Budget 2018: The Victoria Effect
So the budget is out and there has already been lots of great discussion about it in the previous post. Here are my thoughts on the changes.
The NDP’s 30 point housing plan has three main components to it:
- Stabilizing the market
- Cracking down on tax fraud and closing loopholes
- Building the homes people need
Let’s see how the main actions that have been detailed may affect Victoria.
Stabilizing the market
Introduce a speculation tax
What is it?
A new tax to target people owning residential property in BC without paying taxes here. It seems rather than actually trying to find these people, they will levy the tax and then give out an income tax credit to cancel it out. How exactly this will work and how much income would be required to cancel out the tax is all up in the air. It will apply in the same regions as the foreign buyers tax (see below).
When?
Although they say “we are acting immediately”, the timeline for implementation is actually Fall 2018. Also it starts at 0.5% and only ramps to the full 2% two years later.
Effect on the Victoria market?
Negative, but magnitude is unknown. Note I use negative in the sense that it will push down on prices pressures, of course this could be positive depending on your perspective. In Vancouver, the latest report showed 4.8% of properties owned by non-residents, which could be affected by this speculator tax. However there are exemptions for most principal residences, long term rentals, and special cases, the details of which are not released yet.
Increase and expand the foreign buyers tax
What is it?
Same as the existing foreign buyers tax in Vancouver, where foreign buyers pay additional property transfer tax. This will be increasing from 15% to 20% and expanding to Victoria (along with Nanimo, Kelowna, and the Fraser Valley). On the island that is roughly these areas:
Notice that it doesn’t include Duncan, Chemainus, Ladysmith, Lake Cowichan, or anything north of Bowser. Surely Crofton will become the next hot area for foreign buyers.
When?
It takes effect immediately. However there are some transitional rules, most importantly that they won’t affect most current deals. ” You don’t have to pay the additional property transfer tax if the registration occurs before or on May 18, 2018 and the property transfer is subject to a written agreement dated on or before February 20, 2018.” In other words this won’t affect most current pending deals however any deals going forward will be subject to the foreign buyers tax. Don’t take my word for it though, if this is your situation, consult your lawyer to determine if you need to pay the tax.
Effect on the Victoria market?
Negative. In Vancouver the foreign buyer tax dropped foreign buying activity by about 75%. So either those buyers stopped buying or they found ways around being registered as foreign buyers (bare trusts for example). In Victoria, there were 483 foreign buyers in 2017, so a 75% decrease would have dropped about 360 buyers out of the market, or about 4% of sales. Not a huge number, but remember that foreign buyers represent pure demand so dropping 360 buyers that are coming from outside of town has a much larger effect than dropping 360 move-up buyers (which do essentially nothing). What amuses me is the crocodile tears cried when Victoria was considering asking for the tax were all in vain. We might see a larger effect in pockets that have attracted foreign buyer attention, which are mostly in Saanich.
Increase property transfer tax and school tax on properties over $3 million
What is it?
An increase in the property transfer tax rate from 3% to 5% for properties over $3 million. Note that this is on the portion of the fair market value that is over three million. For example, someone purchasing a $4 million dollar property would pay:
1% on the first $200,000 = $2000
+ 2% on the value between $200k and $2M = $36,000
+3% on the value between $1M and $2M = $30,000
+5% on the value above $3M = $50,000
Total: $118,000 (compared to $98,000 before the change)
Note a foreign buyer of that same $4M property would pay $918,000 in property transfer tax!
When?
Property transfer tax increase is effective immediately, school tax increase coming in 2019.
Effect on the Victoria market?
More or less zero. There were only 31 sales over $3M last year in Victoria. I doubt any of them would have been deterred by an extra few tens of thousands in tax. The foreign buyers tax will have a much greater effect.
Cracking down on tax fraud
What is it?
The province is introducing several information gathering initiatives to crack down on fraud and tax evasion, including reporting all pre-sale condo assignments to the government, establishing a registry of beneficial owners of property (so people can’t hide behind bare trusts and corporations), and collecting more information (such as SINs) for homeowner grants and property transfers. They will work more closely with the federal government to ease investigations and enforcement of existing laws.
When?
Most of these measures don’t have timelines attached, but one would presume they will try to act quite quickly on this.
Effect on the Victoria market?
Unknown at the moment but can only be negative. These actions are positive but they are only the foundation, and will require the federal government to act on the data that is uncovered and step up enforcement. Some of these actions may make the foreign buyers tax more effective by taking away common loopholes, and some may help investigations into the laundering of drug money. How much of a factor is this in Victoria? We can only wait and see but these efforts are long lasting ones. We won’t see an immediate effect but our market will become more fair in the long run.
Building the homes people need
Build 114,000 affordable homes over 10 years
What is it?
The province will invest $6.6B to build 114,000 affordable homes over 10 years. It appears that the sub-measures in this section that focus on increased rental housing, housing for vulnerable populations, students, and indigenous people are part of this 114,000 total. They are also making a number of changes to incentivize municipalities to build more rental housing in the future.
When?
The investment is for an average of 11,400 homes per year over 10 years, but some language indicates they may try to frontload this somewhat. It will be good
Effect on the Victoria market?
Fundamentally this will increase the supply that is already coming. If the housing supply is allocated by population, we would get about 865 new units of affordable housing every year for the next 10 years. That is nothing to sneeze at. Although we started over 3800 units in 2017, that is still a boost of 22% on the current frantic pace of construction. The 10 year average is only 2000 units per year so the new initiative would be almost a third more.
This should make a big difference to available supply and we will be moving away from record low rental inventory and frantic bidding wars for scarce supply.
The province is also winding down the incredibly ill-advised and ineffective HOME Partnership Plan, a vote buying scheme disguised as a way to help first time buyers which will take away a small bit of extra demand.
Overally, these measures are pretty significant. They are landing at a time when sales are off by a quarter from last year already due to the stress test, which is still ramping up. They are landing as interest rates are increasing which will hit more and more people as they renew. Back in the spring of 2016 I said it might still be a good time to buy and that the previous hot market had lasted for a good 5 years so this one could go longer than expected as well. We are only about 2.5 years into this hot market but I think all these cooling measures are sufficient to yank us out within this year. Will it cause price declines? It’s anyone’s guess but I wouldn’t count on it quite yet. I have yet to see a market decline significantly without associated economic weakness and have a hard time imagining that prices could decline more than 5% percent without a significant weakening of the economy. In any case I think it’s a better time than most to take your time and make a reasoned decision.
Remember it’s not always about the stats. Some good deals happen on an individual basis when the market is experiencing a shock and buyers have backed off while sellers still need to sell. Keep a lookout.
TransMountain is carrying dilbit, not these higher-value products. That is the whole point.
Josh, that is not true at all.
Lol, Josh your youth is showing.
Re: TC op-ed by Robyn Allan
She’s been trying to stop pipelines for years. I only skimmed through the article, but it looks like she’s trying to mislead the public like she did with the expansion’s job numbers.
http://theamericanenergynews.com/markham-on-energy/robyn-allans-incorrect-explanation-for-trans-mountain-expansion-job-numbers
Her biggest misconception has always been that “Canada has enough pipeline capacity”. She continues to overlook the incredible increase in production of lighter oils, condensate, NGLs (ie. non-tarsands) that need a safer way to market than by rail. I guess she wants to see more rail cars in the Fraser River…
Sorry to be a buzz kill but Wiki lists 27 different refineries located in Canada, one of them is even on the recieving end of the Kinder Morgan pipeline.
Preliminary Monday numbers: https://househuntvictoria.ca/latest
Not a drop is refined in Canada. The “pipelines = jobs” crowd seems incapable of wrapping their heads around the facts. The pipeline is owned by a private company from Texas and every drop (that isn’t spilled) from Kinder Morgan is shipped (past our coast) to China at rock bottom prices. I suspect the reason is that Saudi Arabia being able to tank the oil sands industry whenever they feel like it means investing in local refineres is too risky.
“Hawk, your memory is flawless, as usual. Everything above is inaccurate except for that I live in Gordon Head.”
That’s not what you’ve posted. I’d go look it up but I have a life. Trolls always screw up.
Hawk, your memory is flawless, as usual. Everything above is inaccurate except for that I live in Gordon Head.
Thanks for the articles. Very interesting!
Elizabeth May has some commentary here as well:
http://www.timescolonist.com/opinion/op-ed/elizabeth-may-is-the-pipeline-really-in-our-best-interests-1.23177458
For her point regarding using our own oil and stopping importing from others, does anyone have numbers on how much we import vs how much we export? Exporting unrefined and importing refined products seems a lot like the ongoing argument over BC exporting raw logs.
Wow. Fascinating article. If true, it is basically saying that Alberta’s argument for the TransMountain pipeline is that they really really want to export local refining jobs to Asia. However, this comment in the article shows that “Alberta” is not speaking with one voice:
“This is why the Alberta Federation of Labour, which represents 170,000 workers, argued so strongly against Trans Mountain’s expansion at the National Energy Board hearing. Alberta’s workers don’t want future upgrading jobs shipped to foreign markets along with raw bitumen. They are smart enough to know that real economic wealth and more jobs come from value added, not raw resource export. “
http://www.timescolonist.com/opinion/op-ed/comment-cenovus-ceo-should-get-facts-straight-1.23184567
Great article on why there is a price differential.
Thanks Leif, that makes sense. It’s a precarious time to be a central banker, i guess.
It seems like the resource cycle is on the up and up again (well, maybe not oil), which is good for the Canadian economy. It can change fast though, as we all know.
I read an article on CNBC earlier saying gold technical analysis shows that 1400 is on the horizon (take TA for whatever it’s worth…). Copper seems to be bouncing back too. If these trends are real, it’s good for jobs in BC (how good? i do not know).
Also, environmental/social debate aside, if transmountain does ever get expanded and oilsands get something more akin to world market prices rather than the discounted western Canadian select prices, that is positive for jobs too (even in BC… in my industry i see many fly in fly out jobs – many people on the island do – or did anyways – actually work in Ft Mac (oilsands, pipelines), Prince Rupert (LNG), Terrace/Smithers (Mining & LNG), Tumbler Ridge (met Coal).
I can see the bull, bear, soft-landing and neutral cases all playing out. Or even combinations of all, depending on location. I guess that’s why i enjoy reading all the different opinions here from many walks of life, ages, professions, etc.
Leif,
Also recall how the US overshot raising rates in mid 2000’s which may well happen again. It exposed the weak credit in their housing just like it would do the same here with our household debt so far past the US.
Was reading the US first time buyer is getting squeezed out like here. The food chain survival highly depends on them.
I think they are out of stimulus bullets already.
@Hawk @Barrister
If that scenario does play out, wouldn’t rates have to be cut to prevent/react to recession?
That would put us back where we started this to some extent wouldn’t it?
From what I have been reading, I cannot find the article to quote it, an increase in rates is required to have any leverage in the next collapse /recession. If interest rates remain low without being able to raise them while the economy is “strong” during the next recession they will not have the ability to pump the economy with cheap money. Last article I was reading on bloomberg.com called for more likely of 4 rate increases in the US now this year compared to the expected 3 earlier.
Meanwhile, on the mainland, apparently some “investors” might be bailing.
https://thinkpol.ca/2018/02/24/home-prices-fall-73-metro-vancouver-bc-budget-begins-bite/
“Asking prices for homes in Metro Vancouver are falling ‒ in one case by as much as 73% ‒ suggesting that budget measures announced by the NDP government to promote affordable housing by tackling rampant crime, corruption and speculation in the real estate market is beginning to work even before they come into force.”
Last time I looked Marko is a salesmen in what has been an overextended one way market. Last voice of authority I would bet my financial future on with higher than expected inflation and interest rates coming.
Same as listening to a troll from Golden Head who takes out a 40 year mortgage who should be mortgage free but still has 25 more to go after 10 years of wasting tens of thousands to the bank.
ICYMI interest rates chart broke a 1980’s downtrend chart. History repeats itself troll.
Hawk’s favourite gross oversimplification: today is just like 1981, except for household debt.
By the way, Marko’s predictions have been a teensy bit more accurate than yours.
“So he is guessing just like the rest of us.”
He’s privy to stuff you or I don’t see. You calling for 4 or 5 years when prices tanked 30 to 50% in 81 in 2 years or less is just trying to hope for the best case scenario when there was no household debt problem back then.
Fast rising rates has major gobal consequences this time around, especially with 170% record household and government debt loads.
With 47% of mortgages up for renewal this year, maybe he sees many not getting renewed ?
Mortgage Fraud Prompts S&P to Lower Canada Bank Risk Metric
“High housing prices and debt loads increase incentives for fraudulent activity such as overstating a borrower’s income to meet qualifying criteria. Additionally, a growing share of mortgages is being originated by brokers who don’t bear the credit risk for the loans like lenders, according to the statement.
“Given this, we expect more evidence of fraud” in Canadian residential mortgages could arise, S&P said. The rating company pointed to a January report from Equifax Canada whose data suggested a 52 percent rise in suspected fraudulent mortgage applications since 2013.”
https://www.bloomberg.com/news/articles/2018-02-23/mortgage-fraud-prompts-s-p-to-lower-canada-bank-risk-metric
“I also want to know what that bank economist had to say!”
There doesn’t seem much mystery about what could go wrong with an economy largely dependent on debt and real estate, at a time when interest rates are rising, the government is using the public broadcaster to issue daily insults to the leader of our largest trade partner, and we have to take a $30 discount on tar sands oil because government has failed to provide adequate means to export the stuff. And that’s before the proposed US tariffs on steel and aluminum kick in.
When the price of oil crashed, a 25% discount on the C$ made sense. But with oil back in the $60 range, a C$ at a 25% discount to the greenback indicates we’re already in serious economic trouble.
@ Barrister
“But, following on your basic doctrine of supply and demand perhaps stopping immigration might be the obvious way to reduce demand.”
To secure the territory we need more people, not fewer. Otherwise we could find ourselves at some point in the future in the same position as were the first nations 400 years ago.
But I’d like to give Canadians the first crack at populating the country and that means protecting our manufacturing sector and pushing housing costs sharply lower.
“I assume that you have done a survey of the city when you make a pronouncement what the majority of core dwellers think.”
No, but I’ve read the municipal bylaws that restrict the use of residential property and those bylaws presumably reflect the wishes of the community.
I also want to know what that bank economist had to say!
Property tax deferrals skyrocketed 67 per cent last year
“Thousands of people who can afford to pay their property tax are taking advantage of it because it’s not means tested, and it should be,” consultant Michael Geller said.
That’s because the interest rate for anyone over the age of 55 is just 0.7 per cent. That’s too good to pass up for people like Geller, who defers thousands of dollars a year and invests the money instead.
https://bc.ctvnews.ca/property-tax-deferrals-skyrocketed-67-per-cent-last-year-1.3285962
Story about CIBC supporting moving of money from China to Canada via multiple accounts to stay under the $50k Chinese control.
http://m.scmp.com/comment/blogs/article/1854618/judges-cibc-bank-supports-clients-who-break-chinas-cash-export-laws
It reminds me somewhat of the follow the money story for drugs and terrorists who used HSBC in the “Dirty Money” Netflix episode.
The banks are always looking to make money without reprocussions. I’m sure over the next year or so journalists will continue to uncover massive money laundering and schemes through casinos, banks and real estate in BC. People who say it doesn’t play a part are totally naive or benifiting from it.
Just got off the phone with a good friend of mine who is the senior economist for one of the big six banks.
So he is guessing just like the rest of us.
Assume that house prices crashed between 30 and 40% over the next year and that total sales declined to 30% of last years sales what would the effect be on the overall economy in Victoria? This is a serious question and I am not trying to sound like Hawk.
It is going to take 6 to 12 months alone just for inventory to return to a balanced state. If we were to hypothetically see a 30 to 40% correction I can’t see it taking less than 4 to 5 years sans massive earthquake, economic meltdown, spike to 5%-6% mortgage rates (like the actual rate you get, not the qualifying rate).
Except you wouldn’t pay 5% PTT even on a 3 million dollar property. You only pay on the amount OVER 3 million – and even if you bought a house for 3.5 million you only pay the 5% PTT on the 500,000 – so that wouldn’t be a reason to reduce prices from 3 million to 2.8 as 5% PTT isn’t applicable in either scenario.
Except if I thought that 5% PTT was paid on the entire $3 million (>$3 million) why would I quote an average price? Obviously if $2.8 million is the average a large number of homes would be above $3 million mark; therefore, the drop from $3.0 to $2.8 wouldn’t have saved everyone.
My post was 100% sarcastic….who cares what the PTT over $3 million is anyway? Two houses so far this year have sold above $3 million in greater Victoria. Non-story.
Indeed.
I wouldn’t mind if you elaborated on this – otherwise, I do kind of wonder why you posted this in the first place.
I would definitely be interested in hearing their insight, or your interpretation of it.
swch25:
On interest rates, I am not an economist either and certainly the wrong person to ask. I am not sure precisely how much practical control the government has over interest rates. I dont think that you can just dial interest rates up or down without consequences. But I am the wrong person to ask,
@Hawk @Barrister
If that scenario does play out, wouldn’t rates have to be cut to prevent/react to recession?
That would put us back where we started this to some extent wouldn’t it?
Just curious. I am by no means an economist.
Barrister,
I’m all ears about what your buddy had to say. My posts are based on economic signals the last couple years not just wishful thinking. Let me guess, the consumer who has been keeping this business cycle debt bubble afloat is finally tapped out.
Toss in the bond markets / higher interest rates/ derivatives and you have a recipe for credit liquidity issues. Mix in some China /global real estate probs and record stock markets and the ending is not pretty.
Since there are a number of people on here far more familiar with the real estate industry here then myself let me ask you this question.
Assume that house prices crashed between 30 and 40% over the next year and that total sales declined to 30% of last years sales what would the effect be on the overall economy in Victoria? This is a serious question and I am not trying to sound like Hawk.
CS:
You are absolutely right about supply and demand. Vancouver is proof of that dynamic. They added massively to supply over the last ten years and prices obviously dropped. There is a bit more complexity to the equation.
But, following on your basic doctrine of supply and demand perhaps stopping immigration might be the obvious way to reduce demand.
Then again I am one of the core dwellers that dont have a problem with a home workshop. I assume that you have done a survey of the city when you make a pronouncement what the majority of core dwellers think. But since you have concerns about noise and dust we probably should ban all construction of buildings in the core since they are much more annoying and polluting. Some might argue that you are both self adsorbed and overly entitled although I would not take it that far.
Any statistics platform that is worth a damn will definitely have to filter out the new builds that are listed on MLS. It’s really screwing with the stats more and more as completions ramp up and more developers seem to be retroactively uploading pre-sales into MLS.
Needs to be kept out of the resale stats to make them worth a damn.
Different person.
Just got off the phone with a good friend of mine who is the senior economist for one of the big six banks. He is a man who by nature is both sound and steady. We may have more to worry about than the possibility of a housing crash. It was to say the least a sobering conversation.
“So he is quoting a subset of the market where prices went from around $3 million to $2.8 million….just enough of a drop to avoid the 5% PTT”
Except you wouldn’t pay 5% PTT even on a 3 million dollar property. You only pay on the amount OVER 3 million – and even if you bought a house for 3.5 million you only pay the 5% PTT on the 500,000 – so that wouldn’t be a reason to reduce prices from 3 million to 2.8 as 5% PTT isn’t applicable in either scenario.
Yeah, I guess, maybe.
All good.
