Is your home an investment?

I've seen it argued that while it may be a poor time to buy investment property in Vancouver, it's never a bad time to buy a home you live in because 'your primary residence is not an investment'. While its true that your home will never be as liquid as stocks or a high interest savings account, it seems disingenuous to claim that your primary home is not an investment, particularly when the next reason to buy now is often that 'prices always go up in the long run'.

If the hope for future price increases isn't an investment than what is it?

According to this article the average house price in Vancouver for November was $519,294, down about $29,000 from the previous month. Now I don't know about you, but anything I buy for more than a half million dollars is going to be a fairly major purchase in the grand scheme of things, and $29,000 represents some nice renovations, a chance to buy more space or a few really nice vacations.

Maybe I should be unconcerned about the historical ups and downs of the real estate market since my home is not an investment, but if its not an investment then why is it so much more expensive to buy then it is to rent the same property?

Welcome back VHB!

It looks like VHB has returned from his hectic vacation schedule of sipping margaritas by the pool and resumed normal postings on the Vancouver Housing Blog.

There's a good roundup of top posts from 2006 there now, covering myth busting, quotes & market analysis. Welcome back VHB!

A 'Plague' of Condos

There's an interesting interview in the TYEE with English architect Alain de Botton and his 'first impression' of architecture in Vancouver.

"Lots has gone wrong with these condominiums. There's just too many of them. I guess it's just a matter of people pulling the levers. The condominium structure is never going to be all that inspiring. The best of them are done with touches that are out of the ordinary. And I haven't found any evidence of that. I found that they are standard-issue stuff. And I think it is ruining the city. I think as an outsider it is clearly, clearly wrong. It's a real pity."

I wonder how much demand there is for stand-out design in Vancouver. We do tend to have a 'sameness' to our condo tower architecture, and there is something to his point that tourists tend to gravitate to the unique rather than the 'same'.

10 condo price drops Dec 2006

Here's an updated list of condo price drops in Vancouver. The previous price drop list was for October 2006, all but one of those listings has been sold or expired and was removed from the market. This list is being updated on December 27th 2006.

Criteria for being included on the list: There must be a greater than $10,000 dollar reduction in asking price, extra points for listings over 90 days. If there is more than one unit with a price reduction above $10k in the same building I'll list only the one that has been on the market for the longest. For instance: I see a minimum of 25 units listed with price drops ranging from $10,000 up to $70,000 located at 1082 Seymour st, but I'm only listing the one that has been for sale the longest.

There is only one listing from the original list that hasn't sold or expired from active listing and thats the first one on this updated list.

1099 E BROADWAY - Original price: $349,900 | Asking: $308,000
"Faces Broadway but quiet inside"

4868 Fraser St. - Original price: $269,900 | Asking: $249,000
"Close to everything."

2238 Kingsway - Original price: $305,000 | Asking: $289,000
"Hurry! All meas approx, buyer to verify"

1082 Seymour St. - Original price: $322,800 | Asking: $299,900
"Brand new 1 bedroom unit"

1328 W 73rd - Original price: $293,000 | Asking: $278,000
"unit on ground level with small patio"

1420 E 7th Ave - Original price: $368,000 | Asking: $310,000
"Short walk to popular commercial drive & skytrain"

5380 Oben St. - Original price: $349,900 | Asking: $319,888
"Oversize 1 bdrm & den, 722 sq ft."

1155 Homer St. - Original price: $344,900 | Asking: $324,900
"Feels larger than 644 sq ft."

711 E 6th- Original price: $349,000 | Asking: $319,800
"Recently renovated with new paint & laminate"

2388 Kingsway- Original price: $259,900 | Asking: $215,000
"Recently renovated with laminate floors"

Depending on who you talk to this could be your last chance to get a good deal, or it could be the beginning of further price drops in Vancouver real estate. I'll leave the predictions up to you.

Whistler re-booming?

The Vancouver sun has an article about how the recent snow is set to create the right conditions for a turn-around in the tourism industry for local mountains. It may have meant snow, heavy rain and wind for Vancouver, but the wintery weather has been great news for the mountains.

"We had a few years of decline and flat business. But things are turning around because of the amazing snow," said Tourism Whistler spokesman Michelle Comeau Thompson.

