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It Was Heartbreaking, Absolutely Heartbreaking

A report from Bloomberg on Canada. “The housing numbers out of Vancouver, once among the world’s hottest real estate markets, are getting more dismal with each passing month. With Canada’s rising household debt levels ‘perilously high,’ more needs to be done to lift incomes that have stagnated for years within British Columbia’s real estate fuelled economy, according to Tamara Vrooman, chief executive officer of Vancouver City Savings Credit Union.”

“‘Real estate has been our oil, in many ways,’ she said. ‘It’s been the dominant factor in our regional economy.'”

From The Province in Canada. “A few months back, Postmedia News reported that a single-family detached home had been listed in Vancouver for less than a million dollars. As demand shrinks and supply grows, the appearance of Vancouver homes now selling for less than a million is becoming more common.”

“According real estate blogger Steve Saretsky, Vancouver housing sales in the first part of 2019 were at the lowest levels in 30 years. ‘As a result we are seeing inventory grow and prices move lower across all segments,’ Saretsky wrote. ‘We are seeing more homes in East Vancouver selling below the million dollar mark and the vast majority of homes are selling below the tax assessed value.'”

“He also pointed out that the recent big declines in prices for expensive homes was starting to trickle down to the lower end of the detached market.”

From Business in Vancouver in Canada. “There were 10 project launches in the region in April – five of which were wood-frame condo developments in West Coquitlam, New Westminster and Langley – totalling 865 homes. Of those, just 20% have sold so far, said MLA Advsory. That compares with an absorption rate of 43% in April 2018, of the 879 presales released that month.”

“Suzana Goncalves, chief advisory officer and partner at MLA Canada, said, ‘MLA Advisory estimates that nearly 5,000 concrete units within 17 projects have postponed their sales launches [to wait] for more favourable market conditions.'”

“The group is warning that the reduction in new home supply, caused by the slowing housing market, will have significant effects in the long term. Goncalves added, ‘These concrete pre-sale project delays, along with decreases in housing starts by up to 20% province-wide, will have drastic long-term implications on our housing supply, affordability and home ownership.'”

The West Australian. “The State Government has ruled out any change to the 7 per cent surcharge for foreign property buyers despite apartment developers complaining that the impost has smashed off-the-plan sales, putting new projects in jeopardy and damaging job creation.”

“WA Property Council executive director Sandra Brewer said foreign buyers were typically the first movers in off-the-plan apartment sales, which was key to building sales momentum and getting new projects approved. ‘Without those early sales, projects are at risk of not getting off the ground,’ she said.”

From Nine Finance in Australia. “Housing prices are plummeting as Australia’s property market continues to experience the wobbles, and many now fear buying or selling is too much of a gamble. But despite the drop in prices, there are more dwellings on the market than at any time since 2012.”

“Ola Zaryzycki, 63, saw her house sell for $300,000 less than it had been valued at only a year earlier. ‘It was heartbreaking, absolutely heartbreaking,’ she said.”

From Mirage News in Australia. “UNSW Business School’s Jonathan Reeves notes there is a large amount of historical evidence that indicates Australian house prices by 2017 were a very large bubble.”

“‘There were three primary factors indicating a housing bubble. Firstly, values were not supported by fundamentals such as household income. Secondly, debt levels to finance housing were excessive. And finally, there was a high presence of speculative investors,’ he said.”

“Dr Reeves has looked at the bursting of historically large housing bubbles and says that peak-to-trough falls typically exceed 30 per cent.”

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This Post Has 38 Comments

  1. What do you know, I found an Australian using the B word.

    ‘Suzana Goncalves, chief advisory officer and partner at MLA Canada, said, ‘MLA Advisory estimates that nearly 5,000 concrete units within 17 projects have postponed their sales launches [to wait] for more favourable market conditions’

    ‘The group is warning that the reduction in new home supply, caused by the slowing housing market, will have significant effects in the long term. Goncalves added, ‘These concrete pre-sale project delays, along with decreases in housing starts by up to 20% province-wide, will have drastic long-term implications on our housing supply, affordability’

    If you are so worried about affordability, finish the gotdam airboxes ya greedy bashtards, and slash those prices!

  3. ‘Real estate has been our oil, in many ways’

    Tamara, you might want to sit down. You got no oil. And now your bubble has burst, so that’s going away fast. I hear there’s some jobs in the Yukon greasing snowmobiles.

    1. One similarity comes to mind: Like the real estate market under present day mania conditions, oil is prone to extreme boom and bust cycles.

