The Vacant Condos in Vancouver

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Suddenly lurking in the shadow inventory.

The magnificent housing bubble in Canada has been stumbling recently, propped up largely by the two largest cities, Toronto and Vancouver.

Home prices declined 0.1% in January from a month earlier, the second month in a row of declines, according to the Teranet-National Bank National Composite House Price Index. Even Toronto booked a decline of 0.2%. The oil-dependent regions got hit harder. Prices rose only in four of the 11 metro areas in the index. On a 12-month basis, the index was still up only 5.9%, the lowest 12-month gain in three months.

But Vancouver has none of this slow-down rigmarole. Its housing market is booming, with prices up 12.5% year-over-year, beating Toronto’s 12-month gain of 8.5%. Due to their size, they account for well over half of the index.

In Vancouver, prices have now soared 40% from the peak of the bubble just before the Financial Crisis. This chart by NBF Economics and Strategy of the Teranet-National Bank House Price Index shows just how crazy prices have been in Vancouver:


But the price increases might have been even crazier. Depending on methodologies used, “results may vary,” as they say. The Real Estate Board of Greater Vancouver reported that home sales in February jumped 36% from a year ago and were 56% above the 10-year average.

“We’re in a competitive, fast-moving market cycle that favors home sellers,” gushed REBGV president Darcy McLeod. “Sustained home buyer competition is keeping upward pressure on home prices across the region.”

So their benchmark price for all types of homes in Metro Vancouver soared 22.2% year-over-year to C$795,500.

In some of the more expensive neighborhoods, price increases were even higher. For instance, the benchmark price for all types of homes in Vancouver West and West Vancouver soared respectively 24% to C$1.1 million and 26.1% to C$2.25 million. The benchmark single-family house prices in both neighborhoods reached C$3.0 million and C$2.7 million respectively.

So those prices might not be an issue for wealthy foreign buyers who pick and choose among the trophy cities around the globe. They’re not earning their income in artfully beaten-down Canadian dollars. But for local buyers, prices are an issue. Like other trophy cities, Vancouver is struggling with an affordability crisis.

To get a grip on the problem, the city commissioned a report last year, and the results were just presented to the City Council. The idea was to figure out how many homes were vacant, presumably owned by absentee investors. These vacant homes have been a hot topic.

“Home buyers and prospective renters have fretted for years that investors were snapping up homes and leaving them empty, cutting supply and boosting prices in the process,” as the Financial Post put it.

The report analyzed residential electricity consumption via a decade’s worth of anonymized data provided by BC Hydro, the electric utility. A home was considered non-occupied for the year if electricity use, which normally varies dramatically during the day, showed little variability in each of the “non-heating months August, September, and the following June and July.

And one thing stood out: 12.5% of the condos were deemed non-occupied.

They accounted for most of the city’s 10,800 empty homes. But it might have been much higher: The methodology identified condos used as summer homes as occupied for the entire year, even if they were vacant the rest of the year.

By contrast, only about 1% of single-family homes, duplexes, and row houses were vacant. This brought the overall vacancy rate down to 4.8%.

This massive number of empty condos is now causing a lot of political hand-wringing.

“Given the significant housing affordability challenges in Vancouver and the intense pressure on renters and rental stock, the city needs to do what we can on this issue,” explained Matthew Bourke, the city’s lead on the empty homes report.

City councilors are urging the provincial government to do something about it. Academics have been bandying about a punitive tax on the owners of empty homes. Premier Christy Clark dodged the request for such tax measures this way: “I think we are all concerned about the vacancy rate in Vancouver in particular because we have to be concerned about it hollowing out neighborhoods.”

It is ironic that the solution to the affordability crisis should be a tax on vacant homes, when these soaring prices are a direct result of the giant asset bubbles that central banks, including the Bank of Canada, have purposefully blown and, in their infinite wisdom, continue to blow with all their might.

Yet there is a real solution. It will kick in on its own. And it won’t be pleasant. These vacant condos are investments. Prices have soared for years. Owners don’t have to use their condos to make the math work; they can just rejoice in the feeling of getting richer as prices rocket toward the blue sky. But when prices turn around and head south, as they do when housing bubbles deflate, these thousands of vacant condos are suddenly lurking in the shadow inventory.

