Friday Numbers

Friday was sort of a slow day. 185 new listings and 128 sales, for a sell/list of 69.19%

Inventory dropped to 10,864, while over 90s also dropped, reaching  2,200, or 20.25%. 

I’m ambivilent about the strength of the summer/winter slowdown, spring/fall uptick effect, but regardless, kids are heading back to school and we are on the summer/fall threshold.  It will be interesting to see how the current economic hypertext effects our local real estate sub-text in the next couple of weeks.

Advertisements

165 Comments

Filed under Daily Numbers

165 responses to “Friday Numbers

  1. fish

    Big end of month drop is listings.

    Lets see what price they relist at. Pity you stopped all the price data- it was very useful.

    Even if you could do it once a week that would be good.

    Personal anecdotal stuff:

    1) Off craigslist. I suspect we will get many more of these:
    http://vancouver.craigslist.org/rfs/411034224.html

    2) Friend seeling to move to Toronto. Packed and moved everything out. Last minute the buyer says his financing has been pulled (yes this happened here in Vancouver not in Fl)

    I dont kknow who the buyer was getting financing from, but noted a few like GMAC pulling their horns in.

    My friend’s lawyer says they should give the buyer another week ot two before trying to keep the deposit, since the recent financial events were ‘unprecedented’.

  2. Jay

    Looks like inventory is decreasing. Will that be the case now that the ‘traditional’ summer slow-down in RE activity is over?

  3. Domus

    So, let’s try to sum up what we know:

    1) population growth in greater Vancouver is far from buoyant: according to the Sauder school we are at the lowest growth rate in more than 15 years. This is supported by anecdotal evidence of people leaving for the East and U-Haul rates higher for vans transiting towards East.

    2) The city seems a big constructions site: cranes everywhere, especially in the downtown core. The number of units coming to the market between now and the Olympics is forecast to reach a record in absolute numbers.

    3) Individual pay settlements are not larger than 2 to 3% per year for most salaried workers: see recent strike turmoil for evidence of that. Incomes are not growing faster than elsewhere in Canada, in fact Vancouver incomes are lagging Ontario (recent story on the Van Sun);

    4) Easy credit is retrenching: interest rates have been on the up for the past 6 months. Risk premia are going up, which will make credit more expensive for buyers with small downpayments. Anecdotal evidence from friends is that many mortgages which were pre-approved have been revoked or renegotiated at different, more expensive terms.

    5) Housing situation in the powerful US neighbour seems to become worse by the day. It is not uncommon to hear of 20% reductions in former hot spots. Volumes of sales have collapsed, prices are slowly adjusting downwards.

    Can someone explain to me how can we have flat prices for a few years in this scenario? And why?
    Does anyone still believe in strong appreciation for the future? If so, why?

    I am not being bearish, I just want to understand the argument of the optimists. Ideally, they should also rationalize their argument with the facts above.

  4. Northern Ally

    11305 listings Thurs., + 185 new listings Fri., – 128 sales = 11362.

    But Fri. inventory = 10864.

    498 listings got pulled Fri.? Is that significant, Rob? That’s 4.38% of all inventory being taken off the market in one day.

  5. Anonymous

    Of the 498 expires/cancellations, wonder how many will come back over the next few weeks as “New Listing” at sharper pricing.

  6. Snick

    I’m sure we’ll see a lot of “NEW!” (stale/old) listings pop up next week. I’ve already noticed several in the Coquitlam area.

    Such a sneaky practice…

  7. Anonymous

    Amazing.

    Just months ago BEARS were cheering in tandem as listing inventory was rising sharply.

    Now that same indicator dropped to where it is today, but now BEARS perceive it to be no big deal & they revert to Sauder data, and anecdotal stuff. Again.

    Amazing.

  8. doubter

    I continue to wonder what exactly is defying all the logical arguments (e.g. posted by Domus). Is it solely psychology? If so, it is sustainable indefinitely, at least in theory.

  9. robchipman

    Doubter:

    The BoC report that we spoke about a few months ago indicated that expansionary periods take on a life of their own, vs. recessionary periods, which react more predictably to things like lower i%. So far this market is conforming to the report’s findings.

    Domus brings up some good points, but he’s only showing part of the picture. I’ve been in the labour market as a consumer for a year now. I can’t get solid help. I have a placement agency looking, and they can’t get me solid help. And as for wages rising 2%-3%, what I was paying $11.00/hour for I now need to pay more like $14.00 or $15.00. That’s a 27% to 36% increase.

    I’m sure that’s not happening everywhere, but there are a lot of signs outside of businesses and constructions sites asking for workers. You can’t argue against that. This economy is rocking, and that isn’t pyschology in the sense of wishful thinking.

    A lot of people treat it as a given that listings that expire are simply re-listed again. Some are, but a lot aren’t. If they are re-listed at the old price, that says something. If they’re re-listed at lower prices it says something else. To characterize it as “sneaky” (considering that the whole thing is hidden behind on button click, or in other words, not really hidden much at all) requires the assumption that the seller lists in order to pump up or otherwise manipulate listing stats rather than to try to sell. Its a weak conspiracy theory. People who list their property generally want to sell. They may be unrealistic about price, but they want to sell.

    FWIW, I don’t find lots of listings that are re-listed. Its true that I’m generally looking for value, and so most listings I notice sell, but still, I look at a lot of listings.

    Also, we’ve seen very low, and if anything, decreasing days on market. DOM down + inventory down = strong sales relative to listings. The idea that there is a widespread practice of re-listing the same old stuff is correspondingly weakened, I think.

    If the expiries come back at new, sharper prices, we’ll see them sell.

    Which brings me to fish: Sorry about truncated numbers. My biggest challenge these days is getting solid front end staff. We’re also re-organizing the business, so my workload has increased two ways. The flood is almost resolved (new furniture on Tuesday/Wednesday) but we’ve got some health issues in the family that require a fair bit of time in the hospital. I hope to be back to the old style numbers by mid-September. We’ll be able to crunch over 90 percentages, average sale and list price, DOMs and the rest once again.

    Interesting story about your friend. On a hypothetical basis its important that a Realtor not allow a buyer to remove financing subjects without a commitment letter from the bank. Once you have that the lender won’t “pull” financing. I don’t want to gainsay this particular lawyer, so again, I’ll speak hypothetically: the standard contract (perhaps they never used one) relies on the Real Estate Services Act. There is a “Completion” clause that says, among other things, that time is of the essence, and that if the buyer does not complete or enter into an agreement with the seller to do so, the seller may declare the contract void and keep the deposit without prejudice to other remedies. In other words, the hypothetical buyer is behind the eight-ball. The hypothetical listing Realtor will be happier if he demanded a large deposit, and the hypothetical Selling Realtor should be nervous.

    As a seller, you may see deposit clauses like “$1,000 within 24 hours of all subject removals”. Obviously this is a bad clause. Ethically Realtors should attempt to get 5% of the purchase price as a deposit. The bigger the deposit, the better the offer. If the hypothetical Seller had a $25,000 deposit and a buyer who couldn’t complete, it lessens the pain (in the first place, he’s made his commission).

    As a buyer, don’t remove subjects unless you know you can buy. Its that simple.

  10. edward

    And as for wages rising 2%-3%, what I was paying $11.00/hour for I now need to pay more like $14.00 or $15.00. That’s a 27% to 36% increase.

    How does this make any impact on housing sales?
    No one making $11 /hr could qualify for a $400k mortgage. I think even with a 50% increase they still would not come close. In proportion I don’t see higher wage earners receiving wage increases with those %’s

  11. Jay

    Northern Ally, I kinda noticed the same thing with inventory. I wonder what happened there. Should be an interesting Sept. and beyond.

    Blueskies, do you have anymore good news for buyers wanting in on a SANE market?

  12. fish

    Rob

    What we have just gone through has been a credit bubble. All assets inclsuing real estate have responded to that.

    5 years when anyone with a pulse got a mortgage in the US…and it hasn’t been much harder here.

    Junk bonds had been trading with almost NO premium to Government treasuries…bizarre.

    There was too much easy money around, courtesy of the Bank of Japan, the Fed, the Eurpean bank and surpluses in Russia and China and the Middle East.

    Hedge funds leveraged this cheap money up 10-20X.

    They bought anything. RE loans yielding 2-3% over treasuries, asset backed loans, credit card loans…anywhere to park the money.

    Now we are getting the credit squeeze that comes after a glutonous meal of junk. No bids on sub-prime mortgages, stink bids on some asset backed stuff.

    There is still money out there, but no one knows where to put it. return of principle is paramount.

    Re has done very well in this time of lax lending and low rates. Will it continue to do well?

