Canada's 'housing bubble' deemed close to bursting

[someone123]

Originally Posted by lio45

Why are we so sure that there will be always be "increasing demand" for ever-pricier SFHs? They can't keep increasing in price at a much faster rate than inflation forever, there's a mathematical impossibility there.

The argument about limited land supply in the core doesn't explain why Vancouver is different from all the other growing cities out there, and I'm not sure it's even true to begin with. Transportation improvements, brownfield rehabs, etc. effectively increase the supply of inner-city land and the most desirable areas shift around over time.

I agree that the low vacancy rates and low rents are a sign that it's not attractive to build apartments. Vancouver rental rates are at what the market can bear and it doesn't make financial sense to add more rental buildings at this price when condos are so much more valuable.

I've observed a pretty noticeable "brain drain" of university grads (with graduate and undergraduate degrees) while I've lived here. A lot of companies struggle to hire people and find space, and people who move here complain that they can only afford much smaller houses on their salaries. I don't think it's a very healthy situation, and I think that would improve a lot if real estate prices deflated somewhat.

I've also noticed that there's a bit of a "best place on earth" reality distortion bubble around here. Locals who haven't lived anywhere else tend to have a really low opinion of other parts of Canada and don't consider moving away to be attractive. In reality I think that some of them are just not very knowledgeable about the country and might have actually been happier moving away, particularly if they're struggling to find decent employment here.

[whatnext]

Originally Posted by casper

....You also have an adjustment to the expectation. On an average salary in Vancouver you should expect to be able to buy a condo, not a single family house. On a double income you might be able to afford a house. As you move into the suburbs things become more affordable however due to geography it becomes harder to make outlying suburbs work.

Why should working Vancouver families have to adjust their expectations and cram into an apartment, just so wealthy offshore interests can purchase a single family home? That makes no rational sense.

As someone123 points out, I can't think why anyone with a family or plans to start one would relocate to Vancouver unless they were getting a huge salary.

[casper]

Originally Posted by whatnext

Why should working Vancouver families have to adjust their expectations and cram into an apartment, just so wealthy offshore interests can purchase a single family home? That makes no rational sense.

As someone123 points out, I can't think why anyone with a family or plans to start one would relocate to Vancouver unless they were getting a huge salary.

The reason working family need to adjust expectation is there are fewer single family houses and an increased number of families that want to purchase them. You either (1) plan to spend more on housing, (2) plan to live far out in suburbia or (3) you make do with a condo or some other denser living arrangement.

The City of Vancouver had a population of 410,000 in 1971, it has a population of over 600,000 in 2011.

The concept of a family is also changing. Today families are "complex" the husband-wife + 2.5 kids living in the same house with the kids moving out to university at 19 is not the modern reality.

As for available land, we need to be clear if we are talking about the City of Vancouver or Metro Vancouver. The City of Vancouver is a pretty small place, there is still some pockets of industrial land (especially associated with the port) but for the most part industry has moved out to suburbia a decade or two ago.

I grew up in East Vancouver, when I was a kid, down at Grandview and Rupert there was RCA on one side of the street a steel manufacturing plant in the building that now houses the Super Store. CAE had a manufacturing facility a few blocks away on Broadway. All that land associated with the sound stages for TV/movies was industrial. Most of the area around Joyce Station was industrial. That is all gone. There were a hand full of manufacturing along the Arbutus line, that is all gone.

[Tropics]

Originally Posted by lio45

Why are we so sure that there will be always be "increasing demand" for ever-pricier SFHs? They can't keep increasing in price at a much faster rate than inflation forever, there's a mathematical impossibility there.

Well, the wealth/net worth of rich people tends to vastly outpace inflation as well. As long as population keeps increasing and the number of SFH's keep decreasing there will be more and more rich people pushing the prices of those houses up even further. SFH's near the center of a city are always going to remain exclusive and sought after and insanely expensive and they will generally keep pace with the increasing net worth of the top 1% who are buying them, not inflation.

[cornholio]

Originally Posted by Tropics

Well, the wealth/net worth of rich people tends to vastly outpace inflation as well. As long as population keeps increasing and the number of SFH's keep decreasing there will be more and more rich people pushing the prices of those houses up even further. SFH's near the center of a city are always going to remain exclusive and sought after and insanely expensive and they will generally keep pace with the increasing net worth of the top 1% who are buying them, not inflation.

Single family homes in metro Vancouver are not decreasing, they are increasing. Single family homes in the suburbs are still way over priced. There are thousands upon thousands of single family homes being built in the suburbs and there is plenty of land left to build on. Even places like Squamish or Abbotsford or Chilliwack are overpriced. Same with Victoria where there is plenty of land left to develop for the rest of this century at least. As for the municipality of Vancouver, the limited number of new single family homes coming online due to subdivisions does not justify 200% plus increases in house prices when income growth is low and population growth is low (lowest in recent memory and dropping).

