BC, Canada, data, debt, economy, politics, prices

This is a real estate province

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The new BC government interest free loans program for first time buyers might help to get some more condos sold.  Certainly real estate developers in this province tend to be in agreement with government policies, showing their appreciation by holding 8 of the top 10 liberal donor spots:

Eight of the 10 top donors to the B.C. Liberal party in 2016, and so far in 2017, are involved in the province’s property development and construction industries.

Combined, the eight donors contributed nearly $1.5 million of the $12.5 million collected by the Liberals during the period, an analysis by Postmedia News of the donor list released by the Liberals last week shows.

Some of the real estate development and construction sector donations came in six-figure instalments.

At least this booming real estate market is creating lots of jobs right?

Well, not as many as Quebec which created more full time jobs than any other province and accounts for 42% of national labor growth in 2016.

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Newcomer

“You have to be quite the optimist these days to be in Vancouver real estate. First BCREA predicts the benchmark will drop 8.7%, then the Real Estate Board of Greater Vancouver (REBGV) releases this months report. According to the latest numbers from the REBGV, the benchmark price for detached homes dropped, sales plummeted, and listings are disappearing.”

https://betterdwelling.com/city/vancouver/vancouver-real-estate-sees-detached-benchmark-drop-27k/

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best place on earth

what market does not correct itself? what happened in 2008, and 2012-13? the market constantly changes; but bears’ bitching and whining do not.

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bestplaceonearth

noone can please you people…no matter what gives, bitching and complaining and whining are what you do best !

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Newcomer

“No one” should be written as two words.

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best place on earth

really now!

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Oracle

People getting hoodwinked here by YVR, Patriotz, Shut it, Newcomer.

Got you debating about whether Chinese money affects Vancouver real estate. LOL. Don’t be so naive.

Time to call this blog another GT child. It will still be callin for a crash in 5 years. And saying debt is the cause. Hahaha.

Listen to common sense. For example , Alex Fraser will be going to 4 Lanes each way tomoro. Big announcement. You heard it here first.

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Newcomer

Odd that you don’t buy in such a market. Is it because you don’t have a job? I hear that VanCity will help minimum wage workers, people receiving income assistance etc., to buy, so if you have any source of income whatsoever, it would seem to make sense to get into the market. Then you can come back in five years and tell us what losers we are.

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YVR

Odd that you don’t buy in such a market. Is it because you don’t have a job?

Oracle is one of the top berry pickers and her cousins have 2 paper routes. Once she and the cousins save up enough for the 2.5% down they will own one of the nicest studio condos in Hope.

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Oracle

Paid stooges don’t stop.

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Confucius

Lol, especially when they say they will.

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Oracle

What does me buying have to do with anything. Shows your true colours.

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Newcomer

You are arguing that prices and rents will go up. If you believed that, you would buy if you could. So either you don’t believe what you say or you cannot buy for some reason. If you cannot buy for some reason, that’s fine. But if you don’t believe what you say, that’s another matter.

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Bear Vancouverite

Oracle, you did say on several occasions last year that you and/or relatives would buy up as many SFH as you could if there was a correction, thus supporting prices.

I noticed you recently stopped saying this though.

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Oracle

No correction in valley SFD.

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Funky monkey

My coworker telling me how nothing in his Langley nabourhood is selling.

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Foo Man

“Then you can come back in five years and tell us what losers we are.”

Why? It must be obvious what losers you’ve been for the last ten years. Doesn’t appear to have had any impact.

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Newcomer

Indeed.

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bullwhip29

Inside the Christy Clark government’s Site C Spin Machine
http://www.nationalobserver.com/2017/01/17/news/crackdown-inside-christy-clark-governments-site-c-spin-machine

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bullwhip29

New York Times reporter stands by story on B.C. ‘Kafkaesque’ political donations
http://www.metronews.ca/news/vancouver/2017/01/18/ny-times-reporter-story-on-bc-kafkaesque-political-donations.html

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bullwhip29

Students from Vancouver, Portland and Seattle compete to transform a Coquitlam parking lot into condo development
http://www.metronews.ca/news/vancouver/2017/01/18/students-compete-to-design-transit-neighbourhood.html

>>> I wonder if Bob Rennie will be there is person to crown the winner?

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bullwhip29

Vancouver airport’s long-term strategy suggests no new runways within 20 years
http://vancouversun.com/business/local-business/vancouver-airports-long-term-strategy-suggests-no-new-runways-within-20-years

>>> yeah right…

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bullwhip29

Landlord B.C. launches online registry
http://www.cbc.ca/news/canada/british-columbia/landlord-b-c-launches-online-registry-1.3940726

>>> so what do the poor prospective tenants do if no landlords sign up for the course? or if certification can be achieved with a few mouse clicks?

