2022 Market Predictions

Sure you can sell your property to a holding company. More PPT for the government and you’ll trigger capital gains. The government wins again.

Savvy investors don’t do things on rumors. They wait until they see the trends emerge. Or at least see what the politicians, with inside information, are doing before it becomes public.

And I don’t think that it’s a small amount of investors that would be effected by an increase in the CG tax. They would re-evaluate their holdings to determine if the loss is equivalent to any potential future gains. They could sell now or hold their properties and sell later and pay even more in CG taxes if the properties continue to rise. The government wins again.

This is all pure speculation. But I think the government has to do something and investors are the low hanging fruit.

On June 18, 1987, Finance Minister Michael Wilson announced that the rate would increase to 662⁄3 percent in 1988 and to 75 percent in 1990.

That was a white paper of proposals, open for discussions and submissions many of which were modified or not implemented. https://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=1161&context=jlsp
There’s a big difference between proposals for discussion and tax law.

Just like Justin Trudeau promising a 1% foreigner homeowner tax in his April 2021 budget, “scheduled to come into effect Jan 1, 2022 in Canada” . Except it didn’t.

https://www.canada.ca/en/department-finance/programs/consultations/2021/tax-unproductive-use-housing-non-resident-non-canadian-owners.html

Maybe because we tugged on Superman’s cape, and the US threatened to tax Canadian sunbirds with US property…
https://www.politico.com/news/2021/06/23/brian-higgins-trudeau-canada-tax-495739

He said announcing an upcoming change, thus encouraging investors to sell at the lower tax rates.

If fear of a future cap gains increase was going to make people sell investment real estate, they would have done it already (or at least crystallized the gain). Because if you’ve been following this topic, you’d be expecting cap gains increases coming. Because federal Liberals (and the NDP) have been musing about increasing the rate of cap gains to 75% from 50% for at least two years. And 2022 may be it. Many savvy investors have crystallized gains in preparation for this, and anyone sitting on stock or property gains should consider it, as once they announce it as official, it’s too late. btw) People sell RE properties to their holding companies to trigger (crystallize) gains so it doesn’t mean that the properties go on the market.
https://nationalpost.com/opinion/tasha-kheiriddin-get-ready-for-tax-hikes-to-pay-for-liberal-spending

On June 18, 1987, Finance Minister Michael Wilson announced that the rate would increase to 662⁄3 percent in 1988 and to 75 percent in 1990. The new reforms, unlike the 1972 reforms, provided no grandfathering for gains accrued under the old regime.

In 1987 the Toronto RE market, the country’s largest, was near the top of a bull market which was followed by Canada’s biggest RE bust.

The government would never be foolish enough to pre-announce a capital gains increase.

Ahem.

Patriotz, you’ve the better memory. Do you recall what happened to stocks when the government changed the rules on how the gains would be taxed? I think the term was crystalizing????

Frank, it really depends on how much money you would be losing by holding and how those thinking of buying short term for quick appreciation would react.

This wouldn’t effect your home just your rentals. If you notice a spike in listings you could always sell now and buy back when prices are lower.

Increasing capital gains taxes would not produce an influx of properties being listed, investors would only hold onto them longer, decreasing supply. Rents would go up, along with prices. Investors aren’t desperate, they can hold on for a long time, I have, and plan on holding even longer.

My opinion, and believe me no one agrees with me on this one. Is that you can’t build your way to lower home prices with new construction.

Oh you can eventually. The problem is dealing with the consequences when the outsized RE sector inevitably collapses, as shown by the first graph on this page.

But you’re right that a more sophisticated approach is dealing with misallocation of existing and new RE investment. When we have a housing crisis at the same time that RE investment consumes a record high % of capital formation, that should be apparent.

Getting rid of both the HOG and property tax deferral should be no-brainers. They may have effect only at the margins, but that’s what moves prices. Likewise interest expenses should not be allowed to create an operating loss for RE, as is already the case for CCA.

I’ve never seen the point of the home owners’ grant. I doubt that removing this subsidy will make any difference to the real estate market.

But it could be a signal of trends to come as real estate becomes an increasing cash cow for the government to milk. With the great wealth of Canadians from real estate, I can envision that we could be heading to an inheritance tax as well as a change in the Capital Gains Tax.

Real Estate is one of the last areas that the government can milk to bring in tons of revenue.

My opinion, and believe me no one agrees with me on this one. Is that you can’t build your way to lower home prices with new construction. Construction stimulates the economy and drives prices higher. But if you stimulate the pre-owned/used housing market to put their homes up for sale then it is possible to increase inventory and bring down house prices without stimulating the economy.

The real estate market comprises only 2 or 3 percent of the total housing in Greater Victoria. There is a massive amount of existing homes that could be brought onto the market. If the government announced an upcoming change to the Capital Gains tax, then some investors might to chose to sell now rather than later when the new CG rates come into place.

Aren’t you glad I don’t work for the government. Awaiting your daggers to come my way.

bought separate property for our child

We have four so was not affordable for us to do this. Did what we could at the time and it has worked well so far. I think most homeowners can’t afford to buy a home for a child at today’s prices so suite or multifamily (which are admittedly rare) might be possible.

The most common scenario going forward for people wanting a place for their kids may be coownership. If you have a largish SFH that has or can be suited you can sell part of the home to the child, register a private mortgage, and transfer the interest without PTT or capital gains implications.

You can easily register a private mortgage on a property. Same forms as used by banks.

somehow I am not able to paste the link fromCRA. here is the full contents on Section 85.

~~

Transfer of Property to a Corporation Under Section 85
From: Canada Revenue Agency

NO.: IC 76-19R3

DATE : June 17, 1996

SUBJECT: Transfer of Property to a Corporation Under Section 85

This Circular cancels and replaces Information Circular 76-19R2 dated June 15, 1990. It provides information and guidance to help you make elections under subsections 85(1) and (2) of the Income Tax Act for certain types of property transferred to a corporation. You should read this circular in conjunction with Forms T2057 and T2058, and Interpretation Bulletins IT-169 and IT-291. Any reference to an Interpretation Bulletin or Information Circular in this circular refers to the current version of that bulletin or circular.

This Information Circular incorporates the 1991 to 1994 amendments to the Income Tax Act and clarifies the departmental policies. It does not include any comment on 1995 draft legislation.

