Cambie-fornia, Compare and despair.

Remember when a million dollars was real money?

It’s always fun to compare what your Vancouver home dollars will get you in less fortunate countries.

A commenter by the name of mortgage posted this delightful contrast.

Here’s what $2.5 million will get you on a major street in the Cambie corridor, walking distance from the world famous ‘Oakridge Center Mall’.  This 1948 beauty is located near the vibrant heart of Vancouver, where the sun always shines:

Somewhat south of there is a place called Beverly Hills California.  If you take your $2.5 million down there you’ll find something like Dudley Moores old digs:

..but you wouldn’t be walking distance to Oakridge Mall.  They have a Zellers.

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Guy Smiley
Member
Guy Smiley

Lapre!! Lapre!! Lapre!!

Where are you buddy, i haven’t logged in to see your morning greetings for awhile now. Sleeping in??

I just finished reading yesterdays posts and had some thoughts regarding the furnished apts. Any tax lawyers on the forum available to tell me if this is a remote possibility?

If those properties were owned by people who only used them occasionally and who also happened to be in a high earnings bracket, could they not be put into a rental pool and rack up losses all the time they sit empty? They don’t acutally want anyone to stay in there vacation home, hence the outrageously high prices. But come tax time their purpose-bought investment condo keeps losing money because nobody will rent it ……

VMD
Member

New guidelines coming for mortgage insurers
– another round of tightening in a few months. We haven’t even observed the full impact of 2012 CMHC/OSFI rule changes yet! Looks like someone up top is antsy to … un-embiggen the bubble balloon.
Nov. 19 2012
“Canada’s financial regulator will release new guidelines for mortgage insurers early next year, including the government’s CMHC. – but they won’t drag down the housing market as much as the guidelines for banks have, says the country’s banking watchdog…

..Mr. Flaherty moved to put CMHC, which dominates the mortgage insurance business in Canada, under OSFI’s authority earlier this year.”

G
Guest
G

“but you wouldn’t be walking distance to Oakridge Mall. They have a Zellers.”

I am also not happy with Van RE’s sky high prices, but the person who wrote this comment just sound like a loser.

Naked Official #9000
Guest
Naked Official #9000

@G:

You’re not exactly a ray of sunshine, either.

gordholio
Member
Guys/gals: Ever heard of a place called 17 Mile Drive? I was there last year (in January – to interrupt the never-ending BPOE grey/rain). It winds through the southerly portion of the Monterey Peninsula, adjoining hoity-toity haunts like Carmel and the Pebble Beach Golf Course. A stunning little road that hugs Pebble Beach and takes you right down to one of the most beautiful coastlines you’ll ever see. Windswept trees, massive rock outcroppings, super-soft sandy beaches, pelicans, sunshine, etc, etc. (They charge you something like $10 just to *drive* it.) Anywho, there are private homes all along this rarified road, including a number of $20 million palaces – and I mean *true* palaces. Yet you can also buy on the Drive for under a million. And for the sum mentioned in today’s post, you get, well, this: http://mls.carmel-realty.com/index.cfm?Fuseaction=Detail&MLS=81240090 Plus, you… Read more »
patriotz
Member

Flaherty’s rule changes will bite hard: mortgage brokers

The country’s mortgage brokers are taking aim at Jim Flaherty.

The Finance Minister’s moves to slow down Canada’s housing market have gone too far and are putting the economy at risk, the national mortgage brokers’ association argues in a report to be released Monday.

The economy is at risk all right – the fake economy based on ever-increasing consumer debt which these people have been pushing. That’s what’s gone too far. Sure didn’t hear these jokers complaining when Jimbo fuelled the ride up in 2006.

Just leave the keys to the Bimmer on the counter guys.