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bullwhip29

Fear of a lack of culture one of the main reasons people hesitant to leave Metro Vancouver, says marketer
http://www.cbc.ca/news/canada/british-columbia/advice-for-b-c-cities-trying-to-entice-vancouverites-northward-become-vancouver-lite-1.3940357

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Combat roach

What culture???

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Abdul Lahazi

Dim Sum restaurants and massage parlours.

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Dave

I was sent this report and had a skim and it looks excellent to me.

http://resonanceco.com/reports/future-of-bc-housing/

Good bedtime reading.

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Just me

Since we still have a bunch of China-skeptics on the blog (mostly not local observers with feet on the ground, I suppose), I went back and searched for some serious numbers about the size of the recent money outflows from China. Here is a recent and fairly convincing piece: http://blogs.cfr.org/setser/2017/01/17/chinas-fell-by-around-45-billion-in-december-using-the-pboc-data/ If you do the math (adding up profits not repatriated and genuine outflows) you get a rough figure between 950 billion USD and 1.2 trillion USD in yearly investments made abroad by Chinese nationals (individuals and corporations). To put things in perspective, last year the Canadian GDP was around 1.5 trillion USD. So, Chinese money outflows are likely above 2/3 the yearly GDP of Canada. Now, if even a fraction of that figure finds its way into Vancouver real estate, what do you think the effect will be? Well, to… Read more »

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Dave

Or just join the dark side and go all in with debt and hope for the best. Seems like that has always been the best strategy for Vancouver.

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Newcomer

You are getting there, but it is still guesswork. You have the new credit in Canada, find out what total residential RE purchases were for the same period. The difference is where foreign money should play a role. Do the same for ten years or more and see if there is a correlation between outflows of Chinese money and a larger portion of Canadian RE purchases being made without mortgages. At that point, you would have enough data to start estimating the impact of recent outflows.

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Just me

This is not guesswork, you can repeat the analysis yourself. If you think that credit on its own is the reason behind the current housing crisis, then you should be able to prove it. Happy to see what you come up with.

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patriotz

The only way you can actually prove this (or any other conjecture about what’s supporting prices) is to change the variables and see what happens.

I will point out that Christy Clark, who I think has access to a lot more information than anyone here, thinks that credit is crucial in maintaining prices, as seen by her recent effort to support even more borrowing.

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YVR

change the variables

Price increase minus Winnipeg or Saskatoon increase = Chinese influence. Still mostly credit.

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Just me

Clark knows full well that what she did will have no impact. She wants to be seen doing exactly that, though.

As for the foreign tax, I suppose she figured out that at 15% it would not have much bite at all (like in Hong Kong, where a similar tax has been shrugged off by the market in 6 months or so).

The only reason that the market has slowdown (even in the presence of record low interest rates) is the sudden reduction of China money outflows due to the Chinese government curbs on capital flight.

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Newcomer

You are, quite literally, incorrigible.

Can I suggest to you that there is no point stating an opinion more than once, if you have nothing to back it up. You are basically saying, “Is so!”

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Just me

You know why I think you are totally wrong? You think that credit is completely independent of Chinese money. It is not. Much of the money brought from China is leveraged in the Vancouver housing market. Local banks make sure of that.

Locals on credit could be an explanation when prices where 1.5 million, not when prices are at 3.5 million.

By the way, the evidence I brought is there for everyone to read. Where is you evidence guys?

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Newcomer

How long have you been reading this blog?

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Shut It Down Already

That’s not true. We know that homeownership is at an all time high, as is mortgage debt, that the savings rate (including RRSP/TFSA contributions) is low, that there’s a correlation between interest rates and prices, that foreign buyers make up ~10% of the market, people think that “real estate always goes up” and so on.

Your argument is akin to saying that we cannot prove climate change without modifying the behaviour of the world’s population then waiting for a bit to see what happens.

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Newcomer

I don’t think that. Markets are complicated. I think that local credit and confidence are the largest drivers but other drivers, including foreign investment, are significant. The reason why it is important that local credit and confidence are the largest drivers is that, even if foreign investment stays high, the impact of changes in local purchases will swamp that input. As for repeating your analysis, it’s not really possible, as you didn’t actually do any. Instead of analysis, you put “if even a fraction of that figure finds its way into Vancouver real estate,…” That is just a guess, and not even a quantified one. You have to have numbers to do a market analysis. The numbers for foreign participation and the numbers for local debt have been given many times over. If you’ve got additional or better numbers, let’s… Read more »

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YVR

“if even a fraction of that figure finds its way into Vancouver real estate,…”

Plus prior to this bubble we had Hong Kong in the 1990s and Iranians prior to that. There has always been foreign money. Probably way more in this bubble but always been there to some extent.

