Housing Bust 2017

Leveraging, renting vs owning, making an investment or buying a home?
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ig17
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Re: Housing Bust 2017

Post by ig17 »

Mordko wrote: 11 Dec 2017 00:23 Sorry, didn't realize you need help with Googling. Here: http://www.huffingtonpost.ca/2017/04/28 ... 10158.html.
Here's my favourite part from the article:
Many economists have raised the alarm about Canada’s increasing dependence on housing for its economic growth. Global banking consultancy Macquarie found last fall found that Canada’s reliance on real estate investment hit a record high last year — the same thing that happened in the U.S. shortly before its housing bubble burst.

...

A report last year from the International Institute for Sustainable Development urged Canada to reduce its reliance on both housing and oil, arguing the industries have put the economy on a “roller coaster.”

Mordko wrote: 11 Dec 2017 00:23 "Popular" and "legal" isn't the same as "fair" or "good for the economy". Often its the exact opposite.
a. By your definition of "fair", we should just open the borders and let everyone in.
b. "Good for the economy" typically means GDP growth. GDP growth is a poor measure of progress.
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kcowan
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Re: Housing Bust 2017

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Mordko wrote: 10 Dec 2017 23:40I agree that there is a problem when foreign millionaires buy a house here and then send their families who don't work but get free schooling and healthcare, etc... But that has nothing to do with housing.
Yes the big problem is that lack of an asset-based means test for everyone who get a government break. That would fix many inequities in our taxation system. This has been going on since the 80s (maybe earlier but that was when it happened across the road from us in the GTA).
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Re: Housing Bust 2017

Post by Mordko »

kcowan wrote: 11 Dec 2017 06:00
Mordko wrote: 10 Dec 2017 23:40I agree that there is a problem when foreign millionaires buy a house here and then send their families who don't work but get free schooling and healthcare, etc... But that has nothing to do with housing.
Yes the big problem is that lack of an asset-based means test for everyone who get a government break. That would fix many inequities in our taxation system. This has been going on since the 80s (maybe earlier but that was when it happened across the road from us in the GTA).
Yep.
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Re: Housing Bust 2017

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It's really sad reading about the entitlement people seem to demand.

My child wants an affordable house, with a well paying job in exactly the place where they want to live.

I remember when I graduated, there were no jobs. One of our courses was industry coming in to tell us about the "real world", their talks were mostly "we're not hiring, we're not planning on hiring and I may be fired next week". They actually cancelled the course halfway through the year.

What did we do? Well some of us probably sat in our parent's basements, but others looked for any job available moved away to a place that had jobs or, like me, created our own.

No one handed us a job just because we wanted one. No one chained us down and said we had to live "here".

We found solutions to our problems instead of demanding the government legislate it away (which rarely works without a ton of unintended consequences which are usually worse).

Canada is a big country, lots of big cities, many different economies (you don't have the option of GTA, Vancouver or some hick town in the middle of nowhere Saskatchewan. For a list of options, consult an atlas.

In these days of high speed internet and technology, you can run a company from anywhere (I've been in the middle of field, surrounded my miles of nothing and remotely connected to a client's computer (or the office) using my phone and been able to fix issues.

There are also so many ways to increase your incomes passively that most people don't even think of. Can't afford a mortgage in GTA based on your paycheque? What about becoming a landlord (or other type of investor) in some other city where you can rack up a stable of income producing properties which generate the profits to pay your mortgage, or anything else you want, for you? The only limit on your income is how many cash flowing investments you can be bothered to find. My investments generate way more income than my companies do for me personally.

I guess the real difference is, when I was faced with a problem I looked for solutions. These days most people want handouts or others to solve the problems for them. Soon we're going to demand the government provides physical supports for people so that their arms don't get tired from extending them all day while they look for handouts.
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Re: Housing Bust 2017

Post by kcowan »

Aren't the people you are describing the kind of people who would work for a telco or the government?

