1.Vancouver, Vancouver, Vancouver
A new forecast by Central 1 Credit Union predicts B.C.’s hot real estate market will remain robust for the next two years, despite fears a tax on foreign buyers is chilling Metro Vancouver sales. But market overseers say the trend will even out and benefit other parts of B.C.’s housing market in the short term, with B.C. sellers remaining in a strong position.
With the new tax on foreign homebuyers in Vancouver expected to slow purchase activity, at least temporarily, there is a greater risk the city’s lofty real estate prices would be vulnerable to a potential jump in local unemployment, Fitch Ratings said on Monday. The new tax will likely be effective in tamping down buyer activity, Fitch analysts wrote, but with signs that the market may have begun to cool even before the tax, that leaves Vancouver home prices more exposed to potential changes in Canada’s economy.
Meanwhile, the B.C. Real Estate Association is out with its third quarter report.
This time around, the association predicts the 15% foreign buyers tax will have a moderating effect on the housing market in Metro Vancouver through to the rest of the year. However, that would be offset by strong sales in markets outside of that.
Residential sales are expected to climb this year to about 10.4%, which would break the previous record of 106,310, set in 2005. It’s also predicting housing demand will moderate by next year, but only to about 8%, to 104,400 units.
The B.C. government’s 15-per-cent tax on foreign buyers in the Vancouver region had barely been in place a week when realtors and industry groups lined up with anecdotal evidence that it was having a major impact. Sales figures are now slowly trickling in, and while it’s still too early to say what impact the tax will have on the region’s market over the long term, there are indications that things may be slowing down. Evidence shows it didn’t take long for BC’s property tax hike to axe the real estate market in greater Vancouver. Home sales were already sliding in the Lower Mainland, down from a year ago by 19% in June, and 31% in July, however the Real Estate Board of Greater Vancouver reports that in the last two weeks of July, sales fell off by 42% over 2015.
Not happy with being singled out, the tax might even be driving Chinese investors to Toronto! But for those not willing to travel so far, Victoria is emerging as a popular destination. Central 1 Credit Union proclaimed Vancouver Island as “B.C.’s new housing hot spot.” And a reality show is even in the works.
2. BANKING ON REAL ESTATE
Royal Bank CEO David McKay says the lender is “closely monitoring” the real estate markets in Vancouver and Toronto, where home prices have been climbing at a breakneck pace. Canada’s largest banks, which began rolling out their latest earnings on Tuesday, are often seen as insulated from a potential housing downturn because about half the $1.6 trillion in total mortgage debt in this country is supported by government-backed insurance. But the big banks would not be immune to a steep drop in prices, something that seems within the realm of possibility given early indications of cooling in Vancouver’s red hot market. In a report Monday, equity analysts at National Bank Financial said softening house prices in Vancouver are expected to translate into weaker retail spending in British Columbia this fall, which could trigger a cascade of events leading to rising household credit losses for the banks.
3. REAL ESTATE AGENTS BEHAVING BADLY
A realtor who worked at a firm under investigation by the Real Estate Council of B.C. has filed a lawsuit against her former employer, alleging New Coast Realty pressed her to engage in the “blatantly unethical” practice now known as shadow flipping and then withheld more than $240,000 in commissions after she refused.
Meanwhile, at least 70 real estate agents in Calgary are still owed more than $1 million in commissions on the homes they sold before Discover Real Estate went bust in May, according to documents obtained by CBC News. The company officially closed down around the end of July, leaving many of its former realtors hanging — a trend that some industry insiders say shows a gap in real estate regulation in Alberta.
4. SALES KEEP FALLING (AND RISING) TO THE SOUTH
U.S. house resales fell more than expected in July after four straight months of strong gains, as a lack of inventory limited choice for buyers, but further price rises suggested the housing market remained on solid ground. The slump in sales reported by the National Association of Realtors on Wednesday is likely to be temporary, given that a tightening labour market is steadily pushing up wages and mortgage rates are near historically low levels. Meanwhile, new U.S. single-family home sales unexpectedly rose in July, reaching their highest level in nearly nine years as demand increased broadly, brightening the housing market outlook. The
5. THE MANY EMOTIONS OF HOME OWNERSHIP
Buying a home means more than buying a house. It means you’re buying into a city, neighbourhood — a destination, if you will. But, we’ve all got regrets and some linger longer than others. When it comes to real estate, those regrets can stick around for the rest of your life. Knowing that, is this even a good year to buy a home in the Canadian market? The latest data from the Canadian Real Estate Association (CREA) may lead you to believe otherwise.
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Gavin is a media relations consultant and news junkie based out of Collingwood, Ontario.