    In the example above, the deposit was nearly $20K, so my friend is covered, but he wants out, rather than taking the money and relisting and going all the hassle again. He agreed to give the buyer another as his lawyer suggested.

    The $20K will be reduced by the lawyer fees (assuming the buyer doesn’t have grounds to contest it), having to keep paying taxes and utilities and up-keep costs. Plus the house is now empty and barren and doesn’t show as well. He will also have to pay someone to look after it, as he is moving to Toronto- so I doubt he will gain very much.

  13. coco

    People in the U.S. and Canada have record amounts of debt right now, never before in history we have had so much debt and so little savings. We are in uncharted waters.

    People can only borrow so much for so long and keep spending so much for so long. When the economy slows it will take a long time for people to pull themselves out of all the debt they got themselves into.

  14. coco

    Subprime saga will not leave Canadian industries untouched.

    http://tinyurl.com/22m73a

  15. News Flash

    “1) population growth in greater Vancouver is far from buoyant: according to the Sauder school we are at the lowest growth rate in more than 15 years. This is supported by anecdotal evidence of people leaving for the East and U-Haul rates higher for vans transiting towards East.”

    The population is still growing significantly and is forecast to continue to do so. Any population growth is bullish. Some areas in the US have a declining population. How is we have declining inventory for sale and a near zero vacancy rate for rentals? If you want to rent a place downtown you are competing with 10 others for the same place.

    “2) The city seems a big constructions site: cranes everywhere, especially in the downtown core. The number of units coming to the market between now and the Olympics is forecast to reach a record in absolute numbers.”

    Concord Pacific, Downtown South and Coal Harbour have been in construction booms for 15 years now. This is nothing new. Over this last year we have seen thousands of new units complete and prices are still rising. People are lining up to rent them. Downtown Vancouver may be the best urban area in the world to live and there is huge demand for it. Rents are up probably 40% over the last 5 years and could easily be up the same amount over the next 5 years.

    “3) Individual pay settlements are not larger than 2 to 3% per year for most salaried workers: see recent strike turmoil for evidence of that. Incomes are not growing faster than elsewhere in Canada, in fact Vancouver incomes are lagging Ontario (recent story on the Van Sun);”

    In the trades and low paying jobs there have been significant increases. Minimum wage is almost unheard of now. There are also more people employed. Businesses are doing well and people have done well with investments.

    “4) Easy credit is retrenching: interest rates have been on the up for the past 6 months. Risk premia are going up, which will make credit more expensive for buyers with small downpayments. Anecdotal evidence from friends is that many mortgages which were pre-approved have been revoked or renegotiated at different, more expensive terms.”

    Interest rates are up slightly but still low. CMHC sets the lending standards and they have not changed. It looks like BOC rates are going to come down over the next 18 months as the US must lower rates. Also note it is an US election year next year.

    “5) Housing situation in the powerful US neighbour seems to become worse by the day. It is not uncommon to hear of 20% reductions in former hot spots. Volumes of sales have collapsed, prices are slowly adjusting downwards.”

    Real estate is regional. The US real estate has nothing to do with BC. Most of the hot US areas are down less than 3% after gains in the 100% plus range. This is hardly a collapse. Actually the US points to the unlikelihood of a collapse here. Look at all the negative sentiment in the US and still over 18 months most hot markets only lost 3%after 100% gains. I don’t think anyone here is going to sweat a 3% loss.

    “Can someone explain to me how can we have flat prices for a few years in this scenario? And why?
    Does anyone still believe in strong appreciation for the future? If so, why?”

    Personally I see another 10% by this time next year. Things are still too hot to even flatten quite yet. Simply put demand exceeds supply. At some point the bull run will end. Maybe in 2009 who knows. I am sure we will see our 3% plus decline like the US at some point just not next year. Real estate prices are sticky. Unless people are forced to sell they don’t. If you can think of reasons why people will be forced to sell then you will see declines. In the US the worry is about the teaser rates which reset and may cause people on the edge to sell or foreclose. There are no teaser rates in Canada. High prices alone won’t cause a decline. You will need unemployment or higher interest rates where home owners must sell. Do you think we will see significant unemployment and higher rates in the next 18 months? I don’t.

    “I am not being bearish, I just want to understand the argument of the optimists. Ideally, they should also rationalize their argument with the facts above.”

    I guess you have to look at what has happened over the past few years and ask yourself what has changed? Not much, the bull market is still intact until something changes. I do not believe mortgage lending standards have changed for 98% of buyers. If new tighter standards keep out the weakest 2% that is probably a good thing but in the end will not cause declines.

  16. blueskies

    jay! how are ya?

    2 things:
    1: our CFP met with us and gave us a heads up on stock market… Sept and Oct will be very volatile as credit markets work themselves out
    longer term all is good

    2: strange goings on in hedge/derivatives markets….. huge bets on down market ($2 billion) put/call plays on S&P and other unusual stuff (tin foil hat?)

    enuf to wake up and think about this stuff at 3:00 AM…. am gettin’ too old for this sh!t

  17. coco

    Of course, lack of consumer confidence and fear can change everything.

  18. Jay

    News Flash makes some key points. I am sure a downturn is coming but will it be significant? I hope it is but I am starting to lose faith… you’re my boy, blue!

  19. blueskies

    I am sure a downturn is coming but will it be significant?

    nightmarish bearish scenario:

    no available credit for mortgages at all

    all sales are 100% cash for next 6 months or so

    prices? i would think… down way down
    back to the fundamentals

  20. Snick

    “Over this last year we have seen thousands of new units complete and prices are still rising. People are lining up to rent them. Downtown Vancouver may be the best urban area in the world to live and there is huge demand for it. Rents are up probably 40% over the last 5 years and could easily be up the same amount over the next 5 years.”

    Whatever you say.

  21. Snick

    “I’m sure that’s not happening everywhere, but there are a lot of signs outside of businesses and constructions sites asking for workers.”

    Well, Rob, if you have lived here for any length of time, you wouldd know that BC is the “last in” and the “last out” of any recession.

  22. abc

    Newsflash I only bothered to check one of your points: “Rents are up probably 40% over the last 5 years and could easily be up the same amount over the next 5 years.”

    Try 21% over the last decade. See, eg,
    http://forum.skyscraperpage.com/showthread.php?t=122494&page=86
    (from Vancouver Sun)

    If you are going to make a long detailed post, please take the time to make it factual.

  23. helen

    so may be Rob nows who is buying the houses in lower mainland?

    people who are earning 14-15$ /Hr?

    And if that’s true then we will see US kind of situation here as well very soon.

    and economy is rocking just because u cant find the labors?

    In High tech industry where there is lot of money,people are not getting any raise for years now or very minimal raise.

  24. Anonymous

    “In High tech industry where there is lot of money,people are not getting any raise for years now or very minimal raise.”

    There’s your problem: you don’t work in RE or construction 🙂

  25. Jay

    I think News Flash may have missed on his numbers when discussing the RE market in the U.S. I believe he said the loss had been a few %. From what I’ve read it has been higher…I think some claimed well over 10%. Anyone?

  26. The unthinkable "Renter"

    Jay and Blue Skies, Just like my hunch that my old house would reach $650K The market will only correct 5-20% tops and 20% is asking allot in the next 5 years. Good luck.

  27. The unthinkable "Renter"

    That said 10% on a half million is $50k!!!
    Try and pay that off in 40 year ammortization and now were talking that 10% is a big difference!!!

  28. fish

    Jay

    Click on the city to see how much the median asking price has dropped over the last year

    http://www.housingtracker.net/askingprices/

  29. doubter

    What is the current median price in Vancouver? (I mean somewhere that someone who works downtown would reasonably live, e.g. not including Burnaby.)

  30. crasher

    Thanks for the stats fish. Very interestng.

    As the inventory numbers are a true representation of supply and demand, I find them much more significant than asking prices wich only reflect one side of a negotiation/transaction.

    The average weekly inventory of the 45 cities is an increase of 0.66%. That would work out to an astounding 34.3% per year. However, if we remove the abnormally weird number for the the tiny city of Austin, Texas, that would give us an annual increase of a mindboggling 53.4%.

  31. Jay

    So, have there been any follow up stories to that downturn in Edmonton story?

    http://www.edmontonsun.com/News/Edmonton/2007/08/27/4450482.html

  32. Snick

    “Click on the city to see how much the median asking price has dropped over the last year”

    Apparently, lower asking prices doesn’t cut much ice around here. I mentioned that this was also the case throughout the GVRD quite some time ago.
    Cast as a lunatic, I was…

    ANYONE who has not noticed the decline in asking prices in the Vancouver area from early Spring until now is, well, a lunatic.

