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Linda Shaw, Realtor 604-787-2062E-mail Me Now

 

Rating the Top 5 impacts

 

A number of significant changes have been imposed on the real estate industry in recent months, both nationally and locally. Combined, these changes can and will have a significant impact on market conditions in the GVRD and will effect sellers, buyers and investors in different ways. Following is a highlight summary of the recent changes, a rating of their impact and a commentary on how it will affect the outlook for real estate in BC in 2017.  

 

1)    “Stress Test” - Threshold increase for mortgage qualification –  Rating = Negative

 

Implemented in late 2016, this federally driven increase means that although interest rates remain at historical lows, the interest rate at which a borrower is qualified for a new mortgage is higher – typically by at least several percentage points. Unfortunately what that translates to for the borrower is their maximum loan amount will be for less than if they were qualified at a lower interest rate.    

 

Of course rates will go up eventually and it is prudent to ensure that marginal buyers do not jeopardize the overall market as rates rise, but the net effect of this policy is very short sighted because it makes it that much harder for a first time buyer, particularly in high priced markets like Vancouver, to enter the market. This has a cascading effect because folks already in the market in a starter home, can’t find lower priced buyers to sell to so they can leverage up & buy a bigger place, and so people stay put and make do with less, contributing to an already very tight inventory supply situation.

 

Personally, I believe we need more diversity in real estate inventory and options – not less choice for buyers, or more options for the wealthy only.  For more information:

http://www.fin.gc.ca/n16/16-117-eng.asp

 

2)    BC HOME PARTNERSHIP LOAN for first time buyers -  Rating= Neural

 

This program is a new initiative of the BC provincial government, designed to help first time buyers achieve a minimum 5% down payment by matching existing saved funds with a repayable assistance loan to purchase a home with a price of up to $750k. First time buyers must meet a number of eligibility requirements and be preapproved by a lender. For more information: https://www.bchousing.org/housing-assistance/bc-home-partnership

 

3)    CMHC rate increase – Rating = Negative for first timers and low income borrowers

 

As of March 17th of this year, the federally governed CMHC will hike their rates for the second time in as many years. For those applying for a high ratio mortgage (anyone with a down payment of less than 20%), borrowers are required to pay mortgage insurance – not as a benefit to them but to insure against defaulted loans.  For more information:

https://www.cmhc-schl.gc.ca/en/corp/nero/nere/2017/2017-01-17-0830.cfm

 

4)    Foreign buyers tax – Rating = Neutral

 

Introduced by the BC government in mid-summer 2016, this additional property tax of 15% imposed on non-residents was implemented to help cool the perceived high demand for properties particularly single family dwellings from foreign buyers, which was thought to have contributed to a significant rise in house prices in 2015/2016.

 

There is not enough data to truly understand the impact of foreign ownership, but supply is a much bigger issue.

For more information: http://www2.gov.bc.ca/assets/gov/taxes/property-taxes/property-transfer-tax/forms-publications/is-006-additional-property-transfer-tax-foreign-entities-vancouver.pdf

 

5)    BC homeowner grant threshold increased – Rating = Neutral

 

In a possible effort to soften the significant hike in 2017 property taxes, the BC government announced in January that the threshold to qualify for the BC homeowner grant was raised to $1.6M, up from $1.2M in 2016.

 

This increase is a welcome relief for many homeowners already struggling with the high cost of real estate prices in the lower mainland and makes a lot of sense, however it may have an unintended negative impact. While supporting people (particularly the elderly) to live in their home for as long as possible is a good thing, it could slow down and delay the flow of new available inventory further, contributing to an already very tight supply status which continues to create upward pressure on prices. Additionally, any equity which may have been used when the home was sold to help the younger generation – is also potentially delayed. For more information: http://vancouver.ca/home-property-development/are-you-eligible.aspx

 

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SUMMARY – direction for 2017

 

Overall, the combined effect of these changes has correlated to a cooling effect in the market, and various experts are indicating that we will likely see (and are already seeing) a downward effect on pricing – which some would argue is long overdue. While sellers may understandably not feel kindly towards this state of affairs, this could improve affordability and create a long overdue opportunity for buyers, which would be a welcome reprieve from previous double-digit increase years.

 

I am always happy to assist buyers, sellers and investors with their real estate goals! Please contact me anytime to discuss your interests.

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Do's and Don'ts for buyers in a busy spring market

 


The spring market is in full swing here in the lower mainland, and what your view is of our frenetically busy market, depends on which side of the fence you sit on!

