There were 204 new listings and 136 sales for a sell/list of 66.66%. Inventory was 11,026 and over 90s were 2,666 (24.18%)
There were 204 new listings and 136 sales for a sell/list of 66.66%. Inventory was 11,026 and over 90s were 2,666 (24.18%)
Filed under Daily Numbers
The Best Real Estate Anywhere! 
Note – I am off on the inventory prediction by @2,000 units. Well, I’ll take my lumps, but put in a new prediction for 13,000 units listed – Feb 15th…
http://vancouver.craigslist.ca/rfs/478786070.html
Look at this and tell me we’re not in a bubble.
Infinity 2 assignments:
“The units that I have on the 35th floor are around $600 per square foot
A one bedroom 554 sq/ft unit is $332,400.00 requiring $138,245.00 to assume the contract
Two bedroom 843 sq/ft unit is $499,900.00 requiring $213,110.00 to assume the contract
Completion is summer 2009”
“Infinity 2 assignments:
“The units that I have on the 35th floor are around $600 per square foot””
$600/square foot?!!! Who is going to pay that now?
There is an ELAN building in downtown Vancouver – completion early 2008 and it’s about $625/square foot.
Who and idiot would buy a condo in Surrey for the price of Downtown ?
There is A LOT of land in Surrey for condo development compared to downtown core.
What confuses me is you can buy a nice house with suite potential in Surrey for about the same price as those Infinity assignments.
$395,000
http://vancouver.craigslist.ca/rfs/478739453.html
Wow, just wow.
The way the inventory is dropping makes my jaw drop.
This is a very interesting situation. We keep pushing against the afford ability ceiling, while demand is still as strong as ever.
For now, I’m an arm-chair RE investor. Just sitting back and watching the show. It’s kind of fun, just as it is watching Deal or no Deal.
On one hand I know there is a possibility that prices are just as likely to keep going up, but on the other, I don’t have the stomach to bet against a correction.
But if I had to bet my fake money, it would be this:
Vancouver is going to have THE most expensive real estate in the world 3 years from now (justified or not). No I don’t mean most expensive relative to residents income (we are already there). I mean most expensive in absolute terms. Vancouver will beat Seoul, Tokyo, Seoul, London, etc.
P.S. Fundamentals be damned.
The mass mentality is like a wild beast can only be observed and studied, and can rarely ever predicted.
Priced Out,
There seems to be some weird pull to Vancouver proper to buy real estate. When you take a trip to the U.S……drive around the White Rock area on the way to or from the border…. for sale signs are everywhere….Fraser Valley inventory is a real eyeopener.
Fraser Valley inventory is a real eyeopener compared to Vancouver.
that is because Vancouver proper is far and away much more desirable than living in a suburb
Fraser Valley inventory is a real eyeopener compared to Vancouver.
thats because of same reason infinity’s 3 left over tower =900 units sold out last week.
those unit from craigslist floor wise prices are right and $3,000 per floor adds up to floors. orignal price on the bottom is 450 then add up all those 35 floor plus views.
Other hands Elan equavalent floor would be @1,000 per sqf.+$50,000 for parking and locker,$10,000 for up grade pkg.So when we see differences in prices those are reason to dig through.note :I think elan is only 34 story.
I attended my company sales meeting today where we discussed the “market”…
It is expected that the market is going to slowdown from here heading into the end of the year and then slowdown even more next year as listing supply increases amid deteriorating affordability. As mortgages come up for renewal in 2008 at significantly higher rates than 5 years ago, many owners are going to be forced to sell their properties to avoid foreclosure (monthly payments will rise significantly). Given higher mortgage rates, deteriorating affordability, and increasing inventory, it is expected that we’re heading to a more balanced market where properties will take much longer to sell. Currently, well priced properties are selling in an average 45 days and as we begin 2008 that is expected to double to 90 days, then possibly worsen more. 90-120 days is considered a balanced market.
Jeff:
“90-120 days is considered a balanced market”
Thanks for that. We’ve been up so long that I think some people think the least little market hesitation equals a crash. Would you agree that in a balanced market fewer listings sell than don’t?
“As mortgages come up for renewal in 2008 at significantly higher rates than 5 years ago…”
What do you see as the effective difference, taking into account mortgage paydown and any income increase (due to inflation or moving up the income ladder)?
“Given higher mortgage rates, deteriorating affordability, and increasing inventory…”
If those things are givens, the result is predictable. Buying opportunities will become common. The question is what inventory is going to do. Projections for completed condos are high, and inventory is climbing in the Valley. In other words, it seems reasonable to pencil in a certain amount of “off the books” inventory for the REBGV. At the same time I have a problem: VHB was really good about posting very small in-migration numbers, putting the lie (at least partially) to the idea that we had a population boom; yet, we’ve been absorbing a lot of inventory anyway. How do we square that circle?
