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We Are Going To See A Torrent

A report from the Globe and Mail in Canada. “A prominent Vancouver immigration lawyer and other experts are praising the surprising amount of information that the province has demanded on the declaration form for its new Speculation and Vacancy Tax (SVT). They say such data, which includes social insurance numbers, will finally enable governments to nab foreign and domestic speculators who are reaping windfalls from property purchases without contributing their fair share of taxes.”

“The collection of that extra income tax information is vital, says lawyer Richard Kurland, who has been outspoken on this issue for years, saying that the double whammy of failure to declare global income by wealthy foreign buyers, coupled with speculative buying practices, has lead to the current affordability crisis.”

“‘It’s not a perfect system, but it’s a game changer,’ he says of the SVT. ‘Locals were paying taxes on capital gains and foreigners were declaring their profit to no one – not Canada, not their home country – so they could afford to keep buying more and more property while the locals could not, because they had to give a piece of the pie in tax. And we were outbid.'”

“‘That’s why we had this problem – all because the [previous] government refused to collect the information on who knows what, which crippled enforcement of the Income Tax Act, which let these guys take profit, untaxed, anywhere in the world and they were able to beat out the locals in house auctions again and again.'”

“As well, he adds, the new information will help in the battle against money laundering, which was revealed by a provincial report last year as occurring in casinos and real estate. ‘That’s the plus,’ Mr. Kurland says. ‘This is an effective tool against money laundering because you know who owns what. Then [government] can go, ‘Okay Mr. Smith, great, you bought and sold three houses for $1-million each. We looked at your income tax returns for 20 years and you have been earning $40,000 a year. Where did the money come from?'”

“Derek Holloway is a recently retired senior assessor for BC Assessment and he would like to see the government target large commercial and industrial properties as well, a sector where foreign money is flowing. But he applauds the collection of new data in housing.”

“‘This is the only government that is truly responsible, because previous governments didn’t give a damn. We have a market screaming along, super over heated, values skyrocketing and they were collecting [property transfer tax] on it, they loved it. It was filling the coffers,’ he said.”

“Mr. Kurland said the high-end market for properties in areas such as West Vancouver and the west side of the city had already began to tumble when the new tax measures were announced early last year. With the collection of more data, he sees more unloading of properties. ‘It’s almost a magic mirror. When the new system of the prescribed form came in, the high-end residential property in Vancouver began to tumble, quickly. With the social insurance number, we are going to see a torrent, but only from people who have something to hide. If you have nothing to hide, there is no reason to sell,’ Mr. Kurland says.”

From Better Dwelling. “Toronto and Vancouver real estate is seeing default rates climb from recent lows. Canada Mortgage and Housing Corporation (CMHC) numbers show the ratio of delinquencies is climbing in both cities as of Q3 2018. The increase is most notable for the largest mortgages.”

“Toronto CMA experienced a sharp annual uptick in delinquencies larger mortgages. The big change was in mortgages $400k and larger, which reached 0.09% – up a whopping 28.57% from the year before. Vancouver CMA is seeing a similar trend, with the largest mortgages showing a fast climb.”

“Canada’s largest real estate markets both saw delinquencies on larger mortgages climb. The rate is still low in the grand scheme of things, but inventory is rising and sales falling both cities. This makes it more difficult for a distressed seller to liquidate in a timely fashion. That can turn a delinquent loan into a defaulted loan fairly quickly. If this doesn’t reverse soon, expect motivated sellers to bring prices further down. After all, a home’s price is only as strong as its comp.”

From Global News. “The number of vacant new homes in Edmonton has reached a record high for the fifth consecutive month. ATB Financial says the number of completed — but not purchased — homes climbed to 1,941 in January. That is a 63 per cent increase compared to a year ago and a 7.5 per cent increase from a month earlier, according to ATB.”

“Calgary is experiencing a similar situation, with the number of vacant new homes reaching 891 in January, which was close to the record reached in 2001, ATB said. The number also marks a growth of 39 per cent from a year earlier.”

From CBC News. “‘What we’re seeing is a bit of an overbuild that began in 2018, said John Rose, the City of Edmonton’s chief economist. ‘There was a period in 2018 and late 2017 where we didn’t see the housing starts come down even though the housing market had softened … Basically the industry couldn’t move back fast enough and they got a little ahead of themselves.'”

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This Post Has 31 Comments

  1. ‘That’s why we had this problem – all because the [previous] government refused to collect the information on who knows what, which crippled enforcement of the Income Tax Act, which let these guys take profit, untaxed, anywhere in the world and they were able to beat out the locals in house auctions again and again.’

