Prices up, incomes down

Pete McMartin is on a roll over at the Vancouver Sun with a series of articles that looks at actual data on the Vancouver economy and housing.

The most recent article looks at local income levels.

Vancouver stands out as an unusual case around North America: Our house prices rose as our incomes fell.

But those high house prices, and our utter preoccupation with them, have become a distraction to a greater problem, and they are only a part of Vancouver’s economic malady. At any rate, those high housing prices are largely beyond the jurisdictional abilities of Metro Vancouver’s municipal governments to have any real effect on them. Meaningful change — in immigration numbers, for example — would reside with the federal and provincial governments, but not at the municipal level.

No, the persistent, year-over-year problem has been in income decline, and this has been a long time coming.

“This is not a new story,” said Tsur Somerville, director of the University of B.C. school of urban economics and real estate. “We have lagged behind the other major metropolitan cities since the 1980s, and even before the period of rising home prices.”

Read the full article here.

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Madashell
Madashell
5 years ago

“Canada may need tougher rules to slow gains in the housing market, the International Monetary Fund said.”

Spineless Joe is basically a caretaker and not a true policy maker so I doubt anything will happen till after the next election.

@space989
@space989
5 years ago

Agreed Space.

If a family with lots of $$$ moves in from overseas, they have the right to be our wealthy and bring their sense of entitlement.. Middle Eastern? Sure, if they can’t have multiple wives by law here, they have resorted to being sugar daddy’s. Chinese guys are also following the trend..but more with having multiple maids.

The girls are local girls (hope they are not related to anyone here) who’ve been priced out and need money.

space889
space889
5 years ago

@Ford Prefect – But think about the seniors who paid income tax all their life and now have nothing beside their $5M house! We can’t force them to sell the house and make them live in $1M condos!!!

People lik ePatriotz would cry, wail, and scream in protest….

Income tax is much worse than asset tax on hoarded assets put to non-productive use like big mansions more for ego and decadence than anything else.

With high income, at least you have to work some to earn it. With asset or asset based income (eg. dividends), you just have to be lucky to be born or married into the $$$$.

space889
space889
5 years ago

Every time I got stuck at Bellingham Costco gas line, most people that are filling up with jerry cans and making the gas line as bad as the border wait are non-Chinese.

space889
space889
5 years ago

About rich Chinese not paying income tax, ok, explain to me again why someone should pay income tax if you have no income? If these immigrants have any investments in Canada – eg) $1M managed by one of the wealth mgmt firm/big bank in Canada, they will pay income tax on all dividends, interests, and capital gains because all info are automatically send to CRA. If they have $$/income back in Asia that CRA don’t know about, well that’s tax evasion and it isn’t limited to Asians. In fact I believe most techniques are invented by rich westerners and they are the biggest users. Also, it’s Canada’s fault for not having tax info sharing treaty with India/China/etc which would help catch these cases. Lastly, withdrawing $100K/yr from your savings to spend it doesn’t mean you are making $100K/yr and should… Read more »

space889
space889
5 years ago

– I was against HST on 2 reasons:
1 – I believe it is a thinly disguised tax increase on the regular joe and tax break to business.
2 – It was discussed during the election or even a debate in parliament which is one of the main purpose of having an elected government. Instead it was imposed almost like in a dictatorship.

If the taxes was done with at least an equal offset of income tax and no loophole for business, including export business then I would support it. However, the way it was implemented, I can’t and I guess most BCers also feel the same way.

Slagathor
Slagathor
5 years ago

….The BC government tried to increase consumption taxes through the HST and the dumb locals revolted….

Actually, the BC Government got caught lying about the HST and the smart locals kicked them in the balls.

Slagathor
Slagathor
5 years ago

….Sounds pretty easy to make $1.2 Million per year tax free. Any reason you are not doing it?…..

What gave you the impression I haven’t been?

Ford Prefect
Ford Prefect
5 years ago

condo_day_ftw Says: @31 is talking nonsense, and anyone who has ever filed an income tax return would know it!

Actually if you find yourself among the !%, then what #31 said is true.

The rich have won. Consumption taxes to them are chump change. If you are rich then income taxes are low to nil – green bonds (tax free), TFSA, dividend tax credits, ROC, capital gains etc. And wealth taxes are non-existent.

The rich hate income taxes and taxes on wealth. That is why almost all discussion on taxes is about consumption taxes not wealth or income taxes because the !% do not want you thinking about regressive vs progressive taxes.

Son of Ponzi
Son of Ponzi
5 years ago

#55
“oriental tax exemption”. 🙂
Like a reversed head tax.

ostritch
ostritch
5 years ago

Why not fill up on gas when you’ve successfully brought 20K in $20 bills over the border in the recesses of your car?

waaa!?
waaa!?
5 years ago

Rich people in the western world pay more than their “share” of taxes. They pay income and sales tax. This is normal.

