There were 246 new listings yesterday, and 170 sales, for a sell/list of 69.11%.
Inventory reached 11,274, while over 90s reached 2,621, or 23.25%.
Filed under Daily Numbers
Where are all the bad news bears?
Particulary the ones forecasting the inventory of 1350 by now.
they all ran out to buy a house.
Maybe they’re like me. Tuned in to read 3 comments, saw they were written by children, and moved on.
One foolish concern of the central banks is deflation. Why are they terrified by deflation? Why keep throwing more money in the market so that things are forever more expensive as time goes? The only exception is perhaps electronic and computer stuff. Wonder those workers on strike … how many of them are already having difficulty with their bills. Even if they get a 4% raise per year, losing a month’s pay is already more than 8% loss right there. So even at 20% raise for the next 5 years, they are really getting 12% for the next 5 year. If consumers don’t find the way BOC deals with interest rate and inflation wrong, then they have only themselves to blame if the market eventually becomes a lot more unfriendly. Because only when the majority of the population join in this inflationary game would the price go up like it has today. And now they find that they must have at least 3~5% raise per year to keep up with inflation. Do they even realize how inflation has robbed them of the buying power with the same amount of cash? With housing price growing double digits per year, a 5% raise won’t save the day because housing price is only one of the factors in surging cost of living.
So I hardly see a bull’s market. Enjoy the good time while it lasts. Even if central banks keep pumping money, the problem can only be differed, not diffused. I certainly see deflation a good thing but I am sure those with significant assets would disagree.
Except for Rob, has anyone here heard of any friends/family who bought houses with cash and with no mortgages?
Oh, you wanted some bad news?
Anonymous “they all ran out to buy a house.” Nope! We’re sittin back thinking like I often do about a guy I know who drives drunk all the time, I been tellin everyone he’ll kill someone or himself in a couple of years. He still makes it home some how. Still tells me he’s sober as a rock, that I am totally wrong about his state of mind. He has trouble finding his place sometimes, and his family is paranoid, but hey what do they know. So what do you think? Am I wrong? 🙂 Because my forecasting his demise is wrong day after day! 🙂
August 29th, 2007 at 4:52 pm
Yup! Young couple making decent money and socking money away while living in one of parents’ basement suite with free rent and free childcare. They saved some $50,000 per year for 10 years = $500,000 and pay cash for their starter home.
I don’t think I consider myself a bear but I do think buying in this market is ridiculous. When something increases it’s value over 100% in 6+ years it is a touch unrealistic. I don’t think it can last but it doesn’t make a big differenct to me if it does or doesn’t. Money isn’t my main objective.
Growyourmoney, that’s a pretty bold commen about the bears. I won’t feel sorry for you when your overpriced RE causes you financial hardship in the near future. Did you notice the RE downturn in Edmonton and Calgary? Did ya? Are we far behind. Here’s a link to an Edmonton paper:
“Did you notice the RE downturn in Edmonton and Calgary?”
I’m sure he only reads the Vancouver Sun.
the bears are still here….
turn around and check the shadows…..
New blog on its way after long weekend.
Will be called Rob’s Words.
It will have lots of info.
I posted this as I think it seems to be unnoticed what Genstar is doing in Mission. (Has anyone noticed whats up in Mission BC. Starting 2008, city to double in size. Silverdale area, phase 1, 600 of 1400+ ac to build 2000 homes. Land in the development Rezoning area selling for around $150,000 per ac. with house and more.) With everyone disliking the Vancouver prices and chance of further price increases. For less than the price of a house in Vancouver you can buy subdividable land with nice houses in Mission Silverdale area.
Strataman you made my night! LOL
I know you are a professional who’s is simply trying to get clients who want to buy or sell a house. Your job isn’t to predict the future. You are hosting this website to hopefully gain a few clients. Thank you for taking the hours out of your week to do this for us. Whether one agrees with you or not the people who constantly slam you should remember that you are not doing this for their entertainment. If I do buy a house in the future I will call you.
“Did you notice the RE downturn in Edmonton and Calgary? Did ya? Are we far behind. Here’s a link to an Edmonton paper:”
A common bear mistake is to think when people change their asking price it means something. It does not. What matters is actual selling prices. According to the article selling prices are still on the way up – big time.
From the Edmonton article:
“The Edmonton Real Estate Board recently reported there was virtually no increase in the selling price of single family resident in July. That month, condo prices went up 2.5%, while townhomes increased 1%. The figures for August are expected to be released early next month.”
Prices are up an average of 1.33% in July 2007 in Edmonton during a typically slow month. That is an annualised rate of 16%. Edmonton real estate was hotter than Vancouver last month.
“virtually no increase in the selling price of single family resident in July. That month, condo prices went up 2.5%, while townhomes increased 1%.”
This tells me that single detached family homes have hit a ceiling. Out of affordability range for the majority. People are turning to condos and townhomes.
Same is pretty much for Vancouver.
As well I noticed sdfh prices in the outskirts of the lowermainland are the same price range as homes in Vancouver. Although the drive is longer you get more. Sorry, the traffic sucks here, I’d rather have a $500k beater than have to sit in traffic for 3 hours a day!!!
Jeff. Would that be the bad news that reports that in July, “condo prices went up 2.5%, while townhomes increased 1%”?.
Oops. I should really read all the replies before commenting!
“Except for Rob, has anyone here heard of any friends/family who bought houses with cash and with no mortgages?
