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08-21-2012, 09:06 PM
  #201
Lonny Bohonos
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Originally Posted by fenrir604 View Post
That's interesting, 3.5% seems very low. But I guess you could be right.

It's just that; even though I'm not an economist, I work in the housing/commerical design sector and I am exposed to lots of clients and realtors. Maybe I'm just an isolated case but I've noticed that in Richmond, Vancouver's West End and Metro Vancouver as a whole has seen huge increases in foreign purchases within the last decade or so.
I thought the same thing. Im sure foreign investment plays some role in that but it appears the govnt is trying to curb some of that as if im not mistaken they introduced "laws" a few months back tightening foreign investment regulations.

But its largely driven by the low cost of borrowing including interest rates. Its not specific to vancouver.

I was just in Moose Jaw where i saw a rancher style house advertised through a local realtor for $530,000. My grandmother just bought a 2 bedroom condo for in "downtown" MJ for $400,000. Dont know if youve ever been to MJ but imagine a much much ****tier version of White Rock without the benefit of being a suburb of vancouver, without the "nice" weather, natural beauty etc

My wife and i have discussed where we would move to if we move back to canada one day and ive been pretty consistent it would be a place like Alberta or Saskatchewan bit that seems like it would be a bad move.

Vancouver has never been on the cards even though between the two of us we could easily afford a big downpayment towards a nice house in vancouver.

The scary thing is Vancouver economy which appears to be entirely service industry orientated how many people are tied up in the real estate industry. Certainly the resulting boom has raised incomes and jobs within the real estate industry including builders and agents. So "if" the bubble bursts what is the knock on effect?

I lived through the very tailend of the boom and the bust in Dubai and during the boom the place was filled with shady unqualified real estate agents etc. All of them got wiped out because dubai which was over reliant on the housing market crashed.

The only saving grace for the market in dubai is the fact that its a safe place in a region beset by instability. The uprisings and resulting turmoil have benefited the housing market in dubai as people flee to safer havens. Dubai being the easiest for many reasons.

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08-21-2012, 10:05 PM
  #202
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Originally Posted by craigcaulks View Post
FWIW, White Rock isn't Vancouver. But more importantly, multiculturalism in White Rock? Are you talking about where people's cars come from? Is there a whiter enclave in the province?
Well I meant greater Vancouver. As for the multiculturalism, I'm not just talking about White Rock, I'm talking about greater Vancouver and the Fraser Valley in general.

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Originally Posted by buddahsmoka1 View Post
He probably went to Semiahmoo Secondary or something.
Lmao, you're such a clown. I didn't grow up in the lower mainland.

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08-21-2012, 10:07 PM
  #203
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I don't mind the multiculturalism, I embrace it..besides I'm Asian lol

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08-21-2012, 10:09 PM
  #204
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Originally Posted by vadim sharifijanov View Post
sounds like there was a reason beyond cost that he chose to buy in white rock and not, say, yaletown.
I bought in White Rock, because my fiance loves it there and that is the only place in greater Vancouver/Fraser Valley I would live in. I'd live in Langley or Aldergrove, but the old lady works in downtown, so it's a bit far for her.

I will be selling my place in White Rock and will look to buy an acreage somewhere in the Kelowna/Peachland area.

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08-21-2012, 10:56 PM
  #205
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Originally Posted by CanucksnWpg View Post
The housing crash that happened in the States will never happen in Canada. In any part of Canada. Canadian banks don't just give every random joe mortgages to purchase a home. You have to have good credit, show that you pay your bills every month, have 20% down. And that housing crash is still going on. I could easily purchase a house down in Arizona for what I make right now.
It happened in Vancouver only 30 years ago. There was a huge spike in the late '70s to early '80s where housing prices doubled in a short span before losing half their value just as quickly. There were also a couple of 25% drops in the '90s, so to suggest that it can't happen again is foolhardy. Even in 2008 homes lost nearly 20% of their value before they were propped back up with emergency level interest rates which made money basically free to borrow.

