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Victoria Spring market far from the usual as real estate continues to react to pandemic
 
A total of 287 properties sold in the Victoria Real Estate Board region this April, 58.8 per cent fewer than the 696 properties sold in April 2019 and 52.8 per cent fewer than the previous month of March 2020. Sales of condominiums were down 64 per cent from April 2019 with 73 units sold. Sales of single family homes were down 55.8 per cent from April 2019 with 163 sold.
 
"We continue to see the impact of the COVID-19 pandemic on the local real estate market," says Victoria Real Estate Board President Sandi-Jo Ayers. "Sales numbers are much lower than what we expected to see this spring and new listings are slow to come to market as owners wait to see what our community's trajectory is over the course of this pandemic. As a result, the available inventory of properties for sale remains lower than in April last year. Like so many other industries, much of the real estate market is watching, waiting and adapting."  
 
There were 2,305 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of April 2020, 16.2 percent fewer properties than the total available at the end of April 2019 but a 2.4 per cent increase from the 2,252 active listings for sale at the end of March 2020.  
 
"Real estate services and REALTORS® were declared an essential service by our province in March in order to protect consumers who need to make real estate transactions during this time," adds Ayers. "This responsibility has opened opportunities for our profession to adapt our way of doing business to ensure our community's health is protected. Technology has allowed us to move much of our work online. Now you can participate in an open house from the comfort of your couch and manage your contracts and negotiations securely online. Of course, the vast majority of transactions still require an in-person showing at some point and so local Realtors are ensuring they are adhering to the advice of the Provincial Health Officer. We know that we are in complex times, but also that some people need to buy and sell. Our message has been and will be moving forward - if you need us, we are here."
 
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in April 2019 was $843,500. The benchmark value for the same home in April 2020 increased by 4.6 per cent to $882,700, 0.6 per cent more than March's value of $877,700. The MLS® HPI benchmark value for a condominium in the Victoria Core area in April 2019 was $512,700 while the benchmark value for the same condominium in April 2020 increased by 3.5 per cent to $530,700, 0.2 per cent less than the March value of $531,900.
 

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The real estate boom gripping B.C., and the city of Victoria in particular, has been historic on nearly all fronts. The frenzy to snatch up Victoria Real Estate soil kicked off after the 2013 boom in real estate in Vancouver. Bidding wars for detached homes spread like wildfire, pushing sales to a record in 2017, along with dollar volumes, which hit high prices driving the average home price up in Victoria

In response to public angst about runaway housing costs, policymakers at all levels dog-piled onto the real estate market, announcing a foreign buyers tax, mortgage stress tests and a hike in the property transfer tax. Meanwhile, the Chinese government took swift action to curb capital outflows, requiring citizens to pledge that they wouldn’t use cash leaving the country to buy property. Outflows from China plunged, however rumour has it that rich investors are still finding ways of laundering their money out of China to invest in Real Estate in Canada.

Increased taxation has pushed foreign bids aside, as a watch and hold approach is now being taken. With a $3-million purchase now requiring those buyers to cough up over half a million in levies upon closing. Local purchasers have been stymied by rising mortgage costs and tougher qualifying rules. A typical Victria household with an average mortgage would have to increase their salary two fold to be able to keep up with this ever increasing housing market.


We are optimistic that over the next few years there will be an increase in supply of housing, bringing the market into equilibrium and making housing more affordable for the average Canadian.

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Speculation Tax Update

The British Columbia government recently announced a “Speculation Tax” effective for the 2018 tax year. Details on the Speculation Tax have been limited especially given the magnitude and scope of the new tax. Below is some information released to date along with a link to the most recent Ministry of Finance Information Sheet:
So far the B.C. Government has advised the following:
   
Speculation Tax:

