Author Archives: Brenda Kinnear

Vancouver Waiting for the Final Vote in April 2017

Despite the media trumpeting stats that the real estate market is down the reports are referring to the numbers of sales, not prices. April sales were 4.8% above the 10 year average for the month but much below the megasales numbers of 2016. There has been little inventory coming on the market due to seller uncertainty about what would be available to purchase if they did decide to downsize in this market.

Vancouver by Kyle PearceVancouver by Kyle Pearce

The stratospheric detached home prices have resulted in a huge surge in the numbers of condos and townhomes sold. The benchmark price for an older ordinary detached home, considered mainly as a building lot, on the Westside of Vancouver is $3,500,000. In North Vancouver and Richmond the benchmark price is $1,600,000. Lack of affordable inventory has created a multiple offer scenario on almost every sale. For the first 4 months of 2017 condominium and townhouse sales have comprised 68.5% of the residential sales market on average. For 2016 in the comparable sales period condominium and townhouse sales were at 58.2% market share. A 10% increase in one year.

After the May 9th Provincial Election the real estate market has leveled off while everyone waits to see which party forms the government and which wild real estate scheme will come to the fore. There was a split in the province as the resource based north looked for development projects and jobs, the Lower Mainland population worried about Affordability. A huge portion of the population feels uncertain of their future in the Greater Vancouver region. There is little affordable housing to rent or buy, the cost of living is high, transit projects are not being funded, infrastructure is being neglected and people who grew up here, who moved here no longer feel like they have a safe future. Vancouver is hurtling down the road of becoming a world wealth resort city.

There is resentment in the population over the perception that outside money is distorting the real estate market due to the negligence and greed of the Federal and Provincial governments who look away from dirty money pouring into Canadian real estate and being laundered clean when the properties are sold. Canadian banks are complicit too. There is a short term focus on share holder value and none on the longer term effects of no families,no young people, no life in the heart of our cities. This fear is endemic in London, in Sydney, in New York, in San Francisco, in Toronto and elsewhere. Canada has the Immigrant Investor Program operated by Quebec, the US sells Green Cards to foreign investors who invest in mega real estate projects through the EB-5 Visa program.

In the election the Liberal party opted for tweaks to the status quo, not wanting to diminish residents equity in their homes. The idea being to keep home owning voters onside and hoping that more people can afford to fund their retirement from their home sale. They also focused on their economic record and balanced budget. They were successful outside the Lower Mainland.

The NDP offered to raise taxes on corporations and high earners and remove user fees from almost everything. No bridge tolls, no healthcare costs, subsidized daycare, renters subsidy, to build 114,000 units of affordable housing etc. Higher Foreign Buyer Taxes, forced rentals of empty homes were also part of the program. Local voters who closed their eyes to the costs of the platform just wanted it all to happen for them. These promises swept many seats in the Greater Vancouver area. If the recounts give more seats to the NDP we may see how they implement these pipe dreams.

The Green Party is holding the balance of power and their main goal is to change the way the voting process occurs so they can get more seats in the future. No First Past the Post even though that current system has been reaffirmed by referendum in BC in the recent past. The Greens plan to force whatever party they support to implement Proportional Voting without a referendum. They have also got a pie in the sky housing platform but it seems to have slipped down the To-Do list along with their environmental concerns. A recent post-election survey showed that many people have voters remorse already. What they thought was a protest vote has upended the system and tied the Legislature’s hands.

The real estate market is still busy but it’s waiting for the other shoe to drop. The final vote count and appointment of a government will occur before the end of May. May the Games Begin!


Prices Driven up by Competition and Location in March 2017

The raging fire of unsustainable rising prices seems to be consuming the Greater Toronto housing market including satellite cities like Barrie 90 km away and Hamilton 65 km away. The big concern for Stephen Poloz,Governor of the Bank of Canada is the effect a real estate collapse would have on the Canadian economy. The Greater Toronto Area (GTA) economy is larger than many of the smaller provinces combined. Right now it is being sustained by a soaring housing market with a 35% price increase for detached homes between March of 2016 and 2017.

Although the hot housing market in BC is included in the mix of BoC worries the Vancouver home market in the higher detached end has not been leveraged by local speculators as much as the Toronto market. The Vancouver buyers have deeper pockets. Vancouver has more international buyers some of whom may be impacted by CRA enforcement of FINTRAC and money laundering laws, the principal residence crackdown on exemption from capital gains rather than mortgage debt. 

Vancouver Skyline byVancouver Skyline by Jerry Meaden

It does seem like the Chinese government imposed restrictions on sending funds outside their country is having an impact on the ability of some buyers in the $2million price range to access money in a timely fashion. Deals are falling apart over the availability of deposit funds and the heightened requirements around down payments by Canadian lenders. Many corporate and ultra-wealthy individuals who have money in foreign banks are able to avoid these restrictions and can and do purchase homes in the $5million+ price range. There are bona fide buyers in the $20million+ price range. The benchmark price for detached homes on the Westside of Vancouver is currently $3,461,700. This is a 12.7% increase from March 2016. The low Canadian dollar makes the costs of purchasing here about 40% less than in comparable high value currency locations.

The concern now is the pressure on condos and townhomes. There are so few listings that the prices are being driven up by competition and location. There is one recent sale of a 450 s.f. condo near Kits Beach being listed at $399,000 on an assessed value of $365,000 selling with 21offers for the extraordinary price of $700,000.

BC Assessments are finalized by July 1 of the previous year. In 2017 the assessments are reflecting sale prices of 2016 before there was any interference in the market by the government in the form of the Foreign Buyer Tax. The imposition of the FBT created the expectation that sale prices would be considerably lower than assessments and many home owners who are house rich and cash poor rushed to appeal their assessments. It turns out that homes are now selling just below or considerably above the BC assessment price. In the lower price ranges condos and townhomes are selling higher because there are between 2 and 20 offers on every property. In North Vancouver and Richmond townhouse prices are up over 17% between March 2016 and 2017.

According to the Real Estate Board of Greater Vancouver the sales-to-active listings ratio for March 2017 is 47.2%, a 15% increase over February. Generally a downturn in price occurs when the ratio dips below the 12% mark and home prices rise when the ratio surpasses 20% over several months.

Many buyers are moving out of Vancouver and other close-in locations like Richmond and Burnaby to buy in outer areas like New Westminster and Abbotsford which were quite affordable for 2 and 3 bedroom condos for a long time. Prices are rising there due to demand. Year over year prices in March for condos rose +17% in New Westminster; in North Surrey or Whalley +18%; in Abbotsford +30%. In new developments buyers are willing to pay more than the original price for an assigned contract. If buyers are willing to accept the inconvenience and expense of ferry travel they can buy a detached home in Powell River on the Sunshine Coast for under $300,000. Prices and demand is rising due to buyers leaving other once affordable areas like Squamish where detached home prices went from $450,000 to $700,000+ in a short time span.


In the Vancouver Sun there is a big discussion going on about the role the City of Vancouver under Mayor Gregor Robertson has played in the rising unaffordability of new construction. The cry is for more affordable homes so that young families and employees can live in the city. The problem is that Vancouver didn’t want to upset the political applecart or their major campaign donors so placed no restrictions on rezoned land. The idea was to build more affordable family friendly larger condos near transit but the land along the main streets and particularly the Cambie corridor got bid higher and higher until the only units built in the approved condo buildings sell for over $1million and are available to foreign buyers and downsizing baby boomers. They listened to their voters who didn’t want low-rise development on the fringes of their neighbourhoods and still placed no restrictions on the rezoning so any lowrise condos or street entry townhomes will be predictably unaffordable no matter where they are built.

The planners and City Council are projecting demand along the UBC subway line which may never get built and allowing developers to buy up existing commercial properties and start lobbying for higher heights and more density on the property. Over many years no City Council has defied the voters to preserve the character of the city and to enforce high architectural standards. As a result beautiful neighbourhoods are blighted by huge mansions of no redeeming style. Vancouver charges the lowest property taxes of any major city in Canada. There is never enough money to support worthwhile endeavours and all that there is available is directed away from solving the middle class housing crisis.

In the current provincial election campaign promises for housing solutions are being offered by all sides. Some are draconian in method and may have the result of destroying the momentum that all facets of the real estate industry have contributed to the best provincial economy in Canada.There is a rising public demand for a solution but no easy answers after 30 years of mismanagement by the Social Credit, NDP and Liberal governments. Expo86 was the watershed moment when things went wildly awry. It used to be that Vancouver was a city where you could enjoy a champagne lifestyle on a lemonade purse. It’s wonderful to be wanted by the world but we could have made less self-centred choices. Singapore is a wonderful example of a forward thinking,forward planned city that benefits all its residents despite enormous international demand to live there. Australian regulators are worried that it’s housing bubble is about to burst with great damage to the economy. The prices in Melbourne rose 14% and in Sydney 19% in the past year. The conditions of a resource based economy with low interest rates, high levels of consumer debt and international investors resonates with that of Canada.

Around the world it is a damned if you do and damned if you don’t list of financial choices and regulations. Finance Minister Morneau is huddling with the Premier of Ontario and the Mayor of Toronto to try to prevent a possible meltdown of Canada’s two turbulent housing markets of Toronto and Vancouver.

More anon.


Vancouver Housing Market Still Strong in February 2017

There’s an old Scottish saying that ‘you should cut your cloth according to your stipend’ meaning to live within your means. It appears that local buyers are taking that idea to heart and making housing decisions based in reality, not dreams.

The Vancouver housing market is still going strong, not gangbusters like it did a year ago when offshore money was pouring into the detached housing market, but extremely active all the same. The detached market is recovering its mojo but the real demand is for townhomes and condos. Properties at each price point in all areas are receiving multiple offers and selling over the asking price.

Vancouver Housing Market Still Strong

Condo properties in the city, close to transit, restaurants, and other amenities sell at a higher price point than further out. Buyers go where they can get a mortgage so North Vancouver near the Seabus is next on the desirability list. Richmond, where units are a little larger and less expensive per square foot but close to shopping, transit, and community centres, is attracting buyers. It’s 25 minutes from Brighouse across from the Richmond Centre to Waterfront Station with no downtown parking costs when you arrive.

With this change of attitude of buyers and with sellers worried that there is nowhere to go if they do sell the inventory is at a 14 year low for February. We are back to a Seller's market with the sales-to-active-listings ratio at 31.9% for February 2017, a 10 point increase from January 2017. A buyer’s market with lowered home prices occurs when the ratio goes below 12% for a sustained period of time, while a seller's market which we have enjoyed for the past several years occurs when the ratio is above 20% for that time frame.

No matter how it’s looked at affordability is a huge issue in Metro Vancouver. The MLS composite benchmark price for all residential properties in Metro Vancouver is $906,700 in February. This price is down 2.8% from the high of June 2016 and up 1.2% from January 2017. There is international financial institutional concern that the high price of homes and the amount of debt that borrowers are carrying is a danger to the Canadian economy.

In an effort to bridge the affordability gap the provincial government instituted a program called BC Home Owner Mortgage and Equity (HOME) to help qualified younger buyers with the difference between what they have and what they need as a downpayment to purchase. They can borrow up to $37,500 interest and payment free for 5 years. As always the devil is in the details. The loan has to be factored into the debt service ratio of 35% of household income required to qualify for the mortgage by the bank and the new federal mortgage rules require the borrower to qualify at the posted 5-year bank rate. This limits the number of buyers who can get a mortgage even with a minimum downpayment. It does assist younger first time buyers with a good paying job and closes to what’s needed for the downpayment. There is anecdotal evidence that this program is contributing to the number of multiple offers and sales over the list price on condominiums in the lower to medium price ranges. Everything that comes on the market sells if the building can be approved for CMHC financing. In some cases, the location or condition requires a higher downpayment but overall it is open season for condo homes.

There is a demand for investment apartment buildings as the rising prices in all home categories preclude purchasing by a large segment of the population. Rents are rising as fast as possible under the Residential Tenancies Act and any available loophole is being utilized. This includes fixed rate one year leases that can be increased without restriction at renewal. There is a rising concern in older buildings that new owners can evict long-term tenants in order to repair the units. The tenant can have first chance to move back in but most cannot afford the new rent. There is pressure on the municipalities to rezone for dense high rise rental buildings but many older walkup buildings will be razed in the process with old people, young people, new immigrants, disabled people with low incomes being unable to afford their neighbourhoods. The new town centres being developed along the Burnaby Skytrain line are replacing old with new in order to house the increasing numbers of people moving to the Lower Mainland.


In Metro Vancouver, a large portion of the rental housing stock is condominium investment properties. Unless the investor is a first owner and grandfathered as a landlord the strata council can hold a properly constituted meeting and the owners can vote to restrict the number of rentals. This also lowers the inventory. Almost any condo that comes up for sale is purchased by a user not investor. A recent Federal Court decision allows licensed medical marijuana users to grow their own drug inside their rental unit despite restrictions from the landlord and any ensuing damage. It creates fire danger for all the building residents but is now the law. A tenant can grow up to 60 plants, the landlord can lose his insurance and cannot evict the tenant. Sellers have to declare the past or present marijuana grow-op in their property when listing it for sale.

The Provincial Government is addressing the unintended consequences of the Foreign Buyer Tax on the recruitment of employees in IT and other specialized industries. With changes in the US business visa system, there may be more opportunities in Canada and local companies are trying to convince international talent to come to Vancouver. Everyone loves the city but not the housing prices, especially if a 15% surcharge is added to the existing property transfer tax. A work permit and paying Canadian taxes will exempt the non-Permanent Resident/Canadian citizen from paying the Foreign Buyer Tax.

There is a class action lawsuit from a group of Chinese buyers who are suing not to pay the Foreign Buyer Tax even though they are not Permanent Residents. They contend that the tax is discriminatory and that BC historically discriminated against people of Asian origin. Interestingly, as of November 2016, Hong Kong charges everyone buying a property a 15% Stamp Duty on the sale price. Only exceptions are Hong Kong Permanent Residents buying their first property. The HK property market was overwhelmed by Mainland Chinese buyers scooping up multiple homes at a time. Not that any level of tax is a deterrent to the most wealthy buyers in Hong Kong. A corporate buyer just paid HK$1.08 billion for a 9,950 s.f. house on The Peak and owes HK$324 million on the 30% Stamp Tax levy which includes the 15% "buyer’s levy" from 2012.

Douglas Todd of the Vancouver Sun writes that Canada Immigration has reported a large increase in Permanent Residents renouncing their status after 5 years. More than 21,000 immigrants over the past two years, mainly from China, India and South Korea, who qualified for Canadian citizenship refused it. They don’t want to meet Canadian requirements or pay Canadian taxes or declare income. They choose the 10-year visa program introduced by the Harper government. Under this visa, they can come and go on their passport of origin with no questions about working in Asia or spending sufficient time in Canada. Usually, children and spouses are living in Canada with the children going to school here until they graduate. Many return to Asia to work.

