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Baby, we got a bubble!?

CN Tower said:
DS, careful- your ignorance is showing. Just because something doesn't make sense to you or your personal investment (or capital retention) goals does not negate it's value to someone else with different objectives.
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Explain to me how it makes sense to have a condo sitting vacant when you could rent it for $1,500/month?

Essentially I am asking you does it make more sense to earn $0/month or $1,500/month?
 
DearSummer said:
Source?
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Dunno about Toronto but there was a Vancouver study in 2009 based on 2007 BC Hydro data that looked at a sampling of condos. Condos were defined as empty if power usage was less than 75 kWhr in a month. The results were that 5.5% of Vancouver condos were empty but in the Coal Harbour neighbourhood it was as high as a 23%.

However this includes stuff like condos between tenants as well as seasonal dwellers. Undoubtedly there are some units that are owned by owners that never intend to rent them out but as mentioned in my other post I would think that those would be the minority of the "empty" condos. I do know for example that Coal Harbour is popular for seasonal dwellers or for condos as secondary homes. Chinese businessmen including Canadian citizens often buy there but spend 6 months a year in China. For those 6 months the condos sit empty.
 
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The Fords speak of having six condos in Florida. Unless they are used in some manner by people we're not aware of, they would be vacant most of the year. Same situation probably happens here, although this is less a vacation destination.

We might instinctively feel that more units being built should open up supply and filter down to make housing more affordable for everyone. But it doesn't feel that way on the ground. Housing demand appears surprisingly elastic. Like traffic. Around the boom and bust of 2008 in the States houses were built, occupied then abandoned without much sense of where the people came from and where they went. Like then, if distortions and excesses are happening in this market they won't be apparent to most of us until the post-mortem. But we might see hints in the basement of Aura or the investor revolt at Trump. My concern is that the recent construction is a bit of a monoculture, targeted for sales and marketing to either investors or childless professionals. Options may have increased for some people, and it's a great thing that more people are living downtown. But the city could once house lower class workers, families, artists, young people looking for opportunities and adventure. Despite all the construction, it doesn't seem as open today.
 
IMO, the Trump condo revolt is because it's a horrible project, and because people bought into hype into a building specifically marketed as a rental investment tool. It's quite different from the usual residential condo project.
 
GREATER TORONTO REALTORS® REPORT JULY RESALE HOUSING MARKET FIGURES
TORONTO, August 7, 2014 – Toronto Real Estate Board President Paul Etherington reported
strong year-over-year growth for July 2014 sales and the average selling price. Sales reported
by TREB Members through the TorontoMLS system were up by 10 per cent to 9,198. This was
the second-best July sales result on record.
“The second half of 2014 started where the first half left off, with very strong demand for the
diversity of affordable home ownership options in the Greater Toronto Area. Sales were up
strongly for most major home types and market conditions actually tightened, with sales growth
outpacing listings growth. The result was average price growth well-above the rate of inflation,”
said Mr. Etherington.
The average selling price for July 2014 sales was $550,700 – up by 7.5 per cent compared to
July 2013. The strongest rate of price growth was reported for the detached market segment in
the City of Toronto, with a year-over-year change of 11 per cent. The better-supplied
condominium apartment segment experienced average price growth of 5.3 per cent for the GTA
as a whole.
“Strong demand for ownership housing will underpin robust average price increases for the
remainder of 2014. In fact, the pace of price growth that we have experienced over the past
year will continue until growth in listings outpaces growth in sales for a sustained period of time,”
said Jason Mercer, TREB’s Senior Manager of Market Analysis.
 
Eug said:
So, no source then?
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http://www.francesbula.com/uncatego...empty-or-occupied-only-by-temporary-visitors/
"Nearly a quarter of condos in Vancouver are empty or occupied by non-residents in some dense areas of downtown"

http://www.francesbula.com/uncatego...empty-or-occupied-only-by-temporary-visitors/
"And because many of the new flats in some areas are purchased by investors who then leave them empty, local businesses are having a hard time surviving."

Happens in London too:
http://www.bloomberg.com/news/2014-...ner-sees-empty-luxury-homes-hurting-city.html

http://www.standard.co.uk/news/lond...e-investors-who-keep-flats-empty-8702570.html

Like I said..this is not some new phenomenon.
 
Buying a condo and leaving it empty is a good way to offset income from other sources (a tax perspective) and then cash in on a huge cap gain later.

Btw.. great call on the July numbers CG
 
TheKingEast said:
http://www.francesbula.com/uncatego...empty-or-occupied-only-by-temporary-visitors/
"Nearly a quarter of condos in Vancouver are empty or occupied by non-residents in some dense areas of downtown"

http://www.francesbula.com/uncatego...empty-or-occupied-only-by-temporary-visitors/
"And because many of the new flats in some areas are purchased by investors who then leave them empty, local businesses are having a hard time surviving."
Click to expand...
I can't believe you just posted that, given that I just posted two posts refuting that even before you made your post. If you must know, I was specifically addressing the popular myth that some people (which I guess includes you) have been perpetuating. Yan, the author of the study never tried to claim that a quarter of some neighbourhoods were investor owned properties with no intent by the owner to rent them out.

The problem here is that basically the popular media grabbed onto one point in a larger study, without actually reading the study or trying to understand the point of the study and related research, and then worded their articles to lead readers to jump to a conclusion. I suggest you go back and reread those posts I made just earlier today.