1.     The Speculation Tax will target foreign and domestic speculators in BC. 

2.     Exemptions will be available for:
a.     Principal residences (excluding satellite families – households with high worldwide income that pay little income tax in BC )
b.     Qualifying long-term rental properties (no specific definitions of long term rental provided)
c.      Certain special cases
3.      A non-refundable income tax credit will help offset the tax for BC residents. This will leave the bulk of the tax levied on vacant and short-term rental properties owned by individuals who do not live in BC, as well as satellite families.
4.     In 2018, the tax rate will be 0.5% of assessed value. In 2019, the rate will increase to 2% of assessed value.
5.     The Speculation Tax will initially apply to the Metro Vancouver, Fraser Valley, Capital and Nanaimo Regional Districts, and in the municipalities of Kelowna and West Kelowna.
At this time the following concerns and practice points have not been addressed:
1.    No grandfathering announced for existing owners or buyers currently under a contract of purchase and sale.   
2.  No announcement whether this tax can form a lien or is otherwise attached to the Speculator’s property (including after the Speculator’s property is sold in which case a Non-Speculator Buyer may be liable for a Speculator Seller’s tax liability).
3.  No announcement on how the Speculation Tax is to be prorated when a Speculator Seller has paid the tax for the year and the property is then sold to a Non-Speculator Buyer. 
4.  No announcement on any Seller or Government certificates that may protect a Buyer from tax liability when purchasing from a Speculator Seller or a Seller that the government may later deem to be a Speculator.
5.  No announcement on suggested changes to the Contract of Purchase and Sale that may be required to deal with liability to both buyers and sellers due to the proposed tax (including a Non-Speculator Buyer that may be liable for tax liability from a Seller that is later deemed to be
Many Realtors have commented that there appears to be a new landscape where government passes sweeping legislative changes often times on short notice, without grandfathering, without consultation with industry and with significant penalties (for example penalties of double the tax, interest on the tax, a fine up to $250,000 and up to two years in prison for Realtors providing certain advice or preparing certain documents under the Property Transfer Tax Act). Given this constantly changing landscape, we appreciate that you and your clients may wish to work with a law firm that is well-versed in these matters and Mullin DeMeo is proud to continue to assist you and your clients in this regard. If you have any questions on the above or any other real estate related matter, please do not hesitate to contact our office at any time.
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Victoria Real Estate Market Adapts to Changing Policy Landscape

A total of 545 properties sold in the Victoria Real Estate Board region this February, 19.3 per cent fewer than the 675 properties sold in February last year. The sales of condominiums were down 15.5 per cent from last year in February with 174 units sold. Single family homes were 24.4 per cent down from the year previous, with 260 sold this February.

"We certainly anticipated that we would see some lower numbers this year compared to last," says Victoria Real Estate Board President Kyle Kerr. "Right now prospective home buyers are met with many hurdles as they start shopping for their new home. They're in a market that's experienced long-term low inventory, which means more price pressure and competition on homes. Buyers are navigating increasing interest rates and the new mortgage stress test. These factors all combine to constrain our market. Like any changes to consumer experience, there is a period of response before consumers adapt to the new rules. We saw an increase in buyers in November and December who bought early to avoid the mortgage stress test, and this likely means less buyers in the current market. However, with continued historical low inventory levels, demand is still outpacing supply."

There were a total of 1,545 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of February 2018, an increase of 3.6 per cent compared to the month of January and 0.5 per cent more than the 1,537 active listings for sale at the end of February 2017.

"The provincial government recently rolled out its budget, which includes an admirable commitment to spend six billion dollars to build 114,000 units in ten years," adds President Kerr. "These units will take years to come to market, and it is difficult to predict how many we will see in Victoria. The government needs a long-term approach to supply needs in our area, and that initial commitment is a good start. A reasonable way to bolster their commitment and improve current conditions is for the province to work with our municipalities to reduce the timelines and costs associated with bringing new housing to our market."
 
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in February 2017 was $771,100, while the benchmark value for the same home in February 2018 increased by 9 per cent to $840,300, slightly higher than January's value of $831,900. The MLS® HPI benchmark value for a condominium in the Victoria Core area in February 2017 was $394,400, while the benchmark value for the same condominium in February 2018 increased by 19.85 per cent to $472,600, which is slightly higher than January's value of $460,500.


 
About the Victoria Real Estate Board - Founded in 1921, the Victoria Real Estate Board is a key player in the development of standards and innovative programs to enhance the professionalism of REALTORS®. The Victoria Real Estate Board represents 1,371 local Realtors. If you are thinking about buying or selling a home, connect with your local Realtor for detailed information on the Victoria and area housing market. 
 
 
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