Canada's 'housing bubble' deemed close to bursting

[dleung]

Originally Posted by Procrastinational

That's not that unusual in the grand scheme of things. I bet a piece of property in central London or on the middle of Manhattan is probably worth 30 times more than a similar sized piece of land in the suburbs.

Edit: There is a greater range than that on Manhattan alone...

Note that the top of the scale even in Manhattan is a mere $5000 per square foot of dirt. West Pender Place, at $300 million per acre, is ~$7000 per square foot. The Residences at the Georgia, at $400-$800 million per acre (depending on whether you include the hotel) is up to $18,000 per square foot. It doesn't compute.

If you compare to the central cluster of office towers in Vancouver, in an arguably more desirable location next to rapid transit, the land ranges from $50 - $90 million per acre for Bentall 4, 5, Cathedral Place, Park Place, etc, which is more in line with what is expected.

Thus it can be concluded that developers and condo buyers are overpaying 7-10 times the true value of the land, meaning that the overall price of condos should be about 30-50% what they currently sell for.

[someone123]

Originally Posted by dleung

Note that the top of the scale even in Manhattan is a mere $5000 per square foot of dirt. West Pender Place, at $300 million per acre, is ~$7000 per square foot. The Residences at the Georgia, at $400-$800 million per acre (depending on whether you include the hotel) is up to $18,000 per square foot. It doesn't compute.

The map sort of suggests that it's showing the value of the land, not improvements, but then they comment that the total implied by this valuation is far lower than some others. So I'm not sure it's comparable to the Vancouver numbers.

I'd be investing in Manhattan real estate if there were hundred storey office towers plus land going for $5,000 per square foot of footprint at ground level. That's only $50 per square foot per floor.

[dleung]

We're comparing assessed values to assessed values. Market values are always higher and more volatile. Accuracy is kind of moot, since in what world would a lot in downtown Vancouver be 3x more valuable than the most expensive part of Manhattan?

[WhipperSnapper]

Also depends how often those assessed value have been updated especially in a case like Manhattan.

[lio45]

That blue Manhattan map is also over 10 years old, so you have to compare it to land values in the Vancouver of 2004, not the Vancouver of 2015.

There's the exchange rate to consider, too.

[WhipperSnapper]

He's not comparing Manhattan to Vancouver. He's comparing the assessed value differences between neighbourhoods on Manhattan. To me, this looks dated. Harlem and the Bronx seem far too low to the realities of today.

[SignalHillHiker]

I received my new property assessment last week. It didn't go up a penny . And, what's more... I think it may have decreased in value since I purchased it, at least as far as assessments go. I assume this is the case everywhere, but when a properly is sold, St. John's automatically reassesses it for the purchase price. So that's STILL what mine was assessed for in this new round.

Most of our indicators are significantly down and, anecdotally, I know two people trying to sell right now. Both expect to sell for more or less what they paid for it five years ago (less than 15K difference).

And, in spoiler because it's only tangentially related but I want to share it:

Not sure where this fits, but I'm very excited - it's my first time doing anything like this on my own.

I've started fixing up my house, changing it from the hideous forest green it was when I bought, and replacing my first-thing-I-find-on-Kijiji furnishings with best-things-I-find-on-Kijiji furnishings, lol.

I've only done two rooms so far...

Kitchen before:



That blue table thing took up WAY too much space and the previous owners painted parts of the cabinets the same colour as the wall:



Kitchen after:





Still trying to pick out a little bar table with four stools. I want either black metal or very dark wood, with absolutely no hint of red. Some silver in places is fine. Something like this:



*****

Living room before:



It was SO DARK with such dark walls.



Living room after (still waiting on a few things):





A local artist painted two of my pictures and gave me prints as a thanks:



I still have a bunch of pictures and one or two accessories to pick up for the living room. Copes brought over his two prints of my panoramas for me to sign. The one of the left is exactly what I'm getting printed, but larger and on canvas for above the couch:



Replaced the bare bulb on the ceiling with a faux Tiffany-ish one from Canadian Tire. I liked it pre-shopping online but it was too expensive - but when I went, it happened to be on sale for about 1/4 the price.



And I wasn't expecting this... I wasn't even planning to do anything with them but Mom insisted ("This is poverty looking!"). The biggest impact was just repainting the softwood floors.



I'll replace the couch/chair when I can afford it... something dark grey, small, modern with black, fairly high legs. For now, just covers.

Phew... only two more important rooms (bathroom/my bedroom) to do, and a few other little rooms I can slap together (the laundry, etc.).

[kwoldtimer]

What's above that acoustic tile faux ceiling in your kitchen, SH?. That really needs to go, if possible. It's way too 1964 recreation room.

[SignalHillHiker]

No idea - but that's a bit much for me yet. I know there's only pressboard under the frayed carpet on the stairs.

[Denscity]

Vancouver housing sales up 40% year over year compared to last November.

[caltrane74]

November Sales up 14%, new annual record for Home Sales. Still 1 month left in 2015.

GTA sets new annual sales record

[whatnext]

The G&M reports Australia's booming housing market is finally slowing. Will Canada's follow the pattern? Of course Australia has foreign ownership controls so that might have helped. The article concludes with a Vancouver tale that is sadly too familiar:


After a seemingly unstoppable run of soaring valuations in recent years, house prices in major Australian cities have begun to slide in a sign that one of the world’s hottest real-estate markets is cooling.

In Sydney, Australia’s biggest and most expensive housing market, house prices fell 1.4 per cent in November, while prices in Melbourne fell by 3.5 per cent, according to data from global research firm CoreLogic RP Data. The situation has forced many sellers to cut asking prices, has led to fewer auctions resulting in sales and fewer investors piling into the real-estate market....

