How Credit Has Inflated Real Estate Prices The debate rages on as to why real estate prices have grossly inflated and have completely diverged from basic economic fundamentals. Some blame foreign buyers and speculation while others dumb it down further to population growth and supply constraints. However, research from the brightest minds in finance and economics will tell you those are all symptoms of an underlying disease. The disease, is a prolonged credit cycle, combined with low interest rates, lax lending standards, and a hunger from banks to provide more and more leverage for homebuyers in need of a mortgage.  As a result, household debt levels and real estate prices are at record highs. To explain further, I’ll pass this one off to the experts. Here’s what billionaire hedge fund manager Ray Dalio has to say. “There are two important cycles to pay attention to — the business cycle, or short-term debt cycle, and the debt supercycle, or long-term debt cycle. We are eight years into the expansion phase of the business/short-term debt cycle — which typically lasts about eight to 10 years — and near the end of the expansion phase of a long-term debt cycle, which typically lasts

Toronto Real Estate Following In The Same Footsteps as Vancouver I often get asked what are my predictions or thoughts on the Toronto Real Estate market. While I can’t comment from a statistical or feet on the ground perspective what I can tell you is all financial markets tend to function the same regardless of the location. There’s no such thing as “it’s different here.” With Toronto real estate prices soaring 22% last year, and expected to increase by 25% or more this year, the housing plague has gripped Toronto residents. Economists and other market experts are now sounding the alarm bells. “Overall, while the investment boom in housing supported the economy through the oil shock, the further deterioration in housing affordability and greater housing imbalances are worrisome, symptomatic of an economic crisis in the making caused by investor speculation and excessive financial leverage.” – David Madani, Capital Economics  “Let’s drop the pretense, The Toronto housing market — and the many cities surrounding it are in a housing bubble. Housing starts in Toronto and Vancouver have been chugging along at almost 70,000 units per year recently, an all-time high, while overall Canadian starts are above demographic demand at 200,000 units

Cardero Vancouver by Bosa- Georgia & Cardero Introducing Cardero by Bosa Properties, a cornerstone connecting Coal Harbour’s seawall, Stanley Park, and the downtown core. An illustrious gateway to a famously livable city, Cardero blurs the line between structure and sculpture and is destined to raise the bar for architecture and innovative design in Canada. Bosa Properties and Henriquez Partners Architects are set to transform 1575 West Georgia Street into an urban cornerstone with a dual-tower residential building perched atop a four-storey podium, offering retail on the ground floor and three floors of office space. This boutique collection of luxury residences raises the bar for architecture and innovative design in Vancouver. Anchoring the corner of Georgia and Cardero streets, a distinctive 26-storey tower, 7 levels of underground parking is fitted with special screens to reduce solar heat gain while providing residents with greater privacy and shade. Amenities include social lounge, outdoor terrace, fitness room and yoga studio. Cardero will also feature charging stations for electric vehicles, and a temperature controlled storage for grocery delivery. As a Cardero homeowner, you’ll be ideally situated near the Coal Harbour waterfront and its multi-purpose seawall, connecting the convention centre and cruise ship terminal at Canada

Price Trends Suggest a Correction in Vancouver There’s no shortage of predictions for Canadian real estate prices nor is there a shortage of opinions on how financial markets function. But predicting markets correctly is an almost impossible task, as famed economist John Maynard Keynes once said “The market can stay irrational longer than you can stay solvent.” But let’s dive in anyways. The latest from Macquarie Research group, a leading provider of financial, advisory, investment and funds management services believes that a 25% correction in the Canadian National home price index would bring it back to trend. Of course, in Vancouver that’s even higher. Famous Blog dog Garth Turner‘s doodling shows a 33% price correction would be required for Vancouver real estate just to fall back to it’s “normal” trend line. There’s no question a price correction would come as welcoming news to many Vancouverites. According to Metro News, Doctors, lawyers, computer programmers and accountants can’t afford to buy a home in Vancouver. But alas, segments of the market are still hot hot hot leaving some bulls to believe prices could triple this year and heck may even quadruple next year…

Why All Levels of Government Are Reluctant to Prick the Bubble When it comes to the housing crisis in Vancouver there seems to be much finger pointing. Trudeau says it’s a provincial problem, Christy Clark alleges it’s a city problem, and Mayor Gregor just wants more bike lanes. So who’s bubble is it anyways? From a federal level Trudeau and the gang have been backed into a corner. GDP growth is anemic, commodity prices are in the gutter, and interest rates virtually at rock bottom. Canadian residential real estate is one of the last legs holding up the economy. HELOC’s (Home Equity Line’s of Credit) made up a staggering 12% of Canadian GDP in 2015. Even more pathetic, home ownership transaction costs represented nearly 21% of total GDP growth post-2014. No wonder Trudeau passed the hot potato over to CC. After holding out for years Christy Clark painstakingly pulled the lever on a 15% foreign buyers tax. The market fluttered into a tailspin, so a panicked CC pulled the other lever, this time in the form of sub prime loans to first time buyers. After all, don’t kill the hand that feeds you… Next up, Mayor Gregor. High house prices?

