Anatomy of the Housing Downturn in Vancouver, Canada

It’s not pretty.

In 2018, “each month has brought weaker than normal sales, rising inventory, and continued downward pressure on prices” in Vancouver, British Columbia, writes Steve Saretsky, a Vancouver Realtor and publisher of real-estate blog, Vancity Condo Guide. The market faces another headwind: “With the Bank of Canada determined to reach a neutral rate of interest of between 2.5-3.5%, borrowing power continues to erode.”

The single-family price spike unwinds.

The hardest hit segment are single-family houses (“detached houses”). Sales volume in the city of Vancouver has dropped to 27-year lows for most months of the year. In October, sales plunged 32% year-over-year to 146 houses, the third worst October on record. The plunge in sales was first triggered by the imposition of a tax in August 2016 on nonresident foreign buyers – mostly investors living in China. This chart from The Saretsky Report shows sales volume in every October going back to 1991 (click to enlarge):

Inventory for sale of all types of homes combined – single-family, townhouse, and condo – in the city of Vancouver surged 24% year-over-year, “pushing prices lower across all property segments,” he writes. Within that group, townhouse inventory jumped 34% and condo inventory soared 74%.

But inventory of single-family houses edged down by 4%, to 1,556 listings, “primarily a result of sellers taking their house off the market and trying to wait out current conditions,” Saretsky writes. Given the decline in sales, months’ supply surged 35% to 10.7 months. “This has paved the way for buyers to negotiate steep discounts”:

We have now been in a weak detached housing market for over two years and as a result, price declines are becoming more noticeable and more significant. There is strong evidence from previous housing booms that volumes tend to lead prices by about two years, and for the most part that has been the case here in Vancouver.

The median sales price of single-family houses in October dropped 13% year-over-year to C$1.88 million. From the peak of the crazy spike in the spring of 2016 to October 2018, the median price has plunged by over C$700,000 or 28% (click to enlarge):

The Saretsky Report adds:

We are seeing more forced sales as a result of Vancouver’s vacancy tax and BC’s proposed speculation tax which is slated to begin starting January 2019. Remember, a house that is listed for sale but does not sell in the calendar year is still subject to Vancouver’s empty homes tax of 1% of the assessed value.

The once red-hot condo market begins to gasp.

Sales of condos in the city of Vancouver fell 28% year-over-year, to 388 units, the lowest for any October since 2012 (click to enlarge):

But inventory for sale jumped by 70% year-over-year to 1,845 condos, though it remains moderate by historical standards. Saretsky writes, “when sales fall and inventory jumps, that trend should keep market participants on their toes.”

The report:

Similar to the detached market, sellers are trying to maintain current prices and buyers are holding out anticipating future price declines. Sellers will need to price their condos more competitively or they risk sitting stale on the market. There is now 4.7 months of inventory for sale.

The median price of condos sold in Vancouver in October dropped 7% year-over-year to C$699,000. The average sold price per square foot, at C$1,016, is now down 10% from the peak in January 2018 (click to enlarge):

Then there is the condo construction boom.

Across Greater Vancouver, as of September there were 41,944 condos under construction “that will all require buyers to close upon completion date.”

The recent slowdown in the condo market has also impacted the pre-sale market. Developers are reporting much weaker absorption rates at pre-sales centers and are ramping up incentives to entice new buyers. As a result of the slowdown and market uncertainty, commercial brokers and developers are reporting a significant decline in new land purchases.

If prices continue to decline, developers run the risk of seeing some buyers back out of existing contracts. There are growing reports coming out of Hong Kong that this is already beginning to happen in that market. What happens in the Hong Kong market is certainly relevant considering there are a number of projects being developed in Vancouver that were marketed and sold in Hong Kong.

Townhouses are more advanced in same scenario.

Sales fell 9% in October year-over-year to 67 townhouses. Inventory for sale surged 37% to 314 townhouses. Months’ supply jumped 67% to 5.2 months. And the median price dropped 15% year-over-year to C$990,000.

Once red-hot Fraser Valley freezes over.

Fraser Valley – to the east of Metro Vancouver and destination for Vancouver housing refugees, lured once upon a time by massive developments and lower prices – “was the hottest condo market in the lower mainland in 2017, with year-over-year price growth peaking at 51% in December 2017,” Saretsky writes. “However, 2018 hasn’t been so kind. In October home sales plummeted 50% year-over-year, and inventory spiked 149%. The median sales price is decelerating rapidly.”

