Canada's 'housing bubble' deemed close to bursting

[logan5]

Originally Posted by mistercorporate

At no point was I just referring to the Lower Mainland, I'm including the entire stretch of what comprises the Southern coastline of the province and Vancouver Island. There is a tremendous amount of space surrounding Metro Vancouver, there's nothing particularly limiting to its geographic location beyond zoning and development permissions. Vancouver is not developing its hinterland, but then it doesn't need to, there's plenty of room to develop density within the lower mainland.

Not sure what your point here is. Are you suggesting people should commute in from Nanaimo or Powell River?

There is only 1100 sq miles that is Metro Vancouver. Included in that is around 400 sq miles of undevelopable mountain range. After that there's the east Fraser Valley, then practically nothing. There are little towns squeezed into the mountains.

I will say this though, just by rezoning the inner suburbs to at least row-house, which give you the same size house on half the land, you open open hundreds of square miles of redevelopable land in areas close to transit, the city center, all the amenities you want from a city. It seems liker a no brainer to me.

[mistercorporate]

Originally Posted by logan5

Not sure what your point here is. Are you suggesting people should commute in from Nanaimo or Powell River?

There is only 1100 sq miles that is Metro Vancouver. Included in that is around 400 sq miles of undevelopable mountain range. After that there's the east Fraser Valley, then practically nothing. There are little towns squeezed into the mountains.

I will say this though, just by rezoning the inner suburbs to at least row-house, which give you the same size house on half the land, you open open hundreds of square miles of redevelopable land in areas close to transit, the city center, all the amenities you want from a city. It seems liker a no brainer to me.

Please read the thread, I was responding to inaccurate statements justifying Vancouver's real estate prices on account of its geographic limitations vis-a-vis other city regions.

[st7860]

http://www.rebgv.org/alr-changes-horizon
"Zone 1: about 10% of the province, includes land in the Lower Mainland and Fraser Valley, the Okanagan and Vancouver Island. Here land will remain in the ALR and will be strictly protected. "

[lio45]

Originally Posted by logan5

I will say this though, just by rezoning the inner suburbs to at least row-house, which give you the same size house on half the land, you open open hundreds of square miles of redevelopable land in areas close to transit, the city center, all the amenities you want from a city. It seems liker a no brainer to me.

As was discussed a few times already, everyone who currently has a stake in Vancouver's insane property values will oppose that, though.

[geotag277]

Originally Posted by mistercorporate

Please read the thread, I was responding to inaccurate statements justifying Vancouver's real estate prices on account of its geographic limitations vis-a-vis other city regions.

Your conclusion does not follow from your statements. Answer the question, do you want people to commute from Nanaimo? Are you using Nanaimo to justify that Vancouver has absolutely no shortage of land? When the commute from Nanaimo would essentially be at least 2 hours, potentially 3, with a 1 hour 40 minute ferry ride.

And yes, people do commute from Nanaimo, which is yet another sign of the land restrictions. When your choices are Squamish, Chilliwack, and Nanaimo, it doesn't seem so bad.

If you can't even recognize that Vancouver has land shortage issues not comparable to any other major Canadian city there is no point attempting to talk intelligently at the matter. It is a basic axiom of the Vancouver market, and has been for 30+ years.

[st7860]

Originally Posted by logan5

Not sure what your point here is. Are you suggesting people should commute in from Nanaimo or Powell River?

There is only 1100 sq miles that is Metro Vancouver. Included in that is around 400 sq miles of undevelopable mountain range. After that there's the east Fraser Valley, then practically nothing. There are little towns squeezed into the mountains.

I will say this though, just by rezoning the inner suburbs to at least row-house, which give you the same size house on half the land, you open open hundreds of square miles of redevelopable land in areas close to transit, the city center, all the amenities you want from a city. It seems liker a no brainer to me.

Secondary suites are already allowed in almost every zoning area and laneway homes were recently allowed to be built in any lot except narrow ones as well.

[mistercorporate]

Originally Posted by geotag277

Your conclusion does not follow from your statements. Answer the question, do you want people to commute from Nanaimo? Are you using Nanaimo to justify that Vancouver has absolutely no shortage of land? When the commute from Nanaimo would essentially be at least 2 hours, potentially 3, with a 1 hour 40 minute ferry ride.

And yes, people do commute from Nanaimo, which is yet another sign of the land restrictions. When your choices are Squamish, Chilliwack, and Nanaimo, it doesn't seem so bad.

If you can't even recognize that Vancouver has land shortage issues not comparable to any other major Canadian city there is no point attempting to talk intelligently at the matter. It is a basic axiom of the Vancouver market, and has been for 30+ years.