Anonymous
Guest
Anonymous
Last week in The Daily Beast: “Vancouver has been a popular destination for Chinese, driven in large part by its proximity to China and its spectacular feng shui,” notes Jamie MacDougal of Sotheby’s International Realty…But MacDougal notes that Chinese offshore buyers arriving in Vancouver spiked to truly unsustainable levels in 2011, during which bidding wars were regular events and property values rose by the week… The current market, notes MacDougal, has changed from one in which Chinese speculators were trading among themselves to one in which the market is “flooded with inventory” and “mainly Chinese sellers” are responsible for the supply. MacDougal’s thoughts are backed up with hard facts. The Real Estate Board of Greater Vancouver notes that in September 2012, the number of transactions of detached, attached, and apartment properties fell 32.5 percent from September 2011. Further, the total… Read more »
Makaya
Member
Makaya
From Mish’s blog: How Sustainable are China’s Copper, Cotton, Steel Imports? What About Chinese Purchases of Canadian and Australian Real Estate? Fresh Thinking on Balance of Payments What About Canadian and Australian Real Estate? Pettis states “The demand for real estate may or may not abate at some point in the future, given the size of Chinese demand to hold assets in a safe place – a demand which is not likely to drop with slower Chinese growth but rather to speed up.” Demand to get money out of China will likely speed up. However, and in a rare (albeit slight) disagreement with Pettis, I suggest demand for real estate is likely to plunge once real estate investment is no longer consider a safe haven. Property bulls in Australia and Canada will not know what hit them once that “safe… Read more »
MM
Guest
MM
@Makaya “I suggest demand for real estate is likely to plunge once real estate investment is no longer consider a safe haven.” I am not a RE bull, but I have something to add. What if Chinese rich people who are attempting to launder ill-gotten money out of China and park their money in Van RE view RE losses as the cost of laundering money? Let’s say Van RE goes down 50% in price. That means the Chinese investors still have the other 50% of their capital–that may be more than what they would have if they left their money in China and the Chinese authorities confiscated it or it was lost in a Chinese RE crash. Not even the most extreme RE bears are predicting a 100% drop in Van RE prices–bears ackowledge that Van RE will hold some… Read more »
MM
Guest
MM

Correction to previous post:

“I don’t think your disagreement with Pettis is “slight” at all. This is a very significant disagreement.”

It was Mish saying they had a slight disagreement with Pettis, not Makaya. I misread where the quote from Mish’s blog ended. Sorry.

MM
Guest
MM

A quote from Pettis on Mish’s blog post linked to by Makaya:

“My point more generally is that growth in China is likely to be negatively correlated with Chinese demand for foreign real estate and positively correlated with Chinese demand for commodities.”

Stated differently, negative growth (ie. recession) or perhaps even just slowing rate of growth in China is **POSITIVELY** correlated with Chinese demand for foreign real estate and **NEGATIVELY** correlated with Chinese demand for commodities.

**IF** these correlations are true and **IF** the Chinese economy is in for a rough patch, then this argument is a BULLISH argument for Vancouver real estate and a BEARISH argument for commodities.

painted turtle
Guest
painted turtle
@Makayana For once, I disagree with you. Those investors have the choice to invest in many other countries and the US is trying hard to attract them. Why buy an asset that is falling in value? They became attracted to Vancouver RE after the Olympic media buzz. 10% appreciation of an expensive home, good schools, trendy destination, Mom could come over with the kids and make $100,000 by just staying home. I bet in the last 18 months they discovered high taxes, high prices for everything, continuous rain (2011 was a great one!), traffic congestion. The world class city, aka BPOE, appeared like a regional centre with nice Feng Shui and a lot of boredom. Some wives even called it ‘immigration’ jail. And I am not sure they felt welcome in all neighbourhoods. And, not to offend anyone, but the… Read more »
painted turtle
Guest
painted turtle

Sorry , I meant ‘disagree with MM’, not Makaya…
I should drink my breakfast before typing…

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

@Makaya:

What’s there to comment on? Pettis and Shedlock are in disagreement. But of course bear logic causes you to be blind to the facts that don’t support your position.

Australia real estate isn’t “toast”. It’s up on an annual basis.

Once the leadership hand over has settled in Beijing the flood gates will open again. Be prepared to get priced out again.

I saw a mainland china tour bus checking out the Olympic oval and the river green development this weekend.

painted turtle
Guest
painted turtle

@ Bull Bull Bull:

I hope they enjoyed the weather!

MM
Guest
MM
@Painted Turtle: I hope you are right! I really detest Chinese investment in Vancouver real estate driving up prices and pushing out locals. The argument I laid out that you are disagreeing with is not an argument I am married to. I was just getting my argument from the quotes by Pettis in the Mish article that Makaya posted. I don’t know which argument is right, Pettis or Mish. Both arguments seem logical to me. It is interesting to point out though that your argument about why the Chinese may be turned off Vancouver real estate is all about individual Chinese subjective reactions to life in Vancouver. At this juncture, the arguments quickly depart from economic fundamentals/quantitative statistical stuff into subjective human experiences. The messy reality is that most people are not entirely rational economic actors. People make their decisions… Read more »
Potomac
Guest
Potomac

Why would Chinese invest and move to US or anywhere else but Vancouver? They have dim sum restaurants here, their paper, TV, radios, their elected officials, even houses are built with Chinese kitchens. even ATM machines are programmed in Mandarin. Why would you move somewhere else ?

