Real Estate

Vancouver housing bubble?

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  • Jun 14th, 2019 6:05 pm
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Deal Addict
Jan 14, 2009
1651 posts
661 upvotes
Vancouver, BC
Motoss wrote:
Jun 21st, 2018 8:52 am
You are indeed trolling - stop. I’m also still waiting for you to answer your other claims 6 pages back, but I won’t hold my breath - stop trolling.
Another good snippet! Very simple to understand even for laymen.
Can more housing supply resolve the affordability crisis in Vancouver?
More than two centuries of economic science shows that supply and demand factors are both crucial for determining prices. From avocados to apartments, markets must use prices to allocate scarce goods to the consumers who want to buy them. If demand for coffee increases, firms both expand coffee production and raise prices to avoid shortages. How much more coffee gets sold and how much prices rise depends on production costs, regulations, the extent of market competition, and consumers' sensitivity to price changes.
Deal Addict
Jan 14, 2009
1651 posts
661 upvotes
Vancouver, BC
choclover wrote:
Jun 21st, 2018 10:37 am
People who are truly concerned about the liveability and future of Vancouver should be very cautious before accepting any information provided by the named "professors" such as Davidoff, Somerville and Gottlieb. If you read these people's backgrounds and listen to their approach, you will soon learn that they have no allegiance or loyalty to Vancouver and that what they are recommending is very harmful to the locals residents of Vancouver. Anyone who loves this City or wants to see it restored to some sense of liveability would not implement any of their recommendations. Professors may have had some credibility at one time but it is not the same today. Today you really need to pay close attention to where the information is really coming from and what it is being used for. The smart people know what's going on and as more and more people get hurt, others are starting to see it too.
Are you saying they have some sort of hidden agenda? What they are saying is mainstream economics. I'm not a big fan of Davidoff because of his constant advocating for increasing property taxes but I won't accuse him of being deliberately malicious. High real estate prices have made some of you irrational. Lashing out at imagined villains.
Deal Addict
Dec 27, 2006
1913 posts
886 upvotes
zakarydoks wrote:
Jun 21st, 2018 1:20 pm
Another good snippet! Very simple to understand even for laymen.
Can more housing supply resolve the affordability crisis in Vancouver?
More than two centuries of economic science shows that supply and demand factors are both crucial for determining prices. From avocados to apartments, markets must use prices to allocate scarce goods to the consumers who want to buy them. If demand for coffee increases, firms both expand coffee production and raise prices to avoid shortages. How much more coffee gets sold and how much prices rise depends on production costs, regulations, the extent of market competition, and consumers' sensitivity to price changes.
lol you are the only one who believes this - it has been disproven countless times - stop trolling! Can you please back up your other previous statements 5 pages back???
Deal Addict
Dec 27, 2006
1913 posts
886 upvotes
https://www.theglobeandmail.com/report- ... e37562481/

What Toronto and Vancouver housing data do and don’t tell us
Published January 10, 2018
Josh Gordon is assistant professor at the Simon Fraser University School of Public Policy.

Statistics Canada and the Canada Mortgage and Housing Corp. recently released a batch of data looking at "non-resident" ownership of housing in Toronto and Vancouver. Many observers have tried to spin the data in misleading ways, so it is important to look closely at what the data tell us – and what they don't. Here are four important takeaways.

First, the data provide a baseline or conservative estimate of foreign ownership. Statscan and CMHC define "non-resident" owners as those with their primary residence outside of Canada. This will mostly capture foreign citizens who have limited ties to Canada.

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In the popular debate, this group has loomed large: buyers flying in to purchase houses as investments or people buying condos in showrooms overseas. While vivid, this imagery has always been understood to be something of a caricature by those who study the issue.

What's startling is just how substantial this "caricature" appears to be: 4.8 per cent of the housing stock is owned by "non-residents" in Vancouver and 3.4 per cent in Toronto – roughly 36,000 housing units in Vancouver and 56,000 in Toronto. Nothing to sneeze at.

Second, the release provides data on the "stock" of non-resident ownership – the share of all existing property – but little on the "flow." When it comes to housing prices today it is the "flow" that matters more – those currently participating in the market.

The most telling "flow" data are the non-resident ownership rates of condos completed in the past two years. This is striking: 16 per cent of newly built condos are owned by non-residents in Vancouver and 12 per cent in Toronto.

These shares are sufficient to have a big impact on prices. One U.S. study of the 2000s housing bubble suggested that for each percentage point increase in the share of "out of town" buyers in an urban market, prices increased by about 2 per cent over the next year.

Third, non-resident buyers are acting as the "marginal buyers." In each housing category, whether condos or detached houses, non-resident buyers are paying more for units than resident buyers, sometimes substantially more. They are thereby "setting the pace." When 10 "local" buyers for a unit get outbid by a big offer from offshore, the winning bid has just set the benchmark for what prices can be achieved – and this will subsequently affect buyer and seller behaviour, especially if that dynamic is as substantial as the "flow" data indicate. This means that a modest number of buyers can have a major impact on the market.

