Chinese Investors Driving Up Metro Housing Prices

[whatnext]

Originally Posted by ckkelley

Most people it seems aren't willing to make the sacrifice needed to own real estate in Vancouver. There's definitely an attitude of entitlement for some strange reason (I want to live where I want live and I want to pay what I want to pay).

I ALWAYS knew that if you want to get ahead in the world, it doesn't happen without sacrifice. For most people it just isn't going to happen otherwise.

I just dont see it as being more complicated than that.

People earning the median income of $68k in Vancouver couldn't sacrifice enough to buy a home now in vast swaths of Metro. Do you suggest they give up food?

[ckkelley]

No, I suggest they work 2 perhaps 3 jobs, share apartments, buy used clothing, clip coupons, etc. Has any of that occurred to you?

If you're not prepared to make any sacrifices you won't be buying any RE in Vancouver. That's a totally unrealistic goal. Failing that people should move further out Aldergrove, Chilliwack.....Flin Flon.

[GMasterAres]

I have a few friends who recently sold properties in Vancouver and asked 100% above assessed value because they were trying to attract foreign buyers. They ended up selling for around 75% above assessed value in both cases after negotiation but is it the buyer who is to blame or the seller?

My money regardless of who has an MBA and who has worked in the industry a million years is just common sense, it is actually the seller who is to blame be it the private seller or real-estate company. Double edged sword.

The truth is anyone in the seller's position would do the same thing. People in Vancouver crying over real-estate prices only have themselves to blame. Not the Chinese or anyone else.

[s211]

Originally Posted by jhausner

I have a few friends who recently sold properties in Vancouver and asked 100% above assessed value because they were trying to attract foreign buyers. They ended up selling for around 75% above assessed value in both cases after negotiation but is it the buyer who is to blame or the seller?

My money regardless of who has an MBA and who has worked in the industry a million years is just common sense, it is actually the seller who is to blame be it the private seller or real-estate company. Double edged sword.

The truth is anyone in the seller's position would do the same thing. People in Vancouver crying over real-estate prices only have themselves to blame. Not the Chinese or anyone else.

Swing and a miss. Not everybody's an owner. For those people that are not presently owners, they've got every right in the book to raise concerns.

[GMasterAres]

Originally Posted by whatnext

People earning the median income of $68k in Vancouver couldn't sacrifice enough to buy a home now in vast swaths of Metro. Do you suggest they give up food?

There are 2 things that have to be taken into account with answering your statement. The first is, as major cities grow and densify, houses go away. Try buying a house in Hong Kong or Tokyo. How about New York City or London. You won't find any unless you're on the far outskirts many times further than even Surrey is from central Vancouver. Not for prices less than $1 million.

This entire forum is dedicated to sky scrapers and densification. The price of densification is house prices going up and market availability vanishing. So take that with some qualification.

Second point, as the person a couple above me stated, people's idea of sacrifice in North America is sad and quite frankly the opinion of self-entitled selfish individuals that would know what sacrifice actually means if it bit them in the nose and ran away with their girlfriend.

I'll give you an example. I pop onto mls.ca and do a search for houses between $200,000 and $400,000 in Surrey. It tells me there are 169 properties listed right now. So let's look at $200,000 vs $300,000 vs $400,000.

$400,000 place: For a 30 year mortgage of $340,000 at a rate of 5.69% weekly (15% down obviously), you'd be around $450 a week or $23,400 per year.

$300,000 place: For a 30 year mortgage of $255,000 at a rate of 5.69% weekly, you'd be around $340 per week or $17,680 per year.

$200,000 place: For a 30 year mortgage of $170,000 at a rate of 5.69% weekly, you'd be around $225 per week or $11,700 per year.

Now the first sacrifice in looking at the above number is maybe you can't afford the $400,000 home and you need to aim just a tad lower. Here is how a family can sacrifice things:

1. Don't own 2 or 3 cars
2. Do less driving
3. Shop at the Superstore and buy no-name products or shop for sales and best deals all the time
4. To eat out and cook food at home for breakfast, lunch, dinner
5. Stop drinking Starbuks coffee
6. Quit drinking/smoking/gambling
7. Don't own a pet or multiple pets
8. Conserve energy
9. Work an extra job
10. Lock your credit cards away in a safe and only buy things if you've saved up for it

You do the above and I'd bet anyone they'd find an extra $5,000 a year easy on a wage of $68k a year. EASY. A lot of people I know eat our for lunch every day at work. Let's do that quickly:

52*5 business days - 8 holidays = 252 working days. Say an average of 3 weeks vacation = 237 working days. Round down to 230 for 7 sick days.

