Friday Numbers

There were 213 new listings today and 189 sales for a sell/list of 88.73%. 

 Inventory dropped to 11,295, while over 90s reached 2,388, or 21.14%

Out of curiousity I did a snapshot count of North Van over the past 14 days.  121 new listings and 116 sales, for a sell/list of 95.86%.

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79 Comments

Filed under Daily Numbers

79 responses to “Friday Numbers

  1. A

    “Out of curiousity I did a snapshot count of North Van over the past 14 days. 121 new listings and 116 sales, for a sell/list of 95.86%.”

    Of course, because North Van is different from just plain old Vancouver. North Van has garbage collection!!!

    Imagine rich foreignors looking at the expensive homes in Vancouver and when they check the back alleys….whoa….what’s all this garbage piling up?

    When they go to the local parks….yikes, garbage all over the place!

    When they go the library to check out study facilities for their kids, they find people blocking the entrance and carrying signs “Sam’s Strike”

    When they go to the local community centre to check out the swimming pool and exercise facilities, they see more “Sam’s Strike” signs.

    The foreignors wonder who’s this Sam guy?

    Then they go look at houses in North Van. Prices are reasonable. The streets and parks are clean. The libraries and swimming pools are open. They say, Let’s buy in North Van!!!

  2. coco

    Although, probably much work for Rob. I thought a list/sell by areas would be interesting read. Maybe there are cracks in areas of the Fraser Valley compared to different areas in Vancouver?

  3. tqn

    “When they go the library to check out study facilities for their kids, they find people blocking the entrance and carrying signs “Sam’s Strike””

    or the investors might think that the vancouver major is looking to find a reasonable ground for the taxpayers – a city like that is worth investing! By the time they take possession of property, the union members are happy to get back to work, garbage will be collected, swimming pools will be opened, parks will be clean…Vancouverites are proud of their city.
    See what I mean, it depends on how positive or negative you are in life.

  4. Growyourmoney

    tqn

    Vancouverites are great recyclers too.

    I found my bedroom furniture in the alleys of vancouver. My lampcovers are made of milk bottles.Hey, I have no money for furniture. I am saving for the 35% down payment of my second house.

  5. tqn

    “I am saving for the 35% down payment of my second house”

    then i should congratulate you!

  6. Jay

    These numbers continue to amaze. I feel sorry for anyone that has to buy in this market. I am worried for the speculators/investors/greedy that want to make a quick buck. This market does not make sense. Be careful out there, people!

  7. helen

    Last night I was in gas town.

    70% apartments had their lights off..either they are on vacation or saving energy to pay off their mortgage or investment properties which will always be investment properties only now.

    Rob is trying to convince people to buy real estate ,even when it’s going down.That’s very irresponsible.He shouldn’t be misleading people with numbers.

    In US,People who were boasting for housing prices,they have quit their jobs,they are not even in this business now.

    All the banks were lying until a month ago that they have any exposure to sub prime mortgages but now they are not able to hide it…

    Look at CIBC ..three weeks ago ,they refused to admit that their exposure is about 300M $ and now they are coming out and saying we have about 1B $ exposure to this market.

    It’s so typical in Canada/US that businesses wants to take every penny out of common people’s hand and media will normally come in their defence.

  8. A

    helen wrote:
    August 19th, 2007 at 9:03 am

    Rob is trying to convince people to buy real estate ,even when it’s going down.That’s very irresponsible.He shouldn’t be misleading people with numbers.

    ————————-
    I don’t think that Rob is “misleading people with numbers.”

    He’s providing the numbers……it’s up to each reader to INTERPRET the numbers and make his or her own decision.

    It takes a buyer and a seller to complete a transaction.

    Eg. Last week stock market…..TSX falls 585 points on Thursday morning…….it’s up to each investor to buy or to sell…….nervous sellers sell, bargain hunters buy……Thursday afternoon market gains back 300 points.

  9. tqn

    “Rob is trying to convince people to buy real estate ,even when it’s going down.That’s very irresponsible.He shouldn’t be misleading people with numbers.”
    Can you prove it? If you can, send it to real estate board. Otherwise, accusation is dangerous and it can backfire at you.

    Jay,
    I am not worried for them one bit. Dont play the games if they dont know them.

  10. TI

    When many bad news related to housing or mortgage play out, our sales are still strong. It is very easy to cause suspicion.

