Realtors question legality of new taxes as foreign buyers exit cooling Vancouver housing market giving locals hope

By Drew Penner

Within real estate circles, the effect of new taxes aimed at foreign buyers cashing in on Vancouver’s superheated housing market has been palpable.

Shawn Anderson, a realtor with Engel & Völkers Vancouver, says the change has been a psychological one.

“We’ve started to really notice the slow-down in the higher end market,” he said, adding it started about two years ago. “It was a more natural slow-down.”

But the gradual impact primarily on the single family dwelling market that was encouraged by the 15 per cent foreign buyers tax has now spread across the board with the provincial budget released in February, he said.

Anderson says while multi-family units have continued to pick up steam, with prices rising 20-25 per cent, the top end of the housing market is virtually at a stand-still.

“They’re just not selling,” he said. “The market’s kind of confused.”

There’s been a lot of discussion about how the speculation tax introduced by the NDP this year, with some noting it doesn’t directly target true speculation, with others suggesting it doesn’t go far enough.

Realtors like Anderson say, in any event, it proves the government was more eager to score political points than to target the root of the problem.

“It’s not going to make things more affordable,” he said. “They’re not going to turn a $4 million house into an $800,000 house.”

From his standpoint, what the government has done is put the brakes on a lot of potential deals.

“You’ll see buyers that aren’t in a big hurry to buy,” he said. “Sellers are reluctant to lower their asking price.”

That’s not to say he’s against real estate reform. In fact, Anderson cheers the recent decision by the Real Estate Council of British Columbia to increase penalties for rule breakers.

He just doesn’t think the NDP did their homework before adding a supposed levy on speculation into the mix.

“They admitted to doing no modelling before implementing those taxes,” he said. “Just because you charge more tax doesn’t mean you’ll net more revenue.”

But some have begun to benefit from the market cooling-off.

Karen Nguyen isn’t exactly a fan of what she considers new “sneaky” tax burdens.

But in recent days the Vancouver real estate agent’s had the opportunity to get her local clients in to take a look at condominium pre-sales, when before they’d have been booked solid.

“Last year it was very difficult,” she said, adding over the past few weeks the ground beneath sellers’ feet has really begun to shake. “They definitely are panicking.”

As the deposit required to lock down a home has jumped to 20, 25 and now 30 per cent for foreign residents, she’s started to hear back from sellers who may have previously sold out available stock within a week. Now, they’re telling her she can check out any unit she wants.

“The market is closing down,” she said. “You don’t know what’s coming up next.”

She wonders if the province’s new taxes are even totally legal, or if they would be found discriminatory in a human rights tribunal decision.

And Nguyen predicts this investment will just disappear from Vancouver entirely if the province keeps upping taxes on the wealthy.

“It’s not that they don’t want to pay it,” she said of foreign buyers. “Maybe they don’t feel it’s fair.”

[Photo: BC Minister of Municipal Affairs and Housing Selina Robinson (L) chatting with BC Finance Minister Carole James (R). Credit: Province of British Columbia]

26 Responses to Realtors question legality of new taxes as foreign buyers exit cooling Vancouver housing market giving locals hope

  1. AllieG says:

    Per the REBGV the Benchmark price for a detached home in Metro Vancouver hit a peak of $1.7M in 2017. That is 20X the median household income in the area, when anything above 4X is considered entering the “unaffordable” category. When someone comes into BC (from wherever – outside or within Canada) and purchases a $3M or $5M or 7M home – that is not an “investment.” It is stashing money in a “safe” piggy bank. When non-residents snap up condos in pre-sale, they make the market more difficult for first time home buyers. When an 1800 sq ft house on a normal city lot is bought for $750K, torn down, and a 4000 sq ft faux mansion is built and priced at $2M that makes it harder – or impossible – for a young couple to have that second or third child and start their young lives. The BC RE market has been soaring for three or four years and the result has been to drive the very lifeblood of any society away. We are losing teachers, police, firemen, medical professionals, small business owners, entry level white collar workers away. We already cannot staff hotels, restaurants, small businesses with entry level workers – they can’t survive the Metro Vancouver area unless subsidized by family. I’ve never been an NDP supporter until now. What they are doing is not just right – it was long overdue. The measures are giving hope to those who had given up hope. I care more about the 20-something or 30-something BC resident who wants to stay in their “home town” and build a life than I do about the net worth of those who already have more than one home. Anyone who doesn’t is wishing for Metro Vancouver to be rendered a resort city that is a ghost town 50% of the year.

