When do you think the Vancouver housing bubble will explode and come crashing down ?

[taxi]

Very interesting results from the poll.

 

This "bubble" definitely feels like something that is not going to burst. Given that every other housing bubble in human history has burst. Cities like London, NYC, and San Francisco have all taken measure to soften the blow. Their inflation adjusted prices have all fallen over the last few years. The opposite has happened in Vancouver.

 

All that being said, what makes a bubble a bubble is the feeling that it will never end. The phenomenom of a bubble bursting relies on people investing right up until the very end.

[grandmaster]

This is a ridiculous thread.

 

The housing market in the Vancouver will never crash. There is simply no bubble. Stop trying to compare with other areas and other type of markets.

 

Theses are the reasons why it will never crash:

 

- Vancouver single family houses are TAPPED OUT, you can not build on land here with out redeveloping or building upwards (condos)

- Vancouver is a highly multicultural city that includes global foreign buyers 

- Vancouver is a coastal city with tremendous environmental attributes (ocean, mountains, beaches, etc)

- Vancouver is one of the warmest areas in the ENTIRE country

- Vancouver is a short distance to the US and short flight from Asia

- Vancouver is central to the largest metropolitan area west of Ontario

 

All you dreamers that think the housing market here will crash are out to lunch. The demand here will always be high. High demand = high costs. 

 

Eventually, if not already, only the rich will be able to afford a single family home in this city. 

 

Is it right? Hell no. This coming from a guy who owns 2 houses. My kids are screwed. Thankfully I will be able to help them. But this sucks for those that can't get the help and are not in the market. 

 

I could see us becoming like New York where the majority will be renting expensive apartments with no hope in owning anything. 

 

Try and get into the market asap. If not, resolve yourself as a renter in life or decide to live elsewhere. Things are going to change, but for the worst and get a hell of a lot more expensive.

[Realtor Rod]

On 28/05/2016 at 1:14 PM, LolClarkson said:

So a plateau type formation  ?

 

Sept. 3, 1929: The market reaches its highest point before the Great Depression

At this time 85 years ago, Yale economist Irving Fisher was jubilant. “Stock prices have reached what looks like a permanently high plateau,” he rejoiced in the pages of the New York Times.

 

Apologies if I sound condescending but that is always what people say in bubbles. Show me a chart where this has ever happened. The market is clearly a bubble and it will crash. It has to.

 

A lot of people have been duped by the local speculative community, in typical Vancouver fashion.  Its unfortunate because the resentment that's building against the scapegoated "Chinese" community in Vancouver is really getting nasty. There is very little actual evidence that the bubble is being fueled by cash. Lots of Chinese were buying in Vancouver in 1997 when Hong Kong was turned back over to the Chinese. There are some Chinese who are cashing out of that real estate.

 

Either way, most bubbles comprise of cash and borrowed funds. Cash sales do not change anything after the speculative bubble gets this separated from fundamental valuation metrics. The delusion will end and market fundamentals with rear their head.

That is simply not true. There are lots of borrowers in the market. So to say there won't be ANY mortgage trouble is disingenuous. 

 

And as we can see here, interest rates continued to fall all through Japan's real estate bubble/crash. Low rates did not prevent anything.

 

Anytime an asset divorces itself from any fundamental metrics by a factor of 5 or 10, it can only mean speculation.
 

That proves that there is way more local speculators in the market than people want to admit. And again, lots of bubbles are built on cash money

Look for it to last for a few more years in my opinion. Not this explosive,  it at least until a flood of listings arrive.  We are carrying less two months of inventory with 8 months worth of buyers. 

 

Likely some shifts, no bubbles to pop though. 

[DonLever]

Considering that there 30,000 new people moving into Metro Vancouver and 1.2 million extra people by 2014., how can there be a crash?   People have to live somewhere and there is no more land, you can't build anymore single family houses.   As Will Rogers said, "Buy land.  They ain't making more of the stuff."

 

Also, consider the increase in immigration by the Liberals.  Where will the 300,000 immigrants live?  The 3 big urban centers of Toronto, Montreal and Vancouver is where they end up.

 

In the 1950's and 1960's and 1970's houses in Vancouver were pretty cheap.   You could get good house for $20,000.   In those days,  Vancouver was a pretty small city.  There was only a small Chinese population here.  Vancouver was a very white city back then.

