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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b5baxter
9 years ago

@Anonymous:

What exactly is nonsense? I was very careful to accurate in everything I said.

– Anthony Watts, whose link was posted in the comment I was referring to, is a former TV weather man. We have no evidence that he has even graduated from university.

– His ideas have been thoroughly discredited: http://climatecrocks.com/2010/11/23/watts-stung-b

– The idea that he is somehow right and all 32 national science academies and 97% of climate scientists are wrong sounds like a conspiracy theory to me.

Anonymous
Anonymous
9 years ago

@b5baxter: …And linking to a discredited media personality spouting conspiracy theories does not lend much credibility. …

Neither does posting nonsense as fact on a RE blog.

shikko
shikko
9 years ago

@b5baxter: …And linking to a discredited media personality spouting conspiracy theories does not lend much credibility.

Thank you for supplying that, so I didn't have to.

Everyone is entitled to their own opinions, folks; but no one is entitled to their own facts.

b5baxter
9 years ago

@Devore:

@Devore:

Stating the phrase ".. science that human-created carbon dioxide did it is much less than clear.." does not make it true. The science is clear.

32 national science academies have come together to issue joint declarations confirming anthropogenic global warming. No scientific body of national or international standing has maintained a dissenting opinion. 97–98% of the climate researchers most actively publishing in the field support the tenets of ACC (Anthropogenic Climate Change) outlined by the Intergovernmental Panel on Climate Change.

And linking to a discredited media personality spouting conspiracy theories does not lend much credibility.

Devore
Devore
9 years ago

@Absinthe: Th science that human-created carbon dioxide did it is much less than clear, or that puny human-driven attempts at reducing it will have a meaningful effect. I'm as concerned about the environment as your local Greanpeacer, but I'd rather instead of spending the trillions on fighting global warming, we spent it on real, actual, fixable, preventable damage being done to the environment right now, polluting our water, air and land.

Absinthe
Absinthe
9 years ago

@Absinthe: (We may not get tornadoes and hurricanes, but they're bleeding money out of our biggest market…)

Absinthe
Absinthe
9 years ago

@chipThe climate science is pretty clear that something has to be done, sooner rather than later. I'm not sure there's any way to deal with it that will be economically easy in a country the size of Canada: but non-stop tornado & hurricane damage, melting poles, raising sea water, failure of crops, infestation of pine beetles… all that costs money, too.

Anonymous
Anonymous
9 years ago

Who knew this blog was a haven for NDP nut jobs?

Best place on meth
Best place on meth
9 years ago

@VHB:

Lowest April sales numbers in 10 years.

Suspicions confirmed.

chinaren
chinaren
9 years ago

@WBCA guy whose father-in-law a high ranking party cadre in China, recently bought a SFH $2M+ SFH in Deerlake and another $1M+ detached near Burnaby hospital. His friends are wondering how he got through fintrac & cra.

chip
chip
9 years ago

@patriotz:

"Things are going to get plenty worse regardless of who wins, because we are headed for a collapse of the Canadian housing bubble and consumer debt crisis which are a direct outcome of Conservative economic policies."

I actually agree with this. But apparently many here haven't read the NDP platform, which clearly states that Canada's largest and most lucrative industry must be phased out, carbon taxes phased in, all the while the federal govt steers the national economy into a green tech revolution that has failed miserably and expensively in every other country it has been tried.

Or maybe you have read the platform, think Clark was misunderstood and Rae a genius before his time.

patriotz
9 years ago

@Jim:

I’m not sure who the conservatives represent, but it doesn’t appear to be small town alberta or BC.

Sure they do – on social policy. On economic policy, they represent Bay Street and the Petroleum Club.

What gets them elected is that the people they represent on social policy don't really understand their economic policy, and the people they represent on economic policy don't really care about their social policy.

VHB
VHB
9 years ago

April 10 year report.

April

sell list sell/list

2001 2253 3556 63.4%

2002 3785 5215 72.6%

2003 3095 4139 74.8%

2004 4106 5665 72.5%

2005 4043 5731 70.5%

2006 3345 4452 75.1%

2007 3490 5724 61.0%

2008 3218 7010 45.9%

2009 2963 4649 63.7%

2010 3512 7648 45.9%

Mean 3381 5379 62.9%

median 3417.5 5440 67.1%

VHB
VHB
9 years ago

Here are the final numbers. We are missing data from two days. Those two days are projected using the 5-day moving average.

