US real estate, Vancouver, and Currency

Foreign investors coming to Canada must be either oblivious to the relative valuations of Vancouver vs US real estate or are as dumb as a post.  The chart below demonstrates just how much of a spread has developed between Vancouver home prices and US home prices in Canadian dollars. For a rational foreign investor buying investment property the decision should be a no-brainer: World class US cities priced at distressed multiples and in “cheap” greenbacks ,or an over inflated Vancouver market which is priced at unsustainable income multiples and in a currency that has seen strong appreciation.  As you can see from the chart the relative valuations have gone from pillar to post – with US home prices at one time valued at approximately 2X Vancouver to now being valued at roughly 1/2 of Vancouver prices.

What is it then that makes foreign investors ignore the fire sales across the border? Is it our free health care system that they are coming for???  If the rich immigrants are as rich as we hear, why would they need a free health care system especially when an affluent individual can set themselves up to receive better health care in the US.  Are there massive tax differentials on foreign owned property to justify the spread?  It is most likely the “buy in” to Canadian citizenship which is the draw for many.  As well, the herd mentality must also be a contributing factor.

In any event – I doubt that these relative valuations can be maintained – What do you think?

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pricedoutfornow
Guest
pricedoutfornow

Which is why I just don't believe in the "rich foreigner" theory. Unless they really do have rocks for brains.

registered
Member
registered

Or are, for example, new naive money from a culture that's never seen real market capitalism. Great learning opportunity.

Thurston Howell
Guest
Thurston Howell

Rich people don't have rocks in their brain.
And they are not inflating the bubble.
People who buy the BS pushed by scum like Rennie deserve the inevitable.

Burpy
Guest
Burpy

@pricedoutfornow:

Well, if you've ever walked into TNT super market, you will see that they eat pig snounts, chicken feet and fried pigs blood. No joke. They can't be too smart.

chinaren
Guest
chinaren

According to HAMs, China is printing money faster than helicopter Bernanke. People are getting their money out as fast as they can before $hit hits the fence.

On another note, China now allow their ex-citizens to renounce their foreign citizenship and will give them back their Chinese citizenship and passports.

frank
Guest
frank

I would actually like to see Harper get back in with a majority, with Jack Layton as a strong badgering opposition. Why?

I think we are in for some hard times, once all the debt they accumulated is reconcilled, and they aren't going to do it by raising taxes on corporations..so you can imagine who's hide it is going to come out of. Also if they get a majority they can bring out all their anti-gay, anti-abortion policies that they have been hiding in the closet.

Then people will see the right for it really is, not wooly cardigans, but beholden to big oil and small town Alberta social values and they will be kicked out of power for a generation, much like Mul-ruiny and his gang were, when the Conservatives were reduced to two (yes two) seats.

squidly77
Guest

My apologies for any comments made under my moniker last night, may there be a lesson to all, always log out. Peace and cheers.

Stu
Guest
Stu

Hey crew, big Stu here setting the pace. Looks like Luongo was wearing his panties again tonight, bit of drama queen that tart. Jack should come to Vancouver more often, me thinks baldie has rice fever. Anyway the foreigners know, you might find a parade here in June but they won't find a land making machine.

patriotz
Member
Active Member

What is it then that makes foreign investors ignore the fire sales across the border?

Because they're not really investors – i.e. people who are looking for a financial return. The actual offshore buyers are buying RE for other reasons.

And because there are so few of them, they cannot possibly be driving prices metro-wide. It's just a classic domestic credit driven bubble like anywhere else.

jesse
Member

"What is it then that makes foreign investors ignore the fire sales across the border?"

There are a few potential reasons.

1) The lending situation in Canada is preferable compared to the US's.

2) Canada is seen as a preferred immigration destination and that is driving up perceived future value.

3) The investment is momentum (read: dumb) money.

4) As was pointed out, there may not be that many foreigners investing at all, but as long as people think there is that's all that matters for now. Google "gold rush".

Runawayscreaming
Guest
Runawayscreaming
Vancouver is the Best Place on Earth to buy a foreign hideout or a house for your delinquent children to live in while you are abroad pilfering money from the people of your home country. The veracity of your forged immigration documents will never be checked. Even if you or your spoiled children and disenchanted wife never plan to emigrate to Canada you can hire gardeners who speak your language to cut the lawn of your empty Vancouver house. The residential property taxes in Vancouver are very low and there lots of experts available to help you remove your ill-gotten gains into expensive Vancouver real estate. If you are a criminal immigrant/"investor immigrant", Vancouver is the perfect place to set up a personal income tax evasion scheme that the Canada Revenue Agency will never check. If you need to do… Read more »
victoria
Member
victoria

Property is still high in Victoria and I don't see any influx of HAMs here. Property is slowly going down but not fast enough.

blueskies
Guest
blueskies

where is Dave in all this?

probably stuck on the other side

of the looking glass with the

Trumpian Teaparty knuckle draggers

he can see us but we can't hear him scream………

Raven
Guest
Raven

@blueskies:

"where is Dave in all this?"

I think the low life is taking an advantage of the flying weather, spending his folks' money, while his brother is pumpimg, and with some succcess, RE in the Main & 33rd area.

Jenny The Troll
Guest
Jenny The Troll

@Stu:
Anyway the foreigners know, you might find a parade here in June but they won’t find a land making machine.

Here we go again, another asshole claiming shortage of land, in one of the most unpopulated, and second ,largest country in the world.

And who needs a land making machine, the stuff never wears out.

Anonymous
Guest
Anonymous

open house in my apartment building in Kitsilano this weekend, Sat and Sunday, 2 "lookers" on Saturday and only 1 party through today.

This is a fairly reasonably priced condo (compared to others, ridiculously priced in actuality).

I'd say if this is any indication, the market on Vancouver's West Side might be starting to soften.

WBC
Guest
WBC

"Which is why I just don’t believe in the “rich foreigner” theory. Unless they really do have rocks for brains."

Well stealing money from Chinese peasants is one thing, investing that money is a completely different game.

pricedoutfornow
Guest
pricedoutfornow

Rich people don't tend to stay rich for long when they make silly (and in the case of Vancouver real estate, downright stupid) investment decisions.

Supraboy
Guest
Supraboy

With the rise of the canadian currency, there will be more people loading up houses in Canada and use it as a safe haven. If you had cash as a Chinese, Russian, Iranian, etc…where would you park it? USD? Gold? Silver? Or Canadian real estate? The other option is parking it in Australia.

Supraboy
Guest
Supraboy

@pricedoutfornow:

Poor people who rents stay poor for a reason.

Prca
Guest
Prca

@Supraboy:

Supra??? You are still around? I would think you forgot about this place with your recent genital reconstruction and sex affirmation surgery while being super-busy servicing your wealthy clients even more enjoyably and eagerly. Welcome back!!!

bubbly
Member
bubbly

I suspect that on the margin, the market is being pushed up by ninjas. A ninja can get up to $750,000 mortgage and buy two properties. That are the "official" rules. I bet that they can borrow more with a little creativity.

Jim
Guest
Jim

Osama Bin Laden's death with re-ignite the US economy. And real estate.

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