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The Vancouver Real Estate Market Rollercoaster

Tyler Durden's picture




 

It is one thing to watch squiggly lines, or pretty, but largely meaningless bubble charts explaining a snapshot phenomenon or one transpiring over time. It is something else to actually be in a rollercoaster which recreates the experience of the Vancouver real estate market. Which is why the following animation from Vancouver Condo Info is rather cool. "This is a roller coaster simulation of the last 35 years of the
Vancouver Real Estate market. The actual graph you're riding is the
inflation adjusted value of a house in Vancouver BC based on data
collected by Royal LePage and calculated by the UBC Centre for Urban
Economics and Real Estate. Some of the peaks and troughs have been
rounded to keep the train from flying off the tracks, but other than
that slight modification it is a precise scale model of the red line on
this graph: cuer.sauder.ubc.ca/?cma/?data/?ResidentialRealEstate/?HousingPrices/?housing-pri-vancouver.pdf. When the housing bubble of the early eighties popped in this city some house prices dropped by 50% over the next couple of years and didn't reach their inflation adjusted real price again for 25 years. What would a real estate market bust look like these days?"

Vancouver RE market rollercoaster from Vancouver Condo Info on Vimeo.

And for those who would like to try their skill at converting charts, such as for example the Fed's balance sheet (warning: it will be a boring ride), or the S&P in the last decade, or for a true free fall, CNBC's Nielsen ratings, can do so using NoLimits Roller Coaster Simulation here.

h/t Mike

 

 

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Wed, 06/01/2011 - 19:25 | 1330760 sabra1
sabra1's picture

i, i barfed on the bald lady in front of me!

Wed, 06/01/2011 - 20:10 | 1330892 ACjourneyman
ACjourneyman's picture

I sold our house in the Vancouver suburbs, 30 miles from Vancouver, for 300k 8 years ago. If I wanted to rebuy the same home now it would cost me 600K. My wage has gone up about 2.00 an hour or less than 5%. I don't know if anyone else can do the math but it doesn't work. I guess the 5.00 gas and 1500 a year car insurance doesn't matter either, hard to live now.

Thu, 06/02/2011 - 01:34 | 1331567 Whalley World
Whalley World's picture

And no salute to the Canucks? Take that Boston! 

Anyway, in 1980 in Deep Cove, North Van, when interest rates went to 18% houses went from $750K to $250K.

Developers were wiped out.  Bubble? Think China investing here and you decide.

Wed, 06/01/2011 - 19:27 | 1330771 rsnoble
rsnoble's picture

My next big drunken conspiracy thought of the evening:  We are going to have a cyber attack.  Except it will be our own assholes that do it(like 9-11).  This attack will shut down the internet.  Then we'll pick which ever asshole country we want to go loot.  The US sheep have already been fleeced to the point of bloody scabs, now the assholes need there next bag of cash at the expense of killing 1000's of foreigners somewhere.

Wed, 06/01/2011 - 19:39 | 1330802 Timmay
Timmay's picture

Ummm, no need to shut down the internet, how are we supposed to see the foreigners getting killed??

Wed, 06/01/2011 - 21:54 | 1331166 Transformer
Transformer's picture

Right, no need to shut it down.  Just clean it up and get rid of the terrorists.  Like Drudge, Jones, ZH, that ilk.  It will be all their fault anyway.

Wed, 06/01/2011 - 23:26 | 1331418 Vic Vinegar
Vic Vinegar's picture

Do you remember when that crazy cat shot at the Pentagon last October?  Well I do and I remember this classic comment from John McCloy at the time:

CNBS will shortly Report:

That the suspect was wearing a Ron Paul shirt, wrapped in an Gadsden Flag, carrying a sack of gold and silver coins, listening to Infowars broadcasts on his Iphone and had a Zero Hedge tattoo on his forehead and screaming "Glenn Beck" as he fired.

He reportedly is the same man accused of molesting women along side Julian Assange in Paris last month and was also seen stepping on Maltese puppies to death outside prior to the shooting.

More as they get it. Our next guest actual believes this could be the catalyst for another 300 point move up in stocks.

That was absolutely fucking brilliant. 

