Canada's 'housing bubble' deemed close to bursting

[lio45]

Originally Posted by Marty_Mcfly

800K in the St. John's CMA is likely better spent buying a large new build in the suburbs near Conception Bay. But even still, you better be buying it knowing that you'll never be able to sell it since we're likely the last generation of people to be living here

If I were somehow forced to spend $800k in St. John's, all things considered, what I'd likely do would be buy twelve fourplex buildings like this one, and argue that the minor loophole was fair game.

https://www.realtor.ca/real-estate/19404...-family-house-100-main-street-saint-john



Or else, requiring even less arguing, I'd buy something over there:
https://www.google.ca/maps/place/St+John...2f63db374f!8m2!3d17.1274104!4d-61.846772

I'm sure $800k would get me something pretty nice down there

[ssiguy]

Here is one for you.....................neither the City nor Regional Municpality of Langley BC {combined population 160,000} and one of Metro's fastest growing cities hasn't seen a single family home sale in the last month according to Zolo. This despite the fact there are over 600 on the market and asking prices are plunging. Without the Chinese money launderers/flippers to buoy the market, the market is having to rely on local incomes to buy the houses and guess what, they can't afford them.

How do you spell housing implosion?

[someone123]

It's true that the market dynamics of the past year or two are hard for people who believe foreign buyers are a non-factor to explain. The foreign buyer tax and empty homes taxes had immediate impacts and the market seems to be in a continued protracted weakening period even as BC's overall economy is doing well.

I was always open to seeing more data showing that foreign buyers and money laundering were inconsequential but we never really saw that data and my intuition is the opposite. I think both are under-reported and on top of that there are some multiplier effects (foreign buyer buys West Side Vancouver house for $5M, that family buys a $2M house and some condos for the kids, the previous $2M house owners move out to Langley and buy $800,000 houses...). It has also led to inflation in housing prices that in and of itself encourages more people to invest in a classic bubble market.

There's no question that supply matters too but that's always true. Prices depend on both supply and demand.

[ssiguy]

Originally Posted by someone123

The foreign buyer tax and empty homes taxes had immediate impacts and the market seems to be in a continued protracted weakening period even as BC's overall economy is doing well..

This exemplifies how foreign money has warped the housing market...………..prices no longer have any relationship to local incomes. Vancouver's housing market is totally detached from the local economy and wages. This is why you get a strong economy, low unemployment, low mortgage rates, and yet plunging real estate. The situation in Langley also blows a hole in the developers and the politicians they bribe, that it is all a supply problem.

[misher]

Originally Posted by ssiguy

Here is one for you.....................neither the City nor Regional Municpality of Langley BC {combined population 160,000} and one of Metro's fastest growing cities hasn't seen a single family home sale in the last month according to Zolo. This despite the fact there are over 600 on the market and asking prices are plunging. Without the Chinese money launderers/flippers to buoy the market, the market is having to rely on local incomes to buy the houses and guess what, they can't afford them.

How do you spell housing implosion?

Chinese money launderers? Should I call it white pedophilia and beastiaility now? If we’re going to color crimes by those rumored to perform them it goes both ways.


Btw money is laundered by criminals and I think it’s sickening that your attributing all crime to one ethnicity and it’s very sickening that no one else called him out for this. The drug dealers on our streets are definitely not chinese yet somehow all the money they make is?

The last NDP report pointed out that most money laundered in BC is from BC.

[SpongeG]

I know someone who was and works for a new development in the suburbs and she said that they used to get buyers from China coming in and buying a whole floor of units at one time, but that seems to have slowed down now and why some projects are getting put on hold or scaled back in Coquitlam.

[ssiguy]

One thing about the Langley stats I must say is that Ièm not sure I believe them. Sales are definately anemic in the extreme but it does seem strange to me that no SFH have been bought all month so I wouln't be surprised if that is updated soon. A realtor post stats on his website thru MVHC and it does however confirm that there have been no SFH in Langley for over a week.

