Buyer's Market in Vancouver as Seller's Advantage Wanes

A buyer's real estate market is burgeoning in BC as June residential sales declined 23% throughout the province. The REBGV showed a decrease in sales for the first time in three months, at a total of 2,968 sales, activity was down 5.9% from last month throughout Vancouver and the Fraser Valley. Increased housing inventory and more stringent requirements on government-backed mortgages factored into the cooling of prices by slowing inflation and decreasing poorly qualified buyers, resulting in a stablized market.

Read the full article

Decline in Canadian House Prices Projected

Market conditions are indicating a nationwide decline in home sales leading to a moderate drop in home prices according to a survey of Canadian real estate boards.

Read the full article

RBC Decreases 5-year Fixed Mortgage Rates

RBC has introduced its new five-year fixed rate mortgage offer, lowering it once again by 0.10, for a new rate 5.89. This is the second time the bank has lowered its rate in just over a month.

Read the full article

City Of North Vancouver Approves Coach Houses

Coach houses in the City of North Vancouver are coming. New regulations permitting the building of coach houses were approved by Council on April 19. Coach houses, also referred to as laneway homes, are separate secondary dwellings situated behind a larger primary house on the same property.

Read the full article

British Columbia Housing Forecast 2010-2011

Demand Will Increase in BC
According to the CMHC, housing demand will increase in British Columbia as we approach midyear due to an improved economy and increased levels of employment with income moderate growth. BC's forecast deviates from the Canada wide prediction that MLS® sales will decline, with 2008's pent up demand subsiding.

Read the full article

Borrowing Rates Raised in Canada

Demand Will Increase in BC
Canadian home owners are still enjoying unprecedented low borrowing terms; however, the ever-lowering trend is coming to an end. On June 1, the Bank of Canada announced that it had increased the overnight lending rate from 0.25 to 0.5 percent, making Canada the first G7 nation to increase rates since the financial crisis of 2008. The increase is incremental, but significant in that it is the first policy reversal in nearly three years of measures intended to stimulate the economy.

Read the full article

The BC HST - What You Need to Know

On July 1, 2010, British Columbians will begin paying the Harmonized Sales Tax (HST) on many goods and services. The HST will add the existing 7% BC Provincial tax to any product and service that has the existing 5% GST applied to it, including new housing. If you are buying or selling a home the following points will identify what the HST affects.

How HST affects Home Purchase

1. Newly constructed and significantly renovated homes (more than 90%) will be subject to the entire 12% HST. Currently, these are only subject to the 5% GST charge.


2. Pre-owned homes will not be affected by the HST


3. The HST will increase the cost of buying and selling old and new property, as it will be applied to any service currently subject to the GST, including Realtor® fees, appraisals, legal services and so forth


4. New homes priced $525,000 or less will be discounted 71.43% of the provincial portion, up to $26,250. New homes exceeding $525,000 are eligible for flat rebate of $26,250

Read the full article

Mortgage Rates May Rise in Canada

Canadian mortgage rates look like they are set to rise again - something to consider when evaluating what you can afford in a home. An online survey conducted for the Canadian Association of Accredited Mortgage Professionals (CAAMP) found that 375,000 borrowers are having challenges paying back their mortgages, and an additional 475,000 householders would be in difficult circumstances if mortgage rates rose to 5.25 %. Already, most of the big banks are currently showing rates of 6.10% or more for five year fixed-terms, though the average rate for borrowers that locked in mid-2009 to early 2010 year is 4.02%.

Read the full article

New Mortgage Rules for Canada in 2010

Three new rules for government-backed mortgages came into effect on April 19. Minister of Finance Jim Flaherty announced that the rules were designed to support stability within Canada's housing market.

Read the full article

Olympic Torch Relay

Kathy-Kreiner Phillips, Olympic gold medalist and North Vancouver resident, carries the torch past one of eCo Realty's hybrid vehicles during the North Vancouver leg of the torch relay for the Vancouver 2010 Games.

How British Columbia HST Will Affect Real Estate Costs

British Columbia's government has announced that it is planning a blanket Harmonized Sales Tax (HST) that would combine the GST and PST on products and services, and will add a 7% tax to many items that do not currently have PST. This includes new residential constructions, and most likely, Real Estate services.

In a July 28 article for the Business Council of British Columbia in house publication, Jock Finlayson and Ken Peacock write that the government's primary reason for reconfiguring the tax is to remove PST from business inputs, saving businesses costs on equipment and materials.

What does this mean for home buyers?

According to the BC Ministry of Finance website, the tax will be applied to all new construction. However, the government has planned a rebate of 5% up to a maximum of $20,000, meaning that there is relief for people buying new constructions priced up to $400,000. This figure was arrived at by taking the median of residential sales in all urban areas of the province, including detached houses, apartments, condos and so forth.

The Ministry of Finance website explains the 5% rate for the rebate. Though HST adds 7% to a property, a government assessment on new constructions determined that there currently exists an embedded PST of 2% overall in building materials and equipment, which buyers of new homes are already paying in the overall cost. Therefore, the current real tax on a new home is 7% (5% GST plus 2% embedded PST). The new HST, being 12%, therefore only adds an additional 5% to the current overall price of the home.

This rebate is seen by many professionals and consumers in the Real Estate market as inadequate, particularly in Greater Vancouver where most starter homes begin from anywhere between $450,000 and $600,000. Even Finlayson and Peacock, who are strongly in favor of the tax, wrote, "Given the high cost of housing in urban British Columbia, the government may want to consider additional measures to mitigate the impact of the HST on housing costs."

One possible positive outcome of this tax, at least from an environmental perspective, is that this threshold may encourage smaller and more affordable constructions, in order to meet the purchasing capabilities of consumers. This could be particularly timely, since Vancouver City Council has recently approved lane-way housing. However, this may also result in shoddy construction and cost cutting measures.

Frequently Asked Questions about HST

Q. Are all property purchases subject to this tax?
A. The HST will only apply to goods and services already subject to the GST. That means new constructions. Used homes will not be affected.

Q. If I make a purchase on a new home that exceeds the $400,000 threshold, will I be taxed the HST on the entire amount, or only that amount that goes over the 400K mark?
A. The government is saying that you can receive a rebate for up to $20,000. You will pay the additional 5% on the amount exceeding $400,000. This means that if your home purchase is $500,000, you will pay an additional $5,000, not $25,000.

Q. Are professional real estate services subject to the tax?
A. Yes

Q. If there is a new construction purchased before implementation of the tax, but in which the transaction is not completed until after the implementation of the tax, because construction was not completed until then, will home buyers be charged?
A. At the time of writing, the Ministry of Finance said that this detail has not been determined. However, it is most likely that if the conveyance commences after the tax is in effect, it will be subject to the HST.

Q. If I am in the housing market, what the simplest way to avoid paying the new HST tax on a new construction and representative's commission?
A. If you have been thinking about buying a newly-built home, this is a good time to begin the process, ahead of the additional costs that the HST will bring. Employing services of a buyer's representative will put you on the fast track to home-ownership. There is no additional expense to do this, and it puts you on an equal footing with the seller.

To Recap

The HST put a 12% tax on amounts exceeding $400,000 on new constructions in BC. New construction priced up to $400,000 will make buyers eligible for a $20,000 rebate. The Real Estate community does not want this, and is lobbying hard to achieve a solution that will not hurt housing starts. If you are thinking about buying a home ahead of the HST, remember that others are too. Give yourself the edge that buyer agency will give you.

Articles Disclaimer