Royal bank warns of headwinds

[lcpp64]

Why no skin in the game in BC or Okanagan if you believe this “magic bullet”?

Also (this thread or another) I referenced “a silver bullet” which is a simple or seemingly magical solution to a complexed problem.

The “magic bullet” is what killed Kennedy.

No way I can afford to play RE here in BC. I couldn't afford a garden shed here.
I'm just saying that like vacancyrate said, Canadian RE will be protected at any cost because it is the economy now. Even RE in Sedalia AB (pop 7 or 8) is going up real fast. People are getting away from the larger cities fueling demand for RE in places like Sedalia AB.
The magic or silver bullet comes with a heavy price- get $$$ now to keep it hyper inflated( yes....I said inflated cuz it is) regardless of the true cost tomorrow. It's the Canadian way, and govts only way to stop the house of cards blowing over in the upcoming windstorm.

Oldtrucker, I am truly sorry to hear that (difficult for you to buy RE) & I can imagine your frustration logically thinking a RE dip should have happened after 2008 & waiting to buy.

Hyper Inflation, the Canadian RE Bubble Bursting, Crazy new Fed & Prov Laws shifting “things”, Wages, even BC Housing in this Province are all some of the items on my radar. These days I am hedging my bets. I am also probably paralyzed in analysis. I want to buy more, but honestly I am afraid of the bubble bursting and the short term loss. Oddly I also want to make a return of any investment (just funny that way). I am semi-retired now & need to play things a bit more conservative.

I know no risk no gain. It just doesn’t feel right just now. I will watch & see what is going on in the spring.

[DoDo1975]

Talking about Vancouver where many well to do Asians have decided to park their money in what WAS cheaper real estate.........not the run down areas of Toronto.

Vancouver has 2 million people. How many do you think are rich Asians?

The overwhelming majority of Vancouverites slog at work everyday like the rest of us smucks. Sure there are lots of rich Asians there but just like here their bubble is based on normal people borrowing more than they should.

[lcpp64]

Talking about Vancouver where many well to do Asians have decided to park their money in what WAS cheaper real estate.........not the run down areas of Toronto.

Vancouver has 2 million people. How many do you think are rich Asians?

The overwhelming majority of Vancouverites slog at work everyday like the rest of us smucks. Sure there are lots of rich Asians there but just like here their bubble is based on normal people borrowing more than they should.

This might shed some light on the rich Asians / Vancouver situation.

https://cullencommission.ca/files/Dirty ... Part_2.pdf

[DoDo1975]

yes, I am aware of that report. There was some shenanigans going on, but it doesn't change that its working class boneheads taking out as much money as the bank will lend them driving this bubble. A few rich Asians and some money laundering may have helped it get a little bigger, but they are just a scapegoat.

[lcpp64]

yes, I am aware of that report. There was some shenanigans going on, but it doesn't change that its working class boneless taking out as much money as the bank will lend them driving this bubble. A few rich Asians and some money laundering may have helped it get a little bigger, but they are just a scapegoat.

I hear ya & agree the debt addicted house lusty are the driving force especially in OK.

[t76turbo]

RE prices are detached from incomes already. Not based on real income jobs anymore especially in Vancouver with foreign money raising prices way out of line of job incomes. My point is even if there were job losses from covid economic fallout-RE prices aren't based on those jobs anyway in a lot of popular Canadian cities like Kelowna( big retirement/ tourism $$$) , Vancouver.

I’m of the same belief.
Kelowna and the Okanagan in general seem to shield itself pretty well from market “corrections”.
People keep moving here, driving demand.

Besides I think there’s lots of wealth here just waiting to scoop up more RE investment properties should they come across a “deal”.

Still I wonder tho, this covid thing and government overreach has got me a little perplexed.

[OKkayak]

A few rich Asians and some money laundering may have helped it get a little bigger, but they are just a scapegoat.

These few Rich Asians buy up entire neighbourhoods and houses sit empty, many of them don't even live here. The ones that just do rent out, they have their granddaughters take care of the properties.

