The "Forever" Canadian Housing Bubble

[jk]

Re: The "Forever" Canadian Housing Bubble

[thriftyandboringinohio]

Re: The "Forever" Canadian Housing Bubble

...the high-net-worth hordes...

That's a great turn of phrase, I will be using it from now on. "High-net-worth hordes"

[GRG55]

Re: The "Forever" Canadian Housing Bubble

I used to ski Whistler when I was an engineering student at UBC in the 1970s. That was before it was "discovered" and long before Blackcomb was developed.
Back in those days Toni Sailer used to run an annual summer ski camp on the glacier.

Couldn't count the number of days it was pissing down rain in Vancouver and in the Whistler village, and the gondola would take us up through the stratus and we would ski the powder in the sunshine above the cloud deck all day. One of the small, original gondola cars is pinned to the current lower station in the village. It looks so tiny compared to the high capacity system in place to move the high-net-worth hordes today.

[Adeptus]

Re: The "Forever" Canadian Housing Bubble

how's the nightlife, restaurant and bar scene around whistler vs the areas near you? man does not live by snow alone.

I must admit, the view from the top of the two mountains is nothing short of breath taking. On a clear day, most beautiful views I've seen in my life. You can see snowy mountain tops as far as the eye can see. Skiing down the mountain is also very beautiful. The skiing is overall world class. There's over 8,000 acres of skiiable terrain - making it the largest skiing destination in North America . At the bottom of the mountain there is what is called "Whistler village", which is a mix of restaurants, bars, hotels and some shopping. It's great, but you'd exhaust all there is to see and do there after about a week.

Outside of the main Whistler mountain area there are more hotels and more restaurants, but also some additional activities. Whistler is actually a tourist destination all year round because of all the activities. That said, after 2 weeks, I'd be bored of the activities aside from skiing.. but I'm not at all into drinking and bars, so maybe others would dig the scene more than I. For me the outdoors and a few 4 & 5 star restaurants are what attract me. But as you can imagine, it's pretty darn expensive - but I'm definitely going back again. Been there 2 times in winter and 2 times in summer (business trips). Very different experiences, but for sure go in Winter if you only go once.

[jk]

Re: The "Forever" Canadian Housing Bubble

they certainly must.

There's something else going on here that I do not understand.

I live within 90 minutes drive of four world class ski hills including Lake Louise, which annually hosts a World Cup downhill event. The vacancy rates are currently high, rents are affordable, and housing prices are actually slowly falling at the moment. And we had a spectacular winter for snow this year, at a time many resorts further south in Colorado and a Utah were struggling.

If he makes his living from being a ski patroller he does not have to live in a clapped-out 40 year old van in a parking lot in Whistler. There's something else going on here I do not understand. And not understanding is the reason I have for years steadfastly believed Vancouver and surroundings have insanely priced property markets, (over)due for correction.

how's the nightlife, restaurant and bar scene around whistler vs the areas near you? man does not live by snow alone.

[GRG55]

Re: The "Forever" Canadian Housing Bubble

some people REALLY like skiing.

they certainly must.

There's something else going on here that I do not understand.

I live within 90 minutes drive of four world class ski hills including Lake Louise, which annually hosts a World Cup downhill event. The vacancy rates are currently high, rents are affordable, and housing prices are actually slowly falling at the moment. And we had a spectacular winter for snow this year, at a time many resorts further south in Colorado and a Utah were struggling.

If he makes his living from being a ski patroller he does not have to live in a clapped-out 40 year old van in a parking lot in Whistler. There's something else going on here I do not understand. And not understanding is the reason I have for years steadfastly believed Vancouver and surroundings have insanely priced property markets, (over)due for correction.

[jk]

Re: The "Forever" Canadian Housing Bubble

Who in their right mind would persist in staying in that situation year after year after year? Have people completely lost their minds?

some people REALLY like skiing.

[GRG55]

Re: The "Forever" Canadian Housing Bubble

i just looked up the record of our old friend, vancouvergoinup. he joined itulip 8/2/07, and his last activity here was 12/22/10. we have been calling for a crash in vancouver real estate since BEFORE vancouvergoinup came around and was thoroughly ridiculed for his boosterism for vancouver real estate. yes, i too believe that eventually the bubble must pop, but we're winning no prizes for our ability to time anything.

and i'd like to think that vancouvergoinup is on his yacht somewhere

its utterly insane. Read an article recently about the increasingly crazy Whistler property market (two hours north of Van) and how staff can't find affordable places to live. Showcased a ski patroller who's been living in a parking lot in his 1980s vintage Dodge van for the past four years. Earns less than $3000 per month after tax income.

Who in their right mind would persist in staying in that situation year after year after year? Have people completely lost their minds?

[jk]

Re: The "Forever" Canadian Housing Bubble

i just looked up the record of our old friend, vancouvergoinup. he joined itulip 8/2/07, and his last activity here was 12/22/10. we have been calling for a crash in vancouver real estate since BEFORE vancouvergoinup came around and was thoroughly ridiculed for his boosterism for vancouver real estate. yes, i too believe that eventually the bubble must pop, but we're winning no prizes for our ability to time anything.

and i'd like to think that vancouvergoinup is on his yacht somewhere

[GRG55]

Re: The "Forever" Canadian Housing Bubble

Actually, this really happened and crashed the local market. But ironically, it wasn't the foreign government that banned Chinese buyers but the Chinese government that banned Chinese citizens from buying.

