FFFA! Millenials! Burbs! Owners! Rents!

August 22, 2014 admin

Hey looky here, it’s another weekend!

That means it’s time for our regular end of the week news roundup and open topic discussion thread for the weekend.

Here are a few recent links to kick off the chat:

–Millenials decamp to suburbs
–80% of renters under 50 want to own
–CANY VS COV
–Do you trust developers?
–Rents softening in Toronto
–AFL: scrap foreign worker program
–Cooling down in London
–

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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southseacompany

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“RBC economist predicts home price declines in 2016 as rates rise”, Globe & Mail http://www.theglobeandmail.com/report-on-business/economy/housing/rbc-economist-predicts-home-price-declines-in-2016-as-rates-rise/article20142425/ “An economist at Canada’s biggest bank says home prices could start falling in 2016 if interest rates return to more normal levels. And he warned that, in the meantime, what goes up will likely come down if salaries and incomes don’t keep pace.” “He believes that the current low level of interest rates is not sustainable, and that longer-term rates could rise meaningfully by late 2015 (RBC expects five-year Government of Canada bond yields to more than double to 3.30 per cent by the end of 2015. Five-year fixed mortgage rates tend to move in step with five-year government bond yields).” ““We expect that the current condo construction boom in large urban centres will bring more properties on the resale market as units are completed.… Read more »

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patriotz

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Vancouver housing data reveals Chinese connection One of the largest real estate companies in British Columbia says that more than one-third of all the single-family detached homes it sold last year went to people with ties to mainland China. “Ties” to mainland China? What does that mean exactly? Macdonald Realty Ltd., which has over 1,000 agents and staff in B.C., said 33.5 per cent of the 531 single family homes sold by its Vancouver offices in 2013 went to people who the company said were a mix of recent immigrants and Canadian citizens. Oh OK. So none of these people were offshore buyers, and their count may include people who immigrated decades ago. The figures did not include Macdonald’s sales in suburban areas such as Richmond, Burnaby or North Vancouver. Oh so that opening paragragh isn’t correct. They just mean… Read more »

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patriotz

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@1: “While the majority of condo units under construction are already sold”

Actually not, rather someone has promised to buy them when finished.

And if the buyer can’t or doesn’t want to complete because prices have gone down – well we’ve seen this movie before.

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fitzrovia

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Patriotz you are deluding yourself. The entry hall of YVR is full of big advertising posters from high end developers and the writing on them is ONLY in Chinese.
There is RE hoarding going on by a group that needs to get their money out into anything else. It has been happening for a decade and all the while we hear..”well there isn’t enough hard data to prove it”. there isn’t because no one who could collect it Government, Banks, RE companies wants to rock the boat. So we continue to pretend it isn’t happening.

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patriotz

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@4: “The entry hall of YVR is full of big advertising posters from high end developers and the writing on them is ONLY in Chinese.”

Well it would be wouldn’t it? That’s where you would target Chinese-speaking buyers.

What language are the ads in the Georgia Straight in?

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@fitzrovia

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Patriotz has a vested interest in downplaying immigration….all while it increases. I would do that too if I was in the industry. Unfortunately, most here buy his drivel.

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patriotz

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@4: “there isn’t because no one who could collect it Government, Banks, RE companies wants to rock the boat.”

BS. The RE industry is going out of its way to rock the boat, with articles like the one above that are less than meets the eye, and outright fabrications like Mac Marketing’s fake Chinese buyers and the yellow helicopters.

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fitzrovia

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@fitzrovia

It has little to do with legitimate immigration and more to do with allowing asset hoarding by a small group who may have derived their money by nefarious means. In fact I don’t think they are real immigrants, who come here to make a life, work , pay taxes and contribute to society. I would categorize them as mere asset movers and they would likely be just as happy in the US or Europe or anywhere that they could get their money planted in safe banks and RE and away from retribution.

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bullwhip29

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RE: Do you trust developers

Say what you want, but these complaints are borderline laughable imho. On the one hand, owners welcome with open arms all the development (provided it is done “tastefully”) and new money pouring into the city, which has resulted in mind boggling windfall gains for most home owners. At the same time, a significant % of them go into full NIMBY lockdown mode the very second something disrupts their tranquil, dreamy state of being. Sorry, you can’t have it all folks. What’s next, banning families with young kids from moving into your neighborhood?

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Loon

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My doomer prediction a few days back has some basis in reality then, nice to see it validated by a professional.

I’m not gloating, as I’m sure most of the regulars here would have made a very similar prediction.

