Pretty Freaking Nuts To Survival Mode
The Washington Post reports on Canada. “The daughters of wealthy Chinese Canadians who star in the reality show the ‘Ultra Rich Asian Girls of Vancouver’ pursue modelling careers, carry Birkin bags, and sip on Veuve Cliquot. And they snap up million-dollar Vancouver homes with the same level of dedication that some of us use to shop for a new pair of shoes. ‘It’s not that expensive in Richmond,’ 24-year-old Chelsea Jiang told a local news channel shortly before beginning the show in 2014. Jiang, born in Ottawa, Canada, was looking to buy a single-family home in Richmond, part of the Vancouver metro area, in addition to a luxury condo she already owned. ‘It’s really cheap and I have a budget of $2 million.’”
“As Justin McElroy, a Canadian journalist, pointed out on Twitter, the average price of a Greater Vancouver home rose as much in the past six months as it did from 1980 to 2006. (When those figures are adjusted for inflation, the trend looks even crazier. In today’s Canadian dollars, the city’s housing prices grew by only roughly $150,000 between 1980 and 2006, but shot up by $375,000 in the last six months.)”
“Many experts are blaming the surge on an influx of cash from wealthy Chinese, who are rushing to send investments out of their country as its economy slows. A torrent of money historic in its proportions is currently flowing out of China, driven by expectations of a weaker Chinese currency and an effort to hedge investments against a weaker economy. The Institute of International Finance estimates that $676 billion of capital left China through official and unofficial channels in 2015. By some accounts, it is the biggest occurrence of capital flight in history.”
The Vancity Buzz. “Kitsilano real estate records were broken on Tuesday after a home sold for $735,000 over the asking price of $3.5 million. The house at 3555 West 1st Avenue was built in 1912, is 3,400 square feet and sits on a standard 33 x 120 foot lot without a view. The selling price of $4.23 million is about $1.6 million above the lot’s assessed property value. ‘For it to go over $4 million is remarkable. I had five offers,’ Brandan Price, the real estate agent who sold the house tells Vancity Buzz. ‘These were local buyers just looking to make a shift who wanted to move into this area.’”
“‘These prices are getting pretty freaking nuts in my opinion,’ Thomas Davidoff with UBC’s Sauder School of Business tells Vancity Buzz. Davidoff says purchasing a lot for that much money is only beneficial to the buyer if they plan on developing it. Buying that Kitsilano lot for $4.2 million, in his opinion, doesn’t make much sense. ‘As a proposition for someone who’s going to live in that house and what you’re getting for four million plus – that is a ridiculous joke and that is not something that’s going to work for people who just make a living in Vancouver.’”
“Davidoff says it’s impossible to pinpoint where Vancouver’s housing market is heading next, but the risks are astronomical. ‘The uncertainty around Vancouver’s housing market is huge. I believe prices are going to keep on rocking, but at this point we’re at huge risk of a collapse too,’ he says.”
From Metro News. “With migration to Alberta slowing and hundreds of rental units set to hit the Edmonton market, 2016 could be a good year for tenants and a tough one for landlords. In the downtown alone, hundreds of purpose built rental units have or will come on stream in 2016 — the first large-scale build of such units in decades. And the units are coming available just as the market is cooling, with vacancy rates doubling over the course of 2015, landing at 4.2 per cent at the end of the year.”
“Jandip Deol, who specializes in multi-family construction projects with Colliers International, a real estate firm, said the towers about to open were commissioned at a time when the Alberta economy was demanding them. ‘It’s something they already committed to two or three years ago when the oil price was so strong and there was a plethora of people moving in,’ he said. ‘It’s really hard to pull back now.’”
From Global News. “Sign a lease to rent one Calgary home, and a big screen 55-inch LED TV is yours to keep. It’s a growing trend Alberta landlords are being forced to keep up with in order to lure tenants. Gifts and free rent are now commonplace in ads, after a dramatic shift in the rental market since oil prices dropped. ‘[In the past] you could throw an ad up with a high rent and get a bunch of calls right away,’ leasing agent Shawn Langille said. ‘You could pick your tenant and have them fight over a property.’”
“Online rental sites have seen their business spike, with a big jump in ads. ‘Roughly a 40 per cent increase from this time last year,’ RentFaster.ca’s Mark Hawkins said. ‘And then we’ve seen that price drop anywhere from 10 to 20 per cent.’”
“Experts say the next big hit to the market could come in the spring, when many leases typically come up for renewal. Plus, supply continues to increase as more Albertans are renting their homes out, as opposed to selling them at a loss. ‘Yeah, it’s bad,’ Langille said.”
The Star Phoenix. “Following a period of rapid expansion driven by high commodity prices, Saskatchewan’s economy deteriorated sharply in 2015. At the beginning of this year, it was deep in what University of Regina economics professor Jason Childs describes as the end of a commodities ’super cycle.’ ‘We’re seeing the backslide of a commodities cycle,’ Childs said. ‘All the prices were being inflated. Now all the air is being let out of the balloon and we have to shrink back down.’”
“‘We were overheating pretty good,’ the U of R economist said. ‘Housing prices were pretty scary. It was virtually impossible to find a good employee. We were seeing all of the hallmarks of an overheating economy.’”
The Regina Leader Post. “Once the province’s poster boy for economic growth, Estevan is now the canary in the coalmine, the first city to feel the full impact of the plunging price of oil. Nowhere in Saskatchewan has the slowdown in the economy — the transition from boom to bust — been more pronounced or rapid. Mayor Roy Ludwig, who served on council for 22 years and the last four years as mayor, says almost overnight the prevailing attitude has changed from buoyant optimism to hunkered down ’survival mode.’”
“‘There’s somewhat of a general malaise out there right now,’ said Ludwig in a recent interview. ‘The people who do have jobs feel very fortunate and they do feel sorry for the ones that don’t.’”
“Manpreet Sangha, the city’s economic development officer, knows that 75 building permits valued at just over $11 million were issued in the city of 13,000 in 2015. That’s down sharply from 157 permits valued at nearly $35 million in 2014. Even more dramatic was the decline in single-detached housing starts, from 72 in 2014 to only 18 in 2015. According to Canada Mortgage and Housing Corp., there were 91 multiple housing units started in 2014, compared with only four in 2015. Total housing starts in Estevan plummeted 87 per cent to 22 in 2015 from 163 in 2014.”
“After average prices on the multiple listing service increased from just under $250,000 in 2013 to about $263,000 in 2014, housing prices in 2015 slid back to 2013 average prices ($246,921). But higher priced homes have seen even larger prices decreases —$60,000 to $70,000 in some cases, Sangha said. ‘The average (vacancy rate) is 20 per cent (in April 2015), compared to an average of 5.5 per cent vacancy rate in April 2014,’ Sangha said.”
“While vacancy rates in apartments have climbed, occupancy rates in hotels have plunged during the past year. Occupancy rates, which used to exceed 90 per cent, have fallen to around 20 to 30 per cent. Like the explosion in rental housing units, the number of hotel rooms was expanding exponentially when the downturn hit the oilpatch. Two new hotels came on the market and another doubled its capacity in the last year or so, further exacerbating the falling occupancy rate. She said the city’s transient population — mainly young single males working in the oilpatch — have vacated the city. ‘Even full-time permanent workers have been laid off, so that’s another big thing that has happened in our economy.’”
