Vancouver Real Estate Blog

The Federal Proceeds of Crime(Money Laundering) and Terrorist Financing Act

Yesterday I was asked by a client why I needed to collect personal information, when I never asked for it the last time I sold his property. My answer to him was simple. IT'S THE LAW. Then I went into why it became law and who else has to go through the same procedures.

On June 23, 2008 new federal money laundering and anti-terrorist financing regulations came into effect that require REALTORS®to collect personal identification information from buyers and sellers. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as I know it keeps all this information and tracks everything. Here is a list of others that also follow the same procedures.

Who must report to FINTRAC

In addition to REALTORS®, other professionals and organizations are also required to ask for your personal information, including:

• financial entities including banks, credit unions, trust and loan companies and agents of the Crown that accept deposit liabilities
• life insurance companies, brokers or agents
• securities dealers, portfolio managers and investment counsellors who are provincially authorized
• persons engaged in the business of foreign exchange dealing
• dealers in precious metals and stones
• money services businesses
• accountants and accounting firms when carrying out certain activities on behalf of their clients
• casinos
• individuals and any entity importing or exporting currency or monetary instruments (such as a money order) of $10,000 or more
• lawyers and notaries public
• real estate developers and builders

For additional information about this federal initiative, please visit FINTRAC's website or call toll-free 1-866-346-8722

Harmonize Sales Tax - Decreases affordability

 To help mitigate the effects of the HST, the Real Estate Board of Greater Vancouver made five recommendations to the provincial government in a presentation to the Selection Standing Committee on Finance and Government Services on October 16, 2009.

To read BCREA full submission visit: Learn more >>

British Columbia leads the way in Residential Sales

The vancouver Sun is reporting today that British Columbia  led Canada in a record for new monthly residential sales in October. In an interview CREA"S Chief economist Gregory Klump said "of all the Provincial monthly gains, BC's was the highest"

For more information follow this link:

http://www.vancouversun.com/business/real-estate/leads+nation+record+residential+sales/2229190/story.html

Harmonized Sales Tax

The BC Government has announced that it will exclude new homes costing up to $525,000 from its proposed 12 per cent Harmonized Sales Tax (HST) scheduled to take effect July 1, 2010.

The government has also increased the rebate of the provincial portion of the HST paid on a new home to a maximum of $26,250.

This represents a 30 per cent increase over the original government proposed home price threshold of $400,000 and maximum rebate of $20,000.

A similar rebate will also support the construction or substantial renovation of affordable rental housing.

The government has released its proposed Residential Housing New Housing Rebates and Transitional Rules for British Columbia HST, which provides details on new housing rebates including transitional rules for real property. This includes:

Transitional rules: the HST would not apply to sales of new homes where ownership or possession is transferred before July 1, 2010;

Grandparenting: sales of new homes under written agreements of purchase and sale including presales entered into on or before midnight November 18, 2009, would generally not be subject to the provincial portion of the HST, even if both ownership and possession are transferred on or after July 1, 2010. Any home sold on or after November 19, 2009 is subject to HST transitional rules.

For a copy of the new Transitional Rules, visit: http://www.sbr.gov.bc.ca/business/Consumer_Taxes/Harmonized_Sales_Tax/HST_Transitional_Rules.html

Highest number of MLS sales in October since 2003 reports BCREA

Vancouver, BC – November 17, 2009. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 115 per cent to 8,624 units in October compared to the same month last year. Last month posted the highest number of MLS® residential sales for the month of October since 2003, when 8,682 units changed hands. The average MLS® residential sales price in the province climbed 17 per cent to $493,328 from $420,259 in October 2008.  

“BC homes sales continued on an upward trend in October,” said Cameron Muir, BCREA Chief Economist. “Despite a lackluster economy, low mortgage interest rates have induced many potential buyers into the market. However, the recent phenomenal pace of home sales is expected to moderate in the coming months as pent-up demand dissipates and eroding affordability begins to impact the purchasing power of households.”

For the complete news release, including detailed statistics, follow this link: www.bcrea.bc.ca/news_room/2009-10.pdf.

 

British Columbia's Economic and Fundamental Business Indicators -part 4/4

Out of all the indicators out there, one that remains rather robust and less understood is Housing Starts. The biggest problem with the section is that Housing starts always "Lags Behind" what the market is doing. Simply because builders do not want to build unless their is a demand. Once there is a demand, they then have to have land ready to build on, or more precisely buy the land, then start the application process for their project, lets say a high rise in down town Vancouver. Start, draw and submit architectural drawings, meet with the board of variance to get the project approved, investigate any environmental concerns,etc. to get it to the point of getting a housing permit.

