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Major Property Tax Increases Cool Investor Enthusiasm in Vancouver’s Resurgent Market

Published March 9, 2020 by Real Estate Leads

It certainly doesn’t take a rocket scientist – or a realtor – to understand why the housing markets of Vancouver and Toronto make the most sense for investors with pockets deep enough to actually be ABLE to invest in properties there. The basics of supply and demand in both locations and the fact that demand will always outstrip supply means a very likely increase in the return on that investment. If you’re a realtor working in these major metro areas then you’ll almost certainly be working with investor buyers at least somewhat regularly. If you’re a new realtor then you should be quite enthused if the opportunity to work with one such buyer, and in much the same way you’d be to be putting a family into a much-needed home that suits them well. Here at Real Estate Leads, our online real estate lead generation system is designed more to generate leads made up of clients who are looking to buy homes to live in, along with others selling homes and indifferent to whether that home will be a principal residence or a rental. As a new realtor, you’ll be in a position to benefit greatly from using it.

One of the things that’s been very front and center in the news in Vancouver these days is the sharp rise in property taxes approved by city council recently.  On the first day of this new decade, the City of Vancouver implemented a shockingly large 7 percent increase to local property taxes, which works out to about nearly double the 10-year average. This tax hike was and continuous to be contentious, and the primary reason that it goes far beyond the rate of inflation.

When you consider that the original suggest rise was 8.2%, it definitely makes you go ‘wow’ and wonder what the logic is in doing this to a city where families are stretched so thin financially as it is. However, we must remember that the NDP is currently in power and this discretion-less spending has always been a party of that party and the way they conduct themselves.

Tough on Existing and Would-Be Investors

Real estate investors in Vancouver have already been bearing the brunt of the Province’s speculation and empty property taxes put into place over the past two years, and this property tax spike likely isn’t going to sit well with them for that very reason.

In an interview with local media recently, a well established Vancouver realtor stated that while he understands the municipal government needs money, this is one hundred percent working against the interests of affordable housing. There is absolutely a belief among those who work in industries related to the housing market that this dramatic jump in property taxes is another example of government tinkering with Vancouver’s painfully tight housing market to curb demand.

Real estate professionals and economists will agree on one thing – this type of ‘reactionary’ response is yet another example of Government missing the mark in how to address the housing crisis while still protecting the health and vibrancy of a market that – like all of them – function best when left to their own dynamics.

Discouraging Investment

There’s no getting around the fact that higher taxes will certainly discourage investment into the city, but realtors can still assure investors they may be working with that if they choose to purchase in Vancouver they will still make long-game profits, but perhaps not on the monthly cash-flow basis that they were expecting.

The bigger picture reality in all of this is also one you’ll be hard pressed to find a single realtor or economist ready to disagree with; when you have a situation of dramatically restricted supply, and the process of releasing more supply is highly politicized, and you then ADD ever increasing demand in the form of a growing economy and a growing population because of immigration, what do you think is going to happen? That’s right – prices are going to go up. By increasing property taxes, there’s no way you’re going to get around this and where it gets people the most is with those who are renting homes.

It is absurd to think a property owner is going to have those increased property taxes coming out of their bottom line. It is going to be absorbed by the renter, and this further diminishes that person’s ability to save up for a down payment to actually enter the housing market in the future.

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