Average price of Metro Vancouver home now almost $663,000, above pre-recession levels

[cornholio]

Originally Posted by awvan

Ya it's not really foreign money except for the very top of the market. The multi-million dollar properties. Most buyers are local.

Lots of these so called locals are recent immigrants whos money and wealth is either at work outside of the country or they earned their money outside of the country, and lots of time they dont even "really" live locally.

Your silly if you think all this wealth propping up our real estate market is being generated here in BC.

[Yume-sama]

No, but it's probably more from other provinces than whole other Countries.

I know plenty of people (myself included) who have moved from other provinces, but for tax reasons, still keep roots in the OTHER province!

You get my property taxes and that's it!

But still, most buyers are local. The overwhelming majority of them.

[cornholio]

Originally Posted by Yume-sama

Stupid people pushing up the price of those $25 million penthouses. I bet they'd be only 750,000 if not for them !

Like I said in another thread, since you actually have to strictly *qualify* for a mortgage in Canada (which is why we are not having the economic problems of the USA)... I don't know where the money is coming from, but evidently it is there. And you can't even blame rich Chinese people, as I believe it was jlousa who posted the study that proved it to be a myth, that only 3% of buyers (or some other nominally low number) are actually foreign.

It is probably far more likely to say that evil wealthier Canadians are moving to the coast for its temperate climate.

Like I said once a "foreigner" buys his way in he is no longer a foreigner but a local, the fact that the wealth he brings in and often time keeps generating outside of Vancouver makes him no different then a foreign investor as it isnt locally generated and thus inflates prices above the norm.

[Yume-sama]

So, considering the price of a house in one of Canada's big 6 cities is several times the price of a house in some of America's big cities, what is inflating them ?

Vancouver just so happens to be the most desirable of Canada's big cities, and with desirability, comes higher prices.

Even without a big foreign boogeyman that studies show has very little effect on the market.

[cornholio]

Originally Posted by Yume-sama

No, but it's probably more from other provinces than whole other Countries.

I know plenty of people (myself included) who have moved from other provinces, but for tax reasons, still keep roots in the OTHER province!

You get my property taxes and that's it!

But still, most buyers are local. The overwhelming majority of them.

Obviously it will be a majority, it only takes relatively small imbalances to inflate prices significantly. Just the other day I read about the 80-20 rule again, in this case it would mean that 20% of the buyers are responsible for 80% of the real estate price inflation.

[cornholio]

Originally Posted by Yume-sama

So, considering the price of a house in one of Canada's big 6 cities is several times the price of a house in some of America's big cities, what is inflating them ?

Vancouver just so happens to be the most desirable of Canada's big cities, and with desirability, comes higher prices.

Even without a big foreign boogeyman that studies show has very little effect on the market.

Your right that Vancouver is desirable.

My question would be what effect would there be if Canada decided to start taxing overseas income. I would think there would be atleast a bit of a convergence of housing prices between Canada and America.

[Yume-sama]

That would be fine if there was anything at all to indicate the real number is anywhere near 20%.

If Canada started officially taxing overseas income, I doubt there would be any change. Because anyone with overseas income knows how to hide it.

Even the USA can't really ENFORCE it.

And, it would really only effect Canadian citizens. Not the mythical foreigner who is supposedly buying all of Vancouver.

If I buy a house in the USA today, I don't have to pay any US income tax *at all* tomorrow. And there are MANY Canadians who own property in the USA and don't pay a dime in US income tax.

[cornholio]

Originally Posted by Yume-sama

That would be fine if there was anything at all to indicate the real number is anywhere near 20%.

Its a rule of thumb, it can be 10%, 5%, 30% etc. The point is that a small number of people are going to be responsible for a large percantage of the increases.

Its called the 80-20 rule but doesnt mean its 80%-20%.

Its no different then saying that generally speaking 20% of your time finishes 80% of your work, the other 80% of your time finishes the other 20% of your work. This rule of thumb can be applied to almost anything and is always important to remember. Its actually very funny when you observe this little fun fact of life at work like a unionized environment where infact its extremely close to 20% of people doing 80% of the work and the other other 80% of the people doing the other 20% of the work.

But back to real estate, this rule of thumb is very relevant to remember when discussing this subject.

Edit: Here is a better explanation of what im talking about.
http://en.wikipedia.org/wiki/Pareto_principle

[whatnext]

Originally Posted by Yume-sama

Stupid people pushing up the price of those $25 million penthouses. I bet they'd be only 750,000 if not for them !

Like I said in another thread, since you actually have to strictly *qualify* for a mortgage in Canada (which is why we are not having the economic problems of the USA)... I don't know where the money is coming from, but evidently it is there. And you can't even blame rich Chinese people, as I believe it was jlousa who posted the study that proved it to be a myth, that only 3% of buyers (or some other nominally low number) are actually foreign.

It is probably far more likely to say that evil wealthier Canadians are moving to the coast for its temperate climate.

If you can find a realtor honest enough to tell the truth, your eyes would be opened. How do you separate "passports of convenience" holders from local buyers? Tell me how all but the wealthiest of out-of-province Canadians can afford to buy into Vancouver's housing market? Selling that 6 bedroom house in Winnipeg might get you a one bedroom condo here.

Even if people say "but its only in Vancouver, not the burbs" miss the point. The whole process has an inflationary impact that ripples from Vancouver out to the suburbs.

I agree with cornholio that the time has come to tax offshore income to level the playing field, but the whores that make up our major political parties will never have the guts for it.

[Yume-sama]

It's usually not rich people who strive to become Canadian for the "passport of convenience". What, exactly, would being Canadian entitle them to that is so desirable?

It's the poor people in under developed Countries who become Canadian for "convenience" for our social services, etc.

