10 ms·
High-end house rents in Vancouver plunge up to 20% as inventory spikes: experts
- krausejj 8y agoDoes anyone have details on the "speculation" tax? Do any other regions use similar taxes?
- Tiktaalik 8y agoHere's the government info: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax https://www2.gov.bc.ca/gov/content/taxes/property-taxes/spec... Essentially the tax targets secondary home ownership in certain non-tourism related hot housing markets of the province. A British Columbian that has a cabin in the woods somewhere is not terribly likely to be impacted. There has been criticism from people saying "but I'm not 'speculating' I have a second home in Vancouver because (whatever reason)", but the tax seems generally popular so far. When so many don't own a single home, and with homelessness such a significant issue in Vancouver, I don't think there's much empathy for people upset that they'll be taxed on their second home.
- krausejj 8y agothanks for the context!
- stevenwoo 8y agoLondon has a second home tax, https://www.theguardian.com/money/2016/mar/31/stamp-duty-second-homes-what-will-i-pay https://www.theguardian.com/money/2016/mar/31/stamp-duty-sec... and a luxury home tax https://www.cnbc.com/2014/12/04/luxury-homes-tax.html https://www.cnbc.com/2014/12/04/luxury-homes-tax.html but they also had to add rules for proving money was not laundered to buy things earlier this year for the UK https://www.usnews.com/news/best-countries/articles/2018-06-13/uk-crackdown-on-foreign-wealth-targets-russias-elite https://www.usnews.com/news/best-countries/articles/2018-06-... though it sounds like a workaround is to use shell companies in different countries to buy property.
- krausejj 8y agothanks!
- goatherders 8y agoI rent in the north shore. I'm glad rents are coming down and I'm glad I didnt buy last year when u was tempted. That said, I dont know anyone that thinks the market is slowing. The overseas money still props things up pretty well.
- refurb 8y agoYou were very smart not to buy. Housing prices are coming down in Toronto as well, and people who bought homes still under construction are finding out that that the prices are now lower than what they paid.[1] Canada is generally has recourse laws, which means you can’t walk away from an underwater mortgage. [1]https://www.thestar.com/business/real_estate/2018/01/29/how-a-softer-housing-market-has-crushed-pre-construction-home-buyers-dreams.html https://www.thestar.com/business/real_estate/2018/01/29/how-...
- Tiktaalik 8y agoThe Globe and Mail does a constant round up of various real estate sales, and this recently published one was quite interesting: Empty-homes tax prompts sale of Vancouver condo https://www.theglobeandmail.com/real-estate/vancouver/article-empty-homes-tax-prompts-sale-of-vancouver-condo/ https://www.theglobeandmail.com/real-estate/vancouver/articl...
- tspike 8y agoThis is great news and may serve as a model for other cities facing similar housing shortages. Was the speculation tax a ballot measure or something passed at the city council level?
- goatherders 8y agoI believe the city has been adding different things for the last couple years trying to open up more rentals. If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. It has had a real effect on employment, especially in tech. A friend of mine at hootsuite laments that sometimes they miss on great hires because even though the salary is competitive, there is literally nowhere within an hour of the office for the candidate to afford to live.
- jimrandomh 8y ago> If I recall correctly something like 25% of all condos downtown are unoccupied which is insane. They arent even available to rent, just sitting their empty. You do not recall correctly. https://www.reuters.com/article/canada-housing-vancouver/nearly-5-pct-of-vancouver-homes-deemed-vacant-amid-housing-crunch-idUSL4N1QP593 https://www.reuters.com/article/canada-housing-vancouver/nea...
- romed 8y ago5% is barely a functioning market. Normally you'd expect 8-10% vacancy rate in a well-supplied housing market.
- Tiktaalik 8y agoHe was probably thinking of Coal Harbour, a downtown neighbourhood which did have a census non-occupied by usual residents rate between 20-25%.
- projectramo 8y agoI think i see the confusion: 1% vacancy 5% unoccupied but not open to rent So of the houses that are unoccupied, only 20% are vacant? (I actually read it as 1/6th but the point is where the confusion may have come from)
- ryanwaggoner 8y agoThis is a garbage article when compared with the headline. The “experts” is two property managers who don’t even agree on what’s happening or why. The 20% figure comes from a quote that sounds like an off-the-too-of-my-head assessment from one of them: ”What we’re seeing is that rental rates have decreased up to 20 per cent from the spring of 2017, and it’s getting even worse.” They also say they’ve never seen anything like this in their TEN whole years of property management!! Rents might be dropping by this much, or even more, but this is hardly even evidence of that, let alone data from “experts”. Better title: “One property manager estimates that some luxury property rents in Vancouver have declined by up to 20% over the past year.”
