Real Estate

Vancouver housing bubble?

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Jan 2, 2012
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adamtheman wrote:
Jul 18th, 2012 11:14 pm
In the end, if prices do drop, every property will suffer. I hope that you are correct and detached prices drop less than condos (which would be beneficial for me, as a condo renter). I'll give you the opportunity to have the last word regarding this and then maybe we can move on.
Yes i agree its run its course... and as a final word until i see some facts, figures or polls showing the average new family will choose a condo as their main residence and not even bother to continue to save to move into a lowrise home as the final goal.... I can't see any evidendce your "trend" is anything more that personal opinion.

As for condos dropping most, again this is all going back to the basics of supply and demand. In a market correction, the item with the highest supply should see the biggest % drop in price. And seeing the ridiculous number of small condo units flood the market over the past 5-10 years, its not hard to predict these will be the first to get hit in a RE market drop.

% price drop would then trickle down through the supply line, ending with the detached homes and townhouses in the city which are currenly at the lowest supply level. The demand for basic housing will NEVER go away and in fact will continue to rise as people need to live somewhere regardless of if they own their own place or rent from someone who owns, so the lowest supply should see less of a market hit.

Of course this is great in theory, but when it comes to RE it is impossible to say as this market is based so much on emotional decisions.
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Latest stats for July in Vancouver, updated as of the end of Wednesday:
Jul-2012
Total days 21
Days elapsed so far 12
Weekends / holidays 6
Days missing 0
Days remaining 9
7 Calendar Day Moving Average: Sales 112
7 Calendar Day Moving Average: Listings 225
SALES
Sales so far 1402
Projection for rest of month (using 7day MA) 1004
Projected month end total 2406
NEW LISTINGS
Listings so far 3033
Projection for rest of month (using 7day MA) 2025
Projected month end total 5058
Sell-list so far 46.2%
Projected month-end sell-list 47.6%
MONTHS OF INVENTORY
Inventory as of July 18, 2012 19180
Current MoI at this sales pace 7.97
and you can compare those to previous July's
year sell list sell/list
2001 2618 3504 74.7%
2002 2670 3929 68.0%
2003 4023 4447 90.5%
2004 3019 4785 63.1%
2005 3652 4107 88.9%
2006 2732 4370 62.5%
2007 3873 4924 78.7%
2008 2174 7104 30.6%
2009 4114 5061 81.3%
2010 2255 4138 54.5%
2011 2571 5097 50.4%
Mean 3064 4679 65.5%
median 2732 4447 71.3%
The projected sell-list ratio of 47.6% would be the 2nd worst since 2008. Still, these numbers are not absolutely terrible. One theory could be the increased July sales from the 25 year amoritzation, allowing sales to be the 3rd lowest in 10 years. Sales report once all subjects are removed, which can take up to 1 or 2 weeks. Sales are still reporting from before July 9th. Sales have slowed down considerably from the beginning of the month. It will be interesting to see the prices at the end of the month and whether or not Vancouver can have an up month in July.
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Someone asked about HPI above, and others have heard me criticize the HPI used by real estate agencies (while applauding Toronto's transparency, even if they also use HPI, at least they post all the numbers on each report openly).

Garth Turner's most recent blog post called "Statistics" talks exactly about this. Here's a portion of it:

http://www.greaterfool.ca/2012/07/18/statistics/

Major boards have adopted the fabricated ‘MLS Home Price Index’, making it virtually impossible to detect shifting market conditions. The frankenumber was hatched just as housing was set to enter its big slide. Talk about coincidence!..........
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rob444 wrote:
Jul 19th, 2012 7:18 am
Yes i agree its run its course... and as a final word until i see some facts, figures or polls showing the average new family will choose a condo as their main residence and not even bother to continue to save to move into a lowrise home as the final goal.... I can't see any evidendce your "trend" is anything more that personal opinion.

As for condos dropping most, again this is all going back to the basics of supply and demand. In a market correction, the item with the highest supply should see the biggest % drop in price. And seeing the ridiculous number of small condo units flood the market over the past 5-10 years, its not hard to predict these will be the first to get hit in a RE market drop.

% price drop would then trickle down through the supply line, ending with the detached homes and townhouses in the city which are currenly at the lowest supply level. The demand for basic housing will NEVER go away and in fact will continue to rise as people need to live somewhere regardless of if they own their own place or rent from someone who owns, so the lowest supply should see less of a market hit.

Of course this is great in theory, but when it comes to RE it is impossible to say as this market is based so much on emotional decisions.
Hi Rob. Even though our convo is coming to an end I thought I'd share the article on Vancouvercondo with you today as it sort of played into what we were talking about (plus it's hilarious). You can't make this stuff up:

http://www.rethinkhousing.ca/view_submission.php?ID=103

"At today's market rates a 580 sqft condo costs $415,000 but 1 cubic foot costs only $199"

Well, when you put it that way!!!!!
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Dec 23, 2002
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looks like Vancouver market is becoming balanced
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confused wrote:
Jul 19th, 2012 4:25 pm
looks like Vancouver market is becoming balanced
With an MOI at 7.97, I think we are seeing a buyer's market and not so balanced. Post-July 9th sales are still extremely low, most of the sales reported yesterday were still from before July 9th. Only 34 sales yesterday out of 100 were post-July 9th.
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Asians seem to be moving on from Vancouver to places like California, and now, London:

London property boom: Asians bought 51% of new luxury homes
Buyers from China, Hong Kong, Malaysia and Singapore accounted for 51% of new-property purchases in central London neighbourhoods that the broker handled, up from 47% in 2010, Jones Lang said in a report released on Monday. Hong Kong buyers led Asia with 17% of the purchases, the Chicago-based broker said.

