Two items today – the first from Business in Vancouver:
Demand from foreign buyers is also playing a significant role in these two markets (Vancouver and Toronto), and is also beginning to play a role in Montreal.
While many downplay this factor (‘it’s only X% of the buyers!’), Economics 101 will tell you that the marginal buyer sets the price; and, if you introduce a wave of new buyers on an already tight market, prices will soon reach for the sky as the demand curve shifts even slightly to the right,” Porter and Kavcic write.
Excess global savings sloshing around have driven many asset prices rocketing higher in recent years — bonds, commercial real estate, infrastructure, private equity, residential real estate in Manhattan and London — and now that wave has washed upon Canada’s biggest cities.
Both Vancouver and Toronto are now showing signs that speculation is in play: Porter and Kavcic find evidence of speculative behaviour in the increase in number of Vancouver properties being bought and sold within 12 months, and the recent steep increase in condo prices.
The two economists said policy makers should focus on foreign buyers who seek to use real estate as a safe haven, rather than wealthy landed immigrants. Recent policy moves to increase how much homebuyers need to put towards their down payments have focused on domestic buyers; those measures will “simply crowd out the domestic buyer and leave the field wider open for foreign capital inflows.
This is from the Bank of Montreal, for gawd’s sake. Could it get any clearer? It leaves no wiggle room for decision-makers in the future to say, unlike in 2008, ‘who could have predicted this unfortunate outcome.’
And then this from The Sun:
Nine rural schools slated to close next year have been tossed a lifeline with new provincial government funding announced Wednesday.
Premier Christy Clark announced that districts outside of Greater Victoria, Metro Vancouver and Kelowna will be able to apply for ongoing funds to keep those schools open. Some districts will be eligible for amounts equal to what they would save by closing them. …
About 50 schools in the province are at risk of school closure, including about five in Richmond and up to 20 in Vancouver that are not eligible for this funding. …
Could Premier Clark be any clearer: Vancouver, we truly don’t care about you because we really don’t need you.
The issue of rural school closures has sparked a grassroots backlash in some communities against Liberal MLAs, who face the prospect of angry voters at the polls.