Real Estate

Vancouver housing bubble?

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  • May 26th, 2019 9:29 pm
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Deal Addict
Oct 7, 2007
4561 posts
1468 upvotes
Does anyone know where one can find the selling price in $/SqFt of new condos and townhouses by month in Vancouver proper? I thought it would be interesting to see how this measurement changes over time.
Deal Guru
Jan 27, 2006
10518 posts
4155 upvotes
Vancouver, BC
civiclease wrote:
Apr 14th, 2019 8:50 pm
Yes and as bad as detacheds look, the biggest declines happening right now are actually condos. After a couple years of stubborn sellers, prices are now FINALLY starting to fall off a cliff.

Vancouver and Richmond condo prices -20% yoy according to Zolo (month ending April 11).
Burnaby condo prices -10% yoy.
West Vancouver has 117 condos as active listings and 0 (zero!) sales in the past month.
Condo prices are playing catch-up before a few major developments come online in the next year or two...

I suspect that once condo prices fall a bit more, we will see another round of drops in the entry level detached.
Newbie
Mar 26, 2009
12 posts
9 upvotes
http://bcrea.bc.ca/docs/government-rela ... tement.pdf

British Columbia Real Estate Association
Backgrounder To The Real Estate Sector Anti-Money Laundering Statement

In September 2018, Attorney General David Eby commissioned former RCMP Deputy Commissioner Peter German to study whether there is evidence that BC real estate, luxury car sales and horse racing industries are being used for money laundering. In parallel, the Ministry of Finance set up the Expert Panel on Money Laundering to assess legislative and regulatory gaps that could contribute to risks of money laundering and administrative noncompliance in the real estate and financial services sector.

Since then, professional organizations representing BC REALTORS®, appraisers, notaries and mortgage brokers have been working to support the government with their investigations, while learning more about the challenges the professionals they represent face in identifying and reporting suspicious activities.

One thing has become clear. Given that real estate transactions involve multiple professionals, it will take a coordinated effort and collaboration with government to strengthen anti-money laundering measures in BC’s real estate market.

That’s why the following organizations came together in early 2019 to commit to shared best practices and propose recommendations to government that will help ensure the public can have full confidence in BC’s real estate market:

  • British Columbia Real Estate Association
  • Appraisal Institute of Canada - BC Association
  • BC Notaries Association
  • Canadian Mortgage Brokers Association - British Columbia
  • Real Estate Board of Greater Vancouver

http://www.bcrea.bc.ca/news-and-publica ... ws-release

British Columbia Real Estate Association
BC Real Estate Sector Submits Anti-Money Laundering Recommendations To Government

Vancouver, BC - April 15, 2019. Organizations representing key professions in the BC real estate sector submitted joint recommendations to the provincial and federal governments today to help protect BC’s housing market from money laundering.

The participating organizations include the British Columbia Real Estate Association, the Appraisal Institute of Canada – BC Association, BC Notaries Association, Canadian Mortgage Brokers Association – British Columbia, and the Real Estate Board of Greater Vancouver.

In their submission, these organizations also commit to shared best practices to help keep the proceeds of organized crime out of the economy. Their efforts focus on helping protect the real estate market from unscrupulous operators and ensuring the public can have full confidence in BC’s real estate market. All of the organizations have fully supported and participated in the government’s investigations into money laundering and real estate.

A real estate transaction involves multiple professionals. It will take a coordinated effort by all involved, working in collaboration with government, to stop money laundering. The joint recommendations and best practices submitted by these organizations reflect their commitment to the professionals and consumers they serve.

Read their submission to government:

Real Estate Sector Anti-Money Laundering Statement

As a group of real estate organizations representing industry professionals, we are committed to a transparent real estate market and to ensuring that the public can continue to have full confidence in the real estate industry. Illegal funds have no place in BC’s real estate market. We are supportive of the government’s investigations into money laundering and real estate, having actively participated in Peter German’s review and the Expert Panel on Money Laundering.

As an industry, we have come together to commit to shared best practices and make recommendations to government. By aligning as an industry and working in collaboration with government, we can help facilitate an environment in which consumers are wellserved and industry professionals can thrive.

Anti-money laundering recommendations
Our collaboration has resulted in a commitment from the undersigned organizations to pursue the following shared best practices and recommendations for government:

  1. Accept only verified funds – For sectors of real estate that are not already required to do so, we recommend that they accept funds only in forms that are verifiable through Canadian financial institutions.
  2. Mandatory anti-money laundering education – We recommend the introduction of mandatory anti-money laundering education for all real estate professionals subject to the reporting requirements administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to ensure that those professionals are trained in recognizing and reporting suspicious transactions. FINTRAC should work with sector organizations, regulators and the provincial government to improve existing resources so that they better reflect real-world situations and improve compliance.
  3. Smart regulation – We recommend that the federal government amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to allow FINTRAC intelligence to be made available to additional regulatory authorities, including the BC Securities Commission and the Financial Institutions Commission (FICOM). Optimally, the federal and provincial governments, as well as their respective agencies, should coordinate their actions, share information, such as the provincial assignment registry, and create a comprehensive, efficient enforcement regime.
  4. Ongoing engagement – We recommend governments and regulatory agencies, including FINTRAC, better utilize on-the-ground experience of real estate professionals to develop compliance resources and test policy ideas. This will result in well-crafted, practical regulation and foster a culture of compliance to protect consumers and the economy.
  5. Timely and transparent reporting – We recommend that FINTRAC implement a framework to identify and report trends on a regular basis and in language that is consistent and understandable to professionals, the public and media. This reporting system should also include consistency in examinations with immediate feedback designed to help industry professionals improve their compliance systems.

