Vancouver Real Estate 'Bubble' at 30-year Peak

[whatnext]

Originally Posted by misher

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

Fewest July sales in 18 years, and sales 12% below the ten year average. Only realtors would try and polish that turd into a diamond.

[misher]

Originally Posted by whatnext

Fewest July sales in 18 years, and sales 12% below the ten year average. Only realtors would try and polish that turd into a diamond.

Total inventory being down 5% is hugely significant considering its been growing and growing for months. Its not a diamond but its also not a turd. Its a sign and take it as you may. I'd say we've reached the bottom and are now bouncing.

[whatnext]

Originally Posted by misher

Total inventory being down 5% is hugely significant considering its been growing and growing for months. Its not a diamond but its also not a turd. Its a sign and take it as you may. I'd say we've reached the bottom and are now bouncing.

Gee, it's not like inventory always drops every year in the summer when people are on vacation and don't want to deal with selling their home.

[misher]

Originally Posted by whatnext

Gee, it's not like inventory always drops every year in the summer when people are on vacation and don't want to deal with selling their home.

This is usually a slow time. Spring is when sales are supposed to go up.

[retro_orange]

It's nice to get some perspective from outside of Canada, I guess that's one of the final nails in the coffin for those thinking the Chinese money will flow into our real estate again. Remember Canada now shares tax information with China and there will be an inquiry into numbered companies purchasing Canadian real estate, among others. The loopholes are closing and things will never go back to where they were a few years ago. There will be no appetite to eliminate these stronger policies nor will there likely ever be one as that would not be a popular move to the majority of the voting base who have seen little or no gain or benefit from our real estate price escalation as wages are nowhere near where they need to be. There likely won't be any other people stepping up to the plate now that the cat is out of the bag.

Chinese Media Is Now Warning Canada’s Housing Crash Will Be Worse Than The US


July 18, 2016
Shots fired! While our media has been pointing out how Chinese buyers are driving up real estate prices, the Chinese media has been dissecting our economy, government, and warning Chinese buyers of the dangers of owning Canadian real estate.

We’re always curious to know how other countries interpret our statistics, political climate and what outside media is reporting about Canada’s economy. Since China has been a hot button subject in Canadian news recently, we thought it was high time we took a look at how Canada is portrayed in China’s State regulated media. While the Chinese media does acknowledge that Chinese buyers are a contributing factor to our prices – and admit they have been capitalizing on it – they also point out some interesting observations that our media has failed to cover. Here are the most interesting points we found from three major Chinese publications.

Worse Than The 2008 US Crash

Hexun, China’s largest finance portal, recently published an article pointing to Canada’s debt fueled economy. They noted that Canadians have the largest debt-to-income ratio of any G7 country, with the average spending 165% of their salary. To contrast, at the height of the US housing crisis in 2008, Americans carried what was then considered an outlandish 147% debt-to-income ratio – 17 points lower than where we currently sit. Canada’s total household debt reached $1.892 trillion dollars, with $1.234 trillion dollars of that as mortgage debt – roughly 65% more than we make per year. To put that 1.82 trillion dollars into perspective, we could have run the US government for 8 months with that amount of money.

“This is a very big bubble. And it’s going to end in tears.”
–Paul Ashworth

CN Gold, another one of China’s large financial sites, ran an article quoting Toronto-based economist Paul Ashworth who told them “This is a very big bubble. And it’s going to end in tears.” They then went on to say that once this bubble bursts, real estate will likely be a major “blow to the Canadian economy”.

Real Estate As An Economy Booster

Sina.com’s real estate partner, and NYSE listed Leju was quick to point out that while the average home price in Vancouver is up more than 30%, the province is in a state of “stagflation.” Stagflation is a fancy word that describes when the cost of living increases but there is stagnant demand in the economy. They go on to say BC has one of the lowest median incomes in the country, and the BC government is hoping rising home prices will “render some good”.

While they didn’t put statistics to those statements, we recently published an article that showed Vancouver’s home prices have risen 172% in the last 15 years, while income has only moved up 10%. The struggle in VanCity is real.

