Cory Raven | 604-220-9399

This was in the Globe and Mail today.  Arg!  I know people think multiple offers are a great thing and Realtors must love them, but a balanced market is much healthier and sustainable

Special to The Globe and Mail

When Vancouver real estate agent Terry Flahiff listed the Kitsilano bungalow a few weeks ago, he knew it would generate interest. Located on the city's west side, the 1926 home featured hardwood floors, a large renovated kitchen, a bright two-bedroom basement suite, a white picket fence and a tree swing.

Sure, the yard was small, the view out the back was a giant condo complex, the bedrooms were tiny - the master was slightly more than 100 square feet - and it was just half a block off one of the city's busiest thoroughfares. Still, those shortcomings were quickly forgiven by the dozens of prospective buyers who streamed through the first open house saying, "Honey, I love it" and trying to imagine life without closets.

Five days later, seven agents lined up to make their offers. The asking price was $959,000, but because of the competition, they knew they had to push higher. Only two bids came in at less than $1- million, and in the end, the home sold for a staggering $1.142-million - more than $180,000 over the original price tag.

"My clients were hoping to get around $1-million or maybe $1.05-million," Mr. Flahiff says. "I think they were very happy."

As neighbours south of the border continue to pay the price for their housing market collapse, it seems that home buyers in Vancouver have forgotten the global economic downturn like it was yesterday's news - and that rush of optimism is fuelling a return to bidding wars.

Earlier this week on the Eastside, a partly updated Commercial Drive bungalow with a two-bedroom suite and a new garage and studio drew 10 offers - most of them with no inspections, despite the fact that the 1926 house needed a new roof, electrical upgrades and drain tile work, and had an old oil tank buried in the back yard. The first showing was Thursday last week, and on Sunday it sold for $113,000 over the asking price.

The same dizzying chain of events is being repeated around the city, where homes are selling in a matter of days, some for prices that sellers could not have imagined just a few months earlier. To make matters worse, many are being bought outright, because an offer that includes subjects (that is, the buyers want a few days to get an inspection or appraisal, finalize financing and so on) just can't compete.

According to veteran agent Rod MacKay, prospective buyers who have been waiting in the wings for the past year feel more confident about the economy and want to capitalize on the record low mortgage rates and reduced home prices before they drift outside their financial grasp. And because of the low mortgage rates, home ownership is now within reach for thousands of first-time buyers who had been priced out of the market, adding to the pressure at the bottom. Meanwhile, sellers aren't jumping in nearly as quickly: A third fewer houses were on the market this August than a year earlier, giving buyers a tough lesson in the laws of supply and demand.

"Prices have moved up 10 per cent in the last six months, so people are worried that if they wait for the perfect house, it won't be affordable," says Mr. MacKay, whose client offered $62,000 over the asking price on the Commercial Drive home, but landed near the bottom of the pack because her offer was contingent on getting two weekdays to finalize the financing. "So if someone is offering on a house that's $950,000, but they can afford $1.1-million, they think they'd better pay it now because that house will cost $1.75-million before they know it."

Still, experts say that even though Vancouver posted record sales in August - a whopping 117 per cent over the previous year - the overheated market is not likely to last. The backlog of buyers will purchase homes, and more sellers will enter the market, marking a return to a more balanced situation.

"The volatility has definitely been very surprising. We expected to see improvement from the recessionary lows, but we didn't see it rising this quickly," says Brian Yu, an economist with the British Columbia Real Estate Association, pointing to a steep decline in mortgage rates and low inventory as the central reasons behind the speedy return to a red-hot market.

"But the Vancouver numbers are showing some signs of plateauing, so the markets are probably going to stabilize over the next while," he says. "They can't increase at this rate forever."

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Courtesy of Thane Stenner, published in the Globe and Mail
Looking west from the boardroom in our office, you can just see it: an enormous pit, perhaps 200 feet deep, where the crowning glory of Vancouver's skyline would have been.

Designed by the late, great Arthur Erickson, the Ritz-Carlton's 123 luxury residences would surely have been one of the most prestigious addresses in the city. Fully 58 storeys high, the tower featured a dramatic 45-degree twist from foundation to apex, with spectacular views of the city, the Strait of Georgia and the North Shore mountains.

At least, that was the idea. When the global financial crisis hit last fall, the Ritz-Carlton was one of the casualties. Faced with sky-high construction costs, uncertain financing and sluggish sales, the developer halted the project in October. Recently, there's been some buzz about things starting up again after the 2010 Olympics. Until then, it serves as a poignant reminder of the depth of the global financial crisis.

A time to buy?