http://bcrea.bc.ca/docs/government-rela ... elease.pdf
Deal Guru
Jan 27, 2006
10518 posts
4155 upvotes
Vancouver, BC
hugeinpants wrote:
Apr 15th, 2019 7:49 pm
http://bcrea.bc.ca/docs/government-rela ... tement.pdf

British Columbia Real Estate Association
Backgrounder To The Real Estate Sector Anti-Money Laundering Statement

In September 2018, Attorney General David Eby commissioned former RCMP Deputy Commissioner Peter German to study whether there is evidence that BC real estate, luxury car sales and horse racing industries are being used for money laundering. In parallel, the Ministry of Finance set up the Expert Panel on Money Laundering to assess legislative and regulatory gaps that could contribute to risks of money laundering and administrative noncompliance in the real estate and financial services sector.

Since then, professional organizations representing BC REALTORS®, appraisers, notaries and mortgage brokers have been working to support the government with their investigations, while learning more about the challenges the professionals they represent face in identifying and reporting suspicious activities.

One thing has become clear. Given that real estate transactions involve multiple professionals, it will take a coordinated effort and collaboration with government to strengthen anti-money laundering measures in BC’s real estate market.

That’s why the following organizations came together in early 2019 to commit to shared best practices and propose recommendations to government that will help ensure the public can have full confidence in BC’s real estate market:

  • British Columbia Real Estate Association
  • Appraisal Institute of Canada - BC Association
  • BC Notaries Association
  • Canadian Mortgage Brokers Association - British Columbia
  • Real Estate Board of Greater Vancouver

http://www.bcrea.bc.ca/news-and-publica ... ws-release

British Columbia Real Estate Association
BC Real Estate Sector Submits Anti-Money Laundering Recommendations To Government

Vancouver, BC - April 15, 2019. Organizations representing key professions in the BC real estate sector submitted joint recommendations to the provincial and federal governments today to help protect BC’s housing market from money laundering.

The participating organizations include the British Columbia Real Estate Association, the Appraisal Institute of Canada – BC Association, BC Notaries Association, Canadian Mortgage Brokers Association – British Columbia, and the Real Estate Board of Greater Vancouver.

In their submission, these organizations also commit to shared best practices to help keep the proceeds of organized crime out of the economy. Their efforts focus on helping protect the real estate market from unscrupulous operators and ensuring the public can have full confidence in BC’s real estate market. All of the organizations have fully supported and participated in the government’s investigations into money laundering and real estate.

A real estate transaction involves multiple professionals. It will take a coordinated effort by all involved, working in collaboration with government, to stop money laundering. The joint recommendations and best practices submitted by these organizations reflect their commitment to the professionals and consumers they serve.

Read their submission to government:

Real Estate Sector Anti-Money Laundering Statement

As a group of real estate organizations representing industry professionals, we are committed to a transparent real estate market and to ensuring that the public can continue to have full confidence in the real estate industry. Illegal funds have no place in BC’s real estate market. We are supportive of the government’s investigations into money laundering and real estate, having actively participated in Peter German’s review and the Expert Panel on Money Laundering.

As an industry, we have come together to commit to shared best practices and make recommendations to government. By aligning as an industry and working in collaboration with government, we can help facilitate an environment in which consumers are wellserved and industry professionals can thrive.

Anti-money laundering recommendations
Our collaboration has resulted in a commitment from the undersigned organizations to pursue the following shared best practices and recommendations for government:

  1. Accept only verified funds – For sectors of real estate that are not already required to do so, we recommend that they accept funds only in forms that are verifiable through Canadian financial institutions.
  2. Mandatory anti-money laundering education – We recommend the introduction of mandatory anti-money laundering education for all real estate professionals subject to the reporting requirements administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to ensure that those professionals are trained in recognizing and reporting suspicious transactions. FINTRAC should work with sector organizations, regulators and the provincial government to improve existing resources so that they better reflect real-world situations and improve compliance.
  3. Smart regulation – We recommend that the federal government amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to allow FINTRAC intelligence to be made available to additional regulatory authorities, including the BC Securities Commission and the Financial Institutions Commission (FICOM). Optimally, the federal and provincial governments, as well as their respective agencies, should coordinate their actions, share information, such as the provincial assignment registry, and create a comprehensive, efficient enforcement regime.
  4. Ongoing engagement – We recommend governments and regulatory agencies, including FINTRAC, better utilize on-the-ground experience of real estate professionals to develop compliance resources and test policy ideas. This will result in well-crafted, practical regulation and foster a culture of compliance to protect consumers and the economy.
  5. Timely and transparent reporting – We recommend that FINTRAC implement a framework to identify and report trends on a regular basis and in language that is consistent and understandable to professionals, the public and media. This reporting system should also include consistency in examinations with immediate feedback designed to help industry professionals improve their compliance systems.

http://bcrea.bc.ca/docs/government-rela ... elease.pdf
I believe that this falls into the category of - "trying to save one's a$$ before it gets chopped off".
Deal Addict
Dec 27, 2006
1894 posts
877 upvotes
https://www.bnnbloomberg.ca/1-000-bucks ... -1.1244950#

'$1,000 bucks for all this?': Students live like kings in Vancouver’s empty mansions
The Castle , Jennifer Gauthier/Bloomberg
The Castle
Isaiah Boodhoo, 22, thought it was a “complete hoax” when he saw a rental listing on Facebook for a bedroom in a Vancouver mansion for only $1,100 a month.

