Canada's 'housing bubble' deemed close to bursting

[hipster duck]

Originally Posted by blueandgoldguy

Ssiguy, can you tell me where and in what type of home the typical young professional couple/family live in in the greater Vancouver area - condos? Houses? Renting basement suites? Square footage? How far from downtown? I'm thinking of those who are making reasonable salaries in the early to early/mid-stages of their career...say combined income of 100,000 - 125,000.

Offhand, i remember the last time I was in Vancouver (9 years ago) I saw advertisements for new condos starting at 300 or 350,000. I would think those would have been pretty small and I can only imagine how expensive they would be nowadays.

Okay, this is entirely anecdotal, because no good evidence exists on this and nobody's researching it either.

But my impression as a Vancouverite who studies housing issues is that:

1. Many young professionals in Vancouver are actually Vancouver natives (i.e. born and raised in Vancouver). Many of them who have bought homes of various types and sizes were able to do so thanks to wealth transfers from their parents (who owned homes a long time ago). This is especially prominent in the Chinese community - which is not the same as foreign Chinese - because it is a long-standing cultural tradition that you help your children financially into adulthood and they, in turn, take you in when they are middle-aged and look after you at the end of your life.

2. Young professionals who don't have parental help either rent in a non-appreciating rental market or buy homes within a non-appreciating small condo market or find homes in a suburban municipality. Given that Vancouv er has one of the lowest proportions of jobs in the central city, and arguably one of the best rapid transit systems in North America, this is not as bad as it seems. A larger proportion of Vancouverites with a taste for urban living are willing to settle in a place like New Westminster or Port Moody than, say, Torontonians with a taste for urban living are willing to settle in Mississauga or Brampton.

[Berklon]

Originally Posted by st7860

https://www.google.com/#q=cmhc+wage+growth+vancouver+low+risk
"Low Risk — Despite high Vancouver home prices, demand for housing across the price spectrum is supported by a growing population and growth in personal disposable income. "

The "growth in personal disposable income" comes nowhere close to keeping up with the rise in home prices. As already mentioned, the average income in Vancouver is less than a few cities in Canada - while their home prices are insanely higher. It's no coincidence the personal debt load in Canada is at it's highest - breaking records every year... and that includes Vancouver.

Vancouver is NOT an economic powerhouse - it's housing prices are so high because of a combination of speculation, very low interest rates, Chinese parking their money and high debt.

[st7860]

http://www.canadianbusiness.com/lists-an...bourhoods/highest-household-income-2014/
Vancouver is #2

[st7860]

Originally Posted by hipster duck

Okay, this is entirely anecdotal, because no good evidence exists on this and nobody's researching it either.

But my impression as a Vancouverite who studies housing issues is that:

1. Many young professionals in Vancouver are actually Vancouver natives (i.e. born and raised in Vancouver). Many of them who have bought homes of various types and sizes were able to do so thanks to wealth transfers from their parents (who owned homes a long time ago). This is especially prominent in the Chinese community - which is not the same as foreign Chinese - because it is a long-standing cultural tradition that you help your children financially into adulthood and they, in turn, take you in when they are middle-aged and look after you at the end of your life.

2. Young professionals who don't have parental help either rent in a non-appreciating rental market or buy homes within a non-appreciating small condo market or find homes in a suburban municipality. Given that Vancouv er has one of the lowest proportions of jobs in the central city, and arguably one of the best rapid transit systems in North America, this is not as bad as it seems. A larger proportion of Vancouverites with a taste for urban living are willing to settle in a place like New Westminster or Port Moody than, say, Torontonians with a taste for urban living are willing to settle in Mississauga or Brampton.

Chinese whether or not they are foreign have that long standing cultural tradition of helping their kids into adulthood.

A young person does not necessarily need to live in New Westminster. He or she could live in Vancouver, Richmond, or Burnaby, and still find an affordable place to live. For individuals that have stayed in not for profit housing, Vancity will lend the 20% down payment on a mortgage of up to $300,000. Other people without that status but who want to have a lower monthly payment can get a mortgage with a 35 year amortization.


There are plenty of affordable units in Metro Vancouver.

2 bedrooms, with air conditioning.
# 713 989 NELSON ST, Downtown, Vancouver West, $317,500.00

3 bedrooms in a quiet area - near k12 schools and transit
# 307 7260 LINDSAY RD, Granville, Richmond, $116,900.00

2 bedrooms, k7 school, daycare center, post secondary, shops, all nearby. on two express bus routes(one to downtown, another to the millenium skytrain line"
# 302 9150 E UNIVERSITY HIGH ST, Simon Fraser Univ., Burnaby, $354,900.00

[Berklon]

Originally Posted by st7860

http://www.canadianbusiness.com/lists-an...bourhoods/highest-household-income-2014/
Vancouver is #2

Richest neighbourhoods.
How the hell does that translate into Vancouver having the 2nd highest income?

If you can't tell the difference between neighbourhoods and the city itself, then I don't think I can help you.

[mistercorporate]

Originally Posted by st7860

http://www.canadianbusiness.com/lists-an...bourhoods/highest-household-income-2014/
Vancouver is #2

Are you retarded? This shows how one-sided your arguments are...that list talks about highest income neighbourhoods, not average household income in Vancouver compared to other Canadian cities. Vancouver is still a below average income city compared to the other major metros and especially relative to its housing costs.

