Canada's 'housing bubble' deemed close to bursting

[mistercorporate]

Originally Posted by giallo

Yeah. I think sunsetmountainland has outlived his/her usefulness.

Everyday the Canada section is filled with their passive aggressive posts (and terrible grammar to boot).

Mods?

Agreed. But he doesn't swear so they tolerate him. It's still trolling though, and dumbs down this forum.

[dleung]

Originally Posted by lio45

I doubt that's correct; are Gambier Island and the area north of Brunswick mountain "developed"? From Google Maps, it certainly doesn't appear so.

The thing is, given that about half of Sea Island (airport) is of that same color (darkest shade of the three greys), I'm having a hard time guessing what the shades of grey even mean. Especially since one of the three shades is missing from the legend.

Downtown Vancouver is all mid-grey, so it's a safe bet that that shade is the one that means "developed". Light grey and dark grey, no idea. There are areas that are obvious wilderness that are light grey (such as West Lion mountain and the surrounding area) and there are other areas that are obvious wilderness that are dark grey (such as the area around Brunswick mountain and the mountains north of it). From my limited outsider's point of view, I haven't been able to deduce the difference.

I think it makes more sense if you invert the legend, assuming the dark area outside metro vancouver doesn't count

[casper]

Originally Posted by lio45

My immediate reaction to this map is the opposite: I'm shocked by how much of inner city Vancouver is allocated to single family residential.

Second reaction however is similar to yours: the outer "disc" of abundant cheap SFHs with long commutes as their tradeoff you usually find in a North American metro area isn't there.

Condos (until very recently) were expensive but not uber expensive relative to most other major cities in Canada. Older ones were quite reasonable, newer ones smaller and a bit expensive.

It is the SFH that have caused all the concern. That suggests the solution is more of them.

[lio45]

Actually, SFHs themselves aren't any pricier in Vancouver than anywhere else, it's the land that's under them that's the concern, which suggests one element of solution would be rezoning areas of the inner core for more density, as several SSPers have been suggesting for years.

(Just so we're clear, both of these, my 1) rezoning vast swaths of the inner core to multifamily and your 2) eliminating (at least parts of) the ALR so suburban SFH sprawl can take over those areas, would help lower the prices of housing by adding more supply regionally while demand remains the same. I just think #1 makes much more sense.)

[someone123]

Originally Posted by lio45

Actually, SFHs themselves aren't any pricier in Vancouver than anywhere else, it's the land that's under them that's the concern, which suggests one element of solution would be rezoning areas of the inner core for more density, as several SSPers have been suggesting for years.

For years people have often suggested the era of affordable single-family dwellings in Vancouver is over, and that we all need to transition to living in multi-unit buildings (except for some rich people). If this is true, why is so much of the city still zoned for detached houses?

Some people also argue that Vancouver's housing prices are caused only by the limited availability of land and free market forces. I don't know how anybody can argue this with a straight face when East Van is full of run-down Vancouver specials and NIMBYs around Commercial Drive fight anything over 3 storeys. If land were the only issue we would see expensive land but affordable multi-unit buildings. Instead, condo prices have skyrocketed.

[whatnext]

Originally Posted by someone123

For years people have often suggested the era of affordable single-family dwellings in Vancouver is over, and that we all need to transition to living in multi-unit buildings (except for some rich people). If this is true, why is so much of the city still zoned for detached houses?

Some people also argue that Vancouver's housing prices are caused only by the limited availability of land and free market forces. I don't know how anybody can argue this with a straight face when East Van is full of run-down Vancouver specials and NIMBYs around Commercial Drive fight anything over 3 storeys. If land were the only issue we would see expensive land but affordable multi-unit buildings. Instead, condo prices have skyrocketed.

The problem is nothing being built now is affordable in the City of Vancouver. New 2 bedroom condos are over a million, that's not affordable. New three bedroom townhouses are closing in on $1.5 mil.

[cabotp]

Originally Posted by someone123

For years people have often suggested the era of affordable single-family dwellings in Vancouver is over, and that we all need to transition to living in multi-unit buildings (except for some rich people). If this is true, why is so much of the city still zoned for detached houses?

