|The day has finally come where Pospischil Realty opens its doors at our new head office located at 1638 W 1st Ave. After 6 months of construction, we officially open the office doors for business in early February.|
Our new state of the art office is centrally located to best service our entire Vancouver market area. We also built in some little surprises into the new design like our “wall of success”, our new Kids Area, NY loft ceilings, some creative furniture, and generous glass-walled presentation rooms. It’s a great place to celebrate Vancouver real estate and link in with the latest in our market. We would love for you to drop in for a coffee or espresso to see the new digs and say hello.
There is a new energy abound in Vancouver that began early in the New Year. I am not going to bore you with all the graphs and copious amounts of data we have to show you the carnage over the past 18 months but in summary: detached houses have softened, and strata condominiums and attached townhomes/duplexes have held their own and appreciated a healthy amount. On a lighter note, call volume is up, plus appointments for listings and buyer meetings are up dramatically, signalling a very promising spring market.
Now that the dust has settled from 2018, we are witnessing many buyers stepping back into the market including first time buyers, clients purchasing investment property, and upgrade buyers taking advantage of the compressed market. The threat of increased interest rates has calmed and current rates, which are well below the historical average, are holding nicely (see Paula’s Mortgage Update article).
With inventory beginning to build and buyers entering into our market we will likely see a stabilization and possibly some growth for 2019 despite the doom and gloom we are all reading in social media and the newspapers. Remember the media reports on past data, but we are on the front lines and see firsthand the activity and behaviour in our market. And it’s looking very very promising.
With some political windows opening up, beginning with the Nanaimo provincial by-election January 30th, there is further opportunity for a political shift back towards the right which would be a positive impact on our market. The upcoming Federal election this October 21st could also offer some easing of existing restraint programs assisting new buyers. The bottom line is our population in Greater Vancouver is expected to grow by 30,000 people per year, or 1.2 million people by the year 2040 for a total number of residents of 3.4 million. All of these new Vancouverites will need a place to live. Even with increased densities and increased rental stock, the demand on this limited supply of land will grow significantly. So, the opportunities are in place for our market to come back and, with any luck, 2019 could be a ‘revival year’ for Vancouver real estate.
The Ministry of Finance said letters outlining the first year of speculation tax fees and exemption processes will begin showing up in the mail at all homes in Greater Victoria, Nanaimo, Kelowna and Metro Vancouver (excluding Bowen Island and Lions Bay, but including Abbotsford, Mission and Chilliwack) starting this week. Make sure to complete this declaration by following the letter instructions before March 31st, 2019.
The tax rate is 0.5% of a subject property’s assessed value in 2018, which would be $10,000 a year for a property assessed at $2 million. Starting in 2019, the rate changes to 2% for out-of-province owners, foreigners owners and satellite families (this is defined as households that have more than 50% of income coming from outside Canada).
Owners are exempt from the tax if the property is their principal residence, they rent it at least six months of the year (only three months is required in 2018), they are disabled, the property was just inherited, it’s valued below $150,000, or a person was away and it was vacant due to residential care, medical challenges, work or spousal separation.
Strata property units in buildings where strata bylaws ban rentals are also exempt, but only for 2018 and 2019, to give stratas time to change their bylaws, according to the ministry.
Other exemptions are allowed for First Nations, charities, co-ops, some not-for-profit organizations, local governments, and developers working on construction or renovation of property.
British Columbians with second homes (IE vacation property) who are not exempted will be allowed to get a credit intended to negate the tax on the assessed value up to $400,000, with the remaining value of the property then levied and taxed at the full rate.
Details of this tax are still evolving and changing, so visit the provincial government website for up to date info: https://tinyurl.com/yb6dmt4c
We have seen rates rise in late 2018, however, we are now in a position for rates to decrease as the bond yields fall. The Bank of Canada also held off increasing the overnight rate during January’s meeting due to uncertainty of the overall economic performance within Canada and globally. The US Government shutdown is also keeping the Bank of Canada from increasing their overnight rates. We expect to see rate sales pop up as we approach the spring market.