Commuting to Vancouver is not the only determinant of the value of living in a region. Does everyone in Abbotsford commute to Vancouver? The land in Abbotsford still has value. Vancouver's house prices are not the function of the attractiveness of a small commute to a high paying job market (LOL!). There is value in living in other regions of coastal BC, its immediate hinterland and the rest of Vancouver island. They could sprawl or build high density townhomes for the population if space was the problem. It is speculation and money laundering that's keeping prices up, not the lack of space. The vast majority of people in the GTA do not commute to the downtown core.

[lio45]

Originally Posted by geotag277

If you can't even recognize that Vancouver has land shortage issues not comparable to any other major Canadian city there is no point attempting to talk intelligently at the matter. It is a basic axiom of the Vancouver market, and has been for 30+ years.

Some land shortage issues -- yes.

Enough of a land shortage issue to single-handedly justify ~$2M as a normal price for a modest bungalow -- no.

Scarcity of land plays a role, yes, but you're kidding yourself if you think that land rarity alone, without factors like massive infusions of Chinese money leaving the PRC, lax Canadian laws, and interest rates at levels historically unheard of, could have brought the prices up to the levels currently observed.

[logan5]

Originally Posted by mistercorporate

Please read the thread, I was responding to inaccurate statements justifying Vancouver's real estate prices on account of its geographic limitations vis-a-vis other city regions.

Um... alright.

[geotag277]

Originally Posted by lio45

Some land shortage issues -- yes.

Enough of a land shortage issue to single-handedly justify ~$2M as a normal price for a modest bungalow -- no.

Scarcity of land plays a role, yes, but you're kidding yourself if you think that land rarity alone, without factors like massive infusions of Chinese money leaving the PRC, lax Canadian laws, and interest rates at levels historically unheard of, could have brought the prices up to the levels currently observed.

Where did I say foreign investment plays absolutely no factor? Of course it does, it increases demand.

All the factors you mention are moving the needle towards the enviable outcome - very expensive land values in a location where land is at a premium.

Vancouver was premium priced compared to every other Canadian city since the 80s, roughly going for double the average house in Toronto, when, by the way - interest rates were at historic highs.

The writing has been on the wall for 35 years. Pointing your finger at any one of these issues today is a bit absurd, it's not interest rates, it's not foreign investment, it's not "money laundering" which accounts for a laughable percentage of real estate transactions. This is the direction Vancouver was headed for 35 years. It's a population clinging to the concept of single family home living and zero political will power to act meaningfully on the trends that have been occurring for the past 35 years.

Yes, low interest rates increase demand. Foreign investment increases demand. Criminal enterprises both foreign and domestic increase demand. Lottery winners increases the demand for housing. But the writing has been on the wall for 35 years. There is no excuse and using these things as scapegoats allows the SFH owners in Vancouver to justify continuing to do nothing.

[st7860]

Originally Posted by geotag277

Where did I say foreign investment plays absolutely no factor? Of course it does, it increases demand.

All the factors you mention are moving the needle towards the enviable outcome - very expensive land values in a location where land is at a premium.

Vancouver was premium priced compared to every other Canadian city since the 80s, roughly going for double the average house in Toronto, when, by the way - interest rates were at historic highs.

The writing has been on the wall for 35 years. Pointing your finger at any one of these issues today is a bit absurd, it's not interest rates, it's not foreign investment, it's not "money laundering" which accounts for a laughable percentage of real estate transactions. This is the direction Vancouver was headed for 35 years. It's a population clinging to the concept of single family home living and zero political will power to act meaningfully on the trends that have been occurring for the past 35 years.

Yes, low interest rates increase demand. Foreign investment increases demand. Criminal enterprises both foreign and domestic increase demand. Lottery winners increases the demand for housing. But the writing has been on the wall for 35 years. There is no excuse and using these things as scapegoats allows the SFH owners in Vancouver to justify continuing to do nothing.

Never quite understood why people say foreigners are a problem - what kind of foreigner would be an idiot to buy and sell houses here when he or she has to pay heavy taxes whereas a normal Canadian Citizen pays no taxes when selling his or her lived in home.

[lio45]

Originally Posted by geotag277

... when, by the way - interest rates were at historic highs.

The two following ratios, Vancouver houses to Vancouver wages, and Vancouver houses to Vancouver rents, were likely very different when interest rates were at historic highs.

Ergo, historically low interest rates have helped push property prices to a point where they're temporarily out of whack with these other metrics that are normally (when not dwarfed by speculation) directly linked to demand for housing and ability to pay for housing, and therefore property prices.

[lio45]

Originally Posted by geotag277

Pointing your finger at any one of these issues today is a bit absurd

Isn't that exactly what you were doing by pointing to "scarcity of land" alone?

I've always been saying that the current Vancouver bubble is the result of a perfect storm of factors, several of which I'm not expecting to last in the long term.

[geotag277]

From 1979 to 1981, Vancouver single family detached homes average price more than doubled in value. In this time, interest rates increased from ~10 to ~15 percent. So the data does not bore out your assumptions.

