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max4me posted:But any investor should be thinking what his ROI is and if prices are too high then they too wouldnt buy. Hell I backed out of another Short Sale deal when I realized the the house was soo trashed it would take up 57% more than the cost of the house to repair everything. A family friend of a friend did this. Bought a place in a very quick sale by I think the bank or something (old couple died, no heirs). Snapped up a house in a million dollar neighbourhood for about 600k. Thought he'd fix it up for 200k or so and then make 200k in a profit. Nope, entire house had to be knocked down because the old couple were hoarders and the whole house was a write off. It's almost like you can't judge a house by just walking through it a couple times. BUT because there's an endless supply of speculators, he managed to then quick turn around and sell the place for just shy of 700k because, even though it was fully disclosed the house its self was a write off, they made some decent improvements quick to the front and back yards and cleaned the house up. The house was then knocked down, the entire site stripped down to dirt and stone, and because there's an endless supply of filthy rich people who want o move here, 2 huge mansions built. Both sold for about 1.5 million before they were done. Purely anecdotal, but I've noticed any large house that's been bought in the last 3-4 years had a conservative sign out front during the election, they're generally the only ones in the area. Not sure what that even means.
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Mar 20, 2013 15:40
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Cultural Imperial posted:Having worked with a shitload of antipodeans in europe, I'm really distressed to learn that Canadians are such weak hearted pansies that they could never ever consider leaving home for better opportunities abroad. We should all just give up now and fold this country so we won't have to put up a fight when the russians and americans come for our natural resources. Hahaha, that's rich. They don't need to invade us for our natural resources, they already own them. Foreign corporations extract, refine, and sell our oil and we get a pittance in return. Not that it even matters that they're foreign because they're all on the same side. They control the media and the government, and the coup has gone almost unnoticed. Soon enough Canada will only exist in any meaningful way as an appeal to patriotism in commercials. We already folded and the country is already gone.
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Mar 20, 2013 20:47
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Can anyone here speak on the topic of how much risk the real estate bubble presents to our banking system? I'm not talking mortgages, but direct property holdings. The credit unions here seem to be bankrolling an awful lot of condo developments and it's giving me the jitters what might happen to them if the bubble were to pop...
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Mar 20, 2013 20:51
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Pinterest Mom posted:I have a pretty big problem with the minister's office calling up a bank on a whim and telling them that their interest rates are too low. When the government intervenes in the economy, I feel it should be rules based, transparently, and in a way that renders the government accountable for its actions. Personal debt is now at 165% of disposable income and borrowing costs have been so persistently low that it has lulled many consumers into a sort of stupor. Things could get pretty nasty if this whole thing blows up. Seeing the government call out an irresponsible policy by a bank strikes me as refreshing, not inappropriate. Given that we have absolutely terrible corporate accountability(Conrad Black had to be charged in America, for gently caress's sake) and fairly lax regulation I really can't get that worked up about the government interfering with some bank's private decisions, given that in this case they were doing it openly and in a way that actually protects the economy.
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Mar 20, 2013 20:56
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Rime posted:Can anyone here speak on the topic of how much risk the real estate bubble presents to our banking system? I'm not talking mortgages, but direct property holdings. The credit unions here seem to be bankrolling an awful lot of condo developments and it's giving me the jitters what might happen to them if the bubble were to pop... I am sure our banks have learned a lot from the American banks and their number fudging, the shadow inventory concept has probably already started in places like Toronto and Vancouver.
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Mar 20, 2013 21:07
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Have you heard that everyone wants to move to Vancouver? Well not really. http://housing-analysis.blogspot.ca/2013/03/bc-population-growth-to-q4-2012.html
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Mar 20, 2013 22:01
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Helsing posted:Seeing the government call out an irresponsible policy by a bank strikes me as refreshing, not inappropriate. It is refreshing and a step in the right direction, but if the finance minister wants banks to lend more conservatively (no pun intended) he can do that with a thing called "Parliament" which can create things called "laws" and "regulations". The stability of the country's finance system should not rely on the finance minster personally calling banks and asking "hey, could you just keep a lid on things, please". This is the second (at least) time he's done this and the first time Scotia Bank already told him "no".
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Mar 21, 2013 00:21
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I agree that it shouldn't, but as my father likes to say, the perfect is the enemy of the good. And given all the other distortions in our "free market" economy I have trouble getting worked up over this particular one.
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Mar 21, 2013 00:23
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How much influence does the government have on the Bank of Canada to increase interest rates?
