11 ms·

The problem in Vancouver is the house prices are not driven by economic activity in the city itself. Bay area and Manhattan prices are a product of the local ec

The problem in Vancouver is the house prices are not driven by economic activity in the city itself. Bay area and Manhattan prices are a product of the local economies. Vancouver prices are a product of speculation and wealthy people who live/have property there but don't work there.

vonnik 11y ago
You should look more closely at Manhattan and SF. There is a ton of speculation, luxury highrises, and out-of-town wealthy buying second-, third- or fifth homes.
- acchow 11y ago
  You really don't see any empty homes in SF...
  - jonsmit 11y ago
    Anecdotally I see a lot of empty apartments here in SF. Not as bad as London though. I basicslly had an entire massive luxury apartment complex to myself. I would walk around the halls drinking with friends carrying a prop ax pretending we were in the shining. Good times.
  - vonnik 11y ago
    I don't think we have a lot of transparency on the how often the tenants and owners of luxury apartments are actually inhabiting them.
stanmancan 11y ago
Exactly this. A significant portion of the housing is being bought by foreign investors who don't even live here. Not only is it raising the pricing of the housing, but you don't get the economic benefit of said wealthy individuals living in the city. I recall reading an article about a local coffee shop. A number of new buildings were built around it, all residential condo's. The condo's in the buildings were completely sold out, hundreds of units, yet it was a ghost town around there. The coffee shop, and I believe a local pub as well, ended up going out of business because despite all the units being purchased, nobody actually lived in them. Similar experience, my office is in the heart of downtown, right on the water. A beautiful building went up beside us, all condo's for sale, starting at $1.5 million. They got bought up instantly. However, once the building opened, I looked out my window and into a building where 90% of the units remained completely empty (no curtains) for well over a year until I switched desks. Foreign investors buy up all this property and it just sits there...empty. Meanwhile everyone that lives and works here is being priced out.
- gozur88 11y ago
  When the market tips all those foreign investors are going to try to unload their investment property at the same time. If I lived in a market like that I probably wouldn't buy anything even assuming I had the money. There's a big hangover at the end of this party.
- refurb 11y ago
  A significant portion of the housing is being bought by foreign investors who don't even live here What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!". Don't forget there is a ton of speculation going on by Canadian citizens as well. Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher. Some of the stats make Canada look even worse than the US did at it's peak[1]. [1]http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-content/uploads/2015/05/canada-housing-bubble.png http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-c...
  - sandworm101 11y ago
    From the OP >> ...absentee foreign ownership and empty condos, which are said to account for nearly 25 per cent of units in certain neighbourhoods. There are parts of Vancouver that are just dead. Rush hour now sees more carpenters and real estate agents commuting into these residential areas each morning than commute out. Places like the North Shore are essentially industrial zones manufacturing real estate prices. The people who live there (me) talk of empty neighborhoods populated only by retirees, every other house either under construction or sitting empty.
  - thebokehwokeh2 11y ago
    In the west end, it really is "yellow peril". I am asian myself, but I contribute to the economy as a job provider. Speculators are the reason for the impending ghost town that is Vancouver. http://www.nationalpost.com/m/wp/blog.html?b=news.nationalpost.com/news/canada/in-a-six-month-period-70-of-detached-homes-sold-in-vancouvers-west-side-went-to-mainland-china-buyers http://www.nationalpost.com/m/wp/blog.html?b=news.nationalpo...
BurningFrog 11y ago
So why do speculators choose Vancouver of all places to speculate in?
- smcl 11y ago
  I can't answer that, but I can add that it is quite common in London too. I can see the allure of the "park my millions in property in the world financial capital" investment strategy, but I don't get the Vancouver version. That's not meant as a slight on Vancouver.
  - eigenvector 11y ago
    You can't buy a UK or US passport. You can buy a Canadian one. http://www.immigration.ca/en/immigration-wiki2/151-updates/701-quebec-investor-immigration-2014.html http://www.immigration.ca/en/immigration-wiki2/151-updates/7...
    - refurb 11y ago
      You don't get a passport, you get a Permanent Resident Card.
      - throwaway2048 11y ago
        Which then allows you to get a passport....
        refurb 11y ago
        If you move to Canada and maintain residency for X number of years.
        smcl 11y ago
        So it's not a home run, but it still sounds like a good deal to me - especially if I was an Oligarch keen to put distance between myself and the FSB
pfarnsworth 11y ago
Except it's been this way for 30 years. Vancouver house prices have always been higher than Ontario, even back in the 80s when I lived there. So speculation is one thing, but 30 years isn't speculation. And back then they were saying it was foreigners too, especially from Hong Kong. But it's 30 years later, and the house prices haven't abated at all. That isn't speculation, that's a permanently high prices. When my parents bought their house there it was $275,000 it was almost 75% higher than our house in Toronto. And they sold it for $1,300,000 a few years ago. Crazy, but it's only annualized 6% over 25 years, less than the stock market (but higher than normal real estate I'm assuming). However it's prime Vancouver real estate with fantastic schools, a case could be made that it's worth it if you compare to San Francisco. The only difference is that no one knows where the money is coming from for the last 30 years. There is no industry in Vancouver, except tourism and the average salary is ~60k.
- vehementi 11y ago
  I mean, there's tech, professional trades, doctors, finance sector, real estate agents (lol), luxury services, etc.? That accounts for part of the money. How much? How did you determine it was insignificant, if I infer correctly from your post?
rezashirazian 11y ago
As someone who grew up in Vancouver this sums up the problem.
tbirdx 11y ago
Bang on! At least if you made a reasonable wage it would be worth it, but everyone in Vancouver, including NHL superstars like the (Sedin) twins take a pay cut because they claim to love the opportunity to stay there. Every Vancouver employer I ever had gave me that line. "Sorry we can't pay you more, but you know, the rents! This is a great opportunity for you though". Later I found out that I made about 25-50% more than my colleagues, and I was vastly underpaid. It is a horrible work culture.

