BC, data, economy, hype, mortgage, prices

Eliminating Affordability

Good news real-estate investors!

Metro Vancouver housing affordability is nearing the worst ever seen in Canada.

That’s according to RBCs housing affordability index:

The index, which captures the proportion of pre-tax household income needed to service the costs of owning a home, rose the most for B.C. among all provinces.
The measures increased by 2.1 percentage points to 71.4 per cent for bungalows, and by 0.4 percentage points to 33.3 per cent for condos.
“Poor housing affordability at the provincial level, particularly in the single-detached home segment, is a reflection of the extreme situation in Vancouver,” said Craig Wright, senior vice-president and chief economist, RBC.

This can only make our real estate more desirable as sales continue at a brisk pace. Read the full article here.

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We were right, you should have listened.

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[…] Ulsterman dug up this blast from the past: a posting from this here site in 2006. At that time we recommended Vancouver real estate as the easy road to riches. If you followed that advice you’re probably reading this now on a solid gold iPad while you recline on silk cushions with your feet in a bath of Diva Vodka. […]

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Ulsterman

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Royce McCutcheon: Many good points. I agree that realistically fundamentals have not changed, and it is really just a matter of personal timelines. That’s what’s pressuring me. I’m a youthful, active early 40s and sense that mortgage time is running out for me.

Having just spent 5 weeks in europe i have experienced life in places where buying a home is a normal life event – not a lottery-win dependent occurrence.

The logical solution is to leave the lower mainland and find a desirable place with normally priced housing. It’s just such a pain on the arse to make the upheaval!

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Royce McCutcheon

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@125 (with apologies for the text wall) What a mess, huh? I think you might be quite right regarding savings impacts of renting detached places on those with average incomes (though I would argue that this approach is still better than going massively into hock to buy the same place that and pay much more each month!). And I completely agree that the instability of renting, etc. would prompt many people to pay a premium to own over renting (even if it doesn’t make sense based on economic fundamentals). You ask when someone might admit that the Lower Mainland is an anomaly. If we’d had an uninterrupted price run-up lasting a decade, I might have a different take. But here’s the thing: I don’t see this as a 10-year run-up. What immediately springs to my mind is the behavior of… Read more »

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Ulsterman

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Royce McCutcheon @ 115: I agree with you that the situation is absurd, divorced from fundamentals etc, and our political representatives seem to have sold out future generations to placate the current ownership group. Fundamentally you are of course right. the situation is absurd. But after being wrong for 10+ years, how much longer before we should admit the Lower Mainland is an anomaly? I’m quite serious. If it goes another 10 or 20 years is that the time to capitulate and say it IS different? I don’t know the answer, but I’m wondering what figure bears would accept before they’d say it may be different this time. Has the world changed with the influx of money to the region and the seemingly ever-low rates? Many in 2006 could have bought a SFU but didn’t because of their (logical enough)… Read more »

Realtors not hungry

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[…] RFM has updated the Realtor Hunger Index over at VancouverPeak. […]

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midnite toker

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Possibly relevant to our interests.

A Secretive Agency Hunts for China’s Crooked Officials Worldwide
http://bloom.bg/1hTgRlC

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realist

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@119 BBB!

“Five Chinese Navy Ships Are Operating in Bering Sea Off Alaska Coast
Chinese naval presence off Alaskan coast appears to be a first”

Another expansionist Asian power, also lacking the ability to otherwise engage Uncle Sam in the lower 48, has previously flexed its muscles in Alaska:

https://en.wikipedia.org/wiki/Aleutian_Islands_Campaign

By the way, like PRC, that country also made many highly destructive “Zeros”, but of metal, not debt!

https://en.wikipedia.org/wiki/Mitsubishi_A6M_Zero

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crikey

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#91 said, “seriously, you ppl sound like degenerate gamblers.”

Right! The people who *don’t* have the million dollar mortgages are the gamblers! The people who will not bankrupted by falling pricing and rising interest rates are the gamblers! The people who are NOT taking a risk are the gamblers!

Just talk to all of the millions of people around the world that were foreclosed on, whose life were made miserable, from 2007 onward, due to the global real estate crash.

Orwell would be proud of you. War is peace. Safety is gambling. LOL!!!

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bullwhip29

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coming to a malfunctioning fare gate near you…

http://www.businessinsider.com/the-worlds-8-most-expensive-commutes-2015-8

Guest

Bull! Bull! Bull!

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Five Chinese Navy Ships Are Operating in Bering Sea Off Alaska Coast
Chinese naval presence off Alaskan coast appears to be a first

http://www.wsj.com/articles/pentagon-watches-as-chinese-navy-ships-sail-in-bering-sea-1441216258

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Bull! Bull! Bull!

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@114

yes and no.

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realist

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Shanghai house prices result of approximately USD $20,000,000,000,000 (count all those zeros! – you wouldn’t want to miss any!) expansion of Chinese debt since 2007. It’s surprising how low they are after that’s been unleashed on them.

http://www.washingtonpost.com/news/wonkblog/wp/2015/02/11/chinas-increase-in-debt-is-massive-and-unsustainable/

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realist

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@85 Oracle Says:
“We will become an Asian city.”
Agreed – in many important ways, such as a deepening cesspit of corruption and tax evasion, it already is.

“I’m willing to bet detached prices will be like Shanghais one day.” Do you mean today’s Shanghai prices? or “one day’s” Shanghai prices? Or is that a moot question as Shanghai prices have reached a “permanently high plateau”*, somewhere between moon and the stars?

