2017 – What to Expect in the Vancouver Housing Market

Leading to and during last year, much of the real estate talk in Vancouver was centered on how to slow the market down in view of substantial price hikes.  But 2017 could spark a much different type of conversation.

The 64 million dollar question is “will the Vancouver house prices drop in 2017?” Housing experts state that while there are factors pointing to this, there is still much uncertainty especially as we come to terms with the fallout of some major policies introduced by all levels of government within the last 6 months; notably:

1) 15% Foreign buyer tax.  This tax was introduced in August last year by the Provincial government in response to a public outcry that blamed foreign buyers for the rising house prices.

Although it is not yet a 100% evident that the tax is responsible, the market for high-end homes has cooled with some of the foreign demand seeping into the Interior, Victoria and Toronto.  While demand has cooled considerably, prices have not gone down as expected.

2) Changing mortgage rules. Recently, more stringent mortgage qualification rules were introduced by the Federal government targeting first time homebuyers. Ottawa is worried that first time homebuyers are taking up too much debt,  which will cause a lot of concern if prices drop and interest rates rise.

First time homeowners are required to take a “stress test” to see how they can fare financially in times of adversity.

Other measures introduced include a decrease in the amount of money they can effectively borrow, in some cases as much as 20%. This means that first time home buyers will have to come up with a larger down payment than was previously required, forcing some to put their home purchasing plans on hold.

3) City of Vancouver empty home vacancy tax. In response to the general euphoria targeting foreign homebuyers who have bought local homes for investment purposes and left them vacant, and the very low rental vacancy rates, the Vancouver Municipal government has introduced a vacancy tax.

Beginning this year, homes in Vancouver that aren’t lived in or rented for at least half the year are now subject to an annual 1% tax. So for a $2 million home that qualifies, the owner will be responsible to pay $20,000 in taxes. Penalties for non-compliance are severe.

4) Interest free loan program for first time homebuyers. Yet to be implemented, this program introduced by the Provincial government for BC residents, offers a capped loan with a 5-year interest free period, aimed at helping first time homebuyers afford the down payment.

Since this program will be launched mid January, its impact will not be known for a few months. But the idea is to make home buying more affordable for first time homebuyers.

This measure somewhat contradicts the Federal government’s recent change in mortgage rules aimed at restricting first-time homebuyers as discussed previously.

We have yet to see the long-term impact of the recent policy changes, but one thing is certain – unlike previous years, this will be a very interesting year as far as real estate in Vancouver is concerned. So stay tuned!

 

We have been in the real-estate business for over 28 years. Our real-estate professional advisors are well qualified and experienced to give you their qualified opinions on the Vancouver real-estate scene. If you have any questions or concerns, please contact us or call us on 604 695 1000.

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How the New Empty Homes Tax Will Affect You

The Empty Homes Tax was introduced on January 1, 2017 to address the current state of the rental market in Vancouver, which has the lowest rental vacancy rates and the highest rental costs in Canada.

It is hoped that the tax will improve Vancouver’s vacancy rate, which currently stands at 0.6%, by persuading the owners of the thousands of empty apartments and houses to put them up for rent.

This December, if you own a residential property in Vancouver, you will receive a property status declaration notice for 2017, whereby you will be required to make a property status declaration, which will determine if you are subject to the tax.

Most properties will not be subject to the tax including those that:

  • Are being used as a principal residence by the owner, his/her family members, or friends.
  • Are being rented for a total of 180 days of the year, in periods of at least 30 consecutive days.
  • Meet the criteria of a list of permissible exemptions that have been outlined by the City of Vancouver.

If your home is deemed to be empty as a result of the property status declaration, it will be subject to a 1% tax of the property’s assessed value. For example, a home with an assessed value of $2 million will be taxed $20,000.

Non-payment of the tax (which will be applied annually) will be treated to the same treatment as property taxes, whereby there will be:

  • A late payment penalty of 5%
  • Daily interest on any arrears

There will be a rigorous audit process in place, especially in the early years of the tax. If you are found to have made a false declaration, you will be subject to potential fines of up to $10,000 per day, in addition to payment of the tax.

