Thomas Davidoff, director of the University of British Columbia’s Centre for Urban Economics and Real Estate, says the best way to keep housing prices from rising is to have policies that encourage home construction and more rental housing | Rob Kruyt
If real estate investors needed clarity on what the general public thought about the practice of buying and flipping Metro Vancouver homes, they got it in the 2021 federal election.
Vancouver Granville Liberal candidate Taleeb Noormohamed came under heavy fire after the media revealed that since 2005, he had bought and sold at least 21 homes within timeframes shorter than one year.
Many took to social media to express outrage that the Liberal Party of Canada candidate would do that when the party was promising to implement an “anti-flipping tax” that would be over and above the capital gains tax that real estate investors already have to pay on those sales.
Coverage of Noormohamed’s dealings may have almost cost him the riding, which he was able to win in a squeaker when mail-in ballots were counted.
The issue became a flashpoint because the high cost of housing was a key issue for many voters.
Rentals.ca and Bullpen Research & Consulting’s latest rent report revealed that the asking price for Vancouver one-bedroom apartments rose 15.7% in September compared with the previous September. That was the highest increase in the country. The $2,167 average monthly price for a one-bedroom apartment that landlords were asking in Vancouver was also the highest rate in the country.
The Liberals winning a minority government provides some clarity of what policies could be on the horizon to battle housing affordability.
In order for a newly purchased property to qualify as a principal residence for tax purposes, the owner must live in the property for at least one year. The result is that the tax that the Liberals have proposed for home resales would only be for properties that are not considered primary residences.
The Liberals would also need support from another party in Parliament to legislate the plan.
If the Liberals succeed in passing the plan, it will not be a silver bullet to affordability, said Thomas Davidoff, director of the University of British Columbia’s Centre for Urban Economics and Real Estate.
“The reason people speculate is because they think prices are rising,” Davidoff said.
The best way to keep prices from rising, he added, is to have policies that encourage home construction and more rental housing.
He praised the Liberals for recently tweaking the Canada Mortgage and Housing Corp.’s mandate to include rental housing, which he said could help create more rental units.
On the campaign trail, the Liberals promised to build, repair or preserve 1.4 million homes in the next 10 years.
The party also said a Liberal government would double the first-time home buyer tax credit – something Davidoff called inflationary because it gives new buyers more purchasing power.
The current system provides first-time homebuyers with a $5,000 non-refundable income tax credit. Doubling that amount would put up to $10,000 in those buyers’ pockets.
“There will be action on the foreign buyers and foreign capital file,” said Simon Fraser University director of the City Program, Andy Yan.
The Liberals promised in the campaign to implement a two-year ban on allowing foreign nationals to buy homes in Canada, but Yan doubts that the ban will materialize.
“If anything, it will be a foreign buyers’ tax, because, hey, that’s income,” he said.
Real estate developers, such as Hold It All owner Chip Wilson, similarly, like the idea of taxing foreign buyers more than banning them.
“Let them buy, but make them pay a premium,” Wilson told BIV.
Yan said that if the Liberals implement a new tax on reselling homes within a year of purchase, the levy is unlikely to evolve into being a tax on homes resold within longer timeframes.
Doing so, he said, would mean taxing primary residences, and though that would be popular among some voters, others would be irate.
A flipping tax is aimed at deterring speculative real-estate purchases, Yan said, whereas taxing principal residences is just a money grab.
Real Estate Wealth Lab chief intelligence officer Jennifer Hunt told BIV that she expects the Liberals will try to win support from another party to introduce a new multi-generational home-renovation tax credit for homeowners who want to add secondary units to their homes to accommodate immediate or extended family members.
Those upgrades would increase real estate values and could be inflationary.
The Liberals promised in the campaign that homeowners would be able to claim a 15% tax credit, up to $50,000, in renovation and construction costs for these upgrades. That means homeowners doing those renovations could pocket up to $7,500.
Another Liberal housing promise that hinges on support from the NDP, or another party, is to provide $1 billion in loans and grants to develop, or scale-up, rent-to-own projects with private, non-profit and co-op partners.
A typical rent-to-own scenario could be one where an individual commits to rent a property for a period of time and receives the option to buy the real estate at a locked-in price before the end of the lease.
“The policy that would be more likely to get passed, based on NDP support, would be to double the first-time homebuyers’ tax credit,” Hunt said.
