Canada's 'housing bubble' deemed close to bursting

[Wigs]

Originally Posted by swimmer_spe

Maybe he is PP....

even though I disagree with lio on many things, he actually has a personality and sense of humour unlike PP

[swimmer_spe]

Originally Posted by Wigs

even though I disagree with lio on many things, he actually has a personality and sense of humour unlike PP

Could he be acting on here so he can prepare for the election he thinks he will win?

[lio45]

Originally Posted by Wigs

lio, what's up with your crypto fetish? Are you like PP?
You keep bringing it up.

I'm very anti-crypto, if you've been paying attention you'll know that. Even the post you replied to was obviously panning crypto (for being an even worse investment than a shoddily-built $1M Welland house with crooked stairs.)

[someone123]

Originally Posted by lio45

I'm very anti-crypto, if you've been paying attention you'll know that. Even the post you replied to was obviously panning crypto (for being an even worse investment than a shoddily-built $1M Welland house with crooked stairs.)

For properties you can look at cap rates and for stock you can look at earnings. I am not sure how you're supposed to value crypto.

[lio45]

Same way as gold: by assuming some people are going to buy it off you in the future for more than what you paid for it.

Not sure if you'll recall (I mentioned it here a couple times) but I started collecting Roman gold coins (aurei) before the pandemic. They went up in value a lot, so I was lucky there, but it's really supposed to only be a hobby. However, they don't bring me any revenue. They just exist, and I hold them. They don't generate anything, they're a completely unproductive asset. Just like crypto, except more tangible. And nicer to look at

[someone123]

True although you might want to flip it around and ask, if you wanted to buy the coins now, what price would you wait for, and how would the information environment change that estimate? I am not sure what $ value I would name for bitcoin, or how seeing new changes in pricing for anything but a very long timeframe would change my view of it. For gold there is a long history.

I was collecting some vintage computers pre-pandemic. I would buy fairly bad ones (with fixable problems) with a plan to repair them. They're up around 2-10x now and it's hard to find cheap ones in bad shape to fix up. If you had a big pile of old ones sitting around, fixing them up suddenly became far more valuable (although fixing is also harder since it's harder to buy new broken ones for spare parts). I'm tempted to sell mine, but I'm not sure what I want to keep on hand and buying different ones is now very expensive. A bit like Vancouver real estate.

[Wigs]

Originally Posted by lio45

I'm very anti-crypto, if you've been paying attention you'll know that. Even the post you replied to was obviously panning crypto (for being an even worse investment than a shoddily-built $1M Welland house with crooked stairs.)

I know. I was kidding.
Had you seen my expression you'd understand, but I tried to use emoji to convey it

And yes we can never forget that poorly built house with crooked steps, exterior lanterns and mismatched vinyl charging a King's ransom.
I wonder if some fool from Brampton, Mississauga, other GTA area or beyond bought it lol

[Truenorth00]

Originally Posted by suburbanite

The speculators are already sweating. Seen four requests for assignment in the last week at a subdivision in Oshawa where people bought townhomes for $1.1-$1.2 million and current offers are coming in at $900k. They know when the bank comes to appraise their new purchase it's not going to be pretty.

This was the craziest part of the mania. Literally flipping pieces of paper.

Some of these folks obviously won't be able to close. I wonder if builders have a plan. Sell at auction and sue for the difference?

[Wigs]

To me, the craziest thing in Canada's housing market is still the shadow flipping that took place in Vancouver around 2016. Not sure if it ever got banned or what.


https://www.theglobeandmail.com/news/inv...ncouvers-housing-market/article28634868/

[Truenorth00]

Originally Posted by Wigs

To me, the craziest thing in Canada's housing market is still the shadow flipping that took place in Vancouver around 2016. Not sure if it ever got banned or what.

That was crazy. I lump that all in with assignments in general. What I don't get is how people look at all that and think that there was no bubble and no mania in our market. This is also why I don't think this stops at a 12% decline. When bubbles pop, the fear grows just as quickly as the greed did.

[Wigs]

Originally Posted by Truenorth00

That was crazy. I lump that all in with assignments in general. What I don't get is how people look at all that and think that there was no bubble and no mania in our market. This is also why I don't think this stops at a 12% decline. When bubbles pop, the fear grows just as quickly as the greed did.

Totally agree.
In what world do townhouses in Oshawa cost $1M+ or shoddily built 3/4 bed/2.5 bath homes in Thorold, Brantford or London go for $1.2M or more

The bubble is popping in everyone's faces but those that bought their home to live long-term, as a house should be.

