Friday Free-for-all! Luxury Credit.

You made it to the end of another work week, and that means it’s time to do our regular Friday Free-for-all post here at VCI.

This is our end of the week news round up and open topic discussion thread for the weekend.

Here are a few recent links to kick off the chat:

Price changes and credit (graph)
Why so many doomers?
High prices raise debt levels
Perspective on foreign buyer levels
3rd try for Versace in Vancouver

So what are you seeing out there? Post you news links, thoughts and anecdotes here and have an excellent weekend!

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VMD@work
Guest
VMD@work

Apparently S&P has just cut Canadian Banks’ outlook from Stable down to Negative (source: BloombergNews)

joe
Guest
joe

@southseacompany

“David Stockman, U.S. President Ronald Reagan’s budget director, said in a recent blog post that by telegraphing their intentions to keep rates low, the world’s central banks are pursuing financial instability. That’s because they are removing the element of risk that keeps speculation in check.”

So how far does the central bank and the Canadian government chase urban families to the brink? Long term price stability and housing affordability is THEIR job. It’s time many of them got off their asses and got behind a podium and started talking concrete POLICY. Some MPs need to have THEIR young married kids try to live in TO and YVR. See how they get on….

VMD@work
Guest
VMD@work

Canada’s biggest banks get rating outlooks cut to negative by S&P

“Canada’s six biggest banks including Toronto-Dominion Bank and Royal Bank of Canada had their outlooks cut to negative from stable by Standard & Poor’s because of regulatory changes that could affect bondholders.

“The outlook revision reflects our expectation of reduced potential for extraordinary government support arising from implementation of the proposed new elements of the resolution framework for Canadian banks,” Tom Connell, an S&P credit analyst, said in a statement Friday.

The other banks affected are Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Bank of Montreal and National Bank of Canada”

patriotz
Member

“Gov’s inflating away their debt is a better outcome than default.”

For the politicians/rich elites or for average citizens?

For average citizens, because they are debtors too. Haven’t you heard?

Insanity
Guest
Insanity

@19 “Their parents intend to use the well-known “own residence” loop hole to avoid taxes.”

You can claim a place as your principal residence as long as you don’t own another property considered your principal residence at the same time. This is tax code not a loop hole. If the kid moves back to his parents he can claim it as a principal residence.

It is a moot point anyway because nobody has made a dime off a condo in the last 5 years and the next 5 years will look much worse. Claiming it as an investment property would gain you a capital loss and you would be better off.

patriotz
Member

@11: “The Canada Mortgage & Housing Corp. survey of 42,426 households, who owned their primary residence in the census metropolitan areas of Toronto and Vancouver in August and September of 2013, did find that 17.1% of the market was made up of investors while 82.9% of the condos were owner-occupied.”

This paragraph does not make sense. “The market” consists of properties that are being sold, i.e. is a flow, while owner-occupied condos are a stock. They are not supposed to add up to 100%.

The wording is clearly from the droid at the NP. Don’t have time to look up what CMHC actually said.

Insanity
Guest
Insanity

@21 “It is a part of culture and tradition therefore better statistics could be considered racists here.”

Someone using the tax code to legally pay as little taxes as possible is not doing anything wrong but they are doing what everyone should do. The fact people are spinning it as a Chinese culture thing and therefore somehow negative is racism. You make the point perfectly.

Dave
Member

Joe (27), I would blame the local government and Provincial government before I would blame the Federal Government and our Central Bank.

The cost to build and develop land in Vancouver is astronomical. The requirements to build are over the top and those costs get passed directly on to the consumer and raise the price of real estate across the whole market. The Provincial Property Transfer Tax is also a huge cost for buyers. Add in all the other expenses associated with buying and it’s pretty astonishing overall.

Could the Feds do more? I would suggest they should get out of the way (e.g. do we really need the CMHC?).

And finally, the Central Bank in Canada only has a single mandate, which is inflation targeting. They don’t have tools to impact the housing market.

Insanity
Guest
Insanity

@24 “as # 19 pointed out, these surveys are not reliable.”

Of course not. The data does not support your hypnosis so it must be false.

As unreliable as a government 42,000 condo owner survey might seem it is better than a hand full of peoples anecdotal observations.

patriotz
Member

@33: ” The requirements to build are over the top and those costs get passed directly on to the consumer and raise the price of real estate across the whole market.”

Did those requirements go away in April 2008 and get reimposed in March 2009?

Dave
Member

patriotz, do you know how many projects got stopped in their tracks in Fall 2008?

