Canada's 'housing bubble' deemed close to bursting

[esquire]

Originally Posted by lio45

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.

Most of these laws came into effect in the 70s when the ag industry was really starting to change from a collection of mom-and-pop small time outfits into larger operations driven by national and international players. I'm no expert, but from what I know I don't think they've really worked as intended.

As you correctly point out, there is plenty of domestic capital that has bought up farmland. A lot of farmers especially in Alberta and Sask have expressed displeasure at oil-rich Alberta interests bidding up the price of farmland well beyond the prices that they can afford. In addition, there are now investment funds like these ones that promise sound annual returns while hinting at the potential jackpot that awaits if agricultural land is opened up to foreign investors.

I'm sure that if the farming lobby that pushed for these laws had their way back in the 70s, ag land ownership would have somehow been restricted to owner-occupiers. But that was untenable, so they ended up with laws that allowed Bay Street robber barons to buy up farmland, but at least kept American speculators out. Of course, this has done little to prevent consolidation of farms into larger and larger operations that are more corporate in nature with every passing decade... at best it has slowed things down just a little.

But anyway, to bring things back to housing markets, ownership restrictions would likely be a bit more successful in the GVRD area as domestic speculation is probably a small overall driver of housing price increases. Let's face it... you lock out Chinese investors, and you restore balance to the market. The problem is that introducing such legislation now could have the effect of pulling out the rug from a lot of Canadian citizens who intend to keep residing in Vancouver.... if you're a thirtysomething carrying a million dollar mortgage, how eager would you be to see laws come into effect that could knock the value of your home down by 1/3 to 1/2?

[st7860]

Originally Posted by Procrastinational

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 discriminati 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.

Wouldn't people prefer that the money comes here instead of boosting the US economy? When Canada put the immigrant investor program on hold about 2 years ago the funny thing is the US investor program suddenly started hitting its annual quotas. I wonder if that was a coincidence or connected. Prior to that time, the US program almost never hit its annual limit.

[Procrastinational]

Originally Posted by st7860

Wouldn't people prefer that the money comes here instead of boosting the US economy? When Canada put the immigrant investor program on hold about 2 years ago the funny thing is the US investor program suddenly started hitting its annual quotas. I wonder if that was a coincidence or connected. Prior to that time, the US program almost never hit its annual limit.

We really shouldn't be relying on real estate for our economic growth. The primary driver of long term economic growth is increases in technology and productivity. Building $10 million houses to sit empty contributes to neither of those. Having all of our money tied up in real estate also reduces national saving, which again, is a hinderance to economic growth.
If you want a good example of what can happen when we get too focused on real estate, take a look at what happened to the US economy from the dot com bubble bursting to the global financial crisis. Real incomes were stagnant, household debt increased, manufacturing jobs were lost, etc.

The other thing to remember is that economic growth in the US generally lifts economic growth in Canada, so if that money instead goes into the States we aren't entirely missing out. It would however cause the same problems in the States that I mentioned above.

[vanman]

Originally Posted by Northski

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.

You know the flood map in your link is set at 7m not 1m.
At 1m sea level rise there are spots west of Langley that will flood but nothing too dramatic.

[dleung]

Originally Posted by Procrastinational

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?

I agree with most of your post, but the fact remains this is still a racially-charged issue. If it were wealthy Russian oligarchs buying up the real estate while blending in with their whiteness, it wouldn't have rubbed locals the wrong way to the same extent. A huge percentage of this "foreign investment" are just locals who happen to be Chinese. Hence in the past we've seen more than a few forumers, and other disgruntled locals in the papers, who have suggested raising the criteria for citizenship/PR status to include cultural, language and other factors, which would favor immigrants from western countries. Yes we should protect our housing stock for the benefit of locals, but for some this is also the only socially-acceptable outlet left for their sometimes-subconscious xenophobia

[someone123]

Originally Posted by dleung

If it were wealthy Russian oligarchs buying up the real estate while blending in with their whiteness, it wouldn't have rubbed locals the wrong way to the same extent.

What's your basis for saying this? The warm and fuzzy feelings that all of these supposedly racist, backwards Canadians have toward Russian oligarchs? You should have at least picked the UK or something.

I still think racism is an uninteresting red herring as far as the housing market goes. If you agree that the housing market is messed up, which seems pretty likely given that the average price of a detached house in the Vancouver metropolitan area is now over $1M, it doesn't really matter if some people somewhere are racist or not.

