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Vancouver Off-Topic / Current EventsThe off-topic forum for Vancouver, funnies, non-auto centered discussions, WORK SAFE. While the rules are more relaxed here, there are still rules. Please refer to sticky thread in this forum.
As EvoFire was saying, I'll believe it when I see it. And even then, it would be the Fed cutting rates. Whether BoC will follow suit is a different story.
Regardless of whether rates get cut or not, we are all walking a really tight rope right now. Keep hiking rates, and a lot of home owners stand to lose their homes. Hold or drop rates, and inflation may go through the roof. Personally, I have no idea what the best course of action would be, and all the available options that I can see look bad.
This “losing your home” think was touted after the first increase. It seems to be a narrative these losers on the sidelines waiting for a “crash” seem to run with
I know people whose mortgages have gone from $2600 a month to over $5000 a month and “losing their home” isn’t even on their mind.
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Dank memes cant melt steel beams
Yeah we've been checking out open houses every weekend to see what types of homes are really out there. With the limited supply, do you guys just offer a reasonable lower offer to start and see if you land lucky, or pay asking knowing the competitiveness? E.g. Say your budget is $1.6M and a house is $1.68M, what do offer? What is even considered acceptable in todays market with offers?
I've also seen stupid owners that apparently get offended when I talked to selling agent at open houses. "Oh, the owner got an offer $100K less than asking and felt offended and didn't want to even counter back". A week later, I see owner drop the asking by $50K LOL.
Dude don't be so snobby about Van and Burnaby... if you just go a bit farther out 1.7 is easy to buy something for.
Right in your wheelhouse... that bridge will get built and your house is gonna go up like 40% easy and it's got a frickin full out cottage in the back.
Even Richmond has a tonne of places under $2M.
Or you could buy half a piece of shit duplex I guess, up to you!!
This “losing your home” think was touted after the first increase. It seems to be a narrative these losers on the sidelines waiting for a “crash” seem to run with
I know people whose mortgages have gone from $2600 a month to over $5000 a month and “losing their home” isn’t even on their mind.
Naturally, people will stretch themselves in all kinds of manners in attempt to ward off "losing their homes" -- cut expenses, take on 2nd or 3rd jobs, etc. You can say people should always live within their means, and build a buffer zone to prevent this sort of thing from happening. Those things are all true, but I'd hardly think it is a good thing for people to go out of their ways to stretch themselves so thin.
For who are able to withstand that kind of massive increases to their payments -- kudos to them for being so baller. Personally, if I were in that situation, I would have just downsized LOL~
This “losing your home” think was touted after the first increase. It seems to be a narrative these losers on the sidelines waiting for a “crash” seem to run with
I know people whose mortgages have gone from $2600 a month to over $5000 a month and “losing their home” isn’t even on their mind.
These types of reactions usually come from people that don't have any understanding of personal finances (ie. haven't even talked to a bank/financial/mortgage advisor before) and haven't spent a second of their time trying to learn. They read headlines and tout them like the gospel since they are catchy and it matches their personal bias.
Remember the deferral cliff? Everyone was supposed to lose their house when deferrals ended and the market was supposed to come crashing down hard, crushing all home owners and investors. Oops.
For who are able to withstand that kind of massive increases to their payments -- kudos to them for being so baller. Personally, if I were in that situation, I would have just downsized LOL~
Downsizing can hurt even more than cutting all other expenses/savings/picking up a PT job/gig/airbnb a room and trying to scrape together another $2-3k/month. Once you include the loss of equity from the drop in price + selling commissions + fees and then eventual fees + taxes to buy again you could be out a few hundred thousand.
I have a friend who is in this exact situation. Bought early 2022 and has lost ~$200k in equity. Selling and buying in the future would cost them another $75k in commissions/taxes/fees + rent ($2k/mo minimum).
Instead, they've decided to rent out a bedroom or 2 in their basement to help cover the gap.
