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Claverjoe posted:I think I see the problems here. 1 is what the U.S. banks said back in the day, and 2 is just bitterly funny. It also overlooks how many Canadian homeowners are also doing the same HELOC piggy bank approach seen in the US bubble, with the median balance running around $45000.
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Sep 19, 2013 16:21
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Of course not. All those motherfuckers with mortgages they can't afford can just take out loans secured by the houses they don't own. Banks now collect twice the amount of interest and 30 thousandaires can make it rain by furnishing the home they don't own with 'bauhaus inspired' furniture they're renting. everyone wins
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Sep 19, 2013 16:28
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Lexicon posted:Leaving aside housing bubble collapse doomsday scenarios - are you/your colleagues not at least slightly troubled by the international comparisons of price:rent ratios, price:income ratios etc? Canada is solidly the leader of those league tables. Absolutely. I work in wealth management, so when I say colleagues realize I am not speaking of your average bank employee. Our job is to figure out strategies that benefit our clients in any market. A healthy amount of time has been put into analyzing a few likely scenarios. I personally have settled on one of two results if the macro-environment remains as even keel as it has over the last few years: So here are some of my personal views: 1) Market metrics like those posted by the OECD analyze the entire Canadian housing market as an aggregate. The problem is Toronto and Vancouver make up a much larger part of our population than New York does of the US. It skews the overall picture. 2) Canada's stature has improved in the international community. It attracts international buyers. The international real estate market in what I consider prestige countries always has a target destination. There is a lot of misinformation with respect to foreign investment: especially from the BC Realtors, who are always downplaying foreign investors. The reality is that Canada now has two prestige markets. Prestige markets are bubbly. Our newly created prestige markets skew things more than they would in other markets. 3) Canada's geography (i.e. very little desirable real estate) lends itself towards higher prices. Real estate should be more expensive in Canada than in the US, all other things being equal. But here is the real kicker, beyond anything else. Money inflation is high right now. It is keeping wages afloat, it is helping employment numbers, and it is reducing the value of our dollar. Consumer credit is tightening up and already people are having to adjust. The age group getting hit the worst right now are seniors on fixed incomes, and I hate to say this, but they are best able to absorb the impact by changing their standard of living. There was no magic solution out of the 2008 recession: we did a pretty good job of getting out of it without destabilizing the country. So...thank you housing for saving the day...now we just need to get it under control and land this baby as softly as possible.
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Sep 19, 2013 17:38
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Dreylad posted:This is related to the thread I think, and pretty interesting if we're actually starting to reclaim farmland (which we should be doing): How much of this price increase is related to development demand, do you think? I'm wondering what effect a residential bubble pop would have on farmland prices. I vaguely remember you were interested in farmland protection in Ontario- how do you think this affects that concern? Generally I'm leery of the notion that increased farmland prices in the vicinity of major urban areas is good for anyone other than the farm owners. In particular, it seems to deny access to growing land to those other than the wealthy or those willing to sell themselves to a bank. This is problematic for those of us interested in moving away from industrial agriculture, ensuring eg recent immigrant communities have physical access to growing land, etc. Matthew_O posted:I personally have settled on one of two results if the macro-environment remains as even keel as it has over the last few years Do you have (institutional or personal) contingencies for the failure of the "if" doing so much work here? Paper Mac fucked around with this message at 19:24 on Sep 19, 2013 |
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Sep 19, 2013 19:22
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Matthew_O posted:3) Canada's geography (i.e. very little desirable real estate) lends itself towards higher prices. Real estate should be more expensive in Canada than in the US, all other things being equal.
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Sep 19, 2013 19:43
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spacemost posted:This really only seems relevant in British Columbia. Southern Ontario is not hurting for space, and we have 1/10th the population of the States. Real estate restrictions only make sense due to geography limiting things such as in the case of peninsula cities or city surrounded by really mountainous terrain such as Hong Kong.
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Sep 19, 2013 19:47
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Matthew_O posted:So here are some of my personal views: Several of these points seem wrong to me. The GTA and Metro Vancouver encompass nearly 25% of the population of Canada, that isn't a skewing of housing costs, those two areas really are a large fraction of the real estate market. Inflation in Canada is low (link) not high, it is also low in the US, and the Canadian dollar hasn't moved much against the US dollar, which is further evidence for low inflation in Canada.
