Canada, data, economy, hype, prices, USA

It’s not a bubble, it’s a balloon. Lets give it more air.

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Patriotz pointed out this article over at the Globe and Mail:

Economist caution against Harpers focus on rising home-ownership rate.

Stephen Harper is putting a new focus on Canada’s rising home-ownership rate, but some economists warn that pushing to drive it higher is a “wrong-headed” approach in an overheated market.

In government, the Conservative Leader brought in policies to encourage Canadians to save for their first home. Now, on the campaign trail, Mr. Harper’s promotion of home ownership is shaping up as a key part of his party’s pitch to Canada’s younger middle-class voters as he promises a package of new measures.

In a new twist to his message, Mr. Harper recently boasted that his party’s policies have contributed to the fact that Canada’s home-ownership rate is now higher than in the United States.

We’re number one! We’re number one!

Canada’s home-ownership rate is not often cited by Mr. Harper. It is a statistical achievement that did not turn out well for the U.S. when it reached a similar level more than a decade ago.

Oh. Read the full article here.

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[…] ILoveCharts posted their take in the previous thread, and that comment is reproduced below: […]

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Tiger

LOOK AT THIS GUY WHO THINK HE MAKE $100,000 ON FLIP THIS CONDO. WHO SAY CONDO DOESN’T GO UP I SHOULD HAVE BOUGHT IT WHEN I HAD THE CHANCE ?

http://selectonmain.com/officelistings.html/details-37835423 (2014)

http://evaluebc.bcassessment.ca/Property.aspx (2014)

https://www.locatehomes.ca/bc-real-estate-listings/vancouver/mls-V1140040/319-2222-Prince-Edward-Street-Vancouver-V5T4M6?id=261972102 (2015)

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southseacompany

“Barbara Yaffe: Stephen Harper’s housing affordability plan not suited to Vancouver market”, Vancouver Sun

http://www.vancouversun.com/opinion/columnists/Barbara+Yaffe+Stephen+Harper+housing+affordability/11302256/story.html

Subscription, but you can scroll and read behind the pay window.

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paulb

New Listings 215
Price Changes 61
Sold Listings 168
TI:12292

http://www.paulboenisch.com

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VanRE

Talked to a realtor friend. price for SFH on westside is just crazy, over 100% price increase in the last 5 years. definitely foreign driven at the high end > 5M, low supply and property quickly snatched up even at this level.

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patriotz

@59:

Sorry, parsed the “or” incorrectly.

Drawing down retirement assets is complicated. Selling non-registered assets could be neutral (i.e. maturing GIC), capital gain, or capital loss. RRSP or RRIF withdrawl is income. TFSA withdrawl isn’t. CPP/employer pension is income. OAS/GIS isn’t.

But that’s a bit beside the point since according to the article linked in @56, the income data is coming not from tax returns but the National Household Survey, where respondents simply give whatever answer they want, or none at all if they don’t feel like answering.

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patriotz

@58: “Does reverse mortgage count as income?”

No.

“Or drawing down your savings in retirement?”

Yes. Or more precisely, dissavings, aka borrowing.

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space889

@BBB – Does reverse mortgage count as income? Or drawing down your savings in retirement?

Or my favorite, small biz owners who has run the same biz for 20+ years and never declared more than $30K in annual income. But somehow has all the nice fancy toys, cars, mansions, and kids in expensive private schools……

Oh wait, what I’m talking about…it must be the Chinese cheaters….even if they did bring in $10M CAD when they immigrated, they are still cheapers for not declaring all that money as income, even though CRA don’t consider that to be income.

My bad….

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southseacompany

“Federal Reserve moves toward raising interest rate for first time in years”, The Guardian

http://www.theguardian.com/business/2015/aug/19/federal-reserve-interest-rate-increase

“The Federal Reserve is inching closer to the first interest rate increase in nearly a decade, minutes of the central bankers latest meeting indicated on Wednesday.”

“The minutes of the Federal Open Market Committee’s (FOMC) 28-29 July meeting did not mention any timetable, but did state that most members believed that economic conditions were “approaching” those that would warrant a rate increase.”

