Vancouver's Real Estate Market

[PeanutButter]

https://dailyhive.com/vancouver/cana...over-1-million

Umm. this is the most crazy thing i've seen in a long time.

Majority of these people can barely afford their property tax, how will they afford this surtax???

[Alpine]

There's too much propaganda & misinformation out there. Here's the reply from our housing minister:

https://twitter.com/HonAhmedHussen/s...662345218?s=20

[PeanutButter]

Man, why is there so much politics going on? I hate it.

[donk.]

It sure is hard making 100-300k a year in appreciation, and then god forbid, paying 7-12k regular tax, and then another 2-5k in surtax

What will these poor homeowners ever do!?!?!?!

Ps, if you read dailyhive, you might as well read theonion & watch American "news"

[westopher]

Originally Posted by PeanutButter

https://dailyhive.com/vancouver/cana...over-1-million

Umm. this is the most crazy thing i've seen in a long time.

Majority of these people can barely afford their property tax, how will they afford this surtax???

I don’t know maybe they can dip into the free 1 million dollar retirement fund they have acquired through appreciation in the last 5 years? The one that all the poors are expected to save via their 60k a year? Only need to put away your entire after tax salary for 3/4 of your career to get there.

[Traum]

Originally Posted by donk.

It sure is hard making 100-300k a year in appreciation, and then god forbid, paying 7-12k regular tax, and then another 2-5k in surtax

What will these poor homeowners ever do!?!?!?!

Ps, if you read dailyhive, you might as well read theonion & watch American "news"

Find me a townhouse in Metro Vancouver that isn't worth over $1M. Chances are, the home owner is just a regular working class Joe family trying to keep it together. All of those gains that you speak of are only happening on paper, so how do we expect the home owner to magically come up with the extra dough to pay for this surtax?

So this so-called UBC prof -- the founder of this Generation Squeeze -- says the surtax can be deferred until the property is sold. What if the market (somehow) tanks as a result of the City / Province / national policy for affordable housing works? A bunch of that so-called paper gain has evaporated, but the taxes owed won't. Does that sound nice and dandy to you?

FWIW, the news was also reported by City News 1130:

https://vancouver.citynews.ca/2022/0...rdable-report/

This is the founder dude from Generation Squeeze:

https://www.spph.ubc.ca/person/paul-kershaw/



With him teaching at UBC and being based in Vancouver, I honestly don't know how he can ever think the $1M threshold that he suggested is a reasonable number. It might be reasonable for other parts of the country, but for the 2 most expensive RE markets in Canada -- Toronto and Vancouver -- they almost definitely do not make any sense.

In Vancouver, the high prices is primarily a major disconnect between demand and supply. People continue to think Vancouver is a desirable place to live, so the demand is huge. Meanwhile, CoV, in particular, takes forever to approve new building permits, while other municipalities are nowhere close to being fast either. The building code, esp CoV's ultra leftard green initiatives, make building costs expensive. Quite a number of RS-ers have work related to the construction business one way or another. I'm sure they can tell you what can be done on the supply side to improve things so that costs savings can come down from there, and these are far better suggestions than to "just tax the current home owners".

[westopher]

The choices here are
“Pull up your bootstraps and save 300k for a down payment”
“Pull up your bootstraps and pay 60k in taxes over the next 30 years”
Both suck but one is a lot more sensible ask.
That said I’m sure the people that should actually be paying the tax (rich people) have accountants that will get them out of paying it.

[donk.]

If you can't afford to pay tax on your million dollar condo, house, townhouse, that means you are financially irresponsible and are living above your means

[supafamous]

Originally Posted by Traum

With him teaching at UBC and being based in Vancouver, I honestly don't know how he can ever think the $1M threshold that he suggested is a reasonable number. It might be reasonable for other parts of the country, but for the 2 most expensive RE markets in Canada -- Toronto and Vancouver -- they almost definitely do not make any sense.

In Vancouver, the high prices is primarily a major disconnect between demand and supply. People continue to think Vancouver is a desirable place to live, so the demand is huge. Meanwhile, CoV, in particular, takes forever to approve new building permits, while other municipalities are nowhere close to being fast either. The building code, esp CoV's ultra leftard green initiatives, make building costs expensive. Quite a number of RS-ers have work related to the construction business one way or another. I'm sure they can tell you what can be done on the supply side to improve things so that costs savings can come down from there, and these are far better suggestions than to "just tax the current home owners".

