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Some Fast Facts About Richmond

History
Richmond was incorporated on November 10, 1879 and designated as a city on December 3, 1990. Historical industries include fishing, salmon canning, boat building, agriculture – dairy and berry production, aviation, export, and service. The founding cultures are First Nations, British European, Japanese, and Chinese.

Government
The model of government in Richmond consists the Mayor and eight Councillors elected at large. The major awards won by city are Nations in Bloom 1999; Communities in Bloom, Canada – 1998; National; and Environment Award for Terra Nova Rural Park, 2008. Richmond’s twinning cities are Wakayama, Japan and Pierrefont, Quebec, Canada.

Geography
Richmond’s land area is 129 sq. kilometers (49.8 sq. miles) with latitude of N 49º 10’ and longitude of W 123º 8’. There are 17 islands making up the City of Richmond. Richmond is located on the west coast of Canada between two arms of the Fraser River. The area enjoys 1,500 acres (607.5 ha) designated natural areas and parks.  A transportation hub which includes The Vancouver International Airport, the sea ports located in the city are the Vancouver Fraser Port and Steveston Fishing Port.

Climate
Richmond average temperature in January is 2.5ºC and average temperature in July is 17.3ºC.
The average annual rainfall is 1,112.6 mm.

Population
Richmond population was 199,141 in 2011 (BC Stats estimate) with a projected population of 225,000 in 2021 (Metro Vancouver estimate). The average annual population growth rate from 2006-2011 is 1.7%.
City population as a percentage of Metro Vancouver region is 8.3%.

Immigration

Immigrants as a percentage of population were 57.4% as of May 2006. Between May 2001 and May 2006, the number of immigrants who came to Richmond is 18,780 (est.). The three leading countries of birth for recent immigrants are China (People’s Republic of), Philippines and Hong Kong.

Education
The percentage of population with University Degree is 26.0%.

Jobs and Industry
There is an estimate of 125,000 jobs in Richmond. The city jobs as percentage of provincial jobs is 7.4%. The total labour force from age 15+ is 92,470, where the percentage of this population group in labour market is 63.1%. There were 12,684 business licences issued in 2009. Major industries in Richmond consist of high tech, retail, aviation, transportation, tourism, service, manufacturing, and agriculture. Cranberries, blueberries, hay, and field vegetables are the major agricultural products in the city. According to the 2006 Census, average family income in 2005 was $74,790 and median family income in 2005 is $67,627. Business Associations include Richmond Chamber of Commerce, and Richmond Asia Pacific Business Association (RAPBA).

Recreation and Culture
Libraries, gateway theatre, arts centre, heritage sites, Richmond Art Gallery – 
contemporary art gallery, museum, public art are the cultural amenities in the city. Some of the recreation facilities include 100 parks with 1,500 acres of area/open space, including the 320 acre Iona Island Park.
The area enjoys an 80 km system of interconnecting dyke trails, cycling routes and walkways; eight community centres; a seniors centre; cultural centre; fitness centre; two (2) arenas; eight ice rinks; two indoor aquatic centres; two outdoor pools. There are over 200 volunteer community organizations; 50 advisory committees and task forces; partnerships with business and community groups for community involvement. The major cultural events are tall ships 2002, annual Maritime Festival, Winter Fest, Music Fest, multicultural festivals, and choral concerts.

Tourism
Richmond’s major tourist attractions are Steveston historic fishing village; Britannia Heritage Shipyard National Historic Site; Gulf of Georgia Cannery National Historic Site; Richmond Olympic Oval; International Buddhist Society Temple; Richmond Nature Park; London Heritage Farm, Asian shopping malls; and world renowned restaurants. The number of airport passengers annually is 17.9 million (2008). Richmond represents ⅓ of Vancouver’s bed base with 26 hotels and 4,700 hotel rooms.