Where applicable, Revenue Canada has extended its position on section 85 elections to elections under subsection 93(1), Election re disposition of share in foreign affiliate, subsection 97(2), Rules where election by partners, and subsection 98(3), Rules applicable where partnership ceases to exist. You should use Form T2107, Election in Respect of a Disposition of Shares in a Foreign Affiliate, Form T2059, Election on Disposition of Property by a Taxpayer to a Canadian Partnership, and Form T2060, Disposition of Property Upon Cessation of Partnership respectively to make these elections. The Department’s views on the merger or amalgamation of Canadian partnerships are set out in IT-471, Merger of Partnerships

PROPERTY TRANSFERRED

1. Subsection 85(1) permits a taxpayer, and subsection 85(2) permits all members of a partnership to elect to defer all or part of the income which would otherwise arise on the transfer of certain types of property to a taxable Canadian corporation. This section provides that you, as the taxpayer, can make the transfer at an agreed amount on which the Act imposes various limitations. You have to elect a dollar amount, as opposed to making a descriptive election, in setting the agreed amount for the purposes of subsection 85(1). You may amend (see paragraph 15) but you cannot revoke an election filed under section 85.

2. The rules in section 85 apply to each property transferred. Accordingly, if the parties intended but failed to include a particular property transferred when filing an original election form, we will consider that the transferor disposed of the omitted property for proceeds equal to the fair market value. However, according to subsection 85(7) or 85(7.1), the parties may file an additional election for that property after the date the election was otherwise due (see paragraph 15).

3. Although Form T2057, Election on Disposition of Property by a Taxpayer to a Taxable Canadian Corporation, and Form T2058, Election on Disposition of Property by a Partnership to a Taxable Canadian Corporation, require a specific and adequate description of each property transferred, the parties to the election can exercise some discretion when transferring many properties. For example, if you are transferring all the depreciable properties of a prescribed class, it is not necessary to list each property, or show the consideration for each on the election form. Instead, you have to indicate on the form only the total fair market value of the properties, the lesser of the undepreciated capital cost and the cost of the properties, the fair market value of the consideration received, and the agreed amount for the whole class. However, you must retain supporting schedules. They are particularly important to determine the designated order of disposition of each depreciable property, as described in IT-291, Transfer of Property to a Corporation under Subsection 85(1).

4. The Department will accept elections reporting a nominal amount as the agreed amount for the transfer of property, provided that the amount is within the limitations imposed in the relevant paragraphs e.g., 85(1)(c), (c.1), (c.2), (d), and (e).

5. Paragraph 85(1)(d) ensures that the agreed amount for eligible capital property for a business cannot be less than the least of 4/3 of the cumulative eligible capital of that business, the cost, and the fair market value. When the lowest of these amounts is zero (e.g., earned goodwill for which there is no cost) and the parties intended to transfer the property on a tax-deferred basis, the parties still have to list the property on Form T2057 and state a nominal amount. If the parties transfer goodwill and do not include it on the prescribed form, we will consider it to be disposed of at its fair market value. It may be possible to avoid this tax consequence by filing a late election (see paragraphs 2 and 15 to 18). For more information, refer to IT-143, Meaning of Eligible Capital Expenditure, and IT-123, Transactions Involving Eligible Capital Property.

6. Forms T2057 and T2058 require you to disclose the fair market value of both the property disposed of and of the non-share consideration received. You should keep the working papers used to arrive at these values.

7. Even though you may list several properties on a single election form, section 85 requires a separate agreed amount for each property transferred. The Department will adjust an election form to disregard all references to a transfer of an ineligible property, without affecting the validity of the other transfers. There may be tax consequences in transferring ineligible properties. Therefore, it is important to ensure that you include only eligible properties in any election filed under section 85.

CONSIDERATION RECEIVED

1. Under section 85, the consideration that the transferor receives for the property transferred to the corporation has to include at least one share (or fraction of a share) of the capital stock of that corporation for the election to be valid.

FILING REQUIREMENTS

1. Form T2057 applies to elections made under subsection 85(1). Transferors must file this form separately from any income tax return at the tax centre where they file their tax returns. The transferor, or a person authorized in writing on the transferor’s behalf, and the authorized officer of the transferee have to sign the election form.

LATE AND AMENDED ELECTIONS

1. Under subsection 85(7), you can make an election up to three years after the filing deadline referred to in paragraph 12. Subsection 85(7.1) provides that you can file an election more than three years after the original due date, or amend an election at any time if, in the opinion of the Minister, the circumstances giving rise to the late or amended election are just and equitable. The Minister delegates the authority to accept these late and amended elections to the directors of tax services offices. You or your representative should file a late or amended election, provided under subsection 85(7.1), at the transferor’s tax services office, together with a written request to the Minister to accept the election. The request should provide the reasons why you consider that it is just and equitable to accept the election. If you do not include these reasons, the Department will not process the election. You also have to pay an estimate of the applicable penalty when making the election (refer to paragraph 21).

retroactive tax planning, such as taking advantage of losses or tax credits not considered when the election was originally filed. In situations where the changes are partly retroactive tax planning and partly to correct errors, we will advise you that we will only accept an amended election for the latter;
to take advantage of amendments in the law enacted after the original election was filed, e.g., an increase in the agreed amount of an election made in April 1985 to create a capital gain that may be offset by a capital gains deduction under section 110.6;
to improperly avoid or evade tax; or
to change the agreed amount in a statute-barred year.
17. The Department will accept an amended election only if you or your representative originally filed a valid election under subsection 85(1) or (2). For example, if, in the original election, consideration received by the transferor does not include at least one (or a fraction of one) share, it will not be a valid election.

1. Revenue Canada will generally accept an amended election when:

it corrects an inaccurate property valuation that gave rise to unintended tax consequences;
it reduces the agreed amount of transferred shares to the correct cost amount when a transfer at cost was the intention, e.g., subsection 83(1) dividends were omitted when calculating their adjusted cost base;
it corrects situations where it is clear that an amount was inserted in error, such as the transfer of depreciable property at its net book value instead of its undepreciated capital cost; and
it corrects other situations which resulted in unintended tax consequences, e.g., the application of section 84.1, subsections 15(1), 84(1), and 85(2.1), or paragraph 85(1)(e.2), when it is clear the parties wanted the rollover without any immediate tax consequences.
AMENDED ELECTION NOT REQUIRED

1. The Department will correct clerical errors without requiring an amended election. We will consider transposition or typographical errors as clerical errors only if they are obvious upon our initial review of the election form. We will not consider as a clerical error a situation where the agreed amount equals the fair market value of the property at the time of transfer.

PENALTY FOR LATE AND AMENDED ELECTIONS

1. The Department does not accept an amended or late-filed election made under subsection 85(7) or (7.1), unless the transferor calculates and pays the estimated penalty when filing the election. We will subsequently determine and assess the balance of the penalty the transferor has to pay without delay. If we accept a late or amended election, the penalty, calculated pursuant to subsection 85(8), is the lesser of:

(a) one-quarter of 1% of the excess of the property’s fair market value at the time of the disposition over the agreed amount for each month or part of a month after the election’s original due date and before the filing of the late or amended election; and
(b) $100 for each month or part of a month referred to above, to a maximum of $8,000.
22. The penalty described in paragraph 21 is subject to the provisions of subsection 220(3.1). For details on the cancellation or waiver of any penalty, see Information Circular 92-2, Guidelines for the Cancellation And Waiver Of Interest And Penalties.

