MickeyFinn posted:

AVeryLargeRadish posted:

It's pretty hilarious, if you sell and get 1.1m after taxes and fees and such and you invest that a yearly return of 6% gets you 66k a year. There are plenty of places where you can live quite comfortably off of that, or you could get a job too and have two incomes and reinvest some of that money and retire at 50 and live the good life until your vices kill you.

quote:

The rising cost of homes in our region is well-documented. Metro Vancouver home prices have increased nearly 80 per cent since 2005. Detached home prices have increased over 100 per cent.

We worry about how our children can afford a home and how the most vulnerable among us can find basic shelter. These concerns have led to public debate about possible solutions.

One suggestion is for government to introduce new taxes. Some believe government should tax non-Canadian investors who buy properties. Mayor Gregor Robertson believes there should be a luxury housing tax on the sale of the most expensive homes in Vancouver.

We believe more taxes won’t help. Taxes bring unintended consequences. There’s little to no evidence that a luxury or foreign buyer tax would make homes more affordable.

History tells us that taxes like this fail to have the desired impact and succeed in permanently adding to government coffers.

In 1987, the provincial government implemented what was advertised as a wealth tax. It was supposed to apply to the sale of the most expensive five per cent of homes sold in B.C. It’s been 28 years since that tax was introduced and the thresholds have never been adjusted for inflation.

Today, that tax is known as the Property Transfer Tax. It’s applied to 95 per cent of all residential property sales in the province. This tax makes housing less affordable.

The home is where many people’s financial net worth resides. It’s one of the last major assets residents can sell and not pay a tax on the revenue. A little-mentioned fact is that we already have tax disincentives for foreign owners. If a foreign homeowner wants to sell a property in Canada, they are unable to receive a capital gains exemption.

The picture of affordability and home ownership is changing in Metro Vancouver. Our region’s affordability challenges are complicated and, unfortunately, there isn’t a single action that can solve them. Economists will tell you offshore investment is a factor in today’s market. To what extent, no one has the data to know.

What we do know is that local conditions have a much more significant impact. We live in one of the most beautiful, progressive and prosperous areas of the world. There are more people who want to live here than there are homes available. This causes prices to rise.

The natural solution would be to create more supply, but we’re constrained by mountains to the north, an ocean to the west, and a border to the south.

Despite the headlines, the majority of home sales in Metro Vancouver are not $1-million and beyond. Based on our Multiple Listing Service statistics, nearly 70 per cent of all sales in the region last year were below $800,000. The price of condominiums ranges between $200,000 and $600,000 depending on size and location. Townhomes range between $300,000 and $800,000 in the region.

Detached homes in the city of Vancouver are at the high-end of our market. Recent activity has pushed homes on the Vancouver Westside above $2.5 million.

It’s a different story in neighbouring communities. The benchmark price of a detached home in Maple Ridge is $499,100; in Ladner the benchmark price is $713,200; in Coquitlam the benchmark price is $845,400.

Affordability challenges exist but there are also more options and aspects to the story than is typically discussed in the media. There’s certainly more than the mayor is putting forward.

Darcy McLeod is president of the Real Estate Board of Greater Vancouver.

quote:

There is not an issue facing Metro Vancouver more multifaceted and complex than the cost of housing, a fact vividly illustrated by the current debate enveloping the topic here.

Recently, the mayor of Vancouver appealed to the province to introduce tax measures aimed at cooling off a red-hot real estate market, which has become increasingly out of reach for many prospective first-time home buyers.

Of course, this situation has been brewing for years. So why the overture to Premier Christy Clark now?

Likely because it has dawned on Mayor Gregor Robertson that the cost of housing is becoming a damaging and divisive political issue. Anger over the perception that rich foreigners are buying up the city and driving prices skyward is palpable. This angst has been simmering for some time, but the mayor’s office has now realized the mood is getting hostile. Some have suggested there is a racist undertone to some of the discussion. I think it’s more accurate to say there is resentment being directed at a specific cultural group – in this case, wealthy Chinese – believed to be creating the affordability problem.

This is not good on any level.

There has been frustration directed at the mayor, and council, over the fact they have been reluctant to do anything to try to remedy the situation. Among those most upset are young, urban professionals who can’t afford to live in the city in which they work. These are Mr. Robertson’s people; they form a key demographic of his Vision Vancouver party’s network of supporters. (It also has not helped that the mayor has been characterized as a friend of the development community.)

Finally spurred to action by an anguish that is now tangible, Mr. Robertson sent his appeal to Ms. Clark for tax measures that would punish speculators and foreign investors who are buying up luxury property in which they have no intention of living.

