Friday Free-for-all! July 22nd 2016

It’s the end of another work-week and that means it’s time for another Friday free-for-all!

This is our regular end of the week news roundup and open topic discussion thread for the weekend, here are a few recent links to kick off the chat:

CIBC goes negative on bond yield
Lower mainlands wide open areas
CMHC: Low risk in TO condos
More helicopter money?
Four reasons prices keep soaring

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

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Yikes
Guest
Yikes

Wow a ton o listings appearing notably high end properties 5 mill plus

Boombust
Guest
Boombust

Pleeze ‘splain.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

I’m just starting to get a grasp on how this money laundering thing might work in the case of real estate (after consulting with Reddit).

But now I’m thinking that comparing someone’s reported income to the value of the house they recently bought is not going to be enough to catch a crook. This is because it won’t be the buyer who is hiding the big $. Rather, the buyer is doing a favor for the seller who actually helps the buyer buy the house in order to launder his (the seller’s) money. The buyer only pays $100 and the seller reports that the buyer paid $200. Is that how it works? So one would look more for offshore sellers of houses than offhore buyers. (Though people do both of course.) Amirite?

Bag it and tag it
Member
Bag it and tag it

I heard Crooked Clark put her house on the market a couple weeks ago. Can anyone confirm?
The recent surge in listings past couple weeks could be explained by ‘The Friends of The Liberal Party’ acting on insider information. This could also explain Chinese interest in Victoria over the past couple weeks. Christy paying back favours…your donation money at work…

cvdr
Guest
cvdr
Sellnoworbepricedin4evah
Guest
Sellnoworbepricedin4evah

In an efficient market home prices should be adjusted down by the appropriate percentage to compensate for this 15 pct tax. However this is not an efficient market and has not been for a decade at least. So who knows.
It’s a step in the ‘right’ direction but not enough.
Though I would say the grassroots movements that have creates this, CRA attention, and more will change the view that Vancouver is a hospitable location for laundering dough.
So congrats to Vancouverites who have raised their voices and little fists. You have made a difference! Keep it up!

Specuskeptic
Member

Crickets from the 50 cent crew LOL. Bunch of weasels….
https://en.wikipedia.org/wiki/50_Cent_Party

I\'m With Stupid V
Guest
I\'m With Stupid V

Foreign Tax implemented!!!

Huzzah the crisis is over, shut the site down Amirite???

Yikes
Guest
Yikes

Paul too busy making new listings as phone ringing off the hook panic selling

ostritch
Member
ostritch

I guess Victoria will skyrocket.

Bag it and tag it
Member
Bag it and tag it

Whistler and Sunshine Coast too. I’ll bet De Jong is hoping Abbotsford will get a bump, but they’ll take one look at the place a run away laughing…

It’s also possible an increase in foreign buying outside of Metro could be offset by a drop in local buyers that have recently been bailing on Metro for VI, Kelowna, etc…while they sit back and wait to see how things unfold…

Ooooh Weeee
Guest
Ooooh Weeee

lots of denial among the speculators that I know, some even saying this tax is gonna make prices go higher lol.

Lurker
Guest
Lurker

Just like how the new down payment rules in December were totally going to slow the market down? Sure, they’re in denial. We’ll believe when we see it.

MikeS
Member
MikeS

I keep hearing that. I don’t understand how. This is purely a demand decrease. It’s also potentially a supply increase if current owners decide to list before demand crashes. Both of those put downward pressure on price…

I’ve seen the argument that they’ll “pass on the tax” but I just don’t know how that would work in this context.

Ooooh Weeee
Guest
Ooooh Weeee

Think of it like a swimming pool filling up with water from a tap, this tax which is up to 18% on property over 2 million (3% existing + 15% new tax) is like a crack in the pool to keep the water level(prices) same or growing the tap pressure(new capital in markets) has to continue increasing. Its as simple as that, we will have to wait and see what happens. If the sentiment among foreigners changes then the pool will slowly drain down.

here is a link to the actual legislation for anyone interested
https://www.leg.bc.ca/parliamentary-business/legislation-debates-proceedings/40th-parliament/5th-session/bills/first-reading/gov28-1

MikeS
Member
MikeS

Sorry… can you explain how prices can rise in your metaphor?

Ooooh Weeee
Guest
Ooooh Weeee

prices will rise if tap flow is turned up, meaning more capital from foreigners or locals into the market which will be a wait and see.

Ooooh Weeee
Guest
Ooooh Weeee

Best bet will be to follow daily stats from paul b on this board the data will tell the story what ever it may be.

Newcomer
Member
Newcomer

But they would have risen anyway. The tax (leak) will make them rise less. So the effect of the tax, even in your analogy, is lower prices, not higher prices.

