Real Estate

Vancouver housing bubble?

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  • Oct 18th, 2019 11:31 pm
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Deal Guru
Jan 27, 2006
11324 posts
4623 upvotes
Vancouver, BC
DanielM491 wrote:
Apr 8th, 2019 2:16 pm
France is an outlier. Highest tax burden in the world. No work where those chateaux are. Not to mention the $10k euro a year heating bill. plus millions of euros of repairs and upkeep.

Back to reality, Auckland is having a very similar slowdown. Average salary is the same as vancouver. But the Asian money has dried up due to foreign owners being banned from buying any existing houses. They are only allowed to build new.

I could point to 10 acre parcels of land in Lithuania for $10k but it is not an accurate comparison. Who wants to live in france, anyway?

You need to compare the GVR to similar sized coastal cities with similar or better weather. And historically low unemployment
You are now grasping at straws! I did say originally that you can buy mansions and castles for $2.1 million... I didn't say that it was cheap in terms of upkeep nor was there any statement that the Vancouver special that was going for $2.1 million on the West side was in perfect shape either.... heck, many teardowns went and are going for $2.1 million. And for your information, according to the OECD records for 2017, France does not have the highest tax burden in the world - they are number #4.

Why would you need to compare Vancouver with similar sized coastal cities with similar or better weather with historically low unemployment? You didn't do that yourself!

London - much bigger city (8.1 million in 2011), with worse weather
San Francisco - much bigger city (7 million in the bay area in 2010)
Syndey - much bigger city (4.8 million in 2014)

In comparison, the entire British Columbia had 5 million people in 2018.

As for who wants to live in France... I would say 67 million people as of 2018. And they actually want to live there than any other part of the EU as EU citizens have free movement inside of the EU so they could have lived anywhere in the EU.

But we are getting off the point in even taking into account weather and employment numbers as we all know that many of the foreign buyers in Vancouver aren't buying because they want to live here - they are buying because they want to make money here via real estate. After all, why would anyone need to buy multiple houses in Vancouver to live in them? How many houses in a geographical area can someone live in at the same time? Just look at the Huawei's Meng... she owns at least two houses here (declared anyways) which she vacations here for two weeks a year. Other documentation that has come to light for foreign buyers have shown that many of them have multiple properties as well.

And by the way, Seattle's average detached house price in March of 2018 was $819,000 US or about $1.09 million CDN which is far lower than the average house price in Vancouver back in March of 2018 at $1.6 million.
Member
User avatar
Jul 25, 2015
392 posts
159 upvotes
Burnaby, BC
2.1M Canadian are approximately 1.5M US, just saying.
Deal Fanatic
Oct 7, 2007
5096 posts
1777 upvotes
RxMills wrote:
Apr 8th, 2019 12:31 pm
Market for houses freezes up. House & condo prices drop.
April 6, 2019

Highlights:

-- "Inventory for sale now stands at 12 months’ supply at the current rate of sales. This is still very high, but it’s down 51% from a year earlier, not because the market has improved but because it has essentially frozen up, and some sellers have pulled their unsold units and other sellers are not putting them on the market, hoping for better times."

-- "Condos face enormous headwinds going forward, in form of a flood of new supply coming on the market: with impeccable timing, over 40,000 condos are under construction in Greater Vancouver."

-- "Vancouver has joined some of the other major cities around the world with housing bubbles whose duration and magnitude have amazed the world and that were scheduled to inflate further for all times to come – because, you know, you can’t lose money in real estate – but that are now deflating with panache."

https://wolfstreet.com/2019/04/06/updat ... er-canada/
..........................................

In summary, the gov't is doing everything (same in Australia) to ensure a "soft gradual decline" in the significantly over-inflated markets (say economists).

Instead of a fast blunt deep correction, slower (but therefore lengthy) is desired for economic and political stability.

The gov't is being helped (in the short-term) by those who pull their listings thinking "things will turn around" shortly.

But that means there is still a sizable inventory that is waiting to be sold in the future. As long as that large supply is released slowly, the economy is safe. It's important that most remain hopeful that "the worst is over".

However, in reality, we are coming out of peak good times:

(1) artificially low interest rates

(2) record high economy and full employment

(3) large capital foreign inflows from China, along with significant unchecked money laundering

(4) great stock market (retirement investments)

Every one of those factors may charge significantly in 6-18 months.

It'll be tragic for the market if all the temporarily withdrawn real estate inventory is suddenly pressured into being sold all at once. I suppose it's vitally important for many to believe that we'll be returning to those "peak prices" in the near future.
The comments to the Wolf Street story are just as interesting as the story.
Deal Guru
Jan 27, 2006
11324 posts
4623 upvotes
Vancouver, BC
Piklishi wrote:
Apr 9th, 2019 10:03 am
2.1M Canadian are approximately 1.5M US, just saying.
And, I did the currency conversion when I quoted those figures about Seattle... just saying...
Deal Addict
Aug 21, 2007
4506 posts
385 upvotes
civiclease wrote:
Apr 10th, 2019 5:50 am
BC to Chinese investors : “Buh-bye!” *blows kiss*
for someone who lives in toronto, you do know this is not a good thing...right?
Sr. Member
Dec 30, 2012
900 posts
972 upvotes
Toronto
mkjr wrote:
Apr 10th, 2019 8:45 am
for someone who lives in toronto, you do know this is not a good thing...right?
I don’t live in Toronto, or anywhere in Canada.