Taken from here:

http://www.zerohedge.com/article/bullets-shot-pentagon-high-powered-rifle

 

Thu, 06/02/2011 - 02:36 | 1331602 Michael
Michael's picture

I hope and pray they shut down the Internet.

Google stock price goes immediately to zero.

Apple stock zero.

Amazon zero.

Microsoft zero.

HP zero.

I could go on and on.

Wed, 06/01/2011 - 19:41 | 1330812 Buck Johnson
Buck Johnson's picture

You may be right.  There was that massive cyber intrusion into a bunch of defense companies and govt. that the govt. won't say how much damage was done, but said that now they are considering cyber attack an act of war.  Now this is a catch all for any attack on anybody, because as long as an attack comes from the countries servers the US can say that country did it.  Something this way comes, and it won't be pretty.

Wed, 06/01/2011 - 19:44 | 1330833 Hugh G Rection
Hugh G Rection's picture

I was ready for war after the playstation network got hacked.

Wed, 06/01/2011 - 19:54 | 1330865 American idle
American idle's picture

Is that what your government sponsored defense contractor news release wanting more money for security team vomited on you via the mainstream propaganda machines? Must be nice to play lame and get rewarded for it.

Wed, 06/01/2011 - 19:59 | 1330866 American idle
American idle's picture

Is that what your government sponsored defense contractor news release wanting more money for security team vomited on you via the mainstream propaganda machines? Must be nice to play lame and get rewarded for it.

Wed, 06/01/2011 - 22:12 | 1331209 theotheri
theotheri's picture

"Except it will be our own assholes that do it(like 9-11)."

You lost me here. idiot.

Wed, 06/01/2011 - 23:14 | 1331373 Abitdodgie
Abitdodgie's picture

If your lost on that one try Yahoo chat rooms they will be more to your liking 

Wed, 06/01/2011 - 19:37 | 1330796 Sockeye
Sockeye's picture

Where do I buy the picture, you know the one with me screaming and everyone else cheering?

Wed, 06/01/2011 - 19:36 | 1330801 sheeple
sheeple's picture

in hong kong, we need a "drop zone" simulator to model our residential condo price

Wed, 06/01/2011 - 19:40 | 1330804 Anonymouse
Anonymouse's picture

For this kind of ride, the classic wooden roller coaster is too dangerous.  You need a steel coaster to keep from derailing with these angles.

Wed, 06/01/2011 - 19:42 | 1330827 Frein
Frein's picture

Too bad these drops would crush even steel, not to mention humans riding the coaster.

Wed, 06/01/2011 - 19:39 | 1330814 eureka
eureka's picture

Maybe the next 25 year dip comes, like next year. 

Maybe then Canadians halt their rampant acquisition of WA state.

Wed, 06/01/2011 - 23:30 | 1331420 Spitzer
Spitzer's picture

The Vancouver housing bubble will bust when interest rates go up, plain and simple.

Thu, 06/02/2011 - 00:33 | 1331509 slvrsurfer
slvrsurfer's picture

True, or when there are no more buyers (ie.greater fools). Canadian real estate is due for a correction, hopefully not a big one. Things are not as rosy as some may say they are up there. Who can you short in order to trade this move?

Thu, 06/02/2011 - 01:51 | 1331576 Whalley World
Whalley World's picture

Ya just can't argue with that!

Wed, 06/01/2011 - 19:39 | 1330817 Buck Johnson
Buck Johnson's picture

Also 25 years for the realestate market in Vancouver to come back to its inflation days, that is very bad news.  Because the babyboomers and the homebuilders and the bond holders can't wait 25 years for those assets to get back to inflation prices.

Wed, 06/01/2011 - 19:42 | 1330825 robertocarlos
robertocarlos's picture

After Vancouver wins the Cup later this month the real estate market is really going to take off. The Chinese money is just pouring in and they like blood sports.

Wed, 06/01/2011 - 21:56 | 1331174 Transformer
Transformer's picture

I live in the NW, and it's well known that Vancouver is the place to invest.  Can't lose.

Thu, 06/02/2011 - 01:50 | 1331581 Whalley World
Whalley World's picture

I can confirm that having witnessed the affinity of my Asian colleagues for the Canucks.

 

Wed, 06/01/2011 - 19:43 | 1330829 Rodent Freikorps
Rodent Freikorps's picture

As long a the oil flows who cares what America's hat does?

