Canada's 'housing bubble' deemed close to bursting

[casper]

Originally Posted by whatnext

Um, wrong. This was posted upthread, apparently you didn't read it:

...Consider the claim that it’s “all about supply.” This claim suggests that we are not building enough new housing to meet the demand from a growing population. But is there any evidence of that? No. In fact, the ratio of population to housing units in Greater Vancouver has been falling for the past 20 years or so. Even the UDI said in a late 2015 report that housing starts were in the “healthy range” given population growth, and had been for several years. And housing starts have surged recently, to their highest point in over 25 years, even while net migration (international and domestic) into Vancouver has declined somewhat in recent years....

http://www.theglobeandmail.com/report-on...-its-not-a-supply-issue/article30380106/

If you disagree. Clearly there is demand for more properties and that is driving up price. Increase the supply and price will go down or stop going up as quickly.

So demand is growing at a faster rate than population. Is anyone surprised by that. There are a people buying condos and having them sit empty. I don't think that is a problem for society. It may be silly to buy a condo that you let sit empty for a decade or you use as a vacation property but it still benefits society. Society benefited from the injection of money into the construction industry to build the empty condo. Society benefits from the property tax paid on the condo every year and strata fees cover maintenance of the building as a whole.

I think there are also changes to society is general with the traditional family unit being displayed by more complex arrangements that are causing more people to live in along resulting in increased demand.

[casper]

Originally Posted by ssiguy

That graph is soooooooooo 2015. The SFH is up $400k

As far as Vancouver/Province should be doing a lot of different things all at once to stop the housing frenzy explains exactly why none of them will ever get done.

I think if you take the 2014 and 2015 numbers and extrapolate it gets you close to where we are.

Limited number of SFH in Vancouver. Over time there will be fewer. What we need to regulate is what developers are building, mandate family friendly condos.

Some things to change about condos:
- Remove the ability of condo boards to limit age of residents.
- Remove the ability of condo boards to limit the ability of a condo owner to rent the unit.
- Mandate a minimum number of units have 3 bedrooms (lets say 20%)
- Mandate mixed us on major routes in Vancouver. Commercial/Office on ground floor and minimum of five stores residential above. Alternatively minimum of 4 story office/commercial.

[ssiguy]

You make it sound like having empty homes is a good thing.

The problem is that for every empty house there is one less place for a person or their family to live.

You have this notion that housing is just another capitalist commodity which is fallacy. A person can live without a TV or gas or gold or cars or even most foods but they cannot live without housing.

Housing is a necessity of life and should not just be considered just another expense on the list. If that requires extreme measures to make sure that all people have fair access to this human right then so be it. Good thing Christy can't get her hand on the water supply or she would be selling that to the Chinese as well and if there is none left for the locals or they can't afford to pay $5/litre for every drop of water they use then they can leave.

[rbt]

Originally Posted by geotag277

Low interest rates benefit borrowers, which is the vast majority of people. High interest rates benefit lenders, which is the vast minority of people.

It's a very very large minority once you toss pension plans (including CPP) into the mix.

[kwoldtimer]

Originally Posted by casper

I think if you take the 2014 and 2015 numbers and extrapolate it gets you close to where we are.

Limited number of SFH in Vancouver. Over time there will be fewer. What we need to regulate is what developers are building, mandate family friendly condos.

Some things to change about condos:
- Remove the ability of condo boards to limit age of residents.
- Remove the ability of condo boards to limit the ability of a condo owner to rent the unit.
- Mandate a minimum number of units have 3 bedrooms (lets say 20%)
- Mandate mixed us on major routes in Vancouver. Commercial/Office on ground floor and minimum of five stores residential above. Alternatively minimum of 4 story office/commercial.

I know that some condos are geared toward seniors, but do condo boards actually have that power?

[CanSpice]

Originally Posted by kwoldtimer

I know that some condos are geared toward seniors, but do condo boards actually have that power?

They do in BC. The only thing you're allowed to discriminate against for living in a strata is age. Section 9 of BC's Human Rights Code leaves out age in the list of things you're not allowed to discriminate against when selling a property to another person. There have been a few cases where a couple has been fined because they had a child while living in a strata complex that restricted the age to 19 or older.

[whatnext]

Originally Posted by casper

I think if you take the 2014 and 2015 numbers and extrapolate it gets you close to where we are.

Limited number of SFH in Vancouver. Over time there will be fewer. What we need to regulate is what developers are building, mandate family friendly condos.

Some things to change about condos:
- Remove the ability of condo boards to limit age of residents.
- Remove the ability of condo boards to limit the ability of a condo owner to rent the unit.
- Mandate a minimum number of units have 3 bedrooms (lets say 20%)
- Mandate mixed us on major routes in Vancouver. Commercial/Office on ground floor and minimum of five stores residential above. Alternatively minimum of 4 story office/commercial.

