The specuvestors

Interesting article on Chinese real estate buyers and avoiding taxes.

https://www.theglobeandmail.com/real-estate/vancouver/out-of-the-shadows/article31802994/

As I mentioned before I’m sure lots of people are marking their homes as primary residences even if they do not live their to avoid taxes.

On the tax front, records suggest that the clients classify some of the properties as their principal residences, even though they do not live in them. That’s despite the fact that Canadian rules stipulate that a taxpayer cannot call a home a principal residence and sell it tax-free, unless they purchased it to live in it, and didn’t sell it within the same year.

Tax lawyer Jonathan Garbutt estimates that the tax revenue lost through such activity is massive, particularly in pricey Toronto and Vancouver. “I think this is yet another example of non-enforcement of penalties under the law. It’s pervasive and it’s systematic,” Mr. Garbutt says. “Unless it changes, this will get worse. We will have a corrupt system.”

Victoria borrowing awesomeness on the decline as the credit noose tightens. Investment in western Canada on the decline and pouring into US via BNN.

Via Steve Saretsky this morning :

“What the bank failed to mention was that mortgage growth not only decelerated over the past three months it actually turned negative in January, dipping 0.012% for the first time in six years. Suggesting a declining willingness of households to borrow, or from banks supplying less credit. “

How great was the weather this weekend!

Pure Victoria awesomeness.

“Hi all, I’m looking to move from Vancouver for a job in Victoria. My wife is interested in a new home in Victoria and we are looking at a couple options in the core.”

I’m not an RE agent so my 2 cents may not worth much.

It is essential for you to get a house in Victoria Core, near bus routes, school, shopping, hospital, and parks important to you? These are the questions that you might want address when look for a house.

Like others has mentioned that is to rent for a few months. Wait and see which direction the market is heading to, and more importantly is that it give you time to find the neighborhood that suit your lifestyle.

As for the houses in the links you provided. IMHO, they are over priced.

Another good reason for the suite upstairs is for a distant owner living there when they visit and the rest of the house is rented out.

8,481 unoccupied/under-utilized properties

Unoccupied/underutilized is inaccurate. It includes exempt properties (someone died/in hospital/can’t be rented under strata bylaws) and the 2500 owners who did not respond and were deemed vacant, as well as whatever owners declared vacancy.

We won’t have final figures until the fall. They should have released the number of actual vacant properties vs. exempt vs. undeclared and not included them in the same category for greater accuracy imo and that would have been an easy thing to do.

Right now no conclusion can be drawn about the numbers except they are far lower than projected.

Penguin:

I had a friend in Toronto who started with a 1950 box house who lovingly transformed it into a very beautiful home (albeit with years of labour). He always said that the basic secret was to start with the right lot. There is little point in trying to transform a house if you are sitting in the middle of a row of 1950 boxes. Some of the things he did were cleaver and not outrageously expensive. The example that stuck in my mind was when he added shutters to the windows but he put in full length shutters that ran from the top of the window to almost ground level. Under the window he put in a decorative wood panels (painted white) that where made from plywood and molding trim. It virtually transformed a boring box into a much more elegant feel. By the way he built the panels himself.

Someone here was wincing at the cost of a new roof the other day. To correct a number (but not all) of the design and load-bearing errors at Falling Water the bill was $11,500,000.

Frank is my favourite, but the man knew absolutely nothing about engineering.

@Barrister
I totally agree with you. I’m feeling less pressure right now anyway. I also feel like it wouldn’t be so bad renting for a while longer because the alternative is an 800k tear down that would make my life much more difficult than it is now. Hopefully new inventory brings out some better selection. I wouldn’t hesitate buying if something came along for the ride to price though but those properties get snatched up pretty quick currently due to lack of inventory in this price range. I was definitely seeing a change until the crazy end of the year scramble hit and new rules kicked in.

Nice to meet you too Barrister, and your lovely wife.

Nice to meet you Paul and thanks for your opinion on the open house.

I was having mega FOMO the last year but I’m actually happy I didn’t jump in to anything. I’m also thinking it may be wise to wait until at least next spring. How much higher can prices really go? Lots of inventory coming on and looks like there are some hopeful sellers. They won’t be getting my business though. Maybe some of these houses will still be for sale next year for a discount…

@ 1 and F

“I would pay 2 million for this flat roof box”

Amazingly, you can buy a bunch of genuine Frank Lloyd Wright houses for a bit less than 2 million a piece.

https://www.elledecor.com/celebrity-style/luxury-real-estate/g9917182/frank-lloyd-wright-houses/

Looking at prices of new listings in OB confirms that hope springs eternal. No. 6 says inventory is rising, which suggests that some vendors face disappointment. But insofar as folks are buying, it suggests declining confidence in the Federal Government’s competence to manage the economy, which is understandable in view of the botched China trade deal, which failed because of Canada’s absurd insistence on dictating China’s gender equity policy, the uncertainty about NAFTA, the flourishing Trudeau budget deficits, the diplomatic failure in India coincident with an increased tax on chickpeas, a slumping loonie, and a BoC Governor clearly intent on letting the dollar find its own level while promising to go easy on the BoC rate as the US Fed rate climbs.