1-year Fixed 3.19%
2-year Fixed 3.19%
3-year Fixed 3.39%
4-year Fixed 3.64%
5-year Fixed 3.39%
7-year Fixed 3.69%
10-year Fixed 3.89%
We have received many calls every year regarding assessment values. Let’s review a few quick facts: BC Assessment sent home owners their 2019 assessment notices a couple weeks back, which reflect a mostly computer-generated figure “value” as of July 1, 2018 (in other words by the time you can access the info online or get it in the mail, it is 6 months old); furthermore this value from July 1st of 2018, is based on the property condition as of October 31, 2017 so as you can gather looking at these dates, these figures are just a “Ballpark” for tax purposes and very out-dated at best. This is in contrast to a formal market value appraisal done by a Realtor or appraiser using recent sales (where ready, willing, and able buyers made a purchase of similar properties) taking into account current physical details of the property, market, etc.
Many people are concerned about their decrease in assessed value, and some with the increase in assessed value. Many assume that just because your assessed value goes up so will your taxes. Rest assured this is not necessarily the case. The City of Vancouver calculates your annual taxes by dividing their annual budget by the total assessed value of all the properties in Vancouver (the mill rate) and multiplying this factor by your assessed value. So, if all the assessments are up (across the board) your taxes should not change. Your taxes will change, however, with City Hall’s new Budget (that’s what you should be scrutinizing – not the assessments). If the budget is up, and your assessed value is up, your taxes will likely go up. Or, if by chance, your assessment has jumped above your neighbours because of a renovation, then your taxes will go up accordingly.
Fun fact: Total value of real estate on the 2019 BC assessment roll is $1.99 trillion, an increase of 7.45 percent from 2018.
Property owners who decide to appeal their property assessment should review information on the Property Assessment Appeal Board website on how to prepare for an appeal and then complete a Notice of Complaint (Appeal) Form. The deadline to appeal your assessment is January 31, 2019. For more info visit the BC Assessment site at www.bcassessment.ca
“One Tin Soldier Rides Away” – The Past
Well the ‘behind closed doors’ government efforts to slow down the Vancouver’s real estate market was, in fact, quite successful. We have had experienced one of the quietest stretches in our market that I can remember apart from the 1980 market crash when interest rates hit 20% – remember Nelson Skalbania? (age giveaway!) The provincial Greens’, NDP, and even the federal Liberals can celebrate their victory. . . like when the Valley people killed all the mountain people and gathered ‘round the treasure chest to open it as the song goes. But, when the Valley people opened the chest the note inside read “Peace on Earth”. All the mountain people wanted was to share their treasure and live in peace.
But in their efforts was the government really victorious in making real estate affordable to the average Canadian? No, as with the parallel of the song above, all the Vancouver real estate market wanted was to share its wealth by contributing hundreds of millions to the BC Economy via massive employment of all those benefitting from a robust market (carpenters, painters, labourers, Notaries, furniture salespeople, flooring suppliers, glass manufacturers, hi-tech smart home businesses, measure-masters, photographers, printers, etc.) Last year real estate contributed over 18% to the BC GDP.
The MLS Housing Price Index Benchmark price for houses on the westside fell by 6-9%. So instead of the average house on the Westside costing $3.6M, it’s now $3.3M. And east side detached houses fell only 1.7% by about $30k.
For detached houses to be affordable to the average wage earner, in Vancouver prices need to fall below $1M and we just don’t see that happening. No one will sell. In fact, over the past year the government programs initiated had the reverse effect on condos and townhomes causing prices to increase by 7-9%. Why? Because buyers who would have otherwise purchased detached homes could no longer do so under the new “Stress Test” guidelines. They were forced to purchase condos/townhomes which further heated up that product category.
The only thing the programs may have achieved is win each level of government some votes from frustrated residents not being able to purchase a home in Vancouver. It failed miserably and cost the taxpayers millions to implement and cost our economy hundreds of millions in lost potential revenue as we watched investors flow to Seattle and Toronto. . . .” and one tin soldier rides away”.
We believe that the free market is the free market and performs best when left alone and unhindered. Yes, prices will appreciate and many who would love to live in our city may not be able to afford to do so unless they adjust their expectations. And yes, many foreigners will purchase property here but that is the reality of a free market and chances are something will happen within our marketplace to shift things around a little.
