BC Budget: Taxpayer Debt To Support The Construction Industry – “Every young person out there today understands the challenges of getting into the housing market.”

“Every young person out there today understands the challenges of getting into the housing market. As parents and grandparents, we worry about the struggles our children and grandchildren have trying to save for their first home.
Even with the relief we provide to first-time buyers from the Property Transfer Tax, it is still difficult for many British Columbians to save up enough to make a down payment and still have money left over to cover all their other costs.
That is why, as part of this budget, we are introducing the B.C. First-Time New Home Buyers’ Bonus. It is a temporary, refundable income tax credit for first-time buyers who purchase newly‑built homes effective today until March 31, 2013.
They will receive a cheque for up to $10,000. Just think of the difference that’s going to make.”

[Yeah, it'll almost definitely result in the prices of New Homes purchased by FTBs rising by an effective $10K, resulting in absolutely no net-savings to the purchasers, who will continue to purchase at the very limit of their monthly-payment 'affordability' level. -ed.]
“It complements the measures we announced last week — which included raising the threshold for the existing HST rebate to $850,000, and making a similar grant available for new secondary homes outside the Greater Vancouver and Capital regional districts. Over 90 per cent of all new homes in the province are below this threshold.
Together, these measures serve the dual purpose of giving consumers a break, while supporting the new-home construction sector.”

- BC Finance Minister Kevin Falcon, Budget Speech, 21 Feb 2012

This in a budget that will come in with a spending deficit of about $1 Billion.
Taxpayers are spending borrowed money to support the construction sector.
And note the glib assumption that “every young person” needs to “get into the housing market”.
Next up, assistance for toddlers interested in buying their first condo.
- vreaa

Addendum:
Find the ‘fact sheet’ regarding this bonus here:
2012 First Time Home Buyer’s Fact Sheet
[And see the end of the sheet for the hilarious example that some government wag came up with: a home for $150K! Unfortunately the home has to be in BC, Canada. - ed.]

102 responses to “BC Budget: Taxpayer Debt To Support The Construction Industry – “Every young person out there today understands the challenges of getting into the housing market.”

  1. Aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaauuuuuuuuugggghhhhhhhhhhhh!!!!!

    • I echo that completely.

    • I think everyone here should send the BC government a letter of thanks. It’s hard to imagine a policy that could be more damaging to the resale market, especially for condos. Among the boneheaded policies that we will ultimately pay for, this is small potatoes. So let’s enjoy this rare case where some honest people (always a minority) get a dividend from our corrupt system.

      • So you would say this is the little push that sends the market over the edge? This is the straw that will break the camels back? I think you might be right. No way it was planned that way though. They cannot be that bright.

  2. 4SlicesofCheese

    http://www.theglobeandmail.com/globe-investor/personal-finance/personal-finance-reader/rob-carricks-reader-where-renting-beats-buying-and-its-not-even-close/article2344556/comments/

    Apparently G&M had to disable comments.

    “Comments have been disabled

    Editor’s Note: Comments have been closed on this story because an overwhelming number of readers were making offensive statements about other commenters and/or the individual or individuals mentioned in the story. That kind of behaviour is a breach of our commenting policy, and so the comment function has been turned off. We appreciate your understanding.”

    Hmmm I wonder if it was renters making offensive statements about home owners or home owners making offensive statements about renters.

  3. VREAA, forgive me. I’m going to re-submit my comment from the very end of the last post because it seems so danged pertient to this sorta BS. And because it took a long time to write it and it likely didn’t get many reads sitting at the end of the thread. :-)

    Just a little on-the-ground stuff from my neck of the woods, where my GF and I currently rent a rancher at $1600/month.

    We live between the border crossings on 0 Ave in extreme South Surrey. Five years ago, this area (between 0 and 8 Avenues and the Pacifc and Peace Arch crossings) was, in many ways, a forgotten zone. Some ALR land mixed with solid old homes and cabins on massive lots, with oodles of natural brush and forest mixed in. But in the past few years, all of that has changed.