[LANDM]

I agree that it will not disallow the cycles from happening, but it simply adds to one side of the supply and demand equation. That definitely has an effect of moderating the cycles. We have seen that in the Okanagan, since we have had a net inflow over time. Our cycles are more moderate in the downward pricing swings compared to some other areas.

Because Kelowna is different.

Every place is different. Not necessarily unique, but different.

If, by an attempt at sarcasm, you actually feel that real estate markets are homogeneous, then I disagree. And I would simply be correct while someone holding a countering view would be incorrect....to argue that is folly.

For example, the Kelowna and Vernon markets have always been different. They react slightly differently and have been valued differently. Slight differences but different nonetheless. Kelowna and Fort Macmurray have always has more pronounced differences in how and when they react in market cycles. Similarly with Vancouver, Trail, Summerland, and pretty well everywhere else in the world....even Bhumseks, Saskatchewan, the neighbouring community of the more raunchily named town that many refer to, is different.
So yeah, Kelowna is different, as are all other places. One just has to have a comfort level of watching markets to realize what the differences are.

[DoDo1975]

A few rich Asians and some money laundering may have helped it get a little bigger, but they are just a scapegoat.

These few Rich Asians buy up entire neighbourhoods and houses sit empty, many of them don't even live here. The ones that just do rent out, they have their granddaughters take care of the properties.

While there is some empty houses I am not aware of whole neighbourhoods. Can you back up this claim? There seems to be a lot of unsubstantiated rich asian claims floating around. What I do know is that there are tonnes of normal Vancouver people with giant mortgages they can't actually afford.

Every place is different. Not necessarily unique, but different.

This quote was a favourite of the best bubble blog known ever to mankind, Housing Panic. Sadly the blogger shut it down in 2008 when the blog premise was fulfilled.
It's different here is the mantra of every bubble ever. Obviously the housing bubble is everywhere in Canada, just worse in some places than others. But everywhere you go, people have a reason why it's not a bubble in their town and therefore fundamentals don't matter and it won't pop. Its what people tell themselves when their head is in the sand. It helps them believe prices are sustainable because something is unique to their area, even though the cause of the price increases are the same everywhere. Cheap money and poor lending practices. With so many years of gains people forget about risk and start eroding affordability because they think its a no lose situation and the more they borrow the more they win.

Its different here because rich asians, rich retirees, no more land blah blah blah. You pick the place and insert your reason why economics no longer applies in your town.

[W105]

this was a VERY common sign to see in Banks when Christy Clark was running the show here...all you needed was 35% down and NO income verification..doubt any of us had this option when we bought a home here in BC

[ckil]

Of course, removed Monetary policy effects Kelowna different than the rest of the country.

[AlienSoldier]

this was a VERY common sign to see in Banks when Christy Clark was running the show here...all you needed was 35% down and NO income verification..doubt any of us had this option when we bought a home here in BC

CIBC-Kills-Foreign-Income-Program-Makes-Buying-Canadian-Real-Estate-Harder-Student-Foreign-Buyer.jpg

35% down payment!?!? Those students are safer to lend to than most Canadians!

[ckil]

National Bank Of Canada Tells Investors They’re Preparing For Real Estate Price Drops

https://betterdwelling.com/

[Sparki55]

National Bank Of Canada Tells Investors They’re Preparing For Real Estate Price Drops

https://betterdwelling.com/

They are estimating a worst-case/ best-case price drop from 1.5% to 10%. Considering that homes recently went up in value again, any drop in value will be absorbed by the gains.

A 5% drop in home prices is hardly concerning knowing they will be climbing again soon.

[Sparki55]

Exactly. I'm thinking that if someone rich like Alan lent me a million, I'd not hesitate to buy a $850k RE 5-10% over asking-$900k knowing that in a few short years I'd sell for 1.2 mil and be able to pay out Alan with 100k interest plus put a 100k in my pocket.

That approach is extremely risky as real estate can take drastic short term losses. This approach should allow for a long term hold of the property to offset a short term loss. Long-term appreciation of property values is proven with multiple generations of data.