Canada's 'housing bubble' deemed close to bursting

[casper]

Originally Posted by someone123

My understanding is that these numbers don't usually count indirect ownership. So if you are a non-Canadian and you purchase real estate through a corporation it does not count.

Likewise if you participate in an investor-class immigration program and you don't live in Canada (you're supposed to but in the past not everybody did), you count as a domestic buyer. You can be Chinese-born, live in China, you have never lived in Canada, and you count as a Canadian with a primary residence here for the purposes of these statistics.

Another strategy is to pass money on to Canadians to buy the properties and nominally list them as primary residences. In Vancouver there are officially Canadian buyers of multi-miillion dollar properties who are students with $0 income and moved here from another country only a few years ago.

All of this means that there could be a huge difference between the impact suggested by the official foreign buyer number and the actual impact of foreign real estate investors or speculators.

This student owning homes issue keeps being tossed out as a problem. I don't have an issue with it.

When I lived in Saskatoon I had a condo near the university. It was not uncommon for a good percentage of other 2-3 bedroom condos in neighborhood to be owned by farm families that lived outside the side. They oldest kid hits university age. The parents looks at the cost of rent for their kids going to university and then looks at the mortgage cost and it is an easy choice to make. You buy the condo or house. Kid 1, 2 and/or 3 use it as they go to school and after that is all said and done you sell it. What is the problem with the setup? There is no problem.

Now do the same thing with a foreign student. Why is that any different. It is not.

[Nite]

Originally Posted by GreaterMontréal

Downtown Montréal will become more and more unaffordable. The problem with the real estate market in Montréal is that the construction industry can't keep up with the population growth. The Greater Montreal Extended Area added more than 75k people, Q2 2018 to Q2 2019.

In most case, it is regulations which slows down the construction industry, not the industry itself. How long does it take to get a project approved in Montreal?

[Martin Mtl]

Originally Posted by zahav

No one is trying to put Montreal down.

Pinus just said that « we » are stupid people, full stop. So, there’s that.

Listen, I live in a house in Rosemont, beautiful, with a small back yard, two storeys plus a large bedroom downstairs and a shower. I pay 1835$ a month for close to 2k square feet. Thanks to rent control, I can enjoy this for as long as I want without undue rent increase.

One of my best friend just bought a house in a nice district of St-Lambert, walking distance to the metro Longueil, 15 minutes car ride from Mtl downtown, and she paid 270.000 $. When was the last time such a house costed that price in Vancouver ? Answer that and keep telling me that « we are the same ».

Also, so that you know, the Montreal mayor already is asking the provincial governement the power to impose a tax on foreign buyers if that becomes necessary. But we’re not there yet.

[whatnext]

Originally Posted by Martin Mtl

Pinus just said that « we » are stupid people, full stop. So, there’s that.

Listen, I live in a house in Rosemont, beautiful, with a small back yard, two storeys plus a large bedroom downstairs and a shower. I pay 1835$ a month for close to 2k square feet. Thanks to rent control, I can enjoy this for as long as I want without undue rent increase.

One of my best friend just bought a house in a nice district of St-Lambert, walking distance to the metro Longueil, 15 minutes car ride from Mtl downtown, and she paid 270.000 $. When was the last time such a house costed that price in Vancouver ? Answer that and keep telling me that « we are the same ».

Also, so that you know, the Montreal mayor already is asking the provincial governement the power to impose a tax on foreign buyers if that becomes necessary. But we’re not there yet.

Why so defensive?

We’re just trying to warn you of the consequences based on what everyone here went though. Montreal is in a sweet spot of being a large vibrant city with a good economy and affordable housing. Don’t let that disappear in a flood of global capital.

[GreaterMontréal]

The population growth rate is lower than Vancouver

not anymore.