I asked Ross McCredie about the project when we met for a working lunch late last week. As president and CEO of Sotheby's International Realty Canada, and a 10-year veteran of the industry, he knows full well how tough times have been for anyone buying or selling luxury real estate in Canada. "It was incredible how quickly the market dried up," Mr. McCredie said, shaking his head. "From October of 2008 to the spring of this year, across the country, sales literally stopped."

Since then, however, it's been a different story. "I was surprised at how quickly the market picked up this past spring," he said. "[In Vancouver,] we've sold one home well over $10-million, one at $9.5-million, as well as two in Victoria at $6.8-million and $6.5-million, all in the last six weeks."

Why the dramatic change? Mr. McCredie believes it has everything to do with the psychology of the sellers. "The past year has cut deep into the mindset of many high-net-worth individuals and their families," Mr. McCredie said. "[Many] have decided to dispose of properties they thought they would never sell."

If you're a buyer, this is the kind of mentality you've been waiting for. "In the urban centres, properties over $3-million have a limited number of buyers, and they're taking a great deal more time to sell," Mr. McCredie said. "Often, sellers feel as if they 'missed the market,' and they're panicking somewhat."

If it's a recreational property you're shopping for, the news is equally good.

"Across Canada there are rare opportunities to purchase one-of-a-kind properties at well below assessed values - and often well below replacement cost," Mr. McCredie said. "This is especially true in the recreational markets such as Whistler, waterfront homes in the Okanagan, Muskoka and Mont Tremblant."

Advice for buyers and sellers

Despite his optimism, Mr. McCredie is quick to point out that luxury real estate is far from a "slam dunk," even in this market.

Certainly, great deals are out there, but the rules of real estate still apply: "Location is still the No. 1 driver of value in the upper end of the market," Mr. McCredie said.

At the same time, he points out that buyers are looking for more than just a pretty view.

"The architectural significance of the home is becoming more important. Size has little to do with value, but the actual beauty, quality of construction, and function of a home are key components of establishing a home's value."

Mr. McCredie believes that when it comes to luxury real estate, both buyers and sellers need to think carefully about the investment aspect of their purchase.

"Whenever buying or selling any home - and especially the most expensive home on the block - think about who else would buy it," he said.

As Mr. McCredie points out, building your dream home is all well and good, but your dreams aren't necessarily the same as a potential buyer's.

"People often get carried away building a trophy home for themselves without ever considering the basic fundamentals of real estate," he says.

"As a result, they overbuild for a particular lot or neighbourhood."

As Mr. McCredie candidly explained, such a move is rarely a wise investment decision. "It's a very simple supply-and-demand function," Mr. McCredie said.

"If there are multiple high-net-worth individuals who would want the home, then its value can easily exceed the current market."

As our server brought us the bill, I asked Mr. McCredie where he thinks the luxury market in Canada is headed over the next year.

He reminded me that when it comes to luxury real estate, the market is only one factor in the equation.

"A home's value is always determined by the buyer's ability to believe the home's story," Mr. McCredie said.

"Done poorly, you can sell a home well short of its value. Done well, you can overcome nearly any market."

Thane Stenner is founder of Stenner Investment Partners within GMP Private Client L.P., as well as Managing Director, Private Client. He is also bestselling author of ´True Wealth: an expert guide for high-net-worth individuals (and their advisors). He can be reached at The opinions expressed in this article are the opinions of the author and readers should not assume they reflect the opinions or recommendations of GMP Private Client L.P. or its affiliates.

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The Real Estate Board of Greater Vancouver just released their stats for July 2009 and it reflects what any Realtor in town will be able to tell you; July was an amazingly busy month

July stats:

Strong spring market carries into summer months

VANCOUVER, B.C. – August 5, 2009 – The Greater Vancouver housing market gained further momentum in July with record sales levels and a continued strengthening of home prices.

The Real Estate Board of Greater Vancouver (REBGV) reports that the number of residential property sales in Greater Vancouver totalled 4,114 in July 2009, becoming the highest volume of sales ever recorded within the REBGV for that month, outpacing the 4,023 sales in July 2003, which is the only other year that July sales exceeded the 4,000 mark.

Since the beginning of the year, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver has increased 9.2 per cent to $528,821 from $484,211. However, home prices compared to July 2008 levels are down 5 per cent.

“Home sales this summer are seasonally higher than normal, which is due in large part to the price correction that has taken place in the last year and low interest rates,” Scott Russell, REBGV president said. “Although wellpriced listings and lower-to mid-range priced properties remain in the highest demand across Greater Vancouver, recent activity from first-time buyers is beginning to boost demand in the “move-up” segment of the market.”

