The BC Real Estate Discussion Thread

[Harvey Spector]

14 hours ago, tybarber said:

Hey Harvey, really appreciate all the updates regarding housing. Question and some commentary for you, does the BCREA (or any organization for that matter) look at number of rentals and rates as well over the last year? Has this empty home tax had an effect do you know?

 

The reason I'm asking is I live in a shared house along the Cambie corridor which got bought up by a developer (5 mil for a piece of garbage, but that's for another day) and we all are looking to move out. Over the past year, I would occasionally check craigslist to see what was available for rent. And as I'm looking now, it seems like the supply of available 1 bedroom condos (brand new nonetheless) to rent is significantly larger than what I remember from say 6 months ago. This is purely anecdotal of course, so I'm wondering if BCREA has the stats for this? It seems that the empty home tax might be having an effect, in conjunction with a lot of new developments being completed. Because there just seems to be an astounding number that are brand new. 

 

In one of the earlier articles posted, it talked about supply, and how that's not the real underlying problem for housing prices (not necessarily rentals), which I agree with. Maybe there's a supply problem for the purchase of condos, but for renters, it just doesn't seem that way? The most notable statistic is how the rate of increase in dwelling numbers has matched or exceeded the growth rate of the City, and has consistently been like that for the past 20 years.The argument has been that, well, there are too many luxury condos that are being built. 

 

So, If just looking at the City of Vancouver, do you think it's possible to see downward pressure on rental prices? I only say this because the supply seems so high right now, and where's the demand for these luxury units coming from? And, also posted in one of the previous articles, it had mentioned that some major developments are slated for completion at the end of this year (again, more luxury homes) and are supposed to double (not sure on this figure) the number of units completed last year. So, a combination of these high 1-bedroom rental rates (~1,800 - 2,000), which seem  to be all that's on the market, and all that will be coming on the market, who can they rent them to? I only say this of course assuming that there's quite a few that need to be rented, because, well the owner doesn't actually live here. There's only a select group that seem to be in a position to comfortably be able to rent these units. It seems to me to only be the sort of 25 - 35 year old young professional that is making over 60K/year. Which even then seems to be a bit of a stretch for some. We don't have the high paying tech industry that sort of, "justify" isn't the right word, but maybe, "accompanies" the high rental rates we see in SF, so something seems awry to me that just doesn't add up here in Vancouver. Unless you consider that industry developers. Of course though, people have been saying that for the last 5, 10 years and nothing has happened to start put a downward pressure on prices. 

 

Anyways, what I'm seeing could be the total opposite of what the stats say, but that's just what I'm seeing as I start too look for a new place to live in the City. 

Hey Tybarber,

 

Appreciate the compliment. Hopefully you get to learn about what's going on in the real eatste market with all of my info.  Being in the industry I try to do as much research as possible so I post a lot of the articles that I read myself as well as the info from my Real Estate Board. 

 

The BCREA doesn't really publish rental rates as they are not readily available to any Board.  Most rental agents will post ads on Craigslist and use their company websites to advertise their rental properties, but there is not really anywhere that you can find actual statistics from any official Real Estate Board.  CMHC actually does a survey twice per year in April and October to collect data, but not sure how accurate that can be as they can't really call everyone. It's kinda like election polls. We know they are usually not 100% accurate. 

 

I think it's too early to judge if the empty homes tax has had any effect. We'll probably need to wait until at least next year to see if more supply has hit the market specifically because of this tax. I know a lot of Chinese owners who will not rent out their properties regardless of any tax, so not sure how it will affect that particular market which is what the empty homes tax is targeting. 

