Category Archives: BC

A city full of racists

Concerned about the housing market in Vancouver and think something should be done about affordability? You probably believe foreign buyers are partly to blame for running up prices.

You’re probably a racist.

Unfortunately it seems we live in a city full of racists as more and more people express concerns about things like assignment flipping, livable teardowns and empty homes.  Or at least you can call them racists in an effort to shut down the discussion.

David Fine writes in the Huffington Post:

We are both assured that foreign investment is actually not a significant issue and at the same time, by the same people, told that any restrictions on foreign property investment would cause serious damage to our home equity, the construction industry and the residential sales industry.

Guess what, it can’t be both! There really is no doubt that foreign property investment is a significant part of home sales in Vancouver and real estate companies know it. They have offices in China and appeal directly to offshore buyers through advertising in Chinese media. It’s big business and it’s fuelling rampant speculation.

This is about foreign money, not foreign people. We have duties and tariffs on all kinds of foreign goods and industries to protect our economy. Why nothing on our homes?

Read the full article here.

Q&A with Globe and Mail RE Reporter

Kathy Tomlinson is the reporter who wrote a recent article detailing the flipping of property in Vancouver which seems to have gotten some government attention.

Many Franks pointed out that she did an AMA over on reddit today.

There’s a comment from a Real Estate lawyer that points out this practice is not necessarily a driver of a hot market, but more a symptom of a hot market and it can go both ways:

First, without a clause disallowing it, any contract can be assigned. You can assign your cell phone contract to someone else. There’s nothing sneaky about this.

Second, the final purchase price is listed on the transfer document (Form A Transfer) and easily found through the Land Title registry. Just need the PID number, pay the search fee and it’s under s.2(b) of the transfer. Property transfer tax is paid on this amount since it’s a tax on the transfer. There’s no tax avoidance here.

Third, the seller. The seller signed off on the transfer agreeing to the sale price. If they thought they could sell for more, there’s no one forcing them to sell at the price they signed off on. I fail to see how the sellers in the article were taken advantage of.

Fourth, the middleman. Okay so a few things, if the middleman isn’t paying taxes on the lift (the difference between the original purchase price and the final sale price), then that’s tax evasion, and attracts criminal liabilities. And a stupid way of going about it too. Sure, it’s a private contract but if the CRA/police come inquiring there’s a massive paper trail.

Further, if the middleman signed the contract without having the intention to complete but just to flip, then they’re taking on the risk of not finding a final buyer. And if they don’t complete, then they’re liable to lose the deposit and get sued for damages if the seller can’t find a buyer at the same price.

I was around in 2008 during the housing crash when it went the other way, when buyers assigned their contract at a loss because their financing fell through when property values plummeted.

Garth is right basically, this is a symptom, not a driver of insane housing prices. Want to watch prices drop? Increase the interest rate. Have the rate go to 6-7%. I might have to go into foreclosure work.

Read the full AMA thread over at reddit for this and other viewpoints.

It’s interesting that this topic has blown up so much and spurred responses from government. There’s nothing inherently shady about purchasing something and reselling it for a higher price and if the government feels like getting some of their hands on this money all they have to do is tax each assignment transfer.

Call for inquiry on Vancouver home contract flipping

The Globe and Mail recently published a story on contract flipping in Vancouver:

The probe reveals that homes are being flipped by assigning – selling – sales contracts before closing, for higher prices than what the original seller homeowner receives in the end. Assigning contracts like this is legal, but controversial.

Speculators who profit this way also don’t pay property transfer taxes, because technically the property doesn’t change hands until the deal closes.

Mr. Eby said he is hearing from upset constituents in his Point Grey riding, where many homes are demolished to make way for new investor-owned houses that sit empty, some resold several times.

There have been a number of reactions to this story, but most recently calls for an inquiry:

The technique, which brings profits for speculators but higher prices for buyers, has sparked a torrent of criticism in the province “The investigation needs to be independent because the government has already said it doesn’t think there is a problem,” said MLA David Eby.

Vancouver Mayor Gregor Robertson said after Saturday’s report that the province should impose a tax on speculators.

Read the full article here.

BC Premier Christy Clark has already said no to the province making any extra money off of sales to offshore buyers, but says now there will be a study on the impact of foreign buyers.  The government also proposes to raise the PTT exemption as a way to solve high housing costs without risking lower house prices for first time buyers.

It’s worth highlighting this comment from ‘shut it down already‘ who points out that this summary confuses the issue of offshore buyers and contract flipping which has the ‘racists running in circles’:

Rampant speculation generally resolves itself in the end. The other obvious contradiction is that we often hear people here saying that government intervention in the markets is the problem, yet now you want them to step in and intervene.

Don’t forget that the original sellers of an assigned property accepted a price that they were satisfied with. It’s only greed and jealousy that had them aghast that the buyer might resell for more than they paid.

10 reasons the top is in for Vancouver real estate

Whistler or bust? posted this list of reasons they think the top is in for the Vancouver real estate market. What do you think? 

10 Reasons why am I calling a top now

1. Vancouver Real Estate has finally gone parabolic. It has gone from years of above average price increase to massive never before appreciation. No asset class that I am aware of has ever gone parabolic or hockey stick on a chart and not had a major crash. Not tulips, oil or tech stocks. This is textbook classic top – Greed has replaced Fear and it’s different this time for ______ and _______ has replaced rational thinking.

2. Panic buying and large price increase have spread to the distant suburbs such as Maple Ridge, Places where there is plenty of buildable land and lots of new inventory. Places are going multiple bids in average neighborhoods. People genuinely think if they do not buy now they will be priced out forever.

