Canada's 'housing bubble' deemed close to bursting

[someone123]

Originally Posted by lio45

An old couple, family friends, just sold their suburban Montreal house - they bought it in the 1960s when it was new-ish and did not change much in it since. My uncle remarked anyone buying it would have to put $100k in it... in the end, he was incorrect: a young couple bought it - at a reasonably low price: a bit over $200k - who loved the authentic "vintage" feel and intends to leave it as is That house was a true time capsule. (I'm a huge fan of time capsules and would also have left it as it was!)

This kind of thinking seems to be driven by TV (specifically HGTV). In the 90's, lots of people had old 1950's retro kitchens and didn't really think much of it, but if you watch one of the shows on HGTV you can listen to 20-somethings complain about how they can't possibly live with dated circa 2000 cabinetry and how it all needs to be ripped out and replaced. Or the people in Waco, Texas who have a $150,000 budget and are looking for a 6,000 square foot mansion with home theatre, indoor go-kart course, and sensory deprivation chamber (I imagine they're setting up a new Branch Davidian compound).

Another variant:

Source

HGTV also has a lot of conversations about what people can "afford" house or reno wise that seem based on the premise that you go shopping around with creditors to see who will lend you the most money and then that is your budget (!).

Are these people real or are they actors? Are unnecessary renos a significant driver of the bloated consumer debt of Canadians?

[Andy6]

Our 100 year old next door neighbour in Winnipeg had owned her house since it was built in the early 60s. When she finally moved to a nursing home around 5 years ago, it still had all the fittings and cabinetry that my dad had ripped out of our very similar house by the mid-70s. It was just fascinating to see how what had once seemed tacky now seemed historic and even rather elegant.

[lio45]

Yeah, that's the thing with style and architecture - the high quality examples of any era will become desirable sooner or later, given enough time. The best International and Brutalist buildings are already there.

[someone123]

Originally Posted by Andy6

Our 100 year old next door neighbour in Winnipeg had owned her house since it was built in the early 60s. When she finally moved to a nursing home around 5 years ago, it still had all the fittings and cabinetry that my dad had ripped out of our very similar house by the mid-70s. It was just fascinating to see how what had once seemed tacky now seemed historic and even rather elegant.

In the 1960's the construction quality was good enough that things lasted a long time if well taken care of.

My place is only about 15 years old and a lot of the finishings are disintegrating. A lot of stuff is just built out of MDF and there is nothing to repair once it starts to fall apart, or it was not installed properly, or there was some known issue with products that the contractors bought "as is" at a discount.

Even some of the high-end Vancouver condos priced in the millions are like this. There was a notorious video going around of a guy spray painting DIY MDF cabinets for a Coal Harbour condo. And the other video with the light that was always on regardless of the state of the light switch, tiles falling off the wall in the 8 month old bathroom, etc. That stuff won't be around in 50 years.

[p_xavier]

Originally Posted by someone123

HGTV also has a lot of conversations about what people can "afford" house or reno wise that seem based on the premise that you go shopping around with creditors to see who will lend you the most money and then that is your budget (!).

Are these people real or are they actors? Are unnecessary renos a significant driver of the bloated consumer debt of Canadians?

They're real. Love it or list it Vancouver is to another level. I was watching this week, a Lesbian couple which one of them didn't like the "flow" of the house. Nothing was really wrong with it. "My new house budget is 2.8M$ and a reno budget of nearly 200k$." WTF are these people and where do they get their money?

I have a small loft in the city and a small house in the country, only because it cost me less than an average loft in the city. Forget about me being able to afford a city house in my lifetime.

[someone123]

Originally Posted by d_jeffrey

WTF are these people and where do they get their money?

In Vancouver it can easily be that one of them inherited grandma's decrepit West Side bungalow which turned out to be worth $5M.

[whatnext]

Originally Posted by d_jeffrey

They're real. Love it or list it Vancouver is to another level. I was watching this week, a Lesbian couple which one of them didn't like the "flow" of the house. Nothing was really wrong with it. "My new house budget is 2.8M$ and a reno budget of nearly 200k$." WTF are these people and where do they get their money?

I have a small loft in the city and a small house in the country, only because it cost me less than an average loft in the city. Forget about me being able to afford a city house in my lifetime.

Where's the money from. I suspect there was a lot of this kind of thing, found on Steve Saretsky's Twitter feed:

When your home is quite literally an ATM Machine:

1. Teacher buys Vancouver home for $700k in 2002.

2. House inflates in value to $3.5M

3. Takes out 4 mortgages

4. First mtg $885K

5. Second mtg $635K

6. Third mtg $1.65M at 9.5%

7. Fourth mtg $200k at 12%

https://twitter.com/SteveSaretsky/status/1119629465636622336

Canadians are carrying a shocking amount of debt.

