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In the wake of Vancouver Mayor Gregor Robertson’s letter to Premier Christy Clark last week suggesting the provincial government should tax real estate flippers and owners of luxury homes, and the province’s reply to Robertson that perhaps the mayor should (and I paraphrase) suck eggs, we here at The Sun wondered how the provincial government can:

(a) Dismiss Robertson’s suggestions out of hand if there was a lack of data;

(b) Admit there was a lack of data but then quote a study by the B.C. Real Estate Association suggesting offshore investors had a negligible effect on the housing market (because, you know, the real estate industry is completely unbiased on this issue), and;

(c) Sleep at night.

Since demands have grown louder that our government provide some sort of verifiable data, we put questions to the premier’s office, the Ministry of Housing and the Ministry of Finance. (We asked the same set of questions of the Canada Mortgage and Housing Corporation. More on that in a future column.) A spokesman for Housing Minister Rich Coleman replied the minister was unavailable for comment. The premier’s office replied, after four days, that it was deferring to the Ministry of Finance. Our questions to the finance ministry and its answers follow:

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The Lower Mainland has historically been an expensive market, primarily driven by economic activity, rising population due to in-migration, and a constrained geography.

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U.S. short sellers betting on Canadian housing crash: ‘An accident waiting to happen’

VANCOUVER — Large Wall Street investors who made billions when the U.S. housing market collapsed in 2008 are now betting real estate values in Vancouver and other Canadian cities will crash, financial insiders say.

The hedge fund investors, known as short sellers, are betting against what they believe is a housing bubble in Vancouver, Toronto, Calgary and other Canadian cities. They believe Canadians hold too much mortgage debt, and that Canadian banks, mortgage insurers and “subprime” private lenders will lose money on unpaid loans when property prices fall.

“The cross currents are beyond crazy in Vancouver — it’s a mix of money laundering, speculation, low interest rates,” said Marc Cohodes, once called Wall Street’s highest-profile short-seller by The New York Times. “A house is something you live in, but in Vancouver you guys are trading them like the penny stocks on Howe Street.”

He says Vancouver real estate has reached peak insanity, and any number of factors could trigger a collapse.

Local real estate professionals predicted the U.S. investors are likely to lose their shirts betting against Vancouver property, which they described as a special market thriving on international demand.

But one Canadian housing analyst who advises U.S. clients, including Cohodes, said major investors are currently “building positions” against Canadian housing targets. They are forecasting a raise in historically low U.S. interest rates this fall will spill financial stress into Canada.

“All of the big global macro funds that were involved in betting against the U.S. in 2007 and 2008 and 2009, they’ve all studied Canadian housing for a few years,” said the Canadian analyst, who asked not to be named because of client confidentiality. “I know a number of them are shorting Canadian housing. It looks like an accident waiting to happen.”

This is although housing markets in Vancouver and Toronto have continued to rocket higher since international short-sellers started circling in 2013.

Short sellers use complex financial arrangements to make rapid profits when publicly traded stocks fall in value. In this case, they are betting against businesses connected to property and household debt. They are also betting against the Canadian dollar, because they believe it will decline significantly in a housing bust.

Most of these traders are employed by secretive New York investment funds that shy away from publicity, partly because they want to disguise how they lay their bets. A few though, like Cohodes, take the opposite approach.

He has come out of semi-retirement on his chicken farm in Northern California to make targeted bets against “subprime” Canadian lenders, who make loan to borrowers rejected by traditional banks.

The Canadian housing analyst noted short-selling bets against big Canadian banks have doubled in New York markets in the past several months. And the risk of a sharp housing correction connected to Canadians’ high household debt has risen since December, the Bank of Canada recently reported.

While short sellers point to Vancouver as the most extreme housing bubble in Canada, the analyst noted that some investors believe a massive flow of investment from Mainland China makes the market impervious to corrections.

Others speculate that if China’s economy slows dramatically, Vancouver housing will bust. “Toronto sees some offshore money from China, but definitely Vancouver is in its own world,” the analyst said. “Some of the guys that have timed this bet think that when China blows up Vancouver will blow up too, but I’m not sure that will happen.”

However, one of the world’s most influential investors — Laurence D. Fink, head of the world’s largest asset fund, BlackRock Inc. — recently declared Vancouver property is not only as good as gold, but better. “The two greatest stores of wealth internationally today are contemporary art, and apartments in Manhattan, Vancouver and London,” he told a conference of investors in Singapore.

