Real Estate

Vancouver housing bubble?

  • Last Updated:
  • Aug 10th, 2020 6:29 pm
Tags:
None
Jr. Member
Dec 5, 2009
176 posts
83 upvotes
RxMills wrote: I have 3 family members households (not in Vancouver) that are all going to be sellers next spring. There's a whole lot of local and global news that'll happen between now and then. I tried to convince them all to hit the market now.
What's driving them to be sellers next spring? Are they offloading investment properties or downsizing/upsizing their current property?
Deal Addict
Apr 10, 2011
1803 posts
1316 upvotes
GVRD
Alpine84 wrote: What's driving them to be sellers next spring? Are they offloading investment properties or downsizing/upsizing their current property?
They're residences, not investments, to them. (Stocks are more controllable. I can trigger an automatic sell at $180, for example.) They've all had gains over the years. They're either downsizing space, or location. But for them, there are just too many steps in the process (get place looking best, showings, find new place, etc.).

I think they'd make an additional $150-300k if they sold right now instead of the next (uncertain) spring. Best likely case, it's today's prices. Worst likely case, it's down 7-10% probably (for detached), depending on how successful they are at selling into the spring buying/selling wave. I'd sell now and get storage and a rental for 12 months before buying back in. But that's easier said than done. But anything could happen in this uncertain global and domestic environment over the next 6-12 months to move markets either way.
Deal Guru
Jan 27, 2006
13827 posts
6747 upvotes
Vancouver, BC
RxMills wrote: They're residences, not investments, to them. (Stocks are more controllable. I can trigger an automatic sell at $180, for example.) They've all had gains over the years. They're either downsizing space, or location. But for them, there are just too many steps in the process (get place looking best, showings, find new place, etc.).

I think they'd make an additional $150-300k if they sold right now instead of the next (uncertain) spring. Best likely case, it's today's prices. Worst likely case, it's down 7-10% probably (for detached), depending on how successful they are at selling into the spring buying/selling wave. I'd sell now and get storage and a rental for 12 months before buying back in. But that's easier said than done. But anything could happen in this uncertain global and domestic environment over the next 6-12 months to move markets either way.
They may be thinking that with the current economic conditions, the prices are depressed NOW and will rebound early next year...
Deal Addict
Apr 10, 2011
1803 posts
1316 upvotes
GVRD
craftsman wrote: They may be thinking that with the current economic conditions, the prices are depressed NOW and will rebound early next year...
Perhaps. They also know that if they get more for their homes next spring, they'll probably have to pay more for their next home too - and visa versa. That may diminish their enthusiasm for feeling that they accurately need to time perceived market peaks.

A National Post story this morning quotes a condo developer as saying condo prices will be up 10-15% next year. They better, as there are a whole lot of developments in the pipeline over the next 2 years. Giving that it's a key industry for Canada, and urban centres keep asking for more housing, it should continue to get government support (low interest rates, etc.). It's all going to be very interesting.
Deal Guru
Jan 27, 2006
13827 posts
6747 upvotes
Vancouver, BC
RxMills wrote: Perhaps. They also know that if they get more for their homes next spring, they'll probably have to pay more for their next home too - and visa versa. That may diminish their enthusiasm for feeling that they accurately need to time perceived market peaks.

A National Post story this morning quotes a condo developer as saying condo prices will be up 10-15% next year. They better, as there are a whole lot of developments in the pipeline over the next 2 years. Giving that it's a key industry for Canada, and urban centres keep asking for more housing, it should continue to get government support (low interest rates, etc.). It's all going to be very interesting.
Given the fact that we are now seeing the government thinking about cutting back on programs like CERB and the lukewarm reception to programs like CEWB by businesses (I say lukewarm since various businesses recently have announced they will be scaling back or shutting down business lines), there is a strong case to be made that things are not going to come up roses even if a vaccine is developed this year.

I wonder how many of those demands predictions include a massive drop off in various sectors like foreign students or investments properties? Or did they not collect/mine enough data to be able to tell a base level of demand and surge demand?
Jr. Member
Dec 5, 2009
176 posts
83 upvotes
RxMills wrote: They're residences, not investments, to them. (Stocks are more controllable. I can trigger an automatic sell at $180, for example.) They've all had gains over the years. They're either downsizing space, or location. But for them, there are just too many steps in the process (get place looking best, showings, find new place, etc.).

I think they'd make an additional $150-300k if they sold right now instead of the next (uncertain) spring. Best likely case, it's today's prices. Worst likely case, it's down 7-10% probably (for detached), depending on how successful they are at selling into the spring buying/selling wave. I'd sell now and get storage and a rental for 12 months before buying back in. But that's easier said than done. But anything could happen in this uncertain global and domestic environment over the next 6-12 months to move markets either way.
Thanks for sharing! So they're not exiting the market entirely, just shifting their assets around.
Best of luck to them... I did something similar last year but made a critical mistake. I sold my condo on July 2019 and did not put enough emphasis on researching the market as a buyer before selling. Thought it would be easy and thus sold, went on vacation, then started researching. End result: We ended up being too picky, got outbid on every house I put an offer in & watched prices increase by 5-10% over the course of 9 months before finally throwing in the towel and buying a detached house in Coquitlam (outside of my original consideration set) a month ago.

