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A little more than 25 years ago, John Douglas Carnahan bought the rights to two burial plots in the northeast corner of a hilly cemetery in a dense area of Burnaby, B.C.
Back then, they cost $750 each.
As years passed and space grew scarce, the cost of a single plot in the same cemetery surged to more than $10,000.
After Carnahan’s death at 91, his widow decided not to use the plots. Her battle for the right to sell the plots privately to any buyer at market value has now spilled over into B.C. Supreme Court in a case experts say again proves the region’s real estate crunch is also squeezing its graveyards.
“We are running out of space, particularly in the Lower Mainland,” said architect Bill Pechet, who’s worked in cemetery design for roughly 30 years.
“Just like we have a housing crisis for the living, we’re also encountering a housing crisis for those who want to be buried.”
Carnahan bought both plots at Pacific Heritage Cemetery in March 1998. At the time, there was a clause in the purchase agreement saying cemetery directors “may” buy back owner’s plots at the original purchase price.
Carnahan’s widow, Sheila Carnahan, contacted the cemetery after her husband’s death in 2021 to ask how she could go about privately selling the plots she no longer needed to a third-party buyer.
Her claim said staff told her in an email last October that, according to its bylaws, she could only sell her plots back to the cemetery for the original purchase price of $750 each.
Sheila Carnahan has argued the cemetery “misinterpreted” its own bylaws because the clause said cemetery directors “may purchase” plots back — not “must purchase.”
“The claimants say that the position taken by the [cemetery], while invalid in law, effectively prevents a sale to third parties because the [cemetery] controls the ownership record and the operation of the cemetery, including the preparation of the grave for use,” the lawsuit said.
“The [cemetery] could effectively prevent the new owner from using the plot.”
The cemetery has not responded to her claim in court.
In B.C., buying a plot is just buying the right to interment, meaning a buyer is paying for the right to be buried in the space but not purchasing the land itself. Those rights are sold in perpetuity, so buyers can hold plots for however long they choose — unless a plot has been empty for more than 50 years and the rightsholder is more than 90 years old, in which case a cemetery can launch the complex process of applying to get the space back.
Each cemetery sets its own rules around resales. Some bylaws allow private sales, others don’t.
Most cemeteries in Metro Vancouver are full or nearly full. As the value of real estate has skyrocketed over the last decade, so has the value of that scarce burial space — especially in urban areas. Private plots in Metro Vancouver have been listed on Craigslist or Kijiji for anywhere from $5,000 to $50,000.
Resales are common enough to warrant caution from Consumer Protection B.C., urging buyers to check online ads carefully to ensure whether cemeteries honour private sales.
There’s a shortage of traditional cemetery space in B.C. for the same reason there’s a shortage of space for new homes — builders have nowhere else to go.
“The housing crisis that we’re encountering is a result of our inability to expand horizontally because we encounter the mountains on one side and the ocean on the other,” said Pechet.
“We have a land shortage for housing, and cemetery spaces are a form of housing.”
City planning was also an issue.
“For some reason, the Metro Vancouver area seems to have significantly less cemetery space through some planning than most other municipalities,” said Glen Hodges, who manages Mountain View Cemetery, the only graveyard in Vancouver.
“It’s some magical mystery as to why.”
Some European countries, like Switzerland, Sweden, Italy, France and Germany, limit cemetery leases to anywhere between three and 30 years to free up more plots.
In Spain and the United Kingdom, bones can be moved after a certain period so the plot can be recycled to be sold again. The City of London Cemetery, for example, reuses graves left untouched after 75 years.
In 2019, the City of Vancouver passed a series of bylaws to save space at its only cemetery. Gravesites at Mountain View Cemetery are now allowed to be shared by multiple families, and the cemetery can decide when additional remains can be added to an existing space.
Pechet said B.C. might have to consider vertical cemeteries, like those in Japan, or find a way to tactfully incorporate gravesites into existing public parks. Recycling could also be an option.
“I think it will inevitably have to lead to a lot of invention,” he said.
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Banks Believe They Are Well-Prepared for Commercial Real Estate Fallout The Wall Street Journal
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Robert McLister: Tax shelters don’t make housing more affordable, but those with the cash would be foolish not to use them
Published Apr 19, 2024 • Last updated 55 minutes ago • 4 minute read
With housing unaffordability near its worst-ever level, our trusty leaders are on a quest to right their housing wrongs and get more young people into homes.
Part of Ottawa’s big strategy to “help” is promoting tax-sheltered savings accounts and pumping up their contribution limits. That, of course, stimulates real estate demand amidst Canada’s population and housing supply crises. But save that thought.
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First-time buyers now have three government piggy banks to stockpile cash for a down payment:
1. The 32-year-old RRSP Home Buyers’ Plan — which lets you deduct contributions from your income to defer taxes and then borrow from the account interest-free for your down payment (as long as you wait 90-plus days to withdraw any contributions);
2. The 15-year-old Tax-free Savings Account (TFSA) — which lets you save after-tax dollars, grow your money tax-free and withdraw it without the taxman taking a bite;
3. The one-year-old First Home Savings Account (FHSA) — which is a combination of an RRSP and TFSA. It lets you deduct contributions from income, compound it tax-free and never pay tax on withdrawals used to buy a home. You can even save the deduction for a year when you need it more — when you’re earning more money.
Assuming you have the funds and contribution room, these tax shelters can combine to help you amass a supersized down payment.
“Looking at the FHSA alone, with the max annual contribution room of $8,000 for 2023 and 2024, a potential first-time home buyer could have as much as $16,000 deposited in the account today for a down payment,” says Eric Larocque, chief mortgage operations officer at Questrade’s Community Trust Company.
