Housing Bust 2017

Leveraging, renting vs owning, making an investment or buying a home?
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optionable68
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Housing Bust 2017

Post by optionable68 » 17 Jan 2017 18:18

In keeping with this decade old annual tradition, I have restarted this threat.

At some point someone may get it right,And we know the government will continue to introduce policies to keep a handle on pricing

Today, CMHC indicated it will make it harder for buyers who need mortgage insurance based on an increase in insurance premiums as highlighted here
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Re: Housing Bust 2017

Post by kcowan » 18 Jan 2017 07:52

and BC made it easier for first time buyers to get into debt...
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Re: Housing Bust 2017

Post by Just a Guy » 18 Jan 2017 09:43

Until interest rates rise, or some big disaster, it's not going to happen for more than a short term. Even a local correction won't last as, with low interest rates, people can "afford" to run the prices back up as they snatch up "bargains".

It's why the states recovered after their correction.

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Re: Housing Bust 2017

Post by patriot1 » 18 Jan 2017 16:36

The US recovered (somewhat, many markets are still well below the peak in nominal terms) only after interest rates dropped to far lower than they were at the peak in 2006 and stayed low for years.

That is simply not going to happen in Canada. Just as we had to track US rates going down, we will have to track them going up. We now have falling prices (Toronto excepted) and rising interest rates. We also have the federal government disengaging from insurance risk which will also result in higher mortgage rates for a given GoC bond rate.

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Re: Housing Bust 2017

Post by Shakespeare » 18 Jan 2017 18:06

Just as we had to track US rates going down, we will have to track them going up.
Not sure about that. The government (or BoC) may let the currency slide instead if inflation remains low.

Poloz says rate cut ‘on the table’ amid concern over Trump policies - The Globe and Mail
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Re: Housing Bust 2017

Post by Flaccidsteele » 19 Jan 2017 22:29

No crash as long as Canadians are employed and money is free (from parents and/or financial institutions or both).
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Re: Housing Bust 2017

Post by FI40 » 24 Jan 2017 16:01

Shakespeare wrote:
Just as we had to track US rates going down, we will have to track them going up.
Not sure about that. The government (or BoC) may let the currency slide instead if inflation remains low.

Poloz says rate cut ‘on the table’ amid concern over Trump policies - The Globe and Mail
I don't see how a weaker dollar and inflation remaining low can happen though. It's not like we produce everything we need here in Canada, far from it.


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Re: Housing Bust 2017

Post by Flaccidsteele » 05 Feb 2017 08:42

Came back from another friend's house. From observation, most houses seem like glorified storage facilities.
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Re: Housing Bust 2017

Post by Mordko » 05 Feb 2017 12:01

My street in the GTA: 30% of all properties are Chinese-owned, purchased in the last couple of years and are sitting empty. The owners "invested" about two millions each and are waiting for the investment to grow = an even bigger fool to come along and to pay even more money.

If this isn't a sign of a bubble, I don't know what is.

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Re: Housing Bust 2017

Post by twa2w » 05 Feb 2017 18:02

Mordko wrote:My street in the GTA: 30% of all properties are Chinese-owned, purchased in the last couple of years and are sitting empty. The owners "invested" about two millions each and are waiting for the investment to grow = an even bigger fool to come along and to pay even more money.

If this isn't a sign of a bubble, I don't know what is.
Maybe they are not waiting for a greater fool but holding the property as a hedge or escape in case the political economic situation at 'home' changes unfavorably. Maybe they have enough money that it doesnt matter what the price is or if it drops. Likely other funds for living are stashed elswhere.

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Re: Housing Bust 2017

Post by nisser » 11 Mar 2017 13:33

This thread has died down quite a bit. Things are definitively amiss in the major Canadian markets and I suspect it has in large part to do with foreign buyers. Things don't go up 27% yoy (as in Toronto) with local buyers when it's already moving from an exeptionally large 1mill+ base. The economist recently published a comparison of real estate among EOCD counries and the ones that stand out are New zealand, Canada, Australia and it clearly implicates foreign buyers

What exactly is the downside of instituting massive foreign buyers tax and why aren't we doing it?

