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April 22, 2018 | Worsts

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.

When the official numbers emerge in a week or so, the extent of social engineering will become obvious. Vancouver is pooched. Socialism doesn’t work. You cannot make things cheaper by taxing them more. Every politician in Canada should be watching, taking notes, and never forgetting. One of our great cities is in trouble, largely of its own making.

March was a mess. April will probably be worse. A silent spring on the left coast.

Consider the recent stats coming out of one of the most expensive and petulant housing markets in North America:

  • Detached house sales in the city are sitting at a 27-year low. Fewer than 140 homes changed hands last month, toppling 44% from a year ago.
  • As sales plunge, listings decline. Sellers are “confused”, the real estate board boss says. “They’re just holding on, taking a wait-and-see approach.”
  • Sales for the entire urban region are scarcely better, falling 37% from last year.
  • There haven’t been this few properties for sale since the end of the credit crisis. That has helped keep prices from collapsing along with sales. But this will change when owners understand the market’s about to get a lot worse.
  • Condo prices have shot high with the sales ratio sitting far about that of detached houses, thanks new mortgage rules. What was affordable no longer is. Meanwhile investment dollars have been driven away by the empty houses tax, the luxury property tax, the anti-Alberta speculation tax and the 20% anti-foreigner tax.
  • In the first 90 days of this year, a mere 350 houses sold in YVR, the lowest ever. Worse that during the darkest days of the financial crisis.

“It’s going to be a very dry year,” realtor Allan Angell told his clients the other day. “Our government continues to steal the equity from our houses.”

Angell has been compiling stats for more than 30 years, back to the mid-Eighties. What he’s just published is at shocking odds with the subdued story being told by the Great Vancouver Real Estate Board. “We saw less demand from buyers and fewer homes listed for sale in our region in the first quarter of the year,” the board admits. “High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today.”

But only by putting this in historic context can you see the damage now being wrought by the perfect storm of monetary policy, regulatory overkill and elected morons.

  • West Vancouver. Average sales for a March over 34 years have been 77. The worst-ever March saw 40 sales – until now. Last month just 26 occurred.
  • North Vancouver. Average sales over the last three decades for a March have been 141. The worst March on record had 79 deals. Last month there were only 70.
  • On the Westside the three-decade March average for sales is 182. The worst month ever had 94. This March the number was 58.
  • Greater Vancouver. The March average for the whole region is 1,415, with the worst recorded total being 1,036. But last month just 757 sold – a precipitous drop of 46.5%.
  • Finally, unsold inventory of detached luxury houses is mounting fast. For example, only 3% of the 117 properties worth more than $6 million have sold this year. So, 97% linger.

This is the start, not the end. The impact of Comrade Premier Horgan’s market-killing plan has been largely psychological so far, as the spec tax is just being legislated. Sentiment has turned negative against BC almost everywhere outside the province, since the notion of seriously taxing long-time property owners just because they have Alberta or Ontario license plates is anti-Canadian. Ripping off buyers coming in from other countries with a massive 20% surcharge looks xenophobic and tribal. It makes BC seem like a backwater economy. The river of money that jurisdictions like Florida and California welcome to help pay for local services, is slowing to a dry trickle in the Lower Mainland and on the Island. Meanwhile mortgage regs are pushing demand into condos, escalating the debt of newbie buyers.

Sales go first, prices later. The only brake on valuations now is the paucity of listings. When it becomes clear there are several years of NDP incompetence, rigid ideology and trial-and-error legislation ahead, sellers will be scrambling to get out. Mr. Angell will have many more ‘worsts’ to record.

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April 22nd, 2018

Posted In: The Greater Fool

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