i don't disagree with China being a portion of our current situation, but its not like we, a country of 3x million ppl will suddently let in millions of chinese immigrants, we just don't have an infrastructure to even increase by 50% over 5 years (3 million a year) - and at that, the chinese immigrants coming to canada aren't all going to BC, not by a long shot, MANY go to Toronto & surrounding areas, Calgary, etc. as many don't want to live in Vancouver as its too expensive (only a small portion of immigrants who come here come here not to work)

also i've heard a couple ppl say "the chinese are buying, they're all chinese in my building, no english speaking at that" -probably because they live in richmond (fact) - couple things about this 1) i live in yaletown, my building is a mix of caucasian, chinese, some brown people, some green people, some grey people - a fair reflection of hte population in vnacouver 2) the building across from mine appears similar (yes i can see into their condos, ppl shoudl really learn to put blinds down at night) 3) people see what they want to see, if they think 'the chinese are coming', they'll notice more chinese people, i'm sure anyone with a psych degree can back that up with some BS reasoning, and 4) those chinese people don't need to speak english (a HUGE fault of this city), doesn't mean they're not canadian citizens, just as much as i am, tax paying, hard working (maybe, maybe not), mortgage paying, soon to be negative equity crackers

US isn't Canada, having said that mortgage rates in the US have been increasing last couple of weeks (go look at the rates now, its true), 'rates' i.e. the overnight rates don't need to go up for mortgage rates to go up, mortgage rates are basically based on long term bond yields, as appetite for long term (20, 30 year) treasury bonds dries up (which it is starting to do so now, i've been a teasuries bear for a couple months - i'm early to the party, but we're starting to see traction on this now), yields go up, and accordingly mortgage rates go up, simple economics. clearly if the fed comes out and increases the overnight rates, that causes bond yields to rise, but its not a 1:1 relationship.

Equally, if the US economy conitunies to recover & (more importantly) inflation starts to become a problem, they will need to cool off inflation, while attempting to maintain the growth, one tool to do that is to increase rates to decrease ease of funds, which will decrease upward pressures on things like oil (probably the biggest aspect of basket inflation).

Fed decisions change like underwear - as soon as something 'new' comes up, they'll have a policy to 'deal' with it - these 'long term' low rates are great and all, but are not sustainable in the long term, and they will be forgotten about soon enough - our fears at this time are stagflation - we have inflation, no question about it ($100+ barrel of oil does that to you) - not a problem if we have growth - canada has anemic (sp) growth, which is another concern to this housing bubble

Totally agree, realtors, and workers at land titles offices (where they see the contracts) notice that there are many chinese buyers.

I think we should lump in the China category into the FOREIGN MONEY category.

And I think that's how we should define these foreign investors or "mainland" chinese buyers.

China has hundred of millionaires and most of them feel Vancouver is a safe place to put there money.

The thing that bugs me most is that many of them abuse our education and healthcare system. A lot of the students here apply for permanent residence, then they no longer have to pay international student rates, then there parents buy them a nice place to live.

But I do agree that if interest rates rise people are fucked. Many of the people here make little money, all the jobs that are left are poorly paid.

Seriously, look at all the types of jobs here in Vancouver, it's saturated with too many scholar graduates (arts/business/ accounting/science) due to the gazillion of Asian kids in university etc and not enough skill-trades graduates that are in short supply.

Vancouver has one of the highest CA / CFA per capita, accountants, analysts, office workers, teachers, etc are paid less than their counterparts in other parts of the country because theres TOO MUCH SUPPLY of these type workers and not enough demand.

All the trades people in vancouver that make $80K a year cant really afford a Single Family House and are forced to live in small condos. So they move to other provinces, leaving no one really to service the wealthy people. whats left is workers that are dont make enough to support the lifestyles. In essence quality of life for these people go down, the poor people pay a large % of their income to taxes, tolls, gas taxes, cardon taxes, HST, etc etc. and commute from suburbs. they have no RSPs, . .. i'm rambling on, but basically. .. . . . theres going to be HUGE problems in the future. . . .

Inflation is manipulated by the government cause they always change the definition of "CORE" inflation. which I think is BS, if u include the shiet people actually use, inflation i think is a lot higher than what is actually reported.