Source: City of Richmond

Bank of Canada Interest Rate Announcement – October 23, 2012

The Bank of Canada once again opted to hold its target for the overnight rate at 1 per cent this morning. Interest rates have been held constant for over two years, the longest such period since the 1950s.  The Bank somewhat tempered its bias for higher future interest rates, including a softer statement regarding the appropriateness of a gradual withdrawal of monetary stimulus as excess supply in the economy is absorbed. In a bit of a surprise, the Bank actually raised its forecast for the growth in the Canadian economy this year to 2.2 per cent, but kept its 2013 forecast at 2.3 per cent growth. The Bank judges that at that pace of growth, the Canadian economy will return to full capacity by the end of 2013. 

It is our view that monetary policy at the Bank of Canada will continue to be constrained by external events in the global economy and household debt growth at home. While the Bank’s preference for tighter policy is clear, it is difficult to make a case for higher interest rates when core inflation is below the Bank’s 2 per cent target and already slow economic growth is threatened by global uncertainty. Therefore, we are forecasting that the Bank of Canada will hold its target overnight rate at 1 per cent until mid-to-late 2013 when, conditioned on an improved global economic outlook,  it may test the water with a 25 basis point rate increase. 

 

Source British Columbia Real Restate Association. 

Grant for new secondary or recreational homes available

If your you buy a new or substantially renovated secondary or recreational home in BC, but outside of Greater Vancouver or Victoria, before April 1, 2013, they may qualify for a provincial grant for the Harmonized Sales Tax (HST).

The grant for new secondary or recreational housing is directly administered by the BC Ministry of Finance.

This grant should not be confused with the BC New Housing Rebate available for new residential homes bought as a primary residence, and administered by Canada Revenue Agency (CRA).

The grant for new secondary or recreation housing is 71.43% of the provincial portion of the HST paid on the new home up to a maximum rebate of $42,500. Secondary or recreational homes priced at $850,000 or more are eligible for a flat grant of $42,500.

To be eligible, the secondary or recreational home must be:

  • a new home (detached, semi-detached, duplex, condominium, townhouse) constructed or substantially renovated (more than 90%) together with land bought from a builder;
  • a new home together with leased land;
  • a new mobile home or float home;
  • a new home bought through shares in a housing cooperative; or
  • a new home constructed or substantially renovated (more than 90%) by the owner builder.

To be eligible, buyers must meet all of the following conditions:

  • the HST was paid on or after April 1, 2012 and before April 1, 2013 on the purchase of a new or substantially renovated house, or to build or substantially renovate a house;
  • the buyer or a family member will use the house as a secondary or recreational residence;
  • the home is located outside the Capital Regional District and the Greater Vancouver Regional District;
  • the buyer (or any other co-owners) or family are the first occupants of the home, or in the case of a substantial renovation, are the first occupants after the renovation; and
  • the home will not be used for commercial purposes (vacation rentals, bed & breakfast, small business) by an owner who is an HST registrant claiming input tax credits for some or all of the HST paid on the home.

In addition to the general qualifications above, buyers must meet other conditions depending on the type of home and whether the client buys or builds the house alone or with others. For example, if two or more individuals buy a new secondary or recreational home, or build or substantially renovate a home, each buyer must meet all eligibility conditions, but only one may apply for the grant as the claimant.

You do not have to be a BC resident to be eligible for the grant.

Buyers of secondary or recreational homes must complete an application form and provide supporting documents within six months from the date the HST was paid and before October 1, 2013 (whichever date is earliest).

To learn more, contact: 1.877.388.4440 or visit www.fin.gov.bc.ca/rev.htm and in the search box type in HST Notice #13. For application forms, in the search box type in “grant new secondary residence.”

Source: Real Estate Board of Greater Vancouver, Ministry of Finance

Alternative dispute resolution for stratas coming

Resolving strata disputes will soon become faster, more accessible and more affordable thanks to recent provincial legislation.

Bill 44: The Civil Resolution Tribunal Act, which passed earlier this year, creates an independent body, the Civil Resolution Tribunal, which will provide dispute resolution tools as an alternative to going to court. The tribunal is expected to be operational by 2014.

