Real Estate

Vancouver housing bubble?

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  • Oct 16th, 2019 12:20 pm
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Sr. Member
Aug 17, 2013
531 posts
352 upvotes
Toronto
Jeremyl007 wrote:
Mar 19th, 2019 1:43 pm
I don't like the average price since its skewed to the upside.. medium sales should be more relevant... I still don't see a reason for anyone to get into Vancouver right now... What industry does it actually have... On the pretty hand Edmonton and Calgary are cheap compared to both markets
Comparing Edmonton and Calgary to Vancouver is a joke. No one wants to live in Edmonton. If it wasn't for Pipelines/drilling rigs, Edmonton would be a ghost town. Buying an investment home in Edmonton, you might as well throw it in a savings account.

Those markets are cheap for a reason. Vancouver is the greatest place in Canada to live. I would rather be broke living in Vancouver than being rich and in Edmonton.
Deal Guru
Jan 27, 2006
11311 posts
4614 upvotes
Vancouver, BC
orianna wrote:
Mar 19th, 2019 1:59 pm
Comparing Edmonton and Calgary to Vancouver is a joke. No one wants to live in Edmonton. If it wasn't for Pipelines/drilling rigs, Edmonton would be a ghost town. Buying an investment home in Edmonton, you might as well throw it in a savings account.

Those markets are cheap for a reason. Vancouver is the greatest place in Canada to live. I would rather be broke living in Vancouver than being rich and in Edmonton.
Actually, Edmonton and Calgary aren't bad for the traditional real estate investor. By traditional, I mean the ones that are looking for rental income to pay the mortgage down over time (ie a decade) rather than the current ones that are looking for pure capital appreciation (over a few years) with renting as an afterthought.
Sr. Member
Jun 7, 2017
744 posts
536 upvotes
BC
craftsman wrote:
Mar 19th, 2019 7:31 pm
Actually, Edmonton and Calgary aren't bad for the traditional real estate investor. By traditional, I mean the ones that are looking for rental income to pay the mortgage down over time (ie a decade) rather than the current ones that are looking for pure capital appreciation (over a few years) with renting as an afterthought.
Edmonton and Calgary are 2 of the worst RE environments in the country. Maybe student rental might be ok.
Deal Guru
Jan 27, 2006
11311 posts
4614 upvotes
Vancouver, BC
Furcorn wrote:
Mar 19th, 2019 8:03 pm
Edmonton and Calgary are 2 of the worst RE environments in the country. Maybe student rental might be ok.
Which makes them good candidates for the traditional real estate investor model - low capital outlay for the property will result in better returns via rent - especially if you have the oil and gas sector picking up in the near term to medium term.
Sr. Member
Jun 7, 2017
744 posts
536 upvotes
BC
craftsman wrote:
Mar 19th, 2019 8:18 pm
Which makes them good candidates for the traditional real estate investor model - low capital outlay for the property will result in better returns via rent - especially if you have the oil and gas sector picking up in the near term to medium term.
Should be a separate thread. Forecast for Edmonton and Calgary RE markets. It appears you are a bull for the oilpatch. I'm not. Or maybe for their general employment sectors which drive rentals. Nope.
Deal Addict
Dec 27, 2006
1944 posts
921 upvotes
https://www.theglobeandmail.com/real-es ... buyers-in/

Previous housing data understated amount of non-resident buyers in Vancouver and Toronto
Published March 19, 2019

A neighbourhood of single-family homes is seen in Arbutus Ridge in Vancouver on Wednesday, Sept. 5, 2018.
DARRYL DYCK
Not so long ago, real estate industry and government officials were doing their best to shut down concerns that skyrocketing housing prices in Vancouver and Toronto were related to non-resident buying.

As it turns out, they were very wrong.

“Basically, if we put every residential property unit that was built in the city of Vancouver from 2006 to 2017 into a single building, every tenth unit [and a bit more] would have been owned by somebody who doesn’t live in the country,” says Andy Yan, urban planner and director of Simon Fraser University’s City Program.

