# In Vancouver, the seller�s market recedes



## the-royal-mail

*In Vancouver, the seller’s market recedes*

http://www.theglobeandmail.com/repo...er-the-sellers-market-recedes/article4389244/

_"Vancouver’s housing market is cooling to the point that the balance appears to be shifting in favour of buyers for the first time in years.

Prices in the country’s most-expensive real estate market remain stable, but activity has dropped sharply.

The number of sales in June, normally one of the busiest months of the year for home deals, dropped more than 17 per cent from May and 27.6 per cent below June, 2011, the Real Estate Board of Greater Vancouver said Wednesday."_

Has the correction begun? Wasn't someone on here just recently wanting to trade in their BC apt for a condo?


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## Square Root

Pretty high probability that the correction is starting. Buying now would be really risky.


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## NotMe

One month does not a trend make, no?


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## dogcom

If you own your own house already and don't have a lot of debt then I wouldn't worry about it. I think it is to risky to sell ones own home in hopes of lower prices down the road.

If you don't own and would like to buy then I would wait because it does seem like we should get a correction here making for a good entry point.


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## phrenk

Wait until the new CHMC regulations come into effect later this month, then the correction will pick up steam.


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## the-royal-mail

Buyers beware. Seems things are not so strong in Toronto, either.

http://www.theglobeandmail.com/repo...-toronto-condo-sales-plunging/article4391684/

*"Cautious buyers send Toronto condo sales plunging"*


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## Four Pillars

Is Royal the new Belguy?


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## Young&Ambitious

It's about time


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## Sampson

Four Pillars said:


> Is Royal the new Belguy?


Hehee. I was thinking and was going to post the exact same thing.

Maybe FP is the new Sampson or vice versa.


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## Sampson

Meanwhile in Calgary...

*"Calgary market not overheated, says expert"*

*"Calgary house activity similar to '07, Prices rise as properties spend fewer days for sale"*

*"Calgary’s the best for global commercial real estate investors, says new survey"*

Rental vacancies are at 1.9%
Unemployment 4.8%
Job growth 4% higher than one year ago.

Thank goodness Canada is not measured by Toronto and Vancouver alone.


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## sags

It looks like a lot of people would rather have lower monthly payments for a longer period of time, ignoring the fact they are buying in a market that is declining.

What do they plan on doing if interest rates go up?

http://ca.news.yahoo.com/home-buyers-scramble-mortgage-rules-change-165947146.html


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## Eder

Well homes in general should be 3x family income and interest rates should be 6-8% so I think there's a lot of correcting to get back to the mean....a lot of pain ahead for many.


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## jamesbe

Ottawa is still apparently rather hot, which is odd. I know an agent he listed 2 houses this past week and sold them within hours.

There was a report on the news that condos in Ottawa were a hot commodity still. Baffling.


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## Jay

jamesbe said:


> Ottawa is still apparently rather hot, which is odd. I know an agent he listed 2 houses this past week and sold them within hours.
> 
> There was a report on the news that condos in Ottawa were a hot commodity still. Baffling.


I'm in the Ottawa market... and getting email updates for condo status updates downtown, and the market has been dead as a doorknob the past few weeks. 2-3 weeks ago, I was getting new listings at about a rate of 3 to 1 for every conditional sale... In the past two weeks, I've gotten a handful of new listings, a few price reductions, but not a single "conditionally sold". I've also been following the market over the past few months(I was shopping), and there's definitely a slight downward trend. Perhaps it is just people being overly ambitious with their asking prices, but places don't generally sell quickly unless they're in a handful of popular buildings. I think there are a lot of sellers trying to hold out in the hopes they'll get their asking price, but it's just not happening... 

A place will sell quickly if it is in a desirable place and well priced - especially if it's a detached house in a good neighbourhood. During the Spring, there were even a few small bidding wars in particular desirable areas.  Those were big-time exceptions though. My perception is that the Ottawa market has been shifting towards buyers in the past few months, but it is happening very slowly, and will not generate the same headlines as TO and Van City.

