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The reviled harmonized sales tax is now in the British Columbia court system, and a prominent industry group is blaming it, in part at least, for stalled real estate sales in both Ontario and British Columbia. Declines on a month-to-month basis of 14.1 percent were witnessed in B.C. Ontario experienced the same declines at a lesser rate of 8.5 percent.
B.C. Real Estate Association chief economist Cameron Muir said that the launch of the HST is one element of several that is causing the market to falter. Muir also cited rising interest rates and stricter mortgage regulations for the sales decreases. He said the combination of these factors led his organization to predict a shortfall.
Muir contended that many people bought homes during the first half of 2010, anticipating the advent of the HST. He said that the tax is particularly onerous in the sales of homes priced at $525,000 and more. Peter Simpson, chair of the Greater Vancouver Home Builders’ Association, said his organization was successful in its efforts to increase the minimum price for tax imposition from $400,000 to $525,000.
Rob Grimm, who works at Portrait Homes in Vancouver, said that it is possible that buyers might be overly anxious about the effect of the HST. To respond to consumer concerns, Grimm developed a spreadsheet that indicates home prices before the application of the HST and after. Although the price difference might be thousands of dollars, those dollars may end up being a relatively small percentage of the total home cost. Grimm reported that Portrait is experiencing healthy sales, having sold eight residences in the past month.
According to Colin Hansen, Finance Minister, the real estate business contributed to the HST frenzy by capitalizing on consumer worries. He believes that the perception is much worse than the actual impact of the tax.
An investigation of a faulty downtown Vancouver demolition yielded a number of problems with the procedure. The report, conducted by the City of Vancouver, indicated that a written safety plan had never been submitted by Global Excavating and Demolition Ltd. Additionally, the company had not been granted final demolition clearance by the district’s building inspectors, which is required by law.
In last month’s demolition, two of the exterior walls of a building being torn down tumbled outward toward the streets at Holmcken and Hornby. One of the walls caused damaged to a vehicle, a sidewalk as well as a light standard. When the other wall came down, it fell onto a lamppost. Although there were no injuries, the incidents were recorded on video and posted to YouTube. Within days, hundreds of thousands of people viewed the video.
Immediately following the incident, Global Excavating and Demolition’s two active permits for demolition were suspended by the city. The suspension has since been lifted for the site where the botched teardown occurred.
Before resuming with the demolition, the company was required to provide a safety plan regarding the rest of the project, as well as to pay around $10,000 to the city for property damage. The company hired a professional engineer to assess the plans for the remaining demolition work and to watch over the project.
Since 1995, 14 permits were issued to Global Excavating and Demolition. Aside from the current one, all of the permits were granted to tear down single-family residences.
Canada’s two most expensive real estate locales, Vancouver and Toronto, are both experiencing a cooling off period. Vancouver, with the highest real estate prices in the nation, saw a 30 percent decrease in June sales compared to June of 2009. Sales are still ahead of June 2008, the worst of the recession period, by 22.6 percent.
In Toronto, June sales were down 23% from June of 2009. Second quarter sales in total were one percent higher than the second quarter of 2009. Sales for the first half of 2010, particularly the first quarter, were strong, reaching record numbers, but things have cooled considerable.
Not only are both locales affected by the higher mortgage rates and the tougher mortgage qualification standards, both Toronto and Vancouver are affected by the Harmonized Sales Tax (HST) which went into effect on July 1st. Home buyers wanting to avoid this tax bought early in the year, which also contributed to the early 2010 numbers and likewise will weaken summer and fall purchase statistics.
This trend appears to be blossoming across Canada, with Calgary another city reporting low June sales. Their June numbers were 42 percent lower than June of 2009 and 16 percent lower than May of this year. So far prices have not been dramatically affected but with more homes on the market and fewer people able or wanting to buy them that could change.
The concept of laneway homes in Vancouver started with the best of intentions. The homes were regarded as a way to provide affordable housing in older, established single-family-home towns. However, many of the homes are now becoming as ornate and overdone as the “McMansions” that have replaced vintage homes in countless communities.
Oliver Gilbert, who lives in Dunbar, said that he originally believed laneway homes were a smart alternative for people who may have wanted to create residences for their relatives. He now believes that many of the homes are affecting the character of his neighbourhood, commenting that some of the houses seem to be two storeys in height.
