Saturday, July 17, 2010

Stu's Breakdown on HST and Real Estate in Vancouver


Stu's Breakdown on HST and Vancouver Real Estate

With the billeting and the protest proving futile, British Columbians now live life with HST, a 7% hike on the 5% GST to a 12% harmonized sales tax, no more PST. This TAX is like the old GST tax and ONLY APPLIES TO NEW REAL ESTATE, a common misconception is that all home sales are subject to HST. There is also a generous new HST REBATE equal to 71.43% of the HST Payable for new homes under $525,000 up to $26,250; while homes over that price may apply for a flat $26,250 rebate.

The majority of Real Estate will not greatly be affected by the HST, but it will lower the asking prices of new construction: good news for Home Sellers and Buyers looking for Brand New Property, bad news for Developers.

The Bad News for Home Sellers (and Buyers) is that they will have to pay a 7% increase on Real Estate Commissions and Lawyer fees. A $500,000 condo where fees may be $19,000 the sellers pays an extra $1330 in taxes.

A Left Wing approach to governing with the goal to increase business growth and jobs, as well as incomes and employment rates across various sectors. In the long run, this will be good for BC and the Economists (who don't account for Foreign Investment & Tax Sheltered income) may stop rating Vancouver as an unaffordable city to live as the gap between average incomes and average home prices tightens.

In the short run, I find it impressive that British Columbia, and Ontario, are able to implement a tax increase in the midst of an American and Global Recession. I fear the restaurant, retail, and entertainment sectors will slow down as purchasing power decreases, but Real Estate in Vancouver will not be slowing down in the next 5-10 years and our Beautiful Province will benefit from Tax Revenue and Business Growth.

I am confident in our Real Estate Market because of BC's rock solid lending practices and regulations, banking sector, our influx of new immigrants and foreign direct investment, our forward progressing city planning with improvements such as The Canada Line, The Convention Center, The New Sea to Sky Highway, Vancouver International Airport, the new BC Place, and new world class Hotels and Developments as Vancouver has quickly progressed to become a Global City with Worldwide Recognition, Appeal, Admiration, and Respect equating to a very healthy Demand for our limited Supply of Real Estate.

I believe BC's new HST Tax will shrink developers profits as the Market (Buyers and Sellers) determines Real Estate Values, and with a large supply of resale product they will have to be creative with their pricing and packaging to stay profitable. Supply may not expand as previous predictions have calculated as new home starts become less attractive for developers and home builders.

There has been 259 Detached Home Sales and 282 Attached Home Sales in The Lower Mainland in the first 2 and half weeks of July 2010, since the HST was implemented on July 1st, so it appears The Market will continue to roll. While in a traditional July and August summer lull, when many act in May or Move Away, I suspect September and the fall market will bring increased consumer confidence and activity in the market as HST is accepted and continued Record Low Interest and Mortgage Rates propel first-time home buyers, investors (driven by high rent rates), as well as downsizes and upsizers across the Vancouver Real Estate Market.

If you have any questions about HST and Vancouver Real Estate please feel free to call me at 604.562.0532 or email me at stu@stubell.com.

Best Regards and Happy House Hunting:)

Tuesday, July 6, 2010

June 2010 GVRD Real Estate Stats

July 5, 2010
REBGV Stats June 2010
Activity steady to start the summer season

The Greater Vancouver housing market experienced steady activity to begin the summer season.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled 2,972 in June 2010, a decline of 30.2 per cent compared to the 4,259 sales in June 2009, which was the second highest selling June on record.

“Activity in June marked a healthy balance between the near record setting pace of June 2009 and the considerably slower activity witnessed in June 2008, a period of recession as we all know,” Jake Moldowan, REBGV president said.

Compared to June 2008, last month’s sales represent a 22.6 per cent increase over the 2,425 sales recorded that month, but are 30 per cent less than the 4,244 sales in June 2007. June 2010 sales also represent a 5.8 per cent decline compared to the previous month’s sales totals.

“We didn’t experience any record-breaking activity in June, but we did see a stable summer market,” Moldowan said. “The number of new listings coming on the market is not as dramatic as we saw over the previous three months and demand remains at a healthy level for this traditionally quieter time of year.”

New listings for detached, attached and apartment properties totalled 5,544 in June 2010, a 3.2 per cent increase compared to June 2009 when 5,372 new units were listed, and a 21 per cent decline compared to May 2010 when 7,014 properties were added to the MLS®.

At 17,564, the total number of property listings on the MLS® increased 1.2 per cent in June compared to last month, and is up 32 per cent compared to this time last year.

“There has been less upward pressure on prices in our market the last few months, which has allowed prices to ease back from the record high numbers seen in April,” Moldowan said.

Over the last 12 months, the overall MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver increased 11.8 per cent to $580,237 from $518,855 in June 2009.

Sales of detached properties in June 2010 reached 1,139, a decrease of 31.7 per cent from the 1,667 detached sales recorded in June 2009 and a 24.1 per cent increase from the 918 units sold in June 2008. The benchmark price for detached properties increased 13.4 per cent from June 2009 to $795,025.

Sales of apartment properties reached 1,258 in June 2010, a decline of 29.7 per cent compared to the 1,790 sales in June 2009 and an increase of 19 per cent compared to the 1,057 sales in June 2008.The benchmark price of an apartment property increased 9.7 per cent from June 2009 to $391,528.

Attached property sales in June 2010 totalled 575, a decline of 28.3 per cent compared to the 802 sales in June 2009 and a 27.8 per cent increase from the 450 attached properties sold in June 2008. The benchmark price of an attached unit increased 11.6 per cent between June 2009 and 2010 to $492,861.