The NDP promised in the campaign to extend the maximum amortization period for mortgages to 30 years, and this could be a part of horse-trading that the party engages in with the Liberals to support policies that the Liberals want to put in place, she said.
That Liberal policy could be the flipping tax, but Hunt still gives that policy only a moderate chance of becoming law.
“I don’t believe that the appetite from the other parties would allow for that policy to go through,” she said. •
Over A Quarter of Toronto Real Estate Is Bought By Investors With Multiple Properties – Better Dwelling
Staying Competitive- How The Power And Voice Of The Real Estate Industry Are Changing – Forbes
Last week, Warburg Realty* became part of Coldwell Banker’s Global Luxury Group. Warburg is just the latest in a series of mergers and acquisitions which is gradually shrinking the pool of independent luxury brokerages in New York City. With CORE’s 50 percent sale to The Related Companies, followed by the sale of Stribling to Compass in 2018, and now Warburg, the landscape of New York’s luxury firms echoes the brand consolidation which has swept almost all industries in recent years. And the rest of the country fares no differently. For most brokerage CEOs, this decision is being spurred by an awareness of how profoundly the business of real estate has changed in the last decades. Here is the how and why:
Through the early 1980s the residential sales business in New York, as in most of the rest of the country, was a family affair. Most brokerages were run by founders or long-time owners. Douglas Elliman was the exception, having already had more than one corporate owner. The firms were small, as was the entire business. Property listings were written on file cards and were given non-exclusively to a handful of firms. Agents worked hard to acquire those listings, making cold calls and walking the avenues chatting up and tipping doormen. No one co-broked listings, since none were given exclusively to agents. There was no central listing repository. The only advertising was columns of listing ads in the New York Times Real Estate section and the occasional display ad in the Times Magazine or, as time went on, Quest Magazine. No firm had more than 60 or 70 residential agents; L.B. Kaye, where I (along with a number of other industry executives) started my career, had fewer than 50.
There were no condominiums at that time and a limited number of co-ops. Artists actually lived in Soho, in unimproved or barely improved loft spaces. Alphabet City was not a safe place to venture, and the Lower East Side was not much better. The Bowery was still inhabited by winos.
The mid-80s brought a cascade of rental-to-co-operative conversions to New York. Landlords saw an opportunity to cash out of buildings. At the same time, they maintained cash flow by creating wraparound mortgages at high interest rates which they imposed on these conversions. Because of this trend, the number of apartments for sale probably tripled between 1980 and 1988, until the market crashed and conversions and sales both ran aground.
During the early 1990s, multiple changes shook the market. First, we were forced to acknowledge that, as the number of co-op buildings exponentially increased, the old way of handling listings no longer worked. File cards gave way to the first clunky computer listing systems. Exclusive listings and co-broking came to Manhattan, championed by a small company led by Susan Byrd; her work transformed the way we sell property here (the superbroker Sharon Baum is one of the few remaining Susan Byrd veterans still plying her trade among us). Equally significant, the brilliant innovator Barbara Corcoran forced upon her reluctant colleagues the twin ideas of branding and marketing, which many of us were slow to understand were NOT the same thing as advertising.
And so, as the millennium turned, the industry was poised on the cusp of a sea change: technology, branding, and capital pushing their way to center stage of our formerly tame backwater of a business. Over the past 20 years, the goalposts which enabled small firms to continue to succeed kept moving. Cendant (now Realogy) acquired Corcoran and then Sotheby’s Realty, Douglas Elliman changed hands to become a part of the Vector Group portfolio, Terra Holdings took over Brown Harris Stevens and Halstead, Town Residential came and went in New York to be replaced by its vastly better capitalized and more sophisticated sibling Compass, which spread throughout the country like a wildfire fed by a seemingly bottomless pit of capital. The worst excesses of the finance and tech industries came to the real estate brokerage market, as huge companies offered six-figure signing bonuses as well as multiple assistants and vast marketing budgets to agents, all in the belief that today’s loss leader would somehow morph into tomorrow’s profitable company.
In such an environment, a small residential company faces the ultimate challenge: not how to be profitable but how to provide competitive, best-in-class technology, customer relationship management, and seller engagement tools to its agents. In the end, these considerations drive many small and mid-sized brokerage owners into the arms of big national firms. These national players connect agents with like-minded agents in every major city and town in the country and often throughout the world. In addition, they provide their agents with the ability to match any tools a competitor may offer to win client business. The power and voice of the industry have thus gradually moved from the many to the few. With so many issues critical to real estate at stake before the Department of Justice and other government agencies, we all trust that these few have the deep understanding of the industry required to create a best-case outcome for us all.