The entrepreneurs are still engaging although it is tougher to get a home run these days.
Maybe they have to get up to bat 2 or 3 times to get a winner.
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Re: Housing Bust 2017

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Just a Guy wrote: 14 Dec 2017 09:40 It's really sad reading about the entitlement people seem to demand.
My child wants an affordable house, with a well paying job in exactly the place where they want to live.
Well put. Far to much whingeing these days. People forget that rewards shouldn't come without sacrifice. Probably a result of to many "participation" medals when they were young and parents/grandparents that are to indulgent.

edit: and interest rates that have been far to low for far to long.
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Re: Housing Bust 2017

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Just a Guy wrote: 14 Dec 2017 09:40 It's really sad reading about the entitlement people seem to demand.

My child wants an affordable house, with a well paying job in exactly the place where they want to live.
No one is demanding that, okay? You put words in peoples mouth to misrepresent their position, just like mordko did before you. He talked about a total ban on foreign RE ownership, even though no one had suggested that. You talk about "the entitlement" that no one demands.

It's very telling that the defenders of the status quo resort to the tried and true straw man argument. It's so much easier to knock down a straw man than to address the real issue at hand... the impact of foreign capital on Canadian real estate prices.

Canadian middle class is forced to compete for housing with foreign multi-millionaires who use Canadian houses as their safety deposit boxes. Go ahead, try defending this policy on its own merits, without erecting a straw man.
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Re: Housing Bust 2017

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You're talking about two cities in a country that's the second largest in the world. It's not like foreign ownership is making the Maritime provinces unaffordable, nor the prairie provinces, nor the north...heck, there are affordable places in BC and Ontario as well (life does exist outside of the GTA and Vancouver). As someone who owns affordable housing all across the country, I probably have a better idea about real estate than you do. As I originally said, Canada is a big place, full of lots of opportunities. Try visiting another country and see what life is like in other places (Europe, for example has some places with multigenerational mortgages because houses are so expensive one generation can't pay it off).

Your arguement smells more of xenophobia than reality.
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Re: Housing Bust 2017

Post by ig17 »

Just a Guy wrote: 14 Dec 2017 21:33 You're talking about two cities in a country that's the second largest in the world.
"The second largest" is a red herring and you know it. Most of the territory is frozen tundra. GTA and GVA have a combined population of 9 million. The affordability crisis has spread well beyond the boundaries of GTA and GVA (the spill-over effect). You can safely add another 1-2 million to 9 million as affected. That's somewhere between 1-in-4 and 1-in-3 Canadians.

Just a Guy wrote: 14 Dec 2017 21:33 As someone who owns affordable housing all across the country, I probably have a better idea about real estate than you do.
Of course you do. As someone who does RE for a living and owns a large RE portfolio, you benefit directly from the uncontrolled influx of foreign capital. In other words, you are talking your own book here.

Just a Guy wrote: 14 Dec 2017 21:33 Try visiting another country and see what life is like in other places (Europe, for example has some places with multigenerational mortgages because houses are so expensive one generation can't pay it off).
Maybe we should learn the lesson and not head down the same path?

Just a Guy wrote: 14 Dec 2017 21:33 Your arguement smells more of xenophobia than reality.
How very predictable. This is the go-to argument for RE lobby in GTA/GVA. They can't win the argument on its own merits... so they try to shut down the debate by playing the racism card.
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Re: Housing Bust 2017

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As someone who counts on rental income, the value of the property is meaningless. The only way I'd "benefit" is to sell my holdings, which kind of defeats the purpose. It certainly wouldn't help me when I buy (which I do several times a year).

You make it sound like cities of Kamloops, Edmonton, Calgary, Saskatoon, Regina, Winnipeg, Hamilton, Ottawa, Quebec City, Montreal, St. John's, etc. Are all small hick towns without job prospects or even indoor plumbing.

These are all growing cities, and very affordable.

You fear an unsubstantiated "foreign investor" which you get from internet posting as opposed to stats Canada or any reliable source.

