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October 2nd, 2009 at 5:29 pm
@23man:
Well based on current price/rent one might think so, since LV is now down over 50% from peak. However the fundamentals for LV (i.e. real rents) look pretty grim looking forward due to declining US disposable income (which the local economy depends on) and climate change (water supply, air conditioning).
October 2nd, 2009 at 5:22 pm
@Hovering:
Wrong, the proceeds from the flip would have to have been invested in another taxable investment to defer the captital gains tax.
A principal residence is not considered a taxable investment on either the buy or sell side.
October 2nd, 2009 at 5:16 pm
Nothing new here folks. Still a market that is overdue for a correction and has lots of room to fall. Move along ladies and gentlemen….move along now.
October 2nd, 2009 at 4:42 pm
@crabman:
LOL Crabman.
October 2nd, 2009 at 3:51 pm
patriotzed
I think you miss the point of the G&M article I linked. THe author and briefly the COnservatives were proposing changing the captila gains laws so that selling a ppty would not attract capital gains tax so long as you reinvested the $ within 6 motnhs. My point is this change (if doen) would be crazy and fuel RE speculation as I think one could sell one’s principal residence at the same time as flipping a condo and used the proceeds from both to buy a new principal residence. One year and a day later the sale of the second residence would attract no capital gains thus one could speculate in real estate and pay zero capital gains
madness
October 2nd, 2009 at 3:47 pm
@scullboy:
I felt the exact same way back in LA in 1989. I was ready to buy my first house or condo after being in apartments my entire life. Unfortunately, this was the height of the last bubble and I couldn’t afford anything I liked. I thought a lot about moving, and even took a few trips to scout out some other cities. In the end, I just rented until 1993 and the problem took care of itself. I bought a small house for about 50% off peak prices.
I have no doubt this current bubble will also pop. So, like 1989, I’ll rent while I wait it out. (But if you can convince enough of those other people to move, it will speed things up!) ;^)
October 2nd, 2009 at 3:45 pm
I had always heard the famous anecdote that you know that a bubble will finally burst when you hear investement advice from your shoeshine guy, etc.. etc..
Well, my buddy who works as a flight attendent just advised me that now is a great time to buy an investment property in Las Vegas. He’s been talking to a few co-workers about it and wants me in on the deal. He also just bought a place in Calgary (5% down, 35 yr mortgage). Although I’m realistic about the fact that the govt will keep ultra low interest rates for the next year (at massive future cost to our country), the end will come… eventually. Patience, all.
October 2nd, 2009 at 3:39 pm
@Hovering:
No.
The house you are living in at any given time is your principal residence. You are not liable for capital gains tax when you sell it. You are liable for capital gains tax on all other properties that you sell. And remember if you move into a non-principal residence and make it your principal residence, that is treated as a taxable sale as of the date you move in.
October 2nd, 2009 at 3:15 pm
patriotz says
“No, a change in use to principal residence is not a reinvestment for tax purposes now nor would it have been under the proposed changes. It’s treated as a sale, period.”
Ok, lets say I bought House #1 and moved in. On the side I bought and flipped condos. One year and a day later, I sold house #1 (principal residence therefore no capital gains tax on the profit) and used that $ plus the profit from my last condo flip to buy house #2.
I move into house # 2 and live there for a year and a day. I continue flipping condos on the side.
Repeat
I think I have avoided paying any capital gains on any of the properties I sold.
No?
October 2nd, 2009 at 2:41 pm
@scullboy:
I’m at exactly the same point, same age bracket, good savings from when I got out of real estate 2.5 years ago but just not seeing the jobs here even if prices do decline significantly.
The East Coast looks very interesting, PEI looks good if interested in politics (they have all the same federal requirements but a miniscule population) as it is pretty easy to get some kind of federal posting. But I’m thinking South of the border. I’m lucky (or unlucky depending you you look at it) in that I have very specialized expertise such that visa’s are easy to acquire… at the same time, there are only a handful of “good” companies that use people with my experience thus limiting the places I can go.
Hmmm, minister of XYZ in PEI sounds not bad…
October 2nd, 2009 at 2:35 pm
I find it hard to believe that in 2001 vancouver had more head offices than calgary.
October 2nd, 2009 at 1:08 pm
@scullboy:
Ever?
Canadian Pacific Airlines
BC Railway
BC Hydro Gas & Railway
Pacific Coast Terminals
Versatile Pacific Shipyards
Bank of BC
Vancouver Stock Exchange
McMillan Bloedel
Western Canada Steel
Ioco refinery
Westcoast Energy
Woodward’s
Microtel Pacific Research (MPR)
Etc.
