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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BubbleTea
Guest
BubbleTea

GT: Kathleen Wynne to announce a similar foreign sales tax for Toronto after the long weekend.

Best place on meth
Guest
Best place on meth

Class action lawsuit by locusts to follow.

Diadora
Guest
Diadora

CKNW: Meena Wong delivering a petition with 1500 signatures on it to the mayor’s office asking for the resignation of Kerry Jang

BubbleTea
Guest
BubbleTea

The flag that was raised wasn’t the flag of Chinese people, it was the flag of a oppressive communist regime.

history
Guest
history

Free Tibet?

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

I wonder what the City would do if a bunch of people went with the flag of Tibet and sat on the lawn for a few hours. I wonder whether the Mayor would get a personal call from the Chinese embassy demanding the flag be taken down.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

And I wonder what that personal call would mean, since after all a city is only a city and should not be subject to all the nuances of diplomatic protocol to which public places of importance in Ottawa might be subject.

Best place on meth
Guest
Best place on meth

The petition is racist.

Meena and these other 1500 people only want Comrade Jang to resign because they’re anti-chinese.

Wow, I’m getting good at these talking points.

HAMster
Guest
HAMster

Ottawa will attempt to close Fintrac lawyer loophole.

http://vancouversun.com/news/national/aml-changes

HAMster
Guest
HAMster

Takeaway:
“I think there are some people in the legal industry that are aiding and abetting money laundering, with impunity,” said Marsh, a former RCMP organized crime unit leader. “There is no other English common law country that has given lawyers this reporting exemption. So Canada is unique. And the problem is coming to light now with the huge amount of money flowing into the property market, some of it stinky.”

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Also there will be some who aided who are now retired. This has been going on for awhile remember.

ALZero
Guest
ALZero

I always thought hiring a lawyer in BC is to help you laundy the money legally with their legal trick. With this coming, isn’t it a bit conflict of interest?

Newcomer
Member
Newcomer

If they can think of a legal way of doing it, they would not have to report it. They would only have to report it if the method were illegal.

HAMster
Guest
HAMster

“I don’t understand why anyone would get into this market right now,” the Simon Fraser University professor who specializes in real estate finance tells NEWS 1130.

http://www.news1130.com/2016/10/05/signs-home-prices-peaked/

“If prices continue to go up from here, there will be a government body on some level that will do more to make sure they don’t, but of course the risk of them going down is substantial.”

YVR
Guest
YVR

That is really key here. The government at every level has said and taken action that they want housing to stop going up. If it does they will take further measures. By buying real estate you are placing a bet that you cannot win.

Dave
Member

Betting on governments failing at something is sometimes a good bet. We wouldn’t be in this situation if government didn’t fail. To fix something, you have to target the problem. In this case, it’s cheap money, immigration and limited supply. I don’t see government fixing any of that. The only effect they might have is scaring the market because of uncertainty.

patriotz
Member

“We wouldn’t be in this situation if government didn’t fail”

Quite the opposite, we’re in this situation because government policies to boost RE prices have been so successful.

All they have to do to bring prices down is ease up on these policies.

YVR
Guest
YVR

Exactly. The price appreciation was intentional. Now they want prices to go down. That is easy for any government. The simple power to raise property taxes to any level can make any real estate worthless with a stroke of a pen.

Newcomer
Member
Newcomer

Prices in the prairies have tripled without limited supply or immigration, so the real issue on the national scale is cheap money and belief in appreciation. They are targeting those two. Also keep in mind that population growth in Vancouver, and everywhere else in Canada, is below historical averages, so while immigration is a driver, it’s not an unusual driver than we haven’t normally had. Nobody can predict short term movements in an irrational market, but there is a good chance that this brake tapping will be effective.

Its_the_ALR_stupid
Guest
Its_the_ALR_stupid

It’s not so much immigration that’s the problem as the imbalance between immigration and supply growth. We could double immigration to metro Vancouver and as long as we tripled supply there would be no problem. But due to a number of factors (ALR, NIMBYism, permitting delays, etc.) we don’t produce enough supply to match population growth. And none of the recent announcements do much to change that dynamic, unfortunately.