Ooooh Weeee
Guest
Ooooh Weeee

yes I agree prices going lower not higher, I was lol at the speculators who were saying that they will go higher. I think we will be at 10000+ listing by the end of september and priced trending lower unless BOC lowers interest rates again.

Boombust
Guest
Boombust

Yes. Please!

HAMster
Guest
HAMster

2 million has nothing to do with it.

Ooooh Weeee
Guest
Ooooh Weeee

1% on the first $200,000, and
2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000, and
3% on the portion of the fair market value greater than $2,000,000

Plus the 15% on top of above.

That is what I mean when over 2 mill.

HAMster
Guest
HAMster

Garth really blew it today. His worst post ever and it was filled with multiple errors. He was so busy blasting this tax he didn’t bother to read the text of it.

Yikes
Guest
Yikes

On another note, my duplex developer buddy is freaking out looking to get trades to work 24hr to finish his current build, says he pay extra coin to those who work graveyard, all inside finish work so no noise.

He says must list now

Fear monger
Guest
Fear monger

Paul is late again
What a slacker.
Anyone has the numbers?

Yikes
Guest
Yikes

Anyone know the last few days of sakes SFH east and west are doing?

popgoesthebubble
Member
witherintothetruth
Member
witherintothetruth
Combat roach
Guest
Combat roach

Interesting comments, people are wakening up slowly although a bit late. Nobody seems to buy “racist” BS crap any longer.

David Lee
Guest
David Lee

Trust ….

Do you really trust the Lie-berals?

Unless puppetmaster Rennie and his developer buddies all got hit by a bus at the same time recently, there’s probably something more to the 15% scheme than they are letting on. After all, they don’t think much about the intelligence of the average voter (given the robbery in broad daylight they’ve been facilitating for more than a decade now).

After all this time, the Lie-berals are doing something about the money laundering? Something is fishy. There’s probably one or more things that we don’t know and once we find out, we’ll say “Now that’s the Lie-berals we’ve come to know and hate over the last decade”!

Zero Down Forty
Guest
Zero Down Forty

The Libs know that home sales over $ 2mil only make up 5-10% of sales in Metro Van. Hence, little impact to the market.

The Libs look good – while the folks leveraging themselves to buy a crappy condos, and those investors that buy whole floors of $500k Surrey micro-condos keep the market going.

Newcomer
Member
Newcomer

Nowhere does it say that they tax is limited to properties over 2 million.

MikeS
Member
MikeS

One of the articles I read used it as an example and I think some people are misreading it.

MikeS
Member
MikeS

Hah! And Garth thought it was a 2mil threshold as well.

I hope every potential seller realizes that it’s on all prices. The idea of holding onto your shack, waiting for that chinese buyer, will hopefully be over soon.

Boombust
Guest
Boombust

Thought so…and, people have been pointing this out to him.

Boombust
Guest
Boombust

Makes him look like a bit of a goof, doesn’t it?

Newcomer
Member
Newcomer

For a guy who used to work as the Minister of National Revenue, yeah.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

To be fair. A person is at a disadvantage if they have not physically spent time in a place. The charts don’t tell the whole story. They are bound to miss something.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Honestly, why hasn’t Clark gotten rid of Rennie after all the recent media discussion pointing out the problems? If the discussion has been enough pressure to cause them to do the 15% tax and to say they are stopping the real estate industry overseeing itself, why keep Rennie on staff? I don’t get it.

ostritch
Member
ostritch

Wasn’t this tax his idea?

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

I think it emanated from the cybersphere and coffee shop conversations and conversations on the street, with many seriously smart economist plants littered amongst the peeps. These conversations have been happening for the last 6 years.

Specuskeptic
Member

He brings home big bucks – that simple.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

It just makes them look so bad. It’s like a cartoon or a bad movie. I guess their answer is a bird in the hand (money in the hand) is worth two in the bush (an honorable reputation that might attract financial support). Where oh where has my democracy gone. It’s all too weird.

Combat roach
Guest
Combat roach

“After all this time, the Lie-berals are doing something about the money laundering? ”

They are just increasing their fees for money laundering services. They know the other side can easily absorb it, just the reasonable racket bump close to elections.
If they wanted to do something they would make it radical either with 50% tax or a ban on foreign ownership but again the other side would just become more creative as they always do. Either with false driving licenses, passports, visas, care cards, social assistance collected with Porsche Cayenne or now, as per new requirement, using relatives as proxies to continue their shenanigans without much disturbance. Those fuckers can get only stopped with draconian enforcement of extremely radical measures, the language that they can only understand, no English required.

HAMster
Guest
HAMster

I agree. We need to BAN all immigration in all its forms from China. Sorry to say, but they have ruined it for themselves by taking advantage of Canada for their own ends.

ostritch
Member
ostritch

+1. Just more Money for the same privilege. But I will watch you bears go nuts.

