Vancouver Condo Info

Canada’s housing market cooling off

The Pope — Tue, 16 Mar 2010 04:42:43 +0000

The CREA says a cool-down in the national housing market is happening in advance of new mortgage rules set to come into effect April 19th. Here in BC there was a heavy drop in activity, partly offset by a Toronto market that’s still hopping. It will be interesting to see if this is a trend, or a blip caused by the winter games.

Meanwhile, the number of new listings — an indication that homeowners are looking to capitalize on demand — climbed 2.4 per cent, marking the fifth straight month that housing supply grew. The amount of housing inventory in February stood at 5.2 months, well below where it was a year ago, at 8.8 months, but on par with 2008 levels.

“Headline price increases are drawing new supply to the market, and so that’s taking some steam out of the market,” said Gregory Klump, CREA’s chief economist.

The average price of all homes sold in February through the MLS system was $335,655, CREA said, up a robust 18.2 per cent from a year ago.

However, CREA said the gain was smaller than in the past four months — down from the January increase of 19.6 per cent — and future increases are expected to become “further subdued” in the months ahead.

“Time will tell how normal the market becomes, but I think there are pretty clear signs that some self-correcting mechanisms are starting to take over and lead to a calmer market, compared to what we saw in late 2009,” said Douglas Porter, deputy chief economist at BMO Capital Markets.

Joycer points out that RBC has also released their affordability report, you can read the PDF here. They make some comments specifically about the BC market:

While still below their recent cyclical peaks, all RBC measures stand well above long-term averages. Such poor affordability levels represent an element of risk that could weigh heavily on markets when interest rates start rising.

Feed enhanced by Better Feed from Ozh

West end residents protest densification

The Pope — Mon, 15 Mar 2010 15:31:29 +0000

Plans to build a 20 story tower in the west end met some resistance yesterday, as local residents held a protest against the proposal.

The rezoning would allow developers to build a 20-storey tower on the site and take advantage of the city’s Short Term Incentives for Rental Housing (STIR) program, which includes incentives such as faster permitting process, parking requirement reductions and increased density of the rental apartments.

“It’s completely out of sync with what works in the neighbourhood,” said Godfrey Tait, a spokesman for the concerned residents. “You could maybe have some mixed-market, family-oriented housing, maybe something that wouldn’t exceed six levels, but certainly not another tower.”

The full article is in the Vancouver Sun.

Feed enhanced by Better Feed from Ozh

Friday Free-for-all!

The Pope — Fri, 12 Mar 2010 09:24:13 +0000

It’s the end of another week and that means it’s time for our news round up and economic open topic discussion. Here are a few links to kick off the weekend:

-BCREA: Feb sales strong despite Olympic fervor (pdf)
-Sales Inventory growing by a few hundred units a day
-Vancouver MOI still low
-Housing price reversion to trend
-Balanced budget plan about $10 billion short
-National Bank: Canada is in decent shape
-Canadian house prices on steady rise
-New mortgage provider on the block
-Buy yourself a newspaper
-

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

Feed enhanced by Better Feed from Ozh

Why a home is a bad investment

The Pope — Thu, 11 Mar 2010 06:59:26 +0000

Those heretics over at Canadian Business magazine have a cover article this month called Why Buying a House is a Bad Investment.

The euphoria around home ownership crowds out some of the unpleasant truths about real estate: mainly, that long-term returns are often modest at best. Some studies have found that stock indexes actually outperform housing. More worrying is that real estate prices can and do fall — and they can take a long time to recover. Canada has not been immune to severe price corrections in the past, and we could be on the verge of another one now. With interest rates set to rise and curb affordability, and with economists speculating about a bubble, staking one’s entire financial future on a home is not necessarily a wise bet. In fact, a house just might be one of the most overrated investments around.

..and it goes on and on.

“There’s a unique confluence of factors that has driven house valuations up this sharply,” says Derek Holt, vice-president of economics at Scotia Capital. “They’re all temporary, and that’s a house price bubble that could be pricked as we go off into the next year.” The rate of growth in home prices for the past 10 years has in fact been out of line with prior decades, pointing to lofty valuations today, according to Holt. Prominent Canadians such as money manager Stephen Jarislowsky and former Bank of Canada governor David Dodge have also sounded the alarm recently on today’s unusually rich home prices.

