Fraser Valley Real Estate Board says foreign buyer tax, mortgage test did not make homes affordable

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      Realtors with the Fraser Valley Real Estate Board sold 2,087 homes last month.

      The board released a market report with one executive noting that measures taken by the government to curb demand did not make housing affordable.

      The August 2021 sales represent a four percent increase compared to July this year, and 2.4 percent over the same month in 2020.

      The board covers Abbotsford, Langley, Mission, North Delta, Surrey, and White Rock.

      In a media release Thursday (September 2), the FVREB indicated that August 2021 saw “near record sales”.

      It was the “second highest sales ever for the month against a backdrop of decreasing supply”.

      “Sales remained unusually high for the month; second only to August of 2005,” the board stated.

      The FVREB also noted a “market of extremes” with high sales happening in the face of the “lowest supply in four decades”.

      “Our sales are over 30 per cent above normal, while our housing stock is at levels last seen in the early 80s,” board president Larry Anderson said in the release.

      The FVREB reported that August 2021 month ended with a total active inventory of 4,077 homes.

      That’s a 16.8 percent decrease from July 2021, and 44.9 percent lower than August 2020.

      Anderson added: “Home buyers are facing one of the worst supply shortages in Fraser Valley history.”

      Benchmark prices of detached homes, townhouses, and condos increased in the region in August compared to prices in July.

      In the same release, FVREB CEO Baldev Gill commented on government measures that were supposedly meant to improve home affordability.

      One was the B.C. government’s foreign buyers’ tax in 2016.

      The other was the federal government’s introduction of stress tests for mortgages, which started in 2018.

      With a stress test, a borrower has to qualify for an interest rate that is higher than what the person is actually going to borrow.

      “And yet, in the last five years,” Gill said, “the price of a typical detached home in the Fraser Valley has increased by 50 per cent.”

      Gill stated that those demand-side measures did “not address the core issue, which is insufficient supply to meet the rise in our population growth”.

      Gill went on to say that all levels of government should “work together to correct the structural housing shortage”.

      There is an ongoing federal election campaign, and NDP leader Jagmeet Singh has promised to slap a 20 percent tax on Canadian home purchases by foreigners.

      The Liberal Party of Justin Trudeau had pledged to impose a one percent tax on Canadian properties owned by foreigners.

      Conservative leader Erin O’Toole wants to stop foreign home purchases for two years.

      B.C. economists have previously pointed out that foreigners make for a small portion of property transactions, with demand largely driven by local buyers.

      The federal government has also tightened mortgage rules.

      Starting June 1, 2021, insured as well as uninsured mortgage applications should qualify at either the benchmark rate of 5.25 percent or the rate offered by the lender plus two percent—whichever is higher.

      The previous qualifying rate was 4.79 percent.