Yup! Young couple making decent money and socking money away while living in one of parents’ basement suite with free rent and free childcare.”
Gotta love ’em.
No problem completely exhausting the elderly grandparents by electing them both their daycare AND shelter providers so they can load up & stash all the cash possible in their basement mattress for themselves.
I bet that was how the grandparents foresaw their golden years: screaming toddlers running rampant all over their house & a complete nuclear family in the basement… that doesn’t pay them rent.
Looks like the grandparents scored a heckuva deal on that one!
“Yup! Young couple making decent money and socking money away while living in one of parents’ basement suite with free rent and free childcare.”
This basically proves the BEAR argument not the BULL argument. Unable to afford housing without income from others financing it. Income being free rent and childcare. If they had to pay this back at the local economic rate what equity would they have? I could also afford to buy if my landlord gave me free rent for a few years! 🙂
Looks like the grandparents scored a heckuva deal on that one!
I could also afford to buy if my landlord gave me free rent for a few years!
Hot Ballz and Strataman,
In my mind, looks those guys bought their place with cash by saving hard and help from parents…….don’t see any problem with that concept.
“Hot Ballz and Strataman,
help from parents…….don’t see any problem with that concept.”
So, ok then, just out of curiosity how do you envision your life in your golden years?
“In my mind, looks those guys bought their place with cash by saving hard and help from parents…….don’t see any problem with that concept.”
There is nothing wrong with the concept, however it has nothing to do with affordability. What it says is that the market is unafordable to the “average” Vancouver middle class couple that doesn’t have outside family income. I would recommend it as the only way people should buy housing. In fact it is preferential to taking a 90% mortgage. It’s just that the Vancouver I WAS used to meant that a hardworking frugal couple, could without going into massive debt, in five years or less, accumulate enough of a downpayment to keep their mortgage debt to a respectable 30 – 40 % of their gross income. That was the Vancouver that was the “Best Place on Earth”. Right now with the crazy annual increase in housing prices that same couple cannot even keep up to the increase in costs, no matter what they do. What ever they have saved likely won’t even match the increase in housing costs on an annual basis. So if you save $20,000 a year the same hypothetical house you were looking at a year ago will have increase in price as much or likely more than what you saved. I tell my three adult children that housing is terrible compared to what I experienced and as far as I am concerned young people have little or no hope without external help. Thats why the current situation stinks. Being born late should not disqualify you from decent housing. Housing should be based on the individuals contribution to local society. Speculators should be taxed to bankruptcy, as they contribute nothing to the productive economy (they produce nothing but debt) and are modern day leeches! Given the choice between a housing speculator and a street person, the one we could really do with out is the speculator!
Speculators should be taxed to bankruptcy, as they contribute nothing to the productive economy (they produce nothing but debt) and are modern day leeches!
So should stock traders, currency traders, commodity traders be taxed to bankruptcy as well?
Awesome post Strataman.
“So should stock traders, currency traders, commodity traders be taxed to bankruptcy as well?”
Yes if they are speculators they should be. Don’t confuse the issue, there are investors, in real estate for instance as well as stocks, and there are speculators in all of the above. I have no trouble with a landlord making a return on their investment (I rent from one and consider it mutually beneficial), I have trouble with “flippers” (leeches) of all sorts!
To clarify; an assignment is a leech, a currency trader is a leech. Absolutely no contribution to society, not even close to a street person who contribute thru recycling! 🙂
Australia’s first subprime victim
The letter sent by Ben Bernanke, Chairman of the US Federal Reserve, to New York Senator Charles Schumer about subprime issues.
“Speculators should be taxed to bankruptcy, as they contribute nothing to the productive economy (they produce nothing but debt) and are modern day leeches!
So should stock traders, currency traders, commodity traders be taxed to bankruptcy as well?”
the government should make it owning a house is mandatory for all Canadians; and selling any thing more than inflation rate plus 3% is illegal. Now, back to reality…
uh… no one seems to question this … but whatever people (traders/non-contributors …etc) are legally allowed to do, the government allows. So who let those non-contributors to harm the market?
You’re absolutely right. Speculators cause nothing but harm because they stop your kids from buying real estate at a price that you and they like (as opposed to a price that other peope are willing to pay). Plus, when the speculators get their profits, they just spend them on things that make the economy chug along – another bad thing. Of course, those crappy, temporary construction jobs that speculators help create – another negative. And of course, once they make their money in the big bad city, they probably descend on a place like Winnipeg and buy a nice house free and clear, thinking, like all equity locusts, only about themselves, and not the poor local who has to adjust to new prices. Besides, where did they get that money anyway? They’re probably rich foreigners, or grow op operators, or born rich/lottery winners. They damn sure don’t deserve what they get.
I’ll remove my tongue from my cheek now. We live in a market economy, and all the players, as a collective, make the decisions on who gets what for how much based on our actions. If you want certain people taxed more than others (and yes, I realize we do this somewhat already) you’re picking winners. That’s a challenge, of course, for the reasons pointed to above. Why should we favour your kids, for example, at the cost of more construction jobs? Or at the cost of more sales proceeds to the sellers of the properties? If I sell my retirement nest egg principal residence to a speculator, should I be taxed into oblivion? Of should I only have the option of selling to one of your kids in an artificially restrained market? Its a tough challenge, but I think the evils of speculation are more than balanced by the benefits of it.
