Canada's 'housing bubble' deemed close to bursting

[Berklon]

Originally Posted by logan5

Actually Hamilton has more expensive housing than Calgary. Hamilton home prices rose 14.9% over a 1 year period. A huge jump, just like other land constrained cities. Cities with no land constraints had very slight price increases or declines.

This is the first I've heard of Hamilton being land-constrained.

[lio45]

Originally Posted by geotag277

Real estate markets aren't complicated. It's supply and demand. If a location cannot build enough of one type of housing stock to meet demand, prices will rise. There are no special snowflakes.

Yeah, and my point is that what brought the Vancouver market to such insane heights is mostly that intense demand for housing as a safe and convenient place to park cash smuggled away from the PRC. You, on the other hand, seem to want to ignore the elephant in the room and act like it's all land constraints, while in truth it's probably a pretty distant factor (IMO, as I said already, land constraints and the incredibly low interest rates are the other two main factors pushing the prices to such abnormal heights, but it seems obvious they're far behind Chinese money in importance).

Overbuilding will help push prices down, I've never denied that; it's obvious. Zoning for higher density will also have that effect. Successfully keeping PRC buyers out would do wonders for bursting the bubble (getting those half a century old covenants preventing Oriental ownership out of the mothballs would assuredly work for bringing prices back to more normal levels). It's up to the Vancouver and BC voters to do something about it, if they want. Whatever they prefer.

[lio45]

Originally Posted by geotag277

It's not a fact and is easy to debunk. Laws are set up to optimize freedom across the population

Laws are set up to optimize happiness for the general population, not freedom. The distinction is important.

And yes, whether you want it or not, it's a cold hard fact that "there are zero rules, everyone can do what they want" is an unarguably more free situation from the participants' points of view than "there are a number of strict rules governing what you can and cannot do". That's not even up for debate.

[rbt]

Originally Posted by Berklon

This is the first I've heard of Hamilton being land-constrained.

Take a look at the greenbelt in the Hamilton area.

http://www.mah.gov.on.ca/Page1392.aspx

They have lots of opportunity for vertical growth by rebuilding areas for increased density but not much space for completely new SFH neighbourhoods.

[Pavlov]

Originally Posted by logan5

Actually Hamilton has more expensive housing than Calgary. Hamilton home prices rose 14.9% over a 1 year period. A huge jump, just like other land constrained cities. Cities with no land constraints had very slight price increases or declines.

You seriously think its just a coincidence that the highest home prices are in land constrained cities?

That would be surprising. Latest numbers for average and median house prices in Calgary are still substantially higher than Hamilton. Do you have a source?

[dleung]

Originally Posted by ssiguy

Yes, I'm making it all up just for you. All the kids are staying because the wages are astronomical and the housing is so cheap that they have just so many options that it overwhelms them so they leave so they can have fewer options.

The fakeness of your anecdotes to hide your own xenophobia have nothing to do with whether the underlying problems are real to begin with

[logan5]

Originally Posted by Reesonov

That would be surprising. Latest numbers for average and median house prices in Calgary are still substantially higher than Hamilton. Do you have a source?

http://www.crea.ca/housing-market-stats/national-average-price-map/

[Stingray2004]

Originally Posted by cornholio

Earlier I posted a link to one of the many Urban land reserves, specifically one in Maple Ridge that is expected to be opened up in 2030 once Maple Ridge hits 100k people and develops most of its develop-able land, and this year is already pushed back by a decade due to slower then expected growth.

Do you even know where Maple Ridge's "Thornhill Urban Reserve" is located? Not on the flat prairie lands where most of Maple Ridge's population resides (along with major ALR lands) but on the north side of the Fraser River near Whonnock, which is also near the Mission border - wayyyyyyy out there in the boonies. That rural area goes up a hillside/mountainside and subdivision servicing development in areas akin to that are also very expensive due to major earth-moving and blasting requirements.

Furthermore, AFAIK, major sanitary sewer/water mains are also both very distant and very expensive to bring to the area to boot.

As an aside, housing prices in the Abbotsford and Chilliwack areas are also surging upwards now. A nutty market whereby listings have tumbled almost everywhere, due to spooked potential sellers staying put, while putting the market further out of equilibrium.

