4 ms·

>I agree that there is at least a sentiment, or a potential explanation that world-wide money movements can explain an abnormal demand for cities demographics.

>I agree that there is at least a sentiment, or a potential explanation that world-wide money movements can explain an abnormal demand for cities demographics. At this point, it's a certainty that it's happening. The only question is to what extent. Overleveraged residents certainly isn't helping, but that alone simply cannot explain Vancouver real estate increasing in value more than the combined annual income of every resident in the city. >housing has increased in rural areas as well, and in lesser cities. That's usually chalked up to a combination of residents buying further out because they've been priced out of Vancouver, and former Vancouver owners who sold and are now looking for a "quieter" place to live. That's happened to at least one former landlord of mine, and my friend's parents are in the process of doing that right now. There's also an area to the south that is zoned for agricultural use, with mansion farmhouses and Ferraris parked out front. >cities could be building more In Vancouver, that's simply not possible to build more than we already are. People will often blame overregulation or zoning for not building more, but they completely forget about logistics. There isn't a single construction crew in the city that doesn't already have a huge backlog. Realistically, we're putting up towers as fast as they can be built and it's having zero measurable impact on housing affordability. And that's ignoring the already substantial problem of shoddy construction we have in this city. >For sure i am absolutely against laws and rules that try to patch a problem that is not understood, having the risk of making the problem worse. The general consensus among people I know is that it will have little to no effect. The government spent so long denying this problem even existed and openly refusing to even consider such a tax back in the spring, to implementing one overnight in the summer. Everyone here pretty much agrees that it's window dressing done to boost abysmal poll numbers in an election year. >I wonder what modern economists think of this. Economists out of UBC have been saying that the only explanation for such explosive, unrealistic growth in real estate is a flood of foreign money. Last I heard, they were calling this tax, at best, a good first step.

conanbatt 10y ago
I googled this yesterday a bit, and at least in the us they are mentioning how development companies scaled back in 2008 and they are still ramping up construction: for the last 8 years, developers have been building less than the increase in demographics in the US. That could have been a global side-effect of the previous crisis. If it is so, this would automatically fix over the next 10 years. The more mainstream idea that the money is cheap is also getting reverted by the Fed by increasing its rates.\ > Economists out of UBC have been saying that the only explanation for such explosive, unrealistic growth in real estate is a flood of foreign money. Last I heard, they were calling this tax, at best, a good first step. Do you have any sources for this? This is a bit mindboggling: flood of foreign does not explain the global effect very well. Argentina doesnt have the same issue, but real estate prices also had its great increase. But also, flood of foreign money into a city like Vancouver could be helping a lot in its economic development: if a city is flooded with cash prices increase, but so does the economic revenue of many people in it: by putting a measure that limits money coming in, you could reduce prices but you would also reduce value, because the property is simply less desirable. In any case, we still dont know why a rich person would buy a property and never rent it out if he doesnt plan in living in it and thats the supply problem its trying to get targeted. Why would the chinese tycoon face depreciation of his property and losing money? It even looks like a business opportunity, if it is so.
- drspacemonkey 10y ago
  >at least in the us they are mentioning how development companies scaled back in 2008 and they are still ramping up construction That's in the US. Canada wasn't hit anywhere near as bad by 2008, and Vancouver construction rebounded very quickly. With the way real estate has been skyrocketing since 2009, it was inevitable. >This is a bit mindboggling: flood of foreign does not explain the global effect very well. I'm not talking about the global effect, I'm talking about Vancouver, where prices have become so decoupled from local wages that you need to earn twice the median family household income just to afford the average home (I'm including condos in the definition of "home"). >flood of foreign money into a city like Vancouver could be helping a lot in its economic development And it could also hinder its economic development if there's too much. The only question is whether or not there's too much. Given the completely out-of-whack salary to cost of living ratio, I'd say we hit the "too much" point a long time ago. I don't think there's anyone familiar with the area who says otherwise at this point, including the infamously, intentionally out-of-touch government. >we still dont know why a rich person would buy a property and never rent it out if he doesnt plan in living in it Right now, we can only speculate thanks to the government shoving their fingers in their ears and refusing to admit there's a problem. But there's a few key factors that help us make informed speculation. First, we know from the Panama Papers that Vancouver real estate is being used to launder and hide money. You don't rent out your tax shelter or money washer to some rando off Craigslist. Second, having a tenant delays sales by at least two months (that's how long an eviction without cause takes). That's a LIFETIME in Vancouver real estate. Third, in the last few years, asset appreciation means you're gaining more money on paper just by holding onto the real estate than you could ever hope to collect in rent. Even if you pay a property management company to deal with everything, it's still a non-trivial amount of work for comparatively little gain. Fourth, it sounds nuts, but in Chinese culture, a home that has been lived in sells for less money than one that has never been lived in. Something about feng shui, which is still such a big deal in China that it's made its way into Vancouver real estate. Hell, until the city council put a stop to it due to the logistics issues it causes emergency crews, buildings were going up that didn't have floors with the number 4 in them. 4 is associated with death in Chinese culture, and apartments with the number 4 don't sell as quickly.

