What’s going on with AirBnB?
The City of Victoria has been in the news recently with their changes to their short term rental regulations. As a reminder, though short term rentals are not permitted under zoning in most of the region, only the City of Victoria has actively targeted short term rentals, introducing a bylaw in 2018 that essentially banned short term rentals in non-owner occupied homes. The only investor-owned units that could be rented for short stays were in the dozen or so buildings that had transient zoning and had to be grandfathered in. Everywhere else, owners could only rent out their homes while they were away for short periods. I wrote about the impact of both the pandemic and the regulations on short term rentals two years ago, and in short the city’s regulations seemed to have at least succeeded in halting the growth of short term in the city. To their credit, the city has put substantial resources into the problem, with several full time employees dedicated to licensing compliance. They’ve taken hosts to court and won, but there remain hundreds of unlicensed listings in the city.
The city has essentially two problems:
- They can’t ban short term rentals in buildings that previously explicitly allowed them under the “Transient” zoning. The province requires those uses to be grandfathered.
- Short term rental platforms have not cooperated with the city, which means enforcement is extremely time consuming and difficult, with the city having to use investigative techniques to match unlicensed listings to properties in order to assess fees.
To cut down on the first category of listings, last week they increased the business license fee from $1500 to $2500/year for short term rentals in non-primary residences. They also increased fines for non-compliance, and tightened some rules around how many times you can rent out your place when you’re away (the new max is 4 times).
Will that make a difference? No, generally not. I’d be surprised if it motivated more than a few dozen units back to the long term market. Despite quite a bit of media coverage, the changes don’t fundamentally resolve the two primary challenges that are behind the existence of the majority of currently active short term rentals in the city.
Let’s take a look at the numbers. According to Inside AirBnB, there are 913 whole home short term rentals in the City of Victoria. However 172 of those have not had a booking in the past 12 months, leaving 741. The city says 665 licensed were issued last year and 85% of those are for non-owner occupied units (though they estimate 66% compliance so may be counting units somewhat differently). I don’t think anyone is concerned about people renting out their homes while they are on vacation, so the only ones that really matter are the units that are rented frequently and thus are likely to be full time rentals. After a dip during the pandemic, AirBnB activity fully recovered to the pre-pandemic trend mid last year. A tripling in review activity in 5 years is substantial.
In the City of Victoria there are a couple hundred AirBnBs that are currently evading licensing that could be returned to the long term market if enforcement wasn’t so difficult, and another few hundred currently being legally operated out of transient zoned buildings that could be long term homes if the city wasn’t required to grandfather them. While it’s possible that the grandfathering provision could be targeted by the province, it seems less likely given the grandfathering is used more broadly and is probably not something they want to abolish.
If we zoom out to the entire region, there are 2970 whole-home AirBnbs that have had at least 1 booking in the last 12 months. Subtracting out the approximate number of units in transient zoned buildings that may continue to operate legally, and the 500 some units that were booked for less than a month (indicating they are more likely to be someone’s primary residence), we are left with about 2000 units in Greater Victoria.
I’ve long said that provincial action is required in order to actually get a handle on short term rentals. Enforcement is nearly impossible when the platforms refuse to share data, and the smaller municipalities don’t have the resources to dedicate to the task. The solution is to put the onus of enforcement on the platforms, which is where Quebec is going after the deadly fire in a short term rental in Montreal some months ago. Instead of having the municipalities chase unlicensed units, they are publishing the list of valid licenses and requiring AirBnB to only host units with valid licenses. If BC created a similar system and municipalities opted to use it to enforce their existing prohibitions on short term rentals, it could essentially put an end to most of the full time AirBnBs in the region.
What impact would that have? Well, from the earlier stats there are at most 2000 units that could be returned to the long term rental market. Some would of course be left vacant or decommissioned if AirBnB was banned, but let’s examine the limit. If half of those were sold and half rented, we would add a max of 1000 units to the rental market and 1000 to ownership market. There’s about 67,000 rental households in Victoria with a 1% vacancy rate which is causing rents to increase quickly. 1000 additional rentals would increase the rental vacancy rate to about 2.5%, which is nearly enough to stabilize rents (about 3% is required). On the resale side, adding 1000 units to the current 2400 would shift the market from sellers to balanced territory. Of course any change would be gradual and this represents the upper limit of impacts. The City of Victoria cited a McGill study that estimated that for each 1% of the rental stock that is in AirBnB, monthly rents increase by $50/month. Another way to provide perspective is that 2000 units represents about 8 months of construction in Greater Victoria.
In the end, in a city that could use tens of thousands of homes, adding 2000 units (and realistically more like half that) is not huge. But the Eby government has shown they are fond of pairing supply side with demand side measures, so expect some provincial action on short term rentals this fall. If your investment hinges on short term rentals, you may want to be prepared to pivot.