This is welcome news for the Board, which together with BC Real Estate Association (BCREA) had, for many years, voiced concerns about strata property legislation.

In 2008, BCREA invited member Boards and REALTORSÒ to provide feedback. A key concern from REGBV members was the strata dispute resolution process, which members believed could benefit from a legislated mediation component.

BCREA advocated for this change and in 2011 reiterated the industry’s position during the province’s 2011 consultation process on strata dispute resolution.

Who can access tribunal services?

Strata corporations, strata owners and tenants will be able to access tribunal services

  • If two individuals are in a dispute, both must need to agree to participate in the tribunal.
  • If a strata owner or a tenant decides to use tribunal services, the affected strata corporation must participate.

The tribunal will have the authority to handle strata disputes between strata property owners and strata corporations, including:

  • Non-payment of monthly strata fees or fines;
  • Unfair actions by the strata corporation or by those owning more than half of the strata lots in a complex;
  • Uneven, arbitrary or non-enforcement of strata bylaws (such as smoking, noise, pets, parking, rentals);
  • Issues of financial responsibility for repairs and the choice of bids for services;
  • Irregularities in the conduct of meetings, voting, minutes or other matters;
  • Interpretation of the legislation, regulations or bylaws; and
  • Issues regarding common property.

The tribunal will not decide matters that affect land, including:

  • Ordering the sale of a strata lot;
  • Court orders respecting rebuilding damaged real property;
  • Dealing with developers and phased strata plans; or
  • Determining each owner’s per cent share in the strata complex (the “Schedule of Unit Entitlement”).

These matters will continue to be heard in the BC Supreme Court, as will other matters, including:

  • The appointment of an administrator to run the strata corporation;
  • Orders vesting authority in a liquidator’
  • Applications to wind up a strata corporation;
  • Allegations of conflicts of interest by council members; or
  • Appointment of voters when there is no person to vote in respect of a strata lot.

How will tribunal services be accessed?

                The tribunal services will be available online 24/7. Assistance will also be offered by phone, mail or even in person. Disputes are expected to be resolved within 60 days, compared to 12 to 18 months for the court process.

The tribunal will have five stages

Stage 1 – Self-Help: Information and tools will be available online 24/7 to help parties resolve disputes.

Stage 2 – Online Party-to-Party Negotiations: If Stage 1 fails; parties can go through a guided negotiation monitored by tribunal staff.

Stage 3 – Facilitated Settlement: Where an agreement is still not reached, parties can pay applicable fees and request active facilitation by the tribunal involving mediation or other dispute resolution processes. All parties must consent.

Stage 4 – Case management Preparation: A case manager will facilitate mediation and explore options for settlement.

Stage 5 – Adjudication: Any dispute not settled by agreement will be heard by an adjudicator with the authority to decide outcome and make binding decisions.

Fees for tribunal resolution of a dispute have not been finalized.

Learn More Information on strata property and the tribunal available at: www.housing.gov.bc/strata

 

Source REBGV

What you need to know about Non-Residents Tax Laws

Property in the Lower Mainland continues to attract investors world-wide. It is therefore important to understand Canada’s tax laws to help avoid mistakes and pitfalls. Here is a brief summary of information relevant to foreign investors.

Resident or non-resident?

Under Canada’s income tax system, whether an individual is a resident or a non-resident can play a significant role in how much tax they pay.

  • A resident must pay Canadian income tax on his/her worldwide income from all sources.
  • A non-resident must pay Canadian income tax only on income from sources inside Canada.

Residents

Canada Revenue Agency (CRA) defines a resident as someone who has lived in Canada for a minimum of 183 days within the past year.

Someone is considered a resident of Canada, they will not have to pay taxes owing on the sale of property in Canada until they file their income tax return for the year in which they sold the property.

Non-residents

Your is a non-resident for tax purposes if they:

  • Live in another country and are not considered a resident of Canada;
  • Do not have a significant residential ties including a home, spouse or common law partner or property in Canada; and
    • Live outside Canada throughout the tax year; or
    • Stay in Canada for less than 183 days in the tax year.

