Vancouver Real Estate 'Bubble' at 30-year Peak

[Changing City]

Originally Posted by misher

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.

I didn't pick up on your statement, because I assumed you knew what you were writing about. My mistake, sorry.

That isn't a 'budget'. It's a statement of what the City anticipates they will receive as payments to meet the various aspects of the Capital Plan. Of the $498 million, $400 million is in the form of 1,200 to 1,600 units to be given to City as affordable housing as part of a development. They may not rezonings, they might just be built to inclusionary zoning, where the development has to provide a proportion of non-market housing. Examples are the Jervis and Mirabel on Davie street. Together they have 96 non-market units, so presumably worth between around $25m and $30m. If projects like that stop building, then the capital plan will have been over-optimistic. But the City isn't committed to any expenditure, and all it means is there's less affordable housing built to meet the immediate needs. When developments do get built in future, when the market picks up again, then the units will get handed over to the City at that point. Nothing changes, except the timing.

[SpongeG]

Feds pledge $184M to build 1,100 affordable housing units in Vancouver

CTV News Vancouver
Published Wednesday, August 7, 2019

The federal government has announced it's funnelling $184 million into the construction of affordable housing in Vancouver – a city that was recently ranked the most expensive place to live in Canada.

The investment is part of Ottawa's $55 billion National Housing Strategy, which includes a goal of decreasing chronic homelessness across the country by half.

Officials said the $184 million will come from the Canada Mortgage and Housing Corporation and fund up to 1,100 units of affordable housing, all of which will be built on city-owned sites across Vancouver.

...

https://bc.ctvnews.ca/feds-pledge-184m-t...ble-housing-units-in-vancouver-1.4539841

[Migrant_Coconut]

#TGIAEY (Thank God It's An Election Year)

[cairnstone]

What is considered an ok rent for non-market rentals. If the unit is downgraded finish to much, poor locations, and different access than the market portion of the building. All the special interest groups go ape shit. The more government influences the market the more the market reacts in a long term negative way.

Historically the Developers/Pension funds would build a variety of projects. Tax rules were changed somewhat in the 80s and almost all market rental was stopped except for a few enities mainly Concert Properties. SO what you have is a bunch of post ware tear down buildings that need replaced in the worst way but cant as no place to put the people leaving on the poverty line.


Now government is begging to people to build rental. The problem is the cost of new rentals is 1700 a month for 1 bedroom and up. I dont think anyone uses Plam countertops anymore, and every rental has insuite laundry etc etc. Then you look at the fees city hall adds to the units.

[rofina]

Originally Posted by cairnstone

What is considered an ok rent for non-market rentals. If the unit is downgraded finish to much, poor locations, and different access than the market portion of the building. All the special interest groups go ape shit. The more government influences the market the more the market reacts in a long term negative way.

Historically the Developers/Pension funds would build a variety of projects. Tax rules were changed somewhat in the 80s and almost all market rental was stopped except for a few enities mainly Concert Properties. SO what you have is a bunch of post ware tear down buildings that need replaced in the worst way but cant as no place to put the people leaving on the poverty line.


Now government is begging to people to build rental. The problem is the cost of new rentals is 1700 a month for 1 bedroom and up. I dont think anyone uses Plam countertops anymore, and every rental has insuite laundry etc etc. Then you look at the fees city hall adds to the units.

The finishes are not that significant of a cost add. Yes you can go PLam, carpet, etc. But you're maybe talking $10,000 a unit reduction in cost.

The costs come from building code, plumbing, sprinkler, in suite laundry, engineering, code compliance, raw material costs, etc.

Even "premium" units have inexpensive finishes for the most part, flat stock MDF baseboard and trim, laminate floors, some do have higher quality tile work.

[whatnext]

Great to see progress being made!

Vancouver has come in dead last in the latest global ranking of luxury real estate by consultants Knight Frank.

That second-quarter ranking – No. 46 of 46 cities measured – is similar to where it stood in the first quarter. One difference is that just 45 cities were ranked in the first three months, though that hardly matters when you’re last.

You have to remember that provincial and federal policy makers moved deliberately to cool down Vancouver and other housing markets.

Toronto, in turn, managed to move up two spots, to No. 13 from No. 15 in the Knight Frank measure of luxury housing, or the top 5 per cent of the market in most cities....

https://www.theglobeandmail.com/business...ranking-of-luxury-real-estate-dead-last/

[misher]

Originally Posted by whatnext

Great to see progress being made!

Vancouver has come in dead last in the latest global ranking of luxury real estate by consultants Knight Frank.

