Gord Goble – A Glimpse Of Our Future?

These photos from Gord Goble, following up on ‘South Surrey Building Blitzkrieg; Thoughts and Images’, March 2012. Gord writes: “I took a little time late this afternoon to grab some more pics of the crazed (and horrid) construction going on in my insane little neighbourhood (and the telling signs of a real estate bubble pop). Pretty eerie. A glimpse of the future.”
Sombre images. Many thanks, Gord.

41 responses to “Gord Goble – A Glimpse Of Our Future?

  1. Some awesome shots there.

    This is the ugly side of housing bubbles. Unfinished buildings, wasted supplies and just general ugliness. Expect to see a lot more of this around the lower mainland in the coming years.

    • UBCghettodweller

      As a former Calgarian that saw stuff like this in the early-90s this gives me a certain measure of Schadenfreude. Just wait until foundations for buildings are put in but the rebar spires sit unused for a half-decade.

  2. Truth that 1) pictures of a bursting bubble are in Vancouver 2) most of the US does, and did, not look like that.

  3. 4SlicesofCheese

  4. Comment I just saw from a week ago that made my blood boil:

    “Speaking of taxes (again), I really don’t understand why higher property taxes (NB: they work a lot of places elsewhere) wouldn’t work here. If it’s true that, as some people claim, there’s a lot of income tax evasion going on in very wealthy neighbourhoods here, higher property taxes for people who own estates (or crack shacks) worth $2, 3, 4, 5, 6 million etc. would be a way to recapture some of that revenue, no? And if owners like that fled/sold because they hated the higher property taxes, hooray, maybe housing prices would drop even more and middle-class families could buy those houses.”

    Who do you think is having to sell right now on the West Side because of property taxes?? The middle class! My neighbourhood went from being a normal, if nice, middle/upper middle class neighbourhood to 70% rich asian, 20% retirees living in $2 milion “teardowns” who’ve deferred their property taxes, and maybe 10% white professionals w/ family who need to earn $300,000 per year just to afford a 3 br that was only 5x salary in the 80’s when I grew up. Why should normal people pay 1/5th of their income in property taxes just because the city is addicted to foreign money? No wonder people are leaving the province.

    • ASDF, I’m glad you posted your thoughts. I certainly sympathize with people here who are struggling financially. I did not realize that, as you suggest, it may be that more people than I would have thought are feeling like they have to sell due to property taxes alone.

      When I posted that earlier comment, I was wondering why people on the West Side with perhaps 2 Mercedes Benzes and one BMW/Range Rover/Maserati in their garages pay property taxes that are quite low compared to other cities’ — or why people who own high-end properties here that remain empty for years at a stretch are not assessed some kind of penalty tax for taking up housing and land that other people could use.

      If some of these people paid taxes more in line with what can only assume are their incomes/assets, given their properties and possessions, maybe Vancouver wouldn’t have to rely on construction permits to supply 25% of its operating budget and the City would get more serious about encouraging the building of housing the rest of us can afford.

      • It is not just property taxes. Many families see their kids grown up with no chance of buying in the community, or even maintaining the taxes on the house if they were to give it to them, and decide to sell.

        What you are referring to are “foreign owners”, who are parking their money, and often their families here. “Chinese owners” would be even more precise. Do you feel comfortable profiling them with higher taxes or restrictions on ownership? I do. But that’s just me. You will catch lots of normal people if you just cast a big “high tax” net over the nicer parts of town. And considering that taxes on the west side just go to buy votes in East Van (how many new community centers do they need??), I am doubly against it.

      • “Many families see their kids grown up with no chance of buying in the community”

        FYI there is no special entitlement by birth to live in a certain part of town

      • “Do you realize how elitist you sound?”

        Um, ditto.

      • People absolutely have the right to own property in the neighbourhood in which they grew up. It is how stable communities are formed. Packing people in here in an attempt to make a buck is destroying the city.

      • “People absolutely have the right to own property in the neighbourhood in which they grew up”

        I have to politely disagree with this one. There is no right here, there are those who grew up in other parts of the city, country, and world who want to live in specific areas. I see no reason to grant priority based on one’s birth. If you mean instead that areas must increase density to accommodate families staying together, that may be a nice goal but I doubt it would be too popular.

        I am certainly sympathetic to the strains of having families spread out across a region that takes long times to traverse, but I do not see an easy way out of it, even if population growth and foreign capital flows were cut off.

      • The way for multiple generations to live in the same area, if they so choose, is for a given generation’s purchasing power to be comparable or superior to the previous generation’s. What’s happened in Vancouver, and in Canada more generally, is that real incomes have grown only marginally, while real estate prices have–over a fairly short period–skyrocketed. In other words, purchasing power has taken a hit. Under “normal” circumstances (no speculative craze, emergency interest rates, etc.) this wouldn’t have happened, and affordability would be a non-issue. The market will correct this eventually, but it is frustrating in the meantime…

  5. 4SlicesofCheese

    I thought homeowners were happy (on the outside) that their property taxes were going up. That means, they think, their property values are going up!

