Canada's 'housing bubble' deemed close to bursting

[ssiguy]

Article in Vancouver Sun this weekend about the shocking rate of how Vancouver is being hollowed out and how communities are being completely levelled and lost their historic charm.

A staggering 6700 single family homes have been torn down in the last 9 years almost all replaced with more SFH. This of course doesn't include the thousands that have been torn down in the previous 15 in the first wave of Hong Kong "handover". A new one is an old historic house made by one of Vancouver's most iconic builders. Beautiful spiral tarot and old styled thatched roof in a pleasant area of the Westside. A small lot house and it just sold for $3 million and was immediately torn down.

Remember this is only the CITY of Vancouver not the Metro area. Imagine in the old city of Toronto having 6700 just in the last 10 years. The entire inner city would be laid waste. Imagine Toronto losing Forest Hill, Riverdale, Cabbagetown, Parkdale, and replaced with ugly stucco monster houses that go to the lot line with all the trees torn down with it. What a dreary and uninteresting place it would be..........a Don Mills in the those neighbourhoods. This of course is made worse by the fact that many sit empty.

A city looses it's history, sense of community, sense of permanence, and attachment of the people to the city itself when whole neighbourhoods are considered nothing but monster houses that haven't been built yet.

[st7860]

I prefer to not be a hater. Let people buy them up. It keeps taxes lower for everyone else.

[eternallyme]

Have people or jobs moved to the Interior, or other provinces (probably Alberta) as a result of the exorbitant costs of living in the Lower Mainland?

[esquire]

Originally Posted by st7860

Its good that people in Canada aren't as discriminatory as those in Australia

Good point. It is very important to keep putting up with declining living conditions because there is absolutely nothing worse than having people accuse you of being discriminatory!

Hey, did you know that non-Canadians generally can't own farmland on the prairies? What are we going to do about this blatant discrimination and RACISM?

[lio45]

Originally Posted by ssiguy

Article in Vancouver Sun this weekend about the shocking rate of how Vancouver is being hollowed out and how communities are being completely levelled and lost their historic charm.

A staggering 6700 single family homes have been torn down in the last 9 years almost all replaced with more SFH. This of course doesn't include the thousands that have been torn down in the previous 15 in the first wave of Hong Kong "handover". A new one is an old historic house made by one of Vancouver's most iconic builders. Beautiful spiral tarot and old styled thatched roof in a pleasant area of the Westside. A small lot house and it just sold for $3 million and was immediately torn down.

Remember this is only the CITY of Vancouver not the Metro area. Imagine in the old city of Toronto having 6700 just in the last 10 years. The entire inner city would be laid waste. Imagine Toronto losing Forest Hill, Riverdale, Cabbagetown, Parkdale, and replaced with ugly stucco monster houses that go to the lot line with all the trees torn down with it. What a dreary and uninteresting place it would be..........a Don Mills in the those neighbourhoods. This of course is made worse by the fact that many sit empty.

A city looses it's history, sense of community, sense of permanence, and attachment of the people to the city itself when whole neighbourhoods are considered nothing but monster houses that haven't been built yet.

That's one more factor that has me thinking that Vancouver real estate is likely a really bad investment in the long run.

Overpaying in a place that has at least some special cachet (usually historical, so bound to only get better as the decades pass) can be kinda justified...

(for example, overpaying for something that's within the city walls in the core of Old Quebec)

[lio45]

Originally Posted by esquire

Good point. It is very important to keep putting up with declining living conditions because there is absolutely nothing worse than having people accuse you of being discriminatory!

Hey, did you know that non-Canadians generally can't own farmland on the prairies? What are we going to do about this blatant discrimination and RACISM?

Exactly... distinguishing from a legal standpoint between non-Canadians and Canadians isn't "discrimination" or "racism". All countries do it.

An Australian citizen who's 100% ethnically Chinese is not going to be discriminated against.

[esquire]

Originally Posted by lio45

Exactly... distinguishing from a legal standpoint between non-Canadians and Canadians isn't "discrimination" or "racism". All countries do it.

An Australian citizen who's 100% ethnically Chinese is not going to be discriminated against.

Farmland ownership restrictions came into place because of concerns over foreign owners snapping it all up and rendering prairie farmers as basically little more than sharecroppers. Of course, because this involved Americans as the likely ownership threat, race never entered into the equation.

