Canada's 'housing bubble' deemed close to bursting

[geotag277]

That article is all over the place. Wow. What a poorly worded, written, thought out, and researched piece. The Globe and Mail journalistic standards have really sunk lately.

First, what is the methodology to collect the 250 samples? That is never even mentioned, they simply looked at 250 transactions over two years.

They try to conflate Chinese names with Canadian citizens (a face palming piece of rhetoric if I ever saw one) and then proceed to lambast owners for apparently both buying the property as a primary residence and NOT buying the property as a primary residence. I'm not sure why they would even ask the CRA about property owners who are declared as non-residence, as they have no obligation to report their income beyond capital gains on the property itself in question.

It all comes across as very contrived and not very convincing. They had the opportunity to do a good job with a well researched article, and instead they do what all modern media does, straggle together a populist hack job piece with lazy writing, lazy rhetoric, and hitting all the key words to try to get it's message out across social media. I'm sure this article plays well here and on reddit, but in the real world it's just lazy journalism.

[st7860]

I read those pages too. So it seems that while it is pretty easy to lose permanent resident status by staying out of the country more than 6 months a year repeatedly, it is not so simple to determine one's residency for tax purpose.

[whatnext]

Originally Posted by osmo

Yet the article only scrounges up around 250 foreign owners ...

How many Canadians are buying $2.5 million dollar homes?

Are you asking us to believe Aunt Minnie from Prince Albert packs up and moves to Vancouver and buys herself a 2 million dollar house?

Ask any realtor, even std7860 if he was in the mood to be honest.

[lio45]

Originally Posted by casper

I don't understand the correlation that is being proposed between the value of a home and if the buyer pays in Cash or with a mortgage.

Most people I know get pre-approved for a mortgage and then go house shopping. The seller could care less how the property is financed by the buyer as long as he is paid.

The price does not go up because it is a cash sale. The lawyer fees go down a little bit.

Vancouver might be a different animal but in my experience (10 years of activity in real estate in several jurisdictions) there's a pretty big correlation, the price can very often be lowered by buying cash, as it means quick closing, no waiting on financing greenlight, no opportunity to back up before the financing contingency gets confirmed, and most of all no uncertainty (depending on the property's condition) that the bank (they're really finicky nowadays) might choose to snob it, making the deal fall through.

I can see the opposite (weird as it sounds to the experienced real estate investor at the low-ish end of the market) happening in a "special" market that would be mostly a shelter for cash, though. When money HAS to leave China or else you risk losing it, better overpay for something if that's what it takes...

A "normal" Canadian, on the other hand, would be more reluctant to overpay.

(Kinda the same phenomenon with criminals needing to launder money: they often overpay when buying businesses, etc. The need to have the best deal possible is trumped by the need to just have a deal, and when money's easily made, you can afford to be a bit less careful with it anyways.)

[st7860]

http://www.theglobeandmail.com/report-on...vancouver-hit-new-highs/article26639751/
"“The number of homes listed for sale hasn’t been keeping up with the demand,” Mr. McLeod said in a statement Friday. “It’s this dynamic that’s placing upward pressure on home prices, particularly in the detached home market.”"

[MolsonExport]

Originally Posted by st7860

http://www.theglobeandmail.com/report-on...vancouver-hit-new-highs/article26639751/
"“The number of homes listed for sale hasn’t been keeping up with the demand,” Mr. McLeod said in a statement Friday. “It’s this dynamic that’s placing upward pressure on home prices, particularly in the detached home market.”"

reposti

Sounds like "dreamland" to me, except it isn't Ontario!

Waiting for hurl of abuse from the usual suspect.

[st7860]

http://thetyee.ca/News/2015/08/07/Vancou...ily&utm_medium=email&utm_campaign=070815
"Michael Goldberg, professor emeritus of UBC's Sauder School of Business, did research on foreign investment at the time. In 1990, Vancouver's top foreign investors were not from Hong Kong. They were revealed to be mostly American, British, Dutch, and then German, according to the Canadian Yearbook.
And yet the public eye was still set on East Asians, framing them as the foreigners doing the most harm to Vancouver's real estate landscape.
"The 'Yellow Peril' comes out quite often," said Goldberg of the return of these fears. "Once again, the hysteria is way over blown."

http://www.thetyee.ca/Opinion/2015/08/20/Foreign-Ownership-Affordability-Vancouver/
"Buying into the conversation about foreign ownership as it is currently cast risks reinforcing threads of racism that have, for too long, shaped civic culture in Vancouver. It is too easy -- and too risky in terms of building a tolerant, multi-cultural and racially diverse civic community -- to reduce the housing issue to one of foreign ownership. It foists the problem off onto the shoulders of "foreigners." It allows the federal government to continue a policy of neglect with respect to its responsibilities to ensure that all who live in Canada have access to adequate housing.

Here's what we need: a federal government that reinvests in social housing provision; a federal government that joins that ranks of the other G7 countries by having a national housing strategy; a federal government that enacts policy supportive of affordable rental housing, not merely helping the wealthier buy increasingly expensive homes; and a federal government that deals with poverty and income inequality as key parts of an equation that adds up to the housing crisis."

[MolsonExport]

Are you a robot?

[mistercorporate]

He needs help, professional help (not kidding).

[st7860]

Originally Posted by MolsonExport

Are you a <obscenity>

No

[Berklon]

Originally Posted by MolsonExport

Are you a robot?

You noticed it too, right?

As soon as someone posts in this thread, he obviously gets notified of a post and immediately goes to it - and usually responds with something pro-RE (mostly links to real estate companies comments) if there's someone showing the problems with it.