BENEFIT CONFERRED ON A RELATED PERSON

1. Paragraph 85(1)(e.2) prevents you as the taxpayer from using subsection 85(1) to confer a benefit on a person related to you. If the fair market value of the transferred property immediately before the disposition exceeds the fair market value of all the consideration taken back, the agreed amount will be increased by the portion of this excess that can reasonably be regarded as a benefit conferred on a person related to you. This rule applies except for the purpose of determining the cost to you of the shares of the transferee corporation you received as consideration for the transferred property. Transfers to a corporation that was a wholly owned corporation of the taxpayer immediately after the disposition will not be subject to paragraph 85(1)(e.2) “benefit conferred to a related person.” In these circumstances no benefit will be considered to have been conferred even though the fair market value of the transferred property exceeds the fair market value of the consideration received. Subsection 85(1.3) defines the term ” wholly owned corporation.”

the transferor takes back retractable preference shares having a retraction amount equal to the fair market value of the transferred property less any other consideration taken back;
the net fair market value of the transferee corporation is not less than the retraction amount of the retractable shares immediately after the transfer; and
the rights, conditions, and characteristics of the shares are such that they maintain their value until they are redeemed.
For clarification purposes, “retractable shares” are shares that are redeemable at the option of the holder.

DEEMED DIVIDENDS AND APPROPRIATIONS

1. A person transferring property to a corporation shall receive consideration which includes shares, or a fraction of a share, of a class of the capital stock of that corporation. This transfer may result in an increase in paid-up capital that is more than the increase in the value of the corporation’s net assets. In such a situation, for property disposed of before November 22, 1985, all the shareholders of that class of shares are deemed to have received a dividend according to subsection 84(1). After November 21, 1985, when the taxpayer transfers property to a corporation under subsection 85(1) or (2), and the paid-up capital of the share consideration is greater than the cost to the corporation of the property (less the fair market value of any non-share consideration), subsection 85(2.1) will apply to reduce the paid-up capital of the shares by the amount of the excess. As a result, we will take into account the reduction in paid-up capital under subsection 85(2.1) in determining the amount of any deemed dividend under subsection 84(1) for the same transaction. In such situations, where the total fair market value of the consideration is more than the fair market value of all the properties transferred, subsection 15(1) applies, except for any amount that was already included in income under subsection 84(1). For more details and examples, see IT-432, Benefits Conferred on Shareholders, and IT-291, Transfer of Property to a Corporation under Subsection 85(1). For information concerning paid-up capital, refer to IT-463, Paid-up Capital.

PRICE ADJUSTMENT CLAUSES

1. IT-169, Price Adjustment Clauses, states the conditions under which the Department will recognize a price adjustment clause for property transferred in a non-arm’s-length transaction. However, a price adjustment clause does not automatically amend a section 85 election. In order to give effect to a price adjustment clause, you have to file an amended election under subsection 85(7.1). An acceptable price adjustment clause has to adjust the price of the property transferred and the consideration received, not the quantity of the property transferred. The terms “amount” and “fair market value” in section 85 must be interpreted as fixed and specific dollar figures at the date of transfer, not formulas that can determine or adjust an amount later. A price adjustment clause cannot change these figures retroactively.

LOSSES FROM DISPOSITION OF PROPERTY TO A CONTROLLED CORPORATION

1. Generally, you cannot claim an allowable capital loss or a terminal allowance (i.e., the deduction of your cumulative eligible capital) if it arises on a transfer to a corporation and, immediately after the transfer, the corporation was controlled directly or indirectly by the taxpayers described in subsection 85(4) – see IT-291, Transfer of Property to a Corporation under Subsection 85(1). This restriction on losses applies on a property-by-property basis. Consequently, losses and gains on properties transferred at the same time may not be offset.

PRE-1972 APPRECIATION

1. In certain cases, you will be unable to obtain a tax-free distribution of a pre-1972 gain as a result of a transfer under section 85. For example, if the fair market value of depreciable property at December 31, 1971, is more than the actual cost of the property, and an individual transfers the property to a corporation under section 85 at less than the fair market value at December 31, 1971, no 1971 capital surplus (or, after 1978, pre-1972 capital surplus) will arise if the corporation later disposes of the property at more than its actual cost. For more details, see IT-132, Capital Property Owned on December 31, 1971 – Non-Arm’s Length Transactions.

FACSIMILE ELECTION FORMS

1. The Department may permit facsimile forms if you obtained prior written consent from the:

Director
Publishing Directorate
Revenue Canada
17th floor
Albion Tower
25 Nicholas Street
Ottawa ON K1A 0L5

You should send a copy of the proposed facsimile form with your submission to the Department at least 60 days before the electors have to sign the forms. For more comments on facsimile forms, see Information Circular 92-5, T1, T2 and T3 Customs Returns.

Does anyone know if Saanich is enforcing the rule that homeowners must live in houses with a rental suite rented out?

Saanich by-law enforcement is complaint based. So unless the tenants make trouble (e.g noise, garbage, etc.) to cause two or more neighours to complain, there wouldn’t be enforcement. Otherwise there can be.

Does anyone know if Saanich is enforcing the rule that homeowners must live in houses with a rental suite rented out? Given the housing shortage especially…

Totoro, would the kids lose there first time home exemption then?

I think there may be a clause in the land registry that will allow you to transfer ownership without having to pay property purchase tax if the transfer is between legal partners (married/common law) but I don’t know if that extends to children.

It does allow children to be added if it is your primary residence without PTT.

What you’re suggesting is a new idea to me, but a deemed partial sale of your multi-family building should have tax implications. You might not set a value to the “shares” but the government will.

That is more complicated and I would say talk to a knowledgeable accountant about how to structure your agreement for tax purposes, there are many ways to go, but remember that the sale of part of a primary residence that is used as a primary residence, which this is, is tax exempt. This is a legal non-strata multi-family so there is only one title.

Then Totoro, are you putting them on Title as Joint Tenants or Tenants in Common?

How are you going to handle capital gains when you sell to them and they sell back to you?

What you’re suggesting is a new idea to me, but a deemed partial sale of your multi-family building should have tax implications. You might not set a value to the “shares” but the government will.

I think there may be a clause in the land registry that will allow you to transfer ownership without having to pay property purchase tax if the transfer is between legal partners (married/common law) but I don’t know if that extends to children.

Anyway it’s an interesting idea.

How are you going to handle those things?

Our places are already townhouse equivalents – no need to sell to move to this. If they want to sell we will buy back if they want to buy a different home in Victoria, but we’ve recommended they convert to a rental at that point and we will lend the equity and they can pay back from rental income. And it is not shares, it is a form of co-ownership with a co-ownership agreement so the equity will be tax exempt if it is their primary residence.

