Vancouver's Housing Supply Myth

[rofina]

Originally Posted by whatnext

How many are sold to speculators? Those who thought they could flip them for a quick buck? What happens when they can't?

The graph illustrates perfectly a speculative mania. There's no historical precedent or need for that level of construction.

Wouldn't this hopefully demonstrate a market operating in a healthy way?

Oversupply should lead to a price decrease, this would give some credit to the supply side argument.

I would find it much more worrying if all these units complete over the next 24 months and price don't move down from current levels.

[GenWhy?]

In response to the market we've shrunk a few of our market units to decrease their price to stay up to date, our rentals on the other hand have no lack of slowing down in quantity or price to a degree. We have noticed to our benefit that SF homes are more easily to get a good price for to assemble lots. Folks are no longer reaching for the moon to suck a crazy amount of money from people so they can redevelop.

[whatnext]

Originally Posted by rofina

Wouldn't this hopefully demonstrate a market operating in a healthy way?

Oversupply should lead to a price decrease, this would give some credit to the supply side argument.

I would find it much more worrying if all these units complete over the next 24 months and price don't move down from current levels.

In theory, but it's unlikely it will unwind all the price increases driven by speculative mania.

[rofina]

Originally Posted by whatnext

In theory, but it's unlikely it will unwind all the price increases driven by speculative mania.

Difficult to quantify just how much of the increases are spec driven, and how much real demand driven. The local economy is performing well, tech, tourism, film, all booming.

I remember some pretty dramatic fire sales in 08/09 down cycle.

Full page ads in paper, buildings advertising 30%+ discounts - I also remember specifically The Beasley offering existing buyers significant discounts to not walk away.

Granted - that also took a global credit crisis, which makes me all the more curious what tighter local credit, and an oversupply of units will do here in couple years time.

[Vin]

Originally Posted by whatnext

How many are sold to speculators? Those who thought they could flip them for a quick buck? What happens when they can't?

The graph illustrates perfectly a speculative mania. There's no historical precedent or need for that level of construction.

Yup, care to find out what percentage are sold to speculators, and out of that, how many are foreign speculators as opposed to local ones?

The fact is, local demand is still very high, and speculative or not, there is just not enough inventory. Other than just a few very expensive condo buildings around Coal Harbour and Yaletown, I see that most condos are lived in, as opposed to many claiming that many towers are empty. I would love to see fully (or almost fully) dark condo neighbourhoods at night.

[Vin]

Originally Posted by rofina

Difficult to quantify just how much of the increases are spec driven, and how much real demand driven. The local economy is performing well, tech, tourism, film, all booming.

I remember some pretty dramatic fire sales in 08/09 down cycle.

Full page ads in paper, buildings advertising 30%+ discounts - I also remember specifically The Beasley offering existing buyers significant discounts to not walk away.

Granted - that also took a global credit crisis, which makes me all the more curious what tighter local credit, and an oversupply of units will do here in couple years time.

Even in the 08/09 downturn, prices hardly dipped too much in Vancouver from previous years. People were still paying at a premium (of that generation, of course), compared to what was happening in the States with all the foreclosures.

[WarrenC12]

Originally Posted by Vin

Yup, care to find out what percentage are sold to speculators, and out of that, how many are foreign speculators as opposed to local ones?

The fact is, local demand is still very high, and speculative or not, there is just not enough inventory. Other than just a few very expensive condo buildings around Coal Harbour and Yaletown, I see that most condos are lived in, as opposed to many claiming that many towers are empty. I would love to see fully (or almost fully) dark condo neighbourhoods at night.

The problem isn't local vs. foreign (although some taxation of those who don't earn income here is fair). The problem is speculation. We want homes for people to live in, not as assets to flip.

[trofirhen]

Originally Posted by WarrenC12

The problem isn't local vs. foreign (although some taxation of those who don't earn income here is fair). The problem is speculation. We want homes for people to live in, not as assets to flip.

