Live data from Hacker News

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

vancourier.com

101–110 of 112 posts

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

#101
post #87

Earlier quoted context omitted.

I am sure I am missing some nuance since this is the first I have heard of this but, on first blush, that seems like a great idea.

It was an effort by an independent govt body (OFSI) that is charged with managing risk with canadian banks. Basically the number of uninsured mortgages had been climbing rapidly, so this instituted so that even with a fall in housing prices, loans are less likely to default. Good I think from a banking risk mentality, but not so good for homeowners looking to buy. I remember reading that a couple making $100k and 20%…

The second one sounds like what they ought to be able to buy to my ears.

$100k after taxes is $65? Maybe less?

$650 after 20% does is $520 to pay off?

I know there is no magical answer but that feels right to me if I were a homeowner.

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

#102
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.

> much more money available to speculate than available surface area

Doubtful, some of the biggest cities on earth have tiny geographic areas.

Build more and let them keep buying, a clear government policy that targets rezoning to keep price rises in-step with inflation would certainly make empty home investors think twice.

Real estate speculation is a gamble that governments won't accommodate growing populations and politically benefit from rising house prices. In many places on Earth they are likely right.

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

#103
post #55

Earlier quoted context omitted.

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.

It also severlely penalizes the elderly and retired, who don’t earn but certainly still vote. In my city in Australia it’s common to see a single elderly retiree living in a rundown home on a large block, where the land alone could be worth close to a million dollars. When the property is sold it can often be split into two, and house two families in detached homes. It feels cold hearted to say elderly should be push…

If you have a million bucks in assets, I don't care if you're 75. Our country has been ruined by boomers running the country into debt by way of cutting their taxes -- taxes that millennials will eventually have to pay. I have no qualms with taxing the "winners" of that generation. They owe it to us anyway.

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

#104
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.

Disagree. Our house here is just under $3M - not a mansion, but a big house with ocean view in a desirable neighborhood. We just finished renting it out for 4 years at $4500/month.

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

#105

Are there prior examples of usage wherein one may 'plunge' in an upwards direction? Idiomatically, the word is most frequently used to describe (a) rapid motion into water and/or (b) rapid motion downwards. Personally, and perhaps consequentially, I have only ever encountered the term with respect to 'into' and 'downwards'. However, if the etymology of the word is consistent with a more general usage, I would be plea…

Subtitle of the article: Slowdown of detached home sales, speculation-tax avoidance, Airbnb rules bring flood of high-end houses onto rental market, creating “desperation” as owners slash rents

Wow, that was idiotic of me. I misread the sentence in a weird way and failed to notice the normative interpretation; and yes, if I'd cared about the subject matter to read the article, I'd have noticed my error.

Unfortunately, it appears that we can't downvote our own comments here.

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

#106
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.)…

SFH sellers (and agents) dont seem to have accepted the change yet. No NWMLS data to back it up, but list pricing has stayed roughly at the same crazy high levels of spring 2018. Units are instead sitting for weeks or months. The rare ones that are relisted are reduced by maybe 1-2%. As you said, will be very curious to see what May 2019 looks like.

PS: IIRC it was the may 2018 sales and inventory data that deviated from the recent trend lines. Slightly earlier than June.

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

#107
post #7

Earlier quoted context omitted.

Ten whole years—almost one market cycle...

This belief that market cycles are 10 years is the gamblers fallacy in action. Just because there is a "trend" of economic cycles occurring in 10 year periods doesn't mean the next one will occur 10 years after the last. Also the entire purpose of laws an regulations like Dodd Frank is to prevent debt bubbles. Whenever someone says that we are "Due" for a correction they are falling for the gambler's fallacy.

I agree--my comment was tongue-in-cheek. Whether there is or isn't a market cycle, these folks haven't been around long enough to see it.

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

#108
post #99

Earlier quoted context omitted.

And yet we're told by the MSM that foreign ownership is 5%, makes one wonder if situations like this are even statistically detectable. If this article is remotely true and this is the start of a trend set off by having no rules whatsoever and then suddenly a whole bunch of not terribly well thought out rules, it's going to be interesting to see how this all plays out, especially when good old "fear is stronger than…

It's not just the MSM, it's the CMHC and Stats Canada. https://www.cmhc-schl.gc.ca/en/data-and-research/publication... Also, what's not mentioned in that report is the percentage of purchases by foreign-owners last year or the year before. The 4.8% number is total Vancouver residential foreign-ownership - it's just a snapshot.

> It's not just the MSM, it's the CMHC and Stats Canada.

The linked CMHC numbers are surveys of people's perceptions of the impact of foreign money, which is a hilariously useless metric.

Stats Canada is pretty careful about the wording they use, I imagine they run everything by the legal department before release to make sure they're not technically lying, they leave that up to the newspapers and TV to accidentally misreport repeatedly, until it becomes common knowledge.

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

#109
post #63

Earlier quoted context omitted.

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.

We're adding as much as we can as fast as we can This is not even remotely true. Much of the city is still zoned exclusively for single-family housing, although that may be (very slowly—too slowly) changing: https://www.sightline.org/2018/08/14/vancouver-housing-of-al... . About two-thirds of Seattle is also single-family only: https://www.seattletimes.com/business/real-estate/amid-seatt... . Those factors alone like…

Changing zoning of course doesn't magically create houses and there's not much evidence that Vancouver is constrained by lack of zoned land. The parent is right. CoV and Metro Vancouver have been constantly rezoning and adding supply and massively adding multi-unit housing. The fact that there still remains low density land is not relevant.

The numbers of multi-unit under development in Metro Van at the moment is unprecedented.

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

#110

Earlier quoted context omitted.

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.)…

SFH sellers (and agents) dont seem to have accepted the change yet. No NWMLS data to back it up, but list pricing has stayed roughly at the same crazy high levels of spring 2018. Units are instead sitting for weeks or months. The rare ones that are relisted are reduced by maybe 1-2%. As you said, will be very curious to see what May 2019 looks like. PS: IIRC it was the may 2018 sales and inventory data that deviated…

Oh, it's just the usual waiting game. Happens every time. Sellers will stubbornly hold on to the last "fair" prices they were told, even if they can't sell, the RE agents will suggest waiting out the winter and taking the house off the market till the next spring. Buyers are aware of the inventory increase are waiting to see if it grows further and the they snatch up a bargain from a desperate seller.

That's how it went down 10 years ago, it will be same this time - come spring and the "for sale" signs will pop up on every single corner. You can just count those signs to tell if it's the buyers or the sellers market.

However there are differences too. 10 years ago we were facing a catastrophic recession, including an unprecedented level of banking shenanigans (undermining business financing) and a huge hit on the employment (undermining consumption), but this time it seems pretty stable. So that's a bull development. On the bear side, strong overall economy might embolden the Fed to keep increasing the interest rates, decreasing housing affordability and pushing the prices further down. Also Seattle has seen a huge amount of construction recently, a lot of old properties on the Capitol Hill were torn down and rebuilt in the last 3-5 years (at this point we are talking not just a number of affected properties but a percentages of the entire inventory in the Madison-Aloha area), the downtown sees a large number of constructions and SLU has been a giant construction site since like 2010. Also notably there is no shortage of rental properties downtown and Capitol Hill at stable prices. The rental market was positively nuts in the run-up to the 2008 implosion which was somewhat distressing to me personally.

Fun times!

Are you looking for a place to settle down?

Post reply on HN