I have sold a property at 35340 Jade Dr in Abbotsford
B.C.'s Property Transfer Tax Could be Made Less Harmful
The best way to deal with B.C.’s socially and economically
harmful PropertyTransfer Tax would be to scrap it.
However, the B.C. Chamber of Commerce is promoting a second-best solution that has a far better chance of winning support from provincial politicians hooked on spending our money.
The Chamber’s approach, adopted at a policy session during its annual meeting in Richmond on Friday, is to lower the tax for British Columbians who buy primary residences, and raise it for foreigners who buy second homes or investment properties. In Vancouver — which has the province’s and the nation’s least-affordable housing — this could help rein in runaway costs, and not just by reducing the bite the tax takes from money saved for downpayments. It also might, by costing non-residents more, moderate the impact of so many of them bidding up the price of higher-end houses and condos.
My preferred solution — scrapping the tax — is almost certain to be a non-starter because the tax is such a rich cash cow. It brings in about $750 million a year — nearly two per cent of the provincial government’s revenue. And it has the “merit” — viewed through a political lens — of irking only a limited number of citizens in any given year. So politicians won’t surrender it. Too much money is at stake, and they are loathe to provoke a whole new group of voters by replacing it with some other tax.
But B.C.’s tax on home buyers is the highest in Canada — $5,000 on a modest $350,000 home here, compared with $120 in Alberta, $1,050 in Saskatchewan, and $3,725 in high-priced Ontario.
Our tax has another huge failing. It hammers home buyers at the very time they can least afford it, when they are scraping together money to buy a home. It erodes the savings available for downpayments, thus forcing buyers to borrow more. This means higher mortgage payments for years.
The Chamber’s proposed solution deals nicely with both these issues: how to replace the revenue government will lose if it makes the tax less burdensome for citizens, and how to spare home owners a worrisomely high expense.
The resolution calls for the tax to remain as is — one per cent of the first $200,000 of value, and two per cent on the rest — for British Columbians purchasing anything other than a primary residence. For people buying homes to live in, the Chamber wants it lowered to one per cent across the board. For non-residents of Canada or corporations they control, the resolution wants the rate raised to two per cent on the full price.
Thus, to cite the example from a paper prepared for the policy discussion, today’s PTT assessment of $8,500 on a $525,000 home would drop to $5,250 for a British Columbian buying a primary residence, but would rise to $10,500 for a non-resident.
The paper notes many jurisdictions, several provinces among them, either put restrictions on what non-residents can buy or tax them up to 15 per cent extra.
B.C. doesn’t track foreigners’ involvement in the real estate market, so precise figures are hard to come by. But the paper cites a 2011 study of Vancouver’s housing market by Landcor Data Group that concluded: “In 2008 and 2010, between 46 and 74 per cent of buyers of condos over $2 million and homes over $3 million were sold to persons identified by Landcor as People’s Republic of China investors.”
As well, “While the Chinese buyer group is significantly present, other foreign buyers from 90 different countries are also entering the Vancouver market.”
Source: The Vancover Sun, Don Cayo
I have sold a property at 26872 26th AVE in Langley
Key To Understanding Future Real Estate Trends: Wealth Transfer to Generation Y
Real estate demand from Generation Y, or those aged between 14 and 34 years old, is fueled primarily by loans from parents and grandparents and will combine with other societal changes to alter what real estate is in demand, say real estate analysts.
Some key trends to watch include increased demand for larger units in the future because of a need for home-offices and demand for higher-end small units in the short term, Real Estate Investment Network president Don Campbell told Business in Vancouver May 16.
“I would never say that they’re spoiled but Generation Y’s quality bar is higher than the Baby Boomers’ one was,” he said. “They want quality – nicer countertops.”
The demand for quality from this younger generation is partly because they are likely to have lived with their parents for a longer time and are used to that comfort.
They also have slightly higher salaries and much higher net worth in standardized dollars than counterparts had 30 years ago, according to a BMO study released May 15.
Add to this Rennie Marketing Systems owner Bob Rennie’s assertion that those aged older than 55 years have $163.4 billion in mortgage-free properties in Metro Vancouver and it is clear that, as the older generation dies off, inheritances will make it viable for Generation Y to buy the larger homes they are likely to want.
Parents and grandparents already provide deposits for 40% of today’s first-time home buyers in Vancouver, according to a poll that Rennie’s company conducted.
“Generation Y will have more different jobs through their lives than we as Baby Boomers ever had,” Campbell said. “They will be in more independent contractor relationships than employer-employee. So, they will need home offices and that means larger homes.”
Another trend that Campbell has gleaned from his organization’s research is that there’s a trend among those in Generation Y to buy a home with a platonic friend.
“That leads us to not having small units because you need two bedrooms,” he said.
In Metro Vancouver, developers have so far been trying to one-up each other by building the most livable small condominiums imaginable.
It called its 320-square-foot homes in Surrey’s Alumni project “transformable” because every square foot of space is designed to be as efficient as possible and the space can easily be transformed from one use to another.
One bedroom units have been such a common unit-type in the city of Vancouver that general manager of planning Brian Jackson told BIV that he is actively encouraging developers to build larger units.
“Developers are going to want to pound out the one-bedroom units because right now, in this moment, they’re selling based on affordability,” Campbell said. “In the future, the demand is going to change to larger units as this giant Generation Y cohort moves through and starts to demand two-bedrooms and two-bedroom-plus-den homes.”
The takeaway lesson for investors who own and rent one-bedroom condominiums is to consider selling now to buy a larger unit.
“One-bedroom condominium prices in the future will not track the same as the rest of the market,” Campbell said. “If the rest of the market goes up, one-bedroom units probably will too but not as much as other homes.”
Source: BIV.com, Glen Korstorm
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I have sold a property at 2695 SPRINGHILL ST in Abbotsford
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Vancouver Home Sales Approaching Seller's Market
Strong home sales in April across
Metro Vancouver have kept prices relatively flat but pushed the region closer to being in a sellers’ market than at any time since mid-2011.
That is because the number of new listings could not keep up with the strong sales, according to data that theReal Estate Board of Greater Vancouver (REBGV) released May 2.
The benchmark home price across the region rose to $619,000 in April. That is 0.6% more than in March and 3.6% more than in April 2013.
The region’s 3,050 sales in April, however, were 15.5% more than in the longer month of March and 16.1% more than in April 2013.
New listings could not keep up with those sales, rising 12.7% compared with March and only 1.3% compared with April 2013.
That meant that the sales-to-active-listings ratio was pushed to 19.7%, or the highest that indicator has been since June 2011.
“We’re not in a buyers’ market,” REBGV president Ray Harris said. “For that to happen we would have a higher price-to-active-listings ratio for a sustained amount of time.”
Conventional real estate wisdom is that a market is considered to be a buyers’ market when the price to listings ratio is below 13%. A balanced market exists when the ratio is between 13% and about 21%, Harris explained. It is then considered a sellers’ market when the ratio is above 21% for at least a few months, he added.
The result of stronger sales than new listings is that Metro Vancouver’s current sales-to-active-listings ratio rose 1.5 percentage points to its current 19.7%.
That index was stuck at 18.2% for the past two months and was at 15.7% a year ago. To get a sense of how much of an upward trajectory the trend-line has been for the price-to-active-listings ratio, the indicator was as low as 8% in September 2012.
Source: Biv.com (Glen Korstrom)