[someone123]

Originally Posted by whatnext

When your home is quite literally an ATM Machine

It's Vancouver's "freedom 55". No need to save for retirement; just borrow against your house. As long as housing prices keep going up by an average of 10% a year, you don't need to worry about money. How is this going to work out for people who go bankrupt when they're 65 and haven't been in the work force for 10+ years?

Aside from borrowing as much as possible, a lot of people believe that real estate is a low risk investment because it is a tangible asset. But it won't matter that there is a physical house if you borrow millions of dollars at 10% and the house you own will only cover 50% of your debt. You will go bankrupt.

[whatnext]

I've said it before and say it again, Montrealers should be asking their elected officials for foreign buyers stats, not relying on realtor blandishments like "the group still composes "a small percentage of overall top-tier sales activity"

Luxury real estate sales rise in Toronto, Montreal; fall in Vancouver

Luxury real estate sales flourished in Montreal with property sales over $4 million jumping by triple digits in the first half of 2019, but continued to dwindle in Vancouver, according to a new report.

"Canada's top-tier real estate markets veered in separate directions," read a report released Wednesday by Sotheby's International Realty Canada, which tracked the number of condominiums, townhouses and detached homes sold for over $1 million and $4 million in major Canadian cities.

The agency has previously forecast Montreal as an emerging hot stop set to make new records.

Sales of properties over $1 million jumped five per cent in the first half of 2019 compared with the same period last year. Sales of properties over $4 million soared 267 per cent with 11 properties sold. Three such properties were sold in the first half of 2018.

The agency's experts noted an increase in international buyers — a group that includes new Canadians, permanent residents and investors, according to the report, as foreign buyers' taxes in Toronto and Vancouver redirected international buyers to Montreal. However, the group still composes "a small percentage of overall top-tier sales activity" in the city, it said...

https://www.vancourier.com/luxury-real-e...to-montreal-fall-in-vancouver-1.23880420

[someone123]

Originally Posted by whatnext

I've said it before and say it again, Montrelaers should be asking their elected officials for foreign buyers stats, not relying on realtor blandishments like "the group still composes "a small percentage of overall top-tier sales activity"

In Vancouver the real human owners of real estate weren't even being reliably tracked, so there was no way to know that foreign buyers were a small percentage of the total.

Permanent residents are considered domestic rather than foreign buyers, so it's hard to say what the impact of immigration policies are on the housing market.

The realtor groups of course have no problem with this lack of transparency.

[CanSpice]

Originally Posted by whatnext

I've said it before and say it again, Montrelaers should be asking their elected officials for foreign buyers stats, not relying on realtor blandishments like "the group still composes "a small percentage of overall top-tier sales activity"

Just say that all foreign buyers are wearing hijabs and then I'm sure the Quebec government will be all over it.

[Harrison]

Edmonton, as the 5th or 6th largest city in Canada, seems to be an anomaly, as I can still find a solid house within a 10-15 minute bike ride of Downtown for under $270,000. It's a buyers' dream here.

[SpongeG]

Originally Posted by d_jeffrey

They're real. Love it or list it Vancouver is to another level. I was watching this week, a Lesbian couple which one of them didn't like the "flow" of the house. Nothing was really wrong with it. "My new house budget is 2.8M$ and a reno budget of nearly 200k$." WTF are these people and where do they get their money?

I have a small loft in the city and a small house in the country, only because it cost me less than an average loft in the city. Forget about me being able to afford a city house in my lifetime.

A family friend bought their house just off of commercial drive in the late 80s for $125,000. They sold it a few years later in the early 90s for $250,000. That same house today would sell for $2 million easily. There are a lot of homeowners in the same boat who have been in their house for decades.

I live in an apartment but the home next to our building the people had live in there since at least the 70s and it was paid off and they sold it for $4 million last year to developers, he said it was like winning the lottery and was going to move to the island.

So people who have been in real estate since the 90s or before in Vancouver have no problem getting million dollar homes.

The thing with HGTV shows too is they are mostly faked. In order to get on the show the couples who are "buying" have to own the property they want the renovation done for or be in the final stages of buying the house. They then get filmed looking at two other properties even though they already have their property bought.

This new season of Love it or List Vancouver was filmed in Kelowna, where the designer lives. They show footage of Vancouver in B roll footage at times but its filmed in Kelowna.

[ssiguy]

Another wide scale trick that real estate developers use to show that foreign ownership isnèt as bad as it obviously is is having huge number of houses/condos bought by numbered companies. It has worked out very well for Chinese crooks because they are hence hard to track to axactly who owns the property helping them to avoid both the foreign buyers tax and income taxes. Vancouver is a money launderers wet dream.