Btw, if you look up the definition of xenophobia, you'll find it's different than racism...

xen·o·pho·bi·a
ˌzenəˈfōbēə,ˌzēnəˈfōbēə/Submit
noun
intense or irrational dislike or fear of people from other countries.

You see, I not only know about real estate, I also studied English, so I don't twist meanings into definitions that aren't true.
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Re: Housing Bust 2017

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Still, excessive real estate price escalation, however caused and by whom, has benefited those already in the game the most. One might argue this was a planned conspiracy to benefit the haves the most. The powers-to-be did not understand Econ 101, i.e. that continued relaxation of mortgage rules did little to increase affordability, except in the very short term every time a relaxation came around. All that easing mortgage rules did was to increase demand, which increased prices, with ultimately no net change in affordability in the long term. Had we always stuck with 25 year amortizations and 6-8% interest rates and a mandatory 25% down payment, house prices wouldn't be close to what they are today.

Now, in places like GVR and GTA, we have a hollowing out of communities with a disadvantaged middle class (the have nots) unable to ever own. Don't know about GTA, but that middle class of mostly young professionals is now leaving GVR if they can, and re-locating to the Interior where at least some city councils are pursuing housing sizes and types that these folk can have a hope of purchasing. The Central Okanagan has seen a surge in Lower Mainland refugees and is scrambling to approve development permits for the 'right' mix of housing.
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Re: Housing Bust 2017

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I agree the lowering of interest rates had far more of an effect on housing prices than "foreign investors". We should even see proof of that in the coming years (since people fail to remember what happened in the USA in 2007/8 when the balloon payments and no more refinancing destroyed the housing market) as the interest rates rise. We could also point to Alberta over the last few years after their economy tanked and housing prices, especially the high end, corrected.

There's a reason I only purchase properties for about 40-60% under current "market" prices. As interest rates rise, housing will correct.
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Re: Housing Bust 2017

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Just a Guy wrote: 14 Dec 2017 22:51 You make it sound like cities of Kamloops, Edmonton, Calgary, Saskatoon, Regina, Winnipeg, Hamilton, Ottawa, Quebec City, Montreal, St. John's, etc. Are all small hick towns without job prospects or even indoor plumbing.
You are putting words in my mouth, again.

Just a Guy wrote: 14 Dec 2017 22:51 These are all growing cities, and very affordable.
Hamilton has skyrocketed in the last few years due to spill over from GTA. Average house price is between $555K and $585K. That doesn't strike me as "very affordable". CHMC rates Hamilton as overvalued.

Ottawa: I live in Ottawa. It's in a better shape than GTA but I wouldn't call it "very affordable" either. House prices have far outpaced income growth in the last two decades. Ottawa is not subject to 15% foreign buyer tax, so it's getting hotter while Toronto is cooling down a bit.

Calgary was very similar to Ottawa the last time I looked.

Just a Guy wrote: 14 Dec 2017 22:51 You fear an unsubstantiated "foreign investor" which you get from internet posting as opposed to stats Canada or any reliable source.
Our government refuses to collect relevant data, so it's must be an imaginary problem. See, if it were a real problem, they would promptly give us official data. No data... not problem. In the meanwhile, don't believe your own lying eyes.

But here's the funny thing, every time the subject of foreign buyer taxes is brought up, RE lobby starts shrieking.
Foreign buyers are absolutely not a problem, screams the lobby.
If so, it shouldn't be a big deal if tax them more?
No, god forbid, that would totally destroy Canadian economy.
Right, that must mean they ARE distorting our market?
No, no, no, says the lobby, they have absolutely no impact on affordability. But don't you dare to tax them more. That will be the end of the world as we know it.

Just a Guy wrote: 14 Dec 2017 22:51 Btw, if you look up the definition of xenophobia, you'll find it's different than racism...
Yes, I know the difference. Xenophobia card... racism card... it's the same game. Shut down the debate by labeling your opponents as intolerant.
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Re: Housing Bust 2017

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So, your opinion is the only valid facts you need. Government coverups, not tin hat sounding at all.

