Canada's 'housing bubble' deemed close to bursting

[Metro-One]

Originally Posted by giallo

It'd be hilarious if it wasn't so true.

He is correct except for one point, the #1 between Chilliwack and Van isn’t reduced to a single lane, I think he is confusing it with the 99 and the tunnel which connects South Surrey and White Rock to Van.

A minor correction

Unless he is referring to accidents or the current highway widening construction between 200th and 216th as the causes of the single lane reductions.

[giallo]

Originally Posted by Metro-One

He is correct except for one point, the #1 between Chilliwack and Van isn’t reduced to a single lane, I think he is confusing it with the 99 and the tunnel which connects South Surrey and White Rock to Van.

A minor correction

Unless he is referring to accidents or the current highway widening construction between 200th and 216th as the causes of the single lane reductions.

I thought he was referring to the accidents which is a common occurrence on that stretch of highway.

[once]

Originally Posted by rousseau

From a different thread:



From this I deduce that you can't really go wrong investing in real estate in Ontario. After all, they keep making people, but they're not making any more land.

Canada's birth rate is below replacement, so they aren't really making more people. Your more people argument implies we will continue to have massive immigration, but as third world countries become wealthier we can expect less extreme mobility between jurisdictions (less reason to move when you have opportunities and stability in your own country) as well as a dropping of the birth rate.

[once]

Originally Posted by misher

True Montreal seems like a great place to invest in. But honestly Metro Vancouver has 2.4 million people while Metro Montreal has 4.1 million. So % wise Vancouver is growing faster. Plus I'm not sure if those numbers include the increase in international students.

Yeah, but %-wise Montreal makes a bigger contribution to Canada's 0.6% growth rate, and without Montreal's growth Canada's growth rate would be much less than without Vancouver's growth.

[misher]

Originally Posted by once

Canada's birth rate is below replacement, so they aren't really making more people. Your more people argument implies we will continue to have massive immigration, but as third world countries become wealthier we can expect less extreme mobility between jurisdictions (less reason to move when you have opportunities and stability in your own country) as well as a dropping of the birth rate.

It does take a significant amount to afford to come here I’m not sure if a wealthier third world would lead to less immigration.

[misher]

Think Australia's forest fires will lead to a surge of investment/immigration into Canada? Australia seemed to compete with us for investment, tourism, and immigration. I could see a small surge in foreign interest in Canada.

[whatnext]

From today's Globe & Mail:

Vancouver is ranked dead last in a new look at luxury property markets for 2020 as prices are forecast to decline 5 per cent.

It’s still an “improving scenario,” however, according to real estate consulting group Knight Frank.

Knight Frank’s 2020 forecast, for the top 5 per cent of a market, looks like this:

[IMG]housing by whatnextyvr, on Flickr[/IMG]

https://www.theglobeandmail.com/business...prime-real-estate-in-2020-with-bargains/

[misher]

Originally Posted by whatnext

From today's Globe & Mail:

Vancouver is ranked dead last in a new look at luxury property markets for 2020 as prices are forecast to decline 5 per cent.

It’s still an “improving scenario,” however, according to real estate consulting group Knight Frank.

Knight Frank’s 2020 forecast, for the top 5 per cent of a market, looks like this:

[IMG]housing by whatnextyvr, on Flickr[/IMG]

https://www.theglobeandmail.com/business...prime-real-estate-in-2020-with-bargains/

Not surprising, the taxes on property 3mil+ mean all investors now aim for lower properties which is killing housing affordability. Plus it’s now killing top level property values creating a shift in property tax burden from the rich to the poor.

Honestly I think everyone knows that immigration has a huge impact on our housing market. It’s probably tied for the biggest key factor along with low interest rates. With recent events in Hong Kong, Australia, and the US, all 3 having huge Canadian expatriate communities, I suspect huge increases in immigration and returns will occur combined with a large decrease in emigration from Canada. We better be ready for more people because world events are saying come here.

Especially given what’s happening in Iran I suspect Trump will be in a rush to smooth things over with China and will revoke the request for Meng.

[Dengler Avenue]

https://www.youtube.com/watch?v=WG1-9F5Ev0o
Home values drop by up to 15% across Metro Vancouver

[whatnext]

The next thing the BC government needs to do is apply the Foreign Buyers Tax to purchases of residential multi-unit rental buildings.

