Chinese Investors Driving Up Metro Housing Prices

[logicbomb]

Originally Posted by Pinion

The housing market crashing doesn't mean getting the city back, it just means the end of one of the few surviving industries in the city.

This place will be a smoldering crater when all is said and done. The tax should have been introduced in the late 90s at latest.

No doubt, this was the last booming industry. Tech and film aren't generating the necessary jobs to keep up with the swath of fresh graduates. Plus this is only temporary relief until Trudeau opens the door to mass immigration over the next few years.

Though the blame is squarely on all levels of government that allowed this to occur. How we got stuck with an economy that relied on shaddy money and corruption is beyond me.

We're headed towards dark times.

[whatnext]

Originally Posted by logicbomb

No doubt, this was the last booming industry. Tech and film aren't generating the necessary jobs to keep up with the swath of fresh graduates. Plus this is only temporary relief until Trudeau opens the door to mass immigration over the next few years.

Though the blame is squarely on all levels of government that allowed this to occur. How we got stuck with an economy that relied on shaddy money and corruption is beyond me.

We're headed towards dark times.

Indeed. Anybody can see that neither the Liberals nor Conservatives had much interest in critically examining immigration policy in an age when automation is rendering mass immigration useless. Both parties thought they could profit from pandering for votes amongst this group and that. had the NDP been relevant they'd be too scared of offending their SJW contingent to be critical either. At a time when job quality is at a 25 year low, the whole premise that immigration is going to fund our social safety net is dangerously outdated.

[Klazu]

Originally Posted by logicbomb

Tech and film aren't generating the necessary jobs to keep up with the swath of fresh graduates.

While I don't disagree with you, it is still pretty interesting that in tech sector we are currently finding it so hard to find enough talented people that we are actually recruiting people straight out of school. Many of them begin their career as TFTs, but the best are also being converted to RFTs. Still we are having challenges finding enough people, as the local talent pool is not big enough.

Originally Posted by whatnext

Anybody can see that neither the Liberals nor Conservatives had much interest in critically examining immigration policy in an age when automation is rendering mass immigration useless.

Yeah, the whole society will very soon have to adapt to the new reality where an ever smaller amount of people will have to and are being able to work. It will be a major challenge for the whole world to transition to the new world run by automation.

• Video Link

[logicbomb]

Originally Posted by Klazu

While I don't disagree with you, it is still pretty interesting that in tech sector we are currently finding it so hard to find enough talented people that we are actually recruiting people straight out of school. Many of them begin their career as TFTs, but the best are also being converted to RFTs. Still we are having challenges finding enough people, as the local talent pool is not big enough.

The companies are creating those challenges by their silly requirements that are turning away students from applying. I have seen several "entry level" jobs require 3+ years experience. I am curious how you guys are advertising these positions, and how much the pay is. I will take your word on it as students up until recently (2011ish) were pursing anarchic degrees such as those in the social sciences; we will undoubtedly see a surge of new tech graduates in the next few years.

I always present Facebook as the premier example of how they screwed over local software engineers, and this flew under all news radars for 2 years until they consolidated operations in San Fransciso. The backstory is that they opened up in Vancouver in mid 2013, put out several job postings that required 5+ years of experience, all while recruiting skilled engineers from all over the globe. Eventually Facebook closed up in early 2015 after many local skilled workers caught on and realized where they were located.

Originally Posted by whatnext

Indeed. Anybody can see that neither the Liberals nor Conservatives had much interest in critically examining immigration policy in an age when automation is rendering mass immigration useless. Both parties thought they could profit from pandering for votes amongst this group and that. had the NDP been relevant they'd be too scared of offending their SJW contingent to be critical either. At a time when job quality is at a 25 year low, the whole premise that immigration is going to fund our social safety net is dangerously outdated.

No doubt it becomes a dangerous game when the labour market is flooded with surplus qualified skilled and unskilled employees competing for a blended mix of temp and part-time jobs. Opening the doors to mass immigration and bringing in thousands of refugees will only compound matters. The truth is our country cannot sustain population growth right now, hence why the push to bring 300k immigrants and 50k more refugees is asinine.

Libs/Cons- we need to ensure that we keep up with labour demand... have a deep labour pool to allow for a more flexible labour force that's willing to get paid peanuts.
NDP- we have a moral obligation to open our borders to anyone that's facing hardship

Originally Posted by Klazu

Yeah, the whole society will very soon have to adapt to the new reality where an ever smaller amount of people will have to and are being able to work. It will be a major challenge for the whole world to transition to the new world run by automation.

• Video Link

Hence why a 15% foreign investors tax is seen as a huge mistake right now. Most domestic service sector jobs is undergoing transitioning, and increasingly being automated. The real estate sector was safe barring a major global economic collapse...

[SFUVancouver]

I'm sorry, have we suddenly changed our minds about having a local real estate market that is decoupled from local incomes? That is an acceptable situation now?

It is not an economically or socially healthy situation for a city, no matter how much DFI it garnered and temporary local employment it stimulated.

