Archive for the ‘hype’ Category

Eliminating Affordability

Monday, August 31st, 2015

Good news real-estate investors!

Metro Vancouver housing affordability is nearing the worst ever seen in Canada.

That’s according to RBCs housing affordability index:

The index, which captures the proportion of pre-tax household income needed to service the costs of owning a home, rose the most for B.C. among all provinces.

The measures increased by 2.1 percentage points to 71.4 per cent for bungalows, and by 0.4 percentage points to 33.3 per cent for condos.

“Poor housing affordability at the provincial level, particularly in the single-detached home segment, is a reflection of the extreme situation in Vancouver,” said Craig Wright, senior vice-president and chief economist, RBC.

This can only make our real estate more desirable as sales continue at a brisk pace.  Read the full article here.

Federal audit looks at Vancouver Real Estate transactions

Thursday, August 27th, 2015

Vangrl pointed out this story in the Province:

Vancouver’s booming real estate industry is being targeted in a federal money-laundering audit that could potentially lead to massive fines and jail time for realtors.

Ottawa’s increased examination of Vancouver real estate deals has been under way for several months and has been revealed in a Province investigation that obtained rare internal data and risk-analysis reports from Canada’s financial intelligence unit, Fintrac.

Documents obtained under access to information law — and The Province’s interviews with a wide array of B.C. real estate professionals, money laundering experts and Fintrac officials — suggest dramatic under-reporting of large cash transactions and suspicious transactions that realtors and developers are responsible to make to the federal government.

“We have significantly increased our examinations in the Vancouver area,” a Fintrac official said. “Our compliance people are not happy.”

Read the full article here.

Why worry about home ownership rates?

Wednesday, August 19th, 2015

Some people have expressed concerns about Canadian home ownership rates hitting the highs that were last reached in the US before their market crashed, while others have said they’ll do what they can to increase home ownership rates in Canada.

So why would anyone worry about high ownership rates anyways?

ILoveCharts posted their take in the previous thread, and that comment is reproduced below:

Why do we need to worry about high home ownership rates?

1) Because when too many people own a home, it reduces the mobility of our workforce. Given the spotty/local nature of our economy, it’s important for our economy for people to be able to move within the country to follow the hot spots. When commodities are hot, people need to move to the west and our dollar is higher so manufacturing in the east suffers. When commodities are doing poorly the dollar drops and people need to move east to escape the barren mines, forests and oil fields of the west. Until we see major investment in diversification at the provincial level (likely will never happen,) this cycle will continue. With high home ownership rates, the teeter totter has tipped but people are nailed to the plank and they are stuck.

2) Because there is a practical maximum and a natural median. There will always be people who can’t practically buy (they are students, in poverty, etc.) When you go through a period of above-average buying, you expand the size of the housing industry (construction, realtors, etc.) in a way that is not sustainable in the long run. Once you hit the maximum, it only has one way to go to get back to the median. In the process, a lot of people lose their jobs. Seeing as 70% of people own homes, they start to run into problems with their mortgage. You can try to move the maximum point a little bit with new lending rules.. but you can only play that game for so long. Are we going to bring back the 40 year mortgage? Shocking to hear that we are going to allow $70k tax free out of the RRSP…

3) Because home ownership provides little to no value to society when it’s more expensive than renting. We want Canadians to be saving their money and investing in Canadian companies through Canadian stocks. We want those vast sums of money to deployed in our markets – creating and growing enterprises. Ownership of dirt doesn’t move our country forward.

The price of land is arbitrary. We have the second lowest population density in the world. It’s an incredible sign of weakness that we have allowed ourselves to get into a situation where we each pay so much for little pieces of it. We need to blame ourselves and our governments. We need to blame ourselves for feeling entitled to increases in the value of our property. Businesses with growing cashflows deserve to increase in value. Dirt does not – at least not at this rate. We need to blame the governments for being so willing to satisfy our demand for their short-term gain.

Now we’re hooped. The NDP wants to bring in massive social housing projects, the Conservatives want to use what is basically a nationalized bank (CMHC) to backstop ever-increasing mortgages for an ever increasing portion of the population and the Liberals just want to legalize weed.

I honestly can’t think of a way out of it.

It’s not a bubble, it’s a balloon. Lets give it more air.

Monday, August 17th, 2015

Patriotz pointed out this article over at the Globe and Mail:

Economist caution against Harpers focus on rising home-ownership rate.

Stephen Harper is putting a new focus on Canada’s rising home-ownership rate, but some economists warn that pushing to drive it higher is a “wrong-headed” approach in an overheated market.

In government, the Conservative Leader brought in policies to encourage Canadians to save for their first home. Now, on the campaign trail, Mr. Harper’s promotion of home ownership is shaping up as a key part of his party’s pitch to Canada’s younger middle-class voters as he promises a package of new measures.

In a new twist to his message, Mr. Harper recently boasted that his party’s policies have contributed to the fact that Canada’s home-ownership rate is now higher than in the United States.

We’re number one! We’re number one!

Canada’s home-ownership rate is not often cited by Mr. Harper. It is a statistical achievement that did not turn out well for the U.S. when it reached a similar level more than a decade ago.

Oh. Read the full article here.

Do we have what it takes to draw ‘top talent’?

Monday, August 10th, 2015

There’s an article over at the Globe and Mail about the difficulty faced by Tech startups in Vancouver – apparently it can be a challenge to attract top talent.

