@WORLDS GREATEST LOVER:

130

X WORLDS GREATEST LOVER Says:

The argument against your point was posted by someone else above. To wit: Illegal drugs are not a new occurrence in BC, so they can’t be blamed for the rise in house prices.

++++++++++++++++

I never blamed the "invisible tenant" for the rise in house prices, I said it was a contributing factor. I never based my statements on manufactured statistics or anecdotes masquerading as fact, but rather real life experiences. I'll say it once more; I've met more than a few people who only can afford their homes because of the grow op in the basement. This inflates the housing bubble. Billions of dollars are "laundered" in this province every year with a large percentage undoubtedly going into real estate.

@No Longer Looking:

Totally naive. Latest grow op bust in Shaugnessy? Young couple with a pit bull cross and a preschooler. Met the mom, kid and dog in the park a few times….

@Chilled: The problem with the 'invisible tenant' investors is that it's real easy to remove them from the marketplace. Anyone paying their mortgage by growing weed in their basement is one phone call away from a heap of trouble. I suspect the city will start being more aggressive about seizing property due to drug crimes now that they have their own money problems.

That's not really the argument against your point though. The argument against your point was posted by someone else above. To wit: Illegal drugs are not a new occurrence in BC, so they can't be blamed for the rise in house prices.

Re: "invisible tenant"

Why oh why do people bother buying a house and then have a couple or family move in downstairs? Doesn't this somehow defeat the purpose of "single-family housing"? It just seems ridiculous to brag that you now "own" a SFH, yet in actual fact it is NOT a SFH. Why not forget about the tenant issues and just buy a townhouse? Some of the houses in Vancouver barely have yards anyway, so what's the point?

I swear, people are CRAZY!

@patriotzed:

116

X patriotzed Says:

March 7th, 2010 at 4:46 am

@chilled:

The proof that actual incomes (whether reported or not) are not any higher in Vancouver than in Calgary, Toronto, or Ottawa is that rents aren’t higher. For any kind of property from Surrey basement suites to Shaughnessey mansions.

Period.

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Proof of what? I don't give a rats ass what statistics say, yours or anyone elses. The fact is I know a few people who are able to pay the mortgage ONLY because of the "invisible tenant" in the basement. My point was, BC's multi-billion dollar a year drug industry helps to artificially inflate the real estate bubble. I'm unsure how anyone can deny this. To what degree, who knows?

[…] March 2010 · Leave a Comment Clarke at vancouvercondo.info 6 Mar 2010 4:58 pm – “In my own line of work, I get access to a lot of private company info including […]

[…] March 2010 · Leave a Comment scullboy at vancouvercondo.info 6 Mar 2010 9:25 am – “I [also] gave up caring about ownership, and actually I had a good hard look around […]

Asking $260k for a condo that looks eerily similiar to the developments at Arbutus and 12th…except it's in Seattle…

http://www.trulia.com/property/1040377334-1610-Be…

Also, agent Will's weekly stats – 8700 total listings in Van now – he does not include Surrey and the Valley in his numbers.

A quick search on Trulia at total Seattle listings shows 4,100.

hhhhmmmmmmmmmm

[…] Absinthe at vancouvercondo.info 6 Mar 2010 12:36 am – […]

[…] Dr. Know at vancouvercondo.info 5 Mar 2010 5:16 pm – […]

"The marginal buyers are the ones who are the least able to afford any good or service. "

Perhaps marginal in the sense that they make up a minority of buyers, but perhaps not in the number of homes bought. Drug industry types own (for operations) or buy for investment 3, 5, 12 and 20 properties. These aren't numbers I pluck out of the air but the numbers for certain individuals I hear about.

Or you can read the SCMP or other papers in HK or China and it's quite remarkable how often stories about corrupt officials contain details about the number of homes they own in Vancouver (one HK policeman had 12 properties in Vancouver).

Fat Lai didn't flee to Vancouver on a whim. Vancouver is a haven for these types of people.

A house is not just an investment, Mr. Milevsky cautions. Although equity in your home may increase annually, the net gain can be calculated only after totalling property taxes, repairs, landscaping, maintenance, etc. – the costs of consumption. Factor in all of these, he says, and many homes will register a negative internal rate of return. This applies, he confesses, even to his own house; although its sticker price is higher than it was when he bought it several years ago, his actual return if he sold it next month would be negative, given the other funds invested in it. As with education, other considerations – neighbourhood, schools, proximity to houses of worship – will inevitably influence decisions about buying or renting. But Mr. Milevsky argues that too many people ignore, at their peril, the implicit consumption costs of owning… Read more »

Is this true? From a link on Ben Jones'Housingbubbleblog:

"According to Businessweek Magazine, Vancouver faces $700 million in financing for the luxury condos used by Olympic athletes in February, and the city needs to sell 474 units for as much as $10 million each to recoup its lending. These condos overlooking False Creek could otherwise prove damaging to Vancouver's credit rating."

$10 million…EACH??? Is that for real? Is anyone not just a little bit terrified? If I were a Vancouver property owner I'd be scrambling to sell my house right NOW.Heck, this makes me want to leave BC!

@rp: I believe they have to qualify for the 5 year posted rate no matter what term they take for an insured mortgage. Once they're qualified they only pay the discounted rate, but that 5 year posted rate is now the hurdle to get qualified for any CMHC insured mortgage.

@Ulsterman:

The richest 0.1% of dealers reap 99% of the profits and maybe they are the buyers at the margin pushing up the prices.

That is completely backward. The marginal buyers are the ones who are the least able to afford any good or service. The people with the deep pockets aren't setting house prices in Vancouver (except of course for the most expensive properties) any more than Bill Gates and friends are in Seattle, which happens to be 1/2 the price of Vancouver.

@Chilled:

The proof that actual incomes (whether reported or not) are not any higher in Vancouver than in Calgary, Toronto, or Ottawa is that rents aren't higher. For any kind of property from Surrey basement suites to Shaughnessey mansions.

Period.

@Chilled:

Chilled, i don't doubt the sincerity of your assertion, but no, none of my house-owning friends has the invisible tenant downstairs.

I do agree that the $7bn has to go somewhere. Maybe the drug market is like capitalism on steriods. The richest 0.1% of dealers reap 99% of the profits and maybe they are the buyers at the margin pushing up the prices. I don't know of course, but what i do know is that it cannot be average people buying average houses with their average wages.

chilled – so drugs only appeared in BC in 2003, eh?

@anonymous:

thanks a lot. i was looking for some hard data on that. it seems it is stricter than I thought. I wonder how serious the actual implementation will be (e.g., can there be 'smart' brokers which find a way around the rules — what we normal people call fraud)?
If people have more info about this, i would really appreciate it. It is a big deal.

Thanks anonymous, here's the original news link:
http://www.canadianmortgagetrends.com/canadian_mo…

So the posted 5 year rate will be used to qualify CMHC insured mortgages now. As of today that rate is 5.39% – that's a big jump – or a big drop in 'affordability' for insured mortgages. I guess we're about to find out if the market in Vancouver is driven by people stretching for insured mortgages or by people putting more than 20% down. Should be an interesting summer in the Vancouver real estate market!