In terms of affordability, we’ve seen some huge changes in the mortgage business, and some very low rates. If I go back three years I don’t think I could have imagined some of the changes we’ve seen, so its hard for me to imagine that they’ve got more tricks up their sleeves to address affordability. But, if we keep printing money someone’s going to have to get it lent out.
Rob,
I absolutely agree that in a balanced market fewer listings sell than don’t.
Mortgage rates are going to change from mostly 4% then to roughly 6% now.
Regardless of population growth we have a major affordability problem.
I think the RE theme going forward will be affordability, affordability, affordability.
Mortgage rates going up?
Not likely.
We still haven’t felt the pain from the $CDN appreciating 25% in 10 months.
Rates may drop, as Goldman Sachs consolidates is total dominance of all major financial institutions.
“Goldman Sach’s CFO goes to NYSE and now to Merrill Lynch. The GS chief economist becomes head trader for the Fed. The GS CEO becomes Treasury Secretary. The former GS CEO becomes the former Treasury Secretary and now the head of Citigroup. The Cdn GS managing director becomes Head of the Bank of Canada. GS vice-chairman becomes Head of the Bank of Italy. Recent GS Chairman to head the World Bank.” BillCara.com
Doug,
My comment is not that I think rates are going up from here… it is that rates were 4% in the past 2-5 years… and now those mortgages need to be renewed today at 6%.
I read with interest the Remax statement that 50% of DT condos are owned by investors and that our condo market is being fueled by speculation.
I’ve also read that there are over 23,000 housing units under construction in Metro Vancouver. Per GRVD stats, the Vancouver CMA (Metro) population has grown at about 26,000 persons per annum average, between 2001 and 2006. Using 2.4 as the average persons per household unit, housing demand would be in the range of 11,833 units per annum.
I’m ready for scorn to be heaped upon me by the bull contingent. That said, does anyone else think that the combination of the high rate of investor-owned condos and what appears to be rampart over-building might make for the perfect storm?
Jeff,
That affordability theme has been expired long time ago, don’t you see record breaking sales every where affordability is three year old issue.Actually most of people are in affordable situation they are either like to rent or they are waiting for crash.
Are you different from remax?.up-up-up
What do you think about the report from CMHC?.up-up-up
Are you different from Realtors association?.up-up-up
Interest Rates:Some how,If you reach up to here thats nothing go to any bank and tell them how much you can pay monthly that’s the deal.
“We still haven’t felt the pain from the $CDN appreciating 25% in 10 months” Exactly so with unemployment probably up to about 8% in two years who will care if mortgage rates are low? No renters, no jobs, I think low mortgage rates will be short term gain for long term pain. Lowering the interest rate to protect the CDN dollar is a sign of panic, and will result in steeper inflation. Bottom line is housing has to be affordable for the majority of middle income earners. They vote and they are the majority. Speculators and investors are a minority.
Remember despite the recent rise in oil prices, pump prices have not increased because the CDN $ appreciated in lock step with oil. If we use the BOC to constrain the CDN $ watch the pump prices go outa site!
So 68% from the majority are home owners than what is left?minority again but in middle income earners.See things turn otherway around.
“So 68% from the majority are home owners ” A home owner is some one who owns 51 % of their property. Some one who has 10% down is not in anyway a home owner! They rent big time!
Jeff says 11/11
funny thing is… I am a Realtor and a bear on this site and the fact is that properties are selling in 1-2 weeks often with multiple offers.
Jeff says 11/14
Currently, well priced properties are selling in an average 45 days
Funny what a difference a few days can make….
Just a couple of quick notes on above comments, no flames please.
1) People renewing 5 yr mortgage at a slightly higher rate (rates are not much higher then 5yrs ago, maybe 1/4% to 1/2%) are not going to be forced to sell unless something happened in their life. Over those 5 years they would have received raises even at a modest 2% a year compounded it would more then cover the increased payments. Let’s pretended it didn’t though, they would just refinance to 25yrs instead of 20yrs instead of being forced to sell. No bloodbath coming from renewing.
2) Those 23K units you quote, are not completing in any one year, they are completing over several years, 2007-2010. Even if we take 13K as completing on any given year, that would only roughly equal to what the pop. is increasing every year. That is also assuming these units maintain the average of 2.4 occuppants which includes sfhs, the condo average is probably lower then 2.0. Then there is the 2nd home market which would need to be deducted from that 13K/year, as we know there is a sizeable amount of condos that are not f/t homes. So while the supply might seem large it isn’t going to provide the relief some would expect it to.
