Vancouver Homes https://jaybanks.ca With Jay Banks Fri, 20 Apr 2018 23:31:06 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.5 Vancouver Real Estate: Sales Dropped and Prices Are Still Rising in March 2018 https://jaybanks.ca/vancouverrealestatenews/2018/04/20/market-report-march/ https://jaybanks.ca/vancouverrealestatenews/2018/04/20/market-report-march/#respond Fri, 20 Apr 2018 21:28:14 +0000 https://jaybanks.ca/?p=110677 Brenda Kinnear

"For they have sown the wind and they shall reap the whirlwind..."
― Hosea 8:7 Old Testament KJV.

It appears that the well-being of residents of BC has been compromised by an economy built around organized crime and money laundering through casinos and real estate. Provincial finances and credit ratings have been buoyed up by the annual billion dollar property transfer tax revenue.

A Vancouver Sun article from 2016 explains the windfall and how the Liberal government looked the other way when confronted about the source and out of control rising home prices.

The property transfer tax revenue has been budgeted by the NDP finance ministry to be greatly diminished going forward which will impact the current economy and spending. The government is projecting higher revenue from the increased foreign buyer taxes but that may be wishful thinking as home sales have fallen. Revenues will be impacted by the government review and enforcement of casino rules for high rollers mainly from China. There won’t be laundered funds available to invest in high end real estate. Taxes paid to the government by the casinos will be much reduced. These changes will impact the real estate sector including construction, sales, leasing, services, retail which was 18.36% of the provincial GDP in 2016.

As the gaming investigation winds down the Attorney General is ordering a similar investigation into the real estate industry. Sam Cooper formerly of the Vancouver Sun is now an investigative journalist for Global News and has produced a damning report of the BC government, the federal government, FINTRAC and the Supreme Court ruling that gives the legal profession a free pass on money laundering clients. In 1994 the federal government allowed Chinese Triads to establish themselves in Canada. They are the source of the Fentanyl/opioid tragedy wracking Vancouver. According to Australian intelligence services the ‘Vancouver Model’ is notorious for allowing organized crime to entwine itself through the economy and society.

Vancouver by Josiah Coates

The real estate market is moving at a much lower energy level than in 2017. Buyers have been severely disadvantaged by the new mortgage stress test. Even though the number of sales have dropped the prices are still rising. On a good day the Lower Mainland is unaffordable. Many buyers don’t qualify to buy at today’s home prices with a 2 point higher mortgage rate requirement even though the actual mortgage rate will be lower.

There is pent-up demand in the downtown core for condos. They usually sell over asking but there is little inventory available. This is the most affordable popular product for local buyers. The Vancouver School Board was blindsided in its projections of how many schools they would need downtown. Many parents are distressed that their children cannot be enrolled in their local school because there is no space available. The former chair of the VSB has an interesting analysis of school problems in Vancouver that impact real estate sales.

Townhomes are a rarer commodity in the Lower Mainland partly because Vancouver has a prohibition against homes that would be called semi-detached or row housing in Toronto. If the city was zoned for freehold property ownership with common walls density could be substantially increased and prices would be lower than detached prices. There is such pressure to find more housing options that the City of Vancouver is considering changing their longtime rules. They have devised a housing strategy that they are starting to implement in 2018.

Vancouver ideas for row housing include many models.

There is political movement advocating pre-zoning the Cambie corridor for multi-family housing ahead of their current timeline. The problem has always been the rise in prices to include windfall profits. Sort of negates the idea of affordable housing.

The stats are a bit misleading because the sales of detached properties in April are much lower than in March. In the high end detached market in Vancouver Westside, Richmond and West Vancouver it is the lack of Chinese buyers that is making a difference, combined with high prices and new government taxes.

"Even with lower demand, upward pressure on prices will continue as long as the supply of homes for sale remains low. Last month was the quietest March for new home listings since 2009 and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms" as stated by Phil Moore President Real Estate Board of Greater Vancouver.

More anon.