  33. Domus

    And, yet, lunatics can be right some times……

  34. Snick

    Especially during full moons.

  35. blueskies

    nothing like a full eclipse of the moon to bring out the lunatics………

  36. helen

    You never go with average or median house prices.This is just to fool people.They are cutting prices by 10% or more.Even when the prices went up ,they never said that they are going up by 10% or 15%..it was always going up by 2%…

    Their stats are very confusing as well.Monday they released the number and said prices dropped 3.5% in this quarter and they are the most in last 16 years.Two days later some other numbers came and said houses prices rose at the slowest pace.WTF..isn’t it just to confuse people.Everyone knows that’s it’s buyers market in US right now.

  37. helen

    Jay,

    here so many realtors on this board so no one wants to comment on what’s happening in Edmonton.Same might be happening here as well but they won’t admit it until they can’t make any penny.

    Realtors like to scare both..buyers as well sellers.See the agent in edmonton is frustrated with sellers cause he can’t make his money.He is advicing them to cut by 10-15% so the houses can be sold…

  38. Anonymous

    “However, if we remove the abnormally weird number for the the tiny city of Austin, Texas”

    Austin probably has better lending standards and their local economy is resource driven.

  39. coco

    Psychology will change the market. The dreaded “R” word is being thrown around lately in the MSM it will probably make people more cautious about spending automatically.

  40. tqn

    “ANYONE who has not noticed the decline in asking prices in the Vancouver area from early Spring until now is, well, a lunatic.”

    Thank you for speaking up your mind.

    “You never go with average or median house prices.This is just to fool people.They are cutting prices by 10% or more.Even when the prices went up ,they never said that they are going up by 10% or 15%..it was always going up by 2%…”

    So you advise people not to compare similar property with sold price, but list price when buying??? Why dont you develope a method and apply for a nobel prize!
    Are you really confused about the sold price vs. list price, change in m.o.m vs. y.o.y?

  41. macchiato

    NewsFlash, without any outside sources, links, to back what you say, it’s just hot air. some of the stuff you say is laughable … 40% increase in rent in the last 5 years and another 40%. Why don’t you just find out exactly before you post exagerrations? You can’t even post correct figures for what already happened, what value could one possibly then give to the 40% prediction.

    You are alluding to the US market as ‘it’s hardly a collapse’ … mainstream media is calling it a collapse, so why do you bother trying to spin that and downplay it? My guess is: there are some unreasonable bears around these parts, so I imagine you are just trying to balance it by being the unreasonable bull.

  42. Skeptic

    The only merit the bear arguments have had is rising inventory (which was tenuous anyway) and now that is gone.

  43. Dyugle

    There is a methodology it is called the Case/Shiller index and maybe they deserver a Nobel Prize. All the other numbers are designed to confuse and give little or no information. As an example of the confusion the majority of people in the U
    S still feel their house is appreciating (Shiller survey of home owners) in fact there has been a 3.2% decline in same house prices over the last year (Case/Shiller index). Since this index can be traded it is at least transparent enough for the CME which is more than can be said for any of the other price indexes. Where can I trade the average or the median?
    As far as Vancouver following the US then we can say that 2 years ago the US had a 20% increase in prices yoy. Last year they has a 7.5% increase yoy. This year they have a 3.2% drop yoy. Last year Vancouver had a 25% yoy incease. This year Vancouver has a 11% yoy increase. Next year Vanvouver will maintain 11% yoy or it will drop another 14% and be down 3% yoy. Vancouvers numbers are probably not very accurate is there is no Case/Shiller for Vancouver so I am sure others will have different numbers but the appreciation has fallen by more than half in the last year regardless of the numbers used. And comparing to a hot year may be unrealistic but that is what the American realtors said a year ago and we all know how that turned out.

  44. crasher

    Brilliant contribution Skeptic.

    Care to give us some fundamental reasons why the market should continue to go up?

    ….but please look up the definition of “fundamentals” before you do.

  45. Skeptic

    crasher, until something changes, nothing will change. Which fundamental do you think has changed recently ?

  46. The unthinkable "Renter"

    $keptic,

    How about the fact that three months ago the banks were willing to lend my wife and I $570k and now since the rates have risen approx .5% they are now only allowed $430k.

    That tells me that the banks are tightning their belts are making it harder for people to aquire homeshich normally should be out of reach as well the homes should be priced lower.

    This could potentially show a spike in condo and town home prices because most sfd-homes are out of reach in the lower mainland for most young families already.

  47. News Flash

    “NewsFlash, without any outside sources, links, to back what you say, it’s just hot air. some of the stuff you say is laughable … 40% increase in rent in the last 5 years and another 40%.”

    I was referring to downtown rents specifically if you look at the post. Rents in downtown condos are up 40% in the past 5 years based on the same condo being re rented. A small 1 bedroom condo that rented for $1000 in 2002 rents for $1400 today. A nice 2 bedroom 1000+ ft condo that rented for $1800 in 2002 rents for $2500 today. That is a 40% increase whether you like it or not.

    Over the next 5 years will rents go up another 40%? Who knows that is just a guess, but considering every hotel room in Vancouver is already reserved for the official Olympic VIPs/media there will be huge demand for short term condo rentals around Vancouver. I suspect some landlords will leave their rentals empty or short term only to cash in on the Olympic tourists. I also suspect people will want to live downtown during the Olympics to be close to the celebrations. This will likely cause a severe shortage in 2009/early 2010 hence sky rocketing rents IMHO. If I was renting, I would lock up the lease beyond 2010 by next year.

    “You are alluding to the US market as ‘it’s hardly a collapse’ … mainstream media is calling it a collapse, so why do you bother trying to spin that and downplay it? ”

    I guess it depends on your definition of a collapse. The mainstream media exaggerates and sensationalizes everything. Almost every MSM link/post is an opinion or anecdotal story mostly based on asking price reductions on increasing inventory. What are the benchmark sale prices year over year, for the last 5 years, 10 years, etc.? Have we really seen a collapse considering the run up (i.e. 100% up with a 3% decline)? You may be able to make a good argument a collapse is coming based on teaser rates and the sub prime situation, but it hasn’t happened yet. I also do not believe those arguments (teaser and sub prime) are applicable to Canada at all.

    “My guess is: there are some unreasonable bears around these parts, so I imagine you are just trying to balance it by being the unreasonable bull”

    I am not trying to be unreasonable. I just see little or no connection to almost all of the bear arguments on this blog. Like it or not the market is on still a bull run right now and the US market has not collapsed as of yet.

  48. coco

    U.S. home builders risk bankruptcy 2008

    http://tinyurl.com/2jj29r

    (with builders profits down 85% last quarter and Kara Homes in NY going bankrupt recently, a new larger wave of subprime resets to hit soon, it doesn’t look like some home builders are going survive for too much longer)

  49. Snick

    “….but please look up the definition of “…mental” before you do.” – crasher on Skeptic

    Yes. Do.

  50. crasher

    Skeptic,

    The whole point is that the fundamentals (which you obviously don’t know the meaning of) have NOT changed, and the market has defied all fundamentals for more than 2 years.

    Here are a few:

    – With more than 70% of an average income to support an average mortgage, and the cost gap between renting and owning at an all-time record, affordability has never been farther out of reach

    – Immigration is the lowest in about 10 years

    – The rising Can$ is not attractive to foreign buyers

    – With many aging boomers needing to downsize or use their home equity to fund their retirement, North American demographics have never been more negative

    – The inverted yield curve has long pointed to a slowing economy, which can only be accelerated as US consumers can no longer rely on growing home equity to feed their appetite

    – We are nearing the end of an extended global econoic cycle that was spurred by unsustaiable cheap credit. Any suggestion that such cycles can last foever, or to think that Canada’s resource based economy will not be affected are ludicrous.

    – Although comparison of historic market behaviour has nothing to do with fundamentals, let’s not forget that previous market surges in 81, 90, and 96 (which look like mole hills compared to our current mountain) all came crashing down to reality….and most of them happened 12 to 18 month after similar occurances in the US.

    So c’mon Skeptic, look up the word and give it your best shot.

  51. News Flash

    – With more than 70% of an average income to support an average mortgage, and the cost gap between renting and owning at an all-time record, affordability has never been farther out of reach

    So who is buying all the houses that are being sold every day? CMHC would not give these people mortgages at 70%. They either have the cash or the income or the houses wouldn’t sell.

    – Immigration is the lowest in about 10 years

    Immigration is still booming even if it is slightly lower from peak years. You are also looking in the rear view mirror. What will immigration be in the future is what matters. In the low cycle real estate prices went up. What happens in the next uptick to immigration?

