Spot The Speculator – “I can’t imagine a bubble bursting where over six months you see a decrease of 30 or 40 percent”

“Living in cramped spaces is everyday life for many families. Because of the high cost of housing, many have to make do with whatever they can afford.
In Vancouver, city staff estimated that more than 8,000 families with at least one parent and a child were living in a studio or a one-bedroom apartment in 2011.

Ryan Chahl, a 29-year-old entrepreneur, is thinking about settling down. He wants to provide adequate housing for his future family.
“I’m kind of looking for a home that could potentially support a family,” Chahl told the Georgia Straight in a phone interview.
That means a three-bedroom house “with some room to grow”.
“I’m trying to plan for the future and think ahead,” Chahl said.

For now, his plan doesn’t include selling the Port Moody condo he bought four years ago. “It’s an asset that I can grow equity in,” he said about the two-bedroom property where he lives on his own, and which he intends to rent out eventually.
He used to live with his parents before he purchased his apartment with a five-percent down payment.

Chahl’s challenge is how to secure a new mortgage.
Aimal Pamir, who was his mortgage broker for his condo purchase, has advised him that because he is self-employed, it’s not going to be easy.
According to the Real Estate Board of Greater Vancouver, the federal Office of the Superintendent of Financial Institutions requires from individuals working for themselves a minimum down payment of 35 percent of the purchase price to qualify for a loan.

In 2016, Chahl set up his own consulting and project-management firm. Chahl related that his business is doing well, giving him the confidence to approach a major bank for a mortgage.
“It’s kind of been the vehicle for me to start making those heavy savings that are required to be able to buy a home in Vancouver or near Vancouver, at least,” he said.
Getting the bank to approve a mortgage will likely take a bit of time.
Like the more than 400,000 self-employed people in B.C., Chahl has to prove that his business is viable. According to him, banks typically require three years’ proof of income. If he wants to make a purchase in six months to a year, he said that he may have to produce a 50-percent down payment.

Chahl holds a business-administration degree from SFU. For him, the housing market isn’t just a game in which he wants to make a quick buck.
“It’s something that I’m investing in, going in long-term with the kind of goal of seeing those assets appreciate long-term, not kind of flip them in a year or two,” he said.
Chahl expects home prices to gradually decline, which is generally in line with the latest projections by the Canadian Real Estate Association (CREA). According to the CREA forecast issued on March 15, home prices in B.C. will shrink by more than five percent in 2017.

Chahl is not worried that the property market has risen so fast that it can only head for a crash. In September last year, Swiss bank UBS reported that Vancouver is number one on its global list of cities with the highest bubble risk.
“Over the next year, maybe two, you’re going to see a decrease in prices, but I can’t imagine…a bubble bursting where over six months you see a decrease of 30 or 40 percent,” he said.

As in his first purchase, his realtor and older brother, Adam Chahl, is around to help him acquire a second property. “Adam, being who he is, I have absolutely no issues trusting him,” he said.
Chahl said he’s happy with the way things are going for him.
His long-time girlfriend lives in a neighbouring city 10 minutes away from his condo. There are lots of trails nearby where they can hike and walk her three dogs.
Chahl can see the two of them growing a family together in the future: “That’s the plan.”

– image and entire article from ‘Home search: Millennial in the market to buy second property’, Carlito Pablo, Georgia Straight, April 5th, 2017

—-

For 10 years or more, the vast majority of Vancouver RE sales have been at least partly based on the belief that there would be ongoing outsized price gains.
The buyer above is convincing himself that he’s an investor, and that he’s purchasing for his own future sensible use, but actually he’s speculating.
He’s assuming there may be modest price decreases in the short term and then.. off to the races again. Why else buy two properties?
It’s interesting to hear him state the possible risks but then dismiss them.
The family RE professional is another bubble feature.
Buying even vaguely near the top of a bubble can take thirty years or more from which to recover, in real terms.
Perhaps this guy will be lucky and fortuitously-timed price drops will cause him to reconsider.
Timing can be… tricky. Luck helps.

PS: Yeah, we know the standard response: “But, he just needs a place for him and his family to live!” — That’s the argument that has fueled this bubble all this while: Locals overextending themselves into mortgages which in rational times would be seen as preposterously & laughably oversized, pushing prices higher and higher in doing so, completely unsupported by any real economic fundamentals, all the while convincing themselves they are prudent citizens motivated by wholesome values. If and when you take the expected unrealistic price gains out of this equation, there will be fresh air under this market.

