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Go Back   SkyscraperPage Forum > Regional Sections > Canada > Alberta & British Columbia > SSP: Local Vancouver > Business & the Economy

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  #81  
Old Posted Feb 17, 2012, 1:34 AM
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Quote:
Originally Posted by mr.sandbag View Post
anyone check the census stats that just came out... ofcourse we did. Where do you put 197k people (thats roughly the city of Richmond added in 5 years or put another way 20% of Calgarians decided to move here ), in housing , add this to all the other factors and we get what we have. There is no bubble.
Population growth does not mean there is no bubble. If history is any indicator, bubbles have formed and and deflated, regardless of population growth.
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  #82  
Old Posted Feb 17, 2012, 1:46 AM
twoNeurons twoNeurons is offline
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Immigrants usually rent when they first get here anyhow.

Also doesn't explain why we have a record high months of Inventory of houses on the market.

Surely, with population increases... there would be fewer houses on the market.

I have no evidence to support this... but in boom times, my guess is that new housing starts outstrips demand to a large degree.

Anyone have any numbers on how much housing was added in the last 5 years?
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  #83  
Old Posted Feb 17, 2012, 1:58 AM
mr.sandbag mr.sandbag is offline
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Originally Posted by b5baxter View Post
Census data actually supports the view that we are in a bubble. Population growth has been at a much lower rate than increases in real estate. In last 10 years Vancouver's population growth averaged 1% per year. Home prices grew much faster.

If were really bringing in more people too fast and running out of room we would see rents increasing at close to the same rate as houses but we haven't.
I checked those links and they don't really say too much other then BC (not Vancouver) has a declining population growth rate. How that plays out over the next few years will be seen. With Alberta's housing market taking a bit of hit since the recession of 2008 and better job prospects there then BC, i'd expect there to more people leaving BC for other provinces.

Vancouver and the Fraser Valley still absorbed 200,000 people. They have to go somewhere. Add this fact to the following:

1. The whole Fraser Valley has a finite amount of develop-able land (land here is not cheap) which continues to be developed due to net increase in population, increasing the price of land.
2. A Safe and Beautiful place to live
3. Low interest rates
4. There was a 1-2 year lull in new housing stock during the recession, it wasn't until 2010-11 where see developers start marketing new buildings/subdivisions

As long as Vancouver remains a livable city (excluding cost of housing) we will attract immigration. As long as interest rates remain below 6%; as long as developers don't flood the market with inventory; as long as the economy remains relatively stable, we will see the housing prices stabilize and see modest 2-5% increases year over year.

What people in other parts of the country do not understand is that what is considered affordable here in Vancouver has changed compared to the rest of country. Not every one here wants a house. Condos are now the entry level property and people who want to buy into the Vancouver market have to understand this. They may have to start in the valley and move in as they can afford. It might take more time to save. Whatever is needed. It can be done.

A friend of mine who just turned 22, sold his truck, used all his saving to buy a 30 year old condo in PoCo. It cost him 113k, yes 113k. Its old but he bought where and what he could. It is tough to accept the idea that what most people grew up in is no longer affordable. We have to change our expectations.

The most retarded thing is if everyone all started to believe there was a bubble and started selling we'd all be F@cked.

So try this on for size, if we all just stated that it is best to buy what you can afford and over time work your way into to your dream home, keeping your expectations in reality we'd have nothing worry about. But then we'd have nothing to complain about.
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  #84  
Old Posted Feb 17, 2012, 2:25 AM
mr.sandbag mr.sandbag is offline
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Quote:
Originally Posted by twoNeurons View Post
Immigrants usually rent when they first get here anyhow.

Also doesn't explain why we have a record high months of Inventory of houses on the market.

Surely, with population increases... there would be fewer houses on the market.

I have no evidence to support this... but in boom times, my guess is that new housing starts outstrips demand to a large degree.

Anyone have any numbers on how much housing was added in the last 5 years?
Your are probably right about the renting, but they have to live somewhere. Something has to give. You build more driving up the cost of the land. Someone is buying the houses/condos most likely investors and then renting them.

here's an example from New York,

Rent for $2000/ month 1200 sqft 2 Br 1 Bath
http://www.sublet.com/spider/supplyd...pplyid=1979608

Buying a condo same area
$4.1m, 2br, 2 bath
http://realestate.nytimes.com/sales/...-YORK-NY-10019

A 2br in my building the Social rents for around $2000. it is obvious to me that rents do not have to change at the same rate as the price of a house otherwise we should see rents alot higher in New York then you do. I know this was a quick sample but when you compare New York and Vancouver there are similarities.

1. Land locked or limited develop-able land
2. People want to live there

these 2 factors are huge when it comes to price of buying property.
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  #85  
Old Posted Feb 17, 2012, 3:58 AM
twoNeurons twoNeurons is offline
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There are also huge differences between New York and Vancouver.

In addition, Manhattan is NOT New York. Most people in search of livable property don't live in Manhattan, unless they're in the projects in the Lower East Side or in a Rent-controlled building.

