The Metro Vancouver Real Estate Thread

[Jalapeño Chips]

Originally Posted by misher

I understand that we don't run our government like a business and its not expected to make a profit but to me it makes business sense to tax the hell out of people rather than ban it entirely. if you check our budget http://bcbudget.gov.bc.ca/2018/estimates/2018_Estimates.pdf
Tobacco brings in $800 million in revenue, similar to what fuel taxes bring in. Imagine if half the money that was spent on drugs went to taxes as well!
Only 2.2 billion is spent on social assistance so an extra $500 million makes a huge difference in our budget.

I don't agree with the 20% tax foreign buyer as its too high (btw 15%->20% was a publicity move, if someone is dumb enough to pay 15% then they will pay 20%), a 5% tax would likely result in much greater total income as a 20% tax just scares people away. However, banning it entirely makes no sense at all as a 20% tax brings in huge income for each sucker that is willing to pay it.

BTW New Zealand is still allowing condo purchases by foreign buyers with some restrictions.

No, I completely disagree. I am for a complete ban, 20% is too little. We will find the money somewhere else. We can't have this housing insanity driving people away and into homelessness as the new norm. It makes no business sense to depend on wealthy foreign investors for revenue, absolutely none.

[misher]

Originally Posted by Jalapeño Chips

No, I completely disagree. I am for a complete ban, 20% is too little. We will find the money somewhere else. We can't have this housing insanity driving people away and into homelessness as the new norm. It makes no business sense to depend on wealthy foreign investors for revenue, absolutely none.

Where else would you suggest? I'm not saying your wrong I'm just wondering where? Personally I feel people will just move if they can't afford to buy real estate or rent...instead of being homeless? But lets assume your right. If you have a way to increase revenue enough so that we do not rely on real estate let me know. Around 17% of our GDP was real estate in 2015 according to this and around 10-20% of provincial tax revenue comes from real estate. Lets be honest without foreigners and if we continue killing the real estate market prices will go down. I know many have said they should go down 50% so lets assume that happens, how will we pay for things if this occurs?

https://www.huffingtonpost.ca/2016/05/12/bc-real-estate-alberta-oil-economy_n_9938922.html

Also 56% of the city of Vancouver's budget comes from Property tax so if prices go down half we have to figure out how to make up the 28%. I'm assuming we can't just cancel police and fire services.

Btw a good chunk of our univ and schools funding also comes from foreign students, depending on the school they can pay 5-7x more. There are also multiple sectors in our economy that rely on foreigners. https://students.ubc.ca/enrolment/finances/tuition-fees/undergraduate-tuition-fees

And as you'll see a large chunk of jobs/income are construction or real estate related as shown below:



I'm seriously being open to your suggestions and am not criticizing, if you have a solution to solving our reliance on foreign money and expensive real estate go for it.

[Changing City]

Also 56% of the city of Vancouver's budget comes from Property tax so if prices go down half we have to figure out how to make up the 28%.

Er, no we don't that's not how property tax works. The budget establishes how much the city - any city - needs to spend. The proportion expected to be raised from fees and other revenue is calculated. The rest comes from property tax. So if the city needs to raise 56% of the budget from property taxes, then they set the mil rate - the tax rate for different property types - based on the previous year's assessed values. If in some bizarre world property vales dropped 50% in one year, then the mil rates would double. That way, the amount of money raised from property tax would remain exactly the same - so the tax rate would double, but the amount a taxpayer would pay wouldn't change.

[misher]

[QUOTE=Changing City;8282827]

Originally Posted by misher

Also 56% of the city of Vancouver's budget comes from Property tax so if prices go down half we have to figure out how to make up the 28%. QUOTE]

Er, no we don't that's not how property tax works. The budget establishes how much the city - any city - needs to spend. The proportion expected to be raised from fees and other revenue is calculated. The rest comes from property tax. So if the city needs to raise 56% of the budget from property taxes, then they set the mil rate - the tax rate for different property types - based on the previous year's assessed values. If in some bizarre world property vales dropped 50% in one year, then the mil rates would double. That way, the amount of money raised from property tax would remain exactly the same - so the tax rate would double, but the amount a taxpayer would pay wouldn't change.

