Real Estate

Vancouver housing bubble?

  • Last Updated:
  • Nov 21st, 2019 1:20 am
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Sr. Member
Jan 29, 2010
630 posts
376 upvotes
zakarydoks wrote:
Feb 10th, 2019 9:05 pm
Same, born and raised in Vancouver but spend lots of time in HK. Vancouver and HK each has their pros and cons so there's no need to pick either exclusively. Plenty people live in both cities. Lots of people in HK have long established connections to Vancouver. This is just the nature of the global economy we have today. Also, it is always good to diversify and always be prepared to escape when things get too communisty Grinning Face. Really no point in going down with the ship.

HK is great because I can get higher quality Canadian seafood there than I can in Vancouver. But HK is too population dense especially during the daytime when the mainlanders flood in and the air quality is not the best. That's one of the reason I'm not for wholesale density increases in Vancouver. I rather pay more money to keep the place low density.
Agree. Actually reside in TO now, which has much more modestly priced housing and reasonable salaries. Though the south of the border has been looking more and more appealing lately due to the much higher salaries and cheap housing outside the big cities.
Deal Addict
Apr 10, 2011
1298 posts
788 upvotes
Vancouver
Average time to sell a home in Vancouver in 2018:
... 56 Days

I suppose that's why there are price adjustments or homes often taken off the market after 2 months in Vancouver.

This spring should be interesting. I personally know 5 people who took their properties off the market last summer/fall who will soon re-list them.

Although they're still wanting peak prices, they're now extremely motivated to move on and sell.

https://m.huffingtonpost.ca/2019/02/06/ ... _23661049/

Financial advisors are saying the market is still pretty stable, with a downward trend, except for the highend market (which is in an advanced decline).

A jolt to the economy or a formal "recession" in Canada will definitely accelerate all price levels downward. Many are predicting that to begin (with job declines, etc.) this fall.

At the latest, if the US presidency should turn to the democrats, there will be sharp increases in corporate tax rates as the democrats return to more previous tax levels. Corporations will then start laying off workers to keep their share owners happy. A more significant recession is expected Nov'2020.

So, continuing negative pressure now. Significant downturn in all levels in all markets in 18 months at the latest.
Deal Fanatic
Oct 7, 2007
5317 posts
1884 upvotes
Driving around the west side on Saturday afternoon and there were SO MANY open houses everywhere. It was just insane. Didn't notice a huge rush of people lining up to view any one in particular but then maybe they came in a big crowd when I wasn't around.
Deal Guru
Jan 27, 2006
11495 posts
4744 upvotes
Vancouver, BC
choclover wrote:
Feb 11th, 2019 1:11 pm
Driving around the west side on Saturday afternoon and there were SO MANY open houses everywhere. It was just insane. Didn't notice a huge rush of people lining up to view any one in particular but then maybe they came in a big crowd when I wasn't around.
Even when the real estate market was booming in 2016, very few people ever attended an open house as it's been reported by various reporters who looked so I wouldn't put much into that. I believe that a lot of those open houses were contractual arrangements with the seller to have X number of them. I remember one report way back in 2016 when the reporter asked the agent why have the open houses when no-one comes and their answer was it was in the contract. What is interesting is when developments come on the market, you do see a distinct difference in how many news reports of people lining up to view/buy into those developments.
Deal Addict
Apr 10, 2011
1298 posts
788 upvotes
Vancouver
choclover wrote:
Feb 11th, 2019 1:11 pm
Driving around the west side on Saturday afternoon and there were SO MANY open houses everywhere. It was just insane. Didn't notice a huge rush of people lining up to view any one in particular but then maybe they came in a big crowd when I wasn't around.
An agent told me that his clients have a "beat the rush" for spring listings this year.

The disadvantage though is that it'll be on the market for 100+ days in June if it hasn't sold.

After that, it's considered a bad listing as purchasors will avoid it or give extreme lowball offers.

I know someone with a larger property. They were getting offers of 30% off the listed price. They're going to try again in April but there's going to be much greater inventory from very motivated sellers.