[cornholio]

Originally Posted by Stingray2004

Do you even know where Maple Ridge's "Thornhill Urban Reserve" is located? Not on the flat prairie lands where most of Maple Ridge's population resides (along with major ALR lands) but on the north side of the Fraser River near Whonnock, which is also near the Mission border - wayyyyyyy out there in the boonies. That rural area goes up a hillside/mountainside and subdivision servicing development in areas akin to that are also very expensive due to major earth-moving and blasting requirements.

Furthermore, AFAIK, major sanitary sewer/water mains are also both very distant and very expensive to bring to the area to boot.

As an aside, housing prices in the Abbotsford and Chilliwack areas are also surging upwards now. A nutty market whereby listings have tumbled almost everywhere, due to spooked potential sellers staying put, while putting the market further out of equilibrium.

I know where Thornhill is and I personally in the past looked at properties there and researched the shit out of the area. Its a gently sloping hill and servicing will be brought to the area when a OCP is created decades from now. I specifically mentioned it because houses on its boundary have gone up in price over 50% over the past 12 months. And I know of one instance where foreign buyers bought a house for 988k on Creekside street. In Maple Ridge. Maple Ridge is a shit hole with junkies and homeless, high crime, few jobs and choked off from the rest of the region with a rush hour grid locked Lougheed Highway. You are better living in Abbotsford and commuting to downtown Vancouver then Maple Ridge. And safer.

I wont lie though. I am de invested from Vancouver at this point. I will probably end up either east coast Canada or US so I can be closer to Central Europe and Brazil flight wise at some point or leave Canada all together (almost a certainty in retirement) and go back to Europe. I have resigned to the fact that Vancouver does not have a future for me. Not just prices but city planning and demographic changes, and family and friends leaving already. And of course I would love to be far away when the speculative bubble bursts because it will take years to unfold and nothing good will come of it.

[Stingray2004]

Originally Posted by cornholio

I know where Thornhill is and I personally in the past looked at properties there and researched the shit out of the area. Its a gently sloping hill and servicing will be brought to the area when a OCP is created decades from now. I specifically mentioned it because houses on its boundary have gone up in price over 50% over the past 12 months. And I know of one instance where foreign buyers bought a house for 988k on Creekside street.

Have driven past there oft... and I dunno about the "gently-sloping" part. But anything extant there is obviously old stock housing on acreage (water well/septic tank). And yes, land speculators are driving up that type of property all over.

[logan5]

Originally Posted by cornholio

I know where Thornhill is and I personally in the past looked at properties there and researched the shit out of the area. Its a gently sloping hill and servicing will be brought to the area when a OCP is created decades from now. I specifically mentioned it because houses on its boundary have gone up in price over 50% over the past 12 months. And I know of one instance where foreign buyers bought a house for 988k on Creekside street. In Maple Ridge. Maple Ridge is a shit hole with junkies and homeless, high crime, few jobs and choked off from the rest of the region with a rush hour grid locked Lougheed Highway. You are better living in Abbotsford and commuting to downtown Vancouver then Maple Ridge. And safer.

I wont lie though. I am de invested from Vancouver at this point. I will probably end up either east coast so I can be closer to Central Europe and Brazil flight wise at some point or leave Canada all together (almost a certainty in retirement) and go back to Europe. I have resigned to the fact that Vancouver does not have a future for me. Not just prices but city planning and demographic changes, and family and friends leaving already.

With those concerns in mind, which city in Europe? It seems like a lot of cities in Europe have the same problems, or worse problems than Vancouver.

[cornholio]

Originally Posted by logan5

With those concerns in mind, which city in Europe? It seems like a lot of cities in Europe have the same problems, or worse problems than Vancouver.

You most certainly don't have the same problems in Europe. You can live 30 min out of any major city near a train line for dirt cheap. EU has 508 million people and only the centers of a handful of cities are expensive and could be described as scratching the surface of speculation. Regardless those cities for the most part have wonderful and affordable options within easy 30-60 min train or car commute of the job centers. As for me I said central Europe. I am from Prague specifically and obviously as intimate with the city as Vancouver (there is lots more to it then the historic central part that was sacrificed to tourists) and its very well connected to the rest of the country and Europe/world. Anyways getting off topic.

[ssiguy]

dleung..........I try never to swear on any forums but you are really starting top piss me off.