So 230 days. Lunch is on average $10 a day if you eat out, $5 a day if you cook your own. So that's $1,150 saved just making your own lunch.

Now how about alcohol? A lot of people I know drink on average a bottle of wine every 2 weeks. If we assume an average of $15 per bottle * 26 you could save $390 right there.

Now what about dinner? Go out once a week? Average dinner out in this city is around $50 after tip for 2 people compared to around $20 for 2 people if you cook at home. That's $1,500 right there.

So that's just 3 sacrifices I've found that a lot of people I know and work with could employ in their lives and we have a savings of $3,000. That's roughly 9 weeks worth of mortgage payment right there on a $300,000 house or on a $200,000 one 12 weeks.

Obviously the sacrifices don't match everyone but they are examples of sacrifices that can be made and often people ignore. These aren't even "high end sacrifices" like ckkelley suggested. Saying people making $68k a year can't afford a house in metro-Vancouver is just an excuse. I think the better statement is people making $68k a year can't afford a $600,000 house in the heart of Vancouver, or a $600,000 5 bedroom house on 1 acre land in Surrey.

But if you want to buy a house you can do it easy if you use your brain and do a bit of sacrificing. Maybe you can't go on vacation to Las Vegas this year. Maybe you can't buy that new big screen TV. Maybe you can't buy HD cable with 200 channels. Maybe you can't buy Starbuks once a day. Maybe you have to quit smoking. Maybe you can't buy that dog you've always wanted. Maybe you can't eat steak twice a week. Maybe you can't buy your 4th pair of shoes. Sacrifices.

[GMasterAres]

Originally Posted by s211

Swing and a miss. Not everybody's an owner. For those people that are not presently owners, they've got every right in the book to raise concerns.

And I'd like to complain that I wasn't old enough to cash in on the dot net domain name bonanza that happened 10 years ago. I'd also like to complain that I wasn't able to buy a mint condition 57 Corvette for $7,000 and keep in a garage to cash in on its $170,000 worth today.

Not everybody's an owner is just an excuse. There is no reason why people can't be owners in metro Vancouver. Drive down the streets of Vancouver, Richmond, Surrey, Burnaby, Coquitlam, you name it and you'll see LOADS of properties for sale for between $170,000 and $225,000. Are they HOUSES? No. But they are properties that can get you into the market. Actually as a side bar there are 12 HOUSES listed in Surrey for under $300,000 so they are available though rare I do agree.

People raising concerns are to me no different than those people wanting affordable housing for the poor on Waterfront property downtown Vancouver. They're just selfish individuals that don't know what the word sacrifice truely means.

So no it isn't a swing and a miss. People complaining in Vancouver only have themselves to blame be that the owners inflating prices by being selfish or the non-owners not being willing to make 1 or 2 sacrifices in order to get in on the market.

The truth is, the average joe in Metro-Vancouver can't buy a place > $300,000 for their first home on a single median income. It's just that simple. And house prices rising doesn't really make a difference. Condos are still priced reasonably throughout many areas. Can you buy a $200,000 condo in Downtown Vancouver? YES YOU CAN! Heck you can buy 6 right now. What about for under $300,000? Oh wait, YOU CAN! There are 51 listed for under $300,000. A large amount of them are even new! Who would have thought.

Swing and a miss. Sorry you can't, for your first house, buy a 4 bedroom home in Kitsilano. I'm really sad about that.

A friend of mine just bought a 4 year old town-house in Fleetwood for a reasonable $250,000. 5 minutes drive/10 minute bus from Skytrain, Guildford, Highway 1. Schools near by. He doesn't even have a full time job and makes well under the median income in Vancouver. How'd he do it? Through some sacrifice and this little concept called saving money. So while people sit there complaining about housing prices and why they can't get into the market, other people on less income are having no issues by using their brain.

[GMasterAres]

To illustrate my point of buying a HOUSE in cities where density continues to rise...

Buy a HOUSE here:



I think the difficulty would be finding a house there.

[mr.sandbag]

Originally Posted by jhausner

And I'd like to complain that I wasn't old enough to cash in on the dot net domain name bonanza that happened 10 years ago. I'd also like to complain that I wasn't able to buy a mint condition 57 Corvette for $7,000 and keep in a garage to cash in on its $170,000 worth today.

Not everybody's an owner is just an excuse. There is no reason why people can't be owners in metro Vancouver. Drive down the streets of Vancouver, Richmond, Surrey, Burnaby, Coquitlam, you name it and you'll see LOADS of properties for sale for between $170,000 and $225,000. Are they HOUSES? No. But they are properties that can get you into the market. Actually as a side bar there are 12 HOUSES listed in Surrey for under $300,000 so they are available though rare I do agree.