 

In terms of the supply issue, the actual stats from the Vancouver Real Estate Board show a marginal increase in supply this year. Supply is still quite low compared to a few years ago. Supply is definitely an issue when it comes to pricing, but not so much on the higher end side like Downtown Vancouver and the West Side. In those areas it is only the wealthy that can afford to buy there so it really doesn't matter how much supply there is. At this point buying in those areas is just a faded memory for locals who are on a budget. Those prices I don't think will ever come down to affordable levels in our lifetime. There is just too much demand from offshore buyers and also the land is so expensive for development that it's not possible for developers to lower prices in the near future and beyond. Developers are paying upwards of $80 million for land in Downtown Vancouver. So to justify those costs condos have to be sold in the $1500 per foot range in order for these developers to make money. And of course if you are paying $1500 per foot guess what, those rental rates are going to have to match the price, so high prices also drive up rental rates. Even in Burnaby by Metrotown developers are paying $40 million for land. It's crazy out there. 

 

As for the supply of condos specifically, there is going to be a large influx of new condos hitting the market this fall and winter. I believe I posted an article on that. These condos however have already been sold so when they complete the rental pool will increase dramatically. I'm not sure how that will play out in terms of rental rates. There could possibly be a downturn in rental rates because of it. It's hard to say at this point. I actually do some rental management as well as sales and my office does a lot of property management, so what I have been seeing out there is actually an increase in rental rates this year. I just rented out a one bedroom condo in New West for $1600, so even in the suburbs rents are getting out of control.  In terms of who is renting out all these high end condos, we do get ALOT of foreigners coming into the City as well as people from the USA and the U.K. for short term visits. The luxury furnished rental market is still quite active, especially in Downtown Vancouver. I have a friend who only does furnished condo rentals downtown and she is very busy. She advertises a lot down in the States and we get a lot of renters from the movie industry that come into the City for short term stays. I don't see that market slowing down anytime soon. 

 

If you are looking for a place for yourself I would suggest signing a month to month contract right now and see what happens over the next 6 months. However most rental agents want you to sign a one year lease so you might have to bite the bullet for a year if you find a place you really like and there is competition. 

 

Final thoughts. I don't anticipate rental rates actually going down anytime soon. I expect them to rise even further next year. Same with condo prices. There is just too much demand locally and internationally. Detached homes is a different story though. There is some downward pressure on prices right now and I am seeing homes taking much longer to sell. In some cases 3 months or longer. But for condos it's the opposite. Bidding wars are still prevalent in all areas of the City. So condo prices still look to be on the rise for the immediate future. 

Edited August 23, 2017 by Harvey Spector

[apollo]

On 8/22/2017 at 11:01 PM, Harvey Spector said:

Final thoughts. I don't anticipate rental rates actually going down anytime soon. I expect them to rise even further next year. Same with condo prices. There is just too much demand locally and internationally. Detached homes is a different story though. There is some downward pressure on prices right now and I am seeing homes taking much longer to sell. In some cases 3 months or longer. But for condos it's the opposite. Bidding wars are still prevalent in all areas of the City. So condo prices still look to be on the rise for the immediate future. 

Say it aint so...

 

If the NDP does go through with those 72,000 perhaps it'll cool it down? 

 

But as long as our government welcomes money launderers more so than any other developed nation, I think we're doomed. 

 

It just doesn't make sense though. Why are people buying Condo's here when rents are so low compared to Washington, NY, LA, etc? Washington 400k condo rents for 3500 USD per month... DT van, 600k condo rents for about 2400 CAD a month... they get way lower rental returns

[Harvey Spector]

43 minutes ago, apollo said:

Say it aint so...

 

If the NDP does go through with those 72,000 perhaps it'll cool it down? 

 

But as long as our government welcomes money launderers more so than any other developed nation, I think we're doomed. 

 

It just doesn't make sense though. Why are people buying Condo's here when rents are so low compared to Washington, NY, LA, etc? Washington 400k condo rents for 3500 USD per month... DT van, 600k condo rents for about 2400 CAD a month... they get way lower rental returns

The Chinese are not attracted to Washington or LA.  Those are the last places they would buy Real Estate.  New York gets alot of international attention especially from Europe. LA to a lesser extent.  The Chinese love Canada and especially Vancouver due to its closer proximity to mainland China and its relatively safe laws and stability of country.  The USA is a mess right now politically.  I highly doubt any Chinese would want to park their laundered money down there right now.

