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semven
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Re: Vancouver's housing market crash hits home.

Wed Aug 24, 2016 3:58 pm

Desirable markets down south showed rents remaining strong, and subsequently skyrocketing shortly after their RE fiasco.

I would expect the same here;
  •  Increase demand for Vancouver once (if?) prices ever reach lower levels.
  • Inability of new residents to buy due to multitude of issues;
  1. Credit restrictions
  2. Transient nature of job opportunity
  3. Perceived fear of RE market
  • Strong rental increase with stagnant or inflation level price rises, leading to compelling ownership metrics.
I think the stage is set for this - this town is booming; film, tech, mining, its all go. This is already leading to record rent increases.

Throw in reduced housing purchase costs and some long time fundamentals will begin to turn in favour of the investor vs speculator.

I think the majority of this was Credit Restrictions...You had a revamping of Fannie and Freddie as well as many people who suffered collateral damage in the downturn. People that were unaffected as far as their employment situation but were caught in the ARM resets with underwater assets nonetheless.

You wont see people renting homes to leave them vacant here....That makes no sense. Maybe the Folks in Shaughnessy and Point Grey should watch "Animal House"?
I think the 1600 Students who need a place to live will be finding rentals on WeChat.....



 
 
Geyser
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Re: Vancouver's housing market crash hits home.

Wed Aug 24, 2016 5:00 pm

Numerous studies have shown that a very high percentage of Canadians are living "pay-check to pay-check".

When the economy turns down, people lose their jobs, others may keep their jobs but lose their overtime. If they belong to the "pay-check to pay-check" crowd they will not be able to pay their mortgages, the lenders will forclose, sell the homes for whatever offer they can get, and then go after the hapless debters for any shortfall.

Here is what The Financial Times discovered:

http://business.financialpost.com/perso ... io-and-b-c

Almost half of Canadians polled said they are living paycheque to paycheque and would find it difficult to meet their financial obligations if their pay was delayed by just a week. The situation is worst in Ontario, British Columbia and Atlantic Canada.

Less than one quarter of respondents said they could probably not come up with $2,000 if an emergency arose within the next month. Some 36 per cent of working Canadians said they felt overwhelmed by their level of debt and 12 per cent doubted they’ll ever be debt-free.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
yzfr1
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Re: Vancouver's housing market crash hits home.

Wed Aug 24, 2016 5:29 pm

Numerous studies have shown that a very high percentage of Canadians are living "pay-check to pay-check".

When the economy turns down, people lose their jobs, others may keep their jobs but lose their overtime. If they belong to the "pay-check to pay-check" crowd they will not be able to pay their mortgages, the lenders will forclose, sell the homes for whatever offer they can get, and then go after the hapless debters for any shortfall.

Here is what The Financial Times discovered:

http://business.financialpost.com/perso ... io-and-b-c

Almost half of Canadians polled said they are living paycheque to paycheque and would find it difficult to meet their financial obligations if their pay was delayed by just a week. The situation is worst in Ontario, British Columbia and Atlantic Canada.

Less than one quarter of respondents said they could probably not come up with $2,000 if an emergency arose within the next month. Some 36 per cent of working Canadians said they felt overwhelmed by their level of debt and 12 per cent doubted they’ll ever be debt-free.
How many of these guys living pay check to pay check managed to save up 600-700K for a down on a house? I would argue the pay check to pay check people live in cheaper condos out east, Langley and Maple ridge. you don't have great saving habits and all of a sudden live in the poor house after buying a place.
Cheaper condos, and new developments might get destroyed however if the perfect storm comes with un employment. Rising interests rates and panic selling. Where everyone mortgage resets at the same time and everyone is of the working class pool with mortgages as opposed a established neighborhood with a mosaic of people owing and owning outright with strong equity  
 
reallyreal2
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Re: Vancouver's housing market crash hits home.

Wed Aug 24, 2016 5:53 pm

i would say many people living all over the city live pay cheque to pay cheque.

How many people have tenants to help with the mortgage?

How many people bought to the max they could afford working backwards from the most monthly subscription payment at current interest rates?

How many people bought by bidding more than they said they would to get into the market?

How many people are not seeing pay increases keep up to inflation?

You are crazy if you think pay cheque to pay cheque is solely a langley, maple ridge, port coquitlam issue. And equity has nothing to do with it when you can't make monthly payments.
 
tdma800
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Re: Vancouver's housing market crash hits home.

Thu Aug 25, 2016 12:27 pm

Numerous studies have shown that a very high percentage of Canadians are living "pay-check to pay-check".

