Realtor – “The market will come off the rails in Vancouver next year. Smart money does not chase a falling asset. Spring will be a disaster out west; it may self-perpetuate.”

“The market will come off the rails in Vancouver next year. We’re seeing some China buying reductions but there will always be some Chinese money, however smart money does not chase a falling asset no matter how much they want their kids to go to the “best Schools”. Give me a break – they are not so great that Vancouver is better at education than other cities, that losing 500K is not noticed. Spring will be a disaster out west – as soon as the mainstream media pick up on this – it may self-perpetuate.”
– A Vancouver RE broker, quoted by Garth Turner at greaterfool.ca 27 Nov 2011, who also added “The first half of this year [2011] was hot, the second half will show a dramatic cooling. Tons of sellers have given up, and will flood the market with renewed listings in the Spring [2012]”.

“Smart money does not chase a falling asset. (Price drops) may self-perpetuate.”
Readers will recognize that we’ve been saying exactly this for sometime now.
We’d ourselves probably call it ‘momentum money’ rather than truly ‘smart’ money.
But, regardless, yes, buyers will dry up into price drops; that’s what happens when speculative bubbles burst.
Price drops will beget price drops.
– vreaa

150 responses to “Realtor – “The market will come off the rails in Vancouver next year. Smart money does not chase a falling asset. Spring will be a disaster out west; it may self-perpetuate.”

  1. The paradox of “pent-up demand” sitting on the sidelines refusing to buy. Greed works on the way up as well as on the way down.

    • Right. The actual pent-up demand is modest, it’s lower than usual (ownership rates are at historic high levels; buyers have been sucked forward by low rates and the mania; the marginally qualified buyers have already been drawn in).
      Many of those who are actual prospective buyers will sit on their hands when prices start to drop in earnest.
      There will always be some buyers, of course, but we suspect they’ll be overwhelmed by supply. Some will step in at early 2009 lows, and we could bounce there. Later that level will give way.

      • “Many of those who are actual prospective buyers will sit on their hands when prices start to drop in earnest.”

        Yeah and they’re not speculators, they want LOWER prices! LOL

      • So I guess we’ll see the first test of our theories next spring. Looking forward to it.

      • Julian -> We’ll get to test our respective hypotheses when prices clearly start to drop (5% or 10%), perhaps that’ll happen in the Spring.

  2. “To sleep, perchance to dream-
    ay, there’s the rub.”

    • “I hold the world but as the world, Formula1; A stage where every man must play a part, And mine is a sad one”

      I would have that the speculative mania does not exist, but it does, so.. there it is.

  3. “Some will step in at early 2009 lows, and we could bounce there. Later that level will give way”

    LOL
    haven’t learned by recent history.

  4. A long time ago, in the context of rising gas/oil prices following 9/11, I heard none other than Michael Campbell say on his CKNW radio show something to the effect of:

    “A trend continues to be a trend until it reverses.”

    Whatever you think of Campbell in general, that statement is certainly true. Unfortunately a lot of people forget the part that starts with “…until…” due to historical or willful blindness.

    • Don’t know, but the oil / gas are still expensive. And despite the downturn, still almost double the 2001 level.

      • Don’t know, but the oil / gas are still expensive. And despite the downturn, still almost double the 2001 level.

        Peak cheap oil; new demand from Asia; moneyprinting.

        I rest my case

      • The trend was the rise, rise, rise. It’s no longer rising and, in fact, has come down quite a bit from the peak price. So the point stands.

      • @robert dudek, yes, I agree with what you are saying, hence why I think E.G’s point is flawed.

        @E.G. so… the market has basically crashed, oil just hit 101 dollars today and with the coordinated actions of the central banks you will see an even higher rise in the future. I’d be shocked if the 143 peak doesn’t get breached within 3 to 5 years. If you invested in oil after 9/11, you’d still get a hefty return despite this crash. So not sure why you are bringing oil into this discussion.

  5. I don’t usually read this site on weekends or at home, so I’m reposting this reply to an older post where I commented about how a lot of Chinese retiree type immigrants are dodging taxes here and while happily collecting money from governments here.

    ———————————
    This stuff has been going on for 20 years+ now. I doubt CRA would be so stupid as not to know it. It’s likely that some of the these cases can’t be prosecuted without co-operation from Chinese tax authorities to hand over individual’s income tax returns in China. Add in their standard 300% minimum return on cost rules likely means these cases are not priority for chasing up. I guess there is enough of a backlog of local tax cheats with tons of money to prosecute here. One of their biggest tip sources are from divorcees apparently.

    The other thing is that CRA might not have access to things like property tax records, property holdings, social benefits collected without getting a court order first, you know, personal freedom and privacy and all that. So again, might not be worth it.

    Suffice to say, this is such a common practice among the Chinese immigrants community, especially the retirement kind that no one even bats an eye about it anymore. Some though after collecting so much money while living in Canada for just 6 months a year and in a multi-million dollar house to boot do gets scared about CRA audit and voluntarily stops collecting the money for a while.

    For actual tax paying working immigrants like me who never collected a single penny in government money yet, it does piss me off to no end. However what can you do? Unless you can go do the dirty work yourself and find these people and report them to CRA, nothing is likely to change. Maybe CRA is not cracking down on these people on purpose since government do love the money they are bringing in and helping to prop up Canadian GDP.

  6. read a bit of mark hanson’s research – according to which – the ham buyer driving/holding up prices is pure urban legend. the numbers don’t support it. it’s canadians taking on mass amounts of mortgage and heloc debt. hate to keep bringing up cmhc but doesn’t get nearly the press it deserves. fraser inst estimates cmhc was 30:1 exposed to ~ 500B about a year ago. so, depending on how much prices reverse, it could be 100B-200B shortfall on the taxpayer. and that is just cmhc alone. what about all the 20%-ers in a 20%+ reversal and all the helocs? super rough estimate. say cmhc needs 150B and everything else only adds up to only another 150B. that’s 300B in a 1.5T economy (~20%). what were the 2008 wallstreet bailouts worth again? i’m pretty sure it was only ~ 10% of GDP. what’s comical is this all just went down next door. going out on a limb. prices stuck for a while in the US before dumping. but markets have a funny way of surprising. so, i’m going to guess van may be setting up to hit a giant air pocket when everyone has that OF moment and realizes this is just a crappy remake of that other movie that just played. plus, the rest of the country isn’t as levered up and hates van anyway – so there will be little sympathy or help.

    • “read a bit of mark hanson’s research – according to which – the ham buyer driving/holding up prices is pure urban legend. the numbers don’t support it.”

      I don’t necessarily disagree with it, but there’s something that I have a hard time to understand.

      Why is it that Vancouver RE prices are so out of whack even by Canadian standards? Why is it that Vancouver has risen so much higher than Toronto? Why would Vancouverites be more speculators than the rest of the Canadian population? Are we just greedier or more stupid when it comes to our personal finances? If so, why?

      I really have a hard time explaining that fact. Maybe some of you will have a rationale explanation.

