From the Daily Durning~as reported in the Financial Post  “Foreign inflows are distorting Canada’s already constrained housing market and aren’t the kind of investment the country needs, the chief executive officer of Royal Bank of Canada said. “We do not need foreign capital using Canadian real estate as a piggy bank,” David McKay, said Tuesday at a bank conference in New York hosted by the Toronto-based lender. “If capital is coming in to sit in a home, unproductively, and is distorting your marketplace and the livelihood of your residents — no thank you.”
“Toronto, Canada’s biggest housing market, has been correcting over the past few months amid a slew of regulations put in place to steady booming prices and increasing debt. Toronto home sales fell 35 per cent in February from a year earlier, marking the weakest month of sales in nine years, though benchmark prices were up 3.2 per cent on the year, according to data released Tuesday by the Toronto Real Estate Board.McKay, whose bank is Canada’s largest mortgage lender, says he’s supportive of government taxes and other measures targeting foreign buyers, as well as other regulatory efforts to cool the country’s housing market. He’s seeing some impacts from these rule changes, with “a little bit more healthy dynamics.”
A surge of foreign money into Canadian housing had been adding “gasoline” to markets in Vancouver and Toronto, McKay said. He identified a “cocktail of factors” that led to unconstrained growth of Toronto and Vancouver home prices, including a growing population, land constraints, lack of supply and highly stimulative interest rates that caused people to funnel more disposable income into their homes in addition to foreign money.”


  1. True in theory. But there are also many MANY benefits to local economy ie for local sellers making huge $s as well as trades, as a new $1M condo doesn’t fall out of the sky. It creates massive jobs and massive local tax revenue too.
    How to best monetize it though ?
    The new BC speculation tax is not well thought through yet. It’s not really a speculation tax. It’s another vacant or non-resident tax.
    Many MANY unintended consequences. It will reduce supply immediately in some areas and will affect other businesses living off tourists with second homes. It will shift $s to ag land and will drive up those values dramatically. It will shift $s to cities just outside the boundaries of say Kelowna or Victoria, say Lake District, Sooke or Sydney.
    In addition it is very easy to circumvent, actually. Since rentals are exempt, why not rent the second home to a family member or friend for a nominal amount, say $100? For foreigners it is very easy to set up a B.C. Corp and pay the non-income tax paying occupants ( say a spouse or a university attending kids ) a nominal income, say $20,000 a year with little income tax. Now it is occupied by a Canadian resident. Or one retired Alberta spouse will declare the golf course condo as the primary residence, pay almost no income tax but now use B.C. healthcare. Huge, unintended consequences, with far less tax money collected as envisioned.
    As such, the far FAR better approach would have been to do what US states like WA or TX are doing: eliminate BC provincial income taxes and charge every property more, say 1%, regardless of ownership. Easy to enforce. No cheating. A massive job boom. Renters would have more money in their jeans. It would monetize BC’s golden goose, residential real estate, far far better, more evenly and more just. It would actually create an incentive to work more and not just invest in under-taxed real estate.

  2. The foreign buyers narrative is losing steam.
    From the Globe and Mail Report on Business on March 3rd:
    Sales volume for detached houses saw the biggest decline as 621 properties changed hands last month, down 16.6 per cent from a year earlier. Over the past year, condo sales fell 7.1 per cent to 1,185 deals in February, while townhome sales slipped 0.7 per cent to 401 transactions in the Vancouver area.
    Last month’s sales of detached properties rang in 39.4 per cent lower than the 10-year average for the month of February.