And they’ll come out of the shadow and hit the market as owners try to salvage their gains or cut their losses. And just then, liquidity evaporates, as it always does during housing busts. Owners become even more desperate to dump their units. This sort of selling acts as the great accelerator and makes condo prices so notoriously volatile on the way down. Banks have learned that long ago, but now they can’t remember.

Of course, this cannot happen in Vancouver, or more broadly in Canada, because the city and the country are immune to housing busts, given the healthy fundamentals that have been driving the market higher – that’s what market gurus always say, until they’re the last ones left still saying it.

Canadian banks are heavily exposed. Here’s Christine Hughes, Chief Investment Strategist at OtterWood Capital in Canada in a video clip, explaining why. Read…  Canada’s White-Hot Housing Market Gets “Jingle Mail”

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  62 comments for “The Vacant Condos in Vancouver

  1. Spencer
    March 10, 2016 at 9:59 pm

    …”“We’re in a competitive, fast-moving market cycle that favors home sellers,”…

    …”These vacant homes have been a hot topic.”…

    …and the result is…”There is a role for assignments, but nobody is asking where the money came from. We are creating vehicles for money laundering.”…

    Everyone has a role to play, no?

  2. Ptb
    March 10, 2016 at 10:34 pm

    Vacant? Does it matter that much? It’s the NPLs that crater parties. If they’re bought with cash, there’s not a big problem.

    • Chicken
      March 10, 2016 at 11:15 pm

      Yeah, that too. Cash deal isn’t a bank liability but the buyers are trusting government doesn’t jack up their property taxes, assuming there are property taxes.

      And by government sanctioning money laundering foreign buying this keeps property prices thus property tax receipts artificially high so thanks government for giving me the opportunity to sell and move to Florida, enjoy your absentee slum lord!

      Another job well done, hope it works out for you!

    • Petunia
      March 11, 2016 at 9:01 am

      The empty condos are a problem because they cause local business owners to make decisions based on increase real estate sales and the traffic isn’t there to support those decisions.

      In downtown Miami, many restaurants and other businesses were attracted to the area based on these phantom owners and the traffic never materialized. After 6 pm the area is completely dead, even during lunch it is very quiet. Those businesses are closing, losing a lot of money, and may never reopen anywhere. They are still building multi-use properties that will remain mostly empty too.

      • Mary
        March 11, 2016 at 6:40 pm

        Same is true of Vancouver. New high rise residential buildings with only a few windows lit at night, surrounded by empty public spaces and ghostly commercial districts. Boom bust cycles aren’t harmless. They eventually drive off the folks capable of building great urban communities.

    • March 11, 2016 at 10:34 am

      Exactly. Let us welcome the cash back. People whined when the money was leaving for China, now they’re whining when the money is returning. They whined when the Dow was at 11,000, now they’re whining when its 17,000. Let us find out which one of you whiners has done something other than whine and bitch about what these politicians are doing or letting others do. Tell us about it. What office did you run for and when was it? What’s that? I have to go first. Okay, whiner. I ran for a US Senate seat against Senator Richard Shelby (Alabama). I did so on my own money. I spent six months working for Bill Clinton. I did so on my own money. Okay, we’re all excited about what you have done for the world. Come on, we all know you have don’t great things for your country, so don’t be shy.

      • Mary
        March 11, 2016 at 6:29 pm

        Excellent point.

        Financial news websites, no matter how intelligent, tend to attract commenters whose notion of preparing for the future involves stockpiling canned goods and ammo. Grouchy finger-pointing equaled by fatalistic passivity always on display.

  3. Chicken
    March 10, 2016 at 11:08 pm

    Okay, 90% of unoccupied are condos, this stands to reason for security purposes and typical style of Chinese investors.. But, the unoccupied rates aren’t terribly large, not as if 90% are unoccupied.

    I guess I don’t get the problem? Yeah Bay Street is no doubt a money laundering machine and personally Canada’s economy is just volatile and dangerous due to Bay Street manipulation. You wouldn’t find me there except to view Niagara Falls from the good side.

    Assuming the US doesn’t do well, neither will Canada IMO, and watching Canada tells me US isn’t doing all that well. Ditto for Mexico, except with China hitting the skids the impact on Canada is direct due to commodities, which Canada has turned their back on.

    I think the US FED has pulled off a great transfer of wealth from the US public to their future employers.

