Ends and beginnings - there are no such things.
There are only middles.
— Robert Frost
Jay & Brenda News
For the past several months commentators in the US Presidential campaign have been speculating on a possible October Surprise. A result that is the bête noir of one side and the saviour of the other. It looks like the Foreign Buyer Tax results are the October Surprise in BC. Combined with the CMHC changes to mortgage qualifications for buyers with less than a 20% downpayment plus the Finance Ministry closing principal residence tax loopholes there are huge impacts on the real estate market in BC.
According to Maclean's magazine of October 12th: "Both initiatives are potentially devastating to one of the most important industries in Canada. Along with energy and manufacturing, residential real estate is a key growth factor in the Canadian economy. Home builders, construction workers, realtors, renovators, architects, banks, non-bank lenders, shadow bank lenders, lawyers, notaries, building product suppliers, furniture stores, electricians, plumbers, land speculators, carpenters, high-rise condo developers, advertiser-dependent media, provincial governments, municipalities and many others count on housing-related activity to keep the cash register ringing."
The new rules require a stress test for borrowers with a down payment of 5-20%. The buyer has to qualify at the higher posted 5 year rate average of Canada's top 6 banks even though the actual rate is lower. Recently the real rate was 2.17% and the posted rate 4.64%. This is to ensure buyers could make their payments if the rates do go up. It means that buyers who could borrow a large amount at a low rate based on income will be qualified at a lower price point so in the highly priced Vancouver market they will lose up to $100k off the price they will be allowed to pay for a property to be approved for an insured mortgage.
CMHC is looking to shore up the mortgages guaranteed by the federal government and to download some of the cost and risk to the banks. CMHC is posting a red warning for housing markets across Canada, particularly Vancouver and Toronto.
The changes are aimed at slowing down the housing market in an effort to make it more affordable for local buyers and to prevent the laundering of hot offshore money through investments in high end real estate in Vancouver. There was a quote in The Sun describing the mortgage rule change as "it is raining in Vancouver and the Alberta buyer has to put up his umbrella." The law of unintended consequences is hard at work.
Since September we are certainly noticing a slowdown in sales in the detached end of the market offset by multiple offers on lower priced (under $400k) condos that are in good condition in a well-maintained complex with a reasonable Depreciation Report.
There is pushback on the BC Foreign Buyer Tax (now being considered by Ontario) from big-time Chinese entrepreneurs and investors. The "Billionaire's Club" founded by Jack Ma of Alibaba has been touring Canada and has the ear of the Prime Minister who is anxious to do more business with China to improve the Canadian economy. Frank Wu, VP of the China Real Estate Industry Association stated that Chinese investors have told him they are turned off investing in Vancouver by the Foreign Buyer Tax. Even though no level of government ever tracked who was buying and investing in real estate it was clear to all realtors and most of the public that the money was overwhelmingly coming from China. So there is a big impact on the real estate market in Metro Vancouver.
Major cities around the world are tightening foreign ownership rules and taxes. London is proposing a law that says that if a foreign buyer can't prove the legal source of funds that purchased a multi-million pound property then the property will be able to be confiscated as the proceeds of a crime. Hong Kong, Sydney, Singapore all have heavy taxes that mean nothing to the richest buyers who purchase in spite of them. Australia has ownership rules that they mainly enforce; eg houses have to be occupied; only one property can be owned at a time; must be sold if the buyer does not live in the country; no older or waterfront properties allowed to be purchased. New housing only is allowed in order to keep the construction industry at full employment.
In Vancouver the BC Supreme Court ruled on the legality of Heritage zoning in First Shaughnessy bounded by 16th Avenue to King Edward Avenue, Oak Street to East Boulevard. Pre-1940 homes can be restricted from demolition according to the City of Vancouver bylaws. The judge stated that the home owner plaintiffs were motivated by greed and that the city had the right to save designated structures; that there had been a wholesale destruction of the history of Vancouver by buyers who wanted to take out older homes and trees and build larger mansions on the big lots.
There will be a clearer picture in the October/November stats. This is a time of year when sales slow down but there will be a noticeable drop in sales numbers and a decline in sale prices.
The Vancouver City Council is hosting an international group of planners and those involved in social and affordable housing initiatives around the world at a conference to discuss successful programs. With its new city executives in place they are looking at the 2011 homeless/social housing program and realizing it falls short of the goal of maintaining Vancouver as a livable city not a large resort town for the rich of the world. The City Council is prepared to offer city owned properties for affordable housing and is talking to developers about what can be built. They are trying to maintain a city where families can live and work. The big shock to all the NIMBY baby boomer property owners who want no change – increased density is coming to a block near you!
Uncertainty is always the enemy of a stable housing market. More anon.