That second-quarter ranking – No. 46 of 46 cities measured – is similar to where it stood in the first quarter. One difference is that just 45 cities were ranked in the first three months, though that hardly matters when you’re last.

You have to remember that provincial and federal policy makers moved deliberately to cool down Vancouver and other housing markets.

Toronto, in turn, managed to move up two spots, to No. 13 from No. 15 in the Knight Frank measure of luxury housing, or the top 5 per cent of the market in most cities....

https://www.theglobeandmail.com/business...ranking-of-luxury-real-estate-dead-last/

Why would you be happy at this? Its like saying your happy our restaurants are becoming McD. Luxury real estate is something that distinguishes a city. I want there to be wealth, fancy cars, upscale retail, etc here which are signs that your a major global city. If you want us to be a low tier city like Calgary or Kelowna why not just move there.

[trofirhen]

Originally Posted by misher

Why would you be happy at this? Its like saying your happy our restaurants are becoming McD. Luxury real estate is something that distinguishes a city. I want there to be wealth, fancy cars, upscale retail, etc here which are signs that your a major global city. If you want us to be a low tier city like Calgary or Kelowna why not just move there.

Pardon my 2 cents worth, but I think that Whatnext meant that Vancouver (which is small for a global city) has been so overpriced with luxury retail estate that
its 'cooling-off' comes as a relief.
I like my city to be chic, elegant, and noteworthy too, but the retail market here has been so overheated, so unavailable, that the $ dropping off is like rain after a heat wave.
Vancouver is a small city among the cities listed - almost a blip, among the others - Sydney, Toronto, London, NYC, - and is the same size as Portland Oregon, in fact.
I rather doubt Portland is on the list at all, nor perhaps even Seattle. And Vancouver is included, has lots of Jaguars and fancy cars, high-end shopping, and wealthy people.
I don't think you have much to worry about regarding Vancouver prestige as a city, it's still rather "hot" as small metropolitan areas go, and will remain so for quite a while yet.

[Migrant_Coconut]

Originally Posted by misher

Why would you be happy at this? Its like saying your happy our restaurants are becoming McD. Luxury real estate is something that distinguishes a city. I want there to be wealth, fancy cars, upscale retail, etc here which are signs that your a major global city. If you want us to be a low tier city like Calgary or Kelowna why not just move there.

Even once we DO become a global city - right now, we're just ahead of Calgary and behind Seattle - we still need to be home to people who aren't one percenters or even twenty percenters. Everything becoming fast food is bad, but so is everything becoming foie gras with caviar; you're fiddling while Rome burns either way.

[misher]

Originally Posted by Migrant_Coconut

Even once we DO become a global city - right now, we're just ahead of Calgary and behind Seattle - we still need to be home to people who aren't one percenters or even twenty percenters. Everything becoming fast food is bad, but so is everything becoming foie gras with caviar; you're fiddling while Rome burns either way.

Like it or not a major city will always be home to the wealthy because that's where the best jobs are. You can't accept the benefits of living in a major city while wanting us to go back in time to when we weren't a major city. You can't ask for things to be cheaper back when unemployment was high and the economy worse yet want unemployment to stay low. There are always trade offs.

If you want Vancouver to be like Calgary or another lower tier city, why not just go to that city? Most of us came to Vancouver because we wanted to be in a high tier city. I don't understand people who want to change Vancouver to be like so and so and go downhill. I want us to go up. Sure there's a ton of people here richer than me but I like being in a high tier city. If I didn't I would have moved a long time ago.

The best jobs are here, unemployment is low here, the weather is good here, crime is low here, schools are good here, food is good here, of course your going to have a ton of people who want to live here, expensive housing, and high demand. San Francisco, Seattle, and Los Angeles are great examples of cities similar to ours where everyone wants to live. San Francisco+Seattle has had a similar housing crisis too. Its just what happens to cities that are awesome. And I don't think making our city less awesome is the solution to a crisis. You cannot go back you can only go forward.

As for average salaries, 50% of us make $6500 or more a month. Thats more than I make! Assuming a couple who both make that salary that puts half the population of Vancouver in the top 20%. That doesn't even count income made outside salaries. So it looks like a majority of Vancouver's residents are in the 20%, so perhaps it is a city for the 20%?


http://www.salaryexplorer.com/salary-survey.php?loc=3334&loctype=3

One more thing to show off, residents of Vancouver are on average richer than other Canadians. So yes, Vancouver is the richest city in Canada. And I personally like it that way. I want to be in the New York/San Francisco of Canada not the Detroit. People keep complaining things are expensive here, yeah well its supply and demand and we're richer than the rest of Canada. If you don't like it there are lower tier cities in Canada.