Vancouver is a leading loser in the head office game
But but but… wasn’t Gordo supposed to have turned things around from the dark days of Glen Clark?
“I’ve given up trying to figure out this town…” « Vancouver Real Estate Anecdote Archive Says:
October 2nd, 2009 at 12:55 pm
[...] are a good number of non-owners exhausted and demoralized by Vancouver RE price action. This from scullboy at vancouvercondo.info Oct 2nd, 2009 at 11:29am [...]
October 2nd, 2009 at 12:53 pm
@Hovering:
No, a change in use to principal residence is not a reinvestment for tax purposes now nor would it have been under the proposed changes. It’s treated as a sale, period.
I agree with everything else – the proposed exemption would have amounted to a lifetime capital gains holiday for the rich and speculators. As far as I know less than 10% of Canadians ever incur taxable capital gains under the present tax structure.
October 2nd, 2009 at 12:45 pm
PorkyFlu Says:
October 2nd, 2009 at 11:05 am
What I’m saying is why bother supporting this shit? This place is an utter dump and by living here you are supporting everything you rail against on this blog. You are a hypocrite. Myself I am leaving soon. ——–
——–
Good, cya then. Close the door on your way out.
Vancouver may have its issues, but it beats most other places in Canada. Lot’s of places overseas beat Van, however.
October 2nd, 2009 at 12:16 pm
http://www.theglobeandmail.com.....le1306445/
I read this article a couple of days ago and I can’t get the stupidity of it out of my head. The author is lamenting that the Conservatives broke an election promise to do away with the capital gains tax.
Capital gains attract taxes when you sell capital property such real estate (unless it was your primary residence -lived in it for at least a year) stocks, bonds, mutual funds etc..
Apparently the Conservatives considered eliminating capital gains taxes so long as you “reinvested the money within 6 months”.
As I see it this idea would only fuel the speculative disease under which we are now suffering. Stocks could be bought and sold without tax consequences. RE speculators could keep flipping houses until they settled in one for a year and then sold it – without paying tax – only to start flipping again.
my gawd the ideas people come up with to keep the status quo going ! It makes my head spin. I can’t wait to see what our “leaders” come up with over the next few years.. the mind boggles.
October 2nd, 2009 at 12:06 pm
@rentah:
I have a couple of problems with this. First, as I have said previously, asset inflation is not a source of wealth. It simply creates the illusion of wealth, and a vehicle for the transfer of wealth from the stupid (the buyers) to the smart (the sellers). Maybe that’s what he meant but he could have said it better.
Second, nobody has to participate in asset inflation, because the only things people need to buy are consumables, by definition. Nobody ever had to buy pets.com, and nobody ever has to buy a house either. And asset prices inevitably must revert to fundamentals. Because of this, asset inflation does not truly represent debasement of the currency – just a temporary mispricing of capital. Debasement of the currency is caused by consumer price inflation.
As I have said before, just say no to overpriced assets.
October 2nd, 2009 at 11:52 am
@scullboy:
Yip our family feels alot like you. We’re in our early thirties and just starting our family. For now, we’ll hang in here for awhile longer and see what happens. However niether of us feel married to living in Vancouver and if we can provide better for our family somewhere else we’ll move.
As a side note, I noticed that recently housing prices in places like Ottawa, Halifax and Montreal have gone above pre-reccesion highs. Interesting development anyway…
October 2nd, 2009 at 11:29 am
Porkyflu, I am starting to get where you’re coming from.
This town seems to have three classes of people:
Upper class, comprised of gangsters, wealthy offshore types and people who made it big in the housing boom
Middle Classes, who are barely keeping their heads above water but are pretending they can afford their own lifestyle
Everyone else.
I’ve never met so many gangsters as I have in Vancouver and bear in mind these people admitted they’re gangsters. One kid got kicked out of culinary school when the head of the school discovered he was only using his education as a cover. And that’s just the kid they happened to catch.
I’ve given up trying to figure this town out…. I’m giving it a couple more months, then I’m packing it in for somewhere else. I’ve spoken to a lot of people between 35 – 45 who are saying the same thing….. “Yeah it’s pretty but I’ll never be able to afford more then a 2 bedroom apartment I’ll have to share with a roommate.”
My own roommate is preparing to leave. He’s in construction. He runs fiber optic cable through new buildings. He was saying the whole construction industry is set to dry up completely after the Olympics.