    And who was the big money guy? Why the biggest ass-hole in Canada:

    What if it’s not a bubble? – Real Estate Marketer Bob Rennie addresses UDI – Part 1

    Published on May 22, 2012

    https://www.youtube.com/watch?v=NCSIg51DLDk

    Is it a bubble now Bob?

    A Long Rant About Bob Rennie : vancouver – Reddit
    https://www.reddit.com/r/vancouver/comments/…/a_long_rant_about_bob_rennie/

    May 16, 2016 – One year ago I was blood boiling angry with Vancouver “Condo King” Bob Rennie. I recall distinctly thinking “I want to … You’re just rambling about how people are misattributing the housing bubble as being the result of foreign investment and idolizing an asshole developer.

    Sep 13, 2017
    Brace for more housing shortages, warns Vancouver real estate guru

    torqcampbell on Twitter: “bob rennie: current title holder of the biggest …
    https://twitter.com/torquilcampbell/status/744880110449332224
    Jun 20, 2016 – … bob rennie: current title holder of the biggest asshole in canada

    ASKBiblitz on Twitter: “Crash! And take that asshole Bob Rennie with it …
    https://twitter.com/leobiblitz/status/613724921789743104

    And the “Winners” are … the Worst of Vancouver, 2015 | scamcouver
    https://scamcouver.blog/2015/09/…/and-the-winners-are-the-worst-of-vancouver-201…

    Sep 28, 2015 – BMW (possibly an M5, possibly belonging to Bob Rennie) … be an asshole.

    2013: The Scam Reviewed | scamcouver
    https://scamcouver.blog/2013/12/31/2013-the-scam-reviewed/

    Dec 31, 2013 – bob rennie is an asshole

    1. The Canadian crash sure seems like a slow-motion train wreck. It is taking forever for prices to fall. It seems the US moves much more swiftly. Why is that?

      1. ‘It is taking forever for prices to fall’

        Good gravy. There are areas down 40%, and that was years ago. Try and sell a shack in Calgary, the golden child of the housing bubble in 2014.

        1. I guess I’ve missed those massive price declines. I knew Calgary was ugly but I thought Vancouver was still sporting detached housing prices of almost $2 million. Seems a little excessive.

        2. Calgary isn’t representative of Canada though. It’s a boom bust oil town, with Its fortunes tied to the price of oil. When oil crashed in 2016, everything in Calgary crashed as well, including real estate.

  2. ‘That’s why we had this problem – all because the [previous] government refused to collect the information on who knows what, which crippled enforcement of the Income Tax Act, which let these guys take profit, untaxed, anywhere in the world and they were able to beat out the locals in house auctions again and again.’

    ‘As well, he adds, the new information will help in the battle against money laundering, which was revealed by a provincial report last year as occurring in casinos and real estate. ‘That’s the plus,’ Mr. Kurland says. ‘This is an effective tool against money laundering because you know who owns what. Then [government] can go, ‘Okay Mr. Smith, great, you bought and sold three houses for $1-million each. We looked at your income tax returns for 20 years and you have been earning $40,000 a year. Where did the money come from?’

    Oh, remember the days when anyone who dared to suggest there was money laundering going on was shouted down as racist? My have things change in Canada.

    1. I wonder if such a crackdown on foreign money laundering could work in the U.S.? It might be worth a try.

      1. You would think it would. I have a hard time grasping why our gov allows it to happen. My take is that as prices go up, so do taxable amounts. On the flip side, if the foreign buyers are immune to these taxes somehow, then that gov income is gone…

    2. the other thing – if you put 20% down under the old CHMC (government agency) rules, they did not ask a lot of question ….

      So … the dad (still living in China) would have the house in the childs name (studying at a BC university) … So the tax rate would only be on the condo appreciation …

    1. Halton includes the rich suburbs like Oakville and Burlington. The fact that sales dropped so much – but the prices stayed so high is very wierd.

      My folks are in Oakville – and amount of 60’s bungalos that were torn down (within 1 mile of the waterfront) and rebuilt into mega mansions is very significant. I cannot even recognize west oakville any more

  4. ‘the number of completed — but not purchased — homes climbed to 1,941 in January. That is a 63 per cent increase compared to a year ago and a 7.5 per cent increase from a month earlier…Calgary is experiencing a similar situation, with the number of vacant new homes reaching 891’

    Calgary hasn’t needed one shack built in 4 years. So there’s that. But I can tell you how this Edmonton thing happened. It’s something about these Queen worshiping countries. All hell can be breaking out in several places, but the media and public want to know, “Where’s the next bonanza? We want easy riches!”

    Well a year or so ago that was Edmonton. Ta-da! Glut!