It took all of one day for the Premier to dismiss the mayor’s overture. In doing so, she trotted out a questionable analysis done by the finance department that allegedly showed how damaging these types of measures would be to the value of homes in the region. (This proposition is ridiculous. Specific tax measures on foreign investors buying luxury properties as well as some type of surcharge on property speculators would have little deleterious impact on the equity of a person’s home in Vancouver, trust me).

Ms. Clark also said that the foreign investors account for only 5 per cent of purchasers in the region and, consequently, could not be blamed for creating the affordability problem that currently exists.

In the same way that the cost of housing in his city represents a serious political problem for Mr. Robertson, any recommendations to address the issue that involve messing with free-market principles are a problem for the leader of the province’s purported free-enterprise party. Real estate is a major economic driver in the province. Many of the B.C. Liberal Party’s biggest financial supporters would be people and organizations that would resist any measures to curb real estate investment. Ms. Clark understands this instinctively.

Having said that, this is not an issue that is going away any time soon. While Ms. Clark may not want to tinker with free-market principles, she should at least be backing the mayor’s call to give municipalities more powers to track who, precisely, is driving the insanity in the housing market that we are witnessing. If it’s not Asian buyers, then our political leaders should be trying to dispel that myth as quickly as they can, if for no other reason than to let some air out of the growing antipathy being directed at this community.

That said, I remain skeptical of the notion foreign buyers have little to do with what we are seeing today. For more than a decade now, Vancouver has attracted tens of thousands of rich immigrants under various federal programs tied to wealth levels, most of whom have been Chinese. As Ian Young of the South China Morning Post has written, housing unaffordability in the city is up 100 per cent since 2005. Is the massive influx of wealthy Asian immigrant investors and the paralleled rise in the value of real estate just a coincidence?

There is much we need to learn about what is going on in the Metro Vancouver housing market and the sooner we get the facts the better. Meantime, this is a political issue that will continue to fester and possibly get much, much worse.

Decoy Badger posted:

If we assume that housing price increase is mostly driven by cheap debt, how much would the increase be if the BoC goes full-ZIRP? A basic mortgage calculation shows about a 30% increase in house price for the same mortgage payment at 0% as at 2.2%, but is this a reasonable correlation to make? Would that be the limit of credit-fueled housing speculation?

Denmark (with effectively 0% mortgages) has reached their pre-2007 levels (article), but the article claims that Denmark also experienced wage growth as well to compensate for it.

quote:

Let’s acknowledge the obvious: Canada’s May employment report was very good. But one month does not make a trend – especially when we’re talking about Statistics Canada’s Labour Force Survey. When we look at the past six months – which, besides being a round-ish number, also captures the bulk of the oil price shock – we see a labour market that is moving at a snail’s pace, but at least in an encouraging direction.

Statscan’s May jobs report was, in many respects, eye-popping: 58,900 net new jobs in the month. Full-time jobs up 31,000. Private-sector jobs up 57,000.

If this is how we fight an oil shock, bring it on. Heck, even Alberta – oil-shock-central – added 20,000 full-time jobs in the month.

But we’ve said it before in this space, and it bears repeating any time Statscan releases an exceptional jobs report like this one: The Labour Force Survey contains a large margin of error. So large that perhaps we should simply call it, “Grain of Salt.”

Let’s review. The Labour Force Survey is, indeed, a survey of households – Statscan calls people up and asks them questions about their employment status. And like any survey, it has a margin of error. The standard error on the May employment figure is 28,700. What that means, statistically speaking, is that there is a 68-per-cent chance the actual job change for the month falls within one standard deviation in either direction. So, there are a little more than two-in-three chances that the true job growth for May was between 30,200 and 87,600 – but there’s also a one-in-three chance that it was some other number outside of that range. There’s a 90-per-cent probability that the actual number is within 1.6 standard errors of the reported 58,900 – so, somewhere between a gain of 13,000 jobs and 104,800 jobs.

The good news is that this almost certainly means Canada produced jobs in May, and likely a decent number of them. But the other thing to note about the LFS is how prone it has been to mood swings in recent months. Since March, we’ve rollercoastered from a jump of 29,000 to a slump of 20,000 to a spike of 59,000. And in the details of the reports – things like full- versus part-time jobs, public- versus private-sector hiring, self-employment – the numbers have been similarly volatile. Eyeballing the numbers from month to month, we have to wonder how big of a role those margins of error have been playing from one survey to the next. The monthly snapshots look mighty blurry.