[apollo]

Just now, Harvey Spector said:

The Chinese are not attracted to Washington or LA.  Those are the last places they would buy Real Estate.  New York gets alot of international attention especially from Europe. LA to a lesser extent.  The Chinese love Canada and especially Vancouver due to its closer proximity to mainland China and its relatively safe laws and stability of country.  The USA is a mess right now politically.  I highly doubt any Chinese would want to park their laundered money down there right now.

That makes a lot of sense. There's no way our government will stop letting them launder their money here freely so I guess people that work here and don't own property are doomed. 

 

Contemplating Kelowna, Ottawa or possibly the US now. I'd be such a hypocrite if I moved to the US though. 

[Harvey Spector]

5 minutes ago, apollo said:

That makes a lot of sense. There's no way our government will stop letting them launder their money here freely so I guess people that work here and don't own property are doomed. 

 

Contemplating Kelowna, Ottawa or possibly the US now. I'd be such a hypocrite if I moved to the US though. 

Ottawa is a nice city.  One of my best friends is originally from Ottawa and moved his family here around 20 years ago.  He still has his parents and sister there.  Quite cheap compared to Vancouver or Toronto.  Not sure how the job market is out there though.  That would have to be a major issue wherever you decide to move.

 

I wouldn't buy in Kelowna though.  Too overpriced and not enough demand moving forward.  It's a nice place for a family if you already have money or you are retiring, but if you are still young there is not much out there, even job wise.

Edited August 24, 2017 by Harvey Spector

[Warhippy]

REALLY interesting.....calling out Bcs reliance and addiction to real estate pricing and sales to keep the economy afloat

 

http://www.cbc.ca/news/canada/british-columbia/real-estate-economy-1.4260288

 

Economic experts are raising concerns over the province's financial reliance on B.C.'s booming real estate market and the new government's promise to try and cool the market down.

The 2016/17 public accounts released earlier this week recorded a $2.7 billion surplus.

Real estate revenue accounted for a big part of that high number, largely due to a 32 per cent growth in the Property Transfer Tax revenue, which brought in roughly $2 billion in total revenue last fiscal year.

While speaking on The Early Edition Tsur Somerville, a professor of economics at the University of British Columbia, said beyond the Property Transfer Tax the income from the hot real estate market feeds several other government revenue streams.

He used examples like the personal income tax on a home builder, the income tax of a real estate agent and the tax on furniture or home appliances, all of which are tied to the strength of the market.

 

 

Somerville noted that in B.C. real estate accounts for a larger share of government revenues than it does in any other province.

Lindsay Tedds, an economist at the University of Victoria, agrees that the current framework of B.C.'s economy relies heavily on the strength of the market.

"Much as we like to point to Alberta being so reliant on their oil revenues, we are very reliant on the real estate industry to prop up our economy," said Tedds.

Inherently risky

That is why Somerville is concerned that during the most recent provincial election campaign the B.C. NDP promised to cool the hot housing market.

"If you slow down the real estate industry, because it's an overly large part of our economy, you're going to have some repercussions," said Somerville.

"It's not a healthy situation to be that dependant on real estate, so the adjustment is going to be a little bit painful no matter what happens."

 

At this point however, Somerville said despite the NDP's promises of cooling the market, so far their strategies are more geared towards making it easier for people at the bottom end of the market to buy property.

"It's hard for government to come in and change markets. When you try to blow up a market, you really don't know where things are going to go," said Somerville.

Among the NDP's campaign promises was the creation of 114,000 affordable housing units, the creation of a Housing Affordability Fund and the introduction of a two per cent absentee speculators tax.

Somerville said these early measures won't change the dynamics of the housing market, but could generate more revenue that could be used to help people hurt by housing affordability.

With files from The Early Edition and Samantha Garvey

[Warhippy]

2 hours ago, Harvey Spector said:

Ottawa is a nice city.  One of my best friends is originally from Ottawa and moved his family here around 20 years ago.  He still has his parents and sister there.  Quite cheap compared to Vancouver or Toronto.  Not sure how the job market is out there though.  That would have to be a major issue wherever you decide to move.