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Sep 19, 2013 19:48
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quote:Do you have (institutional or personal) contingencies for the failure of the "if" doing so much work here? On the investment end, for our sophisticated non-institutional clients, the contingencies are obviously easy to implement. Those in the sweet spot (5-50 million) in liquid assets have the most flexibility to profit from a bear market. Retail and large institutional investors are the ones most at risk. The institutional contingency plan is easy to see, although not directly expressed to anyone: international mortgage exposure, particularly in the US. My current employer leads the Big 6 with this plan (sigh, it only took a few posts to basically out my employer...c'est la vie.) Personally? I am not worried. Economic cycles are personal opportunities.
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Sep 19, 2013 20:16
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Paper Mac posted:How much of this price increase is related to development demand, do you think? I'm wondering what effect a residential bubble pop would have on farmland prices. I vaguely remember you were interested in farmland protection in Ontario- how do you think this affects that concern? Generally I'm leery of the notion that increased farmland prices in the vicinity of major urban areas is good for anyone other than the farm owners. In particular, it seems to deny access to growing land to those other than the wealthy or those willing to sell themselves to a bank. This is problematic for those of us interested in moving away from industrial agriculture, ensuring eg recent immigrant communities have physical access to growing land, etc. I think it's directly related, and I disagree with the G&M's conclusion that this is going to lead to a resurgence in local farming food growing. Climate change isn't going to open up the Canadian Shield to farming; a warmer climate isn't the only factor in growing plants and animals. The hippy in all of us would love to see all this farmland be used as foodland, but that's really not how the economics are playing out. Look at the Niagara peninsula as a great example: we get tons of fruits and vegetables from there, but you can drive down to Niagara-On-The-Lake and see all the former peach farmers transforming their fields into vineyards. I love wine as much as anyone else, but we can't eat those grapes. It's going to require government intervention because I don't think the economics of growing food are going to neatly align themselves with encouraging local food growers. We need easements and environmental protection to keep agricultural land agricultural and not turned into acre estates with a horse ranch. That, I think, is the big disconnect right now: that agricultural land is an environmental issue. It's also a national security issue, but that's not the point. The current legislation doesn't reflect that, although the Ontario government has been pretty good in the past about trying to foster Ontario agriculture. Dreylad fucked around with this message at 20:25 on Sep 19, 2013 |
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Sep 19, 2013 20:20
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MickeyFinn posted:Several of these points seem wrong to me. The GTA and Metro Vancouver encompass nearly 25% of the population of Canada, that isn't a skewing of housing costs, those two areas really are a large fraction of the real estate market. Inflation in Canada is low (link) not high, it is also low in the US, and the Canadian dollar hasn't moved much against the US dollar, which is further evidence for low inflation in Canada. I understand your point. I need to be more clear. My personal view is that Toronto and Vancouver will remain bubbly due to the global recovery of prestige markets. Within these markets Vancouver is middle-tier and Toronto is low-tier. If the current economic environment persists these markets will remain robust and immune to the type of correction envisioned by many economists. Because of this, the entire Canadian market is skewed disproportionately. We have internal metrics that remove prestige markets from the equation to get what we believe is a better view of the market. Our view is that prices are too high, but not unreasonably so. We also believe real estate in a few other markets are larger risks. As for inflation, let's put it this way: we do our own internal modelling and the Canadian money supply, relative to other currency markets, is quite inflationary. I can't tell you when this will bear fruit.
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Sep 19, 2013 20:34
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Interesting thoughts on all this stuff Matthew_O. Thanks for sharing... Great to hear this perspective.
