Foreign buyer tax hurts blue collar immigrants in the Fraser Valley?

Business in Vancouver has an article predicting that the BC Foreign buyer tax will hurt blue collar immigrant workers in the Fraser Valley, which is weird because we were under the impression that the tax was on the Metro Vancouver area and the valley was exempt:

Rob Philipp, chief executive officer for the Fraser Valley Real Estate Board (FVREB), said that while the new tax is aimed at high-end buyers, it’s only going to hurt the working-class immigrants who are trying to move to the region. He called the Fraser Valley’s immigrant population “the engine that drives us.”

“The people who are buying on the west side of Vancouver, they don’t really care about an extra 15% tax. If you’re buying two-, three- or four-million-dollar homes, they want into the market regardless.”

Philipp said the new tax also dampens the incentive for skilled out-of-country workers to settle in the region.

“As a province we’re trying to recruit really specialized professionals – doctors, nurses, certain types of engineers,” he said. “And those are people who are spending $800,000 to buy a place out here and now they’re thinking, ‘Well, I have to spend another $120,000. I’m not going to do it.’”

The other odd thing is that if skilled out-of-country workers actually ‘settle in the region’ and file a Canadian tax return they are exempt from the foreign buyer tax, so we’re curious how it would dampen incentives to move here any more than paying $800k for a house out in the Valley would.

Read the full article here and please correct us if we are mistaken about how the foreign buyer tax actually works.

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HAMster
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HAMster

What to make of this incident:

http://www.news1130.com/2016/08/17/vandals-use-paint-to-ruin-new-north-vancouver-home/

Is this a backlash against property speculators/ Asians/flippers or what?

C.Junta
Guest
C.Junta

“…Now, they restrict themselves to occasionally blowing up vacation homes owned by wealthy foreigners”

http://www.vice.com/en_ca/read/piss-off-a-corsican-and-theyll-bomb-your-holiday-home

I hope I will never see it in Vancouver. It’s a dead end.

Funkeymonkey
Member
Funkeymonkey

A co-worker just bought a 1m+ condo, still owns his condo he thinks he can get 800k for it. Only bought it 2 years ago 550k I think. This is a couple who makes less than 200k a year.
We will se what happens.

Mortgageslave
Member
Mortgageslave

Oracle, there’s this new tax on foreign real estate purchases, notsureifyouve heard of it. It’s designed to stop foriegn speculation and cool (crash) the market. Can you tell us all again for the 100th time this week how loads of imigrants are fleeing to Vancouver to get in on the overpriced bubble and tax bonus. What a load of shit u spew. Do u give your friends this advise.? Who needs enemies….lol

Best place on meth
Guest
Best place on meth

Yesterdays detached sales in Vancouver:

East side – 1 sale, 6% over asking, sale date Aug 2

West side – 1 sale, 4% over ask after 6% price drop, sold July 15

yvr2zrh
Member
Great info – let’s keep this up . . This is a complete disaster really. Just a quick thought. When we get to the end of this month, it would be interesting to run the sales report for VVW/VVE/VRI/VWV/VNV and the 3 Burnaby sub-zones. Find out how many SFH sold with a sale date after July 25. Remember, the board publishes numbers based on the date the transaction made it into their system as a sale but the actual sale date which is entered manually is often quite far back – as you can see today with the July 15 sale date for the one transaction today which posted. This is actually still a trickle over from before the tax announcement. The sale date is the date the subjects come off and not the date of completion (AFAIK). So –… Read more »
UBC in Crisis Mode
Guest

There are 239 listings in Van West over $5 million, and 10-20 more are added every day since the new tax. What gives?

http://www.realtylink.org/prop_search/Detail.cfm?MLS=R2088868&REBoards=All&From=MLS

franko
Member
franko

” People buying in the west side of Vancouver, they don’t really care about an extra 15% tax ”

The fact that a mindboggling 15,000 transactions were completed within 48 hours of the deadline tells me that THEY CARE A LOT. The mere thought of such a tax a year ago would have sounded absurd, and we should give ourselves credit for having forced the BC govt to act, and I wouldn’t rule out further legislation if the outrage is loud enough.
Meanwhile, the Federal Liberals have not only done nothing, but are going in the opposite direction with more immigrants…and whatever happened with Moonbeam’s plan to tax vacant properties?

yvr2zrh
Member

Frankly, the comment that people won’t care about the tax is a load of crap. If you understood the economics of what it means to add 15% closing costs- on top of 3% PPT which is already in place, on top of the 35% that a foreigner basically must put down – you are reducing their overall maximum purchase capacity by 30%.

Now – there are some who are just truly completely wealthy – – but most people don’t get there by paying tax. Heck – you may find that some foreigner who buys a $20M house pays more tax on that purchase to BC than they have in their home country in their entire lifetime.