– vreaa

83 responses to “Spot The Speculator – “I can’t imagine a bubble bursting where over six months you see a decrease of 30 or 40 percent”

  1. He says he “can’t imagine” a bubble bursting where over six months there is a decrease of 30 percent. So, double-digit increases are quite normal, but a decrease of similar magnitude is unimaginable?

    And why the dismissive “six months”? This fellow should consider the possibility (likelihood) of a downturn lasting, as vreaa points out, decades in real terms.

  2. Another hilarious comment, vreaa. Why don’t you go back to all your posts since Feb 2008, and review how many buyers you have ridiculed them being speculators and the likes; we all know they have done good for their families. And, compare them to the current status of the missed-out bears and see where you are at! Don’t you think it’s time to trash your economic fundamentals after all those years. Get out once a while, go ask those buyers near the Horseshoe Bay development, or 8X, about your fundamentals. Admitting of being wrong is a positive step for mental health, accepting the reality will give you inner peace should you need it.

    • You are absolutely, correct, Fred, almost all of those speculators since 2008 will have successfully made at least paper-gains in the value of their RE holdings. And, yes, those who have chosen to “miss-out” do not have those gains. (And the bears have looked very silly, we have admitted that many times.) And, yes, it superficially does indeed seem that “economic fundamentals” should be “trashed”.
      All of these things are always true in speculative manias.

      • the home owners want security for their families. they dont give a danm about those paper gain that you poor bears assume. if this is a speculative mania, have you seen any fire sale during thís low inventỏry peíod? it ís time to move to the acceptance stage.

      • “they dont give a damn about those paper gains”.

        Never a falser statement has been made.

    • “they have done good for their families”

      They have done good in the same way as a casino gambler who got lucky on borrowed money has done good. The difference being, most of them haven’t cashed their chips, and the casino is closing…

    • I think you’re missing the point on how bad it can go. In 2011-2012, home prices in Atlanta and Phoenix were at 1997 prices. So, someone who bought a house “for the long run” in those cities got savaged anyway. In Albany, NY my friend’s house was 1,000,000 in 2007 and now still sits at 520,000$.

      Your right that bears might have been “chicken little” for more then 10 years or so, but you’re missing the other side of the cycle. Once the market goes down, how long will the downturn last? 5 years? 10 years? a la Japanese ( 20 years?).

      Bears probably lost a great opportunity to make money over the years, but what they lost they will gain in peace of mind.

      • You mean the peace of mind of when can I buy my own house, and stop paying outrageous rent checks to my tax dodging locust landlord? I’m not seeing much piece of mind from bears at all, but rather getting a lot of piece of their mind about how it’s all stupid foreign locusts fault.

      • space889’s idea of peace of mind is writing cheques to the bank, insurance company, government, and handyman, all the while locking his life savings into a depreciating asset. Each to his own.

  3. BTW, I like the stairs the guy is sitting on in the photo that accompanies this article, from the Straight. Great design; simple; lots of soul.
    Is that Mexico? or Spain?
    If it’s anywhere in Vancouver, please tell us where.

  4. Prices will likely go up in the long run, but not every generation is treated equally

    • Yes. At the rate of inflation.

      • Yvrhousing

        They will go up faster than inflation, especially for housing in growing land-constrained metropolitan areas. This may be hard to accept.

      • They might rise at inflation + GDP, but no asset can appreciate faster than that in the long run. Also, if we have a significant correction, we are potentially looking at a generation or more of just catch-up.

      • Yvrhousing

        In the long run yes but that is a very long run. Over the next 50-100 years as the city grows, I do not find much evidence to suggest that a particular property in Vancouver will do worse than wage inflation, most notably those with lower FSRs closer to the core.

        There will be fits and lurches that can (though not necessarily) last decades but the overall trajectory is towards higher land values. This could change once population growth ebbs. I don’t see that happening in any of our lifetimes, catastrophes aside. World population growth will only plateau in the 2100s at the earliest.

      • First off, I’m wary of predictions. I have said that I believe a significant downturn is likely, but no one really knows. The future is inherently unpredictable, and the far-off future even more so.