I work with realtors all over the country. While there are foreign buyers, no one denies that, many Canadians have been involved in bidding wars over the past two decades. Fuelled by low interest rates and "affordable" payments. When I sold my personal residences over the years, all for at least double what I paid for it originally, not one was bought by a foreign investor.

If what you suspect is true, then housing prices will continue to rise along with interest rates (foreign buyers don't have mortgages) and economic slowdowns (foreign investors don't work in Canada). Funny how Alberta went down due to economic impacts...you think foreign investors would have propped up the prices. Toronto is having a current slowdown as well...doesn't make sense if foreign buyers are picking up everything.

No, it must be true because you want it to be so...

Funny thing, every time foreign buyers is brought up as the cause, no one can provide evidence because of government coverups. No one talks to actual realtors, examines the other possible causes, nope, it's always someone else causing the problems...

Let me guess, you also think we need to tax the rich and redistribute money so that everyone can be "equal". The rich are responsible for all your woes, except maybe housing prices, that's rich foreigners...

By the way, I also didn't "label" you anything, I said your statements sound xenophobic...then I presented the definition of xenophobia...tell me where in your statements it does not fit the definition. I'm sorry, any "label" is only self imposed by your actions, of course that doesn't stop you from blaming someone else...

Calgary has had prices on the high end drop about 25% in the last couple of years...still not affordable, but certainly not heating up...of course don't let reality get in the way of your beliefs.

Finally, I'm not "putting words in your mouth", I'm countering your arguements by pointing out the falicy of your arguement, of course your too closed minded to see that.
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Re: Housing Bust 2017

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Keep it civil, boys. Remember - no personal attacks. You are getting close to the line.

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Re: Housing Bust 2017

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Low interest rates and foreign capital moving in to buy up Canadian assets are not two independent factors. This isn't either or; in fact we have strong positive correlation. It went like this:
1. Oil prices tanked
2. Lower long-term prospects for our economy.
3. Lower expectation of interest rate rises compared to other economies.
4. CAD tanked.
5. This made Canadian assets cheap for foreigners.
6. Foreigners move in and buy up Canadian assets. That includes shares (2016 was quite a year for Canadian stocks) and houses.

Now, we don't have data to track where the money is actually coming from. Even if a resident of Canada is buying a house, the money may well be coming from abroad. This isn't tracked. All I have is anecdotal evidence that during the crazy house market in GTA, it were the Chinese who were bidding the prices up by hundreds of thousands. Typically , out of 20-30 potential buyers, 95% would be people born in China. Prices were heavily impacted by factors which make no sense but are popular superstitions in China. For example anything with 4 is bad and 8 is good.

This is how the market works. Can't fight it; not even the North Korea has been able to actually defeat the market forces. All the regulations on foreigners did was to enrich more intermediaries and shift the boom from one part of Canada to another.

And the transfer of foreign money into Canada has made Canadians better off - on average. Those who don't have a job and/or Canadian assets don't gain so much but even they gain because the government gets to collect more taxes to sustain them.
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Re: Housing Bust 2017

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It would be very simple to make Canadian RE unattractive to foreign investors or local investors funded from abroad - change the tax laws so that it would give poor returns compared to the stock market, etc. The problem is that to make this airtight you would have to subject domestic owners to the same tax regime.

Too many Canadians are depending on their houses to fund their retirement. I'm pretty sure that house equity comprises a record % of household net worth (including present value of pensions) today. That's the underlying problem.
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Re: Housing Bust 2017

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patriot1 wrote: 15 Dec 2017 18:42 It would be very simple to make Canadian RE unattractive to foreign investors or local investors funded from abroad - change the tax laws so that it would give poor returns compared to the stock market, etc. The problem is that to make this airtight you would have to subject domestic owners to the same tax regime.

