Active Listings have exploded in Vancouver

[taylor192]

Active listings are on a pace exceeding that of 2008, view the graph I have attached. We all know what happened when active listings hit the last peak of > 20K - prices dropped 19% and needed emergency interest rates to bring prices back up.

This time around there's no emergency rate to bring it back up if it drops. In fact, it is worse this time:
- HST on new homes > $530K
- HST on real estate commission, lawyer fees
- 5yr rates up 1% and climbing
- BoC rate going up for sure

Oh, and I'm back. and I've sold my house.

[no_clue]

so now that you sold your home.. are you renting for the time being?
just to be specific, do you mean vancouver only or the lower mainland?

when the market crashes, theres opportunity to be made for people who are not drowning in a mortgage. You planning on purchasing a few properties DT/Kits?

[wouwou]

my wife and I popped into a open house today when we were strolling with our 6 months old.

A 460000 2+den condo just received a 30,000 price reduction over the weekend, and is "open for further negotiation" lol

[RollingStone]

taylor, your posts are very educational as always. I thought you were banned? LOL

PS. I ran out of thanks, i will thank you asap.

[waddy41]

Originally Posted by wouwou

A 460000 2+den condo just received a 30,000 price reduction over the weekend, and is "open for further negotiation" lol

Which area is this in?

[taylor192]

Originally Posted by quatchi

taylor, your posts are very educational as always. I thought you were banned? LOL

PS. I ran out of thanks, i will thank you asap.

I was banned and spent a few months lurking. Please don't ask about the ban. I've accepted that some people don't appreciate my style of posts, so in the future I will not entertain discussions with them.

[taylor192]

Originally Posted by wouwou

my wife and I popped into a open house today when we were strolling with our 6 months old.

A 460000 2+den condo just received a 30,000 price reduction over the weekend, and is "open for further negotiation" lol

I would not want to own a condo in metro Vancouver for the next 5-10 years. Especially if you own a 1bdrm, are 25-35yo, and would be looking to sell in that timeframe.

[taylor192]

Originally Posted by no_clue

so now that you sold your home.. are you renting for the time being?

I will rent in metro Vancouver until the price-to-rent ratio is much better. Currently I save > 30% renting at emergency rates. Thus prices need to come down much more than 30% since rates are going up. Otherwise my money is better parked in investments.

Originally Posted by no_clue

just to be specific, do you mean vancouver only or the lower mainland?

Metro Vancouver is my focus, yet if you read about Surrey you'll find price reductions are the norm.

BTW the graph above is for the lower mainland, yet the stats are available for just Vancouver, and just condos - and I'll reiterate what I said above - I would not want to own a condo in metro Van.

Originally Posted by no_clue

when the market crashes, theres opportunity to be made for people who are not drowning in a mortgage. You planning on purchasing a few properties DT/Kits?

No. I will be out of real estate for at least 5 years.

I don't think we'll see a crash. Maybe a 10-20% correction, then a couple years of a slow fall, followed by years of flat prices. It'll be 1994-2002 all over again. Corrected for inflation, it took 10+ years for housing prices to recover to 1994 levels.

Thus everyone waiting to buy, sorry, yet a crash that magically makes housing affordable is not coming. Even a 20% correction is offset by higher rates. Silver lining: higher rates mean your investments will have better returns.

Real estate will be a very bad place to have your money invested for the next 5-10 years in Vancouver - if you can rent (ie your wife is not bugging you to "nest") your money will have better returns in the market.

Oh and to answer your question: even with a 20% correction you'd be hard pressed to find a positive cash-flow rental property without leaving a significant downpayment - and then your downpayment would be better invested in a market for falling/flat real estate prices.

[no_clue]

I am currently looking at phoenix, miami, ft Lauderdale, and vegas, do you look at the US market as well?

As for the 10-20% reduction, it's good if you are making a cash purchase and also if you are buying a home to live in, not rent out I think...

Funny how everyone was saying that the olympic village will cause prices to tank in DT but so far nothing... haha

[taylor192]

Originally Posted by no_clue

I am currently looking at phoenix, miami, ft Lauderdale, and vegas, do you look at the US market as well?

No, I'm content to park my money in safe investments for while. RBC prefered shares pay 6+% dividend, which cause dividends are tax advantaged is like making 8+% of capital gains.

Originally Posted by no_clue

As for the 10-20% reduction, it's good if you are making a cash purchase and also if you are buying a home to live in, not rent out I think...

Of course! The smart person buys on total amount, not cheap monthly payments due to interest rates.

