Seller raises price then offers tax discount to foreign buyers.

Here’s a good way to get your listing in the news:

One Metro Vancouver realtor says he will cut the sale price of his own Richmond home by 15 per cent for any international buyer, in a response to the province’s new levy against foreign citizens who want in on the region’s overheated housing market.

Eddy Chen says a person from Mainland China was in the midst of completing the paperwork on the purchase of his $1.98-million house last week when the government announced its new tax, which comes into effect Tuesday. The buyer walked away after the government’s surprise announcement because they could not get a home inspection or mortgage approved fast enough to avoid an extra $298,000 brought on by the new levy, he said.

“They said they don’t think it’s fair to foreign buyers, so they want to wait and see what happens [to the market],” he said. “There’s no point for them to rush it through, because they thought they were ripped off by those extra taxes.”

Now, he has upped the price to $2.35-million, but says he will take 15 per cent off for any foreign citizen hit by the new property transfer tax so they “have an equal opportunity to get the property.”

Thank goodness there’s still a sense of decency and fairness in the world.  Read the full article over at the Globe and Mail.

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Kim
Guest
Kim

Foreigners are still paying 15% more. But of course, if they don’t care….

Kim
Guest
Kim

I also wonder if a Canadian could sue him for discrimination.

OPENHOUSEMASSACRE
Guest
OPENHOUSEMASSACRE
BubbleTea
Guest
BubbleTea

Only one! Must be thousands of them spying for China.

space889
Member
space889

Edward Snowden….

franko
Member
franko

Just heard that the market in Toronto is going nuts after the weekend as sellers and foreign buyers are in a panic to complete deals before implementation of the same tax by the Ontario government.

backwardsevolution
Guest
“China’s funds regulator said on Monday it has canceled the licenses of over 10,000 funds, amid a crackdown on the country’s poorly regulated fund management sector, which has been dogged by runaway managers and misappropriation of investments. The move comes after the hedge fund industry was thrown into disarray earlier this year as managers rushed to comply with stringent new rules. “Some funds registered in reality had no intention of getting into the business,” the Asset Management Association of China (AMAC) said. “Some engaged in illegal fundraising for illegal and criminal activities under the guise of funds, cheating the public,” the note added. New rules introduced by AMAC that took effect in July require fund managers to fully disclose their investment risks, review the identities of investors, and set up special accounts to manage capital.” http://www.reuters.com/article/us-china-funds-regulation-idUSKCN10D02Q Might be one of… Read more »
david
Guest
david

So the government thought it had it all figured out, with a slick solution that made them money AND didn’t upset voters.
And lo and behold, the market reacts and does exactly what it does every time: adapts.

Leaving the politicians to marvel once again at the Law of Unintended Consequences. As they do a lot.
Because they’re idiots….who consider us even bigger idiots.

space889
Member
space889

No, just you & rest of the bears who are going orgasmic over this tax, which will simply do nothing past the initial 3 months shock, and the people whose deals don’t complete before August 2.

david
Guest
david

Putzes gonna putz.

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

http://www.straight.com/blogra/746706/demand-vancouver-residential-real-estate-could-be-putting-farmland-and-food-security

Interesting. Apparently ALR rules allow for a single home to be built on each property, presumably because the farmer needs a place to live. But nowhere does it state that you need to actually grow any crops, so some buyers are purchasing entire 20-acre farms to build their “mansion”.

Quote: “Excellent site to build your mansion,” reads an ad Olsen found on a for-sale sign for a 22-acre property on Mount Lehman Road in west Abbotsford.

Talk about unintended consequences.

Dddd
Guest

I don’t think it works like that. Many of those mansions have blueberry farms in the back. I think that the portion of the land that is used as a farm is taxed very low. So in addition to the alt there are other taxes.

Drive down no 5 road in Richmond. Many massive houses are selling blueberry to the public. Many more lease the land to blueberry growers.

space889
Member
space889

And yet those blueberries are still darn expensive.

patriotz
Member

Assessment of land in the ALR at agricultural value requires that it actually be farmed. Otherwise it gets market value assessment like any residential property. So there’s a big property tax penalty to leaving that land unused.

HAMster
Guest
HAMster

Or people that own acreage who get their property rezoned as farmland so their property taxes drop to almost nothing. I know of a guy in rural Langley on a few acres who is doing this. Plant some trees and call yourself a tree farm.

patriotz
Guest
patriotz

Property tax rates in Langley Township are actually much higher for farm zoning than for residential zoning. See for yourself:

http://www.tol.ca/Portals/0/township%20of%20langley/finance/tax%20rates/2016%20Tax%20Rates.pdf?timestamp=1470226227765

patriotz
Member

He simply trying to get foreign buyers to up their bids. They will offer 15% more to him than for an identical property without such a “deal”, as what they are concerned about is their net cost. Oh, and he gets a lot of free advertising.

