Vancouver Real Estate in the News: "Boom or Bust" in 24 hours and on CTV
I happened upon a copy of 24 Hours this morning and their provacative deadline "Boom or Bust: 24 Hours and CTV look at the Lower Mainland real estate market". Okay well the "Boom or Bust" part was dramatic but the rest was more than a bit dry. And under the headline was a shot of the bald head of one of my Vancouver REALTOR colleagues surrounded by the recently completed Spectrum towers beside GM Place (and on top of the new downtown Costco).
Inside was the story of Christie Coughlan and her frustrating search for condo that is bigger than a parking spot. Not a lot of substance really in the main article. Around the article (under in the online version) is more useful info with some "Good News" about why prices will rise more slowly now; some ways to buy a cheaper place (equity co-ops, leasehold property (beware), and mixed mortgages); and lastly some data showing how much income different sized families have to make to afford to buy a home.
I have copied the whole article in below becuase I don't think that link will work forever, or maybe even tomorrow.
Matthew Collinge: www.604homes.com - Royal LePage Westside
Should I buy now or should I buy later...?
By IRWIN LOY, 24 HOURS
At issue:
24 hours Vancouver and CTV have teamed up to bring you an in-depth look at the current real-estate market in the Lower Mainland. The series kicks off today by exploring what homeowners can expect with current market conditions.
Let it be known: Christie Coughlan is not in the market for a shoebox.
Unimpressed at the idea of throwing her money at a 400-sq.-ft. condo, the 28-year-old advertising exec is still living on a month-to-month lease.
"It's hard," says Coughlan of her now two-month-old search to find a home. "It's more expensive than I expected."
The first-time buyer might be in for a long wait.
"I'm expecting a year," Coughlan says. "I'd rather find the perfect place than settle."
Patience may be a virtue. But analysts expect apartment prices to increase by eight per cent over the next 12 months or so. That may be less than the staggering double-digit increases of the last two years, but could it be enough to price Coughlan out of the market even before she has time to set foot in it?
Realtor Ken Wyder has seen it happen.
"The market's moved so dramatically in the last couple years," says Wyder, an agent with Remax Select Properties.
"I've started working with people and we find that what they could afford when we started, they often can't afford a few months later."
It's that kind of frenzy that's sparked bidding wars over unexceptional properties.
"It's just fear. Pure fear. I don't see anybody winning here," the realtor says.
Wyder admits he gets a lot of blank stares from other realtors when he mentions that.
Or this: Ken Wyder, successful west side realtor, is a renter.
"Even if I had a big wad of cash in the bank right now, I don't think I'd buy today. I think now the pressure on prices we're seeing is not fundamentally sound."
To be clear, few observers, Wyder included, are predicting a crash anytime soon in Vancouver, or even a drop in prices.
Problems from the U.S. subprime mortgage crisis may eventually spill into Canada.
"But is it going to crash? I doubt it very much," says Robert Helsley, senior associate dean at UBC's Sauder School of Business.
"I think caution's the word," says realtor Wyder. "It's not like I'm saying freeze or just sell. Just buy smart. Take a deep breath. Know it will calm at some point."
GOOD NEWS?
Three reasons why prices won't rise... as much
1) MORE HOUSES TO CHOOSE FROM
Analysts expect more homes to come on the market, giving buyers a bit more to choose from.
The flip side: That's great if you're in the market for a condo. But you might be up the creek if you're looking for a single detached home.
2) MORE INCOME
Analysts say our incomes are growing! "We're actually seeing housing affordability improve in 2008," says RBC's regional manager for mortgages, Kevin Lutz.
The flip side: That's putting a smiley face on this sobering fact: Affordability in Vancouver hit a new low last quarter, according to the RBC Affordability measure. Vancouverites spend significantly more of their pretax income on the costs of owning than do residents in any other Canadian city.
3) FEWER PEOPLE
Vancouver's lofty housing prices have soared so high that they've actually bumped would-be buyers out of the game.
The flip side: That may be good news for those still lucky enough to buy. But analysts are still expecting price hikes well above the long-term average.
BUYING CHEAPER?
CO-OP HOUSING
Not to be confused with non-profit co-ops, owned co-op buildings are actually limited companies, and owners buy shares in the company. Co-ops are often cheaper than traditionally bought housing. On the downside, bank financing is usually more difficult to obtain.
LEASEHOLD
Rather than owning both the land and the apartment on it, leaseholders own only the building and pay fees to the landowner - often the city. The downside: Leaseholds are for a set term. Don't plan on sticking around for multiple generations.
MIXED MORTGAGES
Mixed mortgages, offered by Vancity, let you share the cost of a mortgage with a family member or friend. In effect, splitting payments.
The downside: Ever wished your mother-in-law could own part of your house?
SINGLE - CONDOMINIUM
Median price - $291,415
Qualifying household income - $64,654
COUPLE - TOWNHOUSE
Median price - $424,713
Qualifying income - $93,059
FAMILY - STD. TWO-STOREY
Median price - $609,092
Qualifying income - $133,584