Wed, 06/01/2011 - 20:10 | 1330893 eureka
eureka's picture

And as long as oil flows who cares who owns WA state.

Wed, 06/01/2011 - 20:13 | 1330905 Rodent Freikorps
Rodent Freikorps's picture

As long a Boeing moves to SC, I hope WA. does leave. Leftist douchebags should hang together.

Wed, 06/01/2011 - 21:49 | 1331146 eureka
eureka's picture

Sure. Oh, btw - isn't Boeing a beneficiary of WA DC's/Pentagon's dole?

Wed, 06/01/2011 - 22:41 | 1331163 Rodent Freikorps
Rodent Freikorps's picture

It is also the latest rape victim of the NLRB.

This shit is gonna end.

You do realize we are one Supreme Court justice away from either civil war, or mass exodus, don't you?

Elections matter.

Everyone seems to forget that the communist walls were built to keep people IN.

Thu, 06/02/2011 - 06:23 | 1331692 Seer
Seer's picture

There's a rabbit running down your (silo) hole.  I think that you need to go chase it...

Thu, 06/02/2011 - 01:54 | 1331583 Whalley World
Whalley World's picture

Hold on a second there.  When the Big dollar was 1.60 you guys bought Whistler and a whole lot more and did we complain?  No we took the commissions and taxes!

Thu, 06/02/2011 - 02:38 | 1331599 Bay of Pigs
Bay of Pigs's picture

Funny you say that. I see tons on BC vets dumping RE there and buying in Maui...

Smart money?

Wed, 06/01/2011 - 20:22 | 1330918 chinaguy
chinaguy's picture

I remember a much larger spike mid-to-late 80's as the Hong Kong money bid up Vancouver properties. Anyone else recall this too?

Wed, 06/01/2011 - 20:35 | 1330957 HistorySquared
HistorySquared's picture

There should be a Chinese man on the roller coaster, as some estimates have more than half of Vancouver homes going to Chinese buyers. Not to be outdone, the mainland buyer has helped Australia's bubble, with reports of students buying 500k beachfront homes. Then there is the biggest bubble of all in Hong Kong where in the words of Andy Xie, it is "every man's dream to sell their home to some stupid mainlainder."

Wed, 06/01/2011 - 20:34 | 1330962 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

I do wish the Case-Shiller rollercoaster will be updated at some point..

Wed, 06/01/2011 - 20:42 | 1330973 DavidC
DavidC's picture

That was an amazing video.

DavidC

Wed, 06/01/2011 - 20:47 | 1330977 Problem Is
Problem Is's picture

HA! Leo is in the car in front of me crying like a little girl with a skinned knee...

Wed, 06/01/2011 - 20:43 | 1330978 PulauHantu29
PulauHantu29's picture

No one in their right mind is buying ANY real estate now since the reality is RE will drop another 40% according to many economists in line with stagnant wages and the current "long and painful" recession.

Wed, 06/01/2011 - 20:47 | 1330992 oddjob
oddjob's picture

Watched the local news a few days ago, a house listed in West Van. for $2 miilion ,sold for $2.9 million. They had 150 offers in 2 days, most all from asians. Anybody that thinks the Chinese are gonna run out of paper money are sadly mistaken.

Wed, 06/01/2011 - 20:58 | 1331014 Sockeye
Sockeye's picture

So you are saying China is printing money so they can buy Vancouver real estate? You must be an eCONomist!

Wed, 06/01/2011 - 21:14 | 1331038 Diogenes
Diogenes's picture

The Fed is printing money for Walmart to give to China so the Chinese can buy Vancouver real estate, Saskatchewan potash mines, Alberta oil fields, African farm land, and whatever else they want. Try to keep up.

Wed, 06/01/2011 - 21:24 | 1331079 Sockeye
Sockeye's picture

FED is printing, yes, that is putting money in the hands of the chinese manufacturing elite - I get that. I also get that China is using their new found wealth to buy up potash and oil sands and natural resources around the globe. But Vancouver real estate? I don't get it. Why aren't they buying up Seattle real estate? I mean if you really want a moss covered shack in the rainforest they are a whole lot cheaper 3 hrs down the highway.