It turned out the glass chandeliers, luxurious blue drapes, steam room and billiards table were for real. The nine-bedroom home, dubbed “The Castle” by the 14 students who share the property, is apparently owned by an Afghani pop artist, according to Boodhoo.

“Honestly, I would stay here for as long as I could,” he said, sitting on a white couch while sipping from a Slurpee cup. “$1,000 bucks for all this?”

Others may also soon find themselves as lucky as more mansion owners in the city turn to renting to avoid a new tax on empty homes. In the new world of Vancouver’s housing market, where Chinese investors are decamping and low-ball offers are the norm, students can find themselves living in the lap of luxury.

It’s a far cry from the frenzy of a few years ago when the city was at the center of a global property boom. Prices more than doubled in the decade through 2016, outpacing gains in New York and London. But government policies to tame the market—from new taxes to stricter mortgage regulations—have fueled a plunge in sales to the weakest since the global financial crisis. Prices are down 8.5 per cent from their peak in June, according to the Real Estate Board of Greater Vancouver.

The city boasts a thriving tech and tourism scene and sits in the province with the lowest unemployment rate in the country. But the sense of unease in the real estate market is palpable.

The Lucky Renters

With taxes on an empty Vancouver home potentially adding up to 3 per cent in annual levies, homeowners are rushing to lease their homes, according to real estate agents. That’s leading to bargains in a city where the vacancy rate has been near zero per cent.

“You have houses that are worth $4 million renting for $4,500,” said Steve Saretsky, a Vancouver realtor whose popular real estate blog was pointing out cracks in the market even as benchmark prices peaked last year.

Embedded Image

Prospective tenants are getting bold, said Kevin Wang, who runs a sales and rental real estate team with his twin brother Jerry. They’ve received calls from people offering to help with gardening or maintenance in exchange for free rent in a luxury home.

The owner of “The Castle” and the rental agency didn't respond to requests for comment.

For his part, Boodhoo, not only has he scored luxury digs, he’s cut his commute time to his classes in music production to about 18 minutes from two hours.

“Everyday I come home from school and I see just the tips of the castle, and I’m just like, that’s my house,” said Boodhoo, who’s looking forward to the pool in the backyard. It should be filled by June.

Embedded Image
Lisa Sun looks over paint samples. (Jennifer Gauthier/Bloomberg)
The Chinese Seller

Lisa Sun paces around the Vancouver mansion she’s been hired to sell by its wealthy Chinese-Canadian owner. The family’s had it with the new taxes and what it sees as increasing hostility to Asian capital. Sun reckons that early last year the home would have easily sold for about $8.5 million—holes in the wall and all.

Today, the 28-year-old realtor isn’t sure she’ll get a credible offer for the 8,343 square-foot mansion. These days a pool, wine cellar, and home theater on a prime lot aren’t enough to clinch a deal, even in West Vancouver, where opulent homes carved out of steep slopes overlook the ocean. Sun needs a “stager” to empty the house and brighten it up with new furniture, a modern chandelier, and lick of paint.

“I’ve been through only the peak, never the low,” said Sun as she schedules a makeover of the property. Pink tags indicate to the four cleaners what needs to be dumped. The Lamborghini and Rolls-Royce in the garage, relatively unused for three years, also need to be dealt with.

The house is listed at $10.9 million, but after receiving mostly low-ball offers closer to its tax-assessed value of $6.2 million, she’s planning on dropping the asking price closer to $8.3 million.

Embedded Image

The 8,343 square-foot mansion for sale in West Vancouver. (Jennifer Gauthier/Bloomberg)
That’s a hefty cut but holding on to the home would mean paying potentially more than $140,000 in extra taxes annually for the Canadian owner who splits her time between Vancouver and Beijing. Canadian taxes are not the only measures weighing on the market. China’s capital controls are also limiting spending on global real estate.

Sun doesn’t think Vancouver’s market is going to come back to its highs, especially at the top end. “Why would they come here and pay all that tax and feel like a criminal?”

The Bargain Hunters

Buying a house seemed an impossible dream for Brandon Chapman.

The 28-year-old financial planner first started looking at one-bedroom condos in 2016, around the peak of the market. “It was just bananas so I took a step back,” he said, in an interview at his Vancouver office.

He’s glad he waited. He now figures he might even be able to afford a detached home and is viewing properties at around the $1.1 million mark in East Vancouver. To make it affordable, he’s teaming up with his best friend to purchase the property—and offering way under asking. It hasn’t quite worked out yet. One offer for about $200,000 less than the listing price was rejected.

“We haven’t closed on anything but the market in my opinion is still trending down so why would I rush into buying something if I don’t need it this second?” he said.

Then there’s Robin Rickards, who happened to be looking for a temporary home at a serendipitous time. The 64-year-old orthopedic surgeon needed a place to stay while his current home was being rebuilt into an oceanside oasis. He ended up making an offer on three different homes and got one for almost $1 million less than the original asking price.

“It’s like a candy store for buyers right now,” Clara Hartree, the realtor working with Rickards, said by email.