  4. memento mori
    March 11, 2016 at 1:02 am

    I would question your statement about the Canadian banks exposure to real estate. Do you have any data to back it up?
    Almost all mortgages with less than 20% down are insured by CHMC in Canada (equivalent of freddie mae) .
    Canadain banks dont keep those mortgages in their books, the Canadian taxpayer does through CHMC.
    Personal anecdote, last year I had a discussion with a TD Bank mortgage adviser and guess what, my interest rate was way higher If I took a mortgage with 50% down payment than a mortgage with 5% down payment that required CHMC insurance instead. The bank was not really interested in giving me a mortgage with 50% down where I had real skin in the game, but rather kept pushing vigorously for a 5% down where I was required to take mortgage insurance.
    My guess is that CHMC will lose billions when this bubble burst , then the cCnadian taxpayer will end up footing the final bill by bailing out CHMC.
    I don’t see how Canadians banks are exposed other than consumer loans. My guess is the CAD will go to 50 cents once CHMC is bailed out, the banks will be fine, as always.

    • March 11, 2016 at 1:13 am

      Watch the video that in the linked article. The statement about the Canadian banks is a lead-in to the video, which is all about housing and the banks in Canada.

      • memento mori
        March 11, 2016 at 1:21 pm

        Yes, I did but it is misleading. On average, 60% of the mortgages are insured by CHMC, which means banks have close to zero risk there as CHMC will make them whole.
        The other 40% which are uninsured have a LTV of 55% on average.
        I see more risk on lines of credit and equity loans than mortgages.

  5. MC
    March 11, 2016 at 3:38 am

    I have a question: why Vancouver?
    I can understand the housing frenzies in Geneva, San Francisco, New York, Copenhagen etc but why Vancouver? Before it started making headlines in 2012-2013 it never struck me as a white hot global property market.
    Are there some city regulations which make it appealing to domestic/Chinese speculators? Or are Canadian/British Columbian financial regulations conductive to such a white hot housing market? Or perhaps is it simply a case of snowball in motion?
    Inquisitive minds want to know!

    • Nicko
      March 11, 2016 at 6:17 am

      Vancouver has a huge Asian population going back decades, the climate is temperate, people embrace multi-culturalism, and they have great ethnic restaurants, oh, and Vancouver is routinely voted the best city to live in. Plus, Vancouver is still cheaper than other places due to currency fluxuations.

      • Mark
        March 11, 2016 at 8:15 am

        Vancouver suicide capital of the world, in part thanks to the weather you prize on. Rain, rain, rain……..rain.

        Wolf in Toronto downtown and close proximity (10km) is terrible shortage of homes priced between 1.2-1.5 mil. Anything that comes on the market ends in biding war and usually they go for 100k more of asking price.
        Maybe high end is 0.2% in decline but houses 1.2 mil in good area are in general considered CHEAP and they end up in extensive renovations bringing final price closer to 1.7-2 mil.

        • Casey Baldwin
          March 11, 2016 at 9:40 am

          Would suggest that ‘Mark’ and other comments missing principal reason for this explosion for average properties suddenly having multi-million dollar values. It is occurring in ‘stable advanced nations’ amidst global trade chaos. This ‘flight to safety’ by the world’s wealthy, using real estate as protection from another possible recession, makes sense. For example however, empty condos and home prices beyond average middle-class families, are driving them to apt/home rentals that are also soaring. The AVERAGE 2BR apartment in Vancouver is now $4,600 a month. But the flood of foreign home investment, particularly South-East Asian, is not infinite, particularly with Chinese growth slowing. So the real estate safety balloon, may soon start to leak.

        • nhz
          March 11, 2016 at 10:11 am

          regarding the ‘flight to safety’ for the rich:

          definitely a factor, you can see the same in cities like London (UK) where most of the big price gains come from foreign investors parking their usually ill-gotten money in London RE because it is supposed to be safe (from their own government/tax office/courts etc.). And also people still assume that ‘real estate never goes down’. Despite the declines in many countries around 2008 or so, it still looks much better than the stock market or a savings account on a longer term basis (thanks to record low interest rates, mostly). It looks even better if you invested in RE with leverage using a mortgage (but with enough capital to stomach temporary losses).

