Four major changes to Canadian housing rules

Vancouver home sales have plunged by about a third in the last month or so, this been largely blamed on the foreign buyer tax.

But that tax focused on the city of Vancouver isn’t the only change to the real estate market, new rules and changes have the potential to affect the wider region and the nation as a whole.  Southseacompany posted this summary from a Globe and Mail article  in the comments:

“Four major changes to Canada’s housing rules”, Globe & Mail
http://www.theglobeandmail.com/real-estate/four-major-changes-to-canadas-housing-rules/article32223470/

1. Expanding a mortgage rate stress test to all insured mortgages.

2. As of Nov. 30, the government will impose new restrictions on when it will provide insurance for low-ratio mortgages.

3. New reporting rules for the primary residence capital gains exemption.

4. The government is launching consultations on lender risk sharing.

As Canadian Mortgage Trends puts it, is this the last nail in the coffin?


NOTE: disagreements are fine, but repetitive personal attacks and insults to other posters will get you an IP ban.

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bullwhip29
Guest
bullwhip29
I think word is finally out that a “global” RE (and other asset) bubble is finally unravelling at the seams after one bandaid after another has been applied since 2008. It’s been a hell of a run for the last 8+ yrs or so, but central bankers and other policymakers are basically out of moves now. There are no excuses this time around. We’ve all had ample time to get our finances in order since the days of Lehman’s collapse and have heard warning after warning from everyone under the sun that things are going to end badly (eventually). Well, my guess is that time is upon us now and what we are about to witness will make 2008 look like a minor tremor. Anyone that turned a blind to all this and blew their brains out spending wise is… Read more »
Royce McCutcheon
Member
Royce McCutcheon
You mention the responsible folks. If I can float a tangent: what if the responsible folks don’t play ball? I’m not talking about a revolt or anything. But what if enough of the responsible folks – and anyone coming up who was too young to participate but will see a wasted land before them – decide to just live differently. What if they eschew the big city/ professional aspirations of their predecessors? I mean, think about how some jobs are increasingly portable and can be worked from anywhere. As this is more and more possible, people might choose to live in Creston or Terrace or Port Hardy, keeping their nut small to achieve a better quality of life. Particular as many parts of Vancouver have become ghost towns for families. These people won’t need to earn as much, they won’t… Read more »
Boombust
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Boombust

Well said.

yvr2zrh
Member
The stats for September are out. What is strange is that although the market is weakest in terms of sales volumes at the high end, it is the low end that is having more price decreases (including Fraser Valley). I think it is important to be clear that the mortgage rules announced yesterday result in a massive reduction to liquidity in the market. People will have significant reduced borrowing capacity and this will reduce prices at the low end (even more). In the coming 2-4 weeks, the REBGV will have daily stats which spike higher as people rush to get deals done before their borrowing capacity is reduced. It’s a bit strange – knowing that the new rules will create downward pressure on prices, instead of waiting for prices to adjust, people will rush to beat the deadline and pay… Read more »
bullwhip29
Guest
bullwhip29

what is even more strange is the sleight of hand trick morneau seemed to pull on the masses yesterday. what was billed as another measure to clamp down on foreign criminals was really more about battening down the hatches when it comes to lending at the lower end of the scale. seems like the light bulb finally starting to turn on today and many just feeling outright blindsided by all this.

yvr2zrh
Member

Exactly – – The foreign buyer headline was partly a red herring (a big one really – look how long it was talked about – like it actually was something – – I’m a tax “expert” and I could not figure out in any way what this really meant – and what really had changed. . . but – it also is something perhaps they are trying to get political brownie points for . . since it is somewhat politically popular to bash the foreign buyer right now.

One thing I read today – which I have not fully confirmed or understood – was that mortgages on properties over $1 million no longer qualify for any CMHC bulk insurance. Is this a change? is it true? How does this affect a monoline lender?

bullwhip29
Guest
bullwhip29

it looks like when (not if now) things go to hell in a hand basket, they (and all locals) can point the finger at all those corrupt foreign buyers. whether true or not, that’s what many want to believe (and the reason donald trump is doing much better than practically every rational minded person first thought)

patriotz
Member

The reason Trump did better in the Republican primaries than people expected is because people underestimated how much the GOP’s core support was based on racism and misogyny.

As for the general electorate, so far Trump’s poll numbers have lagged Mitt Romney’s all the way through the main campaign.