This is essentially that same as the “we pay GST” sales you see. No they’re not paying the GST, you are.

Newcomer
Member
Newcomer

Metro Vancouver home sales dropped 75% after foreign buyer tax announced: realtor

http://globalnews.ca/news/2861138/metro-vancouver-home-sales-dropped-by-75-after-foreign-buyer-tax-announcement-realtor/

Best place on meth
Guest
Best place on meth

If that’s the case then by next week Paul should be reporting some pretty tiny sales numbers, given the 1-2 week lag between the sales date and the posting date.

Mr Yeeeeee
Guest
Mr Yeeeeee

10000+ listings by the end of August

space889
Member
space889

Weren’t you people cheering about 20K party and the start of RE bubble burst a few years back? Now 10K inventory is going to do what 20K inventory can’t?

Bag it and tag it
Member
Bag it and tag it

The fact that there was a sharp drop off the week prior to the announcement is a clear indicator that insider information was disseminated.

Shut It Down Already
Guest
Shut It Down Already

There’s always a sales drop off in summer.

Best place on meth
Guest
Best place on meth

Don’t quite understand Eddy’s math here.

If he raised his price by 15% so that he could offer a 15% locust discount to his money-laundering mainland buddy, then nothing changes – they still pay 1.98 million plus the 15% tax.

And why is Slimy Ed favouring offshore buyers in the first place?

I think Eddy boy is going to earn himself a much deserved CRA audit in the future, he seems to be one hell of a shady fucker.

Kim
Guest
Kim

Because very few locals will buy in Richmond for that price. Most locals can’t afford it, unless they are moving up/have help/etc. But very few non-Chinese will move to Richmond nowadays.

Combat roach
Guest
Combat roach

Who sane would live in Richmond if not Chinese?

patriotz
Member

“And why is Slimy Ed favouring offshore buyers in the first place?”

He isn’t. The list price means nothing, and a 15% “discount” off the list price means nothing. He will accept whatever bid puts the most money in his pocket.

Shut It Down Already
Guest
Shut It Down Already

There’s no math wizardry involved. He’s just promoting his own listing. And it clearly worked.

Chabar
Member
Chabar

Premier Clark and Mayor Roberston are standing up for their rich friends rather than Vancouverites. The 15% tax is pocket change for those buying up Vancouver. This situation can be dealt with effectively and immediately if the federal government recalls parliament to change the immigration laws to stop the sell-off of Canada to Chinese.

Kim
Guest
Kim

People keep saying 15% is pocket change but this is not pocket change. I don’t invest in real estate but I buy stocks-and I look at valuation closely. If a stock price suddenly moves up 15% with no justification, I won’t buy it, even if you can afford it. If you are a prudent investor, you do not throw away 15% like that. Now, if you are desperate to move money out, then sure, pay the extra 15%. But the psychology of this says that you are being stupid and nobody likes to be played.

Remember, Vancouver is not the only place in the world to buy real estate.

patriotz
Member

It has nothing to do with immigration, and everything to do with polcies encouraging foreign buyers, immigrants and native born Canadians alike to use RE as a tax shelter.

Oracle
Guest
Oracle

Immigration needs to be reduced. Otherwise our infrastructure is going to be overwhelmed and we will end up a third world country with everything being user pay.

Permanent resident formation needs to be reduced by 50% per year. That would still be one of the highest rates in the world.

HAMster
Guest
HAMster

This is an old retail marketing trick. Boost the retail price, then put it on “sale” at the regular price. It is illegal to do this in retail sales, but not in real estate.

Chabar
Member
Chabar

Is there a word “illegal” in the Chinese wocabulary?

Best place on meth
Guest
Best place on meth

Probably, but they don’t have a word for ethical, moral or respect.

Ulsterman
Member

I watched the video below of the guy who’s lived in China for 10 years. He likes it and commented on how safe it was. But what really struck me was the absolute lack of ethics he claims is the norm in the society. Food is dangerous, contaminated baby formula, out of date vaccines, no regard for pedestrians on the road etc. I basically said that if a Chinese person can make a quick buck, they’ll do it regardless of how many people get hurt or killed. They think only about their own interests and in the short term. I THOUGHT, WTF is wrong with these people and why do we want this culture’s values dominating the Lower Mainland?

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

If this is true, I think it’s the result of having in the recent past lived under a brutal authoritarian regime without any revolution away from it. People stop taking personal responsibility when they have been disempowered in that way.

patriotz
Member

The listing price for RE is simply an invitation to bid, so the seller can set it at any value without any justification.

