Yank at VREAA 4 July 2011 6:39pm –
“I’m a US ex-pat living in Canada, enjoying the country and the people very much. For bubblelicious reasons, I’m concerned about buying — especially as I might not be in town for more then 5 years. I’m not in Vancouver — prices are just mildly insane in the prairie city where I live. I’ve got friends in Vancouver, and I’m sort of horrified, entranced, and baffled by the situation.
Until recently I was living in the medical and university center in a rural midwestern state. My small city had the most expensive housing in the state: 5000 square foot mansions were going for 400 – 500K. A large 2 story was going for 200-300K. Townhouses with 2story attached garages, 1400 square feet, not including the finished basements, new construction were selling for 150K.
About a year ago friends bought a detached house in a nice area near Greenlake (Seattle) for 350K. You can get a good house in the nicest suburbs of Chicago, with the best public schools in the nation for half a mil. (Northbrook, Glenview, Willmette, Evanston). I’ve also seen nice two stories in those suburbs for as low at 350K.
Half a mil is a lot of money. This bubble just baffles me. Canada has land. Canada has trees. WTF?”
We also experience the bafflement, the horror, the entrancement.
And the fascination appears to have gone up a notch this last 6 months.
It’s like we’re watching a freak show and the rubber man is pushing limits we hadn’t anticipated.
Even his handlers are aghast; surely he can’t do that without hurting himself? – vreaa
Vancouver Real Estate Anecdote Archive 
Alas, inevitably it plays out like this… (caveat, “WorldClassCities” will increasingly come to be associated with ThirdWorld outcomes)…
“I never thought I would find myself sleeping in Victoria Station. But I come across all sort of other professionals who are also homeless, including former doctors and lawyers. Nothing is shocking in England any more.” – Jean Preux, 33, Qualified chef, laid off in January, moved from Wales to London, now sleeps in Victoria Station.
[UK Independent] – Middle classes are Britain’s new homeless: State safety nets are gone
http://tinyurl.com/6ftohbb
geez, it’s getting repetitive here…the US of A is in the verge of BK. how do you even compare?
BK isn’t default. The default will be for political reasons if it happens. The USD is the world reserve currency.
it’s fascinating to watch washington, i turned away pre-obama, it was the main topic of interest for me from hanging chads on to about michael chertoff, tom delay, etc. it was TARP and all the rest … i could see how americans could be led to war (multiple times) but it was the flagrant looting (besides the pentagon contracts) that blew my mind. it all just got rammed through so fast.
have you seen inside job? client 9? how about pax americana? jesus camp?? (lol) why we fight etc etc. american black out, ‘american drug war – last white hope’ etc etc. i can go on – check em all out if not, set aside a day of mourning and watch them all 😉
this is spaaartaaaaa
(apologies for the rachel maddow link, it was the only footage i could find)
alex, one more, sorry
http://www.zerohedge.com/article/several-inconvenient-truths-about-debt-ceiling-and-deficit-reduction
Thanks Derp!
(I’m alex – keep forgetting I’m yank here.)
Maybe the adults will wake up but I’m afraid the inmates are running the asylum. I’m a bit worried we’re about to see the first soveign default caused by political insanity. and so it goes.
This might kick up interest rates, but I have no idea what it would do for the Canadian housing market. Maybe it would push up the market even futher? Maybe it would be a black swan event?
actually i am fairly certain that everything will continue to levitate for quite a long time yet – it has before, why should we assume any different? (or as eyes/rusty/fred/etc keep repeating: “the trend is your friend”)
anyways, happy to share – we have to inform ourselves, since the hired help is so determined to prevent that.
“This bubble just baffles me. ”
not just you, even super duper intelligent VREAA has been baffled as well. He has been waiting to buy a piece of land here pennies on the dollar…
i like how it took you 6 minutes to post the 2nd reply
were you sitting there staring at the screen, fuming at this?
and then you had to punch it all into your translator and transcribe it, right?
i like how you mock patience, that’s a good investment strategy, being impatient
i just like you, rusty/i mean eyes
I can laugh at Rusty. But Fred is just nasty. I don’t get why he’s so angry.
