HST and The Vancouver Real Estate Market
Stu's Breakdown on HST and Vancouver Real Estate
With the billeting and the protest proving futile, British Columbians now live life with HST, a 7% hike on the 5% GST to a 12% harmonized sales tax, no more PST. This TAX is like the old GST tax and ONLY APPLIES TO NEW REAL ESTATE, a common misconception is that all home sales are subject to HST. There is also a generous new HST REBATE equal to 71.43% of the HST Payable for new homes under $525,000 up to $26,250; while homes over that price may apply for a flat $26,250 rebate.
The majority of Real Estate will not greatly be affected by the HST, but it will lower the asking prices of new construction: good news for Home Sellers and Buyers looking for Brand New Property, bad news for Developers.
The Bad News for Home Sellers (and Buyers) is that they will have to pay a 7% increase on Real Estate Commissions and Lawyer fees. A $500,000 condo where fees may be $19,000 the sellers pays an extra $1330 in taxes.
A Left Wing approach to governing with the goal to increase business growth and jobs, as well as incomes and employment rates across various sectors. In the long run, this will be good for BC and the Economists (who don't account for Foreign Investment & Tax Sheltered income) may stop rating Vancouver as an unaffordable city to live as the gap between average incomes and average home prices tightens.
In the short run, I find it impressive that British Columbia, and Ontario, are able to implement a tax increase in the midst of an American and Global Recession. I fear the restaurant, retail, and entertainment sectors will slow down as purchasing power decreases, but Real Estate in Vancouver will not be slowing down in the next 5-10 years and our Beautiful Province will benefit from Tax Revenue and Business Growth.
I am confident in our Real Estate Market because of BC's rock solid lending practices and regulations, banking sector, our influx of new immigrants and foreign direct investment, our forward progressing city planning with improvements such as The Canada Line, The Convention Center, The New Sea to Sky Highway, Vancouver International Airport, the new BC Place, and new world class Hotels and Developments as Vancouver has quickly progressed to become a Global City with Worldwide Recognition, Appeal, Admiration, and Respect equating to a very healthy Demand for our limited Supply of Real Estate.
I believe BC's new HST Tax will shrink developers profits as the Market (Buyers and Sellers) determines Real Estate Values, and with a large supply of resale product they will have to be creative with their pricing and packaging to stay profitable. Supply may not expand as previous predictions have calculated as new home starts become less attractive for developers and home builders.
There has been 259 Detached Home Sales and 282 Attached Home Sales in The Lower Mainland in the first 2 and half weeks of July 2010, since the HST was implemented on July 1st, so it appears The Market will continue to roll. While in a traditional July and August summer lull, when many act in May or Move Away, I suspect September and the fall market will bring increased consumer confidence and activity in the market as HST is accepted and continued Record Low Interest and Mortgage Rates propel first-time home buyers, investors (driven by high rent rates), as well as downsizes and upsizers across the Vancouver Real Estate Market.
If you have any questions about HST and Vancouver Real Estate please feel free to call me at 604.562.0532 or email me at email@example.com.
Best Regards and Happy House Hunting:)