Why?

Cause in 10 years when your salary is higher yet mortgage payment about the same, you can start to afford to pay off the mortgage faster. A lower amount is easier to pay off - too bad many FTBs are not thinking longer than the next 5 years.

Originally Posted by no_clue

Funny how everyone was saying that the olympic village will cause prices to tank in DT but so far nothing... haha

They have no been released to the public AFAIK, thus they are not on the market.

[taylor192]

For anyone thinking of buying a condo: (weird, I wonder why this section does not allow images?)

http://www.yattermatters.com/wp/wp-c...-Apr-20101.jpg

http://www.yattermatters.com/wp/wp-c...20-04-2010.jpg

http://www.yattermatters.com/wp/wp-c...-Apr-19-10.jpg

[Ducdesmo]

Condos are most volatile to RE bubble. When I see people selling their new 1 bedroom + den condo in Surrey for near 280K, I shake my head.
BTW, welcome back Taylor.

[taylor192]

From another forum:

This last weekend I made another in depth round around the city for some on the ground analysis – last time Burnaby, this time Downtown. You know, Vancouver downtown – rental city, immune to price increases, always go up, market of its own, etc. etc – the same one Rennie speaks about and the speculators feeding grounds. The amount of new listings are incredible – the same buildings a few months ago had MAYBE 25% of the listings available. Now the attitude is different – the arrogance is fading, the desperation techniques are coming full force. Here are some notables at buildings I was considering – noone can tell me any of these will go for anywhere near asking price with the amount of competition:

Building name – # of listings

Espana Towers – 40
Brava Towers – 15
Carina – 9
Cascina – 7
Conference Plaza – 11
Coopers Lookout – 25
Coopers Pointe – 12
Elan – 17
Erickson – 13
Fairmont – 16
Melville – 12
Pinnacle – 13
Qube – 16
Ritz – 17
Shangri La – 27
Smart – 22
Space – 12
Spectrum towers – 62
Lions towers – 21
The Park – 19
Sapphire – 10
TV Towers – 33
Vita – 22
Woodwards towers – 31
Yaletown Park towers – 31
Flagship – 14
H-H 12
Hudson – 12
Koret – 10
Mariner – 19
Max towers – 23

If you look at current downtown rental vacancies, the number of empty units is mind boggling – record vacancies. Sure, those who bought early on when the price was right can probably weather the storm – let it sit, reduce rent, etc. However, the panic is starting to set in for those who bought 2006 and on at overinflated prices. They are the ones who can’t leave units empty for months or afford to give rent reductions. Expect to see more and more downtown listings – not to mention all the speculators who are going to want to offload units in buildings being completed this year.

I myself have a personal interest in DT. I work there, I’d like to live there given it’s within my reasonable means. Early this year I visited numerous open houses, spoke to realtors, gave them a “would the seller consider my offer if it were $xxx,xxx?” The attitude was arrogant to comical – many of them scoffed standing by their downtown rule. Fast forward 3 months – Many of the listings I see now are now listed at what I originally suggested to offer. Those sellers now would be ecstatic to receive anything close to that – but alas, greed and the influence of RE agents held too much sway.

So here we have it, the downtown market collapsing before us – no government help this time, harder to borrow money, tomorrow’s buyers already gone, increase of rates and taxes. Notice all the buildings I chose to list are newer (most within the last 5 years)? You guessed it – speculator dumping.

Pass the popcorn please.

I have been checking CL looking to see if rents are dropping cause supply is increasing, and have noticed 2 things:

1. There are a few more places for slightly less than we are paying.
2. There are a lot of units that are very unreasonably priced.

I speculate the unreasonably priced units are priced where the owner breaks even.

There is also the tax double-whammy for those who choose to rent for below the cost. Lets say rent is $1000, and mortgage/taxes/fees are $1200, yet $300 of that is equity paid down on the mortgage. Thus tax deductions are only $900 ($1200-300) and there's $100 of taxable income, taxed at your highest personal income tax rate.

[waddy41]

^where was that quoted from?
I'd like to read what that person had to say about burnaby

[taylor192]

Originally Posted by waddy41

^where was that quoted from?
I'd like to read what that person had to say about burnaby

It is from the latest post on: http://vancouvercondo.info/

I don't know if he posted the Burnaby stats, if you find them please post them here.

