Category: Uncategorized

Realtors, investors and property owners are already seeing the effects of the foreign homebuyers tax introduced earlier this month, new data suggests.

The number of homes sold in the Vancouver area so far this month is dramatically lower than in August 2015, suggesting the new tax may have halted sales or encouraged house hunters to look elsewhere.

According to new numbers released to realtors and obtained by CTV News, sales have dipped as much as 84 per cent in some areas when compared to the same period last year. The data is based only on sales from Aug. 1 to Aug. 15.

The steepest declines were found in areas with a historically high percentage of foreign buyers.

In Richmond, only 14 detached homes were sold in the two-week period this year, while 89 were sold at the same time last year.

Year-over-year, sales dropped 71 per cent in the City of Vancouver, where only 39 detached homes were sold this year compared to 135 last year.

The sharp drop-off may be in part due to Metro Vancouver’s new tax on foreign buyers , which was passed in late July by the BC Liberals. The tax forces foreign nationals to fork over an additional 15 per cent of the home’s value in property transfer taxes, in what the government called an attempt to quell competition local buyers face.

Recently released data showed that foreign buyers make up about 10 per cent of property sales in the area, so at least some kind of decline is to be expected. With the average Vancouver-area residence selling for about $633,000 last month, buyers outside Canada would face an additional tax of more than $99,000.

Realtor Ian Tang said he’s seen a dip in the number of offers made since the tax came into effect.

“The market was already slowing and plateauing based on prices getting too high and it being summer, then they implemented a tax that created a lot of uncertainty in the market,” he said.

“It’s made buyers very wary and a bit hesitant to purchase.”

The additional expense may be pushing those buyers out of the Metro area, and the British Columbia Real Estate Association is already seeing an increase in sales elsewhere in the province.

Cameron Muir, chief economist for the BCREA, said the drop in home sales in Vancouver has been offset by increases in Victoria, Chilliwack and the Okanagan. Although the tax may redirect foreign buyers outside of Vancouver, he doesn’t expect the tax to impact the province overall.

“The market is being driven by people who live, work and raise their families in these communities,” he told CTV News.

Muir said the tax is likely to continue to affect Vancouver sales, but that the Metro Vancouver market showed signs of cooling even before it was introduced.

“The trend is going to have a much sharper drop-off as we see the foreign buying activity drop out of the marketplace, but overall the market has been out of balance for quite some time.”

However, Muir added that two weeks of data likely isn’t enough to make any sweeping assertions.

The tax has shifted its prediction, but the BCREA still expects 2016 to be a record-breaking year for residential sales. The association credits B.C.’s strong economy, migration patterns and increase in housing starts.

The BCREA predicts the province’s sales will climb 10.4 per cent from last year’s total, with approximately 113,000 units sold.

The group does expect the demand to cool off, and predicts sales across B.C. will decline next year by about 8 per cent (104,000 units).

Though the number of sales may decrease slightly, the average price is forecasted to increase by 11 per cent to $706,900.

For Metro Vancouver, the BCREA predicts the number of sales in 2016 will drop by 1 per cent from last year, and another 6.6 per cent in 2017.

Similar to trends forecasted for the entire province, the average MLS price in the Metro area will still increase. The association expects an average price of $1.03 million (14.1 per cent increase) this year, and $1.09 million next year (a 5.8 per cent increase).

“For those who are thinking that a tax on foreign buying is somehow going to make housing magically more affordable, they’re going to be sorely disappointed,” Muir said.

Still, experts like Muir across Canada are keeping an eye on other cities that may be more attractive to foreign buyers looking for savings.

A forecast from the BCREA showed sales in Victoria are predicted to increase by 24.3 per cent by the end of the year, while sales on the island overall are expected to grow by 22.6 per cent.

In the Sunshine Coast area, the forecast is an increase of 7.6 per cent, and in Fraser Valley the number of units sold is expected to grow by 18.2 per cent.

Realtor Danny Evans said the valley is still busy but prices are starting to lower.

“There are some bidding wars, but most of it is coming back to more mainstream real estate,” Evans said.

The Chilliwack area will see a growth of 34.6 per cent, Kamloops will grow by 19.5 and the Okanagan Mainline by 18.6, according to the forecast. Increases are also predicted in the south Okanagan, northern B.C. and the Kootenay area. Unsurprisingly, the average MLS listing prices are expected to increase in all regions being monitored by the BCREA.

Thousands of kilometres away, officials in Toronto are watching their numbers closely for signs of growth in Canada’s largest city.

The Royal Bank of Canada is also watching the Vancouver and Toronto markets, with its CEO stating earlier this week that both cities need to be prepared to react quickly.

The bank was asked about the possibility of a market crash in both cities, but Edward Jones analyst Jim Shanahan told The Canadian Press there is no data to suggest a correction is coming.