Fred is very deep in debt. He can’t get a break. Of course he is angry.
he’s quite articulate..
“..in the verge of..”
“..super-duper..”
Hey Fred
Vancouver = zero Stanley
I know DerpDerp, Jesse, et al will get this… 😉
http://tinyurl.com/cc4dju
LOL. Camp-a-rific!
Canada has land but Vancouver is running out of land. See the difference?
oh, a creative twist on an old favorite
Yeah- this argument doesn’t explain the crazy. San Fran is also “running out of land.” So are a bunch of places in California. The prices in Vancouver suburbs don’t make any sense either. (Surrey, ect.)
Vancouver is crazier then California was during the boom. And California fell after the housing pop. In fact, places with land & zoning restrictions were more likely to experience bubble prices & they fell harder in the crash.
The price for an average home in Seattle is less then Edmonton.
and i enjoy laughing of bunch of whinnie renters wanna be home owners here…
the government offers free adult English courses – it’s ok, we’re paying for it – just like later on when you default on your mortgage(s).
I think what is happening in Vancouver has become normalized to many people living in the city and other Canadians.
The housing bubble has spread throughout most of Canada, and this is contributing to the situation. Canadians now expect to spend 4 or 5 times (or more) annual income on a house. I’m surprised by how common it is for older parents to give a down payment to their adult children. Or how people talk about inheritances becoming the down payment for their Vancouver house.
This is not normal for a regional city. Vancouver is not Paris or New York or Tokyo. Maybe Vancouver will become Monaco, but I think it’s much more likely that when China’s over capitalization hits a speed bump in the next coupld of years investors will sell. Wealthy people are less likely to get creamed. It’s the over-leveraged mortgage-carrying middle and working classs that will be killed by a drop in prices.
I think because almost every Canadian city is in a bubble, it becomes harder for people to see the bubble.
Agreed. Desensitization. All over Canada but especially in Vancouver.
Even early skeptics start accepting very high prices. $2.5M for a SFH starts looking understandable, $1.4M starts looking appropriate, $900K is downright “cheap”.
If you tell yourself enough times that a home is worth ‘x’, you start believing it.
People have completely lost sight of how much work it would take to actually earn these sums. The moment any such math even vaguely returns to the equation, a very large vacuum will be discovered below these prices.
Perfect example of “Groupthink”… It becomes a self-reinforcing reality, but in the Canadian context, it’s downright bizarre since we saw what happened in the US just a short 4 years ago. Groupthink combined with narcissistic overtones…
that’s whats so strange, usually getting Canadians to move in lockstep is ‘like herding cats’ – unless of course… they were really scared of something…
Saw an Asian family today going into a house west of Dunbar, new build, asking over $5 million!! Think of what $5 million could buy elsewhere, or what 5 mill. could do period, one can only dream.
5 million workdays of factory labour?
who am i kidding??
IT’S DUNBAR, MAN, ** DUNBAR **
Do not feed the trolls.
Right Said Fred. I remember the movie debut of that song: Encino Man. Encino Cali… notable for real estate carnage along with reintegration of primitive homos into mainstream society.
you’re a bigot!
Peter Pan -> Yes, the fact that Canadians have convinced themselves that we are divorced from US-type descent is as bizarre as the price elevation.
And the US is bracing for even more distress:
“It’s going to feel very hard, harder than anything they’ve experienced in their lifetime now, for a long time to come.” – Tim Geithner, US Treasury Secretary, 10 July 2011
Can’t Canadians see that this has to effect us?
If we were producing, earning and looking safe, all well and good; but we aren’t: we’re borrowing more, and speculating.
“Yes, the fact that Canadians have convinced themselves that we are divorced from US-type descent is as bizarre as the price elevation.”
