Vancouver Real Estate 'Bubble' at 30-year Peak

[whatnext]

Originally Posted by Changing City

OK - we can see now. (they've got condo and attached prices switched in the article). "The number of homes sold in the Greater Vancouver area was up in August compared with a year ago, but benchmark prices for the major categories of housing was down, the region’s real estate board says.

The Real Estate Board of Greater Vancouver says there were 2,231 home sales last month, up 15.7 per cent from 1,929 in August 2018.
However, it says the benchmark price for 706 detached homes sold in August was $1.4 million, down 9.8 per cent from the same month last year."

So fewer sales in August than July (but that's normal) and more than last year (which was dire). And prices are continuing to fall for houses, and have been flat for apartments for the whole of 2019, having fallen about 8% from a year ago.

It will be interesting to see what areas of Greater Vancouver had the increases.

[nds88]

Originally Posted by misher

Missed that thanks, I guess I should go read the whole report. Interesting that detached dragged it down despite being quite a bit up from Aug 2018.

Yes, detached dropped, but it appears that condos and townhomes are plateauing. Not enough data yet to confirm.

"For all property types, the sales-to-active listings ratio for August 2019 is 16.7 per cent. By property type, the ratio is 12 per cent for detached homes, 18.4 per cent for townhomes, and 21.2 per cent for apartments.

Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices of often experience upward pressure when it surpasses 20 per cent over several months."

The last few months condos and townhomes have been in the upper range of a balanced market, with Condos flirting slightly into seller's market. Detached homes have also been in the balanced market range, but flirting with the buyer's market.

I think a catalyst is needed to move prices. October election.....will Trudopey be booted and Scheer remove or ease the stress test? Is a recession around the corner? I think Trump will do everything he can to avoid this for at least 1 year. What about interest rates? I think rates are going down and Trump will continue to call out the Fed. Canada will have to follow. China trade war. With China growth slowing, are the wealthy Chinese feeling as inclined to purchase global real estate if they are not getting richer? What about the Hua Wei arrest, what outcome will happen and what message will that send to China and affect our relationship?

On a local level, so far I don't have any major complaints about the new Mayor. The council has a few nutjobs but not enough to screw things up majorly. Province wide, not a fan of Horgan, but no upcoming election so he's going to be around for a bit. However, I think he's fired all his anti real estate bullets, so no further damage is loaded, cocked and aimed.

I saw a few headlines that Australian real estate is starting to heat up, after a slump. Vancouver tends to be correlated, so is our next frenzy around the corner?

https://www.businesstimes.com.sg/real-estate/australias-housing-market-heating-up-again

"The sudden turnaround in sentiment can be traced to three factors: the central bank's back-to-back interest rate cuts which have pushed mortgage rates to record lows, the regulator's loosening of mortgage stress tests, and the surprise re-election of Prime Minister Scott Morrison's government in May, which killed off the opposition Labor Party's plans to wind back tax breaks for property investors."

The 3 factors they point to: interest rate cuts, stress test loosening and leadership. This is very possible for Canada too. Rate cuts will happen soon, no matter who is in charge. If Trudopey is gone, Scheer will create a more investment friendly environment and loosen/eliminate the stress test. Boom! Catalyst for a new frenzy.

[Changing City]

Originally Posted by whatnext

It will be interesting to see what areas of Greater Vancouver had the increases.

The detailed data is here. As I noted above, the press release has got the value of attached (townhouse) and apartment switched (in error), but the numbers in the tables are correct.

Prices of detached houses are lower everywhere in Greater Vancouver over the past month, except Burnaby North which saw a 0.2% increase. Prices for townhouses were down everywhere except Richmond, (+0.5%), Burnaby South (+0.8%) and North Vancouver (+1.7%). For apartments they were up in North Vancouver, Vancouver East and West, Richmond, Pitt Meadows, Maple Ridge and Coquitlam, and down in the rest of Greater Vancouver.

Prices in Greater Vancouver are several percentage points lower for all housing types, in all sub-areas, year-on-year. (Whistler and Squamish, which are part of REBGV have seen increases).