      • Royce McCutcheon

        @Makaya: Maybe we’re not as significantly greedier or stupid as you might think? Hear me out. At the end of the day, I think there IS a premium associated with living here. For the love of all things tender and holy, please note that I do not think this premium is anywhere near enough to justify current prices. (I believe those are massively impacted by national policies that have fueled speculative mania.) But the roots of the whole Best Place on Earth /’Everyone wants to live here’ myths are based on the idea that Vancouver is a relatively nice place to be and this city has had premium pricing attached to it long before the run-up of the last decade. I can’t say whether that’s foreign/immigrant $ at the root or a willingness from long-standing Vancouverites to pay, but payments have been made.

        I look at data for Toronto and Vancouver here: http://cuer.sauder.ubc.ca/cma/index.html#

        Okay, yeah, the reference houses they’re using show a nearly $400k difference today and Vancouver is nearly double the cost of Toronto. But if you go back a decade to when prices were not at such insane multiples of income or rents – back before CMHC insurance rule relaxations, emergency low interest rates, etc. – Vancouver was also priced way above TO. I know this isn’t close to a perfect take on things, but I do think the very real premium that exists for this place has simply amplified a mania that’s been playing out across this country.

      • Thanks Royce, that’s a great explanation.

        “Vancouver is a relatively nice place to be and this city has had premium pricing attached to it”

        It is true that Vancouver is a nice place to be. I love this city and I usually joke with friends that I didn’t immigrate to Canada but to Vancouver. I accept the fact that there is a premium to pay to live here and I’m fine with it. But I’ve also lived a few years in the south of France, where there is also a premium to pay for Real Estate (nice Mediterranean weather, lots of wealthy immigration from Russia and the middle east, etc.). The thing is, over there, there is a premium to pay if you buy as well as if you rent. Price/rent isn’t very different than in most parts of France.

        Comparatively, rents in Vancouver are not outrageously expensive and price/rent is also out of whack. It’s really strange to me. In France, there is no CMHC but if you’re a first time buyer, you can get a “PTZ” (0% loan from the government that will cover part of your purchase and can be used as a downpayment) and you can secure your mortgage rate for 25 years at the current rock bottom rate (3.96% today).

        The situation in Vancouver is just strange to me. Thanks for offering your thoughts on it!

    • yes. it would be fitting in a way, if the ‘stock’ just went no bid – like old times on the vse.

    • That’s possibly true overall, but for some segments of the Vancouver market, read West Side, West Van, Richmond, Asian money must surely be a huge factor.

  7. “Why is it that Vancouver RE prices are so out of whack even by Canadian standards? Why is it that Vancouver has risen so much higher than Toronto? Why would Vancouverites be more speculators than the rest of the Canadian population? Are we just greedier or more stupid when it comes to our personal finances? If so, why?

    I really have a hard time explaining that fact. Maybe some of you will have a rationale explanation”.

    I hate to be so unoriginal as to break this to you…
    No land.
    Toronto is continuing to add subdivisions of detached houses. Vancouver’s last subdivision of detached was 1980.
    Add to this the loss of 40% of our detached stock to multi-family redevelopment in the last 20 years.
    I think the “no land” factor can more than adequately account for any difference – and the widening gap between Vancouver and Toronto to come.

    • Royce McCutcheon

      I fondly recall in 2008 when more land was built on Vancouver’s West side and prices declined 10% in less than a year as a consequence.

      Ah, memories.

    • The Land factor is probably part of the reason. But then again, why is it that Vancouver rents are not dramatically more expensive than in Toronto?

      Talking again about the South of France example, if you go to Nice, the city is stuck between the Alps mountains and the Mediterranean see. I guess there is even less land there than there is in Vancouver. Real Estate prices there are very expensive by french standards, but rents are too. Why don’t we have the same phenomenon happening in Vancouver?

      • How many high rises do you see in Nice as compared to Vancouver? Nice is a resort town; Vancouver is a major port city.

      • @Robert
        I’m not here to defend Nice, but Nice has the second busiest airport in France and also has a technology park called Sophia Antipolis where a large chunk of the french high-tech industry is located, so it is not just a resort town. Besides, apart from the Defense business centre and some sketchy “banlieue” neighborhood outside of Paris, you will not find a lot of high rises in France.

        Vancouver and Nice are definitely different. My point was more how can we justify that Vancouver has such high real estate prices and not so high rental prices. I’ve taken the example of Nice because, like Vancouver, it’s stuck between sea and mountains. The comparison stops here.

    • No land – hog wash – it’s the lack of transportation infrastructure! Take a look at any world class city in terms of transportation to suburban communities – Vancouver really sucks. Bike lanes and the skytrain don’t cut it!

  8. “Comparatively, rents in Vancouver are not outrageously expensive and price/rent is also out of whack”.

    so long as condos can be built (rental stock) there will always be affordable rents. In areas where there are sky high rents there is also little ability to add to the available supply.

    • True, but then why are condos so expensive in Vancouver? There is no shortage of condos in Vancouver for sure!

      • True, but then why are condos so expensive in Vancouver? There is no shortage of condos in Vancouver for sure!

        Outside of the downtown area, is this really true? Toronto has tons of semi-empty condos too and the rents for a downtown condo are comparable to Vancouver.

      • As far as owning condos, once you are in a speculative mania it has its own momentum. Condo prices have risen on the back of the general speculative mania, even though supply has ramped up too. It takes awhile for the supply glut to slow down the momentum, but when it does there will be a harsh correction.

        Another factor is that the mania has created a situation where most buyers are completely priced out of the detached market. These buyers would normally buy detached houses in most markets, but have to settle for condos in Vancouver.

        For this same reason, I do not thnk the correction will be as harsh in the detached segment, due to the lack of supply.

      • @ Robert.

        I know we are in a speculative mania. My initial question was: how come prices in Vancouver have increased much faster than anywhere else in Canada, and even Toronto. This is true especially for detached homes. How come they are so much more expensive than in Toronto while rental rates are comparable, if not lower in Vancouver than there.

        The real question is: why is it that the Vancouver market is “more speculative” than anywhere else in Canada? What are the driving factors?

      • Makaya -> “The real question is: why is it that the Vancouver market is “more speculative” than anywhere else in Canada? What are the driving factors?”
        —-
        One answer may be that we have had “more convincing stories”: The Olympics, Asia, running-out-of-land, Best Place On Earth — that all whipped the locals into that much more of a frenzy than elsewhere in Canada. But they’re still mainly just stories, and will not support prices in the bust.
        Yes, there has always been (and always will be) a modest no-snow-and-beauty premium on Vancouver prices, but that doesn’t by any means explain current lofty prices.

      • When the condo market corrects harshly, the number of condo owners who want to and can move up to a SFH will be sharply reduced — enough so that prices of SFHs will be affected, even if the supply of them is limited.

      • Canis -> Agreed, this is a crucial point.
        Move-up will freeze in the crash.
        We predict that, peak to trough, ALL sectors will see ball-park similar drops.
        Yes, we know many argue that certain sectors (property type, price level, geography, yada-yada) are more resistant than others, but… just watch.
        The preciousness of the sub-sector is priced into the degree of speculative mania… The darlings will fall, too.

