The BC Real Estate Discussion Thread

[bishopshodan]

10 hours ago, Elias Pettersson said:

Inventory levels will take years to increase enough to make a difference.  Too much red tape for developers and the municipalities are too slow in handing out building permits.

 

Right now developers are starting to add on incentives to their presales, so even though there is little inventory sales have still plunged dramatically.  

 

I would say this last round of rate increases have caused alot of panic right now for buyers.  The next round coming in September will be even worse.

 

Inventory levels for rentals are at an all time low, causing rents to soar.  The cost of living in Vancouver is getting out of control.  With food prices and gasoline shooting through the roof, with interest rates rising at an astronomical rate affecting all homeowners in variable rate mortgages, and with inflation rising at a historical rate with no end in sight this is all a perfect storm for an upcoming recession of epic proportions.  There is no way of getting out of it either.  Like a Hurricane, it cannot be stopped.  I wonder how it is all going to look like when the Hurricane finally passes through town. Will any buildings still be left standing?

With the amount of people moving to BC yearly vs development. I dont know if the inventory will catch up.

 

Rent will keep increasing as multi-home owners will hold adding to that inventory tightness. Why sell now during a down turn?

 

[Warhippy]

Someone smarter than me wanna fill me in on what happens in a cascade effect to BC, Canada and America if China continues down this path?

 

https://fortune.com/2022/07/15/china-mortgage-boycott-homebuyers-real-estate-property-debt-crisis-evergrande-contagion/

 

Former UBS Group AG economist Jonathan Anderson once called it “the most important sector in the universe.”

 

More than a decade on, Chinese property is again grabbing the attention of global investors—this time for all the wrong reasons.

Mounting signs of stress this week in an industry that accounts for about a quarter of the world’s second-largest economy have roiled China’s credit markets, dragged down the nation’s bank stocks and pummeled commodities from iron ore to copper.

After a burst of optimism earlier this year that looser regulatory curbs might stem the industry’s debt crisis, investors are getting spooked by rolling COVID lockdowns and a rapidly escalating homebuyer boycott of mortgage payments on stalled projects. The bigger worry is that a widespread loss of confidence in real estate will put major strain on China’s economy and financial system, which is sitting on 46 trillion yuan ($6.8 trillion) of outstanding mortgages and still has 13 trillion yuan of loans to the country’s beleaguered developers.

“Property has been getting steadily worse the whole time; prices, sales, starts, all terrible,” said Craig Botham, chief China economist at Pantheon Macroeconomics in London. “The chronic deterioration has now taken another step. It was always going to hit the financial sector eventually, given the prevalence of collateral in loan books with large real estate portions.”

 

What started as trouble with China Evergrande Group is now snowballing into a crisis that risks engulfing the majority of the country’s developers, its biggest lenders and a middle class that has significant wealth tied to the property market. China’s home prices have tumbled 10 months straight, according to data released on Friday. 

“The whole pyramid is collapsing now,” said Anne Stevenson-Yang, co-founder of J Capital Research Ltd. “What’s different is that things are worse now because of the Evergrande crisis a year ago, which is spreading its tentacles throughout the Chinese economy.”

The turmoil this week has battered what was already one of the world’s most stressed industries. The average yield on Chinese junk dollar debt, which is dominated by developers, has surged to almost 26%. Selling has also spread to investment-grade builders, with a bond issued by China Vanke Co., the nation’s second-largest builder by sales, falling to a record-low of 81.6 cents on the dollar on Tuesday.

China’s COVID Zero policy is exacerbating the situation by damping demand for property and depressing economic activity. Lockdowns remain commonplace in China, which continues to stick to a policy of keeping out the virus with stringent curbs. A recent flareup in Shanghai has spurred concern the city could be heading for another lockdown. 

 

Concern that mortgage boycotts will lead to a rise in souring loans sent a gauge of Chinese bank shares to its lowest level since March 2020. 

Chinese authorities held emergency meetings with major banks this week to discuss the mortgage boycotts on concern that more buyers may follow suit, according to people familiar with the matter. Some lenders plan to tighten their mortgage lending requirements in high-risk cities, two of the people said.

The housing ministry in Xi’an became one of the first government agencies to address the issue publicly, saying it will penalize developers who cause social incidents due to failure of project delivery.

Homebuyers have stopped mortgage payments on at least 100 projects in more than 50 cities as of Wednesday, according to researcher China Real Estate Information Corp. That’s up from 58 projects on Tuesday and only 28 on Monday, according to Jefferies Financial Group Inc. analysts including Shujin Chen. 

“If more home buyers cease payment, the spreading trend will not only threaten the health of the financial system but also create social issues amid the current economic downturn,” Betty Wang, a senior economist at Australia & New Zealand Banking Group Ltd., wrote in a note Thursday.