DT00KS

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Spring Has Sprung in Kits Point https://jaybanks.ca/photos/vancouver-bc/kitsilano/spring-has-sprung/ https://jaybanks.ca/photos/vancouver-bc/kitsilano/spring-has-sprung/#respond Wed, 11 Apr 2018 22:06:27 +0000 https://jaybanks.ca/?post_type=fv_photo&p=110738 Vancouver photographer roaming-the-planet captured the long-awaited signs of spring in the City. Thank you for submitting this colourful photo!

DT00KS

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Digital Orca https://jaybanks.ca/photos/vancouver-bc/digital-orca/ https://jaybanks.ca/photos/vancouver-bc/digital-orca/#respond Wed, 04 Apr 2018 00:07:40 +0000 https://jaybanks.ca/?post_type=fv_photo&p=110731 Digital Orca, an art masterpiece by Douglas Coupland is placed in the middle of Vancouver square since 2009. Just like it is leaping right out of a video game, combining digital and one of the symbols of the City, this sculpture is as eye-catching with the mountain backdrop as with the city lights. 

DT00KS

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The reasons behind falling sales numbers in Vancouver https://jaybanks.ca/newsletter/2018/03/28/reasons-behind-falling/ https://jaybanks.ca/newsletter/2018/03/28/reasons-behind-falling/#respond Wed, 28 Mar 2018 22:49:13 +0000 https://jaybanks.ca/?p=110721 There is turmoil in the air around us and is playing out in politics, trade agreements, carbon tax, pipeline protests, mortgage stress tests and real estate sales. At this time prices have risen not declined but affordability is still the unresolved conundrum of these times. Numbers of sales in each area have declined substantially in March although they were off the previous year’s sales numbers in January and February as well.

We are noticing that neighbourhoods with empty houses where offshore buyers purchased second homes or investment properties have been noticeably affected by falling sales numbers.

There are two explanations put forward, one being the mortgage stress test. This particularly applies to entry level buyers with low down payments but also hits move up buyers who have to reduce the house price they qualify for under the raised rate. Buyers now have to qualify for a mortgage two points higher than the actual mortgage rate that they will receive. This was instituted by CMHC in response to a worry by the Bank of Canada that too many people would not be able to pay their mortgages if interest rates rose. It has also been affected by the banks being forced in 2016 to be more responsible for their loans. In the past insured mortgages were on houses not borrowers and they were equal to gold plated government bonds. The Government of Canada was the guarantor of the mortgages and was liable for $484 billion in debt in the third quarter of 2017. Stats aren’t in yet as to the effect of the stress test on numbers of mortgages related to the Government of Canada guaranteed debt.

The second explanation for falling sales numbers concerns newly enforced rules in 2017 by the Chinese government on money being taken out of the country and spent overseas. As it stands each citizen is allowed to take US$50,000 out of the country every year. Chinese companies investing overseas and wealthy citizens removing funds to buy houses in Canada and the US and Australia and Hong Kong were depleting the Foreign Reserves of the country.

Chinese citizens were allowed to convert their funds to US$ online and transfer to an overseas bank account. No longer. Money has to be withdrawn at the Bank and a waiver signed that the money won’t be used to purchase real estate or securities overseas.

There are lots of creative ways to get around these rules and large corporations with funds overseas do so but for middle class millionaires who live in China there is fear that the enforcement will hit them at home. There was expectation that this restriction would impact sales in Vancouver and Toronto in 2017 which actually turned into an outlier year for price increases and sales. However, 2018 appears to be feeling the effects.

Restrictions and adjustments don’t impact greed however. Vancouverites weren’t as shocked as the rest of Canada who saw the news article of the 1922 original house with RM-5 zoning on a 33’x131’ lot in the West End being marketed at $6.98 million as a land assembly with a maximum building size of 6,484 s.f. According to the Vancouver Sun the land is assessed at $3.3 million, the house at $117,000.

Some holdout sellers got their comeuppance from the BC Supreme Court when they tried to delay the sale of a condo building being slated for redevelopment by the majority owners. Owners at Barclay Terrace built in 1992 had gradually been bought out by holding companies owned by Westbank and Bosa. BC strata property bylaws state that when 80% of the owners agree to wind up the strata corporation and sell it then it can be done. Two remaining owners tried to hold out for more money, one for $10 million. When the final sale price of the project was confirmed these sellers did not get from the judge’s decision what they thought they were owed.