This chart shows those trends in percentage terms: the spiking listings (red), declining median sold price (yellow), and plunging sales (blue). Click on the chart to enlarge:

In the US too, hot air is hissing out of the market. Read…  Sales of New Houses Plunge, Pile of Unsold Homes Highest since January 2009, Prices Drop from Year Ago  
 

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  72 comments for “Anatomy of the Housing Downturn in Vancouver, Canada

  1. Ishkabibble
    Nov 11, 2018 at 11:07 am

    What do governments do when citizens freely decide to have fewer children (future TAXPAYERS!), which IMO is a very good thing for Mother Earth, but fatal to an economic system in which the vast majority of wealth and large-scale capital equipment is owned by a microscopic percentage of the population for their own astronimical profit — a system which ABSOLUTELY REQUIRES perpetual population/economic growth and perpetual war?
    https://www.cbc.ca/news/politics/canada-immigration-increase-350000-1.4886546
    So don’t worry, low-birth-rate Vancouverites, Immigration Minister Ahmed Hussen is guaranteeing a perpetual, ever-increasing flood of housing, etc., demand coming your way to keep the “everything bubble” expanding forever.

    • RepubAnon
      Nov 11, 2018 at 11:22 am

      The “growth forever” model violates the physical laws of the universe. It is a Ponzi Scheme, in that sooner or later one runs out of fresh water, arable land, etc. (Look at the laws of thermodynamics – the same reason we don’t have perpetual motion machines is the same basic reason we can’t have growth forever.) Economists love ignoring the well-documented law of conservation of mass / energy, but I tend to trust the physicists on this one.

      When somebody invents a perpetual motion machine, I’ll change my mind. Until then, I’m going with the physicists.

      On a side note: they won’t be able to sell all those expensive houses to folks fleeing poor conditions elsewhere. Those people don’t have enough money to buy those properties.

      • Nov 11, 2018 at 12:47 pm

        Brilliant! I’ve long sensed this but never knew how to put it into words.

        The only thing that I can think of that can go on in the long run is depreciation of the currency (inflation). As the potential for growth fades away, this will become its surrogate as desperate financial elites try to substitute the appearance of growth for the real thing.

        We’re probably seeing the early stages of this now.

      • Ishkabibble
        Nov 11, 2018 at 3:13 pm

        “On a side note: they won’t be able to sell all those expensive houses to folks fleeing poor conditions elsewhere. Those people don’t have enough money to buy those properties.”
        =====
        No problem. Those poor folks won’t need that much money. All they’ll need to do after they arrive is pool their welfare checks and “family allowances”, pack as many of their fellow poor people as possilble into one “home” and obtain a 100-year mortgage.
        https://homeguides.sfgate.com/longest-mortgage-7677.html
        Of course part of the mortgage agreement will be for the “owners” to legally guarantee that the “owners” children will take over the mortgage payments when they inevitably inherit the home. If the mortgage applicants don’t already have kids, they’ll have to promise to make as many as possible after they put their X on the dotted line. The future-mortgage-payer tally will have to be closely monitored by the issuer of the mortgage for those 100 years, of course.

        See, this economy thing is so simple! Just ask the TBTF bank owners. Where there’s a will (and an infinite number of fiat dollars), there’s a way! Enjoy!

      • Fred
        Nov 11, 2018 at 3:23 pm

        Also, throw the law of entropy into the mix, ever increasing resources are required to maintain an ever increasing wealth inequality.

      • yun yang
        Nov 11, 2018 at 6:43 pm

        Need to build more 3 star hotels

      • Intosh
        Nov 12, 2018 at 1:10 am

        “Economists love ignoring the well-documented law of conservation of mass / energy”

        Economists, mostly the neo-liberal ponzi schemists, trust the law of the “invisible hand”.

    • Paulo
      Nov 11, 2018 at 11:27 am

      Geez Ish,

      I just deleted what I was going to post about having kids, posted, then read your comment.

      Yes, many families are getting smaller, except for those on the bottom of the economic ladder ladder and on First Nation Reserves. Those birth rates are expanding into a world of few jobs and even less opportunity. Coupled with these issues, and a broke Govt asked to subsidise and/or provide housing for those without real work or training, sooner or later things will come to a head.

      • Fred
        Nov 11, 2018 at 3:26 pm

        I think our population pyramid would be identical to Japan’s if it weren’t for the great 1900s immigration from south of the border.

        But as of now, even the birth rate for that demographic has collapsed.

        • Chim Ritchalds
          Nov 11, 2018 at 4:26 pm

          Not nearly enough, They’re still bringing in more than 2 million of those people per year. We’re screwed.

        • KFritz
          Nov 11, 2018 at 6:29 pm

          Source of information for “2 million per year,” please?

