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Comment by hoodoof | Hacker News Reader

The only thing that counts is money...... keep selling. Sell it all. Sell sell sell.

Who gives a toss for community or society or cohesion. Sell everything.

As long as property sellers can take all that lovely cash and buy more and bigger homes then what else matters?

Ordinary middle class people and the young - make em rent! Why the sense of entitlement that people should be able to afford to buy a home, what are you a communist? Whose country do you think this is?

In fact put one giant price on the whole of Vancouver and sell it ALL in one big job lot.

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Not a bad idea...When the bubble pops buy it all back. Meanwhile, rent. That's equivalent to shorting the bubble.

Do you think the people buying these houses are so poorly off that they will sell when times get tough or do you think they incredibly rich and will laugh off market fluctuations?

Yes, they will sell. These people don't care about the price when they buy. They won't care about the price when they sell either.

The last time a property bubble in a developed economy fueled by Chinese speculators crashed, it crashed by 70%. [1]

People never see a property price crash coming.

Credit Suisse First Boston – 15 July 1997: [2]

We believe the supply demand imbalance will continue to drive residential prices during 4Q 1997 and into 1Q 1998. The two extremes will perform best; luxury residential prices should fare particularly well as we see flows of capital into the top end of this sector. Luxury property is also much less sensitive to affordability levels and much more geared to supply and price expectations. The smallest units (below 40 square metres) will also fare well as there is very limited supply at this level, yet they are the most affordable private sector flats.

[1] http://www.macrobusiness.com.au/wp-content/uploads/2013/04/H...

[2] http://www.businessinsider.com/hong-kong-property-did-you-se...

The overheated property markets Vancouver & Sydney are fuelled by Chinese speculators. Why are they buying overseas when there's a perfectly sound economy right on their border, Hong Kong?

There's a property bubble in Hong Kong too, and it was getting expensive there, the Chinese went overseas to other well-off cities that are full of Chinese, Vancouver and Sydney. If Hong Kong was leading the price rise amongst the three cities, it might lead the price fall too.

At this very moment, Hong Kong's property prices are slumping:

http://www.bloomberg.com/news/articles/2016-02-01/hong-kong-...

One could argue, for all the many rich people buying in Vancouver who could shrug off market fluctuation, there are even more millionaires and billionaires in Hong Kong, which has the 4th highest billionaires per capita, who could shrug off even bigger market fluctuations. Yet it's property price is falling anyway.

One third of property buyers in Vancouver are Chinese. How many percent Chinese do you think are buying the property in Hong Kong?

Wasn't the Vancouver property also fueled by some kind of citizenship granting process from purchasing property in excess of some price?

Not anymore as far as I know. And not for a few years.

The Fed investor immigration program was canned, but there's still a backdoor in Quebec letting in millionaire immigrants, as Quebec manages their own investor immigrant scheme.

Nearly all of these millionaire immigrants to Quebec move to BC.

http://www.scmp.com/comment/blogs/article/1929324/study-reve...

That is unfortunate. There's been a long history of provinces just screwing each other (Sask just recently put two homeless men on a bus to vancouver).I wonder why the federal govt doesnt have full jurisdiction on immigrant visas.

> People never see a property price crash coming.

Isn't this a bit like any statement. 'People who get hit by a car never saw it coming'. Or 'people diagnosed with cancer weeks before they died, never saw it coming'. Well sure, ignoring the people who did saw it coming, which are events we then ignore. i.e. there may have been various formations of bubbles, people saw it coming, adjusted their investments, and the bubble diminished.

Further, it's not like today, people don't realise there's a bubble in Vancouver. It's pretty much the opposite.

>> people don't realise there's a bubble in Vancouver.

Property price crash != property bubble.

Everyone knows there's a bubble in Vancouver. No one thinks the bubble is crashing next month or even this year.

You've got people on this very thread thinking Vancouver's people are selling their souls and never getting it back.

