Got them coming and going

BETHANY LINDSAY
The Vancouver Sun

Don and Charlene Brooks were asked by the potential buyer of a neighbour?s home in their Gastown development if he could list it on Airbnb. FRANCIS GEORGIAN

Charlene and Don Brooks discovered that city bylaws forbid rentals shorter than a month without a hotel or bed and breakfast licence. FRANCIS GEORGIAN

Until a couple of months ago, the residents of Vancouver’s Alexander Row didn’t know much about the wildly popular short- term rental service Airbnb.

“I thought Airbnb was more like a home-exchange type of thing, where people from other countries come … and you exchange homes,” said Charlene Brooks, who owns one of six row houses in the small Gastown development.

But she learned exactly how Airbnb works when her husband received a note from someone interested in buying a neighbour’s home. The potential buyer wanted assurances from the other owners that they’d be fine with him listing the suite on Airbnb, something he’d done a whopping 65 times over an 18-month period in his current condo.

“That’s when we realized that this was something that we didn’t want,” Brooks said, explaining that the idea of allowing a revolving door of strangers into the building made her nervous.

She was surprised to learn that Vancouver’s bylaws forbid rentals shorter than a month without a hotel or bed and breakfast licence, and felt little was being done to enforce the rules. Right now, city staff only enforce the rules against illegal shortterm rentals when they get a complaint.

“If you’re going to have a bylaw, then you have to enforce it. What’s the sense of having it if you don’t enforce it?” Brooks said.

Across North America, city governments and neighbourhood activists worry the exploding popularly of Airbnb is hurting neighbourhoods and putting a strain on rental housing stock, as landlords choose the lucrative option of short-term rentals over long-term tenants.

They’re dealing with these issues either by enforcing existing bylaws and talking tough with Airbnb and other shortterm rental services, or by legalizing the industry, introducing licensing systems and collecting lodging taxes from hosts.

Vancouver City Hall is examining those approaches as part of a study into how the city should handle Airbnb.

For some city councillors, the biggest concern is how the site’s popularity impacts the already limited rental housing stock.

“A very large number of listings are out there, and if even half of them are in secured rental housing and that housing has been taken off the market, then that could have an impact on our vacancy rates, which are virtually zero in parts of the city,” Coun. Geoff Meggs said.

Numbers compiled by Murray Cox, a community activist in New York who operates InsideAirbnb.com, suggest that there were 4,728 Airbnb listings in Vancouver in December. His numbers also suggest that about a third of the site’s listings in Vancouver belong to people who rent out multiple homes or rooms. Right now, one has 29 listings in the city, all of which are for entire apartments.

Airbnb describes those numbers as inaccurate, but the company has yet to produce a full study on its impact in Vancouver.

Meggs hopes Vancouver will be able to work with Airbnb to enforce any future regulations.

“Airbnb has worked with municipal jurisdictions to try and find a balance. They collect taxes in some cities, they participate in some oversight and regulations,” he said.

That includes Philadelphia, Jersey City and San Francisco.

Karen Sawatzky has been gathering data on Airbnb for her master’s thesis in urban studies at SFU, and her research suggests a 63-per-cent increase in the number of Airbnb listings in Vancouver between November 2014 and December 2015.

“Airbnb is facilitating the conversion of housing space to leisure space, and I don’t think we have room for that to happen in the city of Vancouver,” Sawatzky said.

She supports regulating the short-term rental industry, as long as the city’s focus is on preserving housing for residents.

“I’m a little pessimistic, I have to say, about how cities are going to be able to manage this,” she said. “I haven’t seen anywhere that Airbnb is providing local governments with the data that they need to properly understand and address the issue.”

She points to New York City, where the home-sharing site made a claim to transparency in November when it released data on its listings in the Big Apple. But the company later acknowledged that it had scrubbed about 1,500 listings from the site before making the numbers available.

Those listings were from operators who were renting out multiple homes, listings that the company said “did not reflect Airbnb’s vision for our community.” Airbnb maintains that those listings were removed as part of an effort to eliminate commercial operators, and that it will continue to remove similar listings.

New York is one city that is digging in its heels and promising to crack down on Airbnb rather than regulating short- term rentals.