    • Ishkabibble
      Nov 11, 2018 at 11:47 am

      What all Canadians should be asking themselves is just exactly WHAT would happen in/to the “Canadian” economy if Mr. Hussen DID NOT ALLOW any more so-called “economic migrants” into Canada, but still allowed those ” 51,700″ refugees “by 2021”.

      Just exactly WHAT is the inadequacy, the IMO fatal flaw, in the present economic system that ABSOLUTELY REQUIRES a perpetually rising popluation, perpetual “economic growth” (presumably, GDP) AND perpetual war? The problem is that this fatal flaw cannot be explained in a tweet.

      • Fred
        Nov 11, 2018 at 3:36 pm

        Just look towards Japan. In the absence of the next generation of natural persons buying assets to prop up prices, Japan was forced to use the mother of all unnatural persons, the Bank of Japan. And even then that wasn’t enough.

        In my opinion, the US is using a series of synthetic approaches to counteract the demographic demand destruction of 2008. First, was QE by the Fed allowing corporations to transform paper stock assets (stocks) into cash using cheap debt . Second, was the Trump tax cuts financing more SBB. The only tool left is the SS Trust Fund, which is MF-ing hilarious, because it’d be the greatest redistribution of wealth ever, using payroll taxes to buy hyper-valued stock prices. But of course, it’d be sold as fiscal reform…

      • Mike Earussi
        Nov 11, 2018 at 5:29 pm

        The present capitalist system is not designed to work within a steady-state model. Instead it’s more like a cancer that devours everything in it’s path until it kills the host. Unfortunately, the host in this case is the planet Earth and capitalism will soon finish it off given how little is being done to stop the the destruction.

      • Kraig
        Nov 13, 2018 at 4:15 am

        Income tax at stable or lowering levels plus budget deficit and debt.

        More debt means more tax needed which means raising taxes or raising taxpayers. How many politicians (outside of norway/Singapore) run on a platform of rasing taxes?

        Take a look at immigration rates of countries with constantly rising tax rates.

        The more growth the more income tax, the more governments benefit.(which is why originally it was only proposed as an emergency measure to defeat the armies of Napoleon..

  2. RepubAnon
    Nov 11, 2018 at 11:10 am

    I’d guess a number of factors, including:
    * Other investments now show decent returns with less overhead
    * Banks raising interest rates, making home loans less affordable for buyers
    * New laws discouraging the foreign “cash only” investors

    The housing bubble was triggered by the near zero interest rates enacted to save the banks from receivership. Rather than inflate our way out of the crisis (thus helping people keep their homes), the government chose to give free money to the banks and let them slowly foreclose on the folks they drained dry by giving them unaffordable loans. Now that the economy’s in better shape, the flow of free money is being cut off. The banks, having gotten used to free money, are of course upset.

  3. Paulo
    Nov 11, 2018 at 11:16 am

    A friend of ours lives in a New West apt (Vancouver suburb). It is an older building, close to Skytrain, and has a peek view of the river. She has lived there for 30+ years. Two years ago she was given notice to move out for demolition and a new condo project on site. After a year of vainly searching for a decent rental replacement (to no avail) the eviction notice was rescinded and the building will not be replaced. She is now be able to live there until she retires and is able to move away from Vancouver. This puts a face on the stats and article. Is it really doom and gloom? I don’t think so.

    As someone who has lived on Vancouver Island for most of my life, I speak for all of my friends and family that we are praying that this decline trend continues and will put the brakes on our insane pace of RE development. The Island is being ruined and forced into unaffordability, one subdivision at a time as Vancouverites (plus Canadian winter refugees) relocate.

    I spent one winter in North Vancouver as my Dad had to work there for awhile. It was in ’68. I could hop the bus with my crab trap, go down to the bottom of Lonsdale and crab from the docks and return home with supper for 4. In the ’70s I lived in the Cowichan Valley (high school times). We could hunt deer before school, fish for steelhead and brown trout by the silver bridge and I kept a small tinny to scoot down our creek and onto the Reserve for salmon fishing every October. What the hell happened? It took just 40 years to ruin it all. Hopefully, this downturn will give us time to reassess.

    This Canadian said it best in 1970: (Lyrics only)
    http://jonimitchell.com/music/song.cfm?id=13

    • Nov 11, 2018 at 12:21 pm

      There are many winners, including the younger generation, when a housing bubble deflates significantly. They’re just not the people who matter the most in our scheme of things. Asset holders (homeowners & investors), lenders, and taxing authorities matter the most politically, and a housing downturn is painful for them. That’s why housing bubbles are so encouraged.