Design consultant and retired architect Peter Selnar initiated a campaign to notify people about the size of the homes. Last year, the city approved a policy regarding laneway homes, and since then, 89 houses have begun to spring up in Vancouver. According to policy, the residences may be rented, but cannot be sold apart from the main house.
Vancouver Planning Director Brent Toderian said there have been relatively few complaints about the homes. However, he said, a few of the larger houses represent grounds for some adjustments in the policy. He said that most of the complaints are with regard to the presence of larger units on small lots. After the initial 100 applications are completed, which should happen soon, Toderman will deliver a report to council, and will likely make amendments to the code. It is not likely that the height limit will be reduced from 1.5 storeys, the current allowed limit.
Three houses have been the subject of several complaints. The houses are located on West 21st Avenue, West Eighth Avenue and West 46th Avenue. Selnar has made his own list of about six egregiously large laneway units. The home on West 21st Avenue is listed for sale for $2.83 million, and is part of a total teardown on the lot.
Builders are happy about the prospects for this type of housing. K. Bagheri, a co-owner of Zagross Construction, said she is receiving positive feedback from a laneway home her company constructed on West 16th Avenue.
The city of Vancouver is getting a new city hall, and at a relative bargain too. It is tentatively purchasing the former Columbian building, which was forfeited to the Bank of America as part of a bankruptcy settlement, for $18.5 million. The original asking price for the building and adjacent parking lot was $41.5 million, with an assessment value of $22.7 million. Pat McDonnell, the City Manager, thinks this is the perfect time to broker such a deal and hopes that council will approve the sale.
The sale includes the building, 5.14 acres of land and a parking lot located at Esther and Sixth Streets. The building address itself is 415 W. Sixth Street. Consolidating all the city employees in one location is going to save Vancouver roughly $1 million a year in rent and maintenance. Currently there are 300 employees scattered amongst five buildings which is costing the city $2.45 million annually. Even with the $5 million it is expected to take for renovations and associated moving costs and fees, in the long run the city is saving money.
Vancouver already has $14.9 million allotted for the sale that is sitting in the capital fund. $5.2 million of that is from selling off two other buildings and miscellaneous savings, which must be used for purchasing or building real estate. The city will take out a bond for the additional funds. It is expected that the renovations will be completed by early in 2011.
The Millennium Waters luxury condo complex in Vancouver, which served as part of the athlete’s village for the 2010 Vancouver Olympics, is up for sale. So far 40 out of the 474 available units have sold, which is ahead of expectations. Considering that the homes go from between $600,000 and $4.7 million, that is impressive, given the fact that Canada is not too far out of a recession.
The worry is that there are still over 400 condos to sell, and that there may not be enough financially backed interest in the luxury condo market, or that these units may be over priced. Millennium Waters is being represented by Rennie Marketing Systems, and its president, Tracie McTavish is justifying the high price tag for these units.
The condos are on prime waterfront real estate, and that fact alone commands premium pricing. Millennium Waters is also a very green building. It has incorporated environmentally friendly features such as toilets that recycle water and a system that collects rainwater for landscape irrigation. The Platinum-level certification awarded by the Leadership in Energy and Environmental Design folks confirms that.
It appears that this upscale condo would give you a lot for your monetary investment. Let’s just hope there are enough interested buyers around with enough money to take advantage of the opportunity.
Lower Mainland real estate sales have been easing up the past few months and April was no exception. Property prices re stabilizing, inventory is up and buyers have more to choose from. The market is balancing, returning to where it would be expected to sit after a lengthy recession period.
People in British Columbia that wanted to make purchases as the market was recovering have largely done so. Many were spurred on by the promise of higher interest rates and the stricter mortgage rules that came into effect this past month. It is normal for the market to cool off a bit.
The chief economist for the British Columbia Real Estate Association, Cameron Muir is neither surprised nor worried. He expects the prices and sales to hold steady for the remainder of 2010.
In metro Vancouver, the Multiple Listing Service showed 3,512 sales through the system this April, an 18 percent increase over April of 2009. Sellers also listed 7,648 units, bringing the availability total to 15,901 units. That is 17 percent higher than this past March and 11 percent higher than in April of 2009.
The average regional benchmark price for homes also increased. A single detached home price averaged $818,403 in April of this year, 21 percent higher than April of 2009 and 2.2 percent higher than March of 2010.
