New property taxes outlined in BC’s 2018 budget are under fire for primarily affecting domestic homeowners in the province, Alberta and other parts of Canada, instead of targeting foreign buyers.

According to a Royal LePage survey, nearly 91 per cent of real estate professionals said that BC’s new speculation tax — set to roll out in fall 2018 — will negatively impact home sales from out-of-province buyers who are looking to purchase a second home in the province.

“Canadians make up a much larger proportion of secondary home owners in the province. If you look at a city like Kelowna, for example, it’s estimated that 15 per cent of the properties are owned by Albertans,” Royal LePage CEO Phil Soper tells BuzzBuzzNews.

The survey, published on Thursday, polled over 500 real estate professionals in BC and Alberta about the housing policies included in the BC government’s 2018 budget, unveiled in February.

Along with a new speculation tax, the government increased the foreign buyer tax to 20 per cent, expanded its boundaries and raised property-related school taxes and land transfer taxes on homes valued over $3 million.

Although 77 per cent of respondents surveyed said that the new levies will deter international home buyers, this group was ranked last when compared to other groups of homebuyers who will be impacted most by the new policies.

According to the survey, nearly 45 per cent of the real estate professionals said the new taxes will impact BC residents the most, followed by Canadians who own or are looking to buy in BC (43.5 per cent) and foreign buyers (11.3 per cent).

With the announcement of these taxes, roughly 81 per cent of Alberta-based respondents believe that Albertans’ interest in BC recreational properties will decrease. Advisors suggest that Albertans will increasingly look for property within their own province or south of the border.

As for market activity in BC, 78 per cent of those surveyed predict that home sales will decrease within the first three months following the announcement of the new policies. A further 57.3 per cent stated that prices will drop during the same period.

“The challenge with broad-based policy like this — that’s rolled out without consultation with industry or academics — is that you can have unintended consequences,” says Soper.

Soper also notes that the new policies will materially impact affected communities that rely on recreational property markets for their local economy.

“When a significant number of people leave a community, it lowers the value of homes, homes become more difficult to sell,” says Soper.

“Some British Columbians who own property in, for example, the interior of BC and live in the big city of Vancouver, may sell because they’re worried about a drop in home prices,” he adds.

A Chinese website that markets international property to buyers in the People’s Republic and elsewhere has just struck a partnership that could potentially expose 300 million new customers to real estate in Vancouver and other cities.

Juwai.com, which describes itself as the “No. 1 Chinese international property portal,” has joined with Chinese online retailer JD.com, a competitor to Amazon, to market real estate in Canada, the U.S., the U.K. and Australia to its customer base.

The arrangement will see Juwai’s listings appear on JD.com, allowing online shoppers to browse real estate alongside items such as shoes, watches and electronics.

“We are truly excited to be launching this partnership with JD.com, which is not just one of China’s but one of the globe’s most advanced commerce and e-commerce companies,” Carrie Law, Juwai.com CEO, said in a news release.

The arrangement will add an audience of almost 300 million to the existing 2.2 million monthly users who currently visit Juwai.com.

It will see “selected Canadian listings” marketed on JD.com.

The retailer asked specifically that Canadian property be included among listings because they see such strong demand for it.

Vancouver and Toronto have been prime destinations for real estate investors from other countries, with the impact of investor immigrants alone (many of whom come from China) estimated at over half a billion dollars per year.

But in an email to Global News, Law said Vancouver is just one city, “albeit a popular one,” and that she “wouldn’t expect Vancouver properties to be predominant by any means.”

Nevertheless, she expected that the partnership with JD.com would be “useful in helping sell the Vancouver property that we market on that platform.”

Law went on to say that Juwai.com and JD.com are going for “quality rather than quantity,” and will only list apartments from new developments.

“There will be a real value add for developers and agents of specific projects, but the impact on the Vancouver market overall will be minimal,” she said.

Anyone hoping to invest in Vancouver real estate via JD.com will find themselves facing a host of new taxes that were introduced by the BC NDP government in February.

They include additional property transfer tax and school tax on homes worth more than $3 million, a speculation tax targeting homes owned by people who don’t earn income in B.C., and hikes to the property transfer tax targeting foreign buyers from 15 per cent to 20 per cent, as well as extending it to areas such as Victoria, the Fraser Valley, the Okanagan and Nanaimo.

