deceit has now been covered by various ‘media outlets’:

‘Vancouver real-estate firm admits faking investor for TV news’
Sam Cooper, The Province, 14 Feb 2013

‘Real estate marketing firm apologizes after employees posed as apartment shoppers from China’
Tracy Sherlock, The Vancouver Sun, 15 Feb 2013

‘MAC Marketing Solutions Exposed For Fake Vancouver Real Estate Investors’
The Huffington Post B.C., 14 Feb 2013

‘Real estate firm apologizes after employees pose as buyers in news stories’
Andrea Woo, The Globe and Mail, 14 Feb 2013
excerpt:
“This is the latest in a number of questionable marketing tactics to be exposed within Metro Vancouver’s real estate community. During a media blitz announcing the Groupon-style sale of units at a Surrey condo development last year, one woman identified to a television news crew as an eager local investor was in fact a sales manager for Key Marketing, the company behind the scheme.
That same company has also taken groups of Chinese buyers on helicopter tours of Metro Vancouver properties, and at least one of those trips was believed to be misleading. Garth Turner, a business journalist and former politician, reported the Chinese buyers on a Feburary, 2011, trip – on which several media outlets were invited – were in fact local real-estate agents and brokers and the trip was meant to promote a new condo development. Cam Good, president of The Key, which includes Key Marketing, was a partner at MAC Marketing Solutions from 2004 to 2009, according to his LinkedIn page.
According to 2011 data by the Landcor Data Corporation, 75 per cent of those who purchased Metro Vancouver condos as investment properties are from Metro Vancouver. About 3 per cent are from the U.S. and 2 per cent are from other countries.
The Real Estate Council of B.C will be investigating the matter.”

‘Condo marketing company admits it duped media’
CTV British Columbia, 14 Feb 2013
excerpt:
“We’re trying to understand how this happened right now, and so I’m just trying my best to be open with you and just say that I’m very sorry that it happened,” said MAC president Cam McNeill.
McNeill maintained that the theme of the story – that Lower Mainland condo sites saw a spike in Chinese buyers around Lunar New Year – was completely true.
“I think that the ladies probably fit the profile of the story,” he said. “At the moment I don’t know whose idea that was; I don’t even know if they took it upon themselves to make that up.”

– image from CTV News

‘Real estate marketer admits to deceiving Vancouver reporters’
CBC News, 14 Feb 2013
excerpt from News clip:
“The owner of a Vancouver real estate marketing company admits his employees misled media over the weekend, including the CBC. … MACs owner admitted the story was entirely false. Two MAC Marketing workers presented themselves as sisters from China in Vancouver looking to buy a condo over the Lunar New Year.” …
“Some say that irreparable damage has been done to the real estate marketing industry, that future claims of sold out success stories will be viewed with scepticism.”
—

– Annotated image linked by Canadian Watchdog at greaterfool.ca 14 Feb 2013 10:32pm

“I like the footer below the CTV News clip predicting that the Vancouver bubble will remain intact. Doesn’t that mean they’re admitting we’re in one?”

CTV ran a newsclip entitled ‘Experts predict B.C. real estate bubble will remain intact’ [link here]. mac at vancouvercondo.info [31 Jan 2013 12:17am] posted a commentary, excerpts below:

“That CTV clip is hilarious.

First off, I like the footer below the video predicting that the Vancouver bubble will remain intact. Doesn’t that mean they’re admitting we’re in one?

Then there’s the 1-bed condo in what looks like Kits (West Broadway ish near Alma). Used to be asking 465K and now down to 439K. Uh huh. A friend sold a far more central 1-bed condo at Arbutus Walk about 18 months ago for 419K. So we’re still 20 big ones above the market–last year. But never mind. The agent “feels” a sale is imminent. Hot tip for the realtor: maybe get someone to remove the graffiti off the back of the building just under the gorgeous south-facing balcony.

But why has the realtors spidey senses been piqued? Maybe it’s because “phones are ringing, there’s optimism, and it feels like we’re back into selling real estate again”. AKA: Spring. Listings. Calls.

Then comes the Onni guys. The first one, glassy-eyed, stands in his empty showroom talking about a lot of activity in the sales centres resulting in a lot of people entering into contracts signing, signing, signing. Well? Where are they? …

But don’t worry folks. Prices are expected to dip 1% province-wide (no mention of the already 40% decline in some areas of the province like the interior and Whistler) and only 2%-5% in metro Vancouver. Whew!

Don’t believe us? Let’s trot out a Chinese agent from, gosh golly, Onni again. And if you care to notice he’s standing in front of Central 1 –the home of Helmut Pastrick-, where there are absolutely no Onni projects currently going up. WTF is that guy doing being interviewed there anyway?

Any-who… this guy is the obvious expert on the foreign market because he can tell you the exact opposite of what Larry Yatowsky’s realtor survey showed us, that YVR is a destination for a lot of international buyers. That’s the only truthful but anachronistic statement in the whole piece.

Then the news guy, who never asked a question in the whole piece, summarizes that the experts agree that high prices in metro van are here to say. Thanks for the laugh News Guy!”

—

mac is correct to call CTV out on the internal contradiction of the title ‘Experts predict B.C. real estate bubble will remain intact’. To really say that a market is in a ‘bubble’ is to also predict that it will implode. Most market watchers don’t thoroughly understand the dynamics of a speculative mania.
– vreaa

Local Realtor “Cautiously Optimistic”

“Now Andrew had a couple of questions about the Vancouver real estate market… In the media he’d been reading that the Vancouver real estate market had seen a significant drop in the last little while, and he wanted to know what the real situation was.” …
“We’ve seen a lot of changes in the economy in China, so there’s a lot less people coming over from China. We’ve also seen changes in mortgage rules which has also reduced a lot of demand for property here in Vancouver.” …
“What are my predictions for the next six months?.. Our major trading partners (US, China) have been having some issues but their economies seem to be turning the corner. So I’m cautiously optimistic. … In terms of changes to mortgage rules, they came in 3 to 4 months ago, we’re feeling the effect now, in the past after mortgage changes, you get about 3 to 6 months where things soften up, then things begin to pick up. So, you know, I’m cautiously optimistic.”
– excerpts from Mike Stewart, local realtor, self posted youtube video, 20 Nov 2012 [hat-tip Anon]

Whenever a speculative mania tops and begins its deflation, participants who don’t understand the fabric of bubbles, and who haven’t seen the mania for what it is, will search for extraneous factors to blame. Sure, some external factors may shape the path of the price descent, but the real cause for the resultant implosion is the fact of the mania.
– vreaa

Quotes from above added to the “It’s Only A Flesh Wound” sidebar post.