Embedded Image
Robin Rickards stands on his deck in Lions Bay. (Jennifer Gauthier/Bloomberg)
The Frustrated Flippers

The twisty, cantilevered glass tower is one of Vancouver’s most hotly anticipated developments. It starts as a triangle at its base—wedged awkwardly between the on and off ramps of a downtown highway—before swiveling into a square at the top.

That iconic silhouette helped developer Westbank Corp. rapidly sell out some 400 ultra-luxe units when presales began in 2014, thanks in part to avid interest from Asian buyers. As it nears completion, investors are seeking to offload rights to more than two dozen units, according to listings cropping up on realtor websites.

Embedded Image
Vancouver House. (Jennifer Gauthier/Bloomberg)
One flyer offers a 368-square-foot unit at $515,000. “Transfer at original price,” it reads in Chinese. Last year, it would’ve fetched as much as $800,000, says Jerry Huang, a realtor with Nu Stream Realty Inc., which specializes in presale developments.

“That’s an insane deal,” he said. Presales were once seen as a slam dunk—put down a 20 per cent deposit, flip the contract at a premium before completion, and pocket the gains.

Westbank said in an email that in the five years since some investors purchased, values have appreciated from 25 per cent to 100 per cent depending on the unit. The number of so-called assignment sales is less than 10 per cent of total units in the building and “in-line with expectation.”

But the broader downturn is beginning to catch some out across various developments.

Those who bought at the peak need to find a buyer fast or come up with the full amount to pay the developer. With banks in some cases assessing units lower than the contract price, buyers hoping for a loan may face a shortfall. "There are no assurances right now," says Adil Dinani, a realtor with Royal LePage—some sellers may be lucky just to break even.

There have always been buyers who overextended and needed to sell quickly.

“But the difference is earlier, we were able to help them because the market was going up,” says Sonny Bhinder, a realtor who’s received calls from half a dozen clients seeking to sell assignments since the start of the year. “The job of the real estate agent has become much tougher now.”

--With assistance from Feifei Shen, Paul Panckhurst and Erik Hertzberg
Deal Addict
Oct 7, 2007
4561 posts
1468 upvotes
craftsman wrote:
Apr 16th, 2019 12:22 am
I believe that this falls into the category of - "trying to save one's a$$ before it gets chopped off".
Hard to believe that the RE sector would do the right thing voluntarily or when no one is watching. While too much destruction has already happened, I hope we don't continue to leave the fox to watch the hen house on this.
Newbie
Dec 18, 2010
8 posts
vancouver
hugeinpants wrote:
Apr 15th, 2019 7:49 pm
http://bcrea.bc.ca/docs/government-rela ... tement.pdf

British Columbia Real Estate Association
Backgrounder To The Real Estate Sector Anti-Money Laundering Statement

In September 2018, Attorney General David Eby commissioned former RCMP Deputy Commissioner Peter German to study whether there is evidence that BC real estate, luxury car sales and horse racing industries are being used for money laundering. In parallel, the Ministry of Finance set up the Expert Panel on Money Laundering to assess legislative and regulatory gaps that could contribute to risks of money laundering and administrative noncompliance in the real estate and financial services sector.

Since then, professional organizations representing BC REALTORS®, appraisers, notaries and mortgage brokers have been working to support the government with their investigations, while learning more about the challenges the professionals they represent face in identifying and reporting suspicious activities.

One thing has become clear. Given that real estate transactions involve multiple professionals, it will take a coordinated effort and collaboration with government to strengthen anti-money laundering measures in BC’s real estate market.

That’s why the following organizations came together in early 2019 to commit to shared best practices and propose recommendations to government that will help ensure the public can have full confidence in BC’s real estate market:

  • British Columbia Real Estate Association
  • Appraisal Institute of Canada - BC Association
  • BC Notaries Association
  • Canadian Mortgage Brokers Association - British Columbia
  • Real Estate Board of Greater Vancouver

http://www.bcrea.bc.ca/news-and-publica ... ws-release

British Columbia Real Estate Association
BC Real Estate Sector Submits Anti-Money Laundering Recommendations To Government

Vancouver, BC - April 15, 2019. Organizations representing key professions in the BC real estate sector submitted joint recommendations to the provincial and federal governments today to help protect BC’s housing market from money laundering.

The participating organizations include the British Columbia Real Estate Association, the Appraisal Institute of Canada – BC Association, BC Notaries Association, Canadian Mortgage Brokers Association – British Columbia, and the Real Estate Board of Greater Vancouver.

In their submission, these organizations also commit to shared best practices to help keep the proceeds of organized crime out of the economy. Their efforts focus on helping protect the real estate market from unscrupulous operators and ensuring the public can have full confidence in BC’s real estate market. All of the organizations have fully supported and participated in the government’s investigations into money laundering and real estate.

A real estate transaction involves multiple professionals. It will take a coordinated effort by all involved, working in collaboration with government, to stop money laundering. The joint recommendations and best practices submitted by these organizations reflect their commitment to the professionals and consumers they serve.

Read their submission to government:

Real Estate Sector Anti-Money Laundering Statement

As a group of real estate organizations representing industry professionals, we are committed to a transparent real estate market and to ensuring that the public can continue to have full confidence in the real estate industry. Illegal funds have no place in BC’s real estate market. We are supportive of the government’s investigations into money laundering and real estate, having actively participated in Peter German’s review and the Expert Panel on Money Laundering.

As an industry, we have come together to commit to shared best practices and make recommendations to government. By aligning as an industry and working in collaboration with government, we can help facilitate an environment in which consumers are wellserved and industry professionals can thrive.

