Enjoy, but don’t be this guy. -ed.
[cartoon by Art Young, 1920]
Enjoy, but don’t be this guy. -ed.
[cartoon by Art Young, 1920]
The federal government, concerned about sky-high real estate prices in Vancouver and Toronto, announced Friday it will make new buyers come up with a heftier down payment starting in mid-February.
The move was part of a three-pronged effort aimed at lowering risks in the housing market, though Finance Minister Bill Morneau rejected the suggestion that Ottawa fears a real estate “bubble” in the two cities.
“We’re not talking about bubbles here,” he told reporters. …
“We are talking about ensuring that Canadians take the right approach to investing in a home. It’s to protect the market for the existing homeowners and it’s to protect new home buyers as well, so they have the appropriate amount of equity in their home.”
Morneau was asked by The Vancouver Sun why the federal government is targeting first-time buyers in cities like Vancouver, while doing nothing to deal with the alleged impact of speculators and foreign buyers driving up prices.
“You know, we are taking measured approaches to make sure we protect Canadians,” he replied.
“We are looking at how we can ensure the Canadians who already have homes recognize there is a stable housing market, and those people that are aspiring to have homes can be assured that their biggest financial investment is in a stable and effective market.”
Details of mortgage changes: [Effective February 15 of 2016, the minimum down payment for new Canada Mortgage and Housing Corp.-insured mortgages will jump from five to 10 per cent – though that extra five per cent will apply only to home purchase prices exceeding $500,000. In other words, the current minimum payment on a $500,000 house would be $25,000. If the house costs $600,000 a 10 per cent charge is levied only on the extra $100,000, bringing the minimum payment to $35,000.The new rule will not apply to Canadians who already hold mortgages, and doesn’t impact sales of properties of $1 million or more because they already require 20-per-cent down payments. Morneau, in a statement to reporters, made clear his concern in targeting homes in the $500,000-$1 million range was Vancouver and Toronto.]
“We are looking at how we can ensure the Canadians who already have homes recognize there is a stable housing market.”
Why does that even come up?
What’s with “protecting the market for the existing homeowners”?
Doesn’t a sound market inherently protect its participants?
If we really aren’t “talking about bubbles”, if prices really are driven by fundamentals, if there really is a “stable housing market” in Vancouver, why the need for any of these reassurances?
How many years has it been since Vancouver RE buyers have “taken the right approach to investing in a home”?
And, who can blame them? – how many years has it been since our government sensibly priced the risk of borrowing money?
“It’s a little disingenuous,” said Tom Davidoff at UBC Sauder School of Business. “They really mean they want to protect themselves” from a potential housing market meltdown spurred by imprudent buyers.
“If you have to put 10 per cent down on a house over $500,000, that doesn’t sound like the most crazy thing I’ve ever heard,” Davidoff said. “If people are like lemmings buying houses, when interest rates go up it protects them from jumping off the cliff.”
But that doesn’t place housing more in reach of home buyers or renters, Davidoff notes.
“It makes me nuts that nobody’s acting on the more obvious issue — that there’s an affordability problem. Trudeau should really have to answer for his lack of affordability policy. I’m a little mind-boggled by the lack of leadership there.”
– The Tyee, 12 Dec 2015
“A Craigslist user has recently listed a holiday gingerbread house for sale with a steep asking price of $4.5 million.
The charming one bedroom cottage is located in the city’s West End and according to the ad, it’s one square foot in size.
The cottage is quite colourful made from gingerbread pieces and icing with a candy-covered exterior.
The baking sheet on which its stands is unfortunately not included in the sale but the seller claims that it’s an “investor’s dream” and is only asking for “serious buyers.”
The gingerbread house is still up for grabs but only for a few more weeks, as it will be demolished on Jan.1.”
– from Karina Nowysz, The Daily Buzz/Yahoo, 4 Dec 2015
Vancouver’s real estate market has never been hotter, which is why the Vancouver School Board has decided to sell off the playground and soccer field at Lord Allison Junior High.
“We were getting offers three times over asking!”
– Howard Bleeth, Vice-Superintendent, Vancouver School Board
“It was a no brainer and it’s very exciting for us to finally, like everyone else in this city, get in the real estate game,” said Vice-Superintendent Howard Bleeth.
When asked if he was concerned about the well-being of the students at Lord Allison, Bleeth responded by saying: “Sure, it’s too bad these kids no longer have a playground to play on at recess, but ultimately they understand … they understand that this is Vancouver and nothing is more important than real estate.”
Peter Oldring spoke with Bleeth to learn about his plan to sell off more playgrounds and why he thinks gymnasiums might be the next hot sale.
Some great lines:
“Sure, it’s too bad these kids no longer have a playground to play on at recess, but ultimately…they understand that this is Vancouver and nothing is more important than real estate.” – ed.
Skyrocketing housing prices in Canada’s cities, most dramatically in Vancouver, threaten the cohesion of our society, argues Nobel laureate and former World Bank chief economist Joseph Stiglitz. …
“It’s the same phenomenon happening in New York,” he said. “We attributed it maybe to Russian oligarchs buying multimillion-dollar apartments in huge buildings… driving up rents, making it unaffordable to live in the city.” …
“There are very significant benefits to creating communities with diversity, diverse incomes and other forms, that cannot exist if we price ordinary people out of our cities.”
In Greater Vancouver, the average residential sale price was about $947,000 in October, and for Greater Toronto it was roughly $631,000. Excluding both areas, the national average price was just over $339,000.
For Vancouver, it amounts to an average home price that is 2.79 times greater than the national average. The October ratio is Vancouver’s second-highest on record, eclipsed only by a peak of 2.91 reached in February of 1995. For 76 consecutive months, Vancouver’s price-gap ratio has run above its 35-year average.
– G&M, 18 Nov 2015
The Canada Mortgage and Housing Corp. has finally determined that Vancouver’s real estate prices are “overvalued”. The housing corporation has consistently refused to peg the sky-high housing market on the west coast as excessively frothy or due for correction. It contends that underlying fundamentals justify and support Vancouver’s crazy housing prices, and earlier this week, CMHC officials asserted the region offers a range of affordability in its housing stock. …
Interest rates, and thus mortgage rates, are expected to start rising in late 2016, “contributing to a modest slowdown in housing markets”.
Note the adjective “modest”. CMHC explains: “Underlying fundamentals suggest that the demand will be well supported going forward (with sales) likely to retreat slightly to still-elevated levels, while prices are expected to increase at a slower pace over the forecast horizon.”
So, housing prices that have grown by 9.2 per cent this year are expected to increase only by three per cent next year, and 2.1 per cent the year after.
After 15 years of almost uninterrupted bull, few are ready for even the slightest pullback in housing prices in Vancouver. – ed.