Real Estate

Vancouver housing bubble?

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Deal Guru
Jan 27, 2006
12550 posts
5724 upvotes
Vancouver, BC
adamtheman wrote: I don't disagree with anything you've said. However, no one can deny that this "bubble" has been going on for 15 years now and even though there's a huge majority of foreign money involved, there's also lots of Canadian buyers who have gotten sucked up into it. Anyone who lives in Vancouver knows that all anyone talks about is what their house is worth. It's an obsession. If the NDP and Greens come in and block all foreign money from coming in and implement taxes, then not only will they piss off every homeowner, but they will also lose that sweet sweet property transfer tax and GST that the libs have been enjoying for 16 years. End result will be huge budget deficits while the housing market crashes. And that means that the NDP will be a 1 term government (if they even make it that long) before Christy Clark comes out and goes "See, I told you so!". In a way, you can almost see that the Liberals have set the NDP up for exactly this. In 4 years when real estate prices have crashed down and there's defaults and foreclosures everywhere, people will blame the NDP. Of course it is not the NDP's fault - it is the liberals who for 16 years allowed all this foreign money to flow into the market. But are the voters of BC smart enough to realize that? Yet to be determined. The point I am trying to make is nothing is a guarantee with the NDP. The right thing for them to do is to bring this whole thing down FAST, but I wouldn't be surprised if they F it all up.
You forgot two things... the NDP isn't afraid of running deficits and they will of course blame the previous government for 'cooking the books' and leaving them with a mess.

As for the property transfer tax, an active market generates money from the property transfer tax in up and down markets as long as the market is active so the NDP will be buffered to a certain extent if its a fast moving crash as the high number of transactions will provide the funds in question. The problem will be when the market has dropped and the activity has slowed....

As for bringing things down fast, real estate markets always overshoot the destination either to the upside or to the downside. By going down FAST, there's just a greater likelihood of massively overshooting.
Deal Fanatic
Feb 9, 2009
8338 posts
5447 upvotes
adamtheman wrote: Just hot air. People will just rent out their unit for $1 a month to a family member who will never actually occupy it but on paper it is rented out. Lots of ways around it. Takes 10 minutes to make up some false paperwork and the city has no way of proving otherwise.

What the city needs is real solutions, like the one that the UBC folks presented. Bottom line - if you are not paying income taxes in Canada then you need to be paying an additional property tax, period. That is easy to track and cannot be faked.
Well that means getting into the CRA database... good luck...
Sr. Member
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Feb 9, 2009
719 posts
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adamtheman wrote: But are the voters of BC smart enough to realize that? Yet to be determined. The point I am trying to make is nothing is a guarantee with the NDP. The right thing for them to do is to bring this whole thing down FAST, but I wouldn't be surprised if they F it all up.
Of course you're right. Responsible and non-corrupt provincial government would not allow this to happen for 15 years. People voted for Liberals mostly because they position themselves as "social justice activists" and "non-racists", which turns to be fake when you see money for "social justice" drawn from illegal cash influx resulting in inaccessible housing for most low earners, and Canada per country immigration quotas grossly circumvented in BC in favor of certain countries nationals who bring more money. This is strictly against Canada national interest, and threatens the country to loose sovereignty if continues. As to how to avoid inevitable crisis when the bubble blows - that is very hard to do given Liberals allowed 40% of BC GDP being real estate transactions based - this kind of conduct may deserve jail times for those allowing it to happen. I don't know if NDP possesses required art of governance for the task, but what they obviously need to do is looking for the most qualified people to manage the way out, those who have experience managing housing bubble crisis. And its required across all spectrum of tasks, from law enforcement to finance to real estate & developers audit to new economy development that would largely substitute today's source of programs funding.

