Let's Change our Vancouver Real Estate Vocabulary
A new year means new resolutions, and we should start fresh when talking about Vancouver real estate.
Happy 2012! In keeping with the spirit of the brand new year, I say we resolve to look at our dynamic real estate market in a fresh way. Let’s proverbially “sweep out the old” and make room in our news for market stories from a fresh perspective.
First, we should agree not to discuss things that don’t exist. There are three things I don’t want to hear about anymore in the real estate world for 2012, so let’s clear the air and get off on the right foot here.
The Bubble
What bubble? If I never have to hear one word again this year, it would be “bubble.” One of the most compelling aspects of the bubble is there is no way to predict it.
In each historic case of bubble markets (characterized by rapid price increases and a sudden pricing collapse), it is the unpredictability in forecasting that is the common thread. While economists and pundits have claimed affordability indices are the true measurement of anticipating a housing bubble, there is no historical data to support it.
All of the market bubbles in Japan, the U.S. and Australia, had their own underlying economic and political drivers. Our country’s lending policies are conservative and are coupled with record-low interest rates. B.C. is known for exceptional regional livability, low unemployment and excellence in education.
Let’s face it – if there is a bubble correction, most single-family homeowners won’t be affected. In any market, few “win” on both ends of the deal. Buy low/sell low and buy high/sell high would be the norm for most. Let’s agree to disagree until we can discuss it in hindsight.
Real Estate Fees
The Competition Bureau issued a notice last year that real estate agents can now be competitive with their fees. Psst … they always were! Some people just didn’t know to ask.
Like everything in this world, there are different ways to pay for services. My lawyer charges me by the hour or he takes 30% off the top of a settlement. That’s if I get a settlement, but then he accepts the risk. Realtors can do essentially the same thing. You can pay in advance, you can pay a flat fee, you can pay for a myriad of services a la carte (can I have cheese on my listing? But no dessert! I’m saving room on my bottom line) or you can pay for “full”service, payable after services rendered. The world is your oyster, but please, no more about fees being competitive.
Foreign investment
This phenomenon was anecdotal. Briefcases full of money? Investment fraud in mainland China driving the Richmond market? Really?
Many have tried and few have been able to quantify the number of actual foreign investors in our market. Landcor produced the only measurable statistic regarding foreign investment. The company measured the number of assessment notices mailed outside of Canada, and less than 0.4 per cent of 2010 sales were sold to foreign investors.
Until you can measure it, let’s not speak of it.
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Yes, I asked.
Submitted by CBWest on Wed, 2012-01-11 15:27.Realtors insist (in general) that fees are negotiable and yet I have personally asked four different Realtors in two provinces to negotiate fees on a transaction, and all refused to negotiate. You damage all Realtors' credibility when you insist upon this lie. Listen to your customers. They are always right.
No vested interest there right?
Submitted by YoungProfessional604 on Wed, 2012-01-11 13:36.I agree with the other poster, there seems to be an inherrent conflict here.
1) bubble - "let's not talk about it unless it happens" is faulty logic, an obvious conflict and very dangerous. Buyer beware. I remember that kind of talk in the stock market right around 1999. That's not fear mongering either, I'm an active real estate investor and this is (whether you admit it or not) a consideration in investing. If an investment can't be substantiated through some idea of fundamentals, it's something worth considering.
2) real estate fees - don't think consumers are dumb...the residential real estate quasi-monopoly / "cabal" hurts consumers, but I think the gov't is working to make this more open. It should be a la carte...funny the author trumpets this as the reality, when this is fairly new in the market and also caused by more competitive forces ("One Percent Realty" type operators). Don't get me wrong, a talented realtor can be worth the full price, but in my experience it's the exception rather than the norm. Realtors consistently represent their own interests. Why not charge by the hour, or based on the "you make money if I make money" model. I hope the new entrants turn out to be a game-changer if they aren't already.
3) foreign investment. It's a big world out there Ms Author, you might want to consider the possibility that there's even a small flight of capital from the giants in China coming to western canada. A small blip of capital in their eyes has a huge (market-shifting) impact on Vancouver. Remember (or learn) that we're VERY small potatoes on the world stage. And just because it can't be quantified doesn't mean it's not having an impact. I think foreign investment is great, we're becoming a world-class city, with the prices to prove it.
The sky isn't falling, but these factors can have real impact which any prudent investor considers. Regardless of what their realtor says, and especially if they say things that make you think of large birds with their heads in the sand. Realtors aren't market advisors for good reason. I hope the average investor gets that.
PS troubling thing about GVRD's housing market is that I was born and raised here, I have several degrees and am paid well, but being conservative prices me out of the market. I need to leverage heavily and take huge risk in order to live in the GVRD? That's not fair. But that's the market reality and I love Vancouver so I do my best to live here and not lose my shirt in the process.
Why?
Submitted by ginner on Sun, 2012-01-08 12:42.Wouldn't it be a better idea to leave economic analysis to an economist? Our country's lending policies are not conservative as we allowed szerod down 40 year mortgages and allowed young first time homeowners to take on those loans with 70% of their after tax income going to housing costs. That is not conservative. Houses costing over 10x annual income is not conservative. There are literally no economic fundamentals of any kind that support house prices in Vancouver. None. They are buoyed by collective insanity. The real estate industry is now reporting data in an extremely misleading fashion.
I agree
Submitted by Jared on Wed, 2012-02-01 15:44.I find it interesting to listen to real estate agents (usually who barely made it through high school with a C- avg.) giving economic advise.
Is there any agency that regulates real estate agents and what they say to buyers (like the truth in advertising board)?
Conservative?
Submitted by pbrasseur on Sun, 2012-01-08 06:18.Lending hundreds of thousands to couples in their 20s at AAA rates is conservative?
That is one heavy load of c...