Anti-money laundering recommendations
Our collaboration has resulted in a commitment from the undersigned organizations to pursue the following shared best practices and recommendations for government:

  1. Accept only verified funds – For sectors of real estate that are not already required to do so, we recommend that they accept funds only in forms that are verifiable through Canadian financial institutions.
  2. Mandatory anti-money laundering education – We recommend the introduction of mandatory anti-money laundering education for all real estate professionals subject to the reporting requirements administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to ensure that those professionals are trained in recognizing and reporting suspicious transactions. FINTRAC should work with sector organizations, regulators and the provincial government to improve existing resources so that they better reflect real-world situations and improve compliance.
  3. Smart regulation – We recommend that the federal government amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to allow FINTRAC intelligence to be made available to additional regulatory authorities, including the BC Securities Commission and the Financial Institutions Commission (FICOM). Optimally, the federal and provincial governments, as well as their respective agencies, should coordinate their actions, share information, such as the provincial assignment registry, and create a comprehensive, efficient enforcement regime.
  4. Ongoing engagement – We recommend governments and regulatory agencies, including FINTRAC, better utilize on-the-ground experience of real estate professionals to develop compliance resources and test policy ideas. This will result in well-crafted, practical regulation and foster a culture of compliance to protect consumers and the economy.
  5. Timely and transparent reporting – We recommend that FINTRAC implement a framework to identify and report trends on a regular basis and in language that is consistent and understandable to professionals, the public and media. This reporting system should also include consistency in examinations with immediate feedback designed to help industry professionals improve their compliance systems.

http://bcrea.bc.ca/docs/government-rela ... elease.pdf
Why doesn't this include the Law Society of BC and Canadian banks? Doesn't laundered money enter Canada through lawyers trust accounts (held in a Canadian bank) with no questions asked due to client confidentiality? Once the money has entered Canada its too late to try to see if it is laundered.
Deal Guru
Jan 27, 2006
10518 posts
4155 upvotes
Vancouver, BC
choclover wrote:
Apr 16th, 2019 11:30 am
Hard to believe that the RE sector would do the right thing voluntarily or when no one is watching. While too much destruction has already happened, I hope we don't continue to leave the fox to watch the hen house on this.
You can have the fox watch the hen house provided you also have the farmer with a shotgun aimed at the fox...
Deal Guru
Jan 27, 2006
10518 posts
4155 upvotes
Vancouver, BC
Interesting article on the general local real estate scene from a few different viewpoints in the Financial Post today - In Vancouver, college kids live like kings in empty mansions: Stories from a real estate market in upheaval
“You have houses that are worth $4 million renting for $4,500,” said Steve Saretsky, a Vancouver realtor whose popular real estate blog was pointing out cracks in the market even as benchmark prices peaked last year.
Prospective tenants are getting bold, said Kevin Wang, who runs a sales and rental real estate team with his twin brother Jerry. They’ve received calls from people offering to help with gardening or maintenance in exchange for free rent in a luxury home.
Lisa Sun paces around the Vancouver mansion she’s been hired to sell by its wealthy Chinese-Canadian owner. The family’s had it with the new taxes and what it sees as increasing hostility to Asian capital. Sun reckons that early last year the home would have easily sold for about $8.5 million — holes in the wall and all.

Today, the 28-year-old realtor isn’t sure she’ll get a credible offer for the 8,343 square-foot mansion. These days a pool, wine cellar, and home theatre on a prime lot aren’t enough to clinch a deal, even in West Vancouver, where opulent homes carved out of steep slopes overlook the ocean. Sun needs a “stager” to empty the house and brighten it up with new furniture, a modern chandelier, and lick of paint.

“I’ve been through only the peak, never the low,” said Sun as she schedules a makeover of the property. Pink tags indicate to the four cleaners what needs to be dumped. The Lamborghini and Rolls-Royce in the garage, relatively unused for three years, also need to be dealt with.

The house is listed at $10.9 million, but after receiving mostly low-ball offers closer to its tax-assessed value of $6.2 million, she’s planning on dropping the asking price closer to $8.3 million

That’s a hefty cut but holding on to the home would mean paying potentially more than $140,000 in extra taxes annually for the Canadian owner who splits her time between Vancouver and Beijing. Canadian taxes are not the only measures weighing on the market. China’s capital controls are also limiting spending on global real estate.

Sun doesn’t think Vancouver’s market is going to come back to its highs, especially at the top end. “Why would they come here and pay all that tax and feel like a criminal?”
Buying a house seemed an impossible dream for Brandon Chapman.

The 28-year-old financial planner first started looking at one-bedroom condos in 2016, around the peak of the market. “It was just bananas so I took a step back,” he said, in an interview at his Vancouver office.

He’s glad he waited. He now figures he might even be able to afford a detached home and is viewing properties at around the $1.1 million mark in East Vancouver. To make it affordable, he’s teaming up with his best friend to purchase the property — and offering way under asking. It hasn’t quite worked out yet. One offer for about $200,000 less than the listing price was rejected.

“We haven’t closed on anything but the market in my opinion is still trending down so why would I rush into buying something if I don’t need it this second?” he said.
Then there’s Robin Rickards, who happened to be looking for a temporary home at a serendipitous time. The 64-year-old orthopedic surgeon needed a place to stay while his current home was being rebuilt into an oceanside oasis. He ended up making an offer on three different homes and got one for almost $1 million less than the original asking price.

