Canada's 'housing bubble' deemed close to bursting

[casper]

Originally Posted by cornholio

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.

I am saying the exact opposite....

Don't create a bubble in the first place by artificially limiting the supply of condos. That is what the city is doing currently with hight limits on buildings, with zoning etc.

Creating an over supply will over time bring the prices closer to the replacement cost of the condo. Which I think is what everyone wants.

Controlling money coming into the economy is plain silly and impossible. Money comes in to Canada every day and goes out every day. Trying to figure out why its coming in and for what purpose before it comes into the country is virtually impossible.

Putting rules in place that state that non-residents can not own property is not enforceable. What ever rule you dream up, all you do is create work for the lawyers, accountants and realty agents to invent new legal structures to work around it.

[milomilo]

Originally Posted by casper

I am saying the exact opposite....

Don't create a bubble in the first place by artificially limiting the supply of condos. That is what the city is doing currently with hight limits on buildings, with zoning etc.

Creating an over supply will over time bring the prices closer to the replacement cost of the condo. Which I think is what everyone wants.

Controlling money coming into the economy is plain silly and impossible. Money comes in to Canada every day and goes out every day. Trying to figure out why its coming in and for what purpose before it comes into the country is virtually impossible.

Putting rules in place that state that non-residents can not own property is not enforceable. What ever rule you dream up, all you do is create work for the lawyers, accountants and realty agents to invent new legal structures to work around it.

Unfortunately the genie is out of the bottle. You can't just create over supply in a free market. Now the developers can charge obscene prices why on earth would they build more than just enough to keep those prices rising?

[logan5]

Originally Posted by milomilo

Unfortunately the genie is out of the bottle. You can't just create over supply in a free market. Now the developers can charge obscene prices why on earth would they build more than just enough to keep those prices rising?

Couldn't you create a huge amount of potential supply by up-zoning large areas at a time? That potential supply supply should cool down the market without having developers build out that potential.

Everybody wins in this scenario. Home owners get a lift in their property values, while panic buying is eliminated.

[Pinion]

Originally Posted by logan5

Couldn't you create a huge amount of potential supply by up-zoning large areas at a time? That potential supply supply should cool down the market without having developers build out that potential.

Everybody wins in this scenario. Home owners get a lift in their property values, while panic buying is eliminated.

How do you figure you can cool down the market and lift property values at the same time?

Mass upzoning would make developers even richer and happier but change little else IMO. They'll continue to build the next condo after selling out the last, demand will never be satiated until our foreign ownership laws change or China implodes.

[casper]

Originally Posted by milomilo

Unfortunately the genie is out of the bottle. You can't just create over supply in a free market. Now the developers can charge obscene prices why on earth would they build more than just enough to keep those prices rising?

Because the developers don't operate are cartel. Even if the city tries to turn it into a cartel by controlling the number of new units entering the market.

For any given developer, they want to make the most money possible off a given development even if it means making less on each condo individually. Remember developers are greedy.

What they are not going to do is built and sell condos for less the replacement/construction cost.

[ssiguy]

This "high density" model has proven itself very effective for quelling conversation and enriching real estate developers but has been an abject failure.

Proof is in the pudding.Vancouver has built thousands of new condos downtown which years ago said would help alleviate high prices............oops, that didn't work out so well. In fact now the situation has become so ridiculous that the economic future of the city is being put at risk as the young and educated flee.

Did a little checking to show how obscene and dire the situation has become.........in Van, NVan, West Van, Rich, Burn, and NW a full 97% of all SFH are listed at over $1 million yet somehow they think the young and educated will stick around. As a top business person recently state, due to the high price of housing and if it continues to rise, "Vancouver will become an economic ghost town."

[ssiguy]

^^^ That was stated by Ryan Holmes, CEO of HootSuite earlier this year.

[Coldrsx]

Edmonton housing sales way up, prices slightly down, starts down but still significant

Edmonton’s housing market continues to demonstrate signs of stability. Unit sales for single-family detached homes were up 19.3 per cent from April and up 3.8 per cent year-over-year, with 1,119 homes selling in May across the Edmonton census metropolitan area.

Unit sales of duplexes and rowhouses increased 37.2 per cent over April and 23.03 per cent over May 2015, with 203 units sold in the month. Condo sales were up 5.3 per cent month-over-month, but down 18.2 per cent year-over-year.

