Tuesday, May 31, 2011
Monday, May 30, 2011
Commercial property owners near Richmond’s Canada Line who got caught in a “hot zone” of frenetic land speculation will be getting a new tax break.But the same tax break won’t be coming for Vancouver landowners caught in the same situation.The province is proposing new legislation that will only allow Richmond – not other municipalities – to give full or partial exemptions of city taxes to dozens of businesses whose land values soared in a once-commercial area that Richmond has designated as a future downtown residential zone...Councillor Raymond Louie said he doesn’t believe Vancouver needs to give the kind of tax relief that Richmond petitioned the provincial government for.He said the city helps keep commercial taxes reasonable by averaging land values over three years and by discouraging speculation with its system of making developers give back the city some of their profits from land-value increases that are created through rezonings.
Friday, May 27, 2011
Wednesday, May 25, 2011
|For the composite index, the 12-month gain in March was 4.1%, an acceleration - the first in 9 months - from 3.8% in February. The largest 12-month rise was 7.5% in Montreal, followed by 7.2% in Ottawa, 6.4% in Halifax, 4.7% in Vancouver and 3.9% in Toronto. Though Toronto's 12-month inflation was the smallest, it was up from February, as were Montreal's and Ottawa's. Twelve-month inflation decelerated for a tenth consecutive month in Vancouver and a third consecutive month in Halifax. Calgary prices were down 3.3% from a year earlier, for a sixth consecutive month of 12-month deflation.|
Seasonally adjusted data from the Canadian Real Estate Association show April home sales down from March in the major urban markets. However, market conditions were little changed - balanced for the country as a whole, a little tight in Toronto and Vancouver.
Teranet – National Bank House Price Index™
The historical data of the Teranet – National Bank House Price Index™ is available at www.housepriceindex.ca.
The Teranet–National Bank House Price Index™ is an independently developed representation of average home price changes in six metropolitan areas: Ottawa, Toronto, Calgary, Vancouver, Montreal and Halifax. The national composite index is the weighted average of the six metropolitan areas. The weights are based on aggregate value of dwellings as retrieved from the 2006 Statistics Canada Census. According to that census1, the aggregate value of occupied dwellings in the metropolitan areas covered by the indices was $1.168 trillion, or 53% of the Canadian aggregate value of $2.207 trillion.
All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005.
1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada.
Tuesday, May 24, 2011
...as long as you ignore the parts that are unaffordable, at least according to condo marketeer and dark-rimmed rose-coloured-glasses-wearing Bob Rennie (emphasis mine):
Mr. Rennie, who commissions research on real-estate trends for an annual talk to the industry, said that once the skewed prices paid by a small group of mostly mainland Chinese buyers in Richmond and the west side of Vancouver are removed, housing prices are comparatively reasonable.As well, the numbers indicate that only about 1 per cent of those high-end buyers are non-resident investors.“When you’re looking at the numbers, you have to build a fence around the west side, where there are external forces operating that have nothing to do with local forces,” Mr. Rennie said.Yes, he said, the sale prices on those houses have increased dramatically in the past year.But that top one-fifth of the market operates in its own world and has almost nothing to do with what is happening with real estate in the rest of the region that is connected to the local-buyer market, he said.
Friday, May 20, 2011
Wednesday, May 18, 2011
The speculative mania in Vancouver RE had its roots in the early part of last decade. Vancouver housing was already pricey by Canadian standards, the good-weather premium was baked in. Things really took off after 2003, when very low interest rates allowed home prices to divorce themselves from fundamentals such as local incomes. This effect occurred in all major Canadian centres, it was a monetary and not a local effect. Through 2004, 2005, 2006, 2007, local Vancouver speculators threw themselves onto the fire, borrowing large amounts to buy primary-residences and ‘investment’ properties at prices that were only justifiable if you thought that prices would continue up forever......Canada’s policies of multiculturalism encourage people to celebrate their differences. This is hunky-dory when everybody is rich and has adequate resources; it is easy to celebrate your neighbour’s good fortune when you are experiencing similar luck. But, if you put the economic screws on a society that has been encouraged to emphasize difference, it is probably more prone to developing ethnic fault-lines than a society that puts more effort into celebrating similarities.There has been more and more media prominence given to foreign buyers recently. Local politicians such as Peter Ladner are pointing to this group as the cause of our lofty prices. We are concerned that many are going to be getting their wires crossed by associating foreign buyers with the existence of the bubble. There is a very real subsequent risk that many of those who suffer the consequences of the imploding Vancouver RE bubble will mistakenly blame foreign buyers and, by extension, specific ethnic groups, for the whole phenomenon, and for the inevitably devastating outcome.
