Tuesday, March 28, 2023

Unprecedented Pace of Construction Needed to Offset the Impact of Record Immigration to BC

 


Housing demand impact of record-high immigration is five times as large as the Foreign Buyers Ban: report

To fully offset a deterioration in housing affordability, new home completions in BC need to increase 25 per cent above their historical average level for the next five years to a record level of about 43,000 completions per year, a new report has revealed.

 According to the latest Market Intelligence report from the BC Real Estate Association (BCREA), two significant federal government policies – the Foreign Buyers Ban and record-high immigration targets – will shape housing demand in BC over the next three years.

Summary Findings:

  • There is weak evidence that Canada’s Foreign Buyers Ban will achieve its objective of lowering home prices, with an estimated reduction in home sales of 2,400 units in BC over the two-year ban.
  • BC will welcome an estimated 217,500 new permanent residents from 2023 to 2025 or 100,500 more new permanent residents than would be expected based on historical average immigration levels. This translates to a 20,500-unit increase in housing demand from new permanent residents.
  • The demand impact of the increase in immigration is approximately five times as large as the Foreign Buyers Ban and is estimated to place significant upward pressure on home prices.

“Lowering price growth so that income growth can catch up to prices is integral to improving housing affordability in BC,” says Brendon Ogmundson, BCREA Chief Economist. “In our simulations, an appropriate supply response can offset the negative impact on affordability from an immigration-driven demand shock and if sustained, can achieve a permanent improvement in affordability in BC. 

Immigration plays a vital role in the economy by supporting economic growth, creating job opportunities, and bringing diversity to communities. However, as detailed in this report, immigration also adds significantly to housing demand. As the population continues to grow and global migration patterns persist, it is essential to create policies and programs that support and welcome immigrants while addressing the consequent pressures on an already stressed housing market.

“To ease the pressure on the housing market that arises from sudden changes in housing demand, governments can take steps to increase housing supply,” Ogmundson adds, “This can include zoning changes to allow for more housing construction, increasing funding for affordable housing programs, and providing incentives for developers to build more housing units.”

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source: REBGV

Amendments to the Prohibition on the Purch

 

The Honourable Ahmed Hussen, Minister of Housing and Diversity and Inclusion, announced amendments to the Prohibition on the Purchase of Residential Property by Non-Canadians Act’s accompanying Regulations.

The Act was passed by Parliament on June 23, 2022, and the Act and Regulations came into force on January 1, 2023, as part of the Government of Canada’s strategy to make housing more affordable for Canadians. The accompanying regulations were developed for the Act to set out specific exceptions, definitions, and clarifications necessary to implement the prohibition.

To enhance the flexibility of newcomers and businesses looking to add to Canada's housing supply, the Government of Canada is making amendments to the Regulations, to expand exceptions to allow Non-Canadians to purchase a residential property in certain circumstances. These amendments will further support individuals and families seeking to build a life in Canada by pursuing home ownership in their communities sooner and address housing supply issues. These amendments come into force on March 27, 2023.

The following amendments are being announced by the Minister of Housing and Diversity and Inclusion:

Enable more work permit holders to purchase a home to live in while working in Canada.

The amendments will allow those who hold a work permit or are authorized to work in Canada under the Immigration and Refugee Protection Regulations to purchase residential property. Work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at time of purchase, and they have not purchased more than one residential property. The current provisions on tax filings and previous work experience in Canada are being repealed.

Repealing existing provision so the prohibition doesn’t apply to vacant land.

We are repealing section 3(2) of the regulations, so the prohibition does not apply to all lands zoned for residential and mixed use. Vacant land zoned for residential and mixed use can now be purchased by non-Canadians and used for any purpose by the purchaser, including residential development.

Exception for development purposes.

This exception allows non-Canadians to purchase residential property for the purpose of development. The amendments also extend the exception currently applicable to publicly traded corporations under the Act, to publicly traded entities formed under the laws of Canada or a province and controlled by a non-Canadian.

Increasing the corporation foreign control threshold from 3% to 10%.

For the purposes of the prohibition, with regards to privately held corporations or privately held entities formed under the laws of Canada or a province and controlled by a non-Canadian, the control threshold has increased from 3% to 10%. This aligns with the definition of ‘specified Canadian Corporation’ in the Underused Housing Tax Act.

