Anyone Waiting for the Canadian RE Bubble to Burst to Buy a Property?

ShokWaveRider

ShokWaveRider

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This is money related, at least for me as we are considering purchasing a property in Victoria, BC. But the prices seem silly at the moment, especially in Vancouver, BC.

I went through the RE Crash in Southern California in the early 1990s and again in Florida in 2006, both times buying on the correct side of curve, and coming out on top (3 x on top as far as the SoCAL property was concerned). Even though the recovery is slower in Florida than it was in SoCAL, I am beginning to see the signs. One of the big signs is that it is in the Papers and on the news everywhere you look on a daily basis and everyone has their opinions. Vancouver, BC has put a 15% tax on foreign buyers buying property and Toronto is considering it. I am a believer that if you talk about something for long enough, and people start to believe it, it will happen..... eventually.

Your thoughts?
 
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How long do you plan to own the property?

My thoughts are that real estate can be viewed as an investment, or as a place to live.

If you don't plan to live there very long (or if you are buying a rental property), then I would regard it as an investment. In that case, I'd definitely try to buy when the market is down (and from what you are saying, now is not the time!). I don't personally know anything about the prices of real estate in Canada, but I do know that in some places in the US they are getting unreasonably high.

If you plan to live in the property for decades, on the other hand, then really it's more of a place to live than anything, IMO. In that case I'd suggest buying what you want when it's available, and not paying as much attention to the timing.
 
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"BC" means "bring cash". Any accessible area of the Province will be more expensive than comparable locations elsewhere. That said, real estate markets are very local. Right now, Vancouver's bubble has been deflated somewhat by the 15% tax on foreign buyers introduced on August 2nd (which was the government's intent), but other areas of BC, including the Okanagan, where I live, remain very strong. Victoria, which could be an alternate destination for foreign buyers avoiding the tax in Vancouver, is a seller's market at present.

Sales Statistics & Trends

If your goal is to buy an investment property, good luck finding something that's cash flow positive in BC. However, if you plan to live in the home, I suggest getting to know the local market, so that you can take advantage of a good deal when it eventually materializes. That's what I did several years ago. Mortgage interest rates in Canada are at historic lows, too, and likely to stay low for at least another year.
 
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The bubble has not deflated yet. Volumes are off previous highs but prices are not.
 
I get a kick out of watching HGTV and the price of houses in the Toronto retail market. Everyone wants public transit within waliking distance, and they refuse to move to other parts of town. And for $650K, they have to spend another $200-300K to get it livable.

I honestly don't know where the money comes from to pay for such real estate. And for $650K, I wouldn't be caught dead living in such a dump.

We went to Victoria & Vancouver on vacation, and it's a teriffic place. We really enjoyed the people, however the cost of living's really high.

We remain thankful that we were born in the Mid South and that we can afford to live a better lifestyle--for the money--than those in most other places in North America.
 
.

I've heard Chinese buyers are driving up the prices in Vancouver.

That 15% foreigner tax might not deter those Chinese who are looking for a safety net should things get weird in China.
 
I think:
There could be a bubble in Vancouver/Victoria, and Toronto, but there isn't one in Ottawa (Capital of Canada). And its always been this way for 2 decades.

If I owned a place in Vancouver, I'd be mad about the 15% foreigner tax, as it just killed sales, might cause a crash and the market won't recover as even with a 25% cut in prices, they are still expensive compared to the rest of Canada except perhaps Toronto.
 
As mentioned, I am waiting for a burst of some sort. So much in the new about the inability to sustain the current level, based on income ratios.
 
We have been watching the Calgary market for just under three years. Prices are down, especially in the apt/condo marketplace and the higher end single family.

Looked at a place yesterday. Down $100k from three years ago. But as more product sits we become more choosey. We are enjoying renting more and more. We may continue to rent and buy something in the south where we can stay for five/six months. Not certain yet.


I keep telling my sister to bail on her Vancouver home. Take the money and run.
 
My daughter and SIL are waiting to buy a house in Toronto. This would be their first house. I asked her recently about how much it would cost to buy a place she would feel comfortable in. She said $1.5 million. Pretty expensive for a first home, eh? She has about half of that saved (thanks to her very generous father) but she doesn't want a mortgage more than about $500,000. So a real estate crash would suit her (and me) just fine.
 
Just wanted to throw my two bits into the fray...

During the early 2000's, the housing market in Vancouver was already starting to cause a fuss. As we were well on our way to paying off our mortgage and our incomes growing, we started thinking about an investment property. We started following a couple housing blogs and RE discussion boards where there was a lot of chatter about how overpriced the housing market was. Ultimately, we didn't buy an investment property and missed out on getting in on the housing boom, save for our primary residence.

The point being, chatter around the Vancouver housing market being overpriced has been going on for the last 15 years with the only a short term blip being the 2008/09 recession. That was a funny period too with people getting sued when they got nervous and tried to weasel out of their presale contracts. In hindsight, obviously they would have been fine.