You are absolutely correct that downsizing stands to lose more money than engaging in some sort of financial stretching or acrobatics, esp in the long run. However, there are times when the situation just doesn't allow you to stretch anymore.
And even if stretching is possible, is that really a good thing? Just because the mortgage payment defaults aren't happening doesn't mean it is a good thing.
A higher interest rate is gonna take anywhere between 1 - 3 years to see its fuller effect on the market and economy. So far, only a year has passed since the rates started climbing.
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Originally Posted by Alpine
Downsizing can hurt even more than cutting all other expenses/savings/picking up a PT job/gig/airbnb a room and trying to scrape together another $2-3k/month. Once you include the loss of equity from the drop in price + selling commissions + fees and then eventual fees + taxes to buy again you could be out a few hundred thousand.
I have a friend who is in this exact situation. Bought early 2022 and has lost ~$200k in equity. Selling and buying in the future would cost them another $75k in commissions/taxes/fees + rent ($2k/mo minimum).
Instead, they've decided to rent out a bedroom or 2 in their basement to help cover the gap.
You are absolutely correct that downsizing stands to lose more money than engaging in some sort of financial stretching or acrobatics, esp in the long run. However, there are times when the situation just doesn't allow you to stretch anymore.
And even if stretching is possible, is that really a good thing? Just because the mortgage payment defaults aren't happening doesn't mean it is a good thing.
A higher interest rate is gonna take anywhere between 1 - 3 years to see its fuller effect on the market and economy. So far, only a year has passed since the rates started climbing.
Well, that's the question that each individual owner has to ask themselves. Is it worth stretching your budget by another $2-3k a month or taking a huge financial hit upfront and in one shot.
Don't worry, I am just providing the counterargument to downsizing, just as you have provided the counterargument for stretching your finances. People will do what they personally think is best anyways.
I haven't noticed many homes that were purchased over the past 2 years getting listed meaning investors are still holding but the question is how long can they hold if rates stay elevated?
And here's an article from today...
Canadian Economists Overwhelmingly Predict Property Price Declines for 2023
Quote:
That brings us to the real estate market. Nearly all experts — 88% — predicted a decline in real estate prices in 2023. Most (55%) believe the country’s home prices will drop 10% annually by end of 2023. One expert anticipates a 15% drop by the end of the year. The average price of a Canadian home sold in January was $612,204, marking a year-over-year decline of more than 18%, according to the Canadian Real Estates Association.
As Carl Gomez, Chief Economist and Head of Market Analytics for CoStar Canada explains, “With pent up demand among both buyers and sellers further adjustments to prices may be required to get the market moving.”
Lander notes that the supply-side of housing — or lack there of it — is currently keeping prices higher, despite rapid rate hikes over the last year. “Housing prices should fall a lot more, but supply remains constrained thanks to overly restrictive zoning laws in many Canadian municipalities,” says Lander. “Once people readjust to the higher interest rates, demand will recover and limit the fall in prices.”
Furthermore, 100% of experts believe that insolvencies will keep rising in 2023, particularly among homeowners. “Households and businesses have been forced to incur a lot of debt,” says Nikola Gradojevic, Professor of Finance at the University of Guelph. “It is difficult to maintain the same living standard with almost no salary increments amidst rampant inflation. Utility and grocery bills are out of control.”
For some households, it may be too much to handle. “When variable rate mortgages renew, some households will be squeezed enough [to result in] forced selling [of their home],” said Sherry S. Cooper, Chief Economist for Dominion Lending Centres.
"Lander notes that the supply-side of housing — or lack there of it — is currently keeping prices higher, despite rapid rate hikes over the last year. “Housing prices should fall a lot more, but supply remains constrained thanks to overly restrictive zoning laws in many Canadian municipalities,” says Lander. “Once people readjust to the higher interest rates, demand will recover and limit the fall in prices.”
At least in lower mainland we're relatively safe, we got no space, and how many new immigrants a year?