I hate to quote Rob but I think he’s right about the solution to high prices is high prices.
Rob siad, “If I go back three years I don’t think I could have imagined some of the changes we’ve seen, so its hard for me to imagine that they’ve got more tricks up their sleeves to address affordability. But, if we keep printing money someone’s going to have to get it lent out.”
Kudos to you Rob for you comment now when do you think the market will correct? Or better yet are we overdue for a correction?
You can get a rate even today at 5.5% fixed, I don’t know anyone that was able to secure a 5yr fixed mortgage for only 4% 2yrs ago. 5% would be more accurate. If you want to include variables, well then you weren’t paying 4% for the full 5yrs.
In that case those buyers are paying 3,000 monthly and earning atleast 10,000 monthly from appreciation.Still I won’t change those stats 68% home owners are confirmed.
Joe just Joe
Some good points but a couple of comments.
Units under construction would, be complete on average within 18 months so this still represents a 50% over-build situation. The 2.4 metric takes into consideration attached properties. The metric is higher for detached properties. I’m don’t think the second home scenario is relevant within the context of Metro Vancouver.
This said, I also agree with Rob that the solution to high prices is high prices. I think we’re very close to, if not at, FTB resistance levels.
“earning atleast 10,000 monthly from appreciation.Still I won’t change those stats 68% home owners are confirmed.” Yep as soon as they SELL that money is their’s otherwise they have nothing. And if they sell they have to move to tim buck two to use that money. I have made $7000.00 in the last three months on stocks however unless I sell those stocks I do not HAVE that money? Right? Or do I have it no matter what? You tell me!
Sell that and pay half in tax go ahead and otherside thats all yours beleive that when ever.
“Sell that and pay half in tax go ahead and otherside thats all yours beleive that when ever.” Good reply don’t have to pay tax goes into RRSP :-). Results in income reduction. Didn’t answer my question, do you HAVE the money if you don’t sell?
who have the money anyway?
In country like ours people just got cards in their pockets thats it,Once my wife with draw 1,000 we suppose to buy some thing cash week after . I asked her to display that money on TV unless we make purchase.
Better yet you take 400.00 out of your realestate and I will take $400.00 out of my stocks (which I can do in about 10 minutes), I will pay a trade fee of $35.00 and owe nothing. I could throw it away. I suspect you could not take $400.00 out of your equity. Nother words you are hamstrung. Oh yea you could BORROW against it. But I am not borrowing, its my money! If I neeedd a couple of thousand for two weeks and decide NEVER to pay it back I can do it. You can’t! You OWN what exactly?
JR:
“I’ve also read that there are over 23,000 housing units under construction in Metro Vancouver.”
That is 23,000 / 3 years average = 7667 per year
“Per GRVD stats, the Vancouver CMA (Metro) population has grown at about 26,000 persons per annum average, between 2001 and 2006. Using 2.4 as the average persons per household unit, housing demand would be in the range of 11,833 units per annum.”
2.3 is a stretch considering 90% plus under construction are condos. Even at 2.3 people per condo there is still a shortage of over 3ooo housing units per year forecast over the next few years. And that doesn’t factor in the population growth is expected to increase in 2008 (you skewed the average low by including 2001 to 2003 > 2004 to 2007 have been much higher).
Think about that for a minute. Very conservatively a 3000 unit shortage per year with historic lows in rental vacancy rates and historically low inventory listed for sale already. It makes a housing crash virtually impossible.
the 18month completion is pretty small for larger projects, again I talking more d/t and not some of the smaller suburb condos, ie (Woodwards start early 06 complete late 09) (Fairmont start 07 complete late 09) (Hotel Georgia 08-11) (Ritz 07-10/11) These are just a sample, but they are included in the inventory as under construction even though some won’t complete for 4 more years. And alot of those d/t condos again while on the inventory won’t be used to quash any demand from the pop. increase,they will be vacation/2nd homes. While I’m not arguing there might be an oversupply, I do beleive if there is, it’s pretty insignificant. Vancouver proper anyways is acutally seeing less units coming onboard in the coming years then what has already come on board. Not sure of the stats outside vancouver, I imagine it’s not the case with Surrey though.
*
who have the money anyway?
In country like ours people just got cards in their pockets thats it,Once my wife with draw 1,000 we suppose to buy some thing cash week after . I asked her to display that money on TV unless we make purchase.
This is a fantastic example of the majority of the immigrant mindset and the root of the speculated market conditions. This type of blatant excessive overspending on all levels…. Truly scary.
what about compromise house is a life time gift.In your own words you will throw that 400 away and you also have a knowledge about personal line of credit,So cash is with you always . money is not a problem,but problem is when we miss our chance or skip according to what time required to do us.After 35 there is a big problem if you are not in,thats where you have exceed the limit to achieve honor of being owner.
