Real Estate

Vancouver housing bubble?

  • Last Updated:
  • May 26th, 2019 4:02 am
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Deal Addict
Aug 21, 2007
4443 posts
369 upvotes
atomiton wrote:
Mar 25th, 2019 5:39 pm
The price of cauliflower and tomatoes and milk also goes up. Condo fees go up. The price of maintaining a house also goes up. the cost of renovating a home also goes up. Of course rent goes up. It more or less tracks inflation or local job wages though, in most cities.

I'm not saying renting a home is always the best idea. I personally do not rent. However, I'm just commenting on the misconception that buying houses always make money and renting is like tossing your money down the drain. Like anything, it depends. Right now, I think you could probably strike a few deals. If you turn your house into a business a house can earn you money.

People very rarely actually consider the true cost of ownership. Just the other day, I had a family member who said they wish they had the flexibility to move closer in to town... I said it's too bad the market has kind of tanked.

The response: "Well, we could still sell now, we'd still be making $50,000 more than they paid... I asked if they factored in opportunity cost (~$2000/monthly they'd be earning with some very modest safe investments), real estate costs (mortgage is paid off), condo fees.

The predictable response: "That sounds risky"

My response: "If you invest in just one asset class, it is... like for example, real estate"

The thing is... houses are easy to understand. There's very little effort to understanding them. You don't need to be a genius... and there are armies of (realtors) who will gladly take your money to help you out with the buying and selling of them. Banks love them, because they're either CMHC-backed or equity-backed, and they're a real physical unmoving asset. Usually the harder something is to understand, the more opportunity there is to earn money. If it were easy, everyone would be doing it. So, I don't begrudge people who make these specious claims about real estate.
another far to rational response for the rational. as to rents only going up more, ponder this in Toronto that i read the other day. https://betterdwelling.com/urbanation-t ... s-in-2019/
Deal Addict
Dec 4, 2016
1061 posts
407 upvotes
mkjr wrote:
Mar 26th, 2019 8:26 am
another far to rational response for the rational. as to rents only going up more, ponder this in Toronto that i read the other day. https://betterdwelling.com/urbanation-t ... s-in-2019/
Looking beyond the headlines, rent is still going up, just not as much as the last couple years. Obviously rent is unlikely to go up at the same rate as the last couple years, after Wynne's rent control fiasco. But the article is still projecting 4-5%, which is still higher than inflation. Actually at 4-5% rent inflation, I would be very glad I have bought, as my wages are definitely not going up 10% per year for 2 years then 5% per year after that. I know, I'm not as accomplished as the average RFDer.
Deal Addict
Oct 7, 2007
4561 posts
1468 upvotes
In a "normal" real estate market where interest rates are not artificially low and there isn't tons of external money (some of which is derived from the proceeds of crime and being money laundered), I agree that rent will increase and continue to increase over time with inflation. HOWEVER, in a real estate market such as the one we now have in Vancouver, Toronto and other Canadian cities (and actually other cities worldwide) where many people own several homes for the purpose of flipping, are superleveraged, and foreign money derived from illegal sources all contributing to the inflation of the market, I see other forces in effect that may cause both real estate and rental prices to behave unexpectedly over time. It is interesting to note that our Prime Minister just today acknowledged that money laundering is "just beginning to be a problem...". Really? Where have you been all this time.
Deal Addict
Aug 21, 2007
4443 posts
369 upvotes
choclover wrote:
Mar 26th, 2019 11:48 am
In a "normal" real estate market where interest rates are not artificially low and there isn't tons of external money (some of which is derived from the proceeds of crime and being money laundered), I agree that rent will increase and continue to increase over time with inflation. HOWEVER, in a real estate market such as the one we now have in Vancouver, Toronto and other Canadian cities (and actually other cities worldwide) where many people own several homes for the purpose of flipping, are superleveraged, and foreign money derived from illegal sources all contributing to the inflation of the market, I see other forces in effect that may cause both real estate and rental prices to behave unexpectedly over time. It is interesting to note that our Prime Minister just today acknowledged that money laundering is "just beginning to be a problem...". Really? Where have you been all this time.
yah, just think of how much money our government has left on the table for all the "fake" principal residence sales and no tax paid and not developing a method to go after these scammers until recently.
Deal Guru
Jan 27, 2006
10517 posts
4155 upvotes
Vancouver, BC
mkjr wrote:
Mar 27th, 2019 2:12 pm
yah, just think of how much money our government has left on the table for all the "fake" principal residence sales and no tax paid and not developing a method to go after these scammers until recently.
But that 'principal residence' issue has been around since the exclusion was first put in place... many small time developers have used that loophole to build their 'own' homes and then selling them two or three years later for tax-free income. If they go after the current crop of 'tax avoiders' then they should go back and look at the others as well as constant flipping of houses like this really amounts to a job and employment income... just like how the government treats frequent traders of stock.
Deal Fanatic
Feb 29, 2008
7503 posts
2797 upvotes
Anikiri wrote:
Mar 25th, 2019 3:28 pm
I see a lot of priced out jelly going about in here.
Yea, they an stay where they are. Don't want any of that over here.
Deal Addict
Dec 27, 2006
1894 posts
877 upvotes
https://www.theglobeandmail.com/canada/ ... n-british/

Ottawa to focus much of its anti-money laundering resources in British Columbia
Published 2 hours ago

B.C. Attorney General David Eby and Federal Minister of Border Security and Organized Crime Reduction Bill Blair speak before a press conference on Wednesday, March 27, 2019.
CHAD HIPOLITO/The Canadian Press
Canada will focus much of its new anti-money laundering resources in British Columbia, where lax regulation and policing have led to the region becoming a global hub for the crime.