 Quote:

“To provide greater flexibility to newcomers and businesses seeking to contribute to Canada, the Government of Canada is making important amendments to the Act’s Regulations. These amendments will allow newcomers to put down roots in Canada through home ownership and businesses to create jobs and build homes by adding to the housing supply in Canadian cities. These amendments strike the right balance in ensuring that housing is used to house those living in Canada, rather than a speculative investment by foreign investors.”

— The Hon. Ahmed Hussen, Minister of Housing and Diversity and Inclusion

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source: CMHC

Friday, March 17, 2023

What Is A Housing Bubble? And Are We In One?

 

What is a housing bubble? You’ve undoubtedly heard the term, but what does it actually mean, and is Canada experiencing one? Whether you already own a home, are considering buying one soon, or are waiting for the right time to sell, you want answers to this vital question.

Let’s explore what a housing bubble is, what causes it, and how it may impact you.

What is a Housing Bubble?

A housing bubble happens when the price of homes rises quickly, at an unsustainable rate. Typically, a price-growth rate in the high single digits is considered healthy and sustainable. Under healthy conditions, homeowners continue to earn equity over time, sellers can make a profit on resale, and buyers can still afford to get into the market. Economic factors such as an employment boom and favourable interest rates usually explain this price growth.

On the other hand, a housing bubble can result from non-organic growth. For example, if speculators were flooding the market, buying homes to take advantage of rapid price growth, to sell in the near term for a hefty profit. This massive influx of listings, coupled with stagnating demand, causes prices to plummet and results in a “housing market crash.” A housing market crash is temporary, prices eventually return to normal levels when demand rises again and home-buying activity resumes.

What Happens When a Housing Bubble Bursts?

During a housing bubble, homes become overvalued. When the bubble bursts, prices fall. Homeowners without the intention of selling are unlikely to feel the direct impacts of the bursting bubble. However, these market conditions often indirectly impact other aspects of the economy, so to call homeowners who aren’t selling “free and clear” would be misleading. The ripple effects of a bursting housing bubble would likely touch most of us in one way or another.

Homebuyers who purchased a home during a housing bubble likely paid considerably more than it was worth. Properties bought by end-users as a residence, with no intention of being sold in the short-term, will eventually rebound closer to “normal” values and, at some point, return to positive growth.

A housing bubble poses the most significant risk to home sellers. Those who purchased in the bubble but now find themselves forced to sell their home will come up short on resale. They bought the house at a price exceeding what they could recoup, putting them in the red with no assets to show.

For example, someone purchased at peak market prices, but due to circumstances such as a job loss or the inability to carry the costs for any reason, now has no choice but to sell in a down market. The seller still owes their mortgage lender money on a home they no longer own.

Are We in a Housing Bubble?

The Canadian housing market reached record-high selling prices throughout the COVID-19 pandemic. After coming to a grinding halt in mid-March of 2020, a spike in demand for homes met by a supply shortage created that environment of price growth.

Speculators tend to wait out hot markets, buying when prices are down and selling when they’re up again. The short-term investment opportunities they generally look for are hard to find under hot market conditions, where bully offers and bidding wars are commonplace, and demand continues to outpace supply. These factors are generally inhospitable to speculators and investors.

Now, with rising interest prices and an increase in supply, there are signs that the market may settle into more typical patterns, not the records we saw throughout the first two years of the pandemic. However, for a housing bubble to burst, there needs to be a steep incline in inventory and new listings and a decline in demand – neither of which is likely to happen any time soon.

Housing Crash 2022? It’s Highly Unlikely.

The Canadian housing market is still feeling the impacts of pent-up demand from 2017 when the government introduced the foreign buyer tax and the mortgage stress test to cool the overheating market. These policies prompted many homebuyers to move to the sidelines, opting to wait and save, with plans to re-engage in the housing market in a few years.

Now fast-forward a few years to 2020. COVID-19 had a similar impact on the market, whereby many homebuyers delayed their purchase plans due to pandemic-related uncertainties. That pre-existing pent-up demand for homes continued to swell. With Canadians subject to stay-at-home orders with nowhere to go and spend their hard-earned money, they collectively saved historically high sums, which were injected into the housing market once consumer confidence returned. The spending came in the form of record-high home sales and renovations to existing dwellings for those unwilling to face the competitive resale market conditions.

Though inventory is not at record lows, it is still in short supply. With monthly sales starting to decline, experts are predicting that we will return to a more balanced market in the coming months, with more normal levels of sales activity and a flattening out of prices.

Given all this, it’s doubtful that we’ll experience the influx of real estate listings needed for a housing market crash – and if we did see those listings suddenly come on stream, there should be plenty of buyers to absorb them.