Even I think taxing the the speculators is a touch extreme. However, I think there should be some restraints put on how much residential property non-residents can buy. Any foreign person or group should be allowed to purchase in designated areas and then have to pay extra $ on each property if they want to buy in the ‘locals’ area. This is a simplified model of my thoughts but I hope you get the idea. I’m sure many will try and get around this but something should be done. The market has never been more unreasonable than now!
I have to liken it to foreign students paying additional costs for attending local universities.
August 30th, 2007 at 9:55 am
“So should stock traders, currency traders, commodity traders be taxed to bankruptcy as well?”
People invest in shares, trade currency and buy commodities in hopes of making a profit with market price movements.
So if you invest in 10,000 shares of Company A at $10/share and it goes up to $12/share the following week and you sell, you should be taxed to bankruptcy?
If you buy $50,000 US dollars today at 1.06 CAD per USD and the US Fed Reserve increases interest rate and causes the the US dollar to surge to 1.10 CAD per USD and you profit from buying back the CAD…….you should be taxed to bankruptcy?
You buy 100 oz of gold at US$670 per oz and price goes to US$700 oz and you sell, you should be taxed to bankruptcy?
“Any foreign person or group should be allowed to purchase in designated areas…etc..etc..etc…”
If I recall correctly I think Vancouver already had something like this already in place just a little while ago at the turn of the century or something.
Its a quiet piece of history that the city isn’t very proud of.
Something about only white people being allowed to own real estate or something?
I think that’s disgusting. & a tragedy. and shouldn’t be revisited by sticking foriegners in “designated areas”.
“This tells me that single detached family homes have hit a ceiling. Out of affordability range for the majority. People are turning to condos and townhomes.”
and where all these people, who are selling condos and townhouses are going? Are they fleeing this city with a bag full of Cash?
That’s timely. I just sold a piece of North Van property. Restrictive covenant from October 1945, between the seller, any future buyers and the Distruct of North Van. No selling to Asiatics or Negroes.
These covenants are no longer enforceable, but they are a historical fact and not exactly one that we should be proud of.
If Rob so much as to worship the so called free market, why the interest rate control by the central banks? Why worry about credit or liquidity? Why use tax payer’s money to intervene? Just because the government is playing a bad game and you and many others seem to follow, it does not mean it’s a good thing in the long run. So those construction jobs that lived only a few years have given the market some jobs …. and an expensive housing market…. Really, can you really say you’d worship the speculators?
I agree with Rob and others who speculate; I mean, realized capital gains for investment properties are taxed – as are any sort of investment gain. Even if you speculate with your own home, you need to be very careful lest CRA decide you’re not a homeowner but rather a flipper.
Lack of control on speculation has created shortages of affordable property – but so have controls like high capital gains tax rates and rent control. So regulation won’t cure the ails of the market. Nor will high taxes on investment gains. What does help is high employment, low inflation and interest rates, and realistic expectations.
Rob Said; ! “Plus, when the speculators get their profits, they just spend them on things that make the economy chug along – another bad thing.”
Seems like I have to spell everything for you, I said speculators – flippers. I have nothing but respect for developers, and investors who by the way create those jobs. I know of no speculators, flippers who could work hard enough to build one house let alone a bunch. And speaking of preferential tax breaks very few speculators pay any income tax as they cushion it with paper write offs on paper ownings. Stocks are the same I invest in stocks, I choose companies that produce something, I do not just buy and sel to make a quick buck. A speculators money is stolen money from a producer somewhere. If I robbed a ban and got away with it would you say after I bought a house that I had “contributed to the economy?” Give me a break the world finances are in a mess due to self appointed little men who think as you say “my kids are important I’ll just steal the money”. Speculators are leeches!
Anony, I think you missed my point all together. Maybe you should try reading without your white hood on.
Perhaps you would be happier living in Cuba, Venezuela, or the good old USSR of yore where such experiments in controlling markets are/were prevalent?
Speculators (like me, although not in real estate) have not stolen from anyone – comparing speculators to bank robbers is ludicrous. Speculators exchanged a legal monetary instrument to pay market value at the time of purchase thereby satisfying the seller, and receive market value at the time of sale satisfying the buyer. Are you telling me that the bank or its customers are satisfied by a bank robber? What a farce – where do you get this stuff?
You do realize that all speculators take on risk in order to achieve their rewards? That deployment of speculator capital towards risk underpins economic growth. Just look at the junior mining industry that has grown out of the ashes of the bear market. Look at the construction jobs and wealth created during the RE boom. No one can deny that wealth has been created, and speculators are typically the first ones in – exposing themselves to the earliest and gravest risks.
The truth is that no one knows what society will look like in 5, 10, 30 years from now. The primary human behavioural trait that trumps all others is self/family preservation (aka survival), and one of the best ways to achieve this is to build wealth to act as a cushion should this be threatened.
If for instance China and the US were to engage in nuclear war over the remaining cheap oil reserves, I would rather be in a position of wealth in order to help acquire clean food and water for my family.
You bet I will continue to speculate in the free market economy that has underpinned western society for the last several hundred years. The beauty of this country is that if you don’t like capitalism and free markets, you are free to attempt to vote in a Socialist/Communist regime, or move to such countries.
how do you define ‘locals’?
people that were born in Canada?
– exit immigrants that have earned their way in.
people that can trace their roots back to some certified First-Nations blood?
– exit most people in Canada
or any other vague, discutable definition.
all it leads to is a sealed-off, backwards nation.
I am sure it’s really hard to buy RE in North-Korea. but maybe that’s your role-model.