  9. “I fondly recall in 2008 when more land was built on Vancouver’s West side and prices declined 10% in less than a year as a consequence”.

    yes, I loved that time too. The 6 month hiatus produced a 2.5 year and 50% increase in subsequent values.
    I’m personally hoping for another such pause in the action LOL

  10. “True, but then why are condos so expensive in Vancouver? There is no shortage of condos in Vancouver for sure”!

    beats the s**t outta me.
    Condo prices are set at the developer end. Should they fail to sell their units they’re discounted until they sell (i.e. 2008). Why people continue to pay these prices with zero land is one of life’s great mysteries.

  11. Eyesthebye, you are so transparently tied to the real estate industry, I don’t even know why you bother. Everyone knows who you are, and your little “previews” into upcoming MLS listings are a pretty obvious red flag about your ties to a realtor.

    Either you are a sociopathic shill, or a lunatic shut-in who sockpuppets all day for no material gain. Which is worse?

  12. Lots of good info, thanks to all. Multiple plausible explanations for Vancouver’s high RE prices over the years.

    But re: Mark Hanson’s research: did Mark Hanson live the past dozen years on Vancouver’s west side? It’s ridiculous to say that it’s an “urban myth” that there haven’t been price wars there, (especially recently, when the prices went up over 20% in one year), with the huge majority of the bidders and buyers being wealthy speculators from overseas (and I include people settling their wives and children here, but not themselves), builders working for them, or realtors who work with that market looking to flip. I’m tired of hearing the “myths” about how this is a “myth.” It’s happening on every block of the west side. Not only that, the repercussions are not confined to west side houses and condos. Sellers on the east side know they can sell their houses and condos for higher rates due to would-be west-side buyers being priced out.

    • Yes saying the influence of foreign ownership is a myth or limited is a real dis-service to the bear cause. Many people I know, and many people they know, is that the foreign influence is gigantic. Clearly the type of data collection that is required isn’t available. This is why even real estate economists can’t even touch this. Why don’t we collectively create an open-data-wiki initiative around this?

      • hazu chan -> Sounds interesting, please explain what you envision.

      • I don’t know vreaa. But recently I was privy to 3 potential transactions on an East Van SFH. The buyers are all “local” but the offers were contingent on funds coming from overseas (via long completion dates). What I’m saying is that how do we aggegrate this kind of deal flow information into a central database? The problem for many bears is they are not tied into the direct information flow for these sorts of deals. This anecdote site is one such way to collect sentiment and useful “hearsay”, but there needs to be structured data input so that we can make the anecdotes more formal, more queryable. Why not map out houses and attach recent sales, sold prices, and any relevant information to that property? I’m not a techie guy so I’m just throwing this out there in the hopes someone more savvy than I am can make this work.

    • Yes, but so many here still believe that it’s not about HAM despite all the address changes to include 8’s and listing prices full of 8’s. Some people are so blind!

  13. If there was ever any doubt in my mind how much money in Vancouver is dumb, as of this moment, that doubt has now been completely erased. That is all.

  14. New Westminster’s 258 development sells out in under an hour

    http://www.royalcityrecord.com/Westminster+development+sells+under+hour/5780152/story.html

    Hmmmm… is New West running out of land? Yet another Manhattan in Lower Mainland…?

    • I wonder why this is news at all. I have never seen an article about sourdough bread being sold out in IGA, even though it does happen and it’s very inconvenient…. 🙄

    • bubbly -> thanks

      From the article (all 72 units sold):
      “Anderson said, based on his meetings with the new owners, there are no off-shore buyers planning to leave their units empty.
      “I just don’t see any. These are end users here,” he said.

    • 4SlicesofCheese

      Update on my friend who I mentioned earlier was gonna buy here.

      Well she did, and so did her mom. They bought 2 units, said it was a gong show at the sales center.

      They actually commented how it was like in China now, how everyone goes crazy sales day and everything gets sold out day 1. After I mentioned China real estate market was going down recently, she was genuinely shocked and thought I was crazy, and said no way, then after awhile said well depends which city and not big cities.

      Then I sent her
      http://www.forbes.com/sites/gordonchang/2011/11/06/property-prices-collapse-in-china-is-this-a-crash/

      I ask where do you get your info about Chinas market, no answer. But she says news always overhypes the situation. Which I replied can be used in both ways. Just look at RE pump stories.

      She says the same thing as many people believe about Lower mainland real estate and why prices will remain high,
      -everyone wants to be here
      -China money (millions of millionaires coming)
      -who cares if market goes up or down, as long as you have a comfortable place to live
      -you may die tomrw (lol)

      But guess what, they got their deposit refunded the day after because they decided the units were too small. But before that, they had raved about the location and price and how it was perfect,

      The same day they got their deposit back they went and bought at the Viceroy, which was “perfect”.

  15. “The threat of a bubble has largely dissipated,” senior economist Robin Wiebe said of Metro Vancouver. “But, really, there never was one.
    “When prices rise, new supply is attracted to the market. And that’s what’s happened.”

    http://www.vancouversun.com/business/Metro+Vancouver+resale+market+balanced+conference+board+report/5784366/story.html

    — Wow… unbelievable… This article HAS to make it to the “What Bubble?” archive. How can a “senior” economist make these type of comments without any consequences. People…. we’re by ourselves here. Good luck to everybody… you’re gonna need it.

  16. HAM is not as the reason for high/rising prices but it is the excuse.

    While the number of foreign buyers in Vancouver doesn’t justify the perception that a massive inflow of off-shore money is inflating property prices; the fact that locals (the VAST majority of buyers) believe this to be true enables their delusion that taking on huge debt to own an ugly, rain-soaked shack is a good idea because prices only go up.

    Having said that the Yuan’kers do exist & have been buying houses…just not enough to influence the market fundamentals to the extent that RE shills like Formula 1 would have you believe.

    • Royce McCutcheon

      Dingdingdingding!

      Of course there’s a HAM impact. But I’ve met many, many more longstanding citizens of the Lower Mainland who have entered the markets themselves while citing that theirs was a good choice because HAM will sustain prices.

      Curious to know what those who think HAM is the primary driver of prices in the Lower Mainland think is the % of buyers that they represent. 5%? 20%? 50%?

    • I think I’ve figured it out.

      One day a Mr Gao shows up and outbids the local bidders by 200k on a 1m westside house. The next day ten locals list for 20% more than they were planning to. More locals buy nine of those for 10% more than that, because they think Mr. Liu is coming next week to outbid by 20%. Mr. and Mrs. Huang come and outbid by another 25% on the tenth house. Twenty locals list for 20% more than they were planning on. Rinse and repeat.

      A few high profile bidding wars drag up the entire market based on expectations.

      • @TPFKAA — yup that’s what happens.

      • Yup – but who is setting the price here? Don’t answer, we all know who. When that price setting buyer doesn’t show up next year, it’s pretty obvious how much prices will gap down to locally supported levels.

      • local income cannot support these westside prices – or so I’ve been told over and over again. Thus it can’t be one HAM bidder giving rise to nine more locals paying same price
        back to the drawing board TPFKAA

      • diablo/Formula1/etc/etc -> Yes, they can ‘afford’ it, they’re move-uppers!
        You should know that, you’ve made the same argument incessantly before.

