Author Topic: Garth Turner - Real Estate in Canada  (Read 486574 times)

wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #590 on: March 04, 2016, 01:49:04 PM »
Land is valuable to developers. I believe that is where most of the inventory is sitting - it takes a while for city approvals, demolishing and building.

When this is over and done with - it will be interesting to look at the number of Canadians who became builders.
« Last Edit: March 04, 2016, 01:50:59 PM by wisdom »


gary17

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Re: Garth Turner - Real Estate in Canada
« Reply #591 on: March 04, 2016, 02:06:12 PM »
Land is valuable to developers. I believe that is where most of the inventory is sitting - it takes a while for city approvals, demolishing and building.

When this is over and done with - it will be interesting to look at the number of Canadians who became builders.

i personally know of quite a few family friends and relatives just buying up lots and holding...   not developing.     many Asians would save money in land rather than in a savings account lol 

nodnub

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Re: Garth Turner - Real Estate in Canada
« Reply #592 on: March 04, 2016, 05:00:06 PM »
Nodnub - I was talking about PR's. It was just that I used a short form when you asked for the source. If you look at the graph in the article it does not look like a one time read - It looks like that is the trend. It is possible that 2004 was an anomaly. I do not know for sure though.

Yes I see what you are saying.  I think this is a more telling excerpt from that article.

Quote
Henry Yu, a history professor at the University of B.C. who studies migration between China and Canada’s west coast, said the decline in permanent residents does not mean there are fewer Chinese in B.C.

“What you’re seeing is the benefits of permanent residency have declined over time. It doesn’t mean there are less Chinese here. It just means that permanent residency as a desirable decision has declined, at times precipitously.”

Yu points to the former Conservative government’s introduction of a 10-year super visa as “ground changing.” Super visas are valid for 10 years and allow parents and grandparents to visit children in Canada for up to two years at a time. The government introduced the program in 2011 as it capped the number of new permanent residence applications for parents and grandparents it would accept because of a lengthy backlog.

For Chinese parents who have children studying in Canada, for example, it often makes more sense to apply for a super visa than for permanent residence, Yu explained.

“If you have a 10-year super visa, then what’s the upside of being a (permanent resident)? In fact, there’s quite a few downsides to being a (permanent resident),” Yu said, noting that having to pay taxes in Canada is at the top of that list. There is also no requirement to be a permanent resident in order to own property in Canada.
Again,  I would love to have these people come and stay and become permanent residents and become citizens and work and pay tax in Canada.  But if the parents live and work overseas and buys a big house for their 18 year old kid to come study here and live in the big house by themself and use it as a tax dodge (personal residence exemption), then what value does that family contribute to Canadian society?




wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #593 on: March 04, 2016, 05:09:20 PM »
That is the hot money that may be coming in and will be first to leave when and if things go south. Just makes for larger swings. The unfortunate thing is that this is real estate that we are talking about that is being used to speculate and tends to have a large impact with each move because more people own homes and leverage. Leverage can be 20x.

For perspective - Last year home prices increased 30% in Vancouver on top of a 15 year run up. There are several examples where I know people who are turning around and selling a house the same day for $90k more than the purchase price.

Never been easier to get rich.

Phoenix01

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Re: Garth Turner - Real Estate in Canada
« Reply #594 on: March 04, 2016, 07:37:23 PM »
The graph in this article needs to be seen to be believed.

http://www.news1130.com/2016/02/02/vancouver-house-price-new-record/


nodnub

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Re: Garth Turner - Real Estate in Canada
« Reply #595 on: March 04, 2016, 09:58:14 PM »
That is the hot money that may be coming in and will be first to leave when and if things go south. Just makes for larger swings. The unfortunate thing is that this is real estate that we are talking about that is being used to speculate and tends to have a large impact with each move because more people own homes and leverage. Leverage can be 20x.

For perspective - Last year home prices increased 30% in Vancouver on top of a 15 year run up. There are several examples where I know people who are turning around and selling a house the same day for $90k more than the purchase price.

Never been easier to get rich.

That is definitely how it looks! I used to believe the following expression would come true "what the wise man does in the beginning the fool does in the end".  But not sign of that yet.  It's a crazy time. 