    We moved here, into one of those older homes, a half year ago. I was stunned at the time as to the level of recent development in this area and how the landscape had changed. But that’s nothing compared to what’s gone on since. BOOM – another hunk of forest gone and another bunch of row homes/townhouses/SFH’s go up. Boom, boom, boom, over and over again. Indeed, I just checked the MLS map view and see there are currently 75-plus homes for sale (90% of which are brand new or halfway built) just in this little neighbourhood alone.

    But what’s happened in the past three weeks, while we were on vacation, is perhaps even more incredible. There were precious few untouched patches of raw land remaining, and probably the biggest of those, in just three weeks, is gone. We’re talking several acres here folks, and what was natural forest/brush is now leveled, void of foliage, and filled with more earth-moving equipment and workers than I’ve seen previously anywhere in the vicinity. I have no idea what they’re going to put there, but this is one large area and could certainly fit a ton of townhouses/houses, particularly if they cram them in as they have everywhere else.

    Now, you gotta understand – this work goes on unabated. Weekends, in the pouring rain, and well into the evening. It just doesn’t stop. And the natural forests have been replaced with a forest of another kind – a forest of Open House and For Sale signs. In fact, I think I’ll get out there and snap some pics later this week. Seriously, for an admitted “bear,” it’s quite the sight to see this building boom not only continue, but ramp up. I’ve read that housing makes up 25% of our GDP, and I’ve gotta say that this little area alone has kept hundreds of workers working and scores of associated businesses in the black, non-stop, since I’ve moved here. But to what end?

    BTW, townhouses in this area *begin* at $400,000. Houses (with virtually no yard) begin at $600,000 for the bare bones and quickly move to $700,000 and more should the buyer want a few amenities. And my god, they slap up these things quickly.

    I don’t really have a conclusion. Just wanted to share a few firsthand observations. Just a wee bit of extra craziness from the land of the popping bubble.

    • Actually I just read it and checked out the area for fun. Spec deals, some agent owned. If my post goes thru, links to some defunct agent web sites. Methinks, sales needed to meet the second phase. Sorry about your trees. Joni Mitchell, et al.

  4. Anyone selling an old house will be thrilled!

  5. A 10K subsidy for people who have no discipline to save money. My tax dollars at work – a subsidy to developers and the construction industry disguised as “assistance” to first time homebuyers.

    • Unbelievable! So the provincial budget gets warped now too. It just figures. Nobody has any answers to the dilemma of prices being out of control except to throw more money on the fire. Does anybody know what happens to provinces that cannot cover deficits and bankrupt by any chance?

    • FTBs include the half-a-million new comers – PRs, TWPs, student visas, and NPRs (employees of foreign companies after our resources, etc) .
      Too much breasts and pea brain.

      • Forgive me but I have no idea what you just wrote. What is a PR, TWP, NPR etcetera? I might not be in the lingo loop but if you don’t mind using the long version…….it would help.

      • My bad. One zero too many.
        PRs = new immigrants who landed here as Permanent Residents
        TWP = temporary work permits
        non-PRs

        This scheme is luring this group to buy their first homes quickly before the dateline set on Feb21, 2013.
        They don’t by resale if they can help it. Instead they go for new homes.

        VMD posted the following at VCI:
        According to a realtor (on the Chinese forum), to qualify for the credit, you must:

        1. Buy or build a new home between Feb 21, 2012 and Feb 21, 2013
        2. Neither husband or wife had owned a primary residence before
        3. Will pay tax in BC in 2011 or 2012.
        4. Use the new home for primary residence.
        5. (“having already enjoyed HST credits” -not sure what he means by this)

        *if purchasing as individual, If income >150k, then 20% of the portion above $150k will be deducted from the credit ;if income >200k, there will be no tax credits
        *if purchasing as a family, if combined income >150k, then 10% of the portion above $150k will be deducted from the credit; if income >200k, there will be no tax credits

      • 5. (“having already enjoyed HST credits” -not sure what he means by this)
        ———————-
        .. .. all PRs even if they do not have an income to declare, do file a tax return in order to claim GST/HST credits.