Shifting Things Around A Little – The Present
One thing that our local government is doing to help accommodate the high demand for housing in Vancouver, is to in increase zoning density. Increasing zoning in the RS single family neighbourhoods will allow more homes to be built on the same lot. Currently, zoning allows for three homes (main residence, secondary suite, and laneway house). In fact, City Council is now considering duplex zoning on all RS single family lots. Yes, there are some repercussions to such a massive rezoning such as parking, denser living, increased traffic, more demand on civic resources and services. There are details to be worked out, of course, but chances are this will allow for more families to live within our city. In addition, the RT7/RT8 zoning guidelines will also be relaxed to allow for easier demolition of character homes for redevelopment into strata duplexes. Yes, some character will be lost but something has to give and perhaps this is an area the public would be willing to allow some concessions on. City council is planning public hearings on the issue and my guess is they are wanting to push the rezoning through before the October election.
What About Positive Programs? The above is an example of the government doing something positive to react to the housing crisis. that does not penalize the buyers or exclude certain groups.
Rather than adding tax after tax, or making it more difficult to borrow money, why not be more creative and come up with programs that support the purchaser. Perhaps:
• special lending rates for first time Canadian home buyers
• greater exemptions from Property Transfer tax for those getting into the market
• or even interest free down payment loans with 20-year payback for families wanting to buy a home
• and 997 more positive ideas. . .
There are many approaches our government could take to have a positive impact on our housing market. It’s time for our politicians to think outside of the box and I believe it’s not too late!
Market Outlook – The Future
My read on the fall market is somewhat positive. For over 26 years, I have seen that the market ebbs and flows. Whenever there is a slow down for whatever reason, the demand in the background continues to build. As I’ve said before it’s like a dam that builds water behind it when the flow is turned down. People are always downsizing, having children and needing larger homes, relocating in and out of our city, etc. So, when the continuous demand on housing is there and the demand is not met, it builds in the background, like the water level in a dam. At some point after our market adjusts to all the new programs, and consumers become more comfortable, we will begin to see the flood gates open. Transactions will and are already are beginning to take place opening up more product for those waiting buyers who will in turn have something to sell. And so begins the awakening of a stifled market. Sometimes this happens naturally and sometimes a catalyst is needed to ignite the market.
Once the increased activity and price appreciation is exposed by media, more buyers/sellers join the activity and soon the market becomes very active. There are already signs in that our market activity is increasing and I expect a healthy fall market. A full recovery? Yes of course it will happen, however, how and when are yet to be seen as our fall market and upcoming spring market unfold.
As many of you know, after 26 years of selling homes, just over one year ago Adam and I formed Pospischil Realty Group. We have just, this past month, had our one year anniversary for the birth of the new company. As our clients you already know how much we love real estate and working with all of you, your family, and friends and honestly Pospischil Realty Group since its inception has allowed us free reign on making the experience even more enjoyable. Our goal in this transformation into an independent brokerage was to allow our quickly growing company to:
1. Provide an even higher level of service to our clients by creating a cutting edge corporate office utilizing the latest in technology allowing us to implement innovative new marketing systems for your home and better systems for finding your new home.
2. Have complete control over all facets of our company from the design of our signs to what wine to serve you at offer presentations. :)
3. Allow our service area to expand by bringing onboard a very select few highly specialized professionals servicing areas outside of Vancouver.
4. Further enhance the overall buying and selling experience to a level of efficiency and comfort unmatched in our industry.
5. Ultimately allow Pospischil Realty Group to become a household name in real estate in Vancouver.
We are very excited to announce that our new permanent home is already under construction and will be ready for opening in early 2019. The new home / head office of Pospischil Realty Group will be at 1638 W 1st Ave in Kitsilano. We will keep you posted on our progress and hope to see you all at the Office Warming Opening Party next year.
We are partnering with our clients and friends at West Point Cycles to get some great
gear, and training support set up for the team etc. So it will be epic!
Would love to have you along for the ride, as we continue on our journey to
Conquer Cancer once and for all!
There is also a discount code to join the 2019 ride for a limited time for $25 Code: RIDEWITHME19