It turns out that the original purchasers of individual units and the adjoining townhomes in Barclay Terrace, prominent local developers Bosa and Westbank, fell out over a plan for redevelopment of 1075 Barclay Street. They did agree to sell the property to a major development company out of Hong Kong for $105 million. The Globe and Mail analyzed the transaction and the enormous profit gained by Westbank and Bosa.

Land claim settlements are impacting communities in unexpected ways. UBC has settled with the Musqueam First Nation and will see the population of the endowment lands double. In Area D bounded by University Blvd, Acadia, Agronomy, and Toronto Roads plus Wesbrook Mall there will be 1.2 million s.f. of residential and 30,000 s.f. of commercial construction over the next ten years. The provincial government which administers the university endowment lands or UEL is studying ways to mitigate the impact of such a massive development on the rest of the UEL.

Good news is that Richmond may be coming to the party about mansions on the ALR. There’s nothing like outraged voters to change the Council’s mindset.

The maximum house size of 5,382 s.f. allowed by the provincial government has been modified in Richmond to allow 10,763 s.f. mansions. That was a reduction last Fall from the 12,000+ s.f. homes allowed plus outlying buildings and amenities. Richmond is inundated with applications to build $5 million mansions with amenities on the best farmland in Canada. Mansion owners can pay to have a few acres of blueberries grown on the land and then pay agricultural land taxes instead of residential property tax. There is vocal opposition to change from those hoping to receive windfall profits from their farmland.

We are still waiting for clarity on some of the real estate provisions in the February Budget. More next month. Check out the Stats Report for budget discussion: Vancouver Market in February: Low Inventory in Every Category.

DT00KS

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Steveston https://jaybanks.ca/photos/richmond-bc/steveston/steveston-2/ https://jaybanks.ca/photos/richmond-bc/steveston/steveston-2/#respond Wed, 28 Mar 2018 00:00:27 +0000 https://jaybanks.ca/?post_type=fv_photo&p=110689 The smell of saltwater and a peaceful scenery on a cloudy day - Jerry Meaden captured this landscape in Steveston. Thank you for submitting!

DT00KS

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Katie and Bev Willows https://jaybanks.ca/about/testimonials/all-clients/katie-and-bev-willows/ Mon, 26 Mar 2018 22:18:45 +0000 https://jaybanks.ca/?post_type=testimonial&p=110696 Vancouver Market in February: Low Inventory in Every Category https://jaybanks.ca/vancouverrealestatenews/2018/03/24/february-market-report/ https://jaybanks.ca/vancouverrealestatenews/2018/03/24/february-market-report/#respond Sat, 24 Mar 2018 22:24:26 +0000 https://jaybanks.ca/?p=110657 Brenda Kinnear

There is a reason that certain sayings become famous: they are applicable to every high-minded solution to an intractable problem. In BC the problems are housing affordability and money laundering through casinos and real estate. The results of identifying the issues and trying to solve them fall into "Be careful what you wish for, it just might come true" or the Law of Unintended Consequences. Both these bits of philosophy apply in BC since the NDP government started tinkering with the system with the help of the Federal government taking a sledgehammer to the mortgage qualification process.

The February 20 Provincial Budget started the markets roiling. The Foreign Buyer Tax of 15% introduced by the Liberal government in July 2016 has been raised to 20% and applied to a much wider area in order that offshore investment doesn’t move from place to place and destabilize communities other than Vancouver. On homes over $3 million the property transfer tax paid by all buyers rises to five percent from three percent. Urban demographer Andy Yan states in the Vancouver Sun that Metro areas will feel the tax rise most and that it is designed to tax wealth coming into the province to buy real estate.

The Law of Unintended Consequences is showing up in the dramatic drop of detached home sales in February all through Metro Vancouver. In Richmond 52 detached homes sold in February 2018 compared with 92 homes sold in February 2017. In Vancouver Westside 53 homes sold in February 2018 compared with 93 sold in February 2017. These are areas with a large number of foreign buyers. Local sellers hoping to cash out for retirement are having to rethink their plans as the downsizing has gotten more expensive and elusive.

