Polls just closed. I'm calling a NDP majority government, probably by 15-plus seats.
Everyone Knows™ that Dippers are bad for business, bad for the economy and especially bad for housing. I have it on good authority that their first order of business is to pass a law that gives common-law property rights to any basement suite dwelling tenants who stay put for longer than 6 months.
They plan to unionize realtors. It's true. They're not satisfied with the economic-rent seeking monopolies of the past. Uh uh. Commision sales people deserve a living wage after all. Especially in high rent markets like Vancouver.
To pay for it all, the property transfer tax is going up--after all, everyone knows only people earning more than $150,000 per year and corporations can afford to sell homes to buy new ones today. This won't effect you and me and the rest of joe middle class public because we're selling our homes to co-op associations and staying put regardless... no tax implications there, just unicorns, ponies, free money and low rents.
Besides that, us degreed folks are going to head back into Skills Training Programs so that we can have lucrative skilled trades careers working in "public relations" for the Ministry of Information helping people understand why it's important that government mandates be changed from 4 year terms to lifetime terms because short terms lead to bad decisions for "the people."
All kidding aside--surely some folk in BC feel the need for comic interlude regardless of election outcome--I'm curious to know what people in Victoria think: will the outcome of today's election have an effect on tomorrow's home prices?
Everyone Knows™ that Dippers are bad for business, bad for the economy and especially bad for housing. I have it on good authority that their first order of business is to pass a law that gives common-law property rights to any basement suite dwelling tenants who stay put for longer than 6 months.
They plan to unionize realtors. It's true. They're not satisfied with the economic-rent seeking monopolies of the past. Uh uh. Commision sales people deserve a living wage after all. Especially in high rent markets like Vancouver.
To pay for it all, the property transfer tax is going up--after all, everyone knows only people earning more than $150,000 per year and corporations can afford to sell homes to buy new ones today. This won't effect you and me and the rest of joe middle class public because we're selling our homes to co-op associations and staying put regardless... no tax implications there, just unicorns, ponies, free money and low rents.
Besides that, us degreed folks are going to head back into Skills Training Programs so that we can have lucrative skilled trades careers working in "public relations" for the Ministry of Information helping people understand why it's important that government mandates be changed from 4 year terms to lifetime terms because short terms lead to bad decisions for "the people."
All kidding aside--surely some folk in BC feel the need for comic interlude regardless of election outcome--I'm curious to know what people in Victoria think: will the outcome of today's election have an effect on tomorrow's home prices?
221 comments:
«Oldest ‹Older 201 – 221 of 221"Personally, I don't know of any definition of a bubble."
Economists worldwide agree that a housing bubble had formed and peaked in the US by 2006. If Canada's price run-up was equal to that of the US by 2006, and has gone much higher than that since, then it is safe to say that Canada currently has a housing bubble.
"But that's not a usable definition. How many investors must do this before the market is in a bubble? 1? 1%. 50%?
Bubbles are really only identifiable in retrospect. For now we can only call it a boom with worrying fundamentals"
As I pointed out to Just Jack, a simple comparison to the US makes it clear that the Canadian housing market is currently in bubble territory.
The peak of a bubble might be identifiable in retrospect only, but in most cases a bubble can be identified before its peak.
@info. Devil's advocate:
You're playing Jenga with your grandma. She's got parkinsons' and knocks over the tower when it reaches 15 blocks in height.
Later you play a round with Bill McSteadyhands and the tower reaches 17 blocks. That's beyond what dear old grannie achieved, but that doesn't mean it's necessarily a fundamental rule of stability. The tower might make it to 30 blocks before becoming unstable.
*and yes I realize in the end both towers end up on the floor, but we've reached the limits of this analogy.
"Actually if you wander over to globalpropertyguide.com there are many examples of countries that have experienced very rapid house price growth and no crash."
Worldwide housing studies show that the Canadian housing market is the most overvalued in the world.
As I have said all along, there are some countries with housing bubbles that have not corrected much, including Canada and Australia as the two that top the list. Hong Kong is also in that category. The above article by The Economist supports that.
Where are the "many examples of countries that have experienced very rapid house price growth and no crash"? They are not showing up on this chart.
@ caveat
Switzerland is undervalued, btw.
"$5000 reduced from original pirice!!!!!!!!!"
...
"SELLER is MOTIVATED"
Listed: $515,000
Assessed: $458,200
One percent off the original asking price. They don't seem very motivated.
12828847
One of the reasons we are the most overvalued is because rent is cheap... In San Fran you are either renting for $5k /month or buying for a million so you are screwed both ways. At least here you can still rent for cheap. That's one of the things that makes Victoria livable....
