Vancouver Real Estate 'Bubble' at 30-year Peak

[rofina]

Originally Posted by cairnstone

Shall we put limits on how many pets a person owns and how many kids they have and what jobs they do. Parking money in a few properties is not what the issue is. We invited the world to move here and they did. Same reason transit is over crowded and can't build enough schools. If money laundering was as prevevlent as everyone says and everything is empty. Why is everything else conjested.

I actually agree with this.

We need to plan for the future much better, this is literally about the only positive lesson we can take from China.

Build SkyTrain, build high speed rail out to the Valley, build infrastructure non stop. This is a sure win.

To bet on global Cities collapsing and losing population is to bet on the permanent collapse of the current socio-economic systems, its unlikely and even if it does happen, financial consideration of the infrastructure costs wont be important.

The road network this City still operates on is substantially the same since the 1950's. That's 70 years of non stop population growth.

That's not changing, our only option is to double down, then triple down on relentless public transportation upgrades. Ambitious ones - we don't need to debate for a decade on the merits of any of these upgrades.

The Millennium line went in when Brentwood and Lougheed were pipe dreams. Look where we are now.

The Canada Line is already at near capacity and seeking longer and reconfigured trains, that took 9 years.

We as a City need to start thinking longer term, and start thinking bigger.

We should welcome more money here, not less, but take that money and spread the benefits around for all to see.

The endless greed of the BC Liberals turned the public against money flows that could have built our City into a positive future for all.

[Changing City]

The official REBGV numbers are out. It looks like Steve Saretsky was a bit high - 'official' number is 2,077 sales in June.

Prices continue to show very little change in the past couple of months. "Detached houses fell 10.9 per cent from June 2018 to $1,423,500. However, the price inched forward month-over-month, up 0.1 per cent since May. Townhomes fell 8.6 per cent to $774,700 and condos dropped 8.9 per cent to $654,700. Both also saw month-over-month drops with townhomes losing 0.6 per cent and condos 1.4 per cent compared to May." [source - Vancouver is awesome]

[rofina]

Originally Posted by Changing City

The official REBGV numbers are out. It looks like Steve Saretsky was a bit high - 'official' number is 2,077 sales in June.

Prices continue to show very little change in the past couple of months. "Detached houses fell 10.9 per cent from June 2018 to $1,423,500. However, the price inched forward month-over-month, up 0.1 per cent since May. Townhomes fell 8.6 per cent to $774,700 and condos dropped 8.9 per cent to $654,700. Both also saw month-over-month drops with townhomes losing 0.6 per cent and condos 1.4 per cent compared to May." [source - Vancouver is awesome]

This sounds about right.

The fall off a cliff is done.

We now fractionally grind lower, month after month for the next 18-24.

[Vin]

Not too bad at all, I mean the fall. The doomsday predictors are all way off and this City remains very unaffordable.

https://dailyhive.com/vancouver/rbc-econ...ancouver-housing-affordability-june-2019

[whatnext]

Metro Vancouver's benchmark home price crashes below $1 million for the first time in over two years:

...However, despite this relative reduction in new listings, the much-slower absorption rate has pushed up the total number of homes currently available for sale. As of the end of June, 14,968 were on the region’s MLS, a 25.3 per cent increase compared with June 2018 and up 1.9 per cent over May 2019...

....The benchmark price for all property types combined across Metro Vancouver slipped below the $1 million mark to $998,700. This is 9.6 per cent lower than in June 2018, 0.8 per cent lower than May 2019 and the first time the composite benchmark has been below $1 million since May 2017....

https://biv.com/article/2019/07/benchmark-residential-price-metro-vancouver-slips-under-1m-rebgv

Now remember, this meltdown occurs at a time the local economy is doing quite well. Imagine what will happen when the next, inevitable, recession hits. The current economic expansion is already long in the tooth.

[whatnext]

Originally Posted by Changing City

The official REBGV numbers are out. It looks like Steve Saretsky was a bit high - 'official' number is 2,077 sales in June.

Prices continue to show very little change in the past couple of months. "Detached houses fell 10.9 per cent from June 2018 to $1,423,500. However, the price inched forward month-over-month, up 0.1 per cent since May. Townhomes fell 8.6 per cent to $774,700 and condos dropped 8.9 per cent to $654,700. Both also saw month-over-month drops with townhomes losing 0.6 per cent and condos 1.4 per cent compared to May." [source - Vancouver is awesome]

One of the most telling pieces of the article, from the press release is this:

.....“Sellers are often trying to get yesterday’s values for their homes, while buyers are taking a cautious, wait-and-see approach,” Ashley Smith, the real estate board’s president, said in a statement....

That's the head of the real estate board telling people the party's over, don't expect to get massive appreciation from your real estate assets.

[Changing City]

CMHC have published Housing Starts data for June. Here are the cumulative numbers for the first six months; as noted before, there can be wild fluctuations from one month to another, but putting several months together allows a better comparison of one year to another. Note that the June 2019 total of 3,489 units is more than double the 1,467 units started in June 2018.

