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

[taxi]

24 minutes ago, DefCon1 said:

I want to know if the cities in those countries had the same influx of new immigrants and foreign buyers investing or was it just local buyers. Vancouver is a city that everyone wants to move in, even if you are in some other Canadian province. The Canadians from other provinces like to live in Vancouver due to the mild weather, its scenery and laid back style. The foreign buyers from China want to live or invest in Vancouver because they consider it as a safe investment and its a place where they can eventually go to retire or for their future kids etc. I just don't see how the type of interest that Vancouver is picking up could be compared to some US cities or an Asian country. Canada is seen much differently from US and Japan from a foreigner's point of view and more people would obviously like to live in Canada than those other countries whether its due to our politics or the environments and benefits. Until all those interests are halted due to some reason, I doubt the influx of foreign money will be halted. Even if the locals can't afford the houses being sold, there will always be foreign buyers ready to gobble up the properties. 

You're saying there will be no lack if investment by foreigners in Vancouver real estate, because it's a safe investment... Do you not see the circular logic there. What happens when the prices drop and it ceases to be a safe investment.

[Hugor Hill]

8 hours ago, taxi said:

According to that graph it peaked in 2008 at around 1,000,000 and then crashed several by as much as 25%. I also don't know why you're using Manhattan as a benchmark. It's well known that Manhattan and London are two of the most out of control real estate markets in the world and everyone is expecting a crash in those markets. The comparable for Vancouver would be somewhere like San Francisco or Seattle. 

 

Manhattan is an especially troubling scene. They are experiencing the same boom in prices we are, but now sales are slowing and projects are going unsold. That's typically the first warning sign of a crash. It doesn't happen instantly, as people try to wait it out and leave their investments on the market for a while before accepting it's time to pull out whatever cash you can.

 

Basically, my point is choosing the second most inflated market and using that as a comparable for why ours cannot crash is pretty illogical.

1) That's the monthly mortgage payments that went down by 25%, not sales price. Sales price stayed very much the same.

2) Right. Actually an even better comparable would be Toronto. People been saying Toronto's would crash for over 10 years now. It hasn't.

3) Using one of the most inflated prices in the world that did not crash at its most crash'able period, it serves as a very good example  to illustrate why Vancouver's market is not going to crash easily.

 

It's possible, and may eventually happen, like Winter is always coming even in May/June, but it won't come without some drastic macroeconomics shift. When it does, I think housing prices won't be our primary concern.

 

[Hugor Hill]

7 hours ago, LolClarkson said:

 

1) Yeah they had a national housing boom and crash. Just like the rest of the world except for Canada and Australia. So far we've just had the boom.

2) The chart for just Vancouver would illustrate my point a lot more than just the average.

 

Looking at graphs alone is like using technical analysis to evaluate stocks. It doesn't work. We got to look at the causes and reasons behind the numbers.

 

Canada and Australia and much of Asia didn't crash because we didn't have messed up mortgage practices like the US. 

 

As long as Vancouver stays amongst the favourite destinations for international investors to park their money, the real estate market will remain strong.

[Hugor Hill]

6 hours ago, taxi said:

You're saying there will be no lack if investment by foreigners in Vancouver real estate, because it's a safe investment... Do you not see the circular logic there. What happens when the prices drop and it ceases to be a safe investment.

You are using circular logic to argue with his circular logic. But then again, the markets run on circular logic.

 

But yes, if it ceases to be a safe investment, people may choose to pull out. But unlike the stock markets, people generally cannot pull their money out overnight. It's REAL estate, not fake crap; property owners would have to find buyers to take their properties off their hands. It's a process that takes time. 

 

There are a few reasons why international investors would choose to pull out simultaneously:

 

1) Major macroeconomic shifts within Canada, relative to the rest of the developed world

2) Major social political turmoil in Canada, again relative to the rest of the developed world

3) International investors all the sudden lose their financial standings they have to sell their foreign investments to get ends meet

4) An actual bubble bursting. To determine whether we have a bubble or not, we have to compare Vancouver's RE prices to other world class cities. I think the results are very much inconclusive. And even if there is truly a bubble, it doesn't burst overnight like the stock markets do.

