Vancouver Real Estate 'Bubble' at 30-year Peak

[misher]

Originally Posted by Vin

Good news! For a while I was worried that newer developments in City centres would be severely curtailed due to the downtown. Should be able to see some actions with an improvement in the long-term outlook.

Development has significantly decreased and while there are signs the market may be back I haven’t seen development increase with it yet. I think all the new fees plus the instability of the market has made developers hold off. That said, the industrial market and office leases are still strong.

Immigration is increasing, rates are decreasing, its municipal roadblocks that are killing development. Metro City Translink Utilities etc are all competing to raise fees without agreeing between them what the maximum the market can bear is.

[Changing City]

Originally Posted by misher

Development has significantly decreased.

2017 January to September housing starts 18,025
2018 January to September housing starts 18,055
2019 January to September housing starts 22,229

[source: CMHC]

[Vin]

Originally Posted by misher

Development has significantly decreased and while there are signs the market may be back I haven’t seen development increase with it yet. I think all the new fees plus the instability of the market has made developers hold off. That said, the industrial market and office leases are still strong.

Immigration is increasing, rates are decreasing, its municipal roadblocks that are killing development. Metro City Translink Utilities etc are all competing to raise fees without agreeing between them what the maximum the market can bear is.

When you hear news of a 82 store condo tower, among others, being proposed in the suburbs, it hardly feels like a downturn.

[GenWhy?]

It wasn't a "downturn". That's for sure. More-so for those that bought land too high and thought they could sell it for the astronomical prices they got to... plus construction costs never go down.

[whatnext]

Originally Posted by GenWhy?

It wasn't a "downturn". That's for sure. More-so for those that bought land too high and thought they could sell it for the astronomical prices they got to... plus construction costs never go down.

I dunno, for those trying to seel a SFH on Vancouver's West Side, West Vancouver or Richmond, it's definitely a downturn. Same for anyone peddling $1.5 million+ two bed condos. Basically anything that depended on Mainland Chinese money is still toast. And it's not just in Vancouver:

It’s meant to be one of the crown jewels of downtown Los Angeles’ urban renaissance but now it’s in limbo -- plagued by lawsuits from subcontractors, and victim of an ongoing trade dispute between China and the U.S. and a Beijing crackdown on credit and capital flight...

...In downtown San Francisco, Oceanwide halted construction this month on one of the two towers of a mixed-use development. The 54-story tower is to house a Waldorf Astoria hotel, a Hilton Worldwide Holdings Inc. property. Hilton’s Chief Executive Officer Christopher Nassetta said on an Oct. 22 earnings call that the company had been aware of Oceanwide’s liquidity problems...

...While L.A.’s Oceanwide Plaza remains in limbo, the downtown market for high-end condominiums is becoming a buyers’ market, said Christiano Sampaio, founder of real estate brokerage Loftway.

There’s still strong demand for unique properties, according to Sampaio, particularly in the Arts District, the old industrial neighborhood on the side of downtown where Warner Music Group this year moved into a former Ford factory. But the influx of Chinese investment that helped inflate real estate assets from Vancouver to Sydney is abating...

https://www.bloomberg.com/news/artic...ulls-back-cash

[LeftCoaster]

Originally Posted by whatnext

So wrong:

$3.9M burnt-down house in Vancouver won't take long to sell, agent says

'The thing is location, location, location,' Hunt Tse says
CBC Radio · Posted: Aug 23, 2018 4:59 PM ET | Last Updated: August 23, 2018

Vancouver real estate agent Hunt Tse is not worried that the $3.9-million lot with a burnt-down home on it will sell, even though he describes it as a "pile of rubbish."

"I don't think it would take that long because it's a good location," Tse told CBC Radio's As It Happens guest host Helen Mann, about the lot in Vancouver's popular Kitsilano neighbourhood.

Most of the home is collapsed from a long ago fire and the 6,000-square-foot lot is overgrown with grass.

Nevertheless, the house is listed for $3,990,000.

Tse said that the property is under foreclosure and has been seized by the bank, and nothing has been done to remove the rubble. That will be left for future owners to negotiate....
https://www.cbc.ca/radio/asithappens...says-1.4796303

Seems like Mr. Tse should haven't been so cocksure after all. Just sold over a year later for $2.66 million (still ridiculous, the greater fool theory at work).

Well it's been for sale quite a while so I'd say they are a bit out to lunch.

[LeftCoaster]

Originally Posted by GenWhy?