[st7860]

Originally Posted by Berklon

Richest neighbourhoods.
How the hell does that translate into Vancouver having the 2nd highest income?

Swearing won't get you what you want.

[st7860]

Originally Posted by mistercorporate

Are you retarded? This shows how one-sided your arguments are...that list talks about highest income neighbourhoods, not average household income in Vancouver compared to other Canadian cities. Vancouver is still a below average income city compared to the other major metros and especially relative to its housing costs.

Rude words won't get what you want. A Vancouver average income of $71,000 will easily support housing.

[Berklon]

Originally Posted by st7860

Swearing won't get you what you want.

I agree, it's not going to get you an informed argument.

[Berklon]

Originally Posted by st7860

A Vancouver average income of $71,000 will easily support housing.

Riiiight. The average income has gone up, what... 5-10% in the last 10 years maybe... and housing prices have gone up 2-3x. Income can't even keep up with inflation, yet it's keeping up with the ability to support housing?

As I said... interest rates are at their lowest and debt at it's highest. That does NOT equate to income "easily supporting housing".

[st7860]

Originally Posted by Berklon

Riiiight. The average income has gone up, what... 5-10% in the last 10 years maybe... and housing prices have gone up 2-3x. Income can't even keep up with inflation, yet it's keeping up with the ability to support housing?

As I said... interest rates are at their lowest and debt at it's highest. That does NOT equate to income "easily supporting housing".

$61,000 annual income -it isn't even at the normal limit for service ratio. If monthly payments are a concern, then 35 year amortizations are available. and for people that think interest rates will go up 10 year closed mortgages are available at decent(4%) rates as well.

3 bedrooms - near skytrain - quiet area
# 108 3638 RAE AV, Collingwood, Vancouver East, $339,000.00

Home Financing ...
% Down Payment 20 %
Mortgage TERM : 3 Yr
Down Payment $ 67,800
First Mortgage Amount $ 271,200
Insurance Fee ( 1 % of mortgage ) $ 2,712
Total Mortgage Amount $ 273,912
Monthly Mortgage Payment $ 1,296
Monthly Property Taxes $ 104
Monthly Condo Fees $ 419
Monthly Heating Costs $ 0
TOTAL Monthly Payment $ 1,819

Household Income Required $ 60,367

[Berklon]

And there you go again cherry-picking listings to support your claims.

We're talking about the average price in Vancouver and why income levels can't support that. You picking a few examples means nothing when we're talking about averages.

Of course in your example you chose to use a 20% down payment, when in reality the average amount of down payment in Canada hovers at around the 7% mark.

[st7860]

There are plenty of listings in vancouver of that price range and 20 percent is considered s conventional down payment

[Xelebes]

Originally Posted by st7860

Swearing won't get you what you want.

st, argue the point instead of tone policing. The mods will take care of any profanity.

[ssiguy]

Article today about soaring prices in West Vancouver in the Sun.

Foreigners are buying expensive properties and doing absolutely nothing with them and then putting them back of the market on average 6 months later with some prices jacked up by as much as 60%. The mayor, like every other developer bribed politician in BNC, says there is nothing they can do.

They asked a West Van realtor about it and she said that "some" were foreigners and said speculators {her words not mine} have to be careful as said the homes that are selling fastest are those with "good" feng shui.

Those damn Bolivian investors and their feng shui crap.

[lio45]

Originally Posted by ozonemania

Part of the problem too is that salaries/wages in Vancouver are quite low. People don't get paid much here for similar work compared to cities like San Francisco, Hong Kong, Toronto, or even Calgary, Edmonton and Ottawa.

Rents in Vancouver are laughably low compared to London, San Francisco, Manhattan. Vancouver cannot be compared to those cities: housing in Vancouver is a lot less in demand (as evidenced by free market rents) than in all of those.

[st7860]

Vancouver rents are higher compared to other cities and its difficult to find an empty place to rent

http://bit.ly/1cJD6HA
"The rental crisis in Vancouver is even worse than many feared, according to a Vancouver MLA.

The Canada Mortgage and Housing Corporation’s 2014 market rental report, released Tuesday, says parts of Vancouver – specifically the West End and Downtown – have vacancy rates as low as 0.3 per cent, while the city as a whole has a rental vacancy rate of just 0.5 per cent."

[st7860]

http://bit.ly/1AeNEsW
"Vancouver’s problem is empty homes, not foreign ownership: Mayor Gregor Robertson"

[lio45]

Originally Posted by st7860

Vancouver rents are higher compared to other cities

High rents? Please.

As I pointed out already on page 126, rents are 2.5 times higher in that foggy West Coast city by the San Francisco Bay.

Not just a bit higher... Not just 50% higher... Not even just twice as high... 2.5 times higher, no kidding, for comparable units.

(So, you'd normally expect a house in Vancouver to be selling for about a third of what the same house in San Francisco would go for.)

Originally Posted by lio45

If everyone wants to live there, then why are rents so low?

https://www.rentjungle.com/average-rent-in-vancouver-bc-rent-trends

https://www.rentjungle.com/average-rent-in-san-francisco-rent-trends

[st7860]

http://rabble.ca/blogs/bloggers/michael-stewart/2014/01/vancouver-rent-still-too-damn-high

" As Sean Antrim, the Executive Director of the left-wing municipal party the Coalition of Progressive Electors (COPE) and editor at The Mainlander, points out, rents in Vancouver have increased on average an astonishing 15 per cent in the last four years."