The slippery slope

DIFFERENT modified

On CBC Toronto Wednesday morning housing economist Frank Clayton argued for a heavy tax on foreign dudes in the GTA. Phooey, I said, in an articulate response. That would be thick.

Of course the CBC host was on the side of stiffing the out-of-country buyers. So are most people on this blog. And in Vancouver. Maybe everywhere. But they’re still wrong. Too much government diddling in the housing marketplace has distorted it. In fact for decades, there’ve been strong pro-real estate measures enacted by every successive group of politicians, leading us directly to now – when the average family can no longer afford the average home.

Artificially-low borrowing rates, government-backed mortgage insurance, legislated 5% down payments, RRSP homebuyer loans, first-timers grants, property tax rebates, land transfer tax exemptions – the list of interventions is endless. So now crap houses cost a million. Good job, government.

As a result of unaffordability (it takes 110% of gross income to carry a house in Van and 73% in Toronto – even with a huge down payment), governments want new taxes to try and correct mistakes already made. Thus by dumping big levies on foreign buyers they seek to soothe the locals, saying markets “will cool off.” So naïve.

Still, Ontario’s finance guy, Charles Souza, insists the province is closely watching the new Van Chinese Dudes Crash Tax saying, “I welcome what BC is putting forward and we’re certainly looking at whatever options can be made available.” This is significant, since both Sousa and BC’s wacky finance minister sit on the newly-minted federal task force on housing, set up by federal minister Bill Morneau.

In other words, dumping on foreigners has legs. Most people see this in the same light as new T2 taxes on the wealthy or slashing the TFSA contribution limit – a way to gouge others better off then they, without consequence. So cute and Millenialesque.

Here are the basic reasons why we’re now on a slippery slope every homeowner should worry about:

There’s simply no data showing foreign guys caused houses to go ballistic, and overwhelming evidence Canadians have done this themselves (with the help of politicians). Even the latest Van stats reveal locals and foreigners spent an identical amount per purchase, and Canadians outnumbered them by nine-to-one. Case closed. We’re reaping the harvest of our own house horniness, FOMO sniffing and debt snorfling.

Second, the market will find its own direction – which was already heading south. As this pathetic blog has documented with nauseating repetition, sales are falling, listings rising, sales ratios eroding and speculation spreading in 604. The Chinese-spanking tax will serve to remove some missing-out anxiety from the public’s mind, spread the meme of a cooling market and help ratchet a normal correction into something worse.

Third, taxes – especially ones imposed only on a narrow geographic area – are destined to cause more problems than they fix. If Chinese Money-Laundering Dudes (as everyone categorizes them) really want to wash-&-rinse in Canada, then they can do that as easily in Victoria or Kamloops as Vancouver or Burnaby. If Toronto brings in an eat-the-foreigner tax, then won’t money flow to K-W, Hamilton or London? In addition, people are clever little weasels. Already lawyers, realtors, accountants and advisors are plotting ways to avoid the head tax – so we’re on the way to a bloated bureaucracy which may cost more than it collects.

Fourth, the economy. It blows. Growth may be 1% this year if we’re lucky. Jobs are scarce, commodities weak and Alberta is pooched. Is this really the time to be shutting the door on foreign capital?

Fifth, Toronto’s not Vancouver. Six times bigger, far less anxiety over foreigners. Sticking a Chinese Dudes Crash Tax on the GTA would be nothing more than a tax grab in drag. Very bad idea, because…

Finally, real estate’s in big trouble already. Just about everywhere – even as most people are completely blind to the risks. Why else would the bank regulator ask financial institutions to stress test for a 50% property crash in YVR and a 40% drop in Toronto this week? At the same time CMHC is setting its pants on fire, saying there is (for the first time ever) “strong evidence” of problematic conditions in both Vancouver and the GTA.

“We now have sufficient evidence to raise our overall assessment of problematic conditions in the Vancouver market to high,” it shouts. “For Canada overall, we now detect strong evidence of overvaluation.”

Add it up. Bank CEOs warning about excessive borrowing. Two of them curtailing mortgage lending in YVR. The regulator worried about a housing Armageddon. CMHC sounding an historic alarm over too-costly houses. Every major US debt rating agency saying we’re nuts. Warnings from the IMF and World Bank. Prices wobbling dangerously higher on thinning sales. Unheard-of levels of household debt, while incomes flatline and the GDP groans. And now, an unnecessary, politicized assault on foreign investment.

The inflated, voracious, teetering housing market that sucked so many in was created in Canada by Canadians and their leaders. It constitutes a great risk. What a moment to push it over the edge, all because of myth and xenophobia.

We’re getting Trumped.

CHART

Chart by Gary Anderson, Blog Dog (click to enlarge)

228 comments ↓

#1 TurnerNation on 07.27.16 at 5:57 pm

Here’s an example of someone on a govt pension eating cat food due to a 150 year old technology. Rural area.

I believe our highest electricity costs in the world have been so ‘weaponized’ to drive people off their land into “Agenda 21”
concentrated city sustainability slave zones.

https://www.thestar.com/news/gta/2016/07/27/pensioner-left-in-dark-after-hydro-pulls-plug.html

#2 Steerage Bilge on 07.27.16 at 5:58 pm

You forgot zero down for 40 years…..

#3 all about hormones on 07.27.16 at 5:58 pm

Garth,
Do you agree or disagree with this statement:

It doesn’t matter whether or not foreign money is affecting housing prices, especially if you believe it doesn’t. What does matter is that the locals believed it did, so bought into the meme of buy-now-or-buy-never. The question now is – do locals believe price will be stable, possibly correct, maybe crash, and therefore, the best time to buy is not today, but tomorrow.

#4 james on 07.27.16 at 6:01 pm

“The inflated, voracious, teetering housing market that sucked so many in was created in Canada by Canadians and their leaders.”

Agree with this. Foreign money has an impact, but it is not the core driver.

Canadians should be thanking foreign buyers right now, because the latter are buying at the worst possible time. A local whose house is purchased by an offshore investor is the recipient of a golden goose. The offshore buyer is putting their capital at risk. I’d be retiring to another country if someone took a 1.6 million dollar east van crack shack off my hands.

#5 El Presidente Trump on 07.27.16 at 6:06 pm

TRUMPED.. what a glorious word.

I’ve asked my buddy Putin to see if he can find all the DELETES….. should be interesting reading for you all.

Don’t worry Smoker Dude.. I know you love me.

#6 mark on 07.27.16 at 6:08 pm

I’d be disappointed if everyone now calling for intervention hadn’t sold up already.

#7 armpit on 07.27.16 at 6:17 pm

Hmmm… a tax imposed on Foreigners not residing in Canada. No warning…no grandfathering of sold home closing after Monday.

I wonder what may happen to homes sold to the 10% and are closing afterwards? Would they pay the tax? Or simply walk away…leaving the Seller more complications, especially if Seller bought elsewhere.

If they walk away, this may cause a domino effect.

What are the government thinking about?

Of course, there are no votes to be worried about.

Time….of course… will give us he answers.

#8 White Crock BC on 07.27.16 at 6:20 pm

As this pathetic blog has documented with nauseating repetition, sales are falling, listings rising, sales ratios eroding and speculation spreading in 604.- Garth
============

Prices going down yet?

#9 Gold is Looking Spectacular on 07.27.16 at 6:20 pm

Garth is quite right about real estate.

GET OUT!!!!

(Wanna hear it louder!? LOL!!!)

And the place to go…is….GOLD.

RBC today says they expect $1500 by early 2017.

Probably more, I say, and $2000 will hold this time, likely by early 2018.

Huge gains ahead for those who see this coming. A sweeet ride for the next five years at least, maybe locked in for longer if the debt crunch and global crises keep multiplying their effects.

Nothing else will come close.

#10 Annek on 07.27.16 at 6:20 pm

Hi Garth
I heard you on the CBC radio today and I thought you were very impressive. Good job!
I had a lady come to clean my house today. She told me that she has a condo in the GTA near Islinton subway. Here monthly costs were $3000 a month, so as a result she has 3 jobs to keep up the payments. She is a cosmetician at Shoppers, does facials, pedicures, etc. and has to clean houses to make her monthly payments. I was so tempted to ask her why she does not rent, but this always gets me into trouble. Oh, to the joy of home ownership!
People do not want to listen.
In some ways, I do hope there is a big correction in both the GTA and Vancouver.
As least this would make it affordable for a lot of young people . On the other hand, other people will get burned.
But, these were the people who would not listen and thought they knew better. There are many people patting themselves on the back because they bought a house and their house had appreciated. They feel so smart.
Funny, I own a house that I bought years ago, that is quite nice , backs onto parkland in Mississauga. It has gone up some, but we had bought in a peak and so there were many years it did nothing. But I view it as accomodation and do not consider this as a major asset.
But there are many retirees counting on their appreciated homes as major assets because they do not have much savings.
The fallout may be quite interesting not just for those who recently bought, but those who feel that they have a goldmine nest egg in their home.
Are taxpayers going to be subsidizing both ends of the spectrum when there is a correction?
As you often say,
” this will not end well”

#11 Toronto Dweller on 07.27.16 at 6:20 pm

I feel sorry for Ontario that we became a province of house horny flippers and not much else. We used to have such a huge manufacturing base here in Ontario with well paying jobs and a future. And now it seems like the career to be is in Real Estate.

#12 ole Doberman on 07.27.16 at 6:24 pm

Hate to fan the flame here but calgary based Boardwalk REIT the most shorted stock in the world:

http://calgaryherald.com/business/real-estate/calgary-based-boardwalk-reit-now-the-most-shorted-stock-in-north-america

#13 F.dover on 07.27.16 at 6:31 pm

Speaking of things going south, At this time last year, West Jet told us the trip we had bought and paid for in April would not be a direct flight from Halifax in February as planned. Seasonal direct flights to Montego Bay exist no more.

Now today, we got the very same call from Air Canada about this years bought in April, prime season trip to a resort that sells out quickly so you must do it this way.

Will it be Air Transat calling us next August? I won’t give Sun Wing that pleasure. I’ll take a bus first…

It looks like Halifax is not going south, to Jamaica anyhow, with West Jet and now Air Canada, except through Toronto.

Just like the 80’s all over again here down East!

#14 Shawn on 07.27.16 at 6:32 pm

The Real Reason the Pensioner is “Eating Cat Food”

TurnNation at number 1 provided the article on how Hydro bills were allegedly causing the pensioner to eat cat food.

Granted Hydro costs in Ontario are high and Hydro has been hugely mismanaged for decades.

But the article, perhaps unintentionally, provided the real reason for the problem.

“It (Hydro) was going to cost me more than my mortgage,” she said.

So, the pensioner with no retirement savings and relying on government pensions has a mortgage. She is 74 years old and moved to the rural area five years ago.

Houston, I think I see the problem. Just who approved a mortgage for this lady? She bought a property that she could not afford. Therein lies the problem. How did the lender expect this would work out?

#15 parksville senior on 07.27.16 at 6:35 pm

Housing is a sector with a very low co-efficent of elasticity due to time lag, building regulation and the slow process of land development.

Thus a very minor change in demand can have a large effect on price-ie the 3-6-9% (whatever) of foreign buyers can have a disproportionate effect on price-very econ 101 which, unless you have drank the Republican Kool-aid, still does a pretty good job of describing price discovery.

So if the demand is diverted to other markets (Kelowna,Kamloops, Medicine Hat), then it is working as it should. There is no reason to believe that the number of Foreign investors will increase because of the tax, so as they are diverted to other markets their effect is diluted and the price increase is lessened.

Take these foreign investors and divert them to Eyebrow, Elbow and Tuay Saskatchewan, then Vancouver (and Toronto) are relieved.

If the foreign investors are determined to throw gas on these inflammatory markets inspite of the tax levy-so be it that they take a haircut.

Even David Ricardo would have pulled up a bit short of your defense of destabilizing outside influences.

have a good one Garth!

#16 Suede on 07.27.16 at 6:37 pm

I’m with smokey…

All these measures are to try and cool the market so when the BOC rate drops, my colleagues won’t up upping their mortgages and buying more presale condos.

Remember when Carney was talking about rate hikes and for people not to gorge on house debt?

I do.

More of the same

#17 Frank on 07.27.16 at 6:38 pm

Irony: you critique anti-foreign buyers as being racist yet always casually refer to them as ‘Chinese dudes’ or ‘Chinese guys’ and never ‘person’ or ‘woman’ because only men could buy a home. And then you wonder why you’re called sexist but no one buys the claims of racism.

* Sigh * — Garth

#18 A Canadian Abroad on 07.27.16 at 6:41 pm

The new BC Real estate tax = Foreign withholding taxes that’s been around for a very long time.

It’s not racial or racist, it is an acceptable practice worldwide and applies to everyone regardless of race/colour/creed.

“Almost all countries levy a tax on dividends paid to foreign investors: usually 15%. (Foreign withholding taxes do not apply to capital gains.) ”

I’m a little surprised Garth hasn’t mentioned this in his posts being a fellow investment advisor to cool the anti-race rhetoric in the blogs.

But Foreign Withholding taxes are common.

The BC Chinese Dudes levy is not a withholding tax. It is aimed at discouraging investment and shunning those investors. The government made that clear. — Garth

#19 Shawn on 07.27.16 at 6:43 pm

Stupid Investor Tricks

#5 ole Doberman on 07.27.16 at 6:24 pm said:

Hate to fan the flame here but calgary based Boardwalk REIT the most shorted stock in the world:

***************************************
So what? As the link states this is likely uniformed investors. The same investors that shorted Canadian banks. How is that working out?

Why would anyone invest on the basis of following the crowd? You can’t beat the market (which is the crowd) by following the crowd.

But everyone is entitled to their opinion and we should respect those who make financial bets on their opinions. But blindly following them is not a great idea.

In 20 years of analysing stocks I have never once paid any attention whatsoever to the short interest in any company. It is simply not a relevant factor.

#20 Grey Dog on 07.27.16 at 6:44 pm

Heard you this morning on CBC Metro Morning Matt Galloway.
Foreign money enjoying the fresh air, peace, and security of Canadian housing and society can easily afford a 15%tax on the homes they purchase.
Foreign buyers also need to pay capital gains taxes when they upgrade their Canadian homes.
Canada and the affected provinces need money to fund infrastructure. Foreign money isn’t invested in the community, they are just looking for a save haven to park their money.
Bottom line, can we easily purchase a home in their foreign homeland?