People try very hard to justify the prices but none of the justifications I hear hold water. I do however understand the causes, offshore money combined with low interest rates to bait along the locals. Problem is that this is not sustainable in any way shape or form. At the end of the day people who live here and work here have to be able to support the market long term and right now as it stands they cant, the fresh offshore money injected only creates a short term illusion.

[casper]

Originally Posted by cornholio

Single family homes in metro Vancouver are not decreasing, they are increasing. Single family homes in the suburbs are still way over priced. There are thousands upon thousands of single family homes being built in the suburbs and there is plenty of land left to build on. Even places like Squamish or Abbotsford or Chilliwack are overpriced. Same with Victoria where there is plenty of land left to develop for the rest of this century at least. As for the municipality of Vancouver, the limited number of new single family homes coming online due to subdivisions does not justify 200% plus increases in house prices when income growth is low and population growth is low (lowest in recent memory and dropping).

People try very hard to justify the prices but none of the justifications I hear hold water. I do however understand the causes, offshore money combined with low interest rates to bait along the locals. Problem is that this is not sustainable in any way shape or form. At the end of the day people who live here and work here have to be able to support the market long term and right now as it stands they cant, the fresh offshore money injected only creates a short term illusion.

Comments on the supply shrinking apply to the City of Vancouver. The same can also be said for Burnaby and New West. The North Shore also does not have much land open for development.

There are artificial constraints, the agricultural land reserve locks up a large part of Richmond for example. The same holds for Abbotsford.

Completely different city. When I lived in Saskatoon it was a similar story. The city had a land bank that it would develop and release lots for resale. That controlled the supply and likely make property more expensive.

[cornholio]

Originally Posted by casper

Comments on the supply shrinking apply to the City of Vancouver. The same can also be said for Burnaby and New West. The North Shore also does not have much land open for development.

There are artificial constraints, the agricultural land reserve locks up a large part of Richmond for example. The same holds for Abbotsford.

Completely different city. When I lived in Saskatoon it was a similar story. The city had a land bank that it would develop and release lots for resale. That controlled the supply and likely make property more expensive.

But supply is not shrinking. Properties continue to be subdivided, all be it slowly. The population growth is low, job growth is low, there is nothing to justify these prices and the recent appreciation. It's not sustainable and it is only a result of offshore money and low interest rates. And of course people buying into the hype thinking they too will win the lottery if only they mortgage their entire future. It's a bubble plain and simple and it can't go on for ever. I still think imo this year will be the one where the tide begins to turn since the Canadian economy is in trouble and the dire situation is being covered up only because it's a election year, with temporary measures. All while interest rates are set to begin a steady climb south of us. A perfect storm is brewing. Just look at some of the major retailers that recently existed the Canadian market, the timing is not going to be a coincidence, they see the writing on the wall and shown their faith in the economy here by walking away.

As for the ALR you underestimate just how much land is left to develop and subdivide.

[Stryker]

Originally Posted by someone123

I've also noticed that there's a bit of a "best place on earth" reality distortion bubble around here. Locals who haven't lived anywhere else tend to have a really low opinion of other parts of Canada and don't consider moving away to be attractive. In reality I think that some of them are just not very knowledgeable about the country and might have actually been happier moving away, particularly if they're struggling to find decent employment here.

Yeah you find this everywhere in canada, even when objectives conditions in said place are absolute garbage(aka remote newfoundland)

Worst still in Vancouver is you get migrants from western areas quite a bit where geography and weather isn't as good.



Ironically I had the opposite experience while in Toronto. People assuming that the job market was much worst in newfoundland when at the time it was far better.

Reality was I like toronto for the access to multiple language speakers.


just because they knew alot of folk to went to ontario for jobs back in the 80s-90s(pre alberta boom).

[st7860]

Originally Posted by Stryker

Yeah you find this everywhere in canada, even when objectives conditions in said place are absolute garbage(aka remote newfoundland)

Worst still in Vancouver is you get migrants from western areas quite a bit where geography and weather isn't as good.



Ironically I had the opposite experience while in Toronto. People assuming that the job market was much worst in newfoundland when at the time it was far better.

Reality was I like toronto for the access to multiple language speakers.


just because they knew alot of folk to went to ontario for jobs back in the 80s-90s(pre alberta boom).

Nominee programs tend to be far easier in Eastern Canada to qualify for. Would you want to live there? (assuming you do anything besides going to work and coming home)

[st7860]

Originally Posted by casper

Comments on the supply shrinking apply to the City of Vancouver. The same can also be said for Burnaby and New West. The North Shore also does not have much land open for development.

There are artificial constraints, the agricultural land reserve locks up a large part of Richmond for example. The same holds for Abbotsford.

