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 »

https://www.theglobeandmail.com/news/na ... e37381468/
... critics noted that Statscan's report, which is the first release from a new federal program to address gaps in home ownership data, focuses on non-residents' ownership of housing stock rather than their share of recent purchases, or flow, which can drive up prices beyond the reach of local buyers.

"What is very interesting is that this data is being spun in a certain manner and it is not illustrating the point that many people want it to make," said Josh Gordon, a professor at Simon Fraser University in British Columbia who researches the Vancouver and Toronto housing markets. "Once you look at flow, not stock, the picture changes substantially."

For example, figures in the report's data tables show that 19.1 per cent of condominium units built in the past two years in the city of Vancouver were purchased by non-residents. In the city of Toronto, non-residents bought 11.6 per cent of recently completed condos.

"That suggests that non-resident buyers are playing a major role in the condo market and much greater than the industry has been letting on," Prof. Gordon said.
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Re: Housing Bust 2017

Post by ig17 »

https://www.reuters.com/article/us-cana ... SKBN1ED1P7
(Reuters) - Foreign investment in Canada's hottest housing markets is low and stable, Statistics Canada said on Tuesday, but data showed non-resident buyers were driving the newest and most-expensive segments of the market, particularly condos, in Vancouver and Toronto.

Non-residents owned 3.4 percent of Toronto residential properties and 4.8 percent of Vancouver's housing stock as of mid-2017, Statscan said. But when new-built condos were isolated, the number of non-resident owners jumped sharply, suggesting overseas investment is driving the hottest segment of the market.

Non-residents, defined as those whose principal residence is outside of Canada, owned 15.5 percent of condos built in 2016-2017 in Vancouver, and 11.3 percent in Toronto, Statscan data showed.

"These numbers confirm what a lot of people have been suspecting is happening, particularly in new-builds," said Andy Yan, director of The City Program at Simon Fraser University in Vancouver, who first noted the trend. Reuters confirmed the findings with Statscan.

Yan also said the data does not fully capture the impact of foreign money, nor the impact of domestic and foreign speculation, because it focuses on the owners, rather than where the money comes from.
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Re: Housing Bust 2017

Post by ig17 »

A tweet by Reuters reporter who wrote the above article. It includes a spreadsheet with the raw numbers cited in the article. Reuters confirmed the findings with Statscan.

Per spreadsheet, non-residents bought 22% of the new townhomes built in Vancouver in 2016-2017. Proxy ownership is not included.

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Re: Housing Bust 2017

Post by Flaccidsteele »

ghariton wrote: 19 Dec 2017 14:06I leave it to others to say whether this is a little or a lot.

George
Those numbers are in line with what I expected.
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Re: Housing Bust 2017

Post by hamor »

One other thing about this so called statistics ;) is how does one account for foreigners who now reside in Canada, but bought their homes with the cash they brought with them..?
"Speculation is an effort, probably unsuccessfully, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little." Fred Schwed " Where are the Customers’ Yachts?"
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Re: Housing Bust 2017

Post by ig17 »


John Pasalis, President of a full-service real estate brokerage in Toronto wrote: "Once you look at flow, not stock, the picture changes substantially." The industry is spinning the foreign buyer data by focusing on the entire stock vs the % foreign ownership of recent transactions which is far more important

John Pasalis, President of a full-service real estate brokerage in Toronto wrote: Non-residents behind 12% of new condo completions in Toronto and nearly 25% in Richmond - builders have repeatedly said less than 5% of units are bought by non-residents
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Re: Housing Bust 2017

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Evan Siddal, President and CEO of CMHC wrote:
Definitive data from @StatCan_eng and @CMHC_ca proves our assertion that blaming foreigners for high house prices is not full story.
One of the responses he got:


Twitter user FIVRE605 wrote:
umm @ewsiddall did you dig into your own data?

Do you really believe this much added competition to Van condos hasn't contributed to higher prices?