You can read the full article at the Canadian Business website, but these people clearly don’t know what they’re talking about. After all, real estate prices never go down, everybody knows that.

Feed enhanced by Better Feed from Ozh

Test drive the forum

The Pope — Wed, 10 Mar 2010 04:27:38 +0000

Discussion seems to be getting heated around here, and people seem to want to talk about a number of different topics, so I’ve rebuilt the forums. If you have a VCI user account, you’ll be able to post topics and take part in the discussion there. There’s a link to the forum at the top of the blog pages, and recent forum posts will show up in the upper right hand corner of the blog.

As always feedback is welcome.

Feed enhanced by Better Feed from Ozh

Deal of the week!

The Pope — Tue, 09 Mar 2010 05:27:36 +0000

This fixer-upper is conveniently located near the center of Vancouver BC host city of the 2010 Olympic and Paralympic games. Just minutes from downtown, it can be yours for only $579,900. You may be slightly put off by the pictures, but remember, many investors won’t be able to recognize a diamond in the rough, so you might not have to bid too much over asking price to put this baby in your portfolio of investment properties.

First time buyers, Investors, Builders. Corner lot with lane. Nice residential street. Close to everything. Central location. Handy man special. Needs TLC. Mainly Land Value. 21st Avenue and Prince Albert St. 10 mins to Downtown Vancover.

Thanks to crash and tincup for finding this gem!

Feed enhanced by Better Feed from Ozh

CMHC mortgages based on posted 5 year rate

The Pope — Mon, 08 Mar 2010 04:53:29 +0000

When Flaherty announced new rules for CMHC insured mortgages in Canada a few weeks ago, there were a lot of questions that remained unanswered. One of the big ones was about the new rule requiring approval based on the 5 year interest rate. The question was which 5 year rate would that be, the posted rate or the discount rate?

Canadian Mortgage Trends is reporting that it will be the 5 year posted rate, which makes sense since the discounted rate is infinitely variable, whereas the posted rate is consistent across all lenders. The posted rate can be found on the Bank of Canada’s website. That rate is posted weekly on Mondays, and as of Sunday night it is 5.39%. The current rule, set to expire April 19th allows lenders to approve insured mortgages based on a discounted 3 year rate, which is currently 3.29%.

This means that as of April 19th, buyers who don’t have at least 20% down and require a CMHC insured mortgage will be approved based on a rate that is more than 2% higher than it currently is to ensure that they can weather rising interest rates.

Just to illustrate what that 2.1% represents in real money, I used the ING mortgage calculator and plugged in some round numbers:

Household income: $100,000
down payment $30,000
Monthly loan credit card payments: Zero
Term: 25 years Property taxes: $2000 Condo fees: Zero

3 year discount rate: 3.29% – you can borrow $491,551

5 year posted rate: 5.39% – you can borrow $397,349

As always, corrections to my math or reasoning is welcome in the comments section below!

Feed enhanced by Better Feed from Ozh

Friday FREE FOR ALL!

The Pope — Fri, 05 Mar 2010 09:14:19 +0000

Hey now, it’s the end of another week! Lets do our regular end of the week news round up and economic open topic discussion post. Here are a few stories I’ve noticed lately:

-Lightly used waterfront condos: $1100 /sq foot
-Vancouver now almost as world-class as Toronto!
-Canadians spent at the winter games
-Canadians drank at the winter games
-Suprise drop in Canadian building permits
-Monster houses at risk in Vancouver earthquake
-Feds aim for $17.6 billion savings in five years
-Flahertys ‘tough budget’ may be a year away
-I’m sure glad the recession ended
-The big US ARM reset
-

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

Feed enhanced by Better Feed from Ozh

Hot markets in BC

The Pope — Thu, 04 Mar 2010 09:11:18 +0000

The latest issue of Business BC is all about the property market rebound and they focus on 5 ‘hot pockets‘ to watch for and invest in for 2010.