Todd in the Vancouver Sun also wrote on innovative tax schemes to cool the real estate market and create affordability. Some are practiced elsewhere to good effect. The idea is to level the playing field. People who don’t pay Canadian taxes and use loopholes in the tax system to evade CRA are speculating in Vancouver, Victoria and Toronto real estate. One option put forward by Ryan Kesselman, SFU policy specialist, advocates for a progressive property tax. Homes valued below a certain amount would be exempt. Percentages would increase to a maximum on houses over the limit. He suggested 0% below $1 million and 2% over $3 million. Those who pay Canadian income tax can offset the property tax. This way non-resident owners; those who own properties out of line with their income tax payments; speculators in residential properties; tax evaders; aggressive tax avoiders; criminals; astronaut families; nominee purchasers would all be paying an increased share of the tax burden. This system has been under discussion in Toronto where they are suffering the Vancouver syndrome of many foreign buyers and escalating prices.

Todd discussed the London purchase tax that has cooled the market there lately. The Stamp Tax is charged on a sliding scale from zero percent to 10 to 15% on more expensive properties. David Ley of UBC who wrote the book "Millionaire Migrants" proposes to tax the class of buyer, not the ethnicity. It’s clear that offshore investors will be returning to the Vancouver market and it would be a huge advantage to the provincial government to be pro-active on this issue. They can expand the effects of the Foreign Buyer Tax to actually help restore affordability to the third least affordable city in the English speaking world according to Demographia.

More anon.


The End of the Gold Rush Housing Boom in Vancouver

The End of the Gold Rush Housing Boom in Vancouver

It’s hard to get excited about the end of the Gold Rush Housing Boom in Vancouver when the rest of the world seems to be going up in flames on a daily basis. In fact

"The time has come," the Walrus said,
"To talk of many things:
Of shoes--and ships--and sealing-wax--
Of cabbages--and kings--
And why the sea is boiling hot--
And whether pigs have wings."

(Lewis Carroll)

Such topics seem just as relevant as last year’s housing news. The detached market is still out of reach for local buyers and the offshore buyers have vanished. Sales are down about 40% from January 2016. Prices are down about 10-15% but they were up 35% mid-2016 so single family homes continue to be unaffordable. The benchmark price for North Vancouver is $1,564,200; for Richmond $1,566,000; Vancouver East $1,440,500; Vancouver West $3,419,800; West Van $2,907,100. They are all up 16-18% except West Van at 9% in price from January 2016.

The listing inventory is up about 9% over January 2016 but is not fulfilling the demand in the affordable price ranges. There are multiple offers on almost every property under $500,000 but there are serious constraints on bank approval for purchases. Vancouver and suburbs are full of older condo buildings that are now being analyzed for the Depreciation Report required by the BC Government Housing Ministry. These reports are an eye opener to buyers and a red flag to lenders. Now that CMHC mortgage insurance requires more liability to be covered by the bank it has triggered a 20% downpayment policy for many condo buildings. According to the BC Government website: A depreciation report tells a strata corporation what common property and assets it has and what are the projected maintenance, repair and replacement costs over a 30 year time span. Common property is just not buildings. Seeing future costs laid out in black and white is a sobering experience.

The costs of buying and the higher downpayments is depleting the RRSP reservoir as buyers take their tax-free savings to buy homes.

The sales numbers are down mainly due to the fall off in detached sales as there still is demand for certain products. According to Dan Morrison, President of the Real Estate Board of Greater Vancouver, "Conditions within the market vary depending on property type. The townhome and condominium markets are more active than the detached market at the moment. As a result detached home prices declined about 7% since peaking in July while townhome and condominium prices held steady over this period." The sales-to- active listings ratio for January 2017 is 21%; the lowest since January 2015. Prices don’t usually drop seriously until the sales-to-active listings ratio is below 12%.

In Richmond over the Chinese New Year there were surprising sales in nice neighbourhoods of older homes. The $2 million price range was popular. The empty $3 million mansions did not sell. These may have been visiting buyers who got their money out of China before the new currency controls went into effect. Controls have been tried before and have usually been ineffective at preventing enormous amounts of capital fleeing China.


The government has taken a much more interventionist approach this time and Chinese citizens looking to convert their money and send it overseas must go into the bank to do so and sign a waiver stating that they will not use the funds to purchase real estate or securities while travelling. The enforcement is heavy handed and those middle class Chinese buyers who have impacted the housing markets in Vancouver, London, Sydney are now afraid to defy their government and do not have the off-shore funds available to complete new home/condo purchases around the world. The developers who have Chinese pre-sale clients are being left high and dry with half-finished buildings. The mega rich corporate tycoons already have money stashed in banks around the world so are not so affected.

The perceived catalyst for sending buyers from Vancouver to Toronto and elsewhere is the BC Foreign Buyer tax of 15% added to the existing Property Transfer Tax for non-resident buyers who aren’t Canadian citizens or Permanent Residents who buy in the Lower Mainland. Although this was pointed out at the time the tax was enacted the government ignored the problem until closer to the upcoming election and are now back tracking on levying the Foreign Buyer Tax on those buyers coming to Vancouver to work. Many tech people and others recruited here by their employers were sandbagged by the additional tax levied without notice. No legislation yet but Premier Christy Clark has said that they will exempt working foreigners and may refund taxes to those who already paid.

The City of Vancouver has discovered that the population has shrunk in high-priced neighbourhoods and that vacant homes are up 15% since the 2011 census. In both Vancouver and Toronto buyers are flocking to the suburbs where housing is newer and prices more reasonable. Surrey and Langley are having huge growth spurts. A successful realtor in Barrie, Ontario which is 100 km north of Toronto was saying that most of detached home sales there are to Chinese buyers. Not every foreign buyer is ultra-wealthy and if they are planning to move to Canada they are looking for neighbourhoods of well-maintained or newer homes and good schools.

There are warnings coming from economists that in the housing markets that aren’t Vancouver or Toronto home prices fell over this past year. There is worry that the buoyant housing markets that carried Canada through the oil price drop of 2016 may be slowing enough to drag down the national economy. According to David Madani of Capital Economics there is no macroeconomic catalyst or trigger including the Foreign Buyer Tax that caused the sudden slow down in the Vancouver market. He says the market was largely driven by "unpredictable investor mania". Also the lax enforcement of money laundering laws and primary residence requirements by CRA. All coming under much more scrutiny now as many investors head for the hills or Toronto.


2016 the Third Highest Selling Year of Metro Vancouver Housing Market

A new day has dawned. Just not the one that all the pessimists were expecting. Properties have come off their mid-2016 highs; numbers of sales have declined from the end of 2015. Given that sales were already slowing by June 2016 it is a continuation of that progression of the market. A one year price increase of 35% mid-year for detached homes has fallen off to about 20% (except in West Vancouver where the one year increase ended at around13%) so no huge loss there.

There is currently a battle raging between home owners and the BC Assessment Authority over the 2017 tax assessments. The BCAA uses sales figures at July 1 of the previous year to set the valuations for the next year.This means that the 2017 assessments are set at the highest point in the market before the Foreign Buyer Tax crashed the party. The province had to raise the limit for the Homeowners Grant to $1.6 million in order to partly pacify their voters. The BCAA is about to be inundated with individual appeals of the assessments which have gone up 35-55% in one year. This means that municipal property taxes have gone through the roof.

The Metro Vancouver housing market of 2016 was the third highest selling year after 2015 and 2005. 

2016 the Third Highest Selling Year of Metro Vancouver Housing Market

The MLS Home Price Index (HPI) composite benchmark price for all residential (detached,attached and condo) properties in Metro Vancouver finished 2016 at $897,000.This is a 2.2% drop over the past 6 months and a 17.8% increase over December 2015.

However, it is an active orderly marketplace. The big difference is the change of focus from detached homes to townhomes and condos. With all the offshore buyers looking for investments in high end properties there was a strong draw to that product. It wasn’t until unethical and illegal real estate practices by some companies/realtors/developers/investors were exposed by the Globe and Mail investigative journalists that the provincial and federal governments were forced by public opinion to close loopholes that had made Canadian, particularly Vancouver, real estate attractive to money laundering and abusive investment strategies. The province stopped the process that allowed contracts to be sold before completion and then resold at a higher price with no tax paid, commonly called shadow flipping. CRA finally had to deal with the laissez-faire approach they took to dealing with unpaid taxes and illegal claims of permanent residency with no capital gains tax being paid on the sale of empty homes.

These mechanisms to slow the high end of the market were topped off by the Foreign Buyer Tax imposed in late July that added a 15% surcharge to the existing Property Transfer Tax to be paid by non-resident buyers. The FBT has moved foreign investor funds from the Vancouver to the Toronto market that is now in the same position that Vancouver was in 2015/16.

Although homes are still selling with the Seller absorbing the Foreign Buyer Tax in the sale price the interest in detached homes has waned. There are newly built mansions in the $3 million range languishing on the Richmond market. According to the Vancouver Sun in BC only 8 properties over $3 million were sold to foreign buyers in November 2016 while 304 properties under $1 million were sold to foreign buyers.

Overall it appears that foreign buyers are also looking for cheaper real estate. This may become more apparent with the upcoming Lunar New Year celebrations when a billion Chinese go on the move throughout China and around the world to observe the New Year with family and friends. Those who come to Vancouver often use the visit to choose a home here.

With local buyers at the fore a different product mix is selling. Mainly due to high prices and the changing mortgage requirements by CMHC.


In Richmond and Burnaby where there is still a preponderance of Chinese buyers attractive livable homes under $1.5 million are selling well. Prices are down about 10-15% from their high. In Vancouver on the Westside, the most expensive location in Canada large properties are not selling at the pace they once did. With a benchmark sale price of $3.4 million the change is demonstrated in the number of sales in December 2015 (133) and 2016 (64).

Local buyers who have to pass the bank’s mortgage stress test to be qualified are being forced to consider townhomes and condos. This has put pressure resulting in multiple offers on well-priced properties. Yaletown in Vancouver with its high walkability score is particularly popular. Recently a mid-sized condo in an 8 year old building listed for $718,000 received 6 offers and sold for $780,000. Over 100 buyers attended the Open House.

According to the Vancouver Sun most surveys have shown that BC, especially Metro Vancouver, is the Canadian capital of loans from the Bank of Mom and Dad at 42% of first-time buyers receiving help from family. It would be impossible for most first-time buyers to put together a downpayment for the mortgage if not for this help. There has also been an uptick in bundled mortgages where buyers go to an unregulated mortgage company (MIC) for a secondary loan in order to qualify for the first mortgage. All legal but a sign of property prices being unaffordable without extra funds.

A danger on the horizon is the oppressive monetary policies of the Chinese government. Business news sources in the Vancouver Sun, Globe and Mail and elsewhere state that China has instituted new rules against transferring money out of the country to buy real estate around the world, particularly in Canada. Some see the new rules as inspired by the reports of Chinese investment in Vancouver real estate much of it funded from corrupt business and banking practices in China. The longer view is that China is trying to stabilize the yuan renminbi as a solid international currency in competition to the US dollar after allowing more overseas investment over the past two years. They now prefer to increase consumption and business expansion in China rather than see their citizens invest in other countries.

According to China-watching sources the government is concerned about its diminishing foreign reserves so no Chinese citizen can now convert their yuan renminbi into US dollars by transferring funds online. They have to go into the bank, sign a document requesting the funds, state why they want to move money out of the country. Apparently the requests are mainly refused. One person posted an application online with the reason stating he wanted to breathe again and live longer so was going to Canada.

The rule in place was that US$50,000 was allowed to be sent abroad by each Chinese citizen each year. Many family members would pool the money when it got to its destination. Now in addition to the increased disclosure requirements those exporting currency have to sign a pledge that it won’t be used to purchase real estate or securities.

The general consensus is that big corporations and investors who have substantial sums in foreign banks are not affected by this but the middle class buyers who have been purchasing most of the real estate in Metro Vancouver are affected. What impact this will have on the local markets is still an open question.

It may be that the optimistic forecast for a stable real estate market in 2017 was a bit premature. More anon.


Jay and Brenda’s Newsletter: January Jump Up

Cheers to a New Year and another chance to get it right.

— Oprah Winfrey

Jay & Brenda News

Humans jump into an optimistic mind space at the beginning of each New Year with resolutions, with hope. After the surprises of 2016 we are still shell-shocked and battle-weary but back in the trenches with more realistic expectations.

The real estate market in Metro Vancouver has had to remake its expectations too after the gravy train of international buyers ground to a halt thanks to Premier Christy Clark and her band of merry men and women in the cabinet anticipating the May 9 2017 election. The detached house market has dropped like a stone in sales numbers, prices are still unaffordable for local buyers and foreign buyers have left the building.

There is a report on the 2016 real estate results and an explanation of the impact on real estate in Vancouver of the new China currency controls in my website article. Link below.

2016: The Third Highest Selling Year of Metro Vancouver Housing Market

Efforts have been made to compensate for this unaffordability factor by offering a government loan to qualified buyers who need a little help to get to an acceptable down payment on a property. The maximum of $37,500 loan to first time buyers toward the 5% downpayment under the BC Home Partnership Program is limited at the top end to a $750,000 home purchase with the government anticipating that most home purchases will be in the entry level range of $300,000-$400,000. The 25 year loan will charge no interest or repayment for the first 5 years and an interest rate based on the RBC prime rate + 50 basis points, reset every 5 years for the following 20 years. The concern from those who think that housing needs to be affordable and in good supply (wishful thinking without a wholesale change in attitude by the municipalities and their NIMBY voters) was that this government loan would fuel the market and create multiple offers on every affordable property.

Jay and Brenda Boxing Day 2016Jay and Brenda on Boxing Day 2016

Probably true. Program is just getting underway now. Buyers are heavily concentrated in price ranges for which they can qualify for a mortgage. The new mortgage stress tests mandated by CMHC for buyers with less than a 20% downpayment has resulted in most buyers being approved for less mortgage than they would have been approved for in 2015 and early 2016. That combined with the buyers preference for high walkability scores and access to rapid transit has resulted in multiple offers on mid-sized, mid-priced condo units in downtown Vancouver and on newer townhomes in the suburbs.

The BC economy is divided regionally with rural areas suffering lower growth and fewer jobs partly caused by lack of resource development, slowdown in the oil industry and the softwood lumber dispute with the US with some potential job-creating projects being litigated by First Nations and the environmental movement. The growth in the tech sector which offers urban employment has created jobs in the Lower Mainland, Victoria and Kelowna. Recruitment and retention are challenging for all employers because the high cost to rent or buy makes it difficult for most younger employees to move to Vancouver even though they love the place. It’s a huge circle going round and round.

Julie snowshoeing at Crooked Creek New Year’s 2017Julie snowshoeing at Crooked Creek New Year’s 2017

Interestingly the Urban Development Institute’s annual forecast lunch which attracts all the movers and shakers in the real estate and development sector focused on an entirely different part of the market at their January 2017 conference. After 14 years of Bob Rennie, marketer extraordinaire, giving the keynote address on the future of real estate in Metro Vancouver the UDI 2017 presentations were on master planned communities and transit oriented development.

