A year and a half ago she approached me and said, “Don’t dare tell my husband.” I soon realized, sadly, this was going to be about her house. But I soldiered on. “I want to sell it because everyone on the street is obsessed,” Dawn said. “All they talk about is the Chinese and how prices are going to go up forever. I’m with you. Time to get out.”
And she did, after four sessions with me and her squeeze, Rick. They sold the ugly little blue bung on the treeless Van street to some Guangdong dude in a bidding war for $1.6 million, then leased it back for 24 months. Her mother told her she was insane. The neighbours watched the spectacle and laughed. Fool woman. But Dawn paid out the $480,000 mortgage on a house she’d bought for less than eight hundred four years earlier and invested the rest. $1.1 million.
Today there are no Mainland Chinese guys arriving in airport limos. Four ‘For Sale’ signs decorate on the street, two of which went up last autumn. The bung is worth about $400,000 less, but nobody’s buying anyway. Nor is anyone laughing. Dawn still lives in the same house, and could buy it back today with cash – no mortgage – having increased her family’s net worth by almost half a million in under two years. Rick thinks she’s a freaking genius and is mulling retirement at age 42. The Chinese dude has offered to sell them the place, “on most reasonable terms.” Dawn cracks up over that.
There has been no US-style housing crash in Vancouver. No wave of mortgage defaults. No mattresses or furniture hauled on lawns by bailiffs. No more abandoned houses. No Armageddon headlines. No tears.
But every day everybody’s equity goes down a little. Families get a little less wealthy and, so, a little more indebted. Those who bought in the last two or three years – when ‘buy now or buy never’ was the meme, local promoters used the HAM scare to bloat prices, and house lust ignited the region – are losing the most. Troubling that so many are kids. Young couples snared by realtors without ethics and banks without morals. How will they recover? And without them, who moves up the property ladder? Who bails out the wrinklies in their seven-figure houses with their failing incomes?
What’s happening now in BC is the slow-mo correction this blog’s warned about for a few years. It won’t follow the US shock-and-awe model of 70% craterings within a year or two. There will not be millions of foreclosures, or weekly auctions of unwanted homes on the courthouse steps. Rather, sales slide a bit, then slide a lot. Prices flatline before easing lower in a long and cascading arc with an unknown bottom. Local real estate boards will do all they can – as they are now – to mask the trend. No politician will address it. The media will fudge. The best hope is that the losses and disappointment stay silent, lest private hurt goes postal.
In case you didn’t realize it, here are a few things happening in the harbinger province:
In the capital, Victoria, for generations a mecca for wealthy retirees looking for a storybook city with flowers in February, house sales tumbled again last month, this time by 21%. The median price has already fallen about 8%, erasing $40,000 in equity, and yet sales languish. There are almost 4,000 houses on the market and fewer than 300 just sold. Worse, of the 304 listings above $1 million, last month three changed lands. That’s a 14-year supply.
“Sales are not what we would like to see,” admits head realtor Shelley Mann.
In the inspiring south Okanagan Valley, where real estate values bloated right along with those in SoCal, the news is even worse. Total sales have plunged by 38% from this time last year. Dollar volume for the entire local real estate board fell last month by half compared to last year. This is a disaster on mute.
South and east of Greater Vancouver, through the bustling Fraser Valley, the local real estate board has been telling regional media things are just fine. But hardly so. Sales of single-detached homes are down 63%, falling from 714 last year to 264 so far in 2013. In that greatest of human ironies, as prices fall, buyers retreat.
And in Vancouver itself, the marquee housing market in North America a year ago, sales now erase monthly. Down 14.3% in January from a year ago, the second-worst showing in a dozen years. Detached house sales are off 18%, and overall activity is running 19% below the 10-year average. While the real estate board claims a 6% price decline, the street toll is substantially worse. This year the average SFH will dip below the $1 million mark, rolling prices back three years. And that won’t be the bottom.
In Toronto, as in Calgary, Edmonton, Saskatoon or Montreal and Halifax, denial. As local GTA realtors cooked their numbers this week to show only a slight sales decline, my email inbox was slammed with notes like this: “Garth your house of cards is crumbling…fast. Wrong since 2008 – 5 years and counting.” In a world which no longer has boundaries, fences, walls or moats, people still think they can live in a city where ‘it’s different.’
So did Dawn’s mom.