Bubble mostly driven by risky lending conditions

A UK firm is saying that Vancouver house prices are being primarily driven by low interest rates and lax lending standards rather than foreign buyers:

In an effort to explain why Vancouver and Toronto have experienced sharper increases in home prices compared to other Canadian cities, the paper looks at lending conditions for insured mortgages.

It states that last year in Montreal and Ottawa, about 10 percent of insured mortgages had a loan-to-income ratio of more than 450 percent.

Meanwhile, in Toronto, about 40 percent of insured mortgages were made at that risky quotient, and in Vancouver approximately 33 percent of insured mortgages had a loan-to-income ratio of more than 450 percent.

“We’re reliably informed that the mortgages in Toronto now stretch to 600% of combined gross income,” the newsletter reads. “So two people both earning $100,000 gross can borrow $1,200,000. What has really changed in the past 12 months is not a big increase in foreign buyers, but a further decline in interest rates, which has allowed lenders to relax lending standards even further.”

The paper concludes with an alarming statistic related to Canada’s gross domestic product (GDP).

It states that while real estate ownership-transaction costs still only account for 1.8 percent of GDP, since the first quarter of 2014 commissions on real-estate sales accounted for 21 percent of Canada’s overall gain in nominal GDP.

Read the full article in the Georgia Straight.

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Sellnoworbepricedin4evah
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Sellnoworbepricedin4evah
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[…] –How to deal with 200+ comments –Canada a real estate nation waiting to crash –Industrial market nothing like residential market –Housing Action for Local Taxpayers –Auditor warnings on real estate ignored for 20 years –Subprime lending is booming –Working for free in Vancouver –Is real estate market in free fall? –Agent: best time to buy in 2 years –Absorption rate at 25% –Sold as percent of inventory by day –Vancouver moves ahead with affordable housing – […]

southseacompany
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southseacompany

“Greenspan Sees U.S. Interest Rates Rising Soon, Perhaps Rapidly” Bloomberg

http://www.bloomberg.com/news/articles/2016-08-18/greenspan-sees-u-s-interest-rates-rising-soon-perhaps-rapidly

“Former Federal Reserve Chairman Alan Greenspan forecast that interest rates will begin rising soon, perhaps rapidly.” ““I cannot perceive that we can maintain these levels of interest rates for very much longer,” he told former Securities and Exchange Commission Chairman Arthur Levitt ”

““They have to start to move up and when they do they could move up and surprise us with the degree of rapidity which may occur,” Greenspan added.”

Its_the_ALR_stupid
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Its_the_ALR_stupid

The problem with statements like this is that it’s the same thing that so-called experts have been saying for the past 8 years (I’m looking at you Garth!)

Rate increases imminent? I’ll believe it when I see it.

southseacompany
Member
southseacompany

“Economists see Vancouver market losing momentum, as Canada’s home sales fall 1.3% in July”, BNN

http://www.bnn.ca/economists-see-vancouver-market-losing-momentum-as-canada-s-home-sales-fall-1-3-in-july-1.546739

“”The real eye-catcher is the fact that mighty Vancouver has been largely responsible for the recent cooling, with seasonally-adjusted sales now falling in five straight months, albeit from gaudy record levels at the turn of the year,” BMO senior economist Robert Kavcic wrote in a note to clients.”

southseacompany
Member
southseacompany

“Vancouver’s Housing Market Crash Hits Home”, Digital Journal
http://m.digitaljournal.com/pr/3044499
“According to data released today to The Wealthy Homeowner™, Vancouver’s housing market has crashed and prices are now plummeting.”