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Sep 19, 2013 21:21
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Matthew_O posted:
Can you share more details about this? I remember several studies coming out not too long ago that put foreign investors at ~15%, which doesn't seem that high. Like, what is the actual figure? Also are many of these foreign investors actually keeping apartments empty as everyone suspects? Again, I recall some actual numbers coming out on the topic more recently and it seemed that vacant apartments have in fact gone up significantly. I'm also wondering what you think about the role of laxer mortgage terms has been in the current Van/To bubbles - stuff like 0% down and long-rear end repayment terms that have only been constricted relatively recently, after most of the damage was done. Basically the way I am wrapping my head around Vancouver's current prices is that it was primarily driven by overly generous mortgage terms which allowed people to take on debt far in excess to what would usually have been seen as acceptable or affordable. I think there is a visible increase across Canada that corresponds with this. The reason Vancouver in particular has grown so much faster is a combination of desirability increasing to people that can afford to bid each-other up to the current prices (foreign investors like you mentioned I suppose), at least some amount of vacant homes being kept for flipping (though it's hard to say exactly how much), and (as you mentioned) limited geography - Vancouver can only really expand east which is already pretty far away from where the city wants to grow... How does all that sound to you? I am wondering though - once fixed term interest rates start to expire and people have to pay the current much higher rates, couldn't that actually start a wave of foreclosures just because the previously mentioned mortgage terms have already put many (most?) buyers at the very limit of what they can actually afford? (btw, does anyone have a historical chart of mortgage expenses to income ratios for vancouver v rest of canada?)
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Sep 20, 2013 00:07
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Icemakor posted:I'm trying to figure out what to do in halifax myself. I've got a good bit of cash in the bank and I'm just itching to pull the trigger (probably a detached $180K-200K house in spryfield or dartmouth). Halifax, outside of the obvious areas, seems to still be a great place to buy a home. Housing prices in Dartmouth, Cole Harbour, etc. don't seem to be too affected by the hype. Condo prices downtown and anywhere they can lure foreign student investment money is a shitshow. The NDP right now is promising some sort of tax rebate for "young families" who buy a home. This sounds great until you realize that there aren't that many people for whom that would help with buying a home (i.e. if your combined family income is ~40k, making the interest on the mortgage tax refundable isn't going to make you buy a home)
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Sep 20, 2013 12:01
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Mr. Wynand posted:Can you share more details about this? I remember several studies coming out not too long ago that put foreign investors at ~15%, which doesn't seem that high. Like, what is the actual figure? A quick response before I run to a meeting: The BC Realty people are REALLY bad at giving any information on nationality/citizenship. A few people with more time on their hands like Andy Yan tracked luxury homes via hydro bills and the like. The Realtors have commissioned their own studies (and shocker, they came in with these ridiculously low sub 5% figures). What we are privy to, along with some relevant disclosure from sister banks, is that the YOY changes in large residential complexes is substantial. Substantial enough to change our evaluation of the market and put it into what we consider a prestige class (if the term is unfamiliar, it should be, every investment bank has coined their own term for it). Very few investors keep anything empty on purpose. I'll leave that at that. It is not just Canada's national bank that creates bubbles in places like Vancouver: central bank policy in China and the U.S. also has an effect on markets like Vancouver. On the mortgage rate end, in general home owners in Vancouver are stretched, but recognize that as long as employment stays steady and wages creep up there is wiggle room. And although most people settle for long terms, the length of the variable mortgage still has some "wiggle" room. Principal reduction also helps. Taken in combination on a a 5-year variable: 1) Principal reduction 2) Wage creep 3) Term flex 4) Rate flex 5) Minor adjustments to standard of living These 5 buffers allow for correction without a wave of foreclosures and a proverbial "bubble pop". I hope that kinda covered things.
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Sep 20, 2013 16:25
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Matthew_O, thanks a lot for your insightful posts. Of the people in Vancouver and Toronto that can get mortgages for homes, do you have insight on whether they're well capitalized?
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Sep 20, 2013 18:56
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Matthew_O posted:There was no magic solution out of the 2008 recession: we did a pretty good job of getting out of it without destabilizing the country. Forgive my potentially naive reasoning, but this makes absolutely no sense to me. Imagine, by way of silly analogy: through the 2000s, monetary and policy decisions precipitated a massive rise in the value of vehicles. The feds made it easy to borrow money for cars, rob RRSPs to buy them, and the general environment subsequently encouraged some niche manufacturers to pile into the business (i.e. jobs). Prices were bid up due to the vigorous consumer interest in vehicles, and the correspondingly lagging supply. Vehicle manufacturing suddenly comprised a larger proportion of the Canadian economy than ever before, people went into ever greater debt to buy them, and international and historical comparisons revealed this all to be highly abnormal. I don't think anyone could look at that scenario and call it a healthy outcome that "saves" anything. At best, it's nothing but drawing future consumption to the present, and unjustifiably enriching some banks, middlemen, and rent-seekers along the way. Why is it different with homes? This potentially gets us into a Keynesian debate, and I'm nothing but an armchair economist, but the idea that you can prosper through over-spending has never carried much water with me. Yes,  .
