If you own a small run down million dollar house in Vancouver, let’s take a moment to thank the renters who help pay for some vital services, like the new first time buyer loans and the homeowner grant, the cap of which has just been raised to 1.6 million.
“This is a remarkably lousy policy,” said Thomas Davidoff, head of the University of British Columbia’s Centre for Urban Economics and Real Estate. “You’re going to take money from people who don’t own homes and give it to people who own homes. That seems to be a step exactly in the wrong direction if the dominant issue is affordability.”
Read the full article over at Bloomberg.
An anecdote from commenter YVR on asking prices downtown:
Every month a realtor send me listing and sales for my building where I rent. It is a newish building in downtown Vancouver so suites are almost identical to compare sale prices to. Here are the last 3 sales for almost identical suites:
March 2016 $1.32 million
June 2016 $1.36 million
Nov 2016 $1.15 million
From June to Nov that is over a 15% reduction or $210K in 5 months. Imagine being the person who bought in June and just received the same flyer with the recent sale price. Ouch. If he/she sold today after transaction costs they would be down by $280K and that assumes they could get the November price which is unlikely.
Despite widespread criticism of the BC governments plans to make teaser loans to first time homebuyers (worst idea everrrr) Kirk Lapointe points out that not everyone thinks its a bad idea.
I would wager that for every Christmas dinner gathering of finger-wagging and tut-tutting about the fiscal irresponsibility and market impact of the Clark manoeuvre, there were a dozen families seriously discussing if this was the time – perhaps the last real window – to get the kids into a home in the same city.
Politics ain’t always about what makes the most sense.
Read the full editorial here.
Praising a forecast market correction in Vancouver as a return to sanity:
Vancouver’s long-awaited housing correction may be around the corner: prices are headed for a double-digit decline in 2017 as buyers drop out of the market, according to the head of Canada’s largest real estate services company.
“Home prices had gotten so out of whack with the growth in underlying wages and salaries that there had to be a correction,” said Phil Soper, chief executive officer of Royal LePage, a unit of Brookfield Real Estate Services Inc. “And it’ll happen in 2017.”
Royal LePage is preparing a formal forecast for release in early January based on data from Brookfield, which also runs the nation’s biggest property valuation company. Those appraisals are used by banks, insurance companies and mortgage underwriters.
Read the full article here.
The new first time buyer teaser loan program announced by the BC government has met a suprisingly negative reaction in the media, but some online polls show voters approve.
This move seems designed to undo some of the federal ramp back of housing market fuel. Bearvancouverite points out this might help developers who are seeing people backing out of presales agreements.
This might be exactly why Christy did it. Developers were panicking that presales won’t close because mortgage qualifications would be so different in the next few years, they need to dangle a carrot to make sure speculators don’t just walk away and first time buyers can be convinced to take over presales from flippers.
Scoop points out why this program should be referred to as a “teaser loan” as made popular in the US housing bubble:
Definition of “teaser loan” from investopedia: An adjustable-rate mortgage loan in which the borrower pays a very low initial interest rate, which increases after a few years. Teaser loans try to entice borrowers by offering an artificially low rate and small down payments, claiming that borrowers should be able to refinance before the increases occur.
Let’s all call start calling this new program what it is: Christy’s Teaser Loan Program.