Vancouver Real Estate - Bubble or Nonsense?

[chemgear]

Originally Posted by Clarkey

A wealthy Chinese guy I work with claims that this same effect is about to hit Calgary. He said that wealthy Chinese (he is one of them) are starting to opt to move to Calgary instead because you get more bang for your buck here. Apparently the advent of flights direct from Calgary to Hong Kong have also contributed to the desirability of Calgary.

Oooooh nice - the Chinese are gonna take over Calgary! (Though I thought it was Manhattan first, then Berlin.)

Hehe, I'd imagine some of them are in for a rude surprise when the cold/snow hits again . . . and heaven help us when they all take over the roads!

[soulchoice]

Originally Posted by chemgear

Oooooh nice - the Chinese are gonna take over Calgary! (Though I thought it was Manhattan first, then Berlin.)

Hehe, I'd imagine some of them are in for a rude surprise when the cold/snow hits again . . . and heaven help us when they all take over the roads!

Exactly! They will stop investing and wanting to live here as soon as they experience first hand how crappy the weather here in Calgary is.

[VladtheImpaler]

To de-rail the thread once more, I've just realized that houses in Toronto are cheaper than in Calgary, at least in the sense of what you get house-wise and location-wise for the same amount...

[Rubicant]

Originally Posted by VladtheImpaler

To de-rail the thread once more, I've just realized that houses in Toronto are cheaper than in Calgary, at least in the sense of what you get house-wise and location-wise for the same amount...

Come to the dark side Vlad

[VladtheImpaler]

Originally Posted by Rubicant

Come to the dark side Vlad

I said I was moving to Toronto if the Canucks won the Cup over in that "coping" thread. Could be there soon...

[Winsor_Pilates]

Originally Posted by squiggs96

I love the Cambie corridor. I have been outbid in that area a few times this spring. One house was listed at $1.1M to bring in people like me, but they were actually looking for $1.7-$1.8M. They got it in about three weeks.

Do you have any knowledge on the three row homes at the corner of Cambie and 33rd? They have been there since July of last year I believe and have changed realtors at least three times that I've seen. Are they just firm on the price and not willing to budge, or do people not want to move there? My thoughts are that they are great houses with decent floorplans and the lanehomes are great for a mortgage helper. The downside is there is no real land as the three homes take up all the dirt and if you are willing to spend $1.8M plus HST you can easily get a great house in that area for that price. I think the middle one is worth $1.5M including HST and the smaller two at $1.3M. Thoughts?

MLS # V880481, V881176 and V880624.

If you feel more comfortable PMing me that's fine. I'm not sure what you are and aren't able to say on a forum like this being a realtor.

Took a look at the listings.
They are the first non-strata row homes in Vancouver. So basically, they're like townhomes but without and strata. Freehold ownership.

You're correct, they've changed agents a few times and dropped pricing. they first one went from 1,899,000 in Nov 2010 to 1,798,000 now and the others have adjusted as well.

I noticed they're just finishing construction and some of the specs changed on the various listing remarks. For example, the first one said concrete walls between the homes; and the new listings now say party wall systems.

My guess is a combination of price, new style of home(hard to compare prices) and still being built with uncertain finished product have made them sit on the market.

If they're finished now, maybe they'll move. I didn't look into comparable prices in the area to assess if I think they're good value or not.

The second one V881176 has an open house this Sunday. You should go check it out, I might go by myself to see what this style of place is like.

[squiggs96]

I went to an open house there a few months ago. They are nice looking places and I'd definitely purchase one if the price was right. If they are willing to sit on them until they get asking, they'll be there another year. Right now they are just not worth it, for what you can get in the area. If you find out anything, let me know. I got your PM as well.

[sergei_makarov]

Wasn't California another market that people said would never crash because of location, foreign investment (again from Asia) and weather (except in California's case, the weather is actually good compared to rainy Vancouver).

If people are looking for a place to drop their money and invest (as opposed to actually live in, as is the case for so many of the properties in Vancouver), why not get more bang for your buck in California for example? You could get 2 homes for the price in 1, and each of the homes you buy in Cali would be bigger than the one in Vancouver (and newer) on its own.

I'm just a little doubtful when I hear the "Vancouver's different" rumblings... it really isn't all that different... just hasn't popped yet.

[squiggs96]

Originally Posted by sergei_makarov

Wasn't California another market that people said would never crash because of location, foreign investment (again from Asia) and weather (except in California's case, the weather is actually good compared to rainy Vancouver).

If people are looking for a place to drop their money and invest (as opposed to actually live in, as is the case for so many of the properties in Vancouver), why not get more bang for your buck in California for example? You could get 2 homes for the price in 1, and each of the homes you buy in Cali would be bigger than the one in Vancouver (and newer) on its own.

I'm just a little doubtful when I hear the "Vancouver's different" rumblings... it really isn't all that different... just hasn't popped yet.

The people that are investing in houses and using them as a bank account don't care if they have one house or three, as long as the return on investment is there. In Vancouver you get an increasing market, whereas in the States you get a decreasing market. In California you could own two houses, but that just means you have two houses going down in value instead of one house in Vancouver going up in value.

[Jedi Ninja]

Originally Posted by squiggs96

The people that are investing in houses and using them as a bank account don't care if they have one house or three, as long as the return on investment is there. In Vancouver you get an increasing market, whereas in the States you get a decreasing market. In California you could own two houses, but that just means you have two houses going down in value instead of one house in Vancouver going up in value.