      1. Like the real estate

        The majority of money spend on construction ultimately goes to buy energy. A construction mania stretches oil supplies. In other words, a Chinese debt fueled ghost city building boom jacks up the price of oil.

    2. ‘Real estate has been our oil, in many ways’

      At least oil isn’t just being sold to each other over and over again at higher and higher prices. So there is some logic to its price based on supply and demand as it gets continuously consumed and produced.

  4. Has anyone else noticed that Zillow changed the way their search results display has changed?

    Search for sale on a given ZIP (80210 as an example) and the _price cuts_ are no longer visible on the page of results, you have to click on the individual listing for the used house to see the most recent price cut.

    Why is that, REALTOR? What are you hiding?

    1. The lower price reveals were effecting our sales and thus we classified them as a hate crime against hard working, cookie baking, shack Pamphlet handing out, realtors as a whole. We had those removed, thanks zildo!

    2. Yup. You used to be able to see the price drops just by mousing over the homes on the map.

  5. From a previous HBB post reference.

    – IMHO, the global real estate bubble is nothing more than “panem et circenses” (bread and circuses) to distract from economies ravaged by central bankers (locusts) via financialization slight-of-hand. However, we’re all living on borrowed time. Can-kicking is not a long-term economic policy. Eventually, the piper must be paid.

    https://www.theglobeandmail.com/report-on-business/rob-commentary/canadas-a-real-estate-country-just-waiting-for-a-crash/article31457558/
    Opinion | Canada’s a real estate nation, just waiting for a crash
    Konrad Yakabuski | Updated May 16, 2018

    “Hewers of wood and drawers of water, not. Canada is now a real estate nation, with little else to keep the economy from sinking into an even deeper funk. Gross domestic product shrank 0.1 per cent in May, and that’s after excluding the negative impact of Alberta’s wildfires on oil sands output. Yet, we’re still buying houses like there’s no tomorrow.”

    “The so-called economic rotation from oil to manufacturing exports that rate cuts (and the related decline in the Canadian dollar) were supposed to produce has not only failed to materialize but policy makers have pumped helium into an already overheated real estate sector that is masking structural weaknesses in the economy and setting us up for a bigger fall.”

    It’s “difficult to believe that any progress has been made in terms of economic rotation. Indeed, the opposite appears to be the case, given real estate’s increasingly large share of economic output,” TD Bank economist Brian DePratto noted in a Thursday report. “Rising home prices do have positive knock-on effects for consumer spending, but over-reliance on the real estate market is hardly the sign of a healthy economy.”

    “The real estate sector’s share of GDP has grown 0.4 percentage points in the past two years alone, TD noted, while the share of everything else (including oil and manufacturing) has shrunk. Going back 10 years, to May, 2006, manufacturing output is down 11 per cent in real terms and mining (including oil) extraction is flat. But real estate’s contribution to GDP has surged 35 per cent since then.”

    “Who’s to blame? The very policy makers now trying to cool the market with demand-side measures that instead risk crashing the entire economy. Not only have low interest rates and restrictive land-use policies created an affordability crisis by driving prices for detached homes through the roof, any sudden reversal of those policies would take the floor out of the market.”

    “Politicians who claim to be fighting for the middle class have priced most of them out of the Toronto and Vancouver housing markets.”

    “If prices do start to fall, even moderately, buyer psychology will shift rapidly and a reverse wealth effect will set in. A real estate crash (which bypassed Canada during the last recession) could become a self-fulling prophecy.”

  7. Oh no more sadness in the MSM. Holding my tears back for this poor woman. Heartbreaking is a strong word for gambling. Perhaps a more suitable term would be “disappointing” but that’s what happens when you play the “Wheel of realestateFortune”.

    “Ola Zaryzycki, 63, saw her house sell for $300,000 less than it had been valued at only a year earlier. ‘It was heartbreaking, absolutely heartbreaking,’ she said.”

    1. “…saw her house sell for $300,000 less…”

      It would probably be beyond words if she had borrowed and spent that faux equity on the good life.

    1. Disgusting.

      Hey REALTORs, I did a lighting retrofit project in August-September 2018 at a grocery store in Denver managed by a millennial REALTOR who “took the job” just to “have some more regular income coming in.”

      Get a job with some dignity, and self-respect, like this guy did. Being night manager at a grocery store isn’t easy, but life isn’t easy either…

    1. Lies, damned lies! That website is another hate crime. Needs to be banned.

    2. At the end of his article, this guy pitches Fundrise, a peer-to-peer real estate crowd funding scheme. It seems that if he were really concerned about the housing bubble he would steer clear of this novel asset class.