Condos built in the last year that are owned by non-residents

Vancouver - 19%
Richmond - 24%
Coquitlam - 23%
Metro Van - 16%
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Re: Housing Bust 2017

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hamor wrote: 20 Dec 2017 22:47One other thing about this so called statistics ;) is how does one account for foreigners who now reside in Canada, but bought their homes with the cash they brought with them..?
Why are foreigners buying property before they have permission to reside here?
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Re: Housing Bust 2017

Post by longinvest »

kcowan wrote: 21 Dec 2017 09:00
hamor wrote: 20 Dec 2017 22:47One other thing about this so called statistics ;) is how does one account for foreigners who now reside in Canada, but bought their homes with the cash they brought with them..?
Why are foreigners buying property before they have permission to reside here?
Why not? If non-resident foreigners want to buy here and cause house prices to go up, it's an excellent opportunity for local residents to sell and realize nice tax-free capital gains. It becomes a good time to rent as non-resident foreigners will want to cut their losses by renting their properties putting a downward pressure on rents. I would let foreigners "buy high and sell low" and try to be on the other side of such transactions.
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Re: Housing Bust 2017

Post by adrian2 »

kcowan wrote: 21 Dec 2017 09:00
hamor wrote: 20 Dec 2017 22:47One other thing about this so called statistics ;) is how does one account for foreigners who now reside in Canada, but bought their homes with the cash they brought with them..?
Why are foreigners buying property before they have permission to reside here?
I don't see how hamor's statement can necessarily be interpreted to imply Keith's query.

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Step #2: when approval is received, move to Canada, bring a million dollars with you
Step #3: buy property with that million $
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Re: Housing Bust 2017

Post by ghariton »

longinvest wrote: 21 Dec 2017 09:33 Why not? If non-resident foreigners want to buy here and cause house prices to go up, it's an excellent opportunity for local residents to sell and realize nice tax-free capital gains. It becomes a good time to rent as non-resident foreigners will want to cut their losses by renting their properties putting a downward pressure on rents. I would let foreigners "buy high and sell low" and try to be on the other side of such transactions.
:thumbsup: :thumbsup:

I remember when, in the late 1980s, Japanese buyers, flush with cash from their own real estate and stock market bubbles, started buying up large chunks of real estate in the U.S. and other countries, overpaying all the while. Heck, they even bought the Rockefeller Center in New York. A few years later, desparate for cash, they were selling these propoerties, usually at a loss, and sometimes at a big loss. The net result was a transfer of cash from Japanese "investors" to U.S. residents.

If foreigners are stupid enough to overpay for our stuff, we should be happy to take their money and make more stuff. By the way, how are all those zoning restrictions coming along?

George

(I guess I won't be very popular here for a while.)

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Re: Housing Bust 2017

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I don't mind taking money off foreigners in these kinds of instances, if they are stupid enough to throw it around, but there is a lot of significant collateral damage, namely that this artificial demand has driven up housing prices, especially condos in places like GVR and GTA, and shut hard working, middle class Canadians out of the home ownership market. This collateral damage is highly damaging to entire families' standard of living, health and welfare. That is the real price.
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Re: Housing Bust 2017

Post by hamor »

ghariton wrote: 21 Dec 2017 14:15If foreigners are stupid enough to overpay for our stuff, we should be happy to take their money and make more stuff.
It is different this time :)

shut hard working, middle class Canadians out of the home ownership market
AR,
Bingo!!! I am thinking about the next generation.
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Re: Housing Bust 2017

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AltaRed wrote: 21 Dec 2017 14:22 I don't mind taking money off foreigners in these kinds of instances, if they are stupid enough to throw it around, but there is a lot of significant collateral damage, namely that this artificial demand has driven up housing prices, especially condos in places like GVR and GTA, and shut hard working, middle class Canadians out of the home ownership market. This collateral damage is highly damaging to entire families' standard of living, health and welfare. That is the real price.
:thumbsup:
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Re: Housing Bust 2017

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ig17 wrote: 21 Dec 2017 15:44
AltaRed wrote: 21 Dec 2017 14:22 I don't mind taking money off foreigners in these kinds of instances, if they are stupid enough to throw it around, but there is a lot of significant collateral damage, namely that this artificial demand has driven up housing prices, especially condos in places like GVR and GTA, and shut hard working, middle class Canadians out of the home ownership market. This collateral damage is highly damaging to entire families' standard of living, health and welfare. That is the real price.
:thumbsup:
Sure I can sell my home for a tax free capital gain but I still have to live somewhere. I thought prices were overdone about $1M ago, so market timing is not my forte. So this isn't really a benefit in the short run.