Best place on meth
Guest
Best place on meth

His poll numbers have lagged Romney’s for one very simple reason.

3rd and 4th party candidates are taking 10% more of the votes than they did 4 years ago.

This is why Hillary’s numbers are also way behind Obama’s.

patriotz
Member

You have the causality backwards. The 3rd party (in the case of Trump) is picking up voters because Trump can’t retain all of Romney’s support. It’s not like that guy who can’t name a single foreign leader is running a standout campaign.

Combat roach
Guest
Combat roach

A jester Donal Trump is a Trojan Horse brought by Democratic Party to secure the election victory.

bullwhip29
Guest
bullwhip29

honestly, i think many people just want to see these kind of people get torched for once. if trump is the guy to do it, so be it…

http://www.zerohedge.com/news/2016-10-04/clinton-foundation-hacked-exposing-thousands-donor-databases-pay-play-folder

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

If the Occupy protest had not been squelched by all the phony disrupters dressed as participants running around the camps, if people had been able to address the causes of the 2008 crisis instead of bailing out banks, Trump would not have appeared on the scene. If the Occupy protest had not been squelched due to the threat of the opponent to the mayor (remember there was an election going on at the time), some of the root causes of the housing crisis might have been addressed. Remember what happened in Vancouver during Occupy? Did anyone here even pay attention to that? Did you notice how it unraveled? Did it occur to you to wonder why and how? Wouldn’t it have been great to have examined THEN rather than now, how the economy really works in this city?

Newcomer-can\'t-post
Guest

In a way, it was a very neat trick, but by itself, it has no effect. The status quo was that you don’t have to declare so, until people know that they do have to declare, everyone will keep on not declaring, and will keep on flipping houses they don’t live in an not declaring them because they guess they can get away with it. For the policy change to have an impact, they will have to let everyone know and make examples out of people and whatnot. I wonder if they were just saving that for later, and if so why.

Boombust
Guest
Boombust

If the cohort at the lower buying end is shut out, price adjustments at the higher end will respond downward accordingly. I guess we could call it “trickle up economics”

Boombust
Guest
Boombust

I watched a BNN interview with the guy from Rate Hub…according to him, it is doubtful there will be a mad rush to buy before Oct. 17th. But, who knows?

Ktown
Guest
Ktown

Would have to be a complete idiot. Anone that buys right now with the stats out there deserves to lose every penny.

Billybonger
Guest
Billybonger

U r, interesting and thanks. Are you sure about that – can you please provide additional details?

Oracle, I would never wish that on anyone’s mother, ever. Just so you know.

Shut It Down Already
Guest
Shut It Down Already

Assuming you survive the IP ban it would be swell if you could learn how to use the “reply” button to give us a clue what you’re talking about.

Oh oh
Guest
Oh oh
Oh oh
Guest
Oh oh

Gen worth stock sinking just like vancouver houses…..better buy a lifejacket this ship is sinking

supersogs
Member
supersogs

WHOA. MSM on board?

http://www.theprovince.com/foreign+buyers+just+lost+
gains+they+made+housing/12251065/story.html

supersogs
Member
supersogs
Newcomer-can\'t-post
Guest

This exemption never existed in the first place. You could never be resident for tax purposes in another country and have a primary residence located in Canada. JOHN SHMUEL is writing based on his imagination. I’d love to see the redline version of the actual changes to the regulations.

Combat roach
Guest
Combat roach

Smash the bastards hard, they had it coming. Also focus should go onto those families with the high child poverty rate, students and homemakers living on the Westside and Richmond and their status and taxes revisited. Our society is in need of big cleanup and reset.

Boombust
Guest
Boombust

I know that “Vancouverphiles” will probably not get too excited about this, but realtor Steve Saretsky has tweeted that in Langley, the sell/list ration has plunged to 22% in September from last June’s high of 70%.

Hyper-mega-Bull
Member
Hyper-mega-Bull

comparing June to September. That’s bearlogic for you.

Can’t believe you people are buying all this “we killed the market PR”.

But I guess it makes sense. After all the gullibility of vancouverites is exactly why we now live in China.

paulb
Member

New
203
Price Change
68
Sold
127
TI:9790

http://www.paulboenisch.com

Newcomer-can\'t-post
Guest

Healthy sales for October.

Best place on meth
Guest
Best place on meth

You spelled December wrong.

