Vancouver Real Estate 'Bubble' at 30-year Peak

[misher]

Originally Posted by fredinno

Also, 2000 was the beginning of the post Dot-com recession, so prices were lower back then than would be expected from this so far.


Unless enough people and banks were betting on RE prices to rise, in which case, falling RE prices might predicate a recession in and of by itself anyways.

Yeah I see a lot of people referring to the prices in 1990-2000 as what prices should be, but they forget that prices peaked in 1980 and then didn't rise much until 2001ish.

I know my dad watched a house decrease in price 50% over 6ish years before he bought it. You cant use our last major real estate/economic slump as a basis for what you feel normal prices should be.

[240glt]

I looked at a 2 bed condo in a new high rise in Newport village in Port Moody back in 2000 right when they were first developing it, price $170k. At the time I thought that was expensive.

Same year my good friend bought a cute little bungalow on a nice lot a few blocks from the seabus terminal in North Van for $250k. I thought she was crazy.

And here we are...

[osirisboy]

Can we just merge this thread in with the real estate thread. The title makes no sense now since it's from almost 10 years ago

[whatnext]

New rules regarding declaring pre-sales went into effect this week. Will be interesting to see how it effects sales.

...the B.C. government has legislated that new developments must collect and remit the names of buyers and flippers of all presales. This move, along with condo prices trending lower, will put a damper on speculation. As of July, the average sale price in the city of Vancouver was about $860,000, according to the Real Estate Board of Vancouver, down 2 percent year-over-year.

The shift is already under way, and many developments have begun offering incentives such as decorating bonuses—an allowance for flooring, appliance and other upgrades—to bring back buyers. The new presale registry is “extremely significant,” says Vancouver architect and developer Michael Geller. “People have been told presales are a great way to make money tax-free,” Geller adds. “But as soon as you have registration, it’s a game-changer. I think it will result in the cancellation of some projects moving forward.”..

https://www.bcbusiness.ca/Property-Watch...ndo-presales-cause-some-projects-to-fold

[Alex Mackinnon]

Originally Posted by misher

Uh no, you can speculate things will go up or things will go down. It goes both ways.

Are you a speculator? I was accused of supporting speculators before and now that its predicted that prices will go down speculation is on that side. So anyone wanting prices to decrease is supporting speculation.

https://www.investopedia.com/terms/s/speculator.asp

More typically that is called a short selling or just shorting. Aside from shorting stocks (of construction and RE dependent companies) or construction commodities, how do you suggest someone would speculate on a falling market?

That's generally some institutional investor level stuff there.

[misher]

Originally Posted by Alex Mackinnon

More typically that is called a short selling or just shorting. Aside from shorting stocks (of construction and RE dependent companies) or construction commodities, how do you suggest someone would speculate on a falling market?

That's generally some institutional investor level stuff there.

They'd sell off everything and wait until prices were low then buy up everything from local owners desperate to sell, especially if we had our own mortgage crisis.

If you truly believe foreign buyers are a massive issue (I don't but you may), then shouldn't we keep prices high to prevent them from scooping up a bunch of property from locals?

[MIPS]

Originally Posted by misher

If you truly believe foreign buyers are a massive issue (I don't but you may), then shouldn't we keep prices high to prevent them from scooping up a bunch of property from locals?

Artificially keeping prices high merely floats their properties as low gain investments and for the most part does not impact them but will still impact everyone else. Introducing newer rules, regulations and moratoriums on foreign buyers/ownership while a "natural" deflation takes place locks them out so they can sell if they want (and if they are here holding property as an offshore asset they won't hang around long when their investment is losing money monthly) but they will not be otherwise allowed to jump right back in when the market stabilizes.

Consider the following:

[240glt]

Check valve

Allows fluid to travel one direction while preventing downpipe fluid from backflowing when pressure is reduced

[240glt]

Originally Posted by misher

Uh no, you can speculate things will go up or things will go down. It goes both ways.

Are you a speculator? I was accused of supporting speculators before and now that its predicted that prices will go down speculation is on that side. So anyone wanting prices to decrease is supporting speculation.



https://www.investopedia.com/terms/s/speculator.asp

I do see this... somewhat. Speculators buy on the hope or assumption that the asset will increase in value. One can choose not to buy an asset on the same premise but opposite, that the asset will reduce in value

We could purchase a piece of property now for $200k, but property values may decrease so we’ll opt to wait & see if property values decline. The difference I see is that speculators who buy appreciating assets do so by investing. People who are hoping values decrease don’t invest anything.

[WarrenC12]

Originally Posted by misher

They'd sell off everything and wait until prices were low then buy up everything from local owners desperate to sell, especially if we had our own mortgage crisis.

If you truly believe foreign buyers are a massive issue (I don't but you may), then shouldn't we keep prices high to prevent them from scooping up a bunch of property from locals?

Sell High, Buy Low. Some truly remarkable investment advice.

[Alex Mackinnon]

Originally Posted by misher

They'd sell off everything and wait until prices were low then buy up everything from local owners desperate to sell, especially if we had our own mortgage crisis.

If you truly believe foreign buyers are a massive issue (I don't but you may), then shouldn't we keep prices high to prevent them from scooping up a bunch of property from locals?

So, going back on to your previous comment. Speculation control would mean doing what? You basically gave a dictionary definition to my previous question.