      • Many thanks for the clarification TOL. Now I know what you were referring to. I just made comments regarding immigration on another thread here. I worry that the program is going to be scaled back if we ever see the kind of unemployment that the US got following their property bubble bust. I just don’t know how the kinds of numbers we see for new immigrants can be sustained if we see double digit unemployment.

    • Banks are still offering new immigrants special rates of 2.49%

  6. pricedoutfornow

    This is a ridiculous subsidy. And why only newly built homes? What’s wrong with older ones?
    This is what happens when lobbyists have too much power with government.

    • This might help. If you know what a non-refundable tax credit is then the refundable version suddenly makes sense. For example, when you donate to a charity you receive a non-refundable tax credit in the value of the donation. This can be used to reduce your taxes payable however it typically only results in a tax savings of 40 to 60% of the contribution because of where the deduction is located on the tax form. You never get back 100% of the donation as a tax credit. In any case, if you had no taxes to pay yet you still made a donation to a charity there is no refund available to you. It is non-refundable. With a refundable credit though, even if you had no tax obligation there would be a check in the mail for the value up to but not exceeding 10K. I don’t know if I am explaining this very well but hopefully it helps.

  7. *groan*

    Why does every taxpayer have to subsidize new home builders? *groan*

    Mind you, it provides a great incentive for FTBs to get a new-build, rather than a perfectly-serviceable resale building. And who wouldn’t go for a new-build when the gov is offering free money to get something new! (after all, everybody wants new!)

    Which means that according to the law of unintended consequences to centrally-planned decisions, existing home stock will drop in price, as FTBs go after new builds which will *pay them* to buy. $10K gets you a 5% deposit on up to $200K! If I couldn’t scrape together any money and wanted to gamble in the ever-rising housing market, I’d take this deal! Fortunately (unfortunately?) I’ve got too much to lose…

    And what the heck does “It is a temporary, refundable income tax credit” mean? Temporary I get, because it’s only good for one year, but “refundable”? Does this mean you have to pay your income taxes first, and then you get a bit of them back? At least that’s more reasonable than just sending a $10K check… Gah, what a load of crap this is…

  8. A pay off to the government’s buddies at UDI (Urban Development Institute) pure and simple. Given the time frame for this credit, this won’t even create new housing supply. Only developments just completed or those at the very end of the development approval process will be eligible. Onni and Bosa are smiling today.

  9. There is a ringing endorsement of the government saying that the province is running out of buyers to keep the scheme going. Just like the stock market once everyone is in there is no more buyers to support the stock price.

  10. wtf is going on, I just read that developers are getting $10,000 for every new home sold. Of course they are just going to raise prices by $10,000 when every citizen is armed with free money from my provincial taxes.

    • I think this little incentive is just to help the few connected ones get out before the shit hits the fan. Everybody knows this market is toast. Think about it. A gift of 10k tax dollars subsidy combined with a 10k discount (or more depending on what the specker might dream up) will just sway enough people to buy some selected properties in time before the crash (er, I mean correction) comes.

  11. I just heard this morning about how other approaches to affordability will be discussed at the following event, Feb. 28th, open to all (sorry I don’t know how just to post the link):

    Affordable Home Ownership in Metro Vancouver

    The next Metro Vancouver Sustainability Community Breakfast will take place Tuesday, February 28th, 7:30 a.m. to 9:00 a.m. at British Columbia Institute of Technology (BCIT) downtown Vancouver campus at 555 Seymour Street, Vancouver.

    The need for affordable home ownership in the region is increasing, with many families and young professionals being priced out of the housing market. Businesses need to attract employees – without affordable homes to purchase in the region we will have trouble competing for talented workers. What are the economic impacts of this? How can we increase affordability and create financial equity to enable mid-income people to purchase a home so they can live and work in the region? Join us to hear about projects, partnerships and innovations that can be part of affordable home ownership solutions.

    Speakers:

    Jeff Fisher, Deputy Executive Director, Urban Development Institute
    Heather Tremain, Principal, Urban Fabric
    Marla Zucht, General Manager, Whistler Housing Authority
    Peter Ladner, Fellow, SFU Centre for Dialogue
    If you plan to attend please RSVP by clicking on the ‘Register Now’ button below.