Some New York City councillors are promising to bring in more inspectors, and they’ve even gone so far as to send a letter to the company’s investors advising them to pull their money out.

But many other cities have been more flexible.

In B.C., Tofino allows licensed home rentals, but is planning to crack down on unlicensed hosts out of concerns about a lack of housing for residents.

Austin, Texas, has made enforcement of its recent shortterm rental regulation scheme “the highest priority thing we’re doing,” according to Robert Alvarado, who heads up a new short-term rental enforcement office.

Like Tofino, Austin is a community that periodically swells with thousands of visitors in need of a place to stay. This month, an estimated 200,000 people flooded into the city for the South by Southwest conference and festival, and another 450,000 are expected for the Austin City Limits Music Festival in August.

These tidal waves of tourists create tremendous temptation for local residents to cash in through Airbnb, but the platform’s popularity is straining Austin’s housing supply — and created some big conflicts with neighbours.

“There’s a term people keep using: it’s a ‘ bad actor.’ It’s the person who rents to bachelor parties, groups of young men who get drunk, make a lot of noise, get into fights and generally cause trouble,” said Alvarado.

He estimates that there are only about 20 “bad actors” among the thousands of people who advertise on Airbnb and other shortterm rental sites.

Still, the headaches they’ve caused for their neighbours were serious enough that the city introduced a $285 licensing fee and fines of up to $2,000 for violations.

The rules were introduced about three years ago, but until recently the city has focused on educating hosts and encouraging them to pay for their licences. Now, about 1,400 licences have been issued in a city where there are an estimated 7,000 listings across all short-term rental sites.

Enforcement amped up in October. Alvarado now supervises four full-time inspectors dedicated to making sure people follow the rules, as well as a researcher who scours online listings for violations.

So far, just two violations have gone through the city’s administrative hearing process, both resulting in fines of about $700, but Alvarado expects that number to jump in the near future.

And Austin’s rules are about to get stricter. City councillors voted last month to begin phasing out all short-term rentals where the owner doesn’t live on site and limiting the number of people who can stay in a single Airbnb.

In Oregon, Portland has also introduced a licensing system for short-term rentals, with mixed success. Hosts are also required to pay lodging taxes and provide proof that the home is their primary residence.

So far, the city has had mixed success.

“Our compliance rate is still very low,” said Mike Liefeld of the city’s development bureau.

“At last check we had just a little over 500 permits issued and there’s estimates of, at any given time, online rooms for rent that exceed 2,500 units in the city of Portland.”

One feature of Airbnb the makes enforcement difficult is that its website gives officials no way of confirming the identity or location of a host. The company has no plans to change that feature. It’s promised to provide city governments with some data about local listings, but not names.

Since Portland’s regulations came into effect in 2014, the city has issued 321 warnings and violation notices to hosts, and five to the operators of home-sharing websites.

But city staff say that Airbnb has been relatively co-operative, working with the revenue division to encourage hosts to get the proper permits and pay their taxes, and the site hasn’t been served with any violation notices.

Competitor VRBO and its parent company HomeAway have been less helpful, according to the city, and those two sites have been sued by the city for failing to remit taxes and display hosts’ licence numbers.

In Vancouver, an Airbnb representative said he’s excited to be working with the city on its approach to the short-term rental issue.

“We take a lot of pride in working with local government,” said Aaron Zifkin, Airbnb’s country director for Canada.

He pointed to the company’s community compact, released in November, which pledges to work with cities on any issues they have with Airbnb, and to ensure that hosts are paying all applicable taxes. Part of that will be working with local governments on a solution that addresses their “individual policy needs.”

For Vancouver, that may mean weeding out commercial operators who are cutting into the rental housing supply.

“In the case of Vancouver, obviously housing affordability is an issue, we want to make very sure that people are renting out their primary residences,” Zifkin said.

© Copyright (c) The Vancouver Sun

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What’s behind the numbers that rank us as so utterly unaffordable?

Frank O’Brien
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Condo speculation sounds like easy money in this housing boom, but taxes, commissions and carrying costs quickly whittle away the profits, warns Frank O’Brien

Frank O?Brien
Other

I can understand why many of you are considering taking on the role of “flipper” in the heated Vancouver condominium market.

