[url]https://betterdwelling.com/city/vancouver/chinese-media-now-warning-canadas-housing-crash-will-worse-us/[/url]
[QUOTE]We’re always curious to know how other countries interpret our statistics, political climate and what outside media is reporting about Canada’s economy. Since China has been a hot button subject in Canadian news recently, we thought it was high time we took a look at how Canada is portrayed in China’s State regulated media. While the Chinese media does acknowledge that Chinese buyers are a contributing factor to our prices – and admit they have been capitalizing on it – they also point out some interesting observations that our media has failed to cover. Here are the most interesting points we found from three major Chinese publications.
Worse Than The 2008 US Crash
Hexun, China’s largest finance portal, recently published an article pointing to Canada’s debt fueled economy. They noted that Canadians have the largest debt-to-income ratio of any G7 country, with the average spending 165% of their salary. To contrast, at the height of the US housing crisis in 2008, Americans carried what was then considered an outlandish 147% debt-to-income ratio – 17 points lower than where we currently sit. Canada’s total household debt reached $1.892 trillion dollars, with $1.234 trillion dollars of that as mortgage debt – roughly 65% more than we make per year. To put that 1.82 trillion dollars into perspective, we could have run the US government for 8 months with that amount of money.[/QUOTE]
[QUOTE=HumanAbyss;50875670][url]https://betterdwelling.com/city/vancouver/chinese-media-now-warning-canadas-housing-crash-will-worse-us/[/url][/QUOTE]
Question, Is this really true, or is china making up the fact to spite canada after talks of closing that loophole.
Thanks, China.
It's been a long time coming, to be honest. The prices are absolutely ludicrous in Toronto, and even worse in Vancouver from what I hear.
Although I know it's going to happen, I don't know what will happen when it does.
Canada is literally turning into a 3rd world country before our very eyes and we're doing nothing about it. Collapse of the oil industry, unemployment crisis with over 100k jobs lost in the past two months, the same problems young people have in the States, and now according to the Chinese, a looming debt crisis and housing market collapse. I'm honestly completely terrified for the future of this country and I legitimately fear us becoming just as bad as Venezuela.
But hey who cares Trudeau looks good without a shirt so we have nothing to worry about.
Isn't this more the government's fault for not closing the loophole?
[editline]12th August 2016[/editline]
[QUOTE=Taepodong-2;50875706]Canada is literally turning into a 3rd world country before our very eyes and we're doing nothing about it. Collapse of the oil industry, unemployment crisis with over 100k jobs lost in the past two months, the same problems young people have in the States, and now according to the Chinese, a looming debt crisis and housing market collapse. I'm honestly completely terrified for the future of this country and I legitimately fear us becoming just as bad as Venezuela.[/QUOTE]
Oh calm down. If you're supposed to be dropping to "as bad as Venezuela", the US would be Ethiopia-And-A-Half by now.
[QUOTE=Zillamaster55;50875708]Isn't this more the government's fault for not closing the loophole?[/QUOTE]
Complicated, but in a lot of ways, yes.
We can't really blame the Chinese mainlanders for taking advantage of our market when we left ourselves open to it.
It just seems like it comes down to the Fed, and Provincial governments utterly failing to keep up with the gap between income and cost of living. Canada is seriously suffering from a debt crisis that will cripple our nation for decades to come, and we're ignoring it.
I got no issue seeing it implode. While it will severely negatively impact our construction markets it's not like we'll see a giant glut of new homes. It's older already established residences and condos that will flood the market. Many in places where for the last decade most of the locals have left because it was too expensive to live anymore. It will also probably impact efforts to save older homes positively.
For Clarke however, she's fucked since she built her reign on LNG...which has recently pretty much collapsed...and foreign investors.
The provincial election is coming up. My money is on she's not gonna be going back to her job.
[quote]Isn't this more the government's fault for not closing the loophole?[/quote]
It technically is however it's more the meddlings of a previous government. The Conservatives for their decade in power were very, very heavy on their incentives to the chinese to spur investment from them as they had money to throw around like it was nobody's business. You can blame Trudead a little for not doing much beyond dumping billions into defunded or crippled government services but telling china to piss off isn't one even I would want to do.
[QUOTE=OmniConsUme;50875693]Question, Is this really true, or is china making up the fact to spite canada after talks of closing that loophole.[/QUOTE]
Loopholes been closed for two weeks. They added on a 15% tax for foreign buyers.
We'll see the long term effects of the closure in the future, but that 15% isn't really what we need to fix our economy or housing market.
The situation is clearly fucked and unsustainable, but let's play devil's advocate for a second here.