Just curious. We have a poster who changes names and posts good market data. It’s a complement.
Gwac, I found the rare opportunity to post a few on the blog this evening, just wanted to get my opinion out there. I have been appreciating the opinions on this blog for about 2 years now. I appreciate the bull opinions as much as the bears even though I am currently bearish on the housing market.
Cheers All.
Is Charlie new or just a new name?
Okie doke, Charlie.
LF, Toronto and Vancouver are the 1st and 3rd largest housing markets in the country, respectively. Is that correct? I know Tdot is 1, I think Vancouver is 3 after Montreal. Big markets. Big markets affect little markets. I think if TO and Van go down, then the Canadian market goes down too. Right now it appears as though the slope pertaining to sales is increasing towards the negative in TO and Van. Modus Ponens if you will.
If the TO and Van housing markets crash then the Canadian housing market will crash.
The TO and Van housing markets are crashing.
Therefore, the Canadian housing market is crashing.
I don’t, at least not at this point. In most of the country, this isn’t true at all. What you’re seeing right now is an apparently sustained shift in momentum in what have been the hottest markets in the country. In a few of those segments, there may be price decreases that technically count as a correction. There is no “crash” occurring anywhere, if we accept that to mean a sustained correction of 30% or more. Another way to put it, there is increased market volatility and confusion, which are often preludes to a full blown corrective situation – but not always. It’s far too early to say anything.
What is true, is real estate is now faced with multiple market shocks against a rising interest rate environment and a population that in a few short years, has made itself among the most indebted in the world. There’s so many different and supressive policy changes being implemented from every which direction, hell is anyone’s guess what the outcome will be. But our regulators and leadership appear almost desperate to douse this bubble before it gets any larger.
Ah spring was in the air today. Time to re-list the re-listings from the previous fall that were listed last spring. But it is ok if any houses listed this spring do not sell, they were probably just listed too soon. Best not to drop the price, just list in the busy fall season after summer holidays. Better yet, just hold off until next spring. We are just in a bit of a gully right now. Whats that? You would like to sell your house? Oh, sorry, I am just a Realtor, not a miracle worker.
I am no expert, but I think the problem is trying to extract too much information from too narrow a slice of time. There are so many confounding factors, like the stress test pulling sales into Dec/Jan, that we won’t really know until afterward.
Is it happening? Quite possibly, but it still wouldn’t startle me if sales here jumped back up in the spring, when everyone realizes that the sky isn’t falling.
That said, if there are outside world events (and interest rate hikes), then it may reinforce everyone’s nervousness. Then your crash may be absolutely true.
Just curious, and I am being as sincere as I can, is there anyone on this blog that does not think that the Canadian housing market is currently correcting/crashing?
The following is for SFH sales data for the period beginning Jan 24/2018 to Feb 21/2018 from Zolo:
Richmond…..-79%
Vancouver….-56%
Surrey…..-64%
Burnaby….-47%
West Vancouver….-66%
Delta….-44%
Coquitlam….-62%
Langley….-50%
For January 2018 (Toronto regions) from TorontoRealEstateCharts:
Markham detached home sales down 38.8%, active listings up 252.5% year-over-year (YoY)
Richmond Hill detached home sales down 61.4%, listings up 314.0% YoY
Vaughan detached home sales down 39.8%, listings up 248.4% year-over-year (YoY)
@ JPM
“There are many ways governments can encourage business and people to relocate to other areas of the island. Tax incentives and short-term subsidies for businesses that establish themselves in a more open area is one way.”
How much incentive does an ambitious professional need to go and live in the sticks rather than set up shop in Victoria, or Vancouver or Toronto. A lot. Too much to make it worthwhile (for the taxpayer). And for most businesses, the incentive would have to be a regular and never ending subsidy since it would likely entail ongoing additional costs.
Tax incentives and subsidies mean government management of the economy. State direction of the economy rarely works well, is often unproductive, and creates scope for widespread corruption.
@ Dasmo
“I do also think their row house style building should be all over the core.”
Absolutely. On one large Uplands lot there would be room for ten or twenty town houses. Instead we have one trophy quite likely owned by a non-resident. Maybe the way forward would be to adjust property taxes on land according to the number of living units that could be accommodated on it, given rational zoning of the land. That would give owners of land rezoned for higher density an incentive to sell sooner rather than later.
@ JPM
Your first point seems to contradict a basic tenet of economic theory, that increased supply lowers price, so to convince anyone of your contention, I think you would need to offer some rationale.
As for people who need a workshop, etc. well obviously they are not ideal core dwellers.
Mostly, we in the core frown on that kind thing, especially if it involves a lot of machine noise, dust, vibration and smoke. So people who need that kind of space, or want to keep a few sheep or goats will probably have to go on doing what they’ve done in the past, live on the Peninsular, Sooke, etc.
Haha. The 1950s suburban ideal wants to have a word 🙂
To be fair, most of people’s front yards are actually municipal land. If Victoria and Sannich decided to build out sidewalks and bikelanes everywhere in residential areas, everyone’s front yard would be cut at least in half.
It makes me laugh when I see expensive landscaping and other things people put on land they don’t own. A new sewerline and, boom, all gone.
Both Victoria and Sannich provide world-class mapping websites showing property lines, several years of airphotos, and all the public utility lines. A hint to buyers: Go figure out what you are actually buying.
@ Intro:
“How about we don’t, which will keep Gordon Head quiet and pleasant and has the added benefit (for existing homeowners) of keeping prices high.”
Y0ur proposal is absolutely sound, if the objective is to keep home prices high.
However, a few well-designed low-rise condo buildings on, say, Feltham Avenue (some with commercial space on the main floor) would surely make Gordon Head a better place to live.
My point was the Netherlands achieved very high density without high rises. But, I do also think their row house style building should be all over the core. I don’t see a lot of people welding in their back yards much. There is also A LOT of wasted space in the front yards we are forced to have….
Leo S, all good questions. The little I have read is that the province will impose the tax separately from the municipal property tax, but I am sure they will use the same assessment information. p80:
“The tax will be administered by the Province,
outside of the normal property tax system
and property tax cycle. The Province will issue
notices by mail that will direct residential
property owners to a Ministry of Finance
website that will contain an electronic
tax form. The notices will also contain
information on the various exemptions.”
As for up-front exemptions, I think the list for the Vancouver vacant house tax is probably the best guess at the moment:
http://vancouver.ca/home-property-development/will-your-home-be-taxed.aspx
jpm, welcome to the discussion. I think there was some conversation earlier about the idea of the provincial govt relocating certain facilities. Many things could go to the West Shore. Forestry could go to Kamloops (I know I just pissed off a lot of Forestry people, sorry). Duncan is quickly becoming a commuter town. Why not just move something there and start making the town more substantial. Other stuff will follow, along with a nice rail line.
Hey, leave the Highlands alone! Where do you think all the parkland is that makes it worth living on the peninsula? The big rule in growing a city: Don’t screw up what makes people want to live here in the first place, or you may as well move to LA or Hong Kong.
They should definitely finish making McKenzie into multi-family buildings. I still can’t fathom why there are SFH on McKenzie between Shelbourne and Gordon Head Rd.
Shelbourne south of McKenzie also needs to develop the last straggler SFH lots. The other areas in Gordon Head are less suitable, but the new development proposed at University Heights mall and just to the north are both good. That is, as long as they plan proper transportation in and out. Things will be very ugly if the roads and busses don’t change.
@CS
There are many ways governments can encourage business and people to relocate to other areas of the island. Tax incentives and short-term subsidies for businesses that establish themselves in a more open area is one way. If the jobs are there, then the lifestyle will bring in people. The open wilderness and accessibility will attract people if jobs are there.
@Dasmo
The Netherlands is dense by necessity – there are a lot of people in a very small space.
That doesn’t translate the same here. I think that increasing density is actually contributing to the high price of housing in the core. Most new lots are so small that outdoor hobbies – like a workshop – become impossible. Reasonably sized yards are at a premium and anyone who needs a little outdoor space is forced to compete for this limited resource.
The myth that we are out of land – hemmed in by ocean & mountains is interesting. Has anyone driven through the Highlands lately? Or how about Metchosin? Lack of regional cooperation and planning combined with poor transportation infrastructure is limiting us as much as anything.
The Netherlands is one of the most dense countries in the world. Almost no high rises. Almost no SFH’s either.
How about we don’t, which will keep Gordon Head quiet and pleasant and has the added benefit (for existing homeowners) of keeping prices high.
@ JPM
“Anything we can do to spread people out will help affordability. Personally, I see that as being a better approach than increasing density in the Victoria region.”
Nothing to stop people spreading out, except for the reason that you yourself gave: up island jobs tend to be few and far between.
What’s more, employers won’t locate where there is no suitable pool of available labor. Without a command (Soviet style) economy, there’s nothing government can do about the fact that jobs and people come together in greatest numbers in the largest centers of population. That’s where the interaction among human, physical and economic resources yields the highest payoff.
Naturally, vigorous urban growth will raise real estate values in the core as population growth forces more and more of the population to commute. The only antidote is to increase density. For some reason, Barrister thinks that increasing density means 40-story highrises everywhere, which is nonsense. Oak Bay could double its population merely by raising the density to eight or tens stories all along the avenue. Gordon Head could do the same along its many boring main roads.
The Big Short Part 2. US market to tank with Canadian. The more the merrier. 😉
“If the Fed raises rates four times this year, and if the yield curve steepens even a little to edge back toward a normal-ish range, as I expect it to, average interest rates for conforming mortgages may well be around 6% by year-end. And that, I think, would mark the real pain threshold for the housing market.”
http://www.businessinsider.com/housing-market-could-be-in-for-a-shock-tax-law-interest-rates-2018-2
And is real estate an even better hedge against inflation if one has a mortgage, since inflation benefits the debtor and hurts the creditor?
Definitely time for another skill-testing/myth-busting question (we’ll use US to keep emotion out):
Judging by rates, are US prices more likely to go up or down in early 2018?
(Note: the green interest rate line is current, Case-Shiller is Nov ’17)
Bonus question: How about in real terms? Is RE a good hedge against inflation?
Here’s some recent ot values for Oak Bay
1044 Hampshire $875,000 for a 50 x 112′ lot
830 Transit at $720,000 for a 55 x 120
1606 Yale $630,000 for a 50 x 128′
If you’re paying a million for a building lot in Oak Bay you’re guaranteed to loose more than a hundred grand on the completed home. Construction costs are too high and buyers are not paying the high prices like they used to.
If builders would pay a million for the land then
2044 Milton would have sold by now at an asking price of $898,000 and it has a house on the site.
The same for 1017 Monterey at $969,000 and it has a functional home that is worth keeping and assessed at $80,000 on that site too.
The same for a house on Eastdowne that’s been listed for a month at $929,900.
The land is just too expensive at over $875,000 to build a home and sell it.
Speaking of bike lanes. I was driving around town the other day wondering if these were more of a tax grab than just bike lanes. They took out 2 lanes, created bike lanes but also way more parking downtown. I can see how it may help people park closer to a shop but I was wondering if they planed increased tax revenues for this.as another reason.
Everytime I drive into town I dislike the traffic more and more, luckily I currently work from home and only go into town for dinners and the odd meeting.
I personally think traffic will never get better and can only get worse. Even with that exchange they only move the stop and go traffic forward to the next light. Getting out of town is a gongshow at 5pm.
Been reading this blog for a while – great info! I moved to the island to be near family – a brother in Powell River and a son in Nanaimo. I’m a tail-end boomer or early gen X-er and I’ve lived all over Ontario.
I agree with expanding to several small cities across the island. But it needs to be a balanced approach. Consider seniors, families, singles. And all of that means jobs.
I tried moving to the mid-island. It is a much more central location – easy to get to Victoria, PR or Vancouver. Housing was also much cheaper. The primary challenge was work. We ended up in Victoria because as a techie, all the work was here. Government, VIHA, private sector all concentrate their jobs in Victoria. As a result, I had no choice but to enter this crazy housing market.
So the question is how do we spread out the work across several key centers on the island? Nanaimo and Courtney/Comox are great locations for businesses to locate. Government could distribute some of their offices, but we could also add incentives for businesses to locate up-island. The challenge is to get multiple communities to work together instead of competing.
Anything we can do to spread people out will help affordability. Personally, I see that as being a better approach than increasing density in the Victoria region. Canada is a big place. The entire island is beautiful and has lots of room. Why do we continue to concentrate all of the work and amenities in a single area?
@ Barrister:
Yes, I’ve wondered about that kind of development. Maybe a ghost city somewhere in the middle of nowhere, for Chinese investors. With no people, there’d be no wear and tear on their investment condos, which would remain in pristine condition for evermore.
As for retirement communities, don’t they already exist somewhere in the Arizona desert for anyone who is attracted by that kind of thing?
Trouble is, old folks mostly don’t want to be quarantined even if there is a good hospital. Mostly, they want to stay wherever it is they were at the time they could no longer deny that they had become old. For one thing, they know their way around, and even know a few people in the community, perhaps members of their own family. And in fact, old people mostly like to be in the thick of things. Haven’t you noticed how the come out on Saturday mornings to do the grocery shopping. Come to think of it, Saturday morning is when I do my share of the grocery shopping (but I do try not to doddle around blocking the aisles or hold things up at the checkout by any display or cognitive decline or confusion).
I think if you want to create new cities you have to create a viable economic base other than old folks. In a command economy, that is easy, but in our system it is unclear to me how you do it. And in fact I don’t think we will. We will continue to muddle on, screwing the younger generation as the older generation accumulate wealth in their empty nests. Meantime, we’ll have more and more goofy green schemes, like bike lanes taking up have the traffic space downtown, and mad boondoggles in sewage treatment (we need full separation of the sanitary sewer from all other waste water, plus full treatment of the greatly reduced volume of the sanitary sewer), bridges, etc.
@ Once and Future
“If you are suggesting a non-stop train to Nanaimo, I fully support you.”
Absolutely I am NOT suggesting a non-stop train to Nanaimo. Well, it’d be great, but I’m not suggesting it.
I am talking about rapid transit between downtown Victoria and a satellite city with a journey time of less than 20 minutes and at a minimal cost.
Duncan and Nanaimo are not, and never will be, satellites of Victoria. Furthermore, a modern rail link, e.g., a two track monorail (which would resolve the problem with multiple rail crossings, while leaving the right of way available to hikers and bikers) would probably cost at least $25 million a kilometer, i.e., $2.5 billion to Nanaimo. And with a mountain pass to traverse, it would not be travelling at bullet train speed, or with high energy effficiency.
No, Brentwood Bay is about as far from Victoria as an economically viable satellite of Victoria could be. The transit time, with a high-speed, non-stop linke from satellite to downtown Victoria would be under ten minutes. And with regular highway vehicles banned (autonomous minicabs would be allowed) downtown Victoria would be even more attractive than it is now.
With Duncan people focus on the highway. Duncan is one square mile. NorthCowichan is much nicer. Cowichan bay is amazing. Chemainus and lady smith are beautiful. Mill bay is great. Along the river and lake is great. Duncan has its issues in its 1 square mile. No doubt.
Eventually… even so, you’ll probably have to come down to Vic for a lot of specialists…
Cowichan is nice enough I guess, but Duncan is not very attractive at all. There are lots of issues there w/ FN as well. There is the never go-away issue of very arduous commute to Vic – lots of people I work w/ are doing it – can’t believe how they do it!
Just looked up Peterborough to London trains and I see Richard Branson is now running things on Virgin. Ok, so it takes an hour and one minute to go 118km which is the train track distance. (7km further than Nanaimo to Vic) We could use someone with his tenacity over here to sort things out for us, I really admire this guy. He also treats his employees really well and is a great example of how to run a company full of happy employees for so many heartless corporations out there. He’s still trying to get Virgin Galactic off the ground for the space tourists… https://www.virgingalactic.com/
Cowichan area is an amazing area to live. The hiking,MTB, river and lake and cheap housing make it a great area to look at.
I know that when I first started to look for a home on the island I asked about hospitals in other cities like Duncan. I remember the realtor saying that while there is a hospital in Duncan he sure as hell would not want to trust his life on it. While I generally take comments from realtors with a large mountain of salt I have heard the same from a lot of other people. Don’t know the truth of it myself.
GWAC:
That is good news and a great investment for the future of that area.
I am a coach and had to spend a very grim afternoon with an athlete at the Duncan Emergency a few years ago.
Not third world but very close. The worst hospital condition wise that I have been to. A new hospital is long over due
Luke a new one is going to go up.
https://www.cowichanvalleycitizen.com/news/date-for-new-hospital-for-cowichan-valley-pushed-back/
Actually I was reading a Family Law Article the other day setting out the financial advantages of not being married for a couple these days. The author was making the point that in an increasing number of scenarios there are distinct financial advantages to not tying the knot. I am not sure that I am totally convinced but I can see how that might be the case.
Interesting QB never had a population cap. All these years I thought it did!
Once and future- I lived in Peterborough in 1998 for about a year and it was great to take the train to London in just an hour. Same distance as Nanaimo to Victoria approx. they have the option of the slower train that stops at all the little towns or fast train non stop.
However nice this would be on the island we just don’t have enough population to support it yet. Though I do think they should bring some sort of train back to the E&N. doesn’t seem to be a will to do it though. So we’ll continue to try to pack people in down here in the CRD.
Gwac. The Duncan Hospital is really small. When living up Island for many reasons people still have to travel down to Victoria. This is even true for Nanaimo.
@Barrister, https://www.viha.ca/locations/hospitals.html
Even in the CRD this is the fabric of Victoria. We are a bunch of small cities. Some serviced by the Hospital in View Royal some by the Royal Jubilee. (View Royal pronounced “Royal with cheese”)
I would add Duncan/ North Cowichan.
Cowichan regional district has its own hospital. Mill bay/Lake Cowichan and lady smith all part of the CVRD and are within 20 minutes of the hospital. Growing area.
Amazing facilities for young and old in the area. Pool/arena/library/ schools.
If we actually had 10 largest cities each one would have a population of 50,000. The math simply doesn’t work out. We don’t have the population to support more than a handful of cities with full services.
As we grow population wise that will change. We’ll have Victoria, Nanaimo, Parksville/QB, Courtnay/Comox and CR as the major centres on the island. Perhaps even Port Alberni.
There is no need to build more cities, we already have plenty that have no impediments to growth.
Dasmo
I am less familiar with the island than you are. Can you name the ten largest cities up island with both (full service hospitals and universities for me. Off the top of my head, I can only think of two but I am sure that I am probably wrong about that. Assuming you are correct what needs to be done to make those communities as desirable or more desirable than retiring in Victoria. Perhaps what I am suggesting is not practical but I am not sure that never ending increases of density in Victoria is the solution either in the long run.
The sun is out so I am going to enjoy the day as I hope everyone else will as well.
And whether the non refundable covers 100%. Retiree with low income??? If not get divorced and claim 2 separate primary residences. 🙂
Also note the Elkington Forest failure. They were trying to build a totally new village but our market was uninterested. Rightfully so they would actually be living in a gravel pit their entire lives not a unique European style eco village. The only way this can actually work is if it’s built in its entirety first China style. Problem is we don’t have slave labour or China style rule. Well, that’s not such a problem…..
I guess the unknown part is the “up-front exemptions”. And how would that even be administered? Who collects the taxes? The municipality?
Will be interesting to see if Qualicum lifts their population cap if they become more popular.