In the meantime, the British Columbia market place is thirsty for inventory and the only thing out there is re-sale homes. Buyers have no choice, so they must buy these homes as no new one are out there on the market. So housing starts next year in 2010 are expected to increase 46% compared to 2009. If what I am seeing in the market place is any indication, I think that we will see housing starts to rise sharply to keep up with demand.

British Columbia's Economic and Fundamental Business Indicators - part 3/4

British Columbia's Employment rate as depicted from Stats Canada show how BC is already climbing out of this recession. The fall started in the later part of 2008. But has rebounded and showing strong gains. The BC employment rate can be attributed to various factors. Increase in migration to BC, MLS housing market sales are up 20% compared to 2008, Consumer confidence is up, Retail Trade Sales are showing an increase, Low consumer mortgages for homes and new business, Housing starts in BC are expected to increase 46% in 2010 and economic and greater stability in the BC housing industry/market has arrived and predicted to get better in 2010 as the economy of BC picks up. 

British Columbia's Economic and Fundamental Business Indicators -part 2/4

How did we get here? Everyone seems to want to know. From March of 2008 we saw a downward trend. In other countries and other parts of the world, we saw massive declines in housing prices-namely the the United States for example. We all saw and witnessed the collapse of the Financial Institutions and Wall Street.

But how did we survive so well? That answer put simply is in how our economy works with the rest of the world and frankly how it works independently at the same time. British Columbia unlike the rest of Canada and the USA has a different and flexible market place. Where there are the mega corporations and an inflexible corporate structure and a philosophy of "same old same old". BC has a very young and on the most part, a very small corporate structure, where flexibility is everything. This in turn allows these smaller companies to adjust in a moments notice causing less people to be tossed out of work, as these people are represented by families and are not just numbers to a big corporation. The entrepreneurship is alive and well here in British Columbia.

So, as the unemployment rate rose around the world dramatically. BC while experiencing some of that, was never  hit as hard as everyone else. That being said, we also had an influx of migration over the year of approximately 60,000 people expected for the 2009 year end, historically low interest rates, inventory levels of homes starting to falling, pent-up demand from buyers, a massive new housing start decline all added to produce a demand that out paced supply on re-sale properties. That's economics 101.

So where do I see price levels reaching? Let me take you back 14 years ago when I wrote an article to the home owners of Dunbar. Back then prices for a standard lot sold for about $450,000.  I predicted home prices surpassing the $1 million dollar mark. Yes I got a lot of calls telling me that would never happen and even some saying "It Would Not Happen In A Million Years". Well as time went on the market told the real story. So predicting the future home prices, I would say given our geographical location, lack of usable land, the natural beauty, the mountains to the north, the mildest climate in canada, the Baby Boomer's, economic ties to China, Japan and other Asian Pacific country's, population growth, employment opportunities and life style. I would say that in 10-20 years from now what we are saying are extreme prices for homes in the area, will be a drop in the bucket in years to come. Do not forget the power that the media has and over the 2010 Olympics their will be billions of advertising messages going out to the world about Vancouver and British Columbia as a whole. Do you remember what Vancouver was like before Expo?? Now think of how far we have come from those days. This is just the beginning. Like everyone says.... Hold onto Real Estate. Because if you are not in, then you are out.....

Mortgage Rates Past, Present and Future

Mortgage rates over the last 2 years have come down to current lows. The down turn in the rates is simply a by product of the financial collapse and economic downturn throughout the world. Governments around the world used interest rates to stimulate the economy to get people spending again.

Forecasts indicate that current mortgage rates will remain at historically low rates through to the fall 2009, winter and spring 2010. As the economy starts to pick itself up as we head into the later part of 2010 and 2011, rates will gradually start to rise.

With mortgage rates and falling housing prices at the beginning of this year, home buyers are fueling the economy with home sales.

British Columbia Migration 2009 forecast

The largest component of migration comes from international countries. 90% of our growth comes from foreigners entering our country to become residents. Forecasts indicate that in 2010, international migration will rise 6% as oppose to a a 4% decline expected for this year compared to 2008.

The full Fall 2009 Housing Forecast is available at: www.bcrea.bc.ca/economics/HousingForecast.pdf.