I doubt we'll see a massive US style crash either, but a 25-35% drop is a very distinct possibility, which is several hundred thousand dollars of value for the average house in Vancouver.

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08-21-2012, 11:17 PM
  #206
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Originally Posted by opendoor View Post
It happened in Vancouver only 30 years ago. There was a huge spike in the late '70s to early '80s where housing prices doubled in a short span before losing half their value just as quickly. There were also a couple of 25% drops in the '90s, so to suggest that it can't happen again is foolhardy. Even in 2008 homes lost nearly 20% of their value before they were propped back up with emergency level interest rates which made money basically free to borrow.

I doubt we'll see a massive US style crash either, but a 25-35% drop is a very distinct possibility, which is several hundred thousand dollars of value for the average house in Vancouver.
No one knows the final drop.

However 25-35% is very realistic. Lending rated have been at historic lows not unlike the US and other housing markets before their crashes.

As the maxim goes the markets with the highest amount of speculation suffer the biggest loses. So which is canadas biggest speculation market?

The problem is the decline is never linear. Its not as simple as a few over leveraged home owners biting the dust but the knockon and side effects.

Not to mention Vancouvers economic make up. Seemingly 4/5 jobs in BC (guidetobceconomy.org) are service sector and i should think a good portion of the 1/5 goods sector jobs are outside of Vancouver and most jobs in Vancouver are service sector.

Construction accounts for 44% of goods sector jobs or 10% of all jobs which of course will take a hit as the market slides. 15% of jobs in the service sector are wholesale/retail which takes a massive hit when times are tough.

Basically peoples equity being eroded along with layoffs. More people on govnt assistance. Increased govnt spending. Maybe increased taxes to make up for that spending and so on.

Add to that many people who have decided to finance their retirement through their home which could lead to panic selling once they see their nest egg depleting and further compounding the issue i dont really see Vancouver being entirely different than previous bursts.


Only this time household debts are higher than before so is the exposure of the banks.

I can see why the govnt is keen to get the oil sands up and running.


Last edited by Lonny Bohonos: 08-21-2012 at 11:29 PM.
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08-21-2012, 11:40 PM
  #207
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Won't be surprised to see prices drop soon.

Real estate prices are high now, but the demand has stagnated.

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08-21-2012, 11:45 PM
  #208
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Quote:
Originally Posted by Wilch View Post
Won't be surprised to see prices drop soon.

Real estate prices are high now, but the demand has stagnated.
Theyve already dropped. Especially in the condo market.

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08-21-2012, 11:53 PM
  #209
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Originally Posted by Lonny Bohonos View Post
Theyve already dropped. Especially in the condo market.
I haven't been following real estate prices until this year, but how were prices back in 2008 before the bubble began? Like for a one room 600ish sq.ft condo in kits?

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08-21-2012, 11:59 PM
  #210
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Right now there's been a drop in demand due to new mortgage downpayment requirements; the market has been slow. I think it'll pick up a bit by the end of the year, though. The flow of new people into Vancouver hasn't slowed down at all.

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08-22-2012, 12:07 AM
  #211
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Originally Posted by Lonny Bohonos View Post
No one knows the final drop.
You can make a pretty approximate guess:



http://vreaa.wordpress.com/

2002 is when the mini-recession of 9/11 was ending due to lowering of interest rates globally and the rise of easy credit.

Nearly all of the world has had real estate drops. How is Vancouver different? Our economy and gdp has tracked the US with a lag time of about 1 to 2 years.

Vancouver's employment sector is also 75% related to real estate. The drop is going to be very, very, very painful for Vancouver. I'm glad that my consultancy (and soon business) sells to a global audience, cause Vancouver IMO is going to be absolutely dead in the water for the next decade in a few years.

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08-22-2012, 12:13 AM
  #212
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Originally Posted by craigcaulks View Post
It is the first step in allowing the government out of transit. In order to sell pieces like the train, buses, etc, there will have to be a way to account for usage. The same company won't necessarily by everything, so the money needs to be alloted fairly.

You get on the train in NW, then get on a bus at Main. You'll swipe your ticket to get on the train then on the bus and that will allow the proper payment to go to each company. It's not a new concept.

