Canada's 'housing bubble' deemed close to bursting

[kwoldtimer]

Originally Posted by lio45

You could actually cash out at the peak of the bubble then rent for a while then get again in the market.

Scroll down and look at the graph...
http://www.zillow.com/miami-beach-fl/home-values/

Surely with hindsight you'll agree with me the correct thing to do was to sell during the Sunbelt bubble (in November of 2006, ideally) and rent for a few years (maybe even moving to a cheaper corner of the metropolitan area) before buying something again in 2010-2011.

Why get back in the market at all? With those hyper-inflated prices, you could sell and then rent for the rest of your life and still come out far ahead. I know a number of people who have done just that - it's especially attractive if you are at or over retirement age.

[whatnext]

Originally Posted by casper

If you want a non-Asian example. When I lived in Saskatoon this was pretty common scenario:
- Farm family in rural Saskatchewan hits the point where kids are in the age demographic to go to university. They buy a condo in Saskatoon for the kids to go university. When done they sell it off. With 5% down-payments and low interest it is cheaper than renting for 6-7 years.

My objection is to poor journalism.

The reporter knows nothing about the person who is at the centre of this article other than what he/she obtained from property registration documents.

The MLA being interview knows even less. The Liberals and NDP will always play politics and try to score points on each other. That is the nature of our system. It is when you drag private citizens into this that I get worried.

What exactly has this new homeowner done to deserve this attention?

More and more this look like McCarthyism.

Surely you see there's a huge difference between buying a condo and plunking down $3 million plus for a house.

Declaring a homeowner as a Student or Housewife is an acknowledged tactic to avoid taxation. Unlike in Red China we thankfully have a free press in this country that will ask tough questions and hold politicians to account. If Tian Zhou can't stand the heat he's more than welcome to get out of the kitchen.

[casper]

Originally Posted by whatnext

Surely you see there's a huge difference between buying a condo and plunking down $3 million plus for a house.

Declaring a homeowner as a Student or Housewife is an acknowledged tactic to avoid taxation. Unlike in Red China we thankfully have a free press in this country that will ask tough questions and hold politicians to account. If Tian Zhou can't stand the heat he's more than welcome to get out of the kitchen.

What ever job title you put on the land title transfer documents has no impact on the taxes you pay. All we know 99% owned by someone who decided to call himself a student and 1% owned by someone who decided to call herself a business woman. Parent-Child relationship? Couple? Siblings? One of them was able to show sufficient recurring income to convince CIBC to extend a mortgage.

The problem I have with the press is this article implies the owner did something wrong (without any evidence).

Do most students have the money for a downpayment on a property like this? No. Do most "Business woman"? However these two managed to convince CIBC that they can afford it?

If you ask new immigrents they will tell you it is hard even getting a Visa card from a Canadian bank without a proven domestic trackrecord of income.

[kwoldtimer]

Originally Posted by casper

What ever job title you put on the land title transfer documents has no impact on the taxes you pay. All we know 99% owned by someone who decided to call himself a student and 1% owned by someone who decided to call herself a business woman. Parent-Child relationship? Couple? Siblings? One of them was able to show sufficient recurring income to convince CIBC to extend a mortgage.

The problem I have with the press is this article implies the owner did something wrong (without any evidence).

Do most students have the money for a downpayment on a property like this? No. Do most "Business woman"? However these two managed to convince CIBC that they can afford it?

If you ask new immigrents they will tell you it is hard even getting a Visa card from a Canadian bank without a proven domestic trackrecord of income.

And that their money is clean.

[casper]

Originally Posted by kwoldtimer

And that their money is clean.

Exactly.

There is an assumption by some they are foreign immigrants. We don't know that is the case? Could they be third or fourth generation Canadians? Perhaps, don't know. Given it is not a cash deal and is backed by one of the major banks there is a high probability these people have been in Canada for a long time and have a legitimate source of income to pay the mortgage.

The Vancouver Sun has decided to write an article about two people buying a house and getting a mortgage. Without getting an interview from them, their realtor, their lawyer, or there seller.

The NDP critic has decided to weight in on the matter. He probably knows even less than the report about these people.

Frankly it sounds like an invasion of privacy and a witch hunt.

[ssiguy]

This is one of the many social problems that has arisen out of this real estate frenzy.......it is not only causing greater socio-economic stratification but now also a racial one.

Most people who see a Chinese person in a Mercedes now assume they are passport buyers, tax cheats, and money launderers. As the Chinese continue to buy up the Westside there is also a real physical segregation taking place.