Anonymous
Guest
Anonymous

I know, it’s great fun, and so easy, to find ridiculously overpriced old bungalows in Vancovuer and compare to the fancy mansions you get for the same money somewhere else. But, to be fair, look at what else you can get for 2.5 millions in and around Vancouver:

http://www.realtor.ca/propertyDetails.aspx?propertyId=12479913&PidKey=211628913

http://www.realtor.ca/propertyDetails.aspx?propertyId=12124001&PidKey=898338562 (a leasehold, I know, but darn nice)

http://www.realtor.ca/propertyDetails.aspx?propertyId=12588105&PidKey=904102069

jesse
Member
@MM: So before we get into the “Chinese will favour real estate assets over anything else” maybe we can take a step back and ask a few things: 1) Is real estate still seen as a safe investment in the long run when prices are seen to be falling at (say) 5% per year? 2) Are there times in history when certain Asian economies known for propensity for real estate investment (say Hong Kong) have turned sour? 3) Why would an offshore bank account with government securities be any less safe than a real estate deed whose funds are traceable? 4) Do we have a history of the behaviour of investment-driven Asian economies’ propensity to liquidate foreign-held assets vis-a-vis locally-held ones? The statement Pettis made is in direct opposition to Vancouver’s experience over the past year, and in opposition to… Read more »
Anonymous
Guest
Anonymous

@MM: “What if Chinese rich people who are attempting to launder ill-gotten money out of China and park their money in Van RE view RE losses as the cost of laundering money?”

You need to look up the definition of money laundering. Buying real estate does not launder money in any way, shape or form. If they are looking for a ‘safe haven’ why not just put the money in a Canadian bank or even better a Swiss bank account? Much more liquid. Real estate can be easily confiscated and all transactions are public record. It is not a good place to hide money. Regardless of where you get the money there is no reason to put it into something that is declining in value when there are so many better options out there.

jesse
Member

@MM: Also on Canada as a “safe haven” for foreign wealth, consider some of the actions undertaken in the past year or so by our much-hated governments:
– Hold on investor immigrant applications
– Requirement to declare income for mortgage qualification
– Kenney complaining about provincial nominee program loopholes
– BC suspending “suspicious” provincial nomination applications
– Quebec getting severe pressure to curtail its nominee loopholes
– No interim HST rebate for houses $1mm+
– Removal of MI for $1mm+ homes
– Rejecting residency applications, apparently mostly to middle-eastern immigrants

Not that these have quenched the flow of foreign capital but they are all things that make investment in Canada less fertile. There may be more to come over the next year, we’ll have to see how closely Harper is willing to work with China’s Xi on his nation’s potential anti-corruption salvo.

Devore
Member
Devore

This seems to rest on the premise that wealthy Chinese favour real estate over everything else, even when it is falling in value. Will they double down, or will they fold? Why wouldn’t they redeploy their money to safe heaven banks (Swiss, Cayman, etc), or into western government bonds, which are not losing value, are not costing them 1000s of dollars every year, and where foreign immigration and tax authorities aren’t hassling them constantly? By all indications, the really wealthy aren’t very keen on leaving China, it is only the upstart “middle class” of unconnected and uncorrupt, who are of modest means by western standards, who want to leave China so they, or at least their children, can get ahead.

Anonymous
Guest
Anonymous

this is comparable for sure. unlike stupid bears compared the best place on earth VANcouver to NY and NJ. Looked what those cities have became after the superSandy arrived! dont just poke your own arses, bears .

Many Franks
Guest
Many Franks

Here’s a quick Rob Carrick interview about how the new regulations will behave with dropping values.

There are some stats thrown around at the outset, including:
“Only 4% of Canadians have less than 5% equity in their houses.”
That’s a weird stat. I suspect he means Canadian households, and it’s not clear whether he’s including renters instead of just mortgage-holding households, which would of course make the proportion of high-LTV mortgages sound lower than it actually is.

(That’ll teach me for trying to get useful stats out of a face-to-face interview, but the guy really could’ve tried harder to make some sense…)

Anyway, he does point out that high-LTV in combination with a HELOC might well put borrowers offside with the regulator if house prices dropped. In that case the bank would freeze the LOC until the homeowner could pay it down sufficiently.

Ok, But
Guest
Ok, But

Yeah, Vancouver is over priced. But Cambie street was re-zoned as high density so these houses will soon be torn down and replaced with sky boxes that fetch 300-400k each. So the comparison is not valid.

Has this blog turned into what it hates most? Mindless droning of one side of the story?

It seems that rational discussion here is becoming more and more rare. This place is turning into an echo chamber for bears.

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