Canada's 'housing bubble' deemed close to bursting

[dleung]

Originally Posted by ssiguy

Funny. My brother put his 1980 3 bed/3 bath, 1800 sq feet rancher, no basement place in South Surrey which is 25km from downtown and at least 45 minutes in rush hour for $1.7 million on the market this week. A Chinese couple stopped and looked at it while they were walking around and were surprised it was that "affordable"...

He already has a house in South Surrey, can sell it for almost $2 million, but "desperately" needs to repurchase at <$1million in the same area? LOL I don't think it works that way

Originally Posted by ssiguy

My brother is desperately trying to find a decent house out here in SS/WR 25 km and one hour in rush hour to downtown for less than a million...

[Pinion]

My brother, who happens to be a "Canadian immigration official," just bought a place in New Westminster for $350,000. Technically a bachelor suite, it's a two level condo with a loft "bedroom." 10 years old, right next to industrial train tracks, but since he works at the border he can't live any farther north, and hates the more traditional suburbs.

I though this was insane until I looked up price in my (nicer) North Vancouver area and saw comparables to my condo were $80-100k more than last time I looked.

[whatnext]

Originally Posted by dleung

There should be binding contracts on how much money the immigrant must invest in the local market beyond real estate, or employment salaries given, etc. The government has a long ways to go on milking more out of these people before it comes remotely close to that sweet spot where it's just barely a good enough deal to keep them coming.

A very good idea. There were too many businesses created just for the sake of satisfying the program that were folded shortly after the requirement was satisfied. Not only does that subvert the intent of the program, it hurts genuine businesses have to make money to survive.

[CanSpice]

Originally Posted by Pinion

My brother, who happens to be a "Canadian immigration official," just bought a place in New Westminster for $350,000. Technically a bachelor suite, it's a two level condo with a loft "bedroom." 10 years old, right next to industrial train tracks, but since he works at the border he can't live any farther north, and hates the more traditional suburbs.

I though this was insane until I looked up price in my (nicer) North Vancouver area and saw comparables to my condo were $80-100k more than last time I looked.

That's crazy, when we were looking at townhouses six months ago there were quite a few 2-bedrooms available for under $400k. Older buildings than 10 years, mind you, but still.

[rousseau]

You know how I know the housing market has officially jumped the shark?

Well, I don't actually know for sure, but I figure the fact that there is now a flashy new Range Rover parked on the street outside my house is as good a portent as any.

After a rumoured legal delay the renovation of the two-storey Victorian brick place across the street from me is back on. The owner bought it for $350,000 and is spending that much again to update it. She sold her house in Toronto for well into the seven figures. She has the moolah in a way than nobody else on my street does.

Because my neighbourhood may be close enough to downtown to be sorta funky, what with its Victorian housing stock and quirky B&B vibe, but we're certainly not riche, nouveau or otherwise. This car stands out like a sore thumb. It's black, fer crissakes. It says: "I'm in a rush at the moment; can you possibly discuss it with the maid?" Which is probably not what this newly-retired neighbour is actually intending to say, but she could be going through a late-life crisis, and now has more cash than sense.

If this kind of thing can happen in a staunchily staid burg like Stratford, then it could happen literally anywhere. Is nowhere immune? Whatever happened to reserved good taste, and not ruffling the feathers of the neighbours? I haven't even met her yet, but rest assured, the first time I do I will temper my normally gregarious friendliness with an ever-so-subtle tinge of automotive disapproval, and will continue to do so during subsequent encounters until such time as she recognizes her transgression and trades the Range Rover in for something more sedate like a BMW.

Or throws a good summer barbecue.

[geotag277]

Yup, if you asked me to sum up rousseau in two words it would most assuredly be "gregarious friendliness"

All jokes aside, it doesn't get more small minded than stereotyping an individual based wholly and entirely on the car they drive. Are you also the type to assume every female who steps out of a Subaru won't be interested?

[ssiguy]

Originally Posted by dleung

He already has a house in South Surrey, can sell it for almost $2 million, but "desperately" needs to repurchase at <$1million in the same area? LOL I don't think it works that way

He knows it doesn't work that way. He says he wishes prices were half what they are today {which would cost him plenty} because it would mean that the young people wouldn't have to leave.

