DATE

BC Home Partnership
Steve Saretsky -

When the BC Government announced their 30 point plan to address housing affordability, they quietly noted they would be phasing out the BC Home partnership program. It appears the move to quash the program is happening much quicker than anticipated. Per the BC Housing website, the program will no longer be accepting applications after March 31, 2018. A rather dull ending for the controversial program. The lending scheme was first introduced by the BC Liberal Government at the start of last year and pledged to match the downpayment of struggling first time buyers. First timers who couldn’t save enough for a downpayment would have their downpayment matched by the BC Government up to a maximum of 5% or a sum of $37,500. The loan was interest and payment free for the first five years, and registered on title as a second mortgage.  While the program may have been well intentioned, the lending scheme ultimately encouraged first time buyers to purchase on nearly 100% leverage during a frothy a housing market. Yes, the BC Government was essentially involving itself in the subprime lending business using tax payer money. As a result, the program received considerable backlash during a time when financial regulators were

Steve Saretsky -

The munch anticipated BC Budget was announced today. It was expected to bring swift measures to the Residential housing market and it certainly didn’t disappoint. The BC Government introduced extreme policies aimed at “moderating” a historically frothy property market. The BC Government introduced a 30 point plan for housing affordability. The full report can be found here, but a recap is detailed below. Speculators Tax A speculators tax will be introduced later this fall. The tax will be aimed at foreign and domestic speculators who own residential property in BC but don’t pay taxes here, including those who leave their units sitting vacant. Satellite families- households with high worldwide income that pay little income tax in BC will also be captured by the tax. Up-front exemptions will be available for most principal residences. Up-front exemptions will also be available for qualifying long term rental properties and certain special cases. The majority of homeowners in BC will be exempt from this tax. A non-refundable income tax credit will also be introduced to offset the new property tax. The new tax will apply province wide, exempting rural areas, with a tax rate of 0.5% of the assessed value in 2018. In 2019 the tax

Steve Saretsky -

Early cracks are emerging in the Vancouver pre sale condo market. Vancouver based developer Jago Developments Inc. alerted buyers they would be served with a 15% price increase following substantial delays in the construction process of their New Westminster condo project, the Westbourne. The low rise wood frame condo building featuring a total of 55 units, was initially sold out in 2016 around $475/ square foot with an expected completion date of spring/early 2017. However, per the developer, “Due to numerous factors beyond the developer’s control, including unforeseen soil conditions, labour shortages and extreme weather, among others, there have been significant delays and, as a result, the project has been delayed and the developer will lose a substantial amount of money,” citing “cost overruns in the millions of dollars”. As a result, buyers are being told they’ll be partly responsible to foot the bill. They must agree to a new price that is 15% more, If not, they can choose to terminate their sales contracts and get their down payment returned, plus an additional 50%. They can also opt to get their down payment back, and then wait for the developer to eventually sell the unit to a new buyer and

Steve Saretsky -

As if the Canadian housing market needed another round of tightening, it appears CIBC is pulling the plug on it’s controversial mortgage program which targeted foreign Income. As first reported on Better Dwelling, CIBC has quietly notified its mortgage advisors the “Foreign Income Program” has ended. The program was replaced on February 1, 2018, with a new program designed to ensure compliance with B-20 guidelines from OSFI. The foreign income program went viral in early 2016 following the branch advertising a 35% down, no income verification mortgage scheme. It touted favourable interest rates, ideal for international students. CIBC will now qualify income in accordance with OSFI B-20 mortgage regulations which have already been considered some of the most aggressive changes in Canadian lending history. CIBC will now require the following: The client’s T1 General, complete with foreign income stated (line 104). CRA Form T1135, a.k.a. a Foreign Income Verification Statement, showing assets. Companies using income will require a CRA Form T1134, Information Return Relating To Controlled and Non-Controlled Foreign Affiliates. A Canadian credit bureau report, and a foreign credit bureau report to confirm any foreign liabilities. It’s believed several other large banks will follow suit. This new clamp down will ensure those

Steve Saretsky -

Since the NDP Government took power in July 2017 they have been relatively quiet on the housing front. This comes amidst sweeping promises to bring drastic measures to the housing market, some of which included a 2% absentee speculators tax, an agency task force to prevent money laundering, and a rebate for renters. However, just one week away from their budget announcement on February 20th, the NDP Government hinted at what’s to come. Lieutenant-Governor Judith Guichon reiterated, “Safe, decent housing is a right that is under threat by speculators, domestic and foreign, who seek windfall profits at the expense of people who work, live and pay taxes in B.C.” She added, “Your government believes that people seeking to profit from B.C.’s real estate must also contribute to housing solutions.” Guichon’s remarks hint towards a much anticipated real estate speculation tax. If so, it will be a hefty blow to property flippers. It could further erode profits of detached house flippers, many of whom have been caught eating losses with that segment of the market having gone stale. Meanwhile, Vancouver condo flipping, which hit a 9 year high, could be in for a rude awakening. In 2017, nearly 11% of all condo

Steve Saretsky -

As Vancouver’s housing market reached dizzying heights in early 2016 many buyers were forced further out into the suburbs of the Fraser Valley. Detached houses in the suburbs exploded into multiple offers, and like clockwork, as Vancouver detached homes cooled so too did the Fraser Valley. It appears to be a follow the leader scenario, with the condo market now following a similar pattern. Vancouver condos hit a record high average sales price over $1M this past month. This continues to push buyers further and further east, as buyers squeeze each other out for the remaining bit of affordability. As of January, inventory in the Fraser Valley plunged to decade lows amid buyers desperately bidding up the remaining housing stock. This has sent prices surging to new highs, with the average sales price showing a 31% increase year over year and the median sales price jumping an eye watering 45%. Bidding wars appear to be growing stronger, as many buyers rush to beat expiring rate holds and rising interest rates. In January, 53% of Fraser Valley condos sold over the asking price, just off an all time high of 59% in December. Meanwhile, speculators have been gifted with incredible liquidity

