Housing Bust 2017

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

Post by AltaRed »

I see the GVR problem as quoted in the posts first hand with relatives on both sides of the housing issue. Those having been lucky enough to get in years ago, versus those who appear never be able to get in, and rental prices going skyward, and almost no vacancy at the same time. That situation is tearing the social fabric of a community apart. Vancouver will be negatively affected long term if this continues.
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Re: Housing Bust 2017

Post by Just a Guy »

I wonder if anyone has ever really done the math...

Everyone is complaining about the high prices of real estate because of the foreign investment. The hing is, these foreign investors aren't getting mortgages, they are paying cash, unlike most home grown Canadians.

If you were around in the 80's when housing prices were much lower, but interest rates hit 20%, if you use the rule of 72, you see the average Canadian paid a small fortune for that cheap house when you acountnfor the doubling of price due to interest on the loan.

Evenntoday, with sub 3% interest, most Canadians are paying at least double for their "affordable" homes. If you pointed out that Canadians were paying at least double what they bid, it makes the foreign investors look cheap by comparison in my mind.

If Canadians saved and invested first, then bought a house, instead of demanding a house that they can't really afford without a payment plan, they could probably outbid foreign investors and still save money in the long run.
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Re: Housing Bust 2017

Post by AltaRed »

Of course people have done the math. The initial momentum in 'out-sized' RE prices was simply a case of relaxed mortgage rules and low interest rates supposedly to increase affordability, but driving up demand and thus price anyway. Ultimately no one was better off with that result. The unintended consequences of outsized RE price growth was to encourage speculative investment... and hence the current valuation problem. Gov'ts should have left mortgage rules alone 20 years ago and we might not be nearly as much in the situation we are in today (low interest rates notwithstanding).
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Re: Housing Bust 2017

Post by CROCKD »

Anecdote.
My son who is an IT exec and my DIL with a supervisory job at the City of Toronto were looking for a house in the spring. They were quite willing to move to the outskirts and drive and take the GO train to their jobs. They have a good income. They had an agent. Everything they put an offer in on, they were outbid by several hundred thousand dollars. Happened several times. With two small children and another one on the way a shoebox in the sky was not an option. Neither was as has been suggested moving to Moose Jaw, Riviere Du Loup, or Radium Lake.
As has been reported by AltaRed, young professionals are leaving GVR in droves owing to house prices. I suspect the growing digital industry in Vancouver will be hard pressed to find workers.
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Re: Housing Bust 2017

Post by Just a Guy »

If everyone leaves, demand decreases, prices fall...

Then they can choose to move into the GTA and start the whole cycle over again.

That, of course would require patience.

And, of course, no one would actually want to live in the GTA then...it's been abandoned.
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Re: Housing Bust 2017

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A number of tech companies, amongst others where jobs are mobile, are now opening up shops in the Okanagan Valley where affordability is much better than GVR but RE prices have been moving significantly here in the last few years as a result. A new technology office building is almost fully leased. Hopefully another one to come along soon. Rental vacancy near zero but there is now a spurt of rental supply coming along to help solve that along with a lot of low rise town home condo development.

Kelowna, at least, has a young mayor and a mostly progressive council which is trying to respond positively to the surge with planning and development flexibility. Now if we could get a few other city councils who are caught in a time warp to respond similarly, the whole valley will gain considerably at the expense of GVR municipalities.
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Re: Housing Bust 2017

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AltaRed wrote: 22 Dec 2017 15:34...Now if we could get a few other city councils who are caught in a time warp to respond similarly, the whole valley will gain considerably at the expense of GVR municipalities.
I hope the valley survives this dislocation! I see the GTA driving house prices in Barrie. But it is a short commute well-served by Go Transit. The 5+ hour commute to the Valley makes it undesirable IMHO. And that is a good thing. Think about Napa avoiding the Silicon Valley phenomenon!
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Re: Housing Bust 2017

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Canada's immigration targets 'a form of housing policy,' says study
There is no doubt Canada’s high immigration rates have a major impact on housing affordability in Vancouver, Toronto and Montreal, according to a new study.

“First and foremost, immigration policy is, essentially, also a form of housing policy,” University of B.C. geographer Daniel Hiebert says in a comprehensive paper published in the winter edition of the Canadian Journal of Urban Research.

“Metropolitan housing in Canada would, very likely, look totally different if the scale of immigration were to change dramatically in either direction. The recent decision to raise permanent immigration admission levels from approximately 270,000 in 2015 to 340,000 in 2020 will surely have a significant impact,” Hiebert said.