Those ideas are mostly bad.

-Build more three bed units and more rich people will snap them up.
-Forcing condo boards to allow rentals is a surefire way to turn people off condo living. If you've spent anytime in a condo with large amounts of renters you will hear a litany of complaints about it from owner-occupiers.
-Mixed use does nothing to help with residential affordability, if anything it takes away a ground floor level that could be well used by families or those with disabilities.
-Hasn't the age restriction been done away with and is only grandfathered for existing complexes with those limits?

Why are you so reluctant to take the action that would have the most effect: ban foreign ownership?

[kwoldtimer]

Originally Posted by whatnext

Those ideas are mostly bad.

-Build more three bed units and more rich people will snap them up.
-Forcing condo boards to allow rentals is a surefire way to turn people off condo living. If you've spent anytime in a condo with large amounts of renters you will hear a litany of complaints about it from owner-occupiers.
-Mixed use does nothing to help with residential affordability, if anything it takes away a ground floor level that could be well used by families or those with disabilities.
-Hasn't the age restriction been done away with and is only grandfathered for existing complexes with those limits?

Why are you so reluctant to take the action that would have the most effect: ban foreign ownership?

I don't know about that - the wealthy are more inclined to purchase more sq ft, in the form of larger rooms. Family-oriented three bedroom condos would likely have bedrooms too small to attract the wealthy buyer.

[Pinion]

Originally Posted by geotag277

From the very report that the article is based on ^

Notice one of those lines is not like the other? Apartments and attached have remained relatively flat while there is one obvious run away train. By building like crazy Vancouver has kept those two categories in check, and building must continue.

I notice in the article is also tries to paint this picture that everyone who thinks we need to build more is against foreign capital controls, and everyone who thinks we need to do something with foreign capital controls thinks we don't need to build more.

This is why the political situation in Vancouver is at an impasse. This false dichotomy "there is one silver bullet and we have to ignore the rest" mentality. In reality, Vancouver needs to be doing everything. And yes, building, rezoning, land use policies to promote family development, lower cost development, non-luxury development, etc. is a key part of it.

Condos have skyrocketed in the last year that your graph doesn't show. My 40 year old suburban unit is worth $100,000 more than last year.

Also as someone who lives in an adults only building, screw anyone who wants to take that away from us. It's bad enough we have to live in shoeboxes as it is, the last thing I need is shrieking/stomping kids everywhere.

[casper]

Originally Posted by whatnext

Those ideas are mostly bad.

-Build more three bed units and more rich people will snap them up.
-Forcing condo boards to allow rentals is a surefire way to turn people off condo living. If you've spent anytime in a condo with large amounts of renters you will hear a litany of complaints about it from owner-occupiers.
-Mixed use does nothing to help with residential affordability, if anything it takes away a ground floor level that could be well used by families or those with disabilities.
-Hasn't the age restriction been done away with and is only grandfathered for existing complexes with those limits?

Why are you so reluctant to take the action that would have the most effect: ban foreign ownership?

I don't know a good way of banning foreign ownership. In countries like Mexico that have had such bands all that happens is the foreigner has to incorporate as a local company, the company buys the condo and foreigner owns the shares.

I think the reality is for middle class families single family homes will never be affordable in Vancouver again. It is still viable in the suburbs (e.g. Surrey) but not in Vancouver proper. The number of homes are in decline and the number of families is growing. To have a healthy population mix and diverse communities we need families in Vancouver. That means creating condo/townhouses that are family friendly.

I lived in Saskatchewan where it is illegal for condo boards to ban renters. In fact I lived in a brand new condo development and sat on the board. For a brand new development on day 1 well over 50% of units were owned by investors. Many were numbered companies out of Ontario. After the first round of investors flipped there condos there was still about 50% rentals. Feedback from the management company was that is normal for a new development, over time a number of the investors flip there properties and it becomes closer to 40%.

I now own a condo in Victoria, the building I am in has a silly 19 year age limit. Personally I think it is not appropriate for a condo board to tell an owner your not allowed to have kids visit or live in your condo.

[casper]

Originally Posted by ssiguy

You make it sound like having empty homes is a good thing.

The problem is that for every empty house there is one less place for a person or their family to live.

You have this notion that housing is just another capitalist commodity which is fallacy. A person can live without a TV or gas or gold or cars or even most foods but they cannot live without housing.

Housing is a necessity of life and should not just be considered just another expense on the list. If that requires extreme measures to make sure that all people have fair access to this human right then so be it. Good thing Christy can't get her hand on the water supply or she would be selling that to the Chinese as well and if there is none left for the locals or they can't afford to pay $5/litre for every drop of water they use then they can leave.