Here's an apartment in Queens:
http://realestate.nytimes.com/sales/...UEENS-NY-11414

You won't even find prices like that in an old place in Surrey or Langley.

If everyone started selling, you're right, there would be short-term pain for those that are over-levereged. Who are those people? Many of the people who are bought in recently for almost nothing down. It's pretty hard to find an investment property in Vancouver that'll be in the black once you purchase it. Many mortgages hold a 200% premium over renting, even with a sizeable down payment.

You'd be a pretty poor businessman to buy a property only to rent it out in this market... unless you were trying to carry a loss and holding the property. And that really is the key. Vancouver, for the past several years has been a speculators paradise. Low-risk, low-interest easy to flip properties.

A lot of people have made a lot of money during this time. Housing, like all other assets don't ascent forever. They fluctuate.

The problem with many people is that they're not buying because they want to invest, they're not buying because they can afford it. They're buying out of fear of being priced out of the market forever. When you do that, you start to justify buying a smaller, hard-to-sell place because you just gotta get into the market.

Your friend sounds like a reasonable guy. My guess is that the same place would rent for about $600, but that's just a guess based on the price. That's about right.

Those properties, however, are the exception not the rule.
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  #86  
Old Posted Feb 20, 2012, 2:55 AM
b5baxter b5baxter is offline
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re: "we are running out of land"

- I am sure people were saying the same thing about San Diego 5 years ago. International border to the south, ocean to the west, mountains to the east and a large military reserve to the north. No room to expand in any direction. Yet, the bubble burst and there were declines of > 40%.

- Another example is Tokyo. They have densities that are much higher than Vancouver. And yet their real estate bubble exploded dramatically and 20 years later prices have still not recovered.
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  #87  
Old Posted Feb 20, 2012, 3:56 AM
cornholio cornholio is offline
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Yeah the land argument is bs imo. Land constraints would result in reduced growth not increased prices.
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  #88  
Old Posted Feb 20, 2012, 4:58 AM
G.O.B. G.O.B. is offline
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Originally Posted by twoNeurons View Post
There are also huge differences between New York and Vancouver.

In addition, Manhattan is NOT New York. Most people in search of livable property don't live in Manhattan, unless they're in the projects in the Lower East Side or in a Rent-controlled building.

Here's an apartment in Queens:
http://realestate.nytimes.com/sales/...UEENS-NY-11414

You won't even find prices like that in an old place in Surrey or Langley.
That place has $700+/mth(!) strata fees (which, relative to a $150 strata fee, pretty much doubles the price of the unit). Its true cost is closer to $250-300K. You can get a much nicer apartment for much less in Surrey/Langley.
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  #89  
Old Posted Feb 21, 2012, 5:17 PM
twoNeurons twoNeurons is offline
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Look out below Canada now must confront a bubble of its own.

Quote:
Look out below
After years of lecturing America about loose lending, Canada now must confront a bubble of its own.

When the United States saw a vast housing bubble inflate and burst during the 2000s, many Canadians felt smug about the purported prudence of their financial and property markets. During the crash, Canadian house prices fell by just 8%, compared with more than 30% in America. They hit new record highs by 2010. “Canada was not a part of the problem,” Stephen Harper, the prime minister, boasted in 2010.
In this section

Today the consensus is growing on Bay Street, Toronto’s answer to Wall Street, that Mr Harper may have to eat his words. In response to America’s slow economic recovery and uncertainty in Europe, the Bank of Canada has kept interest rates at record lows. Five-year fixed-rate mortgages now charge interest of just 2.99%. In response, Canadians have sought ever-bigger loans for ever-costlier homes. The country’s house prices have doubled since 2002.

Speculators are pouring into the property markets in Toronto and Vancouver. “We have foreign investors who are purchasing two, three, four, five properties,” says Michael Thompson, who heads Toronto’s economic-development committee. Last month a modest Toronto home put on the market for C$380,000 ($381,500) sold for C$570,000, following a bidding war among 31 prospective buyers. According to Demographia, a consultancy, Vancouver’s ratio of home prices to incomes is the highest in the English-speaking world.

Bankers are becoming alarmed. Mark Carney, the governor of the central bank, has been warning for years that Canadians are consuming beyond their means. The bosses of banks with big mortgage businesses, including CIBC, Royal Bank of Canada and the Bank of Montreal, have all said the housing market is at or near its peak. Canada’s ratio of household debt to disposable income has risen by 40% in the past decade, recently surpassing America’s (see chart). And its ratio of house prices to income is now 30% above its historical average—less than, say, Ireland’s excesses (which reached 70%), but high enough to expect a drop. A recent report from Bank of America said Canada was “showing many of the signs of a classic bubble”.

