Canada's 'housing bubble' deemed close to bursting

[milomilo]

Not directly. They have one goal, keep inflation at 2%. That's it.

[SpongeG]

B.C. housing market recovery ‘much quicker than anticipated’: Central 1

Province's median home sale price is expected to hit a new record next year, forecasts the credit union
By Joannah Connolly, Glacier Media Real Estate | November 25, 2019

After a drop in home sales in the early part of 2019, B.C.’s residential real estate market is recovering “much quicker than anticipated,” according to a report released November 25 by Central 1 Credit Union.

The rebound in activity is “driven by lower mortgage rates, first-time buyer incentives and population growth boosted by international migration,” Bryan Yu, the credit union’s chief economist, wrote in his forecast.

Yu wrote, “After a plunge in early year sales, B.C.’s housing markets have found themselves on firmer footing with MLS sales up in seven of eight months since February. The demand environment has improved, despite many prospective buyers remaining on the sidelines due to federal government mortgage stress tests and various provincial tax measures, which continue to curtail purchases by both domestic and foreign buyers, specifically in the highest priced urban areas like Metro Vancouver.”

...

https://biv.com/article/2019/11/bc-housi...MF9cDAMwLQMVsgCBy8UcGo27xi-eZ3VJg_NFJDKA

[misher]

Originally Posted by SpongeG

B.C. housing market recovery ‘much quicker than anticipated’: Central 1

Province's median home sale price is expected to hit a new record next year, forecasts the credit union
By Joannah Connolly, Glacier Media Real Estate | November 25, 2019

After a drop in home sales in the early part of 2019, B.C.’s residential real estate market is recovering “much quicker than anticipated,” according to a report released November 25 by Central 1 Credit Union.

The rebound in activity is “driven by lower mortgage rates, first-time buyer incentives and population growth boosted by international migration,” Bryan Yu, the credit union’s chief economist, wrote in his forecast.

Yu wrote, “After a plunge in early year sales, B.C.’s housing markets have found themselves on firmer footing with MLS sales up in seven of eight months since February. The demand environment has improved, despite many prospective buyers remaining on the sidelines due to federal government mortgage stress tests and various provincial tax measures, which continue to curtail purchases by both domestic and foreign buyers, specifically in the highest priced urban areas like Metro Vancouver.”

...

https://biv.com/article/2019/11/bc-housi...MF9cDAMwLQMVsgCBy8UcGo27xi-eZ3VJg_NFJDKA

Queue housing price deniers who think that prices will decrease despite a good economy, a growing GDP, rising wages, rising immigration, and a slowdown in development.

[WarrenC12]

Originally Posted by misher

Queue housing price deniers who think that prices will decrease despite a good economy, a growing GDP, rising wages, rising immigration, and a slowdown in development.

Always a great time to buy, or sell! As my real estate agent tells me.

[misher]

Originally Posted by WarrenC12

Always a great time to buy, or sell! As my real estate agent tells me.

Ever walk into a car dealership, grocery shop, restaurant, or store and have the salesperson tell you to leave its a bad time? Do you tell your customers to go away?

[WarrenC12]

Originally Posted by misher

Ever walk into a car dealership, grocery shop, restaurant, or store and have the salesperson tell you to leave its a bad time? Do you tell your customers to go away?

Nope. But I take anything you and the RE industry have to say on the topic with a metric ton of salt.

[misher]

Originally Posted by WarrenC12

Nope. But I take anything you and the RE industry have to say on the topic with a metric ton of salt.

Even BC Assessment is tweeting it:
https://twitter.com/bcassessment?ref_src...url=https%3A%2F%2Fwww.bcassessment.ca%2F

[dleung]

I wonder how much of this is due to the situation in Hong Kong

[Loco101]

Originally Posted by misher

Ever walk into a car dealership, grocery shop, restaurant, or store and have the salesperson tell you to leave its a bad time? Do you tell your customers to go away?

It has happened in Timmins to me.

[dreambrother808]

Originally Posted by misher

Even BC Assessment is tweeting it:
https://twitter.com/bcassessment?ref_src...url=https%3A%2F%2Fwww.bcassessment.ca%2F

Yes but you have shown your stripes many times. Whether or not you are right on any given topic is now overshadowed by a healthy heap of skepticism.

[LeftCoaster]

Originally Posted by WarrenC12

It's too busy, nobody goes there anymore.

As much as I love that saying, there is a fair amount of truth to this in the context of commercial real estate cycles. There are a lot of firms who want space today but can't get in. There will be relief but not for 2-3 years as new buildings come online.

There was recently a big block of space that came available in the Bentall Centre. It wasn't even on the market and has already been spoken for.

Originally Posted by dleung

I wonder how much of this is due to the situation in Hong Kong

Probably not much.

45-50,000 people a year move to Vancouver. Last year a lot of people sat on the sidelines waiting to see what happened with the "real estate crash". People seem to be willing to sit on the sidelines for only so long as rent shoots up. So long as the economy and immigration are strong, there will be upward pressure on housing costs in Vancouver.

[WhipperSnapper]

There's more McMansions being built than ever in my neighbourhood but, we had to shut down because we weren't selling. I've spoken we other local builders and they said the same thing. The "builders" today are also paying top dollar to tear down and rebuild. There is no way there is any profit in it. It just keeps going on and on and getting dumber and dumber.