[whatnext]

Originally Posted by Changing City

The detailed data is here. As I noted above, the press release has got the value of attached (townhouse) and apartment switched (in error), but the numbers in the tables are correct.

Prices of detached houses are lower everywhere in Greater Vancouver over the past month, except Burnaby North which saw a 0.2% increase. Prices for townhouses were down everywhere except Richmond, (+0.5%), Burnaby South (+0.8%) and North Vancouver (+1.7%). For apartments they were up in North Vancouver, Vancouver East and West, Richmond, Pitt Meadows, Maple Ridge and Coquitlam, and down in the rest of Greater Vancouver.

Prices in Greater Vancouver are several percentage points lower for all housing types, in all sub-areas, year-on-year. (Whistler and Squamish, which are part of REBGV have seen increases).

Interesting, though I'd like to see the number of units sold in those markets as well as the price. I guess that will come a bit later.

[Changing City]

Originally Posted by whatnext

Interesting, though I'd like to see the number of units sold in those markets as well as the price. I guess that will come a bit later.

If you follow that link, you can compare sales by sub-area for this August with last August - page 6. (As we know, the numbers are generally up), and year-to-date (where almost everywhere is down except the North Shore, which is up compared to last year, and where the price drop appears to have been the greatest - which might explain the higher sales numbers).

[rofina]

Bull trap or a bottom before things start cooking again?

Negative rates world wide already.

Canada has some of the highest mortgage rates, strictest lending standards, and short amortisation periods.

Lots of levers left to pull to heat this party up again.

[Alex Mackinnon]

Originally Posted by rofina

Lots of levers left to pull to heat this party up again.

Assuming anyone wants the market to heat up more, when by most people's standards it's still too expensive.

[SpongeG]

Whats not clear is would this build 500 units per year for 10 years or 500 units over 10 years?

Proposed $4 tax in Metro Vancouver could build 500 units of affordable housing: report

BY ASH KELLY
Posted Sep 5, 2019

VANCOUVER (NEWS 1130) – Four dollars a year could help build 500 units of affordable housing over 10 years. That’s the idea behind a newly proposed tax for Metro Vancouver, currently before the region’s housing committee.

Jonathan Cote, the mayor of New Westminster, says the committee could be debating the tax for months and expects some blowback from the public.

With a tax of $4 a year for each household in the region, hundreds of affordable housing units could be built, the report says. And while the public may not like the idea of paying more money, Cote says it is a good one.

“Metro Vancouver does have tremendous ownership of some really strategic sites in the region. With funding partners and an ability to provide some funding to this, [we] would be in a better position to actually develop some new affordable housing units in the region,” he says.

...

https://www.citynews1130.com/2019/09/05/...-500-units-of-affordable-housing-report/

[SFUVancouver]

It sure sounds like 500 units over ten years. I'm almost speechless at the paucity of the Mayor's proposal. If $4 per household per year builds 500 units over a decade, well, let's crank that up to $40 per year and aim for 500 a year of new units for 5000 in a decade. That's actually something. It's insufficient to move the needle on housing affordability and renewal of aging Metro Vancouver social housing, but 500 over a decade in a region of 2.5M people is just... nothing.

[rofina]

Originally Posted by Alex Mackinnon

Assuming anyone wants the market to heat up more, when by most people's standards it's still too expensive.

You just have to look why construction is happening these days, and who finances projects.

Its pension funds, hedge funds, institutional owners investing hundredths of millions, or billions in some cases in new developments to generate returns.

This is the real, real estate demand, and I suspect the players holding billions in land and buildings are eager to see some green after 2 years of bleeding red.

If Sheer gets in the fall, I wouldn't be surprised to see things warm up more.

EDIT: I do hear what you're saying - us mere mortals are still having a hell of a time.
Its a "crash" out there to some, but you still cant get a house for less than $1.1 or a condo for much under $500.

[misher]

Originally Posted by rofina

You just have to look why construction is happening these days, and who finances projects.

Its pension funds, hedge funds, institutional owners investing hundredths of millions, or billions in some cases in new developments to generate returns.

This is the real, real estate demand, and I suspect the players holding billions in land and buildings are eager to see some green after 2 years of bleeding red.