On the West Side of Vancouver, for example, the benchmark price of a condominium apartment increased by more than $43,000 in the past three months, to $624,800. In the past six months, its value has increased by 15.7 per cent, or approximately $93,000.

And, across Greater Vancouver, the typical condominium price is now 25.5 per cent higher than it was a year ago. This equates to more than $100,000 in paper profit if a flipper sold at the current benchmark price of $454,600.

The value of a townhome increased by about $94,000 in the same period.

In other words, a typical strata home made a lot more money in the past year than the median pre-tax household income of $76,000.

A Word of Caution

I would be the last to dissuade those of you with deep enough pockets and big enough, well, nerve, to get in on the action.

For everyone else, though, I inject a note of caution.

If you are buying condos to flip, you will need raw courage, cash, and a mortgage broker on speed dial. In many cases you will be subject to competing bids on the same property. You will be expected to come in with no subjects on the property, such as subject to an inspection or subject to financing.

This is an unprecedented housing market. OK, a crazy market where the normal rules are turned upside down.

You have to have a savvy mortgage broker behind you when you hit this market because multiple bids can blow your price point away within hours. The mortgage broker must be familiar with flipping properties and, like you, have unshakeable confidence that prices will keep increasing.

Financing is much harder today than during the last boom in 2006-07. Also, pre-approved mortgages are nearly worthless today when it comes time to really close on a property, especially in multiple-bid competitions: you must have already convinced the lender that you have the credit score and income ratios in line to cover the debt.

But just because the market is crazy, you shouldn’t be.

Many condo flippers who bought in the spring of 2007 were trying to unload their overpriced property into a sellers’ market a year later. It can happen again, as any Calgary condo investor can attest.

It’s Not All Gravy

Also, factor in your costs: if you buy a condo for $500,000 and flip it for $600,000 in 12 months, you would have to first put down a minimum of $100,000 in cash and pay $8,000 in BC’s property purchase tax (the recent tax exemption does not apply to investors buying resale homes). When you sell, you will pay about $24,000 in real estate commissions and you could face a $15,000 income tax bill on the lift in value, depending on your tax bracket. You would also be handling financing costs of around $2,000 a month while you are holding the property. Add it up and your $100,000 “profit” is whittled down to approximately $30,000.

You can make money in this housing boom, but you must also be prepared to lose.

© 2016 Real Estate Weekly

Steve Randall
Other

Ottawa have vowed to do more to understand the level and impact of foreign ownership of Canada’s property but in the meantime speculation continues. National Bank of Canada has estimated that in Vancouver, a third of the homes sold in 2015 were bought by Chinese investors.

In dollar terms that’s $12.7 billion says financial analyst Peter Routledge. In Toronto the level of far lower, at 14 per cent, and amounts to $9 billion of sales.

Routledge is among those who say the proposed $500,000 funding from Ottawa is not enough to effectively track foreign ownership. In his client note he wrote: “Investing only 25.7 percent of the cost of an average price of a detached home in Vancouver is, at the very least, a touch on the low side.”

Copyright © 2016 Key Media Pty Ltd

In the first of a two-part series, real estate marketing ninja Sepy Bazzazi unfolds how virtual reality is already transforming home sales

Sepy Bazzazi
Other

A short generation ago, when MLS® listings first became available online, the real estate industry was in a state of excitement and turbulence.

Now roughly 20 years later, even the most old-school REALTOR® has been weaned off of filing cabinets and fax machines and has adapted to the internet age. Today we think back on the early 90s and wonder how we ever managed our real estate listings before the internet.

The introduction of online MLS® was only one of the most recent in a series of fundamental changes in real estate marketing. The Social Media Revolution was another, even more recent one. Major improvements and shifts in the way real estate business is conducted have been happening since as far back as we know.

