[Canada] Canadian Politics Redux

[Camerus]

At the risk of inciting Beeb to once more liken me to a shoeshine boy, I'm still not convinced that the old models of understanding hotspot Canadian real estate valuation are as valid as they used to be due to globalization, and in particular to large scale wealthy Asian immigration / investing / moving money offshore. The fact that this alleged bubble has persisted for decades and the population of Canada's desirable urban centers continues to grow significantly seems to suggest to me that the game has changed.

[Barrister]

At the risk of inciting Beeb to once more liken me to a shoeshine boy, I'm still not convinced that the old models of understanding hotspot Canadian real estate valuation are as valid as they used to be due to globalization, and in particular to large scale wealthy Asian immigration / investing / moving money offshore. The fact that this alleged bubble has persisted for decades and the population of Canada's desirable urban centers continues to grow significantly seems to suggest to me that the game has changed.

"This time it's different".

Said during every asset bubble ever.

[Camerus]

Deep.

[Jacob]

At the risk of inciting Beeb to once more liken me to a shoeshine boy, I'm still not convinced that the old models of understanding hotspot Canadian real estate valuation are as valid as they used to be due to globalization, and in particular to large scale wealthy Asian immigration / investing / moving money offshore. The fact that this alleged bubble has persisted for decades and the population of Canada's desirable urban centers continues to grow significantly seems to suggest to me that the game has changed.

"This time it's different".

Said during every asset bubble ever.

Do you think there are bubbles in all the large cities across the world that have high property prices, or just in Vancouver?

[crazy canuck]

There are some significant problems with BB's analysis.  The fundamental problem is he ignored what the business article expressly stated - that the labour rate is improving because of population inflows.  All those people coming to British Columbia need to live somewhere.

The second problem is that article he relies upon is very misleading.   The real estate market, as measured by contribution to GDP, has had very moderate gains.  Whereas the oil industry in Alberta has crashed.  That is the only reason a sensational headline can claim that the real estate market is as important to BC as the oil industry is to Alberta.

The other significantly misleading thing about that article is that all sectors of our economy are growing at about the rate of the real estate market.  The sector that has experienced the most growth, as a percentage of GDP, has been the natural resource sector.

The last point is that people have been saying that BC is in a housing bubble since at least the 90s.  But if you look in the migration patterns into BC you will readily see why land has become increasingly valuable.  People keep moving here.  Granted if people stop coming or start leaving that will be a problem.  But that is a different issue. So long as Vancouver is the main economic driver in Canada people are going to be attracted to this place - and not just because we get the best weather in the country 

[viper37]

and not just because we get the best weather in the country 

Depends.  How long a drive is it if you want to ski and get the best of both worlds?

[crazy canuck]

and not just because we get the best weather in the country 

Depends.  How long a drive is it if you want to ski and get the best of both worlds?

30 minutes from the beach to the ski hill.  For the local mountains anyway. Fifteen minutes from my house to both   Two hours from the local beaches to Whistler for world class skiing.

[viper37]

Ok, Vancouver really seem like paradise.  I always wanted to visit, but it often costs less to travel to Paris for a week than 3 days in Vancouver.

[Jacob]

Ok, Vancouver really seem like paradise.  I always wanted to visit, but it often costs less to travel to Paris for a week than 3 days in Vancouver.

Yeah, and it's usually cheaper for us to fly to China than to Ontarios (or Quebec).

Friggin' Air Canada (and West Jet).

[Josephus]

Canada people are going to be attracted to this place - and not just because we get the best weather in the country 

Nah, it is the weather!

My niece just moved to Tofino. I want to follow her

[Malthus]

There are some significant problems with BB's analysis.  The fundamental problem is he ignored what the business article expressly stated - that the labour rate is improving because of population inflows.  All those people coming to British Columbia need to live somewhere.

The second problem is that article he relies upon is very misleading.   The real estate market, as measured by contribution to GDP, has had very moderate gains.  Whereas the oil industry in Alberta has crashed.  That is the only reason a sensational headline can claim that the real estate market is as important to BC as the oil industry is to Alberta.

The other significantly misleading thing about that article is that all sectors of our economy are growing at about the rate of the real estate market.  The sector that has experienced the most growth, as a percentage of GDP, has been the natural resource sector.

