Housing Crisis: Who and How this 32% cost adding to the builder?

Hello, I'm Debbie Simmons with the Simmons Lifestyles Real Estate Group. We are powered by Real Broker. We serve the central Vancouver Island real estate market area, that's Mill Bay through Ladysmith and out to Lake Couch and my partner Mark Brotherton and myself. This is our weekly market update. I'm going to start with interest rates as I usually do because they're so important to us. This morning, the Bank of Canada came out and announced their holding rates even, which we anticipated, and we're still anticipating about a 1.25% decrease in five incremental quarter percent decreases from June to December 2024. I'm going to show you the weekly stats now, I'm going to share my screen and show you what happened in our marketplace this week. Okay, here it is. So we have 24 new listings, which is amazing. That's really, we're fully into the spring market. Now this is when the vast majority do happen. These new listings, the cheapest one is $259,900, and it's a 356 foot one bedroom park model in Shermanis RV Gardens on River Road. And the most expensive of those new listings is $2.12 million, and that's a waterfront in Ladysmith. And here they are here, you can see, and you can also see here, there's three pages on the hot sheet today, which is very telling of the market. So we have seven new pending sales. Here they are, seven new pending sales between the prices of about $731,000 up to about $929,000. We have four new sales here, or sorry, four new price decreases this week. And you can see them there. By the way, you can just email us or phone us and we can send you all of this information so you can look at all the finite detail on it if you want to. There are eight new sold, so these properties changed hands to their new owners, eight of them. We have two new acquisitions this week, 10 expiries, which is quite a few, quite a few. I'll go to the third page here just to show you that. But the real story is in all of these new listings and what these new listings are priced at and what these new sales are priced at. Are they, so us as realtors in the industry, we'll be analyzing, you know, what percentage are they even or were they at the traditional one, which was they're going for 97% list to sale ratio. In other words, they negotiate 3% off the list price, or are there multiple offers happening again and are the prices then going to start increasing? So these is what, now that we see all these new listings and these sales starting to happen, we'll be able to determine which direction the market's going to go this year on pricing and volume. Okay, I'm going to call up for you the cheapest homes in our area so that you can see there is still some affordability here. So starting at 420 on Joel Road and Lake Couch, the same listing we saw as the cheapest one last week as well, and the highest priced one is 679 on Trunk Road. So a lot of these are, like I said last week, they're all around the highway area, a couple and Lake Couch is always where you can usually find a bargain. Okay, we're going to stop the share on that and get to our topic of the week. So our topic of the week is housing affordability. And I want to try to describe why and how our housing pricing got to where it is today. And I'm still going to encourage you, please go and listen to Michael Campbell. You can watch him anytime online because he has a podcast so you can watch when it's convenient. And he goes into great depth on all of this stuff. So housing affordability, the government has piled huge amounts of cost onto our developers and builders, enormous amount of cost. Some of the stats that were shared today, he had, so Michael had Ralph VanderWaal on today. He is a mainland developer and he spelled out, you know, the cost that he's incurring. So he outlined it on all three levels of government. First off, we'll start with the permit delays. We're still in Maple Ridge where he was citing this sort of a case study of that one site in Maple Ridge. He had a nine-month delay getting his permits, even though he's a very sophisticated and experienced developer. And that permit delay also adds to all kinds of costs, like, you know, their interest they're paying on their loans or property tax and all that. And then, of course, that is all passed on to the consumer at the end of the day. And plus the regular cost of building keeps escalating, escalating. Can take up to 10 years. So a lot of developers like Ralph, they won't touch it. It's just too, there's too much uncertainty into it. The governments make it far too difficult. And who knows where you're going to be in 10 years. So a lot of these projects just never get off the ground because they're just too arduous, even just coming out of the starting gate. By the way, these guys are having some seminars, Ralph. And if you go to Mike's moneytalks.ca, they have seminars on how to invest properly and how to actually benefit from this market on Tuesday and Wednesday this week. So please go to that website and partake of those webinars if you want to know. And how you can sort of circumvent all of these costs by getting in the right place at the right time. So what he outlined, if it costs him, and I think he was referring to the same project, $7.3 million he invested in purchasing the land, the government in all the costs, they end up taking $2.3 million of that. That is 32% of the cost. So those three levels of government are adding 32% to the cost of housing for the public. So there they are. They're forcing developers into bankruptcy, cessation of their projects, delaying of some projects and completely cancelling. And a lot of them just walking away saying, I'm not working in Canada anymore. I'm going to go to another country and build where at least I know I have a secure future and the taxes don't keep escalating. So much of our property is in the agricultural land reserve and 94% crown land, almost impossible to get land out of crown land and almost impossible to get it out of the ALR. Yes, we do need ALR lands, but a lot of them are not arable land, simply not arable land. And it needs to be relooked at to open up the supply. When you open up the supply, the prices will start to come down. And then the other part of this is the average Canadian is paying roughly 50% or more taxes when you add up property tax, payroll tax, carbon taxes, PST, GST, all those taxes. They're not able to save up for down payments anymore. It's made it so unaffordable from that perspective too. That's where all of this unaffordability is coming from, is from three levels of government. So we better be awfully careful how we vote. And then now this new flipping tax. So they're making it worse. They're bringing in a flipping tax starting January 1st, 2025. So it's 20% tax on the first day. If you buy your house and then you get transferred from your job and you have to sell it within that 12 months, you're going to be giving it 10 and over 20% to the government. And then it declines between 12 months and 24 months. It's a declining, degrading scale down to zero after that, but still way too much and unnecessary. It's just made it all unaffordable for the average Canadian. So those are the facts. So it's up to us now to elect the right people, put pressure on governments to stop getting in the way of developers putting affordable housing. The governments themselves getting the job to try to create affordable housing is not the right answer. It's not the right answer at all. Anyway, thank you for listening this week. I want to thank you for being with us. Please, if you have any real estate needs, we are very, very experienced in all aspects of real estate. Please call Mark Rutherford or myself at 250-246-0708 and have a wonderful week ahead.