[whatnext]

Originally Posted by 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.

In the City of Vancouver you're lucky to find any detached home under $1 million!

[whatnext]

Originally Posted by st7860

Wouldn't people prefer that the money comes here instead of boosting the US economy? When Canada put the immigrant investor program on hold about 2 years ago the funny thing is the US investor program suddenly started hitting its annual quotas. I wonder if that was a coincidence or connected. Prior to that time, the US program almost never hit its annual limit.

LOL won't somebody think of the local BMW dealers!

[Stryker]

http://www.bnn.ca/News/2015/3/10/Real-Es...-alarm-over-Canadian-housing-market.aspx


Nothing to see here just another highly influential global organization saying our housing is overpriced.

Too bad they wouldn't acknowledge they have a significant ace up our sleeve. We've got the hole world convinced this is some winter waste land, with day time highs of -15, little do they know.

[kwoldtimer]

Originally Posted by Stryker

http://www.bnn.ca/News/2015/3/10/Real-Es...-alarm-over-Canadian-housing-market.aspx


Nothing to see here just another highly influential global organization saying our housing is overpriced.

Too bad they wouldn't acknowledge they have a significant ace up our sleeve. We've got the hole world convinced this is some winter waste land, with day time highs of -15, little do they know.

Actually, the IMF report struck me because it had a lower (7% to 20%) estimate of the amount of over-valuation than some studies and because it talked about conditions for a "soft landing" rather than a bursting bubble.

[st7860]

Originally Posted by Procrastinational

We really shouldn't be relying on real estate for our economic growth. The primary driver of long term economic growth is increases in technology and productivity. Building $10 million houses to sit empty contributes to neither of those. Having all of our money tied up in real estate also reduces national saving, which again, is a hinderance to economic growth.
If you want a good example of what can happen when we get too focused on real estate, take a look at what happened to the US economy from the dot com bubble bursting to the global financial crisis. Real incomes were stagnant, household debt increased, manufacturing jobs were lost, etc.

The other thing to remember is that economic growth in the US generally lifts economic growth in Canada, so if that money instead goes into the States we aren't entirely missing out. It would however cause the same problems in the States that I mentioned above.

Makes sense but well, a city needs industry as part of its fundamentals right? Vancouver has mostly service and very little industry left. So... many people say, real estate, weed, and immigrants are Vancouver's primary industries lol -- ie: without real estate, Vancouver would be just an average place.

[st7860]

Originally Posted by whatnext

LOL won't somebody think of the local BMW dealers!

Many people are surprised when I tell them a few years ago BMW's top female salesperson worldwide was based in Richmond, BC!!.

[st7860]

Originally Posted by dleung

I agree with most of your post, but the fact remains this is still a racially-charged issue. If it were wealthy Russian oligarchs buying up the real estate while blending in with their whiteness, it wouldn't have rubbed locals the wrong way to the same extent. A huge percentage of this "foreign investment" are just locals who happen to be Chinese. Hence in the past we've seen more than a few forumers, and other disgruntled locals in the papers, who have suggested raising the criteria for citizenship/PR status to include cultural, language and other factors, which would favor immigrants from western countries. Yes we should protect our housing stock for the benefit of locals, but for some this is also the only socially-acceptable outlet left for their sometimes-subconscious xenophobia

Yes, from what I heard, not that many true foreign(non immigrant) Chinese like buying in Canada anyway. Non immigrant Chinese prefer buying in places like Seattle, New york, and(a little enclave that you wouldn't expect) California.

[cornholio]

Originally Posted by dleung

I agree with most of your post, but the fact remains this is still a racially-charged issue. If it were wealthy Russian oligarchs buying up the real estate while blending in with their whiteness, it wouldn't have rubbed locals the wrong way to the same extent. A huge percentage of this "foreign investment" are just locals who happen to be Chinese. Hence in the past we've seen more than a few forumers, and other disgruntled locals in the papers, who have suggested raising the criteria for citizenship/PR status to include cultural, language and other factors, which would favor immigrants from western countries. Yes we should protect our housing stock for the benefit of locals, but for some this is also the only socially-acceptable outlet left for their sometimes-subconscious xenophobia