First off, let's state the obvious... if you are a homeowner and you are thinking about selling - this is practically, "Klondike Gold Rush" time right now. Sellers who have been in their homes, particularly detached homes in Vancouver and the immediate suburbs - can potentially become instant millionaires, and as real estate investors and owners - it's hard to imagine a better scenario or investment than this.

For buyers however, the reverse is happening - it can feel like a kid stuck outside of the sweet shop, face pressed up against the glass & straining to catch a glimpse of that prize-winning cake. Demand for land in the lower mainland is unwavering, and supply is thin and rare, which makes for a very competitive & challenging market out there for buyers. On the most desirable properties, multiple offers are fairly common, and homes often go for above the asking price.

There is good news for buyers though - there are strategies which you can successfully employ to help you get what you want!

 


The following tips will help you have a good purchase experience:

1) Have a Realtor represent you! Buying a home is the most significant & important financial decision for most folks - how often do you spend hundreds of thousands of dollars! So why not have a professional whom you like and trust to help you navigate the process and help you get the best results!

2) Don't get caught up in a buying frenzy. Real Estate is an emotional decision as well as a financial one, and it's easy to get swept away with the current market's fast-moving pace. Do get an inspection, and don't do a subject-free offer (unless you have good professional advise) - the consequences of subject-free offers can be extremely serious!

3) Be clear about what you want & need, be patient and don't jump at the first thing that looks great, a better option is often right around the corner, sometimes literally!

4) Get your financing pre-approved. Unless you plan on purchasing a property and paying for it in full, you will likely need a mortgage. Knowing how much you can afford to spend, before you go shopping.... is the best use of your time and energy, and ensures that when you find the home you love, you can secure it with confidence.

 


There are many additional sub-strategies that professional Realtors such as myself employ to ensure client success for both buyers and sellers, and I would love to put my expertise to work for you! Drop me a line and let me know how I can help...... and good luck out there!

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TOP GRANTS & REBATES FOR RESIDENTIAL PROPERTY OWNERS

 

1)    HOME BUYERS PLAN - Eligible home buyers can withdraw up to $25k (couples can withdraw $50k!) from their RRSP’s for their downpayment.

 

2)    GST REBATE ON NEW HOMES – Buyers of new construction homes can apply for a 5% GST rebate if the purchase price is $350k, and between $350k and $450k there is a proportional rebate. Anything $450k and above is nil.

 

3)    BC PROPERTY TRANSFER TAX (PTT) EXEMPTION FOR FIRST TIME BUYERS – Eligible first time home buyers may be exempt from paying the PTT, which is 1% on the first $100k and 2% on the remainder of the purchase price, up to $475k. There is a proportional exemption for homes priced between $475k and $500k, with no exemption applicable beyond $500k.

 

4)    BC HOME OWNER GRANT – Reduces property taxes for homeowners with assessed values up to $1.1M.

 

5)    HOME ADAPTATIONS FOR INDEPENDENCE (HAFI) – Provides up to $20k to help low-income seniors and disabled homeowners & landlords to finance modifications to their home to increase accessibility and safety.

 

6)    CITY OF VANCOUVER RAIL BARREL SUBSIDY PROGRAM – The City of Vancouver offers a 50% subsidy on the cost of a rain barrel for residents.  Other municipalities have similar offers.

 

7)    BC HYDRO APPLIANCE REBATES – Mail-in rebates are applicable for buyers of ENERGY STAR cloths washers, fridges and freezers.  BC Hydro also rebates customers $30 to turn in spare fridges in working condition.

 

8)    FORTISBC REBATE PROGRAM FOR HOMES – eligible buyers can receive up to $300 rebate for purchasing an Enerchoice fireplace, or up to $1k off an ENERGY STAR water heater or switching to natural gas from oil or propane.

 

9)    HOME OWNER GRANT LOW-INCOME GRANT SUPPLEMENT PROGRAM – a supplement for low-income seniors for homes assessed up to $1.1M.

 

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I have always had an interest in Architecture, which contributed in part to choosing a career in Real Estate. The many types of styles, methods of construction, and innovations along the way have always fascinated me, and now with some remarkable new advances in technology, there are even more ways to create more cost effective dwellings that people can happily habituate within.

Recent trends in Architecture that really stand out to me include portable micro-housing (picture a slick designer treehouse on wheels!) shipping containers converted to portable or permanent housing (innovatively designed, modified and stacked/sided together they can be really roomy and attractive) lane-way housing (a newer phenomenon in Vancouver to make better use of existing land), and now, 10 houses a day being printed in a giant 3-D printer.  http://www.bbc.com/news/blogs-news-from-elsewhere-27156775   The idea that you can 3-D print something as useful and important as a house! provides wonderful promise for the future, and has the potential to go a really long way towards solving one of humanity's greatest problems: lack of adequate housing. 

