The crash tax?

FIRE modified

On a day when the price of oil oozed back down to $43 and the Canadian dollar slid into the 75-cent range, provincial politicians in BC told foreign investors to buzz off. It was a bold, unexpected and political move.

In fact, just about all the pols had on their mind was housing. The BC government has also taken over regulation of the real estate business from the industry itself, and paved the way for Vancouver to start taxing property owners for not living full-time in their own condos and houses.

The new levy on foreign buyers was a shocking, ground-breaking reach for a bunch of people who said a few months ago this would be a dumb move. But a spring election gets closer by the week and, ya know, it’s all about perceptions. And dumping on foreigners. In a Brexit-&-Trumpian world, it’s the new normal.

Anyway, here’s the deal. Foreign nationals (or corps) registering property in Metro Vancouver will be hit with an astonishing tax of 15% of the purchase price. Yes, that’s an extra $300,000 on a $2 mill pile. Welcome to Canada. Everyone else pays the same land transfer tax as now – about $38,000.

The logic behind this: the tax will help dampen demand and throw water on runaway price acceleration in YVR. It comes weeks after the province started collecting data on foreign buyers, discovering they’re behind about 5% of deals. By the same token, this amounted to $1 billion worth of sold listings in a month. That would equal tax of $150 million. The province has also left room to raise the Chinese Dudes Tax to 20%, if it feels like it, or depending how the polls look for premier Christy Clark in March.

So what might this accomplish?

Beats me, since a lot will depend on how these two moves – a tax on non-resident buyers and another tax on investment properties – is perceived outside our borders. If we look like a bunch of anti-globalist, wall-building, inhospitable nimrod isolationists, then the flow of capital could end quickly. If everyone living in Vancouver is correct (as opposed to me) and offshore capital is the No.1 reason houses are insane, then this would be a Crash Tax.

Given the weakening energy sector, our no-growth economy and the latest job loss numbers – not to mention a US presidential candidate who wants to tear up our free trade deal and erect his own tariff barriers – predicting consequences looks easy. I think you should have listed your house in Kits last week.

Then again, the Chinese Dudes Crash Tax could also work to force the same flow of capital (that everyone believes is evil) into lesser-priced properties. After all, if these Chinese dudes are (as everyone believes) a bunch of corrupt money-laundering mainland criminals, why not just use a few condos for the wash-and-rinse cycle instead of one fat Shaughnessy mansion? Or, better yet, swim to Victoria?

That would topple prices at the top end of the market while fattening them in the middle. Suddenly the last sleeve of listings truly affordable on average Van incomes would no longer be that way. So it’s hard to know how Christy could stand up on Monday and say, “Today we are taking measures to ensure home ownership remains within reach of the middle class.” Actually, it’s the opposite.

So if Chinese dudes are a major market-maker, a tax of this magnitude would have the same impact as a big spike in mortgage rates. Given the fact prices have catapulted higher while sales of detacheds have collapsed up to 40% already, it could be game over. If the buyers flee, so do billions in home equity. Gone will be the force that pushed 91% of all Van house over the $1 million mark. So much for that early retirement.

But if the Chinese dudes’ influence is more urban myth than economic reality, how could these moves – taxing land registrations and empty condos – make housing more affordable for anyone? Vancouver continues on the same path of real estate obsession, over-borrowing, rampant speculation and a dangerous one-asset economy.

The governing Libs are gambling, of course. The more market intervention by government, the more unknown the outcome. Politicians anxious to be seen ‘doing something’ have opted for the lowest common denominator of blaming external forces – foreigners – for a problem which has been 95% created by house horny locals, and remains.

Either the market keeps soaring, or it turns into a smoky hole with a tail fin protruding. There is no soft landing. Not even for Ms. Clark.

248 comments ↓

#1 TurnerNation on 07.25.16 at 6:15 pm

USD/CAD is again telling the true story.

#2 What a gong show! on 07.25.16 at 6:20 pm

Mysterious wheeler dealer is at centre of a web of bc real estate deals
http://theprovince.com/business/real-estate/mysterious-wheeler-dealer-is-at-centre-of-a-web-of-b-c-real-estate-deals

Then this…

No action planned on money laundering, tax evasion in real estate
https://www.youtube.com/watch?v=NeDl_4R06GA

#3 YVRpeasant on 07.25.16 at 6:20 pm

Hey Garth, thanks for the post.

Someone posted on the comments here that the tax was on 2M+, but I think its on all price ranges. The 2M+ was just an example they threw out.

http://www.cbc.ca/news/canada/british-columbia/province-to-tax-foreign-buyers-of-metro-vancouver-homes-1.3694167

I could be wrong though…

#4 TrumpHasWon on 07.25.16 at 6:22 pm

Tax the people who own multiple properties and tax the REIT’s too, that will end the bubble too….

The Donald will become the industrial President of the 21st century….rebuilding America 1 brick at a time….

Globalization is a scam, just a wealth transfer to the rich with no savings passed down to everyone else.

#5 Mocha on 07.25.16 at 6:24 pm

I heard this tax is just a copy of what Hong Kong does. It didn’t lead to a crash over there as of the current time. Mainlanders did what they have done here and will continue to do here: buy through proxy.

#6 Sean on 07.25.16 at 6:27 pm

Garth you will very soon learn how very wrong you have been about foreign money. 1 Billion a month new $ is a huge amount of money to vanish from the system.You will, however be correct about the housing crash. I predict a 50% drop. Doug Porter wants Ontario to enact its own tax right away.

#7 Wruckus on 07.25.16 at 6:28 pm

If you don’t like Canada why don’t you leave?
“anti-globalist, wall-building, inhospitable nimrod isolationists” Rubbish. The majority of Canadians are proud to be Canadian because of our Canadian identity- the values we have and the standards we keep. If ANYONE wants to move here they are more then welcome- but- They must adapt those same standards and that identity and live among us without trying to form their own mini-communities and attempting to not live my our laws. In Sharia law women are treated as a second class citizen- You think that is okay? If they don’t want to live with our rules then DON’T MOVE HERE. This is not racist, or isolationist this is how the majority of Canadians feel. We already have increasing unemployment – Why would the few jobs that are left go to people that are not born and raised in our country?? You Garth- are the one insisting Globalism is a good thing. The same globalism that crushed our manufacturing? The same globalism that forced the Chinese off of their farms and into factories making $3 a day? The same globalism that has made the 1% bankers 50x wealthier? Your the minority. Take a pole.

#8 active on 07.25.16 at 6:30 pm

i thought the tax applied to all properties? the example they gave in the news release was on a $2M home, but nowhere does it state the tax only applies to properties greater than $2M?

#9 Manderson on 07.25.16 at 6:31 pm

First?!

#10 Brazil ex-pat on 07.25.16 at 6:32 pm

Apparently the Govt of BC did not get the memo that it is locals and not foreign buyers…..

#11 chrisy feels the heat on 07.25.16 at 6:33 pm

garth. there is no 2 million min. the tax will apply to any amount that is spent. the 2 million was simply an example.

Ministry of Finance
Tax Information Sheet
ISSUED: July 2016 Information Sheet 2016-006 gov.bc.ca/propertytransfertax
Additional Property Transfer Tax on
Residential Property Transfers to Foreign Entities
in the Greater Vancouver Regional District
Property Transfer Tax Act
Effective August 2, 2016, an additional property transfer tax applies to residential property transfers to foreign entities in the Greater Vancouver Regional District.
The Greater Vancouver Regional District includes Anmore, Belcarra, Bowen Island, Burnaby, Coquitlam, Delta, Langley City and Township, Lion’s Bay, Maple Ridge, New Westminster, North Vancouver City and District, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, Surrey, Vancouver, West Vancouver, White Rock and Electoral Area A. The additional tax does not apply to properties located on Tsawwassen First Nation lands.
Foreign Entities
The additional tax applies on all applicable transfers registered with the Land Title Office on or after August 2, 2016, regardless of when the contract of purchase and sale was entered into.
Foreign entities are transferees that are foreign nationals, foreign corporations or taxable trustees.
Foreign nationals are transferees who are not Canadian citizens or permanent residents, including stateless persons.
Foreign corporations are transferees that are corporations:
• not incorporated in Canada or
• incorporated in Canada, but controlled in whole or in part by a foreign national or other foreign corporation, unless the shares of the corporation are listed on a Canadian stock exchange
PO Box 9427 Stn Prov Gov Victoria BC V8W 9V1

#12 acdel on 07.25.16 at 6:33 pm

Desperate politicians for future political votes at the time where most are no longer respected; lol, come on people, these are the idiot’s we need to rid out of our system to make Canada the great country it is; we have it all, we have what the world wants; educated people, mineral rich, creativeness, we do are fair share if not more in the environmental movement and human rights.

Let us not forget what pays for it all; it takes time for the second largest country in the world with such a small population with one of the best standards of living to do much more. Although, if we can get past of many of the politicians that can only think of the 4 or 5 yr cycle of their job; imagine what we could be.

#13 Freedom First on 07.25.16 at 6:33 pm

I once dated 3 women at one time and only 1 of them was my cousin.

#14 White Crock BC on 07.25.16 at 6:33 pm

TurnerNation on 07.25.16 at 6:15 pm

USD/CAD is again telling the true story.

=============================

I can hear “Loonie Watcher” dusting off his/ her keyboard…sigh…

#15 stuckintownhouse on 07.25.16 at 6:33 pm

Garth, I know that you do not believe foreign investment is a major factor, but growing up in Vancouver I have seen a major shift in the demographics. Also, drive around Vancouver, Richmond or Burnaby and majority of the realtors for sale signs are from Chinese Realtors.
This has caused a trickle down effect of people selling out in Vancouver then moving into the suburbs and pushing up prices here. Also, lots of people receiving down payment gifts from family based on parents home equity.
I make an excellent income have no dream of Vancouver proper SFH, but feel like one in the suburbs should be attainable. Currently I am stuck on the property ladder in a townhouse and afraid to overstretch myself into a SFH for fear of market correction or rising interest rates. I am really hoping for a correction. If my employment was not tied to Vancouver’s Film Industry I would have moved a long time ago.

#16 X on 07.25.16 at 6:35 pm

“why not just use six condos for the wash-and-rinse cycle instead of one fat Shaughnessy mansion?”

Or 1.9 million and a briefcase of $….either way tax doesn’t make a difference.

Ironic how it will probably further price out the average Joe from the condo market.

Another .25 rate hike by the US again in December won’t make much difference at all on the mortgage rates.

Doubtful Mr Morneau will make significant changes for the sake of making the Liberals look bad. Unless they take over the RE industry and lay all of the blame on the RE boards.

Best to sit on the sidelines until a change in direction for this RE market. My money invested in RE at these prices has no return compared to it being invested in the markets.

#17 Fred on 07.25.16 at 6:35 pm

Interesting read. Judge for yourself.

https://www.linkedin.com/pulse/vancouver-real-estate-bubble-burst-bidyut-b?trk=prof-post

#18 Smoking Man on 07.25.16 at 6:36 pm

#1 TurnerNation on 07.25.16 at 6:15 pm
USD/CAD is again telling the true story.
…….

It sure is.

#19 A Canadian Abroad on 07.25.16 at 6:36 pm

Many know I’m a financial advisor/trader/investor here and I have to say, I firmly believe Vancouver/BC did the right move today to protect their market from an incredibly unsustainable real estate bubble. Well done.

That said, I’m advising to who haven’t sold their investment homes yet in BC or Toronto to do so NOW. Infact, if you don’t mind renting free for the next 100 years, sell your primary now at the top of the market and live free.

Or watch your real estate values go down each day. You may not need the money right now, but eventually, everyone does and usually sells at the BOTTOM of a market.

Break the trend and SELL NOW.

#20 Mark on 07.25.16 at 6:37 pm

Trump will win! Especially now that Clinton has some real dirt on her with the DNC head resigning in disgrace. How will Bernie supporters back her now?

Trump actually got a bounce from that shit show of a convention. Garth’s demographic will be coming out in droves to vote for their new messiah. I hope I’m wrong, but if Trump wins forget about a slow melt in real estate prices.

#21 Dan Duran on 07.25.16 at 6:37 pm

At best prices would drop a bit (say 10%) and govt will grab some cash. Life will go on. Won’t change much for the local buyers. At worst, it will crash and burn some 30% of the equity owners have and create a backlash that will become something future political science students will study for years to come.

What is 100% sure is that our freedoms take another knock if everybody follows this example and we cannot buy abroad and they cannot buy here. Tied to the land we (already) own. Stuck. No way out. Nowhere to go. Thanks activists and nativists all over the world. Tell us in 5-20 years what YOU got out of it other than the sheer joy of seeing others stuck because you couldn’t or wouldn’t do what every other homeowner did: work, make money and buy a house.

#22 mike leblond on 07.25.16 at 6:37 pm

Overseas Chinese buying Canadian real estate is not a myth. I lived in Southern China five years and I have seen it happen in increasingly large numbers. And I currently have a property near Yonge and Bloor, in a skyscraper, and everyday I see overseas Chinese coming in to visit units, accompanied by real estate agents. And, no, they are not Canadians of Chinese descent; i can tell as I speak their language.

#23 Brian Ripley on 07.25.16 at 6:38 pm

I mashed up some charts on the weekend – high end art sales and the West Van single family detached sales drop of 28% Y/Y

http://www.chpc.biz/history-readings/fomo-vs-fogi

According to the luxury item sales chart, the peak was in 2011.

If only 5% of BC sales were due to foreign capital, I suspect we won’t see any big change in the July data when it comes out in a couple of weeks. What will pressure the Vancouver market especially in the strata sectors, probably will be earnings which in BC posted a new high in last month’s data:

http://www.chpc.biz/earnings-employment.html

The construction and FIRE related businesses are big employers in BC.

#24 Harden on 07.25.16 at 6:40 pm

Is it limited to >$2 million? I don’t see that in reports other than example of $300K tax on $2 million purchase

#25 Say What? on 07.25.16 at 6:41 pm

Foreign nationals (or corps) registering property in Metro Vancouver will be hit with an astonishing tax of 15% of the purchase price on deals over $2 million.

—————————————————————-

Good! It’s a start. I would wonder why any right thinking Canadian should object to this. Of course, unfortunately, the implementation of this will be fraught with problems. It will be messed up badly and will have holes big enough to drive a Mack truck through it.

#26 Fustercluck on 07.25.16 at 6:42 pm

The Spillover Effect?

How will this change in taxes in metro Vancouver impact activity and prices in spillover regions such as Vancouver Island?

Will FOMO instantly take a breather, suppressing the market or even catalyzing a bust?

Will Vancouver refugees stop flooding the island and take a wait and see approach?

If HAM exists – will it immediately shift to other regions like Vancouver island or fear BC’s real estate industry altogether?

Would it be logical to anticipate a continued or even accelerated spillover by those who try to maximize the transition from a high price (Van) to a lower price market (Vic)?

#27 Victor Y on 07.25.16 at 6:43 pm

ditto mike here. I have lots of chinese friends. local or non local. Most of them are very horny for buying house/town/semi/condo whenever/whatever they. They all live in the Urban greater van. low interest mortgage is the key driver for sure, people are just greedy, just never from day 1 and would never change.

