The biggest story of January 2017 is likely to be our 2017 property assessments. Some areas seeing an increase of 50%! But let take a look at the top stories of 2016; Shadow flipping, foreign buyer tax and Donald Trump in the White House ... It's been an eventful year.
January of 2016 saw property assessment increases of 12-17% which were considered much higher than the previous years assessments still under 10%. According to BC Assessment the 2016 increase was considered the fourth highest ever in BC.
In February a Globe and Mail story re unethical contract assignments started a landslide of media and articles investigating "shadow flipping". This media storm pushed the provincial government to act - see March and May.
At the same time the BC budget was released - to the concern of many - favouring buyers of new homes over first time buyers making new home purchases over 750,000 exempt from Property Purchase Tax. Then on Feb 15th new down payment rules came into effect increasing the min down payment on homes over 500,000. This graduated min down payment is still 5% down on the price of a home under 500,000 but it increases to 10% for the portion of the purchase price over 500,000. This in an attempt to stabilize the overall real estate market and reduce risk. LINK HERE
March saw homes sales breaking records turning out to be the busiest month of the year and the busiest month on record for any previous year of Vancouver home sales. Then the government proposed new provincial rules requiring the consent of the home seller if a contract to purchase their home is looking to be assigned to a new buyer. This was aimed at eliminating agent profit from contract assignments and although this move was supported by many the Real Estate Board of Vancouver felt it was a overzealous long term solution to a short term problem.
April continued with smoking hot sales numbers. Central 1 Credit Union released a April Forecast predicting BC home prices to continue to rise through to 2018. No one could of foreseen the eventual drop in sales resulting from government intervention in August.
May saw the media focussing tighter on shadow flipping and on the BC Governments formal announcement of the new rules around contract assignments they announced back in March. Sale agreements now expressely state no assignment of an agreement to purchase can take place without written consent from the seller. This was largely well received by the public.
June took away the real estate industries self regulation with Christy Clark announcing the appointment of a new superintendent of real estate that will take over the real estate councils (RECBC) regulation and decision making authority. Then 2 federal real estate red flags. The Bank of Canada governor issued a warning to buyers; the Vancouver housing market was vulnerable to a downturn and the federal finance minister Bill Morneau announced his intention to look for solutions to cool expensive housing markets like Vancouver and Toronto.
July saw lots in the media about record high pricing and sellers unrealistic expectations of what they can sell their home for then right at the end of the month we saw the governments announcement of plans to impose a new Foreign Buyers Tax which added up to an additonal 15% in property transfer tax. This left the real estate industry scrambling to get as many oversees transactions pushed through before the deadline of August 2.
August saw the immediate reporting of deals collapsing under the weight of the new tax. Lots of stories of hardship and the unforeseen consequences to purchasers. Sales stats just starting to show signs of a market contraction but more time was needed to truly see the collateral damage.
September everyone was eager to see the month end sales stats for August revealing that although there was a drop in home sales it was no where near where they data had been suggesting. In fact the adjustment wasn't as strong as it was in June or July indicating the market had already been on a cooling trend. Still, a class action law suit was launched Sept 19th against the government of BC for damages incurred to those as a result of the Foreign Buyers Tax.
October launched further policy with the federal governments announcement of strict new rules of mortgage qualification. Canadians applying for a mortgage that requires CMHC insurance will now have to qualify under the posted mortgage interest rate rather than the discounted rate. In addition, buyers with 20% down (a LOW loan-to-value ratio) must meet the same loan criteria as those with insured mortgages (a HIGH loan-to-value ratio). 2 new types of stress-test for buyers.
November. Donald Trump wins the US presidential election! Many began to speculate on what a Trump White House may mean for the Canadian housing market and economy. Like this opinion piece here expecting lower interest rates, a boost to resources, a spike in Canadian immigration and a cooling of China's economy.
December. Vancouver tax payers were put on the hook for the lower mainlands Fentanyl crisis and would see their property tax increase 3.9%. Christy Clark announced a new loan program that would match first time home buyers down payments up to 37,500 or 5% of the homes value. The loan is payment and interest free for up to 5 years and registered as a 2nd mortgage on your home. Could this loan be right for you? This editorial helps to address
Happy New Year from Us! Your South Surrey, Sullivan / Panorama Real Estate Team!