image from hereIt's probably not news to you, but the BoC cut the prime rate by a quarter point today. I'll bet that all those that scrambled for pre-approval and bought over-priced shacks in the summer will be happy that they did so.
I have read rumours (no links) that the BoC will be cutting rates by another 3/4 of a point before a year has passed. Smoking, impervious economy and all, y'know.
It will not save this (or other) doomed market(s) though, the writing has been on the wall for a while (4 years...), and I believe that the psychology has changed. There will still be sales - there always will be - but for less and less until purchase prices catch down to rents.
33 comments:
Speaking of rents: :-) I see so many places for rent especially in the downtown condo scene, that I believe this is a "LEADING" indicator. Available now means empty. One month of lost rent is 1200 to 3000 lost profits for 1-2 bedroom units. If you are in this price range you have unlimited choice. I am seeing rent DECREASES each day on many units. Remember rental vacancy DOES NOT APPPLY to buildings that are strata owned, only to buildings that are 100% rental by ONE owner! Spectrum is really desperate! Renters! Negotiate you are the one in control and for cryin out loud don't sign a lease because you'll get a way better place in six months, and the owner(s) will have another period of no income!
Available now means empty.
And bleeding multiple thousands of $ every month. Some deep pockets are needed to hold on.
Negotiate you are the one in control
Absolutely. People are intimidated by their landlords, afraid of ending up on the street, but there are a lot of illegal suites and empty condo's around.
If you are "forced" to rent from an amateur, feel free to call them at any hour to tell them that the outside light is burned out (you are only responsible for the inside of the house). Tell them that you can't cut the grass because you hurt your back trying to catch a rat, so he'll need to make arrangements (and get an exterminater before you call the health department). Is there mold? That is a health hazard. Demand that the place is up to code, with hard-wired smoke and carbon monoxide detectors. Is there an illegal suite? Tell them that you won't turn them in if they let you have your German Shepherd, Golden Retriever and 3 cats, and $200/month off the rent.
Niggle and nag,
and wear dem down,
we gonna chase dem infesters,
dem specuvestors,
outta town,
dem prices going down.
Dem going down.
(you can wrap that around Marley's Baldheads)
strataman is right. There are hundreds of rentals that do not show up in the official stats.
Here in Hamilton there are always places to rent. Most being absolute crapholes.. with Slumlords too boot. Been there done that.. never again.. I will be the landlord... Prices vary depending on the type of crap hole you are looking for. Recently an older building in the downtown core was gutted and turned into condos and when they were advertising them for sale, I believe they were going around 70 k to 100 k depending on the suite..They were more than 500 sq ft of space..
Heres something...
did a search on craigslist for the word "Spectrum" in the apts/housing for rent.
159 items were returned - this is by no means scientific.
looking at the total number of units in the spectrum development there are a total of 900 units.
thus 17.6% of the whole development could be rentals. thus minimum of 20% speculators?
i am no scientician - but just thought it would be neat to do some maths.
cheers,
spark
Spectrum is running 60 to 70% rentals,inside information and I cannot reveal the source! Sorry!
Spectrum=future slums?
Patiently Waiting said...
Spectrum=future slums?
Yep definitely probably by or before 2010. A couple of long established realtors I know, say they actually will not take listings for these units, as they have a reputation for satisfied clients. I have never heard this before!
"Spectrum=future slums?"
Yep definitely, it reminds me a bit of Anchor Pointe for some reason!!!
Anonymous said...
"Heres something...
did a search on craigslist for the word "Spectrum" in the apts/housing for rent. 159 items were returned - this is by no means scientific."
That's total BS. I checked right now. No way that its 159. It's 215. ;) Get your facts straight and stop posting LIES about real estate!!! (tongue firmly in cheek...)
But seriously, thanks for the tip. It's quite an entertaining number to watch via craigslist...
"Remember rental vacancy DOES NOT APPPLY to buildings that are strata owned, only to buildings that are 100% rental by ONE owner!"
I don't understand what this means. Can you explain a bit more.
I think the commenter implies that RENTAL VACANCY is only reported from managed rental buildings (such as apartment buildings, not condos). There is no way to report on the privately owned and managed rental units. While the stats on managed properties are available.
So while rental vacancies in apartment buildings is low, there are far more vacant condo suites that the investor-owners can't find tenants for. The rent for managed rental buildings is much cheaper than the rent for a privately owned condo. The apartment building was developed decades ago at much lower prices, while the condo was developed (and SOLD!) during the astronomic prices of a long lasting speculative bubble.