Douglas Todd of the Vancouver Sun wrote on the long history of unaffordable housing and outcry against too much inflow of people to Vancouver with the various remedies tried at different times. All politicians including progressive leaders like Mayor Art Phillips, Alderman (later Mayor then Premier) Mike Harcourt and conservative Premier Bill Vander Zalm blamed the federal government for actively encouraging immigration and foreign investment. Nobody was concerned with political correctness and Phillips is quoted as writing in his mid-1970s book The Housing Crisis: "I maintain that the primary approach to solving the housing crisis in the Greater Vancouver area lies in the immediate reduction and future control of immigration". Harcourt wanted the federal government to lower the limit of 200,000 immigrants allowed into Canada annually and to create conditions that would discourage in-migration from other parts of Canada by making the present locations of the potential in-migrants more desirable. After Expo 86 the numbers moving to Vancouver exploded.

Alec with Thor in the mountainsAlec with Thor in the mountains

Vander Zalm created the Property Transfer Tax in 1987 as a way to charge investor buyers. He explained his reasoning this way: "Foreign investors, many speculatively, are driving up home prices beyond the reach of British Columbians. These people paid no tax and most have never paid a BC tax of any kind. These welcome newcomers should also contribute to the needs of the province, and this should be done through some sort of ‘property transfer tax’".

Plus ça change, plus c'est la même chose. The more things change, the more they stay the same!

Until Brian Mulroney became Prime Minister and ramped up the immigration rate the federal government under all leaders adjusted the immigration flow to suit the economy and the labour market. Harcourt pointed out that one of the outcomes of Paul Martin, Finance Minister in Chretien’s government, taking draconian action to lower the deficit in the 1990s was the jettisoning of federal funds for social housing programs in Canadian cities. This has contributed to the serious housing deficiency in Vancouver today.

Lucia and Constantin at a jazz concertLucia and Constantin at a jazz concert

Prime Minister Justin Trudeau has stated that increased immigration into Canada is necessary to replace our aging workforce and population. He also promised an affordable housing strategy for Canada which unfortunately will be running into the same headwinds as the 1990s when the debt got out of hand and many programs were cancelled. We shall see.

Family News

We are busy with clients, listings and sales in these early days of 2017. Activity is across the board for area and price range but there is a slowdown in the sale of older detached homes which in the past have been purchased for redevelopment. The Foreign Buyer Tax has had a major impact there. Building bylaw changes in desirable Vancouver neighbourhoods and the cancellation of Land Use Contracts permitting setbacks and heights that imposed on neighbouring properties in Richmond have altered what size and style of home can be built to replace the existing homes. This in turn has discouraged high end buyers who want large imposing new homes with 3 garages and gates.

Julie, Brenda, Jay and Mary Christmas 2016Julie, Brenda, Jay and Mary Christmas 2016

Jay does make time to walk the dog, cheer on the Toronto Maple Leafs and enjoy the wide range of films and concerts available on Netflix. His birthday is February 6 (also that of Ronald Reagan and baseball hero Babe Ruth) and we are very much enjoying the big screen HD/4G TV that he received last year. It was great for all the political action of 2016, the Trump Inauguration and the Women’s March on Washington. I have managed to wean myself off my addiction to television political news and just watch occasionally when Jay wants to see it.

Effi is doing well and enjoying her walks with the Woofer Walkers. Justin takes the gang in rain, snow, ice and sunshine. He said that on one snowy freezing day someone left a big pile of frozen fish parts on McDonald Beach near the airport where the dogs walk. They discovered it first and ran around with frozen fish pieces until Justin corralled them. He said that he attached their leashes and took them a long way away from the fish but that one Lab/Shepherd X ran back through the woods to find the fish again and he had to chase her to get the piece from her. I’m sure it was some kind hearted neighbour who thought they should feed the raptors, seagulls and geese not realizing that other animals would be injured by eating fishbones. Effi loved all the action around Christmas and the coming and going of family, friends and guests.

Effi at Garry Point Park, Steveston December 2016Effi at Garry Point Park, Steveston December 2016

We had a wonderful time with Julie and Mary here for the holidays. They celebrated with a trip to Whistler and one to visit friends in Victoria. The 3 days at Whistler with fabulous snow conditions culminated in time spent with Jane and a day of skiing with Rory and his pals. She said it brought back memories of the year she lived at Whistler, skied through the week and sold expensive children’s ski clothes on the weekends. And was the top salesperson in the department!

Julie, Mary and friend Tracey at Whistler December 2016Julie, Mary and friend Tracey at Whistler December 2016

The trip to Victoria was a thrill for Julie. The rough return ride wasn’t Mary’s favourite excursion. They went by Harbour Air Seaplane from the Fraser River Terminal to Victoria Inner Harbour where their friends met them. Instead of hours on the ferry and long lineups they were there door to door in 30 minutes. We marked their return with lunch at the Flying Beaver Grill adjoining the terminal.

Mary on Harbour Air Fraser River dock enroute to Victoria December 2016Mary on Harbour Air Fraser River dock enroute to Victoria December 2016

Julie’s Uncle Russ organized a big cousins party at the Yaletown Pub which was catch-up time and a highlight of their visit. The main event was the wonderful Bellinger Family Christmas dinner at Jane and Rory’s home. We all got to admire Ronan, their 6 month old grandson.

Julie and Mary returned to Toronto to enjoy New Year’s at the cottage with hours of snowshoeing punctuated by hours without electricity. Fortunately they have a Honda generator for just such emergencies and managed to keep the fridge operating and the house warm with their airtight wood burning stoves.

Julie, Mary, Murphy and Mickey out walking at Crooked Creek New Year’s 2017Julie, Mary, Murphy and Mickey out walking at Crooked Creek New Year’s 2017

We were sorry not to be spending Christmas with Alec, Lucia and Constantin. They celebrated the completion of their Kittsee renos and Christmas with Lucia’s family at their home in the Slovak mountains.

Constantin at Christmas dinnerConstantin at Christmas dinner
Constantin and his first snowman he built with LuciaConstantin and his first snowman he built with Lucia

Kath and Stef hosted Christmas for friends and family members at Crooked Creek. They had a lovely time enjoying the days away from Toronto in the snowy Ontario woods. Lots of dogs to walk for exercise and fun.

Julie, Auntie Mo, Mary toasting the Season December 2016Julie, Auntie Mo, Mary toasting the Season December 2016

That same group is going on holiday together to Palm Springs in early February. Julie and Mary are going separately to their own place but will be seeing the gang plus David and Pam Bellinger who will also be there at the same time.

FYI: We find that working with clients at every stage of life: buying first condo homes, moving up to family size townhomes or detached, then downsizing from the large family home to a condo again is very satisfying. We hope that Life is good for you too.

Brenda on Marinaside Seawall January 2017Brenda on Marinaside Seawall January 2017

Real Estate News

For those interested in the tax rates of the Metro Vancouver municipalities Jay has compiled them and posted them on our website.

The complete December 2016 Stats Package from the Real Estate Board of Greater Vancouver is also posted: 2016: The Third Highest Selling Year of Metro Vancouver Housing Market.

Dan Morrison, President of the Real Estate Board of Greater Vancouver states "It was an eventful year for real estate in Metro Vancouver. Escalating prices caused by low supply and home buyer demand brought more attention to the market than ever before. As prices rose in the first half of the year, public debate waged about what was fuelling demand and what should be done to stop it. This led to multiple government interventions into the market. The long-term effects of these actions won’t be fully understood for some time."

"The supply of homes for sale couldn’t keep up with home buyer demand for much of 2016. This allowed home sellers to raise their asking price. It wasn’t until the last half of the year that prices began to show modest declines." Morrison said.

According to the Real Estate Board of Greater Vancouver MLS residential property sales of detached, attached and apartments reached 1,714 in December 2016, a 39.4% decrease compared to 2,827 sales in December 2015.

December sales were 8.1% below the 10- year sales average for the month.

In December 2016 the number of residential properties listed for sale on the MLS in Greater Vancouver was 6,345. This is an increase of 5.3% from December 2015 (6,024).


The REBGV Home Price Index includes Benchmark Prices for consistent comparisons. Benchmarks represent a typical property within each market. The benchmark property descriptions have been updated to reflect current buying trends.

Home Price Index / Benchmark Prices
Detached December 2016 1 year change 5 year change
North Vancouver $1,578,000 19.3% 67.0%
Richmond $1,581,100 21.9% 56.9%
Vancouver East $1,456,700 19.1% 76.1%
Vancouver West $3,443,100 19.3% 62.2%
West Vancouver $2,948,200 12.7% 63.2%
Townhouse December 2016 1 year change 5 year change
North Vancouver $831,400 18.2% 41.7%
Richmond $721,300 22.4% 41.6%
Vancouver East $731,900 12.2% 46.0%
Vancouver West $1,061,500 18.3% 55.1%

The following schedule shows the change in sales volume from December 2015 to 2016:

Detached Home Sales
  December 2016 December 2015
North Van 48 78
Richmond 59 177
Van East 63 122
Van West 64 133
West Van 31 72
Townhouse Sales
  December 2016 December 2015
North Van 16 29
Richmond 47 90
Van East 25 31
Van West 23 47

Change has already begun with new mortgage rules. We’re still advising clients to take advantage of the continuing low interest rates available now whether you are moving up or down in the market. You will be glad that you did so at this time!

We thank you for your referrals and look forward to assisting you or any of your friends and family with future real estate needs.

"And now, let us believe in a long year that is given to us, new, untouched, full of things that have never been."

Rainer Maria Rilke

Sending warmest regards and all good wishes for a Happy New Year.

Jay Banks & Brenda Kinnear


Why the Foreign Buyers Tax Isn’t Solving Vancouver’s Housing Crisis

realtor brenda kinnear 300 1Brenda Kinnear 

Legislated into effect on August 2 2016, with the hope that it would cool down the Lower Mainland's property market, with its sky high prices and empty houses, the Foreign Buyers Tax adds 15 per cent to the cost of BC property purchased by persons outside of Canada.

The Foreign Buyer Tax was really enacted to calm down the people in Vancouver, and the Lower Mainland in general. It was largely a political decision by the Premier in order to position the government as being pro-active on the housing file before the May 2017 election. The goal of the tax was to assist the middle class to be able to buy houses in Vancouver, to make them more affordable and accessible. Furthermore, the provincial government would use the revenue from the Foreign Buyer's Tax to fund government housing initiatives for renters, low income earners and first-time buyers. All popular ideas.

It's safe to estimate the market is already down 10-15 % from last year which saw a 35% rise in prices. However, selling prices have not gone down that much, even on the sales that are coming through. There are not much lower prices. There are just fewer sales.

The tax has had the intended effect of cooling the market down. In many cases at the higher end of the market, the seller absorbs the tax in the sale price. Houses have been selling for less than they would have six months ago because of an extra $400,000 to $600,000 or more added to the sale price. The existing Property Transfer Tax applies to every transaction registered at the Land Registry and is paid by every buyer. The 15% Foreign Buyer Tax is paid in addition to the existing property transfer tax.

the effects of the foreign buyers tax

Why was it implemented? The market was exploding the way it was, so there had to be some kind of a lid put on it. Nothing is settled yet. It seems that the buyers are just watching and hoping for new opportunities. At this time the changed mortgage rules are impacting buyers ability to qualify for a mortgage and make a purchase more than any potential price adjustments have done so far.

It looks like the high demand for housing across the board will continue. The real concern is whether the Lower Mainland will have the supply to meet it. There are so many people coming to Vancouver, and so many people who live here, and so many young people who would like to stay here, whatever goes up, can sell. But really the deep problem is that all the Lower Mainland municipalities, except probably for Burnaby, have been very difficult about rezoning and density.

Are people changing to rentals? They are if they can find one.

While the Foreign Buyer Tax's revenue is intended to go to government housing initiatives for more rental housing, the plan may not be large enough to have positive effects. The City of Vancouver has started offering up its own land to developers for lower cost housing to provide accommodation to that large section of the population that cannot afford market rents, or find space for families. The City is working with the developer of the new River District on SE Marine Drive near the Burnaby border to build a rental community to City specifications.

The provincial government is also moving to build more affordable rental housing near transit hubs. However due to the infinite amount of unfilled demand it doesn't seem possible that the Foreign Buyer Tax will eventually lead to improvements in Vancouver's low rental vacancy rate. It might change the number of buildings that sell, or at what price they sell, but it won't change the vacancy rate.

The solution to Greater Vancouver's housing problems lies not in regulations and taxes, but in rezoning and densification. The Urban Development Institute, forecasts 40,000 people moving into the region per year, and an aggressive increase in development, not taxes, would be the most effective way to improve the market.

There can't be competition when there's no supply. The tax was a step towards controlling the skyrocketing prices after the shocking 35% increase last year in prices of detached homes but it does not add to the housing stock.

The tax will not change the vacancy rate

Burnaby is rezoning old low-rise buildings with affordable rents to high rise density. There will be more people housed but the rents are much higher than in the old buildings that were affordable for seniors, immigrants, young people with lower incomes. There is nowhere in the neighbourhoods they are used to for all these low income people to find rental housing:

There is a tsunami of seniors coming who have no pensions or savings except the government pension which is not enough to live on. Many are losing their rental accommodation after many years because the building gets inherited or sold and the new owners want to upgrade the units. It's called "renovictions". The former tenants have to be given first shot at the updated suites but they can't afford the new rents.

The City is very late to respond to the problem. In the past the City has focused on homelessness and providing housing for those with mental and drug issues. It took them awhile to wake up to the fact that working families could not find housing or reasonable rentals in the city. All the municipalities around Vancouver are looking at encouraging developers to build rental units but they do not return the same profit to a developer. There is such a demand for housing along the transit lines that both rental and condo units are snapped up immediately.

Large lots and low density are the problem

The real estate development industry where permitted has begun to create more density in the city, which is a better solution to the housing shortfall. In Vancouver, the Aquilini family owns properties around BC Place. Two years ago, they submitted plans to the City of Vancouver to build condos, which the City delayed. The Aquilinis studied the market and found the demand was for rentals, and they reconfigured their buildings accordingly. There is a big drive among pension funds and investors for new rental apartment buildings providing large cash flows. In Vancouver the land prices are too high for a decent return on the investment except for developers who already own their land. Toronto offers more opportunities to build large scale rental accommodation.

Much of the problem is a result of Greater Vancouver's policy of large lots and low density housing. The inner ring of the city is apartments and multi-family housing and as you go out, you get into lower and lower density. Most of the city is single-family-zone density and very big lots. In Toronto, big houses are on forty-foot lots. It's a shock to go into any other city to see that people manage quite well on much less property.

the overall message is wait and see

There is a strong resistance everywhere to rezoning or densifying existing residential neighbourhoods. The City of Vancouver is is increasing density on single family lots where they don't tear down the old house. Both neighbours, owners and buyers hate the new program and do not want to follow it.

