Real Estate

Vancouver housing bubble?

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[OP]
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Dec 3, 2004
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Things are breaking down in Vancouver big time. It is starting to move quickly now. I had wondered if perhaps we would see this drop wait until next Spring, but it looks like there's a lot of desperate sellers out there who want to get out of the market and not enough buyers. People who bought condos in early 2018 may have ended up being at the absolute peak of insanity.
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Jan 27, 2006
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adamtheman wrote:
Oct 8th, 2018 4:51 pm
Things are breaking down in Vancouver big time. It is starting to move quickly now. I had wondered if perhaps we would see this drop wait until next Spring, but it looks like there's a lot of desperate sellers out there who want to get out of the market and not enough buyers. People who bought condos in early 2018 may have ended up being at the absolute peak of insanity.
I didn't think it would wait until Spring given the following:

1. Interest rates are going up much faster than the optimist believed it would. As the short term rates move, those open variable rate mortgage holders who didn't listen, believe, or understand how interest rates can move up from historic lows are now starting to scramble for a longer term fixed rate only to find out that the new mortgage stress test AND higher long term rates are causing further issues.
2. With the recent trade issues with the US and China causing the reported economic woes in China, we are probably see the effects of much stronger currency controls for outflows out of China. I've often pointed to Macau's casinos as a good indicator of how the outflows are going and from the stock prices of those casinos, things are not going well. Also, with the recent high profile arrest (or disappearance and reappearance) of high profile Chinese citizens - ie the actress and the former head of INTERPOL, I'll bet that others are either running or trying twice as hard now not to upset the Chinese government in any way shape or form.
3. The RE market hasn't been too transparent in terms of facts and figures and the RE boards have used that to their advantage. Now with the pending release of data on 'official' avenues like realtor.ca and the release on un-official ones like zealtor.ca, people are realizing exactly what's going on without the spin from the RE boards and they are drawing the own conclusions.
4. People are also starting to see the tell tale signs of a RE slowdown - new developments no longer selling out, houses that have been for sale for months, 'price lowered' signs on existing for sale signs, realtors giving away products (like iPhone Xs) for buying or selling with them.... - and it's sending a message to them that the RE boards haven't been exactly right.
5. With civic elections happening soon, many investors might be worried that many of the local governments will get more 'anti-investment' for housing and result in an even more depressed market.

Note. That this is all at a time when BC leads with the lowest unemployment AND with large mega projects being announced. In theory, all of this economic activity should be driving the RE market upwards... not downwards and yet, downwards is the direction we are going.
[OP]
Deal Addict
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Dec 3, 2004
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Vancouver
craftsman wrote:
Oct 8th, 2018 6:58 pm
I didn't think it would wait until Spring given the following:

