Vancouver's Real Estate Market

[Hakkaboy]

Now why can't this start happening in the GVR? Is the GTA much less desirable or are there way too many shady realtors/developers/immigration lawyers/money launderers here? Combined with locals who are conditioned here to think that RE should always rise rise and rise.

https://beta.theglobeandmail.com/rea...ticle36181877/

"The average home in the Greater Toronto Area sold for $732,292 in August, a 20.5-per-cent drop from the market's peak in April, when prices for all types of homes averaged $920,791, according to the Toronto Real Estate Board"

[!LittleDragon]

It's mentality. You can pretty much narrow it down to a single week where people there all of the sudden decided property was too expensive and stopped buying. Same excuses were heard over there too... foreign buyers, they're not making anymore land, everyone wants to live there, etc... but when people decide it's too expensive, they'll just stop buying. You see that here with many houses sitting on the market for the past year, people think it's too expensive. Condos are still relatively affordable so you're not seeing it there yet but it'll happen just the same.

edit:

Here's a fun site to check out.. http://www.myrealtycheck.ca/

[Traum]

GTA and vicinity will not run out of land for a very, very long time. Unlike Metro Vancouver were we can pretty much only expand eastward into the valley, and a lot of people here are reluctant to do so. On the other hand, you can pretty much reach out from GTA for 2 hours in all 4 directions (well, kind of for going south) and IMO, things aren't really that different. In fact, much of the outlying municipalities are nicer than the older 6 GTA municipalities. And people over there are nowhere nearly as opposed to longer drives compared to many Vancouverites.

[Harvey Specter]

In my opinion the issue in Vancouver is a lot of people don't need to sell so they'll price high and wait it out hence the supply issue. The ones that need to sell are pricing at market value or below and unloading but most of these houses are gone before the listing is even active on MLS. There's no winning for people waiting it for a massive correction because I don't think it'll happen in Vancouver, too many people have near paid off homes and have no reason to sell.

[originalhypa]

Originally Posted by Harvey Specter

too many people have near paid off homes and have no reason to sell.

You're forgetting about the majority of the people in this province who don't have paid off homes. Maybe your circle of friends and family is in that position, but you fail to recognize that so many people aren't. Just look at the average family income in BC.

In 2014, the median family income in B.C. was $76,770. In 2015, British Columbians working full-time earned an average weekly wage of $1,054.47, compared to the national average of $1,057.16. The average hourly wage for full-time employees in the province was $26.58.

https://www.welcomebc.ca/Choose-B-C/...come-and-Wages

I think of families that I know in the suburbs who are racked with consumer debt, a high cost of living, and a mortgage. Even those getting into the housing market in the mid-2000's paid far more for their properties than they earn. Talk to a banker in a suburb and he'll tell you that virtually everyone is paying off a mortgage. Add to your family budget ICBC going up, hydro rates increasing, high gas prices, and a higher interest rate, and it's a matter of time before it really starts to hurt.

The household debt-to-income ratio now stands at 169.4, up 23 per cent from a decade ago, and on par with what the US saw at the peak of its housing bubble.

Drowning in debt is the new normal in Canada - NEWS 1130

There are a lot of wealthy folks who can buy up these assets, but the truth is that there is a chance of far more inventory than buyers. Especially when the banks stop lending like they did in the US in 2008.

I'm seeing so many parallels between our housing market, and the US housing market in 2008. Something is propping our real estate values up, and the gov't is now making moves that may hurt this "constant growth" cycle than we're seeing.

Just look at Toronto, where house prices fell 20% in the past 12 months. Is it the beginning of the end of growth? Or is it a parallel to our housing market in 2012 when it dipped, then skyrocketed?

[Harvey Specter]

Originally Posted by originalhypa

You're forgetting about the majority of the people in this province who don't have paid off homes. Maybe your circle of friends and family is in that position, but you fail to recognize that so many people aren't. Just look at the average family income in BC.

You'll be surprised how many older homes (20+ years) in Vancouver still have original owners and most of these people are not the type to have massive consumer debt.

[Coren]

^ 20% drop in 5 months, not 12 months
And don't forget the Toronto region added a foreign buyers tax in during that time as well

[Liquid_o2]

Toronto has so much land for growth. It is a completely different animal than Vancouver.

[Hondaracer]

Also let's face it, everything being equal buyers who have to choose between paying the foreign tax in Vancouver or toronto are going to be picking Vancouver for the most part.

[westopher]

Vancouver is the greatest place in Canada if you can afford to live here and not work here.
Hell there are tons of people that own in my building with Alberta plates on their cars. They work somewhere that has reasonable wages that is a terrible place to live (anywhere in northern Alberta, and they fly here to Vancouver for their time off in their 2 week on 2 week off cycle.

[Mr.Money]

i'm more amazed the amount of condo's buildings being built and selling out asap no matter what...how many times is gonna happen before it burns its self out.

[Tapioca]

Originally Posted by Harvey Specter

You'll be surprised how many older homes (20+ years) in Vancouver still have original owners and most of these people are not the type to have massive consumer debt.

People like my parents and their friends. Homes have been paid off for over 20 years.

These people have no reason to move and will never sell until their health no longer supports going up stairs or taking care of basic maintenance. Most immigrant families would also rather pass their homes onto their children rather than putting them on the market.