Edit: I guess it’s not a cap after all https://www.bclocalnews.com/news/the-so-called-population-cap-in-qualicum-beach-is-no-more/
But you just described Vancouver Island as it stands. There are numerous cities clustered up the island with universities and hospitals and jobs.
CS:
I obviously was not clear enough when I referenced building cluster communities on the island. These are not intended to be some form of commuter satellite for Victoria but rather small independent clusters of nearby towns that essential act as a small city and are independent of other cities. If anything the idea is to drain development pressure away from established cities like Victoria.
This sort of development is particularly favorable to Vancouver island precisely because of the nature of development pressure in Victoria. You are absolutely correct in stating that people and companies move to cities like Victoria because that is where the jobs are located. But perhaps more than any other city in Canada a lot of the escalation of prices in Victoria is not due to local incomes but
rather due to the numbers of boomers retiring here. At the risk of oversimplifying the issue greatly it would possible to create a small town cluster that would compete and hopefully in short order be preferred as a retirement destination over Victoria. To have a living city one can not just create a grey haired ghetto but a elegant retirement destination can be one of the pillars of a new small city.
Just by way of illustration build a first rate hospital in the center nod of the cluster community; move the school of medicine and the school of nursing at UVic out to another of the adjacent towns.
As you pointed out people move to a location for jobs and in order to make this sucessful a certain number of government jobs would need to be transferred. It is not, in my opinion a mere coincidence that Oak Bay commands such high prices. In part, it is because it still has a small town feel to it but also has access to a full facility hospital. Obviously a lot of retired people prefer to be downtown with all its activities but a lot don’t. Off the top of my head , I would look at an area like Mill Bay and Cowichan Bay. If one could divert even ten to twenty per cent of retiring boomers away from Victoria and leave the city directed more to the young people who work here then prices in Victoria would begin to more accurately reflect incomes in Victoria.
Would it be a challenge, undoubted so, would it require real commitment from government, absolutely. But other countries have very successfully done this and while perhaps naive I have always believed that Canadians, once they set their minds to it can do anything as well or even better than anyone else in the world.
Anyway, I hope I was a bit clearer as to what I was suggesting.
Here’s another example. A rare written piece. http://www.huffingtonpost.ca/ross-kay/canada-housing-bubble_b_9595134.html
So despite prices rising, his argument is that bears have been correct about the market because an obscure measure that doesn’t mean what he says it means has been up and down. Argument by confusion.
First I known zero about this except what they are proposing has more units than what it was.
Is this not what will solve the issues we are facing. It was turned down.
https://www.vicnews.com/news/victoria-council-denies-44-unit-building-after-tie-vote/
Opponents claimed the building would disrupt residents that are happily situated in the area.
“This proposed box will add nothing to the charm of this neighbourhood,” said one resident wearing a sweater emblazoned with ‘Empresa – Wrong fit for Burdett.’
Density and zoning changes are what will fix the issue. Supply and more supply.
I am somewhat familiar with the UK. As a example, Peterborough to London non-stop cuts out a road trip of roughly 80 miles (128km) down the A1. That is further than Nanaimo to downtown Victoria.
If you are suggesting a non-stop train to Nanaimo, I fully support you. I just think we also need ones that stop in Duncan and all points in between (just like there are stopping trains that go to Peterborough).
@ 1 and F
“Just a plain decent speed train between Duncan and downtown Victoria with sensible stops would make people leap at the opportunity to live further out.”
Nah, a stopping train entirely defeats the purpose. If you look at the satellite communities around London where the upper classes live, you will find that there are fast, non-stop electric trains to Liverpool St. or wherever. But it costs, bigly.
Whether First Nations have control of ocean inlets such as Saanich Inlet would be interesting to know. It seems doubtful to me. But when a small lot in Oak Bay now costs a million fifty, the annual rental on 20 feet of wharf frontage would look very attractive to most people. It would be environmentally sound too. No lawns to mow, no damn leaves to rake each fall. It would be a floating counterpart to St. Petersburg or Venice — in time perhaps a tourist attraction.
@ Barrister
Eight hundred square feet. Wow, that’s huge. Seriously. Years ago Margaret Thatcher persuaded the city of Westminster to sell its council flats. I looked at one or two. They were in ten story, brick-built, walk-up buildings, which didn’t look bad on the outside, and the flats probably averaged 400 square feet — a three bedder maybe five or six hundred square feet.
And they surely make comfy snug homes, located in the best part of town, with lots of recreational facilities, entertainments and shopping nearby, not to mention the Parliament buildings where one could spend an idle hour in the visitors gallery listening the current debate.
And that, it seems to me, is how low -cost housing should be done: good looking buildings, not the cheap ugly town homes that the Dave Barret NDP government put up on Hillside, Wilkinson Rd, etc. They should be good looking because everyone, not just the inhabitants, have to look at them every day.
But the cost should be held to a minimum by keeping rooms small. A kids double bedroom doesn’t need to be much bigger than a bathroom and a kitchen/living room with a nice view of the street needn’t be more than 150 – 200 feet.
So, yeah, 800 feet, that’s palatial.
CS, I think you are right that rapid transit would easily make satellite communities interesting. I don’t think it needs to be a hyperloop, though. Just a plain decent speed train between Duncan and downtown Victoria with sensible stops would make people leap at the opportunity to live further out.
But please stop with the floating city nonsense. It is engineering stupidity, it is partially park, it would be an ecological disaster, and the local first nations would block you forever (and rightly so).
http://www.env.gov.bc.ca/bcparks/explore/parkpgs/gowlland_tod/gowllandtod.pdf?v=1519445729591
There is plenty of land to build on. Rapid transit is the best solution to get people to other town centers.
Further to my last sadly unproofed comment about Barrister’s satellite city plan, the real problem is to achieve the synergies among people and services that a large city provides without intolerable additional cost, and that is difficult because you have to move people from center to center at a cost in time and money that is comparable to the zero cost of those interacting within a single center.
However, with advanced technology one might get close. A center to center non-stop hyperloop, for example, with a mass of autonomous minicabs at each terminus would eliminate virtually the entire cost in time. The question that remains, however, is what it would cost to build and operate such a system of rapid transit.
My own preference for a Victoria satellite, as I’ve mentioned to a response of zero interest, is a floating town on Saanich Inlet. The pros include:
… Zero land cost
… Zero earthquake risk (I assume a city of floating structures would ride out a tsunami)
… With floating bridges connecting to either side of the inlet Victoria would be better connected with the up Island economy.
… Construction costs would be minimized since all housing and other structures could be factory built and floated into place.
Well, Barrister, this kind of thing isn’t going to help further your idea:
https://www.saanichnews.com/news/victoria-council-denies-44-unit-building-after-tie-vote/
Four story rental-only building on Burdett near Cook. Sounds like it is hardly pushing the envelope, there. Does anyone know why it generated such local opposition (other than the usual)?
Leo S, from page 72:
“A non-refundable income tax credit will also be introduced to offset the new property
tax. This will provide relief for persons who do not qualify for an up-front exemption,
but who pay income taxes in BC. The income tax credit can be carried forward to future
years.”
I know we are pissed off at Alberta right now, but I think we should make an exemption for them as well. Eastern BC is going to be furious if this flies as advertised.
Cutting off Alberta holiday homes in the Okanagan (and maybe the Kootenays) is about as smart as Alberta refusing to buy clean BC electricity. Make life worse for your own people just to score political points.
Barrister:
I thought it might. But, like when Trudeau mansplained “peoplekind” to a woman, one can be fooled into taking statements at face value.
I like your thoughts on self-contained smaller centres, as opposed to a sprawl of suburbs. But how to incentivise their population growth? Making larger cities less affordable is one. But I would prefer more carrot and less stick.
Funny that my spellchecker underlines ‘peoplekind’ and ignores ‘mansplained’.
Barrister, I would love if the internet at large had a more civilized tone of argument. I certainly don’t mind strong argument, but the pettiness and personal attacks always seem completely unnecessary.
However, that is not the world we live in. I am afraid that the modern world has decided that the average discussion on the internet will not hold to older standard of civility. Is this a bad thing? I think so, but I don’t matter in the grand world of the cyber inter-tubes.
My suggestion: Be a good example of how to argue with respect. Maybe some people will be inspired to follow your lead. If not, don’t get too personally invested in what strangers on the internet think of you.
I am late getting back here, but my take on the “interview” was:
1) The NDP did exactly what “we” suggested.
2) Speculators had no effect.
3) No-one knows the effects of these regulations and no-one has good data but me.
I can’t say that I came out any wiser than I went in.
Thanks Marko
Marko what is actually happening to the market this week. How are people reacting. TIA
Pending sales coming in as normal so far. The market will likely hold for the spring due to record low inventory.
@ Barrister
We have totally failed to develop new small cities as an alternative to the few existing cities. In my opinion government needs to take the lead in this creation. Retiring boomers are not going to flock to Duncan or Mill Bay when there are no proper hospitals or infrastructure.
That’s not really the case. Look at Vancouver Island. We have a dozen or so large villages or small towns, Sooke, Sidney, Duncan, Chemainus, etc. There all well located each with its own attractions. But people aren’t flocking there, they’re flocking to the big cities because that is where the jobs are. And the jobs are in the big cities because that is where the people you want to employ are, and where the associated industries and services you need are.
Asian economies that are outgrowing ours at a rate of two or three to one, have vastly denser cities with correspondingly greater densities of economic resources that promote growth. Our cities would also be vastly denser if we had a huge rural population heading for the city, but that’s already happened in Canada, so our cities grow in a rather desultory, but our small towns mostly stay small.
The only way you could change that would be with some kind of command economy, which Canadians, generally, would not favor.
Your idea of satellite towns makes sense, but you’d need something better than BC Hydro buses to link the satellites to the main city, and the cost would be extravagant.
As for James Bay, no need to spoil it for a decade or two. Meantime we should be densifying along OB avenue and other boring streets with low-rise appartments, no more than five or ten stories.
B.C.’s housing tax overshadows Alberta’s playground
The potential fallout, should B.C. extend its proposed tax to the Columbia Valley and its neighbouring areas, would hurt locals more than outsiders, according to critics who reside in the Kootenays. Barry Brown-John, a director on the Kootenay Real Estate Board, argues local businesses would be damaged if Albertans packed up.
“With vacation properties, they use lawn services, they use home [security] watch,” he said. “They employ a lot of people in the valley.”
https://www.theglobeandmail.com/news/british-columbia/new-tax-stirs-fear-in-parts-of-bc-that-are-albertasplayground/article38099003/
Marko what is actually happening to the market this week. How are people reacting. TIA
“For those looking to sell or buy, the current downward trend in the market with falling sales and prices will be amplified by these measures. And with rising interest rates with more planned this year, and the new B20 mortgage rules that lessen credit for new buyers, the pressure is mounting. Now is the time to buy!”
The pressure is mounting! Buy now before prices go down even more.
Why pay less?
Did I miss the part where they confirmed that the spec tax would affect out of province owners? Pretty sure they said the exemptions haven’t been nailed down yet. They could easily not apply to owners from other provinces. The trickiest part is probably proving that if the tax credit is all done on the provincial level.
Maybe they will get together with Ontario and ask the feds to move it to the federal level? Then any canadian income could be used to offset the spec tax. That would be fair.
I bet Hawk’s wife wants to kill him, after she let him talk her into selling their house right before prices skyrocketed 40%!
Marko: “So he is quoting a subset of the market where prices went from around $3 million to $2.8 million….just enough of a drop to avoid the 5% PTT
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
Lol, true enough Marko, but this is one seriously sick market if sales are any measure.
Vancouver Detached Sales
“When comparing on a year over year basis, January sales inched up by 3.4%, however they remain a staggering 47% below the ten year average for the month of January. The 91 sales recorded for the month of January were the second fewest since 2009. “
No argument from me here. If – as the boss of some real estate firm in China said – taxes won’t stop wealthy foreign investors is true, then I see that as something of a good thing. If they are going to come anyway, at least collect the revenues requires to build more supply.
The hyperventilation from the industry that this is the death blow for the market is way overblown.
However it makes the market more balanced and fair. I think people would be a lot less upset about high prices if there was some certainty it was driven up through dubious means.
Entry level detached home prices remain relatively firm with most of the pressure on more expensive detached homes, most of them off their peak pricing by about 5-10%. The average sales price for January 2018 was $2,797,295.
So he is quoting a subset of the market where prices went from around $3 million to $2.8 million….just enough of a drop to avoid the 5% PTT 🙂
If this market is down 10% and CREA is showing near peak prices that would be the $1,000,000 homes drifted upwards.
This might be a sign of the times. Lol. Kinda sounds like a realtor but ….
http://www.usedcowichan.com/classified-ad/Attn-Buyers–Sellers-JUST-REDUCED_31347398
$529,000 · Attn: Buyers & Sellers (JUST REDUCED)
Great opportunity for first time buyers or investors! I have three properties available in Mill Bay and Cobble Hill for immediate sale or possession.
“For those looking to sell or buy, the current downward trend in the market with falling sales and prices will be amplified by these measures. And with rising interest rates with more planned this year, and the new B20 mortgage rules that lessen credit for new buyers, the pressure is mounting. Now is the time to buy!
I have three properties available for sale for those looking for long-term rental income or those looking to buy their first house.”
Marko: “I’ve read articles that Van SFHs are up 8% Jan 2017 – Jan 2018 and it seems that CREA stats would support that -> http://creastats.crea.ca/natl/index.html
It seems if anything prices are within 1 or 2% of peak.”
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
http://vancitycondoguide.com/detached-market-report-january-2018/
Vancouver Detached Prices
While having access to the numbers and the data is nice, the interpretation of said data is critical. As always, focusing on the trends as opposed to the monthly fluctuations should be the priority. Entry level detached home prices remain relatively firm with most of the pressure on more expensive detached homes, most of them off their peak pricing by about 5-10%. The average sales price for January 2018 was $2,797,295. The median sales price was $2,273,000.
Leif,
I’m glad I’m not the only one noticing. I find it crazy that a family house in saanich is the same price as Sidney or Brentwood Bay. I haven’t been seeing houses selling like they were in 2017 and I don’t think these people will get the prices they are looking for. I have also noticed a lot more on the rental front in all areas around vic compared to the last couple of years.
Aren’t the greens by definition left of the NDP?
It’s true BC is one way or the other. We had the Liberals going too far to the right for 16 years after a long reign of NDP too far to the left… something more in the middle would be nice, but it doesn’t exist here! The Greens on some levels appear even more left wing than the NDP!
While I liked many aspects of the budget – like going after FB’s. I also have concerns about it. They may have gone a bit too far, so if they crush the economy how to pay for all the goodies?
God help us in this province – we just keep yo yo – ing one way then back to the other without stopping in the middle. Hard to predict what to do in life sometimes. I’ve always just trucked along trying to benefit from both sides of the coin – can’t control it anyway.
@number6
Introvert is a english majoring, Edmonton jealous Calgarian Woman.
I guess that doesn’t preclude her from being a dad in this day and age though.
@gwac
I would say the 15% was put in to make the market more affordable for the average person. It paused the market and than prices in non luxury market ie Condos surged. Most people are not in the luxury market and do not care if it has fallen. The 15% had no lasting impact on the market where most people are and may have even sent prices up in the lower priced market.
Vancouver condo market surged after the 15% because it did not apply to pre-sales assignments. If you go look there are charts showing a direct correlation between houses and condos because the 15% FB tax on houses did not effect pre sale assignments. They just started dumping money into pre sale assignments which didn’t have the 15% and could avoid other taxes.
Luxury market (where the foreign buyers are) was hit hard and remains down. Sales at decade lows and prices down 10-15% from peak according to Saretsky
I’ve read articles that Van SFHs are up 8% Jan 2017 – Jan 2018 and it seems that CREA stats would support that -> http://creastats.crea.ca/natl/index.html
It seems if anything prices are within 1 or 2% of peak.
@penguin
It is interesting to see the craziness of the peninsula. Looks like assessed values went way up and people are still listing way above assessed. I think a lot of these places are going to sit for a very long time if they don’t drop prices. I don’t see this happening as much in my price range in the core.
Not sure if you saw my post on this earlier but I am seeing the same thing. Assessed went up 20% but they are still putting them now at new assessed plus 20%. Places that were selling for 650-700 in nov/dec are now listing at 750/800. I honestly have no idea where they are getting the numbers on some of these. I have flagged them to watch and see. I have also seen what looks to be more rental houses hit the market so maybe people are hoping to get this high price and are not really serious in selling unless they do.
Introvert, you seem to have done some research regarding your attacks on this blog so that you believe that you’re not liable for your personal attacks. However, if something was to happen, to say Hawk, after all of your comments, you would be a person of interest to the police. Especially with all your hateful comments wishing him harm. That’s a lot of circumstantial evidence over the years. So you better hope Hawk and his family have a long and healthy life. Because you would be close to the number one suspect if something were to happen.
Or better yet, why not set an example to your children.
(Snip remainder of comment - admin)I feel like some form of financial literacy should be a mandatory part of high school academia. There are so many people, if not most, that literally have no clue of what’s going on around them.
So why is it not in school? Actually it is just executed very poorly.
It is called CAPP (Career and personal planning) class get taught and the teachers just use it as a block to pretty much do nothing? No teacher wants to teach it. No one does anything useful in it. I remember everyone would come and sign in and just sit around.
This is where they should have taught accounting and basic finances.
They don’t teach it because honestly I do not think they want you to know how to save or think about money and your future.
Never heard of him but seems like and impressive life.
I didn’t see a notable person around town. Maybe s/he would be notable only to an old fogie?
Sorry – didn’t realize you were talking about financing as opposed to the type of taxation measures in the new budget. In terms of financing, most lenders in Canada already require that foreign buyers put 35% down and they also charge a higher rate.
@ Totoro
Canadians typically pay ½ to ¾% higher loan rate than a standard domestic buyer in Maui. Canadians also need to put down at least 30% on a condo.
Things vary from state to state but the point was that if you’re buying in different areas, that aren’t your primary residence/where you pay tax, you will often be subject to extra fees. I believe in Florida, you’ll pay up to 75% more in property taxes, than a Florida resident.
In this couple’s defense, house prices in Victoria haven’t seen a nominal 10% YOY drop in over 30 years (or something like that).
Apparently, one’s real identity has to be openly linked with the pseudonym, and even then “this may not be enough for a court to find one’s own name sufficiently identified in the circumstances.”
So thanks for looking out for me, LeoM. You’re a real sweetie. But I think I’ll just keep saying whatever I feel like saying on this blog.
https://nsmedialawyer.wordpress.com/2015/04/20/is-it-possible-to-defame-the-anonymous/
3 new foreclosures this week. One was a deceased notable person around town. As I was saying, appearances don’t tell the tale of one’s true financials.
Grace
Same story in the Comox Valley. But the theme there was as soon as the OFSI regulations were announced, sales went off the hook. Sales were slowing prior to that announcement.
Dec 2017 saw SFH sales up 50% over Dec 2016, condos up 35%, patio homes up 60%, townhomes up 350%.
Jan 2018 was up 25% for SFH, condos were up 50%, patio homes up 300% and townhomes up 30% compared to Jan 2017.
It’ll be interesting to see what the next few months hold once the pre-approvals run out and the OFSI regulations start to be felt.
I don’t think this is correct. The property tax rates are based on use of the property – rentals are taxed more than principal residences. Canadians don’t pay more because they are not residents – locals pay the same property taxes based on use. There are withholding taxes if you are foreign, but they are refundable once tax forms are filed.