Empty Homes Tax Due Dates:

Property status declaration (for 2017): February 2, 2018

Empty Hoes Tax payment: April 16, 2018

Unpaid tax added to property tax bill: December 31, 2018.

 

If you require more information regarding this issue or any other developments that have taken place recently, please contact us or call us on 604 913 1000. Our real estate professional advisors will be only too pleased to be of assistance.

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The Principal Residence Exemption: The Tax Implications of Selling Your Home – Simplified

If you are one of the majority of the Canadians who own only one personal residence at a time, any gain on the sale of your home will be tax free, thanks to the Principal Residence Exemption (PRE). However, there are other factors that come into play that could impact your ability to fully or even partly shelter the appreciation of your home from tax.

You can use the PRE to reduce or eliminate the capital gain on the sale if your home when it meets certain conditions.  The CRA states that in order for your home to qualify as a principal residence for a particular year, the following must apply:

  • You must own it (either alone or jointly with another person);
  • You or your family members must inhabit it at some time during the year; and
  • No other property may be designated as the principal residence of any other member of your family unit for that year.

Here are some of the basic issues concerning the PRE:

Renovating and “flipping”

If you bought a home, renovated it, lived in it and then sold it, it may not qualify for the exemption, as the CRA may determine that the gain on the sale represents business income and thus would be ineligible.

Purchases made before 1982

Prior to 1982, you and your spouse could each have designated a separately owned home as a principal residence and sheltered each home from tax on capital gains. This allowance was cancelled on Jan 1 1982.

Renting out your home.

The PRE does not qualify if you:

  • Own the home just for rental purposes
  • Rent out more than 50% of the home

If you rent out your basement and claim a capital cost allowance on your taxes, by claiming the PRE, you may trigger a CRA review.

Size of your home lot

There are restrictions on the size of the area on which your home sits on. If the lot exceeds one half hectare, you may be required to show that the remainder of the lot is needed for the use and enjoyment of the residence.

Vacation property

In some cases, you may be permitted to chose a vacation property as your principal residence, but only if it is for your own vacations and not used to earn rental income.

It isn’t advisable to simple take for granted that the sale of your home will be tax-free. Consult an accountant or lawyer for the correct professional advice and information.

We have sold thousands of homes for hundreds of satisfied clients. If you are considering selling your home, we can find you a qualified buyer and remove the stress. Contact us on 604 913 1000, visit one of our offices or email us.

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The New Provincial Down Payment Loans Assistance Program For First Time Buyers – The Facts

For those individuals having trouble getting into the housing market, starting on January 16, 2017, the BC government will be offering down-payment loans for first-time homebuyers. The new loans are called the BC Home Owner Mortgage and Equity (HOME) Partnership program.

The 25-year loan is interest free for the first 5 years and covers up to a maximum of $37,500. After the initial 5 years, market interest rates will apply.

To be eligible, the applicant must:

  • Have saved a down payment amount at least equal to the loan amount.
  • Have been a Canadian citizen or PR for 5 years.
  • Have lived in BC for at least 1 year.
  • Will use the property as their principal residence for the first 5 years.
  • Have not owned an interest in any residential property anywhere in the world at any time.
  • Purchase a home with a price tag of less than $750,000.
  • Be able to qualify for an insured high-ratio first mortgage for at least 80% of the purchase price.
  • Have a combined gross household income of no more than $150,000.

According to Jill Oudil, president-elect of the Real Estate Board of Greater Vancouver, the program will help first-time buyers overcome a “key obstacle” to home ownership, and it will give young families the incentive for the down payment that would have otherwise might have seemed unattainable.

Architect, planner and adjunct professor Michael Geller said that the supply of new housing in Metro Vancouver is limited relative to the demand, and while this program could further increase demand, he believes it will offer a greater incentive to builders and developers to initiate new projects.

