Vancouver Sun – Harmonized Sales Tax Raises Home Price

July 31, 2009

HST could be a hurdle for buyers in a recovering market

Homebuilders are worried that B.C.’s proposed harmonized sales tax will add significantly to the price of a new home, and perhaps slow down the real estate market’s signs of recovery. Rob Grimm, co-owner of Richmond-based Portrait Homes, said in an interview that recent sales have picked up as buyers take advantage of lower real estate prices, but that the new tax – which will add a provincial sales tax to the federal goods and services tax on new homes, effective July 1, 2010 – might change that trend.

Under the plan, a previous exemption from the provincial sales tax for new homes will disappear, resulting in an extra seven-percent tax. As some of that tax was already built into prices because it covered things such as building materials, the effective tax rate will climb about five per cent, according to the B.C. Ministry of Finance.
The new plan will offer a five-percent rebate of the provincial portion of the single tax, but only up to a maximum of $20,000, which will ensure that new homes up to $400,000 will bear no more tax than under the current tax regime.

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VARIABLE RATE PAYMENTS OVERTIME

July 20, 2009

Monthly payments on most variable-rate mortgages fluctuate when prime rate goes up or down.  It’s interesting to see how these payments have changed over time.

We created the chart below to show what one’s mortgage payment would have been had they taken out a variable-rate mortgage based on prime—any time in the last 18 years.

The chart goes back to 1991 and assumes a $100,000 mortgage with a 25-year amortization. (The data is linear so payments on a $300,000 mortgage, for example, would be three times higher than those in the chart.)

mortgagepmtbasedonprimesince1991

The blue line shows how monthly payments have changed with prime rate.

The red line is the average monthly payment over the preceding five years.

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RBC’s HOUSING TRENDS AND AFFORDABILITY REPORT – Regional overviews – July 2009

July 20, 2009

British Columbia – Market springing back to life

The repair of poor affordability levels in British Columbia accelerated significantly in the first quarter of this year, with RBC’s affordability measures dropping between 3.4 and 7.4 percentage points. For most housing types, the cumulative declines over the past year have been the sharpest since 1991, which has helped to set the province’s housing market onto a healing course in recent months.
Sales of existing homes have picked up vigorously from historical lows during the
November-January period
, and prices have shown hints of leveling off after generally falling since winter last year. At the same time, the pace of homes being put up for sale has slowed  onsiderably, which has contributed to rebalance the market. With construction of new units still extremely weak and, therefore, bringing fewer homes onto the market, better balanced conditions are likely to persist and put a floor under prices in coming months.

Alberta – Affordability restored

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REBGV – Market conditions drive strong June housing sales

July 14, 2009

VANCOUVER, B.C. – The combination of low interest rates and more affordable pricing helped propel Greater Vancouver home sale numbers to the second all-time highest total for the month of June.

The Real Estate Board of Greater Vancouver (REBGV) reports that sales of detached, attached and apartment properties increased 75.6 per cent in June 2009 to 4,259, from the 2,425 sales recorded in June 2008. The figure is just short of the record-breaking 4,333 sales which occurred in June 2005.

New listings for detached, attached and apartment properties declined 17.9 per cent to 5,372 in June 2009 compared to June 2008, when 6,546 new units were listed. However, new listings increased 13.5 per cent from May to June of this year. Total active listings in Greater Vancouver currently sit at 13,252, down 27 per cent from June 2008 and 2.9 per cent below the active listings count at the end of May 2009.

“Price reductions and low interest rates have created an improvement in affordability, which is causing the number of sales to rise to levels comparable to 2003 to 2007,” Scott Russell, REBGV president said.
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Housing Market Rebound

July 2, 2009

Uneasiness Marks Housing Market Rebound – 2 July, 2009

Data show sales and prices are picking up again, but rising mortgage rates seen dragging on market.

The worst of the country’s housing market woes appear to be past but the sector’s rebound will be tenuous as a rise in mortgage rates and high unemployment limit the recovery in prices and sales.

Property experts say first-time buyers and Bank of Canada rate cuts have helped restore stability to a market that slumped from late 2008 to early this year, when the worst leg of the global financial crisis battered consumer confidence.

”We should be less fearful than we were six months ago, but I don’t think we should be exuberant yet,” said housing market consultant Will Dunning.

Recent data suggests the residential property market, which weathered the financial crisis much better than its hard-hit U.S. counterpart, has been thawing for several months.

The latest Canadian Real Estate Association data shows May resale home prices rose 0.4 percent to $319,757, topping the previous record set a year earlier. It was the first year-over-year increase since May last year. And sales activity climbed for a fourth straight month.
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