Wed, 06/01/2011 - 22:02 | 1331181 Transformer
Transformer's picture

So, Vancouver RE is probably a better bet than silver or gold.  Hmmmm.

Wed, 06/01/2011 - 22:02 | 1331193 Transformer
Transformer's picture

So, Vancouver RE is probably a better bet than silver or gold.  Hmmmm.

Wed, 06/01/2011 - 22:10 | 1331212 Devore
Devore's picture

Shacks in Vancouver are going UP in price, those in Seattle are going down. These are the ultimate in momentum "investors", what do you expect?

Wed, 06/01/2011 - 22:14 | 1331216 ??
??'s picture

Check out the demographics for Canada very Asian friendly country  e.g. Van and TO pop half visible minority/majority - vast swaths of the large urban centers could be mistaken for similar locations in an Asian country - large Chinese supermarkets etc etc

http://www.statcan.gc.ca/pub/91-003-x/2007001/figures/4129891-eng.htm

http://www.statcan.gc.ca/pub/91-003-x/2007001/figures/4129878-eng.htm

Wed, 06/01/2011 - 23:27 | 1331407 zen0
zen0's picture

Universal health care, bitchez.

Fri, 06/03/2011 - 01:07 | 1334911 Deliverator
Deliverator's picture

It's called the Immigrant Investor Program. 

http://www.cic.gc.ca/english/immigrate/business/investors/facilitators.asp

Buy a house, and presto, chango! You're a landed immigrant (equivalent of green card status in the US), and you and your family can partake of all that Canada has to offer, including going to Canadian schools and to universities at the resident tuition rates. What's more, when you sell your house in one year or more, the capital gain is tax free! What better way to get your money out of the Old Country and wash it clean as a whistle?

Vancouver - China's laundrymat.

Wed, 06/01/2011 - 21:53 | 1331155 eureka
eureka's picture

Add to your list: HI, WA, San Francisco & L.A.

Wed, 06/01/2011 - 21:06 | 1331033 Rodent Freikorps
Rodent Freikorps's picture

In other news, a lizard is going to be used to shut down Texas oil production.

America is ruled by people who want America dead.

Good times.

Wed, 06/01/2011 - 21:58 | 1331171 eureka
eureka's picture

And how did "scummy leftist" Canadians get rich ?

While good capitalism faithful US citizens got poor?

Do tell, RF.

Wed, 06/01/2011 - 22:04 | 1331183 Rodent Freikorps
Rodent Freikorps's picture

They ignore the EPA.

Canadians are not a stupid as the modern American.

But, the demographics are different.

Thu, 06/02/2011 - 06:24 | 1331690 Seer
Seer's picture

"Canadians are not a stupid as the modern American."

Uh, aren't you a "modern American?"

If they aren't as stupid, then why are they, despite the obvious example a mere border-crossing away, noting that, yes, housing prices DO fall?  There's a global recession (most surely caused by the commie conspiracy- lots of commie bankers ya know), yet the smart Canadians are behaving as though none of it exists.

Your "socialism = devil" brush-stroking ran into a problem with facts/reality here.

Will it end badly for those "socialists?"  Sure, as it will for any group that's trying to attain max velocity off the planet (infinite growth on a finite planet).

Fri, 06/03/2011 - 01:41 | 1334935 longorshort
longorshort's picture

They are not rich if they have a mortgage not paid off.

Fri, 06/03/2011 - 01:45 | 1334936 longorshort
longorshort's picture

They are not rich if they have a mortgage not paid off.

Wed, 06/01/2011 - 21:13 | 1331042 PulauHantu29
PulauHantu29's picture

"It took 19 years for the housing market to regain its losses after the depression ended, noted Paul Dales, a senior economist at Capital Economics."

"Based on the Case-Shiller index, prices are now 33 percent below the 2006 peak – to a level last seen in the third quarter of 2002. That’s further than the 31 percent price drop during the Great Depression."

 

http://www.msnbc.msn.com/id/43238760/ns/business-eye_on_the_economy

Wed, 06/01/2011 - 21:14 | 1331045 Arch Duke Ferdinand
Arch Duke Ferdinand's picture

Vancouver BC...World's #1 Most Liveable Cities: 2011 Economist Intelligence Unit Report

...How much is Political stability worth?....

http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/02/vancouver-bcw...