Another "magical" marketing campaign by Rennie thus far. The claims of the building being sold out is false, since there are still brokers advertising that they have units for sale. In fact, drive by the signs out by the project, still no "SOLD OUT" stickers on it. Every other project he's marketed for has always put out the stickers when it's actually done pre-sales.

He's used the media to help drum up business for his future Canada/Evergreen Line projects. If you want, get ready to "line-up" at the Brighouse Station project opening next month...300 units, if you are insane that is.

And the assignment selling of the Marine Gateway presale has already started on Craigslist :high:
SOLD OUT - LAST CHANCE TO OWN @ MARINE GATEWAY if you missed out

^I'm starting to think Bob Rennie is the slimiest guy in the city

Thank you!

First, excellent post on the subject, as per usual.

I have never understood fully what makes Vancouver tick. No retail level activity is going to drive the local economy-so all the lawyers and doctors and the 50,000 people that work at the local 30,000 starbucks aren't doing it.

We have construction, some head offices as you said, we have 'some' manufacturing and then what? I think the main thing is building condos and developments actually creates money, and its maintained through retail passing of the buck.

I don't have as much experience as those that work in the field, but here is my little equation that doesn't add up:

High real estate costs
+
No real salary increases
+
No real economic drivers for economy
+
People devoting more of their monthly wage to housing than elsewhere
=one prime location for a drop in real estate prices

Yeah, people have been calling it for years. So what stops it from happening.

These guys that line up and buy out a not-so-hot building in 4 hours. Sure, there is a foreign money component, but I agree that its an influence, but not a driver of our local market. Maybe it is purely, that people will spend redonc money on a small apartment to live here, because we can all do the math. Dino and I do it all the time. Let's move:

Calgary/Edmonton-sure. Nice change. Good economy. Gets a little chilly, yeah?
Toronto-Big. Also cold. Enjoy your commute. Oh, and if you don't like BC politics, you are going to love Ontario.
Halifax-been there, done that. Sure, some nice real estate for a comparative bargain, but good luck finding work...oh, and not getting bored.

So...no one fills boxes.

apparently one guy bought 40 units

Find it hard to believe when the developer limited one unit per person / per purchaser.

Even if he/she had the whole family + friends line up the unit would be sold to the different named individual.

Also at a lower end spectrum of 300K a pop that would be 12 million in committed contractual obligations in 3 years with 1.2 million due today.

Not a very wise use of capital

I found this blog on one of the real estate forums and it makes you wonder. It basially says there were 106 people in line when the sale started. 106 people can't buy 415 units :suspicious:

Whispers from the Edge of the Rainforest: What's wrong with this picture?

Excellent find!

Just to add my $0.02, developers who work with marketing companies usually have more than one "opening", some call them "soft opening", followed by "grand opening". Marketing company usually has a list of clients who are ready to pull the trigger and they get first dibs. Insiders get their units first.

Nvm, your right. This was at a different tower in Vancouver that isn't built yet either, buyer is a Chinese government official (he probably just wants to park his $ somewhere). In general though, not everyone plays by the same rules, only regular people have to line up. If I wanted to buy 40 units, I would go directly to the developer. They would be stupid not to take guaranteed sales.

People that were involved with marine gateway also had first dibs as my mom's client was asking her why their daughter's friend was getting access and why she as their real estate agent wasn't taking them to do so on the same day.

We aren't surprised by this, are we?

Why do you think Rennie gets hired? Because he has a graphic designer that makes really good brochures? What do you think Rennie Marketing Systems actually does?

He brings people to the development that have money and want to buy, thus hyping demand, thus getting a bunch of people together to stand in line to buy his shit.

And for that, he takes a slice off something and calls it a day.

You call that sleazy...I call it fucking genius.

With that mindset, you'll never get a development that has high interest since everyone else is willing to buy it. Also, not everyone buys units to live in themselves, which is probably the case here at Marine Gateway largely investor-driven. Usually, these units will rise 5% by the time their done construction. My own case, bought a presale 2 years ago and already made 40-50k on my valuation.