 

 

[MaxVerstappen33]

3 minutes ago, Hugor Hill said:

You are using circular logic to argue with his circular logic. But then again, the markets run on circular logic.

 

But yes, if it ceases to be a safe investment, people may choose to pull out. But unlike the stock markets, people generally cannot pull their money out overnight. It's REAL estate, not fake crap; property owners would have to find buyers to take their properties off their hands. It's a process that takes time. 

 

There are a few reasons why international investors would choose to pull out simultaneously:

 

1) Major macroeconomic shifts within Canada, relative to the rest of the developed world

2) Major social political turmoil in Canada, again relative to the rest of the developed world

3) International investors all the sudden lose their financial standings they have to sell their foreign investments to get ends meet

4) An actual bubble bursting. To determine whether we have a bubble or not, we have to compare Vancouver's RE prices to other world class cities. I think the results are very much inconclusive. And even if there is truly a bubble, it doesn't burst overnight like the stock markets do.

 

 

1,2,3) Bubbles simply collapses on their own weight . They manifest themselves on momentum and investor phsycology. 

 

 

4) That is simply a false statement.  I already posted the chart showing New York house prices and their almost 50% fall.  The chart you posted was just condos in Manhattan and condo lease prices. 

 

The results are glaringly conclusive.  By most fundamental and historic measures, Van house prices are an epic bubble.  And I am not doing traditional technical analysis with charts.  I am just using them to visualize the market compared to others . The chart resembles most financial bubbles of the last 100 years. 

 

 

[Hugor Hill]

49 minutes ago, LolClarkson said:

1,2,3) Bubbles simply collapses on their own weight . They manifest themselves on momentum and investor phsycology. 

 

 

4) That is simply a false statement.  I already posted the chart showing New York house prices and their 5) almost 50% fall.  The chart you posted was just condos in Manhattan and condo lease prices. 

 

The results are glaringly conclusive.  By most fundamental and historic measures, Van house prices are an epic bubble.  6) And I am not doing traditional technical analysis with charts.  I am just using them to visualize the market compared to others . The chart resembles most 7) financial bubbles of the last 100 years. 

 

 

My 1, 2, and 3 are not bubbles. They are fundamental macroeconomic factors. You are welcomed to disagree with my macroeconomic assessments, but they are not bubbles. Please tell me you understand the difference.

 

5) It wasn't even close to 50%, but ok, it dropped noticeably. Fine. However, Metropolitan New York is huge and was subject to the same mortgage policies that lead to the rest of the housing crash in the US, policies we did not suffer from.

 

6) Looking at charts is like technical analysis, in its most basic elementary form. You know that, right? - "Oh look! It went up, so it must come down!"

 

7) The real estate market is not the financial markets. They don't behave the same way. If we are talking about the financial markets, looking at these charts, I would almost certainly agree with you.

 

You are 100% entitled to your opinion, but you really don't know what it's meant by 'fundamental _____(anything)'.

 

 

 

[MaxVerstappen33]

1 hour ago, Hugor Hill said:

My 1, 2, and 3 are not bubbles. They are fundamental macroeconomic factors. You are welcomed to disagree with my macroeconomic assessments, but they are not bubbles. Please tell me you understand the difference.

 

5) It wasn't even close to 50%, but ok, it dropped noticeably. Fine. However, Metropolitan New York is huge and was subject to the same mortgage policies that lead to the rest of the housing crash in the US, policies we did not suffer from.

 

6) Looking at charts is like technical analysis, in its most basic elementary form. You know that, right? - "Oh look! It went up, so it must come down!"

 

7) The real estate market is not the financial markets. They don't behave the same way. If we are talking about the financial markets, looking at these charts, I would almost certainly agree with you.

 

You are 100% entitled to your opinion, but you really don't know what it's meant by 'fundamental _____(anything)'.

 

 

 

1,2,3) You are just throwing around big words and making very vague statements.  You said " 1) Major macroeconomic shifts within Canada, relative to the rest of the developed world " and now you are calling that a macroeconomic assessment. Its nothing more than a vague statement.
 