Yes they they still have to qualify for a first mortgage. Don’t your kids have jobs?

Median family income in Victoria is about 90k. If your kids are median then the maximum mortgage they are going to qualify for is about $400,000. With your 20% they’ll be able to get something for 480-500k if you note it as a gift rather than a loan. That will get you a two bedroom apartment here if you are under 50 and most singles won’t have 90k income alone at the start of their careers so your child may need a partner to qualify which may or may not happen.

I prefer our route as we bought much earlier at a lower price with our credit and each child will be able to buy a townhouse equivalent (ranging from 2-4 beds) in town if they wish suitable for a family without restrictions vs. pets and kids. And the eldest is still probably five years away from this stage. I can imagine that affordability will decline further over this time period to the point that your 20% down payment loan may not get your child an apartment here by the time they are in a position to purchase as it has in Vancouver already.

Yes they they still have to qualify for a first mortgage. Don’t your kids have jobs?

I bought a Court sale previously in Alberta.

In my 11+ years seems like every single time I’ve been to court the place has sold above market value. My thoughts here -> https://www.youtube.com/watch?v=Drk2xOJE3PE

Whoeveriwanttocallmyself: I don’t know what most parents/grandparents do in order to provide funds to assist their adult kids iwith their various wants and needs. Myself I paid for my daughter and granddaughter’s education in full out of my savings. With my grandddaughter, I purchased RESP’s each year. My daughter’s education funds came from savings from when I was working. I helped considerably with the down payment on her first and 2nd homes both located in Vancouver. These funds also were from savings. However, if I didn’t have those savings, I would not of helped by putting myself in any kind of debt.

I like what Totoro has done.

I believe quite a few seniors/pensioners have helped their kids by taking out a reverse mortgage. To each his own I guess.

Everytime someone comments on what is affordable and what is not, they should include the group trying to buy and the market segment they are trying to purchase. I know the dictionary meaning refers to average, but in my mind median would be a more relevant.
It seems like Patrick’s definition of affordability is based on the top quintile of earners/wealth is currently purchasing the houses currently for sale, so housing is affordable.
It seems like most first time want to be buyers commenting are using the following segments: median of all want to be first time buyers (so not just the actual first time buyers) cannot afford the median of properties currently for sale (so not a median or average of all properties, because there is no way for them to buy a house not for sale).

Thanks Alexandracdn, the follow up question I would ask is from what source are the parents/grandparents getting the money to gift. Is it from their savings or from the equity in their homes? And what is meant by “gift”. Are the parents giving the money with no strings attached? Going on Title as joint tenants? Co-signing the loan? Or a verbal or written agreement that the money is to be paid back to the parents or form part of the kids’ future inheritance?

The risk is if the gift is from the parent’s equity. if any of them default on their mortgage ie loss of employment, health, etc. that could cause a cascading effect of defaults for some of the others. A case of all of one’s eggs in one basket again.

Along the lines of holding a second mortgage. If you are behind the lender on title and the property goes into default then as the parent you should be prepared to buy out the first mortgage or take over some or all of the payments.

The report was very interesting and reflects our plans with the exception that we do not help our children purchase vehicles.

We have taken things a step further and have already purchased multiple family housing for our children and they will be able to buy an affordable share from us allowing occupation of a unit when they are ready if they want. Not fancy, but in Victoria and they can choose to rent it out or live in it and they will be added to title.

The housing market is not affordable to first-time buyers in Victoria. If you are a homeowner want your children to be able to stay here then I think you have to face the fact that you have benefited from the appreciation to their detriment and consider assisting them. The takeaway from the report reflects a shift that occurred for me when I was a young adult looking at how different cultures treat family economics, and it it this:

The research also pointed to an increase in the willingness of families to view wealth created by the oldest generation as a means of enabling the next generation to take steps to ensure a sustainable future, be it through education or the establishment of a family home.

And my job is great. Challenging and meaningful and still leaving a lot of free time. Thanks for asking.

maybe someday Patrick will call a mobile home as the average home in Victoria for the average household

True. But this future “mobile home” will be modular, solar powered, self-driving, and equipped with meta verse Step 85 integration, so you’re convinced that you’re living in a waterfront Uplands mansion.

Really? Do you know the difference between the rate of average household income increase vs the rate of average home price increase in past 5 years?

Yes, you just have to look at the numbers to see how an average household income buys an average home. (

A poster here (Whoeveriwanttocallmyself ) told us:

“- the average one-bedroom condominium in the core sells for around $425,000
– and the average two-bedroom sells at around $560,000”

• Now, about two months back, we did an analysis of an average buyer household income with a $100K income being able to afford a $700k townhouse. So condos are well within reach for the average buyer. And the $700k gets you a townhouse in Westshore. These are average, affordable homes for average incomes
• $100k income is nothing special, and could be two $25/hr dishwashers https://www.richmond-news.com/local-news/50kyear-dishwashing-job-illustrates-desperation-in-restaurant-industry-4533006 ,

The average household in Victoria can afford an average home, which by your definition makes Victoria homes affordable.

Really? Do you know the difference between the rate of average household income increase vs the rate of average home price increase in past 5 years?

As the mortage rate hasn’t changed too much, if the income increase rate is the same as house price increase, then the affordablity would be the same. If the average home price has increased much faster, then housing is becoming more expensive and less affordable.

Yes, we should be all grateful having a roof over our heads, be it a SFH, a condo, or a mobile home. But if the average household who could afford a SFH 5 years ago can only afford a townhome/condo today, it can only mean one thing – the average home is harder to reach for the average household, period.

So, are the people buying their first home today average or above average?

In Victoria to buy a first SFH you need above median income or help via a cosigner and/or down payment gift. A median income family could still buy a condo. In any event, waiting until you have diversified assets into other investments is pie in the sky for the vast majority of first time purchasers – in fact they will need to withdraw their TFSA and RRSP most likely to come up with the down payment. Once you have equity things are easier.

It’s more likely well under 5% of total households that are driving our prices.

Agreed.

From dictonary:
“un·af·ford·a·ble – too expensive to be afforded by the average person.”

Unaffordable and Unsellable are two totally different things. House market is hot and sell-able houses do sell fast. But the fact is (for us and lots other home owners) – if we didn’t have a house and need to buy today, we wouldn’t be able to afford to buy the house we live today. It is not just expensive, but too expensive.

Patrick, you are over estimating the size of the real estate market.

There are over a hundred thousand homes in greater Victoria but only a small fraction of those are for sale at any time and those make up the size of the real estate market. And only a small portion of that fraction are starter homes. It doesn’t take many above average income earners with above average down payments to raise prices. So 40% of households is way too high. It’s more likely well under 5% of total households that are driving our prices.

