Canada's 'housing bubble' deemed close to bursting

[MolsonExport]

[SpongeG]

Foreign-investor impact unknown, admits CMHC

"Anyone ... claiming it is a big deal or not a big deal, is stating an opinion [because] we do not currently have the data to answer that question," analyst says

By Frank O'Brien | June 6, 2018

A lead analyst for Canada Mortgage and Housing Corp. (CMHC) made a startling admission to a developer-packed conference in Vancouver May 25 regarding the impact of foreign capital on the Metro residential market.

“We don’t know,” Eric Bond, CMHC market analysis principal, told the Greater Vancouver Board of Trade’s Housing Forum 2018, despite an intense focus on the role of foreign buyers in the Metro housing market by Statistics Canada and B.C.’s Ministry of Finance over the past two years.

“We do not know, concretely, what the impact of foreign capital has been on the Vancouver housing market,” Bond said. “Anyone claiming otherwise, whether they are claiming it is a big deal or not a big deal, is stating an opinion [because] we do not currently have the data to answer that question.”

...

https://biv.com/article/2018/06/foreign-investor-impact-unknown-admits-cmhc

[ssiguy]

The fact that we don`t even keep the records of the impact of foreign capital on our housing market is scandalous and exemplifies the massive political influence of developers and real estate companies.

[whatnext]

Even New Yorkers can’t afford a Toronto home

There’s only a handful of cities in the world that make living in New York seem cheap for middle-income people, places like London, Sydney and Hong Kong. And then there’s Toronto, as 26-year-old JunJun Wu will tell you with a sigh.

After almost three years in New York she opted to move to Toronto for what she figured would be less-expensive housing.

“The apartments that I saw were so tiny, which was shocking,” she said. “Compared to my studio in New York, these were half the size.”

Prices have soared almost 60 per cent in the last five years in Canada’s biggest city, and are up another 3 per cent already this year. They’re not as high as Vancouver – one of the hottest real-estate markets anywhere – but among the world’s major cities, Toronto housing ranks as the fifth-most unaffordable relative to income, according to consultant Demographia...
https://www.theglobeandmail.com/investin...llennials-find-themselves-priced-out-of/

[MonkeyRonin]

Originally Posted by whatnext

[I]Even New Yorkers can’t afford a Toronto home

There’s only a handful of cities in the world that make living in New York seem cheap for middle-income people, places like London, Sydney and Hong Kong. And then there’s Toronto, as 26-year-old JunJun Wu will tell you with a sigh.

It's a catchy headline, but I don't think it's very true. The Demographia study it references is based on the average $1,123,800 price of a detached house in Toronto. Which is pricey - everything is pretty expensive here, after all - but most people don't live in a detached house.

Demographia is pretty well known as an advocate of sprawl, and their agenda becomes pretty transparent in their assessment of Toronto: "In Toronto, the housing affordability loss has been associated with the middle-2000s adoption of urban containment policy (“Places to Grow”), including a Green Belt and other draconian restrictions. "

[MonkeyRonin]

The apartment market is tough too - I certainly know from experience. But I feel like people who can "only" find tiny studios starting at $1600/month are the same people who would only consider living in a newly-built condo. Older apartments, commie blocks, and basements provide a pretty big stock of more reasonably-priced (albeit still high) accommodations.

I definitely got lucky, but nonetheless found a really nice (clean, high ceilings, exposed brick, new appliances), large 1-bedroom in a 1910s building for $1100/month as of late 2017. Before that I lived in a 1960s tower in the East End for a few years, paying $1000 for a 1-bedroom.

[ssiguy]

An update of the carnage taking place in Vancouver, Stats are for SFH sales from May 12 to June 9/2018 compared to same time last year:

W. Van....................Sales...-76%.. Inventory..+26%
Vancouver.........................-61%...................+20%
N. Van...............................-62%...................+38%
Delta.................................-69%...................+21%
Richmond...........................-71%...................+21%
Coquitlam...........................-62%...................+33%
Burnaby..............................-73%...................+20%
Surrey................................-71%..................+14%
New West............................-34%..................+18%
White Rock...........................-85%..................+16%
Langley................................-75%..................+35%
Maple Ridge..........................-80%..................+9%
Port Coquitlam.......................-78%.................+76%

Of course the fact that the Chinese are finding it harder to funnel their illicit funds out of the country, CRA finally going after tax evasion, and the increase to the foreign buyers tax and these plunging sales are completely coincidental.