“Most economists expect that rates, which have been held at near-zero since the 2008 financial crisis, will be raised at the Fed’s next policy meeting on 16-17 September. But the recent collapse in China’s stock markets and worries they may spread may slow the Fed, according to some economists.”

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Bull! Bull! Bull!

In Bizarro Vancouver, 25,000 households declare less income than they spend on housing alone

The unusual phenomenon exists in one in ten households across city – with the situation extreme in Dunbar, South Granville and other wealthy neighbourhoods

http://www.scmp.com/comment/blogs/article/1851003/bizarro-vancouver-25000-households-declare-less-income-they-spend

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southseacompany

“Real Estate Watch: RBC downplays chance of housing market crash”, BNN Video

http://www.bnn.ca/News/2015/8/19/RBC-downplays-chance-of-housing-market-crash-in-Canada.aspx

“RBC Economics is shrugging off the prospects of a crash in the Canadian housing market even as some market watchers warn overvalued home prices could spell disaster for homeowners.”

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southseacompany

“Soft landing for housing market amid gradual rise in rates: RBC”, Global News

http://globalnews.ca/news/2173759/soft-landing-for-housing-market-amid-gradual-rise-in-rates-rbc/

“Activity in Canada’s real estate market will slow “modestly” next year as interest rates begin to rise, according to a new report from RBC Economics.”

“The report pegs the risk of an outright crash in real estate as low, saying RBC expects the economy to grow and that interest rates will likely rise gradually starting next year.”

“However, the bank says there could be a “severe” downturn in the real estate market if employment plunges due to a deep recession or if interest rates surge dramatically.”

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Bull! Bull! Bull!

Probability of Fed rate hike in Sept. falls to 36% after Fed minutes: RBS

http://www.cnbc.com/2015/08/19/probability-of-fed-rate-hike-in-sept-falls-to-36-pct-after-fed-minutes-rbs.html

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Shut It Down Already

Why not throw th price of milk and gas into the equation too? Because, like income taxes, they’re not relevant to absolute housing prices.

Your point about fixing a U.S. mortgage for 30 is obviously spot on, but who knows how rates will vary over the long term. They’ll surely go higher from where they are, but hard to say if they’ll go high enough to make a considerable impact.

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StupidityCheck

50: Why would you take the exchange rate into account? Are SF property owners paid in $CAD?

And it’s not quite the “end of story” — SF incomes are far higher, rents are higher and income taxes are lower. In the US, you can lock-in a mortgage rate for 30 years. You can also deduct property taxes and mortgage interest payments.

When you take everything into account, it makes more sense to buy in SF than it does here.

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Shut It Down Already

Patriotz, I found a 3 bed 2 bath detached on the west side of about the same price ($1.3m CAD).

Even with your numbers that’s still ~2x the property taxes when taking the exchange rate into account.

SF property taxes are far higher, end of story.

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patriotz

@43: ” For that Zillow link, (property tax is) about 3x higher than a roughly equivalent place in Vancouver”

No it isn’t, because you’re looking at the price, not the house and location.

A similar house on the West Side of Vancouver would cost about $2 million and pay $7K in property tax versus $10K for the San Francisco house.

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patriotz

@41: “I wonder if the feeling is mutual? (Texas/China)”

Texas has no state income tax and as a consequence has among the highest property tax rates in the US. So why not let some foreigner buy a house and help pay for your kids’ schooling, roads, etc.?

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vangrl

#44
Whore-City

How could you possibly know that?

Although it wouldn’t surprise me.

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Shut It Down Already

Whore-city, you mean “realtors with Chinese-sounding names” rather than “Chinese realtors”?

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History

meh, the big big Macau gaming houses were downgraded today in HK

“Citigroup reduced Macau’s gaming revenue forecast for August, Daiwa even downgraded Macau’s gaming sector outlook to Negative and cut the industry’s gaming revenue forecast for this year.”

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Whore-city

5/6 SFH sold in West Van were bought by Chinese Realtors. One for $9 M. I am 100% certain that they were all bought with legit earned and tax-paid money

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Shut It Down Already

SF also has much higher property taxes. For that Zillow link, it’s about 3x higher than a roughly equivalent place in Vancouver. Over $1k a month. That would cover a decent chunk of mortgage interest 😉

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w

“Rates rise in the US in a month.”

I’ll belive it when I see it.

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