“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”

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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

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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

“You Have No Idea How Angry I Am” – “A generation of people has been screwed. It’s so obvious. Everyone I work with is so angry. A select group of people have profited from this”; “I am very angry at the system.”

“A Vancouver accountant told The Globe that she and her colleagues see questionable real-estate transactions all the time, which they believe have contributed to skyrocketing prices. “This has become a huge mess. You have no idea how angry I am,” says Corina Ciortan. “A generation of people has been screwed. It’s so obvious. Everyone I work with is so angry because there is a select group of people who have profited from this.”

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One of the Vancouver homes Mr. Gu flipped sat vacant for three years, in a city where many people can’t find a place to live.

Ottawa says it is studying the issue, and B.C. has brought in a tax on foreigners who buy residential real estate in Vancouver. But those who see firsthand how real estate is traded like stocks and bonds say this isn’t nearly enough. “We have governments that are not doing their job,” argues Mr. Lazos, who acquired his inside knowledge while working for Jun Gang Gu, also known as Kenny Gu, a former civil servant originally from Nanjing, near Shanghai.
Mr. Gu came to Canada in 2009 under Ottawa’s now-defunct immigrant-investor program, which gave permanent residency to applicants who agreed to lend a significant amount of money to the federal government. He started out here as a developer, but the documents show that his business evolved to buying homes – using other people’s money– and then flipping them. His deals are financed with investor money from China and mortgages issued to those investors by Canadian banks.


In addition to holes in the tax system, speculators like Mr. Gu also rely heavily on Canadian financial institutions to give their clients multimillion-dollar loans. “They are using this money temporarily – to make more money – instead of using their own money,” Mr. Lazos says. “Then prices go up. We are making the bank richer and the Canadians poorer.”

Mr. Lazos says that his whistle-blowing will be worth it only if it jolts Ottawa and B.C. into action. And his reasons, at least in part, lie close to home: “I hate the fact that for my daughter and my grandchildren, there is no way they can own a house in this city.”

– from ‘Out of the Shadows’, Kathy Tomlinson, G&M, 10 Sep 2016

Average Vancouver Detached Price Loses Last 12 Months’ Worth of Gains In One Month.

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“As was largely expected, the first official data since the bursting of the Vancouver housing bubble following the 15% luxury real estate tax, was ugly: on one hand, the number of Vancouver home sales fell 26% from a year earlier, and tumbled by 23% comparted to July, to
2,489 transactions. Detached properties were hit hardest as sales dropped 45% from a year earlier. Transactions of attached homes such as town-houses dipped 25% and apartment sales were down 10%. On the other, prices likewise slumped, with the average price of detached Vancouver properties crashing 17% in just one month, and already down 0.6% on the year, to C$1.47 million in August, the lowest price since September 2015.

What is worse, is that what was until now a mostly regional housing bubble, is starting to spread in the form of a hit to Canadian consumer confidence. As Bloomberg reports, “a shifting real estate market in Vancouver led Canada’s consumer confidence index lower for a second week.” According to the BBG Nanos telephone poll shows, the share of respondents who see local real estate prices falling has almost doubled in the last two weeks, rising to 22.5% in the latest survey, up from previous readings of 20.5% and 12%. Conversely, the share of those who see higher prices fell to below 40 percent for the first time since April.”

– from ‘Vancouver Housing Bubble Burst Sends Local Consumer Sentiment Crashing Most In Three Years’, Zerohedge, 6 Sept 2016

Zerohedge: “Vancouver Housing Market Implodes”; “Devastated”; “Slammed Shut”; “About To Get Very Ugly”

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“Three weeks ago, when we looked at the long-overdue sudden change in the Vancouver housing market, long a receptacle for Chinese hot and laundered money, we found that as a result of the implementation of the 15% property tax implemented by British Columbia (something we recommended over a month earlier), that the Vancouver housing bubble has burst.

We concluded this based on anecdotal evidence by local real estate professionals: “As a new dawn breaks in Metro Vancouver’s real estate market, realty companies and real estate boards are reporting the first anecdotes of deals falling through as foreign buyers forfeited deposits on binding deals rather than pay the new tax. Worse, if only for the unprecedented local housing bubble, and certainly better for potential local homeowners who were locked out from the massively overpriced market, they report evidence of local buyers withdrawing offers in expectation that the market will soften.”

