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June 17th, 2008 at 2:56 pm
Note there are private MIs in the market as well, not just CMHC.
Yeah, that is a head scratcher for sure. Why would private money join this tax payer funded race to the bottom?
I always make the point of reading Genworth’s financials and check out their conference calls. So far no alarms or concerns out of Canada. Rather they were pleased with profitability of Canadian operations.
June 17th, 2008 at 2:47 pm
I always knew Krish-Krash-brownstain was multi talented.
Can the blog be fixed so that whenever he makes a comment there’s just a link to this clip instead? It would be more entertaining, and at least it would make SOME sense.
The high pitched woman’s voice is like something out of The Exorcist.
June 17th, 2008 at 2:40 pm
“I’d be all for regulations that require CMHC to increase minimum downpayment whenever price/rent multiples go above a certain threshold.”
I’m pretty sure you’ll get your wish in a few years. Note there are private MIs in the market as well, not just CMHC.
June 17th, 2008 at 2:33 pm
Now I know what Krrish does at work all day long.
June 17th, 2008 at 2:27 pm
Rob A.
“I think that there should be a tax so more people can enjoy downtown Vancouver, and get into the action here.”
I thought you were leaving? Didn’t you say a couple of weeks back that you’d had a job offer elsewhere and you were outta here? The only “action” that Downtown has that other parts of Vancouver don’t also have is drug peddling, prostitution, extremely high levels of panhandling.
I live a 20 minute drive from Downtown and yet I have a theatre, many nice restaurants, a wide variety of grocery stores, a dozen or so coffee shops in walking distance. Nearly anything that I could want is within walking distance in fact. Certainly anything you can reasonably claim as an advantage there I also have here.
June 17th, 2008 at 2:24 pm
The real problems are inflation and the incorrect pricing of risk (cheap money through commoditization and the government nationalizing mortgage risk).
If rates go to where inflation is back under control and risk is correctly repriced, the actual cost of holding a vacant property come to bear and this issue will be moot.
June 17th, 2008 at 2:22 pm
I am against it. Interference with market forces is a bad idea.
On a related note, I’d be all for regulations that require CMHC to increase minimum downpayment whenever price/rent multiples go above a certain threshold. That would have kept the situation from getting out of control. CMHC is the real culprit.
June 17th, 2008 at 2:22 pm
As usual if there’s a problem in BC it’s time for a new tax.
June 17th, 2008 at 2:05 pm
Thanks for the info regarding the 18k number.
“that is really beside the point of wither or not this is a good idea”
I agree with you that it is beside the point, but I disagree that a speculation tax is a bad idea.
I think that there should be a tax so more people can enjoy downtown Vancouver, and get into the action here.
June 17th, 2008 at 2:02 pm
Flipper tax is a great idea. It’s very simply. Just police it like the income tax.
June 17th, 2008 at 1:51 pm
“I think the 18,000 number is out to lunch”
It seems to gibe with other data points. Look at immigration, supply of new units and people/unit ratio. It looks to me like Vancouver has been producing more places for at least 5 years than we have people to fill them.
June 17th, 2008 at 1:13 pm
I think the 18,000 number is out to lunch but that is really beside the point of wither or not this is a good idea. I know it won’t be a popular opinion but this is a free country if someone wants to buy a condo and never even set foot in the place it isn’t my business to tell them otherwise.
June 17th, 2008 at 1:11 pm
“Are you suggesting landlords will kick people out to get Olympic renters? Any idea how hard it is to get a tenant out of a place, even if they’re not paying the rent?”
Yes, some landlords are going to try to make a killing, but most will fail. Also, many tenants don’t assert their rights. They will get tricked or pressured to leave for a few months.
Example: One guy I know has agreed to leave his apartment around the time of the Olympics at the request of his landlord. He believes his rent is below market and will stay that way when he moves back in. I suggested he stand up for himself, but he says “landlords are like gods in Vancouver”. Sighhhh
June 17th, 2008 at 12:57 pm
I don’t believe the “18000 vacant condos” report is anywhere online. That number first showed up in April when a BC Hyrdro spokesperson mentioned it during a meeting at City Hall about the EcoDensity proposal.
http://communities.canada.com/.....ility.aspx
As far as I know, BC Hydro has never published the report in question.
June 17th, 2008 at 12:48 pm
The 18,000 figure comes from housing centre director Cameron Gray in his EcoDensity presentation to city council on April 15, 2008. Here is the quote from his presentation:
As far as I know, we’re still waiting on getting the official confirmation from the city. That said, if it were untrue I’m surprised no one has come forward to challenge it.
