Canada's 'housing bubble' deemed close to bursting

[someone123]

Originally Posted by ssiguy

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.

Who knows how it will turn out in the long run, but even the transit-oriented developments in areas like Brentwood and Lougheed have the feel of being built for investment buyers or maybe downsizers. People who would really benefit from good transit access on their commute earn local wages and generally won't be able to afford these units.

Theoretically an empty home tax should ensure that the investment units become rental stock but I am skeptical about enforcement. Note the recent news articles about "immigration jail" and how people who on paper were living in Canada for two years were actually overseas.

Urban planning is mostly a joke in Vancouver, dominated by boutique projects like bike lanes and laneway housing. The more serious planning projects of past decades like major public housing developments and new infrastructure rarely happen today and are not keeping pace with the city's growth, even as we are supposedly awash in foreign cash.

[giallo]

Originally Posted by 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).

You should see Kelowna. It's filled with Kelowna returnees (leaving Vancouver once they have their second child) and tons of families from Metro Vancouver that want a house to raise their kids in, but be within a few hours of their extended family. This transition was very noticeable when I was back in Kelowna for the summer. It seems almost everyone I know from Kelowna, but living in Vancouver with a family has moved back or is in the process of moving back to the Okanagan.

And Vancouver is no longer a low rent city. Potential home/condo owners that can no longer afford to buy in the metro area are now competing with renters to find a place to live. Most of my friends living downtown are paying in the neighborhood of $1600-$2200 for a one bedroom.

[Metro-One]

Originally Posted by giallo

You should see Kelowna. It's filled with Kelowna returnees (leaving Vancouver once they have their second child) and tons of families from Metro Vancouver that want a house to raise their kids in, but be within a few hours of their extended family. This transition was very noticeable when I was back in Kelowna for the summer. It seems almost everyone I know from Kelowna, but living in Vancouver with a family has moved back or is in the process of moving back to the Okanagan.

And Vancouver is no longer a low rent city. Potential home/condo owners that can no longer offered to buy in the metro area are now competing with renters to find a place to live. Most of my friends living downtown are paying in the neighborhood of $1600-$2200 for a one bedroom.

When I move back to BC (hopefully within 3 to 4 years) I am not even considering Metro-Vancouver. My first picks are Victoria or the Okanagan. if both of those areas are also out of reach by the time I return, then I will be looking at Nanaimo or the Kamloops area. After that... Nelson?

[giallo]

Originally Posted by Metro-One

When I move back to BC (hopefully within 3 to 4 years) I am not even considering Metro-Vancouver. My first picks are Victoria or the Okanagan. if both of those areas are also out of reach by the time I return, then I will be looking at Nanaimo or the Kamloops area. After that... Nelson?

I'm not even sure where I'd go if/when I return. Probably Metro Vancouver as that's where my wife wants to be, but ugh, I really don't want to deal with all the headaches that would be associated with relocating there.

Revelstoke has always been an awesome place, just......very small. Nice climate, and fantastic skiing though.

[Metro-One]

Originally Posted by giallo

I'm not even sure where I'd go if/when I return. Probably Metro Vancouver as that's where my wife wants to be, but ugh, I really don't want to deal with all the headaches that would be associated with relocating there.

Revelstoke has always been an awesome place, just......very small. Nice climate, and fantastic skiing though.

I feel lucky, my wife loves the Okanagan and Kamloops areas (scenery and climate).

So Kelowna and Kamloops seem to be my two most realistic options, haha.

Revelstoke is an amazing area. Love it, but I think we need an area of at least 100 000 people or so.

[LeftCoaster]

Meh, market will probably have corrected a bit by the time you guys move back so I'm sure Vancouver will be in play again.

[Metro-One]

I am hoping so, but I also won't hold my breath (already been gone for over 4 years and affordability has only become worse in Vancouver since then, while I rent a 2 bedroom apartment on the 10th floor in Japan for around $600 Canadian, in one of the few areas of the world that is safer than Canada)

[giallo]

Ah....cheap rent. I haven't experienced that since my days in Tainan, Taiwan.

We have an apartment in both Shanghai and Seoul at the moment, and boy, are those two cities not cheap to rent in.

[Metro-One]

Yeah, I am luck that I live in less populated area of Japan (still 700 000 people or so within 45 minutes of me by train).

[milomilo]

Calgary is fantastic as a renter right now. If you are sharing with at least one other, you have a great variety of reasonably priced options in the inner city. I managed to get our rent reduced just by asking a year ago.

[Denscity]

Originally Posted by Metro-One

When I move back to BC (hopefully within 3 to 4 years) I am not even considering Metro-Vancouver. My first picks are Victoria or the Okanagan. if both of those areas are also out of reach by the time I return, then I will be looking at Nanaimo or the Kamloops area. After that... Nelson?

Castlegar is starting to see people moving here from both Vancouver and Kelowna. And apparently the cities' development department has never been busier fielding calls and visits from Vancouver and Kelowna developers wanting to build new commercial and residential buildings.

