Canada's 'housing bubble' deemed close to bursting

[someone123]

Originally Posted by lio45

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.

One issue in Vancouver I have noticed is that a lot of the condos aren't very good. Lots of layouts are impractical (the trade-off for shiny/unusual buildings) and many units are tiny. I wonder if this isn't a symptom of the "investment" activity and the fact that so many buyers are picking out condos based on what looks like it will provide a good return (shiny) instead of their actual living requirements (square footage, #rooms, amenities).

People will of course counter that this is a World Class city and so you should expect your shopping-mall-adjacent Burnaby condo to be about as roomy as a place overlooking the Seine in the 6e arrondissement of Paris, but the fact is that there are rentals in this town that are far more spacious than the new stuff, often equally well-located or better and are still hugely affordable in comparison. Hence the miserable cap rates for condos.

I think this multi-unit issue contributes to the overall housing problems somewhat in that it's very hard to find a decent condo comparable to even a small detached house. They tend to max out around 1,000 square feet unless you're talking about super-expensive penthouses. I believe New Westminster has required a certain number of 3 bedroom units to counteract this effect, but it's a small city that represents a tiny part of the metropolitan area and housing supply.

If there were a lot of large/good condos at a reasonable price (I mean even $600,000 or less), a much larger proportion of the people living here would consider them a viable alternative to owning a detached house. Zoning in most of the City of Vancouver prevents that from happening. The extremely limited multi-unit zoned land in Vancouver means that space even in the air is at a premium.

[CanSpice]

Originally Posted by someone123

I think this multi-unit issue contributes to the overall housing problems somewhat in that it's very hard to find a decent condo comparable to even a small detached house. They tend to max out around 1,000 square feet unless you're talking about super-expensive penthouses. I believe New Westminster has required a certain number of 3 bedroom units to counteract this effect, but it's a small city that represents a tiny part of the metropolitan area and housing supply.

New West has, but that's not going to make much of an impact because it only affects new buildings (obviously) and I think it's only something like 5% of the units need to be 3 bedroom. Couple that with the fact that the new unit price per square foot in New West is about $650/sqft, if you have a 3 bedroom unit with any appreciable size (say, 1100 square feet) you're getting over $700k for a unit, and that's not really affordable either.

[geotag277]

Originally Posted by someone123

One issue in Vancouver I have noticed is that a lot of the condos aren't very good.

Pretty sure this is a Canada wide problem. Vancouver probably has the most experience behind Toronto of building usable floor plans for condos, so you can imagine how bad the rest of us have it.

If there were a lot of large/good condos at a reasonable price (I mean even $600,000 or less), a much larger proportion of the people living here would consider them a viable alternative to owning a detached house. Zoning in most of the City of Vancouver prevents that from happening. The extremely limited multi-unit zoned land in Vancouver means that space even in the air is at a premium.

Vancouver at this point is really a place that needs to be doing everything at once (rezoning, foreign capital restrictions) and yes, land use policies are part of that. It becomes a self fulfilling prophecy that few 3 bedroom units are made, few units over 1000 sqft are made, so when they do come on the market, they are priced to the moon as luxury options like penthouses.

Land use should be requiring family friendly layouts everywhere as a percentage of the building. More units will mean more options will mean lower prices. Of course, you can't then complain that you bought a 3 bedroom condo, it isn't appreciating as much as you'd like, there are so many new units coming on the market that are devaluing your unit, and you can't soon upgrade to a single family detached home.

You can't have it both ways - either developers overbuild to put downward pressure on prices, or developments don't build enough and your property appreciates. It seems many here want to have their cake and eat it too.

[geotag277]

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.

I lay most of the blame there because even in the 90s, with higher taxes and much higher interest rates, single family detached homes were generally unaffordable to the majority of Vancouver residents. You cut out foreign investment, even if prices drop 50%, same situation.

There is only one path forward that opens up affordability options to the vast majority of Vancouver residents, and that is multi family development. So while I have repeatedly said that Vancouver is a city that needs to be doing everything all at once all the time (including foreign capital controls) - the one thing that is actually working, as evidenced by both articles from you and others - is overbuilding multi family. It's working.

And Vancouver at 2.5 million people it is the only thing that will sustainable work for the foreseeable future, even if Vancouver can get the ball rolling in BC and Federal legislatures about foreign capital.

[geotag277]

Originally Posted by geotag277

Pretty sure this is a Canada wide problem. Vancouver probably has the most experience behind Toronto of building usable floor plans for condos, so you can imagine how bad the rest of us have it.