(CMA), 2016/2017
Montréal : +1.2%
Vancouver : +1.1%
https://www150.statcan.gc.ca/n1/daily-quotidien/180213/cg-a001-eng.htm

(CMA), 2017/2018
Montréal : +1.6%
Vancouver : +1.5%
https://www150.statcan.gc.ca/n1/daily-quotidien/190328/dq190328b-eng.htm

in fact, last year, Greater Montreal added more people than all of BC. Quebec added 90k+ yoy, probably close to +70k in the GMA, Montréal should have a growth of more than 1.5% again this year. The GMA Extended area is about 4.5M easily. The ARTM transit studies now include cities like Joliette, Saint-Adèle, Sorel-Tracy, etc. that's 70km from downtown Montréal.

[MonkeyRonin]

Originally Posted by theman23

I think the issue is that young adult type that tends to post on SSP (and old geezers like you) can still afford property in Montreal. Many already have purchased, so of course they'd cheer as their investments go up in value. The same age group in Vancouver and Toronto can't, so are of a totally different mindset.

Enjoy it, but your children and younger siblings will resent you.

Very astute observation.

Originally Posted by Martin Mtl

Listen, I live in a house in Rosemont, beautiful, with a small back yard, two storeys plus a large bedroom downstairs and a shower. I pay 1835$ a month for close to 2k square feet. Thanks to rent control, I can enjoy this for as long as I want without undue rent increase.

One of my best friend just bought a house in a nice district of St-Lambert, walking distance to the metro Longueil, 15 minutes car ride from Mtl downtown, and she paid 270.000 $. When was the last time such a house costed that price in Vancouver ? Answer that and keep telling me that « we are the same ».

We have rent control in Toronto too. That doesn't mean that unscrupulous landlords don't still try to either directly evict or indirectly force long-time tenants out through neglect to capitalize on the current market rate. And god forbid you should ever need or want to move.

You could get that in Vancouver as recently as 15 years ago too, or in Toronto 10 years ago. Things change fast. Yet you're acting as if the extreme unaffordability of Toronto and Vancouver are some moral failure on their part that Montreal is uniquely positioned to avoid.

It's not a criticism of the city to note that there are signs that the housing market could be poised to follow the same troubling patterns we've seen elsewhere. Though I guess it's not surprising - we all seemed to have the same laissez-faire attitude in Toronto a decade ago.

[GreaterMontréal]

Toronto and Vancouver became unaffordable between 2011 and 2017, so after the recession. The probability to go another 10 years without another big recession is very slim.

[someone123]

Originally Posted by casper

This student owning homes issue keeps being tossed out as a problem. I don't have an issue with it.

When I lived in Saskatoon I had a condo near the university. It was not uncommon for a good percentage of other 2-3 bedroom condos in neighborhood to be owned by farm families that lived outside the side. They oldest kid hits university age. The parents looks at the cost of rent for their kids going to university and then looks at the mortgage cost and it is an easy choice to make. You buy the condo or house. Kid 1, 2 and/or 3 use it as they go to school and after that is all said and done you sell it. What is the problem with the setup? There is no problem.

Now do the same thing with a foreign student. Why is that any different. It is not.

One problem is that capital gains on these properties are taxed at 0%.

Another problem is the difference in supply and demand. There are only so many farm kids coming in to study in Saskatoon. UBC on the other hand has become a hugely popular school for students from Asia yet the city has NIMBY planning rules in place in a 5 square km swath of city around the campus, so there is a small supply of available housing. It's to the point where it's hard for UBC to even hire and retain professors.

[Martin Mtl]

Originally Posted by MonkeyRonin

you're acting as if the extreme unaffordability of Toronto and Vancouver are some moral failure on their part that Montreal is uniquely positioned to avoid.

How do you get that from anything I wrote?

All I'm saying is that right now the Montreal market has a healthy growth that is not out of whack like what you had in Vancouver or Toronto*. Montreal would have to keep the same growth rate that we are observing now during 13 years non stop to reach the present Toronto level and 19 years to reach Vancouver level. It could happen, nobody says the contrary, but it's unlikely and, furthermore, we would have time to see things coming and act consequently before it's too late.