So Totoro we are back to the word “average” again.

Is the average person buying starter homes in Victoria?

We know that the average household income is around $85,000 and that the average one-bedroom condominium in the core sells for around $425,000 and the average two-bedroom sells at around $560,000. So, are the people buying their first home today average or above average?

A question best answered by a broker or real estate agent.

It sounds like many people here will only accept the idea that homes are unaffordable.
And that they are so unaffordable that Leo expects them to rise in price by 5% this year.
Yet all of these unaffordable homes will be purchased and afforded by thousands of fellow Victorians, many with multiple offers.
If this logic makes sense to you, then continue to refer to the homes as unaffordable.

For me, I think they are in fact affordable to large numbers (70% ) of Victoria households. This would consist of 40% of households that can buy above avaerge homes (SFH). And another 30% that can buy the below average price homes (condos). So homes are in fact affordable to about 70% of Victoria households IMO. And this group will continue to purchase them, year after year.

Why does this matter? Well, some of the “homes are unaffordable” believers here expect that these unaffordable homes won’t sell (because they’re unaffordable). And so my point is, yes they will sell, because lots of people can in fact afford them.

A better word to describe Victoria home prices would be “expensive.”

Totoro, every person is different and every situation is different.

We have statistical analysis that demonstrates that first time buyers share many characteristics on average. Half are under 35, 3/4 are families, and 30% had family help with the down payment (average amount of 82,000). Also, 9/10 homeowners 25-44 have a mortgage. We also know that the family home is the single biggest asset for Canadians and that current prices in Victoria for a SFH are not affordable without family help for the majority of first time buyers based on median incomes.

https://www150.statcan.gc.ca/n1/pub/11-627-m/11-627-m2019091-eng.htm
https://torontosun.com/business/money-news/one-third-of-first-time-canadian-home-buyers-get-parental-help-cibc
https://www.canada.ca/en/financial-consumer-agency/programs/research/canadian-financial-capability-survey-2019.html

For court ordered sales you can search the Victoria Court House web site. Myself I would contact Marko and ask if he would search the MLS system. I think it is well worth what he would charge, as buying property under duress can be tricky. It isn’t the same as buying a home when there is a willing seller involved. The process is well regulated by the courts and the odds are not that good that you will get a discount from market value for the risk involved when buying this type of property.

A better way is to look at Estate Sales where the executors are not from the city or the estate is being handled by a law firm. The vendors seem to be more motivated when it comes to disposing of this type of property. Again you’re going to need someone, like Marko, to assist you. The emotional factor with these properties comes from sibling rivalry. Especially when properties are selling quickly, as one of the family members might argue that the executor under sold the property as it sold in under two weeks. I think anyone who has ever been an executor of an estate will explain to you how all of the skeletons in the closet between siblings come out at that time.

Do your relatives a favor, sell all of your stuff before you die. Or if you have a kid that you want to have your property, put them on title as joint tenants. Then the Right of Survivorship will apply regardless of what your will states or doesn’t state.

They are however affordable to at least enough buyers to match the numbers that are selling their homes.

If this was used as the definition of affordability then homes are ALWAYS affordable. At any point in time every home that sells is sold to people who through a combination of saving and borrowing can meet the purchase price.

A. When the people that buy it can’t pay for it.

This is something that only becomes apparent after the fact, so is not a useful definition of unaffordability. And as patriotz said here is always a proportion of people who buy something and then can’t pay for it.

“Q: because under that premise, when is real estate not affordable? ”

.

A. When the people that buy it can’t pay for it.

Somebody is always buying something they can’t pay for. That why credit cards get declined or cars get repossessed or people go bankrupt. Granted that in the US circa 2005 more people were buying houses they couldn’t pay for than usual, but the fact remains that most buyers could pay.

Not a useful definition at all.

Patrick that’s the point. What do you mean by “people” because real estate is always being bought therefore it is always affordable. Never have “people” stopped buying real estate.

I would say you should buy real estate when you can afford it and the housing meets your basic needs and you’re not risking all of your fortune in one asset class. You should have a back up plan in case the market goes upside down on you. Make sure you have investments in something the creditors can’t take if things go sideways on you. As the other commenter said. Don’t put all your eggs in one basket.

There’s one very good part to renting even if it’s a high price. It’s that I am not committing a quarter of a million in capital into an asset that I also have to spend $3000 to $4000 a month to service debt on. Unfortunately, people just tend to look at their monthly in and out costs instead of possible opportunity costs by the large commitment to a single illiquid asset class (and no, drawing from your HELOC is not releasing trapped equity or spending your gains, it’s adding to your liabilities and your costs). The problem is the religion of property ownership that has convinced people to sacrifice everything else and destroy financial capacity, wiggle room, alternative means of gains and has drawn in multiple generations of some families to be singularly committed to the success of one vehicle to ensure financial stability and success in life. It’s a terrible amount of eggs to put in one basket.

Fatigued buyer that actually seems like an interesting definition of affordable housing. If we took that to the extreme then houses in Victoria could be ten million dollars and considered affordable as long as the inventory stayed low and a few people could buy them. Supply meets demand and therefore real estate must be affordable. It seems like a logical fallacy of circular reasoning to me. Because under that premise, when is real estate not affordable?

When I say prices are affordable, of course I don’t mean that they are affordable to everyone… They are however affordable to at least enough buyers to match the numbers that are selling their homes.

Hi Patrick,

Fair enough. Whether it’s a social problem/issue/crisis or not is beyond what I was considering.

The point remains that relative to other years in the history of the CRD real estate market we are at peak unaffordability…it is what it is I guess.

In the context of Leo’s discussions, “affordability” is a term of art that relates the price of homes that sell to average disposable income

Using your definition, there are plenty of homes that are available/affordable to the average disposable income first time buyer. They are townhouses. Talk to some forum members here, who bought one recently. These are the average homes, between condos and SFH. What isn’t available to the average disposable income income is SFH (detached homes). Those aren’t average price homes, they are above average price homes. And they are affordable/available to above average disposable incomes. As expected.

If you look at the people buying the detached homes in Victoria, you’ll see that they aren’t average disposable income people. They are above average incomes, and second home buyers. And there are plenty of them to buy these homes, hence the bidding wars.

Average incomes can afford average Victoria homes. What’s wrong with that?

“Why would you use the assessed value? And not what you think your home is worth?

The latest assessments, in most cases, are still below market value. Using the assessment is going to give you a lower estimate of the rent. If you use the assessed value then you will have to use a lower factor than 280. And if BC assessment has not caught any improvements you might have made then the factor can be way off.

That’s why I said to use the value you think the house is worth and not the assessment.”