    I don’t doubt Rob’s numbers . But I suggest that MLS should verify and follow every sale after being reported.

  11. -A-

    Rob, Aaron, Tq, A, skep, :

    I thought the Fed’s easy money policy would eventually lead to asset inflation world wide, but I also thought that eventually the bubble would pop.

    But, just out of curiosity, where did you intellectually endowed titans think all the fake money would end up?

  12. TI

    tqn

    Helen just expresses her viewpoints like you. you overreact it. Can you prove your viewpoints as you asked her?

    You can debate with her. But it is irrational to threaten someone for showing her disagreement. Canada is not a communist country.

  13. vanreal

    I think if the truth were known, Rob and most realtors would benefit from a correction in the market. I don’t think Rob has any need to fake numbers to cause people to buy real estate.

  14. fish

    Don’t blame the messenger.

    I know bears find it incredible that the numbers here show no let-up even with the housing armageddon that is happening across the border.

    eg Miami now has 31 months of condo inventory and Capital One just said they would not lend money to Fl condo buyers..period.

    Even the strongest market…San Diego is down 3.5% this year (median prices).

    Faced with this, posters are blaming Rob for either causing a buying frenzy 🙂 or making up the numbers.

    patience bears. We were behind theUS markets by a couple of years into the boom and we will likely be late to the drop as well.

    Even in the US the rich areas are still holding up pretty well (compared with the wasteland that is sub-prime) and that has in fact skewed numbers from showing even bigger drops.

    Vancouver is still attracting wealthy buyers..from the US, Alberta, UK, China, Korea and the Middle East.

    This trend is likely to continue until we hit a worldwide recession. Will that happen? I believe so. I therefore believe we will see yoy price drops soon.

    Place your bets but don’t blame Rob if the numbers are taking longer to prove the bear case.

  15. fish

    Rob- would you consider posting the average list and sales prices again and the number of price reductions and change in price etc. That was certainly useful information.

  16. Domus

    Hey, just a thought about the financial disaster happening in the US and worldwide: didn’t bears warn about it in advance? Was there not talk about mortgage reset problems well over a year ago?

    I think that at least on this one some bulls should give credit….

    As for Vancouver prices coming way down in real terms, I am still sitting at the fence and waiting. It is more likely to happen than ever. Even after liquidity release by central banks we still have a credit market at standstill: who will provide the money to happy housebuyers of 70ft boxes?

  17. Coq_Mike

    Domus said:

    “I think that at least on this one some bulls should give credit….”

    Well, if the bears said this problem was going to affect Canadian real estate, to this point they appear to be wrong. Too bad the bears never said my Canadian mutual funds were going to take a 5% or greater hit due to bad U.S. mortgages.

    Just when think you are doing okay a new problem comes along and hits you were you never expected.

  18. helen

    guys,

    I didn’t mean daily sales numbers though.

    He wrote that big article and interviewed some of his rich friends from US who still belive that Real estate always goes up.Thats nothing but BS.

    And the purpose of writing that article when the market is really starting to go slow is suspicious.

  19. Snick

    “And the purpose of writing that article when the market is really starting to go slow is suspicious.” – Helen

    I think realtors are now starting to feel just a little “queasy”.

  20. tqn

    TI,
    it was just a sidenote to Helen; this is an anonymous board so no sweat. Calling someone misleading and irresponsible, while he provided free information, is ok with you?

    -A-,
    I do not care whether it’s fake or real money. Owning real estate is priceless, for everything else, there is central banks.

  21. blueskies

    hey! all you bulls out there….

    this is it!….. the party is over!

    after this last week or so I’m willing to
    bet this is the psychological “tipping point”…

    this is where metro Vancouver goes from “can-do” into a screaming dive…..

    are you ready for a buyers’ strike?

  22. helen

    tqn,

    you don’t have to defend anyone and he is not responsible for whatever he writes here.He has opened this forum,people are expressing their views.If he doesn’t like he can always close it.

    remember some of the people had to go jail in US for recommeding stocks which had no fundamentals,Unfortunately we live in Canada where govt. doesn’t interfere in financial crimes.
    Mr. Black is being prosecuted in US not in canada…

  23. albatrox

    thanks for the interesting insight in Vancouver RE.
    Here is a couple of questions for you.
    I will be moving to Vancouver with my wife, two children (2 and 4 years old) by next summer. (now living in Brussels – Belgium)
    What is the best aera to live in this city ? (work, school and safety)
    If I purchase a house based on MLS prices, what other hidden costs should I consider on top of the sale price? What about taxes on RE in Vancouver ?