* En effet, les augmentations de prix montraient un pic d'abord dans le Grand Vancouver lors du deuxième trimestre de 2016, à 27,3 % d'appréciation de son agrégat d'une année à l'autre, suivie par le Grand Toronto, enregistrant une pointe à 25,3 % au deuxième trimestre de 2017. De son côté, le Grand Montréal, qui depuis trois ans enregistre des taux d'appréciation se situant dans une fourchette allant de 3,4 % à 6,1 % d'augmentation, toujours d'une année sur l'autre, tout type de propriété confondu, est donc bien loin de ses consoeurs.
Source

Originally Posted by MonkeyRonin

Though I guess it's not surprising - we all seemed to have the same laissez-faire attitude in Toronto a decade ago.

The city of Montreal already asked the Quebec government to have the power to impose a tax on foreign buyers. The city also adopted recently a new bylaw call 20/20/20, that will force developers to include 20% of affordable units, 20% of social units and 20% of family-size units in all their project. That is quite a radical move. It's far from laissez-faire policies.

[Pinus]

Originally Posted by Martin Mtl

Pinus just said that « we » are stupid people, full stop. So, there’s that.

My comment was directed any anyone from any city that stands idly by and thinks massive increases in housing prices in very short periods of time due to foreign investment is a good thing for the medium to long-term future. That includes people from Vancouver, Toronto, your Montreal, and any other city/region that is foolish enough to let that happen.

[lio45]

Originally Posted by theman23

I think the issue is that young adult type that tends to post on SSP (and old geezers like you) can still afford property in Montreal. Many already have purchased, so of course they'd cheer as their investments go up in value. The same age group in Vancouver and Toronto can't, so are of a totally different mindset.

Enjoy it, but your children and younger siblings will resent you.

My only younger sibling (a biologist who works at MUHC in downtown Montreal) owns her condo, next to a subway station in Verdun, a few stations from her place of employment. I haven't asked her directly but I'd be quite surprised if she rooted for her condo to lose as much value as possible, or would be pissed off if she found it went up in value.

As for my children (who don't yet exist), with what they're on track to inherit I don't think they'll be complaining about real estate being worth too much.

Also noteworthy to me, I've been called an old geezer for the first time in my life. I guess this exact moment eventually happens to everybody!

[lio45]

Originally Posted by someone123

One problem is that capital gains on these properties are taxed at 0%.

Agreed. As you probably remember (we've had these conversations in the past), I am 100% with you that this policy is pure nonsense.

[Rollerstud98]

I think we’re roughly same age Lio, I have not been referred to as an old geezer yet but sure have felt like one the last week. Really wonderful back injury last week keeping me hobbled lol

[Andy6]

Originally Posted by lio45

I've been called an old geezer for the first time in my life. I guess this exact moment eventually happens to everybody!

I'm getting seniors' discounts now -- eventually you too will profit from your geezerhood.

[Acajack]

Originally Posted by lio45

My only younger sibling (a biologist who works at MUHC in downtown Montreal) owns her condo, next to a subway station in Verdun, a few stations from her place of employment. I haven't asked her directly but I'd be quite surprised if she rooted for her condo to lose as much value as possible, or would be pissed off if she found it went up in value.

As for my children (who don't yet exist), with what they're on track to inherit I don't think they'll be complaining about real estate being worth too much.

Also noteworthy to me, I've been called an old geezer for the first time in my life. I guess this exact moment eventually happens to everybody!

Welcome to the club!

BTW I think you can get FADOQ memberships and Rona senior discounts at 50.

[p_xavier]

Originally Posted by lio45

My only younger sibling (a biologist who works at MUHC in downtown Montreal) owns her condo, next to a subway station in Verdun, a few stations from her place of employment. I haven't asked her directly but I'd be quite surprised if she rooted for her condo to lose as much value as possible, or would be pissed off if she found it went up in value.

As for my children (who don't yet exist), with what they're on track to inherit I don't think they'll be complaining about real estate being worth too much.

Also noteworthy to me, I've been called an old geezer for the first time in my life. I guess this exact moment eventually happens to everybody!

Which is exactly why I'm in favor of an inheritence tax. I remember being flabergasted when I bought my first loft, I was the only one on my floor who was paying the condo by himself. Two of them got theirs paid entirely by their parents. (one 25yo had a unit valued 600k$ at the time, graduating from university gift...) So these kids basically have their lives set up for them while others struggle for basic necessites.