Most immigrants show greater determination than Canadian-born citizens to buy housing in Canada’s three major cities, said Hiebert, who also studied buying and renting patterns along ethnic lines.
The elevated home-ownership rate among ethnic Chinese immigrants in the expensive cities of Vancouver and Toronto is “striking,” Hiebert said.

“The rate of home ownership among individuals declaring Chinese origins is exceptionally high for newcomers: Over seven in 10 of those who arrived in Canada between 2006 and 2011 reside in households that own a home,” he said.

The discovery that most new Chinese immigrants can afford to buy housing within a few years of arriving in Canada — at a rate higher than the overall Vancouver average of 69 per cent — supports numerous reports that have indicated many new immigrants from East Asia are making their purchases with large amounts of capital earned in their homelands.

Recent Chinese immigrants to Toronto and Vancouver have a home-ownership rate of nearly 73 per cent “and a propensity to dedicate a very high portion of their income to housing. Given the scale of immigration of individuals from China, Hong Kong and Taiwan to Vancouver, it is likely that this group is having an impact on the metropolitan housing market as a whole.”
The peer-reviewed study by Hiebert, who frequently advises the federal government, enhances earlier research by UBC geographer David Ley, as well as the Conference Board of Canada, that has shown a strong correlation between rapid immigration and pricey housing in Metro Vancouver and Toronto.

Hiebert’s analysis of decades of Statistics Canada data confirmed two contrasting narratives about immigrants and housing — that well-off immigrants are increasing housing prices in Canada’s major cities, at the same time lower-income immigrants are struggling to pay for shelter.
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Re: Housing Bust 2017

Post by Just a Guy »

I can just see the natives sitting around having a conversation...

Remember when those immigrants came across the big blue sea. They took away our sacred hunting grounds and made it difficult for our sons to continue our traditional ways of following the herds, living in draft filled tents, huddling around a fire...

They came and made the land scarce, yet gave us no compensation...

Now they complain when new immigrants aren't even coming to this country, giving lavish compensation for land they do not use, making the invaders wealthy, but not wealthy enough for their satisfaction. They complain that they have the money, but now have to move to different provinces where their wealth will buy them mansions, but they had to give up their culture of the Big Smoke.

We should take pity on them and not shake our heads.
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Re: Housing Bust 2017

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ig17 wrote: 23 Dec 2017 13:44 Canada's immigration targets 'a form of housing policy,' says study
There is no doubt Canada’s high immigration rates have a major impact on housing affordability in Vancouver, Toronto and Montreal, according to a new study.

“First and foremost, immigration policy is, essentially, also a form of housing policy,” University of B.C. geographer Daniel Hiebert says in a comprehensive paper published in the winter edition of the Canadian Journal of Urban Research.

“Metropolitan housing in Canada would, very likely, look totally different if the scale of immigration were to change dramatically in either direction. The recent decision to raise permanent immigration admission levels from approximately 270,000 in 2015 to 340,000 in 2020 will surely have a significant impact,” Hiebert said.

Most immigrants show greater determination than Canadian-born citizens to buy housing in Canada’s three major cities, said Hiebert, who also studied buying and renting patterns along ethnic lines.
The elevated home-ownership rate among ethnic Chinese immigrants in the expensive cities of Vancouver and Toronto is “striking,” Hiebert said.

“The rate of home ownership among individuals declaring Chinese origins is exceptionally high for newcomers: Over seven in 10 of those who arrived in Canada between 2006 and 2011 reside in households that own a home,” he said.

The discovery that most new Chinese immigrants can afford to buy housing within a few years of arriving in Canada — at a rate higher than the overall Vancouver average of 69 per cent — supports numerous reports that have indicated many new immigrants from East Asia are making their purchases with large amounts of capital earned in their homelands.

Recent Chinese immigrants to Toronto and Vancouver have a home-ownership rate of nearly 73 per cent “and a propensity to dedicate a very high portion of their income to housing. Given the scale of immigration of individuals from China, Hong Kong and Taiwan to Vancouver, it is likely that this group is having an impact on the metropolitan housing market as a whole.”
The peer-reviewed study by Hiebert, who frequently advises the federal government, enhances earlier research by UBC geographer David Ley, as well as the Conference Board of Canada, that has shown a strong correlation between rapid immigration and pricey housing in Metro Vancouver and Toronto.

