Happy Monday Morning! Back to our regularly scheduled programming after a few weeks off during the holidays. Last year was an eventful year across the Canadian Real Estate spectrum to say the least. I figured i’d start off the New Year with a quick sentiment check.
Another point about property assessments. A friend who lives in a lower Vancouver Island municipality was told by a recently elected municipal councillor that their council is concerned about the 'black box' of how assessments are derived. Is it just BC Assessment who determine this and/or is the real estate industry (gasp!) involved?
We just received our property assessment. Curious if anyone has estimated the increased tax revenues the province has taken with their massive unilateral assessment increases over the past 2 years - when applied to the complete real estate picture. This has to be a MASSIVE number.
We have watched our assessed value go from 1.2M in 2021 to 1.6M in 2022 and now 1.8M in 2023 and I can guarantee you we would not be able to sell our home for the assessed value. Is the tax calculation being adjusted to soften the tax blow or still the same equation from 2021? As a new retiree, this indiscriminate taxation is causing me to seriously consider leaving the country because I have no mechanism to keep up with the level of taxation. We considered downsizing and moving into our basement suite and renting the main floor but my accountant advised that we would lose principle residence if we did this.
Thank you for your reports. I look forward to reading what you have to say. I wonder about the immigration numbers, often folks come in on a work permit and then become a Permanent Resident, is there some double counting taking place. Also the new rules on restricting people on work permits buying a home in certain areas for at least three years should keep those people as renters.
Thanks again for the report, it is always interesting.
Your chart with debt-adjusted rate comparisons is very misleading.
First, it uses nominal debt, not inflation-adjusted (or house-price or income-adjusted or real GDP-adjusted) debt... in an attempt to convince the reader that it is so bad now, compared to back when a mortgage on a home might be $100k instead of $1 million.
The debt data needs to be adjusted for the huge amounts of inflation over the decades in the chart. Some of us can still having to qualify for a $25k loan to buy a home. Inflation counts.
As a psychologist, I know that ignoring the % change is misleading when trying to understand contrast-effects. It is the doubling of the interest rate that has the effect, not the absolute change. Going from 2% loans to 4% is like going from 4% to 8%.
Central Banks following ZIRP or near-ZIRP policy to enable Govt. to spend obscene amounts knew all along they were setting up the society for trouble when they were forced to (attempt to) normalize.
And anyone who was lucky enough to learn real economics (on the Street corner or in University... because Canadian economic education in public schools doesn't really exist) has known this was going to happen all along... as the interest rates were forced lower by flooding the economy with liquidity.
If you were caught by surprise and thought minimal interest rates and huge Govt. deficits were "normal" take it as a lesson that your kids need better schooling. Lobby your Provinces to teach some practical economics in schools... so Govt. and the BoC can't fool them so easily.
I think your consensus is correct. I am a bit more bearish on immigration fueling housing sector. Could be wrong on this if sufficient new Canadians come with assets sufficient buy or qualify for mortgages. Certainly rental markets will be stressed.
Another point about property assessments. A friend who lives in a lower Vancouver Island municipality was told by a recently elected municipal councillor that their council is concerned about the 'black box' of how assessments are derived. Is it just BC Assessment who determine this and/or is the real estate industry (gasp!) involved?
We just received our property assessment. Curious if anyone has estimated the increased tax revenues the province has taken with their massive unilateral assessment increases over the past 2 years - when applied to the complete real estate picture. This has to be a MASSIVE number.
We have watched our assessed value go from 1.2M in 2021 to 1.6M in 2022 and now 1.8M in 2023 and I can guarantee you we would not be able to sell our home for the assessed value. Is the tax calculation being adjusted to soften the tax blow or still the same equation from 2021? As a new retiree, this indiscriminate taxation is causing me to seriously consider leaving the country because I have no mechanism to keep up with the level of taxation. We considered downsizing and moving into our basement suite and renting the main floor but my accountant advised that we would lose principle residence if we did this.
Thank you for your reports. I look forward to reading what you have to say. I wonder about the immigration numbers, often folks come in on a work permit and then become a Permanent Resident, is there some double counting taking place. Also the new rules on restricting people on work permits buying a home in certain areas for at least three years should keep those people as renters.
Thanks again for the report, it is always interesting.
Your chart with debt-adjusted rate comparisons is very misleading.
First, it uses nominal debt, not inflation-adjusted (or house-price or income-adjusted or real GDP-adjusted) debt... in an attempt to convince the reader that it is so bad now, compared to back when a mortgage on a home might be $100k instead of $1 million.
The debt data needs to be adjusted for the huge amounts of inflation over the decades in the chart. Some of us can still having to qualify for a $25k loan to buy a home. Inflation counts.
As a psychologist, I know that ignoring the % change is misleading when trying to understand contrast-effects. It is the doubling of the interest rate that has the effect, not the absolute change. Going from 2% loans to 4% is like going from 4% to 8%.
Central Banks following ZIRP or near-ZIRP policy to enable Govt. to spend obscene amounts knew all along they were setting up the society for trouble when they were forced to (attempt to) normalize.
And anyone who was lucky enough to learn real economics (on the Street corner or in University... because Canadian economic education in public schools doesn't really exist) has known this was going to happen all along... as the interest rates were forced lower by flooding the economy with liquidity.
If you were caught by surprise and thought minimal interest rates and huge Govt. deficits were "normal" take it as a lesson that your kids need better schooling. Lobby your Provinces to teach some practical economics in schools... so Govt. and the BoC can't fool them so easily.
I think your consensus is correct. I am a bit more bearish on immigration fueling housing sector. Could be wrong on this if sufficient new Canadians come with assets sufficient buy or qualify for mortgages. Certainly rental markets will be stressed.