Most people in Canada don’t care about the Vancouver housing market, but that doesn’t mean they would be unaffected by a bursting housing bubble here.
Canadian Business argues that what we need is a national regulator to deal with risks in the financial system:
In 2013, the International Monetary Fund called on Canada to create a federal entity with a clear mandate to monitor threats to the financial system. The IMF earlier this month scolded Ottawa for so far ignoring its advice.
The Vancouver house-price surge is exactly the sort of thing the independent agency should handle. It is a national issue: everyone knows who will be called on to clean up the mess if it bursts. The banks would feel it and likely would curb lending. CMHC would feel it because it has insured most of the mortgages Vancouverites have used to buy their inflated assets.
Unfortunately as a politician anything you could do about the housing market would most likely be political suicide. Owners are voters and nobody wants to see the value of their home drop. Read the full article here.
A while back NDP MLA David Eby held an ‘emergency meeting‘ on the Vancouver housing crisis. (Presumably called a ‘crisis’ because the 25-44 age group is leaving Vancouver faster than they are arriving.)
But you should not be under the impression that the BC Liberals are sitting back and doing nothing about the housing situation here.
Not only have they announced new real estate rules to address many of your concerns, the minister responsible for housing will be attending a Burnaby North Breakfast on Friday May 20th about housing affordability for young first time buyers.
Tickets are only $20 and all proceeds go to support the Burnaby North Riding Association. If you are unable to make it, there is a convenient link to make a direct donation on the bottom of that page and there’s nothing that says donations are limited to developers only.
Polozi Scheme posted this link to a post at Ross McKay real estate consultants with the theory that the Vancouver real estate is a ‘currency exchange ponzi scheme’.
A investor seeking to remove Chinese Yuan from China and have it converted into a foreign currency purchases a home in Vancouver. The investor once having the currency exchange authorized and completed for the purchase to take place then offers the same opportunity to another investor who is willing to offset any costs the original investor incurred through paying a high enough price for the same home that then allows the previous investor to “break-even”. This pattern is continued over and over again causing the selling price to raise higher and higher at no risk to the investor, while at the same time offering higher and higher amounts of currency to be exchanged on the rising home price being paid.
At no time is the price paid reflective of fundamental value of the real estate being traded but is being established for ulterior purposes that are not related to normal house price growth.
At some point in time the scheme ends as the last investor is converting so much currency that the benefits exceed even the need to “break even” and the home can be sold at a net loss. When that moment is reached the appearance of sustained house price growth ends and the scheme ends moving the scheme somewhere else.
Read the full posting here.
It’s Friday the 13th and that means it’s time for another Friday free-for-all, or regular end of the week news round up and open topic discussion thread.
Here are a few recent links to kick off the chat
–Normal interest rates are history
–Canadian rates to rise?
–Why does this government hate free money?
–Negative discretionary income
–Vancouver, stay or go?
–Freak show housing market
–One heck of a student loan
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
The BC government has announced new rules that require purchasers to reveal citizenship details:
The new requirements, aimed at answering whether foreign ownership is driving up housing prices, go beyond the data that are supposed to be collected for Canada’s anti-money-laundering agency whenever someone is involved in a real estate transaction. Records show there is significant non-compliance among Vancouver-area real estate firms, which are required to collect the information for the Financial Transactions and Reports Analysis Centre (FinTRAC).
B.C. Finance Minister Mike de Jong said he is confident provincial auditors will be more successful. “The objective here is to get beyond the theory, get beyond the conjecture and the speculation and actually have hard data,” he told reporters on Tuesday.
They also announced new requirements to deal with bare trusts:
The new disclosure rules will also create new data on the use of bare trusts, after an investigative report in The Globe showed how such trusts may be used to transfer property ownership without paying the property transfer tax. Mr. de Jong said the data, which must be provided on the new property transfer tax return form, will be shared with Revenue Canada.
Such data are supposed to be collected under Canadian law, but a federal audit of paperwork in Vancouver realty offices found many instances where required filings were significantly lacking.
And of course the dreaded ‘shadow flipping‘:
The new regulation – which applies only to licensed realtors – will not ban contract assignment but seeks to ensure that the seller consents to such an arrangement and is the one who profits if the property is resold before the deal is closed.
So presumably the best way to continue shadow flipping is to avoid being a licensed realtor. Read the full article over at the Globe and Mail.