Whenever shitty condo floor plans are brought up I always like to bring up this gem from a recent Calgary development:

[someone123]

Originally Posted by geotag277

Pretty sure this is a Canada wide problem. Vancouver probably has the most experience behind Toronto of building usable floor plans for condos, so you can imagine how bad the rest of us have it.

The tiny investor-class condos seem to be largely a Toronto and Vancouver phenomenon though. Are developers building large numbers of sub-600 square foot or lower condos in any other cities? That Calgary one you posted is 900 square feet; it would qualify as a large place in Vancouver, crappy layout or not.

Here's a list of units in a building in a city that is evidently not Vancouver: http://pavilionsouthpark.ca/condominium/2-bedroom-den/

It's got 2000+ square foot non-penthouse units, 2400 square foot penthouse. There are apparently no studios and the 1 bedrooms are over 800 square feet. I think the biggest technical barrier to having units like this in Vancouver is that the zoning space is at a premium. They would be affordable to build at current condo prices in Vancouver were it not for the zoned land.

[GreaterMontréal]

The average home price in Quebec is lower than in Ontario, BC, Manitoba, Saskatchewan, Alberta, Newfoundland and Halifax . not bad lol

[1overcosc]

Originally Posted by geotag277

Whenever shitty condo floor plans are brought up I always like to bring up this gem from a recent Calgary development:

Uhhlllhh.. that sends shivers down my spine... blech.

[lio45]

Originally Posted by geotag277

Whenever shitty condo floor plans are brought up I always like to bring up this gem from a recent Calgary development:

This is actually... not bad at all, IMO.

(Note that I've never lived in a condo and likely never will, but this seems totally liveable to me.)

What's supposed to be so bad about this layout?

[geotag277]

Originally Posted by GreaterMontréal

The average home price in Quebec is lower than in Ontario, BC, Manitoba, Saskatchewan, Alberta, Newfoundland and Halifax . not bad lol

I've written before about how Montreal urban development is basically way ahead of everywhere else in Canada, because I read a report that showed Montreal actually ahead of places like Vancouver and Toronto in multi family percentage % units.

Well, I found the report again:

http://www.metrovancouver.org/services/r...ingPublications/Census2011-Dwellings.pdf

It's actually sourced in Stats Can, but here are the relevant numbers:





Even in 2011 Montreal had a higher % of apartments than either Vancouver or Toronto. Montreal also had the lowest % of single family detached homes and the highest % of low rise apartments.

The people of Montreal have embraced the concept of multi family living, the most efficient form of housing - low rise condos - absolutely dominate in Montreal and quite frankly embarrass both Vancouver and Toronto, and combined with tenant protections and controls on keeping rents low (by limiting rent increases) - Montreal just has a sustainable urban development plan that leaves the rest of Canada in the dust. The result is reasonable and affordable housing for all.

As evidenced in this very thread - Vancouver residents can't seem to let go of the dream of owning their own single family home, and are actively pushing against more mutli-family developments and shooting themselves in the foot in the process.

[geotag277]

Originally Posted by lio45

This is actually... not bad at all, IMO.

(Note that I've never lived in a condo and likely never will, but this seems totally liveable to me.)

What's supposed to be so bad about this layout?

If you never lived in a condo you might not understand. Playing tetris to get your furniture in there, bathroom only by the front door - person living in second bedroom has to walk all the way to the front door just to go to the bathroom, and walk across the kitchen after taking a shower. Living room and dining room existing in a shared glorified hallway. The front entrance being a super long hallway eating up precious square footage.

The place is technically more than 900 square foot, but the usable floor area makes it potentially equal to a 450 square foot condo with more efficient use of space.

[plrh]

Originally Posted by geotag277

Whenever shitty condo floor plans are brought up I always like to bring up this gem from a recent Calgary development:

This is a Wpg Qualico classic

http://www.bluestemcondos.ca/pdf/Willow%20Marketing%20Plan.pdf

2nd floor kitchen and triangular rooms. The only thing worse would be circular rooms. There are several buildings around town with this plan.

[lio45]

Originally Posted by geotag277

If you never lived in a condo you might not understand. Playing tetris to get your furniture in there, bathroom only by the front door - person living in second bedroom has to walk all the way to the front door just to go to the bathroom, and walk across the kitchen after taking a shower. Living room and dining room existing in a shared glorified hallway. The front entrance being a super long hallway eating up precious square footage.

The place is technically more than 900 square foot, but the usable floor area makes it potentially equal to a 450 square foot condo with more efficient use of space.

I noticed the long hallway (and knew it would be named as a negative) but I don't actually think it's a problem, if you consider that the reason for it is optimizing the number of condos in the building for a given perimeter and making the best use of the perimeter (where the windows are).

