Canada's 'housing bubble' deemed close to bursting

[SignalHillHiker]

[whatnext]

I had to repost this here, just to show how completely the Vancouver market has jumped the shark. This is what happens when you build for offshore money, then realize those buyers have disappeared:


A Vancouver building targeted at billionaires: ‘The perfect pied-à-terre for the wealthy’

A Vancouver developer has built an ultra-exclusive, three-unit, prime beach-front property in English Bay aimed at the international buyer who has so much extra cash to spare that they won’t care that it won’t make any money.

It is, he promises, the most luxurious apartment building in Vancouver.

“The perfect thing is, roughly, how many billionaires are in the world?” developer Stanley Dee asks rhetorically. “The Forbes list is almost 3,000. Those are guys with public companies that they can measure. There are as many guys who stay quiet and low-key, and so we think there are more than 6,000. Of those, how many have been to Vancouver and want a place here? There will be enough. We are only going to reach 1 or 2 or 3 per cent of these guys.

“A lot of them have five or six homes around the world, and they want [a home] here when they get here that is well kept, hassle-free, no worries and it’s safe, and they can keep art and things there without any trouble, and they would prefer to spend less money than more. It’s the perfect pied-à-terre for the wealthy.”

Mr. Dee, who is founder of Deecorp, says his family-run company is selling units in their Eventide property at 1460 Bute St., at the corner of Beach Avenue, as 30-year leasehold properties, which means Deecorp will maintain ownership. It’s similar to paying one’s rent upfront, but without the conventional landlord.

The lease is not renewable, so it will revert back to the owner at the end of the term. A big advantage for the buyer, he said, is that it skirts the property-transfer tax (PTT) because it’s a 30-year lease. The property-transfer tax is 20 per cent for foreign buyers; property leases that are 30 years or less are generally exempt from the tax....

https://www.theglobeandmail.com/real-est...eted-at-billionaires-the-perfect-pied-a/

[1ajs]

thats a cleaver way around that and will result in even less afoardable rentals on the market

[misher]

Originally Posted by whatnext

I had to repost this here, just to show how completely the Vancouver market has jumped the shark. This is what happens when you build for offshore money, then realize those buyers have disappeared:


A Vancouver building targeted at billionaires: ‘The perfect pied-à-terre for the wealthy’

A Vancouver developer has built an ultra-exclusive, three-unit, prime beach-front property in English Bay aimed at the international buyer who has so much extra cash to spare that they won’t care that it won’t make any money.

It is, he promises, the most luxurious apartment building in Vancouver.

“The perfect thing is, roughly, how many billionaires are in the world?” developer Stanley Dee asks rhetorically. “The Forbes list is almost 3,000. Those are guys with public companies that they can measure. There are as many guys who stay quiet and low-key, and so we think there are more than 6,000. Of those, how many have been to Vancouver and want a place here? There will be enough. We are only going to reach 1 or 2 or 3 per cent of these guys.

“A lot of them have five or six homes around the world, and they want [a home] here when they get here that is well kept, hassle-free, no worries and it’s safe, and they can keep art and things there without any trouble, and they would prefer to spend less money than more. It’s the perfect pied-à-terre for the wealthy.”

Mr. Dee, who is founder of Deecorp, says his family-run company is selling units in their Eventide property at 1460 Bute St., at the corner of Beach Avenue, as 30-year leasehold properties, which means Deecorp will maintain ownership. It’s similar to paying one’s rent upfront, but without the conventional landlord.

The lease is not renewable, so it will revert back to the owner at the end of the term. A big advantage for the buyer, he said, is that it skirts the property-transfer tax (PTT) because it’s a 30-year lease. The property-transfer tax is 20 per cent for foreign buyers; property leases that are 30 years or less are generally exempt from the tax....

https://www.theglobeandmail.com/real-est...eted-at-billionaires-the-perfect-pied-a/

Weird I thought most leaseholds were 99 years. I guess they lowered it to 30 to avoid the FBT? Leaseholds are generally an awful deal equivalent to renting if not worse. I think 90%+ of our population would say stay the hell away from leaseholds which is why you'll see they often carry a 30-50%+ discount despite having 30+ years left on the lease.

https://www.theglobeandmail.com/real-estate/great-deals-or-potential-nightmares/article1378285/

As to whether leasehold ownership is a good deal depends on whom you ask. There are risks, such as if it's not prepaid for the term, there are regular lease payments on top of mortgage payments. Those payments could come up for renewal that is based on a much higher market value than when the property was purchased.

The most famous example of a hike in lease payments was in 1995, when Musqueam Park leases came up for renewal after 30 years. The Musqueam band raised the payments in accordance with then-current market values on the tony west side properties. It meant average lease payments went from about $400 to more than $2,000 a month.