“The city of Vancouver has been the center of news headlines across North America and around the world for more than two years for its rising house prices but as was forecast earlier this year, Vancouver’s Housing Bubble has officially popped. Now six months after peak price for trade-up homes was recorded in February and after 5 consecutive months of declining values, in typical house price bubble fashion the average home buyer is now spending less than seventy-five percent of what they were paying only months ago”

southseacompany
Member
southseacompany

“Real-time sales numbers show a decline in ‘average’ Vancouver home prices”, The Province

http://www.theprovince.com/business/real-estate/real+time+sales+numbers+show+decline+27average/12136178/story.html

“Zolo, a national real estate brokerage, has been attracting attention for its tracking of MLS home sales in real time. It says the “average price” of homes sold in the last 28 days in the City of Vancouver has fallen 21.4 per cent in the last 28 days, is down 25.1 per cent over the last three months, and down 7.4 per cent from last year.”

southseacompany
Member
southseacompany

“Richmond home sales dive in first two weeks of August”, News 1130
http://www.news1130.com/2016/08/18/richmond-home-sales-dive-in-first-two-weeks-of-august/

“Richmond house sales have come to a “screeching stop” this month as locals wait for a market slow down and foreigners balk at the new land transfer tax, according to a Vancouver-area realtor.”

““(Local buyer’s) change in psychology is shifted from a fear of missing out ‘I need to get into the market’ to ‘hold on let’s wait and see what happens, maybe the market is slowing down. I don’t want to jump in right now,’” “

QueenBee
Guest
QueenBee

All of you whiners make me laugh. China is squashing you all like turds. Nothing you can do with a sell out government. China loves Canada’s eagerness to whore itself out.

Best place on meth
Guest
Best place on meth

Agreed, that’s why we need camps.

Best place on meth
Guest
Best place on meth

Update from Ian Young about an hour ago on CBC radio:

CRA returned his call, refused to confirm or deny the allegations in Ian’s report and refused his request for an interview.

Government transparancy at its finest.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Is Marc Cohodes in town? Is he giving a talk somewhere? I want to go listen. (Saw something in twittersearch)

paulb
Member

New
147
Sold
99

TI:9526

http://www.paulboenisch.com

Newcomer
Member
Newcomer

Big pull-back in listings. I wonder if anyone will bother to list this fall. Certainly not seeing a rush to the exits.

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

I’ve notice that too, at least in my neck of the woods. Lots of listings removed. On the other hand buyers have completely disappeared too. It’s like we’re in the midst of a giant Mexican standoff between buyers and sellers across the Lower Mainland. I wonder who will blink first.

Lurker
Guest
Lurker

When was that last day there were more sales than listings?

Ktown
Guest
Ktown

Are the sales based off contract being signed? IE an accepted offer went in monday for a property the subjects are removed today so the sale is listed as sold for todays date?
Or are they slower to report? Could we possibly be seeing sales from pre-15% tax days?

Kim
Guest
Kim
Best place on meth
Guest
Best place on meth

The owner of New Coast is being sued? That’s it, just sued?

This vermin should be put to death.

Kim
Guest
Kim

Ironically the sob would get death in China if he pulled shit like that.

kim
Guest
kim

Wealthy 30 somethings breed online hate for not joining housing cult.

http://www.cbc.ca/news/business/kristy-shen-bryce-leung-1.3724450

Canada’s RE obsession has officially gone bonkers.

Sellnoworbepricedin4evah
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Sellnoworbepricedin4evah
Oracle
Guest
Oracle

How come these numbers don’t make sense with Pauls numbers??

Are these only detached ? What gives?

These are far too low.

Sellnoworbepricedin4evah
Guest
Sellnoworbepricedin4evah

Yes detached.

Single family home mkt (especially higher end) is dead

bullwhip29
Guest
bullwhip29

Spillover effects of B.C.’s real estate tax on foreign buyers can benefit Alberta, real estate agents say
http://edmontonjournal.com/business/real-estate/spillover-effects-of-b-c-s-real-estate-tax-on-foreign-buyers-can-benefit-alberta-real-estate-agents-say

>>>yeah, this according to New Coast Realty’s Edmonton branch…lol

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

How come New Coast Realty has such a major presence? Were they even in existence 10 years ago?