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The CMHC condo survey of 2015, a busy year for the real estate market, maintained that foreign ownership of condos was low in metro Vancouver and metro Toronto, at 3.5 and 3.3 per cent respectively.

In 2016, Canada Housing and Mortgage Corporation chief executive Evan Siddall told the Vancouver Board of Trade that blaming foreign buying was creating an “unhealthy tension” between “existing residents and newer arrivals.” Instead, he pointed to local investors, population growth and lack of supply as the big factors in Vancouver’s affordability crisis.

But the CMHC’s latest Housing Market Insight report, released last week, shows the previously released data were off by as much as two to three times the actual rate of non-resident participation in home ownership. Based upon the new study, the numbers are actually 11.2 for metro Vancouver and 7.6 for metro Toronto.

The CMHC’s new Housing Market Insight report, in partnership with Statistics Canada, now reveals the extent of non-resident buying in Vancouver. The CMHC had begun releasing its Condominium Apartment Survey in 2014, after collecting information on non-resident ownership, in response to the affordability crisis. But the CMHC only had access to condo data and its methodology was limited. It partnered with Statistics Canada to form the Canadian Housing Statistics Program (CHSP), to address the major gaps in data on housing. In 2017, as part of the federal budget, StatsCan got extra funding to delve deeper into offshore buying, which is when the data got more interesting – and far more accurate. It meant that instead of interviewing building managers about the number of foreign owners in the buildings – an obviously problematic method – the CMHC had data from Canada Revenue Agency and the provincial land titles office to verify tax residency.

Perhaps the most surprising revelation is the rate of non-resident participation in the buying of newly built condos across the region.

“Of the housing units owned by non-residents, 55 per cent are condos,” says Jordan Nanowski, senior CMHC analyst and co-author of the report.

Where non-resident ownership is concerned, metro Vancouver overshadowed Toronto by a wide margin. And new builds were a particular draw. Non-resident owners played a part in 19.2 per cent of Vancouver condos built between 2016 and 2017. In other words, almost 20 per cent of condos built that year had at least one non-resident on title. In Toronto, meanwhile, the number falls to a mere 9 per cent.

Mr. Yan dug deeper into the CHSP data, and came up with more numbers. Non-residents have participated in the ownership of a shocking 14 per cent of all housing types built in the city of Vancouver in the past decade (as in, at least one person who owns the property is a non-resident). For metro Vancouver, that rate is 11.2 per cent. For the city of Toronto, the rate is 8 per cent; metro Toronto is 5.2 per cent.

In Coquitlam, B.C., 20.8 per cent of new condos had at least one non-resident on title. In Surrey, B.C., the figure is 20.5 per cent of condos in that time period. Burnaby, B.C., is at 25.1 per cent. Richmond, B.C., has the highest percentage of all, at a whopping 25.8 per cent, he says.

“In Richmond, condos built between 2016 to 2017, we’re talking about 26 per cent have non-resident participation. That’s one in four.”

The numbers are big in the broader housing market picture as well, with 7.8 per cent of all single detached houses built in metro Vancouver from 2006 to 2017 owned by at least one non-resident purchaser. For condos, the numbers jumps to 18 per cent of all condos built in that time period.

“This is something that people have denied for so long,” Mr. Yan says. “It measures a form of foreign ownership that many have denied was happening, and in proportions that few could imagined.”

Mr. Nanowski says that non-resident participation tended to increase when density increased and prices increased. Across all age groups, non-residents tended to own more expensive homes. But a number that stood out for him was the higher prices of detached homes owned by non-residents in the city of Vancouver. Detached homes in the city owned by non-residents were, on average, assessed at $1.1-million more than those owned by residents. In Toronto, the difference of a detached house owned by resident and non-resident was only $89,000.

Story continues below advertisement

“Big difference,” Mr. Nanowski said. “Yes, non-resident premiums are largest in Vancouver and the prevalences are largest in Vancouver as well.”