    Thanks in advance

  24. coco

    Subprime Derivatives explained simply.
    (now you can see how banks/investment firms,etc. around the world invested into subprime)

    http://tinyurl.com/2elf5t

  25. coco

    National Bank of Canada buyouts mutual fund holders, recommends customers funds go into Tbills or bonds.

    http://tinyurl.com/2zpajc

  26. coco

    albatrox,

    Do you have a job lined up in Vancouver next year? One usually buys real estate closer to their work to avoid long commuting times.

    There are a lot of nice areas in Vancouver and the lower mainland to live, but that would depend on your housing budget (which your totally vaque on)

  27. robchipman

    Helen:

    This is an open forum, true, but I think you’re stretching just a tad. You’re reading meaning into a statement that was never there, and you’re ignoring things I’ve actually written.

    Fish:

    Glad you liked that stuff. I’m just too busy these days. I’ll get back to it if I can.

  28. vanreal

    Most people would say either the west side of Vancouver or West Van as being the choice areas of purchase. Both are very expensive–in excess of 1.5 million to get anything decent. Certain pockets of the east side are also very nice and becoming very family friendly. If you want to live in the suburbs then some areas of North Van are nice. The further out you go the longer the commute to downtown but the cheaper the housing costs. The valley has the cheapest housing but it is at least an hour plus commute to downtown. All areas of Vancouver are fairly safe, criminal activity is present everywhere with no part of the city really being spared but it is infrequent.

  29. Jay

    Blueskies, I find it difficult to figure out why the downturn would be starting next week. What’re your reasons? This market is just way too ridiculous for me to believe that downturn will happen so soon.

  30. blueskies

    based on 1 data point of bank financing being pulled at the very last minute….

    i can see credit availability drying up, even for
    good quality risks, so i am extrapolating into the future from the recent past. this same argument can be used in an up market too, as we have witnessed……

    also i really really love hyperbole!

  31. vanreal

    apparently it was flagged for removal. What did it say?

  32. fish

    A desperate owner trying to sell his waterfront floru-plex in Florida. Dropped the price by $330K to just over One Mill.

    But willing to negotiate further and take back a second mortgage and manage it for the buyer and ….you get the picture…ugly.

    Of course it wont ever happen here.

  33. vanreal

    Florida is a poor comparison IMHO because of the extremely high insurance rates and taxes. Insurance can be as high as 1300 a month in some areas around Miami depending on house value. That is a lot of coin no matter how you look at it. This is due to hurricanes and the feeling that the seasons are only going to produce stronger and more frequent events

  34. Geezer

    A recent article posted here pointed out that Downtown Miami is about the same physical size as Downtown Vancouver but Miami has approximately 20,000 condos currently listed for sale plus almost another 20,000 nearing completion.

    Clearly, any comparison with Miami is absurd but it keeps being raised.

  35. Growyourmoney

    For all of those who are crying liquidity bottle neck. Just got approved for no doc loan with prime less 0.9.

    I got no time to listen to bear chat. The world is not comming to an end next week. LOL

  36. blueskies

    Just got approved for no doc loan with prime less 0.9.

    yeah, but will it actually fund?

    got no time to listen to bear chat. The world is not comming to an end next week.

    more like Tuesday at 2:45 PM Pacific Daylight Time…… 🙂

  37. Snick

    “Just got approved for no doc loan with prime less 0.9.”

    Yeah. Sure you did.

  38. coco

    Blueskies,

    Do you work in finance?

  39. Johnnyrent

    Geezer

    Direct comparisons between downtown Vancouver and other NA downtowns can be dubious. As it concerns condos, however, the comparison between ourselves and Miami, while not apples to apples, is not so absurd.

    Take for example, the fact that we are second only to Manhattan in downtown residential density (condos) and we’re well beyond Miami. Further, we’ve added thousands of condos to the downtown core of late and thousands more are under construction/committed. Finally, Miami has a high incidence of condo investment. Depending upon who you listen to, it is estimated that 40 to 50% of downtown Vancouver condos are investment properties.

    The slightest, sustained crack in the condo market in downtown Vancouver would result in a rush to the exits, reminiscant of downtown Miami, and therein lies an apples to apples comparison.

