What do falling rents mean for the condo market?

Southseacompany posted a few stories about our changing market and dropping rents as some people move away from city cores.

“People are leaving the cores of major cities, including Vancouver, and that has led to some rent drops.”

“The average monthly rent in Vancouver in October for a two-bedroom apartment was the highest in Canada at $2,712, but it was an eight per cent drop from a year earlier, the steepest fall in B.C.”

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southseacompany

Veteran landlords selling Vancouver portfolios“, Business In Vancouver
https://biv.com/article/2020/12/veteran-landlords-selling-vancouver-portfolios

“With immigration to B.C. hitting negative levels – more people left the province for other regions than arrived in 2020’s first half for the first time in history – Vancouver rents are declining while insurance premiums for apartment buildings have increased an average of 75%, property taxes have soared and capitalization rates have flatlined in the sub-3% range. This has resulted “in a dampening of enthusiasm to invest in the province’s biggest city,” according to Avison Young”

Dave

Watch what happens in the Spring, when this virus is over and all those people have lived through a Winter outside of BC. Come April 1st, the second wave will be mostly gone and a cure provided to most that want it. Rates will still be low, condos will be starting from a low base and with reasonable inventory levels. We’ll be back to another North Vancouver each year with international flights resuming. And all those people will never want to experience another Winter outside of BC.

I expect we’ll see condos be the leading real estate segment in 2021 for these reasons.

My advice if you want a condo… get approved in late February and be ready to act in March and April of 2021.

Werner Stein

https://thinkpol.ca/2020/11/30/canada-to-tax-foreign-homeowners/

“Canada will start taxing foreign nationals who use Canadian homes to park their wealth, according to the federal government’s fiscal update released on Monday.”

“Speculative demand from foreign, non-resident investors contributes to unaffordable housing prices for many Canadians. To help make the housing market more secure and affordable for Canadians, the government is committed to ensuring that foreign, non-resident owners, who simply use Canada as a place to passively store their wealth in housing, pay their fair share.”

Spec

I recall discussing calling out BS on this site, racist and otherwise, and how it should be managed. I subscribe to the don’t feed the trolls theory…. I did back then as well. As a result of this, I was accused of being racist – or at least racist adjacent. Well… pushing back appears to be working fucking wonders eh? Would you look at the stream of 4chan level shit in here?!! The individual wants an audience and, more importantly, engagement. I will not interact with that individual going forward. Do not interpret my silence as approval because it simply is not. Also, the adage about arguing with a pig applies in spades here. To MVCA or whatever you’re calling yourself these days: you need medical/psychological help and your beyond the pale beliefs belong in ages long past along with… Read more »

paulb

N 152
PC 66
S 86
TI 11836

MTD Sales 3113

Any real estate questions, I’m always happy to help. http://www.instagram.com/clivestevepaul

Werner Stein

Asking for a friend……..

Not entirely sure if it could be explained by psychology which asserts that human perception is badly flawed and therefore not infallible, and if socialization creates biases not based on facts.

But my friend has confessed to me that when she sees headlines relating to some RE transaction gone bad, or a major law suit she anticipates that the names that follow are Asian.

When a clip is shown of somebody handing over a hockey bag of money to be laundered, although the characters are not shown in high definition, she tells me she tends to fill in the details and pictures an Asian person.

Human frailty, social biases?
Please help

Dave

You can be both cognitively biased and correct at the same time. It can be both true that Asians are more likely to be involved in said issues, but that you also cognitively magnify it. The only way to find out is to compare you perception to the data.

Dave

CIBC Black Friday Mortgage Deal 1.49%. 4 year fixed 20% down.
That’s less than $400 per month per $100k and 69% equity flow ($275 per month), and only $125 interest per $100k.

Now imagine buying a $500k condo. That’s only $625 carrying cost per month and $1,375 equity gains per month.

And now you know why the Spring market will be hot.

southseacompany

“Short The City”, Steve Saretsky
https://stevesaretsky.com/short-the-city/

The flight to the suburbs has become all the rage these days. The reality is this trend was already underway.”

Thankfully for the city, we will get a vaccine soon, and that will slow the urban exodus. However, the structural impairment of housing affordability will continue to push people outwards, it is simply impossible to stop. Short the city, go long the suburbs.”

Werner Stein

RE Ad Hoc Link:

In the comment section:

“Allison Barber
Where is the developer now? HK? Do you know how many laws and bylaws must be broken to create such a POS? Again, the crooks walk away and the people pay.”