Whistler hotel bookings for New Year's Eve are up 32 per cent over last year and up 16 per cent for the entire holiday period, she said. "It's great to see the strong turnaround and definitely the early snow has been a huge factor," said Comeau Thompson.

A record-breaking 684 cm of snow has fallen on Whistler and Blackcomb Mountains since Nov. 1. Hotel revenue in Whistler began declining in 2001 -- largely due to the strength of the Canadian dollar -- and continued to fall for the next three years.

But hotel bookings began to rise last winter and this past summer, said Comeau Thompson. Bookings rose five per cent last ski season and are projected to rise by three per cent this year. "It looks like Whistler is going back in the right direction," said Comeau Thompson. "No snow in Europe and eastern North America works in our favour. Skiers go to where the snow is."

Surviving the RE bust.

It seems like just a year ago the US media was filled with positive stories about the housing market boom. It seemed like all you had to do was buy a house or a condo in a hot US market and you'd be on the road to riches. It's looking so much gloomier now.

MSNBC has their top business stories of 2006, with the housing slump coming in at #2 (just after Wall Street surges).

CNN Money has an investors guide for 2007 with 6 strategies to survive the housing bust where they predict that 2007 will be bad, but 2008 will be worse.

"Last year the question was whether the housing boom would slow down. Now its how bad will it get."

1) Sellers: lower your expectations.
"As painful as it might be to realize that your house isn't worth what you thought, asking too much in a slow market is a mistake. "Trying to get last year's price is wishful thinking," says Hessam Nadji, managing director with real estate advisory firm Marcus & Millichap. "Often you're unable to sell your house, which compounds itself, and you keep chasing the market down."

2) Buyers: Drive a hard bargain.
"North of Sacramento, Pulte Homes recently agreed to part with a 2,700-square-foot four-bedroom home for almost 18 percent off the $497,000 list price, plus an additional $8,500 in credits. "I've never seen anything like it," says Lance Pagel, the realtor on the deal. "I recently point-blank asked one developer's agent what incentives she was offering, and she point-blank answered $80,000."

3) Consider renting.
"Economist John Talbott, author of Sell Now!, applauds the notion of renting in a market like this - even if it isn't part of the classic American dream of owning your own home. "Maybe you don't live to the same standards, but don't worry about it," he says. "If we're talking about the chance to bank $1 million, that's real money."

4) Step away from the exotic mortgage.
"ARMs have traditionally been the province of wealthy and sophisticated homebuyers. During the boom, however, banks went after anyone with a wallet. As a result, a lot of homeowners out there are living under a roof they soon won't be able to afford."

5) shop for a rate drop.
"In 2003 the mortgage industry originated $3.8 trillion worth of loans, according to the Mortgage Bankers Association. Next year it will hand out an estimated $2.1 trillion. "That's nearly a 50 percent drop in volume, which means there's tremendous pressure on company earnings," says Doug Duncan, chief economist with the MBA. "They're going to negotiate to get your business."

6) Keep an eye on your equity.
"The good news, of course, is that reckless spending has kept the American economy chugging. But it has also saddled many American families with some major debt, which is particularly dangerous in a declining real estate market."

But I'm SUPPOSED to be RICH!

I have a question for you. We live in a time of superb economic growth for the western provinces, Vancouver is a beautiful place to live and we've got two weeks of winter games coming in just 4 years. Interest rates are very low by historical standards and the CMHC will insure mortgages with absolutely no down payment.

So given all those positives WHY IS MY HOUSE WORTH $29,000 LESS THAN IT WAS A COUPLE OF MONTHS AGO?!?

I mean seriously, prices should be going up shouldn't they? We've got nothing but positive economics here. I'm taking some solace in the fact that its the winter and the market usually slows down around now, but a $29,000 average drop in house prices!?

This has got me worrying about the liquidity of my house-riches. What if I can no longer put up some fresh paint and new laminate and increase value by $50k? What if something were to happen to our economic paradise? What then?! I mean if prices can go down when everything is going great what happens if everything stops going great. What if rates rise, more people move out of the province, or the job market starts to decline?

You people have turned me into a worrier, just BUY SOMETHING ALREADY!

