Vancouver (un)Real Estate

Solipsist has created an interesting Vancouver Real Estate blog called Vancouver(un)RealEstate where he focuses on specific examples of properties that have been rotting on the market for more than a year. The fascinating thing about these specific examples is that they've been raising the price when the house doesn't sell.

Now I'm not educated in the mysteries of economics or supply and demand, but if you can't sell a house for your asking price in a year, does it really make sense to raise the price? Any theories (other than insanity) on how this happens?

Good work solipsist, I for one would like to see more of these example in the future if you've got 'em.

Vancouver Property Taxes increasing at double the rate of inflation

The city of vancouver is considering a property tax increase of up to 6.3 percent to cover spending over-runs according to this article in the Province newspaper. The increase would be necessary to cover the current budget including proposed Olympics funding and is above and beyond this years 4% increase.

"In operating-budget estimates going before council Tuesday, budget staffer Annette Klein says the city's funding shortfall amounts to a 4.9-per-cent tax increase. And $7.1 million in new spending could tack on another 1.4-per-cent to the property-tax bill.

"If we don't make any changes in the budget . . . this is approximately what it would be to run the city," said Klein. "On top of it, we have these funding requests."

In July, the NPA-dominated council voted to cap future property-tax hikes at four per cent. "Now, what we're going to do is keep working on this, and come back with some options on how to get to that four [per cent]," Klein said. Next year's inflation rate is pegged at two per cent.

Last year, council raised taxes four per cent after a gruelling budget process. It cut costs to social programs and community and arts groups. The city also eliminated the equivalent of 25 full-time jobs."

There is more coverage in the Vancouver Sun, where Peter Ladner suggests that even though a 6% tax increase is a 'goulish' prospect, citizens may tell council they are willing to accept a larger tax increase for more city services. That article also looks at some of the numbers:

"According to the "preliminary estimates" for the city's 2007 operating budget, the total revenues next year are expected to be $823 million. But, as it stands now, total expenditures are pegged at about $846 million in projected expenditures.

That's a "potential funding shortfall" of $23.4 million. If council uses a tax hike to fill that massive gap between revenues and expenditures, it would have to impose a 4.9 per cent increase.

Then there's $7.1 million in new funding requests. The most expensive request comes from the senior managers on the city's "corporate management team." Those managers propose that $5 million be allocated next year to a "legacy reserve fund" for the 2010 Winter Olympic and Paralympic Games.

According to the budget document, a total of $20 million would be set aside during the next four years to "provide for the involvement of communities, citizens and businesses; allow the city to meet sustainability objectives; and be host of visitors and residents participating in the Olympic experience."

Vancouver Realtor meet-up tonight.

It's a bit of a late notice, but if you're a Realtor or looking to buy or sell real estate in Vancouver you may be interested in the Vancouver Realtor Meetup happening at 6:00 pm tonight (Monday October 30th, 2006) at 'diner' downtown.

When:
Monday, October 30, 2006, 6:00 PM

Where:
Diner
1269 Hamilton Street, Vancouver (Yaletown; between Davie and Drake)
Vancouver , BC V6B 6A8
604-444-4855

Who should come? Are newcomers welcome?
—————————————————-
All Real Estate Professionals are welcome to come. Thinking of buying or selling a home? Well, you should come by as well and meet Vancouver’s leading Real Estate Professionals in a great relaxed environment.

Why should people come?
—————————————————-
To learn more and discuss all things Real Estate with Vancouver’s leading Real Estate Professionals.

They request that you RSVP so they know how many people to expect.

Realtors using the B-word in public.

No, not blogger, bakery or bunion. I'm talking about a very dirty B-word when it comes to the BC market: Bubble. I'm talking about Realtors (not including Rob Chipman) using the word bubble or referring to the possibility of a downside for the market here.. Whether their purpose is to deny the existence of a Vancouver housing bubble, entertain the possibility or sound warning bells (hey, it could happen). It's interesting to see how Realtors phrase any reference to a Vancouver real estate bubble and the idea that prices won't keep rising like they have:

Duncan Browns market update May 2006:

My best guess is that this intense pressure on prices will force buyers to back off a little which could take the heat out of the market for a few months, while it adjusts. This kind of minor correction could be exactly what the market needs in order to sustain itself over the long term and prevent those infamous "bubbles" from bursting!

Jacob Krause blog entry March 2006:

Buyers putting up 5 per cent of the price of a home and mortgaging 95 per cent are doing the same things as stock market junkies snapping up securities on margin. The only way they make money is if the asset rises in value, and quickly. So far the 5 per cent-down crowd have done very well, since their extreme leveraging has paid off in a rising market. But if housing prices move in the opposite direction, their tiny little bit of equity can evaporate in a week or two, leaving them with nothing but a sea of debt. Oh yeah, and a home they "own."