More of Julie and Brenda's Great Adventure in Quebec:
Quebec City is still old and foreign. The President of Mexico was visiting overnight at the iconic Chateau Frontenac before going to meet Trudeau and Obama in Ottawa. The Fairmont Chateau Frontenac was built as a Canadian Pacific Railway Hotel in the late 19th century in grand medieval and Renaissance style and rivals the Citadel and fortifications for gravitas and presence.
We stayed on the top floor of a lovely converted house in the Old Town (with no elevator but an elegant curving staircase). Many of the public squares have been restored to colonial glory (much cleaner than in those days). It's a funny mix of early royalist New France and British colonial rule. The province is restoring the white stucco house that Queen Victoria's father lived in before returning to England to enter the royal heir sweepstakes. He married his German cousin, dragged her to England to have her baby and produced Alexandrina Victoria who was the first and only legitimate royal baby born after the death of Princess Charlotte in 1817.
The most amazing amounts of money are being poured into the Historic District of Old Quebec to uphold its status as a UNESCO World Heritage Site. The Upper and Lower Towns with their ramparts, bastions, stone walls, gates and La Citadelle are the best surviving example of a colonial fortified town.
The shopping in the Lower Town is fabulous. All kinds of great independent or high end retail shops built into restored heritage buildings. Many shops feature local crafts, Julie got the cutest lambswool slippers for Constantin. I bought some gifts at Aqua Maritime, a gorgeous nautical clothing shop headquartered in Croatia!
A little historical background:
When I first visited Quebec as a young girl from BC I was struck by the role of women in New France. Through the colonial years under the French King and then the British years guided by the Quebec Act of 1774 the Catholic Church provided the social order and underpinnings of society. Society in turn was held up by and ministered to by amazing orders of nuns. In Quebec City there is a tall monument with all the towns of New France listed with the name of the order who delivered social services, health care and education. In my earlier visits I remember wondering how normal women managed long heavy skirts, stone buildings, freezing weather and pregnancy. Les soeurs religeuses prayed the canonical hours and did all the work in between.
More of restored French colonial public square. High end boutique hotel nearby. Julie and Mary stayed there in January when everything was covered in snow
Before the Reformation and Britain becoming Protestant under Henry VIII all of Europe and England was dotted with abbeys and almshouses run by the church. The wool trade that provided England's wealth in the 14th and 15th centuries was built by the great Cistercian and Benedictine abbeys in Yorkshire. Most of Europe remained Catholic under the Counter-Reformation 1545-1563. The Church allowed women an outlet that was separate from marriage and likely death in childbirth. Those women who had a vocation or who wanted to live a life devoted to God, work and running the world became "Brides of Christ". Families provided a daughter's dowry to the church instead of to a husband and the young woman entered God's service. It was a great career choice for many who became administrators of convents and abbeys and who emigrated to New France to establish the institutions in the new colony.
My favourite purchase on our trip is a painting of Les Ursulines in Quebec City in the 1600s. Now hanging in my bedroom to remind me how fortunate are modern women.
Before the St Lawrence Seaway opened in the 1950s the St Lawrence would ice up between Quebec City and the Atlantic Ocean. It would be unnavigable for 6 months. Cargos had to be prepared. Passengers had to stay aboard. The furs being shipped to the London auctions from Montreal and Quebec and further west into Upper Canada (Ontario) had to be loaded and ready to sail by mid-October or there would be no way to get them out of the iced up river. The profits of the Hudson Bay and North West Companies depended on departing on time. Sometimes the ice came early and it was a race to leave ready or not.
Our Adventure continued:
On to Montreal which is totally under construction. Many abandoned garment factories in the old part of town along the river have been re-purposed as centres of artisanal businesses including some large scale food businesses. Julie and I went through one where we found a wonderful children's wear shop and bought all kinds of presents for Constantin.
We stayed in a great boutique hotel, Auberge Bonaparte located in an 1880s building, with nearby parking, in Old Montreal. We were behind the Notre Dame Cathedral (famous for Celine Dion's wedding and her husband's funeral). It is large and dark inside. More Gothic than Baroque. Julie and I saw fabulous light and bright Baroque churches and cathedrals on our Danube River cruise last year and no church I have seen in Canada begins to compare with those in Austria and Germany.
In Baie-Saint-Paul the gallery owners would say they were second only to Montreal and even surpassing them. Julie and I didn't think so. The art galleries in Montreal were plentiful with wonderful presentations of their featured artists.