You see my brother has something that you clearly can't contemplate.........a social conscience. He thinks it is scandalous that foreigners are warping the real estate market and it is the locals {especially those under 30} who are paying the price. He believes, unlike BC politicians, Chinese money launderers, and developers, that housing is a human right and one that should be enjoyed by all. He does not believe that it should be bought and sold with no more thought than buying a car, TV, or IPOD because it, unlike those things, is a necessity of life.

[ssiguy]

BTW, did some fact checking....................there are about 430 SFH for sale in White Rock/South Surrey {pop approx. 90,000} and of those 430 only 32 are less than $1 million.

[dleung]

Originally Posted by ssiguy

He knows it doesn't work that way. He says he wishes prices were half what they are today {which would cost him plenty} because it would mean that the young people wouldn't have to leave.

You see my brother has something that you clearly can't contemplate.........a social conscience. He thinks it is scandalous that foreigners are warping the real estate market and it is the locals {especially those under 30} who are paying the price. He believes, unlike BC politicians, Chinese money launderers, and developers, that housing is a human right and one that should be enjoyed by all. He does not believe that it should be bought and sold with no more thought than buying a car, TV, or IPOD because it, unlike those things, is a necessity of life.

Ok... so does that mean he's gonna sell his $2 million house for $1 million, because of his "social conscience"? Not sure what your point is

[whatnext]

Originally Posted by Pinion

My brother, who happens to be a "Canadian immigration official," just bought a place in New Westminster for $350,000. Technically a bachelor suite, it's a two level condo with a loft "bedroom." 10 years old, right next to industrial train tracks, but since he works at the border he can't live any farther north, and hates the more traditional suburbs.

I though this was insane until I looked up price in my (nicer) North Vancouver area and saw comparables to my condo were $80-100k more than last time I looked.

Yup. I looked at a condo in Harbour Cove on False Creek not quite a year ago which ended up selling for $800k. It's now on the market again for $1.028 million with nothing changed. A 200k increase on a 30 yr old 2 bdr condo. Total bubble behaviour.

[whatnext]

A long but chilling piece from The Walrus on what is happening to Vancouver:
http://thewalrus.ca/the-highest-bidder/

A couple interesting points: after 15 years in Canada refugee claimants report higher income than well-heeled investor immigrants.
And if Chinese nationals are only legally able to take $50k out of the country, how are they able to buy multimillion dollar homes? Is it dirty money?

[esquire]

^ If no one wants to do anything about the Vancouver situation because "racism!", then why not just pack up and leave, either further east into suburbia or to a different city altogether? What reason is there for an average middle income earning family that didn't luck into homeowning through a long-ago purchase or inheritance to stick around in Vancouver?

[lio45]

My ex in Australia was asking me advice a few days ago on buying a property in Canada for the duration of her postdoc (the two leading contenders are IML in Rimouski and something at SFU = Vancouver) and after I told her a bit about the market situation in Vancouver, she pointed out the exact same phenomenon (real estate being a prime destination for dirty Mainland Chinese cash) was totally at play in Sydney, with pretty big impacts on the city -- it's extremely unaffordable nowadays, the market's completely out of whack with metrics like wages and rents.

I think Vancouver and Sydney maybe should start paying attention to each other, see what works, learn from the other's mistakes, etc.

I have no idea if one is a bit further along in the process than the other, but if so, it would likely be interesting for the "laggard" to watch the other very closely.

[someone123]

Originally Posted by lio45

My ex in Australia was asking me advice a few days ago on buying a property in Canada for the duration of her postdoc (the two leading contenders are IML in Rimouski and something at SFU = Vancouver) and after I told her a bit about the market situation in Vancouver, she pointed out the exact same phenomenon (real estate being a prime destination for dirty Mainland Chinese cash) was totally at play in Sydney, with pretty big impacts on the city -- it's extremely unaffordable nowadays, the market's completely out of whack with metrics like wages and rents.

I think Vancouver and Sydney maybe should start paying attention to each other, see what works, learn from the other's mistakes, etc.

I have no idea if one is a bit further along in the process than the other, but if so, it would likely be interesting for the "laggard" to watch the other very closely.