Bears to the rescue?

Browse through blogs and forums with a local Vancouver focus right now and you'll likely find a lot of skepticism about the current state of real estate prices in Vancouver. How many blogs are there out there now looking at the downside of our market? VHB, (Un)realestate, BC Housing, heck even investment realtor Rob Chipman seems to exhibit some bearish ideas*. Even over at the RealEstateTalks BC forum you don't see much 'vancouver is a great investment' sentiment these days.

There seems to be no shortage of people that think rent/price fundamentals are out of whack, or that the massive supply of new condos completing over the next couple of years will dramatically shift the supply/demand equation. People argue that as Vancouver gets more expensive people will move away to where they can get more for their buck reducing demand, and that if we (god forbid) see any real negative economic impact from the US housing market crash then we could be in for some big losses on real estate investments.

Through it all the common thread is people discussing the future of our real estate market, and that means one thing to me: they are interested in our real estate. And if they are interested that means they would like to buy it. They are our 'reserve tank' of demand.

So will the bears awake from hibernation in the spring and absorb some of the new housing stock? Will they buy some of those stale listings? Are there enough hungry bears out there to counteract all of the factors that hungry bears hold up as proof that our market is unsustainable?

*I'm sure the postings of 'anonymous' and 'boombust' will keep him from ever fully joining the bear army.

affordability?

The affordability index for a detached bungalow in Canada's largest cities:

• Vancouver 70.1%
• Toronto 43.8%
• Calgary 40.9%
• Edmonton 33.4%
• Montreal 36%
• Ottawa 30.8 %

"The higher the city is in an index, the more costly it is to afford a home. For example, a reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up half of a typical household's monthly pre-tax income."

report in the Globe & Mail

With predictions of a bumpy economy next year should we expect affordability go up or down?

a comment on comments

I've had a request to turn off anonymous comments to fix the signal to noise ratio on this site, but for now I'm opting not to. I'm interested in both sides of the housing debate and I'd like to keep it easy to comment here.

The drawback is that we get some odd, possibly insulting and not well thought out comments. We see this from both sides of the debate, but I'm hoping for a sensible post about why our market is 'worth it' right now and not just incredibly overpriced. As long as the main argument in favor of buying right now is to 'grow some balls' and 'move out of your mothers basement' I'll be steering clear of anything near 'market value' in the lower mainland. What you do is up to you.

I will keep an eye on the jerry springerfication factor and if the consensus among those of you that post reasonable well researched points is that easy comment posting just isn't worth it, I'll reconsider my position.

Soft landings for all!

TD has just put out their forecast for a canadian housing market soft-landing that will be softer than the soft landing currently not being enjoyed in the USA.

The gloom and doom from down south:

An ever-deepening housing correction is scarring the economic landscape. A sharp backslide in residential investment shaved 1 percentage point off real GDP growth in the third quarter, which marked the largest drag from this sector in 16 years. TD Economics expects to see a repeat performance in the final quarter of this year given that housing starts plummeted 13 percent in October. Moreover American shoppers are already contributing about half a percentage point less to GDP growth. And, estimates show that it takes at least one year for the full impact of a change in real estate wealth to feed through to consumption behaviour.

Bah! That's merely semantics. If we only look at the US market 1 month at a time it IS the soft landing that everyone was predicting there a year ago. Its only when you look at long stretches of time (several months in a row) that the US housing crash looks bad.

The Canadian market is doing pretty good so far though:

Any drag from cooling housing construction will be mild in comparison to the U.S. This is not to say that the Canadian economy is free of housing risks. For instance, residents in Vancouver dedicate an inordinate amount of pre-tax income (+50%) to housing costs, while Alberta's double-digit price growth won't be sustained. However, a boom-bust cycle can be avoided if price growth cools in the near-term, which seems quite possible given ongoing supportive fundamentals.

Some hopeful signs for a potential soft landing have already emerged. New listings are up substantially in Calgary (51% y/y), Edmonton (27% y/y) and Vancouver (19 y/y), which should help alleviate price pressures in time. If a hard landing were to befall the western provinces, it would likely be due to the ripple effect of an unexpected collapse in the U.S. economy, rather than a sharp reversal of domestic fundamentals.