Remember when we had to spend tens of millions evacuating thousands of them from Lebanon during the war?

We should probably be ENCOURAGING more wealthy people to actually become Canadian. But there's really no point.

If you're truly a very wealthy non-Canadian, a Canadian passport is not the one you want to get.

Have you ever noticed most REALLY rich Canadians don't even live here ?

[whatnext]

Originally Posted by Yume-sama

It's usually not rich people who strive to become Canadian for the "passport of convenience". What, exactly, would being Canadian entitle them to that is so desirable?

It's the poor people in under developed Countries who become Canadian for "convenience" for our social services, etc.

Remember when we had to spend tens of millions evacuating thousands of them from Lebanon during the war?

We should probably be ENCOURAGING more wealthy people to actually become Canadian. But there's really no point.

Go to any Open House on the west side of Vancouver, or UEL and see how many of the downtrodden, huddled masses from under developed countries are shopping there.

[Yume-sama]

Well, I wouldn't dispute that people come here to live. However, I would object to mis-labeling them in particular as people out for a "convenient" passport.

Most are likely second or third generation by now. Don't forget you came here from somewhere, too.

Dirty foreigners, all of you!

[cornholio]

Originally Posted by Yume-sama

Well, I wouldn't dispute that people come here to live. However, I would object to mis-labeling them in particular as people out for a "convenient" passport.

Poor people in these countries have nothing to lose, the wealthy do. And in rapidly growing economies the risk is very real to lose everything as rapidly growing and unstable go hand in hand. Canada is a safe haven, many developed countries are, but Vancouver is popular and Canada doesnt tax over seas income, trust me that lots of people get passports out of convenience.

[Yume-sama]

Originally Posted by cornholio

Poor people in these countries have nothing to lose, the wealthy do. And in rapidly growing economies the risk is very real to lose everything as rapidly growing and unstable go hand in hand. Canada is a safe haven, many developed countries are, but Vancouver is popular and Canada doesnt tax over seas income, trust me that lots of people get passports out of convenience.

No, but they have everything to gain which makes it rather convenient. This is the stereotypical "passport of convenience".

Especially if we'll come evacuate out of a war torn Country even though you don't even really live in Canada, and then nurse you to health, and give you a welfare check

But this distracts from the whole entire point that the FOREIGN BUYER thing is a myth. In the end, none of the other banter really matters.

I can't find the article at the moment, but it points out that 95% of buyers are British Columbians, meaning not even evil Albertans like me make that much of a difference.

[cornholio]

Originally Posted by Yume-sama

No, but they have everything to gain which makes it rather convenient. This is the stereotypical "passport of convenience".

Especially if we'll come evacuate out of a war torn Country even though you don't even really live in Canada, and then nurse you to health, and give you a welfare check

But this distracts from the whole entire point that the FOREIGN BUYER thing is a myth. In the end, none of the other banter really matters.

The foreign buyer thing is irrelevant. The only relevant thing is that there is lots of real estate being bought with wealth generated outside of the city and country. When you take in to account the 80-20 rule(actually called Pareto principlehttp://en.wikipedia.org/wiki/Pareto_principle) it means that you only require a small amount of people buying real estate with wealth generated outside of the city/country to significantly effect housing prices.

Anyways its a fun discussion and in the end we can agree to disagree. Im pretty confident with my point of view though so might be good to agree to disagree.

[Yume-sama]

The "irrelevant" foreign buyer was the whole point of your essay on the last page...

And it would really only matter if they were purposely bidding UP the price, and not paying the market rate that 95% of the locals do.

So yes, we will agree to disagree

[jlousa]

Yume is correct the foreign buyer is and always has been a myth, it amounts to ~3-4% of the market.
The best solution I've heard for high prices is also the simplest. Supply+Demand. Since Supply is constrained, we need to reduce demand. The solution is to make Vancouver as undesirable as possible. It would bring prices crashing down quicker then anything. It worked wonders in Detroit. We seem to have a local government that is attempting just that. Of course I'm kidding, but I would love to see a politician who runs on that platform.

[quobobo]

Originally Posted by jlousa

The best solution I've heard for high prices is also the simplest. Supply+Demand. Since Supply is constrained, we need to reduce demand.

Alternately, increase supply. Ending the moronic practice of zoning for freestanding houses nearly everywhere in Vancouver would be a good start.

...or we could start small, like not capping building height around 4 stories in central locations like Broadway and Commercial.

But yeah, blindly applying the 80-20 rule to this is silly. "A tiny percent of condo buyers are X! Therefore X must be to blame!"

(replace X with foreigners, really tall people, gingers, whatever)

[Yume-sama]

Originally Posted by jlousa

Yume is correct the foreign buyer is and always has been a myth, it amounts to ~3-4% of the market.
The best solution I've heard for high prices is also the simplest. Supply+Demand. Since Supply is constrained, we need to reduce demand. The solution is to make Vancouver as undesirable as possible. It would bring prices crashing down quicker then anything. It worked wonders in Detroit. We seem to have a local government that is attempting just that. Of course I'm kidding, but I would love to see a politician who runs on that platform.

Well, that's one way to do it, alright! Hmm... fill in the inlet to make a sewage plant or garbage dump? Start mining the mountains, de-forest them all ?

Or we could work to create density, particularly around SkyTrain stations, and reduce height restrictions downtown.

[red-paladin]

I really think the Poco type model for redevelopment would work on a big scale in Vancouver and Burnaby. Just tell all those people with houses that they can live in them as long as they want, but the area is zoned for medium density from now on, so once you decide to sell, it has to be to a developer. Of course you get blocks were there are empty lots and few houses, but it would only take 20 years, and most of Vancouver and Burnaby would be 4-12 stories and mixed-use developments. We've already seen lots of nice medium density developments and this would accelerate it.