Canada's 'housing bubble' deemed close to bursting

[ssiguy]

The reality is that any ideas of containing the real estate forgery will NEVER take place and the standard cry of racism will be used as a very convenient excuse.

In fact I can see the province and city adding fuel to the fire as they know it is essential for the city's economic well being.

[geotag277]

Originally Posted by ssiguy

The thing that discredits this idea that prices are high due to land restraints is "who is buying these houses"?

Just because Vancouver has less land available doesn't mean their boss will give them a raise. The maximum amount allowed by CMHC qualifications is the same across the country so how are all these Vancouverites affording these million+ homes?

The key thing to remember is that it is single family detached housing that is the run away train. It is easy to see why when land runs out why these prices skyrocket so much by just looking at the growth data.

Yes, Vancouver is growing at "merely" 1% a year, but that equals tens of thousands of people a year and puts Vancouver near the top of Canada's fastest growing cities. As a consequence, of these individuals, the wealthiest will gravitate towards buying single family detached homes, and as the percentage of single family detached homes relative to the population decreases, the wealth bar required to purchase said homes keeps going up and up - that's why it becomes detached from local wages, and it doesn't matter if "your boss" gives you a raise or not, or even if average wages go up or down.

The people like whatnext who are desperately trying to protect the single family housing stock in Vancouver and are adamantly against rezoning are dooming Vancouver to this unsustainable situation.

[whatnext]

Originally Posted by geotag277

You seem a bit confused. There is no restriction on the amount of money that you can bring into Canada from another country. The only thing you must do is declare it at the border.:

Which we know from gov't data many are not.

Originally Posted by geotag277

Indeed. So if you run a business in Canada, and own a vacation home in Phoenix, you are a hypocrite. Words can mean whatever whatnext wants them to mean I guess. :

There's a huge difference between purpose built vacation properties and residential homes.

Originally Posted by geotag277

I'm still waiting to hear why you tolerate the massive capital outflows of Canada to the USA. We need to stop Canadians from spending their money outside the country.

If you can't see the difference between dropping some money on rides and trinkets at Disneyland and buying up single family homes, there is truly no point trying to have an adult conversation with you.

Twist and turn all you like, we've all got your number, and your comments are duly discounted as objective.

[geotag277]

Originally Posted by whatnext

Twist and turn all you like, we've all got your number, and your comments are duly discounted as objective.

Like when Fox News calls another news organization "biased", I see this statement from you as more of a compliment.

[Berklon]

I for one am enjoying seeing the stratospheric price increases in Vancouver. I hope it goes on for a very long time. I'd love to see the average home price hit 3 million.

The brain-drain is kicking in nicely right now. My firm is effected, and so are our corporate clients who look to be moving out of Vancouver because of the high costs and lack of qualified professionals. Enough of our corporate clients do that, and we'll have to shut down our Vancouver office as well.

It's like watching a car accident in slow-motion... you can scream all you want about the danger, but no one will listen... so you just sit with some popcorn and enjoy the blood-bath.

It takes 23 years to save for a down payment in Metro Vancouver: ‘Hard work doesn’t pay off like it used to’

As our former resident (now banned) real-estate shill used to say... "to the moon!".

[lio45]

Originally Posted by Berklon

I for one am enjoying seeing the stratospheric price increases in Vancouver. I hope it goes on for a very long time. I'd love to see the average home price hit 3 million.

Same here, because as Van continues its insane rise it's clear that we'll see more of Chinese capital normally headed for Van go instead to Toronto and then Montreal (where a significant rise in Chinese cash buying has been witnessed of late in the new condo towers).

The Sherbrooke market is a "spill" market for Montreal and inevitably follows its trends, and if Mtl goes up, I'm happy.

To the moon!

[GreaterMontréal]

Originally Posted by lio45

Same here, because as Van continues its insane rise it's clear that we'll see more of Chinese capital normally headed for Van go instead to Toronto and then Montreal (where a significant rise in Chinese cash buying has been witnessed of late in the new condo towers).

The Sherbrooke market is a "spill" market for Montreal and inevitably follows its trends, and if Mtl goes up, I'm happy.

To the moon!

The housing market in Montréal will never be as high as in TO of Van, impossible. +1, $291,861 in Laval for single detached home, and -4%, 209k$ for condos. do not expect to see them double in value over the next 20 years.

[cornholio]

Prices in Vancouver have nothing to do with land constraints. The prices are well past those premiums. There are large areas of the metro area that don'r even have OCP's and are not even opened up for sub division or development yet. Townhouses and condos are also inflated in metro Vancouver. Its a speculative bubble, there are several reasons for it and it will collapse in on its self at some point in the future like all speculative bubbles do. Not if but when. We can argue all we want, but anyone who does not see this as a speculative bubble, that continues to grow, is not in the same reality as me.

Here is one of many urban land reserves in metro Vancouver of the top of my head. http://mapleridge.ca/DocumentCenter/View/4251

And worse the bubble is spreading to nearby communities such as Fraser Valley, Sunshine Coast, Nanaimo and Victoria. They all get ignored yet they are the clearest indication of the scope of the problem.

