etalian posted:

remember how everyone though everything was fine before the US real estate bubble burst?

Rime posted:

Yeah, I second the WTF on the Powell River buzz recently. It's an extremely isolated dying mill town with no economy, horrible horrible people, and one of the worst rates of teenage drug and alcohol abuse in the entire province. (The "talented young people" that guy is going on about are the same ones that drive logging trucks drunk at 10am, so watch out!). The place has no redeeming qualities and may god have mercy on the soul of anyone who is stupid enough to move to that godforsaken shithole.

And yet it's being fluffed all over the loving place for some reason.

Lexicon posted:

It's sort of odd to use "we have low real estate prices" as a marketing point. I mean, if a place has low real estate prices, fine, but to trumpet about it is more or less to fully admit that a place is either not a desirable place to live or there are gently caress all job opportunities there.

Rime posted:

Yeah, I second the WTF on the Powell River buzz recently. It's an extremely isolated dying mill town with no economy, horrible horrible people, and one of the worst rates of teenage drug and alcohol abuse in the entire province. (The "talented young people" that guy is going on about are the same ones that drive logging trucks drunk at 10am, so watch out!). The place has no redeeming qualities and may god have mercy on the soul of anyone who is stupid enough to move to that godforsaken shithole.

And yet it's being fluffed all over the loving place for some reason.

Lexicon posted:

It's sort of odd to use "we have low real estate prices" as a marketing point. I mean, if a place has low real estate prices, fine, but to trumpet about it is more or less to fully admit that a place is either not a desirable place to live or there are gently caress all job opportunities there.

Isentropy posted:

It's really, really bizarre how most of these stories could be transplanted to almost any small town in Canada if you only change a few details. Do you have the hosed up kids running around knifing gay people and shooting at/bashing cats, or the parks full of empties and condoms (and I mean full)?

quote:

Some homeowners will be testing B.C.’s assessment office on whether their older homes on Vancouver’s west side are really worth as much as this month’s valuations said they were.

One resident, a former city planner and Vancouver architect, is making the argument that the city’s new policy to protect houses built before 1940 – aimed at slowing down a controversial trend of builders bulldozing older homes to erect mansions – will end up reducing the value of those lots.


So he’s appealing his $3-million assessment and helping his neighbours in similar situations to file appeals as well.

“The Vancouver west side real-estate market is primarily seeking lots for redevelopment (demolition of existing homes required),” Bob McGilvray wrote in his appeal.

He said, based on conversations with city staff, that people who buy pre-1940s homes and want to tear them down and rebuild will not be allowed to build as large a house as those who buy a post-1940s house.

In fact, according to his calculations with information supplied to him by staff, someone who bought his property would be able to build a house only 86 per cent of the size of what would be allowed on another similar-sized lot with a post-1940 house. In his case, that’s 660 square feet – a valuable piece of indoor space.

“Since property sales are strongly based upon the allowable buildable floor area, I believe our assessment should be reviewed and reduced,” he said in his appeal.

Mr. McGilvray has no plans to sell or redevelop. In fact, he helped develop some of the city’s current zones aimed at preserving older houses when he worked at the city in the 1990s.

But he doesn’t think any residents should have to pay taxes on improperly calculated value. If his assessment were reduced by the $420,000 he has suggested, that would mean about $1,500 less in taxes for the year.

Some realtors say they’re scrutinizing current sales to figure out whether their clients will also see the impact Mr. McGilvray is seeing.

“Common sense tells me there should be some effect like that,” said Allyson Brooke, who works with Macdonald Realty on the west side.

She said that so far, she’s seen only hints of what might happen.

quote:

It’s always a hot topic on these pages and in the media generally, but these past few weeks the issue of Vancouver’s lack of affordability has been more discussed than ever.

First, a few weeks ago, the price of a typical Greater Vancouver single-family home surpassed $1 million for the first time.

On January 13, Workopolis published a survey that got picked up by mainstream media including VanCity Buzz, outlining what you need to earn to buy an average house in Canada’s cities. Needless to say, Vancouver came out worst, at $147,023 a year.

Then, on January 19, an annual survey by Demographia asserted that Vancouver was the world’s second-least affordable metropolitan region, after Hong Kong.