Less than a month later, there is also hard evidence to confirm this assessment. According to Global News, evidence from realtors and MLS data is showing the Vancouver real estate market is in the midst of a major slow down, with prices dropping and sales plummeting.

While August is typically one of the slowest months for real estate transactions, MLS sales data from the first two weeks of the month shows what many have been hoping for during the last few years of escalating prices. According to realtor Brent Eilers, using MLS listing data, there were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94%.”

Global News obtained MLS sales data from several key Metro Vancouver markets and found the number of homes sold during the first two weeks of August in Greater Vancouver dropped by 85% on average. Richmond experienced a 96% drop in the number of sales and Burnaby North fell by 95%. Vancouver’s West Side, West Vancouver, and Coquitlam also took major hits.

It appears that the Vancouver housing market has slammed shut.

Which is hardly a surprise: virtually everyone saw it coming, the only question was when. Eilers says he’s been warning of a real estate slow-down for at least a year due to the region’s unsustainable and unsupportable prices. West Vancouver, where he does a large part of his business, had a benchmark detached home price of almost $3.4 million in July according to the Real Estate Board of Greater Vancouver.

“The market in West Van is up 450 per cent since 2001. So is everyone making 600 per cent more income than they were so they can pay their taxes and buy their houses? Of course not. So how is this inflation been financed? By off-shore money and record debt.” Precisely what we said at the start of the year when we first heard horror stories about Chinese buyers paying cash, sight unseen, for any and every local luxury, and not so luxury home.

It appears that it is not just the 15% luxury tax implemented on on July 25 that has burst the bubble: according to Eilers sales were dropping even before the tax. According to the data, July was another slow month in West Vancouver with only 44 sales, down from 80 in 2015. June saw 74 sales, also down from 102 the year before.

The pattern has left the market “devastated”, Eilers adds.

While it may be too early to make a definitive conclusion, after all while earlier this month, the REBGV released its statistics for the month of July, saying the data showed the market had slowed down to “normal levels”, there was still no official August data available, and thus no actual indication of the slowdown. Fortunately for buyers, real-time data proves otherwise.

Zolo, a Canadian real estate brokerage, keeps track of MLS home sales in real-time and reports prices as an average rather than the “benchmark price” used by the REBGV. It currently shows a major correction underway in most Metro Vancouver markets. According to the website, the City of Vancouver currently has an average home price of $1.1 million, down 20.7% over the last 28 days and down 24.5% over the last three months. The average detached home is $2.6 million, down 7% compared to three months ago.

If the bubble has indeed burst, things are about to get very ugly. Eilers says that in the 1980 housing crash, prices dropped by 40 to 60% within a year and took six years to recover. “So your $2 million house became $800,000 in five months. There’s a lot of economists and a lot of wise people that believe that our financial structure is much closer to that structure from a corrections’ point of view,” Eilers explained.

One thing, however, appears certain: the foreign money influx has stopped. Zolo’s CEO says the foreign buyer tax has certainly stopped speculative buyers. This has caused many other buyers to take on a “wait and see” approach, which has essentially frozen the market.

News of the foreign buyer tax has spread to China, where Chinese real estate website Juwai now promotes other Canadian cities as foreign capital destinations. The website used to promote Vancouver as one of the best places for wealthy Chinese to invest, but has now switched to publicizing Calgary and Alberta due to the tax.

Which means that while one bubble is bursting, another is about to start, even if it is smack in the middle of Canada’s bleeding oil patch.

That said, this is good news for ordinary Vancouver residents. NDP MLA David Eby says the tax has caused a lot of people to hit the pause button on buying homes, but all those people might come back into the market in September. Despite his reservations on how the tax was implemented – he would have preferred an incrementally-increasing tax – he says a market slow down is good news.

“A lot of people have said to me quietly that they hope there is a substantial housing crash.”

Well, it appears they got what they wanted. Now the only question is what happens once Vancouver “corrects” by 30%, 40% or more – will the Chinese buyers stay away permanently or, like a good S&P500 algos, simply BTFD. We will have the answer in a few months.

– from Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month – “The Market Is Devastated”, Zerohedge, 19 Aug 2016

As the article says: “If the bubble has indeed burst, things are about to get very ugly.” – vreaa

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