...On Wednesday, new real-estate figures showed the benchmark price for detached homes in Greater Vancouver was up 22.6 per cent year-over-year. Vancouver, like Sydney, has seen soaring house prices in recent years.

There also doesn’t seem to be any drop-off of international interest in Vancouver. Local real-estate agent Nava Rosenberg, who has a real-estate partner of Chinese descent, says the majority of her clients are still coming from China. She points to a detached home she just sold in Vancouver’s Dunbar neighbourhood. The property was listed for just under $2-million and sold for $2.55-million, more than $500,000 over the asking price. Four out of the five offers came from buyers from China, she said, and the local offer was outbid by a whopping $300,000.... (bold mine)

http://www.theglobeandmail.com/report-on...d-commodity-price-slide/article27571608/

[geotag277]

Originally Posted by whatnext

The G&M reports Australia's booming housing market is finally slowing. Will Canada's follow the pattern? Of course Australia has foreign ownership controls so that might have helped. The article concludes with a Vancouver tale that is sadly too familiar:


After a seemingly unstoppable run of soaring valuations in recent years, house prices in major Australian cities have begun to slide in a sign that one of the world’s hottest real-estate markets is cooling.

In Sydney, Australia’s biggest and most expensive housing market, house prices fell 1.4 per cent in November, while prices in Melbourne fell by 3.5 per cent, according to data from global research firm CoreLogic RP Data. The situation has forced many sellers to cut asking prices, has led to fewer auctions resulting in sales and fewer investors piling into the real-estate market....

...On Wednesday, new real-estate figures showed the benchmark price for detached homes in Greater Vancouver was up 22.6 per cent year-over-year. Vancouver, like Sydney, has seen soaring house prices in recent years.

There also doesn’t seem to be any drop-off of international interest in Vancouver. Local real-estate agent Nava Rosenberg, who has a real-estate partner of Chinese descent, says the majority of her clients are still coming from China. She points to a detached home she just sold in Vancouver’s Dunbar neighbourhood. The property was listed for just under $2-million and sold for $2.55-million, more than $500,000 over the asking price. Four out of the five offers came from buyers from China, she said, and the local offer was outbid by a whopping $300,000.... (bold mine)

http://www.theglobeandmail.com/report-on...d-commodity-price-slide/article27571608/

So a local buyer was willing to spend 200k over the asking price for that home. And how much do you think home prices will drop without foreign buyers again?

Again the obsession with single family detached homes. A big difference between Sydney and Vancouver? Sydney is continuing to build single family detached houses because they have plenty of space to build.

http://profile.id.com.au/australia/dwellings?WebID=250

Greater Sydney has over a million "separate houses" and continues to rise. Vancouver has a tiny fraction of that and continues to fall.

Let go of the entitlement that working in Vancouver entitles you to a single family detached house.

[1ajs]

so its been 5 yrs since this thread started bizzar

[casper]

Originally Posted by 1ajs

so its been 5 yrs since this thread started bizzar

Clearly there is good evidence that the prediction "The housing bubble is close to bursting in Canada" was incorrect five, four, three, two and one year ago.

What level of confidence should we have in the prediction in 2016?

[Procrastinational]

Originally Posted by casper

Clearly there is good evidence that the prediction "The housing bubble is close to bursting in Canada" was incorrect five, four, three, two and one year ago.

What level of confidence should we have in the prediction in 2016?

I think it's relatively pointless to predict when it will bust. The only thing we can say for sure is that prices must have a correction eventually. Could be a year from now, could be ten years from now. But it will happen. If I had to guess, it will be when the baby boomers start to leave the workforce in significant numbers.

[miketoronto]

Would you guys support foreign ownership or even price controls on Canadian housing?

[Procrastinational]

Originally Posted by miketoronto

Would you guys support foreign ownership or even price controls on Canadian housing?

I'm not sure how I feel about foreign ownership controls...

But price controls on ANYTHING is a bad idea. They create more problems than they are worth. The only time they might not be a bad idea is during wartime to control inflation.


http://www.econlib.org/library/Enc/PriceControls.html
http://thismatter.com/economics/price-controls.htm

[ssiguy]

I don`t believe in price controls but I don`t think anyone who is not a citizen should be able to buy housing.

If Vancouver is `running out of land` then what the hell are we doing letting people from outside the country buy the remaining land we have! We have absolutely no responsibility to these people to offer them housing. When born and bred Canadians can`t find affordable housing due to foreigners then it`s time to stop the foreigners from buying.

It`s just money laundering by people who have absolutely no desire to actually live in Canada and even less to become Canadians in law and spirit. Canada is for Canadians not passport buyers.

[casper]

Originally Posted by ssiguy

I don`t believe in price controls but I don`t think anyone who is not a citizen should be able to buy housing.

If Vancouver is `running out of land` then what the hell are we doing letting people from outside the country buy the remaining land we have! We have absolutely no responsibility to these people to offer them housing. When born and bred Canadians can`t find affordable housing due to foreigners then it`s time to stop the foreigners from buying.

It`s just money laundering by people who have absolutely no desire to actually live in Canada and even less to become Canadians in law and spirit. Canada is for Canadians not passport buyers.

Foreign ownership controls do not work. In countries where such things are common you simply incorporate a company, and the company owns the property.

For example:
Mrs Jane Joe from London falls in love with the bungalow in Delta.
She goes to here friendly lawyer says I want to incorporate "The Jane Joe Property Company Ltd." or if less creative "323242332312 BC Ltd.".
Lawyer sets up the company with his office In Vancouver as the residency for the company and Jane Joe as the shareholder.
The company now goes and buys the bungalow.

Shell companies are a wonderful thing.

All this is accomplished by doing this is creating work for lawyers.