[whatnext]

The situation unfolding in BC as spoiled Boomers boohoo about having to pay more tax on their multi-millon dollar mansions:

Another week, another protest rally held by multimillionaires on the west side of Vancouver who are upset they are going to have to pay a 0.2-per-cent property surtax on that portion of their home assessed at over $3-million.

For many, it may cost a whole $1,500. I’m sure some of you reading this are now shaking in rage, too. Not in sympathy, but in anger at their pettiness...


https://www.theglobeandmail.com/opinion/article-what-about-the-poor-multimillionaire-homeowners/

[whatnext]

Wow, I found this cary statistic on Steve Saretsky's excellent blog on Vancouver's real estate market:

..For simplicity sake, we can estimate how this would affect the real estate broker space, where real estate commissions now command 2% of Canadian GDP....(bold mine)

http://vancitycondoguide.com/canada-real-estate-sector-transition/

[240glt]

Originally Posted by ssiguy

An update of the carnage taking place in Vancouver, Stats are for SFH sales from May 12 to June 9/2018 compared to same time last year:

W. Van....................Sales...-76%.. Inventory..+26%
Vancouver.........................-61%...................+20%
N. Van...............................-62%...................+38%
Delta.................................-69%...................+21%
Richmond...........................-71%...................+21%
Coquitlam...........................-62%...................+33%
Burnaby..............................-73%...................+20%
Surrey................................-71%..................+14%
New West............................-34%..................+18%
White Rock...........................-85%..................+16%
Langley................................-75%..................+35%
Maple Ridge..........................-80%..................+9%
Port Coquitlam.......................-78%.................+76%

Of course the fact that the Chinese are finding it harder to funnel their illicit funds out of the country, CRA finally going after tax evasion, and the increase to the foreign buyers tax and these plunging sales are completely coincidental.

Wow those are some interesting numbers. It will be interesting to see if that’s just a temporary blip or part of a longer term trend

[someone123]

Originally Posted by whatnext

Wow, I found this cary statistic on Steve Saretsky's excellent blog on Vancouver's real estate market:

..For simplicity sake, we can estimate how this would affect the real estate broker space, where real estate commissions now command 2% of Canadian GDP....(bold mine)

The scarier chart is the one about real estate investment in Canada vs. investments that increase the country's productive capacity. The symptoms in the economy seem consistent with that chart. Prices shooting up in some areas, some people getting rich off of speculation (zero sum), and seemingly not much increase in overall productivity, wealth, or standard of living.

The market seems like it has seized up more and more in BC. 5-10 years ago the city was still unaffordable but if you had a decent income you could buy a condo or, if you were adventurous and had some kind of starter home, still stretch to buy a house. Today I'm seeing listings for 800-1,000 square foot suburban condos in the $700,000 range, and there's a half a million dollar or larger gap between those and somewhat nicer townhouses or detached homes. Few people can afford a starter home and few people can afford to upgrade. The only rationale for buying is to try to capture more increases in prices.

In more recent years (maybe 2014-2016 or so) the primary game was folks with bags of money earned offshore who could get in on the rapidly rising prices and ridiculously favourable tax regime. That is all less attractive now.

So who is left to buy Vancouver housing at current prices?

[ssiguy]

Originally Posted by ssiguy

An update of the carnage taking place in Vancouver, Stats are for SFH sales from May 12 to June 9/2018 compared to same time last year:


**** I updated the list. The first 2 sales/inventory is same but added new list of May 14th to June 12th/2018 compared to last year. As you can see the difference of just the past 3 days has been huge.

W. Van....................Sales...-76%.. Inventory..+26%..........-78%...+26%
Vancouver.........................-61%...................+20%...…......-71%...+20%
N. Van...............................-62%...................+38%...……….-72%...+40%
Delta.................................-69%...................+21%..........-76%....+23%
Richmond...........................-71%...................+21%.........-75%....+21%
Coquitlam...........................-62%...................+33%...........-74%..+33%
Burnaby..............................-73%...................+20%.........-83%...+20%
Surrey................................-71%..................+14%...........-81%...+15%
New West............................-34%..................+18%..........-60%...+30%
White Rock...........................-85%..................+16%.........-91%....+14%
Langley................................-75%..................+35%.........-80%....+38%
Maple Ridge..........................-80%..................+9%..........-85%.....+13%
Port Coquitlam.......................-78%.................+76%.........-85%...+70%

Of course the fact that the Chinese are finding it harder to funnel their illicit funds out of the country, CRA finally going after tax evasion, and the increase to the foreign buyers tax and these plunging sales are completely coincidental.