Bill Blair, the federal Minister of Organized Crime Reduction, met on Tuesday afternoon with B.C.’s Attorney-General in Victoria to discuss how new measures outlined in the federal budget will roll out on the ground in Canada’s westernmost province. Over the past year, information about specific cases has emerged pointing to billions in ill-gotten gains being washed through B.C.’s gambling and real estate sectors.

After the private meeting, Mr. Blair told reporters that Ottawa intends to crack down on money laundering in B.C., acknowledging how there have been major effects on “the affordability of housing and the integrity of our financial institutions.”

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“[B.C.] is a priority for the dedication of resources and effort to respond to these challenges,” he said.

Last week, the federal budget announced an extra $29-million in anti-money-laundering spending each year on the RCMP and the country’s financial-intelligence watchdog, as well as the creation of a new expert task force to identify threats and loopholes. The budget also earmarked $50-million over the next five years for the Canada Revenue Agency to create four new residential and commercial real estate teams to audit “high-risk regions” in B.C. and Ontario.

Attorney-General David Eby, who has been pushing Ottawa to step up its funding for months, said Mr. Blair’s second B.C. news conference on the issue this year also demonstrates Ottawa’s commitment to fighting this “very serious issue” in the region, which he said should demand the majority of the new federal funding.

Mr. Eby said he also pressed Mr. Blair to ensure federal agencies such as the RCMP and the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) provide information and co-operate should B.C. decide to open a public inquiry into how it became a hotbed of money laundering.

The province, he said, has so far resisted calls from the public, municipal politicians and its largest public-sector union to start such a process, noting the Premier and his cabinet will decide whether that is necessary after reviewing two independent reviews into the issue that are due this weekend.

Former RCMP deputy commissioner Peter German, who also chaired an earlier investigation into money laundering at B.C.'s casinos, is finishing up his report into existing loopholes and how federal and provincial agencies can better combat money-laundering in the province’s real estate, luxury-car and horse-racing sectors.

After Wednesday’s news conference, Mr. Eby told The Globe and Mail that he “cannot fathom” why Mr. German has not yet received a confidential intelligence report from the RCMP that found transnational organized crime groups were linked to more than $1-billion in one year of real estate deals in and around Vancouver. Mr. Eby said he has asked Mr. Blair numerous times to intervene and get the RCMP to release this report to Mr. German, but he said the decision lays with the Mounties.

Neither man addressed this specific report publicly on Wednesday, but Mr. Blair praised B.C. for bringing the issue to the fore and pledged that Ottawa is improving the way intelligence is shared between federal agencies and law enforcement.

Earlier this month, The Globe reported how FinTRAC was warned as far back as 2014 that the country’s banking, real estate and casino sectors were vulnerable to sophisticated criminals washing vast sums of illicit cash. But a 154-page draft report on the significant weak spots was never finished because the author was reassigned.
Sr. Member
Dec 30, 2012
772 posts
802 upvotes
Toronto
If the Zolo figures are in any way accurate, March year over year price stats for Vancouver condos are going to be brutal. Detached seems to be taking a breather after the initial 10-15% drop.
Deal Guru
Jan 27, 2006
10517 posts
4155 upvotes
Vancouver, BC
civiclease wrote:
Mar 28th, 2019 1:21 am
If the Zolo figures are in any way accurate, March year over year price stats for Vancouver condos are going to be brutal. Detached seems to be taking a breather after the initial 10-15% drop.
Detached will drop as more inventory comes on the market in the next few weeks.
Deal Addict
Oct 7, 2007
4561 posts
1468 upvotes
civiclease wrote:
Mar 28th, 2019 1:21 am
If the Zolo figures are in any way accurate, March year over year price stats for Vancouver condos are going to be brutal. Detached seems to be taking a breather after the initial 10-15% drop.
Are you able to post what you are seeing? I would love to see what you are referring to.
Deal Expert
User avatar
Feb 9, 2003
17604 posts
2314 upvotes
Langley
Here's Vancouver condos. It's not too exact, because there's no way to correct for a changing proportion between low-end and high-end condos, but clearly it's not a pretty picture.

Image
Deal Addict
Aug 21, 2007
4443 posts
369 upvotes
i6s1 wrote:
Mar 28th, 2019 2:35 pm
Here's Vancouver condos. It's not too exact, because there's no way to correct for a changing proportion between low-end and high-end condos, but clearly it's not a pretty picture.

Image
Wow. I keep hearing people say will never happen here in Toronah.
Deal Addict
Jan 17, 2006
1523 posts
1368 upvotes
Toronto
mkjr wrote:
Mar 28th, 2019 2:49 pm
Wow. I keep hearing people say will never happen here in Toronah.
You hear it right, all greens in Toronto.
Sr. Member
Dec 30, 2012
772 posts
802 upvotes
Toronto
choclover wrote:
Mar 28th, 2019 10:44 am
Are you able to post what you are seeing? I would love to see what you are referring to.
https://www.zolo.ca/vancouver-real-estate/trends

As noted by i6s1, the data do not account for apartment mix, so one obviously can’t assume a blanket 18% drop year over year. But it does seem the lower end is catching up with the higher end in terms of price falls.
Deal Guru
User avatar
Mar 14, 2005
12288 posts
1837 upvotes
City of Vancouver
Got a phone call today from someone who did not tell me who they were. He said there was a newly removated property on a nearby street, and would I know of anyone interested in it. What the heck, is this ethical behaviour from real estate agents?
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