7 Responses to “February 20, 2018”

1. malcolmm says:

   February 21, 2018 at 3:16 pm

   I’m not a fan of increased taxes but I’m glad that the foreign buyers tax was increased and applied to more cities.

   I’m planning to leave Vancouver and have been looking at properties in Nanaimo. I almost bid on a 2 year old, 2,000 sq. ft. house. It sold for $400k new. Two years later is was listed at 620k. They won’t get that but they will probably get 600k.

   The apartment market in Vancouver is crazy. The sales to listing ratio is 100% which means you are going to be paying over asking and you probably can’t put any subjects in. Home inspection – nope, not if you want to be the successful bidder.

   There are few, if any, cities with affordable housing in BC. Those that are affordable don’t have many available jobs. Its easy to suggest that people who complain about expensive housing in Vancouver should move, but unless someone is willing and able to move out of province, there aren’t good options.

2. jiHymas says:

   February 21, 2018 at 5:43 pm

   I’m not a fan of increased taxes but I’m glad that the foreign buyers tax was increased and applied to more cities.

   I haven’t seen any evidence that the 15% tax had any real effect on housing prices and of course the effect of a 20% tax has no evidence at all. I consider the tax to be simply an exercise in Trumpist bash-the-furriners feel-goodism.

   The cause of rising prices is easy money. When mortgages hit 6% we’ll see the flip-side of this.

   unless someone is willing and able to move out of province, there aren’t good options.

   A fortuitously timed article in the Globe today:

   To solve this riddle once and for all, Statscan finally decided to go straight to the source. “If you were offered a job in another province, would there be anything standing in your way of accepting that job offer?” the 2016 census inquired of unemployed Canadians. It’s the first time such a question has been asked. The replies are surprising, and utterly depressing.

   Less than 1% said a lack of credential recognition would prevent them from taking a job in another province. The high price of housing in other regions was similarly a non-issue; only 1.2% cited this as a barrier. And the financial implications of leaving your home province to take work elsewhere—presumably including the loss of attractive EI benefits—was cited by just 9%. The overwhelmingly dominant reason has nothing to do with social policy but, rather, social circles.

   Half of all respondents said personal reasons explained their refusal to move to a new province for work. Of this group, nearly two-thirds explicitly said they wouldn’t want to leave their family and friends behind. Another quarter said their spouse or children would balk at a move. A much smaller fraction claimed the need to care for relatives. And while you might reasonably expect married folks to be less willing to leave familiar surroundings, a substantial 38% of unmarried and presumably footloose adults also claimed personal reasons for their reluctance to seek their fortune elsewhere.

   I have zero sympathy for these entitled layabouts. None.

3. dodoi says:

   February 21, 2018 at 9:40 pm

   I haven’t seen any evidence that the 15% tax had any real effect on housing prices and of course the effect of a 20% tax has no evidence at all

   It is true, but it is a beginning and hopefully it will happen like in Winston Churchill’s quote: “Americans Will Always Do the Right Thing — After Exhausting All the Alternatives”.

   I think the main culprit is with Statistic Canada in the way they collect the data. It catches very well the price of goods where it is relatively easy to do it, where you compare the price of goods from now with the one from the past but when it comes to rent or to the price of a house the collecting mechanism does not work anymore. It probably surveys the people at some random addresses and they are asked about the cost. If you just rented or bought that house you will likely pay more than if you lived there for some time. This would explain why the huge increase in rent cost and house prices is not reflected in CPI.

   As for people who do not want to move out of the province is not so easy as it looks. In these kind of decisions you would have to include the husband or wife too. What if the husband/wife has worse prospects or no future at all?

4. jiHymas says:

   February 21, 2018 at 11:59 pm

   I think the main culprit is with Statistic Canada in the way they collect the data.

   Here’s an article from the Globe that was updated in 2017:

   Rather than a straight measure of the cost of houses, the agency looks to measure “a selection of costs that are specific to homeowners.”