*Disclaimer: Frederick Warburg Peters is the CEO of Warburg Realty, which he sold to Coldwell Banker. Warburg Realty, of which Peters will remain CEO, will operate under the name Coldwell Banker Warburg starting in January 2022.
Real estate secrets; Family blindsided after others profit off obituary; CBC's Marketplace Cheat Sheet – CBC.ca
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Real estate agents caught on hidden camera breaking the law, steering buyers from low-commission homes
Marketplace’s latest investigation is uncovering some shady real estate practices.
Posing as homebuyers and sellers, Marketplace tested if real estate agents are engaging in steering, an anti-competitive practice that steers potential homebuyers away from properties that offer agents lower commission. The team’s hidden cameras found some agents deceiving the buyers they are supposed to represent in an effort to pad their own bottom line.
Experts and industry insiders say what Marketplace has uncovered is indicative of an industry working for the benefit of real estate agents at a cost to home sellers and buyers.
“There’s a huge inertia, and maintaining the status quo, it absolutely benefits existing realtors 100 per cent,” said broker and real estate agent Michael Walsh, one of the few speaking out on this issue.
After learning about our findings, the Real Estate Council of Ontario issued a notice about steering to more than 93,000 real estate agents, brokers and brokerages under its purview, noting that such behaviour breaches their code of ethics. Read more
Family blindsided after marketing company, funeral home cash in on father’s obituary
Before pancreatic cancer took his life in April, John Rothwell made his dying wishes clear: if mourners wanted to donate to a cause in his name, the money should go to an educational fund he and his family set up.
Instead, family and friends unwittingly paid for a product that puts money into the pockets of companies profiting from grief, says son Nathan Rothwell
Rothwell told Go Public that while he knew the obituary would be on the website of the Mackey Funeral Home in Lindsay, Ont., he made sure it included a request for mourners to consider donating to the educational fund, in lieu of flowers.
What no one told his family is that Frontrunner — a Kingston, Ont.-based marketing company that runs the funeral home’s website and many others across the country — uses obituaries to sell what it calls “memorial” trees and other products.
The obituary included links that said, “Plant a tree in the memory of John Rothwell” and led to a different website where mourners paid for products the family knew nothing about, said Rothwell.
“Family and friends spent money out of their own pockets for what they thought were my dad’s wishes,” Rothwell said.
After Rothwell complained and got a lawyer involved, Frontrunner doubled what mourners paid for the trees, and donated that money — more than $2,000 — to the educational fund. The company maintains that it did nothing wrong. Read more
The U.S. land border is reopening, but Canadians with mixed vaccines are still in limbo
While it’s welcome news that the U.S. will reopen its shared land border with Canada to non-essential travel on Nov. 8, some Canadians with mixed vaccine doses aren’t celebrating just yet.
That’s because at the same time the U.S. reopens the land border, it will start requiring that foreign land and air travellers entering the country be fully vaccinated.
The U.S. Centers for Disease Control (CDC) currently doesn’t recognize mixed COVID-19 vaccines — such as one dose of AstraZeneca and one dose of Pfizer or Moderna — and hasn’t yet said if travellers with two different doses will be blocked from entry when the vaccine requirement kicks in.
“CDC will release additional guidance and information as the travel requirements are finalized later this month,” spokesperson Jade Fulce said in an email on Wednesday. Read more
What else is going on?
What we know about kids and COVID-19 vaccines
If parents feel heard and understood, they’re in a much better position to make decisions, say pediatricians
Zellers returns — kind of — but the lowest price isn’t quite the law
Discount store brand reappears months after HBC appears to lose trademark registration.
Sweatpants forever? Why the ‘athleisure’ fashion trend may outlast the pandemic
The pandemic has changed fashion trends — and experts say our desire for comfort is here to stay.
Canada seeks to claw back $25M in COVID relief from thousands of fishers
More than half of the harvesters affected by the repayment request are in Nova Scotia.
Specialized Tarmac SL7 Bicycles recalled due to fall hazard
Consumers should immediately stop using the bicycles and contact an authorized Specialized retailer.
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