Hey, what’s going on?
It’s the end of another week and that means it’s time for another Friday Free-for-all!
This is our regular end of the week news round up and open topic discussion thread for the weekend, normally we post links to kick off the chat here, but this time it’s up to you!
What are you seeing out there? Post your news links, thoughts and anecdotes in the comments below and have an excellent weekend!
[…] Southseacompany pointed out this article in the Globe and Mail about the connection between retail sales and household debt. […]
http://vancouversun.com/news/national/b-c-a-battleground-for-lawyer-loophole-cases
B.C. is the front line of a developing skirmish between federal Finance Department officials and Canadian lawyers over rules designed to fight money laundering.
Hope you all enjoyed the Oscars while the vermin continued their propaganda drive.
I guess we are looking at decades of Chinese superheroes and role models.
I am looking forward to superdaddy: he embezzles and launders money, to help his wife and kid lead a half-decent life of luxury in Vancouver.
Earlier, you said, “…no sane, intelligent person believes that “locust” is an actual racial slur.” Is it your belief that “vermin” is likewise, not a racial slur? If this is the case, could you discuss what you believe the term “racial slur” means and give us some examples?
Forget about the Chinese and the Oscars. The Russians hacked the best picture presentation. Does anyone really think The Academy voted for Moonlight? We need a special prosecutor to investigate this.
Hong Kong Property Market Sets New Records Despite Moves to Tame Prices
The difference with Singapore is startling. One government has genuine will to lower prices, the other does not. It reminds me of Christy Clark’s half-hearted tax.
Here is the contrast, for the still many doubters:
By no means perfect in Singapore. But the trend difference is becoming significant after almost 4 years of different paths.
Someone should tell Christy Clark that one should stick to the method that guarantees lower prices. She won’t listen, but at least she will not be able to claim ignorance.
China’s High Rollers Are Back at Macau’s Gaming Tables
Bad sign.
A scary inside view into the social psyche of many of our new residents in Vancouver.
http://www.bbc.com/future/story/20170223-chinas-zombie-factories-and-unborn-cities
Feb 26, 2017 Daily Video Review of Vancouver Real Estate Housing Bubble news and items from Twitter #VanRE https://youtu.be/Qj8_3F_aZ3c
“Could slowing retail sales burst Canada’s housing bubble?”, Globe & Mail
“Falling interest rates between the fall of 2013 and mid-2016 made it easy for Canadians to add debt. The five-year Government of Canada bond yield, on which mortgage rates are based, fell from a high of 2.2 per cent in September, 2013, to a low of 0.49 per cent in February, 2016. This trend made monthly mortgage payments lower and helped spur the housing boom.”
“The reverse process – rising interest rates – is now evident and mortgage debt is getting more difficult to service. The five-year bond yield has climbed to 1.1 per cent and major lenders are slowly raising mortgage rates.”
801-4360 Beresford Street, Burnaby
Oct 13:$1,088,888
Feb 25: $888,000
Change: – 200888.00 -18%
yeah, okay
and my home(van) goes 0 to 80km in 18.8 seconds
But with all the 8’s how could it have not sold?
Estimated 8,000 millionaires immigrated to Canada last year, report says.
http://www.cbc.ca/news/business/canada-millionaires-1.3996247
Canada attracted an estimated 8,000 millionaires last year, trailing only Australia and the United States on the list of top destinations, according to a recent report from New World Wealth.
Australia drew 11,000 millionaires, while the U.S. received 10,000, the report says.
New World Wealth said the inflows into Canada were boosted by large-scale migration from China into Vancouver, and from Europe into Toronto and Montreal.
Well, we actively encourage Chinese millionaire migrants to park their ill-gotten loots in our city’s RE.
This is a very simple politicsl problem: vote in politicians who target this wealth fliws and the wealth flows will stop.
Absent that, we might be witnessing one of the laregest displacements of residents of recent times. Locals will be forced to move.
Many have already moved as in being proactive, why wait till one cannot afford to move? Got to take action while they are still ahead in the game.