Using new methodology, the crown corporation has revealed that many properties have a mix of resident and non-resident ownership. They analyzed this mix in the category of “non-resident participation,” meaning at least one owner on title was a non-resident. Put another way, at least one person on title is a non-tax resident, which means they do not have a principal tax residence in Canada. They earn their income and pay their income taxes elsewhere. This is a key difference from the CMHC’s previous methodology, which was to define “non-resident” ownership as a property that was owned entirely by non-residents, or majority-owned by non-residents.

The definition of a “non-resident” is someone whose principal residence is outside of Canada, irrespective of their nationality.

Also, these rates do not include pre-sale purchases, or what units were not owner-occupied and held as investments. The study authors did not provide data on the source countries of origin for non-resident owners.

“The summary of all this is the globalization of Canadian residential real estate,” Mr. Yan said, "and what are you going to do or not do about it, on a federal, provincial and local policy basis? This is about transparency, taxation and fairness, and how we build housing and for who, in our communities.”

Mr. Nanowski says the previous data they used weren’t flawed, but useful for following trends. The new data is much more comprehensive, he says.

Story continues below advertisement

“When we look at this data, we want to compare it to itself only, as a kind of cross section and not compare it to previous data. Because there is a change in methodology,” he says.

Josh Gordon, assistant professor at the School of Public Policy at Simon Fraser University, says that the delay of such important data has likely been a setback. He points out that industry voices used the previously limited CMHC data to bolster their arguments that foreign buying was exaggerated. Prof. Gordon had questioned the CMHC’s reports at the time, and received some flak for it.

“Imagine in 2015 if we had a sense that non-resident buyers were buying 15 per cent or so of new condos. How would that have changed the nature of the debate? Would that not have indicated that there was an issue that needed addressing?,” Prof. Gordon asks.

“Those who wanted to push back against possible restrictions were able to use the ‘authority’ of the CMHC in the debate to good effect, and this delayed possible policy action. More accurate data would have helped build the case for policy restrictions, and that might have mitigated the sharp escalation of prices.”

Mr. Yan found it ironic that the report was released the same week as the City of Vancouver announced its annual homeless count was underway.

“Perversely, this week saw the release of measures on two drastically different ends of Vancouver’s housing situation. With the CMHC release, we see the numbers of homeowners who don’t live in the country, juxtaposed with Vancouver doing its homeless count of those who actually live here, but don’t have the benefit of a home.”

Story continues below advertisement

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Deal Guru
Jan 27, 2006
11311 posts
4614 upvotes
Vancouver, BC
Motoss wrote:
Mar 19th, 2019 9:37 pm
https://www.theglobeandmail.com/real-es ... buyers-in/

Previous housing data understated amount of non-resident buyers in Vancouver and Toronto
Published March 19, 2019

A neighbourhood of single-family homes is seen in Arbutus Ridge in Vancouver on Wednesday, Sept. 5, 2018.
DARRYL DYCK
Not so long ago, real estate industry and government officials were doing their best to shut down concerns that skyrocketing housing prices in Vancouver and Toronto were related to non-resident buying.

As it turns out, they were very wrong.

“Basically, if we put every residential property unit that was built in the city of Vancouver from 2006 to 2017 into a single building, every tenth unit [and a bit more] would have been owned by somebody who doesn’t live in the country,” says Andy Yan, urban planner and director of Simon Fraser University’s City Program.

Story continues below advertisement

The CMHC condo survey of 2015, a busy year for the real estate market, maintained that foreign ownership of condos was low in metro Vancouver and metro Toronto, at 3.5 and 3.3 per cent respectively.

In 2016, Canada Housing and Mortgage Corporation chief executive Evan Siddall told the Vancouver Board of Trade that blaming foreign buying was creating an “unhealthy tension” between “existing residents and newer arrivals.” Instead, he pointed to local investors, population growth and lack of supply as the big factors in Vancouver’s affordability crisis.