Also the weekly sales numbers:
| August 2023 |
Aug
2022
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 104 | 478 | |||
| New Listings | 231 | 980 | |||
| Active Listings | 2398 | 2137 | |||
| Sales to New Listings | 45% | 49% | |||
| Sales YoY Change | +25% | -42% | |||
| New Lists YoY Change | -2% | +10% | |||
| Inventory YoY Change | +11% | +90% | |||
| Months of Inventory | 4.2 | ||||
A decent start to the month at 25% more sales than the first week of August last year while new listings are unchanged. With low and volatile sales levels I wouldn’t read too much into those differences, but it’s clear that there are no major moves in market activity recently. As in July, activity is staying relatively resilient, even if the price gains we saw earlier in the year are likely behind us. Last year we had a little sales bump in the latter half of August, so the vagaries of the month may well change that balance.
From the sales to list ratio, the market is not really much different than it was this time last year. Slightly tighter, but with a bit more selection.
The fall is often a good time to buy, so if you’re kicking yourself for missing last year’s slow market, we may be in for a similar situation again. Though if I’m right that affordability matters and given it hasn’t improved at all, the stable/boring market may hang around for a lot longer than anyone expects.
AirBnB (etc) is just the TC classifieds in today’s form…and serves diverse housing needs well beyond the “true” STR–which itself is not just tourists (don’t we want tourists?), but also temp housing for the arts, health care, education, etc. contributing to a healthy community & dependent on furnished housing. Rigid policy means that the City doesn’t not even know what it has–suites in use for decades but not grandfathered and won’t be licensed, so invisible. Shutting down locally invested housing in favour of remotely owned corp AirBnB tower (Fort & Blanshard) shifts away from those who are invested in the local community. Approving bedrooms 7×7 in new build studios (Cook & Hillside) delivers accommodation aimed at STR, what they say they don’t want. We’re in a very reactive environment in which politicians pat themselves on the back and people actually engaged in housing suffer–or benefit–depending on circumstances.
New post: https://househuntvictoria.ca/2023/08/14/suites-and-home-values/
The data on suites and house prices is not as clear as you might think
The advantage of buying a home with a suite in Langford over Victoria is that a lot of the suites in Langford are on permit. While in Victoria most are not on permit. That makes qualifying for a larger mortgage easier for someone buying in Langford.
Makes sense. Wonder if it will also shake loose some inventory eventually as well. Gonna be grind for a lot of owners if rates stay high until late 2024 as seem to be the most recent projections.
There are some clean and well kept houses in the core that are selling around the $900,000 range. But they are all starter homes without suites or along busy streets.
If one has sold their condominium for average price of a condo at $550,000 then it would almost make sense to buy a $900,000 starter house as the mortgage payment with $500,000 down would be about the same as renting the same property. But property taxes will be around $4,200, then insurance, maintenance, and municipal utilities on top of that.
Or you could have rented it for $30,000 a year and put the $500,000 in a GIC at 5% making $25,000 a year or at REIT at 8% making $40,000 a year and just banked your paychecks.
I just think that prices have to come down as there are better options than real estate these days.
Not all homeowners are struggling. That’s an over exaggeration. Money is still cheap for those that have security such as a HELOC. Money only starts to get expensive when it comes to unsecured credit at around 11%. That’s what most businesses rely on to meet periodic shortfalls between income and expenses in order to average out the good months against the bad months.
Secured credit is still cheap.
The problem is that the homes are so darn expensive. You don’t get much more of a house for spending another 100K . Maybe an extra 250 square feet on a new build which would be a small family room, or one or two underground parking spaces in a condo. You’re not getting much value for your money.
I looked at a new two-bedroom condo that sold for a $1,000 a square foot. The waste paper basket cost $14.99 but the space to put it on cost a thousand.
Looks like some suited livable SFH’s in the core are transacting in the 900’s again.
Homeowners suppose to be struggling with these interest rates and we discussing $4 to $10k hot tubs, a completely luxurious item that devalues the property on average 🙂
I guess there is some randomness but a good feel on the pulse of the market helps. Late July/Early August my buyer intake started quoting pre-approvals of upwards of 5.79% and I had a feeling that would slow August down a bit. The 5 year bond yield hasn’t moved (in fact it has gone up a bit) so I think we are stuck with these elevated rates for the time being. That being said certain product still doing okay such as SFHs with a suite. Certain other market segments slow.
I think if rates moved back down to high 4s/low 5s things would pick up a bit again but over 5.5%ish just a bit too much for a random bump.
Don’t even have to spend $10k. We bought a 4 person (realistically 2 adults or 4 kids) hot tub for $4k when COVID hit. Canadian Spa Company, 120V, just plug it in. Gets a ton of use. Currently on sale again: https://canadianspacompany.ca/collections/all-hot-tubs/products/saskatoon-12-jet-4-person-plug-play-spa
I think it will be interesting to follow this market over the next year. I am wondering how many projects are going to be put on hold over the next year. I suspect that there may be a growing realization by some that Canadians are actually poorer than ten years ago. Burger and fries, with tip, are now pushing $25 (consider not ordering a beer with that).
