Is the death spiral starting to happen now?!!! LET THE GAMES BEGIN!!

[huggzy]

DATA: Is the Metro Vancouver real estate market in free fall?

http://globalnews.ca/news/2887766/data-is-the-metro-vancouver-real-estate-market-in-free-fall/


About fucking time. And this was just starting to happen before the 15% tax was implemented...apparently the Chinese government is starting to prosecute citizens who are illegally moving money out of the country. Rumour has it that about 450 people were charged.

 

[huggzy]

And I hope a crash stings them bad...


"News of the foreign buyer tax has spread to China, where Chinese real estate website Juwai now promotes other Canadian cities as foreign capital destinations.
The website used to promote Vancouver as one of the best places for wealthy Chinese to invest, but has now switched to publicizing Calgary and Alberta due to the tax.

'According to the National Bank of Canada, Chinese buyers [are] estimated to have bought up one third of Vancouver homes in 2015 …However, a recently imposed 15 per cent foreign buyer tax in British Columbia to cool the soaring housing prices in Vancouver may turn the tide, causing Chinese property investors to search for better options elsewhere in Canada,” the company wrote online in a blog post.'"

 

[87112]

So Calgary is next to get it up the butt. Who is next for Wealthy Chinese after Calgary? I suggest Flint, Michigan or Gary, Indiana. :mad-new:

 

[JimDandy]

This projected crash is based on poor sales in the first 2 weeks of August. I wonder if this cannot be at least partially blamed on a rush of completions at the end of July when the new tax was announced. Probably not related because one is sales and the other is completions, but throwing it out there anyways.

Regardless, I predict by next spring, the traditionally hottest time of the housing market in Vancouver, the housing prices will once more be going up, up, and away. By that time greed will once more have over powered fear.

http://www.investopedia.com/articles/01/030701.asp

JD

 

[FreeG]

I agree with JD - calling the tax a "success" or "death knell to the housing mkt" after two weeks of data is kinda like saying the a tsunami is coming because the water has moved a few feet up the beach - MAYBE a tsunami IS coming, or maybe (more likely) these are fluctuations that happen all the time and were only minorly affected by the tax.

I think (hope) the tax will have SOME affect. Interesting that I hear folks now worried about the housing bubble collapsing. So what the hell is the alternative? Keep allowing prices to rise even FURTHER?? If the mortgage companies have done most of their homework and only provided loans to those who can afford them, then I don't see how a housing bubble affects anyone except those trying to flip a house, only committed for a few years (like for a job), or get laid off and then can't afford the house.

Now, on to the next problem - affordable, available rentals.

 

[maniacalone]

The trickle down impact is what will cause the bubble to pop. If the initial driver of the market is absent due to the tax, the developers sitting on lots or building homes to sell in a few months will be underwater. Foreclosures will follow and the trickle will cause a steep decline due to liquidity issues. A house for 1 million is 150k in tax. 2 million is 300k in tax to a foreigner on top of price. They will not pay it. Prices will drop to recognize this. It will get ugly by December.

 

[JimDandy]

The trickle down impact is what will cause the bubble to pop. If the initial driver of the market is absent due to the tax, the developers sitting on lots or building homes to sell in a few months will be underwater. Foreclosures will follow and the trickle will cause a steep decline due to liquidity issues. A house for 1 million is 150k in tax. 2 million is 300k in tax to a foreigner on top of price. They will not pay it. Prices will drop to recognize this. It will get ugly by December.

I would wager you that you are wrong. There will not be a collapse. There might be a small correction, no more.

To the foreign buyers, Vancouver properties are still cheap, even with the tax. They have pausing buying because of fear (see my previous post) but will jump right back in again when greed over powers fear, which will be soon enough. These foreign buyers (read Chinese mainland buyers) have huge amounts of capital to spend and for the most part are in it for the long term. They want some of their capital invested in foreign markets in case they piss somebody off that is above them in the government bureaucracy and they are thrown in jail and all of their Chinese holding seized. At least their family will be able to live comfortably on the capital they have invested outside of the country. I am not making this up. I have been told this directly by friends who are recent immigrants from mainland China.

JD

 

[87112]

True its not that expensive to rich Hong Kongers, look at HK flats 600 sq feet is 500k USA dollars. A 2000 SQ Feet home in BC 1.5 million no problem.

 

[marsvolta]

those who are betting that the new tax will not cool the market may be in for a surprise.... similar measures in other countrries have HAD THE DESIRED EFFECT. these foreign buyers are business people who are laundering their money into investments and as such don't care where that investment is. if they as a group can move a market then they will choose to invest where they get the best returns.

 

[huggzy]

These numbers dropped BEFORE anyone even knew there was even going to be a tax announced. The government never hinted they were going to do this.