Gic rates have already dropped and I've been starting to see lower mortgage rates too.
As an investor I'm still sitting out until next year because I still see prices trending down as the rate hikes over the past few months start to catch up. I also think we're probably setting up for a bull trap come this spring which might give some a false sense of the market is rebounding. Again, it's my personal opinion so I could be wrong.
Not to discredit the economists' views nor question Harvey's insights -- one observation we all know too well is how the Vancouver / LM housing market has a tendency to buck national trends and behave in its own manner, and we all know why that's the case -- it is exactly as JDMDreams has said -- there is (nearly) no space to expand, and our population is expected to continue climbing in the years to come.
The economists are not wrong -- they are referring to national trends, not Vancouver / LM trends. Even assuming interest rates hold, I wouldn't expect local home prices to drop by another 10% by the end of this year (compared to right now).
This fucked up market defies logic and for that reason, I'm probably gonna Leroy Jenkins myself back into this market for a 2/3 bed townhouse in Coquitlam for over a million within the next month or two. Thought I had a shot at detached or even a duplex but that window has now closed with the budget that i have
Every single block, on every single street, from downtown to hope, has vacant lots, old run down vacant single story buildings, ready for demo and new towers.
How does Vancouver have 20 cranes in the core, year in, and year out, every year....
Once you hit south Vancouver, or Burnaby, there is literally endless land, and old 110 year old tear downs that developers are begging to get their hands on for condos and townhomes. (Well... Maybe not this year with the "current situation"
Just look at south Cambie, there was "no land" and yet somehow the entire road is turning into stacks of towers
Your statement about Vancouver holding its own is correct tho
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Originally Posted by Mr.Money i hate people who sound like they smoke meth then pretend like they matter.
Originally Posted by ilovebacon
Does anyone have a pair of 25 pounds one-inch hole for sale at a reasonable price?
Originally Posted by mikemhg
Clothes come off and my car is permeated with the smell of fillet-o-fish and canned tuna.
Every single block, on every single street, from downtown to hope, has vacant lots, old run down vacant single story buildings, ready for demo and new towers.
How does Vancouver have 20 cranes in the core, year in, and year out, every year....
Once you hit south Vancouver, or Burnaby, there is literally endless land, and old 110 year old tear downs that developers are begging to get their hands on for condos and townhomes. (Well... Maybe not this year with the "current situation"
Just look at south Cambie, there was "no land" and yet somehow the entire road is turning into stacks of towers
Your statement about Vancouver holding its own is correct tho
There is plenty of space to build higher density, but the city's zoning policy restricts what builders/developers can and cannot build.
Want to build a high-density condo? Sorry, the city will only allow you to do so in very specific areas. This drives the land values in these areas through the roof. Once these areas are developed, they'll update zoning and release another chunk of land for high density.
As an investor, knowing that the city is restricting the supply of the product I am invested in makes the decision easy for me.
This fucked up market defies logic and for that reason.
The market is actually following logic and reason - there's wildly insufficient supply especially in cities like Vancouver (and the neighbouring cities) and there's wildly high demand so the behaviour is exactly what you'd expect to see.
Our perceptions of lots of construction happening are distorted because most of it happens in busy corridors that we tend to see but we're only marginally building slightly more than what's needed to keep the population the same rather than building to support new population.
There's lots of good analysis showing how far behind we are in providing housing and this one looks at it from the perspective of "suppressed households" and is a pretty straightforward read: https://doodles.mountainmath.ca/blog...holds-in-2021/
I mean there's plenty of space on Hastings and main we can build on, property values are cheap there, no demand to live there, people are already homeless no one to kick out, just tear all those buildings down and build high-rises ??? Profit
Will be interesting to see if this stabilization lasts or if it will continue to fall. I would bet things level off for a while as market adjusts to the new higher rates. HPI price peaked in April almost exactly when the first rate announcement was made
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