Category Archives: 05. Where do Buyers get the money?

First hand accounts of where buyers are getting the cash for their downpayments. Financed by Mom & Pop? Grow-ops? Four jobs? Offshore funds? Robbed a bank? Commodity trades? And so forth..

Young Canadians And Homes – “What happens if we all decide we can’t afford this shit?”

0dd5089e00000514-3494870-image-a-2_1458142724698

VICE: People often choose buying over renting because there is stability and community for family life. What changes when we stop buying houses?

Milevsky: We suddenly lose the stickiness of our labour force. It’s very important for Canada to have more than just high wages keeping us here. The last thing we want is to be a commodity labour market. What’s stopped us from doing that is the connections we’ve had to our community. If the younger generation sees housing as unaffordable and uninteresting they’re more likely to move internationally.
People may lose their anchor to a particular geographic location. I want my neighbourhood park to be clean and green and well maintained. If I just live their temporarily, do we lose our interest in the environment beyond our immediate needs? There’s also the transient nature of politicking. Who are your constituents if communities change?


Kershaw: If you opt out of home ownership, you opt out of the most secure opportunity for starting families and to have your kids in the same school, childcare, and community. Home ownership has also been a route to get access to the ground and playing outside. Renting in bigger cities is not having the kind of stock suitable for families. Big cities aren’t losing 20 somethings, it’s when the biological clock starts ticking you see a bit more of an exodus.
If renting is going to become a common practise for adults, systems such as childcare need to be improved. I’d like my child to be in the same childcare space for a few years. I don’t want to move around from neighbourhood to neighbourhood because I’m being evicted because my landlord can make more on other renters. We need to think about how renting can create that kind of security.

– from ‘What Happens if Young People Never Buy Homes?’, Samantha Power, Vice, November 27, 2016

Vancouver Home Buyers Will Require About 27% More Income To Qualify For Mortgage On Average Priced Home

screen-shot-2016-11-21-at-9-23-05-pm

Finance Minister Bill Morneau introduced tighter new mortgage regulations last month, requiring a “stress” test for borrowers of Canada’s most common mortgage, the five-year fixed-rate.
It requires borrowers to qualify for loans at the Bank of Canada’s posted rate, which is about two percentage points higher than current offered rates.
Of course, most people aren’t going to see a pay raise of 20 per cent or more this fall, so the likely outcome of the new mortgage rules will be a decline in home sales (something the Finance Department itself predicted) and slowing or declining house prices.


In Toronto, you’ll need nearly 25 per cent more income (an extra $29,000 or so) than before to afford an average house, while in Vancouver you’ll need 27 per cent more — an extra $33,000 in income.

– from Canadians Will Need 20% More Income To Buy That House They Wanted, Huffington Post, 21 Nov 2016

Fortunately, in Vancouver there is no relationship between income and housing prices. So this new rule is unlikely to have any effect. -ed.

Selling What’s Left of Our Soul – Vancouver Seeking More Corporate Labels

school070405

“Vancouver has launched a new initiative to develop an inventory of its assets – everything from buildings and cars to its awards programs and even its website – that could make good candidates for sponsorship and naming rights.
The Vancouver consultant is being asked to look at the policies in other cities and then “develop the criteria to identify all marketable components (i.e. programs and facilities) associated with those assets and determine the type of sponsorships that can be leveraged, such as naming rights for a facility.” In addition, it will need to explain why some assets are not appropriate for naming rights or sponsorships.
The final report is supposed to “provide the City with realistic revenue projections and return on investment based on various sponsorship/agreement terms (e.g. 5, 10, 15, 20 years)” and “suggest how the city can maximize the market value of these assets or potential revenues via targeted sponsorships and bundling.”

– from ‘Vancouver to develop list of assets eligible for sponsorship, naming rights’, Frances Bula, G&M, 18 Nov 2016

“I went to Berlin because it was a place where you could afford to have space and time, which was a tricky thing in Vancouver. Time to work on my art because I wasn’t on this insane anxiety of the financial pressure of the city.”

“Berlin and Vancouver are very, very different cities. Just culturally, it’s extremely different. I went to Berlin because I was making music and art consecutively and it was a place where you could afford to have space and time, which was a tricky thing in Vancouver, and continues to be a very tricky thing as an artist. So Berlin allowed me time, more than anything. Time to work on my art because I wasn’t on this insane anxiety of the financial pressure of the city. So, the working is different. In Berlin you have to be quite self-motivated, because you can easily just go down a hole and not work, because of the lack of pressure to pay your bills. I still love Vancouver deeply and it’s where I’m from, but at the moment Berlin is where I call home.”
Artist Jeremy Shaw, winner of the 2016 Sobey Award, in interview with Canadian Art magazine 1 Nov 2016

Where Life Is Absurd, We Need Art – “Why I pranked Torontonians with fake condo signs”

fake-signsmain-1

It was a mock proposal so realistic that, for a moment, Toronto collectively gasped – was Old City Hall really being turned into a condo? The artists behind the stunt, self-identified ‘urban interventionists’ known only as Glo’erm and Tuggy, intended to spark outrage when they erected a fake public notice last week. They wanted people to be angry – so angry that they started caring about how this city is developing.

“In the real estate frenzy this city is experiencing, it feels like nothing is too sacred not to be considered for development. Our faux proposals featuring Toronto’s most beloved buildings address our concern that the development proposal process in this city is broken. How many of us are meaningfully included in the shaping of Toronto?”
– Daniel Rotsztain

– from The Globe and Mail, 27 Oct 2016

We’re Number One! – Vancouver RE ‘Overvalued Since 2007’ – UBS 2016 Housing Bubbles Report

ubs-house-bubbles-2016

Vancouver and London came first and second on the 2016 list of cities most at risk of real estate bubbles. Bubble risk was also evident in Stockholm, Sydney, Munich and Hong Kong: house prices in these six cities have increased by nearly 50% on average since 2011. The average price rise in other financial centers has been less than 15%.

Who is to blame for this latest global bubble? Why your friendly, local central banker of course.

As the WSJ summarizes, loose monetary policy at global central banks is a key driver behind rising prices, the report claims. Low interest rates have pushed investors to hunt for returns in tangible assets, “so it is hardly any wonder that housing markets are again overheating,” according to report authors Claudio Saputelli and Matthias Holzhey. …

Meanwhile, Vancouver house prices have been significantly overvalued since 2007, according to UBS. The culprit there is not so much the BOC as the PBOC: until recently Vancouver served as the primary offshore target for Chinese money launderers, which neither the financial crisis nor weakening commodity prices managed to dent. However, this bubble now appears to have finally burst after the provincial government of British Columbia introduced a 15% transfer tax on foreign home buyers in August, leading to a crash in the most expensive local housing segments.

– from Zerohedge, 27 Sep 2016

Vancouver RE, ‘Overvalued since 2007’. Care of weak monetary policy, and strong local narrative. – vreaa

Vancouver’s Housing Market Not Crashing, Just Frozen, Says Realtor

“We need to recognize that living in a great place may just be more expensive than some people want it to be.” [6:30]
For this and lots of similar material, watch the Video from BNN 12 Sept 2016

The headline reminds us of Stevie Smith’s ‘Not Waving but Drowning‘. -vreaa