Real Estate

Vancouver housing bubble?

  • Last Updated:
  • Aug 17th, 2019 5:44 pm
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Deal Addict
Oct 7, 2007
4760 posts
1582 upvotes
craftsman wrote:
Jul 6th, 2019 2:02 am
If you are going to keep blasting the BC Liberals, you need to include Vision Vancouver and how they (yes, they) selected Rennie to sell the Olympic Village properties... I'm sure there were some 'rewards' for that to happen. As for constantly communicating against it being driven by foreign money, don't forget that Vision (as well as many other local governments) were pounding the table louder than the Liberal government at the time about how the market was driven by local demand and how hundreds of thousands of people were moving to Vancouver. And of course, the Federal Conservative government at that time was also pretty quiet about money laundering and how they cut the CRA and RCMP's budget so that the two groups didn't have enough resources to property investigate OR how they introduced FINTRAC but didn't give it any real powers or enforcement measures to stop money laundering.
Shame on all of these parties for what they have done to our country, our province and our city(s). History will not forget the ugliness that they brought and the mess they have created. I just hope voters have the sense to see how leadership must change for there to be a hope of change in what we see everyday. Looks like voters made some changes at 2 out of 3 levels (maybe not a lot better but certainly not the same nor worse). Hopefully, we will do better come the 2019 federal election in October.
Penalty Box
Mar 7, 2011
3463 posts
1607 upvotes
Vancouver
choclover wrote:
Jul 6th, 2019 11:19 am
Shame on all of these parties for what they have done to our country, our province and our city(s). History will not forget the ugliness that they brought and the mess they have created. I just hope voters have the sense to see how leadership must change for there to be a hope of change in what we see everyday. Looks like voters made some changes at 2 out of 3 levels (maybe not a lot better but certainly not the same nor worse). Hopefully, we will do better come the 2019 federal election in October.
Don't hold your hopes too high, plenty of people will vote for the BC Liberals and the federal Conservatives, because Capitalism is great and because NDP = Communists. Just look at Alberta.
Deal Guru
Jan 27, 2006
11084 posts
4488 upvotes
Vancouver, BC
joepipe wrote:
Jul 6th, 2019 10:50 am
i.e. the screws are tightening....
I wouldn't even go that far... I would say that we now know where the screw is, told people about the screw and are currently looking for the rightsized screwdriver.
Deal Addict
Jul 3, 2007
1672 posts
1723 upvotes
Toronto
craftsman wrote:
Jul 6th, 2019 5:31 pm
I wouldn't even go that far... I would say that we now know where the screw is, told people about the screw and are currently looking for the rightsized screwdriver.
Deal Addict
Oct 7, 2007
4760 posts
1582 upvotes
joepipe wrote:
Jul 7th, 2019 10:50 am
It sounds like most speculators were evading taxes on their flips up until recently and we seldom heard of people being audited. I just expected that people would report their gains and losses on their taxes because tax evasion is a very serious crime. It seems that the CRA was also very lax in enforcing any kind of tax laws on such individuals. Not sure why. And when I am not sure why I can't help but think it must have been for political reasons. ( I have taken courses in taxation, attended a few conferences on the subject and even received training fro CRA employees and through all of my experiences was always under the impression that the CRA does not go soft on these types of things. Historically speaking, I guess). With the government (esp. this one) always looking for more money, you would think that enforcing tax laws on property flippers would be an easy win for the government.
Member
Dec 26, 2005
214 posts
88 upvotes
The CRA is too busy going after the waitress that didnt report $20 in tips, they dont have time for money launderers.
Deal Addict
Apr 10, 2011
1242 posts
737 upvotes
Vancouver
Real Estate Stats Week #26


Real Estate Board of Greater Vancouver


Listed:
1,001 properties ($1.26 Billion)
+5.70% for one week

***Previous week 904 properties


Sold:
25 properties
($24.98 Million)
-87.31% for one week

***Previous week 37 properties ($42.74 Million)


Price Dropped:
491 ($30.03 Million)
-6.65% for one week


PRIOR WEEK'S STATS:

Listed: 904 (1.21 Billion)
-22.47%

Sold: 37 (42.74 Million)
-82.38%

Price Dropped: 526 (38.29 Million)
-13.20%

(Source : Fisherly)

......................................