I think for a general statement, it's carries a lot more weight than the two examples you've given.

It's a general description of sentiment during a bubble, not a precise description of each person's state of mind. As a statement, I think it's fine as it is.

> the last time a property bubble in a developed economy fueled by Chinese speculators crashed, it crashed by 70%

FUN facts - IF the Vancouver housing market crashed by 70%

1] - A Vancouver detached house would still be valued at OVER the current Canadian national average selling price(2016-02) for detached homes of 503K

2] If you exclude Vancouver and Toronto sales out of the national housing sale, the average price of a home drops from 503K to 355k

SRC http://creastats.crea.ca/natl/index.htm

>People never see a property price crash coming.

People always see the property price crash coming. People know, intuitively, housing can't go up 20% or 50% or whatever every year. It's just that they think they can make money and get out before the crash happens. Let me put on my Carnac the Magnificent turban and tell you there's definitely a property price crash coming in Toronto and Vancouver. Guaranteed.

The problem is you have to know when it's coming to cash in, and I can't help you there. If I could I'd be buying up million dollar houses. These things last way, way longer than I expect.

They will sell, just like they sold when the Japanese bubble popped. This has happened before, playing out in almost the exact same way (except the bubble is bigger this time, and more cities are involved).

if the bubble pops it means people are selling.

It can be very difficult to find a place to rent in Vancouver.

Vancouver properties seem to be renting for around half the price of Sydney properties, where I live. [1] It seems relatively affordable to me. But then again, maybe I'm numb to it...

[1] https://vancouver.craigslist.ca/search/apa

Depends a fair bit on location. Many of the 'cheap' places there aren't actually in Vancouver, but a 45 min drive away in a neighbooring city/ suburb.

Part of the problem is much of the central property has been redeveloped, also increasing prices. Its tough to find place at <$800/bedroom or <$1000 for a studio in central Vancouver.

Since everyone thinks it's expensive, it is.

I would expect to pay $2200 for a central Sydney studio.

My apartment, 2 bedroom with study, half hour from the city, costs $2200 too.

I rent out the bedroom at $1050 and the study (size of 3 single beds tucked together) at $800 as a side venture.

Why rent to the riff-raff if you are so rich? It's such a hassle. The property values going up is enough of a return. Soon we will have an empty Vancouver that serves as a city sized trophy case for rich people.

I thought the bubble would of popped 9 years ago in 2007. It hasn't. Should I wait another decade for "bubble^2: faster, stronger" to not pop this time? Is the property value going up by about the canadian currency drop or more in the past 18 months a coincidence?

Did Vancouver or Canada recently experience a huge economic boom and increase it's residents income band to more than the Reno, NV levels than it currently is? Actually, the opposite is happening with alberta's oil industry currently imploding and every imported good going up %30 in price due to the property increase.

I moved away, like a lot of younger people, to somewhere somewhat more affordable, and I suggest anyone who is a software dev to do the same. The compensation delta is %100+.

What's that other somewhere? It can't be in Canada surely, because the only other tech hot spot I can think of is Toronto and it's not that much better here sadly. I don't know too much about Montreal.

Well ironically, even when alberta was in economic boom mode, it was more affordable to buy a house there than it was in vancouver. And it's still more affordable. Also montreal. The big RE bubble areas of canada are Toronto and Vancouver.

But for software devs, I definitely suggest the USA, either Seattle or even the SF Bay Area / NYC because the pay is so much more.

The problem is the bubble is being propped up by foreign investment. So much money is able to flow, and the buyers have no incentive to keep the prices down.

Renting isn't a short because you don't profit when the market goes down. And you are still out rent.

I think what was meant by the short was selling at current prices and holding the money, intending to buy back after a crash.

The correct stock/equity analogy of renting is that you don't own shares of XYZ; you do volunteer work for XYZ. You pay XYZ regular dividends instead of the other way around, you maintain the equipment of XYZ and so on.