“Speculators should be taxed to bankruptcy, as they contribute nothing to the productive economy”
Speculators contribute capital and secure financing. Something absolutely necessary for any capital market to thrive.
Speculators actually help the housing market increase inventory. For example on presales it is the speculators who provide the security deposit to allow the development to get financing and be built. Without speculators half the condos being built right now would never get financing for construction. Projects like Woodwards that create social housing wouldn’t get built. In the end without speculators, there would be less new construction and less supply which may mean higher prices.
Are they fleeing this city with a bag full of Cash?
no they are renting and waiting…..
re: taxing the flipper/speculator.
there is no need for this, when the market turns any over leveraged f/s will be crushed
by an implacable fair market place, much better than taxation IMO
Almost sound like the speculators are a huge benefactor to our society/market and that we couldn’t thank them enough. Our family produces medical equipment products and we sell them with almost a fixed price that with inflation, the price actually drops in real dollar. What about housing? Why should a $200k house be $450k now? No one asks the speculators to take the risks. And I do mean speculators, not investors.
Jacob, locals = residents or people moving into these places. Not investors from all over the world just buying property to rent, lease, flip etc.
I find the replies to me earlier comment somewhat amusing. The replies all took a ‘racist’ twist (isn’t racist an odd term in itself – aren’t we all from the HUMAN race). Not a sole considered my comment about guidelines to tax non-residents like they do in universities. I know RE agents do not require a degree but I assumed someone knew what I was talking about when I suggested applying the non-resident student idea. I guess it’snot well known unless you’ve been through some post-secondary institution. My bad…
Craig, interesting comments. Do you know what the markets are like in those countries? I have no idea and I’m curious.
I prefer to earn my money as opposed to speculate, gamble and guess. I guess I’m old school because I think you should work for what you get. This RE market has caused a lot of people to get rich and that’s great for them. I just wonder what else they have offered to society other than collecting money.
That’s it. I worship speculators. That’s the point of my post. Excellent analysis.
You said speculators and I said speculators. I wasn’t confused by your usage. Tell me: when a speculator invests in a pre-sale and gives money to the developer and the construction companies, is his money different from the investor who plans to hold and rent? I don’t see a difference. If you do, then you need to explain it and convince at least some others that its worthwhile making the distinction. But, you don’t need to spell it out for me. I can understand you and still disagree with you.
A house was bought for $220k near Metrotown in 1991. The price went up and then down and it was assessed by the city government at $255k in 1999. And now it’s $580k. So is that not speculation that drive up housing price this much in such a short time? Seriously, if investors can buy carry trades with high liquidity, would they invest in RE and expect some 15% return with option of quick exit? Or is it speculators that manipulated the market?
Rob: “Tell me: when a speculator invests in a pre-sale and gives money to the developer and the construction companies, is his money different from the investor who plans to hold and rent? I don’t see a difference.” He’s not a speculator at that point, he/she is an investor, once they put the contract up for assignment however they are no longer contributing and are stealing money from the buyer. If they sold for cost + inflation then that would be non-leech so to speak. But you know as well as I that a quick look at assignments on Rennies site will show massive increases in price with absolutely no benefit to the developer or your so called creating jobs. So you tell me without this there would be no economy while I say the buyer of an assignment from other then a leech would still have that money and somehow would more likely spend it in the local economy then said leech!
“once they put the contract up for assignment however they are no longer contributing and are stealing money from the buyer.”
1. The project may not have gotten out of the ground in the first place without that speculator.
2. If the assignment wasn’t put on the market it would be one less unit for sale. That means one more buyer bidding on a different unit that some other buyer wants.
Don’t fool yourself. People can be educated.
Its easy to point a finger at speculators or foreigners or any other identifiable group and say “Tax them, they’re bad and contribute nothing”; its harder to actually make the case.
Its also harder to convince doubters that you’re asking for anything other than favourable treatment. Its the politics of envy, and its common.
Does the money spent by a speculator or a rich foreigner not stay with the seller of the service or product?
in principle I am against taxing specific “types” of people. I would agree with you.
But saying that it is difficult to target people is pure nonsense: how about a higher transaction tax on properties that are bought and sold within 6 months?
How many non-flippers do you know that buy and sell at that frequency? Would this decrease the amount of flipping/speculation in RE?
“Does the money spent by a speculator or a rich foreigner not stay with the seller of the service or product?” No actually it doesn’t tends to go out of the community, and lower the standards of the community. I’m not big on people that don’t live here and pay income taxes using our systems such as health care on a as needed basis. Much rather have committed homeowners who don’t have to pay leeches living here spending the same money that will now be stolen from them. As to favourable treatment that is exactly what you are protecting, don’t contribute to the local economy, steal from it come running back from Hong Kong or Alberta when you need help. Totally favourablre biased treatment, as if being a leech entitles you to special roights. Speculators are the original favorable treatment people, example: no one who doesn’t pay income taxes here should be allowed in a Canadian hospital until absolutely every body else has had treatment and the hospital is empty.
You are protecting the very people you mentioned. But we will never get rid of them, leeches are always around! 🙂
Rob, I think you have missed my point entirely so I will try again. I say non-residents should face additional taxes for buying local RE so the local residents have a fighting chance to get some of their own RE. Non-residential investors can come from everywhere and when you live in a nice city then you’re going to get that much more interest. Outside money will swoop in and those buyers are typically quite well off. What kind of chance does the average person have to buy some decent RE? Again, I am not too concerned about the infusion of money but more concerned about the average local person that is being priced out of his home/residence/city by investors, speculators etc.