So as TD sees it, the only real risk to the canadian market is the US economy. And hows that going so far again?

South of the border, however, the U.S. economy will fall short of its potential pace (3.3 percent) by a full percentage point, resulting in a greater degree of economic slack. Moreover the American slowdown has only reached its halfway mark.

I'm sure many Americans would be dissapointed to hear that they've only reached the halfway mark in their economic slowdown. That's a strange thing to state as fact. Is the TD bank perhaps controlling the US market? Or else they've hired some new soothsayers.

Either way, you may find it useful to know that both 'defuse anthropomorphic assets' and 'forecasts hide upon metaphors' are anagrams for 'the prophesies of nostradamus'

Montreal pays it off!

Break out the champagne and poutine! Montreal has just paid off the olympic stadium built for the 1976 games, previously nicknamed 'the big owe'. Thirty years is a nice round number don't you think?

The original estimated cost for this beauty was $250 million, but the final cost came in a teensy bit higher at $1.5 billion. Now that they own it, whats the plan?

The Canadian Olympic Committee would not comment on the final payment. But CTV Montreal's Tania Krywiak said "they did tell us they would continue to use the Olympic Stadium as a venue to host sporting events as well as commercial events."

As far as the City of Montreal is concerned, "they tell us they are just not ready, they are not willing and don't want to take over the Olympic stadium."

Meanwhile here on the westcoast we're gearing up for our own little party in just a few years, and despite the negativity of an earlier report from the BC auditor general, Vanoc CEO John Furlong says we're on schedule and under budget!

Furlong said that despite the conflicting numbers, VANOC is still on track to finish on time. His assertion the project is so far under budget comes partly from the fact VANOC has yet to rely on any contingency money..

VANOC said it will try to finalize a detailed business plan next month, but it won't be release the plan to the public until February or March 2007.

repairs: 1188 Richards st.

Asun sent in this shot of the residential tower at 1188 Richards currently under the leaky condo raincoat. Apparently this building was constructed with rainscreen technology.

The most recent info I can find on these apartments is in this post on pricetags from september:

on the matter of whether the designers and contractors of 1188 Richards have paid for the repairs, the answer is… not yet. Legal action is being initiated, which involves restoring many of the entities involved to the provincial corporate registry as they were evidently dissolved to try to avoid liability. I wouldn’t anticipate a settlement until the $8 million job is pretty much complete.

So its not just woodframe and stucco buildings that have water problems, concrete towers leak as well, and they're expensive to fix.

send your leaky tarp covered condo pictures for the repair photo album to: vancouvercondo.info@gmail.com

Yaletown Park ready to flip.

Apparently some people just don't get the concept of a Vacation. VHB has stopped posting on the Vancouver Housing Blog, but we still see him lurking around the comment sections of boards around town. Clearly someone forgot to take his internet connection away.

I got a note from VHB just yesterday pointing out that Yaletown Park is now showing up on MLS. He's also seeing a 25 unit jump in rental listings downtown, not including craigslist. I just checked craigslist and I count at least 15 units in Yaletown Park up for rent right now, most offering 'free rent until Jan. 1st'.

Prices drops: Vancouver leads the way

News on the Canadian housing market is getting more bearish across the board: Reuters leads with the headline Canada's Housing Sector Stalling, while over on the CBC it's Average resale home price drops $3,500 in November. Thats the average drop last month in Canada, and though we're still #1 for unaffordability in Vancouver, we're also leading the way with the largest average price drop. November saw our number of sales decline by 21% while the average house price dropped by almost $29,000.

Thanks to 'anonymous' for the links.

A mighty wind

Whether you rent or own, last night was a good one to have shelter. Heavy rain and wind up to 157 km per hour (!) battered this little seaside town, stress-testing our construction and leaving thousands without power (i'm guessing you're not reading this if you're one of those). There's trees down everywhere, the skytrain was down in surrey and a belltower blew off a school house downtown. Looks like the worst of it is over, I just hope this doesn't mean more turbidity.

This weekends forecast: slushy snow.

New BC Housing blog

Uncertain Buyer has started up a BC housing blog at http://bchousingblog.blogspot.com/ and is off to a great start. This blog is written from the perspective of someone who has just cashed out of the Real Estate market and will be renting for a while as prices are just starting to drop.