When the economy turns down, people lose their jobs, others may keep their jobs but lose their overtime. If they belong to the "pay-check to pay-check" crowd they will not be able to pay their mortgages, the lenders will forclose, sell the homes for whatever offer they can get, and then go after the hapless debters for any shortfall.

Here is what The Financial Times discovered:

http://business.financialpost.com/perso ... io-and-b-c

Almost half of Canadians polled said they are living paycheque to paycheque and would find it difficult to meet their financial obligations if their pay was delayed by just a week. The situation is worst in Ontario, British Columbia and Atlantic Canada.

Less than one quarter of respondents said they could probably not come up with $2,000 if an emergency arose within the next month. Some 36 per cent of working Canadians said they felt overwhelmed by their level of debt and 12 per cent doubted they’ll ever be debt-free.
How many of these guys living pay check to pay check managed to save up 600-700K for a down on a house? I would argue the pay check to pay check people live in cheaper condos out east, Langley and Maple ridge. you don't have great saving habits and all of a sudden live in the poor house after buying a place.
Cheaper condos, and new developments might get destroyed however if the perfect storm comes with un employment. Rising interests rates and panic selling. Where everyone mortgage resets at the same time and everyone is of the working class pool with mortgages as opposed a established neighborhood with a mosaic of people owing and owning outright with strong equity  
Its pretty obvious yes. Those area especially the valley are growing fast for that reason.  Except in misc. pockets of Vancouver itself its rare to have renters in your own place.   Many are getting increased salaries and all sorts of cola this cola that(not the drink). It has all to do with west and east.
 
VanBullBear
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Re: Vancouver's housing market crash hits home.

Thu Aug 25, 2016 1:22 pm

The source of that latest reference to our crash

Quoted for future reference.
We're in a market crash folks...Rentah is calling it.
Wow, you are so forgetful, you seem to have the attention span of a humming bird and you are confusing words like "apparently", "probable" and "downturn" with an absolute declaration of the bubble having already burst. I'm certainly calling a bubble but please re-read the comment I posted yesterday, the one you already seem to have forgotten. Here it is again for the slow learners:

"Agreed, hence my statement yesterday:
"I think it may be well beyond October before we know with any certainty that the bubble has burst. If it follows the typical pattern there should be a sharp drop (which already appears underway), followed by a modest but short-lived recovery, followed by a massive collapse. It could be next spring before the really big plunge."


I can't help to notice your description of price action is quite accurate of a sharp correction. You must have some stock trading experience in technical analysis. good stuff geyser.
 
Geyser
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Re: Vancouver's housing market crash hits home.

Thu Aug 25, 2016 2:24 pm

yzfr1 wrote:
"How many of these guys living pay check to pay check managed to save up 600-700K for a down on a house? I would argue the pay check to pay check people live in cheaper condos out east, Langley and Maple ridge. you don't have great saving habits and all of a sudden live in the poor house after buying a place."


Geyser replied:
Have you not heard about the secondary mortgage market and the bank of mom & dad? Even high income people have been stretching to the max in order to buy homes with minimal down payments.  If your mortgage is more than three or four times your annual income you are at high risk, regardless of whether you are a poor person who went in over his/her head for a small condo in Surrey, a middle income couple who stretched to buy an old house on the East Side, or a high income couple who stretched to buy a multi-million dollar home on the West Side. Many of these folks will be at risk in a housing price collapse, and the later they joined the party, the higher their risk.


yzfr1 wrote:
"Cheaper condos, and new developments might get destroyed however if the perfect storm comes with un employment. Rising interests rates and panic selling. Where everyone mortgage resets at the same time and everyone is of the working class pool with mortgages as opposed a established neighborhood with a mosaic of people owing and owning outright with strong equity."



Geyser replied:
Prices are dictated by those who need to sell, not by those who aren't selling. In "an established neighborhood with a mosaic of people owning" one would reasonably expect a mix of older, mortgage free owners, other owners with modest mortgages, and quite a lot of other folks who bought their first home in this last decade. In Vancouver a fair percentage of the latter group are likely to be working couples with mortgages running anywhere from $500K to way over $1 million. 

Those are the folks who are most likely living hand to mouth, regardless of whether they are a couple of young physicians making a serious dual income and struggling with a million plus mortgage, or average working class folks struggling with a $500K mortgage, child care fees, car payments, ICBC increases, Hydro increases, Property Tax, etc., etc..  These folks are all house poor because they are letting the house suck most of their income away.  They are the ones who are at greatest risk because a job loss, an interest spike, unexpected major repairs, or any one of a dozen other emergencies which could make the mortgage payment unmanageable, and you know how the lenders react to that!