Newcomer
Member
Newcomer

That is not true. They shortage of supply is not due to a lack of stock (completed housing units) which has been growing at a higher rate than the population growth for the past decade. The problem is that the stock is not being released to the market as supply. Instead, it is being held by investors. That is why townhouses and condos are selling for seven figures.

Its_the_ALR_stupid
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Its_the_ALR_stupid

I have no doubt that speculators holding empty units are a part of the problem, among other things. But that doesn’t change the fact that building more units would still be one viable solution (among many) that would help to lower prices.

HAMster
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HAMster

Correct. Speculators hoarding housing stock is what creates the inventory shortage. there is real demand (consumers) and there is the artificial demand (speculators/investors) and this secondary artificial demand is what drives up prices.

Shut It Down Already
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Shut It Down Already

You cannot separate the two. All buyers are culpable. Yes, even your friends who “won” a bidding war.

BubbleTea
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BubbleTea

Sun: http:Ottawa will attempt to close a loophole in Canada’s anti-money laundering system that excludes lawyers from having to report suspicious transaction.

bullwhip29
Guest
bullwhip29

$31M home owned by student just ‘estate planning’: Peter Brown
http://bc.ctvnews.ca/31m-home-owned-by-student-just-estate-planning-peter-brown-1.3104357

HAMster
Guest
HAMster

I like how Brown gets all indignant that someone should question him on who he sold his house to or what their motives are. “Estate planning”? Ya sure, buddy. I guess he thinks the unwashed riff-raff would not know any better. He is just lucky he unloaded his shack before the 15% kicked in.

bullwhip29
Guest
bullwhip29

would be interesting to know how many close friends, family and associates (aside from rennie) got a heads up that a tax was coming and sold beforehand? just like hilary clinton and her uncanny way of picking the right stocks 100% of the time, some people like this are almost certainly tuned in before the rest of us.

Shut It Down Already
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Shut It Down Already

Source for clinton’s perfect stock-picking track record?

avgjoeblow
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avgjoeblow

I can’t stand so many business people always stating things are legal. Legal does not mean ethical. Currently greed has taken over ethics, as shown by many business people and currently by our BC government.

bullwhip29
Guest
bullwhip29

and surely Canaccord did everything by the book esp back in the ol’ wild west VSE pump and dump days…LOL

Dave
Member

Looks like the Bank of Canada smartened up a bit and realizes the effect that cutting interest rates has on real estate. I don’t think they will dare to cut rates again, short of the economy going into recession.

http://www.theglobeandmail.com/report-on-business/economy/bank-of-canada-backs-ottawas-bid-to-cool-housing-market/article32271246/

Cutting rates twice last year was a terrible decision in my view. All it did was push the housing market higher and it didn’t lead to export growth or business investment, which was predictable in my view.

southseacompany
Member
southseacompany

On the other hand, has Morneau now given Poloz a ‘free hand’ to cut rates again if needed?;

“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

Dave
Member

Despite my last post, I still think it’s good news that the Bank sees the link between interest rates and a runaway housing market.

Dave
Member
That’s a good point and I didn’t look at it that way at first, but should have. Poloz strikes me as a robot. If inflation is under 2%, the rule book says to cut rates, context and everything else be damned. I don’t think the mortgage rules are strong enough to negate the effect of rate cuts. It might take the edge off, but it will only fuel the ‘bubble’. It would be crazy to cut rates outside of a recession. We only have 1/2 point to give. Better to save that ammo for a downturn because if we are at the zero bound and then hit trouble, it will be very damaging to consumer and business confidence. I don’t think we ever want to be a negative interest rate economy. It’s not the image we have of ourselves. And… Read more »
southseacompany
Member
southseacompany

Maybe Poloz will wait for JT’s turn;

“Poloz Hands Baton to Trudeau on Promise of Deficit Spending”

http://www.bloomberg.com/news/articles/2016-01-20/promised-deficit-spending-prompts-poloz-to-hand-baton-to-trudeau