I'm not saying don't build affordable housing. I propose that luxury real estate is a separate independent market that pays a ton of taxes, employs people, and boosts our economy, and we shouldn't seek to kill the golden goose. If we actually stroked the goose we could easily be adding $500 million extra to our coffers annually (likely a lot more when you add up all the city and provincial fees/taxes) which means were losing out on 1000+ units of housing for locals every year due to our boner for hating the rich.

https://dailyhive.com/vancouver/vancouver-development-cost-fee-hike-cancellation-august-2019

According to a December 2018 budget forecast, the municipal government was projected to see $258 million in revenues in 2019 from DCLs, CACs, and DBs — down from $421 million in 2017 and $885 million in 2018, which was a record year for CACs secured as a result of the approved rezoning of Canadian Metropolitan Properties’ redevelopment of the Plaza of Nations at Northeast False Creek.

[SpongeG]

will the bay parkade be redeveloped in our lifetime?

Vancouver developers delay projects in sluggish condo market

At least 19 Metro Vancouver developments have been postponed or mothballed
By Glen Korstrom | August 13, 2019


Holborn Group of Cos. has put redevelopment on hold at the Bay parkade on Seymour Street | Chung Chow


Metro Vancouver’s sluggish residential real estate market has caused some developers to pull the plug on projects, while others either delay or “retool” housing developments or switch their firms’ focus to rental housing.

Pre-sale homebuyers at Richmond’s Alfa condominium project were left in the lurch in July when developer Anderson Square Holdings Ltd. sent them notices to say that it was cancelling their contracts for units in the under-construction building because the developer was “facing serious and significant circumstances beyond its reasonable control.”

Anderson’s executives were not available to comment on the decision to halt the Alfa project, but developers across the region are grappling with a sluggish housing market.

"The market is totally in the dumps right now,” said Holborn Group of Cos. CEO Joo Kim Tiah. “I don’t think people are aware or have a full grasp of what is going on. The B.C. economy is headed for tough times. The real estate economy is not going good.”

One project indefinitely on hold is the redevelopment of the Bay parkade on Seymour Street – a site that is connected to the Bay department store by a skywalk above the street. Tiah’s family owns most of the block bounded by West Georgia, Seymour, Dunsmuir and Richards streets, and he has been eyeing redeveloping that land for years.

He told Business in Vancouver that he plans to keep his commitment to build a social-housing building at 155 East 37th Avenue, on a 15-acre site that his company owns in Vancouver’s Little Mountain neighbourhood. Market condominium towers on the site, however, are delayed.

“I was hoping to bring [market housing in Little Mountain] to market in the spring of next year but it is now looking hopefully to be in the fall,” he said. “I don’t want the market to tank even further or to go even worse.”

...

https://biv.com/article/2019/08/vancouve...RlR_QuLPIpKtbGRiIXsbKhcrJ82hamtrCSkYfW14

[whatnext]

Originally Posted by Migrant_Coconut

Even once we DO become a global city - right now, we're just ahead of Calgary and behind Seattle - we still need to be home to people who aren't one percenters or even twenty percenters. Everything becoming fast food is bad, but so is everything becoming foie gras with caviar; you're fiddling while Rome burns either way.

He's probably just panicking over dwindling commission cheques.

[Migrant_Coconut]

Originally Posted by misher

Like it or not a major city will always be home to the wealthy because that's where the best jobs are. You can't accept the benefits of living in a major city while wanting us to go back in time to when we weren't a major city. You can't ask for things to be cheaper back when unemployment was high and the economy worse yet want unemployment to stay low. There are always trade offs.

If you want Vancouver to be like Calgary or another lower tier city, why not just go to that city? Most of us came to Vancouver because we wanted to be in a high tier city. I don't understand people who want to change Vancouver to be like so and so and go downhill. I want us to go up. Sure there's a ton of people here richer than me but I like being in a high tier city. If I didn't I would have moved a long time ago.

The best jobs are here, unemployment is low here, the weather is good here, crime is low here, schools are good here, food is good here, of course your going to have a ton of people who want to live here, expensive housing, and high demand. San Francisco, Seattle, and Los Angeles are great examples of cities similar to ours where everyone wants to live. San Francisco+Seattle has had a similar housing crisis too. Its just what happens to cities that are awesome. And I don't think making our city less awesome is the solution to a crisis. You cannot go back you can only go forward.

Sorry, exactly where did I say Calgary was preferable? Like it or not, Calgary is a Beta city, and Vancouver's a Beta Plus; San Fran and L.A. are Alpha Minus and Alpha respectively. We're getting to be a top-tier city, and that's great, but we aren't just yet - right now, we're a middle-tier city with top-tier prices.

