Always the Right Time to Buy! Cheap Rope For Vancouver RE Buyers

“If homeowners can just hold off selling, the Canadian housing market will emerge fine from its current “deep freeze”. According to a recent TD Economics housing forecast update, the market is expected to gradually recover from the effects of the COVID-19 pandemic. After an anticipated “historic” plunge in sales in the month of April 2020, a “much stronger activity” is seen next year. A lot of that depends on whether homeowners can avoid distressed selling during this pandemic. “Absolutely key to our forecasts is the assumption that listings mirror sales by dropping substantially in the near-term and recovering gradually thereafter,” Rishi Sondhi, an economist with TD Economics, wrote. By holding off on selling, homeowners can do one thing for the market. “This puts a floor on prices and sustains relatively tight-supply demand balances across most markets, allowing for the resumption of positive price growth as provincial economies are re-opened,” Sondhi explained.” – excerpt from ‘Homeowners avoiding distressed selling key to Canadian housing market recovery: TD Economics’, Carlito Pablo, 1 May 2020, Georgia Straight No, folks, that ‘analysis’ is not from ‘The Onion’. Seems like the TD analysts have found a sure fire way of maintaining every bull market, forever… (it’s easy: just get sellers not to sell). It’s remarkable that this kind of ‘analysis’ can get parroted on & on without getting called out. Remember: Sellers aren’t competing with Buyers, they’re competing with other Sellers. How many Vancouver RE speculators (essentially each and every buyer for the last 10-15 years) are going to realize their thus-far-paper profits? We are already seeing many anecdotal examples of people who bought in 2016 or later taking losses on resales. – vreaa

The Averages powered up in September per Larry’s numbers. Not altogether unexpected. While not as strong as August, September this year was a lot stronger than 2012. Was this the last of the pre-approvals going through? Certainly there seemed to be a division later in the month with lower sales/list showing up. We have also had some big sales. As I documented earlier in the month, there were two $7 Million + sales in West Van alone (and a slew of $4-5 M sales). One was to a local buyer and one to a HAM from what I can ascertain. These numbers certainly baffle me. To spend $7 M on a house, requires a net worth at least twice that, and at a tax rate of even 30%, that’s over $20 Million of earnings! How many people have that sort of income? Then I remembered that some banks were paying their senior executives over $10 M every year as was Telus. MOI ends the month at over 7 for SFH and 6 for Apartments. The bubble is not restricted to residential BTW. I spoke with a  commercial realtor a few days ago and he said there is so much money in this town looking for a home, that yields on smaller, good retail and office packages have reached silly low levels. The money is local professionals looking for diversification, Eastern retired money and of course hot offshore money. “If there is a tenant turn-over, the lost rent and expenses associated with tenant inducements and costs can bring the yield down to zero for that year. They just want a low yield in a tangible asset that can keep up with inflation. Of course if there is a serious recession in our city, there will be a LOT of unhappy landlords”. He explained that is one reason for the high turn-over of tenants in particularly retail businesses. “The rents are just too high”. For example it is cheaper for a landlord to leave a unit empty until it finally rents, even to a weaker tenant , and lose the few % return while he/she waits RATHER than lower the rent much.  If you lower the rent say 10%, that could drop the value of your property significantly in this bloated market, where every dollar of return is accounted for in the price. Whence go we? The pre-approvals must be done. The market now sinks or swims on it’s own. I suspect the HPI will still come in lower for September (it will if compiled fairly by the REBGV IMHO). We should know soon if this is the case. As for the blog, I will be going fallow for a couple of weeks. I have a few matters to attend to and hope to be done near mid-month. If all goes well, I will return with commentary and the numbers at that time. May throw stuff in the comments from time to time. Have a great October.

This is the residential address for the apartments above the retail building at 2409 Main Street. Our 1937 image shows there was a different arrangement to the building in those days, with several main floor units that these days have become two more retail stores. We think they were offices – in 1932 City Electric Company operated from 154 East 8th, as well as BC Monumental who designed stone monuments. In 1936 both 152 and 154 were vacant (as they had been the year before). Upstairs, 156 East 8th had 10 apartments. The Main Street (left hand) part of the building was developed by J B Mathers in 1910, with A J Bird as architect. Two years later W P White was hired to design an addition on East 8th at a cost of $9,000, which would be the four upper windows on the western end of the building. Before the building was painted, it was possible to see a slight change in brick colour. In 1937 the building appears to have been given a makeover, with a name, ‘The Crosbie Block’, and 13 suites upstairs but the numbering started at ‘0’, presumably to avoid trying to lease ‘suite 13’. Stuart Thomson  photographed it that year, and that’s where our Archives image comes from. We have no idea where the Crosbie name came from; Charles Crosbie was the only wealthy resident in the city with that surname; the retired BC head of the Royal Bank, who lived on Angus Drive. In 1952 there was a newly completed retail store that became home to the Standard Sewing Machine Center. By 1985 it had become a cafe, offered for sale for $29,000. In 1990 156 East 8th was a 1,000 sq ft retail store that leased for $400 a month. The twelve remaining residential units now have ‘Crosby Building’ over the door in gilded lettering, and a 2-bed apartment rents for $2,990. Downstairs, Melo Patisserie have one retail unit, (replacing the Nice Cafe – ‘Mount Pleasant’s original greasy spoon cafe’ – that was here for many years) while the Express Rut Bar offers root touch-ups – ‘the missing link in the hair industry’, for $65. Image source: City of Vancouver Archives CVA 99-5012 1418    