Dave
Member
Sounds like he wants to wait it out, which is good. Cutting interest rates isn’t going to raise oil prices. Fracking was a game changer and I believe that oil will remain low for a long time, if not forever. Solar power is rapidly becoming competitive with hydrocarbons and people like Elon Musk are about to bring the electric car to the masses. We quite possibly have hit peak oil consumption and I think demand will drop off in the coming decade. Why does that matter to us? Oil has been by far the greatest source of corporate investment and job creator in the last ten years. That won’t be repeated over the next ten years. Government spending can’t make up that gap. Trudeau is only going to spend like 1% of GDP. It’s nothing of an economic stimulus. The… Read more »
bullwhip29
Guest
bullwhip29

VIDEO: New housing rules have ‘highly disturbing’ ramifications: Sherry Cooper
http://www.bnn.ca/video/new-housing-rules-have-highly-disturbing-ramifications-economist~966924

chilled
Member
chilled
southseacompany
Member
southseacompany

“In Canada’s housing-dependent economy, new cooling measures send shivers”, Financial Post
http://business.financialpost.com/news/economy/in-canadas-housing-dependent-economy-new-cooling-measures-send-shivers

“For almost a decade Canada’s housing market has withstood just about anything that government officials have thrown at it in an attempt to restrain breakneck growth. Measures introduced by Prime Minister Justin Trudeau’s federal government on Monday may finally bring it to heel, analysts and economists say.”

patriotz
Member

Let me fix that sentence:

“For more than a decade Canada’s housing market has responded to just about anything that government officials have thrown at it in an attempt to achieve breakneck growth. “

southseacompany
Member
southseacompany

“Is Canada’s Economy on the Verge of a Financial Crisis”, Bloomberg TV

https://www.youtube.com/watch?v=WwziuLcTn_M

“Hilliard MacBeth, author of “When the Bubble Bursts,” explains why Canada’s housing market may cause a financial crisis.”

ostritch
Member
ostritch

But Hillard, they’re doing this to avoid the bubble bursting

bullwhip29
Guest
bullwhip29

Single mother faces daunting reality of Metro Vancouver housing search
http://www.metronews.ca/news/vancouver/2016/10/06/single-mother-faces-metro-vancouver-housing-search.html

bullwhip29
Guest
bullwhip29
bullwhip29
Guest
bullwhip29
bullwhip29
Guest
bullwhip29

Developer Jon Stovell has an order for Vancouver: grow up, already!
http://www.bcbusiness.ca/Developer-Jon-Stovell-has-an-order-for-Vancouver-grow-up-already

bullwhip29
Guest
bullwhip29
Hyper-mega-Bull
Member
Hyper-mega-Bull

Sinofication continues unrestricted.

Combat roach
Guest
Combat roach

Nothing but sad and tragic. Epic shame…

bullwhip29
Guest
bullwhip29

Mainland Chinese Tourists’ Overseas Spending Skyrockets
http://www.theepochtimes.com/n3/2167884-mainland-chinese-tourists-overseas-spending-skyrockets

“…discrepancies in data show that Chinese travelers may be transferring out large amounts of cash when they leave the country by buying properties while studying abroad, signing insurance packages while in Hong Kong, and depositing money overseas”

bullwhip29
Guest
bullwhip29
bullwhip29
Guest
bullwhip29
Newcomer
Member
Newcomer

That actually all sounds pretty rosy to me. 8% decrease in sales, banks stocks doing fine, mortgage growth of 2.3%. We are a long way from blood in the streets.

bullwhip29
Guest
bullwhip29
patriotz
Member

“so that any B.C. municipality can levy a higher rate of property tax on anyone who does not claim their home is their principal residence.”

Which means this is essentially a measure to soak landlords (and ultimately renters) with higher property taxes so that owner-occupiers can pay less (as if the homeowners grant wasn’t enough), as the number of rental properties far exceeds the number of vacant properties.

