Vernon Real Estate – Blog & News

Market Conditions

Posted by admin on January 19, 2011 | No Comments

 We are experiencing reasonable number of sales, but it pales when you compare it to the number of available listings.  I ran a quick check on the number of single family homes listed in the North Okanagan.  It’s approximately 1300 listings.  The number of strata listings is almost 500.  The number of residential plus strata sales shown in the last 30 days  (May 24 to June 24) shows as 103, 25 of which were over $500,000.  To say this is a very competitive market would be fair.
 So what do you do if you must sell?  You call up your Realtor and discuss your asking price. 
 It is really important that you isolate the homes that are similar to yours.  Then price your home at or close to the lowest asking price in your group.  Saying that you are “open to offers” seldom works in a market where the supply heavily outweighs the demand.  Buyers automatically migrate to where they can see the best value.
 On the bright side, if you are a buyer, there are some lower priced opportunities out there.  The increase in interest rates was very small.  Rates are still unbelievably low.
 If you are concerned about the HST, please remember that it does not apply to used residential homes. (Resort properties are a possible exception and should be discussed only with an accountant trained in GST/HST).
 Even on new homes there is an extra rebate.  If the home is all or partially complete on June 30th, 2010, the buyer can apply for a significant rebate if they will be the owner occupant.  It is called the PST Transitional Rebate.  The HST information phone number is 1-800-959-8287 if you would like further details.

Originally published in the Vernon Morning Star – June 27, 2010

Transitional HST

Posted by admin on January 19, 2011 | No Comments

 Yes, there is such a thing.  Homes completed, or semi-completed prior to July 1st, 2010 will qualify for a rebate that will provide considerable assistance.  As an example, I have a new home on the market priced at $484,500.  It was fully completed by June 30th, 2010.  The home qualifies for a transitional rebate of around $9,690.  That offsets the expense of the HST so well, that the prospective buyer will actually be no further out of pocket than they would have been, paying only GST.  Alternately, if I chose to, I could claim the transitional rebate and lower the price to the buyer.  Either way the buyer saves money.
 Please don’t miss the point here.  I am talking only of the Transitional Rebate which applies to homes already built, at least partially, but unsold by July 1st, 2010.  The formula varies with the fair market value and the degree the home is finished. Also, owner built homes have different rules.

The formula looks something like this:
 Fair Market Value  $484,500
 12% HST     $58,140
 Less BC New Housing Rebate   $24,225  (for owner occupied homes)
 Net Cost Equals    $33,915

 Actual Purchase Price  $518,415
 Less Transitional Rebate      $9,690
      $508,725
2 % x Fair Market Value x percentage finished on June 30th, 2010 = rebate of $9,690
(The buyer can claim this rebate or the builder can claim it and reduce their price
 accordingly, if they see fit to do so.)

     Under the old system of GST this same home would have cost the same price:
 Fair Market Value  $484,500
 GST (5%)     $24,225 (no rebate due to the price being over $450,000)
 Actual Purchase Price  $508,725

So, the HST used along with the transitional rebate, is no more expensive than GST, in this example. (My source for this information was the HST hotline (so, hopefully I was given correct information).  That number is 1-800-959-8287, plus an accountant.

 Another transitional expense is the HST to be charged on  real estate commissions.  Many properties have been on the market a fair time before July 1st, 2010.  The real estate fees on sales after July 1st, 2010 will be subject to HST, rather than GST.  However, your Realtor will be able to fill out a form that outlines what portion of the work in marketing the property took place prior to July 1st, 2010 versus the work that took place after that date.  The marketing work performed prior to July 1st, 2010 will still only be subject to 5% GST.  12% HST will only be charged on the services that remained to be performed after July 1st, 2010.
 I would like to remind everyone – HST is only applicable to new homes and substantially renovated homes, NOT regular used residential.  Please consult your accountant for an explanation of “substantially renovated”.
 This is a difficult learning curve for us all.  Lots of misinformation is out there.  If I’ve done nothing else in this article, but alert you that a Transitional Rebate exists, I have done what I hoped to do.  This opportunity definitely softens the blow.
 A useful website is http://hst.blog.gov.bc.ca/wp-content/uploads/2010/03/new home HST calulator.x/s
 Lean on both the HST hotline and your accountant.  They can sort out these questions for you and make it much easier.

Originall published in the Vernon Morning Star – July 11, 2010

Markets to Strengthen

Posted by admin on January 19, 2011 | No Comments

 Predictions are for a busier real estate market in 2010, according to CMHC and others.
 The number of sales in existing homes in 2009 showed quite clearly that the depressed market of the last half of 2008 and the first quarter of 2009, is a thing of the past.
The market remained active deep into 2009 until thoughts of Christmas and the cold weather made sales trail off, just as it has done in years gone by.  By the fall, the prices were beginning to show signs of re-stabilizing.  I see more home construction starts underway again as I compare it to late 2008.
 The Canadian economy is expected to continue its recuperation.  British Columbia expects employment numbers to improve.  That’s welcome news!  Too many people lost their jobs in 2008 and 2009.
Signs are that for the foreseeable future interest rates will be very low.  It’s my opinion that this is amongst the biggest reasons the market improved so much in 2009.  Rates are expected to rise in 2010 but only slightly and slowly.
 It is expected that the inventory of listings will be lower than in 2009.  If that comes to pass, and I think it will, then the number of listings will be more in sync with the number of buyers.  The simple laws of demand and supply would then lead to price increases and a healthier more active market.
 Happy New Year everyone!

Orignally posted in the Vernon Morning Star – Jan 10, 2010