 

Banks are rushing to reassure investors that risks from loans to homebuyers were controllable, with at least 10 firms issuing statements. State-owned Agricultural Bank of China Ltd. said it held 660 million yuan of overdue loans on unfinished homes, while smaller rival Industrial Bank Co. said 1.6 billion yuan of mortgages were impacted, of which 384 million yuan have become delinquent. 

Nomura Holdings Inc. said the refusal to pay mortgages stems from the widespread practice in China of selling homes before they’re built. Confidence that projects will be completed has weakened as developers’ cash woes intensified. 

Nomura economists led by Ting Lu estimate that Chinese developers have only delivered around 60% of homes they presold between 2013 and 2020, while in those years China’s mortgage loans rose by 26.3 trillion yuan. GF Securities Co. expects that as much as 2 trillion yuan of mortgages could be impacted by the boycott.

Housing in China has gone from being a sure bet over the past two decades to a growing risk. The government cracked down on leverage in the real estate industry, helping drive up debt refinancing costs for developers and triggering a record wave of defaults. Home sales tumbled 41.7% in May from a year earlier, with investment dropping 7.8%. 

The real estate industry has an oversized impact on the economy. When related sectors like construction and property services are included, real estate accounts for more than a quarter of Chinese economic output, by some estimates. About 70% of household wealth is stored in property, along with 30-40% of bank loan books, while land sales account for 30-40% of local government revenues, according to Pantheon Macroeconomics’ Botham.

 

The worsening crisis will test authorities’ ability to minimize the fallout. Earlier this year, China was setting up a stability fund to provide support to troubled financial firms as risks to the economy grow. Handling such issues will be also key for President Xi Jinping ahead of a leadership confab widely expected to cement his rule for life.

Data Friday will likely show the economy’s performance in the second quarter was the weakest since an historic contraction in the first three months of 2020 when the pandemic first hit. Economists predict GDP likely grew 1.2% in the second quarter from a year ago, down from 4.8% in the first three months of the year. 

The slowdown in construction is also hurting demand for building materials. Iron ore slumped more than 8% on Thursday, falling below $100 a ton for the first time since December. A year ago, iron ore was trading comfortably above $200 a ton, with China’s wave of Covid-era stimulus feeding a boom for property and the steel market. Futures for steel rebar in construction collapsed in Shanghai to their weakest since 2020. Copper dropped for a fifth day.

[ronthecivil]

On 7/16/2022 at 12:56 PM, bishopshodan said:

Sales are way down. But also listings are down as sellers start to decide to hold ....and rent

 

Rent rates up.

https://dailyhive.com/vancouver/vancouver-rent-report-july-record-2022

 

No mercy for those trying to get ahead.

 

Inventory, we need more inventory. 

Interestingly I heard Falcon and Eby on the radio this morning.

 

Eby wants to push cities with a carrot and stick approach (aka the carrot is how much more housing you approve, the stick is you can for example stick transit expansion until you do) in a bid to increase housing supply.

 

Falcon said its' what he was already advocating.

 

So either way, it's great news. Well, not for the NIMBYs, but &*%$^& them!

[The Arrogant Worms]

With rents soaring across Canada, some people are getting priced out

 

https://www.cbc.ca/news/business/rising-rent-housing-market-canada-1.6525075

[Warhippy]

4 minutes ago, The Arrogant Worms said:

With rents soaring across Canada, some people are getting priced out

 

https://www.cbc.ca/news/business/rising-rent-housing-market-canada-1.6525075

While it's cruel of me to,

 

I laugh when people read these and blame the government.  Like this wasn't happening back before 2010 in Vancouver and Kelowna.

 

We here in bc have been priced out for over a decade.  It's now general and across the entire nation.

 

The feds need to step up and bam corporate ownership of homes and the purchases of mass swaths of housing for rental purposes.  That's a huge contributor now to these issues because they need to please shareholders.

 

Edit*. Not saying you, just people in general who blame the government 

Edited July 20, 2022 by Warhippy

[ronthecivil]

13 minutes ago, Warhippy said:

While it's cruel of me to,

 

I laugh when people read these and blame the government.  Like this wasn't happening back before 2010 in Vancouver and Kelowna.

 

We here in bc have been priced out for over a decade.  It's now general and across the entire nation.

 

The feds need to step up and bam corporate ownership of homes and the purchases of mass swaths of housing for rental purposes.  That's a huge contributor now to these issues because they need to please shareholders.

 

Edit*. Not saying you, just people in general who blame the government 

Why are prices up? Inflation!

 

Why is there inflation? Big government deficits.

 

Who wins from inflation? Owners of hard assets like land, and the means of production like stocks.

 

Who looses from inflation? People living paycheck to paycheck.

