The Metro Vancouver Real Estate Thread

[LeftCoaster]

Well the only way the price drops 50% is if demand drops off a cliff, in which case we wont need government building rental stock.

[MIPS]

The easiest way to do that is selectively bar a certain international demographic from the market entirely. At that point the market gluts with real estate nobody can afford and a market nobody wants to live in because for the next decade anything you buy is at a loss.

[rofina]

Originally Posted by LeftCoaster

Well the only way the price drops 50% is if demand drops off a cliff, in which case we wont need government building rental stock.

That creates another interesting question in my mind.

What percentage of increase in cost can be attributed to speculative foreign demand only?

What interests me is that we have a humming local economy, tech is really maturing, film is phenomenal, tourism is breaking records. We are importing money, and locals are certainly benefiting.

What would the prices look like if things were more closely aligned with that economy and not the economy that brings us Kengo Kuma and Butterfly?

[whatnext]

Originally Posted by LeftCoaster

Well the only way the price drops 50% is if demand drops off a cliff, in which case we wont need government building rental stock.

After the US housing crash, there was a huge increase in demand for rentals. That was due to foreclosures, so I'm not sure it would lay out the same way here.

[Alex Mackinnon]

Originally Posted by rofina

I posted this in the other thread, how does a crash even look like here?

Say we go through a real correction, of 25% - that brings a 2 bedroom pre-sale down to $750,000-ish from $1,000,000-ish.

Does that really do much for any local?

50% cut across the board makes the math more interesting, bringing the 2 bed back down to $500,000-ish.

Do we really believe that:

- We will see a 50% crash in Vancouver
- Will builder be able to develop with prices down by half? Land will obviously be much cheaper, but CAC's, taxes, build costs taken into account can a builder bring a unit to market for $500,000? I imagine trades might be more competitive and sharpen pencils, but by how much?

How do you guys see it?

Have a look at the luxury sfh markets. YoY West Van appears to be down 31% according to zolo. The bubble is popping from the top down. Inventory has gone from something like 5 months to 18 months.

There's no reason that trend can't happen in lower cost markets.

About a year ago I posted on here wondering if the spate of huge announcements in Burnaby was trying get presales finished before the market imploded. I think that's a huge likelihood now.

Condo developments are the cheapest type of unit which should be affordable to broad swaths of society. This market is so distorted that people have lost their sense of what value is. As soon as the fear of missing it passes, the gas bubble can't sustain itself.

[rofina]

Originally Posted by whatnext

After the US housing crash, there was a huge increase in demand for rentals. That was due to foreclosures, so I'm not sure it would lay out the same way here.

The interesting bit here is that its not immediately clear that we are overbuilding to the same capacity as some of the harder hit cities in the US.

I imagine if prices crashed to a level where it prevented developers from building for a prolonged period of time it would still result in a massive housing shortage a couple years down the road.

This is of course assuming the local economy remains strong, and the collapse comes from speculative money existing the market, and not the local economy crashing and burning.

[WarrenC12]

Originally Posted by whatnext

After the US housing crash, there was a huge increase in demand for rentals. That was due to foreclosures, so I'm not sure it would lay out the same way here.

Laws are different here, there is no mailing your keys in and walking away from mortgages.

The demand for rentals will increase, but not by as much.

[rofina]

Originally Posted by Alex Mackinnon

Have a look at the luxury sfh markets. YoY West Van appears to be down 31% according to zolo. The bubble is popping from the top down. Inventory has gone from something like 5 months to 18 months.

There's no reason that trend can't happen in lower cost markets.

About a year ago I posted on here wondering if the spate of huge announcements in Burnaby was trying get presales finished before the market imploded. I think that's a huge likelihood now.

Condo developments are the cheapest type of unit which should be affordable to broad swaths of society. This market is so distorted that people have lost their sense of what value is. As soon as the fear of missing it passes, the gas bubble can't sustain itself.

I agree with the top down fall, this is becoming clear in the stats.

However, I disagree about condos being affordable.

Wood frame 3 story can still provide relative value. Land and build costs, ignoring other soft costs cost about $600 sq/ft. That means cost on a 2 bedroom 800 sq/ft unit is roughly $480,000.

High rise the numbers get a lot less favourable. Now you're looking at land and build costs of about $750 sq/ft, bringing the 2 bedroom unit cost to $600,000.

Both above examples exclude; CAC's, development fees, financing costs, profit, advertising, and broker fees.

Add all the above, and its how we get 2 bedroom pre-sales at $1,000,000 even in Burnaby.