Some people also argue that Vancouver's housing prices are caused only by the limited availability of land and free market forces. I don't know how anybody can argue this with a straight face when East Van is full of run-down Vancouver specials and NIMBYs around Commercial Drive fight anything over 3 storeys. If land were the only issue we would see expensive land but affordable multi-unit buildings. Instead, condo prices have skyrocketed.

Because before the price of land wasn't at the tipping point of having to rezone an area from detached home to multi store home. Also they temporarily got around it by introducing lane way houses or multi-suite detached homes.

Also residential rezoning doesn't change happen over night. It is easier for a city to rezone an industrial or commerical area because they are only just business. But rezoning a residential area is more difficult because people's homes are affected and this will cause more of a back lash. So most cities are reluctant to do so.

[Pinion]

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[osmo]

Originally Posted by whatnext

The problem is nothing being built now is affordable in the City of Vancouver. New 2 bedroom condos are over a million, that's not affordable. New three bedroom townhouses are closing in on $1.5 mil.

You don't build affordable units as land values will cook up the end price for the users, more units satisfy those who can afford to pay the top price and the secondary units these people occupy filter down as more affordable housing stock.


-blogtorontorealestate

The Summit in Toronto is a clunker for the mid-1980s. Great location and you can buy old units in here for a good price relative to the rest of the newer product in the area. You can buy a condo in this building for $350-400K.

Older housing has always been cheaper typically unless it is housing that sits in a tony neighbourhood. With restrictions on units overall, you just get people sitting still in units versus upgrading if they have the means and ability to.

Originally Posted by Pinion

I can't believe there are still people who think more towers will solve anything. There are tons of towers going up all the time and it's been that way since the mid 90s. Only foreign ownership restrictions will reverse housing price trends.

Housing growth is not keeping up with the population growth we see in Toronto and Vancouver. Canada built more housing in the 60s and 70s versus now with less growth.

Toronto needs current record inventory to continue come online for roughly 5-7 years to stabilize prices.

[Pinion]

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[CanSpice]

Originally Posted by Pinion

Housing growth is just fine in Metro Vancouver. Vancouver isn't growing very fast because no one can afford it anymore, and lots of previously occupied homes are sitting empty. e.g. West Vancouver, where the average house price went from $1.5 million to $2.5 million between the 2011 and 2016 censuses, while population DROPPED by 2,000. How do the domestic supply-and-demand diehard believers explain that?

You should also point out that West Vancouver is really anti-densification. The median income is quite high there, and it's always been seen as an enclave for the rich. You can't pick it as an example of why Metro Vancouver bucks the supply-and-demand theory.

You also can't look at the base population stats either. Which cohorts are leaving West Vancouver? Is it young adults moving out because they're priced out? Are household sizes going down? Is rental stock disappearing?

Basically, using West Van's housing prices and population to make a blanket statement about Metro Vancouver is crazy. You might as well use Anmore and Belcarra too.

And you say things like "Vancouver isn't growing very fast" when Metro Vancouver's population growth from 2011 to 2016 was higher than the national growth rate, up by 6.5%.

[osmo]

Vancouver is still behind, not getting anywhere when your housing grows slower than your population growth. 8% increase in dwellings versus 9.34% increase in population (11-16), it is not enough. Everyone who says housing growth is just fine shouldn't complain about prices then as they are very much related.

[rbt]

Originally Posted by Pinion

Housing growth is just fine in Metro Vancouver. Vancouver isn't growing very fast because no one can afford it anymore, and lots of previously occupied homes are sitting empty. e.g. West Vancouver, where the average house price went from $1.5 million to $2.5 million between the 2011 and 2016 censuses, while population DROPPED by 2,000. How do the domestic supply-and-demand diehard believers explain that?

Total population isn't really the right number to use for a supply/demand comparison as it includes dependants.

A family of 4 (2 parents + 2 kids) is more easily priced out than a family of 2. The DINK couple doesn't have kid related expenses, which can go toward housing, and tend to invest more time in their career which can result in higher overall earnings. Higher earnings + lower expenses == more expensive housing but lower population.

It's not a particularly good trend for a city to have. Long-term survival requires new blood with an attachment to the region.


A more interesting figure for trending might be population with income > $40k. Something that separates the home buyer from the others who might live in it. Development demand, after-all, comes from purchasing homes not from living in them.