[someone123]

Originally Posted by LeftCoaster

45-50,000 people a year move to Vancouver. Last year a lot of people sat on the sidelines waiting to see what happened with the "real estate crash". People seem to be willing to sit on the sidelines for only so long as rent shoots up. So long as the economy and immigration are strong, there will be upward pressure on housing costs in Vancouver.

The average for the CMA population estimates during the past 4 years is 35,000. I wonder to what degree affordability will affect Vancouver's future growth. I don't think we will see real estate prices continue to shoot up to where average condos are $1M and see 50,000 people coming here every year.

As far as houses I think of there being two big phenomena overlaid on top of each other. One is the raw demand for housing (based on population and wealth/income) and the other the demand from speculation, people who are investing in housing in the hopes of getting a monetary return. The raw demand is a kind of "floor" and it goes up over time. When there is speculation we can go far above this floor and fall quickly back down to it. I don't think a detached house in Vancouver will ever be cheap but if a property sold for $1M in 2014 I don't think there's any guarantee it'll be "stuck" above $1.5M forever after 2019.

Multi-unit is a completely different story. Apartment or condo prices could drop hugely if there were a change in zoning. I think this would have a bit of an effect on detached too. People would be less willing to fork out $1M for a 3 BR 2 bath detached house if the same thing were available in condo form for $500,000 (and that is a realistic price given construction costs and land; it's just not permitted by planning rules and the condo oligopoly).

Here's a chart that shows detached houses split off:


Source

I think these are nominal dollars. So add in another -6% or so from 2016-2019. And that works out to little real growth in prices from the 2011 peak to the 2019 trough.

I'm personally "on the sidelines" somewhat in that I could buy a house, and wouldn't mind a nice one, but I also have a condo and I like it. If prices continue to soften a house will become more attractive and if rundown houses in Surrey go up to $3M I'll just stay put I guess and have a bunch of money saved.

[misher]

Looks like the BoC won't be lowering rates despite the feds lowering theirs, personally I was expecting a rate cut before the end of the year. Possibly the Canadian dollar will go up which will benefit cross-border shoppers but hurt our export industry?

Bank of Canada to hold rates through 2020, call on a knife's edge

BENGALURU — The Bank of Canada is now expected to hold rates through to the end of next year, according to a slim majority of economists in a Reuters poll, with forecasts on whether or not the central bank holds or cuts sitting on a knife’s edge through 2020.

The latest Reuters poll of over 30 economists taken Nov. 19-26 showed the BoC will hold its key overnight interest rate at 1.75% this year and next, flipping from equally narrow expectations for a rate cut early next year in the last poll.

https://business.financialpost.com/pmn/b...rates-through-2020-call-on-a-knifes-edge

[WarrenC12]

Originally Posted by misher

Looks like the BoC won't be lowering rates despite the feds lowering theirs, personally I was expecting a rate cut before the end of the year. Possibly the Canadian dollar will go up which will benefit cross-border shoppers but hurt our export industry?

Why? We have personal debts at crisis levels and a good economy. Zero reason to cut rates right now. We could do with some appreciation in the C$. Good for consumers.

[zahav]

Canada shouldn't have a high-valued loonie, even if it is good for consumers for imported products, our economy benefits far far more by a lower loonie, due to our economy relying a lot on exports, as well as beneftting from tech offices, movie production, and tourism that are better off with a lower dollar

[yaletown_fella]

Originally Posted by misher

Queue housing price deniers who think that prices will decrease despite a good economy, a growing GDP, rising wages, rising immigration, and a slowdown in development.

Even if wages were actually being raised hours are being cut and automation and AI is absorbing work that will never be replaced. The net cuts coming wil be unprecedented.

And immigration has peaked and will slow down very soon as full time work becomes more scarce.

Cutting interest rates would be criminal and hurt lots of seniors dependent on interest income. It's time to stop rewarding debt.

[someone123]

Originally Posted by zahav

Canada shouldn't have a high-valued loonie, even if it is good for consumers for imported products, our economy benefits far far more by a lower loonie, due to our economy relying a lot on exports, as well as beneftting from tech offices, movie production, and tourism that are better off with a lower dollar

What's the difference to an American company if the CAD is equal to the USD and they pay workers here $100,000 CAD a year or if the CAD is equal to 0.5 USD and they pay workers here $200,000 CAD a year?

There's stickiness to wages and contracts and complexity in terms of how exchange rates are passed through to consumers but the exchange rate seems to get way too much attention, and whenever it comes up there's rarely any nuance (high rate good, low rate bad!). What really matters is that Canada is producing inherently valuable goods and services. Exchange rates are at best a second-order concern as long as there is currency stability.

[GreaterMontréal]

Originally Posted by yaletown_fella

Even if wages were actually being raised hours are being cut and automation and AI is absorbing work that will never be replaced. The net cuts coming wil be unprecedented.

And immigration has peaked and will slow down very soon as full time work becomes more scarce.

Cutting interest rates would be criminal and hurt lots of seniors dependent on interest income. It's time to stop rewarding debt.

Exactly, normally we hike interest rates when the economy is doing good. The next recession will be painful.

[misher]

Vancouver real estate sales still way up in November, slightly lower than Oct but Nov is supposed to be one of the slower months. Still slightly lower than Nov 2017.