Canada's 'housing bubble' deemed close to bursting

[CanSpice]

Originally Posted by lio45

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.

I seem to remember a thread on some forum somewhere that had pages and pages about how we're in a housing bubble and how that's a problem. Or I guess a housing bubble isn't a problem then?

[lio45]

Originally Posted by CanSpice

I seem to remember a thread on some forum somewhere that had pages and pages about how we're in a housing bubble and how that's a problem. Or I guess a housing bubble isn't a problem then?

It's definitely "a problem" for some people -- the ones who'd like to be able to own property in Vancouver.

It's great for other people -- the ones who already own. This group includes SSPers like sunsetmountainland, and I suspect many BC Liberal voters fall into that category as well.

It's a bit like the exchange rate -- for me the high loonie was wonderful and the low loonie hit me in the wallet pretty hard. But the Ontario manufacturing sector probably had a point of view differing from mine on "the devastatingly catastrophic problem of the low loonie". If I could have helped elect a government promising to act to make sure the loonie stayed over the US dollar, I'd have done that in a heartbeat.

[whatnext]

Originally Posted by CanSpice

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

The same as the geotag277 solution. Both are out of touch and clueless about Vancouver's housing market.

[mistercorporate]

Originally Posted by lio45

It's definitely "a problem" for some people -- the ones who'd like to be able to own property in Vancouver.

It's great for other people -- the ones who already own. This group includes SSPers like sunsetmountainland, and I suspect many BC Liberal voters fall into that category as well.

It's a bit like the exchange rate -- for me the high loonie was wonderful and the low loonie hit me in the wallet pretty hard. But the Ontario manufacturing sector probably had a point of view differing from mine on "the devastatingly catastrophic problem of the low loonie". If I could have helped elect a government promising to act to make sure the loonie stayed over the US dollar, I'd have done that in a heartbeat.

How did it hit you hard? I would have assumed the opposite.

[lio45]

Originally Posted by mistercorporate

How did it hit you hard? I would have assumed the opposite.

The loonie crashed right in the middle of a huge contract for us (ongoing during 2014-2015) that was quoted, negociated and signed in Canadian dollars but our suppliers are all American. Thankfully, we had enough margin...

I initially wanted to quote in USD (because that's what all our expenses are in) but our Canadian client insisted on fixing a price in CAD. I did not expect it would go from near parity to 68 cents over the next year and a half...

Based on that experience, recently we managed to get Canadian customers to accept contracts in USD a few times.

Now that that one-time hit has been taken, though, you're right that the low loonie is not really harming me any more. In fact, now that I have sizable real estate portfolios on both sides of the border, the US/Can exchange rate can move in any direction and I'll inevitably gain on one side but lose on the other.

Generally though, I still prefer the loonie to be as high as possible, as most of my revenue (current and future) is in Canada but most of my investment plans for the foreseeable future are in the US.

[mistercorporate]

Originally Posted by lio45

The loonie crashed right in the middle of a huge contract for us (ongoing during 2014-2015) that was quoted, negociated and signed in Canadian dollars but our suppliers are all American. Thankfully, we had enough margin...

I initially wanted to quote in USD (because that's what all our expenses are in) but our Canadian client insisted on fixing a price in CAD. I did not expect it would go from near parity to 68 cents over the next year and a half...

Based on that experience, recently we managed to get Canadian customers to accept contracts in USD a few times.

Now that that one-time hit has been taken, though, you're right that the low loonie is not really harming me any more. In fact, now that I have sizable real estate portfolios on both sides of the border, the US/Can exchange rate can move in any direction and I'll inevitably gain on one side but lose on the other.

Generally though, I still prefer the loonie to be as high as possible, as most of my revenue (current and future) is in Canada but most of my investment plans for the foreseeable future are in the US.

Yeah, you had no way of foreseeing that, glad you made it through okay. Contracts can make or break you.

[GreaterMontréal]

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.

ce sont les baby-boomers qui ont fait monter les prix. C'étaient eux les plus riches et les plus nombreux acheteurs. Ils se mangeaient entre eux. Maintenant que le peak d'achat a été atteint, à moins d'un revirement incroyable, le prix va suivre l'inflation, sauf à quelques endroits à Montréal. Les gens n'ont plus les moyens de payer 100k$ de plus pour la même maison. Il se construit des 2 étages assez gros, mais ces maisons ne coûtent pas 1M$. Je parle des banlieues de Montréal. Je ne crois pas que le prix moyen des unifamiliales à Laval va approcher les 400k$ avant 2025 si les salaires ne suivent pas.