Get rid of un needed junk, don’t buy if not absolutely necessary, have a list of all cancellations of services, have your resignation letter and notice to landlord premade and it should be easier to do the move. Learn about the new location beforehand.
I have a feeling when spring comes, the liberals are back in, there will be many exiting BC. There is no hope in BC. I you don’t place a value on your time and life, who will? (Not those that vote liberal for sure)
The best prep for moving is going and spending time in the new location. You can find neighborhoods, look for jobs, make connections. Getting out is easy. Even if your exit is imperfect, it doesn’t matter. You’ll be gone anyway.
Pretty sure Libs get in and pretty sure the FBT is removed shortly thereafter
“Estimated 8,000 millionaires immigrated to Canada last year”
Out of a total of about 100K households. I would have expected more really, since being worth $1mil USD doesn’t mean much in today’s world. I’m not too far from it myself and I certainly don’t feel rich.
About 3.5% of Canadians (1.2 M) are millionaires, which I guess makes about 10% of households millionaire households. Assuming that the 8000 figure is distributed as only one millionaire per household, then the percentages of millionaires among immigrant and existing households are about the same. That would mean that immigration is not changing demographics or impacting market markets other than by increasing volume.
Given the lack of data, I would urge caution. The upper tail of the wealth distribution of new immigrants from China might be very different from what we have experienced before. Exactly because it is a relatively recent phenomenon. For one, they don’t seem to immigrate as past cohorts. The father is usually in China making money, single mother and extended family is transferred to Vancouver (free education, healthcare, clean air). These millionaires are also different insofar they seem utterly uninterested in setting up business over here. They hate labor regulation and higher business taxation. Hence their only economic contribution seems to make car dealerships (Merc, BMW, Lamborghini, Rolls, Ferrari) richer and make elite schools more crowded. Christy Clark loves the flow of money as it generates taxation and makes money for her buddies in the real estate industry (not… Read more »
space888 used to (correctly) argue that wealthy immigrants also paid taxes and injected money into our province and country in other ways:
1) PST and HST capture some tax for their consumption. This is why consumption by wealthy immigrants is to be celebrated, not jeered at.
2) Consumption of services and products employs people selling and providing those services and products.
I do agree that above and beyond this, the wealthy who have low T4 incomes do need to pay their fair share of taxes.
Talking about tax, will Trudeau government look into the KPMG scandal?
http://www.cbc.ca/news/business/cabinet-ministers-met-publicly-with-kpmg-while-firm-s-tax-sham-under-cra-probe-1.3234876
A more detailed investigation will be on CBC “Fifth Estate” next week.
For everyone (like Oracle) who is gloating about the continued heat in condos and Valley RE, I wonder what your thoughts are on the reversal of the “trickle down effect” and the slowdown of downsizing as a result of current low listings and sales. We’ve often seen suggestions for instance that sellers will simply pack up and wait until the market gets better. We all know that a segment of the market always has to sell (due to age, illness, death, financial strain, sudden change in financial standing, etc). These sellers will have to keep lowering prices until they find someone willing and capable of buying their homes. We also know that part of the market in the surrounding suburbs and in condos is the trickle down from downsizers. If all the potential downsizers are suddenly shy of selling their… Read more »
It’s looking like people will keep buying as long as the banks let them. Even when the condo market starts to fall, as long as mortgages are available, I would not be surprised to see FTB snapping up “bargains.”
Sooner or later, however, I imagine that the banks will tighten lending standards.
Me gloating? Good grief. And I bet you believe that Newcomer YVR and Shut it are here to have an intelligent conversation.
Face palm.
They are playing you guys. Only stupidity can be played. Good grief.
https://www.ft.com/content/02c97b84-c185-11e6-9bca-2b93a6856354
Tide of Chinese apartment buyers slows in Australia
Regulators crack down on foreign lending amid fears of property price bubble
That headline should be “amid fears of property price bubble bursting if it gets too big.”
Which you have to think Toronto going parabolic leading into Spring is making the federal government freak out right now.