In short, I suspect that some people are expecting financial and economic Hell to come and have lost confidence in both cash and stocks, and thus are opting for boxes with flat topsies, or just about anything else with a land component, at just about any price.

“Btw – has Hawk ever admitted to being wrong? ”

All the time Luke if you read my posts. Unlike many others here who can’t under any circumstances. No one is perfect.

Grant,
5 year fixed in particular are tied to US bond rates. It’s been well documented on many financial websites, no smell test required.

Interesting I was reading that even if your bank gives you a rate deal, the stress test is done based on 2 points above the posted fixed rate not at your deal rate.

I noticed that a couple of new built, flat roof boxes have come in the market. What struck me is that they are listed for over two million. Not on the water, in fact not even a glimpse of the water. Small lots. Has the world turned insane. Who in their right minds would pay two million for these

Curious Barrister where are these? There’s one on Mowat in North OB just came up on only a 4720 sq ft lot. For $1.95m + GST!

There’s often predictions the loonie goes lower. This could mean more FB interest despite taxes and closing loopholes. Esp if it goes to 60 cents.

Re Narrcism. Not sure if Introvert is one but if you ever have the misfortune of running into these people who can never be wrong it’s just best to avoid them as much as possible…

Btw – has Hawk ever admitted to being wrong?

If a tree falls in a forest and nobody is around to hear it does it make a sound? Well, the entire forest is falling but nobody is listening……yet.

Last month the months of inventory on Salt Spring Island was 11.0. In the Malahat area it was 5.4 and in Sooke it was 4.9. Most often a market will contract from the outer areas into the inner core over time. As home prices in the different neighborhood are relative to each other, as prices decline in the outer areas that decline ripples back into the core areas.

We also have a price ceiling in the premium areas that is causing inventory at the high end of the market to increase. Victoria, Oak Bay and Saanich East had 4.3 months of inventory last month. As prices decline in the high end that will put pressure on homes lower down on the property ladder to decline as well.

And that’s where we are going this year unless there is a substantial rally in the market. And that’s a good thing as prospective purchasers will have lower prices and more selection.

And so the market pendulum swings.

Doesn’t a weak dollar boost our exports?

Yes, you’re correct. Early Saturday am, and no coffee. Besides, in my post below, I just wanted to say the word “poppycock”.

One would have to be pretty naive to think that Canada will not raise bond yields if the US continues to do so. If Canada does not follow the US then our entire economy is at risk. Canada has to follow the US in order to maintain foreign investment.

“Bond Yields and Fixed Rates (Positive Relationship)
Generally fixed rates have a positive relationship with bond yields and increase and decrease along with bond yields. In other words, when bond yields increase, fixed rates increase, and when bond yields decrease, fixed rates decrease.”

Canada’s 5-year bond yields have been on the rise for the past year to follow the US. Yes, I agree, the BOC is between a rock and a hard place. But for the most part, they will have to follow the US lead. Mortgage rates will rise potentially devastating the Canadian real estate market. IMHO the Canadian real estate market is already in correction/crash mode and has been for some time.

If a tree falls in a forest and nobody is around to hear it does it make a sound? Well, the entire forest is falling but nobody is listening……yet.

“I think track records are more useful than you wish.

I don’t wish anything. Just don’t see the connection between a price prediction and a discussion on, say, whether a spec tax is or is not fair and reasonable.”

Looks like Intorovert’s narcissism is out of control again and needs a therapy session. Narcs cannot handle being wrong,ever. They actually get extremely scary when threatened they are proven wrong or soon will be.

“I”m right,I’ve always been right and always will. Please Marko tell me the numbers I want to hear so I can prove again I am right again”.

Pretty sick.

Genworth doesn’t need backing by the US government but for some reason a company providing high ratio insurance in Canada has to be backed by our government. And that’s money into the federal governments purse while protecting the Canadian banks from a high ratio insurer going bankrupt.

Sweet deal.

Like I said, track records have no bearing on the validity of an argument based on logical reasoning.

Oh Leo. Some people have been logically reasoning that prices will decline a lot for a decade now (they haven’t).

Now if someone is making an assertion without any evidence or reasoning, then you would look at their track record to determine their believability

Many people here have written brilliantly supported theses on the future of this market—and been totally and utterly wrong.

I think track records are more useful than you wish.

CS:

Older is better is one of the things we tell ourselves as we age to make ourselves feel better. But you gave me a smile today and cheered up the day.

If you don’t feel comfortable answering it, that’s fine, but please let me know so I’m not waiting endlessly.

Let me put it this way. I see CMHC files so rarely that I fall out of my seat when I do see one because of the insurance fee amounts. The insurance fees are insane with the last increase we had. Last one I saw last year was something like 18k. Makes sense to get gifted money from family.

It certainly doesn’t, but different people have different prediction track records.

Looking back to last year it doesn’t look like anyone called the election and its final outcome right – I thought the Liberals would squeak through with a majority myself. So let those who always predict correctly throw the first stone.