As you can see I updated the list from just 3 days ago and sales are in free fall.

[whatnext]

You know your government is on the right track when realtors start to bitch and moan:

...Polls show the NDP’s affordability measures have broad support, but not everywhere. For the first time in years, those who have ostensibly benefited from Vancouver’s real estate boom—homeowners, investors, flippers and the entire industry—feel threatened. “The NDP is creating class warfare, and using real estate to drive the wedge,” fumes real estate agent Keith Roy. Someone, he notes, recently defaced lawn signs on the west side protesting the school tax, scrawling “EAT THE RICH” on them. “Homeownership is being punished,” he says. “Success is being vilified.”...

https://www.macleans.ca/economy/realestateeconomy/the-real-estate-war-on-the-west-coast-vancouver/

[lio45]

Prices are still decently cheap (though significantly higher than they used to) in Quebec, they can come here

[milomilo]

Originally Posted by lio45

Prices are still decently cheap (though significantly higher than they used to) in Quebec, they can come here

Honest question - do you actually believe that? Do you want your fellow citizens to not be able to afford a place of their own? I feel like promoting expensive houses is one of the most selfish things people can do. I don't yet own a house, and perhaps I'll change my opinion when I do, but I truly hope that house prices in Calgary stay reasonable - I can make money for retirement some other way through investments, in a way that doesn't damage normal people's dignity.

[p_xavier]

Originally Posted by milomilo

Honest question - do you actually believe that? Do you want your fellow citizens to not be able to afford a place of their own? I feel like promoting expensive houses is one of the most selfish things people can do. I don't yet own a house, and perhaps I'll change my opinion when I do, but I truly hope that house prices in Calgary stay reasonable - I can make money for retirement some other way through investments, in a way that doesn't damage normal people's dignity.

I totally agree, in my building, a 700sf condo just sold for $450k, which would have been unbelievable just a couple years ago in non core MTL...

There is nothing succesful as to be able to own place where you can live.

[ssiguy]

Its true.

It is scandalous that successive BCLiberal governments and the municipalities of Greater Vancouver allowed an entire city to become nothing more than a real estate flipping scheme and the fact that housing is an essential of life was met with supreme indifference.


The issue now is how big a drop it will be. If the drop is a big one of 40-50% then the effects on all Canadians could be devestating. Montreal which is not overpriced could have a 10% price reduction and on SFH that would represent about $30,000. A lot of money but people would continue to pay their mortgage. In Greater Vancouver however a 40% drop would result in the average home dropping in value of about $650,000 and in the city itself that 40% would represent $1.1 million. For those who bought in the last 2 years who have little to no equity in their homes that is far to big a hit. This is when people just decide to cut their loses and walk away giving the keys back to the banks but with CMHC becoming the monster it has that means the banks will simply turn around and give the keys back to Ottawa and all Canadians will pay dearly.

[ssiguy]

Of the 78 price changes recorded for yesterday from myrealtycheck.ca, 3 were up and 75 were down.

[Rollerstud98]

Why do people adjust up if they aren’t selling? I don’t understand that one. Have seen it a few times out here in Airdrie and those listings generally end up expiring and not selling.

[lio45]

Originally Posted by milomilo

Honest question - do you actually believe that? Do you want your fellow citizens to not be able to afford a place of their own? I feel like promoting expensive houses is one of the most selfish things people can do. I don't yet own a house, and perhaps I'll change my opinion when I do, but I truly hope that house prices in Calgary stay reasonable - I can make money for retirement some other way through investments, in a way that doesn't damage normal people's dignity.

Most of my wealth is in the form of well-located, cheaply-bought real estate that I estimated had good appreciation potential, so, yes, personally, I'm going to be happy whenever it goes up. I don't control these levers, so don't blame me.

If I owned a gold mine, I'd be happy when the price of gold skyrockets, even though it means my fellow citizens can no longer afford the gold jewelry they'd like.

If I owned the Athabasca Oil Sands, I'd be happy when the price of oil goes through the roof, even if it means my fellow citizens have to let their children starve in order to afford to fill up their vehicles.

If I had bought a lot of bitcoin early, I'd have been happy when it went up to $20,000, even though that meant my fellow citizens who missed the boat would be having a much harder time investing in that product, poor little things.

Again, I'm not really doing anything myself, just placing my bets (and whenever I'm right, good for me; but it would have happened even if I hadn't bet on it, so I'm not guilty of anything).

Plus, everything's still very affordable here; won't hurt us if that changes a bit. Anyone lower middle class or higher can easily get a house if they want.