False Creek Sunrise by Gord McKenna

Prices for detached homes have risen 10.8% across the Lower Mainland since February 2017 but that figure varies per area. Vancouver Westside rose 2.3%, Richmond which is more affordable rose 8.8%. Vancouver East rose 9.5%, North Vancouver rose 6.7% while Coquitlam rose 14%.

The elephant in the room is the Speculation Tax, something that was devoutly wished for by left-out buyers and suggested by a group of economists trying for a way to make Vancouver real estate affordable to local buyers. Andrew Weaver, leader of the Green Party and partner to the NDP in keeping them in power commented that the ratio of house prices to incomes needs to be 3:1 to be considered affordable...In the city of Vancouver the ratio is at 37:1. There is almost no way to build more affordable housing except by rezoning single family neighbourhoods and restricting what can be built there.

The devil is in the details of the application of the speculation tax and the famous saying that applies here is "it all depends on whose ox is being gored".

Pensioners who are living in $3 million homes that they purchased 50 years ago will be paying .02% tax on the value between $3 million and $4 million and 0.4% tax on assessed value above $4 million. One couple profiled in the Vancouver Sun article purchased their house in Point Grey for $370,000 in 1987 which now has an assessed value of $6.5 million. Their school tax bill will increase by $12,000 next year. Many baby boomers are house rich and cash poor thanks to the meteoric rise in real estate prices fuelled by offshore investment in property.

There is a concern that many buyers who purchased at the end of 2017 to avoid the mortgage stress test coming into effect on January 1 2018 may be under water with the new tax rules.

The lack of affordable housing to buy or rent in Vancouver is creating a flight of younger people and retirees to towns outside the Lower Mainland. The new speculation tax is reaching the popular areas around Victoria, Nanaimo and Kelowna. The Law of Unintended Consequences strikes again. Residents of rural BC who have second homes in Victoria or Vancouver will be subject to the speculation tax if their apartment is not rented out on a long term basis. The finance minister says they are looking at tweaking the legislation but many Gulf Islanders and others are worried that they will have to sell their rural homes.

The purpose of the speculation tax (calculated at $5 per $1,000 of assessed value for 2018, increasing to $20 per $1,000 of assessed value in 2019) was to collect tax revenue from all homeowners that do not reside in BC, pay BC income tax and who don’t rent out their property. This has created a lot of anger from residents of other Canadian provinces who own second homes in BC. Alberta buyers are a big part of the real estate market in the Okanagan and most of them are upset by the new rules. The tax can be extended at the government’s discretion to any part of the province. The municipal governments around Kelowna are fearing a huge drop in real estate sales and prices plus general loss to the economy. Most areas that have been added to the speculation tax list are requesting to be exempted from the tax. Their "ox is being gored".

In the Metro Vancouver real estate market the Condo is King. As the prices have soared over the past year there is less and less room between detached home prices and newer condo prices. This has contributed to low inventory in every category. Detached home owners can’t lower their prices because they can’t afford to move if they do. Townhouses are scarce and larger ones are expensive even out in Maple Ridge and Pitt Meadows. Condos are selling at or over their list price, usually for quite a bit more than their assessed value. Recently in Steveston an unrenovated 1400 sf condo with a wonderful water view, assessed at $970k, in an older building sold for $110,000 over the list price. There are multiple offers on almost every unit in every municipality.

The sales to active listing ratio for February 2018 is 28.2%. By property type, the ratio is 13% for detached homes, 37.6% for townhouses, and 59.7% for condominiums.