1. Interest rates are going up much faster than the optimist believed it would. As the short term rates move, those open variable rate mortgage holders who didn't listen, believe, or understand how interest rates can move up from historic lows are now starting to scramble for a longer term fixed rate only to find out that the new mortgage stress test AND higher long term rates are causing further issues.
This is so true and it is an example of why the rich (banks) get richer and the middle class is being eliminated. Looking at how this has all played out, I have to wonder if this was all planned as far back as 5 years ago. E.g... crash mortgage rates down to record lows and lock as many people into 5 year fixed rates as possible. Then, when all the renewals are coming up, raise interest rates and implement rigid stress tests so that the buyers won't qualify for a new mortgage. The only option? Renew with their current lender, at whatever ridiculous rate that current lender is offering. This is because, as I understand it, the stress test does not apply if you are renewing with the same lender. Sneaky banks. I am sure this is happening more than people know. This if course will have a huge chain effect on the economy because if a person's mortgage payment goes up $500 then that is $500 less they will be spending in the economy. Small businesses will be the ones to suffer and again the rich (big business) get richer.
2. With the recent trade issues with the US and China causing the reported economic woes in China, we are probably see the effects of much stronger currency controls for outflows out of China. I've often pointed to Macau's casinos as a good indicator of how the outflows are going and from the stock prices of those casinos, things are not going well. Also, with the recent high profile arrest (or disappearance and reappearance) of high profile Chinese citizens - ie the actress and the former head of INTERPOL, I'll bet that others are either running or trying twice as hard now not to upset the Chinese government in any way shape or form.
Not much to add here, except to say that I believe for many, Canada was the contingency plan if exactly what you said began happening. As it turns out, Canada is not the safe haven that for money laundering anymore that many foreigners are used to. So we may see a mass exodus of foreign money from BC to other safer havens. One other thing to point out is that with the recent USMCA signing, and the clause included in there which is basically "anti-China" (aka Canada chose USA/Mexico over China, or that is how they see it) relations may become poor with China and if that happens then getting money out of China to Canada will be near impossible. I could see China really tightening up over the next few years and collapsing inward.
3. The RE market hasn't been too transparent in terms of facts and figures and the RE boards have used that to their advantage. Now with the pending release of data on 'official' avenues like realtor.ca and the release on un-official ones like zealtor.ca, people are realizing exactly what's going on without the spin from the RE boards and they are drawing the own conclusions.
This is a long time coming and is really going to hurt the real estate boards. Companies (like Zillow in the US) will start up in Canada and those "benchmark HPI" numbers and other BS that real estate boards spew will become a thing of the past. The real estate boards have used their control of stats to manipulate the market for long enough. This is huge.
4. People are also starting to see the tell tale signs of a RE slowdown - new developments no longer selling out, houses that have been for sale for months, 'price lowered' signs on existing for sale signs, realtors giving away products (like iPhone Xs) for buying or selling with them.... - and it's sending a message to them that the RE boards haven't been exactly right.
It's like 2010-11 all over again but worse because of rising mortgage rates. What I find funny is that buildings I previously drove by, which had signs up saying "95% sold! HURRY!" months ago, suddenly have those signs removed and are now offering huge incentives to buy like cars. And if you go into those sales offices, I am willing to bet there's a lot more than 5% of units for sale. Someone on here (or reddit) posted something similar, about how if you go into pretty much any new construction and ask for a specific unit that is "sold" they will somehow magically make it "un-sold" for you. The jig is up.
5. With civic elections happening soon, many investors might be worried that many of the local governments will get more 'anti-investment' for housing and result in an even more depressed market.

Note. That this is all at a time when BC leads with the lowest unemployment AND with large mega projects being announced. In theory, all of this economic activity should be driving the RE market upwards... not downwards and yet, downwards is the direction we are going.
The province of BC seems to be in surprisingly good shape. I was a bit blown away by the surplus they announced despite all the costs of record fires and the ICBC thing but it may be smoke and mirrors. It does show how well the province is operating though, compared to Ontario for instance (and Alberta). I don't think the municipal elections will do much for housing personally. Empty promises will be made, but this problem is too big for any one municipality. This needs to be dealt with at a provincial and federal level, and it is. All of the elections seem totally corrupt now with huge lobby groups running the show. Burnaby in particular kind of disgusts me... huge political games being played there. Every cycle it's the same thing. Anyways that's another story.
Deal Guru
Jan 27, 2006
10508 posts
4152 upvotes
Vancouver, BC
adamtheman wrote:
Oct 8th, 2018 7:34 pm
This is so true and it is an example of why the rich (banks) get richer and the middle class is being eliminated. Looking at how this has all played out, I have to wonder if this was all planned as far back as 5 years ago. E.g... crash mortgage rates down to record lows and lock as many people into 5 year fixed rates as possible. Then, when all the renewals are coming up, raise interest rates and implement rigid stress tests so that the buyers won't qualify for a new mortgage. The only option? Renew with their current lender, at whatever ridiculous rate that current lender is offering. This is because, as I understand it, the stress test does not apply if you are renewing with the same lender. Sneaky banks. I am sure this is happening more than people know. This if course will have a huge chain effect on the economy because if a person's mortgage payment goes up $500 then that is $500 less they will be spending in the economy. Small businesses will be the ones to suffer and again the rich (big business) get richer.
This actually has nothing to do with the banks the general public deals with.... Short term interest rates and them going up is a function of the central banks trying to keep the economy going while keeping inflation in check. The longer term stuff is a function of the bond market which is bigger than the banks themselves so the chances of the bond market being controlled by the banks is slim and none.

As for the stress test and not being able to transfer between banks, the banks themselves had nothing to do with that rule as well. If you want to blame anyone, blame the Federal government as they brought in that rule as well as the stress test in an effort to cool the housing market.
adamtheman wrote:
Oct 8th, 2018 7:34 pm
Not much to add here, except to say that I believe for many, Canada was the contingency plan if exactly what you said began happening. As it turns out, Canada is not the safe haven that for money laundering anymore that many foreigners are used to. So we may see a mass exodus of foreign money from BC to other safer havens. One other thing to point out is that with the recent USMCA signing, and the clause included in there which is basically "anti-China" (aka Canada chose USA/Mexico over China, or that is how they see it) relations may become poor with China and if that happens then getting money out of China to Canada will be near impossible. I could see China really tightening up over the next few years and collapsing inward.
Canada wasn't the contingency plan.... Canada was one of many 'safe' regions where money can me moved to without too much oversight from the Chinese government. The fact that we didn't enforce things like our own laws like FINTRAC was just a bonus.