Tom Everitts anti bubble tirade September 2006:

I've been involved with this 'bubble' argument for so long, it is inevitable that the naysayers will be right one day. One day....but not now, nosiree...not a chance folks. Once again, during the lull that was August, everyone started throwing the 'bubble' word around again. 'Ohhh, it's coming this time'. 'Ohhhh, all those people shouldn't have bought'....'Ohhh, blah, blah, blah'.

So thats three random remarks made recently by Realtors in Vancouver.. Seen any other interesting remarks from people involved in the day-to-day business of selling homes here? If you're looking for a place to buy is this a topic that comes up for conversation between yourself and your realtor?

Sales tactics for a sagging market.

Looking to sell a house or condo in a slowing market, but having trouble getting potential buyers in to look at your place? You might try Value Range Marketing a real estate marketing technique in which agents list a price range instead of a fixed price for a property.

"There are still plenty of skeptics and some outright opponents to Value Range Marketing (VRM), and the marketing technique represents just a tiny share of all U.S. property listings. But Lund said VRM is attracting a lot of attention with the slowing housing market.

He rattled off a list of market areas from which real estate professionals have contacted him in the past month about using VRM, among them: Vancouver, Canada; Golden, Colo.; Flagstaff, Ariz.; Ogden, Utah; Minneapolis, Minn.; and Staten Island, N.Y."

I'm surprised to hear that this would work at all in a slowing market - I can imagine in a sellers market that giving a price range for a property may get more offers, but in a slowing market? Why would anyone offer anything over the lowest range listed?

"It's the bigger net theory of fishing. It opens up the marketplace to more people looking at the property," he said. Also, in a market that is subject to major swings in pricing, VRM can reduce the likelihood for price reductions, he said. "When market conditions are changing the way that they are, if you put a fixed price in it might only be valid for that day."

I'm still skeptical - if prices are dropping in a market I'm not sure how giving a price range would eliminate price reductions, but if you're feeling desperate give it a try!

Home sales and prices still dropping across the US

This article on MSNBC looks at the stats for home sales across the USA, with the subtitle "year-over-year median sales price drops by the largest amount on record."

"Housing, which had set sales records for both new and existing homes for five consecutive years, has been rapidly loosing altitude this year, as consumers were battered by rising mortgage rates, soaring energy prices and a slowing economy.

However, economists with the Realtors said they believed the housing decline could be hitting bottom.

“The worst is behind us as far as a market correction — this is likely the trough for sales,” said David Lereah, the Realtors’ chief economist. “When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market.”

However, analysts said that the weakness in housing could last for several more months with a real upturn in sales not occurring until next spring."

Condos with Mortgage helpers.

There's an article in the province about a great new idea! Renting out part of your condo to pay the bills.

"You know what I should call it? It's a mortgage-helper in the sky. It's a mortgage-helper, and it's a way of delivering affordable housing. It's just like the basement suite."

Hmm.

10 Vancouver west-side house price reductions

So whats happening on the west side sfh market? Here's ten random price drops in that market, similar to the condo price drops, these are mostly listings that are over 90 days old, price drops from $50,000 - $250,000. Go get your bargains now and keep those prices from slumping!

1125 W 43RD AV- Original: $2,280,000 | Asking: $2,080,000
"Home Theatre handpainted with florescent mural"

1092 W 42ND- Original: $1,980,000 | Asking: $1,880,000
"Walking distance to Osler and Eric Hamber School"

6318 GRANVILLE ST- Original: $1,450,000 | Asking: $1,200,000
"Great central location close to the airport, downtown & UBC."

2047 W 14TH AV- Original: $1,180,000 | Asking: $1,080,000
"Strata with 3 legal suites."

4599 W 5TH AV- Original: $2,150,000 | Asking: $1,850,000
"Here you have a hot tub, mini bar & a sound system. Come see!"

7529 OAK ST- Original: $998,000 | Asking: $899,000
"The house is livable and in good condition."

1025 W 43RD AV- Original: $1,798,000 | Asking: $1,688,000
"Priced to sell."

1593 W 64TH AV- Original: $749,900 | Asking: $699,900
"close to all amenities."

209 W 64TH AV- Original: $850,000 | Asking: $798,000
"Close to school, bus, shopping, airport!"

3760 W 17TH ST- Original: $839,000 | Asking: $775,000
" Small Cute Bungalow in need of your decorating ideas.

The great 'buy vs. rent' debate.

There's an article today on canada.com about the affordability gap between buying and renting in Canada.