Terrace House by Portliving Terrace House, the world’s tallest timber frame hybrid building is coming soon to the Coal Harbour area. Located at 1250 W Hasting Street, this new development by Portliving will be 19 stories high and feature 20 residential units. The first 12 floors will be concrete construction, the remaining triangular portion will be built by locally sourced timber. Designed by Pritzker Prize winning architect Shigeru Ban, Terrace House represents the best in design, exclusivity and luxury urban living. Set to become the world’s tallest hybrid timber structure, offering cutting edge design and material use, it will set a new precedent for architecture and innovation not only in Vancouver, but around the world. To register for Terrace House updates click here.

Synchro Vancouver By Bold Properties- 379 E Broadway Synchro by Bold Properties is a 5 storey mid-rise building coming soon to the up and coming Mount Pleasant area. Located at 379 East Broadway, Synchro is within walking distance of cafes, pubs, boutiques shops and exotic restaurants. Mount Pleasant offers a short walk to Olympic Village and False Creek. This new condo development will consist of 13 one bedroom suites ranging from 532 – 653 square feet and 16 two-bedroom units ranging from 724-1062 square feet. Synchro will offer state of the art design, smart technology, panoramic views, and multi-functional community communal spaces. To view all floor plans click here. To register for updates on the development click here.  

Yukon Residences Vancouver by Alabaster Albaster Homes has announced their newest development Yukon Residences. Situated along the Cambie Corridor, within walking distance of Winona Park and Langara Golf Course. Within minutes of grocery stores, fitness centres, Oakridge mall and the skytrain. Yukon Residences is a boutique development consisting 33 three and four bedroom townhomes. Expected completion has not yet been announced. Sales will begin in the spring of 2017. You can join their registration list for further details HERE. Alabaster highlights the new Vancouver development as “An incomparable location, perched high atop Winona Park. Yukon Residences will feature exquisitely appointed Townhomes and single-level Garden Homes. Close to top-ranked schools, Canada Line, and access to YVR.” View all New Condo Developments Here  

Housing Debate Gets Heated Amongst Finance Committee Just the other day local politicians got together to discuss the future of Canadian housing. There was about a one hour segment where politicians grilled CMHC’s Evan Siddall. Most of the focus was on the stress test and further lending policies moving forward. You can watch that full interview here. Mortgage Stress Test Since the implementation of the stress test CMHC says there has been a 15-20% reduction of first time buyers being able to qualify for an insured mortgage. CMHC says they are pleased with the results to weed out over leveraged buyers.  Of course, this had some local politicians up in arms saying that CMHC is denying first timers the Canadian dream of home ownership. How quickly they forget just how generous the banks have been in recent years. The massive lending towards residential real estate is unprecedented. Risk Sharing with Banks CMHC’s Evan Siddall says the Bank of Canada is continuing their research towards implementing risk sharing with the big banks. They want the banks to pay a deductible should someone default on their payments. CMHC says if this is implemented that borrowers can expect between a 10-50 basis point

Activity remains sluggish in Vancouver Real Estate Market Activity in the Vancouver real estate market remains quite sluggish through the first half of February. This report follows the two previous January reports (January 2017 Detached Market Report and January 2017 condo/townhouse Market Report). So what do I mean by sluggish? Well sales are down, way down from last year. New listings are also quite scarce. Let’s take a look. REBGV Detached Detached sales are following the exact same trend as the past six months or so. Detached sales through the first 15 days of February are down 52% year over year. There have been a total of 385 detached sales across Greater Vancouver which is 28% below the 10 year average.   There have been 690 new listings added so far in February. This puts the current sales/actives ratio at a paltry 9%, which of course means it’s still considered a buyers market. REBGV Townhouse Townhouse sales remain relatively stable, once again following a similar trend we have seen over the past few months. Through the first 15 days of February sales are down 30% year over year, and are also 8% below the 10 year average. Through 15 days

Arne Vancouver Townhouses by Mondevo Arne Vancouver is a new development by Mondevo. It will bring twenty new townhouses to the Mount Pleasant area. Located at 321 E16th Avenue.  Offering a clean, warm expression that balances architectural modernity with flexible layouts. Its floor space ratio, open courtyard layout, outdoor stroller lockers, and proximity to a park with a playground make this development ideal for young families. The first two storeys are a very crisp cube in white brick veneer, with form and material emphasizing the individuality of each dwelling. The upper storey is a more subtle, contrasting expression of metal faux wood siding that recedes from view, giving the impression of a smaller external facing. Arne Vancouver Prices It’s estimated completion is Spring 2018, the development is now sold out.

Grosvenor Pacific Vancouver- 819 Pacific Street Grosvenor, a privately owned property group has announced that they have plans to develop the site located at 801-819 Pacific Street in Vancouver. The proposed plan for this adjacent site includes a seven-storey City-owned arts and culture building as part of the community amenity contribution for the rezoning of 1380-1382 Hornby Street.  The plan also includes continuation of the new Pacific Street dedicated bike lane, expanded sidewalks and additional street trees to improve the public realm.  You can find more details on the application here. Located at the corner of Hornby and Pacific the development will consist of approximately 212 homes including 1,2 and 3 bedroom condos along with 3 two storey town-homes. This prime Yaletown location will feature spectacular views of False Creek and the city. Within walking distance of seawall, Aquabus, and Yaletown restaurants. You can register for more information at the Grosvenor website HERE.