        That said, let’s say prices do go up. At what rate? Going up at a slightly positive rate is not nearly fast enough to justify the speculative bets that have been placed in this market. These bets are counting on sustained double-digit gains and are going to blow up at anything short of that. Even for those who have not overextended in their RE purchases, slow growth implies a cost in the form of foregone returns available via better-performing investments.

        If we have a downturn of 30% (I think it will be much greater), followed by GDP-like growth, we are talking 10 to 20 years just to break even.

      • That is possible, but I don’t think it’s necessary to apply any “future is unknowable” arguments here; land is constrained and population is growing. In the long run land values will increase. They have arguably increased more recently than the long-term trend, but hey everyone needs to start somewhere, even if it’s at a less favourable time.

        Maybe he should get into late-cycle index funds and hop on the AI bandwagon.

      • Flip-flop at its best. Didn’t you say to Brian about fifty percent crash in 18 months or something! Grow a pair and own up your action. I thought bears are good at prediction that never materialized.

      • Yvrhousing

        El Ninja did you hear something? Neither did I.

  5. “hey everyone needs to start somewhere.”
    Yeah, what are you gonna do, pay someone else’s mortgage forever? They’re not making any more land, ya know. And everyone needs a place to live. It’s always a great time to jump into the market.

    • [CBC] – Housing activists mark 10-year anniversary of Little Mountain saga: ‘Look at the big hole. There’s still no building,’ says housing activist

      …”About 40 people gathered in Vancouver Saturday at the former site of the Little Mountain public housing complex to mark what they described as a sombre anniversary.

      The gathering marked 10 years since the social housing complex was slated to be redeveloped and hundreds of residents of the 224-unit complex told to move out.

      At the time, many were told they could move back when a newer building complex was constructed. But today most of the land sits empty.”…

      http://www.cbc.ca/news/canada/british-columbia/little-mountain-activists-10-year-anniversary-1.4062663

  6. @El Ninja, maybe you research this topic called “Equity Risk Premium Puzzle”. US and most intl equity indices have gone up more than inflation + GDP growth rate for a LONG time now – 60 years+.

  7. Most home buyers I know don’t factor in future home appreciation much, if at all. They do however have fear of missing out, which is totally justified given the rate of housing price growth, and wage growth.

    The only economic fundamental factors most people care about is the monthly payment and so far, the aggregate monthly payments on outstanding mortgages have not increases that much compared to the normal market of the 80s with the 3x income housing prices. Property taxes and maintenance fees have increased more but in aggregate they have not eaten up a big % of take home pay yet.

    • First off, you can’t state that home buyers don’t factor in future appreciation while simultaneously asserting that they fear missing out. You contradict yourself.

      Second, do you know where interest rates were at in the early 80s? Double-digits. Do you know what happened to Vancouver RE at that time? It lost value in real terms for about six years, and only reached its previous peak in the early 2000s.

      • They fear missing the boat, but most if not all of them don’t expect to get rich or making that 10% no risk return after they buy either.

        Do you know what the interest rate is RIGHT NOW?

  8. The other thing VREAA is that you have been wrong for 10 years now. For the average 25 years old with 3 to 5 years working experience in 2006, how many more 10 years do that person have? They are much much worse off than 2006, despite the vastly increased income. Even a 50% housing price bust is not going to make him / her / whatever in the same purchasing position as 2006. Never mind in such case, the local economy is likely to implode a lot as well, and a lot of people outside of gov’t unions are going to have trouble hanging onto their jobs and wages.

    So 10 years of missed boat, and at best 5 years crash to 50% for a total round trip of 15 years and an unprecedented local housing market Armageddon, and that person at 40 still hasn’t gotten back to where he / she / etc at back in 2006. But if that person wants to have their own place and be mortgage free at their retirement, that person will have to buy now or bet housing prices will keep going down for another 5 years and retire at 72.

    Maybe that sounds for some people, but most? especially those that want to marry and have kids? Probably wouldn’t work and a lot of divorces probably already happened.

    Yes, yes, yes I know the bears responses, you can rent, the crash will even worse, etc. But hey, crash hasn’t been happened and people who missed out are already in worse positions compared to those who bought. Bears can’t claim any high ground compared to bulls because let’s face it, you are SPECULATING on the opposite side of the bet. You can have all the arguments and facts and whatever you want, but at the end of the day, you are SPECULATING about how the future should unfold according to your logical infallible argument. It’s just your argument makes sense to you, but bull’s don’t. But let’s not kid yourselves here, you are also SPECULATING, and speculating dramatically wrong for the last 10 years.

