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Vancouver Off-Topic / Current EventsThe off-topic forum for Vancouver, funnies, non-auto centered discussions, WORK SAFE. While the rules are more relaxed here, there are still rules. Please refer to sticky thread in this forum.
All it takes is some perfectly synchronized events to some individuals to "crash" the market. We aren't seeing the effect yet because Canadian's mortgage tend to be more traditional in 5yr terms. And for the vast majority who bought in the last 3yrs (the last climb) still has a few years until renewal.
Problem? What if interest rate raises by the time of renewal? (it can't go lower, so chances of going up seems high) What if the market corrects, let's say even a modest 10~20% decrease, and wiped out one's initial downpayment? There would be people who are forced to sell.
Then there are those rich Chinese who hold tons of units with no mortgage. When they see price continue to decline, they would bring all their entire portfolio to the market at once and sell them for cheap as a method to stop losses.
By the time we reach there, there'd be a bloodbath with everyone racing to the bottom to get their unit sold first. Then you'd see the "crash" and it won't be pretty.
You can already sense pressure on the banks from the Gov't to start raising interest rates. They've admonished BMO and Manulife for continuing to to offer rock bottom rates (shopping around can get you a 10-yr term @ under 3%).
To all the ones that keep saying that "everyone has predicted a crash and it hasn't happened", that's due to manipulation of data, rates and media that makes things appear to be okay. The sheer volume of units on sale and the days on market tell a bleak picture in the Vancouver market. Of course, the REBGV is using their creative Home Price Index to mask the real declines. Looking at the real data for Terra Nova in Richmond, median sale prices have declined a whopping 50%, from $1.388 million to $688,000.
The two groups that are going to get steamrolled by the "crash" are the people that put down very little downpayment and the Boomers who are looking to their real estate assets for retirement.
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Last edited by AWDTurboLuvr; 03-26-2013 at 10:07 AM.
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^^ That's true. My sister just bought a town home near Patterson skytrain. 1100sq ft 5years old for around 490k. Is lower than what the gov. estimated on.
Actually the agent who is selling is willing to lower his commision.
One of the things i hate is that when a unit is sold it just said it is sold never does it show how much is sold for.
The town home my sister purchase is listed as 520k but was sold at 490k that's a 30k gap and without the actual amount it gives sellers and buyer a fasle info thinking it was sold at asking or even higher than asking price but truth is that it is sold at a lower price.
One of the things i hate is that when a unit is sold it just said it is sold never does it show how much is sold for.
The town home my sister purchase is listed as 520k but was sold at 490k that's a 30k gap and without the actual amount it gives sellers and buyer a fasle info thinking it was sold at asking or even higher than asking price but truth is that it is sold at a lower price.
If you were working with a realtor, ie were serious in buying/selling, that information is easily available and listed, as is every other price change that property has seen, and much much more.
Why would potential buyers and sellers assume that the property sold at or above asking price? All parties would be prudent in doing market research for the area, similar units, assessed pricing, then determining a price based around all of these factors.
What this video fails to mention is that although some businesses are worst off due to vacant units, other businesses are doing VERY well to cater to rich wealthy individuals, ie. luxury clothing stores, jewellery stores, high end restaurants that cater to the rich, car dealerships etc.
However, there is a bigger systemic picture here and that is the long term costs of high real estate prices in general.
1. Extremely high housing prices affect the economy through demand for goods, because the if people are spending more of their income on shelter costs, that leaves less for disposable goods or other expenses. Because I'm spending more on shelter I eat out less or don't shop as much etc. This could have a rippling affect where due to people spending less money, restaurants, retail shops, entertainment places may lose or go out of business as the demand for goods decrease.
As the demand for goods decrease, restaurants/stores/entertainment venues etc cut down hours of labours or laid off staff, which further increases people to spend less more, and thus negatively affect the economy.
2. There is a cost of attracting talented individuals in the workplace. Employees may not want to move here to work due to the cost of real estate. Or workers here may move out to different provinces or become expats.
I'd be interested in 4444's(dude, you need a better name) take on this. What's the likelihood of this scenario?
I'm bored of giving my opinion, ppl want to argue too much (bc that's what ppl love to do)
But, rates will go up, ppl won't be able to afford, forced sales for less (liquidations), prices will start going lower even quicker.
