In an effort to better understand Vancouver real estate, more people have been turning to the news for information on current events and trends within the market.
James and Monica break down real estate headlines that have caught their attention recently, sharing which articles are just clickbait and which ones you should pay the most attention to.
This episode will review media coverage regarding the number of Canadians who have been affected by the trigger rate for their variable rate interest, the upcoming increase in homes selling for under the assessed value, which locations can be charged the speculation and vacancy tax for empty homes in 2023, the repercussions of overlooking the Foreign Buyer’s Tax, as well as the prevalence of tax sales and whether or not they are a good deal in Vancouver.
Read the Transcript Here
Hi everyone, I’m James Garbutt. And I’m Denny Dumas. And this is the Garbutt Dumas Real Estate Podcast.
James: We’re talking news headlines today. This is an experimental episode where we’re digging into some of the real estate headlines that have caught our eye over the last couple months, just to share them with you and see what comes from it.
Monica: You live in Greater Vancouver you love a real estate headline. Everyone loves them.
James: It’s all over the news. So much of our economy is around real estate and so much of our news headlines are around real estate as well, especially after just an election year and affordability being the talk. So let’s get right into it. I’ll start, how about that Monica?
So I’ve got this headline from The Province and it’s basically “Half of variable rate mortgages have hit their trigger rate estimates Bank of Canada”. And, and just to be clear, a trigger rate is the point where the interest rate on your variable mortgage has not been covered by the payments. So a lot of people’s mortgage payments are going up.
And I guess the interesting fact is that I actually thought this number was going to be higher but in the article it says “13% of all Canadian mortgages are variable”. So 13%.
Monica: And then half of those have hit their trigger rate.
James: Half of those have hit their trigger rate. Now, I thought that number would actually be higher than half of them hitting the trigger. I thought it would be much higher. So I guess by the numbers, if 13% of Canadian mortgages hit their trigger rate, or half of 13%, we’re talking about six and a half percent. And now, how accurate that is, that’s up to The Province newspaper that released this statement. I’ll leave that up to them.
Monica: I think that’s interesting to know because a lot of the information you get it seems like everyone’s about to hit their trigger rate. Literally every person is going to hit their trigger rate.
James: We both have!
Monica: Everyone in this room has!
James: Yeah, three for three. Monica, what do you have?
Monica: I like this one because it’s topical and it’s coming up the, and this was from CTV, that the “BC assessment is estimated to go up five to 15% January 3 of 2023”. What do you think about that?
James: There’s gonna be more places selling under assessed value in 2023. We’re already, I’m already starting to see sales happen like, list prices at assessed and sales happening under assessed now. I wouldn’t say, I’m going to throw up a random percentage, call it 10 to 20% of the time. That’s gonna go up
Monica: If I’m excited, I love it. I love a good, I love a good wild ride. I think that so often we get a lot of realtors and buyers try to tell us “oh well, the assessed value is you know $50,000 underneath what you’re listed” I can’t wait to list something under assessed value. I cannot wait like “Well, we’re $50,000 under assessed value, this is a deal.”
James: I think the trend in 2003 is you’re gonna see “Priced under assessed value” as like in all caps in the write up of real estate listings.
Monica: Can’t wait.
James: I think one thing that I mentioned is I, as a realtor I hate about 90% of conversations around assessed value because they are not accurate and a lot of people talk to us realtors as if this is the holy grail of assessments. This is an appraisal that is accurate of my property. And assessments aren’t. They’re just a guideline that it’s, it’s a select few people assessing 1000s and 1000s of properties. They’re not taking into account your renovations. They’re not taking into account all your features. They are just a guideline.
And these assessments happen in July of every year. So the assessment that’s going to come out in January 2023 is based on July 2022 values. They’re gonna go up, what was it? 10 to 15%
Monica: Up to 15%.
James: Up to 15%. We’ll see. Up to 15%
Monica: Over the last one.
James: Over the last ones. So, in theory, your assessment that’s going to arrive in January, it should be up, let’s call it 5 to 15% higher than it was worth in July of 2021.
Monica: Yeah, I can’t wait to have the exact same conversation with the same exact agent about assessed value but they’re going to be arguing the opposite.
James: In theory, this might help some properties sell.
James: For you know, certain buyers that are stuck on assessed value as a guide of value are going to see “Oh this property just went up in value”. There is and that is, that is a real thing, that is a real thing.
Monica: It’s true! That’s why this one for me is my favorite headline. I had this conversation with buyers yesterday.
James: Rarely do you get a moment where they go out so much when the market is correcting in the other direction. So, this is, enjoy the moment.
I’ll throw one out there I have. This is from the Daily Hive: “Young people need to give up 26 lattes every day for five years to afford a Vancouver home”. Well first of all, don’t you love the conversation about a coffee a day for like…
Monica: These people are going to be exhausted. They’re not going to get through a day of work.