[Metro-One]

Originally Posted by Denscity

Castlegar is starting to see people moving here from both Vancouver and Kelowna. And apparently the cities' development department has never been busier fielding calls and visits from Vancouver and Kelowna developers wanting to build new commercial and residential buildings.

My sister's family just bought a house in Nelson and they will be moving there this spring. So there is a chance I could end up in the area as well... at the very least I will be visiting there far more often.

[Denscity]

^^^Aah cool. Ya to us Nelson is expensive but if you're from the coast or even the okanagan it doesn't.
You'll have to check out all the different climates we've got going on here.

[whatnext]

Originally Posted by Denscity

Castlegar is starting to see people moving here from both Vancouver and Kelowna. And apparently the cities' development department has never been busier fielding calls and visits from Vancouver and Kelowna developers wanting to build new commercial and residential buildings.

I get a laugh at the thought of Vancouver developers being priced out of Vancouver. Maybe the parasites shouldn’t have spent two decades whoring out the city to Chinese money. And now the same Chinese money is outbidding them. Karma’s a 🞵🞵🞵🞵🞵.

[osmo]

Originally Posted by 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.

Planners get it wrong more than right. Planners are one of the reasons for such expensive housing as their technicalities and density clamps prohibits cheap housing from getting built. Stick walk-up apartments with accessible ground floor units, simple 6-9 unit buildings which were a dime a dozen in previous decades in Canada. These things are cheap to build and a small group of local investors could litter thier whole community with these if there wasn't barriers to zoning and time sinks with approvals and let us not forget costs

Vancouver and Toronto have chosen the point tower podium model for density as thier hill to die on. We see this sort of density isn't enough and these housing products are just prone to attract speculative activity. This type of housing is also the most expensive to product and it never actually produces any truly mid-msrket options unless it's some TOD thing in the far flung burbs.

Planners are out of touch. I had a conversation with a high level Toronto planner st an event after she presented on the Unilever Great Gulf project that is going to add 12 million square feet of commercial product. I asked her why the city does not think it would be beneficial to rethink the employment land destination (in Ontario we have province mandates for lands set aside for jobs, city can reorganize and reallocate these lands though asking as the ratio stays in place. The only good lots left in Toronto are largely in Employment lands where developers can't build housing) to include condos so the area can truly be, you know, missed use. She seemed puzzled that I would suggest that This development will end up like any other single use business core that turns into a deadzone after 6pm. Go to any Canadian city that lacks large downtown resident numbers and everything closes at 7pm and it all becomes a ghost town.

The fact it isn't easy to walk to either and you will be forced to enter via transit does not help either. She genuinely had the notion that it was a perspective that was new to hear and I nearly fell out of my chair. Her rebuttal was that thier is "lots of housing surrounding the site" to which I implied "you mean the many cozy semi-detached homes in Riverdale? Isn't this a stable community? What changes will come here aside from potential pressure on prices from workers wanting to life within walking distance to work" ... She didn't have an answer for that one.

We were both getting annoyed with each other and the conversation shifted but this is generally the mindset of planners these days. Very much lovely bees and butterflies when it comes to concepts but true lack of full circle vision when it comes to long range planning. Great Gulf has tied to push the city to make a change so they can include condos on site but the city won't budge.

I don't get the logic of building essentially a new mini downtown and not including housing into it. I suspect these Toronto and Vancouver planners just visit plCes like Paris and London and think every city is dynamic like that. You build single purpose cores and all you get is downtown Regina or Hamilton with a bunch of tall buildings but no life after 6pm.

Planners are shy. The hard work of pitching beneficial changes to the public and politicians is something they can't seem to do. 'Point towers are not satisfying the housing need, what else can we do?' 'Cresting mono-districts end up not being dynamic; why and how can we change that?' 'Do we bare responsibility for housing prices; yes as we set the rules the market has to play buy in delivering product'.

[lio45]

Originally Posted by Pinion

If the on-paper wealth was more permanent I would tend to agree, but eventually it's going to disappear...

Still, a good chunk of it has been now permanently injected into Canada, whatever happens: any Vancouver boomers who cashed in selling to Chinese buyers, the money, foreign in origin, is now irreversibly here to circulate.

When it disappears, it will be the current owners who will lose. Originally, nearly all housing in Vancouver was owned by Vancouverites (decades ago); nowadays, it's not the case. The difference between the two situations is the chunk of the foreign money that showed up from external sources and will stay here whatever happens.

It's substantial, from most accounts.

Originally Posted by someone123

The real question we should be asking is whether this investment is channeled as productively as it could be

I'll stop you right there. It's extremely likely that this investment is real estate or nothing. If we prevent Chinese multimillionaires from bringing their millions into Canada by not letting them buy properties, they will likely go with "buying property in Sydney, Australia and keeping it empty" as their second choice, not "invest into job-creating high-tech high-risk ventures in Canada".