Even Mayor Gregor Robertson told press in response, “It’s going to take us years to start to move the needle and improve affordability as a city and across the region.”

But is it really as bad as the headlines make it seem? After all, the real estate market is hotter than ever, with home sales in 2014 up 16 per cent compared with 2013. So if Vancouver real estate is so very unaffordable, how are all those buyers, well, affording it?

And we’re not talking about overseas investors, who make up about third of the luxury market and a much smaller fraction of the market overall. We’re talking about regular folk with their average incomes, buying typical homes.

Here’s how. There are three major, often-overlooked reasons why families and individuals continue to be able to afford real estate in a supposedly unaffordable market.

1) Most People Have Existing Equity

Around 70 per cent of all real-estate purchases are made by non-first-time buyers. That is, people who are selling a home to buy the next, and therefore already have equity to offset against the cost of their new mortgage.

A typical family buying that typical million-dollar single-family home has probably been in the market for around 10 or 15 years: first buying a condo as a couple, then moving to a townhome or duplex when the kids are small, and then finding their “forever” home to grow into. It’s not as though they are taking out a full million-dollar mortgage and having to pay that off with their average household income.

This family has been able to take full advantage of the rising house prices in selling their previous homes, so the sharp rise in prices has worked as much for them as it has against them.

This means that the income-to-mortgage ratios of surveys like those by Demographia and Workopolis simply do not apply in the real world, especially when you factor in reason #2 below. (And by the way, Demographia also chose not to include many developed countries such as France, Germany and Russia, so its numbers should be taken with a pinch of salt in general.)

And what about first-time buyers who do not have any equity? They need to follow the same process as our family above, like everybody else. And if they want to live in downtown Vancouver but can’t even afford a one-bedroom condo (Vancouver’s 10 most-affordable condos listed here) then why not build up equity by buying in an up-and-coming outlying area, rent it out and carry on renting downtown (more on that here)? Or just live in it and work your way up the ladder back to your desired area. The sense of entitlement felt by so many that they should be able to afford to buy a home in whichever desirable area they choose is, frankly, outdated and naïve in a city such as ours.

2) Income-to-Price Ratio Skewed

There is a fundamental flaw in the methodology of comparing average household incomes with average house prices in Vancouver.

Let’s take the Demographia survey as an example. It cited a median price (mid-point of all sales prices) of $704,800 and a median household income of $66,400.

This median price factors in all those super-luxury homes generally bought by rich overseas investors, as well as the regular homes more generally bought by locals. But if you are factoring in homes bought by the super-rich from overseas, then you need to factor their income into the average household income of the “buying public” – not just Vancouver residents.

Either that, or strip the super-luxury market from the equation entirely – bringing the median price down considerably. But don't compare apples with oranges.

3) Interest Rates at Historic Lows

On January 22, at the Urban Development Institute 2015 Luncheon, Neil Chrystal of Polygon Homes presented the below slide and made a crucial point.

quote:

He observed that because of the current historically low interest rates, the mortgage payments on a typical home in 2014 were only slightly higher than those made on a home in the late 80s and early 90s. Allowing for the increase in average annual income in that time, and it is now probably cheaper to pay a mortgage on a typical home than it was back then. Of course, Chrystal is in the business of getting people to buy homes, but his point is nevertheless valid.

Now that interest rates have just dropped even further, this is truer than ever. Of course, all home buyers must be careful to allow for future rate increases, but we are extremely unlikely to see the highs of the early 90s any time soon.

Overall, the message is that aspiring homeowners must not be alarmed by the headlines, and should find out for themselves what they are able to buy. There is a multitude of very affordable homes in the Greater Vancouver region for people to get onto that property ladder and start being on the right end of those price increases. The last thing they should do is be disheartened by unaffordability hype and continue to rent long-term, locking themselves out of the market permanently.

This train ain't stopping – so get on board.

Cultural Imperial posted:

http://www.rew.ca/news/editorial-don-t-believe-the-hype-why-vancouver-isn-t-that-unaffordable-1.1741028

eXXon posted:

I love that logic. First, rich foreign investors don't count, because they only make up a third of the relatively insignificant luxury market. But we should still count their incomes along with Canadians, because reasons? Oh also the luxury segment is insignificant but somehow heavily biases the median sale price because other reasons.