Quote

was subject to the same mortgage policies that lead to the rest of the housing crash in the US, policies we did not suffer from.

 

We through the CMHC, our Freddie Mac, and the BOC with their record low interest rate policy have manifested the exact same thing as the US. We just havn't had the bust YET. Now debate wise, if we are both going to agree to play tennis here, you have to make the case that the CMHC and the BOC interest rate policy has not had the same effect and has not chased prices up to crash worthy levels.

Quote

6) Looking at charts is like technical analysis, in its most basic elementary form. You know that, right? - "Oh look! It went up, so it must come down!"

I never said anything about "head and shoulders" patterns, "death crosses", resistance levels or any of that crap. I am just showing a chart of prices. Both the US through the Fed and Freddie Mac and Canada through the CMHC and the BOC, chased prices of houses up. Both places had rising prices in tandem because they were subject to the same policy. Just so happens that the US market collapsed and Canada's has not YET. 

[taxi]

3 hours ago, Hugor Hill said:

1) That's the monthly mortgage payments that went down by 25%, not sales price. Sales price stayed very much the same.

2) Right. Actually an even better comparable would be Toronto. People been saying Toronto's would crash for over 10 years now. It hasn't.

3) Using one of the most inflated prices in the world that did not crash at its most crash'able period, it serves as a very good example  to illustrate why Vancouver's market is not going to crash easily.

 

It's possible, and may eventually happen, like Winter is always coming even in May/June, but it won't come without some drastic macroeconomics shift. When it does, I think housing prices won't be our primary concern.

 

2) Using Toronto as a comparable is the same flawed logic. My left shoe isn't wearing away, look the right one is at the same level.

 

3) Vancouver has limited space, but it's not Manhattan. 

 

I don't know why people are insisting on comparing Vancouver to NYC. Perhaps comparing downtown Vancouver proper to Manhattan is justifiable, but even then Vancouver has a lot of opportunity to add density that Manhattan does not have. The major issue in Vancouver is that it's not just the city centre that is rising in price, it's every suburb in the GVRD. Is Port Moody a world class city like Manhattan? Abbotsford? No. Get a grip. 

 

The obvious comparable is Seattle, and to a lesser extent San Francisco. Both had relatively large crashes in 2008. Seattle prices have currently been dropping for the last year, while Vancouver has gone into some kind of hyper-rise. That's the major issue. If things had flat lined about 2 years ago and then slightly dropped, like they did in Seattle, we wouldn't be having this conversation. Instead, the GVRD has risen to levels well beyond any local economic indicators say it should.

[Hugor Hill]

2 hours ago, LolClarkson said:

1,2,3) You are just throwing around big words and making very vague statements.  You said " 1) Major macroeconomic shifts within Canada, relative to the rest of the developed world " and now you are calling that a macroeconomic assessment. Its nothing more than a vague statement.
 

We through the CMHC, our Freddie Mac, and the BOC with their record low interest rate policy have manifested the exact same thing as the US. We just havn't had the bust YET. Now debate wise, if we are both going to agree to play tennis here, you have to make the case that the CMHC and the BOC interest rate policy has not had the same effect and has not chased prices up to crash worthy levels.

I never said anything about "head and shoulders" patterns, "death crosses", resistance levels or any of that crap. I am just showing a chart of prices. Both the US through the Fed and Freddie Mac and Canada through the CMHC and the BOC, chased prices of houses up. Both places had rising prices in tandem because they were subject to the same policy. Just so happens that the US market collapsed and Canada's has not YET. 

1) It's not the low interest rates, it's subprime mortgages. You haven't forgotten that, right?

2) Regional prices and national prices have very different drivers. The main driver of Vancouver RE prices is foreign investments, correct? You agree at least with this?

 

EDIT: 'macroeconomic shifts' are not big words now. Anyone who has studied any economics would have a pretty good idea what is meant by that. It's not vague. 

 

[Hugor Hill]

1 hour ago, taxi said:

2) Using Toronto as a comparable is the same flawed logic. My left shoe isn't wearing away, look the right one is at the same level.