There are simply not enough people in this town who can afford to pay the rents required to cover the mortgage and other costs of all those new condos. The "worldclass" township of Vancouver does not have the plethora of high salaried jobs that a true world class city like San Francisco, New York or London does.
It makes it tight on the affordable rental market, but eventually the money runs out and the foreclosures and sell offs should happen.
'tis better to rent and live below your current means near the top of a speculative bubble, than to sell your soul to the financial suicide of a 40 year mortgage.
I've been watching the Craigslist listings for Spectrum for the last five weeks. It is a comedy. So funny in fact that I arranged a viewing of some suites with one of the property management companies. Really nice folks but the sales tactics were hilarious. We'd look at a studio, then they'd tell us how all units in the building were "going fast" and how that studio was "the last one" and such. Anyone who could believe that deserves to have $1400/month extracted from them, which is what was being asked to rent the place.
Strataman, you seem to have good knowledge of the rental market. What's your sense on what would be reasonable rent at Spectrum or other new downtown condos?
Condohype: "What's your sense on what would be reasonable rent at Spectrum or other new downtown condos?" The going rate for a 1 bedroom with den in the "older areas" (3-5 years old) like along Marinaside and Beach 700+ sqft is $1400.00 compared to the 500 sqft Spectrum 1 bedrooms which due to the smaller size, budget finishes and appliances, poor and undersized recreation facilities, absolutely NO visitor parking and some units with NO private parking, I would say $1100.00 should be the max a renter should offer. That is really only a $300.00 premium over a standard apartment unit, for which you get in-suite laundry, and a new feel fo a couple of years. Two bedrooms for the same reasons would be 1800-1900 in the Waterfront area I mentioned, and no more than $1400.00 at Spectrum. They may rent a few above that for a few months to the nieve, but once they are familiar with the area, the tenant will move. This means another month vacant. I repeat DO NOT SIGN a lease at Spectrum, insist on month to month and then go for a rent reduction after a few months!(Besides leases with spec/flipper/landlords puts them in a position of landlord neglect for a year). Suprising to some you will have problems in these type of new units, and unless your landlord is diligent in chasing the Concord Warranty dept for the first year you the tenant will suffer. After the first year expect no service from amateur landlords, many who think that the building maintenance persons will fix in-suite problems. Remember building maintenance will not step in-side a suite unless it is an emergency. If your toilet plugs YOUR private new landlord has to arrange for the plumber, and so on. Suprisingly many tenants( and newbie landlords) are unaware that private condo's are not maintained by building staff! :-)
newcomer (I don't understand what this means. Can you explain a bit more.) Bby summarized it perfectly! They are never included in rental stats!
Strataman, you're my new favorite Boomer. :)
I think we've all been gleefully been looking through Craigslist in the last few weeks. I had a practical reason.... moving in with the bf. :)
I think Spectrum should have been called Fulcrum, since that building seems to be the one where the tipping point was reached. It's turning to a renter's market.
There are a number of other buildings in that neighborhood that seem to have a LOT of units available. One of those buildings was where they found a massive arms cache a few weeks ago.
Do you guys really think these buildings are gonna be future slums? I mean if people are paying 1400 bucks a month, then they should be earning arounf 60K/year.
I would think the older building in the West End (where I live) would suffer more....
OOOOOO I almost forgot!
We could have an awful lot of fun doing one of those impromptu gatherings since we all hang out here, on Vancovuercondo.info and on the fabulous Condo Hype site.
We could all arrange to view the suites any given mgmt company are handling at Spectrum. Show up wearing a "hello my name is:" tag, and make sure it bears your handle on these blogs.
We could walk through the suites casually saying things to each other like "I hear the housing bubble has burst" and "I dunno, I think it's worth mayyyyyybe 950 a month." and my favorite:
"Last suite my ass, I logged into Craigslist on my Blackberry, there's like 200 more units for rent here. Anyone looking for a 2 bdroom plus den?"
You can also search spectrum for real estate for sale (29 ads), and sublets (12 ads). Haven't analyzed to see how many ads are duplicates. I wonder how many ads for spectrum are not included in results because they don't mention the word "spectrum"?
What other property names (like "spectrum") can be used as search terms in craigslist?
I wonder if we'll see a crash in rental prices before we see a significant decline in real estate prices. After all, renters can easily move around to better deals.
"I wonder if we'll see a crash in rental prices before we see a significant decline in real estate prices." http://tinyurl.com/2sy5zv
No parking! $1390! Offer $900.00
:-) Lets all email them just for fun! :-)
Most of the new owners of Spectrum 3 and 4 will see their first mortgage payment in early January. Spectrum 1 and 2 will see theirs in December. The large number of investor speculators are counting on a tenants damage deposit and first months rent to make their first TWO payments. In March I suspect a whole lot will suddenly be listed as they see the writing on the wall. I do believe rental vacancies throughout the downtown area, (my estimate is 8-10% minimum real vacancy downtown), will lead the condo real estate downturn.