A prime example of the strain on average and lower income families can be seen in East Vancouver with its vast tracts of houses with basement suites. You can be pretty sure that most of those homeowners don't need the rental income for their next luxury vacation, they tolerate the unpleasant necessity of having strangers in the basement because they have to in order to put food on the table and to help pay their crippling mortgages and other monthly bills.  Those are the places most likely to see massive waves of foreclosures if the economy tanks.  The older mortgage-free folks will pull through it, but the folks with mortgages which are large compared to their incomes are at great risk. Even if the economy does well they are still in danger because a sound economy brings much higher interest rates.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
eyesthebye2
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Re: Vancouver's housing market crash hits home.

Thu Aug 25, 2016 4:09 pm

Working people with a motgage of 1 million?
Working class folks with 500k mortgage?
Fuck that's funny.
Last edited by eyesthebye2 on Thu Aug 25, 2016 10:07 pm, edited 1 time in total.
 
yzfr1
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Re: Vancouver's housing market crash hits home.

Thu Aug 25, 2016 9:49 pm

Lol yeah, how many 1 million dollar mortgages are there in Vancouver to working class?

I duno where you live, but you are out of touch with the city. As someone who lived in east van for the past 30+ years I can tell you the average detached home owner is not some young hot shot power couple. East van is way to un hip for that. That's what Yale town is for.

East van is either old families from pre 80's or working class Asian from Hongkong / Taiwan from early 2000 or new mainland Chinese.

Btw most basement suites are run by the Asians, its in the culture to maximize profits. Even if they don't need the money they will rent it out anyways. It's considered free money.

I just don't see people dropping all their money to live in east van, especially since it requires such a huge down payment. If they were able to save $500+ k they would not be stupid enough to live cheque to cheque. That type of lifestyle would be suited for downtown or out east.

Then again it's just here say.. This is my .02 from my experience and understanding


Btw is bought my place in east van in 2011, I got a 700k cheque from the bank of mom day and 100 of my own from the sale of my apartment in Burnaby. With a montage of 300k. That's my situation, so it's not like I'm saying all this stuff with bull goggles on for my survival.


A dip would help me out because I'm here long term for my kids, and I don't qualify for grants because of assed value. It's a $7,000 a year tax bullet every year.
 
HomelessinSD
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Re: Vancouver's housing market crash hits home.

Fri Aug 26, 2016 8:14 am

Working people with a motgage of 1 million?
Working class folks with 500k mortgage?
Fuck that's funny.
Why? I remember someone on this forum buying a $630k home with 10% down, that's over a $500k mortgage. This person also claims to be regular, working class person.
 
HomelessinSD
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Re: Vancouver's housing market crash hits home.

Fri Aug 26, 2016 8:18 am

Lol yeah, how many 1 million dollar mortgages are there in Vancouver to working class?

I duno where you live, but you are out of touch with the city. As someone who lived in east van for the past 30+ years I can tell you the average detached home owner is not some young hot shot power couple. East van is way to un hip for that. That's what Yale town is for.

East van is either old families from pre 80's or working class Asian from Hongkong / Taiwan from early 2000 or new mainland Chinese.

Btw most basement suites are run by the Asians, its in the culture to maximize profits. Even if they don't need the money they will rent it out anyways. It's considered free money.

I just don't see people dropping all their money to live in east van, especially since it requires such a huge down payment. If they were able to save $500+ k they would not be stupid enough to live cheque to cheque. That type of lifestyle would be suited for downtown or out east.

Then again it's just here say.. This is my .02 from my experience and understanding


Btw is bought my place in east van in 2011, I got a 700k cheque from the bank of mom day and 100 of my own from the sale of my apartment in Burnaby. With a montage of 300k. That's my situation, so it's not like I'm saying all this stuff with bull goggles on for my survival.


A dip would help me out because I'm here long term for my kids, and I don't qualify for grants because of assed value. It's a $7,000 a year tax bullet every year.
Depend what you consider working class: If "working class" is simply just people working for a salary, then there are lots of working class people in the City of Vancouver with $1 million mortgages. Servicing a million dollar mortgage would be about $4k / month. Certainly doable for two working professionals. 
 
yzfr1
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Re: Vancouver's housing market crash hits home.

Fri Aug 26, 2016 9:32 am

If two working professionals can qualify for 1 million mortgage with no CHMC that means +200,000 K down payment minimum + 150-200k year combined income.

The chances are they are no idiots, some of them living pay cheque to pay cheque plossible but majority of them doing that? Highly unlikely

All the people hoping for a crash seriously think everyone who bought must be some sort of grade A moron just hanging on by the skin of their teeth. Everyone is entitled to a opinion, but then there is reality.

Cognitive dissonance..

