Canada's 'housing bubble' deemed close to bursting

[Coldrsx]

Originally Posted by giallo

Talk to Hong Kongers if you really want to see how bad it can get. There's a whole generation there that will never be able to own an apartment.

Bingo.

Van certainly is being impacted, but ain't on the level yet.

[Berklon]

Nothing surprising here. We're already seeing the brain-drain occurring in Vancouver - it'll just get worse.

Skyrocketing housing costs ‘clear and present danger’ to Vancouver’s economy, new report warns

“Anyone contemplating a move to the region faces exorbitant housing costs (and) this limits Greater Vancouver’s attraction to younger people who could represent its future,” the report states. “This represents a major barrier to retaining and attracting talent and therefore business investment. Unfortunately, the identification of causes and remedies for this clear and present danger is highly controversial.”

[Pinus]

Originally Posted by Coldrsx

Bingo.

Van certainly is being impacted, but ain't on the level yet.

Apples to Broccoli. You can't compare the costs of living in any Canadian city to Hong Kong. We are talking about affordability rates among Canadian cities only. And quite simply, because of Chinese investments in Vancouver (and now creeping into Toronto and likely other cities soon), Vancouver is now a no-go zone for most Canadians in terms of affordability. And soon, many other Canadian cities will also fall victim to this as well if measures aren't put in place to curb this effect.

Again, a bloody shame and something should be done about it; but of course nothing will.

[mistercorporate]

After years of criticizing the house flipping racket ive finally bitten the bullet and i now understand what all those vancouver trolls are on about when they claim theres no property bubble. I dont want this party to stop, my only regret is not getting in on this cash cow sooner. So to all you folks reading this, THERE IS NO BUBBLE, OUR HOUSING MARKET IS JUST FINE!! Anyone disagreeing is just jealous they dont live in sunset-mountainland!!

[esquire]

Originally Posted by mistercorporate

After years of criticizing the house flipping racket ive finally bitten the bullet and i now understand what all those vancouver trolls are on about when they claim theres no property bubble. I dont want this party to stop, my only regret is not getting in on this cash cow sooner. So to all you folks reading this, THERE IS NO BUBBLE, OUR HOUSING MARKET IS JUST FINE!! Anyone disagreeing is just jealous they dont live in sunset-mountainland!!

There is no bubble!!



/dated reference

[MolsonExport]

gfycat

[whatnext]

Originally Posted by mistercorporate

After years of criticizing the house flipping racket ive finally bitten the bullet and i now understand what all those vancouver trolls are on about when they claim theres no property bubble. I dont want this party to stop, my only regret is not getting in on this cash cow sooner. So to all you folks reading this, THERE IS NO BUBBLE, OUR HOUSING MARKET IS JUST FINE!! Anyone disagreeing is just jealous they dont live in sunset-mountainland!!

I hear sunset-mountainland is lovely this time of year!

[whatnext]

I posted this in the Vancouver thread, but it's worth having here as well as it documents how an out of control housing bubble can spread from the major city out to the secondary ones. Ontario, you've been warned, Toronto's problem will become your problem!

Essentially the former chief of staff for Gordon Campbell tears into that premier's successor for doing nothing to control a bubble. The Feds also get singled out for sitting on their hands.

...Metro Vancouver’s affordability crisis is now Greater Victoria’s unfolding nightmare.

Victoria is now the second least affordable housing market in Canada and the third-hottest luxury real estate market in the world, according to Christie’s International Real Estate.

Kelowna is now also feeling the pinch, aggravated by runaway foreign investment that is either directly or indirectly pushing home prices through the roof and putting the dream of home ownership out of reach for too many B.C. families....

...it follows that we should also ask ourselves whether our governments should act to deliberately suppress that added foreign demand, no matter how incremental it might be in further aggravating our housing affordability crisis.

That unwanted demand, it must be noted, is also largely driving certain new supplies of new housing that is being built primarily to attract those wealthy foreign buyers and the higher prices their investments leverage.

It is also hiving off huge portions of our existing housing supply to sell to those wealthy foreign buyers, who are typically wealthier than most Canadians and who enjoy a competitive edge over all domestic buyers by dint of the substantial premium they gain on our struggling currency....

http://www.straight.com/news/702206/martyn-brown-essay-bcs-housing-crisis-and-what-do-about-it

[Pinion]

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[ssiguy]

One thing Victoria could do is not allow any homes to be torn down unless they increase density ie townhome/duplex/condo. Unfortunately Victoria is doing the opposite and home demolitions are soaring. These actions mean the house itself is nothing and the land is everything. Chinese investors wouldn't want a 1950s style house and this would greatly suppress real estate prices. Vancouver has allowed wholesale demolitions and the result is the crisis you have now. Vancouver's housing crisis is nearly 100% self made.

