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Payback Is A B*tch

A report from the Georgia Straight in Canada. “The Real Estate Board of Greater Vancouver is reporting another painful month for the housing market. According to the REBGV, 1,829 homes were sold in April 2019, representing a 29.1 percent decrease from the number recorded in the same month last year. That’s 43.1 percent below the 10-year sales average for the month of April, the REBGV indicated. There are also more house listings than previously seen since October 2014.”

“In April this year, a total of 14,357 homes were listed for sale, a 46.2 percent increase compared to April 2018, and a 12.4 percent increase from March 2019. ‘There are more homes for sale in our market today than we’ve seen since October 2014. This trend is more about reduced demand than increased supply,’ association president Ashley Smith said. ‘The number of new listings coming on the market each month are consistent with our long-term averages. It’s the reduced sales activity that’s allowing listings to accumulate.'”

From the Huffington Post. “Payback is a b*tch. If you own residential real estate in Greater Vancouver, it’s likely your property’s value is back to where it was in 2016 or 2017. According to blogger and realtor Steve Saretsky, sales of all housing types hit their lowest level since 2000, while detached home sales were the lowest on record.”

“‘Detached home sales were the lowest on record this April and down 70% after peaking in 2016. Probably safe to assume prices need to move lower to get sales volumes back up, he said.”

“The benchmark price for all housing types in the area is down 8.5 per cent from a year ago, to $1.008 million. This works out to a decline of about $7,000 a month over the past year, and it puts the benchmark price back to where it was in June, 2017.”

“The correction has been more severe in detached homes, with the benchmark price falling 11.1 per cent over the past year, to $1.425 million. That amounts to a decline of about $15,000 per month, and it brings prices back to levels last seen in April, 2016.”

“In a now-familiar refrain, REBGV President Ashley Smith pointed the finger of blame directly at government policies, particularly the mortgage ‘stress test’ now in force for all mortgages at federally-regulated lenders. ‘The federal government’s mortgage stress test has reduced buyers’ purchasing power by about 20 per cent, which is causing people at the entry-level side of the market to struggle to secure financing,’ Smith said.”

“Some market observers have suggested Vancouver’s correction has some way to run yet. Ed Devlin, head of Canadian portfolio management at investment firm PIMCO, recently warned of ‘particularly significant declines’ in house prices as foreign buyers abandon the city.”

“‘The things that are concerning us … is that there have been a number of local regulations and taxes put in place that have converted Vancouver from probably being the preferred place for Chinese capital flight into real estate to now being openly hostile,’ he told BNN Bloomberg.”

The Globe and Mail. “The complexion of Vancouver’s market has changed dramatically. Greater Vancouver’s real estate market surged for most of the period from 2009 to 2017, but speculators have largely exited with prices continuing to fall in recent months, said Steve Pomeroy, senior fellow at Carleton University’s Centre for Urban Research and Education. Reduced asking prices are now common in a region accustomed to bidding wars.”

“‘In the past decade, we saw sales from foreign buyers or locals who wanted to flip properties,’ Mr. Pomeroy said. ‘To have a healthy market, we don’t want housing as a commodity but where people can live.'”

“The sale of a detached house in the Dunbar neighbourhood on Vancouver’s west side underscores the price declines. The bungalow at 4063 West 28th Ave., built in 1952, sold in mid-April for $3.4-million, after being on the market for six months. The original asking price last October was $4.5-million. The list price was reduced to $3,998,000 in November and dropped again to $3,898,000 in March, before it sold in April.”

“The assessed value was $4,393,400 in mid-2017, and $3,813,300 in mid-2018. Most of the assessment is land value since the house itself is considered a teardown. The benchmark price for detached properties sold on Vancouver’s west side in April was $2,948,400, down 13.4 per cent from the same month last year.”

“Andrew Ramlo, vice-president of market intelligence at real estate firm Rennie Group, said housing prices at the higher end of the market have fallen the hardest. For owners who find themselves in a position where they need to sell, the buyer’s market is a reality, he said.”

“In the Fraser Valley Real Estate Board’s territory, which includes the sprawling suburb of Surrey, there were 1,383 sales on the Multiple Listing Service in April, down 19 per cent from a year earlier. The average price for detached houses sold in the Fraser Valley dipped to $991,756 last month, down 8.2 per cent compared with April, 2018.”

This Post Has 68 Comments
  1. ‘In a now-familiar refrain, REBGV President Ashley Smith pointed the finger of blame directly at government policies’

    Stamp your little feet Ashley. Stamp em’!

    1. ‘The federal government’s mortgage stress test has reduced buyers’ purchasing power by about 20 per cent, which is causing people at the entry-level side of the market to struggle to secure financing,’

      At first that might sound awful, but really it should be very difficult for young people to finance a house that they will never be able to pay for.

    2. As astonishing as the Vancouver housing bubble is, it is still not as astonishing as how quickly the whole sordid tale will be swept under the rug.

      1. That would be much easier if the population pyramid looked like a pyramid because it is retiree’s pensions and saver’s savings that lose purchasing power. Retirees live long lives these days, and they all vote.

  2. ‘Andrew Ramlo, vice-president of market intelligence at real estate firm Rennie Group, said housing prices at the higher end of the market have fallen the hardest’

    Would that be the Rennie Group of Bob “biggest ass-hole in Canada” Rennie?

  3. Quillette discusses “real journalists” and censorship:

    “What counts as “journalistic or editorial content”—does it include online news sites such as Breitbart? And what about personal blogs? Would only publications with a print edition be exempt? What about when newspaper articles are shared on social media? If they are flagged by Twitter or Facebook as containing “harmful” content, will they be removed or hidden by search engines? What about the impact of removing content from websites on journalists researching articles? None of these questions have been answered.”

    https://quillette.com/2019/04/30/the-moral-panic-behind-internet-regulation/

    1. Most people don’t seem to know for as long as this country has existed, the ‘free press’ has had to deal with ongoing restrictions from the government and a sort of detente was worked out. Given that for the longest time you needed to physically print newspapers or books, there were a limited number of choke points involved in suppressing particular information. Fortunately, it seemed to mostly apply to things of national security and interest as local news and entities were mostly independent and in completion with each other. Radio, then Television expanded to mediums, and reach, but there still were key choke points (think the big 3 TV networks and the Associated Press ) if it was important enough to suppress – it was still a few authors to a huge audience model, and could be censored when needed.

      The internet changed everything (for a while). We now had almost zero barriers for individuals to be sources and broadcast to many, plus the channels of replication and promotion went from more or less understood to unpredictable.

      You can be absolutely certain the western nations and the institutions and individuals that most influence them want the genie put back in the bottle and have given considerable thought as to how to do that, without being noticed, via a long game with a goal of turning the mechanism to their advantage.

      Sounds like ‘old spiffy is paranoid, isn’t he?

      Regarding the detente that used to exist… Anyone remember Fiddle and Faddle? aka JFK’s playthings in the White House? The entire White House press corps knew that they were secretaries in name only and were there to ‘service’ the president. And the press corp was the choke point to control that info. But no one was going to break that story back then, and in doing so risk their career or more. It took an issue of importance of the level of Watergate to convince someone to become ‘Deep Throat’ (even then they knew the risks of Whistlblowing).

      Imagine that today (ok, with a younger president) … all it would take would be an anonymously leaked cell phone video snippet and the word would get out. Look at what’s going on in China with regards to image control and propaganda. I do think all nations wish to shape their internal narrative to that degree and more.

      I could ramble on to make the case, but I’ll just say that I do see us as having crossed the peak of ‘free information’ already.

      1. Considering it’s common knowledge that the sitting president has had numerous affairs and side flings with porn stars and Playboy models and he was elected anyway, I’m not sure JFK’s philandering would have mattered nowadays.

        1. I was trying to illustrate that today there are lots of ways to leak information widely today, with damning evidence like video (see bad things soldiers have done in the middle east) with a point in the past where it was much easier to control. I just couldn’t think of a better offhand then vs now comparison.