#28 Bill Gable on 07.25.16 at 6:45 pm

Mr. Turner – how will tis impact ‘the lenders’. Let’s see how banks are doing in other jurisdictions:

Stats from HarryDent.com

Starting in Italy, banks have a problem. Back when the old rules actually meant something, when a bank had 10% non-performing loans, it was technically bankrupt. That’s 10% of our pledged deposits against their bad loans.

Italy has 18% non-performing bank loans. They’re not technically bankrupt. They are bankrupt.

Greece has non-performing bank loans of 34%.

Ireland, 19%.

Portugal, 12%.

And we haven’t seen the next serious financial crisis yet.

*What a mess!

#29 $2 million correction? on 07.25.16 at 6:46 pm

“Anyway, here’s the deal. Foreign nationals (or corps) registering property in Metro Vancouver will be hit with an astonishing tax of 15% of the purchase price on deals over $2 million. ”

I believe the $2 million number was just an example used when describing the taxed amount. The additional tax will be applicable to all values. From the Vancouver Sun [1]:

“The government said the additional tax on a $2 million home in the Lower Mainland would amount to $300,000 on a foreign citizen.”

The Ministry of Finance Tax Information Sheet [2] does not mention thresholds.

[1] http://vancouversun.com/news/politics/premier-unveils-foreign-buyers-tax-on-metro-vancouver-real-estate

[2] http://www2.gov.bc.ca/assets/gov/taxes/property-taxes/property-transfer-tax/forms-publications/is-006-additional-property-transfer-tax-foreign-entities-vancouver.pdf

#30 Todumbtocare on 07.25.16 at 6:51 pm

BC real estate concerns on the governments part are more political than any intelligent structuring to keep home ownership open to all. The 2017 BC provincial election is on the minds of Christy “Cluck” and her crew who have been milking the millionaires via property transfer taxation. Money laundering, non taxed flipping, sales of property in trust, even BC “bud” money may be drivers.

Here’s a provocative article on the whole dirty scene of incestuous property swapping.

http://www.straight.com/news/741391/explaining-vancouver-real-estate-10-step-alternative-foreign-buyers-narrative

#31 Doug t on 07.25.16 at 6:54 pm

I find it amazing how financial magicians keep this illusion of a world economy floating on a pin head – it’s like juggling six plates and then someone is bound to toss a knife to the juggler – it’s all a great show until it’s not

#32 rknusa on 07.25.16 at 6:55 pm

re: There is no soft landing. Not even for Ms. Clark.

Garth many times in the past you have said there will be no US style crash (with only a tail protruding) just a slow burn for years (i.e. a soft landing)

which is it, anything less than a 30% decline in the most heated markets is one big yawn given how much property has gone up in the last 3 years

#33 Joe2.0 on 07.25.16 at 6:57 pm

I guess since off shore money’s such a minascal contributer it doesn’t really matter….

#34 jay on 07.25.16 at 7:00 pm

Finally, Chrusty is doing something, let’s hope it’s not to late.

#35 The Wet Coast on 07.25.16 at 7:02 pm

I have a dream. A bunch of old Chinese and old White dudes sitting at a Tim Hoton’s complaining about Canadian taxes. I have a dream.

#36 Victor V on 07.25.16 at 7:03 pm

WikiLeaks founder Julian Assange says his next leak will virtually guarantee an indictment of Hillary Clinton

http://silenceisconsent.net/breaking-wikileaks-founder-julian-assange-says-his-next-leak-will-virtually-guarantee-an-indictment-of-hillary-clinton

#37 Dave on 07.25.16 at 7:03 pm

Sure Garth, Vancouver prices are 10 times higher than the rest of Canada And the reason is people just spend more money on housing and are leveraged more. Do you really think anyone believes that ?

#38 Daniel on 07.25.16 at 7:05 pm

Love your stuff & thanks!

Put my tin foil hat on and… can you walk away from home loan in BC(dont think so?) what about through bankruptcy(reduced?) how is that different than say Alberta (yes)(yes)? , Toronto? …hate to ask what would you expect if they pull down free trade: B.C. lumber, Alberta oil? … and the US is sunshine and rainbows now? :) need a mini course FreeTrade 1.0

It seems there will much drain on Banks & Government balance sheets …let the Easing begin?

funny world,
Dan

#39 Dave on 07.25.16 at 7:05 pm

Oh no, the lucky five percent who own houses in Vancouver might lose some of their equity–most of which they never dreamed of getting that much. God forbid we make housing affordable for young families and people who make less than 150k.

#40 Smartalox on 07.25.16 at 7:10 pm

Whenever government introduces sweeping, new, regulations, my mind always asks ‘What will be the unintended consequences of THIS gem’?

First thought: a lot of pissed off Americans, easily the largest demographic of foreigners in lower mainland real estate. It’s going to make it a lot harder for companies to recruit foreign talent to Vancouver, that’s for sure.

Second, if Canadian-registered corporations controlled by foreign entities can avoid the new taxes by trading shares on a Canadian stock exchange, could that launch a stock market for housing?

People could IPO their homes, freeing up large chunks of that stranded capital. If Vancouver SFH keep going up and up and up, that’s a market that I want to be in on. And since real estate is tied so strongly to location, I could totally diversify by buying shares in all sorts of different homes throughout the region!

#41 acdel on 07.25.16 at 7:11 pm

#24 Say What?

It’s not that we object to it, considering most of it was created by locals getting their best bang for the buck, individuals that knew how to get around the rules with local and provincial politicians not acting when they should have (like other countries), it’s too little to late, there are so many loopholes that any can get around the whole system needs to change.

Just out of curiosity and perhaps great ideas for the future who wish to listen to you; what are your ideas for making sure that the system is fair, and what are you going to do about it? Thanks…

#42 Blacksheep on 07.25.16 at 7:13 pm

Yes, a new 15% transfer tax on foreign buyers in metro Vancouver area.

But what’s that….your a thrifty foreign dude and don’t want to pay the extra 15 points tax on an spec home buy?

No problem, just leave the metro Vancouver area as
every piece of land in Victoria, Abby, the Wack and Mission is offering better value than ever !

Do what they do, not what they say. When Mikey D. start selling, then it’s time to bail.

PS: Does anybody really believe, the connected foreign buyers, had not already been shown the back door entrance, before this toothless announcement was even made?

Please….

#43 Robert on 07.25.16 at 7:13 pm

Nothing more than pre-election smoke for the public; will simply push the property bubble into the surrounding areas. Watch for floods of expat money into Fraser Valley, Vancouver Island, Okanagan. Bad enough that BC permits clear cutting forests to ship all the raw logs overseas, pollution of our salmon waterways with fish farm offal; but selling off the land beneath our feet. Have to admit that it’s certainly one way to create a budget surplus when Christy and co. apply for their jobs again in the fall.

#44 Mark on 07.25.16 at 7:14 pm

The data is pretty clear, Chinese are a statistically negligible portion of Vancouver’s RE marketplace. Most “foreign” transactions have US citizen principals on the papers, not Chinese.

This transaction tax will accomplish nothing other than perhaps fan the flames of protectionism south of the border on a minor basis. Kind of sad that the BC government had to resort to such a crass measure.

My prediction: they’ll spend more $$$ on legal fees defending the inevitable legal challenges against the tax and the various loophole structures that lawyers will try to construct against it. Than they’ll actually collect in tax. With Vancouver and Toronto prices stagnating for over 3 years now, they’re basically trying to tackle a problem which doesn’t exist.

#45 JP on 07.25.16 at 7:15 pm

Another pointless and easy to sidestep tax by the BC Liberals:

http://www.scmp.com/news/world/united-states-canada/article/1994773/foreign-home-buyers-vancouver-hit-hk-style-15pc-tax

However, the 15 per cent tax will exclude permanent residents of Canada, regardless of nationality. Peer-reviewed research has previously linked Vancouver’s real estate market and its decoupling from local incomes to the presence of rich and foreign-earning immigrants, including millionaire immigrant investors, mostly from China, who have flocked to the city in their thousands. More than 60,000 millionaire migrants and family members have arrived in Vancouver since 2002.

#46 RP on 07.25.16 at 7:22 pm

Hi Garth… from what I read the 15% tax applies to all properties. The $2mil was just an example. So I think it is any property bought by a foreign national in Metro Van starting Aug 2 regardless of price would trigger this tax.

#47 Pete on 07.25.16 at 7:23 pm

“If we look like a bunch of anti-globalist, wall-building, inhospitable nimrod isolationists, then the flow of capital could end quickly.”
Yes, and not just the capital flow to the housing market.
They could have worded it so that the new tax applies only to pre-existing properties, so if the foreigners want to invest without the tax penalty they would have to do so by building more housing (helping to keep an abundance of properties available and thus stemming price increases). It’s amazing that the government doesn’t welcome an influx of foreign capital but that wouldn’t be Canadian would it.

#48 Someguyinvancouver on 07.25.16 at 7:26 pm

Let me get this straight. You now say this tax could cause a complete crash, but, you constantly say that rich Chinese dudes have nothing to do with the insane market. Apparently it’s all the locals making a HOUSEHOLD income of 75K that are buying all these detached homes and poorly built condos.

You now make no sense. Your stubbornness regarding this whole foreign buyer thing has made you look foolish.

Everyone in Vancouver knows what’s up. You don’t live here. You don’t see it. Enough.

Stop slobbering and read the piece. It references both sides of the argument. — Garth

#49 nonplused on 07.25.16 at 7:27 pm

I’m guessing a gargantuan land transfer tax will be nothing but reduce liquidity as that is just that much more money sellers will have to have in equity before they can consider selling.

Taxes always have the effect of distorting the market. For example, it is given wisdom that high sin taxes on tobacco and alcohol reduce consumption of those products. If this is true, what should a payroll tax be expected to do? What about a high personal income tax rate? (The answers for those of you who can’t extrapolate, payroll taxes reduce payrolls and high income taxes demotivate people to achieve high incomes.)

We have it as a core belief in our society that we need a government or either all hell will break loose or some band of thugs will form a defacto government like what happens in Afghanistan. We also believe that now that we’ve decided to have a government, it needs tax revenue. The question that has never been resolved though, is how much revenue? Given the extreme tax rates and the fact that we also have extreme levels of government debt, the answer seems to be that the government can never have too much revenue. Unfortunately some how or some way every penny of that revenue has to come eventually from the productive efforts of the private sector. This is the case for every tax.

Here is an example. Probably the best case for justifying taxation is royalties on extracted commodities. After all the crown owns them. But not considering exports, let’s use a closed economy for this example, the end consumer of those commodities ultimately pays the royalty. So a litre of gasoline that was going to cost $0.70 now costs $1.10 and the end user pays every bit of that, it doesn’t come out of nowhere. (I may have thrown in some GST and other taxes there, but soon we will get the phony-baloney carbon taxes too so the cost will probably be $1.30 a litre.)

Will carbon taxes reduce consumption? Yes, but only in the land area they are applied, and at the cost of economic activity. The factories that we still have are not going to splurge on solar powered roofs and parking lots, they are going to move to China. Even the solar panel producers have done that. The carbon tax is so destructive and insidious it’s even likely to affect minor sports. The cost of mowing the lawn just went up and also games are going to have to be played a lot closer to home. School budgets are going to have to go up, which means increased property taxes and turning out the lights in the gym. This money is going to have to come from somewhere. Even your water and sewer bills are going up because they need a lot of electricity to keep this stuff moving back and forth. It truly is a “tax on everything”, and the poor pay it as much as the rich. Probably disproportionately so. And the idea the money goes back into the economy because the government will spend it is true, but at such an inefficient rate that we will all be poorer off. The government is much better at digging holes and then filling them up again than planting vegetables or developing cool video games. “Politicians are the same everywhere: they promise to build a bridge where there is no river.”

#50 Someguyinvancouver on 07.25.16 at 7:28 pm

For the record, I think you’re doing good work in giving people all this free advice, and my comment wasn’t meant to be rude or personal.

It was more out of frustration with your whole opinion regarding foreign investors.

#51 greyswan on 07.25.16 at 7:29 pm

Is it true that permanent resident is considered foreign national by Canadian government?

#52 Great Advice on 07.25.16 at 7:32 pm

This needs to be done in Ontario ASAP. As long as this applies to all purchase price ranges I believe this is a good thing in the long term. Canadians can’t own real estate in other markets, they shouldn’t be allowed to own here either.

#53 Suede on 07.25.16 at 7:36 pm

Here’s what it means…

Basement dwellers are screwed.

Foreigners will now buy a couple of houses under 2 million.

Look for those SFH’s priced between 1 and 1.5M to soar

#54 jess on 07.25.16 at 7:37 pm

DELETED

#55 mark on 07.25.16 at 7:39 pm

Far as I can see it’s 15% on any purchase no matter the price.

#56 Victoria - the original on 07.25.16 at 7:43 pm

I was just told by a young man in the trades today that there is a massive flow of people from Vancouver to Victoria …. as well a mainland Chinese.

hmmm.

Anyone know anything?

#57 acdel on 07.25.16 at 7:45 pm

#46 Pete

We welcome it as long as all pay there fair to taxes share to provide our standard of living that we are accustomed to; I do not get it; what is so hard about that?? Pay the taxes as all in CANADA are expected to. You live here, use our educational and health care services, pave the streets, snow clearing etc, what is it about this argument that I am missing????????????????

#58 jess on 07.25.16 at 7:52 pm

Revenue Commissioners was examining the use of SPVs for property investments.

Dublin has become an international hub for largely unregulated SPVs and similar structures called financial vehicle corporations (FVCs) set up under the 1997 tax laws. The industry is one of the most secretive and least regulated parts of Ireland’s €2.3 trillion shadow banking sector, a term used for banking activities that take place outside banks. It is growing rapidly globally.

http://www.irishtimes.com/business/financial-services/charities-regulator-examining-groups-over-investment-vehicles-1.2733832

#59 For those about to flop... on 07.25.16 at 8:00 pm

I drove by this Frank Lloyd Wright inspired masterpiece today…

M42BC

http://www.rew.ca/properties/R2088719/4875-yew-street-vancouver

#60 VanMom on 07.25.16 at 8:01 pm

Does the tax apply to houses bought after August 2 or all houses currently owned by foreigners ?

#61 Andrew Woburn on 07.25.16 at 8:05 pm

#22 Brian Ripley on 07.25.16 at 6:38 pm
I mashed up some charts on the weekend – high end art sales and the West Van single family detached sales drop of 28% Y/Y
========================

Thanks for this and your ongoing interesting and informative posts.

I was until recently been a long term resident of Vancouver and well aware of the change in demographics, but I agree with Garth that there simply aren’t enough megarich Mainland Chinese dudes to explain the craziness of YVR prices.

I also find it hard to believe that “corrupt” Mainland money is still that much of a factor in Vancouver. If you have been following the unprecedented corruption crackdown in China, you will know that some very senior people have already been taken down. Anyone under potential suspicion who buys expensive property in Vancouver with ill-gotten gains is painting a target on his own back. It’s a reasonable bet that Beijing knows a lot more about what’s going on in Vancouver’s Chinese community than Victoria does.

If you were a Chinese national trying to make money disappear, what would you rather have right now, a high profile property in West Van or a few million anonymous Fortune 500 shares held through a chain of offshore accounts?