          Have pity with the 0.1% for the terrible inflation they are seeing in assets where they can park their money – trophy homes, classic cars, new super cars, super yachts, top quality art … all double digit inflation ;-)

          This won’t be over until we have a few years of double-digit price declines in real estate for the rich on a worldwide basis. There is no reason why RE should appreciate more than inflation long-term (just check the research about the Dutch ‘Herengracht index’). The last 20-30 years have been a huge anomaly.

      • Paulo
        March 11, 2016 at 10:04 am

        Vancouver or Toronto? I hate Vancouver but I can say rain is better than snow in the winter, and a pleasant summer is better than +30 and rain coming out your armpits. Plus, for a city it is beautiful.

        As for foreign buyers. On survival blogs they talk about bug-out bags. Vancouver property is nothing more than a bolt hole, conveniently able to act as a safe deposit box for their stolen funds. (Stolen from the backs of the Chinese factory worker).

        My advice for Vancouverites is the same I gave my friends in the Oil Patch and ultimately moved to Ft. Mac. “It doesn’t last, it never lasts, think about taking your winings and relocate for a better life.

        • Nicko
          March 11, 2016 at 12:39 pm

          One guy I know in Egypt, a factory owner and multi-millionaire, owns properties in Switzerland, Germany, and Canada. He also has multiple passports. Guys like him know how precarious political situations can unravel, bankruns do happen, governments do collapse.

    • Kam
      March 11, 2016 at 9:35 am

      I have a question: why Vancouver?

      The bulk of the funding for the political party that controls the province of British Columbia comes from real estate developers. So all the dirty money flowing out of China and into Vancouver comes with no questions asked, no strings attached. To hell with locals being priced out of their homeland.

      Premier Christ Clark has more in common with Hillary Clinton than her gender.

      • Paulo
        March 11, 2016 at 10:10 am

        Kam called it right, for sure. Remember the old bumper stickers from the Bill Bennett days when he drove the Province into a virtual revolt? “Don’t Blame Me, I’m NDP”. They were bright orange. Well, there are options to Christi, problem is, not only do the Libs come under the control of developers, they spoon feed Keith Baldry and his media colleagues.

        LNG…..righhhhhhhhht. Yeah, like that was going to ever happen.

      • Chicken
        March 11, 2016 at 10:34 am

        This is exactly what I’m thinking, plus a whole lot more. Government doesn’t mind inflating our local property taxes even if it runs us out.

        There’s some kind of a globalization cycle going on.

        • Jill
          March 11, 2016 at 12:05 pm

          “There’s some kind of globalization cycle going on”

          I couldn’t agree more. I think there is too much attention given to alleged Chinese speculators and not enough to the bigger picture.

      • MC
        March 11, 2016 at 1:39 pm

        That’s the best answer by far I got so far.

        Thanks (and to all those who replied).

      • Regis190
        March 13, 2016 at 8:59 pm

        If you lived your entire life breathing polluted air in China, Vancouver is a dream come true. Very few cities in the world have this kind of crisp, breathable air. Fewer car emissions than most of the world, no coal power and a temperate climate. For all the haters saying they see this housing bubble from a mile away. What were you saying 12 months ago? You just missed out on 20% plus gains in prices. I guess you were busy loaded up on the S&P500 that went nowhere or a CD that paid 25bps. Ya, I want more advice from you losers!!!!

        • March 13, 2016 at 9:20 pm

          Remember, housing bubbles on the way up are no problem for the folks who own the homes, and for the governments that tax them, and for the industry that sells them and builds them. Everyone LOVES housing bubbles (except those who are priced out of the market).

          The problem arises when these bubbles deflate. That’s when liquidity suddenly dries up. And what you thought you could sell in a month or less you can’t sell at all anywhere near the price you could accept.

    • nick kelly
      March 11, 2016 at 11:54 am

      Every year the UN ranks countries on general livability. The same five or so countries pretty much always come in the top tier. Sweden, Holland, Canada, Denmark and Australia, and New Zealand swap places back and forth. I may have missed one but those are always among the contenders
      The US has never cracked the top ten.
      Oddly, or not, all the contenders are constitutional monarchies.

    • d'Cynic
      March 11, 2016 at 5:53 pm

      The speculators and money launderers go for a soft political environment, and Canada has one of the softest. Vancouver has a benefit of the climate, and you do not have to speak English to get around just fine. That chart actually is probably wrong or is in logarithmic scale: Vancouver is really off the chart.