Newcomer-can\'t-post
Guest

Nice one. But if you aren’t sure about how things have been in other years, you can check here: https://docs.google.com/spreadsheets/d/1dYtxpv5aEMF-Ccyyb8sKmtHI4nQL8rqP4vEVxMx4VUc/edit#gid=0

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

Oooooo schooled.

rockerguy
Member
rockerguy

I’m now calculating MOI daily – basically inventory divided by that day’s sales, divided by 30. It’s a noisy number, but this chart shows the weekly average by year:

https://goo.gl/M9yTtX

YVR
Guest
YVR

Here it is all laid out in it’s gory details from Canadian Mortgage Trends. I love gore.

Is This the Last Nail in the Coffin?

One big non-bank lender didn’t mince words when describing today’s DoF’s announcement. “This is a crisis,” the executive told CMT. The lender estimates that up to 40% of its insured volume could vaporize near-term because of these rules. Background: Non-bank lenders rely on default insurance because it (in the DoF’s words) “supports lender access to mortgage funding through government-sponsored securitization programs.” Banks don’t depend on insurance to the same extent (at least not on conventional mortgages) because they don’t have to sell their loans to investors.

So what happens now? Here are our top 10 predictions:

1. Housing prices will tumble…

http://canadianmortgagetrends.com/canadian_mortgage_trends/2016/10/is-this-the-last-nail-in-the-coffin.html

Slava
Guest
Slava
Best place on meth
Guest
Best place on meth

The petition gets this part wrong:

“As a municipal councillor and acting Mayor, Kerry Jang raised a foreign country‘s national flag in front of the Vancouver City Hall, we think this is absolutely unacceptable. ”

It’s not unacceptable that a foreign flag was raised, it’s that a foreign flag of a dictatorship was raised in celebration of the anniversary of the dictatorship.

But Kerry Jang will just blame the outrage on racism because he’s all about personal attacks and insults – he’d better not come around this blog or else.

Best place on meth
Guest
Best place on meth

Hey Admin, what the hell is this note at the top?

NOTE: disagreements are fine, but repetitive personal attacks and insults to other posters will get you an IP ban.

Define a personal attack, because every time one of these two instigators on the board play the racist card, THAT IS a personal attack and insult.

Can we take this to mean that space and shut it down are on their way out?

Finally?

Shut It Down Already
Guest
Shut It Down Already

Bullies like to silence those who disagree with them, don’t they, but I imagine this was directed at Billy.

Best place on meth
Guest
Best place on meth

Admin,

I’ve just been personally attacked and insulted by being called a “bully”.

Please remove this poster permanently as per your new regulations.

Shut It Down Already
Guest
Shut It Down Already

Admin,

May I suggest you start by banning those who repeatedly use racial slurs? It really sends out the wrong message that you allow these sorts of people to post their semi-literate rantings with impunity.

space889
Member
space889

If the admin cared about such things, s/he would have banned the likes of BPOM years ago. I think the admin is using freedom of speech as a shield to promote these views that s/he probably agrees with.

BPOM was banned from BC Real Estate Talk Forums YEARS before Jonny Horton was banned and they have to PURGE all history! That’s some accomplishment.

space889
Member
space889

BPOM, consider this notice your micro-aggression trigger warning….

There should be virtual safe space on this blog.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

At first I laughed at the way space88 employs the expression “micro-aggression trigger warning” but then the thought occurred to me that he may well know vastly more about the politics of political correctness than I could imagine. The extra-judicial Re-education camps in China only ended in December 2013. “The government finally was forced to act by widespread public anger last year when the mother of an 11- year old girl who had been raped was sent to a labor camp for lobbying publicly for the death penalty for her daughter’s attackers.”

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

According to this article the re-educaation camps to which I refer above and which so painfully recall the Mao era of repression for some people, will probably be continued under another name. http://www.csmonitor.com/World/Asia-Pacific/2013/1230/China-votes-to-abolish-notorious-re-education-camps

My point in mentioning this on a real estate blog is to point out that it is not unlikely that there is organized attention to how to bend public opinion in Canada to make more economic opportunities for nationalists supporting those in power in China. I don’t think this is a paranoid or “left field” idea.

bullwhip29
Guest
bullwhip29

that’s what your bedroom is for…

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Yes, a safe space.