      • earl d.
        Nov 11, 2018 at 1:24 pm

        What we’re seeing in Vancouver is an approximation of how market oriented capitalism is supposed to work, i.e. asset appreciation results in a signal for the market to produce more of the increasingly scarce good. Vancouver’s planning and zoning environment allows for considerable expansion of the housing stock and the result has been record levels of housing production, especially multi-unit — the root cause of the deflationary pressure.

        Compare that to California, where an onerous regulatory environment makes productions of new housing units extraordinarily expensive (CA’s response to housing scarcity has been to enact policies that make new construction even more expensive), and you have an environment where housing continues to be a very safe and attractive investment, but to the considerable detriment of economic efficiency and ultimately the public good.

        • Tom Stone
          Nov 11, 2018 at 4:20 pm

          Earl D, in California not even the sky is the limit!
          Call me NOW and I’ll let you in on a literally UNBELIEVABLE deal!!
          Yes, an UNBELIEVABLE, FANTASTIC, a deal you won’t want to miss!!!

          The opportunity of a lifetime is here, buying preconstruction Condo’s on the shores of the Salton Sea.

          Don’t wait, buy now before you are priced out FOREVER!!!!

        • Jon
          Nov 11, 2018 at 8:01 pm

          Not anymore
          Ca real estate has peaked few months back
          Now there has been surging inventory lowering sales volume and this price reductions

        • rich
          Nov 11, 2018 at 10:32 pm

          Vancouver has priced out its middle class. There is no affordability. Blocks of houses being razed for million dollar plus codes. Who can afford them? Restaurants are reducing their hours because nobody can afford to live and work in Van unless they’re making six figures. The average mortgage service is 88% of income. There may be a building boom but it is doing nothing to improve housing.

        • intosh
          Nov 12, 2018 at 1:37 am

          Except that, to me, this “market capitalism” (if there is such a thing) is totally useless. What’s the point of it if the production of the scarce resource does not make the said resource any more accessible to the people who need it? Note that it is widely beleive the current decline is due to government intervention. Yeah, so much for market capitalism. Also, if the demand is an artificial one generated by foreign investors who benefitted from their own government’s monetary largesse, if not questionable wealth building process, is it still really market capitalism?

    • safe as milk
      Nov 11, 2018 at 2:20 pm

      sounds similar to my experience here in manhattan (with less fishing). the few of us who are left in my neighborhood from 30+ years ago now all recognize each other and speak nostalgically of the past. i’m ok with change but what i’ve seen is nothing short of global consumer capitalism sucking the soul out of our city.

      i’ve come to the conclusion that endless growth may be important to “them” but it’s killing me.

        • safe as milk
          Nov 11, 2018 at 4:07 pm

          i’ve witnessed the abuse of airbnb rentals first hand. recent college grads subdivide already small apts in my bldg. they will then airbnb their individual room for the weekend and take a bus to the hamptons. this is completely in violation of their leases.

        • Nov 12, 2018 at 9:01 am

          Why don’t you take some photos and report them?

          It seems by your passivity you are endorsing what they’re doing.

          That’s fine with me.

        • safe as milk
          Nov 12, 2018 at 11:02 am

          “Why don’t you take some photos and report them?”

          my landlord is truly awful and i will do anything to avoid engaging that office. he is on the official 100 worst landlords list of nyc. he makes his living by buying out regulated buildings and bringing them onto the market. he does this by using every method available short of physical violence including bribing public officials. i have wasted thousands of dollars defending myself from nuisance lawsuits he instigated to harass me out of the building.

      • Memento mori
        Nov 11, 2018 at 3:35 pm

        Continous growth is the principlal philosophy of a cancer cell.

        • KFritz
          Nov 11, 2018 at 6:33 pm

          Memento mori indeed!!

    • Chim Ritchalds
      Nov 11, 2018 at 4:36 pm

      How is it going to stop? Trudeau is increasing your already sky-high immigration. More people = more demand. You know this. The only question is if “MUH FREE WEED” is worth being replaced and pushed outo f your homeland by your own government.

      • Chim Ritchalds
        Nov 11, 2018 at 4:37 pm

        *That was supposed to be “LEGAL WEED”

        *I don’t think Canadians even have the will to fight.

      • kam
        Nov 11, 2018 at 6:02 pm

        Canadian government ad on TV. ” Our first reason to legalize dope is to keep it out of the hands of underage users.”
        Yes.
        Goebels couldn’t have said it better.

      • PIGL
        Nov 11, 2018 at 6:19 pm

        On what basis do you claim that kind of does immigration rates are “skyhigh”?

