Anyone Waiting for the Canadian RE Bubble to Burst to Buy a Property?

[Twa2w]

Companies buying in Vancouver must meet the criteria for foreigner ownership as well. Ie owners of the corp must meet rules.

Foreign ownership can be banned but it would violate NAFTA.

Remember the spevial tax only applies to Vancouver, not all the surrounding cities.

 

[jabbahop]

There are a lot of places in various countries that a person earning the median family income cannot buy a house, they are called rich folk areas.
For example: "Los Altos, California, in the heart of Silicon Valley, is now the most expensive real estate market in the country, according to a new report from Coldwell Banker. The average four-bedroom, two-bath home in Los Altos costs $1,963,100"

We moved from Los Altos 12 years ago so for fun I looked up our old street. The 3/2 1400 square feet house next to our old place has a pending offer for $2.4M. Crazy what the silicon valley job market has done. When we lived there, that neighbor was a 70 year old retired pensioner and former worker for the town. His whole yard was vegetable gardens.

 

[Sunset]

We moved from Los Altos 12 years ago so for fun I looked up our old street. The 3/2 1400 square feet house next to our old place has a pending offer for $2.4M. Crazy what the silicon valley job market has done. When we lived there, that neighbor was a 70 year old retired pensioner and former worker for the town. His whole yard was vegetable gardens.

Great opportunity for him to sell (or even better for his inheriting children).
I wish my home would be bought for 2.4 Million, I'd be happy to move out in 10 minutes.

 

[Meadbh]

To the OP:

You should be aware of this morning's announcement by the Minister of Finance:

Federal government closes tax loophole used by foreign home buyers, hikes mortgage scrutiny | Financial Post

In future, in order to avoid paying tax on capital gains when you sell your home in Canada, you must be a Canadian resident at the time of purchase. We'll see how this rolls out.

 

[bld999]

Policy experiments related to real estate are popular in Vancouver. In 1988 the large Expo '86 site was sold to a Hong Kong developer for a very low price. The resulting development and public amenities served up as part of the deal drew international attention.

Buy in programs for immigrants followed. This biased the immigrant population toward high net worth, and likely higher levels of education. The place is severely geographically constrained, and the outdoor rec. opportunities are massive. Low and mid income people did and will have trouble affording the place in the absence of subsidies, much like other similar coastal cities.

Residential real estate has far greater liquidity than it used to, but I personally would be reluctant to "trade" unless I lived there and could have my ear to the rail frequently.

Victoria is a different story, I rarely travel there and have no sense of what is going on.

 

[ShokWaveRider]

To the OP:

You should be aware of this morning's announcement by the Minister of Finance:

Federal government closes tax loophole used by foreign home buyers, hikes mortgage scrutiny | Financial Post

In future, in order to avoid paying tax on capital gains when you sell your home in Canada, you must be a Canadian resident at the time of purchase. We'll see how this rolls out.

Good input, although as Canadian Citizens, myself and DW would not be classified as foreigners. At least it could be argued.

 

[Meadbh]

Good input, although as Canadian Citizens, myself and DW would not be classified as foreigners. At least it could be argued.

The text focuses on residency, not citizenship. You might have to reestablish Canadian residency before you go house hunting. Or buy the house early in the year and move in immediately so that you spend at least 183 days in Canada during that year.

Minister Morneau Announces Preventative Measures for a Healthy, Competitive and Stable Housing Market

Specifically, from the technical backgrounder:

"An individual who was not resident in Canada in the year the individual acquired a residence will not—on a disposition of the property after October 2, 2016—be able to claim the exemption for that year. This measure ensures that permanent non-residents are not eligible for the exemption on any part of a gain from the disposition of a residence."

 

[chris2008]

We are just visiting the area of Mont Tremblant, 2 hours north of Montreal. For sale signs on every 3rd house. Whatever this means...

 

[Danmar]

We are just visiting the area of Mont Tremblant, 2 hours north of Montreal. For sale signs on every 3rd house. Whatever this means...

Right, Quebec's real estate market would not be viewed as comparable to Vancouver or Toronto. Much lower prices.

 

[timemoveson]

Similar real estate market to the US in some ways

Canada is similar to the US or UK in the sense that you have a handful of powerful housing centers powering housing market up. Toronto is unique in this regard as, really, Canada's major economic hub.

Vancouver has had a long-standing blistering market for other reasons. Same outcomes as Toronto, but different inputs and conditions. I don't have definitive data but I'm intuitively fairly sure that Toronto is being buoyed heavily by foreign money too; however, the economy is so big and diverse you don't see it nearly as clearly as in Vancouver.

Most other markets in Canada move at the rate of inflation or are flat. Some are down in recent historical terms and over the medium term. Calgary has obviously been hit hard by the energy deflation and it's spillover effects. Montreal, Halifax, Ottawa, Edmonton, Winnipeg and some other medium cities are "stable".

 

[kcowan]

The argument about Vancouver is that it has attained Pacific City Status meaning that a Chinese person can move into any neighborhood and encounter others who speak his language. Before, say 10 years ago, it was only the suburb of Richmond that had that status.

The fact that such people could attain a principal residence exemption indicates how incompetent our federal government has been.

 

[Danmar]

The fact that such people could attain a principal residence exemption indicates how incompetent our federal government has been.

Agree. Hopefully the changes announced yesterday to tax reporting and mortgage qualification will fix this. I think we are getting pretty close to a correction in the real estate bubbles in Vancouver and Toronto.

 

[brett]

Two years or so ago we looked at a condo in the complex (Calgary) where we are currently renting. Asking price was $619. There is currently an identical condo now listed in the same complex, same condition, same view for $509K.

Our realtor tells us that there is enough condo supply, current and coming on stream, to satisfy this market for five years.

 

[timemoveson]

makes sense

Brett, that makes sense. A pin-prick to Toronto or Vancouver price levels would do the same thing to their condo markets.

I have moved in and out of condo investments over 15 years in Toronto and I can assuredly say you must buy extremely carefully and understand neighbourhoods, rent levels, the controls, condo expenses, the boards, etc. to make a low-acceptable return as an investor in an expensive city like this.

As a homeowner, it is a very expensive way to go as well that has risk if you are forced to relocate prematurely for work or family reasons.

 

[harley]

Well, I'm saving my spocks for when the market drops low enough for me to be able to buy.

 

[Danmar]

You'll have to save s lot of "Spocks".

 

[tmm99]

Wow, did you guys know about the changes they are implementing this month, in an attempt to control the housing market? I wonder if they are planning an interest hike?

Four major changes to Canada’s housing rules - The Globe and Mail

 

[Meadbh]

Wow, did you guys know about the changes they are implementing this month, in an attempt to control the housing market? I wonder if they are planning an interest hike?

Four major changes to Canada’s housing rules - The Globe and Mail

Yes, I knew, because I follow current events. This is Federal government fiscal policy. Conversely, regarding monetary policy, analysts interpreting Stephen Poloz' recent speeches from the Bank of Canada suggest that an increase in short term interest rates may not happen till 2019.