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The Market Has Become A ‘Candy Store’ For Home Buyers Now

A report from the Daily Mail on Canada. “Flashbacks to college homes often bring up memories of tiny dorm rooms filled with bunk beds and cramped apartments falling apart at the seams. But many Vancouver college students are currently living in mansions for less than $1,000 a month thanks to the country’s new taxes on empty homes.”

“Chinese investors have been hit hard by both a foreign buyers’ tax and a municipal vacancy tax, and they’re turning to students for a solution. Isaiah Boodhoo, 22, is one of those students. oodhoo resides at The Castle, a nine-bedroom home shared by 14 students that is owned by an Afghani pop star. The stunning residence features glass chandeliers, a steam room, and a billiards table.”

“Boodhoo’s rent? Just $825 USD a month. ‘Honestly, I would stay here for as long as I could,’ he told Bloomberg. ‘$1,000 bucks for all this?'”

“And Boodhoo isn’t the only student getting lucky in Vancouver.  Vancouver realtor Steve Saretsky revealed that some $3million USD homes are renting for just $3,369 USD a month. Some prospective renters are even calling realtors with offers to help maintain or do gardening at a home in exchange for absolutely no rent at all.”

“It didn’t always used to be like this, of course. Just a few years ago, Vancouver was the most unaffordable city in North America. The housing market was then hit with a number of new taxes in 2016, which has driven prices down 17 percent in Canada’s richest neighborhood.”

“While the new market has been a renter’s dream, it’s been a nightmare for sellers. One Canadian-Chinese homeowner is trying to sell a mansion that could cost her more than $104,000 in annual taxes. But while the home is listed for $8,161,841 USD, it’s currently only getting offers for $4,642,515 USD.”

“But the market has become a ‘candy store’ for home buyers now, driving down prices to figures that just years ago would have been unimaginable. Robin Rickards, 64, recently purchased a home for almost $748,792 less than the asking price. In 2016, Brandon Chapman, 28, couldn’t even afford a one-bedroom condo. Now he’s looking at detached homes.”

“‘We haven’t closed on anything, but the market in my opinion is still trending down,’ Chapman said. ‘So why would I rush into buying something if I don’t need it this second?'”

From Asia One on Malaysia. “A man unhappy with the alleged sub-standard quality of his brand-new serviced apartment vented his frustration the only way he knew how – by taking a sledgehammer to the floor and spray paint to the furniture. In a video which has gone viral on social media, the man, believed to be Malaysian, first demonstrates the difficulty in opening and closing the bedroom and bathroom sliding doors.”

“The property in question appears to be the freehold Tropicana The Residences condominium located in the heart of Kuala Lumpur. With a can of red spray paint in hand, he shows his displeasure over the flooring defects by spray-painting on the marble tiles found to be cracked or chipped, while complaining, ‘You sold this to me at RM2 million?’ A check online showed a one-bedder 714 sq ft unit going for RM1.8 million (S$591,474).”

“Things took a more drastic turn in the video, where the man is seen wearing protective headgear and eyeglasses. urning his attention to a sidetable which appears to be detachable from the headboard, he noted: ‘Impeccable taste? This is an afterthought.'”

“‘You give me this kind of sofa,’ he says, before spray-painting over the couch. ‘You don’t even have a curtain rod, you call this a luxurious apartment,’ he vented, marking a red ‘X’ on the curtains. ‘This is definitely not acceptable to me.'”

“In the final few minutes of the video, the man rants: ‘Your ‘impeccable taste’, you want me to accept, I don’t accept… I don’t need you to pay me, I don’t like it,’ adding that he intends to use the trashed apartment as a ‘showflat’ for other potential buyers and owners.”

From The Guardian on Australia. “A Sydney real estate listing has drawn equal parts praise and ridicule for a custom-made two-minute video described as ‘so breathtakingly horrific that it borders on art.'”

“The lavish cinematic offering, for a four-bedroom house in Padstow, shows a couple dancing through the property, prowling across their kitchen benchtop, awkwardly swimming, and then settling into bed – all to a pounding dance music soundtrack.”

“The video, which was produced by a third party company, was removed and re-uploaded with a new backing song this morning, after it went viral. On Twitter, it was described as unnecessarily sexual, incredibly funny and ‘the most real estate agent video I have ever seen.'”