Andy Yan, the director of Simon Fraser University’s City program, wondered what effect these measures would have on those listings.

“It’s hard to say because there are so many things happening on the demand side,” he said.

Nevertheless, he said a move like Juwai’s is likely to concentrate more attention on areas where diasporic centres exist already.

“You can generally expect that this is not in Regina or Winnipeg,” he said.

“That it will follow where the diasporic centres are, in this case of the Chinese, which is metropolitan Vancouver or Toronto.”

Should the partnership kick up investment in new Vancouver apartments, then there’s potential that an already-sizable share of non-resident ownership in such property could grow even further.

Data from Statistics Canada shows the share of non-resident ownership of condominium apartments steadily growing based on the year in which it was built.

For buildings constructed in 1960 or earlier, the non-resident ownership share is 10 per cent.

But for buildings constructed in 2016 and 2017, that share grows to almost one-fifth of units.

But in an email, Juwai.com’s Law said she didn’t think the partnership with JD.com would have a “great impact market wide because we will not be putting large numbers of Vancouver projects” on the site.

“We believe it will be of measurable benefit to those projects that are marketed, but most projects will not be.”

The partnership is expected to launch officially in April.

Had lunch a couple of weeks ago with a wonderful Calgary couple in the middle of this non-stop snowstorm of 2018, which got us talking about vacation homes.

The talk went from Palm Springs to Phoenix, then north to Kelowna, where these folks own a getaway retreat.

Correction. They owned a getaway retreat.

With a proposal to introduce a non-resident speculation tax, as well as a suite of other residential-related taxes, by B.C.’s minority NDP government, their Kelowna condo was immediately listed and sold.

Their plans are now to spend some time, and money, in Palm Springs, rather than Kelowna, which I doubt is what B.C.’s NDPs had in mind. But, that’s speculation on my part.

In case you’ve been on vacation in California or Arizona, or have awoken from hibernation, hoping spring has arrived (have a shot and get back on the cot), here’s how the speculation tax is being proposed.

Non-residents of B.C. who own a secondary property in areas identified by the B.C. government (Metro Vancouver, Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack, Mission and the Capital Regional District around Victoria on southern Vancouver Island, excluding the Gulf Islands and Juan de Fuca) will be subject to a one percent tax, if that property is vacant more than six months of the year.
For example, a condo valued at $600,000 would be taxed $6,000 per year. And that’s only for the first year.

But there’s more. If you’re thinking of buying an existing dwelling in B.C., you’ll pay a land transfer tax, which, for a $600,000 home, would be $10,000 in taxes.

The entire suite of taxes being proposed will have the most effect on people living in B.C., according to a Royal LePage Advisor Survey of 535 real estate professionals in B.C. and Alberta.

When asked, 85 percent of B.C. advisers said the new tax policies have hurt consumer confidence in residential real estate across the province. Additionally, 78 percent believe home sales will decrease within the first three months of the announcement of the new policies, while 57.3 percent are of the mind prices will also decrease.

“The expected impact of the proposed housing taxes announced in British Columbia should not be taken lightly,” says Phil Soper, president and CEO, Royal LePage. “Homeowners across the province will feel the effects as major policy changes like this are also amplified by a drop in consumer confidence. We saw this happen in 2016 when the previous government launched a tax on foreign investors. A small number of international purchasers withdrew from the market — along with a huge cohort of domestic home buyers.

“Canadian home buyers from coast to coast were already struggling with new federal restrictions on access to mortgage financing. We expect the impact of the new government’s housing tax policies to be even more pronounced as they will force Canadians, Americans and potential buyers from elsewhere in the world out of the market.”

Of the advisers polled in Alberta, 80.7 percent believe Albertans’ interest in B.C. recreational properties will decrease, with 75.6 percent saying Albertans who already own recreational property in B.C. are likely to sell, which my friends did.

It is also the belief of 72.6 percent of advisers here that Albertans will now go shopping for property in Alberta, while 46.7 percent believe they will look in the U.S. for secondary properties.

It is the belief of the B.C. government the speculation tax will result in more housing for British Columbians, however, a mass exodus of Albertans and other out-of-B.C. property owners will have negative ramifications.

“We expect the new taxes will materially impact communities that rely on recreational property markets for the health of their local economy,” said Soper. “There will be some Canadians in British Columbia and across the country that will choose to sell their properties in the province as the new taxes add to the cost of homeownership.