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YVR

If you think that credit on its own is the reason behind the current housing crisis, then you should be able to prove it.

It does not have to be all or nothing. Are you saying with no Chinese money Vancouver would be at 2001 prices today while the rest of Canada in areas where we know there is zero Chinese money have tripled since 2001?

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Shut It Down Already

There is no analysis. You’re guessing how much money is entering Vancouver and how much is used to buy real estate – for starters.

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Just me

Sounds like people are getting a bit irked.

I guess that not even 1% of china money outflows found their way to our neck of the wood. After all it is well known that Chinese would never move even a fraction of their money to Vancouver, right?

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The Man

What about all the other 20+ major centres across Canada that experienced the same or greater % rises in the last 15 years.

http://www.torontocondobubble.com/p/canadas-housing-bubble.html

Just some magical coincidence that they’ve also risen concurrently. Or are the Chinese buying up Saskatoon, too?

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Just me

I believe that total RE appreciation in other centres has been strong but not even close to appreciation in Vancouver over the past 10 years. If you have data to the contrary, feel free to post them.

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YVR

If you have data to the contrary, feel free to post them.

He just did. Look at the link.

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Just me

The growth in housing being seen does not compare the same units. You should look at a SFH in Vancouver Point Grey in 2006 and a comparable unit in Toronto in the same year.

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YVR

You should look at a SFH in Vancouver Point Grey in 2006 and a comparable unit in Toronto in the same year.

Would you be looking to buy a SFH in Point Grey even at 2006 prices? Maybe you should focus on other areas that are more relevant to you.

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YVR

Actually BC and Vancouver are up less in percentage terms.
Saskatchewan up 3.06 times since 2000.
Manitoba went up 2.97 times since 2000.
BC went up 2.42 times since 2000.
Vancouver went up 2.6 times since 2000.

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Just me

Again, I wish you could compare similar dwellings in Saskatoon and Vancouver. How many people live in condos in Saskatoon? the same proportion as Vancouver?
Of course not.

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Newcomer

Now you are being silly. You are sidestepping the fact that YVR has crushed your argument.

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southseacompany

“Vancouver Real Estate Sees Detached Benchmark Drop $27k”, Better Dwelling

https://betterdwelling.com/city/vancouver/vancouver-real-estate-sees-detached-benchmark-drop-27k/

“December stats show single-family homes dropped in prices, sales, and listings.”

With map.

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Dave

I don’t think these prices drops have much meaning at this point. Prices are moving on very thin volume. If listings don’t pick up significantly, prices will not fall very much.

The snowpocalypse has more or less paused the market. Now that it’s melting, we’ll probably see a lot of activity for the next few weeks as listings catch up to where they should have been. But, I don’t think we should get our hopes up because the rate of increase might be a little artificial.

I think the real test of this market will be the Spring and we won’t know anything substantive until early May once the April numbers are out.

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oncebittwiceshy

Hey Dave,

I think that you are a very cautious bear. The bigger problem for the entire mainland market now is not inventory; it is sentiment.

When Royal LePage goes on Global T.V. and tells all the viewers that they are expecting a drop in home prices this year, on top of the price drops recorded in November and December, why would anyone buy?

It is the opposite of FOMO, perspective buyers are waiting for more price drops. Who wants to put down a 5 to 10% down-payment only to see it disappear?

http://www.myrealtycheck.ca/

This website shows the trend for housing prices and it has been a sea of red for several months now.

You are right though, spring should be very interesting.

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bullwhip29

nothing would irritate the fence sitters more than yet another dip that wound up being bought while they sat and watched for the world to end. i predict not only the very same reporters to do a complete 180 and call a bottom in the coming months, but for Krusty and co to tip off their friends and family prior to the inevitable policy changes to comfort all the RE players and pretty much everyone else that is long RE.

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YVR

nothing would irritate the fence sitters more than yet another dip that wound up being bought while they sat and watched for the world to end.

We have already had the dip and still no buyers?

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bullwhip29

still too early. a sudden surge in volume would look suspicious right now. krusty will wait until at least feb-mar before she tells her friends its go time. after all said and done msm schills will attribute increase sales volume to nothing more than typical seasonality reasons and that “random” buyers who happened to wake up and want to load up on RE for no particular reason, were just lucky they bought before the 15% tax was rolled back.

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YVR

If it was so easy for government to reinflate then why did it not work in any other bubble? Bubbles always pop regardless of what the government does. I don’t think you get that.

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bullwhip29

no, you are talking about a full blown RE collapse which hasnt yet occurred. for all intents and purposes it is still full steam ahead in almost every other mkt outside of vancouver, which cooled dramatically only after the tax was introduced, all i am saying is that krusty could play that card and get some sort of mileage out of it (for however long that lasts before the SHTF everywhere)

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YVR

no, you are talking about a full blown RE collapse which hasnt yet occurred.

