Category Archives: economy

No plan to prohibit foreign buyers

Bullwhip29 points out that BC Finance Minister Carol James has no plans to prohibit foreign buyers in BC.

Foreign buyers who want to buy residential real estate in Metro Vancouver pay a 15 percent tax.

Meanwhile, Finance Minister Carole James has no intention to outlaw foreign buying of B.C. homes when the NDP government introduces a series of policies in the next couple of months to address the high cost of housing.

James has said that there will be no ban like the one that exists in New Zealand.

B.C. Green Leader Andrew Weaver, on the other hand, has demanded an outright ban on foreign buying of residential real estate to curb demand. And he wants James to introduce this in her upcoming budget.

Read the full article over at the Straight.

Interest rates shoot higher

Southseacompany pointed out this article about rising interest rates around the world:

The bond market is getting a wake-up call from global central banks that the post-financial crisis era of easy money and super low interest rates is coming to an end.

In what was a sizzling move for the Treasury market, the 10-year yield zipped higher Tuesday amid talk that the Bank of Japan could finally be ready to wind down its easy policies. The 10-year yield broke above the key 2.50 percent level and was trading as high as 2.55 percent, the highest since March.

The 10-year is key since it is a benchmark that mortgages and many other consumer and business loans are based on.

Read the full article here.

Mostly wrong for more than a decade.

A comment from Ulsterman to kick off the new year:

Well, it’s been almost 15 years of being wrong about this market. Yup, believe it or not back in 2003 people thought prices were too high. Yes, it’s comical now, but at the time when you watched a Commercial Drive condo go from 80k to 115k within a year, people were worried about buying at a peak….

Anyhow, 2018 certainly looks like there are many factors aligned against rising prices:

1) SFH prices have already been falling
2) rates are rising
3) more restrictive lending
4) a kinda/sorta foreign buyers’ tax
5) the upcoming stress test
6) insane debt levels

What i have learned through bitter experience is that the LM market can be incredible resilient, so i won’t get my hopes up for a really significant drop in prices, but i genuinely do think SFH’s will be cheaper a year from now. Will it make a difference to me? Unlikely.

Good luck to all of you in 2018!

Tougher to get a mortgage in 2018

In the new year we’ll see a ‘stress test‘ added to all new uninsured mortgages, are you ready for that?

The Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking regulator, confirmed earlier today that there will now be a qualifying “stress test” for all uninsured mortgages, affecting consumers with downpayments of 20 percent or more.

Under current housing rules, only borrowers with a downpayment of less than 20 percent require mortgage insurance. This category of borrowers are already subject to a mortgage “stress test” that was introduced back in July 2016, amidst concerns about rising household indebtedness.

Right now, if you’re applying for a mortgage with a downpayment of 20 percent or more, the lender will assess if your financial situation is robust enough to afford a five-year mortgage qualifying rate, which currently sits in the range of 4.64 to 4.89 percent.

Under the new rules, OSFI will require that lenders use that same five-year mortgage rate plus two percent — essentially you’ll need to have income that qualifies you to afford an interest rate on a home loan of roughly seven percent.

Dave Madani says this is equivalent to a 17% reduction in the maximum mortgage people will be able to qualify for. Read the full article over at Vice.

Houses being sold at a loss

Southseacompany points out this article claiming speculators are leaving the local market and selling homes purchased in the last two years for less than the purchase price:

Dozens of homes in Metro Vancouver bought in the last two years are currently listed to be sold for a loss as speculators appear to exit Canada’s hottest real estate market.

An industry insider sent ThinkPol sales data for single family houses in the Lower Mainland showing roughly 40 properties that are currently listed for prices lower than what the sellers originally paid for them.

As the property purchases were made within the last two years, ThinkPol was able to validate this data using information published by BC Assessment.

price read the full article here