Ignoring The Effects Of A Topping Bubble – “Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity.”

“The market for home sales is chilling further after months of decline – and it’s putting Finance Minister Jim Flaherty on the hot seat. New data show sales deteriorating in November, and the association that represents Canadian realtors says sales will fall, not rise, this year and next. Mr. Flaherty, who sought to cool the market this summer by tightening mortgage insurance rules, says his actions are only one part of the story and that Canadians are voluntarily curbing their appetites for mortgage debt.” …
“Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity,” CREA chief economist Gregory Klump stated in a press release.
– from ‘Realtors blame Flaherty as slump deepens’, Globe and Mail, 17 Dec 2012 [hat-tip allen]

A speculative mania eventually implodes under its own weight. It doesn’t need rising interest rates or a failing economy to bring about its demise. In fact, its deflation is more likely to bring on an economic slump than to be caused by it. In Vancouver, the market started slowing before the mortgage changes came into effect.
The erroneous argument put forward by the economist above has already been ‘collected’ in our ‘Erroneous Theories For Falling Prices’ category.
– vreaa

Realtor Chat – “There is little actionable support out there. A best guess low may be early 2014. … Sadly, we don’t live in a perfect world.”

“There is little actionable support out there. The sense we Realtor types get from our coffee sessions is that everybody is waiting and digesting the mortgage rule changes. The scary part is nobody will really know when the bottom hits. By the time we get there and figure it out it will have passed.
The Vancouver real estate market is a box of chocolates. A best guess low may be early 2014. A better wish to come true would be a steady flat market for 5 to 10 years. Those markets are good for everybody. The reality is that some politician will screw the whole thing up and we’ll all wish we bought something “back then”.”
– Larry Yatkowsky, local realtor, at his blog yattermatters.com, 1 Dec 2012 8:07pm

And sounding like testimony before a Senate committee:
“I readily acknowledge that I and my fellow Realtors are called a lot of things and yes we are known to say a lot of things that in many instances are on the edge of truth. By the same token, buyers and sellers tell us a lot of things that approach the same edge. It is neither right nor is it perfect. Each circumstance, individual and piece of information needs to be weighed, judged and acted upon its own merit. … Humans are prone to do what ever they feel is morally acceptable to them as a group or individually to get the upper hand over the other guy. In a perfect world equity for all would prevail. Sadly, we don’t live in one.”
– Larry Y, 2 Dec 2012 5:41pm, same thread as above

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

“A relative of mine was at University, then left in second year to become a realtor in North Van for about the last two years.
As of September, he’s returned to classes. Before then, for several months, the number of facebook updates about multiple bidding wars, a balanced market, or open houses dwindled to zero.
To keep peace in the family, I specifically haven’t mentioned any of my heretical views on the Canadian housing market or asked why an English degree suddenly looked better than being a realtor in the “Best Place on Earth.”
– UBCghettodweller at VREAA 29 Nov 2012 7:48am

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

Phil Soper, CEO, Royal LePage – “I think the impact of mortgage regulation is being blamed far too often these days in what is clearly just a natural cyclical slowdown in the market driven by overpriced homes. We were due for a slowdown.” [We Agree]

“The real estate industry has ramped up its attack on rules making it harder to borrow but its challenges face one big obstacle — mortgage restrictions are working exactly the way the federal government wants them to.
In the past week the Canadian Association of Accredited Mortgage Professionals weighed in with complaints that Ottawa’s restrictions were killing consumer confidence and even raised the stakes further by suggesting the entire Canadian economy was at stake.
Toronto builders joined the fray, calling out the federal government for rules it maintains have a lot to do with the cooling market in the city that saw sales in October dip 14% below their long-term average.”
…
“One executive who says he’s changed his tune on the government’s crackdown is Phil Soper, chief executive of Royal LePage Real Estate services. When the latest regulations came out in July, he was one of the first to suggest the time was wrong, but he’s gone full circle since then.
“At the time, I thought it didn’t make sense,” said Mr. Soper. “I’m being contrary again. I think the impact of mortgage regulation is being blamed far too often these days in what is clearly just a natural cyclical slowdown in the market driven by overpriced homes. We were due for a slowdown. The timing was unfortunate but it’s not a major event. I think chances of it being reversed are close to zero.”
– from ‘As tougher mortgage rules slow housing market, critics call for a reversal’, Garry Marr, Financial Post, 26 Nov 2012 [hat-tip CM]

We agree with Phil regarding mortgage regulations being erroneously blamed. And hats-off to him for admitting his earlier error in judgment. We suspect we’d likely disagree with him on the magnitude of the coming ‘slowdown’, however.
The spec mania was waiting to pop, would have done so with absolutely no precipitant at all (spec manias finally collapse under their own weight; fallacious ‘reasons’ for the collapse are always blamed).
We’ve already started collecting ‘Erroneous Theories For Falling Prices’. Number five is ‘Tightening Of Mortgage Rules Caused The Crash’.
– vreaa

We Want Zillow

Garth Turner, at greaterfool.ca, today published a good piece on the benefits of information.
Zillow is a transparent and comprehensive source of RE data for US RE buyers.
If you’re Canadian, you’ll find Zillow breathtakingly useful for exploring any US RE market.
Why can’t we have a BC equivalent?
Is the fact that BC RE consumers are kept in the dark an admission of local market frailty?
– vreaa

Agree To Buy A Condo; Earn Money!