          It wasn’t so much that he had affairs (Leader have had them since the beginning of time), but how the press was actively compliant in keeping the details under wraps. Fast forward a few decades and look at all the political teeth gnashing Clinton faced over his dalliance when word of it got out.

          Though it (Clinton – Lewinsky ) didn’t amount to much materially, it shows why those in power want a tight grip on what is known about them. Think about Xi in China and how you can spontaneously donate all your organs if you compare him to Winnie the Pooh. Or how much Richard Sackler, with his family’s 11-digit net worth, would like to have have censorship power John Oliver and Last Week Tonight.

          I think there’s just too much incentive for those at the top the wealth and power pyramid to want to see the ability to freely share information curtailed.

          1. Point taken, and I largely agree that there would be a desire to curtail information. Thankfully I think there is much more freedom of expression in the US, despite some powerful wanting to censor. We can easily mock our leaders without the consequences that would befall Chinese citizens.

        2. Don’t forget William Jefferson Clinton lubing his cigars in young White House intern Monika Lewinski’s cooter.

        3. I suspect media transparency has changed a great deal more through the years than has presidential (aka alpha male) philandering.

          Updated on Aug 29, 2018
          Historic Presidential Affairs That Never Made it To the Tabloids
          FDR and Eleanor had a special arrangement, LBJ had no shame, and Harding had a favorite closet.
          Becky Little
          People in a California coffee shop read the Los Angeles Times the day after President Bill Clinton admitted to having a relationship with Monica Lewinsky.
          (Credit: David Butow/Corbis/Getty Images)

          Reading about the president’s sex life is still a pretty new phenomenon. Americans first experienced it in the 1990s, when the cover-up of Bill Clinton’s affair with White House intern Monica Lewinsky—and Clinton’s subsequent impeachment trial—became a huge news story.

          “Until Bill Clinton … there had not been coverage of any infidelity on the part of a sitting president in the mainstream press,” says Alison Dagnes, a political science professor at Shippensburg University and editor of Sex Scandals in American Politics.

          Before then, journalists didn’t report on presidential affairs because they didn’t consider them newsworthy. Even if a president’s affairs were well-known to his friends, staffers, and journalists, Dagnes says the public didn’t learn about them until “after the president was out of office, most of the time after the president was long dead.”

        4. I’m not sure JFK’s philandering would have mattered nowadays.

          Before he was president I agree. While president it depends. If he shook his finger in everyone’s face and lied to them I suspect it would still be a problem.

      2. You can be absolutely certain the western nations and the institutions and individuals that most influence them want the genie put back in the bottle and have given considerable thought as to how to do that, without being noticed, via a long game with a goal of turning the mechanism to their advantage.

        Let’s be more specific and accurate, shall we? The financier oligarchy that has rigged the game to its own advantage wants a complete monopoly on the news and information the proles can access. As Henry Ford sagely observed, we would have a revolution tomorrow morning if the ordinary people know how badly they were being screwed over by the banking cartel. (Google exact quote). As long as the oligarchy controlled the media, they controlled public perception. Then the Internet enabled an increasing number of truth-tellers to challenge the lies and propaganda, aka The Narrative, disseminated by the captured media. The oligarchy and its media minions couldn’t abide being called out, and as millions of Americans became red-pilled and corporate media like CNN saw their ratings plummet, crushing any dissenting voices has become paramount. Hence the tech giants are trying to silence and suppress alternative media outlets on the Internet. However, there are a small but growing number of awake and aware Americans – free thinkers – who have no intention of going quietly into that Long Goodnight the globalists have in store for them, and will continue to resist all efforts to herd them into the oligarchy’s incorporated neoliberal plantation.

  4. “The assessed value was $4,393,400 in mid-2017, and $3,813,300 in mid-2018. Most of the assessment is land value since the house itself is considered a teardown. The benchmark price for detached properties sold on Vancouver’s west side in April was $2,948,400, down 13.4 per cent from the same month last year.”

    No Bubble here! 4.3 M for some dumpy land is reasonable. It’s just a mix problem!

  5. “Real Estate
    Apr 30, 2019
    Vancouver’s ‘hostile’ housing market nears significant declines, warns PIMCO’s Devlin
    Rajeshni Naidu-Ghelani, BNN Bloomberg”

    If this worked to root the Chinese money launderers out of Canada, then why couldn’t it work in the U.S.?

    What’s stopping us from trying!?

    1. What’s stopping us from trying!?

      Those Chinese money launderers seem to be very savvy with their political donations. That buys a lot of impunity.

    2. “What’s stopping us from trying!?“

      You think our real estate mogul Mr. Trump wants the RE market to have any additional headwinds… far from it, he wants to keep it propped up for his whole term. He will go down in history as the president that created a mass of artificial millionaires and then setup the preceding president to assume the aftermath of a bursting bubble.

      1. It is interesting to me that while he would be the obvious guy to take the fall for an economic crash, he might manage to put it off just long enough to get reelected anyway. I never would have expected that.

    3. We should be trying. I think it’s the REIC that would resist this. And, there is a reticence towards the level of regulation this would entail. Still a lot of true believers that unfettered capitalism will correct all problems.

  6. “‘The things that are concerning us … is that there have been a number of local regulations and taxes put in place that have converted Vancouver from probably being the preferred place for Chinese capital flight into real estate to now being openly hostile,’ he told BNN Bloomberg.”

    I’m sure young Vancouverites without a hope in hell of owning their own home are distraught over the loss of competition from Chinese embezzlers and money launderers.

  7. Russel Casse: “Payback’s a bitch, ain’t it?” – “Independence Day” (1996)

    “Price discovery’s a bitch, ain’t it?” – Paraphrase in the era of (Keynesian) Central Banking

    Is there a Canadian version of this movie? (rhetorical). The aliens were from across the Pacific Ocean and not outer space in this one.

      1. Dystopian movies gaslighting the sheeple under the guise of entertainment (our modern day bread and circuses). Did I get that right, Boo?

  8. And so it begins… The blame game.

    Bubbles and hot potatoes
    John P. Hussman, Ph.D.
    November 28, 2018

    “Over the completion of this cycle, you’re going to hear a lot of misinformation about monetary policy, along with a great deal of misplaced blame. The initial blame will be directed at whatever immediately accompanies the downturn. If a market collapse happens to fall on the same day that an organ grinder’s monkey throws a coconut at the bronze bull on Wall Street, they’re going to blame the crash on the monkey.”

    “Additional rounds of blame will be directed at whatever advances the agenda of the person talking. Republicans will blame Democrats. Democrats will blame Republicans. Dogs will blame cats. Cats will blame mice. Everyone on financial TV will blame Jay Powell at the Fed for the “policy mistake” of even trying to normalize interest rates. But the true object deserving of blame will be the thing that made a financial collapse inevitable in the first place: the yield- seeking carnival of speculation engineered by the Bernanke-Yellen Fed.”

  9. Concierge Auctions email from today:

    Asian buyers’ interest in real estate continues as they look for a safe place to invest their money. In fact, Chinese overseas property transactions are predicted to hit US$220 Billion by 2020.

    Beginning this month, we will showcase a selection of luxury properties to a world of qualified buyers. Our last two sales targeted to luxury buyers in greater Asia brought 120 bidders to the table and resulted in more than $90M in sales.

    Properties included in this auction will benefit from our global reach with additional exposure on Juwai.com—the largest and most authoritative source for global property in Chinese.

  10. June 11, 2016

    From Chris Sorenson at Maclean’s in Canada. “After years of pumping money into the country’s frothiest housing markets, Canada’s big banks are suddenly—and alarmingly—nervous about the debt-fuelled monster they’ve helped to create. In the span of a few days this week and last, several big-bank CEOs and chief economists let loose a flurry of warnings about surging home prices in Vancouver and Toronto, where it now costs an average of $1.5 million and $1.3 million, respectively, to buy a detached house.”

    “Such remarks are a marked departure from the finance industry’s earlier nothing-to-see-here attitude. So why the sudden change of heart? It no doubt has much to do with Vancouver detached-house prices surging by 37 per cent in the year to this May, and Toronto’s soaring by a still ear-popping 15 per cent. Those sorts of gains are unsustainable and suggest investor euphoria—the always-dangerous ‘fear of missing out’—has firmly taken hold.”

