The survey utilizes an affordability scale that factors in a city’s median home price along with the median pretax household income.

Hong Kong is at the top of the scale at12.6.  Vancouver falls at number 2 on the list at 10.6.

Want more affordable housing?  In the US the winning cities are:

Detroit  1.4
Atlanta  1.9
Phoenix  2.2

In Canada?   Edmonton ranked at at respectable and affordable 3.5.

In this short video (2:47) Setticasi explains what took place in the Vancouver housing market over the past month.  If you are interested in finding out whether the market is going up, down or sideways Setticasi has all the charts and graphs you need to figure out what is happening.

For more news and statistics visit us at http://www.rebgv.org

November 2011 Market Update

With the recent defeat of the HST (to be implemented in March 2013), I have received some questions about how this will affect the real estate market. The short answer is: there will be a minimal effect, and some people will win, while others will lose.

While we can prognosticate about how these changes will affect the market, the government has yet to come up with a set of transition rules for how this will go ahead. However, to predict how things will be affected, we must break down its effects into 3 categories: New Construction, Resale, and Fees.

New Construction

This category is the one that is likely to be most influenced by the change back from HST to GST. All new residential construction will be taxable at the 5% rate rather than the previous 12%. However, the government will also be eliminating the New Housing Rebate, which was introduced to offset the burden of the HST on a property valued up to $525,000. For new construction valued at over $525,000, the rebate of $26,250 is being eliminated as well, but with the lower tax burden, there should be a net savings.

But that’s not the end of the story. The change back from the HST to the GST & PST will result in higher construction costs as government rebates for input costs are eliminated. That means that while the tax burden may go down on these homes, the cost base will go up.

The net result is that for homes valued at more than $525,000, the overall cost will likely go down, while homes that are valued at less than $525,000, the overall cost will likely increase.

Resale

The change back to GST should have little to no effect on the resale market as ‘used’ homes are not subject to HST and will not be subject to GST or PST. Instead, the government has a Property Transfer Tax, which will remain the same: 1% on the first $200,000; 2% on the balance.

Fees

The change back to GST will apply to the fees associated with a transaction and will lead to a slight decrease in these fees. That said, many of the fees currently associated with transacting a home already charged both GST & PST so there will be no change; however, the taxes on a realtor’s fees will decrease by 7%. For a $1,000,000 home, real estate commissions typically average 2.95% of the purchase price. A tax decrease of 7% on this amount means that the tax on a typical realtor commission should decrease by roughly 0.2065% of a home’s purchase price.

Taking all of this into account, it is clear that the change back to the GST will have a positive effect on the market, but only slightly so. That said, depending on your asset class, you may end up behind.

In addition to the change in tax regimes, one must also be aware of the typical hidden costs of buying or selling a home.

I’ve spelled them out below:

Hidden Costs of Buying or Selling a Home:

Traditional Sellers’ Costs:

• Lawyer’s Fees: Attending to Execution of Documents
• Costs of Clearing Title including:
  • Discharge Fees charged by Encumbrance Holders
  • Mortgage Prepayment Penalties
• Real Estate Commission

Traditional Buyers’ Costs:

• Inspection
• Appraisal (if required for Financing)
• Lawyer or Notary Fees and Expenses including:
  • Searching Title
  • Investigating Title
  • Drafting Documents
  • Land Title Registration Fees
• Insurance
• Property Transfer Tax (1% on the first $200,000; 2% on the balance)
• Goods and Services Tax (5% on new product)

This is by no means an exhaustive list, but it will give you an idea of some of the additional costs associated with a Real Estate transaction.

November 2011 Market Update

If you would like to learn more, please feel free to contact us by phone or by clicking on one of the links below:

Simon Clayton 604-764-0711

Jason Low 604-790-5276

Sandra Ens 604-263-1911

Jenny Stephanson 604-675-6214

Jason Feinstadt 604-263-1911

MacDonald Realty 604-263-1911

For those of you new to home ownership and mortgages,  CMHC provides mortgage loan insurance that enables you to buy a home sooner with a minimum down payment of 5%.

The  CMHC  site has dozens of informative articles and videos aimed at helping you buy, maintain and renovate your home.

Here’s a synopsis of the information and where to find it:

Buying a Home

The information in this section includes a Five Step Home buying Primer as well as information on; Buying Your First Home, Choosing a Neighborhood, Buying Condos and information on Government of Canada Home Ownership Incentives.

CLICK HERE for information on buying a home.

Maintaining a Home

For most Canadians, their home is their most important investment. It’s where your family spends a lot of time, so keeping it healthy, well tended and safe is important. A regular schedule of seasonal maintenance and repairs can help you protect your investment by putting a stop to the most common and costly problems before they occur..

CLICK HERE for information on maintaining your home.