    • nonconfidencevote says:

      Excellent points.
      Total agreement.
      Ironically.
      Vancouver has become Whistler

    • The Seven says:

      The complaint starts after the closing date when the local homeowner sells his/her home to a foreigner. Once the check is cashed, the attack begins how foreigners are destroying this city. I am a Real Estate agent and have not met a single , Canadian born homeowner who refuses to sell their home to a foreigner.

      • Ted cruz says:

        Only a realtor can twist like a pretzel and say something like that. Nobody has banned anyone from buying a property in bc, the issue is vacant homes and property owners who do not contribute to the local economy.
        As a realtor, do you inform clients that the buyer is foreign and their intended use or do you try to convince your clients to sell for less and exclude certain types of buyers?
        As a realtor, do you think you have an ethical responsibility to get as much as you can for your buyer?
        Are you now complaining because business is drying up and.
        Lastly, why dont you put your real name up? Lets see, you make $20-40k on a sale, that your client pays you and you bash them on ethics?

        • Shannon LeBlanc says:

          Good points Ted. Excellent points. I agree with Andrew Weaver, foreign buyers should be banned and we should also be considering kicking out all foreign owners as was done in many latin american countries when something similiar happened there under corrupt governments. Foreign ownership of homes is creating a dystopian nightmare for locals. And when homes are sold without any communication between buyer and seller, Canadian sellers CAN’T ‘refuse to sell to foreign buyers’. And how many of these foreign buyers are turning the homes into Air BnB where the profit is double that of long term rentals? Many here in Victoria. So many ads are either short term rentals, or won’t take pets, or don’t want children–it’s not strange that businesses can’t find staff. Staff don’t want to live in a city that caters to foreign elites over locals and where they have to resign themselves to a massive drop in living standards if they want to move away from their parents’ home. The answer isn’t more of the same so that homeowners can use Air Bnb as a mortgage helper, the answer is to stop the crazy direction this is going in and realize that the citizens of this country actually have human rights to shelter and work? The homelessness crisis is going to explode into extreme civil unrest as locals become fed up with the results of extreme unregulated greed. I have worked 40 years, paid my taxes but due to divorce was forced out of a home, and now as a renter with two kids, we are faced with throwing a dart at a map to figure out where to go to leave Victoria because we cannot afford to be here. My children’s home town and we have to move somewhere else to live where we will meet many others in the same boat.

      • Paula Brink says:

        They are out there. My cousin purchased a home on the Island, there was also an offshore buyer in the mix and the owners sold to my cousin and instructed their agent to advise that they got the house because they were locals.

  2. justin says:

    Shawn Anderson is worried he might need to brush up his resume soon. I imagine the 20,000 other burger flipping realtors will be likely doing the same soon. What did you honestly expect from a 3 week course? a lifelong career, lmao.

    Dont worry guys, A&W are always hiring ex realtors/mortgage brokers.

    • Shawn says:

      Appreciate your comments Justin but I studied Engineering and have a BCom from UBC. I also worked in kitchens while putting my self through university, so I feel like I’m well prepared if that time comes, but really appreciate your insight. How do you like your burger? Cheers

      • Ed says:

        Nice reply! :)) Too bad you’re not putting those engineering skills to a better use, real shame.

      • Richard B says:

        Bravo Shawn!! You are the man!