'Tis the season,
and that's the reason.
Fa-la-la-la-la la-la la la!
(according to the realtors)
http://www.news1130.com/news/local/article.jsp?content=20071207_115209_5092#
Another one to watch (though in Surrey, not Vancouver) is the Infinity tower (#1), due to be completed in January. I've seen a few listings asking astronomical prices for the area (Whalley). $1050 for a one bedroom, 1300+ for a two bed. Who would pay that to live in Whalley, I wonder? Sure it's got the skytrain right beside it, but for those prices you would be better off just living closer to downtown. Poor investors who thought it would be a good investment! Here we go! Lower rents to come! :)
Man, strataman wasn't kidding about Spectrum, if you hit Craigslist and filter for "Spectrum" there's an evening's worth of entertainment.
I love how amateurish some of the ads are "TOWNHOUSE LOFT" (aren't those 2 completely different things?)
It's Yaletown! It's Gastown! It's in the middle of downtown! It's trendy! It's sophisticated! It's everything you want it to be!
And the rents are laughable. The best part is picking a dollar amount, then seeing the range of places offered, which is considerable.
Thanks for the explanation, bby!
So -- changing subjects -- what will happen to the investors if they bail? Can they just walk away from their deposits. If they can, I wonder how many will bother trying lower rents. When they realize that they are going to have a negative cash flow, and if they've seen the writing on the wall (or in the Sun, for that matter) about where prices are going, they may quit right there, if they can.
"Can they just walk away from their deposits." too late for Spectrum those contracts were all signed in Nov-Dec. They owe the full potatoe, they have to rent or flip. But on the otherhand I think the Woodwards and Millineum Water Olympic Village contract holders may be starting to consider trying to sell an assignment at cost in the new year. I suspect if they don't get rid of their deposits by this time next year many will never complete.For Millineum Water chances of recouping costs after the Olympics by specvestors would be almost impossible. We'll have to see if we've run out of greater fools yet I guess! :-)
Even if prices fall so mortgages are equivalent to rent, I'd still have my doubts about buying.
You'll know what I mean after you check out this hot deal:
http://tinyurl.com/ysu6tn
I'm sure the renters are happily in a warm place, leaving this mess behind them.
Even if prices fall so mortgages are equivalent to rent, I'd still have my doubts about buying.
Funny that you should mention that...
Property taxes are going to go "through the roof" here to pay for the schmolympic extravaganza (the raping and pillaging of Vancouver and it's sleeping denizens). Services will be cut, and the hangover will be horrific. The sad, sad irony is that Vancouverites (at large) voted for the "games", and the correspondent debt, albeit with slick marketing stars in their eyes.
The family and I are seriously considering leaving - regardless of the future costs of RE. The coming carnage will be a bitter vindication. I am looking to have a cow, a vegetable garden, and some chickens. I am fed up with competing for living space, and bureaucratic restrictions. All I want is some ammunition, and some canned goods.
end Drunken rant /end
Anybody looking for additional search terms to find Spectrum units can search for Citadel Parade, as that is where the units are located.
In property for rent, I found 22 listings for Citadel Parade that didn't include "spectrum".
I find that a fun way to browse Craigslist is to search by digits of the contact phone number. That makes it easy to get a list of who's posting over and over again, even if they choose to completely rewrite the suite description.
Using this search, you'll find that the infamous "townhouse loft style" unit at Spectrum has been on Craigslist since at least Oct. 31.
Asking rent on Halloween? $2250 with a 5 year lease (!) preferred.
Today? $2050. No mention of lease.
This market is a gong show.
BTW, I appreciate your info, Strataman. Thanks.
solipsist..
On the new Serj Tankian (ex System of a down) CD there's a funny song on it called: 'Praise the Lord and pass the ammunition..' makes me think of your canned goods rant :)
cheers :)
I wonder if we'll see a crash in rental prices before we see a significant decline in real estate prices.
No. Rental prices are determined by actual supply and demand - you can't flip your lease. And neither change all that rapidly, with few exceptions.
Rental prices crash only when you have a gross oversupply of housing - this is happening in places like Florida and Phoenix, but Vancouver is nowhere near as overbuilt.
There is however a good chance you will see a collapse in wishing rental prices - as opposed to the price properties actually rent for - as landlords "get real". And this may well presage a fall in selling prices as the specuvestors realize it's a losing game and head for the exits.
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