    For more information about upcoming Metro Vancouver Sustainability Community Breakfasts please visit ourwebsite.

    Sustainability Community Breakfast Affordable Home Ownership in Metro Vancouver
    Date: February 28, 2012
    Time: 7:30 a.m.
    Metro Vancouver: Sustainability Community Breakfast

  12. Is there somebody that can do the math on this? How many NEW homes were sold in 2011 (as an example)? Let’s find the total subsidy amount, and then let’s divide and make it per capita. I would like to recommend to any idiot that buys a new home in the next year that they negotiate a discount on top of the credit in the amount of their per capita provincial taxes that has been taken from them already. I know that I want my household per capita provincial tax contribution back from this boondogle although I’m certainly not buying a house in the next year. Thanks.

    • Not much point in doing the math Ray. We already know the outcome. This idiocy will be proven to have been an effort at bringing forward the last little bit of demand and ushering in the correction sooner.

      Stimulating demand at this stage of the game is as ridiculous as shutting off credit altogether. All tweaking and adjustments will create a hazard now. They waited too long to respond.

    • I did my own numbers and posted it to my Facebook feed to inform whoever I could.

      ‎76,721 homes sold in BC (2011). With 25% of that total being NEW homes at $10,000 a piece going to Developers, that subsidy is worth $192 million. On a per capita basis that’s $44. I don’t know about you, but I’m a bit miffed that my family had to write a cheque to property Developers for $88 in this budget to keep new home prices high for just a bit longer. With the majority of Vancouver being renters (not owners) I would think this is political suicide for Kevin Falcon and the Liberals in the upcoming election.

      • Nice work Ray. Sorry if I sounded dismissive at first. I am just disgusted by the program. Everyone worth his salt knows how these programs play out. It is always the same. The medicine just makes us all sicker. So the Feds are backing away from the R/E stimulus game and the Provinces are now trying to fill the void. Will it be municipalities next?

  13. There were a few similar programs in the US after the bubble burst. An $8k first-time-home buyer credit, later extended to any home buyer, IIRC. Also, a tax break that let big companies offset losses incurred in 2008 and 2009 against profits booked as far back as 2004, home builders being among the biggest beneficiaries. It didn’t even incentivize anything; it was just a great whopping retroactive gift. And it isn’t like stick frame construction is a high tech national treasure that will go offshore or result in the loss of a trove of IP and irreplaceable skilled workers if current builders go bust.

    • As you said though, Ralph, those US programs came AFTER the bubble burst. This just kicks the can down the road a little bit longer and makes the correction that comes all that much worse.

  14. I hear the words “condo bust” loud and clear. I wonder what new provincial tax will be installed once all the 10K subsidies are flushed down the drain with this year’s correction. Keep buying suckers!

  15. I only got this far in the speech:

    Investors are nervous. Consumers are cautious. And rightly so, Mr. Speaker. They’re concerned about their futures and now, more than ever, they’re concerned about rising debt—not just their own, but their governments’ debt. And the days of markets tolerating government overspending are finished.
    That’s the new paradigm. That’s the new reality. And that is the context in which we prepared this three-year budget and fiscal plan. Some people may not agree with our decisions. Some will say we should disregard the bigger
    picture, pay no attention to the turmoil around us, and simply spend more, tax more, and pass the bill to the next generation.
    But British Columbians can see for themselves— that’s the wrong direction.

    .. therefore we’re going to urge consumers to take on more debt, and add to the government’s, disregard the bigger picture, spend more, tax more, and pass the bill to the next generation.

  16. When possible, could somebody please clarify exactly how the “temporary, refundable income tax credit” ‘B.C. First-Time New Home Buyers’ Bonus’ will work?
    Does it mean that, effectively, a down-payment is increased by $10K?
    In other words, does it mean that FTBs can use the $10K credit as though it was money in their hands, to gain that much more mortgage?
    If so, this is insanity… we’ve got yet another layer of allowing people to take out highly leveraged debt with government assistance. This ‘bonus’, CMHC, etc.

