Category Archives: opinion

Who to blame for housing bubble? Government.

So if there’s a housing bubble in Canada who is to blame? Some people blame foreign buyers, some people blame local buyers. Some people think sellers are to blame and some people think the government is to blame. From the National Post:

Many analysts are becoming increasingly concerned that some cities — notably Toronto, Vancouver and possibly Calgary — are in the midst of their own U.S.-style housing bubble. A document written by the country’s financial regulator and obtained earlier this year through an access to information request, expresses concern over the “emerging risk” of Canadian loans that “have some similarities to non-prime loans in the U.S. retail lending market.” Bank of Canada Governor Mark Carney continued tosound the alarm as well last week over the growing level of household debt, while maintaining the overnight lending rate at a near-record low level of 1%.

The question remains as to why prices in Toronto and Vancouver — where the economy is stagnant — are rising so fast, and not in cities like Edmonton and Saskatoon — where the economy, and population, is booming.

Read the rest of the article here.

More racism debate in the Courier

The courier is getting lots of linkage from us as of late, but they’re playing both sides of this issue pretty well.  Is it racist to say that we should have foreign buyer restrictions or that absentee owners can kill a neighborhood?  Mark Hasiuk says NO.

Christy “Families First” Clark, a committed globalist, won’t restrict foreign ownership in B.C. Mayor Gregor Robertson, who slobbered over Beijing during a 2010 “trade mission” to China, won’t reform the tax code to accommodate the new normal. Which means foreign real estate investors pay the same rate (4.2 per cent) as local homeowners, not the business rate (18 per cent) they should.

Read the full article here.

Overpriced homes destroying retirement and education saving?

A few people pointed out this Rob Carrick column over at the Globe and Mail, looks like it should get front page attention here:

In February, Mr. Salvi called this client to remind her about the upcoming RRSP contribution deadline. “She said, ‘You know, I cannot put anything into my RRSP and, by the way, I need to cash it in.’”

Mr. Salvi recalls warning her about the withholding tax that applies to money withdrawn from an RRSP. Her reply was that her RRSP was her last resort. “The sad thing is that it took years to grow that RRSP, and it’s going to be used up in a few months.”

When somebody buys an overpriced house they’re giving up all the other things that money could have been used for.  It looks like those sacrifices include saving for retirement or their kids education.

Here’s the full article.

Real estate isn’t really a race issue

Nice response from Sandy Garossino to last weeks Allen Garr column “Blaming Chinese For High House Prices in Vancouver Is Racist”.

When I raised concerns over the impact of international transactions during the civic election campaign, the response was overwhelming and full-spectrum from across our entire community, because the problem is universal.

It was notable how concerned Canadian Chinese Vancouverites are about this difficult issue, and how optimistic and imaginative some of their solutions are. Many in this community, such as Susie Joe Dooner, expressed grave concern about the exodus of gifted young people they have seen—their own friends and family leaving their home city and province in despair of having a future here.

And it was this community which also expressed concern that our local real estate and development industry bears some responsibility for its aggressive marketing to foreign investors. Some cautioned that the scale of the potential market poses real hazards to a small city like Vancouver.

It is profoundly inaccurate to represent the public reservation about unregulated international capital in our housing market as having a racial bias, when the concern is universal.

Read the full letter over at the Courier.

I wonder why we don’t have a foreign owner property tax structure like Florida and other places that charge a premium to non-resident owners (regardless of what their race or country of residence is).  It would raise more money to pay for city expenses, take some of the tax burden off residents and best of all the only people who would complain about it can’t vote!

Bank offers you should not accept

Many Franks pointed out this article in the Financial Post, which offers a flipside view to yesterdays “do whatever it takes to scrape up 5%” article.

It has a real simple message: Banks exist to make money.  That includes making offers that sound good but may not be in your best interest.

While many people want to blame the banks or the government for Canadas alarming consumer debt problem, theres only one person who is truly to blame: the consumer.  Sign yourself up for a suckers deal and you have only yourself to blame.

While some bank chief executives have put it on themselves to tighten their own lending rules, others continue to look to Ottawa to take the lead.

In the interim, all you have to do is walk into a branch, grab some pamphlets and you will see an array of offers that could get you into even more debt trouble.

One of my favourites is the cash-back mortgage. It is offered to a varying degree by most of the major banks, so there is no point in picking on any one institution.

Here’s the offer: Take out a mortgage for more than five years and get 5% of the value of the mortgage up front to a maximum of $25,000. In other words, get a $500,000 loan and immediately get $25,000 back. “It’s great for first-time buyers,” we’re told.

Really? If the loan is at the posted rate of 5.44%, which it usually is for these types of mortgages, you could easily land into more debt trouble long term.

Another deal tries to lure me over to a new bank with an offer of 2% cash up front, or up to $4,000 on $200,000 if I switch to the financial institution. But what about the costs to break my existing mortgage, and is there really any point in switching products to get that cash right away if I’m going to end up with a higher rate and a less-flexible mortgage?

“Somebody is going to pay for it,” says Kelvin Mangaroo, president of RateSupermarket.ca, about the cost of the promises. “Sometimes there is more fine print than the actual offer.”

Check out full article here.

What do you think, do we need more consumer protection to protect consumers from themselves?