All I am proposing is build enough condos for both the people who want to own an empty condo and the people who want to actually live in one.

Let developers flood the market with condos it will help drive down prices and make housing affordable for more people.

[logan5]

I've mentioned this a few times, but never really heard a valid response. Detached home prices in the Fraser Valley (Surrey, Langley, Abbottsford,etc.) are rising at an astronomical rate...

The MLS® HPI benchmark price of a Fraser Valley single family detached home in May was $834,200, an increase of
38.3 per cent compared to May 2015 when it was $603,100.

Even Abbottsford, which is not even in Metro Vancouver, is rising at an incredible rate. Meanwhile, home prices are rising at normal or below normal rates across the rest of the country...

Over the course of a single month, the benchmark price of a detached home in Abbotsford rose an astounding 7.1 per cent – or $40,000 – to $614,900, according to the Fraser Valley Real Estate Board (FVREB).

Only four months ago, that home price passed the $500,000 mark, and over the past year, the benchmark price has risen 32 per cent – or $140,000.

So somebody explain to me how rich Chinese buying up property in Vancouver are causing these dramatic price increases in the Fraser Valley, where there are no rich Chinese bidding up prices.

One explanation I've heard people use is that it's a ripple effect. That the people cashing out in Vancouver are moving to other areas of the Metro. But so what. What difference does make if people from the City of Vancouver or Calgary, or wherever are moving to areas in the Fraser Valley. That's just normal population growth. Something that every other major city in Canada is experiencing. Calgary, for example, takes in as many new residents as Vancouver, and Calgary has half the population of the Lower Mainland. Home prices have risen 1.1% over 1 year in Calgary. Same story in other cities across Canada that are growing at the same (proportional) rate as Vancouver. So what makes Vancouver so different? There's no way a handful of rich Chinese are skewing up prices in places as far away as Abbottsford.

The only logical explanation is Metro Vancouver's extreme land constraints.

http://globalnews.ca/news/2624064/iv...val-vancouver/
http://www.fvreb.bc.ca/statistics/Package%20201605.pdf

[kwoldtimer]

Originally Posted by casper

All I am proposing is build enough condos for both the people who want to own an empty condo and the people who want to actually live in one.

Let developers flood the market with condos it will help drive down prices and make housing affordable for more people.

Who are these developers that seek to drive down the price of condo apartments? You don't hear a lot about them ,,,

[lio45]

Originally Posted by logan5

I've mentioned this a few times, but never really heard a valid response.

(...)

So somebody explain to me how rich Chinese buying up property in Vancouver are causing these dramatic price increases in the Fraser Valley, where there are no rich Chinese bidding up prices.

(...)

One explanation I've heard people use is that it's a ripple effect. That the people cashing out in Vancouver are moving to other areas of the Metro. But so what. What difference does make if people from the City of Vancouver or Calgary, or wherever are moving to areas in the Fraser Valley. That's just normal population growth. Something that every other major city in Canada is experiencing. Calgary, for example, takes in as many new residents as Vancouver, and Calgary has half the population of the Lower Mainland. Home prices have risen 1.1% over 1 year in Calgary. Same story in other cities across Canada that are growing at the same (proportional) rate as Vancouver. So what makes Vancouver so different? There's no way a handful of rich Chinese are skewing up prices in places as far away as Abbottsford.

You got your explanation already: rich Chinese skewing up prices in Vancouver has an obvious boosting effect on the prices of the entire metro, because a metro area functions as a single real estate market.

Say I tell you that Montreal real estate prices have just quadrupled lately. Without looking at Laval prices, you think that them having remained flat would be a likely guess?

[sunsetmountainland]

Michael Campbell's Daily Business Comment

Record Low Interest Rates Have Helped Pushed Prices Higher

click link then listen to the audio if interested

http://www.cknw.com/money-talks/

[CanSpice]

Originally Posted by logan5

I've mentioned this a few times, but never really heard a valid response. Detached home prices in the Fraser Valley (Surrey, Langley, Abbottsford,etc.) are rising at an astronomical rate...

Even Abbottsford, which is not even in Metro Vancouver, is rising at an incredible rate. Meanwhile, home prices are rising at normal or below normal rates across the rest of the country...

So somebody explain to me how rich Chinese buying up property in Vancouver are causing these dramatic price increases in the Fraser Valley, where there are no rich Chinese bidding up prices.