There's probably going to be a formal money laundering inquiry in BC with a focus on prosecutions following the recent news from ONT & QUE. Any of the washed real estate may also be looking to sell now and move money off shore.
Deal Guru
Jan 27, 2006
11495 posts
4744 upvotes
Vancouver, BC
RxMills wrote:
Feb 11th, 2019 5:58 pm
An agent told me that his clients have a "beat the rush" for spring listings this year.

The disadvantage though is that it'll be on the market for 100+ days in June if it hasn't sold.

After that, it's considered a bad listing as purchasors will avoid it or give extreme lowball offers.

I know someone with a larger property. They were getting offers of 30% off the listed price. They're going to try again in April but there's going to be much greater inventory from very motivated sellers.
Hopefully for them by the time they list, the going price doesn't go down another 10%...

RxMills wrote:
Feb 11th, 2019 5:58 pm
There's probably going to be a formal money laundering inquiry in BC with a focus on prosecutions following the recent news from ONT & QUE. Any of the washed real estate may also be looking to sell now and move money off shore.
According to some on this forum, there's no connection between this and real estate prices...
Member
Jul 26, 2015
205 posts
124 upvotes
Vancouver, BC
Personal experience of GVR market at this moment:
A well-priced Richmond single family home, open house attendance - 1-2 parties per day!
A well-priced South Surrey single family home, open house attendance - 10-12 parties per day.
Both not below the market value, but both are the top 3 well-priced homes for the neighbourhoods.
It’s all about overall affordability now. Not really about the prime location.
The stress test made everyone reassess where they want to be and what they can afford.
Deal Expert
User avatar
Feb 9, 2003
17867 posts
2472 upvotes
Langley
RxMills wrote:
Feb 11th, 2019 5:58 pm

I know someone with a larger property. They were getting offers of 30% off the listed price. They're going to try again in April but there's going to be much greater inventory from very motivated sellers.
No surprise. Older houses (where property value is the dominant component of total value) are selling 10-30% under assessment. If your acquaintance is pricing the house above assessment, then offers at 30% off list could be FMV.
Deal Expert
User avatar
Feb 9, 2003
17867 posts
2472 upvotes
Langley
Sam286 wrote:
Feb 11th, 2019 8:17 pm
Personal experience of GVR market at this moment:
A well-priced Richmond single family home, open house attendance - 1-2 parties per day!
A well-priced South Surrey single family home, open house attendance - 10-12 parties per day.
Both not below the market value, but both are the top 3 well-priced homes for the neighbourhoods.
It’s all about overall affordability now. Not really about the prime location.
The stress test made everyone reassess where they want to be and what they can afford.
I don't think so. I think it was foreign money driving the high-end market, especially in Van West and Richmond, and that money has vanished. So that will be the component of the market that sees the first drop. The suburb's prices were driven by inflated prices at the high end, so it will take a bit of time to filter out - just like there was a delay on the upswing.
Deal Addict
Apr 10, 2011
1298 posts
788 upvotes
Vancouver
i6s1 wrote:
Feb 11th, 2019 8:33 pm
No surprise. Older houses (where property value is the dominant component of total value) are selling 10-30% under assessment. If your acquaintance is pricing the house above assessment, then offers at 30% off list could be FMV.
You're exactly right. I didn't know that. Under modern standards, their place is a teardown.

But they, and maybe others, are still comparing to peak 2016 Chinese demand.

Meanwhile, their costs keep going up (mortgage payments, new roof, taxes) and their asset value will continue to decline (I think).

This is no longer a wait-it-out market. Demand, prices, carrying costs, market sentiment, etc., have all changed.
i6s1 wrote:
Feb 11th, 2019 8:35 pm
I don't think so. I think it was foreign money driving the high-end market, especially in Van West and Richmond, and that money has vanished.

So that will be the component of the market that sees the first drop. The suburb's prices were driven by inflated prices at the high end, so it will take a bit of time to filter out - just like there was a delay on the upswing.
Most agents in those key areas would agree (but maybe not publicly).