Completely different city. When I lived in Saskatoon it was a similar story. The city had a land bank that it would develop and release lots for resale. That controlled the supply and likely make property more expensive.

Yes. Its difficult for some people to understand that it is better to live here. When I tell people not from Canada that "trains at a stereotypical dark deserted subway station such as as the Sperling Station in Burnaby come every 6 minutes at the WORST case" people go "—? ". There are tons of things like this unequaled in the world lol.

[Stryker]

Originally Posted by st7860

Nominee programs tend to be far easier in Eastern Canada to qualify for. Would you want to live there? (assuming you do anything besides going to work and coming home)

What do you mean, my point was I wasn't moving for the job market.

[st7860]

Originally Posted by Tropics

Well, the wealth/net worth of rich people tends to vastly outpace inflation as well. As long as population keeps increasing and the number of SFH's keep decreasing there will be more and more rich people pushing the prices of those houses up even further. SFH's near the center of a city are always going to remain exclusive and sought after and insanely expensive and they will generally keep pace with the increasing net worth of the top 1% who are buying them, not inflation.

Yes. On Facebook(and other places) there's a lot of harping about OMG!! Foreigners. However foreigners tend to think Vancouver real estate makes money for them too slowly compared to what they are used to. Its rare that a foreigner will buy a home here.

I also find it hard to believe that the 30,000 or so people coming to Metro Vancouver each year are mostly living with their relatives or having roommates.

[st7860]

Originally Posted by Stryker

What do you mean, my point was I wasn't moving for the job market.

I assume you are a Canadian or at least a permanent resident.

I meant for people that don't have at least permanent residency, there are nominee programs in most provinces that allow accelerated (turbo!) processing for PR status. the BC nominee program tends to be harder to qualify for, with programs in Quebec and the east coast being easier.

Here's what I've noticed among people that are not in Canada but want to come.

there is a small quantity that like French, so of course those will apply to Quebec. An even smaller minority prefers a rural lifestyle, so they go to the Maritimes.

an average amount want an active pounding nightlife and/or care about a large salary more than anything else., those go to toronto.

the others prefer to go to Vancouver.

[Stryker]

Originally Posted by st7860

I assume you are a Canadian or at least a permanent resident.

I meant for people that don't have at least permanent residency, there are nominee programs in most provinces that allow accelerated (turbo!) processing for PR status. the BC nominee program tends to be harder to qualify for, with programs in Quebec and the east coast being easier.

Here's what I've noticed among people that are not in Canada but want to come.

there is a small quantity that like French, so of course those will apply to Quebec. An even smaller minority prefers a rural lifestyle, so they go to the Maritimes.

an average amount want an active pounding nightlife and/or care about a large salary more than anything else., those go to toronto.

the others prefer to go to Vancouver.

I still do not get your point.

Besides from all that, immigrant groups tend to prefer where they already have an established community, with the exception of Alberta.

Job opportunities don't matter near as much as where it's easy to integrate, while trying to become established.

As integration means much more for the actual job market for a particular group of people.

[Stryker]

Originally Posted by st7860

Yes. On Facebook(and other places) there's a lot of harping about OMG!! Foreigners. However foreigners tend to think Vancouver real estate makes money for them too slowly compared to what they are used to. Its rare that a foreigner will buy a home here.

I also find it hard to believe that the 30,000 or so people coming to Metro Vancouver each year are mostly living with their relatives or having roommates.

Yawn why is it chinese immigration issues are a near constant issue for vancouverites yet nothing similar can be said in toronto.

Have you ever thought about this????

[kwoldtimer]

Price of detached SFHs in the City of Toronto up 16% in March on the year, to average $1.042million. Average condo prices up by a more modest 4.3%. Prices overall were up 10%. All according to the Toronto Real Estate Board.

http://www.theglobeandmail.com/report-on...sales-activity-heats-up/article23819264/

[st7860]

Originally Posted by kwoldtimer

Price of detached SFHs in the City of Toronto up 16% in March on the year, to average $1.042million. Average condo prices up by a more modest 4.3%. Prices overall were up 10%. All according to the Toronto Real Estate Board.

http://www.theglobeandmail.com/report-on...sales-activity-heats-up/article23819264/

Lots of racially motivated comments below that article lol. Regardless, I usually don't give a flying explicit toy helicopter. Its not really good behavior when one expresses dislike for a market and product when it costs more than you can afford. Many things cost more than one can afford, not only a house.

[GreaterMontréal]

no problem in Montréal.

[kwoldtimer]

Originally Posted by GreaterMontréal

no problem in Montréal.

Last report I saw had average prices in Montreal down 5% on the year.

[GreaterMontréal]

Originally Posted by kwoldtimer

Last report I saw had average prices in Montreal down 5% on the year.

that's good news. you only need a salary of $ 70,000 to buy a house in Montreal