I don't have a crystal ball but IMO, I don't see the overall housing market "crashing" unless mortgage rates rise significantly or we hit a recession with a significant amount of unemployment. I don't see mortgage rates rising significantly until close to 2020. We can't really predict a recession but you can see how the oil crash, recession, and layoffs has been impacting Alberta's housing market.

As to cash flow properties in BC, one of my friends is actually making a nice go of it buy really small rental properties in the interior and renting the units out to temporary residents (people in the trades in town for a project). I don't go into too much detail with him but it's still possible but not in the major centres.
 
Friends DD and SIL just sold their 2653 sq.ft. home in east Vancouver for $1.895 million which was over asking. They have bought a beautiful older home on North Vancouver (4400 sq.ft.) for less money and with an unfinished basement. Bigger home, bigger lot, bigger potential.

The house just sold
 
brett said:
We have been watching the Calgary market for just under three years. Prices are down, especially in the apt/condo marketplace and the higher end single family.

Looked at a place yesterday. Down $100k from three years ago. But as more product sits we become more choosey. We are enjoying renting more and more. We may continue to rent and buy something in the south where we can stay for five/six months. Not certain yet.


I keep telling my sister to bail on her Vancouver home. Take the money and run.
Click to expand...

From what I have read, Calgary is heading the downturn. We lived there in 1987, loved the city. It is a little to big for us now though. And not to mention Cold. But the 330+ days of sunshine per year are NOT to be complained about.
 
Oil has not bottomed out yet. Far from it IMHO. And when it does it will take quite some time to impact 'Cow Town'.

We love it here. We expected to retire back to Vancouver but we like it here too much to move. Big sky. We leave by New Years and return for Easter. Usually gone in Sept and October. This year is an exception-home for October.

Real estate agent says there are enough condos and apts on the market and coming on stream to meet demand for five years. Real estate board is not saying this of course but the market prices certainly are.

Here is the odd thing. We have owned our homes in various cities for the past 35odd years. During our first 18 months of renting the desire to buy was strong. Over the past 18 months it has subsided to the point where we are ambivalent about owning. It is so good to have choices. We have downsized so much plus experiences have taken precedence over 'things'. Does this happen to other retirees??
 
brett said:
We have downsized so much plus experiences have taken precedence over 'things'. Does this happen to other retirees??
Click to expand...

When my late wife & I sold our place on Salt Spring in 1997 in order to fulltime RV, we disposed of almost everything, except our 'treasures' and items we considered 'essential'.

Those things went into storage, and following her death in Ontario in early 2002 I had everything shipped east. Sorting through the boxes/crates I kept saying to myself "Why on earth did we keep this?"

Almost fifteen years later, happily married to a lady who is as non materialistic as I am, 'stuff' progressively means less and less......(which is reflected in the way we travel); in fact what I would likely consider my 'greatest treasure' (DW excepted) is this, purchased at a roadside market in South Africa in 1983:

2he9207.jpg


Important things are closeness, travel, the granddaughters......etc, etc,.....stuff..Meh.
 
My feeling is this just will push the market into recession, some places that are land restricted like Vancouver/San Francisco/Victoria would remain expensive.
All other places will be pushed closer to a recession or depression on housing.

If one is worried about ownership by foreigners, why just tax it, just ban it, only citizens can buy property, that should kill the market pretty quick.
 
Sunset said:
If one is worried about ownership by foreigners, why just tax it, just ban it, only citizens can buy property, that should kill the market pretty quick.
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The issue in Vancouver is not having too many foreigners living in the city, but having too many middle and low income Canadians who cannot live there at all because the cost of housing is so insane. Chinese billionaires and multimillionaires buy homes in Vancouver to park their money abroad, or for their kids to attend university, or to establish residency with a view to citizenship. Many of these homes remain unoccupied. It's not healthy for the city.
 
Meadbh said:
The issue in Vancouver is not having too many foreigners living in the city, but having too many middle and low income Canadians who cannot live there at all because the cost of housing is so insane. Chinese billionaires and multimillionaires buy homes in Vancouver to park their money abroad, or for their kids to attend university, or to establish residency with a view to citizenship. Many of these homes remain unoccupied. It's not healthy for the city.
Click to expand...

+1 Exactly!
 
The low and middle income Canadians could never afford to buy in Vancouver for about the past 20+ years.
Personally I'd like to live in a city where 10% of the condo's were owned, taxes paid, but nobody lived there, it would be less population density with extra tax money available since these empty places would be less of a drain on resources.

Anyhow, the easy solution for all the foreigners is to form a shell company and their company can buy the real estate. It will increase business for some lawyers.

There are a lot of places in various countries that a person earning the median family income cannot buy a house, they are called rich folk areas.
For example: "Los Altos, California, in the heart of Silicon Valley, is now the most expensive real estate market in the country, according to a new report from Coldwell Banker. The average four-bedroom, two-bath home in Los Altos costs $1,963,100"

The 10 most expensive real estate markets in the US

I do think it's totally within rights of the government to do this tax as there are already lots of other countries that do not allow foreign ownership of property. Just that it will not permanently solve the problem, and hurts all the Canadians who were hoping to sell their house to rich folks, so they could retire to a LCOL.
Like a some San Francisco/California owners do when they retire to AZ or NV.
 
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