Governments live to be re-elected and have so far buckled under protests to rezoning applications. It's starting to appear that will change. As things are going only the very wealthy will be able to live in a detached home and there are few other options in the nice parts of the city. There is a lot of work going on but there is strong blow-back.

Let’s "wait and see"

These changes have been rough on both real estate professionals, sellers and buyers, as the top-end of the market has effectively been cut off by the Foreign Buyer Tax plus the fact that it has become more difficult to knock down an existing building or older home and replace it. It's a big shock to go from the level of activity that we had, that did trickle down because people would sell at the top, buy another property, or give money to their children to buy their first home. This slowdown has impacted the whole market.

The Foreign Buyer Tax is just one of many factors influencing the long term outlook for the Lower Mainland's real estate market. New types of housing like laneway houses and heritage houses, changing mortgage qualifications, and the failure of municipalities in the Lower Mainland (except Burnaby) to increase urban density, have also affected the market. Policy changes from the new US administration could alter or end the North American Free Trade Agreement, or the lumber dispute, and have a profound impact on Canada's economy.

Once it's all shaken out, it'll be a lot better for everybody in that there will be more stability in the market. People will be pressed to rezone areas so that there's more housing available.


Vancouver Market in November 2016: Detached Home Sales Dropped

It’s a Blue Christmas for detached homeowners across Metro Vancouver. It’s challenging for sellers to become accustomed to the new normal after the historic rise in prices and sales over the past two years. Overall for detached homes the number of sales are down 52.2% from November 2015 while prices are up 23% from November 2015 to a benchmark of $1,511,100. Prices are declining slowly. Affordability of detached homes for most buyers is still well out of reach.

In North Vancouver the detached benchmark is $1,625,800, up 27% in one year with a drop in numbers of sales from 102 in November 2015 to 61in November 2016. In Richmond with a benchmark of $1,610,500 that is up 27.2% in one year with a reduction in numbers of sales from 192 to 65 between November 2016 and 2015. It’s a similar story across the Board. In Van East the benchmark is $1,473,900, an increase in price of 21.9% with numbers of sales dropping from 144 in November 2015 to 77 in November 2016. Vancouver Westside still has the highest benchmark price at $3,521,000, a 22.9% increase over the November 2015 figure. Number of sales fell from 165 to 68 in that period. West Vancouver is noticing the numbers. The benchmark is $3,016,600, price increase is 17.7% over the year and sales in November 2016 are at 26 compared to 82 in November 2015.


The largest contributor to the decreased number of detached home sales is the 15% Foreign Buyers tax imposed in July 2016. That and actual high real estate prices. And mainly bad world wide political and economic news.There is anecdotal evidence that some buyers from Mainland China have chosen to invest in Victoria or even further south in Seattle. The pre-sold condo market is also being affected by offshore buyers who do not want to/can’t afford to pay the Foreign Buyer Tax. Many are walking away from properties as the closing day draws near and Property Transfer Taxes will be due and payable at Land Titles on registration.

It’s not only the FBT that is affecting the market. Scales have fallen from regulators eyes thanks to all the investigative reporting done on the Vancouver real estate market. Governments who have been stupid and lax in enforcing money laundering and tax regulations are under public pressure and since the goal of all governments is to be re-elected at last they are paying attention.

A recent front page article in the Vancouver Sun equates Canada with Kenya as the countries with the lowest requirements for registering a company with hidden ownership. According to Transparency International almost half of Vancouver’s 100 most expensive homes are bought through shell companies that obscure the identity of the real owners. BC and Canadian law allows unemployed relations or friends (students and housewives) to be the registered purchaser of multi-million dollar homes. This nominee can claim principal residence exemption and low income tax when he sells the house on behalf of the beneficial owner. The government and Canadian taxpayer is defrauded of millions of dollars of tax revenue. Because Canada has not closed loopholes that aid and abet financial crime it is becoming a popular place to park illegal funds.

There is no way to know how much money is coming into the Vancouver property market but it is clear beyond government nay-saying that it has flowed in while blind eyes were turned. A memorable quote in the Transparency International report says

In Canada more rigorous checks are done for individuals getting library cards, than for those setting up companies.

Many jurisdictions including the UK are moving to require all buyers of real estate to declare the beneficial ownership on the transaction record.

The market does seem to be morphing into a buyer’s market.Still difficult for sellers to get their minds around the changes, especially since the townhouse/condo move down market has remained stable. This market is heavily local in origin except for new condos in Richmond.

Many existing homeowners are feeling hard done by the end of the boom market and declining home prices that are not being taken into consideration by the BC Government Home Owner Grant Program. The Home Owner Grant Program was established to assist BC homeowners to pay some of their property taxes. Every year the threshold is established by the authority. With the rising home prices many owners were house rich and cash poor. In 2016 the grant threshold is set at $1.2 million property evaluation and many owners no longer qualify for it. This has created hardship for some and general bad feeling for most of those excluded. It combines with the July 1 cut off date for home sale data to be considered by the BC Assessment Authority when setting the basis for the mill rate and municipal taxes. Because the information is retroactive taxes are based on higher home prices this year again disadvantaging local owners. Many owners see it as a government tax grab and think that assessments should have been frozen at the 2015 levels.

As a result of the demand and rising prices of 2015 and early 2016 Metro has set a record in housing starts. It’s expected to slow in 2017 as market realities hit. Housing starts in 2016 are expected to reach 27,500. New building rules contemplated in Metro municipalities are also impacting the future of detached homes.

The City of Vancouver has affected the market with their new heritage rules for pre-1940 homes. They are not allowing demolition but are allowing increased density on the lot when the old house is renovated and preserved.That is impacting the values of larger lots that have attracted builders/buyers in the past who want a new large home. As one prominent Vancouver realtor commented "the City should be regulating what they allow to go up, and not focusing so much on what may be coming down." Preserving neighbourhoods with a consistent look that reflects Vancouver style would make sense. The new density allowances appear to be turning every heritage house into a high end condominium development. Increased density by stealth. There are many unhappy homeowners (read voters) out there. Realtors working in those areas affected by RS -5, 3, 3A zoning feel that it is affecting sales of pre-1940 properties.

Mortgage requirements for those with less than a 20% downpayment are making it difficult for buyers to qualify for homes they would like to purchase. Having to qualify at the posted combined rate of the 5 big banks lowers the potential purchase price of a new home for many applicants. Those re-financing or renewing mortgages where there is equity in the property are not having these problems.

This is the Season of Joy and Celebration historically reflected in a generally slower real estate market (except in 2015). There will be unexpected changes in the New Year that will be reflected in sales and activity that will be reported here in 2017. In the meantime we give thanks for living in such a blessed country as Canada.


Vancouver Market: Wait and See Attitude on the Rise in October 2016

The party's over
It's time to call it a day
They've burst your pretty balloon
And taken the moon away
It's time to wind up the masquerade
Just make your mind up the piper must be paid...

— by Betty Comden, Adolph Greene, Jule Styne

Detached home sellers all over Metro Vancouver are paying the piper for escalating prices, loose legal and financial rules and unrestricted offshore investment purchases that resulted in unsustainable growth and today’s hangover from all the excess. Around the world wealthy countries are pulling the welcome mat out from under buyers who distort markets and make them unaffordable for local residents. People in Vancouver have been saying for years that the provincial and federal governments were enabling offshore immigrants and investors to purchase luxury properties and to treat Vancouver like a holiday resort instead of the vibrant active city with a unique culture that it is.

Vancouver by Imogene HuxhamVancouver by Imogene Huxham

The Foreign Buyer Tax of 15% added to the existing Property Transfer Tax (The PTT is charged on the fair market value of a property at a rate of: 1% on the first $200,000; 2% on the balance up to and including $2,000,000; 3% on the balance greater than $2,000,000) has made buyers more wary of purchasing in Metro Vancouver. Not because they can’t afford it but investors no longer see their way to use the weak enforcement of existing laws to work in their favour. The provincial government has outlawed shadow flipping whereby Contracts of Purchase and Sale for properties can be resold multiple times with a bump at every level until the final purchaser pays the increased price, registers title and pays the statutory taxes. Wholesale money laundering through real estate sales is becoming more difficult. The legal profession that got a pass from the Supreme Court on having to disclose the shady financial affairs of their clients based on the concept of privacy and self-incrimination is now getting a closer look from the Canada Revenue Agency (CRA). The honour system of reporting a sale of a principal residence without triggering capital gains taxes has been exploded by CRA after investigative journalists reported the number of non-residents and builders who were claiming multiple empty homes as their principal residences and therefore paying no tax on the increase in equity between purchase and sale prices. There has been a thirty-five percent bump in prices between 2015 and 2016 alone.

Hong Kong which wins the prize for the most unaffordable real estate in the world and is under siege by Mainland Chinese buyers who want to own multiple properties there has just raised its Stamp Tax (analogous to our Property Transfer Tax). Currently in HK it is 8.5% on all sales over HK$2 million to be raised to 15% flat rate on all properties for non first time buyers. The Stamp Tax is not levied on Permanent Residents buying their first home. Initial reports are that this sudden announcement has slowed the real estate market there.

2016 octoberVancouver Market in October 2016

In Canada Toronto is currently the darling for offshore buyers investing in Canada. There is a huge condo building boom that has attracted massive investment. Single family house prices are closing in on Vancouver prices; there is no inventory in single family homes even a two hour commute from Toronto. The Premier of Ontario has said they won’t enact a Foreign Buyer Tax there but Premier Christy Clark said the same thing until she was forced by political reality to do so in BC. In fact it has severely reduced the Provincial Treasury takings from the real estate Golden Goose.

In Vancouver the culprit for high prices is the lack of available land to build on. Eighty per cent of the city is zoned single family with high rise construction at the centre downtown. The City has subtly increased density by allowing a laneway house and a basement suite in every detached house in Vancouver. The downside is that title to the property remains single family. The other residences on the property cannot be severed or sold. The rezoning of main streets for low-rise multi-family homes has caused speculation in land prices as groups of owners get together to sell as one package. The high land costs mean high development costs which means even multi-family properties are prohibitively expensive. Vancouver is also infamous for the amount of red tape tying up any building applications. Surrey and Burnaby are much more development friendly.

The changes by the Federal Government to the mortgage rules and CMHC guaranteed mortgages for buyers with less than a 20% downpayment has impacted sales across Canada. The purpose of the changes was to lower levels of household debt so the economy would be less vulnerable in a downturn. The Governor of the Bank of Canada has stated that these changes were more useful than adjusting the bank interest rate. The new mortgage stress test requires borrowers to qualify for a mortgage at an average of the posted rates of the 5 big banks. In Metro Vancouver including the suburbs where buyers could afford to buy a home based on a mortgage at the discounted rate those buyers are now left hanging because they don’t quite qualify for the same amount of mortgage at the higher rate. Formerly the buyer may have been offered a mortgage at 2.2% and after October 17 had to qualify at 4.65%. According to many realtors there are unhappy clients out there whose future plans have been derailed. Purchases have had to be tailored to the new mortgage requirements and some buyers have had to drop their approved price range from $650k to $450k.

There seems to be a wait and see attitude of both sellers and buyers to the changing market conditions. Prices haven’t dropped as much as the number of sales has tapered off. Buyers are hoping that prices do come down to make homes more affordable. There was a big drop in October but it appears that buyers are starting to make decisions again. There is a strong push toward townhomes with many new projects being built in Surrey, Langley and White Rock. The single family home closer in is still unaffordable for most buyers. There was a 55% drop in sales of detached homes in Metro Vancouver when comparing the months of October 2015 and 2016. The benchmark price in October 2016 is $1,545,800 which is a 28.9% increase from October 2015. In Metro Vancouver’s two highest priced residential districts Vancouver Westside and West Vancouver the benchmark price is $3,570,000 and $3,200,000 respectively.

There is a noticeable difference in the number of detached sales: in Vancouver Westside in October 2015 there were 163 sales vs 78 sales in October 2016. In Richmond there were 194 sales vs 61 sales. In North Vancouver there were 130 sales vs 61 sales.

We shall have to wait to see how the arc of history bends next month.


Jay and Brenda’s Newsletter: November Nocturne

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.

— Charles Dickens: A Tale of Two Cities

Jay & Brenda News

The Two Cities are Vancouver and Toronto and the response described above includes the shocking US election results; the effect of the new mortgage rates on Canadian buyers; the effect of the City of Vancouver empty home tax plus its heritage home demolition bylaws on upscale neighbourhoods and over all the snuffing out of the high end market by the Foreign Buyer Tax. Vancouver is feeling the pain; Toronto is still riding high.

It’s becoming clear that the whole edifice was built on sand. All the regulation in the world cannot create supply where there is no willingness on the part of any level of government to require or rezone existing residential areas for high density street townhomes or low-rise multi-family units. Governments cannot go back and erase decisions that led to the unaffordability of real estate in Canada’s most popular cities.

There was gross malfeasance on the part of the Federal Government with the Immigrant Investor Program selling Canadian citizenship at bargain basement rates with no enforcement of the existing tax and residency rules required by law. This blatant money grab was not even well-executed. The payment for citizenship by Immigrant Investors turned out to be an interest free loan to the government by the applicant on the understanding it would be returned to them after a set period of time. This craziness was originated by the Liberal government of the day, continued and upgraded by the federal Tories until cancelled in 2014 only to be taken up the Liberal government of Quebec who takes the money and scares the Immigrant Investor with French language requirements so that they run to Vancouver and Toronto taking their tax avoiding ways with them.

JayAndMikeAn old pic of Jay and his friend Mike Andruff at the RE/MAX office in early 2000s

Thanks to the ongoing Globe and Mail newspaper exposure of fraud and abuse in the Vancouver real estate market by dishonest investors, builders and realtors the Provincial government has had to respond to numerous charges of avoiding responsibility for the fallout and lack of affordability in the Metro Vancouver market. In order for Premier Christy Clark and the Liberals to be re-elected and avoid a Trump-style pushback they have to appear to have the best interests of the voters (not the financial well-being of their contributors) in mind. Hence the ban of shadow-flipping; imposition of the foreign buyer tax and now cracking down on the abuses in the Agricultural Land Reserve where buyers are pretending to run a blueberry farm to claim the agricultural reduced tax benefits. Many buyers of farm properties are turning them into estates and boutique hotels using the ALR loopholes.

There is some too little/ too late investigations of suspicious real estate transactions in Vancouver and Toronto being undertaken by CRA for a total of $240 million to date. They have audited 13,400 Ontario residents and found mainly GST/HST and New Home Rebates illegally claimed to the tune of $210 million. More audits occur in Ontario but thanks to all the publicity CRA is setting its sights on investigating British Columbia real estate deals starting with 500 suspicious high dollar transactions. The federal revenue minister said the government is aiming to recoup more money in B.C.

"We are making a clear effort in British Columbia and our goal is to recover as much money [as in Ontario], if not more," Diane Lebouthillier told the Globe and Mail.