  40. blueskies

    coco:

    no i’m a retired boomer renter bear
    follow HBB daily

    we are DOOMED!

  41. The unthinkable "Renter"

    Blues skies tell us more, I dont get all the short comments.

  42. blueskies

    t.u.R

    if as proposed, we are about a year behind California and after seeing the nasty stuff happening down there methinks we have a problem up here in Vancouver.

    I also lived through the bust in ’81 in Calgary.
    very strong parallels with what I see here.
    same denial mentality and wishful thinking.

    “It can happen here”

    the “doomed” comment was missing this: 🙂

  43. -A-

    Johnnyrent, well reasoned, and fact backed up response to Geezer; however, the RE pimps have very short and selective memories.

    It wasn’t long ago, the shysters justified Vancouver’s bubble prices by pointing out prices of other places.

    Now that we find the demand from other cities and countries was manufactured with cheap credit and hype, they suddenly cannot see the similarities.

    The overnight line ups staged by the marketers, the inflated migration numbers, the media manipulation, it’s different here this time, and on and on.

    The script is exactly the same, and it will end the same.

    I just don’t know how these pimps can sleep at night.

  44. -A-

    ps thanks for the numbers Rob

  45. macchiato

    “For all of those who are crying liquidity bottle neck. Just got approved for no doc loan … ”

    How many hundreds of billions have been wiped? all those silly cry-babies!

    Interesting way to tell bears to get stuffed … mentioning you got the type of mortgage that is at the source of the US housing meltdown … how scathing (sarcasm).

  46. Snick

    tqn,

    I noticed your post in today’s Realty Talks whereby you quote REALTORS about the rosy future for Vancouver RE.

    Pathetic.

  47. Snick

    P.S. Even “Agent Will” was a little startled.

  48. Growyourmoney

    Blueskies
    more like Tuesday at 2:45 PM Pacific Daylight Time

    Snick

    Yeah. Sure you did.

    Bear Buddy

  49. Growyourmoney

    Interesting way to tell bears to get stuffed.

    My next project is a positive cashflow condo in orlando.

  50. blueskies

    condo in Florida?!

    can’t finance it!
    can’t insure it!
    and probably can’t rent it!

    good luck with that

  51. News Flash

    “The slightest, sustained crack in the condo market in downtown Vancouver would result in a rush to the exits, reminiscant of downtown Miami”

    Not quite. Miami as was pointed out has big time insurance premiums that just came in and new property taxes for non residents. Property taxes also get reset once sold. I read a 900k home that currently pays $2400 per year tax if sold goes to $20,000 per year.

    Of course if Vancouver home insurance goes to $15,000 per year and property taxes go to $20,000 per year we would be in a similar situation. The average condo owner in Vancouver pays about 5% of that. Until that happens don’t hold your breath.

  52. News Flash

    “if as proposed, we are about a year behind California and after seeing the nasty stuff happening down there methinks we have a problem up here in Vancouver.”

    So you see the crash as a 3% decline? What has CA dropped even with all the nasty stuff? Not much, LA is still up more than Vancouver over the past 5 years.

    “I also lived through the bust in ‘81 in Calgary.
    very strong parallels with what I see here.”

    Oh ya with our huge oil boom/bust cycle like Calgary had?

  53. News Flash

    “Just got approved for no doc loan ”

    No such thing in Canada for mortgages.

  54. Johnnyrent

    News Flash

    You correctly point to the fact that property taxes are considerably more expensive than here in Canada.

    What you haven’t considered, however, is that both property taxes and mortgage interest are tax deductable in the US whereas neither are deductable here. Give me higher property taxes but allow me to deduct these and mortgate interest any day of the week – as an investor, I’d be much further ahead. Oh, by the way, the first $500,000 in capital gains tax on RE proceeds are tax free in the US as well.

    As you can see, under the circumstances, minor corrections in our RE market would have far more dire consequences for our RE investors than is the case for their American counterparts.

  55. Alpha_Bear

    Newsflash said,

    “Just got approved for no doc loan ”

    “No such thing in Canada for mortgages.”

    Are you sure about that?

  56. tqn

    “I noticed your post in today’s Realty Talks whereby you quote REALTORS about the rosy future for Vancouver RE.
    Pathetic.”