C.Junta
Guest
C.Junta

Have you ever heard about foreign investors snapping Singapore RE? Progressive property tax may be a reason why you never have:

https://www.iras.gov.sg/IRASHome/Property/Property-owners/Working-out-your-taxes/Property-Tax-Rates-and-Sample-Calculations/

Think of it as a wealth tax with the rate that grows together with your home value. And mind you, your home value is calculated using potential rental income numbers (they call it “annual value”). Pretty interesting and makes sense to me.

patriotz
Member

These rates are low even compared to City of Vancouver, which has low rates by global standards. A house that would rent for $55K annually would likely be worth at least $1.5 million in CoV. In CoV that’s a property tax of about $4600. In Singapore it’s $1880. At the top end the rates in Singapore can be double this or more, but they’re still pretty low.

Now as we know low property taxes enable high prices relative to rents. Who owns all the land in Singapore – the government.

Kim
Guest
Kim

My relatives in San Francisco were paying 10k for a 1 million dollar assessed property. In Vancouver, a 1.3 million dollar assessed property would pay 4K in taxes. Raise property taxes accordingly and you will see more pressure on prices

C.Junta
Guest
C.Junta

I totally agree that Vancouver property tax rate is extremely low. I just mentioned the taxation scheme – we can negotiate the actual rate numbers when implementing it here 🙂

“Who owns all the land in Singapore – the government” – can I have a link to your source please?

patriotz
Member

OK not all of it, but over 90% which is effectively monopoly control.

read this

C.Junta
Guest
C.Junta

“OK not all of it, but over 90% which is effectively monopoly control”

Fine. Same in Canada:

“About 89% of Canada’s land area (8,886,356 km²) is Crown Land, which may either be federal (41%) or provincial (48%); the remaining 11% is privately owned”

https://en.wikipedia.org/wiki/Land_ownership_in_Canada

Zero Down Forty
Guest
Zero Down Forty

Your comparing the second largest country in the world with one of the smallest, a tiny island-city state?

Yeah, the Crown owns vast areas of uninhabited wilderness and tundra almost the size of Europe. Not a reasonable comparison.

C.Junta
Guest
C.Junta

“Not a reasonable comparison”

Maybe. In such a case, let’s leave alone the “government owns X% of the land” thing. It was not me who brought it up.

Zero Down Forty
Guest
Zero Down Forty

When the gov owns 80%-90% of habited urban land, and 80% of residences are public housing, that is reasonable point to bring up.

Comparing that to vast uninhabited wilderness is not reasonable.

C.Junta
Guest
C.Junta

“80%-90% of habited urban land”

Care to provide a credible number source for Canada and Singapore?

Anyways, my point is: arguing without having trusted numbers and clear definitions, like what “inhabited” means, does 99 year lease means “ownership” or no etc is walking on thin ice.

I just mentioned a taxation mechanism that makes sense to me, and I cannot see any fundamental reasons why it cannot be implemented in Canada. Not sure that government land share is a factor here.

Zero Down Forty
Guest
Zero Down Forty

Kind of hard to snap up a lot of Singapore’s real estate when 80% of the population lives in public housing.

https://en.wikipedia.org/wiki/Public_housing_in_Singapore

C.Junta
Guest
C.Junta

Correct. And “public” means:
“The majority of the residential housing developments in Singapore are publicly governed and developed”. Not “owned”, mind you.

HDB is a way to achieve high homeownership rate in a controlled environment. At the same time, they have free market for non-HDB housing, so if you have money and do not want to live in a tiny HDB apartment (and yes, most of them are tiny), go ahead and buy a condo/home and get ready to be taxed on a progressive scale.

elvince
Guest
elvince

“The people who are buying on the west side of Vancouver, they don’t really care about an extra 15% tax. If you’re buying two-, three- or four-million-dollar homes, they want into the market regardless.”

Sounds like a good argument to make it a 30% tax. Then if it still doesn’t have any effect, it can be raised by 15% increment every 6 months. At some point, a 1500% tax ought to do something…

Kim
Guest
Kim

They will care if they are speculators and/or flippers. For a long term hold, probably not a big deal but as an investor, I would never even pay more than 0.5% as a “cost of investing”.

bullwhip29
Guest
bullwhip29

Auckland too much like China says Chinese immigrant and real estate agent
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11693726

bullwhip29
Guest
bullwhip29
Kim
Guest
Kim
Shut It Down Already
Guest
Shut It Down Already

And the relevance to real estate is…?