With files from CTV Vancouver’s Nafeesa Karim, CTV Toronto’s Paul Bliss and The Canadian Press

http://bc.ctvnews.ca/home-sales-dip-dramatically-in-weeks-after-foreign-buyers-tax-1.3044523

Tags: TREB

**July 2016 sets another record!** 9,989 homes were sold through the TREB MLS in July. At just shy of 10,000 transactions, this was the best July result on record. While sales were up on a year-over-year basis, listings for single-detached and semi-detached houses and townhouses continue to be in short supply. The result has been an increase in pent-up demand and annual rates of price increases well above the rate of inflation.

Realtors in Toronto and Vancouver are pitching Canadian cities as relatively safe property havens now that London, for years one of the world’s leading targets of foreign capital, suddenly looks a lot riskier. Blame it on Brexit.

“Brexit’s good for us, not for them,” said Anita Springate-Renaud, owner of Engel & Volkers’ brokerage in Toronto, who expects to field calls from clients seeking to redirect their investments. “We are a safe bet.”

If Ms. Springate-Renaud is right, there may be heightened demand from moneyed clients for homes and condos as well as office towers in two of Canada’s hottest real estate markets, which already have seen prices soar from an influx of foreign money. There’s a record $443-billion (U.S.) in global capital allocated to commercial property that wealthy investors haven’t deployed, according to figures from Cushman & Wakefield Inc.

Within hours of the stunning Brexit outcome, Brian Kriter, an executive managing director of valuation and advisory at Cushman & Wakefield, was on a 6:30 a.m. call from his home in Toronto to discuss the potential ramifications of the referendum with colleagues in London and New York.

In the days since, Mr. Kriter has met with one Asian commercial real estate lender who decided to freeze plans for a multimillion-dollar financing deal in London and is considering channelling that money to North America instead. Cushman & Wakefield is organizing a client day in July, potentially in New York, to discuss the early implications of Brexit’s fallout.

“You have this phenomenal amount of capital that’s looking to be placed in commercial real estate, and it’s very fluid,” Mr. Kriter said. “Foreign investors view Canada as an island of certainty.”

In the past decade, central London saw the biggest increase in residential property prices of any major city as the favoured destination for global capital seeking a stable sanctuary. Nearly three out of every four newly built homes in 2013 were bought by foreign buyers, half of them from Asia, according to Knight Frank LLP. Similarly on the commercial side, 70 per cent of central London purchases were by foreigners in 2015.

Britain’s decision to leave the European Union may not necessarily change that overnight. The pound’s record plunge could attract buyers seeking a bargain, said Brad Henderson, chief executive officer of Sotheby’s International Realty in Canada. The vote may ironically bring more predictability to Britain, but export uncertainty to the rest of Europe, Mr. Kriter said.

But with China among Asia’s most vulnerable economies to Brexit risk, there could be an even greater appetite from mainland buyers for North American assets, such as Anbang Insurance Group Co., which has snapped up multimillion-dollar assets in New York, Toronto and Vancouver.

A record $18.3-billion flowed out of China globally in 2014 and nearly half of that went to just three markets: London, Manhattan and Sydney, according to a March report from Colliers International Group Inc., the Toronto-based real estate firm. That flow has since diversified to other markets with Canada increasingly a beneficiary.

In the six months to February, foreign investment into Canadian commercial real estate surged to $1.4-billion, more than double a year earlier, the brokerage said in a separate March report. Of that, 42 per cent came from China, compared with just 5 per cent in the previous period.

Royal LePage is advising clients that Brexit is likely to cause the Bank of Canada to hold interest rates lower for longer, which will stoke demand in the residential market, said Adil Dinani, a Vancouver agent for the unit of Brookfield Real Estate Services Inc.

Any additional trickle of demand into Vancouver and Toronto could prove a headache for Canadian policy makers seeking to damp record high home prices. In recent weeks, the International Monetary Fund, Organization of Economic Co-operation and Development and Bank of Canada have all flagged the increasing risk of a potential correction.

“It’s something we’re going to have to talk about because there are concerns about overheating,” Royal LePage’s Mr. Dinani said. “We’ll likely see more capital inflows into these cities, so what is that going to look like? Are there going to be policy tools put in place to protect the market from further increases?”

In Vancouver, the price of a detached home rose 37 per cent in the past year to $1.5-million (Canadian). In Toronto, the average price of a detached property rose 19 per cent.

“We’re in early days – it’s hard to sift through how the variables are going to play out,” Sotheby’s Mr. Henderson said. “But capital will look for more attractive, stable markets. And Canada is still very much a bargain.”

http://www.theglobeandmail.com/real-estate/vancouver/brexit-vote-could-heat-up-canadian-real-estate-market/article30745801/

Congratulations to The Regan Team on being in the Top 1% of Royal LePage Shelter Foundation donors for 2015! Your leadership helped them to raise a record-setting $2.3 million! Keep up the great work 🙂