– from the website promoting ‘The residences at West’ [Nov 2012], a development that we are told “will change the face of Vancouver’s Southeast False Creek forever”.
[hat-tip to Landbaron]

Recently we featured a post discussing some of the ways in which RE marketers are promoting their Vancouver product [‘Sellers Offer Incentives – Cars, Cash, ‘Price Drop Guarantees’, VREAA, 9 Nov 2012].
Hats-off to the marketers with the idea above. Such superb sleight of hand.
Prospective buyers are attracted but also distracted by the ‘earn 10%’ (“Such a good return!”), while the sting is that they agree to buy a condo at 2-3 times its fundamental value (about the same overvaluation as all other Vancouver RE).
Note the use of the ‘good’ word “earn” – wholesome; hard work; prudence.
Furthermore, we may be wrong, but judging by the ad our hunch is that the ‘10% interest’ you earn is 10% total until completion, and not 10% per annum until completion. In other words, 10% total rather than the 21% total that is implied by the overall impression of “10% interest” over two years. (If we’re incorrect on this, and anybody has precise info, let us know.)
– vreaa

PostCardsFromTheBlastRadius #16 – “Where Dreams Are Real!… and TheHype is ‘Realtor’™”

He’s Baaaack! For the uninitiated, Nemesis is responsible for the indispensable prior 15 episodes of ‘Postcards From The Blast Radius’. And, here it is… Number Sixteen!
The perimeter moves closer; the images, both visual and lyrical, become bleaker.
We don’t pretend to understand the full meaning of every word, but we suspect the chaps at ‘The Little Review’ would have said the same about Joyce. Once in a while, it’s good to give your brain a workout. Keeps you agile.
Thanks to Nem; and, to readers: good fortune.  Be sure to click on the panoramas for large images. – vreaa
—–

It’s hard to tell whether this is an interrogat​ive enticement​… or, grammatica​lly speaking – an imperative​. Either way, it’s a none too subtle NeonSignPost to the collective dynamic of our times…

Yes, DearReaders… there’s something peculiarly disconcerting about a political economy that can be characterized – in a single snap, no less – by a 15Tonne cargo of HighFructose CornSyrupConfections™ manoeuvring past Realtors™, CreditUnitions™, CharteredBanks™ and DevelopmentPermitApplicationDepositories™. …but for the solitary exception of an ATM™ supplicant*, an urban landscape virtually devoid of RealPeople™.

The KeenEyed among you will note that our *Supplicant has paused – ever so briefly – on the ThreshHold ‘O Cash… to genuflect, cherish and fondle the latest HighlyCoveted copy ‘O OkanaganHomes&Land™… Gotta be this month’s HotCover… which, as it happens, is Tantalizingly™ adorned by  TagTeamReatresses™ …it’s just ‘business’… Right? PageHits. Eyeballs. ClickThroughs. Conversions… I’m guessing it’s just another Work’aDayPracticality for the Ingénues ‘o Realty™.

Moving on… Here be’eth The Wade&Main PanaromicP​anopoly ‘O ‘Prosperit​y’… AnchorFina​ncial institutio​ns on each of four corners. Egads!, a veritable CinemaScope® MexicanSta​ndOff ‘o Credit… and as previously illustrate​d – by no means an exceptiona​l or isolated example of PecuniaryR​edu​ndancy on the HillBillyR​iviera’s infamous ‘strip’ ‘o ReFi’s.

[NoteToEd: Albeit, not otherwise here depicted..​. and but “mere steps” away… there be not 1… there be not 1&1/2… but 2! Yes!!! 2CashStore​s! ‘Facing off’ like Unemployed​&Desperate NHL HockeyFran​chisees in a MadJuxtapo​sit​ion of the KittyKorne​rKind. Rather like StarBucks on RobsonStra​sse used to be… before the BenightedB​ubbleTea ‘invasion’​.​]

Alas… but a mere StoreFront or two distant from the PanoramicP​anopoly ‘O Prosperity​… an altogether different story emerges. That’s a MortgageBr​okerage on the left – or rather, what is presumed to be a MortgageBr​okerage, as their illuminated signage has recently disappeare​d and the current, lonely occupants are looking more than a little forlorn of late. I wonder, is their Signage next door – awaiting redemption…

Well, at least they’ve still got a trailer… Hidden behind their premises, a CourtesyCargoHauler cum SpecialEvent​sVenue WheelClamp​ed for safety (or by Mr. “Quick n’ Easy”?) in a far flung corner of the adjoining, spooky, Develop​ersGraveYa​rd…

[**NewsFlash** NoteToDearReaders: The Great MortgageBrokerage SignageMystery is solved! – and very much a case of, “from the Sublime to the Ridiculous”… or should that be from the Ridiculous to the SubPrimeLender™… the same people who were flogging Mortgages to those eminently likable – if Gullible&C​redulous – HillBillie​s… have since reinvented themselves as a DominionLe​ndingCentr​e™! With a FancyNewBl​ueAwning! E​rgo, now that their former clients are in NegativeEq​uity and somewhat ‘strapped’​… it’s a simple matter of, “Heck, Bubba… sure we kin sport you a FewExtraTo​onies. Just sign right here.”]

Never mind all that, though… for even if AdultNovel​ties & RisqueNegl​igees are but a distant memory or a ForbiddenP​leasure.. and assuming – Shock&Horror! – that one actually has a SpareToonieOrTwo of one’s own to ‘invest’… There are… OtherTemptations!
 
How about… A Scratch n’ Win GIC!… I shit you not – and just imagine which demographi​c that was designed to entice.

Yep​, exclusivel​y for you, Granny – from the VeryNicePe​ople @ Prospera.

[NoteToEd: I am reliably informed that SratchCard AnyThings are to TheElderly as AlcoPops are to any RighteousT​eenRebelli​onPartay..​.]

Scratch&Wi​n GIC not pan out?… Well, “DurnIt”..​. there’s always the CashFactor​y followed by a little Bling and maybe a PermanentH​omage or two to BillyBobRa​y of GrindRod fame and that MagicalEvening on the Chrysler Valiant’s BenchSeat…

In spite of what you might reasonably think, DearReaders… This is Ret​ailSyne​rgy personified… in the HillBillyR​iviera… A QuiteCommo​n juxtaposit​ion, actually. Really.

[NoteToJohnsson’sRodAKAchubster: Uncle Ben’s CashFactor​y is, obviously, rather more impressive – still, you’ve got to admire local initiative​. Hopefully, this particular CheekyCoun​terfeiter’​s financiers will not regret the proprietor​’s bold artistic license. As for your Rod, Johnsson… I neglected to add… yes, there is actually a place called GrindRod in the HillBillyR​iviera. It’s quite charming and just North ‘o Enderby. Cue: LillyTomlin as child going: “SoThere, SFX: PROLONGED RASPBERRY’]

AllRight, DearReaders… and at the very real risk of straying into Verboten/Tasteless Territory… I think it only righteous and just… that we include, even if only a peremptory glimpse… a brief peek at some of the Strip’O ReFi’s other inhabitants… Ok?

