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Comment by sandworm | Hacker News Reader

I know where it's going. My neighbourhood in Vancouver BC is covered in "for sale" signs. There are minivans full of Chinese investors paroling the sidestreets looking for houses.

The downside is that, by my count, more than half of the houses are vacant or under construction. I smell bubble.

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>I smell bubble.

Canada is one of the last-men-standing as far as housing bubbles. Toronto is also bad. Calgary is heading for trouble now that oil has crashed. It could get interesting.

Australia and Canada are very similar. Both continued with a housing bubble well after all other Western markets collapsed. Both also supplied the raw materials that fuel China's economy; an economy that didn't slow down very much while the rest of the West suffered. But now they're clearly takings some of the heat out of their economy. Australia and Canada will feel that.

Or maybe as China slows more Chinese people will flee China, pushing yet more money into the can/au housing markets.

The Chinese people I talk to in my neighbourhood all talk of Canada and Australia as more "stable" than the UK, China or the US. I'm not surprised. If all you have to go on are news reports, the US and UK don't come off well.

but just when will this bubble burst and are there any metrics or signs we can find that have suggested the bursting of subprime mortgage debts in 2008?

China's bubble has already burst. Their real estate market will continue to fall indefinitely. Their record debt accumulation will continue until they burst at the seams, while they try to keep the fake growth going.

Australia will trend down with China's weakening demand for resources. They're directly pegged to China's well being.

Canada will trend down (or up) with oil. If oil is $30-$60, Canada will have to tighten their belts. If oil is $60 to $100, all will be well, mostly.

That said, Canada's ability to binge on debt is likely nearing an end (including mortgage debt). Their household debt has continued to soar post great recession. Given where it's at now, there isn't likely a lot of runway left. 1-3 years tops. As the debt binge ends, the housing market will lose a lot of support. The only question will be whether it'll be an orderly decline, or a crash; and I think that will depend on how much higher that household debt level goes over the next ~36 months.

http://www.theglobeandmail.com/globe-investor/personal-finan...

The Canada vs US household debt chart paints the picture rather starkly:

http://i.imgur.com/HCp5Gs1.png

How is the US faring? Are we as linked to China's bubble?

The typical vancouverite response (annoying) is

"oh but our prices will never fall, we live on the best god damn city in the planet, just look at all this foreign demand for our real estate, we are in a bubble you say, you eggheads have been crying about it for the past 15 years and look it hasn't happened so it never will, this time it's different"

"this time it's different" - japanese real estate bubble.

"we are in a new economy" - dot com bubble

"samsung now makes cars" - asian financial crisis

"these people will pay us back" - subprime mortgage crisis

"oil will never fall" - oil drop

"bitcoin is gonna keep going up" - 2013

Yup. This is why we moved away. When you go to an open house and every single person there except you is speaking only Mandarin, including the agents, then you know your time is done.

No one seriously says prices will never fall. People are just get tired of aimless remarks. You can repetitively tell a person he will eventually die, one day - but does that make any sense?

And how's the weather where you are?

I took my dog to the dog beach this morning. Sunny and 12* ABOVE. We had one day of snow this year. And the "wet coast" is really a myth. Seattle gets rain, but Vancouver is tucked behind Vancouver Island and is much drier.

In all seriousness, the real estate market is driven by people with money, the investor class. They are older and do not necessarily work, or they work internationally and can park their families anywhere they want. So Vancouver, being Canadian but without Canadian winters, is something different. I think Toronto will burst long before Vancouver.

Old data. I don't want to start a climate change debate, but since the rain of 90s Vancouver is very different. Extremely dry summers are now the norm.

http://globalnews.ca/news/754673/july-2013-the-all-time-drie...

Take a look at these images from January and December of last year. It is very hard to believe canada can be like this in winter. (I just grabbed a couple from my phone).

http://i.imgur.com/Kv9y42n.jpg http://i.imgur.com/4bTEfbr.jpg

"And the "wet coast" is really a myth. Seattle gets rain, but Vancouver is tucked behind Vancouver Island and is much drier."

This is just blatantly false, and easy to check. Vancouver average annual rainfall is around 45 inches. http://en.wikipedia.org/wiki/Seattle#Climate Seattle average annual rainfall is around 37 inches. http://en.wikipedia.org/wiki/Seattle#Climate Vancouver also gets more snow. I guess Seattle is "tucked in" behind the Olympic Peninsula better than Vancouver is behind Vancouver Island.

> And the "wet coast" is really a myth.

Nice try but Vancouver really is wet and miserable most days in winter. I know because I lived there for 5 years. Sure winter is more bearable than Halifax or St John's but that's not saying much.

Now I live in Melbourne and just laugh and point to the banana tree in my backyard when people complain about winter here.

if we're going with the Chinese investors are inflating real estate prices theory - most Chinese people would probably find the cold winters in the rest of Canada a deal breaker, whereas the rain in Vancouver is a mild inconvenience. If you don't want to go to the US, Vancouver Canada and Australia are at the top of the list - Vancouver doubly so because of the large native Chinese population.

Personally I think the foreign investment segment in the Vancouver real estate market is a bit over-reported. A large part of the demand here comes from East-Asian immigrants (30% of the population) who will buy a home despite renting being a better fiscal option. This is reflected in the gap between ownership and rental prices.

If you're referring to a housing bubble, keep an eye on real estate stats, but not the ones the real estate folks release (because they always put it in the best light).

In Canada, units for sales have already tripled in Calgary, while actual sales have decreased. Housing prices have dropped 5%.

It might be the start or it might take longer, but it will happen.

US subprime mortgage defaults were just the trigger for the 2008 global financial crisis. Most subsequent mortgage defaults in the US (and Ireland, Portugal, Spain etc.) were for prime mortgages.

My guess is that the Saudi oil price war, Chinese credit defaults and turmoil in the Eurozone will trigger an even bigger global financial in 2015.

FWIW I currently live in Melbourne, Australia, but lived in southern California when the US housing bubble burst. I see lots of parallels in Australia, but if anything the housing bubble in Australia is even bigger due to idiotic policies like negative gearing and interest only investor mortgages.

The Chinese could bleed $100B/yr into the west coast of North America for years and not blink.

That's cash, not derivatives, in those minivans. They're settling here, unless you think they're going to fall in love with Detroit or Wichita.

This is the new normal.

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