vonnik 11y ago

You should look more closely at Manhattan and SF. There is a ton of speculation, luxury highrises, and out-of-town wealthy buying second-, third- or fifth homes.

acchow 11y ago
You really don't see any empty homes in SF...
- jonsmit 11y ago
  Anecdotally I see a lot of empty apartments here in SF. Not as bad as London though. I basicslly had an entire massive luxury apartment complex to myself. I would walk around the halls drinking with friends carrying a prop ax pretending we were in the shining. Good times.
- vonnik 11y ago
  I don't think we have a lot of transparency on the how often the tenants and owners of luxury apartments are actually inhabiting them.

stanmancan 11y ago

Exactly this. A significant portion of the housing is being bought by foreign investors who don't even live here. Not only is it raising the pricing of the housing, but you don't get the economic benefit of said wealthy individuals living in the city. I recall reading an article about a local coffee shop. A number of new buildings were built around it, all residential condo's. The condo's in the buildings were completely sold out, hundreds of units, yet it was a ghost town around there. The coffee shop, and I believe a local pub as well, ended up going out of business because despite all the units being purchased, nobody actually lived in them. Similar experience, my office is in the heart of downtown, right on the water. A beautiful building went up beside us, all condo's for sale, starting at $1.5 million. They got bought up instantly. However, once the building opened, I looked out my window and into a building where 90% of the units remained completely empty (no curtains) for well over a year until I switched desks. Foreign investors buy up all this property and it just sits there...empty. Meanwhile everyone that lives and works here is being priced out.