The last point is that people have been saying that BC is in a housing bubble since at least the 90s.  But if you look in the migration patterns into BC you will readily see why land has become increasingly valuable.  People keep moving here.  Granted if people stop coming or start leaving that will be a problem.  But that is a different issue. So long as Vancouver is the main economic driver in Canada people are going to be attracted to this place - and not just because we get the best weather in the country 

I agree that the bubble talk is just amusing at this point (real estate has been bubbling, allegedly, for decades now) - but is there any truth in the reports we occasionally get that there are lots of houses in Vancouver sitting vacant because Chinese investors buy them and don't move in? That would be concerning.

http://www.theglobeandmail.com/news/british-columbia/vancouver-house-buying-frenzy-leaves-half-empty-neighbourhoods/article27056534/

[Jacob]

I agree that the bubble talk is just amusing at this point (real estate has been bubbling, allegedly, for decades now) - but is there any truth in the reports we occasionally get that there are lots of houses in Vancouver sitting vacant because Chinese investors buy them and don't move in? That would be concerning.

http://www.theglobeandmail.com/news/british-columbia/vancouver-house-buying-frenzy-leaves-half-empty-neighbourhoods/article27056534/

I think it's overstated. It's the narrative pushed by people who are incensed by rich Chinese investors coming over here and ruining the property market, so they tend to see confirmation everywhere.

There was a story about - I think it was a journalist - who was making a big deal about an reports of empty houses in his neighbourhood being left empty by Chinese investors ruining the place; one particular woman had raised the issue and he wanted something down. Turned out, after some investigation it was his house - he's of Chinese background and he'd bought the house to build/renovate and was waiting for permits.

Anyhow, there are things going on - people are buying and renting out. There's definitely some people who are buying and flipping quickly, which leaves houses empty for a while - there was a story about that and threats about gangsters being made f. ex. http://www.theglobeandmail.com/news/british-columbia/bc-realtor-accused-of-making-threats/article30024457/

What I personally think is happening more is that well moneyed immigrants buy a place to live, but continue doing business in China - meaning they're often away for two, three, six months of the year. Others will buy a place for their kid who's attending university (while they stay in China to work/ do business). Some will buy a giant house for the family, but only the wife stays there (sometimes not full time) while the husband goes back to work.

Developers will buy houses and plan to build, but between permitting and other business reasons, sometimes they leave the house sitting for a while.

All of that will contribute to the "empty neighbourhood feel".

I don't know of course, and there're certainly a lot of "common sense" and "everybody knows" stories being passed around that fit the recurring "blame the Asians." Maybe they're true, too. I can say that amongst the rich Chinese we know - and we know a few - there aren't a lot of "parking our money in an empty house" going on.

[Monoriu]

Even if those houses are occupied, those neighbourhoods will not go back to how they were.  Chinese tend to keep to themselves, stay indoor, participate less in communal affairs etc.  I lived in a mostly Chinese area in Vancouver.  The houses were occupied but almost nothing went on in the area and we didn't know who lived next to us.  No trick or treats, no Christmas decorations etc.

[crazy canuck]

There are some significant problems with BB's analysis.  The fundamental problem is he ignored what the business article expressly stated - that the labour rate is improving because of population inflows.  All those people coming to British Columbia need to live somewhere.

The second problem is that article he relies upon is very misleading.   The real estate market, as measured by contribution to GDP, has had very moderate gains.  Whereas the oil industry in Alberta has crashed.  That is the only reason a sensational headline can claim that the real estate market is as important to BC as the oil industry is to Alberta.

The other significantly misleading thing about that article is that all sectors of our economy are growing at about the rate of the real estate market.  The sector that has experienced the most growth, as a percentage of GDP, has been the natural resource sector.

The last point is that people have been saying that BC is in a housing bubble since at least the 90s.  But if you look in the migration patterns into BC you will readily see why land has become increasingly valuable.  People keep moving here.  Granted if people stop coming or start leaving that will be a problem.  But that is a different issue. So long as Vancouver is the main economic driver in Canada people are going to be attracted to this place - and not just because we get the best weather in the country 

I agree that the bubble talk is just amusing at this point (real estate has been bubbling, allegedly, for decades now) - but is there any truth in the reports we occasionally get that there are lots of houses in Vancouver sitting vacant because Chinese investors buy them and don't move in? That would be concerning.

http://www.theglobeandmail.com/news/british-columbia/vancouver-house-buying-frenzy-leaves-half-empty-neighbourhoods/article27056534/

It turned out to be anecdotal nonsense.  In the past year there has been a lot of scapegoating going on.  The low point was a crack pot study which looked at the Surname of people buying property and surprise, a large percentage of names were Asian sounding.

There was another study by academics released in March which looked at the theory that off shore buyers were leaving houses empty.  They found that the number of empty housing units in Vancouver has been unchanged as a percentage for over a decade.   So much for the theory in the Globe and Mail. 

[Monoriu]

If I buy a house in Vancouver for investment purposes, I won't leave it unoccupied.  I want rental income. 

The way I see it, "low occupancy" is just a politically correct way to say it.  The real problem is "Chinese buying up all the houses, driving property prices to insane levels, and they don't talk to us."  In other words, basically the same problem that we face in Hong Kong now