Except you have described exactly the investment philosophy that drives bubbles; buying something simply because the market is going up in value, without any intention to live in the home, rent it out, or otherwise derive any productive value out of the asset.

[opendoor]

Originally Posted by squiggs96

The people that are investing in houses and using them as a bank account don't care if they have one house or three, as long as the return on investment is there. In Vancouver you get an increasing market, whereas in the States you get a decreasing market. In California you could own two houses, but that just means you have two houses going down in value instead of one house in Vancouver going up in value.

That's just circular logic. You're saying that the prices keep going up because of investors, but these investors are buying because the property prices keep going up.

That can't and won't continue forever. At some point property prices will either come down or at least flatten out for a sustained period of time, at which point there will be no return on investment.

[chemgear]

Originally Posted by sergei_makarov

I'm just a little doubtful when I hear the "Vancouver's different" rumblings... it really isn't all that different... just hasn't popped yet.

"There is no bubble, it is totally different here <insert option here>"

- the whole world wants to live here
- there is no more (suburban/expansion) land here
- it's totally unique here
- people would rather live here than New York, London, or San Francisco, etc.
- we just had the olympics, world's fair, circus, etc.
- it's more responsible here, there have been no bad loaning/credit
- there is water/oceans
- all the foreigners will keep pouring money here/the chinese will save us
- the economic fundamentals simply don't matter anymore
- everybody knows real estate values can NEVER go down
- job growth/wage increases here will more than offset the price increases of 20+% per year.
- the fact that prices have not decreased or popped yet absolutely PROVES that there is no bubble!

I remember hearing similiar stuff from analysts discussing the various markets in the US a few years ago. Everytime I hear it blindly being chanted, I keep seeing this guy in my head:

[Cowboy89]

Originally Posted by squiggs96

The people that are investing in houses and using them as a bank account don't care if they have one house or three, as long as the return on investment is there. In Vancouver you get an increasing market, whereas in the States you get a decreasing market. In California you could own two houses, but that just means you have two houses going down in value instead of one house in Vancouver going up in value.

In a changing world (just look at the last decade for an example), the riskiest assets are the ones that have a lot to lose. My prediction is that if you're just getting into the gold, silver, or Vancouver housing market, you will be taking part in the biggest losing transactions of the 2010s. Risk isn't binomial in which there is equal risk of things going down as they are going up. Relative to fundamentals the most expensive assets have a greater risk of going down than up and vice versa. As things grow in value their propensity to grow at the same rate diminishes. This happens at the same time that a high historcial growth rate is built into the current prices. Eventually, growth grinds slower and the PV impact of lower growth hammers the price of the asset, it's why value investors like Buffet stay away from stocks like Apple.

[afc wimbledon]

The irony of real estate is it is likely where most of us will make the most money outside of work, yet at the same time it is a lousy very risky place to invest in.

You buy a house you like and can afford, even if the rates do (and they will) go up, and want to live in for the next 10 to 20 years, who cares what the market does after that.

[bizaro86]

Originally Posted by Winsor_Pilates

haha love that site, I usually get about 95% right too.
Obviously those homes are being sold for land value in very high demand areas. Goes to show the limitations of land in Vancouver.
Take a look on MLS Calgary at some tear downs in Marda Loop or South Calgary. Not that different, likely around $400,000.

This 50 foot lot in sunnyside is listed at 899,900....
http://www.realtor.ca/PropertyDetail...ey=-1744520514

[bizaro86]

Originally Posted by Clarkey

Apparently the advent of flights direct from Calgary to Hong Kong have also contributed to the desirability of Calgary.

By direct do you mean flying YYC-YVR-HKG?

Because unless I've missed something pretty big, you can't fly from Calgary to Hong Kong without stopping.

[troutman]

T.O. penthouse sells for a record $28M

http://cnews.canoe.ca/CNEWS/Canada/2.../18212366.html

[Winsor_Pilates]

Originally Posted by Cowboy89

In a changing world (just look at the last decade for an example), the riskiest assets are the ones that have a lot to lose. My prediction is that if you're just getting into the gold, silver, or Vancouver housing market, you will be taking part in the biggest losing transactions of the 2010s. Risk isn't binomial in which there is equal risk of things going down as they are going up. Relative to fundamentals the most expensive assets have a greater risk of going down than up and vice versa. As things grow in value their propensity to grow at the same rate diminishes. This happens at the same time that a high historcial growth rate is built into the current prices. Eventually, growth grinds slower and the PV impact of lower growth hammers the price of the asset, it's why value investors like Buffet stay away from stocks like Apple.

Does he say to stay away from Berkshire Hathaway for the same reason? or is their $117,000 stock still a good investment?

[Cowboy89]

Originally Posted by Winsor_Pilates

Does he say to stay away from Berkshire Hathaway for the same reason? or is their $117,000 stock still a good investment?

Actually Berkshire Hathaway will not grow as much as it did in the past due to the same principle that growth must slow down as a company outgrows the market's propensity to support said growth (doubling Berkshire would mean growing over $100 billion in value). The larger the assets under management are relative to the size of the market the harder it is to grow. Same principle applies to any market. It's easier to turn $1 into $2 than it is to turn $100 billion into $200 billion).

[Mad Mel]

Originally Posted by bizaro86

By direct do you mean flying YYC-YVR-HKG?

Because unless I've missed something pretty big, you can't fly from Calgary to Hong Kong without stopping.

You would be correct, Obi Wan.

My favourite new Google feature.