gozur88 11y ago
When the market tips all those foreign investors are going to try to unload their investment property at the same time. If I lived in a market like that I probably wouldn't buy anything even assuming I had the money. There's a big hangover at the end of this party.
refurb 11y ago
A significant portion of the housing is being bought by foreign investors who don't even live here What evidence is there that foreign ownership is a major problem? I've heard plenty of anecdotes, but no actual data. I do know that Vancouver real estate agents are milking the "yellow peril" for all it's worth. "Buy now before China owns all of Vancouver!". Don't forget there is a ton of speculation going on by Canadian citizens as well. Suffice to say, Canadians are doing what American's did in the early 2000's. They are going into a crazy amount of debt to buy housing, which is only pushing prices up even higher. Some of the stats make Canada look even worse than the US did at it's peak[1]. [1]http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-content/uploads/2015/05/canada-housing-bubble.png http://2oqz471sa19h3vbwa53m33yj.wpengine.netdna-cdn.com/wp-c...
- sandworm101 11y ago
  From the OP >> ...absentee foreign ownership and empty condos, which are said to account for nearly 25 per cent of units in certain neighbourhoods. There are parts of Vancouver that are just dead. Rush hour now sees more carpenters and real estate agents commuting into these residential areas each morning than commute out. Places like the North Shore are essentially industrial zones manufacturing real estate prices. The people who live there (me) talk of empty neighborhoods populated only by retirees, every other house either under construction or sitting empty.
- thebokehwokeh2 11y ago
  In the west end, it really is "yellow peril". I am asian myself, but I contribute to the economy as a job provider. Speculators are the reason for the impending ghost town that is Vancouver. http://www.nationalpost.com/m/wp/blog.html?b=news.nationalpost.com/news/canada/in-a-six-month-period-70-of-detached-homes-sold-in-vancouvers-west-side-went-to-mainland-china-buyers http://www.nationalpost.com/m/wp/blog.html?b=news.nationalpo...

BurningFrog 11y ago

So why do speculators choose Vancouver of all places to speculate in?

smcl 11y ago
I can't answer that, but I can add that it is quite common in London too. I can see the allure of the "park my millions in property in the world financial capital" investment strategy, but I don't get the Vancouver version. That's not meant as a slight on Vancouver.
- eigenvector 11y ago
  You can't buy a UK or US passport. You can buy a Canadian one. http://www.immigration.ca/en/immigration-wiki2/151-updates/701-quebec-investor-immigration-2014.html http://www.immigration.ca/en/immigration-wiki2/151-updates/7...
  - refurb 11y ago
    You don't get a passport, you get a Permanent Resident Card.
    - throwaway2048 11y ago
      Which then allows you to get a passport....
      - refurb 11y ago
        If you move to Canada and maintain residency for X number of years.
        smcl 11y ago
        So it's not a home run, but it still sounds like a good deal to me - especially if I was an Oligarch keen to put distance between myself and the FSB

pfarnsworth 11y ago

Except it's been this way for 30 years. Vancouver house prices have always been higher than Ontario, even back in the 80s when I lived there. So speculation is one thing, but 30 years isn't speculation. And back then they were saying it was foreigners too, especially from Hong Kong. But it's 30 years later, and the house prices haven't abated at all. That isn't speculation, that's a permanently high prices. When my parents bought their house there it was $275,000 it was almost 75% higher than our house in Toronto. And they sold it for $1,300,000 a few years ago. Crazy, but it's only annualized 6% over 25 years, less than the stock market (but higher than normal real estate I'm assuming). However it's prime Vancouver real estate with fantastic schools, a case could be made that it's worth it if you compare to San Francisco. The only difference is that no one knows where the money is coming from for the last 30 years. There is no industry in Vancouver, except tourism and the average salary is ~60k.

vehementi 11y ago
I mean, there's tech, professional trades, doctors, finance sector, real estate agents (lol), luxury services, etc.? That accounts for part of the money. How much? How did you determine it was insignificant, if I infer correctly from your post?

rezashirazian 11y ago

As someone who grew up in Vancouver this sums up the problem.

tbirdx 11y ago

Bang on! At least if you made a reasonable wage it would be worth it, but everyone in Vancouver, including NHL superstars like the (Sedin) twins take a pay cut because they claim to love the opportunity to stay there. Every Vancouver employer I ever had gave me that line. "Sorry we can't pay you more, but you know, the rents! This is a great opportunity for you though". Later I found out that I made about 25-50% more than my colleagues, and I was vastly underpaid. It is a horrible work culture.