What kind of chance does the average person have to buy some decent RE?
once the market turns the speculators will depart and the locals will reign supreme.
the whole thing will be an interesting anecdote for your grandchildren……
why when I was your age every block here had million dollar houses on it….
grampa is that why you are living with us?
Why should a $200k house be $450k now?
Why are you assuming the $200k level is more representative of “legitimate value” than the $450k level?
…a currency trader is a leech…
This is a truly bizarre statement for someone living in a resource-export and tourism based economy. Without currency traders greasing the wheels of commerce, those of us in BC would be completely screwed.
“Without currency traders greasing the wheels of commerce, those of us in BC would be completely screwed.” Shows how much you know about currency trading. The idea of currency trading is to trade currencies to allow grease for the wheels of commerce as you say. Unfortunately as usual speculators (leeches) found another niche where they could make money doing currency trading to make money flipping one currency to another and back as required. Many times they hold a currency for only a few hours before dumping it . This is called “gambling” and greases nothing other then their pockets. They should be called currency gamblers not traders cause they have no interest in the impact of their trades other then how much money they will make. They could care less if their trading results in a few hundred unemployed which happens daily.
Obviously some people are looking to point their fingers at someone for their poor decisions in life.
Immigrants and foreigners are a classic target. You should study what Hitler stood for because it was similar.
Sometimes people need to look in the mirror when trying to figure out who to blame for their misfortunes.
Simple solution is to get the government out of the housing market and let the free market rule. No more tax breaks and no more CMHC. Then lets see where the dust settles. How many homes would sell without government backing?
Prices might return the the levels they were before the governement interfered with the market.
Wow Dyugle! Finally a lucid post after how many? 30 rants?
I love you too.
Newsflash, I’m doing ok but my comments are on a more general basis. Our local residents are getting squeezed out of here. I did buy back in the day and am doing ok. I just don’t like to see people I know have to pick up and leave because they can’t afford this place. I know it’s tough, for some of you, to look beyond your wallets.
Dyugle, in case it wasn’t clear, I didn’t mean you ranted 30! I meant I was happy to see a insightful comment after others ranted back and forth for 30 posts.
eh…Rob…how about the numbers?
Gotta tell you guys, speculators own real estate as well, why would they talk against there own investment?
Just like Bulls hate Bears because they expect more people to help perpetuate the overly high cost of real estate through purchasing.
Oh and if your not with them they truly can’t stand it!!!
“Are they fleeing this city with a bag full of Cash?”
Blue skies comment: “no they are renting and waiting…..”
I say they could either rent and live of the interest from their equity of the sold house or continue in the rat race by going for a house. Perhaps they maxed out when they bought an apartment with 25 year ammortization then discovered when the banks introduced 40 year ammortization they thought that now they can afford a house!!!
I love the generation that lives off their credit cards!!! Instant gratification. Little do they know when their times up I’ll be buying their house at a discount. Why you ask cuz this is a market and markets fluctuate while I get to live off equity and stash my cash!!!!
Leeches, and flippers, and traders oh my!
What’s the matter sparky, stocks took a hit last few weeks?
“Housing should be based on the individuals contribution to local society”
Is it not? Your skillset is worth x amount of dollars which determines your housing.if you want to improve your housing improve your skillset.
Don’t get me wrong. Its not difficult to target people. Targetting people is easy.
Its difficult to make a good case for targetting people, though. You think targetting flippers is a good thing. That’s awesome. I don’t happen to agree. We can both, easily, identify the flippers and we can both easily agree how to turn the identification of them into targetting. What’s difficult is you convincing me that its a good thing to do.
You’re tipping your hand by using “leech” so often 🙂 Here’s the money train: rich, stinky, foreign leech speculator brings money from his home country and pays a local developer money for a pre-sale. Developer pays some to little old lady, who uses it to pay off her local kids’ mortgages. He uses some more of it to buy raw materials from local suppliers, and some more to pay local labour, who in turn spend the money locally.
After a year the rich stinker assigns his pre-sale to another rich foreign speculator. Stinker one takes his money (sans capital gains) back to home country. The whole deal is done by fax. Rich speculator #1 never even came to Vancouver, and never saw a hospital. Stinker #2 sends his money from his home country to Vancouver, where local lawyers and the taxman take a cut before sending what’s left to Stinker #1. Later, Stinker #1 and Stinker #2 pass each other in their home town, none the wiser.
Vancouver is now home to Stinker #1’s original money, and a piece of Stinker #2’s money. Local real estate lawyers buy a local round of golf.
Stinker #2 rents the unit out at rents that simply don’t justify buying it. He hopes to flip it, but can’t. The tenant loves his landlord, because otherwise he’d never be able to have a downtown condo with granite countertops for so cheap. He gets on a blog that night and argues why its so smart to rent.
I think you’re right. I missed your point. I thought you wanted to target some people so that you would be able to get what they have acquired, only do it more easily.
In fact, all you want to do is tax them so that you have a fighting chance of accomplishing what they have accomplished. I can clearly see the difference now. All you want is fair outcomes distributed by the government. Excellent idea. Why haven’t we thought of that one before?
I guess my comprehension problem is that I don’t see outside investors as some sort of super-being that you need protection from. Also, I’m confused: do these rich foreign investors only run the prices up here, or were they responsible for Miami, too? And San Diego? Phoenix? Calgary…? Edmonton….? Saskatoon….?