“It’s like a candy store for buyers right now,” Clara Hartree, the realtor working with Rickards, said by email.
The twisty, cantilevered glass tower is one of Vancouver’s most hotly anticipated developments. It starts as a triangle at its base — wedged awkwardly between the on and off ramps of a downtown highway — before swivelling into a square at the top.
That iconic silhouette helped developer Westbank Corp. rapidly sell out some 400 ultra-luxe units when presales began in 2014, thanks in part to avid interest from Asian buyers. As it nears completion, investors are seeking to offload rights to more than two dozen units, according to listings cropping up on realtor websites.

One flyer offers a 368-square-foot unit at $515,000. “Transfer at original price,” it reads in Chinese. Last year, it would’ve fetched as much as $800,000, says Jerry Huang, a realtor with Nu Stream Realty Inc., which specializes in presale developments.

“That’s an insane deal,” he said. Presales were once seen as a slam dunk — put down a 20 per cent deposit, flip the contract at a premium before completion, and pocket the gains.

Westbank said in an email that in the five years since some investors purchased, values have appreciated from 25 per cent to 100 per cent depending on the unit. The number of so-called assignment sales is less than 10 per cent of total units in the building and “in-line with expectation.”

But the broader downturn is beginning to catch some out across various developments.

Those who bought at the peak need to find a buyer fast or come up with the full amount to pay the developer. With banks in some cases assessing units lower than the contract price, buyers hoping for a loan may face a shortfall. “There are no assurances right now,” says Adil Dinani, a realtor with Royal LePage — some sellers may be lucky just to break even.

There have always been buyers who overextended and needed to sell quickly.

“But the difference is earlier, we were able to help them because the market was going up,” says Sonny Bhinder, a realtor who’s received calls from half a dozen clients seeking to sell assignments since the start of the year. “The job of the real estate agent has become much tougher now.”
Jr. Member
Dec 26, 2005
198 posts
54 upvotes
JayLove06 wrote:
Apr 11th, 2019 4:48 pm
I love putting down Vancouver, it always brings out the hurt feelings. Vancouver simply isn’t in the level of Toronto and I’m not talking about the weather.

Go look at the tourism numbers. Toronto dwarfs Vancouver. Also dwarfs them economically. More jobs, more head offices. More concerts, more professional sports teams, more schools, world class hospitals. No one knows the Canucks outside of Canada. Toronto also more multi cultural than Vancouver.

Not to mention the political situation there they’re trying to keep immigrants with money out. Futures not looking too good over there.

Toronto has already had drops in certain areas but for the most part we are better off than Vancouver. You really think NDP is a chance here? Lol.
Usually when someone knocks something they can't have its because they are jealous. That's ok, we understand, its ok to be jealous because you don't live here.
Heck, even the foreign buyers dumped Toronto in favour of Vancouver. When the foreign buyers tax came in here they split and moved in there. Kinda like leaving Vancouver for Whalley.
When the foreign buyers tax came along in Ontario they said hell no and headed back here. So it seems that at least a few people around globe agree that Toronto isn't the center of the universe, not even close.

Image
Deal Addict
Dec 27, 2006
1894 posts
877 upvotes
https://www.theglobeandmail.com/real-es ... ng-market/

How private lending is distorting the Vancouver housing market
Published 45 minutes ago
Satnam Sidhu has been a realtor for almost 40 years and he’s been buying and selling foreclosed houses for the past couple of decades. But he says it’s been many years since he’s seen the surge in foreclosures that he has witnessed in the past few months. And most of the properties are being sold off by private lenders – a rapidly emerging and largely ignored major player in the B.C. housing market.

“I have never seen more foreclosures on the market than I have in the last six or eight months, especially in areas like West Vancouver and the west side,” Mr. Sidhu says.

Mr. Sidhu is the former president of the Real Estate Board of Greater Vancouver and the Canadian Real Estate Association, and the former chair of the Real Estate Council of B.C. He’s also chaired several government committees and task forces on real estate matters.

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An obvious reason for the increase in foreclosures is the overall market downturn. But another is the distortion caused by private lending. Private lenders are individuals and mortgage investment corporations (MICs) that fund mortgages, and the number of private lenders in B.C. has exploded in the past few years.

Because they are taking a greater risk, a private lender is more likely to foreclose on a property as soon as the mortgage payments stop. Since the banks introduced “stress test” rules on borrowing, property owners have turned to private lenders in droves. They use them if they are self-employed and don’t have the necessary credit rating; to borrow first or second mortgages on their homes because they need to pay off Visa bills; to pay their kid’s university fees; for a new car, or any number of reasons. Mr. Sidhu says he sees a lot of borrowing to pay off income taxes and to consolidate debt.

Because so many people are using private lenders, some believe Canadians might be far more indebted than is being reported by mainstream financial institutions. But, Mr. Sidhu says, private lenders are “filling a huge void in the marketplace.”

“In the past, the bank would say, ‘We will refinance and increase your mortgage from $500,000 to $600,000, and now banks won’t do that – because people were using their homes as ATMs and not always for a good reason, for maybe a car or a motorhome.

“So the trend over the last few years has been more and more towards people having to borrow from private lenders, smaller lenders. But the rates are higher with these lenders, because there is more risk.

“And now, when I look at foreclosures on the market, a good 70 per cent of the properties being foreclosed upon are [backed by] private lenders.