“In the late 1800s, real estate brokers regularly gathered at the offices of their local associations to share information about properties they were trying to sell. They agreed to compensate other brokers who helped sell those properties, and the first MLS was born, based on a fundamental principle that’s unique to organized real estate: Help me sell my inventory and I’ll help you sell yours.” (Wikipedia)

Real estate ninjas who have remained agile and spotted opportunity in the changing landscape are the ones who have always levelled-up over the years. If you are a modern real estate marketer who has a grip on the current state of affairs, you might be wondering “What’s the next game-changing trend that REALTORS® should be aware of?”

Enter Virtual Reality

As a concept, virtual reality, or VR, has been around since the early 1960s. The many iterations of VR over the years have each been incrementally better than the last, but in 2014 when Facebook acquired Oculus Rift for $2 billion, things changed. Now there is a variety of competitors in the market; from general options such as Samsung Gear VR (powered by Oculus) or Google Cardboard to even some real estate-specific products such as Matterport. This product creates immersive virtual reality tours of homes, commercial spaces and places, and was first brought to Vancouver in 2014 by LNG Studios, a local 3D rendering and animation practice.

OK, so you might be thinking, “I already have virtual tours for my listings, so I’m all set”.

But virtual tours and virtual reality are completely different. You might have a YouTube video that was filmed by a cameraman walking through the property. If you’re really cool you’re probably showing visitors a 360-degree photograph of the different rooms in the property. They can use the mouse to control where they are looking, etc. This is definitely a virtual tour, but it is certainly not virtual reality.

Today, virtual reality has reached heights that are truly mind-bending. If you haven’t seen the photo-realism and total immersion that is possible with a VR headset, watch this video by VR Global in New York right now:

Pretty awesome, right? Now imagine the potential of virtual reality marketing for your real estate business. If you don’t have the time to imagine, fret not – there’s a number of current and upcoming VR marketing opportunities for Canadian REALTORS®.

Efficiency and Innovation

How many times have you spent an entire Saturday and Sunday driving your client around the city, taking them to 10+ properties that they are “serious” about? Trade in your fancy sports car for a VR headset and change the fundamental way you do business.

Your client is not actually serious about 10 listings, so why not boil those 10 down to two or three before you take them out to the physical address? With VR you will be able to take your clients through a detailed home tour from the comfort of your office or even their living room – in hours, not days. Just hand them the VR headset, load the VR tour of the property, and run your pitch.

Your client will be looking through the headset at their virtual property in awe. As they “stand” in the property and look around, they will be delighted at how cutting edge their REALTOR® is and shocked at how incredibly realistic the whole VR experience feels. Meanwhile, you will be able to monitor what they are looking at, so that you can actually cater the home tour to them with a relevant, live narrative.

By the way, I’m not talking about some concept that is years away. This is happening right now in the real estate industry around North America. In an interview with Fortune.com, Sotheby’s real estate agent Matthew Hood said:

“I can lead a VR tour remotely and even see where the client is looking, which allows me to address things like a kitchen counter style while they’re looking at it, just as I would in a real world tour.” (Full interview here)

For your business in particular, VR marketing has the potential to save you dozens of hours a month. Imagine what you could do with your free time.

In the second of a two-part series, real estate marketing ninja Sepy Bazzazi explains the next level of virtual reality in presales, gamification and neighbourhood tours

By

Sepy Bazzazi RealtyNinja

April 6, 2016

Presale Tours

Have you ever walked a client through the sample unit or showroom of an undeveloped building?

Many overseas buyers are online right now, checking out units in these undeveloped buildings, interested in purchasing ASAP. These people don’t have the means to come see the sample unit or showroom first hand, so they rely heavily on whatever they can find online to help them make their initial decision.

Luckily, the building they are interested in has a VR tour available for every different unit type. The overseas investor can throw on a VR headset and completely immerse themselves in the unit from thousands of miles away. They can walk around, look in any direction, examine unit features more closely and get a real idea of the space. Just by using VR, you’re already ahead of most the competition.

If you were wondering about local buyers, know this: the showroom of the future will simply be an office with numerous VR headsets on desks. Prospective local buyers will walk in, put on the VR headsets and have an agent guide them through the VR tour with live narrative. This gives you the ability, if you wish, to show the unit to thousands of people at the same time.

There are also other ways to enhance the VR showing experience, one of which we cover in the next section.