Are you saying we’re just plain lucky to have those resources?
Rob, gotta say it, that stinker 1 and 2 is classic …..
The bears were telling us to put our money in the stock market a couple of months ago, they’ve gone quiet on that now.
good point skeptic. the bears kept going on and on about house price declines. they forgot to mention the stock market would get hammered and isn’t that where most of them claim to have their money sitting??
Rob, the investors aren’t super-human but they tend to help drive this ridiculous market. I just want to see a bit more realistic market (by that I mean prices that do not over extend buyers and cause many to live beyond their means just to buy RE).
Anyway, I see your RE agent mentality shining through with nothing but cheeky comments today. It’s unfortunate that you can’t provide reasons for your comments – I’m sure you have examples and evidence etc to back up your calls but you prefer to make silly comments instead. You used to take the high road on your replies but over the last few days the sarcasm and cheeky comments have come flying out. I hope all is well in your world and hope you can provide, once again, some insightful commentary down the road.
WSJ.com (today) “Investors Default On Outsize Share Of Home Loans”
Don’t worry. Will never happen in Vancouver.
Strataman – The forex markets are the largest, most liquid markets on the planet trading in the trillions of dollars on a daily basis. The “few hours” types you’ve got your knickers in a knot over aren’t even a pimple on a pimple – they are fodder for the machine and completely irrelevant.
Rob – I suppose there is an element of luck to winning a prize in the geophysical lottery, but it also takes a lot of hard work and risk-taking to cash that ticket in. There are several resource-rich places on the planet where most people unfortunately live like mangy dogs. 😦
“Lucky” – sure. “Just plain lucky” – I guess I don’t quite see it that way.
“Newsflash, I’m doing ok but my comments are on a more general basis.”
Who said I was referring to you? Does the shoe fit?
“Our local residents are getting squeezed out of here.”
The local residents being who? Once someone buys a residents here are they local or must you be born here?
“I did buy back in the day and am doing ok.”
Nice to hear you haven’t been squeezed out.
“I just don’t like to see people I know have to pick up and leave because they can’t afford this place.”
Why do they have to leave? Being “local residents” they must have been here some time already. Why the sudden need to buy now or pick up and leave.
“I know it’s tough, for some of you, to look beyond your wallets.”
It is a free country and a free market. I like that whether it helps or hurts my wallet. Instead of complaining about it I prefer to study it and figure out how to make it work for me. It is much easier to change yourself than the world around you.
Answer this: did rich foreign speculators drive prices up in Saskatoon? Edmonton? Calgary? Miami? London? Australia? Spain? All those places get named in bubble talk. All have had big price run ups.
Do you have any evidence showing that foreign money is behind our price run ups? (We’ve had offshore buyers for years and years, btw)
Between what I sell and broker I see quite a few real estate deals. I don’t see a lot of foreigners driving prices up.
Quick survey of renter here: is your landlord a rich foreign speculator or a local?
From that perspective I think that you’re attributing much more market power to rich foreign buyers than they really have.
But let me indulge you for a moment. Let’s pretend foreign money is the reason for our high prices in the Lower Mainland. Is it bad that prices are high? Local sellers benefit, correct? Aren’t you really arguing that local sellers should be forced by the government to take less so that local buyers can pay less?
I’ve only said three things, and you’ve presented the evidence for each of them through your actions and your ommission of any facts: You’re practicing the politics of envy, you’re giving too much weight to foreign money, and while its easy to target people, its hard to truly justify the targetting.
Call me uneducated, tell me I miss the point, label me a Realtor and call me cheeky and sarcastic. Or actually make an argument. Your call.
As in any country, Canadian citizenship confers certain rights and privileges on Canadian citizens. While I can’t say that I am for it or against it, favourable tax treatment for locals when buying/selling real estate could very well be entirely consistent with the notion of citizenship.
I am relatively certain there are several precedents for favourable real estate tax treatment for locals/citizens in European nations. Contrary to the Fraser Institute-inspired commentary above, such differential treatment is not necessarily the hallmark of either (a) communism or (b) fascism. Indeed, by many markers of societal health, said Europeans win hands down.
As an aside, how do those of you infatuated with unrestrained free-market capitalism manage to reconcile the fact that the US is, for many who live there, an entirely disfunctional country? Have you ventured near New Orleans recently? Do you just not care about the poor? Or as ol’ Craig said above, do you care only about your family and not your community? Man, what a Dickensian world view. Oh, and Craig, if the nuclear war did occur, good luck holding onto your pile of gold while everyone else in your community starves.
As for taxing flippers/speculators, we already do it. As someone alluded to earlier, if you buy/sell too often you can be declared a flipper by Rev Canada and have your capital gains taxed as income. Last I checked, this provision hasn’t stopped all contruction and economic activity in the province. Again, the Fraser Institute fear mongering is getting a bit extreme.
Yes, Rob, I would favour tilting the tax rules so that prices stayed more affordable. Sellers would still make a profit but would have to take less. In exchange, buyers (some of whom the seller might care about) would more easily be able to stay in the community. A more diverse community is a better community. Of course, sellers re-entering the market would get what they wanted at a lower price.
There is a reason why most all free market capitalist countries have redistributive tax systems. The system tends to break down when the gap between winners and losers gets too big. Even the Republican party in the US has figured this out.
No housing bubble or flippers in Germany. You have to own a home for 10 years before you don’t pay any capital gains tax on it.