What goes down in B.C. real estate must, apparently, come up. And quickly: by the end of 2009, the average home price in the province had risen to $463,000, back to where it was in 2007. Interest rates are, at least for now, at record lows, and increasing consumer confidence has spurred the market’s recovery beyond expectations. Barring the usual unforeseeable mayhem, things are looking good.

Just for fun, let’s see if we can predict which of those five markets will do best by January 2011. Below are the BC markets they focus on, vote for the one you think will have the best percentage return by the end of 2010. In the event of a housing market crash, best performance would be the market that lost the least amount of value.

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll.

Feed enhanced by Better Feed from Ozh

Feb 2010 Benchmark House Price: $800,796

The Pope — Wed, 03 Mar 2010 10:05:14 +0000

The REBGV benchmark house price reached $800,796 in February. The rise in listings puts us into a ‘balanced’ market condition according to the Real Estate board. Will we be able to maintain this ‘balance’? I suppose it depends on how much our market is driven by CMHC support and how new rules and higher interest rates affect those margins. Here’s some interesting math courtesy of reader bestplaceonmeth:

Based on $58,000 median household income in Vancouver using ING’s “how much can I borrow?” for 35 years (yes, 35 years – it’s what all the cool kids are doing nowadays). Also assuming no other debts (ha ha) and a conservative $250 a month for property taxes or condo fees or both.

Prior to April 19, qualifying at 1.95% variable rate:

YOU QUALIFY FOR A MORTGAGE OF $415,270 WITH 5% DOWN!

After April 19, now having to qualify at 3.89% fixed rate:

YOU QUALIFY FOR A MORTGAGE OF $313,880 WITH 5% DOWN!

Holy foreclosure, Batman! That’s a 25% haircut off current prices!

Now let’s fast forward to the end of 2010, 4 successive 1/2 point interest rate hikes and you now need to qualify at a rate of 5.89%.

YOU QUALIFY FOR A MORTGAGE OF $244,287 WITH 5% DOWN!

That’s 41% less than 10 months ago, and we’re just getting started.

See, I told you math was fun.

Now, who wants to go out and get into a bidding war?

UPDATE: It’s been pointed out that CMHC currently requires the 3 year rate to be used, so the difference is not as extreme as the above example. DoDo1975 clarifies with this math:

A quick calculation shows that a family with absolutely zero debt making $90k a year could borrow $533,721.32 over 35 years today. All else being equal, after April that number will be $456,311.49 or approximately 14.5% less. This 14.5% is constant across all income levels.

If interest rates on the 5 year prevailing rate also go up 1.5% in the future, this translates into a 28% decrease in the amount someone can borrow compared to today.

Feed enhanced by Better Feed from Ozh

raising interest rates: how fast?

The Pope — Tue, 02 Mar 2010 15:59:30 +0000

The BOC is holding interest rates at a record low .25% for now, but hinting that may change soon. BC is doing some belt tightening now that the games are over, but in the rest of Canada the economy is growing surprisingly fast. So when do rates start going back up, and how fast should they be raised to reign in inflation?

The C.D. Howe institute is recommending that they be raised sharply for every rate announcement for the year after their conditional July commitment. This would mean the overnight rate would move from its current .25% to 2.0% at the end of 2011.

Feed enhanced by Better Feed from Ozh

Owe the Podium

The Pope — Mon, 01 Mar 2010 11:56:38 +0000

Well that was fun. The games have wrapped up, but we’re not completely done yet – the Paralympics are up next, so still a chance to partake in some Olympic fun before 2012. Hopefully everyone out there had a good couple of weeks, whether you stayed in town or skipped out to some holiday destination.

Despite a bad start to the games, we had some unseasonably beautiful weather and wrapped up with a nice amount of Gold for Canada. Overall a positive experience with an upbeat ending.

So now what? We’ll find out what bills are due soon, but what will be the long term economic result of hosting the games? Are there people out there that have just discovered Vancouver and now must move here and buy at any price?

A recent UBC study found that host cities see no measurable boom or bust in real estate values due to the Olympics, but maybe it’s different here. Do you think the next few years will see an economic boom or bust in BC?

