Feb 26 Market Update
Weekly sales numbers courtesy of the VREB.
| Feb 2018 |
Feb
2017
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Unconditional Sales | 72 | 185 | 312 | 476 | 675 |
| New Listings | 104 | 311 | 519 | 751 | 880 |
| Active Listings | 1434 | 1487 | 1519 | 1536 | 1537 |
| Sales to New Listings | 69% | 59% | 60% | 63% | 77% |
| Sales Projection | — | 473 | 506 | 533 | |
| Months of Inventory | 2.3 | ||||
It’s the first week after the budget hits with the variety of demand reducing measures that it came with. However it’s not likely we will see an immediate effect in the numbers. The foreign buyer tax is the only significant measure taking effect now, so that will shave a couple percent of the buyers off, but when sales are off a quarter already due to the stress test that’s not going to be massive. The bigger impacts from the budget come later this year as the details of the spec tax are laid out, and in the following years as the new supply measures begin to make themselves felt.
Last week condos sold at roughly the same rate as last year but they are down a cumulative 22% from Jan 1. Meanwhile single family sales last week were down some 40%, with the year to date total down 20%.
I’m projecting single family months of inventory to come in at 4 for February. On the face of it that seems totally ok. Months of inventory at 4 is still in sellers market territory so the market is still very active right? Well not quite. The important thing to watch is not the absolute level, but the seasonal pattern we should be seeing. January figures were almost identical in 2018, 2017, and 2016, but this year in February we are diverging, and quite substantially. Whereas the months of inventory in the last couple years dropped massively from January to February to match the normal seasonal pattern, this year it’s staying steady. And if the spring can’t heat the market, what will it look like halfway through the year?
If it was just the stress test I’d say the shock could pass after a few months and we’ll be back to activity. However with rising rates and the budget changes kicking in later, I think this spells the end of our sellers’ market.
The condo market is not looking like that, with February months of inventory coming in at a more seasonably normal pattern. I suspect we will need to wait for more supply to come online before that side moderates substantially.
Some of the new listings are just unrealistic when you make the most basic comparisons. The realtors must be desparate to get inventory. It is all going to pile up as we get into the spring.
You should know that this always happens on the 1st of the month as expired properties are relisted. Nothing unusual.
The grumpy one?
Anyway, new post: https://househuntvictoria.ca/latest
I’m curious — the NDP basically got into office due to the housing crisis, and campaigned on a 2% spec tax unless you pay BC income tax. Now that they’ve gone through with that promise, why are so many here so surprised and riled up? Was it that you thought it was lip service and they wouldn’t actually act on it?
April 13, 2017: “B.C.’s New Democrats are promising to impose a tax on property speculators who don’t pay income tax in the province, which the party says will be more effective than a levy on foreign buyers introduced last year by the Liberal government.
The NDP tax, announced Thursday in the party’s campaign platform, would put a 2-per-cent tax on homes of people whose tax returns indicate they pay little or no taxes in British Columbia. ”
https://www.theglobeandmail.com/news/british-columbia/bc-ndp-promise-new-tax-on-foreign-speculators/article34711965/
I am not affected but found it interesting that a friend in Toronto is planning on selling his Whistler condo. He knows Whistler is not yet affected buy he figures it is just a matter of time. Asked him what he was planning since his kids and grand kids use the place a lot and said he is buying in Aspen or Breckenridge although Stowe is another place he wants to check out.
I also have a old friend who lives on Salt Spring who believe that this tax could really hurt the island.
Interesting survey that shows 80% support. Rather amazed that 80% of the population understands the tax. It would be interesting to see the survey if the first question asked was how does the speculation tax effect speculators. This starting to remind me of an old British comedy.
https://globalnews.ca/news/4057149/vancouver-highest-debt-transunion/
Scary
Are those number times 2 for a family so vancouver would be 80k for 2 adult family?
Average mortgage is 361k in BC.
Just curious:
Are any of the blog regulars affected directly by the speculation tax – i.e. anyone here own a vacation property in one of the areas in BC covered by the tax? Seems like quite a few Victoria folks own “cabins” in the gulf islands and thus might be affected.
If not directly affected – do you have any immediate family who are?
I’m not affected personally but a family member lives in Alberta and just recently bought a place on Saltspring. They will be affected. Though I still think it probable that the Gulf Islands will end up excluded. They were thinking of moving out a some point, so it is possible in their case the tax might hasten the move out.
Leo. I’m curious about your agent referrals. I only just noticed the link and not sure how long it’s been there. What do you use to determine honesty, a good realtor etc. when you haven’t been in the RE business yourself? I’m very curious… Nice to see you trying to get something out of it though! It’s a great idea.
Westcoast Windows. My GC likes them so that had som sway. Happy with them so far. But ask me again in ten years 😉 note I also see the doors came with hardware too so that also knocks down the difference. I made a huge tiny mistake….
Interesting. Even if the quotes weren’t quite one-to-one, a 44% jump seems a pretty high premium. Were the doubles approximately the same quality level? Which company did you go with?
Thanks swch25. Everyone is so serious here sometimes it’s refreshing when someone actually recognizes my humour….
My windows and doors were 36k vs 52k. Doors were not triple. However looking at the quotes again I see the doors in the triple quote were painted so not as much difference as my residual impression.
Good posts Josh. Being rich enough to be entitled for special treatment is a growing disease in BC. Anyone who wasn’t born in BC should pony up too. 😉
“Could it be? Was the man with the ice cream actually gwac and not Hawk at all?”
You’re finally catching on caveat. My ice cream rocks. 😉
https://youtu.be/i2RKWJD5ops
Hmm…interesting.
Combined sales for the month of February – Victoria, Oak Bay, Saanich East:
Year/Number of Sales/Total Sales Volume
2018/65/73.2
2017/99/105.9
2016/163/137.6
2015/124/86.6
2014/91/60.4
2013/84/54.1
2012/109
Went as far back as the stats were shown (VREB) for single months and could not find a year with lower sales numbers than this year for the month of Feb. Peak year for Feb looks to be 2016 with 163 sales for 137.6M. This year, just two year later, we are down around 60% for sales and around 50% for dollar volume. Could be an interesting spring and summer in the Victoria real estate market.
Once again No. 6 is making no sense to me – I’ve lived in BC for 30 out of my 40 years and never lived in another province. Paid lots of BC income tax over those years.
I always knew BC stands for Bring Cash – just send even more now if you are an Albertan who wants to own an empty prop. here. The spec tax at 2% is a lot of tax – on a place assessed at $500k it’s $10k a year is it not? This is on top of Prop. tax and is a lot more than Prop. tax.
None of these new taxes actually effect me directly. It just seems like a ridiculous tax but move on I guess…
Ask Albertans or other Cdns who own prop. here the same question… but my guess is the BC Gov’t doesn’t care about that.
Triples should be 10 to 15% premium over high-end doubles.
“That’s into bear territory with 2.6 new listings for every sale.”
Bring it on. 😉
People not just starting out use equity to move up from, ex., a townhouse to a house or from one house to the next. Older owners are starting to inherit and these windfalls support second home ownership as well. A teacher from medicine hat could very well have inherited the funds to purchase or have a paid-off primary residence and two disposable incomes if the kids are finished school.
People starting out are getting family help most likely in Victoria. Lots of down payment gifts and co-signing by parents.
DuranDuran, thanks for your numbers. 10% is certainly not a huge jump and lower than some estimates I have heard. The absolute number will obviously depend on your number of windows. Any particular reason you went with Plygem over any one else?
Once and future:
For our build, the triple glazed low-e window package came in at about $18000.
The similar double paned quote was about 10% less. This was with Plygem. Window quality seems good; service wasn’t great.
One of the biggest days that I’ve seen for New Listings to Sales.
71 New Listings
27 Sales
That’s into bear territory with 2.6 new listings for every sale.
@DaveJ
I do agree, I continue to wonder as well. I went for a drive yesterday to see a few homes in the core @$800k and the neighborhoods were total garbage IMO. All rental type houses with very little up keep. I think the majority of people just buy what they can and don’t do math, that is what your mortgage broker and real estate agent are for right? Telling you what you can afford 😉
I am still blown away at how many people buy to their limit since Victoria always goes up and I guess looking at the charts it has for the majority of it. There have been no real corrections… in their lifetimes. I’m sure there is no way these people will be able to pay their mortgages if we go up 2% but let’s be realistic I think financially focused people are almost penalized for planning on rate changes that will probably never be able to take hold because it would crush the real estate market. Would BoC really allow the market to crash?
I guess we will need to wait and find out as the Fed in the US plans for 4 hikes this year and I’m sure BoC will have to follow close by.
These salaries, after tax, are laughable by the real estate people. During the time I read this blog and wrote my comments, someone, somewhere, has made a killing in real estate, in Vancouver or Victoria, much more than a normal person makes in several years salary.
I remember a article on Vancouver real estate making well over +$100k a year just sitting doing nothing.
Over 80% of BC residents support the speculation tax as well as the foreign buyers tax in this new poll
https://biv.com/article/2018/03/most-bc-residents-support-foreign-buyer-tax-increase-and-new-speculation-tax-poll
While I realize this is tongue in cheek. There is some truth here. Great post.
@Leo M
“I think Marko’s investment strategy makes good sense; invest in new one bedroom concrete/steel condominiums; but investing in an old six unit building seems crazy to me.
Am I missing something?”
No Leo you are absolutely correct and yes Marko has the right approach for more than one reason.
Firstly in buying anything over 3 units (will be classified as commercial) you have to put way more down than 20%. No bank will finance 80% on a “commercial” property, they require a minimum of 35% down. So right there you need deep pockets. Furthermore you won’t get attractive interest rates as offered on a SFH or Condo they will be at least a full percentage higher.
Secondly when you go to sell there will be very few buyers because of the huge amount required for the downpayment and the few buyers there are, will be seasoned and very experienced and won’t give an inch and will be ruthless negotiators.
Thirdly any “commercial” ( anything over 3 units) property is strictly valued by its income. If the rents only go up 2% a year the value of the building will only go up proportionally minus any increased expenses. It is a completely different market from individually owned units which are valued on emotion as much as anything else.
Fourthly one would be way wiser to own three or more scattered around units then the same number as a single building. Way easier to sell individually and one’s risk has been spread out.
Josh said: “Or put money into medium risk stock blends and stop speculating 85% of people out of the market maybe? Please?”
I half agree with you Josh, but half of me disagrees.
Since there are almost zero investors willing to build big, high density, purpose built rental high rises with hundreds of rental units, it falls on people like Marko to buy individual condominiums and turn these condo suites into rental units. Without people like Marko there would be zero new rental units on the market other than the Hudson and maybe a couple others. Without people like Marko investing in Condo development, the developers would not be building half the new concrete & steel high rises throughout the city.
But I hear what you’re saying Josh, too many condo investors makes the prices rise and that impedes first-time condo buyers who want to own a condo for their home. But on the bright side, condo developers will build and build until there is adequate supply and equilibrium between investors and wanna-be owner-occupiers. Eventually the market will turn, it always does eventually.
Question for Dasmo and DuranDuran, what was the price difference you were quoted for triple pane vs high-end double-pane? Do you have any comments on the window company you went with in the end?
Yeah, the Hydro rate freeze was a dumb promise. We need to pay the real cost of electricity and keep up our hydro infrastructure. We have some of the best utility-scale renewable electricity in the world. Let’s not run it into the ground.
As we should know from the ICBC debacle, it makes no sense to underfund your future.
That still counts as benefiting society. You dirty socialist you.
Small point: I’ve never asked for a government handout and have said several times that it’s stupid to subsidize RE purchases. I’m pro safety-nets and selective government intervention, not pro handouts.
The building I’m in was put on the market last year. The asking price was utterly mental considering the rental income. Even with the recent spike in rental prices, there’s a chasm between the cost to rent and the cost to own.
Or put money into medium risk stock blends and stop speculating 85% of people out of the market maybe? Please?
Are real estate rental buildings a good investment?
Recently I’ve noticed several acquaintances of family members are touting investments in rental buildings. For example two older six unit rental buildings are/were on the market recently. Each building has 6 one bedroom suites. The first is at the corner of Richmond and Fairfield. The second building is in Cook Street Village. Both buildings are about the same price, roughly $2.2 Million each.
Net rents for each building will be about $70,000 per year.
With a 20% downpayment the owner/landlord will be subsidizing his tenants with monthly infusions of over $4,000 in cash to offset the expenses not covered by rental income. That’s an annual infusion of $50,000 by the landlord.
Who would buy a money pit like this and consider it an ‘investment’?
Revenue Canada might get not even allow the owners to claim expenses because the CRA has the investment caveat that an investor must have a reasonable expectation of making a profit and in this case there is no reasonable expectation of profit unless they double the rent, which is not allowed.
I think Marko’s investment strategy makes good sense; invest in new one bedroom concrete/steel condominiums; but investing in an old six unit building seems crazy to me.
Am I missing something?
Glad to see some do not believe NDP math. Good job commission. Better to pay small now than huge later.
http://vancouversun.com/news/politics/b-c-utilities-commission-rejects-b-c-hydro-rate-freeze
Because oil tanked so everyone moved back, the green rush hit so there were more houses needed for grow ops, the tech industry blossomed so more people moving here, Vancouverites woke up and realized they could sell and buy here at great profit, More people realized they could profit from AirBnBing places, Millennials are having babies so want to own, and we have not built enough inventory to absorb the demand.
Let’s hope that by 2032 (when step code 5 is proposed), the technologies have moved along enough to let almost all structures easily meet it. Looking forward to those vacuum insulated windows and affordable VIP panels.
Most structures today can meet step 5, but Dasmo is correct: not much you can do if you’re in the shadows.
gen z packing on the debt.
https://www.bnn.ca/canadian-millennials-gen-z-piled-on-consumer-debt-at-fastest-rate-in-2017-report-1.1013994
So no way you can meet that without triple pane windows.
This is in essence passive house standards. In my case I would have needed triple pane windows and I would have also needed to cut down ALL the trees. In my case, not worth it both for the trees sake and for the $$$ sake. Thankfully I was not forced to meet this standard.
Roger I have a feeling it will not be dollar for dollar but maybe 3 0r 4 to 1. So 1k in tax is a 4k tax credit or something like that.
The devil is always in the details. The NDP “Speculation Tax” will be fleshed out over the summer and it’s impact on vacation home and cottage owners in places like Salt Spring (300-500 properties), Pender Island and Horne Lake has many foreign and non-BC owners worried. But the tax will affect some BC property owners as well. There is a non-refundable tax credit for BC residents but if the income is low enough some speculator tax will still have to be paid according to the tax info bulletin below. This might occur with a senior that has a modest family income of 50K and pays no income tax but owns a lakeside cabin that was bought years ago. It will be interesting to see the final legislation. I suspect there will be some unhappy BC owners too.
https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/publications/is-2018-001-speculation-tax.pdf
No I have a long time left in the work force. I do like ice cream though.
Animal charity Josh. I like to build a certain rescue operation a building. Next generation can make their own money.
Could it be? Was the man with the ice cream actually gwac and not Hawk at all?
Correct me if I’m wrong, but any Canadian can still move to BC for work and buy a home without paying a foreign or speculator tax. They just need to reside here. I suspect the number of out of province vacant home owners is quite a small %, and they’re quite wealthy and could deal with a ramping tax between 0.5% and 2%. If I moved to Ontario I would work and reside there, and the same tax applied in Ontario wouldn’t affect me. Also, how pricey would a place have to be to incur a $400k tax? Whatever it is, I don’t have it.
That whole thing was childish. Of all the possible responses to a wine ban, none are the approval of a pipeline. I’m still kind of amazed she thought it was a good enough idea to actually do it.