In this case, accusations of racism, racial discrimination and bigotry creep up whenever ownership restrictions are discussed in the context of real estate in BC's Lower Mainland. Come on. To that I say that the GVRD has more than sufficiently demonstrated that it is a fully tolerant, accepting and pluralist place. It has nothing to prove in that regard...these are two totally separate issues.

[kwoldtimer]

Originally Posted by lio45

That's one more factor that has me thinking that Vancouver real estate is likely a really bad investment in the long run.

Overpaying in a place that has at least some special cachet (usually historical, so bound to only get better as the decades pass) can be kinda justified...

(for example, overpaying for something that's within the city walls in the core of Old Quebec)

Vancouver has no "cachet"? You're just asking for it, lio!

[lio45]

Originally Posted by kwoldtimer

Vancouver has no "cachet"? You're just asking for it, lio!

Read the post I was replying to.

I'm familiar with Québec real estate within the walled city, it's pricey-ish (cap rates ~6%-7%) but it can still be a decent investment... although only thanks to the guarantee that the rest of the core-within-walls won't be messed with too much. If the neighborhood could possibly get turned into a sea of pink stucco monsters over time, the exact same building would IMO stop being a decent long term investment.

[kwoldtimer]

Originally Posted by lio45

Read the post I was replying to.

I'm familiar with Québec real estate within the walled city, it's pricey-ish (cap rates ~6%-7%) but it can still be a decent investment... although only thanks to the guarantee that the rest of the core-within-walls won't be messed with too much. If the neighborhood could possibly get turned into a sea of pink stucco monsters over time, the exact same building would IMO stop being a decent long term investment.

OK. I assume that "within the walls" also benefits tremendously from the fact that there's only so much within the walls to go around. A bit like SFH in Toronto.

[lio45]

Originally Posted by kwoldtimer

OK. I assume that "within the walls" also benefits tremendously from the fact that there's only so much within the walls to go around.

But if the area didn't _also_ have extra cachet no one would pay higher rents to be there over areas that are just as central and equally close to the Parliament buildings (like for example the St-Jean neighborhood).

[someone123]

Originally Posted by lio45

Exactly... distinguishing from a legal standpoint between non-Canadians and Canadians isn't "discrimination" or "racism". All countries do it.

An Australian citizen who's 100% ethnically Chinese is not going to be discriminated against.

Similarly, Vancouver has a large local Asian population. Relatively few people here have any problem with immigrants who move here, get jobs, and then want to purchase property, although it's also reasonable to have a debate about how much immigration is sustainable. It's the investment trading of housing and absenteeism that is considered harmful. I have never heard anybody say that people of Chinese ancestry shouldn't be allowed to buy property. It's a red herring.

I'm not sure the business class immigrants were ever a net win for the city, although it's hard to say. Supposedly a common game plan is to retire here after working and investing in business overseas. Meanwhile we pay for the subsidized medical care, subsidized tuition for the kids with PR status, etc. The tax revenues from the empty houses are pretty insubstantial compared to the opportunity cost to having some of the best property in the city essentially lie fallow rather than providing housing for people who participate fully in the local economy. I think the people who sell houses to investment buyers get a personal windfall, and their lobbying efforts are what keeps this going, but I don't think the larger phenomenon is great for Vancouver or for Canada.

[lio45]

Originally Posted by esquire

Farmland ownership restrictions came into place because of concerns over foreign owners snapping it all up and rendering prairie farmers as basically little more than sharecroppers. Of course, because this involved Americans as the likely ownership threat, race never entered into the equation.

Still doesn't prevent non-local people from snapping up land as a long term investment and leasing it to the locals afterwards.

Out of curiosity, did the policy work as planned?

I personally think that if the land is not in the hands of an owner-occupier any more, it's irrelevant whether he's from out East or from south of the 49th or anywhere else. For example, I've been looking at agricultural land as a passive investment myself, and actually ended up two years ago buying pieces of ex-farmland (now forested, and therefore subject to a super low taxation category) instead. Which could be reverted to farmland eventually, if desired. From the point of view of the Manitoba gov't, I might as well be a foreign investor.

[lio45]

Originally Posted by someone123

Similarly, Vancouver has a large local Asian population. Relatively few people here have any problem with immigrants who move here, get jobs, and then want to purchase property, although it's also reasonable to have a debate about how much immigration is sustainable. It's the investment trading of housing and absenteeism that is considered harmful. I have never heard anybody say that people of Chinese ancestry shouldn't be allowed to buy property. It's a red herring.