#21 BOOM! on 07.27.16 at 6:45 pm

Garth-

Looks like we are ALL going to get “TRUMPED.” In taking my informal survey of people, there seems to be far too many Trump supporters. Well, if he wins we can all look forward to protectionism, higher costs, and a crappier standard of living.

Maybe I’m just being too optimistic here.

M64WI

#22 pathcontrolmonk on 07.27.16 at 6:46 pm

So here is another possible scenario for Canadians getting hooped: foreign buyers backing out of sales leaving seller worth no recourse because you know, no rule of law in the PRC.

http://www.theprovince.com/business/real-estate/condo+27presales+could+left+chaos+industry+warns/12084803/story.html

You seriously think any offshore buyer can be sued for not closing a deal? Losing the deposit? Sure. Damages? No way. — Garth

#23 robert james on 07.27.16 at 6:47 pm

Slippery slope indeed..,,,,,,,,,,,,,http://vancouversun.com/business/real-estate/top-vancouver-realtor-rapped-for-trying-to-avoid-new-15-property-transfer-tax

#24 Chaddywack on 07.27.16 at 6:48 pm

The amount of foreign investors in metro Vancouver was nearly 10%. That was much higher than I thought as previous estimates were in the low single digit range. I was evidently wrong in my belief about the level of their impact over the past years.

Houses in the worst parts of Surrey are listed for over $800k now. Something is seriously wrong with this picture. To have prices that detached from local incomes is a serious issue and needs to be addressed in some form.

#25 Joe on 07.27.16 at 6:49 pm

Heard stories of one realtor moaning in Vancouver today because foreign investors who purchased 20+ presale condo units were screaming at them for the additional 15% tax. Yes. One realtor sold 20+ presale condo unit to foreign investors…

#26 Sheane Wallace on 07.27.16 at 6:49 pm

The people responsible for this mess are trying to blame non-existent foreign buyers. So Canadian!

It shows though the deep and smelly trouble we are in. It surely will hit the fan folks!

#27 Eco Capitalist on 07.27.16 at 6:54 pm

@#1 TurnerNation,

After reading the Star article you link to, all I can do is shake my head. This woman is a perfect example of what Garth is warning people about:

– she’s trying to LIVE on CPP and OAS
– she has a mortgage at age 74!
– she has five children (who aren’t helping mom out)

I don’t think the electricity costs are the issue here. Unless her kids step up, there is no way this can end well.

#28 Lorne on 07.27.16 at 6:57 pm

#3 all about hormones
Garth,
Do you agree or disagree with this statement:

It doesn’t matter whether or not foreign money is affecting housing prices, especially if you believe it doesn’t. What does matter is that the locals believed it did, so bought into the meme of buy-now-or-buy-never. The question now is – do locals believe price will be stable, possibly correct, maybe crash, and therefore, the best time to buy is not today, but tomorrow.
……..
Sounds pretty logical to me.

#29 JAnderson on 07.27.16 at 6:59 pm

I found this awesome blog by chance and am happy I did. It was like discovering the Matrix was real and I wasn’t alone in the world. Am glad there are other independent thinkers out there who challenge “established thinking” instead of blindly jumping out the window behind all the other lemmings in this country!

#30 Happening now on 07.27.16 at 7:03 pm

Heard from my colleague who’s wife is a realtor with McDonald Realty on the west side of vancouver, that he is having to take the rest of the week off to look after there children as his wife is working around the clock to try and get deals closed this week….stated lawyers are working 24 hrs on this……panick in the office as everyone tries to beat this tax !!

#31 Lorne on 07.27.16 at 7:03 pm

#20 Grey Dog
Heard you this morning on CBC Metro Morning Matt Galloway.
………
Link??

#32 Barb on 07.27.16 at 7:03 pm

Two things:
1. on the 15% tax: A segment of the population demanding government nail another segment sounds eerily similar to 1939/40. Government’s insatiable appetite for revenue will eventually extend to the complainers, too.

2. and *sigh* Trump 1998 interview with People magazine: (verbatim) “If I were to run, I’d run as a Republican. They’re the dumbest group of voters in the country. They believe anything on FOX news. I could lie and they’d still eat it up. I bet my numbers would be terrific.”

*burp*

#33 Pitbully on 07.27.16 at 7:09 pm

Thought I would share. I dont know if it was posted before.

http://news.nationalpost.com/news/canada/meet-the-mysterious-tycoon-at-the-centre-of-half-a-billion-in-b-c-property-deals?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NP_Top_Stories+%28National+Post+-+Top+Stories%29&ref=yfp

#34 Somehow i agree on 07.27.16 at 7:14 pm

I was happy and suprised by the 15% tax on foreigners, but then i think it was stupid.
1. Will crash the market hard and quick
2. Government should have imposed a yearly 1-2% of assesment value for foreigners, this way you don’t destroy the market and collect $$$ every year.
Oh well, nothing is coincidence in life and i wouldn’t be surprised if we see a 10% drop in yvr by end of september. Then the credit will stop from banks and CUs , more crash by next spring because of that, probably 30% in yvr in 9-12 mo… Get ready

#35 Matt on 07.27.16 at 7:16 pm

Well, 30℅ correction on my street bring prices down to last year’s level , I can live with that. But Garth you seriously underestimate the foreign investors buying power, plus I think your definition of foreigner is wrong.

#36 tkid on 07.27.16 at 7:18 pm

Garth, I think you’re giving foreign buyers too much credit. I think most foreign buyers won’t hear 15% tax on their property purchases in Vancouver, I think most foreign buyers will hear 15% tax on their property purchases in Canada.

#37 Somehow i agree on 07.27.16 at 7:21 pm

I forgot to mention 2 things
Nothing drops 10% only All the heloc’s are recalled and people will not spend more layoffs
Construction workers are layoff and realtors will not re-up leasez for audis
Now you have a problem

#38 common sense on 07.27.16 at 7:21 pm

Not only is Canada “pooched”, 98% of the world is as well.

Interest rates in the USA will only rise in the USA in December once Trump wins.

Blame EVERY central bank in the WORLD for keeping interest rates low and not allowing true price discovery on hosing and stocks.

Pray for my 17 yr old and anyone under this age who has to pick up the pieces and suffer through this shit show of
hallowing out the middle class, many years of lies and increasing debt – stealing the future.

You tell me, what do I say to my daughter at night when she asks about all of this ?

What a freaking joke. Can SOMEONE in government have the cajones to stand up, take responsibility and do the right thing so we can at least start to rebuild now vs another 5 years down the road when it will be that much worse?

Cowards..all of you.

#39 White Crock BC on 07.27.16 at 7:24 pm

The BC Chinese Dudes levy is not a withholding tax. It is aimed at discouraging investment and shunning those investors. The government made that clear. — Garth
===================================

Now you’re calling YVR RE an “investment”?

#40 Self Directed on 07.27.16 at 7:26 pm

Fed did not hike rates today. What else is new!

Janet says “oh, but we’re going to do it next time, for sure!” But then, something always happens.. they always panic over something small. The markets have them trained NOT to make a move… or else dire consequences!!!

I am now a believer… rates WILL NEVER NORMALIZE!!! EVER AGAIN!!! THIS IS THE *** NEW NORMAL ***, PEOPLE!!!! The old model is already in the Garbage… we just keep pulling it out to get all nostalgic over the ol’ days.

Garth, I think you are never going to win this argument.

#41 DisgustMadeMePost on 07.27.16 at 7:29 pm

#23 robert james on 07.27.16 at 6:47 pm
Slippery slope indeed..,,,,,,,,,,,,,http://vancouversun.com/business/real-estate/top-vancouver-realtor-rapped-for-trying-to-avoid-new-15-property-transfer-tax

…………..

Reinforces my aversion to R E agents..

So he’s being investigated. Might make him sit up and notice if he was suspended during the process.

#42 BS on 07.27.16 at 7:30 pm

The quicker they get the bubble deflating the better for everyone. Less people sucked in. If you take 10% out of the market that makes a big difference. Especially considering most of that 10% of foreigners are not selling a property in the same market like most locals are. Trade up buyers and downsizers are actually market neutral even though they account for most of the sales volume.

#43 TRON on 07.27.16 at 7:31 pm

There can be no doubt of the ‘perception’ that overseas wealthy Chinese buyers have pushed housing prices in Vancouver higher. It fuels the buy now or never crowd, realtors, westside homeowner’s and media into believing there is an endless supply of buyers.

If the perception is true then a 15% tax may just be the cost of doing business when you’re moving money out of China. Many foreigners deal with additional costs when doing business outside their own country and usually the additional costs are justifies as the ‘cost of doing business’.

However, with prices already at record highs, an uncertain economy, fear of Trump nuking NAFTA and the Chinese governments attempt at curbing the money leaving China we may see a loss of appetite for a home in the YVR.

But this is just a sidebar to the bigger issue. Interest rates go lower driving prices higher and un-affordable. Interest go higher and mortgages become un-serviceable.

Buying a house is the second biggest life commitment next to marriage. What do you think would happen if you married someone who spent your entire paycheck every month, never let you move, forced you to keep your job even if you hated it, left you no money for the weekend and wanted plastic surgery every year to keep up with the other woman in the neighbourhood?

You’d run unless someone (family) convinced you it’s the right time to do it because it’s affordable (bank) and besides she’s perfect (realtor) for you.

People have a tough time thinking things through to the end. But they need to remind themselves that so do the people who are advising them on life.

#44 SeeB on 07.27.16 at 7:32 pm

#32 Barb on 07.27.16 at 7:03 pm

2. and *sigh* Trump 1998 interview with People magazine: (verbatim) “If I were to run, I’d run as a Republican. They’re the dumbest group of voters in the country. They believe anything on FOX news. I could lie and they’d still eat it up. I bet my numbers would be terrific.”

————————————————————–

Not that I’m a big fan of Trump, but that quote is a fake.

As for shutting the door on foreign capital, I fail to see how this specific capital is of real net benefit since foreigners represent a small fraction of total buyers. Either they are dumping enough money to have an impact here or they are not. It can’t be both ways.

Besides, all that money does is go to the previous owner who either hordes it or dumps it into another property, which keeps it out of the general economy anyway. Anyone savvy and motivated enough to use all that money to invest or start a business that benefits our economy has probably already done so.

#45 DisgustMadeMePost on 07.27.16 at 7:32 pm

To the poster who mentioned moving money out of credit unions ..

I got nervous when the mortgage guy at my C U told me stories of million dollar mortgages being given out to groups of family members banding together to buy houses.

Any excuse to keep the party going.

#46 AB Boxster on 07.27.16 at 7:34 pm

Many moons ago I posted that I believed that there was
no way that politicians would do anything to spoil the RE party.
What I did not take into account were two things:
1. That millennial voters were fine with gov’t policy as long is it did not impact them directly.
2. That the political class first and foremost valued their entitlements.

In the BC case, the massive increase in housing costs were starting to affect people who actually vote and therefore the political class found their entitlements threatened.
So voila. A new tax.

Also, I now believe the Trump will win the US election.
After watching the democratic convention it is obvious how far left this party has moved, mainly to appease the Bernie groupies.

For the Democratic VP selection to say that they would give illegal immigrants amnesty within the first 100 days was a massive blunder.
As death tolls continue to rise in Europe due terrorist acts the pro immigration message is poorly received in America.

As well, it is so pathetic how the mainstream media caters to this group. So much so that I think many Americans just ignore it now.

The majority of Americans are mainstream middle of the road when it comes to politics and policy.
The US democrats are now so far left of center that Hillary is probably un-electable.

And despite his bombastic style, Trump’s policies align far more with mainstream America than do the democrats platitudes, and messages of peace and love.

No one has a clue what Clinton stands for anymore.
Black lives matter, but so do Blue lives.
We must fight terrorism but we must love the terrorist.
Vote for me because I’m a woman, despite the fact that you don’t trust me.

Pathetic that in such a great country these are the choices.
But listening to Bill Clinton talk the other night about how much he loves and respects women, kind of sealed it for me.

#47 ROCK BEATS PAPER on 07.27.16 at 7:36 pm

The provinces are warm up for the Feds, so this stupidity on foreigner will go nation wide. That kills our last great export industry, real estate sales. Garth, you should have moved way past denial of foreign purchasing to espousing all its benefits.

As for the CMHC, it will be interesting to see them refuse to payout to the big banks. Maybe, defaults will drag out in court as the banks are forced to prove that they were diligent in their underwriting of “sub-prime” mortgages.

#48 YVR Update on 07.27.16 at 7:41 pm

“There’s simply no data showing foreign guys DID NOT CAUSE houses to go ballistic…”

Also, since we all know foreign buyers are a minuscule amount of the market, the 15% tax will have no effect. Maybe raise it to 50% since foreign buyers are a myth.

Why is everyone so upset?

#49 Say What? on 07.27.16 at 7:42 pm

“Is this really the time to be shutting the door on foreign capital?” – Garth

———————————-

D%$ RIGHT IT IS! If that capital is only generating more speculative frenzy, then we don’t need it!

#50 Ed on 07.27.16 at 7:43 pm

CMHC past due date
How about removing the CMHC completely and letting banks shoulder the full risk? I know the chances of change happening in Canada are minimal. I will give my MP my 2 cents worth at any rate.

#51 Say What? on 07.27.16 at 7:45 pm

“What a moment to push it over the edge, all because of myth and xenophobia.” – Garth

————————————————-

If Garth, as you maintain, there is no foreign capital contributing to this speculative bubble, then the market won’t be pushed to the edge.

Read it again. — Garth

#52 Ace Goodheart on 07.27.16 at 7:46 pm

Re: “Already lawyers, realtors, accountants and advisors are plotting ways to avoid the head tax – so we’re on the way to a bloated bureaucracy which may cost more than it collects.”

This is true. The Mexican government tried a similar thing, banning foreigners from owning property in Mexico (it is still the case, you can’t directly own property in Mexico unless you are a Mexican).

This stopped no one. Foreigners now own Mexican property by having it held in trust for them by a Mexican bank, which holds the title.

No real difference, just add a middle man.

#53 Basil Fawlty on 07.27.16 at 7:54 pm

Is it true that Australia and Switzerland have significant restrictions on foreigners purchasing real estate? Is this to help keep prices lower for locals? Is it racist?

