Vancouver Real Estate 'Bubble' at 30-year Peak

[phesto]

Originally Posted by Pinion

Yes. I'll get $10+ more per hour for a similar job and prices are not that different. Housing is cheaper, economy is better, crime is better, culture is better, weather is better, government is better, etc. A lot of this is personal preference of course, but Vancouverites think their city is way more special than it actually is. Vancouver's great, for Canada.

Yup, I lived in Melbourne for a year and can concur (the culture part is debatable). I would love to move back but like so many Vancouverites, family is what ties us here and now with a young family its so tough to make the jump.

[Pinion]

Originally Posted by phesto

Yup, I lived in Melbourne for a year and can concur (the culture part is debatable). I would love to move back but like so many Vancouverites, family is what ties us here and now with a young family its so tough to make the jump.

Most of my family's in California/interior BC so that's not a factor for me. And don't worry about kids moving countries, I lived in three countries by age four and it was no big deal. Kids adapt quick.

My brother's trying to get EU citizenship despite having a cushy CBSA job (Dutch mother) so there'll be no one left in Vancouver in about 10 years.

[WarrenC12]

Originally Posted by whatnext

Not going to happen. There might be corrections along the way, but then fundamentals are sound. The economies of both countries are doing well, as is Europe.

LOL economies are cyclical, you know that right?

What about this picture is sustainable:

5yr:



Since 2000:


Timing is always tough, as is the specific reason, but the outcome is inevitable. Dow will most likely drop back below 20,000.

Canadian RE (specifically Vancouver) is an even larger bubble.

[WarrenC12]

Originally Posted by rofina

That would be interesting - definitely seeing money rotate into commodities.

Logically one would start to be cautious in the 10th year of a bull market.

Still not totally convinced about RE bursting though - and don't get me wrong, I hope it does so I can buy in lower.

I think this market demonstrates that well - people are willing/able to hold.

The current market is illiquid, low listings, low sales, low activity. No one budging up, or down.

If this persists for a year or two, its a de facto correction.

Interest rates continue to rise. Too fast IMO, but I guess we will see. US treasury bonds are higher than Greek bonds (2yr). Let that sink in. I stopped all investing in my retirement accounts earlier this year. I'm too chicken to sell too much, but back to accumulating cash instead. And some gold, we'll see how that does, I'm not usually a fan.

I agree listings are low, and we're likely to have a low listing spring, so prices should rise as a result. But the bigger the bubble gets, the smaller the pin has to be to pop it.

[rickvug]

In 2018 housing will have multiple headwinds all hitting at once. Specifically new mortgage qualification rules, interest rate hikes, empty homes tax, a large spike in building completions, and the NDP announcing housing measures in February. No one has a crystal ball but I really don't know how someone can be bullish on the market. Even if the fundementals and economy are sound that is a hell of a lot for the market to power through considering the massive run up in prices. I can see the speculation about the lower end doing well (people will have little choice) but the higher end is likely to have a tough time.

[s211]

Originally Posted by rickvug

NDP announcing housing measures in February.

?

Do tell!

[s211]

Originally Posted by Pinion

Vancouverites think their city is way more special than it actually is. Vancouver's great, for Canada.

Heresy!

Vancouverism! Greenest City!

[WarrenC12]

Originally Posted by s211

Heresy!

Vancouverism! Greenest City!

Vancouver is great for Canada, and Canada is great for Earth. Do the math...

[phesto]

Originally Posted by WarrenC12

I agree listings are low, and we're likely to have a low listing spring, so prices should rise as a result. But the bigger the bubble gets, the smaller the pin has to be to pop it.

Agreed, but in any scenario for prices to decline for sale inventory must increase significantly. I think that a lot of casual observers of the market don't understand how low inventory levels are right now for both single family and condo.

[Pinion]

Originally Posted by WarrenC12

Vancouver is great for Canada, and Canada is great for Earth. Do the math...

It is at least a top 20 country, I agree.

[WarrenC12]

Originally Posted by phesto

Agreed, but in any scenario for prices to decline for sale inventory must increase significantly. I think that a lot of casual observers of the market don't understand how low inventory levels are right now for both single family and condo.

Yes, definitely. Spring will set the tone for the year though, that's when the most activity happens. If listings don't ramp up in the next few months it will be another positive year for Vancouver RE.

[whatnext]

Originally Posted by WarrenC12

LOL economies are cyclical, you know that right?

Timing is always tough, as is the specific reason, but the outcome is inevitable. Dow will most likely drop back below 20,000.

Canadian RE (specifically Vancouver) is an even larger bubble.

Doesn't look much different from Vancouver housing prices, and how long has that party been going on uninterrupted?

What events do you foresee in the near that would trigger a major correction? The only thing I see is the debt bubble in China but so far the Communist Party seems to have a pretty tight clamp on managing it, unlike the USA in 2007. If Canadian house prices correct it will likely be due to rising interest rates due to a booming economy. Therefore as housing deflates other areas of the economy will take up the slack. Reducing housing related activities to a more normal share of GDP would be a good thing anyway.

[rofina]

Originally Posted by Pinion

Australia. We're already allowed in but man does the processing take forever.

It's cute when people there complain about real estate prices.

"I live in a paradise beach city of 6 million people with a thriving economy and it costs me $800,000 to live in my most desired area!"

That's awesome - if I could live anywhere it would be Sydney or Melbourne.

To me they are Vancouver, with more of everything that's good a little less bad, and most importantly better weather.

Congrats.