BTW the above list adds up to 583 condos available of the 1500 listings (1400 are condos) on MLS if you zoom in on downtown/west end. This does not include the Olympic village AFAIK

[waddy41]

"This last weekend I made another in depth round around the city for some on the ground analysis – last time Burnaby"

But there isn't a specific post in BBY

[twitchyzero]

interesting..my 'rents are looking to sell the house this july

[taylor192]

Originally Posted by twitchyzero

interesting..my 'rents are looking to sell the house this july

Get it on the market now and get it sold. In 2008 August was the tipping point, and we're ahead of 2008's pace.

Why are they waiting? Closing dates can be negotiated, just the deal needs to be signed now. If prices drop and the buyer backs out, you can sue for damages if you sell for less later.

[taylor192]

Originally Posted by waddy41

"This last weekend I made another in depth round around the city for some on the ground analysis – last time Burnaby"

But there isn't a specific post in BBY

Oh dude, goodluck. That site is a comedy of off topic comments on the various posts. This might make it easier:
- Load each post from the last 2 weeks
- Display all comments
- Search for "supersogs" using your browsers "Find" feature

Hopefully "supersogs" uses the name name to post. If not create a post in the current topic asking supersogs to repost the Burnaby info. Never hurts to ask.

[RollingStone]

hey taylor, what investment websites/books do you recommend? in particular info about dividends vs capital gains. thanks!

[Carl Johnson]

Originally Posted by taylor192

No. I will be out of real estate for at least 5 years.

I don't think we'll see a crash. Maybe a 10-20% correction, then a couple years of a slow fall, followed by years of flat prices. It'll be 1994-2002 all over again. Corrected for inflation, it took 10+ years for housing prices to recover to 1994 levels.

Thus everyone waiting to buy, sorry, yet a crash that magically makes housing affordable is not coming. Even a 20% correction is offset by higher rates. Silver lining: higher rates mean your investments will have better returns.

Real estate will be a very bad place to have your money invested for the next 5-10 years in Vancouver - if you can rent (ie your wife is not bugging you to "nest") your money will have better returns in the market.

Oh and to answer your question: even with a 20% correction you'd be hard pressed to find a positive cash-flow rental property without leaving a significant downpayment - and then your downpayment would be better invested in a market for falling/flat real estate prices.

This is exactly my view too. I just don't see a meltdown like what happened in the states but prices have peaked in the near - intermediate term (this can change if we see a big RMB revaluation but I doubt it).

Just looking from the perspective of relative return, you can get much better return with your money in risk assets such as stocks (yes big run already but can go even higher). Investment opportunities across the broader is so attractive with the current exchange rate and economic cycle.

[Chuck Norris]

Vancouver has not been an investors market for a long time. The only thing that has saved the people buying is the capital appreciation which is now at an end.

As for what's going to happen with declines, we shall wait and see. On one hand, I want to agree with Taylor but on the other I'm not so sure it's going to be such a calming dip of 20%.

The big issue is that Vancouver's economy (other than growing weed) the biggest economy is very much connected to real estate itself.

For example, this city has no real economy.

Prices overshoot on the way down like they do on the way up meaning that prices are likely to fall below standard valuation.

As for the Asian buyers that buy up property, many of the buyers are using borrowed monies which is, in some cases, very high risk since it is all related to the same industry (albeit in another part of the world).

As for where to put your money, buying in the US is a decent choice provided you know where you're buying and you have a bigger reason to buy compared with the buy hold and sell.

[taylor192]

Originally Posted by quatchi

hey taylor, what investment websites/books do you recommend? in particular info about dividends vs capital gains. thanks!

Since you're asking this question, I assume you're just getting started. I'd read:

Money Road by Garth Turner - if you disregard the real estate rhetoric it is a good overview of different types of investments.

Motley Fool - a good overview of how we're in a communication age, not information age. Picking the best stocks is about communication, and there's lots of way to communicate that information today.

After that stick to mutual funds until you have a handle on looking at reports and understanding them. Funds are diversified and will minimize your initial risk, albeit for a fee. I'd stay away from ETFs that match the markets, they have been holding steady for > 6 months, ie no gains.

You can also sign up for an iTrade simulation account and give trading a go for a month.

[wouwou]

Originally Posted by waddy41

Which area is this in?

burnaby mountain

[taylor192]

Originally Posted by Carl Johnson

Just looking from the perspective of relative return, you can get much better return with your money in risk assets such as stocks (yes big run already but can go even higher). Investment opportunities across the broader is so attractive with the current exchange rate and economic cycle.

This is why I recommend Garth Turner's latest book Money Road to newbies to read. It does a great job of explaining the cycles of different asset classes, and how to balance a portfolio to deal with them.