[Hondaracer]

All my friends parents either cashed out on a home they owned with no mortgage for 1m+ or they are still sitting on a house worth 1m+ with no mortgage as Tapioca said.

Majority of their kids though are not in the market. But the same goes for most people that I know who live in my neighborhood and who grew up with my wife. No mortgage/no debt

[nah]

I still feel speculators are still buying up property thinking it'll never drop. Just need to cut the supply of cheap money with interest rate hikes and speculators will stop.

[Harvey Specter]

Originally Posted by Tapioca

People like my parents and their friends. Homes have been paid off for over 20 years.

These people have no reason to move and will never sell until their health no longer supports going up stairs or taking care of basic maintenance. Most immigrant families would also rather pass their homes onto their children rather than putting them on the market.

Exactly.

My parents have a paid off house with no debt. If they sell tomorrow they would probably pocket well over $3m+ but they'll never sell. This is the case with a lot of my friends and their parents. You might see a mass sell off maybe in 15+ years when the houses start getting passed down but until then supply will be tight in Vancouver.

[Mr.HappySilp]

Originally Posted by Mr.Money

i'm more amazed the amount of condo's buildings being built and selling out asap no matter what...how many times is gonna happen before it burns its self out.

Like I said before when an apartment goes to public sale over 80 to 90% are sold already. Pre-sales, VIP events is when you want to get it. What's left for public sale is all garbage anyways.

[Drow]

today the bank's prime rate was the highest i've ever seen in the last 7 years

i really hope mortgage rates don't increase to the 4% range fml

[Tapioca]

Originally Posted by nah

I still feel speculators are still buying up property thinking it'll never drop. Just need to cut the supply of cheap money with interest rate hikes and speculators will stop.

The only way to get rid of speculation is to make this market undesirable.

Government sponsored xenophobia. Natural disaster. An economic meltdown. Nobody wins in either of those scenarios except the rich.

[lowside67]

Originally Posted by Drow

today the bank's prime rate was the highest i've ever seen in the last 7 years

i really hope mortgage rates don't increase to the 4% range fml

Comments from Doug Porter (BMO's Chief Economist) today was that they are forecasting 4 hikes in 2018 for another 1.00% above rates after today's increases. If that was the case, you would be seeing residential mortgages in the very high 3s and close to 4% IMO.

Mark

[UFO]

Originally Posted by originalhypa

Just look at the average family income in BC.

Trouble with looking at any data set using averages, it fails to take into account those who can live comfortably without any officially reported income. Or those who can get by on a very modest income because their homes are paid off, they have no debt to service, and are happy living a modest life style.

I think of families that I know in the suburbs who are racked with consumer debt, a high cost of living, and a mortgage. Even those getting into the housing market in the mid-2000's paid far more for their properties than they earn.

Racking up consumer debt, living the baller life on credit, that's all a matter of personal choice though no? We can blame increased costs of living sure, but at some point we also have to take responsibility for the choices we make. If someone bought in the mid-2000's, makes an average salary, lives reasonably within their means, there's no reason for you to be in a bad situation with the way housing is currently positioned.

I'm seeing so many parallels between our housing market, and the US housing market in 2008. Something is propping our real estate values up, and the gov't is now making moves that may hurt this "constant growth" cycle than we're seeing.

I'm not too in tune with the financial world, so I'm quite fascinated by this. From what I understand, the US housing meltdown was heavily due to poor lending practices, fraudulent even in some cases. Which is then linked into the stock markets somehow. So basically the bottom fell out in one sector which dominoed to a complete melt down of their economy. What are the sytsemic similarities that you see in the Canadian/GVR market?

Originally Posted by Drow

i really hope mortgage rates don't increase to the 4% range fml

It wasn't THAT long ago (less than 10 years) that rates were 4%+; in the 80's they were pushing high teens, that is true FML. Look at it this way, if it pushes up, demand and prices may drop correspondingly as the masses become more conservative. If you have positioned yourself well in advanced, you may be able to capitalize.

[Liquid_o2]

People forget that a higher interest rate can also negate a slowdown in the market.

My fiancee and I bought a place just over one month ago and got locked in at 2.64%. If we were to get a mortgage at 3.5%, we would be paying well over $10,000 more in interest over the first five years. It makes a huge difference.

[Tapioca]

Metro Vancouver is also home to a higher than average number of personal corporations that are used to reduce personal income taxes. People use numbered companies to buy real estate, or use credit unions to buy their houses despite have low personal incomes on paper.

[MarkyMark]

I think a lot of people who bought in the last few years are going to get a kick in the pants when renewal time comes around and their 2% mortgage is now 4%+

[Rallydrv]

^ With world economy so unpredictable and 8-9 yrs of bull run. Not sure anyone can be certain that 4+ gonna happen.

[!LittleDragon]

Originally Posted by Tapioca

Metro Vancouver is also home to a higher than average number of personal corporations that are used to reduce personal income taxes. People use numbered companies to buy real estate, or use credit unions to buy their houses despite have low personal incomes on paper.

Rumour is PM Trudy will be taking care of that next month with some major tax changes for personal corporations. Just in time for another possible rate hike next month... The market has already priced in another hike by the end of the year.