    • Renters Revenge

      Blatant handout to the construction industry.

    • I suspect that banks and third party lenders will loan against the tax credit as a contribution to a downpayment or payment of property transfer tax but basically the program is a credit against provincial 2012 tax payable. This credit is a transfer from existing condo owners / sellers to builders and will have the unintended consequence of magnifying the drop in average condo prices – similar to what the Chinese government is doing with their affordable housing programs.

    • If you can borrow against your tax credit you can use the extra money. It is highly unusual though.

    • There WILL be some way to turn this into downpayment, and suddenly you qualify for a 200K condo

  17. Renters Revenge

    It is clear that there are some very small minds running our government. I’ve never seen such an obvious vote buying scheme. Totally repulsive idea.
    Your tax dollars at work.

    • Hi Renter. I disagree, how can this buy votes? The majority of people in this city are RENTERS, not owners. We know this from the stats. Therefore, the majority of people (renters) should be absolutely livid that their provincial taxes are going to Developers and in effect keeping house prices that much higher for that much longer. It’s economics 101 to know that a subsidy of this nature just inflates all new homes by the corresponding amount when the Developer’s marketing team prices the new homes. The fact that the BC govt is doing this is political suicide because the majority should be pissed. The renters know we need a correction in the housing market and the govt pulls this and tries to dress it up in their PDF? They should be ashamed of themselves and let’s hope British Columbians aren’t stupid enough to think they are actually getting $10,000, lol.

      • Hmmmm. Lets see. Bric Resources, Fantasy Gardens, Fast ferries, GST fiasco’s, the Olympics……yeah, voters will fall for it hook line and sinker. Just like always. BC is still as crazy as a bat and the politics are always a sight to behold. Nothing ever changes.

      • But hey, any renters unable to save up $10k can now become owners and ride the rising prices.

        And existing owners need first time buyers entering the market.

      • Ralph Cramdown

        Hi Renter. I disagree, how can this buy votes? The majority of people in this city are RENTERS, not owners.

        But property owners have a much greater propensity to vote in most places. And aspirational renters might vote for it. A policy doesn’t have to appeal to the majority to buy votes. It just has to turn on more people than it turns off, i.e. if this doesn’t help person x, will it offend him so much that you’ll lose his vote based on this issue alone? Most budgets are a grab-bag of stuff that helps a few, doesn’t cost too much, and are fairly inoffensive to the unaffected, er, unhelped.

  18. Btw
    Im not sure if this was posted, but here it is

    6225 Balsam st sold for $1,708,000
    What a dumbass buyer

    • Not necessarily. They could be very intelligent.

      This could be a cleverly calculated gamble. With probability 1/2, housing prices double again and they flip for a $1m profit. With probability 1/2, housing prices plunge and they declare bankruptcy and lose all their assets (of which they have none), or flee to Costa Rica, China, etc.

      If my domestic situation were different, that’s a gamble I would be tempted to take too!

      • Yeah, I spend my idle time dreaming up schemes that either
        (1) short RE, or
        (2) gamble with privatized profits and socialized losses.

        My recent thought was that it might be possible to “scale out” the gamble by recruiting people with nothing to lose to join in. Why not pick up a homeless person in DTES, then formulate a legal contract where they take out a mortgage and buy a house, you split the profits of a flip, he takes the losses, but you promise to buy him 3 meals a day for the next year.

        If only I were a lawyer…

    • homelessindunbar

      Well, that’s a tidy profit considering they bought it for $1.4M last May. Damn….I was hoping the realtor would be proven wrong (she/ he estimated a market price of $1.7M)…..

      • Proper marketing for certain areas will create bidding wars. Realtors pumping and banging their drums will suck these buyers in. In a flooded Van west, I wanna know how this realtor pulled this one off.

  19. I liked how it was aimed at first time homebuyers yet the max. income you could have was 250K. Probably 99% of people fall into that category of making less than 250K. Not much incentive – but more a way to create demand and let developers charge 10K more.