Does that look like having the government prop up real estate prices, thereby screwing it's own residents who have already been priced out?

Would controls on speculative selling prevent investors from holding their money in cash?

You have an very unique view as to what the government should or shouldn't be doing. These things your inferring to are incredibly bad ideas for the government, investors, the market, and the general populace. You need to develop these ideas a bit more before sharing them.

[SpongeG]

Originally Posted by 240glt

I looked at a 2 bed condo in a new high rise in Newport village in Port Moody back in 2000 right when they were first developing it, price $170k. At the time I thought that was expensive.

Same year my good friend bought a cute little bungalow on a nice lot a few blocks from the seabus terminal in North Van for $250k. I thought she was crazy.

And here we are...

yea

I Knew someone who moved here from Toronto in 1996 and left a couple years later cause he said it was too expensive, $175,000 for a condo in yaletown was ridiculous, he said it was cheaper back home in TO. Sigh haha.

[rofina]

Originally Posted by fredinno

hmmm....



$400/sqft is ~$552/sqft today adjusted for inflation. Accounting for that, a New Westminister New Build 2-bedroom condo might cost $400,000, which sounds about right. Not sure, but might still be profitable...? Maybe? Anyone want to confirm?


Also, 2000 was the beginning of the post Dot-com recession, so prices were lower back then than would be expected from this so far.


Unless enough people and banks were betting on RE prices to rise, in which case, falling RE prices might predicate a recession in and of by itself anyways.

I'm pretty sure the build costs on a concrete tower are something like $300 a foot anyway, not including land, profit, common areas, financing, sales fees, etc.

Less for low rise, but we will struggle to ever deliver housing on a large enough scale if prices are down 30-40 points, it simply wont be profitable to build high rise.

[fredinno]

Originally Posted by rofina

I'm pretty sure the build costs on a concrete tower are something like $300 a foot anyway, not including land, profit, common areas, financing, sales fees, etc.

Less for low rise, but we will struggle to ever deliver housing on a large enough scale if prices are down 30-40 points, it simply wont be profitable to build high rise.

TBF, costs will also decrease (for example trades, concrete) if building demand decreases overall.

[misher]

Originally Posted by fredinno

TBF, costs will also decrease (for example trades, concrete) if building demand decreases overall.

If the city and province decrease taxes and fees on new builds then even if construction costs don't decrease then development can still continue at a large pace even if prices decrease. It'll never happen though.

[rofina]

Originally Posted by fredinno

TBF, costs will also decrease (for example trades, concrete) if building demand decreases overall.

Maybe material costs will decrease slightly with lower demand, but most are imported from the US. Their economy is booming nicely, I don't see cost reductions there.

As far as labour - I wouldn't count on wages coming down. Most companies are still desperate to hire.

Even if the work load decreased, companies are hugely understaffed, let alone equipped to deal with the additional demand over the last few years.

Add to this low entry rates into trades, and a huge wave of retirements and I very much doubt wages come down much if at all.

[fredinno]

Originally Posted by misher

If the city and province decrease taxes and fees on new builds then even if construction costs don't decrease then development can still continue at a large pace even if prices decrease. It'll never happen though.

In the suburbs, it might happen. Vancouver itself is probably going to have to have a West-Vancouver-style awakening to make it work though.

[whatnext]

Looks like there could be a global downward trend on housing. This tme Canada won't escape as easily as it did in 2009.

James Stack, who predicted the 2008 real estate crash and nailed last year’s housing slowdown with uncanny timing, is back with some bad news for 2019.

“Housing could be heading for its worst year since the last housing crash,” Stack, 67, said in a phone interview. “Expect home sales to continue on a downward trend in the next 12-plus months. And there’s a significant downside risk to housing prices if a recession takes hold.”...

...Almost a year later, the signs of coming distress in property markets — and the broader economy are only increasing, said Stack. Home purchase contracts in the U.S. fell 7.7 per cent in November, according to a National Association of Realtors index. Consumer confidence dropped in December. And a gauge of U.S. manufacturing plunged by the most since 2008, only a day after Apple cut its sales outlook, prompting investor worries about a global growth slowdown.

Stack, who manages US$1.3 billion for people with a high net worth from his office in Whitefish, Montana, studies his fireproof files of newspaper articles on bear markets dating back to 1929. He predicted the housing crash in 2005, just before prices reached their peak. Last year’s warning came after Stack noticed that his “Housing Bubble Bellwether Barometer” of homebuilder and mortgage stocks was up 80 per cent in a year, a sign that investors once again had gotten too “exuberant.”...

https://vancouversun.com/real-estate/hou...wcm/087b9185-3cfb-4804-aaa3-a22723580076

[csbvan]

What amazes me about the brutal sales numbers is how much the population has grown since 2000. If you looked at per capita sales...it would be downright apocalyptic.

[misher]

Originally Posted by csbvan

What amazes me about the brutal sales numbers is how much the population has grown since 2000. If you looked at per capita sales...it would be downright apocalyptic.

True.

But you reallly got to wonder do we have a bunch of water (buyers) built up behind a dam waiting for an excuse to purchase, or is it just empty air? Across the country the mortgage rules stopped sales but eventually they resumed. You got to assume
The same will happen here sometime as wages, the economy, and population are still here.