Real Estate in your city

[iheartthed]

Originally Posted by Crawford

Keep in mind that Detroit gentrification stuff is almost irrelevant to a metro housing market of 5 million. Detroit proper is like 600k, optimistically 10% in zones of gentrification, and even there, it isn't exactly Vancouver or SF. Likely 95%+ of high(er) earners in metro area live outside of city proper. For HNWI it's likely closer to 99%.

Sprawl, not gentrification, is still mostly driving growth. Here's an example of over 1,000 upscale housing units going up on former farmland in a stagnant metro, in an area with no infrastructure:
https://www.spinalcolumnonline.com/a...-developments/

Sprawl isn't growth. I wish we had better language than this. Sprawl in a metropolitan area like Detroit is cannibalization.

[Innsertnamehere]

Detroit in the city was comically cheap for a while as it's population was rapidly shrinking and property taxes were insane. Both are stabilizing now, and investment has returned in a big way.

Basically the housing surplus in Detroit was so comically large in the 2000's that you could buy a house for basically nothing.

Prices have gone up a lot because they were so comically low before. Demolition has removed a huge amount of stock which used to be available and the number of homes more closely resembles demand now. Detroit is ultimately home to some of the largest companies on the planet and has a huge GDP so it makes sense that prices would be higher than more depressed economies like Cleveland or Buffalo, provided that housing stock matches demand, which wasn't the case for Detroit for decades.

Most housing investment in Detroit is still renovations as prices in the city still aren't really at the level to support new construction though. It's just a sign that the gap between housing demand and supply is shrinking. Eventually demand will fully catch up and new supply will start up in large numbers, and I think Detroit is getting close to that now, there is increasing amounts of new construction in the most desirable areas.

Vancouvers costs definitely have a bit to do with foreign capital, but it has more to do with development regulations. The only type of housing permitted to be built in large numbers is the most expensive per sf type of housing - large scale condominium projects. The average property sale price is about $930k USD - high, but not as insane as the $1.55 million USD average price for a detached property.

Vancouver's market has to be looked at not as how much it costs to buy detached, but how much it costs to buy an average property. It's just that Vancouver's land use regulations mean the average property is a 700sf condo, not a 1,500-2,000sf house like it is on most of the continent. And since space comes at such a huge premium, people are forced to spend more than normal to get it.

Basically Vancouver has decided that you can't build new units for less than $800/ft USD or so, which means that people have to scramble and completely max out their housing budgets to get even basic housing. The lack of more affordable housing construction methods drives up the cost of all housing types as all incomes get shoved down into more and more modest housing forms. Starting a successful company in Los Angeles may mean a beautiful mansion on a large lot, as there is enough supply of that housing type, but in Vancouver, which has very little of that, and which none more is permitted to be built, it means a relatively modest dwelling on a small lot.

The level of market distortion coming from a housing market where market demand for single-detached is probably similar to elsewhere in NA (i.e. 50-60% people want detached) but where only 25% of stock is that product type is profound.

Toronto is similar but on a less extreme scale - as detached is 39% of housing stock, and significant amounts of it is actually still getting built. It's still a restricted environment which results in inflated pricing compared to globally, but not as extreme. The $6.5 million house in Vancouver would probably be $3 million in Toronto.

[Crawford]

Originally Posted by iheartthed

Sprawl isn't growth. I wish we had better language than this. Sprawl in a metropolitan area like Detroit is cannibalization.

Yeah, I don't disagree. Just pointing out that midtown loft conversions and the like aren't really altering the overall metro area dynamics.

For every in-town gentrified unit, there are probably 50 new sprawl units.

[iheartthed]

Originally Posted by Innsertnamehere

Detroit in the city was comically cheap for a while as it's population was rapidly shrinking and property taxes were insane. Both are stabilizing now, and investment has returned in a big way.

Basically the housing surplus in Detroit was so comically large in the 2000's that you could buy a house for basically nothing.

Prices have gone up a lot because they were so comically low before. Demolition has removed a huge amount of stock which used to be available and the number of homes more closely resembles demand now. Detroit is ultimately home to some of the largest companies on the planet and has a huge GDP so it makes sense that prices would be higher than more depressed economies like Cleveland or Buffalo, provided that housing stock matches demand, which wasn't the case for Detroit for decades.

Most housing investment in Detroit is still renovations as prices in the city still aren't really at the level to support new construction though. It's just a sign that the gap between housing demand and supply is shrinking.

Vancouvers costs definitely have a bit to do with foreign capital, but it has more to do with development regulations. The only type of housing permitted to be built in large numbers is the most expensive per sf type of housing - large scale condominium projects. The average property sale price is about $930k USD - high, but not as insane as the $1.55 million USD average price for a detached property.

Vancouver's market has to be looked at not as how much it costs to buy detached, but how much it costs to buy an average property. It's just that Vancouver's land use regulations mean the average property is a 700sf condo, not a 1,500-2,000sf house like it is on most of the continent.