Agreed. What I'd like to know, given the extremity of the situation, is why they don't do here what they did in Australia (and NZ, I believe),
that is forbid sales unless the house is going to be lived in.

[WarrenC12]

Originally Posted by trofirhen

Agreed. What I'd like to know, given the extremity of the situation, is why they don't do here what they did in Australia (and NZ, I believe),
that is forbid sales unless the house is going to be lived in.

Empty Homes Tax. It's not "forbidding", but it's a big tax if the unit isn't lived in by somebody.

[Vin]

Originally Posted by WarrenC12

The problem isn't local vs. foreign (although some taxation of those who don't earn income here is fair). The problem is speculation. We want homes for people to live in, not as assets to flip.

So how do societies regulate how people speculate on housing? There are already taxes laid on secondary homes, but it does not deter rich folks from buying more. In healthy economies, housing prices will always go up, and that would encourage wealthy people to invest in real estate. So, again my question: how do you prevent people from buying more?

I agree it isn't local vs foreign, but it still doesn't prevent racists from coming in to blame a particular ethnic group.

[Vin]

Originally Posted by trofirhen

Agreed. What I'd like to know, given the extremity of the situation, is why they don't do here what they did in Australia (and NZ, I believe),
that is forbid sales unless the house is going to be lived in.

The answer is, policy makers and their rich supporters get to gain. And they are locals, not the scapegoated rich foreigners.

[scryer]

This is usually one of those threads that I like to keep quiet in and just read...

But we aren't seeing this massive amount of foreign real-estate investment in Europe. Now I know that Europe is a totally different animal but if I was a billionaire that lived in Asia, I might consider taking some of my millions to buy a place in Portugal to enjoy the beaches (for example). There's lots to be desired in Europe.

Other countries are preventing this real-estate frenzy around the world. Would anyone have any insight as to why this is? Because even tiny countries in Europe aren't crying over housing like we are here. Please excuse my ignorance but I feel that they have certain laws and strategies in place that we don't.

[whatnext]

Originally Posted by scryer

This is usually one of those threads that I like to keep quiet in and just read...

But we aren't seeing this massive amount of foreign real-estate investment in Europe. Now I know that Europe is a totally different animal but if I was a billionaire that lived in Asia, I might consider taking some of my millions to buy a place in Portugal to enjoy the beaches (for example). There's lots to be desired in Europe.

Other countries are preventing this real-estate frenzy around the world. Would anyone have any insight as to why this is? Because even tiny countries in Europe aren't crying over housing like we are here. Please excuse my ignorance but I feel that they have certain laws and strategies in place that we don't.

Maybe the EU is better at scrutinizing dirty money?

[Hourglass]

Originally Posted by scryer

This is usually one of those threads that I like to keep quiet in and just read...

But we aren't seeing this massive amount of foreign real-estate investment in Europe. Now I know that Europe is a totally different animal but if I was a billionaire that lived in Asia, I might consider taking some of my millions to buy a place in Portugal to enjoy the beaches (for example). There's lots to be desired in Europe.

Other countries are preventing this real-estate frenzy around the world. Would anyone have any insight as to why this is? Because even tiny countries in Europe aren't crying over housing like we are here. Please excuse my ignorance but I feel that they have certain laws and strategies in place that we don't.

I'd beg to differ. Coming out into the meet and greet area of Lisbon airport a couple of years back, I saw property sales brochures (in Chinese) being handed out to anyone who looked Asian. Portugal's golden visa program has been pretty popular in attracting Chinese investors. The difference is that Portugal's economy was in meltdown a few years back, and therefore needed and welcomed this money.

In China, HK and Singapore, it's common to see a ton of advertisements in the newspapers for the latest London development. Canadian developments? Not as common -- at least in HK or Singapore. In fact, I'd argue London's luxury property market is equal to or worse than Vancouver when it comes to foreign money. Probably worse, because in addition to Asian buyers, you have Middle Eastern and Russian money thrown into the mix. See here: https://www.independent.co.uk/news/b...-a8274106.html

So no, Europe isn't exempt from this frenzy.