[Pinus]

Originally Posted by misher

Chinese money launderers? Should I call it white pedophilia and beastiaility now? If we’re going to color crimes by those rumored to perform them it goes both ways.


Btw money is laundered by criminals and I think it’s sickening that your attributing all crime to one ethnicity and it’s very sickening that no one else called him out for this. The drug dealers on our streets are definitely not chinese yet somehow all the money they make is?

The last NDP report pointed out that most money laundered in BC is from BC.

Your far-left SJW crusade is noble, but misguided in this instance, unfortunately. You are just afraid to admit to something that goes against your own morals and principles.

[zahav]

The slowdown is masking lots of demand that still exists from locals and immigrants (yes, immigrants are different than foreign buyers!). All realtors I have talked to say there is still plenty of demand, the issue is buyers want tomorrow's prices (lower than today) and sellers want yesterday's prices (higher than today), so it's basically a stalemate. There isn't a rush of people leaving (ie. the good economy) but people who are able to take a "wait and see" stance (on both sides) are doing just that, hence why the numbers are even lower than expected. This is a classic sign of an adjustment, it takes time for an equilibirum to be established. I hope some of the investors are going to cash out (even at a loss, which some are prepared to do since they have other investments going on) which will allow some units to start moving at lower prices. I have seen many listed in Richmond at real bargains, so I think there will be movement sooner rather than later in many segments.

The issue over stalled developments is more concerning. These developments are supposed to offer more supply onto the market, so holding them back will just create issues all over again. I think cities should force devleopers to start construction or else lose their permit, that threat may push them to find the efficiencies required to still make the projects viable. I have a hard time believing the projects aren't viable at lower prices, the developers are just so greedy and don't want to move forward unless they can get obscene profits. The cities should make it difficult for them to do so

[whatnext]

Jennifer Keesemat has an excellent piece in the Globe & Mail on how we need to stop fetishizing home ownership and stop treating rental as some terrible second-rate option. I was struck by this:

...Germany offers a counterpoint. For a variety of complex reasons, including the legacy of the Second World War, the country has one of the lowest home-ownership rates in the Western world at just more than 51 per cent in 2017. But it also has one of the highest rates of satisfaction with housing, at 93 per cent. That’s because of a significant part of the German experiment: Most people live in rental housing, and it has been purpose-built as rental housing: high-quality, well-designed and well-maintained housing in excellent neighbourhoods that you can rent for your lifetime, and without a huge impetus to move unless you choose to do so, including limits on unreasonable rent increases. In the Canadian context, the lack of such purpose-built rental has allowed condos owned by investors to fill the rental-housing gap, which is fundamentally unstable...
https://www.theglobeandmail.com/opinion/...ing-lets-banish-the-hoary-myths-of-home/

Vancouver had such a neighbourhood in the West End which consisted largely of rental stock close to the downtown core, the beach and Stanley Park. Then the last administration, the horrible Vision Vancouver, wrecked it by unleashing rampant speculation with rezoning. This culminated in the insanity of some offshore firm $72 million for a gas station site to build condos for offshore buyers. If the federal NDP wants to stand any chance in the election they need to boldly come out with some strong pro-rental policies.

[aastra]

...we need to stop fetishizing home ownership and stop treating rental as some terrible second-rate option.

Will it ever happen? Here's some historical context with the focus specifically on Victoria:

Daily Colonist
October 15, 1967

Housing Crisis Stymies B.C.

...the question is really the basic one of whether Canadians shall continue to own their own homes or whether we become a nation of tenants.

...the prospects of the average working man owning his own home today are so remote as to be practically out of sight.

B.C. spokesmen obviously see a diminishing role for the single family dwelling in Victoria and Vancouver.

****

Daily Colonist
September 14, 1969

Squeeze Is On
High Density Inevitable

The day of the single-family home, so long considered the natural aspiration of everyone, may be just about over in Canada...

Condominium housing -- in effect, row housing or apartments put up for shared ownership rather than for rent -- may be the only way for the average man to own his own four walls in the future...