More helpful might be to take a bigger swath of data – say, over the past six months. Not only is that a pretty reasonable time frame over which to expect discernible trends to emerge, but it also takes us back to December – approximately when the oil shock really hit Canada’s economic fan. Those six months might give us a better sense of how the labour market has weathered the storm.

Over the past six months, the LFS shows Canadian employment up a total of 91,000 – or, on average, about 15,000 a month. While it’s certainly nice that this number is positive, given the sense of dread surrounding the oil shock, let’s keep it in perspective: The working-age population grew by an average of 23,000 a month. The employment rate – the number of people employed as a percentage of the working-age population – sits at 61.4 per cent, precisely where it was six months ago. That’s barely above the Great Recession’s lows, and about two percentage points below pre-recession levels.

Even with May’s big gain, we’re merely treading water here. The country continues to have excess labour capacity, and the meagre pace of job creation is doing nothing to reduce that.

But there are a few encouraging signs.

All the country’s net job production over those six months has been in full-time positions – 107,000 in total, or nearly 18,000 a month (part-time employment has declined by 16,000 over the period). The vast majority of job creation – 73,000 jobs – has come from the private sector, evidence that business owners were expanding and hiring even amid considerable economic uncertainty.

And the labour market in Alberta has held up remarkably well. The province has actually added nearly 16,000 jobs in the past six months, including small gains in both full- and part-time employment. Job cuts do tend to lag economic shocks a little, so Alberta is far from out of the woods, but so far we haven’t seen the kind of employment decimation that many people have been expecting.

So while we’re not exactly on a national hiring spree, the labour market isn’t in dire straits, either. Indeed, given the circumstances, its health has been holding up quite well – and the trend in full-time and private-sector hiring suggests that job quality is looking up.

That may not be as bright a picture as a 59,000-job May report paints. But all things considered, we’ll take it.

Decoy Badger posted:

If we assume that housing price increase is mostly driven by cheap debt, how much would the increase be if the BoC goes full-ZIRP? A basic mortgage calculation shows about a 30% increase in house price for the same mortgage payment at 0% as at 2.2%, but is this a reasonable correlation to make? Would that be the limit of credit-fueled housing speculation?

Denmark (with effectively 0% mortgages) has reached their pre-2007 levels (article), but the article claims that Denmark also experienced wage growth as well to compensate for it.

quote:

The most expensive housing market in North America is not where you’d think. It’s not New York City or Orange County, California, but Vancouver, British Columbia. Now, Vancouver is a beautiful city—a thriving deep-water port, a popular site for TV and movie shoots. By all accounts, it is a wonderful place to live. But nothing about its economy explains why—in a city where the median income is only around seventy grand—single-family houses now sell for close to a million dollars apiece and ordinary condos go for five or six hundred thousand dollars. “If you look at per-capita incomes, we look like Reno or Nashville,” Andy Yan, an urban planner at the Vancouver-based firm Bing Thom Architects, told me. “But our housing prices easily compete with San Francisco’s.”

etalian posted:

it has unique things like sky high housing prices without sky high jobs and salaries

Baronjutter posted:

It's not about incomes it's about the lifestyle and natural beauty, things no other cities on earth have. Other people just don't *get* Vancouver man. People are just more laid back in Vancouver, you don't come here for some high income "career" job you come here to just chill while you go into crippling debt trying to get rich off housing speculation.

Femtosecond posted:

Kind of funny I've heard both "the housing bubble is going to burst" and "we're due for the big 9.0 earthquake" my entire life and neither has come true. I remember having earthquake preparedness assemblies in elementary school. I wonder which will happen first. Or maybe neither will.

Femtosecond posted:

Seeing how easily the city shook off the slowdown in 2008 associated with the US bubble burst, I think the only thing that could possibly create a lasting drop in prices in Vancouver would be if The Big One™ finally hits, causing huge amounts of property damage and causing liquefaction damage in the entirety of Richmond.

Though the West Side and Downtown is on bedrock so maybe that'll boost demand in those areas further lol.

Cultural Imperial posted:

Vancouver's market was tanking like gently caress until rates dropped to 1% and GREATEST FIN MIN FLAHERTY EVER PBUH made zero down legal , 50 year amortization and an assortment of other bullshit.

etalian posted:

Looks like the whole bubble started around 2001 for some reason:

etalian posted:

From the index data looks like Vancouver had on a small amount price appreciation during the 90s

Femtosecond posted:

Kind of funny I've heard both "the housing bubble is going to burst" and "we're due for the big 9.0 earthquake" my entire life and neither has come true. I remember having earthquake preparedness assemblies in elementary school. I wonder which will happen first. Or maybe neither will.

ocrumsprug posted:

That was likely the exodus of people from Hong Kong before the handover to China.