Boombust
Guest
Boombust

Someone posted an article on today’s blog by a realtor who said sales to foreign buyers have collapsed by about 75%.

So, if all of these foreigners are so RICH and fresh out of the money-laundering-mat, why would a paltry 15% be such a big deal to them?

Boombust
Guest
Boombust

That would be Garth Turner’s blog…

Best place on meth
Guest
Best place on meth

That would be the blog of the prick who referred to the foreign buyer tax as a “head tax”.

Race baiters are incorrigible.

space889
Member
space889

And racists morons are scurring excitedly like cockroaches, while trying to appear all nice and pretty.

Oracle
Guest
Oracle

You denying that Garth is a liar? The facts speak for themselves.

Newcomer
Member
Newcomer

If this tax has effect, it will be primarily psychological (like everything else in this market). If people (especially local people, who account for the vast majority of sales) think, “This tax may lower prices,” they may wait a while before making their offer. Whether that will cause prices to fall is anyone’s guess.

Boombust
Guest
Boombust

I absolutely agree with you. The psychology of any bubble is all about second-guessing everyone else…

Shut It Down Already
Guest
Shut It Down Already

Stats like this tend to breakdown when the numbers are small. Sales may have dropped from 4 to 1, which is indeed 75% technically but it’s disingenuous to present it as such. If it was a drop from 4000 to 1000 then it’s be more significant.

paulb
Member

New
380
Sold
151

TI:9084

http://www.paulboenisch.com

Bag it and tag it
Member
Bag it and tag it

Can anybody (preferably Paul) confirm what are classified as ‘sales’ for these stats? Is it title transfer/registration (ie. close date) or is it an accepted offer after subjects are lifted? There was some discussion on this last week but I don’t think there was any consensus.

Shut It Down Already
Guest
Shut It Down Already

This has been discussed lots of times. For example, http://vancouvercondo.info/2010/05/friday-free-for-all-111.html

Google is your friend.

Bag it and tag it
Member
Bag it and tag it

OK then…considering all the stories of the sudden drop off in sales since the tax was announced, I would imagine this will be one of the biggest sales days we’ll see for a long while. I suspect a lot of these sales happened over the weekend and were quick sales which also closed before the tax deadline. I suspect sales will start to tail off dramatically going forward.

Shut It Down Already
Guest
Shut It Down Already

Unlikely that you’d find a lawyer working past 4pm on a weekday let alone at any time over a long weekend.

HAMster
Guest
HAMster

Lawyers can work 36 hours a day.

Bag it and tag it
Member
Bag it and tag it

From the Bob Rennie article: “Another 300-odd transactions were recorded over the long weekend.” Looks like you’re wrong not once, but 300 times.

Newcomer
Member
Newcomer

Dude, you’ve obviously never met a lawyer. Lawyers will work all day and night, and go to a nearby hotel so they can get two hours sleep before getting back behind the desk, and then have other lawyers call them slackers.

Lurker
Guest
Lurker

How come the total inventory hasn’t changed?

patriotz
Member

Vancouver condo marketer denies he knew about foreign-buyer tax

I hope Bob has a rear view mirror on this bike, backpedaling at that speed can be hazardous.

Best place on meth
Guest
Best place on meth

Everyone calling into CKNW this afternoon as well as the hosts of the show believed he had insider info.

Even if he’s telling the truth (unlikely), in the court of public opinion he’s already a dead man.

Bag it and tag it
Member
Bag it and tag it

I don’t recall popcorn ever tasting this good

Ohhhhh weeeeeeE
Guest
Ohhhhh weeeeeeE
Combat roach
Guest
Combat roach

As time goes by all these talks about China stopping the capital flight sound more and more as a complete bullshit. Neither their corrupted communist government is capable to stop it, neither it would be possible to do anything like that in the society where fraud, deception, cheat and corruption are essential attributes defining success. It is hard if possible at all to undermine a rock-solid fundament that system is built upon.

OPENHOUSEMASSACRE
Guest
OPENHOUSEMASSACRE
This following point is taken from G&M made by Working Class Revolution.This is one best i have read on controlling Vancouver RE. 1. Re-Regulate Real Estate as a Special Class of Property: De-license all realtors and brokerages, which are a redundant monopoly. Create a public secure online property registry and tender system for all real estate transactions. All property sales by public tender with public electronic opening of bids. All bids required to be conditional on at least a minimum standard set of due diligence items (inspections, disclosures etc.), to slow down sales. Prohibit assignment (shadow-flipping) and replace with bid bonds (insurance). Enforce disclosure and compliance for identity, residency, citizenship, place of declared income, source of funds legal and Canadian-tax-paid, buyer/seller agency, shadow-flipping prohibition, previous commercial use of property, commission structures, etc.. 2. Reciprocal Property Ownership Limits: Create a new… Read more »
Combat roach
Guest
Combat roach

Right, Canada is flirting with a deadly disease, a cancer of the worst kind. This is not about affordable housing any longer but the destiny and future of Canada. Berlin Olympics 1936 and German pretensions looked quite innocent but several years after the worst horrors became a part of everyone’s life. Apparently lesson hasn’t been learned.

