The Globe and Mail recently published a story on contract flipping in Vancouver:

The probe reveals that homes are being flipped by assigning – selling – sales contracts before closing, for higher prices than what the original seller homeowner receives in the end. Assigning contracts like this is legal, but controversial.

Speculators who profit this way also don’t pay property transfer taxes, because technically the property doesn’t change hands until the deal closes.

Mr. Eby said he is hearing from upset constituents in his Point Grey riding, where many homes are demolished to make way for new investor-owned houses that sit empty, some resold several times.

There have been a number of reactions to this story, but most recently calls for an inquiry:

The technique, which brings profits for speculators but higher prices for buyers, has sparked a torrent of criticism in the province “The investigation needs to be independent because the government has already said it doesn’t think there is a problem,” said MLA David Eby.

Vancouver Mayor Gregor Robertson said after Saturday’s report that the province should impose a tax on speculators.

Read the full article here.

BC Premier Christy Clark has already said no to the province making any extra money off of sales to offshore buyers, but says now there will be a study on the impact of foreign buyers.  The government also proposes to raise the PTT exemption as a way to solve high housing costs without risking lower house prices for first time buyers.

It’s worth highlighting this comment from ‘shut it down already‘ who points out that this summary confuses the issue of offshore buyers and contract flipping which has the ‘racists running in circles’:

Rampant speculation generally resolves itself in the end. The other obvious contradiction is that we often hear people here saying that government intervention in the markets is the problem, yet now you want them to step in and intervene.

Don’t forget that the original sellers of an assigned property accepted a price that they were satisfied with. It’s only greed and jealousy that had them aghast that the buyer might resell for more than they paid.