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Re: Housing Bust 2017

Post by AltaRed » 11 Mar 2017 14:15

BC has done that for the GVA and I understand Ontario is now considering it for the GTA. Provincial gov'ts are loathe to do it because they get addicted to land transfer tax revenue. The other downside is it pisses off high value homeowners by putting headwinds on price increases for their McMansions. Cry me a tear....
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Re: Housing Bust 2017

Post by doom_diver » 11 Mar 2017 21:35

I'm not too worried, Toronto has been the epicentre of everything bad that has happened in Canada and continues to do so. Notice the TD scandal? The Hydro Scandal? Etc...etc..etc... And those are the "Factors" that have been taken into consideration recently. We all know that if we do our research there have been additional signs in the winds.

Is it going to be a housing bust in British Columbia? No, British Columbia *(Specifically Vancouver.) has been covered very well. From what I've been pointed to as of recent the housing market here *(Even with the consideration of the 15% tax) has patched up a good portion of the issue.

*(Though from what has been spoken about in certain circles it is not difficult to be considered a Canadian citizen as long as you know the right people to talk to. Which is why I believe the market shall continue to grow)

In regards to what is a good indicator of Canadian spending; I personally have always enjoyed using HBC as a good litmus test on spending.
https://www.google.ca/#q=HBC+stock+price&*

Nordstorm is a good one to utilize for comparison purposes.
https://www.google.ca/#q=nordstorm+stock&*


I've been for a long time now pegging the Canadian dollar to the American dollar at the sub-par 70 cents marker. I wouldn't be surprised to see it go further down, *(The biggest downfall should be around December of this year?) What makes this problem a dastardly one I would argue isn't the fact that the Canadian housing market is too competitive, but simply the cost of living in Canada is starting to go too far high.
- ICBC is raising car insurance rates further
- Cost of groceries continue to grow
- The ability to own storefront property is more expensive. *(While being in competition with online retailers. Who quite frankly give better deals)
- Canadian internet/phone plans some of the most expensive in the world.


Originally however I didn't blame the Chinese, I've always found Americans to be the source of money problems. Regardless I frankly believe that people will first stop getting the services above before the housing correction happens. That is my guess.

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Re: Housing Bust 2017

Post by kombat » 13 Mar 2017 10:12

nisser wrote:What exactly is the downside of instituting massive foreign buyers tax and why aren't we doing it?
It's isolationist economic policy, it could violate international trade agreements, retaliatory policies by trading partners (anyone here own a winter property in Florida?), the benefactors of overpriced homes are usually Canadians, cooling effect on tax revenues, accusations of xenophobia driving economic policy ... is that enough? :)

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Re: Housing Bust 2017

Post by twa2w » 13 Mar 2017 15:09

kombat wrote:
nisser wrote:What exactly is the downside of instituting massive foreign buyers tax and why aren't we doing it?
It's isolationist economic policy, it could violate international trade agreements, retaliatory policies by trading partners (anyone here own a winter property in Florida?), the benefactors of overpriced homes are usually Canadians, cooling effect on tax revenues, accusations of xenophobia driving economic policy ... is that enough? :)
I would have come up with a similiar list except on reflecton most of that isn't reality.
Residential real estate does not enter into any trade agreements including NAFTA. Retalitory policies are meaningless. How many Floridians are buying property in Toronto. Besides Florida already taxes non- resident properties much higher ( annual property taxes are 2-3x for non res)
How many Canadians are buying properties outside of Canada other than in the US. It is not the Americans driving prices in the GTA so they are unlikely to retaliate.
The benefactors of higher prices may be Canadian but that is illusionary as they have to replace the house with another, also at inflated prices. ( other than a few moving out of the market)A stable price market is considered more beneficial overall. And lower prices benefit more Canadians than not.
Xenophobic. Sure.
Fixing the unintended consequences of previous poor monetary and regulatory policy. Yes. But what will be the unintended consequences of this move.

