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High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

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Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#51

Post by refurb »

Tiktaalik wrote: post #40
projectramo wrote: post #32

Two questions that seem to be answered but aren’t quite: 1. So was the theory that the housing price spike was driven by foreign buyers who didn’t occupy their homes accurate? 2. So did the speculation tax work?

Speculation tax hasn't even been implemented yet. We're seeing a 20% drop due a basket of measures such as CoV empty homes tax, airbnb regulations, provincial increased school tax on homes over $5M and a fear of the upcoming speculation tax.

Don’t forget the “stress test” required to get a mortgage since last year.

New buyer now have to qualify for a mortgage at the Bank of Canada rate plus 2%, which is close to to 6% now. Even though mortgages can be had for a little over 4%.

That shutdown a lot of buyers very quickly.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#52

Post by tptacek »

quickben wrote: post #46
40acres wrote: post #44

It's hard not to see the overall solution to the housing crisis in some North American cities as simply building more housing. A speculation and/or vacancy tax makes sense in cities with a high number of foreign buyers like Vancouver and New York but in other cities it seems like the biggest road block is simply zoning restrictions that prevent supply to meet demand. There are second order effects that need to go w/…

Building more doesn't work. Some areas in Toronto have 30% empty dwellings. There are much more money available to speculate than available surface area. Leverage was cheap (through housing) so everyone played that asset class on margin here. Now that the interest rates are going up, it will sort itself out.

The average rent in Toronto is even lower than that of Chicago. It doesn't sound like there is a housing problem there.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#53

Post by jacquesc »

tptacek wrote: post #52
quickben wrote: post #46

Earlier quoted context omitted.

Building more doesn't work. Some areas in Toronto have 30% empty dwellings. There are much more money available to speculate than available surface area. Leverage was cheap (through housing) so everyone played that asset class on margin here. Now that the interest rates are going up, it will sort itself out.

The average rent in Toronto is even lower than that of Chicago. It doesn't sound like there is a housing problem there.

You have to compare it to avg incomes. They make less in Vancouver than Chicago, so it takes up a much higher percentage of their income.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#54

Post by refurb »

goatherders wrote: post #3

I rent in the north shore. I'm glad rents are coming down and I'm glad I didnt buy last year when u was tempted. That said, I dont know anyone that thinks the market is slowing. The overseas money still props things up pretty well.

You were very smart not to buy.

Housing prices are coming down in Toronto as well, and people who bought homes still under construction are finding out that that the prices are now lower than what they paid.[1]

Canada is generally has recourse laws, which means you can’t walk away from an underwater mortgage.

[1]https://www.thestar.com/business/real_estate/2018/01/29/how-...

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#55

Post by jowiar »

quickben wrote: post #46
40acres wrote: post #44

It's hard not to see the overall solution to the housing crisis in some North American cities as simply building more housing. A speculation and/or vacancy tax makes sense in cities with a high number of foreign buyers like Vancouver and New York but in other cities it seems like the biggest road block is simply zoning restrictions that prevent supply to meet demand. There are second order effects that need to go w/…

Building more doesn't work. Some areas in Toronto have 30% empty dwellings. There are much more money available to speculate than available surface area. Leverage was cheap (through housing) so everyone played that asset class on margin here. Now that the interest rates are going up, it will sort itself out.

Cities need to fund themselves through real estate rather than income taxes. Tax “the person who could live in a place” rather than “the person who does live in a place”. For actual residents, it’s a wash, but it severely penalizes the investment crowd.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#56

Post by xyzzyz »

jacquesc wrote: post #53
tptacek wrote: post #52

Earlier quoted context omitted.

The average rent in Toronto is even lower than that of Chicago. It doesn't sound like there is a housing problem there.

You have to compare it to avg incomes. They make less in Vancouver than Chicago, so it takes up a much higher percentage of their income.

I just did that, and it’s not true. Average rent is higher percentage of average wage in Chicago.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#57

Post by noobermin »

40acres wrote: post #44

It's hard not to see the overall solution to the housing crisis in some North American cities as simply building more housing. A speculation and/or vacancy tax makes sense in cities with a high number of foreign buyers like Vancouver and New York but in other cities it seems like the biggest road block is simply zoning restrictions that prevent supply to meet demand. There are second order effects that need to go w/…

It is worth noting the story wasn't about building more housing, it attributed it to more taxes on speculation, rules, and one market effect, a slow down of home resales. "Resale" meaning not new housing units.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#58

Post by tptacek »

xyzzyz wrote: post #56
jacquesc wrote: post #53

Earlier quoted context omitted.

You have to compare it to avg incomes. They make less in Vancouver than Chicago, so it takes up a much higher percentage of their income.

I just did that, and it’s not true. Average rent is higher percentage of average wage in Chicago.

Also, I said Toronto.

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#59

Post by [deleted] »

xyzzyz wrote: post #56
jacquesc wrote: post #53

Earlier quoted context omitted.

You have to compare it to avg incomes. They make less in Vancouver than Chicago, so it takes up a much higher percentage of their income.

I just did that, and it’s not true. Average rent is higher percentage of average wage in Chicago.

[deleted]

Re: High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts

#60

Post by tfehring »

jacquesc wrote: post #53
tptacek wrote: post #52

Earlier quoted context omitted.

The average rent in Toronto is even lower than that of Chicago. It doesn't sound like there is a housing problem there.

You have to compare it to avg incomes. They make less in Vancouver than Chicago, so it takes up a much higher percentage of their income.

I assume you mean Toronto, not Vancouver, based on the parent comment. Median household income in Toronto is $65,829 CAD as of 2015 [0], which is about $52,500 USD adjusted for purchasing power parity [1]. Chicago's median income from 2012 to 2016 was $50,434 [2].

I didn't take the time to find numbers that are perfectly apples-to-apples, but it definitely doesn't seem like Toronto's median income is materially lower than Chicago's.

[0] https://www.toronto.ca/wp-content/uploads/2017/10/8f41-2016-...

[1] https://data.oecd.org/conversion/purchasing-power-parities-p...

[2] https://www.census.gov/quickfacts/fact/table/chicagocityilli...

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