“A private lender is not going to wait like a bank would. Banks have tens of thousands of mortgages, so if you have a bad one, it’s not the end of the world. But for a smaller lender who doesn’t have tens of thousands, just a few, they can’t absorb those losses.”

In the past several years, there have been many people making tidy profits in the world of private mortgage lending.

Lenders can be anyone who has a chunk of money they want to invest, and Mr. Sidhu sees realtors, lawyers, doctors, and many other average people lending money and charging interest typically between 10 and 12 per cent. And the mom-and-pop private lenders are an unregulated group, he says. They just need a lawyer to handle the mortgage contracts.

Toronto-based mortgage broker Ron Butler says that while individuals who lend mortgage money are unregulated, only a registered mortgage broker can advertise such services. He says that’s the case in Ontario and B.C.

“A private person can loan mortgages, but cannot publicize providing them in any way,” Mr. Butler says. “That is an offence that comes with large fines and possible jail time.”

Usually, the loans are for about a year, and some private lenders operate as numbered companies, realtors say. If the person misses a payment, the lender can obtain an Order for Conduct of Sale, which means they have the right to sell the house close to market value and recoup what is owed to them. If other lenders have charges against the property, they also get paid out. However, foreclosure is a last resort, emphasizes Mr. Sidhu, because if the loan-to-value ratio has gone as high as 70 or 80 per cent, the loan might be bigger than the equity left in the house. The lender might lose. In a declining market such as this one, that has become the concern.

“In the Lower Mainland, our values have dropped in the past year or two, and maybe the equity isn’t there anymore, so now these people want their money back. But if the person is paying, the lender will just carry on [with the loan].”

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Mr. Sidhu says he knows private lenders who have saved cash and want a better return on their investment than they’d get with a typical investment product, and who believe private lending carries less risk than buying shares in a company.

“You want ways to get the maximum return on your money – and you are certainly not going to do it by putting it in GICs,” he says.

A more formally structured and regulated form of private lending is the mortgage investment corporation, or MIC, which is an entity formed by a group of investors who’ve pooled their money for lending purposes. They might charge fees on top of interest and get paid dividends every quarter.

Ron Usher, a lawyer who was part of an independent advisory group that made recommendations to reform B.C.'s real estate industry, is keeping an eye on private lending transactions. He says the mysterious inflow of money through private lending needs to be made transparent.

“What we do need for buyers and unregulated [individual] private lenders are ‘source of funds’ declarations at the time of purchase, or on the advancement of funds further to a mortgage,” Mr. Usher says. “MIC’s should also have to disclose the source of funds, at least to Canada Revenue Agency.”

Mr. Sidhu estimates that about 75 per cent of foreclosures he’s seeing are claims by individual private lenders and MICs. He just sold a property in West Vancouver, B.C. that was a court ordered sale listed by a private lender, and he has another court ordered sale at 1370 Ottaburn Rd. in West Vancouver, listed at $3.298-million that has been listed since December and was reduced by $500,000.

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The listing is one of five current court ordered sales in West Vancouver, and four of them list private lenders as the sellers.


This house, at 928 Groveland Rd. in West Vancouver, is valued at $7-million and currently in foreclosure.
Royal LePage
Another one of those listings is at 928 Groveland Rd., West Vancouver, which is a 7,767-square-foot mansion, built two years ago and listed at $6.998-million, reduced from $8.898-million. Listing agent Malcolm Hasman says that he knows nothing about the seller, other than it is a private lending company.

“My client is a financial institution who has a court order, a mortgage lender,” Mr. Hasman says.

He says he does not market the properties as “must sell,” or anything to encourage low bids. Mr. Hasman says he believes there is a market turnaround underway in West Vancouver.


The mansion was priced at $10.88-million two years ago.
Royal LePage
“Of my active 20 listings, I only have two that are under Supreme Court order,” Mr. Hasman says. “This house [on Groveland] was originally priced two years ago at $10.88-million. Some people might say it’s come down 35 per cent, but the truth is it was probably unrealistically priced when first listed.

“You are seeing massive price reductions on houses … but there are two sides to every story. The open houses I’m doing on Saturday and Sunday on premium properties in the $8-million to $15-million price bracket are extremely busy.”

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He’s seeing packed open houses and buyers looking to move up the property ladder from Richmond to West Vancouver, and looking for deals.

“They see houses listed at seven or $8-million that were at $9-million or $10-million. They see opportunity.”


The house at 928 Groveland Rd., West Vancouver. The home, valued at $7-million is currently in foreclosure.
Royal LePage
Mr. Hasman’s brother, realtor Andrew Hasman, says he’s heard about the uptick in foreclosures. Andrew is a private lender involved in MICs, usually with conservative loan-to-value ratios of around 55 per cent. That’s far less risk because there is plenty of equity left in the house should the borrower default.

Private lending investment is “huge,” he says. “On a conservative fund, you are getting 7 or 7.5 per cent net. But here’s the thing – the average investor knows nothing about this stuff, because it’s more for sophisticated investors.

“To go to one of these private MICs, where they are not publicly traded, you need to become an accredited investor with a minimum net worth of something like $5-million or $2-million, something like that.

“That’s because of the risk level. I’ve been involved for five years now and the returns are tremendous. The three funds I’m involved with have never missed a payment. We always got our interest cheques or whatever. But I suspect in this market environment, there will be an increase in bad debt and bad loans.”

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Andrew Hasman says he became a private lender when he learned about it through his network. Each year he attends an extravagant business party with hundreds of wealthy retirees at a private country club, where he rubs elbows with fellow private lenders.