James: Yeah. In the article adds: “A typical young person aged 25 to 34 in Metro Vancouver would need to save up for 27 years for 20% downpayment for a home in the region.” I mean, by this, is trying to catch eyes a little more. It basically highlights, I don’t know if they’re using you know, detached home or you know they’re, they’re probably not using the low price older, one bedroom condo.
“When it comes to earnings young Vancouverites would need to make around $186,000 per year, more than triple the current levels to afford a home in Vancouver today.”
James: This is, this is, I just appreciated the title because it said “26 lattes a day”.
Monica: Yeah. This is good. I mean I don’t know anyone that drinks 26 lattes a day. I like this one. This was also from CTV: “Woman ordered to pay $125,000 deposit because she pulled out of the deal. She didn’t know that the foreign buyers tax applied to her”.
James: Did she have a realtor?
Monica: I mean, it didn’t say any of that. I read that whole article because I was like, what is this about? Well duh, if you pull out of a deal that you’ve already removed subjects on,
James: She lost her deposit. That’s news and that is the law.
Monica: Yes. So the law was upheld in this scenario guys. And the sellers got to take the $125,000 deposit.
James: So if you’re a foreign buyer listening to this just be wary. Make sure you know your information before you buy in Canada.
Here’s one from The Western Investor: “Ski hills experienced strong demand but real estate softens.” There’s nothing much to add to this. I just thought it’s ski season soon and those mountains that have been on like, real estate, I’ve been watching this because I go down fantasyland a long time. Recreation property has gone on an absolute tear during COVID and some of these markets have gone up considerably. Specifically the smaller like Big White, Mount Washington on the island. I mean Whistler has always been expensive, but the article did have some stats about these recreation properties going down in price.
But I will say they didn’t seem accurate like they’ve gone down 10% which is the market average. So it didn’t seem like any specific news but I do, you know, from what I’ve observed in some of the smaller markets, it’s much more than 10%. So yeah, the small town ski hill, real estate prices are a little bit hurt right now.
Monica: Sorry ski community.
James: I got another one from The Western investor here: “New rental units are smaller than three parking stalls”. So this is a Concord high rise project in Burnaby, 58 nonmarket studio suites are between 323 and 346 square feet. I wonder if the 346 is like a one bedroom and den?
Monica: Right? So I’m just looking up here because I’m really curious the size of a standard parking stall. Okay, a standard parking stall according to Google is 16 feet by 18 feet. So that times 3.
James: Oh yeah. Oh jezz, don’t put math on the spot. But like we’re talking, I remember IKEA having these ridiculously designed one bedrooms that were around this size but yes 323 to 346 square feet per rental unit. That might be the future. That might be the future of housing for these giant concrete towers in dense neighborhoods.
Monica: Well you and I saw last week, some 400 square foot in Port Moody.
Monica: I think that’s probably the smallest condo in Port Moody, ever.
James: And to be clear, they were I think, let’s call it around 430 square feet.
Monica: Well, there were some that were like 406.
James: Was there a 406?
Monica: Yeah. And then there was the other ones that were 430-ish. Yeah.
James: And add that they did not include a parking.
Monica: No. Or a toilet.
James: If you asked either of us, 10 years ago if you would expect a presale to launch a 400 square foot, no parking, one bedroom in Port Moody. I’d say that’s not sellable. But, in this market, they might be able to prove me wrong.
Monica: Yeah. And they, they’re renting them and they had 25 of them that are going up for rent. That’ll be interesting.
James: Alright, what’s the next title? Do you have a title for me? I got plenty.
Monica: Yeah, go ahead, keep firing away.
James: “Vancouver City Council approves empty home tax hike to 5% of assessed value”. It was previously 3%. So at the beginning of January 2023. if you are sitting on what’s basically a vacant home or empty home and you have to pay that tax, it might be a big bill. 5% of assessed value is a big penalty to pay for having an empty place.
Monica: Oh yeah.
James: You might as well rent your place out you know, for dirt cheap.
Monica: And you can now. You can now.
James: On the empty home theme is another article and this is The Daily Hive as well: “Empty home tax has reduced Vancouver’s number of vacant homes by 36%”. So according to this article, there are 1398 homes which is, sorry, compared to 27, I’m butchering this Karl, I’m going to read it word for word so I don’t butcher it any further.
1398 homes or 36% fewer properties compared to 2017 when the empty homes tax first launched. So this is, I don’t have anything to elaborate on this one.
Monica: No. That’s a good one. I have one here that I thought was kind of interesting. This is from NSnews.com: “Court squashes North Van found order for homeowner to fix high risk Creek.” So that’s, that’s a pretty interesting one. They were trying to get the owner to fix a creek that goes through their property that’s, that’s not their creek. They don’t own the creek.
James: I actually know the house. I do know the house. I, I now live in North Vancouver, I walk my dog out there, it’s out towards Quarry Rock. I think it’s on Panorama Drive, if I remember it, and this house was built and I’m gonna guess the 80’s and they have, it has a raging creek under an extension.