My personal favourite – and, for reasons which will momentarily become self-evident, is CheersTheChurch™. No, your FearlessForeignCorrespondent has not attended a service. That said, he has performed extensive DigitalDueDiligance… Accordingly, I think it not just Proper&Fit but PositivelySerendipitous that TheCreator has seen fit… to install a store front Pentecosta​l FrontierO​utpost on such a NotoriousB​oulevardO​fSin…

[No​teToEd: Come on… it makes perfect sense on a street dominated by TattooParl​ours™, CharteredB​anks™, BokeragesO​fThePawns™​, PayDay™Emp​oriums and OnanistOut​fitters™ to EvenThings​Up a little bit… by including a religious assembly with substantiv​e expertise in DemonicPo​ssession, SpeakingIn​Tongues, BeastlyMar​ks and, naturally.​.. the inimitable CrefloDoll​ar’s ‘Prosperit​yGospel’™. Wouldn’t you agree?… And no, there is absolutely NoTruth to the rumours that ‘Nem’ has a ComCastUni​versal Developmen​tDeal in progress for a new RealitySer​ies entitled, “JEEZOTS™ – Jesus Endorsed Enterprise​s Zealousy Opposed To Satan”]

Well, irreveranc​e aside…. and “irregardl​ess”, I feel compelled to provide you with yet another instance of ‘RetailSyn​ergy’… HillBillyR​iveraStyle.

Which, as you can clearly see… is indeed, Alive&Well​!

Or as BillyBobRa​y ‘o GrindRod is wont to opine, “LandLord locked ya out, Bubba? No worries… you kin jest put a lien on yer Chevy and git the LockDude to let ya back in!….”

Of course, when a Developer is LockedOut by GlobalMacr​oEconomic MarketCond​itions…i​t’s slightly trickier.

Accordingl​y, when a Developer’​sDream ChecksOut to that big PermitAppl​icationKio​sk in the Sky… it is not – and this is entirely contrary to popular belief – memorializ​ed with funerary statuary atop a grassy knoll… but rather… by a ParkingLot​.

So, DearReader​s – welcome to th​e contempora​ry ElephantsG​raveyard for ProjectsGo​neBoom and DreamsGone​Bust…

Sti​ll, at one quarter a go – I’m sure they’ll eventually recoup the SquareFoot​age premia imagined in their Numerous, Glossy, LogoEmboss​ed, UV SpectraCoa​ted Prospectii​…

Emphasi​s on eventually​. As measured in Geological​Time.

It’s a shame, really… ParkingLot​sR’Us are the only growth industry in the HIllBillyR​iviera these days… Well, apart from ‘PayDay’ Emporiums, TattooParl​ours & Brokerages​OfThePawns​…

Sad&Needle​ss to say, though – even on their ‘busiest’ days… The capacity utilizatio​n of these CarrierLan​dingDeck sized BlackTops remains, more or less, as illustrate​d…

Even allowing for [and you’ve got to look VeryVery carefully indeed to see it] the MortgageBr​okerage’s Forlorn & WheelClamp​ed SpecialEve​ntsVenue – a permanent fixture on this particular lot of late.

Of course, DearReader​s – not everyone needs a ParkingLot​sR’Us… some people – I know, it’s hard to believe! – actually depend upon TransitusP​ublicus…​

Pity them as they disembark.​.. given that each HBR BusStop reveals such a shockingly similar and gloomy tableau…​

But never mind all that!… Shall we pull the DingALinge​r, DearReader​s​… put down our copies of TheBuzzer and SallyForth​…???

OhM​y!… oh my oh my oh my… Do you hear that!? Shade’s ‘O Disney AudioAnimatronica circa ’62

It’s… It’s… WindowTalk™. Doctor DooLittle was fond of talking to the animals… but for the UnderHouse​d Bored&Rest​less DooLittles of the HillBillyR​iviera there’s nothing more satisfying than some, “Try Our WindowTalk™”. Well, to be completely truthful… it’s a Window that talks to you.

Accordingly, many an innocent PropertyVirgin [or AmbitiousWorkingGirl!] compelled by circumstance to utilize that BusStop… has been enticed, much like Alice passing through TheLookingGlass, into a life ‘o DebtSlavery repackaged as Glamour.

What a bleak ‘present’ we have wrought for ourselves.​.. Imagine, if you will, the Marilyn Monroe of “BusStop” [1956] hopping off her JohnnyGrey​hound and landing… amidst the RodeoRealt​ors™ & UnctuousUr​surers of the HillBillyR​iviera’s MidTown Car​nival ‘O Cornucopia…

…her tattered cardboard suitcase fiercely clutched against her bosom… her skirts billowing in the ChillAutumnBree​zes… a NeonCarousel of orange/sca​rlet frost-hewn leaves swirling about her feet… as she ponders a ‘FreshStar​t’.

Marilyn looks to the right… A PayDay Loan collateral​ized by her “SevenYear ​Itch” legacy wardrobe?..​.

She glances to the left… A NewCareer™ KickStarte​d by Cleavage???!!​!.​..

Yes!!!! Rea​lTress it is, then!…

No more diners and HonkyTonks for our Marilyn! It’s PentHouses & WaterFront​s only from here on in… [Cue: CondosAr​eAGirlsBes​tFriend… SMASHCUT: CandleInTh​eWind]

[No​teToEd: And Marilyn thought she was on to the BigTimes..​. alas, she’s just another PrettyGirl in a Window now… albeit, slightly less provocativ​ely displayed than is normativel​y the case in Amsterda​m. Same business, though. Whatever they tell you.Bus​Stop…]

No PropertyBordellos for Elaine TheArtist, though!… &Bravo!, Elaine. Bravo! [NoSarc Intended/I​mplied]

For​get about JadedMaril​yn’s BusStop.. We’re talking You​thEbullien​t’s CentenaryT​ribute to HappyTimes​… Or at least to HappierTim​es and BetterPros​pectsAhead​…

The WorthyDrea​ms of Efferevesc​entAdolesc​ent CivicPride​…

Just one little glitch though as, ironically​, Elaine’s canvas… once the adjoining wall of some lively local enterprise​…is, sadly, today…

…just another vacant lot… years on the market… years. DearReaders will note the Realtor’s™ signage including the poignant invitation​, “Owner Will Consider All Options” [one of which, if the property continues to languish will doubtless involve the EmergencyS​ervices and a Mortuary followed by a PostMortem and a CoronersRe​port].​..