I’m very confused by this. Canada is very vulnerable to the type of decrease in prices we saw in 2007 that led to Lehman’s collapse. Canada is less vulnerable to the magnitude of the shock experienced in the US because there is an automatic bailout in place and more economic stabailizers in Canada. But the Canadian housing market could very well drop, and the Vancouver market is primed for a very very bad situation.
De-leveraging debt is a real drag on the U.S. economy right now. That overleveraging is directly related to the housing bubble. And Canada seems to be jumping in, feet first, to leverage up the mortgage debt. 500K for a house is a lot of freaking money, but people are acting as if it’s no big deal to take out jumbo mortgages. People are overexposed in their real estate investments and are taking out loans on the capitol in their houses. It’s exactly what happened in the states.
And Canadians don’t get to fix in their mortgage rates for 30 years. Everybody seems to be on an adjustable rate mortgage. Five years is the longest for which many people fix in their rate. The drop in the U.S. was caused in 2007 because of the price jumps in adjustable rate mortgages. The “subprime” market has been much over talked. It was the jump in ARMs that caused that first critical drop in the market that led to the US economic crisis.
re: jumbo mortgages – i’ve mentioned this before – i know my landlord’s son was given 100k from his parents as a down payment on his girlfriend’s parents’ rental house in port moody. he is a cook – she works in a beauty salon i think? – he told me the house was $600ksomething? maybe it was $400 – last time i saw him he had sold his sports car and was driving a new, leased import sedan (a very small one) and he mentioned something about ‘being broke all the time’ because the house was costing was north of $2500 a month.. i recall him mentioning that his parents weren’t wild about the situation.
either way, in a sane world, the only person in a restaurant kitchen who should qualify for a mortgage should be the executive chef, the pastry chef (if they’re well trained, ie: michelin star) but c.d.p.’s, sous chefs etc really ought not to qualify for $500k loans – it’s insane.
but who cares, right? it only goes up when foreign money comes pouring into a place that’s running out of land that’s been zoned to benefit developers and existing land owners’ profit margins – and don’t forget the great schools! this message was brought you by the number 8.
To get back to you Derp, yes it’s Dunbar, the same place I saw an Asian lady picking out bottles from the recycling bins one morning…maybe that’s HAM! btw, I do not live in Dunbar, but have family there.
dunbar, that’s got the same climate as Maui, right?
maybe it’s the feng shui?
I was at wedding this weekend sitting at my table was a relative who works in the financial industry industry in Toronto in a senior position. The company he works for is a commercial real estate investment firm with major holdings in Canada including Vancouver. he was of the opinion that Vancouver can’t crash so long as HAM and zoning restrictions created scarcity of real estate, he is in the commercial real estate maybe that is a different animal than housing. He is basic point is that the fundamental of locals economy don’t matte if money is coming in from outside of Vancouver and that Asians don’t want to deal with the USA so they come to Vancouver instead.
Fundamentals don’t matter. That’s why they pay him the big bucks.
i bet he holds his door open at night with a copy of “Advanced Candlesticks”
It’s possible. A relatively small number of buyers can skew a market upward as long as Vancouver doesn’t experience significant unemployment. The population of Vancouver isn’t very large, so it’s more vulnerable to this type of effect.
” A relatively small number of buyers can skew a market upward”
But this is true in any market by definition. I disagree a few thousand well-heeled buyers can dictate what the plebs must pay. Doesn’t pass the smell test when accounting for free will and substitution.
what about a few thousand buying 3-10 each?
“what about a few thousand buying 3-10 each”
If that were the case, which it is not, then yes marginal pricing still sets the marginal price. Even in this situation there are still affordable, if not perfect, substitutes for locals.
i know, i’m just stroking rusty
The Vancouver RE market is substantially due to the purchase of homes by the Mainland Chinese
More specifically, the Chinese government’s recent tightening of buyers ability to purchase 2nd, 3rd, or 10th home in the Mainland has caused the Chinese to look elsewhere to park their money in what they believe they know and trust – Real Estate. Currently, as of summer of 2011, hottest area is Vancouver West, especially houses, not condos. Richmond is currently bit of favour (related to fears from Japan tsunami of all silly things), White Rock is heating up, Burnaby still going, and in the future, I would predict West Vancouver will take off.
