VANCOUVER (NEWS 1130) – Housing experts are pitching their ideas to the Prime Minister on how to cool Vancouver’s hot real estate market.
Justin Trudeau along with Vancouver area MPs Jonathan Wilkson and Joyce Murray met with more than a dozen housing experts and interest group representatives to discuss the city’s skyrocketing housing prices.
The meeting lasted about an hour and a half and covered a variety of areas including the impact of foreign investment, supply, density, taxes, affordable housing, and linking housing and transit.
Before the meeting, Generation Squeeze founder Paul Kershaw said he was optimistic the meeting signalled a sign of support from Ottawa.
“British Columbia is to housing today, what Saskatchewan was to medical care back in the ’30s and ’40s. Back then, it was difficult from coast to coast to be able to afford to go to a doctor or the hospital. And then we started dreaming differently in that region to make it more affordable, and that dream eventually became a national policy by which we define ourselves,” explains Kershaw.
He said his group would present a couple solutions including shifting towards housing wealth taxation and away from income tax, increasing opportunity to build more homes and balancing equity for seniors while keeping prices affordable for the younger generation.
PM Trudeau/MPs Jonathan Wilkinson Joyce Murray & Hedy Fry @ housing affordability roundtable #yvr #cndpoli #bcpoli pic.twitter.com/2sKT0nq77h
— Lasia Kretzel (@lkretzel) June 17, 2016
SFU City Program’s Andy Yan says he and other interest groups were given a chance to stress the severity of the skyrocketing market.
“This is his first toe-dip into a vast ocean of challenges, I think. When it comes to affordable housing in Metro Vancouver, it’s going into his exploration of understanding that it’s both an issue of supply and demand.”
Kishan Roy is the CEO of the BC Non-Profit Housing Association. He says it’s encouraging to see Trudeau join the conversation.
“To have him be so animated in his interest in the issue and to take so much personal time, it’s really exciting for people in our sector. I don’t think he’d be doing it if he wasn’t planning some real action,” says Roy.
“He took notes, he didn’t try to intervene. What he tried to do was give everybody an opportunity to make, as succinct as possible, their key point.”
The bank isn’t predicting when a housing correction will happen but says prices will soon drop
TD says Vancouver’s market is ‘ripe’ for a correction
VANCOUVER (NEWS 1130) – When will the madness surrounding sky-high local real estate prices come to an end? If you look at the prediction from one of Canada’s big banks, it looks like the tide could turn sooner than later and it couldn’t come soon enough for anyone trying to get into the market.
But there is some bad news if you’re thinking about cashing in and cashing out to capitalize on the market.
A new report from TD says, “There is little debate Canada’s hottest markets like Vancouver are ripe for a correction; the difficulty is predicting its timing.” Meaning, it’s not going so far to say the bubble is going to burst, at least not anytime right away.
Instead, prices are expected to start moderating later this year as more supply enters the market. “Over the second half of 2016, some moderation in resale activity and price growth should become evident as bond yields pull off their lows and stretched affordability leads to a cooling in domestic and foreign housing demand.”
“However, barring significant new government regulatory measures to curb housing market speculation later this more, more concrete signs of a housing market slowdown are unlikely to be seen until 2017.”
The report finds housing prices in BC are expected to go down between two to four per cent sometime in 2017.
UBC economist doesn’t think the Liberals will do anything because of political influence from developers
Local columnist calls for a six-month ban on foreign home ownership
VANCOUVER (NEWS 1130) – We’ve heard calls for everything from new taxes to an outright ban on foreign ownership, but you’re being warned not to expect any drastic action from the provincial government to help cool our white-hot housing market.
An economist at UBC says it’s unlikely Victoria will take even “reasonable steps” to lower prices. Tom Davidoff says part of the reason could be the political influence of those who benefit from a heated market.
He says there is no question developers have influence in the province because they’re an important part of the economy and because they make substantial political donations. “I think the province doing something that faces strong oppositions from the builders is probably unlikely.”
When it comes to a temporary ban on purchases by foreign buyers, Davidoff says that would be a step too far. “[It] brings in nationality in a way that’s unfortunate, and given the province’s unwillingness to take reasonable steps, I don’t expect them to take a stronger step.”
Davidoff thinks it’s more likely to have foreigners who buy homes here pay higher property taxes. “But it wouldn’t be tied to nationalities.
Somebody from Calgary would be treated symmetrically with someone from Shanghai and the beauty of that tax is it’s very difficult to evade. Whereas I suspect, if you ban foreign individuals from buying property here, they’ll buy as local individuals, as local corporations or as foreign corporations which may not be banned.”
He doesn’t think the NDP would consider the same idea if the party was in power.
OTTAWA – The Bank of Canada delivered a warning today that surging housing prices in the hot markets of Vancouver and Toronto are humming along at an unsustainable clip.
Governor Stephen Poloz cautioned that climbing real estate prices have outpaced local economic fundamentals like job creation, immigration and income growth.