 

I wouldn't buy in Kelowna though.  Too overpriced and not enough demand moving forward.  It's a nice place for a family if you already have money or you are retiring, but if you are still young there is not much out there, even job wise.

??

 

Actually one of the fastest growing cities in canada for units built and cost increases.  Kelowna is so wildly overpriced it's ridiculous.  It's actually seeing what happened in Surrey in the 80's and 90's happening to it right now

 

Since they opened the Mission area for development and Rutlands grandfathered ALR lots are now slated for development they can add almost 250k to the population over the next 20 years.  it's going to grow and it's going to grow badly with massive infrastructure failures if it grows at this present rate including sewer and water as well as road systems hospital issues and lack of schools

 

If anything kelownas biggest issue is it is facing to much demand moving forward.

[Harvey Spector]

38 minutes ago, Warhippy said:

??

 

Actually one of the fastest growing cities in canada for units built and cost increases.  Kelowna is so wildly overpriced it's ridiculous.  It's actually seeing what happened in Surrey in the 80's and 90's happening to it right now

 

Since they opened the Mission area for development and Rutlands grandfathered ALR lots are now slated for development they can add almost 250k to the population over the next 20 years.  it's going to grow and it's going to grow badly with massive infrastructure failures if it grows at this present rate including sewer and water as well as road systems hospital issues and lack of schools

 

If anything kelownas biggest issue is it is facing to much demand moving forward.

There is currently 126 condos for sale in all of Kelowna.  Just to compare, there is 123 condos for sale in Yaletown, which comprises of around 8 city blocks downtown.  That's not alot of inventory in Kelowna at the moment.  

 

A two bedroom condo on Sunset Drive is asking for $888k and is 1185sf, so $750 per foot for Kelowna, which is insane.  33 condos have sold in all of Kelowna this month so far.  In Yaletown, there have been 28 sales.  So the entire Kelowna market is pretty much in line with the size of Yaletown in terms of active listings and sales.

 

I'm not privy to all the new developments up there, so I can't really comment on that.  However, from what I've been told from people I know who have moved to Vancouver from Kelowna and vice versa, the market in Kelowna is very seasonal because of the tourists and out of towners that go there.  My client took over a year to sell her house there, so it is quite a bit different from the GVRD.

 

Hippy, you're probably more in tune with what's happening out there construction wise, maybe it is picking up now with more infrastructure being built.  But I don't honestly think buying in the Okanagan is a great investment at this point.  Prices are just way too high for the area and I don't see a huge demand moving forward for the younger generation who prefer to stay in the GVRD because of lifestyle and employment opportunities.

[Warhippy]

26 minutes ago, Harvey Spector said:

There is currently 126 condos for sale in all of Kelowna.  Just to compare, there is 123 condos for sale in Yaletown, which comprises of around 8 city blocks downtown.  That's not alot of inventory in Kelowna at the moment.  

 

A two bedroom condo on Sunset Drive is asking for $888k and is 1185sf, so $750 per foot for Kelowna, which is insane.  33 condos have sold in all of Kelowna this month so far.  In Yaletown, there have been 28 sales.  So the entire Kelowna market is pretty much in line with the size of Yaletown in terms of active listings and sales.

 

I'm not privy to all the new developments up there, so I can't really comment on that.  However, from what I've been told from people I know who have moved to Vancouver from Kelowna and vice versa, the market in Kelowna is very seasonal because of the tourists and out of towners that go there.  My client took over a year to sell her house there, so it is quite a bit different from the GVRD.

 

Hippy, you're probably more in tune with what's happening out there construction wise, maybe it is picking up now with more infrastructure being built.  But I don't honestly think buying in the Okanagan is a great investment at this point.  Prices are just way too high for the area and I don't see a huge demand moving forward for the younger generation who prefer to stay in the GVRD because of lifestyle and employment opportunities.