 

3) Vancouver has limited space, but it's not Manhattan. 

 

I don't know why people are insisting on comparing Vancouver to NYC. Perhaps comparing downtown Vancouver proper to Manhattan is justifiable, but even then Vancouver has a lot of opportunity to add density that Manhattan does not have. The major issue in Vancouver is that it's not just the city centre that is rising in price, it's every suburb in the GVRD. 1) Is Port Moody a world class city like Manhattan? Abbotsford? No. Get a grip. 

 

The obvious comparable is Seattle, and to a lesser extent San Francisco. Both had relatively large crashes in 2008. Seattle prices have currently been dropping for the last year, while Vancouver has gone into some kind of hyper-rise. That's the major issue. If things had flat lined about 2 years ago and then slightly dropped, like they did in Seattle, we wouldn't be having this conversation. Instead, the GVRD has risen to levels well beyond any local economic indicators say it should.

1) Foreign investors are pushing the locals out to the suburbs. Is that an accurate statement from your ground observation?

 

Let's look at SF and Seattle:

 

 

 

 

SF is another foreign investment target. Seattle probably not so much.

 

All I'm really trying to say is that Vancouver is a hot spot for foreign investments. Prices won't stop going up until they hit market equilibrium relative to other hot spots around the world. And from what I can tell we are not quite there yet.

 

 

 

[taxi]

11 minutes ago, Hugor Hill said:

1) Foreign investors are pushing the locals out to the suburbs. Is that an accurate statement from your ground observation?

 

Let's look at SF and Seattle:

 

 

 

 

SF is another foreign investment target. Seattle probably not so much.

 

All I'm really trying to say is that Vancouver is a hot spot for foreign investments. Prices won't stop going up until they hit market equilibrium relative to other hot spots around the world. And from what I can tell we are not quite there yet.

 

 

 

....and the big differences in between San Franciso/Seattle vs. Vancouver are:

 

1) San Fran/Seattle crashed heavily in 2006-2012 and Van did not.

 

2) If you look at recent data from this year, both San Fran and Seattle's prices are softening. Meanwhile Vancouver is going into some kind of hyper-rise in prices. 

 

https://www.redfin.com/blog/2016/04/march-national-housing-market-tracker.html

http://www.businessinsider.com/san-francisco-house-prices-fall-redfin-2016-4

http://fortune.com/2016/04/15/san-francisco-housing-prices-drop/

 

It's not the fact that Vancouver is going up is the issue, it's that it's doing it at an unprecedented rate. So if Vancouver was trending like Seattle or San Fran, in having a large fall in 2006, then rising, then leveling off, there'd be no issue. That's not the way things are going. And if you look at your own charts, inflation adjusted prices are still only at 2004 prices for Seattle. 

 

It's not that prices are increasing in Vancouver that is troubling. You're right that's normal. It's the final part of the curb that for Vancouver that is troubling. This is the part of the curb that is totally out of line with every other market:

 

[MaxVerstappen33]

39 minutes ago, Hugor Hill said:

1) It's not the low interest rates, it's subprime mortgages. You haven't forgotten that, right?

2) Regional prices and national prices have very different drivers. The main driver of Vancouver RE prices is foreign investments, correct? You agree at least with this?

 

EDIT: 'macroeconomic shifts' are not big words now. Anyone who has studied any economics would have a pretty good idea what is meant by that. It's not vague. 

 

1) In the US, it started with sub prime mortgages and led to price collapse across the risk spectrum. We have sub prime in Canada too but apparently you weren't aware of this.

Subprime lending market in Canada skyrockets to record as banks ...

business.financialpost.com/.../subprime-lending-market-in-canada-skyrockets-to-recor...

Dec 15, 2014 - Subprime lenders’ share of the Canadian mortgage market has reached record levels, according to data obtained by the Financial Post, putting increased risk on the housing market.
 

Quote

Regional prices and national prices have very different drivers.

 

By far the biggest drivers of prices is the CMHC and the BOC interest rate policy. Then of course, there are industry specific drivers of prices across the country. What is your point  with that statement ?
 

