Friday Free-for-all! August 4th 2017

It’s the end of another day at the end of another week at the beginning of another month.

And that means it’s time for another Friday Free-for-all!

This is our regular end of the week news round up and open topic discussion thread for the weekend, here are a few recent links to kick off the chat:

NDP house measures under review
New banking rules
What are covered bonds?
City vs Citizens on sunshine coast
Rethink house wealth tax

So what are you seeing out there? Post your news links, thoughts and anecdotes in the comments below and have an excellent weekend!

We’re super-addicted to real estate fees

This is just kind of sad if it’s true, an analyst says that the associated fees for buying and selling real estate (commissions, taxes, legal costs and fees) make up a stunning 1.9% of GDP.

That’s more than agriculture, fishing, forestry and hunting combined.

Doyle points out that the U.S. was relying big time on home ownership transfer fees in 2005, when its real estate market peaked. But even then, those fees made up only about 1.5 per cent of U.S. GDP. Now, years after the U.S. housing market crash, transfer fees make up less than one per cent.

In Canada, upcoming data will likely show those fees have already started to fall, as the number of home sales across the country fell in June by the most in seven years.

Doyle says Canada’s increased reliance on real estate fees can be blamed on years of ultra-low interest rates, worsened during the oil price slump when the Bank of Canada cut rates even further.

“I think they felt that the lesser of two evils in that situation was to cut interest rates,” Doyle said.

But that fix has helped put Canada in another tricky situation, where the economy relies to an unusual extent on home transactions. That could have particularly negative consequences as the central bank begins to raise rates again.

“The drag on the economy that’s going to flow from [higher rates], I think, will prove to be much more severe than it’s been in the past,” Doyle said.

Read the full article here.

CRA targets vancouver condo flippers

The Canada Revenue Agency is going after condo flippers for taxes due.  They are already taking developers to court for info an presales buyers who flipped contracts. Guess the taxman wants his cut of the boom.

In an emailed statement, Canada Revenue Agency (CRA) spokesman David Morgan explained the rationale behind the applications.

“In general, people who buy and resell homes in a short period for a profit may be engaged in property flipping. The CRA acquires and analyzes third-party data and uses this information to identify whether all income from property flipping is being reported correctly. The profits from flipping real estate are generally considered to be fully taxable as business income. The facts of each case determine whether such profits should be reported as business income or as a capital gain,” Morgan wrote.

Read the full article here.

That foreign buyer tax

Well it’s been a year since the BC government brought in a ‘foreign buyer tax‘ in the Vancouver metro area.  How’s that affected the market?

“The public perception is that it hasn’t brought down prices and has had no effect,” said Simon Fraser University professor Josh Gordon, a political scientist in the university’s school of public policy. “But the slowdown in price increases is a positive.”

Even before the tax was implemented, Mr. Gordon said it was unlikely to have a huge impact since it was not targeting all foreign money, much of which comes in with new immigrants who are not affected by the tax.

He and others have always said that the province – or country – would need to add many more measures: more investigation into the sources of money coming into the country; more rigorous pursuit of people avoiding capital-gains tax on their real-estate transactions; a more comprehensive tax that targets people not paying income-tax in Canada.

Mr. Gordon believes that, if the lack of dramatic impact from the tax proves anything, it’s that people in Vancouver have a profound belief that the market will continue to rise.

Read the full article over at the Globe and Mail.

Friday Free-for-all! July 28th 2017

It’s the end of another glamorous week in Vantucky and that means it’s time for another Friday free-for-all!

This is our regular end of the week news round up and open topic discussion thread for the weekend, here are a few recent links to kick off the chat:

Condo market smoking hot
Rich Chinese would rather live in LA
Speculation tax
Just say no to LNG
Fed rate unchanged
New bank rules

So what are you seeing out there? Post your news links, thoughts and anecdotes in the comments below and have an excellent weekend!