Serious question: what do you plan to do with all your plunder when the “disaster nears the end”. Build a giant pyramid shaped tomb? Or perhaps give it to the next generation…
Anyone have any theories as to why inventory is so low?
Intro
The one where hard work is important and rewarded and don’t ask for government handouts.
Josh:
You are right provinces have no limit on who they decide to tax on property. On the other hand, would you be alright with Ontario imposing a land transfer tax of $400,000 on anyone moving to Ontario who wants to buy a house. You can move and rent or buy and pay who so it is just a way to have people pay for all the Ontario government facilities and also helps with the housing crisis.
Alberta had the right to ban Alberta wine but it was not the right thing to do either.
Where in the step code are you forced to use triple glazing?
To which generation do you belong, gwac?
March 1, 2018 A total of 545 properties sold in the Victoria Real Estate Board region this February, 19.3 per cent fewer than the 675 properties sold in February last year. The sales of condominiums were down 15.5 per cent from last year in February with 174 units sold. Single family homes were 24.4 per cent down from the year previous, with 260 sold this February.
“We certainly anticipated that we would see some lower numbers this year compared to last,” says Victoria Real Estate Board President Kyle Kerr. “Right now prospective home buyers are met with many hurdles as they start shopping for their new home. They’re in a market that’s experienced long-term low inventory, which means more price pressure and competition on homes. Buyers are navigating increasing interest rates and the new mortgage stress test. These factors all combine to constrain our market. Like any changes to consumer experience, there is a period of response before consumers adapt to the new rules. We saw an increase in buyers in November and December who bought early to avoid the mortgage stress test, and this likely means less buyers in the current market. However, with continued historical low inventory levels, demand is still outpacing supply.”
Not arguing against triple pane. They are obviously best in class. Arguing against forcing them into every new build especially when overall they might not really be better for the environment. They are better for comfort level of the house without doubt.
@josh
“Also what medicine hat teacher can afford a songhees condo and to only live there 3 months of the year!?”
I second that. I have been in Canada for 20 years and I am puzzled by people with modest salaries that can afford such expensive homes. I make a high-end IT salary, and I think houses and condos are simply unaffordable. Where is this mystery money coming from? Here is my reasoning.
Checking statcan, https://www.statcan.gc.ca/daily-quotidien/170913/dq170913a-eng.pdf , I see the median household income in B.C. was $69,995 in 2015.
I have heard that IT people “make a lot”. Well, not really. According to PayScale https://www.payscale.com/research/CA/Industry=Information_Technology_(IT)_Services/Salary, a software developer makes on average: C$64,072. You have to be a manager to make C$80,045.
It is a joke that IT people earn a lot in Victoria, in Toronto maybe a bit more, not here or Vancouver.
I have heard that builders also “make a lot”. Again, according to PayScale (https://www.payscale.com/research/CA/Job=Builder/Hourly_Rate), builders are paid in the C$24,014 – C$76,283 range.
These salaries, after tax, are laughable by the real estate people. During the time I read this blog and wrote my comments, someone, somewhere, has made a killing in real estate, in Vancouver or Victoria, much more than a normal person makes in several years salary.
I can’t fathom people with the above salaries buy in this market. A family income of 70K is around $4500 net (after tax, pension deduction, etc) a month. To service a mortage of $400K (say for a median-price townhouse of 525K) you need 2K (see https://www.tangerine.ca/en/calculators/calculators.html#mpc) a month, plus, say 1K for tax/fees/maintenance, for a total of 3K a month. So, can really a median-income family afford to live on 1.5K of what’s left after servicing their home? This is in Victoria. How about Vancouver? There it should be utter despair for an honest median-income family.
So, what gives? What’s this mystery?
Glad SidekickSpliff responded before I did.
Dasmo – there are many additional studies on windows and glazing, and most show clear efficiencies in increasing from double to triple pane, as well as in inert gas injections and reflective coatings.
From your source: “In order to reduce life-cycle energy costs as far as possible, glazed units using argon gas appear to be the optimal solution for the Scottish climate (payback of less than six months for double-glazed units, and less than 18 months for triple-glazed units).”
As you know, home design for energy efficiency is rather complicated, and involves tradeoffs between climates, seasons and glazing percentages. It’s cool to consider life-cycle costs of materials, but not a simple matter to do so, and also very hard to take studies from other countries, as in Europe, and apply the results to your local situation.
Some interesting take-aways I got from that article was that (in the authors’ estimation, based on current manufacturing specs at the time of their research, in Scotland and prior to 2005) wood frames had significantly lower embedded costs than uPVC, and manufacturers felt that people were replacing their windows every 10 years. Also, krypton gas is expensive and not worth it (but argon is). It’s not clear at all how that applies to our situation in Victoria in 2018, where wood frames are definitely more expensive and less common, vinyl is standard, and few people would probably consider replacing windows installed in 2008 a high priority.
Still feel good about getting triple panes installed, though it may not meet everyone’s needs.
I rather stick around and watch the disaster unfold and than scoop in on the mess. Socialism never works and there is money to be made as the disaster nears the end.
Might as well just dig your grave and hop into it now.
well, i did read freakonomics once…
okay okay, you got me, it was an audiobook.
swch
You seem to understand economics that’s your problem here. 🙂
Those reflective barriers tend to be pretty useless. They may work really well in space, but if they worked well here we’d all be using them.
We’re not all like this, but most every time I post anything i get flamed so I try not to.
@Dasmo
Quick experiment. Go outside on a sunny day and stand in the sun. Next put a piece of fabric in front of you. Was there any change?
“That’s what happens when there’s better investments elsewhere”
Josh wtf. Do you even read before you write stupidity. That is a problem if no one wants to invest here. It says there is a problem. We need the investment to pay for jobs/our large expensive programs. OMG if you are the next generation god help us all.
@Dasmo – From a technical/thermal perspective, yurts are not efficient at all (at least the ones I’ve seen). They are super cool though and think they make a lot of sense in many ways. The general idea of things getting more complex and therefore more expensive is so true.
I’d also disagree pretty strongly anyone arguing against triple pane windows ***(in the context of a new high performance house). The science so far shows that windows are still the biggest source of heat loss and that the details matter: http://www.slideshare.net/grahamfinch/the-tradition-and-science-of-window-installations-where-are-we-headed-with-more-highly-insulated-buildings?lipi=urn%3Ali%3Apage%3Ad_flagship3_profile_view_base_recent_activity_details_shares%3BJ7ympS8kTpaJ2ktwAqpS6g%3D%3D. [RDH engineering slideshare]. You probably ran the numbers for your house in PHPP so I’m surprised you’d advocate for doubles. Another interesting anecdotal thing to keep in mind: https://bruteforcecollaborative.wordpress.com/2010/10/30/can-european-windows-actually-save-carbon/
I ordered my triple paned windows/doors from Austria mostly because the performance they can achieve makes a real difference when taking things to passive house levels.
I will say that high-performance building materials and details are still not well understood by building officials, many engineers etc. and so there is a lot of room for improvement. I would hope that with the step-code, more products and techniques become available and accepted (which should help to drop the costs).
In principle, energy-efficient building is very simple. Make it air-tight and “ventilate right”. Add more insulation and use better windows and doors. The reality is it’s a fair bit more complicated to actually do it right.
That’s what happens when there’s better investments elsewhere. Investors, foreign or domestic are not your buddies and won’t take care of you unless it happens to take care of themselves. So who is being self-serving here?
Nope. No change to it. It’s just behind the fabric doing the same job. The round design is also super efficient. They come with real windows and doors and even the same reflective cover for the windows. All your heating needs with a small pellet stove. Very efficient and super eco friendly. Replace skin every twenty years and it will last forever. Recycle the vinyl into bags etc. Anyway these are details. The point is when the step code finishes the SFH is dead for all but the filthy rich. I am having extra pain because I have 3” of foam on the outside of my house. Extra engineering, extra time with siding etc. Try 6”. That’s a long nail to hit yer studs….
Vacation home is not necessity, it is a luxury.
I just don’t understand why people complain about it so much? Remember BC residents would need to pay spec tax on their BC vacation home, too, if their income is not high enough to get any/enough tax credit.
If the new tax forces some of these properties into local long-term rental and housing market, thus stabilize or reduce rental/housing prices, that is a good thing, IMHO.
BTW, we did help one of our Alberta friends buy one house (at boarder between Victoria and Oak Bay) in 2015, and they have been renting it out since and will be so until they move here. But when they asked our help to look for more afterwards, we politely declined and stayed away.
http://business.financialpost.com/news/economy/foreign-direct-investment-in-canada-plunges-on-oil-exodus-1
This is what happens when you say screw you to foreigners with stupid self serving policies that in the long run will cause major issues to our economy. Hey live in the bubble. All will be fine. Anyone seen Newfoundland`s economy and unemployment. Can happen to the rest quickly. Lots of homes for sale there but hey still no one can afford.
Nice one.
Sincerely,
A former Albertan
@adam, I’m not angry….and subjectivity is subjective 🙂 I think your logic sucks too!
@Luke
Doesn’t PEI have restrictions on non-residents?
Why not simply rent the house out and not be subject to the tax? There’s a market for long term, there’s a market for retirees coming from back east and Alberta for the milder winters and there’s a market for summer rentals.
P.S. Totoro — yes, have spent time on a small gulf island.
LOL
Cheated… once I realized that there are no real lakes in Alberta* just shallow eutrophic puddles of algae.
*Lake Athabasca and a few ice cold but beautiful lakes in the Rockies excepted
Well, treat it as part of the cost for owning a vacation property. So you buy or keep it if you can afford; Or you don’t buy or sell it if you can’t. Plus there is the 3rd option: rent it out over 6 months of the year, with reduced rent if needed. Isn’t it that simple?
send Ms. Notley a very strongly worded letter.
You know what I mean.
Totally agree. My old work place was offering $5k bonuses for referrals, with bonuses for the new employee and still no one could be convinced to move to Vancouver from out of province.
Anyone who wants to move to BC and buy a home can do so. Anyone who wants to retire to BC can do so. What they can’t do is own an empty BC home without a BC income, without paying a frankly small tax. Given the circumstance of affordability, I see zero downside in that. And it’s funny, that article you linked to has a video of BC residences largely saying the measures aren’t enough.
From the article: “How would you feel if you bought a lake property in Alberta, or a ski property in Banff, and the Alberta government did this to you”
Why I would set down my gilded plate of caviar and send Mr. Horgan a very strongly worded letter!
Cry. Me. A. River.
“Over taxing some Albertans with vacation houses is going to do nothing for affordability.”
Taking the anger and subjectivity out of this, we get, “Taxing people, including Albertans, with vacation homes…”
If vacation homeowners believe they are being taxed too much to keep the home (that is, they are being over-taxed), then they will sell. If the taxes aren’t too much, they won’t sell. In other words, whether someone is taxed too much to hold onto a second property is determined case-by-case by the owner. If not a single person decides to sell, then that means nobody was taxed too much and nothing was done for affordability. If some people sell because they are being over-taxed, then something will have been done for affordability. Either way your logic, like most of the posters crying about poor Albertans, sucks.
Well Luke, you don’t seem to have a problem paying city taxes for Victoria although you live in another city? What’s the difference between a city tax and a BC tax?
It should come as no surprise to you that Canadians across the country know that BC stands for Bring Cash. At least now the BC government will recover some of the social costs you enjoy living in BC part time . Things like parks and other provincial services that you have never had to pay for before as you did not pay into BC income tax.
Time to open up that wallet buddy, the free ride is coming to an end.
http://vancouversun.com/news/local-news/ndp-tax-changes-do-better-job-of-taxing-wealth-flows-demographer
Andy Yan’s take is the new FB taxes will effect the most expensive parts of Metro Van the most… question is how much and we will have to wait and see.
Meanwhile the Financial Post is perplexed as to why it was expanded to Van Is. and Okanagan – where apparently FB’s are few and they say there won’t be much impact felt?
http://business.financialpost.com/pmn/business-pmn/expansion-of-b-c-foreign-buyers-tax-to-okanagan-vancouver-island-is-questioned
Luke a great post. Sums it up. I cant read Comrade Josh`s posts anymore. They are so far out there. He/she makes Bernie Sanders seem right wing.
http://www.kellogg.northwestern.edu/faculty/mazzeo/htm/sp_files/021209/(1)%20Payback%20Periods/Articles/windowpaybackperiods_bsert_2005.pdf
Well young Josh – I thought we were all Canadians living in the same country. Suddenly our Prov Govt is targeting CANADIANS with a new tax just because they live in another province. I think it tramples on citizenship rights and is anti-Canadian. You may be right about targeting harmful economic behaviours on some levels, like in cities such as Vic and Van where there is a housing crisis, but what about this couple…?
https://globalnews.ca/news/4048807/alberta-couple-b-c-speculation-tax/
Many Albertans are simply buying retirement homes in another province in what they thought was their own country – they are just as Canadian as anyone else. Now, in places like Horne Lake where there is no housing crisis they are being harmed. They should’ve done more of a ‘flipping tax’ instead of constructing it this way – really harming speculation instead of calling a new ’empty home tax’ on non BC tax payers a ‘spec tax’. It doesn’t affect me at all but it just strikes me as unfair. And, you – as a Canadian from another province should relate to that. If you lived in Ont. and wanted to move here in the future so secured your home ahead of time – how would you feel about it then?
The FB’s were the one’s that caused a large part of the problem, and speculation is part of that but it isn’t people buying a future retirement home is it? Now they have to move here and claim income here before buying to avoid this tax? How is that fair for our fellow Canadians? It’s getting a bit more like ‘Canadistan’ every time we turn around. Now, we are limiting freedom of movement – just like a communist country does.
LMAO!
When I was starting out, I lived on an iceberg in the arctic and commuted to work by passenger pigeon and lived off nothing but regurgitated whale blubber. Now all these pesky millennials think they somehow “deserve” a bed and a roof over their head just because they serve me supper and maintain my garden and pave my roads and fix my cars and build my computers. I got news for you, millennials, you entitled lot you, it’s not some sort of a “human right” for me to let you wash the shit-stains from the toilet in my second home. I do it out of generosity and decency, something that existed in my time. And how do you thank me? By asking for housing of your own!? Some people’s children.
According to NRCAN: “In most houses, radiation accounts for less than 10 percent of heat loss and most of that loss will be associated with windows”
The solution presented by your yurt reflective insulation tackles a negligible portion of the heat loss. Plus they cover the reflective insulation with “an attractive .. fabric” reducing the effectiveness of their miracle NASA product.
IMO there would not be a significant embodied energy difference between the triple and double pane. I don’t think there is a quick payback in our climate for triple pane but if you specific requirements, ie netzero then it may be required. If we suddenly have to take into account embodied energy, I cannot fathom how much more complex the building code will become.
Over taxing some Albertans with vacation houses is going to do nothing for affordability. It will increase the AirBnB supply though! Neither is Government purpose built rentals. Those will take decades to build….
How about my other idea of making the appraisal system like the house price index?
Just make it an abstract number out of 100 instead of sending out letters to everyone saying your house value just went up 20% last year? I mean that is instant!
“Long term rentals are define as more than 30 days and totalling six months of the year for the Vancouver tax.”
I guess the provincial government could be as daft as Vancouver but if you are suffering from the low rental vacancy rate how is a six month rental going to help?
@josh “There isn’t a business crisis in BC. Things are going swimmingly well on that front.”
Actually, the housing crisis has repeatedly come up as a central issue for businesses. If the budget addressed housing affordability, then hats off to the ole govvy for killing two birds with one stone.