According to CRA, it is looking into five areas of concern, including:

  • Questionable source of funds.
  • Property flipping.
  • Unreported GST/HST on the sale of a new or substantially renovated property or on the GST/HST new housing rebate.
  • Unreported capital gains.
  • Unreported worldwide income.
At the cottageJulie, Brenda, Sondra, Mary at the cottage in November 2016

Last year an unlicenced criminal Immigration Consultant based in Richmond BC was tried for fraudulent activities including immigration applications where the Chinese immigrant lied by stating that he was resident in Canada while working in China. The consultant set up false addresses and accounts to make it appear his client was actually living in Canada as required by the Immigration Act. By investigating the client list the government has lined up a group of residents to be deported for lying on their application. All of them are complaining they were misled, the documents were in English and they only read Mandarin, their families live in Canada, they own high end real estate in Vancouver etc etc. The federal court appeal process usually takes one year. However, the government does not recognize "I was misled" as grounds for staying in Canada. When they are deported they cannot apply to come back for 5 years and have to disclose they were thrown out for illegal documentation when they do apply.

FYI: the immigration consultant got 7 years in jail and a $600,000 fine. His sentence was just upheld on appeal.

However, these few clients are the tip of the iceberg. For years realtors and the public have been reporting that many Chinese immigrants are "astronauts" who are working in China while their families live in Metro Vancouver using all public facilities including medical services and schools while reporting minimal incomes to CRA and paying less tax than many poor refugees. CRA has said in the past that it does not plan to check up on world wide income but it seems they will be forced to do so by public demand.

As a result of increased regulation and surveillance of real estate transactions the high-flying Vancouver market has been taking a breather. Anecdotally it appears that those buyers who are required to pay the 15% foreign buyer tax are taking it off the sale price of a property. A home listed at $4 million in April may be listed at $3.5 million today and sell for $3 million to account for the $450,000 Foreign Buyer Tax added to the existing Property Transfer Tax for a total of $500,000. Plus any applicable GST if it is a new home.

Some buyers cannot afford or are unwilling to pay the Foreign buyer tax on pre-sold condos as they are being completed and are ready for registration at Land Titles with all taxes due and payable. There is no grandfathering of an earlier transaction and the buyer must be a Canadian citizen or an immigrant with Permanent Resident status in Canada as of the date of purchase to be excused from the tax. We are seeing collapsed sales being reported on the MLS by the Real Estate Board of Greater Vancouver.

Constantin brushing his teethConstantin also learned to brush his teeth. He's not quite as accomplished as he looks in this picture but he's a keen student.

Areas of Vancouver that fall under RS-5,3 and 3-A zoning are also hard hit as the City has denied demolition permits for pre-1940 homes. This includes Kerrisdale and Shaughnessy. Most foreign buyers, either investors or residents, are looking to build a new home suited to their needs. A lovely old Vancouver home, even when renovated is seldom configured the way they prefer. There is a premium being paid for newer homes that were built before the bylaw changes.

The Vancouver Sun had a spread on a home at 5387 Cypress Street that has been bought and sold 6 times in the last 13 years, last sold in Fall 2015 for $4.55 million. It is currently listed for sale at $5.28 million. However, it is impacted by the new bylaw. A realtor was making a comparison with this property and one across the street and down the block at 5468 Cypress Street. That property as an older home sold in February 2011 for $2.998 million. It was razed and replaced selling at $8.074 million in April 2012. In June 2016 (before the Foreign Buyer Tax applied) the 6,500 s.f. home sold for $12.26 million. Built before the new bylaw with its size restrictions and heritage requirements changed the market for older homes as candidates for redevelopment.

Needless to say, those owners who did not take advantage of the wild west marketplace before it was shut down are disgruntled by what many of them think is the capricious application of zoning bylaws and the Foreign Buyer Tax. Many think it should have been applied to more areas in BC than Metro Vancouver to more effectively spread the restrictions throughout the province. It does not apply to Squamish, Whistler, Victoria or Kelowna which are busy real estate markets.

I will report on the impact of the new mortgage rules next month plus the tragic rental market. We are still awaiting the announcement of Trump’s trade policies. In the meantime let’s celebrate the Season in gratitude for our many blessings.

Family News

Jay is busy with clients and calendars. There is action in the real estate market with the right product and price point. He has lots of interest in his listings. Buyers have to go through more hoops today to get a mortgage and there must be many applications in the system because it is taking the banks much longer to appraise and approve properties. In the meantime there are joyful seasonal visits to be paid to past clients and news to be caught up on. He always has an attitude of gratitude.

Lucia and Constantin with Thor The hunters come out in force on the weekends from end of September until after Christmas. Lucia and Constantin with Thor in a hunting jacket.

Effi is recovering from a sudden onset urinary tract infection diagnosed at an after hours trip to the emergency vet. We found Burrard Animal Hospital & Emergency (open 24 hours) to be outstanding in facilities and staff. They are equipped to do lab tests, X-rays and surgery on the spot. Fortunately after tests the treatment turned out to be antibiotics for canines and she is all better now.

Since Jay’s 2016 birthday gift of a big screen HD/4G TV his movie going has been a bit curtailed. He says it’s mainly because there aren’t that many great movies that need the large cinema screen to enjoy. He likes the Fifth Avenue Cinema for its civilized presentation and lobby cafe where you can get an expresso to take into the flick.

Late October coloursThat's Thor there in the middle who's scented either a bear or another dog. Late October colours in Slovak mountains.

After the election I lost all interest in TV news. I still read the Washington Post, NY Times, Globe and Guardian online to keep up with our wildly spinning world. I do better without graphic visuals that you can’t get out of your head.

When I was in Toronto Julie reminded me that she and I had experienced the great 2016 anti-globalization election outcomes together. We were in the Eastern Townships at Manoir Hovey in June when we heard the EU shaking Brexit results in the middle of the night and then on November 9 when Trump unexpectedly won the Electoral College even though Hillary was well ahead in the popular vote. It was like remembering the Kennedy assassination for our generation. Ontario was dry and warm for the week I was there. Mary, her mother Sondra, Julie and I had a great time at the cottage. It’s always fun to walk through the woods and crispy leaves with the dogs. The Royal Winter Fair was another highlight. Held at the Canadian National Exhibition grounds we enjoyed the crafts and vendors and dressage and driving and jumping competitions. All held in Victorian era buildings with high ceilings and much molding. It was wonderful to spend time with family and dear friends.

Royal Winter Fair1aRoyal Winter Fair Jumping Competition

Even with a rocketing real estate market that kept the JKT busy, Julie’s birthday was celebrated regularly throughout the month so she and Mary have been enjoying an active social life. Mary hosted Julie at a popular restaurant in Toronto owned by Julie’s clients. Guests were Julie’s friends including many from school and camp days. Mary is enhancing her retirement with advanced culinary courses at George Brown College. Right now Central Italy is on the menu.

Mary with her new pasta machine1aMary with her new pasta machine

We are excited to be spending Christmas with them in Vancouver. Lots of festivities planned. They will have a day at Whistler with Julie’s college roommate Tracey who now lives in Vancouver as well as a trip to Victoria to see Mary’s longtime friends who live there. I pointed out the possibility of being stranded by weather related ferry cancellations but Julie just told me to have a more positive attitude. So no rain or wind in December by decree. The Bellinger family is gathering at Jane and Rory’s home for a traditional Christmas dinner.

Julies birthday1aJulie’s birthday party with longtime school and camp friends. Front from Left: Jen Palacios; Sarah; Back from Left: Kate; Julie; Stephanie; Heidi.

Alec and Lucia are wearing themselves out with work and renos. Alec sent us a funny story with pics about their busy lives and Constanin’s antics. They are fortunate to have such great support from Lucia’s parents who took care of Constantin and Thor while Alec and Lucia recovered from late Fall colds. They also agreed to keep Thor while the work was going at home and there were builders in the yard. Thor has to wear his orange vest to be safe from hunters both at home in Kittsee and in the mountains around Lucia’s family’s village. All grandparents think their descendants are brilliant so Constantin is no exception. It’s amazing how the modern child has taken to technology. It seems to appear in their DNA today.

Constantin in the trainHere is Constantin aged 19 months. Alec took the pics in the train and thought they made a set that demonstrated his personality quirks.

Kath and Stef are planning Christmas celebrations at Crooked Creek while Mary and Julie are on the West Coast. They are hosting Stef’s family and recently bereaved friends plus many dogs. They are looking forward to a trip to Palm Springs in the New Year. They took me for dinner at the Keg Mansion in Toronto which was Julie’s Mansion in the 1970s/80s when I lived there. It’s a big heritage house so looks just the same 30+ years later. However, the guests are not as glamorous and well-dressed as in the old days. In Toronto as in Vancouver tall condo buildings are being tucked into every vacant piece of property so it is getting harder and harder to see the Toronto of old.

A delightful smileA delightful smile - just like Daddy’s

FYI: We find that working with clients at every stage of life: buying first condo homes, moving up to family size townhomes or detached, then downsizing from the large family home to a condo again is very satisfying. We hope that Life is good for you too.

Real Estate News

For those interested in the tax rates of the Metro Vancouver municipalities Jay has compiled them and posted them on our website.

The complete October 2016 Stats Package from the Real Estate Board of Greater Vancouver is also posted.

Dan Morrison, President of the Real Estate Board of Greater Vancouver states "Changing market conditions compounded by a series of government interventions this year have put home buyers and sellers in a holding pattern. Potential buyers and sellers are taking a wait-and-see approach to try and better understand what these changes mean for them."

"While sales are down across the different property types, it’s the detached market that’s seen the largest reduction in home buyer demand in recent months. It’s important to work with your local REALTOR to help you navigate today’s changing trends." Morrison said.

According to the Real Estate Board of Greater Vancouver MLS residential property sales of detached, attached and apartments reached 2,223 in October 2016, a 38.8% decrease compared to 3,646 sales in October 2015.

October sales were 15% below the 10- year sales average for the month.

In October 2016 the number of residential properties listed for sale on the MLS in Greater Vancouver was 9,143. This is a decrease of 4.5% from October 2015 (9,569).

With the sales-to-active-listings ratio at 24.4% in October 2016, it remained a seller’s market which typically occurs when this ratio exceeds 20 percent for a sustained period of time.


The REBGV Home Price Index includes Benchmark Prices for consistent comparisons. Benchmarks represent a typical property within each market. The benchmark property descriptions have been updated to reflect current buying trends.

Home Price Index / Benchmark Prices
Detached October 2016 1 year change 5 year change
North Vancouver $1,658,400 34.7% 78.9%
Richmond $1,673,300 34.8% 65.8%
Vancouver East $1,516,900 29.1% 83.7%
Vancouver West $3,569,700 28.7% 59.7%
West Vancouver $3,210,100 29.6% 79.3%
Townhouse October 2016 1 year change 5 year change
North Vancouver $842,300 25.7% 43.0%
Richmond $714,500 24.5% 39.0%
Vancouver East $771,000 27.9% 50.3%
Vancouver West $1,123,800 35.4% 66.6%

The following schedule shows the change in sales volume from October 2015 to 2016:

Detached Home Sales
  October 2016 October 2015
North Van 61 130
Richmond 61 194
Van East 65 149
Van West 78 163
West Van 22 116
Townhouse Sales
  October 2016 October 2015
North Van 32 36
Richmond 68 132
Van East 28 52
Van West 30 78

Change has already begun with new mortgage rules. We’re still advising clients to take advantage of the continuing low interest rates available now whether you are moving up or down in the market. You will be glad that you did so at this time!

We thank you for your referrals and look forward to assisting you or any of your friends and family with future real estate needs.

As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them.

John F. Kennedy

Sending warmest regards and all good wishes for a Blessed Holiday Season.

Jay Banks & Brenda Kinnear


Real Estate in September 2016: Vancouver’s ‘Brand’ Remains Strong

A day late and a dollar short. The Foreign Buyer Tax will never create affordable housing in Vancouver again. Even with wild price swings a 25-30% drop in price will only negate the increase of the past nine months. The benchmark price for a detached home in Metro Vancouver is $1,579,400, a 33.7% increase since September 2015. In Vancouver Westside where the wealthiest foreign buyers purchased properties the benchmark price is $3,624,300 in September 2016, a 32.1 increase since September 2015, a 62.1% increase since September 2011 and a 186.7% increase since September 2006.

There was a rush to close deals by July 29 before the Foreign Buyer tax increase to the existing Property Transfer Tax should be enacted on August 2 so the August and September sales stats are probably not a true reflection of the market. There was a price increase of 0.1% in September 2016. A truer picture will emerge in October and November stats. Sales for September were 9.6% below the 10-year sales average for the month.

Not actually that still by Kenny LouieNot actually that still by Kenny Louie

It’s been clear to longtime realtors in the Metro market place that the regulation of foreign investment should have begun by 2007 as affordability waned and the trajectory of the market became obvious. The later wave of speculators taking advantage of Canada’s lax finance and money-laundering laws used the Vancouver real estate market as an easy way to collect unreported capital gains on a false principal residence declaration while their dirty money came out sparkling clean on resale of the property. And then more dirty money was dropped into the next property to repeat the process.

It appears that the Finance Minister and the provincial and federal governments have had the scales fall from their eyes and enforcement and stricter rules are now in place. However, there is always the problem of inspecting what you expect. According to reports both levels of government are sorely lacking in experienced audit and reporting staff to be sure that these false claims are disproved and the tax funds are collected.

In a large housekeeping sweep of the mortgage rules and in an effort to offload some of the liability from the federal government to the banks granting the mortgages qualification levels have been redrawn to require more of the borrower and the bank. A mortgage insurer in the secondary insurance market stated the previous CMHC arrangement with the banks to fully insure the loans of borrowers with less than a 20% down payment turned what would be sub-prime mortgages in any other country into gilt-edged government backed securities in Canada. Our guaranteed loans are unique in the world. When borrowing amounts were not so high the liability of the Government of Canada was more manageable. It’s a system that allowed a broader based home ownership and helped to prevent financial meltdown in the 2008/2009 Great Recession.

2016 september jbReal Estate Market Repot September 2016

The new rules of requiring mortgage applicants to qualify at higher rates will reduce a buyer’s pre-approved price point by about $75-100k which places Metro Vancouver townhomes and condos more out of reach for many buyers, causing an even greater strain on the non-existent rental inventory.

The RBC CANADIAN HOUSING October 12, 2016 Vancouver housing market: cooling but not collapsing report was extremely clear in its analysis of the current and future conditions of the Metro Vancouver housing market . We have quoted extensively from pages 5 and 6:

While we expect purchases by foreign nationals to recover partially from the drop in August in the coming months, the new tax has introduced a thick layer of uncertainty.

