Canada's 'housing bubble' deemed close to bursting

[someone123]

Originally Posted by lio45

I like BC, but I think it's expensive for what you get. I also found it cold and rainy while I was there.

It makes very little sense as a retirement destination. It's better to be near friends and family and in the scheme of things the difference in climate is small.

Our average high here from December-February is about +7 and you get 210 hours of sunshine. Back in Halifax the average is +2 and you get 340 hours of sunshine. In Cancun it is about +29 and basically sunny all the time.

"In Canada" makes sense in some ways but it doesn't once we start talking about million-dollar properties. If you have that kind of money you can go anywhere.

[lio45]

Originally Posted by someone123

If it were just an abstract quality of life issue for me I would also probably move to Montreal. I like the city itself more, the job prospects are pretty comparable, if not slightly better in my industry, and winter trips are not that expensive. I stay here mostly because of my friends and personal connections.

Yeah, for him it was the other way around... "friends and family nearby" was a factor among the pros for Montreal and the cons for California. If all your friends were in Montreal and you had no friends in Vancouver, I suppose you'd make a different decision.

But I know the main factor was definitely that you make barely more while properties are something like 3x more expensive. If at least you made 3x the money for the same job, it would work, but it's far from the case.

(He's a workaholic, so having his good friends nearby is certainly a plus, but honestly, we barely see him much more now than back when he was in CA.)

[MolsonExport]

Originally Posted by st7860

Most now call it the University of Beautiful Cars, the source of pride and satisfaction

We used to call it Uncle Ben Converted.

[MolsonExport]

Originally Posted by lio45

If I may be a little rude to some... the way I see it, you're preaching to a mix of choir and stones.





I have a few examples within my circles of family/friends of people who "fled" the West Coast because the wages-to-property-prices ratios were just horrible...

Add me as an example. I absolutely loved living in BC (just as i did in Montreal...ah, great places they both were), but the cost of living was just insane. Maybe I could have made it work under present circumstances, but I could not break into the housing market in the lower mainland (back in the mid 90s) unless (a) I wanted a tiny condo (no thanks) or (b) wanted to move out to Chilliwack or whatnot (no thanks...my job was on West Broadway near Oak Street).

[ssiguy]

What I have never understood is why anyone would retire in the BC Interior.

Yes it is certainly very pretty country but if your reason for moving is to enjoy a milder climate in your retiring years then why would you go to the BC Interior?

Vancouver is out of the question and Victoria is certainly pricey but there are other areas of Vancouver Island that are more affordable with a far more mild climate than Kel/Kam.

Kel/OK/Kam are milder than nearly every area of Canada and get way less snow but no so compared to SW Ontario like Chatham which gets only 80cm a year and it rarely lasts. That's only 20 cm more than Kelowna or Kamloops. Also SW Ontario is in the middle of everything while the Interior of BC is in the middle of no where. Kelowna is the largest city of about 190,000 and not only is it as boring as hell but also the city is a sprawling mess.........Canada's Fresno. Kamloops and Penticton are nice but much smaller and if you idea of entertainment goes beyond going to a movie that means a 5 hour drive to Vancouver or 6 hours to Calgary.

If you are a snowbird the trip to Vancouver is also a dicey one due to the mountain passes. No area of BC is cheap and housing in SW Ont is probably a third of Kelowna.

If you like mountains and lakes and have no desire to partake in urban activities then the Interior maybe a good fit but for snowbirds I just don't understand it.

[whatnext]

Originally Posted by st7860

http://business.financialpost.com/news/e...hould-be-paying-more-attention-to-canada
"Construction employment as a percentage of total employment hit 7.9 per cent in February, its highest level on record.
"

Yeah, and it hit a record in the USA in 2006, just before it all went bad. So unless you come out and admit "it's different here" solely because of wealthy Chinese stashing money, your stats merely point to a bubble.