BC residents buying their first home can also get assistance from other housing programs like the First Time Home Buyers’ program and the Newly Built Homes Exemption.

If you are a first-time homebuyer, why not let the expertise of our real-estate professionals give you the best advice? Call us on 604 913 1000

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When is The Best Time To Sell Your Home?

Most real estate professionals will agree that there are certain times of the year that are more favorable to sell your home than others. Often, the best time to list and sell a single family detached home is in early spring and summer and early to mid fall.

Spring and early summer offers the best time to showcase your home. Once winter is finally over, as the flowers start to bloom and the weather improves, there is a tendency for people to get that “moving bug”.  Buyers may be armed with their tax refunds to use for the down payment and if they have kids, there is no concern about the school year being interrupted.

It is also easier during this period to get your home ready for sale. Remember: since this is historically the busiest time for home sales, you will face more competition as many other homeowners will be thinking along the same lines.

After summer, early fall is the next best time to list your home, especially after a nice warm summer. The beautiful colors that fall is typically associated with mixed with the nice, crisp cool temperatures, will give you another great opportunity to sell your home.

Having said this, town homes and condos  – primarily aimed at first time homeowners, will sell at any time of the year.  These buyers do not have the same constraints of factors such as school catchment areas, preferring proximity to a recreational facility, a transit station or a shopping mall. They are more likely to buy at any time of the year, depending on the property offered for sale and their budget.

Just a quick note to buyers – you may get a good deal in the winter time, as the chances are that the home owner is eager to sell as he/she cannot wait until the traditional selling period.

In our opinion, there is no wrong or right time to sell your home, especially if it is priced right and presented properly. You have to be realistic in your expectations.

 

Please feel free to call THE VIRANI SALES TEAM at 604.695.1000 or email if you would like further explanation on any of our blog topics, or if you have any real estate questions at all.

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Is the Vancouver Real Estate Market Cooling or Correcting?

Around 6 months ago, Vancouver was dubbed as North America’s “hottest” real estate market, where some home prices were increasing by literally $1000/day. Open houses had line-ups within minutes of opening and listings received multiple bids over asking.

In an effort to appease the disgruntled home-buying electorate who were being forced to move to the suburbs, both the BC and federal governments brought in a number of measures to address the soaring housing costs.

It looks like these measures have worked to cool the market somewhat, and there is consensus among realtors that we are currently entering the fourth month in a consecutive buyers market.

Buyers are waiting for prices to drop further and sellers are waiting for a rebound in the market. Inventory levels are now climbing up to “normal” levels, but the sales are not there.

Statistics released by the REBGV for September and October have shown that sales are down from similar periods last year, but prices are not dropping as dramatically as the statistics show. So why is this happening?

To understand the relationship between supply and demand, the sales-to-active-listing ratio is used. In March of this year, the ratio was a whopping 70.3%. In September and October it dropped to 24.4%. When the ratio drops below the 12% mark for a number of months, there is downward pressure on market prices. When the ratio exceeds 20% for a number of months, there is upward pressure on market prices.

The average price of a home in Vancouver was $600,000 in 2006 and has jumped to around $1.4 million in 2016. Many of the current homeowners who have put their home on the market have seen a large increase in the value of their home in the past few years. So many have dug in and are not in a big rush to sell if they don’t get near their asking price.

BC still has a strong economy and better growth than most of Canada. There are more people migrating into BC than to other provinces in Canada. These people need to live somewhere. So it looks like that this situation will not change for the foreseeable future.

One thing that everyone agrees about is that there is uncertainty in our current market:

- What will be the full-blown fallout from the new mortgage rules, which could be a trigger or catalyst for far reaching implications for the housing market?

- The 15% foreign buyers tax which has forced many potential foreign buyers to look East and South – for how long?

- The aftermath of the Trump election – how will it affect us in Canada in the next few years?

 

If you are currently looking into selling your home, contact us or call us on 604 913 1000 and we will put you in touch with one of our real estate professionals who will get you a very competitive price. Remember, we have been in the real estate business for over 27 years.