Edit:
As pointed out upthread, I want my hard working kids to live where they were born and near me - but I guess that's being entitled.
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Re: Housing Bust 2017

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big easy wrote:As pointed out upthread, I want my hard working kids to live where they were born and near me - but I guess that's being entitled.
+1
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Re: Housing Bust 2017

Post by nisser »

kcowan wrote: 19 Dec 2017 16:44 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.
If what she's saying is true (i.e. it's more work to declare yourself as a non-resident), then these "surveys" are about as meaningful as my survey that says that 100% of surveys are garbage.
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Re: Housing Bust 2017

Post by ghariton »

AltaRed wrote: 21 Dec 2017 14:22 shut hard working, middle class Canadians out of the home ownership market.
I suspect that a bigger impact on housing prices, right across the country and not just in FTA or GVA, is the tax-free treatment of capital gains on the sale of a principal residence.

Here's a suggestion. Why not tax those gains, and use the proceeds to help out first-time Canadian buyers? That would both lower prices and give the middle class a helping hand.

FWIW, I still believe that it is a question of patience. Those prices will come down, and housing will become affordable again, for a while, before the next bubble starts inflating.

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Re: Housing Bust 2017

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CROCKD wrote: 21 Dec 2017 16:41
big easy wrote:As pointed out upthread, I want my hard working kids to live where they were born and near me - but I guess that's being entitled.
+1
Wanting is A-OK [says someone who wanted Marilyn Monroe as a teen]. Bet you also want it to be in the GTA. And everyone has to own rather than rent. And the place of their hard work also has to be close to the place where these kids were born - naturally. Now, greenbelt is vitally important, so we all support that, as well as other constraints limiting supply. Anyway, we don't want too much construction in the area where we live. And salaries have to be "decent" (aka top 0.1% in the world), partly funded by high house prices. Which we want to be low. But capital gains on residence sales would be a no-no. Don't want that! Best of luck with all your wants.
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Re: Housing Bust 2017

Post by Mordko »

There is a genuine issue in that the older middle class is screwing youngsters, not only in Canada but all over the place. Advantageous tax treatment for housing, which results in inflated prices for assets owned by the middle class, is only one of many mechanisms.

There is also job protection which is presented as something else but in reality helps the incumbents to the detriment of consumers and youngsters. Under different guises, the purpose is always to protect vested interests. Examples are:
- trade unions
- supply management
- occupational licenses for taxi drivers and cosmetologists
- crazy barriers on foreign-qualified doctors
- ditto on engineers from other provinces

Politicians don't tend to be brave enough to take on the vested interests which is why they tend to go for the gimmicks like the 15% tax on Chinese house buyers.
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Re: Housing Bust 2017

Post by Flaccidsteele »

longinvest wrote: 21 Dec 2017 09:33 If non-resident foreigners want to buy here and cause house prices to go up, it's an excellent opportunity for local residents to sell and realize nice tax-free capital gains. It becomes a good time to rent as non-resident foreigners will want to cut their losses by renting their properties putting a downward pressure on rents.
I agree. There are a lot of things to cry about in this world, but Canadian homeowners reaping large tax-free capital gains from alleged foreigner buying isn't one of them for me.
AltaRed wrote: 21 Dec 2017 14:22 I don't mind taking money off foreigners in these kinds of instances, if they are stupid enough to throw it around, but there is a lot of significant collateral damage, namely that this artificial demand has driven up housing prices, especially condos in places like GVR and GTA, and shut hard working, middle class Canadians out of the home ownership market.
You don't mind? You should mind. After all, it takes two to tango. You can't have a buyer without a seller. It’s only logical to split the outrage to Canadian households who take foreign money for their homes. After all they've contributed equally to this alleged issue.
big easy wrote: 21 Dec 2017 15:51As pointed out upthread, I want my hard working kids to live where they were born and near me - but I guess that's being entitled.
No. Its closer to being unrealistic. But two quotes come to mind:

"Everybody has a plan until they get punched in the face."

"Don't spend time beating on a wall, hoping to transform it into a door."


There’s little logic behind the alleged foreign buyer outrage (since it makes no sense to be outraged at only one side of a transaction) and even less evidence.
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Re: Housing Bust 2017

Post by kcowan »

adrian2 wrote: 21 Dec 2017 10:17
kcowan wrote: 21 Dec 2017 09:00
hamor wrote: 20 Dec 2017 22:47One other thing about this so called statistics ;) is how does one account for foreigners who now reside in Canada, but bought their homes with the cash they brought with them..?
Why are foreigners buying property before they have permission to reside here?
I don't see how hamor's statement can necessarily be interpreted to imply Keith's query.