Better get the thought police on this quickly, before the youth of Vancouver becomes corrupted.

I think that Allison should have to be made to drink the hemlock.

Ad Hoc

Vancouver real estate: leaky East Broadway condo for sale, price reduced, $339,900, cash only
https://www.straight.com/news/vancouver-real-estate-leaky-east-broadway-condo-for-sale-price-reduced-339900-cash-only

What’s the equity flow on this one …?

Dave

Exceptions aren’t rules by definition.

Equity Flow is a perfect pairing of words. It works.

Ad Hoc

Yes it works, like robbing Peter to pay Paul…

Dave

LOL. No it’s not like that.

Werner Stein

“Rates will stay low because central bankers lack imagination.”

No, not because they lack imagination.

They lack control.

They lost control a few years back, and have declared overtly as such many times, suggesting that it was up to the governments to use fiscal tools.

You are the one that lacks imagination and knowledge.

Low bank rates, do not ensure that mortgage rates stay low.

And it does not mean that local RE Bubbles will not burst even if mortgage rates stay low.

A lot of other embers are smoldering.

Reality Bites

It’s because politicians run away screaming from recessions, leaving it to CBs to put out the fire using the only tool they have.

Werner Stein

“amiright?”

No, but as per your usual petulance, you managed to make a fool of yourself once more.

You are now in the penalty box.

Werner Stein

“And you’re suggesting that’s behind each and every sale over the past 5 years?
LOL.”

This level of absurdity is surprising even from you.

LOL 

Shut It Down Already (original)

Money laundering is an insignificant fraction of total sales volume.

But I get it – you can’t afford a house therefore you find it suspicious that anybody else can. Especially those nasty foreigners, amiright?

I think he knows homes are affordable. He’s just worried about unlikely downside risk scenarios.

Oracle

Guys:

1.49% 4 year fixed.

Happy shopping.

Massive immigration means you can’t lose on housing. .

Shut It Down Already (original)

1.33% 5yr fixed on ratespy….

If I wasn’t deep into this fine bottle of wine I’d calculate the equity flow ratio on that rate.

Ad Hoc

Well, now we know how you got your “equity flow” idea …

Big bear

Will it be the same when you renew?

Dave

Doesn’t matter. The equity flow is so high that you’re way ahead of the curve even if rates go up. And the economic situation with higher rates means you’ll have higher income. Not a worry in the slightest.

Big bear

It does matter actually. If rates are that low 4 years from now that would mean that we’re in a perma-depression with mass unemployment and mass homelessness. Better not to buy in that environment for your own sake.

Shut It Down Already (original)

2009 called, it wants its prediction back.

Dave

Rates will stay low because central bankers lack imagination. They play it safe. The likely situation is another decade long economic run with low rates and increases occurring only at the tail end of that. That’s good for real estate. We had our once a decade slow patch and correction. Hop on the bandwagon and join the ownership class.

paulb
Werner Stein

“You mean they’re all colluding to pay more than the underlying is worth?
Laughable idea.”

Paying more that the underlying value is an efficient way of laundering dirty money.

https://study.com/academy/lesson/money-laundering-stages-methods.html

Shut It Down Already (original)

And you’re suggesting that’s behind each and every sale over the past 5 years?

LOL.

Ad Hoc

No one is suggesting that. It is simple supply and demand; more buyers mean higher prices. But it has also been documented that money laundering crooks will pay more than the property is worth to wash their cash. Sometimes they will sell a house back and forth repeatedly between a few buyers to artificially drive up the price and to wash more cash. But you already know all this.

Shut It Down Already (original)

There are thousands of properties sold each month, dummy.

Ad Hoc

Of course there are, and that means they are all legit sales, right?

Shut It Down Already (original)

The legit sales will be the vast majority and therefore the sales which determine market prices.

Today’s prices are a function of today’s buyers. Who, as we know, are almost all locals bidding against other locals in a time of historically low interest rates and FOMO.

You’re just so desperate to blame foreigners and throw accusations of criminality at them. It’s quite sad.

sumtingwong2020

Richmond lawyer permanently banned from practising lawhttps://www.richmond-news.com/news/richmond-lawyer-permanently-banned-from-practising-law-1.24246768

http://www.princemountain.com/en/about-us.html

Werner Stein

Parasites, speculators and criminals have had immeasurable influence for far too long.
Kathy Tomlinson, and Sam Cooper have done extensive reporting on these unpardonable and vile “foreign investors”.

They, among other reporters, amassed so much evidence, that were able to garner the attention of law enforcement which ultimately led to the Cullen Commission.