      • LOL. That’s why you get on the ladder early, Diablo. For the sake of your children. It is the adult, responsible thing to do.

    • Bally -what communities/neighbourhoods are you referring to? Some of what you said above just doesn’t apply to various neighbourhoods on the west side.

      • Vesta, I’m not sure what you mean…I didn’t refer to particular ‘communities or neighbourhoods’ I was talking about Vancouver as a whole. I do understand that HAM has been a factor in certain areas such as the West Side. And I guess I’d throw Richmond in there too. I know a Chinese realtor who mainly sells West Side property to HAM. She has been really, really busy for quite some time (but recently things slowed down considerably).

        Consider this – the West Side accounts for about 3-5% of the listings in GVREB area (~500 out of ~15000 listings). A hot market (3-4 MOI)equates to about 4-5 sales on the West Side per day (500/90 or 120 days). If 75% of the sales of those sales are HAM then that means 3 houses are sold to HAM per day.

        Those three sales are being used to justify the whole ‘buy-now-or-be-priced-out-forever-because-prices-only-go-up-and-HAM-is-buying-everything-over-list-for-cash’ BS that unscrupulous realtors and the supine media are spreading all over this fine city.

        I for one am not buying it. Literally or figuratively. It is not Yuan’kers that are driving up prices – it’s debt. Piles and piles of good old Canadian owned debt. Dished out by the banks. Guaranteed by the CMHC. And gobbled up by the unthinking proletariat who have been brainwashed by RE-porn into thinking they NEED granite & stainless steel and they won’t be really happy until they sign-up for a 30 year term of servitude and poverty courtesy of a mortgage.

        It a truism that people do what they are incentivized to do. Right now banks are incented to lend. The CMHC is run by those incented to perpetuate the RE bubble. And the man on the street is incented to borrow, and disincented from saving, via super-low interest rates. It is a train wreck waiting to happen & I am demoralized that none of our political leaders have the guts to pull the emergency stop and try to minimize the damage to ordinary Canadians.

        Sorry. Rant over.

      • No need to apologise Bally! Every word was well chosen.

        And I think Vesta would say we need more ranters to set this government right.

      • how can you be upset with the leadership in this country??

        theyre spending a lot of time (and tax money!) to change all the stationary to say “The Harper Government of Harpada”

  17. if overseas buyers of 10% skim off the bottom not much effect.
    if overseas buyers of 10% skim off the top significant effect.

    And by all reported accounts (anecdotal and otherwise), nearly all sales on the west side have been asian. That’s gotta be close to 50% of inventory and likely 75% of all detached property value in the city.

    • So true – can’t believe it’s you whom I’m agreeing with. And all those sellers roll on East with their fat chequing accounts moving down the property ladder and in many cases all the way to another province – helping to push up prices all the way down. I’ve watched an entire extended family of 50 do that very thing and, believe me, they know the source buying money is from China and it blows their mind that their wealth is miniscule in comparison to this tidal wave. They also know that at some point the tide will go out at some point as it always does in any great bubble.

  18. Okay, I’m not sure some of the supposedly reassuring (or sarcastic?) comments about foreign buyers were aimed at my posts, but I trust my own eyes and ears. I’m not hallucinating about overseas buyers, they bought half our street in the last two years and most of the new construction at UBC (I also have many connections in various overlapping communities that include overseas buyers). I’m sort of tired of what I see with my own eyes being discounted by supposed real-estate wizards or real-estate apologists, statistics experts from banks and elsewhere, etc. etc. Also the implication that it’s somehow outre for me to notice what I notice. I’m not anti-immigration and I’m no racist. I’m trying to tell people the truth of what’s happening as I see it with my own eyes. Take it or leave it, but don’t keep telling me I don’t know what I know. Also, I’d like to warn Vancouverites about not being naive about being told that buyers aren’t going to leave units empty. Don’t you think that some buyers know that’s not a desirable thing to advertise??? Wake up and smell the jet fuel, Vancouver!

    Am I just bashing my head against a wall by posting here? Maybe my observations would have more value elsewhere and I should put more of my energies into seeking results of various kinds.

    Thanks in any case for what has been an educational forum.

    • I am curious, how do you KNOW that they are overseas buyers and not locals? It’s not like there isn’t a seizable asian population here.

      • @Michael — well, in the case of our own street, I actually talked to people on the street who bought the land/houses!

        And as for the sizable Asian population here — don’t we all have friends and connections in that community? I mean, how can we avoid it? What I’ve seen that other readers of this blog might not have comes from my experience of teaching Asian students from immigrant families for the past dozen years. And I’ve lived in neighbourhoods that were at least 50% Asian or more for the past twenty. So forgive me if I feel like I can trust my own perceptions, even if they don’t match other people’s numbers, wherever those numbers are derived.

      • @Michael — what I meant by having friends and connections in the Asian community here is that unless you live in a mole tunnel you’re not going to be surprised that there’s a “sizeable Asian population here,” as you put it. And yes of course locals buy houses too! And we all know that it’s hard to separate the locals from the overseas buyers because there is so much uncertainty about how those categories overlap. It’s just that in the past several years many more of the buyers I have seen/met/encountered on the west side have been from overseas: they were raised there, they work there, and — in my own experience — many of them return there after their children are educated here. Sorry if that fact makes people think I am just “seeing what I want to see.”

      • I am asking because all the people “in the community” that I know give me a different impression. Yes, certain areas (the upper echelon) may be different, I don’t really walk in those circles and have no desire to. But at least in the other parts of town where I do know people “in those circles” it seems to be locals.

        It just doesn’t quite jive with my own observations and what has come out of other studies, so I was curious to see what you see that I and most others don’t seem to see.

    • Royce McCutcheon

      @Vesta: I don’t doubt your experiences, nor do I think you exhibit any prejudice in expressing them. Further, I don’t doubt that the west side in particular is highly influenced by HAM. But I’ve heard “the HAM defense” used across this region. And I have a difficult time buying it when the person is using it to justify their purchase of an unremarkable nearly half million dollar suburban home in Maple Ridge (at an insane multiple of their salary). As Bally points out above, the west side is only a part of the story, but you hear about HAM being an influence everywhere. Every single person I’ve known who has purchased in the last couple years – whether a condo in North Van or Langley, a townhouse in Richmond or Surrey, a detached house in Burnaby or Delta, etc. – has, unbidden, cited HAM as a reason they think prices are justified and will continue rising. Every case.

      It’s not about being a real estate stats trainspotter. It’s about what I’m seeing, just like you. And what I’m seeing are friends, acquaintances, co-workers, etc. wrangle things like parental money to take on debt at insane multiples of their incomes, all the while justifying it as a responsible, “adult” decision. Or they think the situation is nuts and are leaving (or making plans to leave).

      • Royce, very interesting, thanks for posting this. This is something I definitely hadn’t known, these crazy justifications for buying and getting indebted all over the region.

      • Royce McCutcheon

        Take it for what it is: anecdotal. But it’s certainly what I’ve seen amongst a staggering number of long-standing Vancouverites/Lower Mainlanders I know (not just those who’ve bought, but also those who’ve nodded sagely and commended these people for buying).