If you are in the real estate business at the moment, you are a very busy person. Impending mortgage rate hikes, new mortgage rules and the new Harmonized Sales Tax rearing its head over the provinces of Ontario and British Columbia are causing a spring run on Canada’s housing market.
Nationwide, sales for the first two months of 2010 showed over a 44 percent increase from the same period in 2009. Available housing inventories are at near record lows, showing a 4.7 month supply in the system even with the recent influx of listings. The once balanced market is now leaning in favour of the seller and bidding wars on properties are breaking out.
The limited supply and strong demand is also causing home prices to rise. An average home price nationwide is $328,440, over 18 percent more than a year ago. The greater Toronto area showed a 70 percent increase in sales over this time last year, and an average housing cost of $434,696, a 20 percent increase.
Vancouver, already the most expensive real estate market in the country, shows sales for March of this year up over 38 percent from that in 2009. Montreal, which has some of the least expensive housing in the country, is also showing a 45 percent increase in sales from March of 2009 and a 9 percent increase in single home average price, coming in at $245,000 per unit.
Time will tell what effects the new mortgage rules that take effect on April 19th, the Harmonized Sales Tax, expected in July and the mortgage rate increases will have on the real estate market and whether the slow down will be trickle or a flood. Meanwhile, savvy home buyers aren’t waiting around to find out.
Not only is it important to find the house that fills your every want and need, it is also important to find a neighbourhood that fits your lifestyle and your family make up. A little research on the area you are thinking of investing in could go a long way in making sure time spent in your dream home is a pleasant experience.
Do you have children? If so, then schools should be a consideration. Are there suitable ones in your prospective neighbourhood? If you have teens, is there a high school nearby? Do your younger children have far to go to reach their elementary or middle school? Do the schools have good reputations? When checking out homes in a neighbourhood, take the time to look around for schools and for signs, such as toys and play sets in yards, that there are other kids in the area.
How do you feel about yard work? Hate it, or love it? If some of your happiest moments are spent turning soil or planting beds of mums or catering to rose bushes, then a house with a larger yard would suit. If you prefer your plants to be in a flower box and have a love/hate, mostly hate, relationship with a lawnmower, a postage stamp yard or even no yard, might be more to your tastes.
If there are seniors in your home, having a senior centre close by would be a plus, as well as easy access to public transit and medical care. Bookworms in the family? A library within easy reach would be a nice touch. If you are working, how far are you willing to commute? And if you simply must have that daily latte from Starbucks, find your palace in a neighbourhood that has at least one within throwing distance. Best advice, talk to your real estate agent and let them know more about you, so they can help you find the neighbourhood that suits you best.
Rising home prices made owning and maintaining a home in Canada a bit more expensive during the latter part of 2009. The Royal Bank of Canada predicts that these costs will most likely continue to rise especially since the inventory of available homes is not quite keeping up with the demand. Add to this the expected rise in interest rates mid-year and affordability may become an issue for more potential buyers.
Part of the increased housing demand is due to buyers trying to get into a home before the mortgage rates do indeed go up. This in turn causes prices of homes to climb, though at the moment it is a slow and steady one. The debate on whether a bubble in the market is forming is still going on.
The federal government’s change to mortgage lending rules, set to take effect in April, has offered another incentive for buyers to move now rather than later. But the impact on the market this factor has is an unknown at this point.
The Royal Bank’s housing affordability formula calculates the part of pre-tax household income that it takes to cover a mortgage, taxes and utilities on a home. In the fourth quarter of 2009, all housing types saw an increase in the percent of income needed to maintain a property. The national average for a two storey home was 46.7 percent and a single storey single family home was 40.6 percent. Both categories saw a .03 percent rise. Townhouses came in at 32.9 percent, a 0.2 percent raise and condos were at 28 percent, a 0.1 percent increase.
Vancouver, British Columbia is still the most expensive market in the country in which to buy and maintain a home. A single family home takes 69 percent of pre-tax household income to maintain. Not far behind are Toronto, Montreal, Ottawa, Edmonton and Calgary.
What does Vancouver do now that the Olympics are over? Cash in. Make the most of that precious two weeks in the world’s spotlight and highlight what is best about the area, why it is a great place to live, work and play. There is no reason why British Columbia’s largest city can’t do as well in the financial department as Calgary and Sydney after their respective Olympic debuts.