FWIW, After a lot of thought and calculations of costs, we ended up renting downtown - we realised we'd be paying less per month (even considering mortgage equity) for 5-10 years in a quality rental building vs buying a condo...and the freedom to move quickly was a nice benefit. I'm still following the real estate market closely, but my sense is this is not a good time to buy.

Also, some interesting numbers from a realtor with downtown condo numbers for May which was "hot" according to the local real estate board: http://ottawacondos.blogspot.ca/2012/06/may-hot-or-not.html


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## sharbit

I don't think Torontos inventory is high enough for a decline. Vancouver on the otherhand seems to have excessive inventory in both resale and rental.


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## andrewf

You don't need huge inventories to see a decline. Speculative bubbles are creatures of price momentum. If prices flatten off, speculators may look to exit. There are a high proportion of condos owned by speculators that are not economic investments absent significant price rises.


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## ddkay

I wonder how difficult it would be to change development policy to let muni's control inventory/zoning applications without interference from the OMB. This free market thing doesn't seem to work.


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## Spudd

What I wonder is how interconnected the condo and single family home markets are. I think it's a sure thing that the condo market in Toronto will crash, but I am not as sure about the single family home market. On one hand, they are tearing down single family homes to build condos, so inventory is being reduced. On the other hand, if condos become super cheap, people may decide to buy a condo instead of a single family home.


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## Jay

^^ Good question.... I think you have to look at the type of people that are buying both. Are they buying with minimal down payments? Are they pushing their means? Could they afford the same price with a 2% increase (never mind higher) in interest rates? Did they 'buy now' because they thought housing in trouble and just wanted to 'get in' to the market? If the answer is yes to any of those, I think there will be an effect... though it will likely be more pronounced in the market segments that have more of those types of buyers.

Interestingly in Ottawa, I think it will likely hit suburban homes the hardest - they are a dime a dozen out here, have increased in price significantly and are more often the choice of the first time home buyer scraping together their downpayment. Condos on the other hand, apart from a handful of new projects (and many many more 'proposed'), have been the domain of retirees and wealthier young professionals who have cash. That may change as (if) these new condo projects get built - many of them have significant investor ownership (never a good sign), and while they come at a premium price, often offer less than their older counterparts. 

There's also the argument that older people will downsize into condos - ironically, when we were condo shopping, we actually ran into the opposite a few times - seniors moving OUT of condos to move into a house with their kids or relatives. I'm not sure if a condo is the best place to be as a senior... or at all. Most of the professional rental buildings we saw were generally better run, and perhaps offered an easier lifestyle than condos (A good Super is usually far more attentive/helpful to their residents than condo property managers.. and don't get me started on condo boards). Anyway, I'm not at all convinced that retiring will mean 'let's buy a condo'.


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## andrewf

I expect the effect of a condo market correction on the single family dwelling market to be something like those who would trade up from a condo to a house seeing their equity evaporate and not being able to qualify for the mortgage on a $700k house. If there are fewer people who are entering the bottom of the housing market, it makes it more difficult/expensive for others to trade up within it.

I expect the condo market to see a bigger correction, though.


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## sags

We downsized from a 4 bedroom two storey home to a 3 bedroom rented townhouse.

We are considering a condo as a final move.......but have noticed they are almost all small units of 1-2 bedrooms and no extra room anywhere.

We are used to extra space.........for a den, family room, playroom etc. and we have been keeping an eye out for 3 bedroom condos..........but haven't found anything in a building we would want to live in. We want the amenities.......pool, underground parking, nice lobby, green areas outside, trees etc...............

These size units are rare and from what I read developers aren't building them.

People downsizing want room................so I think the developers are a little off here. They say no one wanted them in the past.....but there are a lot of baby boomers downsizing from big homes and stuffing into a tiny condo isn't on the agenda for them.


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## Jay

^^ That aligns with what I've been seeing - the older 3 bedroom condos seem to be in high demand (even if they're at a premium price), with the 2 bedrooms that are value priced going quickly, and the 1 bedrooms being very difficult to sell at any price.

The newer condos are mostly 1 bedrooms, and overpriced 2 bedroom units... I feel most of the new buildings are aimed at specu-vestors who are looking for a cheap buy-in, and then plan to flip on closing (or rent) or young professionals who can't do math and think renting is "throwing money away". I think these buildings will end up having a high rate of turn over, will be poorly managed....stainless steel appliances only go so far.