Steve Saretsky -

With the introduction of the new mortgage stress test in January many believe the market could come to a simmer. However, just over a month in and the condo market continues to boom. Vancouver condo prices hit a record high of $1,090, 317 in January. Buyers are eagerly pulling the trigger in order to beat out expiring rate holds and rising mortgage rates. Meanwhile as some borrowers face getting squeezed out, the shift to private lenders is growing. Some private lenders are seeing business double or triple. The new mortgage “stress-test” is causing a growing number of would-be homebuyers to look to private lenders and credit unions for financing. The story tonight on @GlobalBC #StressTest #HousingMarket pic.twitter.com/sHvpBrDNJX — Kylie Stanton (@kyliestanton) February 6, 2018 Dave Teixeira, vice president of operations at Dominion Lending, says “Dominion mortgage brokers are seeing a higher rate of rejection and clients have to submit multiple applications to various institutions before finding a lender that works.” As a result, Teixera adds, “Normally, we would see our volume going to the big banks and monolines, and now we’re seeing a little bit more of that, roughly up to 20 per cent… moving over to credit unions.” Robert

Steve Saretsky -

The Vancouver detached market finished 2017 on a cold streak. With the slow pace of sales, rising inventory levels, and the introduction of new mortgage rules, the detached market has the attention of many market watchers. January 2018 seems to be a continuation of recent trends, with weaker than normal sales and further downwards pressure on prices. Vancouver Detached Sales When comparing on a year over year basis, January sales inched up by 3.4%, however they remain a staggering 47% below the ten year average for the month of January. The 91 sales recorded for the month of January were the second fewest since 2009.  New Listings/ Inventory To some surprise, new listings fell in Vancouver for the month of January, dropping 15% on a year over year basis. For sellers holding out and hoping the market will rebound this will be an important stat to follow. If new listings remain low it could be the catalyst to push inventory levels lower and relieve some of the downwards pressure on prices. Despite the decline in new listings inventory still inched up on a year over year basis by 2%. Detached inventory has been on a steady rise for nearly two years

Steve Saretsky -

All eyes are on the condo market as new mortgage regulations kicked in beginning in January. The reality is most buyers are on locked into rate holds for 120 days so the true impacts of the new rules likely won’t be felt until much later this year. If you read last months condo report you may have noticed some panic buying in December as buyers rushed to secure properties prior to the New Year. January appears to be more of the same, with record low inventory levels, desperate buyers, and bidding wars pushing prices higher. Vancouver Condo Sales Vancouver condo sales increased by 8% on a year over year basis and remain surprisingly robust despite continued policies aimed at cooling the market. For the month of January condo sales were 3% above the 10 year average. Vancouver condo sales using a 6 month moving average appear to be slowing after peaking in early 2016. New Listings/ Inventory Levels Vancouver has been unable to solve the mysterious case of new listings, which hit a decade low in January. New listings plummeted 9% year over year and were a staggering 30% below the ten year average for the month of January. Vancouver inventory levels

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The Canadian Economy

Steve Saretsky -

When the BC Government announced their 30 point plan to address housing affordability, they quietly noted they would be phasing out the BC Home partnership program. It appears the move to quash the program is happening much quicker than anticipated. Per the BC Housing website, the program will no longer...

Steve Saretsky -

The munch anticipated BC Budget was announced today. It was expected to bring swift measures to the Residential housing market and it certainly didn’t disappoint. The BC Government introduced extreme policies aimed at “moderating” a historically frothy property market. The BC Government introduced a 30 point plan for housing affordability....

Steve Saretsky -

Early cracks are emerging in the Vancouver pre sale condo market. Vancouver based developer Jago Developments Inc. alerted buyers they would be served with a 15% price increase following substantial delays in the construction process of their New Westminster condo project, the Westbourne. The low rise wood frame condo building...

Steve Saretsky -

As if the Canadian housing market needed another round of tightening, it appears CIBC is pulling the plug on it’s controversial mortgage program which targeted foreign Income. As first reported on Better Dwelling, CIBC has quietly notified its mortgage advisors the “Foreign Income Program” has ended. The program was replaced...

Steve Saretsky -

Since the NDP Government took power in July 2017 they have been relatively quiet on the housing front. This comes amidst sweeping promises to bring drastic measures to the housing market, some of which included a 2% absentee speculators tax, an agency task force to prevent money laundering, and a...

Steve Saretsky -

As Vancouver’s housing market reached dizzying heights in early 2016 many buyers were forced further out into the suburbs of the Fraser Valley. Detached houses in the suburbs exploded into multiple offers, and like clockwork, as Vancouver detached homes cooled so too did the Fraser Valley. It appears to be...

Steve Saretsky -

With the introduction of the new mortgage stress test in January many believe the market could come to a simmer. However, just over a month in and the condo market continues to boom. Vancouver condo prices hit a record high of $1,090, 317 in January. Buyers are eagerly pulling the...

Steve Saretsky -

The Vancouver detached market finished 2017 on a cold streak. With the slow pace of sales, rising inventory levels, and the introduction of new mortgage rules, the detached market has the attention of many market watchers. January 2018 seems to be a continuation of recent trends, with weaker than normal...

Steve Saretsky -

All eyes are on the condo market as new mortgage regulations kicked in beginning in January. The reality is most buyers are on locked into rate holds for 120 days so the true impacts of the new rules likely won’t be felt until much later this year. If you read last...

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The Saretsky Report. December 2022