    “Yet, while Scotiabank says it voluntarily curtailed its mortgage business, it’s unlikely to pull back on the reins too hard for fear of losing market share to competitors and leaving money on the table.”

    “So is there any way for Ottawa to cool sizzling housing markets like Toronto and Vancouver without putting others into the deep freeze? There may well be—and it’s already coming down the pipe. When Finance Minister Bill Morneau announced the latest changes to CMHC mortgage insurance last December, he also proposed forcing banks to hold more capital against mortgages in cities where property prices are high relative to borrowers’ incomes—like Toronto and Vancouver.”

    “The policy shift, the finer points of which are still being hammered out by Canada’s banking regulator, would effectively make it more expensive for banks to lend in higher-priced housing markets, prompting them to either pass along the extra costs to borrowers or issue fewer mortgages.”

    “A better option is raising qualifying interest rates for five-year fixed mortgages. While this would also have a nationwide impact, Craig Alexander, the VP of economic analysis at C.D. Howe and a former Toronto Dominion Bank chief economist, argues the risk may well be worth it. ‘If you purchase a home but can’t make the payments if interest rates go up by two percentage points, you probably shouldn’t be buying that home in the first place,’ he says.”

    http://thehousingbubbleblog.com/?p=9660

    1. June 18, 2016

      News 1130 in Canada. “The Bank of Canada believes rising prices in Vancouver’s real estate market are not sustainable, but there seems to be two schools of thought on what is fueling them. One local academic says addressing foreign ownership, and not a lack of supply, is what will really calm things down. SFU Assistant Professor of Public Policy Josh Gordon says we keep building and so prices will keep rising and he thinks that’s enough evidence that pumping in supply will not slow the market down.”

      “Gordon thinks government should address foreign ownership first. ‘[With] Some form of tax. I also think simply cracking down on money laundering and enforcing those provisions a bit more strictly.’ He’s concerned adding too much supply will worsen any correction down the road leading to unsellable condos. ‘There is this attempt to shift the blame and say it’s all about supply even when it obviously isn’t. This is really damaging and it’s upsetting to a lot of people. People in Vancouver just aren’t buying it anymore,’ adds Gordon.”

      The Province in Canada. “A Vancouver west-side house that changed hands five times in just over two years shows prices are being pushed up by speculators, says a Vancouver real estate agent. The house at 6712 Adera St. first sold in March 2014 for $3.2 million, and last sold in May, for $7.6 million, said Steve Saretsky on his blog headlined: Vancouver Real Estate Speculation Runs Rampant.”

      “He said the house’s final sale was among 179 west-side house sales in that month. Of those, 28 houses — or almost one a day — had been sold at least once in the previous 12 months, said Saretsky, who went through the tax histories of each of the sales to come up with the number. That works out to 16 per cent of all May sales, he said. ‘It’s like a lot of speculation out there,’ said Saretsky, who works for Sutton West Coast Broadway Realty. ‘It is happening. They (buyers) are hanging on to it like stock and then selling’ it at a profit.”

      “The Adera property sold in July 2015 for $6.4 million before being sold for $7.6 million 10 months later, a $1.2-million profit. The buyer made a gross profit of $120,000 a month or $4,000 a day. Saretsky acknowledged there is ‘nothing illegal at all’ about homeowners selling properties held for a short period of time, and speculation is risky if the market crashes. But ‘it’s adding to the problem’ of unaffordable housing, he said. The rising prices ‘aren’t all about supply and demand.’”

      http://thehousingbubbleblog.com/?p=9666

      1. July 1, 2016

        “A Chinese bank is suing to freeze and recover the Metro Vancouver property assets of a Chinese citizen who allegedly ‘fled China’ with an unpaid $10-million dollar loan. A petition filed in B.C. Supreme Court by China Citic Bank alleges that Shibiao Yan and his family lied to the bank about managing a business and owning assets in China when they applied for a loan in June 2014. The suit alleges that Yan and his wife were living in Vancouver and buying B.C. homes without disclosing the information to Citic. Citic’s suit says that the bank located four B.C. homes worth $7.2 million.”

        “Property records obtained by Postmedia in connection to the lawsuit show that Yan bought a number of homes in the summer of 2014, and that Yan obtained mortgages from Canadian banks including Bank of Montreal and HSBC. Two of the mortgages Yan took out from HSBC appeared to be for about 100 per cent of home purchase prices, land title records indicate.”

        http://thehousingbubbleblog.com/?p=9677

        1. July 7, 2016

          “There is no denying that the real estate market in Vancouver is red hot – prices have been rising with no end in sight. But one market analyst thinks we will see the bubble burst. Marc Cohodes used to run one of the largest hedge funds on Wall Street. Speaking on Global BC News Morning, Cohodes made it clear that he has no personal stake in the Vancouver real estate market. Cohodes said he wants to speak out about the housing market in Vancouver because he feels strongly ‘people are being taken advantage of.’ ‘I think it’s a money laundering-induced market,’ said Cohodes. ‘Where the local politicians, or the BC Liberals, are kept or in cahoots with the real estate brokers, developers, lawyers, that angle. And they have sought Chinese money to keep the market propped up and it won’t last. China has capital controls on and Vancouver has become the money laundering mecca of either the world or North America and something is going to change and change drastically.’”

          “Finance Minister Mike de Jong has said he does not believe Vancouver is in a real estate bubble, to which Cohodes said ‘he’s full of more crap than a Christmas turkey.’ ‘The market is ridiculously high and Christy Clark goes and takes real estate people over to China. They have the records,’ said Cohodes, ‘they just don’t want people to really know or they don’t want people to know the truth.’”

          http://thehousingbubbleblog.com/?p=9682

          1. July 8, 2016

            “House hunters in East Vancouver were just greeted by a strange but highly unusual sight: six-figure price reductions on several homes. At least two older single-family homes in the Fraser corridor saw reductions of $100,000 in the past two weeks. The price of a three-story fixer-upper on East 18th Avenue near Kingsway dropped a whopping $449,000 — nearly a full quarter of the asking price — after sitting stagnant for several weeks of open houses with no offers.”

            “Dan Morrison, president of the Real Estate Board of Metro Vancouver, says inventory has crept up slowly over the past four months. Since March, more homes have been listed for sale in the Vancouver area than in any other four-month period this decade. UBC economist Tom Davidoff says it’s unusual to see places taking more than one open house to sell, and that the market could be ‘finding itself’ after a rapid acceleration that saw prices spike more than 30 per cent in a single year. ‘When you start to see inventory rising and homes taking longer to sell that gives you an inkling that you’re at the top of a cycle instead of on your way up,’ he said.”

            http://thehousingbubbleblog.com/?p=9683

    2. “he also proposed forcing banks to hold more capital against mortgages in cities where property prices are high relative to borrowers’ incomes”

      A novel idea!

  11. July 12, 2016

    The Business News Network reports from Canada. “There’s a good chance Vancouver’s hot housing market has hit its peak, following a similar pattern to that of crashes in oil, gold prices and the dot-com bubble, according to LePoidevin Group’s senior vice-president and portfolio manager. David LePoidevin told BNN that Vancouver’s runaway housing prices echo the last, big ‘bubbly’ moves seen before other price crashes. ‘The last move in any market that gets bubbly is the biggest,’ he said. ‘Look at oil going to $147 in the last few years before it crashed … at the Nasdaq, where yours truly started selling short tech shares in January 2000 when the Nasdaq was at 4,000. By April it was at 5,000 – it had gained 25 per cent in four months.’”

    “When prices level off, that’s when danger really begins to set in for investors, LePoidevin said. He warns that one of the main drivers of Vancouver’s run-up in housing prices – foreign capital flows – could be slowing, as China looks to ramp up efforts to halt capital outflows and Ottawa makes its own assessments. ‘We’re starting to see something you haven’t seen in a long time when you’re driving around Vancouver: ‘For Sale’ signs,’ LePoidevin said. ‘The market was once so hot, the sold sign would go up before the ‘For Sale’ sign.’”