For more information visit www.cra.gc.ca and in the search box enter IT221R3. This will take you to a form, Determination of an Individual’s Residence Status.

If you would like a CRA opinion about your residency status, you should complete and submit Form NR74, Determination of Residency Status (Entering Canada). Visit www.cra.gc.ca and in the search box enter NR74.

Non-residents and property ownership

A non-resident who buys a property and does not rent it, and does not earn income in Canada does not have to file an income tax return.

Non-residents and rental property

A non-resident property owner who rents their property is required to pay a 25% withholding tax on either gross or net rent and have it remitted monthly.

1.       Withholding tax on gross rent

A non-resident property owner withholding 25% of the gross rent is required to have a Canadian agent remit the withholding tax to CRA within 15 days of each month-end together with Form NR4 Statement of Amounts Paid or Credited to Non-Residents of Canada.

 2.       Withholding tax on net rent

A non-resident property owner can apply to have the 25% withholding tax applied to net income instead of gross income, under Section 216 of the Income Tax Act. This will allow the owner to deduct expenses such as mortgage interest, property taxes and maintenance.

If CRA approves withholding on the net rent, rather than gross rent, then non-resident property owners must file Form NR6, Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real Property or Receiving a Timber Royalty.

When filing Form NR6, the owner or property manager must still report the gross amount of rental income for the entire year on Form NR4.

A non-resident owner must also file a Section 216 income tax return for that year even if the property owner has no tax payable or no refund coming. See RESOURCES box below for related guides and forms.

When a non-resident sells a property

All non-resident sellers of Canadian property (including assigning a pre-sale) must notify the CRA within 10 days of the date of the property sale to obtain a Certificate of Compliance and remit 25% of any capital gain (profit).

The Certificate of Compliance is proof that the CRA has received prepayment of the taxes owing on profits. The tax is 25% or more of the difference between the sale price and the cost of the property including improvements made during ownership.

If the seller doesn’t obtain a Certificate of Compliance, their notary or lawyer must withhold and remit 25% of the gross proceeds of the sale to CRA.

Buyers also typically request a holdback of 25% or more of the purchase price until the Certificate of Compliance is delivered. This is to protect the buyer. If a seller were to disappear without paying the required taxes, the buyer would be liable for those taxes.

Sellers taking a loss on a property must obtain a Certificate of Compliance; otherwise 25% of the sale price will be used as a holdback.

When a non-resident owner sells a Canadian property that has never been rented, they must complete a Section 116 income tax return, Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada – Section 116. (Visit CRA website and in the search box enter IC72-17R6)

When a non-resident owner sells a Canadian property that has been rented, they must complete a Section 216 income tax return in the year after the sale. This allows them to claim a refund on their income tax for expenses related to the sale such as notary or legal fees, inspection and survey fees, and REALTOR® commissions, when they file their tax return. This return must be filed by April 30. See RESOUCES box below for related guides and forms.

 

RESOURCES

For information, visit www.cra.gc.ca and in the search box enter any of the following guide or form names or ID numbers.

RENTING

Forms related to renting a property owned by a non-resident include:

  • Non-residents of Canada
  • Rental Income (T4036, Line 126 Net & Line 160 Gross)
  • Statement of Amounts Paid or Credited to Non-Residents of Canada (NR4)
  • Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real Property or Receiving a Timber Royalty (NR6)
  • Income Tax Guide for Electing Under Section 216 (T4144)
  • Income Tax Return for Electing Under Section 216 (T1159)
  • T2 Corporation – Income Tax Guide (T4012)
  • T2 Corporation – Income Tax Return (T2)
  • T3 Trust Income Tax and Information Return (T3RET)

SELLING

Forms related to the sale of a property owned by a non-resident include:

  • Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Taxable Canadian property (T2062)
  • Request by a Non-resident of Canada for a Certificate of Compliance Related to the Disposition of Canadian Resource and Timber Resource Property,  Canadian Real Property (other than Capital Property) or Depreciable Taxable Canadian Property (T2062A)
  • Notice of Disposition of a Life Insurance Policy in Canada by a Non-Resident of Canada (T2062B) (if applicable)
  • Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada – Section 116 (IC72-17R6) – when selling a property that was never rented.

