Real Estate

Vancouver housing bubble?

  • Last Updated:
  • Mar 26th, 2024 5:10 pm
Tags:
None
Deal Addict
Dec 5, 2009
2789 posts
3289 upvotes
GooseAkuma wrote: Hasn't that been the case over the past 10+ years? Detached homes have grown in value vs townhomes vs condos. The reality is that there is less and less supply of detached homes.

I do notice that those spacious but crappy looking homes in very average locations aren't being listed for $2-3M anymore.
Yes you could say that has been happening over the last 10 years, but gap is growing at an increasingly faster pace. It might not be long before the jump from condo or townhouse to detached becomes basically impossible without help.
Deal Fanatic
Oct 7, 2007
9404 posts
5374 upvotes
What happens if the desire for condos starts to drop? I am hearing this may be happening as a worldwide phenomenon due to corona virus and other reasons.
Deal Addict
Jun 14, 2018
1368 posts
1662 upvotes
choclover wrote: What happens if the desire for condos starts to drop? I am hearing this may be happening as a worldwide phenomenon due to corona virus and other reasons.
What else are people going to buy if they don't want condos, but also can't afford detached?
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
choclover wrote: What happens if the desire for condos starts to drop? I am hearing this may be happening as a worldwide phenomenon due to corona virus and other reasons.
We have to separate the existing market to those who want to live in the property and those who want to invest in one... Condos will be the entry-level vehicle for both markets due to the lower price point. However, as we have seen by the Toronto numbers where up to 1 in 5 (maybe higher) condos in new developments were purchased as investments which were rented out on Airbnb type of sites, the desire for such investments may have fallen like a rock due to the current travel restrictions. As those Airbnb investors look for a way forward, many of them are converting from short term rentals to longer-term rentals which are driving the rents down which many of an issue for all of those who were in the long term rental business for the past few years - ie they are losing their existing tenents not to home purchases but cheaper rents elsewhere.

I saw one article where rents are becoming more economical than mortgages for the first time in years in certain markets. If that's the case, I can see some homeowners jumping ship to become renters especially if they can still sell their property at higher rates in order to increase their monthly cashflow.
Member
Jul 17, 2018
317 posts
164 upvotes
Alpine84 wrote: Yes you could say that has been happening over the last 10 years, but gap is growing at an increasingly faster pace. It might not be long before the jump from condo or townhouse to detached becomes basically impossible without help.
Sure but how much of that is a function of our government allowing for increased housing density? The reality is that many people who grew up in a house in metro Vancouver who are in their 20s and 30s do not think of being able to afford a detached home. Their kids might not dream of owning a detached home because they didn't grow up in one. There are actually a lot of people who grew up living in a condo who dislike not having a strata to take care of maintenance.
Jr. Member
Feb 4, 2004
175 posts
138 upvotes
Alpine84 wrote: Entry lvl detached is hot across east van/bby and now the wave is sweeping into Coquitlam. I think we are about to see the gap between attached and detached grow.
All municipalities bordering Vancouver appear to be in this trend. I haven't followed Richmond much before but recently doing research on sold prices and days on market, it seems like Richmond is just behind Burnaby. These last 3 months have been insanity.
Deal Expert
User avatar
Jul 29, 2003
19313 posts
2764 upvotes
YVR


The article itself states that 114 Vancouver homes sold from June 6 to June 21 for an average of $1,294,058.