[st7860]

The Canadian market is not the same as that in the US

[casper]

Originally Posted by whatnext

Yeah, and it hit a record in the USA in 2006, just before it all went bad. So unless you come out and admit "it's different here" solely because of wealthy Chinese stashing money, your stats merely point to a bubble.

It is different here for several reasons:

• US builds more commercial building on spec, no so-much in Canada
• sub-prime mortgages are not available in Canada, Canadians have more invested in their homes
• hardest hit regions in the US were places like Florida, Arizona, etc. Basically dominated by mass-migration for retirement and vacation home properties
• Certain at risk communities (e.g. Detroit) had neighborhoods that once they declined, spiralled into becoming a complete ghost town (less likely in Canada).

[casper]

Originally Posted by MolsonExport

Add me as an example. I absolutely loved living in BC (just as i did in Montreal...ah, great places they both were), but the cost of living was just insane. Maybe I could have made it work under present circumstances, but I could not break into the housing market in the lower mainland (back in the mid 90s) unless (a) I wanted a tiny condo (no thanks) or (b) wanted to move out to Chilliwack or whatnot (no thanks...my job was on West Broadway near Oak Street).

Better transit and expanded West Coast Express (similar to GO Train in Ontario) is needed to make long commutes more viable. No question it is an expensive place to buy property. I live in Victoria, where it is a bit more reasonable.

[Acajack]

Regarding relocating to BC for the climate...

I do think it is a minor "thing" for some Canadians who are of working age - especially younger ones. As in: "I am Canadian and I am going to live in Canada. My career is going to be in this country. So, if I am going to settle down and raise my family in a place it's going to be where I won't freeze my butt off (or at least less). Vancouver/Victoria here I come."

I do know a few people from Ontario who did this when they were in their 20s. They are still in BC today. I am sure there are some from all of the other provinces who did this as well.

But I don't know any retirees from the eastern half of Canada who, after living their entire working lives in this part of the country, raised their kids here, made friends here, decided to retire in BC. Zero.

[north 42]

Originally Posted by TownGuy

I've never heard of any retiree in Ontario moving, or wanting to move, to BC. I mean I'm sure some do but its not a "thing". The Florida snowbird...that's definitely a thing.

Same here, never heard of anyone retiring to BC from Ontario, most go to florida. BC is not really on the radar of most Ontarian's retirement plans.

[casper]

Originally Posted by Acajack

Regarding relocating to BC for the climate...

I do think it is a minor "thing" for some Canadians who are of working age - especially younger ones. As in: "I am Canadian and I am going to live in Canada. My career is going to be in this country. So, if I am going to settle down and raise my family in a place it's going to be where I won't freeze my butt off (or at least less). Vancouver/Victoria here I come."

I do know a few people from Ontario who did this when they were in their 20s. They are still in BC today. I am sure there are some from all of the other provinces who did this as well.

But I don't know any retirees from the eastern half of Canada who, after living their entire working lives in this part of the country, raised their kids here, made friends here, decided to retire in BC. Zero.

The pattern I have seen a few times. The kids move out west, start careers and families. The retirees hid retirement age, conclude all the grand-kids are on the west coast and its warmer out there in winter and move.

There is also a certain subset of Alberta population that have vacation property, usually mid-island (places like Nanaimo and Comox) or in the interior and relocate to their vacation homes when retirement comes.

Same thing has happened between Alberta and Saskatchewan. A certain percentage of people moved to Alberta looking for jobs, hit retirement and moved back.

In all of these cases I think it is a small percentage of the population that move for retirement.

If you live in Toronto, Vancouver, Calgary and hit retirement age financially moving to small town Canada can financially make a lot of sense. Even it if is only just outside the city you lived in.

[milomilo]

Originally Posted by whatnext

So unless you come out and admit "it's different here"

Originally Posted by st7860

The Canadian market is not the same as that in the US

Lol!

