Monday, 4 June 2018

Reduced demand is allowing housing supply to accumulate

Home buyer demand continues to decline across the Metro Vancouver housing market.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 2,833 in May 2018, a 35.1 per cent decrease from the 4,364 sales recorded in May 2017, and a 9.8 per cent increase compared to April 2018 when 2,579 homes sold.
Last month’s sales were 19.3 per cent below the 10-year May sales average.
“With fewer homes selling today compared to recent years, the number of homes available for sale is rising,” Phil Moore, REBGV president said. “The selection of homes for sale in Metro Vancouver has risen to the highest levels we’ve seen in the last two years, yet supply is still below our long-term historical averages.”
There were 6,375 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in May 2018. This represents a 5.5 per cent increase compared to the 6,044 homes listed in May 2017 and a 9.5 per cent increase compared to April 2018 when 5,820 homes were listed.
The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 11,292, a 38.2 per cent increase compared to May 2017 (8,168) and a 15 per cent increase compared to April 2018 (9,822).
The total number of listings available today is 17.2 per cent below the 10-year May average.
For all property types, the sales-to-active listings ratio for May 2018 is 25.1 per cent. By property type, the ratio is 14.7 per cent for detached homes, 30.8 per cent for townhomes, and 41.7 per cent for condominiums.
Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“For home sellers to be successful in today’s market, it’s important to price your property competitively given the shifting dynamics we’re experiencing,” Moore said. “It’s also important to work with your local Realtor to better understand these changing conditions.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,094,000. This is an 11.5 per cent increase over May 2017 and a 0.2 per cent increase compared to April 2018.
Sales of detached properties in May 2018 reached 926, a 40.2 per cent decrease from the 1,548 detached sales recorded in May 2017. The benchmark price for detached properties is $1,608,000. This is a 2.4 per cent increase from May 2017 and a 0.1 per cent increase compared to April 2018.
Sales of apartment properties reached 1,431 in May 2018, a 29.3 per cent decrease from the 2,025 sales in May 2017. The benchmark price of an apartment property is $701,700. This is a 20.2 per cent increase from May 2017 and a 0.1 per cent increase compared to April 2018.
Attached property sales in May 2018 totalled 476, a 39.8 per cent decrease from the 791 sales in May 2017. The benchmark price of an attached unit is $859,500. This represents a 16 per cent increase from May 2017 and a 0.6 per cent increase compared to April 2018.
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Friday, 6 April 2018

Everything You Need To Know About the Provincial Government Tax Changes

Speculation Tax

After hearing from cottage owners around the province, Finance Minister Carole James sent her government's new speculation tax, announced in Budget 2018 and slated to come into effect in September, back to the drawing board.
On March 26, 2018 she announced changes saying the new tax will now specifically target only speculators - those who "treat our housing market like a stock market, leaving homes vacant and driving up prices,” said Minister James.
Under this latest version of the speculation tax, more than 99 per cent of British Columbians and other Canadians who own vacation cabins and cottages on lakes and Gulf Islands won’t pay the tax, according to Minister James.

Geographic areas

Once implemented, the tax will now apply to:
  • Metro Vancouver;
  • The Capital Regional District (excluding the Gulf Islands and Juan de Fuca);
  • Kelowna and West Kelowna;
  • Nanaimo-Lantzville; and
  • Abbotsford, Chilliwack and Mission.
Here is a map of the areas.

Rates

In 2018, the tax rate for all properties subject to the tax is 0.5% of the property value.
In 2019 and subsequent years, the tax rates will be:
  • 2% for foreign investors and satellite families;
  • 1% for Canadian citizens and permanent residents who do not live in British Columbia; and
  • 0.5% for British Columbians who are Canadian citizens or permanent residents (and not members of a satellite family).

Exemptions/tax credit

Owners of primary residences, and property that is a qualifying long-term rental, are exempt from the tax.
A long-term rental is considered a property that’s rented out for at least six months out of the calendar year in increments of at least 30 days. In 2018, as part of the transitionary phase, a long-term rental is considered a property rented out for three months of that year.
British Columbians with vacant second homes will be eligible for a non-refundable tax credit that’s immediately applied against the speculation tax.
This tax credit will offset a total of $2,000 in speculation tax payable and ensures British Columbians do not pay tax on a second home valued up to $400,000.

Special case exemptions

These include:
  • The owner or tenant is undergoing medical care or residing in a hospital, long-term care or a supportive-care facility.
  • The owner or tenant is temporarily absent for work purposes.
  • The registered owner is deceased, and the estate is in the process of being administered.

Revenue

BC Budget forecasts revenue of $200 from this tax. The amount isn’t expected to change.

