Category Archives: opinion

Secrets of the Real Estate industry

These may not actually count as ‘secrets’, but over at the Tyee they have a list of 9 things the real estate industry doesn’t want you to know:

You’ve heard it a million times. The reason so few of us can afford Vancouver is because there aren’t enough new homes being built. This is the version of reality that real estate industry leaders and their political allies want us to believe.

But an investigation of the industry by The Tyee has revealed reality to be much more complex. Over the past six months I spoke at length with financial analysts, economists, industry consultants, realtors and many others to learn the true causes of Vancouver’s housing crisis and who is profiting from it. They were in broad agreement that real estate is at the centre of a massive realignment between our society’s rich and poor — and one that few leaders in the industry seem willing to publicly acknowledge.

About half of the items on their list have to do with the class divide and the disappearing middle class.

Read the full article here.

Bank of Canada concerned about debt and housing market

The Bank of Canada is still worried about housing debt levels in Canada and joins the OECD in expressing that concern:

The two biggest concerns on the bank’s radar are also intertwined. It said the growth in mortgage lending in Toronto and Vancouver has largely fuelled an increase in Canada’s overall household indebtedness since the bank’s last review six months ago.

“Highly indebted households have less flexibility to deal with sudden changes in their income,” said the bank.

“As the number of these households grows, it is more likely that adverse economic shocks to households would significantly affect the economy and the financial system.”

The document was released as concerns about the Canadian real estate market — domestically and from abroad — continue to pile up.

Read the full article over at the Financial Post.

Why are investors fleeing Canada?

Canada’s economy is booming, expanding at a 3.7% annual rate in the first quarter. And yet…

Meanwhile, in a year when stocks are rising everywhere, Canada’s benchmark index is the second-worst-performer in the developed world after Israel, according to Bloomberg data. It’s a similar story in currency and bond markets.

The performance underscores how, even with the improving economic performance, caution prevails. Investors remain concerned about geopolitical risks such as U.S. trade protectionism, the outlook for oil prices and a housing market that some analysts say may be on the verge of a correction.

“It is a tad curious to say the least that the Canadian economy arguably has been one of the bigger pleasant surprises in 2017 and meanwhile the equity market has done a belly flop,” said Doug Porter, chief economist at Bank of Montreal, who highlighted the disconnect between Canadian growth and market performance in a May 26 note.

Energy shares are down 10 percent year-to-date, while fears about contagion from a run on deposits at troubled mortgage lender Home Capital Group Inc. have weighed on financial shares, which are down 1.2 percent.

Read the full article over at Bloomberg.

What does a Green / NDP government mean for house prices in Vancouver BC?

The Green Party and NDP have announced an intention to form the government of BC and they have some different approaches to the real estate economy than the BC Liberals.

So what does the future look like to you? Will the new government implement some of their more dramatic policy changes and what does this mean for the Vancouver Housing Bubble and the wider BC real estate economy?

Oracle had the following wish list:

1) 30% FBT Province wide. Absolutely No Loopholes.

2) Tax 2nd homes of Citizens an annual property surcharge of 2% with rental offset. 3rd and more homes tax surcharge of 5%.

3) Tax homes of non taxpaying non residents 2%. Tax 2nd homes at 5%.

4) Limit foreign student at any institution to 15% maximum to ease rental crisis.

5) Inteoduce rental tax credit to out tax Evading Landords.

6) Pressure Federal government to limit 10 year tourist visas stays to a max of 3 months per year.

7) introduce extended mortgage amortization periods for those owners who will go underwater with the above changes.

Markoz points out this shift might not be painless for anyone:

Horgan and Weaver Have a Tough Job Ahead.

If they do all the things Eby talked about, real estate prices will definitely come down. The problem is, Krispy has painted our economy into a corner where it is very RE dependent. Lower prices mean lost jobs in construction and related industries. Also, as others have pointed out, lower tax revenues. There are many benefits to lower prices but they may not be self-evident to the 70% who own. Especially people who bought in the last 3 years.

The Krispy alternative, letting prices run amok until a 1 bedroom condo is $4 m, is not an alternative. Still, doing the right thing is going to be very painful and politically unpopular with many.

Dave wonders what’s next for Christy:

I think Clark should make a throne speech and outline what she wants to do for the next year of government and see what happens. Let the Greens and NDP shoot her vision down but at least people know what got voted down. I also think she should also try to split the NDP and Greens, not because it’s politically smart, but because voters should know what their MLAs stand for and support. Small chance she can pull something off, but not likely. I don’t see any ridings or obvious MLAs that the Liberals could split or steal.

Let us know your thoughts on the future of the BC economy and real estate prices in the comments below!

Why does the foreign buyer tax only apply to Metro Vancouver?

Some people love the foreign buyer tax, some people hate it, but at least one person thinks it was a conflict of interest for the finance minister to enact it only in Metro Vancouver when he owns investment properties just outside that boundary:

 

The one home and six investment properties that belong to Mike de Jong in Abbotsford are worth almost $1 million – a significant investment that rose in value relative to similar properties inside Metro Vancouver, records suggest.

That puts de Jong in a conflict of interest when handling the province’s controversial real estate file, says Duff Conacher of Democracy Watch.

“Given that the finance minister has significant real estate investments, I don’t think he should have been taking part in this,” Conacher said.

“He would have to recuse himself or sell his properties. It has to be one or the other. He can’t have a private interest and take part in decisions about his properties.”

But de Jong tells CTV News he had nothing on his mind except doing his job when he moved and voted for the tax in the B.C. Legislature.

“The decision was based exclusively on the analysis of the data,” he said outside a Liberal caucus meeting.

Read the full article over at CTV news.