Real Estate

Vancouver housing bubble?

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Sr. Member
Aug 3, 2006
591 posts
383 upvotes
Province moves forward on condo, strata assignment register

https://news.gov.bc.ca/releases/2018FIN0081-002123

"Effective Jan. 1, 2019, developers who sell strata lots in development properties must:

include terms and a notice in their contracts to inform buyers of the new collection and reporting requirements;
collect information, including the terms of the assignment and the name and social insurance number or business information of the parties to the assignment; and
report this information in the online register.

The B.C. government will provide this information to the Canada Revenue Agency so that transactions can be traced back to the assigner’s income tax return. This will ensure that people who assign condos are paying the appropriate income taxes."

"The register is one part of the B.C. government’s 30-Point Housing Plan to address housing affordability. Already, the government has taken several actions to address tax fraud and close loopholes in the real estate market, including:

Convened an Expert Panel on Money Laundering in Real Estate to identify systemic risks that leave the real estate and financial services sectors open to money laundering.
Consulting on legislation to establish a new, publicly accessible registry of beneficial owners of real estate in B.C.
Updating the property transfer tax return to uncover beneficial owners behind corporations and trusts.
Enacting legislation to allow information sharing on the homeowner grant with federal tax officials to improve tax enforcement.
Strengthening property transfer tax auditors’ ability to take action on tax evasion.
Establishing a federal-provincial working group on tax fraud and money laundering."
Deal Addict
Oct 7, 2007
4675 posts
1533 upvotes
I am glad to see more measures being put in place BUT would really like to see some strict enforcement of these policies. Our governments seem really good at putting in legislation (which they should get full credit for) but often fall down when it comes to putting the legislation to work. Without enforcement, these laws are meaningless and ineffective. The reason I am saying this is because the City of Vancouver has countless examples of people breaking laws all over the place and they absolutely refuse to enforce the law. Similarly, anti-money laundering legislation was enacted immediately after 9/11 and our province fell down on that one too.
Deal Guru
Jan 27, 2006
10876 posts
4357 upvotes
Vancouver, BC
choclover wrote:
Nov 6th, 2018 10:38 am
I am glad to see more measures being put in place BUT would really like to see some strict enforcement of these policies. Our governments seem really good at putting in legislation (which they should get full credit for) but often fall down when it comes to putting the legislation to work. Without enforcement, these laws are meaningless and ineffective. The reason I am saying this is because the City of Vancouver has countless examples of people breaking laws all over the place and they absolutely refuse to enforce the law.

Unfortunately, there isn't much longterm glory in enforcement especially when it comes to these types of things - ie high quantities of small amounts with nothing really to parade out to show people, unlike drugs or guns. Plus, no-one gets slapped on the back for enforcing laws passed by the previous government but get tons of credit for passing new 'overlapping' laws which seems like a pointless exercise as they could have just used the existing ones.

I've always said that the emphasis should not be on passing new laws but spend the time and energy to enforce the ones that are already on the books as they can be used on, not only day ONE but SECOND ONE. Once that happens, then you can sit back and examine what else is needed to plug the remaining holes. Waiting for new legislation means that instead of day ONE enforcement, you are looking at day 500 before anything can even be thought of getting done let alone getting it done as there is generally a phase-in period.
choclover wrote:
Nov 6th, 2018 10:38 am
Similarly, anti-money laundering legislation was enacted immediately after 9/11 and our province fell down on that one too.
What legislation are you referring to that was a provincial matter?

As I've said many times, money laundering is typically a FEDERAL responsibility and the Conservatives at the time passed FINTRAC which in theory should have been able to track such movements but due to poor enforcement followed by poor information sharing, the results have been less than spectacular.
Deal Addict
Oct 7, 2007
4675 posts
1533 upvotes
craftsman wrote:
Nov 6th, 2018 1:16 pm
Unfortunately, there isn't much longterm glory in enforcement especially when it comes to these types of things - ie high quantities of small amounts with nothing really to parade out to show people, unlike drugs or guns. Plus, no-one gets slapped on the back for enforcing laws passed by the previous government but get tons of credit for passing new 'overlapping' laws which seems like a pointless exercise as they could have just used the existing ones.

I've always said that the emphasis should not be on passing new laws but spend the time and energy to enforce the ones that are already on the books as they can be used on, not only day ONE but SECOND ONE. Once that happens, then you can sit back and examine what else is needed to plug the remaining holes. Waiting for new legislation means that instead of day ONE enforcement, you are looking at day 500 before anything can even be thought of getting done let alone getting it done as there is generally a phase-in period.



