Liberty Posted July 16, 2015 Author Posted July 16, 2015 The average SFH in Toronto costs $1.1 million, while in Chicago the average listing price is $335,984. In Vancouver a urban detached house now goes for $2.2 million. In Seattle the average list is $627,889. A 30-year mortgage in the US costs 4.3% and a five-year adjustable is 3.1%. Both have been rising this year. In Canada you can now borrow a five-year variable-rate mortgage for 1.98% – even before being nipped for today’s central bank folly. http://www.greaterfool.ca/2015/07/15/a-tale-of-two-nations/
alertmeipp Posted July 16, 2015 Posted July 16, 2015 Canada House up 10% year over year. If u take out Van and Toronto, only 3.4%. Rate cut and lowering loonie will almost guarantee more upward movement. But then what.... rate is not far away from zero. But loonie going down means more Chinese buyers.
Guest Schwab711 Posted July 16, 2015 Posted July 16, 2015 How is the housing market still going up!? Thanks for getting back to me wisdom. I've read about some of your 5 points and it does seem likely that high LTV mortgages are being under-reported by a meaningful amount. Do you know any small investment companies with large exposure to development loans? Is anyone trying to short this? Canada House up 10% year over year. If u take out Van and Toronto, only 3.4%. Rate cut and lowering loonie will almost guarantee more upward movement. But then what.... rate is not far away from zero. But loonie going down means more Chinese buyers. How can they cut rates into a housing market that's increasing across the baord!? I agree with everything you say though. It does seem like foreign investors are the only reason the market is up so much between Chinese and American investors [speculators].
gary17 Posted July 16, 2015 Posted July 16, 2015 rate cut will help stimulate export and also the already hot real estate industry - aside from the foreign buyers... those in their 30's , if own a home, will be spending most of their income in housing.. which does not contribute to the economy.... we need consumer spending to get the economy going. the other sad part is most of the price tag of a house is in the land... we were looking at a $1m house in north van... they had 25 offers and end up 250K over asking.... the house is almost a taredown... so the money most goes into the land.... unless the seller spends the proceeds back into the economy... i see very little overall contribution (no construction worker, no materials, etc).... bad..... the US recession came suddenly and the government reaction was swift. feels like Canada may be looking at low oil, low commodity, and slow growth for a while... I hope I am wrong !
Aberhound Posted July 17, 2015 Posted July 17, 2015 rate cut will help stimulate export and also the already hot real estate industry - aside from the foreign buyers... those in their 30's , if own a home, will be spending most of their income in housing.. which does not contribute to the economy.... we need consumer spending to get the economy going. the other sad part is most of the price tag of a house is in the land... we were looking at a $1m house in north van... they had 25 offers and end up 250K over asking.... the house is almost a taredown... so the money most goes into the land.... unless the seller spends the proceeds back into the economy... i see very little overall contribution (no construction worker, no materials, etc).... bad..... the US recession came suddenly and the government reaction was swift. feels like Canada may be looking at low oil, low commodity, and slow growth for a while... I hope I am wrong ! I found out where some of the money goes this weekend when I go to a party up in Kelowna, a small city 4 hours inland from Vancouver. It was like going back in a time warp. Almost everyone at the party had sold and moved from Vancouver over the past 25 years and moved to new homes in Kelowna. The later they moved the bigger the house. Most owned recreational properties as well and all looked exceptionally fit from an active outdoor life culture. Then I visited friends in Oliver, a few hours south in the "Golden Mile", so named because the soil is incredibly mineral rich. Massive monies has gone into wineries while the fruit farms have mostly gone due to low returns. All land owners have had incredible rates of return from rising land values. I can't see why the trend won't continue as higher prices in Vancouver and more immigrants from low trust societies drive those used to a high trust society inland allowing an exchange of wealth and discomfort for wealth, comfort and an improved, more healthy lifestyle. We basically live in a country club economy and we should embrace it and start charging an entrance fee commensurate with the quality of the land and resources. When water starts to back currencies like oil has since the early 1970s BC will be incredibly wealthy so BC seems likely to become the new Alberta. Now I want to convince my spouse to move to Kelowna as well.