Too many Canadians are depending on their houses to fund their retirement. I'm pretty sure that house equity comprises a record % of household net worth (including present value of pensions) today. That's the underlying problem.
Yep, capital gains tax on primary residence sales would change the equation dramatically and remove the strong incentive to profit from ones dwelling. Would be fair, as long as we were to see a reduction in the overall rate to offset the extra government income. Also, will hurt a lot of people with vested interest, so not happening.
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Re: Housing Bust 2017

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Statistics Canada has just released some data on non-resident home ownership in various Canadian cities. Here are the results for Toronto and Vancouver:
Data from the CHSP revealed that non-residents owned 3.4% of all residential properties in the Toronto census metropolitan area (CMA), while the value of these properties accounted for 3.0% of the total residential property value in that metropolitan area. In the Vancouver CMA, non-residents owned 4.8% of residential properties, accounting for 5.1% of total residential property value.

Estimates of non-resident ownership varied by property type. In both metropolitan areas, non-resident ownership was more prevalent for condominium-apartments. Non-residents owned 7.2% of condominium-apartments in the Toronto CMA and 7.9% of these units in the Vancouver CMA. By comparison, non-residents owned 2.1% of single-detached houses in the Toronto CMA, and 3.2% of single-detached houses in the Vancouver CMA.
I leave it to others to say whether this is a little or a lot.

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Re: Housing Bust 2017

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ghariton wrote: 19 Dec 2017 14:06 I leave it to others to say whether this is a little or a lot.
3% to 7% of the total can certainly move the market.

What the above figures don't tell is the (pretty common, anecdotally) situation where foreign money (say, from a rich parent or grandparent) is used by a Canadian resident to (over-)bid on a piece of real estate.
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Re: Housing Bust 2017

Post by twa2w »

adrian2 wrote: 19 Dec 2017 14:12
ghariton wrote: 19 Dec 2017 14:06 I leave it to others to say whether this is a little or a lot.
3% to 7% of the total can certainly move the market.

What the above figures don't tell is the (pretty common, anecdotally) situation where foreign money (say, from a rich parent or grandparent) is used by a Canadian resident to (over-)bid on a piece of real estate.
Agree that that total does not include where foreign money was used to buy a home in the name of child ( often a student) or grandparent, who live in the home. Nor does it include where foreign money buys several homes using a local corporation or proxy.
I suspect that in Vancouver and Toronto that the true number is substantially different and we have no way to accurately track it.
Also agree that it doesn't take much at the high end to move the market.

Altough not accounted for in the study,.... Say in the Toronto market if foreign ownership was 1% ten years ago and is now over 4%, that signifies a lot of foreign buying activity more recently. This of course would have a more significant impact on pricing.
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Re: Housing Bust 2017

Post by big easy »

5% of properties owned by foreigners does not sound like a lot but if it was 1 or 2% ten years ago, that puts a different face on it. I wonder what percentage of sales were to foreign buyers in recent years? Maybe CHMC and the RE boards have a vested interest in downplaying the role of foreign ownership since they stand to lose if prices correct? According to Royal Lepage the Canadian housing market is experiencing a "goldilocks" moment - not too hot not too cold. To quote blonde: Study the system.

Sorry I wrote that without reading the last post.
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Re: Housing Bust 2017

Post by kcowan »

Here is a similar sentiment from Rachelle Berube, a property manager and activist:

http://landlordrescue.ca/cmhc-just-wron ... ercentage/

She seems to know of which she speaks.
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Re: Housing Bust 2017

Post by CROCKD »

From the property manager referenced by Keith.
My guess on non resident ownership in GTA properties? At least 8%. At least.
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Re: Housing Bust 2017

Post by ig17 »

adrian2 wrote: 19 Dec 2017 14:12 What the above figures don't tell is the (pretty common, anecdotally) situation where foreign money (say, from a rich parent or grandparent) is used by a Canadian resident to (over-)bid on a piece of real estate.
Proxy ownership is very difficult to track.

Real-estate agents routinely violate FINTRAC reporting requirements, and they do it with impunity:
http://www.cbc.ca/news/business/fintrac ... -1.3761343

Lawyers are exempt from FINTRAC reporting altogether.

As far as I can tell, Statistics Canada materials don't mention this gap in their data.
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