This tax suggestion is one of the dumber ideas to come out - every form of tax that we have thrown on top of housing has largely failed because, ultimately as you said, this is a supply problem. We don't have enough housing so people are forced to spend like crazy to get something - when the average detached home in Chilliwack and Hope cost $1m I think we've gone well past the theory that it's just foreign investment (BTW: You can get a fantastic detached house in central Calgary for $1m). Detached homes in Hope are being built with suites so people can afford to buy them. It's completely nuts.

This tax would just be more theatre - by allowing deferral it'll never have the effect he suggests in terms of slowing down home purchases and it disproportionately affects the different types of people who own these homes. Some lucked into them by having lived in them for ages, others actually put all their money into one just so they could have it etc. Taxes should be relatively equitable and this one wouldn't be.

There's a small myth that we're out of land to build on in the lower mainland - the myth exists because technically we don't have any more SFH lots available but that's strictly a zoning problem. There are tonnes of massive lots in the lower mainland that the cities won't allow subdivision on so they artificially inflate housing costs. Allow smaller lots and you've got lower costs right away. Then allow more units of housing on these lots and more square feet. I noticed Calgary has much more flexibility in lot sizes and housing types than we do and they've got tonnes of land to build on.

Our politicians are bunch of cowards.

[T4RAWR]

Originally Posted by donk.

If you can't afford to pay tax on your million dollar condo, house, townhouse, that means you are financially irresponsible and are living above your means

Does this apply to seniors who bought their home for cheap in the 90s and through no fault of their own their houses have sky rocketed in value?

Or just for new people trying to squeeze into thr market?

[Alpine]

Originally Posted by PeanutButter

Man, why is there so much politics going on? I hate it.

Sadly, that's how it works. Just a whole bunch of people jocking for power, position, and $. It's hard to find an actual neutral take or position.

[Hondaracer]

Originally Posted by T4RAWR

Does this apply to seniors who bought their home for cheap in the 90s and through no fault of their own their houses have sky rocketed in value?

Or just for new people trying to squeeze into thr market?

Both?

[Traum]

Originally Posted by donk.

If you can't afford to pay tax on your million dollar condo, house, townhouse, that means you are financially irresponsible and are living above your means

Let's look at a hypothetical but mostly realistic situation to see how accurate your suggestion here is.

Let's say a working class family needs more room for their growing kids 10 years ago, and they plunged their savings down to purchase a fairly typical townhouse in Metro Vancouver for $600k. Salaries tend to peak for someone in their 40's - 50's, but it is also fairly common for it to more or less plateau when you aren't moving up the cooperate ladder. You still get your annual 1 - 3% salary increase. But essentially, your salary is not giving you any additional buying power.

For a family like this, they are not budgeting for a million dollar townhouse. They are budgeting for a $600k one. But now that $600k townhouse of theirs has doubled in value over the past 10 yrs to $1.2M now, so they get hit with this surtax. Are they being financially irresponsible and living above their means?

Originally Posted by westopher

The choices here are
“Pull up your bootstraps and save 300k for a down payment”
“Pull up your bootstraps and pay 60k in taxes over the next 30 years”
Both suck but one is a lot more sensible ask.
That said I’m sure the people that should actually be paying the tax (rich people) have accountants that will get them out of paying it.

I'd like to think / find a choice or solution that can avoid both of the options you mention here, and I'm saying there has to be some room -- potentially a lot of room -- in the supply side of the equation to make housing more affordable for everybody involved. And as supafamous has suggested, I'd hardly think this surtax proposal on the $1M+ homes can be effective in reining in home prices for the Vancouver and Toronto market at all. The only thing it'll do is to add yet another cost to working class families like the ones I've described above. To a large extent, I also see myself as someone in that situation, even though I live in an old detached shack in the 604.

I really don't have any creative solutions to address our housing affordability problem, but I like Supafamous' suggestion of opening up more buildable space through zoning conversions. Also, borrowing some tried and true ideas from the likes of old Hong Kong and Singapore, perhaps it is time for the BC and Ontario governments to start considering large scale public housing. The old Hong Kong would be a better example here because it had a long period of time when its public housing program and its private housing market were able to thrive side by side. As I understand it, the Singaporean housing market is mostly dominated by the public sector program. But the BC provincial government would never have the guts to take on something as big as large scale organized public housing...

