YVR pointed out this article by Rob Mclister about the OSFI B-20 bombshell:
The new OSFI’s stress test rules will make 20% of the mortgage market not qualify or they will have to reduce their mortgage by 18% to qualify. That is before recent and future mortgage rate increases are factored in.
Roughly 80% of new big bank lending in the richly valued Toronto and Vancouver markets is low-ratio mortgage lending
OSFI’s stress test, as proposed, would slash buying power for prime buyers by roughly 18%
For non-prime borrowers, qualifying rates would immediately rocket into the 6% to 7% range
Read the full article here.
With interest rates going up there’s good news and bad news for housing. It can make it tough for people who are stretched thin financially, but might be good news for people waiting to buy:
The people who will benefit are those who have a nest egg and have been waiting for the right time to buy a home, he said.
“The real winner here is somebody sitting on a $800,000 down payment who says I’m going to wait for prices to fall.”
Overall, interest rates will continue to rise, added Brander. He predicts mortgage-lending rates could increase by several percentage points in the coming years. But as long as those increases are incremental, like Wednesday’s announcement, the economy will be able to absorb it, he said.
Seems like it’s always a good time to be sitting on an $800k down payment, but maybe we’re just optimists. Read the full article here.
Here’s a surprise – it turns out if you hand out $13 Million in loans to the general population to buy a product, the price of that product rises.
In this case the product is condos and the $13M comes courtesy of taxpayers and the BC liberal governments ‘BC Home Owner Mortgage and Equity Partnership’ program.
As it turns out though, not everyone things this is the smartest thing in the world. UBC economist Tom Davidoff sounds downright unenthusiastic:
The BC Liberals announced the program back in December, arguing it would help young families crack into the red-hot housing market.
But critics warned that financially stretched buyers would take on risk by essentially starting a second mortgage and that the infusion of cash could drive prices up.
Davidoff said that second case appears to be playing out, with people using the program now accounting for about five to 10 per cent of condo purchases.
“When there’s too many people chasing too few houses, pushing more people to get in on the action just seems like a really dumb idea.”
Condo sales have been driving the Metro Vancouver real estate market in recent months, and the average unit price now sits at about $655,000.
For the month of May, the Real Estate Board of Greater Vancouver found 95 per cent of all condos listed had sold, with prices up more than 17 per cent year over year.
Read the full article over at global news.
Looking to cheat on your real estate transaction taxes? Bad news, the CRA has decided it doesn’t want you to and is coming after real estate tax cheats.
From April 2015 to March 2017, the CRA audits of real estate transactions resulted in more than $329.4 million in assessed income that had not been reported. During this time, the CRA applied over $17 million in penalties, primarily associated with Canada’s two major real estate markets in Toronto and Vancouver.
Canadians work hard for their money and the Government of Canada recognizes that many families count their principal residence as both their home and most valued asset. The CRA will continue to strengthen relationships with key partners such as provinces, territories, and municipalities to further expand, obtain, and exchange information on real estate transactions, thereby enhancing the CRA’s ability to combat tax evasion and avoidance.
17 million in penalties? That’s almost enough to buy a fixer-upper on the north shore!
These may not actually count as ‘secrets’, but over at the Tyee they have a list of 9 things the real estate industry doesn’t want you to know:
You’ve heard it a million times. The reason so few of us can afford Vancouver is because there aren’t enough new homes being built. This is the version of reality that real estate industry leaders and their political allies want us to believe.
But an investigation of the industry by The Tyee has revealed reality to be much more complex. Over the past six months I spoke at length with financial analysts, economists, industry consultants, realtors and many others to learn the true causes of Vancouver’s housing crisis and who is profiting from it. They were in broad agreement that real estate is at the centre of a massive realignment between our society’s rich and poor — and one that few leaders in the industry seem willing to publicly acknowledge.
About half of the items on their list have to do with the class divide and the disappearing middle class.
Read the full article here.