"A report on real estate trends indicates that steadily rising home prices and the recent upward drift in mortgage rates is tilting the economics of housing back in favour of renting over home ownership."

The report released by the Scotiabank Group links the price difference between buying and renting to the slowing housing market across Canada.

"Among major urban areas, the buy-over-rent premium in 2005 ranged from just $31 per month in Winnipeg to $1,220 in Vancouver. Nevertheless, in most centres, the affordability gap is widening."

Relative price trends in recent years have consistently favoured renters over homeowners, the report said. Between 2000 and 2005, renters' shelter costs increased at an average annual rate of 1.3 per cent. Homeowners' costs, on the other hand, rose an average 2.7 per cent yearly. Rising home prices have been a major inflationary factor, but homeowners have also faced relatively larger increases in insurance premiums and maintenance costs."

Kitsilano vs. France

I thought this was a rather amazing comparison between two houses priced roughly the same. This was posted by 'exvancouverite' over at the Vancouver Housing Blog, and it gives an interesting comparison between house values in central vancouver compared to other parts of the world (France in this case).

Here's the kits house: $1,280,000

and here's the french house: 8,999 Euro ($1,279,891 CAD)

The french house is quite old though, it was built in the 18th century.

What is the right price to pay for a condo?

With the current real-estate market here most people seem to agree that property is getting too expensive in Vancouver, particularly for first-time buyers. Opinions differ on what that means for the future, most people who earn their living through real estate seem to be of the opinion that prices will stay the same for a while (plateau), increase very moderately for the next few years (about the same as inflation) or dip slightly. Others take a more negative view, pointing to Vancouvers history of manic depressive real-estate price swings, including a one year 40% drop in house prices in the early eighties.

With the current build-up of houses and condos for sale and months of dropping sales its starting to look like we've hit the market peak - so how many are waiting on the sidelines to buy? If prices start to drop who will jump in to make sure they don't drop too much?

If you're looking to buy in Vancouver, but are currently 'priced out' or have found better places to invest your hard-earned money, what would convince you to buy in Vancouver? What do you feel is a reasonable price to pay for a house or condo in Vancouver? What about specific areas: the downtown core, kerrisdale, grandview, collingwood, etc.

Apartment Therapy

Whether you own or rent in Vancouver, if you're living near the center of the city chances are you live in a small space. Apartment Therapy is a site that focuses on tips to make your space more liveable, from color to decor, layout and renovations. If you're looking for decorating tips or just some mindless consumerism to chase away the autumn blahs you might find something interesting on their site.

10 condo price reductions in Vancouver

Looking for a condo in Vancouver but waiting for prices to drop? Well here's some real estate price reductions for you in central Vancouver.. Is this the beginning of a slide in home values or a small dip before prices rocket back up again? I'll leave that for you to decide. Price drops here range from $10,000 to $40,000. All of these listings have been on the market for more than 90 days, and all links lead to the property listing on MLS.ca

6460 MAIN ST - Original price: $395,000 | Asking: $369,000
"Bonus of $1,000 for accepted offer by August 15"

888 PACIFIC ST - Original price: $449,000 | Asking: $419,900
"Wake up & enjoy building amenities.."

1099 E BROADWAY - Original price: $349,900 | Asking: $325,000
"Faces Broadway but quiet inside"

336 E 1ST - Original price: $339,00 | Asking: $319,000
"Easy parking rental in building."

950 CAMBIE ST - Original price: $488,000 | Asking: $478,800
"close to all amenities & other new buildings"

550 BEATTY ST - Original price: $429,000 | Asking: $415,000
"Upgraded kitchen cabinets for those who don't want the conventional"

1238 BURRARD - Original price: $429,000 | Asking: $405,000
"Market rent $1650/mo."

3788 W 10TH AV - Original price: $458,000 | Asking: $438,000
"Quick access to UBC and downtown."

189 NATIONAL AV - Original price: $480,000 | Asking: $440,000
"Bright open kitchen with granite countertops"

6026 TISDALL ST - Original price: $279,000 | Asking: $265,000
"35% down payment required. Adult building."

There are more listings, but I grow weary of typing. If there is interest I'll make this an ongoing feature.

Where housing prices will fall the most

No this isn't news for Vancouver, but it is about ways of predicting the future of the housing market. This MSNBC article talks about some of the different methods of analysing the housing market and how they all end up with pretty much the same view: the largest expected housing declines in the US market will be in some of the markets that were previously the hottest: Miami, San Diego, Las Vegas, Washington D.C. and Boston to name a few.

