The Elusive Canadian Housing Bubble

[GRG55]

Re: Who is paying for this?

Do you think Adelaide is a fair comparison to Vancouver? Adelaide is stuck in the middle of nowhere, at least Vancouver is on the West coast of Canada. I think Perth would be a better comparison, also on the West coast. If Perth's prices were 50% higher than Sydney's that would also be completely illogical. But, to me at least, a better comparison to Vancouver than Adelaide.

Perth is comparable to Calgary, imo. It's a minerals company headquarters city with the concentration of technical and financial professionals that go with that status. Like Calgary, large numbers of brokers and bank branch offices because of the capital intensive nature of the minerals business - in each country second only to the main financial centers of Sydney and Toronto, respectively. What drives long term house price trends in Perth and Calgary, more than any other city in these two countries, is the price of the primary commodities that fuel the economies.

People move to Vancouver because it has the most pleasant climate in Canada, it's beautiful coastal setting and its "laid back" lifestyle. Perth's setting on the Swan River is lovely (I have been there a half-dozen times), but the Canadians I know that moved to Australia all went to Adelaide and bought sailboats.

[Down Under]

Re: Who is paying for this?

Perth is comparable to Calgary, imo. It's a minerals company headquarters city with the concentration of technical and financial professionals that go with that status. Like Calgary, large numbers of brokers and bank branch offices because of the capital intensive nature of the minerals business - in each country second only to the main financial centers of Sydney and Toronto, respectively. What drives long term house price trends in Perth and Calgary, more than any other city in these two countries, is the price of the primary commodities that fuel the economies.

People move to Vancouver because it has the most pleasant climate in Canada, it's beautiful coastal setting and its "laid back" lifestyle. Perth's setting on the Swan River is lovely (I have been there a half-dozen times), but the Canadians I know that moved to Australia all went to Adelaide and bought sailboats.

No doubt Perth is a minerals company headquarters, and hence not like Vancouver in that respect. So, then, why hasn't Adelaide's house prices appreciated in any meaningful manner? I haven't actually checked the stats lately when I make that statement but I lived in Adelaide for a couple of years and it is a very conservative city; too conservative for my liking.

However, very interesting that the Canadians you know all moved to Adelaide. Obviously, not enough of them to move the price.

[GRG55]

Re: Who is paying for this?

...So, then, why hasn't Adelaide's house prices appreciated in any meaningful manner? ...

Dunno. Maybe the Adelaide property agents need to advertise more in the Beijing Morning Herald?

[GRG55]

Re: The Elusive Canadian Housing Bubble

Oh, oh...


It Gets Even Uglier In Canada

August 30, 2015


The Province of Alberta, the epicenter of the Canadian oil bust, may be sliding into something much worse than a plain-vanilla recession. And it’s not exactly perking up the rest of Canada.

Layoffs are already cascading through the oil patch, as companies are retrenching and adjusting to the new reality. New vehicle sales are plummeting. And home sales are taking a broadside.

In August so far, total home sales in Calgary plunged 28% from a year ago, on flat prices. Condo sales collapsed 39%, with the median price down 8%, according to theCalgary Real Estate Board. Year-to-date, total home sales in Calgary are down 25%; condo sales 30%. And those condos that did sell spent 30% longer on the market than condos did a year ago, as sellers hang on by their fingernails to the illusion of wealth, and sales are stalling...

[jk]

Re: The Elusive Canadian Housing Bubble

Oh, oh...


It Gets Even Uglier In Canada

August 30, 2015


The Province of Alberta, the epicenter of the Canadian oil bust, may be sliding into something much worse than a plain-vanilla recession. And it’s not exactly perking up the rest of Canada.

Layoffs are already cascading through the oil patch, as companies are retrenching and adjusting to the new reality. New vehicle sales are plummeting. And home sales are taking a broadside.

In August so far, total home sales in Calgary plunged 28% from a year ago, on flat prices. Condo sales collapsed 39%, with the median price down 8%, according to theCalgary Real Estate Board. Year-to-date, total home sales in Calgary are down 25%; condo sales 30%. And those condos that did sell spent 30% longer on the market than condos did a year ago, as sellers hang on by their fingernails to the illusion of wealth, and sales are stalling...

typical early real-estate crash: the sellers won't lower prices easily, so the volume of sales plummets. later sellers will lower prices.

[GRG55]

Re: The Elusive Canadian Housing Bubble

typical early real-estate crash: the sellers won't lower prices easily, so the volume of sales plummets. later sellers will lower prices.

Nobody wants to be the first on their block to sell a home for less than the last one sold for. What would the neighbours say. After all, homes are "investments" and always go up.

It almost always takes distressed sellers to initiate the price decline. And even then the "dumb money" keeps re-listing at ever lower prices, but always at the top of the range, as they follow the market down.

[santafe2]

Re: The Elusive Canadian Housing Bubble

Nobody wants to be the first on their block to sell a home for less than the last one sold for. What would the neighbours say. After all, homes are "investments" and always go up.

It almost always takes distressed sellers to initiate the price decline. And even then the "dumb money" keeps re-listing at ever lower prices, but always at the top of the range, as they follow the market down.

Maybe it's really beginning to happen. Many of us 'Southerners' are looking for a longer term home when the US gets just a bit hotter...disclaimer for EJ and my other friends on the other side of this issue, I could be wrong, but just in case, I'd like a 2nd home north of the border and outside the US. It looks like the timing will be right in the next couple of years.

