What Happened to Vancouver Home Buyers?

The Answer

Take the local Real Estate statistics along with the accorded speculation depicting our slow Vancouver real estate market and put them in your back pocket. Instead, consider a new information from Statistics Canada – a report that might serve as a possible explanation for the Vancouver market decline.

Not Since 2009

Breadline ABC Archieves

According to the CBC “Canada’s economy lost 54,500 jobs in March, bleak new data from Statistics Canada showed Friday.” This pushed the jobless rate to 7.2 per cent up from 7%.

An added dimension evolves when you consider that “private sector hiring, the engine of growth that policy makers keep a close eye on, actually fared even worse. There were 85,000 fewer private sector workers in March.”

In the face of these new numbers Finance Minister Jim went against the grain saying that “this is a snapshot in time.” “If you look at job creation since the depth of the global recession July 2009, employment in Canada has increased by nearly 900,000 and is now more than 465,000 above its pre-recession peak.”

This should leave the newly unemployed who are unable to pay their mortgage feel a lot better.

The Exceptional Problem

“Much of the losses came among those in the core working-age group of those between 25 and 54. Among those younger than 25 and older than 54, the job numbers were pretty steady.”

Is it too obvious to suggest that this is the core group of people who represent the buyer market for Vancouver homes? 85,000 people without a job is a lot of potential buyers. A sizable number even when spread across our country. Remove that number of potentials out of the mix, add a few new mortgage qualification rules to make a home purchase more difficult and voila – a dead market.

Thanks for the Chuckle

One has to chuckle at Flaherty’s rationale. His thoughts reminded me of an old sales adage that said ‘you are only as good as your last sale.’ What he has yet figure out is that few are buying his hype and fewer still are buying homes.

Photo Credit: Flickr CC – Australian Broadcasting Corp. Quotes: CBC

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

Form Man Says:
April 6th, 2013 at 6:54 am

While dismal jobs numbers are a factor, the main reason housing sales are dropping is because the market is over supplied. After at least 10 years of overbuilding, this correction is going to be painful and lengthy. Easy financing will turn out to be a trap in hindsight.Turns out Canada is not different after all………

Groundhog Says:
April 6th, 2013 at 9:14 am

Perhaps if people focused on working hard to produce real wealth instead of over-leveraging themselves in a non-productive, depreciating asset with the hopes of easy riches and early retirement we would have a real, diversified, solid economy. Instead we have one built on a house of cards.

No offense Larry, the real estate industry is a big problem in this country.

People like myself with a financial background and household salary well above average should be able to afford to buy a decent home. Instead, we rent a very nice home for much cheaper.

Bubbles like this aren’t good for the economy in the long run. In the short term they are able to gloss over serious problems.

Take these -55,000 jobs number with a grain of salt however. The Canadian jobs report is based on a fairly small sample and is notoriously volatile, February’s jobs number was -22,000 in Jan and +51,000 in Feb.

fish10 Says:
April 6th, 2013 at 9:35 am


Flaherty pushed the Easy Button when he inflated housing in 2009, doubling the CMHC lending capacity and bringing in other RE friendly measure.

So in reality he is just reversing some of those more ill-thought out actions, which saved us temporary but put us at longer term risk.

Failure to pull in the reins, would have led us to Spain, Netherlands, US and the UK where the RE bubble grew so big it burst the rest of the economy.

We will have to see if we have escaped that fate.

Carney left just in time to escape the blame. Don’t be shocked to see Flaherty leave later this year before the worst of it hits the fan.

April 6th, 2013 at 10:52 am


“the real estate industry is a big problem in this country”

That is a commonly accepted point of view.
The other view is that without the industry’s multiplier effect there would be more people out of work many of whom are those who work hard to create real wealth.

“household salary well above average should be able to afford to buy a decent home”

I agree but that home may not be where you had hoped it would be. Correct me if I’m wrong but I sense a little tone of entitlement. Maybe I’m missing something.

April 6th, 2013 at 10:53 am

@form man

let’s not forget that someone built those homes. They had a job.

Groundhog Says:
April 6th, 2013 at 11:10 am

” Correct me if I’m wrong but I sense a little tone of entitlement.”