Mark Zandi, chief economist at Moody's Economy.com released a huge housing report last week, predicting house price drops next year by as much as 18.6 percent in Cape Coral Florida, a 17.2% decline in Reno Nevada and a 15.7% drop in Stockton California. To conduct his analysis, Zandi looked at the supply and demand of housing, changes in mortgage rates, demographic trends, the job market, and new housing.

The other angle on real estate price prediction comes from the Chicago Mercantile Exchange which began trading futures and options contracts on housing prices in 10 markets across the U.S. in May. Investors are predicting declines in all 10 cities listed on the CME over the next 12 months.

The article points to the way these two approaches to prediction yeild some similar results:

"In the cases where they cover the same ground, Zandi and the CME traders have some uncanny similarities. For instance, Zandi expects San Diego to drop 8.4% through the second quarter of 2008, while the futures market is expecting a drop of 8.2% by August, 2007. In Washington, Zandi expects prices to drop 12% through the second quarter of 2008, and the futures market expects a 7.7% decline by August, 2007."

It will be interesting to see how accurate any of these predictions turn out to be. On one hand you've got an economist who has done a lot of research, and has a single point of view. On the other hand you've got a group of people, potentially from all walks of life, putting up money betting against future house prices. Either way it looks like prices dropping across the USA and if that ends up happening this will be first decline in US national house prices since the Great Depression.

Vancouver: underbuilt, overbuilt or just right?

There were a few interesting articles in the sun this weekend about the Vancouver housing market: The first article action urged for affordable housing talks about the cost of renting in vancouver and the squeeze put on older low cost rental stock as it is converted into condos for sale. The second article is one from last friday and is titled developers face threat of oversupply.

Over the last four months sales have dropped and listing have risen prompting some to ask if we've reached a tipping point in the Vancouver real estate market. With thousands of new condo units to be finished in the next couple of years, sales levels dropping off and low levels of immigration to the Lower Mainland are we in danger of being over-supplied in the condo market?

If current rental rates are putting the squeeze on renters, but still can't cover the average mortgage cost on a equivelent unit, what happens to rent prices? What happens to sale prices?

Silver lining: Sounds like its about time for everyone in Vancouver to get a healthy pay raise! Go let your employer know!

Double your house-buying power!

I was walking down the street when I saw this a bus-stop ad for a vancity 'mixer' mortgage. It took me a moment to figure this one out.. basically you can share a mortgage with friends now.

Haven't you always wanted a place to call your own? I bet you have one or two friends that have always wanted a place of thier own as well.. Now you can BOTH have that place of your own together! This arrangement combines the pride of ownership with the convenience of a room-mate!

Think of the advantages!

This effectively doubles your buying power- Never have to buy food again, just mooch off your roomie! A little short on the electricity bill this month? No problem! You've got a room-mate to take up the slack. I can't imagine why everyone wouldn't go for this deal - what could possibly go wrong with this arrangement?

This deal combines the low cost of co-habitation renting with a chance to get exposed to the vancouver housing market.. Think there's still some upward momentum to this market? Now you can finally buy that half-a-condo you've always wanted and avoid being priced out of the market forever!

As long as you are always in complete agreement with your friend about all things mortgage-oriented then this is the ideal way to get into the market. What a great creative new way to increase affordability! Take a cash-advance out on your credit card for a down payment and you're on the road to riches!

You think WE have small expensive houses?

So you think property in Vancouver is small and expensive. You're looking at a 700 square foot condo and wondering how it can be worth $400,000? That's not expensive, THIS is an expensive house. At £80 billion per square metre, this house outprices anything anywhere near the lower mainland. Actually it outprices anything in Britain as well. But because its small enough to fit on the head of pin the whole thing will only cost you £20,000.

British artist Willard Wigan specialises in micro sculptures and built this house to fit on the top of a dressmaker's pin. At just 0.5mm across It may be a bit cramped and I don't believe it comes with insuite laundry, but it's so portable that the maxim 'location is everything' becomes infinately adaptable.

Hot Tip: invest in pinheads.

Vancouver raises False Creek lease rates 700%

Buying a condo on leased land in False Creek just became a whole lot more expensive. The city of Vancouver jacked up lease rates overnight with an average increase of SEVEN HUNDRED PERCENT! This story from 24hrs.

"Richard Cooper woke yesterday to find his payments had jumped from $102 monthly to $785.
"I got up this morning and there was a bulletin," Cooper told 24 hours.

Condo owner George Stratis was among the hardest hit. He wasn't aware of the increase until he was contacted by 24 hours yesterday. "You've got to be kidding me! That's absurd," Stratis said, when told his payments had jumped by $1,400 a month. "That's larger than a mortgage."