So far this year housing starts are at 15,723 in Metro Vancouver. That's 3,161 more than in the first six months of 2018.

The City of Vancouver had the most starts - 3,874, 415 more than in the first 6 months of 2018.
Burnaby had the second greatest total starts: 2,911, 1,821 more than last year.
Richmond had 1,902, 489 more than last year.
Surrey had 1,665, 57 less than in 2018.
North Vancouver District saw the greatest fall; just 297 starts, 695 fewer than in 2018.
The Tri Cities saw a big increase - 1,707 so far this year compared to 917 last year.
Maple Ridge & Pitt Meadows saw only 247 starts, a drop from 546 in the first half of last year.

[misher]

I'm doubtful myself that our luxury market will see recovery given the extra taxes put on it but hey there the experts. Maybe the HK Canadian return will prompt this:

Vancouver's luxury housing market 'expected to regain momentum' this year: report

There was an uptick in homebuyer interest and open house activity in early spring, but it did not translate into a lasting renewal in sales activity. With that said, analysts say the gap between the purchaser and seller expectations continued to narrow over the spring, and by June there were quality properties at discounted prices — reflecting current market conditions — “attracting motivated buyers and intermittent multiple offers.”

A consistent period of improved activity could lead to a solid upswing in demand, possibly by the end of 2019.

“There are strong signals that pent-up demand, as well as the gradual reconciliation of sellers’ pricing expectations to current market conditions, are setting the stage for activity at new levels in the latter part of the year,” reads the report.

“Evolving conditions in Vancouver real estate have created opportunities for prospective top-tier real estate buyers to consider housing options previously out of reach. With market recalibration well underway, activity is expected to regain momentum.”

For the city’s condominium market, sale volumes saw declines that were more steep than single-family and attached home segments, with sales falling by 51% in the first half of 2019.

Even with the overall drop in the segment, condominiums between $1 million and $2 million experienced the strongest consumer demand and activity, while sales for condominiums over $4 million saw the most significant decline, with a 78% decrease. Just five high-end condominium units were sold, compared to 23 units in the same period in 2018.

“While the slowdown in Vancouver’s condo market is partly attributed to general market uneasiness and buyers’ reluctance to commit to transacting, it has also been influenced by the fact that building supply and price declines in the single family and attached home markets have steered potential condo buyers to these housing types,” continued the report.

https://dailyhive.com/vancouver/sothebys-vancouver-housing-report-july-2019

[WarrenC12]

Originally Posted by misher

I'm doubtful myself that our luxury market will see recovery given the extra taxes put on it but hey there the experts. Maybe the HK Canadian return will prompt this:

Didn't you already predict we had hit bottom?

[misher]

Originally Posted by WarrenC12

Didn't you already predict we had hit bottom?

For the bottom of the market yes. The top of the market I don’t see much room to go down but I also don’t see any potential to go up.

[Changing City]

Originally Posted by misher

For the bottom of the market yes. The top of the market I don’t see much room to go down but I also don’t see any potential to go up.

Didn't you say that a couple of months ago? Here's the recently published June data, and commentary "Condo sales across Greater Vancouver fell 23.9% from last year, this marked the fewest condo sales for the month of June since 2002. This is particularly concerning given this doesn’t account for the increase in population growth and new condo stock during that time period." and on prices "One bedroom and studio condo sales were down 27% year-over-year with the average price per square foot sinking by 6.9% (8.7% decline for 2 bedroom condos)." [source: Steve Saretsky]

[whatnext]

I was reading the blog "On This Spot", and found this interesting about Vancouver's first massive property bubble:

...It was representative of a time of phenomenal growth and optimism, when the population quadrupled in ten years to over 100,000 and a real estate bubble flew out of control. Property prices rose faster than at any time in Vancouver's history before or since. The boom was so stunning that many people at the time concluded it could only end with Vancouver as one of the leading global centres of trade and finance.17It's of considerable interest to us today then that that is not how the boom ended. Instead, in 1913, the colossal real estate bubble popped, sending Vancouver's economy into a tailspin that would take almost 40 to recover from...

...Then, as now, the frenzied speculation in real estate also led to a frenzied boom in construction. In 1905 only about $1 million in building permits was issued. By 1908 this had reached $6 million. By 1912 they peaked at a stunning $20 million—before falling off a cliff.25 It's interesting to note that building permits worth $3.24 billion were issued in 2015, an "all-time record" according to the city of Vancouver. 26 27 However, if you account for inflation, the 1912 total of $20 million is equivalent to $4.36 billion in today's money, meaning 1912 holds the record....

..Some use this ever-present debate over housing affordability to argue that the current housing market is not unusual. Yet this misses the extreme nature of our current situation. None of these other events had a speculative bubble comparable in size to the one we are living through today. The only historical parallel is the 1905-1913 real estate bubble. It seems worthwhile to see there are any lessons to be learned from it. Of course our economic circumstances today are different from what they were a century ago, and we must be cautious when drawing direct comparisons.

