Housing Bubble/Oil Bubble

[August1991]

When house prices collapsed in Florida, Nevada etc in 2008, many people decided to sell shares, pay down their credit lines move to cash.

With the recent collapsing oil prices, why are we not seeing the same move to cash?

Edited February 29, 2016 by August1991

[sharkman]

No more cash left to move to?

[eyeball]

The term bubble in housing may well be applicable in a lot of places but I think on the northwest coast of America there's a more fundamental issue driving the rise in housing prices, the sheer liveability of the region. Politically correct politicians may be afraid of pointing out that it's the influx of foreign money pushing prices to seemingly irrational levels but I doubt there's anything irrational about the motivation of buyers.

I think a lot foreign buyers are anticipating a day when they'll want to flee the collapse of livability and ecosystems where they live now. If we thought politicians were afraid of being politically incorrect wait until they have to avoid the economic incorrectness of pointing out that crashing environments and livability are what's driving a lot of immigration and the desire of people to move their cash and themselves somewhere safer and nicer than where they are. Of course that sort of denial comes even easier to a politician.

Simply put, our housing bubble on the west coast is actually just an refugee crisis but before the fact. Wait until that becomes apparent and the rise in housing prices now will seem slow in comparison. I doubt anyone will be proposing to build a wall against refugees bearing bags of cash. They should tax the snot out of them though to pay for affordable housing for people who are and will be displaced by this movement of humanity and it's money.

Edited March 6, 2016 by eyeball

[sharkman]

I live in the northwest coast region outside of Vancouver an hour. The prices in Vancouver and area are being pushed up by Asians, it's a well known fact. In Abbotsford a realtor told me of a lower middle class neighborhood in which a home was listed for 424,000. Within a week over 100 buyers had toured the house, it got 18 offers and sold for a little over 520,000. Now that's crazy town.

[eyeball]

The prices in Vancouver and area are being pushed up by Asians, it's a well known fact.

A moot fact. What's more important is why the west coast? Why not just move up in Asia?

[TimG]

A moot fact. What's more important is why the west coast? Why not just move up in Asia?

Chinese money is going everywhere but China. We just talk about what affects us. Also, US cities are larger so the impact of a flood of foreign money is less. Lastly, the money is moving to places where people trust that their wealth is not going to be stolen by corrupt politicians and police. I realize that the relative honesty of Canadian politicians and police is not a idea you can wrap your head around but it is a fact. The 'quality of life' does not mean much for people who don't actually live in Vancouver which is the case for many of these investors. Edited March 7, 2016 by TimG

[eyeball]

Chinese money is going everywhere but China. We just talk about what affects us. Also, US cities are larger so the impact of a flood of foreign money is less. Lastly, the money is moving to places where people trust that their wealth is not going to be stolen by corrupt politicians and police. I realize that the relative honesty of Canadian politicians and police is not a idea you can wrap your head around but it is a fact.

Shouldn't they be more afraid of bleeding heart lefties who'd like to tax the snot out of them? We're often told wealth will flee and stay away as a result of our socialist tendencies. In light of the utter contempt with which you hold bleeding hearts I suspect it's just as difficult for you to vouch for the veracity and trustworthiness of politicians.

Honesty is definitely a relative concept when politicians and wealth are concerned. The trade in values with China's rulers has always been a two way street and I've never been under the illusion our's wouldn't also become more like theirs as a result. Even Trudeau admires how easy it is to get things done there.

I'm certain wealth will always find Canada an easy place to get by in.

The 'quality of life' does not mean much for people who don't actually live in Vancouver which is the case for many of these investors.

Well, that's probably true of anyone who grew rich as a result of being allowed to do so without restraint with regards to their environment and workers at home. You can bet they can see first hand back home that there's more to life than money and know why that is.

Maybe you can take a pleasant place to live in for granted because you've never lived outside one. Maybe it's all just relative but I suspect daily smog alerts aren't.

[August1991]

World oil prices have fallen/changed by about 5X ($140/barrel to $30/barrel) in the last few years, far more than house prices in Vancouver have risen. Albertans, and most Canadians, understand this kind of risk. Snow happens.

[dre]

World oil prices have fallen/changed by about 5X ($140/barrel to $30/barrel) in the last few years, far more than house prices in Vancouver have risen. Albertans, and most Canadians, understand this kind of risk. Snow happens.

Yeah there's some risk in investing in oil right now. The Saudis can produce sweet low sulphur crude for 5-10 dollar per barrel. But why would anyone "move to cash"?

[Big Guy]

I was just watching the real estate news on CTV. The average detached house in Toronto is now at $1.2 million and in Vancouver at $1.5 million. The commentator compared some figures - If you look at the at the average earner in Toronto and Vancouver and compare that to the increase in value of a detached house in Toronto and Vancouver - the house increased more than the earner earned last year.

So the house has become the largest breadwinner for those folks.

Sixteen year ago, we retired, decided to move to a small town in Southern Ontario and sold our Toronto home for $240,000. It has recently re-sold for $1,150,000. Anybody know where I can buy some Bre-X stock?

Edited June 3, 2016 by Big Guy

[BC_chick]

I live in the northwest coast region outside of Vancouver an hour. The prices in Vancouver and area are being pushed up by Asians, it's a well known fact. In Abbotsford a realtor told me of a lower middle class neighborhood in which a home was listed for 424,000. Within a week over 100 buyers had toured the house, it got 18 offers and sold for a little over 520,000. Now that's crazy town.

The house across the street was assessed at 1.1 last year and just listed for 1.8. There are ridiculous Vancouver real-estate stories everywhere you look (we're 45 minutes outside the city, btw). I fully expect to see a sold sign within a couple of weeks.

Edited to correct - this is right before panic phase of the bubble.

Edited June 3, 2016 by BC_chick

[overthere]

The 'quality of life' does not mean much for people who don't actually live in Vancouver which is the case for many of these investors.

Neither do the prices matter much. Paying a couple million for a house is normal for people living in Hong Kong. Of course, very few actually live in houses in Hong Kong since owning land is reserved for the very, very rich- not run of the mill millionaires. No, they look for homes in places where it is relatively cheap like Vancouver.

World oil prices have fallen/changed by about 5X ($140/barrel to $30/barrel) in the last few years, far more than house prices in Vancouver have risen. Albertans, and most Canadians, understand this kind of risk. Snow happens.

The p[rice of oil has been sub-$20 far more in the last 25 years than over $20, and it is now hovering around $50. It is a volatile market, always has been. Shrug.

Yeah there's some risk in investing in oil right now. The Saudis can produce sweet low sulphur crude for 5-10 dollar per barrel. But why would anyone "move to cash"?

The cost of producing a barrel in many of the newer steam assisted deve

When house prices collapsed in Florida, Nevada etc in 2008, many people decided to sell shares, pay down their credit lines move to cash.

With the recent collapsing oil prices, why are we not seeing the same move to cash?

Housing prices and markets in Canada are very regional and frequently quite disconnected from other regions and disconnected from US events.

lopments(all common now in AB) is around $10/ barrel.

The Saudis are not the greatest enemy of the Canadian resource industry. The enemy is all Canadian, all homegrown.The price of oil dropped dramatically, the price of houses in Edmonton are down 2% year over year.