It wasn't a "downturn". That's for sure. More-so for those that bought land too high and thought they could sell it for the astronomical prices they got to... plus construction costs never go down.

Presales are flat, it has definitely been a downturn, most just don't anticipate it to last that long since market fundamentals are still quite strong for (and this is important) locally priced product.

[GenWhy?]

Originally Posted by whatnext

I dunno, for those trying to seel a SFH on Vancouver's West Side, West Vancouver or Richmond, it's definitely a downturn. Same for anyone peddling $1.5 million+ two bed condos. Basically anything that depended on Mainland Chinese money is still toast. And it's not just in Vancouver:

It’s meant to be one of the crown jewels of downtown Los Angeles’ urban renaissance but now it’s in limbo -- plagued by lawsuits from subcontractors, and victim of an ongoing trade dispute between China and the U.S. and a Beijing crackdown on credit and capital flight...

...In downtown San Francisco, Oceanwide halted construction this month on one of the two towers of a mixed-use development. The 54-story tower is to house a Waldorf Astoria hotel, a Hilton Worldwide Holdings Inc. property. Hilton’s Chief Executive Officer Christopher Nassetta said on an Oct. 22 earnings call that the company had been aware of Oceanwide’s liquidity problems...

...While L.A.’s Oceanwide Plaza remains in limbo, the downtown market for high-end condominiums is becoming a buyers’ market, said Christiano Sampaio, founder of real estate brokerage Loftway.

There’s still strong demand for unique properties, according to Sampaio, particularly in the Arts District, the old industrial neighborhood on the side of downtown where Warner Music Group this year moved into a former Ford factory. But the influx of Chinese investment that helped inflate real estate assets from Vancouver to Sydney is abating...

https://www.bloomberg.com/news/artic...ulls-back-cash

In agreement. Hence why I'd call it more of a "correction" if anything. We were able to get some more reasonable prices on single-family homes to assemble new or add to projects both rental and condo.

[whatnext]

Originally Posted by LeftCoaster

Presales are flat, it has definitely been a downturn, most just don't anticipate it to last that long since market fundamentals are still quite strong for (and this is important) locally priced product.

Yes, locally priced is key. That's one reason why I'm very curious to see what happens with the sites that were purchased for big bucks at the height of the bubble: the Chevron and White Spot on West Georgia and that block of Barclay.

[LeftCoaster]

The few downtown lux zone sites will still target stupid money and probably get it, it will just take longer to get there than it had in the past.

The real project opportunities now though are in the $850-$1,100 PSF market. Still crazy expensive IMO but it seems to be what locals have settled on based off what resales are trading at.

[misher]

Originally Posted by whatnext

Yes, locally priced is key. That's one reason why I'm very curious to see what happens with the sites that were purchased for big bucks at the height of the bubble: the Chevron and White Spot on West Georgia and that block of Barclay.

New condos should always be exempt from foreign buyer taxes. They pay a lot of tax already, they employ people, and they create our future affordable rentals. Why kill your cash cow. Both the city and province are very tight for money because of it, even Swanson, in a recent meeting, gave up on pushing to build social housing because staff advised they weren’t collecting any development fees and thus had no money for it.

[whatnext]

Originally Posted by LeftCoaster

The few downtown lux zone sites will still target stupid money and probably get it, it will just take longer to get there than it had in the past.

The real project opportunities now though are in the $850-$1,100 PSF market. Still crazy expensive IMO but it seems to be what locals have settled on based off what resales are trading at.

Any chance the West Georgia sites could be developed as office towers, isn't that the current zoning? Would it be profitable at the rate paid for the land?

[misher]

Originally Posted by whatnext

Any chance the West Georgia sites could be developed as office towers, isn't that the current zoning? Would it be profitable at the rate paid for the land?

They tried for condos and the development fees were too high, they tried for rental and city staff quietly told them they wouldn't approve it. I haven't heard an update in months from my friend working on the project but I'll ask if they considered offices next time I see him.

[LeftCoaster]

Staff wouldn't approve rentals? That doesn't sound right.

Doubtful office would work there, but if they sell it as office strata to hot offshore money it may...

[fredinno]

Originally Posted by LeftCoaster

Staff wouldn't approve rentals? That doesn't sound right.

Doubtful office would work there, but if they sell it as office strata to hot offshore money it may...

TBF, it's Georgia Street. Technically not on the CBD, but the prestige of technically being in downtown on Georgia might get companies into it.