Except of course if they qualify for the oriental tax exception.

southseacompany
southseacompany
5 years ago

“Millennials lured by lengthy stretch of low rates spur Canada’s condo boom” Financial Post http://business.financialpost.com/2014/10/07/millennials-lured-by-record-low-borrowing-costs-spurs-canadas-condo-boom/ ““It was worth it because interest rates didn’t seem too bad — you have to strike while the iron is hot, right?” Qureshi, 29, said from his car en route to his 12th-floor apartment overlooking Lake Ontario. “They won’t raise interest rates anytime soon. I know it. People have been saying rates will rise for years and it hasn’t happened.”” “Qureshi is among the younger Canadians who, lured by record-low borrowing costs, are fuelling a surge in Toronto condo sales. As the nation’s household debt nears an all-time high, these buyers may face a spike in mortgage payments and the possibility of default once rates begin to climb.” First-time homebuyers are the most active purchasers of condos… Today, half of those in Canada aged 25… Read more »

southseacompany
southseacompany
5 years ago

Financial Post: “Canada may need tougher rules to slow overvalued housing market, IMF warns”

http://business.financialpost.com/2014/10/07/canada-may-need-tougher-rules-to-slow-overvalued-housing-market-imf-warns/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FP_TopStories+(Financial+Post+-+Top+Stories)

“Finance Minister Joe Oliver said last week he doesn’t see a housing bubble in Canada, adding that past rule changes have been effective in curbing rapid price gains. While the IMF has called for the country to limit the use of government-backed mortgage insurance to limit taxpayer risk, Oliver said that any future steps he takes will be gradual.”

“Canada’s real estate market has shown unexpected strength this year as mortgage rates declined to the lowest on record. “

Westside Realtor
Westside Realtor
5 years ago

Our sense based on the convos we are having with clients is that our sellers are getting very irate with the lack of bidding on their homes and our push to have them further lower their asking price and expectations.

Well, every market has a top. As does ours. We hit it and turned lower some months ago.

southseacompany
southseacompany
5 years ago

Globe & Mail, Rob Carrick: “In today’s hot housing market, first time buyers can’t afford to get in”

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/housing-market-beats-up-on-first-time-buyers/article20951842/

“People buying a first home are essential to the real estate market. But when the federal government periodically tries to cool home sales, its go-to strategy is make it tougher for first-timers.”

“Housing consultant Steve Pomeroy says the focus on first-time buyers is both unfair and ineffective in addressing a major contributor to rising home prices….Mr. Pomeroy said. “It’s the resale buyer that is driving prices.””

“It may be that the best check on move-up buyers will be weak demand for their homes from first-timers. “We are really constraining the ability of young kids to get into the market,” Mr. Pomeroy said.”

@#47
@#47
5 years ago

@#47 & #49
I’m all for a property tax surcharge/increase taxes on RE.
wrt Increase in consumption taxes such as HST, the rich would pay much less than the working class. There were several news headlines on this fact.

patriotz
5 years ago

@47: ” The BC government tried to increase consumption taxes through the HST and the dumb locals revolted.”

Also in the 90’s the NDP wanted to impose a property tax surcharge on luxury houses and backed off in the face of protests.

The best way to deal with tax evasion is to increase taxes on RE, which cannot be evaded, and increase consumption taxes. Yet the public is hostile to both of these.

patriotz
5 years ago

@5: “as to why we put up with it, well, look at ppl like patriotz and jesse. they are quick to cry racism and stick their heads in the sand. white guilt is blinding ppl.”

This BS is not worthy of a reply but I’ll make an an exception and challenge anyone to find a post by me “crying racism”.

And that does NOT include me claiming that the housing bubble is due to government policies rather than people who look different. That’s just rational thinking.

@43
@43
5 years ago

2238 Melford Ct, Thousand Oaks, CA
Year 2013 Assessment: $$4.9M, Tax: $52,506
Asking prices: since 2006 6.799M, 2013 $4M, 2014 $5.5M

The average Canadian house hold pays about $13,000 per year total in income taxes (provincial and federal). The above house owner would have contributed close to $100,000 in PPT when bought and then $52,000 per year in property taxes all which stays in the province. Add in a another $40,000 in consumption taxes for one high end car and who knows how much else in consumption taxes on other goods. The $13,000 which maybe 20% of that stays in the province in income taxes the average person pays is chump change. Who isn’t paying their fair share? The BC government tried to increase consumption taxes through the HST and the dumb locals revolted.

Bo Xilai
Bo Xilai
5 years ago

#44, sure Chinese don’t make trouble, except for the HK Triad head honchos who get whacked in Shaughnessy, Loan Sharks in Richmond who get murdered in their Mercedes and that Lai character who fought deportation for 10 years… and the Chinese restaurants which never give receipts for their “All Cash” businesses (while claiming GST credits)…

Other than that, it’s all good.

Shut It Down Already
Shut It Down Already
5 years ago

@Westside: “We (our office) are exploding our price expectations for the $3-5+mm market way down.”

I’m exploding my expectations for you to ever provide any verifiable market data way down.

true problem
true problem
5 years ago

All you distracted easily and scape goat Chinese. Chinese work hard, don’t make trouble, very good. East Indian make trouble.

East Indian keep guns in temple basement. Why no one talk about this? Canada is lawful country. Keeping many guns for unknown purposes is against order society. Temples are guilty.

Police must open temple basement and bring guilty to justice. This is Canadian way.

oh yeah!
oh yeah!
5 years ago

@31

“It seems to me these rich immigrants are paying more than their fair share through PST on car and luxury goods purchases and property taxes through home ownership.”

how do i get on board this? i’m still paying income tax and sales tax. did i forget to check a box in turbo tax or something?

jjss
jjss
5 years ago

I watched this great Canadian documentary at the film festival. It’s about offshore tax havens.

http://www.youtube.com/watch?v=k3bvuKuiaiI