The average single family detached home in the Edmonton CMA sold for $440,573 in May, virtually on par with April’s average price of $439,982, but down almost 3 per cent compared to the average price of $453,748 in May 2015. Average condo prices at $254,555 are up over 1 per cent month-over-month

Housing starts in the Edmonton census metropolitan area were trending at 10,052 units in May, compared to 11,809 in April, according to Canada Mortgage and Housing Corporation (CMHC). The trend is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of total housing starts.

http://edmontonjournal.com/life/homes/whats-happening-single-family-home-sales-increase-in-may

[kwoldtimer]

If the overall trendline for sales volumes and prices is downward, what might account for the sudden substantial uptick in sales volumes in Edmonton for the month? People trading up? People selling "while the going is good"? Other factors? I find that the price declines so far in both Edmonton (approx. 3%) and Calgary (approx 5%) have been more modest than I would have expected in the current downturn.

[Coldrsx]

A lot of people are getting good deals on anything on spec out there or people going into things previously committed to and backfilling.

[Berklon]

Originally Posted by kwoldtimer

If the overall trendline for sales volumes and prices is downward, what might account for the sudden substantial uptick in sales volumes in Edmonton for the month? People trading up? People selling "while the going is good"? Other factors? I find that the price declines so far in both Edmonton (approx. 3%) and Calgary (approx 5%) have been more modest than I would have expected in the current downturn.

Remember, those are numbers the Real Estate board is feeding you - which you really shouldn't believe. They always massage the numbers to look much better than they actually are, and use tactics to adjust the stats (ie. re-listing a house with a new MLS# after a price drop so it's considered a new listing - and thus resetting the asking price so the drop isn't accounted for).

There are a considerable amount of homes whose price has dropped 50k+ but aren't being accounted for. I have friends who are looking to buy and haven't jumped on the big price drops because they anticipate they'll drop even further.

You're fooling yourself if you think RE has held up well in Alberta.

[kwoldtimer]

Originally Posted by Berklon

Remember, those are numbers the Real Estate board is feeding you - which you really shouldn't believe. They always massage the numbers to look much better than they actually are, and use tactics to adjust the stats (ie. re-listing a house with a new MLS# after a price drop so it's considered a new listing - and thus resetting the asking price so the drop isn't accounted for).

There are a considerable amount of homes whose price has dropped 50k+ but aren't being accounted for. I have friends who are looking to buy and haven't jumped on the big price drops because they anticipate they'll drop even further.

You're fooling yourself if you think RE has held up well in Alberta.

I think everyone takes the RE industry reports with a (big) grain of salt. They invariably put the best possible spin on the information presented. I always assumed, however, that the price trends are based on actual selling prices rather than asking prices, so I'm not clear on your point about re-setting the MLS listing prices. I said six months ago and I remain of the opinion that, for those who can wait, prices in Calgary and Edmonton will be lower a year from now than they are now. I'd be surprised to see any significant price recovery before mid-2018, if then.

[Tfreder]

Originally Posted by ssiguy

This "high density" model has proven itself very effective for quelling conversation and enriching real estate developers but has been an abject failure.

Proof is in the pudding.Vancouver has built thousands of new condos downtown which years ago said would help alleviate high prices............oops, that didn't work out so well. In fact now the situation has become so ridiculous that the economic future of the city is being put at risk as the young and educated flee.

Did a little checking to show how obscene and dire the situation has become.........in Van, NVan, West Van, Rich, Burn, and NW a full 97% of all SFH are listed at over $1 million yet somehow they think the young and educated will stick around. As a top business person recently state, due to the high price of housing and if it continues to rise, "Vancouver will become an economic ghost town."

That might be one of the dumbest things I've read regarding real estate. So you truly believe that if Vancouver didn't build all of those condos downtown we would have the same exact prices we have today? That all or nothing mentality is very flawed; just because a measure hasn't brought down prices to late 1970's prices doesn't mean it hasnt suceeded in alleviating prices.

[CanSpice]

Originally Posted by ssiguy

^^^ That was stated by Ryan Holmes, CEO of HootSuite earlier this year.

The same CEO who took heat from not paying interns (which is illegal) and runs a company known for paying below-average wages. Housing is unaffordable because house prices are rising astronomically while wages are stagnant. Mr. Holmes could do a lot towards helping out the latter, but he chooses to do nothing towards that.

[whatnext]

Originally Posted by casper

I am saying the exact opposite....

Don't create a bubble in the first place by artificially limiting the supply of condos. That is what the city is doing currently with hight limits on buildings, with zoning etc.

Creating an over supply will over time bring the prices closer to the replacement cost of the condo. Which I think is what everyone wants.

Controlling money coming into the economy is plain silly and impossible. Money comes in to Canada every day and goes out every day. Trying to figure out why its coming in and for what purpose before it comes into the country is virtually impossible.