“After 35 there is a big problem if you are not in,thats where you have exceed the limit to achieve honor of being owner.” Actually been an owner about 4 times lot’s of heartache, now I’ve reached the age where freedom counts, do what I wan when I want. At a certain stage home ownership premium dies and you start looking at life in a differant way. Looking back at years of home ownership versus some really incredible years of living my experience has shown me that freedom to do what you want counts the most. Home ownership can be a source of slavery, sometimes one has to move on to just enjoying everything about life. Immigrants who have never had home ownership consider it a the ultimate goal, I consider it an interimn goal for family raising. After the brood is gone why serve the nest? 🙂
Yeah if you survive from parental attack than wait for another attack from children.sort of agree with you on one point there is one saying”ONLY FOOLISH PEOPLE MAKE HOMES AND WISE MAN LIVE IN THEM”,but wise man also put their family on life time eviction notice. the place we love,the neighbourhood we love,those peoples,friends family around us are all temp show,Just one eviction or moving notice change that life style.Buying home is a life time stability for family and friends than you can enjoy the real freedom.Finally “HOUSING MIGHT BE EXPENSIVE,BUT CAN BE BOUGHT WITH MONEY,WHAT BE CAN NOT BUY WITH MONEY IS FAMILY(BLOOD RELATION)”.Thanks Strataman Enjoy your life there is nothing beyond happiness.
“Home ownership can be a source of slavery, sometimes one has to move on to just enjoying everything about life.”
And the reason for hanging around a real estate blog? You don’t own and sound as if you have no intention of owning.
“And the reason for hanging around a real estate blog? You don’t own and sound as if you have no intention of owning.” Answer three hard working gainfully employed kids in there early twenties. Wish they could have decent housing prices like I did! Is that so bad?
News Flash
First of all, I don’t know where you get three years average completion for units already “under construction”. Second, as previously mentioned, 2.4 already factors in attached units and while I concur that a good many of them would be condos, 90% is a real stretch. Thirdly, if you look at population growth in the Vancouver CMA you will see the rate relatively consistent and relative to earlier history, somewhat anemic. 2008 may be higher, but not to any extent that would meaningfully skew the average.
Finally, although a committed (and informed, I think) bear, I would never suggest that anything is impossible, including the absence of a housing crash here. With North American markets all around us crashing or in the beginning stages of crashing, however, I view it as outrageous for you to suggest that a crash here is impossible. This is the embodiment of denial. With the vilification and subsequent departure of David Learah, followed by the similarly disconnected ravings of Mr. Yun, the NAR may have openings for more eternal optimists. Perhaps there is an opportunity for you there.
“Kudos to you Rob for you comment now when do you think the market will correct? Or better yet are we overdue for a correction?”
Yes. Do tell.
Some people here should do some basic fact checking. According to official CMHC statistics the Vancouver CMA has witnessed over 15,000 completed units per year since the beginning of 2005.
http://langley-financial-planning.blogspot.com/2007/10/record-number-of-homes-under.html
“First of all, I don’t know where you get three years average completion for units already “under construction”. ”
It takes over 3 years to complete a high rise. Almost all of the new construction that comes on line from this point forward will not be done in the next 3 years. Many of the units in the 23,000 will take longer than 3 years. 7667 average over the next 3 years is conservative. And as Mohican points out this is about half of what we have seen since 2005.
“Thirdly, if you look at population growth in the Vancouver CMA you will see the rate relatively consistent and relative to earlier history, somewhat anemic. 2008 may be higher, but not to any extent that would meaningfully skew the average.”
CMHC stats forecast 2008 at 50,000 net migration to BC – 2003 was about half of that.
“Finally, although a committed (and informed, I think) bear, I would never suggest that anything is impossible, including the absence of a housing crash here. With North American markets all around us crashing or in the beginning stages of crashing, however, I view it as outrageous for you to suggest that a crash here is impossible.”
Virtually impossible actually. Just looking at the fundamentals and that is strictly an opinion. Things can change of course if the population growth does not happen.
“This is the embodiment of denial.”
Why would I deny something I have control over. I could easily sell and buy back after the crash if I believed it may happen. That would be the biggest return of any scenario. You on the other hand have played your cards. You have shorted the market and so far bet on the wrong horse. The only way for you to change your bet is to eat 6 figures from selling too early and buy back in. Who is in denial?
“With the vilification and subsequent departure of David Learah, followed by the similarly disconnected ravings of Mr. Yun, the NAR may have openings for more eternal optimists. Perhaps there is an opportunity for you there.”