  4. Memento mori
    Nov 11, 2018 at 12:20 pm

    Canada is letting in 350 000 immigrants a year, given their population, that is the equivalent of 3.5 million per year for the US, so housing is a good long term bet. For any one living in the third world countries, landing in canada is like hitting the jackpot, free healthcare and child tax /benefit and credit and other freebies , make your quality of life go up 20 fold without the need going to find work, just have 4 to 5 kids and you can live on the child tax benefits alone. Then you have the rich and famous that can launder their money with no questions ask, it is well known that canada has the lowest restrictions on foreign money, so it is a mix that will keep things booming for some time. Even if china collapsed, I could see a scenario for Canada similar to when hong kong went to china, more people wanting to escape will land in Canada. I am not betting against the real estate in Canada, especially vancouver.

    • Anthony Aluknavich
      Nov 11, 2018 at 1:05 pm

      Is all this free stuff you mention really free? Or does someone else have to pay for it?

      One of my best friends recently got his U.S. citizenship after working and living here (in the U.S.) for the last ten years. He is moving his retirement money out of Canada. From what I understand, that’s happening a lot these days (money leaving Canada).

      • Memento mori
        Nov 11, 2018 at 3:24 pm

        It is certainly free to those who are getting it

    • Paulo
      Nov 11, 2018 at 3:06 pm

      It is definitely not free in Canada (healthcare), just less expensive and more efficient than the US private system. It works just fine. Funny, I have spent my entire life never thinking about medical costs. Ever. That concern is just foreign and unimaginable.

      However, my taxes are much higher than my US relatives. Liquor is almost double…auto gas 30% more even though we sell the stuff to US. The list is longer, but collectively it pays for all the ‘free’ stuff. LOL. However, I do not mind paying more through taxation or supporting refugees to relocate. We have lots.

      Also, at 63 I am a beneficiary of a rising housing market. I have done okay in life on a modest salary and living/investing as a prudent saver. I am appalled that young people and the disadvantaged cannot afford decent housing for a fair price. In our wealthy country it is criminal. If the value of my house drops, so be it. My kids have homes and are doing fine and don’t really need an extra inheritance. A house is a home, not a stock tip.

      What I would like to see is a relaxation on zoning restrictions to increase affordability. I just built a small rental on some property I own. It is a beautiful little gem. In the city just east of where I live it would have cost me 3X as much to build and the rent would have to increase accordingly. What I am now seeing is poor people living in travel trailers tucked away so they are not even noticed. Plus, the ranks of homeless is growing. This is just plain wrong in every way.

      All the best to our (you) Veterans. My parents were both WW2 vets and I spent the morning thinking about them. They came back from overseas as newlyweds and started out in a 600 sq foot bungalow in a small farming village in Minnesota. All they wanted was for others (and their children) to have similar opportunites of fair reward for hard honest work. I don’t think that’s too much to expect. It starts with housing.

      (quota…last comment)

      regards

      • JZ
        Nov 11, 2018 at 4:13 pm

        Oh Paulo….. Why would I want to leave the next generation a nice place to live and freedom to enjoy? I would let them find my consumptions, be my debt slaves, suck all of their high salaries into my hand and load them with debt so they will never be free. This is the land of consumption and home of the debt slaves. Pull all future prosperity to right f***inh now and let me enjoy it before I die.

      • NoEasyDay
        Nov 11, 2018 at 4:40 pm

        @Paulo-

        >Liquor is almost double…auto gas 30% more even though
        >we sell the stuff to US. The list is longer, but collectively it
        >pays for all the ‘free’ stuff.

        Ditto for Europe… high energy taxes.

        • Erle
          Nov 12, 2018 at 12:13 pm

          In my state I can get a beer that is 8.1% 16 oz X 4 for 2.49USD.
          I have been on Medicare (not taken SS) for three years and I had one eye examination (94.00) and one treatment for a cat bite (44.00) in the period.
          I pay 28,500 for “medical insurance” to supplement myself and wife, but it comes with 6000.00 deductible. Therefore I pay 34,500 for two healthy people.
          I had a routine assembly line colonoscopy/endoscopy that I was billed for 14,000.00 and the “insurance” paid 6000.00.
          I looked on e-bay for the exact same certified equipment and it was there for 17k-22k depending on the gee-gaws and age- but all certified.
          They charge what they can get away with and it matters nothing whether it is legal pricing.
          Anti trust should be enforced. Hell, if you charge 50% more for bottled water in a hurricane ravaged area, the wrath of the state will befall you.

