7 Signs To A Vancouver Real Estate Slowdown or Bubble | 2017 Vancouver Real Estate Forecast

7 Signs To A Vancouver Real Estate Slowdown or Bubble | 2017 Vancouver Real Estate Forecast

Seven Signs To A Vancouver Real Estate Slowdown
Or Bubble In 2017. Hey guys, iIt’s Gary Wong from GaryWongRealty.com again. People know me as the Christian realtor. I’m also the author of the book on Vancouver
real estate and also a director for the Real Estate Board of Greater Vancouver, Vancouver
West Side Division. In this video, we’re going to talk about the
seven signs that are pointing to a Vancouver real estate slowdown or bubble in 2017 and
what you need to be aware of and basically a general 2017 Vancouver real estate market
forecast. Okay, let me start off with the first sign. There were talks earlier in the year where
the, I think it was the NDP or the Gree Party, they were saying that the foreign buyer’s
tax is not enough. They want to increase the foreign buyer’s
tax from 15% to 30%. Even though the realtor committee knows that
that’s not going to be feasible and it’s not going to be something that the political party
will implement, it put a lot of fear in the public’s perspective and it creates a lot
of hesitation in potential buyers and potential sellers in the market. Sign number two, the federal government decided
to change some rules when it comes to principal residence capital gains tax exemption. What they’re saying is that the only portion
that will be exempt is the portion that you’re living in. What this means is that let’s say you’re living
in a house and you rent out the basement and you rent out the laneway house and let’s say
your home is worth two million dollars. Then you live in it for five years and you
rent out the basement suite and the laneway house for five years. Five years later, let’s say your house is
worth three million dollars, so that one million dollars appreciation, you think that it would
be capital gains tax exempt, but that’s not the case. The only portion that would be exempt is the
portion that you were living in. If you’re living upstairs, that portion of
the home would be exempt and the basement portion of the home plus the laneway house
portion of the house would not be exempt from capital gains tax. Let’s say the basement and the laneway accounts
for 50% of the home, then you’re only exempt for $500,000 out of that appreciation of a
million. What does this do to the general public? It disincentivizes rentals. The person who lives in their principal residence
will think twice whether to rent their basement suite or their laneway house because when
it comes to selling the property, that part will not be capital gains tax exempt. What does this do? If they hesitate in renting out the basement
or the laneway house and they think, “Well, why don’t we just keep it empty then”, it
decreases supply and it doesn’t help the Vancouver’s housing affordability crisis. Sign number three, you’ve probably heard about
it, but the city of Vancouver’s trying to make some short term rental policy changes. I will include in the description below information
of where I’m getting this information from, so you can get all the information and detailed
terms and conditions and fine print when it comes to this policy change. Everybody knows that short term rentals is
just not allowed in the city, not in houses, not in apartments. It’s just not allowed. How are they enforcing it? That’s a different story. One of the changes they’re trying to make
is that okay, we will allow principal residence owners to rent out their properties short
term, but for secondary residences, like investment property, they are planning to ban short term
rentals for those properties, the investment properties and any basically any properties
that are not your principal residence. Everyone knows that a majority of the basement
suites in the city are unauthorized suites. They are also trying to crack down on that
as well, in the sense that they are banning short term rentals for these unauthorized
suites. Sign number four, there were talks in the
past couple months about a speculation tax. I think it was the Green Party or the NDP,
I forgot, where I was mentioning that okay, if you’re buying a secondary property, we’re
going to slap a speculation tax on you. This speculation tax would apply for those
people who do not work or live in BC and then they leave their homes empty as well. This also puts fear in those investors who
maybe live half of the year in Asia and then half of the year here or maybe half of the
year in the US or Europe and maybe they have investment property or they want to buy some
properties and maybe park some money in Vancouver real estate. The possibility of a speculation tax really
doesn’t comfort these investors’ perspective. Though this tax is just in the brainstorming
stage, and because the media wrote about it, a lot of people are just taking it easy and
watching how the market responds. Sign number five, everyone knows that late
last year, they were talking about the 1% vacancy tax and that people who leave their
homes vacant for more than 180 days out of the year would be assessed a penalty of 1%
