Canada's 'housing bubble' deemed close to bursting

[ssiguy]

No matter what you think of housing, CMHC is NOT the organization to quote.

CMHC is a branch of the government and has a vested interest in making sure that prices remain high and people feel secure about their prospects in the real estate market. CMHC has a truly whopping $550,000,000,000 in outstanding mortgages on it's books and anything that may slow the market reflects on them.

Its like asking a real estate agent if now is a good time to buy..........it's always a good time to buy when they have a vested interest in saying yes.

As for this "Vancouver has no land" that is crap. The city is sprawling endlessly into the Valley and, contrary to what Vancouverites mike like to espouse, Vancouver is NOT a high density city. The core area is but outside of that nearly all of the city is zoned for SFH. Vancouver city isn't near as heavily populated as even Toronto little alone other world cities.

[st7860]

CMHC is the organization to quote as is a Canadian Government agency and is not a real estate broker.

Vancouver has no land. Rude words (crap) won't change anything. Vancouver is more populated than Toronto in a small space with many people squeezed into growing density. Outside of the core there is plenty of land that isn't for single family homes.

http://en.wikipedia.org/wiki/Agricultural_Land_Reserve_%28British_Columbia%29

[lio45]

Originally Posted by ssiguy

No matter what you think of housing, CMHC is NOT the organization to quote.

In other news, Imperial Tobacco just made a statement that apparently smoking actually isn't that bad for you, according to some new studies.

[st7860]

Originally Posted by lio45

In other news, Imperial Tobacco just made a statement that apparently smoking actually isn't that bad for you, according to some new studies.

The only news statements about that company are regarding their stock price targets.

[st7860]

http://www.cbc.ca/news/canada/british-co...d-up-by-foreign-buyers-1.3063073?cmp=rss
According to Westbank, the buyers are not just from Asia, but the U.S. and Europe too.

[ssiguy]

More great news from "egalitarian" Vancouver.

Article in todays Sun that new downtown developments are now to incorporate some social housing into the condo developments in order to get higher density allocations. Seems like a good plan but the developers say they can't sell those units unless they are segregated. That means that there will be two different entries for the condo side and the social housing side.

Different entrances, different lobbies, even different elevators lest the rich condo owners have to actually share an elevator with the plebiens who need social housing in the most expensive city on the continent. Total class separation lest the rich condo owner has to say good morning to a poorer citizen or, god forbid, the wealthy having to touch an elevator button that a poor person may have touched.

The City has stated that we better get use to it as developers are demanding it and god knows what the developers want the developers get. The City of course has the ability to just say No to the developers and say that if you want higher density the entrances must be the same but developers needs come first, second, and third. This is made all the more offensive by the fact that many of these condo units will be bought by foreigners and sit empty a la Burrard Waterfront.

I remember on this forum having a discussion about how this is common practice in Hong Kong and how offended everyone was but if it's good for Hong Kong then its good for Vancouver.I just hope the condo developer has an antibacterial dispenser at the front condo entry in case on the social housing people accidentally go in the condo entrance so they can wash the cleans their hands of the untouchables.

[st7860]

Home ownership is not a right in Canada.

Medical care is sort of a right in Canada. However, many people don't realize that there is already a two tier system of medical care. Certain groups such as hockey players, politicians, Worksafe BC clients and so on get instant medical treatment while average citizens have long waiting periods.

[niwell]

Originally Posted by st7860

Vancouver is more populated than Toronto in a small space with many people squeezed into growing density. Outside of the core there is plenty of land that isn't for single family homes.

That's not really true. Toronto's overall urban area is more dense than Vancouver, has higher density peaks, and a larger area of high density. Much as one would expect for an urban area almost three times the size.

The only metric where Vancouver comes out as more dense is within city limits, which in this context is kind of meaningless.