 

If you want to ban something, ban the conversion of rental accommodation into condos. Every welfare filled apartment building from my youth (cottonwood, west hill place as examples) are now condos I can't even afford now as an engineer!

 

if you want non inflationary help that encourages organic growth in the economy, give tax breaks for creating rental housing, be it one floor, or the whole building. Encourage cities to lower the property tax on such places. Make the development of such places easier.  

 

Note that the very tenant favored rules in place right now, which are about to be tighter due to political concerns over "renoviction", act as a disincentive to creating rental housing. I for one would never be a landlord, I have heard way too many horror stories about bad tenants.

 

As long as a corporation is playing by the rules and paying their taxes, they too should be incentivized to have rental housing. 

 

Buying a track of houses, then quadrupling the density, and then making half rental, would be a situation where the amount of rental housing would be doubled. This kind of thing should be incentivized.

 

Policies should all be examined from a supply/demand perspective, and their effect on inflation, and their effect on organic economic growth, if you want to have good ones that last.

[The Arrogant Worms]

9 minutes ago, Warhippy said:

While it's cruel of me to,

 

I laugh when people read these and blame the government.  Like this wasn't happening back before 2010 in Vancouver and Kelowna.

 

We here in bc have been priced out for over a decade.  It's now general and across the entire nation.

 

The feds need to step up and bam corporate ownership of homes and the purchases of mass swaths of housing for rental purposes.  That's a huge contributor now to these issues because they need to please shareholders.

 

Edit*. Not saying you, just people in general who blame the government 

I agree.  it's a complex problem with no simple solution. 

 

What drives me even more nuts is the right wing fanatics blaming Trudeau and Horgan for every single problem.

 

My son just moved back to Victoria and is paying $2200 a month for a small 1 bedroom condo.  We had to co-sign his lease because even though he

makes decent money he wouldn't qualify on his own for a lease. 

 

So between rent...gas...insurance....food and a big chunk of his pay cheque goes toward his work pension(which is a good thing).

 

I think he figured out he can save $100 a month is his saving account.

 

 

[ronthecivil]

Oh one other real, real, REAL good idea!

 

This costs NOTHING!

 

Ban strata corporations from banning rentals. Sure, ok ban SHORT TERM RENTALS, no B&B, sure. 

 

But anyone should be able to offer a one year lease. Make rental bans in strata corps ILLEGAL.

 

BAM! I just massively increased your supply. I just fixed cottonwood and westhill place.

[Gurn]

12 minutes ago, The Arrogant Worms said:

I agree.  it's a complex problem with no simple solution. 

 

What drives me even more nuts is the right wing fanatics blaming Trudeau and Horgan for every single problem.

 

My son just moved back to Victoria and is paying $2200 a month for a small 1 bedroom condo.  We had to co-sign his lease because even though he

makes decent money he wouldn't qualify on his own for a lease. 

 

So between rent...gas...insurance....food and a big chunk of his pay cheque goes toward his work pension(which is a good thing).

 

I think he figured out he can save $100 a month is his saving account.

 

 

This is not sustainable for him, or anyone for that matter.

[The Arrogant Worms]

22 minutes ago, gurn said:

This is not sustainable for him, or anyone for that matter.

It's not like he has a choice right now.  Some CRA jobs require you to be in the same city.  He does have a choice on how many days he wants to go into the office and how many to work from his place.  Right now he is taking over for his supervisor who is on holidays.  I think that is his goal to become one as it is still a Union job and the pay tops out at $91,000 but will be higher when they get a new contract.  His current pay grade tops out at $71,000 which he will get next year after his 5th year on the job.

 

We don't mind helping out if he needs it.  We are mortgage free with a high income.   My Mom and Dad were always there for me when they were alive.

 

My Dad talked about the importance of helping family in the last month  before he passed away last year.

Edited July 20, 2022 by The Arrogant Worms

[Gurn]

12 minutes ago, The Arrogant Worms said:

He does have a choice on how many days he wants to go into the office and how many to work from his place.

Given the price of gas, as long as he gets the work done- stay home.

 

Member the old days when around $70 g was big money?

 

Warhippy has previously posted on just how close a lot of people are to insolvency-scary, scary times. Prices going up, and up for everything- except wages.

 

I wonder if people that rent or lease can deduct some of their rental money- as one room is kept for work purposes- or is that just for home owners that have a home business?

[The Arrogant Worms]

9 minutes ago, gurn said:

Given the price of gas, as long as he gets the work done- stay home.

 

Member the old days when around $70 g was big money?

 

Warhippy has previously posted on just how close a lot of people are to insolvency-scary, scary times. Prices going up, and up for everything- except wages.

 

I wonder if people that rent or lease can deduct some of their rental money- as one room is kept for work purposes- or is that just for home owners that have a home business?