[theman23]

Aren’t there court challenges going up on soon to be expiring leaseholds in False Creek? My impression is that the leasehold owners expect to be paid “fair market value” for their (?) properties.

[misher]

Originally Posted by theman23

Aren’t there court challenges going up on soon to be expiring leaseholds in False Creek? My impression is that the leasehold owners expect to be paid “fair market value” for their (?) properties.

Generally renters can screw the landlord in court but I suspect its rare that they can when the landlord is the city. I wish them luck.

[ssiguy]

These leaseholds still alow money laundering and real estate flipping and yet avoid the foreign buyers tax.

[misher]

Originally Posted by ssiguy

These leaseholds still alow money laundering and real estate flipping and yet avoid the foreign buyers tax.

There's like a 3-5% tax on each flip so its not exactly "profitable" unless the markets going up fast except for the province. And using laundered money you can buy pretty much anything so its not like we can just say everything that costs money should be blocked. As for the FBT...yes it seems like this is an oversight. I believe shares in housing corporations are also an oversight and I'm sure there's others.

[whatnext]

Well, well, well...here's one for CivicBlues to get his 🞵🞵🞵🞵🞵🞵🞵 in a bunch about. From HK's South China Morning Post:

Alleged Canada real estate tax cheat for Chinese buyers described in Vancouver legal action
-Court documents say buyers and sellers of British Columbia property would exchange money overseas while understating the true price to Canadian authorities
-The unproven claims, which are ‘strongly denied’, are made in legal action that followed the demise of a partnership between top Vancouver property agents

Under the supposed arrangement, the buyer and seller of a BC property would agree to understate the true price on transfer documents. “[The] buyer then pays the Altered Price on closing in British Columbia, but pays the difference between the Altered Price and the True Price outside Canada,” the response says.

Kathy Xu is accused in the response of telling Maxcel brokers “she had had three deals closed using the Scheme”, and that “the key of success” was that licensees for the buyer and the seller “must be able to trust each other”.
“Kathy and Melissa, who were on close terms, appeared to be offended by Tim at the November 23 meeting and refused to sign the meeting minutes,” the response says. Three days later he was fired.

The description of the scheme only says the transactions would be completed “outside Canada”. Maxcel caters largely to the city’s Chinese community, and 90 per cent of its brokers are ethnically Chinese.

A supposed copy of the minutes from the November 23 meeting, obtained by the South China Morning Post, describes the scheme involving “clients of Chinese descent”, and the transfer of funds between buyers’ and sellers’ bank accounts in China...
https://www.scmp.com/news/china/money-we...ada-real-estate-tax-cheat-chinese-buyers

[north 42]

Windsor ranked by MoneySense as best place in Canada to buy a home.

https://windsorstar.com/news/local-news/...ense-as-best-place-in-canada-to-buy-home

Windsor tops in Ontario for average home price increase: 25% in two years

https://windsorstar.com/news/local-news/...se-price-increase-25-per-cent-in-2-years

[ssiguy]

Rather obscene when you consider that the price of a house in Windsor is now only catching up to where Vancouver prices were 30 years ago.

[whatnext]

For those Montrealers who were cheering the driving up of home prices, don't say we didn't warn you:

When Erica Fagan and her fiance started looking for a new apartment in their St-Henri neighbourhood, they thought they had reasonable criteria: they wanted a two-bedroom place where they could bring their own appliances and their cat, Odin.

But when she started looking, the 31-year-old found there was almost nothing in her price range of $1,200-a-month, much less a two-bedroom that accepted animals. Affordable apartments that were posted online were scooped up almost immediately, leading her to constantly scour Kijiji, Craigslist and Facebook Marketplace.

“I would say within the hour of some places going up, they’d get so many replies (the owner) couldn’t answer any more,” Fagan said in a phone interview...

....Fagan’s story has become a common one this year in Montreal, where the lowest vacancy rate in decades has led to a mad scramble to find housing and, according to housing advocates, is threatening the city’s reputation for affordable rent.

Fagan and her fiance managed to find a new apartment meeting their criteria, but it meant leaving St-Henri for nearby Cote-des-Neiges, where they’ve settled in to the top unit of a fourplex.

“We’re happy, we love the area and it has everything we need, but we’re a little sad we were priced out (of St-Henri),” she said....(bold mine)

https://www.theglobeandmail.com/canada/a...ion-for-affordable-apartments-takes-a-2/

[p_xavier]

I had trouble finding a 320sf studio at that price in 2014... Some people's expectations are a bit too much sometimes too. There are plenty of cheaper appartments in the non-core of the city.