Basically the study said that 5.5% of properties were empty (ie. with "empty" defined as less than 75 kWh electricity usage in a month) in Vancouver, and up to 23% empty in one neighbourhood, but also went on to say that this likely includes rentals without a tenant during that period, and secondary (or primary) housing for people with multiple homes. The neighbourhood in question as I mentioned earlier is Coal Harbour, which although popular with investor types (for rentals) is also quite popular with those who have multiple homes. You'll find a lot of Chinese business people for example who own units there to live there, but only half the year, because they travel a lot for their businesses. They don't rent them out for the unoccupied months because it would be incredibly inconvenient for them and often infeasible. The purpose of these is to be their homes away from home, or a home base - a hub from which they travel. And yes, a lot of these people are Canadian citizens.

Think snowbird condos in Florida. They live there, but only half the year. Except they live in condos in Canada too, not detached homes, and they're not retired. If anything that seems like a smart financial decision. They have a home base in Canada, but it's a self-maintained condo instead of a detached home that requires a lot of extra headache to maintain. That said, I know some of business people who have detached homes in Canada as well… only to leave them empty for 6 months of the year because they spend half their time overseas.

BTW, I personally know several people in both Vancouver and Toronto who do this, and it's relatively common amongst the upper middle class business crowd. Actually, in Toronto, one family I know that does this owns a 2-bedroom condo on Harbourfront. They live in the US, where their business is, but the larger family is in Canada, so they come back to Canada a lot. Toronto is one of their travel hubs, so they're in Toronto quite a bit. However, it's often just for a few days or weeks at a time. They always stay at the condo when they're in Toronto, but ultimately in terms of actual occupancy, I'd guess it's empty 3/4 of the year. At one time they actually did rent it out, but that became too much of a pain, because then they couldn't actually stay there. They'd have to rent the guest rooms in the condo building. Cheaper than a hotel, but still not ideal, and not guaranteed. Now that the condo is no longer rented out, it is now always guaranteed, and because it's a 2 bedroom place, multiple family members can stay there at the same time. I also know people who do this because although their bigger home is in Hamilton, they don't want to commute to Toronto, so during the week they stay downtown at their condo there, and then head back to their home in Hamilton. Hell, I even knew a family who did this when they lived in Richmond Hill, although that seems very strange to me.
 
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Eug said:
I can't believe you just posted that, given that I just posted two posts refuting that even before you made your post. If you must know, I was specifically addressing the popular myth that some people (which I guess includes you) have been perpetuating. Yan, the author of the study never tried to claim that a quarter of some neighbourhoods were investor owned properties with no intent by the owner to rent them out.

The problem here is that basically the popular media grabbed onto one point in a larger study, without actually reading the study or trying to understand the point of the study and related research, and then worded their articles to lead readers to jump to a conclusion. I suggest you go back and reread those posts I made just earlier today.

Basically the study said that 5.5% of properties were empty (ie. with "empty" defined as less than 75 kWh electricity usage in a month) in Vancouver, and up to 23% empty in one neighbourhood, but also went on to say that this likely includes rentals without a tenant during that period, and secondary housing for people with multiple homes. The neighbourhood in question as I mentioned earlier is Coal Harbour, which although popular with investor types (for rentals) is also quite popular with those who have multiple homes. You'll find a lot of Chinese business people for example who own units there to live there, but only half the year, because they travel a lot for their businesses. They don't rent them out for the unoccupied months because it would be incredibly inconvenient for them and often infeasible. The purpose of these is to be their homes away from home, or a home base - a hub from which they travel. And yes, a lot of these people are Canadian citizens.

Think snowbird condos in Florida. They live there, but only half the year. Except they live in condos in Canada too, not detached homes, and they're not retired. If anything that seems like a smart financial decision. They have a home base in Canada, but it's a self-maintained condo instead of a detached home that requires a lot of extra headache to maintain. That said, I know some of business people who have detached homes in Canada as well… only to leave them empty for 6 months of the year because they spend half their time overseas.
Click to expand...

source?
 
TheKingEast said:
source?
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The original study is this one but this was later reaffirmed by subsequent study by the same author, which included the 23% Coal Harbour number. IIRC, the study was presented at a Simon Fraser University forum.

BTW, here is a post that describes exactly what I'm talking about (bolding mine):

I manage units in a building in Coal Harbour right now. I'd estimate about 1/8-1/6 of the units are "sitting empty"-- which is to say they are lived in by owners some of the time, but not for condo flipping. I manage a few of these empty units as part of my company. It's fairly common for them to sit empty while owners are away in Asia.

One two bedroom condo was only used by the daughter of a rich family when her UBC classes are on break and she doesn't want to live in her parents' West Vancouver home. The last time she came back was because her dog had an injury and couldn't climb the stairs so she moved into the condo for a few days while he recovered.

Most are units from families who travel back and forth between Asia. They don't like spending winters in Canada because it gets too cold and renting them out isn't desirable since they don't like strangers touching their things.

I can really only speak of coal Harbour because its what I have direct experience with it and its what the article mentioned. I don't know why they didn't contact property management companies like ours during their study, we could have cleared it up immediately.

---

P.S. I lived in Vancouver for a while, and getting back and forth from West Vancouver is a huge pain. Actually I was in North Van, which is right beside West Van and served by the same very crowded bridge, so I know first hand. If I were a UBC student, and was from a wealthy family, I'd want to stay nearer the university too, and Coal Harbour would be a nice option although probably not my top choice.
 
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