Real Estate

Vancouver housing bubble?

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  • May 31st, 2020 2:17 pm
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Sr. Member
Jul 10, 2018
511 posts
483 upvotes
Just for reference.

The previous Canadian real estate crash in the 1990s had home prices peak in 1990 and bottom out in 1996. (Six year span)

In the Great Recession, US home prices peaked in 2007 and bottom in 2012. (5 year span)

Would you say that 2017 was peak Vancouver home prices? If so, it'll likely take a few years for prices to hit bottom.
Deal Guru
Jan 27, 2006
13213 posts
6235 upvotes
Vancouver, BC
datoprookie wrote: 1305 Kings Ave, West Vancouver just sold for $2.15M. Previous sale was in June 2016 at $3.3M.

June 2016 sale price $3,300,000
July 2017 assessed value $3,376,000
July 2018 assessed value $2,995,000
April 2019 sale price $2,150,000
The sad thing is in other parts of the world, a $2.1 million house is a real mansion (even a castle sometimes) with multiple acres of land! In Vancouver, it's a Vancouver special on a standard 33' lot that west of Main Street.
Deal Guru
Jan 27, 2006
13213 posts
6235 upvotes
Vancouver, BC
TheSinner wrote: Just for reference.

The previous Canadian real estate crash in the 1990s had home prices peak in 1990 and bottom out in 1996. (Six year span)

In the Great Recession, US home prices peaked in 2007 and bottom in 2012. (5 year span)

Would you say that 2017 was peak Vancouver home prices? If so, it'll likely take a few years for prices to hit bottom.
According to the graph on the 1st post, 2017 was the last peak but you could say that it was a duplicate of the previous peak in 2016... Either way, we are looking at approx 2020 to 2022 if we go by the trend you posted. I suspect that we would have to look at how quickly the prices ramped up in the previous peaks to see if there was a similarity with the pricing graph this time.
Deal Fanatic
Oct 7, 2007
6668 posts
2964 upvotes
TheSinner wrote: Just for reference.

The previous Canadian real estate crash in the 1990s had home prices peak in 1990 and bottom out in 1996. (Six year span)

In the Great Recession, US home prices peaked in 2007 and bottom in 2012. (5 year span)

Would you say that 2017 was peak Vancouver home prices? If so, it'll likely take a few years for prices to hit bottom.
Would love to see this Youtube updated to current dates and pricing.

Deal Addict
Apr 10, 2011
1571 posts
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Vancouver
Must first congratulate 'adamtheman' for a great long-lasting perpetual thread.

Have to agree with those above that there is going to be an ongoing downward slide for several years.

It hasn't reached its full deceleration yet as we're still coming out of a peak economy.

It's been a long time since people heard of consistent widespread layoffs from a deceleration in economic conditions.

Most recent purchases (outside of wealthy foreign buyers) are mortgaged by 2 incomes.

Most of the current declines are from the mortgage stress-test and the additional taxing of foreign buyers.

This is exactly what the gov't chief economists desired: A gradual slowdown of the inflated markets that was artificially inflated by artificially low interest rates and a large influx of foreign money. It was further supported by $10B in money laundering that was put into real estate.

Real estate agents are continuing to promote this as a buying opportunity and that things will turn around and start accellerating again in a year.
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Sep 15, 2015
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Abbotsford
craftsman wrote: The sad thing is in other parts of the world, a $2.1 million house is a real mansion (even a castle sometimes) with multiple acres of land! In Vancouver, it's a Vancouver special on a standard 33' lot that west of Main Street.
Not true. Look at London, Auckland, Sydney, San Francisco, Seattle etc.
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Oct 7, 2007
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RxMills wrote: Must first congratulate 'adamtheman' for a great long-lasting perpetual thread.

Have to agree with those above that there is going to be an ongoing downward slide for several years.

It hasn't reached its full deceleration yet as we're still coming out of a peak economy.

It's been a long time since people heard of consistent widespread layoffs from a deceleration in economic conditions.

Most recent purchases (outside of wealthy foreign buyers) are mortgaged by 2 incomes.

Most of the current declines are from the mortgage stress-test and the additional taxing of foreign buyers.

This is exactly what the gov't chief economists desired: A gradual slowdown of the inflated markets that was artificially inflated by artificially low interest rates and a large influx of foreign money. It was further supported by $10B in money laundering that was put into real estate.

Real estate agents are continuing to promote this as a buying opportunity and that things will turn around and start accellerating again in a year.
This kind of "optimism" reminds me of the sentiment we used to hear from Ben Bernanke, former U.S. Federal Reserve Chairman, right after the big financial crash in 2008. He kept saying that in one or two quarters, he expected things to turn around. Here it is more than 10 years later and while things are improving, my understanding is that U.S. banks still own a lot of the homes foreclosed during that rough period.
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Oct 23, 2003
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DanielM491 wrote: Not true. Look at London, Auckland, Sydney, San Francisco, Seattle etc.
London and San Francisco are not resorts relying on Asian money to survive, like Vancouver is, so comparing to those is kind of pointless.

Auckland houses over 4 million out of the 7 million people who live in New Zealand, and is the main hub of the entire country. Vancouver does not house anywhere near 60% of the population of Canada, nor does it lead the pack in terms of finances or tech industry, for the country.

Seattle will be your nearest comparison, but its in the States, has the original Amazon HQ, among other behemoth companies in town, and the salaries vs taxes ratio, are well beyond Vancouver's.

Seattle avg: $69,703 USD
Vancouver avg: $56,586 CAD -> $42,490 USD

Cost of living vs purchasing power is better in Seattle, even with the higher costs:
https://www.numbeo.com/cost-of-living/c ... ttle%2C+WA

I'm actually not sure what city in the world you can compare Vancouver to. Low salaries and very high cost of living, not an economic power house but a rich money parking summertime resort. Dubai perhaps?
Deal Addict
Apr 10, 2011
1571 posts
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Vancouver
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.
Deal Guru
Jan 27, 2006
13213 posts
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Vancouver, BC
DanielM491 wrote: Not true. Look at London, Auckland, Sydney, San Francisco, Seattle etc.
I'm not understanding your objection to my statement.... London, Auckland, Sydney, San Francisco, Seattle... don't define the whole world - or at least that's not the accepted definition of the world.

Here's a real estate site which list 79 French Chateaus for under 1 million Euros - https://www.prestigeproperty.co.uk/fren ... 00000/s-d/. Many of them have arces of land, over 10 bedrooms, swimming pools, and stables.
Sr. Member
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Sep 15, 2015
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Abbotsford
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
Deal Expert
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Feb 9, 2003
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Langley
DanielM491 wrote: 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
The original point was that $2m can buy an incredible property in other places around the world. That point stands.
Sr. Member
Jul 4, 2017
507 posts
105 upvotes
RxMills wrote:
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.
Or people are realizing that it doesn't make sense to sell when they (probably) bought for much cheaper years ago, and the current hot rental market (especially for 1 and 2 bed condos) means that renters are fully paying mortgage + property tax + maintenance fees and building free equity for investors.
Deal Guru
Jan 27, 2006
13213 posts
6235 upvotes
Vancouver, BC
DanielM491 wrote: 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.

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