Quote

The main driver of Vancouver RE prices is foreign investments, correct? You agree at least with this?

 

There is lots of talk about Chinese money in Vancouver. And they are getting the brunt of the blame for the bubble prices while the local property flippers and speculators get off.  But there is limited evidence to show this. But hey  it makes no difference.  The biggest drivers of the Nasdaq bubble in the 90's was forign money too.

 

I don't like how the Chinese are getting the blame for it when there is limited evidence but it doesn't change my hypothesis.

 

Quote

Anyone who has studied any economics would have a pretty good idea what is meant by that. It's not vague. 

The statement adding nothing to the discussion.

[MaxVerstappen33]

54 minutes ago, Hugor Hill said:

1) Foreign investors are pushing the locals out to the suburbs. Is that an accurate statement from your ground observation?

 

Let's look at SF and Seattle:

 

 

 

SF is another foreign investment target. Seattle probably not so much.

 

All I'm really trying to say is that Vancouver is a hot spot for foreign investments. Prices won't stop going up until they hit market equilibrium relative to other hot spots around the world. And from what I can tell we are not quite there yet.

 

 

 

Vancouver ranks third most unaffordable housing market in study, worse than New York and London

 

http://business.financialpost.com/personal-finance/mortgages-real-estate/vancouver-ranked-third-most-unaffordable-housing-market-in-world-worse-than-new-york-and-london

[Electro Rock]

The Seattle metro is almost as large in area as the 5 biggest Canadian cities combined, from talking to people from there it doesn't seem like the desirable areas actually saw much of a price drop. I bet most of the falling values were in the outlying areas, many of which wouldn't even be considered part of the city up here.

 

SF is nuts, I recently met a couple that moved from there who said they were paying $1200 a month to live in some crappy area many  years ago, and the last time they went back there a few months ago their old apartment was going for $4700 a month, and you thought Vancouver was expensive!

[MaxVerstappen33]

3 hours ago, Electro Rock said:

The Seattle metro is almost as large in area as the 5 biggest Canadian cities combined, from talking to people from there it doesn't seem like the desirable areas actually saw much of a price drop. I bet most of the falling values were in the outlying areas, many of which wouldn't even be considered part of the city up here.

 

SF is nuts, I recently met a couple that moved from there who said they were paying $1200 a month to live in some crappy area many  years ago, and the last time they went back there a few months ago their old apartment was going for $4700 a month, and you thought Vancouver was expensive!

Look at the chart that I posted.  all the major us cities including sf fell markedly in 2008  SF is experiencing another bubble that will collapse again.  but at least it took a breather in 08. And despite your story  Van is more expensive than SF

[IamHomer]

When the big earthquake happens. 

[Hugor Hill]

7 hours ago, taxi said:

 

Well I got to say that spike there right at the very end does look kinda crazy. Where is this money coming from?

 

 

[Hugor Hill]

7 hours ago, LolClarkson said:

I don't like how the Chinese are getting the blame for it when there is limited evidence but it doesn't change my hypothesis.

 

 

Well damn! Immigrants don't get blamed for everything in Vancouver? Immigrants putting too much money into this market driving prices up... immigrants sending their pay cheques back home draining cash out of the economy... immigrants taking all the jobs...

 

CDC is pulling a 180 on me.

 

Well now I'm speechless.

[MaxVerstappen33]

20 minutes ago, Hugor Hill said:

Well I got to say that spike there right at the very end does look kinda crazy. Where is this money coming from?

 

 

It is. Thats why I think its just simply momentum getting out of control man.

 

Van will still be the world class city that it always has been and it will never be that cheap of a place to live. But that doesn't excuse the right axis of that chart.

[taxi]

14 hours ago, Hugor Hill said:

Well damn! Immigrants don't get blamed for everything in Vancouver? Immigrants putting too much money into this market driving prices up... immigrants sending their pay cheques back home draining cash out of the economy... immigrants taking all the jobs...

 

CDC is pulling a 180 on me.

 

Well now I'm speechless.

We don't need to confuse immigration and foreign investment. Two entirely different things. The issue is people investing in real estate, who don't actually live here and are not immigrating here.