   That leaves economists measuring rent (1.2 per cent higher year-over-year), mortgage interest cost (-2.2 per cent), replacement cost (3.2 per cent), property taxes (3.5 per cent), home and mortgage insurance (4.9 per cent), maintenance and repairs (1.5 per cent), electricity (4.3 per cent), water (6.3 per cent), natural gas (-2 per cent) and fuel oil (31 per cent).

   Put it all together, and you get a category in the CPI called “shelter,” which gained 2.4 per cent year-over-year. The category accounts for 26 per cent of the total CPI calculation.

   Even after that, I have questions about “replacement cost”. How is that calculated? Importantly, does it include land value? At a guess, land value is over 2/3 of the total price of a detached house in Toronto nowadays.

   So, it’s a problem; but my point about the lack of underpinnings of the foreign buyers’ tax remains. Increasing property taxes would be a much better way of addressing the situation.

   As for people who do not want to move out of the province is not so easy as it looks. In these kind of decisions you would have to include the husband or wife too. What if the husband/wife has worse prospects or no future at all?

   Oh, sure, I agree that the larger the family the harder it is to move. No argument there. However, the article states “And while you might reasonably expect married folks to be less willing to leave familiar surroundings, a substantial 38% of unmarried and presumably footloose adults also claimed personal reasons for their reluctance to seek their fortune elsewhere.”

   As well, a line in the article I didn’t quote was “According to Statistics Canada, the annual rate of interprovincial migration has fallen by more than half since the early 1970s.” This change smacks more of entitlement than an actual problem.

   My other point regarding migration is that – given the admittedly exorbitant price of Vancouver housing – there is incentive to move, not a barrier. If I was starting out in life, it seems to me that I would much prefer to live in a Calgary condo than a Vancouver room; if I was married and thinking about kids then a Calgary detached seems to me more attractive than a Vancouver condo. But, it would seem, instead of responding to market forces, many in Vancouver would rather stay put and blame their problems on the damn furrinners.

5. BarleyandHops says:

   February 22, 2018 at 6:02 pm

   When mortgages hit 6% we’ll see the flip-side of this.

   Not so sure about that.

   Sure there is a lot of flipping and maybe some dark cash being laundered. But, Vancouver is awash w/ foreign students in need of a good education. So you have houses purchased for yourself; but only your children live in the house and as an added benefit your parent lives there too. So, local taxes if there are some, pay for schooling and seniors medical care.

   Going back 10 years or so, saw this first hand. Big house. Futons on the floor. Grandma in the kitchen. No furniture, no wall hangings, no yard care.

6. jiHymas says:

   February 23, 2018 at 1:11 am

   No furniture, no wall hangings, no yard care.

   Sure there will still be a lot of see-through houses; There will be for a long time; at least until the concept of real-estate as a sure-fire path to riches has been eradicated. It will still be a status symbol though.

   But a 6% mortgage rate will wipe out the old-stock Canadians who are in way over their heads. Look at Glorious Leader Patrick Brown, for instance – taking on a $1.72-million mortage on a $181,000 salary. According to TD’s mortgage calculator with a 3.62% mortgage and 25-year amortization, that means monthly payments of $8,700, or $104,000 annually, or 58% of his PRE-TAX income (as Leader of the Opposition); taxes take another 34% ….

   Now, Mr. Brown is probably a somewhat egregious example; in between speeches espousing Conservative values of fiscal prudence, rugged individualism and strict independence he finds time to ask his mommy for money; but there are plenty more over-leveraged suckers out there, convinced they will always be able to sell their property for double their cost even in the (surely impossible!) event they lose their jobs and their side-businesses go sideways.

7. BarleyandHops says:

   February 26, 2018 at 6:34 pm

   monthly payments of $8,700

   Yikes I could not sleep at night!

   Conservative values of fiscal prudence, rugged individualism and strict independence

   Leveraged by cheap money and lending standards.

   I pray for the day we may have the upside explosion of something like 3X Direxion FAZ stock in Cdn terms that we saw in the US. Goosh those were the days!

   :sips a glass of cheap wine: Watching the listing of condos on realtor.ca in the GTA