Homebuyers and Sellers, Do Your Due Diligence

Challenging market conditions and a still-present global pandemic have added some personal risks for homebuyers and sellers. It’s important to remember that requirements vary dramatically across Canada between provinces, cities, and even from one neighbourhood to the next. Now more than ever, it’s essential to work with a trusted, experienced professional Realtor who can guide you through the buying and selling process.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source: RE/MAX Canada

Wednesday, March 15, 2023

Explore the Neighbourhood Before You Buy

 



The quality of the surrounding community is a significant factor in determining whether you will be happy in your new home. While choosing a neighbourhood and forming an accurate impression of it is tough until you actually live there, preliminary research on the area can reduce the likelihood of suffering from buyer’s remorse down the road. So, how can you ensure that you’re well-informed? Here are five strategies for investigating a neighbourhood before you buy.

Choosing a Neighbourhood: Journey of Discovery

To determine whether the area is ideal for you, it is best to pay multiple visits. Listen for things like planes, trains and automobiles as you wander the neighbourhood. Living near places that frequently generate loud noises is probably not a good idea if you have a low tolerance for such sounds.

You should consider the condition of nearby houses as well. A neighbourhood may not be in good shape if many homes are on the market and the fences, yards, and windows all look neglected. Conducting a daytime and nighttime exploration, as well as weekday and weekend visits, are all recommended.

Reach Out to The Neighbours

Talking to locals can be an excellent strategy for gaining insight into a community. Keep your eyes peeled for possible encounters with your future neighbours so you can introduce yourself. Inquire whether they recommend the area to you and your loved ones. A good way to find out if you’d like to move there is to talk to people who already live there.

Check The Prevalence of Crime in a Given Area

There are several factors to consider before purchasing a home, but one of the most important is the local crime rate. Although there is usually some level of criminal activity in every area, some places are considerably safer than others. If the neighbourhood you’re looking at has a low crime rate, you’re likely to feel safer.

It can also be a good idea to check crime maps of the area you’re looking at by doing a quick search on Google. In addition, you can get in touch with the local police for further assistance in finding this information, such as the Toronto neighbourhood crime maps, which show the number of crimes per 10,000 residents.

Examine Recent Changes in Property Values

Considering property value trends is not crucial if you are a renter, but it is essential if you are considering purchasing a home. Before you buy there, you need to know if home prices in the area are rising, stagnant, or falling. Knowing these tendencies is helpful. Also, you can extrapolate information about a neighbourhood’s public amenities funding from the property tax rates there.

It’s important to remember that property values aren’t indicative of a neighbourhood’s desirability and that affordable housing doesn’t mean a place is terrible to live in. However, they are essential to investigate when learning about a community, especially if you plan to make a long-term investment there.

Try Out Your Commute

The commute you endure every day can significantly affect your happiness. While a quick Google Maps search can give you a general idea of your commute and how long it might take, nothing beats experiencing it for yourself, whether you’re travelling by car, foot, bike or public transportation. In addition, the best time to test your commute is when you would typically be on your way to or from work.

Buying the Perfect Home in An Ideal Neighbourhood

It’s just as critical to locate a desirable community as it is to find the ideal dwelling. You can improve a house, but a neighbourhood’s characteristics are much more challenging to alter. Don’t rush into buying a home; instead, take your time to learn about the community and get a feel for the area.

Your RE/MAX real estate agent is another great way to learn the ins and outs of a neighbourhood you are considering moving to. Their expertise and experience in local communities mean they can share insights that you may not be able to find on your own.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source: RE/MAX Canada

Tuesday, March 14, 2023

A Look at Financial Help and Incentives for First-Time Homebuyers

 

Despite recent softening in the housing market, home ownership in Canada is expensive and can be intimidating if you’re a first-timer. Luckily, there’s financial help and incentives for first-time homebuyers, which can help offset the cost of purchasing a new home. You don’t need to feel as if you have to do it all alone – read below to see what incentives are available.

Incentives for First-Time Homebuyers

Home Buyers’ Plan (HBP)

The Home Buyers’ Plan (HBP) offers an alternative way of securing funds for a down payment for first-time homebuyers. If you have a Registered Retirement Savings Plan (RRSP), you may withdraw up to $35,000 from the account to buy or build a qualifying home for yourself or a related person with a disability. You then have a 15-year period to replace the funds in your RRSP.

You can withdraw funds from more than one RRSP as long as you are the owner of each account. However, some RRSPs, such as locked-in accounts or group RRSPs, do not allow you to withdraw funds, so you need to check to make sure that your RRSP is eligible.

