July 31, 2010 Market Stats

Bottom Line: Very high inventory + Not enough buyers = Only homes listed at market value are selling.

Just 5% of all the properties that are listed in the North Okanagan are selling. Here are the stats as of July 31, 2010 as compared to 2009 as well as 2007 to give some perspective:

                                                        Total for Sale 2010/2009/2007       Year to Date Sales 2010/2009/2007

Single Family Residential Homes                      838 / 709 / 413                                446 / 481 / 753

Apartments                                                        225 / 159 /  54                                  75 / 62 / 126

Townhouses                                                       245 / 235 /  119                             144 / 141 / 240

Acreages with Houses                                          293 / 266 / 191                                69 / 54 / 136

 

There are so many contributing factors and why we have such a high number of homes listed for sale and is a topic of conversation everywhere you go. It is my opinon that the HST that came into effect in BC on July 1, 2010 has nothing to do with it, contrary to what many believe.

HST is applicable to new homes and a rebate is in effect anyway. Our market is inundated with pre-owned homes - not new ones. HST is charged on the real estate fee, which is paid by the seller, not the buyer. Again, this is not why we don't have enough buyers.

The new mortgage qualifying guidelines may have something to do with it. I don't believe however, that because purchasers qualify based on a 5 year fixed term mortgage rather than a 3 year, thereby reducing the amount they qualify for means they choose not to buy a home at all. I believe they just move into a lower price range and still buy. Investors however will have retracted since they cannot buy a property that is not their principle residence for 5% down anymore.

One factor that I have not heard being discussed is the Property Transfer Tax (PTT).  In any given market, I would say the bulk of the buyers already own a home. They were probably sellers and buyers when the market was stronger and may be ready to move again for any number of reasons - upsize, downsize, loss of job, new job, new baby, health reasons, etc. Some are prepared to sell their homes for less than they paid only if its not for less than they owe and it allows them to move into what they want to live in next. However, if one adds in all of the costs of selling and buying a new home, the Property Transfer Tax could be the final deterrant.  On a $350,000 home, that would be an additional $5,000 that a person selling their home and buying another one needs to come up with. If they bought their current home within the last 3 years, they simply may not be able to afford to move.

In April, 2010 the BC Real Estate Associaton (BCREA) recommended the provincial government take several steps to help minimize the negative impact of shelter taxes on BC homebuyers, homeowners and landlords. The provincial government was also encouraged to implement a three-year phase-out of the PTT. BCREA has advocated for the elimination of the PTT since it was introduced.  

Since August 2009, REALTORS® and consumers have sent more than 7,500 emails to register their concerns regarding the PTT and the HST with BC MLAs through the BCREA website.  

In addition to a full summary of BCREA’s recommendations to the government, and overviews of how these taxes impact housing affordability and to voice your own concerns visit BCREA’s Shelter Taxes website at http://www.bcrea.bc.ca/sheltertaxes/propertytransfertax.htm.

 Written by Paige Gregson with informaton concerning BCREA and the Property Transfer Tax taken from the BCREA's May, 2010 publication, The Bulletin. 

Paige Gregson

Paige Gregson

REALTORĀ®
CENTURY 21 Executives Realty Ltd.
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