I really feel bad for Canadians caught up in this bubble. I've been through two of them in the US and after the 1st one, people will be more wary. Try not to blame your citizens too much. It always looks like nirvana the first time a bubble appears. They'll return to their roots when the carnage is over and oil will be $100+ a barrel. Probably not great for the environment but like I said earlier, I could be wrong.

[Down Under]

Re: Who is paying for this?

Dunno. Maybe the Adelaide property agents need to advertise more in the Beijing Morning Herald?

I know what you said is in jest, and it gave me a good chuckle.

But, let's be consistent GRG; it's Canadians doing this to themselves regarding Vancouver house prices, so, there's clearly a significant difference between Vancouver and Adelaide, whatever that difference may be. I lived in Adelaide for a couple of years and it's a nice city to live in but so remote from the rest of Australia. As well, I found it to be far too conservative for my liking.

[GRG55]

Re: Who is paying for this?

I know what you said is in jest, and it gave me a good chuckle.

But, let's be consistent GRG; it's Canadians doing this to themselves regarding Vancouver house prices, so, there's clearly a significant difference between Vancouver and Adelaide, whatever that difference may be. I lived in Adelaide for a couple of years and it's a nice city to live in but so remote from the rest of Australia. As well, I found it to be far too conservative for my liking.

Well, Vancouver is on The Left Coast, and definitely not conservative.

Your other comment is rather interesting. When I was growing up in Vancouver it was considered a remote, hinterland city in Canada. This was when the economic powerhouses were Ontario and Quebec, in central Canada, and the external orientation of the nation (excluding USA markets) was to the UK, France and western Europe. The combination of repeated bouts of inflation (driving commodity prices higher, which benefitted the economies of the western Provinces at the expense of energy consuming central Canada) and the rise of Asia shifted economic power in Canada westward (national political power has yet to catch up, however). And Vancouver was "discovered".

[GRG55]

Re: The Elusive Canadian Housing Bubble

Blow-off phase?

Greater Vancouver house prices jump 20 per cent to average $1.47-million

VANCOUVER — The Globe and Mail
Published Wednesday, Sep. 02, 2015 5:33PM EDT
Last updated Wednesday, Sep. 02, 2015 9:32PM EDT


The average price for single-family detached homes in Greater Vancouver has jumped 20 per cent to a record $1.47-million over the past year as the affordability gap widens between houses and condos.

“It’s really the value of the land that is driving prices higher for detached properties and widening that gap,” said Darcy McLeod, president of the Real Estate Board of Greater Vancouver.

The average price for detached homes in Greater Vancouver was $952,809 higher than the average price for condos last month, compared with a gap of $771,298 in August, 2014.
The most expensive properties are within the City of Vancouver. “For anyone who wants a detached home in Vancouver proper, it has become a luxury item,”...

[touchring]

Re: The Elusive Canadian Housing Bubble

Still a bargain if you consider a detached house in Singapore is an average of $8m and many times that in HK.

Blow-off phase?

Greater Vancouver house prices jump 20 per cent to average $1.47-million

VANCOUVER — The Globe and Mail
Published Wednesday, Sep. 02, 2015 5:33PM EDT
Last updated Wednesday, Sep. 02, 2015 9:32PM EDT


The average price for single-family detached homes in Greater Vancouver has jumped 20 per cent to a record $1.47-million over the past year as the affordability gap widens between houses and condos.

“It’s really the value of the land that is driving prices higher for detached properties and widening that gap,” said Darcy McLeod, president of the Real Estate Board of Greater Vancouver.

The average price for detached homes in Greater Vancouver was $952,809 higher than the average price for condos last month, compared with a gap of $771,298 in August, 2014.
The most expensive properties are within the City of Vancouver. “For anyone who wants a detached home in Vancouver proper, it has become a luxury item,”...

[jk]

Re: The Elusive Canadian Housing Bubble

Still a bargain if you consider a detached house in Singapore is an average of $8m and many times that in HK.

i remember when the grounds of the imperial palace in tokyo were estimated to be worth more than the entire state of california.

[GRG55]

Re: The Elusive Canadian Housing Bubble

Still a bargain if you consider a detached house in Singapore is an average of $8m and many times that in HK.

If global CBs continue with endless new phases of QE the ridiculous asset inflation that creates the situation you describe above will continue, of course. But risk now is the Fed leads the way to a (further) tightening of monetary policy by reversing the 25 year secular interest rate cycle and the others are forced to follow, with EM perhaps even taking the lead to deal with consumer inflation (such as Brazil's current predicament).

Housing prices in Singapore and HK is a direct result of the increasingly unsustainable monetary and fiscal policies of Mainland China lo these past 15 years.

[GRG55]

Re: The Elusive Canadian Housing Bubble

August data in.

Let's start a little contest here looking for the most appropriate single word description for the anomalous Vancouver trend shown below.

I will nominate "nuts".

[touchring]

Re: The Elusive Canadian Housing Bubble

If global CBs continue with endless new phases of QE the ridiculous asset inflation that creates the situation you describe above will continue, of course. But risk now is the Fed leads the way to a (further) tightening of monetary policy by reversing the 25 year secular interest rate cycle and the others are forced to follow, with EM perhaps even taking the lead to deal with consumer inflation (such as Brazil's current predicament).

Housing prices in Singapore and HK is a direct result of the increasingly unsustainable monetary and fiscal policies of Mainland China lo these past 15 years.

Housing prices in Singapore have been going up like crazy for more than the last 25 years, you have to go back to 1950s to see the scale of appreciation. Downtown land prices have risen from like $7-$10 psf in the 1950s to $10,000 psf today, a thousand fold.