Hiebert’s analysis of decades of Statistics Canada data confirmed two contrasting narratives about immigrants and housing — that well-off immigrants are increasing housing prices in Canada’s major cities, at the same time lower-income immigrants are struggling to pay for shelter.
So is this type of money good for Canada or not? My personal stance is that it's not. The only way to fix this mess going forward is to link a person's Income in Canada to their property. A person reporting zero to no income has no place owning a property they can't reasonably carry no matter how you fudge the math. They can hold it, but then tax them as a non-resident at an appropriately high rate and use the proceeds to better the local community
If these people are living and working in Canada, then I have zero problems with their money. But if they're using Canada as a safe place to park their money, forcing regular living citizens out then it's not acceptable.

Vancouver is now known as Hongcouver. It's fine if these are people your kids went to school with, or people that are working local business, etc. But that's not the case. There's going to be lots of people citing these awful surveys as "proof" but you only need grade 7 math to realize that it doesn't add up.
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Re: Housing Bust 2017

Post by kcowan »

It is too late! The ship has sailed. Our government has been encouraging immigration since the 80s. It is too late. The damage has been done. It is irreversible.

Efforts now are just sticking a thumb in the dyke.
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Re: Housing Bust 2017

Post by nisser »

I don't think it's too late. Immigration is great, has been great and will continue to be great. But people buying properties in Canada and not actually living here is not healthy.
I just think the government has to be better at tracking this stuff and policing it.

If a 1 million property is attached to a person reporting 0$ of income and thus not paying taxes is not an immigrant; they're a mooch. Either kick them out or tax their property at 500-1000% percent.
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Re: Housing Bust 2017

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nisser wrote: 23 Dec 2017 16:47 So is this type of money good for Canada or not? My personal stance is that it's not. The only way to fix this mess going forward is to link a person's Income in Canada to their property. A person reporting zero to no income has no place owning a property they can't reasonably carry no matter how you fudge the math. They can hold it, but then tax them as a non-resident at an appropriately high rate and use the proceeds to better the local community
If these people are living and working in Canada, then I have zero problems with their money. But if they're using Canada as a safe place to park their money, forcing regular living citizens out then it's not acceptable.
I think you misread the article. It talks about immigration in general, i.e. legitimate permanent residents who settle here. The underlying report did NOT look at the absentee owners, parachute families, proxy ownership, etc. That's a separate discussion, nothing to do with the article that I linked.
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Re: Housing Bust 2017

Post by adrian2 »

ig17 wrote: 23 Dec 2017 19:35
nisser wrote: 23 Dec 2017 16:47 So is this type of money good for Canada or not? My personal stance is that it's not. The only way to fix this mess going forward is to link a person's Income in Canada to their property. A person reporting zero to no income has no place owning a property they can't reasonably carry no matter how you fudge the math. They can hold it, but then tax them as a non-resident at an appropriately high rate and use the proceeds to better the local community
If these people are living and working in Canada, then I have zero problems with their money. But if they're using Canada as a safe place to park their money, forcing regular living citizens out then it's not acceptable.
I think you misread the article. It talks about immigration in general, i.e. legitimate permanent residents who settle here. The underlying report did NOT look at the absentee owners, parachute families, proxy ownership, etc. That's a separate discussion, nothing to do with the article that I linked.
I think Nisser is against legitimate permanent residents coming to Canada with a million+, buying a property with cash and then carrying the property with money brought over, without working in Canada. He wants to "artificially" tax them as non-residents at punitive rates.

I don't agree with his stance, BTW.
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Re: Housing Bust 2017

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adrian2 wrote: 23 Dec 2017 19:40 I think Nisser is against legitimate permanent residents coming to Canada with a million+, buying a property with cash and then carrying the property with money brought over. He wants to "artificially" tax them as non-residents at punitive rates.
If so, it's a red herring. The real issue IMO is what level of immigration is sustainable.

Federal Government keeps annual immigration target at 1% of the population. Seems like a stable, reasonable target. Especially if you assume that 1% is spread evenly across the country (which is definitely not the case).

I think that percentage-based target is highly misleading. In absolute numbers, the annual target doubled from 150K in the 80s to 300-330K now. Can our major cities sustain 330K new annual arrivals? That's 1M new residents every 3 years. I don't think so. To me, it's obvious that housing and infrastructure are not keeping up with the rate of immigration. Unaffordable housing sends a clear price signal that immigration levels are not sustainable. Terrible road congestion in TO, Van and Mtl - same signal.

It's too bad that Canada can't have an open public debate about the appropriate level of immigration. Political correctness is stifling. I'm saying this as a first-generation immigrant, btw.
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Re: Housing Bust 2017

Post by Just a Guy »

Maybe, instead of bringing in wealthy immigrants, we should open our doors to deadbeats, drug addicts and others who won't threaten the housing prices in the GTA and Vancouver. Of course they'd hit our welfare services instead, but they won't put pressure on the next generation of Canadians to figure out a way to be successful.