Wed, 06/01/2011 - 21:19 | 1331056 Hustler Elite
Hustler Elite's picture

Currently reside in Vancouver, i can tell you that on avg. people in Metro Vancouver are currently paying approx. 60% or more of their income on their mortgage.

As the people in California will tell you (that was the median % of income going to mortgages in 2005) this figure is simply not sustainable.

Especially once the Bank of Canada begins raising the benchmark rate (which they have kept at 1-1.25% since 2008)

Wed, 06/01/2011 - 21:53 | 1331156 ??
??'s picture

don't doubt but do you have any links to stats to support that claim - I would think a new purchaser would have a tough time qualifying at that ratio and then of course one must factor in the large segment of owners who actually own.

Thu, 06/02/2011 - 04:43 | 1331651 Seer
Seer's picture

They way that the high mortgages are being paid is from multiple household incomes.  I'm not talking a couple, but SEVERAL!  Extended families with several incomes!

There's also a lot of rent income being used.  That is, renting out rooms.  I know, my wife used to be in this situation (renting out several rooms).  She got tired of the headaches of dealing with renters (mostly the hassles of filling the slots), this along with my incessant harping that the housing market there was going to crash convinced her to sell: got out before going under water.

Many renters are foreign students (rich parents sending their kids abroad- note: good schools up in Vancouver, that's a lot of the attraction).  There are a LOT of young Chinese there on their parent's bill.  If China contracts, or even its growth gets stomped down a bit, I'd expect to see a fair amount of this money stream drying up.  The residential market would get clobbered.

As to houses in the north end getting bid up, that's not what I was last seeing.  But, one can always pick anomalies out...

My bets would be that rising interest rates AND big drops in China's economic growth will create a big cratering in BC's housing market.  Upticks in unemployment (and downward pressure on wages) will only heighten the drop.

It's a long fall if you live high...

Wed, 06/01/2011 - 21:29 | 1331076 hound dog vigilante
hound dog vigilante's picture

 

Vancouver BC has joined a select class of cities for whom international interest/residence inflates - but also supports - real estate values.  San Francisco is also one of these cities... real estate in the SFB suburbs and hinterland is collapsing, but RE valuations in the city itself are stable if not rising.  Vancouver's suburbs may see a severe correction at some point, but my guess is that the RE valuations w/in most of the city proper will remain relatively high (as any percieved dips will be mitigated by steady interest from by international buyers).

Sorry BC canucks... you can join two generations of californians and one generation of seattleites who can no longer afford to live in their own hometown.  Isn't globalization great?

 

 

Wed, 06/01/2011 - 22:02 | 1331182 eureka
eureka's picture

Move over, Citizen!

The internationalist, globalist, leveraged capitalist needs your space!

Wed, 06/01/2011 - 21:32 | 1331104 ejhickey
ejhickey's picture

I think what help moderate the Van. RE market and Canadian RE market as well , is a stronger and more stable Loonie.  

Thu, 06/02/2011 - 04:58 | 1331658 Seer
Seer's picture

There's nothing moderate about the market there!

See my above posting as to what's supporting the market.

The market was hyped up before the Loonie jumped against the USD.  Since I latched on to this metric I've seen the Loonie gain about 33%.  IMO 33% shifts don't seem to equal "stable."  Further, a stronger Loonie actually depresses Canadian exports: and there's more activity with Canadians flocking across the border to shop in the US.

Yes, a stable banking system (though Canada's isn't as stable as you might think) is good, but in the end it's subject to the global economy's stability.

It ALL boils down to growth rates.  If things are geared toward high growth rates then you can be assured of HUGE corrections.  It's just way too hard to sustain high growth rates: and eventually ALL growth rates will head to zero (and below).  Ask China.

Fri, 06/03/2011 - 01:51 | 1334940 longorshort
longorshort's picture

Whats the best way to short this bubble outside of currencies? Any hedge fund strategies here?? Fuck ETFs

Wed, 06/01/2011 - 21:51 | 1331151 ??
??'s picture

Rosie waxed eloquent on Canadian Real Estate yesterday - other than VAN which he said may be in bubble territory the rest of the country is solid as in low inventory lots of demand buoyed by large immigration numbers and a balanced approach by regulators on mortages.  He did say that a 400bp rise in mortgage rates would be a big issue as it is not so much debt levels but the abilty to service debt. Of interest a condo in TO sold this week for $28m (that's $30m US).  A developer I know in Toronto said that for his buildings sales are robust and to users not to investors - prices in the $1200/ft range.