    • Julie K.
      March 12, 2016 at 10:37 am

      Why Vancouver?

      Oh, let me count the ways!

      The trees.
      The air.
      The mountains.
      The beaches.
      The ocean.
      The weather (note: if you are a TRUE Vancouverite, you LOVE the rain).

      These are but a few of the super natural characteristics my beloved hometown offers — and all for free. There is simply no other place like Vancouver in Canada.


    • Jack
      March 12, 2016 at 11:17 am


      Vancouver is very scenic, surrounded by mountains, has great winter skiing, summer water and hiking activities, fishing, etc., you name it. But that to me would not justify buying a home there on the greater fool theory, even if I was filthy rich.

      When I lived in Delta, BC years ago, the N.E. area of Van was a snake pit full of discarded needles, condoms, hookers in plain sight on Georgia St., etc., far different from the picturesque western half of that lower mainland. I think it’s cleaned up a lot by now I’m sure but I haven’t been back there in twenty years and have no desire to go there anytime soon, and sit in traffic.

      There’s a story unfolding now where it’s being reported that the local R.E. agents have been “shadow flipping” homes, thus driving up the prices:

  6. nhz
    March 11, 2016 at 6:54 am

    In the Netherlands we had a runup of the median home price of 400-500% from the late eighties to the early 00’s, even more than Vancouver judging from the chart. This wasn’t one city but a whole country, and very little foreign investment was involved. These numbers even understate the real increase because a flood of old (cheap) former rental homes were gradually pushed on the market, and many bigger homes in the cities where split in apartments – this all drives down the median sales price. The only thing required for this is massive government meddling in the housing market.

    In my own hometown, prices of the more upscale homes increased by 1000-1500% in about ten years. Around 1990 less than 1% of homes cost MORE than 100K euro, 15 years later more than 1% of homes cost over 1M euro and maybe 1% less than 100K. And this is in a provincial town, far from the big cities where things were sometimes even worse. One of the results is that many of the more expensive homes in the city (at least 10% in my area) have been empty for years, for speculators they are far more attractive than money on a savings account and any rent is irrelevant relative to the yearly price increases (plus regulations make it unattractive to rent out a home).

    After a 20% dip in home prices around 2009, politics is doing everything they can to push home prices even higher. In some cities prices are making new highs thanks to ridiculously low mortgage rates (2% for 10 year fixed rate, no downpayment, all downside risk ensured by the tax payers). The huge stream of migrants helps, because they are all entitled to a free rental homes which crowds out the relatively affordable subsidized housing market and pushes more desperate home buyers on the market.

    Such appreciation may sound great, but for normal citizens it is just terrible inflation. Even if your home appreciates, you have to live somewhere and if you take out a mortgage to consume the huge appreciation, you are on the hook to pay it back. One of the results of the Dutch housing bubble policies was that the Netherlands has developed a new export industry of anti-squatting companies. I guess they should look to expand to Vancouver which probably has more potential for appreciation …

  7. Casey Baldwin
    March 11, 2016 at 7:48 am

    Your blog might wish to do a follow on this multi-billion dollar house flipping in Vancouver. Our national newspaper gave a reporter 3 months to run down this story; rare these days.
    Before closing, multi-million dollar houses are often flipped 2 or 3 times with original owner often receiving less than half of the final price. And monthly rental of AVERAGE Van apt is $4,500.

    • RDE
      March 11, 2016 at 10:29 am

      Well, maybe—

      When I left Vancouver in 2012 I lived in a garden apartment in Steveston, a suburb of Richmond on the banks of the Fraser. Four story building with elevators, underground parking, and beautiful grounds. Right across from a marina and a short walk to the riverside boardwalk. 20 minute car commute to work on the south edge of Vancouver or 35 minutes to downtown on the SkyTrain. Market price rent for a one bedroom apt., $1200 CAD.

      Real estate price index has risen from 170 to 210 in that period. Have rents really tripled?

  8. c smith
    March 11, 2016 at 9:50 am

    “It is ironic that the solution to the affordability crisis should be a tax on vacant homes, when these soaring prices are a direct result of the giant asset bubbles that central banks, including the Bank of Canada, have purposefully blown and, in their infinite wisdom, continue to blow with all their might.”