Interestingly, noteworthy, and what should have the parasites worried, is that David Ebby is now in charge of housing and retains the position of attorney general.

A thriving economy cannot, in the long run, be sustainable if heavily reliant on crime and speculative activity.

This is economic fact not ideology. 

Dave

parasite is an organism that lives on or in a host organism and gets its food from or at the expense of its host. 

A Werner is a person who publicly advocates that renters not pay landlords, which likewise is an organism taking from a host.

Ironic.

Shut It Down Already (original)

Werner also doesn’t understand that their belief that we are in a bubble implies that all buyers are speculators (by definition), while over 90% of buyers are local.

And have no intention of flipping. This past year killed the foreign buyer bubble narrative. But have no doubt when the immigration numbers grow to another North Vancouver per year, it will take real estate up with it.

The bear case now requires a massive economic boom that creates inflation which takes rates up with it. While that could play out, it would take many years to get their and it’s very unlikely. Rather, it’s likely rates stay here or go negative in the medium run.

Shut It Down Already (original)

More than that, I think the only trigger of that boom could be over stimulus. If the economy grew naturally then that would imply salary growth, companies expanding and hiring, and new workers coming to the area in need of housing.

I was definitely one of those who used to believe that rates would rise imminently and price trends would be forced into reverse, but I’m also somebody who’s willing to change their view in light of new information rather than stubbornly dig in. I don’t see rates rising in a meaningful way for a decade. In that time you could make a severe dent in a mortgage.

Ad Hoc

Foreign buyers drove up the prices, we are now living with the consequences.

Shut It Down Already (original)

False. We have the data, remember? The data you clowns begged for and now ignore?

Today’s buyers are bidding against each other. All locals.

Ad Hoc

Today’s buyers are bidding against each other at prices that were elevated by foreign investors. The data also shows a big influx of foreign buyers over the last 10 years as prices were increasing almost exponentially at times. Some developments are sold exclusively offshore.

Shut It Down Already (original)

You mean they’re all colluding to pay more than the underlying is worth?

Laughable idea.

Ad Hoc

No that’s not what I mean and you know that.

Shut It Down Already (original)

It’s a logical consequence of what you said, which is just one reason why what you said is false.

Today’s prices are a function of today’s buyers.

Hard to argue against that. Boom.

Ad Hoc

And how did today’s prices get to where they are? Foreign buyers.

Shut It Down Already (original)

Don’t make me school you again.

paulb

N 126
PC 45
S 136
TI 12030

http://www.clivestevepaul.com

Werner Stein

southseacompany:

“Owners of empty homes in Vancouver will get higher tax bills starting in the 2021 tax year, following a Wednesday council vote”

This is just the beginning, as it becomes more politically palatable, the taxes will increase

For the most part the owners of these properties are parasites and criminals.

Judging from my own experience talking to people, I sense strong pangs of hunger for a return to fairness.

Punitive taxation for the abusers seems a civil way toward a more equitable redistribution of peoples hard earned efforts.

Dave

Ok Communist.

Ad Hoc

So with their reasoning being a criminal is cultural.

realist

Thank you for posting that link. Gold indeed.

Ad Hoc

I recall when Jenny Quan was defending the chinese tax cheats who had undelcared overseas income by saying “they are very private people with their money”… as if that makes it okay to not pay their Canadian income tax.

southseacompany

“11,000 condos added to Metro Vancouver’s rental market thanks to vacancy taxes: CMHC study”, CTV News
https://bc.ctvnews.ca/11-000-condos-added-to-metro-vancouver-s-rental-market-thanks-to-vacancy-taxes-cmhc-study-1.5205489

southseacompany

“Vancouver triples vacancy tax, even as many condos flooded rental market”, Vancouver Sun
https://vancouversun.com/news/local-news/dan-fumano-vancouver-triples-vacancy-tax-even-as-many-condos-flooded-rental-market

“Owners of empty homes in Vancouver will get higher tax bills starting in the 2021 tax year, following a Wednesday council vote”

realist

The only change I’ve personally observed since the inception of this tax is a new type of tax evasion: faking the rental of an empty house. This is a twist on the long established ruse of faking occupancy of an empty house as a primary residence.

paulb

N 162
PC 44
S 145
TI 12116

http://www.instagram.com/clivestevepaul

xhistory

Reading this forum, I take it the Fed and Prov synchronized rent whatever policy is jerkbait, primarily designed for repurposed covid flotilla of cruise ship migrants on their way over this spring?