    The average price for condos sold in the region hit $750,052 last month, up 24.2 per cent from a year earlier and just shy of the record $751,358 in January. The average price for townhomes reached a new high at $938,805 last month, up 13.4 per cent from February, 2017. The price for detached houses, by contrast, slipped 1.2 per cent over the past year to an average of $1,737,030, the Real Estate Board of Greater Vancouver said on Friday.
    Detached properties lost almost 40% in sales volume compared to the 10-year average in February, but the price remained virtually flat. What does that tell you about land supply, knowing that each detached house sit on 4,000 ft2 of it and there is virtually no developable land left in the Metro without rezoning?
    Moreover, sales for condos dropped 7.1% while prices escalated by over 24%, with thousands still under construction and entering the supply stream later. Does this mean the price or personal debt ceiling was finally breached?
    On a CBC Early Edition interview this morning senior planner Susan Haid spoke about the upcoming 20% of affordable and social housing to come in the Cambie corridor, with dedicated rentals too. The city and province are gearing up to build thousands of rental units. In other words, new supply, some of it non-market — but in the future.
    All the recent action on foreign money and presales (with more to come) has not affected prices in the desired direction, which only means current supply / demand, cheap credit and desireability are as powerful or moreso than foreign money. So say an increasing number of economists.
    On the city’s related new vacancy tax the research defies the rhetoric. A housing planner was interviewed on Global TV this morning and she said the census figure of 20,000+ vacant homes was wildly misinterpreted by otherwise smart academics and journos because it was only a one-day survey and missed so many people that it could never be used to draw conclusions in any legitimate scientific study. The city’s figure was closer to 7,000 based on actual Hydro readings and other factors involving months of research. The city does need to know the numbers as accurately as possible because charging a vacancy tax based on the census data alone would have led to a legal and bureaucratic nightmare.
    The BC vacancy / speculation tax initative will affect Albertans, and the animosity between these neighbouring provinces will only increase due to an unnecessary and risky diluted bitumen pipeline, a stupid trade war and arrogant bullying from the east. I really don’t think very many people in BC will care that much about Albertan’s feelings now on the vacancy and speculation taxes unless they are in the cottage country real estate industry.
    Here’s another quote from the Globe:
    Real estate economist Tom Davidoff of the University of British Columbia’s Sauder School of Business said he supports the NDP’s move against Albertans and residents from other provinces, though he acknowledges there will be hardship cases that arise, such as seniors on fixed incomes. He suggested that in those instances, the NDP could encourage Alberta seniors to defer taxes owed until their B.C. property is eventually sold.
    “It’s outrageous that a grandma from Alberta will have to pay the tax. But it’s also outrageous that many people can’t afford to work and live in Vancouver. I don’t mean to sound heartless, but you can’t make an omelette without breaking eggs,” Prof. Davidoff said.

    1. The speculation tax levied on golf course condo owners from AB is RIDICOLOUS and will lead to a mass exodus of them and thus, immediate drop in new supply of builders that cater to AB residents, not only in Kelowna and Victoria but also other areas. Other businesses that feed of AB tourists will suffer (pizza parlours, furniture stores, golf courses, gas stations, local trades, ..)
      deleted as per editorial policy

    2. When you quote McKenna and others using the same logic you undermine your argument. He is referring to the price difference between a lighter WTI crude, and a heavier WCS (oilsands product). There is a quality difference which causes a discount, a heavier crude that requires more processing and thus causes a discount, and then there is simply the cost of getting it south to the US (WTI is priced in the US, and transportation isn’t free however you ship it). Having more pipeline capacity doesn’t erase those three discount factors for WCS over WTI, and to pretend it does is ridiculous. In his article you linked, McKenna assumed that all of those discount factors would be erased with more pipeline capacity.

