261 replies to this topic

[sdwright.vic]

So... no one can build anything because they can't sell things to foreign investors or vacation property buyers from other provinces?

Or... is it that they don't want to build things that would have to be built at more affordable price?*

I have kind of always thought things were getting built because the could be sold at hyper inflated prices.

*This is in now way a comment on the tax, more a comment on greed.

[davidN]

Disagree with you completely. I think that Westhills has shown itself to be one of the most responsible developers in the area. They always seem to be priced fairly for their product. One may disagree with a style or something but their sales record speaks for itself so the public obviously agrees..

 

I know that we have been waiting for this building and are disappointed that it is on hold. So disappointed in fact that I called their offices today to get clarity. I would suggest anyone else who has an interest do this as well

 

Here is what they told me:

 

The spec tax effects VERY few of their buyers. They mostly sell to locals.

 

The market has "stalled" both due to this tax and due to the Governments vow to reduce home prices by 20-25% (Carole James).

 

Construction costs continue to rise (i.e. steel tariffs etc) and there is no end in sight for that.

 

Westhills is a cautious company that works hard to build affordable homes using local contractors and trades and they say they have no choice but to wait for the government of wake up and see that this tax is unfair to all developers and all current homeowners and building trades in B.C. 

 

That was their take on the situation,

 

Now here is mine:

 

 

The question is - why would I buy now when the Government is doing everything possible to devalue my purchase? A reduction of 20% of my purchase price on a $700,000 purchase (where our top end lies) means I stand to lose $140,000. within months perhaps after I buy. It is not about greed of the developer or my greed. It is about a government who works behind the scenes to attack my hard earned money that I have invested in my home.

 

Can you afford a 20% decrease in your equity within months of you buy a home? Thats a huge risk for me and I am sure it is even a greater risk for someone like Westhills.

 

MLS figures show the sales are declining each month. While they would not tell me how much it might cost to build this tower I guess it to be around $50,000,000. Do you want to risk that amount knowing the the government is working hard to decrease your possible selling prices or worse - make it so no one buys at all? That's a hell of a risk!

 

And don't forget that it is hundreds of locals who build projects like Westhills. If the market slows down many of them will be out of work and then they won't even be able to afford to rent let alone buy (even with a Carole James discount).

 

You may see it as a greedy developer. I see its  a cautious developer and a government looking for votes.

[tjv]

^where are you getting a 20% decrease from?  I don't recall prices falling that much here ever especially "within months".  I don't recall it falling that much in any major recession we have had here in the last 40 years, but anyone is free to correct me if they have the actual figures

 

I am not predicting a 20% decrease in my house price, but rather a solid 10-15% price increase over the next year

 

I will admit the big factor out there I think is rising interest rates (another rate hike yesterday for those who didn't know) and tightening mortgage rules make it difficult to borrow money, even those with excellent credit

[Mike K.]

The lending market is absolutely a huge component of the equation, for sure.

 

Now the drop in sales we're seeing does not take into consideration what's happening in the pre-sale market. Units are selling, and they're selling rather well.

[tjv]

^yes, especially townhomes and condos

[sdwright.vic]

I don't get how "the spec tax effects VERY few of their buyers. They mostly sell to locals".

And,"the market has "stalled" both due to this tax..."

These comments contradict each other.

[jonny]

Now the drop in sales we're seeing does not take into consideration what's happening in the pre-sale market. Units are selling, and they're selling rather well.

 

Maybe we're just at the point where average Joe's and Jane's can't afford or justify spending $1M, $1.1M, $1.2M (or whatever the going rate is) on a classic Gordon Head BC Box and just give up like so many Vancouverites have.

[Mike K.]

Maybe we're just at the point where average Joe's and Jane's can't afford or justify spending $1M, $1.1M, $1.2M (or whatever the going rate is) on a classic Gordon Head BC Box and just give up like so many Vancouverites have.

 

That exactly what's happening. Very, very few people are willing to buy a 1970's Victoria Special for $1 million, but properties in excess of $1 million now account for 50% of re-sale inventory from Sooke to Sidney.

 

@SD, what they mean is while the volume of vacation property purchasers is relatively small, it is still large enough to have an effect on their specific project.

 

But here's the other side of the equation. Belmont Residences West is selling units like hotcakes and is approaching 50% sold-out status just weeks after its June launch. I'm working on an article right now with more info.

