Category Archives: hype

Is the door closing on home buyers?

Airborne Canine pointed out this PDF from the Real Estate Board of Greater Vancouver arguing that taxes and government regulation are putting home ownership out of reach of buyers.

That’s right, it’s not a problem with prices, it’s the PTT and ‘government regulation’.

As Best Place on Meth angrily points out, that last one is a bit odd.  The recent changes to insured mortgages weren’t government interfering more in the mortgage market, it was less.  They’re simply rolling back the increases in amortization terms to their historical norm.

He also points out a math error:

“How much do the new federal rules cost a buyer of a $609,500 home with a 15% down payment of $91,425?
$270.20 more per month”

In order to make that math work you have to disregard that you’ll be paying that lower monthly cost for 5 more years which means more interest payments.  In fact a 30 year mortgage under the old terms would cost a buyer $53,849.76 MORE than the new 25 year standard term over the life of the loan.

The proposal to reduce property transfer tax and lobby the federal government to increase the amortization period for government-backed insured mortgages doesn’t actually address the root problem: Speculation has driven house prices beyond what the local economy can support.  Trying to juice the market further is not a long term solution.

On a side note Data Junkie is a commenter on this blog who says they’ve done some work for the REBGV as a government relations policy analyst.  If you have a questions about his experience working at the board you can post them in the comments section below.  The highest rated questions will be sent on for Data Junkie to answer.

And last but not least 604x points out that the Select Standing Committee on Finance and Government Services accepts submissions from anyone through their web portal:

https://www.leg.bc.ca/budgetconsultations/survey.asp

As 604x puts it:

Perhaps some of our VCI heavyweights like Jesse, Scuba, VHB, VMD, b5baxter, AG Sage, and the rest could submit summary data illustrating the insanity of past government policies and the impact of CMHC loosening.

The big push now from real estate lobby groups seems to be on restoring the bubble through looser finance and tax breaks. The Committee needs evidence that the bubble is ultimately destructive over (and short-term pain of adjustment downward in prices will help everyone over the longer-term).

Vancouver ain’t what it used to was going to be

Two former city planners who were fired by councils over differences of opinion are in the Vancouver Sun complaining about a lack of planning.

That would be a lack of planning for future city growth.

They are joined in their concern by a third former city planner who retired in 2006.

“I come back to Vancouver and more and more I worry that here we have become incredibly complacent about the future we are going to face,” said Beasley. “To me there is no question. I don’t feel vague about it, I don’t think it is unknowable, we are going to have a big affordability problem in this city. That affordability could in fact be the defining reality and image in this city by 2050. It is already becoming the alternate image of this city that goes along with the beauty and all that.”

He said the region needs a “brand new” metropolitan plan, “a plan that thinks about the issues of the future, a plan that is not shy, a plan that does not have parameters and you can’t talk about this and you can’t talk about that. And until we get that plan, we are not going to solve the problems of the inner city, the affordability, our heritage program, our culture, whether we have enough office space. We just are not going to solve it unless we get a much broader concept of our metropolitan core and we get a plan for it.”

Toderian said in his term as planning director he tried to start a new citywide plan but could not get past “obsolete” local neighbourhood plans that have only made the problem worse.

Can you plan a great city, or can a great city just happen in a pretty place?

Another Realtor says “SELL NOW”

Should we have some sort of index tracking Realtors making public statements that it’s time to sell?

The market is sluggish, sales are low, inventory is growing.

..And the number of agents saying it’s time to SELL NOW is growing as well.

Agent Keith Roy was in the news recently with his blog post about the sale of his personal property and now Sam Wyatt is saying something similar:

Vancouver’s real estate market is getting and is going to get hit from both ends.  So, now that you are thoroughly depressed, here is the bright light:  IF YOU SELL NOW, YOU WILL STILL BE SELLING NEAR THE TOP OF THE MARKET.  If you plan to sell, you will need to price BELOW the most recent comparable sales prices.  If you don’t do this, your listing will stagnate.  I am pleased that this methodology has produced 4 sales in the last 30 days for my clients in a market were most homes are not selling.  In one case we had a multiple offer with a significant over asking result and in another we negotiated a full asking price sale.

I guess the important part is in all caps.

So can anyone find me a Realtor saying that now is a good time to buy in Vancouver?

 

Chinese buyers move to the USA

If you’re wondering why we haven’t heard as much about wealthy chinese buyers lately as prices drift down in Vancouver, maybe it’s because they’re moving to the USA.

“California has always been popular with Asian buyers,” he told beyondbrics. “But whereas before it was mainly buyers from Taiwan, Hong Kong and Japan, now we are seeing more mainland buyers visiting.”

Reasons for purchases vary, say those who have dealt with overseas Chinese buyers. Some are buying because they want to emigrate or they have children who will go to school in the US. More and more Chinese millionaires are looking to settle in the US or at least secure residency rights.

 And why would they be buying in the US as opposed to Canada?
Others buy because the numbers add up: the renminbi is relatively strong against the US dollar and property prices are cheap compared to Australia or Canada.
But it’s not supposed to work like that!  Wealthy people aren’t supposed to look for good deals..
Are they?
Read the full article on ft.com

New mortgage rules make buying hard

How’s this for an opener:

While the country’s new mortgage rules are meant to cool the market, eventually making housing more affordable, they’ve put home ownership out of reach for many prospective buyers.

Uh-huh. And what if the problem was that we put home ownership in reach of too many prospective buyers?

Those who don’t have a down payment of 20 per cent or more will be limited to a maximum amortization period of 25 years. Since 40 per cent of new mortgages last year were for 26 to 30 years, according to a survey from the Canadian Association of Accredited Mortgage Professionals, real-estate neophytes might feel the change most dramatically.

WHoa! Did they just say 40 percent of new mortgages were over 25 year amorts?

Another new rule announced by Mr. Flaherty sets the maximum gross debt-service ratio – the percentage of household income being used to pay for housing – at 39 per cent so buyers will be less likely to take on mortgages that are too big and could leave them floundering if rates increase.

That’s the one that Andrea Benton, a 37-year-old entrepreneur in North Vancouver, B.C., said hits her family of four hardest.

“It means my total family income would have to be an exorbitant amount to afford an $800,000 house,” she said.

You mean you’re expected to have a high income to afford an $800,000 house?!?

Read all the comedy in the full article here.