Here’s a market update from our friends at Macdonald Realty; Simon Clayton, Jason Low, Sandra Ens, Jason Feinstadt, and Jenny Stephanson.

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

Last month I wrote about a TV program called Till Debt Do Us Part.

Gail Vaz-Oxlade - Till Debt Do Us Part

In the TV program, couples are dealing with consumer debt issues ranging from $20,000 to a whopping $100,000+. This does NOT include their mortgages, if they have one.

Financial adviser Gail Vaz-Oxlade shows participating couples where their money is going and how much they actually owe. In various episodes you will see couples overspending from $1000 to $10,000 more than they actually make … EVERY month!

Gail’s tough love approach soon has them paying off their consumer debt in less than 2 years (3 years for a few very extreme cases) and then building their retirement nest egg.

YOU may not have a consumer debt problem. YOU may just want to pay down your mortgage way faster than the financial institutions want you to. The secret to paying off your mortgage faster than you ever thought possible is to use some or all of Gail’s techniques to pay off your mortgage.

If Gail can have a couple paying off their debt load of $100,000 or more in less than two years … guess what? You could be paying down your mortgage by that amount. Since Gail’s measures are extreme you may wish to ease off a bit and pay down $100,000 in 4 or 5 years. How would you like to burn your mortgage in 5 or 10 years instead of 20 to 25 years?

It is possible! Note … I said POSSIBLE, not necessarily easy. Though when you watch the program you will see that a change in your spending habits actually CAN be easy.

Here’s a link to Till Debt Do Us Part
In addition to the schedule and online episodes you will find some great articles and extra videos on budgeting and debt reduction.

Here’s Gail’s Website >> Gail Vaz-Oxlade
Gail has loads of great advice on her personal website, articles, worksheets, and links to her books.

PS. Gail has just started a new series called “Princess.“  Guess what that’s about!

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I just spent an hour browsing through the CMHC (Canada Mortgage and Housing Corporation) website and was amazed by the wealth of information they have for home buyers and home owners.

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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Here’s a market update from our friends at Macdonald Realty; Simon Clayton, Jason Low, Sandra Ens, Jason Feinstadt, and Jenny Stephanson.

October 2011 Market Update

2011 has been the tale of two real estate markets, as mainland Chinese buyers influence some areas and asset classes while ignoring others altogether. The biggest beneficiaries of the influx of Chinese immigrants have been Vancouver and Richmond, and to a lesser extent, Burnaby, White Rock, and West Vancouver. Many areas of these cities have seen their single family home prices increase 20+% over the past 12 months, with some areas approaching a 50% increase!

Historically, big price increases in single family homes in these areas have resulted in upward pressure in both the surrounding communities and alternative asset classes as people cash in by selling their Westside homes and downsize to a condo or house in the suburbs, the Interior, or the Island.

Interestingly, this has yet to happen.

Prices for multifamily homes – condos and townhouses – have remained relatively stable, while prices in the surrounding suburbs of Vancouver as well as on Vancouver Island and in the Interior have more closely tracked the price gains of the markets in the rest of Canada rather than the core cities of the Vancouver area.

So what will happen in the fall and winter?

No one really knows what the market will do, but traditionally, the fall and winter seasons have resulted in a slow-down in the market as families buckle down for the school year and weather patterns make buyer tours less pleasant. Because there are fewer buyers, many sellers decide to pull their properties off the market, which results in less supply to offset the drop in demand.

However, statistics consistently show that house prices tend to be lower in the winter than in the summer, which is why home price stats are seasonally adjusted. There are many reasons for this seasonal disparity, but simply put, people who sell in the winter are more likely to need to sell. And because there are fewer buyers, true negotiations between buyers and sellers are more likely to occur in place of auction-type multiple offer situations.

So what does this mean if you’re a buyer or seller? If you’re a buyer that has the flexibility to purchase during the winter months, your selection will be limited, but if you find what you like, you could very well get a good price for your home. If you’re a seller that needs to sell, the limited supply can work in your favour if you have a good realtor that can outline the unique features of your home.

October 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

As I was clicking through the news casts yesterday, several reporters were talking about the “buyers market” that is now emerging in Vancouver. Each one had their own spin on the topic, including the speculation that this is a result of the global credit crisis.

The Real Estate Board of Greater Vancouver is saying:

Consistent increases in property listings and fewer home sales over the summer months has helped move the Greater Vancouver housing market into the upper end of a buyers’ market.

“There’s more competition amongst home sellers in today’s market, providing more options for prospective buyers,” Rosario Setticasi, REBGV president said. “Buyers now have more properties to choose from and more time to make decisions compared to the spring season.”

If you are a first time home buyer, it seems to be getting better and better.  Lower housing prices plus low mortgage rates.  You can shop around and spend the time to make a good buying decision, have home inspections and some bargaining power.

Give us a call and pre-qualify. Your mortgage broker will not only treat you better, but you will know exactly the price range you can afford.

604-736-1855

Check out the current mortgage rates here.