An example of a borrower is a wealthy self-employed individual who doesn’t qualify for a bank loan and wants to purchase a $3-million home and needs a $1-million mortgage, he says. A group of lenders might get together and loan that person money.

“There are lots of ways to get money out there if you are creative. There’s no question.”

Andrew has invested a small amount in a publicly traded MIC and “a good chunk” in a private MIC. But he is growing wary of pouring more money into private lending in the current market.

“The funds I’m involved with have done incredibly well because business is booming. But I’ve been a little bit cautious about giving them new money because of downtick in real estate prices. I think that there will be an increase in bad loans. So one needs to be careful if they are on the investor side of it, for sure.”

To the outsider, private lending can be a labyrinth of transactions and deals. For example, a scan of property titles shows a $6.468-million property at 5811 Adera St., Vancouver, which has both bank loans and private lender loans on title. The private mortgage lender, who is charging the owner 10-per-cent interest, identifies 5811 Adera as his own address. Then there is the Coal Harbour condo at 2401-277 Thurlow St., where a businessman borrowed $11.414-million from a businesswoman. The property is assessed at only $10.709-million.

Private lending isn’t just a Vancouver phenomenon. John Pasalis of Toronto’s Realosophy released a report last fall with Teranet that showed a major spike in private lending. In the second quarter of 2018, refinancing mortgages from private lenders increased 67 per cent in two years in greater Toronto.

“They are the only ones making a ton of money now, because people can’t qualify for homes or investment properties. And it’s hard for people to refinance if they don’t fit the OSFI [Office of the Superintendent of Financial Institutions] mould.”

Due to requests from clients on the hunt for foreclosures, realtor Ian Watt has relaunched his website exclusively devoted to Vancouver homes that are court ordered sales. He has already collected about three dozen listings, including multimillion-dollar houses. Private lenders are behind more than half the listings, he says.

“The stress test doesn’t mean anything. It just means it’s pushed people into private lending, and private lending is way riskier,” Mr. Watt says.

“It’s riskier because who knows if those guys can keep their boats afloat. What if people start withdrawing their financial support? There is so much money involved and nobody knows where it’s coming from.”

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Deal Addict
Aug 21, 2007
4444 posts
369 upvotes
interesting to see the lower end of the market starting to take a pounding as all those people who thought they would retire on their homes have to start to unload them as they find out they do not have any RRSP or TFSA or savings at all.
Deal Addict
User avatar
Jun 28, 2007
3859 posts
1023 upvotes
Shepherd214 wrote:
Apr 17th, 2019 3:38 am
Usually when someone knocks something they can't have its because they are jealous. That's ok, we understand, its ok to be jealous because you don't live here.
Heck, even the foreign buyers dumped Toronto in favour of Vancouver. When the foreign buyers tax came in here they split and moved in there. Kinda like leaving Vancouver for Whalley.
When the foreign buyers tax came along in Ontario they said hell no and headed back here. So it seems that at least a few people around globe agree that Toronto isn't the center of the universe, not even close.

Image
Not sure what kind of Vancouver "echo chamber" you are living in, but the foreign investors who dumped Vancouver actually left and went to Toronto instead - better fundamentals there: https://o.canada.com/real-estate/proper ... 9d40831298

As for the price graph you posted, it needs updating. Vancouver is the weakest link in Canada now with major price declines while Toronto's housing market has been way more stable (and is actually starting to see price increases again)

https://business.financialpost.com/real ... akest-link
Deal Addict
Apr 10, 2011
1182 posts
637 upvotes
Vancouver
Good point.

Also, they further lose credibility for showing price trend charts limited to the past 5 years.

They likely are leveraged multiple property owners promoting their inaccurate fluff for another purpose.

This spring/summer selling season, at ground level, is showing many new trends that haven't been seen for some time.

Fall/winter will be even more telling. The headlines will get even more startling.

.
gomyone wrote:
Apr 17th, 2019 12:25 pm
Not sure what kind of Vancouver "echo chamber" you are living in, but the foreign investors who dumped Vancouver actually left and went to Toronto instead.

As for the price graph you posted, it needs updating. Vancouver is the weakest link in Canada now with major price declines while Toronto's housing market has been way more stable (and is actually starting to see price increases again)

https://business.financialpost.com/real ... akest-link
Deal Addict
Apr 10, 2011
1182 posts
637 upvotes
Vancouver
There are more than a few people that have had "quiet" loans for their down-payments and who also have "quiet" (under the bank's radar) 3rd mortgages.

One friend recently had their house of loans callapse completely.

Another is still barely holding on but had the car taken away.

Another couple I know is in a rushed sale because of their ending marriage. Since they bought just a few years ago, they will not come out ahead.

Here's yet another 'sign of the times' : A couple I know is being sued by their new buyers for learning of new house problems, months afterwards. In a rising market, new buyers were so grateful to get anything. In this declining market, some will pay a lot to reverse a deal afterwards.

Most are very private of their situations. There's a lot of real estate stress out there that's not making the headlines.

It's unbelievable how some still get advice from Real Estate agents (sales people) or the Real Estate Board (union of sales agents). Would you ask a used car salesman for advice about cars and the best time to buy?
Motoss wrote:
Apr 17th, 2019 8:48 am
https://www.theglobeandmail.com/real-es ... ng-market/

How private lending is distorting the Vancouver housing market

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