OPENHOUSEMASSACRE
Guest
OPENHOUSEMASSACRE

This is what ASSHOLE GARTH said about Ian article

Nothing Ian Young writes is credible. — Garth

#175 Bram on 08.18.16 at 4:48 pm
http://www.greaterfool.ca/2016/08/17/the-snorflers/

realist
Member
realist

Where there are denunciations, you will find truth.

HAMster
Guest
HAMster

Also remember GT was the Minister of Revenue who oversees the CRA.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Wow. That’s really disingenuous. I have seen several things Young has written and he’s terrific. He’s a highly intelligent writer who does his research.

HAMster
Guest
HAMster

Typical GT response if he doesn’t agree with something; just shoot the messenger.

Best place on meth
Guest
Best place on meth

From the guy who himself has never written anything credible.

Shut It Down Already
Guest
Shut It Down Already

I don’t know about that – http://www.greaterfool.ca/2016/03/29/the-wall-4/ was pretty good, as well as his replies to your deranged comments the day prior.

supersogs
Member
supersogs
Newcomer
Member
Newcomer

“… there are fewer offers right now. I just negotiated an offer with subjects at well below list price, …” Good news.

bullwhip29
Guest
bullwhip29

that didnt take long. fast forwarding a number of months, if we were to see a sudden explosion in volume seemingly right out of the blue, then that would be sure sign of an imminent change in policy.

OPENHOUSEMASSACRE
Guest
OPENHOUSEMASSACRE

Did The CRA Know Vancouver Was About To Become One Of The World’s Most Unaffordable Housing Markets Twenty Years Ago?

Steele & Drex -http://omnyapp.com/shows/steele-drex/did-the-cra-know-vancouver-was-about-to-become-one

Madashell
Guest
Madashell

Ordinary folks are taxes to death and harassed by CRA for little things while these rich foreigner immigrants are getting off scot-free. If there are any backbone to this government, go through the list of these asshole immigrants and start auditing each one now.

kim
Guest
kim

Can’t. This government is bought and sold for by the Chinese.

Combat roach
Guest
Combat roach

That would be not only justice and monetary, but moral mandatory for all those Canadians that contributed to this country not only through taxes but also for those who fought and died for Canada. I am pretty sure building the rotten locust farm instead of leading western country wasn’t the plan.

southseacompany
Member
southseacompany

“Canada’s a real estate nation, just waiting for a crash” Globe & Mail (subscription)
http://www.theglobeandmail.com/report-on-business/rob-commentary/canadas-a-real-estate-country-just-waiting-for-a-crash/article31457558/?1471556780424

“A year ago, when Bank of Canada Governor Stephen Poloz cut interest rates for the second time in six months, we knew we’d have to take the bad with the good. Slashing the bank’s overnight rate in half to 0.5 per cent would surely further inflate regional real estate bubbles.”

“A year later, we’re still waiting for the second half of the equation to kick in. The real estate sector keeps setting new records.”

Kim
Guest
Kim
People have to understand. THere is no free lunch. There’s no “soft landing” to this. (I hate that term.) With how things have run up, there has to be a big crash back down to normal for things to be normal. That means a ton of people will be hurt. yes, the speculators, the “investors”, the home owner who will be out of a job because he works in an industry related to housing, and can’t pay his mortgage but is unable to find a buyer. Yes, people’s equity will be wiped out, but you have to do this if you are going to go back to a healthy and normal economy. Canada is like the stereotypical opiate or heroin addict. The central bank is the doctor. Continuing to pump the patient with painkillers/opiates that just mask the pain. Eventually,… Read more »
Combat roach
Guest
Combat roach

What is the foreign or dirty money in this junkie’s analogy? Some sort of life support drug or booster drug enhancing shit prescribed by local doctor (central bank)?

Zero Down Forty
Guest
Zero Down Forty

Its the same junk provided by the same doctor – just a different delivery service.