He/she covers topics ranging from the difference between renting and buying, mixed messages from realtors, and general BC housing news. If you're interested in BC real estate this site is a great read and well worth checking out.

repairs: 1025 1027 1029 w. 7th ave.

This little unit on west 7th in Fairview is looking sassy in blue with a bit of an 'over the shoulder' effect working for it. The flat roof says 'I don't give a damn about the weather' while the stucco says 'let the sun shine!'. This is a stylish and daring look, but I can't imagine that the fully blue view from inside would be all that great.

send your leaky tarp covered condo pictures for the repair photo album to: vancouvercondo.info@gmail.com

Repairs: 1234 W. 7th Ave

Here's a shot of a dapper white plastic balcony cover at 1234 West Seventh Avenue in Fairview. Looks like this one is getting some attention to its decks on the front. The clean white with wooden framing is a nice change from the dark green mesh or blue tarps you usually see on condo repairs. If we had a sunny day this would also provide shade to these suites.

send your leaky tarp covered condo pictures for the repair photo album to: vancouvercondo.info@gmail.com

How do you afford your rock n' roll lifestyle?

Apparently the Koret in gastown sucks. This according to Matthew Good, whose blog has a great rant about Vancouver Real Estate:

This building is just a gong show, I can’t believe people in this town pay these sorts of prices for new places like this. My flat is so cheaply built you’d think a 12 year old did it. And it’s not just here, it’s a problem all over the city. No one can afford to buy because most simply buy apartments to flip in an attempt to make money, driving prices up and out of the range of young families that aren’t pulling in half a million dollars a year. One of these days Vancouver’s real estate market is going to crash, and when it does I’m going to build a giant float shaped like a cock in an ass and throw a parade.

Now if you'll excuse me, I'm just going out to buy some Matthew Good CDs so he can afford to buy here. I've always maintained that if we can't house our rock stars in style then there's something seriously wrong with this town.

(apologies for mixing cake with matthew good)

Canadian industry sagging.

Paulb just sent in a link to this article in today's Globe and Mail with the bad news that we're producing a lot less than we could be.

Canadian industries cut back their use of production capacity to the lowest point in three years in the third quarter as demand for autos diminished and the residential construction market cooled.

Industries operated at 84.2 per cent of their capacity, marking the third straight quarterly decline and the first time since the third quarter of 2003 that the rate's fallen below 85 per cent, Statistics Canada said Wednesday.

The report comes after a spate of gloomy news on the economic front. Canadian exports to the U.S. are falling and labour productivity has declined for the past two quarters. Bank of Canada Governor David Dodge said Monday that North American growth through to the first quarter will be weaker than he'd thought.

“Not a great picture on Canada in the third quarter,” said Stewart Hall, market strategist at HSBC Securities (Canada) in a note.

The Canadian dollar is dropping against the US dollar, which in turn is looking not-so-hot against the Euro. This could potentially help us with favorable export conditions, but:

“Gains in exports were not enough to offset the slowdown in demand for automotive products and the cooling residential construction market,” the report said.

So if you care about Canada and our economy it's time to get out there and get shopping. It is the gift-giving season after all, so grab your credit cards and get buying. If you're trying to figure out what to give me, I could use a new car.

Fed keeps interest rates flat

In their attempts to balance a housing market slump and a dropping US dollar, Bernanke and friends at the Fed have opted for status quo, keeping rates unchanged for the fourth straight time.

The 'rock and a hard place' they are stuck between is this: Do they lower interest rates to try to re-inflate the real estate market and slumping car sales, or do they raise interest rates to ward off inflation fears and prop up a dollar that has taken a tumble lately.

For now they are going with the 'wait and see' approach.

Out with the porn, in with the condos.

One of the oldest theaters in Vancouver is likely being torn down to make way for a new condo project. The Venus theater on Main st. is the oldest theatre left in Chinatown. It was built in 1912 as The Imperial and originally showed live theatre shows . For the last 25 years it has been operating as a porn theater, but its about to make way for a new erection: a nine story condo tower is in the planning stages.

