Category Archives: opinion

And now a political message from Dave

Dave sent in the following opinion, in which he throws up his hands in despair at the state of politics in BC and its role in the housing bubble.

If there was ever an election to vote for None of the Above, this would be it.

I no longer believe that any of the three major parties represent the interests of the average British Columbian. Each have sold themselves out to Special Interest groups of one type or another.

I’ll first start with the BC Liberals because they are looking for a fifth term. I have been a party member, volunteer and voter for the BC Liberals each of the last four elections. I am also a small business owner and employer and I generate a healthy income. In theory, I’m the easiest vote the Liberals should ever get. But they aren’t getting my vote this time.

Continue reading And now a political message from Dave

Blame the banks

Southseacompany pointed out this article in Canadian Business about how the banks have become complicit in the housing bubble, which strikes us as a bit unfair since any bank would be foolish to not take part in the low risk high profit business of mortgages.

As long as government is willing to take on the majority of risk and encourage high debt loads, why should a single bank step back from that money?

In a rational world, the banks could be counted on to help contain the housing mania that has put Canada in this perilous situation. Before the early 1950s, Canada’s biggest lenders had little interest in real estate, according to Charles Calomiris and Stephen Haber, the authors of Fragile by Design, a highly praised international history of the interplay between politics and banking.

That changed after William Lyon Mackenzie King created the Canada Mortgage and Housing Corp. at the end of the Second World War to backstop the construction of new homes for returning soldiers. Nothing stirs a banker like risk-free lending. By 1954, the banks had convinced the government to change their charters so they could join the post-War building boom. In 1992, they were cleared to buy the trusts that were the initial beneficiaries of CMHC’s backstop, triggering the consolidation that cemented today’s oligopoly.

In November 2015, the average monthly holdings of mortgages at Canada’s chartered banks exceeded $1 trillion for the first time. The figure continues to climb, reaching $1.07 trillion in December, according to the Bank of Canada’s most recent statistics. That’s more than double what the chartered banks commit to business lending.

Read the full article here.

Eliminate character to avoid affordability 

There are some old homes on Vancouver and some people think we shouldn’t be tearing down 1000 of them each year.  The city has some heritage and ‘character’ protections in place, but these have the unfortunate side effects of slowing the relentless rising of house prices:

“The real data on the house next door is that it reduced the value by 15 per cent,” said Jackson, whose neighbour’s house was re-listed and sold for less money after the city determined it has “character features” on the exterior. 

Read the full article here

Interest free loans get expensive

Bullwhip29 points out an article that says the BC first time buyer loans program will likely cost the government twice as much as they claim.

“The Ministry of Finance estimates that for every dollar of loan proceeds under HOME, taxpayers will lose about 19 cents in administrative costs and foregone interest. This estimate ignores the cost of default losses that may arise if borrowers are unable to repay their loans.”

Read the full article here.

Downtown condo sales prices drift down

An anecdote from commenter YVR on asking prices downtown:

Every month a realtor send me listing and sales for my building where I rent. It is a newish building in downtown Vancouver so suites are almost identical to compare sale prices to. Here are the last 3 sales for almost identical suites:

March 2016 $1.32 million
June 2016 $1.36 million
Nov 2016 $1.15 million

From June to Nov that is over a 15% reduction or $210K in 5 months. Imagine being the person who bought in June and just received the same flyer with the recent sale price. Ouch. If he/she sold today after transaction costs they would be down by $280K and that assumes they could get the November price which is unlikely.