I think I may or may not be understanding or entirely understanding what you mean

 

Demand in kelowna is as high as it's ever been.  Construction is set to shatter records this year for growth.  prices are through the roof.  If it's taken time to sell a lot or property that has to be a one off because (while seasonal) the agents I work with are all having record seasons and after I shoot their units they hit the market and usually don't last longer than 10 days.

 

Kelowna is absolutely ludicrous to try to purchase in right now

[riffraff]

4 hours ago, apollo said:

That makes a lot of sense. There's no way our government will stop letting them launder their money here freely so I guess people that work here and don't own property are doomed. 

 

Contemplating Kelowna, Ottawa or possibly the US now. I'd be such a hypocrite if I moved to the US though. 

[Lancaster]

@Harvey Spector

A little bit off-topic.... but any recommendations/suggestions on investing in US real estates?  Something that's hands-off, but consistent cash flow?

 

 

[Harvey Spector]

4 hours ago, Warhippy said:

I think I may or may not be understanding or entirely understanding what you mean

 

Demand in kelowna is as high as it's ever been.  Construction is set to shatter records this year for growth.  prices are through the roof.  If it's taken time to sell a lot or property that has to be a one off because (while seasonal) the agents I work with are all having record seasons and after I shoot their units they hit the market and usually don't last longer than 10 days.

 

Kelowna is absolutely ludicrous to try to purchase in right now

You probably work with just the top guys who make lots of money like me. 

 

I'm sure the average realtor is starving up there. There is just not enough sales to go around. 

 

I dont have the stats in front of me but I may pull the sales for the last 6 months to see where the sales are at and the average time on the market for listings. 

 

It's busy everywhere so I don't doubt you when you say it's crazy up there. I just think as you said the prices are through the roof right now and in a down cycle the first place to get hit will be the high end homes in Vancouver and places like the Okanagan that are seasonal in nature and don't have the same demand as the GVRD with the average folk. 

Edited August 25, 2017 by Harvey Spector

[Harvey Spector]

3 hours ago, Lancaster said:

@Harvey Spector

A little bit off-topic.... but any recommendations/suggestions on investing in US real estates?  Something that's hands-off, but consistent cash flow?

 

 

Recommendation:  Do not buy any real estate in the US right now. According to the Trump thread he will be impeached soon and the US will go into Civil War so I'd probably stay away from making any major purchase for the next little while. 

 

But if you really want to take a risk I would recommend Seattle. The Chinese love it there as its close to Vancouver and it's still relatively cheap compared to other big cities. Another place I heard that a lot of people like is San Diego. The Bosa family, huge developers in Vancouver, have built a lot of hi rises down there. I think it's a safe bet in that city. 

 

In terms of what to buy if you want hands off then I'd go the condo route. Stay away from those investments that tell you to buy in and they will pool your money and you only own a partial share of a bigger pool. A lot of those investments are scams and also your money is not liquid and could be tied up for years. You want to buy something that is freehold and you actually own it and can sell it off at any time. Condos are the least maintenance investment and I would recommend buying something relatively new so you are still in the warranty period. 

Edited August 25, 2017 by Harvey Spector

[AV's Coin]

Buy in China. Could the government ever let this system fail?

 

Clamp downs on the number of units one can buy in China spread the disease overseas plus diversification into different markets would be a good strategy no doubt!

 

Who buys the resale crap when there is seemingly an endless supply of new units?

 

 

 

[Lancaster]

17 hours ago, Harvey Spector said:

Recommendation:  Do not buy any real estate in the US right now. According to the Trump thread he will be impeached soon and the US will go into Civil War so I'd probably stay away from making any major purchase for the next little while. 

 

But if you really want to take a risk I would recommend Seattle. The Chinese love it there as its close to Vancouver and it's still relatively cheap compared to other big cities. Another place I heard that a lot of people like is San Diego. The Bosa family, huge developers in Vancouver, have built a lot of hi rises down there. I think it's a safe bet in that city. 