So what can Vancouver expect? Increased employment, attraction of more high tech, media rich industries and more tourists to come spend their money to see where it all happened. Vancouver is expected to be an especially big draw for China which just finalized a trade agreement with Canada.
The city of Vancouver is stressing the fact that though cost of living in the area is on the high side, that the city, as well as British Columbia and Canada in general, has one of the lowest rates of taxation in the world. Since many visitors to Vancouver for the Olympics live in parts of the world with even higher living and housing costs, city fathers do not see living costs as an issue.
Vancouver is not expected to have Olympic debt, as occurred after the Montreal games. Most venues were completed on time and were under budget, and have been designed to have an alternative use after the games. One example is the condos built for the athletes’ villages, which are expected to be sold to recoup the cost of construction, if not a profit.
It is still too soon to reasonably predict exactly how Vancouver will benefit from the world exposure that only an Olympic venue can bring. The city and the country put on its best face and one can only imagine that the effort will be positively rewarded.
Metro Vancouver’s real estate market ended the year nice and toasty. Home sales in December of 2009 were almost three times higher than in January of 2008. It was also a fairly balanced market, with enough new listings coming in to give buyers a good choice but not enough to tip the advantage in the buyer’s direction.
The market is expected to hold steady throughout 2010 according to a report issued by the Conference Board of Canada. The board also expects Metro Vancouver, along with the Fraser Valley, Victoria, Regina, Calgary, Halifax and Ottawa to see their property price points rise from around 5 percent to almost 7 percent before year end.
Farther east, Montreal, Saskatoon and Edmonton are expected to see the highest increase in housing costs, ending at over 7 percent by the end of 2010. Hamilton, Toronto and Winnipeg are more likely to see moderate increases of between 3 percent and 5 percent. Nationwide, no price decreases are expected.
Prices in December of 2009 show an increase of 11.9 percent from December of 2008, averaging $655,234 per home. It also showed a sales ratio of 72 percent between the number of buyers looking for homes and sellers listing properties, making this a balanced market.
The Olympics coming to Vancouver is being viewed as a huge business opportunity by some and a major inconvenience by others. Some, such as Moe Summers who owns a Pita Express eatery in the heart of Olympic central, are taking a wait and see attitude.
Summers was excited when Vancouver was awarded the Olympic Games, envisioning enough of an increase in business that he was contemplating a cushy retirement. Now that VANOC has virtually taken over the waterfront and extended the security perimeter around his business, and others, he is not quite so sure about that early life of leisure.
Construction workers putting up the various Olympic structures have kept him busy. The problem will be during the games, when VANOC is asking businesses to keep their employees out of the security zone. No employees, no customers. His regular clientele is not likely to wander in for the duration of the games.
There will also be competition from an Olympic sponsored food court that is adjacent to his restaurant. Food giant McDonald’s will have a mega store in that very same food court and they are a tough competitor.
But so is Summers. He plans to weather the games by offering a revamped menu including not only his typical Greek fare, but local seafood, including B.C. salmon. His other ace in the hole is a winning personality, a big smile and a hearty “Welcome to Canada” to all that pay him a visit.
President of research firm Landcor Data Corp., Rudy Nielsen, thinks that with the 2010 Winter Olympic Games around the corner, the boost in real estate values the area has experienced can be contributed to the 'Olympic effect' of the 2010 games in Vancouver.
Over the last decade, prices for property in the ski town of Whistler have doubled due to the area's participation in the event. Some of the skiing competitions will be held in Whistler. There has also been a huge increase in international interest for property in Vancouver, Whistler, and B.C.
These games are going to show the world that Vancouver and British Colombia are world-class places, says Nielsen. Over the past decade, Whistler has seen over 8,990 of the 13,134 residential properties exchange ownership. Property values gained over 100% across the board in the small resort town.
Detached homes saw an average increase of over 140%. One realtor in Whistler, Lisa Bjornson, the manager of the Whistler Real Estate Co., says that although it is hard to tell if the games are going to have a profound impact on land and property values, the assumption has already been made by many that the Olympic Games in increase property values.
While modest gains have been seen across the board in the region over the past few years, real estate expert Tsur Somerville, who works for the University of B.C. contributes the rise in demand to the improved Sea to Sky Highway.
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