[geotag277]

Originally Posted by whatnext

The same as the geotag277 solution.

There it is folks, plain as day the intellectual honesty and accuracy of whatnext's posts summed up in one neat phrase. Here is claims my only solution to the housing affordability problem in Vancouver is to call people whiners.

This literally coming mere minutes after I posted the following:

http://www.skyscraperpage.com/forum/showpost.php?p=7452036&postcount=5224

Credibility: zero.

[whatnext]

Originally Posted by geotag277

There it is folks, plain as day the intellectual honesty and accuracy of whatnext's posts summed up in one neat phrase. Here is claims my only solution to the housing affordability problem in Vancouver is to call people whiners.

This literally coming mere minutes after I posted the following:

http://www.skyscraperpage.com/forum/showpost.php?p=7452036&postcount=5224

Credibility: zero.

Because your simplistic solution of "let's build our way out of this" has already been discredited so many times and as recently as today by one of the big banks:
http://www.theglobeandmail.com/report-on...igh-risk-zone-rbc-warns/article30182784/

Everyone here realizes some sense of tribalism is preventing you from acknowledging the real problem. Keep at it if you like, but nobody's taking you seriously.

[geotag277]

Originally Posted by whatnext

Because your simplistic solution of "let's build our way out of this" has already been discredited so many times and as recently as today by one of the big banks:
http://www.theglobeandmail.com/report-on...igh-risk-zone-rbc-warns/article30182784/

Everyone here realizes some sense of tribalism is preventing you from acknowledging the real problem. Keep at it if you like, but nobody's taking you seriously.

"Some sense of tribalism" huh? More incoherent paranoid bullshittisms from the incoherent paranoid bullshittisms master.

Let's talk about the article you linked too. It apparently tries to draw the conclusion that since multi family developments are historically high, that is some kind of extreme warning sign that something is wrong. Let's use our brains for a second and consider what is going on.

All these cities are twice the size they were twenty years ago.

All these cities are experiencing massive urban development growth and demand as a style of living.

All these cities can't possibly supply the land to place single family detached homes to accommodate the population growth rate, except potentially Montreal who incidentally also has the most affordable housing.

But yes, yes, let's throw up alarm bells because now that Vancouver is 2.5 million people instead of 1.5, Vancouver is for some reason building more multi family developments then they have historically.

Sorry, no incoherent paranoid bullshittisms from me. That's your area of expertise.

[geotag277]

I should also point out that if there is "absorption risk" to new mutli family development, what do you think happens? The prices go down, making those units more affordable. So, in effect, the RBC article is actually showing that you can "build your way out of an affordability problem". Because absorption risk will saturate inventory and drive down prices.

Oops.

[mistercorporate]

Come on you suckers, there is no bubble! Vancouver is the next San Fran and Toronto is the next London! A natural price for Van is $5 million per condo. Haters gonna hate!! Wooty woot!

[whatnext]

Originally Posted by geotag277

"Some sense of tribalism" huh? More incoherent paranoid bullshittisms from the incoherent paranoid bullshittisms master.

Let's talk about the article you linked too. It apparently tries to draw the conclusion that since multi family developments are historically high, that is some kind of extreme warning sign that something is wrong. Let's use our brains for a second and consider what is going on.

All these cities are twice the size they were twenty years ago.

All these cities are experiencing massive urban development growth and demand as a style of living.

All these cities can't possibly supply the land to place single family detached homes to accommodate the population growth rate, except potentially Montreal who incidentally also has the most affordable housing.

But yes, yes, let's throw up alarm bells because now that Vancouver is 2.5 million people instead of 1.5, Vancouver is for some reason building more multi family developments then they have historically.

Sorry, no incoherent paranoid bullshittisms from me. That's your area of expertise.

My, my someone's getting a little defensive.

Don't you think the RBC economists took population growth into account. Prices don't go down as overbuilding continues because there's always a foreign buyer to snap up those units, until that tap is shut off by government action.

You live in Calgary. Don't pretend to be an expert in the Vancouver market, even if daddy and mummy jetted in and snapped up a few condos to stash some cash.

[geotag277]

Originally Posted by whatnext

My, my someone's getting a little defensive.