I’m not saying preferential treatment for locals is fascism or communism. I’m saying its poorly thought out or simply envious. It looks to me like a plan that allows a narrow consituency to win at a cost to a wider consituency (with both constituencies being locals).
Call it Fraser Institute inspired if you like, but I’m simply saying that if you prove you’re doing a greater good for a greater number, I’ll probably support you; all I’ve heard so far is “Restrict non-residents so a small group of people have a “fair” chance to compete”. The argument, so far, lacks a bit of merit, imho.
You can spin my not wanting to pick a favourite without a good reason into a fascist love affair with the Bush war agenda if you like, but its a bit of a stretch. You can spin it as a love affair with unfettered capitalism, but again, that’s a stretch. You can even call it hating the poor, but it begs the question: does restricting the options of a senior citizen on a fixed income who has planned on using their principal as a retirement plan help the poor? Which poor?
In case I’m not being clear enough, I’m just asking that you make the case that the redistribution of private property is good for more, rather than fewer. So far everything you’ve said can be spun as greater good for greater number, but it can also be spuns as vote hunting for a government that wants to woo special interest groups. As I said to alpha bear, stop educating people about common theory and start making an actual nuts and bolts argument.
Good point. If Germany does it we should too. Maybe we should copy their immigration policies as well. What do you think?
Rob, I agree foreign investing etc. is only a part of the reason we have over-priced RE. I randomly picked that area to make adjustments/suggestions etc. I do not have the time or interest to lay out a paradigm in any detail when I’ve already suggested it would be loosely based on another system.
I guess you’re not familiar with that system because you suggest sellers would have to ask for less $ from local investors/buyers. Not really. Non-residents would have to pay more. There is a difference.
I think local RE should have some special consideration for people that live here. This will not make a huge dent in the bubble but would cover some housing issues and maybe even address our significant housing problem for the poor. My work and effort is based on helping people and not make as much money as humanly possible. Greed is such problem; it’s like a plague.
Finally, there is no need for me to call you uneducated, a Realtor, cheeky or sarcastic anymore. For that, I have a famous quote, “What is understood need not be discussed.”
Great quote. It explains a lot. And its a common refrain for some people.
It seems that your thinking is as follows: If you understand me you’d agree with me. If you do understand me but don’t agree with me its because your heart is in the wrong place, unlike mine. Because its inconcievable to me that any right thinking person could fail to reach the conclusions that I reach based on my evaluation of the evidence that I see.
I’d argue that you don’t understand things as well as you think.
I’d also argue that you’re applying the label of greed pretty indiscrimanantly (Is the old widow who wants top dollar for her property so that she has a safe retirement greedy? Is the middle aged self-employed male whose trying to provide for his retirement more greedy because he’s younger?).
And of course I’d argue that if you raise the price for one sector of the economy (non-locals) some of them will leave the market, which will reduce demand and hence reduce prices.
Your challenge is still to demonstrate the benefits of your idea. You’re flinching, and instead dismissing critics and polishing your own credentials.
How tough would it be to answer the question: who benefits from your idea, who suffers, and what unintended consequences might arise? Put those answers together and you’ve completed the “we should do/not do this because….”sentence.
Right now all you’re saying is “we should do it because its my idea, I’m smart and I’m sensitive and not greedy. Another chorus of “kumbayah”, please! “
I don’t check for a bit and i miss this civil war. Eeeek. Anyway, Rob, I appreciate the work you do on this forum. I am new to the real estate thing and doing my due diligence. Checking out this blog can only help, I think.
Rob, don’t let the haters get to you! Even if you’re not educated you seem to know your field and that’s a great accomplishment in it’s own right!
“Stinker #2 rents the unit out at rents that simply don’t justify buying it. He hopes to flip it, but can’t. The tenant loves his landlord, because otherwise he’d never be able to have a downtown condo with granite countertops for so cheap. He gets on a blog that night and argues why its so smart to rent.”
You just about lost me with all the stinkers there! So I’ll concentrate on YOUR stinker #2 wh apparently I rent from. First this stinker has an excellent P/E ratio purchase price 190,000.00 rent $1400.00 Second this stinker has no intention of flipping it, and specifically requested a long lease (3 years). He is what you commonly emphasize a long term investor. This stinker owns 7 units in various towers and rents long term on all of them with I suspect similar P/E ratios’. This stinker (the #2 one) has not bought a thing in the last 2 years he says it’s ridiculous pricing.
You seem to have a thing about rich immigrants. My wife is an immigrant, 5 years just got her citisenship this year. I meet a lot of immigrant owners in my line of work, and they are a pleasure to deal with compared to Canadian born recent flipper type owners, by recent I mean bought in the last 2-3 years. Most are not absentee owners, at least the ones I work with because as a rule the absentee owners are a pain in the ass and not very ethical in paying for services. That applies equally to an Alberta owner as to every other absentee owner.
Question: You never answered why a flipper. (I cannot use the word leech, seems I found a sore spot in your character) 🙂 who doesn’t develope anything, doesn’t add material net worth to the development helps the economy by stealing some ones money and turning a profit while producing absolutely nothing?
Strataman, I am more inclined to focus on owners who treat tenants poorly or who make massive renovations (or rebuild) in a way which does not fit the character of the neighborhood. In my experience (which is very limited indeed and may not be representative), it was the long-term owners who were more problematic on these issues.
At today’s rental rates and property values, one can view short term owners as subsidizing renters. And that’s fine by me.