#54 Banker on 07.27.16 at 7:56 pm

If we get a 10% correction the next 15 to 20 will be ugly. Latest stress test by my banks shows that at 10% drop in houses prices will result in upto 25% mortgage defaults. This is fact and straight from my Credit Risk dept as of last week. Based on recent FOMO with >10% down.

#55 ANON on 07.27.16 at 8:01 pm

What a moment to push it over the edge, all because of myth and xenophobia.

Everyone loves a good story, were we are the good guys, then the bad guys come and ruin it for us. :)
Myth on the way up, myth on the way down. That is the only constant.

#56 steerage steward on 07.27.16 at 8:03 pm

“Bank CEOs warning about excessive borrowing. Two of them curtailing mortgage lending in YVR. The regulator worried about a housing Armageddon. CMHC sounding an historic alarm over too-costly houses. Every major US debt rating agency saying we’re nuts. Warnings from the IMF and World Bank. Prices wobbling dangerously higher on thinning sales. Unheard-of levels of household debt, while incomes flatline and the GDP groans.”

That paragraph should scare the crap out of any thinking person. Guess now we see who the greatest fools are.

#57 };-) aka Devil's Advocate on 07.27.16 at 8:03 pm

H.A.M. = Political Hot Potato.

There are a lot of Asians in Vancouver. When I attended university there they claimed as theirs alone a whole floor of the library so much so that as an Anglo you were, made to feel, uncomfortable looking for reference material on that floor. That was over 30 years ago. Today the Asian population in Vancouver is such that Anglos are a minority. Nothing wrong with that, simply another aspect of supply and demand.

I am a REALTOR®. My business is Kelowna. I don’t go beyond my area of expertise but I do have colleagues I work closely with in Vancouver and they tell me, unequivocally, HAM is affecting the market with respect to prices.

Certainly there are many ‘Canadians’ paying big bucks for YVR real estate. Toronto or Vancouver? Seriously? You make your money where you have to, you spend it where you want to. Clearly more people would rather spend their ‘fun’ money in Lotus Land (pun intended).

Walk down any street in BC and you can tell who’s from the East and who’s an indigenous Westerner. We’re way more chill out West.

Actually I think, in BC, we should be levying a 15% PPT (Property Purchase Tax) against Torontonians as well. Really, think about it… you pay your medical premiums there while in good health then retire here, when you need medical attention most, and put strains on our BC Medical System which you have paid little to nothing toward.

Might be a moot point as I hear there is a movement afoot to realign the Canada US boarder from East to West to North to South. East gets Trump and West gets Trudeau – he is pro legalization after all as are more and more of the Western States so clearly there IS already a culture difference that divides.

};-)

#218 };-) aka Devil’s Advocate on 07.27.16 at 6:05 pm
Also then ( with the realignment of the boarder ) the Southern most intersect would be somehwere in the Gulf of Mexico ( surely we get Texas ). So that ‘Wall’ Trump wants to build — A NON-ISSUE

——–

AND… we (Westerners) then get to dump the Quebec issue! Of course it will become something more of an Asian demand based issue – but hey… the whole world is headed that way anyway.

——

Oh and, FYI, when I was going to school in YVR, back in the day, a foreign student asked me to proof read an assignment for her. I read it and complimented her on it. I then asked what jobs she was applying for. She laughed and said she wasn’t considering staying in Canada and working here… she said our taxes are too high.

Make of that what you will, I’m just saying’

#58 nonplused on 07.27.16 at 8:05 pm

I think the real way to restore sanity in the Canadian real estate market, if we want to focus on foreign money, is to break the land cartels and let the Chinese develop land and buildings and sell them. Once we let the Chinese money build the roads and sewer pipes the Carmas of the nation will quickly be out of business. I’m not saying we need to import Chinese workers, we have lots. But there is a reason much nicer houses are so much cheaper in Houston than in Calgary; you are allowed to develop your land and promptly, virtually no zoning restrictions (which are just a cartel way of slowing things up) and there are fewer cartels.

#59 TurnerNation on 07.27.16 at 8:08 pm

#14 Shawn enjoy your peckerhead pension. Austerity augustly I say.

#60 rainclouds on 07.27.16 at 8:09 pm

#25 Joe “Heard stories of one realtor moaning in Vancouver today because foreign investors who purchased 20+ presale condo units were screaming at them for the additional 15% tax. Yes. One realtor sold 20+ presale condo unit to foreign investors…”

Always enlightening to be presented with factual and insightful data from such impeccable sources as “heard stories”

Common sense isn’t that common…….

#61 Tudval on 07.27.16 at 8:15 pm

#54 A banker would know a drop in price cannot cause mortgage defaults, never mind the overblown 10% to 25% ratio. But a Banker could say anything on a blog.

#62 Damifino on 07.27.16 at 8:18 pm

I remember a Simpsons episode were Krusty the Clown was being castigated by the authorities for some dishonest deal he’d made. First he went to his default stance: “I did it for the children”. He eventually confessed in tears saying “They drove a dump truck full of money to my front door! I’m only human.”

In that light, we can understand the actions of British Columbia Premier Christy Clark and minister Mike de Jong. Forgive them. It was win-win-win. What politician could have resisted?

First, the new tax will do nothing to reduce existing equity in the greater Vancouver housing market. That, of course, would be a disaster for the government. Especially with an election looming on the horizon.

Second, to the untrained eye, it sure looks like some mighty tough measures are being taken to address this urgent, recently discovered situation.

Third, they stand to pull in an absolute cartload of real estate transfer tax money. That is, for the next little while, at least.

I’m not sure I would’ve acted differently in their position.

#63 mouldy in YVR on 07.27.16 at 8:19 pm

……we have allowed housing speculation (by all) to reach this level of madness in YVR because of right wing federal and provincial housing policies.
Of course ‘everyone’ wants to buy and thinks renting is for ‘idiots’. Governments on all levels have encouraged this mind set.
This is old news, but the pattern has remained fixed for decades. Simon Fraser University economist Andrey Pavlov thinks the effect of the real estate sector in YVR— taken in the broadest sense to include the banking system which relies on mortgages for a significant portion of their business — is even bigger than the data on direct impacts shows.

“It’s hard to find hard data on that, but my feeling is that it’s a lot more. It’s more like 25 per cent,” said Pavlov, who specializes in real estate finance. “We don’t have any manufacturing really to speak of — with the exception of mining and forestry. Most of our industries are really real estate, finance, insurance and a bit of services.”
http://www.vancouversun.com/business/Tinkering+with+housing+market+could+dangerous+economy/11241388/story.html

Real estate in YVR- that’s what we do…..that’s all we do!

#64 Aggregator on 07.27.16 at 8:19 pm

It's true. This entire foreign buyers frenzy was created by media journalists trying to gain Chinese readers. I even fell for this crap years ago until I started look at the data and reading the inner-workings of the government's housing policy. The media is totally misguided. And quite frankly, their stories are fueling the racial debate. Sad.

Take this Ian Young character from SCMP for example. Applauding his top story on SMCP today. (Hence the Gucci advertisement if you're on an iPad). This guy has no interest whatsoever in solving Vancouver's affordability problem. Instead he's a con-writer trying to gain readers for SCMP by ONLY writing stories about wealthy Chinese folks for mainlanders living in Canada. Alas, the bigger the story, the more readers will come.

He doesn't even discuss data on domestic debt, has no clue how mortgage securitization works and has no idea what CMHC is. And somehow people are listening to him as if he's an expert concerned about Vancouverites. What a fraud. Think about it: He was calling for data on foreigners before even asking for data on local market activity! Why? Because his boss over SCMP would have never allowed him to post a story about CMHC or Canadian banks. Nobody reads that stuff.

Just watch him. Hi's only interest is to direct readers to SCMP.

That aside. The biggest winner in this faux debate is the government who's managed to evade public criticism and gain another revenue source. Now ask yourself why they're politicians and you're a public servant.

#65 Victoria - the original on 07.27.16 at 8:20 pm

Article from Maclean’s magazine – worth reading …

http://www.macleans.ca/economy/economicanalysis/canadas-economy-is-hostage-to-the-housing-bubble-2/

#66 everythingisterrible on 07.27.16 at 8:23 pm

Richmond and Burnaby had foreigners account for 18% of sales during that recent reporting period. That’s a huge influence. At least we don’t have to see Garth bring out that 5% of sales pie chart from victoria ever again.

#67 mouldy in YVR on 07.27.16 at 8:24 pm

What if anything does CMHC do to support reasonably priced social housing for Canadians?……read and weep…(info from 2005, but nothing has changed)

“buried in a complicated table in its most recent
annual report, the Canada Mortgage
and Housing Corporation notes that
more individual homeowners
(746,157) were helped through
mortgage insurance in 2005 than all the social housing
units (633,300) funded in the past 35 years. Further-
more, the CMHC reported that about 7,000 new subsi-
dized housing units were funded in 2005 compared with
the almost 653,000 owners who were supported through the public mortgage insurance system – one-tenth the number of new owners who were helped that year.”
http://www.urbancentre.utoronto.ca/pdfs/researchbulletins/CUCSRB38Hulchanski.pdf

#68 Tudval on 07.27.16 at 8:26 pm

Gold up 5-fold since mid 90’s (more in canadian dollars), stock indeces about 3-4 fold, even some beaten down commodities (ie oil) are up 200%+. So is the price for food. Also construction costs – labor, materials, taxes. And many incomes are at least double. Population up significantly.

For some reason we expect housing to go up with stated and fictitious 2% annually. A luxury condo in Toronto, nice area also is 50% higher than 1989 price!!

Sure, it’s more since 1993 when it was sold under construction cost during the depression brought to us courtesy to punitive capital gains tax increases and interest rate hikes at the beginning of the decade.

Let’s not take as baseline a period when there was net migration OUT of the city and unemployment in some fields was 25%. Could happen again, but let’s hope not.

#69 Long Branch Apprentice on 07.27.16 at 8:30 pm

A lot of dumb Millennials won’t be able to make it the way they thought they could as real estate agents. I wonder where they’ll end up.

#70 John hettinga on 07.27.16 at 8:31 pm

The guy in the front with his hat on backwards and pink shorts is different. But none of them look too rebellious.
I want to be different too.
Think I’ll rent.

#71 About Immigrantion -tell the government what you think. on 07.27.16 at 8:38 pm

The Canadian government is currently holding consultations on immigration levels and types (immigrant investors, foreign workers, students, etc)
It might be time to tell the government what you think.

Answer the questionnaire here:
http://www. cic. gc. ca/english/department/consultations/national. asp

#72 wait_and_see on 07.27.16 at 8:39 pm

The 15% tax was long overdue on foreigners, regardless of their origins, buying real estate. The problem in Vancouver and the GTA has been much worse over the past decade than the government wanted to acknowledge. Many other countries also wisely impose these restrictions so that local families, earning decent local incomes can compete in their own countries. To avoid the displacement effect of foreign capital going to other municipalities, I suggest the ban be countrywide, and loopholes of proxy buying closed and sealed. The proceeds from the collected tax can be used for business incentives for innovative companies and startups to set up shop in our large cities, where there are highly qualified workers who could benefit, earning a good wage and creating new opportunities OTHER than the real estate sector. The job of government is not to turn a blind eye to the troubles faced by its citizens, but to gently steer the economy in a wise direction. The 15% tax was long, long, overdue. If prices crash 32% in one year in Vancouver, we will be back to 2014 levels, and that will be a good start at creating less of a dog-eat-dog cuthroat society where people either can’t find rentals or have a prayer at buying even a condo. Not the Trump Nation as Garth suggests, but a step towards Bernie-Land.

#73 Harbour on 07.27.16 at 8:41 pm

Be fearful when others are greedy, and be greedy when others are fearful. “Warren Buffett”

#74 Gifts from parents on 07.27.16 at 8:42 pm

This is a huge stat on fomo. Does CMHC record gifted downpayment? Garth?

#75 The Dude on 07.27.16 at 8:44 pm

So much confusion and misinformation out there. At first it was stated here that foreigners were a small percentage buying top end properties, mostly in Vancouver. Now it appears it is up to 18% of “average value” properties in the outlying burbs. It was then stated that it didn’t affect the market much. And now it could cause a 50% price change? Hard to see the herd through all the fog out there these days.

#76 Harbour on 07.27.16 at 8:47 pm

The inflated, voracious, teetering housing market that sucked so many in was created in Canada by Canadians and their leaders. It constitutes a great risk. What a moment to push it over the edge, all because of myth and xenophobia.
………………………………………………………………………

Who cares why, who or how it was created… just kill it!

#77 X on 07.27.16 at 8:49 pm

“Too much government diddling in the housing marketplace has distorted it.” Garth

Exactly.

They know they need to make it more expensive, to make it more affordable. But how to publicly do that, and not ruin your political career?

Limiting amortization periods to 25yrs would be a start….upping the downpayment further would be reasonable too….for the sake of the market and for the average Joe on the hook for CMHC…better to have homeowners have more in the game.

Cancelling the Home Buyers plan wouldn’t make much of a difference, many don’t/can’t repay the loan anyways.

Most Canadians have most of their wealth in RE. It has been quite the roller coaster ride up on this cycle….but coasters do pick up speed fast on the drop down as well….RE is so emotional.

#78 WalMark of Sadkatoon on 07.27.16 at 8:54 pm

Lots of candidates for dumb post of the day. Would hate to read what Gartho DOESNT let thru…

#79 Mocha on 07.27.16 at 8:57 pm

Lol, am I banned? My last two posts over the last two days never went through. I think that when you use your blog as a platform to race-bait, you shouldn’t be surprised when people respond critically. Have you noticed the change in mood here lately? You are largely responsible for that, and banning or shadow deleting those who call you out on it won’t improve anything, in fact just the opposite: it creates more resentment and division, but perhaps you derive enjoyment from doing that to people.

People like you? Absolutely. — Garth

#80 dr talc on 07.27.16 at 9:03 pm

#26 Sheane Wallace on 07.27.16 at 6:49 pm
The people responsible for this mess are trying to blame non-existent foreign buyers. So Canadian!


that’s right, Harper got glory for his war on fake terror so T2 has figured that non-existent foreign buyers are the perfect target.