        It makes me think of a story I heard from friends who live in Washington state, a little ways over the border. Over the course of 2009 they saw substantial – and not inexpensive – road upgrades done. What was one of the justifications provided by officials for this work? The need to accommodate all the tourists that would come due to the Vancouver Olympics.

        Oi.

    • Your eyes are not deceiving you Vesta. It’s pretty obvious that the Vancouver politico will do nothing in terms of restricting foreign ownership and controlling speculation. There’s too much vested interest in keeping prices high. You either have to wait patiently for the full correction as the local economy hollows out and China is bankrupt (this could be 5 plus years) or get out and move on to sunnier pastures. As far as I can tell, what you see is the truth.

  19. @hazu chan, yes, those kinds of transactions are happening all the time. When my husband and I were looking for rentals on the west side — and I looked every day for nearly 3 months — we ran into one situation after another where a “local” (a “friend” or “property manager” here) was acting for an owner overseas, or at least overseas a lot of the time.

    I’m not claiming to be an expert on patterns overall in Vancouver. But commenters here don’t need to worry I’m making stuff up about the West Side, thanks.

    • No I totally get the west side anecdotes are approaching some statistically significant data, I do think though that it’s relatively isolated, at least in terms of metropolitan-wide land use.

      I feel your pain; others… the concept is, well, foreign.

  20. i think people underestimate the leverage factor. outside capital introduced into the community can get levered up 5-10-20 to 1 because locals get themselves all lathered up into a feeding frenzy. btw, that’s like an order of magnitude. this is what the numbers (i.e. total mortgage, heloc, etc. credit issued) indicate is happening. the ham capital by itself, not that it’s non-existent, does not pump prices to these levels. it is the expectation of further price gains, however derived, the willingness to speculate/capitulate on that and the complicity of the banking system + govt which bears responsibility for this mess. if i say here’s a hundred bucks, now go out and stop traffic for a while on the sp causeway. would you do it? is it my fault if you did and maimed yourself or worse? if not for a hundred, how about $1k? you get the idea.

    • @Chubster — yes it’s a combo of all these things. CMHC and Canadian banks and foolish or rapacious local speculators play a major role. As does foreign capital. And yes it’s hard to know how to apportion responsibility exactly.

      • yes. though the leverage should be clue to which factor is more significant. case in pt, read some articles about parents ponying up their kids’ downpayments to buy in this inflated market. this brings buyers and credit issuance in at the current price point. why would they do that if they expected prices to go flat or down? it would be much cheaper to rent and deploy the ownership premium elsewhere.

      • don't blame Chinese

        I would blame those original west side house owners for selling their houses to overseaer.

        Stop Selling to Chinese = Problem Solved !!!!!!!!!!!!!!!!

      • I know of 3 families, 1 asian and 2 caucasian all with 2 working parents.
        All 3 bought in Vancouver and borrowed significantly from parents for the DP. The asian parents sold their house in Van to help the kids out.
        Bank of Mom and Dad indeed.

      • I see a combination of both HAM and local leverage too. Out in east Burnaby our previous rental was bought by HAM (Now it’s vacant and on sale since spring and has had two price drops for a total of 6% off 935,000). But the other sale on the street was to a white family. In our street now there is one HAM household and two others that appear to be HAM but I know aren’t. One house went for 1m to a white family. I know another local family (my new brother in law’s) who could appear to outsiders as HAM because of language but have actually lived here for 30 years, and they upgraded to a newish eastside house three years ago. Our landlord owns a few and his associates own many; they also could look like HAM but are Hong Kong migrants from back in the day… It’s a fair mix all right, and complicated by the ethnic makeup of the area… speaking of HAM students, Like Vesta, I’ve also known quite a few who have had homes bought for them while studying here. Some bought investment condos. Some have gone back, some have remained, and of the rest I have no idea.

  21. If the euro sinks it will be the black swan to end all black swans.

    • actually, that will be when the USD blows. if they can’t get it together to print euros (i.e what corzine lost betting on to bail out greeks), they just print in whatever local currency anyway after it sinks. though, some like jim grant suspect they’ll likely stabilize it by putting chaining it back to gold before we get to a full meltdown.

      • stabilize the usd that is. euro is toast in current form. it’s sort of funny to watch all the eurocrat crow like baghdad bob – only bob didn’t believe it.

      • Bad time to start shorting the global reserve currency dude!

    • The Euro failing wouldn’t be a black swan. Everyone knows it’s a possibility (even a likelihood) and are positioning themselve accordingly. A black swan would be something unexpected and extreme. The Canadian government being overthrown by a communist militia or maybe an unprovoked nuclear attack by France against Germany might be considered black swans. See how ridiculous those sound? They are both completely unexpected and as such, there are no bets on the table and the world is completely unprepared for them. The term “black swan” is woefully overused on financial blogs these days…if you want to use it, at least use it properly please. As a rule of thumb, if the thing you’re discussing seems possible & plausible as you discuss it, it isn’t a black swan.

      • allrighty then. Let me be clear.

        I think it’s 1931 and North America is Austria. Over-leveraged. Burdened by Debt. Fragile.

        Creditanstalt number two baby.

        Happy to be wrong, of course.

  22. At least my Mandarin is improving

    Vesta, what you have seen happening on the westside in regards to Chinese buyers is absolutely true.
    I would say close to 95% house/land purchases are made by mainland Chinese buyers.
    Most of the people who post on this blog don’t live on the westside, so it is impossible for them to have any sense of what is going on over here.

    • “it is impossible for them to have any sense of what is going on over here.”

      Why should they care? It’s way out of almost everyone’s reach even when prices were 50% off.

      • At least my Mandarin is improving

        Because it’s interesting and alienating and kind of disturbing and affects us all in the end.
        Most of us westside “locals” know that we wouldn’t be able to afford the houses we live in if we had to buy now. Many of us wouldn’t even consider Vancouver as an option.
        The westside of Vancouver has experienced a massive house price “upgrade” in the past few years, but the last two years in particular have brought an equally large downgrade to these neighbourhoods.
        Eg. Halloween 2011: Several of our new mainland Chinese neighbours barricaded their front doors with lawn furniture so we wouldn’t’ bother them with our freaky culture.
        Many of us wonder if it’s worth sticking around.

      • The whole city shouldn’t care if the thousands and thousands of people who have to work at one of the province’s biggest employers (UBC) cannot live near their place of work? Well, some of the consequences of that will be:
        1). The city may have fewer good doctors, researchers, etc., because as has been reported on this blog, nobody’s going to want to move here.
        2). The city may have fewer good educators because of this.
        3) Unless the west side decides to densify, the city’s transit problems are going to get worse
        4). GOOD LUCK getting a lot of the west-side owners now to embrace densification! From what I’ve seen and heard it’s much less likely to happen now than it ever has.
        5). I would guess that housing prices ALL OVER the city may rise due to astronomical increases on the west side (am i wrong, or is the west side a large part of this city?). Hasn’t that already happened?

      • Again, you’re talking about impacts located in a relatively small, though affluent, enclave of Vancouver metro. I have not seen rents appreciably increase in the past few years, at least in the suburbs, leading me to believe that if there is a knock-on effect of foreign ownership displacing locals it isn’t translating to lack of housing supply.