The seller may also be required to provide one of the following forms:

  • With Form T2062A, sellers should also complete the Disposition of Canadian Resources Property by Non-Residents if you are disposing of Canadian resources property (T2062ASCH1)
  • With Form T2062B, life insurance companies should also complete the Certification and Remittance Notice to report the disposition of a life insurance policy (T2062BSCH1)

IN GENERAL

  • Determination of an Individual’s Residence Status (IT221R3)
  • Determination of Residency Status (Entering Canada) (NR74) – for a CRA opinion on residency status
  • For additional information sellers should read this guide: Disposing of or acquiring certain Canadian property found at www.cra.arc.gc.ca/tx/nnrsdnts/cmmn/dsp/menu-eng.html

For more information contact CRA at: 1.855.284.5946 from Canada or the United States; or 613.940.8499 from outside Canada and the United States. CRA accepts collect calls.

Source: Real Estate Board Of Greater Vancouver, Revenue Canada

New Legislation will open doors to Development on First Nations Lands

Investors and developers planning to do business on reserve land will find it easier thanks to new provincial legislation. Bill 43, the First Nations Commercial and Industrial Development Act (FNCIDA) Implementation Act, introduced in the BC Legislature on May 3, 2012, will create certainty for business by enabling provincial laws and regulations to apply to major commercial, industrial and residential project on First Nations lands.

Currently, provincial laws and regulations don’t apply to reserve lands. First Nations lands are under the jurisdiction of the federal government and only the federal government has the authority to make laws for “Indians, and Lands reserved for the Indians”, as set out in the Constitution Act, 1867, s 91(24) and under the Indian Act.

One notable exceptions is the Tsawwassen First Nation (TSN). Its landmark 2008 Tsawwassen treaty with the federal and provincial governments gave the TFN self-governing powers similar to those of a municipality and land in fee simple, which it can lease.

Of the province’s 198 First Nations, 116 have expressly stated they want the same right as the TFN by participating in the BC Treaty Commission’s treaty negotiation process. However, progress has been slow, often taking years. During this time, business opportunities are being lost—and their accompanying economic and social benefits including jobs and tax revenue.

Bill 43 holds the potential to speed and simplify business activity by creating a level regulatory playing field so that developments on reserve lands are subject to the same provincial regulations that apply to off-reserve developments. This will lead to certainty for business, residents and neighbouring local governments.

The impetus for the new legislation came from requests from two First Nations involved in two projects:

  • The Haisla Nation which has a proposed liquefied natural gas facility for its lands near Kitimat; and
  • The Squamish Nation which has a proposed commercial and 600 unit, four-tower residential development for its lands in West Vancouver.

Bill 43 will operate at the request of a Frist Nation and will also be project-specific. For example, a First Nation planning a mixed-use development alongside a stream can ask the federal and the provincial governments to produce project-specific regulations, which the province will have the authority to monitor and enforce.

Regulations could span everything from the building code to environmental issues to a land title system and a title assurance fund compatible with the BC land title system.

Bill 43 will work with two pieces of federal legislation:

  • The First Nations Commercial and Industrial Development Act (FNCIDA) (2006), which facilitates commercial and industrial development on First Nations lands by allowing provincial regulations to be replicated ant o apply on reserves; and
  • The First Nations Certainty of Land Title Act (2010), which gives the federal government the authority to make regulations respecting commercial land title at the request of a First Nation where the First Nation has the support of a private sector partner and the provincial government.

Currently, First Nations land interests are registered under the federal Indian Lands Registry System, which contains three separate deeds-based systems:

  • The Indian Land Registry System (ILRS), which includes documents related to and interests in reserve (and any surrendered) lands administered under the Indian Act;
  • The First Nations Land Registry System (FNLRS), which includes land records of First Nations operating under their own Land Code as set out in the First Nations Land Management Act (FNLMS); and
  • The Self-Governing First Nations Land Register (SGFNLR), which includes First Nations self-government agreements and documents which grant an interest in self-governed First Nation lands.