    • You present a false choice. Your argument is predicated on the assumption that the only available investment is RE. It is not. Renters may have missed out on lower RE prices a few years back, yes, but those who prudently invested their capital elsewhere are actually ahead of many of those who bought. And please don’t argue that “most people don’t invest prudently”. That may be true for some, untrue for others. Financial literacy is a separate discussion. The point is that RE has lagged other investment options.

      • Really??? seriously? You are going to go there. Let’s take my mother for example, she bought her house at 500K in 2004. I get it, she got lucky and it’s all paper gains but it is assessed at close to 2 mil now. She paid 150K down and have paid off her mortgage a long time ago. But her monthly payments were more or less what the cost of rent would have cost her to rent the place because it has a great layout to generate cash flows. Anyhow… s&p was at 1400 something in 2004, it is what.. .2360 as I type. First of all, taking aside leverage, she still far outperforms the index. This gets even more lopsided when you consider leverage. How else is she going to turn 150K into say 1.9 million in 13 years? You are right that leverage cuts both ways so of course there is downside risk as well.. but please save the idea that renters could perform better in the last decade or so.. because that is simply not true. There are tons of examples. So unless you have someone who has turned 200K or so into 2 million investing which may be done if you are into leveraged investments, I don’t see how your point applies.

      • Sorry, pal. You need to look at the S&P’s total return (i.e. including dividends), not the price-only index.

      • So including dividends you can get from 200K to 2 mil in 13 years? Is that what you saying? Wow… I must have been missing something…

      • You need to add property taxes, insurance, maintenance, and transaction costs to the equation. Also, you can’t compare a levered bet to an unlevered one. When you apply the same leverage, the index outperforms.

        Also, you are cherry-picking a totally unprecedented slice of Vancouver’s history (2004 to present), as if it constituted a representative sample of the real estate market’s performance. You know that real estate, over long stretches of time, has barely outpaced inflation. Compare that to equities, which have delivered 3x the return on a reasonably consistent basis throughout history.

        This is what you all don’t get: four walls and roof is not a productive asset. It’s a depreciating consumer good. The land may appreciate some, but over time there is no reason it should outpace general economic growth.

      • Wait, you are the one who said that prudent renters have done better than home owners. I just called it. When you say they have done better, we are talking absolute terms not this levered versus unlevered comparison that you are talking about. This why I am keeping on saying you must be a millionaire to be saying this because if you are not, someone who bought a detached house even in 08 when this blog began would probably be worth more right now.

        You are also right I am cherry picking a time. Except the time I am cherry picking is like 15 years ago. That’s not that short of a time. Sorry, but if you think investment horizons nowadays for most investors are 30 years you are wrong. I would love for you to poll every investor who have put money into the indices and see how many would say they did not touch that investment for 30 years. Gurantee you that is not a big proportion.

        I have numbers for all of the property taxes, insurance, maintanence, etc. Property taxes today is about 8K now, so in the 13 years averages about 5K a year given property values haven’t always been this high. Insurance is about 1.5K a year, maintanence is barely 2K, transaction costs is a one time thing at sale of about 50K. None of what you say really changes things because those are not large compared to the size of the gain. What I am trying to tell you is that what you said about renters doing better than owners is impossible in vancouver. You might be right if this market crashes 50 to 75 percent like you predicted but it hasn’t. So until that happens, the idea that renters are doing better than owners is simply untrue.

  9. Boy did I miss a weekend of good action. Let’s take a closer look at vreaa’s almost decade long prediction. Aside from everything space has said which I think if valid. Let’s just look at it from a fundamental perspective. Now, what I am about to do is just quick napkin math so there may be holes here, feel free to point it out.

    Take an average building 33 by 122 lot in vancouver east in 2008. That would set you back about 550K. Today, that lot can get you a building of 2800 sq ft (0.7 fsr) plus a laneway. The 2800 sq ft usually features 2 two bedroom suites and an upstairs 3 bedroom place. Average rental price of the two bedroom suite is about 1200 and the 3 bedroom can probably get about 2000. Laneway, you are looking at about 1500. That totals to a rental value of 5900 a month or about 70K a year. Total cost of that build is about 700K. So total cost to owner about 1.25 million if he bought that lot in 2008. 70K a year in rent versus about 1.25 million all of a sudden doesn’t seem like that bad of a ratio does it.