Alibaba owner Jack Ma was talking of Asian middle class looking for quality goods and foodstuff from North America. This guy obviously knows what he says having the largest Taobao pathway to China 1.4 bln population, despite he may say it for political reasons or directed by China government to soften election time Trump's rhetoric. In any case, why don't take his words at face value and offer him some volume deals at selling Canadian food and high quality consumer goods & clothing? Given 40 times population difference, a small share on China market can give plenty of revenue to Canada. Clean natural food production in Canada can be increased without much effort. High quality clothing and footwear was produced in large volume in the past, so not that hard to raise volume again. Canada tech industry can regenerate in Vancouver too given supply of qualified China programmers. Just looking for some ways to fast compensate inevitable funding losses... Indeed, faster turnaround of much lower priced homes can also give extra tax revenue. The government efforts should be directed towards diversifying the region economy, not just fighting with the bubble.
Last edited by arnycus on Jun 5th, 2017 7:20 am, edited 2 times in total.
Deal Fanatic
Oct 7, 2007
6256 posts
2499 upvotes
craftsman wrote: They don't have to... the VISION government is starting their PR campaign ahead of next year's election and as such just needs to show that 'they are listening and doing something' which is vastly different from what their normal SOP is.
Vision really doesn't seem to listen to anything. No matter how loud the residents complain about overdensification or excessive development they just continue on. I have been watching the Chinatown public council hearings where many speakers have come on to explain their concerns about the Beedie project at Keefer and Columbia and the body language of council and the Mayor look so bored and uninterested (shuffling papers while people are talking, calling time more frequently on those who are opposed to the project, etc.). I don't know if they have voted yet but I am almost certain that they just let people speak as a matter of putting the tick in the box and will then approve the project regardless. Any ideas on effective techniques to get them to listen?
Deal Addict
User avatar
Jun 24, 2002
2954 posts
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BC
choclover wrote: Vision really doesn't seem to listen to anything. No matter how loud the residents complain about overdensification or excessive development they just continue on. I have been watching the Chinatown public council hearings where many speakers have come on to explain their concerns about the Beedie project at Keefer and Columbia and the body language of council and the Mayor look so bored and uninterested (shuffling papers while people are talking, calling time more frequently on those who are opposed to the project, etc.). I don't know if they have voted yet but I am almost certain that they just let people speak as a matter of putting the tick in the box and will then approve the project regardless. Any ideas on effective techniques to get them to listen?
This is likely because they know it has to be approved. One of the easiest ways to lower the price on a supply and demand curve is to increase supply. If Vancouver is to become more affordable they will essentially need to oversupply the market, but I'm not convinced that can be done economically given the amount of land available.

High speed rail and better roads will allow quicker and more convenient access to Vancouver from further away, and this will also lower the demand to live in Vancouver. Instead of turning car lanes in to bike lanes, they should be building as many efficient roads in to and around Vancouver as possible. If we could get the high speed rail that other nations have people could commute as far as Abbotsford or maple ridge with little issue where housing is much more affordable.

The issue is that many that want affordable housing don't want to demolish "historic" areas where the rent is cheaper and there are drug addicts all over. Gentrification is a good thing. If they can increase the density many more people will be able to live their, but it likely won't be those renters that are kicked out that will be able to afford the new homes.

There are many practical solutions to increased pricing in Vancouver, but one must get over deserving to live in Vancouver just because they grew up there or rented in an area for a long time.
Deal Addict
Feb 7, 2006
2668 posts
1179 upvotes
arnycus wrote: As to how to avoid inevitable crisis when the bubble blows - that is very hard to do given Liberals allowed 40% of BC GDP being real estate transactions based - this kind of conduct may deserve jail times for those allowing it to happen. I don't know if NDP possesses required art of governance for the task, but what they obviously need to do is looking for the most qualified people to manage the way out, those who have experience managing housing bubble crisis. And its required across all spectrum of tasks, from law enforcement to finance to real estate & developers audit to new economy development that would largely substitute today's source of programs funding.
would it be to much to ask if you could provide facts when you spout stats. 40% is large number. Now I am not doubting your claim as BC stats are new to me. I believe Canada wide the housing sector represents 13.2% (link). Housing construction is built into the construction sector and would have to be broken out. For BC construction represents (link) 7% of GDP. But this includes stuff like roads, dams , housing construction, repairs.