Vancouver is awash in startups with several poised to go public, transforming British Columbia’s economy as they grow. But for Canada’s lifestyle capital to emerge as a world-class tech hub it needs to figure out how to persuade top executives to actually move there (because hey, Silicon Valley has mountains and ocean too)

Meanwhile there’s a local company called Telus that just lost a CEO because he didn’t want to live in Western Canada.

Can you believe that? Not wanting to live in BC?!

Boggles the mind.

Mayor: city is at a ‘breaking point’

Wednesday, July 29th, 2015

When it comes to housing affordability Mayor Robertson says that Vancouver is at a breaking point:

 “The conditions and the context keep getting tougher and tougher in Vancouver as the city gets more and more expensive and more desirable to people all over the world to invest in and move into. We’re basically at a breaking point where we need interventions in the market to ensure that people who live and work and grow up here in Vancouver have the opportunity to stay in the city and to keep being part of it and contributing.”

You may recall the Mayor wrote a letter to the BC Premier supporting the idea of speculation tax. The response from the Premier was based around the fact that such a tax would risk driving down house prices.

The Mayor responds to that idea in this interview at the Tyee:

“I think it’s completely wrong. It’s a totally different subject. What we’re talking about is taking some of the profit out of flipping and speculation, which doesn’t have to do necessarily with foreign ownership or homeownership or the value of homes. This is a business activity that’s taking place every day here in Vancouver where there’s a lot of profit, and it’s an option to transfer some of that profit so people can afford to live in the city. They went off on a completely different tangent in their response at the provincial level, and that’s unfortunate. The premier has said that affordable housing in Vancouver is a problem. Well, we need some action to deal with that.”

Protect the housing bubble!

Wednesday, July 22nd, 2015

It seem natural that most readers of this site would appreciate an MLA standing up for more data on real estate transactions in BC.

It came after Weaver had introduced a private member’s bill to amend the Land Title Act. If it is approved by a majority of MLAs, it would enable the B.C. government to determine foreign-investment flows in the real-estate market, as well as the extent of corporate buying of property.

Unfortunately in a province where everything seems to revolve around real estate and sensitivities around that topic what you end up with is wishy-washy comments that are nonsensical.

Southseacompany points out that Green MLA Andrew Weaver has asked the finance minister what is being done to prevent a Vancouver housing bubble from bursting.  Unfortunately there appears to be some logical inconsistencies in the MLAs statements:

I especially can’t figure that first sentence on Weaver’s blog;

“Today in the legislature I rose to question the Minister of Finance as to what steps, if any, government is taking to ensure that Metro Vancouver’s potential housing bubble doesn’t burst and that housing remains affordable in the region.”

Remains affordable? And that if this bubble burst and prices fell, then… it won’t be affordable??

This man’s nonsense is a waste of time.

 

Investigative Journalism is alive and well

Wednesday, July 8th, 2015

Channel 4 in London has done an experiment on estate agent reactions to potential buyers using obviously ill-gotten gains. The results were predictable:

In a documentary called From Russia With Cash, to be broadcast on Wednesday, two undercover reporters pose as an unscrupulous Russian government official called “Boris” and his mistress “Nastya” whom he wants to purchase an upmarket property in London for.

The couple – Russian anti-corruption campaigner Roman Borisovich and Ukrainian investigative reporter Natalia Sedletska – view five properties ranging in price from £3m to £15m, on the market with five different west London agents, in Kensington, Chelsea and Notting Hill.

Despite being made aware they are dealing with ill-gotten gains, the estate agents agree to continue with a potential purchase. In several instances the estate agents recommend law firms to help a buyer hide his identity.

One estate agent names a “very, very good lawyer … the last person I put them was another minister of a previous Soviet state” in a deal worth £10m.

The estate agents suggest that in the capital secretive purchases of multimillion pound houses are common. One claims that 80% or more of his transactions are with international, overseas-based buyers and “50 or 60%” of them are conducted in “various stages of anonymity … whether it be through a company or an offshore trust”.

Read the full article here.

Locals only

Thursday, June 25th, 2015

A local developer has figured out a good way to get attention on an 18 million luxury penthouse that has remained unsold since 2012: say its for locals only.

Call it exclusionary, or tapping into the zeitgeist, or just a clever promotional scheme. Langereis says he wants a purchaser who will “commit” to this space and the city, and who will actually live here. If not year-round, then at least most of the time.

He wants to look up from street-level and see the lights on. “I want someone fun, someone who will connect with the rest of residents,” says Langereis. “Not someone who treats this place like some hidden chamber and then leaves.”

Read the full article here.

Ontario cracking down on phantom bids

Tuesday, June 9th, 2015

Most real estate professionals are honest and unless there is a signed offer in place would never use the threat of a competing offer in an effort to drive up a property sales price.

But just to make sure a few bad apples don’t spoil the bunch Ontario plans to crack down on phantom bids.

The scam involves a sales agent hinting to prospective buyers there are other bids as a way to coax them to bid higher.“You say, ‘We’re expecting another offer. I do have another offer. You may want to go back to your client and make sure this is their best offer’,” says said Joseph Richer, registrar of RECO. “You are suggesting there might be competing offers when there may or may not be.”

With the new rules, “You cannot suggest or even imply that you have an offer unless you have one in writing, signed sealed and ready to be delivered,” said Richer, while adding there have been very few formal complaints about phantom bidding over the years.

Read the full article here.

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