It’s sad but to be totally blunt, I don’t think natural born Canadians can move to Vancouver and compete. Guys like Supraboy can because they live with Mummy and Daddy but that’s hardly competing, it’s just extending adolescence indefinitely. I think you’ll all agree his posts illustrate my point perfectly.
I’s say the city will collapse in on itself when all those 35-45 years olds migrate somewhere else, but after three years I can figure out how Vancouver ever functioned as a city. There aren’t a lot of head offices. It’s expensive to start a business here. Except for construction and tourism, there just aren’t many industries to support the population.
I know a lot of bears are patiently waiting with loads of money to buy a cheap house but if what’s left of the local economy goes tits up, do you really want to live in a city with high unemployment? There’s a pretty good chance you’ll lose your own jobs and then, you’ll just eat away at your cash while you look for another. You won’t be quite as screwed as everyone else, but you’ll be screwed nonetheless.
Frankly I’m starting to think East Coast. It’s a low level of economic activity but everything is quite a lot cheaper. Happy hour drinks are still a couple of bucks, and a burger and beer won’t run you more then $10 (here you’re not getting away with less then 20). Yeah they get a lot of snow in the winter, but it’s pretty at least and you usually see the sun.
I dunno…. anyone else feel the way I do? I’m tired of sitting on the damn sidelines and I refuse to make a ridiculous purchase. I’m sure Supra and a few others will be gleeful but I’m beyond caring even about that.
October 2nd, 2009 at 11:08 am
Rio de Jeneiro “wins” the 2016 Olympic Games
may god have mercy on these poor souls!
October 2nd, 2009 at 11:05 am
What I’m saying is why bother supporting this shit? This place is an utter dump and by living here you are supporting everything you rail against on this blog. You are a hypocrite. Myself I am leaving soon.
October 2nd, 2009 at 11:00 am
@PorkyFlu:
The market rent is exactly what the use of a property is worth.
Beats borrowing money to buy a property with a rental yield half the interest rate, don’t you think?
Who’s getting the best return? The saver or the homedebtor?
October 2nd, 2009 at 10:16 am
YOU ARE PARTICIPATING YOU FOOLS. You are paying rent to property owners in this shit town. You are financing low interest rates by buying GICs, bonds and putting money in the bank. Your best course of action is to leave this city. These turds do not deserve the fruits of your labour. Leave this city. Leave this country. Let it burn.
October 2nd, 2009 at 10:04 am
I know why people want to come to Vancouver, because they want to see the canucks choke every season.
October 2nd, 2009 at 9:35 am
@patriotzed
The most appropriate comparison is Portland, Oregon which has about the same population for both the city proper and the metro and has about the same amount of world-class industry (i.e. very little).:
Correction. Portland has Intel, Adidas, Columbia Sportswear, and a small company called Nike. While not technically their headquarters, Intel’s Portland office is large as is Adidas.
But we do have… ummmm.. Lululemon? bahahahaha.
October 2nd, 2009 at 9:20 am
@PorkyFlu:
Living in Vancouver and buying a house in Vancouver are two entirely different things, contrary to what the civic religion would have you think.
October 2nd, 2009 at 9:20 am
@PorkyFlu:
We aren’t participating. We’re sitting on the RE sidelines, watching one of the biggest economic shows on earth unfold, and positioning ourselves to take best advantage of the fireworks aftermath. This may (or may not) involve eventually buying a Vancouver ‘shack’ for less than half of it’s peak price.
October 2nd, 2009 at 9:11 am
@PorkyFlu:
I meant NO GOOD REASON to buy a shack in this shit town. So here’s my post again :
Ok serious question here folks listen up. We all know Vancouver is a shithole and we all know there is NO GOOD REASON to buy a shack for nearly a million dollars in this shit town. So what the hell are we doing here? Why even participate in this scam?
October 2nd, 2009 at 9:10 am
Ok serious question here folks listen up. We all know Vancouver is a shithole and we all know there is good reason to buy a shack for nearly a million dollars in this shit town. So what the hell are we doing here? Why even participate in this scam?
October 2nd, 2009 at 8:43 am
Yeah, it is powerful. I can’t resist another quote from the Dalrymple article:
But asset inflation—ultimately, the debasement of the currency—as the principal source of wealth corrodes the character of people. It not only undermines the traditional bourgeois virtues but makes them ridiculous and even reverses them. Prudence becomes imprudence, thrift becomes improvidence, sobriety becomes mean-spiritedness, modesty becomes lack of ambition, self-control becomes betrayal of the inner self, patience becomes lack of foresight, steadiness becomes inflexibility: all that was wisdom becomes foolishness. And circumstances force almost everyone to join in the dance.