@Grant
“Now for guessing what the Victoria market will do, I took the (majority) expectation of slowly rising interest rates,”

I do not agree that interest rates will continue to rise. They may go up a maximum of 1/2% over the next 6-8 months and then they will fall as the new OSFI rules take us into recession. Rates will then come down to try and buoy up the economy. The OSFI regs are taking 20-25% of RE activity out of the market……that is huge.
It is not just buyers, sellers and RE agents that will feel this slowdown, lawyers, home inspectors, surveyors, mortgage Co’s photographers, staging Co’s, reno and furnishing, tradespeople, advertising, etc. etc. also less funds into Provincial coffers from the PTT.
A made in Canada recession……..I would wait till fall before even thinking buying.

Yep, My engineers took my overbuilt house and over-engineered it. Engineering costs $5k (maybe more, I haven’t done the math). But…. Their specs added construction costs. maybe 20k over and above what I actually wanted and what was necessary? I have twice the steel of any other ICF wall that my builder has ever done. My deck is better built than Market Square’s. Y’all know where to host the elephant party. So it’s not just the engineering cost. It’s a ripple effect. Same goes with having more expensive windows. More expensive things are more expensive to install. Unless you do it yourself but the HPO aims to prevent that. This step code has nothing to do with the environment and is just another mechanism to put more control and more money into the industry big players by making a house even more complicated to build.

the engineers to make sure it doesn’t fall down

There is no need for an engineer on a two story home on a level lot. How many character homes have randomly collapsed and killed people.

What is the point of a city inspector if he or she can’t inspect framing on a basic house.

And what’s the big deal with saving each individual tree….forest fires every year burn down half of BC and then you throw a homeowner under the bus with this arborist bs with one tree.

Etc., etc.

they throw up their arms and tell you it must be compliant (or hire an engineer to take the liability).

Been there many times and each time you can see the engineer smirking as they pretend to look at the “issue” and they hit you up for $1,000 for three sentences and a stamp the city doesn’t even read.

So much of building a home is a complete expensive joke. Of course we are all distracted by foreigners driving up prices.

Piling on legislation to make new homes only for the 1%ers.

While I totally agree, what can we get rid of? Need the arborists to protect the trees, the inspectors to make sure you build it right, the engineers to make sure it doesn’t fall down, the utility crews to make sure the underground stuff is correct etc. HPO is a joke.

Part of the problem, imho, is the liability mentality where everyone wants to deflect any liability to someone else. You see it in the engineering where we now have massive safety factors…because why wouldn’t an engineer totally cover themselves if there is no additional cost to them. You see it in the inspectors where if something makes total common sense but doesn’t match the letter of the BC building code, they throw up their arms and tell you it must be compliant (or hire an engineer to take the liability).

Soon you will need 15 consultants to build a garden suite.

Well the step code will only add one more consultant. I would like to see the municipalities either take on this work themselves or offer reduced permitting rates to make it a wash.

The thing I don’t get it will be impossible to build a new home economically

Aren’t we already there (or pretty close)? Unless you’ve got an in with the trades, not many people can afford a 50K roof, 50K drywall etc.

I personally see some disruption coming to the construction industry. Mainly, factory-built structures will become more common and far less expensive. I see the market moving to a much more vertical structure where you hire a single company which does the blueprints, engineering, modelling, in-factory construction, and then on-site assembly. It’s already happening in the states and Europe. Even larger buildings can be pre-fabbed using CLT panels. If I had a bunch of cash I’d be starting one these up on the island.

A bit like some of the ‘medical’ practices you see these days where they have many practices under one roof (GP, Physio, Chiro etc.)

Going for an early renewal appt with CIBC next week. We’ll see what they offer.

Tell them you are an influential real estate blogger and perhaps they will offer you a loss leader rate!

While there is always HHV special from Mike G, if CIBC is not competitive.

Marko:

Soon you will need six consultants to plant a garden.

Also what I haven’t seen discussed too much is the new building step code that will be coming into effect and create a heck of a lot of engineering and building science work in the next decade.

Piling on legislation to make new homes only for the 1%ers.

Soon you will need 15 consultants to build a garden suite.

The thing I don’t get it will be impossible to build a new home economically but you drive down streets in some neighbourhoods and half the houses half single pain windows. Wouldn’t it make sense to try and address that as the delta between updating an old home is much higher than trying to make already energy efficient new homes even more energy efficient.

Michael

What your opinion on Enbridge and that yield?

You’re cruel, Michael—holding people accountable.

Accountability is not usually the goal of that type of commentary. People should understand that kind of silliness will inevitably become a two-way street. There are a few, “it’s different here, different this time” posters on this board, who have written a tonne of juicy quotes that in the event of a downturn, will demonstrate the same fallibility as those who previously challenged their views.

And it’s pointless, IMO. I think it’s more productive to focus on the market now.

CS:

Interesting take on the Burdick sale. What price point do you think the builder needs to break even?

You’re cruel, Michael—holding people accountable.

@! Patriotz:

“Just consumer inflation the next time”

Depends. If Trump follows through on his promise to bring the jobs home, heap tariffs on China, and maybe Europe, then labor in America will once again have a strong bargaining position. And Canada will most likely follow whatever lead America provides.

For some reason a lot of my clients send me their mortgage documents (I think they think I need to see them when they are removing their financing subject or similar).