When I say requirements, I am talking about the little things like door knobs, the colour of the trim on a window and the exact height of a tree. Developments are micro-managed right down to the smallest detail. That adds to the cost and timeline of building. And that just gets passed on to the end consumer.

boopy
Guest
boopy

vancouverites like to see themselves as being world class, green, progressive. the mayor is big part of how vancouverites see themselves.

but city hall can’t get something as simple as permits and building code checks right.

they’re too busy writing and approving proposals for fantasy projects that they don’t have the money to build.

patriotz
Member

@36: “patriotz, do you know how many projects got stopped in their tracks in Fall 2008? ”

Sure, they got stopped because prices were falling.

My point, which you didn’t get, is why did prices start falling if they are determined, as you claim, by costs incurred by the developers?

VMD@work
Guest
VMD@work
@ insanity #30 conforming to tax code or not, at least CRA has reportedly been cracking down on condo speculators Tax auditors target condo sellers in hunt for ‘flippers’ “over the past year in particular, auditors seem to be taking more of a tax first, ask-questions-later approach to even deals involving principal residences, which have been traditionally exempt from capital gains taxes, tax lawyers say.” Of course, as you pointed out condo price has been stagnant for last few years, with poor outlook going forward. However, if I were a condo investor receiving this CMHC survey in the mail, I’d be very hesitent to disclose my investment intention to government. After all CRA has been screening condo transactions as far back as 7 years ago, why label myself as a “condo investor” in their file, right? Again, I’d rather see… Read more »
Insanity
Guest
Insanity
@36 Dave: Input costs might count in a severe bear market. When nobody wants to buy anything and vacant land value is near worthless. Like Detroit right now. Then yes lowering input costs will allow builders to build and sell for less. That may get people interested in buying again. I suspect once the bubble pops here the city of Van will have to cut back of some of their DCCs to get building again. The problem with your point is currently developers are building at record pace and land values are at record highs because people are able and willing to buy at bubble prices. As long as people are able and willing to buy at those prices the developers are not going to sell for less. Those that currently own the land will be able to sell the… Read more »
CBC
Guest
CBC

“Their parents intend to use the well-known “own residence” loop hole to avoid taxes.”

South asian builders commonly live in a house for a year before listing as “brand new house GST Included”
Brand new house which has been lived in for a year = oxymoron

VMD@work
Guest
VMD@work

@41
Exactly. I also know of cases where the builder’s entire family live in the basement suites for a year in order to keep the main & upper floor in “new” condition for sale.

Son of Ponzi
Guest
Son of Ponzi

@36: “patriotz, do you know how many projects got stopped in their tracks in Fall 2008? ”

Sure, they got stopped because prices were falling.
——————
First they got stopped because credit dried up completely.

crabman
Guest
crabman

Dave – I don’t know why you think getting rid of the PTT would help affordability. If anything, the PTT discourages buying and reduces demand. If we reduced (or eliminated) the PTT, prices would probably go up even more.

Son of Ponzi
Guest
Son of Ponzi

Strange.
Canada continues to shed good full time jobs, and yet the locals keep on buying.
Or maybe, it’s not the locals, after all.

CBC
Guest
CBC

1st time home buyers PTT exempt if purchase price under $475k.

Rules seem a bit antiquated in todays market

“First-time home buyers may be exempt from paying the PTT of 1% on the first $200,000 and 2% on the remainder of the purchase price of a home priced up to $475,000. There is a proportional exemption for between $475,000 and $500,000. At $500,000 and above the rebate is nil.”

Joe Taxpayer
Guest
Joe Taxpayer

Yes. Of course. Developers should not pay DCCs, contributions, build roads, utilities, parks and/or amenities for new developments. All the extra infrastructure and amenities that new developments require should be provided for by the taxpayer, therefor subsidizing these developments.

Sounds fair.

Son of Ponzi
Guest
Son of Ponzi

All the extra infrastructure and amenities that new developments require should be provided for by the taxpayer, therefor subsidizing these developments.
————–
Actually, not a bad idea.
Imagine the push back from the taxpayers when they realize that they are paying for infrastructure for empty condo buildings owned by overseas investors.
No sane politician would approve these developments.

Skook
Member
Skook

For anyone who was following the Sunshine Coast sales stats in the VancouverPeak.com forum, I have following got caught up.

The complete July sales stats can be found here:
http://vancouverpeak.com/showthread.php?tid=5236&pid=6188#pid6188

The May & June sales data can be seen in this post:
http://vancouverpeak.com/showthread.php?tid=5236&pid=6185#pid6185

Joe Taxpayer
Guest
Joe Taxpayer

@# 48 Nice thought, but, how would the council know or control who the developer will sell to? Even if the developer agreed to market locally, all the assignments could be flipped to who knows who.

At least, with the system we have, these developments pay their own infrastructure costs. This is fair, as dropping development costs and making the city pay for all the infrastructure/amenities would be a subsidy.