The income to debt ratio covers all spending. Just because the housing market is exploding, doesn't automatically mean that people are buying tons of other luxuries like sports cars and half a dozen TVs. In other words, the two numbers are not inherently directly comparable. Plus a lot of the money inflating the prices is just flowing into Canada, and not going back to China. Even after the crash, prices are probably going to stay pretty high.
It's going to be bad, but this article feels kind of sensationalist.
[QUOTE=pentium;50875722]I got no issue seeing it implode. While it will severely negatively impact our construction markets it's not like we'll see a giant glut of new homes. It's older already established residences and condos that will flood the market. Many in places where for the last decade most of the locals have left because it was too expensive to live anymore. It will also probably impact efforts to save older homes positively.
For Clarke however, she's fucked since she built her reign on LNG...which has recently pretty much collapsed...and foreign investors.
The provincial election is coming up. My money is on she's not gonna be going back to her job.[/QUOTE]
You're wrong though?
Vancouver lives on a whisper thin vacancy rate and has done so for a decade now. Once the economy collapses, people who sunk millions into homes worth nothing won't be able to leave, and there won't be many homes on the market. Our economy is already stagnating from our lack of social housing projects and our willingness to sell "For Sale" homes to buyers who just rent them out as passive incomes for themselves effectively eliminating the entry into the home market for many buyers.
The fact that Clarke even ran with LNG blows my [B]fucking[/B] mind. When she announced that as a campaign promise, she had a few months to get soil broken to actually be market competitive. We still haven't broken soil how many years later on even one of the LNG plants, so we'll never be market competitive and we'll just see Christie fucking Clarke get some more money out of our province.
As a young political activist in Burnaby/Coquitlam, i'm losing my fucking mind with this province. I'm starting to believe the only way change will ever happen is if I run for office and win and the stars align and allow for a real change to occur.
[QUOTE=Zephyrs;50875730]Even after the crash, prices are probably going to stay pretty high.
It's going to be bad, but this article feels kind of sensationalist.[/QUOTE]
The assumption on housing prices post glut is that the prices will slowly drop as realtors try almost anything to dispose of listings they've been holding onto for months or even years. It'll never reach something like the prices in Halifax but at this point if I could get a place in Vancouver Proper for $400000 I think I could get a bank to listen to me regarding a mortgage or a down payment loan.
[QUOTE=HumanAbyss;50875751]Our economy is already stagnating from our lack of social housing projects and our willingness to sell "For Sale" homes to buyers who just rent them out as passive incomes for themselves effectively eliminating the entry into the home market for many buyers. [/QUOTE]
Out of curiosity, do you have a problem with landlords here? If so, can you elaborate on why?
[QUOTE=pentium;50875763]The assumption on housing prices post glut is that the prices will slowly drop as realtors try almost anything to dispose of listings they've been holding onto for months or even years. It'll never reach something like the prices in Halifax but at this point if I could get a place in Vancouver Proper for $400000 I think I could get a bank to listen to me regarding a mortgage or a down payment loan.[/QUOTE]
But the banks will be in financial straights and will have to do business very carefully. A housing crash in Vancouver won't spell the end for our banks, but they'll be in a serious pinch for 6 months to a year at least I imagine, so I'm not sure how that'll play out for you.
But hopefully, it does work out for the best for all of us.
[QUOTE=pentium;50875763]The assumption on housing prices post glut is that the prices will slowly drop as realtors try almost anything to dispose of listings they've been holding onto for months or even years. It'll never reach something like the prices in Halifax but at this point if I could get a place in Vancouver Proper for $400000 I think I could get a bank to listen to me regarding a mortgage or a down payment loan.[/QUOTE]
See, to me, 400,000 American isn't even that expensive. What sort of place are we talking about? 400,000 Canadian is not a hell of a lot for the Eastern coast, especially New England.
[QUOTE=Zephyrs;50875770]Out of curiosity, do you have a problem with landlords here? If so, can you elaborate on why?[/QUOTE]
Well, a year back there was an issue with a richmond(very chinese centric part of the lower mainland) Strata group only holding their meetings in Mandarin, whilst there being several english speakers wishing to attend who felt discriminated against.
But in large part, no I don't. I would personally love to own property to rent out to other people. The issue becomes that home ownership is largely a myth for young people in this province. I'm lucky, I own my own home. But most people are stuck renting in properties that are rented out for exorbitant prices and can never save to own a car, let alone a home. The average Vancouverite spends 50-60% of their annual income on rent. That alone is unsustainable, but our cities and provinces have been pretty excited to keep that bubble going from what I can tell.