But the CMHC’s latest Housing Market Insight report, released last week, shows the previously released data were off by as much as two to three times the actual rate of non-resident participation in home ownership. Based upon the new study, the numbers are actually 11.2 for metro Vancouver and 7.6 for metro Toronto.

The CMHC’s new Housing Market Insight report, in partnership with Statistics Canada, now reveals the extent of non-resident buying in Vancouver. The CMHC had begun releasing its Condominium Apartment Survey in 2014, after collecting information on non-resident ownership, in response to the affordability crisis. But the CMHC only had access to condo data and its methodology was limited. It partnered with Statistics Canada to form the Canadian Housing Statistics Program (CHSP), to address the major gaps in data on housing. In 2017, as part of the federal budget, StatsCan got extra funding to delve deeper into offshore buying, which is when the data got more interesting – and far more accurate. It meant that instead of interviewing building managers about the number of foreign owners in the buildings – an obviously problematic method – the CMHC had data from Canada Revenue Agency and the provincial land titles office to verify tax residency.

Perhaps the most surprising revelation is the rate of non-resident participation in the buying of newly built condos across the region.

“Of the housing units owned by non-residents, 55 per cent are condos,” says Jordan Nanowski, senior CMHC analyst and co-author of the report.

Where non-resident ownership is concerned, metro Vancouver overshadowed Toronto by a wide margin. And new builds were a particular draw. Non-resident owners played a part in 19.2 per cent of Vancouver condos built between 2016 and 2017. In other words, almost 20 per cent of condos built that year had at least one non-resident on title. In Toronto, meanwhile, the number falls to a mere 9 per cent.

Mr. Yan dug deeper into the CHSP data, and came up with more numbers. Non-residents have participated in the ownership of a shocking 14 per cent of all housing types built in the city of Vancouver in the past decade (as in, at least one person who owns the property is a non-resident). For metro Vancouver, that rate is 11.2 per cent. For the city of Toronto, the rate is 8 per cent; metro Toronto is 5.2 per cent.

In Coquitlam, B.C., 20.8 per cent of new condos had at least one non-resident on title. In Surrey, B.C., the figure is 20.5 per cent of condos in that time period. Burnaby, B.C., is at 25.1 per cent. Richmond, B.C., has the highest percentage of all, at a whopping 25.8 per cent, he says.

“In Richmond, condos built between 2016 to 2017, we’re talking about 26 per cent have non-resident participation. That’s one in four.”

The numbers are big in the broader housing market picture as well, with 7.8 per cent of all single detached houses built in metro Vancouver from 2006 to 2017 owned by at least one non-resident purchaser. For condos, the numbers jumps to 18 per cent of all condos built in that time period.

“This is something that people have denied for so long,” Mr. Yan says. “It measures a form of foreign ownership that many have denied was happening, and in proportions that few could imagined.”

Mr. Nanowski says that non-resident participation tended to increase when density increased and prices increased. Across all age groups, non-residents tended to own more expensive homes. But a number that stood out for him was the higher prices of detached homes owned by non-residents in the city of Vancouver. Detached homes in the city owned by non-residents were, on average, assessed at $1.1-million more than those owned by residents. In Toronto, the difference of a detached house owned by resident and non-resident was only $89,000.

Story continues below advertisement

“Big difference,” Mr. Nanowski said. “Yes, non-resident premiums are largest in Vancouver and the prevalences are largest in Vancouver as well.”

Using new methodology, the crown corporation has revealed that many properties have a mix of resident and non-resident ownership. They analyzed this mix in the category of “non-resident participation,” meaning at least one owner on title was a non-resident. Put another way, at least one person on title is a non-tax resident, which means they do not have a principal tax residence in Canada. They earn their income and pay their income taxes elsewhere. This is a key difference from the CMHC’s previous methodology, which was to define “non-resident” ownership as a property that was owned entirely by non-residents, or majority-owned by non-residents.

