Vancouver not goin' up!

[Chomsky]

Where's gollum these days? :P



Vancouver home sales plunge to 10-year low in June


Jeff Wasserman
The Real Estate Board of Greater Vancouver said there were 2,362 property sales in June, a 27.6% drop from a year earlier and a 17.2% decline from just May.

Garry Marr, Financial Post · Jul. 4, 2012 | Last Updated: Jul. 4, 2012 1:02 PM ET

Sales in Canada’s most expensive housing market continue to plummet with the Greater Vancouver area hitting a 10-year low in June for activity.

The Real Estate Board of Greater Vancouver said there were 2,362 property sales in June, a 27.6% drop from a year earlier and a 17.2% decline from just May.

Overall, there are 18,493 properties for sale in the area through the MLS, a 22% increase from a year ago and a 3.7% jump from May.

“Conditions have trended in favour of buyers in our marketplace in recent months,” said Eugen Klein, president of the board. “This means buyers are facing less competition and have more selection to choose from compared to earlier in the year.”

Prices appear to be stabilizing base on what the board calls its composite benchmark price index which is up 1.7% over the last year and 0.7% down from May.

Supply does appear to be trending down with new listing off 18.9% in June from May. Compared to a year ago new listings are down 3%.

“Today, our sales-to-active-listings ratio sits at 13%, which puts us in the lower end of a balanced market. This ratio has been declining in our market since March when it was 19%,” Mr. Klein said.

Detached home sales have been the hardest hit. Sales in that segment of the market dropped 37.4% in June from a year ago.

The benchmark price for detached properties increased 3.3% from June, 2011 to $961,600.

Sales of apartment properties dropped 19% in June from a year ago. The benchmark price of an apartment property increased 0.3% from June, 2011 to $376,200.

http://www.nationalpost.com/related/...637/story.html

[don]

Re: Vancouver not goin' up!

Do I have this right. China's economy is hitting some impressive roadblocks. Vancouver's housing bubble appears to be deflating. Canadian purchases of Florida condos is next to drop? (end of the Line - Floridians aren't buying anything . . .)

[littleshark]

Re: Vancouver not goin' up!

I will say that the Chinese are coming into Queens, NY in droves. They're buying everything. I just bought a single family rehab in Flushing for 380k and in a week before starting anything, I'm in contract for 445k. Totally unexpected.

I'm totally confused by this housing mkt.....

[ProdigyofZen]

Re: Vancouver not goin' up!

Foreigners buying anything and everything concrete. The condo market in Miami turned around at beginning of 2011 due to the influx of Brazilians buying 1 to 4 properties at a time because there were "so cheap"

I wonder when what is happening to Vancouver real estate which is obviously bouyed by Chinese buyers happens to Aussie RE?

[Adeptus]

Re: Vancouver not goin' up!

Victoria is a city right beside Vancouver, and the third highest priced in the country. Here's last night's newsreport which also touches upon Vancouver.

The "July 9th" rule changes, come from our finance minister whom once upon a time relaxed them to the point of 0% down 40 year term which is in great part responsible for the Canadian housing bubble that has in the past year or two reached peak affordability and is now deflating. He has now flip flopped on his policies to "make housing more affordable", and has been taking steps since 2008 to re-tighten the rules back to toward historic normalcy. On July 9th, the following will occur:

* Mortgage term across Canada reduces from a max of 30 years to 25
* Minimum down payment remains at 5% (still way too low IMO, should be closer to 20%)
* HELOCs (Home Equity Line of Credit...aka home ATM machine) will be reduced to limit re-borrowing from your home equity from 85% down to 80%.
* Mortgage insurance which is mandatory for mortgages with less than 20% down payment is no longer available to homes in excess of $1 Million dollars (mostly affects Vancouver and very high priced RE). This has the impact of banks being less likely to lend because they can't insure higher risk / high price mortgages.

Note: If we're seeing a correction now, BEFORE, the new rules go into place, then expect further price declines after the rules go into place. And keep in mind this is at all time low interest rates. Whenever interest rates start going up one day, it's going to be a total bloodbath!