[whatnext]

Richmond's New Coast Realty fined for unlicensed services:
http://vancouversun.com/news/local-n...ensed-services

Wow, a whole whopping $7,500 fine. That'll teach 'em, a fine less than the commission on one condo.

[Cypherus]

Originally Posted by whatnext

Richmond's New Coast Realty fined for unlicensed services:
http://vancouversun.com/news/local-n...ensed-services

Wow, a whole whopping $7,500 fine. That'll teach 'em, a fine less than the commission on one condo.

I saw a few For Sale signs pop up from this company in Surrey last summer and the nature of the signs appeared to cater to a certain demographic despite the cultural characteristics of the area. The one property they sold is now a vacant house and been so for 5 months since I walk by it every day when walking to work. I think unlicensed realtors working for the company is just touching the surface.

[whatnext]

Originally Posted by Jebby

Except it's not when you consider that 70% of the CoV is zoned for not much more than single family detached homes.


https://pbs.twimg.com/media/CF55lMWVIAERxg9.png

Then we take a look at Burnaby, where we also have the majority still zoned for single family detached homes. Richmond has been densifying a lot over the past decade, but it's still majority single family homes. Then look at Surrey, where the majority is ultra-low density over a massive area.

We are not running out of land. There is enough land to sustain population growth for the next 200+ years.

What Metro Vancouver lacks is density and pro-growth policies to deal with the large amount of demand that far outstrips supply. The solution isn't regressive authoritarian laws against ownership or additional taxes. Allow market forces to act and correct the imbalance between supply and demand. Relax density restrictions, streamline permitting and compliance costs, and allow the market to react to demand.

Puncturing the myth of "we just need to build our way to affordability", how the bubble is responsible for an artificial perception of lack of supply:

...Richmond condo market had too much inventory a few years ago. As of July 2015 inventory levels were 24% above the 10 year average. As the market heated up inventory disappeared as sellers refused to sell in light of enormous equity gains over recent months. An excess of buyers compete for the historically low inventory, shooting prices up 25%. As of November 2016, inventory sits 51% below the 10 year average.

Richmond housing starts have been excessive over the last 3 years, setting record high housing starts in 2014, and 2015. Langley also set record housing starts in 2015.

Recent data from CMHC also shows Vancouver is on pace to build 27,495 units this year. With an estimated population growth of 30,000 per year that’s almost one unit per person. As per stats Canada the average household has 2.5 people....
http://vancitycondoguide.com/treatin...t-the-disease/

[Changing City]

You can't compare housing STARTS with population growth. Developments take at least a year to complete, and potentially up to three years or more. CMHC data on Housing COMPLETIONS this year so far at are around 16,000. Not all of those will be a net gain - many of the single family homes will just be a replacement, so there's not necessarily much of a population gain associated with those dwellings. So an estimated population gain of 30,000 would be pretty much in line with that rate of construction.

[whatnext]

Originally Posted by Changing City

You can't compare housing STARTS with population growth. Developments take at least a year to complete, and potentially up to three years or more. CMHC data on Housing COMPLETIONS this year so far at are around 16,000. Not all of those will be a net gain - many of the single family homes will just be a replacement, so there's not necessarily much of a population gain associated with those dwellings. So an estimated population gain of 30,000 would be pretty much in line with that rate of construction.

Did you read the whole article? As much as a critique of overbuilding, it pointed out inventory rates were normal up until 2015. We didn't suddenly have a sudden massive increase in the immigration quota that year. It was due to a seize up in inventory, people hoarding it if you will, in the expectation of future price gains. IE the guy standing in line for a new condo development who buys 10 units and sits on them in the expectation of future gains. That helps explain how almost 50 percent of Richmond condo listings in buildings over a year old can be marketed as "never lived in".

[logan5]

Originally Posted by whatnext

Did you read the whole article? As much as a critique of overbuilding, it pointed out inventory rates were normal up until 2015. We didn't suddenly have a sudden massive increase in the immigration quota that year. It was due to a seize up in inventory, people hoarding it if you will, in the expectation of future price gains. IE the guy standing in line for a new condo development who buys 10 units and sits on them in the expectation of future gains. That helps explain how almost 50 percent of Richmond condo listings in buildings over a year old can be marketed as "never lived in".

Wouldn't a healthy supply of density greatly impair gains manufactured by "hoarding" of new housing supply.

If all those single detached properties were to be rezoned to accommodate 4 family sized homes instead of 1, this supposed hoarding would make no difference because there would be too many other options.

We can simulate the amount of land that Calgary has by developing or designating our land at 4 times the density. Then housing prices would fall in line with the rest of Canada.

[casper]

Originally Posted by whatnext

Did you read the whole article? As much as a critique of overbuilding, it pointed out inventory rates were normal up until 2015. We didn't suddenly have a sudden massive increase in the immigration quota that year. It was due to a seize up in inventory, people hoarding it if you will, in the expectation of future price gains. IE the guy standing in line for a new condo development who buys 10 units and sits on them in the expectation of future gains. That helps explain how almost 50 percent of Richmond condo listings in buildings over a year old can be marketed as "never lived in".