It's kinda how every iPhone user thinks android sucks but Andorid users think iphone users are all sheeps and morons for paying to much for a dumbed down version.

Trying to project what you think is right will not change the market. It's best to have a open mind, how to capitalize on any given moment instead of waiting for the tide to come in.
 
HomelessinSD
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Re: Vancouver's housing market crash hits home.

Fri Aug 26, 2016 9:50 am

If two working professionals can qualify for 1 million mortgage with no CHMC that means +200,000 K down payment minimum + 150-200k year combined income.

The chances are they are no idiots, some of them living pay cheque to pay cheque plossible but majority of them doing that? Highly unlikely
Perfect example.
Two working professionals, each making $100k / year - pretty much exactly where our government punishes those who do a little better than average. They would pay about 25% in income takes. Combined take home pay is $150k, or about $12,500 / month. Seems like a lot?
With their mortgage, property taxes, house maintenance, utility bills, insurance, etc. their housing costs are probably approaching $6k / month. Car payments , gas and insurance are $1k  month.
That leaves them about $150 / day (or $75 each) to pay for all their food, housing supplies, entertainment, lunches (these are working professionals), retirement savings, clothes, haircuts, vacations, etc.  That's not even considering if they have children.
Don't know the actual stats, but I wouldn't be surprised if more of these heavily indebted working professionals are living paycheck to paycheck than we might thing.
 
VanLord
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Re: Vancouver's housing market crash hits home.

Fri Aug 26, 2016 11:20 am

If two working professionals can qualify for 1 million mortgage with no CHMC that means +200,000 K down payment minimum + 150-200k year combined income.

The chances are they are no idiots, some of them living pay cheque to pay cheque plossible but majority of them doing that? Highly unlikely
Perfect example.
Two working professionals, each making $100k / year - pretty much exactly where our government punishes those who do a little better than average. They would pay about 25% in income takes. Combined take home pay is $150k, or about $12,500 / month. Seems like a lot?
With their mortgage, property taxes, house maintenance, utility bills, insurance, etc. their housing costs are probably approaching $6k / month. Car payments , gas and insurance are $1k  month.
That leaves them about $150 / day (or $75 each) to pay for all their food, housing supplies, entertainment, lunches (these are working professionals), retirement savings, clothes, haircuts, vacations, etc.  That's not even considering if they have children.
Don't know the actual stats, but I wouldn't be surprised if more of these heavily indebted working professionals are living paycheck to paycheck than we might thing.
I think your numbers might be over estimated, I'm not saying there aren't people in that situation, but I just took a quick look at my own properties using the exact figures for Maintenance, taxes, utilities, etc.  and ran a couple mortgage scenarios using a mortgage calculator from CIBC and we can see where this would actually be for monthly costs
House in East Van - 1M Mortgage - Monthly Housing Expenses $5860 , less 2 Mortgage Helper suites $2000 total per month, leaves Monthly housing at $3860
Large Condo Downtown - 800 k Mortgage - Monthly Housing Expenses $4650
Medium Condo Downtown - 500k Mortgage - Monthly Housing expenses $3050
So lets say that the company also provides a RRSP/ Pension matching program, plus an employee stock plan, plus a 15% annual bonus, for ease of math will say that is on top of the 100k salary. 
Using the worst case example, living in a large downtown condo, lets call it 6k all-in for car plus housing,  Their retirement savings is taken care, TFSA can get maxed out via the stock plan and they have  over 20k in after-tax bonus money (perhaps for vacations??), plus 6.5k per month to live-on (or approx $215 per day)
Now lets talk about someone with a much lower mortgage, if someone was able to trade-up to that condo over time, and say had a 300k mortgage left on their condo, the total housing expenses would only be $2700 plus $1300 in car expenses, which leaves them 8.5k per month to play with...I think that's more than enough to live pay cheque to pay cheque.
 
 
Geyser
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Re: Vancouver's housing market crash hits home.

Fri Aug 26, 2016 12:48 pm

Working people with a motgage of 1 million?
Working class folks with 500k mortgage?
Fuck that's funny.
No, it's not funny it's sad, it's dangerous and, in Vancouver, it's widespread.  The banksters are only too happy to give a $500K mortgage to a couple earning a combined income of $95K. The secondary loan market can be even more ruthless. A $95K combined income can be earned by a couple of retail workers, a plumber and a waitress, or by a single police officer or a nurse, it's not "professional income" territory, those are working class folks.

With a combined income of $160K a couple can qualify for a million dollar loan. A couple of people in the trades or even a double dipping Transit cop or a nurse logging overtime can make that kind of money.

Add to that the unknown number of "liar loans" where incomes have been grossly exaggerated, and you start to see the size of this house of cards.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
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