It very much reminds me of Montreal back in the day. The English were a minority but were far wealthier than the French majority and they rarely socialised, lived on polar opposite ends of the city, and had little in common. There was a real animosity between the two groups leading to mutual suspicion and distrust.

The governments complete willingness to allow anyone one in with money no questions asked is leading to a rise in alienation and socio-economic-racial stratification.

Vancouver is moving towards a bi-cultural society like old Montreal and it is socially and politically unhealthy and the province/city's constant response of racism anytime the issue is brought up is adding fuel to the fire. It is also alienating the Chinese who have been here for generations and are equally disenfranchised by the real estate frenzy yet are held responsible for it.

[Pinion]

Originally Posted by casper

Do most students have the money for a downpayment on a property like this? No. Do most "Business woman"? However these two managed to convince CIBC that they can afford it?

The whole point of buying houses in Vancouver is to hide money. You can't have everything linking back to "successful businessman" dad back in the old country, so it gets put in the names of extended family with no jobs.

Originally Posted by ssiguy

This is one of the many social problems that has arisen out of this real estate frenzy.......it is not only causing greater socio-economic stratification but now also a racial one.

Most people who see a Chinese person in a Mercedes now assume they are passport buyers, tax cheats, and money launderers. As the Chinese continue to buy up the Westside there is also a real physical segregation taking place.

It very much reminds me of Montreal back in the day. The English were a minority but were far wealthier than the French majority and they rarely socialised, lived on polar opposite ends of the city, and had little in common. There was a real animosity between the two groups leading to mutual suspicion and distrust.

The governments complete willingness to allow anyone one in with money no questions asked is leading to a rise in alienation and socio-economic-racial stratification.

Vancouver is moving towards a bi-cultural society like old Montreal and it is socially and politically unhealthy and the province/city's constant response of racism anytime the issue is brought up is adding fuel to the fire. It is also alienating the Chinese who have been here for generations and are equally disenfranchised by the real estate frenzy yet are held responsible for it.

Should be noted this is not a Chinese vs white thing either, it's nouveau riche Chinese vs everyone else. Same feelings in my Persian neighbourhood, in Korean neighbourhoods, etc.

[ssiguy]

Very true but I feel particularly bad for the "average" Chinese-Canadian in the city as not only do they have to try to survive in such an incredibly expensive city but they get the double whammy of being blamed for it to boot.

[giallo]

Burst, baby, burst!

Infographic: Vancouver Real Estate Mania

http://www.visualcapitalist.com/vancouver-real-estate-mania/

[whatnext]

Originally Posted by casper

Exactly.

There is an assumption by some they are foreign immigrants. We don't know that is the case? Could they be third or fourth generation Canadians? Perhaps, don't know. Given it is not a cash deal and is backed by one of the major banks there is a high probability these people have been in Canada for a long time and have a legitimate source of income to pay the mortgage.

The Vancouver Sun has decided to write an article about two people buying a house and getting a mortgage. Without getting an interview from them, their realtor, their lawyer, or there seller.

The NDP critic has decided to weight in on the matter. He probably knows even less than the report about these people.

Frankly it sounds like an invasion of privacy and a witch hunt.

I'm curious as to why you seem so desperate to paint NDP MLA David Eby as uniformed? I don't always agree with his politics, but he always comes across as intelligent and well briefed in whatever topic he takes on. You can bet he has researched this issue and has been listening to his constituents.

A story about a student buying a $3 million house would likely get some coverage, no matter where they were from.

[ssiguy]

You can see by that article how the City of Vancouver itself has played a large part in this frenzy. They have made very conscious decisions to keep the money laundering going.

Vancouver blamers it all on Victoria and certainly there is much Victoria could do to stop the frenzy. The reality however is this all started by the city of Vancouver itself. The city has allowed wholesale destruction of thousands of single family homes but allowed SFH to take their place. The city could stop all destruction unless it resulted in higher density ie duplex/townhome/apt but they won't. They have commodified the city.

That little $2 million dump on the Westside would only sell for $200k IF the city put a moratorium on all SFH home destruction. The house is worth nothing. Instead the city allows anything to be torn down and replaced with a SFH which has resulted in it's $2 million price tag as the Chinese {or anyone else for that matter} would never buy it it couldn't be pulled down.

Now imagine that happening 20,000 times over the last 20 years and you see how Vancouver itself is to blame.