3. Real Estate prices in the vast majority of BC are flat to down. Its as if the Lower Mainland is an island onto itself. These are areas not affected by HAM or DAM so it better reflects the current economic fundamentals of the real estate.

4. The Canadian and BC economy is weak. There is risk that the spill over of falling oil prices will spread to Vancouver. This can be in the form of layoffs at West Jet or the CIBC because they have to cut costs due to losses on loans to oil companies. This is a bigger thing than many people think.  Continue reading 10 reasons the top is in for Vancouver real estate

The $6 Million tear-down

What would you call a 20 year old 7300 Sq foot house with brand new hardwood floors and an indoor pool?

In Vancouver we call that a tear down.

Property records show that the 7,300-square-foot house was last sold in 2013 for just over $6 million — the assessment today is $7.44 million. According to the 2013 listing for the property, it boasted $350,000 in recent renovations including new hardwood floors, a water purification system and windows. The listing sheet shows the two-storey house on a corner lot has 19 rooms including seven bedrooms, a media room, office and 12-foot by Seven-foot walk-in closet off the master suite.

…Well, we certainly know how to keep bulldozer operators and city dump workers employed!

Read the full article here.

By-election: What do politicians say about housing?

Patriotz pointed this out in the weekends open topic thread:

Tomorrow there will be provincial by-elections in Van Mount Pleasant and Coquitlam Burke Mtn. Both former MLA’s ran in the recent federal election – for the NDP (won) and Conservatives (lost) respectively.

What do the candidate websites have in common? None of them have anything to say about housing. For example in Coquitlam Burke Mtn which is the only real contest:

http://www.jodiewickens.bcndp.ca/issues
http://www.bcliberals.com/joanisaacs/

However I think this bizarre paragraph by Issacs on “Sharing Economy, Growing BC Tech” is notable:

I will advocate for a Sharing Economy to optimize new services for families – the Ubers, the AirBnBs, the Lyfts. A diverse economy means being open to new ideas and technologies. A Sharing Economy encourages the tech sector in BC, which helps create jobs and generates investment. It starts by giving British Columbians the freedom to participate as entrepreneurs or consumers or both!

So BC’s high tech future is operating your car as a taxi or your house as a hotel!

BC Cabinet gains $2.3 Mill from real estate surge.

CTV looked at how much rising real estate prices added to the personal wealth of the BC Cabinet – $2.3 million this year alone.

Surging real estate values added $2.3 million to B.C. cabinet ministers’ personal wealth this year alone, as the government says coming measures to ease housing affordability won’t include any that lower prices.

One minister saw her four properties jump $765,000, more than five times a minister’s salary. Another saw gains on a portfolio of eight homes. On average, ministers made $103,000 – more than an MLA’s salary, according to a review of public records by CTV News.

It’s natural for those ministers to welcome their own wealth boost, but they have to realize how their eye-popping gains translate into tremendous hardship for young people trying to get into the notorious Vancouver property market, said UBC professor Paul Kershaw.

Read the full article here.

As YVR points out, maybe it’s not just wealthy foreigners who are to blame for rising prices:

Funny thing is HAM is supposed to be buying all the property. Susan Anton owns 4 houses in Vancouver and DeJong owns 8 properties in Abbotsford.

Could that be the problem? Locals owning multiple properties? That is 12 properties between 2 people. Both are white and locals.

Let’s confuse the public.

Frances Bula has some comments about a recent proposal to tax vacant properties, pointing out the bizarre lack of logic in most arguments against:

… Real-estate marketer Bob Rennie said it would kill foreign investment in everything, since it would inevitably lead to a tax on foreign investment in manufacturing or other sectors. (Never heard of that in other jurisdictions with housing taxes.)

The mystery documents from the finance ministry surfaced again, claiming it would kill off $1 billion and 4,000 jobs related to construction. (Puzzling claim, since this surtax wouldn’t affect, say, foreign investors who are putting capital into major construction projects.)

And Premier Christy Clark claimed again that somehow this could end up targeting seniors who spend part of the year in the hospital or vacationers. Yet the proposal clearly stated that people who do or have contributed to the local economy (in other words, people collecting pensions) would be exempt.

Read the full comment here and Bulas’ article in the Globe and Mail here.

Vancouver the 17th best city in BC

When it comes to job market opportunity the city of North Vancouver does well at a respectable 3rd in the province. Here in Vancouver we come in as the 17th best city in BC.

For the second year, BC Business has ranked 36 communities in B.C. based on their job markets.

The publication looked at core economic indicators – average household income, income growth, population growth, unemployment rate, people with degrees – and added a new indicator of average household income for the under-35 demographic.

Peter Miron, senior research associate with Environics Analytics, who compiled the data for BC Business, says measuring income for the under-35 age group “is a good way of measuring the overall economic health of a community.”

Read the full list and original article here.

Property tax warnings sent out.

Space889 added a link to this story: BC assessment is sending out warning letters to a few thousand property owners whose property tax is going up.

“Increases of 15 to 25 per cent will be typical for single-family homes in Vancouver, the North Shore, Burnaby, Tri-Cities, New Westminster, Richmond and Surrey,” says B.C. Assessor Jason Grant.

It should come as no surprise that as property values rise their taxes may too, but it’s worth noting that doesn’t necessarily mean more money in government coffers.

That’s because property taxes here are based on a properties value in comparison to its neighbors, not the properties absolute value.