In PEI you pay more property tax if you are not a resident of PEI – 50% more and you cannot get an exemption if you live there for six months a year if you aren’t a Canadian citizen or resident.
Andy
The only argument I have is the rules where changed in the 5th inning. People should be grandfathered. As of now if you know the rules and buy so be it. If you buy outside the 5 areas and you are later nailed so be it. You were warned areas may expand.
That is the difference with us and Hawaii. Hawaii did not kick out or charge everyone already there who bought.
Luke it will not work long-term they eventually run out of other people`s money and it all goes to shit. Too much mobility. The politically cycle starts again with the Liberals. Our politics are a vicious cycle of take or ignore.
The only way house prices are going down medium or longer term are one of 2 things or both. Higher interest rates or the economy going south. Cannot rule either out.
Barrister
Here’s the thing, if you buy in different places, you often have to pay a fee for that. If you buy in Hawaii, you pay more than a local who buys in Hawaii. Do Canadians still buy in Hawaii? Yes, but there are fees for the privilege. If Alberta or Ontario needed to implement a spec tax to try to rein in their real estate markets, I’d completely understand.
I think the NDP was backed into a corner and had to do something and I think the spec tax is a good idea. Yes, it might hit Canadians living in other provinces, but the bigger issue is we have such a problem with housing in BC at this time, that if there’s a bit of collateral damage to help local working people be able to live here, then so be it. People from other provinces can always rent a place here on their vacation if they don’t want to pay the spec tax. Sorry if that sounds harsh, but in my mind it’s unacceptable that local, working people can’t afford to buy something reasonably affordable here.
Didn’t the FB simply find a way around the 15% tax by becoming ‘bare trust’s’ or shell companies? Kristy knew this and it was smoke and mirrors to appease voters and also please her foreign friends and developers. Maybe the luxury market in Van simply had reached a ceiling anyway?
Now, however, it appears the Gov’t is going to crack down on that and close these loopholes…
Given their nature, I still strongly suspect that the FB will search for any way possible around things in order to evade the new 20% tax. However, is it possible for them to find any loopholes anymore? Don’t be surprised if they find a way. Either through being PR, having a PR help them. We will see how this plays out – I guarantee we will see ways they get around things. It’s what they do.
Even so, I do think we will likely see a flight/reduction of FB’s from Van. The Gov’t is basically saying ‘go home and take your money with you – we don’t want your money in our RE market’. They are sending a strong signal to the world BC is not a welcoming place to invest in RE anymore. Without banning them, but given one would think this tax is so high they must be put off by now? Right?
They wanted to turn Van into one of their resort communities – locals be damned, and up until now were getting very close and successful in doing so. Van was becoming their ‘Monaco’. Now, however, I strongly suspect that situation could change. But, as Garth points out – if Van prices drop by 50% still 98% of locals can’t afford it. A house in a large city is simply not affordable anymore – and that’s the way it is in much of the world.
As for FB dumping prop’s here in Vic… well this may be an issue in favoured parts of Saanich like Golden head, and possibly some of the Yankee doodles will dump condo’s downtown, but how much of an impact will this really have?
The other element that perplexes me is how the Spec tax unfairly goes after Canadians who have vacation prop’s here – I think the BC Gov’t should have said anyone w/ CANADIAN income (not BC income) shouldn’t have to pay this tax. Now, we are unfairly targeting other Canadians… Gwac’s right – if you’re rich the NDP is acting a bit like Robin Hood – take from the rich – they don’t deserve it – give back to the poor! BC now stands for ‘Bring Cash’ and be prepared to loose it too, to pay for all the ‘have not’s’.
Carole James did say she’s open to ‘tweaking’ things as we go along. So we will see how it plays out. But she’s in the camp that is almost Karl Marx about things – everyone should be equal – it’s almost communistic isn’t it? That never works out either.
Jacob
You cant but the goal was to change behaviour and slow the market for where the average buyer is. It failed miserable. It turned into a tax grab.
The interview basically said only way to change the market is to change the long term influences on it (supply and demand)and it takes years to know if it was successful. Everything else is just temporary noise on a longer term trend.
https://www.bloomberg.com/news/articles/2018-02-23/canada-inflation-stronger-than-expected-amid-minimum-wage-hike
There’s that inflation…
Or it reduced what would have been an even bigger boom in condos. How can you tell?
Your entire elementary and secondary education was at minimum subsidized by the Canadian tax payer, and if you did any College and University, that was also subsidized.
Leo
You are more knowledgeable than me but just to argue.
I would say there are foreign buyers in the non luxury market in Vancouver-condos.
I would say the 15% was put in to make the market more affordable for the average person. It paused the market and than prices in non luxury market ie Condos surged. Most people are not in the luxury market and do not care if it has fallen. The 15% had no lasting impact on the market where most people are and may have even sent prices up in the lower priced market.
These changes this week may delay purchases but if nothing else changes ….Economy….Interest rates. Demand is still there and will eventually come back in. If no additional supply than prices go up.
It all depends how much demand is gone because of the tax grab. That is the big unknown.
Luxury market (where the foreign buyers are) was hit hard and remains down. Sales at decade lows and prices down 10-15% from peak according to Saretsky
Barrister you take everything as a personal attack but you also dish it out and “leap to assumptions” about other people. Anyway…
I’m going to be watching the market very closely this spring but even though I’m shopping for a house I’m starting to wonder if it’s better to wait even longer. I know it will be but how much “better” will it get.
It is interesting to see the craziness of the peninsula. Looks like assessed values went way up and people are still listing way above assessed. I think a lot of these places are going to sit for a very long time if they don’t drop prices. I don’t see this happening as much in my price range in the core.
I think the spec tax is a countermove to Alberta’s wine ban….
“The months of inventory for houses in the core is rising steadily”
I was wondering if it was just me seeing a few more than usual SFH’s come on the market the past few days. I imagine once the snow melts for good there will be many more out cleaning up the yard getting it ready for the spring rush before the FB’s start to dump.
Leo
Did the 15% really have an impact or pause things for one year and than off to the races again. Not sure what longer term impact/change it had. Anyways he is guessing like the rest of us.
Until you add more supply I agree with him this is a tax grab and may have little impact on the average workers home.
Fraud crackdown and supply will have a long term impact that is certainly clear to most people. However he goes further and says the changes will have zero impact for 2 years. That is an extraordinary claim and should be easy to test in the coming months. It is also directly contradictory of the experience in Vancouver when they phased in the foreign buyer tax and saw a large and immediate impact.
Way too many problems with that interview to go through point by point. If I didn’t think it would get me sued I would write a longer piece on the topic.
Number6:
You are absolutely wrong; it is weeds that spring up in the spring. Hundreds of weeds.
On a serious note thanks for the update. Unless there are a lot more speculators than I think I am not sure where a large amount of inventory will arise. Possible that people might start selling vacation homes here but i dont anticipate a flood of them.
Property magician that is not the point the owner was stressing. He was debt free. Likes his house. Not living a lavish lifestyle on a pension. He just has a house in a desirable area.
At the end of the day where we now penalize those that have assets. He has some decisions to make.
No one under the NDP is safe is you are deemed rich by them.
The months of inventory for houses in the core is rising steadily. I project that there will be in excess of 4.0 MOI for February. New listings in February are being added at the rate 2.1 for every home sold in the core.
Back in February 2016 when oil crashed the MOI was 1.7 and the NLS ratio was 1.3:1
We are quickly leaving a market in favor of sellers and we haven’t started into the spring market yet when daffodils and For Sale signs sprout onto the lawns.
What happens in the next 60 days will determine how severe a market correction we’ll experience. If MOI goes to 7 or 8 then we will have a crash like late 2008 and some construction projects will be shelved as unemployment and vacancy rates increase. March and April will be extremely important to watch this year.
The weaker outlying markets have already had a large increase in MOI. Salt Spring Island is now at 11 months of inventory and the Malahat is at 11.6 MOI
And for some Victorian’s, they can see these areas from their back yards.
On reflection. it might have been fairer to impose a higher school tax on houses purchased after Feb for three million dollars.
I am a little concerned that we have sent the message to all Canadians that buying a vacation home in BC is a bad idea and that you are doing it with a risk. Even if it is not highly taxed today there is a good chance it will be in the future.
I hope that those living in high value properties think to access their equity to pay off the seemingly measly increase in property tax compared to equity value available. Anyone who owns a $6+ mil property for many years has built up massive equity.
Any big or small bank would be willing to extend a HELOC for up to 65% to someone on a fixed income even. Be resourceful people if you don’t want to lose your home to the municipality.
The bigger problem with being underwater is what happens at mortgage renewal time and, whether, the bank will charge a premium for the extra risk.
http://vancouversun.com/news/local-news/housing-taxes-could-put-recent-buyers-underwater-on-mortgages
Interesting by product of the school tax. Let me set it straight I do not feel sorry for anyone in a 6.9m. house. Lucky guy and maybe its time to downsize. His choice though.
The tax is going to hit people without the liquid assets to pay.
Well I care but you’re right probably most of them don’t. PVille QB is highly favoured by the very wealthy retirement crowd – has been since the 90’s but even more so now the baby boomers are coming of age. You might find you will keep rising there even faster than here. Qualicum Beach has had the wealthiest retirement incomes in Canada for quite some time now – this is: people having the most ‘investment income’ in retirement – more than any other place in the entire country.
Josh: There you go again leaping to an assumption that my money is in tax heavens. An incorrect assumption by the way. But, strangely, we both agree that tax heavens are a serious problem. Might I suggest that we both remove the personnel dimension out or our discussions if for no other reason than our personnel situations are rather atypical.
Also where we might agree, maybe, is that we should consider following the American model and taxing citizens on their world wide incomes regardless of residence. In my instance it would not have mattered since my investments are in jurisdictions with about equal or greater tax rates to start with. But it would go a long way to dealing with the problem of people parking their families here and working abroad.
Noticed a couple ‘flips’ come on the market recently…
I didn’t notice anything in the budget about ‘flipping’. Did I miss something?
The Spec tax does not appear to be going after ‘flippers’… just empty places, and satellite families. I do wonder about how it appears to be unfairly persecuting Albertans/other Cdns who have vacation homes here. This may adversely effect the Okanagan esp. but some of our local waterfront may apparently come on market – but that’s high end.
The flips: 2000 Runnymeade Ave. Listed for $1,699,900. Sold for $1,050k just last Aug. Extensive reno done and transformed from 90’s decor to all updated. I think they did a great job but what a price! Place is def. ‘staged’.
338 Foul Bay Rd – steps to Gonzales beach this place was bought for $1,060k just last May. Now listed for $1,699,900. Notice a theme here? Anyway, they also did a gut job on it and the place has a suite. Looks great but what a price. The place also sold in Sept. 2015 for just $725k.
PS. Leif – OB did catch the people in the ‘cat pee’ house and I suspect they will get a fine? They cut the trees down on Christmas day in an attempt to avoid detection… didn’t work out as an OB truck was parked in front with employee frantically on iphone and jotting things down while the new owners were in the front yard trying to clear all the tree debris – that was on Dec. 27.
Barrister,
It’s the very first media article ever in Victoria that suggests it’s happening here. Only the naive think it doesn’t. They have their ways to do it, not with suitcases of cash.
The print version headline said “Real estate money laundering suspected in Victoria”. That took guts to go up against the local industry that advertises heavily in these papers/websites.
I lost track last year how many outrageous over asks were being done in high priced areas as well as low priced as well as the anecdotal evidence. Victoria is not immune from financial crime, we have a huge track record from many shysters and schemes over the years.
Not that anyone here really cares but the real estate market in Parksville Qualicum seems very robust right now. Houses selling over the asking price and in a matter of a few days. A few over one million dollar sales as well.
A take on the Housing plan.
http://www.cbc.ca/news/canada/british-columbia/real-estate-industry-casts-doubt-on-b-c-s-housing-affordability-plan-1.4546341
Hawk:
Not suggesting that money laundering is not a problem but that article is total nonsense.
For a start when I bought my house here, using both a real estate professional and a lawyer to register title absolutely no one asked me my source of funds much less tried to confirm were my funds came from.
The problem for drug dealers is trying to dispose of a million dollars in 20’s and I can pretty well
guarentee they are not buying a house privately and then paying for it in used twenties. A million dollars in twenties would be a stack about 5 meters high and weight about 50 kilos. Do you really believe that some innocent Grandpa who sold his house to a drug dealers is about to cart two giant gym bags to the bank and deposit it with his pension cheque. Absolute nonsense.
The real problem is that casinos in BC will accept cash in rather large amounts and repeatedly over the coarse of an evening from the same “player” and also night after night. Putting a stop to this is very easy and needs to be done yesterday.
Real estate comes into this formula only with people are willing to borrow large sums in cash. And virtually the only people who can dispose of this cash are either gamblers or perhaps some people who are doing minor renovations since, in my limited experience, it appears that there are some contractors who insist on being paid in cash.
Nobody borrows a 100k in cash and then wanders down to the Mercedes dealer and buys a car with a suitcase of twenties.
Josh I think Barrister was referring to the government subsidized education we all get. Josh I also think you would and probably use any legal resources available to you in pursuit of your goals so critizing Barrister is a bit rich.
Outside of Toronto, Alberta and Vancouver success is often critized and attached by others. Not sure I understand why. Best to just keep it hidden as much as possible in Victoria.
If anyone would like to retroactively pay for my education, I’m sure my parents would graciously accept. Until then, they would be fine with me moving.
I actually didn’t think that was sarcasm. I thought it was bait.
There’s a world of things that are perfectly legal but also immoral. Expressing my opinion of the morality of stashing money overseas to avoid taxes is not libel or slander. I’m also not alone in that opinion:
http://www.metronews.ca/news/canada/2017/12/13/canadians-want-ottawa-to-ban-use-of-tax-havens-poll-finds.html
That aside, I’ve agreed with just about all the other points Barrister has made. We need new cities pretty badly.
Barrister
Only thing to add Duncan is building a new hospital. A lot of retires are moving to that area. If you get off the highway. Duncan and North Cowichan has some real nice areas. Mt Tzouhalem is another world from Duncan. 10 minutes from the Chevron. Lake Cowichan/Youbuu and Honeymoon bay are being bought up by retirees to the point, young families cannot find places. Same thing with all the river front place from Duncan to Lake Cowichan. It is hopping place for retirees.
Agee with your point though.
I will not waste my time starting an action for liable, obviously but my point stands that unfounded personal attacks are unacceptable in spite of living in an era of Donald Trump. Feel free to disagree with me. In point of fact, a number of points made by people on this blog have made me re-evaluate my position on some issues. But there is a line between argument and just smearing someones character. I know that I belong to an older generation. Perhaps ones reputation for honesty and integrity are no longer valued.
My comment above raising a family in 800 square feet was sarcasm but on a serious note that almost seems to be the direction we are moving in.
At the risk of boring regular readers let me reiterate my position. First, let me take a step back since we sometimes lose track of the forest because of the trees. Canada has a growing population, primarily because of immigration rather than a natural birth rate. Between 2006 to 2016 the population grew from 31.6 to 35.1 million. For the sake of argument call it about 300k a year. (I know there are other factors involved like the changing size of households and demographic shifts due to the economy). But at the end of the day we as a nation are faced with having to add what is the housing equivalent of another city the size of Victoria each and every year. That is the elephant in the room from my point of view. For as long as I can remember our response to this growth has primarily been to cram more and more people into our existing cities. This blog has focused almost exclusively on how to increase density in Victoria without questioning either the necessity or the wisdom of this never ending growth.
My suggestion, as an alternative, is to follow the Swiss model of creating new cluster towns which effectively, when the cluster is combined, are actually small cities. Leaving aside the fact that small cities are both more environmentally friendly and economically efficient than large cities (facts that I am sure that others will dispute) is the fact that they offer in my opinion a much higher quality of life
to people. My father’s generation had a vision of a better lifestyle for the next generation and to a large degree they succeeded. My generation does not seem to have produced the same for the next generation. Ergo, my comment that it is acceptable to squeeze families into 800 sq. foot condos. I dont feel it is the least acceptable but that seems to be the direction we are moving. We have totally failed to develop new small cities as an alternative to the few existing cities. In my opinion government needs to take the lead in this creation. Retiring boomers are not going to flock to Duncan or Mill Bay when there are no proper hospitals or infrastructure. Young people wont move there when nothing has been done to ensure jobs in smaller communities. God forbid that I suggest that we lead the way in a new bold experiment to improve the lifestyle of the average Canadian. Others have already accomplished this and we merely need to learn both from their failures and their successes. I am aware that this would seriously cut into developers profit margins and ultimately lower housing values in established cities like Victoria substantially but I really believe that the younger generation deserves for us to do better than we have done.
Feel free to argue whether I am right or misguided but I would ask that you dont slander either my honesty or integrity. Since I have reached that point in life were I can count the number of Christmases left on one hand I dont have any vested interests in the direction that is ultimately chosen. Neither my wife nor her children will be in Canada after I am gone so perhaps give me the benefit of the doubt that my opinion is actually heartfelt before throwing too many bricks at me.
Best still, I promise not to regurgitate this again. I wish everyone well, including Josh and by the way, Washington state is a wonderful place to live. To be clear, the education that you got was not a debt you own but rather a debt that my generation paid for the education that we received. I do hope you prosper where ever to decide to be.
Leo
The 20 year impact. Things happening now are from changes 2 years ago. NDP should not be blamed if we do crash because of the length of time for things to work through the system. Most of changes are for tax revenue and will make no difference. All those points make a lot of sense. After that the next 15 minutes felt I was being sold a product to his service.
Jeez, that’s an unusually snippy response coming from you, Leo. I guess you really didn’t like it.
I did listen to it myself, I found it a little confusing in parts. Not really understanding what the effect of the new measures will be for “20 years” seemed rather stretched, as does there being “zero” causation between speculation and prices. Then there’s the usual, “what your listeners need to understand is no one understands the housing market but RKRC”.
Several weeks ago I contacted them asking them about their membership, specifically what came with their market information dashboard. If I’m going to give them $300.00, I want to know what it is I am getting from them. What is shown on the dashboard? What does it measure? Does it answer or address the following questions I have? What markets were being measured or not measured?
They responded pretty quickly. The representative from The Wealthy Homeowner said “RKRC has not licensed us to share that information with prospective clients in advance”.
Interesting response, and it was the last time I contacted them.
Money laundering in Victoria.
Real estate money laundering ‘deeply troubling’
“Real estate professional, Tara Hearn, explained that, while she hasn’t personally seen the practice in action, she has heard of some transactions that should raise some eyebrows.
“Any time you have a home sold, not through a real estate professional, but rather to an ‘independent broker,’ people should be concerned,” Hearn said.”
https://www.vicnews.com/news/real-estate-money-laundering-deeply-troubling/
@gwac
Please explain in detail why you think Ross Kay’s comments constitute a great analysis.
I listened to the full interview and found it chock full of nonsense and evasive non-answers however I’m open to be convinced Ross actually knows what he’s talking about.
There will be a kindergarten raise for sure, but a surprising amount gets eaten up by an increasing number of activities as they get older. Not to mention increased food consumption…. Expensive little blighters any way you look at it.
Jerry – a bit of hyperbole to equate 2% tax to “point of a gun”, no?
Barrister said:
”Josh: I really think you do own me an apology. To suggest that I am dishonest and cheating on taxes is outrageous. For forty years I paid taxes on every penny earned…”
Introvert said:
“Character is important in real life dealings; this is a blog with anonymous contributors.”