“The number of high-net-worth individuals is growing and growing, especially in the Asia-Pacific countries where you’ve got developing economies,” Neil Chegwidden, a residential research director at Jones Lang, said. “They need to invest their money somewhere.”
You could have replaced the word "London" with "Richmond", "Vancouver" or "Toronto" above and you'd have the same exact articles we saw here from 2006-2008.
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Jan 30, 2006
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adamtheman wrote:
Jul 19th, 2012 5:17 pm
Asians seem to be moving on from Vancouver to places like California, and now, London:

London property boom: Asians bought 51% of new luxury homes



You could have replaced the word "London" with "Richmond", "Vancouver" or "Toronto" above and you'd have the same exact articles we saw here from 2006-2008.
the only difference billionaires don't want to live in Toronto or Vancouver
and there is no any statistics about foreign investment into Canadian real estate
just speculation
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kashirin wrote:
Jul 19th, 2012 8:54 pm
the only difference billionaires don't want to live in Toronto or Vancouver
and there is no any statistics about foreign investment into Canadian real estate
just speculation
It's interesting... when Vancouver was booming, all I heard were comparisons from people to London, New York, Los Angeles, Sydney, Hong Kong, Paris, etc. Now, suddenly, it's not comparable to those places. Are Vancouver and Toronto world class cities or aren't they? I thought *everyone* wanted to live here? Even billionaires?
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adamtheman wrote:
Jul 19th, 2012 9:28 pm
It's interesting... when Vancouver was booming, all I heard were comparisons from people to London, New York, Los Angeles, Sydney, Hong Kong, Paris, etc. Now, suddenly, it's not comparable to those places. Are Vancouver and Toronto world class cities or aren't they? I thought *everyone* wanted to live here? Even billionaires?
I think everyone with a gun wants to live in Toronto apparently.
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adamtheman wrote:
Jul 19th, 2012 9:28 pm
It's interesting... when Vancouver was booming, all I heard were comparisons from people to London, New York, Los Angeles, Sydney, Hong Kong, Paris, etc. Now, suddenly, it's not comparable to those places. Are Vancouver and Toronto world class cities or aren't they? I thought *everyone* wanted to live here? Even billionaires?
Toronto is not a world class city.... not by a long shot. Only people in Toronto think they live in one. Ignorance is a bliss.

Vancouver, however is another story. It does have some recognition outside of Canada as a top destination and to be honest I went to Vancouver for the first time ever last year and I thought I was going to hate it. It really is a pretty place.
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The 100 sales are from when to when?
adamtheman wrote:
Jul 19th, 2012 5:13 pm
With an MOI at 7.97, I think we are seeing a buyer's market and not so balanced. Post-July 9th sales are still extremely low, most of the sales reported yesterday were still from before July 9th. Only 34 sales yesterday out of 100 were post-July 9th.
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licenced wrote:
Jul 19th, 2012 10:44 pm
The 100 sales are from when to when?
Those were the sales for Wednesday, July 18. There were 98 sales to be exact, of which 34 were post July 9th.
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Thursday was a rough day for Vancouver. Only 87 detached sales, which is lower than the 7 day moving average and trending lower. The MOI also shot way up. If this continues, the last 8 business days in July could be devastating. Projected sell-list dropped from 47.6% to 46.8% in one day. This late-month crash has been predicted by some, and it appears to be happening. The only good news is listings are also dropping, but they aren't dropping quick enough to keep up. MOI is now 8.22 which is well into buyer's market territory. Updated stats as of end of Thursday, July 19th.
Jul-2012
Total days 21
Days elapsed so far 13
Weekends / holidays 6
Days missing 0
Days remaining 8
7 Calendar Day Moving Average: Sales 106
7 Calendar Day Moving Average: Listings 220
SALES
Sales so far 1489
Projection for rest of month (using 7day MA) 848
Projected month end total 2337
NEW LISTINGS
Listings so far 3226
Projection for rest of month (using 7day MA) 1763
Projected month end total 4989
Sell-list so far 46.2%
Projected month-end sell-list 46.8%
MONTHS OF INVENTORY
Inventory as of July 19, 2012 19208
Current MoI at this sales pace 8.22
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DaleCooper wrote:
Jul 19th, 2012 10:22 pm
Toronto is not a world class city.... not by a long shot. Only people in Toronto think they live in one. Ignorance is a bliss.

Vancouver, however is another story. It does have some recognition outside of Canada as a top destination and to be honest I went to Vancouver for the first time ever last year and I thought I was going to hate it. It really is a pretty place.
Vancouver's location is about all it has going for it. A major hub on the edge of the edge of the pacific ocean. The big problem with Vancouver is the lack of population and growth to be a true global city, while Toronto has that going for it. Vancouver just can't compete on a financial scale with other cities. The global rankings at http://en.wikipedia.org/wiki/Global_city basically ranks cities as follows

Tier 3 = Toronto
Tier 5 = Vancouver / Montreal
Tier 6 = Calgary
Tier 9 = Edmonton
Tier 10 = Ottawa

So no cities in Canada make the top 2 tiers. The first tier only contains two cities - New York and London (true global cities). The second tier contains eight cities, such as Paris, Tokyo, Sydney and Hong Kong. Sydney, to which Vancouver is often compared to, has a population of 4.5 million, versus Vancouver's 600k. Thankfully, population isn't required to make a city beautiful.

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