The definition of a “non-resident” is someone whose principal residence is outside of Canada, irrespective of their nationality.

Also, these rates do not include pre-sale purchases, or what units were not owner-occupied and held as investments. The study authors did not provide data on the source countries of origin for non-resident owners.

“The summary of all this is the globalization of Canadian residential real estate,” Mr. Yan said, "and what are you going to do or not do about it, on a federal, provincial and local policy basis? This is about transparency, taxation and fairness, and how we build housing and for who, in our communities.”

Mr. Nanowski says the previous data they used weren’t flawed, but useful for following trends. The new data is much more comprehensive, he says.

Story continues below advertisement

“When we look at this data, we want to compare it to itself only, as a kind of cross section and not compare it to previous data. Because there is a change in methodology,” he says.

Josh Gordon, assistant professor at the School of Public Policy at Simon Fraser University, says that the delay of such important data has likely been a setback. He points out that industry voices used the previously limited CMHC data to bolster their arguments that foreign buying was exaggerated. Prof. Gordon had questioned the CMHC’s reports at the time, and received some flak for it.

“Imagine in 2015 if we had a sense that non-resident buyers were buying 15 per cent or so of new condos. How would that have changed the nature of the debate? Would that not have indicated that there was an issue that needed addressing?,” Prof. Gordon asks.

“Those who wanted to push back against possible restrictions were able to use the ‘authority’ of the CMHC in the debate to good effect, and this delayed possible policy action. More accurate data would have helped build the case for policy restrictions, and that might have mitigated the sharp escalation of prices.”

Mr. Yan found it ironic that the report was released the same week as the City of Vancouver announced its annual homeless count was underway.

“Perversely, this week saw the release of measures on two drastically different ends of Vancouver’s housing situation. With the CMHC release, we see the numbers of homeowners who don’t live in the country, juxtaposed with Vancouver doing its homeless count of those who actually live here, but don’t have the benefit of a home.”

Story continues below advertisement

Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.
A few things about this study:

1. Those numbers may even be low if you considering that they are using land titles and CRA records to come up with this number. We know from previous articles that some properties were purchased through shell companies as well as locals. We don't know how well the current study was able to see through those two situations.
2. If you look at the numbers and consider that many of those properties purchased had bidding wars on them, how much was the general property prices were driven up due to this activity. After all, if you consider that an average buyer may bid on a number of properties before closing on one, the ripple effect may be huge. Also, with each completed inflated sale, you will see comps in that area go up accordingly which will drive the next batch of price hikes without even a bid...
3. Contrary to what seems like popular opinion, the various Federal departments AND the province do share a lot of information as this study was based on data from both the CRA and provincial land titles. One has to wonder if they can get together for this study, why can't they do the same for possible foreign ownership speculation tax?

Now if you combine the above with the recent news that as much as 250,000 people may not have filed for their exemption to the speculation tax yet, would it be safe to assume that the reason why many of those who have not filed are actual foreign buyers and they aren't in the property to pick up the mail out?
Sr. Member
Aug 3, 2006
602 posts
392 upvotes
Majority of B.C. residents support speculation tax, survey finds

https://biv.com/article/2019/03/majorit ... rvey-finds

"Earlier this month, when Research Co. asked if they agree or disagree with the policy, the results were also satisfactory. More than two-thirds of British Columbians (68%) say they agree with the speculation tax."