Yes I acknowledge that the locust of dirty money is likely to migrate east and perhaps provide temporary support for prices in Toronto, but I see it as a good thing that at least one part of Canada has put in place measures to deter it. It sets a precedent.
Deal Fanatic
Oct 7, 2007
5096 posts
1777 upvotes
mkjr wrote:
Apr 10th, 2019 8:45 am
for someone who lives in toronto, you do know this is not a good thing...right?
From some of the sentiment in the other real estate threads in this topic, I get the sense that many investors in the Toronto real estate market are not paying attention to all of the problems that have been created in Vancouver due to foreign investment, tax evasion, money laundering and the fentanyl crisis. Not to mention that barely anyone can afford to live here whether you own or rent...owners are being taxed to death through their property taxes and the renters have to pay exorbitant rent to cover the landlord's property taxes. Property taxes are now starting to increase at rates that are multiples of inflation. It seems that Toronto investors are excited about the rapid increases in property value but have not realized what the actual cost to their society has or will be. I am glad foreign investors are leaving B.C. but I don't like that they are fleeing to other parts of Canada. It means that all law-abiding Canadians will be on the hook for the cleanup once again.

P.S. B.C. taxpayers are still waiting for the politicians to get to the bottom of what happened here. Politicians "look like" they are being tough but we have yet to see justice served and/or the type of public inquiry where all culprits whether politicians, bureaucrats or otherwise are held to account and the rest of us know how it all happened. When the laws were there to begin with, there is no way that this could have taken place at the scale that it did unless someone was giving the perpetrators a free pass.
Deal Addict
Apr 10, 2011
1287 posts
769 upvotes
Vancouver
Here's the look ahead from industry experts - a real estate investor, mortgage broker, real estate agent, bankruptcy agent, financial economist, etc.

"This is how Canada’s housing correction begins"
Maclean's
Real Estate News

Canadians are finally getting a taste of what a world with rising interest rates will look like, and one thing is painfully clear: we’re not ready for what happens next.

-- Tighter mortgage rules, combined with rising interest rates, means it’s getting harder for people to obtain the large mortgages necessary to get into the market.

-- Kirk Marsh first noticed the mood start to turn in Vancouver’s housing market a year ago. As a real estate investor who buys homes and condos then fixes them up for resale, Marsh has an excellent vantage point on the market. “Today, everything has stalled,” he says.

-- The Bank of Canada has underestimated the hit to consumption and residential investment that’s coming, and for that reason. “Those two things were nearly the entirety of Canada’s growth since the last recession,” he says. The problem for the bank, however, is that if the U.S. keeps raising rates and Canada doesn’t follow suit, the loonie could plunge. “You either decimate the currency or your rates rise in line with the U.S.,” he says. “That’s the nightmare scenario for the Bank of Canada.”

-- As for Butler, the mortgage broker, his prediction for Canada’s mortgage market in 2019. he says: “Pain. I predict pain."

-- "This is finally the perfect storm,” says Steve Saretsky, a Vancouver real estate agent. “I think we’re seeing the catalyst for a correction that everyone’s been talking about for 10 years.”

A consumer insolvency expert with Hoyes, Michalos & Associates, says “When the credit cycle starts to turn, it’s like turning the Titanic,” he says.

https://www.macleans.ca/economy/realest ... on-begins/
Deal Fanatic
Feb 29, 2008
8591 posts
3666 upvotes
So much fear mongering. Maybe more people would listen if there wasn’t so much of this doomsday talk.
Deal Addict
Aug 21, 2007
4506 posts
385 upvotes
JayLove06 wrote:
Apr 10th, 2019 1:46 pm
So much fear mongering. Maybe more people would listen if there wasn’t so much of this doomsday talk.
but it is a major mess in Vancouver with the same issues and i hate to say it, a weaker dollar is most certainly not something people want.

but hey, do not take some random view on this. just read or as Kyrie Irving says, do your own research.

https://www.fraserinstitute.org/sites/d ... dollar.pdf

you might be alarmed that despite the pain to raise rates, if the US does, canada will have to.
Deal Fanatic
Feb 29, 2008
8591 posts
3666 upvotes
mkjr wrote:
Apr 10th, 2019 2:33 pm
but it is a major mess in Vancouver with the same issues and i hate to say it, a weaker dollar is most certainly not something people want.

but hey, do not take some random view on this. just read or as Kyrie Irving says, do your own research.

https://www.fraserinstitute.org/sites/d ... dollar.pdf

you might be alarmed that despite the pain to raise rates, if the US does, canada will have to.
I have always done my own research. That’s why I have always bought when people told me not to. Have done quite well. So is now the time to buy? You mean prices are tanking. Or are bears trying to time and he market and waiting for the bottom? You see, when this whole thing runs it’s course the people jumping up and down for a crash are not going to be as happy as they thought they would be.

BC has taken actions to create a sharp crash. I think that is a mistake.

Trump factor: he’s already trying to get them to stop raising rates so we will see. That clown seems to get what he wants. The can’t see US raising rates to the point it has a big effect over. Here. It’s not like they’re going to aggressively raise rates quickly and often. We really don’t know and that uncertainty is used to fear monger.

There’s a difference between concern and fear mongering.

Vancouver will be a hard hit city and frankly those who are struggling will still struggle. I’d at least rather struggle in a thriving environment.

That said, Toronto will be fine. Vancouver is not nearly as desirable to Toronto globally.

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