A lot of this is being driven by speculative buying from people outside the metro area. I'm not really sure where that's going, to be honest. I haven't yet heard of any policy changes that would stabilize development patterns at the regional level, so I'm skeptical that the market will sustain many of the prices being asked now. But we'll see...

[iheartthed]

Originally Posted by Crawford

Yeah, I don't disagree. Just pointing out that midtown loft conversions and the like aren't really altering the overall metro area dynamics.

For every in-town gentrified unit, there are probably 50 new sprawl units.

Got it. Yeah, agreed on that point.

[Crawford]

Originally Posted by Innsertnamehere

Detroit in the city was comically cheap for a while as it's population was rapidly shrinking and property taxes were insane. Both are stabilizing now, and investment has returned in a big way.

Basically the housing surplus in Detroit was so comically large in the 2000's that you could buy a house for basically nothing.

Again, I think we're conflating Detroit proper and Detroit. Nearly 90% of "Detroit" isn't in Detroit. Detroit never had much "free housing" except for unsalvageable wrecks in a few empty ghettohoods. The metro median is dragged down bc half the metro is off-limits to middle class+ folks (too many poor black people, redneck whites, Arabs, whatever). Middle class+ suburbs were never particularly cheap. The places that were comically cheap were never under consideration anyways.

Yes, Detroit proper has shown real improvement, but not enough to really alter the housing dynamics of a region of 5 million. The cheapest housing is still mostly in Detroit and Detroit-adjacent. And while the core has gentrified, the zone of crappy areas has expanded. Places like Livonia and Sterling Heights are now sorta undesirable to the middle class when before there was no issue. They fell a rung on desirability. The people who used to live in Livonia and Sterling Heights are now in South Lyon and Macomb Township.

And the working class areas of my 1990's youth (Redford, Warren, Westland) are now ghetto-ish. Detroit proper is mostly the same from my youth. Just emptier and a better core. A lot of the solid black neighborhoods in NW Detroit were perfectly fine in the 1990's too.

[Innsertnamehere]

Originally Posted by iheartthed

A lot of this is being driven by speculative buying from people outside the metro area. I'm not really sure where that's going, to be honest. I haven't yet heard of any policy changes that would stabilize development patterns at the regional level, so I'm skeptical that the market will sustain many of the prices being asked now. But we'll see...

Vancouver has had "foreign buyer" taxes in place for years now to minimize capital in-flows into the city's real estate. It's definitely a factor as the housing shortage creates opportunities for huge value gains and people want to take advantage of that, but it's ultimately based on a fundamental lack of supply of in-demand housing types to the extent that what is a basic product for much of the continent is a hyper luxury product in Vancouver.

[Innsertnamehere]

Originally Posted by Crawford

Again, I think we're conflating Detroit proper and Detroit. Nearly 90% of "Detroit" isn't in Detroit. Detroit never had much "free housing" except for unsalvageable wrecks in a few empty ghettohoods. The metro median is dragged down bc half the metro is off-limits to middle class+ folks (too many poor black people, redneck whites, Arabs, whatever). Middle class+ suburbs were never particularly cheap. The places that were comically cheap were never under consideration anyways.

Yes, Detroit proper has shown real improvement, but not enough to really alter the housing dynamics of a region of 5 million. The cheapest housing is still mostly in Detroit and Detroit-adjacent. And while the core has gentrified, the zone of crappy areas has expanded. Places like Livonia and Sterling Heights are now sorta undesirable to the middle class when before there was no issue. They fell a rung on desirability. The people who used to live in Livonia and Sterling Heights are now in South Lyon and Macomb Township.

And the working class areas of my 1990's youth (Redford, Warren, Westland) are now ghetto-ish. Detroit proper is mostly the same from my youth. Just emptier and a better core. A lot of the solid black neighborhoods in NW Detroit were perfectly fine in the 1990's too.

not disagreeing. Just discussing why Detroit-proper prices have consistently risen so quickly as the supply-demand gap shrunk and as population losses slowed.

The Detroit metro as a whole has never been dirt cheap, but generally I think it's about as affordable as you can reasonably expect a place to be, particularly since the Detroit metro has a lot of excellent, well paying jobs. There are limited development controls and the metro-wide population is shrinking which means that there are property classes available to basically every income level as various housing products and types shift their way through the housing ladder. It may not be a "great neighbourhood" but basically regardless of income, someone can buy a house in Detroit of some form. In Vancouver, due to development control, geography, and population growth, the dwelling price floor is held at the most affordable new construction product - i.e. $800/sf condos in random suburbs. A lower income household in Detroit could buy an older home in a rougher neighbourhood, while in Vancouver, they would be lucky to own a studio condo unit.

[lio45]

Vancouver’s comical pricing levels are nearly all due to Canada being fully open to foreign capital and international laundering (unlike the USA).

It’s not local earners who have driven up prices of raw land in Dunbar to a grand a square foot. They couldn’t do that even if they wanted. It’s external money.