gary17 Posted July 17, 2015 Posted July 17, 2015 I heard an interesting idea - The government of Canada has recently scrapped the 'investment immigration' program where a typical Chinese family invests $800K in Canada in exchange for a landed immigrant status - so instead of scrapping that, we should increase the investment from $800K to say $5M CAD, and instead of it being an investment, make it a permanent contribution to the local economy - goes towards improvement of transit, healthcare etc. Now that the $5M for the luxury house west van is gone, perhaps we see a slower growth in real estate, and for whomever we attract, they are now even more certain to be the top 0.1%. LOL
gary17 Posted July 18, 2015 Posted July 18, 2015 $10m house sold last week. Hope this will motivate us all to work hard lol
The Falcon Posted July 18, 2015 Posted July 18, 2015 rate cut will help stimulate export and also the already hot real estate industry - aside from the foreign buyers... those in their 30's , if own a home, will be spending most of their income in housing.. which does not contribute to the economy.... we need consumer spending to get the economy going. the other sad part is most of the price tag of a house is in the land... we were looking at a $1m house in north van... they had 25 offers and end up 250K over asking.... the house is almost a taredown... so the money most goes into the land.... unless the seller spends the proceeds back into the economy... i see very little overall contribution (no construction worker, no materials, etc).... bad..... the US recession came suddenly and the government reaction was swift. feels like Canada may be looking at low oil, low commodity, and slow growth for a while... I hope I am wrong ! This story rings a bell, replace Vancouver with Sydney and Toronto with Melbourne and we have a very similar set of circumstances unfolding down here.
mrholty Posted July 31, 2015 Posted July 31, 2015 Just wanted to add some antecdotal information to this thread. I watched this for a few years and felt there was a bubble atleast in BC. Earlier this summer spent a week in BC on vacation and spent a few nights with locals. Much of the stereotypes or comments I've read in this thread were there. Buying a second home in AZ - check. Sister is a house flipper - sold her business as a Chiro but not ready to retire. now a yoga instructor and house flipper - check etc, etc, etc. Well work took me for the last two weeks to SE Asia + China. These two weeks were with customers who run manufacturing and distribution companies to a part of the energy economy. In general these guys are all in their 50s and looking to sell out their business in the near future. I'd say that 50% of these guys already had a home in the US/Canada and the majority of those were in Vancouver. These guys want the Vancouver weather, they schools and they want some safety of their assets. They all paid 100% cash. That said these guys are just a couple hundred in the entire country of China that serves a several billion dollar industry. Their employees aren't doing what these guys are doing. In a lull between drinking Baiju one older guy smiled and asked me why I was so interested in what these guys did with their wealth. Clearly he was wary of my questions. (In reality I had simply brought up that I had just been vacationing in Vancouver and the rest of them told stories about them buying property there) and setting up their kids in college there and their kids were becoming landlords, starting businesses, etc. He told me that he's got his money in Canadian Banks and he's waiting for the bubble to burst to buy the others guys houses. There is no investment advice in this but much of the stories and anecdotes were confirmed for me in a few weeks of my travels this summer.
Liberty Posted September 3, 2015 Author Posted September 3, 2015 Thought this was good: When 99.9% of folks in Canada talk abt a "historically low debt service ratio," they're using the wrong # #cdnecon
permabear Posted September 3, 2015 Posted September 3, 2015 Thought this was good: When 99.9% of folks in Canada talk abt a "historically low debt service ratio," they're using the wrong # #cdnecon Can you believe stats can reported debt service ratio as interest only until now? What a useless/misleading metric
rb Posted September 3, 2015 Posted September 3, 2015 Can you believe stats can reported debt service ratio as interest only until now? What a useless/misleading metric I am highly disappointed and ashamed by stats can. They don't track a lot of stuff, their interface is total crap, and a lot of data you have to pay for. I think Canada may have the worst statistical service of the developed countries!