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Mar 21, 2013 00:37
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Sovy Kurosei posted:How much influence does the government have on the Bank of Canada to increase interest rates? Zero. The Bank of Canada is politically insulated by design, and any perceived change in that would lead to a poo poo tsunami of epic proportions.
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Mar 21, 2013 00:39
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The government doesn't interfere in the day to day running of the bank, but it does set its broad orientations. Changing the mandate (currently: keep annual inflation between 1 and 3%) of the Bank is a Really Big loving Deal, but it can be done. We've only had the current mandate for 22 years, so you can imagine a future (probably NDP) government changing it, but it's not something that's done on a whim. Ultimately, the Bank is wholly owned by the Ministry of Finance so the government can do whatever it wants with it, it's just really imprudent for governments to politicise central banking. The Bank of England only became independent from the government under Tony Blair, in an amazing fact.
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Mar 21, 2013 00:53
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There would need to be a massive paradigm shift regarding the appropriate role of the central bank, probably not just in Canada but throughout the English speaking world, before it would be politically feasible to change the banks mandate. Given that political paradigms tend to change every couple generations, especially when times are dire, that is hardly an unimaginable step. But its worth emphasizing that right now there is massive pressure at both the national and even to some degree the international level for us to maintain the status quo. And if a change does come, expect a lot of pusback, followed by wailing and gnashing of teeth. A lot of people take the central bank`s current mandate very seriously.
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Mar 21, 2013 01:00
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Pinterest Mom posted:
Not that amazing, Blair was pretty big on sucking the private enterprise cock and serving up public services on a silver platter.
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Mar 21, 2013 02:06
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Rime posted:Not that amazing, Blair was pretty big on sucking the private enterprise cock and serving up public services on a silver platter. Yeah he made a great reflection in many ways to all the geniuses in the Bush administration.
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Mar 21, 2013 03:13
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You know those fabled chinese ghost cities? Looks like vancouver is one of them. http://www.theglobeandmail.com/news/british-columbia/vancouvers-vacancies-point-to-investors-not-residents/article10044403/ quote:
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Mar 21, 2013 05:02
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Looks like your economy doesn't have to provide high-paying jobs to support high house prices if you are pulling demand from a handful of strong economies around the world.
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Mar 21, 2013 05:11
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If an economic system is producing results like this something is seriously hosed. Reminds me of how in dwarf fortress once you were forced from communism to capitalism suddenly half your homes would sit empty because no one could afford the rest/cost while the rich would buy up everything leading to tons of useless empty bedrooms sitting within a fort full of hard working essential people who were homeless because the economic system placed so many key labour jobs at bellow a "living wage"
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Mar 21, 2013 05:15
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Did any of you catch "the big pool of money" on This American Life? There's more than one lesson in that excellent documentary that applies to the canadian housing bubble and vancouver in particular.
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Mar 21, 2013 05:22
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Eh, Someone paid money for all that poo poo to be built, so where did that money go? Unless all the construction workers and interior designers and condo developers move to China Vancouver is still ahead. EDIT: Man there's a lot of pretty thinly veiled racism in this thread. Throatwarbler fucked around with this message at 05:28 on Mar 21, 2013 |
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Mar 21, 2013 05:25
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Baronjutter posted:If an economic system is producing results like this something is seriously hosed. Reminds me of how in dwarf fortress once you were forced from communism to capitalism suddenly half your homes would sit empty because no one could afford the rest/cost while the rich would buy up everything leading to tons of useless empty bedrooms sitting within a fort full of hard working essential people who were homeless because the economic system placed so many key labour jobs at bellow a "living wage" There's not a lot of really rich people, not enough to make huge dents on an entire city. There are a significant number of people with 500k-1mm+ in pooled family savings though. On top of that, many of them come from countries where financial products are underdeveloped and the one of the only practical ways to maintain/grow family wealth is property ownership.
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Mar 21, 2013 05:26
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Throatwarbler posted:Eh, Someone paid money for all that poo poo to be built, so where did that money go? Unless all the construction workers and interior designers and condo developers move to China Vancouver is still ahead. Uh, bulldozing viable low-rise neighbourhoods and replacing them with empty glass and concrete towers that destroy economic activity is a demonstrable economic disbenefit right now. I don't see how a bunch of contractors making bank mitigates that. I'm not sure what racism has to do with it. Is anyone aware of a comparable study for Toronto? I wonder if high crime rates on the Bay corridor aren't partially related to the density of new condo buildings there. Wouldn't surprise me if a bunch of those units were empty. Paper Mac fucked around with this message at 08:54 on Mar 21, 2013 |
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Mar 21, 2013 08:51
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Paper Mac posted:Uh, bulldozing viable low-rise neighbourhoods and replacing them with empty glass and concrete towers that destroy economic activity is a demonstrable economic disbenefit right now. I don't see how a bunch of contractors making bank mitigates that. I'm not sure what racism has to do with it. The low-rise owners weren't evicted at gunpoint, they got paid more than what they figure the property was worth to them. That money didn't just dissapear into a hole in the ground, the total amount of "stuff" (apartments and cash) in the economy has increased. If lovely 1970s low-rise apartment buildings were such a lucrative proposition they can build another one somewhere else.