Does every bear post have to end with the US? Is that all you have? Very weak argument.
Thanks for the graph Mohican,
Certainly clarifies the earlier math… Hmmm, units under construction exceeds both units started and units completed since around 2003/2004. Is the labour shortage the primary reason for that lag?
Hi Rob,
Is there such a thing/way to sell the right to buy the house? For example, someone can pay $50k for the right to buy a house at $500k in year 2012. The house may be worth just about the same value or a bit less.
Is this at all possible?
News Flash
No doubt this response will be next to pointless however…
If you saw Mohican’s post prior to yours you will see that the Vancouver CMA has had over 15,000 completions per year since 2005. So much for dividing 23,000 by three. Under construction does not mean all construction started today, nor do all condos take three years to complete. In any event there are many more units completing per annum, by any measure, than population our growth can absorb for housing purposes. As to betting on the wrong horse, there are more horses in the field than real estate, some with gains equal to or greater than those in real estate.
You say you are relying on fundamentals and you discount what is happening in the US. Do you really think that Vancouver is not subject to the same fundamentals as those in comparable US cities? The fundamentals that matter at this point in history are median prices versus median incomes, rents versus prices, supply versus intrinsic demand and the degree to which a market is driven up through speculation. All of these are seriously out of whack in Vancouver which places a correction in the highly probable category, certainly not the impossible one.
Second, as previously mentioned, 2.4 already factors in attached units and while I concur that a good many of them would be condos, 90% is a real stretch.
I’d like to pretend, for a minute, that the “90% are condos” is true. (I don’t know if the stat of under construction includes condo conversions from rental stock, but that’s also kickin’ around as smaller-sized inventory. Making affordable rentals harder to come by, too, in some areas.)
What does it mean to Vancouver’s employers, its head office retention, and its pool of available employees, if everything within the city is too small or expensive for families to live in? Especially as commuting becomes increasingly expensive (if you’re driving), or claustrophobic (if you use transit)? We don’t have New York or London’s transit system.
I think that if that statistic were true, there’s about to be a very interesting social experiment in Vancouver. Where economics meets “lifestyle”, and “lifestyle” means “people who don’t have kids” && “make over $200K household income per year.”
Fun times.
Not only will mortgage payments go up with renewals, but many condo owners will see increased fees. Then there is racking up of credit card debt, usually at high interest rates. I’m sure all this will push many people over the edge financially.
http://tinyurl.com/37k2d4
go figure, an economist no less drinks the kool-aid.
Growing credit debt is crushing Canadians
A new study of Canadians’ credit debt finds that a whopping 25 per cent owe between $10,000 and $40,000, and 28 per cent don’t even know the interest rate they pay on their main credit card.
http://tinyurl.com/2qvhve
Credit crunch hits homeowners
The credit crisis in financial markets is now starting to hit Canadian homeowners right where they live with higher mortgage rates.
In the past four weeks, all of the major banks have quietly moved to cut the discount they provide on mortgages because their profits have dwindled as their borrowing costs have gone up.
http://tinyurl.com/2qfjcf
Tour bus company drives off into the sunset
Nov, 15 2007 – 12:00 AM
VANCOUVER/CKNW(AM980) – “Tourists in Vancouver have one less sightseeing option. Grayline West ceased operations in the city today, putting 79 year-round employees out of work.”
Over to you, News Flash.
Layoffs rumoured at the National Bank of Canada as it restructures from subprime losses.
News Flash is currently formulating a clever argument to refute Mohican’s data, give him/her some time. News Flash you asked why bear arguments end with a mention of the US RE market, I would like to know why your a$$ clown arguments always end with “it’s different here”? Very persuasive.
Home sales rise in October
http://tinyurl.com/29z62k
“However we are still expecting that sales will gradually erode, primarily due to a decrease in affordability.”
Disbelief:
I don’t think you’re being fair to Jeff. I report average DOMs all the time, and although I’d say that in my area the average is between 35-45 days, I can’t disagree with someone who says its 45 days (the area is likely somewhat different). At the same time we see overlists everyday, and they sell within 2 weeks, generally. The two occurrences aren’t mutually exclusive. I don’t think you’ve caught Jeff saying two different things.
MAC,HIAM:
I can’t say when it will happen, and so I can’t say its overdue (or early). All I know for certain is that the market will change, because it always does. Perhpas that’s more of an article of faith than scientific analysis, but its the best I can do. Its a good guide, I think.
Annon:
I’m sure you could do it (how different is a presale, for example), but its not something I’ve commonly seen, and I’m not sure which seller would go for the idea and why.
