Quick Tips: Should I buy or rent my home?

EVERYONE should buy a home as soon as they are able to.  Long term, the property value goes up, the mortgage gets paid off and the gain is tax free.

For most people, the paid off value of their home is most if not all of their retirement security (and ultimately their estate, to leave to the kids).  For the vast majority of people, their after-tax income is used up covering the cost of living, so if they rent their whole lives, there is usually not much to show for it at the end of the day.

Renting at the outset may be necessary, but it should never be a long term goal in this country.

Mind you, at the rate the NDP is going, property owners’ rights may be dwindled down to those of renters by the time they are finally kicked out of office.


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DISCLAIMER: The foregoing is not legal advice and is presented for information purposes only. Readers of this material should consult with their own legal counsel before making a decision based on this blog post.

For information about this please feel free to contact  Kenneth Pazder or Melissa Valana at 604-682-1509.


Further Reading:

5 Ways the Government could Help with Housing Affordability in Vancouver BC

Why are Metro Vancouver housing prices falling? When will this trend end?

Real Estate Advice: A dozen things NOT TO DO before you buy a home!

Why are Metro Vancouver housing prices falling? When will this trend end?

Those are the $64,000 questions which occupy the top of the charts these days.

For the past 10 years foreign money has poured in to Canada, particularly Vancouver and the Lower Mainland destabilizing real estate prices and uncoupling them from local incomes.

Both the BC and federal governments turned a blind eye to this phenomenon for the better part of the decade and in fact, encouraged it as “foreign investment.”

Finally, upon realizing what was evident to the public for years, both governments acted by attempting to reduce the demand for housing through legislation.

  • In July of 2016 the BC government introduced the 15% Foreign Buyers Tax and then in February of 2018 further increased it to 20%.
  • In January of 2018 the federal government’s financial regulator introduced a mortgage stress test to make it more difficult for buyers to qualify for a mortgage loan.
  • Four consecutive interest rate hikes by the Bank of Canada since 2017 also made financing a mortgage more difficult.
  • The city of Vancouver added the Empty Homes Tax which took effect on January 1, 2017.
  • And finally, to add insult to injury, the misleadingly named “Speculation and Vacancy Tax” came into effect at the end of last year but applied retroactively to all of 2018 (even though details on the tax were not available to the public until late October of last year).

These measures all combined to choke off demand for housing and thus, cause sellers to reduce their prices.

More expensive single family detached homes particularly on the West Side and West Vancouver have been hit harder than lower priced homes and condominiums. Likely the reason for this is that there are not enough locals who can afford homes priced above the three or four million dollar mark.

The inescapable conclusion to draw from stories like this one is that foreign money is responsible for far more than the miniscule 2.92% of real estate transactions reported by the BC government for most of 2018.

Where does that leave the BC real estate market?

In terms of numbers, the amount of sales in Metro Vancouver were off about 40% from January of last year and about 36% below the average number of sales for January over the last 10 years. That is very significant.

The marginally positive signs are:

  • Sales were up 2.9% from December, 2018
  • Realtors are starting to report more traffic at open houses (but for now buyers are still holding off on making offers, believing that they can get a better price by waiting.  The catch is that no one can reliably time the market).
  • There is mounting pressure on the Feds to reduce or eliminate the mortgage stress test.
  • Interest rates have just started to inch down on 5 year mortgages.
  • It’s an election year and the political parties will be trying to look like they are serious about tackling housing affordability, so other measures could be coming

So there is light at the end of the real estate tunnel, but for the moment it’s only a pen light.

[Vancouver Real Estate]: How to lie with Statistics

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“Foreign capital accounted for only 2.92% of Metro Vancouver real estate sales over 11 months” was the recent headline in the Georgia Straight earlier this month.
 
As the perennial classic book by Darrell Huff points out, there are many ways to deceive with statistics, including how they are presented.
 
These foreign capital statistics are misleading, as they relate only to the period between January and November of 2018 – about 7 months AFTER the implementation of the Foreign Buyers Tax (“FBT”) which added 15%-20% to the price of house for a foreign buyer in BC.
 
One would expect that the effect of this tax would be a dramatic decrease in the activity of foreign buyers who, prior to 2017 had been purchasing BC real estate on the same basis as Canadians, but in US dollars, thus getting a 25-35% discount based on the exchange rate.
 
Far more illuminating statistics would be the ones from 2010 to July of 2016 (when the FBT was imposed), however so such data exists as it was not being collected.
 
Thus no one knows what percentage of BC real estate foreign buyers currently own and what percentage of buyers they made up during those years. 
 
In addition, for very high end properties (i.e. $4M and upwards), the sales activity in BC has almost stopped entirely since last year, suggesting that foreign capital was responsible for most of that activity in the first place (certainly far more that 2.92%!!)
 
Presenting these figures without pointing out these additional factors creates the false impression that foreigners and foreign money has had an insignificant effect on BC real estate prices.

Vancouver Real Estate: What Will Happen in 2019?

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Happy New Year!

The big question is what is going happen this year in the housing market. Will prices continue to slide? Or will the market pick up? Will housing crash completely?

Despite all the opinions, no one can reliably predict that market. We will just have to wait and see. Last December sales and the number of new listings continued to drop as Buyers continued to be inactive. Stay tuned to see if this inactivity will continue in 2019!

Greater Vancouver

In December, sales were down 33.3% from November of this year, and down 46.8% from December 2017. There were 1,407 New Listings, a 25.6% decrease from December 2017 and a 59.3% decrease from November of this year.

Benchmark prices:

Single Family Detached: $1,479,000, down 7.8% from December 2017 and down 1.4% from November of this year.

Apartments: $664,100, down 0.6% from December 2017, and down 0.6% from November of this year.

Fraser Valley

In December, sales in the Fraser Valley were down 40.5% from December 2017 and down 22.2% from November of this year. There were 978 New Listings, down 52.9% from November 2018 and down 23.4 from December 2017.

Benchmark prices:

Single Family Detached: $975,300 down 1.1% from November 2018 and down 1.5% from December 2017.

Apartments: $418,300, down 1% from November 2018 and up 7.6% from
December 2017.

Chilliwack & District

In December, sales were down 42.2% from December 2017. There were 153 New Listings. The total number of listings reached 987, a 62.6% increase from Dec 2017.

 

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