And new to me is that the stats can be fluid.
R.I.P. Rick Rypien #37

For Sale:
shortened url's are not allowed
Banned
Nov 10, 2004
1415 posts
59 upvotes
surrey
How do i find a house there is no one murdered? sometime cheap houses has a bad history.
Deal Addict
Dec 5, 2009
2789 posts
3289 upvotes
GooseAkuma wrote: Sure but how much of that is a function of our government allowing for increased housing density? The reality is that many people who grew up in a house in metro Vancouver who are in their 20s and 30s do not think of being able to afford a detached home. Their kids might not dream of owning a detached home because they didn't grow up in one. There are actually a lot of people who grew up living in a condo who dislike not having a strata to take care of maintenance.
Increasing density has only served to benefit builders. Builders are snapping up all the lower priced detached homes and building duplexes/multiplexes in its place, and they are making a killing doing so.
Deal Addict
May 23, 2006
1714 posts
719 upvotes
Vancouver
Add the representation of no murder into the purchase agreement
AlexK wrote: How do i find a house there is no one murdered? sometime cheap houses has a bad history.
Deal Fanatic
Oct 7, 2007
9404 posts
5374 upvotes
Alpine84 wrote: Increasing density has only served to benefit builders. Builders are snapping up all the lower priced detached homes and building duplexes/multiplexes in its place, and they are making a killing doing so.
I hope these people don't get caught holding a bunch of stuff they can't sell. On another note, I am not sure why the City of Vancouver lets them get away with putting up garden boxes on these sites and then getting an exemption from paying the property taxes. It is not like the builders are some kind of charity or are doing something charitable. With the city's help, they are controlling the housing supply and actually making housing about as unaffordable as possible for all.
Deal Addict
Apr 10, 2011
3914 posts
4767 upvotes
Canada
Those unusual price changes could also be a result of this tax-deferral scheme that has worked very well for high-valued Vancouver properties bought/sold overseas. Private deals were being made (and probably still are) to significantly reduce taxes (BC property transfer taxes, annual property taxes, foreign buyer taxes, etc.) where a private arrangement is made to sell a high-valued property legally at an artificially lower price - with the difference being transferred locally in China.

"Alleged Canada property tax dodge for foreign buyers is described in Vancouver legal action"
https://www.scmp.com/news/china/money-w ... ese-buyers
31 May 2019

"Under the supposed scheme, depicted in a British Columbia Supreme Court pleading, buyers and sellers who were both based overseas would understate the amount being paid for a property and exchange only that portion in BC – thus reducing the property transfer tax – while the remainder of the true price would change hands outside Canada."

"China has an annual cash export limit of US$50,000 per person. A scheme such as the one described in the lawsuit could allow Chinese buyers to reduce risks associated with breaching the limit. According to data released by the Canada Mortgage Housing Corporation in March and analysed by academic Andy Yan, about $34 billion worth of residential real estate in the City of Vancouver has at least one foreign owner, representing 10 per cent of the total value of residential property in the city."

Haz wrote:
The article itself states that 114 Vancouver homes sold from June 6 to June 21 for an average of $1,294,058.
Deal Addict
Dec 5, 2009
2789 posts
3289 upvotes
choclover wrote: I hope these people don't get caught holding a bunch of stuff they can't sell. On another note, I am not sure why the City of Vancouver lets them get away with putting up garden boxes on these sites and then getting an exemption from paying the property taxes. It is not like the builders are some kind of charity or are doing something charitable. With the city's help, they are controlling the housing supply and actually making housing about as unaffordable as possible for all.
It’s been working fantastically for them so far... why build a new house and take the risk of trying to sell it for 2.5m when you can build a duplex and sell each side for 1.4m each? Density gives the illusion of affordability. Sure, prices are “cheaper” if the buyer doesn’t understand that they just paid more for less...
Deal Expert
User avatar
Jul 29, 2003
19313 posts
2764 upvotes
YVR
RxMills wrote: Those unusual price changes could also be a result of this tax-deferral scheme that has worked very well for high-valued Vancouver properties bought/sold overseas. Private deals were being made (and probably still are) to significantly reduce taxes (BC property transfer taxes, annual property taxes, foreign buyer taxes, etc.) where a private arrangement is made to sell a high-valued property legally at an artificially lower price - with the difference being transferred locally in China.

"Alleged Canada property tax dodge for foreign buyers is described in Vancouver legal action"
https://www.scmp.com/news/china/money-w ... ese-buyers
31 May 2019

"Under the supposed scheme, depicted in a British Columbia Supreme Court pleading, buyers and sellers who were both based overseas would understate the amount being paid for a property and exchange only that portion in BC – thus reducing the property transfer tax – while the remainder of the true price would change hands outside Canada."

"China has an annual cash export limit of US$50,000 per person. A scheme such as the one described in the lawsuit could allow Chinese buyers to reduce risks associated with breaching the limit. According to data released by the Canada Mortgage Housing Corporation in March and analysed by academic Andy Yan, about $34 billion worth of residential real estate in the City of Vancouver has at least one foreign owner, representing 10 per cent of the total value of residential property in the city."
I remember that article. There like this had gone sideways before with a few deals.
R.I.P. Rick Rypien #37

For Sale:
shortened url's are not allowed
Deal Addict
Apr 10, 2011
3914 posts
4767 upvotes
Canada
The downtown condo market is in a difficult situation. Selling condo units with narrow lobbies, small elevators, etc., may be more difficult at the moment.