One explanation I've heard people use is that it's a ripple effect. That the people cashing out in Vancouver are moving to other areas of the Metro. But so what. What difference does make if people from the City of Vancouver or Calgary, or wherever are moving to areas in the Fraser Valley. That's just normal population growth. Something that every other major city in Canada is experiencing. Calgary, for example, takes in as many new residents as Vancouver, and Calgary has half the population of the Lower Mainland. Home prices have risen 1.1% over 1 year in Calgary. Same story in other cities across Canada that are growing at the same (proportional) rate as Vancouver. So what makes Vancouver so different? There's no way a handful of rich Chinese are skewing up prices in places as far away as Abbottsford.

The only logical explanation is Metro Vancouver's extreme land constraints.

http://globalnews.ca/news/2624064/iv...val-vancouver/
http://www.fvreb.bc.ca/statistics/Package%20201605.pdf

Take, as an example, a retired couple living in a SFH in Vancouver. They decide they're going to sell and move out to Abbotsford. They sell their house for $2.5m, and all of a sudden they're awash with cash to buy a house in Abbotsford. They see a house they really like and put in an offer that's a lot higher than asking so that they get it.

That pushes the prices up in Abbotsford because of the high prices in Vancouver. A friend of mine just sold their townhouse in Langley and moved to Abbotsford and did this exact thing. There might not be any rich Chinese bidding, but there are newly rich Vancouverites now.

[whatnext]

Originally Posted by casper

All I am proposing is build enough condos for both the people who want to own an empty condo and the people who want to actually live in one.

Let developers flood the market with condos it will help drive down prices and make housing affordable for more people.

" build enough condos for both the people who want to own an empty condo"

You realize how ridiculous that sounds, don't you?

[casper]

Originally Posted by whatnext

" build enough condos for both the people who want to own an empty condo"

You realize how ridiculous that sounds, don't you?

What makes you think it is ridiculous. Quite common in many parts of the world.

There is a subset of the population in this world who believe parking their money in Vancouver property provide good upside with little risk. Do I share this view? Absolutely not. Do I think we can stop them form doing it? Not a chance.

If there are foreigners who want to buy and trade condos as an investment, lets build them condos. They are big boys, they know the risks associated with locking there assets in property on the other side of the globe. They are paying strata fees and property tax without benefiting, but they were aware of that going in.

So you add an extra 10 floors to a 50 story building. What is wrong with that.

[cornholio]

Originally Posted by casper

What makes you think it is ridiculous. Quite common in many parts of the world.

There is a subset of the population in this world who believe parking their money in Vancouver property provide good upside with little risk. Do I share this view? Absolutely not. Do I think we can stop them form doing it? Not a chance.

If there are foreigners who want to buy and trade condos as an investment, lets build them condos. They are big boys, they know the risks associated with locking there assets in property on the other side of the globe. They are paying strata fees and property tax without benefiting, but they were aware of that going in.

So you add an extra 10 floors to a 50 story building. What is wrong with that.

The only selling point of capitalism is efficiency. I challenge you to tell me how this is efficient? There is a reason capitalism requires regulations and governance. Because on its path to efficiency it can be destructive. In the long run could the market balance its self out? Possibly. But before that happens real lives of the only people that mater, citizens and tax payers, will be destroyed or at best negatively impacted. When a speculative bubble collapses no one wins. Especially not the people inside of it. The government must protect speculative bubbles at all costs. It must protect housing affordability and system fairness for its citizens at all costs. Saying to simply build more and fuel the speculative bubble is counter productive and makes things only worse. What Canada needs to do is protect key markets from foreign capital. It is ludicrous that we have borders and immigration policies, and for good reasons but we don't have any controls on capital and money flowing in. Just like opening up the country to unlimited number of immigrants would destroy it. So will opening it up to unlimited amount of capital without regulations. If you are not a citizen and tax payer the government should have the final say if you can or can not buy a residential property in Canada. We will be better for it. As it stands we are careening towards a brick wall, count on it.

[logan5]

Originally Posted by CanSpice

Take, as an example, a retired couple living in a SFH in Vancouver. They decide they're going to sell and move out to Abbotsford. They sell their house for $2.5m, and all of a sudden they're awash with cash to buy a house in Abbotsford. They see a house they really like and put in an offer that's a lot higher than asking so that they get it.

That pushes the prices up in Abbotsford because of the high prices in Vancouver. A friend of mine just sold their townhouse in Langley and moved to Abbotsford and did this exact thing. There might not be any rich Chinese bidding, but there are newly rich Vancouverites now.

So supply and demand?

There is almost a perfect correlation between land constrained cities and high home prices in Canada. There is no correlation between the wealth of one cities residents and home prices.

Here’s a breakdown of which Canadian cities hold the most millionaires:

Toronto: (118,000)
Montreal (52,000)
Calgary (32,000)
Vancouver (25,000)
Edmonton (14,000)

http://604now.com/2013/05/13/millionaires-in-canada-which-city-has-the-most/