My impression is that Vancouver/BC/Canada are the laggards, which may explain why things are heating up even more now. There's been a fair amount of Canadian news coverage of Australian real estate controls (one article: http://www.theglobeandmail.com/report-on...wnership-a-model-for-bc/article24325255/). In Australia, data about foreign buyers is tracked and published. Foreigners are also only allowed to buy new construction, not older homes. Despite these controls, Australian real estate is still very expensive.

One area I'm not sure about is the question of immigration and who is considered "foreign". I am not sure if Australia ever had something like Canada's investor class immigrant program. It's very easy for a wealthy person from China to qualify as a "local" rather than "foreign" in BC. The few statistics that are compiled about the impact people from other countries are having on Canada are frequently kind of useless or misleading because of this.

[Berklon]

Originally Posted by esquire

^ If no one wants to do anything about the Vancouver situation because "racism!", then why not just pack up and leave, either further east into suburbia or to a different city altogether? What reason is there for an average middle income earning family that didn't luck into homeowning through a long-ago purchase or inheritance to stick around in Vancouver?

That's what many are doing - especially millennials... but not by choice.
The brain-drain is on. We're already hearing about it.
The company I work for is having a MUCH harder time finding qualified professionals to hire in our Vancouver office. When that happens to companies, they'll move to where the talent is.

[khabibulin]

Originally Posted by lio45

My ex in Australia was asking me advice a few days ago on buying a property in Canada for the duration of her postdoc (the two leading contenders are IML in Rimouski and something at SFU = Vancouver) and after I told her a bit about the market situation in Vancouver, she pointed out the exact same phenomenon (real estate being a prime destination for dirty Mainland Chinese cash) was totally at play in Sydney, with pretty big impacts on the city -- it's extremely unaffordable nowadays, the market's completely out of whack with metrics like wages and rents.

I think Vancouver and Sydney maybe should start paying attention to each other, see what works, learn from the other's mistakes, etc.

I have no idea if one is a bit further along in the process than the other, but if so, it would likely be interesting for the "laggard" to watch the other very closely.

I would assume that the same thing is going on in Los Angeles and San Francisco? Can anyone confirm?

[CanSpice]

Originally Posted by Berklon

That's what many are doing - especially millennials... but not by choice.
The brain-drain is on. We're already hearing about it.
The company I work for is having a MUCH harder time finding qualified professionals to hire in our Vancouver office. When that happens to companies, they'll move to where the talent is.

This right here is the flip side of the housing affordability problem in Vancouver: companies aren't willing to pay wages to attract candidates. Companies always say "we're having hard times finding qualified professionals" while at the same time offering wages that are 50% lower than what companies would pay in Toronto. Wages in Vancouver have hardly grown over the past two decades.

If you're having trouble finding suitable candidates it's not just because they're not there, it's partially because companies aren't offering decent wages.

[esquire]

Originally Posted by CanSpice

This right here is the flip side of the housing affordability problem in Vancouver: companies aren't willing to pay wages to attract candidates. Companies always say "we're having hard times finding qualified professionals" while at the same time offering wages that are 50% lower than what companies would pay in Toronto. Wages in Vancouver have hardly grown over the past two decades.

If you're having trouble finding suitable candidates it's not just because they're not there, it's partially because companies aren't offering decent wages.

Even if those companies doubled their offers, would it really make much of a difference to earn $150K as opposed to $75K if a crappy little SFH was still a million dollar+ purchase in Vancouver?

It's not up to local companies to fix the absurdity that has emerged in Van's local real estate market.

[Berklon]

You're both correct.
Professionals can't stay because it costs too much to live in Vancouver, and companies can't afford to pay these professionals enough to stay to help afford living in Vancouver.

So eventually the company has a hard time staying competitive without the proper talent and will move to where the talent is. This causes a daisy-chain effect - not just because of the lack of talent, but because there will be less companies around for other companies to provide products/services to - so they close up shop or relocate to where their customers are.

The Vancouver economy suffers because of it.

But, hey - the price of that empty house that's falling apart is now 2 million... so...ummmm... hooray?

[lio45]

Originally Posted by khabibulin

I would assume that the same thing is going on in Los Angeles and San Francisco? Can anyone confirm?

Really not to same extent as in Vancouver and Sydney -- not anywhere near it.