It is occurring now. They all start out down 20%. We are at a higher pace down than most. At this point all governments try something to turn it around. Usually lowering rates. Never works to reverse a collapsing bubble. With Toronto still going up lowering rates ain’t going to happen.

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Newcomer

It worked fine in 2009.

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Dave

I agree with you that sentiment has changed but the link between that and markets isn’t always so clear. I trade stocks so I have gone through this a hundred times and sentiment doesn’t always bode for what’s going to happen. What I think is more relevant is expectations versus reality. If for example, prices overshoot expectations of a downturn, then it would get nasty. Likewise, if a correction undershoots expectations, then it’s bullish because it brings confidence back into the market. The sentiment in this City can change very quickly. Right now, I would say the sentiment is one of caution, not bearish. I think people are mostly waiting this out to see what happens. We saw the same thing in 2009. The market more or less froze. At some point the market will make a move one way… Read more »

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Newcomer

“And it’s not like these units can’t be rented in a world of 0.3% vacancy.”

First, you follow the data so you actually know that building has outstripped population growth for the past ten years and thus housing stock is much higher than rental demand if places that are sitting empty were put on the market. Second, you also know that nothing bought recently can be rented for a price that covers holding costs.

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Bear Vancouverite

Dave, of course these price drops have significant meaning. Ignoring them is like ignoring price increases in short periods as having no meaning.

Considering Vancouver has been so hot for so long, it’s hard to imagine discounting price drops.

Listings have already begun to pick up and inventory is rising nicely now according to paulb’s numbers, and as has been posted before, prices will probably follow MOI and list to sales ratios more than absolute inventory numbers.

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Newcomer

I assumed that was at least in part because Quebec had higher unemployment to start with, but apparently that is not the case. They have been doing OK recently.

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oncebittwiceshy

Perhaps Quebec has provided more stable jobs, B.C. not so much so …. challenges … challenges … slow sales mean no income for a lot of these new full time jobs on the mainland.

“Altogether, employment in construction and finance represented a whopping 75% of the new full-time jobs in non-energy producing provinces. In Ontario, finance and construction made up 68% of the fulltime positions over the past year. In B.C., these industries explain over 100% of the growth. In other words, in the absence of this sector, there would be an outright decline in full-time jobs in the province.”
http://www.td.com/document/PDF/economics/special/Part_Time_Conundrum.pdf

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YVR

The funny part about the developer donations is they could make the donation amount back off the price increase from 2015 to 2016 on the sale of one condo. These guys sell thousands of condos per year. The BC Liberals are getting ripped off and not charging enough!

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Just me

While our own Christy Clark micromanages the realestate market and sells a few condos for developers, other provinces have been taking a slightly different approach. Could the cheaper cost of housing have anything to do with this? https://www.bloomberg.com/news/articles/2017-01-18/there-s-a-surprise-leader-in-canada-s-race-for-smart-global-jobs Quebec accounts for 42% of national labor force growth in 2016. Added more full time jobs than any other Province. Question for Crooked Christy supporters: how are her economic plans working out for you? Afford a good life? Christy’s approach is top-down: social engineering of high house prices, bring in mammoth investments in LNG and so on. But a “bottom-up” approach is preferable: make the place livable and companies will be able to attract talent and grow. Living in Quebec right now might be a lot easier than living in BC for a young, smart and entrepreneurial individual. Of course Christy would… Read more »

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YVR

Question for Crooked Christy supporters: how are her economic plans working out for you?

Actually so far it has worked out well for most people who have not over extended themselves on housing. Lots of jobs, thriving businesses, increased equity in peoples houses (wealth effect plus access to cheap credit), relatively low taxation and gov balanced budgets. That is why the Liberals are likely to win the next election. The pain will come in the future when the full reality of the RE crash kicks in, money people borrowed has to be paid back, equity is lost along with credit, jobs are lost when building slows and businesses suffer when there is less money being spent in the economy.

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Newcomer

Agreed. The question above is like shouting, “Are we having fun yet?!” at a drug-fueled party.

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Foo Man

Is this post from 2006?

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Just me

Perhaps you live in an area where everything is hunky dory. But I can testify to many people who are struggling to live in Vancouver, even on good jobs (I mean 150k and above).
From what I see, this is not exactly a drug-fueled party at its peak. We must have passed the peak a while back and the hangover is already hitting a few people.

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YVR

We must have passed the peak a while back and the hangover is already hitting a few people.

I agree lots of people negatively impacted but still lots riding high. Things can change fast. We will see what it looks like in May. The party will be over but the big hang over probably comes in 2018.

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