Listing VR Gamification

Virtual reality technology is going to make the biggest splash in the gaming industry. The same super nerds that were raised in part by video games are now the geniuses who are at the forefront of global technology. Guess what? They are actually building things they fantasized about as a kid.

The point is that virtual reality is not just a visual medium, it’s an interactive art form – it’s gaming, no matter how you chop it up. People who use your VR tours in the future are basically just playing a real estate video game (with real life outcomes, of course).

So why not make your real estate video game the best one out there?

What if, using your VR tours, your clients could change the paint on the walls with the touch of a button? Add a Persian rug or go full hardwood? Go full stainless steel in the kitchen and add a new 60-inch flat screen? Plan a full renovation, or just the removal of some walls? Once they are done “renovating,” potential clients can save their progress for later to share with family and friends. The result: they keep coming back to your website.

If you can be the first real estate agent who gamifies well in your market… the first who offers people a way to customize YOUR listings to THEIR liking?! Fuhgeddaboudit.

Immersive Neighbourhoods

Another opportunity worth exploring is the idea of free-roaming around a specific neighbourhood – from the comfort of your favourite chair (even that chair). We can already do this to some degree with Google Street View, but when virtual reality takes a firm hold on the world, this experience is going to be wildly different and highly dynamic.

Many agents currently showcase the neighbourhoods they serve on their website. Some use nice photos and others even produce beautiful videos. They do this to earn relevant traffic and to express their expertise and understanding of the niche.

Real estate ninjas of the future will complement their beautiful photos and videos on their site with immersive neighbourhood experiences. In less than 10 years, you will be browsing real estate websites and reading call to actions that say things like “Walk the Stanley Park Seawall in VR”, and “Drive across the Lions Gate Bridge in VR.”

Of course, when you start getting into VR neighbourhood tours, things can get pretty hectic pretty fast. Local businesses would get involved, and then so would advertisers. I wonder how the virtual neighbourhoods of the future will end up looking…

The truth is, there are a vast many possibilities when it comes to the virtual realm. I have covered a modest few of them here and hope that you will discover some unique ones of your own. With time and dedication, we’ll learn to harness the true power of Virtual Reality Marketing together.

Our goal at RealtyNinja is to make sure you’re always aware of the modern marketing opportunities available to you today, and in the future. And we’re not the only ones who believe virtual reality will play a role in the future of real estate. Inman said in January that VR is one of three trends agents should look out for.

I hope this two-part series has helped inspire the entrepreneur within each of you. If you have any questions, or would like to chat more, feel free to get in touch with me directly.

© 2016 Real Estate Weekly

BC Premier?s strict new rules on contract assignments are short-termist, influenced by ?emotional and political? affordability debate, writes REBGV president

Joannah Connolly
The Vancouver Sun

The BC government is reacting prematurely by imposing strict new rules on contract assignments, known as “shadow flipping” under a term coined by mainstream media in recent coverage, the president of the Real Estate Board of Greater Vancouver wrote in a letter to BC Premier Christy Clark March 22.

Darcy McLeod used strong language to express his and the board’s concern over what he described as implementing a long-term policy for a short-term problem that he said had been overly sensationalized by mainstream media.

On March 18, the BC government announced two new rules for contract assignments in an attempt to curb the practice of using the system for real estate speculation and price-jacking. Contract assignments will now require the express consent of the original home seller, and any profit made on the assignment of a contract must be passed back to the seller.

In response, McLeod wrote to Clark, “On behalf of the more than 12,500 REALTORS® that we represent, I am writing to express concern at your decision to pre-empt the Real Estate Council’s independent advisory group’s review and introduce new rules on assignment agreements in real estate.

“We are concerned that the provincial government is looking to change the rules to fix a short-term problem. We understand the intention is to curb speculation associated with the high demand, low inventory market Greater Vancouver is currently experiencing. There are often unforeseen consequences associated with attempting to impose limitations on the market and we respectfully ask that the government consider the following issues.

“In other types of markets, assignments can protect sellers and buyers… Financial, family or other personal situations change. In such cases, assigning the contract to a second buyer allows both the original buyer to honour the contract and protects the developer/seller who would otherwise have a contract potentially in default.”