Jonathan Cooper of MacDonald Realty Vancouver says evidence is mounting the city is, in fact, a special market. “It’s an increasingly internationally-focused market with demand not just from Asia, but increasingly from Americans too,” Cooper said. He added he understands short sellers are betting against Vancouver, but he believes the speculators will lose.

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He says Vancouver real estate has reached peak insanity, and any number of factors could trigger a collapse.

Femtosecond posted:

Agh like what? Examples please? Every article I've ever read hand waves at this part, which is annoying because analysis of what could drive a collapse would be the most interesting part of the article. The lack of detail pushes these articles into fluff territory.

jm20 posted:

I want our housing market to crash too, it's not based on reality and is hurting the middle class.

Femtosecond posted:

It's weird that this article seems to try to frame Marc Cohodes as a Wall Street Hedge Fund titan, whereas in reality he only used to do that and he's now a chicken farmer that doesn't seem very involved in Wall Street at all.

jm20 posted:

I want our housing market to crash too, it's not based on reality and is hurting the middle class.

HookShot posted:

Well, I've decided that the market in Whistler is where I can buy a fixer-upper with a good deposit that I can afford for cheaper than I could rent.

So, basically what I'm saying is the market has until I've saved a deposit to crash, or I will be that last bear standing that buys in and triggers it all.

Kraftwerk posted:

So glad I finally landed a new better paying job. Handing in my notice was very satisfying.

HookShot posted:

Well, I've decided that the market in Whistler is where I can buy a fixer-upper with a good deposit that I can afford for cheaper than I could rent.

So, basically what I'm saying is the market has until I've saved a deposit to crash, or I will be that last bear standing that buys in and triggers it all.

Lexicon posted:

Skiing aside, how is it to live full time in Whistler?

I can't help but be put off by the idea given the legions of Jagerbomb-fuelled bros roaming around whenever I'm up there, but I imagine your perspective and experience is quite different.

Femtosecond posted:

Wouldn't Squamish be almost as good but cheaper? I don't spend enough time in Squamish to know why it's worse or better than Whistler. I only go there occasionally to hike the Chief.

Cultural Imperial posted:

English people, unironically, should be banned from Canada. gently caress em

Human loving garbage

PT6A posted:

Banned from leaving England, more like.

Femtosecond posted:

100 days of skiing a year! Nice. Makes sense. It's the same reason I live downtown and not in Surrey. Everything I do is downtown and so it's not worth the commute to be anywhere else.

I'm a bit curious about Squamish just because its location between Vancouver and Whistler is kind of compelling. I'd love to see it grow to be a pretty neat community. It's on my short list of places to look into if I ever had a family and needed to move out of the City. I knew an architect that was working on a community plan for Squamish to help improve their city and make it more dense and walkable, which sounded great to me, but I don't know if anything ever came of it.

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Several large residential projects on Squamish’s development horizon promise to increase the town’s appeal for residents who make the 45-minute commute to Vancouver and entrepreneurs who want to start businesses in the waterfront community.

The District of Squamish is nearing the end of a rezoning process that would allow two packages of district-owned land to house about 1,100 residential units.

District council unanimously supports rezoning the 100-acre oceanfront land and selling it to a group made up of local developer Bethel Lands Corp. and Texas-based Matthews Southwest.

Adjoining land that is on the same peninsula as the oceanfront property, about two kilometres south of downtown Squamish, could house an additional 2,000 units, District of Squamish Mayor Patricia Heintzman told Business in Vancouver.

Reverse Centaur posted:

They're about to add multi thousands of residential units to Squamish that will totally change its feel, for the better if you're a yuppie, for the worse if you want to live in a cheap Surrey By The Mountain. The Sea to Sky improvements before the Olympics turned into a more viable suburb than Abbotsford. Unfortunately nothing will ever be done about Lions Gate bridge so they will just make all of us on the north shore even more suicidal.

I always thought if I was gonna move way out I'd rather live there than the east Fraser Valley. Amazing potential.

Relevant article: https://www.biv.com/article/2015/6/residential-development-boom-looms-squamish/

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http://business.financialpost.com/news/property-post/economists-question-foreign-investment-concerns-in-canadian-housing?__lsa=4f8c-d49a

Economists question foreign investment concerns in Canadian housing

CIBC deputy economist Benjamin Tal is lashing out at people who compare the Canadian housing market to its American counterpart and is downplaying fears of foreign investment.