Here is a handy link to help you out. The numbers are 2015 and the underlying stats com from Stats Canada. Cansim is the base for most of the stats you will see provided in the news outlets.
Deal Addict
Aug 12, 2004
4288 posts
1815 upvotes
Calgary
New all time high? Well so much for the foreign buyer tax having a drastic impact as some hoped. It did have an initial price impact and certainly continuing to have an impact on sales, but oddly enough it seems to have made the market tighter. Real estate keeps on trucking along.
Deal Guru
Jan 27, 2006
12550 posts
5724 upvotes
Vancouver, BC
choclover wrote: Vision really doesn't seem to listen to anything. No matter how loud the residents complain about overdensification or excessive development they just continue on. I have been watching the Chinatown public council hearings where many speakers have come on to explain their concerns about the Beedie project at Keefer and Columbia and the body language of council and the Mayor look so bored and uninterested (shuffling papers while people are talking, calling time more frequently on those who are opposed to the project, etc.). I don't know if they have voted yet but I am almost certain that they just let people speak as a matter of putting the tick in the box and will then approve the project regardless. Any ideas on effective techniques to get them to listen?
I completely agree with you that Vision doesn't truly 'listen'... what I meant from my post is that they are putting on the appearance of listening so that they can get re-elected; hence, the 'listening' part of their PR campaign without any action to back it up.

There's only two things Vision will listen to - voting them out of the office OR developer money. Vision has done a great job in portraying themselves as a party for the people when they actually could care less of what the people actually think and providing good governance.
Deal Guru
Jan 27, 2006
12550 posts
5724 upvotes
Vancouver, BC
Ren wrote: The issue is that many that want affordable housing don't want to demolish "historic" areas where the rent is cheaper and there are drug addicts all over. Gentrification is a good thing. If they can increase the density many more people will be able to live their, but it likely won't be those renters that are kicked out that will be able to afford the new homes.
To a certain extent... Older areas do need to get redeveloped as properties become a safety hazard so a refresh is good. I believe a lot of the rundown nature of the area has caused much of the crime and overall 'low desire for visitors' environment in the area. However, as with many of Vision's visions, the overall community plan is not even half baked - there is no plan. They should have put together a firm community plan with real consultation with the locals to bring back the character of Chinatown from the 70's when the community was more vibrant and more welcoming. A lot of that community plan will include redevelopment and gentrification but in a planned organized fashion that supports and builds a community.

I'm reminded of news articles about how older communities in Beijing were torn down and the residents moved to make way for redevelopment for the 2008 Olympics. While it's not at that scale (and Beijing did have a plan which didn't involve the residents), the same non-consultation and inclusion of the local population is evident.
Deal Guru
Jan 27, 2006
12550 posts
5724 upvotes
Vancouver, BC
Firebot wrote: New all time high? Well so much for the foreign buyer tax having a drastic impact as some hoped. It did have an initial price impact and certainly continuing to have an impact on sales, but oddly enough it seems to have made the market tighter. Real estate keeps on trucking along.
I think two things contributed to the all time high...

1. Ontario's FBT which basically levelled the playing field between BC and Ontario so some of that money is rolling out of Ontario (hence the recent high inventory numbers and the softer increases in prices).
2. The home buyers program and the FEAR that an NDP government will kill it so new buyers are rushing in before the 'free money' is gone.
Sr. Member
User avatar
Feb 9, 2009
719 posts
285 upvotes
MMMM wrote: would it be to much to ask if you could provide facts when you spout stats.
I did earlier, note: "transactions based".

