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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

February 14, 2018 | Orange Crush

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Poor Van. What a perfect storm brews. According to high-flying local brokerage Angell Hasman, it’s already here. Next week it gets worse. After that, the world-famous stoner West Coast smirk may be gone foreveh.

Here are some facts AH’s clients recently received under the headline, “The Truth about the Real Estate Market in 2017.” And what a truth it is… completely at odds with the meme carried by the mainstream media.

  • Total sales in West Van were the 3rd lowest since the 1980s. In North Van, the 5th worst year in three decades.
  • For thirty years sales on the West Van waterfront averaged 21 annually. Since the summer of 2016 there have been only 7. Gulp.
  • Selling prices are down between 10% and 12% this year
  • In January an average 54 houses sell in West Van. This year there were 3.
  • In North Van monthly sales have dropped from an average of 88 to 11; in Vancouver West, from 121 to 18.

What’s caused the collapse? “Government interference,” says AH. “The goal has been to drive the market down.” The anti-foreigner 15% tax was botched, he adds, while the property purchase tax was being raised. “The NDP and Green Party are now in power and Chinese buying has almost stopped. The real estate board has failed to inform the public or the government of how bleak the market really is.”

But it’s not just Chinese caught in this tax trap. “One example of tax costs: A lovely English lady lived here for years,” says the brokerage, “and was also a resident of England.  She made an offer of $2.5 million on an apartment and the total tax was $428,000.”

Tax, tax and more tax. It’s the orange crush way to squish a market, and next week’s NDP budget will bring more with the advent of a province-wide speculation tax. It’s the kind of levy that when used in Ontario decades ago, killed house sales and blew up prices virtually overnight.

The Left Coast Dippers made it clear in the Throne Speech this week that it’s coming. “Safe, decent housing is a right that is under threat by speculators, domestic and foreign, who seek windfall profits at the expense of people who work, live and pay taxes in B.C. The first step must be to address demand and stabilize B.C.’s out-of-control real estate and rental market.”

The specifics will come on Tuesday, but word is the tax will be a straight percentage of the value of a property if held by an owner (or related entity) for less than a specified period of time. Add that to the empty houses tax, the foreign dudes tax, the property tax increase, the federal stress test and rising mortgage rates. This is more than any market can take, especially one held together with the gossamer threads of FOMO and propaganda.

“I have heard some true horror stories on valuation declines in the high end,” says a long-time YVR financial advisor to the well-heeled, “but given the fact that the real estate industry keeps all the local newspapers, magazines and radio stations in business with advertising, it’s all Fake News when it comes to facts. It’s obscene that consumers can’t get data to make informed decisions as you have stated so many times.  Can’t wait for Zillow to show up!”

By the way, this is what the local realtors said in announcing results for the same month Angell says was a total bust:

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,818 in January 2018, a 19.4% increase from the 1,523 sales recorded in January 2017, and a 9.8% decrease compared to December 2017 when 2,016 homes sold.

Last month’s sales were 7.1% above the 10-year January sales average. By property type, detached sales were down 24.8% from the 10-year January average, attached sales increased 14.3% and apartment sales were up 31.6% over the same period.

“Demand remains elevated and listings scarce in the attached and apartment markets across Metro Vancouver,” Jill Oudil, REBGV president said. “Buyers in the detached market are facing less competition and have much more selection to choose.”

But, poor YVRlanders, don’t just blame Comrade Horgan or the Fake New Realtors. Save some hate for the former Christy Clark government’s nutty idea of making houses more affordable by giving people downpayments. A study by the provincial real estate association’s economist (Cam Muir) discovered the obvious – these interest-free and payment-free loans encouraged moisters to spend more, forcing real estate prices higher. In the first nine months of last year, it says, the scheme added 0.55% to the price of an apartment and 0.57% to townhouses. Yes, that’s only about $4,000, but it helps illustrate a simple fact: government just makes stuff worse.

Any doubt should vanish Tuesday.

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February 14th, 2018

Posted In: The Greater Fool

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