Also they always ask if you're working with an agent. If so then you wait till the public sale. If not then they will have one of their in house agents to double end the deal and let you buy before the public sale.

Then you have the flip side of when the first downturn in 08 when people walked away from their presale contracts because they would have lost so much on it. The developers in turn sued them for walking away from their deposits.

I'm starting to notice a lot of large developments going up and this is just from riding the Expo line. When these all complete in 2 years time, there's going to be a huge supply on the market as most people holding presales are in it for investments.

edited: read your statement wrong initially. I believe the developer gets the double commission since their sales people are on salary.

Telus Garden in Downtown Vancouver
 

Anyone bother to check out Telus Garden in Downtown Vancouver?

Interesting project there!

Was planning too but all the 1 bedroom units were already sold to Telus employees. All that was left were 2 bedrooms unit priced at $660k and up. And last I've heard those units were sold too leaving units $900k and up left. Too rich for me

TELUS Garden Exclusive Sneak Peek! Downtown Vancouver New Condo Development | Hello Vancity

Price range:
Home Type Floors Size Range Price Range
1 Bedroom + flex 6-38 467 – 569 sq ft $279,900 – $500,000’s
2 Bedroom + flex 7-21 696 – 774 sq ft $469,900 – $700,000+
2 Bedroom + flex 7-48 802 – 1,131 sq ft $539,900 – $1,000,000+
3 Bedroom + flex 23-48 1,132 – 1,355 sq ft $829,900 – $1,500,000+
Signature Suites 49-50 1,161 – 1,668 sq ft $1,300,000 – $2,000,000+

Deposit Structure

25% total deposit
$20,000 bank draft payable to “Kornfeld Mackoff Silber LLP in trust” at writing Balance of 10% on 8th day after contract writing
3 additional deposits of 5%

Strata Fees

Approximately $0.48/square foot
Strata fees include TELUS Optik TV, TELUS Optik Internet, and 24 Hour Concierge

The one guy who "bought" 30-40 suites was actually a realtor who had a few clients that purchased as VIPS (from what I've heard anyways). Usually VIPS and VIP realtors get to write prior to the public hence when the day comes for the public launch...the building is considered sold out because there is maybe about half left over and the developer had probably already been selling for probably..3-4 weeks? Typical practice with most developers.


Telus Garden ended up being a complete bust for outside Buyers because 38,000 Telus employees got at it first. But then again, it's also typical practice for friends/family/insiders of a company to have a go at it first anyways. Prices are quite high for the size and amount of suites left over IMO. I wouldn't urge my clients to buy there now as it isn't worth the price.

And I can't speak for any of you..but in my opinion..Bob Rennie is far from being a slimey dude. From a business perspective and a personal one...He's good at what he does..which is marketing. Why else do you think there's no one else that can do it like him? Altough I will say George Wong from Magnum is REALLY stepping up his game.

Most developers only pay with a commission structure..long gone are the days of salary ontop of commission for inhouse sales people.

I don't mean to be a Debbie Downer, but that valuation means nothing - it's just paper wealth. The market value on my condo has risen well over 100K, but there are over 20 units for sale in my development. Unless you can liquidate that 50K, it's nothing (unless you're leveraging that equity for other investments with returns beyond your borrowing costs.)

Looking at the factors, its easy to see why prices have gone up for the last TEN years now. (except 2008).

Reasons that support the current prices:

+ China has millions of people who are trying to buy places in Canada.
+ Historically low interest rates.
+ easy financing/lending requirements ( CMHC, low down payments, long amortizations)
+ Many locals speculating.
+ lack of supply
+ most immigrants that come to canada end up living in big cities, even though they initially entered through quebec, manitoba etc. which increases the population
+ relaxed real estate investment laws/ no limits restrictions / minimal foreign real estate taxes compared to other countries
+ the old retired people that sold their house for $1 million + downsized and look to live in condos/townhomes (more demand)
+ many people on sideline waiting for home prices to drop to buy


However its also easy to make a case for prices to start coming down:

- interest rates rising
- people already maxed in debt
- no real sustainable long term economy

The main factor being interest rates, but how likely is it that interest rates will rise to historic norms?