Monday, May 16, 2011
Buyers from mainland China are leading a wave of Asian investment in Vancouver real estate as China tries to damp property speculation at home. Good schools, a marine climate and the large, established Asian community as a result of Canada’s liberal immigration policy make Vancouver attractive, said Cathy Gong, who moved from Shanghai to the Shaughnessy neighborhood on Vancouver’s Westside about three years ago.“The schools here are the best and there are a lot of Chinese people here,” said Gong, whose son is in sixth grade at Shaughnessy Elementary School. Eastern Canada wasn’t an option because “I cannot bear cold weather,” Gong said. Vancouver has the second-largest immigrant Chinese population in Canada after Toronto.
While emerging economies are having difficulties absorbing large private flows, advanced economies have often misallocated surges in yield-insensitive gross claims. In Canada, as elsewhere, large capital inflows will require vigilance from public authorities and private financial institutions. Financial history, particularly during times of large power shifts, is rife with examples of booms stoked by dumb money that turn good situations to bad.
The possibility of greater momentum in household borrowing and spending in Canada represents an upside risk to inflation in Canada. The persistent strength of the Canadian dollar could create even greater headwinds for our economy, putting additional downward pressure on inflation in Canada.
Saturday, May 14, 2011
There are also risks with future "liquidity events". Housing market recessions are often accompanied by illiquid marketplaces where houses take significantly longer to sell than in normal times. If the above risks occur and cash is needed, or the house needs to be sold due to relocation or other life events, it may not be possible without selling at a steep discount.
Thursday, May 12, 2011
ToHon. Jim FlahertyYour MP's name hereSirs,I am writing you supporting potential changes to mortgage financing rules in the upcoming year. As you are undoubtedly aware, the average Canadian household debt to household income ratio has increased significantly in the past number of years and has now exceeded that of the United States. This was made possible by historically, and unsustainably, low interest rates on mortgages. As has been shown in other OECD countries, there is some evidence to suggest that households are primarily concerned with their short-term financial health -- the ability to service today's debt with low interest rates -- and less concerned with their long-term financial health -- the inability to service service tomorrow's debt with high interest rates. I have not seen any data or arguments to suggest that household debt will start decreasing in the coming year as long as interest rates remain low. My concern is that without further tightening of mortgage financing rules, Canadians will continue to take on debts that are unsustainable in the long-term.While I am a believer in free markets, the growth in household debt is not sustainable when interest rates rise and I am not confident households will start saving while debt is so "cheap". If measures are not taken sooner rather than later, the resulting overhang of debt will put Canada at a distinct disadvantage relative to its trading partners, whose households have started to rebuild their balance sheets and will be in a much better position to weather the inevitable interest rate rises in the coming years.SincerelyYour NameYour Address
Dear (redacted):Thank you for the correspondence of January 6, 2011 regarding Canada's housing market. Please excuse the delay in replying.The economy remains our Government's top priority. Although Canada is still recovering from the impact of the global economic recession, we have emerged stronger than most other countries. We are helping to support both economic growth and job creation through Canada's Economic Action Plan and through important tax relief for Canadians. Furthermore, we are encouraging responsible home ownership through measures to help first-time home buyers.Canada's strong housing sector, especially our traditionally prudent mortgage market and responsible lending practices, has also been important to our economic recovery. Unlike the citizens of other countries, such as the United States, Canadians did not face mass foreclosures on their homes, and our banks did not require taxpayer bailouts due to turmoil in the housing market.A home is a family's most important investment, and a stable and secure housing market keeps our economy strong. That is why our Government continually monitors the housing market, ready to take careful steps to ensure its ongoing stability.In 2008, and again in 2010, our Government took proactive steps to protect and strengthen the Canadian housing market. In 2008, we announced measures reducing the maximum amortization period for new government-backed mortgages to 35 years, requiring a 5-percent minimum down payment, bringing in new loan documentation standards, and requiring a consistent minimum credit score. In 2010, we introduced additional adjustments requiring buyers to meet a five-year, fixed-rate mortgage standard, lowering the home refinancing amount that financial institutions can offer from 95 percent to 90 percent, and requiring a 20-percent down payment to non-owner-occupied properties purchased for speculation.Recently, we announced further important and prudent measures to encourage Canadian families to make sound investments in their homes. First, we reduced the maximum mortgage amortization period from 35 years to 30 years for new government-backed insured mortgage (that is, for mortgages with loan-to-value ratios of more than 80 percent). This measure will significantly reduce the total interest paid by Canadian families over the lifetime of