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Here we go again… Mercer recently came out with their 2016 Quality of Life Survey. As usual, the media misused the survey to brag about how Vancouver is the bestest of the best. What they failed to point out is what the survey is actually trying to determine. When executives are temporarily relocated to another city, they frequently will receive a hardship allowance. For example, when an executive in a city like Vancouver is assigned to Jakarta, Indonesia, Mercer recommends a 25% hardship allowance. In calculating their index, Mercer considers these ten categories: Political and social environment (political stability, crime, law enforcement, etc.). Economic environment (currency exchange regulations, banking services). Socio-cultural environment (media availability and censorship, limitations on personal freedom). Medical and health considerations (medical supplies and services, infectious diseases, sewage, waste disposal, air pollution, etc.). Schools and education (standards and availability of international schools). Public services and transportation (electricity, water, public transportation, traffic congestion, etc.). Recreation (restaurants, theatres, cinemas, sports and leisure, etc.). Consumer goods (availability of food/daily consumption items, cars, etc.). Housing (rental housing, household appliances, furniture, maintenance services). Natural environment (climate, record of natural disasters). Because these executives will continue to earn their base salary plus any hardship allowance, and will be housed by their company, local incomes and housing prices are not even considered. The idea that incomes and house prices have no bearing on quality of life is absurd. Any true measure of livability would need to consider both of these factors. This would be especially true for young families who are just starting out. So, in light of the deficiencies of livability surveys that only consider temporarily relocating corporate executives, I’ve adjusted Mercer’s numbers to take into account incomes and house prices. For example, if Mercer thinks City A is 5% better than City B, but pay is 5% higher in City B, they would tie in my adjusted index. The same would be true if housing in City A is 5% higher than City B. I’ve taken the latest available data from Mercer (for English-speaking cities), and adjusted the index to account for incomes and house prices. Here are the results. Vancouver is without question a great place to live for visiting executives, home-owning retirees and the super-wealthy. But for young families just starting out — not so much.

Earlier today, the VPSN wrote to City Council to offer our support for a motion entitled “ A People-Focused Gastown: A Bold, Forward-Looking Vision for a Vibrant and Prosperous Neighbourhood .” A long with our note of support, we offered a few ideas which we felt could strengthen the objectives of the proposal. By way of background, the VPSN has long advocated for improvements to Gastown public spaces. We have programmed several events in the neighourhood, provided input to previous planning and design efforts, and, most recently, participated in a Council walking tour of Gastown that took place late last year. Based on our work in the area, we offered four key suggestions: (1) Recognize that the issues facing Gastown public spaces are complex. There is not going to be an easy solution to the challenges facing Gastown. The area in question has a complex transportation network, a number of overlapping uses (commercial, residential, office, social service, etc.) and also represents a meeting point between a number of different communities, each with varying needs. Work on this important initiative needs to be undertaken with care and consideration. Please resource it appropriately (beyond the current capital budget allocations). Be wary of anyone promising an easy fix. (2) Go bold. Enhance a mix of spaces and places through placemaking & programming. Maple Tree Square and Water Street are central to the renewal of Gastown public spaces, but a comprehensive effort should also give consideration to other critical public space and placemaking opportunities within the neighbourhood, including: Utilizing street-end segments of Cambie, Abbott, and Carrall (i.e. north of Carrall) for supplemental gathering areas Re-opening the CPR right-of-way that runs diagonally between Columbia and Pender Considering new opportunities in commercial laneways, including Homer-Cambie-Cordova Alley and segments of Harbour Light Alley Ensuring a clear integration with Trounce/Blood Alley which has been undergoing a concurrent redesign process (3) Go bolder still. Use the opportunity to establish strong public realm connections to adjacent areas. Similar to the previous point, the present work presents an opportunity to strengthen the broader downtown public space network, by connecting Gastown to other nearby areas, including, but not limited to: CRAB Park – Through a potential connection to/from Carrall Street across the railway tracks Granville Street – Ensuring linkages to an enhanced study area for the Granville Street planning currently underway Waterfront Hub – future-proofing the Gastown work so that there can be appropriate tie-ins to the anticipated Hub project (4) Work with Musqueam, Squamish and Tsleil-Waututh Nations (MST) and urban Indigenous peoples and other cultural communities to ensure the public realm tells a broader and more equitable story. The motion references local First Nations in the preamble, but not in the actual recommended directions. We feel this is an oversight, and encourage you to incorporate language that explicitly directs staff to work with the local Nations and urban Indigenous people when planning for the future of Gastown. Further more, the area has served as a meeting point for a number of cultural/demographic communities – in particular through its connection to Luk’Luk’l, Chinatown, Paueru Gai (Powell Street), and the Downtown Eastside. Ensuring that staff bring a cultural (and broader) equity lens to this work will help to ensure that the resulting improvements are more inclusive and accessible.