Feed enhanced by Better Feed from Ozh

Friday Free-for-all!

The Pope — Fri, 26 Feb 2010 11:27:21 +0000

Hello! It’s the end o’ the week and winter games wrap-up. Let’s do our regular news round up and economic news discussion post, here are a few stories to kick off the chat:

-NYT: a $1 billion olympic hangover?
-ReMAX: few listings mean tight spring market
-Google search for ‘housing bubble’ in Canada and US
-a cooler take on a hot housing market
-Canadian inflation rates 1915 – 2010
-Automatic tipping makes some visitors complain
-Reports show US recovery losing momentum

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

Feed enhanced by Better Feed from Ozh

Follow up on contacting your MP

The Pope — Thu, 25 Feb 2010 10:21:57 +0000

At the end of last year we had a post about contacting your Member of Parliament to find out their stance on Canadian Housing Economics and the role of the CMHC. Did any readers out there contact their MP and get a response back? If you did get a response, were there any suprises or did they see keywords ‘housing’ and ‘economy’ and send you back an unrelated form letter?

Are there any MPs out there that are actually looking at the Canadian Mortgage and Housing Corporation and the role they play in pumping up housing markets?

If anyone feels like contacting their MP, here’s a contact list for Vancouver area Members of Parliament.

Feed enhanced by Better Feed from Ozh

The Mortgage Bubble

The Pope — Wed, 24 Feb 2010 10:06:25 +0000

Don sent in the link to this commentary on the mortgage market in the US and [the economy in] Canada. Dave Rosenberg points out that there are some strange things happening in the spread between treasury bond yields and mortgage rates.

Once again, this Houdini recovery has involved a situation where mortgage rates have plunged and yet Treasury bond yields have been rising — 30-year fixed rate mortgages have fallen to 4.93% and are sitting are record-tight spreads over long Treasury bonds (see Chart 7). Historically, the average spread is 150bps and this differential is now 20bps. This is remarkable and our concern is that investors who may be exposed to mortgages are at serious risk because there is a considerable chance that these rates will be moving higher over the intermediate term — notwithstanding continued support from Uncle Sam’s pocketbook.

Investors must be reminded time and again that mortgages are callable, Treasuries are not; and we are now in a situation where net of fees, which average 70bps, anyone buying mortgage paper today is receiving a rate that is less than what the borrower is paying, How nutty is that?

He also comments specifically on the health of the Canadian housing economy:

All of a sudden, the Canadian economic data are coming a tad below expectations, including the 0.4% MoM advance in December retail sales, which just came up short from recouping the 0.5% decline the month before (revised from down 0.3%). Excluding autos, sales are running at a 2.1 % annual rate over the past three months, which can only be described as tepid in view of all the rampant monetary and fiscal stimulus percolating through the system.

Not only that, but the supply response in the Canadian housing market is beginning to, at the margin, alter the inventory balance. The number of new listings surged 4.0% in January and has risen sharply now in three of the past four months. After outpacing new listings over 90% of the time between January and October of 2009, sales has now lagged in each of the past two months and this has taken the sales-to-listing ratio down to 0.614x from 0.634x in December and the nearby October high of 0.683x (and now stands at its lowest level in eight months). Pricing is sure to follow suit. Better buying opportunities lie ahead for the fence-sitters, in our view.

David Rosenberg is the Chief Economist and Strategist at wealth management firm Gluskin Sheff. Read the rest at Mish’s Global Economic Analysis.

Feed enhanced by Better Feed from Ozh

BOC Deputy Governor: No Canadian Bubble.

The Pope — Tue, 23 Feb 2010 09:12:23 +0000

Paul Jenkins, the senior Deputy Governor at the Bank of Canada has joined Flaherty and Carney in declaring that there is no Canadian housing bubble. So many officials seem so desperate to make comments about this subject right now, but why are they so desperate to reassure us? Of course there is no Canadian housing bubble, just look at house prices in Windsor. What I’d really like to hear them say is that there is no housing bubble in Vancouver, then we could all relax.

The federal government said last week it will bring in new mortgage rules to cool the housing sector and prevent home buyers, tempted by record low interest rates, from overextending themselves.