Beyond this, the OSFI will also be imposing some additional rules of their own come Q3 or Q4 2012:

* Some loopholes that previously allowed banks to offer 5% cash back for new mortgages (to counter the 5% minimum required down payment) will be closed
* The loan to value should be re-calculated upon any refinancing and whenever the lender deems prudent
* The maximum loan to value on home equity lines of credit (HELOCs) is cut to 65% from 80%
* HELOCs will continue to as revolving lines of credit with no specific amortization period. However, OSFI says lenders must now expect borrowers to have the ability to fully repay HELOCs over time.


If there is one thing I've learned here at Itulip in macro market projection is - Government policy trumps the markets! Before 2008, the government was relaxing rules, giving out all kinds of tax credits for home ownership and incentives for flipping properties ("eco-friendly home improvements"), but since then, probably after watching the US bubble collapse has been slowly reversing all those rules it relaxed, and I don't think they are quite done yet.

1 sentence summary: Canadian real estate is a SELL. In particular in the top 3 most expensive cities: Vancouver, Toronto, Victoria.

[Adeptus]

Re: Vancouver not goin' up!

You know the jig is up when even realtors are exiting the market....

Tepid sales numbers spur call to cash out of housing market
http://business.financialpost.com/20...ousing-market/

The last person you might expect to be talking up a real estate crash is your realtor.
But that’s exactly what Keith Roy of MacDonald Realty is doing. Mr. Roy is not only telling people it’s time to cash out of Vancouver housing, he‘s doing it. He sold his townhouse four weeks ago.

Far too often the real estate industry makes excuses for slow sales periods, declining prices and difficult negotiations

This week, as Vancouver posted another set of dismal results for sales, the realtor blogged about why he made the decision to exit the housing market.
“The first thing they teach you at real estate school is it’s always a good time to buy, it’s always a good time to sell,” says Mr. Roy, who must have skipped that lesson because he thinks it’s time to get out of the market. “I pride myself on giving advice and this is one of the more bold moves I have made in my career

Far too often the real estate industry, of which I am obviously a part, makes excuses for slow sales periods, declining prices and difficult negotiations,” he said. “These excuses are self serving.”

Having said all this, I still see no interest rate hikes anywhere in sight.

[GRG55]

Re: Vancouver not goin' up!

Buyer's market? More like a buyer's strike.

Volume plunges. Seller's refuse to discount, firm in their fantasy that "it's just a brief lull, before prices start going up again". Finally the distressed sellers have to cut their prices. And then the bubble finally bursts in earnest as sellers do the classic move and follow the market down.

What's ironic is that what started on the west coast in California, and migrated to Nevada, Arizona, Florida, before crossing the ocean to Ireland and Spain, on to Dubai, now into SE Asia (watch Sydney, Perth and Shanghai) and will finish up back on the west coast in Vancouver. The last hurrah of the Great Global Real Estate Bubble is about to come full circle...

[thriftyandboringinohio]

Re: Vancouver not goin' up!

Buyer's market? More like a buyer's strike.

Volume plunges. Seller's refuse to discount, firm in their fantasy that "it's just a brief lull, before prices start going up again". Finally the distressed sellers have to cut their prices. And then the bubble finally bursts in earnest as sellers do the classic move and follow the market down.

What's ironic is that what started on the west coast in California, and migrated to Nevada, Arizona, Florida, before crossing the ocean to Ireland and Spain, on to Dubai, now into SE Asia (watch Sydney, Perth and Shanghai) and will finish up back on the west coast in Vancouver. The last hurrah of the Great Global Real Estate Bubble is about to come full circle...

Yes Virginia...It's a Bubble

[ProdigyofZen]

Re: Vancouver not goin' up!

GRG, you have any date on the Sydney or Perth markets? Have they collapsed yet? I am asking before I go look for myself

[GRG55]

Re: Vancouver not goin' up!