David Porte says his company looked at any heritage value the theatre had, but concluded it had been so badly renovated over the years it didn't have much architectural merit left.

"We looked at it, investigated it inside and out," he said. "Certainly inside it's fairly grungy, and architecturally there's nothing left inside. Whatever there may have been is long gone, and the exterior, the pink stucco, sort of speaks for itself."

With the current flacid state of our market this could be just the thing to perk up some interest among young buyers eager to spread their wallets wide. Could this be just the tip of a much bigger market penetration leaving lenders and marketers turgid with profits?

I just hope the buyers don't get f***ed.

Market not so sturdy after all?

Marco wrote in with a link to this story in the Globe and Mail. Some of the most expensive cities in Canada saw price drops in new homes for October 2006: This happened in Toronto, Victoria & even oil-rich Calgary. Meanwhile in the US there is a debate over how bad their housing slump is going to get. Realtors think the worse is over, but some academics and economists disagree, with one even saying the housing glut we’ve seen is comparable to the tech boom of the late ‘90s.

So what the hell is going on here? How can we be seeing price drops with a vibrant economy and all that valuable sludge still left under the sand? Could it be that Real Estate in many places around the world is over-valued, propped up by many years of cheap credit as a 'safe' investment? And just how much pressure are we going to have to let out of this bubble to keep it from popping?

Obviously we're going to need more buyers, and it appears like the answer might be closer than you think: Vancouvers booming homeless population needs shelter and we've got thousands of new condos being finished downtown over the next couple of years. While some people have the housing issue under control others clearly do not.

There are two ways we could approach this thing:
1) Tough Love: Outlaw homelessness, convert new empty condo units to prison cells and incarcerate the lot of them.
2) New Customers: Work with lenders to create mortgage products aimed at the homeless population, 'zero down' and 'stated income' could be helpful here.

Option 1 could be VERY expensive tax-wise, so it may not be the smartest move. The only potential flaw with option 2 is that it will take a lot of bottles and cans to get the funds together to cover legal fees and mortgage insurance, and some banks may be hesitant to lend to this market.

If nothing else works I suppose they could just go out and get a real job.

Real estate market sturdy but cooling.

There's an article in this weekends sun about the Canadian housing market slowdown titled Housing market still sturdy, but cooling. Sort of like a casserole, perhaps soon it will be cool enough to eat without getting burned?

The housing market in Canada is holding up better than in the U.S., but it is cooling and will cool further heading into the new year, analysts said Friday in the wake of a stronger-than-expected housing construction report.

Almost all of those new starts are apartments and condos in the prairies and atlantic canada. In BC housing starts declined by 7.9% compared to last year. J.P. Morgan economist Ted Carmichael is quoted in the story with reasons that the Canadian housing market shouldn't be in as much trouble as the US market. He mentions that "mortgage rates at large Canadian banks have moderated recently, reflecting the decision by the Bank of Canada to keep its trend-setting rate steady" and:

...the pace of Canadian housing construction has slowed much less than in the U.S., he added, noting that construction in November here was the same at it was a year earlier, while south of the border construction has plunged more than 27 per cent over that time.

Another report, released earlier this week, suggests that the Canadian market will not suffer the same fate as the U.S. market, with the latest barometer of building intentions _ building permits _ still on the rise, even though the increase was also limited to multiple-unit housing.

I wonder what the gap between a building permit or start date and a buildings completion or move-in date? I would assume it must average around a couple of years for the whole process. Assuming I'm not way off, how clearly can anyone predict market conditions in two years?

Tiny rooftop condos

This is an interesting design and apparently they are available to buy now. The loftcube is a semi-portable living space designed to be air dropped onto empy rooftops and make use of that wasted empty sunny space. I wonder what the city would say if you set one of these up on the roof of your apartment building?

There are two models, one is 420 sq feet and the other is 588 sq feet priced at $USD $136k and $180k respectively.

We're richer 'cause we owe more.

According to this canwest article "Home is where the debt is". Canadians are wealthier than ever, but carrying a record load of debt. In 2005 average canadian net worth increased by 1.4 times what it was in 1999, while our debt load increased by 1.5 times in the same period.

So we've got more money, but we also pay more bills.