“‘Oh my: this is the perfect video for the late cycle phase of the Australian housing bubble’ https://m.realestate.com.au/property-house . Floorplan analysis also found that anybody using the toilet would have been visible from the kitchen, and vice versa. “

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This Post Has 43 Comments

  1. ‘You sold this to me at RM2 million?’ A check online showed a one-bedder 714 sq ft unit going for RM1.8 million (S$591,474)’

    I hear stamping your little feet helps.

      1. What happened to the “it’s simple supply and demand”?

        – Oh, please! That’s so 20th Century. 🙂 Central banks call the shots now. Unfortunately for everybody, they haven’t figured out what to do about the downside. 🙁 (insert foot stamping emoji here). 🙂

        1. “they haven’t figured out what to do about the down$ide”

          As a rock wall climber, eye will suggest that climbing DOWN is far more difficult than climbing UP.

      2. What happened to the “it’s simple supply and demand”?

        The DebtDonkeys and HousingHens have regressed into simply braying and clucking.

        1. “braying and clucking.”

          $peculation with financial intent$ of $pectacular gain$ is Free.to.all Americans … The fact the $tock$ & $helter.$hacks price$ always only increa$e in value, is a common.$ense well establi$hed truth.

  4. the Australian housing bubble

    LJ Hooker Real Estate. My brain read that JT Hooker. Close enough.

  5. Is $133 billion alot?

    Australia’s $133 billion property price slide rapidly becoming the worst in modern history
    BY BUSINESS REPORTER MICHAEL JANDA
    UPDATED TUE 19 MAR 2019, 7:15 PM AEDT
    The data shows Sydney is three-quarters of the way to an average downturn, but in half the average time.
    ABC NEWS: MICHAEL JANDA

    Australian property values fell $133.1 billion in the December quarter, with capital city home prices down an average of 2.4 per cent across the nation.

    Key points:Australian capital city home prices fell an average of 5.1pc over the past yearSydney (-7.8pc) and Melbourne (-6.4pc) led the annual residential property price fallsBIS Oxford Economics says the current price falls in Sydney and Melbourne are about twice as fast as historical averages

    Figures from the Bureau of Statistics show Sydney and Melbourne continued to lead the falls, with a 3.7 per cent and 2.4 per cent fall respectively.

    There were smaller quarterly falls in Brisbane (-1.1 per cent), Perth (-1 per cent), Darwin (-0.6 per cent) and Canberra (-0.2 per cent).

    Adelaide (0.1 per cent ) and Hobart (0.7 per cent) were the only two capital cities where prices rose in the final three months of last year.

    Hobart was the only city to record a large property price rise in 2018 (9.6 per cent), while Canberra and Adelaide home values edged higher.

    Every other capital fell, led by Sydney’s 7.8 per cent slump, with Melbourne not too far behind.

    “Investors were a key driver of price growth through their upturns and the fall in investor demand is now underpinning the decline in prices,” BIS Oxford Economics senior manager Angie Zigomanis said.

    “The weakness in prices and likely concerns about further falls will continue to play on purchaser sentiment through 2019, with further price falls in Sydney and Melbourne expected.”

    Sydney, Melbourne downturn ‘twice as fast as average’
    …

    1. “predict a rece$$ion by the summer of 2020,”

      Might be a good time to visit fellow American citizen/cousins in Puerto Rico!
      (Maybee electric scooter recharge stations will up & working bye then?)

  7. House prices falling across Canada
    By Troy Media on April 15, 2019
    Calgary and Edmonton hit hard, according to report from real estate association

    House prices are falling across the country, with significant declines in March in the Calgary and Edmonton regions.

    According to its regular monthly report, the Canadian Real Estate Association said the aggregate MLS benchmark price across Canada of $617,200 was down by 0.47 per cent year over year during the month. The report said the benchmark price last posted a year-over-year decline of similar magnitude in September 2009.

    The Calgary price fell by 4.95 per cent year over year to $409,400. The Edmonton price dropped by 4.39 per cent to $319,000.

    The association said home sales through Canadian MLS systems edged up 0.9 per cent in March following a sharp drop in February. But that still left activity near some of the lowest levels recorded in the last six years.

    Sales activity fell 4.6 per cent year over year to the weakest level for the month since 2013. It was also almost 12 per cent below the 10-year average for March.