  11. The Uber drivers forced to sleep in parking lots to make a decent living:

    “Every Saturday morning before the sun rises, 35-year-old Uber driver Sultan Arifi rolls up the sleeping bag in the front seat of his car, places it in the trunk, and prepares for another day of work.

    He will spend the next 12 hours picking up as many passengers as he can on the streets of San Francisco before returning to a grocery store parking lot in the north of the city to sleep, often for six hours or less, rising as early as he can on Sunday to do it all again.

    The 35-year-old immigrant from Afghanistan commutes into San Francisco from Modesto, some 80 miles away, where he lives in an apartment with his wife and four children. He is one of a growing group of Uber drivers in San Francisco who spend nights in their cars in parking lots across the Bay Area on the weekends. Some come from places as far as eight hours away to make a living before returning home.”

    https://www.theguardian.com/technology/2019/may/07/the-uber-drivers-forced-to-sleep-in-parking-lots-to-make-a-decent-living

      1. ‘In 2016, Rajesh Raut started driving an Uber taxi in Mumbai, hoping he could earn more than the $215 he received each month for making flatbreads at a roadside stall. Thanks to attractive cash incentives offered as Uber lured drivers in one of its biggest markets outside the United States, Raut’s monthly earnings jumped to $1,280. He managed his car loan and home rent with ease, and sent more money than before back to his family in a village in eastern India.’

        ‘But as Uber slashed incentives, Raut’s earnings dwindled swiftly. His income dropped to about $540 a month this year and he defaulted on his taxi loan payments. Deciding after an accident that he couldn’t afford to fix the vehicle, he quit Uber and now his monthly income, from a new job driving a truck, has crashed to $200.’

        “There is no benefit in driving for Uber … my life was much better just as a cook,” said 26-year-old Raut.’

        ‘Former Uber India executives say incentives were sharply cut in early 2017 because of growing pressure from the U.S. head office to improve financial performance ahead of an initial public offering.’

        https://www.reuters.com/article/uber-ipo-india-drivers/rpt-as-uber-gears-up-for-ipo-many-indian-drivers-talk-of-shattered-dreams-idUSL3N22K3YN

    2. This wouldn’t be so bad if sleeping in a car was more like sleeping in the back of a sprinter van with heating and AC. This is why I am hopeful for an electric Sprinter van.

      2. an electric Sprinter van

        Because Luxury is the best solution to poverty, vagrancy and homelessness.

        1. Cell phones were once a luxury, but they are now a common-day item. Many things start out as luxury at first and come down in price.

    3. I bet his car smells absolutely wonderful after sleeping in it and not showering. Yuck. This is your eCONomy, America. 35 year old Muslim immigrants sleeping in parking lots, working for less than minimum wage.

  12. “‘Real estate has been our oil, in many ways,’ she said. ‘It’s been the dominant factor in our regional economy.’”

    Except that unlike oil, overpriced real estate is nearly useless…

  13. Are you missing out on the dips buying opportunity Wall Street is currently offering?

    1. Realistically, I can’t see the Fed allowing this dire scenario to occur. This guy must believe the Fed may someday find its levers broken beyond usefulness.

      Why a 60-65% Market Loss Would Be Run-Of-The-Mill
      John P. Hussman, Ph.D.
      President, Hussman Investment Trust
      May 2019
      …
      One might view the very comparison of present stock market conditions to 1929 market peak as exaggerated and preposterous, but then, one would be wrong. The fact is that on the valuation measures we find most strongly correlated with actual subsequent long-term and full-cycle market returns across history (and even in recent decades), current market valuations match or exceed those observed at the 1929 peak.
      …

      1. So you believe the Fed has now discovered a way to completely control the stock market so it can never crash again? Interesting.

        1. The Fed is terrified of a recession and if the market corrects big time they’ll do more crazy stuff to prop it up. They are already talking about directly buying stocks like the Japanese and Swiss central banks. Yes it’s gonna end badly but they’re kicking the can as long as possible.

    2. The dealer maker is working his magic snowflakes.

      Pphttps://www.cnbc.com/2019/05/08/trump-says-chinas-vice-premier-is-coming-to-the-us-to-make-a-deal.html

  14. Yawn
    Another day an other lender announcing they are offering a TRUE NINA loan product.
    I wonder how this will end.
    Non deposit based mortgage lender by the way.

  15. The government in BC took specific actions to discourage foreign buyers. Looks like it has worked. Lower RE prices are a boon to young families looking to buy and to society in general. Who says it is a good thing that you have to work your entire life to put a roof over your head? Gorillas are theoretically less evolved then us but only takes them a few minutes a day to construct their shelter.

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