Vancouver is still attractive for international investors:

We have no doubt that the new tax will put a damper on foreign buyer interest in Vancouver in the near term; however, we believe that Vancouver will continue to attract investment from wealthy individuals— especially those from China given the strong connection already established—once the initial shock from the tax has run its course. Vancouver offers a sought-after lifestyle and prestige for wealthy Chinese that only a handful of other international cities can boast. These cities include Hong Kong, Singapore, Sydney, Melbourne and London—all of which impose some form of restrictions on foreign buyers (e.g., special stamp duty or capital gain tax). The new tax, therefore, is unlikely to be a major deterrent for wealthy investors. Compared to the peer group, Vancouver high-end properties still appear to be ‘affordable’ despite looking excessively expensive from a Canadian perspective.

Strong base and flow of wealthy immigrants:

An arguably even more powerful force in the Vancouver-area market is the strong base and inflow of wealthy immigrants that keeps fueling homebuyer demand, especially at the higher end of the scale. Over the years, Vancouver has attracted a disproportionate share of investor-immigrants under the former Canadian Investor Immigrant Program (cancelled in 2014), which channeled substantial wealth into the city. A similar, and still operating program in Quebec reportedly maintains a strong flow of wealthy Chinese immigrant-investors in the Vancouver area to this day, as immigrants are not legally bound to settle in the province of application. High net worth immigrants are drawn to Vancouver for the same reasons as foreign investors (desirable lifestyle, political and economic stability, and prestige), as well as other factors such as good schools, clean environment and the ‘global passport’ that Canadian citizenship offers. We expect that Vancouver’s ‘brand’ will remain strong among wealthy immigrants, as will housing demand from them.


A grey area that could potentially tip the market over. By our reckoning, much of the market frenzy between early 2015 and early 2016 was due to factors other than local fundamentals, and we suspect that buyers motivated by expectations of capital gains have played a prominent role. Admittedly, speculative activity is much of a grey area with limited hard data to track. Statistics released earlier this year by the provincial government would indicate only a small uptick in property flipping (homes resold within 12 months of first purchase) recently; however, we believe that speculators have tended to hold on to their residential investment to capitalize on rapid price appreciation at a time when returns on other types of investment have been significantly lower. Importantly, a downgrade of capital gain expectations have the potential to alter housing investment dynamics considerably, even turning speculators from buyers to sellers. It is important to note that a sharp change in sentiment would not be out of character for the Vancouver market. Home prices in the area historically have been notoriously volatile, recording some of the larger cyclical swings (both up and down) among major Canadian cities."... RBC CANADIAN HOUSING October 12, 2016

At this time prices have come down a little on higher priced properties, sales volumes are lower which was occurring before the Foreign Buyer Tax and is also a characteristic of the late Fall market in most years. The major adjustment appears to be the lack of urgency displayed by buyers. Everyone is waiting for the other shoe to drop.


Jay and Brenda’s Newsletter: October Surprise

Ends and beginnings - there are no such things.
There are only middles.

— Robert Frost

Jay & Brenda News

For the past several months commentators in the US Presidential campaign have been speculating on a possible October Surprise. A result that is the bête noir of one side and the saviour of the other. It looks like the Foreign Buyer Tax results are the October Surprise in BC. Combined with the CMHC changes to mortgage qualifications for buyers with less than a 20% downpayment plus the Finance Ministry closing principal residence tax loopholes there are huge impacts on the real estate market in BC.

According to Maclean's magazine of October 12th: "Both initiatives are potentially devastating to one of the most important industries in Canada. Along with energy and manufacturing, residential real estate is a key growth factor in the Canadian economy. Home builders, construction workers, realtors, renovators, architects, banks, non-bank lenders, shadow bank lenders, lawyers, notaries, building product suppliers, furniture stores, electricians, plumbers, land speculators, carpenters, high-rise condo developers, advertiser-dependent media, provincial governments, municipalities and many others count on housing-related activity to keep the cash register ringing."

The new rules require a stress test for borrowers with a down payment of 5-20%. The buyer has to qualify at the higher posted 5 year rate average of Canada's top 6 banks even though the actual rate is lower. Recently the real rate was 2.17% and the posted rate 4.64%. This is to ensure buyers could make their payments if the rates do go up. It means that buyers who could borrow a large amount at a low rate based on income will be qualified at a lower price point so in the highly priced Vancouver market they will lose up to $100k off the price they will be allowed to pay for a property to be approved for an insured mortgage.

The water is warmer than the airThe Fall colours are great around Julie's cottage. The water is warmer than the air!

CMHC is looking to shore up the mortgages guaranteed by the federal government and to download some of the cost and risk to the banks. CMHC is posting a red warning for housing markets across Canada, particularly Vancouver and Toronto.

The changes are aimed at slowing down the housing market in an effort to make it more affordable for local buyers and to prevent the laundering of hot offshore money through investments in high end real estate in Vancouver. There was a quote in The Sun describing the mortgage rule change as "it is raining in Vancouver and the Alberta buyer has to put up his umbrella." The law of unintended consequences is hard at work.

Since September we are certainly noticing a slowdown in sales in the detached end of the market offset by multiple offers on lower priced (under $400k) condos that are in good condition in a well-maintained complex with a reasonable Depreciation Report.

There is pushback on the BC Foreign Buyer Tax (now being considered by Ontario) from big-time Chinese entrepreneurs and investors. The "Billionaire's Club" founded by Jack Ma of Alibaba has been touring Canada and has the ear of the Prime Minister who is anxious to do more business with China to improve the Canadian economy. Frank Wu, VP of the China Real Estate Industry Association stated that Chinese investors have told him they are turned off investing in Vancouver by the Foreign Buyer Tax. Even though no level of government ever tracked who was buying and investing in real estate it was clear to all realtors and most of the public that the money was overwhelmingly coming from China. So there is a big impact on the real estate market in Metro Vancouver.

Autumn at Crooked CreekJulie and Mary enjoying the autumn at Crooked Creek

Major cities around the world are tightening foreign ownership rules and taxes. London is proposing a law that says that if a foreign buyer can't prove the legal source of funds that purchased a multi-million pound property then the property will be able to be confiscated as the proceeds of a crime. Hong Kong, Sydney, Singapore all have heavy taxes that mean nothing to the richest buyers who purchase in spite of them. Australia has ownership rules that they mainly enforce; eg houses have to be occupied; only one property can be owned at a time; must be sold if the buyer does not live in the country; no older or waterfront properties allowed to be purchased. New housing only is allowed in order to keep the construction industry at full employment.

In Vancouver the BC Supreme Court ruled on the legality of Heritage zoning in First Shaughnessy bounded by 16th Avenue to King Edward Avenue, Oak Street to East Boulevard. Pre-1940 homes can be restricted from demolition according to the City of Vancouver bylaws. The judge stated that the home owner plaintiffs were motivated by greed and that the city had the right to save designated structures; that there had been a wholesale destruction of the history of Vancouver by buyers who wanted to take out older homes and trees and build larger mansions on the big lots.

There will be a clearer picture in the October/November stats. This is a time of year when sales slow down but there will be a noticeable drop in sales numbers and a decline in sale prices.

Autumn at Crooked Creek2Autumn at Crooked Creek

The Vancouver City Council is hosting an international group of planners and those involved in social and affordable housing initiatives around the world at a conference to discuss successful programs. With its new city executives in place they are looking at the 2011 homeless/social housing program and realizing it falls short of the goal of maintaining Vancouver as a livable city not a large resort town for the rich of the world. The City Council is prepared to offer city owned properties for affordable housing and is talking to developers about what can be built. They are trying to maintain a city where families can live and work. The big shock to all the NIMBY baby boomer property owners who want no change – increased density is coming to a block near you!

Uncertainty is always the enemy of a stable housing market. More anon.

Family News

More of Julie and Brenda's Great Adventure in Quebec:

Quebec City is still old and foreign. The President of Mexico was visiting overnight at the iconic Chateau Frontenac before going to meet Trudeau and Obama in Ottawa. The Fairmont Chateau Frontenac was built as a Canadian Pacific Railway Hotel in the late 19th century in grand medieval and Renaissance style and rivals the Citadel and fortifications for gravitas and presence.

Brenda outside Chateau FrontenacBrenda outside Chateau Frontenac

We stayed on the top floor of a lovely converted house in the Old Town (with no elevator but an elegant curving staircase). Many of the public squares have been restored to colonial glory (much cleaner than in those days). It's a funny mix of early royalist New France and British colonial rule. The province is restoring the white stucco house that Queen Victoria's father lived in before returning to England to enter the royal heir sweepstakes. He married his German cousin, dragged her to England to have her baby and produced Alexandrina Victoria who was the first and only legitimate royal baby born after the death of Princess Charlotte in 1817.

Restored French colonial public square in Lower TownRestored French colonial public square in Lower Town. Earliest church seen on right

The most amazing amounts of money are being poured into the Historic District of Old Quebec to uphold its status as a UNESCO World Heritage Site. The Upper and Lower Towns with their ramparts, bastions, stone walls, gates and La Citadelle are the best surviving example of a colonial fortified town.

Julie outside the artisan wool shopJulie outside the artisan wool shop

The shopping in the Lower Town is fabulous. All kinds of great independent or high end retail shops built into restored heritage buildings. Many shops feature local crafts, Julie got the cutest lambswool slippers for Constantin. I bought some gifts at Aqua Maritime, a gorgeous nautical clothing shop headquartered in Croatia!

Historical Note:

A little historical background:

When I first visited Quebec as a young girl from BC I was struck by the role of women in New France. Through the colonial years under the French King and then the British years guided by the Quebec Act of 1774 the Catholic Church provided the social order and underpinnings of society. Society in turn was held up by and ministered to by amazing orders of nuns. In Quebec City there is a tall monument with all the towns of New France listed with the name of the order who delivered social services, health care and education. In my earlier visits I remember wondering how normal women managed long heavy skirts, stone buildings, freezing weather and pregnancy. Les soeurs religeuses prayed the canonical hours and did all the work in between.

More of restored French colonial public squareMore of restored French colonial public square. High end boutique hotel nearby. Julie and Mary stayed there in January when everything was covered in snow

Before the Reformation and Britain becoming Protestant under Henry VIII all of Europe and England was dotted with abbeys and almshouses run by the church. The wool trade that provided England's wealth in the 14th and 15th centuries was built by the great Cistercian and Benedictine abbeys in Yorkshire. Most of Europe remained Catholic under the Counter-Reformation 1545-1563. The Church allowed women an outlet that was separate from marriage and likely death in childbirth. Those women who had a vocation or who wanted to live a life devoted to God, work and running the world became "Brides of Christ". Families provided a daughter's dowry to the church instead of to a husband and the young woman entered God's service. It was a great career choice for many who became administrators of convents and abbeys and who emigrated to New France to establish the institutions in the new colony.

Julie outside our hotel Chateau Fleur de Lys in Old QuebecJulie outside our hotel Chateau Fleur de Lys in Old Quebec. The dormers were our windows

My favourite purchase on our trip is a painting of Les Ursulines in Quebec City in the 1600s. Now hanging in my bedroom to remind me how fortunate are modern women.

Before the St Lawrence Seaway opened in the 1950s the St Lawrence would ice up between Quebec City and the Atlantic Ocean. It would be unnavigable for 6 months. Cargos had to be prepared. Passengers had to stay aboard. The furs being shipped to the London auctions from Montreal and Quebec and further west into Upper Canada (Ontario) had to be loaded and ready to sail by mid-October or there would be no way to get them out of the iced up river. The profits of the Hudson Bay and North West Companies depended on departing on time. Sometimes the ice came early and it was a race to leave ready or not.

Our Adventure continued:

On to Montreal which is totally under construction. Many abandoned garment factories in the old part of town along the river have been re-purposed as centres of artisanal businesses including some large scale food businesses. Julie and I went through one where we found a wonderful children's wear shop and bought all kinds of presents for Constantin.

Brenda shopping in Lower Town1Brenda shopping in Lower Town

We stayed in a great boutique hotel, Auberge Bonaparte located in an 1880s building, with nearby parking, in Old Montreal. We were behind the Notre Dame Cathedral (famous for Celine Dion's wedding and her husband's funeral). It is large and dark inside. More Gothic than Baroque. Julie and I saw fabulous light and bright Baroque churches and cathedrals on our Danube River cruise last year and no church I have seen in Canada begins to compare with those in Austria and Germany.

In Baie-Saint-Paul the gallery owners would say they were second only to Montreal and even surpassing them. Julie and I didn't think so. The art galleries in Montreal were plentiful with wonderful presentations of their featured artists.

Montreals Notre Dame de Bonsecours Chapel Montreal's Notre-Dame-de-Bonsecours Chapel. Also known as the Sailors Church. St Marguerite de Bourgeoys entombed near altar

We visited Notre-Dame-de-Bonsecours, the Sailors Church with its wooden ship models hanging from the ceiling. The remains of St Margaret Bourgeoys are entombed in the chapel. She lived from 1620-1700, founded the Congregation de Notre-Dame in Montreal and was the tireless inspiration that developed Ville-Marie from a wilderness outpost into the city of Montreal. She was born in Troyes, France had a religious conversion at 20 and joined the Notre Dame convent as a cloistered nun who led the teaching program. Her friend in the convent was sister to Maisonneuve, the Governor of New France and he recruited Marguerite to come to New France in 1653 to set up schools and support family life at the fort. She built the first stone chapel and was an inspiration to all who met her. She is a perfect example of the importance of the religious women of New France and their impact on the survival of the colony. She lived to an amazing age of 80 years. The miracles attributed to her led to canonization by Pope John Paul II in 1982.

Constantin reading a bookConstantin just took his first train ride to Bratislava

Interestingly there is a statue of Mary as Star of the Sea on the roof of the church which was a beacon to sailors coming up the St Lawrence River. It was donated by the Bishop at the end of the typhus epidemic of 1847 where a third of the population died. The people of Montreal including the clergy took in and looked after the poor Irish immigrants fleeing the potato famine who brought typhus with them from their voyage. The Bishop himself caught typhus and survived so showed his gratitude to God by endowing the church with beautiful artworks.

Montreal is a cross-section of the history of French and English Canada. Not to be missed on any trip to Quebec.

Constantin is very keen to helpConstantin is very keen to help his mother. He drove the truck with the tiles for the renovations from Bratislava in Kittsee. So young and so helpful

Jay is making his annual calendar visits. It's a great time to see friends and clients and catch up with news and plans. Lots of chats about future real estate goals and timing thereof. We are well aware of the result of throwing the rock into the pond. The ripples go out a long way. It appears that both the BC and federal governments have just heaved a boulder into the housing market pond. We are glad we have had lots of experience in the ups and downs of the real estate market over the years that allows us to advise and support our clients through the changes.

Constantin the driverJump in says the friendly driver. We've got places to go

Jay and I fight over the TV. Will we watch baseball or politics? The Blue Jays are out but Jay is an equal opportunity baseball lover. Effi is just happy to join us. She prefers to go with the Woofer Walkers than to watch CNN.

My trip to Toronto for Julie's birthday is getting closer. We used to joke about organizing a parade down Yonge Street. Now she is satisfied with celebrating over the entire month of November.