 

 

 

Thu, 06/02/2011 - 05:00 | 1331663 Seer
Seer's picture

This is the "we're a protected island" argument.  Every thing is connected (a butterfly flaps its wings... etc).  Vancouver's a main artery; sever it and the rest of Canada will bleed.

Wed, 06/01/2011 - 21:53 | 1331162 jackinrichmond
jackinrichmond's picture

yeah, a real rollercoaster..  UP!

your article is silly.. 

of course prices go up & then correct..  its inevitable that in 35 years that there would be ups & downs.

currently, vancouver's market is demand driven.  lotsa immigration..  lining up for hours to buy condos with cash.  immigration is likely to increase in the years ahead. 

just to say a market is due for a correction because its going up says to me that this article wasn't very well researched.

Wed, 06/01/2011 - 22:04 | 1331191 eureka
eureka's picture

Have fun under the clouds, in the rain, for $1200/ft.

Thu, 06/02/2011 - 05:11 | 1331669 Seer
Seer's picture

"immigration is likely to increase in the years ahead."

"just to say a market is due for a correction because its going up says to me that this article wasn't very well researched."

And where's YOUR "research" that would suggest that immigration increases are going to continue to increase?  Have you thought about what the impacts of China's economy clicking down several notches could have on the markets up there?

Both China and India, where the bulk of Canada's immigrants are coming from (my anecdotal observation), are starting to falter.  All it takes is a percentage point or two shift to set things in motion.

You sound like a real estate agent, or someone trying to pimp a book (talk up the value on one's home).  Just be sure to be hedged...

Wed, 06/01/2011 - 21:55 | 1331170 Justaman
Justaman's picture

F Vancouver...GO BRUINS!

Wed, 06/01/2011 - 22:00 | 1331177 Justaman
Justaman's picture

Yes that's right...GO BRUINS!

Wed, 06/01/2011 - 23:24 | 1331410 oddjob
oddjob's picture

ouch!....shutout.Boston is toast.Vancouver in 4

Wed, 06/01/2011 - 22:07 | 1331199 eureka
eureka's picture

Let's attack Canada. Call it Southpark North.

The empire needs bodies.

While we're at it let's also merge with Mexico.

Can you imagine the inflation and RE demand we can create?

And then - we can really compete with China -

on who can blow the biggest bubble.

Wed, 06/01/2011 - 22:26 | 1331255 ??
??'s picture

2025 Canada will effectively be part of the US on a voluntary basis or otherwise.  By that time 400 million thristy and oil deprived yanks will have little patience for its tiny, self righteous  and insecure neighbor to the north.  The fresh waters of a million lakes, the bounty of a million square miles of fertile prairie and the endless supply of oil and gas along with all manner of riches from the earth, not to mention Vancouver condos.  Fifteen short years from now and Canada will be the 51st star (depicted as a tiny Maple Leaf to keep the canuck population happy) on the American flag.

Wed, 06/01/2011 - 22:28 | 1331261 Rodent Freikorps
Rodent Freikorps's picture

Nope.

Non communist refugees from the USSA will flood Canada's armed forces.

Thu, 06/02/2011 - 05:15 | 1331671 Seer
Wed, 06/01/2011 - 22:21 | 1331200 Justaman
Justaman's picture

Unfortunately for Canada,
they just have a slower moving
US like housing debt bubble.  Good
luck with that.

Wed, 06/01/2011 - 22:23 | 1331248 theotheri
theotheri's picture

Vancouver real estate will crash probably 20%-30% in the next 18-24 months.

HOWEVER

It will still be outrageously expensive.  It's a great place to live.

Sun, 06/05/2011 - 05:52 | 1340773 grant
grant's picture

The jokers at VancouverCondoInfo have been promising a Vancouver housing crash for over 5 years.

One day they might be right... but even if, so what?  Prices will still be higher than when they started beating the drums back in 2005/2006...