So, the question is, knowing those buyers want to buy and hold real estate, do we want them bringing their money here or not? "Using that investment more productively" isn't realistically on the table.

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...

Yeah, those cases aren't beneficial economically. But those houses were originally owned by Vancouverites, so someone likely currently living and spending in Canada permanently made significant money on it at some point which originated from external sources. Also, any time a boomer still holding onto a $4M property sells it to an absentee Chinese owner, that's a net gain. I don't think we can assume all the selling nowadays takes places between absentee Chinese owners; there's got to be a decent chunk of locals still active in owning property.

[someone123]

Originally Posted by lio45

I'll stop you right there. It's extremely likely that this investment is real estate or nothing. If we prevent Chinese multimillionaires from bringing their millions into Canada by not letting them buy properties, they will likely go with "buying property in Sydney, Australia and keeping it empty" as their second choice, not "invest into job-creating high-tech high-risk ventures in Canada".

So, the question is, knowing those buyers want to buy and hold real estate, do we want them bringing their money here or not? "Using that investment more productively" isn't realistically on the table.

Sure, it might only be real estate, but it might be agricultural land (turned into fake hobby farms with McMansions), detached housing lots, condos, or commercial properties. Chinese investors in Vancouver have piled into all of these things at various times depending on what seemed most attractive.

I think a good approach would be to create a two-tier market for new multi-unit construction. Build the $5M luxury condos in 60 storey towers that can sit empty for Chinese investors alongside standard decent-sized units that are only available to locals and are a mix of condo and rental. Foreign "land banking" should be minimized, and condos are a good way to do that. And sometimes it's okay not to take 100% of the foreign investment that is possible.

We also need to modernize many planning rules that were designed for local NIMBYs. These are the rules that prevent densification in central areas like the West Side of Vancouver. They were bad rules when they were first created, and they make even less sense if they're going to be for neighbourhoods that are dominated by absentee owners. It is a similar story with infrastructure. Vancouverites sometimes pat themselves on the back for preventing the construction of highways and NIMBYs have fought transit improvements for UBC and SFU. But we also have foreign buyers who have snapped up a huge amount of the housing in these areas. These two factors have interacted to make housing options and commutes miserable for anybody who works or studies at the universities. UBC is a large and valuable institution (over 60,000 students and employees, including foreign students who pay high tuition); it's not clear at all that sacrificing it at the altar of foreign real estate speculation makes any economic sense for British Columbians.

[geotag277]

I do wonder how many individuals who cash out even stay in Canada. Consider the case of Pinion who is planning on cashing out and moving to Australia, in which case, Canada loses both capital gains taxes on primary residences and the benefits of injecting that money into the economy.

I will reference my earlier comments, that for many in Vancouver, they don't even want to sell, but can't deny how lucrative it is, by pocketing 1+ million dollars. There has been intense listing pressure for lack of listings in Vancouver for a while now, and I get the sense that if houses weren't selling for so much money, they simply wouldn't be listed at all, further exacerbating the listing drought. This is somewhat corroborated by the fact that after the foreign buyer tax was enacted, listings dried up instead of the expected panic selling. High prices are coercing people to list which in turn are actually moderating the price increases.

At the same time, these people having these windfalls might be seriously looking to actually leverage that money into an improved life style, which likely means looking elsewhere for housing, if I had to guess I would place them mostly out of the country (wild guess, but it is my gut reaction considering the sales stories I've anecdotally heard about personally, including Pinion).

[bless-u]

The bubbling prices in Toronto has driven a lot of local Torontonians to North (Orillia), East (Oshawa) and West (Hamilton) of Toronto, while they still have to commute 3 to 4 hours everyday back and forth. It is no longer just the problem for Vancouver any more, though it shares a similar root cause. For Toronto, it started shortly after the implementation of Foreign Buyer Tax in Vancouver. The spill-over effect was relatively rapid, and no policy maker seemed to anticipate that early enough to prepare accordingly. Reaction came only when the spike in monthly increase in home prices reached 30%, which was FAR too late. Damage done.

I know for fact some super wealthy players in the real estate market in Vancouver have moved to Toronto to capitalize on the on-going trend. It makes a small portion of local Torontonians very wealthy, but a GREAT portion of them exceedingly frustrated. It is an terribly awful feeling to be priced out in one's beloved home town and have to moved outside. This viral activity will just keep on spreading to second and third tier cities if policy makers assume their usual wait-and-see and don't-fix-it-unless-it-is-broken approaches. I've gathered Montreal is getting hotter....

[GreaterMontréal]

Originally Posted by bless-u

I've gathered Montreal is getting hotter....

The housing price is stable in the suburbs

North Shore median price
-single-family $261k
-condo $178k
-Plex (2 to 5 units) $405k

South Shore median price
-single-family $300k
-condo $204k
-Plex (2 to 5 units) $384k