In other words, even discounting for the sq ft deemed unusable, this layout should still show better bang for the buck in theory. Now, of course, if the marketing trick from that builder is to try to get away with discounting less than they should ("look, a 900 sq ft unit at the price of only 800! What a deal!"), then yes, you're getting screwed. Note that it might be the case.

I hadn't realized though that the main bathroom wasn't accessible from the outside of the master bedroom -- now yes, that is bad. The "beta roommate" can't even take a bath without asking the alpha... and he has to go all the way to the front door to shower or use the toilet.

Living room being the continuity of the dining room isn't that bad either IMO.

[kwoldtimer]

Originally Posted by geotag277

I've written before about how Montreal urban development is basically way ahead of everywhere else in Canada, because I read a report that showed Montreal actually ahead of places like Vancouver and Toronto in multi family percentage % units.

Well, I found the report again:

http://www.metrovancouver.org/services/r...ingPublications/Census2011-Dwellings.pdf

It's actually sourced in Stats Can, but here are the relevant numbers:





Even in 2011 Montreal had a higher % of apartments than either Vancouver or Toronto. Montreal also had the lowest % of single family detached homes and the highest % of low rise apartments.

The people of Montreal have embraced the concept of multi family living, the most efficient form of housing - low rise condos - absolutely dominate in Montreal and quite frankly embarrass both Vancouver and Toronto, and combined with tenant protections and controls on keeping rents low (by limiting rent increases) - Montreal just has a sustainable urban development plan that leaves the rest of Canada in the dust. The result is reasonable and affordable housing for all.

As evidenced in this very thread - Vancouver residents can't seem to let go of the dream of owning their own single family home, and are actively pushing against more mutli-family developments and shooting themselves in the foot in the process.

You make it sound like they had a choice - Montreal's historic mulit-family housing, much of it rental, reflects that ciity's economic realities more than anything else, no? The decline in Vancouver's housing standards is well under way, however, so they'll get there eventually.

[GreaterMontréal]

The people of Montreal have embraced the concept of multi family living, the most efficient form of housing - low rise condos

not just in Montréal, but everywhere in southern Quebec. In small cities, condos = low-rise.

this might explain why Montréal has not seen a high-rise condo boom like Toronto or Vancouver.

[rbt]

Originally Posted by GreaterMontréal

this might explain why Montréal has not seen a high-rise condo boom like Toronto or Vancouver.

Montreal has no shortage of 10+ floor condos under construction; far more than most cities that size in North America.

There's less urgency than Toronto/Vancouver for various reasons, one being that existing housing stock can be further subdivided into more apartments fairly easily. Toronto added millions of office sqft during the late 90's but it wasn't particularly visible for the same reason; conversion of existing properties.

[geotag277]

Originally Posted by lio45

I noticed the long hallway (and knew it would be named as a negative) but I don't actually think it's a problem, if you consider that the reason for it is optimizing the number of condos in the building for a given perimeter and making the best use of the perimeter (where the windows are).

In other words, even discounting for the sq ft deemed unusable, this layout should still show better bang for the buck in theory. Now, of course, if the marketing trick from that builder is to try to get away with discounting less than they should ("look, a 900 sq ft unit at the price of only 800! What a deal!"), then yes, you're getting screwed. Note that it might be the case.

I hadn't realized though that the main bathroom wasn't accessible from the outside of the master bedroom -- now yes, that is bad. The "beta roommate" can't even take a bath without asking the alpha... and he has to go all the way to the front door to shower or use the toilet.

Living room being the continuity of the dining room isn't that bad either IMO.

Again you come at this from a landlord's perspective, mainly boasting about how you can put lipstick on a pig and potentially sell it to some one. No one doubts your sales prowess, but as someone who generally has no interest in condo living can you really see yourself being satisfied living in this particular layout?

As a potential buyer who is actually going to live in a place, the thing I care about is functional layout, and usable space. This has neither. You better believe you will be paying 500-600 a foot for this place, and when several thousand of that is a hallway, and all you have to show for a 900 sq ft place is a cramped combo living/dining room that you have to maneuver through a tiny kitchen to get too, you will have your work cut out as a sales man for this place.

The one common area in this 900 sq ft apartment is similar in size to what you would see in a 450 sqft pseudo micro unit.

That said I'm sure there are some personalities out there would might find this layout funky and cool (and as far as I know they did indeed sell).

[Stingray2004]

Originally Posted by 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.