It's great to see that Vancouver's plan to dramatically increase townhouses, row houses and semi-detached units has worked so well.
(Actually, it's a complete failure.)
The City of Vancouver will never depart from the larger tax revenues afforded by larger multi-unit high density complexes. We'll be seeing how the new COVID-economy likes that strategy.

(The news article is limited to the opinions of realtors, developers and architects. It is not an unbiased state of the industry.)

"Reopening B.C.: Priorities changing as real estate market ramps up"
https://vancouversun.com/news/local-new ... 6832bb54c/

“Pre-virus, a good chunk of the market buying condos were mom-and-pop investors.”

Now, with the collapse of the short-term rental market and stalled immigration, there are more vacancies. Also, more would-be buyers who are struggling financially are choosing to continue living with roommates or moving back home with parents instead of forming their own new households.

Developer Michael Geller said new condo pre-sales, including several projects on the Cambie Corridor, will very likely be marketed differently or “repackaged” to attract buyers with new priorities.

For example, he said, instead of storage areas, those spaces might be labelled as home offices or work stations to appeal to buyers who have shifted from commuting to offices to working from home.
Deal Expert
Jan 27, 2006
21844 posts
15620 upvotes
Vancouver, BC
RxMills wrote: For example, he said, instead of storage areas, those spaces might be labelled as home offices or work stations to appeal to buyers who have shifted from commuting to offices to working from home.
That's marketing for ya! I wonder which 'storage area' is he referring to - one in the condo (which I doubt as they would have labelled that better to start off with - ie spare bedroom or even panty than storage area) or that storage locker in the parking area? I wouldn't be surprised if he was talking about the storage locker in the parking area!
Deal Fanatic
Oct 7, 2007
9404 posts
5374 upvotes
RxMills wrote: The downtown condo market is in a difficult situation. Selling condo units with narrow lobbies, small elevators, etc., may be more difficult at the moment.

It's great to see that Vancouver's plan to dramatically increase townhouses, row houses and semi-detached units has worked so well.
(Actually, it's a complete failure.)
The City of Vancouver will never depart from the larger tax revenues afforded by larger multi-unit high density complexes. We'll be seeing how the new COVID-economy likes that strategy.

(The news article is limited to the opinions of realtors, developers and architects. It is not an unbiased state of the industry.)

"Reopening B.C.: Priorities changing as real estate market ramps up"
https://vancouversun.com/news/local-new ... 6832bb54c/

“Pre-virus, a good chunk of the market buying condos were mom-and-pop investors.”

Now, with the collapse of the short-term rental market and stalled immigration, there are more vacancies. Also, more would-be buyers who are struggling financially are choosing to continue living with roommates or moving back home with parents instead of forming their own new households.

Developer Michael Geller said new condo pre-sales, including several projects on the Cambie Corridor, will very likely be marketed differently or “repackaged” to attract buyers with new priorities.

For example, he said, instead of storage areas, those spaces might be labelled as home offices or work stations to appeal to buyers who have shifted from commuting to offices to working from home.
Wow...those new marketing tactics should really change things. I wonder how many people have dreamed of working from home so that they could work out of their storage locker?
Deal Addict
Apr 10, 2011
3914 posts
4767 upvotes
Canada
lawonga wrote: Not sure if this was posted yet, but saw this this morning:

https://business.financialpost.com/real ... g-wars/amp

The CEO talks about our local market as well
Yes, Vancouver's markets (especially with lower-end houses and condos) are currently hot.

Buyers are currently motivated (interest rates, spring market moves); sellers are not motivated (few reasons and desire to avoid contact in a pandemic). Purchase/sales activities are down considerably from last year's similar quarter stats. Inventory and activities have been reduced. There are increased buying-supports and reduced motivated-selling pressures.

Current buyers had long ago made the decision to buy at this time. With a limited COVID-inventory, they're chasing prices up. There are sellers eager to get into the market at these prices but are not wanting to sell/move during these COVID-times. When those sellers do finally come to market, many will want those higher prices. They likely won't get them in the fall/winter and so they'll hold out till spring 2021. Unfortunately, the economy in 2021 will probably be in a significantly different state.
Deal Addict
Dec 5, 2009
2789 posts
3289 upvotes
If Airbnb doesn't return by Spring 2021 I expect a flood of condos to hit the market, but I don't expect the same to happen for entry-level detached homes. The proportion of entry-level detached homes owned by investors / bought by builders to tear down & rebuild has only increased and will continue to increase. If the economy is still in a difficult state (and the government deferral/support programs are not working), then it should be a good market for condo/townhome buyers.

Top