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A sustainable housing market.

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Many people have pointed out this CBC news video about a couple of recent sales in Vancouver and VREAA has a good breakdown transcript of the story and some opinions on it.

This story has everything you need to kick off another year of real estate mania in Vancouver BC: a dilapidated tear-down selling for half a million over asking price, hundreds of thousands in profit for holding a house for a couple of months, whispers of wealthy foreigners and a grinning salesman hoping it never ends.

So what do you think? Can the multi-year rise (pretend 2008 didn’t happen) in Vancouver house prices carry on indefinitely? If you’re bearish on the local market are you starting to doubt your outlook? Does the current market have you thinking about moving to a different economy or just taking on a giant CMHC backed mortgage and buying here? How is the Vancouver real estate market affecting your day to day life and outlook?

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blueskies
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blueskies
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an irrational market can remain irrational
longer than you can remain solvent…..

YVR RE is completely irrational
you jump in at your own peril…..

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7 years 5 months ago
JordanClark
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This market is insane, the longer it goes on the worse off everyone here will be in the long run. The prices just flat out don't make sense, there is no justification and people need to realize huge debt comes with real risks. People who got in at the right time might be better off but they do so to the detriment of the younger generations, who will be relied on to pick up the economic torch some day. What will happen when they aren't there or still up to their eye balls in debt? We've been waiting for years and have pretty much given up on greater Vancouver. The market here will collapse some day, but that whole process will probably take many more years, people here are extremely stubborn about the eternal value of real estate and will… Read more »
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7 years 5 months ago
patriotz
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@JordanClark: people here are extremely stubborn about the eternal value of real estate and will take nothing before reducing prices. Like they weren't stubborn in the US, Ireland, etc? RE prices are always determined by the buyers, not the sellers, because someone always has to sell (including builders of new stock), but nobody has to buy. RE busts happen because the market runs out of buyers at current prices. The reason prices usually fall slowly is that buyers (and the governments that enable them) are slow to get real. And I don't care how soon prices become reasonable because I don't plan to live in the city long term and have no aspirations to buy. I do think that if reality doesn't return soon Vancouver will see the biggest hollowing out of the middle class in Canada since Montreal after… Read more »
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7 years 5 months ago
Bizznitch
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http://www.timescolonist.com/business/Locals+boug…

So much for rich Asians snapping everything up left and right by the thousands!

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7 years 5 months ago
Vancouverite
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Count me among those who have had enough. I was born and raised in Vancouver. I am at the very top of my very high earning profession here, like my husband. We own a SFH on the west side (it is respectable by Vancouver standards but pretty modest by the standards of any other city) and we are almost mortgage-free. While we would like to buy a bigger house since our kids are getting older, we won't. This bubble is certain to burst sooner or later and we work way too hard to throw our money away competing with buyers who are up to their ears in temporarily cheap debt. We know how long it takes to save $100K. Although our extended families are here, we are actually giving serious thought to moving elsewhere in Canada or even to another… Read more »
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7 years 5 months ago
LY
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if rich asians immigrated to Canada and bought a house, they will be under the first time buyer or locals category and not in the

3% "buyers from outside Canada" category. Many of the buyers I met when I was checking out open houses in Vancouver are immigrants from Asia and not foreigners. And they prefer to live in Greater Vancouver than Victoria.

I rented for 5 years in Richmond waiting for house prices to correct. Everytime its about to go down, the gov't will intervene. As long as mortgage terms in Canada are lax and rich immigrant's money continue to flow in, I don't see any sizable correction in housing prices especially in bubbly vancouver. I gave up on Vancouver, move to Toronto and bought a house. Adios Vancouver too.

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7 years 5 months ago
"A-Sharp"
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@LY:

I've stopped trying to predict the housing market…

and begun trying to predict debt growth/decline, which is not any easier BTW. As long as debt continues to grow faster than income, everything will feel fine.

If we shoot the Debt-income % to 170 this year, we could see house prices rise by 10%. This is within the outliers on the realm of plausibility.

If debt levels flatline then we will see prices drop.

The truly scary thing is that 2010 showed very moderate house price growth (canada wide) and still showed high debt growth.

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7 years 5 months ago
jesse
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That CBC article ignores that particular prop was listed well below market. We see these all the time on the west side; it's almost a strategic play to drum up a fear and greed fueled frenzy just in time for the spring buffalo jump. The media are more than willing to abet.

Don't fall for it. When was the MSM ever in tune with an impending crash?

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7 years 5 months ago
Renting
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@JordanClark:

The condo life sucks. Luckily I’m a dual citizen so I’m in the process of sponsoring my wife and moving down to Washington State. I wish this was an easier option

There is an easier option – RENTING

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7 years 5 months ago
Renting
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That CBC article ignores that particular prop was listed well below market.

Exactly. Tear down houses (lot value) in Vancouver West have been selling for 1.5 Mil since 2007. This is nothing new. Just a staged news story that sucks in the masses to thinking prices just went up 30%.