Newcomer
Member
Newcomer

Garth says, under the new changes, “mortgage insurance won’t be available if you want a 30-year amortization, or have a rental suit in your house.”

Hmm, no mortgage insurance for the majority of Vancouver SFD. That might make a difference.

YVR
Guest
YVR

What people don’t realize is even conventional mortgages are insured by the banks which means the rates are subsidized. What we are seeing is this subsidy being massively scaled back. As you pointed out this will mean higher rates for Vancouver SFHs. This is only step 1. Next step is “sharing the risk” with the banks on all mortgage insurance. Again higher mortgage rates.

JayTor
Guest
JayTor

It’s about time the banks took back some of the risk for the tax payers of Canada

bullwhip29
Guest
bullwhip29

yeah right…

space889
Member
space889

But repeated attacks against an identifiable group of people are still A-OK and encouraged?

chilled
Member
chilled

It’s entirely up to you, all you have to do is cut the attacks to renters and non-Ponzi scheme participants and things can only get better. Give it a try.

Shut It Down Already
Guest
Shut It Down Already

You’re blaming space for the racism or otherwise claiming that’s it’s justified because of his posts? Get a grip, please.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Yes, all the snarky responses to space (which in fact are not racist) are totally justified because of his trolly rude creepy posts. He denigrates many kinds of people all the time and he is in particular rampantly sexist. Stop race baiting. You undermine real battles against racism. You’re just exploiting people’s concerns about it for your selfish ends.

patriotz
Member

Community shocked by sudden death of Vancouver architect Bing Thom

Another pillar of the late, great city passes.

JayTor
Guest
JayTor

Toronto is on fire… http://www.bnn.ca/real-estate

We are still trying to catch up to Vancouver, flipping crazy!

bullwhip29
Guest
bullwhip29

Ottawa’s move to tighten mortgage market will squeeze some consumers out
http://business.financialpost.com/personal-finance/mortgages-real-estate/ottawas-moves-to-tighten-mortgage-market-will-squeeze-some-consumers-out

>>> still going to take some time before we see the real effects of some of these changes

Billybonger
Guest
Billybonger

Toronto is the only hot market left in Canada, of any consequence.

Just like folks in Surrey, they will get the memo soon enough.

I bet Toronto cools long before we it the vaunted 7,000 inventory mark here.

bullwhip29
Guest
bullwhip29

or maybe HAM will recognize that toronto is more than a place to just launder money and this continues?

bullwhip29
Guest
bullwhip29
bullwhip29
Guest
bullwhip29
Chinabuyeverything
Guest
Chinabuyeverything

So Kamloops looking to sell to Chinese now …

Best place on meth
Guest
Best place on meth

I suspect that places like Kamloops and other areas of BC are being bought by Lower Mainlanders who sold out to HAM and are moving to greener pastures.

chilled
Member
chilled
Lots of social media chatter about “getting out of Vancouver and moving to Tim-Buck-Two, British Columbia.” This shit cracks me up. Been there, done that. Even though I’m in a high paying, high demand job, you quickly find out that there are two economies in BC, The Lower Insaneland and everywhere else. Yup, most people will get a job, and if it happens to turn into a nightmare, remember, that was it. Your former boss and the only other place you could work for in town is owned by your former bosses Moose Lodge buddy. I know experienced Lawyers in ‘The ‘Loops’ than can’t pull in $45K/yr. Yup, start your own business, they say. You’ll quickly find out all your potential customers are cousins of your former and potential employers at the Moose Lodge. If you don’t have a solid… Read more »
HAMster
Guest
HAMster

I looked at Kamloops as a potential “escape plan” from Vancouver but the area I was interested in; Aberdeen if I remember correctly, was under threat of a proposed massive open pit copper mine which would be only a few kilometers to the west of the housing areas. Residents are fighting it but there is too much money at stake so at some point the mine will likely go ahead.

As for Kamloops attracting any significant offshore investment; LOL good luck with that.

southseacompany
Member
southseacompany

“Toronto area housing prices, sales volume soar in September: real estate board”, Toronto Sun

http://www.torontosun.com/2016/10/05/toronto-area-housing-prices-sales-volume-soar-in-september-real-estate-board

“Housing sales in the Toronto area continued to soar last month, with the average price rising 20.4 per cent from September last year to $755,755,”

“The price increases came as the number of transactions in the Greater Toronto Area rose 21.5 per cent, a stark contrast to a big drop in the number of transactions last month in Vancouver’s residential real estate market.”

southseacompany
Member
southseacompany

“Morneau moves to pop housing bubble just in time”, iPolitics

http://ipolitics.ca/2016/10/04/morneau-moves-to-pop-housing-bubble-just-in-time/

“Over drinks in Ottawa one evening about four years ago, Jim Flaherty said he was afraid that the Toronto housing boom would become a bubble.”