[sunsetmountainland]

B.C. home sales to fall as interest rates rise, but prices stay strong: BCREA

Chief economist Cameron Muir predicts higher interest rates, coupled with slower economic growth, will carry the moderating trend in home sales right through next year.

“More stringent mortgage qualifications and rising interest rates will further erode affordability and household purchasing power,” Muir says in a news release.

The association also notes the supply of homes for sale continues at, or near, decade lows in most B.C. regions but it says 60,000 new homes are now under construction, well above the 2008 high of 45,000 units.

“Slowing consumer demand combined with a surge in new home completions over the next several quarters will create more balance in the housing market and produce less upward pressure on home prices,” the association says in its release.

It estimates the average price for a home in B.C. is forecast to increase 6.0 per cent to $752,000 this year, and a further 4.0 per cent to $781,800 in 2019.

http://business.financialpost.com/pmn/bu...-rates-rise-but-prices-stay-strong-bcrea

[lio45]

Originally Posted by sunsetmountainland

B.C. home sales to fall as interest rates rise, but prices stay strong: BCREA



http://business.financialpost.com/pmn/bu...-rates-rise-but-prices-stay-strong-bcrea

That behavior is somewhat telling, as I recall I've explained already more than once.

In a "normal" market, property prices are directly tied to interest rates because the fixed factors for "normal" buyers who are homeshopping are 1) their income and 2) the monthly payment they can afford based on that income.

In a housing market that is essentially just glass-and-steel BitCoins for Chinese billionaires, this direct link does not exist. (Some relationship exists, but it's a lot more tenuous.)

[Pinion]

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[whatnext]

Warning that Canadian debt levels threaten Canada's banking system:

Canadians’ collective household debt has climbed to $1.8 trillion as an international financial group sounds an early warning that the country’s banking system is at risk from rising debt levels.

Equifax Canada says consumers now owe $1.821 trillion including mortgages as of the fourth-quarter of 2017, marking a six per cent increase from a year earlier...

...The fresh numbers come as an international financial group owned by the world’s central banks says Canada’s credit-to-gross-domestic-product and debt-service ratios show early warning signs of potential risk to the banking system in the coming years.

The latest report by the Bank for International Settlements says Canada’s credit-to-GDP gap and debt-service ratios have surpassed critical thresholds and are signalling red, pointing to vulnerabilities...

http://business.financialpost.com/person...ts-1-8t-as-report-warns-of-domestic-risk

[rbt]

Originally Posted by whatnext

Equifax Canada says consumers now owe $1.821 trillion including mortgages as of the fourth-quarter of 2017, marking a six per cent increase from a year earlier...

Written as an average of $50,200 per Canadian for mortgage + personal debt doesn't seem nearly as scary as $1.821 trillion.

Actually, it's kinda fascinating that the per-capita mortgage related debt is only ~$27,000 yet non-mortgage debt is $23k. It doesn't seem like a housing crisis at all; it's a car + credit card + student loan crisis.

[someone123]

Originally Posted by rbt

Written as an average of $50,200 per Canadian for mortgage + personal debt doesn't seem nearly as scary as $1.821 trillion.

Actually, it's kinda fascinating that the per-capita mortgage related debt is only ~$27,000 yet non-mortgage debt is $23k. It doesn't seem like a housing crisis at all; it's a car + credit card + student loan crisis.

For context, here are the relevant statistics on income: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil105a-eng.htm

Only about 13 million Canadians earned more than $35,000 in 2015. And that is their income before taxes (around $30,000 after taxes in Ontario for that group).

When you divide by 35 million or so you're including infants, the disabled, unemployed, and elderly.

[geotag277]

Originally Posted by rbt

Written as an average of $50,200 per Canadian for mortgage + personal debt doesn't seem nearly as scary as $1.821 trillion.

Actually, it's kinda fascinating that the per-capita mortgage related debt is only ~$27,000 yet non-mortgage debt is $23k. It doesn't seem like a housing crisis at all; it's a car + credit card + student loan crisis.

Seems odd to average debt across all Canadians, including those new born babies.

A more sensible approach might be to average debt across working Canadians (about 18 million), then you get a relatively more scary 100k average debt.

Car + credit card debt is definitely more concerning, especially considering the typical interest rates associated with those types of loans.