#62 Toronto on 07.25.16 at 8:08 pm

Come to GTA Chinese dudes well gladly take your money and won’t tax you extra. We promise.

#63 Simplyput7 on 07.25.16 at 8:08 pm

This was an easy way to blame foreigners for a Canadian problem.

They should have made the tax province-wide and tax ALL investors – domestic and foreign, who do not claim the home as their primary residence. Then we could see where all the money is coming from.

#64 Andrew Woburn on 07.25.16 at 8:08 pm

If you are still scratching your head over NIRP, here’s a short explanation.

“Why on earth would you hold a bond with a negative yield? ”

http://www.chaltenadvisors.com/blog/why-on-earth-would-you-hold-a-bond-with-a-negative-yield/

#65 crowdedelevatorfartz on 07.25.16 at 8:10 pm

This is nothing more than political posturing by the ruling Liberal Party to save their own skin in the coming election.
My only fervent wish is that it backfires on them all and they are punted from office for 4 years….
Time to clean the decks and start over.

#66 WallOfWorry on 07.25.16 at 8:10 pm

Garth,

Maybe you are being far too logical in analyzing an asset bubble that is completely illogical? I doubt that these types of actions that the Canadian government undertakes will have zero impact when assessed within the broader context of the global asset structure?

Real estate is simply one asset bubble within many, and with global stimulus continuing unabated, and within a currency war, quite frankly the only thing that will affect the Canadian real estate market is a series of interest rate hikes by the Fed.

Surely you would agree that there is no excuse for the Fed not to raise rates this week, and communicate its intent to raise rates at least one more time this year? If they do not then this charade will continue and the real message will be that there is a lot of other things going on globally that have a far greater consequence than the Canadian real estate valuations?

#67 rainclouds on 07.25.16 at 8:12 pm

Still curious why the RE industry allowed the Bimbo party to implement this legislation , gotta be future payback to their masters………

#68 Finally Some Great News! on 07.25.16 at 8:15 pm

Yes, yes, yes! Put a fork in that market, it is done! Whipee! Let it crumble to the ground! It’s about time, for people who are “price insensitive” start feeling “sensitive”. Great, great news. Was just in my neighbourhood the other day, biked right by a big old empty mansion, grass overgrown, old newspapers piled up, let them pay to keep it empty! Let them pay to buy them!

And I support Trump too!

#69 Colleen on 07.25.16 at 8:16 pm

“Dutch Bank ABN Amro Will Charge Negative Interest On Deposits ”

And this will never happen here? You still think rates are going up?

http://www.zerohedge.com/news/2016-07-24/it-begins-dutch-bank-abn-amro-will-charge-negative-interest-deposits

#70 Madcat on 07.25.16 at 8:18 pm

Hopefully they have not singled out properties over 2 million dollars for this tax alone. If not, the new tax will put upward price pressure on properties valued under 2 million dollars….

#71 Ex-Cowtown on 07.25.16 at 8:20 pm

I’m from Calgary. Does that make me a foreigner? Some days I feel like one…. why?

I feel like I’ve stepped into and alternate universe where:

1. the NDP won in Alberta;

2. Christy Clarke is touting taxes from a non-existent industry to fund a non-existent slush fund to cure all of BC’s societal ills;

3. Refrigerators and air conditioners are deadlier than ISIS (according to the Obama/Kerry twins);

4. Democrats are chanting “Lock her Up!” about their own nominee;

5. The BBC reports that a terrorist suicide bomber who blew himself up and injures 10 innocent people was “a Syrian immigrant killed in an explosion”.

Some days all I want is twice as much of whatever it is that Smoking Man takes….

#72 White Crock BC on 07.25.16 at 8:23 pm

Smoking Man on 07.25.16 at 6:36 pm

#1 TurnerNation on 07.25.16 at 6:15 pm
USD/CAD is again telling the true story.
…….

It sure is.
================

Or maybe it’s because oil is dropping 2% per day….

#73 odious herodias on 07.25.16 at 8:28 pm

A hearty amen to #7 Wruckus

#74 Yitzhak Rabin on 07.25.16 at 8:31 pm

It’s hard to say how much of the Vancouver mania is foreign driven from illegal money. Not sure of the methodology the government uses to label ownership as “foreign”. It would not be that hard to use 3rd party intermediaries to make a property look Canadian owned that was purchased with laundered money.

All residential real estate in Canada is bubbled up by stupidly low rates. Vancouver and Toronto do have more of an “international” character though making it more desirable for foreign money than say, Medicine Hat.

Canada’s 2 most expensive cities are the light versions of London, Hong Kong, New York, Los Angeles and Sydney.

#75 Andrew Woburn on 07.25.16 at 8:31 pm

The investment world believes India is the next China. It may be, but India is an incredibly complex nation, impressively progressive in some ways, incredibly backward and corrupt in others. There is a huge infrastructure deficit and destructive inter-state trade barriers. Sectarian conflicts kill many people every year. Communist guerrillas still control large areas of some states. It remains to be seen which India wins.

One of the things Westerners hardly ever think of in India is the impact of the caste system but millions of “Dalits”, what we might call “untouchables”, are literally excluded from ordinary life and opportunities in ways that echo the prejudice against blacks in the US.

According to this author, there are 165 million Dalits out of about 1 billion Indians and they are using social apps to come together and resist historical oppression. Hopefully they will win and have their chance to enter the middle classes.

http://www.theglobeandmail.com/opinion/how-social-media-is-empowering-indias-dalits/article31091710/

#76 White Crock BC on 07.25.16 at 8:33 pm

crowdedelevatorfartz on 07.25.16 at 8:10 pm

This is nothing more than political posturing by the ruling Liberal Party to save their own skin in the coming election.
My only fervent wish is that it backfires on them all and they are punted from office for 4 years….
Time to clean the decks and start over.
=============================

Notwithstanding the RE nonsense, BC has the best economy in Canada and a balanced budget, even without any LNG money.

Who do you want in their stead and what exactly do you expect to be better with another party?

#77 prairiegopher on 07.25.16 at 8:36 pm

Didn’t we try this years ago when we put a head tax on people to keep them out. Fast forward 50 years and T3 will be standing up apologizing for this racist behaviour. Selfies anyone???

#78 Mean Gene on 07.25.16 at 8:37 pm

The BC Land Titles office is going to be a zoo for the next few days.

#79 Grooby on 07.25.16 at 8:40 pm

They say that Trump has mainstreamed racism, from covert to overt. From a number of the comments here, I see that this is true.

As soon as someone writes ‘its not racist to say…’ it’s clear they’re going to say something racist next.

#80 toronto1 on 07.25.16 at 8:41 pm

wow, what a shock. a 15% tax is not really much when it comes to cleaning money– its actually very cheap.

If there is as much foreign money as people think this will drive the asian $ to the GTA, unless they implement the same.

im actually shocked, i do expect Ontario to follow through in a few months, as soon the revenue stream is realized, they will do the same here— because what govt can say no to that kind of free money.

#81 fleabitten monkey on 07.25.16 at 8:43 pm

Just saw Christy’s press footage on the news. She looked awfully feeble as she stuttered, this will I hope have an impact. Its all a bit stupid and desperately contrived in my opinion. Their own collected data says foreign nationals made up only 5 pct of the buys in their June study, and yet the tax is expected to have an impact? I wonder what their July study will yield….if they publish it at all.

#82 Larry K on 07.25.16 at 8:47 pm

Well, I woke up today and it was 911 all over again, or 2008. In an instant a huge portion of my financial worth was crushed. So, local home owners, of which there are apparently 65% in Vancouver, have lost a huge chunk of their worth. Now any of the parents that wanted to help their children buy property by selling theirs or refinancing cannot. So now the only ones standing to prosper is the Government, by shifting 15% into their pockets instead of ours. Think about it, if a property was previously listed at $2 million and now the buyer has to pay an extra $300 thousand to the Govt, the seller will have to sell at $1.7 million. So in other words the Govt. comes out ahead. Is this to replace the LNG revenue that was supposed to materialize. What to do now? Maybe the NDP will propose 20 or 30% tax. Ahh, what do we need a strong economy for?
Funny, the Govt. held a referendum to scrap a 1/2 percent sales tax to fund transit, but arbitrarily imposes a 15% property transfer tax.

#83 Smoking Man on 07.25.16 at 8:50 pm

The world sure is a fkd up place these days. And I love it here. Up is down, down is up. Progressive means regressive.

Milo the words most famous gay conservative on the road with his dangerous faggot tour turning lefties into humans again.

What a weapon he is the right minded… The left can’t shame him with labels. They have defence. Twitter band him for life.

#84 Chaddywack on 07.25.16 at 8:50 pm

I predict most houses in Vancouver will be selling for $1,988,888

No inspection. No clauses. Cash deal.

#85 The Last Post on 07.25.16 at 8:54 pm

Christy Clark apparently listed her multi-million dollar home for sale 2 weeks ago .

Wonder if she rushed the closing to beat the tax implementation ?

Read this today somewhere, but could not bookmark the page. It did not mention whether it was sold or not.

#86 Larry K on 07.25.16 at 8:57 pm

Yes, Lets find out how many Govt. employees in the know and Christie Clark sold their homes beforehand.

#87 Life among the stars on 07.25.16 at 9:00 pm

#82 Smoking Man on 07.25.16 at 8:50 pm
The world sure is a fkd up place these days. And I love it here. Up is down, down is up. Progressive means regressive.

Milo the words most famous gay conservative on the road with his dangerous faggot tour turning lefties into humans again.

What a weapon he is the right minded… The left can’t shame him with labels. They have defence. Twitter band him f
….
Man you’re on top of this shit. What’s Twitter?
Hey is that you at the long branch alien headquarters smoking a fat one… Burn baby burn

#88 Exurban on 07.25.16 at 9:03 pm

Just had a conversation about this over drinks with about a dozen people from my current workplace here in Vancouver. About half of them are of East Asian descent, mostly Chinese. Consensus: this is a revenue grab, not a crackdown. 15% isn’t enough to slow down capital flight from the PRC, and they are likely going to buy through a proxy if they haven’t already bought permanent resident/landed immigrant/citizen status for themselves. A poster above opined that the current PRC anti-corruption campaign could be significant. Chinese-Canadians I know regard this as a joke; they say first you fall out of favor with the Party, then you get charged with corruption — emphatically not the other way around.

From the CTV report:
” Finance Minister Mike de Jong unveiled the tax, which will take effect on August 2nd, after recent housing data revealed that foreign nationals spent more than $1 billion on British Columbia property between June 10 and July 14.”

I don’t know how accurate that data is, or how exactly it was compiled. But you’ve got to figure that $1 billion a month would affect real estate values in Vancouver, which is hardly New York City or London.

BTW, it’s clear from the text of the press release that it’s 15% across the board. The $2 million example is used because foreign SFH buyers rarely buy anything below that.

#89 fleabitten monkey on 07.25.16 at 9:05 pm

It wouldn’t make any sense that this new rate would apply to purchases only $2 mill and above. As Garth mentioned, that might promote the foreign buyers to purchase multiple properties under that amount thereby exacerbating the shortage of housing which is exactly what Clark’s gang is trying to fix. I seriously hope the minds who are running the show figured this out….although I’m not so sure how smart they are given they amended the legislation in the first place. I guess we’ll wait for the definitive news on this $2 mill number.

#90 Freedom First on 07.25.16 at 9:11 pm

#70 Ex-Cowtown on 07.25.16 at 8:20 pm

I’m from Calgary. Does that make me a foreigner? Some days I feel like one…. why?

I feel like I’ve stepped into and alternate universe where:

1. the NDP won in Alberta;

FF007

I know how you feel. I once knew a guy here in Alberta who voted NDP. We ran him out of town pretty quick.

#91 The crash baby the crash on 07.25.16 at 9:12 pm

Its funny, I have been a gold bug a long time and a real estate bull. Well I have recently joined Garth on his bearish stance for real estate simply because prices are ridiculous. Any sane person can see that.

But I think gold still has room and lots to run.

mr. Garth can you ever account for the repercussions of being the biggest in debted nation ever to have existed? I am of course talking about the US and the real biggest bubble of them all is the US bond market.

When this bubble snaps, and it will, I will be rich with gold. 5000 per ounce will be a bargain

#92 acdel on 07.25.16 at 9:15 pm

#76 prairiegopher

Maybe we are on the same page or not; my argument if you live in Canada; use the resources that Canadian’s pay for, then in my eyes you are Canadian and should pay the same as the rest of us, wow, what a concept; through history lessons and books that is how this great nation prospered. Oh Canada, our home and_______

#93 WiseGuy on 07.25.16 at 9:16 pm

The easy solution for the Chinese is to simply adjust their investment to Ontario, notably Toronto, where there won’t be a provincial election for a few years, essentially bloating up the real estate in Toronto and elsewhere that much more!

#94 Blobby on 07.25.16 at 9:24 pm

Out of interest, would this tax hike mean that realtors get a bigger cut?

also I fail to see how it works, the media is always gleefully reporting that these “foreign” owners who “took our heeerrommess (jeeeerrrbbbs!)” are normally inhabited by students and house wifes.. If the property is in their names.. Then, they are residents.. Therefor the tax won’t effect them.

#95 Funny Scenario on 07.25.16 at 9:25 pm

“Ms Clark! Do I cut the blue wire? … or the red?… okaaaay… understood. cutting the res wi…”

#96 Blobby on 07.25.16 at 9:26 pm

If realtors do now get bigger cut, won’t they then shift their attention away from locals, yadda yadda..,

#97 ANON on 07.25.16 at 9:29 pm

The crash tax?

More like the crash alert. Tail fin, AKA sharkfin (exponential growth, logarithmic decay); the perpetually perceived, yet never accepted law of the world. At least human psychology can change the immutable law by adding a bear trap, then a bull trap, to the fin, but that’s about it.

#98 Nemesis on 07.25.16 at 9:31 pm

“Either the market keeps soaring, or it turns into a smoky hole with a tail fin protruding. There is no soft landing. Not even for Ms. Clark.” – HonGT

#ANotSoCrypticParable,Or…

…”We crave a different kind of buzz.
Let me be your ruler (ruler),
You can call me queen Bee
And baby I’ll rule, I’ll rule, I’ll rule, I’ll rule.
Let me live that fantasy”… – “Royals” by Lorde [Vevo]

#Puddles’Cover… #PairsWellWithGreyGooseOrCristal… #MPAA:PG13 #SmokingManHallucinatoryAdvisory

https://youtu.be/VBmCJEehYtU

#99 Alberta Rising on 07.25.16 at 9:41 pm

Glory days lie ahead for Calgary and Edmonton.

Alberta is going to boom higher than it ever has and is now where foreign investors will be headed.

#100 JP on 07.25.16 at 9:44 pm

New slogan in YVR = Sell Now or Lose Equity

#101 Julie K. on 07.25.16 at 9:44 pm

Riveting. Read. Again.

Mind you, great material to work with….

Thanks, Garth.

PS: So freakin’ glad I am still alive to see all that is unfolding geo-politically, financially, technical innovation, generationally, culturally, etc., etc. Not that it is all good, but sure is fascinating simply to observe and wonder.