    1. Property bubble bursts in outer ‘burbs
      The Australian-6 hours ago
      … as the latest figures suggest the speculative bubble in outer suburbs housing … is facing a dramatic downturn, with a spike in speculators and first time home …

      Wow, the Australian used the B word.

  6. “If you have nothing to hide, there is no reason to sell,’ Mr. Kurland says.”

    What if prices are dropping like a rock? Wouldn’t that be a reason to sell, rather than riding a falling knife the whole way down?

  7. The house flippers are still out en masse. Here’s a flipper who flipped it to another flipper, who’s trying to flip it to somebody else. Check out the price history on this one. It’s what happens when greedy out-of-towners turn an area devoid of jobs into a speculative real estate orgy, where locals can no longer afford to live. By the way, this is in a flood plain. Good luck with insurance:

    2/25/2019 Price change $179,900 -2.7%
    2/15/2019 Price change $184,950 -2.6%
    2/8/2019 Listed for sale $189,950 +153.3%
    10/9/2018 Sold $75,000 -6.1%
    10/9/2018 Listing removed $79,900 —
    9/22/2018 Pending sale $79,900 —
    9/18/2018 Price change $79,900 -36.1%
    9/8/2018 Listed for sale $125,000 +257.1%
    7/18/2016 Sold $35,000

    https://www.zillow.com/homes/for_sale/61015615_zpid/46.704262,-122.900019,46.62769,-123.047648_rect/12_zm/1_fr/

    1. Who in their right mind would buy a place without bedroom closets?
      Where are you going to put clothes – in the useless area in front of the fridge, perhaps?

      1. “Who in their right mind would buy a place without bedroom closets?”

        oooh oooh oohhh me me me!!! I bought a house once with 2 non-conforming bedrooms. Which means they had a door and a window but no bedroom. Cost me about $2000 to hire a contractor and put in a closet both rooms rooms, including permits. It’s really not that big a deal.

        For older houses like the one you posted, it’s quite common to have bedrooms without closets. Typically those bedrooms are used as home offices. Or if they are used as traditional bedrooms, 2 small kids can share one closet in one room or you can install a closet, buy a wardrobe, etc.

        I have no idea what that area is like, and no idea whether it’s priced well or not. But just judging the house itself, it’s a nice little home. Would make a great AirBnb rental.

  9. Australia economy hits dry spell as incomes fail to flow | Reuters
    https://www.reuters.com/article/us-australia-economy/australia-economy-hits-dry-spell-as-incomes-fail-to-flow-idUSKCN1QL077?il=0

    (snip)

    “Figures from Australia and New Zealand Banking Group (ANZ.AX) showed total job advertisements fell 0.9 percent in February, from January when they slipped 1.7 percent.

    “That was the fourth straight month of losses and left ads down 4.3 percent on a year earlier.

    “’The labor market has been a key source of strength for the Australian economy over the past year, with the strong gain in jobs and declining unemployment rate providing a material offset to the impact of lower house prices,’ said ANZ’s head of Australian economics, David Plank.

    “’The year ahead looks to be more challenging.'”

    1. Wealth is created through value-added production. Speculative Yellen bux asset bubbles should never be confused with wealth creation.

  14. ‘Tesla owners protested at Tesla’s showroom this weekend in the central city of Changsha after the electric vehicle manufacturer slashed prices across its Chinese range on March. 1.’

    ‘In light of these huge price gaps, some recent Tesla buyers are seeking compensation from the electric car manufacturer. One Weibo user by the handle luweijuzi said that he was aware of the price reduction only five days after receiving his Model X on Feb. 25, adding that he arguably could be considered as one of the “most unlucky” buyers of the brand. A photo posted by the user shows a banner mounted across the showroom windows of a Tesla outlet in Changsha, the capital of Hunan province. The sign reads: “Tesla cuts prices randomly, infringing customers’ legal rights.”

    ‘Some comments posted under entry by luweijuzi post argued that such price reductions were just regular market mechanisms and that Tesla owners unhappy with them had no legal grounds to claim for compensation. Other netizens were more empathetic, saying the reaction by some Tesla buyers was understandable given that the decline in price was so considerable.’

    https://technode.com/2019/03/04/tesla-price-reductions-have-some-chinese-consumers-fuming/

    2. To Chinese FBs and Tesla owners: please stamp your little feet on alternate days to avoid triggering spurious alarms in earthquake sensors.

    3. adding that he arguably could be considered as one of the “most unlucky” buyers of the brand.

      That argument quickly fails when you realize people die when the car barrels out of control, catches fire, and the firemen can’t figure out how to get into the vehicle to rescue the “most unlucky” of buyers.

  15. foreigners were declaring their profit to no one – not Canada, not their home country

    Sounds like a pretty sweet deal.

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