None of these systems is as secure as the Torrens-based land registration system used in BC.

Bill 43 will work with the First Nations Certainty of Land Title Act (2010), to enable the provincial government to create, at the request of a First Nation, a land title system administered by the provincial Land Title and Survey Authority (LTSA) on behalf of the federal government.

The Squamish First Nation has made this request. A new land title system will be created for residents of the proposed Squamish project who will be able to register leases with the provincial LTSA on behalf of the federal government.

The Squamish First Nation will also negotiate a range of service agreements, for example, transportation, schools, water and sewer.

 

Source Real Estate Board of Greater Vancouver

Greater Vancouver housing market hits summer lull

Residential property sales in Greater Vancouver remained at a 10-year low in July, while the number of properties being listed for sale continued to edge down and prices remained relatively stable.

The Real Estate Board of Greater Vancouver (REBGV) reports that there were 2,098 residential property sales of detached, attached and apartment properties in July. That’s an 18.4 per cent decline compared to the 2,571 sales in July 2011 and an 11.2 per cent decline compared to the previous month’s 2,362 sales.

July sales were the lowest total for that month in the region since 2000. They were 31.2 per cent below the 10-year July sales average of 3,051.

People appear to be cautious about making significant financial decisions right now. While our local economy appears to be quite robust, there may be some concern about the impact of international markets and the federal government’s tightening of mortgage regulations.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,802 in July, the lowest number of new listings for any month this year. This represents a 5.8 per cent decline compared to July 2011 when 5,097 properties were newly listed for sale on the Multiple Listing Service® (MLS®) and a 14.5 per cent decline compared to the 5,617 new listings reported in June 2012.

At 18,081, the total number of active residential property listings on the MLS® increased 18.8 per cent from this time last year and decreased 2.2 per cent compared to the previous month.

With a sales-to-actives-listing ratio of 11.6 per cent, conditions have favoured buyers in our marketplace in recent months. That means buyers have more selection to choose from and more time to make a decision. For sellers, it’s important to price properties competitively.

The MLS® Home Price Index (MLS® HPI) composite benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 0.6% to $616,000 and declined 0.7% compared to last month.

 

Richmond

Sales of detached properties on the MLS® in July 2012 reached 60, a decrease of 51.2 per cent from the 123 detached sales recorded in July 2011, and a 68.4 per cent decrease from the 190 units sold in July 2010.

Attached property sales in July 2012 totalled 55, an 37.5 per cent decrease compared to the 88 sales in July 2011, and a 40.7 per cent increase from the 135 attached properties sold in July 2010.

Sales of apartment properties reached 101 in July 2012, a 25.2per cent decrease compared to the 135 sales in July 2011, and a decrease of 56.4 per cent compared to the 232 sales in July 2010.

 

Source Real Estate Board of Greater Vancouver

 

Ottawa caps CMHC mortgages at 25 years

Finance Minister Jim Flaherty has outlined new rules aimed at reining in a hot housing market and ensuring Canadians aren’t taking on more debt than they can afford.

Flaherty laid out a series of changes to the rules that govern the Canada Mortgage and Housing Corporation, the Crown Corporation that effectively oversees the housing market by insuring the vast majority of Canadian mortgages.

The most important new change is that the maximum amortization period has been reduced to 25 years, down from 30. The longer a mortgage is spread out, the lower the monthly mortgage payments are — but the more the borrower ends up paying overall over time.

The impact of the change is likely to be significant. It’s about the same as a 0.9 percentage point increase on a typical mortgage, Bank of Montreal economist Robert Kavcic noted.

Indeed, the numbers add up. A $300,000 mortgage spread over 30 years at 4.0 per cent would cost $1,426 a month to pay back. That same mortgage amortized over only 25 years increases the monthly payment by $152 or 10 per cent to $1,578 a month.

