Think You’re In Heaven But Ya Living in Hell

31980733 – sete, france – september 21, 2014: graffiti portrait of bob marley, a famous jamaican reggae singer-songwriter and guitarist on the wall of sete, south of france.

The last 6 months have been a media dream with an oversupply of real estate stories to fill the airwaves and print; stories of a white hot market, escalating prices, shadow flipping, unscrupulous realtors, unaffordable housing for the average buyer, and of course, the foreign buyer that is the root cause of our unaffordable world class city and region. The unaffordable market stories continued to gain momentum and strength as the media and public kept pressing and asking the government how to solve the problems—the problems of escalating prices, the unaffordable market for the average Vancouverite, and all the vacant homes owned by foreign buyers. The BC Liberals in their infinite wisdom to bring all things real estate back to earth in Greater Vancouver and the Fraser Valley implemented a new 15% property transfer tax to all foreign buyers purchasing residential property in the Greater Vancouver Regional District, effective as of August 2, 2016. The Liberals new tax was rolled out with only one week notice; therefore, no grace period and no exemptions for any contracts that were written days, weeks, months, or even years ago.

The Bob Marley song “Time Will Tell” says it all when it comes to understanding what affect this new foreign tax will have on the market. The title of the song, “Time Will Tell,” will be prophetic, and in less than 30 days, we will have a much better understanding of how this tax will have impacted the market.  However, as prophetic as the title of the song is, it is the lyrics in Marley’s song that I believe tell the tale of we feel about the market:

Time alone-oh, time will tell:

Think you’re in heaven, but ya living in hell;

Think you’re in heaven, but ya living in hell;

Think you’re in heaven, but ya living in hell;

Time alone-oh, time will tell:

Ya think you’re in heaven, but ya living in hell.

Back them up; oh, not the brothers,

But the ones who sets ’em up.

Oh, ma children are cryin’.

Oh, children weep no more;

The lyric of “Think you’re in heaven, but ya living in hell” pretty much sums up Vancouverites. Every day, we are reminded about how much we love this beautiful world class city and how we think we are living in God’s country, or heaven. In fact, as I listened to the radio today, the DJ went on and on about this great city and region of ours and even said, “This is the most amazing city in the world.” This is why the rest of the world has descended on Vancouver to buy real estate. However, this foreign buying spree is not a new phenomenon. In fact, the wealthy foreigner has been buying up property ever since the Provincial Government promoted Vancouver to the world at Expo 86 and then again in 2010 with the Winter Olympic Games. The intensity of this buying cycle has certainly increased with China producing more than 2,300,000 millionaires over the last number of years. With so many of these foreigner millionaires devouring the prime real estate, many of us feel as though we are losing our amazing city, and as Marley sings, “but ya living in hell.”

Not all property owners are complaining though. Many property owners that I speak with are feeling fortunate about their timing in the market and have seen their equity positions increase by more than 40% in the last 6-12 months! However, these same owners are concerned about their children or first time buyers that may never be able to buy into this hyper inflated market. Marley sings, “Oh, ma children are cryin,'” but then follows with, “Oh, children weep no more.” I, like Marley, believe there is hope for our children and the first time buyer. Every market is cyclical and the Greater Vancouver and Fraser Valley market is not immune to the cycle change. It will eventually start to cool—in fact, some sub areas and property types are currently cooling (check out the STR stats).

Ultimately, the Liberal Government cannot solve the affordable housing problem with this new foreign tax. Provincial and municipal governments need to start treating the approval process for zoning and development permits as though they are truly open for business and want to be part of the solution. Upon the process being simplified and fast tracked, developers could bring new product to market much more quickly. Time is money. Many government agencies could not care less how much time it takes for approvals, which is a huge drag on the system and expense of creating new homes, which in turn, ends up being downloaded to the end user, the buyer. As Marley again sings, “Back them up; oh, not the brothers.”  The brothers that Marley sings about are the stake holders or developers. He then goes on to sing, “But the ones who sets ’em up.” The developers will eventually get their approvals and then eventually over build. Once this happens, the buyers’ cycle will return, making for more affordable housing.

Looking at the STR stats for the month of July, it appears that the Liberals did not need to implement the tax to cool the market. The majority of the detached market in all areas is currently trending down; West Vancouver moved into a buyers’ market, hitting a low 8% STR, while Surrey North in the Fraser Valley also moved lower into a balanced market of 13% STR. There is no question that the market is cooling and it will be interesting to see how the new tax impacts the market as we move through the next 30 days. “Time alone-oh, time will tell.”

If you would like to receive a copy of the statistical market report contact us here.

Randy Dyck
Personal Real Estate Corporation
604-807-4366 or randy@eximus.com

STR (Sell Through Rate) Formula = Sales ÷ Active Listings + Failed Listings + Sales  ​