Real Estate

Vancouver housing bubble?

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Feb 15, 2008
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Calgary
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.

http://www.thestar.com/business/real_es ... eport.html
Loans make things more expensive, and houses are no exception -- so if government wants to make housing more available and more affordable, thus keeping the construction industry more viable over the long term, they would tighten credit up even more. This is a distinct issue from BoC policy rates being needlessly high at the moment.

As for "rich Chinese cash buyers", haven't we been over this before? They're not even enough of the market to be of any statistical impact.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Deal Addict
Aug 12, 2004
4382 posts
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Calgary
bcbgboy13 wrote: 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"
When I moved to Calgary in 2008 with a friend, we were on a lease of 12 months + 1 month free. This was at the height of the Calgary boom, a 1200$ cash incentive. Cash incentives have always existed and is nothing special. Not to mention you basically get 'free' what several apartments give for free anyways. The whole article and video seems to be a fluff piece for Hollyburn, making a story out of nothing.
Freshly renovated one-bedroom, one-bath apartments are on offer for $1,250 a month – not a bargain, but the company is throwing in three months free parking or $200 cash as an incentive.
1250 a month + parking for a fricking 1 bedroom dump based on the video with zero equity to show for that much cash. Great deal for Vancouver renters ;) . For that amount of cash you can get a 250K mortgage at a 4% 10 year fixed rate for a similar sized place (if worried about 'skyrocketing' interest rates).
But it does appear unlikely that rents will drop.
I guess you failed to mention this pretty important part. Nothing has changed for renters. In fact, in my part of the woods, rent has increased by about 10% since last year.
macadavy
2013/02/13
at 9:39 PM ET
Hollyburn: renowned for renovictions - stay far, far away!
Not to mention that the first and highest rated comment on the article is how crappy the landlord company happens to be.

On a side note, I notice the air on the finance boards seems a little less polluted now that we have a bit of a break from PF4 :) .
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Aug 12, 2004
4382 posts
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Calgary
Magoomba wrote: Not sure if this is posted yet.
Another example of a couple making over $200K and only have $150K in assets.
The problem? Too much real estate exposure.

http://business.financialpost.com/2013/ ... headaches/
The couple’s problem of negative returns on top of massive debt breaks down into several parts. They have a house with a market value of $950,000 on which they owe $758,000 and there are two income-generating properties in British Columbia — a $540,000 unit with a $446,000 mortgage and a $240,000 unit with a $329,000 mortgage. They also owe $75,000 in business loans, $32,700 for credit card charges and $13,200 for a car loan. The total: almost $1.7 million.
Moreover, if they make some economies, such as halving the $685 per month they spend on clothing and grooming, and cut $600 from their monthly $1,570 bill for food and household expenses, they might be able to save about $11,300 per year.
That's not a case of too much real estate exposure, that's a case of total financial incompetence and lack of common sense. That a couple making 245K a year has 33K in credit card debt and has 1.7 million in liabilities? It's people like that who raise the Canadian average debt disproportionately.

It takes a special kind of incompetence to buy a vacation property for half a million that has since lost over half it's value during good real estate years, and they sat on it this whole time. I'd love to hear the story on that debacle.
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Nov 22, 2002
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Firebot wrote: That's not a case of too much real estate exposure, that's a case of total financial incompetence and lack of common sense. That a couple making 245K a year has 33K in credit card debt and has 1.7 million in liabilities? It's people like that who raise the Canadian average debt disproportionately.

It takes a special kind of incompetence to buy a vacation property for half a million that has since lost over half it's value during good real estate years, and they sat on it this whole time. I'd love to hear the story on that debacle.
Yes, that too. But they do have almost $2.0M worth of RE on that combined income. That's still a high ratio.
That vacation property tanking by half is a brilliant move!
What amuses me is the over $685 per month in grooming and clothes. Who are they, George the Animal steel?
[OP]
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Dec 3, 2004
5188 posts
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Vancouver
As the stats keep rolling in, February is really looking to be far worse than I could have imagined. Sales are way below what they were in February/2012, which was already a low month for sales. Listings are also continuing at the same high pace, and not backing down. Take a look:

Sales so far: (first 8 business days of February)

2013 = 674
2012 = 876
2011 = 1125

Listings so far:

2013 = 2303
2012 = 2239
2011 = 2248
Listings for the first 8 days of the past three February's have been basically identical (although, slightly higher this year). But then take a look at sales. We all know how Feb/12 set off the chain of events (high listings, low sales) which made 2012 a bad year for real estate. And here we are, Feb/13, and things are even worse. The numbers don't lie...
[OP]
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Dec 3, 2004
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This is getting a lot of attention, and their facebook page is getting hit with lots of bad comments. Apparently people aren't taking this lightly. I have to ask though - is anyone surprised?
Without a doubt, reporters often field real-estate story pitches and, in recent themes, marketers have focused on the voracious Chinese investor who comes to Vancouver on holiday during Chinese New Year ready to throw down cash.

On Thursday, the Mac Marketing Solutions Facebook page is getting quite a backlash against that narrative, seemingly from young Vancouverites who are fed up with high home prices and excessive greed in the city.