If Sheer gets in the fall, I wouldn't be surprised to see things warm up more.

I'm actually surprised Trudeau hasn't done more to win over homeowners pre-election. The Liberals receive similar donations from construction and development as the Cons and many of their voters are homeowners. I was expecting him to scale back the stress test, its not like the anti housing lobby would go elsewhere.

[whatnext]

Originally Posted by rofina

You just have to look why construction is happening these days, and who finances projects.

Its pension funds, hedge funds, institutional owners investing hundredths of millions, or billions in some cases in new developments to generate returns.

This is the real, real estate demand, and I suspect the players holding billions in land and buildings are eager to see some green after 2 years of bleeding red.

If Sheer gets in the fall, I wouldn't be surprised to see things warm up more.

EDIT: I do see what you're saying - us mere mortals are still having a hell of a time. Its a "crash" out there to some, but you still cant get a house for less than a $1.1 or a condo for much under $500.

Canada's home ownership rate is pretty high by historical standards. It's possible the maximum point has already been reached. That, along with CMHC programs, might be why institutional investors are looking at rentals again.

Vancouver hasn't even retraced the frothiest part of the 2015-2018 bubble yet. And with even stricter capital controls on buyers from China, there's not a lot to support higher prices anyway.

[rofina]

Originally Posted by SFUVancouver

It sure sounds like 500 units over ten years. I'm almost speechless at the paucity of the Mayor's proposal. If $4 per household per year builds 500 units over a decade, well, let's crank that up to $40 per year and aim for 500 a year of new units for 5000 in a decade. That's actually something. It's insufficient to move the needle on housing affordability and renewal of aging Metro Vancouver social housing, but 500 over a decade in a region of 2.5M people is just... nothing.

Its a rounding error.

We are a big city with some backwater small town aspirations, and the mindset to match.

Its evident at every step that our leadership is not willing to take chances and make ambitious things happen.

Even 5000 over 10 years is not much, were talking about small numbers for a large region. We need to be looking at 50,000 over 10, and even that doesn't account for the amount of growth over the next decade.

[rofina]

Originally Posted by whatnext

Canada's home ownership rate is pretty high by historical standards. It's possible the maximum point has already been reached. That, along with CMHC programs, might be why institutional investors are looking at rentals again.

Vancouver hasn't even retraced the frothiest part of the 2015-2018 bubble yet. And with even stricter capital controls on buyers from China, there's not a lot to support higher prices anyway.

I agree about the headwinds.

However, I think all bears are underestimating how hard the next few years will be for renters and buyers looking to get in if nothing changes on the qualification side.

Rents are increasing at a rapid pace, and developers will only build rental if the money makes sense.

Cheap rent is what made Vancouver affordable for many over the last 15 years, those times are gone.

[Alex Mackinnon]

Originally Posted by rofina

I agree about the headwinds.

However, I think all bears are underestimating how hard the next few years will be for renters and buyers looking to get in if nothing changes on the qualification side.

Rents are increasing at a rapid pace, and developers will only build rental if the money makes sense.

Cheap rent is what made Vancouver affordable for many over the last 15 years, those times are gone.

Last I checked, rents are barely rising at inflation now (2.6% in 2020 max increase), and yet it's still much cheaper to rent than own.

There's enough construction activity going on that projects are competing over trades and facing significant delay. Juicing this aspect of the economy isn't going to do anything except drive inflation up, and make all other aspects of the economy (ie, the important ones) less competitive on the global stage.

If the current project backlog clears and suddenly 30,000 construction workers hit the welfare line, then you might need some loosening of finance rules, but as is the construction industry is running flat out in BC with little room for further expansion.

When that bubble finally pops, I think most people realize that spending on infrastructure is a much better way to drive the economy anyways. RE eventually eats the other sectors competitiveness.

[misher]

Originally Posted by rofina

I agree about the headwinds.

However, I think all bears are underestimating how hard the next few years will be for renters and buyers looking to get in if nothing changes on the qualification side.

Rents are increasing at a rapid pace, and developers will only build rental if the money makes sense.

Cheap rent is what made Vancouver affordable for many over the last 15 years, those times are gone.