Don't you think the RBC economists took population growth into account. Prices don't go down as overbuilding continues because there's always a foreign buyer to snap up those units, until that tap is shut off by government action.

You live in Calgary. Don't pretend to be an expert in the Vancouver market, even if daddy and mummy jetted in and snapped up a few condos to stash some cash.

More embarrassing assumptions on your behalf. My parents come from extremely humble origins. For the record I've given my parents several times over what they ever monetarily spent on me, including funding their current home. I'm wondering if you can say the same?

RBC itself is intimately tied to the real estate market, which makes several assumptions regarding future appreciation. RBC wants housing to continually increase, because that is a sign that demand is continually increasing. If real estate goes down, like it has in Calgary, that is generally bad news for real estate, and by extension, RBC who is funding these mortgages.

The fact that market absorption from multi family developments are going down in all Canadian cities implies this will put downward pressure on the market for these units, thereby increasing affordability. That should be exactly what everybody wants, including allegedly you, who continually rails against multi family developments.

So again, let me ask you point blank - what exactly is the problem with the conclusion of the RBC report that indicates potential absorption risk for multi family development as it relates to your housing affordability problem? Why would you be concerned at all about that development and why wouldn't you be cheering about the downward price pressure implications?

[whatnext]

Originally Posted by geotag277

More embarrassing assumptions on your behalf. My parents come from extremely humble origins. For the record I've given my parents several times over what they ever monetarily spent on me, including funding their current home. I'm wondering if you can say the same?

RBC itself is intimately tied to the real estate market, which makes several assumptions regarding future appreciation. RBC wants housing to continually increase, because that is a sign that demand is continually increasing. If real estate goes down, like it has in Calgary, that is generally bad news for real estate, and by extension, RBC who is funding these mortgages.

The fact that market absorption from multi family developments are going down in all Canadian cities implies this will put downward pressure on the market for these units, thereby increasing affordability. That should be exactly what everybody wants, including allegedly you, who continually rails against multi family developments.

So again, let me ask you point blank - what exactly is the problem with the conclusion of the RBC report that indicates potential absorption risk for multi family development as it relates to your housing affordability problem? Why would you be concerned at all about that development and why wouldn't you be cheering about the downward price pressure implications?

Because this kind of overbuilding is the classic sign of a housing bubble. When bubbles unwind the price decreases are messy and ruinous. It is far better the various levels of government step in now to slowly deflate it. The problem starts at the top with offshore money driving up the cost of single family homes and the trickle down from that driving up the prices of condos and townhomes.

What I predicted years ago is coming to pass: housing gridlock. People cannot move up because offshore money is blocking that natural progression, so everyone becomes stuck in place (or leaves). From today's paper:

Skyrocketing housing prices in Toronto and Vancouver are now preventing even existing homeowners from being able to upgrade into a new home.

While much has been made of the plight of first-time homebuyers who have to contend with lack of affordability in both markets, TD Economics notes that higher prices are now locking out those who bought entry-level homes years ago and are hoping to upgrade...
http://www.theprovince.com/business/toro...idlock+even+existing/11947341/story.html

[geotag277]

Originally Posted by whatnext

Because this kind of overbuilding is the classic sign of a housing bubble. When bubbles unwind the price decreases are messy and ruinous. It is far better the various levels of government step in now to slowly deflate it. The problem starts at the top with offshore money driving up the cost of single family homes and the trickle down from that driving up the prices of condos and townhomes.

I see. So really you don't want to "build our way out of it", and in fact, when "building our way out of it" appears to be working, you think it is a bad thing. "Overbuilding" is what balances a real estate market.

Cognitive dissonance at it's finest.

For the record, I believe government should step in and try their hand at some form of foreign investment controls related to real estate, like Australia is doing (it is pretty shameful Canada is behind Australia on this front to be honest) - but building housing to meet or exceed demand is the key factor in balancing the real estate market. And for Toronto and Vancouver (and indeed many urban Canadian cities like Ottawa and Calgary who are strained more and more by sprawl) - the only way out is more and more multi family development.

But I am glad you admit in the most backhanded way possible that "building our way out" is in fact working.

[Docere]

Originally Posted by whatnext

You live in Calgary. Don't pretend to be an expert in the Vancouver market, even if daddy and mummy jetted in and snapped up a few condos to stash some cash.