[NoteToEd: Frame left is the now defunct JobCentre™​, also sitting vacant, ForLease!, and UnLoved but for the EverPopula​r InstaLoan​$™ franchise, the building’s solitary, visible remaining tenant… Woe is us.]

This is TooTooDepr​essing by far… perhaps we should stroll down a SideStreet​. GottaBe something Lively there, eh!??? Eh???

RapidPawn & FairRealty​?… Hmmm… I propose RapidRealt​y & FairPawn..​. either way, PoorOld RapidPawn is heading for that merciless Cashier’sC​age InT​heClouds..​. In their own words …

“If you are unable to pick up this month and roll you can pick up next month. We are sorry for any inconvenience. [Redacted] has done her very best to keep the store going for us and for you but the economy is such that it just isn’t working out.

Again we really hate to close, we have met some great people over the 17 years and will really miss you all.”

Ok.. That’s enough. Perhaps… Perhaps it’s time we sought Refuge&San​ctuary… A SpiritualR​espite from Mammon’sWe​rks. ShallWeThe​n?!….

Alas, not unlike the RapidPawns of the HillBillyR​iviera [legion though they be], All Good Things Must Come To An End… and as ends go, a HarvestFestival ChurchSocial and the LifeDevotional – “Spending It All On God” – ain’t so bad, at all. [NoteToEd: A fascinatin​g moral ‘ElevatorP​itch’, wouldn’t you agree?]

Albeit, whether persuading his congregant​s to part with either their financial or their spiritual capital on behalf of altruisic pursuits, I suspect that, somehow – in the current milieu – the GoodRevere​nd Turnbull’s work is more than cut out for him… Still, you’ve got to admire an optimist.

Speaking of EternalOpt​imists™ and TheAfterLi​fe… I often wonder what Visions ‘O Grandeur Lost dance, like ElusiveChr​istmasSuga​rPlums, through the tormented, sleep tossed nights ‘o the Realtors™, Developers​™, Speculator​s™ and other Ambitious SmoothOperators who so frequently seem to dominate these fora…

That would be the CityHall’s of this world… where those who would rather not, “Spend It All on God”… can experience anew that special circle of Hades even Dante would not dare to depict… where access to the MagicApproval of the ubiquitous Developmen​tPermitKio​sks is frequently smoothed by ProximalLobbying ‘o ThoseBushyTailed councillor​s… And Mayors, too – come to think of it!

Albeit, in some ‘burgs, like this one – a Mayor’s ‘ShelfLife​’ can frequently be measured in terms of AlternativePolitical​Opportunit​y…

For, as rumour has it, the HBR’s – to the eternal chagrin of his many municipal ‘sponsors’​ – is enthusiast​ically a ‘Courtin’Ch​risty’… With all his ardour.

So much so, his bags are practicall​y already packed for that MythicVoya​ge on the MagicCanoe to FantasyIsl​and’s…. Legislatur​eLost.

Well, never mind all that… if a SmallTownPolitico can survive the TribalInia​tionRites of his ProvincialBrethren and, subsequent​ly, the PerilousPoliticalPa​ssage to FabledFantasyIsl​and… there be other SugarPlums awaiting his patrons – the idle contractor​’s, architects and tradespeop​le of TheValleys.​.. PrisonsR’U​s, anyone?…

[NoteToEd: One things for sure, MendicantMayors of the HBR certainly won’t have any trouble pawning their Chains ‘o Office or organizing a PayDayLoan to smooth their transition to the BigTent… Heck, if they’re really lucky, they might even qualify for a complimentary Christy’Too or Two!]

——-

[Images Ⓒ​2012 ‘Nemesis’ – All Rights Reserved]

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

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

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

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

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

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

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

– Stan from Vancouver, as relayed by Garth Turner at greaterfool.ca 21 Oct 2012

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

“One of my friends is currently on a 1-year long maternity leave. Hubby is a realtor and has not closed a deal for quite some time now (and being very frustrated about it). I don’t know if this is because they can no longer pay the mortgage or because he sees the writing on the wall (probably a bit of both), but they’ve just put their 2-br-$800K condo up for sale (good luck with that one in this market!).
It’s funny how quickly things change. Just a year ago, I was ridiculed during a conversation for just mentioning that maybe the RE market was over-inflated, that maybe a correction might eventually occur, and that flipping a property at this point might not be a good idea. Oh well, I may not sound so stupid anymore, I guess…”
– Makaya at VCI 16 Oct 2012 2:47pm

Awareness of the bubble is going mainstream.
– vreaa

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

So far, so good.

“Vancouver home sales fell 32.5 per cent in September compared with a year ago, says the Real Estate Board of Greater Vancouver.
Sales of residential properties totalled 1,516 for the month, down from 1,649 in August and 2,246 in September 2011, according to the board.
“There’s been a clear reduction in buyer demand in the three months since the federal government eliminated the availability of a 30-year amortization on government-insured mortgages,” board president Eugene Klein said. “This makes homes less affordable for the people of the region.”
– from Vancouver Sun, 2 Oct 2012

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

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

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

And in the “Keep Calm and Carry On” (also known as the “It’s Only A Flesh Wound”) category of opinions:
“Clearly my prediction of offshore buyers returning in the fall is coming true. The high average is a reflection of the fact that large amounts of high end housing is selling and selling well.
Like I’ve said all along, this is just a brief pause before the Mainlanders return again. Clearly the high end of the market has not been impacted.”
– CBM at yattermatters 1 Oct 2012 9:26pm
—

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

“I visited a few open houses today. At every one, I was the only visitor, and the sales pitch was the same – buy now, do a few quick fixes and sell higher. Nobody assumed that I may actually want to live there.”

“I visited a few open houses today. At every single one of them, I was the only visitor. The used house salesmen seemed generally lethargic. When I talked to each of them, I always got the same sales pitch – buy now, do a few quick fixes (or not) and sell higher. It’s all about flipping. Nobody assumed that I may actually want to *live* there. They were not concerned about quality of life for me, or having a family there, or entertaining guests, or proximity of amenities. It was always about selling down the road, one or two years from now for a profit of a few hundreds of thousand dollars.”
– bubbly at VREAA 30 Sep 202 6:51pm

Homes in Vancouver have become priced largely as financial instruments, and far less so for their utility as dwellings.
Now inventory is high, sales are slow, and prices are showing the initial signs of weakening. Open houses are very quiet.
As the bubble deflates, prices will approximate those determined by true underlying value.
By my calculations, this means prices will fall by somewhere in the range of 50%-66% from the peak.
– vreaa

Handcrafted Spam

Yuck!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Free Car With House In Richmond.”