Remember, the patient is not the homebuyer – the patient is the economy. The homebuyer, whether a local taking on a ridiculous mortgage or a foreigner parking money, is just a Fed Ex service delivering the package.

kim
Guest
kim

Yes, the patient is the Canadian economy. The doctor is the fed. The benzodiazepine is the foreign money that the patient is hooked on, bought off the street. The doctor gives the opiates to the patient. Death is when the whole thing comes crashing down. And sudden withdrawal of benzos will cause death.

Kim
Guest
Kim

And sudden withdrawals from benzos wil cause death in an addict. Much like foreign money.

Kim
Guest
Kim

I would say another drug like a benzo, which produces a high but when combined with opiates can cause death.

HAMster
Guest
HAMster

When will these central bankers wake up to the fact that ever lower interest rates are not working? This is what happens when ideology trumps common sense; if something doesn’t work, then try more of it?

patriotz
Member

The real issue is when will the politicians wake up. Interest rates are the only policy tool central bankers have and it’s hard to fault them for trying to do something if governments won’t use fiscal stimulus.

BubbleTea
Guest
BubbleTea

CB should stop playing politician and act like bankers.

Oracle
Guest
Oracle

WRONG YOU TROLL.

Immigration is the main tool they have.

Zero Down Forty
Guest
Zero Down Forty

Will JT take off his shirt, fly thru the air and drop money on the nation (in appropriate ridings no doubt), saving us all? Stay tuned.

http://business.financialpost.com/news/economy/trudeaus-fiscal-plan-buys-bank-of-canadas-poloz-time-as-record-trade-gap-expected-friday

southseacompany
Member
southseacompany
Whole article: A year ago, when Bank of Canada Governor Stephen Poloz cut interest rates for the second time in six months, we knew we’d have to take the bad with the good. Slashing the bank’s overnight rate in half to 0.5 per cent would surely further inflate regional real estate bubbles. But that, we figured, was just the price to pay in order to fuel non-energy exports and a sustainable recovery. A year later, we’re still waiting for the second half of the equation to kick in. The real estate sector keeps setting new records. Indeed, it’s now Canada’s biggest industry, leaving Alberta’s oil patch and Ontario’s manufacturing heartland in the dust. Ongoing weakness in those latter sectors is generating talk of yet another rate cut, no doubt to the delight of the friendly neighbourhood broker who keeps urging… Read more »
Its_the_ALR_stupid
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Its_the_ALR_stupid

“Restrictive land-use and densification policies in B.C.’s Lower Mainland and Ontario’s Greater Golden Horseshoe, on top of development fees and bureaucracy, have made it extremely difficult and costly to build single-family detached homes. These policies are the result of NIMBY lobbying and pandering to environmentalists who would force everyone but themselves into 700-square-foot condos”

Somebody gets it. Incidentally I’m not necessarily opposed to the ALR. I just find it bewildering that so many people abjectly refuse to admit that it plays any role whatsoever in our outrageous house prices, when it so clearly does.

C.Junta
Guest
C.Junta

A screenshot from the provincial Agriculture Land Commission website:

http://imgur.com/a/VM8L9

Pretty impressive. A lot of green stuff.

patriotz
Member

If land use restrictions are responsible for bubble prices, why have busts always occurred without any previous loosening of the restrictions? The same restrictions were in place in California in 2005 versus 2010, Toronto in 1988 versus 1995, and yes Vancouver in 1980 versus 1985.

Having said that I think restrictions have a role in normal price differentials between markets outside of bubbles.

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

Which is basically my point. I don’t actually think land use restrictions are responsible for the “bubble” component of current prices. That part is due to low interest rates, foreign money, FOMO psychology, and all the rest. And for all those reasons I believe we are indeed in a bubble that will soon burst.