Mantle posted:

I'm not convinced. Then why don't you see the increase happen all the way to 97? And why didn't the increase keep going with the wave of Taiwanese investor immigration in the late 90s and early 2000s?

ocrumsprug posted:

Likely related to the CMHC and lending standards being much tighter then.

In 2000 you could only get government insurance on a <250K purchase and 10% down was only for first time buyers. Needing 25% and real income that the banks vetted first since the government didn't assume the risk, and 6% interest doesn't really encourage a ballooning housing market.

quote:

The NDP has also promised to build 10,000 "affordable and market rental housing units" across the country if it's elected.

quote:

Building new housing does not push down the price of nearby properties, according to research that runs counter to the widely held belief that the best way to make housing more affordable is to increase supply.

A pilot study by the London School of Economics looked at eight developments of nearly 300 homes each, built in the Midlands and the south of England by the housebuilder Barratt in the past five years.

The sites were all in suburbs or villages. Most faced substantial opposition from local residents before they were constructed.

All of the schemes were large in proportion to the number of homes in the local area. Yet in none of the cases did house prices fall once construction was completed, although in some cases prices went down slightly during construction, the LSE researchers found.

In some cases prices even went up in the surrounding area after the scheme was built.

“Developments of the size and scale studied, even in areas where originally objections were significant, can lead to more rapid rises in local house prices,” the report said.
The findings reflect those of Kate Barker, a former Bank of England Monetary Policy Committee member, who produced an influential report on house prices in 2004. Ms Barker found that housing supply was “not particularly responsive to changes in house prices”.

Many economists and housing industry analysts argue Britain needs to build more homes to moderate future house price rises. Most agree that the country needs between 200,000 and 300,000 new homes a year, but in 2013-14 Britain built only 141,000.

The research was commissioned by Barratt and the National House Building Council but lead researcher Christine Whitehead said they had not interfered with the report’s findings, which were independent.

Philip Barnes, Barratt’s group land and planning director, said local residents’ opposition to new houses was often based on fears that it would drive down prices. The research “fits with our general experience that opposition to new homes often rapidly recedes as a development is built”, he said.

“This is a small sample but the developments in this study are typical of much of the housing being built in many towns and does suggest that this additional housing can be absorbed without an adverse impact on an individual local housing market.”

Neil Smith, head of research and innovation at the NHBC, said local opposition was “one of the main obstacles” to getting more homes built.

“It is understandable that homeowners will be anxious to protect their investment in their homes, and concerns about the negative effects of new developments have compounded the issue,” he said.

“While there are clearly a number of factors affecting property values in specific areas, this research challenges the assumption that newbuild developments will adversely affect local house prices.”

quote:

NDP housing critic David Eby agrees caution is warranted.

“People borrow against their homes and leave their homes to their children and grandchildren,” Eby said Wednesday.

But Eby also called Fink’s promotion of Vancouver real estate as a global investment option, combined with China’s loosened offshore-investment restrictions, a “most troubling” combination.

“We need to take that really seriously,” he said, calling on the Clark government to study the impact of speculation while investing in affordable housing.

Eby also cautioned against inciting a racist backlash against Asian homebuyers.

“Every time we talk about this we need to be aware of the history of racism against Chinese people, especially when it comes to housing,” he said. “We have to be certain we don’t repeat that.”

Cultural Imperial posted:

In case anyone is wondering, David Eby, NDP shithead is also a housing market pumper.

http://www.theprovince.com/business/Smyth+Clark+government+leery+taxing+real+estate+speculation/11106591/story.html


lol shut the gently caress up

Cultural Imperial posted:

http://www.ft.com/intl/cms/s/0/f5b7cb3a-0b91-11e5-994d-00144feabdc0.html


Eat a bag of dicks everyone who thinks supply will make housing affordable.

Lexicon posted:

Bullshit. So the opposite of creating supply - reducing existing supply - should create affordable housing then?

ocrumsprug posted:

If you look at construction numbers versus household formation numbers for Metro Vancouver you can see that supply has greatly (like thousands of extra units annually) exceeded demand for quite some time.

Speculation suspends the cardinal rules of capitalism it seems. I don't know what to believe anymore.

Lexicon posted:

Plentiful supply is necessary but not sufficient for affordable housing.

ocrumsprug posted:

You could easily make the argument that supply has nothing what-so-ever to do with affordability, for owners or rentals..

All the supply being built is luxury, or at least is being sold as such.

E: There is an Incredibles villain quote here, something about when everything is luxury...