A bit of free advice to those who slander and defame on this blog while thinking their anonymity protects them from legal action.
Barrister is not anonymous, he has repeatedly revealed his identity and where he lives and he joined the pub night with several bloggers from this site.
So if you repeatedly imply Barrister, an identifiable person on this blog, is a crooked tax cheat or that he has somehow nefariously acquired his assets, then you could find yourself defending your statements in front of non-retired barristers, sitting on both sides of the bench.
I am enjoying Garth’s abrupt switch from “Vancouver is a massive bubble and will crash” to “All cities are expensive and Vancouverites are whiners for complaining about it” and the associated mental gymnastics of the commenters on Greaterfool who are pretending we have always been at war with eastasia
@LeoS
Or, just assume that 10,000 (of the 25,000+) empty homes in Van will be paying this tax, say each house/condo is worth 1M, so $20k each, and there you have your 200 M.
FB tax has nothing to do with renting or not. You are confusing it for the spec tax.
On the revenue projections, here is some back of the napkin math
They say spec tax will bring in $200M per year.
Average sold price in BC is $500,000.
So to get $200M in revenue they are banking on the tax being paid by 20,000 homes in BC.
That is out of the 1,881,970 homes in BC.
So they project 1% of homes will be paying this tax.
As doctors they are likely under the express entry system. That takes 6-12 months to get permanent residency at which point they are free to buy with no tax.
So how many of these doctors are going to actually scuttle a move to Canada because they have to rent for a year first? And if a few do, do we care? Is there a shortage of skilled workers applying or are we swamped with applications?
Just more FUD. Fear Uncertainty Doubt.
https://www.vicnews.com/news/okanagan-real-estate-agents-brace-for-speculation-tax-impact/
Says the man who lives with one other person in how may thousand square feet?
So… a broad consensus that Barrister’s hard-earned assets are his to do with as he likes within the law.
Yet… if Barrister moves to Switzerland he MUST NOT leave his Victoria house empty but MUST rent it out at the point of a gun.
Which comes first, the wilful obtuseness or the leftie cant?
It would be appropriate for Josh to weigh in here.
I actually believe from personal anecdote that this is true. I think the people on this blog actually have a much better awareness of our market than most people in the city, even though opinions on here diverge.
Very few people I know believe that anything here will ever change, and the most common line I hear is, “well, everyone wants to live here”. Another person I know recently bought a place in the Tolmie region for about 850k, hundreds of thousands more than it sold for a few years earlier. This gal and her partner are smart people by almost any measure. But when we got talking about RE, you should have seen the blank look on her face when I referenced market cycles in general. “Oh. Really?” She honestly hadn’t a clue what I was talking about.
Another favourite from a recent buyer I know in Gordon Head – she actually knew full well the home was overpriced, but justified it to herself and her partner saying, “The market is the market. It’s never going to change.” I just said “fair enough, enjoy your home”.
In one sense she’s absolutely correct that the market will always be the market, but I don’t think that’s what she meant. I feel like some form of financial literacy should be a mandatory part of high school academia. There are so many people, if not most, that literally have no clue of what’s going on around them.
Josh:
Glad that you agree. I assume that you are too moral to move to the U.S. since you would deprive Canada of all that education that we paid for you. If forced to move I fully expect that you will not remove any of your saving down there either. But I really think that you should be obliged to remain here on a moral basis.
Where people stand on an issue often depends on where you sit to eat.
“Looks like Spring’s heating up…much faster than Weaver’s global warming I might add
Quite a few sales starting to come in over ask again:”
As we know, someone needs to be the bagholder at the top. They probably never listen to or read the news like so many people I come across lately. Totally oblivious to what’s going on.
“Can anyone explain to me why the NDP didn’t make a framework for the Foreign Buyers Tax and Spec Tax that each municipality could opt into, if they wanted? Wouldn’t it have been a more fair process to let local people actually decide?”
They did let the people decide. It’s called an election and the people spoke for changes to be done where it was most obvious. Lots of butthurt owners need to remind themselves that.
I’ve had that same thought. And the views would be great.
Introvert: Lower profile for Gordon Head, 15 to 20 story high rises would about do it. But 2 bedroom condo sizes should be kept to a maximum of 800 square feet. That is more than enough space for a family.
As long as we keep Gordon Head the paradise that it is.
Deb: Good idea, we should add Rockland to the list in addition to the other areas. It would be fantastic if we could get that passed before I sell the house. With rezoning I really dont see any reason that the city of Victoria cannot accommodate a population of 1.5 to 2 million in the next few years.
3Richard:
You have just stated the obvious. I am not sure if I prefer a dishonest politician or a stupid one; fortunately we usually can get both in the same package.
Personally I think the rest of Rocklands should be zoned for these high rises. After all there are already a few condo’s on Rocklands Ave and there would have to be far less demolition of small homes. One of those big mansions removed would free up enough room for a good sized high rise and it is would be on rock instead of on soil subject to liquefaction.
Nice to see Horgan backing down on the pipe-wine battle.
https://www.bnn.ca/notley-lifts-b-c-wine-ban-after-horgan-blinked-in-pipeline-spat-1.1008072
Looks like Spring’s heating up…much faster than Weaver’s global warming I might add 🙂
Quite a few sales starting to come in over ask again:
6-1016 SOUTHGATE ST, ask 725k, sold 772k
102-636 MONTREAL ST, assess 1001k, ask 1119k, sold 1250k
302-1234 WHARF ST, assess 663k, ask 779k, sold 791k
Wait a minute! ……If the FB tax doesn’t apply to condo’s where the bylaws prohibit renting the units, well guess where all the FB money is going to end up.
Once and Future:
I am not sure that Alberta buyers would trust that the next set of tax changes would not affect them. I am not sure what, if any, reaction there is in Alberta to these changes. Maybe none.
Do we have any idea how many part time residents there actually are in BC and any idea what they add to the economy? For that matter how many Americans have temporary homes up here. I would like to think that the government has a good handle on the numbers and has modeled the economic impact but frankly that has not been my experience with government.
CS: Good idea, now if we can get city council to rezone all of James Bay and Fernwood for 25 to 35 story high rises this would go a long way to reducing housing costs. The developers in order to qualify for this increased costs would need to turn over a small percentage of their units for homeless shelters and for public housing. This can be done without any provincial involvement. This could provide an extra 15,000 to 20,000 units to the city.
Totoro, that is interesting. I found their FAQ here:
http://vancouver.ca/home-property-development/will-your-home-be-taxed.aspx
I can imagine that the Vancouver tax will form a skeleton for the new spec tax, so these exemptions are probably the best guess we have right now.
Your thought about an increase in strata value is also interesting. I wonder if there will be a tension between the (usually) higher value for a rental-allowed condo vs the higher value of a non-rental building in attracting non-BC owner/investors.
Appears that it will likely apply if you rent for less than 30 days at a time for less than six months of the year.
Best guess is that like in the Vancouver example these licensed accommodations are exempt.
My best guess is that it will not apply to condos that cannot be rented – perhaps pushing up their values. The Vancouver empty homes tax exempts people who can prove that their strata council won’t allow them to rent out their unit.
While I am asking foolish questions, will the non-resident tax apply to condos that are being used as AirB&B since they dont have long term leases. Will houses that are legally licenced and zoned as Bed and breakfast be included or excluded? There are at least three of them that are long standing boutique hotels in my neighbourhood and I would hate to see the owners get stuck with more tax.
Rarely do newspaper editorials say anything beyond on the one hand this but on the other hand that. However, in today’s Globe and Mail there is an editorial that almost breaks that rule to say something both sensible and definite about what’s needed to curb the escalation in housing costs in BC.
Thus, under the heading B.C. government’s housing solutions leave room for doubt the G&M says about the provincial government’s newly announced housing policy:
In fact it is a self-evident truth that in a place such as Oak Bay where more than 90% of the price of an older home is attributable to land value, increasing density has the potential to achieve a massive reduction in housing cost.
Can anyone explain to me why the NDP didn’t make a framework for the Foreign Buyers Tax and Spec Tax that each municipality could opt into, if they wanted? Wouldn’t it have been a more fair process to let local people actually decide?
If they were worried about delays, they could just opt-in the current list and let them opt-out if the local municipality passed the required motions in time.
I am certainly open to being convinced that this wouldn’t work, but it seems a little less heavy-handed.
(The side effect of this would be that the NDP could shift some of the blame if people complained.)
Barrister, that is a very good question. I suspect it will still apply, and that is a pretty dramatic push for someone to have to sell if they aren’t in a position to occupy.
As I said before, I can think of dozens of scenarios that might be unfairly hit by the spec tax, but the devil will be in the details. I just hope that the NDP have some people advising with real-world legal experience, and not just a bunch of academics.
LF, yes it certainly is. While expanding the twin taxes to the rest of the Fraser Valley and CRD were somewhat expected, I am still surprised they included Kelowna and Nanaimo.
I can only guess that they are trying to stave off people just shifting from one city to another. However, there is still uncertainty as to whether the NDP might expand the spec tax to other parts of the province, such as the Kootenays (popular with Albertans). Uncertainty is bad for everyone.
I think the persistent political divide between coastal and interior BC does reflect some real geographic and economic differences. While I agree with many things in the NDP platform, their usual weakness is catering to urban coastal problems without properly thinking about the interior.
While I don’t think there are many NDP seats in the Okanagan, this move certainly won’t improve that.
Introvert:
Re: Your comment
Thank you for your kind words.
No, it’s not. The counterargument is that a large portion of people being affected are homeowners, who stand to lose untold amounts of money. Should government act in a way that could harm so many? Of course, that counterargument has an easy rebuttal too, so it’s a balance question of government’s role in a market. I do think this is a pretty aggressive intervention. These people aren’t playing, but I also think that the seeds for serious trouble were planted long before the NDP came in. I do support any measures that are put in place to prevent fraud and abuse. I hope Eby goes to town. Mainly, this is what I am seeing, although the speculation tax will cast a pretty wide net.
Anyone who plays the race card is a fool or hiding something. I find his repeated assertion that neither foreign buying or money laundering are significant elements in the lower mainland’s market to be puzzling and questionable. He likes to quote the recent Statscan numbers which are about 5% foreign ownership, despite Statscan saying their numbers have a series of significant shortcomings and likely under-report. He simply argues that FBTs have an effect simply because the locals think it does – which is probably a real factor. But it’s also an ethereal argument, really.
Based on something I read elsewhere let me ask the following question:
Will the non-resident tax apply to a condo apartment where it is against the condo bylaws to rent out the unit?
(No, I dont own any condos and not thinking of buying one here. Just curious).
And you don’t understand the advice you just received. Has nothing to do with being a VP or a shyster.
I wish it was my personal corp. We just raised our max seed funding 3 months ahead of schedule. There’s a good chance I’ll be asked to move to Seattle at some point this year.
Cause I’m a VP, not a shyster.
Garth has a credibility problem with all those FB’s getting taxed because it probably effects his business thus plays the race card which is total bullshit.
They “were” flying in on plane loads to buy up properties in Van as well as here as fast as they could at whatever price it took and at all levels of housing. To say this had no effect on prices the last 10 years is ludicrous.
Now that they are being whittled down due to China yuan outflows being clamped, Canadian taxation as well as scrutinization of possible money laundering and shady mortgages/incomes/collateral claims on our banking system it’s suddenly not right ? New Zealand, Australia and Singapore are doing the same thing, so why are we such a bad guy ?
As James said, houses aren’t stocks. The time to cool this bloated pig down was long overdue.
I disagree with him. Government action to pop a bubble is not beyond the pale. Not at all. It actually makes sense if the alternative is a worse bubble that pops later. But I guess his perspective makes sense if he truly supports laissez faire.
CS, your essay—which began “It is usually a mistake to make political debate personal”—was thoughtful and beautifully written.
Andy thanks for posting. Great analysis.
Barrister is planning to move to another country. There is nothing shady about taking his assets with him.
And in general complying with the tax code in the way that is most beneficial to yourself is not morally bereft
Ross Kay discusses the new BC housing plan:
https://www.howestreet.com/2018/02/21/bc-housing-plan-how-will-it-impact-the-housing-market/
MLA Adam Olsen’s question to Minister Carole James on housing policy:
https://www.youtube.com/watch?v=-W10g2zZ2h8
A bit of smokescreening and diversion in James’ response, IMO.
Local
No modelling/ no idea how this will end. Not well thought out at what the out come will be. Screwing other Canadians.
I would not buy or invest in this province at this time. Dust needs to settle.
Garth`s blog has some good points as you stated. Thanks for posting.
Yes, thank you for correcting that important technicality concerning your vacation property.
Love him, hate him, or think nothing of him, Garth is certainly not impressed today with the actions of this Province towards the housing market.
The politicians giveth. They taketh away. They also screweth over.
One day after BC’s tax-tax budget, with reflection, thought and a few single-malts, it’s clear government has crossed a line. Elected officials have purposely, deliberately, set a course to crash a housing market. And they admit it.
When Finance Minister Carole James was asked, bald-faced, if the Dippers are attempting to engineer a price plop, she said, “Yes.” Then she admitted the province brought in $500 million in new annual housing taxes without actually knowing the consequences. “We’re take some very bold steps. There are firsts here and we’re going to track it carefully.”
Higher mortgage rates, new borrowing regs and moronic household debt levels were bringing a market correction anyway. Political incompetence might make it Biblical.
I have to say, agree with him or not, I do see his point.
http://www.greaterfool.ca/2018/02/22/capitulation-ii/
A few rambling thoughts on the spec tax:
I expect a the high-end market will see many listings. There are a lot of OB/Saanich waterfront places which are effectively vacation homes with owners coming for a few weeks out of the year. Long-term renting is counter to the purpose of these properties and I doubt many of these people will stomach 50K+ year carrying costs. Don’t think this is going to help your average house-hunter though.
The mid-range (~1M current valuation) foreign-owned places (in core areas) are probably not used as vacation homes. I’d bet the majority of them are rented full-time, as people owning in this bracket most likely can’t afford to let them sit empty.
I don’t think they could apply this outside of urban areas. Too many locals own vacation homes (Shawnigan/Cowichan etc) and this would make this an even worse financial proposition. Might be a good source of housing stock for owner-occupiers, but there would be a lot of unhappy folks!
For non-Canadian students acting as proxy for the wealthy, doubt it makes much of a difference. An extra 20-30K per year may pry some of that housing stock loose, but there sure are some fancy cars in those driveways.
So who exactly, in Victoria, does this hit? The only segment I can think of is the wealthy out-of-towners with vacation homes. Great if you’re looking for a 2+M waterfront property?
Now, I’d wager Vancouver is in for a serious beating. That may slow the tide of Vancouverites coming over, but then again, if our prices also drop, that delta will still look pretty good.
Thoughts?
swch25, you are right that we shouldn’t lose track of all the other financial demands. Especially as an individual, things add up quickly.
Life in any first world country is expensive to maintain.
(Oh, and I may have been wrong about some kind of EI being widespread. Down the wikipedia rabbit hole…)
@once and future
All fair points, and well taken. My point was that touting our income tax rate alone isn’t the whole story as there are other taxes that significantly hit take-home income (and hence affordability).
Josh is the only employee of his company that is his personal corporation. Sigh. Therefore he is also the exclusive cause of every one of its failures and mistakes.
@Dasmo
From what I’ve read, it doesn’t seem to be a money issue so much for Josh, rather it seems like he doesn’t want to overpay for an asset and that’s a wise move in my mind. If he had an awful rental situation, then overpaying might be okay, but if he’s stable where he’s renting at and the housing market seems to be shifting, waiting may be the best path to take.
swch25, I am afraid to ask if you have ever lived in another country?
MSP: Going away
CPP: Not a tax – you will get this back
EI: Every country has this
GST/PST: Try going to the UK where VAT is 20%
Property Tax: Friend in Oregon pays 3x as much as I do
Carbon Tax: Necessary for life on earth to continue
BC Hydro: Some of the lowest rates on the planet
ICBC: Mismanaged by the liberals, so not a great example
BC Ferries: Excellent service and the govt is now subsidizing the true cost of your ride
Other than ICBC, how is any of this better in another country (except maybe Trumpistan where they have given up on social programs)?
Then ask for a raise so you can afford a house. I asked for a 100% raise back in the late 90s for the same reason. I didn’t get it year one but got 15% every year thereafter, which got me there eventually.
You need a cape – and a hyphen.
Can anyone here give insight into what the Kelowna market has done the last 2 years? They certainly don’t have any shortage of land there.
I could see if Kelowna has marketed itself as a destination for Alberta second-homes, then this sudden rule change will make a lot of people angry. I would be wary of punishing people who were playing by the rules well before the current affordability crisis even started.
Not that I particularly have sympathy for Albertans (and particularly not about pipelines), just that the shoe is often on the other foot.
While I can see the intent of the spec tax, I am still worried that the collateral damage may go further than people expect.
Quite possibly the most millennial thing ever said. (Full disclosure: I am a millennial).
If true why are you carrying them? Incorporate. Pull ab annual dividend out of your company. Cut your tax burden in half.
Something doesn’t add up.
Moving assets overseas is neither morally bereft nor shady if done legally.
It is part of one of the most fundamental rights that is enshrined in section 6 of the Charter which protects the mobility rights of Canadian citizens which include the right to enter, remain in, and leave Canada.
Unless you renounce your residency you will still be paying tax on foreign assets in Canada. If you do renounce your residency you get none of the services paid for with these taxes, such as medical care, and you become taxable in the other jurisdiction.
Before you start denouncing people’s actions as morally bereft you should really make sure you are sitting on solid ground otherwise you are, perhaps, fitting this definition yourself.
Deb, I agree that Canada’s tax rate isn’t really that bad, but that chart is misleading since it only shows federal tax. In BC the top marginal rate is around 47.7%. That puts us roughly between the UK, France, & China at 45% and Ireland & Portugal at 48%. Pretty similar to Germany at 47.5%.
If the German economy can power half of Europe, I don’t think that personal tax rate is too high.
Introvert:
Last time I looked Huntsville is not actually in Muskoka or anywhere near it except maybe to some real estate marketer. Before you try to imply that it was some fancy place I might point out that when I bought it Barrie was still cottage country and that secondary structure was not a garden suite but the outhouse.
Our discussion has a bit more nuance, gwac.
Intro must be sole sucking. Tough to be involved with the mess and destruction of a family over and over. The man deserves his retirement.
I’ll interpret this as maybe it wasn’t worth it.
Barrister
Then I set you free, Dobby. I know that stashing cash overseas is legal but it’s my opinion that it’s shady and morally bereft.
I’m single handedly responsible for the success of the company I work for. Does that not qualify as pulling my weight? News to me. It’s amazing to me that someone can agree that things are unfair for my generation, and then take complaints about affordability and call it entitlement. Poor affordability has always been accompanied by complaining. When your generation did it, it was a noble fight for what’s good and right. With my generation it’s all just whining about how others should do things for us. How dare we speak without first collecting a lifetime of assets and interest.
Barrister’s paid his dues. Cut him some slack. I’d probably do the same in his shoes with the massive debt bomb overhanging the country.
Great to hear Carole James talk common sense versus Christy’s “protect every penny of equity of the massive lottery win” BS. If you over paid, or got caught up in the FOMO mania industry pump job, that’s not their fault.
Right wingers maybe need to head east, there’s a new sheriff in town. 😉
“robshaw_vansun
.@carolejames reiterates goal of NDP budget housing measures is to lower price of homes and adjust market. Says when asked about owners being underwater on mortgage that owners in current market need to think about market changes while purchasing or selling.”