For the purpose of the HBP, you are considered a first-time homebuyer if you did not occupy a home that you have owned within the last four years. This means that if you have previously owned a home, you may still be considered a first-time homebuyer and can take advantage of the HBP a second time as long as the balance has been paid as of January 1 of that year and you meet all other requirements.

First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive offers extra help to people looking to buy their first home. The program offers five or 10 per cent of the home’s purchase price to put toward a down payment, which helps to make the mortgage payments more affordable.

To qualify for the First-Time Home Buyer Incentive, your total qualifying income must not exceed $120,000, and the total borrowing amount cannot be more than four times your annual income. These amounts increase to $150,000 and 4.5 times your yearly income if you live in the Toronto, Vancouver or Victoria metropolitan areas. You must meet the minimum down-payment requirements with traditional funds, after which the incentive will be added.

New and existing homes and mobile homes are eligible for five per cent, while new construction homes are eligible for five or 10 per cent. The homebuyer must repay the incentive after 25 years or when the house is sold, whichever comes first, but it can be repaid in full at any time, without penalty.

Tax Credits for Homebuyers

While a couple of incentives are available before you purchase your first home, the help doesn’t stop there. The government of Canada also has several tax credits and rebates available for first-time homebuyers. A tax professional can work with you to see how much you are eligible to get back in the following tax season when you submit your tax return.

Homebuyers’ Amount – This tax credit becomes accessible to first-time homebuyers the following year when they file their tax return and is meant to help offset some of the upfront costs associated with buying a house for the first time. You can claim up to $5,000 for purchasing a qualifying home, as long as it is your first time buying one.

GST/HST Housing Rebates – The sales of new homes are generally subject to GST/HST, and these tax rebates help to offset some of the tax you paid on your home.

Moving Expenses – If you bought your first home in a new location to work, run a business, or study as a full-time student in a post-secondary institution, some of these costs can be refunded. You can deduct eligible moving expenses from the income you earn in the new location in that tax year. Your new home must be at least 40 kilometres closer to your work or school location to qualify.

If you want to enter the housing market but are hesitant due to the price, consider the financial help and incentives available for first-time homebuyers. One of them could be the boost you need to get you into your first home.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source:  RE/MAX Canada

Sunday, March 12, 2023

How to declutter your home: the new rules for decluttering in 2023


Change your mindset for a more sustainable spring clean.

Many of us dream of living in a calm, organized home, and a big spring clear-out can be the answer. But is it time to rethink the way we declutter? It’s easy to get caught in a cycle of getting rid of stuff, then buying more stuff, but it’s possible to live in a more sustainable, considered way.

We spoke to experts about how best to let go of the things we no longer need, and how to think about what we’re bringing into our homes in the first place.

How to declutter your home

Whether you're looking to clear your hallway, organize your bedroom or sort out your make-up bag, these are the rules to follow when it comes to decluttering your home...

Declutter little and often

For Lynda Wylie of Tidy Rooms, ‘mini habits’ are key and she encourages people to let go of things during Lent. She says, “Every day of Lent, put a household item (or a bag of items!) in a box. By Easter, you'll have 40 items you can give to a food bank or charity shop.”

“Decluttering is a lifestyle, not a project,” says Juliet Landau-Pope, author of What’s Your Excuse For Not Clearing Your Clutter?. “It can take less than 15 minutes to sort out one drawer, so start with a small space or a category of items and work from there.”

You don’t always need more storage

“When people ask me what they need to buy before they start decluttering, the answer is nothing,” says Juliet. She identifies three stages to organizing, “none of which actually require you to buy anything”.

She says, “The first stage is to let go of stuff. Review and then reduce your things and think about what you can recycle and reuse. The second step is to organize the things that you've decided to keep (they’re staying in your life right now, but they may not be there forever!). And the final stage is creating systems and routines so that you can maintain order.”

Embrace the circular economy

According to a survey from the British Heart Foundation, 30% of us have thrown away furniture, electrical items and homeware that were in good enough condition that they could have been reused, sold or donated.

But it’s easier than ever to find people who would love the things you’re getting rid of – consider local WhatsApp groups, eBay, Facebook Marketplace and Depop. You can sell books, CDs, DVDs and games on Ziffit, and the Olio app allows you to give away unwanted food and household items to your neighbors.