When was the last time we saw single digit yoy increases in Greater Vancouver?
http://www.cbc.ca/money/story/2007/11/15/realestate.html
Do my eyes deceive me? Only 7.8%.
Last night on CNN they had a clip about the personal devastation the housing bubble has had on some to the victims.
Quite simply, I can’t understand how you RE pumpers/dogs can sleep at night.
Shame on you vermin.
I personally feel that most Realtors are simply facilitators of the RE process. I don’t see us as pumping or dumping the market.
The buyers want to buy, the sellers want to sell, we generally coordinate the transaction at our clients request and in the end hope to get the most money for a seller or pay the lowest price for a buyer. We ensure that a legally binding agreement is produced. We are also extremely effective at getting the deal done.
I don’t think any Realtor could influence the overall market to any degree.
Rob:
You are correct, I stated that average days is about 45… it changes month to month. I also said that properties do sell in 1-2 weeks. Both statements are true and neither contradicts the other.
I personally feel that most Realtors are simply facilitators of the RE process. I don’t see us as pumping or dumping the market.
The buyers want to buy, the sellers want to sell, we generally coordinate the transaction at our clients request and in the end hope to get the most money for a seller or pay the lowest price for a buyer. We ensure that a legally binding agreement is produced. We are also extremely effective at getting the deal done.
I don’t think any Realtor could influence the overall market to any degree.
Rob:
You are correct, I stated that average days is about 45… it changes month to month. I also said that properties do sell in 1-2 weeks. Both statements are true and neither contradicts the other.
Bank of Canada injects liquidity (US Fed too)
http://tinyurl.com/29ubbq
Beware the Ides of November
TSX down 250+ points
I don’t think you’ve caught Jeff saying two different things.
I was trying to make a point and was cut down by the smallest detail. Merely that homes sit for what seems to me a little longer beit seasonal or cooling. I think what we have caught is that timing the market or even calling the market is not an exact science… So let people make a point and look at the point they are trying to make rather than attack at the smallest lack of details. The market seems to be comprised of generalizations and if Rennie says it then it must be so.
Jeff, I don’t buy it. I can understand, somebody like Aaron may not have the capacity to fully understand the implications, and I can understand Rob, being side tracked and blinded by greed, because of his impoverished moral compass, but most of you RE dogs, at some level, know what is right and what is wrong.
Basic stuff
Rob asked an interesting question:
“At the same time I have a problem: VHB was really good about posting very small in-migration numbers, putting the lie (at least partially) to the idea that we had a population boom; yet, we’ve been absorbing a lot of inventory anyway. How do we square that circle? ”
If it isn’t in migration absorbing the inventory there is only one other possibility. People are buying apartments and not living in them. My possible reasons they would do this are:
1) Pure speculation. Letting someone live in a place causes depreciation and makes you less competitive with brand new places coming on the market. The 20 percent a year will more than make up for your carrying costs.
2) Lots of wealthy foreigners who buy in cash so they can have a place in Vancouver ready whenever they want.
3) Flippers. People buying places and fixing them up. While there being fixed up no no one is living in them.
We are definitely in a realm right now where the laws of physics have been changed.
Rob asked an interesting question:
“At the same time I have a problem: VHB was really good about posting very small in-migration numbers, putting the lie (at least partially) to the idea that we had a population boom; yet, we’ve been absorbing a lot of inventory anyway. How do we square that circle? ”
Could the average number of occupants per unit be going down? Is there any data on this value for the Vancouver CMA? Is the ratio of single people to couples/families increasing, and does this have an effect?
Disbelief:
I’m not trying to cut you down or shut you down, but you didn’t really do a very good job of that in the original post (that’s just my opinion); it seemed more like you were trying to point out that Jeff was saying two different things.
Thanks for the clarification in your second post; I still disagree with it, in that average DOMs is still low, and the % of overlists is pretty consistent (I think somewhere between 8% and 12% daily). I haven’t seen this change in any way that’s attributable to seasonal slowdown.
I absolutely agree that DOM is low.
My understanding is that a balanced market is 90-120 days.
we’re currently under 45 DOM for Greater Vancouver.
BBY – here is the household data you are likely looking for http://www.gvrd.bc.ca/growth/keyfacts/perinprivhhd.htm
Greater Vancouver average persons per household has been a stable 2.6 since 1991.
Some other interesting analysis: http://langley-financial-planning.blogspot.com/2007/09/really-long-term-cmhc-data.html
Rob,
I was thinking more like buying/selling a put option on a house. If someone believes that the house will be more than what it is in 2012 and is willing to spend $50k as an insurance, I as an owner would sure sell that put option now. And I am seriously entertaining this idea.