It's impossible to track the number of properties that wish to be sold, but are currently not listed for sale. Based on conversations with industry people, that number seems to be growing significantly. This is the "waiting it out" group.

In the mean time, inventories grow, sideline inventories grow, prices continue to decline, ownership costs rise, etc.
Last edited by RxMills on Jul 7th, 2019 4:18 pm, edited 3 times in total.
Deal Fanatic
Feb 29, 2008
8083 posts
3127 upvotes
Shepherd214 wrote:
Jul 7th, 2019 12:21 pm
The CRA is too busy going after the waitress that didnt report $20 in tips, they dont have time for money launderers.
LOL, I thought the same thing.
Deal Guru
Jan 27, 2006
11084 posts
4488 upvotes
Vancouver, BC
choclover wrote:
Jul 7th, 2019 12:18 pm
It sounds like most speculators were evading taxes on their flips up until recently and we seldom heard of people being audited. I just expected that people would report their gains and losses on their taxes because tax evasion is a very serious crime. It seems that the CRA was also very lax in enforcing any kind of tax laws on such individuals. Not sure why. And when I am not sure why I can't help but think it must have been for political reasons. ( I have taken courses in taxation, attended a few conferences on the subject and even received training fro CRA employees and through all of my experiences was always under the impression that the CRA does not go soft on these types of things. Historically speaking, I guess). With the government (esp. this one) always looking for more money, you would think that enforcing tax laws on property flippers would be an easy win for the government.
I believe it stems from the lack of resources due to misplaced budget cuts by the Harper Conservatives. Once the budget has been cut and the talent laid off, it takes years to rebuild the talent pool once the budget has been restored. I believe we might be seeing the start of it in the past few years but it will take years before they get to where they need to be. The CRA seems to be focused on automating processes and doing the 'easy' fines right now. The next step is probably the longer and more involved investigations.
Deal Addict
Apr 10, 2011
1242 posts
737 upvotes
Vancouver
Shepherd214 wrote:
Jul 7th, 2019 12:21 pm
The CRA is too busy going after the waitress that didnt report $20 in tips, they dont have time for money launderers.
Seven facts about foreign money laundering in real estate transactions make their situation more risky than the waitress:

(1) A permanent record of their financial transactions exist forever in real estate.

(2) Their real estate assets continue to exist for the CRA or gov'ts to one day seize - - unless those assets are resold and the money moved offshore.

(3) The CRA's rule to limit audits to within 7 years does not apply to transactions related to crime or deliberate fraud.

(4) One large transaction is very easy to investigate, rather than the waitress's thousands of transactions. For tips (waitresses, cab drivers, hairdressers), the CRA just uses industry averages.

(5) Few voters have sympathy for money launderers. Going after lower income waiters isn't politically correct.

(6) Cash later spent from tips doesn't go through the banking system. Getting a printout of top cash transactions from a bank, that went through realtors, takes a few minutes. It's more likely that those cash deposits went through a lawyer's holding account. There's another good place for a printout.

(7) The tax revenue gain from the waiter might be $5K. The tax revenue gain from the foreign money launderer might be $5M.

Currently, the CRA's best money laundering leads are coming from ex-spouses and ex-business associates.

Significant updates in federal laws related to money laundering may not come until after November's election. In their last year, a ruling party is in full spending mode giving lots away. They're aggressively working their individual pockets of support.

All the significant federal government people are either in election-mode or vacation-mode.
Penalty Box
Mar 7, 2011
3463 posts
1607 upvotes
Vancouver
craftsman wrote:
Jul 7th, 2019 1:20 pm
The CRA seems to be focused on automating processes and doing the 'easy' fines right now. The next step is probably the longer and more involved investigations.
Well, automation is supposed to help in every case. Especially in ones in which big sums are involved. Why is it so hard to trigger a red flag for a RE transaction and so easy for a waitress?
Deal Guru
Jan 27, 2006
11084 posts
4488 upvotes
Vancouver, BC
charlesd79 wrote:
Jul 7th, 2019 5:02 pm
Well, automation is supposed to help in every case. Especially in ones in which big sums are involved. Why is it so hard to trigger a red flag for a RE transaction and so easy for a waitress?
The automation they seem to be focusing on is more on the customer service side of things rather than the enforcement... I suspect that they will be doing enforcement soon.