I just know the NDP “affordable housing plan” is rife with politics and as per usual cronyism. Like I said Gov building anything means someone is going to get very rich. California’s SB 35 is more something we need. They did it to us with the sewage plan, now do it with housing….
Stop this spot zoning every little project… The only way there will be affordability is if there is some serious over building.
a net zero house with 700 outlets, 8 inches of foam everywhere, a solar power system and triple pane windows
Funny, Dasmo – that is very close to what we’re building right now! Don’t go dissing my lovely triple panes…
Yes, a yurt would have less embodied energy, but the demand for them seems slim in Victoria.
(occasional poster…name change after I outed myself recently…hope no one is bothered by this)
Where did you find the definition of long term as being in excess of a year or are you presenting speculation as fact?
Long term rentals are define as more than 30 days and totalling six months of the year for the Vancouver tax. Distinguishing furnished from unfurnished makes no sense given the long term furnished market. My guess is the bc tax will be similar in its terminology.
@Leo S
“… …
SFH median up a notch from January and up 6% from last year.
Condo median down a notch from January and up 11% from last year.
Full article tonight.”
Could you please break down the SFH median price by core and Westshore? Thanks Leo. Look forward to your article tonight.
The code doesn’t take into account embodied energy. Triple pane windows in every house are probably worse for the environment than good double pane and a bit more energy burn per year.
Jerry your red-baiting is great entertainment, but unfortunately the 1920’s called and wants you back.
Besides these days the kulaks aren’t the enemy of the people it’s the fake news media.
https://www.yurts.com/
@ dasmo
While I don’t disagree simple is generally better than more complex I don’t see how a “yurt with reflective layer” will be inexpensive to heat up(I suppose relative to what, certainly not the equivalent net zero house you described). Putting on a reflective layer will only increase the cost to heat it.
If you want to reduce costs for a new build make it smaller, put in less windows, simplify your finishes, etc.
I hear a lot of complaints on this blog about the building code. We’ve elected politicians with a platform of reduced environmental impact, making the building code more stringent, not less is one means of accomplishing that goal.
Record low new listings (lowest February ever) although about the same as last year.
Residential inventory up about 7%.
Single family sales down 23%
Condo sales down 15%
SFH median up a notch from January and up 6% from last year.
Condo median down a notch from January and up 11% from last year.
Full article tonight.
Number 6 its a cbc assisted production that is why David narrated it . The guys who do it are brilliant all comedy stuff, obviously pushing the boundary with some truth. Just for fun.
And the Anachronism Award goes to…
Also what medicine hat teacher can afford a songhees condo and to only live there 3 months of the year!? That’s a bit too specific to be a random example but I can’t imagine how that would remotely be possible.
GWAC, I’m surprised that David Suzuki lent his name and credibility to such a stereotypical view of millennials.
Although I was expecting the last resort of the guy on the toilet to get a date would have been him sending out a dick pic.
“I think these snowbirds could just rent out their 2nd homes for 6 or 7 months in Summer, instead of selling. We bought a house here 5 years before moving back, and rented it out with no big issues.”
Not good enough. According to the budget the property must be a ” long term rental” which means all year, not part year. I also suspect a furnished rental won’t qualify. Who is going to move in to an unfurnished place for 6 months?
A real solution would be to make a drive to influence up zoning into the appropriate communities, to go after crime in the market place, to tax short term flipping, but most of all revise the building code.
Government won’t let the average Joe build his or her own home to save a few dollars let alone a revision in the building code.
New homes in the core are now for the 1%ers and will be going forward irrelevant of a market correction. There are so many layers of bureaucracy that it is impossible to build an affordable home specifically in the core.
I was driving on May Street a few weeks ago and saw a house wrapped in a bubble (they were likely removing asbestos)….like common. Everything is getting to be out of control from the provincial regulations to municipal to WBC and everything else.
Civic elections are coming. This Vancouver candidate’s tweet made me laugh:
Yep, Plenty of legit targets to go after but let’s hit the retirees from AB…. As usual it’s not about real solutions, it’s politics. Real solutions to affordable housing is not government builds more either. That is subsidized housing. That will only drive the price of construction up further. Why do a private build when you can do a government build for twice as much? A real solution would be to make a drive to influence up zoning into the appropriate communities, to go after crime in the market place, to tax short term flipping, but most of all revise the building code. There should be allowances to build less expensive structures that are still efficient. Yurts with a reflective layer on the skin for example. Super fast and inexpensive to heat up. Super inexpensive and FAST to build. Easy to maintain and overall less impact on the environment than a net zero house with 700 outlets, 8 inches of foam everywhere, a solar power system and triple pane windows. This alone has killed the affordable SFH. It ain’t the 50’s anymore that is for sure.
For Langford, it’s game on for stadium with 8,000 seats
http://www.timescolonist.com/sports/for-langford-it-s-game-on-for-stadium-with-8-000-seats-1.23188068
Here’s the column that freedom_2008 just mentioned:
Jack Knox: Fear of collateral damage arises from tax targeting absentee homeowners
Besides, it rankles to be treated like aliens who are welcomed as tourists but shunned as property owners. “We’re not foreigners,” Madsen says. “We’re Canadian.”
http://www.timescolonist.com/news/local/jack-knox-fear-of-collateral-damage-arises-from-tax-targeting-absentee-homeowners-1.23188072
@ GWAC
“I’ll say. Thanks for posting Chris.”
Me too. An amazing speech.
Oh, those terrible criminals having their way with our beautiful province!
I suppose we could take measures of some kind, but instead let’s go after those retired teachers from Medicene Hat who own a condo in Songhees which (shock!) they only use for 3 months a year.
Classic obfuscation move from the Cheka 1918. Point fingers at the “wreckers” and “counter revolutionaries” and “foreign agents”, meanwhile murdering peasants who have two cows when everybody else in the village has one.
I also don’t see much issue with renting a holding home. It makes sense. Especially now that AirBnB is here. However, the spec tax as described is BS and I expect it will be revised. I’m back to my other theory that this is a shot at AB. Ban our wine? We will tax the crap out of you snow birds!
I’ll say. Thanks for posting Chris.
This level of corruption and wilful blindness sums up for me why the Liberals had to go even though I’m often sceptical of the NDP.
Wow. This is a must read.
Words from Jack K (in today’s TC):
“In fact, as a veteran of government, Bhatia understands the goal of freeing up housing stock. It just seems unfair that it could be at the expense of retirees for whom a part-time home here was the pot of gold at the end of the rainbow.
Call it the law of unintended consequences, the one that kicks in when government fixates on a target like the non-resident speculators who have no interest in seeing their houses used as homes.
Fire a shotgun at the birds of prey, you’re bound to hit a few snowbirds.”
I think these snowbirds could just rent out their 2nd homes for 6 or 7 months in Summer, instead of selling. We bought a house here 5 years before moving back, and rented it out with no big issues.
https://www.youtube.com/watch?v=rgbTUttdyNU
Funny video on the millennials makes me think of a couple people
Highest Months of Inventory (MOI) for houses in the core since 2014.
The spring, starting in about three weeks, brings more listings and more buyers to the market. Historically buyers have outnumbered sellers and the MOI has declined in the spring every year in the last decade except for 2008.
Let’s see what happens this year?
Thank you Leo.
$200M in 2017
Curious how many have read David Eby’s speech?
http://davidebymla.ca/wp-content/uploads/sites/14/2018/01/Transparency-International-Speech.pdf
Possible US steel and aluminium tariffs to be announced today. Keep an eye out for the value of the Canadian dollar. Not a major plunge but every penny makes a real difference on Canadians purchasing power.
Absolutely fair. Agreed…
Does anyone know what amount has been raised to date on the existing foreign buyer tax? A lot, a little or next to nothing? (seriously, I have looked and can not find that reported anywhere.)
“The wind up here on the peninsula is intense. Branches flying everywhere.”
I just drove by what I thought was a tree on the right lane of the pat Bay heading north to Sidney… Turns out its a massive branch, the car in front of me had to swerve into the shoulder to avoid it. I’m sure someone will be in the autobody shop tomorrow.
45 knots out there!!!
In sitting and thinking about our calm before things start to reveal themselves in the spring, I have to say that I am amazed that the NDP jumped in with both feet. With the B-20 rules already having an impact, they could have played things much more cautiously, and probably taken the credit when things slowed down.
I do have some serious questions about the details. Taxes are used both for revenue and for shaping economic behaviour. A brand new tax may have a larger behavioural impact than you expect. While there is risk of short term damage to individuals, I think a large risk is that the NDP tanks the economy — even if it is just an irrational investor mood swing.
I am not a big fan of the BC Liberals (although some of the individual MLAs are good people), and the NDP might be undermining their own work in stopping pipelines and ending housing corruption if they engineer their own defeat by pissing everyone off.
This is similar to the FedLibs. I support their increase in Science funding, and their progressive social policies. However, their tax and other policy decisions (Trudeau’s pet pipeline) are going to fracture their base and put us back to a Conservative federal government. A lot of people don’t care so much about being socially progressive if their small business is being ruined.
So for self-righteous high-earning millenials like Josh, be careful who you label as the enemy. Having the ear of the current govt may be short-lived and the “other side” has a rather long memory.
To be fair, LF, this is the guy who was the first to chart the impact of foreign buyers on the Vancouver market. It even got him called “racist” by the white mayor. He is not giving exact suggestions for a cure and you shouldn’t judge him as if he is.
Indeed. Making housing affordable without making it affordable. In the final analysis, that’s what’s being proposed. It’s magical thinking – there is no way to get to affordability without some people being very hurt. And that’s what happens, it needs to happen, and it’s a necessary part of a healthy, balanced market. We’ve just taken the imbalance way, way too far.
The wind up here on the peninsula is intense. Branches flying everywhere.
What stuck out for me from the article…
“Yan says there may be some solution—a mix of remedies, new laws, purpose-built rental housing, tax adjustments and so on—that does not mean a collapse in Metro Vancouver’s real estate prices. Channelling foreign investment in such a way as to serve the public interest might be possible. “But whether this comes out as a bubble-popping isn’t the point. That’s a secondary concern to the kind of society we want to build. “We need to go back to civic virtues.
“We need to talk about the sacrifices we are willing and we need to make for the greater good of the community. We need to have a discussion about what the public good is, and what we are willing to sacrifice to make it happen.”
…And isn’t this really what we all want in the end? What’s best for society?
http://www.macleans.ca/economy/realestateeconomy/andy-yan-the-analyst-who-exposed-vancouvers-real-estate-disaster/
Maybe Victoria just got more exclusive? Has Van become a sewer that now needs one hell of a clean up? And it took a Canadian, Andy Yan, who came from the ‘head tax’ to expose all of this…
And a little Toronto action. This was posted on GreaterFool. Cannot happen here though.
http://www.risktopia.com/2018/02/ugly-year-over-year-prices-changes.html
Bit of a gully over in Van? Nah, ask anyone, they will tell you. Sales do not matter, only asking prices!! And asking prices are going up, up, up!
@SteveSaretsky
Just 130 sales this February. The lowest total for the month of February dating back to 1991.
Yes but have you actually spent any time on a smaller gulf island? We used to own a place on one of them. Not much going on in the winter and little chance that will change. As I said, it is the weekend users and summer visitors that keep the economy going and it seems to work ok. I don’t see any need for a speculation tax as there is little in the way of unmet need for affordable housing. Wrong place to implement this tax.
“I think most people aren’t even aware of what’s going on.”
I think that is exactly it and something to that effect was mentioned by some people on here before. Most people who have a mortgage I would imagine have no idea what B20 is and won’t until it they need to renew and start shopping around. Some of the mortgage people at the banks I dealt with couldn’t even answer basic questions about it when I was getting pre-approvals.
Most people are pretty uninformed and really only care / worry about what is going to directly affect them that day / week / month.
That or what is happening with the Kardashians.
Average of 4.4% by number of sales, and 5. 47% by sales volume. Really not a big difference.
Good point. Expectations could influence behaviour ahead of the actual change. That said I expected places like the Janion to drop after the Airbnb changes were announced and so far there isn’t that much evidence that it has despite the fact that Airbnb restrictions are still coming. I think most people aren’t even aware of what’s going on.
Number of houses sold. Average of 4.4% in Victoria. Dollar volume a bit higher because of the tendency for those places to be higher valued, but not drastically. I’ll look it up.
I’m genuinely curious to hear what right or law you think this tax tramples on. They’re targeting harmful economic behaviours. If an Albertan wants a vacation in BC every year, there’s a huge market for short term rentals and timeshares. They don’t have to park boat loads of their money in our province’s RE (and reap the gains) to do that.
So what you’re saying is that you don’t care what detrimental economic effect certain behaviours have – you just want to pin all our problems on foreigners. That’s what the kids these days call xenophobia.
Totoro
I think we may agree to disagree. I think empty vacation homes can really hurt a town. Now, if you’re there every weekend, using your cabin, that’s great. In my view, tourism, and not just the vacation home owners tends to support the island economies. And if you make living there easier and more affordable for locals, then it draws more people and other businesses will likely have a chance of springing up and surviving. Look at Cumberland. Look at Tofino — used to be dead in the winter, they marketed the storm season and now it’s a popular winter destination.
Don’t worry Introvert!
The Baby Boomers will all die out solving all those issues… So I keep hearing :/
Meanwhile: Cash in your $1000 pinkies as they are soon to be no more…
http://www.rcinet.ca/en/2018/02/28/1000-bill-no-more/
I have heard many times that foreign buyers are only 2-5% of the market. Is that based on number of houses sold or dollar value? Also saying something is only 1% or 2% of the total number doesn’t tell the true story. Would everyone care if the top 1% in income earners stopped paying taxes? I would like to know what the percentage of total dollar sales are the foreign buyers making up. I have a feeling that number will be higher.
Do I dare mention that neither California nor Vancouver nor Victoria nor the world can continue to grow its population ad infinitum?
We’re already collectively gobbling up more fish, cutting down more trees, spewing more pollution, etc., than the world can safely handle, and we want to keep adding more people?
This is what plans for large-scale densification lead me to worry about. But I worry about this no matter what.
@LeoS “Is anyone surprised that the hyperventilation about the communists crashing the market is overblown? The only immediate effect on Victoria’s market is the foreign buyers tax that will take out a couple percent of demand. The spec tax won’t affect us for 6 months and the supply measures won’t for 2 years.”
I agree that the immediate policy impacts to Victoria are limited. The upcoming measures to close tax loopholes, to restrict overseas capital inflow, and to restrict shell companies/nominees/hidden homeowner identities may fundamentally impact the demand for Vancouver’s market, which would influence Victoria simultaneously.
Emotion and expectations of buyers and sellers matter too. More buyers are watching instead of making over-ask offers without any conditions. Some sellers’ mindset stay at 2016-2017 level and look forward to bidding wars. It will be interesting to see how long the Victoria market stagnation will last.
LeoM
That is some article. We have it good here. Rezoning will make a lot of $$$ for some.
If you think our new NDP is being ‘radical’ on the housing situation, look what California is doing. The NDP pale in comparison, although California doesn’t have a speculator’s tax yet.
If the NDP follow the California model, the NDP will takeover the authority for zoning from the municipal governments, then they will blanket re-zone large swaths of residential neighbourhoods for high density multi-story housing.
https://www.nbcnews.com/news/us-news/california-s-housing-crunch-has-turned-liberals-against-one-another-n851401
Which is what happens anyway on these islands in the winter and will worsen with the tax imo. There is no economy there to support winter rentals or ft homeowners. The only way these work is if there are weekend owners paying property taxes and buying services there and renting the homes out when they can – which is ft in the summer only. Vacation home owners support the island economies.