Cultural Imperial posted:

http://www.rew.ca/news/editorial-don-t-believe-the-hype-why-vancouver-isn-t-that-unaffordable-1.1741028

quote:

He observed that because of the current historically low interest rates, the mortgage payments on a typical home in 2014 were only slightly higher than those made on a home in the late 80s and early 90s. Allowing for the increase in average annual income in that time, and it is now probably cheaper to pay a mortgage on a typical home than it was back then. Of course, Chrystal is in the business of getting people to buy homes, but his point is nevertheless valid.

etalian posted:

lmao let's buy a home based on advice from someone with a literature degree, who really can explain why all the stats that point to a inflated market don't actually reflect reality:
https://www.linkedin.com/pub/joannah-connolly/24/640/237

Cultural Imperial posted:

lmao

etalian posted:

She doesn't seem to get how in a loan even a few "small" points can make a mortgage go from barely affordable to unaffordable.

For canada it's a even bigger issue given how it doesn't have 10+ year fixed loans like the US, so interest rate fluctuations can be a big deal.

etalian posted:

lmao

So basically Vancouver isn't unaffordable for regular people because:

1. All the high priced SFH are actually owned by rich people/overseas Chinese and should be removed from the sample set.

2. Thanks to ultra-low rates home ownership is actually cheaper now than in the past and there's no reason why rates would go up in the future.

3. Most people buying those 1+ million homes will be able to make a big downpayment since they already owned a previous property.


lmao let's buy a home based on advice from someone with a literature degree, who really can explain why all the stats that point to a inflated market don't actually reflect reality:
https://www.linkedin.com/pub/joannah-connolly/24/640/237

Cultural Imperial posted:

Cultural Imperial posted:

That and she's apparently never heard of inflation.

Cultural Imperial posted:

http://www.rew.ca/news/editorial-don-t-believe-the-hype-why-vancouver-isn-t-that-unaffordable-1.1741028

quote:

A soft landing in the housing sector continues to be the most likely
scenario, with residential investment expected to gradually decline over
the projection horizon. However, near-record-high house prices and
debt levels relative to income continue to leave households vulnerable
to adverse shocks. The precise magnitude of the impact of the fall in
oil prices on household income, spending and, ultimately, on existing
imbalances is highly uncertain. However, some further increase in the
debt-to-income ratio is likely. A disorderly unwinding of these imbalances,
should it materialize, could have sizable negative effects on
other parts of the economy and on inflation.

MickeyFinn posted:

#1 seems like a cry for new people to join a pyramid scheme for fear it will collapse.

Cultural Imperial posted:

From page 24 of the MPR.

Lexicon posted:

I like how they enumerate several property transitions as the 'norm' (only because these assholes want their cut of commission each time).

eXXon posted:

That paragraph slipped from 'soft landing' to 'disorderly unwinding of imbalances' really quickly. Oh and the latter sure is a great euphemism for what is likely to be a recession-provoking meltdown of the housing market, which happened in the US less than a decade ago and prompted a global financial crisis.

Cultural Imperial posted:

Joking aside I think the BoC is referring to Canada's housing market as a whole achieving a soft landing. Toronto, Vancouver and Calgary will end up as smoking holes in the ground.

Cultural Imperial posted:

Joking aside I think the BoC is referring to Canada's housing market as a whole achieving a soft landing. Toronto, Vancouver and Calgary will end up as smoking holes in the ground.

Furnaceface posted:

I dont see Toronto cratering quite like Vancouver/Calgary, but its still going to drop. The burbs surrounding Toronto and cottage country on the other hand are so hosed.

Dreylad posted:

I would love for housing prices to drop in Toronto but yeah I don't see Toronto being affected by any potential real estate crash, not because I believe in the magical power infallibility of real estate markets or anything, just that demand isn't going to drop off because so many people work in the city. But the surrounding area will probably get hit really hard, especially eastern GTA where the Oshawa GM plant is looking like it will close.