"In British Columbia, real estate and related fields such as construction and finance make up an astounding 40 per cent of GDP." Your links are possibly more reliable. Smiling Face With Open Mouth And Smiling Eyes

Interesting is, great help in reverting current trend NDP Government may receive from hiring China nationals - experts on trade with China leaving in Vancouver and actively engaged in it. For some reasons, many people think this trade goes one way - from China to Canada, or that Canada can only sell natural resources. Not true - locals export a lot of foodstuff and consumer goods to China right now. The difference is, now its in some part tax evasive, amateur level, and little contributes to budget, but if provincial Government overtakes and enhances the trend, it will be high margin business greatly adding to revenue stream. Given proximity to Asia, Vancouver should become main Canada export city to this world region. Studying the trends and import needs of Asian population, intensive market research in Asia should be one of NDP current trade priorities. Generally, the entire Canada enhanced export to Asia via BC channels will also contribute to local BC budget. Overtime it will not only replace, but greatly surpass cash flow received from selling foreigners best real estate in Vancouver.
Deal Addict
Jun 29, 2007
4617 posts
1304 upvotes
Firebot wrote: New all time high? Well so much for the foreign buyer tax having a drastic impact as some hoped. It did have an initial price impact and certainly continuing to have an impact on sales, but oddly enough it seems to have made the market tighter. Real estate keeps on trucking along.
I usually only track the detached market. Detached average for entire REBGV is all time high in May, I believe is because there has an increase in the lower end detached segment. PoCo had the highest 3 month and 6 month increase out of all (REBGV) cities. At the other end, Vanc westside detached is still 8.7% from the all time high (July 2016).
[OP]
Deal Fanatic
User avatar
Dec 3, 2004
5129 posts
3566 upvotes
Vancouver
craftsman wrote: I think two things contributed to the all time high...

1. Ontario's FBT which basically levelled the playing field between BC and Ontario so some of that money is rolling out of Ontario (hence the recent high inventory numbers and the softer increases in prices).
2. The home buyers program and the FEAR that an NDP government will kill it so new buyers are rushing in before the 'free money' is gone.
Don't forget the Canadian dollar dropping. Foreign buyers only care about the price it costs them in THEIR dollars to buy here. If we priced Vancouver's real estate in US dollars, it actually wouldn't have gone up much. In 2013 the dollar was around par and the average detached home price in Vancouver was around $1.25 million dollars. Today, the dollar is trading at around 1.35, which converts to $1.69 million dollars. Not too far off from where we actually are ($1.83 million). That's a growth of about 2.6% per year or roughly inflation. In other words, in US dollars, Vancouver real estate has not gone up at all for the past 4 years beyond roughly the inflation rate. It's really a worst case scenario for local buyers
Deal Addict
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Dec 13, 2016
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adamtheman wrote: Don't forget the Canadian dollar dropping. Foreign buyers only care about the price it costs them in THEIR dollars to buy here. If we priced Vancouver's real estate in US dollars, it actually wouldn't have gone up much. In 2013 the dollar was around par and the average detached home price in Vancouver was around $1.25 million dollars. Today, the dollar is trading at around 1.35, which converts to $1.69 million dollars. Not too far off from where we actually are ($1.83 million). That's a growth of about 2.6% per year or roughly inflation. In other words, in US dollars, Vancouver real estate has not gone up at all for the past 4 years beyond roughly the inflation rate. It's really a worst case scenario for local buyers
Finally a post that makes sense. I remember when some Canadian politicians were so arrogant to suggest taking US quarters out of circulation because Canadian dollar was worth 5 cents more. Of course, not betting your mother on oil was out of the question.

Thank god for immigration.
Sr. Member
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Feb 9, 2009
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adamtheman wrote: It's really a worst case scenario for local buyers
Apart from changing real estate law enforcement and tax landscape, what do you think NDP can do to substitute easy money coming from the sky due to long term local Liberals hidden support to the artificial housing bubble? Do they possess required qualifications and vision?

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