I will be waiting to pounce and buy properties that will both cash flow well (5%+) and be exposed to capital appreciation - we are a long way from that point, rates need to be nearer 5-6% for that to happen, I suggest 3-4 yrs away. All these numbers are subject to change
As for Asian money, it's a small percentage of transactions, won't have a significant effect, especially if / when Chinese bubble bursts, and money will be repatriated
And I like 4444, 4 4's, easy for my lizard brain to remember
The two groups that are going to get steamrolled by the "crash" are the people that put down very little downpayment and the Boomers who are looking to their real estate assets for retirement.
If you’ve ever had the opportunity to sit on Spanish Banks at sunset, watching Vancouver’s downtown on a summer evening, it’s truly breathtaking.
All those shimmering condo towers and West End apartments make for an impressive sight.
Now squint hard enough and you might also be lucky to spot a few buildings actually filled with jobs. Few Vancouverites give it much thought, but unlike almost every other major North American city, the tallest structures here are all but devoid of any real corporate presence.
In Calgary, three of its tallest towers are filled with people working to keep their economy strong. They include The Bow, headquarters for Encana Corporation and Cenovus Energy. The Suncor Energy Centre and Eighth Avenue Place also capture Cowtown’s free-enterprise spirit.
If you remove the CN Tower from the equation, Toronto is home to the tallest corporate office tower in Canada. At almost 300 metres, First Canadian Place casts a big shadow over the TSX, our nation’s largest stock exchange.
Even in prairie cities such as Winnipeg and Edmonton their highest structures focus solely on job creation.
Meanwhile, on the sleepy West Coast, despite the spin coming out of city hall, Vancouver remains a backwater when it comes to attracting or developing corporate headquarters.
Planners blame a lack of housing affordability, which discourages companies from setting up shop here. Civic politicians point fingers at our obsession with cyclical resources such as forestry and mining, rather than trying to grow the small, but emerging green economy.
At the end of the day, most homeowners are not fussed about a lack of a corporate presence here in Metro Vancouver. But they should be. Compared to Seattle, which generates significant tax revenue and jobs from industry titans such as Microsoft, Boeing and Starbucks, we are bit players.
Our jobs and growth plan is based upon condo development and land speculation. However, take that away, and our local economy is as emaciated as your average catwalk fashion model.
For far too long, we have associated new condo towers with rising property values. In other words, our region has convinced itself we don’t need jobs to increase our personal wealth — we merely need a hot property market.
It is painfully obvious we have lulled ourselves into believing we have a “real” economy. The sad reality is we are only one real estate crash away from finding out that we don’t.
Daniel Fontaine is a local political commentator. He can be reached at Daniel.fontaine[at]sunmedia.ca or follow him on Twitter @Fontaine_D.
a LOT of people are going to lose a LOT of wealth in the coming years.
if you plan on living in your place for 20+ years are have sufficient income to cover the increasing interest payments on mortgages over the next 10 years, you won't notice, but in this day and age, do most people stay in a house for 20 years? and most people borrow (get gifted) money as down payments and max their mortgage payments, having little contingency fund or wiggle room.
the sad thing is, there's no recourse to anyone involved, other than the owner - even the banks are relatively safe (thank's CMHC!)... and is the reason why i would almost welcome more government intervention (and i'm hte biggest fan of small government)... but then again, i'm glad there isn't, as i'll pick up loads of great investments when there's blood on the streets - i can't wait!
Most of them just trade a large amount of their money around in BC. Not sure how much Jim Pattison does outside of BC. Health costs us money. Canada Post costs us. ICBC is all internal(which is better than having it go to an outside company) UBC would bring some money in-again, I couldn't hazard a guess as to how much. UBC also drives economic growth through loans.
I scratch my head wondering the same as well...How does Vancouver afford the higher cost of living when we have no corporate or manufacturing industries. Immigrant money, drugs and our natural resources is all we have.
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Quote:
Originally Posted by AWDTurboLuvr
You can already sense pressure on the banks from the Gov't to start raising interest rates. They've admonished BMO and Manulife for continuing to to offer rock bottom rates (shopping around can get you a 10-yr term @ under 3%).