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How Severe is the Impact of Airbnb and Other Sharing Sites on the Vancouver Rental Scene?

Historically, Vancouver has had a very low rental vacancy rate (currently around 0.3 – 0.6%) and with the advent of Airbnb and similar home sharing platforms, the problem has been exacerbated.

Airbnb listings are increasing quite dramatically around the world and Vancouver is no exception. Since December 2014, Airbnb listings in Vancouver have increased by over 20% and this figure is on the rise.

A study done on the effect of Airbnb on the Vancouver market by Karen Sawatzky, an urban studies student at SFU, reiterates this surge of Airbnb listings in Vancouver. Her study proved, amongst other things, that the number of Airbnb listings is on the rise – she found 2798 listings in January 2015 and 3,473 just five months later. Vancouver has become one of the 10 most important markets for Airbnb in North America.

Landlords and property owners can make a lot more money renting their units on Airbnb than on the regular market rentals. According to data from the CHMC, average rents for a 1-bedroom run around $1,100 a month depending on which part of the city the property is located. The same apartment could earn around $140/night on Airbnb. Large homes have been listed for $500-$900 a night!

While the financial incentives for conversion may be great, the process could have grave potential consequences to the renter. Renovations may be taking place without local government approval. Without the proper inspection and approvals, there could be a number of safety violations that the unsuspecting short-term renters would be unaware of.

So in its quest to reduce the rental crunch in Vancouver and introduce some formality and order to the short-term home rental market, in October, the Vancouver City Council voted in principle to green-light short-term rental regulations. These will include licensing fees, advertising regulations, and a scrutiny ownership – the property has to be a principal residence.

There has been considerable public outcry about the rental shortage in Vancouver, and both provincial and local governments are continually making new policy to address the issue. Affordable housing is no longer affordable in Vancouver and there is still a lot to do to remedy the situation.

If you are looking to rent or rent out your home, let our Property Rental Specialist find you the ideal home to rent or the ideal tenant. Simply fill out this form, or contact us on 604 913 1000.

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Leaving Your Home For A Period Of Time? Take Heed Of This Important Insurance Advice.

If you are leaving your home for a lengthy period (over 4 days), you must make sure that you understand how your insurance works when you are not occupying your home. The first and most important thing to do is to call your insurance company and inform them of your absence, and inquire if there are any special precautions that you have to take before your departure. 

Remember, an unoccupied home is at greater risk of damage and more susceptible to theft. What most people don’t know, and many people in the insurance industry don’t tell you, is that you’ve made a promise to your insurer that you’ll do certain things in the event you leave home for four or more days.  It’s important to note that unlike automobile policies, there is no uniformity amongst property insurance policies. 

Here are some basic preventative measures most insurance companies will advise you on that can help you avoid unfortunate situations such as theft, power surges and broken pipes:

  • Have someone check your property if you are going away for more than three days and specifically ask them to check for any water leakage in the basement or ceilings.
  • Unplug non-essential appliances to help protect them from power surges and to save on energy.
  • Have a neighbour remove newspapers and flyers outside your home. If that is not possible, then put your mail and paper delivery on hold until you are back.
  • If you have a home alarm system, let the alarm company know when you’ll be away and ensure that your call list is up-to-date.
  • Invest in a timer so it looks like the home is occupied both inside and outside.
  • Let a neighbor know where you’re going, when you’ll return and how to reach you. Ask them to call if they notice anything strange.
  •  During the wintertime make arrangements to have the snow shoveled when necessary.
  • Ensure you maintain proper level of heating in your home to avoid pipes from freezing.
  • Shut off the water and insulate any pipes that pass through cold zones, such as the attic, so the pipes don’t freeze and burst.
  • And most important, don’t mention your absence on social media.

 

Because we have been in the real estate business for over 30 years, we can professionally advise you an all aspects of buying or selling your home. Questions?  Contact us and follow us on Facebook.