Agents have told me that the previous wealthy buyers wanted to be the victorious winner at any cost. They're gone now. The new wealthy buyer doesn't want to be seen as a loser for buying back in to early. They know we're early in the down trend if economic conditions should decline.
Deal Fanatic
Oct 7, 2007
5317 posts
1884 upvotes
craftsman wrote:
Feb 11th, 2019 2:13 pm
Even when the real estate market was booming in 2016, very few people ever attended an open house as it's been reported by various reporters who looked so I wouldn't put much into that. I believe that a lot of those open houses were contractual arrangements with the seller to have X number of them. I remember one report way back in 2016 when the reporter asked the agent why have the open houses when no-one comes and their answer was it was in the contract. What is interesting is when developments come on the market, you do see a distinct difference in how many news reports of people lining up to view/buy into those developments.
I guess I was comparing the Saturday scenario to one last summer where there was an open house on my block and probably 200 people showed up to look at it. The house ended up being purchased by someone who already lived in the neighbourhood and was just changing homes but quite a contrast.
Deal Addict
Dec 27, 2006
1952 posts
929 upvotes
https://www.afr.com/news/world/asia/fur ... 213-h1b7ez

Further hit to Australian property as China intensifies capital controls

Chinese investors face growing hurdles getting money offshore to buy property at the same time as Australian banks are restricting loans to foreign buyers. Tamara Voninski TVZ
Shanghai/Sydney | China has introduced jail terms for operators of "underground banks" illegally helping tens of thousands of its citizens transfer money out of the country to buy property overseas, in a move developers warn is a big blow to Australia's real estate market.

China's Supreme Court quietly introduced stiff penalties for illegal currency exchanges at the start of the month, in a further effort to stop capital from leaving the country. China's leaders want to prop up the slowing economy, stimulate the local property market and prevent a further sell-off in the domestic stockmarket.

The move, which imposes jail terms of five years or more for offenders, would target the operators of so-called "underground banks" which facilitate illegal foreign exchange and cross-border trading. Tens of thousands of middle class Chinese use the services to funnel billions of dollars out of the country to buy property in Australia, New Zealand, Canada, the United Kingdom and other countries.


Chinese investors face growing hurdles getting money offshore to buy property at the same time as Australian banks are restricting loans to foreign buyers. Tamara Voninski TVZ
"The tightening law enforcement sends a strong warning signal to illegal capital transaction agents and will impact the illegal capital outflows," Guan Tao, a former senior official in charge of China's foreign exchange policies, told The Australian Financial Review.

Property developers, agents and accountants warned the latest changes to foreign exchange and capital transfer laws in China represented a further blow to foreign buyer interest in Australia's flagging property market, and could scare off Chinese buyers from even legitimate transactions.

Under the new rules, illegal foreign currency transactions of more than 5 million yuan ($1.04 million,) or those which generated illegal profits of more than 100,000 yuan ($20,758), would be treated as a serious violation. The punishment would be five years in prison and fines of up to five times the profit made on the transaction.

Jail terms of more than five years would be imposed for cases involving more than 25 million yuan ($5.19 million) or transactions generating more than 500,000 yuan ($103,767).

The new rules were published by China's Supreme People's Procuratorate late on January 31 and implemented on February 1, just ahead of the week-long Chinese New Year holiday. However, it only caught the attention of property developers this week.

While Beijing has been cracking down on underground banks for several years, the introduction of jail terms is a big step up in Beijing's efforts to keep capital in the country.


Chinese investors line up to buy Australian property through agent Ausin. supplied
Chinese citizens have continued to skirt opaque government restrictions on the amount of money they are allowed to get out of the country, helping to fuel the Australian property boom. This is despite a $US50,000 limit on the amount an individual can send offshore each year. Underground banks, while technically illegal, previously operated within a grey area in Chinese law, without specific punishments of violations.

Analysts said the new rules targeted the operators of underground banks, rather than individual citizens seeking to buy an apartment or a house in Australia. But they would still hurt deals involving legitimate transactions as buyers would be too scared to send their money to agents which have traditionally facilitated such deals.

"Most people will be too afraid to transfer money across, even the legitimate amounts, for fear the money would disappear or fail to follow through," Sydney-based accountant Jack Zhang, who has many Chinese clients, said.

Developers warned this would this would slow apartment transactions where payments were made in renminbi for homes purchased in Australia.