  20. They must be worried about housing inventory. Yikes that’s one heckuva wealth distribution. That takes some stones coming from a fiscal hawk.

  21. Um – - I never thought I would say this – but I think I would vote NDP if I’m still around when the next election comes. This is quite the waste of money. Government borrows money to pay new home development industry. Let the market speak and if you’re worried about cost for purchasers -then prick this bubble.

    • Whoa, there, let’s not get rash. $24 mil is nothing and it’s not like 2400 first time new home buyers are lunging for the market. They are going through incremental stages. Big sales next.
      NDP, shudder the thought.

  22. Anybody know whose bright idea this was?

  23. Unbelievable!

  24. Makes me puke in terms of fiscal responsibility and more government promotion of irresponsibility

    Also… new builds only? In other words, keep tearing up forests and ALR folks. Greater Vancouver isn’t paved over yet. There’s more work to be done…

  25. I suspect it is pay back for the whole development/ RE industry support and also pumping RE is pushing the easy button when it comes to adding stimulus to the economy, future be damned.

  26. Looks like BC wants to keep the “momentum” going.
    Inflating employment in the construction industry has been quite easy in Canada over the last decade, but this only works for so long as history shows. The long term average of the Canadian labor force employed in construction is just under 6%. Right now it is over 7%.
    http://tinyurl.com/7unpzsp

    BC is in absolute crazy land with almost 9% of the working population employed in construction.
    http://tinyurl.com/7x2d9uv

    • Kevin – Thanks. Will headline this chart for further discussion.

    • I notice that in 08 that figure got as high as 10%, Any idea of how many people that actually is? (I don’t know how many work in BC). Kevin, the real question I am getting to is this….if construction employment declined to its long term average in BC as a result of a housing correction, how many people would be unemployed? You seem to be pretty good with charts, maybe you can even estimate the damage off the top of your head.

      This, I think, is what we need to be concerned with now. In the US, real unemployment went above 17% (U6) while the headline rate was also double digits above 10%.

      There is no question that the rising rate of the unemployed created its own downdraft in housing prices as so many people left the workforce all at once. Without a fresh stream of buyers, housing prices plummeted within two years time. As we saw, when the party ended it got ugly very fast.

      Will we have a different experience here?

      I rather doubt that. If our own unemployment rate did not equal and match the 10% US number I would be quite surprised. Again, this is why housing corrections do not (and can not) result in soft landings. No such thing exists.Quite notably, all of this is happening in the absence of rate increases which suggests to me that should the economy falter now that we might actually see two major declines in home prices.

      The first that is about to occur. The second when rates actually rise in 2014. I anticipate that the coming decade should be really stressful for those holding mortgages.

      • The next question we need to ask then is this: If unemployment in Canada gains traction and persists for more than several years as housing prices deflate then how will the government sustain the current immigration targets?

        Those people you see are who we all rely upon to blunt the aging demographic of the baby boomers. It is they who will make up for our low fertility rates. But if unemployment is raging it will be harder and harder to justify the current high levels of immigration. There is a catch 22 in the making.

        Net outcome….a third wave of falling prices coming about in a decades time as a result of retirements in the boomer category. The long ride down in prices could well take more than 15 years to play out before it is done. Which makes perfect sense to me.

        It has taken a decade to inflate this monster to where it is today.

      • Farmer,
        I have estimated that if Canadian employment in construction reverted back to the long term mean, unemployment would rise from 7.6% to 8.5% for Jan 2012 numbers. This is taking into account if everything else would remain constant, but as we all know that would not happen.

        I have not done BC’s numbers but I believe the unemployment rate in BC is 6.9% right now. Off the top of my head if construction employment in BC reverts to the long term average, the unemployment rate could hit 8% with everything else remaining the same. If I get a chance I may run some numbers later today.

      • Thanks Kevin. Your time is really appreciated. Moreso as there are not many analysts looking seriously at the employment outcomes should we experience a bursting bubble. (it is coming without a doubt).

        Most efforts these past months seem to have revolved around one camp of people fretting that a bubble is building while another denies its existence altogether. What is lost in the mix of the disagreement is forward looking analysis and projections should the worst actually occur.

