It Had Gone Up For So Long, We Needed A Reset
A weekend report on Canada, because the news has become so overwhelming I don’t want to fall behind. The Vancouver Sun, “Setty Pendakur has an insider’s knowledge of mainland China’s growth pains, which he recognizes are re-shaping Metro Vancouver. ‘In the past 25 years, I’ve probably been to China about 86 times,’ says the University of B.C. urban planning professor emeritus, who lives with his wife in Vancouver’s Yaletown. And China’s Communist leaders want to soon surpass the U.S. India-born Pendakur, who believes he became the first visible minority politician in B.C. when elected to Vancouver city council in 1972, has helped shape the powerful country through his work for the World Bank and as senior adviser to China’s State Council, which gives him the ear of top politicians.”
“Metro’s soaring housing prices, he says, are significantly fuelled by wealthy Chinese flocking to Canada, which, unlike other countries, has virtually no restrictions on offshore money. Moneyed Chinese, Pendakur said, are scouring the globe for tax havens. ‘Canada is only a big Caribbean country. We don’t ask questions about where money comes from,’ says Pendakur. ‘The loopholes are tremendous’ in Canada’s immigration policy, Pendakur said, maintaining they became more open to abuse under Prime Minister Brian Mulroney. ‘Does anyone ask where they got their money?’”
From CTV Vancouver. “A real estate developer building a condo complex east of Vancouver is hoping to help low-income buyers get into the market by offering ownership with zero down payment. Townline Homes says it is introducing its ‘historic affordability plan’ in Port Moody in response to ‘the ever increasing financial challenges for the average British Columbian to access home ownership.’ The company says it can achieve the plan by selling the high-rise units for eight per cent less than the current appraised market value, and having that eight per cent discount be recognized by the Canada Mortgage and Housing Corporation as the down payment for the mortgage.”
“For example, on a $280,000 condo, the affordability program would discount $22,400 to be used as an eight-per-cent ‘virtual down payment’ – making the actual purchase price $257,000, which would be 100 per cent financed by a book. ‘This is not the same thing as requiring no down payment,’ said Lisa Ono.”
The London Free Press. “The dream of new home ownership is becoming elusive for the millennial generation, says the president of the Canadian Home Builders’ Association. Kevin Lee, said rising property values are outstripping income growth. The national association is lobbying the federal government to make homes more affordable. One step Ottawa could take is to extend the maximum amortization period to 30 years, Lee said. The federal Conservatives lowered the cap to 25 years in 2012 to reduce the risk to borrowers. ‘First-time homebuyers pretty much everywhere are having a hard time getting into the marketplace,’ said Lee.”
The Business News Network. “Alberta’s real estate market is bracing for its worst year since the global financial crisis as hopes dim that an economic recovery can stave off a broad housing correction. Many sellers simply refused to lower their prices last year, said Royal LePage chief executive Phil Soper, instead opting to wait out what many hoped would be a temporary downturn in the economy. That helped push sales down 26 per cent in Calgary last year, even as home values stayed relatively flat. ‘It’s really hard for homeowners to get their head around the fact that their home might be worth less than they thought,’ Mr. Soper said. ‘People just said I’m not selling at a discount.’”
The Bonnyville Nouvelle. “An increase in inventory, coupled with less buyers, has caused a major slide in local housing prices and experts say it’s not over yet. ‘You’re looking at the amount of product on the market, it has increased substantially and the number of sales has decreased, prices have dropped,’ said Gerry Storoschuck with Royal LePage Northern Lights Realty.”
“A realtor with Remax Bonnyville Realty, Vince Kelly that sentiment, ‘Previously we didn’t have a whole lot to offer…We have about 60 to 70 homes (for sale) in Bonnyville now, so about four times the number of homes on the market.’ The housing market has been on a downward trend since the end of 2014, following that of the oil industry. In an area once known for its high housing prices, homeownership is more within realm of reality for many as prices come down close to normal levels.”
“According to Kelly, over the last two years housing prices have dropped 14 per cent, with 2015 seeing a decrease of about seven per cent. ‘It is kind of a good thing. It had gone up for so long, we kind of needed a reset,’ said Kelly.”
From CBC News. “As oil prices continue to plummet, people involved with the St. John’s condo and commercial real estate markets say they are beginning to feel the pinch. They say the pinch is mostly being felt on the high end, as planned condominiums transition to apartment complexes, and existing owners of luxury apartments find renters hard to come by. Consider a place like The Narrows, a recently built high-end condominium complex in the city’s downtown. Real estate agent Larry Hann says one condo owner had to drop the rent on one property from $5,000 a month to $3,000 in hopes of finding a tenant.”
“But even at $2,000 less than the former asking price, the condo is still vacant. ‘It’s fairly obvious to anyone working in the industry the prices are coming down,’ said Hann. ‘There’s a lot of inventory on the market — there’s a lot of nervous people, nervous investors.’”
The Chronicle Herald. “Housing statistics for Nova Scotia are pretty dismal right now, which puts everyone in the real estate sector in an awkward position. But veteran real estate agent Ed Power of Re/Max Nova says there is no point in trying to soft-pedal the numbers, as it only leads to disappointment for the homeowners. Statistics show that sales are down, yet some people are saying home prices will continue to rise in 2016, which Power says is hard to justify. Nevertheless, he says, ‘This is a buyers’ market, but that could be an advantage, especially if you want to move up (in value). This is the time to do it.’”
“The downturn in the stock market and general economic malaise that seems to be gripping parts of the Nova Scotia economy recently has some people emailing me with dire predictions about the national real estate market. People have been making such prophecies about a real estate bubble bursting in places like Toronto and Vancouver for the past several years. So far, there haven’t been signs of a general economic meltdown that could lead to such an event.”
“If it was to happen, it probably wouldn’t have a direct impact on Halifax because any bubble that may have existed in the real estate market here has been deflated.”