Vancouver could put a halt to this tomorrow if it wanted to but it most assuredly doesn't want to. They can bitch at Victoria and Ottawa till the cows come home but the reality is that Vancouver started this mess and only Vancouver can stop it.

[cornholio]

Originally Posted by casper

If you want a non-Asian example. When I lived in Saskatoon this was pretty common scenario:
- Farm family in rural Saskatchewan hits the point where kids are in the age demographic to go to university. They buy a condo in Saskatoon for the kids to go university. When done they sell it off. With 5% down-payments and low interest it is cheaper than renting for 6-7 years.

My objection is to poor journalism.

The reporter knows nothing about the person who is at the centre of this article other than what he/she obtained from property registration documents.

The MLA being interview knows even less. The Liberals and NDP will always play politics and try to score points on each other. That is the nature of our system. It is when you drag private citizens into this that I get worried.

What exactly has this new homeowner done to deserve this attention?

More and more this look like McCarthyism.

The other way to look at this is that in order to make a point you need to set a example of someone. If you set a example of the most deserving person or not is irrelevant. This is common in work, military and group. You identify a problem and to change it you go out and find a someone to make a example of. Frankly I think they did a good job and the "student" that bought the 31 million dollar home is a perfect example to make of, they don't deserve any sympathy or anonymity. To the moon I say.

[Berklon]

Originally Posted by ssiguy

Vancouver could put a halt to this tomorrow if it wanted to but it most assuredly doesn't want to. They can bitch at Victoria and Ottawa till the cows come home but the reality is that Vancouver started this mess and only Vancouver can stop it.

I hope they don't put a stop to it. I want to see the devastation it leaves behind. This is like watching a really fun but dangerous experiment... one where the damage could be extensive, but the participants are willing to play along. I'll sit here as a spectator with popcorn.

• Video Link
• Video Link

To the moon!

[lio45]

Originally Posted by giallo

Burst, baby, burst!

Infographic: Vancouver Real Estate Mania

http://www.visualcapitalist.com/vancouver-real-estate-mania/

Pretty good read.

One nitpick though: chapter 7, "renters aren't immune either", they're mistaken... the property prices to rents ratio being extremely out-of-whack means that renters in Vancouver aren't really feeling the pain -- the appreciation in values isn't impacting the rents, at least not anywhere near as much as you'd expect in a "normal" market (a market where demand for housing and demand for real estate are aligned).

Obviously it's also a clear sign of speculation, as it means that there's demand for real estate as a place to park one's money, not demand for real estate as housing.

[kwoldtimer]

Originally Posted by ssiguy

You can see by that article how the City of Vancouver itself has played a large part in this frenzy. They have made very conscious decisions to keep the money laundering going.

Vancouver blamers it all on Victoria and certainly there is much Victoria could do to stop the frenzy. The reality however is this all started by the city of Vancouver itself. The city has allowed wholesale destruction of thousands of single family homes but allowed SFH to take their place. The city could stop all destruction unless it resulted in higher density ie duplex/townhome/apt but they won't. They have commodified the city.

That little $2 million dump on the Westside would only sell for $200k IF the city put a moratorium on all SFH home destruction. The house is worth nothing. Instead the city allows anything to be torn down and replaced with a SFH which has resulted in it's $2 million price tag as the Chinese {or anyone else for that matter} would never buy it it couldn't be pulled down.

Now imagine that happening 20,000 times over the last 20 years and you see how Vancouver itself is to blame.

Vancouver could put a halt to this tomorrow if it wanted to but it most assuredly doesn't want to. They can bitch at Victoria and Ottawa till the cows come home but the reality is that Vancouver started this mess and only Vancouver can stop it.

In current conditions, would that not more likely result in a proliferation of multi-million dollar triplexes and up/down duplexes? Better from a density point of view, but not a solution to excessive prices.

[Metro-One]

Originally Posted by ssiguy

This is one of the many social problems that has arisen out of this real estate frenzy.......it is not only causing greater socio-economic stratification but now also a racial one.

Most people who see a Chinese person in a Mercedes now assume they are passport buyers, tax cheats, and money launderers. As the Chinese continue to buy up the Westside there is also a real physical segregation taking place.

It very much reminds me of Montreal back in the day. The English were a minority but were far wealthier than the French majority and they rarely socialised, lived on polar opposite ends of the city, and had little in common. There was a real animosity between the two groups leading to mutual suspicion and distrust.