If you think everything I am saying is fantasy I don't give a shit. If you think everything everyone says that doesn't fit into your narrative is mythical then do us all a favor and get lost!

[Pavlov]

Originally Posted by logan5

http://www.crea.ca/housing-market-stats/national-average-price-map/

Thanks. Appreciate it. I stand corrected (still surprised though).

[whatnext]

Originally Posted by geotag277

Important to also note that land use policies also play a role in propping up artificial land constraints. Calgary has pushed over the past few years to limit sprawl, and places like Fort McMurray have artificial boundaries on development of single family home lots with a staggered development plan.

Real estate markets aren't complicated. It's supply and demand. If a location cannot build enough of one type of housing stock to meet demand, prices will rise. There are no special snowflakes.

The problem is you seem to try and lay all the blame at the foot of land constraints in Vancouver's case and it simply not true. At least by admitting that controls on foreign ownership are necessary you seem to be acknowledging, at least a little, the problem.

Honolulu is even more land constrained than Vancouver and has high housing prices, but even there the price increases have not as been as sharp and dramatic.

[someone123]

Originally Posted by lio45

Yeah, and my point is that what brought the Vancouver market to such insane heights is mostly that intense demand for housing as a safe and convenient place to park cash smuggled away from the PRC. You, on the other hand, seem to want to ignore the elephant in the room and act like it's all land constraints, while in truth it's probably a pretty distant factor (IMO, as I said already, land constraints and the incredibly low interest rates are the other two main factors pushing the prices to such abnormal heights, but it seems obvious they're far behind Chinese money in importance).

The bubbliness also seems important. People here believe (not completely irrationally, but based on a track record of many years) that housing prices will keep going up, so they are willing to stretch their finances when buying property. I suspect a lot of Chinese buyers believe this too.

[ssiguy]

Good news...........

Christy is heading a trade mission to Asia and 2 of the companies coming along are real estate developers. Is there any where else on the planet where real estate is considered and export? I'm quite confident these same companies are paying the , dare I say it, "head tax' to go to one of Christy's private functions which she personally get's paid from.

[lio45]

Originally Posted by whatnext

The problem is you seem to try and lay all the blame at the foot of land constraints in Vancouver's case and it simply not true. At least by admitting that controls on foreign ownership are necessary you seem to be acknowledging, at least a little, the problem.

We all agree real estate is simple: supply and demand.

The current bubble is IMO mostly caused by the extremely strong Chinese demand for a safe investment vehicle allowing them to siphon money away from China and into a country where foreign capital is welcome, a demand which is concentrated in that country's one and only major city located on the side of China.

Controls on foreign ownership (something that isn't as easy as it sounds in practice IMO) work fine to reduce the "demand" side of the equation.

Any BC Lib voter who owns a Van SFH would likely be really pissed if anything of the sort was done, though. They're counting on values staying high, that's what the near entirety of their net worth hinges on.

[lio45]

Originally Posted by someone123

The bubbliness also seems important. People here believe (not completely irrationally, but based on a track record of many years) that housing prices will keep going up, so they are willing to stretch their finances when buying property. I suspect a lot of Chinese buyers believe this too.

Yep, and it's a self-fulfilling prophecy: everyone believes housing prices will keep going up, so everyone acts accordingly, which contributes to driving them up, so people get proven right. Repeat cycle.

It will take external factors to burst that bubble; I don't expect Vancouverites to all wake up one morning now considering cap rates to be the most important factor in real estate investing.

[lio45]

Originally Posted by Stingray2004

1. My pop, in his mid-20, was already a SFD builder in Van City proper and prior to the closing of one SFD he noticed, late one night while driving by, that all the lights were on in the house. Naturally, he turned 'em all off. The next day, the ethnic Chinese purchasers called him and gave him shite as they wanted the lights on all night long in order to ward off "evil spirits";

I recall you told that story in the past on this forum already, I remembered it. BTW, I'd have done the same thing as your dad

This all sounds so... alien to me. But then, I'm a very rational guy, and my real estate is mostly made up of numbers and ratios (with eights and fours not enjoying any kind of special status among the aforementioned numbers).

In Vancouver I'd likely be the sucker who wouldn't know better than to end up buying that property with a great cap rate but a bad feng shui