Housing 'bubble' in Vancouver
 

I hear so many different viewpoints on this, but with household debt at over 160% of income, a frothy market, and people encouraged to buy at record rates, what's your view?

I guess if rates go up, or unemployment starts to climb there may be issues. It's sad for young folk who cannot buy a house though in their own city - one of the guys at work was telling me how he plans to move to Asia so he can make ends meet and this guy is an engineer! He tells me that houses are going beserk, and I feel for the fellow. The rate decreases seem to go straight into the pocket of banks and realtors (as prices are bid up the same amount)

Re: Housing 'bubble' in Vancouver
 

Rate drops do get passed on to some extent (see comment below about Bonds). Pretty much nobody pays the headline mortgage rates - you just have to qualify for affordability at those rates. Scotiabank's 5-year fixed rate of 4.49% is actually as low as 2.74% when you have qualified for it.

They were talking on the news last night about speculation that the Bank of Canada is going to drop their overnight rate (UK Base Rate equivalent) to 0% on 15th April to counteract the negative effects in Alberta. I think only Global had this, so it may be nothing more than speculation.

That is only going to drive the BC housing market even more. Demand isn't going to go away because net immigration (from overseas and other Provinces) isn't.

Mortgage rates (especially fixed ones) are more closely liked to Bond Market yields than the Overnight Rate, but it will be interesting to see what happens.

If they are going to drop their rates, I hope they do it quickly as my mortgage and house purchase close on 12th May, so there should still be time for me to get a 'float down' on my fixed rate.

Re: Housing 'bubble' in Vancouver
 

I don't get the fascination people have on owning real estate. Seems like it's a goal in life above all others. Also seems to be the main retirement plan for many, which is a bit weird.

If the BoC drop rates again, that in and of itself pretty much makes the state of Canada's economy officially shit. Unfortunately for many it'll be seen as a great time to buy even though the risk of a pretty bad housing downturn in Vancouver is getting higher. The real estate folks and the media they sponsor will pump it with abandon no doubt.

I wonder how long it'll take for the impact of Calgary real estate and others to spread to the two remaining bubbles of Vancouver and Toronto.

On the plus side, another rate drop will ***** the $CAD so that works for me :thumbup:

Re: Housing 'bubble' in Vancouver
 

Most people eventually get sick of renting. When you combine that with governments artificially pushing up the cost of houses with low interest rates, it's a no-brainer,

Except for the people who buy at the top of a bubble, and see prices fall 50% soon after...

Yes. But you've got to laugh, haven't you?

Re: Housing 'bubble' in Vancouver
 

It's just a matter of time and I know many people who are leaving Canada again. It was the same here in Ireland and the recession was the best thing that could happen. If a country can't compete due to high wages, wages have to drop and with lower wages people can't afford high mortgages. Of course there are other factors, but it happens every 20 years.

Re: Housing 'bubble' in Vancouver
 

Well if you think that you spend most of your life at work and at home, I don't find it that weird. It certainly makes sense to buy if your mortgage is lower than rent and it's also quality of life. I can design the garden the way I like and change things without asking a landlord.

Re: Housing 'bubble' in Vancouver
 

I have been bearish on van RE for about 3 years. I think the causes of the crazy market are many - cheap money being one, immigration another, immigrant investors yet another, the ALR creating land scarcity, and NIMBYism stopping re-development of single family neighbourhoods in Vancouver.

I understand why people want to buy RE though. It gives you a security of tenancy that rentals just don't. Where I live, I have seen several families evicted from long-standing rental homes when the landlord decided to buy the home or move a family member in, and in one case, a family I know was evicted 3 times in 2 years - each time the house went on the market. It's pretty disruptive, especially when you have kids and they are settled in schools and neighbourhoods etc.

Also, there is the idea that by the time you retire you'll have paid off your mortgage and won't have to pay an ever increasing rent.

I get it.

Re: Housing 'bubble' in Vancouver
 

Interesting, i don't see that at all. I work with a lot of young professionals and most of them are sucking it up and buying what they can afford.

Re: Housing 'bubble' in Vancouver
 

It would be nice if people could just buy a house in the region they live in, never mind the city they prefer.

Have to get to Hope before houses become reasonable, but its way too far to be viable.

Most of the younger generation will likely have to accept they cannot own a home in places like the lower mainland and Toronto and just accept they will rent for life.

I would love to own so I can have a garden, a nice pond, my aquariums and not be stuck in a small box controlled by a landlord. But with our maximum price assuming 20% down is around 150,000 owning will never be an option for us unless houses fall really far, but then I'd venture the economy would be such a mess we would be unemployed and couldn't buy anything at that point.

I am not interested in owning a condo and dealing with strata's and still not being able to have what I want in life, plus most condos except the nasty old ones are above our price range as well.

Owning would just be the freedom and stability I seek, renting leads to instability and far less freedom.

Thankfully now we are in a dedicated rental complex, everyone rents and nobody can buy an individual unit, so no risk of the unit being sold and kicked out. It's also rent controlled with a mandate to provide affordable housing, so the rent's are not market rate which would mean for us being homeless as we could not afford market rent unit in this area.

Re: Housing 'bubble' in Vancouver
 

you gotta start somewhere jsmth. A condo is where most people start, (it's where we started - AND in a shitty area) and older buildings can have advantages like: much bigger suite sizes, etc.

Re: Housing 'bubble' in Vancouver
 

The problem is they are not going up in value around here, so I don't see what the benefit is since the prices are stagnant and not going anywhere on the new buildings and going down on the older buildings.

What happens when the condo building is torn down and you still have 15 years on the mortgage?

Plus like I said, condos are above 150,000 for anything that might go up in value, add in that we are mid 30's, and will take about 10 years to get a down payment and stable in employment and better credit, we don't have time to buy a condo, its a house or rent.

But nothing is affordable buying wise in the lower mainland for a couple earning 20-30k a year each before taxes.

I just don't see the advantage to condos when you have to pay the strata fee, and still have all the rules renters have since strata's are just glorified landlords.

Maybe I am missing something about condos. My wifes mom owned one in town for 10 years, she sold it for less then she bought it for as condo prices have been falling, so doesn't seem sound investment.

Am I missing something on condos?

Re: Housing 'bubble' in Vancouver
 

I wonder if it is true that it is a matter of time. I know people who have been on the sideline for over 10 years and the prices keeps going up. What makes you think it's a matter of time? Not disagreeing with you as I personally think the whole world has gone into massive debt and I have no idea where this money is coming from (at the same time people think they are rich as house prices go up) so something has to give too (intuitively speaking)..but just wondering what your thoughts are there.

Re: Housing 'bubble' in Vancouver
 

Interesting. Well this was just one engineer at work, he rents now, I couldn't imagine his salary is that low but that's what he was saying. The thing is the people who are sucking it up now as you say - presumably they are basing this on current low mortgage rates?

Based on that, plus 30-35 years amortization, payments might look do-able but if that changes...

Re: Housing 'bubble' in Vancouver
 

Condo prices have been pretty stagnant although every week I see new ads for new developments around town.

Re: Housing 'bubble' in Vancouver
 

As withabix said, net immigration into BC will likely underpin the Vancouver housing market. It's simply an expensive place to live, and like other expensive cities, most people have to pay their dues by starting small and trading up and/or moving outward. A major recession might lead to a small 'correction' (10%?) but not a crash.