    • Maybe in the Burbs or condo-land where there is no sense of community and people trade houses like they do cars. In normal communities that have been in existence for a while and that aren’t endless mazes of prefab houses, most people like where they live and do not have their eyes on the exit door.

      • Do you realize how elitist you sound?

      • Lots of community in Surrey/Langley. Lots of play parks for kids. Sure better than senior centres.

      • I am an elitist, but I care for the little guy, unlike growth-at-all-costs fanatics such as yourself.

        I was in Coquitlam a few weeks ago, driving through what was up until a year ago virgin forest, and which is now really poorly constructed subdivisions. I defy you to tell me that the people moving there are in it for the long haul, and that there is more of a sense of community there than in 50-100 year old neighbourhoods in Vancouver.

      • I grew up in a suburb and so did my husband, and there was a sense of community both places; in fact, the suburb where I grew up was found to be one of the top ten most continuously settled in the nation. (Children who grew up there kept returning to live there. One point you made I can understand is that people who grew up in Vancouver and would like to settle here as adults might feel a sense of loss and anger about how unaffordable many parts of the city have become. Don’t forget there are plenty of Asian Vancouverites in this position.)

        Also, many people in many cities live in condos and have strong senses of community.

        I don’t think you can evaluate whether or not there is/will be a strong sense of community in a particular neighbourhood based exclusively either on the kind of housing or the length of residency of the denizens. My husband’s parents moved into new tract housing in the early 60s and bonded very quickly with many other people on the surrounding streets; his mother in her eighties still had neighbours looking in on her and offering to shovel snow from her walk each winter.

  6. that bullshit.. if the people had a sense of community they wouldnt have sold and would have passed on their houses to their kids. its because no such feeling existed that the population in the 50-100 year old communities cashed out when they got an offer from an investor/speculator/asian buyer… your community argument is self defeating.

    • No, it’s not bullshit. Do you think parents leave their multiple kids multiple properties in Vancouver neighborhoods? No, they leave one property to their 2-3 kids, who can’t work out an equitable or fair way to split it, so they sell it to the highest bidder. This happened to a Kerrisdale property 10 years ago in my wife’s family.

    • My parents want nothing more than to give their house to one of their children. We children want nothing more than to take it off their hands, or, hell, even rent it from them!

      There are no jobs anywhere near that house, so there’s no chance in hell we’d be able to move there, no matter how in love we are with the neighbourhood.

      It is also, by the way, in the suburbs. Most people on that street have lived there for 30-50 years. New neighbours are in it for the long haul and are already fitting in with the community.

  7. Working on my 5 slide “for everyone” presentation. I have discovered I’m not good at these. Please provide feedback on what I should include by answering the following question:

    What five things would you want a friend to know about Vancouver’s housing market (or housing markets in general), and what data and/or graphs would you use to make the point in a way that is understandable, factually correct, and not misleading? Please avoid rhetoric if at all possible.

    I’m not good with “people” so any advice would be most welcome, or better yet, do your own presentation and share it.

    • My shortlist of “things” (so far):
      – Debt loads compared to other parts of Canada are high (what data should I use?)
      – Price-rent, and that rent-seeking investors eventually set the marginal price (VHB’s chocolate bar argument; or, in regular-land, it costs more to rent something because the renting company wants to make a profit)
      – Falling asset bubble prices typically see credit conditions tighten much faster and for longer than most people envision
      – Population growth is 50% what it was 4 years ago. Construction activity seems incapable of adjusting to this.
      – Foreign capital flows impact the market mostly by changing sentiment, not by injecting cash into an economy
      – Home ownership rate has increased significantly in the past 10 years

    • jesse -> That ‘what five things’ question covers a lot more ground than your slide presentation.

      How about a brief (5? 4?) slide distillation of your very fine presentation covering your ST/LT findings and concluding with the inevitable need for reconciliation of prices with earnings (rental yield).
      Slides:
      1. Short term price pressures are determined by the relationship between sales and inventory, expressed as MOI [MOI chart]
      2. Longer term price pressures are determined by risk-adjusted future earnings potentials [US price rent ratio]
      3. Vancouver Prices Have Grown Divorced From Rents… [GV Apt P-R ratio]
      4. … And Must Reconcile [One possibility: Projected 7 year outlook, 6% drop per year for rough 35% peak to trough]

      • Great suggestions, worthy a joint venture. I ran with it and here you go. Let me know specifically what to add/delete or contact me for edit access via googledocs.

      • jesse -> Will get back to you later with further thoughts.
        El Ninja’s ideas below also make good sense… depends on the audience, too.

