Real Estate

Vancouver housing bubble?

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Feb 15, 2008
26318 posts
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Calgary
gizmo8 wrote: Mark the video you shown is really doesnt reflect how Hong Kong money flows to different countries.From Hong Kong to Vancouver asian money loves BC.The plane trip to Canada is short,
This is where your credibility starts to trend towards zero.

which is insane and the government has eased off on interest hikes.Your seeing signs of slowing because the ultra rich is shifting money into New York,Chicago,etc where property values is recovering so yes asian money has alternative places to invest but the number one and number cities where asian money flows to is Melbourne and Vancouver.Those pulling the listings probably is leasing to tenants again they arent walking away from the properties,they can afford to hold out and wait it out,where there is less listings you tend to get more people bidding on good properties,this doesnt translate into lower bids.
If the "asian" money (or even "martian" money) was driving Vancouver or Canadian RE prices, then debt expansion would not be perfectly correlated with RE pricing. And the industry would not be sh*tting its pants because of the new mortgage rules and CMHC limit being hit. The proof is in the numbers.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Member
Jul 22, 2009
333 posts
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Mark77 wrote: This is where your credibility starts to trend towards zero.




If the "asian" money (or even "martian" money) was driving Vancouver or Canadian RE prices, then debt expansion would not be perfectly correlated with RE pricing. And the industry would not be sh*tting its pants because of the new mortgage rules and CMHC limit being hit. The proof is in the numbers.
Have you considered that debt expansion together with influx of Asian $ caused the property boom? If Asian $ did not come in to bid against local buyers, local buyers did not have to over-leverage to get the house they want.

As far as I can see, new mortgage rule is not doing anything to my SFH community in a good school district. These Asians bought with cash and they have tremendous holding power. The same cannot be said for Gordon Gekko wannabes who put too much into Condos -> only bloodshed awaits them.
Sr. Member
Jul 14, 2008
574 posts
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KBTT wrote: Have you considered that debt expansion together with influx of Asian $ caused the property boom? If Asian $ did not come in to bid against local buyers, local buyers did not have to over-leverage to get the house they want.
As always, no one NEEDS to buy a property
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Feb 15, 2008
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Calgary
KBTT wrote: Have you considered that debt expansion together with influx of Asian $ caused the property boom? If Asian $ did not come in to bid against local buyers, local buyers did not have to over-leverage to get the house they want.
Debt expansion and an 'influx of Asian $' cannot really be simultaneously occurring. After all an influx of $$ would imply a reduction of leverage against the asset class, not an increase.

Also, the assumption being made is that Asians can't/won't rent, especially if rental of a particular asset class is dramatically cheaper than buying. People who talk about "Asians" in this manner expect us to think that "Asians" were smart enough to make hundreds of thousands, if not millions through business ownership and wise investing, but leave all of those characteristics behind to buy some of the most expensive RE in the world. Again, pretty nonsensical if you think about it.
These Asians bought with cash and they have tremendous holding power
And you know this how?? Are you their personal accountant? Remember all those apparently strong Japanese hands in California and elsewhere in the 1980s and 1990s??? They were mostly shaken out by the end of the decade. Why? Because they all bought on credit, whether it was credit against businesses in Japan, or credit against the properties themselves.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Jul 22, 2009
333 posts
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Mark77 wrote: Debt expansion and an 'influx of Asian $' cannot really be simultaneously occurring. After all an influx of $$ would imply a reduction of leverage against the asset class, not an increase.

Also, the assumption being made is that Asians can't/won't rent, especially if rental of a particular asset class is dramatically cheaper than buying. People who talk about "Asians" in this manner expect us to think that "Asians" were smart enough to make hundreds of thousands, if not millions through business ownership and wise investing, but leave all of those characteristics behind to buy some of the most expensive RE in the world. Again, pretty nonsensical if you think about it.



And you know this how?? Are you their personal accountant? Remember all those apparently strong Japanese hands in California and elsewhere in the 1980s and 1990s??? They were mostly shaken out by the end of the decade. Why? Because they all bought on credit, whether it was credit against businesses in Japan, or credit against the properties themselves.
Where did you get the data on leverage against asset class?

If there are 2 houses on the street, one bought with $1mil cash and the other bought with $200000 downpayment + $800000 loan what is our overall leverage statistics? 80%/1 house or 80%/2 houses = 40%?
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Feb 15, 2008
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KBTT wrote: Where did you get the data on leverage against asset class?
You can see it in the charts that show the expansion of house prices as a multiple of incomes. And you can see it if you correlate the chart of debt expansion with house prices. The most damning evidence that credit expansion (not "Asian" money) is the cause of house prices rising is the crash that we are now experiencing because of a tightening of credit standards to the most highly leveraged of buyers. This would not be occuring if the marginal buyer was an "Asian" with a suitcase of cash straight off the plane from Guangzhou.
If there are 2 houses on the street, one bought with $1mil cash and the other bought with $200000 downpayment + $800000 loan what is our overall leverage statistics? 80%/1 house or 80%/2 houses = 40%?
In that case, there's $2M of property supported by $1.2M in equity and $800k of debt. The debt, of course, is being financed through the vendors who deposit the proceeds into the banks (which is why Canadian banks' balance sheets, accordingly, are at a record in size). Basically "grandma" sells her house to some "Asian" who takes out a big loan, and "Grandma" puts her cash proceeds into GICs that ultimately fund the loan.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
[OP]
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Dec 3, 2004
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Edmonton
PF4RedFlag wrote: Adam what is going on in Vancouver ?