Step #1: apply to immigrate to Canada
Step #2: when approval is received, move to Canada, bring a million dollars with you
Step #3: buy property with that million $
Exactly Adrian. That should be the rule, not a promise to buy after you immigrate. Maybe put the money in trust in Canada before immigration. This would only apply to residential construction.
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Re: Housing Bust 2017

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kcowan wrote: 21 Dec 2017 09:00
hamor wrote: 20 Dec 2017 22:47One other thing about this so called statistics ;) is how does one account for foreigners who now reside in Canada, but bought their homes with the cash they brought with them..?
Why are foreigners buying property before they have permission to reside here?
If they are anything like my wife, or my wife's family, they'd want all their ducks lined up well before they arrived. If I had to move to a different country, my wife would want us to have a house there, probably some furniture, I'd need to know the schools my kids would be going to, where the jobs and stores were, etc.

If I wasn't married, I'd probably not even pick the country I was moving to until I arrived, but I find there are more people like my wife out there, especially middle aged people, than ones like me.
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Re: Housing Bust 2017

Post by big easy »

Flaccidsteele wrote: 22 Dec 2017 01:51
big easy wrote: 21 Dec 2017 15:51As pointed out upthread, I want my hard working kids to live where they were born and near me - but I guess that's being entitled.
No. Its closer to being unrealistic. But two quotes come to mind:

"Everybody has a plan until they get punched in the face."

"Don't spend time beating on a wall, hoping to transform it into a door."


There’s little logic behind the alleged foreign buyer outrage (since it makes no sense to be outraged at only one side of a transaction) and even less evidence.
I agree foreign buyers are not the only problem. Prolonged low interest rates, tax free capital gains if you live in the home, and the ability to make a hell of a lot of money speculating with leverage are other factors. There is no doubt that speculation is driving a lot of this but the market is skewed (and was perhaps the sparked) by people with deep pockets coming from overseas. It changes the supply/demand balance, what people are willing to pay and feeds into the cycle of speculation. This has adverse consequences for the community - in North Vancouver we have a traffic problem because low wage workers are coming from elsewhere every morning and leaving every evening. There's a restaurant here that is closed 2 to 3 days a week for lack of staff. Children and entire families are moving away. Not to mention the impact of people that never worked here and don't pay income tax (yeah I know you pay on worldwide income but do they really?) but their kids go to our schools, get free health care etc.

I don't have a problem with lack of affordability if it is a natural consequence of local supply and demand but when foreign buyers and speculators are driving the market I don't think that's healthy. Australia and New Zealand have seen the light - I'm not sure why we haven't put real restrictions on foreign ownership. Australia's solution to allow foreigners to buy only new construction would seem to be a reasonable compromise that creates new housing stock. City counsels could mandate that x% be affordable by building a mix of micro/small/medium condo units that would appeal to different buyers. City counsel goes on ad nauseum about densification but all we get are more monster houses and more $1M condos units.
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Re: Housing Bust 2017

Post by ig17 »

Linking an article because of this one quote:

"This mayor and his council have loaded my pockets, but they've destroyed this city for my children"

That's quite a quote coming from a real-estate developer.

Have Vancouver’s policies hindered rental housing more than helped?
Vancouver's stratospheric housing costs have driven the city to groundbreaking interventions to make more rentals available. That has included Canada's first sin tax for homes left vacant and a radical new housing policy emphasizing creating purpose-built apartments geared to rates local residents can afford.

But some developers and housing advocates say the city has actually obstructed – not helped – efforts to build the kind of projects Vancouver says it wants, prompting at least a few to walk away from potential projects that would have produced hundreds of units.

Those forging ahead with projects say they are not sure whether they will continue in the future, asserting that rentals have become increasingly difficult to build because of a maze of contradictory demands and agonizingly slow permitting times.

And developers say that city policies haven't kept up with the changing conditions in Vancouver's ever-more-surreal real estate market, which are making rental projects less and less viable as land and market condo prices soar.

"This mayor and his council have loaded my pockets, but they've destroyed this city for my children," said Harvey Dales, the president of Rosebud Properties Ltd., who has been trying for three years to develop a site that would have included at least a couple hundred suites.

"Anything rental is borderline on whether to do it. And the city's current methodology of zoning is not going to produce any rental units."

Mr. Dales recently gave up in frustration and sold his prime Robson Street property – to an off-shore development company that will build luxury condos.


Mr. Dales said the city's current policies are producing more unaffordable housing – great for developers, but no one else.
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