Frank, there is the possibility that having more investors sell will not cause prices to decline. But I don’t think that it is probable for the reasons that I gave.
The higher interest rates have not decreased the WANT for a home, but they have absolutely decreased the demand for one as far fewer people qualify for a mortgage today without a whopping huge down payment.
One of the questions that I ask myself is how long can we sustain current market prices at the current sales activity? The car is just idling in the parking lot. It ain’t going no where. How much gas is left in the tank or battery?
If divesting rental properties then did not reduce prices, how is it going to reduce prices now?
I recall a dramatic drop in interest rates at the start of the pandemic. Ceteris paribus and all that.
That’s right Frank. Investors divesting their holdings did not cause a decline in prices at the start of Covid. THAT’S THE ENTIRE POINT OF MY POST!!!!
Although most of the media were signaling that Covid would crash the real estate market at that time. Twice as many investors were selling their pre-owned properties at the start of Covid as compared with today. And thereby displacing a lot of tenants. Tenants with CERB cheques.
The solution Frank is to increase inventory and that can be accomplished by building more housing. Which is not going well as the profit margins are low. Or increase the number of pre-owned homes on the market by incentivizing investors to put their properties on the market.
What is different this time than at the start of Covid is there is no CERB payments, rents are at their highest rate ever, and there are options for renters to relocate to areas of higher wages and lower housing costs.
“We” presumably being those who can’t remember more than 20 years back.
Saunas are a good choice. Lots of research on the health benefits.
In the past, when you we’re building a new home, which took between six to 12 months, the contractor got a bump in land value. That made building very profitable. There has not been a bump in land values for the last 12 months maybe two years. That was an extra $100K or $200K in the contractor’s pocket. Don’t have that anymore.
And It’s tough to buy a tear down in Victoria City and make a profit on a house built on speculation. Since, it’s expensive to hand de-construct these old shacks. Those are sunk costs to demolish. You’re not going to get that money back.
Why build then?
No matter what the feds or province tries to do, they can’t make a contractor build a house that the the contractor will lose money building. Forget building on speculation of a future sale. The only jobs to take are signed contracts. Spec housing has gotten too risky. But spec housing is what the feds and the province are concentrated on building.
So how are the governments going to make it cheaper for a contractor to build a house? Are they going to lower labor costs? How about the cost of materials? How about land costs?
I haven’t heard anything from the government concerning these? You can want all this F’ing houses, but it ain’t going to be built unless there is a profit to be made. There just isn’t that much profit in building on speculation anymore.
So we have low sales and high prices I guess a different kinda slow market manipulated even
A lot of investors who own several properties are immigrants who came to Canada in the last 10-20 years. I know a few of them. Most of the people I grew up with avoided investing in real estate, it can be a real pain. If fact I can’t think of one that did successfully, a few tried but bailed after one bad experience. It’s not easy being a landlord. Ideally everyone should own their own home, ideally everyone shouldn’t smoke, overindulge in alcohol or do drugs.
Your observation that investors divested at the beginning of Covid did not result in reduced prices, in fact prices went up faster than ever. I guess your solution is flawed. The only solution is to decrease demand. Never have so many people come to Canada requiring a place to live, maybe that has to change.
I’m not disagreeing, but rates were identical in the first week of August / end of July and now but sales definitely deteriorated. Rates certainly didn’t drop last August but the last half of the month still picked up. Lots of randomness here.
I’m late to the party, but I’ve always though that if I had 10k to spend on a hot tub I’d much rather have one of those barrel saunas personally… anyone here got one? You could host the next HHV meetup…
Except we haven’t seen rates this high sustained. Will supress sales for August for sure.
Frank, throughout history it has always been the least fortunate that have suffered the greatest. I would expect that renters in the short term will be the most disadvantaged. The government could give rental tax credits to help offset the rental increases. Or the province could tie rental rate increases to the property rather than tenancy.
As prices decline then affordability should increase and then most renters may be able to transition to home ownership and that should improve the vacancy rate. Maybe not rental rates but certainly more choice in accommodation.
I am not one that favors rental rate caps. They have been proven not to be effective in increasing new rental construction. However we are in a housing crisis and desperate times require desperate measures.
Frank, you don’t have to evict your tenants. You would just have to reconsider your rental as an investment relative to other investments. You may wish to remain a landlord as it appeals to your altruistic nature.
Coulda said the same thing all year. Market always surprises. Maybe this time it’ll surprise by staying down, maybe it won’t.
98 sales last week. At these interest rates what makes you think we will have a bump? Last week ends on a Thursday so 80ish for that week.
We are ending the month at 480 +/-.