And it’s only starting – still a few years off from a downturn. Just too many people, with too much money and BC government is ill prepared to deal with macro regulation of the market, which probably will be needed. Expect to see between 10 – 20% growth in some parts of the cities for several more years….
I call Bullshit on White Rock. Every stat I’ve seen indicates it has flat market at best. There is no, I repeat NO, real estate boom in White Rock. In fact, the hype is a feeble attempt by developers to revive that market.
Its interesting how this site is now attracting shills like Hoffman.
lol @ the fear monger
Hoffman -> Would you be prepared to reveal whether your profession involves you working with Chinese investors in Canadian RE?
I just stumbled across this site and decided to post. I am a lawyer working in China and while the main part of my practice is working with foreign investors coming into China. A relatively small part of my practice is to assist Chinese buy property in Van, and have seen this part take off in the past year or so. So I am right on the front line, so to speak. And I should add, I am not a RE lawyer, by far Not an expert. I am just passing info along of areas I see the Chinese buying now.
I totally agree that the market looks outta control, and must be ripe for big, fall quickly, but tell that to the lady in my office yesterday who plunked down 3 million for house in Van West, or the guy last week who went into a bid war with, he claims 4 other bidders, to drive up the price 300,000 over the offer price on a 1.5 million home (cant even remember where). Of course there will be a correction, at some point, but when that will be is anyone’s guess, but I would predict still some years down the road. Only thing that would change this is if the Canadian federal govt severely curtailed their business immigration programs (which is extremely unlikely). The biggest reason for the recent increase is the austerity measures the Chinese government has been bringing in China to cool down their own market, which seems to finally have taken hold, so now a few Chinese are taking a bit of their money and putting it in one of their favorite overseas cities – maybe one they feel they most understand due to the large number of Chinese players in it. The Chinese dont have a whole lot of options when it comes to investment vehicles (no complex securities / derivatives products), but they have RE and they like RE – especially land. And I dont forsee a major correction in the Chinese economy, NWS the continued problems in the US. Exports continue to grow and the Chinese have learnt well from the West to consume so internal consumption is enough to continue to drive the economy.
“I just stumbled across this site and decided to post. I am a lawyer working in China and while the main part of my practice is working with foreign investors coming into China. A relatively small part of my practice is to assist Chinese buy property in Van, and have seen this part take off in the past year or so”
———————————————————————————————
Really!
You sound like a desperate local Realtor
Hoffman -> Will headline your anecdote/opinion, thanks.
Get Real -> Actually, it seems Hoffman is exactly who he says he is (“a lawyer working in China”).
Why do you think Hoffman is telling the truth? The post is boilerplate propaganda. Anyone who thinks White Rock is heating up, better take a close look at the stats, which are available for anyone to see on the FVREB website.
Hoffman is either Simeon, the Scamster himself, or one of their buddies.
Mike -> Don’t get me wrong… I don’t agree with all Hoffman’s opinions… But remember, as moderator in get to see urls and e-mail addresses, and Hoffman does appear to be who he says he is.
He may have links to the group selling White Rock condos but I could find no evidence of such links (Hoffman, care to comment? Are you professionally linked or doing business with ‘the Key’, Cam Good, or any other White Rock developers?)
canada needs to curb foreign land banking
I can assure you all I have no links to any group selling White Rock condos, nor do I even know who ‘the key” et al, is. In fact, I have a pretty detached view of the Van RE market in general, my only involvment relates to the Chinese perspective – good advice to all would be don’t go making any investment decsions based on anything I may say.
And with regard to property sales in WR, in general the Chinese prefer houses with land, the more the better. Most of the properties I have seen sold in WR recently were houses not condos.