Don’t know how I missed this last year. Wonder if luxury Opus Hotel in Richmond still going ahead??
http://www.vancitybuzz.com/2015/04/vancouver-property-developer-wanted-interpol-chinese-corruption/
Feb 25, 2017 Daily video Review of Vancouver Real Estate Housing Bubble News
another self-serving-advertising youtube clip!
These videos hit you right where it hurts, hey?
I think they are great! Keep them coming.
We need to educate the residents of Vancouver and infirm them, since the MSM are not doing a great job of that.
Christine Duhaime Tweets: “DHS says illicit funds are used to buy luxury homes in “every 2nd case” they handle. I bet its the same in VanRE.”
“FinCEN says 30% of luxury home buyers were named in a “suspicious transaction report” for money laundering.”
I don’t know where she is drawing the line for “luxury,” but the number of people with 10 M or more legitimately sourced money to spend on a house is quite low.
True. You just confirmed that several thousands residents of Vancouver (mostly from Mainland China) are using illegitimate money.
Duh.
DHS = Department of Homeland Security.
These guys are not amateurs. They know what they are talking about. And so do Canadian agencies: for reasons beyond me, they keep deliberately ignoring the fact that Chinese use our country as a Banana Republic to launder money.
Probably there is a mixture of self-interest and fear to be labeled racist. Whatever the reaon, in the last 15 years Chinese mainlanders have abused the system. New evidence of this emerges almost every single day.
They are ignoring as they are pathetic WHORES for money and they do not want to know where it is from.
“every 2nd case” they handle.
That is, every 2nd case they think warrants investigation, not every 2nd purchase.
Well, by the same token, I am sure they are not abke to follow up on all potential cases that might deserve wttention. So, the reported number would still be a lower bound of the true number of cases involving Chinese millionaires laundering money.
Each of such cases may run in the tens of millions or more, as we have seen recently. You do the math.
Sadly the crackdown in the US will only drive more money here. The Chinese view the CRA as a joke but the fear the IRS big time.
This means the legitimate Chinese money will likely flow to the US and will get the criminals.
How did you gain your insight into the collective view of the world’s tax agencies by the Chinese?
His point is simple. Chinese money follows the oath of keast resistance.
Vancouver is not resusting at all.
“Potential Homeowners To Face The Wrath of CMHC Hike”, HiBusiness
http://hibusiness.ca/2017/02/25/potential-homeowners-to-face-the-wrath-of-cmhc-hike/
“Things are about to get worst for Canada’s potential first time buyers as the Canada Mortgage and Housing Corporation have decided to increase mortgage insurance premiums for the third time in the past years. Hopeful home-buyers will have to worry about more than just increased home prices in the blazing housing markets. Premiums for borrowers with a loan-to-value ratio up to 95 per cent will go up by 4 per cent as at March 17.”
Typically missing the point that withdrawing CMHC subsidies is the very thing that will cool blazing markets. Sigh.
There are hordes of people who think that tightening lending policy will hurt affordability. This is immensely frustrating.
Agreed.
It is a bit like saying there are loads of people who still vote for Christy Clark. Although one is never quite sure how many have figured out her scam lending help and vote her exactly because they benefit from it.
As patriotz has said many times, many people vote for the Liberals because they are happy with their policies. Many are baby boomers (likely both yours and my parents and relatives will vote Liberal). Many of your friends and colleagues who own real estate, work in real estate, or else like low taxes (like YVR) will vote Liberal. I’m ready for a change and want to see what the NDP can pull off. And unlike YVR, I don’t mind paying taxes. What I don’t want is for MSP rates to be lowered based on T4 incomes since we know that can benefit millionaire homeowners who declare no income. The NDP is the only party that has ever talked about any means testing based on more than reported income and I like that very much. I did write to my Liberal… Read more »
I can see your point on principle, but how many millionaire tax cheats are there out there? 4000? Certainly not more than 40,000? So certainly not more than 1% of the population? At a MSP policy level, that is negligible. There are bigger fish to fry.
Could you expand on what those bigger fish would be?