of their tax assessed value as a taxed. If your property was tax assessed at two million
dollars, you’d be assessed a penalty of $20,000. The realtor community was thinking about how
the government was going to enforce this. It’s still not clear how the government is
going to enforce this, but basically it’s a yearly declaration that you would declare
whether you were or your property was vacant for that amount of time or not. I talked to some lawyers and accountants. How can they prove this? How can we mitigate this and they said it’s
too new to be able to say much about it. Anyways, the fact that they had this vacancy
tax implemented put another policy out there to try to slow down the market. Sign number six, people know in the past couple
weeks the Bank of Canada has finally increased the prime rate from 2.7 to 2.95%. We know that this was inevitable. They had talked about raising the rates for
a long, long time. We know that even though they are going to
raise the rates, they’re not going to raise it like 2 or 3 or 4% right away. They will probably raise it 0.25 and then
wait how the market responds and then raise again and then see how the market responds. They’re not just going to slap on a 2% increase. Sign number seven, along with Bank of Canada
increasing their prime rates from 2.7 to 2.95%, the banks have started to increase their rates
as well. They started making it harder for people to
qualify for high ratio mortgages. High ratio mortgages are those who are putting
down a down payment of less than 20%. Usually they have to qualify at a particular
benchmark of 4.64%. They have increased that to 4.84%, making
it harder for someone to qualify for a mortgage. This, coupled with the Bank of Canada increase
in interest rates and coupled with all the other five signs that I mentioned earlier,
it’s creating a lot of uncertainty and fear for the real estate home buyer or seller out
there right now. The most important question, is this leading
to a Vancouver real estate bubble or Vancouver real estate slowdown? In my professional opinion, I don’t think
so. Has it been slower in some areas of the market? Yes, it has. The condo and townhouse market is still strong,
stronger than last year. Is it as strong as earlier this year, meaning
like early spring? No, it’s slowing down. It’s summer right now. It’s actually slowing down, which is historically
the case. For houses in 2017, the market’s not that
strong. The condos and townhouses are buying and selling
like hotcakes, but houses, on the other hand this year, has been slowing down. Is it crashing? No, it’s not crashing. Is it slow? Definitely that is the case. Is it a 20% drop? A 30% drop or 40% drop? No, it’s not, but for some people who really
need to sell to move to another, move to another country for work or they have legitimate reasons
why they need to sell, possibly they might have to sell at a lower price than what they
were expecting. From last year, we had the foreign buyer’s
tax. It created about a 5 to 10% dip in the market
for most houses. It did recover earlier this year, but now
we’re seeing a little slow down in the single, detached housing market. There’s a lot of investors out there who are
sitting on the sidelines. From those seven signs, they’re seeing how
the market will play out. Actually right now, it’s a strong buyers market
in several areas. It’s a great time to buy some houses out there
right now, but a lot of people are actually … It’s funny because in a buyers market,
most people should end up buying, but in a buyers market, a lot of people, you would
see a lot of people holding back and waiting. Funny, in a sellers market, you’d think that
people would list their property on the market because it’s a good time to sell, but a lot
of times people hold off selling and they actually try to buy, during the sellers market,
which is actually contrary. When it’s a sellers market, you should sell. When it’s a buyers market, you should buy,
but obviously everyone’s case is different. Make sure you talk to your realtor and talk
about your short term plans, your long term plans and see whether you should buy or sell
in any market. Once again, this is the Everything Real Estate
Channel, whether you’re looking to buy, sell or invest or maybe you’re a realtor and you
want to find out some more information, subscribe to this channel. Comment below and you may be responsible for
the topic for the next video. Once again, it’s Gary Wong from GaryWongRealty.com
and until next time, God bless you. Thanks, guys, for watching my video. Please subscribe and share with your friends. Email me if you have any more questions. Thank you.

3 thoughts on “7 Signs To A Vancouver Real Estate Slowdown or Bubble | 2017 Vancouver Real Estate Forecast

  1. Do a video on why it's so hard to get a pre sale condo in the Vancouver area. Is it because they market them to mainland chinese investors? Also when do you think the condo market will slow down as i want to buy another pre sale condo.

  2. Many people don't like to say the word bubble.I wonder if the average house price rises to 10 million they will still say no its not a bubble????

  3. The bubble will burst in 2019/2020. Mark my word.

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