Perhaps it could come across that way, I thought I was just pointing out a fact. I prefer to rent, I like the flexibility of it and lack of stress, in addition to the cost being very low. However in a healthy economy I believe someone in my position should be able to buy a home.

I do not believe we are in a healthy economy, and I believe real estate is one of the main reasons.

You say real estate has a multiplier effect, and that may be the case, but if resources weren’t directed to real estate that doesn’t mean they wouldn’t be directed anywhere. They would be directed to another industry. Building empty houses and condos that will sit and rot isn’t a good foundation for an economy. It will cost us.

I’m not sure why this is hard for you to understand. If the bubble was in a penny stocks of companies with zero productive assets would you feel the same? The penny stock promoters would be rationalizing it like you rationalize real estate values.

April 6th, 2013 at 11:43 am

yup he did and like it or not it at that time Flaherty’s move got a lot happening – both good and bad. Hindsight is of course perfect and it is with that retrospect that I think the dumbest idea was the 40yr mort. This however, was surpassed by the no money down calculation.

As to our local market I fully expect to see prices to begin dropping. Perhaps sooner than later. Right now Coal Harbour and UBC appear to be leading that shake out.

It’s hard to be ahead of the train and I do empathize with sellers as I fully recognize that riding the ‘cow catcher’ takes guts. However, if the market slides even further then riding that ‘cow catcher’ guarantees a blue ribbon.

But there is another element at play. Even with price reductions I wonder if they will be sufficient to ‘fire up’ buyers? Let’s compare that idea to current interest rates. They’ve never been so low but the masses aren’t rushing in to load up on real estate at 5yr/2.74% – (I’m crying at remembering that at one time I was paying 19.5% and later 10% which seemed like an warm ocean breeze).

With that view I am reticent to think that price reductions and low interest rates are the solution. There is a very large gap that exists between wishing you could buy and actually having the money to pay for it over an extended period of time. If these job reports are valid an uplift in the market from buyers doesn’t seem likely.

April 6th, 2013 at 12:58 pm

I don’t have a problem with you choosing to rent – that is your choice.
Paying for the ‘service’ of having a roof over your head does have advantages as you have pointed out.
If you are renting a nice place in a neighbourhood you enjoy then it is very difficult to settle for less – particularly if your rental cost is less than the cost of owning.

Personally, my aversion to renting is based solely on being given notice to vacate. Been there done that and didn’t like it.

I focused on your lament where you claim that “I believe someone in my position should be able to buy a home”. What I understood from that is that you have an ‘entitlement’ wall guarded by the rationale of not being in a ‘healthy economy’. Added is that you claim that you are in a position to buy but you don’t. Why is that? Is it because you are not prepared to consider alternative locations/neighbourhoods. I’m curious – is that another wall?

About being Healthy
Assuming a 25 year term of reference can you point out to me when in Canada during that length of time there has been a consistent ‘healthy’ economy. (BTW I don’t know what you define as healthy).

Next – in lieu of not directing financial resources to real estate which industry would you suggest. Automotive, mining, lumber, oil, food production, Tech, banking?

As to rationalizing values.
Here is what I do understand.
I have always taken the position that the rationale for a price – the ‘real estate value’, remains within the exclusive domain of a willing seller and a willing buyer. My position in that process is simple – I’m there to help them facilitate their rationalization. Part of that facilitation is that I interpret the market compass. I do not however, dictate its direction. That remains the exclusive domain of the compass.

Form Man Says:
April 6th, 2013 at 8:20 pm

The building spree did create a lot of jobs ( I am a builder, so know a bit about that ).

Problem is booms are unsustainable, and the subsequent crash can be quite devastating.

Ralph Cramdown Says:
April 7th, 2013 at 10:54 am

I’ve got that sense of entitlement too, Larry.

I know where my household income is on a percentile basis relative to Canadians’, I know how much effort went into saving the x times our income that we have invested, I know what my family’s station in life is and what sort of a home would normally be commensurate with that. I’m simply not willing to pay seven or nine times income, even on an instalment basis at generous terms (for the first five or ten years) to get that, nor am I willing to spend five times income for something that needs work on a small lot in the catchment of a bad school with the hopes that leverage and future outsized gains relative to inflation and income will allow me to eventually catapult into the property I feel entitled to in the first place. Call it a buyer’s strike if you will, but I believe that either prices return to what were reasonable historical multiples, or the ship has sailed for property ownership for the entire middle and professional class — and I don’t believe that.