Except in one circumstance, that is: the possession of a salary and a pension that the government promises, implicitly or explicitly, to index against inflation. This is the situation of public-sector workers and is a pyramid scheme, too, perhaps the biggest of the lot, since events may require the government to renege on its obligations. But meantime, such employment will seem a safe haven, and the temptation will be for government to expand it, with the happy consequence—for itself—of increasing dependence. And dependence, too, undermines character.
October 2nd, 2009 at 8:30 am
@rentah:
“We should all curse (and punish) those policy makers that have created the perverse monetary and market circumstances of the last 10+ years. They have forced honest citizens to become financial hustlers simply to try to keep their heads above water. The effects have been profoundly distracting and counter-productive for the society, and they are far from having run their full course.”
Thats some powerful shit, thanks for the read.
October 2nd, 2009 at 8:28 am
@rentah:
Er, didn’t Gordo tear up his own balanced budget law when it became inconvenient?
http://www.vancouversun.com/ne.....story.html
A deficit, of course, is just a delayed tax increase.
Obviously Gordo subscribes to the “do as I say, not as I do” school of leadership.
October 2nd, 2009 at 8:27 am
@patriotzed:
I was referring to the comparison of Vancouver to anything else other than the closest comparable offered by Crabman which was Seattle, but you are correct that Vancouver has very little to say when it comes to competing with Seattle mano a mano. Getting down to the nitty gritty even Portland can stand against Vancouver in many ways. This doesn’t say much for Vancouver as a comparable to any location like La Jolla, there is no comparison.
I note that the article today in the Vancouver Scum relating to Canada becoming a sellers market again doesn’t mention the interferance of the extreme intrest rate enviornment. Happy days are here again….unless you’re one of the growing legions of unemployed. We’re going to have to do something about the optics soon. The lines at the food banks and the welfare offices are getting ugly. I heard through a contact that the welfare offices are busy transferring ‘clients’ out to relocate in new municipaties/ neighbourhoods to flatten the spikes of cases in the city.
http://www.vancouversun.com/bu.....story.html
But if you believe that everything is OK, good luck with that. Reading the information flow these days is kind of like being a manic depressive.
October 2nd, 2009 at 8:22 am
@Mark Downs: “I see that Campbell wants to limit municipalities ability to raise taxes:”
Agree, this should be interesting.
Crank up the fire under the pot, AND screw on the lid, at the same time.
October 2nd, 2009 at 8:16 am
We should all curse (and punish) those policy makers that have created the perverse monetary and market circumstances of the last 10+ years. They have forced honest citizens to become financial hustlers simply to try to keep their heads above water. The effects have been profoundly distracting and counter-productive for the society, and they are far from having run their full course.
Here’s a wonderfully straightforward article on the effects of inflation on individuals:
Inflation’s Moral Hazard
An age of loose money not only destroys savings; it corrodes character.
by Theodore Dalrymple
Excerpts:
—
(My father) sold his business in the sixties, at the end of the period of price stability that had reigned throughout his life, for what then seemed a large amount of money. He was a man who, for both temperamental and ideological reasons, held a deep contempt for financial speculation and wheeling and dealing, with the result that he did nothing as inflation inexorably eroded his savings. He grew poorer and poorer through the remaining 30 years of his life, and might have sunk into poverty had he not moved into a house that I owned. And this after reaching a level of wealth that, relatively speaking, was greater than I shall probably ever know.
—–
I still remember the letter that the bank sent me when I was a student, pointing out with considerable asperity that I was almost three pounds overdrawn and asking when I would correct this serious irregularity. Nearly 40 years later, I briefly overdrew my account again—this time by much more—and wrote to the bank, explaining that I would clear the balance in a few days. Unusually, the bank called me: a banker wanted to see me, and would like to come to my house. I made an appointment and expected him with some trepidation.
When he arrived, I repeated that I would pay off the overdraft, and more, in less than a week’s time. “Oh, we don’t want you to do that,” he said. “I’ve come here to ask whether you want to borrow more money.”
—–
I remember an eminent professor’s telling me, with a barely concealed exultation, that he was making nearly $1,000 per day, week after week, merely by owning a very large house in a fashionable area: an amount that, needless to say, dwarfed any savings he might salt away from his salary.
—–
(A good read.)
October 2nd, 2009 at 8:03 am
I see that Campbell wants to limit municipalities ability to raise taxes:
http://www.cbc.ca/canada/briti.....ights.html
This should be interesting…
October 2nd, 2009 at 7:52 am
@realpaul:
Metro Seattle is quite a bit bigger than Metro Vancouver and has a lot more world-class industry (Microsoft, Boeing, Amazon.com, Starbucks, etc).
