Brenda Kinnear
"For they have sown the wind and they shall reap the whirlwind..."
― Hosea 8:7 Old Testament KJV.
It appears that the well-being of residents of BC has been compromised by an economy built around organized crime and money laundering through casinos and real estate. Provincial finances and credit ratings have been buoyed up by the annual billion dollar property transfer tax revenue.
A Vancouver Sun article from 2016 explains the windfall and how the Liberal government looked the other way when confronted about the source and out of control rising home prices.
The property transfer tax revenue has been budgeted by the NDP finance ministry to be greatly diminished going forward which will impact the current economy and spending. The government is projecting higher revenue from the increased foreign buyer taxes but that may be wishful thinking as home sales have fallen. Revenues will be impacted by the government review and enforcement of casino rules for high rollers mainly from China. There won’t be laundered funds available to invest in high end real estate. Taxes paid to the government by the casinos will be much reduced. These changes will impact the real estate sector including construction, sales, leasing, services, retail which was 18.36% of the provincial GDP in 2016.
As the gaming investigation winds down the Attorney General is ordering a similar investigation into the real estate industry. Sam Cooper formerly of the Vancouver Sun is now an investigative journalist for Global News and has produced a damning report of the BC government, the federal government, FINTRAC and the Supreme Court ruling that gives the legal profession a free pass on money laundering clients. In 1994 the federal government allowed Chinese Triads to establish themselves in Canada. They are the source of the Fentanyl/opioid tragedy wracking Vancouver. According to Australian intelligence services the ‘Vancouver Model’ is notorious for allowing organized crime to entwine itself through the economy and society.
Vancouver by Josiah Coates
The real estate market is moving at a much lower energy level than in 2017. Buyers have been severely disadvantaged by the new mortgage stress test. Even though the number of sales have dropped the prices are still rising. On a good day the Lower Mainland is unaffordable. Many buyers don’t qualify to buy at today’s home prices with a 2 point higher mortgage rate requirement even though the actual mortgage rate will be lower.
There is pent-up demand in the downtown core for condos. They usually sell over asking but there is little inventory available. This is the most affordable popular product for local buyers. The Vancouver School Board was blindsided in its projections of how many schools they would need downtown. Many parents are distressed that their children cannot be enrolled in their local school because there is no space available. The former chair of the VSB has an interesting analysis of school problems in Vancouver that impact real estate sales.
Townhomes are a rarer commodity in the Lower Mainland partly because Vancouver has a prohibition against homes that would be called semi-detached or row housing in Toronto. If the city was zoned for freehold property ownership with common walls density could be substantially increased and prices would be lower than detached prices. There is such pressure to find more housing options that the City of Vancouver is considering changing their longtime rules. They have devised a housing strategy that they are starting to implement in 2018.
Vancouver ideas for row housing include many models.
There is political movement advocating pre-zoning the Cambie corridor for multi-family housing ahead of their current timeline. The problem has always been the rise in prices to include windfall profits. Sort of negates the idea of affordable housing.
The stats are a bit misleading because the sales of detached properties in April are much lower than in March. In the high end detached market in Vancouver Westside, Richmond and West Vancouver it is the lack of Chinese buyers that is making a difference, combined with high prices and new government taxes.
"Even with lower demand, upward pressure on prices will continue as long as the supply of homes for sale remains low. Last month was the quietest March for new home listings since 2009 and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms" as stated by Phil Moore President Real Estate Board of Greater Vancouver.
Each year affordability declined for local buyers. First time buyers are particularly hard hit by mortgage stress tests, high prices and lack of inventory.
In March 2018 the benchmark price for an apartment property across the region was $693,500. This was a 26.2% increase from March 2017.
In March 2018 the benchmark price for a condo apartment in North Vancouver was $601,400 up 24.3% in one year, up 72.2% in 5 years and up 70.8% in 10 years.
In Richmond the benchmark price was $659,700 up 26.9% in one year, up 89.1% in 5 years and 90% in 10 years.
In Vancouver East the benchmark price was $577,600 up 24.3% in one year, up 89.5% in 5 years and up 96.4% in 10 years.
In Vancouver West the benchmark price was $844,700 up 20.6% in one year, up 81.8% in 5 years and up 81.2% in 10 years.
In West Vancouver the benchmark price was $1,278,600 up 18.5% in one year, up 70.3% in 5 years and up 94.4% in 10 years.
More anon.
DT00KS