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Sep 20, 2013 20:17
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Lexicon posted:Forgive my potentially naive reasoning, but this makes absolutely no sense to me. There is nothing naive about your post. I differentiate between the scenarios though. The financial crisis had the ability to spiral out of control: mass unemployment leads to less spending, leads to businesses not hiring, etc. etc.. In those types of situations, that future consumption could possibly not happen. It is like paying off a credit card with another credit card: it isn't a smart idea, but in many situations it is better than not making a payment and eventually having both cards revoked. Better to keep them afloat until you are able to recover. Simply said, a timid, guarded public is dangerous for any economy. Yes it creates winners at the expense of those out of the system. But you have to worry yourself about the people still playing the game, not those who have retired from it.
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Sep 20, 2013 22:12
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Matthew_O posted:There is nothing naive about your post. I differentiate between the scenarios though. “‘We have to dance until the music stops,’ Chuck Prince of Citigroup said, but the music had already stopped when he said that.” — George Soros
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Sep 20, 2013 23:48
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Sooo....these guys think that the housing boom has come at the cost of declining exports http://www.voxeu.org/article/real-estate-driven-exports#.UkyHnedZFs8.twitter
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Oct 3, 2013 00:32
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This isn't really political or anything, but I figured anyone who's ever spent time looking at properties online, whether to buy or rent, will enjoy this site: http://terriblerealestateagentphotos.com/
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Oct 3, 2013 04:01
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I haven't followed Canadian housing all that closely in the past few months. When I have paid attention, the media narrative seems to have transitioned from somewhat circumspect, to "LOLZ bears wrong again", "massive YOY sales increases", etc. As the nation's media outlets are nothing but lickspittles for FIRE interests anyway, it's not really worth speculating on how true or false any of this is. Anyone have a more nuanced take? (I'm still firmly in the camp that renting is a fantastic deal, and the country's excessive indebtedness chickens are still coming home to roost eventually).
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Oct 4, 2013 18:49
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HookShot posted:This isn't really political or anything, but I figured anyone who's ever spent time looking at properties online, whether to buy or rent, will enjoy this site: http://terriblerealestateagentphotos.com/ When they even have photos. If you think looking for property is lovely, try looking for rentals. $1300/m, 2br suite, some utilities, nice area, *neighbourhood name*. Submit applications to *PO Box*
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Oct 4, 2013 18:53
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Lexicon posted:I haven't followed Canadian housing all that closely in the past few months. When I have paid attention, the media narrative seems to have transitioned from somewhat circumspect, to "LOLZ bears wrong again", "massive YOY sales increases", etc. The surge we're seeing in sales seems to be coming from people who have been preapproved for mortgages at rates prior to all the hikes that took effect about 3 or 4 months ago.
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Oct 4, 2013 20:24
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Baronjutter posted:When they even have photos. If you think looking for property is lovely, try looking for rentals. Try going through this in Whistler. I think I'm going to kill myself if I see pictures of another 30 year old, obviously not legal basement suite where everything is obviously from the 60s, there's a 50/50 chance an electrical fire will at some point destroy everything you own, no washer/dryer onsite and they want $2,500/month for a year lease. 
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Oct 4, 2013 23:59
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HookShot posted:Try going through this in Whistler. It is absolutely baffling to me why someone would want to own property in Whistler. On a good day, the skiing is admittedly phenomenal, but it's *ludicrously* expensive and the whole place is this absurd town-sized-frathouse. I gave up going there long ago... much better times to be had in the interior or Mount Baker.
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Oct 7, 2013 20:32
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Lexicon posted:It is absolutely baffling to me why someone would want to own property in Whistler. On a good day, the skiing is admittedly phenomenal, but it's *ludicrously* expensive and the whole place is this absurd town-sized-frathouse. I gave up going there long ago... much better times to be had in the interior or Mount Baker. Skiing at Whistler is phenomenal though, that's why we're moving up there.