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Absentee Homeowners in Vancouver Could Soon Face Penalties of $10,000/Day

In the last few years, Vancouver housing has been facing an affordability crisis and rental vacancy rates have shrunk to unprecedented lows. This has caused an uproar amongst the local population, and politicians have been scrambling to appease them.

In August, the Provincial government announced a 15% tax on foreign buyers and on Wednesday November 9, the Mayor of Vancouver Gregor Robertson announced the recommendation of a 1% tax on vacant homes, to be followed by several other moves on the housing front.

“Vancouver is in a rental-housing crisis,” Robertson said. “The city won’t sit on the sidelines while over 20,000 empty and under-occupied properties hold back homes from renters.”

A city commissioned study in March of this year, indicated that around 11,000 housing units in Vancouver had remained empty for 12 or more months. Not good news for a city where rentals get picked up within hours of listing due to the acute shortage.

Summary of the Mayor’s actions:

  • The empty home tax will come into force on January 1 and will be calculated at 1% of the property’s assessed value.
  • All Vancouver homeowners will be required to declare their principal residence (or tenancy), similar to declaring the Home Owner Grant, which generally will not be subject to the tax.
  • The proposed tax will be implemented with very high levels of audit in the first months and years it is in effect.
  • People who fraudulently declare their house is a principal residence or rented out when it isn’t may be charged a penalty of up to $10,000 a day for as long as the offence continues.
  • People who pay the new tax late will face a 5 per cent penalty, while those who don’t declare will automatically be taxed.
  • Snowbirds and other residents who live only part of the year in Vancouver would not be taxed.

The mayor wants to use the proceeds from the tax to build affordable housing. It is hoped that this will relieve pressure on Vancouver’s tight rental market by opening up new rental spaces and subsidizing affordable housing.

Virani Rentals offers a collection of homes, apartments, townhouses and penthouses for rent. We are industry leaders in the Vancouver Real Estate market therefore you have the comfort of knowing that you are getting good value for your dollar when renting from us.

 

If you have a home or apartment to rent, let our rental experts take this for you.

 

Complete and submit this form or call 604-695-1000. Our Property Rental Specialist will contact you shortly.

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Will a Trump Presidency Mean Higher Home Prices in Canada?

Following the surprising election of Donald Trump as the next President of the US, a lot of attention is being directed at disgruntled Americans possibly moving to Canada.

The US election has heightened the brand and perception of Canada as an attractive, welcoming, tolerant and stable country. On Election night, the Canadian immigration website crashed which is indicative of the level of interest Canada is getting. But don’t expect a flood of President-Elect Trump exiles flooding into Canada – yet.

There is still a lot of uncertainty: will President-Elect Trump move forward with his policies? How disruptive will they be? People are still in the information gathering stage, looking at their options.

If Americans do decide to move north, the impact may be felt in the larger urban areas which are more known than the rural areas. Many could use the “toe in the water” approach by buying a small property to start off with.

The weakening Loonie is an attractive option. The fact that our dollar is 30% cheaper than the US one, makes our real estate 30% cheaper than US and other countries.

We are also neighbors with the US. Our geographical proximity makes it easier for Americans to hop on a 3-4 hour flight or make a 5-6 hour drive to our country, than to go anywhere else.

There are those who argue that the situation in Vancouver may be a little different than the rest of Canada. Home sellers in Vancouver shouldn’t expect a big uptick in American interest, as the Foreign Buyer’s tax that was announced and introduced this past August, has dampened interest in property in the Lower Mainland.

It is important to note that the impact of the tax has been on the more expensive $2-3 million plus homes, whose prices have come down proportionately since August.

Since the election, there have been a lot of conversations with realtors, but no moves are imminent. Our real estate industry is attractive to buyers worldwide and whether we will see more interest from the US as a result of the election…It’s wait and see for the time being!

 

If you are planning on buying a home, its important to use a reputable realtor that is familiar with the region. We have been leaders in the real estate industry for over 28 years. Contact us or call us on 604 913 1000.

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