New listings for detached, attached and apartment properties declined in Greater Vancouver, down 17.4 per cent to 5,041 in July 2009 compared to July 2008, when 6,104 new units were listed. At 12,482, the total number of property listings on the Multiple Listing Service® (MLS®) declined 5.8 per cent compared to last month and 34 per cent compared to July 2008.

“It is currently taking, on average, 48 days for a home to sell in the region. Today’s market activity differs by area and property type and it’s important to tap into local housing market expertise to understand why some properties are attracting multiple offers, while others are not moving,” Russell said.

July 2009 home sales declined 3.4 per cent compared to June 2009, but are up 89.2 per cent when measured against the 2,174 sales recorded in July 2008.

Sales of detached properties in July increased 95.2 per cent to 1,614 from the 827 detached sales recorded during the same period in 2008. The HPI benchmark price for detached properties declined 5.5 per cent from July 2008 to $711,702. Since the beginning of the year, the benchmark price for detached properties in Greater Vancouver has increased 9.8 per cent.

Sales of apartment properties in July 2009 increased 76.8 per cent to 1,708, compared to 966 sales in July 2008. The benchmark price of an apartment property declined 4.3 per cent from July 2008 to $365,291. Since the beginning of the year, the benchmark price for apartment properties in Greater Vancouver has increased 9.6 per cent.

Attached property sales in July 2009 are up 107.9 per cent to792, compared with the 381 sales in July 2008. The benchmark price of an attached unit decreased 4.6 per cent between July 2008 and 2009 to $452,085. Since the beginning of the year, the benchmark price for attached properties in Greater Vancouver has increased 6.8 per cent.

Bright spots in Greater Vancouver in July 2009 compared to July 2008:


Burnaby up 121.7 per cent (153 units sold from 69)  

North Vancouver up 53.3 per cent (115 units sold from 75)  

Maple Ridge/Pitt Meadows up 60 per cent (160 units sold from 100)  

Richmond up 140.2 per cent (221 units sold from 92)  

Vancouver East up 66.4 per cent (208 units sold from 125)  

Port Coquitlam up 236.4 per cent (74 units sold from 22)  

Vancouver West up 104.5 per cent (180 units sold from 88)  

South Delta up 203.1 per cent (97 units sold from 32)  

West Vancouver up 108.1 per cent (77 units sold from 37)  

Sunshine Coast up 60.5 per cent (69 units sold from 43)  


Burnaby up 123.3 per cent (134 units sold from 60)  

Maple Ridge/Pitt Meadows up 77.7 per cent (64 units sold from 36)  

North Vancouver up 70 per cent (51 units sold from 30)  

Vancouver West up 110 per cent (105 units sold from 50)  

Richmond up 152.1 per cent (179 units sold from 71)  

Vancouver East up 195.8 per cent (71 units sold from 24)  

Port Coquitlam up 117.6 per cent (37 units sold from 17)  

Maple Ridge/Pitt Meadows up 77.7 per cent (64 units sold from 36)  

Coquitlam up 88.2 per cent (64 units sold from 34)  


Burnaby up 72.8 per cent (235 units sold from 136)  

North Vancouver up 47.9 per cent (105 units sold from 71)  

Richmond up 85.5 per cent (230 units sold from 124)  

Vancouver East up 64.2 per cent (179 units sold from 109)  

Vancouver West up 94 per cent (584 units sold from 301)  

New Westminster up 70.6 per cent (116 units sold from 68)  

Coquitlam up 62.3 per cent (86 units sold from 53)  

Port Moody/Belcarra up 138.1 per cent (50 units sold from 21)  