Well, just so happens I get right about what the assessed value is in rent. At least the assessed value is something to reference when working with tenants and not just your attitude of “oh well this is what I think my home is worth, so this is what I expect you to pay”. Who would want to deal with a landlord like that?

Sure it’s six months old and I know it’s worth more now (I appreciated your free TED talk on that), but I really don’t know what someone is willing to pay for it and neither does anyone on this forum. If you don’t believe that just look at the sales over the past six months. Do I add $50k or $250k?

Also it’s completely flawed to say that “rent is unaffordable” based on what someone/anyone (including the delusional) thinks their home is worth.

Finally, even at my make-believe market value it’s still reasonable, so I don’t think your little 280 equation stands up.

I just think they are too slow in these circumstances.

Quite possibly. But bear in mind that the approval data would have been submitted to the FDA well before HC (as is almost always the case).

I predict that Health Canada will approve it within a couple of weeks, and have nothing negative to say about it.

I agree.

Having our own review process that inevitably starts later than the US process adds a bit of friction for getting new drugs to market in Canada. One study suggested that median time from filing to approval was about 10 months in the US and about 12 months in Canada and Europe

If true this seems to undercut your original complaint about HC’s slow approval of the drug. The approval status is moot for now if there is none of the drug available.

No, I said we wouldn’t receive “substantial quantities”, not that we wouldn’t receive any. Perhaps there’s a compassionate grounds delivery that we’d get, or a source from another country (e.g. Bangladesh is making a generic version, approved by Pfizer). None of that can happen until it’s approved. So approval isn’t a moot point.

Moreover, it isn’t Health Canada’s role to delay approvals based on estimated procurement of a drug. They are supposed to base it on science.

The elephant in the room for Health Canada approvals that might be guiding them is Canada’s thalidomide disaster in the 1950s. This is the morning sickness drug that Canada approved in the 1950s, and kept it in the market despite other countries pulling it. Of course it caused severe congenital abnormalities in thousands of Canadian babies. And the USA never approved it, thanks (ironically) to a Canadian Dr. Kelsey who was working for the US FDA alerting them to problems. For which she got an award by JFK. https://thalidomide.ca/en/the-canadian-tragedy/

So perhaps Health Canada has compensated by being “extra cautious”. However, in this case, the risk/reward favours approval. There are big rewards for the Paxlovid COVID drug (life saving), whereas for thalidomide it was an unnecessary nausea drug for morning sickness. I predict that Health Canada will approve it within a couple of weeks, and have nothing negative to say about it. I just think they are too slow in these circumstances.

FWIW, here’s a young Canadian blogger who makes many of the same points that I’ve been making about Paxlovid. https://www.nenroll-nenroll.com/we-need-to-talk-about-paxlovid-press/1519352022/

The point being, I don’t think Canada will see ANY substantial quantities of US made Paxlovid for several months or longer.

If true this seems to undercut your original complaint about HC’s slow approval of the drug. The approval status is moot for now if there is none of the drug available.

Renting is very expensive these days. To give you an idea of how expensive, here is a little guide to determine what your home might receive as rent.

Take the price of what you think your home is worth and divide that price by 280.

Could you afford to rent your home?

I understand your premise. House prices are rising so that means it is always possible to sell the home for more than the mortgage. But that’s not what happens. People stop making payments

I agree with that. I believe it was patriotz comment that had suggested that people sell the home before stopping mortgage payments – and like you , I don’t buy that argument either.

You’re right that there are always court ordered sales, and that seems like a good place to look for a bargain. Good luck!

Plot twist….. There is no 625 Agnes.

Seems like the end may be near. The court of appeal gave Canada 18 months to decide “whether it will approve funding for infrastructure improvements on the segment of the corridor that includes the [Nanoose] Reserve.” The court set out that if Canada “determines not to approve funding, or does not make a determination on or before that time, the appellant will be entitled to return to court to enforce its right of reversion,” which would return the right of way taken from the reserve to the Band.

Yeah, it’s a complicated legal situation that I don’t fully understand.

I think, though, that if things go sideways for the corridor at this location, they may have to reroute the track sideways 🙂

Patrick I should have been more clear, I meant court ordered sales. There are two foreclosures listed by lenders at 3958 Cedar Hill scheduled for court today. Another at 625 Agnes is scheduled for January 25. Both are actions by lenders.

I understand your premise. House prices are rising so that means it is always possible to sell the home for more than the mortgage. But that’s not what happens. People stop making payments which are then added to the mortgage and the lender and legal fees are piled on. The process can add another hundred thousand and more to the mortgage. The home owner may not have the income now to get financing from another lender to pay off the accumulated debt.

People get into trouble. It doesn’t matter how rosy the real estate market happens to be. Crap happens.

Patrick, that’s an interesting comment about affordability and the low level of foreclosures in the Victoria real estate market.

You don’t get foreclosures in a rising market because anyone having trouble making payments can sell and get their equity out. Has nothing to do with affordability really.

I know we can only see things retrospectively, but I think enough time has gone by to ask, did we achieve the soft landing?

“I hope the Corridor Foundation holds onto the line long enough for a business case to be made.”

Seems like the end may be near. The court of appeal gave Canada 18 months to decide “whether it will approve funding for infrastructure improvements on the segment of the corridor that includes the [Nanoose] Reserve.” The court set out that if Canada “determines not to approve funding, or does not make a determination on or before that time, the appellant will be entitled to return to court to enforce its right of reversion,” which would return the right of way taken from the reserve to the Band.

https://www.bccourts.ca/jdb-txt/ca/21/03/2021BCCA0333.htm#SCJTITLEBookMark225

They are however affordable to at least enough buyers to match the numbers that are selling their homes

Can you outline a scenario where that isn’t the case?

We need the USA to be kind enough to send us the miracle drugs like Paxlovid that they’ve invented.

I have great respect for American ingenuity, but let’s get real here. Last time I checked Pfizer (i own shares) is not a non-profit.

Rephrasing your statement to reflect reality:

“We need global pharmaceutical companies, based in the US and elsewhere, to continue to innovate and continue to be driven by the profit motive to sell their products to the widest possible market, including Canada.”

It would be great if we were a bigger player in Pharma/Biotech but the reality is that we are not.

The U.S. pharmaceutical industry is completely free from any liability if their vaccines cause any harm, thanks to legislation over 50 years ago. Why would they produce vaccines anywhere else?

But you’re right Patrick, Canada is a failure on everything COVID. Probably the worst in the world

Canada has done well, because of the “kindness of strangers” – namely the countries that invented/manufactured and shipped us the vaccines. Primarily the USA (thank you!) but also UK, India (AstraZeneca) and others.
Without them, Canada would be completely unvaccinated, with no treatments, no tests and no PPU. All imported. So I thank the countries that have made this happen, primarily our friends in the USA. And so should you!