        Don’t get me wrong, I sympathize, but the west side has long been isolated and unaffordable for most of those living in LM. If suddenly it’s unaffordable for aspiring upper middle class locals, meh, join the club. I would go so far as to say that many locals on the west side have no problem with extremely affluent residents/foreigners buying; they would probably ask them for tips on how they can get as rich.

      • “GOOD LUCK getting a lot of the west-side owners now to embrace densification! From what I’ve seen and heard it’s much less likely to happen now than it ever has.”

        If that’s the case, perhaps it’s worth a frank discussion on how low density housing close to the core of a desirable city impacts the region at large. Maybe not all the harms and impacts associated with a large lot single family home are being taken into account.

  23. @Michael, you write: “I am asking because all the people “in the community” that I know give me a different impression. Yes, certain areas (the upper echelon) may be different, I don’t really walk in those circles and have no desire to. But at least in the other parts of town where I do know people “in those circles” it seems to be locals.

    It just doesn’t quite jive with my own observations and what has come out of other studies, so I was curious to see what you see that I and most others don’t seem to see.”

    Why did you put quotation marks around the words “in the community”?

    As for “walking in upper echelon circles” — I had to laugh. Your earlier posts seemed to be weighted with certain perhaps insulting assumptions, as does this one. To clarify: I don’ t “walk in upper echelon circles.” I lived on the west side for several years in student/faculty housing at UBC, then in an apartment building, and then in a house. I’m a writer and my teacher. My husband works at UBC and wanted to live close enough to the university so it was a fairly quick bus ride to and from work. And that is how we wound up on the west side.

    We all have different observations, but the challenging way you put your questions I’m afraid raised my hackles.

    And who is “most others”? Most people you know? It just goes to show we all know different people.

  24. @Bally — good points, I agree. The publicity given to what’s happened on the west side may distort the whole picture. Doesn’t make it any less true about what’s happening, but I completely agree CHMC and hype and lack of leadership and debt are contributing to a huge crisis.

    • The same issue is in Burnaby where I visit every month. $1 million+ for the lot and another $2 million to build – all HAM. Every one of them – every where you look. Always SFH’s ie. land. Locals don’t have that kind of coin in this economy. They buy condos and townhouse without land – it’s all they can afford.

      In Surrey and Langley it’s not custom homes but in areas with the new builds it’s hard to find a conversation in English on most streets. And nobody seems to work for a living?

  25. You guys are getting hysterical. Relax. When credit dries up, prices will plummet, on the west side and elsewhere. Patience.

    • maybe 90% of income spent on housing has a lot to do with the hysteria. just a lot of resentment and anger looking for an outlet. it’s just outright nonsense to target foreign buyers, imo. if that is truly the reason for this affordability pb (not my position btw), then, per an earlier poster, one should at least be consistent and persecute the sellers to ham equally – it takes 2 willing parties to conduct the transaction. quick! get their names on a list – they’re ruining this community. that’s how ridiculous the logic is.

      • Agreed, but there actually aren’t that many people selling to HAM anyway. As for the 90% of income, no one is forcing people to buy. Rents are quite reasonable. I just saw a house that sold for $2m in the summer listed for lease for $2100 per month. What a joke. If you can’t figure out that this is a huge transitory bubble, drive to Seattle or Bellevue or something for the weekend and just open your eyes. This too will pass.

      • It’s outright nonsense to ignore the effect of foreign buyers too.

        And human nature’s never going to change enough to persuade anyone being offered a large amount of money for a house to say “Oh no, pay me much less!”

        But I take your point that the CHMC and the government could be doing a lot more to discourage indebtedness and speculation in general.

    • i still say its a vast 100 year red china plot to colonize the western coast of north america – but then again, i’ve only read 14,000 years of the history and patterns of human civilizations – but what do i know?

      i for one, salute our new party overlords.

  26. @jesse, you write: “Again, you’re talking about impacts located in a relatively small, though affluent, enclave of Vancouver metro. I have not seen rents appreciably increase in the past few years, at least in the suburbs, leading me to believe that if there is a knock-on effect of foreign ownership displacing locals it isn’t translating to lack of housing supply.”

    1). FWIW, I think you’re wrong about this — I think higher prices on the west side are driving prices higher (for the sale of homes) in many other places in the city.

    2). Also, is the west side “relatively small”? I mean, how small is it compared to the East side?

    3). I had just written in posts a few days ago that the highest percentage of voter participation in the latest municipal election, except for a few other scattered neighbourhoods elsewhere in the city, was nowhere other than on the west side. The VREAA host very helpfully provided a map showing this to be true. If this trend continues (e.g. lots of people on the east side of Vancouver not bothering to vote), *guess which way municipal policies are likely to go.* Are they going to favor the interests of the very rich, who will probably not be in favour of their neighbourhoods being densified? Yes sirree.

    You also write: “Don’t get me wrong, I sympathize, but the west side has long been isolated and unaffordable for most of those living in LM.”

    But for how long? As late as the 70s many UBC professors and employees could afford to live in Point Grey.

    You also write: “If suddenly it’s unaffordable for aspiring upper middle class locals, meh, join the club.” How about secretaries at UBC?

    And you say: “I would go so far as to say that many locals on the west side have no problem with extremely affluent residents/foreigners buying; they would probably ask them for tips on how they can get as rich.”
    How many locals on the west side do you actually know? I’m sorry, this is not only ignorant but unjust. A lot of the impetus to fight some of the socioeconomic problems that are going to affect this city comes from people on the west side. Sandy Garossino, by the way, lives in Shaughnessy.

    Thanks everyone for the discussions that have been useful and fruitful.

    Ciao.

    • 1) I was speaking about rents, not prices. If former westside residents are crowding out others in other parts of the LM rents are not showing it.

      2) Van West is a fraction of Vancouver metro.

      3) With the exception of Kits, most of the population growth in Vancouver (city) has been on the east side. The staunchly NPA southeast needs ever increasing voter turnout just to tread water.

      When I talk about unaffordable I remember relatives commenting how a two professor family “must have had help” buying in Dunbar in the early ’80s. Even then families were not willing to live in VW, it would have meant a big standard of living sacrifice, 30 years ago.

      As to how many VW denizens do I know, a lot, enough to state that SOME are vehemently opposed to foreign ownership restrictions. They came by their money offshore too. The potential endgame displeases their sensibilities that capital is global, not local. This may not be the majority but I don’t think restrictions being investigated by Sandy Garossino are universally popular.

      There are injustices in Vancouver, but as someone taking a step back and looking at the region, not a subset, I am not seeing foreign ownership register as a broader issue. This does not preclude it being an issue but it’s not where I would focus my energy; if I’m right that foreign ownership and capital is not the overarching drive for high prices region-wide, the root causes will be mostly unaffected by any imposed restrictions. I eagerly await the data nonetheless.

      • Jesse, sometimes you are full of it. Nobody denies that Vancouver was an expensive place even before the bubble.
        However, 10 years ago, the benchmark price for a SFH in Van West was around $600k. Now it’s over $2000. That puts things a little bit into perspective, doesn’t it? If 600 thousand is expensive and unaffordable to most, then what is 2 million?