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

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

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

“My friend is a top-10 best selling realtor on the North Shore. Told me on the weekend that he’s able to spend a lot more time at home with the kids now, because the market is so slow. He doesn’t see any change on the horizon, and feels that this is the reckoning the Vancouver market has been long overdue for.
Reminds me that we shouldn’t assume all realtors are market pumping dolts. The best of them understand that the market comes and goes in cycles, and that they need to have a different strategy to extract the most value out of each part of the cycle.”
– Rocker Guy at VCI 10 Sep 2012 10:14am

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

“Was at the in-laws this weekend in Richmond. They had a friend of theirs over who is a well-connected realtor in the Chinese community.
She said nothing priced above assessment value was selling. Prices off 15% from peak.
This is someone who was invited to one of Harper’s trade missions to China, so in a position to know if an influx of HAM was just waiting to be unleashed. Aggressive sellers are driving prices lower to attract the few buyers in the market.”
– Just looking… at VCI 9 Sep 2012 8:17pm

“‘Love It or List It Vancouver’ will feature families in the city struggling with homes that no longer suit their needs.”

“Former “Bachelorette” star Jillian Harris is taking the helm of a new spinoff of “Love It Or List.”
The Canadian interior designer and TV personality will co-host “Love It or List It Vancouver.” …
“Love It or List It Vancouver” will feature families in the city struggling with homes that no longer suit their needs. Harris will show homeowners a design in hopes of persuading them to stay put. Meanwhile, a real estate agent will work towards getting them to relocate to a new property. Her new co-host will be announced at a later date.
The series is slated to launch next winter.”
– Vancouver Sun, 13 Jun 2012
—

“Jillian Harris will be hosting Vancouver’s love it or list it and they announced her sidekick. Never heard of this guy before but I think he’s not a real realtor but an actor that the network brought on board…hmmm… I was hoping they would get Mike Stewart or Ian Watt some well known realtors who would most likely be great on the show but instead they went with someone else so who is this guy is he really a licensed realtor?” – red_lantern at RE Talks, 6 Sep 2012

“She, not he. It just happens she rents a condo from a friend of mine”. – unicas, ibid.

“Rents? HAHAHA.” – timber2012, ibid.
—

Court Determines Realtor Has To Pay Income Tax Rates On RE Flip Profits – “The CRA discovered that Giusti had bought and sold seven condos in seven years.”

“When you sell a property that isn’t your principal residence and make a profit, half of the amount is taxable. This is the so-called capital gains tax and it’s pretty straight forward, but every situation is different. It all depends on how the Canada Revenue Agency views the transaction.
Real estate agent Romano Giusti bought a condo on Richards St. in Vancouver in November 2006 and re-sold it in June 2007 for a profit of $30,831. When he filed his tax return, he paid no tax on the profit, saying it was his personal residence.
The CRA re-assessed this return and discovered that Giusti had bought and sold seven condos in seven years. He argued that he intended to make the Richards St. condo his personal residence, but changed his mind because of the street noise, irresponsible renters and pets in the building. So, he moved.
Giusti appealed and lost. In a case heard on January 25, 2011, Judge G.A. Sheridan found that Giusti was flipping houses and so was not entitled to the principal residence exception. He also penalized Giusti.
For most people, if you make a $30,000 profit, you only would pay tax on $15,000. In this case, the court found that because Romano was in the business of buying and selling homes, he had to pay tax on the entire profit.”
– from ‘Selling a condo? Beware the taxman’, moneyville, 3 Aug 2012

We should all applaud the CRA for pursuing tax fraud. It is very important that citizens feel that we are all being taxed fairly.
From a Vancouver RE perspective, this story is perhaps more important in that it tells of a realtor buying and selling seven Vancouver condos in seven years. How much has this been happening? How many realtors in Vancouver own multiple properties? What implications does that have in the event of a downturn?
– vreaa

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

As Vancouver’s real estate market cools, losses on the troubled Olympic Village development could soar above $225-million unless condo king Bob Rennie quickly drops prices on unsold units that have languished on the market for too long.
That’s the view of developer and architect Michael Geller, a former NPA council candidate, who suggests flawed pricing and weak marketing is turning the fiasco on False Creek from bad to worse. …
Geller said he fears the city will be unable to sell many of the remaining condos at current prices, as Vancouver’s real estate market seems to have peaked “a year ago when there was a lot of fervour from Asian buyers.”
Geller says better to cut prices and stop losses as competing developments and resale units start to hit the market at prices below Village units, than continue to pay carrying costs for years in hopes of seeing a big real estate rebound. …
“A lot of people in the real estate community are saying this project shouldn’t be taking years to sell out. Everybody knows the market has softened over the last year, and is going to continue to soften.”
…
“The problem with arm chair gossip that the Michael Gellers of the world have, is they don’t sit in the board room with the decision makers and the stake holders … and we have fine-tuned the pricing all the way through,” Bob Rennie said. …
“People come to town and say it is a bubble, but what do they know?” Bob Rennie said.
…
– from ‘Developer Michael Geller says city should cut losses by discounting Olympic Village units; Condo marketer Bob Rennie dismisses Geller as ‘politically motivated’, The Province, 24 Aug 2012

People from out of town have… perspective.
– vreaa

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

“I was at a function on the weekend and spoke with a woman who just listed her West side home. She had just met with one of the ‘Super Star Realtor to the Stars’ (which is another sign of how nuts this place is).
The woman had suggested to the realtor they list at the assessment value to start. No way said the realtor. They told her 200K below assessment was much closer to market.
What is fascinating in Vancouver is that the common belief is that the assessment is lower than the actual value. This, of course, helps us all stomach the high taxes. Except in many cases it is obviously not true or at least not true anymore.”
– Junius at greaterfool.ca 27 Aug 2012 9:55am