    It’s the beauty of copy and paste; the news is fresh and I hope you did not think that I made it up! Take it whatever way is up to you. I agree with you it’s pathetic and disappointed, cuz it just has to keep going, eh!

  57. Iggy_12

    Are you sure about that?

    I wouldn’t really say that is “no-doc” as these are the documents required…

    “borrowers should be prepared to provide the complete T-1 General (3 years), full “Statement of Business Activities” (3 years), Notice of Assessment (3 years) and current year-to-date information.”

  58. Jay

    Blueskies, is that downturn starting yet?

    Here’s a comment my developer friend was making. I commented how the new towers in New West (near the Douglas College skytrain) will block the water view of many condos in behind them (these are 30 story towers). My buddy stated they’re not buying the view. However, when you go to buy a place you sure seem to be ‘buying’ the view. Developers charge an arm and a leg for a water view condo if you compare it to similar units in the same building without the water view. Kinda low on the seller’s part, IMHO. Then again, most of these people are a bit sketchy.

  59. robchipman

    JR:

    “Give me higher property taxes but allow me to deduct these and mortgate interest any day of the week – as an investor, I’d be much further ahead”.

    For an investor those things are deductible here.

  60. foo

    It might not be no-doc, but here’s a clause from the standard mortgage contract for a major, mainstream bank:

    “11. No income confirmation will be required provided that the loan to value does not exceed 65% and meets all lending criteria within the NIQ Program.”

    If you think there aren’t funny-money deals being done on a large scale in real-estate here in Canada, I have a bridge you might be interested in…

  61. New Investor Rob

    Hi Rob

    I know you are very busy but it would be cool if you could provide tips to investors once in a while. I always enjoy the numbers, but people like Johnnyrent continue to show me that most Canadians know more about the US laws than they do about their own country’s. I realize its tricky giving legal or financial advice.

    Like me for instance. I refinanced my townhouse in February and purchased a new home with a suite. I now rent out the townhouse and the suite. I took out as much money as possible on the townhouse so I would have a loss on that property and have the tax right off.

    When I explain to friends that I can write off that loss on my salaried income they are always doubtful. I’m continually amazed at how many people don’t understand the tax laws in Canada.

    I also explain that if my total monthly mortgage cost is $4000 and I can handle it, its beneficial if most of that is on the rental property giving me loss. In turn giving me a nice tax return.

    I could reduce the loss but that would require me to have a bigger mortgage on my residence and would not provide a tax benefit.

    I’m sure there are other related topics like this that I’m unaware of which you could share with those of us who aren’t interested in arguing with the Bears.

    Thanks again for the numbers

  62. Forecasts Revised Upward

    B.C. housing market defies odds, heats up
    Strong sales numbers in recent months confound analysts’ expectations

    Published: Tuesday, August 21, 2007
    Exceptional strength in Canada’s resale housing market in the first six months of the year prompted the Canadian Real Estate Association on Monday to more than double its forecast for sales increases in 2007, the second time this year the association has revised its predictions upward.

  63. ObserverX

    New Investor Bob,

    From my understanding (which is very little) of tax regulations, the process you describe is precisely the one where you *can’t* deduct the mortgage interest on the townhouse — the key to deductibility is that the money is used to purchase an *investment*; you didn’t, you used it to purchase a *principal residence*. So if the taxman came along, I’d think twice about explaining things the way you did here.

    I believe there *is* a way to make the townhouse mortgage interest deductible but it is a bit more complicated than as you’ve described.

    Somebody more knowledgeable want to jump in here?

  64. New Investor Rob

    Here’s how I understand it.

    Once I move out of my Townhouse I have to declare to Canada revenue that I have changed the purpose of the property. A current value is set to the property to figure the future tax when and if I sell it.

    Now that it is acknowledge by revenue Canada that it is a revenue property. I can write off any expenses on that property, i.e. strata, property tax, mortgage interest against my rent.

    At least thats the way I’m planning it. Would love to know if I’m wrong.

  65. Snick

    “…in the first six months of the year prompted the Canadian Real Estate Association on Monday to more than double its forecast for sales increases in 2007”

    Nonsense.

  66. FTB

    Has anyone done any research on the “Smith Manoeuvre”? Here is the link to the website. http://www.smithman.net/home.html
    It is a way to deduct the interest on your principal residence by re-investing the money into a tax-deductible investment as you pay down the principal. I haven’t read the book and I don’t fully understand how it works, but the website claims it has been approved by Revenue Canada. Has anyone here heard of this or tried it?