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Mar 21, 2013 08:59
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Throatwarbler posted:The low-rise owners weren't evicted at gunpoint, they got paid more than what they figure the property was worth to them. That money didn't just dissapear into a hole in the ground, the total amount of "stuff" (apartments and cash) in the economy has increased. If lovely 1970s low-rise apartment buildings were such a lucrative proposition they can build another one somewhere else. Ah yes, because what matters in an economy is how much "stuff" is in it, and concepts like capacity utilisation and density distortions don't actually matter.
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Mar 21, 2013 10:27
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Throatwarbler posted:The low-rise owners weren't evicted at gunpoint, they got paid more than what they figure the property was worth to them. That money didn't just dissapear into a hole in the ground, the total amount of "stuff" (apartments and cash) in the economy has increased. If lovely 1970s low-rise apartment buildings were such a lucrative proposition they can build another one somewhere else. Hey cool, a post that perfectly encapsulates why I mostly avoid this thread. Quick question- are you familiar with the capital gains taxation issue on rental property?
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Mar 21, 2013 15:07
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Throatwarbler posted:The low-rise owners weren't evicted at gunpoint, they got paid more than what they figure the property was worth to them. That money didn't just dissapear into a hole in the ground, the total amount of "stuff" (apartments and cash) in the economy has increased. If lovely 1970s low-rise apartment buildings were such a lucrative proposition they can build another one somewhere else. This is the same argument I imagine got used over the last few years in China, right before a project to build a new empty city was approved. Ironically, the money is actually quite literally being poured into the ground in the form of 35 unused condo towers.
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Mar 21, 2013 15:33
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Fine-able Offense posted:Hey cool, a post that perfectly encapsulates why I mostly avoid this thread. Do you mean the fact that you're taxed on any capital gains from it, just like any other capital asset whose increase in value you realize (excluding a primary residence)? What's the problem with that specifically? Having a problem with the towers and densification is one thing, but are you really arguing that owners of incredibly valuable property should pay no tax on the income they get from it?
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Mar 21, 2013 15:51
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Trapick posted:Do you mean the fact that you're taxed on any capital gains from it, just like any other capital asset whose increase in value you realize (excluding a primary residence)? What's the problem with that specifically? Well, first off, it was a question directed at a statement that included this line: "If lovely 1970s low-rise apartment buildings were such a lucrative proposition they can build another one somewhere else." Since anybody who has been paying the LEAST bit of attention to the housing situation in Canada in general (and Vancouver in particular) knows that the steady decline in purpose-built rental stock is a serious problem, it seemed strange to me that somebody would say something that obviously wrong on the subject. So I asked literally the first question that comes to mind in terms of seeing if somebody knows what the complexities involved in this topic are- do you know about the taxation issue? Since that's basically Point #1 any time the rental apartment owners and managers' association goes a-lobbyin', it seemed like low hanging fruit to see if this conversation is even possible or worth having. Now, to answer your loaded question about whether or not I think wealthy fatcat landowners should be forced to pay taxes, John Galt be praised, the issue at hand has been well-known since the change was made in the 70's under Trudeau. The old model was, if you sold an "investment" property, which any PBR building qualifies as, you could avoid capital gains taxation as long as you took that money and reinvested it in new PBR stock somewhere else. This allowed owners of older, dilapidated buildings who couldn't afford to self-finance redevelopment to sell out to an investor, no matter what crazytown things the property market had done, and then go and buy something elsewhere to resume doing their thing, aka "build another one somewhere else". It worked because it didn't lock people into becoming reluctant slumlords, and ensured that new rental stock was added, and that old stuff was updated. With the change, however, it's pretty obvious to see what's happened in placed like Vancouver, where low-density apartment buildings on prime real estate are literally everywhere, from South Granville to the West End and points in between. The owners of these buildings can't afford to refurbish them, and can't cash out because they'd lose a ton of their equity, which would prevent them from reinvesting somewhere else similar. That means that when one of these buildings DOES finally sell out, it does so to condo developers or predatory assholes with deep pockets like Gordon-Nelson. Now by all means I'm less sympathetic to this particular complaint than the owners' and managers' association would like, because I think a big part of the problem at play is the issue of cheap and lovely builders wanting to cut corners on construction and then fob the problem off to the new strata, but to pretend like the capital gains issue isn't at least something of an issue is... myopic, we'll call it. The lack of a national housing strategy in Canada is a disgrace, and this is just one symptom.