It helps you let go of things if you know they’ll go to a good home and live on, says Lynda: “You can donate sewing machines and household tools to Tools With A Mission, and they go to people who need them in Africa. Meanwhile dog rescue centers love receiving old bedding and towels.”

Buy long-lasting products

“There are a lot of different ways you can shop sustainably – buying products made with recycled materials, or from a carbon-neutral factory, for example – but nine times out of 10, the best thing you can do is buy long-lasting products,” says Tara Button, founder of Buy Me Once. Tara set up the online homeware and clothing store after being given a cast-iron pot with a lifetime guarantee and realizing that she wanted to invest in products that would go the distance.

She said, “The average T-shirt lasts two and a half years, but if you have an item of clothing that lasts 10 years, then the cotton didn’t have to be watered, or ploughed, threshed, woven, manufactured, packaged, transported… It’s so much better for the environment.”

Know what you like

It’s easy to be swayed by trends, so it’s important to know your home style and stick to it, says Tara. She explains, “Everything that we bring into our lives should be a considered choice rather than thinking, ‘I need something and this is easy, or this is cheap’.

“Having a plan is important – take the time to think about your own tastes and what your ideal home looks like, maybe even make a mood board. Otherwise you’ll buy a sofa you like but it won’t go with your cupboards or your carpet, and you’ll think, ‘Now I have to change my carpet!’. It’s an ongoing cycle of consumption.”

Live well with less

“Decluttering can help you live more simply, especially during the cost of living crisis,” says Lynda. “You know what’s in your house so you avoid buying duplicates – if you've already got it in the cupboard then use it up rather than buy more of it. Before you get anything new, picture where it’s going to live in your house. Have a physical boundary – so if you buy a lot of art supplies, have two boxes and if it goes over that don’t buy any more.”

Thinking of others

When we’re surrounded by bags of clutter to get rid of, it can be hard to imagine that some people are living in furniture poverty, with nothing in their homes, not even flooring or curtains. But that’s often the case for families in social housing.

Emily Wheeler is the founder of Furnishing Futures, a small East London charity that furnishes homes using items that would otherwise end up in landfill. She says, “I started Furnishing Futures when I was in frontline social work. Children had no beds, there’d be no cooker, and it was impacting families. Women who’d fled domestic violence had lost everything.”

With a background in interior design, Emily knew that furniture brands often had a huge amount of ex-display or customer-returned stock. She now works with brands and designers to use this furniture in social housing. Furnishing Futures accepts some pieces from the public, if it’s in excellent condition, but look out for charities near you that accept furniture donations to help those in need.

Make space for what inspires you

Decluttering can have strong emotional benefits, says Helen Sanderson, a psychotherapist and author of The Secret Life Of Clutter: “I say to people, your home is like a garden. It's a living, breathing space. It needs cleaning and loving and caring for and maintaining.

“I think of this process as being mindful, rather than a chore. It's an act of self care. Ultimately, what it leads to is a sense of lightness, and then joy and possibilities come flooding back. If you have clutter, you’ve filled your space. But what can you make space for?

“Maybe you've got that box room that’s full of stuff. But if you clear and open up that room, and make it into your writing room or your crafting room or a space for a friend to stay, you start to live a life that is more about nourishment and expression, rather than consuming and drudgery.”

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source: Good Housekeeping / Photo Credit Good Housekeeping

Provincial Housing Market Showing Signs of Recovery Heading into Spring

 

Photo Credit: BCREA

The British Columbia Real Estate Association (BCREA) reports that a total of 4,775 residential unit sales were recorded in Multiple Listing Service® (MLS®) systems in February 2023, a decrease of 46.5 per cent from February 2022. The average MLS® residential price in BC in 2023 was 941,575, down 14.7 per cent compared to the average price of over $1.1 million in February 2022, recorded at the market's peak. The total sales dollar volume was $4.5 billion, representing a 54.4 per cent decrease from the same time in the previous year.

“While activity across provincial housing markets remains well below normal,” said BCREA Chief Economist Brendon Ogmundson. “There are encouraging signs that the market is balancing out. Home sales rose month-over-month in most markets, and prices appear to be firming up in the face of low supply.”

Worth mentioning, the provincial MLS® average price was up 8.5 per cent month-over-month to its highest level since July 2022, partially due to a more stable market but also because of the composition of sales reverting to a more normal mix following low sales of single detached homes through the Lower Mainland in January.

Are you looking to buy or sell property? If you’d like, we can have a real estate expert show you the most efficient process that saves you thousands of dollars, a lot of time, with little or no inconvenience to you. Contact us today!

Source: REBGV