I doubt the BC government is going to approve this, there is enough of a rental crisis already.

bullwhip29
Guest
bullwhip29
FULL TEXT: As Vancouver prepares to start taxing empty homes, West Vancouver is close to proposing the second such tax in B.C., but with a different model that local politicians say is a simpler and more effective way of targeting both local and foreign property speculators. The B.C. government passed legislation in the summer allowing Vancouver to impose a tax on empty homes, which the city argues are taking up housing that could be rented out. The province has said it will consider similar requests from other cities. West Vancouver Councillor Craig Cameron said the city is a week or two away from officially requesting the provincial government amend the Community Charter so that any B.C. municipality can levy a higher rate of property tax on anyone who does not claim their home is their principal residence. RELATED: B.C. real… Read more »
bullwhip29
Guest
bullwhip29
Royce McCutcheon
Member
Royce McCutcheon
chilled
Member
chilled

Feel free to correct me if I am wrong, but aren’t these the “same” social justice warriors that ran screaming from the room, yelling ‘xenophobic racist’ a few years ago at the mere mention of ‘foreign’ ‘investment’ and/or ‘immigrant’??? Just sayin’

patriotz
Member

“Feel free to correct me if I am wrong”

How about I just feel free to ask you to back up your accusation with some facts?

Royce McCutcheon
Member
Royce McCutcheon

What – the band? I have no idea. I just find it interesting that to see art inspired by this situation.

As an aside (and just my opinion, of course): the use of “social justice” as a pejorative might really limit the number of people willing to listen to any valid points you might have to make.

chilled
Member
chilled

Royce, I brought puppets, let me explain. NOBODY in a Vancouver “alternate folk band” would have had an ounce of conservatism or conventional thinking in them leading up to this fiasco, you could bet your life on that. THUS, the term ‘social justice warrior’ who’s line of NDP like thinking helped perpetuate the problem they are now running away from.

Royce McCutcheon
Member
Royce McCutcheon

Oh, I got what you really meant. I’m just not really interested in your hackneyed labels (or insulting tone). And the politics that underpin it have nothing to do with it, as I suspect we might have at least some similar political leanings.

JayTor
Guest
JayTor
I really hate Kevin O’Leary but he does have a point: http://www.bnn.ca/investing/video/wow-this-is-dumb-says-o-leary-on-feds-new-mortage-rules~965432 If the liberals succeed and pop this housing bubble they will pay a huge political price, any intelligent person understands that all bubble burst and the larger it gets the worst the down side is. I know a lot of the people on this board really do not like the federal liberal party but they have to credit them with doing the right thing even thought in the end it will kill them on the political end. I really respect a politician that makes choices like this. (Duff Roblin always comes to mind) I wish they had a stronger interviewer, she was not able to keep up with the garbage Kevin O’Leary passes as fact. He asked her to come up with anytime the government stimulated the housing… Read more »
MarKoz
Member

Oh for Gxx’s sake! They have been stimulating the market since the 1980’s at least! Using your RRSP as a down payment, gradually increasing how much of your RRSP you could use, lesser and lesser down payments, increased amortizations, home-buyers grants, IIP, QIIP, doubling the amount of mortgages CMHC can cover since 2008, I could go on but I’m tired…

Royce McCutcheon
Member
Royce McCutcheon

I think the political calculation, after realizing how bad this is and that kicking the can down the road will be increasingly hard, might just be:

“Oh man. It’s bad. Like, really bad. Can’t stop what’s coming. Screw it: let’s take the hit now, as early as possible into our mandate.”

Also, anyone who asserts that the government never stimulated the market is out of their gourd. Yikes!

JayTor
Guest
JayTor
patriotz
Member

Canada’s largest banks warm to sharing mortgage risks
Of course more risk for the bank means higher rates for the borrower. Remember low rates may be here to stay, but not for everyone.

Just me
Guest
Just me
chilled
Member
chilled

We commented and followed each other on Twatter until they tossed me. Go GAB.AI the last bastion of free speech.

CanNeverThinkOfAGoodName
Member
CanNeverThinkOfAGoodName

Twitter tossed you? Why would it do that?

space889
Member
space889

My sincere apologies, I didn’t not realize that not refering to renters & bears as locusts, scums, lying cheaters, vermin, slime, etc and calling for their extermination is considered to be rude, discriminatory, and constitute attack on these vulnerable groups. In the future, I will ensure that I use the proper terms and style of language when I’m referring to these groups.

Again, my apologies.

Hyper-mega-Bull
Member
Hyper-mega-Bull

Renters aren’t scum. Just ignorant underclass. A bit uppity

chilled
Member
chilled

Do 100 push ups and we’ll think about it.