    Ironic? Hardly. There’s no irony here. This is the CORE of the ruling class’s strategy for maintaining power. Inflate it, then tax it. Always has been.

  9. Ptb
    March 11, 2016 at 9:57 am

    It certainly looks like upscale real estate is the place to park money for the rich. NIRP and low treasuries are making the world a bad place for savers. It’s almost like banks don’t want to have depositors anymore

  10. Kreditanstalt
    March 11, 2016 at 10:15 am

    This is solely due to the reappearance of flipping. And not only in the bubble areas: my neighbor here (Vancouver Island) has been trying in futility to flip an overpriced house and his expected price has come down only 10% in a year and a half…

    In Canada, a 10% reduction is somehow considered a BIG REDUCTION.

    Returning after many years overseas, I find that nothing has changed: Canadians are as always blindly, irrationally, senselessly over-optimistic, starting failing small businesses in recessionary conditions, blowing money on consumption because “there’s more where that came from” and assuming that houses are “assets” or ATMs.

    Perhaps this is a legacy of an economy which, in the 1960s and 1970s, was filled with high-paying resource industry jobs even for grunt labour…

    • nhz
      March 11, 2016 at 10:26 am

      Just wait … in my country many speculators held on to their asking prices for years (sometimes more than ten years) after a price runup of 1000% or so. Everybody was entitled to become a millionaire just by selling their home. Over the last few years, some sellers have come down 10, 20, or even 40% in asking price and find that even with those price cuts there is hardly any buyers left.
      Years ago one of my former neighbours refused an offer on his home at 5% below asking price, which was 8x the price that he paid 9 years earlier. Last year, after several price reductions, he finally sold for 4x his purchase price ;-)

      I guess the Canadians have some Dutch speculation heritage, remember the tulip bulb bubble ;-)

  11. nhz
    March 11, 2016 at 10:19 am

    The Japanese played a similar game in the eighties, that didn’t end well. Would the Chinese fare any better? It seems to me their buying is more massive, so it might last a little longer. But the crash could be even more epic once they run out of greater fools who line up to buy run-down shacks in a for multi-million dollar prices (in a city that has nowhere near the income level to support such prices on a long-term basis).

    • Exurban
      March 14, 2016 at 12:57 am

      There’s 10x as many Chinese as Japanese.
      Everybody in China who has money wants to get out.
      Japanese like it in Japan.
      Japan isn’t run by the Communist Party.
      If you’re a cadre of the Chinese Communist Party the rules don’t apply to you. Only people who have already fallen out of favor with the Party get prosecuted for corruption.
      If prices went down these people would not be “underwater” on mortgages — they paid cash.
      Japanese never invested much in Vancouver. They preferred Hollywood and New York. Chinese love Vancouver.
      There is virtually no enforcement of any financial regulations of any kind in British Columbia.
      If there is domestic discord in China, MORE money will flow abroad.

      Conclusion: This could go on for a long time.

      • Casey Baldwin
        March 14, 2016 at 10:32 am

        Agree, but note that who gets charged with financial corruption in Washington is somewhat similar to Peking. The panicked outflow of Chinese money may be hastened by the dramatic drop in Chinese exports. The article link below dramatically illustrates major problems in China’s economy.

  12. LG
    March 11, 2016 at 10:28 am

    That chart basically shows how many Chinese restaurants there will be in the coming years!

  13. Captain KurtZ
    March 11, 2016 at 11:41 am

    Seattle is no different than Vancouver. We are driven by illegal Chinese holdings that props up the high-end market. There are also massive amounts of condos / apartments that sit empty.

    Homelessness has skyrocketed as hot money pours into redeveloping affordable housing. Those people go straight on to the streets as a new place is 3x the price. Market rate apts. are set by the 1% of the Amazon employees who make a quarter mil.

    The City of Seattle will develop anything right now as they are completely in the developers back pockets. But our infrastructure is lacking by fifty years and things like black-outs and water main bursts, or gas explosions like in Greenwood the other night will become more common.

    We desperately need a building moratorium but nobody in City Hall could stomach the collapse of the tax revenues.

    Everyone keeps pointing at Vancouver but we got the EXACT same problems right down I-5.

    • March 11, 2016 at 12:02 pm

      Oh, did I mention San Francisco?

      • Chicken
        March 11, 2016 at 12:13 pm

        Tell us Wolf, where the heck this is leading.