 

 Things began to change where Pierre Trudeau liberalized immigration laws, the flood of immigrants began.  The biggest group of Chinese immigrants came from Hong Kong. Back then Chairman Mao still ruled and people were so poor they can't buy afford toilet paper, let alone houses.

 

 

[mdehaan]

Heres the thing about every single market, for every single good or service, in the world right now:

 

On the other side of the supply/demand metrics for the good or service (in this case housing) is the supply/demand metrics for money (in this case Canadian Dollars).

 

The supply/demand fundamentals for housing can be favourable for an increasing dollar price, all the while, the supply/demand fundamentals for dollars can be favourable to a decreasing dollar price, and vise versa.

 

A 2 million dollar teardown property in Vancouver has nothing to do with providing a place for someone to live.

 

Consider both sides of the transaction for real estate (or anything for that matter), in order to have a clearer picture of what is happening long term.

[MaxVerstappen33]

11 hours ago, DonLever said:

Considering that there 30,000 new people moving into Metro Vancouver and 1.2 million extra people by 2014., how can there be a crash?   People have to live somewhere and there is no more land, you can't build anymore single family houses.   As Will Rogers said, "Buy land.  They ain't making more of the stuff."

 

Also, consider the increase in immigration by the Liberals.  Where will the 300,000 immigrants live?  The 3 big urban centers of Toronto, Montreal and Vancouver is where they end up.

 

In the 1950's and 1960's and 1970's houses in Vancouver were pretty cheap.   You could get good house for $20,000.   In those days,  Vancouver was a pretty small city.  There was only a small Chinese population here.  Vancouver was a very white city back then.

 

 Things began to change where Pierre Trudeau liberalized immigration laws, the flood of immigrants began.  The biggest group of Chinese immigrants came from Hong Kong. Back then Chairman Mao still ruled and people were so poor they can't buy afford toilet paper, let alone houses.

 

 

The market will still function after the bubble bursts.

 

All kinds of fundamental arguments were made before the bust in the US.  There are cities in the US with stronger in flow than Vancouver yet the bubble is in the past. 

 

It is a bubble sitting atop of a regular housing market.  You are pointing to the movements of the regular market without zooming out and seeing the epic bubble.  it doesn't matter how many ppl move here if they don't have the money to buy. 

 

"buy land, they don't make any more of it" That quote is the reason why real estate bubbles get so out of hand.  because ppl begin to think that price will only go up. 

[MaxVerstappen33]

12 hours ago, grandmaster said:

This is a ridiculous thread.

 

The housing market in the Vancouver will never crash. There is simply no bubble. Stop trying to compare with other areas and other type of markets.

 

Theses are the reasons why it will never crash:

 

- Vancouver single family houses are TAPPED OUT, you can not build on land here with out redeveloping or building upwards (condos)

- Vancouver is a highly multicultural city that includes global foreign buyers 

- Vancouver is a coastal city with tremendous environmental attributes (ocean, mountains, beaches, etc)

- Vancouver is one of the warmest areas in the ENTIRE country

- Vancouver is a short distance to the US and short flight from Asia

- Vancouver is central to the largest metropolitan area west of Ontario

 

All you dreamers that think the housing market here will crash are out to lunch. The demand here will always be high. High demand = high costs. 

 

Eventually, if not already, only the rich will be able to afford a single family home in this city. 

 

Is it right? Hell no. This coming from a guy who owns 2 houses. My kids are screwed. Thankfully I will be able to help them. But this sucks for those that can't get the help and are not in the market. 

 

I could see us becoming like New York where the majority will be renting expensive apartments with no hope in owning anything. 

 

Try and get into the market asap. If not, resolve yourself as a renter in life or decide to live elsewhere. Things are going to change, but for the worst and get a hell of a lot more expensive.

Funny how ppl always get bullish at the top. 

[MaxVerstappen33]

14 hours ago, taxi said:

Very interesting results from the poll.

 

This "bubble" definitely feels like something that is not going to burst. Given that every other housing bubble in human history has burst. Cities like London, NYC, and San Francisco have all taken measure to soften the blow. Their inflation adjusted prices have all fallen over the last few years. The opposite has happened in Vancouver.

 

All that being said, what makes a bubble a bubble is the feeling that it will never end. The phenomenom of a bubble bursting relies on people investing right up until the very end.