The question is: did the usual September sales bump get pulled forward to the end July early August because of the rate increase?
I really have no basis for a prediction. Last August we had slow sales in the first half and a bump in the second half. Maybe we get another bump, maybe we don’t. The day to day and week to week sales have a lot of randomness.
Last week it was +25%, I wonder if the timing of the long weekend and the rate holds expiring has something to do with this.
That’s also the quickest way to increase homelessness. Maybe I should get my renters to respond to your brilliant solution. I’m sure they would tell you to go……….! Please tell me where they would go.
We have to incentivize investors to divest themselves of their surplus properties. That is the quickest method of increasing inventory that will lead to lower prices and improve affordability.
Unfortunately renters are more than likely to get screwed over again. As investors displace tenants they will have to compete for a rental property in a very tight rental market. This is what happened at the start of Covid. Investors were divesting as they feared falling prices and by doing so that displaced tenants and rents skyrocketed. Then the astronomical increase in rents brought investors back into the market and housing prices increased.
I don’t think that scenario is likely to happen this time . Rents are currently atrociously high, there is no income replacement plan such as CERB to offset the rent increases, and there are now options for renters in the 20 to 34 year age group to relocate for better paying jobs and lower home prices.
The plum to pick for the federal government is the Capital Gains Exemption for single family housing. If you want to invest in housing then you should be buying or building purpose built apartment buildings or investing in REITs.
During this housing crisis, single family housing should not be used by investors to create windfall personal wealth. If the government can get investors to divest that would add hundreds of thousands of properties across Canada to the inventory of homes for sale.
Never have so few people (investors) owned so much real estate. We have to change that.
We won’t be 15% by end of month.
202 + 100 + 100 + 80 = will be lucky to match last year.
Rodger-That’s what the government wants us to believe. Also, there are thousands of illegal immigrants coming into Canada from the south U.S. The concept that more immigrants are needed to solve the housing crisis is ludicrous. I guess they’re also going to solve the health care crisis at the same time. I don’t care how many people come to Canada, it’ll just keep increasing housing prices. Expect prices to double in less than 10 years. And expect homelessness to triple, or more.
I don’t even have to unmute them to know that this is Frank.
Thought we were several years past politicians thinking anyone believes this schlock. Had some hopes for Fraser to do better than Hussen at least on the communications side, but so far he’s fallen flat.
The new housing minister, Sean Fraser said that Canadians should accept high housing prices as the new normal. Whatever tack Ottawa is going to take on housing, they will be ensuring that prices stay high. “Our goal is not to decrease the value of their home”
He then proceeded to pull a rabbit out of a hat.
Month to date activity:
Sales: 202 (up 15% over same time last year)
New lists: 465 (up 7%)
Inventory: 2454 (up 12%)
I sense a disturbing tone. You don’t seem to see the value of immigrants or the skills they bring. It is OK if you want to control the flow of immigration but to say you don’t want them here is not a good idea. Boomers need immigration to pay for their OAS, CPP, and other benefits as well as to sell their properties and retire.
We thought of doing the same. Unfortunately double ended clawfoot tubs are fairly rare and the tap end is significantly less comfortable! Also unfortunate is that it is not very energy efficient. We have a hot water heat pump so it is a little better but still extravagant. The final downside is that when I really want it is late fall, winter, and early spring which is exactly when I don’t want to be watering the garden.
You can probably get this outdoors as well.
“I’m a fan of an outdoor bath. Inexpensive, single use water, drains to the garden, no chemicals, and a good way to repurpose a clawfoot tub. Anything with jets is going to both harbor bacteria and aerosolize it.”
Too funny, you could even have two side by side with a table in the middle for the wine.
If you have the cash and want a “spa” like experience in your backyard, splurge on a hot tub of you are committed to keeping it clean.
In 2021 we bought a new large hot tub and have no regrets. It’s really quiet, does require expensive chemical treatments and ongoing balancing but it becomes routine with only a few minutes needed every few days. Definitely well worth the relaxation and evening hangouts. It’s not for everyone but we LOVE having a hot tub. We take care of it, is normally just us in it so don’t need to worry about the dirty issues that we you guys are stressing about.
Looks like rent guideline increases for 2024 in Ontario is 2.5%; N.S. 5%; & Manitoba 3%.
I’m a fan of an outdoor bath. Inexpensive, single use water, drains to the garden, no chemicals, and a good way to repurpose a clawfoot tub. Anything with jets is going to both harbor bacteria and aerosolize it.
that’s odd – maybe this was quite a while ago (older model)? We have one, and it’s very quiet.
We inherited this hot tub with the house – third time this has happened. I’ve come around to the conclusion that I’d be happy if it were just gone. It’s a pretty high-end hot tub, but for the work and money we have to put into it (chemicals, maintenance), it’s just not worth it for the little we use it. For me, it just becomes another chore.