I am sorry but I don't see any whiteness any where around where I live (Collingwood / Killarney area). I do know that western immigration is at a real disadvantage and as a result non existent (not that it matter anymore). Really though I have no idea what you are talking about in your post. Are you trying to shut down the discussion? I mean the fact of the matter is that Vancouver has gone through a rapid transformation, and not a good one by all accounts (say my Chinese colleagues who have lived here for 30+ years). The city is broken as a result imo and what you see now is a generation of people hitting their late 20's early 30's who dont have families that can help them out (often because they them selves were leveraged in to the market) starting to get to a age where the time to start a family is rapidly running out and they are getting to the point they have to leave Vancouver. Its really just starting now, skilled people in their late 20's early 30's are starting to vacate the city, and/or build up some nasty resentment. This is why this issue needs to be dealt with.

[Stryker]

Originally Posted by cornholio

(say my Chinese colleagues who have lived here for 30+ years). The city is broken as a result imo and what you see now is a generation of people hitting their late 20's early 30's who dont have families that can help them out (often because they them selves were leveraged in to the market) starting to get to a age where the time to start a family is rapidly running out and they are getting to the point they have to leave Vancouver. Its really just starting now, skilled people in their late 20's early 30's are starting to vacate the city, and/or build up some nasty resentment. This is why this issue needs to be dealt with.

Funny enough my Chinese friends describe hong kong to be a lot like Vancouver. Ironically, this is why they choose to live in newfoundland.

But yeah don't expect anything to be done.

It'll take 20 years to convince people this isn't a racial issue.

Another 20 to suggest some solution.

I'll shrug it off, hopefully when the whole thing implodes Vancouver might become a descent place to live again.

[SignalHillHiker]

There's a CMHC conference in St. John's right now.

A couple of tidbits:

Housing starts for SFD at lowest level since 2001. They represent about 2/3 of the market here province wide.

10% drop in starts and no change in prices predicted for St. John's in 2015.

[st7860]

Originally Posted by SignalHillHiker

There's a CMHC conference in St. John's right now.

A couple of tidbits:

Housing starts for SFD at lowest level since 2001. They represent about 2/3 of the market here province wide.

10% drop in starts and no change in prices predicted for St. John's in 2015.

The eastern provinces generally have the easiest PNP programs because they want to attract more residents. Quebec is sort of in the middle in terms of how difficult/easy their PNP is.

[st7860]

Originally Posted by Stryker

Funny enough my Chinese friends describe hong kong to be a lot like Vancouver. Ironically, this is why they choose to live in newfoundland.

But yeah don't expect anything to be done.

It'll take 20 years to convince people this isn't a racial issue.

Another 20 to suggest some solution.

I'll shrug it off, hopefully when the whole thing implodes Vancouver might become a descent place to live again.

In Vancouver it is a racial issue because if you go after sellers then you're going after Canadians that got lucky and sold out. And if you go after the CMHC you're going after affordability for lower income Canadians' ability to buy a home thus people tend to go after foreigners instead.

[st7860]

Originally Posted by cornholio

I am sorry but I don't see any whiteness any where around where I live (Collingwood / Killarney area). I do know that western immigration is at a real disadvantage and as a result non existent (not that it matter anymore). Really though I have no idea what you are talking about in your post. Are you trying to shut down the discussion? I mean the fact of the matter is that Vancouver has gone through a rapid transformation, and not a good one by all accounts (say my Chinese colleagues who have lived here for 30+ years). The city is broken as a result imo and what you see now is a generation of people hitting their late 20's early 30's who dont have families that can help them out (often because they them selves were leveraged in to the market) starting to get to a age where the time to start a family is rapidly running out and they are getting to the point they have to leave Vancouver. Its really just starting now, skilled people in their late 20's early 30's are starting to vacate the city, and/or build up some nasty resentment. This is why this issue needs to be dealt with.

Its common that Chinese families that have been in Vancouver over 20 years get upset that other people have more money than them. And yes, the Collingwood area is mostly filipino, i thought everyone knew that already. I have a few school classmates that went to Alberta to raise their family. Sure, but I wouldn't want to live there. Money isn't every thing.

[ozonemania]

At least lately, the discussion is largely focussed on the demand side of the equation. I think Vancouver is trying hard to work the supply side... but can we build our way out of this problem?

Vancouver may just have to accept that the norm for living is condo living, not SFH. This has never been the Canadian way, but Vancouver may be the first Canadian city that will have to make that change. There is still so much resistance to densification outside the core areas.