Foreign Buyer Tax 

The tax on foreign nationals, who are not permanent residents of Canada, has been increased to 20%. It applies to Metro Vancouver, Fraser Valley, Capital Region, RD of Nanaimo and Central Okanagan RD.  It is effective immediately with an exemption for contracts written before February 20, 2018 with a closing date before May 31, 2018
 

Property Transfer Tax 

The Property Transfer Tax will increase on properties over $3million from 3% to 5% on the portion that is over $3million

Hidden Ownership 

Additional information on beneficial ownership of corporations will be required on property transfer forms. A registry of all beneficially-owned property will be established and publicly available. Corporations will be required to hold accurate information on all beneficial owners.

Tax Fraud

The Provincial government will collect information on pre-sales and assignments of contracts from developers. This database will be shared with provincial and federal tax authorities to insure compliance.


Wednesday, 10 May 2017


May 10, 2017
 
Demand for condominiums and townhomes continues to drive the Metro Vancouver* housing market.
Residential property sales in the region totalled 3,553 in April 2017, a 25.7 per cent decline compared to April 2016 when 4,781 homes sold and a 0.7 per cent decrease from the 3,579 sales recorded in March 2017.
April sales were 4.8 per cent above the 10-year average for the month.
Condominium and townhome sales have comprised a larger percentage of all residential sales on the Multiple Listing Service® (MLS®) in Metro Vancouver. In the first four months of 2017, they’ve accounted for 68.5 per cent, on average, of all residential sales. This is up 10 per cent from the 58.2 per cent average over the same period last year.
“Our overall market is operating below the record-setting pace from a year ago and is in line with historical spring levels. It’s a different story in our condominium and townhome markets," Jill Oudil, Real Estate Board of Greater Vancouver (REBGV) president said. “Demand has been increasing for months and supply is not keeping pace. This dynamic is causing prices to increase and making multiple offer scenarios the norm.”

New listings

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,907 in April 2017. This represents a decrease of 19.9 per cent compared to the 6,127 units listed in April 2016 and a three per cent increase compared to March 2017 when 4,762 properties were listed.
The total number of residential properties currently listed for sale on the MLS® system in Metro Vancouver is 7,813, a 3.5 per cent increase compared to April 2016 (7,550) and a three per cent increase compared to March 2017 (7,586).

Sales to active listings ratio

The sales-to-active listings ratio for April 2017 is 45.5 per cent for all property types. This is two per cent below March 2017 and is indicative of a sellers’ market. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
Broken down by property type, the sales-to-active listings ratio is 26 per cent for detached homes, 58.2 per cent for townhomes, and 82.2 per cent for condominiums.
“Until more entry level, or ‘missing middle’, homes are available for sale in our market, we’ll likely continue to see prices increase,” Oudil said. “There’s been record building this past year, but much of that inventory isn’t ready to hit the market.”

Benchmark Price

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $941,100. This represents a five per cent increase over the past three months and an 11.4 per cent increase compared to April 2016.
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Friday, 17 February 2017

There's been a lot of controversy surrounding the recent implementation of the Foreign Buyers Tax on the purchase of Vancouver Real Estate. Sellers of properties, both detached homes and condos, have expressed concern about dropping prices, while purchasers of vancouver properties are hoping it brings relief to prices. Here's a look at the facts so far
 http://bc.ctvnews.ca/mobile/infographic-what-happened-to-home-prices-after-the-foreign-buyer-tax-1.3289303

Wednesday, 8 February 2017

Metro Vancouver housing market off to a quieter start than last year

Home sales and listings trends are below long-term averages in the Metro Vancouver* housing market. This is due largely to reduced activity in the detached home market.
Residential property sales in the region totalled 1,523 in January 2017, a 39.5 per cent decrease from the 2,519 sales recorded in January 2016 and an 11.1 per cent decrease compared to December 2016 when 1,714 homes sold.
Last month’s sales were 10.3 per cent below our 10-year January sales average.
“From a real estate perspective, it’s a lukewarm start to the year compared to 2016,” Dan Morrison, Real Estate Board of Greater Vancouver (REBGV) president said. “While we saw near record-breaking sales at this time last year, home buyers and sellers are more reluctant to engage so far in 2017.”
New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,140 in January 2017. This represents a 6.8 per cent decrease compared to the 4,442 homes listed in January 2016 and a 215.5 per cent increase compared to December 2016 when 1,312 properties were listed.
The total number of homes currently listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver is 7,238, a 9.1 per cent increase compared to January 2016 (6,635) and a 14.1 per cent increase compared to December 2016 (6,345).
The sales-to-active listings ratio for January 2017 is 21 per cent. This is the lowest the ratio has been in the region since January 2015. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“Conditions within the market vary depending on property type. The townhome and condominium markets are more active than the detached market at the moment,” Morrison said. “As a result, detached home prices declined about 7 per cent since peaking in July while townhome and condominium prices held steady over this period.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $896,000. This represents a 3.7 per cent decline over the past six months and a 0.2 per cent decrease compared to December 2016.
Sales of detached properties in January 2017 reached 444, a decrease of 57.6 per cent from the 1,047 detached sales recorded in January 2016. The benchmark price for detached properties is $1,474,800. This represents a 6.6 per cent decline over the last six months and a 0.6 per cent decrease compared to December 2016.
Sales of apartment properties reached 825 in January 2017, a decrease of 24.7 per cent compared to the 1,096 sales in January 2016.The benchmark price of an apartment property is $512,300. This represents a 0.3 per cent increase over the last six months and a 0.4 per cent increase compared to December 2016.