He was particularly scathing of the way in which local mainstream media has presented the issue of contract assignments, following the much-hyped Globe and Mail investigative article in February.

McLeod wrote, “The term ‘shadow flipping’ was coined to inflame public opinion. An assignment agreement is a regulated practice in BC. 

“The media has not let facts get in the way of painting a negative picture of REALTORS® in this story of assignments. We have shared with them, but they do not report, that our organization has yet to receive a formal complaint from the public about assignments.

“We are concerned that the media hyperbole on this topic may lead to changes with unintended consequences once the market changes, as it inevitably does.”

He concluded, “The housing affordability debate in Metro Vancouver is at a fever pitch today. It’s become emotional and political. Amid this climate, it’s important to remember that market cycles come and go, but government intervention is permanent. 

“We welcome opportunities to work with your government to find solutions that help protect the public irrespective of current market dynamics.”

Vancouver real estate agent Darlene Dunnett commented on the letter, “I agree that the media has run with the negative side of story of shadow flipping and in so doing had tarnished with one stroke the reputation of REALTORS® as a whole. It may be true that a certain number of agents and members of the public alike have taken advantage of uniformed sellers who may have allowed their home to be underpriced, and that is wrong. These people should be exposed and disciplined. 

“The real estate council has jurisdiction over all REALTORS® and as such has an obligation to protect the public and to police and discipline their own members who deliberately seek to deceive the public and profit in their deception.”

Kathy Tomlinson, author of the Globe and Mail article that sparked the recent debate, was asked by REW.ca  at a public housing affordability forum in February whether she believed the mainstream media in general had a responsibility to include balanced and contextual information in its stories, such as citing the total number of real estate transactions when highlighting an issue that exists in a small segment of the market. She said, “It’s not our job, frankly, to report on the corner where everything is fine. It’s our job to report on the corner where there is a car crash. It’s deeply ingrained in what we [as journalists] do and it’s not going to change. Nobody is going to assign me a story on what’s going well.”

Tomlinson added to REW.ca today, “I am an investigative reporter – so my job is to focus on, uncover and reveal problems that affect the public and hold the powers that be to account.”

© 2016 Real Estate Weekly

Allen Garr
Van. Courier

Comforting as it may have been for Premier Christy Clark to announce that her government planned to more tightly regulate “shadow flipping,” it is really a side show when it comes to the problem of housing affordability.

Curious, you might think, for this move to be made in the midst of an investigation, called for by the premier to look at this very matter among a number of other sleazy practices carried out by realtors to improve their bottom line.

But Clark did have NDP MLA David Eby nipping at her heels, offering up his own legislative solution. She just had to get ahead of all that.

The other troubling matter, though not central to the problem of soaring real estate prices either, is the matter of the significant number of vacant houses and condominiums that might otherwise be used to relieve Vancouver’s near-zero rental vacancy rate.

It was less than comforting to see the reception given to a study commissioned by the City of Vancouver to look at those vacancies. Ecotagious, the consultants commissioned to do the work, concluded that the rate of empty homes had barely shifted in the last decade. But the author of the report also conceded how his mandate from the city meant the study conducted was extremely limited in scope due to the tools used and the time period covered.

Nonetheless council and many in the media leapt to the conclusion, as we saw in the Globe and Mail: “A new report has popped the bubble on the prevailing myth that Vancouver’s real estate problems are a result of a wave of non-local investors buying homes and leaving them empty.”

It actually did nothing of the sort. University of B.C. geographer David Ley, who has studied the issue of housing affordability both here and around the globe for the past 15 years, noted that conclusion was simply “over the top.”

But for Ley, the main problem Vancouver and other cities face has been, and will continue to be, foreign investment — trillions of dollars coming now primarily from mainland China. It is virtually out of control and it’s undeniably the driving force in pushing up property values to obscene levels in every corner of Vancouver and causing a whole generation of people to consider leaving town if they haven’t already.