Thankfully the NDP are also going after these crooks by making them disclose who owns what so they have to pay the FBT and go after them for years of undeclared income.

[p_xavier]

The QC government has set up a registry of foreign owners and are following the market. No worries, they are looking into it.

[whatnext]

Originally Posted by d_jeffrey

The QC government has set up a registry of foreign owners and are following the market. No worries, they are looking into it.

Looking into it, and doing anything about it are two different things. Here we just saw this little nugget, courtesy of CNN:

(CNN)The wife of a Chinese multimillionaire is suing the Vancouver government over a $200,000 tax bill she was served for allegedly leaving a $20.4 million mansion empty, highlighting the staggering wealth Chinese investors have parked in the Canadian city.

Vancouver is consistently ranked one of North America's most-expensive housing markets and experts say prices there have skyrocketed in large part due to Chinese investment.

He Yiju purchased the ocean-view mansion on Belmont Avenue, one of Vancouver's most exclusive addresses that has been dubbed "Billionaire's Row," in 2015. Her husband Zheng Jianjiang, a top politician in China's rubber-stamp parliament, the National People's Congress, is not named on the property listing. Their family had a combined net worth of $925 million in October 2018, according to Forbes.

In 2018, Vancouver's government ruled that He was subject to Vancouver's Empty Homes Tax, which requires owners of unoccupied homes to pay a 1% levy on their properties' value. He denies, however, that the property was empty. In a petition filed last month to the Supreme Court of British Columbia, her legal team argued that the lot was being prepared for renovations pending the city issuing redevelopment permits...(bold mine)

https://www.cnn.com/2019/07/10/asia/vancouver-tax-china-he-yiju-intl-hnk/index.html

No Canadian tax return = no owning Canadian property!

[khabibulin]

Ottawa continues steady price increases and enters into a clear sellers market period.

"The average sales price for a freehold house sold in June 2019, was $500,716 showing an increase of 11.4% over Jun 2018. While condominium average prices rose 6.2% from last year to $308,482.

2,559 new properties were listed for sale in June 2019, bringing the total number of properties for sale to 3,801 a decrease of 27.4% from June of last year."

[p_xavier]

Originally Posted by whatnext

Looking into it, and doing anything about it are two different things. Here we just saw this little nugget, courtesy of CNN:

(CNN)The wife of a Chinese multimillionaire is suing the Vancouver government over a $200,000 tax bill she was served for allegedly leaving a $20.4 million mansion empty, highlighting the staggering wealth Chinese investors have parked in the Canadian city.

Vancouver is consistently ranked one of North America's most-expensive housing markets and experts say prices there have skyrocketed in large part due to Chinese investment.

He Yiju purchased the ocean-view mansion on Belmont Avenue, one of Vancouver's most exclusive addresses that has been dubbed "Billionaire's Row," in 2015. Her husband Zheng Jianjiang, a top politician in China's rubber-stamp parliament, the National People's Congress, is not named on the property listing. Their family had a combined net worth of $925 million in October 2018, according to Forbes.

In 2018, Vancouver's government ruled that He was subject to Vancouver's Empty Homes Tax, which requires owners of unoccupied homes to pay a 1% levy on their properties' value. He denies, however, that the property was empty. In a petition filed last month to the Supreme Court of British Columbia, her legal team argued that the lot was being prepared for renovations pending the city issuing redevelopment permits...(bold mine)

https://www.cnn.com/2019/07/10/asia/vancouver-tax-china-he-yiju-intl-hnk/index.html

No Canadian tax return = no owning Canadian property!

While many think that QC is the most corrupt province, people there can't stand inequalities or fraud. Thus, being an Ontario resident where all the real estate fraud was clearly happening and nothing was done, I'd rather have that "corrupt" province handle the issue.

[misher]

Originally Posted by d_jeffrey

While many think that QC is the most corrupt province, people there can't stand inequalities or fraud. Thus, being an Ontario resident where all the real estate fraud was clearly happening and nothing was done, I'd rather have that "corrupt" province handle the issue.

I love how people point to their status as foreigners or that their wealthy to justify taxation rather than the merits of the actual case. You really do have less rights in this nation if your wealthy.

No one cares if the task was applied illegally or not, instead they say he can afford it and he's a foreigner so its ok! Its disgusting how many Canadians are supporting being above the rule of law. Are we no better than America/China?

[lio45]

Originally Posted by whatnext

In 2018, Vancouver's government ruled that He was subject to Vancouver's Empty Homes Tax

Really? I always figured our mere mortals' laws were beneath Him.