Originally Posted by geotag277

More embarrassing assumptions on your behalf. My parents come from extremely humble origins. For the record I've given my parents several times over what they ever monetarily spent on me, including funding their current home. I'm wondering if you can say the same?

A lesson about online debating.

Never use "you've been bankrolled by mommy and daddy" as an "argument." First of all it's an ad hominem attack. Second of all, the answer will always be "I'm extremely successful, due entirely to my own talent and efforts."

It's not like this is an anonymous online discussion board or anything.

[ssiguy]

Building more housing in Vancouver won't do squat for affordability............Vancouver itself is proof of that. The more the build, the more foreigners buy. Hell many homes and condos are on sale on Chinese sites and are sold before Vancouverites knew they were even on the market. Go to ANY open house in Vancouver and there are constantly lines of nothing but Asian faces. Many new towers in Vancouver don't include the number 7 because it's bad luck for the Chinese and conversely nearly all homes for sale in Vancouver end with an '8' as it's good luck in Chinese.

I'm in White Rock and there is a full scale Asian invasion taking place and homes are being torn down at a dizzying rate and the Chinese population is soaring. The other day I saw a for-sale sign and it was sold but instead of having a 'sold' sticker across it it had a 'too late'.

[ssiguy]

The BC government is making a fortune on this money laundering scheme and has no intention of turning off the tap. The situation for Ottawa however is a bit different.

Ottawa really doesn't make a whole lot on the housing frenzy and proportionately far less than the province or city. Their situation is, however, a bity more precarious.

If the bubble bursts in BC and there is a major price collapse caused by restriction on foreign money and changes to the tax code {not that they will ever do it} then the implication for the economy and especially the nation's finance and financial standing could be very negatively effected.

A slowing in the Vancouver economy won't make much of a difference nationally and certainly the powers that be in the Tor/Mon/Ott Golden Triangle couldn't care less but foreign investors and Canadians will.

This is because of that runaway monster CMHC. BC is only 13% of the population but makes up a far larger portion of CMHC loans and the loans themselves {due to the cost of housing} is far above any other province.

If a house in Halifax is worth 250k and there is a 10% drop then they are in negative equity by $25k which no one likes but the home owner would be willing to live with as over the long term it will rise again.

If, on the other hand, the Vancouver house is worth $1.3 million with $1 million mortgage and the prices drop 25% {due to being far more overvalued than Halifax houses} that means those people are in the red by $250k. At that kind of money, people will not take the hit but will walk away and give the keys back to the bank. Of course the banks don't care because they will simply forward the keys to Ottawa.

Ottawa is on the hook for ever single sent of CMHC debt which currently stands at about $600 billion...........the same as the national debt.

Also Vancouverites are much more likely to have to turn the keys over to the bank/ Ottawa if the prices only decline 10% but the economy turns south. This is because if one person in the family gets laid off the mortgage in that Halifax home could still probably be handled. In Vancouver however, one person losing their job wipes out any chance of making the mortgage payments backed up by the fact that Vancouverites have the highest non-mortgage debt in the country.

By allowing the housing frenzy to continue in Vancouver they have not only screwed an entire young generation of ever living in the city but also placed the nation's finances in a very precarious state.

[Acajack]

Originally Posted by GreaterMontréal

ce sont les baby-boomers qui ont fait monter les prix. C'étaient eux les plus riches et les plus nombreux acheteurs. Ils se mangeaient entre eux. Maintenant que le peak d'achat a été atteint, à moins d'un revirement incroyable, le prix va suivre l'inflation, sauf à quelques endroits à Montréal. Les gens n'ont plus les moyens de payer 100k$ de plus pour la même maison. Il se construit des 2 étages assez gros, mais ces maisons ne coûtent pas 1M$. Je parle des banlieues de Montréal. Je ne crois pas que le prix moyen des unifamiliales à Laval va approcher les 400k$ avant 2025 si les salaires ne suivent pas.

Ce ne sont pas les boomers qui ont fait monter les prix à partir de 1998 environ. La plupart d'entre eux étaient dans la cinquantaine avancée à l'époque et commençaient à vouloir se départir des maisons dans lesquelles ils avaient élevé leurs familles.

Ce sont les générations X et Y qui ont fait exploser le marché. Ça leur a pris du temps avant d'avoir des bons emplois, mais quand c'est arrivé ils ont acheté des propriétés en masse. Il y avait aussi les immigrants.