As for the USMCA, it's not an 'anti-China' clause that people make it out to be. It's basically a clause to appease the Trump administration's trade conspiracy theorist who think that foreign governments may use 3rd party countries to flood the US market with cheap goods and thereby wiping out the US economy. It has very little to nothing to do with sneaking funds into Canada from foreign countries.

adamtheman wrote:
Oct 8th, 2018 7:34 pm
It's like 2010-11 all over again but worse because of rising mortgage rates. What I find funny is that buildings I previously drove by, which had signs up saying "95% sold! HURRY!" months ago, suddenly have those signs removed and are now offering huge incentives to buy like cars. And if you go into those sales offices, I am willing to bet there's a lot more than 5% of units for sale. Someone on here (or reddit) posted something similar, about how if you go into pretty much any new construction and ask for a specific unit that is "sold" they will somehow magically make it "un-sold" for you. The jig is up.
It's not that simple. Most new construction pre-sales is actually sold but they may be sold in blocks to other realtors who in turn resell them at a profit when the project is closer to completion - or at least that's what was happening during boom times. I know a realtor who did just that and made a killing as they knew the selling realtor. What may happen if you go into one of those pre-sales offices and inquired about a 'sold' suite is that the project's realtor may refer you to another realtor who 'owns' that block of suites and then in turn collect a referral fee from that other realtor (maybe represent the interested buyer in order to split the commission). I would doubt that the developer would want to 'officially' get their hands dirty on this type of transaction... after all, why should the developer care as the suite has been sold one way or another.

adamtheman wrote:
Oct 8th, 2018 7:34 pm
The province of BC seems to be in surprisingly good shape. I was a bit blown away by the surplus they announced despite all the costs of record fires and the ICBC thing but it may be smoke and mirrors. It does show how well the province is operating though, compared to Ontario for instance (and Alberta). I don't think the municipal elections will do much for housing personally. Empty promises will be made, but this problem is too big for any one municipality. This needs to be dealt with at a provincial and federal level, and it is. All of the elections seem totally corrupt now with huge lobby groups running the show. Burnaby in particular kind of disgusts me... huge political games being played there. Every cycle it's the same thing. Anyways that's another story.
It's not any actual action that creates the worry but the threat of action... why own in some place where the returns are down and the government may get hostile to your position? Money is mobile...
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Oct 7, 2007
4555 posts
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For those homeowners who are voting in the Vancouver municipal election, really do your homework on who you are voting for. Some of the candidates want to impose additional taxes on those who own single family homes and are not all that shy about saying so although they are careful not to actually use the word "tax". Instead, they call it a "land value capture". The number of candidates to choose from is overwhelming but after doing some thorough analysis and viewing some in-person debates, I can definitely see who the developer-friendly candidates are as well. It is possible to narrow the choices down to those who appear to have good intentions but I don't know how many people will have the time and patience to go through the process properly.
Deal Addict
Apr 10, 2011
1182 posts
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Vancouver
Builders and Real Estate Investors dramatically reduce development projects as a result of declining purchasing ability of buyers.

BREAKING NEWS
Canadian Housing Starts Fall to Lowest in Almost Two Years

Canadian housing starts fell to the lowest in almost two years in September, led by a drop in British Columbia.

British Columbia saw the most significant deterioration, with starts falling 43 percent in September to an annualized 25,611 units, the housing agency’s report showed. They dropped 42 percent in Vancouver and 56 percent in Victoria.

Canada’s housing market has slowed this year, hindered by rising mortgage rates and tougher qualification rules. Tuesday’s report adds to evidence real estate is starting to act as a drag on growth.

“As these forces continue to weigh on the housing market, we see residential investment
turning from a boost to a drag on gross domestic product in 2019,” Royce Mendes, an economist at CIBC World Markets

https://www.bloomberg.com/news/articles ... -two-years
Deal Addict
Apr 10, 2011
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Vancouver
A Vancouver candidate running for Council has been knocking on doors to motivate voters.

He said HALF of the houses appeared empty (unlived) or were owned/occupied by temporary students that were not citizens (can't vote).