I could have changed my mine since my parents won the lottery since then, but I still believe in selfworth and pretend (and probably will) never see a dime of their money.

[misher]

https://www.vancourier.com/bank-of-canad...used-in-mortgage-stress-tests-1.23890426

Bank of Canada lowers qualifying rate used in mortgage stress tests

OTTAWA — The Bank of Canada has lowered the rate used by mortgage stress tests to determine whether would-be homeowners can qualify, marking the first drop in three years.

The central bank's five-year benchmark qualifying rate is now 5.19 per cent, down from 5.34 per cent. It's the first decrease in the five-year fixed mortgage rate since September 2016, when it dropped from 4.74 per cent to 4.64 per cent, and increased steadily since.

[misher]

Originally Posted by Martin Mtl

Pinus just said that « we » are stupid people, full stop. So, there’s that.

Listen, I live in a house in Rosemont, beautiful, with a small back yard, two storeys plus a large bedroom downstairs and a shower. I pay 1835$ a month for close to 2k square feet. Thanks to rent control, I can enjoy this for as long as I want without undue rent increase.

One of my best friend just bought a house in a nice district of St-Lambert, walking distance to the metro Longueil, 15 minutes car ride from Mtl downtown, and she paid 270.000 $. When was the last time such a house costed that price in Vancouver ? Answer that and keep telling me that « we are the same ».

Also, so that you know, the Montreal mayor already is asking the provincial governement the power to impose a tax on foreign buyers if that becomes necessary. But we’re not there yet.

It costs more than that in taxes and development fees to build a home in Vancouver even assuming construction and land are free!

Sullivan modelled the costs for a typical new one-bed-and-den, $840,000 condo on the Cambie Corridor. The scenario used was a land assembly and new development that takes three years to get approved and two years to build. Over the course of the unit's construction, from the moment the land is purchased to the unit's occupancy, $220,256 would be paid in real estate taxes and fees to all three levels of government, which Sullivan said would get passed on to the buyer.

https://www.vancourier.com/real-estate/taxes-fees-make-up-26-of-new-vancouver-condo-cost-1.23317340

In Vancouver, the restriction cost, or the gap between the cost to build the house and the cost to buy it, was $322 per square foot. For an average detached house worth $1.3 million, the cost works out to $644,000, or about half the end price for home buyers.

https://vancouversun.com/news/local-news...ions-driving-up-home-prices-in-vancouver

“You now need to get $800 a square foot [from buyers] just to cover costs, even if your land was free,” said Rob Blackwell, the vice-president for development at Anthem Properties. He said there will likely be another jump in permits at the end of this year when a new $1,200-a-unit development cost charge is introduced as a new charge to help pay for transit. “There’s a real concern from everybody that the cumulative cost is a big issue.”

As well, numerous councils in the region changing their policies to either demand more rental units in new developments or more protections for renters who are displaced by development, or both.

Burnaby recently introduced a comprehensive new policy, saying 20 per cent of all new projects would have to be rental and any displaced tenants would need to be offered units in the new buildings at the same rent they’d been paying before.

Vancouver councilors spent much of Tuesday debating a plan to increase compensation and protections for renters displaced by development. New Westminster and Port Coquitlam have also introduced new policies to prevent “renovictions,” including the threat of revoking business licences.

“The last two months have been absolutely stunning,” said Mr. Wittstock, who also has projects going in North Vancouver and one in south Vancouver. “I’ve been watching to see major pullbacks.”

A recent report from MLA Realty analyzing market conditions said that several developers have cancelled presales initiatives for 5,000 units in 17 concrete condo projects, which are bigger and therefore more financially risky. MLA Realty had previously predicted 2019 would see 73 projects, comprising almost 14,000 units.

Higher interest rates and the various federal and provincial housing policies are weighing on sales activity.

https://www.theglobeandmail.com/canada/b...ts-surged-before-building-fees-increase/

I think the question is, how much would Montreal real estate prices surge if you had the same taxes, development fees, and government bureaucracy as Vancouver? Would nothing get built until prices double? Triple? Etc.