The governments complete willingness to allow anyone one in with money no questions asked is leading to a rise in alienation and socio-economic-racial stratification.

Vancouver is moving towards a bi-cultural society like old Montreal and it is socially and politically unhealthy and the province/city's constant response of racism anytime the issue is brought up is adding fuel to the fire. It is also alienating the Chinese who have been here for generations and are equally disenfranchised by the real estate frenzy yet are held responsible for it.

I rarely agree with ssiguy but I will admit it when I do, and this time he is spot on.

One of the largest dangers of this entire situation is people eventually directing their anger towards a racial divide. And again, this is not just white people, but all non Mainland Chinese people born and raised in Vancouver (and area) who are very negatively being affected by this.

On my social media pages I am seeing equal frustration towards the lack of will to address this problem coming from people of all colours / backgrounds. And the mounting stories of corruption, bullying, and threatening within the real estate industry (often including Mainland Chinese connections, such as the Chinese woman who recently threatend one potential buyer with her Chinese gang connections) is only going to further fuel peoples' anger.

People say this all because of supply and demand, well, a lot of the demand is bullshit flipping / investments, and this is infuriating for those wanting to buy a place for living in!

The funny thing is, a few fringe people try to use the racist card, but the joke is people are not angry about Chinese people moving into these houses and having families living / working in Canada (that would be racist), but are angry that they are buying these propoerties, inflating the market, and NOT basing themsleves and their lives in Canada.

[giallo]

Originally Posted by Berklon

I hope they don't put a stop to it. I want to see the devastation it leaves behind. This is like watching a really fun but dangerous experiment... one where the damage could be extensive, but the participants are willing to play along. I'll sit here as a spectator with popcorn.

• Video Link
• Video Link

To the moon!

Great series, and yeah, you suck.

[casper]

Originally Posted by whatnext

I'm curious as to why you seem so desperate to paint NDP MLA David Eby as uniformed? I don't always agree with his politics, but he always comes across as intelligent and well briefed in whatever topic he takes on. You can bet he has researched this issue and has been listening to his constituents.

A story about a student buying a $3 million house would likely get some coverage, no matter where they were from.

I am certain David Eby is well informed on the overall issue of housing. But look at his comments:
- He implies the owner as a student has no income, I don't buy it, a chartered bank is not going to loan money to someone with no income. Do you think David Eby has access to the buyers tax return to make an informed statement? Probably not.
- He implies that the previous owner did something wrong by selling to a "student". Guess what most sellers and buys never talk the realtors who broker the deal make certain of that.
- He implies the liberal government is being influenced because one of its supporters is making money on this specific sale by selling above asking. I don't think selling above asking is something that Liberal supports do and NDP supporters do not do.

What I find disturbing is the press singling out an individual in this way. I don't know either the buyer or seller. Publishing someone name in the paper and suggesting that they are doing something wrong has an impact on their reputation, relationships they have both at work and in their personal lives.

The press gets a lot of flexibility in our society but it has to act in a responsible way.

[geotag277]

Originally Posted by ssiguy

Very true but I feel particularly bad for the "average" Chinese-Canadian in the city as not only do they have to try to survive in such an incredibly expensive city but they get the double whammy of being blamed for it to boot.

I feel bad for the successful Canadian born Chinese business men who happen to be able to afford a house getting caught up in these asinine witch hunts. If a successful oil baron from Alberta happens to buy a house in Vancouver with a European sounding name no one bats an eye, but some Vancouver born guy with an Asian name can't say the same thing.

All this witch hunting of Chinese cultural quirks like considering 8s and 4s lucky affects all those who celebrate their own heritage and keep their own cultural traditions alive - including Vancouver born and raised Chinese, wealthy or not.

[geotag277]

Originally Posted by whatnext

I'm curious as to why you seem so desperate to paint NDP MLA David Eby as uniformed? I don't always agree with his politics, but he always comes across as intelligent and well briefed in whatever topic he takes on. You can bet he has researched this issue and has been listening to his constituents.

A story about a student buying a $3 million house would likely get some coverage, no matter where they were from.

From what I've heard about David Eby he is just a politician being a politician. While he seems to make some rather fanciful connections to exaggerate the underlying issues it doesn't mean the underlying issues don't exist. I might suggest it would help the cause more if he valued accuracy over political opportunism, but the thing of it is more people need to be talking about what David Eby talks about in the political sphere for anything to happen, so if he is a vassal to get something done perhaps it isn't all bad.