      • $2000k, obviously.

      • The West is basically a peninsula with easy access to beautiful beaches and a world class University. Someone should really make it more affordable so we can all live there.

      • “That puts things a little bit into perspective, doesn’t it?”

        So yeah Van West went from expensive to extremely expensive. I agree, but to think that correcting a foreign ownership problem plaguing Van West has a significant bearing on the family in, say, Coquitlam is by no means a certain. From all accounts the impact there is minimal, at least insofar as rents are concerned.

      • Perhaps. Unless someone mentions the whole move-up buyer thing, or people moving to the suburbs because the city is now unaffordable. (Not talking about rents here).

        FWIW, I also don’t believe that restrictions on foreign buying will do much. Many of the foreigners have permanent resident status anyway. And then there are all the local speculators, NINJAs, realtor-landlords, etc.

      • blammo, I wasn’t talking about entitlement. Just pointing out facts to provide some perspective. Saying that there is no problem, because Van West was always like this is simply incorrect.

      • Blammo: If more of those who work at that world class university could live within biking/transit/walking distance of it, that would be even greener than an extra bike lane or two downtown.

    • Vesta, I appreciate your earnestness and sincerity, you sound like a nice person but I think you are looking for justice and equality in the wrong place. I’m not sure how you expect curtailing of high prices in the most desirable neighbourhood of a very desirable city to be high on the list of politician’s mandates?

      Sandy Garossino finished a distant 22nd for a reason. Furthermore, her platform was definitely not focused on making Kitsilano affordable for the working class.

      Even if density is increased on the West side, in all likelihood this potential is already baked in to the prices. At best, you will get over-priced and undersized condos. In which case, you are welcome to it.

      Is their a possibility you or your husband could get transfered to SFU? If so, perhaps you could move Burnaby. But I have a feeling that’s not the answer you’re looking for.

      • Thanks Blammo, good points.

        I ain’t lookin’ for curtailing of high prices anymore, and you’re right that I don’t think that’s going to happen. I’m just looking for somebody to step up to the plate and say “Hey too many people with a reasonable income can’t live in this city anymore, isn’t this a problem? And what can we do about it?” Vision Vancouver polling “discovered” that the #1 issue on voters’ minds was affordability — surprise, surprise!

        Did a lot of west-siders vote for Vision, is that why they won? If so, does that suggest even west-siders think about affordability? Another Vancouver mystery to be solved. The NPA wasn’t saying a damn thing about affordability as far as I know.

        Sandy Garossino might have finished 22nd for all kinds of reasons. Not enough people knew about her; she ran as an Independent, and historically Independent candidates here do not fare well, apparently; and people who might have supported her candidacy maybe could not bestir themselves to shuffle their sorry haunches into a voting both.

        Raymond Louie and Kerry Jang, both good Councillors I think, drew the most votes of all Vancouver Councillors. Who WAS running on affordability in Kitsilano, besides Cope people who didn’t get elected or re-elected? And what does their failure to get elected or re-elected say? I really don’t know.

        And I do think that Garossino does care about affordability issues even on the West Side.

        I agree that the only affordability we seem to be looking at now in many places in the city involves undersized, overpriced condos. Come on Vancouver, get creative with your building!

        As for transferring universities, I could get a single-family home within ten minutes of Harvard University for around $400,000. Guess what that would buy me in Vancouver. Hmmm, what looks more attractive?

      • Vesta-> “I could get a single-family home within ten minutes of Harvard University for around $400,000.”

        Wow, that is an important point. Thanks.
        —–
        Vesta-> “…does that suggest even west-siders think about affordability? ”

        What people say they think, what they say they’re ‘for’, matters far far less than what they’re prepared to act on. The vast majority of voters in this city/province own RE. End of story. Don’t expect them, as group, to move for parity in home ‘accessibility’. They’re not going to give anything of substance away. Some individuals may walk the walk, but I absolutely guarantee the group will only talk the talk. Mr Market will take them to task.

  27. I agree with you Vesta! Bally you are out to lunch! I have family in the west side and have friends’ parents living on the west side. Look at the price difference between say Dunbar, Mackenzie, Arbutus and North vancouver, Surrey etc. The west side homes went up way more why? Almost every time I go back which is frequently, it is HAM in these areas of the west side. I tried to help a neighbour of family up the street in the summer, a new house, they needed to water their shrubs etc. Guess who was there? HAM When a couple of my friends’ parents sold their house, who bought? HAM Look they said they feel guilty their kids can’t afford to live there but it was the best time for them to sell and downsize as they were in their 60’s. If you were nearing retirement and your house shot up in value from 1 million to 2 million in a couple of years would’nt you?
    Again I am with you Vesta – just these anecdotes all add up to HAM

  28. “Yes, I know it seems as if the whole of Pender Island is for sale at present, but the historical stats for the current real estate market since the financial meltdown in 2008 show that the fundamentals of our local market have remained remarkably stable… The number of current listing are definitely up but the volume of sales are not, leading to the proliferation of For Sale signs that one sees driving around Pender. In other words it is the individual circumstances of sellers that have changed, causing them to shed asset such as property, not a market collapse where there are no buyers. The buyers are still there but their numbers remain stable and have not increased sufficiently to control what is essentially a flood of new listings.

    Fear and panic still rule the financial and most real estate markets at present, except for Vancouver where the luxury market is driven by foreign ownership, mostly either from mainland China or from the Canadian – Chinese population. I heard a stat from CMHC this morning where they had looked at the names of buyers in the million dollar plus Vancouver market and deduced that 74% were of Chinese origin. Not very scientific I know, but I think it is safe to say that without the Chinese the Vancouver market would look very different.”

    http://homesonpender.com/blog/pender-island-real-estate-market-still-sound/

  29. don't blame Chinese

    Wow, flashback

    At a city hall hearing, local resident Pamela Sauder spoke in opposition to rapid transit through Kerrisdale and her quote became a flashpoint in the debate:

    “We are the people that live in your neighbourhood. We are dentists, doctors, lawyers, professionals, CEOs of companies. We are the creme de la creme in Vancouver. We live in a very expensive neighbourhood and we’re well educated and well informed. And that’s what we intend to be.”

  30. Great discussion, all, thanks to all posters.

    One thing is very clear to me: you can’t blame the sellers.
    They are simply acting like sensible agents in a sea of insanity: when somebody, anybody, offers you a free lottery jackpot, a complete home run, you’re a fool not to humbly accept. Congratulations, successful sellers.

    I agree that foreign_money/recent_immigrants have been buying a lot in certain sub-sectors of the market, but they are not responsible for the very big picture, which is the giant wave, over 8 years, of a speculative mania.
    As we have said all along, and has been spelled out by some in the discussion above, these purchasers have had a modest direct effect and a huge indirect psychological effect… they have encouraged locals to overextend to points beyond their prior wildest dreams.
    Ironically, this local speculative support of the market has in turn encouraged even more off-shore interest, as everybody has been attracted to a market that seems bullet-proof.
    So, wild feeding frenzy, everybody in.
    This is what has propelled prices to the stratosphere, and there really is a very large air-pocket between where they are now and sound fundamentals. When the burst comes, speculators (almost all buyers in the last 5 years) of all stripes, of all social groups, of all home-languages, of all political persuasions, immigrants/locals, will get crushed. The market shows no prejudice.