The Nine Most Terrifying Words :

https://www.youtube.com/watch?v=xhYJS80MgYA

#81 Tremblant110 on 07.27.16 at 9:08 pm

Real estate is local. Recent evaluation of my Ottawa house by MPAC is less then the value three years ago.

#82 The Wet Coast on 07.27.16 at 9:17 pm

The loneliest people on the planet this weekend will be Vancouver open house realtors. Kinda brings back fond memories of the National Energy Program. Brings tears to my eyes.

#83 Yes yes yes please on 07.27.16 at 9:25 pm

Tax them, tax them!!!! Let the market crash and burn!

#84 Smoking Man on 07.27.16 at 9:27 pm

I don’t know why I share this shit with all you bastards.
Having no friends by choice this my only outlet. Is that not fkd up or what.

Needless to say as tears are fogging up my glasses I’ll be taken a few days off posting or maybe not, always a golden variable hidden in the back yard.

The world lost the most beautiful kindest man I ever met in my life at 7:15 pm tonight.

RIP DAD.

Ill post his life story on my blog within a few days. The world needs to know.

#85 Tudval on 07.27.16 at 9:28 pm

#48 YVR Update ” since we all know foreign buyers are a minuscule amount of the market, the 15% tax will have no effect. Maybe raise it to 50% since foreign buyers are a myth.Why is everyone so upset?”

#1 It goes against internationally accepted principles that were adhered to publicly by every government in Canada. Some small extra tax to cover real or imagined costs , such as ‘replacing street light bulbs’ might get by unnopposed, but hundreds of thousands of dollars is punitive.

#2 It’s against our own interest, because if you took economy 101 you know every dollar brought into the country generates 5-6 $ of economic activity. One tear down sold to a foreigner that builds a new house generates taxes, commissions, construction jobs etc..

#3 As it is Canada is bleeding money abroad from Canadians investments, money sent home by people working here supporting families abroad etc… And we are building barriers to foreign money?

#4 It shifts demand from one jurisdiction to another distorting the normal supply/demand

#5 If this gets to be a widely accepted practice and, say a US resident pays 15% tax to have a residence in Canada, which he might need for any number of reasons, while a Canadian pays 15% to have one there, what is the end result? And if he needs to move his foreign residence he pays the tax again?? Maybe we should all stay home where we were “borned and raised” [sic]

#86 Aggregator on 07.27.16 at 9:31 pm

In other housing news today…

Home Capital Group (HCG), the company that was found defruading documentation on about $2 billion in mortgages last year reported its Q2 earnings today. Inside the report we find something that should be concerning taxpayers, as CMHC (Big Gov) raises its stake in the troubled company. Table

Yes, this is what it appears to be. A hidden bailout by HCG using the Government's AAA MBS gaurantee to liquidate its fraudulent mortgages into the marketplace. Rest assured, this number will keep growing as CMHC gives HCG the wink* wink* to pool and offload more these crappy mortgages on to investors' back before the company goes bankrupt.

Red flags are everywhere. And not one peep about it in the media.

#87 Yycnotretired on 07.27.16 at 9:36 pm

WOLFFFF!!! Omg woooolllfff! Wolf, wolf,wolf…….

Oh crap it’s really a wolf this time.

-OSFI, CMHC.

#88 Nemesis on 07.27.16 at 9:37 pm

“There’s simply no data showing foreign guys caused houses to go ballistic…”… – CombustibleGT

“We now have sufficient evidence to raise our overall assessment of problematic conditions in the Vancouver market to high. For Canada overall, we now detect strong evidence of overvaluation.” – CMHC

#Let’sPlaySpotTheDifference,Or… #WhosePantsAreReallyOnFire?… #BloggerDudeOrNGO…

https://youtu.be/yvJkOdscbVQ

#89 Linda on 07.27.16 at 9:41 pm

#32 Barb – I think you nailed it re the tax fallout. Once the government gets $ from ‘foreign buyers’ the next logical step is to assess taxes against locals who (for instance) don’t occupy the dwelling year round.

#74 Smoking Man – condolences. Always difficult to lose the ones you love.

#90 Tudval on 07.27.16 at 9:43 pm

One more post and I’m done, I promise.

I’m quite sure the desired effect of the tax is to shift demand from ‘hot’ areas to the surroundings. They said that much a couple of months back – I didn’t pay attention then, but I have good memory.

This will backfire as well. As a foreigner buying in a strange land, resale value must always be a top consideration. If you try to avoid the tax by going somewhere else, there’s no telling that by the time you want to sell, a tax will not be introduced there as well, lowering your property value. The cat is out of the bag and can only be put back before Aug 2.

#91 Nemesis on 07.27.16 at 9:44 pm

#ForSmokingMan… #AGalacticRequiem… #StarDust.

https://youtu.be/1WvuJwMFPz4

#92 Fleabitten Monkey on 07.27.16 at 9:52 pm

“Second, the market will find its own direction – which was already heading south.”

Well, you’re probably correct, but you know people want instant results and then again Christy wants to win an election.

There was a newly reno’d sfd home in my hood in east van which was listed for $2.25 mill. 3 open houses over 3 weeks by my count, then disappeared, no sale sign, realtor sign down earlier this week. Not sure what happened but a plausible scenario is nobody wanted to buy for such a stupid price….so yep, maybe we are/were already in the midst of a move downward.

#93 Aggregator on 07.27.16 at 9:58 pm

The pre-sale condo loophole

You know things are ugly when the word "presale" and "Bob Rennie" are debated in BC's parliament.

#94 common sense on 07.27.16 at 9:59 pm

#84 Smokey

Condolences to you and your family.

You can live in peace knowing he had a helluva life…

Seize the day everyone!

#95 Sharon Ozborne on 07.27.16 at 9:59 pm

DELETED

#96 BOOM! on 07.27.16 at 10:00 pm

Smokey, my condolences on the loss of your dad tonight.

Mom & Dad gone, but together, wherever.

Always a touchstone when we lose the ones who have known us longer than we have known ourselves.

BOOM.

#97 VICTORIA TEA PARTY on 07.27.16 at 10:07 pm

SO MANY TO BLAME SO FEW TO ACCEPT (THE BLAME)

So pounding on a few off-shore real estate sharpies may be unfair, but this is what happens when central banks’ shenanigans get utterly out of control.

Here’s also what happens: feelings of unfairness by angry consumers who can’t get loans, bad consumer borrowing decisions, unintended societal consequences, you name it.

Sure, Garth, you’re right as rain in your facts and supportive reasonings over Canada’s real estate tragedy, because it is a tragedy of huge national scope where fear spars with greed and there are only losers.

So whacking a high-profile group for more taxes was an inevitable government (ie: clumsy) response to what is a desperate financial disaster for so many so far and a lot more disaster awaits in yonder wings. the only “cure” will be even more rapid property price declines (and unintended consequences).

In Victoria, as my main example here of consequences, anxiety lives with the following renters and would-be renters:

–post-secondary school students for this autumn,

-recent retireds who’ve sold their SFDs and are looking for places to rent because they can’t afford to buy because of too-high prices,

-all other renters especially low income impoverished folks. There are too many of the latter here. And most are “old”.

The rental vacancy rate here is zero. Absolutely. No relief in sight.

The original group to blame is the central banking establishment which supposedly operates independently of government. Central banks juggle interest rates (monetary policy) for one main reason: the betterment of the country they serve. This allows currrency wars to flourish, for example.

Meanwhile, lowly governments run fiscal policy, budgeting and related financial activities either with their own or Other People’s Money.

The problem after the 2008 GFC resulted in a massive and continuing conflict of interest. Why? Governments panicked. They looked at central banks for help and basically “drafted” them into serving those specific governments instead of the countries involved.

The result of this conflict of interest was loss of “price discovery” the nub of the capitalist system.

Price discovery allows buyers and sellers to determine the “best” price of commodities or whatever else they are trading for money. It gives the buyer comfort in the price paid for an item and the seller satisfaction that a profit resulted.

For instance, low interest rates, in the Vancouver real estate market spurred eventual and utter madness between buyers and sellers.

Eventually even off-shore buyers got in on the action. Why wouldn’t they? They saw rubes and idiots “playing” the YVR market so they came to town and screwed them all into the dirt. As a result we saw bidding wars, hard feelings and racial back and forth.

Too late government became involved.

Now that Vancouver’s real estate so-called industry has struck the “price discovery iceberg”, it’s time to leave the dining room and head to what’s left of the life boats.

The skipper in charge of this “ship” is just another victim. He’s going down big league.

The next months will be interesting indeed. The ONLY question here is WHEN, not IF, the BC government gets ready to impose that 15 per cent tax on the entire province. Soon, I think, and the consequences will be an event all on its own.

#98 Smoking Man on 07.27.16 at 10:13 pm

I can see it now. Mom french kissing Dad in heaven tonight. And my grandma on moms side, who no one was good enough for her first born daughter is chucking a wooden clog at dads head.

Granny had great aim, she could hit the back of my head, from 50 feet away when I got out of line.

My dad was hurting huge after mom took went for tee with her mom.

This is a happy day for me. and a sad day for humanity.

He was so good.

#99 Scully on 07.27.16 at 10:16 pm

@#30 Happening Now – Nope! Hate to burst your bubble (pun intended) but there are not a lot of realtors working overtime right now over this tax. And I am in HAM central. Market slowed before this tax.

#100 Big Jack on 07.27.16 at 10:22 pm

Garth, with so many homes set to go underwater when the correction comes & so many debtors set to be insolvent when interest rates normalize, it looks like a huge money making opportunity for someone buying Credit Default Swaps. Any way this can be done in Canada?
Thanks

#101 Stupesing in Cabbagetown on 07.27.16 at 10:23 pm

#32 Barb on 07.27.16 at 7:03 pm – According to Snopes, Donald Trump did not say that Republicans are the “dumbest group of voters” in a 1998 ‘People’ magazine interview. Like all good urban myths it sounds like something he would say.

#102 Mr. Frugal on 07.27.16 at 10:28 pm

I think we will all be much happier once Trump restores law and order.

#103 Binder Dundat on 07.27.16 at 10:30 pm

My sincere condolances, Smokey.

#104 Self Directed on 07.27.16 at 10:33 pm

Does anyone have Earthquake simulation data hitting YVR? Would the Big One burst the bubble, or would it just keep going?

I suppose the housing here would “level”.

#105 45north on 07.27.16 at 10:33 pm

Finally, real estate’s in big trouble already. Just about everywhere – even as most people are completely blind to the risks. Why else would the bank regulator ask financial institutions to stress test for a 50% property crash in YVR and a 40% drop in Toronto this week?

that’s the real message “real estate’s in big trouble”.

Steerage Steward: That paragraph should scare the crap out of any thinking person.

one of the scariest things is that the politicians react with inane nonsensical things.

Aggregator: The biggest winner in this faux debate is the government who’s managed to evade public criticism and gain another revenue source. Now ask yourself why they’re politicians and you’re a public servant.

true that.

#106 Vangordo on 07.27.16 at 10:40 pm

My guess, they will be testing and calling in all the HELOC’s first, and piggybacking on existing mortgages. Lines of credit are not titled against the mortgage, so technically might not be included initially. It would protect the banks (for a price of course), maybe escalate risk on their numbers, however, mortgages are insured under CMHC, lines of credit are not.

There are over 150 “mortgage” positions listed on Workopolis for a major bank in the Vancouver area. Can’t imagine they will be doing a lot of sales activity.

#107 What's really happening now on 07.27.16 at 10:45 pm

Heard buyers in Vancouver are pulling back as the new tax kicks in. Makes sense since a foreign buyers are not will to buy while knowing their chances of selling to another foreign buyers is now nil.

#108 What's really happening now on 07.27.16 at 10:50 pm

#86 Aggregator

Wow what a find. It’s all a house of cards.

#109 Bottoms_Up on 07.27.16 at 10:56 pm

Regardless of the level of foreign investment in Canadian housing, be it 3%, 5%, or 12%, we need rules regarding it.

#110 Scully on 07.27.16 at 11:02 pm

Smoking Man, so sorry for your loss. What the world lost another tonight the universe has gained – another great Neconite. Peace be with you and your family.

#111 Nobody on 07.27.16 at 11:10 pm

Simple solution is an interest rate cut. If poor Canadians are being priced out of YVR by foreigners clutching hockey bags of illegal money we need to do something to help poor Canadians afford these houses.

The simple introdution of 0% mortgage rates and 100year terms would allow the ordinary doctors, lawyers and BC ferry executives to outbid Chinese billionaires and share in the dream of the $10M SFH

#112 Brazil ex-pat on 07.27.16 at 11:14 pm

So….just wondering how long EVERYONE ELSE…..is going to be wrong about everything.

#113 Nelley on 07.27.16 at 11:15 pm

CLINTON CASH is a great doc on Youtube right now-unbelieveable that such a giant of organized crime is not in prison.

#114 joe on 07.27.16 at 11:16 pm

Raincloud. My source was a realtor, no reason for him to live. I live in van…

#115 joe on 07.27.16 at 11:16 pm

Oops typo, I mean no reason for him to lie

#116 Funny Scenario on 07.27.16 at 11:18 pm

If a C-dude was eager to outbid everyone by double digit pct, why would he shy away from the 15%. Might even annoy him into sticking it to all… just a tax grab at the opportune moment, nothing more.

#117 Aggregator on 07.27.16 at 11:19 pm

#106 Vangordo – It would protect the banks (for a price of course), maybe escalate risk on their numbers, however, mortgages are insured under CMHC, lines of credit are not.

Securitized HELOCs are guaranteed by the govt (on CMHC's balance sheet) under NHA MBS.

No matter where you look in Canada's housing market the government is behind it all.

#118 Shawn on 07.27.16 at 11:19 pm

Alberta Mortgages in Arrears

The Canadian Bankers Association has just released the latest figures which are for May.

http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf

The number of Alberta mortgages at least 90 days in arrears has finally started to creep up in the last few months.

It’s still extremely low at 0.34% of all mortgages. But it was at 0.27% for most of 2015. But really, this is still a very low number in arrears. It was as high as 0.84% in early 2011.

I suspect that these numbers would be WAY higher if not for various newer practices that allow home owners to skip payments and make various arrangements during a period of unemployment rather than going officially into arrears. But, if enough people remain unemployed for too long, these numbers have to spike.