“Mac has admitted to perpetrating a fraud on both CBC and CTV news as well as their viewing public in conjunction to a condo development they are marketing,” Chris Bullard posted Thursday morning.

“They represented one of their employees as an out of town Asian buyer to fuel their marketing hype of the non-existent Asian real-estate invasion in Vancouver. The management of this company has no ethics and deserves to be drummed out of the business. I’m urging the authorities to charge them with fraud.”
Just one of many, I am sure. Yep, nothing wrong here... no bubble. I wonder when all the hot chinese money will come rolling in from rich investors, snapping up houses for Chinese New Year? :facepalm: Wasn't last year the "Year of the Dragon", supposed to be a year when chinese would spend lots of money? Well, 2013 is the "Year of the Snake" I believe. And apparently the snakes are coming out. Can't blame them though, after seeing the dismal figures I posted above. Such poor sales in February so far. Not good, not good at all.
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Nov 22, 2002
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adamtheman wrote: Here is the MAC marketing video, which had the actor... and the discussion about the "Year of the Snake". This is disgusting....

http://bc.ctvnews.ca/year-of-the-snake- ... -1.1150505
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Deal Expert
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Feb 9, 2003
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Langley
That's funny stuff. On the Facebook page:

[QUOTE]
Matthew Black I was the CBC reporter on this story and feel some clarification is in order:

*Can you confirm that Amanda is the employee you refer to in the post above?
*Is Chris Lee (from the TV pieces) actually Amanda Lee's sister?
*Is Chris Lee a genuine prospective buyer from China, or, is she also a MAC employee?

I trust you still have my contact information...[/QUOTE]


[QUOTE]
Nathan Fairbairn Nice work, Matthew Black. Check your sources and ask obvious questions *after* publishing and broadcasting your puff piece. Top notch journalism, man. Really, really impressive.[/QUOTE]
Deal Addict
Aug 12, 2004
4382 posts
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Calgary
adamtheman wrote: As the stats keep rolling in, February is really looking to be far worse than I could have imagined. Sales are way below what they were in February/2012, which was already a low month for sales. Listings are also continuing at the same high pace, and not backing down. Take a look:




Listings for the first 8 days of the past three February's have been basically identical (although, slightly higher this year). But then take a look at sales. We all know how Feb/12 set off the chain of events (high listings, low sales) which made 2012 a bad year for real estate. And here we are, Feb/13, and things are even worse. The numbers don't lie...
How are average prices looking so far?
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Feb 15, 2008
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zod wrote: 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.
Exactly, credit just makes RE more expensive over the long term, and reduces affordability. Replace 'houses' with the name of any other consumer good, for instance, laptops. Would a laptop be cheap if it cost $10,000 but you could finance it at 2% on a Dell credit card? Or is it better to have laptops priced at $1000, and the only financing available is perhaps a 20% Dell credit card?

Obviously the latter, not the former situation is preferrable. Ottawa is clearly doing the right thing by tightening down their participation in the credit markets through the CMHC. Of course, banks are still free to offer whatever amortization periods they want, but to blame the federal government's tightening for price decreases caused by over-pricing and over-capacity in the sector relative to incomes, etc., sounds like something of delusion.
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).
Exactly, labour mobility is a huge issue that house over-pricing causes problems with. People who have paid-off homes in other parts of Canada or even the world are scared to death of moving to Vancouver for a better job, or even to accept a promotion or a transfer, because there is a very serious risk of a large loss if they have to take out a significant mortgage and the housing market crashes. Plus over-allocation of the economy to the RE sector has left other sectors of the economy very illiquid in terms of investment and job opportunities. Actually hurting the economy severely in the long run. Just look at all the idled engineering talent we have in Canada, for example.
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.
Absolutely. And tradespeople will still build houses. They'll just earn $25/hour instead of $60/hour.
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.
I think the proverbial 'cat' is out of the bag now, and just like the US, all reflation efforts are likely to fail.
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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Feb 15, 2008
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So what's going on? Its finally being shown that certain Realtors have been running around lying about "foreign" demand for Vancouver RE?
“They represented one of their employees as an out of town Asian buyer to fuel their marketing hype of the non-existent Asian real-estate invasion in Vancouver. The management of this company has no ethics and deserves to be drummed out of the business. I’m urging the authorities to charge them with fraud.”
*sigh*, didn't Mark77 point out, years ago, that the only "money" driving the Canadian RE market has been the product of a domestic credit expansion/bubble??
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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Feb 15, 2008
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Calgary
adamtheman wrote: Here is the MAC marketing video, which had the actor... and the discussion about the "Year of the Snake". This is disgusting....

http://bc.ctvnews.ca/year-of-the-snake- ... -1.1150505
Doesn't it kind of remind you of John Roth pumping his company at the top of the market in 2000, complete with using the Beatles music as its soundtrack? Even as the warehouses were filling up with unsold product?

One of the comments:
Global's been duped by his ruse also. I recall a real estate pumper hiring a helicopter and putting a some "mainland chinese" in and flying them around Vancouver while Global taped the whole thing. Of course it later emerged they weren't from mainland China, just locals from Surrey.
Meanwhile, another day, another all-time record on RBC shares. The whole Canadian financial sector looks primed for a break-out after 5 years of stagnation.
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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