    That is a new home, let’s take my mother’s house for example, that one has basically everything but a laneway house, 2008 assessment was about 800K. The bottom two rentals can probably fetch about 1000 because house is a over 15 years old now. Top say 1800. That’s 3800 or about 45K a year versus 800K.

    What I am saying is simple… as rent has risen (not as much as prices but still more than inflation) and zoning code now is much different than before (laneway house and greater fsr), the prices that you paid in 2008 doesn’t seem that bad fundamentally anymore when you consider cash flow generation. So the chances of someone like vreaa winning is basically saying that you think price to rent will reach something like 50% less than fundamentals given that we are probably not too far from fundamentals in terms of price to rent ratio if you use a purchase price at 2008 levels. This is why it is highly unlikely for vreaa’s predictions to come true because basically you are now betting against fundamentals. We are not throwing fundamentals out of the windows, it is just that rental prices have risen so much that 2008 prices makes sense now fundamentally.

    • I think Brian’s worried about his inheritance. Sad.

      • Actually….. the fact that you even say that shows how little you actually know about chinese culture. My house, my parent’s house, my wife’s property in asia, etc… are all family assets.. they are to be given to my kids and my kids are expected to add to it and pass it down just like we have, not sold so that anyone can go travel the world or retire with it in the bahamas. I paid a lot of my parent’s mortgages because everyone chipped in what they could at the time and when it was time for my down payment, the reverse happened. So… yeah… we don’t need as much help from the bank because we all operate as one unit…. you should try it, it’s great…

        I can’t claim to be better than my indian neighbours because they do the same with their brothers which I think is just inspiring. At a time when individualism is devouring society with all this me, me, me, me… it’s funny how when families stick together they can easily deal with the housing costs eh? Also I am pretty sure if you were to do a study on this type of arrangement you will also find that this type of families probably can build wealth faster in any type of investment, not just housing.

      • Aren’t you benevolent.

        Thanks, but I stopped depending on mommy and daddy for $ when I became an adult. You should try it.

      • I chuckle at your comment. Seriously.. what are we high school? So what, next you are going to tell my parents to stop depending on their kids for money? I love how we associate maturity and independence with leaving your family… and then you see how many seniors today live without support from their families; all this because we want to be independent.. If that’s the price of independence, you can call me whatever you want dude… I rather my parents are taken care of…

      • If you hold up Chinese family culture as superior, it is because you are omitting some of its less applaudable aspects, like female infanticide and sex-selective abortion. You know there’s a reason they won’t tell you the sex of your baby during the first ultrasound or two (in Vancouver). Not so family-oriented on that front, are we.

      • This is where we are going aren’t we… let’s hear how you really think… actually wrong again, they told us the sex during the first visit.. we actually wanted a girl.. but of course you wouldn’t know that because you think chinese culture is all about boys over girls.. it’s like saying we used to have racial tension in the south so all white people are racists.. is that true? You tell me cause you know more than I do probably.

      • That is the policy of a major diagnostic imaging centre in Vancouver, and if it is their policy, it is no doubt a policy elsewhere.

      • El Nino is just like a little bullying child crying for attention every time he wants a lollipop to suck on! And his argument assimilates a person gasping for air before reaching to the brown paper bag.
        Brain shuts you up every time you try to open your mouth, and yet words keep spilling out like flies.
        Where did Brian say Chinese culture is superior? He was just simply telling you about his culture, like other Asians’ culture; real properties passing down from generation to generation.
        It’s hilarious that he said it … like he knew it. by the way, off topic, have you ever accompanied someone to the ultra sound room? or you just watched it on youtube?

      • I’m started to think “Fred” and “Brian” are one and the same. They both write in the same hacked English.

      • you english policing my chinglish again? Fred is my alter ego, you don’t like it? We shop at pacific mall… I will stop now.. so sooollliiiiii…

    • Are el nino and vreaa the same individual? because both waste rent cheques to the landlords at the end of the month.
      by the way, if your english is so goooood, why is your life in misery?

    • @Brian, I think your rent estimate might be a bit on the low side for a 15 years well maintained house.

  10. Hey Brian, is that a turd, or a troll up your ass?

  11. @El Ninja – you do know that female baby is now much preferred in China tier 1, 2, and even 3 and 4 cities than boys right?