        • nonconfidencevote says:

          A commission based house huckster is “The man”.
          Canada is doomed

          • Chris M. says:

            I suggest a 20% burger tax for non-Vancouver residents. This would drive down the costs of burgers to 1983 levels and then we could use the revenue to offer temporary, modular burgers for people like yourself, nonconfidencevote. Problem solved. Thank you very much.

  3. Peggy says:

    This was already going to happen. It was just a matter of when and how bad would it be. Better to try and have a controlled landing than an uncontrolled crash.

  4. nonconfidencevote says:

    To all those Realtors whining about the newly implemented NDP rules.

    It wasnt entirely the NDP stupidity that stuck a fork in this obscenely overpriced ponzi.
    Liberal asskissing of developers.
    Historically low interest rates.
    Historically high debt amoung financially ignorant Canucks
    I could go on but why bother.

    Just wait.
    B20.
    Rising interest rates.
    Banks tightening loan requirements.
    Slowing economy all over Canada…..
    Recession cant happen here.
    bwahahahahahaha

    Just take a look at Japan.
    Insane real estate prices in the early 1990’s
    The Emperors Palace in Tokyo was valued to be worth morth than the entire State of California in 1990.
    The japanese went on a buying binge like no other using their real estate valuations to borrow even more money…….
    A few years later….gutted….deflation.
    20 YEARS of economic enemas have had japan staggering from deficit to bigger deficit.
    Canada….here we come.

    Mr Realtor.
    I’ll take my burger with extra cheese hold the fries.

  5. Marvin Bachman says:

    Somebody really needs to understand economics 101. After 17 years you call me a speculator. I live in B.C. a good hundred days a year but Toronto etc., is fine also.I get the message you want your cake and eat it too. Good luck with that as I will be leaving along with thousands of your other foreign investors.Oh yes, we will not be spending in your business institutions/barber shop/shoe store/restaurants/casinos/gas stations/appliance repairs etc. if you can understand there are thousands of us.
    Enjoy your cake while you have it as I am so out of here with your prejudiced taxes against us foreigners you claim you want your doors open to—can you even spell the words?

    • Ryan Wong says:

      Businesses like the ones you mentioned are already closing up shop because of the astronomical rents as a trickle-down effect of the cost of housing. The so-called “spending” from yourself and your foreign investor friends have not helped them stay in business because you made the assumption that foreign investors are actually spending money here, if they are even here at all. How are they spending money here if they are not here half the year?

      If the price of housing does drop, hopefully the young people that left the city who are the traditional spenders in these businesses may come back and put a stop to the small businesses closing up shop that you supposedly are keeping in business.

      Don’t let the door hit you on the way out. Good riddance.

      • Shannon LeBlanc says:

        Good points Ryan Wong. That foreign investor has the same approach as multinational corporations that get our tax subsidies and then threaten to move elsewhere while busily automating every job they can. We need to stop being doormats to foreign money and realize that their threats are empty. We can provide for ourselves, start our own businesses in our own communities–businesses that are locally accountable and more than happy to operate on principles and values we can respect, rather than on the ‘gut and run’ approach of foreign scalpers and multinational corporations. I would like to know when our govts began to believe it was their job to hand our tax dollars to corporations while giving them tax breaks and allowing the use of tax havens, and thinking that this would somehow work out for us. This situation isn’t just going on here, it’s happening all over the world, except in countries that refuse to cater to a deregulated financial system.

    • David J. Mac says:

      Sounds like the new policy is starting to work. Thousands of flippers leaving, you say? Not enough, but a start. Just don’t leave your house empty on the way out.Word of advice: In a functioning society, properties aren’t bitcoins; they’re places to live for full-time citizens.

    • Marco says:

      Good riddance

  6. Ted cruz says:

    Very well said Ryan Wong.
    What i don’t understand is why would someone own property in BC for 17 years and visit 100 days out of the year. I am thinking 100 days out of the year is an exaggeration or he has been flipping for the last 17 years. Why not own a vacation home closer to Toronto or flip in the GTA area.

