Government moves to cool the market
Governments move to cool the market may back-fire! (at least in short-term).
This Spring should be busy in Real Estate thanks to our Federal & Provincial Governments. Buyers will need to act fast to beat an impending tax increase on new homes and new rules regarding mortgage requirements.
In the short-term these new changes, designed to raise Government revenues and cool a red hot Real Estate market (avoid a housing bubble), could actually heat things up in the next few months.
As of April 19, 2010, Federal rules will tighten mortgage requirements squeezing the already dwindling purchasing power of the average Metro Vancouver buyer by $40,000-$50,000! All buyers will then need to meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with the lower variable rates and shorter terms.
Another change is for the investment buyer, who will be required to come up with a 20% down payment vs. 5%. This will likely have a bigger impact as it may cool down some market speculation. However, over the long term it could mean less investment in rental condos and houses resulting in rising rental rates.
So that takes us to April and right through to July 1, 2010 when the new HST (Harmonized Sales Tax) kicks in. This new tax represents only a few hundred dollars more on the purchase of a resale home but on a new home (especially over the $525,000 threshold) be ready to open your wallet as the increase will be in the tens of thousands of dollars!
After July 1, 2010? Stay posted.