It is usually a mistake to make political debate personal. However, there is a legitimate question as to the extent to which anyone’s prosperity is attributable solely to their own efforts rather than to good fortune and social arrangements that may favor some more than others.
My own view is that those who have achieved prosperity through hard work and intelligence should consider themselves fortunate indeed, since the successful application of intelligence and hard work to the advancement of a professional career or business venture is surely among the most rewarding experiences that this life has to offer.
But while those who have been successful should acknowledge their good fortune in nature’s genetic lottery or in other ways, those less fortunate have to accept that some incentives are needed to insure that those with the ability to do so apply their abilities and energy in a socially productive way. The political question worth debating is thus, not whether there should be differences in wealth, but what differences are most productive for society as a whole.
@ Barrister
Enjoyed reading about your practice. Also I resonate with your advice;
“THERE IS NO FUTURE IN THE PAST.”
I always remember my Grandfather’s philosophy who was liked by everyone and professed that he didn’t believe in any religion but lived by the adage,
“I BELIEVE IN GOODNESS.”
Any other words of wisdom out there?
Barrister says he didn’t shelter his income in any fancy accounts during his working years. On this, I take him at his word and even admire him for it.
That he now has most of his assets off-shore is more or less fine with me, since he paid a lot of taxes during his working life.
But because he mentions it so often, I’m left with the impression that Barrister seeks sympathy (or at the very least external recognition) for how hard he has worked.
Now I do have great sympathy for other hard workers, single parents with two jobs who are trying to make ends meet, for instance. But I have less sympathy for individuals who were more able to choose their own circumstance and who seem to chase continual validation for the hard work they chose to do, to support a lifestyle that included owning vacation property in Muskoka.
@totoro
agreed. This is often the case. People get flack for playing within the rules or using them to their advantage. What people actually have a problem with is the legislation, which is largely out of our hands.
well said Totoro
It seems odd to me that Barrister is being questioned on working hard, saving, investing and paying taxes and now having assets he can choose to do with what he wishes. My guess is that he has more than paid his way in the taxes he has paid in Canada and generated for the practice, not that our system requires this. If he wants to move his investments to another country and become a non-resident for tax purposes he is welcome to do so and our system supports this, as it should in my view. Not to mention that it will likely be of net benefit to Canada’s medical system should other seniors choose to do the same. I suspect some comments are more about envy than fairness.
that’s some deep dalai lama stuff right there. Perhaps it applies to the Victoria Housing Market.
Introvert:
I assume that your question is rhetorical since obviously no one forced me to be a lawyer much less a trial lawyer. Your question is whether being a trial lawyer means one has to work twelve hour days than the answer is pretty generally yes if you are handling major trials. while court runs from 10:00 to 3:00 or 4:00 generally and that sounds like bankers hours the actual court time is more like the tip of an iceberg. You usually spend a few hours on last minute preparations before trial (including time reassuring and calming your client) and then more hours preparing for the next day. People forgot that you are also handling another fifty files at the same time including meeting with new clients.
On top of that as my firm expanded I also had a couple of young lawyers and one or two articaling students to supervise. I hear that more and more a lot of firms will hire neither students or young lawyers. The simple economic fact, assuming that your focus is on training them, is that they generally cost you more money than they earn. I am afraid that I am that old generation that believed that you had a responcibility both to the public and espiecially to your profession to train the next generation. I tried to reserve Sunday mornings to go over accounts and the mountain of paperwork involved in running a business.
Was it worthwhile, was it a proper lifework balance? I really cannot answer that in terms of how people see the world today. I am not sure that I can explain my perspective in any way that would make sense to people today. The best that I can do is to say that I took an oath when I was called to the bar and that I did my duty. Nor did I particularly make a large fortune from the practice, rather a lot of my net worth was because of my cousin who handled my stock portfolio; never could decide if he was brilliant or just extremely lucky.
So was it worth it? The one thing that handling so many divorces taught me was that looking back is a total waste of time. There is no future in the past. And i am sure that this was neither the answer nor the point you were trying to make.
Meanwhile, in low-tax US of A, President Trump proposes teachers who carry guns get bonuses.
https://www.bloomberg.com/news/articles/2018-02-21/trump-hears-stories-from-shooting-victims-in-remarkable-meeting
I don’t consider myself very left wing. I voted NDP – but not with great enthusiasm. Mainly I felt that the corruption/ turning a blind eye had reached obscene levels under Christy Clark.
The budget surprised me by not being too ideological. Despite all the gnashing of teeth the only part of the budget that seems a mistake to me is the new payroll tax on business.
The housing measures could help and the crackdown on corruption is so past overdue it is not funny.
The forecasts are too optimistic I agree. Optimistic budget forecasting is not just a sin of the left though. As Exhibit A I give you Mr. Trump and the Republicans.
swch25
Good post.
well, it is househunt Victoria. Righties are out there though, but trying to change people’s mind is a losing game. Especially on an internet forum.
I don’t consider myself right wing. I do think we pay too much tax though. Even if nominal income tax rates are relatively low compared to elsewhere as someone posted, they really get you on the user taxes, fees and hidden taxes (MSP, CPP, EI, GST/PST, transfer tax, property tax, carbon tax) and then you add the crown corp monopolies which pile onto prices (BC Hydro, ICBC, BC Ferries).
Still. Do i want to live somewhere else? No. So we pay and we enjoy a high quality of life.
it’ll come full circle when im old or sick and im getting good health care without having me or my family go broke for it. Unless the govt goes broke.
Where AG and Michael. Need some more right wing people here. 🙂
Josh:
I really think you do own me an apology. To suggest that I am dishonest and cheating on taxes is outrageous. For forty years I paid taxes on every penny earned and there were no fancy tax shelter or anything of the kind. You seem to forget that what I am living off is capital and that full tax has been paid on every penny of that capital.
Maybe if you spent more time working and paying your rightful tax share and less time online you might start pulling your weight instead of figuring out how other people should make it easier for you. You have the benefit of a good education that people like me have more than happily paid for now spend the next forty years putting 12 hour days instead of whining about how unfair things are.
@ Underachiever:
“Sounds like David Bowie’s Saviour Machine and will probably work about as well. Spoiler alert, not well.”
You think government works well now! What I’m saying is, let’s at least save the cost of all those drones filing sawdust through a knothole.
https://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/
4% 5 year mortgages are just around the corner it the trend continues with bonds.
Hunker down everyone Hawk my get his wish with the help of Comrade Horgan and rates. :).
I am more talking about Vancouver. I don’t think comparatively, there’s a great deal of that behaviour happening here.
Some professions are extremely demanding. Barrister’s is one that is and was. Being a business owner generally is as well. Being a doctor used to be and can be. You trade hard work, time and extreme levels of responsibility for, hopefully, higher than average compensation and the best use of your abilities and education to solve complex problems.
I don’t know if Barrister found this worthwhile, but I can say I did. I likely had less pressure and expectation to continue on this path than he did, and you see this playing out today for professionals like doctors who are choosing to work much, much less than in the past so they have better work life balance.
I haven’t noticed this to be true myself. I know there is a lot of talk about this happening but as far as I can tell houses where I live are occupied – none that I’ve seen are vacant. Leaving a home vacant also voids your home insurance or means you won’t get coverage for things like water damage at all.
Expat use to be that way with real-estate. So times are a changing…
BC wants to isolate itself hopefully Alberta can help them out.
Deb
Only impact on me is the 2% gas tax. I ride my bike most places so little $ impact. The “go fund me” generation is about to get a dose of reality and how the economy works and needs investment and not taxes. . Not everyone can have a government job.
Barrister, did someone force you to work those hours and days? And, looking back, was it worth it?
Yes, if the goal is to provide temporary housing for a person that is fine. My take is that the goal is primarily to reduce the demand side of the equation and raise revenues from taxation to pay for affordable housing. As I stated below, the projected revenues raised from this tax are likely way off and I don’t think it solves the demand side. The demand will still be there from people buying a retirement home or investment.
What it might solve quite effectively is the use of the home as a short-term rental by owners as there will likely be a requirement for occupancy of 30 days or more to qualify. That is smart but not stated directly anywhere I’ve seen yet.
“Stop BC workers from working there.”
Lol, when I moved there for work in the 90s I didn’t even have to show my British Columbia Passport when I crossed the B.C. / AB border.
Apparently there is some loophole where anyone can just go and get a job there if they’re a Canadian resident.
In a lot of cases where someone is looking to buy and hold speculative property, they are looking to have it empty. Part of it appears to be cultural, the “ooo, ahhh” of holding a home that no one has lived in, strained on the toilets, or tracked mud inside. And, they can sell it at a whim without a pesky tenant. House sitting in this way kind of abrogates the first principle and provides credence to the notion that the tax actually worked as intended. But it’s a comparative hassle, rather than the “buy and hold” strategy that you’ve seen play out in Vancouver, you have to set up this system, hope your sitters do their job well and don’t put fingerprints on the window – in an environment where regulators are watching you and piling on one new restriction after another. Perhaps there’s greener pastures?
The other thing is which I alluded to earlier, all of this is moot if the market flattens or declines. No one wants to knowingly hold an asset that isn’t holding value. Many people in China (and increasingly, here) don’t understand that prices of homes can really go down – they’ve never been able to own domestic property before, and have yet to see a major correction at home. A safe country like Canada? Impossible…or so some think.
Holy over-reaction Batman!
Do you think we should also punish PEI and SK for their land ownership rules? As a start I am going to refuse to read “Anne of Green Gables”. If that doesn’t work I’ll escalate to refusing to listen to “Bud the Spud”. My final measure will be to cut back my lobster dinners to twice weekly.
Are you suggesting that I’ll eventually see the light and become a tax evader? I do think the only effective way to get ahead is to effectively “cheat”. In the sense that you do things that in particular decouple hard work from high returns. Working on that, but I’m not going to park all my money overseas. We have different perspectives on what taxes are. You think it’s the man reaching into your pocket and taking your money, and I think it’s paying for services rendered and part of living in a decent society. If you don’t like how it’s spent, then get politically active instead of cheating your dues.
If you love Alberta so much, why don’t you marry it?
Glad to hear it.
Character is important in real life dealings; this is a blog with anonymous contributors.
@Gwac
Your righteous indignation places you firmly in the “have” camp. Do you personally have a home here and in Alberta and will this tax have an impact on your pocket book? If you take a moment to look at this link you would see how little personal tax Canadians pay. Perhaps it is time for the wealthier folk in the population to step up and contribute more to a healthier society as a whole. https://tradingeconomics.com/country-list/personal-income-tax-rate
If people stay in the home then the measure worked. The idea is to have the home occupied or to collect tax.
I dont think we even want to start getting into how much farmland is presently owned by non-Canadians.
Along with golf courses, ski resorts and whatever else holds vast amounts of land.
Article on them buying up Australia and I’m sure it is the same here for our ALR.
https://www.weeklytimesnow.com.au/agribusiness/decisionag/china-to-become-biggest-foreign-owner-of-australian-farmland/news-story/ba27742491380f55568bc3d5ada296cb
Great. Your “workaround” has accomplished exactly what the tax hoped to accomplish. Instead of your property being empty it is now housing one person.
You don’t have to hire anyone and it is not an illusion – people stay in the home. There are loads of free services for this and having a friend stay for free or utility payments for six months works too. And this is perfectly legal under the Vancouver empty homes tax bylaw which I would imagine will be the same or very similar to what the province implements. An occupier in the house for six months and the tax doesn’t apply.
Because hiring people to move curtains, shuffle trash cans and rattle toilet chains to provide the illusion of occupancy probably wouldn’t fall under the exemption rubric. In that case, the owner would be presuming or hoping, that their measures would successfully evade the taxes.
However, it could be a question of how any such law is enforced. We’ll have to wait till the fall to know what they plan to do exactly.
I am not saying I have thought this through but I am a little concerned about the idea of penalizing Canadians, who are not BC residents, from buying homes in BC. I have heard outrage about Alberta’s ban on BC wines but somehow this does have the same feel. The tax may be justified and a good idea but something is not sitting well here. Any thoughts on this?
Well Deb. Saying FU to people who have invested in this Province spent money in the economy and now here another bill and more tax. Time for Alberta to hit these morons hard. You can’t take take and expect others to take it up the a$$. You want to hit non Canadians or stop any future Canadians from buying great. This is just a bullshit tax from a bunch of amateurs who will destroy the economy and investment in it.
The budget had nothing in it for those that create jobs. 1991 all over again.
@Gwac
Premier Horgan is at least trying to help the average person who is not a wheeler and dealer in the real estate stock market. The former party was only concerned in lining the pockets of their wealthy friends and partners in corruption.
See Gwac, anyone can be reactionary and stomp their little political feet. Let’s just wait and see what happens before we get on the old rhetorical orange box. As for Alberta nailing BC; any action taken by them can be countered here in BC, how about charging Alberta residents double for using the BC ferry service;)
Why would you get caught and penalized for utilizing a legal exemption? The government has confirmed that there will be an exemption for long term rentals and primary residences.
Long term rentals for the tax exemption has been defined as homes rented out for at least six months of the year for periods of 30 days or more in Vancouver. In addition, if they are merely “occupied” by a family member, friend or other occupier for six months of the year the home is also exempt. I’d expect the provincial program to be quite similar given the leg work done by Vancouver on this. I wonder if Vancouver has negotiated compensation for this from the province given their municipal program will probably be phased out as a result.
The NDP has created a huge shitshow with the 2%. I think the impact will be disastrous to other aspects of the economy. Hope Alberta nails BC in any way it can possible finds. Start with charging anyone in BC who owns property. Stop BC workers from working there. Comrade Horgan needs to be shown that his actions have reprecutions.
I think you’re anticipating prematurely. Yes, it may be true that someone might find some kind of “workaround” but it’s a hassle to do and the potential for getting caught and penalized looms large.
If you install that silly looking “the club” anti-theft device on the steering wheel of your car, I could say – I could easy cut the steering wheel and take your car just the same. But if you’re a thief, would you feel like doing that, or would you go elsewhere? Some will cut it off, sure, but…
The other thing is this tax is not happening in isolation. A great deal of these off-shore folks were using Canadian mortgages to buy homes, a tap which is starting to get shut off in response to actions by the regulator. The ones that are so wealthy they can just buy cash are getting seriously choked off by capital controls, at least purchases originating from China.
This is not all to say that the issue will now “go away”, but I think it’s important for people to understand there are a lot of new changes and moving parts to this, and it’s very difficult to say at this point, “it’ll work” or “it won’t”.
The 2% tax is just not going to work imo. The projection for revenues from it is likely way off.
If I had a million dollar home that I was not renting out and was facing a $20,000 annual payment as a result I’d just find a family member or caretaker to occupy it while I was not using it if I did not want to deal with the hassle of being a landlord and still wanted to use the house. There are lots of services that are free like this one: https://www.trustedhousesitters.com/house-and-pet-sitting-assignments/
There is no way that someone is going to pay that amount of new tax if they can avoid it – and they likely can.
Another story filled with pure nonsense.
Real estate industry:
“this won’t do anything and might drive up prices!”
“15% of Kelowna buyers are Albertans buying vacation property that will be affected.”
So taking up to 15% of buyers out of the picture will have no effect? Give me a break.
“We’ve done nothing but focus on the demand side over the last number of years”
Total nonsense again. There has been a lot of effort to help supply in this budget and before (mostly on the municipal level). The result is record construction levels. We literally couldn’t be building any faster.
http://www.cbc.ca/beta/news/canada/british-columbia/real-estate-industry-casts-doubt-on-b-c-s-housing-affordability-plan-1.4546341
“Yeah I don’t buy it. We will feel the foreign buyer tax although of course it won’t be a massive hit”
I don’t buy it either. The same people who said the stress test won’t have much of an impact here which it seems like it is are now saying the foreign tax as well won’t. Its funny how before the foreign tax the media and realtors always had plenty of stories of how foreign buyer numbers are exploding in Victoria but now that the tax is here they downplay it and say oh its only 5% of buyers. The psychological factor plays a big part in this tax working. I’ve been to some open houses where realtors talk like this city is being overrun by foreign buyers and try to play on this fear. Now that the tax is here I think buyers will not feel quite the same urgency to jump in this market at these prices and sellers hoping to get some crazy offer for a 70s teardown in Saanich from a foreigner like what was happening last year are going to quickly realize that opportunity is much more unlikely now. Will be interesting to see the sales numbers for the next week.
They will just rent out the units.
You don’t think the 2% annual speculation tax would be some incentive?
“make BC a leader in bureaucracy-free government.”
I daresay C.S. one day this very well may be…
What i found disappointing is that there is no attempt to encourage foreign owners to divest their holdings of residential real estate. A one time tax might discourage some foreign purchasers moving forward but it does not address the amount of real estate presently owned by foreigners in Canada.I dont think we even want to start getting into how much farmland is presently owned by non-Canadians.
You will be well taken care of Barrister. Health care is excellent there, probably some of the best in the world.
Maybe the government will forgive credit card debt for people who own a house and have >= 2 kids in daycare! (Insert laughing emoji) Because I’m pretty sure that’s how most people “afford” it!
If I couldn’t afford to have all the kids I wanted to have I would move in a heartbeat so I could. I don’t judge others for their choices though but to me family trumps career, home ownership, money, location… It’s easy for me to say though since I have most of those things now so I never had to make that decision.
Sorry for veering off topic!
I wonder what the financial (tax) benefit is to having a rental property in another province? Less provincial income taxes right?
Seems interesting the speculation tax only applies to non bc income payers. I guess it’s a way of making those people declare rental income as income.
Not quite. Full time daycare for two kids would cost us around $25,000 per year. Currently paying $22,000 because one is part time. This will knock it down to about $19,000. Looking forward to that kindergarten raise.
Introvert:
Actually I never used any sheltered accounts while I was working. In my time, lawyers in Ontario were not even allowed to be a professional personal corporation. I owned a house in Etobicoke and a small cottage in Huntsville. I invested in stocks and bonds and paid all the taxes on interest and dividends as they came due and capital gains as they were disposed of. There was no such thing even as retained earnings since a law practice was not allowed to be a corporation. The great unfair secret was that I regularly worked 12 to 14 hour days and the better part of most weekends.
I could comment on your willingness to make accusations by innuendo but being of an older generation let me simply label you as a person who lacks character. You may have to ask some old guy you know to appreciate exactly how insulting that label is.
The more you procreate the more you save.
Seriously though. I know so many young families that would have liked two or three kids but stopped at one because they felt they just couldn’t afford it. Be interesting to see if these supports for family do anything for family size.
Two kids in licensed daycare, one eligible for the $100/month, the other for $200/month discount. Assuming the daycare opts in, which I can’t imagine why they wouldn’t. Time limited benefit of course.
Yeah I don’t buy it. We will feel the foreign buyer tax although of course it won’t be a massive hit. Also in one breath they say it will have no effect, and in the next Tony says there are lots of Albertans that keep homes vacant here., By definition they will be either paying the extra tax then or selling their homes which increases supply. How many albertans will be willing to pay an extra $10,000+ (or double or triple that) a year for their empty houses?
Some of the attitudes on display remind me of an analogy an American friend of mine made while visiting us. He said that tons of Northwest live crab leave the coast every day for China by airfreight. They travel in 50 gallon tubs of water. The tubs used for crabs departing Seattle are netted to stop escape attempts but the tubs departing Vancouver do not require nets because anytime a Canadian crab elevates himself towards the rim the entire remaining group grabs him and drags him back down again.