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bullwhip29

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RE: Survey shows 80% of renters… Survey says 4 out of 5 renters would buy if the circumstances would allow it. I think we all could say the same about a lot of things. Yeah, if I won the lottery, I’d like to buy a …. If you think about it, anyone with a mortgage is effectively a “renter” with some added perks and privileges with the most notable being the privilege of telling folks you are not a “renter” (even if this means you rent out all the rooms in your home and live in the basement to make ends meet). In good times, you get to participate in the upside (assuming there is any after taxes, interest and a variety of other costs). In bad times, well, that’s a different story isn’t it? Suddenly, that dream home of… Read more »

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bullwhip29

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RE: Vancouver millennials decamping to the ‘burbs

Clearly these millennials are still in a state of denial.

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bullwhip29

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RE: An RBC economist predicts…

“…prices could start falling in 2016 “IF” interest rates return to more normal levels”

imho, that’s a big IF. this article was nothing but hot air drafted for defensive purposes only. rates will stay in the ashcan for a long time, much like they have in Japan. the Fed et al have no exit plan whatsoever.

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Brian Ripley

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I put a new chart together this week that compares the growth in SFD prices and family income in the 3 hottest Canadian Markets; Vancouver Calgary and Toronto: http://www.chpc.biz/history-readings/crazy-town In the last 10 years average SFD Prices and median Family Income are up: 99% & 33% in Vancouver & BC 66% & 65% in Calgary & AB 79% & 30% in Toronto & ON Notice that Calgary has had a boom in family earnings commensurate with the boom in housing prices… thanks to Texas tea. The above has occurred while CPI has ended up at where it started 10 years ago – 2.4-2.5% per year; slightly less than earnings growth in Vancouver and Toronto (3-3.3% per year. Clearly in Vancouver and Toronto, the price of a Single Family Dwelling is pure speculation, although in Toronto, their market dwarfs the other… Read more »

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???

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Vancouver AND BC? There were a lot of different things happing in rest of BC as compared to Metro Van.

Maybe the same in Ontario outside Toronto and Alberta outside of Calgary.

Better to compare CMA’s only.

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cris

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Interest rate predictions: I think more and more believe low interest rate in the States is not going to help the labour market further, while the low rate may risk another housing bubble. This sort of thinking is diff than the past and is gathering momentum. I think the fed will rise the rate soon.

The earlier the fed starts moving interest rate, the slower and more gradual the raising will be. In baby steps of 0.10 instead of the usual 0.25?

However, in Canada, nothing allows the interest rate to go up. When US Fed starts to normalize interest rate, prepare the CAD to drop like you wouldn’t believe.

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bullwhip29

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@ cris: poloz and co want a lower dollar. end of discussion. no way in hades the BOC moves before the Fed and they may very well take longer than most think (or just do small token increases nothing more). at 0.91 CAD is still too high for their liking. cross border shopping/amazon killing Cdn retail. i know many families who probably do 50% or more of their shopping in the US or from US sources. as for the housing predicament, the policy makers will need to dream up either new measures to cool things down or more colourful, creative verbiage justifying why housing prices have gone parabolic in some markets and that this is the new normal. imho, we’ll see a taste of the former with an extra helping of the latter (ie. Vanc is still cheap compared to… Read more »

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Oracle

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Cris,

Anyone with any financial sense can say that interest rates are not going up in Canada. Even when the USA starts raising rates, we will probably have have one or two token 0.1% raises and that’s it.

Agree that the Canadian dollar will be sacrificed.

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space889

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@patriotz – uhm…buyers are required to pay up or any losses suffered by the developer for not completing the sale. Hell, even if the pre-sale contract is assigned to someone else, the original buyer are still on the hook if the new buyer don’t close the dael. Many presale flipper are totally unaware of this potential issue.

Givens that most flippers / presale buyers purchase under their own name, the developer are free to put a lien against any and all of their assets in case of failed closing.

I wouldn’t worry about this issue too much.

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crikey

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@#11: “anyone with a mortgage is effectively a “renter” with some added perks and privileges with the most notable being the privilege of telling folks you are not a “renter”” The term “home owner” is horribly misused. What is true test for ownership? If I have paid a dollar towards the total price of a downtown skyscraper, should people listen to me with a straight face as I say I own the skyscraper? Or, is the test of ownership simply whether or not you could sucker somebody to lend you the money to buy the asset? (using the asset as collateral, of course, until you actually pay for it) I say you don’t own something until you have paid for it in full. If you have only paid for 10% of a house, guess what – you only own 10%… Read more »

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space889

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@bullwhip29 – there are already buildings where children are not allowed, and if you do end up getting pregnant and give birth, you are required to sell and move out.

Also, developer here is absolutely tame compared to what they do to in China to drive homeowners out. People here should count their lucky stars that developers here are fairly well behaved, especially given the fact that most people don’t have the means and time to pursue legal actions against developers should they behave badly.