Ben Rabidoux ‏@BenRabidoux
All that talk (from the RE board) about sellers not having to sell and taking listings off the market in Vancouver....that's not happening

Ben Rabidoux ‏@BenRabidoux
Wow daily sales and listings numbers in Vancouver are ugly. REALLY ugly. Shaping up to be a brutal month.
Just like Ben Rabidoux says, the sales figures for the month look brutal. So far listings are high, sales low, and the MOI is above 9. Here's how the first 7 days of February look so far:
Total days 19
Days elapsed so far 7
Weekends / holidays 5
Days missing 0
Days remaining 12
7 Day Moving Average: Sales 81
7 Day Moving Average: Listings 273
SALES
Sales so far 590
Projection for rest of month (using 7day MA) 969
Projected month end total 1559
NEW LISTINGS
Listings so far 2003
Projection for rest of month (using 7day MA) 3270
Projected month end total 5273
Sell-list so far 29.5%
Projected month-end sell-list 29.6%
MONTHS OF INVENTORY
Inventory as of Feb 12th, 2013 14820
MoI 9.51
Not good at all. A sell-list of 29.5%. MOI of 9.51. If these numbers stay the same, and the MOI stays above 9, then there will be a crash this year. No doubt about it.
Member
Feb 8, 2010
326 posts
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Toronto
I sold my condo last month in Richmond. Buyers were a couple in their 40's, buying it for a parent immigrating from China. I owned for almost 7 years, walking away with a tidy profit. I'm going to rent for a year. Now bring on the crash!
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Feb 15, 2008
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Even some RE sell-side economists are warming up to the idea that the next BoC move will be a rate cut:

http://www.remonline.com/?p=14815
The bottom line: I have long argued that the BoC’s warnings about near-term higher rates would not come to fruition and the bank’s latest revisions to its interest-rate guidance confirm this view. With that question now put to rest I don’t think it’s crazy to wonder whether the next move in the overnight rate, when it eventually does come, has as much chance being a decrease as an increase. (And that’s especially true if the BoC’s latest international GDP growth forecasts are on the money.)
Ironically, this "economist" (and the Realtor posters in the comments section) probably doesn't understand why a rate cut is likely in Canada's future -- deflation from a collapsing RE market.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
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Dec 12, 2005
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Mark guess who caused the slow down...Ottawa..there are rumblings that its slowing down way too fast and if needed they might loosening the borrowing requirements and even lower interest rates.Real Estate and resources are Canada's golden goose and the last thing they would like to see is 100,000 unemployed construction workers and related industry jobs tied to real estate.Rich chinese are not even affected by the new rules Ottawa set forth,it only alienate the working poor of Vancouver from buying a home and this is not what Ottawa wants.They want to stop speculations but in reality they are causing those who are the side lines to rent even longer with the tight lending rules.Here is recent article about Toronto,even though there are about 30,000 new condos ready to come into the market rental space is still very very tight,that means those who cant qualify for a new condo must rent so in truth the speculators who own units already have no reason to sell quickly if the rent covers the mortgage,fees and property taxes.

http://www.thestar.com/business/real_es ... eport.html
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Jul 14, 2008
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if the rent covers the mortgage,fees and property taxes.
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Dec 12, 2005
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Its does on my part and all my friend who owns secondary properties......
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Jul 14, 2008
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gizmo8 wrote: Its does on my part and all my friend who owns secondary properties......
Anything that's within the last year will have a very difficult time achieving that.

Unless you are in the core of DT core, but then the price tag would have been much higher.

Getting dividends is a much better option right now.
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Apr 2, 2007
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gizmo8 wrote: Mark guess who caused the slow down...Ottawa..there are rumblings that its slowing down way too fast and if needed they might loosening the borrowing requirements and even lower interest rates.Real Estate and resources are Canada's golden goose and the last thing they would like to see is 100,000 unemployed construction workers and related industry jobs tied to real estate.Rich chinese are not even affected by the new rules Ottawa set forth,it only alienate the working poor of Vancouver from buying a home and this is not what Ottawa wants.They want to stop speculations but in reality they are causing those who are the side lines to rent even longer with the tight lending rules.Here is recent article about Toronto,even though there are about 30,000 new condos ready to come into the market rental space is still very very tight,that means those who cant qualify for a new condo must rent so in truth the speculators who own units already have no reason to sell quickly if the rent covers the mortgage,fees and property taxes.
Discard the RE paid gig for pigg and see what is happening with the Vancouver rental market - cash incentives to move in???

"Vancouver rental market competition heats up"
"Increase in vacancy rate induces competition among property owners"
My work here is done - [IMG]http://pbs.twimg.com/media/Au7PTwsCIAAu7G_.jpg[/IMG]
SOFT Landing - [IMG]http://i50.tinypic.com/14ilmqt.jpg[/IMG]
Bonus parade Can banks - here - with "No banker left behind"
Les États-Désunis du Canada - http://www.youtube.com/watch?v=LpDRg7TLY8c
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Mar 12, 2005
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Victoria
I tend to disagree with the need to keep Real Estate prices artificially high? The solution to the entire slowdown is relax lending rules so people can borrow more? It's very shortsighted. It points about the housing prices are directly related to available credit by the purchaser.

I would hope the government looks more long term at the problem. Mortgages tend to be the biggest factor in reduced disposable income. Sure you can allow 35 mortgages with no down payments, but when will those people ever save for retirement, or have any money left over to spend on stuff, which drives the economy? Having such a high percentage of income going towards mortgages will create a host of other problems (probably a retirement crisis for generations X/Y/Z).

I would think lower real estate prices would be good for the economy as a whole? Less money going to mortgages means more money being saved for retirement, and more money leftover for goods and services.

Decrease in home prices negatively imapact existing home owners, but I think its better for the economy. I don't quite understand how funneling so much of GDP into real estate is a good thing? I hope they don't reneg on the recent changes.

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