It isn't but it is a hedge. You put that down payment in some other asset class (stocks?), pay about half of what a mortgage would be currently and then profit when the RE asset bubble pops and buy when it's cheaper. And while your waiting the stocks themselves will probably have a gain of some sort.

That's not shorting, in fact by renting you're financing the bubble. After all, valuation is done on the present value of future cash flows. Firms that earn a lot of money are thus valuable, as are firms that will grow into firms that make a lot of money. By renting, you're constructing that cash flow.

To pop the bubble you must not exercise any demand at all. And to short, you have to construct a financial scheme that benefits when the price goes down.

For example, you could 'borrow' a home, sell it at market price, then 10 years later when prices are much lower, buy it back, then give back the home to the person you lent it from. Or in fact, housing prices could rise, as long as they do not rise more than another guaranteed investment, it makes sense to short this stock and reinvest it into the other investment, and you'd still make money, interestingly, without having to need money in the first place. Of course in practice all of the above is tricky and risky, and so I appreciate that within the opportunity set of a normal citizen, renting is preferable to buying, but let's not call it the equivalent of shorting.

It depends on the rent price vs price to own. If renting is much cheaper, which it is in Vancouver unlike SF, then you are wrong. If the rent prices are equivalent to buying, like they are in the Bay Area, then you would be correct.

Renting and buying prices are equivalent in the Bay area? Not in Palo Alto or the few surrounding cities.

10 years ago or more, the rent prices were much lower than the price to buy a place so it made sense.

Now, it doesn't matter which you do, either buy or rent. They are both wrong, because both are sky-high.

When the Bay Area housing bubble collapses in the future, renting will get cheaper, and your mortgage will stay the same.

No it doesn't. If you're renting, you're financing someone else's ownership of the property. It doesn't matter if they own it outright, or if you're only paying 1/10th of their mortgage. It only matters in degrees.

>No it doesn't. If you're renting, you're financing someone else's ownership of the property.

That's only true if your rent covers their payment, which tends to not be true in a bubble. Where I am, in the years leading up to 2008 there were more rentals available than the market could really support. People were buying houses and getting rents that only covered part of the payment because they were counting on capital appreciation to make them money. If you were a renter it was a great deal. For $1600 you could rent a house that would sell for $700k, which isn't even close to covering the payment.

After the bubble popped the price of housing went down dramatically, and the price of rentals went up dramatically as people stopped buying houses assuming they would appreciate forever.

Also, people who've never owned a house drastically underestimate the costs associated with owning one. I bought my house after the crash, for cash. My housing outlay (with no mortgage) is about 75% of what I paid in rent. And that's not counting maintenance, like painting and appliance repair, or major stuff like a new roof. If the bubble had never popped I would have come out far ahead just staying in the apartment and investing the savings.

"That's not shorting, in fact by renting you're financing the bubble."

You're not financing the bubble.. The bubble is based on valuations that assume much higher income than what you provide by renting at going market rates.

I agree on the latter part of your statement, but that bubble valuation is based on an incorrect multiple and momentum of housing income, both of which are partially created and sustained by demand, which renting is, which is why I disagree on the former part of your statement. Bubbles usually start with actual high returns that are valued fairly, which attracts investors and turns it into a disproportionately large self-fulfilling prophecy. To keep renting in Vancouver now thereby definitely does contribute to the bubble, even though of course it doesn't create the bubble all by itself. If you want to short it, or do something with similar intentions, like the person I was replying to suggested, then I wouldn't recommend renting like that person suggested.

To the extent that the valuation is inaccurate, it's not based on the housing income created and sustained by demand. It's a based on a projection of the growth in that housing income. I believe you're mis-blaming real demand for rental units the for the mistakes being made by real estate investors in projecting growth in housing income.

