Hysteria around Vancouver’s recent tax could create opportunity

The media will kick up a storm of overreaction to the impact the tax will have on prices, according to one investor who argues it will create an opportunity for savvy investors.

“With the 15% tax being imposed on offshore buyers, you’re quire likely going to see a lull and we’re seeing it already. The impact of that won’t be seen until September and October,” Peter Kinch, an investor who focuses on British Columbia, told Canadian Real Estate Wealth. “Watch for overreaction in the media and the media is going to blow it out of proportion which could create a self-fulfilling prophecy whereby boomers and seniors will list their homes in the hopes of getting out while they can before a crash comes.”

Indeed, the Vancouver market is already seeing a slight softening of prices.

And with that expected to continue into the winter, it will create an opportune time for investors to snag a deal between November and February before prices correct themselves, according to Kinch.

“That will have an effect of dumping product on the market, downward pressure on prices and the end result of that will play itself out October/November when the year-over-year statistics really start to show,” he said. “So I’m looking for a very depressed sort of market over the winter months but when the dust settles and everything plays itself out, the spring will go right back to economic fundamentals of supply and demand and that will play itself out in a vibrant, healthy, spring market.

“I think we’ll see all the prices bounce back in spring.”



 

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COMMENTS

  • by Mr. Bigglesworth 2016-09-05 3:47:56 PM

    Mr Bigglesworth ages with Mr Kinch, and here's why:
    as I've mentioned in a previous post, keep in mind that the 15% sales tax equates to approximately (only) 6 months of the sort of year-over-year price increases that the City had been experiencing for the last 2-3 years, so ponying up another 15% is simply akin to paying market value for that property, at early-march 2017 prices, had the market continued as it was doing....was that going to be the ceiling? doubtful. Additionally, as previously mentioned, many sales of all property types completed at "over-ask" premiums of, often, 15%...sometimes less, sometimes more, but the point is, whether you pay the extra 15% by waiting 6 months and then paying market value, or by offering 15% over ask, or by paying a 15% tax, its all the same dollars, for the same property. (true, the fact that the 15% is a TAX affects things like PTT, CG's etc, but you still have to dig deeper by 15%)
    Kinch hits the nail on the head when he refers to the City's fundamentals, (just one of which is supply and demand), as being the drivers of prices here. Right now, the first wave of Baby Boomers all across Canada (and Europe) are entering retirement; they are fed up of freezing cold winters, and bugs and humidity, not to mention the bleak, aesthetically barren landscapes of virtually all cities and towns east of, well, i better not say...(Cambie)( oops!). (this Flat Earth Canada is the stuff of suicides, but i digress). In addition to retiring Boomers heading to the West Coast, we are on the radar of MANY other international investors; from near and far. Political, economic and civic stability, rule of law, moderate year-round climate, an inclusive society, and the ability to lead a healthy lifestyle (in a beautiful setting that resembles a garden more than a city, sometimes) , and of course our endless appearances on the Economist's "best places to live in the world" competition. Vancouver kicks serious butt when it comes to awesome places to live: to truly appreciate it, one has only to leave it, for a while.
    So yes, people will always want to move here, from all over the world. To think that a 15% surcharge, (in CAD$$ no less!) is going to deter any serious buyers/immigrants/offshore investors, especially in the long-term, is an indication of how naieve and parochial we can sometimes be.
    significantly, our houses and condos represent safe places for investors from all over the world, especially given stock market volatility, fixed-income returns, and macro-economic risks. (anyone been to France lately? what if enough of Trumps trailer-park base leave their stills long enough to vote?...) We still have a along way to go before this city is fully valued. We'll get there, though...markets work like that.

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