Category Archives: supply

Government complicit in fueling housing crisis

A recent report out of SFUs school of public policy is generating headlines that are rather extreme:

Foreign buyers crushing Vancouver home dreams as governments do little.

“People recognize what’s going on, and they’re willing to call a spade a spade,” he said, stressing that such views are based on reality, not racism.

His report compiles a number of other studies, including data on home-buying trends, population density, the cancelled immigrant investor program, and American research on the same issue.

Gordon said his report blames Vancouver’s housing crisis on foreign buyers, particularly from China, because “this is where the evidence points, not because of some anti-Chinese animus.”

Chinese investors have also spiked home prices in the Toronto region, but Vancouver has seen the highest rise in real estate due to the influx of foreign money reaching an unprecedented level in the last year, he said.

Gordon noted that other countries, including Australia and Singapore, have created policies for foreign homebuyers to protect their own citizens but that hasn’t happened in Canada.

Read the full article over at the CBC.

VSB seeks input on Kingsgate Mall

Did you know that the Vancouver School Board owns the land under Kingsgate Mall?

Well now you do.

The VSB is seeking ideas on what to do with this asset due to current budget shortfalls.

Surprisingly, the modest little mall has also been generating big money for the Vancouver School Board — upwards of $750,000 per year, The VSB has owned the East Broadway and Kingsway lot on which the mall sits since 1892 when the long-gone False Creek School first opened on the site.

But 124 years later and facing a $24 million budget shortfall, the VSB is now contemplating its future with Kingsgate, and asking for public input.

“One of the questions we’re asking is what do you think the school board should do with it,” said VSB chairman Mike Lombardi.

According to Lombardi, the VSB could see revenue from the property increase to $2 million annually — money which flows directly into the operations budget, offsetting the deficit. The lease with mall operator, Beedie Development Group is set to be renegotiated next year.

Selling the land is also a possibility, although money raised from a sale won’t help the budget shortfall because it would be restricted to capital projects like new school construction and building upgrades.

Read the full article over at the CBC.

It’s a tough job to bust AirBnB listings in Vancouver

Short term AirBnB style property rentals are not permitted in Vancouver and the city can levy fines up to $10,000, but apparently there are still some of these short term rentals available.

“The difficult and complex thing comes when we move forward with prosecution,” Toma said, explaining that the city needs to connect the property owner to an online short-term rental listing without the help of a specific address.

Toma said a few cases against short-term renters are pending. Fines in those and other cases are up to the prosecutor, but staff recommend they recoup investigation expenses at minimum.

City staff are contemplating new tools to deal with the nuisance aspect of short-term rentals at the same time as assessing the industry’s impact, Toma said.

“We do have such a tight rental market,” Toma said, adding that she hoped staff could craft a smart and enforceable regulation that would also “find that sort of a sweet spot” for those sharing their home to meet their mortgage payments.

Of course there is one kind of short term rental that is currently allowed in Vancouver, but it comes with a few catches:

Bed and breakfasts are allowed in Vancouver, but under certain conditions. Homeowners need to live in the residence and they can host a maximum of four guests in two bedrooms, among other regulations. They also have to pay a one-time development and building permit fee, get a business licence and pass a safety inspection.

Read the full article over at the province.

Condos are hot again, buy two or three

CMHC has surveyed condo owners in Vancouver and Toronto and found that the number of owners with multiple units is growing.

…the total number of investors in the two regions who say they have purchased at least two condo units in addition to their primary residence has risen nearly 13 per cent over the past two years. Nearly a quarter of condo investors told CMHC that they owned least two units, with close to 10 per cent reporting that they owned three or more condos.

Buyers are looking for both rental income and appreciation, with some interesting math:

Among condo investors in Toronto and Vancouver, half told the federal housing agency that they had bought their investment unit for rental income. Of those, 56 per cent expect the value of their condo to go up, while only 8 per cent thought that it would go down. The share of condo investors in Toronto who expected their unit to increase in value fell to 60 from 64 per cent from a year earlier, while the share in Vancouver who expected their condos to increase in value rose to 50 from 41.5 per cent.

A slightly larger share of investors in Vancouver reported paying higher prices for units than in Toronto, although the survey found that the reverse was true of rents, which were higher in Toronto. Nearly 16 per cent of Vancouver landlords reported charging less than $1,000 in rent for their condos compared with fewer than 5 per cent in Toronto. By contrast, nearly 50 per cent of condo landlords in Toronto said they charged more than $1,500 for their units, compared with 33 per cent in Vancouver.

Read the full article over at the Globe and Mail. So how many condos do you own and how many are you thinking of buying this year?

Where’s the love Vancouver?

This city has lost more than a thousand people a year in the 25-44 age group since 2012 and it’s not hard to guess why.

One of those people has an editorial in the Vancouver Sun:

Sure, I managed to pay rent on a 380-square-foot apartment and eat takeout sushi once in while, but I definitely haven’t saved for retirement or been able to afford to give birth yet. I’ve spent most of my 30s on the west coast (land of economic opportunities?) while I watched my friends on the east coast (with less education than me) buy four-bedroom houses and multiple cars.

Sure, they shovel snow, but they also run across the street to borrow sugar from the neighbours. They trade gardening tips with the elders living next door. Their children play in the backyard. They are happy and connected.

In Vancouver I’m lucky to get a hello in an elevator.

Read the full editorial here.

Are you in that 25-44 year old demographic and if so are you thinking of leaving or in love with the city and never gonna go?

CMHC looks to define foreign money

How would you go about trying to determine how much foreign money is going into Canadian real estate? The CMHC is now trying to figure that out.