****

Vancouver Sun
May 29, 1993

Trouble in the Garden:
Behind Victoria's grand facade lies a crisis in affordable housing

CRISIS? WHAT CRISIS?

"There is a vast need for affordable housing right now in Victoria. We know that 20,000 to 30,000 households are paying too much for their housing and could require some assistance to make ends meet,"

...Victoria is the most difficult city in Canada for people to get out of renting and buy their own place.

[misher]

Originally Posted by aastra

Will it ever happen? Here's some historical context with the focus specifically on Victoria:

Yep, we've been complaining about home ownership and foreigners for a century+. It just seems like a new issue because home prices tanked in 1995 and the recovery (reaching the same prices as 1995 in 2003)+increase makes it seem like a large increase. Remember that accounting for 5% inflation which is probably less than it actually was back then, prices should have been about 50% greater by 2003. It only reached a full recovery after 2007. Assuming 5% inflation from 1995 to 2019 we have a factor of 3.225 which means that our prices in 2014-2015 were still normal. Obviously something happened in 2015-2017 and no its not that foreign buyers suddenly appeared. Most likely its that land suddenly became scarce

[Denscity]

Buying a used RV or 5th wheel is the best affordable housing ive ever seen. Some of those units are super luxury while being a fraction of the cost of a tear down.

[wave46]

Originally Posted by misher

Yep, we've been complaining about home ownership and foreigners for a century+. It just seems like a new issue because home prices tanked in 1995 and the recovery (reaching the same prices as 1995 in 2003)+increase makes it seem like a large increase. Remember that accounting for 5% inflation which is probably less than it actually was back then, prices should have been about 50% greater by 2003. It only reached a full recovery after 2007. Assuming 5% inflation from 1995 to 2019 we have a factor of 3.225 which means that our prices in 2014-2015 were still normal. Obviously something happened in 2015-2017 and no its not that foreign buyers suddenly appeared. Most likely its that land suddenly became scarce

According to the Bank of Canada, inflation averaged 1.85% over the time frame of 1995 to 2019. So, over that time span, prices should have increased by 55%.

A 5% inflation rate would have a increase in value of 323% over that 24 years.

Inflation calculator - Bank of Canada

[lio45]

A steady 5% yearly appreciation rate for real estate is totally unsustainable and unrealistic, BTW.
(i.e. at that pace, eventually, no one* will be able to afford anything.)

(I see wave46 already sortof pointed that out.)




*Except Chinese billionaires, obviously.

[SpongeG]

facebook.com/greenpartyofcanada

[lio45]

I wonder why Quebec's cities weren't in the data...? Weird.

[CityTech]

Originally Posted by lio45

I wonder why Quebec's cities weren't in the data...? Weird.

The methodology broke a bit in Quebec because the math used gross income to determine what's affordable, but because of higher taxes, Quebecois have lower net incomes for the same gross incomes.

The income tax difference is one of the biggest things keeping Gatineau's rental market way cheaper than Ottawa's.

[misher]

Originally Posted by lio45

A steady 5% yearly appreciation rate for real estate is totally unsustainable and unrealistic, BTW.
(i.e. at that pace, eventually, no one* will be able to afford anything.)

(I see wave46 already sortof pointed that out.)




*Except Chinese billionaires, obviously.

Goes to Surrey, looks around, yes lots of Chinese billionaires here.
Goes to North Van, looks around, yes, so many asians right?
Goes to East Van, looks around, hey where did my bike go.....

I'm disgusted at how prevalent racism against Chinese is. Basically been blamed for all BC's troubles since the 1800's. Despite being overall on average poorer than white people, asians still face racial oppression with the excuse that "some of them" are visibly rich now whereas before they were accused of being too poor. Overall most of Metro Vancouver's wealth is concentrated among its white population as per the below. Overwhelmingly white people occupy the rich neighborhoods of Vancouver. But its the fact that asians have started to become their neighbors that has started calls for racism against asians.

[CityTech]

Aren't a lot of these Chinese foreign buyers not working and thus have an income of $0?