[ssiguy]

Originally Posted by casper

He does not understand what an Agricultural Land Reserve is. They are to preserve high quality agricultural land for agriculture. In BC they were never intended to control or stop subdivisions.

They are reserved and only used for the highest quality agricultural land.

That is what was suppose to happen but reality is quite different. The Vancouver ALR is very rich land but, unfortunately, very unproductive.

A KPU 2018 whitepaper entitled "Protection Is Not Enough" did a study on the ALR and it was both shocking and sad. It found nearly half of all ALR agricultural land {ie not including places like Burn's Bog where agriculture is not viable} that 50% of the land was simply being unused. What's more is that around 60% of all sales/purchases in the ALR in the previous few years were done by investors/speculators who has no interest in developing the land for agriculture.

Drive thru the ALR today and you will see tons of new McMansions built on ALR and many do so because the land is VASTLY cheaper than if it was zoned for regular purposes. This is made even more offensive by the fact that these "farmers" pay pennies on the dollar when it comes to property tax....you and I are subsidizing their lifestyle.

The ALR has been an extremely expensive failure due to a lack of oversight or even caring by the gov't by both tying up valuable land which could be used for agriculture while simultaneously taking huge swaths of land away from potential residential/commercial areas thus driving up current land prices while increasing commute times and the environmental damage associated with it.

[Al Ski]

Originally Posted by ssiguy

That is what was suppose to happen but reality is quite different. The Vancouver ALR is very rich land but, unfortunately, very unproductive.

A KPU 2018 whitepaper entitled "Protection Is Not Enough" did a study on the ALR and it was both shocking and sad. It found nearly half of all ALR agricultural land {ie not including places like Burn's Bog where agriculture is not viable} that 50% of the land was simply being unused. What's more is that around 60% of all sales/purchases in the ALR in the previous few years were done by investors/speculators who has no interest in developing the land for agriculture.

Drive thru the ALR today and you will see tons of new McMansions built on ALR and many do so because the land is VASTLY cheaper than if it was zoned for regular purposes. This is made even more offensive by the fact that these "farmers" pay pennies on the dollar when it comes to property tax....you and I are subsidizing their lifestyle.

The ALR has been an extremely expensive failure due to a lack of oversight or even caring by the gov't by both tying up valuable land which could be used for agriculture while simultaneously taking huge swaths of land away from potential residential/commercial areas thus driving up current land prices while increasing commute times and the environmental damage associated with it.

We've all witnessed the results of rampant speculation:

Businesses kicked out and storefronts left empty for years..

Farmers bought out and farmland left fallow for years..

And now it's all going to come to its entirely predictable end.

Imminent financial disaster.

Only this time it's not going to be just tech or housing..

It's going to be the collapse of everything because everything has been in a bubble.

The phony financializiation of everything is going to result in the collapse of this entire house of cards.

[Architype]

Originally Posted by ssiguy

That is what was suppose to happen but reality is quite different. The Vancouver ALR is very rich land but, unfortunately, very unproductive.

A KPU 2018 whitepaper entitled "Protection Is Not Enough" did a study on the ALR and it was both shocking and sad. It found nearly half of all ALR agricultural land {ie not including places like Burn's Bog where agriculture is not viable} that 50% of the land was simply being unused. What's more is that around 60% of all sales/purchases in the ALR in the previous few years were done by investors/speculators who has no interest in developing the land for agriculture.

Drive thru the ALR today and you will see tons of new McMansions built on ALR and many do so because the land is VASTLY cheaper than if it was zoned for regular purposes. This is made even more offensive by the fact that these "farmers" pay pennies on the dollar when it comes to property tax....you and I are subsidizing their lifestyle.

The ALR has been an extremely expensive failure due to a lack of oversight or even caring by the gov't by both tying up valuable land which could be used for agriculture while simultaneously taking huge swaths of land away from potential residential/commercial areas thus driving up current land prices while increasing commute times and the environmental damage associated with it.

Perhaps it's time to tax unused or fallow agricultural land in the ALR in the same way that vacant residential properties are taxed.

[suburbanite]

Originally Posted by Truenorth00

This was the craziest part of the mania. Literally flipping pieces of paper.

Some of these folks obviously won't be able to close. I wonder if builders have a plan. Sell at auction and sue for the difference?