    “It will be some time before policy measures announced in the recent federal budget designed to help first-time homebuyers take effect,” said Jason Stephen, CREA’s president. “In the meantime, many prospective homebuyers remain sidelined by the mortgage stress-test to varying degrees depending on where they are looking to buy.”
    …

    1. From the article:

      “For instance, one of the nice and convenient things that comes with an entire zip code being torn down and reconstructed is the number of porta-potties sprinkled throughout the neighborhood. Going for a long run or walking the dog and need to use the restroom?”

      I can totally relate to this. I love running in areas where there is lots of construction because if the urge hits, there is always a port-a-potty close by.

  10. Does the Human Population Bubble concern you? This question may seem off topic, but the post-WWII population Baby Boom may have set the demographic stage for the Great Housing Bubble, due to a prolonged period of rapid worldwide increase in the demand for shelter.

    Similarly, Baby Boom die-off will likely play a pivotal role in its demise, as Baby Boomer households abandon their nests to join assisted living communities.

      1. https://www.theatlantic.com/magazine/archive/2019/05/the-trouble-with-dentistry/586039/

        Another link next to your geological era link. I fired my old Dentist he was always tiring to sell crowns and whatnot. I also found out owns a 3 million dollar house in Calabasas. New Dentist lives in a normal house in Valencia and is way better, more honest. And half the price, a longer drive but that’s OK.
        Completely disagreed I need crowns so glad I didn’t get them. Pisses me off though doctors trying to sell possibly dangerous surgeries for profit. These bad doctors as worse than Realtors.

        1. “Pisses me off though doctors trying to sell possibly dangerous surgeries for profit.”
          You never had TMJ.

    2. ETF Daily News
      The housing industry is at risk to face a perfect storm
      March 25, 2019 12:20pm
      …
      We believe the housing industry is at risk to face a perfect storm.

      1. The rate of household formation remains consistently below its long-term trend of 1.2 million a year. Several factors account for this. The U.S. birthrate has been declining for years and presently stands at a 30-year low. The number of births in 2017 (latest available) slipped to 3.85 million, the lowest since 1987. One consequence of fewer newborns is that it reduces the demand for single-family homes.

      A second factor … The number of immigrants receiving green cards fell 5% in 2017 (to 1.127 million) from the year before. … Keep in mind that immigration has historically contributed more than 50% of this country’s population growth.
      …

      2. With baby boomers retiring at a rate of 10,000 a day, one would look to the millennial generation as the next wave of demand for homeownership. But many in this cohort are incapable of making such a financial commitment. They are burdened with a record $1.6 trillion in college debt. And “serious delinquencies” (those at least 90 days overdue or in default) of student debt topped a record $166 billion in the final quarter of 2018.

      Millennials are also skeptical about the future solvency of Social Security and Medicare and so feel added pressure to save more of their income for retirement, rather than for a down payment to buy a house or condo.

      More difficult to measure is the psychological impact the Great Recession (2008-2009) had on millennials. They witnessed many of their friends and families lose homes or declare bankruptcy, and watched how the steep economic downturn eviscerated the long held dogma that real-estate values can forever defy gravity.

      3. The 2017 Tax Act also increases the after-tax cost of homeownership, especially in regions of the country where residents face high state and local taxes. Prospective home buyers have since recalculated the cost of homeownership versus renting.

      4. With household debt reaching an all-time high of $13.5 trillion and interest rates rising the last three years, lenders have also turned more cautious about granting credit to households, according to the Federal Reserve’s Senior Loan Officer Survey on Banking.

      5. The average low rate of 4.50% last year on a 30-year conventional mortgage was not enough of a catalyst to spur much home buying, especially for existing units. With the Fed now declaring a pause on further hikes in short-term rates, mortgage rates have dropped to 4.34% this week, which is the lowest in a year. That rate will certainly drop further in the next few days now that Treasury yields (TMUBMUSD10Y, -0.40%) have plummeted to a 14-year low Friday morning, and this could entice more prospective home buyers to get off the fence and act.

      But there are two offsets to consider. If the economy is markedly weakening, as the Fed’s downward revisions to growth show, Americans may instead choose to back away from such a major purchase until they feel more confident the U.S. is not heading into recession. That is especially the case now that 3-month-to-10-year Treasury yield curve inverted.