#102 Denise#1 on 07.25.16 at 9:46 pm

Victoria (and the rest of Vancouver Island, to a lesser extent) is already being affected by Vancouver’s astronomical real estate prices. The Van people are selling their crap homes & buying in Victoria, pushing our prices up in Victoria & the rest of V.I. Every day I see houses newly listed for sale, in less than a week, the “Sold” sign is plastered on the realtor’s for sale sign. This is in my little old middle class neighbourhood where I grew up. My children cannot afford to buy here now and it’ll get worse. Very sad.
Yeah, when does this sh*t show end? When do we have an end to this inflated house prices cycle & we get a reset? You know, like it used to be; like the US did in 2008, like used to happen here.
This 15% tax by Crusty Christy and her crooked band of Liberals are just pushing the real estate frenzy over to Vancouver Island – AND they know it. She’s always been very open about how she hates Victoria. Pretends to be “helping” Vancouver, which is BS, plus gets to screw her nemesis: Victoria.
The next BC provincial election can’t come soon enough. Crusty, you & your cronies are gonna be booted out & I for one, can. not. wait.

#103 JP on 07.25.16 at 9:49 pm

legislation

https://www.leg.bc.ca/parliamentary-business/legislation-debates-proceedings/40th-parliament/5th-session/bills/first-reading/gov28-1

#104 WalMark of Sadkatoon on 07.25.16 at 9:54 pm

USD/CAD is again telling the true story.

Because the US is growing…

http://www.marketwatch.com/story/gdp-other-vital-signs-show-us-economy-stable-even-if-fed-not-convinced-2016-07-24

And Canada is not…

#105 Kreditanstalt on 07.25.16 at 9:59 pm

R.I.P.

There goes the freedom of two consenting parties to voluntarily conclude transactions of their mutual choice.

And the vestiges of the definition of “private property” are further dismantled.

And they call THIS “free enterprise” and “capitalism”…Hahahahaha…

#106 Metaxa on 07.25.16 at 10:06 pm

They say that Trump has mainstreamed racism, from covert to overt. From a number of the comments here, I see that this is true.

As soon as someone writes ‘its not racist to say…’ it’s clear they’re going to say something racist next.

Old stock Canadians, eh?
Thing is they truly, honestly do not think of them selves as racist.
They completely miss the inward groans at family gatherings, the awkward silences at the office water cooler, the rapid change of subject in the golf course clubhouse.

Personally I’d like to see some of their browsing history…between the Rebel, Blaze and BBC porn I bet its a hoot.

But you know…millionaires all of them.

#107 Newcomer on 07.25.16 at 10:09 pm

@ #55

“I was just told by a young man in the trades today that …”

Do you also take stock tips from shoeshine boys ? :-)

#108 Binder Dundat on 07.25.16 at 10:11 pm

Thanks for the link to the legislation, JP.

There is nothing stating the new tax only applies to properties over 2M.

Next question: what happens to condo pre-sales? As I read it, if you take possession after Aug. 2 and you are considered “foreign”, you’re hooped.

#109 AK on 07.25.16 at 10:14 pm

#61 Toronto on 07.25.16 at 8:08 pm
“Come to GTA Chinese dudes well gladly take your money and won’t tax you extra. We promise.”
====================================
Have you seen the price increase in Markham over the past 12 months ??

#110 JP on 07.25.16 at 10:29 pm

@107 from what I’ve read its 15% on top of the existing PPT potentially being a total of 18% on property over 2 million. Garth may be right to call it a crash tax, this is a big deal.

#111 45north on 07.25.16 at 10:29 pm

Christy Clark assumes that Vancouver housing always goes up. If true then she can make up all sorts of rules and take the credit but it’s not true, the market is going to crash and take Christy down with it.

Smartalox: People could IPO their homes

pretty funny

Victoria: I was just told by a young man in the trades today that there is a massive flow of people from Vancouver to Victoria

Anyone know anything?

established professionals who own their homes ( in Vancouver ) are cashing out and moving

#112 Ultraman on 07.25.16 at 10:29 pm

When someone is willing to buy a property for multiple times it’s real value what difference a 15% tax will make? Zéro.

#113 JP on 07.25.16 at 10:30 pm

@103

https://www.youtube.com/watch?v=U1mlCPMYtPk

#114 DON on 07.25.16 at 10:32 pm

#60 Andrew Woburn on 07.25.16 at 8:05 pm

#22 Brian Ripley on 07.25.16 at 6:38 pm
I mashed up some charts on the weekend – high end art sales and the West Van single family detached sales drop of 28% Y/Y
========================

Thanks for this and your ongoing interesting and informative posts.

I was until recently been a long term resident of Vancouver and well aware of the change in demographics, but I agree with Garth that there simply aren’t enough megarich Mainland Chinese dudes to explain the craziness of YVR prices.

I also find it hard to believe that “corrupt” Mainland money is still that much of a factor in Vancouver. If you have been following the unprecedented corruption crackdown in China, you will know that some very senior people have already been taken down. Anyone under potential suspicion who buys expensive property in Vancouver with ill-gotten gains is painting a target on his own back. It’s a reasonable bet that Beijing knows a lot more about what’s going on in Vancouver’s Chinese community than Victoria does.

If you were a Chinese national trying to make money disappear, what would you rather have right now, a high profile property in West Van or a few million anonymous Fortune 500 shares held through a chain of offshore accounts?
*******************

Having lived in Vancouver – I agree with your line of reasoning. Also the drug money is laundered via real estate and expensive cars.

And no doubt the Chinese government has their crew searching Vancouver at the moment. Lots of arrests and suicides in China at the moment.

#115 Nelley on 07.25.16 at 10:33 pm

#74Andrew-Careful Andrew-the truth is a hate crime these days. Lots of delicate flowers on this blog-scary racism threatens them at every turn.

#116 Say What? on 07.25.16 at 10:34 pm

#40 acdel on 07.25.16 at 7:11 pm

Just out of curiosity and perhaps great ideas for the future who wish to listen to you; what are your ideas for making sure that the system is fair, and what are you going to do about it? Thanks…

——————————————-

I detect a little bit of sarcasm. Regardless, I agree with you. It’s too little and too late. What can be done now that it’s been allowed to get to this insane state? I don’t really know, but as I said, the tax is a start. The problem is the loopholes. A possible solution is that a buyer has to present proof of Canadian citizenship with no exceptions to avoid the tax. Then the citizenship has to be verified. There would have to be laws and penalties for any fraud perpetrated or attempted with severe criminal liabilities and financial consequences. To prevent straw buyers, papers would have to be signed attesting to the true identity of the buyer. Again, severe penalties for any fraud. Given time, there are people that could workshop a real solution. Unfortunately, politics would get in the way and I doubt that a real effective solution could be approved and put in place.

#117 BS on 07.25.16 at 10:43 pm

The foreign buyer tax is just what I called the BC Liberals would do on this blog about 2 to 3 weeks ago.

Even if foreign buyers are only 5% that is still a massive amount to take out of the market. $1.5 billion per month actually. It will evaporate. Not chump change.

Add in the CRA audits which even honest people will want to avoid and should limit people trying to illegally dodge this tax. Easier to go to another market like Toronto or the US with no CRA heat and no 15% tax to dodge.

Then the rush to the exits by the speculators and the house rich who were planning to sell to a rich Chinese dude. Realtors phones are ringing.

All this at a time when the RE market was already cooling with locals being priced out and the last boomer fools having bought their second and third property. I suspect banks will be tightening lending as well in YVR with this news. Just another nail.

Plus the Feds still have to take some action as promised by T2 and we have the City of Van empty house tax which will see property taxes increased 5 fold for some.

This thing is done. My call is we will be down 20% in 90 days, 40% in 12 months and 70% in 3 years. Then a slow melt. People will want to puke when you mention YVR real estate in the not too distant future.

#118 JP on 07.25.16 at 10:45 pm

@111 You must be a YVR realtor

#119 conan on 07.25.16 at 10:57 pm

There are now 15% more reasons to get a local from Vancouver to buy the house for you and split the savings.

Anyone following what is going on in Turkey? Erdogan has shut off power and blockaded the American military base at Incirlik. This has been going on for 5 days now.

Quite a few nuclear weapons stored here.

So scary chit is happening that our press is not reporting.

#120 Ultraman on 07.25.16 at 11:01 pm

@111 You must be a YVR realtor

Very perceptive. I live in the Easter Township of Quebec and sell yarn for living. Try again.

#121 fleabitten monkey on 07.25.16 at 11:02 pm

If this in fact does have an impact of shifting buyers to southern van isle then it would make sense that the government could expand the scope of the legislation to cover any such area. I guess we will see what happens. We are about to see an interesting pattern of consumer behavior re: real estate. This will be telling whatever happens.

#122 Smoking Man on 07.25.16 at 11:04 pm

Hammered beyond beilf

Good feelings flowing through opposing conflicts.

And fks think your life is complicated. Live one day in a drunkin Nictonite prospective.

Knowing the existence of humanity resides on your shoulders.. And your mood swings.

I should write a book about this shit..

Laziness so un rated.

#123 Ultraman on 07.25.16 at 11:12 pm

@111 You must be a YVR realtor

Besides, I’m pretty sure a YVR realtor is convinced that the house he’s selling for millions is worth exactly that and not just a very small fraction of it.

#124 White Crock BC on 07.25.16 at 11:17 pm

BS on 07.25.16 at 10:43 pm

This thing is done. My call is we will be down 20% in 90 days, 40% in 12 months and 70% in 3 years. Then a slow melt. People will want to puke when you mention YVR real estate in the not too distant future.
============================

I love taking screenshots of comments like this.

We’ll talk in 3 years.

#125 mouldy in YVR on 07.25.16 at 11:18 pm

http://www.homes.com/for-sale/blaine-wa/
…why can’t these people who don’t need/want to live in YVR just go and buy a house or two in beautiful Blaine WASH??

#126 Ronaldo on 07.25.16 at 11:22 pm

Time for a review of what our dear Kristy had to say about our real estate situation a while back.

“We’re thinking really hard about those solutions. We want to do it in a way that doesn’t chip away at the equity that we have in our homes,” Clark said late last year.”

A rise of $674,000 in her equity since 2009. No wonder. And that was back in January. Probably much more now.

http://bc.ctvnews.ca/value-of-premier-s-home-up-160k-as-housing-affordability-woes-deepen-1.2726890

#127 Ponzius Pilatus on 07.25.16 at 11:25 pm

#50 greyswan on 07.25.16 at 7:29 pm
Is it true that permanent resident is considered foreign national by Canadian government?
————-
Of course.
Permanent Residents are not Canadian Citizens.
So if a PR gets in trouble in some Third world country, don’t bother the Canadian Embassy.
Dual Citizenship, of couse is a different matter.
Remember the Lebanese who were airlifted at great expense some 15 years ago.
Stupid system.

#128 waiting on the westcoast on 07.25.16 at 11:33 pm

Wow – stunned to see so many people happy to have even more taxation and government interference. Sure – it will likely help drop prices (more due to the perception risk by Canadians than”Foreigners” bailing on the market) but another notch for government fiat to grab money for a perceived injustice.

I may not be buying in Van right now due to market conditions but in no way do I want political protectionism taking hold… If left alone, the market corrects. It’s government manipulation that has allowed this bubble to grow too large and now they will hasten its collapse. Either way, it is bad for rational actors.

#129 Maldroit Ape on 07.25.16 at 11:33 pm

@nonplused#48
” payroll taxes reduce payrolls and high income taxes demotivate people to achieve high incomes. …
Given the extreme tax rates and the fact that we also have extreme levels of government debt … ”
[Citation Needed]
Debt is high but it has been higher, and so have taxes and everything was fine. Entrepreneurs still founded companies and others took high paying jobs working for them. Obscene fortunes were made and then taxed and used to build institutions, utilities and the system that increased our productivity so that we in Canada can enjoy a standard of living greater then most of the worlds population.

“Will carbon taxes reduce consumption?”

That isn’t the point of the carbon tax the point is to encourage consumption of substitute goods either pure substitutes or more productive goods (e.g. more efficient vehicles) econ 101…

Never mind the very real existential threat posed by smothering the planet in CO2, the future belongs to the peoples that can increase energy efficiency. Since energy is the main cost in the production of goods and services decreasing its cost over the long term will increase our standard of living.
An example the ruthless targeting of energy efficiency is what has led to smartphones that last for tens of hours on batteries and are more powerful then megawatt consuming warehouse sized computers of 30 years ago.

Never mind that decreasing the consumption of Oil would stop transferring vast amounts of wealth to people who want to destroy us in Saudi Arabia and the Gulf states.

#130 Ace Goodheart on 07.25.16 at 11:34 pm

This is an attempt by the BC government to reduce the price of a rare item, by restricting supply and adding a 15% tax.

Sort of like what DeBeers did with Diamonds.

Governments make wonderful comedic relief. Never get tired of laughing at what they do.

#131 Smoking Man on 07.25.16 at 11:42 pm

I hate communist. The clan of blaming others for thought mistakes.

Look up to the stars and see….?

I’m just a poor boy no one loves me. Easy come easy go.

That’s it for philosophy tonight. Scored a 26 of JD in the back yard. And I’m thirsty after the wife forced walks so she can fit into a smaller sized dress at the up coming wedding.

Where bellys and boob sizes are on display.

Shit I do for humanity.

#132 macroman on 07.25.16 at 11:43 pm

Still going with the SmokingManHunterThompson 02/17.

Right after Billary inherits/scams the Whitehouse.

SMHT 02/17

#133 april on 07.25.16 at 11:48 pm

#124 – I would if I could………..

#134 Problem with Democracy on 07.25.16 at 11:52 pm

The main merit of democracy, the fact that every vote has equal weight, can also become its potential main weakness down the road.
Theoretically, it is possible that, a majority which is not willing to work but just wants to live on government handouts, can ‘democratically’ elect a government that will increase taxation on the working and productive part of the population to any possible tax rate, and even morally justify such action in the name of ‘social justice’…
Aren’t we gradually heading that way with the current government which buys votes by promising generous handouts to everyone willing to vote for it?
Isn’t that what Ayn Rand was warning against in her, maybe not a very exciting from a literature stand point, but fascinating as a social fiction, novel – ‘Atlas Shrugged’..?

#135 NEVER GIVE UP on 07.25.16 at 11:54 pm

The foreigner tax is only a good start.

Christy and Friends will need to have a task force of investigators to ensure compliance.

As I have said many times before. It is in the very cultural nature of our foreign friends to “beat the system”.

They will try to scurry to every other possible mouse hole to keep the game going until “SNAP”, the mousetrap closes.

Anyone who thinks this legislation will have teeth as is, will need to talk to a Richmond based real estate lawyer or realtor, who will inform you of the multitude of alternatives.

That is an ugly characterization of any group. This tone and language – calling Chinese rodents – disgusts me. — Garth

#136 Observer on 07.26.16 at 12:03 am

Garth do you so much as give a crap for the “little guy”?
Even Hong Kong has a similar tax.

http://vancouversun.com/news/staff-blogs/hong-kong-puts-15-per-cent-tax-on-foreign-buyers-will-b-c-follow-suit

No little guy will benefit from this. — Garth

#137 NEVER GIVE UP on 07.26.16 at 12:05 am

When a government says they are going to put the extra income to a worthy program such as social housing.

They are lying to you.