[westopher]

I agree with the zoning, but there’s is myriad of other things to address.
What about the infrastructure that Vancouver has basically left unchanged for the influx of housing.
What about the hundreds of millions of dollars worth of undeveloped lands that are already owned by developers? They aren’t going to do anything to risk putting too much supply on the market. Onni, pinnacle, amacon. It’s all the same family. Then there’s Bosa or Westbank. None of these developers are going to do anything that would risk making housing more affordable. It’s not permits preventing them from making more housing, it’s strategy.

[Traum]

In the example that you mention where developers are withholding undeveloped but available land, that would be a perfect place for the provincial / federal government to step in and legislate something along the lines of the developer not being able to hold on to the land for X number of years if they are not going to start development on it. I dunno what a good figure that X number of years may be -- it would be for the gov focus group researching on that policy to determine an appropriate number. If the developer does not start developing the land within that X number of years, they will be forced to sell the plot at the government assessed value. In this situation, we know the gov assessed value would be noticeably less than the market value, so the developers would have an incentive to avoid that forced sale.

I don't think this is infringing on private property ownership rights because there'll be that X number of years duration for the developer to capitalize on their profit. If they take on a bite too big for them to chew, that's their problem.

It won't make housing affordable right away. But over that X number of years term, there will be more supply on the market from this undeveloped land.

[rb]

Originally Posted by westopher

They aren’t going to do anything to risk putting too much supply on the market. Onni, pinnacle, amacon. It’s all the same family. Then there’s Bosa or Westbank. None of these developers are going to do anything that would risk making housing more affordable. It’s not permits preventing them from making more housing, it’s strategy.

I worked for one the companies mentioned and reported directly to the owner who's batshit insane and greedy. You're not wrong. When they buy land, it's also sometimes subject to zoning prior to payment in full. Being the way that they are in not paying right away or in full, they sometimes make the tiniest changes to their development or zoning application to buy some time as they have many other projects on the go. That's atleast what the dev manager told me. And sold out projects are never sold. The owner had so many penthouses that he ended up just keeping that he forgot how many he actually owned

[donk.]

Originally Posted by Traum

For a family like this, they are not budgeting for a million dollar townhouse. They are budgeting for a $600k one. But now that $600k townhouse of theirs has doubled in value over the past 10 yrs to $1.2M now, so they get hit with this surtax. Are they being financially irresponsible and living above their means?

Yes

Can't budget for the future? Don't complain when extra costs pop up

Or better yet, sell the property, buy a 1mil one, and have 100k after expenses to pay 10 years worth of surtax, a new car, several family vacations, and even have a savings for once in their lives

[supafamous]

Originally Posted by westopher

I agree with the zoning, but there’s is myriad of other things to address.
What about the infrastructure that Vancouver has basically left unchanged for the influx of housing.
What about the hundreds of millions of dollars worth of undeveloped lands that are already owned by developers? They aren’t going to do anything to risk putting too much supply on the market. Onni, pinnacle, amacon. It’s all the same family. Then there’s Bosa or Westbank. None of these developers are going to do anything that would risk making housing more affordable. It’s not permits preventing them from making more housing, it’s strategy.

Yeah, there are a large number of things that need to be fixed if we're ever going to make the big cities even remotely affordable again - the reality is that whatever the price is today (and going forward) is basically the floor price for housing b/c there's no way govt's intervene in a way that lowers prices unless it's out of their control (major economic collapse). All we can really do now is do things to keep prices from increasing which is really sad.

I'm amazed that there's not even a fringe political candidate that's giving the straight talk to people about what needs to change - massive zoning that drives density, reduce car dependency (to reduce living costs), increased property taxes (to moderate price increases and get fairer value out of land, forcing developers to develop untouched land, etc etc.

All we get are politicians either saying something needs to be done about housing prices and then they try to find a few pennies for social housing or we get the closet racists who say they want to protect neighbourhood character (I'm looking at you Colleen Hardwick).

[PeanutButter]

Originally Posted by donk.

