The Metro Vancouver Real Estate Thread

[Pinion]

I wonder when the bubble pops if they'll be ok with buyers walking away due to lack of profit. lol

[whatnext]

-Foreign buyers tax up to 20% and expansion to Victoria, Kelowna, Kamloops and Fraser Valley!
-Increase on PPT and school tax on homes worth over $3 million!

[whatnext]

-Speculation tax will target those who buy property but don't pay taxes here, including satellite families!
-Developers will be required to collect and report data on pre-sale buyers and this will be shared with CRA.

[LeftCoaster]

I was hoping for a supply and demand approach to the housing issue, not just demand. I like what they did but dislike what they omitted.

I was hoping to see some more incentive for rental development geared towards local incomes.

Attacking the demand is one important piece however there is still a lot of legitimate demand and we need to be ensuring that is met.

[WarrenC12]

The PTT should have been an easy target to make more progressive. Starting at $3M is pretty weak IMO, should be staggered at many more levels, much like income tax.

And the homeowner grant should be means-tested.

[whatnext]

Originally Posted by LeftCoaster

I was hoping for a supply and demand approach to the housing issue, not just demand. I like what they did but dislike what they omitted.

I was hoping to see some more incentive for rental development geared towards local incomes.

Attacking the demand is one important piece however there is still a lot of legitimate demand and we need to be ensuring that is met.

I was surprised not to see Rental Only zoning as part of the housing package, especially since it had been reported as a done deal. Maybe it will come later.

[rofina]

I would suggest that some of the additional measure may be delayed, if only to allow additional action down the road.

This is a win/win - if these actions have exactly the intended consequence than great.

If additional action is required, they have these measure up their sleeves, and can deploy them as time passes.

No one will be able to complain about lack of action, and we get genuinely good solutions.

[CanSpice]

Originally Posted by whatnext

I was surprised not to see Rental Only zoning as part of the housing package, especially since it had been reported as a done deal. Maybe it will come later.

It was in the Throne Speech, not in the budget, because it doesn't require spending any huge amount of money. Here's some clarification on how the rental-only zoning will work.

[s211]

.

[rofina]

Lets speculate - what effect do the new measures have over next 12 months?

Some of my own thoughts:

- High end SFH is already sitting stagnant, with a multitude of listings over $2million.
- This is likely to continue, and worsen with new rules
- I'm seeing more land come up for sale, and boarded up homes, this suggests to me that
builders are getting anxious and starting to unload future projects before start.
- I see this trickling down the SFH price scale in two ways: reduced competition for entry level SFH from builders, and price reductions at top end forcing more competition at lower end.

What has me puzzled - where does this leave condos? What effect will the presale rules have, if any?

Will be continue to see strong buying at entry level as first time buyers continue to look for listings $500k and under?

Local employment conditions remain strong, real housing demand remains strong.

Very interesting conditions.

Share your thoughts all!

[wrenegade]

A slowdown in high-end SFH building wouldn't be the end of the world, especially if it freed up trades to work on multi-family projects. Construction prices have gone through the roof in the last 12-18 months, upwards of 30-35% in some areas. The implementation of the new step code regulations, especially step 3, is just going to bump things up more.

[rofina]

Originally Posted by wrenegade

A slowdown in high-end SFH building wouldn't be the end of the world, especially if it freed up trades to work on multi-family projects. Construction prices have gone through the roof in the last 12-18 months, upwards of 30-35% in some areas. The implementation of the new step code regulations, especially step 3, is just going to bump things up more.

True.

You expect demand for lower priced units to remain strong on local demand? I would think so, many sectors of our local economy are very strong. Film, tourism, and tech are huge components and all firing red hot.

Pre-sale costs have been astronomical, I'm thinking some developers Downtown have to be number crunching if they are looking at $1400sq/ft breakeven.

[whatnext]

Originally Posted by wrenegade

A slowdown in high-end SFH building wouldn't be the end of the world, especially if it freed up trades to work on multi-family projects. Construction prices have gone through the roof in the last 12-18 months, upwards of 30-35% in some areas. The implementation of the new step code regulations, especially step 3, is just going to bump things up more.

What's driving that? Is there a big increase in projects on the go, or is there a shortage of labour due to high housing costs?

[wrenegade]

The industry pretty overwhelmed by the amount of work. Contractors/trades are definitely in the driver's seat when it comes to costs. Some areas (North Shore comes to mind) some trades flat out won't bid as the traffic is not worth the brain damage for their employees when they can just as easily get a job of comparable size in Burnaby/Vancouver/Tri-cities etc. Obviously scale plays a large part, a 200 unit project isn't going to face the same pressures as smaller townhouse or 4 storey condo project.

We're budgeting a 40% increase in hard costs for a project (of similar size/scape/finish) that has a 2019 start date vs. one we started in 2014 (concrete, on the North Shore)

Originally Posted by rofina

True.