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Mar 21, 2013 17:01
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So people who own apartment buildings shouldn't have to pay taxes like everyone else. Cool. That sure was a conversation worth having. (USER WAS PUT ON PROBATION FOR THIS POST)
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Mar 21, 2013 17:37
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Throatwarbler is entirely right you guys. Whats the worst that could happen from over-investment into the real estate sector?
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Mar 21, 2013 17:41
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Throatwarbler posted:Eh, Someone paid money for all that poo poo to be built, so where did that money go? Unless all the construction workers and interior designers and condo developers move to China Vancouver is still ahead. At least until demand disappears, because it doesn't seem to be a density fueled demand for housing, and it looks like actual residents are being out-priced by speculative activity. At that point it seems like the construction industry would be impacted heavily (to the tune of 'no one is buying, so no one is building'). Also I'm not sure what racism you're referring to. Is that in response to the article on foreign investment?
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Mar 21, 2013 17:47
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Racism against rich albertans and people from upper and lower canada, and of course !CHINESE INVESTORS! ?? Taxes play a huge role in what happens in the economy. You tax what you want less of and give breaks to what you want more of. If the tax system means no new rental housing is being built while at the same time tons of condo towers that sit empty are, then something needs to change. Either in the form of tax breaks, subsidies, or direct government involvement in housing. In Victoria a ton of our downtown herritage buildings were rotting away with only the ground floor occupied by shops because all the upper floors were not to code. It had gotten so bad that our downtown was actually shrinking in height. You'd see photos of Victoria in the 1900's and you'd see a street lined with 4-5 story buildings, then then same street today lined with 2-3 story buildings. Same buildings, just the owners would demolish the abandoned upper floors. (Then the city would declare the new height historical and protest 5 story buildings as being too tall for old town but that's a whole other issue) It was financially impossible for them to be brought up to code through market forces alone so the city instituted a tax holiday for developers who fix the buildings up. Almost immediately there was a huge amount of construction as dozens of gorgeous but decaying old buildings were gutted and upgraded into condos. But I guess "lol so properties owners who's buildings are made out of brick don't have to pay taxes" Yes, sometimes the government uses taxes to steer the economy. Baronjutter fucked around with this message at 18:09 on Mar 21, 2013 |
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Mar 21, 2013 17:50
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Baronjutter posted:Yes, sometimes the government uses taxes to steer the economy. Hey now, I'm sure that my detailed effortpost explaining why redirecting capital investment into purpose-built rental housing for low income people could be useful is actually somehow secretly a Galtian crie de coeur, cut the dude some slack.
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Mar 21, 2013 18:15
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Yes, instead of giving money to poor people we should just do what they do in China instead and funnel money and tax breaks into politically connected real estate developers and incumbent property owners. Tax breaks for the rich are literally the solution to everything.
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Mar 21, 2013 18:22
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Nobody is saying that  And 'giving money to poor people' does not rule out utilizing taxes to encourage development.