Without this help from foreigners, many of the 566 people on Vancouver Island diagnosed TODAY with Covid would be very ill in hospital and ICU. But we’re OK, because of the vaccines sent from other countries. Note that Dr. Henry says the reported numbers are about 1/7 of the total cases. If she’s right, that menans 566×7 = 3,966 people on the island that got infected in one day. Given the 780k population of island health. That’s 1 out of 200 people on the island infected in one day.

We are lucky that omicron seems mild in vaccinated people. But the next variant might be resistant to vaccines and more severe. So we need these new treatments like Paxlovid, because they work on all variants, expected to be stopping 90% of hospitalizations and 100% of deaths.

And so we need the Americans help again in 2022… big time. We need the USA to be kind enough to send us the miracle drugs like Paxlovid that they’ve invented. When they do, our Canadian contribution which you’re so impressed with will be to open the packages, and hand out the pills to the people that need them. I suppose that’s something, but don’t confuse that with actually making a difference fighting Covid on a global basis, by inventing and producing these miracle drugs, and that’s primarily the USA.

Now we repeat the same thing

What? You’re ready to repeat 2021… Lockdowns/business closures/CERB/$350 billion deficit.

.. and you have an issue with people who complain about that?

We are almost 2 years into Covid and still don’t have the things we need.
– no rapid tests
– not enough tests for people that have Covid. Told to forget about getting a test.
– not enough icu beds. Need to shut down the economy so they won’t overflow. BC Refused to help Alberta when they ran low on iCU beds, because it turned out our supposed “surge capacity” wasn’t available.
– inability to provide advanced treatments. Antibodies/ regeneron used in first world health systems but AWOL here
– inadequate preparation for this surge that we are seeing now.
– waiting for boosters. Idiotic plan to spread the boosters out by 8 months has resulted in too few people boosted, and excess cases as a result.
– hopelessly inadequate transparency of Covid data. The few releases are too slow (containing old data). Other countries do much better.

And now, with the Paxlovid drug, the “complainers” are the Canadian medical people on the front lines. And you’re telling them not to complain.
e.g. — Toronto ICU cases have doubled in the last week. Dr. Kevin Smith “ A Toronto hospital executive is calling on Health Canada to approve Pfizer’s COVID-19 antiviral pill amid increasing hospitalizations across the country” https://www.canhealth.com/2022/01/05/uhn-chief-asks-for-speedy-approval-of-covid-pill/

Try about 50 years of no movement in the first half of the 20th century

Absolutely correct thanks to the great depression, and 2 world wars.

Imagine if they got a halfway fast train service re-established between Duncan and Victoria.

In that scenario, Duncan would be a bona fide bedroom community of Victoria, and Duncan would see a sharp rise in prices, IMO.

The existing track and bridges are now so degraded that it would have to be built from scratch on the existing right of way.

I hope the Corridor Foundation holds onto the line long enough for a business case to be made. It may take 10 or 20 more years, but at some point there will be enough people on the Island and enough frustration with the ever-more-inadequate existing highway system that rail becomes a viable complementary option to move people and goods.

My prediction for 2022
Sales 7,875
Median SFH $1,120,000
Median Condo $530,000
December inventory 760
Interest rate 1.00%

U.S. Federal Reserve may need to hike rates faster, reduce balance sheet quickly, minutes show

Federal Reserve officials said last month that the U.S. labour market was “very tight” and might need the U.S. central bank not just to raise interest rates sooner than expected but also reduce its overall asset holdings to tame high inflation, according to minutes of their Dec. 14-15 policy meeting.
.
Participants generally noted … it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated. Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes stated.

I feel like Duncan has a lot of room to grow price-wise.

Imagine if they got a halfway fast train service re-established between Duncan and Victoria. Probably a pipe-dream though. The existing track and bridges are now so degraded that it would have to be built from scratch on the existing right of way.

Fortunately you have someone like me

Something new to be thankful for when HHV’ers practice gratitude: the existence of Patrick

Looking at those assessment maps…

Leo half-jokingly talks about investing in Port Alberni, but Duncan ($523K average assessment) is still very affordable — and has the benefit of being fairly close to Victoria.

I feel like Duncan has a lot of room to grow price-wise.

And as we Canadians do what we do best on ending the global COVID nightmare, which is doing NOTHING, and instead we patiently wait for the American created Paxlovid wonder drug to be invented, manufactured and sent to us in Canada and worldwide, I am very grateful that we live beside such an amazing country.

It was invented in 2018, prior to Covid-19, to treat a cat coronavirus that was 100% fatal (to cats). They only went into phase-1 trials for this miracle drug in February 2021 (https://clinicaltrials.gov/ct2/show/NCT04756531).

Side note, really weird inclusion criteria for that trial:

- Healthy male or female subjects between ages of 18-60 years. Male only in part-4.
- Body Mass Index (BMI) of 17.5 to 30.5kg/m2; and a total body weight >50kg (110lbs)
- Japanese subjects who have four Japanese biologic grandparents born in Japan

Edit: Looks like phase 3 trials are supposed to be completed by April 24th, 2022. https://clinicaltrials.gov/ct2/show/NCT05011513
No wonder it hasn’t been approved in Canada yet.

Got this in my inbox today:

https://www.gensqueeze.ca/housing_wealth_generational_inequity

https://www.timescolonist.com/local-news/vancouver-island-assessment-values-soar-on-2022-property-roll-4919634

The government is looking into taxing houses over $1 million. Another reason not to sell, making things worse.

I am very grateful that we live beside such an amazing country.

Greenland?

The snow melt in my neighborhood has proven how disgusting and lazy a great number of dog owners are counter to their assertions. The medians, green spaces and sidewalks around where I live are covered in dog shit (not just a little, a lot).

Little known fact: In the Prairie provinces there is actually a season dubbed “dogsh_t” that occurs between the end of winter and the beginning of spring.

CPI in Japan has actually been pretty flat from 1998 to date. Plenty of asset price deflation though.

Flat CPI because Japan had to increase consumption tax to fund the increasing healthcare and pension liabilities without immigration to offset the lost of manpower and consumption, while keeping low interests and window lending (window guidance) since 1961.

BC implemented it and then lead economic growth in the country for a long time.

Hence, patch work of bandage policies, and escalating housing price to balance the addiction.

Distribution of gross domestic product of British Columbia, Canada in 2020, by industry — https://tinyurl.com/4mmse2eu

Now it is a matter of time before the other shoes will drop when inflation has to be control that bring along deflation (see Japan 1997/98).

CPI in Japan has actually been pretty flat from 1998 to date. Plenty of asset price deflation though.