Shut It Down Already
Guest
Shut It Down Already

Now it’s going to be easy to find out how much revenue is being raised and therefore what total volumes are.

The Man
Guest
The Man

I wonder if pre-sales will count as a ‘sale’ under this new tax.
Of how about when Concord Pacific crowd-funds to get investors for major projects?

http://www.vancourier.com/opinion/money-talks-will-gregor-listen-1.2230080

“Most recently the Province published a piece declaring that a “Chinese Syndicate” headed by Sun Commercial Real Estate was involved in a “crowd funding” scheme inviting overseas buyers onto what was going to be a residential project on the site”
“And now we learned this week that it was Concord Pacific that picked up the property for $185 million”

yvr2zrh
Member

Tax will apply on all pre-sales as they are not yet registered at land titles. So – we may see some strange deals collapsing. . . Again – was there a change in taxation clause that allows the buyer to get out? Probably not – – !

patriotz
Member

It applies when the sale is completed, that’s when the owner gets the tittle. So a foreign buyer can buy a pre-sale and then flip to a local who can complete. But I don’t think pre-sales are that attractive to foreign buyers as they’re just paper assets.

Whistler or Bust?
Guest
Whistler or Bust?

What is all the complaining about??? At least the head in the sand Libs are finally being forced to do something (Kicking and screaming) by the NDP.

I think this is a very big deal. Capital goes to where it is treated best and that is not Vancouver anymore for foreigners.

Royce McCutcheon
Member
Royce McCutcheon
But depending on the fine print and how this is enforced, couldn’t it be taken as a dog whistle about precisely how NOT serious the present government is about this? It’s like when Harper (and then Trudeau) pledged to research the role of foreign money and look into this issue. The fact that both pledged a trivial sum of 500k to do the actual work spoke volumes to the priority of this issue. Now, I have not read the new legislation in any great detail. It may be significant, it may be trivial. But, given the track record of this province’s governing party, I don’t think you can fault people for challenging whether this is meaningful. The long record of heel-dragging and denial thus far has certainly been good to foreign capital and if this legislation is riddled with loopholes,… Read more »
franko
Member
franko

“I think this is a very big deal”

So do I. and it could be just the beginning. All we need now is Moonbeams vacancy tax and Justin to wake up.
The mere perception of less HAM could convince potential sellers that the market has peaked. The number of new listings in the first couple of weeks in August should be very interesting.

Newcomer
Member
Newcomer

I agree. The perceived likelihood of future price changes is the only thing that has ever mattered in this market. If this measure can change that, it changes everything.

MikeS
Member
MikeS

Federal Libs are supposed to be announcing something next month…

BarryG
Guest
BarryG

)) don’t believe a tax on homes over $ 2 mil will make much difference sinnce they are a very small part of the market.

The new tax applies to any price, not just over $2million. For example, a $800k house would have $120k tax

The Man
Guest
The Man

Garth Turner site states it was below $ 2mil, but looking at the press releases I see no mention of price limit.

Knowing Christy, I didn’t think a dollar limit would be a surprise, but if no limit then I blame GT for my error.

The Man
Guest
The Man

Sorry I meant he said above $ 2mil.

Specuskeptic
Member

Though I find, generally, that the laundered/foreign money argument is overplayed, all this news can only help bring this silliness to an end…http://thetyee.ca/News/2016/07/25/Taiwan-Group-MPs-MLAs/

Lurker
Guest
Lurker

Even if this specific measure doesn’t work, between this and the cities vacancy tax, the message is clear to foreign investors: “We don’t want your money”

If I were an investor I would be afraid to buy here now knowing what’s next.

yvr2zrh
Member

Listen. “Investing” in residential real estate is not what’s happening at all. Vancouver has never given a decent cap rate on residential – it has been a 20 year long specu-ride. I do agree that we are going to remove some capital from the market – but frankly – the market does not appear to be short on capital . . . However- removing around 60-70% of the foreign purchases (which this likely will do) will have a massive trickle down effect – not to mention the psychological effect of the foreign buyer tax. (Now they have to outbid you by 15% to be equal with you . . That’s a massive amount).

Lurker
Guest
Lurker

20 years isn’t a bubble. That’s called going long. That’s investing, not speculating. The last 9 months? Sure, pure speculation.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

“Speculator” you mean, right? Participation in a ponzi scheme is not investment.

yvr2zrh
Member

Does the standard purchase and sale agreement for real estate in British Columbia have a clause for “Tax Law changes” such that the contract can be rescinded for changes in tax laws? If not – we are going to have a messy wind up of all the open but not closed transactions as foreign buyers can not close and then a bunch of contracts fall apart. Either way – a bunch of contracts are going to fall apart – – and a bunch of lawyers are going to be working over time to get deals done in 2-3 days – – good luck on all of this. I think this tax is a very prudent thing to implement and we will now see how this market really is working.