I recommend taking a look at Mr. Gray’s presentation. It’s a good read.
June 17th, 2008 at 12:47 pm
The 18K figure came from David Cadman in a COV council meeting, he has been unable to back up the claims after being asked for the source. Yet it continues to be passed along as gospel. No one knows what the acutual figure is.
I find it interesting that anyone would suggest we copy Germany, the country has been on a downward spiral for almost 2 decades now. But lets not let facts get in the way.
Those that say the market will take care of the problem are correct. Government intervention always, I repeat always makes the problem worse. Cough *rent controls* Cough.
June 17th, 2008 at 12:46 pm
“I didn’t say “everybody” wants to do anything. And there is no primary source because it is an OPINION, my opinion.”
my point exactly.
June 17th, 2008 at 12:45 pm
“Are you saying you don’t like eating, drinking and sitting around? I’d be down there right now if I didn’t have to work for a living.”
i’m saying it’s not likely to be the primary reason for “everybody” to choose where to live. like you said, you have to work. some people have to raise families. some people prefer MOUNTAINS!!! the OCEAN!!! the OLYMPICS!!!
deciding to mortage your life away for the sake of COFFEE!!! strikes me as really incredibly silly.
i suppose if one were single and didn’t need much beyond their next shot of caffeine, that might be the life. but even then, picture yourself doing nothing but drinking coffee all day for the rest of your life… well… i mean, even retirees sometimes decide they have too much time on their hands and choose to do something else other than drink coffee.
June 17th, 2008 at 12:20 pm
“Can you please provide me with a link to the primary source of this info? I find it hard to believe “everybody” wants to spend all their time in cafes and restaurants. In fact, i find it stupid and a waste of money.”
I didn’t say “everybody” wants to do anything. And there is no primary source because it is an OPINION, my opinion.
So does anyone have the primary source for the 18,000 number? Anyone at all?
The closest I could find is this: BC Hydro: 18000 grow-ops suspected.
http://www.canada.com/vancouve.....mp;k=63953
Is it a coincidence that the numbers (18000) are the same?
June 17th, 2008 at 12:00 pm
“Also, there will be huge stresses for renters because of the Olympics, as people get displaced by greedy landlords and suddenly realize they will have to pay much steeper rents.”
Are you suggesting landlords will kick people out to get Olympic renters? Any idea how hard it is to get a tenant out of a place, even if they’re not paying the rent?
Maybe landlords with places that become vacant in late 2009 will hold off on renting to the general public until after the Olympics. But Olympic rents won’t make up for more than a couple months of the place sitting vacant. And if that happened there would be a glut of stock in March 2010.
It’s actually renters who are in the driver’s seat as they can easily vacate and sublet their place for 2 weeks.
June 17th, 2008 at 11:57 am
Shouldn’t the city be happy with this?
scoop, we don’t vote for a city, we vote for a candidate.
I’m all for it. No need for me to go on as Charlie and Patiently Waiting said it best for me.
June 17th, 2008 at 11:53 am
Too difficult/costly to determine/police occupancy.
All they need to do is impose the tax on anyone who buys and sells within a two-year period — that’s how it has been successfully done in Germany, and that’s why Germany hasn’t participated in the world-wide housing bubble.
June 17th, 2008 at 11:53 am
Agree with burden of proof, it would not be hard to implement…
What about landlords renting on the low and not declaring the income? Sure, you can’t write off the interest on your mortgage but what if there is little or no mortgage; I have met too many first-time landlords that are pocketing rent without declaring; and they brag about it???
June 17th, 2008 at 11:52 am
By the time this tax is implemented, the bust will have weeded out most of those empty condos anyways… It’s a good idea but difficult to enforce, perhaps do what some states down south do and tax properties differently if they’re owned by out-of-towners. Or perhaps just tax any investment property, or non-primary residences differently.
June 17th, 2008 at 11:49 am
flip this – I read that article too. A big difference between a housing bubble and the other examples you mention is that with a housing bubble there are many more unwilling market participants that suffer the effects. If tulips go crazy, I can avoid the pain of the bubble bursting by not buying tulips. But I need a place to live.
June 17th, 2008 at 11:49 am
Richard,
Are you saying you don’t like eating, drinking and sitting around? I’d be down there right now if I didn’t have to work for a living.
June 17th, 2008 at 11:43 am
“Downtown Vancouver is a great place to live because of the cafes and resturants. It’s where the action is.”