He is only 5 minutes from work so gas isn't much.  I don't believe he can deduct anything if he did he might have to investigate himself lol.  And he really misses the socialization of the work environment since he doesn't know anyone in Victoria. 

 

I am old....I remember when $50,000 a year was big money.  I remember making $8-9 an hour and have enough money for rent...gas...insurence and going out to the bar 3 times a week.

 

I miss that lol.

 

 

[bishopshodan]

5 hours ago, ronthecivil said:

Interestingly I heard Falcon and Eby on the radio this morning.

 

Eby wants to push cities with a carrot and stick approach (aka the carrot is how much more housing you approve, the stick is you can for example stick transit expansion until you do) in a bid to increase housing supply.

 

Falcon said its' what he was already advocating.

 

So either way, it's great news. Well, not for the NIMBYs, but &*%$^& them!

Yeah. I think the province should take control of development from municipalities. They have threatened to do it before but I dont think they ever will.

City planning board members likely live in certain desirable areas and contribute to that NIMBY you speak of. 

 

 

2 hours ago, Warhippy said:

 

The feds need to step up and bam corporate ownership of homes and the purchases of mass swaths of housing for rental purposes.  That's a huge contributor now to these issues because they need to please shareholders.

 

 

Yes. 

High mortgage rates don't matter to big corps as they can buy outright and right now they can acquire more as prices come down. 

[DrJockitch]

1 minute ago, bishopshodan said:

Yeah. I think the province should take control of development from municipalities. They have threatened to do it before but I dont think they ever will.

City planning board members likely live in certain desirable areas and contribute to that NIMBY you speak of. 

 

 

Yes. 

High mortgage rates don't matter to big corps as they can buy outright and right now they can acquire more as prices come down. 

My understanding is they have removed single family zoning from Vancouver so no longer will be able to build. 
Man I wish I could afford to move back because those prices are already crazy and are going to balloon. 

[bishopshodan]

1 minute ago, DrJockitch said:

My understanding is they have removed single family zoning from Vancouver so no longer will be able to build. 
Man I wish I could afford to move back because those prices are already crazy and are going to balloon. 

Do you mean that allowance to add extra units to your land? 

[bishopshodan]

Spoke to an old realtor today.

He thinks that Sept will be the time when sales will start to pick back up and prices will follow. He said his area is at about half regular inventory right now as owners are as reluctant to list as people are to buy

 

Don't know if I agree with him but that's what he said. 

[Elias Pettersson]

1 hour ago, ronthecivil said:

Oh one other real, real, REAL good idea!

 

This costs NOTHING!

 

Ban strata corporations from banning rentals. Sure, ok ban SHORT TERM RENTALS, no B&B, sure. 

 

But anyone should be able to offer a one year lease. Make rental bans in strata corps ILLEGAL.

 

BAM! I just massively increased your supply. I just fixed cottonwood and westhill place.

Any strata building built after 2010 allows full rentals, which is a majority of the buildings now.  Alot of these older buildings are getting torn down to make way for new developments.  The City bylaws supercede any strata bylaws, so it's up to each municipality if they want to actually make these types of changes.  Alot of people don't like to live with tenants in their buildings, so that is why these bylaws exist.  Same with 19+ and 55+ age restrictions.  

[Elias Pettersson]

4 minutes ago, DrJockitch said:

My understanding is they have removed single family zoning from Vancouver so no longer will be able to build. 
Man I wish I could afford to move back because those prices are already crazy and are going to balloon. 

The zoning still technically exists, however the City of Vancouver will allow you to build multi family units on single family zoned properties.  Right now the City of Vancouver is looking at allowing up to 4000 properties in Vancouver to be rezoned for up to 6 units per lot.  They should have this finalized by the first quarter of 2023...

[bishopshodan]

2 minutes ago, Elias Pettersson said:

Any strata building built after 2010 allows full rentals, which is a majority of the buildings now.  Alot of these older buildings are getting torn down to make way for new developments.  The City bylaws supercede any strata bylaws, so it's up to each municipality if they want to actually make these types of changes.  Alot of people don't like to live with tenants in their buildings, so that is why these bylaws exist.  Same with 19+ and 55+ age restrictions.  

My last condo in Van was 60% owner occupied, so rental restricted.

It made it so the sale value was about 15% less than comparable buildings as new owners had to be on a long wait list if they wanted to rent.

It was immaculate and had a huge contingency fund as having that many owners live there kept things in check. 

[bishopshodan]

1 minute ago, Elias Pettersson said:

The zoning still technically exists, however the City of Vancouver will allow you to build multi family units on single family zoned properties.  Right now the City of Vancouver is looking at allowing up to 4000 properties in Vancouver to be rezoned for up to 6 units per lot.  They should have this finalized by the first quarter of 2023...

I would never do it as strata insurance is crazy since they changed things a few years ago. Due to the value of the buildings, those units would have huge strata costs.