There needs to be massive reforms on the rental side. The city and province have focused too much on short term benefits for renters which has left little incentive for people to become rental owners or homeowners. We relied on foreign and speculative investment to be rental owners and now that we’ve turned off that tap we need to find another way to grow rental supply.

As for home ownership, I think we’ve focused way too much on it when what truly makes peoples lives easier is lower rents.

[WarrenC12]

Don't forget TMX, Site C, and LNG. BC's going to be short on trades for the foreseeable future. I know they aren't directly transferable, but enough to make a big impact.

[whatnext]

More murky tales from the wonderful wacky world of Vancouver real estate. I assume the would-be buyer is the Ryan Holmes of Hootsuite?

A businessman who tried to buy a $7-million West Vancouver mansion is suing the seller of the property and his real estate company after they failed to return over $87,000 of his deposit after the real estate deal collapsed.

The lawsuit filed in B.C. Supreme Court Aug. 23 centres on the sale of a 6,600-square-foot house at 915 Groveland Dr. in the British Properties.

According to court documents, on March 7 of this year, Ryan Holmes agreed to buy the 10-year-old mansion for $7 million and paid a deposit of $354,000. The deal was to complete in May.

Under the terms of the contract, however, before that date, the seller Guo Zhu He was to sign a declaration about his residency status in Canada under the Income Tax Act.

But shortly after, “whether the seller was or was not a non-resident pursuant to the act became an issue,” according to the lawsuit.

The completion date for the deal was pushed to the end of July.

But as part of that agreement, Holmes said he needed a signed declaration that He was a resident of Canada seven days before the completion date.

When real estate is bought from someone who is considered a non-resident of Canada, the seller has to submit a form to the Canada Revenue Agency along with 25 per cent of the capital gain made on the property sale. If the seller doesn’t pay the tax, the buyer will be held liable to pay the amount by Revenue Canada....

https://www.richmond-news.com/buyer-sues...illion-house-deal-falls-apart-1.23942102

[rofina]

Originally Posted by whatnext

More murky tales from the wonderful wacky world of Vancouver real estate. I assume the would-be buyer is the Ryan Holmes of Hootsuite?

A businessman who tried to buy a $7-million West Vancouver mansion is suing the seller of the property and his real estate company after they failed to return over $87,000 of his deposit after the real estate deal collapsed.

The lawsuit filed in B.C. Supreme Court Aug. 23 centres on the sale of a 6,600-square-foot house at 915 Groveland Dr. in the British Properties.

According to court documents, on March 7 of this year, Ryan Holmes agreed to buy the 10-year-old mansion for $7 million and paid a deposit of $354,000. The deal was to complete in May.

Under the terms of the contract, however, before that date, the seller Guo Zhu He was to sign a declaration about his residency status in Canada under the Income Tax Act.

But shortly after, “whether the seller was or was not a non-resident pursuant to the act became an issue,” according to the lawsuit.

The completion date for the deal was pushed to the end of July.

But as part of that agreement, Holmes said he needed a signed declaration that He was a resident of Canada seven days before the completion date.

When real estate is bought from someone who is considered a non-resident of Canada, the seller has to submit a form to the Canada Revenue Agency along with 25 per cent of the capital gain made on the property sale. If the seller doesn’t pay the tax, the buyer will be held liable to pay the amount by Revenue Canada....

https://www.richmond-news.com/buyer-sues...illion-house-deal-falls-apart-1.23942102

I understand what the CRA is doing, but that's a preposterous rule.

Buyer on the hook for the capital gains of a house he had literally 0% ownership of previously? I mean that's about the most absurd thing I have heard lately.

Its forcing these litigation's and offloading the burden onto Canadian citizens.

Absurd.

[whatnext]

Originally Posted by rofina

I understand what the CRA is doing, but that's a preposterous rule.

Buyer on the hook for the capital gains of a house he had literally 0% ownership of previously? I mean that's about the most absurd thing I have heard lately.

Its forcing these litigation's and offloading the burden onto Canadian citizens.

Absurd.

Why?

The owner made money on Caandian soil and he's not Canadian. Tax is tax, ignorance of the law is not an excuse. Though from the sound sof it, he tried to pull a fast one on Holmes.