Ya know. I have always considered you as a celebrity gossip TMZ kinda guy. In that vein, I consider myself as more of an analytical New York Times kinda guy who also prefers separating the wheat from the chaff.

So let's decipher your post from a New York Times perspective, shall we?

BC's preem (along with other Canadian preems) typically make trade missions to Asia. And numerous BC companies join those trade missions, which in this instance involved 64 firms from various sectors of the BC economy. No BC trade delegation request has ever been rejected and it mostly involved LNG, clean energy, green tech in this trip.

BTW, they all pay their own airfare, hotel lodgings, etc.

So ya now claim that 2 of these were "real estate developers". Fail. Both were actually real estate "agencies".

And those 2 agencies along with their purpose are:

1. Nu Stream Realty - to promote commercial properties;
2. Sutton West Coast Realty - to assist Canadian citizens to purchase properties in the Philippines;

Your TMZ inferences go down the drain right there.

And ya know what? They went to South Korea, Japan, and the Philippines. No mainland China visit ya say? Again, your TMZ reference again goes down the drain.

BTW, these 2 real estate agencies are small fish - never heard of them before myself. But I will give you some insight into how the major commercial real estate agencies work - the big boys involved in trophy office buildings, regional/neighbourhood shopping centres, multi-unit residential rental properties, and industrial warehouse properties.

A few of these big boys in downtown Van City are friends of mine from my UBC days. Even before them, their predecessors in their major firms flew to Hong Kong (and Asian in general) a few times per annum to meet with potential purchasers since circa 1987. And, the practice continues on to this day unabated.

Aside from life insurance companies, pensions funds, and REITS, Asia has continued to be a major investor in Metro Vancouver commercial real estate with those from mainland China purchasing some high profile properties within the past year as well.

These guys have never had any interest in joining any BC preem trade mission, whatsoever.

Again, your TMZ view of the world has always perplexed me.

[kwoldtimer]

Originally Posted by geotag277

Again you come at this from a landlord's perspective, mainly boasting about how you can put lipstick on a pig and potentially sell it to some one. No one doubts your sales prowess, but as someone who generally has no interest in condo living can you really see yourself being satisfied living in this particular layout?

As a potential buyer who is actually going to live in a place, the thing I care about is functional layout, and usable space. This has neither. You better believe you will be paying 500-600 a foot for this place, and when several thousand of that is a hallway, and all you have to show for a 900 sq ft place is a cramped combo living/dining room that you have to maneuver through a tiny kitchen to get too, you will have your work cut out as a sales man for this place.

The one common area in this 900 sq ft apartment is similar in size to what you would see in a 450 sqft pseudo micro unit.

That said I'm sure there are some personalities out there would might find this layout funky and cool (and as far as I know they did indeed sell).

My condo (1200 sq ft) is in a corner of a big old factory building. After zig-zagging to get to my door, you need to continue zig-zagging for about 25 feet (through a small vestibule and past the front hall closet, a three piece bathroom, a laundry/storeroom and a computer alcove to get to my L-shaped kitchen/dining area/living room. In some ways it resembles the floorplan shown above, although it's more functional. Many people would see the long corridor in my place as wasted space - I saw it as an escape from the usual "open concept" condo (ie a room) and as a space to display my art collection (too many standard condos lack adequate wall space). To each their own. Although if I were to be advising someone likely to sell sooner rather than later, I would say go for the "white bread" layout, so as not to reduce the pool of potential buyers.

[geotag277]

Originally Posted by kwoldtimer

My condo (1200 sq ft) is in a corner of a big old factory building. After zig-zagging to get to my door, you need to continue zig-zagging for about 25 feet (through a small vestibule and past the front hall closet, a three piece bathroom, a laundry/storeroom and a computer alcove to get to my L-shaped kitchen/dining area/living room. In some ways it resembles the floorplan shown above, although it's more functional. Many people would see the long corridor in my place as wasted space - I saw it as an escape from the usual "open concept" condo (ie a room) and as a space to display my art collection (too many standard condos lack adequate wall space). To each their own. Although if I were to be advising someone likely to sell sooner rather than later, I would say go for the "white bread" layout, so as not to reduce the pool of potential buyers.

Three bedrooms gives you the freedom to have purpose rooms outside of the common area. I imagine you probably don't have two room mates and can use that space in practical ways that don't necessarily involve being full time bedrooms.

In the given layout, with the second bedroom occupied, where would you put the computer? TV? Reading area? Dining area? Work space/office area? Where do you sit with guests over? How do you entertain more than 2 people? These are generally challenges with a 350 sq ft single bedroom apartment, not a 900 sq ft two bed room affair.