I’m kind of a germaphobe, and so we often end up using some kind of excuse or workaround when we have houseguests and somehow the hot tub is not usable or convenient or whatever….sorry! Apart from that, we’re great hosts, haha!
Just FYI: Our neighbour used to have a hot tub on a concrete patio. It was loud and they kept it on all the time in summer, even night (might be for hygiene reasons), so we couldn’t sleep with the bedroom window open. Must be the same for them as the hot tub was gone after two summers.
I had a 2 person hot tub that I only used by myself for the most part . It was the amount of chemicals I was putting in it that turned me off to having one
Thanks everyone for their input on hot tubs. I will reach out to a structural engineer about strengthening the deck, but most likely have to put it on the ground. Learning about feces and bacteria is somewhat gross, but my wife has always wanted one… so we will have to skip putting the money on the mortgage. Happy wife, happy life, although the info about the grossness of humans has raised some questions for her and we are a ways from purchasing anything….
It is a direct quote from the linked article quoting Charles Gerba, Ph.D., a professor of microbiology and environmental studies at the University of Arizona. However, I agree that it is likely incorrect and you are right. The specific gravity of feces typically falls within the range of 1.01 to 1.05.
Alternatively, take the $15K you want to spend on a hot tub and apply it to your mortgage. Or make it your emergency fund.
It’s called showering before getting into a hot tub or pool. It comes down to the cleanliness of the people and the maintenance of the equipment. I do agree, gross people will have gross hot tubs.
I’m big on health safety, but it’s important to consider relative risk:
Legionella infections are rare in British Columbia. From 1999 through 2008, 34 cases have been reported to the B.C. Centre for Disease Control.
Think about how many millions of people-hours were spent in hot tubs during those nine years.
http://www.bccdc.ca/health-info/diseases-conditions/legionnaires-disease
From: https://financialpost.com/news/canadians-debt-reducing-grocery-expenses-travel
They wonder why I lack sympathy for some that are complaining about it being tough to make ends meet.
Not sure I follow the math. 5 people with .1g each would be .5g. Assuming specific gravity of poop is similar to water (+-5%?) that would be .5ml. A tablespoon is close to 15 ml so it looks like you might be out by a factor of 30.
The average hot tub goer has about a tenth of a gram of feces hanging out on their body. With five people soaking, you have a tablespoon of poop in the hot tub.
You are welcome.
https://www.dailyrecord.co.uk/lifestyle/hot-tub-warning-tablespoon-human-25065073
Today on HHV we learn that feces and hot tubs are a bad combination. Yuckyyyyyyyy.
There seems to have finally been a few sales in the 2 to 4 mil market. Most seem close or at asking.
Marko, what kind of interest are you getting on your cedar hill listing? Looks like it’s priced in the ball park of current market.
Geez, who are you letting in your hot tubs? Remember, it’s not the hot tubs that are disgusting, its who’s in them and who is maintaining them are the disgusting ones. Speaking of disgusting, when’s the last time everyone has had their HVAC, ACs, heat pumps, air filters and etc… cleaned and serviced? Sleep well tonight and breathe easy during the heat wave next week. 😉
meh – no shortage of sickness and disease you can pick up anywhere. I love a good hot tub (without the feces and urine). Is your HW tank at 140 (not the default 130)?
A study was done by Professor Danny Kahneman where university students were given the choice of two bowls that contained marbles. (They would get a prize if they picked a red marble when blindfolded.)
One bowl had ten marbles and one of those marbles was a red marble.
The second bowl was filled with one hundred marbles and eight of those were red marbles.
30% or so of the students thought that the odds were better if they chose from the bowl filled with the one hundred marbles.
We have owned this house since 1998 and I want tax free liquidity. The only problem is my Wife doesn’t…and I love her deeply.
Its in a desirable area 10,000 sq/ft lot 2800 square house. I’m in quite the quagmire here. I’m 50 shes 48 BTW.
I made the mistake of reading this before having supper. I think I have to go lie down;
I almost got in a hot tub once but having observed the humans already steeping in their broth I was overcome with nausea.
It is not just legionella – although that can be fatal – add cryptosporidiosis, giardiasis, norovirus, shigelloses, e.coli, pseudomonas aka “hot tub rash” and mycobacterium avium complex aka “hot tub lung”. Plus when urine, sweat, and feces mix with chlorine this can create an irritant called chloramine, which can cause symptoms like coughing and red, irritated eyes.
When I was a respiratory therapist I saw a few people die in ICU from legionella…that ended my interest in hot tubs. I am sure the newer ones purge and all the crap but still I’ll pass.
