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Is flipping a house now a flop? Why the practice has lost its cachet in Vancouver – Vancouver Sun

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Real estate insiders say the party is probably over, for now, as housing becomes a hot election issue even as the market cools.

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If you saw COVID-19 as a golden opportunity to flip a house, your timing was impeccable. Prices soared, flippers cleaned up.

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In response, federal Liberals, Conservatives, NDP and Greens are tripping over themselves promising they’ll bring down housing costs.

And the Grits, while promising an anti-flipping tax for properties sold in less than 12 months after purchase, have a candidate in Vancouver Granville, Taleeb Noormohamed, who has flipped at least 21 homes for $4.5 million more than he paid for them.

Regardless, real-estate insiders and observers say the party is probably over anyway.

For awhile, at least.

“I think in the past year-and-a-half since (COVID), house-flipping has been as popular as ever,” Adam Major, managing broker at Holywell Properties, said. “As prices rise, it is easier to make a profit so provided you bought before the summer of 2020 it has been easy money.

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“With the COVID insanity that took place in the last year, it will be more difficult for flippers as they have had to compete to buy just like everyone else.”

In other words, if house prices flatten, flippers will have to swallow the added cost of materials and labour, squeezing profits.

“Flippers will be aware that with interest rates eventually starting to rise, it could be a risky business, so I suspect we will see a slow down in flips over the next few years,” Major said.

If you search “flip this house Canada” online, all sorts of websites pop up, including tax tips and advice from real estate companies.

As the reaction to Noormohamed’s house flips shows, moral outrage is part of the reaction.

But Carollyne Sinclaire, a veteran Vancouver realtor, cautions that many people flipping houses are doing so to improve their station in life.

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“It wasn’t just (Noormohamed) doing it, it wasn’t singular to the wealthy,” she said. “It was a lot of families who knew how to do some construction and repair work. Actually, there was more flipping going on by multi-generational immigrant families than there was by the wealthy.”

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Such as one family who were clients of hers who crammed five people into a one-bedroom townhouse in Fairview Slopes or the three generations of family who comprised eight people living in a two-bedroom home in East Vancouver.

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“They fixed up inexpensive homes and were trying to climb the market to a bigger, better home,” Sinclaire said.

As for flipping itself, does it actually increase the price of housing?

“It could directly if you take a $1 million or $1.5 million home and fancy it up, you might make the house more expensive then, while adding to the housing stock by improving quality of the home,” said Tom Davidoff, assistant professor at the Sauder School of Business at the University of B.C. and a real estate expert.

“But if all the houses in Vancouver got fancy, you might generally have more affluent buyers purchasing, so in that way you could diminish affordability.”

In other words, flipping can attract wealthier buyers who wouldn’t have come into the community had a house not been upgraded.

“On the other hand, you could take it the other way and take an unlivable house and spend some money on it to add to the housing stock,” Davidoff said.

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Supply and NIMBY-influenced zoning, he said, are prime factors in house prices: “The flipping stuff … is second order. That said, I think flipping can exacerbate cycles. You get people buying when the market is hot, that adds fuel to the fire.”

In any event, clamping down on the principle residency provision is a good idea, he said, but it goes beyond capital gains.

“We have relatively low property taxes with a relatively high burden put on income taxes, which is lousy for renters but great for homeowners,” Davidoff said. “But the (political) parties aren’t going to touch that.”

Under Canadian tax laws, Major added, people are rewarded for owning and flipping properties, especially if they can take advantage of personal residence exemption and pay no tax on the gains.

“And even if you do pay capital gains, it’s 50 per cent exempt before being taxed at your personal rate,” he said. “Not to mention we have very low property taxes compared to what we pay in income tax.

“Dumb saps like us who work for a living and have half our income deducted before we even see it are likely the ones who need a wake-up call.”

gordmcintyre@postmedia.com

twitter.com/gordmcintyre


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Hong Kong Billionaire’s K. Wah Wins Shanghai Real Estate Bid, Sees “Excellent” Opportunity – Forbes

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Hong Kong billionaire Lui Che-woo has been making successful investments in Shanghai real estate since the 1980s, such as K. Wah Center set along the city’s swank Huai Hai Road. A new project coming amid the country’s economically painful zero-Covid policies took a big step forward on Friday when his flagship K. Wah International Holdings said it had won a joint tender bid for HK$4.18 billion, or $532 million, to develop land on the city’s western side.

K. Wah, though a subsidiary, will hold 60% of a joint venture in partnership with two state-owned companies to develop residential and commercial property in an area planned for artificial intelligence and healthcare-related businesses, the announcement said.

K. Wah said the project “represents an excellent investment opportunity for the group to be engaged in a transit-oriented development to expand its presence in the Shanghai property market, replenish the group’s land bank and is in line with the group’s business development strategy and planning.”

The announcement comes after China’s overall GDP growth fell to 0.4% in the second quarter from a year earlier. In Shanghai, where millions experienced lockdowns of varying duration in the April-June period, GDP shrank by 5.7%. China’s relations with the United States and Europe have been strained by Beijing’s close ties with Russia and recent military exercises near Taiwan.

Mainland-born Lui, worth $12.1 billion on the Forbes Real-Time Billionaires list today, moved to Hong Kong at age four. Possessing only an elementary school education, he helped his grandmother run a retail outfit that sold food staples in Hong Kong as a teenager. In the late 1940s he re-exported army surplus, and by 1950 was buying construction equipment from Japan and selling it to Southeast Asia. In 1964 his was the first private company to obtain quarrying rights in Hong Kong, thanks to a record bid.