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Re: Housing Bust 2017

Post by optionable68 » 13 Mar 2017 17:41

My neighbors house went for sale last weekend with an open house (Sat & Sunday) asking $899,000 with offers held back until Wednesday. The asking price in in line with what other similar properties in our area sold for over the past year.

2 days before the offer date, a sold sign went up. Sounded to me like a pre-emptive offer. I asked my agent what happened....... sold for $550,000 above asking with no conditions, Oh my !
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Re: Housing Bust 2017

Post by kcowan » 13 Mar 2017 17:48

One of the good things about the speculation tax is that the government gets some revenue from foreigners. I would think from a tax perspective it might have been better to implement it gradually. Maybe 5% in Vancouver and Toronto then 5% in Calgary then another 5% and so on.
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Re: Housing Bust 2017

Post by kombat » 14 Mar 2017 07:29

twa2w wrote:Retalitory policies are meaningless. How many Floridians are buying property in Toronto. Besides Florida already taxes non- resident properties much higher ( annual property taxes are 2-3x for non res) How many Canadians are buying properties outside of Canada other than in the US. It is not the Americans driving prices in the GTA so they are unlikely to retaliate.
So would we tax everyone, except Americans? Or do we just put our cards on the table and call it what it is: A Chinese tax? Because it's not Americans driving up the prices, it's not Koreans, it's not the Scottish, it's not Russians. It's really just the Chinese, right? Isn't that what the (perceived) problem is? Isn't that what we're worried about? And you don't think that singling out citizens of a major trading partner for a punitive tax will have retaliatory consequences?

Does the current BC "Foreign Ownership Tax" exempt Americans?

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Re: Housing Bust 2017

Post by Koogie » 14 Mar 2017 09:13

kcowan wrote:One of the good things about the speculation tax is that the government gets some revenue from foreigners.
I think the bigger issue has always been Canadians diddling the system rather than foreigners. Don't we all know someone who in the past has sold a rental house, second home or cottage and declared it as a primary residence ? The incidence of that happening must have been many magnitudes higher than foreigners mucking about. They have closed that massive loophole finally.
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Re: Housing Bust 2017

Post by gobsmack » 14 Mar 2017 09:24

kombat wrote:Does the current BC "Foreign Ownership Tax" exempt Americans?
It does not exempt any nationality. It even included foreigners who were paying taxes in BC but were working under temp visas. The province later realized the mistake and fixed that though.

I think the idea of retaliation is a bit too far fetched. You would have to upset a major interest group in order to fear retaliation. However, that does not mean the tax is legal.

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Re: Housing Bust 2017

Post by ig17 » 14 Mar 2017 09:47

US rates Canada once again as a “major money laundering country” in annual drug report
1. Canada once again a “Major Money Laundering” country

The 2017 “International Narcotics Control Strategy Report” (INCSR) published in March 2017 by the U.S. Department of State identifies Canada once again as a “major money laundering country” along with a host of mostly risky countries for financial crime such as Afghanistan, Argentina, Brazil, BVI, Cayman Islands, Cambodia, China, Columbia, Cyprus, Dominican Republic, Guernsey, Jersey, Iran, Iraq, Libya, Mexico, Macau, Saudi Arabia, Somalia and the UK.

A “major money laundering country” is one whose banks and financial institutions allow financial transactions involving significant amounts of proceeds of crime. For several years in a row, Canada has been identified as such

<snip>

2. What’s new in 2017 INCSR for Canada compared to 2016 report

Money laundering from tax evasion & corruption; lax conviction rate

According to the Report this year, money laundering in Canada is originating from tax evasion, corruption, as well as the usual drug trafficking, fraud, and such. And the main methods of money laundering have shifted to include Bitcoin, offshore corporations, bulk cash smuggling, money services businesses and real estate.

The Report mentions the exemption of lawyers as a deficiency in the anti-money laundering regime.

The Report says Canada should enhance enforcement and convictions for money laundering.