All revenue goes into a single bank account and is budgeted fresh and new every year. There may for the first year or two be money budgeted for a specific program but the memory of the public is as stable and long as a housefly on crack.

Governments simply move the added income to whatever new program they want to use to buy votes in advance of the next election.

Of all the lies that Government spouts, this is by far the most consistently swallowed piece of bait by the Plebeians of our nation.

Most Canadians are as Naive as a native peasant in Borneo. Only our hands are much softer and our bellies are full so we don’t care.

#138 Mark on 07.26.16 at 12:43 am

“If you were a Chinese national trying to make money disappear, what would you rather have right now, a high profile property in West Van or a few million anonymous Fortune 500 shares held through a chain of offshore accounts?”

A slam-dunk way of telling whether there’s foreign money involved in the high-end housing is simply to look at whether the properties are mortgaged. Most of them are, to the hilt. Why would a money launderer take out a mortgage on a house? It makes no sense to me. Isn’t the whole point of laundering money actually to….launder money? Where is the money?

Your other point is well taken. Why not a portfolio of ETFs? Why not gold buried somewhere? Why is the assumption made blindly that any “Chinese” money invested in Canada must be in RE?

#139 MikeS on 07.26.16 at 12:57 am

Garth do you so much as give a crap for the “little guy”?
Even Hong Kong has a similar tax.

http://vancouversun.com/news/staff-blogs/hong-kong-puts-15-per-cent-tax-on-foreign-buyers-will-b-c-follow-suit

No little guy will benefit from this. — Garth

———————-

I’m trying to find a place to live in the lower mainland where I work, my wife works, and where all our friends and family live. There’s no rental available, and our having a child has made our basement suite too small.

This new tax policy cannot *raise* prices. We’ve saved by renting, and there is nothing wrong with us wanting to own land. Explain to me how this doesn’t benefit us. We make $150k combined and have saved for years waiting for policy like this.

#140 SickofBC on 07.26.16 at 12:57 am

Very Interesting, some of the
Democratic national convention emails via WikiLeaks

DNC member killing horses for insurance money. https://wikileaks.org/dnc-emails/emailid/578 DNC making fun of black woman’s name. https://wikileaks.org/dnc-emails/emailid/17942 DNC telling each other, “I love you too. no homo.” https://wikileaks.org/dnc-emails/emailid/425 DNC requesting a pull an MSNBC commentary segment. https://wikileaks.org/dnc-emails/emailid/6107 DNC controlling the narrative with time released stories. https://wikileaks.org/dnc-emails/emailid/12450 DNC conspiring to create false Trump information and release with Reuters. https://wikileaks.org/dnc-emails/emailid/7102 DNC Hillary supporters infiltrated Sanders campaign. https://wikileaks.org/dnc-emails/emailid/4776 DNC members going to complain to Morning Joe producers about his mentioning of a “rigged system.” https://wikileaks.org/dnc-emails/emailid/8806 DNC discussing their relationship with NBC/MSNBC/CNN and how to get better treatment. https://wikileaks.org/dnc-emails/emailid/13762 Super PAC paying young voters to push back online Sanders supporters. Paid shills. https://wikileaks.org/dnc-emails/emailid/8351 DNC Chair Debbie Wasserman Schultz having an off the record meeting in MSNBC President Phil Griffin’s office. https://wikileaks.org/dnc-emails/emailid/8867 DNC being messed with by the Washington Examiner. https://wikileaks.org/dnc-emails/emailid/5304 DNC discussing Hillary’s policies as unfeasible. https://wikileaks.org/dnc-emails/emailid/519 $200k for a private dinner with Hillary. https://wikileaks.org/dnc-emails/emailid/17287 Offering to send interns out to fake a protest against the RNC. https://wikileaks.org/dnc-emails/emailid/13366 Faking outrage and pasting in a video later. https://wikileaks.org/dnc-emails/emailid/7102 A mole working inside of the Sanders campaign. https://wikileaks.org/dnc-emails/emailid/7793 Bringing up Sanders religion to scare the southern voters. https://wikileaks.org/dnc-emails/emailid/11508 Possible money laundering by moving money back and forth to bypass legal limits. https://wikileaks.org/dnc-emails/emailid/6230 Politico writer sending his stories to the DNC before he sends them to his editor. https://wikileaks.org/dnc-emails/emailid/10808 DNC feeding CNN the questions they want to be asked in interviews. https://wikileaks.org/dnc-emails/emailid/4077 Creating a fake job ad for a Trump business to paint him as a sexist. https://wikileaks.org/dnc-emails/emailid/12803 Hillary funding 2 million dollars in a cooridanted campaign in battleground states to win back the Senate. https://wikileaks.org/dnc-emails/emailid/7784 DNC is upset that their “allies” didn’t send in protestors so they sent out interns. https://wikileaks.org/dnc-emails/emailid/13366 “Clinton Foundation quid-pro-quo worries are lingering, will be exploited in general.” https://wikileaks.org/dnc-emails/emailid/8351 $50,000 – Lawrence Benenson. https://wikileaks.org/dnc-emails/emailid/14700 Daily Fundraising Report for the DNC. https://wikileaks.org/dnc-emails/emailid/2875 Content & Social Strategy Discussion. https://wikileaks.org/dnc-emails/emailid/7512 Re: BuzzFeed and DNC connection. https://wikileaks.org/dnc-emails/emailid/10933 Draft linking news articles about trump to use as negative press. https://wikileaks.org/dnc-emails/emailid/7586 Fwd: State Dinner Countdown. https://wikileaks.org/dnc-emails/emailid/1901 Some chick is angry she hasn’t been given more stuff from the Obama administration…might be interesting to follow up. Re: State Dinner Countdown. https://wikileaks.org/dnc-emails/emailid/2946 Tim O’Brien: Trump’s Fixation on Inflating his Net Worth is a Cause for Concern. https://wikileaks.org/dnc-emails/emailid/4496 RE: May Fundraising Numbers. https://wikileaks.org/dnc-emails/emailid/5615 https://wikileaks.org/dnc-emails/emailid/7720 Hillary for America Raised $26.4 Million in April, Began May with More than $30 Million Cash on Hand. https://wikileaks.org/dnc-emails/emailid/13986 Re: For approval: Trump supporter graphics. https://www.wikileaks.org/dnc-emails/emailid/788 Press talking points, states Hillary is their candidate, dated May 5, 2016. More of a smoking gun than the ambiguous talk in the emails themselves. https://wikileaks.org/dnc-emails/fileid/5254/2728 Consultant calling megyn kelly a bimbo. Has PDF attached that says the same. https://wikileaks.org/dnc-emails/emailid/6087 DNC trying to get away with violating the Hatch Act. https://wikileaks.org/dnc-emails/emailid/20148 Democrats using interns to organize fake “protests.” https://wikileaks.org/dnc-emails/emailid/13830 RE: Action on DNC tomorrow (Immigration Raids). https://www.wikileaks.org/dnc-emails/emailid/9736 Update: You can search the database yourself by visiting https://wikileaks.org/dnc-emails/

#141 mousy on 07.26.16 at 12:58 am

The huge tax levied by govt’ is evidence that they don’t think the foreign buyer is such a big deal. I think the tax was a cynical move to pander to public opinion, all the while knowing it wouldn’t really do anything to halt speculation. Perfect politics: appear to act, but cause no impact on the status quo.

#142 BS on 07.26.16 at 1:20 am

The rush to the exits starts.

Newly renovated home in cedar cottage, trout lake area. I was going to finish renovations…but in light of new foreign owner tax I’m offering it sooner…I’m a Realtor and prefer to sell privately. If you’re a Realtor with a buyer I will pay a fair commission…

http://vancouver.craigslist.ca/van/reo/5701100839.html

#143 BS on 07.26.16 at 1:23 am

And on the buyer side realtors have soiled their pants. Looks like the house of cards will start to fall this week.

The president of the Real Estate Board of Greater Vancouver says there was no warning and no consultation by the province that a tax on foreign buyers was coming.

“The only people calling me more than the media today are realtors upset about this because they’ve got clients that are B.C. residents and voters that are going to get hit hard by this if their transactions aren’t exempt.”

Dan Morrison says a key issue is current transactions that are in the process of closing, which will be subject to the new tax, something he says will could bring short-term volatility.

“These transactions are going to be hit, and to use the price point that the government used in their press release, if it’s a $2-million transaction, all of a sudden there’s an extra $300,000 that’s due.”

Morrison says there could be jilted buyers who would rather forfeit a $100,000 dollar deposit to walk away from the deal to avoid paying the foreign tax and put the seller in a difficult decision.

“If they did, that puts the seller in a very difficult situation because based on the strength of that contract, they’ve gone out and committed to buying another house. If the buyer defaults on their house, they don’t have the funds necessarily to go and buy their new home. So you could get this chain reaction of contracts that don’t complete.”

http://www.cknw.com/2016/07/25/foreign-buyer-tax-real-estate-board-wants-exemption-for-transactions-in-process/

#144 Misled? on 07.26.16 at 1:24 am

This quote from the post explains the last 8 years…

“…. a tax on non-resident buyers and another tax on investment properties – is perceived outside our borders. If we look like a bunch of anti-globalist, wall-building, inhospitable nimrod isolationists, then the flow of capital could end quickly….”

Seems like the people who said foreign money was the problem were beating a biased (dead) horse. They were never going to have their views heard regardless of evidence.

#145 Misled? on 07.26.16 at 1:28 am

Sorry to say but there are genetic differences between ethnic groups. Not acknowledging that is racism and is insulting and naive.

Monkeys are only different than humans by 2% or less.

A 0.02% difference in genes is huge.

Want to bet that, ON AVERAGE, German people are better drivers than Chines people?

#146 BS on 07.26.16 at 1:29 am

#123 White Crock BC on 07.25.16 at 11:17 pm
BS on 07.25.16 at 10:43 pm

This thing is done. My call is we will be down 20% in 90 days, 40% in 12 months and 70% in 3 years. Then a slow melt. People will want to puke when you mention YVR real estate in the not too distant future.
============================

I love taking screenshots of comments like this.

We’ll talk in 3 years.

No reason to save a screenshot. You will get to watch it live. Just save your assessments for nostalgia.

#147 Misled? on 07.26.16 at 1:29 am

This politically correct BS is dead! It won’t brainwash the masses anymore!

#148 Misled? on 07.26.16 at 1:31 am

#126 Ponzius Pilatus on 07.25.16 at 11:25 pm
#50 greyswan on 07.25.16 at 7:29 pm
Is it true that permanent resident is considered foreign national by Canadian government?
————-
Of course.

——

LIAR! PR are not considered foreign nationals!!!

#149 NEVER GIVE UP on 07.26.16 at 1:34 am

That is an ugly characterization of any group. This tone and language – calling Chinese rodents – disgusts me. — Garth

All due respect Garth, It seems to be OK for me to use the analogy of Predominantly white locals (Canada wide) as being “Houseflies on Crack”
But it is not OK to use a rodent analogy to the activities of Foreigners. (Note my Post Below from #136.)

“the memory of the public is as stable and long as a housefly on crack.”

I am more of a rebel like Smoking Man.

I am never going to be a “White Apologist” and I see the constant badgering by political correctness advocates as a direct assault on Free Speech.

It seems to be OK for anyone to make jokes and insults about our Christian Religion and churches. But if we draw a cartoon about Allah we can be justly murdered and that is OK.

I am quite sure if I had used the same analogy about mousetraps in the context of lawyers or any other group of scammers It would be quite alright.

I used the analogy quite correctly to identify a group of people who consistently and efficiently skirt any law or rule or tax that gets in their way.

I also am am Married to a woman who has part Chinese Blood so I am careful. So no, there was no great racist crime perpetrated here. Sorry.Even if my wife was not Asian.

Furthermore it is not my duty to coddle and concern over everyone’s feelings. We as humans can take the rough and tumble onslaught of insults and jabs.

Just as you often correctly point out the fact that our young are given “Special” status in this world and are told they can do anything they can dream of!

We are bringing up a nation of soft touches, easily scammed out of their bank accounts and homes by all manner of predators.

I have been the first hand target of “racist” insults in China , Asia, and even Hawaii. I did not cry nor was I even insulted because I know who I am. I do not even hold the slightest grudge for that.
I am sure every normally mentally adjusted foreigner knows who they are as well and can stand up for themselves. I don’t even hear them complaining on this blog. Probably because they are strong and mentally prepared for a lashing in this forum. (While they count their Millions in RE Profit)

When I am in Hong Kong and if someone calls me a “Foreign Devil” (The direct translation of Gweilo in Cantonese). I smile to myself and am proud of who I am. I do not go to the Chinese office of “hurt feelings” and ask for a jail sentence for the offender some payback money to soothe my hurt feelings. (actually I don’t even think that “gweilo” is an insult when said in today’s context but I have heard much worse)

Our government encourages people to go to the office of Human rights or whatever it is called nowadays, because there could be a financial payoff in it.

#150 Rich Young on 07.26.16 at 1:42 am

BUBBLE BUBBLES EVERYWHERE courtesy of central banks all over and now your local government must try to counter the damage done. Choose your poison:
– stock market bubble
– real estate bubble
– debt bubble
– china’s underperforming debt bubble

This world has gone mad. Two foreclosures in my neighbourhood in Calgary alone and grown over with weeds as the banks take forever to list them in a flooded market. Yet Calgary prices remain the same and buyers keep coming into my hood blissfully scooping up conventional sales not knowing others in the same hood have just up and vanished leaving properties with the mortgage holder.

Enough to turn anyone with a brain mad. I choose none of these bubbles … I choose to earn and save and wait out the madness.

#151 will on 07.26.16 at 1:43 am

Work 43 years in BC.
Planning to retire in November 2016
Elderly father who needs assistance.
Two kids who I was about to help enter the BC housing market.
Upgrade my principal residence in November 2015.
Spent 7 months renovating the property with an offer being prepared TODAY after a weekend showing.
All to have it blow up today.
Expected one day marketplace impact based on a discussion with realtor today: $250k
Just add another tax and tell international buyers to take their money elsewhere.

Small minded morons!

Thanks Clark

Back to work for 5 more years

#152 NEVER GIVE UP on 07.26.16 at 1:48 am

DELETED

#153 Frank on 07.26.16 at 1:50 am

#129 don’t quit your day job arm chair economist

#154 NEVER GIVE UP on 07.26.16 at 1:59 am

One last point.

The notion that foreigners or people from different origins need our protection for their feelings is sheer Hubris on the part of the so called protector.

It is projecting a coddling superiority that is actually insulting to the protectee. It is as if to say “the little people need us to protect them because they are too weak to protect themselves”.

In fact is is belittling and overbearing to offer such protection.

#155 Joe2.0 on 07.26.16 at 2:16 am

Seems to be a growing general consensus that foreign money has impacted some housing markets substantially.

It’s about time the truth came to light and hopefully now some regulations can be instilled to allow non foreigners the opportunities to buy a home in their mother land.