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7 years 5 months ago
Ridiculous
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if 1.6M = 3x the annual family income of the family that bought that place and the cost to rent a comparable property >$10,600 month, I guess it was a good deal.

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7 years 5 months ago
Troll
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@jesse: Assessed value was $1.35M.

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7 years 5 months ago
Junius
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#5 Vancouverite, Great post. Your comments on the difficulty of attracting professional talent ring true to me. As someone who has to do this in his job it gets harder and harder every day. It is also tragic the number of young, bright people who gave up jobs in more traditional industries such as teaching, engineering or even law to go into Real Estate on the promise of greater riches. Where will they be when the market has crashed and Real Estate is a dead end for a decade? We have been very short sighted in this City. It cannot be said enough. The pimps and bulls should enjoy their last days while they can. However all of us are going to have to live with these short sighted policies for decades to come.
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7 years 5 months ago
Steve
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@jesse: The US media predicted their housing bubble collapse years in advance giving everyone lots of warning..

Oh. They didn't?

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7 years 5 months ago
Mr 4 / bad luck re 4
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Could this be also about CBC saying to Global:

" we can buy advertising business , just as well as you"?

Or:

Are the CBC reporters as retarded as the global/ cknw/ 24hrs etc etc?

This to me looks like a staged event.

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7 years 5 months ago
patriotz
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@LY:

if rich asians immigrated to Canada and bought a house, they will be under the first time buyer or locals category and not in the 3% “buyers from outside Canada” category.

And in 2009 there were 5,558 such people (including dependents) arriving in BC, which is probably about 1,500 households or so, or about 1/5 of 1% of existing households in metro Vancouver.

http://www.bcstats.gov.bc.ca/data/pop/mig/immLand…

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7 years 5 months ago
patriotz
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@jesse: When was the MSM ever in tune with an impending crash? http://www.nytimes.com/2005/08/08/opinion/08krugm… This is the way the bubble ends: not with a pop, but with a hiss. Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust. So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already have started. Of course, some people still deny that there's a housing bubble. Let me explain how we know that they're wrong. Of course it's… Read more »
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7 years 5 months ago
Troll
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@patriotz:

And in 2009 there were 5,558 such people (including dependents) arriving in BC, which is probably about 1,500 households or so, or about 1/5 of 1% of existing households in metro Vancouver.

That's flawed logic, because you are assuming that immigrants are buying in the same year that they arrive. How do you know that's the case?

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7 years 5 months ago
french
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The RE is not affecting me in anyway yet, but this rainy foggy never ending wheather is making me depressed. Last time we had some sunshine was last year around December 28. I dont know what people find attractive here, especially during winter it sucks.

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7 years 5 months ago
patriotz
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@Troll:

That’s flawed logic, because you are assuming that immigrants are buying in the same year that they arrive.

No I'm not, I was simply pointing out the actual number of "rich immigrants", which is much smaller than most people think.

It was the previous poster who was talking about purchases by such people.

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7 years 5 months ago
registered
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18 Troll Says: "That’s flawed logic, because you are assuming that immigrants are buying in the same year that they arrive. How do you know that’s the case?"

That's flawed logic, because it implies buyers from 'other years' are hidden in the 2009 stats when the data clearly shows mid-5K is peak for any year going back to the mid-Nineties. The latter is interesting in itself.

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7 years 5 months ago
DaMann
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What a great fear mongering pump piece by the CBC. As other posteres have mentioned there was no mention of lot size or anything. It looked from the vid that it was a 50 foot lot. They have been going for $1.5 million for a long while now. What was more disturbing was the other house that flipped for a $300k profit in 3 months, that one left me scratching my head. Things get more irrational closer to the pop, but I do have to admit that I have given up on this city. It's a whore to RE.

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7 years 5 months ago
Troll
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@patriotz: Point is, just as bulls are guilty of overstating the effect of foreign money, bears are guilty of understating it. Those stats of immmigration rate or number of foreign buyers doesn't really tell us much. What we need to know is how much money not derived from local incomes is pouring into Vancouver RE and particular sub-markets. That would settle the debate immediately. Until then, bears and bulls will continue to point to numbers that suit their bias, neither painting a convincing picture.

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7 years 5 months ago
Troll
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@fixie guy: Have you compeleted your homework yet and learned the difference between real and nominal? Or how interest rates work? Or anger management?

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7 years 5 months ago
pricedoutfornow
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How has RE affected me? Well, for one, I have a whole pile of cash that could potentially be used for a healthy downpayment, if prices were what they were in 2001. If I were to drop that on a downpayment today, it wouldn't get me very far. Plus the cost of carrying the mortgage would make my living costs go up by over $1000 a month (more when interest rates rise!). For another thing, every family gathering with my SO ends with questions from the inlaws as to why I haven't bought yet, why am I throwing money away on rent. No matter how often I explain I'm actually SAVING money, they just harp on about how "Real estate always goes up." Talk about zombies. I do wish I had a dog though, which would be a million times… Read more »
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7 years 5 months ago