      • Top-GUN
        Nov 11, 2018 at 6:28 pm

        Canadian healthcare is better than we have in the U.S.
        What a croc,,, Canadian healthcare is rationed to the point the you Canucks come to the U.S. for healthcare…

        • KFritz
          Nov 11, 2018 at 6:56 pm

          Canadians live 2.9 years longer than Americans, on average. This is from the World Health Organization. The rest is extrapolated from my various readings from various sources, and conversations with knowledgeable folk. Aside from sharing the US superstition that dental care needn’t be part of overall health plans, routine care in Canada is better for most citizens. There are unconscionably long waits for certain specialized surgeries for non-emergency cases. Some people die as a result of this. In the US, lots of people die early because of inaccessibility of routine care. Canadians with enough money come to the US primarily for specialty, non-emergency surgery. Some of them are saving their lives by “jumping the queue.” Others are wealthy folk too important ever to wait in a queue. It’s probably impossible to quantify these categories, and there’s certainly overlap.

          It must be terribly difficult for ordinary Canadians whose loved ones die waiting for needed surgery to acknowledge the overall quality of the system.

        • RoseN
          Nov 11, 2018 at 7:04 pm

          When people don’t use healthcare services in the U.S. because of the high cost, isn’t the end result the same as if it were rationed?

          One thing with the U.S. healthcare system is that it’s inconsistent. One person may have a government-subsidized plan that has very little out-of-pocket expenses while another may have high premiums, huge deductibles and co-insurance instead of co-pays (which are smaller amounts). So, Top-Gun, you may be one of the lucky ones with a good plan, but for many, healthcare costs are a significant impediment to financial stability.

        • Ook
          Nov 11, 2018 at 10:35 pm

          Actually, in the real world, India and Thailand are where people go for medical care (if they choose to do the foreign country thing). The US is an option only for extremely wealthy foreigners who feel their money makes them special.
          Oh, and on some occasions, the Canadian government will pay for specialized treatment in the US.

        • safe as milk
          Nov 12, 2018 at 11:16 am

          @RoseN “When people don’t use healthcare services in the U.S. because of the high cost, isn’t the end result the same as if it were rationed?”

          yup. i am a middle class professional who spends $1300 US / month for a bronze family policy. i have been avoiding having my herniated disk repaired because i can’t afford the deductible and my trusted doctors won’t take this crap insurance.

        • Argus
          Nov 12, 2018 at 2:55 pm

          The Canadian system isn’t perfect, i.m.o. a mixed private/public system would be better. There are indeed long waits for elective procedures. If, however, you have a life threatening condition, you will get prompt and excellent treatment.
          My husband recently spent a month in a Canadian hospital, with daily attention from specialists, investigative procedures, several surgeries and a generally high level of care without us having to worry about how to pay for it.

    • 2banana
      Nov 11, 2018 at 3:41 pm

      If a bigger and exponentially growing population lead to prosperity then India would be an utopian society.

      It doesn’t work that way.

      In fact, depending on who you are letting in, it can work in the exact opposite.

  5. Howard Fritz
    Nov 11, 2018 at 12:54 pm

    Did foreign buyers get cold feet?

    • SimplyPut7
      Nov 12, 2018 at 11:19 am

      No, there are not as many foreign buyers in Vancouver as people think. Most buyers were poor people with lots of equity in their homes. Once the government figured out the game, they clamped down on mortgage qualifications with stress tests and increased the number of tax audits to reduce the speculation going on in the housing market (condo flipping, assignment flipping, empty condos not being used as rentals to keep value up for resale which reduced rental vacancy in the city etc.).

      The foreign buyer tax doesn’t help but if you thought prices were going to continue going up YOY 15%-20% you wouldn’t care about the tax because you would make back your money and continue to grow your home equity in a couple of years. Speculators were locals or Canadians living in other places in Canada. There are a few people from the 1% purchasing properties but most people don’t have millions of dollars to spend indefinitely.

      As for Canada’s aggressive immigration plan, it’s not an altruistic act. The net amount of people in the country is not as much as it sounds when you take into account the number of people who die and are born in Canada every year.

      https://www150.statcan.gc.ca/n1/pub/91-002-x/91-002-x2018001-eng.htm

      It’s to stop Canada from having too many seniors depending on the government for social services (e.g. health care, old age security, Canada pension plan) and not enough people of working age to pay taxes into the expensive government services. Currently, there are more people over 65 years of age in Canada than there are under the age of 15.

      The number of immigrants coming into the country is a concern in Canada. It’s one of many reasons people don’t like Trudeau in Canada and he will probably lose the election October 2019. Where the number of immigrants coming in will be reduced to a number that makes voters happy even if it is at the expensive of the government’s ability to afford Canadian social programs.

  6. KPL
    Nov 11, 2018 at 1:04 pm

    Looking at the chart of Vancouver: Detached (ALL), Given the prices of 1-2009, if we assume that housing grows even at thrice GDP growth rates (I am being generous when I assume GDP grew at 1% for the last decade, source- https://tradingeconomics.com/canada/gdp-growth), the prices should be around 1 miliion (40-50% down). This simply means the prices have some ways to go. This is assuming the central bankers do not intervene with their money wands.