And while yes, it's true that cities get more and more pricey as they grow, it's also true that prices are disproportionately high for our size & importance, and that a healthy metro requires as many blue collars and white collars as there are executives and idle rich.

That's not resistance to change, it's a desire to have good change. If our city turned into a glorified resort town and tax haven for rich tourists and/or fair-weather residents (especially when it has potential to be so much more), that would hardly be awesome.

Originally Posted by misher

As for average salaries, 50% of us make $6500 or more a month. Thats more than I make! Assuming a couple who both make that salary that puts half the population of Vancouver in the top 20%. That doesn't even count income made outside salaries. So it looks like a majority of Vancouver's residents are in the 20%, so perhaps it is a city for the 20%?

One more thing to show off, residents of Vancouver are on average richer than other Canadians. So yes, Vancouver is the richest city in Canada. And I personally like it that way. I want to be in the New York/San Francisco of Canada not the Detroit. People keep complaining things are expensive here, yeah well its supply and demand and we're richer than the rest of Canada. If you don't like it there are lower tier cities in Canada.

Funny you should mention NYC and San Fran; their "top twenty percent" averages $15-17k a month.

That's a very long way away for most of the metro, which currently faces the same prices, yet lower wages. One shouldn't expect them to move to Kelowna any more than you should move to Shanghai or Chicago. What we need is a better economy (which I think we agree on) AND more affordability.

Originally Posted by misher

I'm not saying don't build affordable housing. I propose that luxury real estate is a separate independent market that pays a ton of taxes, employs people, and boosts our economy, and we shouldn't seek to kill the golden goose. If we actually stroked the goose we could easily be adding $500 million extra to our coffers annually (likely a lot more when you add up all the city and provincial fees/taxes) which means were losing out on 1000+ units of housing for locals every year due to our boner for hating the rich.

One, the goose is still alive and kicking. It's just leashed right now, whereas previously it was crapping on the sidewalk and attacking anybody who got too close. Many other posters have pointed out that the city budget is fine regardless, and will simply fund the same plans over a longer period of time. Cambie et all are proceeding as planned, with Broadway, Joyce-Collingwood and others on the way, so the developers are fine too.

Two, it's not our only goose. We've got healthy film, animation/VFX, game development, software, clean tech, medical and biotech sectors, all of which have considerable room to grow and would greatly benefit from non-exorbitant real estate prices.

Really, unless somebody had a house or condo that needed to be flipped in the next six months, this isn't the end of the world.

[Migrant_Coconut]

Originally Posted by whatnext

He's probably just panicking over dwindling commission cheques.

You're not helping. We want the market cooled, not dead.

[nds88]

I am down several hundred thousand dollars and my family a few million. This really pisses me and them off. Every property owner I know, even those who never paid attention to politics before, is now strongly anti-NDP (Provincial) and many are now anti-Liberal (Federal). Most of the price decrease is directly caused from government policy, which imo is not something the government should be meddling in to the degree that they did.

The party will start again, hopefully soon. On a local scale, it appears the market has flattened, although there is still not enough months worth of data to confirm this confidently. On a global perspective, which is very important, we are starting to head to zero interest rates....this will be a key driver to asset appreciation (stocks, commodities, real estate). Trump pressured the Fed to cut rates a couple weeks ago and he will continue to relentlessly hammer them. I'm predicting the Fed will will make at least 1% worth of rate cuts before election day.

The European Central Bank recently cut rates, along with India, New Zealand and Brazil. China has just devalued their currency making it greater than 7:1 against the USD. The ECB and Switzerland are already at negative rates and further cuts are predicted. A major bank in Denmark is now offering mortgages at negative 0.5%. Mortgage holders are getting paid for borrowing money! Just a few months ago, the Danes thought it was absolutely crazy for negative mortgage rates. "A few months ago, we would have said that this would not be possible, but we have been surprised time and time again, and this opens up a new opportunity for homeowners."

Its just a matter of months until Canada follows the interest rate cuts. I think a tipping point will happen soon and central banks will engage in a race to the bottom regarding rates.

It's very likely Trudopey is voted out and the Stress Test will be relaxed, while the BoC starts to cut rates.

https://www.businessinsider.com/danish-bank-offers-mortgages-at-negative-interest-rates-2019-8

[Sheba]

Originally Posted by Migrant_Coconut

Really, unless somebody had a house or condo that needed to be flipped in the next six months, this isn't the end of the world.

Exactly. Those numbers go up and down all the time - unless someone needs to sell now, what the numbers are is pretty irrelevant.