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Oct 7, 2013 21:18
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I'd love to live in an area like Whistler, but if I use the MLS then I can only ever find multimillion dollar vacation cabins or time shares. What are actual housing prices like?
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Oct 8, 2013 15:40
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Condo news out of TorontoThe Star posted:Mortgage brokers, realtors and developers have seen a surge the last few months in people who bought pre-construction condos two to three years ago “scrambling” to get financing to close deals. Coupled with the upcoming glut of condo supply in Toronto, things are probably about to get pretty ugly there.
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Oct 8, 2013 17:05
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ocrumsprug posted:Condo news out of Toronto If you rent, you are just throwing money away. quote:Toronto real estate lawyer Oksana Miroutenko has had two cases in the last few months where clients took interim occupancy of their new condos, only to find out weeks later, when final payments were due, that they couldn’t meet new, more stringent, financing conditions.
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Oct 8, 2013 17:08
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spacemost posted:I'd love to live in an area like Whistler, but if I use the MLS then I can only ever find multimillion dollar vacation cabins or time shares. For all intents and purposes, it's like buying in Vancouver. You can find a one bedroom in the $300,000 range (maybe even $200,000 if you get a shithole), but if you're looking for a townhouse/detached you're pretty much looking at minimum $700k and it goes up pretty quickly. There's certainly exceptions to this, but it's a good general guideline. I would not ever buy in Whistler though. Especially not right now. If you want to live in Whistler, rent a place.
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Oct 8, 2013 17:30
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Was hanging out with my folks the other day, who I guess didn't know that we had long abandoned the idea of buying a condo and were looking at rentals. They were shocked, it's like I told them I had cancer. "But.. you're just throwing your money away! You're paying someone else's mortgage! How will you retire? You aren't building equity!" I tried to explain how hosed the market here is, and how you actually come out financially ahead by investing the money you're saving by renting vs buying. They seemed super sad, specially my poor mom who is pretty upset we'd be the first generation of non-home owners in many generations, like we're breaking some family tradition. They were also sad things were so bad for our generation that we can't even afford ownership. Like they get that in terms of price vs income houses are just insanely more expensive than when they bought. They understand there's basically no such thing as a secure stable job (let alone career) with good benefits or a union like they grew up with. They sort of understand what I explained about renting vs buying and how the whole "property ladder" and "GET A STARTER HOME RIGHT NOW TO BUILD EQUITY" is all bullshit propaganda. They more or less get it all, but they are deeply upset about it. They almost seemed guilty, as if it finally hit them what their generation has done and how they've obviously failed as good parents since their parents helped them get their house and so on down the family line. They still think we're "over reacting" an will regret it in the long run, because by the time we CAN afford a house we won't have been BUILDING EQUITY and we'll be starting too low on the property ladder and they had a 2,000 sqft home when they were in their early 20's and we're in our 30's and wanting to continue to rent like some poor person or student?!
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Oct 8, 2013 17:33
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^ But you will be "building equity", as you're throwing all your excess cash saved from not-owning into a nice portfolio of low-cost index funds as discussed in the other thread. Right? 
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Oct 8, 2013 17:39
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Why shouldn't they feel sad? There is much to feel sad about. All these pillars of the middle class that were built up after a great deal of struggle seem to have crumbled overnight sometimes soon after people your parents age took advantage of them: education leading up to a reliable job, affordable home ownership that pays for your retirement, these were all good things. They were not essentially unsustainable, there is no inevitable reason why those things should not still be available now. And although I'm sure your parents are personally perfectly nice Vancouver Island hippies, it is still for the most part their generation that has allowed or even encouraged (for their own personal gains) the policies which lead to the eventual collapse of these institutions. Maybe they shouldn't be feeling personally responsible or anything, but feeling sad and disheartened at how different the experience of new families is compared to their own? Those feelings are entirely warranted I think...