    Once the dust clears, there will still be big challenges for housing policy in Vancouver, but they will be different from what they appear to be now. It’s hard at this point to know exactly what they’ll be.
    It’s probable that off-shore non-resident investment ownership of residential RE will still be a pertinent long-term issue. China, even though it may undergo massive upheaval and social/economic turmoil in the next decade or two, will still end up being a considerable economic and social force (2030-2050-onwards). We can see the argument for restricting residential real-estate from being owned as an investment by non-resident entities. But most perceived ‘foreign’ buyers in today’s market are actually landed residents.
    With a housing bust that may last many years, and which would be a massive weight on the BC economy, we’d not be surprised to see a period where foreign interest all but disappears, even to the point where locals try everything possible to revive such interest in local RE. Something similar is being debated in the US at present.

    So, we’d not be at all surprised to see a period where the issues being discussed above leave the stage completely. And that would be the result of market, not political, forces.

    • Anyone here thinking about what happens to the overseas/immigrant buyers in our area if the US does enact policies to attract them there?

      • Yes, a percentage will be attracted away. So the direct effect will fall a little (but the stories will remain).
        Perhaps “All the foreign buyers went to the US” will end up being one of the stories of our bust (there is always post hoc rationalization when a bubble bursts, even though no triggers are necessary).

  31. This is my last post of the evening (I promise).

    @don’t blame chinese: you wrote: “Wow, flashback

    At a city hall hearing, local resident Pamela Sauder spoke in opposition to rapid transit through Kerrisdale and her quote became a flashpoint in the debate:

    “We are the people that live in your neighbourhood. We are dentists, doctors, lawyers, professionals, CEOs of companies. We are the creme de la creme in Vancouver. We live in a very expensive neighbourhood and we’re well educated and well informed. And that’s what we intend to be.”

    Well, that’s a stomach-turning statement for sure.

    But, speaking as someone who lived on the west side for 20 years, let me tell you a little bit more about who my neighbours were over those decades, in case it’s helpful in providing a different perspective:

    1). Students and faculty from around the world (when I lived on the UBC campus), most of them definitely not arrogant rich people;

    2). Many elderly people on sharply restricted incomes (apartment building in Kerrisdale)

    3). Cul-de-sac in Kerrisdale: When we first moved 12 years ago there our neighbours were the following:
    a). a former retired sign-maker
    b). an exterminator
    c). a nurse
    d). a high-school teacher
    e). a violin teacher
    f). a refugee from Zimbabwe
    g). a professor at UBC
    h). another retired nurse and her elderly mother
    i). a locksmith
    j). various households of renters, including single mothers, UBC students, a carpenter
    k). a building official at UBC
    l). a retired couple
    m). a retired homemaker who rented out her lower floor
    n). another retired couple
    o). a couple with 4 children (I think the parents were lawyers)
    The mix of countries of origin/ethnic heritage? China, England, Ireland, Scotland, Greece, Italy.

    In the last three years, six of the 19 houses on this cul-de-sac were torn down and seven new houses went up. (Another house, the violin teacher’s, has recently been sold.) All the new houses are owned by extremely wealthy people; there are fewer people who live on the street; there are fewer renters; some of the new owners don’t seem to be there very much; there is less interaction between neighbours.

    The West Side didn’t used to be completely unaffordable for most, or demographically homogenous, but if things keep going the way they’ve been going, it might become so.

    Okay, ciao for real.

    • Vesta, my arguments above are attempting to provide some thoughts on the context of the problem, in both geography and in time. I agree Van West has taken it on the chin with speculation and it is near certain foreign capital bears some, perhaps most, of this.

      Harping on Van West vis a vis other regions is not intended to be class warfare, my comments are more giving a broader picture of the income gaps that have been evident for more than a generation and are becoming more acute, one may argue in part due to a broader income stratification trend over the last 30 years. This is a longer-lasting trend; if we are discussing “affordability” this is a well dug deep compared to the median income of the west side, so it needs to be framed and better defined.

      That said, Van West has earned, rightfully in many cases, the reputation of an area that is difficult to “infiltrate” in terms of density increases. If we are talking about moving the city into a more inclusive place where a UBC employee — or a professor — can live close to his/her workplace without taking large financial risks, that will mean more middle class accommodations city-wide. These are tough issues but require context, especially when wading through the morass of backlash should a viable solution be identified and pushed to the fore of public discourse.

      If you want my view, I think adding density into the westside more aggressively is something that should be debated more than it is, and that if neighbourhoods are going to resist tooth-and-nail density increases, that should be accounted for more aggressively in terms of environmental impact. Prices are signalling, at least to me, that Van West is woefully underpopulated.

      Thanks for the discussion.

      • JEsse, totally agreed on the underdensification point.

        And thanks for your intelligent post to my irritable ripostes.

        Pax and best wishes.

        Okay, bon soir and xie xie to all.

  32. @Vesta,

    Hey, it’s just a quote from one of your west side neighbors.

    I seldom go there, unless I make a wrong turn, you know, Chinese driver 🙂

    • @Blame-Me: you know nothing about me, about my students and their families and my neighbours (good feelings all round) — your comment above suggests I’m a racist bonehead. Brilliant addition to the discussion! It’s so easy to wrap things up by calling other people racists! That’s really sophisticated and fair. And libellous.

  33. Regarding walking the walk:

  34. @vreaa. nice summation. addendum. note who makes off with most of the loot from this after all is done: banking sector > realtor > specs > … + any other special interest groups tied to increased govt revenue.

    @vesta. i hear you and my comment was not intended to be dismissive. i’m sort of an expat westsider and my family still lives there. so, i have seen what you see. however, is the pb foreigners buying or is it general affordability? if affordability, consider any representative x-section of purchases during the boom. how much is cash vs credit? credit is irrefutably and overwhelmingly the primary determinant of transaction prices. ergo, the factors influencing issuance of credit are responsible for the affordability pb. these should be the target of any corrective measures.

  35. CHubster, no offense taken. I got a little exercised last night, obviously. Wanted to thank you for your George Clooney Wreck Beach post, which gave me and my husband the biggest laugh we’d had in days.

    With thanks to thee, my homies (pun intended) on this blog, I’ve learned a lot about causes of/potential solutions for affordability problems in the lower mainland (even if some who post here believe only the market will be the deus ex machina; a credible stance, I know now). If only the gub’mint (at all levels) and the CMHC would read this blog I wouldn’t feel so terrified about what’s going to happen to this town.

    • Vesta… notwithstanding that the authors’ focus is America, you may nevertheless find the following book helpful/illuminating as regards the peculiar dynamic/political economy of YVR RE (viz. Balkanization of incomes/neighbourhoods/political affiliation/cultural affinities+predilections)

      TheBigSort – Bill Bishop

      http://tinyurl.com/cjyhvjd

  36. Magnificent beat ! I wish to apprentice while you amend your website, how can i subscribe for a blog website? The account aided me a acceptable deal. I were a little bit acquainted of this your broadcast offered vivid clear idea

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