If the amount we owe keeps growing at its current rate compared to our incomes, we'll have to invent new types of math to keep our economy going.

Home is where the debt is with three-quarters of this debt taking the form of mortgages. The median value of mortgages in 2005 was up 17.5 per cent from 1999, when it was $76,600.

The second largest contributor to the increase in debt load was lines of credit, which more than doubled during the six-year period to roughly $68 billion. About 3.3 million families in Canada reported having a line of credit debt in 2005 and the median amount has jumped from $5,800 in 1999 to $9,000 in 2005.

Cars and student loans were also big, and increasing, sources of debt, Statistics Canada said. Credit card debt also placed a burden on an estimated 11 million families.

I sure wish they broke those studies down into a smaller focus. I would be very curious to see what Vancouver's numbers look like compared to other parts of Canada.

UPDATE: I just found this article in realtytimes from last April that talks about Vancouvers deteriorating affordability problem and mentions this little statistic:

..B.C.'s provincial savings rate hit an all-time low of -7.9 per cent in 2004 "and likely retreated further since then."

Thats the average for the entire Province, not just Vancouver, and its the worst savings rate /debt load in the country.

November 2006: Vancouver Price Drops

Well its the slow time of year and a bit of a wierd month as well with muddy water and snowstorms, but the Real Estate Board of Vancouver has release stats for November and we're seeing prices coming down in a lot of sectors. A few of the biggest price drops were:

Single Family Homes: Vancouver West (-4.1%) and West Van (-7.7%)
Apartments: Maple Ridge (-9.3%), Vancouver West (-7.5%)

So maybe now is the right time to buy that House in West Van or Apartment in Maple Ridge.

VHB created the handy Price RE/set graphic* shown above to visually track where we are historically on the price rollercoaster. Looks like November saw prices drop back a few months to about what they where in July 2006.

Some people think that this is the start of a softening market with prices dropping steadily for a while like they are in many places in the US. If this happens to be true, and it follows past trends for Vancouver House Prices it could be a while before it turns around. Previous drops from peak to trough have lasted anywhere from a short term of 1 year to several years of steadily dropping prices.

Personally I don't believe that would be reasonable. I have been told that this time it is different, and assured that there will be a steady supply of people with ever increasing buying power to keep making our prices rise higher and higher until they reach my prior prediction of $3,000,000 for a 600 square foot condo in 2010.

UPDATE: There's an article in todays Sun that take a suprisingly negative look at our market. under the headline Could big price drops be approaching? they look at the history of Vancouvers ups and downs and include some very negative possibilities:

By Gartman's estimate, in the current cycle a Vancouver detached house rose from $340,000 at the last trough in the winter of 1998-99, reaching nearly $800,000 this year.

"If the peak was made earlier this year, and if history is any guide to us," and Vancouver prices decline by the average of the last three cycles, Gartman said it could take 25 to 30 months to go down the trough, and 65 to 70 months to see a new peak.

Based on past experience, Gartman added that the drop could be in the order of 28 per cent, taking that $800,000 house down to $575,000.

*Graphic stolen and re-used without permission. I have assembled a crack team of legal ninjas to defend against any legal action VHB attempts to pursue.

L.A. California = Vancouver BC?

There's an interest post over at Realestatetalks.com remarking on the fact that Property prices in Vancouver appear to be on par with L.A. even though rents and incomes here are lower. The poster gives a few examples and is interested to hear what investors think about this situation.

$250,000 buys a bachelor condo suite in downtown Vancouver, and it buys a bachelor suit in West Hollywood.

$300-$350,000 buys a 1 bedroom condo suite in West Hollywood, Wilshire, Santa Monica, which is what you will pay for the same condo in downtown Vancouver.

$2 million buys an ocean front Malibu half-duplex beach property (entry level price). In Vancouver, the same shared ocean front half duplex on Pt. Grey Road cannot be had for $2 million. Recent sales I've seen there are in the $3-4 million range, which makes Pt. Grey more expensive than Malibu Beach comparables. And in Malibu you get Brad Pitt and Jenefir Anniston as your neighbours!

Entry level single family home (old timer) in Larchmont-Adjacent neighbourhood of Hollywood costs $800,000. The same cost of an entry level home on the West side of Vancouver/Dunbar area.