“It’s been left to his successor, Bill Morneau, to finally take action on the runaway costs of residential real estate in two markets, Toronto and Vancouver.”

Boombust
Guest
Boombust

That flunky of Harper’s had a BIG role to play in this mess.

bullwhip29
Guest
bullwhip29

exactly. joe oliver just basically kicked his feet up and stared out the window for a few months

Billybonger
Guest
Billybonger

While Toronto is hot, may I remind you that…

Vancouver is NOT.

If you strip out whistler, Sunshine Coast and Squamish, the sales slow down is even more dramatic.

I am waiting to see listings truly surge, and to be fair, they have as of yet not.

Interesting times for sure.

southseacompany
Member
southseacompany

Fraser Valley RE Board stats out. FV includes North Delta, Surrey, White Rock and Langley.

http://www.fvreb.bc.ca/statistics/Package201609.pdf

/dev/null
Member
/dev/null

Price drops are my new favorite spectator sport. It’s always nice to see naïve optimism (or greed) come back down to earth.

R2098231 – 475 46TH AVE E
Aug 5/16 – $2,498,000
Aug 30/16 – $2,198,888
Sep 7/16 – $1,998,888
Current Price – $1,798,000

bullwhip29
Guest
bullwhip29

love how they got rid of the lucky eights

No Money Down
Member
No Money Down

She’s a beauty to beold.

bullwhip29
Guest
bullwhip29

these kinds of places in vanc, rmd etc are stuck in no mans land now. too expensive to knock down, not nearly upscale enough to attract the sorts of buyers a seller like this is seeking and require too much in reno costs to bring it up to current standands. the only things moving in any sort of numbers (at least from what i can see) are teardowns where the 15% tax hit is reduced or very select prime locations that are hard to find. cookie cutter places like this one on 46th are a dime a dozen.

Funkeymonkey
Member
Funkeymonkey

I walked by that house yesterday. The sign says price reduced. They should have listed it in April.

Royce McCutcheon
Member
Royce McCutcheon

We can chuckle about the huge $700k decline, but that thing could still go for something close to it’s current asking price.

One point eight million. For that place.

I should be used to this by now, but it still amazes me.

Newcomer
Member
Newcomer

In a normal world, it wouldn’t fetch 600K.

Combat roach
Guest
Combat roach

If that much? Total eclipse and yet a pile of idiots still justifie it.

Hyper-mega-Bull
Member
Hyper-mega-Bull

I just see someone trying to get the best price in a rising market.

YVR
Guest
YVR

Trying is the key word. Now they are trying to get 1.8M. Had they tried to get 1.8 in August it would be sold.

Hyper-mega-Bull
Member
Hyper-mega-Bull

House prices are up since August. At least in this reality. Not sure what’s happening where you live.

bullwhip29
Guest
bullwhip29

Poloz has freer hand on Canada rates as Morneau fills wish list
http://business.financialpost.com/news/economy/poloz-has-freer-hand-on-canada-rates-as-morneau-fills-wish-list

>>> so BoC crashes loonie back into the 60’s, more overseas money pours back into Cdn RE, locals at bottom and middle of totem pole (who are now handcuffed further) left to watch another inning of this silly game from the sidelines once again…

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid
I had similar thoughts. For all the attention this announcement has received, it hasn’t done nearly enough to reduce the demand of real estate from foreign money or increase the supply of housing for locals, especially in Van and T.O. Some things that WOULD have had a bigger effect: -A transfer in taxation sources, specifically reducing income taxes and increasing property taxes, thus reducing the financial incentive to speculate on housing -Changes in immigration policy to settle more people in places other than Vancouver and Toronto (which currently receive twice the immigrants per capita as the country as a whole). -Changes to local land use and permitting process as advocated by Tom Davidoff to increase condo and townhouse supply. Of course, none of the above will do much to alter the long term deterioration in detached affordability in Toronto or… Read more »
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