No. Someone suggested that, to pop a bubble, you must 'short' by renting. I explained that no, that's technically not shorting, and no, if shorting the market is not an opportunity to you, then renting will indeed contribute to sustaining a bubble more relative to getting out of exercising demand on the market completely (i.e., not buying or renting but relocating). Both of those statements of mine are completely correct, and none of them imply that renting in and of itself creates a bubble, which are the words you seem to be putting in my mouth.

>then renting will indeed contribute to sustaining a bubble more relative to getting out of exercising demand on the market completely

True. In relative terms, and in this context, you could say it 'contributes' to the bubble.

I still maintain that the concept of normal (organic, non-speculative) demand contributing to a bubble is generally wrong. I don't think it's accurate to say that any and all sources of support for the price are contributing to the bubble. This conceptual framework will mislead people about the cause of a bubble.

But in the context you're using it, it could be considered accurate.

PS. you don't need to get hostile. I was explaining how I interpreted your statement, not 'putting words in your mouth'.

Shorting the bubble would be more like:

1) Alice owns a property.

2) Bob borrows the property and gives Alice an 'IOU one house'.

3) Bob sells the property.

4) Market falls

5) Bob buys the property back, hands it back to Alice, and destroys the IOU.

In #2, as residential properties are not usually completely fungible, it would have to be an "IOU this exact house".

As a result, I think there would have to be something more like this:

1. Alice owns a property that she would like to keep, but will not be using for X months.

2. Alice's default course of action would be to lease it out for those X months and get rental income.

3. Bob offers an alternative: Alice sells to Bob, who promises to sell it back after X months at the same price, while also paying the expected rental income for X months, plus an additional cash incentive.

4. Bob signs a note promising to give back that exact house after paying Alice the rent-equivalent every month for X months, and an escrow agent secures the note by putting a lien on the property equal to its current value plus Y%.

5. Bob can now attempt to short, by selling to someone else for the current value, and putting up Y% in cash as margin, to clear the lien. Bob also has to insert a panic clause giving him the option to rescind the sale by paying the buyers that Y% before the X months elapse.

6a. If the market value drops, Bob re-buys the property and transfers it back to Alice as promised. The escrow agent returns Bob's margin and the difference in sale prices.

6b. If the market value rises less than Y%, Bob buys the property back and transfers it back to Alice. The escrow agent returns the remainder of Bob's margin.

6c. If the market value rises more than Y%, Bob is unable to repurchase the property with pre-secured funds, and Alice might be pissed. The escrow agent could hand over all the cash to Alice, but the property itself would be worth more than that. To avoid this, the escrow agent will activate the panic clause immediately, using the escrowed cash, whenever increase in value approaches a fixed fraction of Y%.

Note that if Bob does not sell the property, the terms of the note and security instrument make the deal indistinguishable from a lease. Note also that there is so much friction in the real property markets that it is just a hell of a lot easier to short shares in any public company that owns a lot of developed land.

They will keep the bubble going with the help of your tax payer money.

>>Ordinary middle class people and the young - make em rent!

Let me know the address of this secret cabal that meets every evening plotting misery and pain for the young and the middle class.

On a more serious note, this is just capitalism and free market economy playing out against you.

Also remember those days when people screamed real estate being a bad investment from the roof tops, while people belittled real estate investments and glorified stocks, a section of people have quietly invested in this area.

The fact of the matter is these opportunities were available for every one, but just like other things like in life like age, education, marriage, kids- time is a critical factor in these things. If you don't make the right moves at the right time blaming others hardly makes sense. People can't buy expensive homes for the same reasons, people with no education can't go back in age and do their schooling.

Investments are all about time, in fact I'm sure there are good house deals at the outskirts which many people are investing in. The young and middle class isn't buying them because they are too far/<regular excuses>. And yet when the prices go up after a few years and that too becomes expensive, same people will come up with the same complaints.

The same is now happening in Toronto. It's truly awful. So many great communities being destroyed by greed. Especially if you're someone who loves city life and does not want to move away.