    From The Province. “While the benchmark price for typical single-family homes rose to $1.56 million, according to the Real Estate Board of Greater Vancouver, the number of sales of those houses dropped by about 19 per cent. In east Vancouver, detached home sales declined by 26 per cent, and on the west side, by 36 per cent. Those declines come even as the number of listings rose. In the first six months of 2015, there were 72 sales for every 100 listings in east Vancouver. A year later, that dropped to 59 sales for every 100 listings. Similar changes were experienced in Burnaby, Richmond, South Delta and New Westminster.”

    “There’s no hint in the numbers of prices cooling off so far, but there is scattered anecdotal evidence of homeowners dropping their asking price after they fail to get the desired offers. Ian Tang of Oakwyn Realty noted that in one extreme example, the list price of an east Vancouver home was recently cut by about $400,000. ‘There are other instances where properties have been up for $1.2 million or $1.3 million, which seems reasonable in comparison to what’s been happening, but then they drop it (by) $100,000,’ he said.”

    From Global News. “Cameron Muir, the chief economist for the B.C. Real Estate Association, the professional association for B.C. realtors, is one of few who deny there is anything unusual about Vancouver’s scorching market. When asked about a bubble, Muir laughed the label off. ‘A bubble is where prices grow at an unsustainable rate for a long period of time, where you end up seeing rampant speculation in the market place,’ he added. ‘This current market cycle has been rather short to be calling it a housing bubble. One year of pretty strong price growth in the market is not enough evidence to suggest there is a bubble.’”

    “In fact, Vancouver’s detached home market has been growing at a steady rate since 2002, aside from a short hiatus around the 2008 recession. The benchmark price for these properties increased 290 per cent from 2002 to 2016. The previous 14-year period (1988 to 2002) saw an increase of 122 per cent.”

    “‘Just because you see the sales-to-active listings ratio edging lower, that’s no indication of any kind of bubble bursting. In fact, I don’t think there’s any economist around that’s telling you there is a housing bubble in Vancouver,’ said Muir.”

    From News 1130. “If you want to know the real cause of skyrocketing home prices, looking at foreign buyer stats isn’t the answer, according to a local realtor. This comes a day after the province shared numbers indicating foreign buyers made up five percent of Metro Vancouver buyers during a 19-day stretch in June. The number shared for that three-week period by the province’s own admission doesn’t tell the whole story.”

    “‘The numbers are probably accurate,’ says Keith Roy with Re/Max Select. ‘There’s probably a low percentage of foreign nationals who are actually buying homes in Vancouver. The issue is where the money is coming from. As an active realtor in Vancouver, what I’m seeing on the West Side and throughout the Lower Mainland right now, is a lot of that money is coming from China. There’s a lot of deals that I’m doing, where the buyer is saying, ‘oh, I need another week for financing,’ or ‘can we move completion because the money hasn’t come in from where the money’s coming from.’ It’s not necessarily about foreign individuals owning properties in Vancouver. The real issue is foreign money that’s driving the whole process.’”

    The Guardian. “Over the past year, the price of a single family house in Vancouver increased by an incredible 30%, to an average of $1.4m. It’s just the latest, most dramatic jump in an already dramatic long-term trend that has turned the beautiful but unassuming Canadian city into one of the world’s least affordable, with a housing price-to-income ratio of 10.8. That’s third after Hong Kong and Sydney, and well ahead of London, which ranks eighth at 8.5.”

    “Driving the rise is an unprecedented flood of foreign capital, mainly from China. ‘What you have is a huge pool of very wealthy people who want to hedge against uncertainty back home,’ says Thomas Davidoff, a real estate economist at the University of British Columbia (UBC). ‘Combine anxious money – a lot of it – with a beautiful gateway city that has limited space to build, low property taxes, lax regulation on capital flows, and wealth-friendly immigration programmes, and you get a market like this one.’”

    “Compounding the frustration is the fact that, according to experts, a major portion of the money flooding into the market is hot. Officially, the Chinese government limits the amount of money individuals can take out of the country per year to US$50,000. And yet, hiding behind an absence of good data, government officials have mostly refused even to admit that foreign capital is making it impossible to buy a house in Vancouver – let alone act to level the playing field, for instance via a progressive property tax.”

    “‘I find it astonishing that Hong Kong, Singapore, Sydney, and London all have had right-wing, market-friendly governments which have intervened quite aggressively in trying to address unaffordability, yet nothing has happened here,’ says David Ley, a UBC geography professor and wealth migration expert.”

    The Georgia Straight. “Justin Fung: An open letter to those who play the race card in the Vancouver housing affordability debate. As one of the resident Chinese-Canadians on the HALT (Housing Action for Local Taxpayers) team, I was particularly frustrated to see this misleading headline on the front page of the Vancouver Sun ‘Is Racism Part of the Issue? Of course it is.’”

    “Every time we make progress on trying to address housing affordability, we end up getting sidetracked and pulled back to square one with cries of racism. We’ve already seen Gregor Robertson and Bob Rennie do it once, calling out academically peer-reviewed research done by Andy Yan as being ‘racist.’ Now it is Pete McMartin of the Vancouver Sun and Charlie Smith of the Georgia Straight just days after Mike De Jong’s foreign ownership ‘data’ got debunked as being completely irrelevant.”

    “If anything, it’s the Pete McMartins and Bob Rennies of the world who would take advantage of our Canadian politeness and welcoming nature toward people of all races to suggest that racism is what fuels the Vancouver housing affordability discussion. Sure, actual racism does exist and I’ll be the first one to call it out when I see it, but the vast majority of Canadians who want a fair shot at an affordable roof over their heads simply don’t have a racist bone in their bodies.”

    “It’s never been about the Chinese people as a race, but the fact that money is flowing out of China and finding its way into Vancouver real estate. The fire hose of foreign capital finding its way into the Vancouver real estate market is the real problem, pricing out anyone making a living locally. It lines the pockets of a select few in this town (namely property developers and realtors) while doing little for the vast majority of us struggling to pay rent and make ends meet or trying to get into the housing market.”

    “This isn’t about how world-class this city is, it’s empty monster houses, the Ultra Rich Asian Girls of Vancouver, money laundering, immigration fraud, New Coast Realty, shadow flipping, or UBC students with $31-million Point Grey mansions. Sure, these are all interesting issues in their own right, but at the very core of the matter is the simple fact that Vancouver’s housing prices are entirely out of the reach of someone earning an income locally in the city.”

    “It has everything to do with the corrupt and complicit politicians who serve the corrupt needs of a B.C. real estate industry whose continued success depends entirely on us turning a blind eye to the obvious problem. This corruption seeps into the media—newspapers and TV stations whose operating costs are paid for by advertising that is increasingly dependent on the real estate industry. Perhaps it’s no wonder that certain members of the media have a vested interest in seeing the race card getting played yet again.”

    “It’s almost as if those who would stand to lose the most in addressing the problem are the same ones crying racist. Let’s stop talking about racism in Vancouver real estate. It’s distracting us from getting to solutions to making housing affordable for those of us who call this city home. It’s time we cut through the bullshit and hold our elected political leaders accountable for the mess they refuse to clean up.”

    http://thehousingbubbleblog.com/?p=9686

    1. July 24, 2016

      From The Province. “A Chinese property tycoon linked to a massive banking scandal in China’s industrial north is at the centre of more than $500 million in B.C. property deals, a joint investigation by Postmedia and global due diligence firm IPSA International shows.”

      “Chinese real estate magnate Kevin Sun — also known as Hong Sun, Kevin Lin, Hong Wei Sun and Sun Hongwei — founded Sun Commercial Real Estate in 2013. In addition to buying and selling hundreds of millions in B.C. property, the B.C. company, which focuses on immigrant investors, has raised over $200 million from investors.”

      “A B.C. Supreme Court civil case connected to a South Vancouver property flip provides insight. Detailed testimony from Bo Jiang, Sun’s friend and first employee in B.C., points to Sun’s fortune in China, his arrival on B.C.’s real estate scene, and complex land investment strategies that preceded Sun Commercial’s incredible growth.”