  67. Fozzie

    New Investor,

    With respect to tax matters, I think the only safe advice is to talk to a tax advisor. There are a lot of times when you can save some money with a “do-it-yourself” approach. But in my opinion, tax planning isn’t one of them.

    Also, just because your friend, co-worker, neighbour or uncle does it a certain way and has never had a problem with CRA, doesn’t make it sound tax advice.

    I’ll admit, my comments are a bit self-serving because I do a lot of work with tax advisors. I am a corporate lawyer and a large part of my practice involves implementing tax driven transactions and reorganizations (including real estate deals).

    I have seen countless cases where a “do-it-yourself” tax planner comes into the office after CRA has audited him/her and it is never good news. Unfortunately for these people, they don’t seem to understand that tax planning is very rarely something that can be done retroactively. Once CRA comes looking, you’re screwed.

    You can take my advice or leave it, I don’t mind either way, but investors should at least appreciate the risk of not getting proper tax advice.

    CRA can be ruthless in the enforcement of tax laws. Penalties and interest charges can be crippling. Above all, CRA does not care whether or not you can afford it or how this affects you or your family.

  68. Fozzie

    FTB,

    The “Smith Manoeuvre” is aggressive. It was successfully challenged by CRA under the GAAR provisions fairly recently in the Lipson case and should be considered high-risk at best.

    No investor should even consider using such a strategy without getting proper tax advice.

  69. News Flash

    “Give me higher property taxes but allow me to deduct these and mortgate interest any day of the week – as an investor”

    Note taxes are deductible for investors and there is a home owners grant for non investors in Vancouver.

    And besides that you would gladly pay $20,000 per year for property taxes compared to $2500 per year if the $20,000 was tax deductible? Okay dokey.

    The point was costs in Florida for home ownership have sky rocketed due to insurance and taxes. This has caused the soft market. I agree if property taxes in Vancouver increased by 8 fold, with higher rate increases for non residents combined with insurance premiums of $15,000 per year we will easily see the same soft market. There is no indication this will happen in Vancouver therefore Florida is a poor comparison.

    Why not use Zimbabwe? House prices have sky rocketed there and can double daily in the local currency. Does that mean it will happen here as well? I don’t think so.

  70. New Investor Rob

    Thanks Fozzie

    I think I just might take your advice and talk to a tax planner.

    I would just like to point out that this is a very common scenario that is listed on the Canada Revenue site but I appreciate any advise.

    Worst case scenario I don’t get as big a return as I had planned. I’m not likely to owe them extra because I was taking a loss.

    No offense, but everyone who has commented does actually claim to know if this is ok. I’m 99.95% sure it is ok. Does anyone actually claim to “know” different.

    Isn’t this conversation much more enjoyable than the Bears saying the sky is falling and the Bulls wondering why anyone would continue to pay rent if they could help it.

  71. Jay

    It just seems a lot of the current buyers cannot truly afford their residence. I wonder what the recent numbers are regarding how much people are saving. Last year I think BC was the worst and in the negatives for money saved.

  72. blueskies

    re: tax deductibility

    I believe that Revenue Canada expects at some point to see a profit on your income properties
    so you won’t be able to indefinitely carry on running in the red. Not tax advice

  73. Johnnyrent

    News Flash

    First, to clarify for you and others re: taxes, I am well aware that as it concerns legitimate RE investments (as distinct from future principal residences) in Canada, property taxes, mortgage interest etc. are tax deductable. The operative phrase, however, is “legitimate RE investments”. The difference in the US is that property taxes, mortgage interest and insurance on principal residences are tax deductable, whereas they are not here, and this takes a considerable sing out of the cost of home ownership for Americans.

    Escalating property taxes and insurance costs in Miami exacerbate the housing slump, as do subprime woes. At the root of the problem, however, were prices going up to far too fast, eclipsing what fundementals could ultimately sustain, while building outstripped intrinsic demand, both of which originally caused prices to stop rising, become flat and then decline. I am of the view that the same scenario will unfold here. In that context, then, I think it is fair to compare downtown Miami and Vancouver. I’ll leave you to argue the Zimbabwe analogy.

  74. Johnnyrent

    Correction

    This takes a considerable sting out of the cost of home ownership for Americans.