- sk5t 8y agoTen whole years—almost one market cycle...
- friedman23 8y agoThis belief that market cycles are 10 years is the gamblers fallacy in action. Just because there is a "trend" of economic cycles occurring in 10 year periods doesn't mean the next one will occur 10 years after the last. Also the entire purpose of laws an regulations like Dodd Frank is to prevent debt bubbles. Whenever someone says that we are "Due" for a correction they are falling for the gambler's fallacy.
- sk5t 8y agoI agree--my comment was tongue-in-cheek. Whether there is or isn't a market cycle, these folks haven't been around long enough to see it.
- reaperducer 8y agoThis is a garbage article when compared with the headline. The “experts” is two property managers who don’t even agree on what’s happening or why. I read real estate press almost every day, and this is pretty much a universal constant. For every bull, there is a bear. For every person predicting a market crash, there is a person predicting things will get even better. Even articles that should be straight forward statistical pieces are usually based on data from some startup web site nobody's every heard of that pushed out an infographic to get clicks. The more I observe the real estate industry, the more I'm convinced that it's mostly made up of people too damaged to sell used cars anymore.
- internet555 8y agoSmok weed everyday
- dang 8y agoCould you please stop posting unsubstantive comments to Hacker News?
- internet555 8y agoSorry
- meritt 8y ago> A $3 million house that would have rented for $5,000 a year ago $5k/mo for a $3M home is a cap rate of just 2%. That's pretty terrible in itself. Now it's $4k/mo or 1.6%? How on earth is that financially sustainable at either amount?
- pcurve 8y agoyeah I was shocked to read that. Even for a $1million house, $5k/mon rent wouldn't make much sense.
- kitcar 8y agoIn many cases the owners do not view it as an investment, it's a store of wealth that is difficult for the government of their home country to seize. Hence even if they lose money every year it's better then the alternative -
- adventured 8y agoThere's no value for the Chinese Government in seizing foreign personal homes of that sort. It's tens of billions of dollars, a trivial sum to them right now. They do not need that money. They need to strictly contain domestic capital from pouring overseas, which has largely been accomplished. And they need controls in place to restrict people from being able to easily flee, which they've also largely accomplished (social scores, heavy tracking, etc). For the most part it doesn't matter if you have a house in Vancouver if they can change a score and prevent you from ever flying away. If you have the audacity to try it anyway, they've probably got your family. Which is something they've used on many occasions to induce Chinese nationals to return.
- toomuchtodo 8y agoYou might be misunderstanding the use case. The Chinese with wealth moved their wealth out of China to real estate in London, Canada, and parts of the US specifically to put it out of reach of the Chinese government and to avoid the capital outflow controls you refer to. Once safely outside of the PRC's reach, it's trivial to move the wealth around using corporate entity ownership (among other methods).
- 40acres 8y agoIt's hard not to see the overall solution to the housing crisis in some North American cities as simply building more housing. A speculation and/or vacancy tax makes sense in cities with a high number of foreign buyers like Vancouver and New York but in other cities it seems like the biggest road block is simply zoning restrictions that prevent supply to meet demand. There are second order effects that need to go w/ more building, such as adequate transportation, parking and services. But if your goal is simply to get the average down can you do better than simply building more? Rent control seems more like a band-aid for a small number of folks rather than a real solution.
- quickben 8y agoBuilding more doesn't work. Some areas in Toronto have 30% empty dwellings. There are much more money available to speculate than available surface area. Leverage was cheap (through housing) so everyone played that asset class on margin here. Now that the interest rates are going up, it will sort itself out.
- tptacek 8y agoThe average rent in Toronto is even lower than that of Chicago. It doesn't sound like there is a housing problem there.
- projectramo 8y agoTwo questions that seem to be answered but aren’t quite: 1. So was the theory that the housing price spike was driven by foreign buyers who didn’t occupy their homes accurate? 2. So did the speculation tax work?
- Tiktaalik 8y agoSpeculation tax hasn't even been implemented yet. We're seeing a 20% drop due a basket of measures such as CoV empty homes tax, airbnb regulations, provincial increased school tax on homes over $5M and a fear of the upcoming speculation tax.
- refurb 8y agoDon’t forget the “stress test” required to get a mortgage since last year. New buyer now have to qualify for a mortgage at the Bank of Canada rate plus 2%, which is close to to 6% now. Even though mortgages can be had for a little over 4%. That shutdown a lot of buyers very quickly.
- projectramo 8y agoI am sure I am missing some nuance since this is the first I have heard of this but, on first blush, that seems like a great idea.