      “Bo Jiang — or Bobo, as Sun affectionately called him — was Sun’s translator and jack-of-all trades in property speculation, Jiang would recall in the 2008 B.C. Supreme Court civil case. It’s not clear how much Jiang knew about his boss’s history in China. But according to Jiang’s testimony, he did know that Sun claimed to be enormously wealthy. Bobo was the worker who asked Richmond bureaucrats for land subdivisions, opened a Marine Drive Royal Bank account to manage Sun’s cash, and took care of all the little things, such as maintaining Kevin Sun’s growing roster of empty homes.”

      “‘At that time he said something like, ‘Eventually I would give you more than what you want or what you ask,’ Jiang told the Supreme Court. ‘He said that, ‘Given that I’m so wealthy, I don’t give a damn about this little money.’”

      “One associate said that in B.C., Sun seems to be repeating the style of business he started in Jilin. ‘He is an opportunist. You know, in Jilin he bought factories very cheap and he sells it for the real estate value and then leaves,’ the associate said in an interview. ‘Now he moves very fast from buying farmland to flipping houses to flipping commercial property. If a developer from China wants to develop in Vancouver, Sun buys the land first and sells it to them. He is very secretive and smart.’”

      “An associate of Sun told Postmedia: ‘In Vancouver, it is not just Kevin, though. There is hundreds of people similar to him.’ The belief that there are hundreds of real estate investors in Vancouver who are under suspicion in China is shared by Canadian law enforcement sources. ‘Sometimes we ask ourselves if we’ve already lost the battle,’ one such source said. ‘I think this guy is just part of a large network.’”

      http://thehousingbubbleblog.com/?p=9699

      1. July 28, 2016

        The Globe and Mail. “Vancouver’s surprising new property-purchase tax for foreigners has generated a storm of coverage in Chinese-language media both in Vancouver and in China itself, with articles warning of dramatic new costs, analyzing the political motives of the B.C. Liberal Party and predicting a host of negative outcomes. But it was journalists and commentators in Vancouver who were the toughest on the new tax and who gave it the most coverage.”

        “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. Another article criticized the tax, which was much higher than anyone expected. ‘Increasing the tax to cool down the real estate market has limited effects,’ it said. ‘It won’t achieve its goal of reducing housing prices dramatically.’”

        “The Ming Pao Daily News echoed some of that and went further. It ran one story about a Chinese buyer looking for contracts being abandoned by offshore buyers because of the new policy. Another story talked about the likelihood that buyers will shift their attention to Toronto, Vancouver Island or Vancouver houses priced under $2-million. ‘The new policy will have a strong impact on houses over $4-million, which are always favoured by offshore buyers,’ said Yongci Lyu, a realtor in Vancouver.”

        http://thehousingbubbleblog.com/?p=9708

        1. August 4, 2016

          The Financial Post. “Realtors and lawyers desperate to get in under the deadline filed a record-setting 15,000 property transfer applications on Thursday and Friday, the last business days before B.C.’s punishing new 15-per-cent tax on foreign property buyers went into effect. Now, as a new dawn breaks in Metro Vancouver’s real estate market, realty companies and real estate boards are reporting the first anecdotes of deals falling through as foreign buyers forfeited deposits on binding deals rather than pay the new tax. And they report evidence of local buyers withdrawing offers in expectation that the market will soften.”

          “Elton Ash, executive vice-president of Re/Max Western Region, said it is too early to accurately quantify how many deals fell apart, but he’s heard from realtors in some of the company’s 30 Metro Vancouver offices of cases where foreign buyers who couldn’t rearrange previously negotiated closing dates have already walked away. ‘Our expectation is that there will be a percentage of transactions collapse due to the buyer basically defaulting on the contract,’ Ash said.”

          The Georgia Straight. “If you’re a regular reader of Vancouver newspapers, you probably believe that foreign investors, particularly those from China, are the primary force driving up housing prices in the Lower Mainland. For B.C. politicians looking toward the May 2017 provincial election, it doesn’t matter if the public’s views reflect reality or not. Elected officials aren’t going to worry if a former federal politician like Garth Turner or a former federal candidate like Victor Wong say that foreign buyers only account for 10 percent of all home sales in the region.”

          “If an MLA wants to keep his or her job, the most important consideration is what the public thinks is true and then taking action to address those concerns. Meanwhile, people in the real-estate industry are expressing shock that their ‘friends’ in the B.C. Liberal government would impose a 15 percent tax on foreign buyers. They’re bringing forth examples of hard-done-by foreign buyers whose lives are being severely disrupted by the new tax.”

          “They’re getting about as much sympathy as former French king Louis XVI’s courtiers received in the midst of the French Revolution. That’s because the public loves the new tax (at least according to the Angus Reid Institute poll). This shouldn’t come as a surprise. As critics of foreign buying were working nearly full-time on this issue for several years, the real-estate sector (with a few notable exceptions) ignored the rising level of alarm.”

          http://thehousingbubbleblog.com/?p=9720

          1. August 5, 2016

            “Amos Latteier, a tech worker in Vancouver, British Columbia, is talking about what everyone in Vancouver can’t stop talking about: the city’s skyrocketing property values and its seemingly endless construction boom, where one luxury condo after another has been built, is being built, will be built. It is a story that should now sound familiar to Seattleites. ‘All property holders in Vancouver literally won the lottery,’ Latteier says. ‘I missed making my million. I just did. I go to parties and I can see people looking at me and saying: ‘He missed making a million.’”

            “A few minutes later, I’m in a cab heading back to my hotel. My driver, a Steve something, excitedly explains that he has a piece of land right by the Georgia Viaduct. It’s a 25-foot-wide plot just off a main street. And it’s across from a fire hall. These, in his money-mad mind, are amenities. He wants three million for the plot. But he fears he will only get a million. He is also upset about the ’socialist government’ intervening and changing things before his dream comes true. He needs the money so badly. This is the only game in town. It’s now or never. He says all of this as he turns this way and that, in the maze of condo towers.”

            http://thehousingbubbleblog.com/?p=9722

  12. June 11, 2016:
    “From Chris Sorenson at Maclean’s in Canada. “After years of pumping money into the country’s frothiest housing markets, Canada’s big banks are suddenly—and alarmingly—nervous about the debt-fueled monster they’ve helped to create.

    And that was almost three years ago… Can’t make this stuff up!

    Banker’s remorse.
    “An ounce of prevention is worth a pound of cure.” – Benjamin Franklin
    “It’s no use closing the barn door after the horse is gone.”
    — John Heywood

  13. August 8, 2016

    “British Columbia’s decision to impose a 15 percent tax on foreign buyers to cool Vancouver’s scorching housing market is poised to derail more than 400 home purchases worth millions of dollars and may prompt calls for legal action. At least 427 deals are likely to collapse due to the new measure, according to Dan Morrison, president of the Real Estate Board of Greater Vancouver, citing responses from 27 brokers to an e-mail inquiry. The group didn’t calculate the value of those sales, though they would be worth about C$404 million ($307 million) based on the average purchase by a foreign buyer of C$946,945.”

    “That may just be the tip of the iceberg. ‘It’s a domino effect,’ said Elton Ash, Western Canada regional executive vice president for Re/Max Holdings Inc. Not only will foreign buyers be hit but also Canadians who had contracts to sell and had already put offers on their next house, he said. Morrison said the effects could take years to play out given some deals involve the sales of condos still being built.”

    “British Columbia joins governments from the U.K. to Australia imposing measures to tame markets that have become unaffordable for many local residents. Public support for intervention was building in Vancouver, where anecdotes abound of offshore investors bidding up prices then leaving homes empty.”

    http://thehousingbubbleblog.com/?p=9729

    1. August 13, 2016

      The Langley Advance. “July saw home price increases stall in Langley, though they remain shockingly high compared to last year. Sales in Langley dropped sharply across all categories of housing. While Langley saw largely flat prices between June and July, the Fraser Valley as a whole actually saw a decline in the price of detached houses. Parts of Surrey saw steeper declines in both sales and prices than Langley.”