Alec and Lucia are extra busy with business and continuing renovations at home and on their heritage property in Kittsee down the street from their house. In addition to all her other responsibilities Lucia is acting as contractor. She learned the skills required when she renovated her Bratislava apartment last year. It's located across from the Castle and is now updated and beautiful. It's a popular Airbnb destination which Lucia manages.

Constantin LightswitchesThe magic of childhood. You get to learn to turn the lights on

Kath and Stef are busy as usual. I look forward to visiting them in Toronto. Kath relaxes by taking the dogs to the beach. They are never bothered by the temperature of Lake Ontario.

Julie and Mary are always on the go between their social commitments and real estate activities. Mary is a great support for Julie in the busy Toronto marketplace. She is really enjoying her retirement and was feted at a fancy surprise dinner last week by very dear friends. It's been a non-stop party for months now. The JKT had their annual pumpkin patch giveaway and Julie wore her Ghostbusters costume. She said the real benefit was the layering underneath it. The wind was brutal. Every year there is always some weather related problem to deal with but they all had fun anyway.

Winter is comingWinter is coming. Some of us are more excited about the challenges of wet weather than others

FYI: We find that working with clients at every stage of life: buying first condo homes, moving up to family size townhomes or detached, then downsizing from the large family home to a condo again keeps us busy. We hope that Life is good for you too.

Real Estate News

For those interested in the tax rates of the Metro Vancouver municipalities Jay has compiled them and posted them on our website.

The complete September 2016 Stats Package from the Real Estate Board of Greater Vancouver is also posted.

Dan Morrison, President of the Real Estate Board of Greater Vancouver states "Supply and demand conditions differ today depending on property type. We're seeing more demand for condominiums and townhomes today than in the detached home market."

"Changing market conditions are easing upward pressure on home prices in our region. There's uncertainty in the market at the moment and home buyers and sellers are having difficulty establishing price as a result. To heop you understand the factors affecting prices, it's important to talk with a REALTOR," Morrison said.

According to the Real Estate Board of Greater Vancouver MLS residential property sales of detached, attached and apartments reached 2,253 in September 2016, a 32.6% decrease compared to 3,345 sales in September 2015.

September sales were 9.6% below the 10- year sales average for the month.

In September 2016 the number of residential properties listed for sale on the MLS in Greater Vancouver was 9,354.This is a decrease of 13.4% from September 2015 (10,805).

With the sales-to-active-listings ratio at 24.1% in September 2016, it remained a seller's market which typically occurs when this ratio exceeds 20 percent for a sustained period of time.


The REBGV Home Price Index includes Benchmark Prices for consistent comparisons. Benchmarks represent a typical property within each market. The benchmark property descriptions have been updated to reflect current buying trends.

Home Price Index / Benchmark Prices
Detached September 2016 1 year change 5 year change
North Vancouver $1,663,500 37.2% 81.7%
Richmond $1,686,300 39.3% 67.1%
Vancouver East $1,537,300 32.4% 86.8%
Vancouver West $3,624,300 32.1% 62.1%
West Vancouver $3,363,700 36.5% 89.2%
Townhouse September 2016 1 year change 5 year change
North Vancouver $878,600 33.3% 52.3%
Richmond $721,300 27.3% 39.5%
Vancouver East $776,400 34.1% 51.4%
Vancouver West $1,116,300 37.2% 63.9%

The following schedule shows the change in sales volume from September 2015 to 2016:

Detached Home Sales
  September 2016 September 2015
North Van 53 107
Richmond 79 176
Van East 62 144
Van West 60 125
West Van 22 67
Townhouse Sales
  September 2016 September 2015
North Van 31 37
Richmond 60 84
Van East 37 48
Van West 49 51

Change is in the air. We're still advising clients to take advantage of the continuing low interest rates available now whether you are moving up or down in the market. You will be glad that you did so at this time!

We thank you for your referrals and look forward to assisting you or any of your friends and family with future real estate needs.

The falling leaves drift by the window
The autumn leaves of red and gold
I see your lips, the summer kisses
The sun-burned hands I used to hold

Since you went away the days grow long
And soon I'll hear old winter's song
But I miss you most of all my darling
When autumn leaves start to fall.

Music by Joseph Kosma; English Lyrics by Johnny Mercer.
FYI: Check out Eva Cassidy's moving version on YouTube.

Warmest good wishes,

Jay Banks & Brenda Kinnear


Vancouver Market in August 2016: Buyers Are Hoping for a Big Price Drop

Everyone held their breath to see what impact the 15% Foreign Buyer/Non-resident tax would have on property sales and more importantly on prices. So far the answer is not much change. The sales numbers were declining in the past three months and continued to do so in August. The increase in sale prices since August 2015 for detached homes in North Vancouver is 42.2%; Richmond  43.6%; Vancouver East 35%; Vancouver Westside 34.2%; West Vancouver 38.1%. This level of annual increase is unsustainable and many speculators/foreign investors have taken their profits and are looking elsewhere for a place to park their funds. The highest end of the market and new homes are particularly affected as they were largely purchased by off-shore non-resident investors who fall under the Foreign Buyer tax.

Vancouver market  August

The sales numbers were down by 26% compared to August 2015.This reflected a lack of inventory of well-priced homes. There are rumours that the cash flow from Mainland China is heading to the Toronto real estate market where the composite benchmark price for all classes of real estate is $710,410 compared with $933,100 in Metro Vancouver. So far Ontario has not imposed a second level of Property Transfer Tax that impacts foreign buyers. However,Toronto itself has a double Property Transfer Tax, just not as onerous as the one in Vancouver.

There is lots of action at the resale townhouse/condo level. Most are local buyers. Still, the sales are down due to a natural human tendency to want to buy when everyone else is buying. There is still lots of wishful thinking on the affordability issue by the public and the provincial government. Buyers are hoping for a big price drop and don’t want to make a decision in case that happens.

Much of the larger condo market focuses on pre-sales of units before the developer starts building. These sales are not yet completed so are not reported in MLS statistics. According to the Vancouver Sun projects are selling out from the plans and there are no new finished units hitting the market. These projects are sold out even before the general public can line up for them, especially the smaller units. Developers and their marketing companies appear to favour investors who don’t require too much handholding or trouble qualifying for a mortgage and who may sell their contract before completion thus paying the developer another level of profit. Banks require projects to be substantially sold out before advancing construction loans. According to the Fifth Avenue Marketing report at the end of the second quarter there were only 42 presale units listed for sale in downtown Vancouver and all were over a million dollars. The projection of pre-sales for 2016 is in the range of 18,000 units throughout Metro Vancouver. Pre-sale condo sales stats are not collected by CMHC or the MLS system.

2016 august jb1Real Estate Market Report - August 2016

As the sales are all in the future the Foreign Buyer Tax has not applied to them yet. The Property Transfer Tax is paid by the purchaser when the title to the unit changes hands from the developer to the buyer. There are no stats yet on how the Foreign Buyer Tax has impacted this segment of the market. There is speculation that many investor buyers will find a way to get around the tax by selling the contract before completion.

The Toronto condo building boom is attracting investors from all over the world, particularly Mainland China and as it is so much larger than the Vancouver market there is lots of room for investment at a lower price point.  In Vancouver at the high end of the pre-sale downtown condo market the price per square foot is $1,500-$1,700 and they are selling out.

There are other influences in BC which may impact the desirability of the Vancouver market for Mainland Chinese immigrants/investors. The Vancouver Sun highlighted this issue. The BC Supreme Court has allowed the government of China to pursue Chinese citizens who fled China with fraudulently obtained funds. In 2015 the BC Supreme Court awarded $670 million to the Bank of China from a couple who live in West Vancouver and who laundered stolen funds through real estate purchases and Canadian bank accounts. The Chinese government is seeking the ability to have BC judges enforce monetary judgements awarded by Chinese courts. They are looking closely at BC and the US as favoured destinations for Chinese fugitives.  

The Globe and Mail over the past few months has contributed to the awareness of criminal behavior in the real estate market in Vancouver. An article on a serial investor who declared each property as a principal residence of his Chinese client who was then exempted from capital gains tax by CRA who never investigated any of the claims despite having documentation delivered to them. The system of speculators make their fortune from wealthy investors in China who pay the costs and whose name is on a mortgage from a Canadian bank while the speculator with power of attorney manages the investments, sells at the right time and pays a set percentage to the Chinese investor and pockets the profits. In the meantime these wealthy Chinese speculators live in multi-million dollar homes and declare incomes of $45,000 a year to the Canadian government. Thanks to the publicity from the G&M articles the BC Finance Minister is pressing the Canadian Finance Minister to look into all the fraudulent real estate practices that go unreported. CRA found $14 million in audits of 339 foreign owners last year when they should be finding hundreds of millions in unpaid, unreported taxes.


The Harper government is largely to blame as the real estate market boomed and they closed down audit departments, relocated experienced people to other departments and then hired inexperienced auditors who knew nothing of taxation of foreign residents. CRA does not require any statement of principal residence and don’t know and don’t care if it is a fraudulent claim. It may be that the Christy Clark government getting their election ducks in a row will be able to deal with some of this fraud and criminal behavior. It is generally accepted that all levels of government have been frightened of being thought racist and politically incorrect as the larger number of fraudulent transactions are orchestrated by and invested in by some crooked Mainland Chinese immigrants and investors. The main culprit is the Government of Canada, both Liberal and Conservative who were so foolish and naïve with the Immigrant Investor Program. No wonder the 60,000 people left on the waiting list when Jason Kenney closed it down sued Canada to be allowed in. 

Many local and foreign buyers are choosing to live or invest in other places in BC. Victoria and Kelowna are doing well. In Vancouver the public closely focuses on real estate. It is the main topic of conversation everywhere. It is narrow in its viewpoint. In fact the globalization of the world and the money that flows to the easiest and most lucrative place is impacting every country. Auckland NZ is the new recipient of the Vancouver treatment. Homes in Auckland are selling for over a million NZ dollars to investors, mainly from China. The government has responded by requiring a 40% cash down payment on any purchase by a non-citizen. Everyone is trying something. In Canada we could start by enforcing the rules we do have.

There will be more info coming out about the effect of the Foreign Buyer Tax over the next few months. It will impact the market but there is a balancing point where the government does not want to destroy the equity of its most reliable voters in a losing battle to make Vancouver affordable again.


Jay and Brenda’s Newsletter: September Song

 I don't look to jump over 7-foot bars. I look for 1-foot bars that I can step over.

— Warren Buffet

Jay & Brenda News

There is now more news about the Foreign Buyer Tax. It's mainly historical. Looking in the rear view mirror. It will take a few more months to have a reliable trend line appear.

So far the effect has been what was projected. The high end of the market has slowed. Sales were slowing anyway even though prices were not dropping. The publicity from the Globe and Mail exposure of corruption in the Vancouver real estate market prompted Premier Christy Clark to look at poll numbers for the upcoming provincial election and throw foreign buyers under the bus. Info that was disclosed about money laundering and non-enforcement of tax laws by CRA was also brought to the public's attention. All of this morphed into a perfect storm fuelled by public resentment of what had been allowed to happen to our beautiful city.

The 15% Foreign Buyer Tax added to the existing Property Transfer Tax has been a successful tactic for the premier as she is now seen as acting proactively on the housing portfolio to protect local buyers with more affordable housing. Unfortunately we are still dealing with demand problems and not solving the intractable supply deficiencies.

MaryMary in her retirement role as bike courier delivering signs to Julie's new listing

It's clear that the market was inflated by investors looking to clean large amounts of cash through our laxly regulated, uninspected real estate market. We invited them in until 2014 through the federal Immigrant Investor program and now through the Quebec Immigrant Investor Program. Canadian citizenship is for sale with an $800,000 interest-free loan to the Quebec government, a $1.6 million net worth and a stated intent to reside in Quebec. The Quebec government will be approving 1,900 applications between May 31 2016 and February 28 2017. Experts figure the cost of buying your way into Canada costs the new immigrant about $125,000. Once admitted and approved immigrants have the right to move anywhere in Canada and quickly disperse to BC or Ontario.

Information about the numbers of students and homemakers with no declarable income who own multi-million dollar homes is now coming under suspicion. According to the Globe and Mail the purchaser at $31.1 million of founder of Canaccord Genuity's home is registered as a student. These investigations are no longer viewed as racist, it's gaming the system by whoever does it. The banks lending practices that favour foreign buyers over local ones are under review. The Sun reports that a loophole in the effort to stop money laundering was created by Canadian lawyers, triggered by BC lawyers. They appealed to the Supreme Court to be exempted from the financial reporting rules required in the banking and real estate sectors through a Charter challenge based on the right to privacy. The Financial Action Task Force, an intergovernmental agency has stated that Canada has a high risk of money laundering activities due to lax enforcement, loopholes as above, and a low level of oversight over sources of funds.

Inspection, enforcement, currency seizures at YVR are having an impact on the amount of money available for investment. River Rock Casino was a favourite place to launder large amounts of cash. According to the Richmond News BC Lottery Corporation rule changes require that the source of the funds used by high rollers to buy gambling chips be verified and as a result the casino revenue has fallen off by 14% in the second quarter of 2016 and the payment to the City of Richmond for social programs and housing has diminished for the first time since 2005. The law of unintended consequences strikes again.

Jay and I have said from the beginning that the new rules should have been introduced 7 years ago before the prices rose so high that local buyers were shut out of the market. At that time any fallout from foreign buyer restrictions would not have impacted as much as they have today. It also would not have allowed the BC government to announce a 2016 $2.2 billion surplus from the Property Transfer Tax collected on every piece of high-priced real estate.

Constantin blowing out dads birthday candlesConstantin blowing out dad's birthday candles

The Financial Post reports that the figures recently released by the provincial Finance Ministry show that in the rush to close deals before August 2 when the Foreign Buyer Tax kicked in $800 million of real estate transactions were registered at the Land Title office on July 29. There were 1,974 property deals with foreign buyers worth $2.1 billion registered between June 10 and July 29. On July 29 55% of all the properties registered involved foreign nationals. There were only 60 transactions with foreign nationals registered between Aug 1-31. Richmond and Burnaby have been particularly affected by the drop in foreign buyers. In Richmond June 10- Aug 1 they were 27% of the buyers and between Aug 2-31 dropped to 1.3% and in Burnaby from 24.2% to 0.5%.

The sky is not falling. Properties are selling and people are looking for homes. It's too soon to say if prices have dropped at the high end temporarily or if the Westside homeowners hoping to finance their retirements just lost a big chunk of net worth. Part of the chilling effect is the 15% addition to the existing Property Transfer Tax but a larger part of it according to one prominent immigration lawyer is the uncertainty of when the next shoe will drop. There is a strong interest in Seattle, San Francisco, Portland, LA from Chinese investors. Right now the Canadian government is considering an extradition treaty with China whereby Chinese agents can come to Canada to identify those they say are criminals who stole funds from the People's Republic banks and other institutions. The Fox Hunt is already active here. There is an outcry against a treaty from most Canadians who have no trust in the Chinese system of courts and justice and capital punishment. The US has refused to consider an extradition treaty and ordered the Chinese government to stop sending bounty hunters disguised as tourists or workers to threaten Chinese immigrants and their families.