At the same time, it said there was no housing bubble, a point echoed on Monday by Jenkins, who was speaking at a panel discussion at the Government of Canada and Financial Times Global Business Leaders Day in Vancouver, where the housing market is especially hot.

“At the moment, we are certainly seeing a certain amount of the recovery in the Canadian economy coming from the housing sector” he said.

“I would certainly not say we are looking at a housing bubble,” he added.

Article in the Vancouver Sun.

Feed enhanced by Better Feed from Ozh

Construction jobs on the rise

The Pope — Mon, 22 Feb 2010 16:48:42 +0000

From the Vancouver Sun:

Although January construction numbers are up to 198,600 jobs, it is below the 202,100 jobs from a year ago, and a far cry from the 220,800 jobs during the boom.

The good news is that new construction is on the rise in the province, with the seasonally adjusted annual rate of housing starts reaching 186,300 units in January, a 5.8-per-cent increase from December.

That’s much better than the 149,081 housing units to begin 2009, but the construction starts have progressed steadily until now, according to the Canada Mortgage and Housing Corp. It’s even better than the figure that economists from financial institutions had been predicting.

The pessimistic CREA throws some cold water on this positive news by predicting that the HST and higher interest rates will push the real estate market down in 2011.

Feed enhanced by Better Feed from Ozh

Friday Free-for-all!

The Pope — Fri, 19 Feb 2010 11:22:36 +0000

Alright! The end of the week means it’s time to do our weekly economic news roundup and open topic discussion. Here are a few recent stories I’ve noticed:

-New mortgage rules to create short term boom?
-Danielle Park on new mortgage rules (video)
-Record household debt not a crisis
-Your bubble is my debt burden
-Canada not immune to downward housing pressure
-Inflation rate jumps to 1.9% in January
-US Jobless claims unexpectedly jump
-Interest rates still headed higher
-

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have a golden weekend!

Feed enhanced by Better Feed from Ozh

Want to buy a ski resort?

The Pope — Thu, 18 Feb 2010 16:19:51 +0000

Anybody looking for a little local ski hill to call their own? Your timing could be just right.

WHISTLER, British Columbia – At the height of its Olympic glory, Whistler — the ski resort hosting glamorous Alpine events at the Winter Games — may be headed for the auction block.

It’s owned by a New York hedge fund that is reportedly behind on a $524 million loan payment, the result of flagging resort business and plummeting property values.

Creditors want their money back, and they’re playing hardball — calling an auction to put Whistler and other property up for sale Friday, the same day Bode Miller is scheduled to compete for his second Olympic medal in the men’s super-G.

Full article at MSNBC.

Feed enhanced by Better Feed from Ozh

Hayek vs. Keynes: Boom & Bust

The Pope — Thu, 18 Feb 2010 02:23:28 +0000

Feed enhanced by Better Feed from Ozh

Athlete complaints at Olympic Village?

The Pope — Wed, 17 Feb 2010 10:57:35 +0000

Several people have posted a link to this article on the German news site Bild.com: Some athletes and coaches have complained about accomodations at the Vancouver Olympic Village, which is pertinent for this site since those units are set to be sold by the city after the games are over.

One of the complaints is that the walls of the rooms are so thin that the athletes are struggling to fall asleep – not a good time to have snorers nearby…

Ski jumping trainer Werner Schuster compared the Olympic Village with a boy scout camp. The 41-year-old said: “The living standard is very poor. Five, six people have to share a bathroom and the walls are as thin as curtains.”

I wonder if the complaints regard temporary walls or actual walls between units?

The size the accommodation has also been criticised. A particularly sore point is that there isn’t enough space for athletes to dry their clothes.

Don’t they know this is Vancouver? We pioneered the art of small living in North America. They should just be glad we didn’t stick them six to a room in a 270 square foot micro condo in the Downtown eastside.

A German functionary said: “The Village is good for summer. But now in winter with this weather it’s a problem.

“The German team have especially bought heaters to dry their things which are always getting wet due to the relentless sleet.”

It’s all about location, location, location. That’s why we located the Athletes village walking distance from Canadian Tire, where they can buy heaters to dry their clothes.