Fourth, and most importantly, we still don't have a good picture of foreign ownership of housing. Foreign ownership is best defined as ownership primarily based on foreign income or wealth. From the present data we learn about non-residency, but not where the money is coming from.

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For example, proxy buyers such as students and homemakers would not usually be counted as "non-resident" in this data – even if the funds were foreign. Numbered companies and speculators with murky offshore financing would also be missed.

The concern in Toronto and Vancouver is that money with no connection to the local labour market is being used to buy housing. This can lead to rising unaffordability, as housing prices are set by wealthy buyers that do not rely on local incomes – the phenomenon of "de-coupling."

To get a better sense of this dynamic, Statscan and the CMHC should compare income-tax data and ownership titles. This analysis is tricky and time-consuming, but there are various ways to get a good initial picture.

One approach would be to look at the properties bought for more than a million dollars in recent years and calculate the share of those properties that were bought by individuals who had paid less than $50,000 in lifetime Canadian income tax at the time of purchase. A truly "local" income earner able to buy such a property would have paid well more than that amount in taxes. There would be some exceptions, but they would be minor – and offset by omissions in the other direction.

The typical measure of housing affordability is the average house price to average household income ratio. For most Canadian cities, that ratio is three or four, including when we look at detached houses in isolation.

In Richmond and West Vancouver, B.C., long known to be popular destinations for foreign money, the price-to-income ratios for detached houses in 2017 were around 25 and 35, respectively. In Richmond Hill, Ont., another popular destination, the ratio was nearly 20 in early 2017. This is "de-coupling" on steroids.

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Industry representatives and too many pundits would have you believe that these extreme ratios have little to do with foreign money. This is absurd. Either the most disastrously designed mortgage systems in North America just happen to be located or concentrated in these municipalities, or foreign money is playing a major role.

Until governments get more complete data on foreign sources of housing finance – not merely foreign citizen or "non-resident" buyers – these commentators should not insult our intelligence with claims that foreign money is unimportant.

There are many channels for foreign money to enter a housing market and properly gathered data can, and will, tell us this.
Deal Addict
Jan 14, 2009
1651 posts
661 upvotes
Vancouver, BC
Motoss wrote:
Jun 21st, 2018 1:33 pm
lol you are the only one who believes this - it has been disproven countless times - stop trolling! Can you please back up your other previous statements 5 pages back???
Previous pages are just filled with bitterness, envy and resentment of wealthy foreigners because some people don't make enough money to buy real estate in high demand neighborhoods Smiling Face With Open Mouth. I'm actually looking forward to more "initiatives" by the NDP. I want them to compeletely wreck and destroy this place trying to force real estate prices lower. They will be exiled for another two decades!

The real reason behind high real estate prices. Not enough supply.
But for any increase in demand, the supply response determines how this demand affects prices. When supply can rise quickly, increasing demand leads to more output. This dampens price growth. But if supply cannot increase sufficiently in the face of rapid demand growth, price increases can be astronomical – as Vancouver and Toronto have recently shown. Housing affordability in Vancouver suffers from both demand and supply-side pressures. Demand growth is high while both geography and regulation restrict housing supply. Of what land developers could use, zoning limits where and how. A long and arduous permitting process slows the supply response to increases in demand.
Deal Addict
Dec 27, 2006
1913 posts
886 upvotes
zakarydoks wrote:
Jun 21st, 2018 2:03 pm
Previous pages are just filled with bitterness, envy and resentment of wealthy foreigners because some people don't make enough money to buy real estate in high demand neighborhoods Smiling Face With Open Mouth. I'm actually looking forward to more "initiatives" by the NDP. I want them to compeletely wreck and destroy this place trying to force real estate prices lower. They will be exiled for another two decades!

The real reason behind high real estate prices. Not enough supply.
But for any increase in demand, the supply response determines how this demand affects prices. When supply can rise quickly, increasing demand leads to more output. This dampens price growth. But if supply cannot increase sufficiently in the face of rapid demand growth, price increases can be astronomical – as Vancouver and Toronto have recently shown. Housing affordability in Vancouver suffers from both demand and supply-side pressures. Demand growth is high while both geography and regulation restrict housing supply. Of what land developers could use, zoning limits where and how. A long and arduous permitting process slows the supply response to increases in demand.
Proof of highlited area?

You supply comments have been debunked - can you answer the previous question I asked you or was that just your opinion?
Deal Fanatic
Nov 2, 2013
5253 posts
1130 upvotes
Edmonton, AB
This topic has been beaten to death left and right. Supply and demand economics are to blame. Bottom line is people will pay big money to live in or hold real estate in Vancouver, for whichever reasons.

You can tax the hell out of it if you want but either that strong desire to buy Vancouver real estate won’t subside, or the money will flow elsewhere to where it wants to go.
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