Combat roach
Guest
Combat roach

Idiot…

Last May, de Jong said he wasn’t in favour of a tax on foreign investment, saying he worried it would send the wrong message to Asia-Pacific investors.

Since when money launderers and speculators are called investors?

Boombust
Guest
Boombust

Doesn’t de Jong hold several West Side properties, too?

Boombust
Guest
Boombust

…oops, sorry. They are in the Abbotsford area.

yvr2zrh
Member

Strange enough – Tax only applies in GVRD – – Where are the De Jong properties? Outside. Not that it would really matter since that region is not really getting the investment.

patriotz
Member

“Not that it would really matter since that region is not really getting the investment.”

Yet. Does anyone think this may not really be an attempt to tax or discourage foreign buyers, but to get the rest of BC outside Metro Van in on the racket?

ostritch
Member
ostritch

It’s definitely a possibility. Spread the wealth, collect more tax, run for reelection.

Boombust
Guest
Boombust

Hmm…

Loon
Guest

BC brings in 15% property tax for foreign buyers

To put that in perspective, the tax will amount to a $300,000 extra charge on a $2-million home.

Huzzah ! take that Garth, that should put a damper on the VanRE market in a hurry.

http://www.news1130.com/2016/07/25/bc-brings-in-15-property-tax-for-foreign-buyers/

Zero Down Forty
Guest
Zero Down Forty

To really bring that into perspective;

According to Southebys stats home sales over $ 3 mil have made up about 5-7% of all home sales in Metro Van for the last few years. According to BCREA around 80% of home sales in Metro were for units worth less than $ 1 mil.

I don’t believe a tax on homes over $ 2 mil will make much difference sinnce they are a very small part of the market.

HAMster
Guest
HAMster

Too little, too late. Why 15%? This tax should be 50%. and it’s easy to get around this anyways by having a local (like a lawyer or relative) buy your property. Or have the property put into a numbered company and the company gets traded, not the underlying assets.

ttul
Member

It will not be easy to get around the foreign ownership restrictions without falling afoul of some pretty nasty legislation. Yes, some people will obviously try to flaunt the new rules with fancy footwork; however, the province will doubtless be hiring some auditors to nail them as a warning to others.

patriotz
Member

It won’t put a damper on the market because they know that actual foreign buyers aren’t significant in number. What would be significant is doing something about local buyers (i.e. recent PR) who don’t pay income taxes in line with their spending.

Pre-election posturing.

Oracle
Guest
Oracle

It will have some impact. Top down…Locals won’t be able to buy in valley cause they may not have foreign money to do so.

But they should only allow Canadian Citizens to buy Residential real estate. Tax PR people 15%. AND Ban Foreign sales completely.

And unfortunately for you, an anti-immigrant sentiment is rising across BC. Canada should ban the Quebec Program immediately. And immigration totals should be the average of all G7 nations.

Otherwise we will have an Asian city in 10 years.

ostritch
Member
ostritch

Cannot ban Quebec anything. Not withstanding clause.

Loon
Guest

$1B foreign investment in 35 days is significant.

Loon
Guest

More details:

https://news.gov.bc.ca/releases/2016PREM0080-001346

this looks like a Gov cash grab, not an actual restriction on foreign investors/speculators.

ttul
Member

At 15%, this is hardly a minor restriction. It’s a gigantic tax. Australia’s states impose a 3% or 4% stamp duty on foreign buyers. And their program was held up as an impressive achievement.

And, yes, it’s an enormous cash grab. Basically the Liberals looked at the new ownership data flowing in from property transfer declarations and crunched the numbers… $1B in sales in five weeks to foreign buyers – at 15% that’s $32/mo per resident of BC.. Nearly as much as MSP premiums.

Combat roach
Guest
Combat roach

Right, this is nothing except a petite additional fee for unscrupulous scumbags. BC lib clowns and their lead clown must go otherwise destruction of anything that is left of BC will continue.

HAMster
Guest
HAMster

Didn’t the Libs tell us 6 months ago to move to Fort St. John if it’s too expensive to live here? Now suddenly they want to ‘fix’ the problem? They’ve only had 10 years to deal with this. There must be an election coming up. I say vote the bums out!

Boombust
Guest
Boombust

No, they know the problem will (and is) on the way to fixing itself. It’s merely a case of covering their asses. Then, after things really start crashing, they can hold themselves up as shining examples of “prudence”.

They will also point they’re fingers at the Feds, the banks…you get the idea.

Combat roach
Guest
Combat roach

Not good enough, it should have been at least 44.4% percent in order to impact some serious money loundering.