Is one guy buying 10 units, holding on to them and then selling a bad thing? Those investors help get projects financed and off the ground fast that if they were no there.

[Changing City]

Originally Posted by whatnext

Did you read the whole article? As much as a critique of overbuilding, it pointed out inventory rates were normal up until 2015. We didn't suddenly have a sudden massive increase in the immigration quota that year. It was due to a seize up in inventory, people hoarding it if you will, in the expectation of future price gains. IE the guy standing in line for a new condo development who buys 10 units and sits on them in the expectation of future gains. That helps explain how almost 50 percent of Richmond condo listings in buildings over a year old can be marketed as "never lived in".

I did read the article. I think some of the numbers are a bit inaccurate. We really don't know what the actual population growth has been since 2011 until the new census data is available next year. If BC Stats know anything ... (long silent pause here) ... they think Greater Vancouver has been growing by around 18,000 new households in the past three years, and around 36,000 people a year. So they think the average new household isn't 2.5 people, and they think population growth has been greater than the article suggests.

I completely agree with the article that the number of units recently started construction is more than in the previous few years. That could mean an excess of units in future. (So if 'the market' works, prices presumably would be expected to fall, and developers would slow their activity until there's more demand again).

There are other possible explanations - there's a constantly slightly changing population demographic; our average household size is falling, and has been for several decades (both in the city and the region). Senior couples become senior singles (and there are more of them as a proportion of the population as the boomers age). Families of child bearing age in Greater Vancouver are having fewer children. It's also possible that population growth - given the apparent strength of the economy - will be greater than 36,000 for a year or two at least.

[Hourglass]

Originally Posted by casper

Is one guy buying 10 units, holding on to them and then selling a bad thing? Those investors help get projects financed and off the ground fast that if they were no there.

It is if that guy is sitting on them, meaning those units are being kept off the market for a substantial period of time (eg there's no one living in them while he's waiting to sell them for a better price), or the units are being used for Airbnb rentals. Bottom line: it doesn't help the market situation because these units don't reach the market.

[Jebby]

Originally Posted by whatnext

[I]...Richmond condo market had too much inventory a few years ago. As of July 2015 inventory levels were 24% above the 10 year average. As the market heated up inventory disappeared as sellers refused to sell in light of enormous equity gains over recent months. An excess of buyers compete for the historically low inventory, shooting prices up 25%. As of November 2016, inventory sits 51% below the 10 year average.

From a supply side, there's your problem. Not enough new builds to satisfy demand raise prices.


On the demand side, there are big issues as well, I've never denied it. Interest rates are way too low (for both borrowing and saving), down payment requirements are way too low, terms are still too long (especially if someone is buying as a second+ property).

[WarrenC12]

Anecdotal but I'll tell it anyway:

A coworker needed to move in Yaletown and wanted to stay in the area (renting). He found a place on Marinaside, nice condo, 10-12 year old building that hasn't been lived in. The place has been used a handful of nights over the entire period, all under the same owner. Now it's a rental for him and his family to live. Clearly the empty home tax is having at least some impact.

[whatnext]

Originally Posted by Jebby

From a supply side, there's your problem. Not enough new builds to satisfy demand raise prices.


On the demand side, there are big issues as well, I've never denied it. Interest rates are way too low (for both borrowing and saving), down payment requirements are way too low, terms are still too long (especially if someone is buying as a second+ property).

You're ignoring the fact that inventory dried up at the exact same time the Mainland Chinese house buying spree started. So we should build more just to have units sit empty? At the same time that enables price inflation because developers know there is some foreign investor willing to shell out a higher price just to get money out of China.

[Jebby]

Originally Posted by whatnext

You're ignoring the fact that inventory dried up at the exact same time the Mainland Chinese house buying spree started. So we should build more just to have units sit empty?

Yes, we should build more.

The vast majority of people will not leave units sitting empty, they will be turned into income producing assets.

And even if a sizeable amount sit empty, it's a net gain for the city because those units still pay property taxes for services they aren't using.

Originally Posted by whatnext

At the same time that enables price inflation because developers know there is some foreign investor willing to shell out a higher price just to get money out of China.

No. At a certain point when supply matches demand prices do no rise.

[whatnext]

Originally Posted by Jebby

Yes, we should build more.

The vast majority of people will not leave units sitting empty, they will be turned into income producing assets.

And even if a sizeable amount sit empty, it's a net gain for the city because those units still pay property taxes for services they aren't using..

The same realtor showed almost 50% of the units on the market in Richmond were being sold as "never lived in". So it's hardly a "vast majority" that will use them, as you claim.

[Pinion]

We've watched the "million dollar line" creep east for years in Vancouver proper... now it's in New West.



http://www.theprovince.com/Business/12561322/story.html