 

14 hours ago, taxi said:

Very interesting results from the poll.

 

This "bubble" definitely feels like something that is not going to burst. Given that every other housing bubble in human history has burst. Cities like London, NYC, and San Francisco have all taken measure to soften the blow. Their inflation adjusted prices have all fallen over the last few years. The opposite has happened in Vancouver.

 

All that being said, what makes a bubble a bubble is the feeling that it will never end. The phenomenom of a bubble bursting relies on people investing right up until the very end.

Yes. 

And that is exactly what the poll reveals .

[taxi]

11 hours ago, DonLever said:

Considering that there 30,000 new people moving into Metro Vancouver and 1.2 million extra people by 2014., how can there be a crash?   People have to live somewhere and there is no more land, you can't build anymore single family houses.   As Will Rogers said, "Buy land.  They ain't making more of the stuff."

 

Also, consider the increase in immigration by the Liberals.  Where will the 300,000 immigrants live?  The 3 big urban centers of Toronto, Montreal and Vancouver is where they end up.

 

In the 1950's and 1960's and 1970's houses in Vancouver were pretty cheap.   You could get good house for $20,000.   In those days,  Vancouver was a pretty small city.  There was only a small Chinese population here.  Vancouver was a very white city back then.

 

 Things began to change where Pierre Trudeau liberalized immigration laws, the flood of immigrants began.  The biggest group of Chinese immigrants came from Hong Kong. Back then Chairman Mao still ruled and people were so poor they can't buy afford toilet paper, let alone houses.

 

 

Realistically, there is lots of room in Metro Vancouver. there are huge areas all around Surrey that remain undeveloped. The limited housing also does not take into account all the empty units and units being held by investors. The issue is that the prices are now so out of control, they are out of reach of the people actually living here. So 

 

People also vastly underestimate the effect of even a 10% decrease in demand on the housing market. When a large part of your demand is coming from foreign money with no ties to the local market, you are at the whim of the economic state abroad. Do you think that Vancouver is the only place in the world with limited housing supply? There are plenty of bigger markets with even more limited supply that have had crashes.

 

Hong Kong,is only now at the point they were before the major crashes of the late 90s. NYC is still below 2005 levels. Vancouver is the anomaly here. 

[taxi]

26 minutes ago, LolClarkson said:

Funny how ppl always get bullish at the top. 

It's the let it ride effect. People have a natural tendency to assume future results will be in line with past success. If Vancouver has had x amount of years of increased prices, people will automatically assume that trend will continue in perpetuity. In reality, it's much more random.

[Electro Rock]

Vancouver's housing market is bound to go down when the teetering global economy does, of course by then we'll have bigger problems.

[MaxVerstappen33]

4 minutes ago, Electro Rock said:

Vancouver's housing market is bound to go down when the teetering global economy does, of course by then we'll have bigger problems.

 We are already in double overtime for the next global recession  .  look at the MCI world chart that I posted

[aGENT]

On 5/28/2016 at 3:11 PM, Warhippy said:

I like this thread.

 

I'm guessing 2 maybe 3 years tops.

I tend to agree...some point in the next couple years it's likely to correct.

 

On 5/28/2016 at 3:18 PM, M A K A V E L I 96 said:

I don't think you'll see the type of crash you're talking about where homes that are worth $1 million now crash down to $300,000. What's likely to happen is the current ridiculous rate of increase stops and you have a minor dip in prices.

That said I also largely agree with this ^^^ 

 

A $1m house now is not going to become $300k when this (correction, burst, whatever) happens. It might go down to closer to what it 'should' be now, say ~$700k (which will cause a large enough problems to a great many on it's own) but I just don't see the Van market bottoming right out.

[The Vancouver Connection]

Vancouver Housing Market Crash? LOL. 

 

The comments in this thread make me laugh.

 

No there will not be a crash in 6 months, 2 years, 5 years or even 10 years from now.

 

However, the economics in Vancouver are not sustainable meaning low wages + high costs. But this theory doesn't apply when demand is so high and foreign investment is welcomed. We're now Hong Kong, San Fran, New Yorks of the world. Everyone sitting here saying they're waiting for a crash to buy, well have fun cause you're going to die renting. 