Ultimately though, the higher monthly payment saves the borrower money in the long run. The total interest payments are $213,558.91 on the 30-year mortgage, but only $173,416.20 on the 25-year one.

The shortened amortization is also likely to affect a huge segment of the market, as about 40 per cent of all new mortgages were amortized over 30 years last year, the Canadian Association of Accredited Mortgage Professionals estimates.

Anyone who needed or wanted a 30-year mortgage before is going to have to qualify under tougher 25-year requirements now.

 

Ottawa has now moved three times to rein in the maximum mortgage term, since the CMHC briefly started insuring mortgages with 40-year terms in 2006. The limit was brought down to 35 years, then 30 and now the more traditional 25.

“The reductions to the maximum amortization period since 2008 would save a typical Canadian family with a $350,000 mortgage about $150,000 in borrowing costs over the life of that mortgage,” Flaherty said.

“Our government has encouraged Canadians to borrow responsibly,” Flaherty said. “Most Canadians have done so.”

At 25 years, the maximum amortization period for CMHC-backed loans is now back to where it had historically been before the Harper government began raising the period after taking office in 2006.

Interim Liberal Leader Bob Rae made that very point in question period on Thursday, asking Prime Minister Stephen Harper if raising CMHC’s limit to 40 years in the first place was a mistake.

“The government has altered rules a number of times and will continue to do so on a prudent and flexible manner depending on the circumstances,” the prime minister replied.

 

Refinancing limit set at 80%

Flaherty also outlined a few other measures.

The government has lowered the total amount that Canadians can withdraw when refinancing their homes to 80 per cent of the home’s value, from 85 per cent.

“This will promote saving through home ownership and encourage homeowners to prudently manage borrowings against their homes,” Flaherty said.

Flaherty also moved to cap the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent in order to get CMHC insurance. Banks calculate the former by adding up mortgage payments and property taxes on a home loan, and dividing by the borrower’s income. The latter adds in other debt payments such as lines of credit and credit cards to the top side of the ledger.

Although they both have obscure, technical names, they’re both effectively just limits on how much debt a borrower is allowed to take on as a percentage of their overall income. That move, too, is aimed at making sure borrowers can’t bite off more than they can chew.

The final change was to limit CMHC insurance to homes priced under $1 million. “Wealthy people can borrow whatever they want from banks, and they can work that out from banks,” Flaherty said. “That is not my concern.”

 

July deadline

That effectively means that a homebuyer who wants to purchase a home for more than $1 million can’t get insurance on it — which in turn means the buyer will have to come up with the 20 per cent down payment requirement in order to get an uninsured mortgage.

So under any circumstance, any new borrower wanting to buy a home of $1 million or more is going to have to put $200,000 down at a minimum. That’s also likely to have a major impact on a comparatively small segment of the market.

“Although this could create some market dislocations in the just-under-$1-million segment, it’s consistent with CMHC’s recent efforts to focus its insurance business on encouraging owner-occupied purchases among average Canadians,” BMO economist Michael Gregory noted.

All of the changes went into effect as of July 9, 2012.

The Canadian Real Estate Association reacted coolly to the news on Thursday, calling it a “measured response” to rein in debt loads, but taking pains to note that the home resale market contributes $20 billion a year to Canada’s economy and as such, is deserving of caution.

“Going forward, we would urge the government to consider the impact of further interventions in the market carefully,” CREA said.

______________________________________________

What is an ‘insured’ mortgage?

In order to guard against risk in the financial system, Canadian law requires certain borrowers to purchase insurance against their loan, in case they end up defaulting on it.

Under the current rules, any would-be home buyer must purchase insurance (this most often comes from CMHC, Canadian Mortgage and Housing Corporation, but sometimes from other private-sector insurers) if their down payment is less than 20 per cent of the value of the home.

Any borrower who meets that threshold can get a mortgage from a bank without having to obtain insurance, and those are known as “uninsured” mortgages. So a borrower who gets a $300,000 mortgage and puts down only $30,000 or 10 per cent on the home would be insured, but a borrower who has $100,000 down for the same home would be uninsured.