The central bank, Poloz added, weighed in on the long-running issue this week after seeing evidence these markets were fuelled by “self-reinforcing” expectations among prospective buyers and lenders that the current skyward price trajectory would continue.
“You have to admit the possibility that the price could actually decline in these circumstances,” Poloz told a news conference in Ottawa after the release of the bank’s semi-annual assessment on the state of Canada’s financial stability.
“But we’re not predicting that or anything.
“We’re just saying the risk that that could happen, whatever number it is, is growing as we sit here.”
The document noted year-over-year house price growth in the greater Vancouver area hit 30 per cent last month, up from 15 per cent in December. In Toronto, prices increased by 15 per cent, compared to 10 per cent six months ago.
Vulnerabilities linked to greater imbalances in regional housing markets and the continued rise of household debt were higher than they were six months ago, the bank said in its latest financial system review.
While the probability of a trigger, such as a severe recession, remains low, the bank said the severity of such an event has increased since its December assessment.
Going forward, Poloz said the longer these risks prevail, the bigger impact they could have.
“It’s not as though there’s been some sudden change or anything like that, but all of the evidence continues to accumulate,” he said.
The bank’s warning comes as the federal government faces pressure from researchers, bankers and other housing sector observers to address expanding household indebtedness and rising prices, particularly in Toronto and Vancouver.
Yesterday, Finance Minister Bill Morneau said Ottawa was conducting an in-depth examination of real estate markets to determine what measures might be necessary to ensure Canadians can still afford to buy homes.
Morneau did not specify what sort of changes the government was considering or how soon it may introduce them.
Over the winter, he increased the minimum down payment for homes over $500,000 to 10 per cent from five per cent, a measure aimed specifically at cooling off the Toronto and Vancouver markets. It was one of several mortgage rule changes the government has made in recent years.
Morneau added that Ottawa is also examining whether there is any evidence to support the notion held by some that foreign buyers are driving up home prices.
In its report today, the Bank of Canada said foreign demand has contributed to price growth in Vancouver and Toronto, which in turn has boosted overall household indebtedness.
The bank noted, however, that it’s difficult to measure the impact of foreign investment on the housing market.
Carolyn Wilkins, the bank’s senior deputy governor, said Thursday that data on foreign investment in Canada’s housing sector is “particularly poor,” though some research has shown it is adding to market demand.
Wilkins also pointed to an unanswered question: if there’s an adverse shock, would foreign owners sell?
Overall, the bank said the level of risk to Canada’s financial system was largely unchanged from six months ago because the higher household vulnerabilities come with the backdrop of an ongoing economic recovery.
The report, which examines vulnerabilities and risks to the financial system, also highlighted other persistent concerns.
It pointed to the continued presence of fragile fixed-income market liquidity as a key vulnerability in the overall financial system, while it repeats the risks of a sharp increase in long-term interest rates, stress from emerging markets like China and prolonged weakness in commodity prices.
VANCOUVER (NEWS 1130) – There is a dramatic, new call for action to cool Vancouver’s over-heated real estate market.
A local columnist says it’s time to bring in a six month ban on all new foreign home ownership in BC.
Bill Tieleman argues that cooling off period would give time to figure out long-term solutions and would communicate to the rest of the world that our region is not simply available to buyers offering the highest amount for an investment.
“When the Bank of Canada and the Bank of Nova Scotia says they’re restricting mortgages in the Vancouver area because of the incredible skyrocketing prices, you know there’s a problem and you know you have to do something and it has to be dramatic.”
Tieleman says promises by the government to end shadow flipping and collect data on foreign ownership won’t do enough.
“So we need to freeze things, make sure we understand exactly what’s going on and take steps during that six month period to ensure that British Columbians and Canadian citizens are protected and that we don’t have a giant collapse, because what happens when prices go radically up, they can also come dramatically down and we could have a bubble that bursts and then a lot of people would be hurt by that as well. So, I think it really would be the right idea ot put a freeze on things, it doesn’t mean there would never be any opportunity for foreign owners to buy, but it is certainly something that we have to think about as we go forward in British Columbia, and in Vancouver, Victoria, Kelowna, areas where there are a lot of foreign purchases, whether we want some restrictions on that.”
He doesn’t think a freeze wouldn’t affect trade relations.
“Real estate mogul, Bob Rennie has said we don’t want to impact the Chinese in particular because of a lot of business we do with them, but I hardly find that because a few Chinese billionaires can’t buy multi-million dollar homes in Vancouver, they’re going to stop buying our lumber, our coal, our commodities, etcetera, and also not sell us the commodities that they sell in vast numbers, televisions, cell phones, etcetera. It’s way too big a business for them to be worried about a real estate deal or two going down. So, it really is kind of a ridiculous statement.
Obviously, it’s not aimed solely at any one country, it’s all foreign buyers, it’s not discriminating against one country. If China is more affected by it, so be it, but it’s not in any way, aimed at any one country.”
But he admits, the chances of the Liberals taking on his plan are very slim, pointing to money they get from the real estate development industry.