I might suggest you google “Malibu Balcony Collapse lawsuit”
I removed the hot tub that came with our house. Home hot-tubs are germ-infested expensive maintenance problems imo. ymmv
Agree completely that there are many competent people out there that could do it but I would be very surprised if your insurance company would cover any issues if there was no building permit and these days all municipalities are very risk averse and insist on an engineers stamp. Even engineers are getting more and more conservative and risk adverse so tend to be “generous” in their calculations. Height above the ground will be a big factor. If it is low enough you might be able to build a pier up from the ground and make the hot tub support independent of the deck structure. If it is very high you probably won’t like the aesthetics of the required structural changes. Supporting a couple of thousand pounds of point load 10 feet off the ground in an earthquake friendly manner is an “interesting” challenge.
99% the answer is ‘no’, unless it was purpose built for this originally.
Officially, you’d need an engineer to figure it all out for you, but unofficially, you might find a construction person who can eyeball it and beef it up. Engineered wood product manufacturers provide (public) online tools for calculating spans and allowable loads for beams and columns. They often have the corresponding Simpson product for attachment as well.
There are many things that can be called an “investment”. That doesn’t make them a good or bad investment or that the investor knows what they are doing.
Buying a condo for rental purposes for example. Would that be a good or bad investment today? The alternative to buying a condo for rental purposes would be the return on equity from a GIC or REIT of say between 5 to 8%. All of a sudden a condo or house as an investment doesn’t look so good anymore.
And it’s the same if you are buying a house to live in. You are giving up the opportunity cost of investing the down payment in other assets while paying interest, maintenance, taxes, etc. that are sunk costs. Of course owning a home has an emotional appeal but buying for emotional reasons would be a stretch to be considered investing.
Perhaps you’re renting a home now for $4,000 a month and have $800,000 as a down payment. Would it be better to buy a house today or invest that down payment in a GIC at 5%?
Better yet, just send them to Texas or Arizona.
Immigration minister Mark Miller said Canada cannot solve its housing shortage without immigration.
That sounds like a contradictory statement as the immigrants will need housing immediately while it will take years to build traditional housing.
But it can be done. What we would need is a bridge between the two. Private enterprise has and does provide such a bridge when developing mega projects such as highways in remote areas by setting up labor camps for temporary housing using trailers.
Take the Saanich Fairgrounds as an example only. A company could lay down temporary sanitary, water and power for hundreds of trailers or recreational vehicles in under six months.
Of course what you DON’T want to do is call them labor camps as that brings up images of razor wire fences and guard towers. Just call them “The Village”.
I’m not up to date on all the rules, but I thought there was also a concern about someone theoretically then just not leaving and forcing you to go through all the residential tenancy stuff & $ to get rid of them – you might want to check into these rules if this is a concern for you. In other words, just having a fixed end-date is not as foolproof as it used to be before the various rule changes a few years ago. Maybe a more theoretical than realistic point, but worth a look. Especially if your 3-month listing price is discounted to what a long-term rental rate would be.
I understand a ‘workaround’ used to be to run a listing like this through Airbnb, which I think then makes it not covered by residential tenancy rules? Sure, then you have to pay Airbnb a cut, but you also get the benefit of whatever insurance their platform provides. Cue over to those folks who view Airbnb as evil personified.
I am interested in putting a hot tub on my deck. I would like someone to say that yes it is strong enough, or no it is not strong enough and here is what would need to be done to make it strong enough. Ideally that person would be able to do any work that would need to be done. Does this group have any suggestions for who I might try contacting? Thanks
They 100% will take stock portfolio as collateral.
Infrequent poster. I’m currently staying in an Airbnb in Paris where the family goes away every summer. They have it all set up very turn key and can accommodate short stays. I’m thinking we might do something like this in the future – rent out our unit for 2 months while we go away in summer. There are professional companies that do 100% of the management – including cleaning, all ads, responding to guests etc. The money is paid to the company who then pays you out (after they deduct their fees).
Go to the bank and ask for a loan, they don’t want your stock portfolio for collateral, they want your home.
Your primary residence is an investment. It’s capital good that provides a yield – the rental value – and possible capital gains and losses down the road
The difference with other investments is that you are both the owner and customer, i.e. you are consuming the service that the residence provides.
You may not think of it as an investment, i.e. you may not be sensitive to investment returns, but that doesn’t change the above.
Let me revise the previous comment. The residence may not be considered an investment, but the land it’s sitting on is.
The ability for a residence to generate an income by renting out part of it also makes it an investment. Your primary residence is also considered an asset that is factored in calculating net worth, along with your other assets which are investments.
I disagree, a primary residence is an investment. It all depends on your point of view. Renting is definitely not an investment. Your residence is an investment that serves two purposes. It is a savings device, usually appreciates and provides a place to live instead of throwing money away on rent. Simply ask yourself, what group of people are better off financially? Home owners or renters. The answer is obvious.
A property is NOT an investment. Only an investment property is an investment. For an investment property, one calculates ROI, ROA, Cash Flow, etc. before buying. For a primary residence, it is all about one’s wants and needs and if they can afford it.