What would really make them spike is a major decline in house values. As long as someone has substantial equity in their house they will usually find a way to make the mortgage. But if the equity gets wiped out, well that will be a different story. (Like outaa here!)

By the way, the 90 day delinquencies in Ontario are at an astonishingly low 0.14%. Good luck to all those betting against Home Capital.

#119 Ole Doberman on 07.27.16 at 11:22 pm

#19 Shawn on 07.27.16 at 6:43 pm

Stupid Investor Tricks

#5 ole Doberman on 07.27.16 at 6:24 pm said:

Hate to fan the flame here but calgary based Boardwalk REIT the most shorted stock in the world:

***************************************
So what? As the link states this is likely uniformed investors. The same investors that shorted Canadian banks. How is that working out?

Why would anyone invest on the basis of following the crowd? You can’t beat the market (which is the crowd) by following the crowd.

But everyone is entitled to their opinion and we should respect those who make financial bets on their opinions. But blindly following them is not a great idea.

In 20 years of analysing stocks I have never once paid any attention whatsoever to the short interest in any company. It is simply not a relevant factor.
———————————————————-
Look at the chart of subprime lender HCG – next stop is $15. It’s all over.

#120 Snowboid on 07.27.16 at 11:22 pm

#52 Ace Goodheart on 07.27.16 at 7:46 pm…

Not entirely true, you can own land as a foreigner as long as it isn’t within the ‘restricted’ zone – land further than 50 km from any coastline and 100 km of any border with Mexico can be purchased outright as a foreigner.

Of course, all the best places are near the ocean!

#121 Ole Doberman on 07.27.16 at 11:25 pm

#98 Smoking Man on 07.27.16 at 10:13 pm

I can see it now. Mom french kissing Dad in heaven tonight. And my grandma on moms side, who no one was good enough for her first born daughter is chucking a wooden clog at dads head.

Granny had great aim, she could hit the back of my head, from 50 feet away when I got out of line.

My dad was hurting huge after mom took went for tee with her mom.

This is a happy day for me. and a sad day for humanity.

He was so good.
——————————————————–
Sorry for your loss smokey. But death always makes us ponder the more important things in life – like God and the after life, as I said before we will all get their someday – even Gartho of Hippo.

#122 Doug t on 07.27.16 at 11:32 pm

Gaaawwwd – sometimes I step back and think we are all so self obsessed about our first world problems. If it’s not house porn, its investments and if not that it’s the freakin cost of cauliflower – or God forbid we throw in the price of gas ( yikes) – and because we are so selfish and obsessed we are never going to be satisfied – nothing will ever be enough – I want mooore – I need mooore – Sad situation indeed – reap what u sow

#123 WUL on 07.27.16 at 11:35 pm

According to Statistics Canada, only 2% of Albertans that own pickup trucks, actually need pickup trucks.

#124 paulo on 07.27.16 at 11:47 pm

whoa more government intervention and taxes umm
so when was the last time this worked?
so whom is the bad guy here
DOOR #1 Chinese dudes with tons of money
DOOR #2 Greed, Speculation, pursuit of ROI in a poor
return on savings environment
Door #3 Epic levels of poor underwriting and debt
(lending fools money they can not repay,
less they are house Poor)
Door # 4 Outdated and antiquated tax rules concerning
capitol gains allowed on property sales
DOOR# 5 A Nation of house horny fools that watch to
to much HGTV and similar shows

IF You choose all of the above you win
IF you are not sure- have another drink

Truth of the matter is that Taxing off shore investors although politically expedient is a dumb and dangerous move that will have negative consequences in the end
the devil is in the details on this plan.

we need to seriously update the taxation rules on real-estate issues.
improve and enhance auditing and possibly introduce a IRS style lifestyle audit system, that compares lifestyle, asset’s and wealth against reported income. hey if your in business so is the tax man pay your share dude/dudet

make our multi billion earning per quarter banks more liable for there loans by significantly reducing CHMC coverage, or better described “taxpayer funded stupidity insurance”

Put into place stringent requirements for proving source of down payment funds , in the old days you had prove you had money (skin) of your own in the deal, not funds from “tony” at Joes pool hall or the bank of mom , or at least limit the amount flake found funds to say 25% of the down stroke.

truth of the matter is that we are likely at the very top of a real estate value bubble, it will pop sooner rather than later

the challenge to government is how to engineer a controlled correction, and avoid a massive and economy killing correction that we are heading for

killing foreign investment is a fools fix

just some thoughts

#125 WUL on 07.27.16 at 11:52 pm

#84 Smoking Man on 07.27.16 at 9:27 pm

From an amateur chain smoking booze hound to a real pro, my condolences. Your sons will be the great beneficiaries of the guidance of a man that fought the Nasties.

Take care.

#126 Bram on 07.28.16 at 12:06 am

#104 Self Directed on 07.27.16 at 10:33 pm

Some properties increase in value after razing and burning down.
Some properties will go down in value by a bit.

None of the YVR properties will lose significant value after disaster:

Most of the value (80%+) is in zoned land. Almost no value in buildings.

As a matter of fact: the building often is a liability, due to high cost of demolition permit, and high cost of recycling pre war homes. An empty lot is worth more.

#127 NotAGreaterFool on 07.28.16 at 12:13 am

My view: Better to tax the foreigners than us. This can be used to funds the T2 and Sousa’s outrageous spending cost. Also, in bubble times, even in one foreigner buys a home on a street and overpays, he/she is contributing to the problem. Government cant sit this one out especially since their policies have caused this. Claw back policies and undue or look for new ways to hit the breaks.

#128 And Yet on 07.28.16 at 12:14 am

And yet, house price in vancouver will be higher next year… and the year after as it always is.

#129 TRT on 07.28.16 at 12:17 am

Post 85 Truval:

Pure drivel.

I can’t even buy in the state of Himachal Pradesh in India and I’m of Indian background. It’s a beautiful place but only those born there can buy land and houses there.

See he world and then comment. Either you’ve been schooled too much or are just trying to deceive.

#130 TRT on 07.28.16 at 12:19 am

My condolences Smoking Man.

You and your Dad were lucky…all the time you guys spent together.

I lost my parents when I was young.

#131 NEVER GIVE UP on 07.28.16 at 12:22 am

#22 pathcontrolmonk on 07.27.16 at 6:46 pm
So here is another possible scenario for Canadians getting hooped: foreign buyers backing out of sales leaving seller worth no recourse because you know, no rule of law in the PRC.

http://www.theprovince.com/business/real-estate/condo+27presales+could+left+chaos+industry+warns/12084803/story.html
——————————————————–
BOO HOO…. Suck it up. Condo builders have had such a gravy train ride for the last 10 years and they will complain about a few lost deals.

Put them up for sale again at a slightly less usurious price.

They can handle the loss of profit out of petty cash.

Meanwhile Millennials have been ripped off and sent through the meat grinder.

#132 Jimmy on 07.28.16 at 12:29 am

Smoking Man, sorry to hear about your dad.

#133 NEVER GIVE UP on 07.28.16 at 12:38 am

The Tax is a good Start.

Now we need to go further and demand by law that foreigners invest in business in our country in order to buy a home.

Tie the two together in a package. Mike them invest in Canadian companies or bring machinery and start up a clothing factory or a computer chip making enterprise. Or don’t come here at all.

We need smart entrepreneurial people not a bunch of money launderers and ex bureaucrats that never did a days work in their life but rip off their own people.

My guess anecdotally and by talking to people in the local community that I am talking about but will be called racist if I say the name of that community.
I figure the ratio of hard working types is 40% and the criminals are in the range of 60%.

Now I don’t even care where they got their money but I do care how they spend it.

Invest in job producing industry and not screwing our young out of a home.

In addition to all this Garth is correct that CMHC should be shut down as well as any kind of manipulation by government.

What a fantasy that that would ever happen! HA!

#134 NEVER GIVE UP on 07.28.16 at 12:43 am

Smokey!
Condolences….
Your dad must have been someone very special.
His son is a very interesting, thought provoking person. Your 40% of the reason I read this blog!
Thoughts are with you….

#135 Underhoused on 07.28.16 at 12:46 am

Bad banking policy, out-of-control spending habits, and unrealistic expectations about home ownership are to blame for the state of YVR and YYZ housing markets. Letting the BC incarnation of the Nanny State stigmatize foreigners for these epic Canadian failures is just lame.

#136 pricedrops on 07.28.16 at 12:47 am

Yvr priced drops are happening now and new listings headed higher. Silly to buy today when prices will fall for quite sometime. 30% increase in last year will be 30% decrease in coming year. That will bring lot’s o people to the poor house.

#137 NEVER GIVE UP on 07.28.16 at 1:00 am

The New York Times stopped the clock on two weeks in March when there were high-profile attacks that commanded headlines — and attacks in places where they have become almost routine. In that period, they counted 247 men, women and children cut down by Islamist extremists in mass killings carried out at soft targets in six countries.

http://www.nytimes.com/interactive/2016/07/27/world/human-toll-of-terror-attacks.html

Oddly I have never heard so much as a peep from people in the Muslim Community condemning it.

Sure the news channel sometimes gets someone to say something but I wonder if the sentiment in the community is more of a tacit understanding of the terrorists.

You could not have so many haters living in the midst of a community of people who are against such activities. It would take a lot of encouragement from many to get up the courage to do the deadly deeds.

So I ask you are Muslims really with us or against us?

This was your final post here. Bigot. — Garth

#138 Rural Rick on 07.28.16 at 1:10 am

Sorry for your loss Smoking Man. Passing the torch.

#139 Jim Morganstien on 07.28.16 at 1:11 am

Globe&Mail article this am refers fed China’s global anti corruption office which reports 46 percent of it’s most wanted corrupt scofflaws reside in Canada

#140 NEVER GIVE UP on 07.28.16 at 1:22 am

If one needs an analogy to understand how big foreign hot money is able to up the value of real estate well think about this one.

In the retail world you only need to undercut your competitor a few cents on several recognizable products in order to kill your competition. The guy with the deepest pockets always wins.

For that reason alone Future shop sold out to Best Buy without a fight. Wisely the owners did the math and realized that there would have been a long drawn out war on prices that would have cost 10’s of millions of dollars. After doing this calculation they wisely negotiated a good sale price and took off for greener pastures.

What about Walmart? They will make sure Tide and Coke are always the lowest price in town. These products are easy comparables. Even though every store demands that the supplier gives them a different and unusual sizes so comparison shopping is difficult, the shoppers eventually figure it out and switch stores often on only one or two products compared. Result, competitors decimated.

When you have a foreigner that deems buying a 2 mil. home in Vancouver a bargain compared to his government confiscating all of the 2 mil. then it is easy to bully bid the locals no matter how hard the local banks try to back them up. In the end the locals have to be able to afford the payment.

It is that 2% to 5% extra bully bid on a property that keeps the market in a frenzy and that is why the tax is a good thing.

If you are a millennial and you have been out bid from 3 homes that you fell in love with. Then you are going to go all out on your next bid if the bank will allow you to do so. The poor suckers even write letters begging the seller to sell to them.

#141 Ronaldo on 07.28.16 at 1:39 am

To all the realtors, flippers, and speckers in Vancouver. Hope y’all enjoyed the party. Time for you to move on. Next stop Victoria and when you’se are done there, come on over to Nanaimo and get these prices of ours moving. We know you can do it.

https://www.youtube.com/watch?v=gmQuIpM4h6A

#142 Kenchie on 07.28.16 at 2:23 am

Worth a listen

http://www.cknw.com/2016/07/25/steele-and-drex-how-big-of-a-problem-is-money-laundering-in-the-b-c-real-estate-market/

#143 Happening now on 07.28.16 at 2:24 am

#99 sully – repeating what I’m being told by a friend I know I can trust. ….and nothing has slowed yet, at least not in the west side…this tax will have little effect on people who were able to get around there own country laws to get $$ out in the 1st place !!

#144 Brydle604 on 07.28.16 at 2:24 am

Smoking Man
My sincere condolences regarding the loss of you beloved Dad.
He must have had good genes to make it into his 90 s.
I hope you have inherited his longevity too.

#145 DisgustMadeMePost on 07.28.16 at 2:28 am

http://www.cbc.ca/beta/news/business/mortgage-housing-bubble-1.3657598

And to think just a few weeks ago this group of ‘mortgage professionals ‘ let us know that there was NO bubble to be seen.

#146 fishman on 07.28.16 at 2:32 am

Hanging on to my west side commercial & residential R/E here on the west side of Van with my fingernails. My oh my,missed the boat. A tax of 15% for foreigners. Imagine, prices go down 30%-50%. What will I do? How will I eat? 1.3 billion Chinese, 1.1billion Indians, 75 million Vietnamese, 80 million Phillipinos,30 million Koreans. 40 million Iranians. And all I want are the rich ones. The .01%.OK, I’ll give the Phillipinos a pass cause I’m going to need a nurse to wipe my dribble & change my diapers sooner than I’d like to admit.) Nobody with money will come to Vancouver ever again, its over. They have forsaken us.We’re doomed. The horror.

#147 Kenchie on 07.28.16 at 2:40 am

#52 Ace Goodheart on 07.27.16 at 7:46 pm
Re: “Already lawyers, realtors, accountants and advisors are plotting ways to avoid the head tax – so we’re on the way to a bloated bureaucracy which may cost more than it collects.”

This is true. The Mexican government tried a similar thing, banning foreigners from owning property in Mexico (it is still the case, you can’t directly own property in Mexico unless you are a Mexican).

This stopped no one. Foreigners now own Mexican property by having it held in trust for them by a Mexican bank, which holds the title.

No real difference, just add a middle man.

—————————————————-

When in doubt, go to the source:
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

Check out the first section of page 2.

=)

#148 macroman on 07.28.16 at 3:05 am

Boom,#21, Trump is a jackwagon and all of his protectionism will definitely put the brakes on globalization.

Beats the heck out of the mushroom cloud Hillary will deliver. Putin knows the outcome of either being elected. He too likes being Trumped.

Say, do you think John Hinckley Jr being released was a message to the Don?

#149 juno on 07.28.16 at 3:18 am

The foriegn ownershi restriction is a common practice around the world

Not a thing the foriegners can do about it.

That is the risk you take when owning foriegn properties.
If the government get the vote to nationalize resources or properties they can.