Oak Bay councillor wants to bring secondary suites out of the shadows
http://www.timescolonist.com/news/local/oak-bay-councillor-wants-to-bring-secondary-suites-out-of-the-shadows-1.23186909
Is anyone surprised that the hyperventilation about the communists crashing the market is overblown? The only immediate effect on Victoria’s market is the foreign buyers tax that will take out a couple percent of demand. The spec tax won’t affect us for 6 months and the supply measures won’t for 2 years.
@Hawk totally agree. Things that don’t sell right away start slashing much faster than they did before xmas.
4817 Cordova Bay Rd is a great example (was well over 900k before xmas if i recall – they’ve unlisted and re-listed a few times so its not recorded as price slashes).
You’re seemingly correct based on what i am seeing. People can definitely be pickier now, that is for sure!
“definitely still some quick over asking sales going on”
Some more slashes going on too in Golden Head, Cordova Bay, Cedar Hill and Fairfield today and the past few. If you want to sell and been on the market abit you better start whacking as the new listings always go first as the agents pump them to their circle. Bagholders are a given. 😉
There are a lot of fixes that people here have suggested and this would be a good start. However, there is very little information to go on. I will remain worried until the NDP actually releases some details about the tax.
It is not silly to look at the wording from previous attempts at legislation. There is currently a vacuum of information, and a simple solution if that stuff is wrong: Give us more detail. It would have been nice if the NDP had actually thought it through more than 3 days before releasing the budget.
caeveat:
I was simply commenting on the previous draft act. I have phoned Carole James office and asked them to confirm that no principle residences will be affected by the new legislation. I agree that there was mention that no principle residences will be included but I just want to make sure the legislation actually reflects what was said. Politicians of all parties are sometimes not totally forthright about their intentions.
Personally, I would have rather seen them go after homes owned by foreign nationals rather than vacation properties owned by other Canadians or at least, in fairness, grandfather the existing owners if you want to discourage future buyers. I am concerned that this is the sort of precedent that could be increasing negative for people having a sense of being one country.
Frankly, I was disappointed that there seems to be no action on dealing with the issue of speculation.
Hopefully you are correct and that they will exempt all principal residences and not try to reissue the framework of a previous bill. Having lived under governments of all three parties I have learned to be equally suspicious of all of them.
By the way, I assumed all of the astute readers of this blog were well aware that we were talking about a previous bill tabled by the NDP.
definitely still some quick over asking sales going on:
7235 Kimpata Way – 60k over asking (950k) 5 DOM
670 Goyette Rd – 16k over asking (906k) 4 DOM
time will tell if they will be bagholders or not.
Gwac,
I suspect that the final spec tax would set a owning time period for BC owner vacation homes, say for example, bought 10 or more years ago would be exempt.
It is “Speculation” tax after all. People bought vacation homes on non-core areas for more than 20 years are not really speculators, are they? But we will see the final spec tax details when it comes in the fall.
Much more fun to assume the worse
From the information sheet linked by once and future below
The majority of BC homeowners will be exempt from this tax.
Exemptions will be available for:
Principal residences (excluding satellite families)
Qualifying long-term rental properties
Certain special cases
But feel free to continue freaking out about the legislation that didn’t pass and was never intended to pass.
Never mind, I see that this is draft legislation from the NDP from 2 years ago. Can’t be what they’ll actually enact.
Cannot believe that this was put out there even in draft form.
@caveat emptor
Actually, it may help the people who live on Saturna, and other such areas. Also, if the people that live in areas like that can’t find housing or are forced to leave, then you end up with businesses not being able to find employees and having to restrict their business hours or shut down, which hurts the economy.
http://www.cbc.ca/news/canada/british-columbia/saturna-island-family-housing-crisis-meeting-1.4523699
” You will effectively prohibit everybody but the richest retires from retiring to B.C.”
That’ll save a bit on healthcare costs.
Barrister – if I was a lawyer I would give more weight to the fact that they have specifically said (in writing) that primary residences will be exempt and less weight to the text of a failed piece of legislation from two years ago.
That is going to be a big problem for those who have small incomes and have not lived in their highly appreciating family home for more than five years. I looked at the legislation and there is only an exemption for homes that are owed by individuals 55 and over who sold another house and used the proceeds to buy the current home.
This means anyone who purchased in the last five years based on equity earned in a starter home and an average house in Gordon Head valued at, say, $800,000 and only earns $50,000 and pays $10,000 in income tax will now have to pay an extra $6000 in property tax. That is punitive and unfair.
People under 55 are not going to sell and re-buy, or buy at all, if this is how the tax is implemented unless they pay enough income tax to get rid of the levy. People who become disabled or lose their jobs are going to be faced with an extra significant tax.
This tax doesn’t penalize the wealthy, it penalizes those British Columbians who have median incomes who won’t have enough tax liability to offset the levy.
“Any permanent resident or Canadian citizen who is 55 years of age or older who lives more than six months per year in the province and would have qualified for exemption 8(d) but for selling his or her primary residence in the province of more than ten years in the last ten year period and using those sale proceeds to buy another property to use as his or her primary residence, is deemed to have lived in his or her new primary residence for ten years for the purposes of this Act.”
I think this legislation needs some work.
You can be sure that one of the additional exemptions will be for licensed short term rentals
Barrister
omg so if its 4 or less or you move after the legislation you never get it. These people are high.
Totoro:
You move to B.C. and you will be liable for the tax forever. The exemption is for a property that has been your primary residence for five years before the passing of the act. We are looking at section 8 of a previous bill by the NDP. Lurkers post below.
(d) Any homeowner who has lived in his or her property continuously as primary residence for more than 5 years predating the year of the Housing Affordability Levy levied is exempt from the Levy
this is one of the exemptions below. Not just primary residence but 5 years
That one will bite a lot of people. Not sure it will make it in.
Where did you find that?
this tax is getting uglier especially with D. You move here as a primary residence and you will pay the tax for 5 years.
Yes, that is counter-productive.
They ask your family and friends questions and look at your bank accounts and any shared assets. If you are representing yourselves to others as a couple all they have to do is find that you are still a couple on a balance of probabilities. Continuing to share the same residence would be some evidence as well.
I don’t think it is as difficult as you would think and if a couple is willing to maintain separate residences and live separately and divorce in order to qualify, they may well qualify in reality.
PEI has been doing it for years. If you change provinces there is a qualifying period to obtain provincial benefits as residence is tied to tax revenues and justifies some differential treatment within provincial jurisdiction. I think there are easier workarounds than moving here though.
It will not make you exempt from the tax. If you rent it out short term you will be making an income in BC which will reduce the tax and provide income to pay for the balance.
dasmo
Only long-term rentals will be exempt from the spec tax. Majority of AirBNB are short term rentals, so are targeted by the spec tax, that is a good thing, IMHO.
No, you will be taxed if you are doing short-term rentals if I understand things correctly. Only rentals of at least 30 days and for six months of the year will exempt you and that is not Airbnb’s market at all. It will stop a lot of Airbnb activity imo.
@Luke, I totally appreciate your comments. As a Canadian living outside of BC (although now I may have to reconsider this) I find this tax attack on Canadians from other Provinces completely Un-Canadian. I have lived in a number of Provinces and I find this whole idea of distinguishing between those that live in BC and elsewhere and treating them differently very disturbing. Is this the tip of the iceberg? We have all grown up believing this is one huge magnificent country where we can dream to be or do whatever and wherever we want right across this great nation. But now apparently not. Is this going to be the Canada of the future? Are Provinces now going to treat residents of other Provinces differently? Isn’t this smacking resemblance of Trumpland, right out of his playbook?
The bulk of the taxes that I pay yearly go to Ottawa and not the Province I live in. To distinguish that if I don’t pay “BC” taxes that I must be treated differently is nothing short of insulting. Some of my taxes most definitely end up in BC as they do in other Provinces but that is part of the pact of being Canadian.
Similar housing crises have occurred in other Provinces but never has a Province taken it out on residents of other Provinces.
Barrister
Primary homes would be exempt right off the bat. Need to make sure it is your primary home. Any other home in another province you would deem secondary.
Woops D/E would be an issue that 5 years. Interesting to see if that makes it into law.
Lurker:
If I am reading the 2016 draft act you will end up taxing every retired person who has moved to B.C. in the last five years (unless they have a really high pension or other income) on a home that is their primary residence. You are talking about tens of thousands of people. These are not speculators but retirees. You will effectively prohibit everybody but the richest retires from retiring to B.C. unless they are willing to move to an area that has limited or no medical facilities.
Maybe I am reading it wrong or I have missed something.
Caveat argument over. We differ on the tax itself which is ok. Does not impact me and if it did I am sure I would find away around it 🙂
gwac – I have stated that I WANT the tax to apply to vacation homes within the key urban areas of BC. There are a LOT of vacation condos/second homes in Victoria and Greater Vancouver. I am OK with and support the tax applying to those whoever owns them. So for me the key consideration / calculation is:
How many (or what percent) of vacation homes are outside the tax area vs the number or percent of vacation homes that are in the tax areas but perhaps shouldn’t be (traditional vacation areas not contributing to housing shortage)?
So I am comparing number of vacation homes in 98% of province to number of vacation homes in:
– Gulf Islands
– CRD west of Sooke
– FVRD east of Chilliwack
– parts of the Regional District of Nanaimo.
My best guess (and it is just a guess) is that vacation homes in these areas that will be taxed and shouldn’t be are less than 5% of the number of vacation properties that are outside the tax areas. I’d like to see the boundaries of the tax areas refined so that the number is close to zero. And I would not be surprised to see that happen.
Just as an example. Levying the tax on a vacation property on Saturna Island: does nothing to help housing supply in Greater Victoria, likely hurts the Island economy, and doesn’t substantially benefit the locals.
My new conspiracy theory is this spec tax was the brainchild of the AirBnB folks. It’s timed with them meeting with the Gov and agreeing to add the tax. This will force people with these homes that they keep for their own needs to put them up for rent. Where? AirBnB! They have excellent negotiators I must say. They do have to grow 30% a year after all….
totoro
LOL how does the government prove you are living together afterward as husband an wife if you legally separate and divorce. good luck with that. Change drivers licences should about cover it. Needs to make sense financially though cause there are other possible savings to being married. Saving 10k a year seems worthwhile. 🙂
I am making a point here if there is a way and government makes policies people will find a way to not pay tax.
2 people want to marry in there 50`s and own2 homes they want to keep. This policy will stop it.
You can’t change your marital status to separated if you are not actually intending to be separated. If you divorce and remain living together as partners you can still only claim one primary residence. Probably not worth breaking up over or lying about it.
190k in single income (not combined income) to pay the 2% tax on a 1m vacation home. 2 50k incomes pay aprox 5k in taxes and would have a 15k bill or 5k on a 500K home. Ouch. One huge tax grab.
As I said changing martial status is an option if it makes sense financially overall.
Freedom
In my area. The new purchasers are high income. Few homes are sold. Vast majority are homes that are owned by non high income that do no upkeep or upgrades and pay the 4 to 5k in taxes and have values in the 700 to 900k. They bought for 100 to 200K 20 or more years ago. So assuming the tax calculation assumption is right. They may pay tax.
Lurker
Easier to change martial status and have two primary homes if the savings are enough 🙂
Caveat
Honest guess what % of vacation homes (non primary) do you think they hit. I would say 85 to 90%.
Your guess?
For those that are speculating as too what the legislation may look like for the speculation tax you can use Bill M 209 as a framework. This was first introduced by the NDP in 2016.
https://www.leg.bc.ca/parliamentary-business/legislation-debates-proceedings/40th-parliament/5th-session/bills/first-reading/m209-1
Exemptions from the levy
(8) The following individuals are exempt from the Housing Affordability Levy:
(a) Any homeowner who is liable for income tax in excess of the amount of the Housing Affordability Levy is exempt from the Levy.
(b) Any homeowner who is liable for income tax less than the amount of the Housing Affordability Levy must pay the difference between that person’s income tax liability and the Housing Affordability Levy to the Receiver General for British Columbia.
(c) Any homeowner who does not qualify for the exemption in section 8 of this Act, and who:
(i) rents the property to an arm’s length party as defined by the Income Tax Act at market rent; and,
(ii) declares the value of the rent in his or her income tax return, may deduct from the Housing Affordability Levy the rental income declared for the property dollar for dollar.
(d) Any homeowner who has lived in his or her property continuously as primary residence for more than 5 years predating the year of the Housing Affordability Levy levied is exempt from the Levy.
(e) Any permanent resident or Canadian citizen who is 55 years of age or older who lives more than six months per year in the province and would have qualified for exemption 8(d) but for selling his or her primary residence in the province of more than ten years in the last ten year period and using those sale proceeds to buy another property to use as his or her primary residence, is deemed to have lived in his or her new primary residence for ten years for the purposes of this Act.
The key exemption is 8(c) where the levy is reduced by a dollar for dollar basis by the rental income amount.
We will just have to wait and see what the final legislation looks like.
Ha ha. Have you ever been to Interior BC?
How about Rocky Mountain Trench from Cranbrook to Valemount? Thick with Albertans.
Kootenays?
All of the Okanogan outside of Kelowna?
Cariboo/Chilcotin?
Note $370K is amount for one person only. People who can afford two properties in the core areas are normally high earners or/and with dual incomes. So the new tax credit would cover much higher than $370K.
Also if long-term rental will be new tax exempt for non-BC residents, BC residents should be treated the same. So BC residents only need the credit for vacation and short term rental properties in the core areas. How many of us in the blog have them? We don’t, and don’t think it will be of high % either.
Sounds like there could be some adjustment for pure vacation properties in the coming months, before tax due.
But for those who do own short term rental properties, the new tax may not force them to sell, but could force them to put these rentals into the long-term rental market, which is good.
Caveat I am all for bleeding foreigner as much as possible as long as the net economic impact is not detrimental to the overall economy. Going after select Canadians is disgusting. Plain and simple.
I like your changes just not enough.
The final version of the tax:
Bear in mind that NOTHING is written into legislation yet. And the way they have written the information so far allows them quite a bit of room to make changes without even reversing themselves.
There will be some intense lobbying on this in the next few months. Look for some changes in the final version and the government saying we listened to stakeholders and made the tax more targeted.
Some desirable changes IMO:
1) Refine the geographic areas so it excludes some primarily vacation or rural areas that are not contributing to the housing crisis. I’d look at excluding the Gulf Islands, parts of the FVRD that are very rural (the FVRD is huge and extends nearly to Lytton.), and parts of the Nanaimo Regional District
2) Carve out some kind of credit against the spec tax for people that have paid a lot of lifetime tax in BC but aren’t currently paying much income tax. This would mainly benefit seniors but could benefit someone who has low income in one year. Never a good idea to piss off the seniors.
3) Possibly make the tax credit threshold based. For instance if you paid BC Income tax above a certain threshold you could be exempted from the spec tax on one property to which it would otherwise apply.
4) Allow deferral of the spec tax similar to property tax.
I am personally very sympathetic no avoiding taxing vacation properties in traditional vacation areas (like the Gulf Islands), but I am OK with the tax applying to our major urban areas. (including Bear Mountain – sorry Stew).
Where I am there are 1 out of 100 homes I know that is owned by a non BC person. This area is not taxed. The only area that is not taxed that probably has a lot of non BC is whistler. Assumption it that a lot of so called vacation homes owned by non BC are in the areas taxed. The government knew what it was doing to get the majority of those homes.
Probably more than 80%, which is completely irrelevant. The tax does not apply to a population base. The tax applies to unoccupied homes in those areas.
These are:
1) empty urban homes held for speculation
2) vacation/second homes in urban areas
3) vacation homes in a few popular areas just outside the population centres – primarily the Gulf Islands
The vast majority of vacation homes both BC owned, other Canadian owned, and foreign owned are NOT in the areas to which this tax applies. It is ill-informed to suggest this tax applies to all or most vacation homes.