their mortgages. It will also allow Canadians to build up equity in their homes more quickly and helps them pay off their mortgages before retirement.Second, we lowered the maximum amount lenders can provide when refinancing insured mortgages from 90 percent to 85 percent of the value of the property. For example, for a home valued at $300,000, refinancing at 90 percent would allow the homeowner to access up to $270,000 whereas refinancing at 85 percent would provide the homeowner access up to $255,000. The lower refinancing limit means homeowners will keep an additional $15,000 in equity in their homes and limit the repackaging of consumer debt into mortgages guaranteed by taxpayers.Third, we withdrew government insurance backing on home equity lines of credit (HELOCSs). Taxpayers should not bear any risk associated with such consumer credit products. These risks should be managed by the financial institutions that offer these products.These measures underline our Government's continued action to protect the stability of the economy by ensuring lenders' practices are sustainable and the investments of Canadian families in their homes are secure. This will decrease the interest payments of Canadian families by tens of thousands of dollars over the life of a mortgage, helping to improve the financial well-being of Canadian households.Our Government's ongoing monitoring and sound supervisory regime, along with the traditionally prudent approach taken by Canadian financial institutions to mortgage lending, has allowed Canada to maintain a strong and secure housing market.Thank you for communicating your concerns.SincerelyJames M. Flaherty
Tuesday, May 10, 2011
The buyers' strike of Australian property sought by a tax reform group last month has proven to be a fizzer, precisely because some people don't like the idea of lower house prices.Online activist group GetUp! decided not to pursue a strike of home purchases to protest at the lack of affordability in the housing market because its own members did not like the idea."While the issue of housing affordability is clearly an issue that resonates with plenty of people, GetUp! members don't support a boycott campaign," wrote Kelsey Cooke, online community co-ordinator for GetUp! late last week."Over the course of the last couple of weeks, we surveyed a random segment of our membership to gauge support - only 10 per cent strongly support the campaign, and more than half the surveyed members opposed this campaign altogether."
Saturday, May 07, 2011
- There were 3 million people in BC in 1986.
- 676,000 people died in BC since 1986.
- Approximately 1 million people out-migrated from BC since 1986.
- The population of BC now stands at around 4.5 million
Friday, May 06, 2011
Mortgage rates are near all-time lows but for the best deal, move to British Columbia.
The province has Canada's most expensive housing but its residents are getting rockbottom rates thanks to a ferocious battle between B.C.'s credit unions and the banks.
B.C. home prices, Vancouver in particular, have long outpaced the rest of the country. The Canadian Real Estate Association said nationally home prices were up 8.9% in March from a year ago, but take out B.C. and the percentage shrinks to 4.3%.
The credit unions are another factor behind the higher prices in the province -loans from credit unions are as low as 3.64% on a five-year fixed rate closed mortgage. Canadians in other provinces, even hard negotiators, are lucky to get 4.19% from big banks...
But bond yields have dropped 30 basis points since April 11 and the banks have been slow to compensate for the situation, waiting to see if rates go back up. Mr. McLister says the banks raise rates more quickly than they lower them."We just have retail deposits and that's what we use for funding," says Norman Krannitz, vice-president of treasury of Coast Capital. "We looked at our deposits rates and they weren't going up so we decided to ride it out. We love the business we are getting."
Home Capital Group made a strong return to uninsured mortgage lending in the first quarter, after scaling back considerably over the last year to avoid excessive losses from risky loans...[CEO Gerald Soloway] said the company is being cautious when considering loans that will go toward properties in Vancouver or downtown Toronto, because the markets are showing signs of overheating. The company would rather lend in a stable market, than one that is posting swings in either direction.
Monday, May 02, 2011
The Hamilton students sampled the predictions of 26 individuals who wrote columns in major print media and who appeared on the three major Sunday news shows – Face the Nation, Meet the Press, and This Week – and evaluated the accuracy of 472 predictions made during the 16-month period. They used a scale of 1 to 5 (1 being “will not happen, 5 being “will absolutely happen”) to rate the accuracy of each, and then divided them into three categories: The Good, The Bad, and The Ugly...The top prognosticators – led by New York Times columnist Paul Krugman – scored above five points and were labeled “Good,” while those scoring between zero and five were “Bad.” Anyone scoring less than zero (which was possible because prognosticators lost points for inaccurate predictions) were put into “The Ugly” category. Syndicated columnist Cal Thomas came up short and scored the lowest of the 26.
When I wrote the first edition of The Return of Depression Economics, I was reacting in large part to the Asian financial crisis, which I thought could presage similarly difficult crises here in America. Sadly, I was right.But what made Asia so vulnerable then but not so vulnerable now? Even then, the best available stories ... focused on issues of balance sheets and leverage. And it’s now standard to focus on household leverage as a key part of what went wrong in 2008: