Canada's 'housing bubble' deemed close to bursting

[dleung]

Originally Posted by Pinion

Nah it will easily go for well over assessment. $20 million is nothing in Vancouver, I wasn't linking to the most expensive, just one on a small lot. There's a 6,600 sq foot condo for sale for $38 million on Cordova right now and about 10 other active listings over $20 million..

The luxury market is somewhat detached from the local market. There's a string of buildings along Coal Harbour where the average unit is $6M. The standard units in 3 Harbour Green go from $8-12M with several over $15M, excluding the penthouse lol

[Pinion]

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[Xelebes]

Originally Posted by ssiguy

Well I'm not that far along yet. I'll wait to see what happens with the budget. I don't like what I have heard so far but the NDP can read polls as well as anyone else and they know that housing is by far the biggest concern of BCers. With them only having a minority government and the Greens being very forthright about wanting a ban on foreign ownership {although legally, that is a federal jurisdiction a 100% foreign tax would do the same thing as a ban} they know they are walking on very thin ice.

Is it, though? I'm just thinking of the situation in Prince Edward Island.

[geotag277]

Originally Posted by Xelebes

Is it, though? I'm just thinking of the situation in Prince Edward Island.

I think PEI's LPA policy is similar in nature to BC's ALR (vast restrictions on certain land ie. shoreline, exceptions handled by the province). PEI also uses property tax as a means of enforcing compliance.

[dleung]

Interesting how these things come in cycles. The average house in Metro Vancouver is about the same as it was 18 months ago ($1.6M), but condos have increased 25% from $520K to $655K within that time.


Also, some updates on the city proper:
http://www.vancourier.com/real-estate/go...median-priced-vancouver-condo-1.23143547

Of the 635 condos currently listed on the MLS® in Vancouver proper, the median unit is priced at $999,800....

...the median list price of a Vancouver detached house is still close to $3 million, currently standing at $2,998,000 among the 1,102 houses available on the MLS. In Vancouver East, the median asking price of the 558 houses for resale is $1,999,000 – but in Vancouver West, that price rises to a jaw-dropping $4,680,000.

[dleung]

[whatnext]

Originally Posted by dleung

Interesting how these things come in cycles. The average house in Metro Vancouver is about the same as it was 18 months ago ($1.6M), but condos have increased 25% from $520K to $655K within that time.


Also, some updates on the city proper:
http://www.vancourier.com/real-estate/go...median-priced-vancouver-condo-1.23143547

Of the 635 condos currently listed on the MLS® in Vancouver proper, the median unit is priced at $999,800....

...the median list price of a Vancouver detached house is still close to $3 million, currently standing at $2,998,000 among the 1,102 houses available on the MLS. In Vancouver East, the median asking price of the 558 houses for resale is $1,999,000 – but in Vancouver West, that price rises to a jaw-dropping $4,680,000.

Hmm, let’s see, if you push thousands of detached dwellings out of the reach of local residents, where are they all forced to duke it out for housing? Multifamily.

[Pinion]

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[milomilo]

Also against Van's woeful transportation infrastructure. Fair enough if you don't want to build roads because you prefer transit, but that still means you have to build transit... Vancouver has built far too little of either.

Vancouver and BC's governance reminds me of politics in the UK - constantly bickering, one party will promise something and almost have it ready to built then the other party get's in and cancels it so nothing ever get's built and what does is years late. All the while ignoring the biggest problem of housing because the people with illusionary paper gains have more voting power than those who will never be able to afford their home.

[lio45]

Originally Posted by Pinion

Here are the real consequences of the bubble, for those who think it just makes people rich:

Again, the true net effect is to make Canadians richer.

If you "zoom out", basically the situation is that there's a massive infusion of money that originates from outside Canada, that we let enter the country semi-legally, and that ends up in the pockets of Canadians.

It also has minor side effects within Canada, all of which are zero sum phenomena: people move from a city to another, 40% of businesses in City X pack up and leave for City Y, etc.

But the greater picture seems to me definitely more positive than negative.

[MonctonRad]

Originally Posted by milomilo

Vancouver and BC's governance reminds me of politics in the UK - constantly bickering, one party will promise something and almost have it ready to built then the other party get's in and cancels it so nothing ever get's built and what does is years late.

Gee - sounds a lot like federal military procurement to me.

[milomilo]

Originally Posted by MonctonRad

Gee - sounds a lot like federal military procurement to me.

Exactly the same.