To all the ones that keep saying that "everyone has predicted a crash and it hasn't happened", that's due to manipulation of data, rates and media that makes things appear to be okay. The sheer volume of units on sale and the days on market tell a bleak picture in the Vancouver market. Of course, the REBGV is using their creative Home Price Index to mask the real declines. Looking at the real data for Terra Nova in Richmond, median sale prices have declined a whopping 50%, from $1.388 million to $688,000.
The two groups that are going to get steamrolled by the "crash" are the people that put down very little downpayment and the Boomers who are looking to their real estate assets for retirement.
That is a very misleading statement. Where is the source for this data? a blog? and how was "real data" calculated? I think what really happened was that most of the sales lately have been the older townhouses (~15 years old) in the 400-500k range that dragged the median sales prices down while very few people were selling/sold their houses as the prices dipped. There is no house in Terra Nova (the min. ~1.3m) or even a decent plot of land in Richmond for that matter that goes for 688,000 (realistically you will need between 800-900k). Terra Nova is also one of the nicer neighborhoods in Richmond where everything was built new around the same time so its considered a desirable neighborhood.
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There are plenty of people like Frank Giustra etc who are actively making money in Alberta and spend it here (take a look at the load stats of WestJet/AirCanada between YYC and YVR. Not to mention people who cashed out in a lot of startups a decade or 2 ago in the tech / biotech field... companies like Creo, original EA, QLT created at least a hundred+ millionaires.
BC has the highest registered heart surgeons who doesn't have a permanent position, most of them became stay at home mom / dad. Surprisingly a lot people just come for the nice weather and the lululemon lifestyle.
Thanks to the gutting of statscan, we just don't have a clear picture of what's going on. I think it is intentional on the gov's part.
Quote:
Originally Posted by Ludepower
I scratch my head wondering the same as well...How does Vancouver afford the higher cost of living when we have no corporate or manufacturing industries. Immigrant money, drugs and our natural resources is all we have.
There are plenty of people like Frank Giustra etc who are actively making money in Alberta and spend it here (take a look at the load stats of WestJet/AirCanada between YYC and YVR. Not to mention people who cashed out in a lot of startups a decade or 2 ago in the tech / biotech field... companies like Creo, original EA, QLT created at least a hundred+ millionaires.
BC has the highest registered heart surgeons who doesn't have a permanent position, most of them became stay at home mom / dad. Surprisingly a lot people just come for the nice weather and the lululemon lifestyle.
Thanks to the gutting of statscan, we just don't have a clear picture of what's going on. I think it is intentional on the gov's part.
Oh, I get all that...and I wasn't wanting to derail into a separate type of thread. I'm talking about 'new' money into province. Selling among ourselves drives economic activity, but I'm talking I guess about driving growth. We either need to create money, or bring it in from somewhere else.
How this relates: I think we're very good at creating growth through borrowing. My issue is, when the housing market takes a crapper(the word potential is up for grabs) then we need to rely on trade. And my fear is, we're going to come up short.
I'm going to tell you, I think I was the first guy to go down in 2009 when the economy slowed. I had 2 projects booked(construction for those that don't know) and while they weren't large my any means, I worked for myself and it was decent. They finished, and its like I woke up in a different world. People fighting over each other to get slop ass re-paints for pennies on the dollar.
As long as money is still flowing from other province, we will never get to a scenario where we are trading among ourselves.
Honestly I think a lot of people are trading on the hope that US will recover sufficiently that there are more people coming into BC from US, while domestic demands drops... how likely or not I am not sure.
I usually think take an average between the worst / best case scenario, we will end up where we will be. I think Garth Turner is probably the worst case scenario, CMHC reports is probably the best case.
Quote:
Originally Posted by Gridlock
Oh, I get all that...and I wasn't wanting to derail into a separate type of thread. I'm talking about 'new' money into province. Selling among ourselves drives economic activity, but I'm talking I guess about driving growth. We either need to create money, or bring it in from somewhere else.
How this relates: I think we're very good at creating growth through borrowing. My issue is, when the housing market takes a crapper(the word potential is up for grabs) then we need to rely on trade. And my fear is, we're going to come up short.
Gridlock I know exactly what you mean. I was taking photos of exotic cars in downtown today and there were a lot. I saw an MP4-12C, a 458, and at least four Maser GT's. The wealth that bought these cars was probably brought into town, and not generated here. Just because the Porsche dealers and Tiffany & Co. on Burrard are getting a lot of business, does not mean that Vancouver's economy is booming. Just because there is a lot of property tax income from condos popping up everywhere, does not mean Vancouver's economy is booming.