I apologize you are correct. But also higher mil rates are better accepted when your home is worth more so the percentage of value is less. I know many seniors defer payment and the city is relying on their home holding enough value by their death to pay the deferred taxes. I've been told that the amount of people deferring has greatly risen due to the new "education" taxes as well. Also the property transfer taxes and other taxes that come about during sales and probate do depend on percentages and these make up over 2 billion in yearly income for the province.

[Changing City]

[QUOTE=misher;8282832]

Originally Posted by Changing City

I apologize you are correct. But also higher mil rates are better accepted when your home is worth more so the percentage of value is less. I know many seniors defer payment and the city is relying on their home holding enough value by their death to pay the deferred taxes. I've been told that the amount of people deferring has greatly risen due to the new "education" taxes as well. Also the property transfer taxes and other taxes that come about during sales and probate do depend on percentages and these make up over 2 billion in yearly income for the province.

I don't think most people care what the rate is - they care how much tax they pay. If they defer payment, the Province pays the city for them, so the city couldn't care less whether the property values change or not. The average annual tax paid by homeowners is less than 1/300th of the value of a home, so the Province aren't going to be worried about getting the back taxes owing (with modest added interest) either.

[misher]

[QUOTE=Changing City;8282857]

Originally Posted by misher

I don't think most people care what the rate is - they care how much tax they pay. If they defer payment, the Province pays the city for them, so the city couldn't care less whether the property values change or not. The average annual tax paid by homeowners is less than 1/300th of the value of a home, so the Province aren't going to be worried about getting the back taxes owing (with modest added interest) either.

True. But the arguments justifying the increases were that its a small fraction of the value. The back taxes+the mortgage may add up though
Also the Province will be running a budget deficit unless things change so that's going to hurt.

You'll see in the below poll that most support anti-foreigner measures but things that strike homeowners themselves are much less popular.

[Changing City]

[QUOTE=misher;8282877]

Originally Posted by Changing City

You'll see in the below poll that most support anti-foreigner measures but things that strike homeowners themselves are much less popular.

With BC Liberal supporters.

[SpongeG]

Metro Vancouver real estate prices are 65% overvalued

Glacier Media Real Estate

By Joannah Connolly - August 15, 2018

Metro Vancouver real estate is valued at 65 per cent higher than it should be, based on local incomes, according to a new global house price index by The Economist.

The U.K.-based financial publication’s research team found that the region’s home prices have risen by more than 60 per cent over the past five years.

In terms of real estate value versus median household incomes, The Economist reported that Metro Vancouver was the fifth most overvalued of 22 major global cities studied, after Hong Kong, Auckland in New Zealand, Paris, and Brussels in Belgium.

Vancouver is followed by London, UK and Sydney, Australia, both of which were deemed overvalued by 50 per cent or above.



On a country-by-country basis, Canada was deemed the third most overvalued country in the world for real estate prices, at 56 per cent overvalued, after New Zealand and Australia.

Check out The Economist’s interactive graph, which shows how overvalued the real estate in each of 20 countries has been since the 1970s.

...

https://www.vancouverisawesome.com/2018/08/15/metro-vancouver-real-estate-prices-overvalued/

[scryer]

I'm seriously being open to your suggestions and am not criticizing, if you have a solution to solving our reliance on foreign money and expensive real estate go for it.

One of the graphs you posted listed "Other services" as income; any idea if hospitality is included in that "other services"? It also doesn't list shipping or exports, which makes me suspicious because Vancouver is North America's third largest port and Canada's key shipping port. I'm just curious, and I don't expect that you actually made the graph yourself .

I think that by breaking the cycle of relying on expensive real estate and foreign money that it is actually more of an opportunity than anything else. It's gotten so bad that we need to break the system, AND maybe it will get our government to wake up and realize that they have placed all of their eggs in one basket. We obviously need to diversify our industries and with the ridiculous amount of catering that we do to the NIMBYs, we need to start thinking differently about how we use the land we have.

Personally I would like to see more light-industrial mixed, TALLER FUCKING BUILDINGS, a focus on the tech industry, more oil exports (bring on the pipeline baby!), and more exports in general.