Now about the DOM, maybe this has been discussed many times. I just hope the low DOM isn’t some filtered numbers. I think a house delisted and then relisted should be included with total days since first listed date.
sell the call options…. my mistake.
To square the circle there are speculators. My boss owns 4 places. He lives in one and the other three are empty.
List of Canadian companies that invested in third party commercial paper
http://tinyurl.com/3as6zo
(most of these investments are frozen, some have been written off and a lucky one or two got some cash back)
Buyouts offered and layoffs pending at Vancouver Sun/Vancouver province as Canwest Media centralizes operations.
Vancouver – There will be job cuts by Christmas according to a restructuring plan outlined by Vancouver’s QLT Inc. as it reported a third-quarter profit of $346,000 US, reversing last year’s $3.7-million loss. The amount of layoffs are not known. QLT employs 250 people.
British Columbia – 80% of the film industry is working on U.S. productions. B.C. could see major job losses if the writers strike lasts into the New Year.
“at some level, know what is right and what is wrong.”
Enlighten us, please, according to you, what is right or wrong? You will get wiser once you finish your school and get working a few years.
Meanwhile, I think the RE dogs sleep very well at night, snoring as loud as they want without the landlord complaining. Owning real estate is priceless, for everything, there is CMHC.
Have a good night.
QLT is brutal – they lay off a bunch of people right before Christmas every year, then use it as an excuse to cancel the Christmas party. (Friend-of-a-friend works there and everyone has jitters this time of year.)
QLT ha! That stock has done nothing for so long. Piss on it.
News Flash wrote:
“Think about that for a minute. Very conservatively a 3000 unit shortage per year with historic lows in rental vacancy rates and historically low inventory listed for sale already. It makes a housing crash virtually impossible.”
And Joe just Joe wrote:
“These are just a sample, but they are included in the inventory as under construction even though some won’t complete for 4 more years. And alot of those d/t condos again while on the inventory won’t be used to quash any demand from the pop. increase,they will be vacation/2nd homes. While I’m not arguing there might be an oversupply, I do beleive if there is, it’s pretty insignificant.”
Thank you gentlemen, I enjoyed and largely agree with your comments. Try not to be discouraged by the frustrated bears, your insights are welcomed – by some of us.
Renting sucks wrote:
“If it isn’t in migration absorbing the inventory there is only one other possibility. People are buying apartments and not living in them.”
Actually there is at least one more possibility, a number of my geezerish friends (and even some of their kids) have youngsters in their early twenties leaving home. Hence one house that held 4 people now holds 2 people and 2 other people (the kids) have either bought or are renting individual homes. There used to be 4 in one home now there are 4 in 3 homes.
I am also aware of a whole bunch of youngsters who can’t wait to leave home over the next few years. (As a friend of their parents I understand their sorry plight but that’s a whole other story)
Conclusion, the number of households can rise substantially even with zero population growth – which we don’t have.
This is a interesting read
http://globeinvestor.com/servlet/story/RTGAM.20071116.wrbrethour16/GIStory/
“People are buying apartments and not living in them.”
I know about 10 executives that own two or more condos. Sitting empty, ready to be sold at a moments notice.
Sitting empty, ready to be sold at a moments notice.
what would trigger a sale?
just what the market needs, more speculators!
CMHC spurs investors
http://www.canada.com/nationalpost/financialpost/story.html?id=52d91d1a-4c0c-4dda-88ff-0e4e1acb280e
ampa, newsflash, satv et al
did you absorb any of this?
The other is a disastrous export picture, with the forestry and energy sectors – mainstays of B.C.’s resource-fuelled economy – both facing major downturns……..B.C. can continue with the Ponzi-like expansion…..And it’s getting worse. In September, exports dropped to their lowest level in three years, down to $2.46-billion from a recent peak of close to $3.2-billion two years ago,……It is only the ability of the housing sector to defy that long-term trend that has pushed the province into boom territory. “If we didn’t have it right now, we’d be sucking wind.”…….
good article DMCK!
I’m halfway between urban Italy and east b***f**** Italy and housing prices here are 300k for condos and 500k for houses. That’s in Euros.
At some point it should sink in that Vancouver prices have little to do with Vancouver…
Per the article, I think Mr. Finlayson has identified a potential trigger for a reversal of fortune in our real estate market when he states “it wouldn’t take a crash, just a reversion to the long-term average rate of growth. It is only the ability of the housing sector to defy that long-term trend that has pushed the province into boom territory.” Quite apart from the threat to BC’s economy overall, I suggest there are profound implications to the condo market particularly were price increases to even begin to move towards the mean – i.e. mid to low single digit appreciation.