After that, Lui started building undistinguished residential housing there. Lui was also an early investor in China, buying into a quarry in Shenzhen in 1980 and later acquiring a land bank in Guangzhou. K. Wah Center opened in Shanghai in April 2005; beside real estate, part of his fortune also comes from the Macau casino operator Galaxy Entertainment Group.

Another long-term Hong Kong success story in Shanghai property development, Shui On Land, led by billionaire Vincent Lo, noted in a filing last month China’s short-term business outlook faces uncertainties. “The Chinese economy faces considerable headwinds amid a highly uncertain geopolitical environment, tense U.S.-China relations, and tightening monetary policy in the advanced economies,” it said. “The property sector debt issue will take time to resolve. Still, the government has the policy means and experience to handle the developers’ debt restructuring process and address the suspended project issue.”

And yet Shui On, whose Shanghai projects include city’s iconic Xintiandi nightlife and shopping area, was nevertheless upbeat about the longer-term investment prospects there. “Although the immediate outlook is less than favorable, the impending market correction should enable us to acquire assets in prime locations at attractive prices during what could be a golden era for new investment,” it said.

See related posts:

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U.S. Business Optimism About China Drops To Record Low

Pandemic’s Impact On China’s Economy Only Short Term, U.S. Ambassador Says

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Real estate markets slow in most nearby communities – Calgary Herald

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Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.

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Slowing demand and rising supply in outlying communities like Airdrie have set in along with cooler temperatures of late summer, recent data shows.

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Calgary Real Estate Board statistics from last month show sales falling year over year in most communities while supply is rising.

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“In all those markets, we’ve seen improvements in inventory,” says Ann-Marie Lurie, chief economist with CREB.
“Still these markets remain quite tight, but we are seeing some price adjustments and that’s because they came up so high during the pandemic.”

Airdrie is the largest and most in-demand market with the highest sales last month, 169 transactions, down almost eight per cent year over year. Still, the community saw inventory rise more than 10 per cent with now more than 1.69 months of supply, an increase of nearly 20 per cent from last year.

Other communities have also seen sales fall and supply rise. These include Cochrane, which had 75 sales, down about 17 per cent from August last year. Its supply is now more than two months, up about 26 per cent year over year.
Okotoks had 53 sales in August, down about 19 per cent year over year while supply grew to more than 1.8 months.

Despite falling demand and growing supply, prices still grew year over year in these communities. The benchmark price in Airdrie increased almost 19 per cent to $493,500. In Cochrane, the benchmark price grew by more than 16 per cent to $517,400 while the benchmark reached $549,300 in Okotoks, also an increase of more than 16 per cent.

Chestermere saw the biggest drop in sales year over year at more than 48 per cent.

Only High River experienced a slight increase in activity with sales last month up 2.5 per cent versus the same span last year.

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Spotlight: Making sense of the current real estate market in Newmarket – NewmarketToday.ca

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Buying a home at any time is a huge undertaking. It requires a lot of preparation, time and access to expertise.

Homeowners—and those who wish to become one for the first time—have it even harder right now, with conditions seeming to change from month to month.

REALTOR® Dave Starr specializes in home buying and selling in Newmarket and the surrounding areas. With over 35 years of experience in the real estate industry, he is happy to share what he’s learned with others.

Slowing things down

So how would he describe the current state of the market in Newmarket? “It’s finally more normal and realistic,” he says. “A prospective buyer has a little more breathing room to make sure that their financing is in place and they can also consider a home inspection.”

A seller will benefit by working with a more seasoned agent, he says, because they have had prior experience with similar markets. He likens the situation to a professional athlete who has played in the playoffs before or competed in a large-scale event like the Masters in golf.

Earlier in the year, the market was not realistic.

That tended to leave buyers, sellers and agents scrambling. “The end result can be a situation with buyer’s remorse, where the buyer no longer wants to close on their purchase. The banks sometimes struggle with appraisals, which can also result in a non-closure,” he says. “In the fast-paced market that took place earlier, some agents potentially made more mistakes, especially since they weren’t experienced enough to handle multiple offers.”

Home inspections and interest rates

While some homes may not require a home inspection, there are lots that definitely need one. “In an extremely busy market, buyers could potentially end up with an unwanted surprise—at a great expense,” says the REALTOR®.

He likens it to the necessity of having speed limits on our roadways. The faster you go, the more chances you have of getting into an accident.

“We are now facing an increased mortgage rate, which many would not like to see, but the truth is it will help balance the market overall. Lower interest rates basically were one of the reasons for the inflated house prices and homeowners were simply taking on larger mortgages than ever,” he says.

For years many homeowners would tell him the same thing: that mortgage money was cheap to them. His answer to that never varied: “You do know you have to pay it back at some point.” If the rate were guaranteed for a lifetime, it would be a different story, but of course that’s not the way it works.

The market over the summer was slower but typical; that has become the norm over the past few years.

The fall market is already starting to pick up, with increased activity, though the number of listings in Newmarket is quite low. Rental availability is both quite expensive and experiencing a shortage.

Says Starr, “The market moving forward should remain stable. Buyers and sellers will have more time to make the best educated decision for their needs and wants.”

Whether you’re a buyer or a seller, he welcomes any calls or emails.

Let Dave Starr Real Estate help you make your next move. Call 416-520-3231 and get the Starr treatment you deserve.

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