Of course, the most basic human need is shelter, and so technology in it's best and truest application can really positively benefit those who suffer from inadequate housing. 3-D printing can make houses quickly, cheaply and has incredible potential to make a significant impact on people the world over.  Increasingly expensive construction costs can often severely restrict the ability for societies to create (or rebuild) housing, and provide not only adequate basic shelter for low income people and families, but efficiently designed spaces where people can live and thrive within. Imagine houses being printed in Haiti after the earthquake, or in emergency camps in areas of conflict - or better planned neighbourhoods in slums around the world...

3-D house printing is very new and I'm sure there are still kinks to work out. The Chinese company who owns the printer has plans to print 3-D skyscrapers! but current regulations are against this. More testing needs to be done over the longer term to ensure proper safety standards can be met. Still, as the technology evolves and more evidence builds to assure safety, this application hold incredible promise and I look forward to watching this new & exciting method unfold...

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I encounter quite a diverse range of styles from Realtors in the market - and “to each his or her own”, as they say. “Recently I heard a buyer ponder the question of how to pick a good Realtor, and it prompted me to consider that some people really aren’t sure what they should look for. Personally speaking, my professional motto has long been “EXPERIENCE. INTEGRITY. RESULTS”.  So I thought I would share what I think is the criteria you should use to measure any given Realtor to make sure you choose the best fit for you.

 

 

 

When being interviewed, some Realtors will trot out stats such as number of homes sold or their closing ratio, others will talk about their awards, etc, and while I think statistics are great they can be easily skewed to suit the message. I also think you want to consider how you will work best with a service provider: are you a “process” kind or person or a “results only” kind of person (or both)?  After all is said and done most clients I work with just want the job done well with good results, and for the process to be a problem-free and positive experience.

 

 

 

Call me old-fashioned, but I think when seeking a professional to aid you in navigating one of the biggest financial decisions of your life – that you should trust your gut and choose a Realtor you feel will diligently work to protect your interests. Statistics are good but in my travels I’ve seen a lot of airbrushed & over-exposed Realtors who’s stats look great but their delivery doesn’t seem to match the image or their promise of satisfaction.

 

 

At the risk of sounding too self promotional, my professional motto evolved naturally out of the principles I believe in – to deliver a skilful suite of quality services and peace of mind that your buying or selling experience will be pleasant and trouble-free.  In a business that has a lot at stake (your home and financial well-being!), you want to choose a Realtor you can depend on to have your best interests at heart.

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Mortgage rates are on the rise. While this is not really news since rates have scraped along the bottom for quite a long while now, the much bigger question is when they would start to rise and it appears the ascent begins now. Within the past few weeks several of Canada’s main banks have raised fixed rate mortgages from between 10 and 20 basis points, and of course the trend is for more of the same. For buyers who have sat on the fence, the golden age of cheap mortgage money is ending and a new phase of ever increasing rates begins.

 

 

 

For those thinking about making a purchase, it makes a lot of sense to talk to your mortgage broker to get pre-approved and get a rate “locked in”, meaning even if mortgage rates rise in the short term, the rate your mortgage broker promised you will be honored for usually between 90 and 120 days depending on who you did your pre-approval with.  Your mortgage broker would be happy to provide more details.

 

 

 

Having a rate locked in while shopping for a property ensures you have a smooth search process with no unpleasant surprises. Knowing what you can afford before you put in an offer ensures you get the property you want when the perfect one comes along. Searching for property without being pre-approved can lead to disappointment if you find your dream home and then discover during the approval process that there are additional obstacles to getting your mortgage. Be prepared and get the best rate possible, so you can get the home you want for the rate you want! Forewarned is definitely forearmed Smile

 

 

If you were to try to predict the Vancouver real estate market 5 years from now, it would be a total shock if mortgage interest rates weren’t higher – of course how much higher is difficult to predict – but it’s a very safe bet that they will be higher so if you have been waiting for that perfect “sweet spot” combination of low rates and the lowest prices possible, I would say there’s no time like the present… Happy hunting!