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Oct 8, 2013 18:00
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Mr. Wynand posted:Why shouldn't they feel sad? There is much to feel sad about. All these pillars of the middle class that were built up after a great deal of struggle seem to have crumbled overnight sometimes soon after people your parents age took advantage of them: education leading up to a reliable job, affordable home ownership that pays for your retirement, these were all good things. They were not essentially unsustainable, there is no inevitable reason why those things should not still be available now. Yeah, it's all understandable, I'm sad about it too as well. I think with better policies there's no reason housing (not necessarily a house, and not necessarily outright ownership) should be so hosed here. They're sort of coming around to the idea that we'll be SAVING money while renting so that maybe we can buy if the market crashes enough, although I don't honestly think it will (and rents here are still pretty expensive so we won't be able to save much each month) As much doom and gloom as there is in this thread I think housing in Victoria will just sort of have a soft-landing. Suburban condo owners might get hosed and see huge losses because who the gently caress wants a suburban condo, specially somewhere nasty like langford, but everything else will just sort of hold steady and a terrible unaffordable level due to seemingly every loving rich boomer in Canada wanting to retire here. Even if a huge dip in prices was naturally going to happen, the government would step in and do some insane short-sighted idiocy that props them up because for most people of my parents generation their house is their retirement fund.
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Oct 8, 2013 18:12
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My parents were just out to visit in Vancouver this weekend, and we walked around some, where they saw some townhouses up for sale. They took down the realtor information and we checked them out later that evening ($750,000 for a 3br/3ba in a gross pastel 90s development), and were pretty much blown away that such a place could be valued like that. Unfortunately this didn't stop them from parroting the 'build equity, you're throwing your money away' rhetoric. I tried to counter but it's just so entrenched in the collective consciousness that it's impossible to get around it.
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Oct 8, 2013 19:30
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Majuju posted:Unfortunately this didn't stop them from parroting the 'build equity, you're throwing your money away' rhetoric. I've had some luck countering this with the following analogy: "We all know it makes more sense long term to buy a car than to lease one. That logic follows from current pricing of vehicles. What if it cost $100 a month to lease a Honda Civic, but $60k to buy one? It is possible to imaging relative pricing of buying and leasing where the latter simply makes more sense. That's how Canadian housing is right now."
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Oct 8, 2013 21:54
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Majuju posted:My parents were just out to visit in Vancouver this weekend, and we walked around some, where they saw some townhouses up for sale. They took down the realtor information and we checked them out later that evening ($750,000 for a 3br/3ba in a gross pastel 90s development), and were pretty much blown away that such a place could be valued like that. Unfortunately this didn't stop them from parroting the 'build equity, you're throwing your money away' rhetoric. I tried to counter but it's just so entrenched in the collective consciousness that it's impossible to get around it. You build equity faster by renting and putting the remainder away. The first few years of mortgage payments are mostly interest and build you almost zero equity. That all said, a workmate who lives in downtown Vancouver has been thinking of buying a condo with her partner. They're currently paying $1,400 a month in rent, and could buy a place for around $280K. Mortgage payments for that would be around $1700/month. Strata fees and property tax together would likely be around $500. That's $2,200/month, or $800 more than they're paying in rent. Over a 30 year amortization, that $800 they could save comes to $288,000, around the value of the property. I did try to caution them, but it almost looks like it spreadsheets out OK (assuming bubbles don't pop, etc)?
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Oct 11, 2013 00:24
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Lead out in cuffs posted:You build equity faster by renting and putting the remainder away. The first few years of mortgage payments are mostly interest and build you almost zero equity. Most people overlook how if you sell a house you need to build up better equity to actually make money and real estate sales also have misc taxes/fees attached to them. Also depending on the condo you can get nasty monthly fee creep over time. The only time buy vs rent makes sense from a money gamble perspective is if it's in area in which home prices are greatly depressed but rents still are fairly high. For example in Miami housing for decent areas is pretty expensive in terms of rent but due to the 2009 bubble the buy cost is much less per month even with the various expenses factored in such as property insurance.
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Oct 11, 2013 01:05
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Lead out in cuffs posted:You build equity faster by renting and putting the remainder away. The first few years of mortgage payments are mostly interest and build you almost zero equity. You're forgetting a bunch of other expenses. Repairs and maintenance, for instance, run about 3-5% of the value of the home per year.
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Oct 11, 2013 01:08
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Fine-able Offense posted:You're forgetting a bunch of other expenses. Repairs and maintenance, for instance, run about 3-5% of the value of the home per year. Plus the whole concept, let's pay more money each month to be experience home debtorship in a dubious bubble environment.
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Oct 11, 2013 01:10
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