Certainly you don't think we just spent $170M to prevent a few million in fair jumpers, many of whom just won't bother riding at all.

Then again, we did just blow $500M+ on a roof.
Having faregates gives you concrete statistics of ridership and a way to estimate revenues in the future. I don't know how you can spin that to some conspiracy about privatizing Translink (which already is partly privatized anyway.)

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08-22-2012, 12:14 AM
  #213
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Originally Posted by kanuck87 View Post
What's an example of a "conservative and low-risk" 5% return per year?
Dividends, mutual funds and 2-3 year GICs at 2-2.5% will average out 4%.

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08-22-2012, 12:16 AM
  #214
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Quote:
Originally Posted by VinnyC View Post
Right now there's been a drop in demand due to new mortgage downpayment requirements; the market has been slow. I think it'll pick up a bit by the end of the year, though. The flow of new people into Vancouver hasn't slowed down at all.
The CDN govnt has capped investor class immigration. Its not like refugees or those economically depressed and immigrating will make up the slack.

Not to mention countries like China, India and Brazil are now slowing down.

Mortgage restrictions are just the start. I listen to the news from Vancouver over the internet and without fail every 3 months theres a story about the Bank considering raising interest rates and everytime the result is the same. The Bank decides not to.

Tells me they are in a bit of a bind about what to do.

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08-22-2012, 12:25 AM
  #215
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Originally Posted by Lonny Bohonos View Post
Mortgage restrictions are just the start. I listen to the news from Vancouver over the internet and without fail every 3 months theres a story about the Bank considering raising interest rates and everytime the result is the same. The Bank decides not to.

Tells me they are in a bit of a bind about what to do.
Yup, spot on. BOC can't raise interest rates because a lot of households are already pushing 85%+ of their income to service debt (mortgage.) Raising interest rates by even half a point equates to probably an average of $1000 monthly on your mortgage payment which would kill most households.

People stop spending to pay the mortgage, which pushes the general economy to another recession, which means more layoffs and less work, which means people can't make payments on their homes, which causes foreclosures and defaults, and the cycle gets really ugly really quickly.

And if they keep interest rates significantly low then it means that liquid assets don't have as high of a return and people will flock to more "high-risk" investments (like RE) to fund their retirement (and make a bubble!). And it also means the Feds have to run a deficit to finance all this.

Either way you slice it, countries are in recessions over this, Canada is just next on the chopping block IMO!

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08-22-2012, 12:58 AM
  #216
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Originally Posted by kanuck87 View Post
I haven't been following real estate prices until this year, but how were prices back in 2008 before the bubble began? Like for a one room 600ish sq.ft condo in kits?
I dont closely follow house prices per se. Im more interested in the "fundamentals.

I dont rent or own in vancouver. The information is available on the net.

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08-22-2012, 01:15 AM
  #217
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Originally Posted by sticknrink View Post
You can make a pretty approximate guess:



http://vreaa.wordpress.com/

2002 is when the mini-recession of 9/11 was ending due to lowering of interest rates globally and the rise of easy credit.

Nearly all of the world has had real estate drops. How is Vancouver different? Our economy and gdp has tracked the US with a lag time of about 1 to 2 years.

Vancouver's employment sector is also 75% related to real estate. The drop is going to be very, very, very painful for Vancouver. I'm glad that my consultancy (and soon business) sells to a global audience, cause Vancouver IMO is going to be absolutely dead in the water for the next decade in a few years.
What do you sell? R/E?

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08-22-2012, 01:20 AM
  #218
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Quote:
Originally Posted by sticknrink View Post
Yup, spot on. BOC can't raise interest rates because a lot of households are already pushing 85%+ of their income to service debt (mortgage.) Raising interest rates by even half a point equates to probably an average of $1000 monthly on your mortgage payment which would kill most households.

People stop spending to pay the mortgage, which pushes the general economy to another recession, which means more layoffs and less work, which means people can't make payments on their homes, which causes foreclosures and defaults, and the cycle gets really ugly really quickly.