Vancouver & BC has been quite happy to blame foreigners as it meanwhile increases fees and buys votes using real estate money. Suddenly we're building modular housing for homeless, providing cheap daycare, etc. and of course that money came from somewhere.

And of course we've gone from the Cambie Corridor CAC's (which were already much higher than just a few years ago) at around $100/sqft to the proposed Broadway DCE's at around $370/sqft.

This means Vancouver now adds on around $300,000 for each one bedroom 700sqft apartment built in an area outside downtown in development fees alone. This doesn't include utility setup fees, permit fees, etc. which are probably another $100,000. So there you go, for a new one bedroom outside downtown your paying $400,000 to the city and who knows what else to the province if the land and building are free. Of course we will find a way to blame the Chinese for this. We will then blame the developer for creating "luxury condos," that cost $800,000+, he should of course build much cheaper condos and just take a loss. Of course development fees don't increase the price of real estate in Vancouver........Welcome to Vancouver the city of far left wing ideology that ignores common sense and the rules of economics.

https://vancouver.ca/files/cov/community-amenity-contributions-through-rezonings.pdf
https://vancouver.ca/files/cov/development-contribution-expectations-policy-appendix-c.pdf

[Me&You]

Originally Posted by d_jeffrey

Which is exactly why I'm in favor of an inheritence tax. I remember being flabergasted when I bought my first loft, I was the only one on my floor who was paying the condo by himself. Two of them got theirs paid entirely by their parents. (one 25yo had a unit valued 600k$ at the time, graduating from university gift...) So these kids basically have their lives set up for them while others struggle for basic necessites.

I could have changed my mine since my parents won the lottery since then, but I still believe in selfworth and pretend (and probably will) never see a dime of their money.

I've never received any meaningful financial help from my parents and stand to inherit precisely $0 (and more likely, some debts), so I don't have a real vested interest in inheritance tax.

Practically speaking though, I don't like the idea of re-taxing money that's already been taxed as income... Maybe I'm missing something, or is this just a sort of inverse FYGM?

[p_xavier]

Originally Posted by misher

It costs more than that in taxes and development fees to build a home in Vancouver even assuming construction and land are free!



https://www.vancourier.com/real-estate/taxes-fees-make-up-26-of-new-vancouver-condo-cost-1.23317340




https://vancouversun.com/news/local-news...ions-driving-up-home-prices-in-vancouver



https://www.theglobeandmail.com/canada/b...ts-surged-before-building-fees-increase/

I think the question is, how much would Montreal real estate prices surge if you had the same taxes, development fees, and government bureaucracy as Vancouver? Would nothing get built until prices double? Triple? Etc.

Vancouver & BC has been quite happy to blame foreigners as it meanwhile increases fees and buys votes using real estate money. Suddenly we're building modular housing for homeless, providing cheap daycare, etc. and of course that money came from somewhere.

And of course we've gone from the Cambie Corridor CAC's (which were already much higher than just a few years ago) at around $100/sqft to the proposed Broadway DCE's at around $370/sqft.

This means Vancouver now adds on around $300,000 for each one bedroom 700sqft apartment built in an area outside downtown in development fees alone. This doesn't include utility setup fees, permit fees, etc. which are probably another $100,000. So there you go, for a new one bedroom outside downtown your paying $400,000 to the city and who knows what else to the province if the land and building are free. Of course we will find a way to blame the Chinese for this. We will then blame the developer for creating "luxury condos," that cost $800,000+, he should of course build much cheaper condos and just take a loss. Of course development fees don't increase the price of real estate in Vancouver........Welcome to Vancouver the city of far left wing ideology that ignores common sense and the rules of economics.

https://vancouver.ca/files/cov/community-amenity-contributions-through-rezonings.pdf
https://vancouver.ca/files/cov/development-contribution-expectations-policy-appendix-c.pdf

Wow, that's outrageous. Such fees don't exist in Montréal, the only fee I know of is for the REM.

The new mayor policy on housing is expected to raise costs of new units from 3-5%.