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How Would Vancouver’s Housing Bubble BURST? — Look to CHINA, Not America!

937 views · Published 18 February 2017 · 16:03 · Indexed 30 October 2026

Channel: Mike Martins · 2017 · News & Politics

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“Vancouver's not a bubble. Vancouver's a hot-air balloon.”
— Mike Martins

This is one of the most important housing crisis articles I’ve covered because what is happening in Vancouver could have implications for other overheated housing markets in Australia, New Zealand, the UK and elsewhere.

Douglas Todd is asking a huge question: If Vancouver’s housing bubble bursts, what actually causes it?

Instead of automatically comparing Vancouver with the American housing crash of 2008, the article argues that we should be watching China, capital outflows, interest rates and Vancouver’s dependence on international money.

Vancouver prices have climbed so far beyond local wages that I don't even want to call this a bubble anymore. This thing is a hot-air balloon.

The article discusses estimates that wealthy Chinese buyers put more than $33 billion into U.S., Australian, British and other international housing markets in 2016, while noting the lack of comprehensive Canadian foreign-investment data. It also examines China's new restrictions on moving money overseas and the potential implications if those controls become significantly more effective.

Then there is the second major danger: interest rates.

Metro Vancouver households are carrying enormous amounts of debt. The article discusses households whose debts exceed annual income by 150% to 450%, particularly heavily mortgaged households in areas such as Surrey, Langley and the Tri-Cities.

Meanwhile, B.C.'s 15% foreign-buyer tax appears to have changed some activity, but it hasn't killed the Vancouver housing bubble. Prices remain extremely high, and the article suggests offshore capital could continue finding ways into the market.

My concern is what happens when this party finally ends.

When housing becomes one of the major economic engines and governments become dependent on the activity surrounding real estate, there is tremendous pressure to prevent the market from correcting too quickly. But you can't keep pushing prices away from local incomes forever.

Young Canadians are watching houses disappear further and further out of reach. Someone who was 10 years old when this boom really started could now be 25 and discovering that ownership in the city where they grew up is practically impossible.

So what finally breaks Vancouver?

China tightening capital controls? Rising interest rates? Household debt? Government policy? Or some combination of all four?

Australia, New Zealand, Toronto, London and other overheated markets should be watching this closely.

Comment below and tell me what you're seeing where you live.

#newzealand  #housingcrisis  #housingbubble  #vancouverrealestate  #china  #chineseinvestment   #foreignbuyers  #foreigninvestment   #interestrates  #affordablehousing  #torontohousing  #australiahousing    #realestatebubble  #mikemartins

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