  75. New Investor Rob

    Blueskies

    Good point. I can’t do this indefinitely(i.e. Smith Man.). I believe they expect you to see a profit within a certain amount of years. 8-10 years seams to be the max they will wait, but I will look into that.

    The CRA page just says that if you consistently show a loss they won’t allow the loss. Thanks for the help.

  76. robchipman

    NIR:

    Interesting post, and a common practice. Like always, get professional tax advice, but again, its a common practice (you saw it on CCRA’s website, right?). When I first saw your question it occurred to me that you might be trolling, though! 🙂

    Johnnyrent:

    Interest/taxes are deductible on legitimate investments. Anything other than a legitimate investment is cheating on your taxes. Nobody recommends doing that. You’re not really clarifying anything, beginning with forgetting that taxes are deductible on investments and continuing with the concept of “…legitimate RE investments (as distinct from future principal residences)…” Think it through: If I buy an investment property today, and take all the write offs, and in ten years decide it will become a principal residence, exactly who am I cheating? You pay the appropriate capital gains when you sell (remembering that death = a deemed disposition).

    In regard to seeing a profit, that is arguable territory. Rev Can has argued that an investment property has to return a profit within a certain amount of time. Their prey has argued that the profit is obvious, and is payable upon disposition. Judges have agreed with the latter position, but the taxman is greedy. Examine first what a profit is (its not the same in tax and legal terms as we’d generally imagine), and then try to accomplish that.

    Also review what a capital gain is and when its triggered. Its not always/only triggered at time of sale.

    All that said, it is a common practice to reduce tax on earned income by incurring an interest expense. Its really deferral and reduction, because you will eventually pay tax on the capital gain.

    Here’s the question: are the people who take advantage of this still part of the minority that pays the majority of income tax?

    And, given the regular surpluses we have, should we require capital gains tax at all, or should we allow tax deferred exchanges?

  77. Johnnyrent

    Rob

    Let’s get back on point here.

    I was responding to New Flash’s remark that the softening of Miami’s downtown condo market was related primarily to increased property taxes and insurance and that downtown Miami was an invalid comparison to downtown Vancouver.

    I disagree with News Flash’s perspective. My perspective is that downtown Miami, long before subprime debacles and increases in property taxes and insurance, experienced softening prices due to RE prices rising too fast too soon combined with building that eclipsed (and still eclipes) intrinsict demand. I stand by that remark and I do think it is analogous to Vancouver.

    If you wish to debate me on that point, fill your boots. Cheers, JR

  78. robchipman

    Johnny:

    Compare Miami and Vancouver all you want. If you can derive a lesson, great.

    Whatever way you slice it, you said:

    “What you haven’t considered, however, is that both property taxes and mortgage interest are tax deductable in the US whereas neither are deductable here. Give me higher property taxes but allow me to deduct these and mortgate interest any day of the week – as an investor, I’d be much further ahead.”.

    That statement is incorrect for investors. Those are deductible costs for investors here. BTW, higher deductions don’t make a better investment.

    You’re also blurring the lines when you describe today’s investment property as illegitimate because its use may change in the future. That’s crazy talk.

    If your point is that downtown Miami experienced more supply than demand, and so saw softening prices, hey, that sounds reasonable to me (although prices that soften after rising too fast aren’t exactly bad news. Again, think it through, or better, visualize what you’re saying. Prices shoot from $10 to $100, and then soften? To what? $75?).

    If your point is that softening demand and continued over-supply in Miami will repeat here, I think you need to put some meat on that argument’s bones. We all see how much is being built. Everything that doesn’t already have something on it, whether its downtown or in Whalley, has a sign announcing something new. You’d have to be sleepwalking to simply assume all that supply will be absorbed. Any thinking person has to wonder: who is going to live in these places?

    It doesn’t matter who owns them. The only thing that matters is that they be occupied. But simply assuming that they won’t be occupied is as soft an argument as simply assuming they will be. I don’t have the numbers to make the argument either way, but I sure wonder about it. Consider this: if I find a PoCo apartment that will cash flow for 35% down today, how will it do in 3 years, if we do indeed over-build drastically? Will its rent drop? Its certainly possible.

    So, if we’re going to fill any boots, you give it a try, but fill out the argument some more. I’d also like to understand why you limit the examination to downtown cores. Don’t you notice what’s going on in other areas? From here to Hope we’re building like crazy.

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