[Vin]

Originally Posted by scryer

This is usually one of those threads that I like to keep quiet in and just read...

But we aren't seeing this massive amount of foreign real-estate investment in Europe. Now I know that Europe is a totally different animal but if I was a billionaire that lived in Asia, I might consider taking some of my millions to buy a place in Portugal to enjoy the beaches (for example). There's lots to be desired in Europe.

Other countries are preventing this real-estate frenzy around the world. Would anyone have any insight as to why this is? Because even tiny countries in Europe aren't crying over housing like we are here. Please excuse my ignorance but I feel that they have certain laws and strategies in place that we don't.

From the 1700s to now, Canada and other Western British Commonwealth nations have always attracted more immigrants than anywhere else (except for the States).

Throughout history, these Commonwealth countries are supposed to be more tolerant in accepting all sorts of immigrants as people of all creed and colours have always been living, dealing and contributing to the growth of the Commonwealth. That makes new immigrants more comfortable to come to a place which is already rather or very diverse, as in Vancouver, Toronto, London, Melbourne, Sydney, Christchurch, etc.

Conversely, many European societies still speak a language many of the educated or wealthy immigrants may not understand. Also, the majority of these immigrants want their kids to grow up in an Anglo society too, since English is pretty much the lingua franca of this planet. Portugal could be much cheaper and idyllic, but in many ways it does not meet the requirements of the wealthy immigrants or property speculators, yes, even for Lisbon.

But things are changing: with better knowledge of other potential areas to invest, I'm pretty sure Chinese money is also finding its way to other newer hot spots around the world.

[misher]

To summarize most of your arguments I present to you the solution to our high demand for housing in this graph. The supply and demand graph is taught in 1st year economics to everyone because it summarizes the two most important drivers of the economy, demand and supply and it stands as an universal truth. As you will see, as supply increases the equilibrium will lower and the cost of housing will decrease while the quanity of housing will increase! Forget all these taxes, policies and crap, lets just build more housing. Eureka!

[GlassCity]

Originally Posted by misher

To summarize most of your arguments I present to you the solution to our high demand for housing in this graph. The supply and demand graph is taught in 1st year economics to everyone because it summarizes the two most important drivers of the economy, demand and supply and it stands as an universal truth. As you will see, as supply increases the equilibrium will lower and the cost of housing will decrease while the quanity of housing will increase! Forget all these taxes, policies and crap, lets just build more housing. Eureka!

There can be situations where demand is so high that supply cannot possibly catch up, which leads to higher prices. This may or may not be happening in Vancouver

It also ignores the fact that Vancouver's been building an unprecedented amount of new housing through this surge of demand, which indeed seems to show that it can just never be enough.

[Metro-One]

It also doesn’t factor in when a small percentage of people buy up large quantities of the supply simply for investments, therefore not reducing the demand and instead inflates the prices far beyond their natural equilibrium.

[CanSpice]

Originally Posted by GlassCity

It also ignores the fact that Vancouver's been building an unprecedented amount of new housing through this surge of demand, which indeed seems to show that it can just never be enough.

If you look at housing built per capita, Vancouver built a lot more housing in the 50s, 60s, 70, and 90s than is being built now. During the 00s Vancouver built at a rate roughly half that in the 70s. https://twitter.com/brendandawe/stat...25014866411520

[LeftCoaster]

While I don't think housing supply is the whole problem, it certainly isn't helping things. While we are building a lot of housing, we simply aren't building enough, with 35,000 to 45,000 people moving to metro Vancouver a year we need to be building much more. last year was a record at about 26,000 starts, given that a lot of those were studios and 1 beds and we are trying to dig ourselves out of an already existing deficit, it simply isn't enough, and it's ONE of the reasons we have seen such crazy jumps in prices over the last two years.