Mr Yeeeeee
Guest
Mr Yeeeeee

Australia having similar issue, chinese money tap turned off.

http://www.zerohedge.com/news/2016-08-02/d-day-australias-real-estate-bubble

mls watch
Guest
mls watch
mls watch
Guest
mls watch

Good overview of the situation, but the conclusions are not appealing …

southseacompany
Member
southseacompany

“A Return To ‘Normal’ Mortgage Rates Would Crush Canadians”, Huffington Post
http://www.huffingtonpost.ca/2016/08/02/mortgage-rates-canada-debt-crisis_n_11262930.html

“An analysis by The Huffington Post Canada has found that a return to a mortgage rate of five per cent — the “normal” rate for years prior to the financial crisis — would put severe pressure on many Canadian homeowners.”

“In Toronto, average payments on an average-priced house would rise by $923 per month, from $3,079 to $4,002. In Vancouver, payments would rise by $1,097 per month, from $3,677 to $4,774.”

HAMster
Guest
HAMster

My first mortgage in 1990 was 11.50%

HAMster
Guest
HAMster

I had a car loan in 1980 at 16.5% from RBC or the Royal Bank as they were known back then.

space889
Member
space889

And 5% mortgage will be coming when???

Kim
Guest
Kim

I’ve said it before and il say it again. US fed will raise rates sooner rather than later. That will force BoC to raise. If they don’t our dollar will plunge even more, making imported goods more expensive and sparking rampant inflation. Net effect is the same, squeezing household budgets.

southseacompany
Member
southseacompany

“San Francisco housing prices are now above previous bubble levels”, Business Insider

http://uk.businessinsider.com/san-francisco-housing-prices-above-previous-bubble-levels-2016-8

“Housing prices in the San Francisco Bay Area are so insane, we have tech workers living in vehicles in company parking lots, people building “pods” in living rooms so they can live there with some privacy, and microscopic apartments selling for $425,000.”

‘Despite the slowing of the tech boom, there’s no end in sight. As this chart from Statista shows, home prices in the area are at an all time high, passing their housing bubble peak of $665,000, which was set in summer 2007.”

HAMster
Guest
HAMster

Someone asked for a youtube link to the guy living in China, so here it is:
https://www.youtube.com/watch?v=0gJ0nfQ9dEU
He has various videos posted, so you can look through them to get a feel for the way life is over there.

southseacompany
Member
southseacompany

“The REALLY Big Short: The $13.7 Billion Dollar Bet Against Canadian Banks Over Housing And Insider Sales”, Better Dwelling

https://betterdwelling.com/the-really-big-short-the-13-7-billion-dollar-bet-against-canadian-banks-over-housing-and-insider-sales/

“t’s no secret that smart money has been piling into bets against the Canadian housing market, but now it’s reaching an epic scale. A little digging revealed that more than $13.7 billion in short bets are being placed against Canada’s big 5 banks”

mls watch
Guest
mls watch
space889
Member
space889
Was up camping in Squamish this long weekend and the place was overrun by mainland Chinese. The topics is all about the tax and laments about having to pay the 15%. But already, advices, strategies and referrals are flying about avoiding it. And the enterpreneural spirits unleashed by the end of communism has already smelled business opportunities offered by this tax. Also, the REMax office is swarmed by eager Chinese tourist buyers looking at investment & development opportunities. Rents are also going up to cover the extra cost due to the tax. Lastly, many are turning to places outside of lower mainland now. This tax has forced Chinese to look elsewhere for opportunity and boy did they find out what they have been missing. All I can say is better hurry and visit BC before Chinese buy it up, development… Read more »
Oracle
Guest
Oracle

Do you realize that continued dominance by a foreign group will eventually wake up the locals…Door will be shut down on Asians. Learn History.

As an South Asian myself, you have no idea what you’re promoting.

92% of people don’t want foreign buyers as per recent polls. How long before 92% don’t want chinese immigrants? Think hard.

Newcomer
Member
Newcomer

“Rents are also going up to cover the extra cost due to the tax.”

Oh, really. So people don’t mind paying double or triple what the get in rent on mortgage payments, but they will be able to jack rent up 15% to cover a tax that impacts 10% of the market. A friend of mine just started a lease on a place that was recently bought for 2.5 M. His rent, 4 K. I guess places like that will be going for 4K + 15% now 🙂

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