In a report co-authored with senior economist Andrew Grantham, the say they want no part of the cross-border comparison.

“We purposely did not compare the current situation in Canada to the U.S. market in 2006. That would be setting the bar too low. Comparing Canada to the pre-crisis U.S. market is not only wrong but also irresponsible. And looking at Canada in absolute terms reveals a multidimensional market and differing directions at the same time,” they write, adding it is still possible for the domestic housing market to overshoot.

“One reason why it’s unwise to compare the Canadian housing market of today to the U.S. market before it crashed is that, unlike the situation stateside, there isn’t anywhere near the same degree of overbuilding in Canada relative to household formation. In fact, the ratio of housing starts to household formation is not far from its long-run average of 1.03.”

The economist also took dead aim at the issue of foreign investors in the housing market which has so spooked Canadians that even the mayor of Vancouver is now calling for a special tax aimed at speculators.

“The issue of foreign investors is largely misunderstood. The share of those investors in total activity is much smaller than perceived. The more significant portion is coming from a situation in which the money is coming from abroad but the family lives in Canada. Is that foreign or domestic investment?” Tal and Grantham write.

Canada Mortgage and Housing Corp. has only studied the issue from the condominium perspective but found only 2.4 per cent of buyers in Toronto were foreign.

The report also notes a long-held standard in the development community which usually requires a down payment of least 30 per cent from foreign buyers because of the difficulty in seeking legal recourse should they walk away from an investment.

“This kind of activity requires a much larger down payment and the fact that the family lives in the house suggests a much higher level of commitment than a typical investor. So in terms of risk, this segment of the market is relatively safe,” write Tal and Grantham about foreign ownership.

Nevertheless, the economists can see some cracks forming in the condominium market, namely competition from so-called purpose built apartment buildings directly aimed at renters. Condominiums have turned out to be a bit of hybrid, some bought by end users but a significant portion purchased by investors whose goal is to rent the property out to cover their costs.

“Condos have also been acting as an important counterbalance in the rental market in Canada’s major cities. In recent years, the proportion of condos made available to rent has steadily increased. But rather than a disturbing trend suggesting that private investors are being overly optimistic regarding the safety of housing, it helped offset a very subdued trend in purpose-built apartment buildings,” the report says.

The problem is demand for rental units is dropping at a time when rental construction is rising. They say the annual increase in demand for rental units likely peaked in 2012 and is now slowly moderating and expects rents to stay flat in the coming year.

“That moderation in rent inflation and the eventual increase in borrowing cost is probably the most significant challenge that will face the condo market,” the economists write.

Overall, they say the real test for the housing market will come if interest rates start to rise. “Higher interest rates probably will not lead to a wave of defaults as feared by many, but could act as a major drag on overall economic activity via the impact on consumer spending (as more income is devoted to servicing debt) and the potentially significant impact on job creation in real estate-related sectors,” say Tal and Grantham.

sitchensis posted:

Found this condo layout from a new build in Calgary. Jesus Christ who makes these things?

And who buys them?!

Baronjutter posted:

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Shirley and Todd Ankenmann loved everything about the home they purchased in Bloor West Village in 2012. So much so, they paid $156,000 over the asking price.

“We didn’t know until they showed up with the pole. We literally had no clue,” Todd said.

Ikantski posted:

Of course his name would be Todd and of course they paid 156k over asking.

The Chase: a couple blows past their budget to land a Leslieville fixer-upper posted:

After renting a condo in the West Don Lands for six months, Timothy and Megan decided they were ready to commit—to each other (they’re newly engaged) and to a home. They wanted a sizable yard (for Timothy, who loves gardening) and a second floor with at least two bedrooms, for a future child or two. Starting with a budget of $500,000, they focused their search in Corktown and South Riverdale, figuring they’d get more house for their money east of Yonge than west. Several bidding wars later, they realized they’d need to boost their budget to land a home anywhere near their desired location.

The Buy
$720,000, sold for $705,000.

This three-bedroom row house had been sitting on the market for months, and it was clear why: it felt dated and reeked of cigarettes. But the ceilings were high and there was plenty of space, including a basement rental suite. For around $50,000 in renovations, they realized, they could have everything they wanted, plus a tenant. The seller signed back their first two offers before accepting their third, at just under asking. In April, they moved into the basement—the only habitable part of the house until the construction dust settles.

Ikantski posted:

Of course his name would be Todd and of course they paid 156k over asking.