I support the tax applying to the first two categories, less so to the latter. I wouldn’t be surprised if the final version of the tax carves out some exemptions for this.
370k not a lot of those homes in the tax grab areas. So BC residents could end up paying taxes too. NDP need to go and go quickly.
Tax deduction:
If you report an income of 100,000 in BC you will pay provincial income tax of roughly 7400 (no dependents). That’s enough tax to offset the 2% on a vacation property or other unoccupied home valued at 370,000.
Re. the George St. house that just sold for $1,039k –
This looked like quite a crappy old house on a very small lot, though in a very good area steps to Dallas Rd which is why it sold. Let’s see if there’s a few more examples this spring before coming to any conclusions as in this particular case the people who bought may have overpaid, and also – may have had a life changing event that caused them to have to sell and move for whatever reason. Unless we see a real trend over the next few months of homes that were recently bought selling for losses, this one house isn’t indicative of anything.
Some recent sales, after the budget:
1317 Richardson St. $1.1m. Looks like a decent enough place though it’s overlooked and on a busy street near the busy Moss/Richardson corner.
1479 Lang St. $1,185k – rare quality 2012 build w/ suite. Backs onto Kiwanis care home (though old people aren’t known to make much noise). Kind of a swampy busy area.
2044 Milton St. $875k – not the best part of OB by any stretch. This is only a 2 bed 1 bath, almost a ‘tiny home’ status at 1121 sq ft! The quotes in the kitchen say it all: ‘Simplify’ ‘Believe’
So, homes are still selling people – even after the supposed ‘kill the housing market’ budget…
That’s true eh, imo – the Vancouver courier is not the best media outlet by any stretch! While Geographically you may be correct since most of BC is mountains/forest/not lived in, one could surmise that it’s more or less ‘BC wide’ as it encompasses among the most popular and populated parts of the province.
On some levels, yes, but he’s also a ‘yes’ man when it comes to development, and hence Langford with it’s rushed development is not the most attractive or aesthetically pleasing place..
Stew is a class act. Need more politicians like him
Caveat what % of the population area 75 to 80%
Really hope someone challenges this.
People who write that in a news article are either lying or suffer from reading comprehension issues. Geographically speaking the area to which the tax applies comprises slightly more than 2% of the province.
What percentage of vacation homes are in that area? Surely more than 2%, but still a small fraction of the total.
https://www.cheknews.ca/alberta-couple-says-new-speculation-tax-is-unfairly-driving-them-out-of-b-c-423591/
Langford Mayor Stew Young says the tax is also affecting Canadians. “When you’re Canadian, not foreign and you bought a home in a resort like Bear Mountain you’re now paying about $2,000 dollars in taxes in Langford, let’s say for your house, and now it just went to $30,000 dollars in taxes overnight,” said Young.
Turns out that the ‘speculation tax’ is actually not a speculation tax at all… it’s an ’empty homes’ tax on non BC income tax residents…
http://www.vancourier.com/real-estate/why-b-c-s-new-real-estate-speculation-tax-is-not-a-speculation-tax-1.23185372
“As finance minister Carole James said the new tax will only apply to non-resident owners who do not rent out or live in the home, it is essentially a B.C.-wide empty home tax, on top of the one imposed in the City of Vancouver. Now, you may or may not think this is a good idea in its own right – but it’s not going to stop speculators flipping properties.”
Since when did we start to discriminate against other Canadians simply b/c they live in a different province? I have a feeling this tax will be challenged in court. This discrimination against other Canadians who own property in BC that they might be saving for their retirement (esp. Albertans) imo is anti-Canadian and if not challenged will be damaging to our economy.
For those people on here who don’t like speculators: in this latest Prov. budget there are actually no new taxes on people who speculate or ‘flip’ properties! They can continue to do so as before.
Wow. You are dramatic. Out of province vacation home owners that actually own in the areas covered by this tax can choose to pay the tax, rent out part time, or they can sell into a currently hot market likely for MUCH more than they paid. Hardly confiscation.
The vast majority of “vacation cabin/lake type property” is not in the areas covered by this tax. People selling or renting their second homes in Greater Victoria or Greater Vancouver will absolutely help bring rental and sale supply to market.
The one glaring exception I see is the Gulf Islands. Covered with vacation homes, no housing crisis on the islands. And creating supply on the islands isn’t going to help meet the need in nearby urban areas. Housing on Saturna or Galiano, no matter how cheap it becomes is not going to exert much downward pressure in Greater Victoria. Only with Saltspring and Gabriola is their some potential for island housing to help with supply in Vic and Nanaimo respectively. I would not be surprised to see the Gulf Islands exempted in the final version of this tax.
You do realize that the VAST majority of BC owned vacation homes are not in the areas covered by this tax at all?
That might be an interesting metric for the market in addition to prices going up and down.
Percentage of sellers that are losing money on resale. One would expect it to be near zero in most cases but would be interesting to see how high it goes in downturns.
Sweet Home said:
“Also, you can’t really lump all the transaction costs in with a drop in the sales price” and Marko concurred.”
Of course you can because that’s the only way to calculate the loss to a person’s net worth when they try to flip a house and end up with a loss. If you only use the difference between purchase price and selling price you have a very misleading and inaccurate financial picture.
If you were buying and selling stocks or mutual funds, you would include all the transaction expenses. Marko often mentions the idiocy of someone paying 2%MER, this is no different; all expenses must be included when calculating a profit/loss statement.
When your accountant calculates your profit/loss they will use a formula that includes all expenses. When CRA calculate your taxes due, they consider all your expenses.
So Sweethome and Marko, please explain why you wouldn’t include all your expenses when flipping a house or condo when calculating your profit/loss?
We haven’t heard from Barrister in a while. Either time has caught up with him, or he’s on the phone with Bill Morneau.
I like your contributions, Josh. Your writing often makes me chuckle.
Leif Sprott is excluded as is LC and Shawnigan. Tofino, whistler, mt Washington. Not sure why.
Ya the big bad bully government is being such a meanie, forcing those millionaire vacant home owners to pay a whopping 0.5% tax so they can afford to build rental housing.
There isn’t a business crisis in BC. Things are going swimmingly well on that front.
I have a feeling they are going to have to do something for BC residents vacation homes though.
Let’s say your vacation home is $650k @ 2% = $13k. Does that mean they need to make an income of at least $13k in BC or does that mean they need to pay at least $13k in income tax in BC?
Making an income of $13k would be fine with anyone with a basic pension or dividend portfolio if they planned for retirement. If they are using a reverse mortgage that might be more difficult.
The lake places in our area of Sproat Lake have been in families for generations. I think only 3 of the 19 have sold in the past 30 years.
I have noticed though that more and more have been bought by doctors and dentists from the Island and Vancouver around the lake. Those homes in the majority of the lake are well over $1 million.
Also, you can’t really lump all the transaction costs in with a drop in the sales price.
People have been lumping this on the blog for the last 10 years and I’ve never understood it. In 2010 or 2011 someone brought up a home in Gordon Head that dropped a bit, but the big talk was the lump sum loss. If the seller blows 100k on real estate fees and takes a massive loss after transaction costs doesn’t benefit you as the buyer. You are still paying X amount.
Has the percentage stayed the same with the large price increases? If someone is just moving from one principal residence to another, why do they have to pay so much money?
As of late some of the percentages on the multi-million dollar stuff have actually increased.
It has never dropped to the best of my knowledge; however, the first time buyer exemption has increased from 425k to 500k in the 8 years I’ve been in real estate. Funny thing is you could have bought a better house for 425k 8 years ago than you can today for 500k.
How on earth is renting vacation cabin/lake type property going to help the housing shortage which was the catalyst that brought about this harebrained idea. Who is going to rent vacation property off season when there is noone around or let alone work for anyone ?
Maybe not a vacation cabin but possibly a vacation condo. When I lived at the Bayview you had quite a few Albertans there with vacant condos. I actually sold one and it was maybe used 4 or 5 months total in 6 years of ownership. The owner would use it for long weekends and a bit in the summer, her friends from Alberta used it from time to time, etc.
How on earth is renting vacation cabin/lake type property going to help the housing shortage which was the catalyst that brought about this harebrained idea. Who is going to rent vacation property off season when there is noone around or let alone work for anyone ?
@Leo M Re: 1340 George Street “The market has changed significantly since the spring of 2017. A ~13% loss in just 8 months is significant.”
That is interesting, but with an old house like that something could be up. Maybe they uncovered some structural issue or water damage. Or maybe they just overpaid last year. I wasn’t following that price range, so I don’t know how last year’s price of $1,085,000 compared with other houses at that time.
Also, you can’t really lump all the transaction costs in with a drop in the sales price. If someone buys a house and then gets transferred 6 months later, they can’t really expect prices will have gone up enough to get all their expenses back.
Which reminds me: I don’t know much about the history of the Property Transfer Tax because I grew up in Saskatchewan where it does not exist. Has the percentage stayed the same with the large price increases? If someone is just moving from one principal residence to another, why do they have to pay so much money?
“The Vancouver exec will presumably have BC income tax to apply the credit against so will end up paying little or nothing.”
I bet that the majority of BC-resident vacation home owners don’t make enough to cover the envy-tax on vacation properties with a non-refundable tax credit equal to the envy-tax. There is no doubt that most BC resident vacation home owners WILL end up paying (or selling).
Where are there a lot of vacation/homes outside of the big cities but within the areas covered by the speculation tax?
Capital Regional District – Gulf Islands and to some extent on the coast north of Sooke
Nanaimo Regional District – Parksville/QB and northern Gulf islands
Metro Vancouver – mostly urban
Fraser Valley – Cultus Lake, Harrison Lake, others?
These are maybe areas that are going to be whacked hardest by the spec tax. Lots of vacay homes but without the urban level of demand to soak up stuff that comes to market because of the tax
Love it!
Most likely neither will be subject to the speculation tax as the “Okanagan” is not one of the areas selected for the tax to apply.
If the two houses are in Kelowna (a small part of the Okanagan) then BOTH will be subject to the spec tax. The Vancouver exec will presumably have BC income tax to apply the credit against so will end up paying little or nothing. The Calgary exec pays full freight.
As mentioned below – the salient difference is that the Vancouver exec votes in BC.
I agree. It is going to be helpful in bringing some supply on to the market both rental and for sale. However it is going to have some negative consequences, penalizing Canadians from other provinces and how is it going to affect the market in the areas where it does not currently apply. Are potential purchasers really going to trust that the text won’t extend to that area in the future?
“And it opens up a new industry of BC residents to buy up cheaper vacation homes and rent them out to those out of province vacationers.”
Wow. You are advocating the confiscation of property owned by out of province owners.
Leo
It’s a transition I would say 30% have sold their
Victoria homes. Rest own 2. Only ones lately to sell
are the parents dying and kids do not have cash so they sell. The 2 lakes are excluded they are both part of the CVRD.
Large amount of People buying what comes up are retiree from Van.
I moved up there in a nano second but their is my family/kids to deal with. They are better off here.
1340 George, in beautiful south Fairfield, close to Dallas Road, Clover Point, Cook Street Village, and Beacon Hill Park, sold 8 months ago for $1,085,000; today it sold again, but for $1,039,000, after a minor renovation.
That’s a $46,000 upfront loss, plus $50,000 in realtor and legal fees, plus the Property Transfer tax of $19,000, plus renovation costs and moving and all the ancillary costs.
That’s a $115,000++ loss in 8 months.
The market has changed significantly since the spring of 2017. A ~13% loss in just 8 months is significant.
Then it’s a primary residence, not a vacation property. The maintenance still applies of course, but you’re maintaining one, not two properties.
And with the spec tax, it would be a lot cheaper for those people to move up to Shawnigan because there would be much less demand from out province buyers with empty lake houses.
It’s a different dynamic for sure. If the spec tax applies to out of province owners of vacation property (still a big if), is it bad that there won’t be as many empty vacation homes on the Gulf islands?
Many residents might prefer it that way. And it opens up a new industry of BC residents to buy up cheaper vacation homes and rent them out to those out of province vacationers. Worse or better or just different? One thing is for sure, change is always painful.
It’s really only an issue because some vacation destinations got caught up in mostly urban areas where the spec tax applies. I have about zero sympathy with people complaining about not being able to leave their downtown condo empty. If you want a vacation condo in the middle of the city pay up, or just rent one instead of owning.
Gwac:
I’m with you on that one. I’m up there, and out of here as soon as practicable.
Marko:
You are probably right, but “close family member” is defined in the Act to exclude siblings, cousins, etc. Who knows why. Having said that, if you (or your close family member) intend in good faith to occupy your vacation home on a specific date, you can use a vacate clause.
Section 13.1 has nothing to do with basement suites. It simply allows a landlord to bypass section 49 of the Act if they plan in good faith to occupy the rental unit on a specific date, e.g., you are going on vacation for 6 months and want to rent out your home for that period. There is no definition of “occupy” in the Act or regulations. That means it is open to interpretation.
All I am saying is it wasn’t written with vacation properties in mind otherwise you wouldn’t have these technical challenges like “close family member.” Why wouldn’t your sister, brother, cousin, or friend qualify for occupation of a vacation property if you can’t make it yourself?
My theory is when they revamped the act in December they weren’t think vacation properties when they wrote the “circumstances when tenant must vacate at end of term” section.
The definition of occupy is up for interpretation but it has been around for decades (i.e., purchaser giving 2 months’ notice to tenant to occupy) and usually it involved someone moving in long term. The dicitioanry definition is reside or have one’s place of business in (a building). Would it fly if you gave tenant notice and then didn’t move in whatsoever?
People will get around it but it won’t necessairly be in good faith.
…….it is kind of like not wanting to rent to single parents so you throw a shower into your suite instead of a bathtub. Difficult to prove that you are discriminating but not acting in good faith. Not everyone wants to act in bath faith. I have a tub in my suite 🙂
Omg Marko that was some video. How do I comment on that other than to say you are wrong.
A lot of people around the area have sold their Victoria places in their 50s and have moved up their full time. They love it.
Marko:
Section 13.1 has nothing to do with basement suites. It simply allows a landlord to bypass section 49 of the Act if they plan in good faith to occupy the rental unit on a specific date, e.g., you are going on vacation for 6 months and want to rent out your home for that period. There is no definition of “occupy” in the Act or regulations. That means it is open to interpretation.
Nick:
On what grounds would the spec tax be challenged in Court? The province has exclusive jurisdiction to make laws respecting property and civil rights in the province, and I doubt that a person’s mobility rights under the Charter are being infringed by this tax.
The 2 lakes within 90 minutes I think over the long run will do ok. Most are kept for decades.
Let me know if you ever want to see what all the fuss is about
I spend a lot of time at both lakes…..even made a video at Shawnigan this past summer.
“Enjoy recreational waterfront property with no mortgage, no maintenance, no insurance, no taxes!”
https://www.youtube.com/watch?v=h49rFXXa_Iw
Marko
Same return if you would have bought 2 for same amount. Good luck selling an uplands property in a down turn. :).
The 2 lakes within 90 minutes I think over the long run will do ok. Most are kept for decades. Not a lot on the lake on MLS.
Marko
My friend owns a cottage.
Land on one of the lakes on the island was sold off in chunks in 1965 for 6500 a lot. Assess this year at 650k. That is land only. Pretty good investment.
You are missing opportunity cost…..a lot in the Uplands was probably 10-15k at the time. When the economy goes south good luck selling on the Gulf Islands or lakefront.
Marko
My friend owns a cottage.