Kim
Guest
Kim
My point is China is exporting everything, even table tennis players representing other countries are Chinese. Of course, in many sports athletes born in one country will compete for another but not to this extent. This is much larger than table tennis. China seeks to export its culture to dominate the world, or at least the west. If they don’t physically take over our country, they will make it so that our government is subservient to them, like Trudeau and Harper. And Gregor. Look at all the backlash at our tax. Cries of racism, and even Chinese envoy is getting into it. Why should they care about how we tax our properties? The only way forward is to be cozy with Americans, because right now, only America has the strength and will to stand up to an increasingly belligerent and… Read more »
CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

The larger socio-economic context is relevant to real estate in Vancouver. In another time and place, maybe social and cultural factors wouldn’t be. But to understand what is happening here we have to look at the bigger picture.

bullwhip29
Guest
bullwhip29

and for some comic relief…

Mainland tourists in Phuket get their Chinese buns handed to them in viral video by Chinese auntie
http://bangkok.coconuts.co/2016/08/11/chinese-tourists-phuket-get-their-asses-handed-them-viral-video-chinese-auntie-video

bullwhip29
Guest
bullwhip29

The Vancouver Art Gallery courts Chinese donors
http://www.bcbusiness.ca/tourism-culture/the-vancouver-art-gallery-courts-chinese-donors

“As the Vancouver Art Gallery tries to build its donor base, a new class of immigrants rises in importance…”

bullwhip29
Guest
bullwhip29
bullwhip29
Guest
bullwhip29
Oracle
Guest
Oracle

Highest per capita in the world.

And all concentrated into 2 cities.

bullwhip29
Guest
bullwhip29

presenting the suburban townhouse, the only remaining viable option for many regular lower mainland families seeking something resembling the perfect home they dreamt about in a former life…

http://bc.ctvnews.ca/housing-frenzy-would-be-buyers-camp-out-for-ladner-townhouses-1.3031420

HAMster
Guest
HAMster

6 people in line. Seems like the word is finally getting out there to the unwashed masses that RE is finished.

yvr2zrh
Member

I was thinking the same thing. Not that much of a line. What I would get the news to follow up on is to see what the prices are and if they actually sell out. It’s a small development and there are still some fools out there (who maybe don’t see that prices are about to crater in several areas). Remember to two auctions (one in Victoria and one out in Coquitlam) which were so highly covered on the news – – ultimately, they did not get bids so they did not sell . . .

southseacompany
Member
southseacompany

“Vancouver Housing Crash Could Be Bad. It Could Be Good, Too.”, Huffington Post
http://www.huffingtonpost.ca/2016/08/17/vancouver-housing-crash_n_11342002.html

“Greater Vancouver home sales have been falling for four months. On the west side alone, sales of detached homes have dropped for the last three, even as supply remains stable.”

“A housing crash is now emerging as a very real possibility.”

“But how deep could housing fall? And how tough would it be on Vancouver and B.C.’s economies?”

Oracle
Guest
Oracle

Unlikely.

Immigration is about to be increased from insane levels.

You don’t even need anything like a PR to live here anymore. Free for all.

Zero Down Forty
Guest
Zero Down Forty

“From insane levels”?

Vancouver’s growth rate has been steadily falling for the last three decades. The 00’s saw the lowest growth rates excepting the 70’s and 30s. Yet prices soared. https://en.wikipedia.org/wiki/Demographics_of_Vancouver

There has been no correlation between population growth and home prices. Don’t look for a rational cause for a bubble – bubbles are irrational.

HAMster
Guest
HAMster

Agreed. We had high immigration levels all through the 1990’s and RE prices (inflation adjusted) dropped almost 50% between 1990 and 2001.

bullwhip29
Guest
bullwhip29

geez, this nyberg and zimmerman couple are getting way too much mileage out of their sob story than would normally be under regular circumstances. this all tells me it is an orchestrated and staged publicity stunt funded and directed by an entity way further up on the food chain

http://www.macleans.ca/news/canada/b-c-foreign-buyers-tax-mires-home-sale-in-uncertainty/

bullwhip29
Guest
bullwhip29
HAMster
Guest
HAMster

Wages are not increasing so neither will rents.

Oracle
Guest
Oracle

Just wait a few years. It’s going to put many smug Caucasian renters out on the streets.

It’s immigration numbers stupid.

Funkeymonkey
Member
Funkeymonkey

Or it might make more skilled workers leave.

bullwhip29
Guest
bullwhip29
Dyugle
Guest
Dyugle

We need to tax non-residents yearly like they do in PEI. Anything less is a waste of time and simply pandering forpolitical gain.

space889
Member
space889

Upvote if your ideal home is a condo?

space889
Member
space889

Upvote if your ideal home is a townhouse?

space889
Member
space889

Upvote if your desired home is a duplex or triplex?

space889
Member
space889

Upvote if your ideal home is a SFH in your desired neighborhood.