There is no advantage to having that additional volatility in the housing market.  I keep thinking hot money flows in real estate just seems like it will end badly some day. That was essentially the problem in the US real estate boom in early/mid 2000s,  except the hot money was coming from inside the country (people that couldnt *really* afford the mortgage, or people that bought more properties than they could handle because credit terms were soooo loose - you had a pulse, you could get a zero-down IO mortgage).

nodnub

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Re: Garth Turner - Real Estate in Canada
« Reply #596 on: March 04, 2016, 10:03:01 PM »
The graph in this article needs to be seen to be believed.

http://www.news1130.com/2016/02/02/vancouver-house-price-new-record/

That is very interesting chart.  Again there is an issues with statistics/data.  I wish they would publish the median value. I wonder what it would look like. I think it would show what the price increases were on a "more typical" house and be less skewed by the most expensive properties.  Maybe the median is only up 10% this year.  who knows.

--
edit:  okay I stopped being lazy. and spent a couple minutes with google. 
MLS has the Home Price Index (HPI) which is calculated using the median price instead of the average price.  I opened this report for Feb 2016 http://www.rebgv.org/sites/default/files/REBGV%20Stats%20Pkg%20February%202016.pdf

In the first table in that report you can discover the median price increase in the last 12 months to Feb 2016 for Detached houses, townhouse and apartments in various areas. eg.  Vancouver East, Vancouver West, West Vancouver, Burnaby South, et al.
or consolidated to Greater Vancouver level.  All numbers are lower than the headline 30% increase,  most of them are in the mid-20s. 

Given that the median prices are increasing at lower rate than average I think that the higher end properties are going up a lot more than 30% in the past year.  It's tough luck to be a millionaire in Vancouver if you haven't bought your 3 million house yet  :)

« Last Edit: March 04, 2016, 10:48:58 PM by nodnub »

JBTC

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Re: Garth Turner - Real Estate in Canada
« Reply #597 on: March 04, 2016, 11:49:07 PM »
That is the hot money that may be coming in and will be first to leave when and if things go south. Just makes for larger swings. The unfortunate thing is that this is real estate that we are talking about that is being used to speculate and tends to have a large impact with each move because more people own homes and leverage. Leverage can be 20x.

For perspective - Last year home prices increased 30% in Vancouver on top of a 15 year run up. There are several examples where I know people who are turning around and selling a house the same day for $90k more than the purchase price.

Never been easier to get rich.

Shouldn't a 15-year run indicate there are long-term fundamental factors supporting the market?

The price chart says apartment prices have increased more modestly than detached homes, suggesting it's land that has become scarce.

I am not saying the current price is fully justified, because it likely reflects both investment merits and speculation.

If Chinese buying is indeed key, then it's difficult to know when the run-up will stop. My guess is if adjusted for quality and lifestyle, Vancouver housing is likely still cheaper than China.

alertmeipp

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Re: Garth Turner - Real Estate in Canada
« Reply #598 on: March 05, 2016, 04:37:20 AM »
just like many bubbles (I don't know if this one is but it sure looks like one) ... it will be hard to see how it stops until it does.

as this continue, pretty much all locals will need to move to condos, while foreign ppl (mainly from China) taking over all detached.

does this look like sustainable to you?

most other major cities in around the globe do have some rules in places to stop the inflow while Canada has done nothing so far. That makes the situation way worse as Canada is becoming the easiest place to move money into.

JBTC

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Re: Garth Turner - Real Estate in Canada
« Reply #599 on: March 05, 2016, 05:31:30 AM »
just like many bubbles (I don't know if this one is but it sure looks like one) ... it will be hard to see how it stops until it does.

as this continue, pretty much all locals will need to move to condos, while foreign ppl (mainly from China) taking over all detached.

does this look like sustainable to you?

most other major cities in around the globe do have some rules in places to stop the inflow while Canada has done nothing so far. That makes the situation way worse as Canada is becoming the easiest place to move money into.

My guess is the problem is mostly in Vancouver and Toronto, not really Canada wide.

The global affluent go after these highly livable cities. You hear the same complaints when you talk to someone from London or Sydney.

I presume even before the immigrants arrived in scale a couple of decades ago, the same trend was taking place, albeit not as visible. People from other cities moved in, neighborhoods gradually gentrified, local low-income households moved out.

So this broad trend has been in place for many years and will surely continue. Only the characters have changed and the pace has accelerated.

I agree if Canada changes its immigration policy, it will likely slow the Vancouver market a bit. In addition, the government could force the foreigners to buy new apartments rather than existing properties, which is the rule in Australia.