[QUOTE=Taepodong-2;50875706]Canada is literally turning into a 3rd world country before our very eyes and we're doing nothing about it. Collapse of the oil industry, unemployment crisis with over 100k jobs lost in the past two months, the same problems young people have in the States, and now according to the Chinese, a looming debt crisis and housing market collapse. I'm honestly completely terrified for the future of this country and I legitimately fear us becoming just as bad as Venezuela.
But hey who cares Trudeau looks good without a shirt so we have nothing to worry about.[/QUOTE]
Holy hell, what is this garbage.
[QUOTE=Zephyrs;50875784]See, to me, 400,000 American isn't even that expensive. What sort of place are we talking about? 400,000 Canadian is not a hell of a lot for the Eastern coast, especially New England.[/QUOTE]
Currently, at this moment, you're looking at a cool 1.2- 1.6 million for a home like this.
[IMG]http://i.huffpost.com/gen/4295270/thumbs/o-VANCOUVER-HOME-570.jpg[/IMG]
People seem to forget that a housing market crash in most Western nations is the only way we'll see affordable housing. Houses everywhere are massively overvalued due to very low interest rates and a housing bubble.
[QUOTE=Zephyrs;50875770]Out of curiosity, do you have a problem with landlords here? If so, can you elaborate on why?[/QUOTE]
A large portion of Vancouver Proper's older homes and Vancouver Specials are single family dwellings converted into multi-family apartments. Usually it's something as simple as the door to the basement has two deadbolts and the landlord has the only key. AT least one of my landlords wasn't even my landlord. They were a representative for a property holdings group down in Texas.
[QUOTE=HumanAbyss;50875813]Currently, at this moment, you're looking at a cool 1.2- 1.6 million for a home like this.
[IMG]http://i.huffpost.com/gen/4295270/thumbs/o-VANCOUVER-HOME-570.jpg[/IMG][/QUOTE]
I'm assuming that's in CAD.
It's still stone cold fuck nuts, but in a lot of places around here, a place like that would easily fetch 200-250k USD in a halfway decent area with a bit of cleanup. That's getting pretty close his 400k CAD range.
[QUOTE=chunkymonkey;50875806]Holy hell, what is this garbage.[/QUOTE]
Just keep drinking the kool-aid. Canada is going downhill and if you can't see it you're blind. Reaching Venezuela levels is probably an exaggeration, but we definitely have the potential to reach Greece levels. And did you ever stop to think that just maybe I live in Alberta, the hardest hit province right now, where if I even want a job at McDonald's I have to move to Calgary, but having a McDonald's job can't let you survive in Calgary. No shit I'm fucking frustrated and angry with the direction this country is going.
[QUOTE=Zephyrs;50875833]I'm assuming that's in CAD.
It's still stone cold fuck nuts, but in a lot of places around here, a place like that would easily fetch 200-250k USD in a halfway decent area with a bit of cleanup. That's getting pretty close his 400k CAD range.[/QUOTE]
Well googles telling me the cad to usd rate is 1.5 million to 1157764.77 for a home that is purely a tear down in Vancouver, and we're not even into building costs yet.
The price is fucked, and much like San Fran we've had a hold on development in many promising areas further causing a housing market squish.
A year ago, I lived an hour outside the city in a smaller town, my parents home in that town sold for 2 million, it was a nice home, but not 2 million dollars nice. But that's what even a home an hour outside of the metropolitan areas costs.
[QUOTE=Zephyrs;50875784]See, to me, 400,000 American isn't even that expensive. What sort of place are we talking about? 400,000 Canadian is not a hell of a lot for the Eastern coast, especially New England.[/QUOTE]
For Vancouver exclusively we can apply the [url=https://en.wikipedia.org/wiki/Vancouver_Special]Vancouver Special Housing Template[/url].
[img]http://yourvancouverrealestate.ca/images/2013/04/Typical-Vancouver-Specials-Floorplan.jpg[/img]
[img]https://upload.wikimedia.org/wikipedia/commons/thumb/a/a7/Vancouver_spcials_01.jpg/400px-Vancouver_spcials_01.jpg[/img]
Designed in the 60's and used extensively until banned in the 1980's as an anti-suburban design measure it is the single most common design used in the lower mainland. Gives you a front yard, a parking space that backs into a laneway and a small backyard, and two floors averaging between 1500 and 2200 square feet while making efficient use of Vancouver's narrow housing plots. Designed for a family of four. Smaller properties from the earlier post-war housing boom and suburban sprawl work with families of three or couples without children.