There wasn't a post since Oct. 7 and it took him only 2 minutes after your post for him to make a post.

st7860 is obviously a real estate agent or someone who is heavily invested in real estate (or both). He couldn't make it any more obvious if he tried.

[st7860]

http://www.theglobeandmail.com/report-on...priced-homes-cozy-banks/article26841468/
"Economists at home don't fear a housing crash. Nor does the Bank of Canada, although it's keeping a close eye on the market "

[TorontoDrew]

Originally Posted by st7860

http://www.theglobeandmail.com/report-on...priced-homes-cozy-banks/article26841468/
"Economists at home don't fear a housing crash. Nor does the Bank of Canada, although it's keeping a close eye on the market "

And yet this thread is still going 52 months strong now. That's one impressive bubble.

[Stryker]

Originally Posted by TorontoDrew

And yet this thread is still going 52 months strong now. That's one impressive bubble.

Yeah because property pops begin and pop in about 2-3 weeks periods.


Keep dreaming, bubbles can last partial generations.

[st7860]

Originally Posted by TorontoDrew

And yet this thread is still going 52 months strong now. That's one impressive bubble.

Well its popcorn time. Yesterday Vancouver City Council voted to take down two viaducts in a few years to build housing on the site. However there's a building firestorm online about that. If the decision gets overturned that's one, but not the only reason housing will stay high....

[TorontoDrew]

Originally Posted by Stryker

Yeah because property pops begin and pop in about 2-3 weeks periods.


Keep dreaming, bubbles can last partial generations.

Really? For the past 6-8 years of impending about to burst bubble talk it has never happened. It's called a bubble because it's unstable and unpredictable. What you're describing is a market fluctuation which can last for decades. I never said a bubble lasts only 2-3 weeks get real. Bubbles don't last 312 weeks and counting. Feel free to say I said they don't last that long, not some ridiculously small number like you wrote. Not to mention this whole thread started on an article that said that market prices would drop by 25% by June of 2014. That never happened.

Yes I will keep dreaming, and you keep having your nightmare. This thread continues to make me LOL.

[WhipperSnapper]

Bubble describes prices beyond reason due to unabated speculation. There are few if any fluctuations in a bubble.

Flat out denial that bubble doesn't best describe market conditions and, given the massive economic impact, that everything has been done to keep it going.

[ssiguy]

Vancouver's market is expensive for one reason and one reason only, Chinese money laundering.

It's an accepted fact in Vancouver but because the media, politicians, and governments rely on that money they invariable state that it's "racist" to say so.

Vancouver has low wages, is extremely expensive not even including real estate, there are very limited high wage jobs, has the highest child poverty rate, 2nd highest overall poverty rate, and largest gaps between the rich in the country. It's rents are very high so there is almost no potential to save for a down payment, Vancouverites are already, by far, the most indebted in the nation, BC is the only province which has had a NEGATIVE savings rate and has had so for every year this century, and the average size of a home in Vancouver is much smaller than most due to older houses having no basements, and people having to move into condos and townhomes even in the far flung suburbs due to not even being able to afford a house there.

It is not due to the "running out of land" excuse as Vancouver's Metro is not high density and much lower than Toronto's, is a third the size, and isn't growing near as quickly.

It's Chinese money laundering and everybody {particularly the real estate agents} know it but the city is addicted to it and has become not an addition to the city's economic fortunes but rather the backbone of it. This is why so many homes in Vancouver are empty..........buy, tear down the house regardless of it's historic value, build a monster with proper fung shui regardless if it fits into the neighbourhood or not, turn around a sell it and you get a free passport to boot.

If you value community, history, and social cohesion be thankful you don't live here as the Glebe, Sandy Hill, Parkdale, Cabbagetown, The Plateau, and Outremont would have been levelled by now with lovely pink stucco houses with no all the trees destroyed.

[st7860]

http://m.thetyee.ca/Opinion/2015/09/03/Less-Focus-on-Foreign-Buyers/#.Vehos-xxmQ0.twitter
"We need to reframe the affordability debate in the following ways: i) less focus on which buyers caused the escalation of property prices, and more on increasing housing supply; ii) less nostalgia about single-family dwellings, and more investment in community facilities to support higher density housing; and iii) more openness to international trade and head office investment to improve Vancouver incomes.

Above all, let's put a stop to the insidious characterization of Chinese investors as villains in our affordability problems. On the contrary, let's seize on the presence of so many well-heeled entrepreneur and investor immigrants, from everywhere, as an opportunity to attract new business capital to the province, create jobs and raise incomes."

[Procrastinational]

Originally Posted by TorontoDrew

Bubbles don't last 312 weeks and counting.

Sure they can. 312 weeks is about 6 years. There's quite a bit of evidence that suggests that housing and land prices seem to follow a roughly 18 year cycle (likely related to population demographics). It sounds a bit far fetched, but it actually explains the timing of other events in the economy quite well.

Recessions tend to coincide with the initial fall of housing prices, and stock market bubbles tend to coincide with the boom in housing prices. If housing prices do in fact follow this trend, then it would be reasonable to suspect that the boom phase (trough to peak) should on average last around 9 years (possibly longer if the cycle is asymmetrical).

This whole thing is quite often used as an argument in favour of a land value tax. A properly levied land value tax would significantly reduce speculation, resulting in a smoothing of housing prices, and a coinciding smoothing of economic growth as a whole. Pretty much every boom and bust cycle can be attributed at least partially to land speculation.