[casper]

Originally Posted by whatnext

The next thing the BC government needs to do is apply the Foreign Buyers Tax to purchases of residential multi-unit rental buildings.

What exactly would that accomplish even if it were possible?

How would propose applying that some of the large residential property owners such as Quadreal and Boardwalk. These are publicly traded REIT. With a good percentage of the shares owned by mutual funds and other institutional investors. Figuring out the percentage owned by foreigners is going to change day to day and be very complex to figure out.

[misher]

Originally Posted by casper

What exactly would that accomplish even if it were possible?

How would propose applying that some of the large residential property owners such as Quadreal and Boardwalk. These are publicly traded REIT. With a good percentage of the shares owned by mutual funds and other institutional investors. Figuring out the percentage owned by foreigners is going to change day to day and be very complex to figure out.

I strong suspect whatnext of being a rental owner or an anarchist. He’s trying to drive up rents to crazy levels.

[misher]

An amazing article about how our left wing cities are doing their best to screw over new renters.

Vancouver Mayor Kennedy Stewart apparently had a very productive visit to Seattle recently. In an interview during his visit, the mayor said he would like “to get a better understanding of how Seattle has built so much rental housing.”

The mayor is right to be curious: Seattle built 17,450 purpose-built rental units in 2018. A Seattle Times article from early 2019 gave telling examples of landlords offering incentives to tenants. One struck me in particular: “Two months free rent plus a $1,000 gift card if you move in within one week!”

Compare this with the near-zero vacancy rate in the City of Vancouver, where the Goodman Report counted only 1,364 new rental units built in the same year. Seattle is bigger than Vancouver, for sure, but it’s not 13 times bigger!

So Mayor Stewart is correct to be curious, but he is incorrect to look for the answer in Seattle. The 17,450 new rental units is the normal and expected free-market response to rising demand in a city of that size.

Instead of asking how Seattle has built so much rental housing, the mayor should be asking what Vancouver has done to prevent the same outcome.

It’s not rocket science. When the demand for apples goes up, normal people plant more trees. It takes a few years, but sooner or later there are enough apples to meet the higher demand.

But when the demand for rental housing in Vancouver increases, we don’t build more rental homes. On the contrary, we do everything we can to sabotage new supply:

• rent control;

• rental-only zoning used to “downzone”;

• a 12-year-old moratorium on the demolition of rental buildings in Vancouver;

• sales taxes on land purchase and on construction costs;

• school tax on development land while waiting for permits;

• years-long development review process; and

• hostile city councillors.

It’s hard to pick the biggest villain from the above long list, but let’s start with rent control. A recent paper on the topic published in the American Economic Review, the prestigious economics journal, uses data from San Francisco to find that “in the long run, landlords’ substitution toward owner-occupied and newly constructed rental housing not only lowered the supply of rental housing in the city, but also shifted the city’s housing supply toward less affordable types of housing that likely cater to the tastes of higher-income individuals.” The authors further conclude: “Taking all of these points together, it appears rent control has actually contributed to the gentrification of San Francisco, the exact opposite of the policy’s intended goal.”

It’s not just rent control. The B.C. government gave cities the power to introduce rental-only zoning. It was meant to ensure that new projects that promise to provide rental units, perhaps in exchange for a density bonus, keep their promise. This was supposed to be a way to incentivize new purpose-built rental development. Instead, cities like Burnaby, New Westminster and Victoria are considering or have already implemented rental-only zoning on existing buildings, without the consent of the owners and without an appropriate density bonus. This has exactly the opposite effect of the intended goal – it turns rental housing into a toxic asset. Most investors like to keep their capital away from such assets.

Okay, so we abuse current landlords because they are stuck with us. They cannot move their buildings elsewhere.

What really puzzles me is why we treat new development projects the same way. Rental-only zoning, even just the possibility of it, not only expropriates from the current owners but also ensures that we will not get a rental building on any property that does not already have one.

Development delays

The only possibility for an increase in rental supply is to redevelop existing rental buildings. But that has also been ruled out by a 12-year-old moratorium on demolishing rental buildings that covers over 95 per cent of Vancouver. In other words, we can neither add new rental buildings nor redevelop existing ones.

