My interest is in the future because I am hoping to spend the rest of my life there.
— Charles Kettering
Jay & Brenda News
Hope that 2016 is looking good for you. We've been following CNBC stock and financial news so have had lots of confusion on how the New Year is looking to us. Hence the delay in checking in with the newsletter. The real estate action in Vancouver in December 2015 was more of the same...higher prices, bidding wars, lack of inventory. The fall off in the stock market and Canadian commodities has been triggered by the slowing Chinese economy. It affects us in Vancouver because thanks to the open door and the red carpet rolled out for unfettered, unchecked investment from China by the federal, provincial and municipal levels of government our economy is dependent on whether those investments continue.
We are holding our breath to see if the upper-middle class buyers can continue to get their funds out of China and whether there is money left over from their stock market crashes to buy homes. What we hear is that many investors are taking their savings out of the country to convert into hard currencies before the Yuan Renminbi is further devalued or the government decides the money should be reinvested in China. So far there is no indication of a change in the policy regarding overseas cash flow.
Anecdotally it appears to be more problematic for the super wealthy or powerful to send their fortunes overseas without attracting negative reactions from the President who is holding corruption charges over the heads of anyone who is not onside with him. Earlier in the cycle personal fortunes of the size we saw coming to Canada from a Communist economy were almost certainly generated above and below board.
Interestingly, the New York Times series on Chinese investment and immigration in the US states that "The government is loosening the rules for corporations, too. Beijing now allows insurance companies to invest as much as 15 percent of their assets overseas, helping drive a surge in commercial purchases.
Chinese companies have been buying stakes in American trophy properties like the General Motors Building and the Waldorf Astoria in New York...
But the highflying deals may have only just begun. By the end of last year, Chinese insurers had only 1.44 percent of their money overseas..."
An unintended consequence of Chinese ownership of upscale venues that are used by governments and corporations with proprietary information they don't want shared is the fear of cyber espionage. At the Waldorf Astoria the US government has security concerns about the $100 million dollar renovation that is planned now that it is owned by the Angbang Insurance Group of Beijing which has close ties to the government and Communist Party. Angbang paid US$1.95 billion for the Waldorf in 2014 with a continuing Hilton management contract. In October 2015 President Obama refused to stay in the Presidential Suite at the Waldorf, where presidents always stay in New York, when attending the UN General Assembly. The US Ambassador to the UN maintains an official residence there as do many other nations.
In Vancouver there is an upsurge in Class A commercial real estate purchases. Rarely available marquee buildings like the Bentall Centre block are highly sought after. The Bentall Centre is being offered for sale by Ivanhoe Cambridge and it is expected to attract billion dollar offers from global investors. It is particularly attractive with the exchange rate of the Euro or US dollar to the Loonie.
The forecast is for another banner year for real estate with the Conference Board of Canada predicting a three percent level of growth for BC through 2017, the top level in Canada. One of the highlights of the report is their confidence in the continuing growth of the Lower Mainland housing market with its international appeal. According to Barbara Yaffe of the Vancouver Sun "the housing sector is a gift that keeps on giving. Housing generates employment in the finance, insurance and real estate industries....including related expenditures such as moving, renovation, durable goods and legal costs..." According to the Real Estate Board of Greater Vancouver in 2014, 33,116 homes changed ownership in the Board's area, not including the Fraser Valley, generating $2.136 billion in economic spin-off activity and an estimated 16,227 jobs. The total dollar value of residential sales transacted through the MLS in Metro Vancouver totalled $27.3 billion in 2014.
Not to mention the billion dollars annually that the provincial treasury receives from the Land Transfer Tax (formula: 1% on first $200k, 2% on balance of purchase price). Premier Bill VanderZalm enacted the Property Transfer Tax in 1987 when detached homes in Vancouver averaged under $150,000 in sale price. The PTT has become the goose that laid the golden eggs.
Locally we are back to the same old, same old affordability crisis, lack of rentals, density conflicts and the downside of being such a beacon of hope and beauty to the world. FYI: There is a light on the horizon...a group of economists, professors at UBC and SFU business schools, concerned about the rising levels of affordability combined with the number of vacant properties owned by offshore investors paying no taxes in Canada, have created the BC Affordabilty Fund for a tax levy on these properties. The 1.5% surcharge on the real estate would go into a community fund to be returned to local taxpayers. The province which has stonewalled any ideas of even identifiying who is buying property in Vancouver is starting to realize the depth of public awareness of how offshore owners are parking or laundering funds, making a 24% return in one year, housing unproductive relatives who use public services and schools while paying no taxes to the community or the country. Nothing like an upcoming election to encourage the Premier to say it sounds like a good idea. More anon.