Can you please provide me with a link to the primary source of this info? I find it hard to believe “everybody” wants to spend all their time in cafes and restaurants. In fact, i find it stupid and a waste of money.
June 17th, 2008 at 11:42 am
Downtown Vancouver is a great place to live because of the cafes and resturants. It’
i heartily agree, YT and CH make for great living. Did you know that there are 181 sushi places in DT Van. I’ve tried 15 so far.
Renting down here is awesome!
June 17th, 2008 at 11:41 am
I agree with Burden of Proof that it would not be that tough to implement. Raise residential property taxes and then offer owners a rebate if they rent out their suite. Like most of our taxes, a self-reporting system backed up by audits and stiff penalties (even possible criminal charges) for false reporting or evasion.
But why would the city have a problem with empty units? They use no services, but pay full property taxes. Shouldn’t the city be happy with this?
I do get that empty units decrease the housing supply and put pressure on prices, but I’m not convinced the city will do a better job than the market of sorting that one out.
June 17th, 2008 at 11:24 am
Downtown Vancouver is a great place to live because of the cafes and resturants. It’s where the action is. So I find it hard to belive that there are 18,000 empty condos in Vancouver.
Can someone provide me with a link to the primary source of this info?
June 17th, 2008 at 11:18 am
“I’d rather just let the market take its course.”
This bubble was not the market taking it course. Government interference actually created this bubble, and government interference will be needed to reverse some of its damage.
June 17th, 2008 at 11:15 am
I am 99% certain that this would exceed the powers that Vancouver city is granted under its charter and about 100% certain that Gordo would refuse to change the charter to let the city do it.
But maybe that’s the strategy – bait the Liberals and the NPA into explicitly supporting the RE speculators instead of tacitly as they have been doing.
June 17th, 2008 at 11:10 am
The “next” bubble, anyone have a comment?
June 17th, 2008 at 11:10 am
from Van Sun comments:
home owner
Tue, Jun 17, 08 at 01:05 AM
Obviously the 4 of you don’t own a home.
ANOTHER HOMEOWNER
Tue, Jun 17, 08 at 09:45 AM
I agree with HOME OWNER
must be regulars
ditto…
ditto ditto….
June 17th, 2008 at 10:48 am
I don’t think speculation should be taxed. In the long run bubbles serve an important role: they create cheap and abundant supply of a commodity in question. For example, dot com bubble created excessive and cheap digital fiber capacity, railway bubble of the late nineteenth century helped to create railway infrastructure, and reduced shipping freights. Current overinvestment in the real estate will most likely result in cheaper housing few years down the road. The abundance of a particular “post-bubble” commodity will in the wrong run subsidize other parts of the economy, and is probably cheaper for the society then implementing any kind of tax.
June 17th, 2008 at 10:40 am
Hey, Comments are on for the Sun article today. Not alot of bullish sentiment there. Why not add your say – I have. Here’s the link again:
http://www.canada.com/vancouve.....0883a29500
June 17th, 2008 at 10:38 am
After reading Burden of Proof’s post, I believe an anti-speculation tax is doable.
By the time Robertson is mayor (I believe he will win), the mood in Vancouver will be even more receptive.
Even in wealthy Westside ‘hoods, people will see abandoned houses with waist-high grass on their streets. Whether it means going after speculators or banks, Robertson will happily take action.
Also, there will be huge stresses for renters because of the Olympics, as people get displaced by greedy landlords and suddenly realize they will have to pay much steeper rents. The pressure will be on to make this empty housing stock available ASAP.
June 17th, 2008 at 10:13 am
hmmm?
1. politician trying to get elected? check
2. promises are cheap? check
3. ‘nuf said
June 17th, 2008 at 10:01 am
Any link to the Hydro study? 18,000 empty units being empty for 12+ months is a lot more than I would have guessed; anyone know when the study took place and/or the definition of “Vancouver”. Given that definition of “Vancouver” it would also be interesting to see what % 18k units equates to.
June 17th, 2008 at 9:44 am
The above should say “(insert hated thing here) tax” – i misused the pointy brackets.
June 17th, 2008 at 9:41 am
Did this mayoral hopeful offer any further detail? Rather than just an empty proposal of a ” tax”?
Personally, I’d rather just have Mr. Market do its work. Speculating carries risk. Taxing speculators when they’re doing well is like taxing good luck.
By the time we’re done defining the whole thing, the only ones making money will be the lawyers.