Applications to build new rentals can take years.

A recent Altus Group report shows that about one-third of units in rental development applications in Vancouver submitted in 2016 were still under review in 2019, as are nearly three-quarters of applications submitted in 2017.

So you wait two, three or more years for your development application to get reviewed, during which time you’re paying interest on the land purchase, property taxes and even the so-called school tax on the entire property. Sooner or later, usually much later, you may get to city council for final approval. That’s when you get yet another insult. Your project gets questioned, and possibly denied, because market rents are too high!

You read that right – we block new rental housing because we don’t have enough rental housing. This doesn’t just defy basic economics; it defies basic common sense.

So, Mayor Stewart, it is not surprising that Seattle got 17,450 new purpose-built rental units in 2018. What is surprising is that Vancouver got 1,364 new units, given how we treat current and new landlords at both provincial and municipal levels. If we keep this up, we’ll get zero next time.

Andrey Pavlov, PhD, is a professor of real estate finance in the Beedie School of Business at Simon Fraser University. His column is courtesy of the Goodman Report from Goodman Commercial Inc., Vancouver

https://www.westerninvestor.com/news/opi...rentals-as-vancouver-stumbles-1.24039073

[Denscity]

Originally Posted by whatnext

From today's Globe & Mail:

Vancouver is ranked dead last in a new look at luxury property markets for 2020 as prices are forecast to decline 5 per cent.

It’s still an “improving scenario,” however, according to real estate consulting group Knight Frank.

Knight Frank’s 2020 forecast, for the top 5 per cent of a market, looks like this:

[IMG]housing by whatnextyvr, on Flickr[/IMG]

https://www.theglobeandmail.com/business...prime-real-estate-in-2020-with-bargains/

Vancouver the only city in Canada recognized internationally for luxury real estate.
And being beside New York isn't a bad thing.
And neither is decreasing prices.

[Denscity]

A good time to buy.

[whatnext]

Originally Posted by casper

What exactly would that accomplish even if it were possible?

How would propose applying that some of the large residential property owners such as Quadreal and Boardwalk. These are publicly traded REIT. With a good percentage of the shares owned by mutual funds and other institutional investors. Figuring out the percentage owned by foreigners is going to change day to day and be very complex to figure out.

It would stop small time foreign landlords from buying older buidlings and trying (often illegally) to jack up the rent. Or to look at them strictly as an opportunity to flip.

[yaletown_fella]

Originally Posted by misher

Re posting this from CANZAK as it is relevant. I am disputing the claims that foreigners are responsible for our prices because the data I see shows that any foreigner can become a PR pretty easily. So rather than say foreigners the only acceptable group you can finger is immigrants.

There are many factors responsible for the absurd prices.

I think promoting the purchasing of real estate as an investment domestically and abroad.

The largest factor are the criminally low interest rates and availability of cheap money that rewards spendthrift people over savers. The bank of Canadas interest rates should never be below 2.5% in my opinion in any circumstance. The interest rate should be enough to enable seniors to subsidize their CPP with interest payments from their savings.

Lastly the over-regulation and tax burden on builders vs too little of a tax burden on speculators purchasing non-primary residences. The tax burden should be shifted from builders to speculators who buy property without renting it out (When I mean rent it out I mean in the form of proper apartments. Not room-to-rent or rooming house slumlords)

The incentives of the game need to be changed so that builders want to build a lot of affordable townhomes, basement units, laneway houses, subdivisions etc.
And yes, some of this building inventory needs to include sprawl so that the value of urban property dosent become inflated.

[misher]

Originally Posted by yaletown_fella

There are many factors responsible for the absurd prices.

I think promoting the purchasing of real estate as an investment domestically and abroad.

The largest factor are the criminally low interest rates and availability of cheap money that rewards spendthrift people over savers. The bank of Canadas interest rates should never be below 2.5% in my opinion in any circumstance. The interest rate should be enough to enable seniors to subsidize their CPP with interest payments from their savings.