The most appropriate comparison is Portland, Oregon which has about the same population for both the city proper and the metro and has about the same amount of world-class industry (i.e. very little).
http://www.movingtoportland.net/homes_price.htm
Nuff said.
October 2nd, 2009 at 7:25 am
@crabman:
Exactly, comparing Vancouver to La Jolla or Beverly Hills is just stupid. Why not Vancouver to Paris or London, New York. The fact is that Vancouver is none of those things. Seattle is a far better comparision in terms of location, industry, pop, etc etc. Good time to invest…… Bwahahahahahahahaha.
Meanwhile, I see that official numbers put umemployment at 9.8%, its really 20% but you’ll never get the government to own up to it.
http://news.yahoo.com/s/ap/200.....NzcmF0ZXI-
October 2nd, 2009 at 6:19 am
@patriotzed:
Exactly. If you want a better comparison, look to the Seattle area. The most expensive Washington city in their report is Bellevue – $781,825.
October 2nd, 2009 at 5:25 am
Baloney from the Globe and Mail:
Canada’s anemic first-time home buyers’ credit
All government credits for home ownership make housing more expensive and less affordable. They benefit only sellers and the RE industry at the expense of everyone else.
The way to get any RE market back to normal is to let prices fall to normal levels.
October 2nd, 2009 at 5:12 am
And…
Well obviously they didn’t talk to Tim Geithner.
When looking at RE markets you have to ignore city boundaries and look at the whole metro. Geithner’s house is not in NYC, but it’s only 1/2 hour from Manhatten on the train.
Utter nonsense.
October 2nd, 2009 at 5:03 am
From that reliable source, Coldwell Banker:
More apples versus oranges nonsense.
Both Beverly Hills and La Jolla (which is in north metro San Diego) are counterparts to West Vancouver – rich suburbs. I don’t know whether they are talking about CoV or Metro Vancouver, but the comparison is bogus in either case.
They also compare 4-BR detached houses against each other in a range of cities around the world. This is meaningless, since in places like Singapore or Shanghai they are only for rich people. Of course they are going to cost more than in North America.
Simply comparing house prices in one city against another is meaningless. What matters is price versus rent for the same house and price versus income for the same market. On both counts Vancouver is one of the most overpriced markets in the world.
October 2nd, 2009 at 2:16 am
These people are on drugs and are not checking their facts- there is no way a “typical 4 bdrm house” costs $1.37 million in Romania!
October 2nd, 2009 at 12:11 am
oh yeeeah nutslaps! garth T visit 3vets for bunker kit!
big bear movie cuming
“2012″
October 2nd, 2009 at 12:00 am
From: B.C. real estate returning to ‘seller’s market’: report
‘If you “invest” in a house you own a tangible asset that you can see, touch and feel. Stocks are often manipulated or use false accounting to inflate their value. Even if you overpay for a house, you own a physical asset that you can rent, live in…whatever.’
People are so blind … real estate is the most honest investment eh? No one is manipulating the RE bubble? People in this city is so hell bent on RE it makes me sick, can’t want till the bubble pop.
October 1st, 2009 at 11:39 pm
The Colbert Report just did a plug for Vancouver 2010 – that’s about the first time most people in the USA will have heard about it.
October 1st, 2009 at 11:29 pm
Interesting comment on the motley fool podcast for 9/30/09.
From economist Simon Johnson at about 12:45 minutes in.
http://tinyurl.com/y9yehmx
“…The next wave of bubbles is coming in emerging markets …it’s almost certainly coming to countries and places that did well in this crisis. Places that people now think are, you know, recession-proof or collapse-proof. That’s the classic sort of cycle that you get into. Crisis, fear, panic then a recovery, then you start to beleive that some people are some how never going to be touched … and this is always a mistake.”
Interesting interview.
October 1st, 2009 at 11:19 pm
I think the article made a mistake with showing brisbane at $217,000 for a home that would be 1.2million in vancouver. From what I understand Australia’s bubble was as bad as ours. Anyways the list is a joke I don’t see how they get affordablility out of that list.Vancouver was near the top of the list. So if I were to read into it correctly the spin is buy in Vancouver, Charlottetown is a steal. Nice bizarro world logic there.
October 1st, 2009 at 10:05 pm
Supraboy, you do know there are other investments, right?
October 1st, 2009 at 9:52 pm
You got it, BC’s going back to a sellers market. So how many fools here missed out on the dip, raise your dinky hands.