I agree with garth 10 percent is not much. But its optics.
Vancouver has this belief that chinese are buying everything. So they don’t sell and try to allocate properties.

They also believe you can’t lose money buying real estate, even at these inflated prices. So who cares if its expensive, because it will double in a few years.

That is a reason why every one is hanging on. Because it can only go up. If you get out , you may never get back in.

But if the armor show weakness with their beliefs, the situations can turn into a waterfall.

#150 Resignation and Disaster on 07.28.16 at 4:03 am

Firstly, 1 month of data does not make a crash.

Secondly, I have been posting for many months YVR RE would crash and not be a slow correction – but for the catalyst to a potential crash being the BC Government…where have we gone so wrong? Are they that power hungry to hurt so many people, if the crash happens? How malicious. Et tu, Brute?

Finally, if the crash has started, we will be in for a near depression…or very hard recession if we are lucky in light of debt levels, poor GDP and Job creation over the past 6 months since RE was the only major growth sector remaining.

It will be a disaster economically and quick at that if it becomes a crash. If so in YVR RE, how far behind can 416 RE be in doing the same?

#151 Self Directed on 07.28.16 at 4:16 am

And yet all we have to do is NOT buy property for a short period of time and the prices will come down.

Easy fix. A simple Boycott. Rent, sit and wait, save your money and watch prices come down.

Canadians whine about so many rising financial hardships: taxes, food, education, health care, gas, insurance, etc… all valid arguments. But seem to have no trouble going to an Open House, and after just 20 minutes, put in a subject free offer with 100K over asking.

I sure hope the cool off is finally here. People need to get their priorities straight.

RE: Christy and Mike’s 15% Tax on Foreign Buyers

They are certainly up to something. I don’t think the desired outcome is a hard landing. That would jeopardize a re-election, especially with 70% home owner rates. No one with a home would be very pleased to see a drop in equity, not even a small amount. They must really believe this tax will do nothing, so they can be perceived as trying to fix affordability.

Christy says “I want to keep home ownership in the grasp of the middle class,” A slap in the face because we all know it is already unattainable.

#152 stress testing Canadian banks on 07.28.16 at 4:40 am

Garth, can you dig deeper on this and find out which banks are being tested? We know the big six (5 + HSBC) are exempted. Credit unions will probably be put under the microscope and who else?

What are the min. deposit requirements for Canadian banks in order to create their book of loans? The recent price run up in Vancouver had to be compensated with some very creative debt mix.

CIBC recently sold a bunch of real estate bundled loans to European banks with a negative interest rate. Reminded me of the US subprime debacle and Norwegian pension funds and others which got stiffed.

Another point worth looking into is the trading of real estate among the vast networks of Indo-Canadian builders, mortgage brokers and realtors. Someone here suggested that sales were assigned but never recorded in order to lift prices. Then selling into a market of mainly Chinese, Korean and Caucasian buyers.

The Indo community is very very tight and connected through family and temple. I can imagine how it’s being done but don’t want to get into it further.

Bottom line is that the entire 604 market is hyped up and a huge speculative bubble.

– rumors of mysterious foreign buyers with bags of cash
– big investors (funds) looking for a solid investment
– propaganda galore
– ease of access to the market with smaller and smaller deposits
– market makers
– house (share) selling among related parties to drive price higher
– blow off top
– official news releases to warn insiders when to get out
– bag holders

*****

Look up the definition of a pump and dump.

That’s what the real estate market in Vancouver resembles.

I actually hope I’m wrong. Many friends who are leveraged up to their eyeballs in order to own not just one but several shares in this stock… pardon.. houses in this “market”.

#153 Zen Headspace on 07.28.16 at 7:12 am

“Better it is to live one day seeing the rise and fall of things than to live a hundred years without ever seeing the rise and fall of things.” -Zen Saying

“He looks at houses, chateaus, forests, and thinks about the countless generations who used to see those things and who are gone now; and he understands that everything he is seeing is oblivion; pure oblivion, the oblivion whose absolute state will soon be achieved, the moment he himself is gone. And again I think about the obvious idea (that astoundingly obvious idea) that everything that exists (nation, thought, music) can also not exist.”
― Milan Kundera, Encounter

An important part of the Zen Headspace is to realize the fact that nothing stays the same.Things that do not change do not really exist. Everything changes, even a mountains will eventually erode into to a small pile of dirt. We lament because all material objects, feelings, situations, and people will cease to exist in their current form.

Not all change need be perceived negatively, however. Your neighbours with the meth lab will move, you will learn new skills over time, sadness will subside and the current government won’t be in charge forever.

We erroneously think that current situations will last indefinitely. If you bought your house cheap, it’s value will eventually rise. If you overpaid for your house, its value will eventually drop. The housing market changes like everything else in this world. It’s an ebb and flow.

“One must be deeply aware of the impermanence of the world.” (Dogen)

#154 CJBob on 07.28.16 at 7:52 am

#32 Barb
Trump 1998 interview with People…
___________________
Don’t believe everything you read on the internet – Abraham Lincoln

#155 LL on 07.28.16 at 7:58 am

…”Artificially-low borrowing rates, government-backed mortgage insurance, legislated 5% down payments, RRSP homebuyer loans, first-timers grants, property tax rebates, land transfer tax exemptions – the list of interventions is endless. So now crap houses cost a million. Good job, government”….

And bankers!
Government-backed mortgage-insurance!! Nothing to loose for some!

…”There’s simply no data showing foreign guys caused houses to go ballistic”…

Forget about statistics..
Curiously foreigners invested in Vancouver and Toronto, where prices went ballistic!
Not much foreigners in MTL, Qc and prices did not went ballistic.

Imagine buying a duplex with a huge mortgage and collecting renting.
Bankers collect your renting (to pay the mortgage) and government tax your revenue! So little lemmings works for government and bankers!
In 25 years the duplex is paid (but you give more then what you borrow) and now it’s time to renovate because the duplex is getting old!

I will buy Loto Max!!

#156 Mark on 07.28.16 at 8:45 am

“CLINTON CASH is a great doc on Youtube right now-unbelieveable that such a giant of organized crime is not in prison.”

One *big* problem with that “doc” is that the claim that TD owns TransCanada, the owner of the Keystone XL pipeline, is unequivocally not true. And probably something that I’d hope TD’s lawyers are looking into actioning as being libelous.

When such a claim, quite simple to investigate and debunk, is made — it draws the credibility of the rest of the ‘doc’ into question. Actually there were many other dubious claims in the doc (and believe me, I am no fan of Hillary Clinton, but can’t idly stand back and watch such lies gain any traction!).

#157 Why Garth, why? on 07.28.16 at 8:50 am

Garth,

Do you ever throw your arms up in the air and say “puck it, when do I do this to myself? I don’t need it.”

Only hourly. — Garth

#158 Mark on 07.28.16 at 8:52 am

“Curiously foreigners invested in Vancouver and Toronto, where prices went ballistic!”

As I’ve written here probably a hundred times, and as Ross Kay independently came to the same conclusion, most of what has been seen in Vancouver/Toronto over the past 3 years in terms of ‘gains’ have not been gains on individual, identical properties. But rather, simply shifts to the average because of dramatic changes to the sales mix.

Intuitively, this is quite easy to understand. The low end dropped out because CMHC subprime was tightened severely by Flaherty (RIP) in Budget 2013. So all that was left to transact were higher end units. Voila, averages go up, not because anything’s actually appreciated, but rather because only the higher end is transacting.

Some rather ‘challenged’ people blame “foreigners” for this (even though they represent, at best, 5% of the market, and most of those alleged ‘foreigners’ are actually US citizens, not “Chinese”). And there are the usual suspects — the “landlord families” who are playing games with their bankers with “assignment flipping” between related parties. But in reality, the entire ‘problem’ has been vastly overstated, and as sales mix changes continue to weaken, falling prices should become quite visible due to the oceans of oversupply brought to market.

#159 T.J.BONES on 07.28.16 at 8:57 am

Sir Garth:
Do you not think that this “head” taxis not an attempt by T2 to appease the Chinese Government? They are pissed that we give “safety” to their criminals and tax cheats! They, the Chinese, bigger and more powerful than Ole Canada! I think that it was a good play T2. Let them have the crooks. They might leave us alone !

#160 Prairieboy43 on 07.28.16 at 9:12 am

GodSpeed Smoking Man.

“This is a happy day for me. and a sad day for humanity.

He was so good”. Smoking Man

PB43

#161 };-) aka Devil's Advocate on 07.28.16 at 9:14 am

“Too much government diddling in the housing marketplace has distorted it. In fact for decades, there’ve been strong pro-real estate measures enacted by every successive group of politicians, leading us directly to now – when the average family can no longer afford the average home.” – G. Turner

EXACTLY!

The economy, and every segment of it, is like a balloon; try and quell it here and it bulges out there, quell it there and it bulges back out here or somewhere else. Your forever trying to regain equilibrium through monetary policy measure that simply exasperate the situation.

Ultimately the free market prevails. Individuals make their individual choice, voting with each dollar spent. In the end none of are so different and collectively we move markets as we seek that which is popular (true democracy in action).

Government has, through it’s use of it as a monetary tool, created a monster in real estate that has become a dominant economic force out of control and now they are afraid and incapable of containing the beast.

#162 Dups on 07.28.16 at 9:15 am

http://www.theglobeandmail.com/real-estate/moderate-evidence-of-problems-in-canada-and-vancouver-housing-markets-cmhc/article31131589/

#163 };-) aka Devil's Advocate on 07.28.16 at 9:29 am

The balloon analogy of my previous post, poignantly, will POP. When? No one knows. Typically follows a 7 to 10 year cycle. We kicked that can down the road somewhat in 2008 (8 years ago – imagine that) only exasperating the situation.

Like I say, SHIFT happens, learn to ride the tide. };-)

#164 TurnerNation on 07.28.16 at 9:38 am

– Paging Khalid to the blog.

– From the King Ralph dept.: keep those AB’ers away from us Eastern Creeps/Bums jobs ;-)

– Keep shorting this market boys. USD/CAD sez so.

#165 TrucMuce on 07.28.16 at 9:59 am

A fact that backs what Garth says is that in Quebec City, prices have gone up MORE than Toronto over the last 8 years. There is NO foreign money there.

Low interest rates is the reason, for sure.

However, house values are way higher in Vancouver than in Quebec City, even if unemployment is 4.2$ in the latter. Quebecers cannot afford 1 million dollar houses. So that’s also an interesting comparison.

Why are there so many houses worth 1 million in Vancouver. Only a case of supply?

#166 CTO on 07.28.16 at 10:26 am

#36 tkid

“I think most foreign buyers won’t hear 15% tax on their property purchases in Vancouver, I think most foreign buyers will hear 15% tax on their property purchases in Canada”.

Agreed
Most foreign people or new Canadians for that matter, see Canada as the big three. These Cities nest the comfort of their specific ethnic communities. Living outside? …visiting maybe, but living?, too scary.

#167 Olive on 07.28.16 at 10:33 am

Smoking Man,

Sincerest condolences to you and your family.

#168 Noel on 07.28.16 at 10:45 am

“There’s simply no data showing foreign guys caused houses to go ballistic”
_______________________

What evidence would you need to believe this? The evidence we have now was good enough for the gov’t to change their tax policies. Also good enough to dominate public sentiment.

Garth, you’re one of the very few people who still believes that foreign (not just Chinese btw) investment is not having an outsized effect on the Vancouver market.

What would change your mind?

BC’s move was political, not economic. You will pay for it dearly. — Garth

#169 };-) aka Devil's Advocate on 07.28.16 at 10:51 am

“A fact that backs what Garth says is that in Quebec City, prices have gone up MORE than Toronto over the last 8 years. There is NO foreign money there.” @ #165 TrucMuce

I understood that was ALL foriegn money };-)

#170 Bdwy sktrn on 07.28.16 at 10:54 am

Khaliiiiiiiiid. khaaaaaaaaliiid come out to play. Mark ,your secret admirer, is on a jealousy and fentanyl bender again. He needs to see how poor you have become.

Khaaalid please he needs you bad.

……..
I was in rmd a few days ago and looked up to see a big remax sign with the single name KHALID on it. Should have got a pic for mark. The funny thing was just then a big helicopter dropped from the sky and landed in the yard. Out stepped the man himself along with two leashed tigers and 3 smokin Amazon’s. A gold plated Bentley sped up to deliver some paperwork . Gawd I wish I was KHALID . He’s awesome. I love him.

PS . Since 2013 every single sfh in vanity is up about up 75 to 130%. On avg about 1.5 mil. The worst east van junker is up easily over 500k.

Mark’s jealousy and denial runs far longer and deeper than any river in Africa .

#171 Ponzius Pilatus on 07.28.16 at 10:55 am

In Vancuva, lotsa “Vacation homes” coming on the market.

#172 Bdwy sktrn on 07.28.16 at 10:59 am

Quebec City, prices have gone up MORE than Toronto over the last 8 years.
,………….
Are you secretly mark in hiding?

Lay off the opiates man.

#173 brad on 07.28.16 at 11:03 am

You’re so rong that Chinese dudes have not pushed up the price of van housing. Even if the % of those dudes is low their overall effect on the market is huge causing the whole thing to inflate and keep going as more of them get their cash out of china.

#174 AB Boxster on 07.28.16 at 11:05 am

Why Trump will win:
http://news.nationalpost.com/full-comment/john-robson-donald-trump-is-riding-the-understandable-backlash-against-all-things-pc

Why the CBC is a garbage news agency:
http://www.cbc.ca/radio/thecurrent/the-current-for-july-28-2016-1.3698477/pokemon-go-shows-how-technology-reflects-real-world-biases-says-prof-1.3698502

#175 LL on 07.28.16 at 11:28 am

# 165 –

However, house values are way higher in Vancouver than in Quebec City, even if unemployment is 4.2$ in the latter.
Quebecers cannot afford 1 million dollar houses. So that’s also an interesting comparison.

BC is the province where salaries are the lowest
in Canada.
How they can afford a 1 million $ house?

#176 CJBob on 07.28.16 at 11:29 am

#137 NEVER GIVE UP on 07.28.16 at 1:00 am
…I ask you are Muslims really with us or against us?
_________________
Really Garth, this is acceptable on a financial / housing blog?