        We should be arming ourselves with data on potential scenarios. That is called planning. The banks do it and those sons of bitches know what we face but will deny, deny and deny right up until the bitter end.

        Lately they are insulting the intelligence of everyone in this country by saying Canadians have borrowed too much (as if this little problem just crept up on them in the nght). They have Chief economists who lecture as though we are all children. Utter crap.

        In many regards I believe we are cheating ourselves by not seriously preparing for the downside that is coming. This discussion needs to be opened up and sites like this and your own are terrific venues to get that subject moving. There is no profit in being ignorant of impending threats and those who would deny any exist hurt the discussion from the get go.

        But there are really just too many god-damned agendas in this country. And there are too few people who have the time and energy to look at the many variables independently and make an attempt to draw a few conclusions for the benefit of an audience that is very interested in what is coming next for the country.

        Let me know if you take a study and it is on your site. I am quite interested in the conclusions you might come too. Construction employment in BC is running 50% above the long run average already. That is totally unsustainable and gives one pause as to just how severe a correction is coming.

        Cheers!

  27. The $10,000 carrot is nothing more than a last ditch effort to keep the Ponzi scheme going. Yet another incentive for people to make the worst financial decision of their lives. You have to wonder what kind of lobbying was done behind the scenes by the banks and construction industry. Sucking the last of the gullible into the financial abyss to make a quick buck before the whole thing blows up is what’s at work here.

    Like Gerald Celente says, “They’ll come up with schemes undreamed of.”

  28. I think the impact of the $10K scheme could be greater than 10 grand. If you use the 10 grand as a downpayment, add 190K as mortgage (CMHC insured of course, or even better, Genworth), and voila, buy a $200K shitbox that never should have existed. Better yet, go round up the identifications of a bunch of dead people and you can help a bankrupt developer buy out his whole condo building…and still have enough money left over to make a sizable campaign donation to the BC Liberals (unless the Falcon prefers brown bags full of cash personally). Welcome to Greece.

    • It is a tax credit. That is at the back end. This is not up-front money. All it does is reduce your taxes payable at tax time and if there is a surplus you get a refund.

  29. http://watch.bnn.ca/#clip623185

    Mortgage Fraud, 400 million worth of mortgage fraud last year, and that is only the cases they found.

    Also fraud levels increasing year over year. Who says Canadian system is more sound.

  30. Inmates running the asylum . . . I mean, developers running the government . . .

  31. This stuff fascinates.

    First time new home buyer bonus was tried in Pittsburgh, some success, but they had a 3 year commitment from the buyer, and their housing market had already bottomed. 2009/10
    greaterpittsburghnewhome.com/NH_Winter10_FederalHome.html

    NSW, Australia tried it for new homes only and exempted used homes. Opposition said it trapped new buyers in over their heads and prevented access to less expensive property. The program benefited marginal players in an already inflated market.
    raineandhorne.com.au/collaroy/cms_lists/358/cms_pages/6741

    US tried borrowing incentives which lowered down payments in 2005, 2006 when the market was also at its peak. When mortgage rates reset a few years later this began a historic period of default called the Subprime Mortgage Crisis.
    -wikipedia

    While the market peaks, BC government aids friends in real estate with an incentive for first time new homebuyers, at the same time the government dumps $700m of its own real estate and reduces tax incentives for small business. Timed to complement the Iran Oil Embargo, the BC Liberal Carbon Tax will also rise in July to 7.67 cents per litre of gasoline (the funds reinvested to ship oil to China that they may also burn gas.)
    various vancouver media

    The entire new home program is only worth $24m, a pittance when compared to the enormous potential for defaults in a two block radius just about anywhere else.

  32. Good discussion/thoughts; Thanks, all.

  33. The irony would be delicious if not so tragic. A big, juicy tax credit to entice youngsters to buy their first home – at the very moment when the worst decision they could make is buying their first home.