Read the rest here: http://www.economist.com/node/21546057
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  #90  
Old Posted Jun 5, 2012, 2:34 AM
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Vancouver house sales slide precipitously to lowest May level since 2001. Paradoxically prices held up :
http://www.straight.com/article-7008...month-year-ago
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  #91  
Old Posted Jun 5, 2012, 5:59 AM
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No changes in selling prices in my neighborhood yet... $330k in 2001, $1.3m today. Still about 20% higher than 2 years ago.
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  #92  
Old Posted Jun 5, 2012, 8:54 AM
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Originally Posted by whatnext View Post
Vancouver house sales slide precipitously to lowest May level since 2001. Paradoxically prices held up :
http://www.straight.com/article-7008...month-year-ago
It's because selling prices lag inventory. If inventories build eventually sellers who are stuck with something they don't want anymore will have to lower prices to attract any buyers. When those sellers have brought enough negative momentum on the market, then people who were holding out on lowering prices will have to also lower their prices in a race to the bottom of the market, in order to be competitive.

We're already at the point where supply has exceeded demand, as evidenced by the build up in inventory. Now as soon as the sellers begin to get desperate, prices will start to tumble. It may take a few months though for people to lose confidence and get desperate.

If the shit really hits the fans here, like in the states; forclosures of people who didn't want to sell, but no longer can afford/qualify for their mortgage will add a feedback effect into the market adding to the oversupply of available housing.


I can't wait for this bubble to pop though. My neighbourhood has become utterly ridiculous. Someone is trying to flip a tarted up Van Special in the downtown eastside for $1.549M. Come on!

See said ugly house.

The house is wedged in on a 25' lot between 5 row houses and an ugly old apartment building, and has absolutely no mortgage helpers which most other $1M properties in the area have. I have no idea what RE are thinking trying to push things like this nowadays.
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  #93  
Old Posted Jun 5, 2012, 3:06 PM
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Originally Posted by whatnext View Post
Vancouver house sales slide precipitously to lowest May level since 2001. Paradoxically prices held up :
http://www.straight.com/article-7008...month-year-ago
Prices seem to be holding up only because there are just enough purchasers out there to keep pricing up.

It was like the stock market up until about a month ago. Valuations were up, but if you looked at the actual transaction volume, it was way down. Of late, there was little to really convince the stock market that the increasing valuations were because of fundamental improvements, and now the wind is out of the sails.
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  #94  
Old Posted Jun 5, 2012, 3:08 PM
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Originally Posted by Alex Mackinnon View Post
Agents, gotta love the hyperbole: "15 minute walk to Vancouver City Centre".
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  #95  
Old Posted Jun 6, 2012, 10:53 AM
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Alex Mackinnon Alex Mackinnon is offline
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Agents, gotta love the hyperbole: "15 minute walk to Vancouver City Centre".
Yup. If I really book it, I can make it in 25 minutes. Google says 36 minutes on foot. Walking speed apparently means 14km/h.

There's other good ones in there too...

"California Inspired" - It's a Vancouver Special.

"Executive Home" - I definitely know nobody I would describe as an executive living around here. Tons of very highly educated people, but almost nobody looking to be a flashy exec. Beater VWs are everywhere, and BMWs are nowhere to be found.

"Bathed in Tranquility" - The little park where the cul-de-sac ends, right be side it, almost always had people either getting drunk or high in it.

Man, if engineers could get away with publishing this kind of stuff.
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  #96  
Old Posted Jun 6, 2012, 2:43 PM
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$1.5 million in Strathcona? Wow. I'm sure it's a nice house, and that's a nice part of the neighbourhood, and I would argue that you could walk to Chinatown/Gastown in 15 minutes, so strictly speaking you are downtown at that point, but a million and a half... Wow.
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  #97  
Old Posted Jun 6, 2012, 3:02 PM
s211 s211 is offline
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Originally Posted by SFUVancouver View Post
$1.5 million in Strathcona? Wow. I'm sure it's a nice house, and that's a nice part of the neighbourhood, and I would argue that you could walk to Chinatown/Gastown in 15 minutes, so strictly speaking you are downtown at that point, but a million and a half... Wow.
Strictly quoting, the agent said "15 minutes to Vancouver city centre". That says Granville/Georgia to me. Maybe with a hover board or Olympic sprint!
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  #98  
Old Posted Jun 21, 2012, 10:49 PM
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Another thing starting to poke the bubble.

Tighter mortgage rules.

Flagherty Annouces Tighter Mortgage Rules

Anecdotally, there's a ton of houses on sale in Strathcona right now. Prices on a couple have fallen, but not by much. The $1.549M Van Special is holding steady. Good luck...
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  #99  
Old Posted Jun 21, 2012, 11:22 PM
go_leafs_go02 go_leafs_go02 is offline
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Here's the most interesting quote I can find:

Quote:
And government-backed mortgage insurance will no longer be available for homes with a purchase price of more than $1 million.
So you need $200,000 up front (20%) to purchase a home over 1 million dollars.

Could you begin to see $999,000 homes come available in order to sell the home to first time home-buyers?
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  #100  
Old Posted Jun 21, 2012, 11:30 PM
WarrenC12 WarrenC12 is online now
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Originally Posted by go_leafs_go02 View Post
Here's the most interesting quote I can find:



So you need $200,000 up front (20%) to purchase a home over 1 million dollars.

Could you begin to see $999,000 homes come available in order to sell the home to first time home-buyers?
I don't think anybody today is buying $1M as a first time buyer, unless they are coming from another country with a pile of cash anyway.
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