“There are further unintended consequences from these kinds of policy changes. If property values decline, property tax revenues decline. Local municipalities will have to deal with this added burden.”

When asked, 81.5 percent of advisers said the proposed new tax policies have already caused interest from Canadians living outside of the province to decrease, with 73.8 percent believing that the move will result in many selling their properties. This is predominantly led by the impending speculation tax, which 90.8 percent of respondents believe will impact sales in the province from prospective homeowners located in other areas of Canada, especially Alberta.

Personally, I don’t see how this will free up a significant amount of housing for people in the designated markets, which have the most expensive housing in Canada.

It would require a full crash of those housing markets to see increased inventory and prices drop to levels more people could afford, which is something no one should want to happen.

Soper doesn’t see the speculation tax, nor the other proposed taxes as being the answer, especially in Vancouver, but offers a solution.
“There is a structural housing shortage in Vancouver itself,” he says. “There are no quick fixes through housing policies. A determined effort to reduce the time and expense it takes for developers to work through the regulatory process will increase supply. There is clearly a need to increase density in the lower mainland with a focus on vertical dwelling and encouraging the development of condominium projects.”

In this day and age, social media is ubiquitous, especially for businesses trying to expand their reach. And while on the surface, platforms such as Facebook, Twitter and Instagram appear to have nothing to do with mortgages, they form the gateway to enlarged clienteles.

According to Ryan Dennahower, the keys to successfully using social media as a mortgage broker are personalizing oneself and highlighting rave reviews.

“I primarily use my Facebook business page for reviews,” said the Bespoke Mortgage Group broker. “After closing, I’ll follow up directly to ask clients to post a review on my Facebook page and then I’ll take that review and share it on my Instagram, and even my personal Facebook page to draw more attention to the services I do and provide to my clients.”

Dennahower uses Instagram much more often and proficiently because, by humanizing himself, he stands apart from competition . One of his favourite Instagram features is video posting.

“I found that with that personal touch, people absolutely love it. The thing I love about Instagram is you have Instagram Stories where you take a short video—maybe a 30 video in your car or at the office—and post it, and you get your material out there really fast, as opposed to perfecting it or editing it. I post things regarding products we have access to, whether purchasing a home with 5% down or a second home with 5% down. A lot of customers assume 5% is for first-time buyers, but when I post that stuff, people will message me directly. I find that when I started doing videos and posts about new products, I get tons of messages from people asking ‘Hey, how is that possible?’ or ‘How do I go about doing that?’ I’ll get messages for preapprovals, for options, from people saying they went to their bank and would like a second opinion but thought they’d have to pay a broker a fee  but now know they don’t have to.

“I’ve been able to convert quite a few of the leads into live preapprovals and into live deals.”

Dennahower has only been using social media in a professional capacity (notwithstanding reviews, which he’s maintained for a couple of years) since the beginning of the year and he’s seen his business surge.

“Even in the short time frame, like with the videos I’ve been posting on social media—even within the last month and a half—the amount of referrals, questions and leads I’ve gotten through those social media platforms have been surprisingly good,” said Dennahower. “I’m going to continue doing them as I feel they’re extremely valuable.”

Edmonton-based Collin Bruce of the Collin Bruce Mortgage Team at DLC Mortgage Mentors, has made social media a priority for the last year and a half, hiring Chatty Girl Media to handle duties—which includes Feature Friday, a weekly profile on a company agent.

Bruce also partnered with Oilernation, a popular Edmonton Oilers fan site, even running cross-promotion campaigns that include giving away Oiler jerseys. Although a big Oilers fan himself, Bruce says the idea is to personalize the Collin Bruce Mortgage Team brand.

“We gave away the new Oilers jersey in October and we were trending on Twitter,” said Bruce. “We’ll get a lot of messages in the inbox. I’m running a promotion right now that I just boosted, talking about the interest rate savings versus the penalty paid on an adjustable rate mortgage, and I’m sure we’ll get a lot of clients from that. The Feature Friday has gotten us a lot of comments, likes and traction, and I think it’s very important.”

Michael Feldman has radical idea: Revising the Interest Act.

The partner at Torys LLP says that the current mortgage system in Canada protects neither borrowers nor lenders the way it should. Residential mortgages most often come with five-year terms and 25-year amortizations, and as a result balloon payments hang in the balance on the last day. Feldman proposes jettisoning balloon payments altogether.