There is something in the fertile soil and soul of our society that amplifies peevishness and envy. Let that seep into the brains of the pathetic dreck which forms the governing classes and the result is policies like those which are now targeting small business.
Leo how will you be saving 300 per month? I likely won’t qualify for any daycare savings as my kids aren’t in a licensed daycare. From what I read it also says savings are reduced for 3-5 year olds (the amount going directly to daycare). Most kids in Canada are only in daycare from 1-5 so that’s only one year for most people. Seems odd.
It’s pretty annoying that my family is considered high income yet it sure doesn’t feel that way. I really shouldn’t complain too much as I feel very fortunate but it is frustrating being middle class and paying a ton of taxes with what feels like none of the benefits. People making not much less net income than me getting more money for daycare, child benefits, first time home buyer loan, etc. I fully support paying taxes to help less fortunate (and everyone in our society regardless of income) but when I’m making just beyond the cutoff for all these benefits that would make my life so much easier it’s tough to swallow. I feel for those in my situation trying to make it in the lower mainland who have even higher costs of housing and raising a family. Id probably be more bitter if I made $112,000 per year. Anyway just a rant. I don’t expect anything to change and I’m fortunate to be able to afford to have as many children as I want while still maintaining my career (as a mother with young kids) and saving money. If only I could also afford to buy a non-teardown house at the same time…
Sounds like David Bowie’s Saviour Machine and will probably work about as well. Spoiler alert, not well.
Intro
Take that with a grain of salt. Until the final rules come down. No body knows. There is a real impact on tourism that the gov needs to be mindful of. Right now it looks like a big middle finger to non tax payers owning property. Let’s see what happens when they ponder things for a while.
Our Marko and the green dude asking how the government tax numbers work?
https://vancouverisland.ctvnews.ca/mobile/video?clipId=1331920
People focus only on the tax hikes, but many families including Josh will likely pay less. Personally we will be saving about $300/month on childcare under the new budget.
Most of the new spending is for the younger generation not for boomers.
Is that every penny of taxes that were due AFTER you shuffled your earnings into myriad sheltered accounts?
Barrister
Well said and good for you. Unfortunately when governments take advantage of taxpayers. Taxpayers look for legal alternative solutions.
Off-topic, but Keith Baldrey is such a crappy journalist. His “reporting” almost invariably falls under one of three categories:
A) Popcorn-eating spectating
B) Fortune-telling
C) Stating the obvious
Just read a column of his, or watch him on TV, and you’ll see.
Caveat:
You can be relieved that the Swiss will probably get stiffed for my health bill. Now all you have to do is figure out what to do with the rest of the boomers. Josh can wait to get mad at me about moving my money out of Canada after he has spent forty years of working very long hours and paying every penny of taxes that are due. Josh seems to have trouble with the concept that it is my money not his. Josh can take comfort in the fact that so many people share his views but perhaps he might take a second to appreciate that it is exactly his views that underlined my decisions.
Great article. I by no means discount hard work as a predictor of success. I have school friends who came from no wealth, were mediocre at school, but who found a passion or interest, followed it hard and have been very successful.
Personally I account about 50% of my (modest) success to “privilege”, 30% to my own hard work and 20% to dumb luck. The privilege I speak of is being born in Canada, healthy, within a stable loving family, white, mainstream in most respects, educated upper middle class parents.
For the price we should have got a bridge across Esquimalt Harbour. The bridge to China might be a stretch even at $100M
I don’t think many of those paying a lot of tax object (publicly) to paying a lot of tax if all of it is spent on things that lead to the creation of a strong and healthy society: aid to orphans, the disabled, the sick, the old; or investment in productive infrastructure and human capital.
But what most people with large incomes suspect is that much of what they pay in taxes is wasted by self-serving, incompetent or outright corrupt bureaucracies. For example school systems in which the majority of those with teaching certificates do not actually teach, natural resource ministries that oversee the destruction of fish stocks, or allow massive degradation of forest resources, or municipal governments that farm out simple engineering tasks like building a bridge to China at nevertheless stupendous cost.
Having worked for three governments, held appointments with multiple educational organizations and also run my own business for many years, I think those who gripe about government waste and incompentence are, in general, justified in their complaint, and it is no trivial complaint.
Governments in Canada consume around half of all wealth, and much more than half if you discount the majority of government work as a contribution to national wealth. Pissing away much of that much wealth is the way to poverty and possible extinction as a free and independent nation (if Canada is still a nation, which Justin Trudeau denies).
So what to do? I suggest we abolish government as we know it. We have a strong tech sector. Surely it is not beyond the ability of the smart people in tech to replace most if not all government departments with an Internet connected box that embodies the latest in A.I. Most government work is mere paper shuffling. Machines can undoubtedly do that job as well as the bureaucracy and much more cheaply.
Education, probably, most of it anyhow, could go the same way.
That way we’d have much more cash for infrastructure, low cost housing and all the things we actually need.
Maybe the NDP can set the ball rolling and make BC a leader in bureaucracy-free government.
Because of the distribution of income most British Columbians would reach it earlier than that.
Aren’t we stiffing the Swiss with the bill for your healthcare? 🙂
From a Liberal hack.
@keithbaldrey
Judging from reaction from various groups and orgs (including rather mild reax from biz community), I’d say @carolejames hit a home run in her first budget. Tax hikes yes, but likely popular ones. And targeted spending hikes will likely be strongly supported. #bcpoli
On privilege, I really like this article on the subject as it relates to financial success. http://www.frugalwoods.com/2015/02/16/the-privilege-of-pursuing-financial-independence/
If that’s accurate then I was wrong. Not by a huge % though. Interestingly if I was in Ontario I’d be $2k+ poorer. That certainly helps with the groceries.
“Simply dreadful this state of affairs. Well at least I certainly made a killing guffaws. Jeeves, be a darling and pull up the anchor, we’re going to Hawaii. Oh and set the dock on fire as we pull away. I wish to watch it burn as we literally sail into the sunset.”
I did the non scientific poll on the budget on the Vancouver Sun. Fully expected 80% in favour. Surprised 43% liked it.
And making sure of that, Barrister has
I was just going off the calculator from https://simpletax.ca/calculator and whacked in employment income values until I hit just under 33% avg tax rate.
Yeah, some were so reasonable like not allowing dividends to family shareholders and then others were counter to economic activity like attacking retained earnings for business owners who have no pensions.
My friend is selling his business because he feels like it is way too stressful to deal with the changes and the incentives are not there to keep managing employees. The business makes a decent amount and employs about 20 people but the responsibility vs. incentive to stay in has been impacted by tax policy and the threat of more changes which may impact the value of the business and retained earnings. I don’t think employees who are not exposed to the stress of owning a business via close family members or friends get the full picture.
We need a balance to generate revenues so we can continue to fund social programs. The federal government seems to not really have that balance to me. I like some of the provincial government changes, but the payroll tax will impact many small businesses. I would be looking to get out too.
I’ll give you a fair price for it. How’s three fiddy?
Somethings not right there. I’m not doing that well.
Generationally self-aware baby boomers are a rarity. I’ll take all the internet sympathy I can get. Maybe I can turn it into a cryptocurrency.
I’d sooner move to Ontario and console myself by weeping into the bags of money I saved.
Introvert:
Dont recall ever saying or even suggesting that a national debt is equivalent to family debt.
Totoro:
Give it up on Josh. But I really do think that people like Josh with that big an income should be paying at least 65% tax. And if he buys a SFH then the tax rate should be pushed up to 75% of gross income and no sheltering behind a personal corporation. He is obviously privileged and needs to pay for all those privileges that he has already had. Besides I dont see any reason that Josh should not have to raise his kids in a small two bedroom condo. Other people manage fine.
That would put you at around $175k/yr with a takehome of just under $10k/mo. Makes more sense that you can save 70% after rent/utils in Victoria. Good on you!
Barrister, thanks for telling us for the 10,000th time that you feel sorry for the younger generations. We get it.
By the way, things will be fine. 99% of all nations have external debt. It’s normal.
https://en.wikipedia.org/wiki/List_of_countries_by_external_debt
I think the mistake that you and so many others make is that a country in debt is not the same as a family in debt. It’s an analogy that conservatives love to promulgate because it serves their ends, is simple, and seems correct if you don’t think about it too hard.
On the subject of the new taxes, I thought this was interesting on the Canadian Maufacturer’s summary:
I certainly didn’t know that.
There are some remaining questions from the budget that stand out to me:
1) What are the exemptions going to be for the spec tax? I can already think of a number of cases where people might get unfairly hit, but we will have to wait for the details.
2) They said they will track beneficial ownership, but did not say outright they will tax changes that don’t register on land titles. This really surprised me. Perhaps they are taking a wait-and-see approach for when there is more transparency.
totoro, I can agree with that. What worries me is sudden poorly planned new taxes like the FedLib’s small business changes. What could have been a reasoned review of the whole tax system ended up polarizing everyone and derailing the conversation.
Businesses, big and small, need stability. Swinging between huge tax cuts and giant tax grabs is brutal for planning. Pick something sensible and gradually adjust it as necessary.
Once
To add. Ontario PC if they can get their act together will be in power. Alberta will be conservative. And the shitshow with Trudeau should be done next election. So tides turn quickly.
I guarantee the majority of people in BC will tire of the NDP act quickly eapically when the economy goes south.
Once and Future:
I agree that there is a political shift to taxing at an even greater rate.Accounts for the fact that I have moved all my assets out of Canada a number of years ago. The only thing left here is my principal residence which \I am considering putting on the market this summer. Best move that I have ever made.
Snowing out there.
Well, no, I’m a woman for one. Mentally normative – probably not.
Yeah, probably not worth discussing any more. Your finances seem fine and I’m not sure how I managed to get distracted by that. Main point for me is that there is a big correlation between hard work and high earnings in my opinion. The other half for those of us without privilege are learning ways to save and invest. Thank you internet.
Once
The swing can happen but governments will not collect any more and will probably collect less. People hit a point and say no more. Jobs in this day can move along with the person or other tax saving measures can be adapted by high income earners.
Yeah, maybe. I may have misinterpreted that.
I didn’t read it that way myself. Only as a comment that those in higher income brackets generally pay fairly high taxes already in Canada and maybe imposing greater taxation might exceed fairness/decrease motivation to grow economically. Not sure. I don’t mind supporting the Canadian social system but I’m opposed to changes which don’t hold that in a strategic balance with revenue generation from economic activities.
I said wealth was overwhelmingly the result of privilege instead of the result of hard work. Not that everyone who has wealth explicitly did not work to get it.
I’m going to take a wild stab and guess that you’re a mentally normative able bodied white straight male who was born and lived in Canada. You have plenty of privilege.
As people have pointed out, upward mobility for income is quite good in Canada. Yesterday’s announcements were made to improve upward mobility regarding primary residence ownership.
Never said that. 16.80% is the provincial income tax rate on $150k+ for 2018. I pay about 33% average income tax.
My mistake, if you are spending all that you withdraw and counting after tax retained earnings as the savings you could be spending more on rent than that.
For those arguing against Josh, at least try not to cherry pick and misinterpret his statements.
Even if you take the most cynical pro-wealth view, you need a stable and happy underclass to support your aristocracy. When the lower income levels get unhappy is when you get revolutions. Just ask Europe in the 18th and 19th century.
Gwac, are you seriously suggesting that our society is ready to get rid of progressive tax rates? The political mood in Canada is swinging the other way, whether we like it or not individually.
I think Josh meant that he’s only spending 15% of his after-tax income and saving the rest.
$875k
“There is an honest to goodness inverse correlation between hard work and wealth. The people that have the most don’t work at all.”
wow what a troll statement of pure ignorance. Congrats.
Great, but you are generalizing your experience so far out that wealth accumulation based on hard work is a “myth” and only the result of “privilege”. I grew up in poverty, put myself through university by working ft while at school and student loans and scholarships and zero parental help. I know others who did the same. And then there are those pesky stats that show I’m not alone in reaching the top earner bracket without a privileged background. Canada is a pretty good place to move up and accumulate wealth. I don’t think I would have fared as well in the US, but who knows.
You haven’t really explained how it is that you only pay 15% tax. The only way I can see is that you’ve deferred the tax by incorporating and paying the 15% small business tax rate while only withdrawing enough to live on that you fall within the 15% income tax rate if you are an otherwise able bodied person. That still leaves you living at home or in a van or employer subsidized accommodation of some kind – if you are happy with that I’d stay put and keep saving and investing. No reason to buy a place.
Here is the reality on the top 10% and what they pay. Delusional statements to think they have loopholes not to pay. Those are troll posts by the left wing.
They earn 34% of the income and pay 54% of the tax.
Hey lets make them pay more because we all have to share harder till it hurts in our comrade state. 🙂
https://www.fraserinstitute.org/article/top-earners-already-shoulder-much-of-canadas-tax-burden
My parents never paid for a penny of my University or Law School and I did not live at home. According to Josh, I must be really poor. “All a person needs in life is luck and I found the harder I worked the luckier I got.” Samuel Clements.
For context, we were talking about the top 10% of earners. From what I’ve googled, that’s people making $97k+, which I fall into. My current wealth would be a fraction of what it is if my parents had not paid for my bachelors degree and living costs during that time. That’s wealth I have as a direct result of privilege. Engineering degrees cost an average of $28k per year. That’s a $100k giant that I’m standing on the shoulders of, not including interest which would be brutal even at OSAP rates. I worked quite a bit during my degree – a year of co-op, and literal 16+ hour days aerating lawns and sealing driveways, but that was a drop in the bucket compared to having tuition and living costs covered.
There is an honest to goodness inverse correlation between hard work and wealth. The people that have the most don’t work at all.
lulz
remember the ‘cat pee’ house? It was bought by people of Chinese descent who tore down all the trees without asking OB.
Wow really? Crazy.
I wonder what their penalty will be, I’m assuming just $$$ so they will not care. I think a lot of people have a rude awaking to realize that even if you were brought up to play by the rules other people are not.
However, we do live in the 21st century now and that’s acceptable in many places around the world that people don’t expect SFH. We just needed more options here.
I think this is the biggest thing. If you grew up in North America you expect to get a house and raise a family.
If you grew up in main parts of the rest of the world you never experienced that. You may have been raised in an apartment and were totally fine with this. After spending so much of time traveling the past few years I came to that conclusion. Land is cheap here in NA and people over in Europe/Asia or wherever else know this and they can buy it cheap, I think domestically people are coming to this understanding as well and land hoarding begins.
Does anyone know what 851 Coles Street sold for?
That is a great savings rate.
If you have no dependents, in order to pay only 15% of your income in tax you’d need to be earning only $25,000 a year. Even if you are maxing your RRSPs out you’d only be earning about $30,000 a year unless you have accumulated room.
Assuming an income of $30,000, if you are only paying $312 a month for utilities and rent you have a pretty amazing deal. I haven’t been following along closely, but are you a student living at home with your tuition paid by parents or something?
Man there is a lot of action today, I was about to post what you did gwac from simple tax calculator showing WAY more than 16%!
And most millionaires in Canada are “self-made” – almost half being immigrants. Education is the biggest correlation with the group.
http://business.financialpost.com/personal-finance/most-canadian-millionaires-are-self-made-and-almost-half-are-immigrants-poll-shows
It is not an “utter myth” – totally an overstatement. There is a definite effect, but many people, including many immigrants, come from low income backgrounds and make it to a much higher income bracket and high net worth.
Canada is one of the most economically mobile societies in the developed world – much more similar to Nordic countries than the US. There is an inter generational wealth advantage and disadvantage effect, but many people overcome this or do not perform as well as their parents. The link between parental income and earnings is actually lowest at the bottom end of the scale.
http://www.statcan.gc.ca/pub/11-626-x/11-626-x2016059-eng.htm
Economic mobility seems to be strongly influence by geographic location – Alberta has a surprisingly high degree of economic mobility and the south of most provinces has much higher than the northern areas.
https://www.theglobeandmail.com/news/national/a-tale-of-two-canadas-where-you-grow-up-affects-your-adult-income/article35444594/
http://www.cbc.ca/news/canada/saskatoon/sask-intergenerational-income-mobility-miles-corak-1.4189498
http://www.conferenceboard.ca/hcp/Details/society/intergenerational-income-mobility.aspx
Tax Freedom Day for the average British Columbian fell on June 16 in 2017. That’s almost 50% of income.
But like I said I am not the one carrying the tax burden moving forward it will be Josh’s generation that carries it. And on the unfair side of it Josh also gets to pay off all the debt that my generation ran up. Lets not mention the spiraling health care bill as us boomers really start to age.I am actually quite sincere when I say that I am sorry for Josh’s generation.
I (cautiously) agree with Josh on this one. I think there is a growing issue with homelessness that could cause serious damage to our cities (and social fabric) if we don’t work really fast toward some solutions. Will it cost money? Yes.
While I agree with others that the government has often mismanaged large projects, I don’t see any other way to do it. Perhaps someone can come up with a good puplic-private model that restrains the excesses of both. In the end, I think a couple percent hit to the income tax in a year or two may be well worth it if the alternative is a seething mass of tents in every city park.
Look to homeless news articles for California and Oregon for what lies ahead for us.
https://www.nbcbayarea.com/investigations/Diseased-Streets-472430013.html
That’s a troll statement if I’ve ever seen one. A theme of discussion so far has been pointing out how much tax I pay and me shrugging it off.
I’m guessing you subscribe to the utter myth that wealth is the result of hard work. It is overwhelmingly the result of privilege.
Households making $150k are in the top 14% locally, but Victoria incomes aren’t especially high. I’m not sure what percentile $150k/year would be if it were 1 persons salary.
My bad, I math’ed wrong. I’m pocketing 85% of income after tax, 70% including rent+utilities.
“It is an obvious point that Hawk choices to overlook. Maybe his kids have safe government jobs.”
This is a government town and where the most secure jobs are. If you’re working for a business related to real estate or own your own and maxed out on your house, toys etc then that’s no else’s fault.
Business moves in cycles and we’ve been nearing the end of this one the last two years, thus the need to jack up interest rates bigtime.
Breaking through a 30 year trend line is extremely important to the future affordability of houses and Victoria is already at levels seen at mid 2000’s levels as well as 1990’s.
Gwac quoting Garth ? Now there’s a switch.
Bonds are entering a rising rates cycle for the first time since the 1940s, which could be ‘worrisome’
https://www.cnbc.com/2018/02/16/bonds-are-entering-a-rising-rates-cycle-for-the-first-time-since-the-1940s.html
Josh:
How can you possibly be living on 10% of your income, after tax, without being in the top ten per cent of earners. (Maybe just possible if you are living for free with your parents or using food banks and getting free clothing from a shelter.)
You might be if you are making $150K/year. Or if you are living with a partner who also makes significant coin you might have a household income in the top 10%.
Which makes it all the more ridiculous that Victoria is still totally unaffordable
https://www.theglobeandmail.com/report-on-business/rob-magazine/canadians-refuse-to-move-to-find-workand-its-hurting-theeconomy/article38027802/
This is an interesting article. It appears despite our low unemployment rate here – many Canadians from places with high unemployment rates may actually be more unwilling to move here. Not for the reason you initially suspect ( high house prices). Canadians don’t want to move elsewhere because of – above all – social connections.
So, most Canadians are not like Josh according to this article.
