Factions within Vancouver real estate had their fingers crossed hoping that the Chinese New Year would produce another rush of eager home buyers. Rumored reality however, seems quite different.

The Change

If ‘coffee talk’ amongst Vancouver Realtors® is the measure for that vein of gold then it appears that few if any of those home buying “nuggets” have turned up. It begs the questions why not? Were Vancouver home sellers digging the wrong hole?

Reasons

Seeking answers to explain why Chinese buyers for Vancouver homes were a ‘no show’, we turn to outside perspective to help explain why the Vancouver home selling gold rush never materialized.

The answers, more global than you might expect, all point to a singular problem – China is in trouble.

Perspective

In the following 22 minute video Patrick Chovanec, associate professor at Tsinghua University’s School of Economics and Management in Beijing, and Nouriel Roubini the co-founder and chairman of Roubini Global Economics, an independent, global macroeconomic and market strategy research firm in New York discuss reasons sure to uncross anxious Vancouver real estate fingers.

Vancouver real estate’s tables were readied in anticipation of their arrival.

UpBeat

Proclaimed was that this Chinese New Year – the Year of the Dragon, would see many overseas players arrive to play their hand in the high stakes game known as Vancouver real estate.

News was upbeat in saying that this Chinese tradition may bring good fortune to locals who frenzied in anticipation that Vancouver’s real estate market might see gaming excitement. Listings flooded in as Vancouver home sellers readied themselves hoping to win the jackpot once more.

Flip Side

According to Wong Li, a prominent Chinese astrologer. “People born in the Year of the Dragon are said to be, to have strong personalities, and be ambitious, and self-assured. On the flip side they can be strong-headed and egotistical.”

Current sentiment amongst some Vancouver Realtors® is that those few who came to play were in possession of Li’s ‘flip side’. Those Realtors® have suggested that ‘strong-headedness’ may have dictated that our guests would not play the high priced stakes of Vancouver real estate deciding instead, to leave Vancouver’s real estate’s gaming table empty.

There are times when we all say and do silly things that make us laugh.

If laughter is the best medicine, then this Vancouver Realtor® considers being able to laugh at himself a life elixir.

Realtor® Speak

I sometimes think that if you were to ask a Vancouver Realtor® if they like holding an open house you may get a different answer from each of them.

Words You Might Hear

• Great way to find new clients
• Great way to meet the neighbours who might sell later
• Opportunity to showcase the Vancouver home
• Opportunity to showcase my other listings
• It’s a marketing strategy
• Never sold a house off an open
• It looks like I’m doing something
• I get to sleep
• I get to catch up on my reading
• People get killed at opens
• I sell off opens all the time
• Best way to get the most people to see your home

Time Machine

This weekend I’m holding a Vancouver open house at 2050 SW Marine Drive – an old Vancouver estate home that has never been for sale before. Prior to unlocking the door, I know that many visitors will be curious about a such large estate property. After all, it’s not often that you get a chance to enter a Vancouver home that is a 9,000 square foot grand old Tudor in original condition. It may be their only chance to casually explore and dream about what life was like living on a large estate for the past 86 years. For many, it is a step into a time machine.

Rare Words

Over 30 years I’ve met thousands of people at open houses. Yesterday however, created a surprise not experienced before. A gentleman took the time to write and say Thank You.

Hi Larry,

Today I went to your open house at 2050 SW Marine with my two friends. Although we are not in the market for a home, we enjoy going to open houses. I think it will prepare us for when each of us takes the plunge.

We were driving to another open when we saw your sign. After a quick look at the house we decided to turn around and have a look. We were not disappointed – what a treasure that house is! I would like to thank you for allowing us to look through it even though it was obvious we could not possibly afford it. The experience certainly made our day. It was all we could talk about afterwards!

Again Thanks
Mike

Benefit

From my perspective receipt of this note is important. First, as a Vancouver Realtor® the note served to remind me that not every guest is there to buy that particular home. Sometimes it more the case that my job as the Realtor® on duty is to help people learn – to help them understand how elements of a home can come together to create value for them by showing them which elements are beneficial and which require change.

From a practical marketing viewpoint the second benefit which is perhaps the most important to the seller is that ‘word of mouth’ advertising was created.

“It was all we could talk about afterwards.”

As a Realtor®, I know that this type of advertising cannot be purchased – it is earned and is something I consider to be priceless! It is the marketing buzz Realtors® hope for.

Approximately 50 people visited 2050 SW Marine Drive yesterday during the scheduled two hours. In addition some after schedule stragglers dropped in as I was closing down. I’ll be there today Sunday, between the hours of 2 and 4 pm. If I’m lucky I will get another email tonight thanking me for holding another Vancouver open house.

‘The experience could make your day’!

When a national forum asks for your opinion about Vancouver Real Estate it’s an honor that comes with attachments.

Jitters

Interview’s on television or in print are not the same as cobbling a post on this blog. Posting a piece here is more like talking with friends about what they plan to have for lunch or discussing the latest hockey score.

An interview with a national paper or magazine such as Macleans is on the other hand, knowing in advance that your words will reach a larger audience of strangers.

Although it’s not my first rodeo, every time I ride into an interview it gives me the jitters and my feet start to shake in my rubber boots!

Logo Courtesy of Macleans
Boot Image

Have you have happily been eating ‘bubble’ fodder on your Vancouver real estate plate?

If so, then Sherry Cooper, BMO’s Capital Markets Chief economist just changed what’s being served.

Vancouver Balloons

Regardless of rising household debt, low interest rates and high Vancouver home price, Cooper’s report says that it is unlikely that a sudden correction will happen.