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## bigbadbull

I like the way this thread is turning out, its been a good read so far but I would like to raise a few points:

Sags- isn't the point of 'downsizing' going from more room to less? I'm interested to learn what you mean by 'wanting room'. I haven't done any research but I'm sure there are condo's geared towards seniors in popular retirement destinations that do have amenities like pools, tennis courts, lawn bowling, nice lobbies, gardens and the like.

Jay- "(A good Super is usually far more attentive/helpful to their residents than condo property managers.. and don't get me started on condo boards)" You sound pretty knowledgable about the market in Ottawa and RE in general and I would like to know if the supers are just residents of the building who the company pick or are they elected within the building? also would they get cheaper rent/bonuses?


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## Spudd

Supers for rental buildings are normally employees of the building. They generally get free rent and a low salary in exchange for being on-call and taking care of all the paperwork/repairs/etc. At least that's how it worked in the building I used to live in.


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## Sherlock

A lot of the new builds have 3 bedrooms, they're not as rare as you think. My building (built 2 years ago) has a mix of units including 3 bedrooms. But they cost as much as a detached house.


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## andrewf

^ Vancouver or Toronto?

I think Vancouver has stronger regulations around the mix of units.


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## Jay

bigbadbull said:


> Jay- "(A good Super is usually far more attentive/helpful to their residents than condo property managers.. and don't get me started on condo boards)" You sound pretty knowledgable about the market in Ottawa and RE in general and I would like to know if the supers are just residents of the building who the company pick or are they elected within the building? also would they get cheaper rent/bonuses?


Any knowledge I have on the Ottawa market and RE just comes from a lot of research and looking from the past year... I'm no expert, just another poster giving opinions. Perhaps I should have said a good landlord, as a good landlord will ensure there is a good super - and by "super", I mean what Spudd described. A good super will treat their building like it's their own, and treat the residents like they are clients of their business...if they don't, it will affect their business's bottom line. That means keeping the building in good shape, and the people happy. Elected condo boards and the property managers they select are frequently under no such obligations...which is why there are so many badly run condos.


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## Berubeland

I would argue that the reason you see such badly managed condos is because of a complete and total lack of expertise on the part of the condo boards who run the show. It is a volunteer unpaid position that frequently gets filled by nosy old busybodies and troublemakers looking for advantage. 

These volunteers are making multimillion dollar decisions about things they have no idea about. Boilers, cladding, landscaping, renovations to common areas, utility contracts, garbage removal etc. 

The property manager is there to supposedly inform the board but in reality, personality conflicts and cronyism is the winner in many cases. The manager doesn't get a vote. 

Furthermore, there is significant incentive in condo management to continually increase expenses because management companies are paid by a percentage of operating expenses. If you start paying for savings rather than expenses you'll get them. After all, budgets in a well run residential rental building are usually a fraction of the operating expenses for a condo. I would say about 50% or less. 

Let me give you an example, today in parkdale I can get a one bedroom for $700 utilities all in and even free bedbugs. In a condo building in the same area the maintenance fees are close to as much as the rent on the 1 bedroom. (No free bedbugs) Having said that the rental building will have huge capital requirements because of the age of the infrastructure and the condo building will be much newer in most cases. 

I see large problems ahead for those buildings as they age. If they cost that much to operate now, what does this bode for the future? Not only that but the elements in a newer condo will be much more efficient and use newer technologies so the burden of utilities is much less. Taxes are about 1/2 of the residential rental because of the different mill rates. There is simply no reason at all for these outrageous maintenance fees.


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## kcowan

My buddy is looking for a penthouse in downtown Vancouver. One he was interested in was 2000 sq.ft. and offered for $2.1 million. The taxes and condo fees amounted to $2k/mo. Crazy! Add in a mortgage at 4%, and his monthly nut is $9k.


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## the-royal-mail

_"Toronto home sales in July slipped 1.5 per cent compared with a year ago as sales of condominium apartments fell 10 per cent, the city’s real estate board said."_

http://www.theglobeandmail.com/repo...to-home-sales-slip-15-in-july/article4459710/


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