*Irving Fisher, as quoted by NY Times, October 19, 1929.

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Royce McCutcheon

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@110: When I see that post, I don’t marvel at it’s wrongness so much as I marvel at the magnitude of the folly of the past decade. This region is probably screwed long-term either way. If prices are justified in their rise and will be sustained as decoupled from fundamentals like rent and incomes, it’s going to be a blight long-term. And if it’s not, then it’s a looooooong way down and it will not be fun to be here when that happens. I don’t go that far back, but I’m not new to this issue either. I don’t regret not buying in at the attached level earlier (which is where I would have been able to enter), as that segment didn’t do much in the time after which I would have bought in. With a family now, such a… Read more »

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Bruce

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@BBB

So then you agree with me, it’s irrational, and at some level a big scam?

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Bull! Bull! Bull!

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@Bruce

that’s your thesis, and it’s fine as long as there are conditions under which your thesis can be invalidated. what are those conditions? after how many years of ‘unsuitability’ will your thesis become invalidated?

i think the flaw in your thinking is that you think that money is something real. it isn’t. it’s a figment of our imagination and only exists in a social context. don’t believe me? get lost in the bush of the north shore mountains and see how far your money gets you.

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space889

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Another red hot August for Van RE sales:
http://www.rebgv.org/news-statistics/competition-continues-drive-metro-vancouver%E2%80%99s-housing-market

Even apartments/condo up 6%+ compared to a year ago.

Definitely a sell now or be price in forever event happening here as bears claim. Obviously these moron buyers should all just have bought stocks instead, especially micro-caps that are so safe and gets bought out at premiums.

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Royce McCutcheon

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@91: Your most excellent posts have completely changed my views on Vancouver real estate. I am now convinced me that I should buy a house, more than doubling what I pay for shelter each month even before accounting for upkeep or property taxes.

If you would be so kind as to recommend a Realtor, I would sincerely appreciate it. (Feel free to suggest a commission for yourself too, as you’ve been so helpful and convincing.)

Sincerely,

Totally prepared to stop being debt-free, portable, diversified, and not-mortgage-poor

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Ulsterman

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For all you young’uns, here’s a post from July 2006 Vancouver Condo Info. The Pope was mocking the get-rich-quick mentality of Vancouver real estate. 9 years on and of course the irony is poignant: http://wayback.archive.org/web/20060822023210/http://vancouvercondo.info/ WEDNESDAY, JULY 19, 2006 YOU can GET RICH in REAL ESTATE! Are you ready to become so INCREDIBLY RICH that you no longer have to adhere to the standards and conventions of ‘civilized’ society? Are you TIRED of eeking out a day-to-day existence while you can smell THE REEK OF WEALTH all around you? Would you like to be able to walk through the mall without any pants and be so EXCESSIVELY WEALTHY that no one can utter a word about your pantless state, lest you unleash your personal squadron of vicious attack lawyers destroying their lives and reputations? Well NOW you CAN! Yes! Thanks… Read more »

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vangrl

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She should have bought Amica..

“The teenage daughter of Chinese corruption suspect Michael Ching Mo Yeung transferred US$1 million (HK$7.75 million) out of Canada and used it to fund the merger of a Nasdaq-listed US firm, an investigation by the South China Morning Post has revealed.

A generically named numbered company set up with student Linda Ching as its sole director made the transfer on April 2 – less than a month before China’s pursuit of her father went public – and the money was invested in Premier Exhibitions, the listed US company that owns the salvage rights to the Titanic and a trove of artifacts from the wreck.”

http://www.scmp.com/news/world/article/1854626/titanic-investment-chinese-corruption-suspects-teenage-daughter-revealed

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Bruce

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@BBB

And yet, it really is unsustainable. The world’s major economies have been floating on bubbles of debt, massive fiscal imbalances, and outright bullshit, since about 2000. Canada and China more than most. One day, it will come unravelled.

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Bull! Bull! Bull!

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@105

>August sales rate is extraordinary! And unsustainable.

we’ve heard it all before.

fixie guy Says:
May 2nd, 2011 at 12:36 am
Good point, the Conservative focus on stimulating unsustainable consumption via housing

betamax Says:
September 20th, 2006 at 3:11 pm
current prices are clearly unsustainable

Globe and Mail
2007/09
There is little doubt that current trends are unsustainable

Jan 2007: Financial Planning and Personal Sanity
Clearly this growth is unsustainable

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bullwhip29

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article in WSJ: China Boosts Efforts to Keep Money at Home
http://tinyurl.com/opzrwqp

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RFM

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The VANCOUVER REALTOR HUNGER INDEX is the percent of realtors who earned no commission income for the stated month. For August 2015 the VRHI was 49%. How does this compare? The 18-year average for August is 50%. At 49%, the 2015 August VRHI was higher than 8 years and lower than 9 years since 1998. Despite turmoil in the speculative equity markets, an ‘official’ recession in Canada, oil prices that are plumbing the bottom of the barrel, foreign money-laundering investigations by the Canada Revenue Agency, corrupt politicians, greedy realtors, rapacious real estate marketing firms and a plethora of other factors that should cause a collapse of the Vancouver housing bubble, continued lower-than-average inventory and strong demand forced already high prices higher, especially in single family homes, where the HPI increased a whopping 17.5% from August 2014 to $1,159,600. Endlessly-low interest… Read more »

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Null

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BTW patriotz I like your pivot from being liberal supporter to NDP fan boy. Does this mean we can expect to see the NDP have a sudden reversal of fortune? Let’s see if the patriotz indicator holds.

Bubble? What Bubble?