Nor do I expect to see consumer price deflation in Canada going forward. We even had CPI inflation in 2020, although it was the lowest in years. Of course all economies see asset price deflation from time to time – better known as busts.

https://tradingeconomics.com/japan/consumer-price-index-cpi

So, to all those that lament the difficulty of finding a place to live with a pet, you only have yourself and those of your cohort to blame for how you impose on those around you

Nah, I’ll blame the guy who voted against pets who thinks he can go through life without stepping in some shit once in a while.

It’s this sort of mentality that drives me nuts. Makes you wonder if that one time a homeowner’s guests couldn’t find parking in front of their house, it caused that homeowner to vote against all future development in the area, citing parking. Shit happens guys! We share these neighbourhoods with other people, including a few irresponsible pet owners.

These prices increases are frightening.

A self inflicted cancer.

First we have ultra low interest rates for 13 years, then we have carbon tax and ESG that increased costs and hamper growth (hence the need for low interest rates), and the last straw that broke the camel’s back is the pandemic EQ because the government ran out of tricks to keep the economy afloat.

Now it is a matter of time before the other shoes will drop when inflation has to be control that bring along deflation (see Japan 1997/98).

So we have Pfizer’s Paxlovid pill, a near-miracle treatment for Covid, stopping 89% of hospitalizations and 100% of deaths.
– And we have the USA approving and distributing it already, with 4 million treatment courses to be delivered throughout the USA by end of January. That’s enough for 130,000 Americans per day to receive the treatment. Amazing!

And we sit in Canada still waiting for Health Canada to approve Paxlovid. Listen to this Ontario doctor describe the frustration https://www.ctvnews.ca/health/coronavirus/hospital-ceo-calls-on-health-canada-to-approve-pfizer-s-antiviral-pill-amid-health-system-strain-1.5725740

And here is the disappointing reply from Health Canada…
“Health Canada told CTVNews.ca in an email statement that the agency is still waiting for additional data from the companies. The agency also said it could not give a timeline on when a decision will be made.
“Timing for the completion of Health Canada’s review depends on many factors, including but not limited to a need for additional data, discussions with the sponsor, and requirements for updates to safety information,” Health Canada spokesperson Mark Johnson said.
“Health Canada will only authorize the use of anti-viral treatments if the independent and thorough scientific review of all the data included in the submissions show that the benefits of the treatments outweigh the potential risks.”
Smith believes there already is enough data to warrant approval now, citing the authorization of Pfizer’s pill in the U.S. and U.K. as well as the “risk for us to not be able to continue comprehensive hospital care.”
“I totally respect my colleagues at Health Canada, but my personal view is we now have enough data from those two approvals,” he said. “It really is time for us to use this at an emergency basis.”
——

Health Canada’s delay in approving Paxlovid is something you’d expect from a third world country. Though that wouldn’t be fair to third world countries. As I see that Bangladesh has approved and is already manufacturing a generic version of Paxlovid – https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/bangladeshi-firm-launches-first-generic-of-pfizer-drug/articleshow/88603468.cms

These prices increases are frightening. I have young kids and I have no idea how they will ever be able to afford to buy a condo or a house. I remember only 4 years ago posting on this website about how expensive a $600,000 house was for a young family. That seems like such a bargain now. What a sad state.

It look like covid restriction is not going away at anytime soon, so the government can’t raise rate quickly without a negative effect on the economy.

I could be completely out to lunch for predicting 18.5% price hike, but I think builder can charge higher profit margin citing covid restrictions and material costs increase. And, the consensus is that there will not be any rate change till the middle of the year that give people plenty of time to buy in during the spring/summer rush

0.75% BoC interest rate.
9000 annual sales, same as my 2021 prediction.
$1,463,000 SFH price jump of 18.5%
$670,000 condo price jump of 18.5%
1400 inventory same as my 2021 prediction.

My guess is that interest rates are at 75 points or less. Sales are lower this year because of a lack of inventory. Condos prices up but SFH average around 1.65. Yes, that is an enormous increase but look at the cost of building new. While I am sticking my neck out there is a good chance that the Canadian dollar ends the year below 70,.

LeoS: Real estate is eating the economy, buoyed by ever increasing debt, both public and private. I expect there will be a reckoning for these excesses, but no one knows how much more time this run has in it.

——-

Patriotz: That first graph bears examination. We have blasted past the 2005-6 bubble peaks of the US, Oz and Spain and are closing in on Ireland.

I disagree, as I don’t think there has been any over investment in RE as a % of total as suggested by LeoS first chart and comments.
So the “reckoning” isn’t coming, it is the housing crisis we are seeing now, from the chronic UNDER-investment in real estate, which has led to the huge demand and shortage of housing for our growing population. There needs to be more RE investment (as shown in your first chart of RE as a % of GFCF), and there have been no recent excesses of home construction in Canada.
We have a chronic shortage of houses in Canada, estimates are up to 2 million homes shortage. Canada has lowest homes per capita of G7 countries.

This is most easily seen by showing home completions as a % of population changes. “ The ratio has been well-below its historical average since early 2018. That isn’t a surprise. Canada experienced an immigration-fuelled population boom since 2015 that saw population rise much more rapidly than new housing units were built. ”

https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-note.housing-note–may-12-2021-.html

New liberal rules possibly coming out against investors. See below

Stop Excessive Profits in the Financialization of Housing

Large corporate owners of residential properties such as Real Estate Investment Trusts (REITs) are amassing increasingly large portfolios of Canadian rental housing, making your rent more expensive.

Homes should be for people to live in, not financial assets for investment funds to speculate on.

A re-elected Liberal government will:

Review the tax treatment of these large corporate owners.
Put in place policies to curb excessive profits in this area, while protecting small independent landlords.
Review the down payment requirements for investment properties.

https://www.youtube.com/watch?v=eCDc9gVCqSQ

Congrats, Frank.the.Tank!
Hope you bought some property and put your money where your mouth was.

My predictions:
7000 sales (few people interested in moving to Alberta, and everywhere else is expensive)
Condo median: $579k (kinda flat)
SFH mean: $1,210k (still rising most of the year, though I expect it to all collapse next fall…..I was wrong about this last year, but here we go again)

BoC: 0.75 – agree with Leo.
Phew.

Heavily restricted, but you still feel sales will be in the upper third of the last 32 years? (21 of the last 32 have been below 8000 sales)

I think with adequate new listings/inventory we would hit 10,000 plus based on my impression of demand.

It’s kind of like Tesla…..their sales are restricted heavily by production capacity; however, they are still producing and selling a record number of cars.

I’ll fill out survey but here it is.

Sales: 8000; sales will be heavily restricted by inventory.
SFH Price: $1,275,000; stupidity has to end at some point and it ends this summer imo.
Condo Average: $585,000; same as above.
Inventory: 1,200; I think low new listings/low new inventory is a long term trend. New listings have been dropping for many many years in a variety of market conditions.
Rate: 0.5%; they will raise it once symbolically but won’t do much else.