That said, statistics tell us we can still count on some net increase in inter-Provincial migration here and perhaps more likely we’ll end up seeing much of our newcomers in the future coming from outside Canada.
Josh you seem to feel others need to pay your bill. Why?
Never understood why on this island there is such a hatred towards people who have done well and they should be taxed right up the eye balls.
A median Canadian household earns 76,000. They would pay under 25% to combined fed and provincial income tax and also get significant benefits if they had kids. Of course they will be paying a wide variety of hidden and not so hidden taxes as well. Still I doubt their tax burden reaches 50%.
There is no doubt that Canadians pay a lot of taxes, maybe too much. On the other hand we do enjoy good healthcare, education, public safety, and we have one of the least corrupt public services in the world. I don’t think everything is perfect – but there is no doubt we get some value for our taxes. Could we get better value – almost certainly.
A friend of mine alerted me to a house for sale at 3805 Ascot Drive but it doesn’t come up in any search. Perhaps some kind soul could say if it sold at all and for what price?
Listing is listed as inactive at $1.249 million
Barrister, according to the FP article I cited, the numbers are for all taxes, Fed, Prov.
and local.
And while on the subject, here are a couple of interesting quotes from the G&M:
It’s difficult to believe that last claim, but if it’s true, I guess we can thank the Trudeau’s the NDP and generally held delusional belief that what the government provides is free.
Hard shrug. I’m not a 10%’er. They should be paying more, especially considering the loopholes they often employ.
You collect data, which we’re doing more of.
In which case they would be avoiding rent anyways and the effect would be the same. Not sure what the point was here.
2014 I think. No one is holding a pitchfork to your butt forcing you to go out and suffer the slings and arrows of retail sales tax. I’m pocketing 90%+ of my income after tax. Remember how I said I would be a better economic citizen if I wasn’t saving for a home?
CS:
I believe the article talks about income taxes and not the total tax burden. Add in property, sales taxes and a myriad of other taxes and fees. The number is much higher.
Re: taxes as a proportion of total income:
According to the Financial Post:
For the top 10 per cent of earners, the average total tax rate is 56 per cent versus 13 per cent for the bottom 10 per cent.
@ Josh
That makes the definition of a bubble almost metaphysical, for how can you know why people buy houses? Maybe they buy not as an investment but because they just want a place of their own, that they can paint as they like, remodel as they like and where they can live happily ever after.
Josh:
It is the total tax burden and not just income tax. When is the last time you bought anything at Home Depot or Cosco. Even if you are renting, part of the rent goes to property tax. There is a long list of others. You know better. Depending on your income the average middle class Canadian is paying close to 50% of his income on various direct and hidden taxes.
.. yes.
a) yes, b) not really, c) not really. Stats indicate that the recent (3 year) run up was not due to constrained new construction.
Yes and yes.
I’m definitely under the impression that if people stopped buying homes on the idea that they’re a failsafe high return investment and started buying them just to get away from the loss of renting, that we would see a significant deflation in prices. It’ll probably take an economic shock to make that happen, but the new rules and taxes help. And the stress test and rising rates.
Josh Sorry I thought your post was referring to total tax.
A lot of talk on BNN that Ontario needs to follow BC.
@ Josh
“We will all benefit from the bubble deflating and returning to fundamentals. ”
Is there really anything mutually exclusive between fundamentals and a bubble?
Isn’t the bubble a consequence of (a) low interest rates; (b) population growth; (c) inflexible zoning that prevents densification in line with population growth? And aren’t those all fundamentals?
To some extent, prices may rise on the expectation that fundamentals will cause them to rise, in which case there is an element of speculation-induced price inflation. But have there not already been clear signals that the most important short-run fundamental factor, namely interest rates, is heading up. So is there really any speculative element remaining in the Victoria market? And if there is no speculative element, does that not, by definition, mean that there is no bubble?
Rather, it would seem we have a problem of rising population combined with static zoning, which inevitably drives prices higher.
In addition, there is probably the fact that social change is leading to delayed family formation and reduced family size, which means that income available for home purchase will have increased. An illustration of this effect is provided by a report that at London’s Chelsea and Westminster hospital, where real estate prices are among the highest in the world, the average age of first-time mothers is 37. So do nations die — unless governments act.
Federal taxes didn’t change yesterday. There isn’t much point in talking about the marginal tax rate IMO. That’s like holding a paper cut up to your eye and saying “look how badly the government injures me!”.
Fully aware that almost 1 in 3 of my dollars goes to the man. Yesterday’s announcements didn’t really move the needle there for me.
Thread drift:
A friend of mine alerted me to a house for sale at 3805 Ascot Drive but it doesn’t come up in any search. Perhaps some kind soul could say if it sold at all and for what price?
josh
https://simpletax.ca/calculator
on 150k income/ 31% tax and 43% marginal
Income & Deductions
Employment income
Self-employment income
Capital gains
Eligible dividends
Ineligible dividends
Other income
RRSP deduction
Income taxes paid
Results
Total income $ 150,000
Federal tax $ 29,222
Provincial tax $ 13,944
CPP/EI premiums $ 3,400
Total tax $ 46,566
After-tax income $ 103,434
Average tax rate 31.04 %
Marginal tax rate 43.70 %
CS that why I said take it with a grain of salt.
Strong chance of the US Fed hiking interest rates 4 times this year. 4 hikes. Interest rates in Canada will also move up, and move up fast. I think this will produce a very negative effect on the Canadian housing market.
“FOMC Minutes Preview: Just One Question – 3 Or 4 Hikes In 2018?”
“the most likely surprise in the Fed Minutes tomorrow is that they may be leaning to four hikes in 2018, but the biggest surprise would be growing support to aim for above two percent inflation temporarily to make up for previous misses to the downside.”
https://www.zerohedge.com/news/2018-02-21/just-one-question-todays-fomc-minutes-3-or-4-hikes-2018
Great analysis of the budget today Leo. I love how Crofton will be the next place for a large Chinese community! (kidding). I used to live near Bowser and so it’s quite amusing that place has a FBT! Ha! probably not a single foreign person there!
Leif I didn’t say I wouldn’t affect Vic. I said It would affect Van more than here. Vancouver City proper and West Vancouver have hyper inflated prices largely due to FB. Our prices are not as hyper inflated. Our market is so small too. yes we were affected by Van but how much is up for debate. That said, i think all these new measures definitely lessen the upside here but when I say housing will be about housing it doesn’t necessarily mean that in the most desirable parts of Victoria we will see much downside from these levels either. Time will tell. What’s really driving things here? Remember also that Victoria was so flat for so long, while Vancouver was rising. Btw – remember the ‘cat pee’ house? It was bought by people of Chinese descent who tore down all the trees without asking OB.
I think Dasmo is right when he says Victoria will always be expensive in the long run though. Just look at ongoing things like population growth, lack of SFH, lack of land, and high desirability compared to rest of Canada. The changes brought in are welcome by me despite very likely softening house prices growth. I actually never thought it was a good thing people can’t find housing so that needed correction. However, we do live in the 21st century now and that’s acceptable in many places around the world that people don’t expect SFH. We just needed more options here.
Did you not notice, GWAC, that Garth rather uncharacteristically, is talking nonsense, the piece you quote being blatantly self-contradictory.
First, he reports:
“the provincial government (a Conservative one, no less) imposed a speculation tax without warning. The toll was 50% of all profits made on land transactions. Notably exempted were owner-occupied principal residences and family-owned farms.
The impact on the entire industry was immediate and overwhelming. Deals blew up overnight, sales withered and the market croaked”
Then he states:
“Booting out foreigners, collaring realtors, raising taxes or jailing land criminals won’t change the price of property. ”
So which is it? Can government action affect the price of property or not? Obviously, from the evidence Garth himself provides, it can.
What Garth meant to say, or would have meant to say if he’d thought what it was he meant to say, is that government action to moderate or lower RE prices can have unintended consequences. As to whether that will prove true of BC’s latest market intervention, I suspect that time alone will tell.
I fully support that helping other people afford housing with my own money. I’ve said before that asides from not being able to afford a place that I could start a family with, I’m doing just fine. There’s a mental disconnect between people who support taxes that help the vulnerable and those who just see it as the government reaching into their pockets. It’s not you paying for their home. It’s all of us, helping each other. Housing vulnerable populations affordably keeps them from becoming homeless, where conservative get-off-my-lawn types will blame morality and laziness and complain about society falling apart and things being better “in their day”. In reality things were better because affordability was better.
We will all benefit from the bubble deflating and returning to fundamentals. Unless you’re heavily RE leveraged in your investments. In which case you can just “pick yourself up by your bootstraps”, and “pound the pavement” right to your realtor.
takes a bow
There’s no such income tax rate. $150k+ is 16.80%, which is hardly middle class.
From Garths blog yesterday.
Take it with a grain of salt but interesting
On April 9th, 1974, after the average Toronto house price had catapulted 30% in a year, the provincial government (a Conservative one, no less) imposed a speculation tax without warning. The toll was 50% of all profits made on land transactions. Notably exempted were owner-occupied principal residences and family-owned farms.
The impact on the entire industry was immediate and overwhelming. Deals blew up overnight, sales withered and the market croaked. Prices tumbled since buyers fled. The same aggressive-Con administration later shocked everybody by blocking the sale of thousands of apartment units involved in a massive corporate deal – then slapped on rent controls. The market choked for a couple of years, before forming an historic bubble which collapsed into a smouldering heap. It would take 15 years for prices to recover.
The moral? Never, ever look to politicians to ‘fix’ the real estate market. On one hand they punish, tax, surprise and ream people legally profiting from it while, on the other, they use public money to subsidize buyers and create more demand. Suck, blow. Bubble, bust.
By allowing voters, locals and people waving signs to think they can turn back the clock and make houses cheap again, the horde running BC’s a fraud. The latest version. We keeping electing liars. They keep lying. Booting out foreigners, collaring realtors, raising taxes or jailing land criminals won’t change the price of property. Only Mr. Market can do that, which rising interest rates and epic household debt are hastening.
Worry about those things you can control in life, kids. This ain’t one of them.
http://www.greaterfool.ca/
good blog today by garth
It is not just larger businesses that will be impacted. It doesn’t take much to get to a payroll of over 500k. A plumbing business with four plumbers two assistants and an admin person or two could get to it. A small pharmacy with three pharmacists, a manager and a few cashiers/assistants will get to it. Most doctor’s offices will get to it. My bet is that this will push more businesses to hire independent contractors if they can so they can reduce payroll below 500k and more owners will take dividends vs. salary. At 1% (there will be a reduced rate for businesses near 500k) that is a savings of 5k per year. Every time there is a tax change people will start to plan around them.
I can tell you that if I was an Albertan who owned property in, ex, the Okanagan, I would simply find a way to have a caretaker or family member there during the winter and charge whatever was needed to qualify for the exemption. I would not pay the speculation tax if I could avoid it. I expect the government will collect far less than it expects from this tax, although maybe there will be more positions for caretakers created. I’d also expect that foreign buyers will not be buying like they have now and so this tax will also not meet revenue projections. Foreign buyers will mostly just go to areas where there is no tax imo.
As far as the MSP premiums go, if the income test was too high for the exemption the government should have, imo, just lower it – not eliminate the premiums. Now someone who earns 100k a year has to pay nothing and there is no other compensating tax that I have seen for those who would just be willing to pay more tax instead. That is not the scheme that is proposed and there is no such tax in the budget that I see. I don’t think we should be cutting this source of revenue until the other sources of revenue have been collected and tallied for a period of time as to re-implement MSP in the event of a large shortfall would be a nightmare.
Funny that you should say that,
that’s always been the name of the game in this blog, as long as I’ve been lurking anyways.
GWAC:
It is an obvious point that Hawk choices to overlook. Maybe his kids have safe government jobs.
I think the government can provide affordable housing at a low cost to taxpayers.
But not with the current model of how they construct affordable housing complexes.
What is needed is a public/private model where the government purchases and retains the land providing a ground rent to the complex and then a private builder or other investor constructs the building and gets first option to buy that stand alone building and receive a rate of return in perpetuity on their purchase price.
There is a lot more details to consider but they are just tweaking this model.
The building is built for free and the government gets a ground rent that they can adjust up or down to market conditions providing a rebate to the tenants to offset the tenant rent being paid to the owner of the building.
The taxpayer/government is into the project for just the cost of the land but they receive a rent for that land forever.
The reason why this model wouldn’t be used is that there are no windfall profits to be made by the builder. The investor/builder is constructing the complex for themselves with the eye to reducing monthly expenses as they get first option to buy. Other investors that would jump at this would be Unions and Insurance companies that are looking for long term high quality investments providing a reasonable rate of return.
If I gave you a guaranteed rate of 5% after expenses on a million dollars for the next 99 years of the land lease- would you take it?
That is interesting to note. I suspect that you are right about the fact that most agents will stick with it for a long time.
Need a job to buy a house. Under your scenario the economy will be a mess as would the finances of the government. Anyways a lot of guessing and so on going on. Time will tell.
Luke I do not think what happens in Vancouver does not effect Victoria. I truly believe that the housing market increase their spilled into Victoria and was the catalyst for raising prices over here.
With sales down 25%, has there been any impact on real estate agents?
Much like home prices losing agents on the way down is very very sticky. It will take at least two years of decreasing sales for people to start leaving the business in significant numbers.
For the top 10% doesn’t really matter….you just have less retained earnings you are piling up in your PREC. Your lifestyle continues to be the same on the 100k dividend you pull out every year.
Marko:
With sales down 25%, has there been any impact on real estate agents?
Items like the luxury car tax are mostly there for optics to make one think that someone other than you is carrying the load.
100% true…how many people buy cars >$150,000?
While the middle class Joe or Suzy every day is paying 2 cents more for gas.
“Hope I am wrong for the younger generations sake.”
I hope I am right for the younger generation’s sake(like my kids and many others) who now might have a hope in hell of owning at some point down the road. Stockpile your cash kids and be patient.
CS:
Good question as to ownership. Certainly the battered and homeless shelters will be provincially owned plus staffing. The devil will be in the details. I doubt the developers will want to own low cost rentals.
“Scary stuff, base interest rates could double and we are back at historic level interest rates for borrowing. Hawk can give you the Armageddon scenario but if SHTF for HELOCs + mortgages…then this could be a very very nasty hole economically to get out of.”
Numbers,
All I can add is some anecdotal info from my bud on the mainland who is close to the action. He says the FB’s have pulled up stakes, left town and the open houses on the Westside are nothing but crickets. That is their MO though. Conquer,pillage and find a new victim.
That Van market cannot sustain the ridiculous prices under this new scenario, which will eventually filter down to other hoods and eventually over here. They will start hacking the prices down larger to beat the chances of being exposed and taxed. 75% are still going under ask versus over.
Always has been my prediction but smells like it has some real legs heading into the spring fling and all our New Rules. 😉
https://www.myrealtycheck.ca/
Just a tax and spend budget that is focused a lot of taxing foreigners and businesses who may just say screw it. Not a lot in the budget to help build the future economy or support businesses. If may be what people wanted when they voted for the NDP. The end result as Barrister suggested may not be as rosy as the NDP projected. I think Hawk may get his wish though…Too many things that are against housing.
Hope I am wrong for the younger generations sake. The golden goose goes it will take a lot of other things with it.
Good review, Leo.
The plan for low cost rental housing, including student housing, will affect SFH prices by reducing the future value of basement suites.
Does anyone know who will own the low-cost housing? Is the province to become the landlord, or will they subsidize developers?
LeoS
Most grocery store chains, like Thrifty will be hit with the new 2% tax as will the larger transport companies. I doubt the apple orchards will be hit with the tax. But, all the larger retailers like Walmart and Home Depot with also be hit with the tax as well as the large local dairies. I suspect that you can expect the cost of lumber to hike up as well as a lot of construction material.
I am wondering how long before Alberta announces a program for seniors and people on welfare to relocate to BC. It would be cost efficient to pay seniors 10k or even 20k to move to BC. You would definitely save that on health care costs alone. Alberta could also run a three month drug treatment program here on the island. Most druggies with probably stay here after their treatment is finished especially if you give then a cash voucher for their “trip” back. Think I will write the Premier of Alberta about this considering her warm feelings to BC at the moment.
Numbers Hack:
Ten year plans never work out, but with the housing commitment it will depend on how many contracts to develop are signed in the next couple of years. Once the contracts are signed it is really hard to get out of them. As we have discovered the costs of staffing housing shelters can spiral completely out of control.
@Numbers hack – So apples will cost
more because MSP is paid at 5 levels which NDP is getting rid of? Does not compute.
Can’t actually tell whether they committed to the amount of money or the units. Realistically a 10 year plan cannot be seen as a commitment in the budget. The chance of it being implemented as stated is zero.
@Lore
You hit the nail on the head. But given the situation politically, this is as good as a budget that the NDP could provide: try to tackle housing like everyone else in the world and throw a few center-left goodies to the “free stuff army”.
What worries me after looking through the budget is inflation. Inflation goes up, so does key interest rates and all the ramifications that come with it. But this will affect the middle class and families the most.
Simple Example, an good ol’ apple from the Okanagan.
1/ currently say $1/apple
after these policy announcements:
a/ MSP for the fertilizer/seed suppliers to the grower
b/ MSP paid by growers to his pickers
c/ MSP paid by trucking co. to truckers to Vancouver Island
d/ Gas tax added by a few cents + increased insurance costs
e/ MSP paid by grocer to their employees
f/ add the New Minimum wage requirements
g/ now we have carbon taxes on an increasing scale
h/ then MSP for the professionals like accountants/lawyers that service these guys
How much is your $1/ apple now? One can only guess, but now think that this will happen for everything that is used to compute the CPI (for what it is worth). BTW, who consumes the most apples? … young families I am sure.
Scary stuff, base interest rates could double and we are back at historic level interest rates for borrowing. Hawk can give you the Armageddon scenario but if SHTF for HELOCs + mortgages…then this could be a very very nasty hole economically to get out of.
I am still absorbing the budget details but I am finding some of the comments on here fascinating and at times surprising. Let me say from the outset that this budget really has little impact on me other than cheap fares for seniors on the ferries.
But let me point out a couple of things that might be food for thought. The government has just committed to building 114,000 housing units. I can guarentee you that they will end up costing much more than they budgeted for. Think blue bridge cost overruns. Committing to a certain number of units as opposed to committing to a dollar figure is very different. What surprises me is that people like Josh think that this is a wonderful idea. Bottom line Josh is that, assuming you stay in BC, it is people like you that will be paying a lot of money for other peoples housing at a time when you are having trouble affording a house of your own. So I have to applaud your generosity. The developers are thrilled by the way since the profit margins for public housing are absolutely huge. Premium rates for substandard work is the norm. Maybe this time it will be different but I doubt it. The other factor with public housing that everyone likes to ignore is that it is not just the cost of building these units but the annual cost of maintaining these units. They are going to cost you money every year and a lot of money for years to come. The simple reality is that if you are middle class you are already working about half the year to pay for taxes. Items like the luxury car tax are mostly there for optics to make one think that someone other than you is carrying the load.
I can almost guarentee you that this budget will be unbalanced at the end of the day. Magically expenses will be higher and revenues less than projected. This is not a function of the NDP but rather simply how government works these days.To paraphrase Eisenhower “beware of the bureaucratic industrial complex”.
Like I said, I am old and this does not affect me but I do feel sorry for young hard working Canadian families. Although reading through some of the posts I wonder whether people are only getting what they deserve.