Frank it’s about public perception. The housing situation is in a crisis and the public are looking at someone to blame. Residential investors are an easy target just as vacation rentals have become.
The government would just set a Valuation Day for residential investments say December 31, 2023. That would be a deemed disposition date to crystalize the investment property. The regular exemption would apply up to that date. After that date the tax changes would be in effect.
The government has done this several times in the past. If the media starts to report that the politicians are selling their investment properties then my guess would be that plans were afoot to make changes.
Property is an investment: residential, commercial, farmland, apartments, etc… Why should it be treated differently from stocks, bonds, precious metals, etc… Just because the government has introduced excessive demand for property shouldn’t allow them to punish investors. It’s not investor’s fault we’re in this predicament.
If home values declined by 20 percent, owners would most likely continue to make their mortgage payments.
What might change is that investors would purchase fewer homes and become net sellers of real estate thereby increasing the inventory on the market faster than any new construction could ever accomplish.
The downside is that tenants will be displaced and may have the effect of increasing rental rates in the short term. That may eventually encourage more 20 to 34 year olds to relocate to Alberta where their wages are higher, taxes are lower, and homes are less expensive.
I am surprised that the government has not said a word about changing the capital gains exemption on residential investments to encourage investors to divest their holdings. Whichever party that forms the next government will likely have to make that decision.
Introvert-People lie like crazy on polls.
Infrequent poster you should check into renting the home furnished to travelling health care workers on a three month basis. The monthly government allowance is higher than that of leasing long term.
Infrequent u might want to furnish it and maybe talk to Premier it’s kind of they’re bag
The worst crime ever is wasting of time
-Irfan Mamoun
Nonsense. It’s not a legal definition, it’s just the definition. Look in a dictionary. When you look at crime stats do you actually expect it to include data on speeding? You ever seen a crime drama about speeding tickets and jay walking? Wait until you see the one about building an illegal suite. Everyone watch out in Oak bay, it is the land of criminals, going 10 over in a 35 zone. I was having trouble joining the hell’s angels for a bit, so I went jaywalking downtown, now I’m a full patch member.
Definitely furnished. No question. Have you checked the price of moving?
What would posters here think is the likelihood of being able to rent out a two bedroom house unfurnished for a period of three months only? Pretty tough to pull off for that short period? Would it make much of a difference if it was furnished?
Where are the people leaving the U.S. west coast going? Not Alaska.
In my experience the people that complain most about property taxes are those that pay little income tax or other taxes (e.g. earning a lot of unreported income, or house rich-cash poor retirees).
The beauty of property taxes is that they are simple to administer and nearly impossible to evade. The impossible to evade part angers some people.
For my part I’d prioritize cutting income taxes much more so than property taxes
Interesting things happening in America’s west coast cities and in New York as people are leaving due to high home prices, yet rental rates continue to climb.
Will Canada’s California be far behind?
A fluff piece done by Zoocasa relying on faulty logic and an incomplete analysis.
BNN- Canadian pension plan looses 5 billion in Q2. (Net investment)
starter home in Oak Bay at $1.5M pays over $5k tax, high end home in Uplands pays slightly above $100K. I guess because the population in Oak Bay is small, that’s why not included in the list (may be).
Fair point. The list was of 30 B.C. municipalities, and Oak Bay didn’t make the cut, I’ve updated my post to reflect that. It looks like they included the 30 biggest cities, and then threw in Whistler because it has the lowest tax rate in B.C.
Curiously, Oak Bay News wrote an article on the same topic, and didn’t mention why Oak Bay wasn’t on the list https://www.oakbaynews.com/news/9-greater-victoria-municipalities-crack-list-of-b-c-s-highest-and-lowest-property-tax-rates-539247
This can’t be true. Oak Bay had the highest property taxes in Greater Victoria back when Leo made this post:
https://househuntvictoria.ca/2016/04/05/municipal-tax-rates/
I can’t imagine things have changed that much since then.
Yes, great idea. To solve the housing crisis, we need a building boom (to at least exceed the population boom we are seeing), and there should be incentives for developers to make that happen fast. That would include lower taxes, subsidies, grants, reduced regulations etc. to developers building needed property types.
The current system imposes enormous taxes and regulatory burden on new builds with (compared to other places) low property taxes. Personally I’d be happier with cutting the tax burden on new builds to basically zero and making up the difference with a modest increase in property taxes, but I’d defer to better and more informed minds on the matter.
B.C. is a bargain for property taxes in Canada, at least compared to Ontario and Manitoba.