[lio45]

FWIW, I found his reply to this even more lol-worthy:

Originally Posted by Berklon

"There's No Housing Bubble to Go Bust"
-- Ben Bernanke (2005)

When the authorities say it's not a bubble, then it can't be a bubble, because they say so. Except on those times when it does turn out to be a bubble.

But Canada is different. We have basically the worst personal debt ratios on the planet at the moment, but we're different. Housing prices here are always based on solid fundamentals like cap rates, etc. and never speculation, because, well, that's the way things are.

[st7860]

http://globalnews.ca/news/1889329/canadians-net-wealth-hits-new-highs-debt-bubble-a-myth-experts/
"The fact that household net worth has broken new highs in recent quarters has been used by some to allay concerns that Canadian household balance sheets are headed down a risky financial path. Some experts have gone so far as to called Canada’s debt binge a “myth,” and touted the fact that household net worth has risen 140 per cent during the country’s decade-long debt boom."

[lio45]

Originally Posted by casper

It is different here for several reasons:

• US builds more commercial building on spec, no so-much in Canada
• sub-prime mortgages are not available in Canada, Canadians have more invested in their homes
• hardest hit regions in the US were places like Florida, Arizona, etc. Basically dominated by mass-migration for retirement and vacation home properties
• Certain at risk communities (e.g. Detroit) had neighborhoods that once they declined, spiralled into becoming a complete ghost town (less likely in Canada).

One good argument that you guys could use is to point out that ultra-high-value places like Manhattan and San Francisco were among the least affected by the bursting of the early-mid 2000s bubble.

I'd counter that, though, by pointing out that Vancouver's job market, wages, rents, and cap rates are not at all on the levels of Manhattan or San Francisco.

In fact, I'd say Van is closer in some ways to markets like Las Vegas or Miami in ~2005 than to markets like Manhattan or San Francisco in ~2005.

[lio45]

Originally Posted by st7860

http://globalnews.ca/news/1889329/canadians-net-wealth-hits-new-highs-debt-bubble-a-myth-experts/
"The fact that household net worth has broken new highs in recent quarters has been used by some to allay concerns that Canadian household balance sheets are headed down a risky financial path. Some experts have gone so far as to called Canada’s debt binge a “myth,” and touted the fact that household net worth has risen 140 per cent during the country’s decade-long debt boom."

You must be kidding!!!

So, someone who has a $500,000 mortgage on a cheap-ass suburban Las Vegas bungalow in 2005 is perfectly safe, because that bungalow is in fact worth $600,000 at the moment: "high debt" for them is a myth, their true net worth, thanks to their property, is quite a bit above zero, not below it.

That's exactly what you're just saying right now... Where's that Picard facepalm image again?

[st7860]

Originally Posted by casper

It is different here for several reasons:

• US builds more commercial building on spec, no so-much in Canada
• sub-prime mortgages are not available in Canada, Canadians have more invested in their homes
• hardest hit regions in the US were places like Florida, Arizona, etc. Basically dominated by mass-migration for retirement and vacation home properties
• Certain at risk communities (e.g. Detroit) had neighborhoods that once they declined, spiralled into becoming a complete ghost town (less likely in Canada).

Precisely, also there is a growth in disposable in come in Vancouver. In addition, unnamed individuals will take a piece of Canadian news to mean America, and vice versa - lol

[lio45]

Originally Posted by st7860

In addition, unnamed individuals will take a piece of Canadian news to mean America, and vice versa - lol

Those basic market laws apply everywhere. You could use the Japanese bubble as an example, or any other. It's pretty much like the laws of physics. They are the same regardless of national borders.

Property prices just can't keep on doubling every few years forever while wages are basically stagnant. In Canada, USA, or anywhere else. Something's got to give eventually.

[st7860]

This is real estate, not physics. Things are different Canada. Interest rates do not have to rise because of another country. In any case a mortgage rate can be locked in for 10 years at less than 4% for those that think rates will rise. For those concerned about their job, then get mortgage insurance for that.