Marko, in terms of clients buying SFHs who send you their mortgage documents, what kind of principal is typical? $700K or $400K?

Going for an early renewal appt with CIBC next week. We’ll see what they offer.

Keep us posted.

Anyway, the one thing that I find super interesting is I haven’t had anyone bring up the fact the rates have gone up substantially. Most of the actual rates my clients have obtained in the last month have been 3.34% or 3.39% and people are just rolling with it.

I think alot of people are about to find the next 10-15 years super interesting with regards to wage & consumer inflation. Not many alive even remember what an extended period of inflation is like.

Speaking of construction and how crazy things are. My friends have a large home in Rockland that needs a new roof (relatively steep pitch but nothing super crazy). Multiple companies (including two of the largest in Victoria) have not provided quotes as they have easier jobs lined up and are not interested. The one quote they did receive >50k.

If we see a slowdown we basically go back to companies actually giving out quotes and the price dropping to $40k. I don’t think we ever go back to people driving around looking for worn roofs knocking on doors looking for work. Not because the economy might not slow down but due to absolute lack of tradespeople.

Typically, the reverse happens. As the housing market slows and prices begin to fall, the wider economic slowdown follows soon after. Given the outsized contribution of RE to the economy as of late, the broader economic slowdown in the event of a RE market reverting to fundamentals could be quite substantial.

I am jaded by real life experiences a bit…..when I started building my home in 2014 it was super difficult to get tradespeople to come out and even give me quotes. I have this feeling that the construction boom has created labourer and low skilled jobs in the $20 to $30 range and those individuals aren’t even close to being able to afford real estate. Those jobs will disappear in a slowdown.

As construction reverts back to the mean my gut feel is that those that participate in real estate will still be able to participate due to fundamental lack of trades. Those that really do get the short end of the stick and are hard working will just go work in potash or Alberta.

Same with my industry…..the huge increase in transaction volume has gone to the top 10% which were already doing well prior to the run up in the market anyway. It isn’t like the RE boom allowed 100-200 newbie agents to buy homes.

I haven’t had many clients in recent years getting into real estate as a result of RE related success. Your typical couple is one government work and a computer programmer (oversimplification).

For a correction in this segment I think we need… an economic slowdown.

Typically, the reverse happens. As the housing market slows and prices begin to fall, the wider economic slowdown follows soon after. Given the outsized contribution of RE to the economy as of late, the broader economic slowdown in the event of a RE market reverting to fundamentals could be quite substantial.

My on the ground impression so far is that the market is reverting to fundamentals. The $800,000 to $1,500,000 is not flying off the shelf and the <$800,000 in the core still attracts big crowds with multiple offers assuming half decent liveable.

Two bedroom two baths core condos in the 500k range still super hot; although condo sellers have caught up to pricing so versus listing for 449k and it selling for 501k my impression is in the last few weeks more sellers are taking the approach of list for 525k and sell for 510k.

I do think fundamentals are changing and you have a greater absolute number of families with household income of 150k-200k which is what I think will set a floor on the sub <$800,000; people simply need a place to live. For a correction in this segment I think we need mortgage rates to jump up around another 0.6% or an economic slowdown.

$800,0000 – $1,500,000 will be an interesting market segment as I feel it could feel the pinch of the foreign buyer tax (probably around 6% of this market segment), Vancouver slowdown, etc. and as for fundamentals there can’t be too many families in the 200k-300k household income bracket in Victoria.

By my math, using my current apartment as an example, I would need a 50% downpayment to have my rent match the mortgage, and that’s assuming interest rates stay at 2.55% for all 25 years.

Depends on what you are renting. If higher end for sure renting is much cheaper; however, I ran the numbers with one of my tenants downtown and it would be cheaper for him on a monthly cash flow basis to buy at Vivid with 20% down. Given he has been renting my unit for 5 years I think the purchase would make sense.

We should consider following the lead of the US and tax citizens on world wide income.

Anyone with a home, spouse or dependent family in Canada is considered resident for income tax purposes and taxable on world wide income. If you taxed all citizens on world wide income it would simply create headaches for other people who aren’t part of the problem.

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/determining-your-residency-status.html

Once and Future:

We should consider following the lead of the US and tax citizens on world wide income. If they decide to give up citizenship then they are banned from Canada for life. Only a partial solution but it works.
Hope everyone has had a wonderful day by the way.

Freedom,

Both of those leaders are smarter and more calculating than most people think – ridiculous, petty bombasticism aside.

I think that’s a great development. Harder to nuke someone you’ve sat down and had tea with.

I guess Notley doesn’t like her vaycay shack taxed. Talk about going back to the dark ages. Now I feel zero pain for rich Albertans coming here.

Alberta threatens to cut off oil exports to B.C. if Trans Mountain obstruction continues

http://business.financialpost.com/commodities/energy/alberta-threatens-to-cut-off-oil-exports-to-b-c-if-trans-mountain-obstruction-continues

Seattle smelling like 2007 all over again. Big Short Part 2 coming up.