BC Government Saved This For The Election

Most interesting, Chinese media outlets are questioning the timing of all of this. Afterall, Vancouver’s real estate has been growing at an unsustainable rate for years (more like decades), while incomes have stagnated. An author from Leju wrote that the Asian investment conversation is being brought on as platforms for the Vancouver municipal and BC provincial elections.

Leju also explained that other cities like Toronto, that have substantially more international buyers, are not having discussions about “vacancy taxes” and “restrictions”. They further allege that the government in Vancouver and BC are looking to distract constituents with “other factors” to explain why income in the province is one of the lowest in Canada.

“this crisis threatens the stability of [the Canadian] financial system.”

Hexun was a little more blunt, stating the Government of Canada “must introduce policies to cool the property market, or face collapse”. Further adding that “this crisis threatens the stability of [the Canadian] financial system.”

While you should approach all media with a grain of salt, they bring interesting points to the table that should be part of the discussion. In Vancouver’s market where mayor Gregor Robertson made almost four times his annual salary selling a home he lived in for only 2 years, and BC Finance Minister Mike de Jong has a stake in 7 homes (only 5 mortgages though), are Chinese speculators the problem or are all speculators contributing to the problem? Also, as Canadians we tend to not discuss things like declining income, which is unfortunate because it’s a big part of our housing story.

https://betterdwelling.com/city/vancouve...ing-canadas-housing-crash-will-worse-us/

[idunno]

^^Note that this article is from 2016.

[SFUVancouver]

Originally Posted by idunno

^^Note that this article is from 2016.

Thank you for that.

I would never hope that something akin to the 2008 Housing Crisis would strike here, and I would also selfishly welcome a major repricing of housing in this country. It is still far removed from what average wage-earning adults can manage, assuming the bank of Mom and Dad aren't funding the down payment.

[misher]

Originally Posted by SFUVancouver

Thank you for that.

I would never hope that something akin to the 2008 Housing Crisis would strike here, and I would also selfishly welcome a major repricing of housing in this country. It is still far removed from what average wage-earning adults can manage, assuming the bank of Mom and Dad aren't funding the down payment.

It is indeed selfish to want unemployment, bankruptcy, and suffering of others just so you can buy a house cheaper. Most people including homeowners support a mild slowing of the market but not a crash for that reason.

[rofina]

This wasn't a typical July.

Lots of expires and a sizeable sales bump over June. That's not easy to dismiss as typically sales fall off a cliff in July as summer sizzles and buying season is over until late September and into October.

Between prices being more attractive and rates nudging down, clearly many are seeing it as an opportune time to buy.

[rofina]

To visualise this;

De-Listings running near all time high. No panic selling. Sellers are removing listings.




New Listings running near record lows. Sellers are no desperate to return to market.




Sales running near record lows, with very unusual bounce into July.





Credit for above, please click link and click some adds there or something:
https://vured.blogspot.com/

[Vin]

Tide turning?

https://dailyhive.com/vancouver/metro-vancouver-home-sales-statistics-july-2019

Month-over-month and year-over-year home sales for July 2019 both increased by nearly a quarter, based on the latest statistics from the Real Estate Board of Greater Vancouver (REBGV).

According to the REBGV, the uptick is unusual, as July is traditionally a quieter month for real estate in the region. However, amidst the depressed housing market conditions, the month’s tally was still about 8% below the 10-year July sales average.

“While home sale activity remains below long-term averages, we saw an increase in sales in July compared to the less active spring we experienced,” said Ashley Smith, president of REBGV, in a statement.

[whatnext]

Originally Posted by rofina

To visualise this;

De-Listings running near all time high. No panic selling. Sellers are removing listings.

More likely just delisting for the summer. I pass by scads of homes daily that have been for sale for months. Those are the ones who aren't lowering their price.

Condo prices are 18% below their peak, with some selling for 32% off assessment. Luckily for the real estate board, most of that data is still hidden to all but agents.

[misher]

Originally Posted by rofina

To visualise this;

De-Listings running near all time high. No panic selling. Sellers are removing listings.




New Listings running near record lows. Sellers are no desperate to return to market.




Sales running near record lows, with very unusual bounce into July.





Credit for above, please click link and click some adds there or something:
https://vured.blogspot.com/

Thanks for putting all this together. Interesting stuff. Didn’t realize the rate of delisting is up and listing is down.