And if they keep interest rates significantly low then it means that liquid assets don't have as high of a return and people will flock to more "high-risk" investments (like RE) to fund their retirement (and make a bubble!). And it also means the Feds have to run a deficit to finance all this.

Either way you slice it, countries are in recessions over this, Canada is just next on the chopping block IMO!
I suspect this is why the govnt is pushing the oilsands and pipelines so much.

People will pass it off as Satan Harper pushing for his good old boys but Im sure behind closed doors there is a realization that if the housing market declines that will set off a chain reaction hooping the economy. I think the opposition would be pushing the same.

Something has to drive the economy and it cant be R/E as it has been and with little to no manufacturing jobs in Van plus the heavy reliance on the service sector for economic activity may mean a resource push.


Itll be curious to see if peoples attitudes change if the housing market crashes.

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08-22-2012, 03:58 AM
  #219
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Originally Posted by kanuck87 View Post
Those don't return 5% a year, at least they don't consistently. GIC's are only returning like 1-2% these days.
There are quite a few lower risk mutual funds that'll return about 5%.

TD Bond fund for example, has returned 8.4% 6.3% and 9.8% in the past 3 calendar years and it's pretty low risk.

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08-22-2012, 09:49 AM
  #220
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Originally Posted by opendoor View Post
It doesn't need to "fall apart forever". A simple housing crash like we saw in parts of the USA is a perfectly reasonable scenario given Vancouver's current fundamentals.

Under normal circumstances the cost of renting and buying are fairly similar month to month. If they weren't similar most of the time, rental properties eventually wouldn't and couldn't exist. In Vancouver, ownership costs are about twice that of renting and that's not sustainable. There will likely always be a modest ownership premium in a place like Vancouver, but 2X the cost is insane.

That's not to say people shouldn't buy; if you are willing to pay the premium of ownership and think you'll be in a house long term enough to ride out the fluctuations it makes sense.
I am interested in seeing your calculations on your 2x number.

And I'd love to see your reasoning for a crash "like we saw in the US" happening here. Not just headline reasoning to get attention, but real information.

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08-22-2012, 09:53 AM
  #221
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Originally Posted by sticknrink View Post
Having faregates gives you concrete statistics of ridership and a way to estimate revenues in the future. I don't know how you can spin that to some conspiracy about privatizing Translink (which already is partly privatized anyway.)
It is not a conspiracy, it is simply a good idea. I am glad you brought up the partial privatization, that's the prequel.

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08-22-2012, 09:55 AM
  #222
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Originally Posted by Lonny Bohonos View Post
I find it suspect when such a major factor in "liveability", the cost of housing vs incomes has changed in so drastically in the last decade+ but yet Vancouver is still ranks where it was a decade ago.
Maybe the survey was funded by the real estate brokers of BC.

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08-22-2012, 10:00 AM
  #223
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There are quite a few lower risk mutual funds that'll return about 5%.

TD Bond fund for example, has returned 8.4% 6.3% and 9.8% in the past 3 calendar years and it's pretty low risk.
Despite being low-risk, there's still a chance those lose you money and I don't like the idea of literally putting every cent you have into one of those if it's only for the short-term, which this would be. One bad year and you'd be kicking yourself. For a retirement fund, it's a great idea, however.

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08-22-2012, 10:01 AM
  #224
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Yup, spot on. BOC can't raise interest rates because a lot of households are already pushing 85%+ of their income to service debt (mortgage.) Raising interest rates by even half a point equates to probably an average of $1000 monthly on your mortgage payment which would kill most households.
A $1M mortgage would cost you $500 more a month with a 1% increase from 3-4%

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08-22-2012, 10:52 AM
  #225
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Originally Posted by craigcaulks View Post
A $1M mortgage would cost you $500 more a month with a 1% increase from 3-4%
A lot will obviously depend on a person ability to service that additional debt.

As it stands personal debt for canadian is at ridiculous levels.

Add to that i believe the govnt already has or is considering implementing rules where bank have to do a valuation at the time of renewing a mortgage with house prices this could screw a lot of people.

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