Household debt grows at fastest rate in 11 years

https://www.marketwatch.com/story/household-debt-grows-at-fastest-rate-in-11-years-2018-03-08?mod=econpol_twitter_new&link=sfmw_tw

QT

Overseas skilled immigrants are encouraged by our government to immigrate to Canada due to skill shortage but they can’t find work, because they find resistant by our licensing system and education system that favor Canadian born citizen first before immigrant. My wife is a physician and her/my friends are experienced engineers/physicians and the likely hood that they ever get a job beyond being a cleaner or nurses aid is extremely slim. Hence, many people go back to their original country to work so they can make money to provide for their family. For an example, my wife wanted to go back to Vietnam to work this spring just so she can keep her medical license valid. By the summer her license will expired, because she hasn’t practice medicine for 5 years since she been here in Canada.

I have friends who are doctors in Canada who were trained outside of Canada. They had to follow a process, but when they did, they were able to practice here.

You may be interested in this:

About halfway through Anmar Salman’s attempts to become a doctor in Canada, he almost gave up.

After studying medicine in his native Iraq and doing a master’s in public health in the U.K., he immigrated to Canada, found a job at the Ontario Ministry of Health, passed the necessary tests and applied twice to be matched to a residency. But both times he was unsuccessful.

“When I finished my exams and I wasn’t hearing back from any program, I thought, well maybe I need to be content with what I have. Because I know a lot of [foreign-trained doctors] who are doing menial jobs, driving cabs, pizza delivery,” he says.

Then a friend told him about Saskatchewan’s new recruitment program, SIPPA. He passed the exams and assessment, and is now a practising family doctor in the province.

Salman is one of many doctors trained abroad, known as international medical graduates. They are a well-established part of Canadian health care, with governments using them to add doctors to the workforce and ease shortages in underserved areas.

The landscape for them is becoming more competitive, thanks to an increase in the number of new doctors graduating from Canadian universities and rising numbers of international medical graduates trying to enter Canada. At the same time, Canadians who have gone abroad to study medicine are making up a larger percentage of the international group.

source: http://healthydebate.ca/2014/06/topic/international-medical-graduates-canada

“I don’t think they sell beverage gas tanks but I get my fills at Crest Fire on Burnside Rd E. Might want to ask the good folks on the Brew Vic facebook group. I’m still looking for a place that sells nitro.”

Another place might be of interest is Praxair at the corner of Fairview Rd. and Devonshire Rd. in Esquimalt.

I suspect Smith would be turning in his grave if he knew he was being quoted in relation to supporting heavy-handed government intervention in individual choice in investing in the housing market.

Except I didn’t. I quoted Smith in response to your claim below. He took the opposite view.

The family home is where most of the money is “parked” in Canada. You’d like to change that? I don’t think it would be popular or have the outcome desired or be good for stability and financial security for Canadians – or tax revenues either.

“The wealthy immigrant program and Quebec’s equivalent really threw a wrench into that. It makes it harder to distinguish locals from foreigners when the foreigners hold Canadian passports. The answer is a property tax tied to income tax, which is exactly what’s happening. I went to school in Hong Kong with kids that were indistinguishable from Canadians because daddy parked his money in a safe Canadian investment. As a reward, they get to send their kids to Canadian universities without paying foreigner tuition, use our healthcare system and get 20% gains from Vancouver houses all while paying less in income tax than any other migrant who actually works in Canada. It was a total no-brainer for them and a shotgun blast to the foot for us. They literally called Vancouver “Hong Kong II”. Man that program was a bad idea.”

I agree that the immigrant investor program is a bad idea, so as federal skilled worker program. There are 2 sides of the coin in this matter and I do feels that people shouldn’t have Canadian benefits if they don’t pay taxes here.

Many honest immigrant investor that come here to Canada don’t have an idea of how our market work and with out any guidance or help from the government, they would sink all of their saving into a local business that bankrupt them after 5 years just so they can stay in Canada.

Overseas skilled immigrants are encouraged by our government to immigrate to Canada due to skill shortage but they can’t find work, because they find resistant by our licensing system and education system that favor Canadian born citizen first before immigrant. My wife is a physician and her/my friends are experienced engineers/physicians and the likely hood that they ever get a job beyond being a cleaner or nurses aid is extremely slim. Hence, many people go back to their original country to work so they can make money to provide for their family. For an example, my wife wanted to go back to Vietnam to work this spring just so she can keep her medical license valid. By the summer her license will expired, because she hasn’t practice medicine for 5 years since she been here in Canada.

In away Canada is destroying people lives promising people great things till they come here and it become broken dreams, and that will feed into criminal activities that we are now discovering in the housing market among many other things.

Wow someone wanted 2751 Burdick Ave in Oak Bay

$1310k sale at 1070k list

Wow! $240k over asking but it was listed under assessment… the thing that perplexes me a bit is it needs lots of renovations – kitchen looks like it is original from WWII era.

It does have what, sort of, looks like a suite or suite-able. But maybe w/ a concrete floor?

9000 sq ft lot somewhat generous – and the area near Uplands is popular and quiet. This does contrast sharply to the recent Bowker Sale but imo that house was way over priced.

Maybe the buyers should’ve been reading this blog?

Adam Smith, “Wealth of Nations”

You mean the fellow who advocated for free trade within and without a country with little or no government restrictions? The one who said the most efficient markets are based on the realization of self-interest? He held that free markets, private property rights, voluntary exchange, and greed produce preferable outcomes most times and under most conditions.