      “Wiebe said that the slowdown in sales will be good for the market. ‘Additional inventory will help drive us towards a more balanced environment for consumers and remove some of the upward pressure on prices we’ve been seeing,’ Wiebe said. The provincial government recently imposed a 15 per cent tax on purchases of homes by foreign nationals, which caused a scramble at the start of August to finalize sales. The change was announced less than a week before the end of July.”

      The North Shore News. “Local real estate agents say they know of several multi-million-dollar real estate deals collapsing and predict the hot North Shore housing market will cool slightly in the wake of a new 15-per cent provincial tax on property purchased by foreign buyers. ‘It’s one of the most shocking events that’s ever arrived in our industry,’ said Brent Eilers, a longtime West Vancouver Realtor with Re/Max. ‘Nobody really knows how it will unfold.’”

      “Eilers said the new foreign buyers’ tax is bound to have an impact, particularly in markets like West Vancouver and North Vancouver, which have been ‘incredibly dependent on offshore money or new money’ that’s come from sales to foreign buyers in other areas of the Lower Mainland. Eilers said he knows of several ’sizable purchases’ where the real estate deals may fall apart. ‘There was a $13-million house in West Van that just got nailed with it,’ he said. ‘It’s hard to see in some of these transactions there’s a clear path to the finish line.’”

      “Realtor Steve Taylor of MacDonald Realty in West Vancouver recently sold a house for a retired couple in Ambleside to buyers from mainland China for about $2.5 million. But the deal is now subject to the new tax, adding a significant cost, which the buyers say they don’t have the money for. Meanwhile, the West Van couple has already bought another home on the North Shore. Until the closing date, said Taylor, ‘They have to sit and hope for the best.’”

      “Since the new tax went into place, the housing market on the North Shore – particularly for detached homes – has been eerily quiet compared to the buying frenzy and bidding wars seen in the spring. The number of sales for detached homes in July were down 45 per cent over last year and down 15 per cent in North Vancouver for the same time period, said Eilers. The 44 West Vancouver sales in July 2016 contrast with the 74 sales in 2015 and the 153 sales there in February 2016.”

      “August has shown an even more pronounced dropping off. The average number of August sales in West Van is about 60. Last year there were 80 sales for the month. So far this month, there have been two.”

      From The Tyee. “And any claim that the BC Liberals’ surprise move to impose a 15 per cent tax on foreign nationals buying residential property will make homes affordable for average buyers is a cruel joke. That horse has truly left the barn. Median detached housing prices would have to be cut in half from their current $1.58 million to even begin to be affordable, using the term almost jokingly – for some upper-middle to higher income families. Everyone else is out of luck.”

      “And if the market did collapse and prices fell 50 per cent, we would be in a economic crisis and no one would be buying houses anyway – they would be hoarding canned goods and water.”

      “How bad is Vancouver’s housing affordability crisis? Incredibly, unbelievably awful, with the price of detached homes up 38 per cent in one year. One example: Only 10 years ago, just 11 per cent of Vancouver detached homes were valued at $1 million or more – when the city was already Canada’s most expensive. Today more than 90 per cent of Vancouver detached houses are worth more than $1 million.”

      “Royal LePage CEO Phil Soper argues that Vancouver’s extreme housing price hikes are unsustainable. ‘You have severe affordability issues in Vancouver. It has become a serious public-policy issue, so it’s not healthy,’ he said in an interview. ‘Prices are moving upward at an irrational rate.’ True. And for some personal perspective, let me tell you about one modest home on West 15th Avenue in Kitsilano that I’m very familiar with – because we used to live there.”

      “Friends bought it in 1986 for $180,000 and sold in 1992 for $380,000, when we rented it. The new owner eventually moved in, did some renovations and sold it for about $500,000 a few years later. Its BC Assessment value in July 2015 was $1.96 million – and a nearby very similar house sold recently for $2.5 million! That means the value of our old Vancouver home is 10 times greater than it was 30 years ago, with most of the increase in the last decade.”

      “And so, as the price of that house and the homes across the region show, the horse has not just left the barn – it has left the country.”

      http://thehousingbubbleblog.com/?p=9737

      1. August 20, 2016

        “Global News obtained MLS sales data from several key Metro Vancouver markets and found the number of homes sold during the first two weeks of August in Greater Vancouver dropped by 85 per cent on average. Richmond experienced a 96 per cent drop in the number of sales and Burnaby North fell by 95 per cent. Vancouver’s West Side, West Vancouver, and Coquitlam also took major hits. East Vancouver’s Nina MacDonald echoes that belief telling Global News she hasn’t had any nibbles on her $1.28 million, 59-year-old bungalow on Napier Street that she’s owned for over 20 years. She’s even cancelled an upcoming open house because she felt like it would be pointless.”

        “She initially wanted to sell because the real estate windfall would allow her to purchase a turnkey property and pay the down payment on houses for her grandchildren. ‘I went from having a phone call every day [from realtors] to not having any,’ she said.”

        http://thehousingbubbleblog.com/?p=9747

        1. August 21, 2016

          The Globe and Mail reports from Canada. “A year ago, when Bank of Canada Governor Stephen Poloz cut interest rates for the second time in six months, we knew we’d have to take the bad with the good. Slashing the bank’s overnight rate in half to 0.5 per cent would surely further inflate regional real estate bubbles. But that, we figured, was just the price to pay in order to fuel non-energy exports and a sustainable recovery.”

          “Hewers of wood and drawers of water, not. Canada is now a real estate nation, with little else to keep the economy from sinking into an even deeper funk. Gross domestic product shrank 0.1 per cent in May, and that’s after excluding the negative impact of Alberta’s wildfires on oil sands output. Yet, we’re still buying houses like there’s no tomorrow. And there may not be a tomorrow for the suckers who buy in at the peak, whenever it comes.”

          “The so-called economic rotation from oil to manufacturing exports that rate cuts (and the related decline in the Canadian dollar) were supposed to produce has not only failed to materialize but policy makers have pumped helium into an already overheated real estate sector that is masking structural weaknesses in the economy and setting us up for a bigger fall.”

          “Politicians who claim to be fighting for the middle class have priced most of them out of the Toronto and Vancouver housing markets. But worry not. B.C. has slapped a 15-per-cent tax on foreign buyers and Ontario could follow, while Ottawa is contemplating raising minimum down payments and slapping a hefty deductible on banks’ insured mortgages.”

          “These and other demand-side policies might indeed lead to a real estate slowdown – to wit, the 18-per-cent year-over-year drop in Vancouver home sales in July. But at what cost? If prices do start to fall, even moderately, buyer psychology will shift rapidly and a reverse wealth effect will set in. A real estate crash (which bypassed Canada during the last recession) could become a self-fulling prophecy. On the bright side, policy makers might finally get their economic rotation.”

          From Metro News. “Following the introduction of B.C.’s 15% tax targeting foreign homebuyers, realtors say local buyers no longer seem to be feeling the FOMO that had been spurring them to compete in bidding wars.”

          “‘What it did, in my opinion, it’s changed the behaviour of the locals where everybody before was rushing in to buy something, going in way over their head with multiple offers,’ said Steve Saretsky, a realtor with Sutton Group West Coast, describing a situation in which local buyers expected prices to continue to rise because of interest from foreign buyers. ‘Then (the tax) came out and everyone’s like oh, all these foreign buyers are going to leave the market, maybe I’ll wait.’”

          “There has already started to be some price reductions in some detached homes in Richmond and Tsawwassen, Saretsky said, markets that had seen detached home prices rise a nosebleed 47 and 42 per cent, respectively. ‘It just couldn’t keep going,’ Saretsky said.”

          The Nelson Daily. “Last week the province instituted a tax on foreign ownership, increased fines for realtor misconduct and moved to create a provincial superintendent of real estate, who will take over all regulation and rule-making duties from the Real Estate Council of B.C. The moves are in response to the ongoing public outcry for reigning in skyrocketing real estate prices in the Lower Mainland and drafting tighter controls for the industry across the province. However, the need for control of a market gone wild in the rest of B.C. is not reflected in the market of Nelson of the present day, say some local realtors.”