[Jalapeño Chips]

Originally Posted by scryer

One of the graphs you posted listed "Other services" as income; any idea if hospitality is included in that "other services"? It also doesn't list shipping or exports, which makes me suspicious because Vancouver is North America's third largest port and Canada's key shipping port. I'm just curious, and I don't expect that you actually made the graph yourself .

I think that by breaking the cycle of relying on expensive real estate and foreign money that it is actually more of an opportunity than anything else. It's gotten so bad that we need to break the system, AND maybe it will get our government to wake up and realize that they have placed all of their eggs in one basket. We obviously need to diversify our industries and with the ridiculous amount of catering that we do to the NIMBYs, we need to start thinking differently about how we use the land we have.

Personally I would like to see more light-industrial mixed, TALLER FUCKING BUILDINGS, a focus on the tech industry, more oil exports (bring on the pipeline baby!), and more exports in general.

Exactly.

[rofina]

Originally Posted by scryer

One of the graphs you posted listed "Other services" as income; any idea if hospitality is included in that "other services"? It also doesn't list shipping or exports, which makes me suspicious because Vancouver is North America's third largest port and Canada's key shipping port. I'm just curious, and I don't expect that you actually made the graph yourself .

I think that by breaking the cycle of relying on expensive real estate and foreign money that it is actually more of an opportunity than anything else. It's gotten so bad that we need to break the system, AND maybe it will get our government to wake up and realize that they have placed all of their eggs in one basket. We obviously need to diversify our industries and with the ridiculous amount of catering that we do to the NIMBYs, we need to start thinking differently about how we use the land we have.

Personally I would like to see more light-industrial mixed, TALLER FUCKING BUILDINGS, a focus on the tech industry, more oil exports (bring on the pipeline baby!), and more exports in general.

I second this agenda.

I been repeating it tons, but here it goes again - this is THE time to rip off the band-aid.

The region has A LOT going for it outside of RE right now - Tech, Fin Tech, Bio Tech, mining, tourism, film, fashion - lots of capital floating around.

Real money is flowing in from other industries. Let the commercial sector and infrastructure sector carry the construction guys and allow the housing sector to deflate significantly.

I'm under no illusion that it will be painless, but this is as ideal of a time as real life will ever permit to deflate this tragedy of a RE market.

[LeftCoaster]

Stopping residential construction is not going to be the band aid ripping that causes prices to drop...

You realize that all those other industries booming means additional workers and additional demand for housing right?

[whatnext]

Originally Posted by LeftCoaster

Stopping residential construction is not going to be the band aid ripping that causes prices to drop...

You realize that all those other industries booming means additional workers and additional demand for housing right?

Can they afford what's being built? Vancouver was out trumpeting that its tech salaries were 30% lower than comparable jurisdictions, yet they're supposed to be buying $1.2 million two beds?

As you have said, there are several factors that were at work in driving Vancouver prices to ridiculous levels. Now that they're starting to unravel one by one (access to credit, interest rates rising and the choking off of capital flight from China) a lot of that demand will be as ephemeral as summer smoke.

[LeftCoaster]

I hope the demand is ephemeral, and if we keep building that will put even more supply into the market and help bring us closer to any sense of market equilibrium.

Best to attack the problem from both sides, we stand a better chance of fixing this through both a demand and supply lens.

[misher]

Originally Posted by rofina

I second this agenda.

I been repeating it tons, but here it goes again - this is THE time to rip off the band-aid.

The region has A LOT going for it outside of RE right now - Tech, Fin Tech, Bio Tech, mining, tourism, film, fashion - lots of capital floating around.

Real money is flowing in from other industries. Let the commercial sector and infrastructure sector carry the construction guys and allow the housing sector to deflate significantly.

I'm under no illusion that it will be painless, but this is as ideal of a time as real life will ever permit to deflate this tragedy of a RE market.

You know there must be something here if we all agree on it

[Vin]

If City planners are smart enough to attract more diversified industries to set up shop here, then I'm sure they would also have the brains to allow higher density neighbourhoods to be established throughout this city, and hence allowing more workers to live in this place close to their work places. Currently, planners and policy makers simply have their brains blocked and handicapped to do anything constructive. Oh wait, they want to pull down the viaducts and enforce viewcones, and concerned about birds crashing into LED lights, then take long vacays in Cancun and Vegas.