#156 out of nowhere on 07.26.16 at 2:23 am

I am one of the last bears in #vane and this tax came out of nowhere. Looks rushed and idiotic, based on 3 weeks of collected data on foreigners? Give me a break… Christy Clark is out and she knows it, trying to grasp on straws now, so let’s do the math…
2015/16 have seen the demand doubled across the yvr, let’s say 10% are Russian gangsta, on a normal year would be 20% of market.
Now you have used the local demand in advance for a year and have the Russian dudes out probably 80%…
That will leave you with around 30-40% of last year demand for the next 18 months… good luck to all in YVR you will need it!
Don’t forget CRA has a 50 people task force in YVR that can process 1 case a month, if 600 cases are published in 2017 that will send a big shock to Russian money laundering, now what we do with FOMO?
This was a good day in long time for me, even though I think politicians overreacted big time.
Ah and some big liberals donors knew about this BTW and sold… to students, follow the money…
Christine Duhaine might know some things…

#157 AB Boxster on 07.26.16 at 2:30 am

#105 Metaxa on 07.25.16 at 10:06 pm


Old stock Canadians, eh?
Thing is they truly, honestly do not think of them selves as racist.

——————————————-
Actually we really just dont care any more.
Call us racist, xenophobix, misogynistic, whatever you want to call us.
We really don’t care any more.
Our ancestors built a great country, based upon hard work, taking risks and personal initiative.
Our fathers fought in wars to preserve freedom of countries and freedom of speech and thought.

Hell, they even died to preserve the leftist babble that you rant on about.

That’s old stock.
Proud to be one.
Happy to be labelled as one.

#158 Damifino on 07.26.16 at 2:53 am

#124 mouldy in YVR

“…why can’t these people who don’t need/want to live in YVR just go and buy a house or two in beautiful Blaine WASH??”
——————————

Because we aren’t American citizens and buying a house in Blaine doesn’t make us so. You can’t even cut your own lawn there without being guilty of talking a job from and American. Get real.

#159 Nailed it on 07.26.16 at 3:05 am

#116 BS

All this at a time when the RE market was already cooling with locals being priced out and the last boomer fools having bought their second and third property. I suspect banks will be tightening lending as well in YVR with this news. Just another nail.

Plus the Feds still have to take some action as promised by T2 and we have the City of Van empty house tax which will see property taxes increased 5 fold for some.

************

Taxing the hell out of unoccupied properties is having more of an impact than the 15% transfer tax on foreign buyers.

Could be that the foreign buyer uses a loophole and buys through a registered BC corp and then puts the “homemaker” with minimal income into the house only to avoid the occupancy tax?

Best solution would have been to restrict any non US or Canadian to buy direct or via proxy unless they have lived and paid income taxes in BC and Canada for min. 5 years.

That’s how other jurisdictions in the world are doing this and the locals are never priced out of owning real estate in their hometown.

Whether or not the foreign money has actually bought property in Vancouver or if just the rumor of an endless supply of foreign money has motivated locals to speculate and take on more and more leverage is actually immaterial.

The train has left the station. Vancouver and more and more also the Fraser Valley have become increasingly unattractive as locations to live, work and raise a family.

Vancouver etc are places where real estate is traded like a commodity. It’s not about the infrastructure or rather lack thereof or the cultural attraction, or the employment opportunities. Vancouver is ranking well behind many other world class cities where young talent is flocking to either seek higher levels of education or start a great career.

Even young home grown talent is leaving Vancouver to pursue better education and employment opportunities East, South or across one of the ponds.

Looking forward to the days when people in Vancouver will talk about relevant issues again and this experience in trading real estate commodities will be remembered just like the past “gold rush” episodes.

#160 3s on 07.26.16 at 3:29 am

Talking down the effect of foreigners on local markets with globalization assisting to create a skewed playing field will be the undoing of elitist politicians Garth.

#161 Renting in 604 on 07.26.16 at 3:35 am

Ok, now that the RE bubble has been pricked we need to have a word with all those “specuvestors” (TM Garth) in Vancouver.

Specuvestors who are hoping that tenants will line-up to pay the landlord’s 2nd or 3rd mortgage costs and hopefully rent one of the 3 basement suites or converted garages.

Specuvestors must know that renters DO NOT HAVE LEVERAGE and cannot take on hundreds of thousands at 2.5% to pay their rents.

Renters do not have HELOCs or LOCs tied to a property because… they don’t own property!

When specuvestors finally realize that there aren’t that many interested potential renters and they figure out that (duh!) renters do not have access to bank of Mom and Dad or other funding to support the high rental costs… it will be game over for that side of the market as well.

Rents in and around Vancouver are in line with rents in places like London, Paris or Berlin where employment and career options are abundant. There’s money tied up in Vancouver real estate but the money doesn’t live there.

That’s a problem for local entrepreneurs.

#162 crowdedelevatorfartz on 07.26.16 at 8:36 am

@#75 White Crock
“BC has the best economy in Canada and a balanced budget, even without any LNG money.
********************************************

Bwahahahahahaha,
You believe the Liberal propaganda? BC Hydro’s multi BILLION dollar Dam construction in northern BC is being rammed through without any financial review, any envoironmental review and no set budget. Total cost? To be determined….but if the dam in Muskrat Falls NFLD financial fiasco is any indication….it will bankrupt BC Hydro…and then rescued by the taxpayer.
Oh and its not included in your mythical BC Budget…..
We wont even talk about the mudslides that are already occuring in the clearcut areas set aside for eventual flooding in the Peace River valley due to the unstable ground. Or the experts that have warned that the dam is unecessary and will be an environmental disaster. Nah, like the slowly unfolding real estate fiasco here in BC….it will come back to bite all us taxpayer in the ass.

LNG
The entire world is awash in excess LNG. Australia has more than enough and then there’s Russia, the US, etc etc etc. ready to sell LNG.
Christy Clarks endless kowtowing to Petronas would be embarrassing if it werent so hilarious. From the environmental disasterous timebomb of fracking to the planned installation of 50 year old LNG tanker ships as permanent “storage facilities” in Squamish ( gee, what could possibly go wrong). To the pipelines and container terminals in environmentally sensitive areas……who cares. pave paradise and put up a parking lot.
LNG is another legacy mega project.

The people are sick of Clarks endless bullshit and her fiscal lies. Boot them out let the socialist hordes play “government” for 4 years and then boot them and bring back another real govt.
Clean slate.

#163 BREAKiNG NEWS on 07.26.16 at 8:49 am

Terrorist attack in France. Censored by MSM.

Priest beheaded in church.

#164 crowdedelevatorfartz on 07.26.16 at 8:54 am

@#84 The Last Post
“Christy Clark apparently listed her multi-million dollar home for sale 2 weeks ago ….”
*******************************************

It wouldnt be the first time Christy Clark ALLEGEDLY benefitted from inside cabinet information….
Please see “BC Rail sale” for explanation of allegations re Clark.
Yo ! White Crock! Maybe you should also take a walk down memory lane as well and refresh yourself as to how “honest” and “competant” the Clark govt truly is…..

#165 Nelley on 07.26.16 at 8:56 am

#152Never-no need for a cartoon to behead somebody-looks like Christianity will have to be outlawed in France-insulting to diversity http://www.dailymail.co.uk/news/article-3708394/Two-men-armed-knives-people-hostage-French-church.html

#166 crowdedelevatorfartz on 07.26.16 at 8:56 am

@#149 Will

So……basically you got greedy, waited too long before listing and got burned…..
Not to worry.
You wont be the only one.

#167 mishuko on 07.26.16 at 9:08 am

no one I talk to thinks the foreign tax is a ‘bad idea’… uh sure. I’m a bit indifferent about it. It’s a bad idea because it only applies to things over 2m. just tax every blood dollar and be done with it.

milo is the man. that’s sensorship for the freedom of speech. he talked real. lets play the victim and chastise a hero. they don’t use logic just words that stir up emotion. meesoogeeneeee or however you say it.

right. that’s all the left can do. label things in a negative context and brainwash you.

they don’t want you to escape. once you do… you can find your own form of happiness.

#168 Tudval on 07.26.16 at 9:10 am

If I was a seller in Vancouver I would never consider selling to someone who may be one of those petitioning the Government to give them an advantage in the market and lower property value in the process. I would make sure the offer I am accepting is from somebody who I consider has equal right to buy it and actually brings some benefit to the country by way of new investment capital.
When I moved to this country my family bought a condo for me to live in, a few month before I came here. According to the new rules, they’d have had to pay an extra 15%?? For what? Is this still Canada, a country we boast is open to immigrants (who make a contribution, not free loaders)??

#169 Alan on 07.26.16 at 9:11 am

@#149

Woe is me. Greed is a sin. Stop whining.

#170 Ex Montrealer on 07.26.16 at 9:50 am

Talk about Racism in Vancouver – We moved to Vancouver in the late 1970’s. With Quebec plates on the car – everyday we were delivered constant insults like “Go Home Frogs” until we got our BC Plates…

#171 Price out in Vancouver on 07.26.16 at 9:57 am

Garth Turner said: “if these Chinese dudes are (as everyone believes) a bunch of corrupt money-laundering mainland criminals”

I would like to make two points. One, you are exaggerating (in a very dangerous way) what the critics of foreign ownership have been saying. Serious critics have not said that all Chinese dudes are involved in this nefarious stuff. In fact, some of the most vociferous critics of foreign ownership have been Canadians of Chinese descent, such as Meena Wong. The issue is locals (including Chinese-Canadian locals) being priced out of Vancouver because of foreign investment. It’s not about painting all Chinese people in a negative light with a broadbrush.

Two, why the focus on dudes specifically? Many critics of foreign investment have been critical of the roles of both (some) Chinese men AND Chinese women in the real estate market. Stop being sexist, Garth Turner. The critics of foreign ownership of real estate have been just as critical of Chinese women who invest in real estate as they have been for Chinese dudes who invest in real estate.

If you can’t take uber political correctness, don’t dish it out. From a millenial’s perspective, your focus on Chinese dudes is sexist.

First, the preponderance of comments to this blog have indeed suggested the flow of money from offshore is of suspicious origin. Blame the people saying it, not me. I don’t buy it. As for ‘dude’, it is “an American English slang term for an individual. It typically applies to men, although the word can encompass either sex.” Methinks you moisters should worry about things a tad more consequential. After all, you are doomed. — Garth

#172 Tudval on 07.26.16 at 10:01 am

Ironic isn’t it, that Trumpism wins in Canada first.. the message we send is ‘ we don’t want those foreigners’ or at least the wealthy ones. I for one, would never go to a place that seems to not want me. It could be a game changer. Bears will still be wrong, since it was not the market forces, but political action that crashed the market. I wonder if even they will want to buy now, since prices will still be too high for them and prospects for appreciation will be nil. Don’t confuse Vancouver with Hong Kong and say nothing will happen here if it didn’t happen there. HK is just another chinese territory, there can be no question of xenophobia there, but questions will be raised here. But as I said, I suspect the bigger problem is that even locals will not want to buy given the new environment being created. Enjoy poverty Vancouver!

#173 Price out in Vancouver on 07.26.16 at 10:13 am

@ crowdedelevatorfarts # 64

You said: “This is nothing more than political posturing by the ruling Liberal Party to save their own skin in the coming election.
My only fervent wish is that it backfires on them all and they are punted from office for 4 years….”

So you are hoping the BC NDP win the next election in BC? The BC NDP were calling for a tax on foreign ownership first, which forced the BC Liberals to act, and now the NDP are saying this tax does not go far enough. The only two parties in BC that have a shot at government are the BC Liberals and the BC NDP.

#174 Price out in Vancouver on 07.26.16 at 10:23 am

@LarryK #81:

You said: “So now the only ones standing to prosper is the Government, by shifting 15% into their pockets instead of ours.”

Stop your crying for homeowners. Haven’t the owner of real estate in Vancouver made enough money already. Even if what you are saying is true, how is that a bad thing. Even if this tax does not bring down real estate prices and simply transfers the 15% from sellers to government that is still a good thing. That means the bounty of foreign capital that has flowed into real estate now more of it will flow to government where it can benefit all taxpayers, including those who rent. Shouldn’t public coffers benefit from all this foreign money? That way taxpayers in general can benefit, instead of just homeowners.

Of course not. It’s a head tax by another name. — Garth

#175 Nelley on 07.26.16 at 10:27 am

#168Montrealer-I once had a girl turn me down for a date-the memory haunts me to this day-can I get my government grant?

#176 Price out in Vancouver on 07.26.16 at 10:30 am

Nice try Garth. You are not responding to my first point.

You said: “the preponderance of comments to this blog have indeed suggested the flow of money from offshore is of suspicious origin.”

I do not disagree that the comments said that. That wasn’t my point. I was taking issue with the way you characterized this discussion of offshore money with a suspicious origin as a broadbrush criticism of Chinese dudes generally, when in fact many of the people participating in the discussion and calling for some sort of tax are of Chinese origin themselves. People have not been saying “all” Chinese but your wording makes it sound like they have been saying that. And by doing that you are fanning the flames of extremism and racism. Many, many Chinese Canadians have spoken out against foreign real estate investment from China. They have spoken out against it in Hong Kong too–which has a similar tax.

Regarding refering to women as dudes–that is a stretch. I’ve never heard of a woman being called a dude. That dictionary may say that it’s a gender-neutral term but in everyday usage (which is what language is all about), people understand the word “dude” to refer to men.

#177 bdwy sktrn on 07.26.16 at 10:32 am

#156 Damifino on 07.26.16 at 2:53 am
#124 mouldy in YVR

“…why can’t these people who don’t need/want to live in YVR just go and buy a house or two in beautiful Blaine WASH??”
——————————

Because we aren’t American citizens and buying a house in Blaine doesn’t make us so. You can’t even cut your own lawn there without being guilty of talking a job from and American. Get real.
—————————————

sure you can cut your lawn, or build a house, or dig in water and power lines (rented a backhoe for this one), or plant trees or whatever you want on your own property. heck i take down truckloads of building materials (and tools) regularly and never had any questions other than “is it for personal use?…go ahead”

the prob lies in the number of days you can visit – about 125/yr (ongoing) if i recall. (but 365 is fine for leaving/storing all your stuff while in costa rica or south spain for the winter – try pricing a 6 bay garage up here –
yikes!)

a 10 ac parcel is almost 100x cheaper a few steps south of the line and nexus makes the border a pleasant , and very brief pause (sometimes no questions at all)

also – 200 kinds of beer at the gas station, 6.99 for a large pizza, and pot shops everywhere – what more could one ask for?

#178 46 and 2 on 07.26.16 at 10:39 am

This tax grab is a slippery slope.

Now that there is a starting point where does it end?

Let’s talk definitions, regions, provinces.

Don’t forget that the entire country is in dire straits and the one thing all aspects of government needs is money from existing and new taxes.

#179 Jacob Mellen on 07.26.16 at 10:49 am

Aren’t you proud top have supported ‘Canadian Greens’ only to find out that it was all an American front for US oil companies all along?

http://business.financialpost.com/news/energy/anti-keystone-xl-group-takes-its-first-shot-against-a-new-target-energy-east

You must feel like a real a-hole now that your taxes have doubled and you have a toddler in the PM’s chair.

#180 46 and 2 on 07.26.16 at 10:55 am

Does Fernie now start taxing partial use Calgarians, what about Invermere, Kenora, Cottage country, Canmore?

Slippery slope folks….and the governments are going to screw this up big time.