I don’t consider MSP a burden (I pay it in full and without complaint or reluctance), I think everyone should pay for it to some degree (based on ability), and I think it is our individual responsibility to use services sparingly and only when truly needed. The health care system in general is constantly under budget pressure and the Feds are not committed to giving us more than a few percent increase per year over the next 5 years.
And unless the BC Liberals have done away with them, the MSP has always had subsidies for low income earners. So my primary concern with MSP is that those with more ability to pay should pay, and pay more.
Well, I gues his point is exactly that there are a few thousands Chinese millionaires families (or more tens of thousands by now) who get the services but pay close to nothing.
Income tax evasion is responsible for a massive loss of revenue. The odd millionaire not paying MSP is a very small fish compared to that. Even the property tax deferrals are of more importance than millionaires not paying MSP. In fact, I cannot think of a fiscal issue of lesser importance. Can you? The MSP is just another way of labeling tax. It’s a tinsy tiny percentage of the total tax bill that most of us pay. If they collect less through MSP it just comes from other revenues. Changes to MSP are irrelevant window dressing. BTW, it is a good idea to see your doctor early rather than try to cut down on visits. That is why your doctor tells you as much. People who avoid the doctor cost the system more by leaving things until they get to… Read more »
Sorry Newcomer, you wrote “At a MSP policy level, that is negligible” so I thought you meant there were bigger fish to fry in MSP premiums than introducing means testing. I should mention that you took this conversation towards tax evasion which is not my original intent. When I say millionaire homeowners who declare no income I include the many legitimate homeowners who have no taxable income. I only mentioned a means test is easy to implement and would help make MSP more fair by not giving such people a pass. I also don’t think that we should marginalize the importance of the MSP for funding health care. The province spent $15.5B in the Ministry of Health. MSP premiums came up to around $3B. This is 30% of our Ministry of Health budget covered by MSP Premiums. Cutting that to… Read more »
I think that would be 20%, but you are right, 3B is not negligible and even one percent of that would be a significant chunk of change.
I’m not at all against wealth testing for government supplements, it’s just that my first priority would be going after undeclared (worldwide) income, cheating on the principal residence exemption, cooked company books, and so on.
Many are baby boomers (likely both yours and my parents and relatives will vote Liberal). Many of your friends and colleagues who own real estate, work in real estate, or else like low taxes (like YVR) will vote Liberal.
Baby boomers, real estate owners and those that like low taxes will vote Liberal? I think you just covered 90% of the voting population. I guess the NDP still have Just Me and the crack heads on the DT eastside who may vote for them.
It will be very interesting to see the many different ways the BC Libs will slowly make life even harder for people like you over the next four years.
You vote them because you are fixated on ideological lines. You also think (mistakenly) that they will save you some money.
Christy Clark knows that there are people like you out there, and she takes full advantage of it. Once in office, she will simply ignore you and keep on with her Chinese-friendly and developers-fruendly agenda.
There are hordes of people who think that tightening lending policy will hurt affordability.
You are confusing what people say and what people think. There is a difference.
Perhaps you are confusing people in the RE industry, who know that tighter lending will lead to lower prices but say otherwise, and the general public, who we know rush to buy before tighter lending goes into effect.
Not just RE industry, but connected industry like banks, politicians and the media who parrot their commentary. Those are the people that you hear commenting. The general public who rush to buy before tighter lending goes into effect do so because they would not qualify or would have less favorable loans otherwise. It has nothing to do with their opinion on the price effect of tighter lending policy. I think they would feel a lower price is meaningless to them if they can’t buy anyway due to tighter lending.
For the most part, when the majority of buyers see their ability to buy drop by $100k, prices will likely drop by $100k sometime afterwards.
The exact same person who could have bought at $600k instead can buy the same product at $500k. The problem is that people are not long term thinkers and can only see the short term, plus there’s a lot of FOMO (I’ve felt it too).
We have been saying this for years on the blog. But we still get a few moronic comments to the contrary.
Some people prefer fantasies to reality.
So 4% of3.5% on a $300,000 mortgage is equal to $420 paid off over 25 years?
