Category Archives: debt

BC slides

Kabloona pointed out this article: “dramatic drop in home sales makes B.C. an outlier among provinces”

“VANCOUVER—B.C.’s real-estate market has gone from being one of the strongest in the country to the weakest as the number of sales drops sharply in comparison to other provinces.

The B.C. Real Estate Association (BCREA) is forecasting a 21 per cent drop in sales in 2018. Meanwhile, the number of sales in July was 24 per cent lower than the previous July, according to Douglas Porter, chief economist and managing director of BMO Financial Group….

“…..Compared to the rest of the country we are noticing that it’s especially weak, which is quite a turnaround from what we’ve seen over much of the past 10 to 15 years,” Porter said. “It’s quite unusual for Vancouver to stick out.”

Read the full article here.

Luxury condo tower pulled on weak demand

It appears there might be a limit to ‘build it and they will come’. Southseacompany points out a recent development proposal that was pulled amid signs of weak demand.

“A proposal for a downtown Vancouver luxury condo tower that was scheduled to go to a public hearing next week has been abruptly cancelled by the owner.”

“A representative of the developer, Brilliant Circle Group, sent a letter to the planning department last week withdrawing the project. The letter, obtained by The Globe and Mail, explained that the decision “is due to the impact of the rapidly changing real estate market, which affects both the unit mix and the CAC evaluation.””

““Everything’s corrected and the luxury market is gone,” said Ian Watt, a realtor who specializes in higher-end housing. “Anything under $2-million will sell, but in the last two months, there’s been only one sale over $3.5-million.””

Read the full article here.

28% of Canadians say rate hike would cause bankruptcy

From southseacompany: this survey claims that more than a quarter of Canadians think that another rate increase would push them into bankruptcy.

The poll comes just days before an anticipated interest rate hike by the Bank of Canada and was conducted on behalf of MNP, a leading Canadian bankruptcy firm, between June 15 and June 19. The same poll found that 42% of Canadians say that if interest rates rise much more their financial well-being will be put in jeopardy.

The Bank of Canada has raised interest rates three times since last summer, and investors expect the central bank will boost its target for the overnight rate to 1.5% this Wednesday (July 11).

Read the full article here.

Loonie leaps on hints of rate hike

From southseacompany an article about the lowly looney leaping up on hints of a Canadian interest rate hike:

The Canadian dollar shot up Wednesday after the Bank of Canada held the line on a key interest rate but pointed to a boost in the future.

In foreign exchange trading, the loonie was ahead by 0.82 of a cent at 77.64 cents US when stock markets closed on Wednesday, after being up by more than one cent earlier in the day.

The central bank left its key target for the overnight rate unchanged at 1.25 per cent, where it has been since mid-January.

However, the bank said in a statement accompanying its decision that developments since April reinforce its view that “higher interest rates will be warranted to keep inflation near target.”

Read the full article over at the CBC.

BC Speculation Tax Impact

People who own more than one home are worried about the new speculation tax:

From a Vancouver Island resident with a condo in Vancouver: “If the proposed speculation tax proceeds as you describe, the two-per-cent tax will far exceed the B.C. income tax that we normally pay. We will have no choice but to sell our Vancouver condo. We’re not speculators. We simply wanted to enjoy a few days a month in the city we used to live in, in the comfort of our own condo.”

On the problem for seniors with recreational properties that have been in the family for years: “If they pay zero income tax because their annual income is low enough to warrant no tax — i.e. married couple making around $25,000 or so — they’d never recover the amount.”

From someone with a place on Saturna: “They call it a speculation tax, but it seems more like an empty home tax. The government claims that taxing homes which remain empty most of the year will help deal with the housing shortage. If that is the case, why isn’t Whistler included? The prices are skyrocketing and there is a real housing shortage for workers. On the other hand, they include a Gulf Island like Saturna, where there isn’t a housing shortage and housing prices haven’t risen in more than eight years.”

On the perverse incentives of a tax vis-a-vis longtime residents versus actual speculators: “If you speculate and sell the property quickly, you pay the tax once, while those keeping property for years pay years of tax. The short-term speculators win!”

Read the full article here.