    It was always a silly idea to inflate house prices to reach for the moon. But then when you are ruled by Intellectuals but Idiots, as Taleb would say, we cannot expect better. Wealth effect you know…

  7. OutLookingIn
    Nov 11, 2018 at 1:04 pm

    The writing is on the wall for all to plainly see.

    Canadian household credit growth (while still high) is now at the slowest pace of growth in 35 years, and continues to steadily decline. The consumer has drastically slowed, or even stopped consuming.

    After seeing a blistering 46.32 % rate of growth, Canadian reverse mortgage debt is declining and is now in a sixth month downturn in growth. The seniors (mostly pensioners) who were house rich and cash poor that drove this, have drawn in their purse strings and are now hunkering down.

    Meanwhile, the Bank of Canada continues to mirror the US Fed policy, by raising rates and tightening liquidity. Slamming the economic brakes on.
    You may rest assured, that the central banks will always do the right thing, at the wrong time.

    The global fundamentals are all in alignment/agreement, a topping has taken place and a downturn has commenced. A worldwide recession is imminently not only possible, but more likely probable soon.

  8. Petunia
    Nov 11, 2018 at 1:08 pm

    It seems the “investors” fled from the Vancouver foreigner’s tax to Toronto and now the people being pushed out of Toronto are fleeing to Montreal.

    I have seen this picture before in my own life. Fled high cost of living in New York to Pennsylvania and then fled high rents in Florida to another southern state. The globalists are turning us all into gypsies.

  9. Cynic
    Nov 11, 2018 at 1:31 pm

    ‘Life time learning’, no job for life, perpetual insecurity!

    It’s great, stop complaining: do you think the economy was designed for you?

    I suspect most of us yearn for the life of our ‘primitive’ ancestors: born into a gender-determined role in a tribe, short life, lots of pain of course, and fear, but with absolute certainty as to what one is and meant to be.

    And an ecosystem in a much better state, on the whole.

    • Julian
      Nov 12, 2018 at 9:08 am

      You’re kidding right? No one is yearning for this mythical life.

      • Chim Ritchalds
        Nov 12, 2018 at 1:36 pm

        Maybe not the modern soy-filled bugmen who break into hysterics if they don’t have internet access for 10 minutes and can’t snapchat their avocado toast, see the latest cute cat pictures on reddit or watch their favorite hardcore pornography on x-videos, but for actual men (those with testosterone still running through their blood) the world of yore can seem quite appealing. It’s been said that to deny man his struggle is to deny man himself, and you’d be a fool to believe otherwise. We are not evolved to live in the soft, safe, world built for us.

  10. Bobber
    Nov 11, 2018 at 1:39 pm

    A lot of the factors impacting Vancouver also impact Seattle, including Chinese money and lifestyle. It was just published in the Seattle Times that the median house price in Seattle dropped $80,000 from the peak so far. With the median house at about $800,000, that’s a decent 10% drop. Things are changing fast. More and more potential buyers are inclined to wait this downturn out as prices continue to drop. There are things on the horizon, such as recession, that could make things much much worse for many years to come.

  11. Augusto
    Nov 11, 2018 at 2:40 pm

    Wolf, one thing you forgot to mention is non-resident taxes and taxes on second homes. They are I believe all rolled into BC’s so called the Speculation Tax (demonizing anyone who falls into this dubious labelling) a BC increased taxes on non-residents, in most areas, and put in a tax on a second home. There have been delays and specific on the second home tax, but like the non-resident tax once in, it will inevitably increase. I know this because I live in Calgary and a lot of my friends have cottages or weekend (skiing) condos in BC. So guess what? A lot want to sell, and a those who were thinking about a second place are thinking again. So if you go in the East Kootney’s of BC where many Albertans have places, there are For Sale signs as far as the eye can see. And it is Alberta money that keeps people employed there, despite locals whining about rich Alberta’s flashing their money and taking all the homes. So they can a choice I guess, a cheaper home, fewer job prospects, and a lot of cheap garage moving sales to choose from.

  12. Augusto
    Nov 11, 2018 at 2:44 pm

    Oops, sorry to all, see a lot of missing words in my last post..should have proof read before dashing off. Apologies to all.

  13. Chim Ritchalds
    Nov 11, 2018 at 4:25 pm

    Who cares? Hongcouver isn’t even a Canadian province anymore.

    • Prairies
      Nov 12, 2018 at 10:44 am

      Of course it isn’t. Vancouver is a city and never was a province….