China

A lot was changed about China in relation to Canada this year in the Report, curiously. However, this year’s report says that the main source of proceeds of crime from China is from corruption involving state-owned enterprise and that criminals are laundering money mostly by bulk cash smuggling, fake large international trade invoices (trade-based money laundering), gambling and real estate.
Our federal government is too cowardly or too inept to take foreign money launderers head on. Absent direct federal measures, provinces are left to come up with their own solutions. Foreign sales tax is a round-about way to resist money laundering in real-estate. It's a sub-optimal solution but I will take it.

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Re: Housing Bust 2017

Post by adrian2 » 14 Mar 2017 11:35

kombat wrote:So would we tax everyone, except Americans? Or do we just put our cards on the table and call it what it is: A Chinese tax? Because it's not Americans driving up the prices, it's not Koreans, it's not the Scottish, it's not Russians. It's really just the Chinese, right? Isn't that what the (perceived) problem is? Isn't that what we're worried about? And you don't think that singling out citizens of a major trading partner for a punitive tax will have retaliatory consequences?
It would not be a tax against China and its government, but (inter alia) against wealthy Chinese citizens likely trying to evade the clutches of their Communist government. In all likelihood, such a tax would be welcome by Beijing.
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Re: Housing Bust 2017

Post by twa2w » 14 Mar 2017 11:49

kombat wrote:
twa2w wrote:Retalitory policies are meaningless. How many Floridians are buying property in Toronto. Besides Florida already taxes non- resident properties much higher ( annual property taxes are 2-3x for non res) How many Canadians are buying properties outside of Canada other than in the US. It is not the Americans driving prices in the GTA so they are unlikely to retaliate.
So would we tax everyone, except Americans? Or do we just put our cards on the table and call it what it is: A Chinese tax? Because it's not Americans driving up the prices, it's not Koreans, it's not the Scottish, it's not Russians. It's really just the Chinese, right? Isn't that what the (perceived) problem is? Isn't that what we're worried about? And you don't think that singling out citizens of a major trading partner for a punitive tax will have retaliatory consequences?

Does the current BC "Foreign Ownership Tax" exempt Americans?
My post wasn't to single out or exempt the US or to be punitive against one country. My point was that inter-country housing purchases usually only flow one way.(Canada US being the exception to some extent) So it is difficult for any other country to impose a retaliatory tariff unless they do it on some other form of trade which would be against the WTA.

Not sure why you brought the Chinese into the discussion. I have no idea who is buying houses in Toronto and driving up prices. As Adrien points out, the Chinese would welcome the tax. They are pursuing their citizens who are moving money out to places like Canada.

Most countries don't worry about citizens buying homes in other countries - it does not enter into trade other than perhaps the effects of currency exchange.(possibly affecting balance of payments via currency exchange).

Also many jurisdictions already have similar types of taxes. I mentioned Florida. There are other US states that do. Prior to the Vancouver issue, BC had penalized non principal residence owners for years via higher property tax (although this likely affected BC residents more). A fair number of countries prevent or restrict foreign ownership of property.
I know of no retaliatory tariffs or taxes as a result of any of these. Why would you want your citizens to take their money out of your country to invest in real estate somewhere else.

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Re: Housing Bust 2017

Post by westcoastfella » 14 Mar 2017 15:10

twa2w wrote: Not sure why you brought the Chinese into the discussion. I have no idea who is buying houses in Toronto and driving up prices. As Adrien points out, the Chinese would welcome the tax. They are pursuing their citizens who are moving money out to places like Canada.

Most countries don't worry about citizens buying homes in other countries - it does not enter into trade other than perhaps the effects of currency exchange.(possibly affecting balance of payments via currency exchange).
In the weeks immediately after the tax was implemented in Vancouver, many articles were written about the "overt" anti-Chinese intent of the tax, and whether or not it was targeted specifically at the Chinese, while hiding behind the ambiguity of the "foreigner" designation. One such example here. There was even a claim that we were violating NAFTA

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