Assuming a price crash, we can lower one huge input, land costs, but I don't see how we lower construction costs significantly particularly because the building requirements are so stringent. Ditto for CAC's and development fees, I see the Cities being more understanding if the market bites it hard and cash flows seize up, but I don't think they all of a sudden slice fees by 50%.

[MIPS]

Kind of had a feeling this was how it worked.

For 2 years, he’s lived in a motor home in an East Vancouver backyard. Then someone reported it
Ron Sanders has spent two years living in a 26-foot motor home, parked in the backyard of a property that Tina McNeilly rents in Vancouver.

Harassed by Vancouver bylaw officers, Sanders, who is on disability and can’t afford anywhere else, met McNeilly after a chance encounter in the alley behind her home.

“I ask her, is there any chance I can put my motor home here? Because I’m going to lose it again,” he said, breaking down in tears as he recounted the story.
https://globalnews.ca/news/4278230/vancouver-motor-home-backyard/

I've noticed that bylaw will leave most camper residents alone unless they start showing signs they are not planning on moving. If they chalk your tires on a Monday and find your camper across the street on a Friday that's fine as it indicates the vehicle is in a driveable condition and not just stuck there until it gets towed.
Ron backed the camper into a driveway and basically established himself there. At that point I can see why beyond someone being NIMBY they would complain as it is now a semi-permanent residence.

[connect2source]

*delete*

[whatnext]

Looks like slimy Westbank tried to block Canadian users from accessing their China website, where they hock Vancouver for offshore buyers:

https://thetyee.ca/News/2018/06/15/Housing-Advocates-Developer-Westbank-Chinese-Website/

[Feathered Friend]

The real estate war on the west coast that’s tearing Vancouver neighbourhoods apart
Garish wealth. Scarce rental housing. A government that sees the middle class as stinking rich. No wonder Vancouverites are at each other’s throats.
by Joe Castaldo Jun 13, 2018

Darren and Hannah have seen the same real-estate-fuelled rage, but for different reasons. The young Vancouver couple run a blog called City Duo, which recounts their experiences supporting new housing developments

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

and the expected backlash

Kerry Gold @Goldiein604
Weird their bios don’t include their occupations. And why no last names? A little more transparency required if they want to “educate” ppl on hsg issues, IMO.

https://twitter.com/Goldiein604/status/1008028231750914048

[GenWhy?]

Always .... wow!

[whatnext]

Originally Posted by GenWhy?

Always .... wow!

Always what?

[whatnext]

About time:

Province to shine light on ‘hidden owners’ of B.C. real estate
Publicly accessible ownership registry aims to reveal individuals behind shell companies and trusts

A new public registry will aim to reveal the “true ownership” of real estate in B.C. – and ensure appropriate taxes are paid – by creating transparency over the individuals behind property-owning shell companies and trusts, the province announced June 20.

As part of its 30-point housing plan, which has seen the launch of a number of new taxation policies, the NDP government plans to establish the publicly accessible database of all real estate ownership across the province...

http://www.vancourier.com/real-estate/pr...den-owners-of-b-c-real-estate-1.23342620

[SpongeG]

Commercial real estate sales drop off in much of Metro Vancouver

by Charlie Smith on June 21st, 2018

It's not just residential real-estate agents who are feeling the pinch of slower sales in Vancouver these days.

The commercial market also also seen a significant drop in transactions, according to the Real Estate Board of Greater Vancouver.

In the first three months of 2018, there was a 10.8 percent fall in its territory, which includes Squamish, Whistler, and most of the Lower Mainland, but not Surrey, Langley, White Rock, and North Delta.

The dollar volume fell 38.5 percent in the first quarter from $4.93 billion last year to $3.03 billion this year.

“Our commercial market returned to more historically normal levels in the first quarter of the year compared to the heightened activity we experienced in 2017,” REBGV president Phil Moore said in a news release. “This shift to more typical activity is mirroring the overall economic trends we’re seeing in our province today.

...

https://www.straight.com/news/1093171/commercial-real-estate-sales-drop-much-metro-vancouver

[rofina]

I wonder how much of the drop in commercial is due to lack of supply for sale?

[s211]

Originally Posted by rofina

I wonder how much of the drop in commercial is due to lack of supply for sale?

There's always a lack of supply. The data's lumpy too. Can't look at quarterly figures and derive meaningful interpretations on market health.

[retro_orange]

Foreign buyers tax on trial as B.C. claims crisis called for action

Chinese citizen claims property levy discriminates against non-Canadians in breach of Constitution

Jason Proctor · CBC News · Posted: Jun 25, 2018 6:23 PM PT | Last Updated: 2 hours ago


Jing Li is the lead plaintiff in a proposed class action lawsuit against B.C.'s foreign buyers tax. She claims the levy is discriminatory. (Peter Scobie/ CBC)


A landmark civil trial kicked off Monday testing the legality of a foreign buyers tax enacted by the province of British Columbia in response to a housing affordability crisis.