I'm not sure the business class immigrants were ever a net win for the city, although it's hard to say. Supposedly a common game plan is to retire here after working and investing in business overseas. Meanwhile we pay for the subsidized medical care, subsidized tuition for the kids with PR status, etc. The tax revenues from the empty houses are pretty insubstantial compared to the opportunity cost to having some of the best property in the city essentially lie fallow rather than providing housing for people who participate fully in the local economy. I think the people who sell houses to investment buyers get a personal windfall, and their lobbying efforts are what keeps this going, but I don't think the larger phenomenon is great for Vancouver or for Canada.

It seems that you're agreeing with ssiguy on all counts (or nearly).

I also don't think the foreign-driven overvaluation of properties in Van is a good thing at all, except of course for anyone who already happened to own property a while ago -- then it's good, but only on a personal, selfish basis.

[st7860]

I'll try to use easier words. Australia is well known for being one of the most infamous western countries with formalized discrimination. The US and the UK have some regional issues but nothing as a nation though.

[someone123]

Originally Posted by lio45

It seems that you're agreeing with ssiguy on all counts (or nearly).

I also don't think the foreign-driven overvaluation of properties in Van is a good thing at all, except of course for anyone who already happened to own property a while ago -- then it's good, but only on a personal, selfish basis.

I agree that the investment seems to have been handled poorly, because it's resulted in inflated housing prices and has created a have-and-have-not type situation where anybody who happened to own a house in Vancouver before, say, 2000 is now a millionaire and those who don't own property are at a huge disadvantage. I'm not sure as far as prescriptions for fixing the situation, and I don't always agree with ssiguy's negative comments about the city. Maybe I'm just too young, but I don't pine for the days when Kitsilano was full of hippies and VW vans.

I think that trade with Asia is a big part of what makes Vancouver interesting and a lot has survived here despite the inflated housing prices because people like the city. I also believe pretty firmly that Vancouver's much more cosmopolitan and interesting than it was 20 or 30 years ago. It would be better if housing were cheaper though.

[Procrastinational]

Originally Posted by st7860

I'll try to use easier words. Australia is well known for being one of the most infamous western countries with formalized discrimination. The US and the UK have some regional issues but nothing as a nation though.

Yes Australia has a history of racism. The White Australia being a rather infamous example. That being said, limiting foreign ownership means that any Australian citizen of ANY ethnic background is able to buy whatever property they like. It's not a racist policy. It's a policy that puts Australian citizens/permanent residents first. Which I 100% agree with. The Canadian government's priority should be the wellbeing of citizens of Canada (this includes many ethnic Chinese btw). If by putting Canadians first makes the Canadian government guilty of discrimination, perhaps that means that some discrimination is justifiable. Anyone ever heard of positive discrimination?

Foreign investment is obviously needed to some extent, but if foreign investment in housing is making the market completely unaffordable to locals, I absolutely think the government should intervene. Overinflated property values make everyone's property taxes go up. So anyone who plans to live in their home for the long term also benefits.

Vancouver also has geographical constraints, so having a fairly significant number of properties staying vacant, and purely functioning as a safe place for foreigners to store their money is a massive waste of space and resources.

[Northski]

Originally Posted by vanman

^ You say that as if its some sort of mystery.

The Agricultural Land Reserve in BC was set up in the early 70s to protect fertile land from development.

Look at flood maps http://flood.firetree.net/ for Vancouver, a 1m sea level will put most of the ALR that is West of Langley below sea level. A huge part of the ALR west of Langley has more to do with sea level rise, flooding, and liquefaction during an earthquake.

[SignalHillHiker]

There is an article in today's The Telegam that notes all of the 10 most expensive homes currently for sale in the city are over $1 million. That's unusual for us.

Some are historic - like the Waterford Manor, and a suite in the Benevolent Irish Society condo building. Others are just large plots of rural land near the city.

[Stryker]

Originally Posted by lio45

Exactly... distinguishing from a legal standpoint between non-Canadians and Canadians isn't "discrimination" or "racism". All countries do it.

An Australian citizen who's 100% ethnically Chinese is not going to be discriminated against.

What's more frustrating, is this isn't even an international issue, it's an issue limited to people funneling corruption money out of the PRC.

It's not simply a matter that these people are rich is that they have no actual attachment to the money.

To call it racist is ironic, because you'd have to exceptionally ignorant of problems of people living in china, to not understand how much corruption is a problem.