Sometimes it’s nice to know who is among us here. — Garth

#177 TurnerNation on 07.28.16 at 11:39 am

Home Crapital (HCG) down big on “earnings” news. Aggregator wuz rite.
Now to short (via Kaputs) Genworth again boys.
Let’s get this market done!!!

#178 Roial1 on 07.28.16 at 11:45 am

Garth, One day recently you mentioned the “Vat tax” in Sweden.

Well, check out this news item. It gives the facts for most of Europe.

http://qz.com/743249/guess-which-country-pays-the-highest-taxes-in-europe/

This is for all taxes in each country.

#179 Tudval on 07.28.16 at 11:50 am

#142 Kenchie People need to get their terminology right. Dirty money that is laundered can only refer to proceeds from criminal activity. And as far as we are concerned, since we live in a (still) free country with no capital controls, that particular infringement of communist Chinese rules is not a crime.

We are accepting people who are labeled criminals in their own countries for activities that we here encourage, condone or just tolerate because we adhere to the Human Rights Charter, principles of personal freedom, etc.. The moment a country stops upholding these values, yes, capital will flow out quickly. If we don’t want it, somebody else will. South of the borders they are praying we close the door so more comes their way.

#180 Roial1 on 07.28.16 at 11:51 am

#161 };-) aka Devil’s Advocate on 07.28.16 at 9:14 am

Hey,DA, the word you want is “exacerbate” not “exasperate” quite different meanings.

#181 Stupesing in Cabbagetown on 07.28.16 at 11:55 am

#137 NEVER GIVE UP – “So I ask you are Muslims really with us or against us?”

That’s very Islamophobic of you. To blame all Muslims for the acts of a few wackos is unfair and unkind.

#182 Yuus bin Haad on 07.28.16 at 11:56 am

I was talking with Mike Harris the other day and he’s feeling a bit spurned. “Nobody blames me for anything anymore. What am I; chopped liver?” Ah Mike, … what a comedian.

#183 Nemesis on 07.28.16 at 11:59 am

#It’sASlipperySlope?,Or… #”BestPlaceOnEarth”TooTaxing?… #YouWantCyprus!…

[WSJ] – Cyprus Gives Tax Breaks to Expat Home Buyers: Tax breaks and other government incentives are luring expat home-buyers to Cyprus.

…”In abandoning the U.K. for this island in the Eastern Mediterranean, “the capital-gains tax was key,” Mr. Kingsley explained. “That and the sun.”
More from Mansion

Mild winters, ocean breezes and plenty of sunshine are nice, but the real draw for many luxury-home buyers to Cyprus is an array of government incentives, including tax breaks for homeowners, half-price title deeds and even the chance to obtain a European Union passport.

Mr. Kingsley, originally from the English city of Norwich, owns around 75 properties in Britain. But last summer, Cyprus passed legislation that allowed anybody who spends more than 183 days a year in the country to become a tax resident. Now, as a Cypriot resident, he will pay no capital-gains taxes in Cyprus on his British assets when they’re sold, and will only pay the U.K. government tax on gains accrued after April 2015, when the British government clamped down on taxation rules for owners of British property living abroad.”…

http://www.wsj.com/articles/cyprus-gives-tax-breaks-to-expat-home-buyers-1469715594

#NotEnoughDosh?… #TheOtherCyprusResidencyOption… #UniformDressMandatory

http://www.un.org/en/peacekeeping/missions/unficyp/background.shtml

#184 dosouth on 07.28.16 at 12:01 pm

Just a reason to collect a tax that the majority of the uninformed will support, the norm for the sheeple. Not that I am against collecting more money to lighten our tax burden but really, 50, 60, 70 or 100k more on millions?

C’mon this is no more than a PR stunt by the politicians but as you know Garth, having a different opinion can make for a cold day in July……

#185 Nobody on 07.28.16 at 12:02 pm

#165 There is limited supply, mountains/US/ocean constrains where you can build. What new construction there is has sensibly been condo towers on transit lines.
Unless the agricultural lands were entirely given over to suburbs there is nowhere to build a new SFH without demolishing an existing one.

Then there is a growth in population; there are tech jobs, the weather is nice and it is a useful hub for Asia and the US west coast – whether you are Canadian or Chinese.

Quebec has traditionally been less welcoming of immigrants – to put it mildly

#186 Moron Face on 07.28.16 at 12:13 pm

Some great points. The ongoing housing banter in the news cycle is a clear indication that things are completely out of control. This is very similar to the oil bubble in 2008 (when the price of oil was posted daily during The National) and the dot.com bubble in the late 90s. Same crazed media coverage.

But it goes further than that this time. The Maclean’s article “Canada’s economy is hostage to the housing bubble” summarizes our situation well.

We’ve sacrificed future economic growth in other sectors at the altar of real estate.

This is beyond bad for Canada long term.

#187 Mark M. on 07.28.16 at 12:26 pm

Atlanta Fed just slashed second quarter GDP estimate. Who’s with me, Garth, The American, WalMark, JP, you guys also still see four rate hikes this year?

Remember, America is BOOOOMING!

#188 Nemesis on 07.28.16 at 12:28 pm

#JustForSmokingMan… #[email protected],Or… #HunterSLivesOn…

[CounterPunch] – Night of the Hollow Men: Notes From the Democratic Convention

…”+ Since my co-editor Joshua Frank prefers to go surfing rather than do his reportorial duty and watch the DNC Convention from gavel-to-gavel, he’s telling me that I have to write another account of tonight’s proceedings. I’m not sure I’m up to it ‘frankly.’ What would Hunter Thompson do? Oh, yes, he would get his body and mind in fighting form by having breakfast. I guess I’ll follow the good Doctor’s example: “Four Bloody Marys, two grapefruits, a pot of coffee, Rangoon crêpes, a half-pound of either sausage, bacon, or corned-beef hash with diced chilies, a Spanish omelette or eggs Benedict, a quart of milk, a chopped lemon for random seasoning, and something like a slice of key lime pie, two margaritas and six lines of the best cocaine for dessert.” All to be consumed while naked. Snarf! Sniff! Belch! ALRIGHT! I’m primed. Bring on Biden!”…

http://www.counterpunch.org/2016/07/28/night-of-the-hollow-men-notes-from-the-democratic-convention/

#189 WalMark of Sadkatoon on 07.28.16 at 12:31 pm

Condolences SM

#190 WalMark of Sadkatoon on 07.28.16 at 12:33 pm

#158 Mark on 07.28.16 at 8:52 am

You’re a joke

I’m mean your posts are like jokes

Yeah that’s it

#191 NEVER GIVE UP on 07.28.16 at 12:49 pm

#181 Stupesing in Cabbagetown on 07.28.16 at 11:55 am
#176 CJBob on 07.28.16 at 11:29 am
——————————————————————-
Just so you guys know where I am coming from before both of you put words in my mouth I did not say.

I have traveled all through Turkey, Syria, Jordan, Lebanon, Israel, Iran, Afganistan , Pakistan and India. I once spent 2 weeks in Syria whereby I never spoke English to anyone because I had not crossed paths with anyone who spoke it!

I loved travelling there BTW. I spent a week camping with Bedouin Tribesmen in Petra, Jordan. I was almost killed by wild dogs in Southern Turkey after getting off a bus at 3:00 am.

This was in 1978. There was war in Lebanon at the time.
I cannot be accused of being a trailer trash variety racist people hater. I am speaking from my heartfelt observations of human behavior and its failings, Of which I myself are at the forefront of. (its failings)

My point was as follows:
When you are in a community of people, that community has a very strong effect on the thinking of its inhabitants.
Not all mind you, but most of the people will go with the trend of their fellow citizens. At least if you are severely outnumbered in your thoughts you will suppress them to a degree.
Note how Canadians are mostly kind of Pro Gun control as opposed to Americans. The people in our community are less militant if they are against Gun control because they are outnumbered by the sentiment of Control advocates. The reverse is true in the USA.

Same with Gay rights if you remember only about 10 or 15 years ago people could write anti gay letters to the editor and they would be published. Now because the community is solidly with Gay rights it is abhorrent to write anti gay literature.

So my point was where is the anti terrorist sentiment in the Muslim community. BTW My family doctor is Muslim and has taken care of my entire family for 20 years. This is not a slight on anyone. It is an intellectual question and I asked for an answer.

In 2002 I took a cab from YVR to my home. A Pakistani driver and I got into a conversation about 9/11. That driver was quite happy that it happened. I was shocked at the time but did not let him know that. So I asked other cab drivers whenever I took them and found out there was little or no revulsion to the act that took place on 9/11 amoung the taxi driving community. I had to ask myself how these people got into Canada?

#192 Milla on 07.28.16 at 12:50 pm

We just see the consiquences of investments in BC real estate. If 1 of 10 is willing to pay millions for a house, or my neighbour got millions for his and is proud of it, why anyone in healthy mind would agree on less? And if locals are allowed with their low income to borrow such crazy money from banks then no wonder prices go up. Could government to put a limit on the houses price? I guess not. It is not as easy as to stop a jumper. I wish investments would be done into industries. Unfortunately Canadian investments go overseas industries.

#193 steven h on 07.28.16 at 1:07 pm

#137 NEVER GIVE UP – “So I ask you are Muslims really with us or against us?”

——————————————————–
You are as xenophobic as they come. Shame on you. Stop blaming eveyone else for your own shortcomings.

#194 Keith in Calgary on 07.28.16 at 1:16 pm

If I am not mistaken a while ago you said that it only takes a 5% move in the market to affect an entire market.

Well, 5% or 10% of outside influence (foreign money) did just that.

#195 NTH on 07.28.16 at 1:17 pm

Smoking Man, very sorry for your loss.

1 person’s Calgary RE report:

We just bought an inner city house which the data will reflect as ‘sold over list’ by a few bucks. However, it was originally listed ~ $80,000 higher than the last list price and ~100,000 below city assessment.

We have done Extraordinary amounts of research/due diligence/reading this pathetic blog for the last 11 months…I believe we struck a bit of a ‘deal’ plus did not get burned on a BRA or similar. We were very informed buyers.

Thanks to Garth (and other posters) I suspect we ‘saved’ ourselves at least $140,000, perhaps more! and certainly much saved in terms of (financial) stress-priceless.

We did not totally lose our minds; no Kia was bought this day. ;-)

BIG Thanks Everyone, Especially Mr. Turner! you are welcome in our home anytime, just please remember to put the seat down will ‘ya.

Yes Tonight Honey (NTH)

#196 Mark M. on 07.28.16 at 1:17 pm

Garth please, I need some guidance here, how many rate hikes this year should I prepare for? Can’t be one and done, right?

#197 Ace Goodheart on 07.28.16 at 1:22 pm

http://www.theglobeandmail.com/news/british-columbia/bc-realtors-voice-unease-over-new-foreign-buyer-tax/article31145792/

Here it comes. $20 million in sales contracts to be rescinded by Friday.

Everyone is uneasy about the new developments in the market.

So, prior to this new development (ie, 15% tax on foreigners who make up a tiny fraction of buyers) everyone was OK with paying multiple millions for houses that could not be lived in and that were affordable to only the top 1% of the population?

#198 NEVER GIVE UP on 07.28.16 at 1:26 pm

My apologies to those who were offended by my posts.
I was of the thinking in light of recent Terror acts that some discussion of this subject would be welcome.
I was wrong to think that.
Better stick to real estate.
Cheers!

You erred in even hinting everyone who believes in one faith share similar thoughts. People are people. Some are saintly. Some are terrorists. Religion is an excuse. — Garth

#199 fishman on 07.28.16 at 1:27 pm

@ #174 Why the CBC is garbage. It was hardly less than 20 years ago we were buying cards with funny Japanese characters.Never did understand babbling 7 & 8 year olds explaining how it worked. Actually good value, kept the little pests busy for hours. Now its white privilege & racism. I nominate CBC as having “Jumped the Shark” on this one.

#200 cramar on 07.28.16 at 1:45 pm

#187 Mark M. on 07.28.16 at 12:26 pm

Atlanta Fed just slashed second quarter GDP estimate. Who’s with me, Garth, The American, WalMark, JP, you guys also still see four rate hikes this year?

Remember, America is BOOOOMING!

—————–

As of yesterday, market has put the chance of a FED rate hike at 46.3% in Dec. So ONE maybe in December! That obviously will change between now and then. Especially on who wins the election could have a drastic effect on markets.

http://www.marketwatch.com/story/odds-of-fed-rate-hike-in-december-marked-up-after-policy-statement-2016-07-27

#201 45north on 07.28.16 at 1:52 pm

Terry Glavin: talking about America’s liberal elite:

What we’re seeing is the fruit of all their years of cultivating contempt and mockery of the hillbillies and the hayseeds that are too stupid to be in thrall of the genius Barack Obama, and that abandoned mass of Americans is now Trump’s base, and the worst and most cunning of the racists and xenophobes among them are now exacting their revenge.

http://ottawacitizen.com/opinion/columnists/glavin-america-faces-a-banana-republic-moment

what I see in the liberal elite is a contempt for the society that fed them.

#202 Ponzius Pilatus on 07.28.16 at 1:53 pm

#183
cyprus is a dandy.
Until the Turks and Greeks get at it again.

#203 Colleen on 07.28.16 at 2:24 pm

#32 Barb:

http://www.factcheck.org/2015/11/bogus-meme-targets-trump/

Q: Did Donald Trump tell People magazine in 1998 that if he ever ran for president, he’d do it as a Republican because “they’re the dumbest group of voters in the country” and that he “could lie and they’d still eat it up”?

A: No, that’s a bogus meme.

#204 bdwy sktrn on 07.28.16 at 2:25 pm

New real estate tax harming foreigners working in B.C., says American buyer
American Mac Kerman will be on the hook for $90,000 if he can’t close his pending purchase by Friday
By Matt Meuse, CBC News

Mac Kerman works in the animation sector in Vancouver. He recently purchased a home, but can’t afford the extra $90,000 in taxes he’ll have to pay if he can’t close the deal by Friday.

An animator by trade, Kerman has been living and working in Vancouver for two years. He’s one of thousands of foreigners living in Vancouver — including professors, hockey players, and experts needed by local companies

Kerman put a $30,000 down payment on his prospective condo early in July. He doesn’t have the additional $90,000 the new tax will cost him, so if he can’t close the sale in time, he’ll have to walk away from that down payment and wait until his permanent residency application goes through, which will likely not be until the winter.