April 2011 month-end projections

Days elapsed so far 17

Days missing 2

Days remaining 0

5 Day Moving Average: Sales 146

5 Day Moving Average: Listings 269

SALES

Sales so far 2552

Projection for rest of month (using 5day MA) 292

Projected month end total 2844

NEW LISTINGS

Listings so far 4827

Projection for rest of month (using 5day MA) 538

Projected month end total 5365

Sell-list so far 52.9%

Projected month-end sell-list 53.0%

Jim
Jim
9 years ago

Then people will see the right for it really is, not wooly cardigans, but beholden to big oil and small town Alberta social values —————————————- Interesting that Wikileaks revealed that Harper screwed his power base on the issue of senate reform. The Americans noted that he wouldn't pay a price for breaking his promises, since the people who care about senate reform are mostly western conservatives who support him. That doesn't sound like the conservative party is beholden to the values of small town western values. In fact, that is a major deviation from them. (You could make the same comment about his immigration policy, keynesian stimulus programs and the like). In short, I doubt your theory is correct. I'm not sure who the conservatives represent, but it doesn't appear to be small town alberta or BC. The sad part… Read more »

Anonymous
Anonymous
9 years ago

@patriotz:

If you want to show the door to Steve and company, vote for the NDP or Liberals in your riding based on who did best in the last election. Make your vote count.

Here's the results from the 2008 election for each riding:
http://en.wikipedia.org/wiki/Results_by_riding_fo

fixie guy
fixie guy
9 years ago

#36 chip Says: "Canada is the most trade dependent country in the G7 …

If you don’t think things can get any worse, you’re not trying very hard."

Good point, the Conservative focus on stimulating unsustainable consumption via housing is about the worst possible trade-negative thing they could have done. We lost a crucial decade of infrastructure, research and industrial investment by making sure that money was diverted to their bank buddies through taxpayer loan guarantees. Golf clap.

patriotz
9 years ago

@chip:

If you don’t think things can get any worse, you’re not trying very hard.

Things are going to get plenty worse regardless of who wins, because we are headed for a collapse of the Canadian housing bubble and consumer debt crisis which are a direct outcome of Conservative economic policies.

Anyway the only feasible outcomes of today's vote are a Conservative minority or a Conservative majority. The NDP is going to finish behind the Cons and the Liberals are not going to put them in government. I know which outcome I would prefer.

A third Cons minority would prove the failure of Harper's extremist politics. If you want to show the door to Steve and company, vote for the NDP or Liberals in your riding based on who did best in the last election. Make your vote count.

chip
chip
9 years ago

@Patiently Waiting:

"We already have high unemployment and businesses closing. I honestly can’t see how the NDP would be any worse."

If unemployment is high and businesses are closing what effect do you think higher taxes and more regulation, particularly on the energy industry, will have?

Canada is the most trade dependent country in the G7 with a third of all exports being energy. Alberta and its oil sands contributed a net $14 billion to the rest of Canada last year.

If you don't think things can get any worse, you're not trying very hard.

Extremely rich Van h
9 years ago

@pricedoutfornow:

In China the ball game is different;wealth depended on who you backers are and how long they gonna be in power.Successful businesss is not depended on sale but back-door lending from national piggy banks,they all belongs to one boss,the party.Therefore,it could only take a individual only few yrs to generate billions of dollars.China is full of gold if you had the right connection.

Extremely rich Van h
9 years ago

@jesse:

What does it relevant to RE here? Indeed, such policy will meet fear resistance from Chinese employers in Hong Kong who is cunning enought to find loopholes to exploit their fellow campatriots.Eeve,here those cunning Chop-Suey Restaurant owners can still find ways to bypass labour law.

jesse
9 years ago

Minimum wage law comes into force… in Hong Kong: Minimum wage enforced in Hong Kong Hong Kong's minimum wage ordinance takes effect from Sunday, as a milestone for protection of the grass-root labor rights in the city. According to the ordinance, wages payable to an employee in respect of any wage period, when averaged over the total number of hours worked during that time, should be no less than the statutory minimum wage rate of 28 HK dollars (3.6 U.S. dollars). Employees are covered by the statutory minimum wage, regardless of whether they are monthly-rated, daily-rated, casual or part-time, and whether or not they are employed under a continuous contract as defined in the Employment Ordinance. The minimum wage applies to the disabled, but is not applicable to live-in domestic workers, student interns and work-experience students. Minimum wage laws on… Read more »

Patiently Waiting
Patiently Waiting
9 years ago

Do you think Tsur, Cam Good, Bob Rennie, Helmut, all the realwhores and mortgage peddlers of BC want you to vote NDP?

There you go, you know what to do today.

Patiently Waiting
Patiently Waiting
9 years ago

Harper warns of "lost decade" but we're already in one. That's what he doesn't get. We already have high unemployment and businesses closing. I honestly can't see how the NDP would be any worse.

http://www.theprovince.com/news/decision-canada/H

Anonymous
Anonymous
9 years ago

@Frank Reader:

Restaurants have been paying their staff $10-$12/hr under the table for years now. Those paying $5-$8/hr hire mostly foreign ESL students, and the restaurants change hands every few years for a reason.