Yet if there is a lesson to be found here, it might be that allowing huge amounts of foreign money into the real estate market and encouraging an atmosphere of frenzied speculation can cause people to overinvest in property in the expectation property values will always rise. This might expose financial institutions and property owners to rising mortgages rates and property taxes, while many more are priced out of the market entirely. Surging property values may paper over these growing imbalances for a time, but the higher they, go the more vulnerable society becomes to global economic forces beyond its immediately control. At this point it could be the proverbial butterfly flapping its wings in Japan (or China) that starts the hurricane. ..(bold mine)

https://onthisspot.ca/cities/vancouver/realestate

[whatnext]

Looks like the Speculation Tax is working as intended and also generating revenue for affordable housing

..As of July 4, 12,029 owners are paying the tax.

Majority are foreign owners
The province says foreign owners make up approximately 38 per cent, satellite families, 27 per cent, Canadians living outside B.C., 13 per cent.

B.C. residents make up 20 per cent of taxable owners, and two per cent are either corporations or trusts with multiple entities that own properties in the taxable area...

https://www.cbc.ca/news/canada/british-columbia/speculation-tax-generates-millions-1.5208584

[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.

[Changing City]

Here's the latest dropped residential project - Alfa in Richmond. The developer is returning the deposits, even though construction had already started. Some purchasers are trying to put together a class action lawsuit.

[whatnext]

Originally Posted by Changing City

Here's the latest dropped residential project - Alfa in Richmond. The developer is returning the deposits, even though construction had already started. Some purchasers are trying to put together a class action lawsuit.

Wow, so they’re pulling the plug with it partially built (judging by the photo)? That’s unusual.

[LeftCoaster]

Yes this doesn't seem to have much to do with the slowing resi market and more the developer being sued.

[SpongeG]

City of Vancouver cancels increases to residential development-cost and community-amenity fees

by Carlito Pablo on July 24th, 2019

Developers are going to have some extra cash in their pockets this year.

Thanks to the City of Vancouver, they are exempted from 2019 inflationary increases in fees they pay for market housing projects, like condos.

Were they not let off the hook, residential developers would be paying an additional 5.2 percent in development-cost levies, community-amenity contributions, and density bonuses.

Instead, the inflationary increase will be applied only to commercial and industrial projects, effective September 30 this year.

Chris Robertson, assistant director for citywide and regional planning, wrote two reports to council that recommended forgoing the rate adjustment for residential developments.

In both reports, Robertson cited a “weakening residential market” as the reason for exempting housing developers.

“The weakening market in the residential sector highlights the need to reconsider the timing and implications of applying the 2019 calculated inflationary rate adjustment on new residential development,” Robertson wrote in a report about density-bonus contributions.

That report on density-bonus contributions was adopted on consent, or without discussion, by council on Tuesday (July 23).

Density bonuses are paid by developers in return for being allowed to build more floor space than is normally permitted. For example, an extra square foot of density in certain areas in the Cambie Street corridor costs $55, based on 2018 rates that will carry over this year.

“Applying the inflationary rate increase to residential development could deter development from proceeding,” Robertson wrote.

...

https://www.straight.com/news/1278186/ci...al-development-cost-levies-and-community

[misher]

Originally Posted by SpongeG

City of Vancouver cancels increases to residential development-cost and community-amenity fees

by Carlito Pablo on July 24th, 2019

Developers are going to have some extra cash in their pockets this year.

Thanks to the City of Vancouver, they are exempted from 2019 inflationary increases in fees they pay for market housing projects, like condos.

Were they not let off the hook, residential developers would be paying an additional 5.2 percent in development-cost levies, community-amenity contributions, and density bonuses.

Instead, the inflationary increase will be applied only to commercial and industrial projects, effective September 30 this year.

Chris Robertson, assistant director for citywide and regional planning, wrote two reports to council that recommended forgoing the rate adjustment for residential developments.

In both reports, Robertson cited a “weakening residential market” as the reason for exempting housing developers.

“The weakening market in the residential sector highlights the need to reconsider the timing and implications of applying the 2019 calculated inflationary rate adjustment on new residential development,” Robertson wrote in a report about density-bonus contributions.

That report on density-bonus contributions was adopted on consent, or without discussion, by council on Tuesday (July 23).

Density bonuses are paid by developers in return for being allowed to build more floor space than is normally permitted. For example, an extra square foot of density in certain areas in the Cambie Street corridor costs $55, based on 2018 rates that will carry over this year.

“Applying the inflationary rate increase to residential development could deter development from proceeding,” Robertson wrote.

...

https://www.straight.com/news/1278186/ci...al-development-cost-levies-and-community

Holy crap intelligence from city council. Now thats a shock.

Was insane to be increasing development fees when the market is going down.

[misher]

Sales rebounded in June and shot up in July, looks like real estate is back. Total inventory is down 5%.