Lastly the over-regulation and tax burden on builders vs too little of a tax burden on speculators purchasing non-primary residences. The tax burden should be shifted from builders to speculators who buy property without renting it out (When I mean rent it out I mean in the form of proper apartments. Not room-to-rent or rooming house slumlords)

The incentives of the game need to be changed so that builders want to build a lot of affordable townhomes, basement units, laneway houses, subdivisions etc.
And yes, some of this building inventory needs to include sprawl so that the value of urban property dosent become inflated.

Don't agree with everything here but I enjoy the sentiment. Honestly I know "speculator" sounds bad but "rental owner" sounds a lot better. Rental owners buy housing and rent it out which generally helps us a lot more than it hurts. We definitely need more of them. If they leave it empty its bad but now we have taxes for it so that problem is gone. Now either its rented out or its taxed which are both great for us. So obviously any rental owner is great!

Originally Posted by whatnext

It would stop small time foreign landlords from buying older buidlings and trying (often illegally) to jack up the rent. Or to look at them strictly as an opportunity to flip.

It would take a complete moron to think that only foreign landlords want to jack up rent or use illegal ways to do so. Or that only foreign owners will sell when there's a profit to be made. Businessmen are businessmen, no one says no to money just because their facial color is different. I don't know why certain morons think that someone's ethnicity makes them a better businessman. I guess we should all hire asians because according to whatnext white people are stupid and don't care about money.

And btw whatever happened to free market? If rents are too high you move somewhere lower. No one controls/regulates the prices of cars, food, gas, etc. Why should one person's rent be much higher than another simply because they've sat in the same apartment for 5-10 years and the landlord previous ignored increasing rent annually? I've never understood this belief that some tenants deserve a "huge deal/discount" at the expense of the landlord. We insulate renters from utility increases, property taxes, maintenance costs, etc. they are treated like children who cannot handle ownership. But why would inflation+2% maximum rent increases be such a big burden on them? Was rent skyrocketing faster than now back when we allowed +2%? Or is rent still rising at the same rate, except increases are now focused on new young renters, the one that can least afford it.

The fact is most of the world doesn't have rent control, or at least not as strong as ours, and they do fine. Its not significantly better to rent here than most places. You don't have landlords doing 20% annual increases in the states or Alberta.

[whatnext]

Since liveability survey crop up so often on SSP, it is worth noting that Vienna usually tops the list. And they do it woth strict rent controls, subisidized housing and without a forest of bland highrises:

Vienna effortlessly tops the world’s most liveable city surveys, and for good reason. Its citizens – 1.8 million at the last count – enjoy affordable public transport, abundant greenery and rents UK citizens could only dream of. In fact, acccommodation in Vienna is plentiful and cheap, making it one of the most affordable places to live. In this compact city, dominated by four- and five-storey, walk-up mansion blocks, tenants have been known to snag flats with palace views, free heating and Alps mineral water on tap. More than 80% of residents rent, and two-thirds of Viennese citizens live in municipal or publicly subsidised housing. Eight out of ten flats built in the city today are financed by Vienna’s housing subsidy scheme. This quality and range helps push down rental prices, meaning low-paid workers can afford to live in the Austrian capital, even in the city centre. They often live centrally and enjoy its cheap amenities, short commutes and, thanks to a sound economy, jobs – even when renting on the partially regulated private market...

....Vienna spends more than €570m a year on subsidising, constructing and preserving public housing despite having a population nearly eight times smaller than the UK capital. Annual government funding for affordable housing in London, with a population of around 8.7m, is only around £500m, less than half the amount spent in 2009/10 and London’s mayor, Sadiq Khan, says this needs to increase to 2.7bn a year to prevent the housing crisis from getting worse. Vienna also wants to do more, last year committing to increasing annual housing production by 30% in order to meet demand.

“It’s been so very important to be close to my working place and that is possible in Vienna (especially after the night shift),” says Hammer.

“Tenancy regulations are so important for living sanely, so, yes, I’m a big fan of rent controls and of Vienna. If I had to spend 79% of my income [on rent, like in London] then I think I’d have to leave Vienna because that’s insanely expensive,” she says.

https://www.theguardian.com/society/2017/dec/12/vienna-housing-policy-uk-rent-controls

[someone123]

It helps that Vienna has barely grown over the past 100 years. It's not experiencing the same development pressure that Vancouver or Toronto are.