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“If you also add in the cumulative contribution room of $95,000 for the TFSA, it amounts to $111,000 in potential funds available — and that’s before incorporating investment gains from either account.”
And it doesn’t stop there. RRSP, TFSA and FHSA savings limits keep increasing. If first-timers have enough contribution room, down payment savers in 2024 can sock away even more in these tax-sheltered troves.
“Factoring in the recent changes to the Home Buyers’ Plan, which now permits RRSP withdrawals of up to $60,000 — up from $35,000 — we land at a potential total of $171,000 in deposited funds that can be tapped for a first-time home buyer’s down payment,” Larocque adds.
That’s quite a wad — easily enough to cover the 20 per cent ($139,706) down payment required to avoid mandatory (and pricey) default insurance on the average home. Canada’s average abode is now worth $698,530 by the way, according to the Canadian Real Estate Association.
Here’s the rub: Canada’s living costs are sky-high, and real disposable income has trended downward. So, how’s an average first-time buyer household, raking in less than six figures, supposed to amass such a stash?
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Based on national averages, saving 10 per cent of one’s pre-tax income per year (who does that?) would take a young FTB couple over 15 years to sock away $140,000. History shows what would happen to home values if you waited 15 years — they’d jet off without you.
If you have no other resources and your bet is that historical appreciation rates continue — despite slower population growth, more building and potentially higher long-term rates — you’re better off saving less and buying sooner with a five per cent down insured mortgage.
So, does Big Brother really expect your typical first-time buyer to max out all these savings plans? Nope. But hey, throwing a buffet of options at you sure paints a pretty picture of government effort, doesn’t it?
Ottawa’s dirty little secret is that these nifty programs crank up demand, turning renters into buyers. So don’t bet on them making the home-owning dream any cheaper, for first-timers or anyone else.
Take advantage of them anyway.
The government sets limits on these tax shelters with well-off home buyers in mind. One lucky bunch who can make use of all three down payment savings plans is the first-timer with prosperous parents.
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Such buyers can make a withdrawal from their parental ATM (a living inheritance, some call it), deposit that cash in all three savings vehicles above and reap: hefty income tax savings or deferrals (thanks to the FHSA and RRSP deductions); tax-free/tax-deferred growth on the investments; and tax-free withdrawals if the money is used to buy a qualifying home (albeit, you’ll have to pay the RRSP HBP back over 15 years, starting five years after your withdrawal).
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The more opportunities it gives people to save for a down payment, the more Ottawa worsens the imbalance between purchase demand and supply. And that, of course, boosts real estate values skyward — which is dandy for existing owners but contradictory to the government’s affordability messaging.
But hey, these tax treats are ripe for the picking. Home shoppers with the means — especially those with deep-pocketed parents — might as well take advantage of all three accounts.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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Successful real estate investors have long followed the adage: When there is blood in the street, buy property.
Historically, this approach has yielded dividends, and it explains the mindset behind a new venture from Hines, a real estate giant with over $93 billion in assets under management. Hines recently announced a new platform called Hines Private Wealth Solutions that seeks to capitalize on the recent troubles in the real estate industry.
The management at Hines has been carefully watching the real estate industry for decades, and they believe that today’s market presents the perfect opportunity for investors to buy distressed assets and sell them at a profit in the future. When you consider that nearly $4 trillion in commercial real estate loans are set to mature between now and 2027, it’s easy to see the logic behind Hines Private Wealth Solutions.
The developers behind many of those projects took out loans assuming they would be able to refinance at pre-COVID interest rates. Considering that current interest rates are about double what they were before COVID-19, that assumption looks more like a losing bet every day. It also means there will be a lot of foreclosures that a well-positioned fund can snap up for pennies on the dollar.
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That’s where Hines Private Wealth Solutions seeks to step into the picture. It’s already contracted with investing heavyweight Paul Ferraro, former head of Carlyle Private Wealth Group, and raised $10 billion in funds for the new project. It will offer its clients a range of investment options, including:
In addition to these offerings, Hines will also give personal guidance to its investors on how to best manage their real estate assets. It is targeting investors who want to turn away from the traditional 60/40 investment model by channeling more money into real estate and away from other alternative investments. Hines is banking on the idea that high interest rates and high inflation will be around for a while.
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When that happens, it becomes more important for investors to hold inflation-resistant assets. That’s a big part of why Hines is betting that real estate is near the bottom after years of declining profits resulting from high interest rates and major losses in the commercial sector. Hines’s conclusion that now is the time to buy real estate is based on long-term company research showing that real estate typically declines after a 15- to 17-year-long growth period.
Its research shows that the decline normally lasts around two years, which is about the same length of time the real estate market has been suffering from high prices and high interest rates. Theoretically, that makes this the perfect time to make aggressive moves in the real estate market, and the Hines Private Wealth Fund was conceived to allow investors to take advantage of current market conditions.
Despite the deep troubles facing today’s real estate industry, it’s not hard to see the logic in Hines’s approach.
“This is a great vintage, it’s a great moment. This real estate correction began really over two years ago, right when the Fed started raising interest rates,” Hines global Chief Investment Officer David Steinbach told Fortune magazine. “So, we’re two years into a cycle, which means we’re near the end.”
If Hines is correct, real estate investors will have a lot of good bargains with high upside to choose from in the next 12 to 24 months. The good news is that even if you’re not wealthy enough to buy into the Hines Private Wealth Solution, there may still be plenty of opportunity for you to adopt their investment philosophy and start scouting for an undervalued, distressed asset to scoop up. Keep your eyes open and be ready.
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This article $93 Billion Real Estate Giant Is Betting The Market Is About To Hit Rock Bottom originally appeared on Benzinga.com
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