      1. You nailed it, Jeff. Obviously you’ve done the research (or read independent studies) as have I — an ex-Albertan BTW with hundreds of family and friends there — instead of reading the oil op-eds in the mainstream press. Independent sources are the best because they do not have a vested interest in pipeline capacity narratives. Bitumen is an inferior product. Nothing can be said to change the additional costs associated with refining it. It has to be noted that Notley just a few days ago announced plans to invest shiploads of public money in upgraders in Alberta. Well well. I wonder why?
        The raison d’être for this pipeline, so the echo chamber says, is to recoup that notorious discount and expand into new markets. This is repeated over and over without a shred of evidence that it will unfold as stated. Where are the Asian pre-lease agreements and contracts? What will be the final price when transoceanic shipping is inevitably added to the cost side of the ledger even after a “premium” price is supposedly paid for this heavy oil? The revenue to Edmonton will be $1.5 billion a year, only half of the value of BC’s film industry last year. Big effing deal. The economics behind the pipeline are on very shaky ground.
        Within hours after Trump approved Keystone, which has not been completed yet, the proponent received tonnes of lease orders years in advance. Trans Mountain / Kinder Morgan? Nada. Keystone killed the Energy East project by taking away the market. The oil industry and their legions of puppets in the media blamed radical environmentalists and Quebec for saying “no.” Trudeau became very quiet after succumbing to the potential mass of votes in Quebec, unlike with BC. By comparison, Trans Mountain is a charade.
        And what about the Asian markets? Gas and oil pipelines are being built right now between Siberia and China, right next door, for cheap Russian fossil fuels. China is also moving head-long into renewables and promises to supercharge EV production, which would make the oil market a lot smaller (land transportation fuels are 80% of the market).
        Once the four prior Supreme Court decisions related to BC (1984, 1997, 2014 and 2018) have played their role in defending BC’s position in the SC, this pipeline will likely have been delayed into oblivion just as increasing numbers of shipments of EVs are unloading in the Port of Vancouver and BC Hydro completes new transmission lines and increases generation capacity of renewables in a crash program to electrify transportation in response to Alberta carrying out its threat to cut off the oil supply, just as it did to Eastern Canada in the 80s. It must be noted that Alberta lost that market with their actions.

        1. You must live in a different Canada than I live.
          EV shipments into Canada ?
          Oil on the decline ? It is growing to at least 2050, and if Canada doesnt ship valuable oil, someone else will.
          Film industry gaffer jobs at $15/h is the future for BC now ? Or high tech jobs subsidized with 30% investment credits ?
          Of course a pipeline will not get built if governments erect hurdle after hurdle. Yet the socialists in ON, AB and now BC pretend that windmills and solar will cover their excessive spending .. guess what: it doesn’t. Now they try to milk the evil foreigners and evil Albertans that own golf course condos .. that too will not work. BC is on the road to a have-not province FAST. Mere vote buying promising declining house prices when in fact in a high immigration country that is extremely unlikely in a landlocked region with mountains and oceans and beautiful scenery. Do $15/h gaffers buy into this myth of “If only $5M house prices drop 20% to $4M I too can buy a condo in downtown Vancouver and/or get cheap rent” ?

        2. I’m like you, I don’t trust governments to get it right as long as there’s a lot of money in the system. Unlike you, I don’t trust industry or their media cheerleaders either, namely because they actively seek to buy decision makers to write laws in their favour, and demonstrate what “vested” interest really means. The common good is secondary.
          Raw bitumen = valuable oil? The value varies from region to region and is subject to the laws of physics. It is a classic error to conflate economically and physically recoverable reserves with an entire resource. It is also a mistake to ignore the investment of energy required to obtain an energy return. The EROI has been in steady decline for years worldwide as the easiest and therefore cheapest oil depletes and the difficult and expensive stuff comes increasingly online. The largest US shale oil & gas formations have a serious and not-fully acknowledged decline problem. Once burned, a litre of petroleum will never return. This has been repeated here many times, but the message seems to bounce off a thick layer of ear wax.
          BTW, the film industry pays well, even for gaffers who are unionized and are offered opportunities for promotion and growth.
          Off topic, but you brought it up.

        3. Thomas posted: “the socialists in ON, AB and now BC pretend that windmills and solar will cover their excessive spending”
          Wait a minute, I thought the socialists in Alberta (under Notley) thought that increased oilsands shipments were going to cover their spending. You say they are banking on wind and solar? Really?

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