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A question I often get from clients is... "How much has the market changed/dropped since last year"
The answer, of course, is not a simple one.  Different areas have been affected differently and even if similar markets different product has had different % drops in the year May 2008-May 2009.
One thing is for sure, whether you think it is a good time to buy or not.... Houses and condos are more affordable than they were a year ago or two ago.
How much more affordable?  Well lets take an example, realizing that it isn't perfect and won't be the same as a percentage for any two properties.
Let's take a home that sold in May 2007 and then at its value in May 2009.  The value has dropped 13% (again, don't use this number as the gospel, but I am using a specific Metro Vancouver home here)
So, the 2007 value was $700,000
In 2009, it is worth 13% less, or $609,000
So 13% less, right? Someone in 2009 is going to get a WAY better deal than 13% off the 2007 value, even if they pay the $609,000
To understand, let's look at interest rates.
In 2007, the price was $700,000.  Let's assume the buyer is putting down 20% so we don't have top deal with CMHC fees (dispite me making this go away for the sake of simplicity in this example, REMEMBER to ALWAYS FACTOR IN ALL CLOSING COSTS, they add up! - talk to your Realtor)
So, $700,000 with a $140,000 down payment leaving $560,000 to Mortgage.  Interest rates were 5.25% for a discounted 5 year rate (we'll do a 25 year amortization - 5 years is just the mortgage term)
Payments on that $560,000 are $3337 per month
Now, it is 2009, you are buying the house for 609,000 and putting the same $140,000 down, leaving $469,000 to be mortgaged.  The kicker?  Today you are getting a 5 year Mortgage for 3.69% (we'll use 25 years as our amortization again)
Payments on that $469,000 at 3.69% are $2388 per month! That is a savings of $949 per month, or 28.4% less expensive per month!
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Last Thursday the Urban Development Institute held its Annual General Meeting and Bob Rennie was the guest speaker once again.
In the buildup to the talk, there was quite a bit of joking going around at the tables "I am sure that Bob will be positive even with what we have seen in this market" and things of that nature.
When Bob was officially introduced, there was even a chuckle in the room as it was said "and I am sure Bob will somehow be positive." 
Let me tell you.  Bob turned the skeptics in the room around really quickly!  Using numbers gathered from an independent source, Rennie dove right into an hour long talk on many issues, but the key to it all was really how little supply there is.
Bob was careful to separate the village of "downtown" from the suburbs, giving a hint that he, like myself, realizes that there is potential for some further downward pressure in the burbs where values must be supported by local incomes.
An amazing time was had, and Bob Rennie, who I have known for years and consider to be a friend did an excellent job.
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I have prepared some sales stats for a client looking at buildings that are 5 years old or older in the Westend, sold between October 1st, 2007 and October 31st, 2008 and is in a woodframe, freehold building where rentals are allowed
Click the link below to see. 
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With almost daily news with doom and gloom, where will things land and is it a good time to buy? A good time to sell and cash in?  Wait and hold?
With elections coming up both in Canada and South of the border, allow me to get into the spirit of things and give you a political answer.  THERE IS NO ANSWER to that question that is right for everyone.
If you are young (at the risk of offending anyone we'll arbitraily define young as under 40) and have stable income for you or your family, I see no reason to not buy a property within your means as a principal residence.  History has showed us a few things; one is that it is hard to "time the market" and buy on the exact right day, and another is that , in the long run, even if you "overpay" by 5-10% you will see great tax free gains on your invesment.
I saw many, many people in 2003 and 2004 , during amazing price increases throughout Metro Vancouver, say over and over that they were going to wait it out.  They now need double the down payment and double the monthly payment (on average) to buy that same property today.  So did you "miss" the market?  You want to sit and wait for the "drop"?  That could very well work for you, and I am not saying it is the wrong thing to do, but I can say that even if you bought at previous market "peaks" in the early 80's and mid 90's, today you would be sitting on a lot of equity.
Investment properties are another issue.  Here you really need to do your research.  How much is the down payment?  How much are your payments including taxes, maint fees, property management fees, What rent can you expect to achieve?  Do you think it would be easy to rent?  Will you get a lot fo tenant turnover? (More of an issue with studios and one bedrooms than single family homes usually) These factors will mean A LOT more and should have more bearing on your decision that price per square foot or other variables.  Really, if you are going to be paying a shortfall on this property of $500 dollars and don't foresee the price going up by a lot more than that, who cares if you are getting a "good deal"?  On the other hand, who cares if you paid $10,000 "too much" if it pays for itself every month and in 25 years you will own it outright with (hopefully) hefty monthly payments coming in from your tenants?  What better retirement plan could one have than properties owned free and clear generating positive cash flow?
So, none of us have a crystal ball?  You have salespeople and developers saying that there has never been a better time to buy.  This is obviously not true.  You have some on the other side blogging and talking about Vancouver being overvalued by 200% - This too is obviously not the case as even just a little knowledge or research will show you.  The answer is somewhere in between, it would have been great to have bought 5 years ago, heck it would have been great to buy 50 years ago.  Is it a good time to buy today? Only time will tell, but in the longterm I believe looking back that it will be proven to be under the right circumstances. 
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Please excuse the mess while I upgrade my website.  In the meantime, you may access all my blog posts by clicking here.
Please excuse the mess while I upgrade my website to provide you with even more timely and topical information on our market and the process of buying and selling.  In the meantime, you can access my blog by clicking here
Cory Raven
Cory Raven - Managing Broker
RE/MAX Select Realty
4806 Main Street
Vancouver, BC
V5V 3R8