Canada, economy, Europe, prices, rates, USA

Global RE frothy again

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After housing markets slumped around the globe governments and central banks did what they could to reinflate them, driving down the cost of debt.

Well it worked.

The US market is down a bit from their precrash highs, but Canada is sailing high.  What’s the endgame?

With global monetary conditions so loose, governments are using regulatory tools to cool overheated housing markets. In Canada, for example, the maximum term of the riskiest mortgages has been lowered from 40 to 25 years. Regulators in both Hong Kong and Singapore have repeatedly raised stamp duties and tightened lending restrictions. The measures seem finally to be working, especially in Singapore, where prices are now falling.

So as potential home buyer on planet earth, what’s your next move? Do you go with low interest rates forever as a way to keep prices up, or do you stand back and wait for a price correction?

As an aside its interesting to note one nation whose market isn’t doing so well is Japan, where they’ve had rock bottom interest rates for a really long time.

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Not the Japan argument again...
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Not the Japan argument again...
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Sheesh,.Japan has a falling population. No demand. Thus zero rates matter little.

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3 years 12 days ago
patriotz
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@1:

As matter of fact Japan’s population has only recently peaked and is higher than it was in 1990:

http://en.wikipedia.org/wiki/Aging_of_Japan

Anyway what matters in any RE market is growth of dwellings versus growth of households. We (and most other bubble markets) as doing just fine in providing new supply to match new demand, just as the US and Ireland were doing during their bubbles.

RE crashes are not due to a drop in actual (versus speculative) demand, just as bubbles are not due to a surge in actual demand.

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3 years 12 days ago
patriotz
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Misleading headline of the week. Of course renters aren’t paying the mortgage for any of the properties in the acticle:

Let renters pay your mortgage

“Very often what I see is people moving from an apartment or a townhouse and thinking: I’ve got this townhouse worth $600,000 and I’d love to get into a home. … That’s probably going to run around $900,000,” says North Vancouver real-estate agent Paul Boenisch, who is with Sotheby’s International Realty Canada. “That’s a big jump. That’s going to increase their cost about $1,400 a month, but if they’ve got a suite, that can happen.

Yes it’s our own Paul B. But I will add what he’s too polite to say, which is if the high end is dependent on suite income, things are really getting stretched.

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3 years 12 days ago
patriotz
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Toronto, Vancouver condos lead record Canada building permits

Canadian building permits jumped to a surprise record in July, led by Toronto and Vancouver condominiums and apartments, at a time when the central bank says high home prices and indebted consumers remain a key risk to the economy.

The value of municipal permits for multi-unit housing jumped 43.4 per cent to C$2.54-billion, Statistics Canada said today in Ottawa. Total permits in Toronto rose 29.6 per cent to C$1.65-billion while Vancouver surged 46.1 per cent to C$718-million.

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3 years 11 days ago
Dyugle
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I’ll wait for the next recession. I expect one every 7 to 10 years so we are getting close.
With no interest rate wiggle room it will be interesting.
Good luck all.

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3 years 11 days ago
space889
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Also rememeber that Japan’s houses and apartment buildings are routinely torn down after 25 to 40 years. Thus when you are buying a place in Japan, most likely you are only going to own it for less than 40 years. Thus it is really just prepaid rent. That has been cited as one reason why Japan has more architect per capita than anywhere else in the world and as an impediment to Japanese households wealth building.

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3 years 11 days ago
Many Franks
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From Country Music Television:

Finance Minister Joe Oliver met with the Canadian Association of Accredited Mortgage Professionals (CAAMP) on Friday. The meeting covered a range of mortgage hot-topics.

[…]

“The Minister is monitoring the housing market,” Murphy says. “The sense is that no further regulatory changes are imminent, but that could always change.”

[…]

Given [housing’s benifits to the economy] and the balanced conditions outside of T.V.C. (Toronto, Vancouver, Calgary), CAAMP believes there is no need for further tightening of mortgage policy.

Move over, Thrust Control Vector and Tinea Versicolor, there’s a new contender for the TVC acronym! Nope, no bubble here.

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3 years 11 days ago
mac
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$2,000 a month for a basement suite in North Van. Holy smokes. Rents are huge in this city. That’s what I’ve been noticing. Prime desirable location, quality finishes, you pay big.

Unlike Patriotz, I do to presume to think for Paul. I’m pretty sure he means what he says. And when we bought years ago we experienced the same thing. We could move east and get a huge place for 100K more at the time. Came with a rental suite that paid for itself and the property tax on the house.

Helped us pay off the whole place within 7 years. Those were the days.