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Vancouver’s previously red-hot real estate market is presently languishing in a general state of malaise right now, the degree of which depends on which side of the equation you are viewing things from. Things aren’t exactly bad, but the one thing that everybody seems to agree on right now is that things aren’t exactly all that awesome either. A sentiment of apathy seems to linger in the market at present, and I don’t see it changing significantly anytime soon…

 

 

 

In the lower mainland we have roughly a 50/50 split, meaning that 50% of us rent and 50% of us own. If you presently rent and have been holding off a purchase for prices to come down before buying, it’s been a frustratingly slow wait. With such high real estate values the first time buyer especially finds it challenging to find an affordable entry point into the market, so even recent modest declines of 5% translate into big savings.

 

 

 

Sellers have had to scale back their expectations because not only have property values stopped climbing they have tapered back by roughly 5% in value. Properties that would previously have sold out in a day with multiple offers have given way to properties sitting for months.  Interestingly, for houses that aren’t selling the prices aren’t dropping by much - the vast majority of sellers have just taken the property off the market rather than accept a lesser value.  With sellers unwilling to take a loss supply is reduced and available inventory becomes more limited for buyers to choose from.

 

 

 

Realtors too have their own version of malaise in this indifferent market.  Realtors are small business owners and operating costs are perhaps surprisingly significant depending on the brokerage you belong to, so when business drops off for a prolonged period of time it doesn’t just adversely impact Realtors only. Because the Real Estate industry is a huge employer in BC, the domino spin-off effects touch many other businesses as well so the malaise stretches far and wide.

 

 

The best news for all concerned is that within this mediocrity there is still good opportunity for everyone to win. For buyers, 5% less or better is a fantastic discount to ease the pain of still expensive real estate values. For sellers, the good news is that those high property values have still been retained even though prices are a bit off from the highs. And for Realtors, it’s an opportunity to hone skills, revisit your core principles, and deliver fantastic, reliable service to remain truly valuable and relevant to your customers :)

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I believe that if there’s one thing you can count on, it’s that things are going to change! With change however sometimes there comes confusion, and I notice people aren’t quite sure about what to expect. So to shine a little light on the topic of purchasing a brand new home and how and when HST does or doesn’t apply, the following is what you can expect to be taxed on and when.

 

Before April 1, 2013 if you purchase a new home in BC the HST (Harmonized or blended Sales Tax) at 12% applies. Note that a potential rebate of up to $42,500 would be applicable on homes valued up to $850k.  The HST was a blend of GST (@ 5%), and PST (@ 7%). As of April 1, 2013 this will change, and the HST will cease to exist.

 

The good news for buyers is that when purchasing a new home beginning April 1, 2013 only GST will be charged and a potential GST rebate will be applicable on homes up to $450k. A 2% transitional tax may be applied on homes purchased after April 1, 2013 and taking occupancy before April 1, 2015.  This 2% represents an embedded fee builders pay on new construction materials.

 

For more details visit the BC Real estate Association’s website at: http://www.bcrea.bc.ca/government-relations/hst-pst-resources

 

So while some things do change (HST back to GST on new home purchases), some things do remain the same (HST or GST has never been applicable on the purchase of a resale home, only PTT applies). Weather the HST transition back to the GST/HST formula is a change for better or for worse is always a matter of opinion but the great news for buyers is that the tax on the purchase of new home will soon cost less, so that’s always a change for the better!

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"To everything there is a season, turn turn turn" sang The Byrds almost half a century ago! Yet the wisdom of the lyrics still rings true today. While some may argue our market has gone to the birds, there is a whiff of a change of seasons in the air, and it’s not just our delicately fragrant cherry blossom trees in spring bloom…

 

Vancouver’s real estate market has been in the throes of stagnation for the past 8 months or so, and what started as a price adjustment to the region's highest-in-the-country's housing prices has now stretched into one big long stall of inactivity. You could almost say that buyers and sellers are playing one giant game of free range chicken, with each waiting for the other to blink.

 

The facts tend to agree with this theory: Since May 2012, the number of transactions have decreased by roughly 20% over both the last year and the 10 year averages, and the average price for a home has dropped by approximately 6% overall.  Flaherty’s much maligned tightening of mortgage policy simply amplified an already cooling market, with global uncertainty and general real estate trends playing an additional role in why this occurred.

 

Which brings us to where we are at right now, and the real question on everybody’s mind: where is the market going, down, or up? I think it’s really anybody’s guess at this point, but I see a number of important indicators are trending upward.

 

Housing starts in the US are up for the first time in almost 5 years, and Europe seems steadier. Interest rates are historically low with no signs of significant change anytime soon and local pent up demand should release into a busier spring market, raising activity and stimulating interest. But longer term, I think it will be slow and steady for a while, with no big drama but no real excitement either! So still lots of good deals out there for smart buyers, and a competitive but steady market for sellers…

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