What legislation are you referring to that was a provincial matter?

As I've said many times, money laundering is typically a FEDERAL responsibility and the Conservatives at the time passed FINTRAC which in theory should have been able to track such movements but due to poor enforcement followed by poor information sharing, the results have been less than spectacular.
I am referring to the FINTRAC or PCMLTFA legislation. I realize this is federal but I am thinking that other parties including the casinos and the provincial entities that oversee such entities may have had a hand in bypassing the application of this legislation when and where appropriate. Certainly we know from journalist reporting that there were things our provincial politicians knew about as they were happening that they kept secret.
Deal Addict
Apr 10, 2011
1229 posts
726 upvotes
Vancouver
2-YEAR FORECAST
CMHC REPORT

"CMHC expects housing starts and sales to slide over next 2 years"

Rising mortgage rates are also expected to affect housing demand and the resale market

It also warned that Canadian households remain vulnerable due to heavy debt loads.

"If interest rates or unemployment rates were to rise more than expected, heavily indebted households could face greater constraints on their consumption leading to downward pressure on the economy and housing activity," CMHC said.

https://www.cbc.ca/news/business/housin ... -1.4893798
.................................

Historically, CMHC has been over optimistic in its reporting projections so not to spook the markets.
Deal Guru
Jan 27, 2006
10876 posts
4357 upvotes
Vancouver, BC
choclover wrote:
Nov 7th, 2018 11:02 am
I am referring to the FINTRAC or PCMLTFA legislation. I realize this is federal but I am thinking that other parties including the casinos and the provincial entities that oversee such entities may have had a hand in bypassing the application of this legislation when and where appropriate. Certainly we know from journalist reporting that there were things our provincial politicians knew about as they were happening that they kept secret.
As I said in the past, we only know what we know in BC because we are looking into it. We don't know if the practices here are the 'norm' in the rest of Canada or we are worse or we are better as NO ONE in any other province is looking under the hood to take a look. Also, many of the issues listed on lack of FINTRAC compliance was done by members of self-regulating professional organizations. Its those organizations that should be held responsible for the majority of non-compliance and since it's a Federal area a responsibility, the Feds should be doing so.
Deal Addict
Dec 27, 2006
1927 posts
902 upvotes
https://vancouversun.com/news/local-new ... ors-debate

Vancouver condos’ price-per-square-foot survey sparks realtors debate
Joanne Lee-Young Updated: November 7, 2018
Metro Vancouver’s overheated real estate market is the target of new Canadian banking rules that firm up information on non-resident buyers.
Vancouver condo prices continue to be the highest in Canada despite decreases over the last year, according to a nationwide study by realtor Century 21.

That’s not surprising, but the price-per-square-foot calculations Century 21 cited in its press release Wednesday sit higher than what some other realtors are starting to discuss in a fast-changing market.

Century 21’s annual price-per-square-foot survey pegs downtown Vancouver condos as some of the most expensive properties in the country at $1,345 per square foot.

The firm clarifies this number is based on prices between Jan. 1 and June 30 of this year, so it can compare with last year’s report, meaning “price changes since then are not reflected.”

Century 21 also says in the release that it asked its franchisees “to help come up with the average price-per-square-foot in their market. However, calculating a precise number is not an exact science as every office and province tracks statistics slightly differently. As a result, some have used either the average or benchmark prices (depending on the market) and tracked average square footage in sales.”

Indeed, other realtors like Ian Watt of Sutton Group West Coast Realty in Vancouver are focused on the change in more recent price-per-square-foot numbers as well as other indicators.

Looking at October figures crunched by SnapStats, Watt said median prices for downtown Vancouver condos “decreased 11 per cent from September 2018 and 21 per cent from the peak of the market in January 2018. The dollar per square foot also decreased from $1,043 (in September) to $979 (in October), which is a six-per-cent drop.”

“There were 143 sales (six per day) in downtown Vancouver in October, which was up 13 per cent from the previous month, but down 33 per cent from October 2017, and the units that are being sold are selling five per cent off the asking price.”

Vancouver realtor Steve Saretsky writes in his October report to clients that Vancouver condo sales fell “28 per cent year-on-year to their lowest total since October 2012” and because of this, “listings are beginning to stagnate. This has allowed inventory to build rather quickly, jumping 70 per cent from the same month last year.”

He adds “it is important to note that condo inventory remains low from a historical standpoint. Although, certainly when sales fall and inventory jumps, that trend should keep market participants on their toes.”

Watt agreed that inventory is growing steadily. Active listings for downtown Vancouver condos in October, at 836, were up 11 per cent from the month before and up 93 per cent from a year before when there were 433.