I suspect Smith would be turning in his grave if he knew he was being quoted in relation to supporting heavy-handed government intervention in individual choice in investing in the housing market.

Maybe you should read what he said in bold font below, comrade patriotz. If that ain’t the words of a covetous socialist, I don’t know what is.

I’m curious, what’s your definition of unsuccessful/ successful?

Well Andy7, ‘successful’ is subjective. My def. is different than anyone else’s. Everyone has different needs and requirements. Generally it’s having a full-filling family life that works for you, full-filling career, good social life with positive people that help lift you up, and stable happy healthy home/housing to live in that meets or exceeds one’s needs. It’s also about having time to do what you need to do whatever works for you. Far too many people it seems are unable to full-fill one or all of these needs these days.

To me, it appears that many Canadians – esp. the younger set – are no longer able to achieve success in their lives. They go to long years at University – only to be stuck in a low paying career/job they didn’t intend to have and still living w/ the parents in their 30’s. Not being able to afford a home even if they get a high paying job doesn’t help either, and many don’t even have that.

Consider that my perception may be somewhat skewed as I work w/ the most disenfranchised folks in our society, but there is a complex problem in our society where more balance is required. Younger Canadians do need to be more explorative as well – not only willing to be more mobile within Canada but also- get out and explore the world! Not everything will be handed to them on a silver platter. I think they also need to be more willing to take jobs that might not fit their dream, but still full-fill needs. It can be tough out there at times, but often, with a bit of tenacity – you can and will eventually get there if you try!

Adam Smith was also a socialist that believed in redistributing wealth from productive people to the large group of unproductive

The patron saint of capitalism was a socialist? That’s not the only thing you got backwards. In his day – the pre-industrial era – people were rich simply because they owned land. The people who actually produced things had to pay part of their earnings to these rich landowners who did nothing. Smith rightly recognized this as an impediment to the development of industry.

Wow! This blog has been busy – take one night off and the comments keep coming – lots to talk about right now though w/ all the new measures coming from the Gov’t. Interesting they will tweak some things and I’m looking forward to seeing how that all pans out. They’re taking some steps in the right direction but some on here may be correct that a foreign buyer ban is what’s really needed.
Then we even need to force sales of homes owned by non-residents – but that will never happen.

https://www.eprop.co.za/commercial-property-news/item/21075-strong-house-price-rises-continue-in-europe-us-canada-and-parts-of-asia.html

Anyone hear about this?

Yep – I saw this under const. on the last several visits to HK. Very mysterious seeing such a long bridge disappear into the mists of the Pearl delta. Made me think could it be done from VI to Van? We know of course that’s not happening – again – same as the train – not enough population.
The JSB is such a joke for taking so long – and they had to get the steel from China too (we can’t make it here?). Oh well, despite the cost and boondoggle, it will be a complement to the city sky-scape compared to the monstrosity it’s replacing! I look forward to driving across it…

The family home is where most of the money is “parked” in Canada. You’d like to change that?

“The stock that is laid out in a house, if it is to be the dwelling-house of the proprietor, ceases from that moment to serve in the function of a capital, or to afford any revenue to its owner. A dwelling-house, as such, contributes nothing to the revenue of its inhabitant; and though it is, no doubt, extremely useful to him, it is as his clothes and household furniture are useful to him, which, however, makes a part of his expence, and not of his revenue.

If it is to be let to a tenant for rent, as the house itself can produce nothing, the tenant must always pay the rent out of some other revenue which he derives either from labour, or stock, or land. Though a house, therefore, may yield a revenue to its proprietor, and thereby serve in the function of a capital to him, it cannot yield any to the public, nor serve in the function of a capital to it, and the revenue of the whole body of the people can never be in the smallest degree increased by it.”


Adam Smith, “Wealth of Nations”

Smith is saying that housing adds nothing to the productive capacity of a nation. Parking household wealth in housing deprives productive industries of capital. Industries then have to depend on foreign capital, which these days increasingly means China. Which means ultimately the nation becomes poorer, the illusion of high house prices notwithstanding.

Anyone hear about this?

https://www.vanguardngr.com/2018/01/china-completes-worlds-longest-sea-bridge/

China just finished spending $16 Billion on a 55 km bridge that connects Macau and Hongkong. Ignoring all sorts of variables, that equates to roughly 1/6 the cost per meter of our new Johnson Street bridge and took roughly the same time – 8 years. They even built an island half way across. Pretty incredible stuff.

Leo I heard the same thing about crest fire as Josh said. Apparently there are two types of soda stream nozzles and you never know which one you’ll get from the box. Only one of them can be refilled. You’d think there would be some kind of adapter you could buy but I haven’t looked into it.
I’d love to go to a meetup but not sure I would have anything to contribute to the conversation.

“Let me know when we get to the bad part.

Schools closing, for starters.”

Asian students start leaving en masse as daddy can’t pay the bills back home. Decimation of Golden Head overnight. Many are here for a holiday anyway, not to learn.

Let me know when we get to the bad part.