[Metro-One]

Exactly. I never expect Vancouver or even areas surrounding it to be a cheap market for housing, but we have long since flown past the limit of what land restraints and population growth can account for in prices.

I have only been gone for 2.5 years and prices has skyrocketed in Vancouver and area since, despite building endless amounts of new towers and homes in the region it seems...hmmm...

The spill over to Vicotria, Nanaimo, and other such places is what really makes me sad, seeing how I was hoping to move back to the south coast with my family in the future. looks like that wont be, another university educated working professional who may not be able to make a reasonable living in his home region (not even city anymore, region!). This spillover also highlights how this is a speculative bubble, nothing more.

And yes, it is largely fueled by Chinese money.

Here is a new render for a massive re-development in Burnaby.

Look at the train station closely. The marketing directed towards mainland China here is almost so comical that it could be mistaken for satire!

The train in the picture is not a Vancouver skytrain, but are CRH Chinese High Speed Rail cars!

Originally Posted by GeeCee

I think you mean:

And no, this is not about racism, many of my middle class vancouver born Chinese friends are just as upset and fucked over by this constant flow of investment, and they have no problem saying where much of this money is coming from.

The most ironic joke about those still using the race card (some on purpose I now think using it to derail serious conversation because they actually have business / money tied into this entire scheme) is they will eventually make the area explode with racism. Currently, the vast majority of concern about Mainland China's contribution to this problem is not due to racism, but give it a couple more decades and if nothing changes and things only get worse, well, then people's frustration and anger very well may become miss-directed and morph into a true racist form. Good job at sticking your heads in the sand and letting the problem get worse!

[milomilo]

Lol at the train. That said, that's a pretty cool development - once areas of cities get three dimensional like that it adds a whole new level of urbanity.

[geotag277]

Originally Posted by Metro-One

Exactly. I never expect Vancouver or even areas surrounding it to be a cheap market for housing, but we have long since flown past the limit of what land restraints and population growth can account for in prices.

I have definitely noticed that, especially people who were born and raised in Vancouver, seem to be in a perpetual state of either denial or yearning for the good old days of Vancouver of their youth. Back in the 90s when Vancouver was just a bit bigger than Ottawa or Calgary are today - housing was more affordable, but even then it was more expensive than Toronto. That was the time for density land use warning flags to start going off.

Now that Vancouver is double in size, you can't put the genie back in the bottle and somehow magically go back to the days of Vancouver being 1.5 million people and having enough land for every one working there to own their nice little plot of land. And it is only getting worse.

The problem is exactly as I said - once land runs out, the wealthy will gravitate towards the single family detached homes, and as the percentage of single family detached homes to general population goes down, the wealth required to acquire said land just skyrockets. In the 90s it was the top 10% of wealthy Vancouver residents. In the 00s, top 2. Now it is top 1 and getting exponentially "worse" as Vancouver continues to grow.

I have only been gone for 2.5 years and prices has skyrocketed in Vancouver and area since, despite building endless amounts of new towers and homes in the region it seems...hmmm...

"Building endlessly" is a bit of hyperbole, and furthermore condos and townhouses are not nearly the run away train that single family detached homes are. You can still find 2 bedroom condos downtown Vancouver for around 500-600k, which are in fact bigger and less per sq ft than a comparable Toronto condo. New West and Burnaby are littered with multi family developments that are largely affordable.

The City of Vancouver proper is tiny. Only a bit bigger than Manhattan. And no one talks about single family detached housing in Manhattan any more. It is absurd places like Mount Pleasant have any single family detached housing at all. The "building endlessly" that has been happening has been moderating prices to an extent, just not as much as it needs to be to meet demand.

And yes, it is largely fueled by Chinese money.

The foreign investment portion of increasing prices is due to a few hot spots, like mistercorporate pointed out, but the thing is it is entirely irrelevant to the conversation. If foreign investment is a problem, the pressure should be on policies and legislation that will protect the domestic market. The source of the capital is irrelevant. As a thought experiment, imagine that manufacturing moves en masse from China and India becomes the new world wide growth engine. Now, Indians are buying up real estate in English language cities, such as Vancouver. The same problem, different country. Maybe next decade it's Russia.

Economic fortunes will come and go for countries over the years, the heart of the matter is what specific policies and legislation we want to enact, and it needs to have nothing to do with "Chinese", "Russian", or "Indian".

[geotag277]

Originally Posted by cornholio

Here is one of many urban land reserves in metro Vancouver of the top of my head. http://mapleridge.ca/DocumentCenter/View/4251.

One urban land reserve in Maple ridge does not meet demand for housing. Vancouver is the only city in Canada where single family detached homes in the city proper are going down, and relative to it's growth rate the single family detached homes being added are by far the lowest in the country.

"Land constraints have nothing to do with Vancouver housing prices" is one of the most ridiculous statements I've ever seen.