The developer I work with the most has been through this before in the 90s. From what the owner tells me, although we have a facade of more recourse in Canada, your chance of actually recovering the difference is pretty much nil. Take the deposit and decide if you want to try and sell it to someone else or just wait.

What I'm hearing from pretty much everyone I talk to is that the developers/builders still feel pretty good about the underlying supply and demand fundamentals. They've all built up significant war chests during the boom, and are willing to sit back and wait for those fundamentals to stabilize the market after the interest rate shocks settle.

[casper]

Originally Posted by suburbanite

The developer I work with the most has been through this before in the 90s. From what the owner tells me, although we have a facade of more recourse in Canada, your chance of actually recovering the difference is pretty much nil. Take the deposit and decide if you want to try and sell it to someone else or just wait.

What I'm hearing from pretty much everyone I talk to is that the developers/builders still feel pretty good about the underlying supply and demand fundamentals. They've all built up significant war chests during the boom, and are willing to sit back and wait for those fundamentals to stabilize the market after the interest rate shocks settle.

That is good. We need developers out there building homes.

[niwell]

Originally Posted by Wigs

Totally agree.
In what world do townhouses in Oshawa cost $1M+ or shoddily built 3/4 bed/2.5 bath homes in Thorold, Brantford or London go for $1.2M or more

The bubble is popping in everyone's faces but those that bought their home to live long-term, as a house should be.

I've mentioned this before but we were briefly looking at older cottage type houses in Crystal Beach, Niagara. 1,200 sq ft places on a postage stamp lot were asking upwards of $700k, yet were literally sold within the past 5 years for $150k or less. Some of these were three season only and not in great shape. I vetoed that area pretty quickly, unless we could find something in good shape closer to a real town centre.

[casper]

Originally Posted by ssiguy

That is what was suppose to happen but reality is quite different. The Vancouver ALR is very rich land but, unfortunately, very unproductive.

A KPU 2018 whitepaper entitled "Protection Is Not Enough" did a study on the ALR and it was both shocking and sad. It found nearly half of all ALR agricultural land {ie not including places like Burn's Bog where agriculture is not viable} that 50% of the land was simply being unused. What's more is that around 60% of all sales/purchases in the ALR in the previous few years were done by investors/speculators who has no interest in developing the land for agriculture.

Drive thru the ALR today and you will see tons of new McMansions built on ALR and many do so because the land is VASTLY cheaper than if it was zoned for regular purposes. This is made even more offensive by the fact that these "farmers" pay pennies on the dollar when it comes to property tax....you and I are subsidizing their lifestyle.

The ALR has been an extremely expensive failure due to a lack of oversight or even caring by the gov't by both tying up valuable land which could be used for agriculture while simultaneously taking huge swaths of land away from potential residential/commercial areas thus driving up current land prices while increasing commute times and the environmental damage associated with it.

So we should do the same thing as we do for residential. Tax at the residential rate, however do something similar to the home owners grant. Provide a tax grant if the land is actively used for agriculture.

[niwell]

Originally Posted by lio45

Same way as gold: by assuming some people are going to buy it off you in the future for more than what you paid for it.

Not sure if you'll recall (I mentioned it here a couple times) but I started collecting Roman gold coins (aurei) before the pandemic. They went up in value a lot, so I was lucky there, but it's really supposed to only be a hobby. However, they don't bring me any revenue. They just exist, and I hold them. They don't generate anything, they're a completely unproductive asset. Just like crypto, except more tangible. And nicer to look at

One of the offshoots of crypto - even though it really has nothing to do with it - was those types of guys purchasing pure tungsten cubes. I guess they found an industrial supplier that would do custom work. Extremely pointless and there was no way anyone was making money off it (except said supplier). But unlike crypto they at least had the cube at the end of the day.

[suburbanite]

Originally Posted by casper

That is good. We need developers out there building homes.

Well I don't know if I consider the current developer mindset to be producing the most public good at the end of the day. Essentially they're willing to hold off on new projects on the speculation that the good times will return. We'd be much better off if developers accepted a 15% margin on their business activities and could then chase that margin whether average home prices were $1.5 million or $800,000. Instead they're pursuing speculation and lank banking to seek exorbitant returns.

If we want more housing built and at more affordable prices, we should minimize the time that land is held for development by those with the expertise to act on it. One side of that is making sure municipalities and regions are not putting up excessive roadblocks, and the other is to somehow cut down on the profitability of land banking.