Land on one of the lakes on the island was sold off in chunks in 1965 for 6500 a lot. Assess this year at 650k. That is land only. Pretty good investment.
Naturally renting is a bit of a hassle. You have to pack up your stuff and most likely rent the unit furnished.
Tenant insurance, additional bookkeeping/more work at tax season, annoyance of having to maintain the unit for the tenant on their terms (i.e. washer breaks down you can’t leave it until the following summer season), etc. If you have a vacation home odds are you are in a higher tax bracket so you get slaughtered on the rental income as well.
Just like boats I’ve always thought vacation properties (esspecially rural) are a horrible investment/headache and I would never ever buy one but I do feel for people impacted by the spec tax.
Marko – don’t make something difficult that is really simple.
Section 13.1 was written with basements suites in mind; not vacation homes.
This is the best definition of occupy I can find on the BC Gov website….
Occupy the unit: Once they take possession, a buyer can choose to live in the unit themselves, or have a close family member live there. That would mean the father, mother or child of the landlord or the landlord’s spouse – it doesn’t include the brother or sister of the landlord or the brother or sister of the landlord’s spouse.
So even if your brother or sister, let alone friends, want to use the lake cabin you are in theory screwed.
Nothing rolls over to month to month unless you took no action.
Fair enough, the tenant just files a complaint once you don’t occupy the unit for the summer; I’ve seen crazier things. Don’t assume that common sense prevails.
I do get your point, most people won’t follow up on the “good faith” component and will get away with it. The occasional person will come across a crazy tenant and will get burnt.
It’s like me renting my suite and booting the tenant because I need the space, but I don’t end up using the space.
I agree. I find it curious they call it a “speculation” tax, when it seems to be more of an empty homes tax. I reason they’d have to have a rationale for choosing this option; I don’t know why they didn’t introduce a flipping tax instead. That’s what Toronto did in the 1970’s – at 50% I think.
I am glad to see some serious action to target force and fraud, and generally I think they’ve tried to walk the fine line. But my understanding is that history is on the side of those that think their intervention does go too far – whenever the “dead hand” of government enters the market to induce a broad market shift, they tend to overshoot and/or create unintended consequences.
They didn’t create this mess, though. We did. But they just might make it worse.
Speculation Tax Info Sheet
https://www2.gov.bc.ca/assets/gov/taxes/property-taxes/publications/is-2018-001-speculation-tax.pdf
Not really much new information. Reading between the lines…
“The speculation tax will initially apply to the Metro Vancouver, Fraser Valley, Capital and Nanaimo Regional Districts, and in the municipalities of Kelowna and West Kelowna.”
Note the word “initially.”
Had to look that up. Good insult!
Owning a cottage or a condo as a weekend retreat is not speculating. Most people I know have had the cottage in their family for decades. This is just a tax grab. Basically BC is telling everyone whether it is a business or owning a home. We just want taxes. Longterm that is incredible short term strategy that will back fire and send tax revenue down.
Zero positive in the budget for businesses.
When housing becomes a commodity to investors, it does not matter where they are from. A Victoria speculator is the same as a Calgary speculator or a Chinese speculator.
The point is simple; houses and condos are needed as homes for local residents.
I agree. I haven’t see any word that the NDP is willing to change course, though. Anyone out there with inside knowledge?
Marko Juras
February 27, 2018 at 5:08 pm
Re speculation tax….what exactly is the difference between a Vancouver exec with a $2,000,000 waterfront place in the Okanagan vs Calgary exec with the same house next door? Shouldn’t we tax the Vancouver individual as well to motivate them to rent it out?
Really Marko? What is the difference? Simple. The Vancouver exec votes in the next BC provincial election, the Calgary exec does not.
[needs source]
Ya you never know CS. 🙂
Leo agree.
Or just make it that anyone paying tax in Canada gets to offset the spec tax. Move the tax credit to the federal level. I realize this is complicated though.
However I don’t think going after Canadian owners is the right way to go. Yes it will help housing affordability but it just feels wrong. There has to be a better way.
Edit: or maybe it’s not that bad and people will just transition to renting their summer cabins here instead of owning. Pretty conflicted about this.
“Prepare for the rath on here it will come swiftly.”
Huh?
Rath: a usually circular earthwork serving as stronghold and residence of an ancient Irish chief
You mean its gonna get that bad here in Victoria?
Nick, that is an interesting number. Do you have a reference I could look at?
Construction is beyond maxed out in the big centers, but I could see that hurting everywhere outside of Van/Vic/Kelowna.
Then again, with the spec tax, I could see a lot more holiday homes in places like the Shuswap or Cowichan. Will non-BC people trust that the spec tax won’t spread to new areas?
Marko – don’t make something difficult that is really simple.
You rent it out for a fixed term intending in good faith to occupy it at the end of the fixed term. Your plans may changed, but the tenant still has to move out. Or if the tenant was interested you could just enter a new agreement for a new fixed term based on your new good faith intentions to occupy it the following summer. Nothing rolls over to month to month unless you took no action.
There is no problem with “occupy” – it doesn’t mean move in permanently it just means occupy.
And of course many/most people that rent a house or suite for an eight month fixed term will do so because they want somewhere for 8 months. So good chance they will move out even if you want them to stay.
Bottom line is you can rent your vacation home for a fixed term provided you enter the agreement with a good faith intention to occupy it at the end of the term.
The outcry here is not because you can’t practically rent your vacation home, it’s because people don’t want to. Most people have their vacation home furnished and filled with lots of their belongings. Naturally renting is a bit of a hassle. You have to pack up your stuff and most likely rent the unit furnished.
They maybe didn’t get the memo. The government wants the whiners to sell to increase listings and help push down prices. That’s why we voted them in.
“… this could have some long-term effects that we haven’t figured out.“
The government estimates a 25% reduction in housing starts as a result of their tax initiatives. That’s going to have a major effect on the construction industry, and it’s not a good effect. And it’s obviously not going to increase supply.
Nick does have a point. For example, I have a friend whose father is a doctor in Yellowknife and he purchased a townhome close to Uvic maybe 10-12 years ago so his three kids could use it (they all went to Uvic) and him and his wife could come during the summer. It has never been rented as far as I am aware, but well used.
So this guy is making a sacrifice living in the middle of no where for some extra cash so he can do something nice for his kids and all of a sudden he is a speculator if the townhomes is left unused by family as they are doing grad programs at other schools, but might come back to Victoria.
It will be super interesting to see how this all plays out.
“Kind of amazing that there is so much hate”
“desperately hoping for the government to create a similar level of misery for everyone else.”
“a bunch of envious low-life’s”
“May I suggest a remedial course in English comprehension?”
LOL
I am still really torn on this spec tax. For some problems, I think it is a great solution. However, I still think it is going to have a lot of unintended consequences.
Number 6, my first reaction is the same as yours. However, making the income tax credit available only to BC taxpayers, but not the rest of Canada, is a very bold move. As much as the surge in aggressive trucks with Alberta license plates annoys me every summer, I wouldn’t be petty enough to shut other Canadians out of BC.
There are some places in the province that have built their local economy around holiday homes. For something that is going to hit so many people, it is starting to piss me off that the govt has not given the details of the tax and its exemptions. “Trust us” is not enough. It really looks like they did not take a lot of time to think it through.
On the other hand, with the right wording, some kind of spec tax might work. I still need to be convinced, though.
“Not really seeing a bunch of hateful lowlifes who are desperately hoping for others to be miserable.”
May I suggest a remedial course in English comprehension?
Not really seeing a bunch of hateful lowlifes who are desperately hoping for others to be miserable.
As a general rule, wealthy people who don’t want to pay tax and outsiders who tell locals how to run their affairs don’t get a lot of sympathy.
Jim Casey will get to vote in B.C. elections just like everyone else when he actually moves to B.C.
Nick you nailed it.
Prepare for the rath on here it will come swiftly. 🙂
It’s part of the go fund me generation
Kind of amazing that there is so much hate directed at people who own a very modest cabin on Pender Island. I feel sorry for anyone so consumed with resentment. They are clearly living a miserable life, desperately hoping for the government to create a similar level of misery for everyone else.
“There are still some crazies out there”
The crazies will always be with us but the continued existence of spittle-flecked Bolsheviks is a bit of a surprise.
“Dude owns 2 condos for vacation shits and giggles and doesn’t think that counts as speculation? Cry me a river. ”
“You are going to pay a speculation tax on your condominium. But I can’t muster a tear for you as you’re a real estate millionaire that can afford to keep a condominium vacant.”
Classic Canadian class envy. The guy (and who said he is a speculator or a real estate millionaire) wants to enjoy the fact that in Canada we are free to move around without asking permission from a bunch of envious low-life’s, and that includes purchasing property for personal use, including future retirement.
I hope the new BC regulations are challenged in court. They are mean-spirited and clearly aimed at Alberta, more than any other region. Typical NDP.
“Re speculation tax….what exactly is the difference between a Vancouver exec with a $2,000,000 waterfront place in the Okanagan vs Calgary exec with the same house next door? Shouldn’t we tax the Vancouver individual as well to motivate them to rent it out?”
My reading is the Vancouver exec will get a non-refundable BC tax credit equal to the 2% spec tax.
Re speculation tax….what exactly is the difference between a Vancouver exec with a $2,000,000 waterfront place in the Okanagan vs Calgary exec with the same house next door? Shouldn’t we tax the Vancouver individual as well to motivate them to rent it out?
Well Jim Casey, desperate times requires desperate measures.
Yes, you are going to pay a speculation tax on your condominium. But I can’t muster a tear for you as you’re a real estate millionaire that can afford to keep a condominium vacant.
Who should I feel more for -a homeless person begging for change in front of a luxury downtown condo tower or a millionaire inside that same tower grumbling over a 2% tax that will help the homeless.
I can not feel compassion for Mr. Casey as he hasn’t shown sorrow for the sufferings and misfortunes of others that are a few feet outside his front door.
That is wrong. You absolutely can rent your vacation condo with a fixed term tenancy and a requirement for the tenants to move out when you need/want the place. The situation where you can still do this is described in the residential tenancy regulation.
What you can’t do is rent your investment condo with fixed term leases.
Fixed term tenancy — circumstances when tenant must vacate at end of term
13.1 (1) In this section, “close family member” has the same meaning as in section 49 (1) of the Act.
(2) For the purposes of section 97 (2) (a.1) of the Act [prescribing circumstances when landlord may include term requiring tenant to vacate], the circumstances in which a landlord may include in a fixed term tenancy agreement a requirement that the tenant vacate a rental unit at the end of the term are that
(a) the landlord is an individual, and
(b) that landlord or a close family member of that landlord intends in good faith at the time of entering into the tenancy agreement to occupy the rental unit at the end of the term.
[en. B.C. Reg. 225/2017, App. 2, s. 1.]
I’ve understood “occupy the rental” as to mean move into the unit. If you are an Albertan vacationing in your condo not sure if I buy that as “moving.”
Secondly too many scenarios too list…what if you decide you are going to your country home in France for the summer instead of Victoria? Now your fixed term lease rolls into a month-to-month and when you decide to come back to your condo you need to compensate the tenant.
The fact that the no-question fixed term lease is been abolished is problematic, even though I agree with that move on its own merit.
Fixed term tenancy — circumstances when tenant must vacate at end of term
13.1 (1) In this section, “close family member” has the same meaning as in section 49 (1) of the Act.
(2) For the purposes of section 97 (2) (a.1) of the Act [prescribing circumstances when landlord may include term requiring tenant to vacate], the circumstances in which a landlord may include in a fixed term tenancy agreement a requirement that the tenant vacate a rental unit at the end of the term are that
(a) the landlord is an individual, and
(b) that landlord or a close family member of that landlord intends in good faith at the time of entering into the tenancy agreement to occupy the rental unit at the end of the term.
This clause works well if you want to occupy a vacation rental for part of the year and rent it for the rest. It would also work well if you wanted to rent your basement suite for part of the year but use it for yourself (say hosting family visitors) over the summer.
I actually think the government hit the right note with this change. Abuse of fixed term is mostly gone, but you can still use it in a couple of cases where it makes sense and would otherwise deter people from renting at all.
Of course you can ALWAYS boot tenants out for own (or immediate family) use of any property you own even if there is no fixed term lease. But you do genuinely have to intend to use it and you also have to give the tenants a free month of rent
That is wrong. You absolutely can rent your vacation condo with a fixed term tenancy and a requirement for the tenants to move out when you need/want the place. The situation where you can still do this is described in the residential tenancy regulation.
What you can’t do is rent your investment condo with fixed term leases.
The speculation tax and the changes made to the tenancy act in December are certainly a tough combo as you can’t do a fixed term lease anymore to meet the speculation tax exemption criteria. You are left with options of rent long term or sell.
I think this was a bad move to get rid of fixed term leases. They should allow vacation holders to rent their place out for the 8/9 months they do not use it. Marko don’t the new laws say something about owners are able to return back though and with enough notice could terminate the lease? I’m sure something must be in there if you own the property and want to go to “live” in it for the summer.
Re: Jim Casey of Edmonton.
Dude owns 2 condos for vacation shits and giggles and doesn’t think that counts as speculation? Cry me a river. I wonder if he’s ever stopped to think about how BC residents benefit from his “investment”. It reads as such a typical grumpy old man yells at cloud article. “Things are changing and this upsets me!” Good share though. Along with Hawks link to the CMHC coverage.
Guess there’s still some crazies out there.
944 Mason came in $105k over asking at $845k.
944 Mason came in $105k over asking at $845k.
The speculation tax and the changes made to the tenancy act in December are certainly a tough combo as you can’t do a fixed term lease anymore to meet the speculation tax exemption criteria. You are left with options of rent long term or sell.
@adam
Wow, crazy story – my wife would have forced us to turn around 3 minutes into that jungle drive..
“I haven’t, but then I haven’t looked. Generally, I find economists aren’t much better at predicting than climate scientists”
Spoken like a true ex-economist Mike.
Harper will go down in history as creating the largest housing bubble in history with 40 year mortgages and handing tax payers a $113 billion CMHC tax bill.
Interesting post from The Macro Tourist.
THE PRICKING OF THE CANADIAN REAL ESTATE BUBBLE?
http://www.themacrotourist.com/posts/2018/02/27/bc/
@Leif
You were correct – “The ratings agency raised its economic risk rating for the Canadian banking sector to three from two on a 10-point scale.”
http://www.canadianbusiness.com/business-news/sp-ups-economic-risk-rating-for-banking-sector-amid-mortgage-fraud-worries/
What a tough market to read right now…sales are slower than last year but some crazy over ask pending sales coming in today. 1/2 duplex in Esquimalt listed for 630k and sells for 760k.
The Mason St home went 105k over ask.
Harper did what he had to do to save the economy after the US shit show a 2008/09. Did one hell of a job to make our crisis far more manage bale than the US. History will judge him a hell of a lot better than what we have now.
I’m sorry that this is so big! I don’t know how to make it smaller.
Inflation in Canada
As of now interest rates have gone up more that inflation to a more historical spread. So nothing is really inflating away. Just renewal costs are just going up.
Inflation rate
2014 1.92%
2015 1.13%
2016 1.41%
2017* 1.6%
Rising rates will increase your payments however your principal payment is inflated away relative to your wages
And your interest rate goes up to counteract that.
No one is lending you money so that it can be inflated away.
Great link Hawk!!
“Your CMHC insurance doesn’t protect you”
That article should be mandatory reading for everyone with a CMHC insured mortgage, especially this paragraph:
”I have a judgment against me by CMHC from a mortgage that was foreclosed. The property was sold for $205,000, which was originally insured for $238,000. CMHC got a judgment of $33,000 plus interest totalling approximately $51,000 against me because the value of my property went down and I defaulted! I had no idea that this could happen. What do I do now?”