And on the note of foreign owned condos. I walked through Coal Harbour for the first time in a long time today. I thought it would be bustling because of all the condos, but it was a ghost town. I was stunned. But I'm sure that the condos are being held by speculators from BC, from Alberta, from back east, etc. We just think foreigners/Asians because we see them all the time.
a lot of the condos at coal harbor are held by asians that use them as summer homes.
they're empty almost all year.
you guys gotta think in terms of scale. immigrant money, especially rich immigrant money is a big %.
for every multi millionaire that decides to buy a home here or live here, they've got more spending/buying power than like 15-500x + of the average person here.
and all that money is generated elsewhere.
just think about that, one exceptionally rich person can replace 500+ of you.
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Quote:
Originally Posted by Ulic Qel-Droma
a lot of the condos at coal harbor are held by asians that use them as summer homes.
they're empty almost all year.
you guys gotta think in terms of scale. immigrant money, especially rich immigrant money is a big %.
for every multi millionaire that decides to buy a home here or live here, they've got more spending/buying power than like 15-500x + of the average person here.
and all that money is generated elsewhere.
just think about that, one exceptionally rich person can replace 500+ of you.
People buying million dollar condos are wealthy as fuck? Thanks Captain Obvious! What other bright gems do you have for us?
That is a very misleading statement. Where is the source for this data? a blog? and how was "real data" calculated? I think what really happened was that most of the sales lately have been the older townhouses (~15 years old) in the 400-500k range that dragged the median sales prices down while very few people were selling/sold their houses as the prices dipped. There is no house in Terra Nova (the min. ~1.3m) or even a decent plot of land in Richmond for that matter that goes for 688,000 (realistically you will need between 800-900k). Terra Nova is also one of the nicer neighborhoods in Richmond where everything was built new around the same time so its considered a desirable neighborhood.
Statement was from Ozzie Jurock himself on RET. RET pulled the article after a day (you can guess who would pressure to take that negative info down).
I agree, it could very well be older townhomes only being able to sell now as the market for homes in that area has dropped quickly. That in itself speaks volumes about the housing market in general. However, it's not a misleading statement since it's true, median sales price was the default graph up until last year. REA's just don't want that sort of headline.
It's funny how you ask, how is "real data' calculated, yet you didn't ask how the HPI is calculated. Perhaps you should ask your local realtor, mine didn't have an answer for me.
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Last edited by AWDTurboLuvr; 04-09-2013 at 12:01 PM.
Most average or median prices aren't very telling as a stat. I don't even know why people bother posting them and make an argument out of it.
All I look at nowadays is the interest rate. Only way for the housing market to begin correcting itself is when rates go up and people recognize that they can no longer afford their mortgages once the cheap money's gone.
Most average or median prices aren't very telling as a stat. I don't even know why people bother posting them and make an argument out of it.
All I look at nowadays is the interest rate. Only way for the housing market to begin correcting itself is when rates go up and people recognize that they can no longer afford their mortgages once the cheap money's gone.
Actually, they are once you filter it down to attached vs detached on year over year results and parse that with inventory stats. Interest rates haven't moved up, yet the correction has already begun in the GVRD, GTA and now Montreal, where I now live. I would add that I think a certain amount of people have already started to realize they can't afford their home...which is why the massive amount of inventory on the market. It was certainly more difficult to sell my condo last summer than my previous transaction 6-7 years ago.
I think once the rates go up, is when the bottom will actually fall out. Do I believe that Vancouver real estate will ever be "affordable"? I don't think so.
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Basically, he just stands there and riffs on shit for half an hour about interest rates, monetary supply and how Canada relates.
His basic premise is that Americans(and by virtue, Canada) is now addicted to 0% interest, and that inflation is higher than what is being reported. I don't think he's one of the hyper-inflation people, but as a result of prolonged 0% interest rates, then inflation would increase.
His take on trade deficits for me was interesting. The shell game of trading goods for paper and other markets playing with their currencies was interesting, if not advice to live by, but something to think about.
It's long, but if you are into this type of stuff, its an interesting listen.
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