In February 2018 the benchmark price for a detached home across the region was $1,602,000. An 8.2% increase from February 2017.
In February 2018 the benchmark price for a detached in North Vancouver was $1,686,800 up 6.7% in one year, up 81.4% in 5 years and up 88.6% in 10 years.
In Richmond the benchmark price was $1,697,900 up 8.8% in one year, up 82.6% in 5 years and up 130.2% in 10 years. In Vancouver East the benchmark price was $1,560,400 up 9.5% in one year, up 92.1% in 5 years and up 137.5% in 10 years. In Vancouver West the benchmark price was $3,500,600 up 2.3% in one year, up 74.8% in 5 years and up 123.6% in 10 years. In West Vancouver the benchmark price was $3,141,900 up 5.9% in one year, up 72.3% in 5 years and up 98.5% in 10 years.

Each year affordability declined for local buyers. First time buyers are particularly hard hit by mortgage stress tests, high prices and lack of inventory.

In February 2018 the benchmark price for an apartment property across the region was $682,800. This was a 27.2% increase from February 2017.
In February 2018 the benchmark price for a condo apartment in North Vancouver was $580,700 up 24.4% in one year, up 67.7% in 5 years and up 65.4% in 10 years. In Richmond the benchmark price was $657,800 up 30.5% in one year, up 89.5% in 5 years and 91.4% in 10 years. In Vancouver East the benchmark price was $565,300 up 26.7% in one year, up 87.4% in 5 years and up 94.1% in 10 years. In Vancouver West the benchmark price was $835,800 up 20.5% in one year, up 81.0% in 5 years and up 79.7% in 10 years. In West Vancouver the benchmark price was $1,237,100 up 26.2% in one year, up 70.7% in 5 years and up 83.7% in 10 years.

According to the Vancouver Sun David Eby, the Attorney General will be in Ottawa to speak before the House of Commons committee on finance which is working on changes to the Proceeds of Crime and Terrorist Financing Act. One of the concerns of the BC government is gang violence engendered by their ability to launder funds through the casinos. BC is looking for enforcement support from Ottawa.

Money laundering is a big component of the offshore investment in real estate in Metro Vancouver, particularly in Richmond and Vancouver Westside. This has fuelled some of the fast rising prices of the past few years and contributed to shadow flipping of expensive properties. Much of the wash and rinse of funds was done through the casinos where the tax revenue flowing into the provincial coffers was so overwhelming that much questionable activity was overlooked for a number of years.

The Vancouver Sun states that a confidential report commissioned by B.C. Lottery Corp. estimates that B.C. casinos could lose up to $88 million in revenue each year if the government bans large cash transactions by VIP gamblers at high-limit betting tables. This could impact government programs outlined in the recent Budget.

More anon.

DT00KS

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Vancouver Lookout https://jaybanks.ca/photos/vancouver-bc/vancouver-lookout-2/ https://jaybanks.ca/photos/vancouver-bc/vancouver-lookout-2/#respond Sat, 17 Mar 2018 16:20:11 +0000 https://jaybanks.ca/?post_type=fv_photo&p=110673 When visiting the Vancouver Lookout, don't look only at the spectacular skyline or the mountains: notice also what's below you - you might be surprised! Photo by Aditya Chinchure.

DT00SK

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A Visitor in Stanley Park https://jaybanks.ca/photos/vancouver-bc/heron-stanley-park/ https://jaybanks.ca/photos/vancouver-bc/heron-stanley-park/#respond Wed, 07 Mar 2018 21:47:30 +0000 https://jaybanks.ca/?post_type=fv_photo&p=110668 The Stanley Park Ecology Society is expecting the return of the Pacific great blue herons and is ready for the the upcoming breeding season. Once they are back, the Vancouver Park Board will share live updates via the popular Heron Cam. Herons call Stanley Park "home" for almost 100 years - but these magnificent birds are currently at risk due to habitat loss and population decline. Photo by James Wheeler.

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Snow Bridge https://jaybanks.ca/photos/vancouver-bc/stanley-park/snow-bridge/ https://jaybanks.ca/photos/vancouver-bc/stanley-park/snow-bridge/#respond Wed, 28 Feb 2018 23:34:02 +0000 https://jaybanks.ca/?post_type=fv_photo&p=110654 Vancouver photographer Sherwood411 documented Vancouver's recent winter wonderland. Quiet corners of Stanley Park like this one are the perfect place to escape the hustle and bustle of the city.

DT00SK

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