Schools closing, for starters.

don’t think they have actually released the numbers

Final numbers won’t be out until the fall because of the complaints process but there about 10,000 returns that have claimed an exemption, declared themselves vacant or failed to file at all. The rest are owner or tenant occupied.

I’d guess maybe 1/3 of them will be deemed vacant – maybe 3500 max? Got to be lots in buildings where rentals are prohibited and exempt…

something like 4000 have not responded

2132 have not responded. Many might not speak English or have tenants that did not respond. We don’t know how many will ultimately be subject to the tax and won’t know until September or so.

I’m sure a lot of people will be making false claims

Maybe. I wouldn’t. The penalty for a false claim is up to $10,000 per day. Seems hefty enough to deter most.

@totoro

Except that the actual number of empty houses looks like it is about 3500 max to me based on the preliminary results of the empty homes tax declarations.

I don’t think they have actually released the numbers they just say that something like 4000 have not responded. I did not see where they actually gave the numbers of empty houses yet? Also I’m sure a lot of people will be making false claims to see how the city actually carries out checking. If there are garbage men on Introverts street clearing garbage in Gordon Head for empty homes I’m sure they will be willing to pay people to try to falsify these claims.

“It only takes a couple billionaires to almost single handedly inflate a market. I am super curious to see who owns what in Vancouver when shell and numbered corporations are unmasked.”

So am I Josh. Look at the investigative reports from Sam Cooper out of Vancouver where multi billions by one foreigner jacked the market who then flogged them to other billionaires down to the multi millionaires.

I have been saying for ages Victoria has similar stories that haven’t been uncovered but examples by freedom only confirm the logical evidence we are not immune, we just don’t like to talk about it. It’s that Victorian thing, bad for business.

“How many out of country and out of province speculators are there that the NDP are trying to target? The truth is, we really don’t know. We know that the rate of out of province buyers (at least those moving directly from out of province to Victoria) is relatively low, at about 11%.”

What is the dollar figure for the 11% ? One would think with the billions that flowed in here from Asia the last 10 years made up for much more than the average local buyer by many multiples.

The CEO of RBC has said it’s a serious thing and he sees the books and mortgages lent out that we don’t see. Something tells me he sees some major disasters looming to be so blunt to say it’s distorting the market.

“Foreign buyers using Canadian homes as piggy banks, RBC CEO warns

Foreign inflows are distorting Canada’s already constrained housing market and aren’t the kind of investment the country needs, RBC chief David McKay said”

A two bedroom flipper on Robinwood Dr., sold in September 2017 for $700 K, now with a paint job, offered at $839,900. Will it set off a bidding war or are we past peak RE?

Buying new computers for your business is a pretty textbook case of investment.

Yes, my apologies!

As a reward, they get to send their kids to Canadian universities without paying foreigner tuition, use our healthcare system and get 20% gains from Vancouver houses all while paying less in income tax than any other migrant who actually works in Canada.

Agree this was a flawed program. Completely counter to how taxation should work. All the service benefits and capital gains exemption for limited taxation dollars. Skews the system and the RE market.

People shouldn’t be parking their money in RE like they would in a stock market.

The family home is where most of the money is “parked” in Canada. You’d like to change that? I don’t think it would be popular or have the outcome desired or be good for stability and financial security for Canadians – or tax revenues either.

It only takes a couple billionaires to almost single handedly inflate a market.

Do you have some math behind that?

It only takes a couple billionaires to almost single handedly inflate a market

No, it takes all buyers. If they aren’t willing to pay more, prices won’t go up, although a couple of them will have to drop out. But if everyone tries to stay in regardless of higher prices, yes the 2 billionaires can have a lot of impact.

The distinction between speculation and investment is flawed. You basically need the benefit of hindsight to determine how risky an investment was. If the market corrects by 30%, suddenly all these people who may have been legitimately defined as investors are suddenly speculators. I think the distinction is useless – their behaviour has the same effect. People shouldn’t be parking their money in RE like they would in a stock market. It might get me called a Bolshevik but I would be very supportive of a primary residence or gtfo tax in urban centres. To the tune of 10%+ and not 0.5% or 2%.

Near as I can tell the BC government has no idea what number of residences are actually owned by foreign nationals.

The wealthy immigrant program and Quebec’s equivalent really threw a wrench into that. It makes it harder to distinguish locals from foreigners when the foreigners hold Canadian passports. The answer is a property tax tied to income tax, which is exactly what’s happening. I went to school in Hong Kong with kids that were indistinguishable from Canadians because daddy parked his money in a safe Canadian investment. As a reward, they get to send their kids to Canadian universities without paying foreigner tuition, use our healthcare system and get 20% gains from Vancouver houses all while paying less in income tax than any other migrant who actually works in Canada. It was a total no-brainer for them and a shotgun blast to the foot for us. They literally called Vancouver “Hong Kong II”. Man that program was a bad idea.

What is clear to me is that the bubble has been caused by vast sums of money from outside BC entering the real estate market.

It only takes a couple billionaires to almost single handedly inflate a market. I am super curious to see who owns what in Vancouver when shell and numbered corporations are unmasked.

Also note the computer is invariably sold for less than it’s purchased for. It’s still an investment.

A computer is not an investment. It is a depreciating asset and a consumer good.