    Also, there is no more 1 child policy in China for the Han majority, and never existed for minorities, and most of rural populations can have 2 children.

    If there is a 1 child policy in Canada, I certainly don’t know it. As for why some people here would perform female infanticide in Canada, I truly have no idea. However, as far as I know, this is not something that’s practiced in the Chinese community here, unless you have evidence otherwise. Yes, there are cases of infanticide by Chinese moms, but that’s done regardless of the sex.

  12. As for the prowess of the average Vancouver renter’s investment performances, there must be something special about Vancouver’s weather, water, air, food, culture, or some other unknown factor for them to vastly outperform the rest of their peers around the world.

    A simple Google search about average investor performances turn up articles about just how badly the average person does investing on their own:
    https://www.google.ca/?gws_rd=ssl#q=average+investor+performance&spf=387

    But Vancouver renters are apparently exempt from that curse as they are all apparently market outperformers.

    Hey, El Ninja, what’s your fee structure? Or at least a subscription to your stock picking / investment newsletter? Cuz I certainly want to earn this magical above average return you speak of. All my existing knowledge and access stuff like Bloomberg, quant finance, industry research are apparently all useless to your superior knowledge. I’m serious here. I don’t need anything fancy, just Vancouver housing return + say 2% with annual std dev of 10% or less, and max drawdown of 20% in any rolling 12 months period, breakeven period of 2 years or less.

    • [CBC] – Homelessness up 30% in Metro Vancouver in latest count: More than 3,600 people are currently homeless in region, up 30 per cent from last count in 2014

      …”Port Moody mayor Mike Clay, who is chair of Metro Vancouver’s housing committee, called the increase “extraordinary,” and said municipalities need the province’s help to address the affordable housing crisis.

      “The problem is increasing faster than solutions,” he said.

      Maple Ridge Mayor Nicole Read is a member of the district’s homelessness task force and their count of 70 camps shows there is a “system-wide failure” to help the homeless.

      The preliminary report, released Monday, says the point-in-time snapshot is conservative and represents the minimum number of homeless people in the region.”…

      http://www.cbc.ca/news/canada/british-columbia/homeless-count-metro-vancouver-2017-1.4064584

  13. many more choices

    either you buy a house or you rent and invest in the markets. incorrect. you may rent and start a business, pursue education, travel the world, etc…you get the idea. tying up money in RE can limit your options. imagine what Vancouver could be if all that capital was released

    • hear, hear!

      • many more choices

        thank you. and I will add, I usually appreciate your comments as well, particularly those that stick to logic and facts – and avoid the typical childishness fred offers up.

    • Sure.. if that’s your fancy.. go ahead. No one is telling you not to do it. Not everyone fancies those things. It is wrong to assume that everyone wants those things.

      • many more choices

        brian – just because you can comment on every post (and lord knows you do), does not mean you should. read carefully, I never made any assumptions or recommendation for what others should do with their money – only pointed out the obvious – life is full of choices, but those become limited when you tie up all your resources in a single asset.

      • Hey Ninja fanboy.. from the glorious mouth of Ninja, “I comment what I want when I want”.. deal with it. Love that you are pointing out the obvious, as if people didn’t know that before.

      • My god, you’re insufferable.

    • Life in a RV is great. Me not waste a couple grands on rent. Good luck with that.

    • Or you can do like many Vancouverites have done, buy a house, wait for price increases, sell & pocket the tax free gains, and travel around the world before retiring to a hedonistic lifestyle in a developing country.

    • [SCMP] – Why so many Chinese millennials can afford their own homes

      …”A new survey suggests that China has one of the highest global rates of home ownership for young people.

      The study by HSBC found that 70 per cent of surveyed “millennials”, or those between the ages of 19 and 36, on the mainland owned their own home.

      By comparison, the poll of some 9,000 people across nine countries found that only 35 per cent of the same age group own homes in the United States, with the figure 31 per cent in Britain.

      For young people in China who do not yet own a home, 91 per cent reported intentions to buy property in the next five years.”…

      http://www.scmp.com/news/china/policies-politics/article/2086636/why-rate-home-ownership-so-high-among-chinese

    • [SCMP] – Why so many Chinese millennials can afford their own homes

      …”A new survey suggests that China has one of the highest global rates of home ownership for young people. The study by HSBC found that 70 per cent of surveyed “millennials”, or those between the ages of 19 and 36, on the mainland owned their own home.

