Where's my population boom?

[Van Housing Blogger]

2007 4th quarter population stats are out. See Statcan here and get data here

I have made two graphs. The first is overall population growth. I have included both the raw growth and the percent of population growth.



You can see that population growth is higher than a few years ago. However, the really interesting thing is that it is much lower than during any of the previous booms. That is, it is hard to make the argument that unprecedented population growth is driving the boom.

The second graph is the interprovincial migration. This is a 4-qtr moving average. We're getting around 3500 a quarter whereas BC has seen around 10K per quarter in past booms. People are not moving here in droves. It is a trickle.



Let me make my point clear: Whereas in past boom cycles it might have been possible to argue that it was driven by huge immigration/migration/population flows, it doesn't look like that is what is driving the current boom.

[lotuslander]

The current boom was a global phenomena, and it's over. We're just a bit slow to catch on to the recession heading or way.

In migration will slow further as potential newcomers will be discouraged by high housing costs. In migration from the US will see the biggest decline, as the low US$ is an incetive for recent US arrivals to take profits and move out of, rather than into BC.

[hughz]

The other thing to keep in mind about Canadian immigration in the medium-run is that in the event that India and China (especially) keep growing at or near current rate we will probably see a significant drop in immigration numbers (or at the very least, a radical change in the composition of immigrant flows). Differentials in current and future income are one of the main drivers of immigration in the economic classes (and to a lesser extent, even in the non-economic classes).

[Greenhorn]

2007 4th quarter population stats are out. See Statcan here and get data here

I have made two graphs. The first is overall population growth. I have included both the raw growth and the percent of population growth.



You can see that population growth is higher than a few years ago. However, the really interesting thing is that it is much lower than during any of the previous booms. That is, it is hard to make the argument that unprecedented population growth is driving the boom.

The second graph is the interprovincial migration. This is a 4-qtr moving average. We're getting around 3500 a quarter whereas BC has seen around 10K per quarter in past booms. People are not moving here in droves. It is a trickle.



Let me make my point clear: Whereas in past boom cycles it might have been possible to argue that it was driven by huge immigration/migration/population flows, it doesn't look like that is what is driving the current boom.

VHB, the boom was in global credit. This is far more important than warm bodies. In terms of condo demand, a well financed investor can own 4 condos but can only live in 1. You see what I am saying?

[gse36]

VHB, the boom was in global credit. This is far more important than warm bodies. In terms of condo demand, a well financed investor can own 4 condos but can only live in 1. You see what I am saying?

doesn't even need to be financed either! haha.

case in point. friend's house (fully paid) went from 400->800k.
he took out LOC 600k (75% of value), and purchased some $3M of presales (8 of them) (only put 10-20% down) and it only cost him 500k or so of that LOC.

He pays interest on the 500k @ prime so around $2k/mo for hanging onto them.

Thats cheaper than buying 8 right now and renting them out (will bleed more than $2k/mo). And much cleaner (no tenants to have to deal with etc), and he can write off the interest.

He made some money already on the earlier purchases, but the later ones. i don't know.

In either case, its quite risky. if prices slide, he risks losing the farm.

[Greenhorn]

VHB, the boom was in global credit. This is far more important than warm bodies. In terms of condo demand, a well financed investor can own 4 condos but can only live in 1. You see what I am saying?

doesn't even need to be financed either! haha.

case in point. friend's house (fully paid) went from 400->800k.
he took out LOC 600k (75% of value), and purchased some $3M of presales (8 of them) (only put 10-20% down) and it only cost him 500k or so of that LOC.

He pays interest on the 500k @ prime so around $2k/mo for hanging onto them.

Thats cheaper than buying 8 right now and renting them out (will bleed more than $2k/mo). And much cleaner (no tenants to have to deal with etc), and he can write off the interest.

He made some money already on the earlier purchases, but the later ones. i don't know.

In either case, its quite risky. if prices slide, he risks losing the farm.

That is bloody cool!!!! He could make $500,000 on his $500,000 investment if the condos went up 20%,

Where they high rises? Where they downtown?

Many of my firends have made a killing flipping presales.

[blazespinnaker]

Until we see the van specific numbers, we know nothing.

[freako]

Until we see the van specific numbers, we know nothing.

The last official data I saw (a few years old now) had Vancouver losing to rest of B.C. That doesn't tell us where immigrants are settling, but it is another piece of the puzzle.

[Van Housing Blogger]

we know nothing.

Well, maybe you know nothing. But I knew that.

[dot com refugee]

This might help: Metro Vancouver Migration Component 1991-2006. Metro Van has been a net loser in the intraprovincial migration department for every year from 1991 through 2006. That is all the data that was immediately available. It looks like Vancouverites are moving on to less expensive pastures.

[silverman]

Very interesting graph by VHB. Three especially interesting points:

1. Population growth plunged from 1994 to 1999. That explains the drop in prices during that time. However, even with that huge drop in pop growth prices only dropped 10% for SDH (slightly more for condos and a lot more for new strata properties).

2. Population growth steadily increased since 1999. That explains (partly) the spike in prices.

3. Population growth as of the end of 2007 is less that what it was in 1994. But it hasn't reached a peak yet.
That explains the fact that there is no noticeable correction in the market yet and, in some areas and for certain housing styles, prices are still increasing... steadily but slowly, even with the huge supply of housing units coming into the market... but definitely not at the level of two years ago.

Another interesting point... superimpose consumer confidence over the graph... and you'll get an exact match.

[fozzy]

Another interesting point... superimpose consumer confidence over the graph... and you'll get an exact match.

but thats waning too no?

[rentah]

Consider the possibility that 'consumer confidence' is a result of rising RE prices rather than a cause of those increases.

[registered]

1. Population growth plunged from 1994 to 1999. That explains the drop in prices during that time. However, even with that huge drop in pop growth prices only dropped 10% for SDH (slightly more for condos and a lot more for new strata properties).

Not a given. Take another look at the Sauder data. I posted a composite graph somewhere here. Population growth was still in full swing and climbing for at least a year after peak prices in the Nineties. It's the reason I suggested 'hidden buyers' in the form of off-shore purchases by those intending to immigrate as a possibility.

[jockey1]

3. Population growth as of the end of 2007 is less that what it was in 1994. But it hasn't reached a peak yet.
That explains the fact that there is no noticeable correction in the market yet and, in some areas and for certain housing styles, prices are still increasing... steadily but slowly, even with the huge supply of housing units coming into the market... but definitely not at the level of two years ago.

...prices tend to be forward looking - yes there is an expectation that population, income, jobs, whatever you want to call it will continue to grow strongly - these expectations are already embedded in today's prices

Another interesting point... superimpose consumer confidence over the graph... and you'll get an exact match.

...here you bring up the most relevant and interesting point. It doesn't matter what all the fundamental information - ie., today's population growth, job growth, economy.... whatever is telling us - prices have been rising ridiculously because of confidence - you are 100% correction to suggest that all that is driving prices are robust expectations of the future (confidence). If, for whatever reason, that confidence erodes or those wonderful expectations do not materialize then I think we have a pretty big correction on our hands!