[m3m]

The lending market is absolutely a huge component of the equation, for sure.

 

Now the drop in sales we're seeing does not take into consideration what's happening in the pre-sale market. Units are selling, and they're selling rather well.

 

Yes, I've had lots of my friends and colleagues complain about this being what is keeping them out of the market. 

 

Anecdotally, I have a friend who is about 2 years into his career as a lawyer.  His wife works in tech sales.  Their household income is well into the 6 figure range.  No kids.  Currently own their own studio apartment, which they purchased about 4 years ago, so the presumably have some decent equity.  They were looking to buy a 2 bd condo in a nice building for about 650K and could only get financing approved through "b" grade lenders.  They ended up having to put something like 30% down just to get a decent mortgage. 

 

If people like that have difficulty qualifying, it's obviously going to affect the market.

[Mike K.]

Is he practicing law as an employee of a law firm or is he running his own private practice?

[tjv]

Yes, I've had lots of my friends and colleagues complain about this being what is keeping them out of the market. 

 

Anecdotally, I have a friend who is about 2 years into his career as a lawyer.  His wife works in tech sales.  Their household income is well into the 6 figure range.  No kids.  Currently own their own studio apartment, which they purchased about 4 years ago, so the presumably have some decent equity.  They were looking to buy a 2 bd condo in a nice building for about 650K and could only get financing approved through "b" grade lenders.  They ended up having to put something like 30% down just to get a decent mortgage. 

 

If people like that have difficulty qualifying, it's obviously going to affect the market.

Believe it or not that is very very common, my inbox is flooded every week with requests for mortgages, some well into the 30% interest range.  Trudeau really has screwed up peoples ability to buy a home.

 

As an experiment I wanted to see if I could refinance my home, I have excellent credit, $2+ million in equity, high net worth, solid income, etc and the rates came back at north of 7% including me having wipe out my current mortgage are role it into the new rate.  I broke out laughing before I politely declined.

[m3m]

Is he practicing law as an employee of a law firm or is he running his own private practice?

 

He's an employee i think, but I believe he is on an "eat what you kill" sort of compensation scheme which would likely affect his qualification.  I think his wife's salary is largely commission based also. 

[Mike K.]

Oh, that’s it then. Banks hate hate hate hate hate dealing with folks who are self-employed and who have only several years of financial history behind them. The bank will put you through the wringer in order to attempt to break you.

Ending up with a class A lender is very difficult in that situation. And what makes it even tougher is financial gifts from family can actually make the whole process more complicated as the dollars are courtesy of someone else.

[Matt R.]

I am self employed and had various “class A” lenders offer me a mortgage in August of last year, no problems. We had a pick of a few. What’s the hate about?

Matt.

[Mike K.]

You’ve operated your business for quite a few years and August of last year was a vastly different lending market than it is today. And based on your comments here you own at least two properties, or at least one that you’ve owned for quite a while, right? That helps, too.

[spanky123]

Believe it or not that is very very common, my inbox is flooded every week with requests for mortgages, some well into the 30% interest range.  Trudeau really has screwed up peoples ability to buy a home.

 

As an experiment I wanted to see if I could refinance my home, I have excellent credit, $2+ million in equity, high net worth, solid income, etc and the rates came back at north of 7% including me having wipe out my current mortgage are role it into the new rate.  I broke out laughing before I politely declined.

 

You can get a HELOC for 4% :-)

[Matt R.]

Yes profitable for more than five years, and we have equity in another cheap townhouse, and we had a good downpayment, but my wife and I are self employed and we are no lawyers!

Have things really changed that much in one year?

Also, the latest townhouse to list at Parkside is listed at $420k. Insanity.

Matt.

[Mike K.]

Yes, they absolutely have. Increased rates and the stress test now applying to all mortgages irrespective of down payment have caused a lot of grief for people in our local market where real-estate prices are so high.

 

And couple that with an April 30th termination of a program that helped banks overcome some of the issues with self-employed mortgage seekers and the mortgage landscape is vastly different than that of 2017, which was already vastly different to that of 2016.

[Matt R.]

Our purchase on salt spring was somewhat forced, we would have rather waited a year but perhaps the timing was for the best then!

Matt.

[tjv]

I am self employed and had various “class A” lenders offer me a mortgage in August of last year, no problems. We had a pick of a few. What’s the hate about?

Matt.

yes LAST YEAR, before the new mortgage lending rules kicked in THIS YEAR.