    This is groupthink at its very worst. I think the politicians, developers, lenders, real estate shills and constructionistas who came up with this plan honestly believe they are helping “young families”. It serves their ends to believe that, so they do. That’s what makes such policy decisions so insidious. When they blow up, nobody need admit they made a mistake. Nobody need accept blame. They were only trying to help. One can imagine the eventual iron-clad justifications:

    “We weren’t goint to sit there while young families were priced out of the market.”

    ” We had to to something.

    The message being that the critics A) hate young families, and B) sat there doing nothing while others (those of us with consciences!!!) tried to help. Doesn’t get much more iron-clad than that. Being wrong means nothing in the face of such sentiments.

    • The same activist government thinking will really explode once the real estate crash becomes apparent to all. Why is it that government programs that do damage to the very people they are trying to help are never held to any accountability? It’s no different than the CMHC, they were created to make housing affordable. The CMHC has achieved the opposite by enticing so many otherwise unqualified buyers into the market, helping bid up home prices to insane levels.

      Peter Schiff said it best, “The government breaks your leg, hands you a crutch and says – ‘See, without me you couldn’t walk.’”

      • We are being herded Loomis. Just like sheep.

      • CMHC could just as easily be the solution to the problem of excessive credit in the mortgage market. Imagine, for example, if they restricted total mortgage amounts to that justified by rents. Government intervention is the only way to prevent a credit bubble. There is no other mechanism available. Left unregulated (like the derivatives markets in the U.S., Credit Default Swaps, another frightening example) the financial markets will pump endless credit to consumers (and into increasingly leveraged bets of their own). So crying for the government to get out of the way accomplishes nothing. It’s not just mortgage debt being pumped to consumers, take note, it’s also LoC and credit card debt. Those have nothing to do with CMHC. The problem is much bigger than that.

        If you want affordable housing, you want the government to act to retain sanity when credit is issued. That CMHC does the opposite is by design. Regulatory capture by the private sector is the reason CMHC acts in coordination with the private sector.

  34. A bit off topic but can somebody shed light on the fact that BC’s dept is approaching 60 billion ( http://fullcomment.nationalpost.com/2012/02/21/bc-budget-2012/ ) which is about half of Greek’s bailout package. Are we a Greece in the working?

    • Holy Shit Leo! Debt is out of control there. I had no idea it was THAT bad.

      • It all reduces to, “The Best Democracy Money Can Buy”, Farmer… and cheers for your prior kind remarks… Canmore? Possibly… but I’ve really got my ViewFinder set on FairmontSprings… there’s an EPIC picture just begging to be made there, when the ‘light gets right’. It’s so good I may even hire a few extras to complete the semiotic/give it that ‘FineArt’ patina…

      • Looking forward to it Nemesis. I don’t know the Fairmont market at all but gather most of the Okanagan, Kootenay’s and Rockies region are all suffering from insanity pricing overload. Ski hills will kill even a healthy budget. I even heard houses in Rossland were going North of 300k. Rossland for GODS sake!!! It was not so long ago they were begging to give them away. Ten K got a decent place. Is the whole world insane now?

      • So anyway, I decided to look at Rossland stats just for the hell of it. Why just believe any old rumour right? And I looked in to Century 21 listings and found that 45% of the homes listed for sale there are in excess of 300,000 dollars. One is nearly a million. Who knew? It really has gotten to be that bad but it goes to show just how over the top pricing has gotten all over the province, not just in Vancouver.

        So much for cheap get away’s in the mountains. Skiing sucks.

    • We are at AAA rating same as Greek before things go bad.

      • So is that approximately 13,500 dollars debt per citizen, Leo? 13.5k for every man, woman and child. That just seems too high. I sometimes have a math problem but that is what it looks like to me. Bring on the Troika and the IMF…..BC could soon go all Greek if you ask me.

    • $60B in debt would put BC in the same territory as Ontario and the Maritime provinces in terms of Debt/GDP @ roughly -30%. For comparision, Saskatchewan is around -6%; Alberta about +10% (negative debt); Quebec around -50%

  35. Bugs Bunny said it best – ” they are total maroons”.
    Falcon says he is going to balance budget in time for the next election.
    In his dreams. Premier Snooki is way out of her depth.

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