Attached property sales in January 2017 totalled 254, a decrease of 32.4 per cent compared to the 376 sales in January 2016. The benchmark price of an attached unit is $666,500. This represents a 0.4 per cent decline over the last six months and a 0.7 per cent increase compared to December 2016.
Ten Things You Should Know About The BC Home Owner Mortgage and Equity Partnership Program

  1. The BC Home Owner Mortgage and Equity Partnership Program helps eligible first-time home buyers who have saved part of a downpayment and can afford a mortgage. This three-year program began accepting applications January 16, 2017 and ends March 31, 2020.
  2. The program offers a downpayment loan of up to 5% of a home’s purchase price, to a maximum of $37,500, on a home with a maximum price of $750,000. The loan matches the buyer’s downpayment and is interest-free and payment-free for five years.
  3. Before applying, the applicant must have a partial downpayment saved (or gifted) and must be pre-approved for a high-ratio insured first mortgage for at least 80% of the purchase price. Buyers must have qualified under all rules for a mortgage including the stress test. The combined, gross household income of all individuals on title cannot exceed $150,000.
  4. The pre-approval letter can come from a mortgage broker.
  5. To qualify, the home buyer(s) must meet requirements on this eligibility checklist. They must be a Canadian citizen or permanent resident for at least five years, have lived in BC for one year, be a first-time buyer who hasn’t owned an interest in a residence anywhere in the world at any time, and plan to live in the home as their principal residence for the first five years.
  6. The program is delivered entirely online with a smartphone friendly interface. There’s no physical paperwork. Buyers submit their application here. They must register first. This online calculator helps determine eligibility.
  7. Only the buyer can complete the application. There are liability considerations. If the buyer claims to have never owned a home anywhere in the world, and the government later discovers this is untrue, the buyer can’t say “My REALTOR® completed the application for me.” If the buyer has questions they can phone the BC Housing information line at 604-439-4727. Staff members speak multiple languages.
  8. In BC, 87% of apartments, 73% of attached homes, and 19% of detached homes currently on market could qualify for this program, according to Dan Maxwell, Chief Financial Officer of BC Housing.
  9. After five years, buyers repay the loan or begin monthly payments at a fixed rate equal to the Royal Bank of Canada Prime Rate plus 0.5%. This interest rate is reset at each of the 10, 15 and 20 anniversaries. Loans are due after 25 years.
  10. The home buyer is responsible for all costs associated with the purchase and financing of their home, including legal costs.
The Process
  1. The applicant gets pre-approval for insured first mortgage.
  2. The applicant applies to BC Housing (BCH) which issues a confirmation of eligibility letter highlighting details and key dates within five business days. BCH issues a Home Buyer’s Package.
  3. The applicant makes offer to purchase an eligible home, and provides BCH with copy of Contract of Purchase & Sale.
  4. BCH issues Conditional Loan Approval Letter for the applicant to take to the lender to finalize first mortgage approval.
  5. The applicant completes due diligence and removes subjects.
  6. The applicant provides BCH with the unconditional Contract of Purchase and Sale at least 14 days before closing.
  7. BCH’s lawyer sends the mortgage package and closing instructions to the applicant’s lawyer.
  8. The applicant completes the home purchase with their lawyer. The BC HOME loan is secured by a second mortgage registered on title to the home on the closing date. The HOME Partnership loan funds are released following registration of second mortgage.

Source: BC Housing
Example #1 – Home purchase price $475,000, home buyer has saved $11,875
  • Minimum downpayment required for an insured first mortgage - $23,750
  • BC HOME Partnership loan - $11,875 (equal to home buyer’s downpayment, equal to 2.5% of purchase price)
  • Total downpayment - $23,750
Example #2 – Home purchase price $750,000, home buyer has saved $52,500
  • Minimum downpayment required for an insured first mortgage - $50,000
  • BC HOME Partnership Loan - $37,500 (maximum 5% of purchase price)
  • Total downpayment - $90,000
At 3%, this home buyer will save $5,201 in interest payments during the first 5 years of their mortgage compared to if they had purchased the home without BC HOME Partnership.
How many loans?
The government forecasts:
  • 42,108 loans will be issued by 2020.
  • These will have a total dollar value of $703 million.
  • The average loan will be $16,685.