But due to supply restrictions I expect the decline to be far less than many would hope before they begin their ascent again. And in the long term, with bubble ups and downs smoothed out, I expect SFD prices to become increasingly unaffordable for average incomes.

patriotz
Member

I think another factor often ignored is that increasingly in metro Vancouver, a “single family house” is actually a duplex or triplex and those that aren’t become priced close to those that are. So it isn’t appropriate to look at SFH affordability between Vancouver and those places where a SFH is just that. Seems to me a townhouse is really the SFH of today.

Ray
Member
Ray

Lots of posts, lately, and I lurk. But you need to know how to get through this forum quickly. Some tips, always read Patriotz no matter how many votes he gets, always read the news articles because these guys don’t miss anything (SouthSeaCompany, etc). Always read PaulB. Immediately skip Space and Oracle. Read BPOM only if you want to shock yourself with the most popular (most upvoted) bigot on the internet. And if you read the forums a day late like I do (recommended), only read posts with 5 votes or higher. Then you can get through these 200+ comment posts in 30 minutes. Good luck!

Oracle
Guest
Oracle

Ahhh shaddap lol

Hyper-mega-Bull
Member
Hyper-mega-Bull

Patriotz spent a decade predicting a crash and denying the impact of Asian money.

Ray
Member
Ray

patriotz thinks he’s right on most things, and he is.

Best place on meth
Guest
Best place on meth

Patriotz, tell your child to get off the board.

There’s cussing going on here.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Maybe its his wife or lover.

bullwhip29
Guest
bullwhip29

Sixth Chinese carrier to start flying to Vancouver International Airport
https://www.biv.com/article/2016/8/sixth-chinese-carrier-start-flying-vancouver-inter/

>>> if I am not mistaken this means there are as many (if not more) chinese airlines operating out of YVR than N. American ones

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Just as long as they are paying their fair share of taxes and contribute equally to repair of the runway and whatnot.

YLTNboomerang
Member

Their logo should be a big green “N” on the tail

Best place on meth
Guest
Best place on meth

Hopefully they become the first chinese airline to crack the the world top 100 airlines.

david
Guest
david

The CMHC idiots who hand out taxpayer loans to buyers is certainly a problem. But it isn’t the primary problem. More of a compounding/supporting one.

Money laundering, money transfer. Wake. T.F.U. folks.

franko
Member
franko

The biggest problem right now is MCCALLUM

Combat roach
Guest
Combat roach

The guy is a relic from the attic with equally progressive ideas how immigration works. Let’s just all come together and live happily ever after.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

He probably has more stereotypical, semi-racist (and outdated) ideas about various immigrant groups than any of the people here who have been accused of bigotry. Otherwise his actions seem inexplicable, they are so out of touch with the actual situation in Vancouver.

VanRant
Guest
VanRant

Hope MCCALLUM is not stupid enough to bring of IIP back.

Best place on meth
Guest
Best place on meth

Look at his face, that should answer your question.

VanRant
Guest
VanRant

Wow, this Ian Young sure stirred up a hornet’s nest today, lots of reaction and tweets that the government at all levels can not ignore. With special thanks to people like Ian Young, Lynda Steele, Sam Cooper and Marc Cohodes, otherwise, the politicians will say what problem, what bubble, go back to your closet and shut up.

Oracle
Guest
Oracle

Nothing but a uprising or a new Canadain Nationalist party is going to stop the crooks.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

An uprising yes. A Canadian Nationalist party? I hope not. The cost of those things is usually too great.

Combat roach
Guest
Combat roach

What are you talking about? Where is it?

UBC in Crisis Mode
Guest

Waiting for more foreign buyers
In the last two weeks, 116 sellers in Van West rushed to the market with their million dollar listings, e.g.:
http://www.realtylink.org/prop_search/Detail.cfm?MLS=R2097482&REBoards=All&From=MLS

Shut It Down Already
Guest
Shut It Down Already

Care to put that number in some context?

Hyper-mega-Bull
Member
Hyper-mega-Bull

http://www.facebook.com/HALTVancouver
Sept 17 Vancouver art gallery