Vancouver’s real estate hangover

A condo boom can be compared to a night of heavy drinking. (Or as I call it, “Thursday.”) When you’re in the thick of it, it’s the best fun you’ve ever had. It’s easy to make conversation. Things you wouldn’t normally be interested in start to look pretty good. Money in your pocket is fast to disappear. The thought of the hangover doesn’t cross your mind.

But the hangover always arrives. When it does, you hate it. You wonder how you could be so stupid to drink so hard. You open your eyes to find yourself in a foreign apartment. White walls with no art. There’s a Malm dresser in the corner. Next to that, a Poang. Below, laminate “wood” floors. Down the hall, a chaise. It’s a condo. You vomit.

With real estate, the hangover doesn’t go away with a day in bed. You’re stuck with the anguish until the market decides it’s done. Already, Vancouver real estate prices are down eight per cent year-over-year. Developers are halting projects. Creditors are pulling out. Arson is a growth business.

Friends, the hype era is over. The hangover is here.

19 Responses to “Vancouver’s real estate hangover”

  1. blueskies Says:

    the white ceramic throne is nice……
    you can almost reach out and touch it…..

  2. Tiktaalik Says:

    You know the uncertainty that developers are facing isn’t connected at all to a slowdown in real estate, but rather, the credit crisis that is currently occurring in the USA and around the world right?

    All of the Vancouver real estate pessimism sites sort of have a vague “I called it!” attitude about this, and while an eventual downturn in real estate prices is obvious and predictable (especially in Vancouver with it’s obviously inflated prices), I’m skeptical when folks link this prediction to the non-Vancouver specific economic downturn.

  3. condohype Says:

    “I don’t know anyone that would build something for which there is no demand.” –Greg Sprung, Senior Vice-President and Regional General Manager, Canadian Western Bank.

  4. s.p. Says:

    i really like the malm line from ikea.

  5. Tiktaalik Says:

    Ok, but I think there’s a line here between projects underway that are in trouble, and projects that aren’t getting off the ground that are in trouble. A lot of people are lumping these together and they shouldn’t be because the causes are different. This Miss 604 post makes the distinction, but most haven’t.

  6. Tiktaalik Says:

    A distinction should be made between successful projects that are having difficulty completing because of world wide credit issues, and projects that are proposed, but have uncertain futures because of a real estate downturn. These are completely different issues, but I’m seeing them grouped together pretty often.

  7. Tiktaalik Says:

    Though now that I re-read your post I can see that your post isn’t guilty of this at all. I guess I’m just responding to general hyperbole that I read on Beyond Robson that frequently links to yours.

    So which condo projects are being halted because of real estate downturn, and which ones because of credit issues. That would be an interesting question.

  8. ScottL Says:

    Has anyone heard anything about Bastion’s projects?

  9. dingus Says:

    Changing the name of the site?

  10. PM Says:

    condohung.wordpress.com perhaps? Any tips on how best to sell my vomit?

  11. CD Says:

    “There’s a Malm dresser in the corner. Next to that, a Poang.”

    Sounds like my place. Welcome to your Ikea years.

  12. condohype Says:

    CD, better a Malm and Poang than a bare room with four foamies and an XBOX. 😉

  13. islander Says:

    Tiktaalik Says: “You know the uncertainty that developers are facing isn’t connected at all to a slowdown in real estate, but rather, the credit crisis that is currently occurring in the USA and around the world right?

    You know you have your head up your azz, right?

  14. condohype Says:

    Now, now, let’s keep it friendly.

  15. Dubina Says:

    Tiktaalik Says: “You know the uncertainty that developers are facing isn’t connected at all to a slowdown in real estate, but rather, the credit crisis that is currently occurring in the USA and around the world right?”

    Tiktaalik, I’d have to argue that the reason for the credit crisis in the United States is that country’s slowdown in real estate, not the other way around.

    Why was there a real estate recession in the U.S.? Too many people rushing to buy homes with mortgages they had no business qualifying for, in an era of unprecedented cheap credit and financial institution deregulation.

    And why was there a credit crisis? These mortgages were packaged in opaque, poorly-explained investment vehicles and sold around the world to unsuspecting investors at yields not commensurate to their true risk.

  16. Tiktaalik Says:

    Dubina you’re right. The US’s credit issues are absolutely connected to the real estate disaster in the USA and the massive mistakes they made. However, in comparison, the downturn we’ve seen in Canada is a natural byproduct of err, too much “condo hype” and not because of the insane “predatory” mortgage issues they’ve had, and as well the real estate situation in Vancouver is a mild stir compared to the foreclosure disaster in the USA.

    If there were no disaster in the USA the likely result of the downward swing in real estate prices would just be that a few of the more risky projects would be put on the shelf, however, because of the crisis in the USA, we’re seeing headline grabbing stories, such as Infinity in Surrey going bankrupt, but as miss 604 notes, the project sold out within hours, so it’s really much more of an issue of the project having their credit cash flow dry up.
    http://www.miss604.com/2008/10/wts-what-the-surrey-36-condo-crisis.html

    I originally posted due to a bit of annoyance that the distinction between real estate sinking and credit crisis wasn’t being noted on a lot of Vancouver blogs and I probably should have posted it on Beyond Robson, since that was sort of the site I was thinking of when I started writing my comment. This post actually just talks about Vancouver’s dropping real estate prices, so I’m actually pretty off topic here sorry.

  17. jesse Says:

    Malm sucks. Scratches.

  18. xbjllb Says:

    “Malm sucks. Scratches.”

    Smart guy… when that happens, you’re supposed to throw it out and get another.

    Sheesh….

  19. Rob Bennie Says:

    Hey.

    No matter how bad things get in real estate in the Lower Mainland and in BC generally, they will never be as bad as they are, and will continue to be, in West Van.

    There is literally about to be blood in the streets, there.

    THREE YEARS of inventory, and, officially and unofficially, the steepest, deepest, most desperate price reductions are already happening in that one district. As bad as North Van is, it looks like 2005 comparatively…

    And West Van is FESTOONED with over reachers, young urban pseudo-professionals who mortgaged upwards of a million while pulling in HHIs of $150 k or less, and who also attempt to finance the rest of their poseur lifestyles on credit.

    My only hope is the haemorraghing housing cancer that is West Van can be contained and not infect the rest of the Lower Mainland.

    According to a couple of economics and finance majors at UBC I talked to, if you subtracted West Van from the greater Vancouver area, our real estate bubble is 40% less severe; apparently, West Van accounts for the lion’s share of the speculative price run-ups in all of BC!! Apparently the average household, personal and mortgage debt in West Van is the LEAST supported by investment equity and employment income of ANYWHERE in North America! MORE than was the case in Florida, Phoenix, Vegas, Southern California or anywhere in New York and the New England states!!!

    If you know a West Vancouverite, watch your silverware when they come to visit….

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