Putting rules in place that state that non-residents can not own property is not enforceable. What ever rule you dream up, all you do is create work for the lawyers, accountants and realty agents to invent new legal structures to work around it.

Controlling money (and people) coming into the country is neither silly nor impossible. It just requires the political will and the resources to track and enforce.

Our friends in Australia are showing the way:

The Federal Government has forced the sale of eight homes around the country in its biggest display of force since beginning its crack down on illegal home purchasing in 2015

Buyers from Malaysia, Taipei, Canada, India, the USA and China have been caught up in the ongoing sting, with properties ranging in value from $215,000 to $5.1 million.

A buyer from Malaysia was forced to sell their $5.1m home in Victoria’s Mount Waverley after being found to have purchased home in breach of foreign investment rules. Other homes included a $780,000 property in Queensland’s Eight Miles Plains, and another home in Park Ridge.

“The foreign investors either purchased established residential property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules,” Treasurer Scott Morrison said....
http://www.theaustralian.com.au/business...s-story/4fe94fcb40d70ad43742a98defe0d518

And yes, it is ironic a Canadian was one of the ones busted.

[casper]

Originally Posted by whatnext

Controlling money (and people) coming into the country is neither silly nor impossible. It just requires the political will and the resources to track and enforce.

Our friends in Australia are showing the way:

The Federal Government has forced the sale of eight homes around the country in its biggest display of force since beginning its crack down on illegal home purchasing in 2015

Buyers from Malaysia, Taipei, Canada, India, the USA and China have been caught up in the ongoing sting, with properties ranging in value from $215,000 to $5.1 million.

A buyer from Malaysia was forced to sell their $5.1m home in Victoria’s Mount Waverley after being found to have purchased home in breach of foreign investment rules. Other homes included a $780,000 property in Queensland’s Eight Miles Plains, and another home in Park Ridge.

“The foreign investors either purchased established residential property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules,” Treasurer Scott Morrison said....
http://www.theaustralian.com.au/business...s-story/4fe94fcb40d70ad43742a98defe0d518

And yes, it is ironic a Canadian was one of the ones busted.

Impressive, Australia has a board that reviews all of these purchase, then the board has staff that follow up and determine if rules are being broken and then spends time in order. So they caught 5 people.

Take a look at the port of Vancouver. On any day there are no shortage of containers being loaded and unloaded from ships. Each one of those constrainers is full of goods paid for by an international wire transfer of one sort or another. The resources to track and associate all of those movement of money with the associated transfer of goods is massive.

Go the other way, track the sale of property. But property can be owned directly or through a company. If it is owned by a company, then track the sale of shares in the company. It is a massive job.

Tracking people coming in and out is a bit easier and government regularly does it. Tracking wire transfers especially if the transactions hit a lawyers trust account. Good luck with that.

[casper]

Originally Posted by ssiguy

....

Proof is in the pudding.Vancouver has built thousands of new condos downtown which years ago said would help alleviate high prices............oops, that didn't work out so well. In fact now the situation has become so ridiculous that the economic future of the city is being put at risk as the young and educated flee. .....

I agree it is a problem. However do you think the problem would have been less severe if we had fewer condos in the city?

[ssiguy]

No, I actually don't think the prices would have been any lower because the Vancouver market is dictated by external forces.

My point was that it's always developers who say we need more condos to bring down prices and clearly that hasn't worked. All this "need more density" talk is simply a way for politicians and developers to make excuses for the real cause of the housing crisis.........foreign money.

It makes it look like the politicians and developers are doing their part to solve the problem. Think of it this way............if higher density really would lower prices why in hell would real estate developers or politicians suggest it when it would cut their bottom line or the politicians would lose kick-back money and supress the economy?

[logan5]

From demographic researcher David Baxter...


https://pricetags.wordpress.com/page/2/

Vancouver has less than half the developable land that Toronto has, and less than a quarter the land Montreal has. Guess which city has the highest cost housing and guess which has the least.

By the way, Toronto and Montreal have far more millionaires to bid housing out reach in their cities. Why isn't that happening in those cities? Because they're not Chinese millionaires?

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/

[Pinion]

Originally Posted by logan5

By the way, Toronto and Montreal have far more millionaires to bid housing out reach in their cities. Why isn't that happening in those cities? Because they're not Chinese millionaires?

Close, it's because they don't have as many millionaires bidding with Chinese money. Chinese millionaires are obviously not counted in Vancouver stats because they never declare themselves as millionaires here, or even above poverty level.

Vancouver has way more millionaires than any other Canadian city, not only because China's nouveau riche are using us as their secret piggy bank, but because everyone with a house or townhouse is a millionaire. The 25,000 figure is laughable.