GRG, you have any date on the Sydney or Perth markets? Have they collapsed yet? I am asking before I go look for myself

I don't follow either extremely closely, but one of my companies is headquartered in Australia and I have a number of Aussie employees, so I hear a lot from them. Sydney, being the financial center for Oz, behaves like most financial centers and goes up or down depending on the fortunes of the banking industry, so I think it's seen some declines recently. Perth, on the other hand, is resource sector driven and the fall in commodity prices and cooling of China has thrown a damper on that overheated market. I don't think prices have started to fall in earnest yet, but property sale volumes in Perth have definitely taken a big hit this year. And that is often a precursor to a price decline in such a market.

Hope that helps,
Robin

[GRG55]

Re: Vancouver not goin' up!

Do I have this right. China's economy is hitting some impressive roadblocks. Vancouver's housing bubble appears to be deflating. Canadian purchases of Florida condos is next to drop? (end of the Line - Floridians aren't buying anything . . .)

Canadians that buy Florida real estate generally come from the eastern side of the country, not Vancouver or "the west". Florida used to be particularly popular with Montrealers, but not sure if that has been the case in recent years.

People from the western part of Canada are now buying recreational property in and around Phoenix, AZ (so we can golf in winter) as the houses are dirt cheap compared to up here. Other places include parts of SoCal (Coachella Valley/Palm Springs is popular with the golf and horsey crowd from the area of Canada where I built my infamous "bunker"), and I have even heard a few people here talking about buying in Vegas because the golfing is even cheaper than Arizona. Apparently the property agent/realtor millionaires from Vancouver (the gin and Jaguar set) still prefer the more expensive coastal region of California.

Our local western Canadian discount air carrier, Westjet (sort of a Southwest Airlines clone), puts on direct flights to all these destinations during the winter months, so it's fairly cheap and easy to get back and forth (assuming Homeland Security likes your face).

By the way, the cheap recreational real estate in the USA, combined with the now much stronger Loonie (Canadian $) has hammered the recreational realty market in western Canada. First signs of a real property downturn in Alberta and B.C. came in that market two summers ago, not in the much watched urban markets of Vancouver, Victoria and Calgary.

[GRG55]

Re: Vancouver not goin' up!

I've posted this before, but here's one of the better (and entertaining) sites that I've come across to track Vancouver and Canadian real estate. One look at this chart and the ultimate outcome in Vancouver should be easy to predict for any iTulip member :-)

http://www.chpc.biz/canada_chart.html

[ProdigyofZen]

Re: Vancouver not goin' up!

Thanks GRG. I tried persuading one of our investors from putting money in the Aussie RE market but alas it didnt work.

This was within the last 6 months. He is going to get crushed IMO.

What kind of company if I may ask?

[ProdigyofZen]

Re: Vancouver not goin' up!

GRG, I will say that the perception that Southwest Airlines is cheap has got to be one of the biggest airline propaganda pieces in history.

Southwest Airlines are not cheap nor are they nice to travel on and I live in the city where they base their hub.

I have yet to find one SW flight that is cheaper than American. Perhaps if I was flying to Austin on the weekend it would be better but then I would just drive.

[GRG55]

Re: Vancouver not goin' up!

GRG, I will say that the perception that Southwest Airlines is cheap has got to be one of the biggest airline propaganda pieces in history.

Southwest Airlines are not cheap nor are they nice to travel on and I live in the city where they base their hub.

I have yet to find one SW flight that is cheaper than American. Perhaps if I was flying to Austin on the weekend it would be better but then I would just drive.

Hmmm. I used to fly Southwest from Houston to/from west Texas back in the late 1980s, and back then it was cheap and cheerful...all the young cabin crew seemed to be enjoying their jobs and that made the shorthaul flights a bit fun. I remember one of the regular male flight attendants back then used to do a hilarious impersonation of an uptight English butler during his pre-flight safety announcements. Westjet is about a decade old and will probably go through the same transition as it, and its staff, mature. Right now, however, they are young, enthusiastic and that seems infectious.