April 7th, 2013 at 1:25 pm


“not willing to pay seven or nine times income, even on an installment basis at generous terms (for the first five or ten years) to get that, nor am I willing to spend five times income for something that needs work on a small lot in the catchment of a bad school with the hopes that leverage and future out sized gains relative to inflation and income will allow me to eventually catapult into the property I feel entitled to in the first place.”

It would seem that there is only one hope – the return to historical multiples. If that doesn’t happen?

Groundhog Says:
April 7th, 2013 at 4:10 pm


I really can’t tell if you’re being genuine in your answers or just trying to argue for arguments sake.

On entitlement, who has the greater sense of entitlement, the person who risks their future for the sake of owning something because that is what they’re told they deserve or the person who lives within their means and stares in amazement at the risks other people take with their future, and refuse to do the same?

I am not a conservative person, or investor by any means, but I also know a thing or two about risk, and have no interest in owning at current risk levels.

And on a healthy economy, it should be clear that building shelter for ourselves then flipping them at higher and higher profits to each other doesn’t serve us well or add any economic value. Mix in a high amount of debt and you have trouble.

On value, it looks like you’re mistaking price for value.

Ralph Cramdown Says:
April 7th, 2013 at 5:45 pm

I keep renting. Or get a tiny pied-a-terre in the city combined with a spread far enough out of town that I see value in it. Or, should I accumulate enough assets that I could overpay and not miss it and not care…

April 7th, 2013 at 5:52 pm

don’t have time to argue.

Re: your 2nd para,
– I suggest to you that each person’s sense of entitlement is a function of self perception resulting from many variable. How or what has gone creating that self perception is I think, beyond this discussion. I presume their preparedness to assume such risks is part of their sense self. There are many articles and papers on how our perception of ourselves is a determinant of the amount of risk we are prepared to assume.

On being conservative – seems to be a good choice for you. Others choose differently. I accept either.
In principle I don’t disagree with your statement but as you know that isn’t how it has worked out.

Continuing on the healthy theme you didn’t answer the question. – Assuming a 25 year term of reference can you point out to me when in Canada during that length of time there has been a consistent ‘healthy’ economy. (BTW I don’t know what you define as healthy).

Re: Value/Price
Value is determined by perceived benefit(s) and price paid.

Value = perceived benefits received
perceived price paid

If a willing buyer pays a willing seller a stated price that buyer has determined that the price paid reflects their perceived benefit(s). Those benefits represent perceived value to that buyer.

Consider a bar of soap.
If the only value you desire from a bar of soap is be clean then the cheap bar of unscented soap will do the job. However, if you perceive a benefit – the value, to smelling better then you might pay more for the scented version with extra bubbles.

Thanks for the chatter. You can have the last word if you wish but as far as this discussion goes I’m washed up. 🙂

April 7th, 2013 at 5:54 pm

I think your question may be the answer.

Smoking Man Says:
April 7th, 2013 at 8:59 pm

good posts.

Ralph, I agree with you.

Larry, great post. Seems that you are of the view that this market is now headed downward (in terms of prices), at least that’s how I read your comments – any coffee talk updates?


April 7th, 2013 at 9:22 pm

@smoking man

re the view
– as noted there appear to be some cracks

April 8th, 2013 at 12:46 pm


Perhaps you meant to say that some in the real estate industry are a problem and not that “the real estate industry is a big problem in this country”. The industry serves a noble function of building shelter for the masses.

The problem is that Greed and Fear get in the way leading to booms and busts.

The industry is cyclical, we sometimes forget that, especially in the last decade. After the Financial Crisis, the housing prices were NOT allowed to go down through a Government Policy of “easy money” and significant “interference” from the Feds to keep prices inflated with lots of liquidity.

Little known is the fact that Flaherty pumped about $80 Billion into buying mortgages from the Banks through the CMHC. All these actions, I believe, were planned and executed because other industry sectors were “essentially down the tubes”. So inflate housing, create the so called “wealth effect” and all would be well because housing was and is a Domestic Industry that can be controlled by the Feds.

Of course, every action has its consequences, intended and unintended. So now we have to pay the piper, perhaps over the long haul and bear some pain.