#181 Victor V on 07.26.16 at 10:56 am

Real estate industry watchers applaud B.C.’s move to tax foreign home buyers

http://www.theglobeandmail.com/real-estate/the-market/real-estate-industry-watchers-applaud-bcs-move-to-tax-foreign-home-buyers/article31114012/

#182 46 and 2 on 07.26.16 at 11:14 am

Every city/town/municipal government in the country is watching this and wringing their hands.

#183 Brett in Calgary on 07.26.16 at 11:19 am

No doubt this story (CBC article below) was released to stir up emotions on BC housing. The subplot, however sad, is the lesson on why its important not to run out of money, or depend on government pensions.

http://www.cbc.ca/news/canada/british-columbia/doris-anthonysz-sechelt-elderly-homeless-car-1.3694358

#184 Ponzius Pilatus on 07.26.16 at 11:19 am

#169
If you can’t take uber political correctness, don’t dish it out. From a millenial’s perspective, your focus on Chinese dudes is sexist.
————
Completely agree with the caller.
Time to bring in “The Chinese Dudettes”, Garth.

#185 Tudval on 07.26.16 at 11:25 am

So if you think somebody else other than the rightful owner, should be entitled to help themselves from the proceeds of the sale, why not advocate to channel the money to the aboriginal communities? They were in fact the original owners of all land before anybody else bought it from them or just grabbed it. They were shut out from buying in the place their ancestors lived. And make the tax retroactive for the last five centuries or so. Fair?

#186 Tudval on 07.26.16 at 11:30 am

There are no rights a person can have beyond those that are enshrined in the constitution. Anything else is simply.. unconstitutional..right?

#187 Bat Flipper on 07.26.16 at 11:32 am

I guess the way it works is similar to a land transfer tax on purchases. If it is a foreign owned property, then you pay an extra 15% up front. Should severely limit foreign owned buyers.

Of course, they could just move on to a different city that doesn’t have these rules like Toronto.

#188 Balmuto on 07.26.16 at 11:34 am

Here’s an interesting take on the new tax:

“When asked about such a tax in British Columbia last month, Stuart Levings, president and CEO of Genworth MI Canada, the country’s main private-sector mortgage insurer, said without similar action in Ontario, foreign investors may simply head to Canada’s next hottest real estate market.

“If you tighten up Vancouver and not Toronto, what was going to Vancouver is just going to go to Toronto,” he said. “So we’re shifting the problem from the west coast to Central Canada.”

Hadn’t thought about that.

http://www.theglobeandmail.com/news/british-columbia/bc-to-target-foreign-real-estate-buyers-with-new-tax/article31096550/

#189 Ronaldo on 07.26.16 at 11:34 am

#174 Price out in Vancouver

”people understand the word “dude” to refer to men.”

What about “guys”. Seems to apply to my wife and I and all other seniors, male or female. Should we get our hair in a dander over it? So what would be wrong to be calling females “dudes” as well?

#190 45north on 07.26.16 at 11:39 am

MikeS: This new tax policy cannot *raise* prices. We’ve saved by renting, and there is nothing wrong with us wanting to own land. Explain to me how this doesn’t benefit us.

Mike it doesn’t benefit you. You cannot afford a house in Vancouver now and on August 2 you still won’t.

5% of sales are to foreign nationals ( more politically correct than just foreigners ). I’m pretty sure they’ll find a way of getting around the tax. For instance here are the Canadian REITs:
http://www.dividendearner.com/best-canadian-reits/

A foreigner could say to a REIT: here’s $4 million, go and buy a house in Vancouver, rent it to me and then sell it back to me. The written contract mentions only the $4 million and the renting part. Perfectly legal. In fact when prices drop, the REIT could sell it back at market value. I’d say difficult to monitor and impossible to prove.

Ronaldo pointed out the real issue: “We’re thinking really hard about those solutions. We want to do it in a way that doesn’t chip away at the equity that we have in our homes,” Clark said late last year.”

in other words she wants to make real estate more affordable without making it cheaper! What other impossible things does she want to do?

BS: This thing is done. My call is we will be down 20% in 90 days, 40% in 12 months and 70% in 3 years.

mine too

White Crock: never mind the screen shot just bookmark the url. Garth doesn’t change the contents after the first day.

#191 Sideshow Rob on 07.26.16 at 11:42 am

#106 Newcomer

“Do you also take stock tips from shoeshine boys ? :-)”

My best stock tip came from my 10 year old daughter 7 years ago. “But daddy all my friends are wearing Lulu Lemon!”

#192 The Wet Coast on 07.26.16 at 11:52 am

Of course not. It’s a head tax by another name. — Garth

I wondered how long it would be until this was thrown out. We’ll be hearing it lots in the weeks and months ahead. Wonder what they call it in Hong Kong?

#193 Tudval on 07.26.16 at 12:01 pm

First hit will be builders and renovators and perhaps not just in Vancouver..why would anybody invest money in this climate if there will be an extra tax on the value added (+HST of course) and uncertain profits? For a foreigner, it makes more sense to buy a tear-down, then contract out the building. Buy the land and the plan, no extra 15% tax on the construction cost.

#194 Aggregator on 07.26.16 at 12:21 pm

#179 Victor V – Real estate industry watchers applaud B.C.’s move to tax foreign home buyers

Exactly. Because it will have minimal or no affect on the market, otherwise Canadian banks and other international institutions  would have came out warning on the consequences of restricting foreign ownership and capital inflows.

In other news…

It seems the must read article I posted the other day by William McCarthy has stuck a nerve with REBGV's President, Dan Morrison, who promptly replied to McCarthy's claim regarding vested interests and revolving doors in BC's real estate market.

REBGV statement on article in the Globe and Mail

If you believe the opinions expressed in “Vested interests will prevent cleanup of British Columbia’s housing mess” (July 21), and other highly biased commentaries recently published by the Globe and Mail, you've no doubt concluded there's no hope for the real estate industry. I believe most people know that's just not true.

It is these types of rebuttal episodes between credible professional market players that tells me where the real issue is emanating from. For Mr. Morrison to even bother responding to McCarthy's article on a public forum implies his sensitivity and concern on the matter.

This is what people need to follow and investigate further instead of reading these self-centric media articles from reporters like SCMP's Ian Young. Read his headlines. All he's written about are a few isolated incidents of wealthy Chinese nationals laundering money into Vancouver, which if summed by total value is marginal compared to domestic household debt.

This guy is a story teller that has no interest in investigating the real mechanics and forces behind Canada's housing market. He doesn't appear to know (or has written about) how Canadian securitization, credit markets and government-backed mortgage insurance works, yet somehow people are referencing him as some kind of housing analyst or economist that knows what he's talking about. Same thing with VanSun's Sam Cooper — a story teller with no experience.

What both men are writing about are wealthy Chinese nationals and their illicit fortunes, a topic that very rarely gets published in mainland China. That gives them an advantage to gain global Chinese readers. Self-serving? I think so.

#195 Ole Doberman on 07.26.16 at 12:22 pm

Haven’t read all the comments so not sure if this has been said:

But why would a foreigner already spending millions on a property and paying in cash care about an extra $200-300K. If you are that wealthy it just doesn’t matter.

It matters to middle class folk taking on a mortgage.

#196 Nemesis on 07.26.16 at 12:37 pm

“It’s a head tax by another name.” — HonGarth

#Actually… #It’sAnElectionTax… #There,FixedItForYa.

[Tyee] – House Price Horrors: Who You Gonna Call? Not Christy Clark: Premier’s latest step won’t bust ghostly killers of home affordability.

…”Those insane prices have resulted in a windfall revenue surplus for the province, with the property transfer tax adding an extra $605 million more than budgeted – a 44 per cent boost to $1.53 billion.

That’s a nice bit of chump change for Clark to spend in an election year trying to buy off voters who have been hearing BC’s economy is Canada’s best but still seeing no improvements in health care, education, disability benefits, social programs or – most of all – investing in much-needed non-profit housing, which has dropped off the government map entirely.

And there’s this paradox. The worse the housing prices get, the more unaffordable Metro Vancouver and the rest of BC becomes, the more money there is in it for the BC Liberals to spend getting themselves re-elected.”…

http://www.thetyee.ca/Opinion/2016/07/26/Vancouver-House-Price-Horrors/

#197 Barb on 07.26.16 at 12:40 pm

#154 out of nowhere on 07.26.16 at 2:23 am

“Christy Clark is out and she knows it…”

———————————————————-
Huh? And the alternative is? Horgan’s NDP?

#198 Captain Stun Doe on 07.26.16 at 12:42 pm

So basically the Vancouver market real estate will now drop 15-20% to cover the 15% spread for f.buyers tax on purchases ?

In other words the F.buyers will be paying the same they are currently willing to pay today. And big brother just took a free 15% from the average Canadian Joe who owned real estate in that province.

Have to love government tripping over dollars to pick up nickels.

#199 Victor V on 07.26.16 at 12:44 pm

http://business.financialpost.com/personal-finance/mortgages-real-estate/b-c-s-15-tax-on-foreign-homebuyers-could-drive-money-to-other-parts-of-canada

Vancouver realtors reacted with fury to the announcement, especially the short notice, and demanded transactions that are in the process of closing be exempt from the new tax.

“Housing affordability concerns all of us who live in the region. Implementing a new real estate tax, however, with just eight days’ notice and no consultation with the professionals who serve home buyers and sellers every day needlessly injects uncertainty into the market,” said Dan Morrison, president of the Real Estate Board of Greater Vancouver.

#200 Victor V on 07.26.16 at 12:46 pm

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-financial-watchdog-tells-banks-to-test-resilience-to-sharp-drop-in-home-prices

TORONTO — Canada’s banking regulator said on Tuesday it will require the country’s banks to test how they would withstand a 50 per cent drop in property prices in Vancouver and a 40 per cent decline in Toronto.

The move, which will also measure banks’ resilience to a 30 per cent price decline in other regions, is the latest in a series of measures by Canadian authorities to counter a risk posed by soaring house prices in the two Canadian cities.

The Office of the Superintendent of Financial Institutions (OSFI) said earlier this month it was tightening oversight of mortgage lending, citing concerns about record household debt and a sharp jump in prices.

#201 Nemesis on 07.26.16 at 12:48 pm

#TuesdayMischief…

[ColonialTimes] – Sooke landlord/tenant bat-and-pipe brawl send four to hospital; nine facing charges

Four people were taken to hospital and nine are facing charges after a landlord-tenant dispute turned into a wild brawl in Sooke.

“This was not usual for Sooke – more like an Oak Bay bidding war, actually,” said Staff Sgt. Jeff McArthur, describing the scene police faced when they raced to a house on Ayre Road after receiving reports of a group fighting with bats and pipes Friday afternoon.

http://www.timescolonist.com/news/local/sooke-bat-and-pipe-brawl-send-four-to-hospital-nine-facing-charges-1.2309722

[NoteToGT: I may have taken some editorial liberties with Staff Sgt. McArthur’s interview.]

#202 Victor V on 07.26.16 at 12:48 pm

Ontario looking ‘very closely’ at B.C. tax aimed at foreign homebuyers as Toronto house prices keep rising

http://business.financialpost.com/personal-finance/mortgages-real-estate/ontario-looking-very-closely-at-b-c-tax-aimed-at-foreign-homebuyers-as-toronto-house-prices-keep-rising

#203 NEVER GIVE UP on 07.26.16 at 12:52 pm

Regarding taxation of empty homes.

This is the most workable plan that defaults on success.
Genius!

http://www.theglobeandmail.com/opinion/a-better-way-to-tax-vacant-vancouver-homes/article31091843/

#204 TurnerNation on 07.26.16 at 12:58 pm

For anyone expecting to live on basic govt pension. …dog food: everything old is new again, in Kommunist Kanada only Party Elites and Faithful Sunshine Listers live in comfort.

http://www.cbc.ca/beta/news/canada/british-columbia/doris-anthonysz-sechelt-elderly-homeless-car-1.3694358

#205 Cone of Silence on 07.26.16 at 1:03 pm

If this is such a good idea the US should consider adopting a similar policy to stop the hoards of Canadian investors driving the house prices wild in FL and AZ.

#206 Bottoms_Up on 07.26.16 at 1:11 pm

#201 NEVER GIVE UP on 07.26.16 at 12:52 pm
——————————————————–
Actually, that really would be a great way to collect tax and reduce fraud/lack of claiming income.

“Here’s how it works: The city would introduce a property tax surcharge, but owners could credit their income taxes against this surcharge. Only those who don’t already pay income taxes in Canada – those who leave properties vacant or don’t declare their income – would end up paying the surcharge.”

#207 Victor V on 07.26.16 at 1:17 pm

Terence Corcoran: Vancouver’s backward plan to make housing cheaper is about to backfire

http://business.financialpost.com/fp-comment/terence-corcoran-vancouvers-backward-plan-to-make-housing-cheaper-is-about-to-backfire

#208 Bottoms_Up on 07.26.16 at 1:23 pm

#193 Ole Doberman on 07.26.16 at 12:22 pm
——————————————————–
It’s true.

The move of the Canadian dollar from 90 cents to 78 cents negates this new tax. (a $2 million dollar home that only a few years ago cost $1.8 million USD, now costs $1.56 million USD, plus $300,000 CAD (for an ‘updated’ total cost, including tax, of $1.79 million USD)).

#209 Brazil ex-pat on 07.26.16 at 1:29 pm

#195 Barb on 07.26.16 at 12:40 pm
#154 out of nowhere on 07.26.16 at 2:23 am

“Christy Clark is out and she knows it…”

———————————————————-
Huh? And the alternative is? Horgan’s NDP?

+++++++++++++++++++++++++++++++++++++

there is no alternative. We are at PEAK govt in the entire world. They are all bafoons…….the next ten years are going to be hell.

#210 Ole Doberman on 07.26.16 at 2:08 pm

Wow more surreal news for Vancouver, OSFI predicting 50% crash for RE – if you ready between the lines:

http://www.bnn.ca/canada-s-financial-watchdog-tells-banks-to-stress-test-for-50-plunge-in-vancouver-home-prices-1.532890

#211 YVRpeasant on 07.26.16 at 2:12 pm

Bring on the crash tax!

Anything to knock some wind out of this market. Even if foreign buyers are as small a factor as some claim, the perception that prices will go up forever because of Chinese millionaires should fade, which will reduce the FOMO factor.

I don’t have a lot of sympathy for the homeowners who say they’ve lost 15% of their home value. The house likely went up ~30% last year, and the 15% hit is only if they are selling to a foreign buyer. If a more significant crash happens, the only people I will feel sorry for are those who bought recently because they believed the realtor/government narrative that everything was fine.

By the way, why is it so bad for a foreigner to rent a place until they get their PR? Buying a house isn’t a right, as everyone points out. It doesn’t say we are unwelcoming, it just says we protect our limited resources (ie. YVR land) for our residents. All you need to do to avoid taxes is to become one of those residents.

My only fear is that the governments will now put their feet up and stop from cleaning up the more profiteering side of the market.

#212 46 and 2 on 07.26.16 at 2:32 pm

“Housing affordability concerns all of us who live in the region. Implementing a new real estate tax, however, with just eight days’ notice and no consultation with the professionals who serve home buyers and sellers every day needlessly injects uncertainty into the market,” said Dan Morrison, president of the Real Estate Board of Greater Vancouver.