According to Cooper “the housing boom is more likely to cool than correct. An exceptions she claims is “pricey Vancouver”, where the number of unoccupied newly built condos is high owing to the Olympic Village construction in 2010. “But,” she states, “Montreal has more vacant condos than Vancouver and a much higher condo rental vacancy rate.”

Not to Worry

“Concerns about a “bubble” stem from a doubling in nationwide house prices and a rapid increase in household debts over the past decade. Average prices have grown more than twice as fast as family incomes since 2001. Consequently, comparing the current ratio of average resale prices and personal incomes with its long-term trend suggests a moderate degree of over valuation, though less than before the early 1990s correction.”

“The main take away is that the national housing market appears somewhat pricey, but is far removed from bubble territory.”

Then Again!

Vancouver’s ratio currently sits at 10 times higher than average household income.

The caveat is that there are three risks to BMO’s outlook:

• risk of a material correction if interest rates were to spike
• a severe recession would reduce affordability and demand
• if foreign investment stalls due to a hard-landing in Asia

Even so, Cooper tells us that “barring one of these triggers, a dramatic correction is unlikely. In our view, the national housing market is more like a balloon than a bubble.”

Sherry Cooper’s BMO Report
Financial Post View
CBC’s Perspective
Image National Geographic via Infoniac

Cameron Muir, Chief Economist at the British Columbia Real Estate Association (BCREA) rubbed his crystal ball to conjure a Vancouver Real Estate outlook in this the First Quarter Housing Forecast.

Highlights

• Modest economic growth at home and abroad is expected to limit growth in consumer demand both this year and in 2013
• BC’s MLS® residential sales are forecast to increase 2.1 per cent from 76,817 units in 2011 to 78,400 units this year increasing a further 2.7 per cent to 80,500 units in 2013.
• 15-year average is 79,000 unit sales
• Record was 106,310 MLS® residential sales in 2005
• European sovereign debt concerns and a sluggish US economy will continue to impact consumer confidence
• Demand in the bond market may keep mortgage interest rates at or near record lows for most of 2012
• Home prices in most BC markets are forecast to experience little change over the next 24 months
• Average MLS® residential price in the province is forecast to edge down 2.2 per cent to $548,500 this year
• Expect market to remain relatively unchanged in 2013, albeit increasing 0.8 per cent to $553,000.

Information Copyright BCREA Reprinted with permission.
Full Report Here

A coffee conversation today with my Vancouver Realtor® buddy had an interesting twist.

Sunday Offer

It was Sunday in the early evening when the call was made to the listing agent.

• Buyer’s Realtor® – “We’d like to make an offer!”
• Seller’s Realtor® – “Ok that’s great but, I need to tell you that three others who visited the weekend open house have also declared their intent to make an offer as well,” said the listing agent.
• “Oh – well then, I will inform the buyers I’m representing to advise them that you expect multiple offers – I’ll get back to you with their decision.”

Later Sunday Evening

Buyer’s Realtor® – “The buyers I’m representing have decided that they do not want to participate in a multiple offer situation.” “Thanks for your time and good luck with your multiples.”

Monday Morning

• Seller’s Realtor® phones. “Would your buyer’s reconsider their decision?”
• Buyer’s Realtor® – “Why?”
• Seller’s Realtor® somewhat embarrassed – “the other three offers that were declared Sunday evening have decided not to go forward.”

Retreating Thoughts

Under the assumption that the recent lack of Vancouver home sales need a reason then here is one that might fit. If in fact this is the reason, then we are left to ask if this is a new Vancouver home buying reality or worse, a portent?

Without numbered conclusions, only suspicion remains that a number of Vancouver home buyer’s may initially be jumping at record low interest rates that excite the prospect of owning a Vancouver home. Then, with quiet reflection, they recognize the financial impact to their life style for years to come. As silent deliberations root buyers exorcise the simplest way out of their dilemma – they retreat to leave sellers gasping.

Is small beautiful?

With the passing of time density is becoming entrenched in Vancouver real estate. This report reveals the next level in maximizing livability when multiplied five times on a 33 foot Vancouver property.

CBC Report

Our good friend Cameron Muir, Chief Economist at the British Columbia Real Estate Association has this to say about the latest Bank of Canada Interest Rate Decision’s possible impact on Vancouver real estate.

On Hold Highlights

• Bank of Canada opted to hold its target overnight rate at 1 per cent.
• global economic outlook is deteriorating, largely due to an expected deep and prolonged recession in Europe
• the Bank expects the Euro-crisis to be contained
• will impact the Canadian economy this year
• Bank is forecasting GDP growth of just 2 per cent in 2012
• the Bank anticipates that both total and core inflation will moderate this year before rising to 2 per cent by the third quarter of 2013.

BCREA Outlook

• the economy is largely in-line with the Bank of Canada -indeed our forecast for economic growth is almost identical
• Canadian economy is likely to face a number of head winds in 2012, both externally from the Euro-debt saga and an uncertain US economy, and internally as traditional sources of growth begin to fade
• it is difficult to see where economic growth will come from in 2012

Expected

• Canadian consumption slows
• Governments begin to address fiscal gaps
• Residential construction moderates
• leaves private business investment to drive the economy however,..
• murky demand outlook, it is far from certain that businesses will be in the mood to take on significant new projects

Upside to Downside

• unlikely that the Bank of Canada will move on interest rates in 2012
• long-term rates will remain at historically low levels until confidence is restored in the sovereign debt of Europe

Courtesy the British Columbia Real Estate Association
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Image Courtesy Bank of Canada