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3 years 11 days ago
@Patriots
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Nice link to the Japan population. It tells me that RE would start imploding in the early 90’s as it did. The trend was clear.

Now why would you highlight a population peak.? Seems very trollish of you.

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3 years 11 days ago
UBC in crisis mode
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UBC in crisis mode
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How much rent would you pay for this UBC old timer (currently rented)?

http://www.realtylink.org/prop_search/Detail.cfm?areatitle=&ARPK=&ComID=&agentid=&MLS=V1083093&rowc=2&rowp=1&BCD=GV&imdp=9&RSPP=5&AIDL=21&SRTB=P_Price&ERTA=False&MNAGE=0&MXAGE=200&MNBT=0&MNBD=0&PTYTID=5&MNPRC=2000000&MXPRC=9000000&SCTP=RS

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3 years 11 days ago
Girlbear
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UBC

Errrrr. Interesting furnishings for a $4.8mill house… Rented or not.

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3 years 11 days ago
Girlbear
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Oh and a mortgage helper on a $4.8mill house.

Sigh. Only in Vancouver.

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3 years 11 days ago
Royce McCutcheon
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@10: How much would I pay? Nothing near what they would ask, I’m sure. How much do I think it could rent for in today’s rental market? $6500/month? At that rate – and i) assuming a cash purchase, ii) ignoring things like property taxes/ upkeep, and iii) assuming asking price of $4.8M was met – am I right in calculating a ~1.6% return on that huge whack of cash? Swell stuff.

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3 years 11 days ago
Son of Ponzi
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“It’s getting more difficult for Canadians to move up from starter homes”

http://www.calgaryherald.com/business/real-estate/getting+more+difficult+Canadians+move+from+starter/10184796/
————
Caucasians wanting to move up into mansion with wok kitchens and perfect Feng Shui will have to wait a little longer.

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3 years 11 days ago
Bob the builder
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Apparently, BC’s we(s)t coast can expect 30% more rain in future years than it currently receives, due to Global Warming, er, I mean: Climate Change. I know it’s true because I read about it in a large article on Page A5 of today’s Vancouver Sun – that bastion of journalistic integrity (article probably paid for by an Asian umbrella manufacturer). That should make even more people want to relocate to: ‘The Best Place On Earth To Get Wet’. I love the smell of mold in the morning.

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3 years 11 days ago
Girlbear
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Meanwhile. On offer in NZ for USD $4mill…

http://www.businessinsider.com/marc-holtzman-selling-new-zealand-home-2014-9?utm_content=bufferbf1bb&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

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3 years 11 days ago
paulb
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New Listings 342
Price Changes 119
Sold Listings 74
TI:15799

http://www.paulboenisch.com

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3 years 11 days ago
VanRant
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Thanks Paul B. Hope this is a start of a trend.

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3 years 11 days ago
paulb
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@Patriotz: Suites are so common now! Everyone wants them. I read an article today about people not being able to upsize because the lower end of the market (condos) hasn’t kept pace with SFH. It’s true and a house with a suite helps condo owners bridge the gap and sneak into the SFH market. I bet suites were very uncommon in our parents generation.

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3 years 11 days ago
Bo Xilai
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paulb #19… Isn’t the concept of a SFH watered down when there is a suite downstairs and there’s a whole other family of cellar dwellers living there?

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3 years 11 days ago
Girlbear
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Paul B.

Crazy numbers today. Wow

And yes suites for houses “worth” $2mill + (in today’s dollars) were unheard of back in the day.

Also unheard of in other cities in North America. Currently. Most people of wealth don’t really want tenants in their basement. Even here.

Personally I would much rather rent a condo in a building for $1500-$2000 than live in someone’s basement “mortgage helper”. And there is plenty of supply to avoid that.

Thanks for diligently posting everyday btw!

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3 years 11 days ago
paulb
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Totally Bo. I agree but the SFH have appreciated much better. Living in a townhome vs. having a tenant are comparable in terms of lifestyle but over the last 5 years SFH have appreciated about 30-40% where condos rose 10%.

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3 years 11 days ago
paulb
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Same here Girlbear. I would rather rent a nice apt with a view than be in someones BSMT(and I’ve done both). However the clients I work with in N Van, E Van and BBY haven’t had much difficulty finding tenants as some great schools reside in SFH neighbourhoods which helps attracts people.

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3 years 11 days ago
fitzrovia
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averages were going down until HAM bought a $6 M house today.

I am certain that they have paid tax on that money.

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3 years 11 days ago
mac
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Fitzrovia,

Care to tell us how you can tell ham from non-ham?

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3 years 11 days ago
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