- refurb 8y agoIt was an effort by an independent govt body (OFSI) that is charged with managing risk with canadian banks. Basically the number of uninsured mortgages had been climbing rapidly, so this instituted so that even with a fall in housing prices, loans are less likely to default. Good I think from a banking risk mentality, but not so good for homeowners looking to buy. I remember reading that a couple making $100k and 20% down could have bought an $850k home before the stress test. Now it’s my more like $650k.
- 8y ago
- truebosko 8y agoI am curious how much lag Toronto has on Vancouver. Not quite the same problems, but very similar. TO seems to be about 1.5 years behind Vancouver markets
- DenisM 8y agoFWIW Seattle real estate market stalled out two months ago - inventory is rising, buyers are sitting on the sideline waiting for the first shoe to drop. No source, just something I heard from a guy trying to sell.
- rubiquity 8y agoIt's real. It started in June. Inventory has risen every month since June and sales have stayed the same or declined. Seattle was insane before June though. Homes were receiving multiple offers within days of being listed and going between 10% and 30% over asking price with sellers throwing in all sorts of crazy contingencies (no inspections allowed, rent from buyer for 2-3 months at some ridiculously low rate, etc.) As one anecdote, my neighbor had arguably one of the nicest homes in one of the more sought after neighborhoods in Seattle. They sold their home in September after it "sat" on the market for 12 days and sold exactly for ask. The price was 16% less than they were estimated at in July, which is what probably triggered them to sell I guess. Depending on which real estate agent you ask, Seattle was absolutely insane before and now it's getting back to slightly above normal levels and will stay there for a while. Others will say if this continues for a few months it's a sure sign of the bubble popping. Inventory will probably go down a little bit in the next few months mostly due to eager profiters taking a break during the usually slow winter months. Buyers will probably decrease a little bit too due to interest rate hikes. Next spring will be the real test. Condos and rental prices don't seem affected yet, but those tend to lag homes in my experience. Seattle does have horrible density so maybe condos will stay strong at their ridiculous $550k median price.
- donavanm 8y agoSFH sellers (and agents) dont seem to have accepted the change yet. No NWMLS data to back it up, but list pricing has stayed roughly at the same crazy high levels of spring 2018. Units are instead sitting for weeks or months. The rare ones that are relisted are reduced by maybe 1-2%. As you said, will be very curious to see what May 2019 looks like. PS: IIRC it was the may 2018 sales and inventory data that deviated from the recent trend lines. Slightly earlier than June.
- derefr 8y agoI want to point out that Vancouver’s municipal election is today (I’m standing in line for it), and many of the candidates are running on platforms related to the housing crisis. Whatever you think of the issue, this particular article isn’t “about” the issue so much as it is a precisely-timed propaganda piece aimed at influencing the election.
- bing_dai 8y agoI just voted!
- deleted 8y ago[deleted]
- krausejj 8y agohow is it meant to sway the election? is this good news or bad?
- robertfw 8y agoIt is great news, the Vancouver housing market is untenable in its current state. The rent:average income ratio is completely out of balance. This is propaganda to try and elect development friendly candidates in our election today
- jdavis703 8y agoWon't increasing supply reduce prices though? It seems like rules such as taxing vacant properties, regulating home sharing (e.g. AirBnB) and increasing the number of houses is needed to make homes more affordable.
- escape_goat 8y agoAre there prior examples of usage wherein one may 'plunge' in an upwards direction? Idiomatically, the word is most frequently used to describe (a) rapid motion into water and/or (b) rapid motion downwards. Personally, and perhaps consequentially, I have only ever encountered the term with respect to 'into' and 'downwards'. However, if the etymology of the word is consistent with a more general usage, I would be pleased to learn that.
- ownagefool 8y agoSubtitle of the article: Slowdown of detached home sales, speculation-tax avoidance, Airbnb rules bring flood of high-end houses onto rental market, creating “desperation” as owners slash rents
- escape_goat 8y agoWow, that was idiotic of me. I misread the sentence in a weird way and failed to notice the normative interpretation; and yes, if I'd cared about the subject matter to read the article, I'd have noticed my error. Unfortunately, it appears that we can't downvote our own comments here.
- pkaler 8y agoThe Vancouver municipal election is today. This is a propaganda piece written by Glacier Media Real Estate. The goals of this piece is to muddy the water and convince people to not for candidates proposing an increase of housing supply. This article should be flagged.
- 18pfsmt 8y agoFor those of us that are far away and oblivious, can you elaborate and cite your sources. Your claim seems plausible, even if missing the word 'vote,' but I can't evaluate without more evidence.