          “In fact, Valhalla Path Realty’s Robert Goertz doesn’t foresee a foreign ownership tax being implemented in Nelson, since the heritage city does not have the same issues with foreign ownership as Vancouver does. ‘People are buying in Vancouver on speculation. People who own homes in Nelson use their homes, even if it is as a secondary dwelling,’ he said.”

          “But Century 21 realtor Brian Euerby said a foreign ownership tax may come to pass in Nelson, even though the tax was largely targeted toward those from mainland China that are making offers without seeing the properties. ‘The demographic of the (buyers) would suggest they prefer the larger urban lifestyles,’ he said about Nelson. ‘That said, though, this model is being watched carefully by other levels of government and there has been some discussion that this tax may well spread throughout the entire province if foreign ownership spreads to the Interior.’”

          “The province could allow the City of Vancouver to impose a tax on vacant homes, with a city-led study finding over 10,800 empty homes in the city in 2014. The province could allow other cities to implement similar taxes. ‘You would be surprised as to how many vacant homes there are out there, but none of which I would suggest are as a result of the foreign buyers that are being targeted on the Lower Mainland,’ Euerby said.”

          “‘People need a place to live and rising prices are the reality they are faced with even if it means over extending themselves,’ Euerby said. ‘I personally believe people are over extending themselves to reach up for prices. Any rise in the interest rates and this is going to tip many over the edge, a society that is already statistically spend $1.60 for every $1 earned.’”

          “And a good deal of the $1.60 is simply debt service, he said. ‘If this tax, and it is substantial, spreads nationwide, it will have an impact,’ he said. ‘Two things are driving this market: foreign investment in larger urban centres; and low interest rates. If one or the other of those is taken out of the equation then Houston, we have a problem. If both change, well … stay tuned.’”

          http://thehousingbubbleblog.com/?p=9749

          1. August 21, 2016

            The Australian. “As buyers returned to the Sydney dwelling market over the weekend, taking auction clearances to a one-year high, on the other side of the Pacific in Vancouver, prices are down 20 to 30 per cent. Vancouver, Sydney and Melbourne are, in a strange way, ’sister’ cities because all three have been subjected to unprecedented Asian buying of domestic real estate, which has sent prices so high that young locals are being priced out of the market.”

            “So, what has happened in Vancouver in the last three months is of vital interest to the Sydney and Melbourne real estate markets. Two blows have hit Chinese buyers of Vancouver real estate — the increasing difficulty of moving money from China and the implementation last month of a 15 per cent property tax by the provincial government of British Columbia.”

            “Both Victoria and NSW have imposed property taxes on foreign purchases but nothing on the scale of what was imposed in Vancouver (in Sydney it is being levied at 4 per cent of the purchase price). Before the tax came into effect, Vancouver experienced the same developments that we saw in Sydney and Melbourne — such as deals falling through as foreign buyers forfeited deposits on binding deals.”

            “Then the Vancouver market received an extra blow — local buyers began withdrawing offers in expectation that the market would soften. Volume slumped dramatically. While August is typically one of the slowest months for real estate transactions in Vancouver, the number of homes sold during the first two weeks of August in Greater Vancouver dropped by 85 per cent on average.”

            “Solo, a Canadian real estate brokerage house, reports that the City of Vancouver currently has an average apartment price of $1.1 million, down 20.7 per cent over the last 28 days and down 24.5 per cent over the last three months. Real estate experts say that the foreign buyer tax has certainly stopped speculative buyers. This has caused many other buyers to take a wait-and-see approach, which has essentially frozen the market. Australia is not experiencing such a development but if the Vancouver slide continues, it should raise property alarm bells around the world.”

            http://thehousingbubbleblog.com/?p=9750

  14. August 24, 2016

    The Richmond News in Canada. “Sales of detached homes for August are predicted to be down by as much as 55 per cent compared to the same time last year, thanks, in part, to the new foreign home buyers tax, according to Steveston realtor Sean Lawson. In fact, Lawson argues the tax, which tacks on another 15 per cent to the purchase price for non-residents, means Richmond has likely reached its high watermark for real estate prices, and the August slump may extend into the fall.”

    “‘The market was already slowing and they (government) dropped this bomb on it without any real consultation with the industry,’ he said, adding it has dour consequences for the overall economy. ‘To kick out two of the pillars – construction and real estate – that along with tourism were doing well was ridiculous and foolhardy. It was a purely political move that is likely to backfire on the government.’”

    “Vancouver realtor Steve Saretsky said he has been watching market trends closely since the foreign buyers tax was implemented and said it is impossible to know for sure how much the tax has slowed sales in the Richmond area where government tracking of real estate transactions showed about 19 per cent of homes were purchased by non-residents — the highest concentration in Metro Vancouver.”

    “‘The implementation of the tax put an immediate halt on peoples’ plans,’ Saretsky said via email. ‘Everyone wants to see what’s going to happen next before making any decisions. It changed the mentality of locals from a ‘fear of missing out’ to maybe I should wait.’”

    “‘Here’s what I see, things are clearly trending downwards,’ Saretsky said. ‘After basically hitting a 40 per cent increase in price at one point how much further can we really expect it to go up? Real estate is cyclical. I don’t want to make any predictions, but if you look at all the data and the trends over the last four months, it’s certainly not encouraging. I would expect things to continue cooling, however September is generally an active month.’”

    “‘If September is another slow month, then the writing is on the wall,’ he added.”

    http://thehousingbubbleblog.com/?p=9756

    1. August 26, 2016

      “Detached housing sales have plunged 84 per cent on Vancouver’s West Side and are down 88 per cent in Richmond during the first two weeks of August compared to the same period in 2015. Total detached house sales through the Real Estate Board of Greater Vancouver plunged 71 per cent in the same period. Zolo Realty BC Inc., a real estate firm that tracks average, rather than benchmark, prices in Vancouver’s housing market, reports that as of Aug. 22, the average home price in the city dropped 17.1 per cent from July 25, to $1.1 million.”

      “Noted real estate investment analyst Ozzie Jurock said it is likely that there will be a sharp increase in listing inventory in the weeks ahead. ‘As investors, we need to batten down the hatches,’ Jurock told his readers this week.”

      http://thehousingbubbleblog.com/?p=9758

      1. September 1, 2016

        The National Post reports from Canada. “Less than a month after the B.C. government imposed a 15-per-cent tax on foreign buyers of residential real estate, sellers of a handful of multi-million mansions have slashed their asking price, in one case by millions. The slashing of the asking price on some high-end residences in exclusive neighbourhoods after the tax came into affect on Aug. 2 is remarkable. The biggest drop is $2.3 million on a Shaughnessy mansion. The owner adjusted the asking price to $16.5 million from $18.8 million on Aug. 23, three weeks after the tax became law, according to Zolo Realty, which tracks real estate data and publishes it in real time at zolo.com. That’s a 12.5-per-cent discount on the building at 1637 Angus Dr. that has been on the market for at least four months, according to Zolo.”

        “The asking price for a ‘concrete modern mansion’ at 1708 Western Parkway at UBC dropped by $1.9 million, to $11 million, or 18 per cent, on Aug. 9, according to Zolo. ‘As a result of the uncertainty caused by the new tax, we are seeing this exact reaction in the high-end market, sellers putting their homes on market to see what they can get, but buyers are waiting to see the impact on prices before they commit,’ said Zolo CEO Barry Allen. The result is increased supply and dropping demand.”

        From CBC News. “Sales of single family homes dropped by half last month across several parts of Metro Vancouver, but it’s too early to call a long-term cooling trend, says one industry expert. Nancy Beaton, the president of SnapStats, says one of the most interesting insights from the data is for the first time in three years, the West Side of Vancouver is ‘officially a buyer’s market’ for detached homes.”