My advice is to start researching the market as a buyer even before they start putting their property on the market. It's not going to be as simple as it might look, regardless of the economic conditions.
Jr. Member
Mar 26, 2015
177 posts
62 upvotes
Richmond, BC
it feels like prices refuse to fall, even in these times - truly amazing.
Deal Addict
Apr 10, 2011
1803 posts
1316 upvotes
GVRD
June was a hot rebound-month. The agent said it best when he said it was the spring selling season playing out, for those that already had made the decision to purchase in the spring. Suddenly, they found themselves being able to afford a lot more home as a result of now having low 2.3% interest rates. That made them aggressive buyers who were able to spend more for a property that they wanted.
COVID-19: B.C. residential real estate rebounds despite government fears
Vancouver Sun / Jul 15, 2020
https://vancouversun.com/news/covid-19- ... 1add1e76a/

“We did miss out on a big chunk of the spring selling season, so overall (annual) sales will be lower, but it remains to be seen how much lower.” BCREA figures show there were 8,166 residential real estate transactions in June — a 17 per cent increase over the same month last year — and the average price was $748,155, a 9.1 per cent increase.

However, the price increases made economic sense to him because of a shortage of supply and record low interest rates. “If you were thinking about buying in March and April and now you can buy with a 2.3 per cent five year fixed rate that is a pretty powerful incentive,” he said “We aren’t going to see interest rates rise for some time.”

Ogmundson tempered his positive market outlook by pointing out that there was still a lot of uncertainty in the real estate market, based on the potential end of government supports, the dire COVID-19 situation in the U.S., a possible second wave in the fall and the fact most forecasting was being done on the assumption a vaccine or treatment would be widely available in 2021.

Finance Minister Carole James said that the speculative real estate market was a terrible way to grow an economy. “It doesn’t provide stability. It provides instability. And I think we are continuing to see that,” she said.
Deal Fanatic
Oct 7, 2007
6982 posts
3211 upvotes
RxMills wrote: June was a hot rebound-month. The agent said it best when he said it was the spring selling season playing out, for those that already had made the decision to purchase in the spring. Suddenly, they found themselves being able to afford a lot more home as a result of now having low 2.3% interest rates. That made them aggressive buyers who were able to spend more for a property that they wanted.
This makes the most sense for explaining what we are seeing in detached housing craziness in Vancouver. While I believe many of the detached homes that are being sold will be homes for their buyers (vs. investments), I am pleased to hear tha Finance Minister James does not want to use real estate speculation as the path to growing our economy.

On a separate note, I wonder if last night's passing of the park camping law by the Board of Parks, Camping and Inebriation (something borrowed from social media) will make living next to park less desirable. Of course, I guess we are also free to pitch tents in the same parks so perhaps it is more desirable.
Member
Apr 5, 2017
481 posts
350 upvotes
Edmonton, AB
gahafa wrote: it feels like prices refuse to fall, even in these times - truly amazing.
impossible what to make of it.

I just finished watching the Big Short for my 3rd time and find it impossible not to draw parallels with it in 2020. Is it even more of a bubble now? Covid Bubble?

No joke here. I don't trust/have a lot of faith in the system. People quickly forgive and forget, IDK. It's a toxic rubberband relationship.
Jr. Member
Dec 5, 2009
176 posts
83 upvotes
The sales to active listings ratio for detached houses in Vancouver under 1.5M is over 50%...
Member
Nov 25, 2009
412 posts
153 upvotes
Terrace
tehwegz wrote: impossible what to make of it.

I just finished watching the Big Short for my 3rd time and find it impossible not to draw parallels with it in 2020. Is it even more of a bubble now? Covid Bubble?

No joke here. I don't trust/have a lot of faith in the system. People quickly forgive and forget, IDK. It's a toxic rubberband relationship.
If you watched the big short then you should have learned that the MBS fiasco != Current housing situation. No relation.
Deal Fanatic
Oct 7, 2007
6982 posts
3211 upvotes
tehwegz wrote: impossible what to make of it.

I just finished watching the Big Short for my 3rd time and find it impossible not to draw parallels with it in 2020. Is it even more of a bubble now? Covid Bubble?

No joke here. I don't trust/have a lot of faith in the system. People quickly forgive and forget, IDK. It's a toxic rubberband relationship.
I think you're onto something even though I can't comment on the movie specifically. I have heard some people say that Vancouver real estate never really corrected properly in the past while many people think there is no limit to how high it will go. However, we do know that (1) events outside the control of the politicians and even the country like COVID can introduce risk that can't be anticipated or controlled from within, and (2) that real estate values are much much higher than what the median household income can suppport, and (3) Canadian personal debt load is very high for a G7 country at something like 178% of income or something like that. As a country, we have made many policy decisions in the past that have kept avoiding dealing with the bubble because no political party wants to have a crash on their watch so the can keeps getting kicked down the road. However, it just seems to me at some point there will be no more road. The rubber band has been stretched so far that there can't be much stretch left. I could be completely wrong but something just doesn't make logical sense.

Top