No country will ban foreign buyers because property sales generate massive taxes. Higher property prices also means higher property tax.

http://www.scmp.com/news/china/polic...rned-nightmare

actually I think New Zealand recently banned all foreign buyers.

[touchring]

Re: The "Forever" Canadian Housing Bubble

If foreign buyers were really the problem afflicting the Vancouver, Canada property market then the government should simply ban foreign buyers outright. Voila, problem fixed. Non?

Actually, this really happened and crashed the local market. But ironically, it wasn't the foreign government that banned Chinese buyers but the Chinese government that banned Chinese citizens from buying.

No country will ban foreign buyers because property sales generate massive taxes. Higher property prices also means higher property tax.

http://www.scmp.com/news/china/polic...rned-nightmare

[GRG55]

Re: The "Forever" Canadian Housing Bubble

20% is crazy, but HK had 30% foreign buyer tax (or rather China buyer tax) since 2016. So it's subjective if it will work.

But even a 30% tax won't be sufficient to stop laundered corruption money from China.

http://www.yazhouproperty.com/city-w...operty-buyers/

If foreign buyers were really the problem afflicting the Vancouver, Canada property market then the government should simply ban foreign buyers outright. Voila, problem fixed. Non?

Unfortunately, that is far from the real sources of the problem. And the governments of BC and of Canada now have collected the data to prove that. So what does the idiot new government of BC do? Oh, let's pander to the worst form of xenophobia, keep blaming Chinese Dudes and raise the tax to 20%.

I was wondering if there was anything worse than the fast ferry debacle. Appears the answer is yes.

[touchring]

Re: The "Forever" Canadian Housing Bubble

4. Foreigner Buyer/Property transfer tax - upwards of 20% more for non-nationals (up from 15% last year)

20% is crazy, but HK had 30% foreign buyer tax (or rather China buyer tax) since 2016. So it's subjective if it will work.

But even a 30% tax won't be sufficient to stop laundered corruption money from China.

http://www.yazhouproperty.com/city-w...operty-buyers/

[GRG55]

Re: The "Forever" Canadian Housing Bubble

IF the B.C. NDP survive the 3-cylinder Green Machine long enough to crash the housing market there is no chance they will survive the next election. I can't think of anything that will bring out the anger-vote more than Vic & Van homeowners watching their equity evaporate.

Over the decades we've seen some truly stupid government policies in Canada, but Horgan & Co. look like they are going to establish new all time records in that respect. Instead of thoughtful, considered policy they give all the appearance of flailing about, trying to make it up as they go. First they are against Site C, then they approve it. During the election campaign they are against LNG exports, now they want to subsidize them. The "speculators" tax, and all the backpedalling in the days immediately after, came across as something they made up during a drunken Cabinet meeting in Horgan's basement the night before the budget.

[Adeptus]

Re: The "Forever" Canadian Housing Bubble

I will admit, the Vancouver housing prices are ridiculous, and I thought for sure, we'd have a crash as far back as 2009. I occasionally travel to Vancouver and know dozens of people who work and live there. A lunch with friends or business people doesn't go by without a hearty discussion on how real estate is such a great investment. I've been having these types of lunches for almost a decade now... the insanity seems endless, but I know it will end, and will end in tears.

What's changed is of course the left leaning NDP government that point blank admitted they have the intention to lower housing prices, and if there's one thing I've learned from Itulip is don't fight the (fed and by extension the...)government. It may not look like it yet, but I think they will eventually win this price reduction battle. I now see too many significant things going against continuous rising house prices:


1. Actual rising interest rates affecting mortage rates. We've had I think 3 hikes so far with at least 3 more on the horizon. History seems to suggest a high correlation with the US hike trends
2. OSFI Mortgage qualification stress tests now require buyers to qualify for 2% higher than the actual rate the banks give them. Some studies suggest this can reduce a buyer's mortgage loan from 15-20%.
3. Empty house tax (1% per year, affecting aprox 2000 properties - this is not going to have much impact, but it's something)
4. Foreigner Buyer/Property transfer tax - upwards of 20% more for non-nationals (up from 15% last year)
5. Pre-sale loopholes to be closed - There were some crazy virtual real estate flipping loopholes (aka. 'Shadow Flipping')allowing people to buy/sell the same property many times before it was actually constructed, all avoiding various taxes whilst increasing real estate prices significantly with each property transfer
7. Laws changing to prevent realtors from representing both buyer & seller (which usually results in higher house prices, so realtor gets bigger comission)
8. As far back as 2016, self-regulation ended for BC real estate industry.
9. Speculation tax - People with 2nd, 3rd etc houses are going to start paying more taxes

Other potentially impacting items:
10. Trump NAFTA complications w/Canada affecting BC
11. BC declining (so far) the KinderMorgan pipeline = less jobs and profit.


Clearly, the provincial government has jumped to the other side of the fence to fix the rampant speculation that they along with the Federal government created as far back as 2007 with all kinds of incentives. If the above measures aren't enough, I could see them implementing more until the desired result is achieved... of course, who knows what the unintended consequences will be, but as it stands, a correction is long overdue IMHO.

A good site to follow this topic is: https://greaterfool.ca It's written by a humurous ex-MP (member of parliament), who is quite knowledgeable on the subject.
As for Canadian housing price chart tracking, this site is pretty good: http://www.chpc.biz/