Wed, 06/01/2011 - 22:29 | 1331267 PulauHantu29
PulauHantu29's picture

But...but....real estate never drops.....my real estate agent told me.

Wed, 06/01/2011 - 22:55 | 1331339 Event Horizon
Event Horizon's picture

Canucks score  .. 19 seconds left.. up 1-0 

 

We built in affluent burb of Vancouver in 2001 for 600k, now its worth 1.6m. Vancouver real estate has always been expensive and it has always been called a bubble. There are some unique factors that will always keep the prices high though not immune to corrections.

Everyone in Canada wants to retire here.

We have a natural limitation on land, mountains, Ocean and US border force expansion East, less desirable and further from the city.

Four houses in the 1.5 million range have sold around me in the last month to Mainland Chinese, three of them on their first listing day. My guess is that the last 20% price hike is all Chinese buyers. They want the best Western schools for kids and there is no restriction on foreigners. They are picking select higher end areas. Typically the kids and wife live here and the husband spends less than 6 months here, non resident no income tax. Currently, 80% of highend sales are to Asians. Speaking to an exclusive Asian realtor, she said they can both easily diversify wealth out of China and give their kids an english western education. She actually claimed that they prefer to be in nonAsian areas to force the kids to integrate.

No capital gains on primary residence, most treat their home as a retirement fund.

City/Municipal taxes are low compared to other big cities. Our appraisal last year was 1.4m we paid 6 grand.

All the analysts fail to recognize the geographic limitations and that most of the wealth comes from elsewhere. Growing up here, most first timers have to buy small/old condos, it has always been unaffordable and it is not typical of the rest of Canada.

This latest Asian wave is just starting and it has a ways to run but it is in select higher end areas.

 

Thu, 06/02/2011 - 02:48 | 1331607 Bay of Pigs
Bay of Pigs's picture

Which is exactly why smart Canadians are buying hand over fist in Maui now that prices have dropped sharply there.

RE Clown Show in BC but "it's different" there this time right?

Thu, 06/02/2011 - 05:26 | 1331673 Seer
Seer's picture

"We have a natural limitation on land"

Oh, that's IT!  Come to think of it, yes, Canada is the ONLY piece of land that's limited!

I'd be careful about using words like "always," it's the same as "never."

Greed (and drugs) distorts reality.

Relying on external inputs -Asian immigration (or influx of money)- is a bit hard to control.  Want to hear a scary scenario?  The US politicians take the "blame China" angle as a scapegoat, which then results in the Chinese politicians deciding that they'll close their borders, no more emigration.  What happens to your "always" scenario then?

Thu, 06/02/2011 - 09:20 | 1331971 Event Horizon
Event Horizon's picture

I was referring to the Vancouver market, the land is limited by geography and agricultural zoning in the burbs. This has a huge impact on supply and price. Yes, if the external inputs are restricted or challenged the prices will take a hit but not a crash as everyone has been calling for since the 1970's. 15-20% corrections are normal. The Asian buyer showed up in numbers right after the Chinese Government started limiting ownership in China.

95% of the land in BC is owned by the Government (Crown), the best investment is large raw rural acreages. I have been looking but even those pieces of land are expensive. Name a comparable where only 5% of the land privately owned...

My point is that you just can't use the same metrics to analyze the Vancouver market as you would the rest of Canada. 

Fri, 06/03/2011 - 00:33 | 1334870 longorshort
longorshort's picture

sell that mother fucking house and rent something nicer and buy back when the bubble bursts.   All the dumb mother fuckers stuck in debt say my house is special because ........

Wed, 06/01/2011 - 22:55 | 1331340 williambanzai7
williambanzai7's picture

They should merge Canada and HK. Half of HK lives there already.

Wed, 06/01/2011 - 23:36 | 1331436 zen0
zen0's picture

I live nearby. It has been referred to as HongCouver for more than ten years now.

The suburb I grew up in (white with Japanese) has become a small Chinese city.

Thu, 06/02/2011 - 08:19 | 1331801 FubarNation
FubarNation's picture

Hey I grew up in Richmond too.

Wed, 06/01/2011 - 23:46 | 1331445 Vic Vinegar
Vic Vinegar's picture

Canada is nice, Harveys makes a mean hamburger, and hockey is an underrated sport.