    – The rising Can$ is not attractive to foreign buyers

    So you would rather invest in assets valued in a declining currency?

    – With many aging boomers needing to downsize or use their home equity to fund their retirement, North American demographics have never been more negative

    According to who? Baby boomers are the wealthiest generation ever. Houses are getting bigger and boomers want multiple residences. Demographics are bullish.

    – The inverted yield curve has long pointed to a slowing economy, which can only be accelerated as US consumers can no longer rely on growing home equity to feed their appetite

    How do you link this to BC? Also link the yield curve followed by declining real estate prices.

    – We are nearing the end of an extended global economic cycle that was spurred by unsustainable cheap credit. Any suggestion that such cycles can last forever, or to think that Canada’s resource based economy will not be affected are ludicrous.

    Who said forever? Does every economic cycle end in a housing crash?

    – Although comparison of historic market behaviour has nothing to do with fundamentals, let’s not forget that previous market surges in 81, 90, and 96 (which look like mole hills compared to our current mountain) all came crashing down to reality….and most of them happened 12 to 18 month after similar occurances in the US.

    Show me the link to similar crashes in the US. Real estate is regional. You can see that by the huge differences in the US market.

  52. Domus

    News Flash,

    I have a question for you and I am genuinely curious (not teasing you):

    – do you think there are any negatives at all in this market?
    – If so, could you list the most important?

  53. Snick

    “Does every economic cycle end in a housing crash?” – News Flash

    When the expansion was because of housing, yes.

  54. Snick

    Domus,

    I think you’re wasting your time. He’s probably a pumper-dumper. In fact, he is probably the owner of those SIX condos on St. John’s St. in Port Moody. He/she/it took out a FULL PAGE FSBO ad in the local newsapaper offering all kinds of “enticements” if you would be dumb enough to pay his inflated assignment prices.

    Te he…good luck with that!

  55. crasher

    News Flash,

    So much for fundamentals I guess, It’s obviously easier to reply with more questions. Anyway, here goes:

    “so who is buying all the houses that are being sold every day?”

    The last remaining fools I suppose, but I wonder who is doing all the selling.

    “What happens to the next uptick to immigration?”

    I assume that the market will have crashed by then and I will have become a bull.

    “So would you rather invest in assets valued in a declining currency”

    I would rather invest before the currency started to decline, as we don’t really know when the incline will stop.

    “Demographics are bullish”

    Not according to demographers like Harry Dent, who called for North American RE to peak in 2005, as far back as the early 90’s. Some retiring boomers may indeed be wealthy but it does not make much sense for most empty nesters or single seniors to load up on more RE.

    “Who said forever? Does every economic cycle end with a housing crash?”

    A hell of a lot more than without a crash. If not forever, then when?

    “Show me the link to similar US Real estate crashes”

    I’m going by memory here and there’s no way I’m going to waste time looking for a link to try to convince someone that is stuck in denial. How about you give us a link to the contrary?

  56. blueskies

    Does every economic cycle end in a housing crash?

    yes! big run up in housing = big crash!
    ‘nuf said

  57. The unthinkable "Renter"

    Look guys I’m saying 20% correction tops with rate only going as high as 8% and 40 ammortization.

    You can call 20% your crash although anything will feel like it at this point. This market is the biggest HARD ON I’ve ever seen, wheres VHB’s Red graph when you need it.

  58. The unthinkable "Renter"

    Hard On

    Oh sorry, I mean, Mountain, Huge, Humongous, Enormous, XXX LARGE.

    Come join us for 2010 😛

    The stakes have never been higher!

  59. robchipman

    UTR:

    You better watch it, my friend. I think I’ve read you calling a 20% correction. tops, twice. You keep that up and snick and helen will start calling you a bull 🙂

  60. The unthinkable "Renter"

    That’s funny Rob..Realistically speaking you have to look at what the market can support. Although we have a strong economy now we are still realitively earning the same money compared to housings BOOM. But still the introduction of 40 year ammortization will act as a buffer. Put it this way, play with the mortgage calculator on MLS and adjust the amortization. On a $300k mortgage going from 25 to 40 years lowers the mortgage payment $300 bucks or so. Then I increased the rate number to 8% which is realistic in the next ten years. Still the numbers are still manageable.

    Rob, I’ve been checking out Richmond. Theres not allot of properties for sale in the $500’s and they are not a good value. I mean pie lots and low sq. ft. They also have been stagnant and sitting for a while. I am really hoping we have hit the ceiling now and the owners of these home will soften their prices.

  61. The unthinkable "Renter"

    Rob, I say 20% MAX!!! I am happy with 10% Which is $50k on 1/2 a mill. Lessons my mortgage payment $300. 🙂

  62. helen

    The unthinkable “Renter”

    there is no limit how low the house prices will go once people’s psychology changes.No one has bought houses here for living so people will hold onto them.It’s an investment and when people see losses ,they will try to cut the losses …

  63. The unthinkable "Renter"

    There is no better investment vehicle right now than real estate. Though things are about to change. Change how much you ask? Well the price of homes will only drop to levels where they then become close to positive cash flow. With todays rising but still low rates and 40 year ammortization the drop in RE won’t be significant. I don’t think RE will ever reach positive cashflow with 25% down as we’ll though.

    I think the majority of those families earning $57k and up can understand what I am sayin’ here. If your family is below the average family income of $57k then you might very well think and wish a CRASH! Sorry Helen.

  64. The unthinkable "Renter"

    Actually people do purchase homes for living as well for their children in the future because parents are afraid that their children won’t be able to afford a home of their own. This psycology will certainly change if a market does turn of course but there are too many “renters” out there waiting to buy back in to eat up the bust, therefore I remain where I stand at 20% correction max!!! This may take 5 years to play out though.

  65. tqn

    “No one has bought houses here for living ”

    huhhhhh? (eyes rolling)

    And this made more sense:
    “Actually people do purchase homes for living as well for their children in the future because parents are afraid that their children won’t be able to afford a home of their own.”

  66. jesse

    “Actually people do purchase homes for living as well for their children in the future because parents are afraid that their children won’t be able to afford a home of their own.”

    This does seem to match actual data. If you look at population growth in established areas with primarily SFH (e.g. Coquitlam, Burnaby) in the past 5 years they have been flat to negative. The kids leaving home have to live somewhere…

    The employment and unemployment rates are going to be key to housing prices and rental vacancies in the next few years.

  67. The unthinkable "Renter"

    Dyugle,

    The banks are lending less since July’s rate hike.

    My families borrowing cap dropped $100k.

    Jesse,

    I have a couple of co-workers in the trades that say they don’t know how their children will make it if they don’t buy them a house now.

    From all that I mentioned above what really is interesting is that strong Canadian dollar, it’s sure putting a spin on things.

  68. The unthinkable "Renter"

    Buy a house now. That was 2 years ago!

  69. /dev/null

    Unthinkable “Renter” – “there are too many “renters” out there waiting to buy back in to eat up the bust”

    Care to provide a source for that assertion? I know of nobody in this situation.

  70. TI

    Oversupply of new homes is a big issue for next few years and causes slump .

    The correction will be easily over 30%.

  71. helen

    tqn,UR

    People who want to buy house for themselves are not buying in vancouver area though..u must be kidding me….

    And what frigging cash flow u are talking about when u want to buy house for living?

  72. helen

    cheap is a relative term and no one would have thought that Nortel share will drop to pennies from the highs of over 120$.

    if people don’t buy things can go really cheap..cheaper than what u can dream of..

  73. tqn

    “People who want to buy house for themselves are not buying in vancouver area though..u must be kidding me….”

    Are you speaking for yourself or on behalf of All Vancouver home buyers? Dont kid yourself…
    My neighbour sold his bungalow for 600k in Renfrew, and bought a brandnew house for 800k in Hastings. The buyer for the old bungalow? a couple with no kid.
    I cannot speak for ALL home buyers, but for these four people who bought houses in Vancouver. However, dont ask me where they got the money; assuming more hard work, more savings, more brains and gutts, and being … realistic.

    “if people don’t buy things can go really cheap..cheaper than what u can dream of..”
    Why dont you advocate this and see what happen? It would be a huge favour for the future home buyers.

  74. DeeDub

    Care to provide a source for that assertion? I know of nobody in this situation.

    At least half the bears in here at one time or another have said (more accurately, claimed) that they’d be looking to buy on a price correction.

  75. kally

    I am waiting it out. My dh and I sold in December of last year, obviously too early, and we are housesitting around the Sunshine Coast and Vancouver Island and having a ball.

    But we have been watching real estate very closely in this time. We will buy back in when it makes sense.