[SpongeG]

Montreal is enjoying the investors that are skipping Vancouver. Enjoy!

[GreaterMontréal]

Originally Posted by SpongeG

Montreal is enjoying the investors that are skipping Vancouver. Enjoy!

it's not that bad.

https://www.yulorama.com/combien-coute-louer-un-appartement-a-montreal/

[zahav]

This conversation can't keep going lol, everyone is saying it as a warning and to take steps now to avoid it going from "not that bad" to a real issue, and everyone from Montreal thinks there's no issue or outside market forces happening and just keep things going as they are. It's great until its not, and not sure the hesitancy to look at things objectively. It's not about bring Montreal down or naysaying, it is something to put restrictions in place now. And Quebec's economy is going OK but nothing superheated to justify the massive increases. Looking at year over year labour market conditions, in Quebec employment is up 1.4%, and unemployment down 6.4% and sits at 5%. In BC, employment is up 4.3% and unemployment down 7.2% to sit as 4.3%. Population growth is 1.5% in BC compared to 0.9% in Quebec. These are just some figures, and again not the only story, but if the market is responding to labour conditions only then something's missing...

[Pinus]

If Montrealers are willing to keep their heads in the sand all for the sake of making some short terms profits instead of preventing long term pain in the housing markets, it's their choice to make. They will find out the hard way what will actually come of this, and by that time it will likely be too late.

Just don't say that you were not cautioned.

[misher]

Originally Posted by Pinus

If Montrealers are willing to keep their heads in the sand all for the sake of making some short terms profits instead of preventing long term pain in the housing markets, it's their choice to make. They will find out the hard way what will actually come of this, and by that time it will likely be too late.

Just don't say that you were not cautioned.

Yes, keep unemployment high to avoid long term pain! Don't make our mistake! A good economy will kill your housing sector! And that is much worse than keeping people off the street. Don't make the mistake of being successful like BC! Be like Alberta where housing collapsed and unemployment is skyrocketing!




The housing market doing well is of course a disaster. Its awful how less people are going bankrupt than ever. You definitely don't want this in Quebec.



In the end once you solve unemployment and bankruptcies, people had to find other problems with paradise to complain about. Its just awful that people here are so successful. Notice that none of the people complaining are willing to move away to the 20+ other cities in BC not to mention the 100+ in Canada that have much cheaper housing.

[Pinus]

Originally Posted by misher

Yes, keep unemployment high to avoid long term pain! Don't make our mistake! A good economy will kill your housing sector! And that is much worse than keeping people off the street. Don't make the mistake of being successful like BC! Be like Alberta where housing collapsed and unemployment is skyrocketing!




The housing market doing well is of course a disaster. Its awful how less people are going bankrupt than ever. You definitely don't want this in Quebec.



In the end once you solve unemployment and bankruptcies, people had to find other problems with paradise to complain about. Its just awful that people here are so successful. Notice that none of the people complaining are willing to move away to the 20+ other cities in BC not to mention the 100+ in Canada that have much cheaper housing.

You must be an investor with money to burn and housing costs are of no issue to you.

That it your head is also stuck in the sand an unable to comprehend the reality that housing prices in the lower mainland are not affordable for most Canadians.

[misher]

Originally Posted by Pinus

You must be an investor with money to burn and housing costs are of no issue to you.

That it your head is also stuck in the sand an unable to comprehend the reality that housing prices in the lower mainland are not affordable for most Canadians.

No I just remember when housing prices were low and the economy was 🞵🞵🞵🞵 and everyone was desperate for a job. I remember my dad delivering newspapers for a living because he couldn’t find a job. I remember eating beans for every meal and going to the food bank. I remember why the NDP lost basically every seat across the province and has not received a majority of the vote in over 15 years. You were obviously a lot more blessed than me or you’d remember this time too. So congrats you tried to paint me as the rich entitled 🞵🞵🞵, but you obviously are or you’d remember what a bad economy is like.

I don’t need to buy a house. But I need a job. The same goes for everyone.

And I also understand that all the construction costs in Vancouver along with the development fees mean that housing costs more to build than most can afford. I recognize that housing will never be cheap enough to satisfy people unless the economy collapses. My head is out of the sand, but yours is at the bottom of a well. All you do is focus on the price of housing like an insane person. Well the sky is vast and there’s more to life than owning a house. Everyone here is well fed, everyone can afford the rent, there’s jobs for everyone and employers are desperate for workers. People can afford iPhones, vacations, and beer. Life is good and a cheap house is the not worth sacrificing that. Canada and Vancouver have double the ownership rates of many major nations and I’d say we’re way too obsessed over it. If there’s less homeowners so be it life goes on.