UPDATE: Nope. We didn’t locate it near a Canadian Tire. Many people pointed out that this is about the Whistler Olympic Village, NOT the Vancouver Olympic Village.

Feed enhanced by Better Feed from Ozh

New mortgage rules April 19th

The Pope — Tue, 16 Feb 2010 15:22:58 +0000

The Federal Government has just announced their anticipated changes to insured mortgage rules to prevent a Canadian housing bubble (which they see no evidence of yet).

The key changes are:

- borrowers must qualify for the 5 year rate even if they opt for a shorter term.

- on refinancing, the maximum amount of equity withdrawal is reduced from 95% to 90%.

- non owner occupied residences bought for speculation now require a 20% down payment.

More info in this Reuters article. There’s still time to buy (or sell) under the old rules, but you better hurry!

Feed enhanced by Better Feed from Ozh

David Dodge: RE market need cooling

The Pope — Mon, 15 Feb 2010 18:19:00 +0000

Domus pointed out this article in the Globe and Mail. Former Bank of Canada governor David Dodge is adding his voice to the opinion that the federal government should act now to cool the Canadian housing market.

“These prices look pretty high by any conventional measure,” he said in an interview, citing measures such as the ratio of house prices to incomes and rents to house prices. “So, the likelihood of house prices falling a bit over the next few years is probably somewhat greater than that they would rise over the next few years.”

“Whether there’s a bubble or not you can only see after the fact,” he added. But it wouldn’t take a bubble bursting to cause consumers pain. If your house price goes down 10 per cent and you’ve borrowed 95 per cent of its value, all of a sudden you’d be in hot water, Mr. Dodge noted.

His comments come as Ottawa weighs action to take a bit of steam out of the housing market. While the government does not believe there is a bubble, it has been evaluating tools it could use to help ensure that more consumers don’t take on mortgages they won’t be able to afford when interest rates rise or if house prices fall.

The worst scenario would be if both of those things occur at once. Consumers would find themselves with higher monthly mortgage payments and less valuable homes.

While it’s virtually assured that interest rates will rise at some point, Mr. Dodge is of the view that it’s also realistic to assume house prices will fall. He notes that mortgage rates are likely to rise, which will put a damper on the market. Secondly, “we’re probably into a fairly long period of relatively slow income growth,” he said, and that too will curtail some housing activity.

Read the rest of Dodges comment in the full article here.

Feed enhanced by Better Feed from Ozh

Movie Moment: Dr. HouseDebt

The Pope — Mon, 15 Feb 2010 10:45:32 +0000

See the full-size version suitable for framing or using as desktop wallpaper here.

The Big Six Canadian banks (in unison): We’re concerned easy-money tax payer insured mortgages are encouraging people to go into more debt than they can handle and they won’t be able to pay off their uninsured debt.

The Finance Minister: Right now, there is no compelling evidence of a housing bubble in Canada.

The Big Six Canadian Banks (in unison): We fear the wide ranging economic fallout of a US-style binge-and-collapse in housing.

The Finance Minister: There are certain tools available to the government if we choose to use some or all of them.

The Big Six Canadian Banks (in unison): Please sir, let go of that lever.

The Finance Minister: Yee-haw!

Feed enhanced by Better Feed from Ozh

Friday Free for all!

The Pope — Fri, 12 Feb 2010 10:42:14 +0000

Hey! You made it to the end of the work week! Perhaps it’s time to get out of town, relax at home or wait in long security lines. What you do with your weekend is up to you, but what we do here is our regular end of the week economic news round up and open topic discussion post. Here are a few recent stories to kick off the conversation:

-There is no housing bubble
-Property tax deferral plan a debt time bomb?
-Scotia Capitol warns Ottawa on popping bubble
-Is Canada in a housing bubble?
-The cult of home ownership
-VREAA: Froogle Scott 4
-Five warning signs of a bubble
-First Canadian trade deficit in 34 years
-Games will give BC short term boost
-Mortgage insurance peace of mind – at a price
-The doomsday view of the mortgage market
-Ottawa weighs stricter mortgage rules

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

Feed enhanced by Better Feed from Ozh