Professionals….what a f***ing joke. Any asshole can become a realtor. I had a quick look at that exam and I’m pretty sure I could have passed it when I was 15 and in grade 9.

#213 Damifino on 07.26.16 at 2:33 pm

#175 bdwy sktrn

“…sure you can cut your lawn, or build a house, or dig in water and power lines (rented a backhoe for this one), or plant trees or whatever you want on your own property.”

There are some who would disagree with that:

http://calgaryrealestate.ca/news/2011/09/canadians-buying-us-houses/

I have a friend with a place in Palm Springs. He doesn’t even dare to sweep the sand from his sidewalks.

What you can get away with is quite different than what you can be hassled or prosecuted for if an American doesn’t like what you’re doing and decides to make it an
issue. Then you don’t have a leg to stand on.

Low cost housing in Blaine is not a solution to expensive real estate north of the border for people who must live and work as Canadian citizens. In other words, practically all of us.

#214 Jas on 07.26.16 at 2:38 pm

Garth:
whatever measures are taken to contain the run away prices in Vancouver, I am in support of it.
We need our young people to stay and be able to afford housing.

#215 nothing to see here? on 07.26.16 at 2:45 pm

Jill Drews ‏@JillDrews1130 8m8 minutes ago
Percentage for most cities up with the longer data set. Burnaby at to 17.7% and Richmond at 18.2% 2/2

NEWS 1130 Retweeted
Jill Drews ‏@JillDrews1130 9m9 minutes ago
[email protected]: longer data set between Jun 10 and Jul 14 shows 9.7% of real estate transactions in Metro Van involved foreign nationals. 1/2

#216 Ponzius Pilatus on 07.26.16 at 2:46 pm

#190 The Wet Coast on 07.26.16 at 11:52 am
Of course not. It’s a head tax by another name. — Garth

I wondered how long it would be until this was thrown out. We’ll be hearing it lots in the weeks and months ahead. Wonder what they call it in Hong Kong?
———————
Apparently, Hongkongers are very hostile towards Mainlanders, calling them names that would never be published on this blog.

#217 nothing to see here? on 07.26.16 at 3:00 pm

OK,
more clear data:
Breakout % of foreign buyers in Metro #Vancouver
Metro:10
Van:11
#Richmond:18
#Burnaby:18
#Surrey:8
#VanRE #BCpoli
So the suburbs connected by highspeed transit to the core are most affected, quelle suprise…
https://twitter.com/MikePHager/status/758011520450228225
And we wonder why tax payers are pissed?

#218 Vanexit on 07.26.16 at 3:26 pm

$885 million in foreign cash poured into Metro Vancouver real estate in 35 days

http://www.cknw.com/2016/07/26/885-million-in-foreign-money-poured-into-metro-vancouver-real-estate-in-35-days/

So roughly 10% can account for foreign money. Not sure how they conducted this study.

#219 Noel on 07.26.16 at 3:39 pm

http://www.news1130.com/2016/07/26/real-estate-transactions-metro-vancouver-foreign/

Your thesis is falling apart brick by brick Garth.


VANCOUVER (NEWS 1130) – The province has released more data on foreign investment in real estate and it seems the issue may be a bigger problem than the first set revealed.

Of the transactions between June 10th and July 14th in Metro Vancouver, 9.7 per cent involved foreign nationals.

Vancouver is at 10.9 per cent, Richmond is at 18.2 per cent, and Burnaby is at 17.7 per cent.

You didn’t believe the 3.3% last time, but take the 9.7% as gospel? Too funny. — Garth

#220 Cici on 07.26.16 at 3:40 pm

OSFI more concerned about lax lending standards than foreign influence; wants banks to see if they can weather 50% drop (Vancouver) or 40% drop (Toronto) in response to tighter lending practices.

Maybe Garth was right about selling right now…this could be the top?

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-financial-watchdog-tells-banks-to-test-resilience-to-sharp-drop-in-home-prices

#221 A Canadian Abroad on 07.26.16 at 3:40 pm

Any industry (like realestate boards) that cannot effectively self-regulate (that gets taken away by the gov’t) and that makes monetary gains from encouraging corruption has no credibility.

#222 DisgustMadeMePost on 07.26.16 at 3:45 pm

Is there data to show what proportion of the value of the market those sales represent?

#223 Frank on 07.26.16 at 3:46 pm

“If this is such a good idea the US should consider adopting a similar policy to stop the hoards of Canadian investors driving the house prices wild in FL and AZ.”

They were fine to but during the second largest financial collapse in their 300 year history they were happy to have outside capital. BC is no peach but it’s not 2009, we can be more choosey as it affects our province. Housing is a problem, a multi-faceted one. Foreign capital is small but controllable for the province so they’re giving that knob a twist. They can’t increase interest rates (a change which could take years) so they may as well make a small change and watch. It’s pretty sensible. I don’t expect an immediate effect as low supply has caused a bit of pent up demand of fools sure they can buy into a market that climbs forever. This demand may take a month or 6 to burn off and then we’ll truly see how much of a driver foreign growth was

#224 Aggregator on 07.26.16 at 3:48 pm

https://twitter.com/MikePHager/status/758007802640134144

*The average investment by Canadian citizen of permanent resident buyers in Metro Vancouver was $911,425, while the average investment by foreign buyers was $946,945.

These are government numbers, but even so they are still showing actual transactions by locals at nearly $1 million dollars. That alone tells you average locals are totally bidding on on the upper end.

#225 Tudval on 07.26.16 at 3:49 pm

There’s an endless list of things foreigners could be charge extra taxes in Canada. Take bank shares for example. I want those dividends, but I don’t want to compete with foreigners to buy the shares. All the money banks make is from Canadians, from the fees and interest we pay them. How much money do they make in China? Right, zero. So why allow a Chinese national the privilege to buy the shares and draw dividends?

Then there is the issue of other essentials, like food and energy. Our trade agreements, skilfully negotiated by our politicians, forbid these companies to sell on the local markets for less than they charge our trade partners. Did anybody ask you if you agree with this? Or maybe you where never told.

#226 BOOM! on 07.26.16 at 4:11 pm

#203 Cone of silence

Why would Americans want to prevent Canadians from Investing here?

First off, when your dollar was at or above par our home prices in AZ FL, CA needed all the help they could get.

Today, with the Loonie at roughly .80 to the US buck we welcome you to buy as much as you desire!!

Remember you’re paying a higher price without regard to the currency exchange.

The time to buy, like Elvis, have both left the building.

Market manipulations never help reality.

#227 canali on 07.26.16 at 4:11 pm

DELETED

#228 canali on 07.26.16 at 4:15 pm

still one of the better analyses:
https://thewalrus.ca/the-highest-bidder/
by globe RE columnist kerry gold.

#229 Noel on 07.26.16 at 4:22 pm

#218 DisgustMadeMePost on 07.26.16 at 3:45 pm
Is there data to show what proportion of the value of the market those sales represent?
__________________

$900 million of the $8.8bn in sales. Just over 10%.

#230 westcdn on 07.26.16 at 4:26 pm

One of my favourite movies – The Last of the Mohicans. https://youtu.be/uzMx60ea_gI I love the soundtrack and the visuals.

This feels like 2008 July to me. I am reducing my equities and going to cash – reducing my line of credit. Buying into preferreds has treated me well. Lets see how it goes – sometimes I am lucky other times not. There is a big difference from 2008 because central bankers will not be flat footed. I can only follow the rules set by the elite and profit from their stupidity.

#231 Metaxa on 07.26.16 at 4:33 pm

3155 AB Boxster:
Hell, they even died to preserve the leftist babble that you rant on about.

1) I voted, paid dues, worked for the Progressive Conservative Party of Canada all my adult life.
2) I have not, however, supported Stephen Harper’s Conservative Party of Canada.
3) I long for the day when a true and proper conservative leader and party re-emerges in Canada.
4) Post after post on here reinforces the posit that it will be a long, long time before that happens and longer still for a conservative government.

Regarding people cheering on this government move…that isn’t small government conservatism, that is intrusion. Just one example of how lost true conservatism is right now…

Regarding folks who died…my father was forced to accept a compassionate discharge from the Canadian army in WWII due to the fact that his father had perished in the last days of WWI and 20 some odd years later his two brothers were killed in the early goings of WWII, leaving my father as my grandmother’s only living kin.

So, a grandfather and two uncles who I never met…that get me entrance into the club?

#232 God Emperor of Mankind Trump on 07.26.16 at 4:38 pm

The public is awakening to the criminal ways of Hillary “Oops, I started a genocide in Syria” Clinton.

The Democratic Party was outed as a cartel that represents large pools of capital, major stake holders in the US economy as well as opinion-making media.

Bernie embezzled hundreds of millions of dollars in small donations from lower class Americans only to re-affirm his support for a literal prostitute of a candidate.

The Democrats are finished.

It took a populist billionaire to break the back of the cartel which has held a monopoly on US power for decades.

#233 Jacob on 07.26.16 at 4:47 pm

You didn’t believe the 3.3% last time, but take the 9.7% as gospel? Too funny. — Garth

Why is that funny? Are you saying the number is likely even higher than 9.7% and you were even more wrong?

#234 dsw on 07.26.16 at 4:55 pm

So it turns out in specific neighborhoods, in the lower mainland, the foreign ownership rates are well above 20%.

In my neighborhood, a completely new area of Coquitlam soon to be connected to skytrain where homes are all above 1.3M, i would say its much higher than 20%.

At least the BC Gov’t is now telling us what we already knew

FWIW, those numbers are extraordinary, as you can add with the price pressure a massive influx of immigrants, surrogate buyers, and corporations.

#235 Brazil ex-pat on 07.26.16 at 5:27 pm

Is there a reason you keep “cherry picking” who gets to post the exact same news? I posted the news link to the 10% foreign buyers and you did not post it…..yet 5 others seem to have made it.

You know why. I dislike you. — Garth

#236 Jas on 07.26.16 at 5:29 pm

That 15% tax should be on ALL who buy in Vancouver.
Actually it should be 50% of purchase price.

#237 Tudval on 07.26.16 at 5:30 pm

It would be so funny if it wasn’t so sad… everybody wanting a piece of the action, even though they haven’t worked for it and don’t deserve it in any way. Working feverishly to justify their own greed while they trample on all principles they so neatly laid out in useless documents they signed. You know, you win if you call one greedy before they get to call you. Then, with the moral upper hand so cleverly appropriated, you keep the pressure relentlessly while the anesthetized opponents watch in stupor.

#238 Ronaldo on 07.26.16 at 5:47 pm

#208 Ole Doberman on 07.26.16 at 2:08 pm

”Wow more surreal news for Vancouver, OSFI predicting 50% crash for RE – if you ready between the lines:

http://www.bnn.ca/canada-s-financial-watchdog-tells-banks-to-stress-test-for-50-plunge-in-vancouver-home-prices-1.532890
——————————————————————
I expect that in the next 3 months we will see a major reduction in mortgage approvals before the taps get shut off entirely. This is the year. The age of easy money is coming to an end. The speckers will be in deep doo doo and will be caught with properties they can’t sell. The rush to the exits is at hand. Expect Christy to be putting her place up for sale very soon. Sit back and enjoy the show.

#239 Brazil ex-pat on 07.26.16 at 5:51 pm

#231 Brazil ex-pat on 07.26.16 at 5:27 pm
Is there a reason you keep “cherry picking” who gets to post the exact same news? I posted the news link to the 10% foreign buyers and you did not post it…..yet 5 others seem to have made it.

You know why. I dislike you. — Garth
+++++++++++++++++++++++++++++++++++++

I see. Well I guess all I can say is welcome to the club then with years and years of “locals only”.

#240 davikk on 07.26.16 at 5:55 pm

British Colombia Targets Foreign Buyers With New 15% Tax

http://investmentwatchblog.com/british-colombia-targets-foreign-buyers-with-new-15-tax/

#241 Cone of Silence on 07.26.16 at 7:01 pm

#222 Why would Americans want to prevent Canadians from Investing here?

My point is Canadian are driving the real estate marking in the US about as must as Chinese are driving the real estate market in Vancouver.

Why would Canadians want to prevent Chinese from investing in Canada?

I don’t see any difference in Canadian’s purchasing real estate in another country and the other countries purchases here.

#242 wait_and_see on 07.26.16 at 9:32 pm

To elaborate further, perhaps the revenues from the tax can be used to give incentives to various modern industries related to high tech, film, engineering, and startups to set up shop in Vancouver and help diversify the economy away from the thousands of realtors, mortgage brokers, builders, and developers who have been calling the shots in this city for as long as I can remember.

#243 Tudval on 07.26.16 at 10:38 pm

#236 Of course Chinese are also big buyers in the US, but Americans don’t mind. I suppose it’s just that they like money much more than us. We don’t need it as long as prices are low. Which of course they aren’t because less money translates in the end to lower productivity in the whole economy. I think we will end up on the path of least resistance, having to impose capital controls like the Chinese. What the stuff stops coming in, then we have to prevent it from getting out.

#244 Kyla on 07.27.16 at 1:14 am

In regards to the multiple comments about Vancouver it’s moving to Victoria, I think it stems from realtors the same way foreign investors rumors did. I’ve heard it from multiple people who’s realtors told them that Vancouver is buying up real estate here but to be honest I don’t know of anyone from Vancouver who has moved here. I have a ton of friends there and they love the city lifestyle that is just not in Victoria. If they just want a cheap house there are so many cheaper options just as close to Vancouver…

#245 Dups on 07.27.16 at 11:11 am

This tax will accomplish nothing. It is too much money at stake which will force the overseas buyers to find loopholes and/or other people aka “cousins” to buy for them. In fact if the tax was not so high, they might just pay it and not go through the hurdles of finding loop holes.

#246 Binder Dundat on 07.27.16 at 1:12 pm

First the BC Crash Tax, then OFSI, now CMHC warnings… what a week.

“Housing prices overheated in 9 Canadian markets, Vancouver at high risk: CMHC”

http://tinyurl.com/gt8y3wq

In what the Crown corporation calls its Housing Market Assessment Survey, released Wednesday, it said overall evidence of problematic conditions in the housing market for the country as a whole has been bumped up from weak to moderate — with Vancouver singled out for “very high” evidence of problematic conditions in its market.

Overvaluation was found in nine markets and overbuilding was detected in seven. Overall, while Vancouver has been added to cities with “problematic conditions,” CMHC says they still exist in Toronto, Calgary, Saskatoon and Regina.

#247 young & foolish on 07.27.16 at 4:07 pm

I took Garth’s advice and asked pops why he just doesn’t sell his rentals and invest in preferreds paying a reliable 5% of tax efficient income.

His response … he would now trigger major capital gains taxes, and since his properties are in downtown Toronto (which is still growing and creating new jobs) he would miss out on long term capital appreciation.

Long live the slanted semi?

There are no ‘massive’ capital gains taxes since 50% of all gains are untaxed and the rest is taxed at one’s marginal rate. Thus the normal tax is 15% and you keep 85%. Pops needs educating. — Garth

#248 canali on 07.27.16 at 5:21 pm

Email from Vancouver realtor to clients suggests ways around foreign buyer tax

http://globalnews.ca/news/2850782/vancouver-realtor-email-foreign-buyer-tax-loopholes/

Why pay a tax when you can legally avoid it? — Garth