  76. helen

    TQN,

    let the numbers come out for this month and watch what happens.Ofcourse lot of marijuana growers have also bought houses here.And some of them are genuine buyers as well.

    why do u think this city is so special?

    I remember after 2000 stock market crash,Lots of Analysts were sent to jail and some others left the business altogether.In US lots of real estate bull guys have changed the trade..I will see what happens here…It’s same everywhere..

  77. The unthinkable "Renter"

    Deedub, I am one of them!!!

  78. /dev/null

    Let me be more specific – I personally know nobody except for myself who is waiting for a to buy. I agree that many bears on these blogs are doing just this – how many people might that be? A couple of dozen? UT states that there is a wave of renters poised to buy into the market when it goes down. To me that seems unlikely, but I’m willing to be persuaded by data.

  79. The unthinkable "Renter"

    /dev/null,

    The concept is not new. Sell your house and reap the equity. Live off the interest from the equity and buy back after the correction for less than you sold.

    One advantage to this is having your rent paid for and having no property taxes, heating costs, supporting deadbeat renters, special assessments, strata fees etc.

    Home sustainment costs are easily $400 per month property taxes inc. Then theres your $1200 interest payment to the bank and your $600 payment to principle. Don’t forget your lousy commute to work.

    I am just saying there are allot of options out there but if you want to be rich there are many ways to do it, Rob shows you one way to hold long term. I disagree with this idea only in Lowermainland right now.

  80. News Flash

    Domus,

    “I have a question for you and I am genuinely curious (not teasing you):”

    – do you think there are any negatives at all in this market?

    1. It is very expensive

    – If so, could you list the most important?

    #1

    I am on the same page as everyone else. Real estate in Vancouver is very expensive. We just differ on interpreting the “data” and how it will affect Vancouver real estate.

  81. TI

    When Rob delays to post new numbers or provides fewer numbers, I strongly feel that the housing market heads to bear market.

    Let’s wait and see

  82. The unthinkable "Renter"

    I was actually thinking of going in debt again for over a quarter mill!!! My economist steered me away. Told me to give my head a shake. BTW he’s got a masters degree.

  83. The unthinkable "Renter"

    He’s got real estate as well snd still told me to hold on.

  84. tqn

    BoC left rate unchanged. Any economist here cares to analyze it?

  85. Dyugle

    If the past has any bearing then the pause will mark the peak of RE prices in Vancouver provided the next move by the BoC is a cut. If they increase again then the prices in Vancouver will still rise.
    IMHO

  86. african

    BoC left the rate unchanged because the credit crunch is achieving what they hoped to constrain with an interest hike…that is constrain consumption (demand).

  87. joe blfzk

    “any economist here care to analyse?”

    Whatever the BOC does means didly squat to financial markets. It’s only meaningful function is to regulate it’s currency by reacting to moves by the FED. Unfortunately, the FED is the only organisation with sufficient clout to influence North American economies, and unfortunately, Joe Homeowner in Canada does not seem to be aware of this.

    Even the FED’s influence is diminishing as private lending institutions are reacting to increased risk.

  88. coco

    Canada’s economy grew faster and operated above its production potential more than had been expected, and inflation remained above target.

    The interest rate will continue to hold or go up if inflation comes in higher than expected again in the next few months. Unless we have major credit crunch problems in the next couple months the rate will not be coming down anytime soon.

  89. The unthinkable "Renter"

    In otherwords economists in general recommend holding off a purchase rather than getting in now?

  90. blueskies

    Unless we have major credit crunch problems in the next couple months the rate will not be coming down anytime soon.

    I think we have a “major credit crunch” right NOW! and lowering the bank rate will not reverse the risk perception…..

    be prepared to start paying cash for your next RE acquisition..

  91. Jay

    The rate seems to be the same but not for good reasons. It seems like getting money in many areas might become a bit tougher.

  92. The unthinkable "Renter"

    Jay like I mentioned above our lender cleared us for borrowing $570k @ 5.29% then we got a pre approval for 5 years at $480k @ 5.8% 5 years.

    Doesn’t this tell us anything?

  93. New Investor Rob

    blueskies,

    I say this in the nicest way. You’re either crazy or you think we’re about to have a major depression. Not a recession, but a depression.

    Because that’s what it will take for us to have to pay cash for real-estate.

    Pretty gutsy call when we are in the middle of a strong economy.

  94. blueskies

    re: depression
    some of the parallels with the original Great Depression are quite striking….

    possible scenario:
    RE becomes a long term depreciating asset class while the overall stock market survives based on “going green” and peak energy substitution/mitigation (couple of bubble possibilities right there).

    investors will shy away from mortgage debt and concentrate on other growth potential
    and if bankers are tight fisted on loans….

    got cash?

    my idea of a depression is 13 quarters back to back with no economic growth

  95. african

    Edmonton prices plummet to spring prices….

  96. The unthinkable "Renter"

    care to add links?

  97. News Flash

    possible scenario #2:

    The fed cuts rates to all time lows. Canada must follow. Housing prices double again and rent quadruples.

    got assets?

  98. News Flash

    “If the past has any bearing then the pause will mark the peak of RE prices in Vancouver provided the next move by the BoC is a cut. If they increase again then the prices in Vancouver will still rise.”

    Typically housing prices increase until interest rates get high enough to tame it. Then after it stops rising the interest rates come down along with housing prices. We then start the cycle again.

    Although what we are seeing this time IMO is interest rates not rising enough to tame inflation / housing prices. If the US fed starts to cut Canada will follow and we may start the expansion again without the contraction.

    Eventually the party must end but it may not be over yet. Bush needs to keep it going until 2009 when things are handed over to the Democrats.

  99. blueskies

    The fed cuts rates to all time lows. Canada must follow. Housing prices double again and rent quadruples.

    housing prices can’t double. we are already at the limits of affordability …..

    and rents can’t quadruple because rents are based on wages paid which we all know are not going up

    cutting rates even to 0% as in Japan is like pushing on a string

    only one possibility remains:
    deflationary house prices
    got assets? indeed

  100. blueskies

    interesting MSM read:

    http://tinyurl.com/27spnp

    boats and cars…. who knew?

  101. joe blfzk

    News Flash,

    The only part you got right is that
    “evetually the party must end”

    You mentioned in another post that RE is regional. Any fool knows that regions differ, but to suggest that RE is totall regional, one would have to be blind to national and international economic trends.
    In case you’ve missed the banner headlines, it may be time to wake up to the fact that this housing bubble is global ….and on the brink.

    If you think that the global credit crunch can be cured by cheap credit, and that the bubble can be patched up with more of what caused the problem in the first place, you may indeed be neyond help.

  102. tqn

    aug sfh benchmark $726,067
    jul 714,810
    jun 715,715

  103. tqn

    Lower Mainland housing prices continue to climb
    Derrick Penner, Vancouver Sun
    Published: Wednesday, September 05, 2007
    Real estate sales across the Lower Mainland continued their upward trend through August, according to statistics released today, defying early forecasts that called for moderation in the markets.
    Multiple-listing-service-recorded sales were up 12.9 per cent across Metro Vancouver compared with the same month a year ago, the Real Estate Board of Greater Vancouver said.
    That means 3,384 properties changed hands in Vancouver, with the so-called benchmark price for a single-family home hitting $726,067, which is up 11.1 per cent from a year ago.
    We’ve seen sales near record levels for three consecutive months despite the summer traditionally being a slower time for real estate in Greater Vancouver,” Brian Naphtali, president of the Real Estate Board of Greater Vancouver said in a news release.
    Inventory, Naphtali added, stagnated at 10,721 units as the number of new listings in August shrank by two per cent compared with the same month a year ago.
    Fraser Valley realtors processed 1,763 MLS sales in August, a four-per-cent increase from the same month in 2007. The average price of a valley single-family home was $526,879, up 8.9 per cent from a year ago.
    http://www.canada.com/vancouversun/news/story.html?id=159f92ad-8ad3-4af2-a422-8be230832f29&k=5119

  104. Alpha Bear

    tqn, interesting read. The Sun paints an odd picture despite credit crunches and the Edmonton bubble bursting. I guess people are like lemmings. It is nice to see them keep going over the ‘deep end’ and over-extend themselves. Such stupidity it boggles the mind.

    Rob, I’m on another verse of ‘Kumbayah’ just for you! Care to join in or are you too busy counting your cash? 🙂

    Beware of Bears!

  105. blueskies

    introductions needed:

    Lemming this is Cliff,
    Cliff ; Lemming……

    and we all know how this ends

  106. Alpha_Bear

    Alpha Bear,

    I like your handle,

    They say that “Imitation is the sincerest form of flattery”, and that “To imitate someone is to pay the person a genuine compliment—often an unintended compliment.”