      Secondly, we believe the current low mortgage rate is just not sustainable. Borrowing rates to purchase a home are closely tied to the 10-year Treasury yield. We’re projecting the T-note yield will climb about 100 basis points over the next year and a half.
      …

      1. Socialism and related income inequality are the primary drivers here. Birth rates go down under Socialism. Root cause of many ills. Central banks + GSEs = centrally planned, command economy. Dollar debasement/inflation primary tool. The Fed is not your friend. This is all very predictable, but still sad…

        1. Birth rates go down as a country industrializes and goes through the population shift. Birth rates go down when country moves from an agrarian model to an industrial one to a services one. Birth rates go down due to birth control and also when women become more educated because they want to stay in the labor force. Birth rates have very little to do with socialism.

      2. We Knew Millennials Were Drowning in Debt. Now We Have Ugly Details.
        Updated April 18, 2019 at 10:20 a.m. ET
        By Reshma Kapadia

        When did you feel like an adult? For past generations, the first full-time job, first home or maybe the first child heralded adulthood. But 75% of today’s young adults equate adulthood with financial independence, capturing the challenges this mix of millennials and Gen Z face as they try to wean themselves from their parents’ support.

        It is one of the findings of a survey released Thursday by Bank of America Merrill Lynch/Age Wave, which defines young adults as a group of 75 million people composed mostly of millennials, but also includes the older portion of Gen Z, born after 1995.

        Drowning in debt

        If there is one common trait among this cohort it is the unprecedented level of student and credit-card debt hanging over them. Nearly 80% of early-adult households have some sort of debt, with those 18 to 34 years old holding a total of about $2 trillion in debt. That debt impinges on their ability to save for retirement or even allow them to just get by without some assistance from their parents.
        …

        1. “When did you feel like an adult?”

          Once eye had to buy ga$oline for my Studebaker pickup truck that had a 460 cubic inch Cadillac engine.
          It was in the early 70’s … there were no “credit card$”.

      3. With baby boomers retiring at a rate of 10,000 a day, one would look to the millennial generation as the next wave of demand for homeownership. But many in this cohort are incapable of making such a financial commitment.

        …at today’s prices. Ahem.

        1. Exactly. Just a matter of time before there are too many chairs in the game of musical chairs and not enough buyers. Demographics will throw this crazy housing bubble into reverse even if the Fed doesn’t normalize interest rates.

    3. Check out the date on this failed economic prediction…lmao

      The Baby Boom, The Baby Bust, and the Housing Market
      N. Gregory Mankiw, David N. Weil
      NBER Working Paper No. 2794 (Also Reprint No. r1357)
      Issued in December 1988
      NBER Program(s):Economic Fluctuations and Growth

      This paper examines the impact of major demographic changes on the housing market in the United States. The entry of the Baby Boom generation into its house-buying years is found to be the major cause of the increase in real housing prices in the l97Os. Since the Baby Bust generation is now entering its house-buying years, housing demand will grow more slowly in the 1990s than in any time in the past forty years. If the historical relation between housing demand and housing prices continues into the future, real housing prices will fall substantially over the next two decades.
      …

      1. 2019 – 1988 = 31. Perhaps they weren’t wrong, but rather three decades early, on their prediction for a Boomer-led housing decline.

        1. Reminds me of the movie The Big Short. Michael Burry wasn’t wrong, just early. The market can stay irrational longer than many people realize.

      2. ” real hou$ing price$ will fall sub$tantially over the next two decade$”

        Eye reckon having women/significant partner enter the work/career force had zero impact on income$ & fund$ available for hou$ing.$helter purchaser$ & price$ …

    4. The economic $now ball that started in the 1970’$ was the merger of x2 income$ to exploit as a means to price the $helter$.as.a$$et/commoditie$ (imhto)

  11. Not just Vancover. We might be relocating back to Toronto

    Very nice, newer $990K condos downtown Toronto are renting for $3500. There is no way that that they are covering their cost – condo fees, property tax, and mortgage interest.

    What a mess

    1. Investors stamping their little feet. The IPO did what it was intended to do: VC handoff to bagholders.

      1. But that realtor troll from a couple weeks ago assured me that Lyft was going to make me rich. Wonder if I can sue him 🤔

    1. Cheap Rental

      Same thing happened in Florida during the last bust
      You could rent a place for much less than carrying costs.
      Although I do remember a few friends complaining about deferred maintenance.

    1. “Tip 1: Re-read the S-1”

      That’s funny. The author assumes that average retail investors know what an S-1 is and have already read it. They clearly don’t and haven’t if they’re trading the wrong Zoom stock.

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