The reason why its probably much easier for a waitress (or we should say wait staff as I'm sure waiters are also targetted) is that the CRA has a lot of examples of model on AND I would doubt that wait staff would spend a portion of their income trying to hide or pay off people to falsify documents in order to throw the CRA off track...
[OP]
Deal Fanatic
User avatar
Dec 3, 2004
5029 posts
3327 upvotes
Vancouver
RxMills wrote:
Jul 7th, 2019 12:22 pm

It's impossible to track the number of properties that wish to be sold, but are currently not listed for sale. Based on conversations with industry people, that number seems to be growing significantly. This is the "waiting it out" group.

In the mean time, inventories grow, sideline inventories grow, prices continue to decline, ownership costs rise, etc.
It's the only strategy Vancouver real estate owners have ever known....... "wait it out". If that strategy fails, then all hell will break loose because no one will know what to do. When this strategy fails (it already has, but not everyone is willing to accept it yet) it will be total chaos. Homeowner depression/anxiety is already setting in, as detached prices approach 15-20% down in some areas. I have a family member who just bought a detached home last year and it's down about 15% based on what the one next to it is listed for (actually nicer than theirs). That is a $200,000 "loss" for them in less than a year, and things haven't really gotten started yet.
Deal Addict
Oct 7, 2007
4760 posts
1582 upvotes
With the 20-year of consistent run up in values of Vancouver RE (and interest rate decreasing in the opposite direction), we have a whole generation and maybe more who don't know (or don't remember) that markets can and do move in both directions,
Deal Addict
User avatar
Dec 14, 2007
3055 posts
1481 upvotes
craftsman wrote:
Jul 7th, 2019 1:20 pm
I believe it stems from the lack of resources due to misplaced budget cuts by the Harper Conservatives. Once the budget has been cut and the talent laid off, it takes years to rebuild the talent pool once the budget has been restored. I believe we might be seeing the start of it in the past few years but it will take years before they get to where they need to be. The CRA seems to be focused on automating processes and doing the 'easy' fines right now. The next step is probably the longer and more involved investigations.
Partly that... and partly that there was a generation of tax payers who in general were more highly protective of privacy when it came to financial transactions. So, a lot of things regarding real estate wasn't really recorded. The CRA had to do a lot more work to catch fraudsters. In recent years, they've been given more ammunition to sink their teeth into. For example, the new 2016 requirement to report the sale of your principal residence on your tax return. This provides a paper trail that the government can follow. And it's an opt-in to get the exemption, instead of being automatic. Great article here: https://business.financialpost.com/pers ... ake-action

Requiring you to deliberately apply for the exemption gives you less legal maneuvering room to conveniently forget. This also allows the CRA to monitor how MUCH is being exempted from capital gains. Once you know how big the pie is, it's easier to justify the expense of going after the slice that is practicing tax-evasion. If it's estimated that 1% of transactions are evading tax... and there's 10 billion in transactions... well, it's easier to budget for enforcement and the recovery of taxes on 100 million in sales.

Without knowing the pie is a $10 billion pie... how much time and effort do you expend? Well, the CRA knows how big the PRE (Primary Residence Exemption) is now. It's just a bit of statistical analysis and some basic arithmetic. The more records there are the harder it is to get away with things... but it also does have some impact on privacy as well. It's hard to see clearly whether or not the next generation of taxpayers will value privacy or not. The current gen of millennials don't seem to value it... but that's because they never grew up with the implications. We may see a rebound, but it's hard to know for sure. We're starting to see some pushback in silicon valley, with Apple, and even it would seem... Google coming around to privacy concerns.
I'd love to write history... in advance.
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