        • Petunia
          March 11, 2016 at 1:05 pm

          It is leading to rent control. The government cannot make all low income people homeless. Eventually they will force non occupying owners to lease the homes out at around carrying cost.

        • nhz
          March 11, 2016 at 1:46 pm

          rental controls, you think so? not a chance IMHO, except if it helps the big speculators to push up prices.

          In Netherlands there has been a shortage of affordable homes for decades (by design …), waiting lists for social housing are 8-10 years in many areas. At the same time speculation with empty homes has been rampant for over 40 years. Around 1980 this led so severe ‘squatting’ riots that almost toppled the Dutch monarchy. Currently empty homes are widespread again due to housing speculation. But the only thing our government does is impose heavy penalties on squatting – they protect the speculators. It also spawned a whole industry of anti-squatting companies, that ‘rent’ the speculator homes to students etc. to prevent squatters from occupying the empty buildings. The anti-squatters pay a very low rent, but they have zero rights; not a good development. The price increases have been so huge for many years that any rent would be insignificant for the owners anyway.

          Politicians are wise enough to protect the big numbers of voters who are on social security: they get heavily subsidized rental housing and while home prices surged their rents haven’t even kept up with official (low) inflation. Only those with big income increase get to pay much higher rents. What has happened is that government imposed punishing rent increases for the middle class (everyone with more than 35K household income), forcing these people to buy a home or rent in the tiny ‘free rental market’ at costs that are 2-4x higher than the cost of a mortgage for a similar home.

          This leads to strange situations e.g. in one area of my home town there are nice family homes that cost 240 euro/month for someone on social security, 660 euro/month for someone with median income (35K or so) who has been living there for a long time, and 1050 euro/month for new inhabitants who don’t quality for social housing. These homes are all exactly the same except for small details of kitchen/bathroom, but there is a cost difference of over 4x!

        • LG
          March 11, 2016 at 2:52 pm

          Its leading to population loss.
          Millenials will have a very hard time to start a family! Government will start buying real estate offering it to millenials with large discounts if they will have children!
          Sounds crazy isn’t it?
          Well they’re doing it Europe!

  14. Ishkabibble
    March 11, 2016 at 12:55 pm

    “…………these soaring prices are a direct result of the giant asset bubbles that central banks, including the Bank of Canada, have purposefully blown and, in their infinite wisdom, continue to blow with all their might.”
    Absolutely right, Wolf. And Ottawa is going to do its part to keep the bubble inflated.
    What has to happen is that a group of people will get together to buy a house or condo and stuff themselves into it.

    How many immigrants into Canada were there between ’04 and ’14?

    2006 ……..251,640
    2009 ……..252,170

    We mustn’t forget that homeowners/voters in Vancouver and Toronto do NOT want the prices of their investment homes to drop. Governments will do “whatever it takes” to make sure that they don’t.

    • Chicken
      March 11, 2016 at 1:31 pm

      Canadians are positively anxious, must be good for Canada’s future and booming housing industry. Home improvement, auto sales, about everything under the sun.

      “There’s still a lot of other questions about whether we’re in a position to take full advantage of the enthusiasm of Canadians to respond to refugees,”

    • nhz
      March 11, 2016 at 1:31 pm

      I guess most of these new immigrants are buying/renting homes with their own money?

      Unlike Europe where almost all immigrants (about 2 million just last year) get their homes for free, a far more stupid policy if you ask me. But in the short run it works extremely well to push op prices thanks to the sheer numbers and because the number of new homes is just a fraction of those numbers.
      A few EU countries like Spain have introduced free residence/visa for people who buy expensive homes there, but I don’t have the impression that we are talking about significant numbers in that case.

  15. nick kelly
    March 11, 2016 at 1:25 pm

    It looks like another Canadian medium is taking a look at Wolf Street.

    In June 10, 2015 the CBC’s Patrick Brown led off a piece on China by saying their blunders were like Mickey Mouse as the Sorcerer’s Apprentice in Fantasia.
    I had made that comparison four days earlier on Wolf Street.
    For pointing this out I’ve been barred from commenting on the CBC.

    Today the Globe and Mail’s Eric Reguly suggested that the next stimulus from the EU could be a type of ‘helicopter money’; it could just credit every bank account with X euros. At least then no one could say they didn’t get any bail out- instead of only bankers.