“Whenever you read these press releases made by real estate companies or real estate boards, please keep in mind what businesses they are in,” said Watt. “The more attractive they spin the statistics, the more money they can make.

“The fact is we are in the middle of a correcting market in Greater Vancouver. I wouldn’t focus on price per square foot, unless you are in the speculation game, but (instead focus on) how few transactions there are and how much inventory we have compared to years before. This is a better indicator of the health of the housing market.”

Watt predicts that by March 2019, “we will have well over 1,000 active listings” in the downtown Vancouver condo market or, in other words, “a lot of inventory creating further downward pressure on pricing.”

jlee-young@postmedia.com

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Deal Addict
Oct 7, 2007
4675 posts
1533 upvotes
For the truth-seekers out there, the writing is on the wall.
Deal Guru
Jan 27, 2006
10876 posts
4357 upvotes
Vancouver, BC
civiclease wrote:
Nov 8th, 2018 6:39 am
FWIW, this analyst is predicting a 26% correction in Vancouver RE, to reach bottom towards the end of 2021. He predicts it will be followed by a massive rally that will quickly overtake the 2017 high.

https://www.eitelinsights.com/marketupdates/
On Global yesterday, one RE agent, Steve Saretsky, said that the West End is seeing a 21% price drop from the highs so it seems like this guy is a day late and a dollar short.
Deal Guru
Jan 27, 2006
10876 posts
4357 upvotes
Vancouver, BC
Here's an interesting look at the state of the detached housing market from Steve Saretsky using actual data - Vancouver Detached Home Prices Decline in October
Vancouver’s detached market has continuously posted 27 year lows in sales throughout this year. If there was any silver lining for the detached housing market, it appears to have come in October. This October there were 145 single family home sales, slightly higher than the 142 posted in October 2016 after the market went into a free fall following the foreign buyers tax. So we no longer have a 27 year low in house sales. However, the recent bump is nothing to get too excited over. Other than 2016 and 2008, this was indeed the third worst October on record for Vancouver house sales.

Inventory also declined year over year by 4.7%, which was primarily a result of sellers taking their house off the market and trying to wait out current conditions. This is explains why new listings fell by 14%. While some sellers are trying to suppress new inventory from flooding the market home sales are so weak that it still leaves 11 months of supply for sale. This has paved the way for buyers to negotiate steep discounts.

We have now been in a weak detached housing market for over two years, as a result, price declines are becoming more noticeable and more significant. There is strong evidence from previous housing booms that volumes tend to lead prices by about two years, and for the most part that has been the case here in Vancouver. The official MLS benchmark index which smoothes out larger price fluctuations and is modelled to determine the price of a “typical home” now shows a 7.8% decline in prices from October 2017. This model tends to be a lagging indicator and by all accounts is under reporting the true decline in house prices.

As is the case in any housing market, there’s no perfect metric to measure the rise and fall of home prices. For example, while the MLS benchmark shows a 7.8% decline, the median sales price shows a 13% drop from last year and the average price has plummeted by 20%. Either way you slice it, house prices have taken a significant decline over the past year.

We are seeing more forced sales as a result of Vancouver’s vacancy tax and BC’s proposed speculation tax which is slated to begin starting January 2019. Remember, a house that is listed for sale but does not sell in the calendar year is still subject to Vancouver’s empty homes tax of 1% of the assessed value.
Deal Addict
May 22, 2003
3450 posts
1475 upvotes
Vancouver
https://www.thestar.com/vancouver/2018/ ... shows.html

"Vancouver tops the list in a survey conducted by real estate data website Zoocasa: its gap between actual and required income required is $98,000. The difference is based on benchmark home prices sold last month at $1,196,000 and actual median household income of $65,000, a number generated by Statistics Canada."
Deal Addict
User avatar
Dec 14, 2007
3055 posts
1478 upvotes
civiclease wrote:
Nov 8th, 2018 6:39 am
FWIW, this analyst is predicting a 26% correction in Vancouver RE, to reach bottom towards the end of 2021. He predicts it will be followed by a massive rally that will quickly overtake the 2017 high.

https://www.eitelinsights.com/marketupdates/
That's how markets usually work... 2017–2021, plus another year to get back to 2017 levels.... so 2022 assuming this. Of course, in the meantime... for investors, that's basically 5 years paying carrying costs, which is fine if you're renting it out for a price that covers property tax, condo fees, and maintenance... add in 5 years of inflation and the break even date ( given this investor's predictions ) is probably closer to 2022 or 2023.

That's 6 years of lost gains.
I'd love to write history... in advance.
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