CBC did a great piece on it: http://www.cbc.ca/doczone/episodes/the-condo-game

as a Canadian, your post is resonating with me...

We're selling our souls, in a very real way, to the highest bidder.

This ain't going to end well.

No, souls != property. People sell their property and get money for it. Generally they do sell to the highest bidder. There is no collective ownership. You have no stake in other people selling their own property. There is no "we". How does a hot RE market imply things arent going to end well? Fairly big jump. Toronto is the only other hot mkt in the vast country of canada. Calgary and other cities are seeing falling RE prices.

Great community spirit there, fella.

>Ordinary middle class people and the young - make em rent! Why the sense of entitlement that people should be able to afford to buy a home

Why indeed?

If there is a shortage of housing, why not build more houses?

Otherwise, if a person wants to exclusively use a piece of land, why shouldn't he have to outbid everybody else?

Unless of course an 'ordinary middle class' and 'the young' are somehow more valued than 'rich chinese people' and so should be given special privileges?

>In fact put one giant price on the whole of Vancouver and sell it ALL in one big job lot.

Well not everybody wants to sell obviously but if everybody does want to sell, why shouldn't they sell to 'rich chinese people'? Why should they not be paid the most for what is rightfully their property?

>> why not build more houses

Because the new houses built are intended to be bought buy people who have money at incredibly high prices.

This argument is the one the property developers put whenever citizens object to selling real estate overseas.

In effect "don't complain, just build us more houses to sell overseas! that will solve the problem"

> Because the new houses built are intended to be bought buy people who have money at incredibly high prices.

The demand is not infinite. If these new luxury houses actually do sell to the people who have the money to pay the incredibly high prices, what happens to the existing houses that were not purpose-built to sell to the rich? If the new houses satisfy even a part of the demand, prices on the existing houses have to drop.

If there is a demand for both high price housing and low price housing, there would be builders for both.

This is like saying "all the rich chinese are buying up all the expensive top end iphones and now all the poor people of the earth and the seas can not have smartphones for their enjoyment".

Again and again I see the same 'fixed size pie' argument when somebody argues for special privileges for the 'special class' that they conveniently belong to.

What about all the canadians who bought their house 4 years ago and now have their property price increased 200%? Nobody talks about those guys. You only hear the 'evil rich foreigner chinese taking up out houses' narrative. If you are a rich foreigner you are taking our houses and if you are poor then you are taking our jobs.

At the end of the day these narratives are just appeal to group-identity and nationalism. They are very thinly veiled attempt at enraging people to get more 'engagement' 'views' 'clicks' or whatever. And they are clearly working because people who are sensible otherwise start losing their minds.

Those who have seen their housing valuations triple still need to live somewhere. If they want to collect that profit (paper profits otherwise, with sometimes very real taxes), they must sell. They then have to buy a new place to live and surprise, that 200% profit disappears real fast when you have to pay 200%extra for a home...

> 'ordinary middle class' and 'the young' are somehow more valued than 'rich chinese people'

If the chinese people are of Chinese nationality then that is exactly true, from the perspective of the government of Canada.

> Well not everybody wants to sell obviously but if everybody does want to sell, why shouldn't they sell to 'rich chinese people'?

Because nurturing a foreign rentier class is not the best plan for retaining your sovereignty and keeping local people happy and wealthy?

Why does the perspective of the government of Canada matter?

Their perspective might as well be that canadian citizens are tax-cows to be milked until dry.

We should care about the people not the government.

I'm not the commenter, but I'm going to go out on a limb and say that in this context, "Government of Canada" did also mean "the people of Canada".

It's not as solid of a distinction outside the U.S. where there is so much anti-government "them vs. us" mentality (rightly or wrongly).

If I say "the Government of Canada wants to legalize marijuana", it's generally safe to assume that is the will of the people unless evidence is presented to the contrary.

Of course, the government can and does occasionally go against the will of the people but that's more the exception than the rule.