    I’ve suggested that several times on Wolf Street, for one thing its impossible to physically drop money in places this big.

    But I’m not annoyed with Reguly- it’s just an idea that could have occurred independently. So don’t bar me, Globe!

    The Mickey Mouse comparison on the other hand was I think kind of creative, and rather unlikely to have occurred independently.

    • March 11, 2016 at 1:46 pm

      That’s funny that you got barred from commenting on the CBC for that comment.

  16. Auracle
    March 11, 2016 at 1:41 pm

    Funny the local sellers weren’t complaining when they were winning the real estate lottery and having lavish retirements funded this way. Now the locals( often the sellers kids) are complaining that they are priced out. And that’s not even counting all the municipal and provincial taxes paid by these investors, often without using the services they are paying taxes for. As usual, people want to have their cake and eat it too.

    • Chicken
      March 11, 2016 at 2:13 pm

      Because it’s the right thing to do.

  17. Shawn
    March 11, 2016 at 3:21 pm

    Don’t worry, there are enough dumb chinese in china and corrupt politicians in canada to keep this charade going for a good long time.

    • Chicken
      March 11, 2016 at 3:49 pm

      Build it and they will come bullet list:

      Chinese investors graciously finance building boom
      Housing for desirable refugee immigrants, inject cultural diversity
      Enticing the eager and highly skilled workforce for Canada
      Expand city, construct robust high-tech economy
      Shift away from reliance on commodities and dirty fuel
      Breakthrough economy


    • d'Cynic
      March 11, 2016 at 6:13 pm

      What is your definition of dumb? If the money was obtained by corruption and laundered abroad? You might google for “naked officials” and come up with the answer, e.g. here:

      I agree that corruption and fraud is well and alive on every level.

      • Shawn
        March 12, 2016 at 12:03 am

        My apologies, ‘dumb’ is not the correct word, ‘money laundering criminals’ is more fitting.

  18. R Gabriel
    March 11, 2016 at 10:47 pm

    Petunia said-

    “It is leading to rent control. The government cannot make all low income people homeless.”

    Yes they will. Because the primary beneficiaries of inflated rent are the top tier government workers.

    There is surging homelessness across the USA and there is a coordinate effort to ‘cleanse’ society of the less fortunate. Many libraries, particularly in NYC now have cops standing in front of them. I noticed recent sweeps of several libraries in my area.

    Homeowners want their homes to appreciate in value and govt workers want cost of living adjustments, so why on earth would it ever stop? Housing inflation based on global capital flows is not reasonable, and it is a direct result of neoliberal policies.

    I see no reason why homes in Canada would not double or triple in value in the next ten years.
    You don’t need people to keep the street lights on so long as the taxes are paid. Militarized police (funded by foreign money), will clean up the human clutter. What’s happening IS THE PLAN!

    Suggest you read -“A Brief History of Neoliberalism” by David Harvey.

  19. Keith
    March 12, 2016 at 2:43 pm

    Bankers are fools; we can’t hide the fact much longer.

    The global monetary system was designed by bankers for bankers and they get a cut at every step in the process of money creation.

    They are given the privilege of creating money out of thin air (fractional reserve banking), which they can then lend out and charge interest on.

    There is only one task they have to carry out and that is to lend the money prudently to people that can pay them back plus the interest.

    Could it be any easier, with no manufacturing, supply and distribution chains to worry about?

    What are bankers like at prudent lending?

    “What is wrong with lending more money into real estate?” Australian and Canadian bankers now

    “What is wrong with lending more money into the Chinese stock market?” Chinese banker last year

    “What is wrong with lending more money into real estate?” Chinese banker pre-2104

    “What is wrong with lending more money to Greece?” European banker pre-2010

    “What is wrong with a NINA (no income, no asset) mortgage?” US banker pre-2008

    “What is wrong with lending more money into real estate?” US banker pre-2008

    “What is wrong with lending more money into real estate?” Irish banker pre-2008

    “What is wrong with lending more money into real estate?” Spanish banker pre-2008

    “What is wrong with lending more money into real estate?” Japanese banker pre-1989

    “What is wrong with lending more money into real estate?” UK banker pre-1989

    “What is wrong with lending more money into the US stock market?” US banker pre-1929

    Globally incompetent at the only job they have to do.

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