Less than $2/months and they call it wrath??
But dumb sheep will read it as that cause they can’t do math.
New on the market (big flip after less than a year?), and it looks like all for the lot values.
5570 Chancellor Blvd, UBC, listed $7,180,000 (assessed $5,683,100)
History: 15/Jun/2016 sold for $5,720,000
5590 Chancellor Blvd, UBC, listed $7,580,000 (assessed $6,134,000)
History: 10/Jan/2016 sold for $5,100,000
For a flip you need to sell it. No way these places sell for anywhere near those prices.
How do you know?
I know everything. Check these listings in a month and they will still be there. They may sell if they dropped the price by 50%.
Ok. Let’s in a month.
For the record, I hope you are right but I suspect you are not.
These high priced UBC listings don’t sell, they languish and get de-listed.
There was 1 sale this month and the next most recent sale was back in October.
15 such listings are sitting there getting no attention.
Until Xi Jinping opens the spigots again. Perhaps after his confirmation next November.
Vancouver Listings 7K yes, but so have sales collapsed, almost at the January 2013 lows. What appears to be more dynamic is the Monthly Absorption Rate and Months of Inventory: http://www.chpc.biz/mar-moi.html Both are showing signs of trend reversals. The former (MAR) has decelerated very sharply and the latter (MOI) has surpassed Calgary and has diverged from running parallel with Toronto for about a year. This suggests to me that the market has definitely peaked with not enough buyers to retest the highs especially in the SFD sector. Condos of course might see a crackup high this spring thanks to Ms Clark’s helicopter drop. I use total listings not new listings added to arrive at my MOI and MAR plots. 2Q will give us more evidence of trend direction. We will be deep into the Trump Budget and U.S. Fed-Speak by… Read more »
I’m thinking maybe the real estate industry is discouraging listings until after the election. The average house seller may not be politically aware, but the agents are.
That would be absurd. In a low volume market why turn away a potential sale during the peak buying season? The extra commission, if prices indeed climb after the election, would surely be negligible. Simply not worth the risk.
True. This us the sellers holding up, not the agents.
Correct. And it’s because:
A) they think prices will climb further
or
B) they can’t afford to move-up
I’m sure it’s a combination of the two, and fail to see that A would make B even worse.
The ABC News website has a story about the “controversy” that the soon-to-be opened Trump Tower in Vancouver is causing….because Vancouver is so cosmopolitan, immigrant-friendly and tolerant. Some city councillors are now in a tizzy.
The article fails to mention a rather glaring issue: that Vancouver is one of the very best places on Earth for real estate hucksters, crooks, and flim-flam artist to make a quick buck. If anything,
The fact that Donald Trump is THIS late to the game here is more evidence he’s a complete putz of a businessman.
The “moral outrage” argument is cute and self-gratifying for locals, but Vancouver real estate devlopment remains a foreigner con artist’s dream.
Trump has just licensed his brand name to this project; he is not involved in any other way.
The fact that Donald Trump is THIS late to the game here is more evidence he’s a complete putz of a businessman.
Trump tower sold out last year at peak pricing and actually sold for record $ per sq ft for a condo in Vancouver. Trump has already been paid for his licensing deal. The snowflakes who are protesting are not the target market.
YVR you sound like a young Warren Buffett. Thanks for slumming.
” he is not involved in any other way. ”
Quite obviously he is, as there is a Trump hotel on the property. The hotel is a tenant though. The same setup in Toronto has led to condo owners suing the developer – successfully -due to terms unfavourable to them.
The Trump Toronto project sold the hotel rooms as strata’s. That is the part that sued. Strata hotels are always losers. In Vancouver the hotel rooms are owned by the developer. Trump gets paid a licensing fee for the project and a management fee for the hotel. That is it.
Trump has no direct stake in the court decision. He has never owned any share of the building, but he licensed the use of his name on the development.
Every person who owns a home in Vancouver is essentially a millionaire, according to data from BC Assessment analyzed by urban planner Andy Yan.
http://globalnews.ca/news/3270040/vancouver-homes-under-1-million-2017-extinct/
But only if the house is paid for.