    Thanks (I’m flattered)

  107. Alpha Bear

    I’m new to this blog and hadn’t seen you on here! I assume you were here first and will have to change my name! My apologies!

    I am liking the number crunching on the average costs for SFH: GV SFH benchmark is about $726,067. Monthly payments on the median benchmark after 20% down ($145,213) are $3,661.28. Add property taxes and other expenses, and we are well above $4 000.00 a month.

    I suppose the bulls and RE agents will continue to tell us it’s always a good time to buy RE. Well, if Hitler can convince a country to hate a culture/people, I guess it’s possible to convince people to buy RE in this market.

  108. Anonymous

    blueskies: “housing prices can’t double. we are already at the limits of affordability …..”

    Please, beg, whine, grovel…

    “and rents can’t quadruple because rents are based on wages paid which we all know are not going up”

    rents are based on whatever the landlord thinks he can find someone willing to pay. The landlord doesn’t care what you earn.

    If your wages aren’t going up, take a leaf out of the city workers book and go on strike…

  109. The unthinkable "Renter"

    …perhaps we should start printing our own money?

  110. Anonymous

    tqn, just wait for the bear spin on the latest figures…

  111. The unthinkable "Renter"

    TQN..

    Everybody has real estate, why would speculators that have real estate ever say anything bad about it?

    BTW, the August run up is only the last of the pre-approved mortgagee’s getting in. Fearfactor.

  112. Dyugle

    The latest uptick in prices is confirming my BoC rate theory. Thanks TQN

  113. News Flash

    “That means 3,384 properties changed hands in Vancouver”

    I didn’t think anybody could afford to buy a home?

    “We’ve seen sales near record levels for three consecutive months despite the summer traditionally being a slower time for real estate”

    Didn’t someone predict a record summer a while back?

    “aug sfh benchmark $726,067
    jul 714,810”

    That is a 1.7% month over month gain – one word WOW

    “BTW, the August run up is only the last of the pre-approved mortgagee’s getting in. Fearfactor.”

    I wonder what happens when rates start dropping later in the year and early next year?

  114. News Flash

    “housing prices can’t double. we are already at the limits of affordability …..”

    Says who… not the 3300 buyers last month.

    “and rents can’t quadruple because rents are based on wages paid which we all know are not going up”

    Isn’t that what you said about housing prices 4 years ago?

    “cutting rates even to 0% as in Japan is like pushing on a string”

    We will see what happens.

    “only one possibility remains:
    deflationary house prices”

    Don’t confuse what you want to happen with what will happen. Two very different things. You have placed a big bet in one direction and it ain’t lookin good.

    “got assets? indeed”

    Do tell

  115. blueskies

    <wonder what happens when rates start dropping later in the year and early next year?

    rates may not drop this year or even next…

    even lower rates won’t solve the low end buyer not being able to get a cheap mortgage due to tightened lending practices.

    gotta have a good credit score and gotta have that down payment

    a lot of buyers have been pushed out of the market, Sept and Oct numbers should prove interesting.

    where’s the buyers?
    where’s our growth?
    say it ain’t so!

  116. blueskies

    You have placed a big bet in one direction and it ain’t lookin good.

    I can’t see a westside SFH going for median $1.5
    and you would not see 3000+ sales at that stratospheric level……

    i’m willing to call:
    “ain’t gonna happen”

  117. The unthinkable "Renter"

    3300 buyers? Let me guess they are all first time buyers?

    Agian, they are all buying $727k sfdh’s?

    Intellegence tells me that these people may be trading up to larger homes seeing as that they’re already in the market.

    C’mon man I am not bringing in the right wing here. Lets try and mediate the whole picture here.

  118. The unthinkable "Renter"

    Would the extremist bulls please accept the fact that this is a market, markets fluctuate.

  119. Anonymous

    News Flash: “The fed cuts rates to all time lows. Canada must follow. Housing prices double again and rent quadruples.”

    I wonder how many are “banking” on that scenario 🙂

  120. Anonymous

    “The landlord doesn’t care what you earn.”

    Gee I thought most *sensible* landlords care what their renters earn if only to be sure they are going to be able to pay rent each month after they give them the keys (you know, to avoid the whole messy eviction process which tends to bite into cash flow).

    Anyway, eventually if rents raise that will cause employers to have to raise salaries (as people get priced out of living in Vancouver and start moving away to more affordable places).

  121. Snick

    Hmm…how interesting. A house at 1909 Brunette Ave. in Coquitlam was listed on August 11 for 539K

    Today? Price reduced to 459K.

    Rob?

  122. helen

    guys,

    if vancouver real estate board is honest than they should give the detailed information about house sales.How many of the houses were over Million$$$.

    These guys here just give a number…average prices went up to 726K nothing else.

    Look at the numbers from victoria real esate board..they breakup everything and give mean price,median price and 6 months average price.What do they give here?

    who knows whats going on..I seriously think they are playing with numbers…

  123. Anonymous

    Alpha Bear, you lifted your entire price quote from a vancouvercondoinfo post.

  124. WoW

    By Jeremy Grantham, Fortune
    September 5 2007: 9:27 AM EDT

    (Fortune Magazine) — Credit crises have always been painful and unpredictable. The current one is particularly hair-raising because it’s occurring amid the first truly global bubble in asset pricing. It is also accompanied by a plethora of new and ingenious financial instruments. These are designed overtly to spread risk around and to sell fee-bearing products that are in great demand. Inadvertently (to be generous), they have been constructed to hide risk and confuse buyers.

    How this credit crisis works out and what price we end up paying has to be largely unknowable, depending as it does on hundreds of interlocking and often novel factors and how they in turn affect animal spirits. In the end it is, of course, the management of animal spirits that makes and breaks credit crises.

    Grantham: Home prices are well above the normal four times family income and will have to come down.

    More from FORTUNE
    10 investments poised to soar

    The many faces of Ralph Lauren

    Selling P&G

    FORTUNE 500
    Current Issue
    Subscribe to Fortune

    But even if this crisis is contained, we are facing some near certainties that should be understood.

    First, house prices may move on euphoria in the short term, but long term they depend on family income – the ability to pay mortgages and rent. At levels well above the normal four times family income, the market gradually loses first-time buyers until prices break and fall back to affordable levels.

    House prices are in genuine bubble territory in the U.S., Britain and many other markets. In Britain and in some critical large cities in the U.S., for example, the multiple of family income has risen to over six times from below four times, and in London last year the percentage of first-time buyers was the lowest since records began.

    From these high levels, prices are guaranteed to fall. In doing so, they will reduce consumer borrowing and spending power. They will also increase mortgage defaults, most of which lie ahead, and lower financial profits and confidence.

  125. Geezer

    Here’s a story from earlier today. Yeah, I know that’s too old to be reliable and the market has probably tanked since this morning – groan.

    “Re-Max reports upswing in luxury home sales in major Canadian cities
    Canadian Press
    September 05, 2007
    MISSISSAUGA, Ont. (CP) – Sales of luxury homes have registered an “unprecedented upswing” in the first half of this year, real estate company Re-Max said Wednesday.
    In a report on 16 major markets across the country, Re-Max said high-end home sales were up in all regions between January and July.
    The highest percentage increase was seen in Edmonton, where sales of more than $900,000 in value rose 521 per cent, Re-Max said.
    In the Greater Toronto Area, sales of homes costing more than $1.5 million increased 28 per cent, while in Ottawa, homes with an upper-end price point of$750,000 saw sales rise 115 per cent.
    In Vancouver, sales of homes $2 million and more increased 48 per cent, while Victoria showed the lowest increase of 13 per cent in all markets surveyed.
    “Strong economic performance, especially in Western Canadian provinces, has bolstered consumer confidence levels to such a degree that purchasers in the upper-end are comfortable with a million-dollar-plus investment in real estate,” Western Canadian executive vice-president Elton Ash said in a release.
    “Recent volatility in the stock market may trigger further investment in real estate as purchasers move to reallocate their holdings.
    In other major markets, the real estate firm said sales had also risen:
    -In Kelowna, B.C., home sales over $1 million rose 64 per cent.
    -In Winnipeg, home sales of more than $400,000 were up 86 per cent.
    -In London, Ont., sales of homes more than $500,000 rose 32 per cent.
    -In Halifax, sales of homes over $350,000 were up 46 per cent.
    -In St. John’s, N.L., home sales valued above $350,000 were up 57 per cent.”

  126. Priced Out

    What I find alarming is not the price bump near the peak – which can happen if the high end is stronger than the the low end – but the number of sales. Most of those 3300 sales are people who will soon find themselves in sad, difficult situations.