As seen in the floorplan above these properties can be inexpensively converted into split-level apartments and many have been.
[QUOTE=pentium;50875830]A large portion of Vancouver Proper's older homes and Vancouver Specials are single family dwellings converted into multi-family apartments. Usually it's something as simple as the door to the basement has two deadbolts and the landlord has the only key. AT least one of my landlords wasn't even my landlord. They were a representative for a property holdings group down in Texas.[/QUOTE]
What percentage of the homes value* is in monthly rent? 1%? 2%? 3?% Just curious, because there's a quick and dirty way to see if the problems are population or money injection related.
*At current market rates.
[QUOTE=Zephyrs;50875950]What percentage of the homes value is in monthly rent? 1%? 2%? 3?% Just curios, because there's a quick and dirty way to see if the problems are population or money injection related.[/QUOTE]
My last place was near the corner of 45th and Boundary. Again, a Vancouver Special turned apartments. ME and four other people lived upstairs, each paying $550 a month, so $2200 a month for half the house. The folks downstairs paid a little less because it was the basement but overall per month the landlord received about $4000.
Quickly googling up [url=http://www.rew.ca/properties/R2082063/2745-e-45th-avenue-vancouver]there's a house a few blocks away listed for $2 million[/url], however it's clearly a "Build to Suit" (AKA a modern Vancouver Special built at the lowest possible cost and at the fringe of current floorspace bylaws) so you need to cut at least $300000 off the price because it's likely a flipped property, plus the building is new.
Even assuming 5 grand a month rent, for a SFH, those rent prices are ludicrously low for a house that is valued over a million. The 1% rule starts to break down with grossly inflated property values, because the value of the house itself is pretty static, while the land is not, but even then, those rental rates are quite low.
Not a foolproof method, but it just reinforces that it's almost purely a massive injection of money, and that there's no real population glut. If there was a shortage due to population, you'd expect the rent rates to surge with, or even ahead of, the value of the properties.
[QUOTE=Zephyrs;50876049]Even assuming 5 grand a month rent, for a SFH, those rent prices are ludicrously low for a house that is valued over a million. The 1% rule starts to break down with grossly inflated property values, because the value of the house itself is pretty static, while the land is not, but even then, those rental rates are quite low.
Not a foolproof method, but it just reinforces that it's almost purely a massive injection of money, and that there's no real population glut. If there was a shortage due to population, you'd expect the rent rates to surge with, or even ahead of, the value of the properties.[/QUOTE]
The issue becomes even those relatively small numbers are relatively extortionate in our market
Our income hasn't trended up more than 10-15% in the same time frame rent has soared
[QUOTE=Taepodong-2;50875846]Just keep drinking the kool-aid. Canada is going downhill and if you can't see it you're blind. Reaching Venezuela levels is probably an exaggeration, but we definitely have the potential to reach Greece levels. And did you ever stop to think that just maybe I live in Alberta, the hardest hit province right now, where if I even want a job at McDonald's I have to move to Calgary, but having a McDonald's job can't let you survive in Calgary. No shit I'm fucking frustrated and angry with the direction this country is going.[/QUOTE]
I live in Alberta too bub but your ridiculous exaggerating is just silly.
And saying I'm just drinking "the kool-aid" because I don't believe your tosh of gloom and doom just makes you look like a nutter.
[QUOTE=HumanAbyss;50876067]The issue becomes even those relatively small numbers are relatively extortionate in our market
Our income hasn't trended up more than 10-15% in the same time frame rent has soared[/QUOTE]
Certainly. I wasn't commenting one way or another on the income growth topic, but you are absolutely right.
My point is that it's primarily a 'gentrification' problem. As an example of high rental demand, rewind back to 2008-2010. Housing prices tanked, but people needed places to live, so rental rates remained very steady, with only minor dips in most places. 1.5-2% monthly rent was common, with some fixerupper places renting for 3%. Now things have leveled out to be more in the 1-1.5% range. This is the opposite scenario. Really obvious indicators of a soon to pop bubble, or gentrification.
My bet is a touch of gentrification with a substantial bubble. Prices will not hard reset to be in line with inflation applied to historic values, because the cash is already there. However, they will crash if the money faucet is shut off, and over the next 10-20 years, you can probably expect the market to not keep pace with inflation as it slowly levels out and the cash filters out of the area. At that point, the 30-40 year timeline will be relatively closely keeping pace with inflation again.
All this assuming of course that the bubble isn't kept alive up to the point where it bankrupts the entire region. Well, that and the assumption that there isn't a massive population boom/exodus in the area for some other reason.
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