Even if they bought the house 10 years ago and have 30 years left on their mortgage (yes, 40 year mortgages, thanks Harper), they’re still millionaires.
Yup. They won the lottery.
Are “they” selling?
You are not millionaire until you hold that money in your hand. If it is in a house value, you have to sell and buy somewhere much cheaper to realize that money.
Good luck with that in Vancouver Lower Mainland.
Why would you have to buy again?
This is a gross exaggeration IMO and at best a weak justification for sitting on a high horse during a bubble. Nobody holds “money in their hand” in modern times. Wealth is always sequestered away in some form.
Real estate is less liquid than equities, but it isn’t completely illiquid. At any point in time your net worth is your assets minus liabilities. There were billionaires who saw their net worth evaporate during the financial crisis, it doesn’t mean they weren’t billionaires before the crisis.
Let’s out it thus way. Given a choice, would you have bought RE 20 years ago or an index of the TSX?
Taking reinvested dividends into account, the TSX index has done better than most real estate.
Exactly. I’m so tired of people saying homeowners aren’t rich because they haven’t sold and crystallized their profits. If you have $1-2m in equity you ARE rich. You have options. Banks are falling over themselves to talk to you. If the shit hits the fan you can sell and move elsewhere. A non-owning, renter just doesn’t have this option unless of course, they’re a blog reader who is fantastically rich from their amazing investing prowess…
If the SHTF a renter can pack up and move easily; the homeowner has to sell their shack first and if the economy is bad that will be a hard sell. It is well known that a society of homeowners is not a mobile labour force.
Not a major problem for people with 1-2 M in equity. Move, let the realtor take care of it and get on with your life. Problem solved. Of course, the renter with 1-2 M in cash has one less headache, but I’d still rather be an owner with 1M in house equity than, a renter with smaller nest egg in cash.
You oay zero taxes on RE capital gains.
Check your tax returns to see how much the giverment is getting out of your “liquid” investments.
Which it probably won’t be, because we know HELOC usage is incredibly high.
This a fact-rich commentary. Good weekend reading.
http://thenelsondaily.com/news/gensqueeeze-responds-bcs-budget-announcement-43873
Any thoughts on this? A reliable source of mine has just told me that banks are not lending to “housewives” or “students” with50% down payments where the funding is clearly coming from overseas, there is no local income, and the source of the funding is not going on title.
I suppose it could be a policy that’s in place to ensure there are no FBT avoidance fines? or?
Either way, there is certainly a complete stop of the top-end of the market. This makes sense and will take time to continue to play out.
I would be surprised if it were true. But also happy.
If it is happening at multiple banks one would expect a directive of some sort that would make at least the industry news.
“or?”
Or not getting their money back if prices fall. I think you’re off the mark on the FBT issue per se, lenders have no liability under it.
Any thoughts on this?
The move up buyer is not moving. When you factor in massive transactions costs and the amount you have to pay to get something even marginally better nobody can afford to move up. Move up buyers are market neutral. That is why prices are still declining with the move up buyer out.
I think you also have a bunch of speculators who bought at peak last Spring and cannot afford to crystallize the massive loss. It is cheaper in the short term to pay the holding costs rather than to sell at 100s of thousands below what you have sunk. At some point these speculators will be forced to sell.
“RBC CEO says Toronto real estate market ‘not sustainable,’ company posts record net income”, Financial Post
“The CEO of Canada’s largest bank says it is time to consider bringing measures that cooled Vancouver’s sizzling housing market to Toronto.”
“Dave McKay, the chief executive of Royal Bank of Canada, cited a “somewhat dangerous mix of catalysts” in Canada’s largest city, such as ultra-low rates, lack of supply of single family homes, speculation, and foreign money coming in at an increasing rate since Vancouver instituted measures to dampen its market, including a foreign buyers’ tax.”
At some point soon the federal government will have to act on Toronto. It is way too important to let this bubble keep inflating. Vancouver, which is already crashing, will be collateral damage.