To suggest that 3-5% of houses are foreign owned is humourous to those who actually live in those areas. That percentage is watered down when adjusting to the entire province of BC.

The percentage in west side Vancouver houses is more accurately 50-60% on average. People actually living in these areas know reality more than official gov't statistics.

Why does Vancouver have such low voter turnout?
A significant percentage can't vote.
Member
Jul 4, 2017
457 posts
96 upvotes
choclover wrote:
Oct 9th, 2018 11:18 am
For those homeowners who are voting in the Vancouver municipal election, really do your homework on who you are voting for. Some of the candidates want to impose additional taxes on those who own single family homes and are not all that shy about saying so although they are careful not to actually use the word "tax". Instead, they call it a "land value capture". The number of candidates to choose from is overwhelming but after doing some thorough analysis and viewing some in-person debates, I can definitely see who the developer-friendly candidates are as well. It is possible to narrow the choices down to those who appear to have good intentions but I don't know how many people will have the time and patience to go through the process properly.
Who do you recommend?
Deal Addict
Apr 10, 2011
1182 posts
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Vancouver
GurungBoi wrote:
Oct 10th, 2018 10:11 am
Interesting piece.
The infamous and masively corrupt QUEBEC IMMIGRANT INVESTOR VISA PROGRAM - The global fast track to a Canadian passport and protection of your illegitimately made wealth.

That's what happens when you allow one province to be an exception to everything under the false assumption of preserving cultural identity.

Québec based immigration and tax lawyers station their people in other countries and help "investors" evade taxes and launder money... for a fee.

No federal politician dares to challenge Quebec for fear of losing votes.

Perhaps their new populist conservative leader will reduce the problem... or force them to stay in Quebec more than 24 hours (enough time to setup a maibox).

It's corruption that's perfectly protected...

(1) Can't touch Québec laws as they're protected by their unique identity exemption

(2) Can't specifically go after China-based "investors" as that would be "racist".

Quebec... the only province where corruption is considered legitimate.

Their "legal advisors" make fast money and stick-it to the rest of the country as those "investors" are considered low income (no income) new immigrants and qualify for all the free available provincial benefit services (medical, new home owner grants, first time home owner programs, etc.) in the province they eventually settle in (BC and Ontario).
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Oct 7, 2007
4555 posts
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setsunafseiei wrote:
Oct 10th, 2018 1:18 am
Who do you recommend?
I am not sure if I am allowed to post my list here or if the moderators would not like that.

I have been spending a lot of time following the candidates, attending mayoral and candidate debates, etc. and am in the midst of compiling my list but so far I have on my list candidates from a new political party that is technology oriented and is focusing on helping locals. The mayoral and council candidates from this particular party seem highly intelligent and their platform seems well thought out. They don't seem the least bit connected to special interests nor developers and have been investing their own personal time in working with City Hall to fix the things that are broken particularly as related to rentals and housing. Unfortunately, City Hall doesn't seem to listen to them (no surprise as they don't listen to anyone but developers) so I am hoping that if they win they will make the changes Vancouver needs to start taking care of the locals instead of the developers, tourists and foreigners. I have also reached out to some independent candidates with specific questions to get more information before finalizing my decision.

For those that want to get a flavour of what is going on, it is helpful to use Twitter to follow CITYHALLWATCH and INTEGRITYBC. You can get an idea of what people are saying about the candidates there and what kind of shenanigans some of the candidates leading in the polls (who even knows how reliable the polls are) have in their past. A lot of isn't pretty but I am not sure if the general voting public knows what they should know.

All I can say is that it is dangerous to vote without doing your homework on this one. If you don't know, do your homework first. Don't just vote based on name or party recognition. For example, the minority party in Council today seems just as tied to developers as the majority one if you take a look at their donations list as published on Twitter. People should not vote for them if they think they will be different. They are beholden to the same people our current ruling party is and WE DON'T WANT A REPEAT OF THE LAST 4 YEARS.
Deal Addict
Apr 10, 2011
1182 posts
637 upvotes
Vancouver
Just analyzing things a bit on the mayoral race, because of the many candidates, it's likely that the leading candidate will win with 33% of the vote.

Why?
- the previous party is not participating
- new fund raising rules and the lack of advertising $
- many different candidates
- no one backed out and told their backers to back another (i.e. no consolidations)

Imagine, a winning government official with power to control $1B with a mere 30-35% mandate.

If he gets 33% of the votes, amongst the 33% of eligible voters who actually turnout to vote, amongst the 66% of Vancouverites that are legally eligible to vote (residents that are citizens), he'll have received votes from a mere 7% of those living in Vancouver!