The BC tax was a cowboy political move made as a sop to the kind of dumbass sentiment in full display on this blog. Good job, government. — Garth

#205 LL on 07.28.16 at 2:29 pm

# 185 – Nobody
Quebec has traditionally been less welcoming of immigrants – to put it mildly.

And I think any migrant is interest to live there…too much snow (specially in Qc and too cold)!
According to meteorologist, Quebec is the place where there is the most quantity of snow on EARTH at winter time!

#206 YVR Realtor on 07.28.16 at 2:33 pm

The 15% tax is a good start.

However, the Bc Liberals are playing the people.

The real problem is the rate of formation of Permanent Residents, the concentration of PR in two cities, allowing PR to buy multiple homes.

Reducing PR numbers and restricting them to one house only would mitigate the foreign money inflows these people are bringing as they couldn’t invest in more than one home.

Foreign national buying is a start but they haven’t touched on the real issue. Anyone who profits from capital inflows will most often use the Xenophobia card.

Great idea! Different classes of Canadians. How can that possibly be xenophobic? Worked great in Alabama. — Garth

#207 Peter on 07.28.16 at 2:34 pm

In a letter on Wednesday to Premier Christy Clark, Cressey Development Group president Scott Cressey warned that it expects to see buyers – half local, half foreign – rescind on $20-million worth of sales contracts by Friday.

“The resident buyers who are rescinding are concerned that this new taxation might destroy the confidence in the real estate market,” Mr. Cressey said in the letter, a copy of which was obtained by The Globe and Mail.

Nope, what the resident buyers are concerned about is that they might no longer be able to flip the purchased property at an even higher price to some gullible Chinese dude.

The stupidity on this blog is palpable. Buyers and sellers entered into binding contracts months ago for future closings. The government’s action was draconian, arbitrary and wholly unfair as it shatters those deals, which were entirely legal. Christy Clark just erased any creds she might have enjoyed. It was a Third World move. — Garth

#208 NEVER GIVE UP on 07.28.16 at 2:38 pm

You erred in even hinting everyone who believes in one faith shares similar thoughts. People are people. Some are saintly. Some are terrorists. Religion is an excuse. — Garth
———————————————————-
I like the way you put that.
Point well taken!

#209 Nelley on 07.28.16 at 2:40 pm

#20145-the irony about the hillbilly comment is that Crooked Hillary’s base is the welfare crowd, not exactly renowned for academic achievement.

Anyone called you an idiot today? Guess it’s still early. — Garth

#210 Aggregator on 07.28.16 at 2:53 pm

#177 TurnerNation

There's something very shady going on with HCG and CMHC. The company gets caught with $2B in fake loans and then CMHC rushes in to provide them with more MBS issuance.

#211 bdwy sktrn on 07.28.16 at 3:12 pm

The government’s action was draconian, arbitrary and wholly unfair as it shatters those deals, which were entirely legal. Christy Clark just erased any creds she might have enjoyed. It was a Third World move. — Garth

————————
spot on this.

however what do third world despots do best? They stay in power.

so what if there is some ‘collateral damage’ – Premier perky (or used to be) is out for blood on this one – she wants the ndp buried.

she gets headlines, but the cash will still pour in to 604. Even if half of it does not skirt the law, bc gov revs ballon.

but mostly the ‘crisis’ out here for affordability for renters and buyers has reached such a pitch she HAD to do something , fast – however ham-handed.

the BC public service is being well paid off, they wont risk ndp.

#212 Tudval on 07.28.16 at 3:23 pm

“Religion is an excuse. — Garth”
Sure BUT, how come it even can be used that way? I was born in a communist country, like I said before and I know there were times when those who were card-carying communists were not allowed to come into free countries. Even though I can vouch that NO card carrying communist ever committed a terrorist act against their enemy – it simply was not taught anywhere. There were (proxy) wars, yes, spying etc.. but the bona fide terrorist organizations that where acting in the name of Marxists ideology (or what they understood from it) – like the Red Brigades in Italy – where always publicly condemned by our governments and definitely not getting any state support. And anybody who’d be even publicly stating support, would get a quick visit from the ‘secret’ police. That would be a start if it were to take place today.

#213 Shawn on 07.28.16 at 3:25 pm

But there is no “we”.

#151 Self Directed on 07.28.16 at 4:16 am said:

And yet all we have to do is NOT buy property for a short period of time and the prices will come down.

*****************************************
True, except that that there is no “we”. When it comes to economics and profit and loss and wages and taxes, there is no collective Canadian “we”. Instead there are just millions of people working individually for their OWN benefit and the benefit of their own families.

Economically, Canada is not a collective.

If there is a war or a hockey game against the Russians then “we” Canadians can all pull together.

But in economics we pretty much all work for our own good. And that’s a good thing. Socialism, communism and collectivism have been tried and failed.

Look after your own economic interests. There is no “we” that is going to help you out. (Unless you are really in dire straights).

The idea that “we” will collectively go on a buyers strike for houses is folly. Individuals will buy or sell a house based on their own interests as they perceive them.

The notion of “we” in terms of the Canadian economy is greatly over-used.

#214 James on 07.28.16 at 3:48 pm

#204 bdwy sktrn on 07.28.16 at 2:25 pm

New real estate tax harming foreigners working in B.C., says American buyer
American Mac Kerman will be on the hook for $90,000 if he can’t close his pending purchase by Friday
By Matt Meuse, CBC News

Mac Kerman works in the animation sector in Vancouver. He recently purchased a home, but can’t afford the extra $90,000 in taxes he’ll have to pay if he can’t close the deal by Friday.

An animator by trade, Kerman has been living and working in Vancouver for two years. He’s one of thousands of foreigners living in Vancouver — including professors, hockey players, and experts needed by local companies

Kerman put a $30,000 down payment on his prospective condo early in July. He doesn’t have the additional $90,000 the new tax will cost him, so if he can’t close the sale in time, he’ll have to walk away from that down payment and wait until his permanent residency application goes through, which will likely not be until the winter.

The BC tax was a cowboy political move made as a sop to the kind of dumbass sentiment in full display on this blog. Good job, government. — Garth
……………………………………………………………………
Now that was a rather large faux pas Garth. You just used three words that are never put together in any normal sentence.
“Good job, government”. :)

#215 westcdn on 07.28.16 at 3:54 pm

SM, my feelings toward you. It is painful to get over the ones you love. Maybe we can trade father stories?

#216 Self Directed on 07.28.16 at 3:59 pm

#213 Shawn on 07.28.16 at 3:25 pm

Well said, Shawn. Immediately makes me think of a flock of Birds, as they fly or migrate. There is a lot of FOMO going on there, too!

It’s unfortunate that some will be on the wrong side of this when it turns.

One thing is for sure. This bubble represents a lot of “we” as everyone’s judgement so skewed that the only thing one can do is go with the flock.

Perhaps Christy is a genius, after all. This might be just the right amount of cool down, and prices might just hover here long enough to become the new normal. And we might never get to see the watermark it would have left.

#217 Aggregator on 07.28.16 at 4:14 pm

The government’s action was draconian, arbitrary and wholly unfair as it shatters those deals, which were entirely legal.

That's not known yet. As you stated, what Mike Stewart did is perfectly legal and ended up exposing a loophole that was later presented in parliament. To make a big stink after being caught for ignoring this loophole (intentionally), it appears the Libs reported the matter to RECBC as a fear tactic towards other agents considering this loophole, when really they've got nothing on Stewart.

The loophole was that a presale buyer has no ownership of a property title until maturity. This makes a presale contract more of a financial asset (a derivative) rather then a property transaction if it is assigned. So assigning a contract to a local buyer to avoid the tax is perfectly legal. RECBC can't do jack.

As an example: If the US imposed a 20% tax on physical corn and you buy/sell a corn futures contract to avoid the tax and have a local person take delivery and store it for you — that's perfectly legal because at no point did you own the underlying asset, rather an obligation to own it.

I don't think this issue is resolved yet.

#218 NEVER GIVE UP on 07.28.16 at 4:27 pm

I still say that municipalities are blocking building permits in droves.

It takes 2 years to get permits through city hall in YVR.

This is criminal.

#219 canali on 07.28.16 at 4:28 pm

this is why many of us don’t buy the ‘it’s only 5-10% of chinese buying RE in Vancouver’ argument…most likely a much higher percentage due to not revealing real buyer’s identity:
http://www.theglobeandmail.com/news/british-columbia/chinese-language-media-up-in-arms-about-bc-foreign-buyer-tax/article31150727/
“In the Sing Tao Daily, one article warned that foreign buyers would be able to hide their identities by asking local residents to buy properties on their behalf.”

also:
http://business.financialpost.com/personal-finance/mortgages-real-estate/top-vancouver-realtor-rapped-for-trying-to-avoid-new-15-property-transfer-tax

#220 boomer88 on 07.28.16 at 4:46 pm

Garth, I think it’s time to upgrade you comment section, make it easier to reply to comments. You generate enough traffic, so cash in on popularity, put few add banners here and there..??

#221 jess on 07.28.16 at 4:55 pm

Could this happen here?
All related to the mortgage industry!Took advantage of the national mortgage crisis,”
Visit the Press Archive for Press Statements and Releases prior to 2016.
2016 Press Statements and Releases
SIGTARP Investigative Outcomes* – Criminal charges filed against 357 individuals
– Criminal convictions of 250 defendants, of whom 148 have been sentenced to prison (others are awaiting sentencing)
tally
http://www.nytimes.com/2016/07/28/business/dealbook/the-big-fish-seen-escaping-an-agency-pursuing-bank-fraud.html?ref=dealbook

https://www.sigtarp.gov/Pages/home.aspx
Treasury’s Blight Elimination Program /HHF (hardest hit fund) vulnerable to fraud, waste, and abuse.

#222 jess on 07.28.16 at 5:05 pm

swaps push back rule

… Before the enactment of Section 716, federal protections for banks created a potential for banks to enter into “no-lose transactions,”
where banks would benefit if a risky swap bet paid off or simply take advantage of FDIC insurance or federal bailout money if the swap didn’t pay off.
18 Section 716 ensured that banks would be responsible for paying for their own risk-taking financial behaviors….read more @

https://www.bu.edu/rbfl/files/2015/07/Warren.pdf

Legal/Regulatory | The Trade
A Strategy in the Fight Over Dodd-Frank: Go Big
By Jesse Eisinger January 14, 2015 12:00 pm nytimes

EU to push back swaps collateral rules

European adoption of the rules will begin in December instead of September.
By Paul Walsh [email protected] June 10, 2016 12:15 PM GMT

#223 jess on 07.28.16 at 5:16 pm

Documents showed the woman’s funds flowed from the Cayman Islands — through Cayman National Bank’s correspondent account with the Canadian branch of Citibank, N.A. — to a Canadian bank account in her name.

As a result of the revenue agency’s review, she was ordered to pay a total of more than $1.2 million plus interest for unreported capital gains related to offshore property.”

Federal court orders 2 Canadian banks to hand over Cayman bank info to CRA
Neither bank opposed federal government’s demand for information

The Canadian Press Posted: Jul 27, 2016 11:27 AM ET Last Updated: Jul 27, 2016 11:27 AM ET
http://www.cbc.ca/news/business/bank-cra-tax-offshore-1.3697078

#224 The Last Post on 07.28.16 at 5:23 pm

@ 193 steven h

Ever;

1) read the Koran ?
2) Visit a mosque ?
3) Listen to a Salafist or Wahhabist imam preach ?

Or better yet, take your wife / girlfriend / boyfriend /daughters to Saudia Arabia for your next vacation.

Then talk about what you have learned.

SJW’s – all ” feelings ” , no facts , totally naive.

#225 };-) aka Devil's Advocate on 07.28.16 at 5:24 pm

#207 Peter on 07.28.16 at 2:34 pm

In a letter on Wednesday to Premier Christy Clark, Cressey Development Group president Scott Cressey warned that it expects to see buyers – half local, half foreign – rescind on $20-million worth of sales contracts by Friday.

“The resident buyers who are rescinding are concerned that this new taxation might destroy the confidence in the real estate market,” Mr. Cressey said in the letter, a copy of which was obtained by The Globe and Mail.

Nope, what the resident buyers are concerned about is that they might no longer be able to flip the purchased property at an even higher price to some gullible Chinese dude.

The stupidity on this blog is palpable. Buyers and sellers entered into binding contracts months ago for future closings. The government’s action was draconian, arbitrary and wholly unfair as it shatters those deals, which were entirely legal. Christy Clark just erased any creds she might have enjoyed. It was a Third World move. — Garth

My understanding is that any deal done prior to the change is grandfathered. Notwithstanding that; I am of the opinion; B.C. has something awesome to offer that is in great demand. Let supply and demand dictate the economic fundamentals. Just as any seller of any property has the right to increase or reduce their price in accordance with the supply/demand quotient in effect at the time so too does our Provincial Government in the interest of it’s constituents. Ergo; if we can line the public coffiers with beneficial dollars as a consequence of the great deman for our land SO IT SHOULD BE.

Why should we give without receipt of fair exchange? The market sets the price, not the seller. BUT why the heck would we leave money on the table that might otherwise comphensate us for our loss in selling out our Province and in turn making home ownership unaffordable for so much of our constituents?!?

All that said, I think it is a political election (pending) ploy by Christie and condemnable on that front alone but on the other hand really kinda makes sense. AND… our markets do need a wet towel thrown upon them to some degree… a great degree.

#226 rainclouds on 07.28.16 at 5:58 pm

Christy Clark just erased any creds she might have enjoyed. It was a Third World move. — Garth

Naaa she has 0 cred . Govern by polls. No brain, can’t think on her feet…. aside from manipulation

Toast 2017

#227 Ed on 07.29.16 at 12:57 am

A tale of two countries; I guess not all millennials are as financially illiterate as the Canadian versions:

http://www.cnbc.com/2016/07/28/millennials-cause-homeownership-rate-to-drop-to-lowest-level-since-1965.html

Oh what a tangled web canucks have woven…

#228 Duncan Pattinson on 07.29.16 at 10:52 am

In the UK a similar story. we changed leaders overnight – good old Brexit. Our conveyancing paused for a day whilst the voting was on and then re started. Our market will get back on track and so change can be good for the right reasons.