      For young people in China who do not yet own a home, 91 per cent reported intentions to buy property in the next five years.”…

      http://www.scmp.com/news/china/policies-politics/article/2086636/why-rate-home-ownership-so-high-among-chinese

    • So this article is basically saying that as a culture, chinese millenials are what, twice as likely to own homes than their western counterparts. And our demographics are increasingly chinese and projected to be even more so in 15 years… what do we expect then to happen to the ownership rates and prices?

      • These millennials don’t “own” their homes. No one owns anything until they’ve paid for it in full. Until then, it’s borrowed property.

        It’s not clear how millennials buying instead of renting should drive price increases. They’re just swapping the landlord for the bank. The number of true owners is unchanged.

      • 1. Bank owns your house? Is that true? What do you define as ownership? If the bank thinks housing is going to crash by 50% can it force a sale? If the bank is short of liquidity can it force a sale of your house? Can a bank force you to move out of your house at any moment? The answer is no. The bank is not a owner in any definition btw. It is a first charge holder. And this isn’t semantics. Being a owner means you get to time the sale of the asset which is critically important when we consider the idea of supply and demand. Because banks cannot force more supply onto the market. The only time when it can is when home owners default on their mortgages so without that happening, banks can do about as much as you and me on the supply side.

        2. Are you seriously telling me you expect the price of real estate to be the same if you have a higher percentage of ownership versus rentals? Let’s take a look from a demand perspective. Say if vancouver was 70 percent renters, would not demand for home ownership go down significantly? This is pretty simple math. There is a good reason why high rental percentage countries do not have high real estate prices. Look at germany, their prices are awesome compared to income and rent. They are a majority rental country.

        btw, while you are at it, can you name me one chinese majority city with good price to income or price to rent ratios. There is a reason for that, this article shows you why.

    • [CBC] – Port Coquitlam latest city to fight housing unaffordability with coach homes: ‘It’s darn near impossible for young people starting out to get into a house,’ councillor says

      ….”Another Metro Vancouver municipality is turning to small homes to tackle the big problem of housing unaffordability.

      On Tuesday, Port Coquitlam became the latest city to allow for coach homes or laneway houses, following the lead of communities on the North Shore, the City of Vancouver and Coquitlam.

      Councillor and acting mayor Brad West says decreasing affordability in the city was the impetus for the move.”…

      http://www.cbc.ca/news/canada/british-columbia/port-coquitlam-coach-home-1.4066945

      • I was confused travelling through England wondering why football coaches were banned from certain inns. I can understand not wanting to chance having Bill Belichick wander through, but to paint them all with the same brush? Seems unfair.

  14. Don’t you mean sweet FA or rather sweet fuck all.

    • An economist and his team – a trio of comics – working for the banksters.

      Professor Michael Hudson is someone actually worth listening to, or reading his books.

      The reporter mentions ‘The Big Short’, an excellent DVD, saying that one of the issues in the US was the poor quality of credit.

      The real issue was the fraudulent financiers, fake ratings agenies, corrupt insurance companies – the bankster types – devious parasites in suits that screwed ignorant people, and then screwed taxpayers. Rich leeches bailed out by government buddies.

    • why don’t you try to apply for a mortgage pre-approval to one of the five big banks, and see what kind of paperwork they demand from you, what kind of diligence they make you go through, and how much they can qualify you. it does not cost you a dime, except a few saliva.
      no? you don’t dare? that’s what i thought. for your information, they would not bite.

      • Ralph Cramdown

        The marginal borrower isn’t getting a mortgage from one of the big 5, and wasn’t in the US during their boom, either. They had Countrywide, Washington Mutual etcetera, and we have Home Capital, Equitable Bank etcetera. Some of the big 5 will refer you to a subprime lender if you don’t qualify for the bank’s product, or your friendly local mortgage broker can hook you up.

      • Who gives a sh*t about what happened in the us. why don’t you refer a few subprime lenders in Canada, if there is one, and apply for a pre-approved mortgage, u.s subprime style. Try it, see how they qualify you.

      • Anyone guess Fred’s age? I’m going with 15, 16 tops.

      • I am 14. What does age have to do with anything? Do you think old fart is much wiser?

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