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

vancourier.com

61–70 of 112 posts

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

#61
post #16

> A $3 million house that would have rented for $5,000 a year ago $5k/mo for a $3M home is a cap rate of just 2%. That's pretty terrible in itself. Now it's $4k/mo or 1.6%? How on earth is that financially sustainable at either amount?

In the BC interior (say the Okanagan), where houses are cheaper, a $750K house would rent out for $3000/mo. In Vancouver proper, it's common to pay $3K for a nice 800 sq ft condo.

I understand it doesn't scale linearly and these are mostly foreign investors moving money out of their country, but still... I have a hard time believing you can rent a $3M mansion for just $5K a month anywhere near Vancouver.

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

#62

Earlier quoted context omitted.

I believe the city has been adding different things for the last couple years trying to open up more rentals. If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. It has had a real effect on employment, especially in tech. A friend of mine at hootsuite laments that sometimes they miss on great hires because even th…

> If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. You do not recall correctly. https://www.reuters.com/article/canada-housing-vancouver/nea...

The rest of Vancouver, and the downtown is quite a different thing.

In 2011, I did an occupancy survey for a college group study, and yes we counted 31% vacancy in Coal Harbour

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

#63
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/…

For the last 20 years Vancouver has been adding housing stock, mostly in the form of multi-family dwellings, at one of the highest rates in North America. We're adding as much as we can as fast as we can. The situation now is worse than ever, so "build more housing" is clearly not a solution, and in fact may be making things worse by adding a lot of investment vehicles that attract foreign capital.

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

#64
post #48

FWIW Seattle real estate market stalled out two months ago - inventory is rising, buyers are sitting on the sideline waiting for the first shoe to drop. No source, just something I heard from a guy trying to sell.

It's real. It started in June. Inventory has risen every month since June and sales have stayed the same or declined. Seattle was insane before June though. Homes were receiving multiple offers within days of being listed and going between 10% and 30% over asking price with sellers throwing in all sorts of crazy contingencies (no inspections allowed, rent from buyer for 2-3 months at some ridiculously low rate, etc.)

As one anecdote, my neighbor had arguably one of the nicest homes in one of the more sought after neighborhoods in Seattle. They sold their home in September after it "sat" on the market for 12 days and sold exactly for ask. The price was 16% less than they were estimated at in July, which is what probably triggered them to sell I guess.

Depending on which real estate agent you ask, Seattle was absolutely insane before and now it's getting back to slightly above normal levels and will stay there for a while. Others will say if this continues for a few months it's a sure sign of the bubble popping. Inventory will probably go down a little bit in the next few months mostly due to eager profiters taking a break during the usually slow winter months. Buyers will probably decrease a little bit too due to interest rate hikes. Next spring will be the real test.

Condos and rental prices don't seem affected yet, but those tend to lag homes in my experience. Seattle does have horrible density so maybe condos will stay strong at their ridiculous $550k median price.

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

#65
post #16

> A $3 million house that would have rented for $5,000 a year ago $5k/mo for a $3M home is a cap rate of just 2%. That's pretty terrible in itself. Now it's $4k/mo or 1.6%? How on earth is that financially sustainable at either amount?

Makes no business sense, especially when you add taxes and maintenance.

BUT it makes sense if you have 40 such homes bought with drug or corruption money (hello China!) Who cares if you lose 4% a year (maybe rising values make up for it, maybe not) at least you have something in a relatively safe place and out of China /Russia.

Plus, it's not like the saved for 20 years to buy them...easy money.

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

#66
I want to point out that Vancouver’s municipal election is today (I’m standing in line for it), and many of the candidates are running on platforms related to the housing crisis.

Whatever you think of the issue, this particular article isn’t “about” the issue so much as it is a precisely-timed propaganda piece aimed at influencing the election.

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

#67
post #66

I want to point out that Vancouver’s municipal election is today (I’m standing in line for it), and many of the candidates are running on platforms related to the housing crisis. Whatever you think of the issue, this particular article isn’t “about” the issue so much as it is a precisely-timed propaganda piece aimed at influencing the election.

I just voted!

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

#68

This is a garbage article when compared with the headline. The “experts” is two property managers who don’t even agree on what’s happening or why. The 20% figure comes from a quote that sounds like an off-the-too-of-my-head assessment from one of them: ”What we’re seeing is that rental rates have decreased up to 20 per cent from the spring of 2017, and it’s getting even worse.” They also say they’ve never seen anythi…

This is a garbage article when compared with the headline. The “experts” is two property managers who don’t even agree on what’s happening or why.

I read real estate press almost every day, and this is pretty much a universal constant. For every bull, there is a bear. For every person predicting a market crash, there is a person predicting things will get even better. Even articles that should be straight forward statistical pieces are usually based on data from some startup web site nobody's every heard of that pushed out an infographic to get clicks.

The more I observe the real estate industry, the more I'm convinced that it's mostly made up of people too damaged to sell used cars anymore.

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

#70
post #16

> A $3 million house that would have rented for $5,000 a year ago $5k/mo for a $3M home is a cap rate of just 2%. That's pretty terrible in itself. Now it's $4k/mo or 1.6%? How on earth is that financially sustainable at either amount?

In the BC interior (say the Okanagan), where houses are cheaper, a $750K house would rent out for $3000/mo. In Vancouver proper, it's common to pay $3K for a nice 800 sq ft condo. I understand it doesn't scale linearly and these are mostly foreign investors moving money out of their country, but still... I have a hard time believing you can rent a $3M mansion for just $5K a month anywhere near Vancouver.

Random data point, but you certainly can't in the bay area (I just checked a few listings around my place in Piedmont). a $3M house is around 8k/month.
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