People raising concerns are to me no different than those people wanting affordable housing for the poor on Waterfront property downtown Vancouver. They're just selfish individuals that don't know what the word sacrifice truely means.

So no it isn't a swing and a miss. People complaining in Vancouver only have themselves to blame be that the owners inflating prices by being selfish or the non-owners not being willing to make 1 or 2 sacrifices in order to get in on the market.

The truth is, the average joe in Metro-Vancouver can't buy a place > $300,000 for their first home on a single median income. It's just that simple. And house prices rising doesn't really make a difference. Condos are still priced reasonably throughout many areas. Can you buy a $200,000 condo in Downtown Vancouver? YES YOU CAN! Heck you can buy 6 right now. What about for under $300,000? Oh wait, YOU CAN! There are 51 listed for under $300,000. A large amount of them are even new! Who would have thought.

Swing and a miss. Sorry you can't, for your first house, buy a 4 bedroom home in Kitsilano. I'm really sad about that.

A friend of mine just bought a 4 year old town-house in Fleetwood for a reasonable $250,000. 5 minutes drive/10 minute bus from Skytrain, Guildford, Highway 1. Schools near by. He doesn't even have a full time job and makes well under the median income in Vancouver. How'd he do it? Through some sacrifice and this little concept called saving money. So while people sit there complaining about housing prices and why they can't get into the market, other people on less income are having no issues by using their brain.

Have to agree, my partner and I saved over 30k in 7 months yes, how by cutting out everything uneccessary, we make a combined 125k which is less then the medium income. it really comes down to what is your proirities are, we sold our property and then rented in a smaller place for half our old mortgage,

it would take someone in our shoes 14-18 months to save enough for 350k condo with no initial savings, as im going to help my friends do this...

it takes a desire and commitment to do it... so yes im tired of all the ranting about home prices as well, get off your couch and save you money!...

[Yume-sama]

I draw the line at sacrificing my Starbucks and designer clothing for my chihuahua. Radical ideas you propose.

[s211]

Originally Posted by jhausner

And I'd like to complain that I wasn't old enough to cash in on the dot net domain name bonanza that happened 10 years ago. I'd also like to complain that I wasn't able to buy a mint condition 57 Corvette for $7,000 and keep in a garage to cash in on its $170,000 worth today.

Not everybody's an owner is just an excuse.

We're not talking lucky investing here, we're talking HOUSING. HOMES. Not being an owner is an excuse for WHAT exactly?

Trust me, bub, I'm all for affordable housing, but you're "forest for the trees" here.

[DKaz]

The median family income in Vancouver was $80k a year in 2008. My family is a bit above average, $125k is upper middle class easy.

[BCPhil]

Originally Posted by mr.sandbag

Have to agree, my partner and I saved over 30k in 7 months yes, how by cutting out everything uneccessary, we make a combined 125k which is less then the medium income. it really comes down to what is your proirities are, we sold our property and then rented in a smaller place for half our old mortgage,

it would take someone in our shoes 14-18 months to save enough for 350k condo with no initial savings, as im going to help my friends do this...

it takes a desire and commitment to do it... so yes im tired of all the ranting about home prices as well, get off your couch and save you money!...

Whaaaaaaaaaaa?

Dude, $125K for a couple is actually almost double median family income in BC and Vancouver. According to StatsCan, 2008 data (before the economic collapse too) shows that $68,670 is the median income for all family types. For just couple families, the median income is $74,270 (2008) in the Vancouver metropolitan area.

Sorry to break it to you, but you're rich and don't even know it... and you are having trouble affording a home.

Plus you can't really compare your plight of having to sell your existing home to those families that are starting from scratch, at an actual median income. Maybe it is possible for you to make cuts, $125K goes a long way, but a family making a combined $50K to $60K can barely afford rent.

Anyway, it is besides the point. So what if people can scrimp and save to afford a home? Just because it is possible doesn't mean it is right. There is nothing in your statement that actually justifies the current price of homes.

Just because if you cut your standard of living and then can afford a home, does not prove or disprove whether homes are overpriced or not. Just because certain, above median income families can afford a home by making major sacrifices does not prove or disprove whether foreign Chinese speculators are driving up the price of homes or not.

[Yume-sama]

People perhaps shouldn't set a standard of living above what they can reasonably afford. Then they could afford it

"You expect me to live in SURREY?! With those... valley people?! I'm willing to sacrifice, but I'm not exactly MLK here!"