    I think some have been reeled in by the 40 year mortgage. If you are about 40ish and buy a $700,000 home with a 40 year mortgage, you are basically committing to a painful rent (to the bank) for the rest of your life. When you add the rent to the bank and other “ownership” costs, it will certainly be above $4000/month on a house that MIGHT rent for up to $2500 if you rented from a landlord.

    And if that $2500 turns out to be too much at some point, all you have to do is leave when your lease expires. In a down market, if you have to get out from under the “bank rent” for some reason, for the “owner” its either suffer horribly or walk away and destroy yourself financially.

    Why bother? Its sick. This is a sick city. I can’t believe the “bulls” are cheering this on. This is NOT a good thing. I just hope this doesn’t end up some kind of bail-out. I am NOT paying for this madness.

  127. Geezer

    Snick said:

    “Hmm…how interesting. A house at 1909 Brunette Ave. in Coquitlam was listed on August 11 for 539K

    Today? Price reduced to 459K.

    Rob?”

    Wow! That’s just like my experience. Last week I listed a 550 sq.ft. one bedroom condo in New West for 1.5 million and didn’t get a single bite! I’ve just had to re-list it at $375,000 – the sky is falling!!! Or do you think my original price was a bit too high?

  128. Snick

    You’re missing the point.

  129. Dyugle

    We have no reference to argue anything about prices because the realtors hold all the info and are not willing to release it. Thanks to Rob we get a little bit more info but this is still not the most important pieces of information. That would be the last sale price for the current listings and the current sale price when that property sells. From that it would be easy to determine the actual direction of the market and stop all this speculation. But info is power and the realtors will not give that up easily.

  130. tqn

    “Everybody has real estate, why would speculators that have real estate ever say anything bad about it?”
    and what would people expect the bears to say? It all depends which side you are on.

    Helen,
    If you doubt about the numbers, I am sure a RE agent will be able to provide you any stats you want. You dont see it here, it does not mean it is not available. You have to dig it.
    http://www.realestatetalks.com/viewtopic.php?t=33411&f=8&sid=fb99309c2424db6b7cd336d56ca80f59

    “Agian, they are all buying $727k sfdh’s?” no as above link.

  131. Anon

    Priced Out:

    I think some have been reeled in by the 40 year mortgage. If you are about 40ish and buy a $700,000 home with a 40 year mortgage, you are basically committing to a painful rent (to the bank) for the rest of your life.
    —————————————————————–

    I’ve been “renting” to the bank as a homeowner since 2002.

    I don’t feel much pain to be honest.

    And the rest of my life doesn’t look too burdened now by it either…. so I don’t know what you’re getting at. Are you THAT convinced of a major crash around the corner? What if you are wrong, is that a possibility?

    Or maybe you’re just hoping for these 40 year old people pain because YOU missed the boat?

  132. tqn

    “That would be the last sale price for the current listings and the current sale price when that property sells. ”
    I am sure a RE agent will be able to provide you any property history you want.

  133. coco

    Fraser Valley August Stats

    http://tinyurl.com/2xmgv7

    Oh, oh! What happened to some of the townhouse and condo prices in the Fraser Valley. Mission townhouses selling for less than the 2006 average price! What! I guess what happens in the valley stays in the valley, as everyone is clamoring for Vancouver real estate.

  134. kally

    Rob
    hoping that all is well with you and yours.

  135. New Investor Rob

    Coco

    Did you even look at the entire report. Here’s a quote from Fraser Valley report that you listed.

    “In August, the price of a single-family house in the Fraser Valley averaged $526,879, an 8.9 per cent increase in
    one year. The average price in 2006 was $483,752. The average price of a townhouse also increased by 8.8 per
    cent compared to last year, going from $294,887 last August to $320,930 this year.
    Average apartment prices in the Fraser Valley increased by 12.5 per cent compared to last year. In August 2006,
    they averaged $193,451 compared to $217,683 last month.”

    Thanks for wasting my time looking up an isolated figure in a mostly Bull report.

  136. coco

    Investor Rob,

    Your looking at overall stats for all townhouses in the entire Fraser Valley. Try looking at Mission section only.

    Mission Townhouses
    212,500 August 2007
    288,333 July 2007
    Down 26.3%
    261,368 August 2006
    Down -18.71%

  137. Anonymous

    for Petes sake lets have the numbers

  138. househunter

    “I can’t see a westside SFH going for median $1.5
    and you would not see 3000+ sales at that stratospheric level…… ”

    I thought the same thing when I could have bought a fixer upper for $400k in Cambie in 2001. I was convinced it was way over priced and I was barely qualifying. WTF happend since then? This is insane and the trend is going to be up and to the right. There will be troughs … i hope… but eventually, average Westside SFH will push a million. Its just a question of when. I’m OK with the realization that I am officially priced out. Reality is reality. C’est la vie. I’ll rent and if by chance the roof falls, I’ll at least be able to buy in. But that (IMHO) will not happen in the next few years. Short of a natural disaster, we are not going to see a +20% correction (Westside). There may be something like that post 2010. Unless a tonne of people see Vancouver on TV and decide to buy as a foreign investment. Hope that does not happen otherwise this is going to go through the roof. Makes me want to move.

  139. The unthinkable "Renter"

    House hunter,

    Suck it up, this is a market. Everything out there is a negative cashflow investment. If they price out all the average Joe’s then who will be left to work in the city? It’s been in the paper the shortage of people that actually want to come work here. Unless you bought 2001 your priced out already. Sooner or later the 40 year ammortization mortgages will begin to pay a tole psycologically on those over extended as well as all those unqualified trades working on all these new condos going up! There will be allot of assessments on shoty design and workmanship to come.

    I am lucky to not be priced out of a sfdh right now, but it deosnt make sence to put hard earned cash to something that can be so easily borrowed by others at zero down!!!

    I therefore am sticking to my guns and holding out. There may or may not be a reward at the end but still traffic will only get worse and I don’t have to live in Vancouver.

  140. coco

    At least we have one area (Mission – townhouses) that are selling below last years average price. This was unheard of just a few months ago, as the yoy average price just kept going up.

  141. robchipman

    Kally:

    Thanks. Things are going very slowly, and the movement from one stage to the next takes longer than normal, but its starting to look like we’re out of the woods. As I mentioned earlier, I am very impressed with teh staff at Lion’s Gate. Dynamite people. They have a tough job and I don’t know how they keep doing it so well.

    Sorry for missing the last few day’s numbers. I’ll try to post a summary later today.

    Coco:

    I said central banks would accept inflation rather than recession, right? So far it looks like I might have made the right call…:-) Let’s keep watching.

  142. coco

    What banks don’t tell you….the smaller your mortgage the higher the rate you pay. Borrow more…get a lesser rate…because you pay the bank so much more interest over time, then the person who borrows less.

  143. coco

    Rob,

    Inflation maybe accepted to a point, then what happens when inflation starts to walk too fast or run? Interest rate hikes?

    BOC/Fed caught in the middle.

  144. coco

    Too high inflation = the deeper recession needed to lower prices.

    Too high interest rates = can slow economy into recession

    The BOC/Fed’s fine balancing act indeed.

  145. WoW

    Rob, wishing you well with the family health issues you are dealing with….

  146. kally

    Rob
    I am pleased that things seem to be getting better. Hang in there. The staff at these places are amazing aren’t they? I am always staggered at how long their shifts are: I come in the morning a nurse is there, I come back in the evening, same nurse is there.

  147. WoW

    Breaking News from The Globe and Mail

    Mortgages are great
    Rob Carrick

    Thursday, September 06, 2007

    Home ownership is a wonderful thing and all, but sometimes it makes sense just to rent.

    This is the logical conclusion to be drawn from some tips offered yesterday by the mortgage brokerage firm Invis to help people understand the current interest rate environment and upheaval in the U.S. housing market.

    “The key to a successful mortgage experience is carefully considering all your options and buying within your means so that you can sustain your payments,” Invis president and CEO Neil Glasberg said in a press release.

    It’s good advice. If you follow it, you may not end up buying a house right now.

    Invis starts off by recommending that people find out what they can afford by getting preapproved for a mortgage by a lender. One benefit of doing this is that you can lock in a mortgage rate for as long as 120 days. Another is that you’ll quickly get an idea of whether you’ll comfortably be able to afford a home or whether you’ll be asking for trouble.

    We’re not talking about falling into the same difficulties as those poor U.S. home buyers who are defaulting on mortgages that enabled them to get in over their heads. The U.S. subprime mortgage market, catering to people with weak credit ratings and a strong desire to buy a home, is a striking example of how a predatory financial industry eats up gullible people and spits out the bones.