        “Beaton says if the tax has had any effect, it has been to hit the pause button on many deals. ‘Everyone is waiting to see. Should I buy? Should I sell? It is a bit paralyzed now.’”

        http://thehousingbubbleblog.com/?p=9768

        1. September 3, 2016

          A report from CBC News in Canada. “There is no denying a wave of fear and loathing has hit Vancouver’s ebullient market in the wake of the provincial government’s tax on foreign buyers. Data collected by realtor Rob Chipman shows that not only sales but average prices seemed to be falling. The real estate board’s actual figures released Friday showed exactly that. Sales in Greater Vancouver fell in August by 23 per cent from the previous month and were down 26 per cent from August last year. The average price for a detached home plunged by almost $300,000 in a month to $1,470,265.”

          “Fear may make speculators, especially those in debt over their heads, want to sell. But when markets are on the way down, potential buyers are hit by loathing, not wanting to be the ones left holding the baby as prices fall further. Leverage — buying on borrowed money — which propelled markets to new heights, goes into reverse.”

          The Business News Network. “For RateSpy.com Founder Rob McLister, the biggest surprise was that ’scary’ drop in average home prices. ‘There is so much psychology driving this market. This 15 per cent foreign homebuyers’ tax is just a kick in the face,’ McLister told BNN in an interview. ‘This was not the time for this intervention.’”

          “Realtor Steve Saretsky has already crunched MLS data for the month of August and he said sales of detached homes dropped 50 per cent in Richmond, Vancouver and Burnaby compared to the average number of sales in August between 2010 and 2014. He left August 2015 out of his calculation because it was an abnormally hot month.”

          “Prices haven’t appeared to drop drastically since the introduction of the tax, said Saretsky, adding that he believes the levy has had more of an impact on local buyers who are waiting to see how prices are affected. ‘I actually think it took a lot of the demand on the local side out, not so much the foreign side,’ he said. ‘Nobody wants to buy in at the top of the market, so everyone is thinking this could be the thing that changes everything.’”

          From CTV News. “Vancouver realtor Paul Eviston doubts the foreign buyer tax is entirely to blame for the lower sales numbers. Eviston said the market was showing ‘clear signs’ of cooling in terms of sales volume in June and May, and sellers have adjusted their expectations. ‘They’re realized we’re not in the same market we were in the spring,’ he said. ‘I think a lot of sellers have adjusted their expectations and selling prices to reflect what’s happening.’”

          “He believes there was a ‘knee-jerk reaction’ after the tax introduction, but that in the long-term foreign buyers will accept the extra cost is ‘the cost of doing business in Vancouver.’ With a Vancouver market mired in uncertainty, the longtime realtor says this ‘is probably one of the best buying opportunities we’ve seen in the last 10 years.’ ‘For all the people that were complaining about affordability issues in Vancouver, take a hard look around to see what homes are listed at and remember this: The market won’t stay like this,’ he said.”

          The Vancouver Sun. “For real estate consultant Ross Kay, figures like benchmark prices and year-on-year sales comparisons obscure what’s truly happening in Vancouver: the rapid deflation of an overvalued market that had been propped up by foreign buyers. Take the benchmark price, a statistic that tracks sale prices of ‘typical’ homes picked for things like age of the building, square-footage, number of rooms, and other factors. ‘Your benchmark price trails what is really going on in the market by up to eight months,’ said Kay, who is based in Ontario.”

          “A better measure, he believes, is average price. According to the real estate board, the average price for detached houses in Metro peaked in January at $1.83 million, but has since fallen to $1.47 million, a drop of nearly 20 per cent. Across all housing types, average purchase prices have fallen by 26.3 per cent since the first quarter of 2016, according to Kay. ‘(It’s) the greatest single drop in Canadian history,’ he said. But, ‘I don’t like to set off panic either, because I know the damage that is done to poor old average homeowners in these cases.’”

          “The real estate board also likes to talk about the ratio of sales to active listings, which is said to measure the balance of the market. That figure is calculated by comparing the total number of sales in a month by the number of listings on the Multiple Listing Service at the end of the month. For August, there had been 29.3 sales for every 100 listings on the MLS at month’s end, which the board says is a sign we’re still in a seller’s market and prices will continue to rise.”

          “Kay prefers to look at the failure rate, which takes into account all of the listings available in the whole month, instead of just the listings at one point in time. Using those numbers, he calculated that 80.39 per cent of all homes on the Vancouver market last month failed to sell. ‘Only one in five was successful. In March, when your market was hot, 36.7 per cent were successful — double. That’s how much your market has collapsed,’ he said.”

          http://thehousingbubbleblog.com/?p=9771

          1. September 7, 2016

            The Vancouver Courier in Canada. “I return to the city five weeks after Christy Clark’s 15 per cent tax on real estate sales to foreign buyers in Metro Vancouver went into effect to find a once buoyant market in serious decline. The populace of buyers and sellers has been consumed by a certain fear and loathing driven by the premier’s clearly knee-jerk act.”

            “For months, if not years, Clark and Finance Minister Mike de Jong refused to do anything about the impact foreign buyers were having on housing affordability. They argued that they didn’t want to tamper with people’s retirement nest egg wrapped up in the value of their homes. In the end, after a couple of weeks, and with David Eby on the opposition NDP benches leading the charge that would hinder a Liberal victory in the approaching election, Clark tossed concerns about retirement nest eggs and laissez-faire markets aside. Instead she hoped to hobble Eby and his party by announcing this new tax — to say nothing of raking a few bucks into the provincial treasury.”

            “What you should know is that even before Clark imposed the tax, the heat was coming out of the market. For months, sales have been declining to what the Vancouver Real Estate Board in a release last Friday called ‘more historically normal activity.’ And here is a not uncommon tale: An acquaintance of mine tells me that literally hours before Clark made her tax announcement, a person confirmed a deal to buy his East Side condo. That person was planning on selling their suburban townhouse to eliminate a lengthy commute time getting to work. The closing date for the deal was Oct. 1. The buyer put down a $35,000 deposit.”

            “My friend, like many in his position, fully expects that deal will now fall through. That person in the burbs is apparently getting zero interest in their townhouse. At best they will be forced to accept a low-ball offer and stretch themselves even further, if that is possible, to buy the East Side condo. It is either that or give up the $35,000.”

            “And let’s not forget the background to this: a real estate industry that for more than a decade under the provincial Liberals had been self-regulating, that allowed a number of unscrupulous agents and agencies to profit mightily by ’shadow flipping,’ that regularly failed to report foreign purchases by concealing the buyers’ country of origin and that failed to report money transfers to the federal body monitoring money laundering.”

            http://thehousingbubbleblog.com/?p=9779

  15. September 9, 2016

    “Amid rumblings of pre-pre-election campaign talk focusing on B.C.’s real estate situation, some were surprised at the Premier’s use of the word ‘bubble’ yesterday. NDP housing critic, David Eby took it to Twitter this morning saying the ‘Premier describes Vancouver Real Estate as a ‘housing bubble’… Not sure Bob would approve of these election year talking points.’ A dig at developer Bob Rennie as well who many see as being too close to the premier, who’s been accused of dragging her heels on cooling the market.”

    “But Eby says Clark’s message is inconsistent. ‘It’s one that’s definitely going to drive a wedge in her fundraising base which is driven by real estate agent Bob Rennie who’s been very clearly saying that there is no bubble so it’s a very interesting change of talking points in an election year.’”

    http://thehousingbubbleblog.com/?p=9781

    1. I could go on. I chronicled the whole thing. So if sales are down 27%, and prices off 11% YOY, imagine how far off they are from those crazy times.

      Kiss my ass Bob Rennie.

      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

  16. I don’t think we can go through a Powell conference without a communication surprise,” said Craig Bishop, vice president of U.S. fixed income at RBC Wealth Management, in an interview with MarketWatch.

    Translation: I bet that what everybody said about the Fed was correct, and lost.

    1. The story kind of reads like the handwriting on the wall for recent homebuyers in California.

    2. Mr Elliott says falling house prices and stubbornly low wage growth are putting pressure on some borrowers, adding that he believes the argument for a cut to the cash rate was sound.

      We should expect to soon see this argument in favor of hair-of-the-dog stimulus measures recycled in many other places where home prices are dropping like a turd in a well.

    3. “When a lot of people take out a loan, they generally make assumptions about their future wage growth,” he said.

      The banks used to make assumptions too, but that was before the age of QE.

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