[whatnext]

Another sign of distress in the residential market. Joie is still being marketed to individuals, yet here's a listing for six townhomes as a rental investment, for $3.1 million. I'm a bit confused by the price which works out to just $516k per unit, but also the listed square footage of only 2,690 sq/ft for six units?

https://www.rew.ca/properties/R24170...hy&sort=latest

[misher]

Originally Posted by whatnext

Another sign of distress in the residential market. Joie is still being marketed to individuals, yet here's a listing for six townhomes as a rental investment, for $3.1 million. I'm a bit confused by the price which works out to just $516k per unit, but also the listed square footage of only 2,690 sq/ft for six units?

https://www.rew.ca/properties/R24170...hy&sort=latest

Its 2-3 mil a townhouse. Fairview has some crazy expensive townhouses mostly occupied by young business professionals and these have a really nice view. Basically an alternative to Yaletown. They've sold half of Joie so far.

[Changing City]

Originally Posted by whatnext

Another sign of distress in the residential market. Joie is still being marketed to individuals, yet here's a listing for six townhomes as a rental investment, for $3.1 million. I'm a bit confused by the price which works out to just $516k per unit, but also the listed square footage of only 2,690 sq/ft for six units?

https://www.rew.ca/properties/R24170...hy&sort=latest

No distress in this case. There's a housing agreement that was part of the Development Permit requirements that there would be six rental units. Those are what is for sale - they're still hoping to get over $1,000 per square foot for rental units, which might be optimistic, as they're still part of the strata so have to pay strata fees as well as property tax and rental management costs.

[misher]

Originally Posted by Changing City

No distress in this case. There's a housing agreement that was part of the Development Permit requirements that there would be six rental units. Those are what is for sale - they're still hoping to get over $1,000 per square foot for rental units, which might be optimistic, as they're still part of the strata so have to pay strata fees as well as property tax and rental management costs.

Very optimistic!
Probably someone could buy them through a company and rent to themselves though? Do it like a housing co-op where each person buys shares in the company and then gets a lease to a unit with the shares they buy. No idea how much leeway is in the agreement with the city.

[nds88]

REBGV Stats - October 2019

Home buyer activity increases in October

The Metro Vancouver housing market is experiencing a fall pickup in home sale activity.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,858 in October 2019, a 45.4 per cent increase from the 1,966 sales recorded in October 2018, and a 22.5 per cent increase from the 2,333 homes sold in September 2019.

Last month’s sales were 9.8 per cent above the 10-year October sales average.

“Home buyers have more confidence today than we saw in the first half of the year,” says Ashley Smith, REBGV president. “With prices edging down over the last year and interest rates remaining low, hopeful home buyers are becoming more active this fall.”

There were 4,074 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in October 2019. This represents a 16.4 per cent decrease compared to the 4,873 homes listed in October 2018 and a 16.3 per cent decrease compared to September 2019 when 4,866 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,236, a 5.8 per cent decrease compared to October 2018 (12,984) and a nine per cent decrease compared to September 2019 (13,439).

For all property types, the sales-to-active listings ratio for October 2019 is 23.4 per cent. By property type, the ratio is 17.3 per cent for detached homes, 26.2 per cent for townhomes, and 29 per cent for apartments.

Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“The recent uptick in home sales is moving us into a more historically typical market,” Smith said. “Both sale and listing activity is trending around our long-term averages in recent months.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $992,900. This represents a 6.4 per cent decrease from October 2018, a 1.7 per cent decrease over the past six months, and a 0.2 per cent increase compared to September 2019.

Sales of detached homes in October 2019 reached 938, a 47.3 per cent increase from the 637 detached sales recorded in October 2018. The benchmark price for a detached home is $1,410,500. This represents a 7.5 per cent decrease from October 2018, a 1.3 per cent decrease over the past six months, and a 0.3 per cent increase compared to September 2019.

Sales of apartment homes reached 1,384 in October 2019, a 40.5 per cent increase compared to the 985 sales in October 2018. The benchmark price of an apartment home is $652,500. This represents a 5.9 per cent decrease from October 2018, a 2.2 per cent decrease over the past six months, and a 0.2 per cent increase compared to September 2019.

Attached home sales in October 2019 totalled 536, a 55.8 per cent increase compared to the 344 sales in October 2018. The benchmark price of an attached home is $771,600. This represents a 5.8 per cent decrease from October 2018, a 0.4 per cent decrease over the past six months, and a 0.5 per cent increase compared to September 2019.