> Because nurturing a foreign rentier class is not the best plan for retaining your sovereignty and keeping local people happy and wealthy?

I'm an Eastern European living in a relatively big Eastern European city, and I'm now writing this from an apartment that I'm a renting from a very cool French guy, the owner, who is in his late 50s or so. At the height of the local real estate bubble (in 2007) the Norwegian sovereign wealth fund invested in buying 500 apartments in a local project, the investment flopped (I don't petty the Norwegians, though, that fund is huge). And I could go on and on with other examples of foreign-owned properties in the city where I'm living in.

Point is, this is capitalism. I'm paying rent to the French owner of my apartment with the money I'm gaining from my current American oversees employer, and there's nothing wrong with that. You guys cannot choose which aspects of capitalism you want to like and which not, i.e. you cannot be allowed to invest freely in other parts of the globe (like Canada is now allowed to do) and in turn not allow other nations to invest in Canada (like not allowing Chinese real estate investors to buy property in Canada). Because if you do that you're economic colonialists.

Most people are suggesting things like a non-occupied housing property tax, so people rent out unoccupied properties. And stronger money laundering enforcement so kleptocrats don't use housing as a bank account.

"You guys cannot choose which aspects of capitalism you want to like and which not..."

Every country chooses which aspects of capitalism they want, via regulation, taxes, social programs. Even the most laissez-faire county does. There is no pure capitalism, it doesn't exist.

>You guys cannot choose which aspects of capitalism you want to like

Yes they can, all countries do this. Minimum wage laws, environmental protection laws, progressive taxation etc... All designed to restrict elements of capitalism we don't like.

>You cannot be allowed to invest freely in other parts of the globe

Their are all kinds of property restrictions on foreigners in many many countries. Until 6 months ago foreigners couldn't buy property in China without first living there for a year.

If a country wants to restrict foreign property purchases that's their business. They don't owe anything to other countries who let their citizens buy property. The reason those other countries allow foreigners to buy properties is not altruistic, it's to attract investment. They would continue to allow Canadians to buy homes even if Canada completely shut their citizens out. But if Canadians started driving up local home prices to the point that they are causing problems, they would add restrictions.

> The reason those other countries allow foreigners to buy properties is not altruistic, it's to attract investment.

So Canada doesn't want FDI, got it. Well, good for them, it means they're self sufficient.

It's interesting because when the going was good, meaning when Canada was making tons of money out of selling their mineral riches to China, I didn't use to hear so many bad stuff about the Chinese. Now, when some of those Chinese people want to invest their money back into Canada somehow it's bad for the middle class Canadians. I'm missing something, because I can't make sense of all this, but I'm just a programmer.

The situation is much more complicated then you are making it out to be. For one, this investment in high end residential property only really benefits a select few elites, not the general population. Of course it does generate some taxes - the debate is whether this small benefit is worth it considering the long term picture.

You're using the word "investment" to make it sound like they are starting local businesses that create well-paying long term jobs, grow the economy, and contribute to the community. The truth is that these houses sit empty 11 months of the year (or more).

Lastly, guess where that profit is going to end up when they sell? Not in the Canadian economy like it would have if a purchased by a Canadian. So again, is this a net gain? It's hard to say, but don't over simplify it.

> Unless of course an 'ordinary middle class' and 'the young' are somehow more valued than 'rich chinese people' and so should be given special privileges?

Citizens should be granted privileges over non-citizens.

Yes. The simplest way to solve all this is that you need to have been resident for > x years, or a national to be able to buy property. But governments won't bring that in until the bubble bursts because it'd burst the bubble prematurely.

They have been building, a lot actually. Condo prices as a result have been staying pretty stable until recently as a result. They need to build large condos that can take families although, something in the range of 1300-2000 sq ft and 3-5 bedrooms. And can handle kids jumping up and down and screaming/crying like they always do. Vast majority of condos are 1 or 2 bedroom places.

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