Its not me with the thing about rich immigrants. I used them as the target because of the clamour to restrict real estate ownership by non-residents (sorry, I mean tax them more severely). You’re beef there is with alpha bear, not me.
Stinker #2, with your numbers, isn’t the stinker #2 from the example. My stinker #2 is a flipper who doesn’t guage the market properly, and gets caught holding the bag. He pays a high price to get a product on the market and is forced to hold (or possibly sell at a loss). Either way he provides the money that pays for the accomodation for a local, who gets subsidized rent (at least according to many pro-renters, and they do, after all have a pretty sound argument in some cases).
I don’t share your expereinces with absentee owners, whether Canadian, US or overseas. I deal with plenty. They’re like everyone else. Some are good, some not, but mostly they’re very good. They ahve long term records of being ethical (my advice? de-hire unethical clients. Life is too short. Pick your friends, in other words).
“Leech” isn’t a sore spot with me. You just used it so much I thought you were joking. When someone buys something from someone else, and they’re both willing participants in the market, nobody is stealing anything from anyone, and they are certainly not stealing from a third party who wasn’t involved in the sale.
When a flipper re-sells at a higher price he adds value to his property (evidence the higher price) and neighbouring properties. That increased price means more liquidity in the market. We can argue that liquidity that comes from flipping is just inflation, and therefore bad, and that’s certainly more interesting than drawing lines between “material” contributions and merely monetary ones. However, its generally accepted that more economic activity confers more benefits on more people than less economic activity.
On that basis alone I’d say flippers are a net benefit to everyone. They don’t take the money with them. They spend it. They pay taxes. They invest in other things. They pay strata fees while they’re waiting to flip, and that contributes to your income stream. I find the distinction between “adding material value” or “earning my money” a little disingenious, frankly. It looks for all the world to me like “They don’t deserve what they paid so much for; I should get the same thing for less; far from thinking property is theft, I like proeprty, and want some for myself; I just don’t want the property rights of others to hamper my acquisition of property”.
I also find the distinction inaccurate. Its like saying “capital that is locked up in real estate is unproductive”. Does anyone think that when you pay $800,000 for a piece of proeprty that the money goes into a hole in the backyard, or down in the basement? Last I checked the money changes hands, and the people receiving the money, whether they be sellers, banks, lawyers or whoever, continue moving the money along. It doesn’t get locked up anywhere. (At best someone can argue that the actual individual who buys RE locks up his debt servicing potential and so can’t make other investments, but that’s a much weaker argument).
“We can argue that liquidity that comes from flipping is just inflation, and therefore bad, and that’s certainly more interesting than drawing lines between “material” contributions and merely monetary ones. ”
That was basically my point, I guess I didn’t convey it right. From a micro point of view what you say about increases in prices is an economic stimulant, however from a macro point of view idf the same flipper was out of the market the end owner would in fact have the same disposable income that said flipper made. My point (and yes it is somewhat idealistic) is that given two scenariols one where a flipper intervenes and raises a price $100,000.00 dolllar due to financial capabilities but no productive input, or the second where the end user/ownr buys at $100,000.00 less serves two things at least. One; housing is affordable for a standard frugal middle class double income couple and the 100 grand will in all likely hood contribute to the same economic benefit to the community as it would be disposable income. It is more likely to contribute to the local economy. An income earner who resides in Vancouver contributes to transit, healthcare, and public expenditures far beyond a property tax payer thru income taxes. So I am not arguing the economic benefits on a global scale, but rather the overall health of the community. Both booms and busts are bad for any community, and true some speculators will suffer the busts, but the point is during the boom there contribution is NOT as all encompassing as a commited taxpaying resident. And in addition the cause direct damage to productive members of the community who cannot afford the inflated price.
On the leech topic… 🙂 I’m, going fishing for 3 weeks up at my cabin in the Chicotin, always go this time of year… the leeches (in the lakes) and mosquitos are gone! No internet, no cell phone, hell no electricity! 🙂
Hold on a second here. How is that you’ve got the cabin in the Chilcotin and I don’t? Now I am envious!
I have no idea what kind of immigration policies Germany has. I just heard the tidbit of news on BNN as they were talking how capital gains tax on flipping houses varies around the world. Other countries like the U.S., France, etc. were mentioned too, but I remembered Germany because you had to keep the property the longest time compared to other countries.
My point is simple, and you can take it back to when you were a kid and your dad caught you doing something stupid with your friends. Just because someone else does something doesn’t mean its smart. It might be smart, but you need to prove the thing’s merits on its own. As I say, so far flipping seems to be bad because other people get to play and other people get the profit.
Nobody’s making the argument that people are going homeless, for example.
Nobody’s saying flippers don’t create jobs or economic activity that wouldn’t otherwise happen.
Nobody’s saying that flippers take resources away from other important things.
Nobody’s saying that flippers don’t already pay more tax than non-flippers.
It seems that they’re saying that flippers make it so that they can’t buy at lower prices, and that flippers don’t deserve the profits they get for the risks they take.
I don’t practice nor recommend flipping, as you know, but so far I’ve just heard flipper envy.
Personally, I don’t have flipper envy, as I find a large majority of flipped properties are rush jobs, on the cheap and sloppy. I’m very fussy with the quality of renos and the quality of the installation. Although I have looked at several flips for sale, all have left me cringing at the type of renos that were done.
Plus…when the economy slows the flipper who had gained so much in the past, may end up losing everything in the future.
Real Estate Board of Greater Vancouver August 2007 single-family home $726,067. up 11.1 per cent from a year ago.
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