[rofina]

Originally Posted by LeftCoaster

Stopping residential construction is not going to be the band aid ripping that causes prices to drop...

You realize that all those other industries booming means additional workers and additional demand for housing right?

Its not about stopping construction. And its not the band-aid I'm referring to.

The band-aid is using foreign capital, largely illicit, to continue building ultra luxury across the City and relying on residential construction so heavily for general revenues and balances budgets.

The idea is let the rest of the economy carry more of the load, and allow residential to wither on the vine so that it returns to more of a utility rather than main spec vehicle for foreign money.

Of course we will require additional supply - but hopefully a major slowdown allows developers and municipalities to get more realistic about what supply this region actually needs.

I would suggest 400 sq/ft units at $850,000 are not it.

[misher]

Originally Posted by Vin

If City planners are smart enough to attract more diversified industries to set up shop here, then I'm sure they would also have the brains to allow higher density neighbourhoods to be established throughout this city, and hence allowing more workers to live in this place close to their work places. Currently, planners and policy makers simply have their brains blocked and handicapped to do anything constructive. Oh wait, they want to pull down the viaducts and enforce viewcones, and concerned about birds crashing into LED lights, then take long vacays in Cancun and Vegas.

I know we always get complaints that people in these neighbourhoods don't want more density so my suggestion is to just pick one area thats mostly commercial/industrial near transit and build gigantic towers everywhere, screw the views and screw everything else, make them look decent and just pack in gigantic towers that maximize units with some commercial/retain on the 1st -2nd floors Look at this thing, 682 units and its less than 20 stories. Imagine if they built 40 stories and a few more towers or wider towers so that we can pack in 1600 condos. As there's only about 300,000 households in Vancouver each of these buildings would increase housing supply by 0.5%. So if we just built 30 of them it would likely solve our housing crisis (combined with all the new construction thats already happening). Of course our construction industry may not be able to build them all at once, but I think this would be a much quicker and more efficient solution than turning everywhere into townhouses.

[LeftCoaster]

Originally Posted by rofina

Its not about stopping construction. And its not the band-aid I'm referring to.

The band-aid is using foreign capital, largely illicit, to continue building ultra luxury across the City and relying on residential construction so heavily for general revenues and balances budgets.

The idea is let the rest of the economy carry more of the load, and allow residential to wither on the vine so that it returns to more of a utility rather than main spec vehicle for foreign money.

Of course we will require additional supply - but hopefully a major slowdown allows developers and municipalities to get more realistic about what supply this region actually needs.

I would suggest 400 sq/ft units at $850,000 are not it.

I think we're already there at trying to stop foreign capital from influencing the housing market.

Problem is the damage is already done. With locals houses now worth millions they are financing their kids purchases and a lot of the demand you see now is local.

Not a ton of foreign buyers still buying in Vancouver from what I'm seeing.

[rofina]

Originally Posted by LeftCoaster

I think we're already there at trying to stop foreign capital from influencing the housing market.

Problem is the damage is already done. With locals houses now worth millions they are financing their kids purchases and a lot of the demand you see now is local.

Not a ton of foreign buyers still buying in Vancouver from what I'm seeing.

True.

But who will all the West Side paper millionaires eventually sell all their 5 million plus bungalows to, if not foreign money?

I personally know a couple "big time" local CEO's that live in Port Moody, because even at their level of success they can't afford to buy a SFH in some of the more traditional high income areas.

Plenty of CFO's I can think of driving in from PoCo and Langley as well.

With that in mind, how long do the SFH values remain this high?

I don't see how the volume can remain this low at above 2 million and not start to have an impact on the price.

This is exactly the scenario bears have been on about for years - the air pocket between even the high net worth locals and the foreign money is so massive that a significant correction is required before locals are able to step in and prop up prices on the high end.

The only thing I see not allowing a correction to happen is a change of government back to the Liberals.

At this point I see it as a slim chance. The casino and RE files are going to sink them for a few years yet.