Foreign buyers tax, new mortgage rules ?squeezing market at both ends,? expert says
SUSAN LAZARUK
The Province
A drastic drop last month in the number of detached homes sold across Metro Vancouver — down as much as 67 per cent year-over-year in the worst-hit neighbourhood — is proof that B.C.’s new foreign homebuyer tax has hurt sales, and the slowdown could be the start of a crash, according to a real estate analyst.
But other housing types in some neighbourhoods are still selling well, with prices still up 30 per cent or more in some categories year-over-year, according to the real estate boards of the Fraser Valley and Greater Vancouver, both of which released their September figures on Tuesday.
And supply has increased, which means the market is more balanced than it has been. The region is now bordering on a buyers’ market in detached housing, says the Greater Vancouver Board of Vancouver.
No one can predict what will happen to prices, but this could be the start of a market crash, said Prof. Thomas Davidoff of UBC’s Sauder School of Business.
“This looks like a classic, humpshaped housing market, when you have an upturn followed by a downturn,” he said on Tuesday.
The drop in sales “could drag on for a while because owners of single-family homes can afford to sit on their homes. Usually, it takes a few months of sluggish listings before the prices drop. No one wants to sell his house for less than the guy who just sold his house.”
If the foreign homebuyers’ tax, which was passed on Aug. 2, scares off purchasers and stricter mortgage qualifying rules that the federal Liberals announced this week make it harder for first-time buyers, the market could be squeezed at both the high and low ends, said Davidoff.
Ottawa also announced this week it will be ensuring buyers claiming tax exemptions for capital gains on their homes as their primary residences are actually entitled to the cheaper tax rate.
Sales last month of all home types slowed year-over-year, in the Fraser Valley by 24 per cent, and in Metro Vancouver by 33 per cent, according to the new numbers.
The drop was more dramatic in certain areas, and especially with detached houses.
For instance, across Surrey, the number of detached homes sold dropped 56 per cent compared to a year ago, with South Surrey/White Rock getting hardest hit with a 66 per cent drop, followed by Surrey Central at 60 per cent.
And in West Vancouver, sales of detached houses dropped 67 per cent, while in Vancouver East, sales fell nearly 57 per cent.
On the west side, there was a drop of 52 per cent compared to September 2015.
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