A core team of analysts at CMHC held several meetings to discuss how best to tackle the data gap. Researchers had initial meetings with agencies including the Canada Revenue Agency and Fintrac, CMHC confirmed. The Financial Transactions and Reports Analysis Centre of Canada monitors money laundering and out-of-country transactions of at least $10,000. The documents show CMHC also planned or had meetings with the Bank of Canada, British Columbia’s housing and property assessment agencies, and the department of finance to start a data working group.

So why are we missing that information and how much real estate is owned by people outside the country?

After meetings with realtors, lawyers and condo developers in Vancouver, CMHC market analysts pointed to the lack of transparency in the market. Realtors often don’t see residency status or identification such as a passport, and that information isn’t stored electronically at the brokerage. Lawyers and bankers who run the transaction aren’t obligated to pass on residency information and buyers don’t regularly check a citizenship box when paying land-transfer tax.

“Conveyance is done through the lawyers and bankers,” minutes from a meeting show. “Money transfers should get passed onto Fintrac. Whether this is taking place or not is an issue.”

Previously, CMHC has tried to glean the scope of foreign investment with a survey of property managers that found less than 6 per cent of condos were bought by people who reside outside the country.

Read the full article over at the Financial Post.

Call for inquiry on Vancouver home contract flipping

The Globe and Mail recently published a story on contract flipping in Vancouver:

The probe reveals that homes are being flipped by assigning – selling – sales contracts before closing, for higher prices than what the original seller homeowner receives in the end. Assigning contracts like this is legal, but controversial.

Speculators who profit this way also don’t pay property transfer taxes, because technically the property doesn’t change hands until the deal closes.

Mr. Eby said he is hearing from upset constituents in his Point Grey riding, where many homes are demolished to make way for new investor-owned houses that sit empty, some resold several times.

There have been a number of reactions to this story, but most recently calls for an inquiry:

The technique, which brings profits for speculators but higher prices for buyers, has sparked a torrent of criticism in the province “The investigation needs to be independent because the government has already said it doesn’t think there is a problem,” said MLA David Eby.

Vancouver Mayor Gregor Robertson said after Saturday’s report that the province should impose a tax on speculators.

Read the full article here.

BC Premier Christy Clark has already said no to the province making any extra money off of sales to offshore buyers, but says now there will be a study on the impact of foreign buyers.  The government also proposes to raise the PTT exemption as a way to solve high housing costs without risking lower house prices for first time buyers.

It’s worth highlighting this comment from ‘shut it down already‘ who points out that this summary confuses the issue of offshore buyers and contract flipping which has the ‘racists running in circles’:

Rampant speculation generally resolves itself in the end. The other obvious contradiction is that we often hear people here saying that government intervention in the markets is the problem, yet now you want them to step in and intervene.

Don’t forget that the original sellers of an assigned property accepted a price that they were satisfied with. It’s only greed and jealousy that had them aghast that the buyer might resell for more than they paid.

The $6 Million tear-down

What would you call a 20 year old 7300 Sq foot house with brand new hardwood floors and an indoor pool?

In Vancouver we call that a tear down.

Property records show that the 7,300-square-foot house was last sold in 2013 for just over $6 million — the assessment today is $7.44 million. According to the 2013 listing for the property, it boasted $350,000 in recent renovations including new hardwood floors, a water purification system and windows. The listing sheet shows the two-storey house on a corner lot has 19 rooms including seven bedrooms, a media room, office and 12-foot by Seven-foot walk-in closet off the master suite.

…Well, we certainly know how to keep bulldozer operators and city dump workers employed!

Read the full article here.

Trapped in a starter home.

A funny thing happened on the way to financial security and easy riches, the condo promise in Vancouver didn’t really pan out for many young families according to a recent Vancity study.

The idea of a starter home is to get on the property ladder, then trade up as your family grows. But this doesn’t work as well when condo prices stagnate and single family home prices grow, especially when there are very few options available for 3-4 bedroom attached or condos.

Across the region, families who wish to move from a one-bedroom apartment or condo to a three-bedroom home with an attached yard would have to increase their debt level by an average of 95%. In Vancouver’s west side, this jumps to 158%. In the city’s east side, it is a much lower 78%. The biggest jump is found in White Rock, where debt levels would increase by an average of 164%.

Read the full article here.

Realtors not hungry

RFM has updated the Realtor Hunger Index over at VancouverPeak.

The VANCOUVER REALTOR HUNGER INDEX is the percent of realtors who earned no commission income for the stated month. For August 2015 the VRHI was 49%. How does this compare? The 18-year average for August is 50%. At 49%, the 2015 August VRHI was higher than 8 years and lower than 9 years since 1998.

Despite turmoil in the speculative equity markets, an ‘official’ recession in Canada, oil prices that are plumbing the bottom of the barrel, foreign money-laundering investigations by the Canada Revenue Agency, corrupt politicians, greedy realtors, rapacious real estate marketing firms and a plethora of other factors that should cause a collapse of the Vancouver housing bubble, continued lower-than-average inventory and strong demand forced already high prices higher, especially in single family homes, where the HPI increased a whopping 17.5% from August 2014 to $1,159,600. Endlessly-low interest rates (and clueless BOC leadership), a flood of foreign investment money and knee-jerk buying by uninformed and delusional buyers, the August sales rate is extraordinary! And unsustainable. My official opinion of all this is available 24/7/365 for US$0.05! Call now! Operators standing by! However, for a more detailed and scientific analysis of the market dynamics of this firestorm, consult the DSM-5! (The Diagnostic and Statistical Manual of Mental Disorders (DSM-5), published by the American Psychiatric Association, offers a common language and standard criteria for the classification of mental disorders.)

Details and comparison data for 18 years at: http://vancouverpeak.com/showthread.php?tid=64