How many investors must do this before the market is in a bubble?
If any investors buying at current prices are, all of them are, provided price/rent does not vary greatly in a given market.
Think about it.
One of the reasons we are the most overvalued is because rent is cheap...
Rent in Victoria isn't cheap at all compared to cities of similar size in Canada or the US.
Comparing it to San Francisco City, or even elsewhere in the Bay Area, makes no sense. Try Eugene, Oregon or Halifax. Not Regina or Saskatoon because they are fast growing cities and Victoria (I mean metro) isn't.
>> If any investors buying at current prices are, all of them are, provided price/rent does not vary greatly in a given market.
Not at all. Tons of variables with diff property types, configurations, down payments, etc.
some people are losing money right now on rentals, some arent
Marko - I see that your listing on Dufferin has dropped another $20,000, for a total of $50,000 off. Assessment is at $645,000 and the new price is $750,000. When this was listed I said the price was too much for the market and it still is. Especially with a 6'6" basement.
@Dufferin
Holy wide angle lense batman.
You can't compare to Eugene Oregon because their incomes are not comparable to Victoria. Halifax is fine but is the rent there somehow a lot cheaper than Victoria?
Why doesn't the $515,000 house have any inside photos?
Lots of updates, new flooring, fresh paint, brand new kitchen cabinets but no inside shots to see.
S2 (JJ's wife)
Tons of variables with diff property types, configurations, down payments, etc.
Amount of down payment does not make a difference to profitability because of its opportunity cost.
As for different property types, yes you could possibly have a bubble in one and not another because they are different market segments, just as you could have a bubble in one stock sector and not another. But this is seldom the case among individually titled properties (i.e. excluding multi-unit properties) because you have the same buyer pool.
>> Amount of down payment does not make a difference to profitability because of its opportunity cost.
Sure theoretically, but consider two places:
The first is newly purchased and doesn't rent out for enough to cover the interest/taxes/maintenance expenses. That owner is counting on appreciation, and the situation is inherently unstable. Eventually that guy will bleed out and be forced to sell.
Another owner with the same place has it mostly paid off and the rent covers his expenses and then some. Yes he's got a crappy investment and could make more by liquidating it, but the situation isn't unstable and he could hold it forever.
The question of whether there is a bubble in RE (or anything else) is about today's prices, not past prices.
Someone with a large downpayment would be in the same position at today's prices.
If prices rose because we had a rise in the population or wages increased. That would not be a bubble. Or even if demand grew for a certain region instead of almost all of them.
Prices rose because of people willing to go into more and more debt. They were fed lies about the stability of Canada's housing market and that interest rates were going to stay low for the "foreseeable future". The banks, insured by the government, were willing to lend you all the money you need to bury yourself in debt.
Some people did something even crazier. They were so confident that rise in prices in their homes was permanent that they borrowed against the value of their home. Then they either bought up more homes (you can never have enough) or just spent the money. It's your money. Nothing will could ever happen to it, it's unthinkable.
The economy kept purring along. No recession here. We found the secret to running an economy. Trading an ever increasing asset between each other while going into more and more debt.
A million dollars for a tear down in Vancouver. Three hundred thousand dollars for a house in Winnipeg that was $180,000 seven years ago. A Toronto condo building orgy of epic proportions.
Although if you wish to bury your head in the sand, I have some pointers.
1. Real estate is local
Don't pay attention to any other real estate markets. Only focus in on one single tiny region of the bubble. This will shield you from actually seeing what is happening in the rest of the country. Or even in the surrounding regions of your chosen small parcel.
2. It will happen "out there" not "in here".
Irrespective of where you, remember it is different where you are than everywhere else. If the Colwood crawl is any indication of where Victoria's work force lives. A crash in Colwood/Langford would have deep ramifications here.
3. deny deny deny
It doesn't matter that buyers are drying up. It doesn't matter that the government is nervous that we could have a serious financial situation if housing slumps (obnoxious, I know). It doesn't matter that you will lose all that "earned" "equity".
4. Base your thinking on a select group of individuals in your group of friends.
Everybody is like you and you are financially prudent, therefore everybody is. We don't have people up to their eye balls in debt. Well.. maybe we do but certainly only a small amount. Certainly.
5. Grasp at staws.
No matter how ridiculous the comparison, make the comparison. Completely forget that you have made numerous mentions that real estate markets can't be compared.
In the end remember one key thing. When this bubble unravels, our real estate prices will be less than the states. Just like they used to. The horror.
No, better not think about these things. Things might actually be different here.
Or not.
Strap yourselves in, we're in for a bumpy ride down.
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