    The risk of taking on a mortgage here in Canada is not so much that you’ll default, but rather that you’ll be so house-poor it hurts.

    Invis suggests revisiting your current debts to make a house more affordable, which makes sense in theory because it looks like interest rate declines are going to help on this front. The Bank of Canada left its trendsetting overnight rate unchanged yesterday and said the domestic economy remains strong, even if there are risks posed by the trickle-down effects of the U.S. mortgage situation.

    One way to restructure your current debts would be to increase the amortization on a car loan, thereby lowering the monthly payments. This would have the effect of lowering your total debt services ratio, which lenders follow closely because it shows how much of your pretax income is consumed by all your debts, including your mortgage.

    Barring financial distress, there are only two good reasons to restructure a loan of any kind: To get the debt paid off sooner, or to take advantage of falling interest rates. Don’t renegotiate your debts just so you can borrow more. If this is the only way for you to afford a home, one interpretation would be that you can’t actually afford that home.

    Lenders generally don’t want to see your total debt service ratio go above 40 per cent, which means $40 of every $100 you earned would go to loans, credit cards and your mortgage. If you think this is a financial plan you can live with, stop a moment to consider whether money would be so tight that you end up piling on more debt over the years to maintain your lifestyle.

    Invis acknowledges the potential stresses of carrying a big mortgage by suggesting you look into a longer amortization period than the traditional 25-year period. You can go as long as 30, 35 or 40 years, and in doing so you will buy yourself some financial stock on a day-to-day basis. The downside is that you’ll pay thousands more in interest, and require an extra five to 20 years to get your mortgage paid off.

    If you’re 30 years old, you could conceivably be committing yourself to a mortgage you won’t be rid of until you retire. Round about the time most people are ramping up their retirement savings, you’ll still be paying big chunks of money to your mortgage lender.

    Invis suggests increasing the size of your down payment as a way of reducing the amount you need to borrow. The obvious threshold to shoot for is 20 per cent, which would allow you to save on mortgage insurance. But with the average house price in Canada now above $310,000, you’ll need at least $62,000 to qualify.

    Invis points out that the federal Home Buyers’ Plan may help because it allows you to withdraw up to $20,000 from a registered retirement savings plan to buy a home. If you’re young and have time to backfill your RRSP, that’s not a bad option.

    A lot of what’s gone on in the mortgage market in recent years has been about helping people buy homes in a market where prices have soared. The underlying assumption is that there’s always a way to make homes attainable, when in fact this just isn’t true.

    If you find that discouraging, just look to the U.S. housing market. Sales there are falling, and you know what that does to prices and affordability.

  148. Jay

    WOW, that’s a great find and post. It’d be nice to see stats on buyers and what they can actually afford. It seems way too many people are buying RE that is beyond their means.

  149. WoW

    Thanks Jay – but please remember – Vancouver is different!:))

    Hey, I wonder how many hundreds of thousands of jobs are being lost in the US construction/real-estate industry – note that we are not talking about thousands, but tens of thousands – so far – could they not come up here and help finish these condo projects off? I hear they will take what they can find, as work is tough to come by now….could we import labour from the US?

  150. tqn

    Quote from the past…month:
    “I think the Sept rate increase will kill the last of the first time buyer demand. I would not expect us to recover from this winters slowdown.”
    “Strong sales across the board, prices going no further – isn’t this the way it should be ? Usually prices keep shooting up to pace demand.”
    “It doesn’t matter what the fed is doing in October.
    BOC is curbing inflation. Interest rates will continue to rise until it is under control 2.0% or less.”

  151. Ymir

    The sad part is, all this “prosperity” is virtually killing customer service quality around here.
    The service/retail industry is built on minimum or just-above-minimum wage and the only remaining candidates for these jobs are pimply adolescents, mildly retarded, substance abusers, elderly immigrants with zero communication skills and the rest of the loser population. Everyone else with any street sense at all seems to be working in construction now.
    If you don’t believe me you should go out there and try to buy anything in-store these days while having any questions and needing help… hopeless.

  152. Tony Danza

    Ymir, only “the rest of the loser population” buys anything “in store” anymore. There’s this thing called the internet that you’re using right now and you can buy anything you need on it.

  153. Anonymous

    tqn,

    So you believe the credit crunch will continue to keep interest rates on hold or are you hoping the credit crunch gets worse so they will drop?

    Not sure what your point really is when interest rates held steady, BOC already stated if it wasn’t for credit crunch problems that they would of raised rates in September.

  154. blueskies

    Short of a natural disaster,
    ……….see credit bubble

    Hey, I wonder how many hundreds of thousands of jobs are being lost in the US construction/real-estate industry

    107,540 lost jobs year to date in US

  155. Geezer

    Here are a couple of interesting quotes from this morning.

    Canadian Press
    September 06, 2007
    “TORONTO (CP) – The Toronto Stock Exchange’s (TSX:X) main index will likely rebound from recent market turmoil to hit a record 15,000 points within six months and climb to 16,200 by the end of 2008, CIBC World Markets (TSX:CM) says.
    “The subprime mortgage meltdown in the U.S. is a temporary and non-lethal shock to the bull market in Canadian stocks,” Jeff Rubin, the investment firm’s chief strategist and chief economist, said Thursday in a release.
    He also predicts two U.S. interest rate cuts in coming months and parity between the Canadian and U.S. dollars by the end of the year.”

    “Even at worst, the selloff in the TSX was no worse than last summer’s correction and the index has already regained 50 per cent of those losses as investors rapidly scooped up discounted stocks. The blowup in the U.S. subprime market, like the collapse of Long Term Capital Management in 1998, will give way to new highs for both the stock market and the economy.”

    “Rubin said the market has already priced in the worst of the U.S. subprime mortgage fallout, which caused a liquidity crisis.”

    “With growth in the Canadian economy outperforming Bank of Canada expectations so far this year, CIBC World Markets doesn’t expect the central bank to match the U.S. Fed rate cuts and undo its July rate hike.”

    “We are adding a half a percentage point of weighting to our position in metal stocks on the belief that global economic growth will remain robust.”

    Another report in today’s Province was predicting continued strong growth in thew BC economy.

  156. paul

    TQN QUOTE:
    Quote from the past…month:
    “I think the Sept rate increase will kill the last of the first time buyer demand. I would not expect us to recover from this winters slowdown.”
    “Strong sales across the board, prices going no further – isn’t this the way it should be ? Usually prices keep shooting up to pace demand.”
    “It doesn’t matter what the fed is doing in October.
    BOC is curbing inflation. Interest rates will continue to rise until it is under control 2.0% or less.”

    I believe that was my quote . At the time rising rates were a sure bet. Now I guess we are in some kind of credit crunch induced limbo. I still believe rates will climb and we will not recover from the slow down that is coming this winter.

  157. Geezer

    Snick said:

    “You’re missing the point.”

    No, I was trying to point out that “asking prices” being dropped often indicate that the property was initially priced ahead of the market. Instead of looking at a poorly informed or overly optimistic seller’s “asking price” for one house in Coquitlam look at the latest GVRD stats on actual real-world “selling prices” and tell me prices are falling.

    Oh, sorry, you’re right! It appears that the average townhouse price in Mission was down a bit last month (whilst almost everything else in the GVRD is selling for more.)

    The sky is falling! The sky is falling!

  158. robchipman

    Paul, no offense, but rising rates last month were far from a sure bet. Yes, the BoC was talking tough, but not all of us were buying that. I’m not certain rising rates are a sure bet now. Last month we had the credit crunch. It may not have been MSM news, but everyone has been worried about it for quite a while. Additionally, we’ve had the dual economy/high dollar problem here in Canada. Both those things mitigated against higher rates. Inflation was the thing that pointed to higher rates. Two possible outcomes means that it was far from a sure bet.

    That holds true for this winter. Rates may climb, or they may not. I don’t think they’ll climb substantially, and I’m not alone in that. Would a US recession not accomplish the same thing as rising interest rates in the long run, at least for Canada?

  159. M-

    coco:

    Regarding the townhouses in Mission, I got excited about the drop in prices also, but then I looked closer at the numbers.

    There were only 2 or 3 townhouses that sold in August. The sample size is so low that you can’t make any conclusions from the average sale price of those Mission townhouses. Maybe some brand-new ones sold during the previous period, and in August some crappy 30-year-old townhouses sold.

  160. coco

    M,

    If only 2 or 3 townhouses sold for the whole month, you have to admit that is a pretty lousy sales volume for a robust August.

    Condo prices have fallen out there too, although not under last years average price yet. One can only wait for further FVREB reports to see what exactly is happening out there before drawing any further conclusions in either direction.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s