From 2002 to 2006 home prices also doubled, as interest rates shrunk from 6 to 5, hardly an earth shattering amount.

It seems the data does not support your assumptions. I like to use data.

[vanman]

Originally Posted by geotag277

Where did I say foreign investment plays absolutely no factor? Of course it does, it increases demand.

All the factors you mention are moving the needle towards the enviable outcome - very expensive land values in a location where land is at a premium.

Vancouver was premium priced compared to every other Canadian city since the 80s, roughly going for double the average house in Toronto, when, by the way - interest rates were at historic highs.

The writing has been on the wall for 35 years. Pointing your finger at any one of these issues today is a bit absurd, it's not interest rates, it's not foreign investment, it's not "money laundering" which accounts for a laughable percentage of real estate transactions. This is the direction Vancouver was headed for 35 years. It's a population clinging to the concept of single family home living and zero political will power to act meaningfully on the trends that have been occurring for the past 35 years.

Yes, low interest rates increase demand. Foreign investment increases demand. Criminal enterprises both foreign and domestic increase demand. Lottery winners increases the demand for housing. But the writing has been on the wall for 35 years. There is no excuse and using these things as scapegoats allows the SFH owners in Vancouver to justify continuing to do nothing.

Great post. You're one of the few people here who actually understand the Vancouver market.

I mean how in hell could a sleepy backwater like Vancouver in the 80s have housing prices double that of Toronto? This is back when Vancouver was relatively unknown to the rest of the world and at a time when interest rates were sky high. It makes absolutely no sense unless you factor in the scarcity of developable land in the region.

[vanman]

Originally Posted by mistercorporate

Commuting to Vancouver is not the only determinant of the value of living in a region. Does everyone in Abbotsford commute to Vancouver? The land in Abbotsford still has value. Vancouver's house prices are not the function of the attractiveness of a small commute to a high paying job market (LOL!). There is value in living in other regions of coastal BC, its immediate hinterland and the rest of Vancouver island. They could sprawl or build high density townhomes for the population if space was the problem. It is speculation and money laundering that's keeping prices up, not the lack of space. The vast majority of people in the GTA do not commute to the downtown core.

No, Vancouver can't just sprawl into it's hinterland. BC has had the Agricultural Land Reserve in place, the first of it's kind in North America, since the early 70s. 47,000 sqkm of the province is off limits to anything other than agricultural use. This is what it looks like in Metro Vancouver and the Fraser Valley:

https://vancouverflippersintrouble.files.wordpress.com/2015/05/alr_map.jpg
Almost everything outside this green zone has already been developed.

[Stryker]

Originally Posted by st7860

Never quite understood why people say foreigners are a problem - what kind of foreigner would be an idiot to buy and sell houses here when he or she has to pay heavy taxes whereas a normal Canadian Citizen pays no taxes when selling his or her lived in home.

The kind of idiot that is trying to hide assets.

[Stryker]

Originally Posted by vanman

No, Vancouver can't just sprawl into it's hinterland. BC has had the Agricultural Land Reserve in place, the first of it's kind in North America, since the early 70s. 47,000 sqkm of the province is off limits to anything other thanagricultural use. This is what it looks like in Metro Vancouver and the Fraser Valley:

https://vancouverflippersintrouble.files.wordpress.com/2015/05/alr_map.jpg
Almost everything outside this green zone has already been developed.

So your telling me all it takes for the bubble to really pop is for more than 50 percent of the voting population in the province of BC being pissed off at an absolutely absurd law system designed to benefit the rich.

Seriously this — could only happen in BC.

[mistercorporate]

Originally Posted by vanman

No, Vancouver can't just sprawl into it's hinterland. BC has had the Agricultural Land Reserve in place, the first of it's kind in North America, since the early 70s. 47,000 sqkm of the province is off limits to anything other thanagricultural use. This is what it looks like in Metro Vancouver and the Fraser Valley:

Almost everything outside this green zone has already been developed.

I've been to some of those zones to the North of that map and even those Gulf Islands. They most certainly can handle more people. We're going to have to agree to disagree on this one. I've done my fair share of real estate development and most of that green forested area North of Vancouver (on that map) can easily and profitably be developed with ease. The issue is not lack of space, it's speculation, interest rates and money laundering.

[Wentworth]

Originally Posted by geotag277

From 1979 to 1981, Vancouver single family detached homes average price more than doubled in value. In this time, interest rates increased from ~10 to ~15 percent. So the data does not bore out your assumptions.

From 2002 to 2006 home prices also doubled, as interest rates shrunk from 6 to 5, hardly an earth shattering amount.

It seems the data does not support your assumptions. I like to use data.

Here is some data:



Image credit: https://vreaa.wordpress.com/2013/01/ and http://www.ratehub.ca/5-year-fixed-mortgage-rate-history