Renovating Your Home

Planning is the key to a successful renovation. To help you plan your renovation project, CMHC has information and easy-to-understand tips that can help you assess your requirements and learn the key questions before you get started.

CLICK HERE for information on how to successfully renovate your home.

Are you buying a home for the first time?  Do you need CMHC backing?  Let us guide you through the whole process … it’s easier when you know how!    Call me now (Justin Blacklock)  and we can get started right away!  604-736-1855

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1. Use our free  Online Calculators.  We have eight handy calculators designed to help you figure out just about anything related to mortgages.

Mortgage Loan Calculator  : This calculator generates an amortization schedule for your current mortgage.

Morgage Refinance Calculator :  How much interest can you save if you refinance your mortgage?

Mortgage Qualifier Calculator : This calculator steps you through the process of finding out how much you can borrow.

Home Budget Analysis : Entering your income and monthly expenditures to find out where your money is being spent, and how much you have left to save, or purchase a new home.

Bi-weekly Mortgage Calculator:  This calculator shows you the possible savings by using an accelerated bi-weekly mortgage payment.

Mortgage Comparison Calculator: This calculator helps you sort through the monthly payments, fees and other costs associated with getting a new mortgage.

Mortgage Payoff Calculator: How much interest can you save by increasing your mortgage payment?

Rent vs. Buy Calculator: Should you continue to rent, or can you afford to get a new home? This calculator helps you weed through the fees, taxes, and monthly payments to help you make a good financial decision.

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2. Use our Cell Phone App

This app really comes in handy when you are visiting properties with your real estate agent.  You can immediately figure out what your mortgage payments will be.

Download this app directly from your Blackberry or iPhone for quick access to our current rates and mortgage calculator.

Download the app from here: http://www.workingbusinesscard.com/download.php
Enter code: 6425010677 to access.

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September 2011 Market Update

With the problems in the US and Europe and the resulting economic turmoil, it is hard not to think of how these factors influence our housing market. And while it’s true that consumer confidence plays a big role in the overall health of housing, it’s important to remember that Canada continues to look like an economic oasis in a desert of bad financial news.

As you know, the US housing market has been in a severe recession for the past several years. And while there’s been talk of a possible correction in the Canadian housing market, it is unlikely we will experience anything near as painful as our neighbours to the south.

There are 3 main reasons for this.

(1) Government Tax Policies
(2) Loan Qualification Policies
(3) Bank Lending Policies

Government Tax Policies

The US Government has long had a policy of encouraging home-ownership. Government-sponsored entities Fanny Mae and Freddy Mac have been getting most of the headlines recently for agreeing to purchase mortgage loans that encouraged unsound lending. However, the US Government’s tax policy of allowing homeowners to deduct mortgage interest payments may be more significant, as it has encouraged Americans to maximize their debt-loads in order to minimize their tax burdens.

Canada, of course, has no mortgage tax break for homeowners, with interest payment deductions only applying to investment properties.

Loan Qualification Policies

The secondary mortgage market in the US allowed the originators of mortgages to pass on the mortgage notes to investors throughout the world. Because of this, lenders and mortgage brokers were incentivized to originate as many mortgages as possible, with little-to-no regard for risk. These perverse incentives led to ‘liar loans’ – where individuals would simply lie to their mortgage broker about their income or employment knowing that there would be no incentive to conduct a background check – and ‘NINJA loans’ – where mortgage brokers offered mortgages to individuals with No Income, No Job or Assets.

In Canada, the originators of loans (typically the Big Banks) tend to hold on to them. Because of this, the correct incentives are in place to ensure that only individuals who can afford the mortgage receive them.

Bank Lending Policies

Another unintended consequence of the secondary mortgage market in the US has been the creation of extensive Adjustable-Rate Mortgage products with attractive ‘teaser’ rates. These products allowed mortgage-holders to pay an unrealistically low rate for a period of time before ‘resetting’ to a much higher, unaffordable, rate.

In addition to this, loans in the US tend to be ‘non-recourse’ meaning that the only collateral that a lender would have on a mortgage is the house itself. In Canada, mortgages tend to be ‘full-recourse’, with many banks demanding personal guarantees. This difference has resulted in people walking away from their homes in the US at a much higher rate than in Canada.

In the end, the result of all of these policy differences means that Canada is fairly well-insulated from the carnage that is occurring south of the border. Interestingly, our conservative, low-competition banking environment may have saved our housing market from a painful downturn.

September 2011 Market Update

If you would like to learn more, please feel free to contact us by phone or by clicking on one of the links below:

Simon Clayton 604-764-0711

Jason Low 604-790-5276

Sandra Ens 604-263-1911

Jenny Stephanson 604-675-6214

Jason Feinstadt 604-263-1911

MacDonald Realty 604-263-1911