gary17 Posted October 23, 2015 Posted October 23, 2015 just to give everyone a sense of how crazy real estate is ... I made an offer on a small house a month ago. didn't get it. a month later a similar property came on the market on the same street. but house was in worse condition and needed to spend more money to have an income suite. so I passed. well, it just got sold for 400k more than the much nicer house I didn't get a month ago...
nodnub Posted October 23, 2015 Posted October 23, 2015 Can you believe stats can reported debt service ratio as interest only until now? What a useless/misleading metric I am highly disappointed and ashamed by stats can. They don't track a lot of stuff, their interface is total crap, and a lot of data you have to pay for. I think Canada may have the worst statistical service of the developed countries! I wonder if the quality of the service is related to the staff cuts made in the last few years? Estimated Job Losses 2012-2016 (Reports on Plans and Priorities) Statistics Canada: 2,230 or 35% of full-time positions via: http://news.nationalpost.com/news/canada/canadian-politics/conservatives-have-wiped-37000-off-the-public-service-payroll-cutting-jobs-faster-than-expected Statscan’s budget has fallen by $29.3-million in the past two years, and its staffing has fallen by 767 people, or 18.5 per cent, in the same period, excluding the census and surveys paid for by outside clients. via: http://www.theglobeandmail.com/report-on-business/economy/lack-of-funds-keeps-statscan-study-from-public/article18088971/
zuokk Posted October 27, 2015 Posted October 27, 2015 https://www.change.org/p/justin-trudeau-keep-the-annual-tfsa-contribution-limit-at-10-000
rb Posted October 27, 2015 Posted October 27, 2015 https://www.change.org/p/justin-trudeau-keep-the-annual-tfsa-contribution-limit-at-10-000 I'm confused about what this has to do with real estate. Also why people this the limit would not be rolled back. It was a proeminent part of the platform.
wisdom Posted November 2, 2015 Posted November 2, 2015 http://www.vancouversun.com/business/bank+mortgages+bags+cash+behind+chinese+home+buys+vancouver/11485324/story.html?__lsa=5235-1262 Study confirms what I have stated several times. 82% of the so called houses bought by new rich Chinese investors are done using financing rather than cash. As a newcomer in Canada one needs no job, no income or credit to borrow. The so called rich immigrants have been playing with other peoples money and loving it.
gary17 Posted November 2, 2015 Posted November 2, 2015 hi Wisdom this is consistent with what i have been learning in the last few months - my wife's family recently sold their house and used a Chinese agent for her connection with the Chinese buyers - the deal was good , but I did learn from her that most of her clients are buying with Canadian mortgages. I also spoke to people I know at TD and RBC and were told that the banks will give them loans provided they can show their incomes in China. Aside from the Chinese buyers; there are also real estate agents and developers in this game - who are bidding up the lot prices. Take for example a North Van lot recently sold for $1.8M... and you could get a brand new 5000 sf house in the same neighbourhood for $2.3M - okay, both are overpriced; but the point is the lot price is way out of proportion than a newly completed house where we know the cost is likely about $150 ~ $200/sf. We will then have suckers like myself, who have a relatively 'good' income in Canada and can likely mortgage our way to buy a $1.5M house in Vancouver , with a bit of parent's help and a basement suite as income helper. I also learn the bank will give you mortgage based on the basement suite rental income - something I was told not possible a few years ago. I am wondering how this game will end - and what it'll do to Canada's economy. ADD: My thought process is that if a few years ago we decided not to trust the accounting of most Chinese RTOs .... why do our banks trust the immigrant's income in China ?