Reminds me of the old replacement CEO adage. Always pick a successor who is a little worse than you, that way you'll look good when history judges you. The theory tends to work well until you're left with the dregs.
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Re: Housing Bust 2017

Post by ig17 »

Just a Guy wrote: 23 Dec 2017 20:54 Maybe, instead of bringing in wealthy immigrants, we should open our doors to deadbeats, drug addicts and others who won't threaten the housing prices in the GTA and Vancouver. Of course they'd hit our welfare services instead, but they won't put pressure on the next generation of Canadians to figure out a way to be successful.
Build a strawman and then violently demolish it. That’s the only way to debate. :thumbsup:

How about... we modulate the immigration rate to let housing and infrastructure to catch up?
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Re: Housing Bust 2017

Post by Just a Guy »

Who's debating?

I'm mocking. There's a big difference. Sarcasm and serious both start with an "S", but that's about it when it comes to being the same. Oh wait, they both have two "S" and an "r".
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Re: Housing Bust 2017

Post by Flaccidsteele »

"Immigration" seems like a red herring.

How are we determining that the annual immigration target of "1% of the population" isn't sustainable? Just because we "feel" that 1m new residents every 3 years isn't sustainable?

Personally I "feel" that 1m new residents every 3 years is sustainable. Unless there is some data to show otherwise?

Anyway, it seems like it's time for me to be upset over Canadian homeowners reaping large tax-free capital gains on the sale of their home to foreign buyers. :?:
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Re: Housing Bust 2017

Post by Mordko »

Let me get this straight:

1. Very upsetting: Chinese coming to Canada, sometimes bringing money into the country, buying houses, their kids excelling at school and getting degrees in accounting and engineering while not trying to blow up bridges.

2. Not upsetting: "refugees" being invited and crossing in from the USA and other unsafe places, not speaking English, not getting a job, being housed and fed at taxpayers expense for life.

3. Not upsetting: "old-stock" Canadian kids focusing on different ways to consume dope, video games and useless degrees in humanities. Subsequently living in mom and pops basements, partly funded by pops and partly by the tax coming from 1.
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Re: Housing Bust 2017

Post by ig17 »

Folks ask for evidence that foreign capital inflates Canadian house prices.

Said evidence is presented to them.

Folks mock the evidence because it doesn’t agree with their priors.

Happens without fail every time.

:thumbsup:
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Re: Housing Bust 2017

Post by Mordko »

There has never been a shadow of a doubt that foreign capital increases Canadian house prices. Trade is more than half of our GDP. Without foreign capital housing markets behave very differently. Please check out Cuba and N. Korea.
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Re: Housing Bust 2017

Post by Just a Guy »

Folks try to prove that their fears are bad because they are happening, which no one really denies.

People point out that they don't share the same fears, that it's an overreaction or not a bad thing.

Folks continue presenting their fears as "evidence" despite few sharing them the same fears and others who point out there are other factors at work to their "end of the world scenario" whom everyone should agree with in the folk's mind.

Happens continually without fail.

Sadly, many teach their children, not having faced and overcome fear themselves, to continue to live in fear instead of growing up and overcoming what others call "challenges", thus the cycle continues.

The main reason most people don't invest, start a company, quit a job they despise, etc. Isn't a lack of resources, ability, foreigners, etc. It's fear.
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Re: Housing Bust 2017

Post by ghariton »

Mordko wrote: 24 Dec 2017 09:24 Let me get this straight:

1. Very upsetting: Chinese coming to Canada, sometimes bringing money into the country, buying houses, their kids excelling at school and getting degrees in accounting and engineering while not trying to blow up bridges.

2. Not upsetting: "refugees" being invited and crossing in from the USA and other unsafe places, not speaking English, not getting a job, being housed and fed at taxpayers expense for life.

3. Not upsetting: "old-stock" Canadian kids focusing on different ways to consume dope, video games and useless degrees in humanities. Subsequently living in mom and pops basements, partly funded by pops and partly by the tax coming from 1.
:thumbsup: :thumbsup: :thumbsup:

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Re: Housing Bust 2017

Post by ig17 »

All I said was that maybe we should try to modulate the rate of immigration until housing and infrastructure catch up.

Sure enough, the counter-argument is to paint me as intolerant extremist.

Like a clockwork.

:thumbsup: :thumbsup: :thumbsup:
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