[misher]

https://thetyee.ca/News/2018/10/01/Vision-Vancouver-Rezoning-Addiction/

In the 2012-2014 capital plan, development contributions totalled $87 million in a budget of $702 million, or about 12 per cent.

In the 2015-2018 capital plan, development contributions totalled $366 million in a budget of $1.085 billion, or about 33 per cent.

In the 2019-2022 capital plan, development contributions totalled $1.046 billion in a budget of $2.8 billion, or about 38 per cent.*

Vancouver relies on housing to pay for things, don't expect their fees to go down and don't expect the cost of new housing to stay down long-term. Things just won't get built and prices will then rise until they do. Opponents of this argue for some kind of public agency that will build housing at a loss, well it doesn't exist now and until it does (which will likely be a cold day in hell) you must support our current housing prices.

[Migrant_Coconut]

Just going to point out that, quote, "the larger dollar amount reflects the fact “there’s more development in our city.”" Supply and demand - lower housing prices is offset by the amount of new housing starts.

[retro_orange]

https://66.media.tumblr.com/54c9f8b4bce9...3b8c8388a7df30aabe190a037af1e71456b8.jpg

[GenWhy?]

Originally Posted by misher

https://thetyee.ca/News/2018/10/01/Vision-Vancouver-Rezoning-Addiction/


Vancouver relies on housing to pay for things, don't expect their fees to go down and don't expect the cost of new housing to stay down long-term. Things just won't get built and prices will then rise until they do. Opponents of this argue for some kind of public agency that will build housing at a loss, well it doesn't exist now and until it does (which will likely be a cold day in hell) you must support our current housing prices.

Land prices are coming down and so is construction.

[Changing City]

Originally Posted by misher

Vancouver relies on housing to pay for things, don't expect their fees to go down and don't expect the cost of new housing to stay down long-term. Things just won't get built and prices will then rise until they do. Opponents of this argue for some kind of public agency that will build housing at a loss, well it doesn't exist now and until it does (which will likely be a cold day in hell) you must support our current housing prices.

It's hard to follow your 'logic' sometimes. The City doesn't rely on housing to pay for new facilities - rather, if there's significant development, it relies on some of that development to pay for some of the additional and improved facilities that the growth then necessitates. If there's no new market housing in the city (because developers stop building because they can't sell their units) then there's less need for additional facilities. They'll still be developed, but over a longer timeframe.

[misher]

Originally Posted by Changing City

It's hard to follow your 'logic' sometimes. The City doesn't rely on housing to pay for new facilities - rather, if there's significant development, it relies on some of that development to pay for some of the additional and improved facilities that the growth then necessitates. If there's no new market housing in the city (because developers stop building because they can't sell their units) then there's less need for additional facilities. They'll still be developed, but over a longer timeframe.

Not all of it goes towards new things for new developments. Also we have a lot of new development such as rentals and social housing that needs facilities which for-profit strata subsidizes.Affordable housing and transportation alone make up 25%.



In the 2019-2022 plan affordable housing makes up $498M, quadrupling what they used to spend. They city heavily relies on development to subsidize its budget.

[Changing City]

Originally Posted by misher

Not all of it goes towards new things for new developments. Also we have a lot of new development such as rentals and social housing that needs facilities. I suspect we need less affordable housing if we build more. Affordable housing and transportation alone make up 25%.

If we have fewer people moving here, because of less development, we don't need to spend as much on improving transportation. That isn't a graphic of what's needed - it's explaining how the $1bn expected to be generated from the rezonings already submitted will be spent. If the rezonings don't go ahead, then the money won't be available, but it's only a part of the total available for capital spending. If City Council doesn't raise as much from CACs then some of the money might come from other sources (like the Federal announcement today finally funding several non-market housing buildings). Maybe it won't be possible to build as much affordable housing, which would be a shame. You added that the city plan to spend $498m over 3 years. Only $125m comes from CACs. If they don't get the $125m, then there will be less built.

If house prices continue to fall (10% in the past year) then presumably sales will pick up, especially if interest rates don't go up, or even get cut. There's presumably a relationship between what new housing sells for, and how much sells, and what existing residential property sells for, and how much is sold. But they're two markets, with different factors affecting them.