Stratis could now owe the city about $20,000 a year. That's on top of his regular property taxes."

One owner has seen their payments raise from $121.50 to $2,000 - An incredible SIXTEEN HUNDRED PERCENT increase! The city claims that these lease rates have been stuck at a low value for thirty years and that todays increase reflects the current value of the land. Leasehold value has been a contentious issue between residents of False Creek and the city of Vancouver for years. Some residents claim this former industrial land is contaminated and overvalued by as much as 40-50 per cent.

"They're simply boldly making the statement saying this land is worth top dollar and we should be getting as much rent for it as if it were clean," said Renger, a senior city planner in another jurisdiction. "That's not what market land value is about."

I have a feeling that even at the peak of a boom you're going to see listings for leased land property in False Creek plummet in value as owners, particularly retirees try to get out of their lease-hold condos.

Update: there's more info in the Georgia Straight - apparently these increases are on 118 units that decided not to prepay their lease in 2001. The only False Creek resident that was there during the October 3rd council vote in favour of increasing the lease rates was Merv Therriault:

“This has all been predictable,” Therriault told the Straight. “In 1998, we got a document through an FOI [request] that said a large increase in rent will present a political burden to council in 2006.”

Though the increase was forseen, apparently the size of the increase was not:

"COPE Coun. David Cadman told the Straight that no one could have predicted land values would rise so much, but it’s council’s job to uphold the lease agreements. Both Cadman and Therriault predict that when the leases expire in 2040, South False Creek will likely be sold and turned into a Yaletown-like development."

I'm unclear on the legal status of units built of leased land. If the city decides to sell the land in 2040 when the leases expire do they need to buy the buildings from their current owners, or can they just tear them down with no compensation since the lease for the land is up?

The end of a sellers market.

A more detailed article today in the Vancouver sun about listings, sales and prices in Septembers real estate market in Vancouver. This article starts with the statement "The sellers' market in Lower Mainland real estate is coming to a close."

Cameron Muir of the CMHC makes the comment that "The asking price of many home sellers is getting to the point at which fewer and fewer buyers can pay", but says that it this point (four months of sales decline) its not a signal of any kind of "significant market correction".

However, Tsur Somerville, director of the centre for urban land economics and real estate at the University of B.C.'s Sauder School of Business, said the trend in sales is a sign the Lower Mainland market "is clearly putting the brakes on. But it's too early to say how much."

Somerville said real estate markets pass through a balanced period when they are rising from depression to overheated, and will also hit balance, or "equilibrium" on their way back.

"Since [the market] has been very overheated, it's quite reasonable to go back to balance," Somerville added. "The question is, are we going to stay there or keep going?"

Somerville wonders whether the psychology of buyers is shifting and more of them are focusing on negatives rather than positives, such as cost overruns for the 2010 Olympics. Somerville said buyers might also be looking at the poorly performing U.S. housing market and worrying how that might affect B.C. Whether it does or not is immaterial, he added, "because psychology matters."

Anecdotaly, I'm finding that people around me no longer view real estate in the lower mainland as a 'sure-bet', In fact- I think I've heard expectations ranging from a dip to a crash from more than 10 different people in the last couple of weeks. Is this the end of the sellers market in Vancouver real estate? What will a transistion to a buyers market look like? Or will we find that sought for balance that saves us from a crash and enables more people to buy?

What are you hearing from people on the street?

September 2006: Listings up, sales down

September is the fourth month in a row that real estate listings have gone up while sales have gone down according to this brief story in the vancouver sun.

The number of sales in the greater vancouver area are down almost 25% from september one year ago, while the number of listings are up 11.4%. Fraser Valley saw similar numbers with a 23% drop in sales and a 19% increase in listings.

"Rick Valouche, Real Estate Board of Greater Vancouver president, said the figures show the region is "moving towards a balanced market."

Does anybody know what a balanced market is? What years would the real estate market have been considered 'balanced' in Vancouver? What effect does 'balance' have on prices?

Rob Chipmans real estate numbers

I've only recently discovered Rob Chipmans real estate investment blog - it's an interesting site which offers something that can be hard to find anywhere else: constantly updated current numbers of property listings and sales in the vancouver area. I don't think that any one days numbers are useful by themselves to give insight into whats happening in the vancouver market, but as a rolling snapshot its a great resource.

Robs commentary is also very informative - He maintains a balanced perspective on the market and understands that there are oppourtunities to be found in both up and down markets. If you're interested in the minutae of the vancouver real estate market and you like numbers its definately worth checking out his blog.

factoid: Spellchecker replaces 'chipman' with 'chipmunk'.
conspiracy theory: Rob Chipman is related to VHB.