Nothing of note in the budget. Some more money to crack down on tax fraud.
And a little bit more money for rental housing loans.
That’s it. I guess the next year’s will be the whopper
As inflation rises, any debt effectively decreases.
People with cash hate inflation, because it eats away at their wealth. But people in debt love inflation, because it eats away at the amount they owe.
I haven’t, but then I haven’t looked. Generally, I find economists aren’t much better at predicting than climate scientists. Hard assets/commodities typically perform best during periods of rising consumer inflation rates or bond yields (eg. mtg rates tripled from 1965-81 as Vic SFH went up ~900%… similar story for lumber, ag’s, copper, etc)
If you meant the yields one, it’s just a ~200-yr bond yield chart. The lines were mine.
Thanks numbers, interesting summary. Once market psychology shifts it can take years to get going again, especially with the hot FB money vacating the province.
“All told, B.C. is now applying the full-court press on housing
affordability, pretty well pulling out all stops short of creating new
land. These measures should help further dampen speculative
psychology and build on the impact of higher interest rates and
stricter OSFI rules. Note that Vancouver single-detached prices
have been stable, while those on Vancouver Island and in the Fraser
Valley are pushing new records—look for the latter markets to stall.”
Interesting talk on the looming end of the bull market and the next financial crisis and inflation by Peter Schiff.
https://youtu.be/WD2zcyfwdJ4
The more and more reading I have done lately all points towards us being in the late cycle of the bull market.
Sounds like rates will be going up 4 times this year.
https://finance.yahoo.com/news/powell-hints-fed-will-raise-interest-rates-4-times-2018-160936735.html
@Michael have you run across any economist talking about the inflationary changes for the upcoming cycle to property? The charts you presented where is it from?
I do agree with the video above that they will try to push interest rates this year, the market will crash and they will try to drop rates again. I’m curious where to hedge for the next crash. I have stock related plans but they are all held in USD but if the USD has a crash that might not be the area to head towards.
“This was a very common bank tactic during the downturn in 1976/77/78 and again after the crash in 1981/82/83, but I’ve been flamed on here a couple times in the past for reminding people that it could happen again. I knew several people in the early 1980’s who lost their houses because the banks would not renew their mortgages because they were “under water”. People on this blog told me it couldn’t happen again because most risky mortgages are now insured by CMHC. It might be different this time for people with CMHC insured mortgages. If they are not insured, it will probably happen again if falling prices leave people under water.”
Good post LeoM. Funny how people today don’t want to listen to how the same scenario played out back then. In the end it’s all comes down to credit and cash, nothing has changed on how money is lent. Do you have both if you have to renew and pony up to make up for the underwater amount?
The hostility is mind boggling but also part of their fear it’s coming true as per what is happening in Toronto today. Where would most people come up with even $50K if they are already maxed out on car loans, HELOC’s etc. CMHC protects the bank, not the owner.
http://www.moneysense.ca/save/debt/your-cmhc-insurance-doesnt-protect-you/
Using the Sale to Assessment ratio is a handy tool as a cross check to a final estimate of value. And I provide that ratio in my reports as it the number one question people ask me.
“How does my assessment relate to my house’s price?”
But it is tricky to determine as the ratio is dependent on physical and location aspects that are specific to the person’s house. The ratio has to be tailored to meet those aspects. A further complexity is that the new assessments came out on January 1st and you can not mix two different years of assessment data. However, I quickly realized that adding one more level of complexity lost most people in understanding the calculation of this ratio.
For the next few months, I will generally leave out that Sales to Assessment ratio until there is at least 4 months of 2018 data. Instead I use several other cross checks that are not dependent on the government assessed values.
I time trend the prior sales of your property using a median analysis to estimate a calculated current price. Your property may have one, two or three previous sales that I will use.
I calculate the median price for homes like yours in your neighborhood and then determine the high and low end of the range and estimate where your home falls in that range due to its condition being superior or inferior to the typical property.
I research the last sale of a highly similar home on your street or in your condominium complex and then time trend that last sale to a calculated current price. This is really helpful when you have something unusual about your property like fronting onto a highway, backing onto a park or a view.
And then the traditional three comparable sales which are a very small judgement sample to illustrate current market conditions for homes like yours. The hypothetical assumption being that your home has been on the market along with these comparable listings and a buyer would have considered these properties along with yours.
In the end the process results in several different estimates and it is necessary to reconcile them into a market value range and give the appraiser’s opinion of the most likely singular value at a specific point in time.
I have to do all of the above as I have to prove a value to the lender or client.
If I were an agent, I would simply ask you what you want for your home and price it from there. If you didn’t have an idea of your home’s worth then it would a discussion between the two of us at what price to set the listing using recent sales as a guide.
Some agents are very good at pricing and some appraisers are very poor at analysis. So in the end, the customer chooses who they are more comfortable with.
I have over 50 electrical outlets in the house we are building. This is entirely dictated by code. It’s three bedrooms + den room 2 1/2 baths 2500sq. It’s a lot of added complexity just with that.
Assessed value. It’s just a poorly done assessment that’s 6-18 months old. Not very useful in pricing. Comparable sales are always going to be better except if there aren’t any. And in that case it’s probably luxury where the assessed value is even less reliable.
https://economics.bmocapitalmarkets.com/economics/budget/2018bc/bud2018bc.pdf
Bank Report:
The Bottom Line: The suite of housing measures will grab most of the attention in
this budget, and rightfully so. Beyond that, however, is a noteworthy shift to bigger
spending and creeping debt ratios again, in what is arguably the latter-stages of the
economic cycle. To be sure, the moves on this front are subtle, and the fiscal plan is
backed by thick contingencies, but it’s probably safe to say that we’ve seen B.C.’s
best days from a credit perspective for now
@Andy7 – I’m not a realtor, but re: assessed values and pricing. If I recall from when it’s been discussed here before, the assessed value is very hit-or-miss. It depends on the specifics of the property (e.g. upgrades vs. the “average” neighbourhood house) and how fast the market is moving (the assessed value always lags behind the current market). I included it because when we were looking a couple of years ago houses were being priced over assessed and still being snapped up right away.
I do wonder how agents arrive at pricing now because I am not seeing much consistency. In some areas there haven’t been many recent sales and many sellers probably have high expectations, so it’s probably tricky.
In other words our market can’t fall because of “support”. Not the most convincing analysis
Matching funding from other levels of government and/or corporate partners and/or non-profits. Still a stretch.
Marko… or any other realtor on here…
When you’re pricing a SFH for sale, aside from looking at previous sales/comparables, do you look at the assessed value and mark it up a certain % (as a rough guideline) or do you pay no attention to assessed value? Just curious.
Advice from the experts: borrow from a private lender @ 12% to fund your flip which will return 20%
Genius
The real genius is of course to charge $35-$250 per ticket to learn these secrets.
http://victoriabuzz.com/2018/02/check-ways-invest-victoria-real-estate-little-no-money-contest/
@R H
Not to mention that the average house size has doubled since 1970.
@M J
The caliber and price of finishings has risen; Quartz is the new Granite. And now each child not only has their own room, but washroom too.
With rising expectations come increased costs.
Supply is a problem. In the 50’s houses were built in 6-8 weeks. In the 70’s the average home took 3 months to build. Today it’s 6 months.
One plug and one light per room, one bathroom per house, no dishwasher, no bathroom fans/venting, no networking, no gas, etc., etc. Houses today are way more complex and getting more complicated by the minute. Impossible to building a simple home anymore.
Very curious how 6B$= 114,000 new units, at least in areas where anyone lives in numbers. I don’t think they could pull that off if construction costs were halved and they were getting the land for free.
Supply is a problem. In the 50’s houses were built in 6-8 weeks. In the 70’s the average home took 3 months to build. Today it’s 6 months. A highrise Condo project now takes 3 years from design/zoning to completion. People are living longer, staying in their houses longer, fewer occupants in each home and every year Canada accepts approx 300,000 new immigrants. The supply side is becoming more and more acute.
Also budget tomorrow. Anyone expect anything for housing?
Speaking of inflation, Dasmo was smart to build when he did. Lumber futures have more than doubled in the last two years and hit new record highs.
Also why did the headline say more evidence of mortgage fraud and then the article just mentioned the year old Home Capital and the equally old Laurentien bank? Where’s the more evidence? Did they just catch that story now?
Hawk said: “Homeowners having to come up with $150K to renew after prices dropped more than 10% from purchase price a year ago”
In other words, when confronted with “under water” mortgage renewals, the mortgagee (usually a bank) give the mortgagors the following option:
1. Since the mortgagee will only lend 80% of their assessed value, pay down before renewal so you’re only borrowing 80% of the assessed value at renewal, or
2. Sell the house then give the full proceeds to the bank with a cheque for the full difference
3. Walk away and be sued by the bank for all costs and outstanding mortgage value.
The banks always won and often garnisheed wages.
This was a very common bank tactic during the downturn in 1976/77/78 and again after the crash in 1981/82/83, but I’ve been flamed on here a couple times in the past for reminding people that it could happen again. I knew several people in the early 1980’s who lost their houses because the banks would not renew their mortgages because they were “under water”. People on this blog told me it couldn’t happen again because most risky mortgages are now insured by CMHC. It might be different this time for people with CMHC insured mortgages. If they are not insured, it will probably happen again if falling prices leave people under water.
Just Jack posted something a couple years ago when the banks changed their mortgage contracts to allow them to use the same tactics again to refuse to renew under water mortgages, but i can’t find his post tonight.
Everyone gets a ragequit. Can’t say I haven’t done that before.
Correct. But is that the new standard? Not only should people be able to buy a SFH in the house, but a new one at that? Might be a little ambitious.
Agreed here too. That is pure mania that they will be left out in the cold. People here the old trope that they aren’t making any more land and they think that applies to condos.
Lost you there. If there was high demand at the current price for SFH we would see higher sales. Lower sales is by definition lower demand. There isn’t a lot of inventory but this time last year we had about the same and way more sales.
I don’t agree for several reasons.
1. There is a lot in the budget to stimulate supply.
2. Supply is key, but at the same time you have to make sure the supply is going where you want it to go. If it’s just being snapped up as a form of money storage, the supply isn’t helping.
3. The province really can’t effectively solve the supply problem. That is the job of the municipalities. Victoria gets it. Langford gets it. They are each building what they can build given their land. What’s your municipality doing?
They are doing some of that in the budget. As for nimby’s, unless you just evict them like they do in some other countries, that’s going to continue to be a problem.
@Trekker
S&P credit rating scales: AAA AA A BBB BB B CCC CC C D. Dropping one notch, for example from AAA to AA, means lower credit rating, higher risk.
I guess it is confusing because S&P lists a number system where they say lower is less risk, then they release bad news and say they are lowering the rating.
I can understand a lower credit rating AA to A but they bumped up the number from 2 to 3 then not decreased it.
Oh yeah, we have one of those too.
Welcome to the blog. You already bought here or just looking?
That’s not household debt Mike. Governments just print more money where we can’t. Big diff.
There was alot of debt in the 40’s to 60’s period to be inflated away.
http://www.bankers-anonymous.com/wp-content/uploads/2016/05/us-debt-as-percentage-of-gdp-1900-2010-2020.jpg
History suggests our spendthrift gov’ts will simply inflate it all away again, as much as I’d rather see a different outcome.
burnaby. That soulless stretch of shopping malls squashed between Van, Richmond, Surrey and Coquitlam. Home of many speculative condos and older homes being demolished for 4000 sq ft monsters.
What’s Bby?
My first post. Bby resident moving to Vic. Houses in Bby are going to be in trouble. So many non primary residences. Empty homes, or impending renovictions. Locals stretched to the max will feel the pinch of interest rates. So when bby and other suburbs waver and correct, what then? Outlying areas will follow. Victoria will follow.
I don’t know why you all have such a hate on for Hawk. Just think how boring this would be w/o him. Also, thanks for the post JD. First of yours I’ve read, the detail is great.
Mike, what was the household debt levels back then ? Not 170% and HELOC’s and multiple credit cards didn’t exist.
Since it’s getting some airtime, I thought I’d show what happened the last two times multi-decade downtrends in interest rates were broken (ie. inflation takes off).
http://thedependent.ca/featured/land-destiny-history-vancouver/
by 1900, an adjoining lot went for roughly $4,250. Incredibly, by 1912, – at a time when wages were roughly 50 cents an hour, and a tailored suit cost less than $40 – a lot in the very same area was worth $725,000.
I’m not implying a similar outcome, but the history of inflationary periods are fascinating. Anyone know what happened to prices around 1775 & 1835 in the motherland? 🙂
Interesting Garth post tonite. Homeowners having to come up with $150K to renew after prices dropped more than 10% from purchase price a year ago. Richmond and Westside digs taking major hits. No worries Victorians, ain’t gonna happen here.Our money is even different. 😉
http://www.greaterfool.ca/2018/02/26/debtville/
Ahh, hate. Like a cold breath of wind, refreshing and invigorating, scintillating to the senses. I’ll grab my flea infested bear suit and jump on the bandwagon.
You drew up there a pretty scarce argument from asserted authority that you probably don’t have and even if you did, it wouldn’t make much difference.
Alas, I don’t find your argument terribly credible. If you think Victoria’s on the up and up henceforth, good for you. But no worker in government speaking in their capacity would or should attempt to employ a vaguely arrogant, “I have special info, experience and knowledge, and as a result, I know what’s going to happen”, because they don’t.
Regardless of what you know, or think you know, you are just as rudderless as everyone else here, and everyone else you work with. If there were data sets out there that could really allow you to make the predictions you have, economists and administrators collectively would have a much better track record, and might just be able to address financial oopsies before they ever got a chance to start. Of course they don’t, but for some reason the opposite perception often predominates.
Also, if you think your previous prediction somehow needs an accolade, it doesn’t. You made a prediction that wasn’t far off, like several others. I might as well congratulate you for having eyes in your head.
What I can say is I am seeing more price reductions on listings in my price range and areas than I have in the three years I have been following them.
Examples: 1550 San Juan (assessed: $747K, orig: $899K, now: $869K); 1607 San Juan (assessed: $738K, orig: $889K, now: $828K); 3991 Bel Nor Place (assessed: $840K, orig: $850K, now $799K).
I think it is irrefutable that the days of bidding wars and houses selling immediately for $100K over asking are over. However, there are so many variables now and so many unknowns that I can’t predict if there will actually be a reduction in sales prices. I think it could takes months until the picture becomes more clear, but I would not be in a rush to buy if I were looking for a home.
When it comes to Vancouver real estate, millennials don’t appreciate comparisons to the 90s
http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-90s-ballance-1.4553070
An Alberta couple who own property on Pender say they will “take it to the Human Rights Commission because [the speculation tax] is a complete violation.”
Own property in B.C.? You could be on the hook for a massive tax hike next year
http://www.cbc.ca/news/canada/edmonton/speculation-tax-british-columbia-alberta-property-1.4550097
An interesting and very well-written post. In short, classic JD.
You can say that again. Hawk is exploding at the drop of a hat. That can’t be good for his blood pressure, which is no small matter at his age.
@Leif
S&P credit rating scales: AAA AA A BBB BB B CCC CC C D. Dropping one notch, for example from AAA to AA, means lower credit rating, higher risk.
Getting nasty on here today.
“Enjoy the view under your (rented) bridge.”
Exactly what I mean. Did you watch the Youtubes ? Probably not. They were famous last sayings of government workers telling us that it’s all good, when it wasn’t.
Any logical debate and evidence of previous crashes/corrections throughout the years is met with the troll/renter/basement BS. If you can’t take a few LOL’s then maybe post on Garth’s blog.