 

Will the market cool down? of course but the max you'll see prices drop are 10%. With a low canadian dollar, low interest rates foreign investment will continue. Government intervention is almost too late because you cannot have an unnatural correction. 

[taxi]

52 minutes ago, J.R. said:

I tend to agree...some point in the next couple years it's likely to correct.

 

That said I also largely agree with this ^^^ 

 

A $1m house now is not going to become $300k when this (correction, burst, whatever) happens. It might go down to closer to what it 'should' be now, say ~$700k (which will cause a large enough problems to a great many on it's own) but I just don't see the Van market bottoming right out.

A 30% fall is considered to be a sizeable crash. That kind of movement would put a lot of people underwater (negative equity). 

 

When people are in negative equity, there is little incentive to hang onto the house vs. just walk away. This drives down prices even further. I'd agree that Vancouver may be less prone to this kind of a spiral, and no you will never be able to pick up a west side home for sub 1.5 million or so, but I wouldn't underestimate a 30% fall.

[taxi]

32 minutes ago, The Vancouver Connection said:

Vancouver Housing Market Crash? LOL. 

 

The comments in this thread make me laugh.

 

No there will not be a crash in 6 months, 2 years, 5 years or even 10 years from now.

 

However, the economics in Vancouver are not sustainable meaning low wages + high costs. But this theory doesn't apply when demand is so high and foreign investment is welcomed. We're now Hong Kong, San Fran, New Yorks of the world. Everyone sitting here saying they're waiting for a crash to buy, well have fun cause you're going to die renting. 

 

Will the market cool down? of course but the max you'll see prices drop are 10%. With a low canadian dollar, low interest rates foreign investment will continue. Government intervention is almost too late because you cannot have an unnatural correction. 

A 10% correction followed by a flat period is the most desirable outcome. We may, however, be beyond that.

[MaxVerstappen33]

17 minutes ago, taxi said:

A 30% fall is considered to be a sizeable crash. That kind of movement would put a lot of people underwater (negative equity). 

 

When people are in negative equity, there is little incentive to hang onto the house vs. just walk away. This drives down prices even further. I'd agree that Vancouver may be less prone to this kind of a spiral, and no you will never be able to pick up a west side home for sub 1.5 million or so, but I wouldn't underestimate a 30% fall.

It will be interesting to see what happens though  because mortgages in BC are non recourse. Unlike the US or Alberta, you cant just mail the bank the keys and eat just your down payment and equity.

 

But either way, when the banks go into conservatorship and nationalized, these underwater mortgages will be renegotiated.

 

And there is this myth out there that Canadian banks didn't get bailed out covertly as per Bloomberg freedom of information request: http://www.bloomberg.com/data-visualization/federal-reserve-emergency-lending/#/overview/?sort=nomPeakValue&group=none&view=peak&position=192&comparelist=&search=

 

[MaxVerstappen33]

24 minutes ago, taxi said:

A 10% correction followed by a flat period is the most desirable outcome. We may, however, be beyond that.

A crash will be the best outcome. The boom is the problem, the crash is the solution. A crash will clean out all of the speculative money and malinvestment that has piled up which will make housing in Vancouver what it is supposed to be again. A place to live for working Vancouverites. Not a place to to deploy hot money, not a place to chase momentum, not a place to launder ill gotten gains, not a place to park money.  None of that sh*&

[aGENT]

39 minutes ago, taxi said:

A 30% fall is considered to be a sizeable crash. That kind of movement would put a lot of people underwater (negative equity). 

 

When people are in negative equity, there is little incentive to hang onto the house vs. just walk away. This drives down prices even further. I'd agree that Vancouver may be less prone to this kind of a spiral, and no you will never be able to pick up a west side home for sub 1.5 million or so, but I wouldn't underestimate a 30% fall.

Sorry, I thought I was clear that it would be a pretty big shake up? I agree a 1/3 drop would have a large effect. 

 

And even that's a worst case scenario IMO. It's far more likely we something like a 10, maybe 15% drop and have it stay flat for a while. People expecting to buy current $1m houses for $300-$400K are living in a fantasy land IMO.

[Electro Rock]

2 hours ago, LolClarkson said:

 We are already in double overtime for the next global recession  .  look at the MCI world chart that I posted

I don't think we're looking at a recession this time however, but going Full Venezuela, but globally.