Unfortunately the demand will continue, it has to. As StatsCan has recently confirmed, real estate is now more important to the BC economy than oil is to Alberta. Also due to extremely high prices for the last 25 years, Vancouverites are the most indebted in the nation in both mortgage and non-mortgage debt..............they have no savings.

Vancouverites may on an social level feel bad for the young people who have a life of poverty to look forward to but on an economic level they have based all their retirement income and financial future on the value in their homes. Hypothetically they may want to have prices drop so the young people have a future but on a personal level they are depending on being able to "cash out" and that invariably means selling to a foreigner.

BC cannot afford to slow down the frenzy as it's social and economic {to say nothing of political} fallout would devastate the economy.

[ssiguy]

Some say that Vancouver and BC's economy is like an oil boom town such as Fort McMurray and that is very much NOT the case.

Fort McMurray was built as an oil town while BC's was not built on real estate but has morphed into it.

Vancouver was built on lumber, natural resources, and as an important port and like all cities, tourism and socio-economic services followed. Vancouver is more akin to Windsor. It didn't start as an auto city and the city's first 75 years never produced a car but since the city went after auto production the city has become dependent on it.

Certainly it led to a lot of good economic times for Windsor but even if it wanted to change course, it's too late now. We can see by Windsor some of the economic collapse seen when the city's primary industry starts to pull back and Vancouver doesn't want that. Windsorites may not like the pollution, ugly factories, or even the rather negative connotations that come with being an auto town but that's irrelevant at this point..............the decision was consciously made and there is no returning.

This is the same with Vancouver except the consequences are much worse as people in Windsor can live without a car but people in Vancouver cannot live without housing.

[csbvan]

Originally Posted by Pinion

It's becoming normal for 2+ bedroom condos to cost $1,000,000 now. That puts condos out of reach of nearly everyone, except of course those who bought in the 90s or prior.

A 2 bedroom on the 12th floor in my building in Olympic Village was listed for 998k...I can't understand how.

[Bcasey25raptor]

If the real estate market collapses in BC, what would be the economic fallout both provincially and Federally?

[eternallyme]

Originally Posted by Bcasey25raptor

If the real estate market collapses in BC, what would be the economic fallout both provincially and Federally?

Provincially, it would likely be catastrophic...worse than what Alberta is dealing with in the past year.

Federally, it would be a hit, but if concentrated in BC and combined with growth elsewhere, it would probably not send the country as a whole into recession unless the non-real estate growth is less than, say, 1% or 1.5%. But if it spreads elsewhere (most likely Ontario/GTA), then that could change matters. I would estimate a BC-only real estate crash would knock about 1% to 1.5% off the national GDP growth, while BC+Ontario would knock about 3% to 4% off. No other region/province is in any serious real estate price problem.

[logan5]

As long as employment remains strong and there is strong population growth, how does a price adjustment in real estate cause a catastrophe? Isn't there a large middle class waiting to to buy if prices plummet? How does a correction in the real estate market cause a recession?

[biguc]

People keep their wealth in property. People borrow based on the value of their property.

[eternallyme]

I read that in cottage country in Ontario, prices have exploded in tandem with the GTA housing prices...even in places not traditionally considered such. Case of Toronto housing wealth being shifted?

[Pinion]

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[jmt18325]

Originally Posted by Pinion

If Vancouver crashes I can't imagine Toronto being unscathed, and Toronto crashing means Canada crashes.

Canada is a pretty diverse place in terms of real estate.

[Klazu]

Originally Posted by cornholio

I liked this read today about Ireland. In 2008 their situation was not identical to ours today, but their governments reaction to a clear real-estate bubble was the same.

I visited Ireland just before the crash I couldn't believe the number of new McMansions everywhere in the coutry. Even the rural countryside had huge new houses everywhere. It felt very strange at the time, but everything was explained just a year later...

What I am currently seeing here in Vancouver seems exactly the same type of phenomenon (just by different drivers). End to this crazyness is inevitable and it can't be far. Good thing I am living a debtless life.