Originally Posted by nds88

The party will start again, hopefully soon. On a local scale, it appears the market has flattened, although there is still not enough months worth of data to confirm this confidently. On a global perspective, which is very important, we are starting to head to zero interest rates....this will be a key driver to asset appreciation (stocks, commodities, real estate). Trump pressured the Fed to cut rates a couple weeks ago and he will continue to relentlessly hammer them. I'm predicting the Fed will will make at least 1% worth of rate cuts before election day.

https://www.businessinsider.com/danish-bank-offers-mortgages-at-negative-interest-rates-2019-8

Perhaps you missed this in your article:

Financial markets are in a volatile, uncertain spot right now. Factors include the US-China trade war, Brexit, and a generalized economic slowdown across the world — and particularly in Europe.

Trump trying to have the US come out on top by throwing tariffs on every country and attempting to put an end to global trade isn't helping anyone. Go figure the markets are jittery and central banks aren't raising their rates.

[whatnext]

Originally Posted by nds88

I am down several hundred thousand dollars and my family a few million. This really pisses me and them off. Every property owner I know, even those who never paid attention to politics before, is now strongly anti-NDP (Provincial) and many are now anti-Liberal (Federal). Most of the price decrease is directly caused from government policy, which imo is not something the government should be meddling in to the degree that they did...

Aww, boohoo you poor thing, can we get you a tissue? I love when posters show how out of touch they are with popular sentiment.

Hate to break it to you, but the real factors than inflated the bubble aren't coming back anytime soon.

Chinese immigration and visitor visa applications to Canada plunge since arrest of Huawei’s Meng Wanzhou
Permanent residency and visitor applications hit their lowest point in recent years after Beijing issued a travel warning about ‘arbitrary detention’

[nds88]

Originally Posted by Sheba

Trump trying to have the US come out on top by throwing tariffs on every country and attempting to put an end to global trade isn't helping anyone. Go figure the markets are jittery and central banks aren't raising their rates.

Tariffs are just a stick to have countries come to the negotiating table to update existing trade agreements. I don't know the full details behind the USMCA, but my general understanding is that its not a 180 shift to major changes. There might be some revisions that favor the Americans, but nothing major that will significantly hurt us. IMO monetary policy trumps everything. Even in a slow economy, zero or near zero interest rates will double all prices of assets worldwide. Just look at 2008-2015 when stock market and real estate all doubled world wide after a few years of non-stop money printing. Although I'm surprised oil has not, but I think a lot of new technology has doubled the supply to counter it.

Our problem in Vancouver is low wages. You could work at Amazon in Seattle and make $250k USD. Go up a couple hours to Vancouver, we get paid half (or less), and in Canadian dollars too. This is a problem I would like our officials to look into.

[trofirhen]

Originally Posted by Migrant_Coconut

Even once we DO become a global city - right now, we're just ahead of Calgary and behind Seattle - we still need to be home to people who aren't one percenters or even twenty percenters. Everything becoming fast food is bad, but so is everything becoming foie gras with caviar; you're fiddling while Rome burns either way.

I appreciate your interesting response, however I have a couple of questions, please.
One percenters / 20 percenters refers to what? High end wage earners? Or something else, and to what, please.
Also, what do you mean precisely when stating that one is fiddling while Rome burns. EITHER WAY. Could you elaborate. Sorry to be so backward in business, but there you go.

[nds88]

Originally Posted by whatnext

Aww, boohoo you poor thing, can we get you a tissue? I love when posters show how out of touch they are with popular sentiment.

Hate to break it to you, but the real factors than inflated the bubble aren't coming back anytime soon.

Chinese immigration and visitor visa applications to Canada plunge since arrest of Huawei’s Meng Wanzhou
Permanent residency and visitor applications hit their lowest point in recent years after Beijing issued a travel warning about ‘arbitrary detention’

Luckily we are fortunate to have sufficient equity as a buffer, but what about those that got reamed recently? Scraping and saving, working OT to get promotions to qualify for a mortgage, delaying gratification. I know exactly what that is like. No one does all this for free.

The Hua Wei arrest was enforcing existing laws/treaties we already had in place. If that results in less Chinese interested in Canada and thus less demand for real estate, I'm cool with that in that it is not an intentional course of action to manipulate a market (whether that be our real estate, or fewer Chinese companies doing IPOs on our stock market, or buying our oil/agriculture). It wasn't thought out in a very savvy manner since there is huge blow back to our overall relationship with China. We got played on this by the Americans, but that's what happens when a PM appoints a cabinet based on diversity for the sake of claiming diversity, virtue signalling and social justice instead of merit and experience.