It was a quiet enjoyable Christmas holiday for us this year...highlighted by the IMAX 3D version of The Force Awakens on Christmas Eve. Great show. Closest to the one that Alec, Kath, Julie and I sat through when Star Wars first stunned us in 1977. It's the off year for Julie and Mary's Christmas celebration in Vancouver so no big events planned. Especially like those of Christmas 2014 where I spent the holiday in bed with a broken hip from a fall at a party! So thankful for a mobile celebration in 2015.
Julie and Mary had the greenest warmest Christmas ever at their cottage with Mary's family where they all marched out for long dog walks in the mild temps. Which were followed two days later by a subzero cold snap and snow. They are now enjoying snowshoeing in moderately cold weather on their weekends at Crooked Creek.
Constantin as a white bunny
Julie and Kath continue to spend a lot of time with their dad at the hospital. He is slowly recovering from a devastating atypical pneumonia. Just goes to show that you can be fit and healthy one minute and at death's door the next. Constant loving support plus outstanding medical care makes a huge difference to survival and recovery.
Constantin and Lucia
At the beginning of February we are looking forward to a brief visit from Kath on her way back from staying with Auntie Jane and Auntie Mo at Jane's home in Hawaii. She is always glad for a break from the Toronto winter. She and Stef are planning a holiday with family and friends in Palm Springs in March.
Alec and Lucia with Constantin and their dog Thor shared the holiday with Lucia's family in Riecka Slovakia. Lots of traditions and history in their village. Constantin is not quite old enough to appreciate presents but still got lots of great gifts. Lucia always has him fashionably turned out. He is a GQ baby with his big smile and award winning wardrobe.
Effi is doing well. We run out for walks between rain showers. I am finding I am motivated to walk to add more steps on my FitBit app. Effi is the beneficiary but I do think we will walk her into the ground. Jay is stoic and walks her in any weather. We are glad she gets long off leash rambles with the Woofer Walkers twice a week.
Constantin looking up
Jay is full of vim, vigor and vitality and is busy with buyers and sellers in this first rush of the Spring market. It will be interesting to see how many people come to Vancouver to visit family and scope out real estate at the Lunar New Year celebrations in early February.
FYI: We find that working with clients at every stage of life: buying first condo homes, moving up to family size townhomes or detached, then downsizing from the large family home to a condo again keeps us busy. We hope that Life is good for you too.
Real Estate News
For those interested in the tax rates of the Metro Vancouver municipalities Jay has compiled them and posted them on our website.
The complete December 2015 Stats Package from the Real Estate Board of Greater Vancouver is also posted.
Darcy McLeod, President of the Real Estate Board of Greater Vancouver states "Home buyers were active and motivated throughout 2015 despite the pressure on supply of homes on the market. Housing markets typically experience quieter periods within a calendar year, but that wasn't the case in Metro Vancouver last year."
"We often hear economists say that seller's market conditions put upward pressure on home prices," McLeod said. "That was certainly the case in 2015, with price increases ranging from 14 to 24 per cent depending on property type."
According to the Real Estate Board of Greater Vancouver MLS residential property sales of detached, attached and apartments reached 2,827 in December 2015, a 33.6% increase compared to 2,116 sales in December 2014.
The number of residential properties listed for sale on the MLS in Greater Vancouver is 6,024. This is a decrease of 41.6% from December 2014.
With the sales-to-active-listings ratio above 25 per cent for 11 months in 2015, it remained a seller's market which typically occurs when this ratio exceeds 20 percent for a sustained period of time.
The REBGV Home Price Index includes Benchmark Prices for consistent comparisons. Benchmarks represent a typical property within each market. The benchmark property descriptions have been updated to reflect current buying trends.
|Home Price Index / Benchmark Prices|
|Detached||December 2015||1 year change||5 year change|
|Townhouse||December 2015||1 year change||5 year change|
The following schedule shows the change in sales volume from December 2014 to 2015:
|Detached Home Sales|
|December 2015||December 2014|
|December 2015||December 2014|
Change is in the air. We’re still advising clients to take advantage of the continuing low interest rates available now whether you are moving up or down in the market. You will be glad that you did so at this time!
We thank you for your referrals and look forward to assisting you or any of your friends and family with future real estate needs.
Wishing you Health, Happiness and Prosperity in 2016,
Jay Banks & Brenda Kinnear