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

A Riddle, Wrapped in a Mystery, Inside an Enigma

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

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

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

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

“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

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

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

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

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

“Last month I pointed out that the active listing volumes for detached Westside houses actually exceeded the highest volume during the credit crisis. In June the number of houses actively listed was even higher at 1078. During the credit crisis, the active listings of detached homes on the Westside never exceeded 1053 houses. Keep in mind also that the three year average number of active detached homes listed on the Westside between January 2009 and December 2011 was only 589. This is a very serious situation.” …
“Vancouver’s real estate market is getting and is going to get hit from both ends. So, now that you are thoroughly depressed, here is the bright light: IF YOU SELL NOW, YOU WILL STILL BE SELLING NEAR THE TOP OF THE MARKET. If you plan to sell, you will need to price BELOW the most recent comparable sales prices. If you don’t do this, your listing will stagnate.”
– Images, and text excerpts, from ‘July Market Update: Am I Too Late to Sell?’, by Sam Wyatt, Vancouver Westside realtor, at samwyatt.com 5 July 2012

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

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

“Overheard someone was trying to sell his condo in New Westminster recently. He wanted $370,000 because a 20,000 cheaper unit sold $350,000 early this year. But his realtor told him to list for $320,000 in order to make it saleable.
This is about 20% drop in price.
He disagreed, so pull the condo off the market. But by the end of the year, I guess his condo will worth less than $300,000.”
– good-format at VCI 8 Jul 2012 9:14am

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

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

Industry Responses To Mortgage Rules

The new mortgage rules become active tomorrow. For the record, here are a few recent responses to the changes:

“We should caution the minister to avoid precipitous actions that would undermine the stability of housing markets. We have stressed the important role our industry continues to play in Canada’s economic performance. There is a clear linkage between stable markets and Canadians’ financial well-being, for both homeowners and home purchasers. …
Having made these changes to mortgage rules, the minister has an obligation to monitor their impact very closely, in all housing markets across Canada. These regulatory actions paint all markets with the same brush, whether they are currently strong, balanced or weak.
We need assurances that the minister of finance will reconsider the new mortgage rules if the evidence shows the result in market instability.”
– from ‘Do the feds really ‘get’ new mortgage rule?’, Stu Niebergall, executive director of the Regina and Region Home Builders’ Association, Regina Leader Post, 23 Jun 2012

“History may look upon this pronouncement and call it Flaherty’s Folly. In the interim, many buyers will see it as more blood drained from their rosy dream of owning a Vancouver home.”
– Larry Yatkowsky, Vancouver Realtor, yattermatters.com, 23 Jun 2012

“These changes, together with new OSFI underwriting guidelines… may precipitate the housing market downturn the government so desperately wants to avoid.”
– Statement, Canadian Association of Accredited Mortgage Professionals (CAAMP), 21 Jun 2012

“A change in the amortization period down by five years is going to affect most people’s buying power by $10,000, $20,000 or $30,000. In today’s housing market, that can be the difference between a really nice place and an average place. Most first-time homebuyers are trying to get into something they really like by pushing their limits.”
– Jeff Trounsell, Vancouver mortgage broker, Vancouver Sun, 22 Jun 2012

“Will this be enough to dampen the market? Maybe, but by own analysis not very much. I expect Flaherty’s move will prevent some on-the-edge buyers from making the leap too soon — but will do little or nothing to address affordability.”
– Don Cayo, Vancouver Sun, 21 Jun 2012

—

For a measured analysis, read Robert McLister at Canadian Mortgage Trends, 23 Jun 2012:
Excerpt:
“Despite the short-term pain and critical comments, it is clear that housing volatility will be reduced by these moves, over the long term. And that’s a positive…if you look far enough out.
The questions are, how long is long-term, how unpleasant are the side effects, and could those side effects have be minimized by a more incremental implementation?
Whatever the case, credit is due to the DoF, OSFI and Bank of Canada… they want to do the right thing.”

“Has this not been anticipated for months or years?”; “Of course but let’s not spill the beans. We can act like it is a surprise.”

vanpro: “WOW! 14% plunge in SFH avg price in 120 days (-13% since June/11)!! Sales at 10 yr lows and unsold inventory continues to climb. This is now an established downtrend.”

BubbleBoy: “I thought prices weren’t tanking?”

Larry Yatkowsky (realtor): “Tanking – does that mean adjusting?”

bbcoq: “Tanking? Trending lower is more accurate. Markets go up, down and sideways. Has this not been anticipated for months or years?”

Larry Yatkowsky: “Of course but let’s not spill the beans. We can act like it is a surprise.” 🙂

[exchange in comments section at yattermatters.com 1 July 2012]

“I moved to Vancouver in 2008 and despite being able to purchase, have held off due to the insane RE market. For now, I will continue to rent.”

“I moved to Vancouver in 2008 and despite being able to purchase, have held off due to the insane RE market. I rent a large beautiful home with a pool in the Dunbar area. Landscaping and pool maintennace are included in the rent, so needless to say, I have a very nice life style here. For now, I will continue to rent. If I ever consider purchasing a house here, I will offer well below market value. For now, I am having too much fun and can’t be bothered to look at the crappy homes listed for so much money.
The reason that I came to Vancouver is that my two children are attending UBC. They are now close to graduating and will likely have to leave Vancouver for a place with a more reasonable cost of living/RE. I will likely leave as well so that I will be in a better position to help them financially. This is too bad, as I like Vancouver, the people and lifestyle. I am afraid that many people are going to be seriously hurt by the artificial RE market here and will end up losing everything or become slaves to the bank for the rest of their lives.”
– DR, via two e-mails to VREAA, 24 Jun and 2 Jul 2012

Realtor CEO – “What we are going to see is a resistance to a reduction in price. I think if they’ve been reading the media they expect prices to drop dramatically. I don’t think they will.” [We Disagree]

It’s just a house.

“Sales in Canada’s most expensive housing market continue to plummet with the Greater Vancouver area hitting a 10-year low in June for activity.” …
“There is the beginning of a trend,” said Benjamin Tal, deputy economist with CIBC World Markets, about the steep decline in Vancouver sales from May. “We see significant softening in investment, we see reduced penetration of Chinese money into the city. I’m not surprised by this. Prices will fall. It’s just a question of time.” …
“There is no real change in unemployment and the economy isn’t changing,” said Don Lawby, chief executive of Century 21 Canada. “People are not being forced to reduce price to just sale. What we are going to see is a resistance to a reduction in price. I think if they’ve been reading the media they expect prices to drop dramatically. I don’t think they will. For that to happen, you are going to have to have combination of people not being able to meet mortgage payments because of increased interest rates or not having employment any more.”
– from ‘Vancouver home sales plunge to 10-year low in June’, Garry Marr, Financial Post, 4 Jul 2012 [hat-tip ‘no debt, no stress’]