[BCPhil]

Originally Posted by jhausner

To illustrate my point of buying a HOUSE in cities where density continues to rise...

Buy a HOUSE here:



I think the difficulty would be finding a house there.

No shit eh?

Seoul (special city): population 10 million, area 605 km^2, density 17,288/km^2

Vancouver (City): population 579K, area 115km^2, density 5,335/km^2

Vancouver (metro): population 2.1 million, area 2,879 km^2, density 735/km^2

Even if you alter the numbers to take out ALR land, the numbers would be nowhere near comparable. Vancouver is not the major economic center of this nation (whose national population is 10million more than just the metro population of Seoul). Seoul has also been at it for about 2000 years, which is about 1900 years longer than Vancouver has.

Your comparison has as much validity as if I compared Vancouver to Boise, Idaho. But how about if I compare it to a similar American city, Portland. At least they are on the same continent and have almost identical populations. On Zillow.com I can find a detached house, in the City of Portland, for under $100K and there are many properties near LRT lines for under $150K.

Now, I'll admit that is not a completely fair comparison either. Vancouver is a more important city in Canada than Portland is in the USA. Portland radiates out from downtown in most directions, while Vancouver is stuck heading east only. But populations, climate, quality of life, industries and job prospects are similar. Even condo prices in the downtown core are somewhat similar. It's not a completely accurate comparison, but more accurate than comparing Vancouver, with economic capitals around the world like Seoul, Tokyo, and New York. So why are houses so affordable in Portland, compared to Vancouver?

[Porfiry]

Originally Posted by BCPhil

Anyway, it is besides the point. So what if people can scrimp and save to afford a home? Just because it is possible doesn't mean it is right.

There is no "right" or "wrong" in markets, the price is set by the buyers and sellers who are participating in the market. The only way to force prices in any direction is to change the balance of the two.

[Yume-sama]

Originally Posted by BCPhil

So why are houses so affordable in Portland, compared to Vancouver?

Why is the National average price of a home nearly 2 - 3x more in Canada ($365,000) than in the USA ($130 - $230 depending whose numbers you look at)?

[DKaz]

$125k is not rich, that'll get you a $500k mortgage (plus whatever you're putting down), but definitely in the broad upper middle class spectrum. Which means the median family in the real middle class can't afford anything more than a townhome or apartment in Metro Vancouver.

I think at about $300k a year is when you start getting into the lower spectrum of rich.

[Zassk]

Originally Posted by BCPhil

So why are houses so affordable in Portland, compared to Vancouver?

Because people want to live in Vancouver more than they want to live in Portland. That should be self-evident. This will always have a bearing on prices.

You want cheap housing, don't pick Vancouver. Take a one-way ferry or airplane to a market you can afford. This is the sort of action that led many to Vancouver in the first place - many of them were fleeing places that had already become unaffordable decades ago.

Sorry if your parents could afford Vancouver and you can't. The city doubled in size in a few decades. It stands to reason that affordability will have changed in the process. Sorry if you feel there is something fundamentally wrong with this. We can't grow our city without causing that kind of change.

There are many nice cities out there that are much cheaper. Portland, for instance. But you're not going to find a clone of Vancouver that is cheaper, because if it was truly a clone of Vancouver, then it would be equally desirable and therefore equally expensive.

Those evil foreign investors? They are a symptom, not the cause.

[WarrenC12]

I'm still not sure why buying RE is the be-all-end-all for so many people.

We rent, we save money, and invest the savings in many things other than RE, especially the tax savings vehicles (RRSP, TFSA, Cdn dividend tax credits).

People eating kraft dinner and cutting their cable TV to buy RE in this area make me laugh...

[Yume-sama]

It should't be the only egg in your basket. However, it is a more lucrative investment than something that might offer 1% a year if you're lucky. Back in the day when interest rates were high people were more likely to invest in savings bonds. Many people became multi-millionaire's investing in savings bonds when interest rates were in the high double digits. This resulted in record low prices of gold / silver, as people could purchase government bonds and earn 15%! I personally have my eggs spread out quite far, though I am no longer actively involved in the stock market (which probably is for the better). Physical metals is a good thing to get in to, even at the current price As people certainly aren't investing in paper right now, with interest rates at 0, and inflation making it a negative in the end.

To that end, real estate *is* kind of risky at the moment. Though it does tend to keep up with inflation (in value), somewhat.

If your money in the bank earns 2% that's good, you'll need it, because everything is 8 - 12% more expensive by years end Look at food prices, etc.