Local agent Home789's Walton Chu said this would temper foreign buyer interest, which had already been hit by a slew of surcharges. Transfers to Western Union outlets could also be deemed illegal under the new laws, the local Chinese business community said.

Others, however, said such "underground" transactions had long been prohibited in China, so the impact on capital transfer would be minimal. In 2018, China's foreign currency regulator helped security officials target 70 underground banks involved in more than 100 billion yuan in transactions, according to the Shanghai Securities Journal.

Liu Yuan, research director at Centaline China Property Research Centre, said the new rules would mainly affect transactions of between 1 million yuan and 10 million yuan as wealthier individuals looking to do bigger deals had other ways to get money out of the country. He said underground banks could still find ways to skirt the new laws. "The Australian property sector will be impacted from these regulations but it won't kill it off," he said.

Liu Xuezhi, an economist at China's Bank of Communications, said the new rules were the latest evidence that Beijing was using a crackdown on illegal capital outflows to stabilise the currency and the domestic.

Court documents said the new rules were designed to "maintain financial market order". Punishments would also apply to online payments being made through Chinese applications such as AliPay and WeChat. China's foreign exchange regulator reported an increase in the number of violations last year.

Chinese investors face growing hurdles getting money offshore to buy property at the same time as Australian banks are restricting loans to foreign buyers. This was highlighted by the collapse of property sales agency Ausin last year, which resulted in 130 failed residential property settlements in Australia.

More than 100 Chinese property investors said they lost millions of dollars in deposits and payments for off-the-plan houses and apartments in Sydney, Melbourne and Brisbane following the Ausin collapse. Some told The Australian Financial Review last year they paid the full amount for the properties directly to Ausin because they did not know another way of getting their money out of China. Nor could they secure mortgages with Australian banks.
Deal Addict
Apr 10, 2011
1298 posts
788 upvotes
Vancouver
Motoss wrote:
Feb 13th, 2019 12:01 pm
https://www.afr.com/news/world/asia/fur ... 213-h1b7ez

Under the new rules, illegal foreign currency transactions of more than 5 million yuan ($1.04 million,)
Therefore, they can still take out (legally) $1.04M.

"Canadian banks give special favours for foreign buyers over Canadians"
The Globe and Mail

BofM specifically allows foreign buyers with merely a 35% deposit to have 65% financing and zero income verification is required!

So if $1. 04M comes out, BofM gives foreign buyers buying power up to $2.97M.

They can still buy a house in Vancouver.

"The exemptions appear to be designed to attract citizens of foreign countries and newcomers to Canada as clients by making it less onerous for them to obtain and build credit here. Canadian applicants must still prove their sources of income.

Critics say that puts locals at an unfair disadvantage and inadvertently encourages real estate speculation by foreigners who have easier access to credit."

"The bank (BofM) employee – himself an immigrant from China – fears he will be fired if he is named.

He said lenders require all domestic mortgage applicants to produce one to two year's worth of Canadian income tax records and pay stubs.

Because that is impossible for foreigners and newcomers, he said, his bank (BofM) made the changes to attract those clients.

In Vancouver, speculators exploited that, he said, to buy properties they had no intention of living in, hold on to them as demand increased and prices rose and then flip them for a profit."


https://www.theglobeandmail.com/real-es ... e31869946/

And what if their 'investment' drops by 35%? They're out with no ramifications (future debt or credit problems).

I suspect BofM is carrying a lot of foreign buyer mortgages.


Seems to be a pattern here:

(1) Bank of Montreal gives incentives to foreign buyers of Vancouver Real Estate

(2) Province of Quebec promotes it's foreign investor program as a back-door into Vancouver Real Estate

(3) Quebec is the main location for immigration lawyers promoting their services to foreign investors as a way to enter Canada

https://www.canadavisa.com/contact-us.html

Is this what it means in the Constitution when Quebec is legally allowed to have its own laws as a "Distinct Society"?
Member
Jul 25, 2008
390 posts
268 upvotes
ottawa
as long as BMOs shouldering the risk, and BMO shareholders are aware, i'm not opposed to that. The bottom line is taxpayers cant be left holding the bag.
Member
Jul 10, 2018
480 posts
427 upvotes
Interesting documentary on Canada's foreign immigration investor program

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