At first I assumed that with 15% tax that we would likely see a drop of 15% in prices in the market (as the foreign money is what is driving prices up and setting them) and then things would just continue on in the same way as before - but just at prices 15% lower. However, seeing as how other cities in Canada don't have this tax, this might mean that foreign money just might decide that there are better places to park their money.

Plus because the government did this, this ought to spook any speculators buying here. If you were a foreigner considering buying here and saw the government just slap a tax on them out of the blue, who is to say that the government won't jack it up even higher if things don't cool down enough? This uncertainty should scare away all the speculators.

 

[SInCity67]

I need the condo market to die . Fuck paying 600 k for one bedroom.

 

[FreeG]

The other stat that doesn't make sense in all of this, heard on NPR a couple weeks ago, is that foreign buyers only make up 10-15% of the house-buying market. This came out after much reluctance to release such stats, which I found odd (or maybe it was only 10-15% were Chinese?)

Either way, I'm still curious: is this a case of the *impression* that foreign buyers are flooding/driving the market exceeds reality, or are the stats low because foreign buyers are using local friends/family to make the deal? Either way, I wouldn't expect a tax of only 15% (which, honestly, is below what some bidding wars lead to) to drastically decrease house sales if its aimed at a small % of the buyers.

 

[huggzy]

The other stat that doesn't make sense in all of this, heard on NPR a couple weeks ago, is that foreign buyers only make up 10-15% of the house-buying market. This came out after much reluctance to release such stats, which I found odd (or maybe it was only 10-15% were Chinese?)

Either way, I'm still curious: is this a case of the *impression* that foreign buyers are flooding/driving the market exceeds reality, or are the stats low because foreign buyers are using local friends/family to make the deal? Either way, I wouldn't expect a tax of only 15% (which, honestly, is below what some bidding wars lead to) to drastically decrease house sales if its aimed at a small % of the buyers.

Except that when these stats came out, sales had already dropped dramatically. One could surmise that foreigners have already been pulling out of the market - leading to the huge drop in sales volume - once these buyer demographics were starting to be tracked. Anyone in the development industry (as I am) doesn't need a study to conclude that most buyers were from other countries. All we needed to do was look at the names on the sales lists of new developments being built, and you could plainly see that most, if not all, the names on these list were either of Asian or Middle Eastern descent.

 

[Ray]

most, if not all, the names on these list were either of Asian or Middle Eastern descent.

That doesn't mean they're not Canadian.

 

[huggzy]

That doesn't mean they're not Canadian.

Don't be stupid. Every client walking through these developments were from everywhere but Canada. It was obvious.

 

[Horn_dawg]

Don't be stupid. Every client walking through these developments were from everywhere but Canada. It was obvious.

So you can tell the difference between an immigrant fresh off the plane versus a foreign buyer off that same plane by just looking at them? That is some mad skills!

 

[huggzy]

So you can tell the difference between an immigrant fresh off the plane versus a foreign buyer off that same plane by just looking at them? That is some mad skills!

Actually, no. But any moron can tell by listening to them talk when they don't speak a lick of english and have a translator in tow everywhere they go, and they are only in for the weekend and flying back home to the UAE or Shanghai.

Don't be so intentionally obtuse because we all know its been happening.

 

[Chef99]

they don't speak a lick of english...

Sounds like most places in Richmond to me

It's difficult to deny that the accelerated rate of house price increases in the past couple of years was fueled by foreign investment. That being said, many people were already bitching about prices increasing too much long before that. Many people have been predicting (wishing) a collapse for years. Has it happened? No, and it won't.... The Vancouver market is extremely unlikely to have a major correction. It may flatten, it may go down 5-10%, but a major correction? hell no. It's not any different than any other desirable and popular city around the world. The advent of the foreign buyer tax has caused everyone (even locals) to pause which, when added to a traditional seasonally slow month (august), has generated the current statistics. People want the uncertainty to settle before spending big bucks, it's only natural. We'll see sales pickup somewhat in Sept and October. By the spring, we'll see things back to "normal" - not as crazy as the last year but an environment similar to a few years ago... just my opinion....

 

[Horn_dawg]

Actually, no. But any moron can tell by listening to them talk when they don't speak a lick of english and have a translator in tow everywhere they go, and they are only in for the weekend and flying back home to the UAE or Shanghai.

Don't be so intentionally obtuse because we all know its been happening.

Ok, that sounds like my dad when we immigrated to Canada several decades ago.

 

[CanineCowboy]

Really hugzy - you are hoping to celebrate declining sales and crashing values and expect us to believe you are a developer. You sound more like a shrill racist who listened to an NW call in show and is trying to appear credible.

The chicken littles have been calling for a crash for two decades and all of a sudden are feeling vindicated by what amounts to a tiny dip recorded over the shortest of time frames.

Although no one really knows what will happen in the future, I think Cheff's projection is a more likely scenerio - unless of course we have a massive earthquake and ...