But come on, now: HK is one of the few places on earth where the spirit of the wild west still lives.  Anyone leaving HK for Canada is a fool.

Wed, 06/01/2011 - 23:17 | 1331374 Monedas
Monedas's picture

I was in Monterrey Park, CA 20+ years ago with a Mexican/American co-worker ! He was alarmed at all the Chinese who had moved into this Los Angeles suburb ! I joked, "They're our secret weapon against the Mexicans !". Let's call it "an attempt at humor that failed" ! Monedas 2011 May I serenade you ? http://trololololololololololo.com/

Wed, 06/01/2011 - 23:34 | 1331426 zen0
zen0's picture

Not funny at all. If you want good solid neighbors, the Chinese are the best choice. Confucianism is family friendly and big on civil responsibility.

Thu, 06/02/2011 - 00:09 | 1331449 Monedas
Monedas's picture

You got me wrong ! I'm all for 'em ! My Mexican buddy was uncomfortable....they think it's all theirs ! Monedas 2011 Confucious says: "If you clumsily misinterpret someones cute little story....'fess up ?"

Wed, 06/01/2011 - 23:33 | 1331389 M.B. Drapier
M.B. Drapier's picture

This is (I think) the original and best: US house prices up to 2006, from Richard Hodge of speculativebubble.com back in April 2007. A nice, understated cliffhanger ending on this one: a big reveal that speaks for itself.

 

[Direct YouTube link]

Thu, 06/02/2011 - 00:33 | 1331517 unionbroker
unionbroker's picture

Thu, 06/02/2011 - 00:34 | 1331518 unionbroker
unionbroker's picture

Thu, 06/02/2011 - 00:34 | 1331519 unionbroker
unionbroker's picture

Thu, 06/02/2011 - 00:37 | 1331520 unionbroker
unionbroker's picture

Thu, 06/02/2011 - 01:01 | 1331548 Dirt Rat
Dirt Rat's picture

A little game of Crack Shack or Mansion? seems appropriate here.

Thu, 06/02/2011 - 01:41 | 1331570 chump666
chump666's picture

Two housing markets that are going to get knocked out together: Canada and Australia...oh so similar

Thu, 06/02/2011 - 05:30 | 1331678 Seer
Seer's picture

And both being held up by China's economy...  Can you say tenuous?

Thu, 06/02/2011 - 03:14 | 1331617 hidingfromhelis
hidingfromhelis's picture

Garth Turner's blog on Canadian Real Estate...the address pretty much sums up his outlook.

http://www.greaterfool.ca/

Ham & Eggs post...good stuff!
http://www.greaterfool.ca/page/3/

Thu, 06/02/2011 - 06:09 | 1331688 Seer
Seer's picture

Turner is dead-on.

His http://www.greaterfool.ca/2011/05/26/silent-spring/ blog entry had this priceless YouTube vid (World Collapse Explained in 3 Minutes):

http://www.youtube.com/watch?v=NOzR3UAyXao&feature=player_embedded

Thu, 06/02/2011 - 03:29 | 1331628 longorshort
longorshort's picture

Any traders or hedge funds on here please post a way to contact you if you have written custom or new index futures contracts to track these bubbles properly. Thanks.

Thu, 06/02/2011 - 04:32 | 1331647 Padrone
Padrone's picture

These roller coasters will always look dramatic. If you can safely assume that reported inflation is always below the actual inflation, then an 'official inflation' corrected roller coaster of housing prices will always tend to go up and up over time. Resulting in the dramatic cliff hanger. It would be more interesting to correct the used inflation percentage with a fixed offset and then redo the coaster. How much such an offset should be is another Q. Maybe it can be done with inflation numbers from shadow-stats.

Thu, 06/02/2011 - 04:32 | 1331648 Padrone
Padrone's picture

These roller coasters will always look dramatic. If you can safely assume that reported inflation is always below the actual inflation, then an 'official inflation' corrected roller coaster of housing prices will always tend to go up and up over time. Resulting in the dramatic cliff hanger. It would be more interesting to correct the used inflation percentage with a fixed offset and then redo the coaster. How much such an offset should be is another Q. Maybe it can be done with inflation numbers from shadow-stats.

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