[iheartthed]

• Video Link

I saw this CNBC story the other day that touched on Detroit's real estate. They display a chart (about the 3:14 mark) in the piece that shows how housing construction fell off a cliff in the city of Detroit after 1950. Between 1950 and 1955, housing construction in Detroit, as a percentage of existing stock, fell about 10 points (from about 13% to about 3%). By 1975 there was effectively no new housing built in the city. There were some small upticks in the 90s of new housing, but Detroit has apparently not gotten above 1% since the 1960s.

The obvious reason why construction fell off a cliff after 1950 is because the city had been completely built out by then. I'm sure a chart that shows the metro area construction would probably not show any slowdown in housing construction until about the 1970s.

[lio45]

Originally Posted by Crawford

Vancouver is insane. Salaries are pretty modest, even for Canada.

Correct, but salaries are irrelevant.

Maybe it’s not common knowledge in the USA, so I’ll point it out again: China has more millionaires than the City of Vancouver has people.

If a significant chunk of China’s HNWIs (also known as BCMLs on SSP ) wishes to own a pied-à-terre in Vancouver for various (some of them good) reasons, the market will soon be completely out-of-whack with local metrics. It’s as predictable as gravity.

[suburbanite]

The way I look at it is that land use controls set the framework for rising SFH prices, and then availability of capital determines how high those prices go.

Vancouver would likely still be one of the pricier Canadian cities without any Chinese money present. It would just be more populated by wealthy Canadian retirees who could afford to spend $2 million on a detached home of which there is little supply and limited ability to add more supply. instead, with free-flowing capital, it attracts Chinese buyers who are significantly wealthier than their equivalent Canadian peers, and can afford to pay $6 million on a detached home of which there is little supply and limited ability to add more supply.

[lio45]

Exactly. Vancouver has severe constraints to sprawl and the mildest winters in the entire country, so it’s normal it would be at a premium in any case, but the current stratospheric levels are because we’re a haven for global capital, a good chunk of which is coming from East Asia and Van is our Pacific-side gateway so that’s where most goes.

In an alternate world where it’s Ireland that has all the billionaires in need of money laundering and Canada has the exact same policies, it would obviously be in St. John’s that we would see modest 1950s bungalows going for a few million nowadays.

[lio45]

Anyone wants to take a guess at how much that San Antonio Riverwalkfront building would go for? Listing has no price. I’m guessing at least $2-3M, will try to find out what the ballpark is for offers.

[Steely Dan]

Back here in "regular people land", the unit on the 2nd floor of our 3-flat just went under contract at $395K. It's a 3 bed / 2 bath 1,300 SF unit.

That price bodes well for us because we have the big "duplex-down" unit in the building on the 1st floor/finished basement with 2,300 SF of living space that we bought for $420K nearly 5 years ago. So if the considerably smaller upstairs unit just sold for almost $400K, then I have to believe that our unit is now worth over $500K.

[lio45]

If you own it free and clear, then by selling it you could get enough cash for a 10% downpayment on this beauty:

https://www.realtor.ca/real-estate/2...enue-vancouver

[suburbanite]

Originally Posted by Steely Dan

Back here in "regular people land", the unit on the 2nd floor of our 3-flat just went under contract at $395K. It's a 3 bed / 2 bath 1,300 SF unit.

That price bodes well for us because we have the big "duplex-down" unit in the building on the 1st floor/finished basement with 2,300 SF of living space that we bought for $420K nearly 5 years ago. So if the considerably smaller upstairs unit just sold for almost $400K, then I have to believe that our unit is now worth over $500K.

Chicago is probably the best "sweet spot" in North America for providing very affordable housing, plenty of high-paying jobs, and excellent urbanity all rolled into one. I guess you pay for all of that with a perennially underperforming football team...

It's always been at the back of my mind to consider the possibility of moving there, but I'm two years away from 30 now and anything beyond my current part-time split outside of Toronto seems more and more daunting.

[Steely Dan]

Originally Posted by lio45

If you own it free and clear, then by selling it you could get enough cash for a 10% downpayment on this beauty:

https://www.realtor.ca/real-estate/2...enue-vancouver

LOL!

Thanks, but I'm quite happy and content here in regular people land.

And we still have about $275K left on mortgage anyway, so........

[Crawford]

LOL at the "NO TREES IN THE BACK". Chinese-Canadians apparently really don't like trees. God forbid a backyard has shade or privacy.

And "very liveable". Yeah, I kinda hope a $5 million CAD bungalow is "livable".

[JManc]

Originally Posted by lio45

If you own it free and clear, then by selling it you could get enough cash for a 10% downpayment on this beauty:

https://www.realtor.ca/real-estate/2...enue-vancouver

There's no logic in that price. At least here in the Bay Area, wages are high and you can find a nicer house between 1.5 and 2 million which is still fucking insane. My house in Houston would be at least 3 million here. It's big and has a huge yard. Our other house (Houston) would probably go for around 2 million.

Steely has a much better deal right where he is and his area is pretty desirable.