The highest taxed city in B.C. (on average price home, on 30 cities listed in previous graphic) is Saanich at $4,275. compare that to Toronto at $7,969 or Winnipeg at $9,111. ouch !
https://www.zoocasa.com/blog/property-taxes-canada-2023/
Builder of RidgeView Place in Langford has filed for bankruptcy
https://www.timescolonist.com/business/builder-of-ridgeview-place-in-langford-has-filed-for-bankruptcy-7382680
Highest property tax paid among 30 municipalities in B.C. (on average home) is Saanich at $4,275. Victoria (city) is close to the top at $4,071. Both are higher than city of Vancouver at $3,000.
https://storeys.com/zoocasa-british-columbia-bc-30-municipalities-highest-property-tax/
Most of them work for the government, its called job security.
Max lol and folks keep asking for more taxes and regulation just can’t get enough
Federal tax, Provincial tax, Municipal tax, capital gains tax, Speculation tax, Vacant land tax, Carbon tax, Property transfer tax, Vehicle transfer tax. In the end I think we only bring home about 15% of what we actually earn.
Now Patriotz, that’s a straw man argument.
“A straw man fallacy occurs when someone takes another person’s argument or point, distorts it or exaggerates it in some kind of extreme way, and then attacks the extreme distortion, as if that is really the claim the first person is making.”
Does anyone know what 1686 Warren Gardens sold for?
That’s complete nonsense. Property taxes in BC are among the lowest in Canada, and low by US standards too. And I mean the $ amount, not just the rates.
In fact BC’s low property taxes are partly responsible for the unaffordability of RE, because they encourage people to use RE as a place to park money rather than just a place to live or receive rental income.
Sorry Island_JKT but you fell into a Soper trap. He baited you. I understood what you meant as you were using the word crime in a colloquial conversation manner not as in the legal definition.
Yes, they do.
While every crime violates the law, not every violation of the law is a crime.
https://en.wikipedia.org/wiki/Wrongdoing#Legal_wrong
Guess I won’t be moving to Hawaii any time soon.
Wait? Speeding isn’t a crime??? Do the police who give tickets and judges who review disputes know this???
https://www.hawaiinewsnow.com/2023/08/09/coast-guard-joins-brush-fire-response-lahaina-where-crews-continue-battle-wind-whipped-flames/
“Hawaii News Now updates that the historic town of Lahaina “has been nearly completely reduced to rubble” as seen in the aerial footage captured from a Hawaiian Airlines flight. The fire is believed to have dominated the heart of Lahaina, where the famous banyan tree stands.”
Seems highly unlikely to me. Just becomes a legal non-conforming use if the zoning changes. Would still be allowed to operate short-term rentals as bylaw changes, according to the Supreme Court of Canada, don’t have retroactive effect in most cases. Given that people buy a legal use like this for a higher price it seems very unfair to pull the rug out. It is the kind of case that would lead to litigation imo and I can’t see the province or muni winning.
Thanks Alexandra:)
Very kind of you/
Great to see you back Deryk, I miss your marvelous paintings as well.
Generally speaking, transient housing has a mixture of vacation rentals and long term tenancies. Those that are active airbnbs will sell for a higher price as furnishings and intangibles are typically included. If the government were to restrict appropriately zoned vacation rentals then the owner would likely suffer a loss in value.
Discounting that they’ve done this for as long as legal rules existed, this isn’t crime. Just like jaywalking or speeding isn’t crime.
For real the northern junk property sitting on prime land downtown wouldn’t be junk if property taxes were higher. The Janion wouldn’t have sat empty for decades either.
I have nothing relevant to add to the discussion except perhaps to comment that people seem to get disproportionately mad about property taxes.
Housing-crisis solvers are always saying that property taxes are so low.
“People are turning to crime ?”
Yes.
Example: People are renting out properties that are not legally registered and do not meet the required rules.
And yes…I do not expect our bureaucratic governments to change.
so that is two separate “insider contacts” saying similar things?? Lol 🙂
People are turning to crime to pay their property taxes?
Unfortunately Derek, that will never happen. They are bureaucrats, their job is to create bureaucracy. And to dole out money to their supporters.
What I have heard (which may be rumor) is that the NDP is considering giving the power to municipalities to remove AirBnB grandfathering clauses.
I do find it interesting that when our governments try to fix a problem, they do not look far enough down the chain to find the source of the problem. It’s easy to get tricked into focusing on the link of the chain that is broken.
We don’t look at the massive weight hanging at the end of the chain which is causing the problem to begin with.
It’s never one thing of course. But people do what needs to be done to survive.
For example: Property taxes are so high that people are forced to find an extra source of money to cover those costs and so they take in a foreign student, rent a room out, rent their basement suite out, or do air BNB. Some turn to crime or other illegal activities.
If the government decides to kill air BNB then people will turn to something else.
Where and how that balloon bulges out is anyone’s guess.
I believe that governments need to shrink. Taxes are killing the goose that lays the golden egg and we now have a wild west as people scramble to try and stay in the game.
Some people might argue that taxes are higher elsewhere. But it doesn’t matter. Those places are not functioning either.
Many opt out of the game all together….take a look at our streets if you don’t believe me.