[ssiguy]

If the city is so concerned about density all it has to do is bring in a new regulation baring the tearing down of any homes if not replaced by higher density............that along would stop 90$ of the Chinese crooks from buying the homes in the first place but that will never happen/

For Vancouver it's too late, has become a resort and money haven...........it's gone from community to commodity in a generation. What makes me sad is that beautiful Victoria seems to be embracing the Vancouver urban planning mantra of real estate for anything and tear down the houses wholesale.

[cornholio]

Originally Posted by ssiguy

If the city is so concerned about density all it has to do is bring in a new regulation baring the tearing down of any homes if not replaced by higher density............that along would stop 90$ of the Chinese crooks from buying the homes in the first place but that will never happen/

For Vancouver it's too late, has become a resort and money haven...........it's gone from community to commodity in a generation. What makes me sad is that beautiful Victoria seems to be embracing the Vancouver urban planning mantra of real estate for anything and tear down the houses wholesale.

Well the problem is it has nothing to do with density nor does it have anything to do with land constraints. The problem is a perfect storm of foreign money and low interest rates, and the result is a large speculative bubble built on local debt (and fueled with foreign money). The government will not touch it, you can count on that. They don't want to be held responsible for the eventual outcome. Their best course of action at this point is to help keep it from collapsing while they line their pockets and hope it lasts as long as possible. The day it fails they can deal with it then.

The real solutions are things like eliminating foreign ownership, bringing back capital gains taxes on primary residences, doing a better job of taxing overseas income of citizens and residents, strengthening mortgage requirements, lowering immigration rates, taxing away all capital gains on flips within say a 24 month period, etc. Eliminating foreign speculation and making short term speculation unprofitable. That would lead to a healthier market.

[casper]

Originally Posted by geotag277

The vast majority of people who refer to modern Chinese money laundering are in fact referring to the draconian capital flight law that says any Chinese citizen cannot move more than 10k of their own money abroad. Any one who does this is viewed as a money laundering criminal in the eyes of guys like whatnext.

Nevermind in the same breath they will also condemn the Chinese regime as being the most oppressive in history, this one tiny law kinda sorta works in their favour for their own political gain and so it is of the upmost importance that China (and Canada) properly enforce this draconian capital restriction.

Cognitive dissonance at it's finest.

That is not money laundering based on Canadian standards and values.

That is a problem the Chinese government may have with the transaction, but I don't see why Canada, BC or Canadians in general should care. The person who has the money has earned it legitimately and wants to bring it to Canada and spend it here.

[casper]

Originally Posted by ssiguy

If the city is so concerned about density all it has to do is bring in a new regulation baring the tearing down of any homes if not replaced by higher density............that along would stop 90$ of the Chinese crooks from buying the homes in the first place but that will never happen/

For Vancouver it's too late, has become a resort and money haven...........it's gone from community to commodity in a generation. What makes me sad is that beautiful Victoria seems to be embracing the Vancouver urban planning mantra of real estate for anything and tear down the houses wholesale.

Vancouver has gone through cycles. The small bungalows replaced by Vancouver specials. Now being replaced by "monster homes" that frankly are actually quite nice and much denser.

In Victoria there are actually a lot of homes recently on the market that should be bulldozed. There is a lot of old housing stock that have significant issues. You don't see a lot of modern homes being bulldozed.

Victoria should remove some of the hight restrictions that do exist.

[Acajack]

Originally Posted by GreaterMontréal

The housing market in Montréal will never be as high as in TO of Van, impossible. +1, $291,861 in Laval for single detached home, and -4%, 209k$ for condos. do not expect to see them double in value over the next 20 years.

C'est encore drôle...

House prices in my part of Gatineau have multiplied by 2.5 in just under 20 years, so it is definitely possible.

Of course, they could also crash. Or stagnate.

One never knows.

I agree that Montreal will never catch up to Vancouver or Toronto. But prices in Montreal may reach where Vancouver and Toronto are today.

[lio45]

Originally Posted by Acajack

C'est encore drôle...

House prices in my part of Gatineau have multiplied by 2.5 in just under 20 years, so it is definitely possible.

Of course, they could also crash. Or stagnate.

One never knows.

I agree that Montreal will never catch up to Vancouver or Toronto. But prices in Montreal may reach where Vancouver and Toronto are today.

Exactly. No need to catch Vancouver for it to nonetheless be a significant rise.

[CanSpice]

It looks like the BC Liberal plan to help the housing affordability problem is to call people whiners.

[lio45]

Originally Posted by CanSpice

It looks like the BC Liberal plan to help the housing affordability problem is to call people whiners.

Correct me if I'm wrong but aren't Lower Mainland SFH owner-occupiers an important voter demographic to court and/or count on for the BC Liberals?

If so, what you are calling a "problem" is in fact the exact opposite -- it's great.

Frankly, if any political party (federal or provincial) had a credible plan to manage to bring Sherbrooke property prices to Vancouver levels overnight and was dead set on implementing it if elected, then they'd be getting my vote in a heartbeat and I might even campaign for them, donate, do anything I can to help boost their chances of getting elected. Business 101...

You'd be foolish to expect people to behave any differently!