April 8th, 2013 at 1:05 pm


There are a few factors that are signalling caution as we look ahead and try to figure out the “direction” of the local real estate market:

1. Unemployment, scary March numbers
2. Canada GDP forecasts indicate tepid growth
3. Business Investment slowing
4. Record Household Debt
5. Very Weak Retail Sales, consumer tapped out
6. Weak Commodity prices and….

a slew of pessimistic housing forecasts.

For some of us that are on fixed income with a short investment horizon, buying into real estate now just feels like a rather risky proposition.

So as another blogger put it, renting is much more attractive, actually about half the prices of owning. Lots of flexibilty with the “Notice to Vacate” caveat……

harper Says:
April 8th, 2013 at 2:08 pm

Having witnessed, first hand and ad nauseam, the unabashed and schadenfreudian exuberance of Canadians regarding the collapse of the US real estate markets in 2007, it will be interesting to observe the forthcoming contortions of reality regarding their own. Especially, when the US criticisms are put in context with Canada’s “Prudent Banking Practices” mixed with equal parts “It’s Different Here” cocktail party mantras.

As for manifestation of downward pressure on home prices during real estate collapse(s), the analogy of a light-switch comes to mind. Initially, despite continuous downward pressure, there appears to be very little movement of the switch. Then suddenly, “Click” …. the lights go out!

Will the last person to leave the Canadian bubble please turn out the lights.

April 8th, 2013 at 2:51 pm


I have to thank you for the light switch metaphor. That’s a great chuckle. I’m still smiling. 🙂

Now the question is – what if it is a dimmer switch?

harper Says:
April 8th, 2013 at 4:19 pm

Light switch analogy:

Beg your pardon. Just realized the ‘humor’ provided in my analogy from a Canadian POV. How naive of me to suggest it could possibly happen in Canada.

Queue Vancouver cocktail music. How does the ‘mantra’ go again?

Not much of name... Says:
April 8th, 2013 at 4:34 pm


Another option…the bulb is simply old and tired and will simply burn out.

April 8th, 2013 at 4:53 pm

no apology required. Anything is possible.

April 8th, 2013 at 4:54 pm

@not much

we’re on a roll. Anybody else?

anonanon Says:
April 8th, 2013 at 5:20 pm

We have made money off of renting…

We earned 12% on our portfolio last last year while house prices in Vancouver dropped or remained flat (depending on the stats you look at).

Looking forward to see what the next few years brings….

Finally Says:
April 9th, 2013 at 12:18 am

You guys are all too deep! I just want to know when I can buy a house near Main Street on a 33×122 lot for under 650K.

Patiently Waiting Says:
April 14th, 2013 at 7:46 am

Hi Larry,

In a response above you say:
“But there is another element at play. Even with price reductions I wonder if they will be sufficient to ‘fire up’ buyers?…”

My husband and I (with kids) realized our profit on our home a couple years ago. We are in no way RE speculators by historic definition but likely fall into that category as we now speculate that house prices will fall.

We knew we didn’t want to live in our former house long term ( had been there 10ish yrs) and thanks to many RE Bear blogs we could see cracks in the system, so we chose to sell, rent and wait.

We remain committed to our plan, having invested our profit and rented in an area we love. We will wait to buy until house prices come down to a point where we believe the value of the house/property is reflected in the price.

Right now asking prices, in our opinion, are artificially high due to manufactured opportunities to flood the housing market with buyers who would have otherwise not been able to afford home ownership (30-40 yr ammort, cash back and 0 down mortgages, raised ceiling on CMHC insurance limits etc.). This influx of formerly unqualified buyers significantly contributed to the rapid rise in house prices.

We refuse to spend our hard earned money (and its investment growth) on an artificially inflated asset.

Sure we put up with some hassles renting, it is definitely not for everyone, but, in our opinion, those accommodations are worth it and in our best interest.

We will buy a home again when prices return to “affordable” and realistic, where they would have been without the various emergency measures. I am considering a ball park being average house prices in @ 2000+ 3% annual increase to be a base number as this would have been average historic appreciation.

Hindsight will reveal how we did on this RE speculation. Until then, we relax and enjoy the benefits of renting.

I appreciate your blog and the opportunity for dialogue that it provides; thank you for your efforts.

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