 

Source Real Estate Board of Greater Vancouver, Vancouver Sun.

Greater Vancouver and Richmond housing market favoured buyers in June

The number of residential property sales hit a 10-year low in Greater Vancouver for June, while prices remained relatively stable.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties reached 2,362 in June, a 27.6 per cent decline compared to the 3,262 sales in June 2011 and a 17.2 per cent decline compared to the 2,853 sales in May 2012.

June sales were the lowest total for the month in the region since 2000 and 32.2 per cent below the 10-year June sales average of 3,484.

Overall conditions have trended in favour of buyers in our marketplace in recent months. This means buyers are facing less competition and have more selection to choose from compared to earlier in the year.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,617 in June. This represents a 3 per cent decline compared to June 2011 when 5,793 properties were listed for sale on the MLS® and an 18.9 per cent decline compared to the 6,927 new listings reported in May 2012.

At 18,493, the total number of residential property listings on the MLS® increased 22 per cent from this time last year and increased 3.7 per cent compared to May 2012.

Today, our sales-to-active-listings ratio sits at 13 per cent, which puts us in a buyers market. This ratio has been declining in our market since March when it was 19 per cent.

The MLSLink® Housing Price Index (HPI) composite benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 1.7% and declined 0.7% compared to last month.

 

Richmond

Sales of detached properties on the MLS® in June 2012 reached 76, a decrease of 51.9 per cent from the 158 detached sales recorded in June 2011, and a 45.3 per cent decrease from the 139 units sold in June 2010.

Sales of apartment properties reached 113 in June 2012, a 18.7 per cent decrease compared to the 139 sales in June 2011, and a decrease of 36.9 per cent compared to the 179 sales in June 2010.

Attached property sales in June 2012 totalled 59, a 31.4 per cent decrease compared to the 86 sales in June 2011, and a 55.6 per cent decrease from the 133 attached properties sold in June 2010.

 

Source Real Estate Board of Greater Vancouver

Spring Activity Balanced in the Greater Vancouver / Falling in the Richmond Real Estate Market

The number of properties listed for sale continued to increase in the Greater Vancouver housing market in May. The number of sales decreased year over year, but remained relatively constant compared to recent months.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,853 on the Multiple Listing Service® (MLS®) in May 2012. This represents a 15.5 per cent decline compared to the 3,377 sales recorded in May 2011.

May sales were the lowest total for the month in the region since 2001 and 21.1 per cent below the 10-year May sales average of 3,617. However, sales have been constant throughout the spring months, with 2,874 sales in March and 2,799 sales in April.

Home sellers have outpaced buyers in recent months, however, there continues to be an overall balance between supply and demand in our marketplace.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 6,927 in May 2012. This represents a 16.8 per cent increase compared to May 2011 when 5,931 homes were listed for sale and a 14.4 per cent increase compared to April 2012 when 6,056 homes were listed for sale on the region’s MLS®.

Last month’s new listing total was 15.3 per cent above the 10-year average for listings in Greater Vancouver for May.

At 17,835, the total number of homes listed for sale on the region’s MLS® increased 7.9 per cent in May compared to last month and increased 21 per cent from this time last year.

 

Richmond

Switching to Richmond, the sales- to-active-listing ratio sits at 9.8%, which is indicative of a falling market. We see market stability  in the 15 to 20% range and an increasing market as we saw in early 2011 in the 20% plus sales- to-active-listing range.

Sales of Richmond detached properties on MLS® in May 2012 reached 111 a decline of 17.78% from 135 Richmond detached sales in May 2011.

Sales of Richmond apartment properties on MLS® in May 2012 reached 93 a decline of 31.11% from Richmond Apartments sales in May 2011.

Richmond townhome properties on MLS® in May 2012 totalled 77 a decline of 25.24% from 103 Richmond townhome sales in May 2011.

Source Real Estate Board of Greater Vancouver

 

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