"The other four key housing policies are also endorsed by majorities of British Columbians. The decision to increase the foreign-buyer tax to 20% from 15% remains extremely popular, with four in five residents (80%) agreeing with its implementation."
Deal Fanatic
Oct 7, 2007
5089 posts
1770 upvotes
Jeremyl007 wrote:
Mar 19th, 2019 12:31 pm
What's the damage in Vancouver since the peak? Anyone has analysis on that? is it like 20% down like Toronto is for detached... Toronto condos don't seem to be impacted yet but Van ones are down like detached.
I have seen a couple of different posts mention that ALL detached homes in Vancouver have dropped by at least $1 million since the peak. Not sure if this is true but from looking around this seems completely believable.
Deal Fanatic
Oct 7, 2007
5089 posts
1770 upvotes
Sparky9087 wrote:
Mar 19th, 2019 12:51 pm
You need you ask yourself why the banks want the borrower to put so much down. Why could the bank not want to be holding onto loans where they own 80% of the equity in Vancouver? Because they know in a few years time the loan will be 100+% of the property value when they will have to foreclose on it.
The banks' behaviour should tell us everything we need to know about the future of real estate in Vancouver. As a taxpayer and a Canadian, I am glad to hear that the banks are being responsible about their lending in this way. We don't need more big messes to clean up in the future at taxpayers' expense.
Deal Expert
User avatar
Feb 9, 2003
17799 posts
2434 upvotes
Langley
choclover wrote:
Mar 20th, 2019 11:16 am
I have seen a couple of different posts mention that ALL detached homes in Vancouver have dropped by at least $1 million since the peak. Not sure if this is true but from looking around this seems completely believable.
No, it's not. A teardown that was priced at 1.5m a few years ago won't be 500k now. Prices for detached in Vancouver have fallen 20-30% since the peak. Many of the most expensive houses have lost over a million, but they haven't all lost a million.
Deal Fanatic
Oct 7, 2007
5089 posts
1770 upvotes
i6s1 wrote:
Mar 20th, 2019 11:24 am
No, it's not. A teardown that was priced at 1.5m a few years ago won't be 500k now. Prices for detached in Vancouver have fallen 20-30% since the peak. Many of the most expensive houses have lost over a million, but they haven't all lost a million.
Not sure where the data come from to support the claims that I read. Perhaps they were limited to Vancouver proper? Not sure.
Deal Guru
Jan 27, 2006
11311 posts
4614 upvotes
Vancouver, BC
choclover wrote:
Mar 20th, 2019 11:28 am
Not sure where the data come from to support the claims that I read. Perhaps they were limited to Vancouver proper? Not sure.
I believe that number may have been taken out of context... the average Vancouver selling price for a detached home dropped by $1 million from a little over $3 million to a little over $2 million from the peak to now. Someone in an article may have just been throwing around the $1 million number without understanding what it meant.
Jr. Member
Jan 31, 2013
101 posts
97 upvotes
Toronto
ekcivichb wrote:
Dec 17th, 2015 11:26 am
The bubble will never burst...we might see decreases of 10-15% in a few years..but pop? LOL...keep on dreaming
Bump.

Image
Deal Addict
Apr 10, 2011
1287 posts
769 upvotes
Vancouver
Vancouver's home prices are driven by...

(1) supply and demand

(2) market interventions (empty home tax, mortgage stress tests, China liquidity, etc. etc.)

(3) other social forces (immigration, interest in Vancouver and Canada, etc.)

(4) the economy (Canada's debt, dollar, gdp, jobs, etc.)

I think the unpredictable #4 is going to get very interesting.

Canada's debt rating is sliding down. The dollar is sliding because the feds can't and won't raise interest rates. At some point, they'll have to as inflation will go crazy. Much of what we buy is in US Dollars (the Chinese currency is pegged to the USD). Car parts, price of oil, fruits and vegetables, and those few items that are Made in China.

If the economy takes a further hit (slowdown, recession, job losses), expect a much larger correction to the Vancouver housing market.

It's not here yet so most of this little correction is a result of #1 and #2. #4's arrival time is unpredictable... 6-months? 2-years?

Another result of #4 is that people don't rush in to buy homes at reduced prices in that situation.

Remember, interest rates will be forced higher to prop up the CDN dollar and employment income becomes a little shaky due to layoffs etc. It's been a while since that happened so it's coming. A 72c dollar would start it and a sub-70c dollar will get rates really moving.


https://mobile.reuters.com/article/amp/idUSL1N2181FV

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