 

In terms of what to buy if you want hands off then I'd go the condo route. Stay away from those investments that tell you to buy in and they will pool your money and you only own a partial share of a bigger pool. A lot of those investments are scams and also your money is not liquid and could be tied up for years. You want to buy something that is freehold and you actually own it and can sell it off at any time. Condos are the least maintenance investment and I would recommend buying something relatively new so you are still in the warranty period. 

How much of a cut do property management companies get?  

I'm hoping I can just rent the place out and just have a relatively steady cash flow.  Flying down to San Diego or driving to Seattle to pick up rent isn't really feasible.

[Down by the River]

Does anyone know why the BC HOME program will not provide you with a loan for a downpayment if your downpayment would be equal to 20% or greater of the purchase price?

 

Also, CMHC has to be lead by a bureaucratic simpleton. My wife and I combined for over 50k in scholarships in 2015 and 2016 on top of our income. These are scholarships that are meant to be treated as income, but because they don't show up on line 150 of our T1s, CMHC thinks we are destitute. 

Edited August 25, 2017 by Down by the River

[Harvey Spector]

8 minutes ago, Down by the River said:

Does anyone know why the BC HOME program will not provide you with a loan for a downpayment if your downpayment would be equal to 20% or greater of the purchase price?

 

Also, CMHC has to be lead by a bureaucratic simpleton. My wife and I combined for over 50k in scholarships in 2015 and 2016 on top of our income. These are scholarships that are meant to be treated as income, but because they don't show up on line 150 of our T1s, CMHC thinks we are destitute. 

Because CMHC doesn't insure mortgages with a downpayment of 20% or greater.  The government isn't going to risk giving you an interest free loan for 5 years unless the mortgage is fully insured by CMHC against default.

[Down by the River]

4 minutes ago, Harvey Spector said:

Because CMHC doesn't insure mortgages with a downpayment of 20% or greater.  The government isn't going to risk giving you an interest free loan for 5 years unless the mortgage is fully insured by CMHC against default.

This should be a decision made on a case-by-case basis. The amount we would need is very small (relatively speaking) to make 20% and would in turn save of >$10k in not having to pay mortgage insurance, which in turn would make mortgage payments substantially lower.

Edited August 25, 2017 by Down by the River

[Harvey Spector]

25 minutes ago, Lancaster said:

How much of a cut do property management companies get?  

I'm hoping I can just rent the place out and just have a relatively steady cash flow.  Flying down to San Diego or driving to Seattle to pick up rent isn't really feasible.

Property Managers usually charge anywhere from 5-8% of the gross monthly rent.  You can just hire a company to help find you a property, pay them a fee for finding you a tenant, usually 1/2 month's gross rent, and then sign a service agreement whereby they manage your property and you pay them the fee which is taken directly off the gross rent on a monthly basis.  If the property is located in the US then you will need to file an income tax return with the IRS and be subject to US tax laws for your income.  Also, be aware if you die and you have property in the US the IRS can come after you for the death tax which is prevalent in the US tax code which allows the IRS to tax you on your world wide assets when you die.  In Canada we don't have a death tax, we have an estate tax which is only 1.4% and doesn't include your principal residence or anything that is joint with your spouse.

[Harvey Spector]

25 minutes ago, Lancaster said:

How much of a cut do property management companies get?  

I'm hoping I can just rent the place out and just have a relatively steady cash flow.  Flying down to San Diego or driving to Seattle to pick up rent isn't really feasible.

Property Managers usually charge anywhere from 5-8% of the gross monthly rent.  You can just hire a company to help find you a property, pay them a fee for finding you a tenant, usually 1/2 month's gross rent, and then sign a service agreement whereby they manage your property and you pay them the fee which is taken directly off the gross rent on a monthly basis.  If the property is located in the US then you will need to file an income tax return with the IRS and be subject to US tax laws for your income.  Also, be aware if you die and you have property in the US the IRS can come after you for the death tax which is prevalent in the US tax code which allows the IRS to tax you on your world wide assets when you die.  In Canada we don't have a death tax, we have an estate tax which is only 1.4% and doesn't include your principal residence or anything that is joint with your spouse.