Montreal's Notre-Dame-de-Bonsecours Chapel. Also known as the Sailors Church. St Marguerite de Bourgeoys entombed near altar
We visited Notre-Dame-de-Bonsecours, the Sailors Church with its wooden ship models hanging from the ceiling. The remains of St Margaret Bourgeoys are entombed in the chapel. She lived from 1620-1700, founded the Congregation de Notre-Dame in Montreal and was the tireless inspiration that developed Ville-Marie from a wilderness outpost into the city of Montreal. She was born in Troyes, France had a religious conversion at 20 and joined the Notre Dame convent as a cloistered nun who led the teaching program. Her friend in the convent was sister to Maisonneuve, the Governor of New France and he recruited Marguerite to come to New France in 1653 to set up schools and support family life at the fort. She built the first stone chapel and was an inspiration to all who met her. She is a perfect example of the importance of the religious women of New France and their impact on the survival of the colony. She lived to an amazing age of 80 years. The miracles attributed to her led to canonization by Pope John Paul II in 1982.
Interestingly there is a statue of Mary as Star of the Sea on the roof of the church which was a beacon to sailors coming up the St Lawrence River. It was donated by the Bishop at the end of the typhus epidemic of 1847 where a third of the population died. The people of Montreal including the clergy took in and looked after the poor Irish immigrants fleeing the potato famine who brought typhus with them from their voyage. The Bishop himself caught typhus and survived so showed his gratitude to God by endowing the church with beautiful artworks.
Montreal is a cross-section of the history of French and English Canada. Not to be missed on any trip to Quebec.
Constantin is very keen to help his mother. He drove the truck with the tiles for the renovations from Bratislava in Kittsee. So young and so helpful
Jay is making his annual calendar visits. It's a great time to see friends and clients and catch up with news and plans. Lots of chats about future real estate goals and timing thereof. We are well aware of the result of throwing the rock into the pond. The ripples go out a long way. It appears that both the BC and federal governments have just heaved a boulder into the housing market pond. We are glad we have had lots of experience in the ups and downs of the real estate market over the years that allows us to advise and support our clients through the changes.
Jay and I fight over the TV. Will we watch baseball or politics? The Blue Jays are out but Jay is an equal opportunity baseball lover. Effi is just happy to join us. She prefers to go with the Woofer Walkers than to watch CNN.
My trip to Toronto for Julie's birthday is getting closer. We used to joke about organizing a parade down Yonge Street. Now she is satisfied with celebrating over the entire month of November.
Alec and Lucia are extra busy with business and continuing renovations at home and on their heritage property in Kittsee down the street from their house. In addition to all her other responsibilities Lucia is acting as contractor. She learned the skills required when she renovated her Bratislava apartment last year. It's located across from the Castle and is now updated and beautiful. It's a popular Airbnb destination which Lucia manages.
Kath and Stef are busy as usual. I look forward to visiting them in Toronto. Kath relaxes by taking the dogs to the beach. They are never bothered by the temperature of Lake Ontario.
Julie and Mary are always on the go between their social commitments and real estate activities. Mary is a great support for Julie in the busy Toronto marketplace. She is really enjoying her retirement and was feted at a fancy surprise dinner last week by very dear friends. It's been a non-stop party for months now. The JKT had their annual pumpkin patch giveaway and Julie wore her Ghostbusters costume. She said the real benefit was the layering underneath it. The wind was brutal. Every year there is always some weather related problem to deal with but they all had fun anyway.
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
The complete September 2016 Stats Package from the Real Estate Board of Greater Vancouver is also posted.
Dan Morrison, President of the Real Estate Board of Greater Vancouver states "Supply and demand conditions differ today depending on property type. We're seeing more demand for condominiums and townhomes today than in the detached home market."
"Changing market conditions are easing upward pressure on home prices in our region. There's uncertainty in the market at the moment and home buyers and sellers are having difficulty establishing price as a result. To heop you understand the factors affecting prices, it's important to talk with a REALTOR," Morrison said.
According to the Real Estate Board of Greater Vancouver MLS residential property sales of detached, attached and apartments reached 2,253 in September 2016, a 32.6% decrease compared to 3,345 sales in September 2015.
September sales were 9.6% below the 10- year sales average for the month.
In September 2016 the number of residential properties listed for sale on the MLS in Greater Vancouver was 9,354.This is a decrease of 13.4% from September 2015 (10,805).
With the sales-to-active-listings ratio at 24.1% in September 2016, 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||September 2016||1 year change||5 year change|
|Townhouse||September 2016||1 year change||5 year change|
The following schedule shows the change in sales volume from September 2015 to 2016:
|Detached Home Sales|
|September 2016||September 2015|
|September 2016||September 2015|
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.
The falling leaves drift by the window
The autumn leaves of red and gold
I see your lips, the summer kisses
The sun-burned hands I used to hold
Since you went away the days grow long
And soon I'll hear old winter's song
But I miss you most of all my darling
When autumn leaves start to fall.
Music by Joseph Kosma; English Lyrics by Johnny Mercer.
FYI: Check out Eva Cassidy's moving version on YouTube.
Warmest good wishes,
Jay Banks & Brenda Kinnear