wisdom Posted November 2, 2015 Posted November 2, 2015 To add to that many Canadians are now builders/developers providing a large secondary income. One of their requirements is having an inventory to demolish and re-build as they build anywhere from 1-10 houses a year. In greater Vancouver even if we assume 100 builders hold an inventory of 10 houses each = 1,000 houses are owned by these builders. My best anecdotal evidence says the real numbers would be higher. Thus, a lot of the demand or shortage of housing you see in GVRD is artificial. It will be interesting when the music stops, because the large secondary incomes will disappear and that inventory could come back on the market when no one else can afford it. My best guess - When Canadian RE goes we will have a recession as our natural resources are already hit and housing seems to be the last pillar. RE is struggling in all cities other than Toronto and Vancouver Similar to Japan and US - our interest rates will drop as housing gets cheaper because the BoC will need to stimulate. This is how I see it playing out. Lower housing prices and lower rates going forward.
rb Posted November 2, 2015 Posted November 2, 2015 You guys are pretty spot on. Our RE situation scares the crap out of me. It seems like we've learned nothing from the near miss in 2008 and the disaster south of the border. Oh and the icing on the cake, today RBC removed its $1.25 million loan limit for newcomers with no credit history. I mean what could go wrong with that?
permabear Posted November 2, 2015 Posted November 2, 2015 Our RE situation scares the crap out of me. It seems like we've learned nothing from the near miss in 2008 and the disaster south of the border. The Canadian government quietly propped up the banking industry in 2008-10. So yeah, the 'near miss' was more like kicking the can down the road. Haven't read this report yet, but apparently the banks received $114bn in support from gov't and CIBC, BMO and Scotia were all underwater! Summary: https://www.policyalternatives.ca/newsroom/updates/study-reveals-secret-canadian-bank-bailout Full report: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2012/04/Big%20Banks%20Big%20Secret.pdf I know it's old news (published in April 2012). If this version of events has since been debunked, would love to hear an explanation.
gokou3 Posted November 2, 2015 Posted November 2, 2015 http://www.vancouversun.com/business/bank+mortgages+bags+cash+behind+chinese+home+buys+vancouver/11485324/story.html?__lsa=5235-1262 Study confirms what I have stated several times. 82% of the so called houses bought by new rich Chinese investors are done using financing rather than cash. As a newcomer in Canada one needs no job, no income or credit to borrow. The so called rich immigrants have been playing with other peoples money and loving it. Meanwhile.... How mortgage fraud is thriving in Canada's hot housing market http://www.theglobeandmail.com/report-on-business/economy/housing/mortgage-fraud-on-the-rise-among-brokers-trying-to-help-clients-qualify/article27051297/
rb Posted November 3, 2015 Posted November 3, 2015 Our RE situation scares the crap out of me. It seems like we've learned nothing from the near miss in 2008 and the disaster south of the border. The Canadian government quietly propped up the banking industry in 2008-10. So yeah, the 'near miss' was more like kicking the can down the road. Haven't read this report yet, but apparently the banks received $114bn in support from gov't and CIBC, BMO and Scotia were all underwater! Summary: https://www.policyalternatives.ca/newsroom/updates/study-reveals-secret-canadian-bank-bailout Full report: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2012/04/Big%20Banks%20Big%20Secret.pdf I know it's old news (published in April 2012). If this version of events has since been debunked, would love to hear an explanation. I've read it. The report is worthless. Yes liquidity programs were used but the conclusions the authors draw are erroneous. At first I thought the authors weren't that much aware of monetary and bank funding operations but as I kept reading I realized that they were just being disingenuous.
Aberhound Posted November 8, 2015 Posted November 8, 2015 http://www.acting-man.com/blog/media/2015/11/1-Sweden-property-prices.png Swedish property prices effect of zirp and Nirp. Coming to Vancouver? When marijuana is legalized soon and you can grow the stuff yourself your worries will seem to drift away.
RichardGibbons Posted November 9, 2015 Posted November 9, 2015 Vancouver single family homes are already up far more than this chart in roughly half the time period. That said, they could go up more.
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