[cornholio]

Nice, its official and my other family member who I shared a house with in Killarney sold for 1.2 million. The last family member with a house in New Westminster is listing theirs next week and that's it. Bye bye Vancouver. The market is fucked. Being involved in two sales and seeing exactly who is buying and for how much, AND seeing the histories of neighboring properties that sold around the same time I can say only one thing. This is going to hurt when the market collapses. Actually will move some of the money (about 500k) back in to a acreage out in Maple Ridge or Mission but not as a investment, just a place to live in the region for a bit a longer. The goal of everyone is to get the fuck out of this market while they can and spread the money. (over 900k profit in 15 years for this one)

As for me I now rent a apartment next to the fraser river, IF I was stupid enough to buy a unit where I live I would pay a extra $650 a month (approx) to own, yet over te next 5 years I would only pay roughly $25,000 towards principal. Over that span that $650 represents $39,000, compounded and risk free. Of course that's assuming the property does not appreciate, which it wont, in fact its more likely it will further depreciate. So thats about as much sense it makes to even buy a condo in this market. Freehold detached homes are no different. Simply a epic bubble. (by the way I personally as of this month own property, but not on this continent...its where I plan to retire and take advantage of better weather and healthcare).

[st7860]

When you rent you're still paying your landlords property taxes, mortgage, and interest. Rudeness and obscenities won't change anything. Of course you will pay more to own when you have a high ratio down payment.

[cornholio]

Originally Posted by st7860

There isn't a bubble. When you rent you're still paying your landlords property taxes, mortgage, and interest. Rudeness and obscenities won't change anything. Of course you will pay more to own when you have a high ratio down payment.

You know you keep saying that but the problem is I have a brain and a calculator. Like I said for me to buy I would lose a minimum of $14,000 in equity over 5 years. Minimum. And probably allot more as the prices would further depreciate and I would have a hard time re selling it for what I bought it for, and lets not even start on the costs to sell (taxes and fees). Single family homes are no different. Certainly my family benefited though so far to the tune of 1.386 million cash.

It is a bubble and nothing you say will change the fact. Anyone who invests their entire life savings in property in Vancouver is nuts. Unless of course money is not a issue.

[st7860]

The calculator isn't that good then as your monthly payments will always be less than rent unless you have a low down payment(high ratio mortgage) thus you're paying your landlords mortgage and taxes. Single family homes are different as night and day. It isn't a bubble and what i said changed it. Anyone who invests their life savings in a property in Vancouver is doing the right thing as its the only way an average citizen could get a tax free capital gain without a registered instrument.

[cornholio]

Originally Posted by st7860

The calculator isn't that good then as your monthly payments will always be less than rent unless you have a low down payment(high ratio mortgage) thus you're paying your landlords mortgage and taxes. Single family homes are different as night and day. It isn't a bubble and what i said changed it. Anyone who invests their life savings in a property in Vancouver is doing the right thing as its the only way an average citizen could get a tax free capital gain without a registered instrument.

I live in a professionally managed rental tower. I told you again that I would lose 10's of thousands of dollars in equity over the next 5 years if I bought next to me in a market tower. I am not against buying property don't worry, just not in Vancouver. I am a dual national and with my SO cover 3 nationalities (along with the EU). The market here is messed up. Stop to tell me I would make money when I dont even have to do complicated math to know that is not true. Like I said a simple calculator will tell you right away that you would lose huge amounts of money. And that is ignoring the future price depreciation's. Its a classic bubble, and it has gotten so bloated now that you can identify it with a calculator and 5 seconds of time. Like I said earlier to buy I would pay about $650 more per month (mortgage, taxes and strata fees) then I do now, yet I would only put $400 per month towards principal. Of course I would also part with lots of my own money which is invested else where, that makes it even worse.

[st7860]

There you go. You live in a below market rental building, and people rarely build those as the profit isn't enough. With a decent non CMHC style down payment of course market rent will be higher than your mortgage. Do any of those nationalities that you can access allow you to buy a property, live in it for a year, and sell it tax free no matter how much the gain was? The US allows that a bit, but there is a fixed limit per property.

[cornholio]

Originally Posted by st7860

There you go. You live in a below market rental building, and people rarely build those as the profit isn't enough. With a decent non CMHC style down payment of course market rent will be higher than your mortgage. Do any of those nationalities that you can access allow you to buy a property, live in it for a year, and sell it tax free no matter how much the gain was? The US allows that a bit, but there is a fixed limit per property.

No I live in a market rental building run and owned by Concert properties (its actually temporary anyways since I will in all probability share what ever acreage gets bought out in the burbs later this year or next). For Brazil, yes, for the EU there are restrictions in most countries (such as extra taxes if you sell within 5 years for example, etc., various measures)

Once again, I already told you that I have a brain and a calculator. I WOULD lose money by buying, lose my hard earned money, nothing you say can change that reality. Lets not even talk about inflation and lost opportunities to invest it elsewhere. I already told you I own a house, and sure that house will appreciate rapidly over the next 10-20 years because its in a un mature market, but the main reason I own it is because I will probably retire to it.

