Wednesday, June 19, 2013

Lay of the Land

Sales are definitely on a little up-tick in Vancouver. It remains to be seen if this is a temporary phenomenon of pent-up demand from the election jitters or a more significant trend. It may also be buyers jumping in on rate fears, forgetting that while higher rates mean they can afford less house, house prices also drop if you give them a chance!!

There seems to be selective HAM buying at the higher end which I think is 'getting money out while we can'. Probably most of the recent higher sales from what I can gauge has gone to HAM buyers. However HAM is not responsible for the recent up-tick in over-all sales, only for the higher end sales.

So far Flaherty's entreaties and reining in the CMHC has taken housing off the boil but has not brought about a significant correction.

Outside of Vancouver, we are in full out correction mode in some places.

Take a look at the Gulf Islands for example.

Here is the June report of one well known Gulf Island Realtor:

2-7 years to sell some properties after major price reductions.

And here is a report of another Realtor for houses sold in 2012. While the report is 6 months old, it will give you an idea of what happens when we are in a buyer's market. We are not in a buyer's market in Vancouver yet. If you listen to the report you will see and hear what it looks like.

For now we wait and see who wins the cat and mouse game. Interest rates have taken a significant jump up. HAM of course are oblivious to Interest rate changes, as are big buyers, which means the average could be skewed again at month's end.



11 comments:

  1. On second thought, and after the frustration has subsided, HAM buy either SFH or NEW condos. They won't be bailing out the resale condo/townhouse market.

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    1. Feck indeed. I am beginning to believe that HAM are a permanent fixture of our RE market. Not just buying, but flipping too! Interestingly enough I have seen more HAM listings too. bought a year or two ago and relisted with cosmetic or no chnages for a big chunk more. I guess that's how they made their dough back home, so why not repeat it here.

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  2. Don't forget prices are also down in many segments. If you have been frustrated and see prices down 10% or so in a building that you have been monitoring for years it almost becomes too much to resist for some. The problem is that the next pool of buyers is another 5% down in prices. Or, more accurately, 5% down in carrying costs.

    Rising interest rates will have a disproportionately negative effect on BC simply because its citizens owe more than anyone else. Variables going from 3% to 5% will have a big impact on those of us with $500,000 mortgages. And, because prices have been flat to down over the last five years, many of these people have little to no equity cushion. Basically, artificially low interest have allowed a lot of people to get away with bad decisions. Just think about the failed flipper turned landlord grossing a 3% yield, nice business that's gonna be. Hope you have the cash to cover that inevitable special assessment because you might have trouble tacking it onto your mortgage.

    Another underreported story is the prevailing weakness in the mining industry, layoffs are on the way, so deleveraging in China is going to hurt us in many ways. And, I would bet that many of the so called all cash buyers from China borrowed some of that money from somewhere. Remember the country has a massive shadow credit system that is currently under stress.

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    1. All your points are valid

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  3. Those links are rather stunning. But now down with a database error. I archived two pages from the second, did Fish or anyone archive them all? I missed it when fresh, but it's pretty relevant.

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    1. Very odd that it went away. I have had that link in my inbox for months and it worked just great until recently. Maybe the Realtor whipped it off, when he saw the traffic.

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    2. It seems like it is working again

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  4. This is serious

    http://www.businessinsider.com/pboc-tough-stance-amid-liquidity-squeeze-2013-6

    It remains to be seen what effect it has on the flow of hot money to our Province

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  5. Fish,

    They've been flipping forever. They buy expensive SFH/land, knock down the existing house and rebuild. Apparently the 2.3-2.6M market (flipped by foreign $$/sold to wealthy locals on credit) is doing well but the 5-6M market not so much. The end buyer for the 8-10M product isn't there...having trouble moving money out of China... from what I hear.

    These are the vagaries of the micro-market, neighbourhood, product, age, etc. Who knows where it settles. What do you think your above quote means for our market. More outflow or less? I can't tell anymore. We're at the freakin' whim of the helm of China as to whether or not they'll see money leave the country and find a home in a more stable place or whether they now want all chips in in order to try and stabilize the banking sector. Who the freak knows? Not I.

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  6. 414 new
    211 price change
    220 sold

    7887 detached
    9392 attached

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