I’ll stick with Barrister’s post from an economist with a top 6 bank before a government planner. Enjoy your negative equity.
Well JD, I don’t know your previous posts and I may not agree with some of your politics but you write well, which is always needed here.
If everyone let Hawk get under their skin, no-one would be posting here at all.
Sadly, most of the media, even the supposedly educated financial media, seems to just regurgitate the same press feed without any kind of analysis. If the original press feed has bad wording, everyone just copy-pastes and adds a click-bait headline.
@ hawk yes. Posting a huge lol aNd YouTube videos is a super respectful debate. People would take your position more seriously if you showed anyone with different opinions an iota on respect or courtesy. As of now you’re getting real close to troll territory. Enjoy the view under your (rented) bridge.
That S&P rating that keeps getting published all over this week, does anyone else think the wording is wrong?
“The credit ratings agency dropped its economic risk assessment by one notch due to evidence of residential-mortgage fraud at smaller Canadian banks, which could compound existing risks from the country’s hot housing market, according to a statement Friday. S&P lowered the Canadian banks’ economic risk level to 3 out of 10, with a higher number representing great risk, revising the trend to stable. That puts Canada in line with the U.S., but lower than the U.K. and Australia.”
“Dropped” by one notch, but lower actually means less risk. Do they not mean, increased by one notch? I have seen the same thing posted in about 3-4 articles.
JD: “Well, it didn’t work out. That means that every family in Victoria that’s even had the benefit of this rocketing market can’t move to those places with the equity in their current place.”
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
… and you are representative of every buyer in Victoria. Perhaps Marko or Leo S. can confirm with us that there haven’t been any move up buyers in the Oak Bay area in the last year or two.
Wow, JD, you’re a planner with the CRD that sounds like a workplace consultant that I had to deal with last year. You’ve managed to touch on every “bull” cliche possible in your diatribe on ever increasing prices.
I hope you’re not the same guy because you mediated the same way as you commented …. one-sided and wishful.
swch25,
When someone says “it ain’t gonna happen” with zero proof other than some city planning for 3 bed condos , and a thin market in the winter time,then I have a reason to post an opinion.
All the evidence points to a major credit lending tightening and new rules intended to push prices down then I have a reason to post an opinion.
It’s not being Introvert, it’s debating that people posting on Facebook whining they can’t find a house is not an economic indicator. That’s also not logic.
Re; 1981. Maybe read up on some history, same story, record house prices, same higher interest rates that killed the market 30 to 50% expect no 170% household debt bomb. How tough is that to comprehend?
The doubling over 2-3 years that I’ve seen has just been wishful thinking that I’ve seen on a number of listings, not a benchmark. The reason I think those listings are motivated to sell is that if they were $200k – $500k more, that price would not look out of place in fall 2017.
I sincerely don’t think we have. I’ll just sit here and let the numbers speak for themselves over the next year.
Their trying to improve affordability from both sides (supply/demand). Current construction is at record highs as you would well know. I don’t know how anyone paying attention could be thinking the affordability crisis is primarily due to supply constraints.
Said it before, I’ll say it again. I’ll dream as I please. Seems younger people hoping is somehow deeply offense to older folk that bought when afforability was much better.
You threw a dart and got closer than others did. It’s not a cause for arrogance.
1981 again… hawk there’s a dead horse somewhere that you’ve beaten to a pulp.
It’s like if you keep making the same comment over and over again it’ll become reality.
Typical first time lottery winner to keep using the basement put down thing. Tell us when you cash out and actually take the profits.
If the market is stuck so bad as you say it is then it’s only more proof the beginnings of a major correction/crash is imminent.
Another 3 or 4 raises will squeeze the credit lending markets like a vice. When major downtrends are broken from the 80’s, it’s not a good sign.
Desperate people don’t stay desperate, they move somewhere else or forget about buying and quit obsessing that a house is the be all, end all to a happy life.
JD nice lol
BTW great post
“There’s some shady stuff goin down. ” 😉
https://www.youtube.com/watch?v=vgqG3ITMv1Q
Evidence of mortgage fraud in Canada raises red flag at credit rating giant
S&P Global Ratings warns it expects to see more evidence of fraud in Canadian residential mortgages amid high home prices and high household debt
http://business.financialpost.com/news/fp-street/mortgage-fraud-prompts-sp-to-lower-canada-bank-risk-metric
“LOLOLOLOLOL I love it when government workers tell us it ain’t gonna happen.”
Aaaaaaand there’s why I don’t post here. I just looked and I guess I won the SFH prediction contest last year, and I was a bit early on condos. But what do I know, I’m just a government worker doing this stuff all day. If I wanted to know about basement dwelling I’d ask a basement dweller. So far no need.
See you in another few years when Hawk will either still be wrong, or things will have changed dramatically. Enjoy that quality, productive screen time friend.
JD: Once demand tapers off, supply will increase. I know people with three (more more) investment properties. Wait till people like that start bailing. It’s “not different” here at all.
The main reason it’s expensive now is due to 1) cheap money (which is coming to an end), and 2) lax lending practices (which are tightening up). I’m sure there’s a few other factors involved, but these are the big ones. Jack interest rates another couple of percentage points and I’m sure you’ll see lots of supply.
I know a few people who are literally living on Kraft Dinner, so they could “live the dream” of owning a house aka. being chained at the hip to the bank. All they do is work work work to pay for this thing. I mean like all week long. Bet they never pay their places off either, since they have to have the latest car etc. I’m sure there’s lots out there like this…
@Hawk there’s really no need to ridicule other’s opinions. You seem to get upset with intro does the same to you.
Loved the post JD.
“Don’t hope for a housing crash. It ain’t gonna happen.”
LOLOLOLOLOL I love it when government workers tell us it ain’t gonna happen.
https://www.youtube.com/watch?v=u5A4Gw20dcw
https://www.youtube.com/watch?v=iW5qKYfqALE
Can’t forget this classic from 2006 from the real estate pumper king.
https://penguinrandomhouse.ca/books/100115/why-real-estate-boom-will-not-bust-and-how-you-can-profit-it#9780307424228
Great post JD. It’s a shame you refuse to post more (which I totally understand). That was a good read.
Palzzo di amore = palace of love (gag)
I said I’d never post here again but I’ve been lurking and just have to comment on Josh’s assertion that there are worse places for 1.2m-1.6m.
You aren’t paying attention. That house on Davie is a few blocks up from mine – I live on Amphion St, 4 bed 2 bath, reno with paint, kitchen, bathroom and flooring and new electrical/plumbing but 10 year old roof, old water tank, oil furnace, rotting fence. We paid $585k in 2011. We’re assessed at $826k this year, the Davie house is $880k, nicer structure than mine by a fancy bathtub and more beds but smaller yard. Basically the same house. I would expect to get around $950k for my place right now.
Scroll over to the new build with a suite on Bank St at $1.6m that’s been on the market since you were in diapers. Far better house, as was the one on Amphion three doors down from me that sold last year with a suite, gutted to the studs and new foundation, for $1.5m. I did the math on moving over to it for my family, given that I wouldn’t have to lift a finger maintenance-wise and it has a deck (mine doesn’t, we want one) and I would hope to cover the difference with the suite income. Well, it didn’t work out. That means that every family in Victoria that’s even had the benefit of this rocketing market can’t move to those places with the equity in their current place.
Take a look at the Oak Bay local FB page sometime and see if you don’t see families looking for housing anywhere. They are. Desperately. We have a 0.5-0.6% vacancy rate here. It’s not that there’s no demand for housing – it’s that the new build SFH core market is now too pricey for two professional people with reasonable equity in their existing 100 year old box in any neighbourhood from Gonzales to Mayfair. The differential for SFH has narrowed considerably between the more traditional upper middle class neighbourhoods of South Oak Bay and Gonzales and into Fernwood, Oaklands and beyond. Why? Because we’ve hit a level of support. Product is more important than the immediate location. The condo market isn’t going gonzo because people have suddenly started preferring condos.
There’s a pervasive assumption that low sales = falling prices. This isn’t true in this market. Low sales volumes are correlating with a high degree of demand for SFH. There simply isn’t enough on the market for a robust market condition.
When Vancouver started building condos in large numbers land values started going through the roof. It will happen here. Infill will be the only way to produce new housing and land represents an increasing amount of potential the more that continues. They aren’t making more lots in the core. They will continue to rise.
I’m a planner at a CRD municipality and I’m freaking the hell out about affordability here. Look for a 3br condo in the region sometime. There’s like 3, and they’re all penthouses. We’re not building enough. The NDP is trying to solve a supply problem with a demand solution. It’s a mistake. You can’t tax housing into existence. The only way you’re going to get new housing is to use all the leverage of the provincial legislation to avoid nimby-filled public hearings and build rental housing that can’t be speculated on. Cap leases on local incomes, and make it illegal to sublet for more than the lease. We’re going to have to let go of the ownership dream if we’re to survive.
Don’t hope for a housing crash. It ain’t gonna happen. It’ll bounce off support as soon as any softening happens from the various measures introduced – measures that can easily get reversed once the pendulum swings back to the Liberals. They’re really skating on thin ice with a minority gov’t flailing incompetently at every turn, checked by Mr. Ego with his 3 seats.
Good luck folks.
Hi all,
Thanks for the entertaining and informative discussions. I greatly appreciate the dynamic perspectives.
@Irregardless
I used to sell real estate in Central America. I sold a beachfront townhome to a family from Minneapolis who purchased not only sight unseen but having never been to Latin America. Their first trip down was a year after they’d purchased, a guilt-laden affair if there was one. I picked them up from the airport and we drove at night the 2.5 hours to the town nearest their new home, from where it was a 45 minute drive down a dark and bumpy dirt road. No streetlights, very few homes, mostly jungle. Fifteen minutes in, our conversation, which had been easy to that point, stopped. After some silence, one of the kids said, “Mom, I’m scared.” The dad frequently asked, “We, uh, must be, uh, close?” I consoled myself with the thought of lights at our destination village and the other vacation homes. Of course, we arrived to darkness. The power was out. The townhome complex had generators but they weren’t yet connected. The dad stumbled around and around their new home trying and retrying all the light switches, not able to comprehend that the power being out meant the lights wouldn’t work. I suggested I take them back to town and put them up at a hotel but they stayed. Thankfully, when I returned the next morning, expecting disappointment, they were all playing in the sand on the beach in front of their new home. The power was on and the generators were soon hooked up and they invited me in for lunch and gushed about how pleased they were.
At the time, I was so invested in FOMO on Nicaraguan real estate that this seemed closer to normal than not.
Really? Our house has not more than doubled and we purchased five years ago and we are in a good core area. The benchmark price for a home in the core in July 2015 was 600,00. In January 2018 it was 831,000. That is a big jump but it is nowhere near doubling and it is less than 63%.
And 2017 summer/fall 2017 benchmark prices were less than they are now.
I’m not sure where you are getting the panic pricing from the listings you have posted?
Compared with 2017 summer/fall prices for similar properties, they seemed priced to sell asap. You can find worse places listed for $1.2m – $1.5m.
A 63% increase in the last 2.5 years is less than the more than doubling that other places have had in the same time frame. It’s certainly a weird market. $1m can buy anything from an unimpressive 2 bed townhouse to a pretty decent 4 bed character home.
https://en.wikipedia.org/wiki/Palazzo_di_Amore
history of the home
On a side note about the markets this is probably the eeriest thing I have ever read and then watched play out.
Bank of America Merrill Lynch predicted “capitulation” for the bull market in 2018, with the S&P 500 peaking at 2,863. This was made back in November of 2017. It turns out that the correction would happen within 0.03% of their top and bottom call 3 months later. The top was called within 0.03% of the actual top and the predication of hitting the 200 day average for the bottom was within 0.01%.
Bank of America Merrill Lynch top: 2863
Actual top of S&P before correction: 2872
Difference ~0.03%
Bank of America Merrill Lynch bottom: 2535 (200 day moving average)
Actual bottom of S&P before correction: 2532.69
Difference ~0.01%
Article posted about the BOA indicator.
https://www.cnbc.com/2017/11/21/bank-of-america-bull-market-ending-in-2018-how-it-will-happen.html
200 day average and chart showing correction
http://stockcharts.com/h-sc/ui
If that does not sound like a engineered correction I don’t know what is.
Overcompensation taken to the level of an art form?
Cheap cheap cheap
https://www.redfin.com/CA/Beverly-Hills/9505-Lania-Ln-90210/home/23100948
1/3 of people on Redfin. Out of the 1500 people they surveyed I’m sure a lot would buy directly using their services. Between new virtual tours and the massive amount of more detail available to a buyer there vs our realtor.ca sites I can see how that is a possibility.
Have you used their website? They give you things like past sales, expected real time value of the house, other offer’s nearby, 3d walkthroughs, schools etc
VS realtor.ca it’s night and day.
I just chose a random house, interesting to see it had an 11% yearly depreciation from 2006 to 2012 but is almost back to it’s 2006 price at the current sale
https://www.redfin.com/CA/Vista/2405-Margie-Way-92084/home/6623632
I would welcome details like this, it would allow end users way more detail than always having to request it through a realtor.
The price on 1704 Davie seems high to me. No sense of panic IMHO.
That is a very high ratio mortgage.
How exactly do you buy a home without visiting? I assume the process is the same as here. Open house/ drive up the frenzy/ do not accept offers/ offers come in on x day. what am I missing.
Victoria going ahead with AirBnb restrictions. Fees of $150 for rooms or renting out while you are on vacation and $1500/year for those with transient zoned properties renting out investment condos.
http://timescolonist.com/news/local/city-of-victoria-forging-ahead-with-proposed-rules-for-vacation-rentals-1.23184147
Them Yanks is crazy…
“Thirty-five percent of homebuyers in the U.S. aren’t even visiting the property before they put in a bid, amid torrid competition in a tight market, according to the latest survey by Redfin Corp. ”
https://www.bloomberg.com/news/articles/2018-02-26/housing-frenzy-sees-a-third-of-u-s-buyers-bidding-sight-unseen
Not sure what the panic part is? They all seem priced quite high to me?
I don’t know if they were asking more originally but, for example, 538 Toronto sold 2.5 years ago for 610,000 and is now listed for 998k. Seems like quite a jump up with not much renovation noticeable.
Not to say that all the market forces will not result in a slow-down, just don’t see a panic on the listings?
A little investigated segment of the over leveraged masses: leaders of the Conservative party
“Brown said he spent approximately $90,000 of his annual $120,000 after-tax income on the mortgage, and lived off the rest.”
http://www.cbc.ca/beta/news/canada/toronto/patrick-brown-complaint-1.4552271
I wonder if this is what Barrister is alluding to https://ca.finance.yahoo.com/news/p-ups-economic-risk-rating-161727977.html with his phone call.
Not looking good down south.
January New Home Sales Crash As Rates Spike
“Following the significant disappointment of January’s existing home sales, hopes were high for a rebound in new home sales (+3.5% expected after December’s 9.3% plunge) but those hopes were crushed as January new home sales crashed 7.8% MoM.
This is the lowest level since August, even as the supply of homes at current sales rate climbed to 6.1 months from 5.5 months.”
https://www.zerohedge.com/news/2018-02-26/january-new-home-sales-crash-rates-spike
Leo calls the end of the Victoria SFH bull market!!
Quick, someone ring the bell!
If you are correct I expect sales to slow more as it is going to take a while before sellers get the memo. Lots of ridiculous asks still out there.
There’s a bunch of SFH that smell like panic sells out there. 944 Mason, 1704 Davie, 583 Toronto. Vancouver’s had some dramatic price slashes as well. Sure hope things are actually turning around.