An investment is the purchase of goods that are not consumed today but are used in the future to create wealth or purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.

A fee simple house is an investment because it can be used to generate rents and because land appreciates.

https://www.investopedia.com/articles/younginvestors/10/what-is-an-investment.asp

The latest census counted more than 25,500 empty homes in Vancouver. That amounts to more than eight per cent of the city’s total housing stock.

Except that the actual number of empty houses looks like it is about 3500 max to me based on the preliminary results of the empty homes tax declarations. This applies to any home used less than six months of the year with a few exceptions – so like the spec tax. And next year my guess is that it will be even less as people plan for it.

The empty homes tax has cost the city of Vancouver about 8 million dollars so far. 331 new staff have been hired. I wonder how this is going to pay off in light of the numbers and the BC tax that does the same thing but gives the money to the province.

If the area of the province projected to have the most speculation/empty homes actually has less than 1% in this category I wonder if the NDP’s revenue projections from the spec tax are way off? How much is this program going to cost to administer?

The latest census counted more than 25,500 empty homes in Vancouver. That amounts to more than eight per cent of the city’s total housing stock. The results came in while residents continued to grapple with a rental vacancy rate resting just above zero.

http://vancouversun.com/news/local-news/empty-homes-tax-city-of-vancouver-releases-heat-map-showing-clusters-of-undeclared-properties

Thay seeks like a lot of empty homes. What was the total for here? I think Hawk or someone posted the ghost chart at one point.

I’m down for a meetup.

Home (and second home) purchases are always a balance of utilitarian and investment.

Utilitarian and investment are not two different things. If I buy a computer or other equipment to use for my business, it’s utilitarian, and it’s also an investment. Also note the computer is invariably sold for less than it’s purchased for. It’s still an investment.

Return on an investment may have any of three aspects – utility (value of owner’s use), income (money from others who use it), and speculation (money from the next owner). A speculator is someone whose primary goal is speculative gains.

I am reluctant to start this argument again. But I am interested to see we most of us can agree on some fundamentals. Let us at least see if we can agree about the heart of the problem. Then lets us if there is any agreement as to what has caused the problem. Maybe then we can look at actual changes that address the cause of the problem.

Perhaps we can agree that the largest and most visible problem lies in Vancouver. (Yes, Victoria has the same problem as well but lets stay with Vancouver for a start). I would suggest that the heart of the problem rests with the fact that house prices in Vancouver have seriously detached from local incomes. Obviously I am not saying that nobody who works in Vancouver can buy a house but rather that a significant number of people cannot buy. Put another way, if only people who worked in greater Vancouver were allowed to buy a house then house prices would be dramatically less than they are. Almost by definition house prices could not be more than people working in Vancouver could afford since they would be the only buyers. I know that I am simplifying somewhat but I believe that it is fair to say that is the general goal that we should be aiming for. House prices might still increase because of lower mortgage rates or higher salaries but they would still be affordable.

The only way that one gets the sort of bubble that we see in Vancouver is if there is huge amounts of money flowing in from outside the city (in point of fact from outside BC; sorry you cannot blame buyers moving from Duncan to Vancouver for this mess). There are only two sources of such enormous amounts of money. Either it is money from other provinces or foreign money or a combination of both. Basically local buyers are being outbid by someone else and seriously outbid.

This is where I have a serious problem with trying to decide how to tackle this problem. Nobody seems to actually know precisely how many homes are owned by either foreigners or non B.C> residents. Near as I can tell the BC government has no idea what number of residences are actually owned by foreign nationals. Is it 3% or is it 33%. Nor do they have any idea of the dollar value and what market segments are owned by foreign nationals. Nor do they have have any precise statistics as to what percentage of sales are to foreign nationals in any given year. The same holds true for purchases from out of province. This is insane from my point of view. How can you possibly craft an intelligent housing policy without having any accurate numbers.

What is clear to me is that the bubble has been caused by vast sums of money from outside BC entering the real estate market. At least in terms of solutions one thing seems obvious to me. We need to ban foreign purchases of residential real estate in BC. But equally we must at the same time
force the gradual sale, in an orderly manner, of all foreign owned residential real estate to remove the distortion in prices that it has caused. (There might be a few areas of exception such as Whistler but not for the major urban areas.)

Since we dont know the actual statistics for foreign ownership we cannot tell if this would make the problem manageable. What we do know is that it would reduce the problem and in all likelihood reduce it significantly. I dont think that a 20% tax on foreign buyers is the right response. In my eyes an absolute ban is required alongside a sizable tax that would increase annually for all residential real estate presently owned by foreign nationals ( it does not matter if the property is vacant, rented or occupied by a student).

Anyway toss out your opinions but please address what you think is the fundamental big picture problem. My own feeling reading this blog is that too often people start focusing on the paper cuts while ignoring ignoring the bleeding artery. If principal residences can be made affordable in our larger cities then is cottage ownership really a problem?

Be nice and lets not play politics here for a while.

“I usually enjoy your posts, but that is a bit unnecessary. If it was humour, it didn’t really come across.”

I’m sorry, I should refrain my self.

Yes let’s have a HHV meetup! May need some security to keep the commies and rednecks apart!