The legal battle pits the government against a proposed class of foreign nationals who claim they've been discriminated against in violation of the Canadian Constitution.

A lawyer for the province told B.C. Supreme Court Justice Gregory Bowden the volumes of argument, affidavits and authorities on display in his courtroom belied the very simple set of circumstances that gave birth to the law.

"There was an affordability crisis in the Greater Vancouver real estate market," Karen Horsman said as she laid out the justification for the tax.
"Local residents were in effect being priced out of the market."


Is the tax legal?

Introduced in July 2016 under the previous Liberal government, the tax initially required foreign entities (including foreign nationals) to pay an additional 15 per cent on the purchase of residential property in Greater Vancouver.

The current NDP government increased the amount to 20 per cent in February and expanded its reach to include the Fraser Valley, Capital Regional District, Nanaimo Regional District and the Central Okanagan.

In an unusual turn of legal proceedings, the province has asked Bowden to determine whether or not the tax is legal in a summary trial — as opposed to beginning with a certification hearing on the class action.

They'll argue that the tax is not in breach of the Charter of Rights and Freedoms.

And that even if it were, the infringement is the kind of reasonable limit allowed given the pressing need for political action in the face of the housing crisis.

'Those are condensed?'

The plaintiff, Jing Li, is a Chinese student who moved to Canada in 2013 to complete a master's degree in public administration.

Weeks prior to the introduction of the tax, she claims she signed a contract for the purchase of a $559,000 home in Langley.

She says the foreign buyers tax added an additional $83,850 to her bill.

Li wants the tax declared illegal and is looking for the restitution of hundreds of millions of dollars collected by the province from foreign nationals like herself in the past two years.

The small courtroom on the third floor of the Supreme Court building was relatively empty considering the high-profile nature of the debate which led to the proceedings.

Li's legal team consists of five lawyers, including Joseph Arvay, a noted Constitutional expert who is currently assisting the province as external counsel in its battle over the Trans Mountain pipeline.

Horsman is one of three lawyers arguing on behalf of B.C.. She began by calling Bowden's attention to the mountain of "condensed" legal volumes laid out in front of him.

"Those are condensed?" he asked.

'A smokescreen and not a theory'

But Horsman said the issue at hand was actually fairly straightforward: "The big picture can tend to get lost when the court is asked to get down in the weeds."

She said the court should consider the situation preceding the introduction of the tax.

By July 2016, the benchmark price of a single family home in Greater Vancouver had risen to $1.2 million. The annual rate of house price inflation had reached nearly 30 per cent, an amount that far outpaced the growth in local income.

As a result, young families couldn't afford to buy homes. The future looked uncertain and while there was undeniably more than one factor, public commentary increasingly pointed to foreign demand as a significant part of the problem.

"By 2016, Vancouver was not only the most unaffordable real estate market in Canada," Horsman said. "Vancouver had become one of the most unaffordable real estate markets in the world."

Horsman noted that markets around the world — Sydney, Melbourne, Hong Kong and London — saw prices rise as housing came to be seen more as an investment than a place to live.

She claimed all those factors contributed to the legitimacy of the government's concern and the need to act.

She accused Li of clouding the issue by referring to historic discriminatory acts like the Chinese head tax as a way to suggest the foreign buyers tax is motivated by racism.

"That ... is a smokescreen and not a theory," Horsman told the judge. "There is nothing nefarious or racist in a government enacting measures that apply to all foreign buyers."

Duelling experts

Both sides came armed with affidavits from a slew of economists and professors to buttress their arguments.

Two of the most widely quoted academics on the subject — both attached to the University of B.C.'s Sauder School of Business — were cited in the days' proceedings.

Tsur Somerville was retained by the province and Thomas Davidoff by Li.
Horsman sought to use Davidoff's words from media interviews against him in order to undermine doubts the plaintiffs have raised about effectiveness of the tax.

Her written arguments include a quote from an interview in July 2016 in which Davidoff called the tax "a win" for the Liberals.

Analysis from one of the province's experts concluded the tax has had its desired impact, cooling the residential market.

Horsman will spend the next two days outlining B.C.'s case. Li's lawyers are expected to begin their arguments on Thursday.

Jason Proctor
@proctor_jason

https://www.cbc.ca/news/canada/british-columbia/foreign-buyer-tax-housing-vancouver-1.4721597


I find it funny how she expects equality yet knows foreign buyers are increasing inequality. How exactly does one become entitled to being complicit in exacerbating inequality in our housing?

[SpongeG]

she's got a good case