James: So it has this like bridge wing of the house that is
Monica: Over a retaining wall.
James: Overtop of, that rages in high rainfall. And you can tell the home is older and the whole thing is back in the day, you could build whatever you wanted. You could build things closer to the ocean. You could build things over top of creeks. And there was less environmental regulation back then. But the, to enforce it on a homeowner today that bought a home that is obviously against today’s environmental setbacks. I mean, it doesn’t feel just. I mean, that’s an extreme example, but went to court but…
Monica: And they wanted him to submit plans and have all kinds of like flying, you know, professionals from all over the world to look at it. It was insane.
James: As someone that’s familiar with the process of building around a creek, which I unfortunately have experienced, are going through right now, that homeowner would be going through the wringer to make that work. There would be so many engineers, environmentalists, the laundry list of like professionals and documents reports, nevermind the work to be done, it would be pretty extensive, I would imagine. And to put that on a homeowner, I think that would be more on the city or the district and maybe have the homeowner contribute something but…
Monica: Well, lucky guy, he’s off the hook. I’ve got a good one here. I really love this one. This is another CTV News: “Tax sale of Vancouver home for.. “ sorry, we’ll start over again. “Tax sale of Vancouver home for 1 million less than assessed value can’t be completed city staff say.”
So the home sold for under a million less than the assessed value this whole, it was a year ago. It was over a year ago. And it’s been, you know, they stopped it from completing it was 3018 Knight Street. It sold last November. So over a year ago in East Vancouver. It sold for a million less than assessed value and the city says “Oops! That was a manifest error in the tax sale process”. So we’re going to not allow this one to complete.
James: Did it mention anything about the owner of the home having the option to pay the taxes and not…?
Monica: Yeah, well the owner of the home is deceased. So this is where, this is where this problem came in. So they didn’t have any errors and they didn’t leave the property to anyone. So the city went ahead and sold it and there was a mistake and it sold for a million less than the assessed value.
And you know owners typically if it was a forced tax sale would have up to 12 months to pay the upset price. And upset price is the price that it ends up selling for in court. And because this owner is no longer with us they didn’t have the opportunity to do that. But the city says no we’re not gonna let, we’re not gonna let this one complete. The all in price, do you guys want to guess what the all in price was?
James: This for a house?
Monica: Yeah. This is for the house. The all in price they bought it for was $34,906.
James: No way that completed.
Monica: The city was like “No, not happening.”
James: On the tax sale note. Invest, real estate investors or real estate enthusiasts might have heard tax sales is an opportunity to get a deal and I think in some markets in the US and maybe Canada it is. But I will say in Vancouver or surrounding Vancouver it is so rare, I’d almost just say it never happens. It never happens.
If you get an opportunity to buy a person’s home that hasn’t paid their taxes, they’re usually countered by the person paying their taxes by the deadline they have to pay their taxes and that sale doesn’t go through.
Monica: And that’s that price upset timeline.
James: So, just assume that they, safely assume, don’t waste too much energy on it. Tax sales aren’t a great opportunity in Vancouver.
Monica: I’ve got another one here.
James: Ok, go for it.
Monica: Ok, I like this. This is BurnabyNow.com: “Burnaby strata condo owner battle over refundable beverage containers.”
James: What the?
Monica: “Burnaby strata condo owner battle over refundable beverage containers”.
James: With who?
Monica: With each other.
Monica: They’re fighting over where to put the beverage containers and this was a headline.
James: That’s amazing. I think that’s just a good headline.
Monica: I love that one. I love it.
James: I have one here. So, “Government expands speculation and vacancy tax to more communities”. So, just so everyone knows that. If you have a vacant home in certain parts of BC, you have to pay that. And now, these areas were not included before but now it includes mostly on the island North Cowichan, Duncan, Ladysmith and Lake Cowichan.
But in the Sea to Sky, Lions Bay and Squamish, and know what’s still not on the list? Whistler.
Monica: Whistler. Even though it’s 30 minutes away.
James: Ah, isn’t that…fair.
James: I think there’s some pretty big shacks that have high assessed values that are clearly not occupied. And that’s why Whistler doesn’t get it.
So these changes will come into effect in January 2023. And just as everyone knows, the existing taxable areas are Metro Vancouver, Fraser Valley, Greater Victoria, Kelowna, West Kelowna, Nanaimo and Lantzville
Monica: Now if you find yourself getting extremely perplexed by real estate headlines in Vancouver, you should call your real estate agent.
James: Yeah, cause there’s a lot! There’s a lot there.
Monica: We have the inside scoop. If you’re very confused by a headline, if you want to know what happened with the battle over the beverage containers. James and I are in real estate, give us a call.
James: If you want to know what’s a headline versus what’s reality, we’re here to help. Thanks for listening.