Community Centres, Libraries, and City agencies all have a free thick booklet describing all the candidates. Grab one and circle /highlight the ones you like and the Counsellors that you don't.

Vote, or you'll be stuck with another Greggor Robertson - - who no dought will soon announce his rewarded big corporate board of directors appointment (like Christie Clark) for a condo development company (Omni, Bosa or perhaps Bob Rennie) .

Then, Greggor Robertson will marry his Chinese pop-star girlfriend and move to Hong Kong to help navigate Quebec's foreign investor (Vancouver Real Estate) Visa program and later get appointed by Justin Trudeau as a Canadian Ambassador.
Deal Guru
Jan 27, 2006
10508 posts
4152 upvotes
Vancouver, BC
RxMills wrote:
Oct 10th, 2018 2:41 pm
Then, Greggor Robertson will marry his Chinese pop-star girlfriend and move to Hong Kong to help navigate Quebec's foreign investor (Vancouver Real Estate) Visa program and later get appointed by Justin Trudeau as a Canadian Ambassador.
Last I heard, Greggor was dumped by her as he wasn't able to help get her mother out of a Chinese jail cell.
Deal Guru
Jan 27, 2006
10508 posts
4152 upvotes
Vancouver, BC
choclover wrote:
Oct 10th, 2018 12:26 pm
I am not sure if I am allowed to post my list here or if the moderators would not like that.

I have been spending a lot of time following the candidates, attending mayoral and candidate debates, etc. and am in the midst of compiling my list but so far I have on my list candidates from a new political party that is technology oriented and is focusing on helping locals. The mayoral and council candidates from this particular party seem highly intelligent and their platform seems well thought out. They don't seem the least bit connected to special interests nor developers and have been investing their own personal time in working with City Hall to fix the things that are broken particularly as related to rentals and housing. Unfortunately, City Hall doesn't seem to listen to them (no surprise as they don't listen to anyone but developers) so I am hoping that if they win they will make the changes Vancouver needs to start taking care of the locals instead of the developers, tourists and foreigners. I have also reached out to some independent candidates with specific questions to get more information before finalizing my decision.

For those that want to get a flavour of what is going on, it is helpful to use Twitter to follow CITYHALLWATCH and INTEGRITYBC. You can get an idea of what people are saying about the candidates there and what kind of shenanigans some of the candidates leading in the polls (who even knows how reliable the polls are) have in their past. A lot of isn't pretty but I am not sure if the general voting public knows what they should know.

All I can say is that it is dangerous to vote without doing your homework on this one. If you don't know, do your homework first. Don't just vote based on name or party recognition. For example, the minority party in Council today seems just as tied to developers as the majority one if you take a look at their donations list as published on Twitter. People should not vote for them if they think they will be different. They are beholden to the same people our current ruling party is and WE DON'T WANT A REPEAT OF THE LAST 4 YEARS.
I would add that you should also be careful of the some Twitter feeds as well since some of those people behind those feeds aren't exactly who they claim to be according to their handles. Some of them are fronts funded by those same special interest groups that got us into this in the first place...
Deal Addict
Oct 7, 2007
4555 posts
1465 upvotes
craftsman wrote:
Oct 11th, 2018 2:54 am
I would add that you should also be careful of the some Twitter feeds as well since some of those people behind those feeds aren't exactly who they claim to be according to their handles. Some of them are fronts funded by those same special interest groups that got us into this in the first place...
I agree 100%. I don't know if you have any specifics in mind when it comes to Twitter feeds but I think if you are paying attention as you are reading, you can almost tell by the nature of the posts who are legitimate and who are fronts for organized groups. I think what is most important is to keep an open mind and use linked sources as much as possible to verify content or statements. Everything else should be taken with a grain of salt. But, on the other hand, there has been information provided on some of the top polling mayoral candidates that is not provided by the media that gives some insight into their past. Sadly, the top 4 mayoral candidates (as per the polls) all have things in their background that concern me and make me believe that none of these four will put the interests of our City before their own. If you have ever seen any of these four at the mayoral debates especially in person, none of them show the type of behaviour or leadership I would expect from my mayor.

I think even the top polling candidate getting arrested for protesting the pipeline is not a good thing. Regardless of our individual positions on the pipeline, do we want to have a mayor someone who breaks the law instead of someone who uses his knowledge, skill and political background to fight the pipeline the legal and legitimate way????

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