      If you want to be so anti others at least get the details straight. “Who cares? Hongcouver isn’t even a Canadian city anymore.” Fixed it.

  14. nofreelunch
    Nov 11, 2018 at 4:42 pm

    On the subject of birthrates and economy, a country does not “feel” better or worse when the GDP changes, but its people do, so it is GDP per capita that counts. Therefore if a country’s population shrinks faster then GDP, then GDP per capita increases. In other words, if the entire population of Italy shrank down to 100 families, the GDP would be reduced to near nothing, but those 100 families would be very wealthy.

    • Ishkabibble
      Nov 11, 2018 at 6:06 pm

      Better still is the situation today in the US:
      https://www.scmp.com/news/world/united-states-canada/article/2119052/three-richest-people-us-own-much-wealth-bottom-half

      If you’re wondering how those who aren’t doing as well as the above manage to stay alive. The answer is CREDIT and Government going ever deeper into debt to provide even more well-deserved profit to the nano-percent.

      Nice system.

      • Ed Kennedy
        Nov 11, 2018 at 8:15 pm

        “3 Richest People…” Exaggerated Statistic!
        While the math may be true, it is not valid to compare the wealth of the richest citizens to the ENTIRE country’s population. The entire population includes infants, children, and young adults who, unless they have an inheritance, have no measurable assets.
        The last I checked, 35% of the US population was under 25 years old (2010 Census). These citizens normally have no, or a negative net worth (Student loans, etc). Most working people are into middle age before having a meaningful net worth.
        My point being, if you want to discuss distribution of wealth, compare the rich to other working ADULTS, not to children and college students. I welcome meaningful statistical analysis, but that article appears to have started with their opinion and then found a statistic to support it
        (Sorry for going off topic – I don’t like seeing links to articles that have incomplete or misleading statistics).

  15. Shawn
    Nov 11, 2018 at 11:19 pm

    I’ve been seeing these housing state for Vancouver for some time. It’s been in the back of our minds to move back to Canada and in particular, Vancouver. But the job market in tech up there really sucks.

  16. SimplyPut7
    Nov 12, 2018 at 5:10 am

    The inability for investors/speculators to close on newly constructed property will be the downfall of developers in Canada.

    Currently, cities such as Vancouver and Toronto have very long construction periods. It can take up to 2 years to complete low-rise homes (detached houses, semi-detached and row townhouses) and 5 years for condos.

    In that period a lot can change in the investor’s life that would make it hard to make the final payment on the property (e.g. recession, job loss, illness, divorce or death of spouse and loss of second income needed to qualify for the mortgage) without even considering changes to the Bank of Canda interest rates, mortgage qualification requirements or lenders’ willingness to lend that same amount of money in 2 to 5 years.

  17. RedRaider
    Nov 12, 2018 at 9:43 am

    I realize this is Canada and not Wisconsin. But it got me to thinking. On Nov 6 I went and voted and then closed on a home. My mom died in February and the home was a result of an estate asset sale. I paid cash (from my portion of Mom’s estate). Since no broker was involved and the original roof was still on(the house is 27 years old) I got a sweet deal.

    I guess I’m going through buyer’s remorse now. Is this the exact wrong time to be buying?

    • Prairies
      Nov 12, 2018 at 10:47 am

      Depends on your market, look at the price compared to the housing bust. If the price is the same or maybe up 50% you are in a safe spot. The prices won’t spike tomorrow but they won’t tank either. If you housing market looks like Houston or San Fran, maybe be worried.

      • RedRaider
        Nov 12, 2018 at 11:18 am

        The local economy is based solely on the paper mill. And paper seems to be a dying industry. The local mill has been sold 5 times in the last 15 years. I don’t think the local housing market is improving, but it’s not getting worse either. If I spent $20k making improvements I would get what my parents paid for it 27 years ago. So it sounds like I’m in the safe spot.

        Thanks for your comments :-)

  18. Erle
    Nov 12, 2018 at 12:47 pm

    @safe as milk
    Look up Oklahoma Surgical Center. They publish their prices and have only 5% as many hospital induced infections.

  19. Rexx Rock
    Nov 13, 2018 at 10:02 pm

    I live in Victoria and the cost of living is getting worse every year.Many are leaving up Island or leaving the Province.Alot of jobs here can’t support a family or even one self.Its bad here and unless you have job that pays over 50 grand your going to live hand to mouth with no saving for retirement.End of story.

    • Curious George
      Nov 14, 2018 at 5:23 pm

      Is this because Victoria is in a similar predicament as Vancouver – high RE prices due to foreigners, low interest rates, etc? If not, what’s driving things in Victoria?

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