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Mar 21, 2013 18:24
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JawKnee posted:Nobody is saying that *clicks Rap Sheet* *nods sagely* Edit for content: the graphic from that article Cultural Imperial linked above is pretty interesting: 
Franks Happy Place fucked around with this message at 18:28 on Mar 21, 2013 |
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Mar 21, 2013 18:26
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Cultural Imperial posted:You know those fabled chinese ghost cities? Woha woha woha - this is actually news. You can't just go and surprise me like that, thread! The only real study I was ever able to find on housing occupancy before this one was maybe from 2-3 years ago, was performed by a real estate consultancy firm and they used hydro usage to estimate the number of vacant apartments. Theirs frankly strikes me as a better methodology then adding up the census numbers, though I've not actually read this paper of course. At first glance however, it would seem Yan's approach might fail to account for the much higher rate of shared housing (roomies, or grown up kids not moving out, etc) brought on by the high prices to begin with. On the other hand no long-term empty apartment has any real reason to pay hydro, but who knows, maybe these dudes are trying to sell them until someone buys at their desired 450% return or whatever and need the heat up for open-houses. Anywho, so the previous study only found 8-9% vacancy rate in downtown alone. If it's gone up to 23% that's huge! It explains why rent in downtown proper has really shot up as well, to the point where it's catching up with ownership prices (which was sort of worrysome because it meant reality was actually beginning to catch up with lala-land prices, at least in downtown). That the vacancy rate outside downtown is as high as 7.7% is also worrying, although I can't imagine being 2.7% above the norm would actually be a contributing factor to home prices (mortgage availability is almost certainly still the primary culprit there). Again though, it would explain the rise in rents we've been seeing in "mainland" Greater Vancouver (is there a term for Vancouver, Burnaby, New West and maybe Port Moody, but excluding Poco and further, surrey + boonies and the north shore?). I've been attributing it to actual rise in population (which has been speeding up as well apparently), but certainly won't have helped. So I actually think this is a big deal. It's one thing to price out locals when you're just building up density (I love density! Never enough density!) - and by the by, poor neighborhoods are almost always full of renters, they don't get poo poo out of gentrification, they are simply to asked to leave their lives behind and go. You are at least building up supply which should of course put downward pressure on prices and making things more affordable for everyone. But if a quarter of all these developments just stay empty? Then that's extremely harmful! It disrupts neighborhoods, it pushes rents up, it pushes home prices even higher and it's also a huge glowing red indicator towards high amounts of speculative investments which are likely to blow up in your face. I've never really taken part in discussion in these sort of solutions before because I didn't think the data actually supported the theory that they were much of a problem to begin with, but with this new study in mind: Is it possible for the municipal government to compel these vacancies to be filled? For example, can have one year (that's probably too generous even) to somehow occupy your apartment (rent it out, or move it, or sell it to someone who moves in - and fake "second homes" don't count), and after that, your property tax starts going up and keeps going up until you do something. Existing RTA regulations would prevent landlords simply rotating tenants out for no reason. I really don't think it's too much to ask of our beloved petit-bourgeois investor class, considering the massive loving problem Vancouver has. (not to mention their asses will almost certainly require some form of bailing out when the poo poo hits the ground)
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Mar 21, 2013 18:53
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Fine-able Offense posted:Edit for content: the graphic from that article Cultural Imperial linked above is pretty interesting: If you were to map construction densities over the past decade, I think it would probably mirror that one fairly closely. The existing purpose built rental stock (which is oddly all 30+ years old now) areas of West-end, Cambie/Oak corridor, Kerrisdale and Kits, etc... all have what looks like normal vacancy rates. While most of the areas that have been built up quite heavily recently, all have 2-4 times the rate.
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Mar 21, 2013 19:19
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Throatwarbler posted:Yes, instead of giving money to poor people we should just do what they do in China instead and funnel money and tax breaks into politically connected real estate developers and incumbent property owners. Tax breaks for the rich are literally the solution to everything. Well in the example I gave, the tax breaks were only the absolute minimum to get anyone to do anything with their properties, and even then a lot of them just barely made any profit because the margins were so slim. One of the most prolific developers did a lot of them out of an actual love for old heritage buildings, it's a huge risk pulling off these sorts of renovations and the city is better off for it happening. I'd be really pissed if it turns out the tax breaks went way beyond making the reno's economically possible and just went into the developers pockets. poo poo like that happens all the time in crony capitalism and it's a huge problem. But sadly we live in a capitalist world and when you have a bunch of 90% abandoned buildings owned by private interests you need to sometimes intervene and invest to make things better. What would the alternative be? Just seize the buildings and have the city do it them selves? I'm all for the glorious revolution comrade but I'm not sure this would have been well received nor would the city even have the power/budget to do it. In this case, giving a local developer with a track record of great heritage reno's the absolute minimum tax break needed for the reno to make economic sense seemed like a pretty good solution. Of course almost all the units are tiny 400-600 sqft units sold for like 150-300k as crash-pads and investment rentals for the rich, but who knows who will be owning those units in 20 or 30 years. And yep, a lot of them sit empty as they're owned by people who just use them to live in for days or weeks when they have business in town. But many are actually owned by people who actually live in them. The problem is, even with tax breaks the only people who can afford projects like this are the rich. The profit margins are super thin, there's no way to make them cheaper. How do you solve it? Baronjutter fucked around with this message at 20:01 on Mar 21, 2013 |
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Mar 21, 2013 19:56
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The topic of heritage structures in BC and the politics surrounding them could be a thread on its own, it goes waaaaay deeper than just building codes and cost. The Janion Hotel is a perfect example.
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Mar 21, 2013 20:07
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The Janion Hotel alone could have its own thread... holy poo poo. But it's still all pretty on topic in how tax policies and regulation have a HUGE effect on housing prices and construction.
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Mar 21, 2013 20:11
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