    Mr Flipper is not happy that the gravy train has come to an end and must find another source of income. Mathematicaly, it does not make sense to own a property you visit only 2-3 months out of the year and keep it vacant the rest of the time, cheaper to rent for 2 -3 months and have a choice where your next vacation spot is going to be.

    Marvin- do you understand the effects of vacant homes?
    Do you realize that businesses are closing shop because land values keep on going up?
    Do you realize the impact and challenges the next generation will face.

  7. nonconfidencevote says:

    Not to worry Chris M.
    I dont require “modular Housing’….unlike unemployed realtors of the future.
    I sold a few years ago and invested.
    HUGE gains baby!

    You might also want to check your stats.
    1983 was the middle of the worst housing crash in BC History to date.

    But if what coming is worse….. I applaud it.

    Happy Housing Crash EVERYONE

    🙂

  8. nonconfidencevote says:

    HEY!
    Almost forgot.
    US raised their interest rate AGAIN today!
    Canada will reluctantly be forced to follow suit or watch the Canuck buck tank even lower than the idiots and their “gender specific” budget in Ottawa have done.
    Trudeau to the rescue for the economy….spare moi….please.
    And all those “90 day time limit pre approved mortgages” from 2017 will run out in another week or so.
    Cant wait to see what the Federal B20 rules do to hammer the nail in the real estate ponzi coffin.

    If you think the housing sales are tanking now……..just wait.
    You aint seen nuthin yet. Shades of 1983 meltdown?
    And with plummeting housing sales……. go prices……..

    And in a year …..or two…..the housing vultures start circling……..

    • Ted Cruz says:

      Nonconfidencevote,

      Agree 100%. I have to admit RE market is collapsing faster than I thought. Also worth mentioning, there are some complex cases that are going through the courts now involving overseas buyers with 2-5 properties in collapsed deals. This puts overseas buyers on notice,furthermore CRA is dedicating a unit to go after money laundering and tax avoidance shemes on RE.

      Interest lending rates will hit 6%or more by 2020. B20 was introduced to prepare for higher rates, not to slow down RE. Think about it, loans are not exclusive to RE.

  9. Chris M. says:

    All good nonconfidencevote, once again your deep thoughts are I’m sure, highly regarded by many readers. I picked 1983 specially to show you that 19% interest rates are certainly a good thing for people buying burgers in cash. For people like yourself who can’t/couldn’t (perhaps?) afford a burger, well then the carrying cost of that burger was significant. Additionally, the economy was, well not so great at that time so burger flipping jobs were limited. But regardless, I’m sure all readers do believe that more taxes are better, perhaps something close to 98% would spur the economy. That would (hopefully) support all the social programs you subscribe to, spur much investment and new jobs, and make all housing $4.00 (rough cost of decent takeout burger). Everyone could afford to live in Vancouver, be highly employed, and gov’t coffers wood be full. Win win. Definitely HUGE gains baby!

    • nonconfidencevote says:

      The NDP’s knee jerk “foriegn spec tax” is too little to late.
      Govt meddling in a market thats already turned.

      The Liberals pumped this market as fast, long and hard ( some Freudian symbolisim in there somewhere)as they could. All while accepting campaign contributions from developers, realtors, etc.

      Banks loaning millions to anyone with two feet and a heartbeat.
      Historically low interest rates.
      On and On and on.
      It wont take 19% interest to slam on the brakes in this ponzi.
      1%? 2%? 3% increases to make borrowers squeal at the “unfairness of it all?
      As if HISTORUCALLY LOW INTEREST RATES would go on ….forever?
      And how many will no longer qualify because they have borrowed too much?
      Then we toss in B20?
      Oh my.
      Say bye bye to the “golden years” of easy high sales numbers and lavish commissions realtors
      This party is Oh-Vaaah.

      Anyone buying a house in this falling market is an idiot.
      Unless , of course its selling for $4.00

      I cant wait for the March stats to come out and listen to how the BCReal Estate Cartel tries to spin a sick, diseased, dying donkey.
      Then April, May and June…….

      Stay tuned folks. Now is a great time to be renting.

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