[geotag277]

Vancouver is not so different than other places in Canada. I will point out that Calgary has underground abandoned c train stations, Toronto has the Allen station, Montreal has flip flopping on extending the blue line, etc.

Conservative politicians, a conservative fickle electorate, not wanting to spend a lot of money, being allergic to debt at the wrong times, focusing on wedge issues instead of issues that can help people in day to day lives, ignoring high priority problems for which only unpopular solutions exist.

These issues typify Canadian politics. What makes Vancouver different is that it really can't afford to wait, due to density, land constraints, and so on. SFH owners sitting on their hands resisting rezoning for decades, transit flip flopping and high impact extensions only being built because of the Olympics - all these things disproportionately affect Vancouver as it awkwardly tries to juggle being a density leader, a transit leader, and very much a Canadian city politically with a Canadian minded electorate.

That said I would argue Toronto is likely most behind the 8 ball on transit out of any Canadian city, perhaps followed by Montreal. Getting around Vancouver is a pain, but it's nothing compared to Toronto rush hour, again symptomatic of Canadian flip flopping regarding transit, density, & huge growth. I think Toronto grew close to 100k last year? Crazy, that's like an extra Thunder Bay, Saint John NB, or Lethbridge AB added in a single year.

[someone123]

Originally Posted by lio45

Again, the true net effect is to make Canadians richer.

If you "zoom out", basically the situation is that there's a massive infusion of money that originates from outside Canada, that we let enter the country semi-legally, and that ends up in the pockets of Canadians.

It also has minor side effects within Canada, all of which are zero sum phenomena: people move from a city to another, 40% of businesses in City X pack up and leave for City Y, etc.

But the greater picture seems to me definitely more positive than negative.

I think this is oversimplified.

The real question we should be asking is whether this investment is channeled as productively as it could be, and whether we are handling the fallout as well as we could be. Unfortunately I think the city, province, and federal government have done a mediocre to bad job on all counts. They have really dropped the ball on affordable housing. There is no reason why Vancouver can't have affordable housing and foreign investment housing at the same time.

Setting that aside, I don't think your premise of tons of money transferred to Canadians is as obvious as it seems. A lot of the money circulating just goes from foreign investors to sketchy foreign flippers and shell companies. Many of these individuals and companies are paying almost nothing in taxes. Is it really good for Canada if an absentee Chinese owner sells a $4M house to another absentee Chinese owner, they barely pay any taxes, and they take advantage of public services here for their families? All we get is a foreign-priced real estate sub-market that takes up useful land that we can't participate in don't benefit from.

And even beyond that, "net national effect" is meaningless to individuals who personally lose out. A lot of the people who have to move away aren't the ones who are getting windfalls from the housing market. And the government is making all of this worse as we previously discussed because the non-windfall group (relying on employment income) is often being taxed more heavily than the windfalls group (tax-free capital gains from real estate). There's also something strange about worrying about a collectivist principle like net national benefit yet throwing individuals to the metaphorical wolves of global capital.

[Pinion]

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[Pinion]

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[geotag277]

I have to say, on the ground, I am noticing a bit of an uptick in people relocating from Vancouver. A bit surprising since our job market still isn't great in general, but it seems the main motivating factor for this wave is the increased rents, which for the first time is starting to spill over from the general unaffordability landscape. You can live pretty well in inner city Calgary for a similar price compared to somewhere like Maple Creek. This is pretty unprecedented in terms of disparity between Calgary (a historically high rent city) and Vancouver (a historically low rent city).

[milomilo]

Originally Posted by geotag277

Calgary has underground abandoned c train stations

Just want to nitpick this - there are no abandoned stations, there are just a few roughed in sections for a future tunnel under 8th ave for the red line. I don't think this is a sign of bad governance and is in fact a good example of long term planning. I don't think Alberta does too badly at all in this regard.

As you say, bad governance occurs everywhere most notably in BC but also Toronto, but to claim it is a Canadian thing is unfair. We can look to the US and UK for far more dysfunctional governments.

[Pinion]

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[ssiguy]

As noted from the North Vancouver comment, this is another negative consequence of sky-high housing..........it increases traffic and commutes as it naturally results in longer commutes as even the solidly middle class cannot afford anything even remotely close to the inner city areas.

High prices makes the urban utopia of living near where you work, which Vancouver planners continue to espouse, is a near impossibility. The farther you live from work the far more likely you are to drive because taking slower transit would simply make your daily commute far too long.