You expect demand for lower priced units to remain strong on local demand? I would think so, many sectors of our local economy are very strong. Film, tourism, and tech are huge components and all firing red hot.

The economy is still doing quite well in Vancouver. People still need places to live, and those that are first time buyers or move-up buyers are mostly in that $500k-$1.25M range, which at this point is 100% attached housing of some type (certainly north of the Fraser, and mostly west of 200th). So ya, I think the condo market will remain pretty strong. It will be interesting to see how the "speculators tax" affects things on the lower end of the market. Most investors we've seen buying over the past 3-4 years are doing so with the intention of completing and then renting the units out, not flipping them before they close so I'm not sure a whole lot will change there, but the buy-and-hold $3M west-side SFH move is probably going to be a lot less prevalent (which I think is a good thing).

Pre-sale costs have been astronomical, I'm thinking some developers Downtown have to be number crunching if they are looking at $1400sq/ft breakeven.

That number doesn't surprise me at all.

[whatnext]

Originally Posted by wrenegade

The industry pretty overwhelmed by the amount of work. Contractors/trades are definitely in the driver's seat when it comes to costs. Some areas (North Shore comes to mind) some trades flat out won't bid as the traffic is not worth the brain damage for their employees when they can just as easily get a job of comparable size in Burnaby/Vancouver/Tri-cities etc. Obviously scale plays a large part, a 200 unit project isn't going to face the same pressures as smaller townhouse or 4 storey condo project.

We're budgeting a 40% increase in hard costs for a project (of similar size/scape/finish) that has a 2019 start date vs. one we started in 2014 (concrete, on the North Shore)

The economy is still doing quite well in Vancouver. People still need places to live, and those that are first time buyers or move-up buyers are mostly in that $500k-$1.25M range, which at this point is 100% attached housing of some type (certainly north of the Fraser, and mostly west of 200th). So ya, I think the condo market will remain pretty strong. It will be interesting to see how the "speculators tax" affects things on the lower end of the market. Most investors we've seen buying over the past 3-4 years are doing so with the intention of completing and then renting the units out, not flipping them before they close so I'm not sure a whole lot will change there, but the buy-and-hold $3M west-side SFH move is probably going to be a lot less prevalent (which I think is a good thing).


That number doesn't surprise me at all.

Interesting, especially in light of the common complaint we aren't building enough supply. Not only do we seem to be building plenty, but it doesn't seem the industry has the capacity to build anymore!

As an aside, I just realized the NDP budget didn't extend the Foreign Buyers Tax to presales which I find surprising (and disappointing).

[Sheba]

Originally Posted by whatnext

As an aside, I just realized the NDP budget didn't extend the Foreign Buyers Tax to presales which I find surprising (and disappointing).

Instead we get "A crackdown on fraud and tax evasion in the housing market, as well as a new two per cent speculation tax on those who don’t pay income tax in B.C."

[s211]

Originally Posted by Sheba

Instead we get "A crackdown on fraud and tax evasion in the housing market, as well as a new two per cent speculation tax on those who don’t pay income tax in B.C."

Only 2%? Is that correct? They might as well play wiffleball instead.

[Changing City]

Originally Posted by s211

Only 2%? Is that correct? They might as well play wiffleball instead.

Really? You must play expensive wiffleball! On a 'modest' $2m home, that's $40,000 a year on top of Property tax, and if you're in the city of Vancouver you still have to pay the City's 1% Empty Homes Tax - so that's another $20,000 as well.

"What the government describes as a speculation tax will be applied annually and will rise to 2 per cent on the assessed value of homes once it is fully up and running next year. The tax is aimed at investors who park capital in B.C. and drive up housing prices. It will hit foreign and out-of-province owners of properties, unless the homes are used as primary residences or house long-term renters.

The tax will apply in Metro Vancouver, the Fraser Valley, the Vancouver Island regions of Victoria and Nanaimo and the municipalities of Kelowna and West Kelowna in the Southern Interior. The tax was one major move in the B.C. budget, released on Tuesday. In budget documents, it was noted the tax will "initially" apply to the five areas outlined." [source: Globe & Mail]

[wrenegade]

Originally Posted by whatnext

Interesting, especially in light of the common complaint we aren't building enough supply. Not only do we seem to be building plenty, but it doesn't seem the industry has the capacity to build anymore!

While we are building plenty, it still isn't enough. And like anything, if it didn't take 24-36 months for permits and developers were able to start construction on projects much sooner I think we would see more contractors/trades come from the interior/island/Alberta to take advantage if they were able to line up projects in a pipeline. If there is work to be done, someone will show up to do it.

[s211]

Originally Posted by Changing City

Really? You must play expensive wiffleball! On a 'modest' $2m home, that's $40,000 a year on top of Property tax, and if you're in the city of Vancouver you still have to pay the City's 1% Empty Homes Tax - so that's another $20,000 as well.

My error, sorry. I thought the tax was one-time at time of transfer, not an annual levy. So... a 2% annual capital tax, basically. Zounds.