[WarrenC12]

Originally Posted by whatnext

Doesn't look much different from Vancouver housing prices, and how long has that party been going on uninterrupted?

What events do you foresee in the near that would trigger a major correction? The only thing I see is the debt bubble in China but so far the Communist Party seems to have a pretty tight clamp on managing it, unlike the USA in 2007. If Canadian house prices correct it will likely be due to rising interest rates due to a booming economy. Therefore as housing deflates other areas of the economy will take up the slack. Reducing housing related activities to a more normal share of GDP would be a good thing anyway.

1. Canadian Personal Debt levels
2. Major changes to NAFTA
3. US political turmoil - or world turmoil
4. Chinese debt/government clamp down on capital exodus that is underway
5. Interest rates (most likely IMO)

The problem is, once something turns sideways there's a rush to the exit for all investors. You've been around a while, the economy doesn't just slow down gently. Something gets triggered and then it's a snowball.

I don't expect this correction to be as bad as 2008, but the recovery since then has been slow, steady, a bit weak, and has yet to increase wages in any meaningful way.

[rofina]

Originally Posted by WarrenC12

Interest rates continue to rise. Too fast IMO, but I guess we will see. US treasury bonds are higher than Greek bonds (2yr). Let that sink in. I stopped all investing in my retirement accounts earlier this year. I'm too chicken to sell too much, but back to accumulating cash instead. And some gold, we'll see how that does, I'm not usually a fan.

I agree listings are low, and we're likely to have a low listing spring, so prices should rise as a result. But the bigger the bubble gets, the smaller the pin has to be to pop it.

I do think interest rates will be more important over the next 12 months than at anytime in recent history, for two primary reasons.

Rates are edging up - but also lots, and lots of renewals are coming up and for the first time in nearly a decade the renewals will be at higher carrying costs.

For some this will only be a couple cups of coffee a month, for others it will be a chunk of change. In a province with a negative savings rate I could see this causing a headache.

2008 credit markets froze and nearly the entire financial system collapsed and all we mustered was a 15-20% correction here - not holding my breath for much more this go round.

Equities on the other hand - yikes. I too started rotating into cash, and plan to start allocating some money to save havens this year.

But then I cant stop myself from piling money into weed stocks. Too much fun riding the bubble up.

[Abii]

Originally Posted by Pinion

SFH did go down for the most part this year, but yeah it should continue going down.

Condos are on fire for two years straight though, which is why I'm taking the equity and GTFOing ASAP. Unfortunately ASAP is quite slow.

I remember I argued with you over something a long time ago (recognize your profile picture lol), but I had to pop in with a

I'm doing the same. I'm selling my Downtown condo and moving to another province for law school. Not sure if I'll ever be back (I might, who knows). Bought mine 2.2 years ago and although it hasn't doubled in price, the equity gain has been substantial.

I'm holding off until May/June though. Want to squeeze every bit of juice out of this thing before saying goodbye. Should be able to get 10-20k more around then.

[Alex Mackinnon]

Originally Posted by Abii

I remember I argued with you over something a long time ago (recognize your profile picture lol), but I had to pop in with a

I'm doing the same. I'm selling my Downtown condo and moving to another province for law school. Not sure if I'll ever be back (I might, who knows). Bought mine 2.2 years ago and although it hasn't doubled in price, the equity gain has been substantial.

I'm holding off until May/June though. Want to squeeze every bit of juice out of this thing before saying goodbye. Should be able to get 10-20k more around then.

You're going to miss it then. Chances are you may have already missed the boat.

[Cypherus]

Originally Posted by Abii

I remember I argued with you over something a long time ago (recognize your profile picture lol), but I had to pop in with a

I'm doing the same. I'm selling my Downtown condo and moving to another province for law school. Not sure if I'll ever be back (I might, who knows). Bought mine 2.2 years ago and although it hasn't doubled in price, the equity gain has been substantial.

I'm holding off until May/June though. Want to squeeze every bit of juice out of this thing before saying goodbye. Should be able to get 10-20k more around then.

Agree. It is a good time to cash out for condo's but they can continue to go up in Vancouver. Even in Surrey, one bedrooms have surpassed $400K and there is no limit in sight as to how far up they can go in the whole region. Surrey's upswing also puts demand pressure for downtown Vancouver because the price differential is getting thin (hence Vancouver condo being more valuable for relatively a bit more). Make no mistake, even if there is a crackdown on foreign ownership, most condo's here in Vancouver are bought by "Homemakers and Students" who are permanent residents, but using money from their mom and dad or brother/sister/husband offshore because Canada is a safe haven for accumulated family wealth from Chinese authorities. These condos are actually foreign owned but the title is registered to a local resident such as a Student/Homemaker. The federal Liberal government and BC NDP haven't figured that out yet. The banks, especially RBC, have known this all along, giving out 1 million plus mortgages to someone who has no income. FINTRAC also sees this because every EFT up to $50,000 US from China is recorded, but they are pretty much silent on the issue.

[Cypherus]

Originally Posted by WarrenC12

Vancouver is great for Canada, and Canada is great for Earth. Do the math...

Canada also has the most natural resources, but its citizens who equal the population of California alone, pay generally the highest amount of taxes compared to the whole world. As well, most citizens are priced out of many metropolitan real estate markets. There's a reason why BC = 'Bring Cash" in many common circles.

[logan5]

Originally Posted by Pinion

It is at least a top 20 country, I agree.

I thought you were moving to South Africa. Whatever. Australia ain't cheap. What's the minimum wage there? Something like 22 dollars an hour? Prices commensurate. 8Oi