Two houses sold within a month, one for 480k over purchase price late last decade, the other for over 900k over purchase price last decade. As I was involved in both sales I got to see all the data in regards to other sales in the area, and the histories. Look again, the Vancouver market is in a bubble and it will collapse at some point in the future. I feel sorry for anyone who is entering it now and over leveraging them selves.

[st7860]

How could you have a loss if you buy an apartment next door with a conventional down payment of at least 25% and a typical interest rate of 3.0? When did the Vancouver rental market become so loose with regards to having a large number of vacanies?

[cornholio]

Originally Posted by st7860

How could you have a loss if you buy an apartment next door with a conventional down payment of at least 25% and a typical interest rate of 3.0? When did the Vancouver rental market become so loose with regards to having a large number of vacanies?

There are plenty of vacancies here, I don't see a single issue. I pay $1045 per month for a concrete tower with fraser river views. To buy next door in a old development I would pay about 300k for the same, about 350k for the same in the new developments east Fraser lands. 25% is 75k to 87k sunk. The mortgage would be about $1045, same as I pay plus strata fees and taxes ($300 per month roughly). So over 5 years I would pay back 31k in principal, while losing 300*12*5 $18,000 in payments, and losing all opportunities with the 75k (which I would have gotten nearly 10% returns on) so about $35,000. So I am already down with your formula by $22,000 in cash by buying.

What you are suggesting is for me to lose 22k before even factoring in the fact I would not be able to sell it for what I bought it for, I would lose tons of money if I tried to sell a condo I buy next to me in 5 years. on the sale (possibly in the neighborhood of 50k would be my guess)

It is absolutely a bad investment.

*all my calculations are quick, its not important to be exact when its clear we are talking about losses in the 10's of thousands of dollars. Real actual losses. Now had the same property been priced at 200k instead of 300k, then I would begin to consider it. Until then I am fine renting in a beautiful concrete tower and investing my money else where. I am financially better of, much better of for it. People who get in to the market right now are nuts. Your advice is very poor.

[st7860]

You're using complicated math and adding numbers like $35,000 which do not contribute to the purchase of an apartment

You didn't include the 60 months of rent that would have gone into your own place either.

[theman23]

Originally Posted by st7860

CMHC is the organization to quote as is a Canadian Government agency and is not a real estate broker.

Vancouver has no land. Rude words (crap) won't change anything. Vancouver is more populated than Toronto in a small space with many people squeezed into growing density. Outside of the core there is plenty of land that isn't for single family homes.

http://en.wikipedia.org/wiki/Agricultural_Land_Reserve_%28British_Columbia%29

Uh....what?

[cornholio]

Originally Posted by st7860

You're using complicated math and adding numbers like $35,000 which do not contribute to the purchase of an apartment

You didn't include the 60 months of rent that would have gone into your own place either.

Of course I included rent. I told you I rent for $1045, that is the market rate in this particular area. It just so happens that mortgage payments on 225k at 3% (300k minus 75k) are $1065, so about the same. Basically the rent would cover the mortgage. BUT there are strata fees and taxes that would equal about $300 more per month that the rent would not cover. Those are real loses. I would spend $300 more per month then I could rent it for. Over 5 years that's $18,000 ignoring interest. Over 5 years I would only pay $31,000 towards the principal. So now 31k minus 18k is only 13k return on a 75k investment (the down payment). That's a bad fucking investment considering I cant sell the place without taking a huge loss and I cant realize the meager gains without selling it. The 35,000 I mentioned earlier is what I would earn had I invested that 75k else where over 5 years. 35k lost opportunity minus 13k is 22k, 22,000 in losses by buying property before even factoring in the fact that I cant sell it in 5 years without taking a big loss. It would cost roughly 20k to sell it (taxes and fees), so just to break even the property would have to appreciate and sell for at-least 20k more in 5 years. The only way I could earn the same return on my investment I would see by not buying would be if the property appreciated at 3% a year over 5 years. It will not appreciate by 3% a year over the next 5 years, that is a promise. This all ignoring inflation, rule changes and other market forces, debt obligations etc. It gets worse if you dig further.