All comparables that I could see suggest LA prime real estate matches very closely with Vancouver prices across the board. Some of the higher end properties in LA are less than what you'd pay in Vancouver.

Hopefully they will get some informed responses to this, I was quite suprised to hear that Vancouver prices are close to L.A. prices. Is that true?

Running late on loan payments

Subprime loans are mortgages to 'risky' buyers that have poor credit histories. Because of the extra risk involved in these loans, lenders charge a premium for them making them one of the most profitable types of loans. Some of these mortgages go for rates that are up to 4% higher than standard mortgages.

In the US late payments on these types of loans have surged recently:

Subprime mortgage originations climbed to $625 billion in 2005 from $120 billion in 2001, the WSJ said, citing Inside Mortgage Finance, a trade publication.

Based on current performance, 2006 is on track to be one of the worst ever for subprime loans, according to UBS AG, it said. It cited the bank saying that roughly 80,000 subprime borrowers who took out mortgages packaged into securities this year are behind on their payments.

So between 2001 & 2005 the subprime mortgage increased by more than 500%? A $625 billion market's got to be hard to resist, but I wonder what effect this news will have on lending standards?

Rick Mercer Report on Vancouver

This is a report on Vancouver's 'most liveable city' status as awarded by the UK's Economist Intelligence Unit in 2002. That year we tied with Melbourne as the best place for a British Expat to live. Although its several years old, this clip is as funny as ever and certainly hasn't lost its relevance:

Will snowbirds chase the bears away?

I've got to admit that the recent sluggish housing market in Vancouver has started to get me a bit worried.. Its not really that bad yet, but we've definately lost the excitement of last year, where buyers would overbid asking prices by $150k with no subjects and leaky condos on the ground floor facing major streets would sell at the first open house.

With the winter blahs this market has been experiencing since the end of last summer, even yours truly (a faithful real estate cheerleader) has started to wonder: is there something to the bears argument? Do 'fundamentals' matter? Is 'affordability' really that big of a deal? I mean, here we are with a robust economy, super low interest rates and an almost world-class city and yet condo's just aren't selling like they used to.

And then it occurred to me: We've got a bunch of baby-boomers just a few years off from retirement, and who likes condo's better than retirees? We just need a whole bunch of them to move here to boost our prices again. I think if we can reach out to old folks from across Canada and the world and convince them that Vancouver is the right spot to retire we can keep those prices chugging uphill.

Economically it just makes sense: An undesirable four bedroom home in a quiet neighborhood in most parts of Canada could be traded nearly straight across for a convenient 420 square foot condo in a vibrant and active downtown east-side Vancouver neighborhood with easy access to 'medication' and 'massage' services.

All we've got to do is convince them that Florida and Arizona are totally lame, and this is where they want to spend their time:

Just think of the therapeutic effect of all that cold damp air on tired joints! Spread the word: Vancouver is a retirement wonderland!

Hard landing in the US?

A reader sent in a link to this article in the business and investing section of todays Globe & Mail . It looks like the housing slump in the US is starting to have an effect on the manufacturing sector, which saw a downturn for the first time in three years:

Industries such as wood, paper, furniture and appliances all were flat or slipped last month, according to the Institute for Supply Management, based in Tempe, Ariz.

In a report that points to a worrisome trend for the economy and for jobs, ISM said its manufacturing index registered 49.5 in November, behind October's reading of 51.2. The last time the sector contracted was in April 2003. A reading below 50 indicates contraction.

The construction sector is still not looking so good either:

The index was one of two troublesome economic reports Friday. The Commerce Department said construction activity in October plummeted by the largest amount since 2001, and home building fell for the seventh month in a row.

Both reports raised concerns that the economy may be in for a hard landing. Stock prices fell in early trading Friday on Wall Street.

Before anyone panics I would like to emphasize that this is happening in the US only and has nothing to do with Vancouver. We have a protective housing bubble that keeps us from being dragged down economically by our largest trading partner.

Also we have the skytrain, which is like a magical train in the sky that will whisk us far away from any worldly problems to our gold-plated condominiums where we will bathe in tubs of warm milk and receive foot massages from beautiful unemployed americans.