How out of control is it? Well, FINTRAC is the federal agency setting regulations and monitoring large sums of money coming from abroad as a way of uncovering money laundering. It relies on the real estate industry, among others, to report back on transactions. But following FINTRAC’s audit last summer, it found the real estate industry compliance in reporting was “significantly” below standards. And as bad as it was in the past, FINTRAC spokesperson Darren Gibb said the latest poor results mark a “significant increase from previous years.”

In a peer reviewed paper David Ley published a few months back in the International Journal of Housing Policy entitled, “Global China and the making of Vancouver’s residential property market,” he explains that we are our own worst enemy.

He writes: “Most important is the claim that the question of foreign ownership had nothing to do with government. Yet it most certainly did, for [Canadian federal, provincial and municipal] governments had for 30 years led trade and investment missions to Asia and had used the tool of business immigration to draw in entrepreneurs and their capital.”

In Vancouver that was highlighted most notably with the sale of the Expo land to Hong Kong entrepreneur Li Ka-shing in the ’80s.  Many smaller Chinese investors from Hong Kong and Taiwan would follow. Now the main flow of capital is from mainland China.

The consequence, whether intended or not, as Asian money flowed primarily into real estate, is the lack of affordability we face today.

Of course when Christy Clark was asked about the impact of Chinese money on real estate, she first said the province had not collected any data. Then, as Ley observed, she drew on a “flimsy analysis, quickly debunked.” It was a short government report based on data from the B.C. Real Estate Association, which has been in denial since the first sharp housing price increases after 1988.

Ley concluded: “The premier’s source of authoritative data, the vested interest of the BCREA, revealed a convergence of institutional objectives.”

That should bring you no comfort at all.

© 2016 Vancouver Courier

REBGV President Darcy McLeod sent the following letter to Premier Christy Clark in response to her announcement about new rules for assignments

Darcy McLeod
Other

Dear Premier Clark,

On behalf of the more than 12,500 Realtors that we represent, I am writing to express concern at your decision to pre-empt the Real Estate Council’s independent advisory group’s review and introduce new rules on assignment agreements in real estate.

We are concerned that the provincial government is looking to change the rules to fix a short-term problem. We understand the intention is to curb speculation associated with the high demand, low inventory market Greater Vancouver is currently experiencing. There are often unforeseen consequences associated with attempting to impose limitations on the market and we respectfully ask that the government consider the following issues.

In other types of markets, assignments can protect sellers and buyers. For example, in pre-sale situations, which of necessity require a long time to complete, a buyer’s circumstance may change which precludes them from closing. Financial, family or other personal situations change. In such cases, assigning the contract to a second buyer allows both the original buyer to honour the contract and protects the developer/seller who would otherwise have a contract potentially in default.

People who buy an assigned contract with the goal of reselling to make a profit are taking a risk. They may profit, or they may incur losses, sometimes substantial losses. For example, in the early 1980s similar activity occurred in BC relative to land sales, and speculators did indeed incur substantial losses. People also experienced losses of this kind in the presale market between 2008 and 2009. In the government’s proposed model, profits are to go back to the original seller. Will that original seller also be responsible for any losses?

The term “shadow flipping” was coined to inflame public opinion. An assignment agreement is a regulated practice in BC. 

The media has not let facts get in the way of painting a negative picture of Realtors in this story of assignments. We have shared with them, but they do not report, that our organization has yet to receive a formal complaint from the public about assignments.

There are already processes in place to deal with any Realtor in breach of their obligations and duties to their clients outlined within the Real Estate Services Act and our professional standards.

Our complaints process is posted on our public website. We administer the national Realtor Code of Ethics and the rules and regulations associated with being a member of our professional association. We and our members take very seriously any breaches to these standards. If Realtors are doing anything wrong, we want to know and we will vigorously investigate. 

The housing affordability debate in Metro Vancouver is at a fever pitch today. It’s become emotional and political. Amid this climate, it’s important to remember that market cycles come and go, but government intervention is permanent. 

We are concerned that the media hyperbole on this topic may lead to changes with unintended consequences once the market changes, as it inevitably does.

We welcome opportunities to work with your government to find solutions that help protect the public irrespective of current market dynamics.

Yours truly,

Darcy McLeod, President Real Estate Board of Greater Vancouver