Even the industry’s biggest cheerleaders are projecting a move away from double digit appreciation, to around 8% in 2008, reminiscent of the NAR’s predictions at the end of 2006, which most of us now know was rabidly optimistic.
Mid to low single digit appreciation will render many a speculator’s investment of marginal to dubious value, particularly when prices are so completely disconnected from achievable rents. In that event, with no emotional attachment to their property, there would be a tendency amongst some to unload their units. At the same time, investment frenzy would cool. Both of these things would happen against a backdrop of ever- increasing supply. This scenario has been played out in more than one US market with predictable results.
We’ve now had it confirmed by the real estate industry itself that 50% or more of DT condos are owned by investors. Some will be sophisticated, long term investors with deep pockets. Many, however, will be relative amateurs looking to flip for short term gains. This could be a recipe for the perfect storm
“Conclusion, the number of households can rise substantially even with zero population growth – which we don’t have.”
Only if housing is becoming cheaper as percentage of total income, meaning that the same extended family can afford a greater number of houses. Otherwise, while it is true that the kids move out, that is offset by the unfortunate fact that the parents die in equal numbers. This has been going on for tens of thousands of years. You would have thought that even an Realtor would have been able to spot the pattern by now.
Geezer,
You need to put your trifocals back on. In all your effort to pump the market you so desperately depend on to provide for your retirement you missed the part where your argument was shot down.
Now, take out your dentures (so you can stop blathering about how great you were in your day) put on your glasses, or better yet get your home care aid to read this for you:
Mohican said:
“Some people here should do some basic fact checking. According to official CMHC statistics the Vancouver CMA has witnessed over 15,000 completed units per year since the beginning of 2005.
http://langley-financial-planning.blogspot.com/2007/10/record-number-of-homes-under.html”
Now, I know a lot of you Geezers are having trouble with the “new” math and all but that’s 15,000 units per year. NOT 3000 per year, get it? Good. And just so you know young people have always been moving out of mommy and daddy’s house to live on their own. It was probably so long ago you don’t remember, but there was a time when more children moved out of mommy and daddy’s than at any other time in our modern history (the boomers) but that’s over now. It won’t happen again in your or your grandchildren’s lifetime.
Mohican:
Where did you find the graph regarding Vancouver CMA Housing Starts, Completions and Under Construction that goes back to Dec ’78? I looked throughout the CMHC website and could find not find the graph. Your post implies that you got the graph from CMHC.
http://langley-financial-planning.blogspot.com/2007/10/record-number-of-homes-under.html
It’s friday…….numbers anyone?
domus:
It’s the weekend… go buy a condo…
just kidding!
Some homebuilders could end up bankrupt…
http://www.businessweek.com/ap/financialnews/D8STK7M80.htm
The housing downturn nationwide (US) is very serious…
the most significant drop since the Great Depression…
http://www.courier-journal.com/apps/pbcs.dll/article?AID=/20071116/BUSINESS/711160394
domus:
Your wish is my command 🙂
“Now, I know a lot of you Geezers are having trouble with the “new” math and all but that’s 15,000 units per year. NOT 3000 per year, get it?”
I got it. One question for you TD. What happened to real estate prices when those 15,000 unit completed? They went up 20%!
Are you saying it is different this time?
“Greater Vancouver average persons per household has been a stable 2.6 since 1991.”
That is for EXISTING housing. How many net new SFH have been added North of the Fraser River over the past few years? Not many when you factor some came out for high density and others were just replacing existing tear down SFHs.
Almost all the new housing North of the Fraser which adds to the housing stock are actually condos and town houses. 2.8 is is a distant memory for future completions.
TD: “there was a time when more children moved out of mommy and daddy’s than at any other time in our modern history (the boomers) but that’s over now.”
Yes that is true. The 20 to early 30 year old range of BC residents still living at home has doubled since the 80’s.
That is pent up demand. They can’t live at home forever and will either enter the rental market (rent increases) or the housing market. Either way very bullish in the long term for real estate.
when those 15,000 unit completed? They went up 20%!…………..which adds to the housing stock are actually condos and town houses. ………..
50% went to speculators which is “fake” demand and appreciation will not hold over the longer term.
They can’t live at home forever and will either enter the rental market (rent increases) or the housing market. Either way very bullish in the long term for real estate.
increased borrowing costs will ensure these little darlings will not leave the nest anytime soon….. rents increases will not happen due to the large numbers of spec held condos for rent (subsidized by newly minted landlords)
either way very bearish for long term RE.
Out in the distant suburbs (places where only the brave dare to tread) condo prices are low and easily within reach of first time buyers. it is just that every first timer wants to live in a sfh in the city. those days are over and will not return. so buy your condo in maple ridge or mission and hopefully you can work your way back in