      • jesse -> I don’t have too much to add, other than to ask again about intended audience. As it stands it still requires some financial savvy/sophistication on the reader’s part to connect the dots.
        If the intended audience is very broad, it requires simplification.
        For instance, the ‘What this would mean’ slide would need to include the point ‘Prices will drop’. Seems obvious, but to many it won’t be.
        Once complete, we can headline it as one way of getting it out there.

        Also… rather say : “… prices would need to drop by 35%, or 6% year-on-year…”

      • As I stated already, I’m not good at making simple slides. I end up simplifying too much in my eyes. The intended audience is whomever can get value out of showing it to others. That is not for me to decide, rather others who think this is useful should guide what is done.

        Personally I know a few people who are “smart” but have bought into the normal RE platitudes. That is where I think some decent factually correct and honest analysis, without stating as fact what is opinion or best estimate, has some good payback.

        The analyst slides the same thing. The businessinsider slides I had used as a template and inspiration were not geared towards the mom+pop retail investor. They were geared towards those who want to learn and seek out good sound analysis. That’s not, unfortunately, my friend’s girlfriend’s half brother who is HELOCed up the wazoo.

      • Understood.
        The slides read well, and make the point.

    • Want to understand why you have a massive bubble in your real estate market.

      Follow this simple table. The basis of this table is this. During the whole time, a person pays a fixed amount of money for housing. However what happens is that changes to government policy and interest rates, changes how much that same person can afford to pay.

      So a person whose maximum affordability for housing was just $495,000, jumps to $1,060,000 within 3 years, and then the government and Bank Of canada start reversing those policies and within 3 years NOW, the purchasing power of the person has dropped from $1,060,000 to $708,771.

      During this whole time the persons income and ability to pay didnt change. And that quite simply is why you have had a bubble. Follow the numbers.

    • I had another thought. I remember seeing an article a while ago where businessinsider asked a few well-known analysts to show them their top charts/thoughts on the market. It was a fascinating read. It might be interesting to collate single slide “things you should know about Vancouver housing” and paste them together. It would be powerful because it would come from different sources and provide a breadth of points of view. I would bug a few of the regulars on VCI as well.

      Just an idea.

    • And to that end, here is another presentation. Please do not distribute widely, rather please submit your graphs and analysis and I can include it. I included Taipan’s because it’s one of the most awesomenesst charts ive seen.

      Disclosure: I met Taipan when he was in Vancouver and he’s legit but doesn’t spell well.

      • Jesse, looks very good.

        Minor typo on page two: “don’t” should be “doesn’t”.

      • jesse -> Great idea, let’s build on it.
        Will give it some thought.

        First thought: To draw together the charts, make the title of each a statement that the chart demonstrates, for instance:
        ‘Affordability Is A Function of Monetary And Fiscal Policy, And Will Drop Precipitously With Rising Rates’
        ‘Mortgage Renewal Will Be More Onerous, Even With Flat Rates’
        ‘House Price Increases Are Based Purely On Debt Expansion’ (for the two charts slide)
        ‘Buyers Are Paying A Large Premium Above The Historic Norm In Order To Own’
        ‘BC Population Growth Varies, And RE Demand With It’
        etc

      • No offense intended to Taipan, but I think his slide contains too much information. (As the Emperor said to Mozart, there are “too many notes”.) A slide whose meaning can be grasped more rapidly would be preferrable.

      • If I could make a suggestion, vreaa and YVR, I would avoid financial lingo and other fancy terms in the chart titles so as not to isolate the average reader.

        For example:

        “Affordability Is A Function of Monetary And Fiscal Policy, And Will Drop Precipitously With Rising Rates”

        becomes:

        “Our Ability to Pay for Housing Depends on Government Policy, and Will Drop Steeply When Rates Rise”

        and:

        “Mortgage Renewal Will Be More Onerous, Even With Flat Rates”

        becomes:

        “It Will Get Harder to Renew Mortgages, Even if Rates Stay Flat”

        and so on…

        Just my two cents. Some people instantly tune out anything that sounds too newsy or dry…

      • fwiw, by now this isn’t news … i.e. it has little to do with fundamentals. the debate over whether fundies matter ended with the us crash and peak credit 2008. those thinking why it might be different or why something like ham could support prices can easily check cmhc asset portfolio, mortgage credit conditions and chinese policy on RE spec. buyers into this market have other reasons … maybe can pay it and don’t care, have self-destructive inclinations, need to fill a hole with purchase, trying for a taxpayer funded domocile/lotto ticket … who knows but they aren’t naive and being duped by the industry

  8. Another request for participation. Please, if you are interested in heritage issues, take this very quick survey, put together by The Vancouver Heritage Foundation and SFU. They are trying to determine if heritage building conservation matters to people here.

    Thanks.

    https://websurvey.sfu.ca/cgi-bin/WebObjects/WebSurvey.woa/wa/survey?117560497

  9. Pingback: Real Estate : ” What Difference 6 months makes” Part 2 September 2012 |

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