conanbatt 10y ago

I googled this yesterday a bit, and at least in the us they are mentioning how development companies scaled back in 2008 and they are still ramping up construction: for the last 8 years, developers have been building less than the increase in demographics in the US. That could have been a global side-effect of the previous crisis. If it is so, this would automatically fix over the next 10 years. The more mainstream idea that the money is cheap is also getting reverted by the Fed by increasing its rates.\ > Economists out of UBC have been saying that the only explanation for such explosive, unrealistic growth in real estate is a flood of foreign money. Last I heard, they were calling this tax, at best, a good first step. Do you have any sources for this? This is a bit mindboggling: flood of foreign does not explain the global effect very well. Argentina doesnt have the same issue, but real estate prices also had its great increase. But also, flood of foreign money into a city like Vancouver could be helping a lot in its economic development: if a city is flooded with cash prices increase, but so does the economic revenue of many people in it: by putting a measure that limits money coming in, you could reduce prices but you would also reduce value, because the property is simply less desirable. In any case, we still dont know why a rich person would buy a property and never rent it out if he doesnt plan in living in it and thats the supply problem its trying to get targeted. Why would the chinese tycoon face depreciation of his property and losing money? It even looks like a business opportunity, if it is so.

drspacemonkey 10y ago
>at least in the us they are mentioning how development companies scaled back in 2008 and they are still ramping up construction That's in the US. Canada wasn't hit anywhere near as bad by 2008, and Vancouver construction rebounded very quickly. With the way real estate has been skyrocketing since 2009, it was inevitable. >This is a bit mindboggling: flood of foreign does not explain the global effect very well. I'm not talking about the global effect, I'm talking about Vancouver, where prices have become so decoupled from local wages that you need to earn twice the median family household income just to afford the average home (I'm including condos in the definition of "home"). >flood of foreign money into a city like Vancouver could be helping a lot in its economic development And it could also hinder its economic development if there's too much. The only question is whether or not there's too much. Given the completely out-of-whack salary to cost of living ratio, I'd say we hit the "too much" point a long time ago. I don't think there's anyone familiar with the area who says otherwise at this point, including the infamously, intentionally out-of-touch government. >we still dont know why a rich person would buy a property and never rent it out if he doesnt plan in living in it Right now, we can only speculate thanks to the government shoving their fingers in their ears and refusing to admit there's a problem. But there's a few key factors that help us make informed speculation. First, we know from the Panama Papers that Vancouver real estate is being used to launder and hide money. You don't rent out your tax shelter or money washer to some rando off Craigslist. Second, having a tenant delays sales by at least two months (that's how long an eviction without cause takes). That's a LIFETIME in Vancouver real estate. Third, in the last few years, asset appreciation means you're gaining more money on paper just by holding onto the real estate than you could ever hope to collect in rent. Even if you pay a property management company to deal with everything, it's still a non-trivial amount of work for comparatively little gain. Fourth, it sounds nuts, but in Chinese culture, a home that has been lived in sells for less money than one that has never been lived in. Something about feng shui, which is still such a big deal in China that it's made its way into Vancouver real estate. Hell, until the city council put a stop to it due to the logistics issues it causes emergency crews, buildings were going up that didn't have floors with the number 4 in them. 4 is associated with death in Chinese culture, and apartments with the number 4 don't sell as quickly.