June 17th, 2008 at 9:40 am
Property taxes are already higher for non-primary residences. I think Gregor needs to be patient and wait for prices to fall. At that point the “speculator tax” will seem unnecessary compared to some of the capital losses already in the oven. FWIW, I’m sure that’s exactly his plan.
June 17th, 2008 at 9:35 am
I’ve never heard anything so stupid!
When the condos tank, and we all agree that they will, I guess we’ll be giving the speculators tax credits for their loss? Get real!
June 17th, 2008 at 9:10 am
The tax would deter spectulative activity. Therefore it would put downward pressure on RE prices to the extent that some spectulators are taken out of the demand side of the equation. More affordable real estate is a popular thing and the tax would be a popular policy amoung everyone except speculators.
As for the administration of the tax, it will not be difficult. All RE that is not a primary residence will be taxed unless the homeowner submits a residential tennancy agreement signed by both parties to prove that the home is occupied.
Like the Income Tax Act, the speculator tax will be a self assessment system. Anywone who fails to report an empty condo by the reporting deadline will be subject to penalties of perhaps two to three times the tax otherwise payable. There could be greater penalties for intentional evasion.
No doubt, a tips line will be set up for people to inform on their friends and neighbours. Is it fair that you pay the tax while your buddy flaunts the rules?
Some people will submit a fraudulent agreement but there are allways people who submit fraudulent tax returns. The penalties for them will be very high.
Determination of what is the principal residence that is not subject to tax is easy. It is done in the administration of the Federal Income Tax Act all the time.
If anyone disagrees with their assessment, they can appeal it with ultimate recourse to the courts, as is the case with all taxes.
June 17th, 2008 at 8:54 am
The problem with the market just taking its course is that everyone but the really savvy get skinned. I’ve been watching the market take its course in the states, and it’s taking out people’s pensions as it goes – I have american family, educated folks in professional careers, and things are looking difficult for them especially coming into “retirement”. They made mistakes – I was the only bear around making squeaking noises – but they believed that it was different this time because that’s what everyone but their Canadian relative from the west coast was saying. And who can trust left coast Canadians a whole generation younger? I couldn’t blame them, really. I watched them go up in the dot com bubble too. The bubble-blowers are the majority in the market, or else there would be no bubble.
The bubble blowing boomers not going to be economic engines for much longer. Their kids are less well positioned than they were to help their now poor parents as they retire, and the wealth of the middle class gets skimmed off the top and concentrated in each bubble.
Market forces are the self-same agents of hysteria and mass delusion that lead to this bubble. The market is a mob.
Although I think the market will self regulate over time, I think it’s also quite possible that the amplitude and severity of the demand/supply swings get big enough that society becomes destabilized – because if people get too vulnerable, they start chucking rocks. If the pendulum in the market swings back during all the boomers retiring and the global climate changing and the heartland producing less yield, then the market may well take social stability down with it.
June 17th, 2008 at 8:40 am
Primary home vs Secondary home vs Rental property
Unoccupied would fall into secondary home and should be taxed accordingly.
Second factor is residency. If you’re not a resident of BC and not renting the property out, then it should also be considered 2nd home and taxed accordingly regardless of the level of occupancy.
June 17th, 2008 at 8:36 am
I don’t see this proposal as very politically unpopular. There can’t be that many Vancouver voters holding or planning on holding vacant condos, most vacant places are likely owned by people from out of town.
The real problem as others have pointed out is the unenforceability of the proposal. A flipping tax is based on sales within a set amount of time which is provable. I don’t see how you can PROVE a condo is vacant without an invasion of privacy.
June 17th, 2008 at 8:21 am
It would be interesting to see how this actually pans out because I believe this position will actually hurt Gregor’s chances.
On the contrary, the way to go about this is to offer a tax break to those who own condos but rent them out. In effect it would be like a kind of home renter’s grant, similar to the home owner’s grant.
June 17th, 2008 at 8:08 am
A politically popular, but unenforcable policy.
To avoid the tax, people will just put a TV in their empty suite and either leave it on, or put it on a timer.
June 17th, 2008 at 7:49 am
Too tough to implement certainly, and pretty left-wing, no surprise from Robertson. I’m not of the opinion that speculation “hurts” more than anything else in an free market. Its like you just bought a giant SUV last year and you’re crying about gas prices, “lets tax big oil to death!”, etc.
I’d rather just let the market take its course.
That being said, the Vancouver market could be in the crapper by the time the election comes along, and Robertson could get huge votes based on this. It might turn out to be a great vote getter rather than realistic policy.