Yes

Can't budget for the future? Don't complain when extra costs pop up

Or better yet, sell the property, buy a 1mil one, and have 100k after expenses to pay 10 years worth of surtax, a new car, several family vacations, and even have a savings for once in their lives

I can't tell if you're just trolling or actually being serious?

Also curious. What's your living situation and your family's situation. Do you or your parents own real estate?

[Gumby]

Originally Posted by PeanutButter

I can't tell if you're just trolling or actually being serious?

Also curious. What's your living situation and your family's situation. Do you or your parents own real estate?

I just get the sense that donk has something against homeowners…

[donk.]

Not trolling, serious

I have two condos, both rented out, I rent a condo for myself
Dad owns two condos
Mom owns a house with stepdad

[westopher]

Donk is just regurgitating what homeowners have said to people complaining about house prices.
Seriously though, if someone has 3 million in equity in their home is it that absurd for them to use 2% of that equity over the span of 30 years to pay for some tax? We aren’t talking about making people homeless here.

[underscore]

2% doesn't sound like much, but that adds up over time. Say you buy a place for $1M right when the tax starts, you live there for 30 years and now it's worth $3M and you sell. Assuming it's all linear equity gain, no interest, etc etc you're paying $1.2M just for this tax on the $3M sale. That's absurd.

I feel like this sort of tax would be one of those things that screws over middle class people and the richer people it's supposed to effect won't even blink at it. It may have other unintended consequences as well when it's giving people an incentive to never move.

Originally Posted by westopher

What about the hundreds of millions of dollars worth of undeveloped lands that are already owned by developers?

So tax the fuck out of undeveloped land owned by development companies. Have the rate increase the longer they sit on it or something.

[supafamous]

Originally Posted by underscore

2% doesn't sound like much, but that adds up over time. Say you buy a place for $1M right when the tax starts, you live there for 30 years and now it's worth $3M and you sell. Assuming it's all linear equity gain, no interest, etc etc you're paying $1.2M just for this tax on the $3M sale. That's absurd.

I feel like this sort of tax would be one of those things that screws over middle class people and the richer people it's supposed to effect won't even blink at it. It may have other unintended consequences as well when it's giving people an incentive to never move.

So tax the fuck out of undeveloped land owned by development companies. Have the rate increase the longer they sit on it or something.

These taxes basically treat homes as investments and if it's your primary home then it's hugely unfair to do it. Homes are NOT investments, they only became treated as such because of a lack of housing. Fix the housing, not the tax policy on them!

I've heard suggestions about taxing the gains like they're capital gains (50% of the gain would be taxable) which would be a huge penalty against people who are moving for legit reasons (for work or growing families).

These taxes would penalize working and middle class folks who are new to the housing market the most while the rich and the long time owners will barely feel the pain (long time owners never expected these gains, they won the lottery).

OTOH, I'm a big fan of higher property taxes. If you're using the land it's fair to tax it more. This hurts more evenly and would push land to be used more appropriately - zoning would be changed when the property taxes on a detached lot got into 5 figures. You bet those long time owners would scream bloody murder.

[quasi]

Originally Posted by supafamous

These taxes basically treat homes as investments and if it's your primary home then it's hugely unfair to do it. Homes are NOT investments, they only became treated as such because of a lack of housing. Fix the housing, not the tax policy on them!

I've heard suggestions about taxing the gains like they're capital gains (50% of the gain would be taxable) which would be a huge penalty against people who are moving for legit reasons (for work or growing families).

These taxes would penalize working and middle class folks who are new to the housing market the most while the rich and the long time owners will barely feel the pain (long time owners never expected these gains, they won the lottery).

OTOH, I'm a big fan of higher property taxes. If you're using the land it's fair to tax it more. This hurts more evenly and would push land to be used more appropriately - zoning would be changed when the property taxes on a detached lot got into 5 figures. You bet those long time owners would scream bloody murder.

I agree, ridiculous to go after people living in their primary residence who own one home, they are not the problem. If you want to add any more taxes or penalties to home ownership do it in the form similar of the speculation and vacancy tax and change it to target those who own multiple properties lived in or not. I mean there really isn't any fair solution to this problem but if you're going to target anyone it has to be the ones that own multiple properties since any additional properties in most cases are for investment purposes.