West Vancouver has taken proactive steps to encourage developers to sell first to the local market and to buyers who plan to live in the community. Westbank Properties is in partnership with the Sewell family who owns the land to build a luxury condo project in Horseshoe Bay. They ran into trouble when they asked for expressions of interest in Hong Kong and China at $1200 per square foot and then introduced it to local buyers who were outraged at the unaffordability numbers Westbank was projecting. The West Van council insisted on the project being offered to the community first, the Sewell family wanted that too so the application was withdrawn and reworked. The new price is plus or minus $875 per square foot. The earlier numbers were a trial balloon as the Disclosure Statement had not been submitted under the Real Estate Development Marketing Act. For 30 days units will be offered to West Van residents, next 60 days to Lower Mainland residents. No investors, no flipping, no empty homes allowed. West Van council has indicated to other developers that this is the policy they will be looking for on applications.

1 View of Baie Saint PaulView of Baie-Saint-Paul, Charlevoix

Vancouver is setting up its vacant home taxation program. It will rely on random checks and self-disclosure, probably helped along by neighbour's noticing and reporting that a home is unoccupied. The city will be working on the principal residence concept so that if you live there or your family or tenants live there then you are exempt from the tax. Who exactly will be exempt is not yet entirely clear. The tax according to the Vancouver Sun will likely be in the range of 0.5% to 2% of the assessed value of the property annually. An interesting experiment. Great if it works. As we said in an earlier article the project will be creating a new job classification of professional house sitter.

We have found that it is harder for builders to arrange financing for new homes. Banks are leery of the effect of the foreign buyer tax on expensive properties that require the two levels of Property Transfer Tax plus GST to be paid by the Buyer. In a rising market the investor buyer paid the original PTT plus GST and left the home vacant to appreciate in value. A little risky these days for reasons stated above.

The real estate market of 2015-2016 is an outlier. A 35% increase in sale prices is not sustainable or a reasonable outcome over one year. A more comparable period to the second half of 2016 is 2012.

We checked out some summer sales numbers and compared them to 2012:

We checked out some summer sales numbers and compared them to 2012:

Number of sales of detached homes:
2016 Aug 1-15 Aug 16-31 Sept 1-15
Richmond 16 homes 42 homes 30 homes
Vancouver West 18 homes 34 homes 23 homes
Vancouver East 28 homes 35 homes 18 homes
North Vancouver 32 homes 30 homes 16 homes
West Vancouver 12 homes 8 homes 6 homes
Burnaby 15 homes 17 homes 25 homes
South Delta (Ladner/Tsawwassen) 12 homes 10 homes 9 homes
South Surrey/White Rock 33 homes 27 homes 13 homes
Squamish* 10 homes 5 homes 8 homes

*Squamish is outside the Foreign Investor Tax zone and has been a hotbed of Lower Mainland buyers choosing to move there for family and lifestyle reasons. The number of detached homes sold appears to have been impacted by the difficulty of downsizing Metro Vancouver buyers to sell their homes

2012 Aug 1-15 Aug 16-31 Sept 1-15
Richmond 31 homes 36 homes 28 homes
Vancouver West 40 homes 38 homes 47 homes
Vancouver East 35 homes 38 homes 32 homes
North Vancouver 28 homes 17 homes 27 homes
West Vancouver 14 homes 17 homes 16 homes
Burnaby 20 homes 16 homes 21 homes
South Delta (Ladner/Tsawwassen) 17 homes 15 homes 17 homes
South Surrey/White Rock 47 homes 39 homes 41 homes

The mid-priced market of townhomes is busy with local buyers. Buyers are looking for liveability and attractive spaces at an affordable price that is usually found further out from Vancouver. Buyers are a bit skittish about prices, they want to feel they got good value. There is a concern about a larger correction in the market so they don't want to pay too much but they know that mortgage rates are still really low so should take advantage of them while they have the opportunity.

For outside buyers using US dollars or the Chinese Renminbi Vancouver real estate is still a bargain. However, the Chinese overseas investors may be spending their money at home. The stock market and real estate markets in China have recovered and the government is taking a close look at overseas investments. They are encouraging investments in commercial properties but not residential real estate. In Vancouver commercial sales activity jumped 34% in just one quarter. More anon.

Family News

More of Julie and Brenda's Great Adventure in Quebec:

We left the Anglo/French/mercantile culture of the Eastern Townships and drove across Quebec deeper and deeper into working class and artists towns of old Quebec society. We drove through Thetford Mines, the location of the last asbestos mine in Quebec which closed after a landslide in 2011. Julie and I were amazed at the huge mounds of earth dotting the landscape. They looked like short mountains in a lunar landscape. They were what was dug out of the mines over 130 years of operation. Compared with the lovely areas along the St Lawrence River this part of Quebec was similar to West Virginia and the coal mining areas of Appalachia and very poor. We stopped for gas and lunch and hit a diner where no one spoke English. The young woman working the grill and the till spoke French, all the customers spoke French until the mother of the young woman spoke up in a few words of English. She was obviously of the generation who was forced to learn English at school. We enjoyed great clubhouse sandwiches.

5 Julie overlookingJulie overlooking le Massif Charlevois et le fleuve Saint-Laurent

We headed east to the Charlevoix region which is an artist's paradise. Many famous landscape painters were inspired by the scenery and Massif. Mont Ste Anne ski hill is nearby in the Laurentian mountain range. The St Lawrence widens here due to a meteor strike millions of years ago so there is lots of shoreline and islands.

3 Early morning viewEarly morning view of l'Isle-aux-Coudres and le fleuve Saint-Laurent from our room

We arrived at our destination of Baie-Saint-Paul a lovely historical town established in 1678 on the St Lawrence. It's famous for art galleries, architecture and as the original home of Cirque du Soleil. We stayed in a simple inn, Auberge Cap-aux-Corbeaux, overlooking the St Lawrence a few minutes from town. The front garden below the deck featured two woolly ewes wandering around. Very cute. Julie wondered where they lived in winter. The host who spoke English said "in packages in our freezer". A basic fact of life that shocked Julie. Walt Disney's anthropomorphism lives on in the next generation.

4 Auberge ewesAuberge ewes resting in their shelter from the sun

We wore ourselves out travelling from gallery to gallery, the art and the town was wonderful and full of life. Julie bought a landscape and I bought my favourite painting of the Ursuline Sisters of Quebec City. Again some of the staff at galleries and bistros spoke English but it really was French Immersion for Julie and me. It was Saint-Jean-Baptiste Day holiday weekend and most tourists were French. We were oddities as English speakers from Ontario and we didn't see many Americans.

Resume the trip:

We departed Baie-Saint-Paul to travel to Quebec City spending the day at Ile d'Orleans, a designated historical district, along the way. Often referred to as the cradle of French civilization in North America it is an enchanting isle about 5 km from Quebec City in the middle of the St Lawrence River. It preserves the French rural heritage with small farms and dairies and maple bushes. It's famous for cheese and maple syrup. It's protected from development so there are artisan food businesses hosted by those running the old farms. Agritourism is a major source of income. The island dates from early settlement days and the woman who toured us through her sugar bush and her maple sugar shack (with a trout fishing attraction out front of the house along the road) told us that her 92 year old father lived in the stone house that their ancestor built when he arrived from France in 1632. Her father rents his fields to a neighbour but still works in his sugar bush. She herself was born in the original house. Nine generations there. She made great maple syrup which I brought home for Jay. She told us that the colour depends on the climate. The colder the maple trees the lighter the syrup. Vermont syrup which is the big competitor is darker than the Quebec syrup.

6 Elegant PicnicElegant Picnic with river view from Domaine Steinbach, I'le d'Orleans

We enjoyed a picnic that we purchased from Domaine Steinbach which includes a lovely little farmer's tasting shop that provided seating overlooking the St Lawrence River. The food was great, especially the duck terrine and onion jam. All farms in those days were narrow and long so that the river frontage could be defended.

7 Windy day at beachWindy day at beach, I'le d'Orleans

More of Julie and Brenda's Great Quebec Adventure to come next month.

Jay is home and we are back to serious business. It's an advantage to have worked through the ups and downs of the real estate market over many years. We have lots of experience in helping our clients survive and thrive through the changes.

We are busy but Jay enjoys the Blue Jays ball games and the occasional round of golf on his downtime. Effi and he love their walks together.

I am looking forward to a trip to Toronto to celebrate Julie's November birthday.

It's our Fall family birthday season so we are privileged to celebrate with dear ones. We give thanks for our many blessings.

Quebec 2016 J M 8775Sugar bush and Sugar Shack with 9th generation Quebecois owner, I'le d'Orleans

Alec and Lucia are busy with business and renovations at home and on their investment property in Kittsee down the street from their house. It's where Julie and Kathryn and I stayed while visiting them last year. Constantin and Thor keep them on their toes. Alec's company, Foliovision, celebrated Alec's recent birthday with a company bike ride and river beach picnic, swim in the Danube, Frisbee and fun. Lucia, Constantin and Thor joined the party on the beach. Thor ran into the river with the Frisbee. The bike ride through Bratislava was a huge surprise. The EU Summit was taking place at the Bratislava Castle and all the streets around had been cleared of traffic. No one had ever bicycled through the city and along the River Promenade so safely.

Constantin with Alec in Danube river Alec birthdayConstantin with Alec in Danube river, celebrating Alec's birthday

Kath and Stef are active as usual. Looking forward to seeing the Fall colours up at Crooked Creek where they are fabulous in October.

Julie and Mary are occupied with a full social life and Julie's demanding real estate practice. Mary is the go-fer for the team. She delivers on her bicycle that she claims is powered by Sauvignon Blanc! The JKT is extremely busy. There is no Foreign Buyer Tax in Toronto but there are demands for it as the market is almost as overheated as this one was. The Ontario government says it's waiting and watching the BC experience.

Constantin bookworm already in KittseeConstantin reading as a bookworm in Kittsee

FYI: We find that working with clients at every stage of life: buying first condo homes, moving up to family size townhomes or detached, then downsizing from the large family home to a condo again keeps us busy. We hope that Life is good for you too.


Vancouver Market Affected by BC Foreign Buyer Tax in July 2016

Before the Foreign Buyer Tax smash-up the market was humming along to another high in July. There was angst about the numbers of sales falling but the prices were still rising. Lower sales numbers reflected fewer listings. July’s sales were 6.5% above the 10-year sales average for the month. Benchmark for a detached home through all Metro Vancouver was $1,578,300, an increase of 38% from July 2015. The sales-to-active listings ratio for July is 38.6%, prices don’t start dropping until that ratio is below 12%. Not too likely.

False Creek by Colin KnowlesFalse Creek by Colin Knowles

The Finance Minister held a conference in mid-July where he told everyone that his department was studying the stats in the report they had commissioned on who was buying BC real estate and escalating the prices into the stratosphere. Said report to be ready by the end of the year with action to follow. Also in July Madame Machiavelli (aka Premier Christy Clark) sniffed the populist wind and realized that she didn’t have any more time to set the stage for the May 9, 2017 election. The populace was calling for action, any action to lower house prices. She realized she had to take draconian measures whose results would settle down before the election.

Against all her previous pronouncements on the subject on July 25th she announced an additional 15% property purchase tax on every sale closing after August 2nd that was made by a party, personal or corporate, who was not a Permanent Resident or a Canadian citizen or corporately owned in Canada. This applied to contracts of pre-sold condos, of previously firm house sales. No exceptions and great hardship. The fortunate parties who were about to close sales were the ones who could persuade their foreign buyer to act early. Over two days at the end of July there were over 15,000 transactions registered with Land Titles. With 9,000 registrations on July 29 the system crashed three times.

There was a grave misunderstanding of the real estate process in the implementation of the tax---beware of unintended consequences among important voting constituents. The Finance Minister and his trusted bureaucratic minions designed the tax in total secrecy. No one contacted anyone knowledgeable about real estate transactions, not even their appointed lawyers who recently investigated the real estate industry or their head of Liberal fundraising who is a top realtor.

The picture will be clearer at the end of August or even later when new stats are published but it seems that many foreign buyers are walking away from their contracts. If their deposit is $100k and the additional property purchase tax is $300,000 it is easier not to close than to find the extra funds on short notice. There are sellers who sold in good faith who can’t close on their new purchase. They will be sued by that seller who can’t close on their purchase. Ad infinitum. Other sad stories include foreign citizens who accepted job offers here, registered their kids in school, bought a condo or townhouse and now have to pay up to $100,000 in additional tax on closing. Employers are already bewailing how hard it is to recruit employees to Vancouver despite its beauty and quality of life.

july jay banks

Now buyers both local and foreign are worried about a reduction in prices because homes didn’t close and may be more difficult to resell for the same amount as before. We can hope it turns out like the Brexit housing price drop in London. According to the Guardian the upper end of the property market there has now recovered and is higher than ever despite their expensive Value Added Tax on property purchases.

The problem as pointed out by Moody’s and other international real estate analysts is that the tax was targeted to demand when the real problem in Metro Vancouver is the lack of supply. Economist Adam Goldin of Moody’s Analytics as quoted by Garry Marr of the Financial Post states "...The single-family housing stock has been relatively unchanged since 1991, although multi-family stock has more than doubled over the same period. To make housing affordable the average price of a single-family detached home would need to be cut in half to $700,000...Because the new tax did not grandfather in deals that were already under contract, anecdotal evidence of foreign buyers cancelling their transactions is pouring in, leaving sellers alone at the altar...It may take several months to see how this plays out, but the law’s designers likely did not mean to cause such havoc".

There is pushback from high-profile realtors and the development industry who say that this is Canada and a free market economy, other legal gadflies state the Foreign Buyer Tax may be in breach of American rights under NAFTA. The Chinese consul general Liu Fei is also questioning the amount of the tax and how it was imposed. She is getting calls from Chinese buyers living here who bought a property and cannot pay the extra tax. Liu Fei is in favour of the government dealing with the supply side of the real estate equation. She is quoted in the Vancouver Sun as stating "This is a big country with a small population. It needs immigration to grow the economy". She advocates an approach to housing that would include transit infrastructure and taller buildings and growth that was informed by statistics and data. "Without a plan, everything is a disaster," Liu said. "We can send people to the moon --- housing is just a small problem". Of course it’s a big problem in Vancouver where 65% of the city is zoned single-family and there are huge outcries against higher buildings blocking views and sunshine. Add in the Liberal political calculus that they didn’t want to pay for transit since most voters drive cars and forced the Metro Vancouver Translink board into setting up a no win referendum. MM may find her chickens come home to roost on May 9, 2017 even if BC has the best economy in Canada. Best for who? may be the public response.

There is a world wide rising tide against globalization and in favour of nationalism. This makes ideas like the Foreign Buyer Tax seem reasonable. In fact there is general approval, especially by young people and renters but as always "the Devil is in the details..."