No, it’s not going to be necessary for “people to not be able to meet mortgage payments because of increased interest rates or not having employment any more” for prices to drop. Those factors would speed a descent, but they are far from necessary for a price implosion.
At the end of a speculative mania, all you need is for psychology to change, and you rapidly find out there is nothing supporting prices except lots and lots of fresh air. Once they see that prices can fall, people stop overextending themselves to buy. Falling prices beget lower prices still. 
That’s all it takes. Supports as determined by fundamental values are far below current price levels.
– vreaa

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

“The number of residential property sales has hit a 10-year low in Metro Vancouver leading the Real Estate Board of Greater Vancouver to declare a buyer’s market.
The announcement is significant since the board has in recent months been calling the market “balanced.”
According to the board’s June report, sales of houses and apartments dropped to 2,362 last month, a 27.6 per cent decline compared with 3,262 sales in June 2011, and a 17.2 per cent drop over the previous month of May.
“Overall conditions have trended in favour of buyers in our marketplace in recent months,” said Eugen Klein, the board’s president, in a news release on Wednesday. “This means buyers are facing less competition and have more selection to choose from compared to earlier in the year.”
June sales were the lowest total for the month in the region since 2000 and 32.2 per cent below the 10-year June sales average of 3,484, the report shows.”
– from ‘Vancouver sales hit 10-year low, real estate board declares a buyer’s market’, Vancouver Sun, 4 July 2012 [hat-tip Loon]

One will be hearing much talk of a ‘Buyer’s Market’ in local media in the near future, and Vancouver Sun/REBGV news release is an example. Most readers on the Vancouver RE blogosphere are very familiar with the difference we refer to, but, for sake of the newbie reader, we thought we’d pop up this post in an attempt at clarification.
—
The RE Board of Vancouver uses the ratio of sales to listings to decide whether to call the market a ‘seller’s market’, ‘balanced’, or a ‘buyer’s market’. Thus, if listings are high and sales are low (as they are at present), it is automatically deemed to be a ‘buyer’s market’.
This ratio can also be expressed as MOI (or ‘months of inventory’), the theoretical number of months that sales at the current pace would ‘clear’ the inventory (total listings). There is a good correlation between high MOI and downward pressure on prices. See jesse’s articles at ‘Housing Analysis’ for eloquent  discussion of that relationship.
Thus, when the REBGV refer to a ‘buyer’s market’, they mean one where sales are low compared to total listing. Note that this in no way refers to absolute price levels. Yes, it is better for a buyer if there is a low sales:listing ratio and downward pressure on prices (more homes to consider, less time pressure, more bargaining strength) BUT it is immediately apparent that absolute price levels are far, far more important to a buyer. The buyer gets more for their money when prices are lower.
In our own terms, and from the perspective of the vast majority of prospective buyers, it is far better to buy a property that is priced at fair value than it is to buy a very, very over-priced property that happens to be falling in price from very, very over-priced to merely very over-priced.
A true buyer’s market is one where the buyer receives good, or at least fair, value for their money.
—
Vancouver prices have only recently begun to weaken from their stratospheric heights.
By fundamental measures, they ran up, in the speculative mania of 2003-2011, to levels that are two to three times fair value. Prices have weakened by about 3%-14% since the 2011 peak, depending on which sector you look at, and which price measures you use.
This is not by any sensible measure now a true buyer’s market. It’ll be a buyer’s market when prices hit the vague vicinity of fair value; they still have a long way to go downward prior to that.
– vreaa

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

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

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

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

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

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

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

“We went to an Open House this weekend to gauge whether there was a rush to beat the July 9 deadline. Open House was on West 33rd and it was dead. We attended with approximately 1/2 hour to go and we were only the second name on the sign in sheet. Even the realtor admitted it was dead and asked us if he could send us some similar listings as “he had lots of time on his hands”.
Nice change from the 30 pairs of shoes and multiple offers you would have seen not too long ago.”
– MEM at VCI 25 Jun 2012 at 1:52pm

“Today’s consumers are better informed, connected and tech-savvy. And they expect the same from their realtors.”

“When Ashley Smith, a 27-year-old realtor in Vancouver, gets a new listing she tweets out the details to her followers and posts the property’s profile on her Facebook page.
And shortly, once her new website is up and running, Smith, who previously worked in the Langley/Surrey property market, will also run a blog to promote her listings and broadcast her thoughts on trends and housing opportunities in the Greater Vancouver area.
A few years ago, a For Sale sign on the property and some New Listing flyers dropped on the doorways of neighbours might have sufficed. But today’s consumers are better informed, connected and tech-savvy. And they expect the same from their realtors.”
– from ‘B.C. Realtors increasingly embracing social media and the web to stay ahead of the pack’, Cassidy Oliver, The Province, 15 Jun 2012 [hat-tip paul S]

It is natural that realtors should be using social media to promote business.
In fact, it would be welcome for BC realtors to use technology to inform consumers even more, in particular, to share data that they have on the market, such as the sales history of each specific property, a la Zillow in the US.
This article is also a reminder that young people continue to be attracted to realty as a career; this is understandable given the strength of the market over the last decade, but it is also an example of the misallocation of resources caused by the speculative mania in housing. There are more than 11,000 realtors in the Greater Vancouver area, up from 6,500 in 2002, and the highest number on record.
– vreaa

A chart from 2010. Membership is now >11,000 [as per REBGV]:

‘The Starbucks Factor’ – Vancouver RE Prices Explained

“When you are buying your first house, you may want to pay special attention to where the closest Starbucks is located. ‘The Starbucks Factor’ is a remarkably accurate qualitative measure that is great at predicting where the next hot neighbourhood will be. Where Starbucks goes, that’s where real estate values are on their way up… They put massive amounts of money into researching that area to make sure they have a solid location. … The way to get the most out of this factor is to buy in a neighbourhood where there isn’t a Starbucks yet, but where there is likely to be one soon. It’s not exactly easy to figure out, but, if you understand neighbourhood trends and you have a realtor on your side who knows the areas that are appreciating at a faster rate than others, you can find the next up and coming area.”
– Andrew la Fluer, Toronto Realtor, self-posted video at youtube, 18 April 2012

This explains EVERYTHING about the Vancouver RE price run-up…
Joking aside, using this strategy may still result in you buying a house that then proceeds to plunge in price, but, at least you’ll have the consolation of knowing you have a large variety of refreshing coffee-based beverages close at hand.
– vreaa