Despite the weather turning colder this week, our Spring Market continues to heat up. Clients are reporting a good number of multiple offers in East Vancouver for single family detached homes. According to a recent CMHC market update there is only a 3 month supply of detached homes in East Vancouver with no signs of slowing down! The Vancouver condo market remains balanced with roughly a 6 month supply, and Westside single family detached homes are still seeing steady activity with house prices generally flat or down slightly. There is certainly a good amount of intra-market variance depending on housing type and location!

 On the heels of last week’s transitional HST rules, the BC Government unveiled a First Time Homebuyer Bonus as part of its 2012 Provincial Budget this week. Here is what we have been able to find out about this program to assist First Time Buyers:

• This is a tax credit, not a rebate or bonus.
• The rebate is calculated as 5% of the home price to a maximum of $10,000.
• There is a pro-rated phasing out of this rebate for higher income families. Phasing out starts at $150,000 with zero rebates for family incomes above $250,000.
• The tax credit is applied when you file your annual tax return.
• You must be a resident on BC after Dec. 31^st, 2011 in order to claim the tax rebate.
• The $10,000 tax credit is a deduction from your personal income with rebate determined by your personal income tax bracket (BC Portion). 
• This is a BC tax credit, not federal, so only applies to the BC tax portion of your personal income. 
• This credit only applies to newly constructed or substantially renovated homes with a possession date before April 1^st 2013.
• The rebate only applies to owner occupied homes.
• This credit only applies to first time homebuyers which in BC are defined as someone who has never owned a home anywhere else in the world.

For more information on government programs available for first time buyers, contact our Advisors at 604-913-1000

TODAY

• For Completion Dates between NOW and April 1, 2012, the current tax (HST) still applies with the same rebate programs.

 TRANSITIONAL RULES

• For Completion Dates between April 1, 2012 and April 1, 2013, transitional rules will apply. GST and PST will be charged. A PST new housing rebate will be available of 71.43% of the PST portion to a maximum of $42,500.

 • Or, in other words, if you buy a home of $850,000 or less, you will pay the usual GST, plus PST of 2% after the rebate is taken into account.

 • For homes constructed partly before April 1, 2013 and partly after

April 1, 2013, there will be a mechanism for calculating which taxes and which rebates will apply.

 • The transitional rules will apply to new rental housing and to new second and recreational homes outside of the Capital and Greater Vancouver Regional Districts.

 NO PST AFTER APRIL 1, 2013

• For homes constructed entirely after April 1, 2013, PST will not be charged. (Note: builders will not be able to claim input tax credits for PST paid on building materials, so home prices may be adversely affected). GST will still be payable and the existing federal GST rebates programs remain in place.

 Follow these links for details of the new tax programs from the Provincial Government:

 http://www.pstinbc.ca/media/2012_housing_rules_FEB.pdf

http://www.pstinbc.ca/buying_goods/buying_a_home/new_home_tax_calculator

Whether you are planning on buying a home or already own a home, here are 10 grants & rebates that will help you save money! Please use the links below to see if you are eligible.

1. Home Buyer’s Plan

Qualifying homebuyers can withdraw up to $25,000 (couples can withdraw up to $50,000) from their RRSP’s for a down payment. Homebuyers who have repaid their RRSP may be eligible to use the program a second time. Go to http://www.cra.gc.ca  enter “Home Buyers Plan” in the search box or phone 1-800-959-8287.

2. GST Rebate on New Homes

New homebuyers can apply for a rebate of the federal portion of the HST (the 5% GST) if the purchase price is less than $350,000. The rebate is up to 36% of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000. Go to http://www.cra-arc.gc.ca  enter “RC4028″ in the search box or call 1-800-959-8287.

3. BC New Housing Rebate (HST)

Buyers of new or substantially renovated homes priced up to $525,000 are eligible for a rebate of 71.43% of the provincial portion (7% of the 12% HST) paid to a maximum rebate of $26,250. Homes priced at $525,000+ are eligible for a flat rebate of $26,250. Go to http://hst.blog.gov.bc.ca/faqs/new-housing-rebate or call 1-800-959-8287.

4. Property Transfer Tax (PTT) First Time Home Buyers’ Program

Qualifying first-time buyers may be exempt from paying the PTT of 1% on the first $200,000 and 2% on the remainder of the purchase price of a home priced up to $425,000. There is a proportional exemption for homes priced up to $450,000. Go to http://www.rev.gov.bc.ca/rpt  or call 250-387.0604.

5. First-time Home Buyers Tax Credit (HBTC)

This is a non-refundable income tax credit for qualifying buyers of detached, attached, apartment condominiums, mobile homes or shares in a cooperative housing corporation. It’s calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009 the maximum credit was $750. Go to http://www.cra-arc.gc.ca/hbtc or call 1-800-959-8281.

6. BC Home Owner Grant

Reduces school property taxes by up to $570 on properties with an assessed value up to $1,050,000. For 2010, the basic grant is reduced by $5 for each $1,000 of value over $1,050,000 and eliminated on homes assessed at $1,164,000+. An additional grant reduces property tax by a further $275 for a total of $845 for seniors, veterans and the disabled. This is reduced by $5 for each $1,000 of assessed value over $1,050,000 and eliminated on homes assessed at $1,219,000+.Go to http://www.rev.gov.bc.ca/hog  or your municipal tax office.

7. LiveSmart BC: Efficiency Incentive Program

Homeowners improving the energy efficiency of their homes who hire a certified energy advisor may qualify for cash incentives through this provincial program provided in partnership with Terasen Gas, BC Hydro, and FortisBC.

Go to http://www.livesmartbc.ca/homes/h_rebates.html or call 1-866-430-8765.

8. BC Hydro Appliance Rebates

Mail in rebates of $25-50 for purchases of ENERGY STAR clothes washers, refrigerators, dishwashers, or freezers between June 1, 2010 and March 31, 2011 or when funding is exhausted.

Go to http://www.bchydro.com/rebates_savings/appliance_rebates.html or call 1-800-224-9376.

9. BC Hydro Fridge Buy-Back Program (different from Applicance rebates)

This ongoing program rebates BC Hydro customers $30 to turn in spare fridges measuring 10-24 cubic feet in working condition. Go to http://www.bchydro.com/rebates_savings/fridge_buy_back.htmlor call 604-881-4357.

10. BC Hydro Mail-in Rebates/Savings Coupons

BC Hydro offers rebates including 10% off an ENERGY STAR cordless phone, 50% off an E2TM dual-flush toilet, $15 off a clothes drying rack, and 50% off Earth Massage showerheads. Check for deadlines. Go to http://www.bchydro.com/rebates_savings/coupons.html or call 1-800-224-9376.

Bonus – couldn’t help but provide you with another one!

11. Terasen Gas Rebate program

Rebates for homeowners include $25 gift cards for furnace servicing, $50 rebates for upgrading a water heater, $150 rebate on an EnerChoice fireplace, $1,000 rebate for switching to natural gas and installing an ENERGY STAR heating system. Go to http://www.terasengas.com/homes/offers/lowermainlandsquamish.html or call 1-888-224-2710.

With the New Year underway and everyone back from holidays, there is no shortage of economic news! The Euro debt sale to stabilize Spain & Italy, and yesterday’s downgrade of Europe’s bailout fund by Standard & Poor’s signifies European issues will continue to create market volatility in 2012. Closer to home the Bank of Canada left its overnight rate unchanged at 1%. Tuesday’s press release mentions that the Bank’s 2% inflation target should be met over the medium term as recession and sovereign debt issues continue in Europe, and US recovery continues to evolve at a modest pace (BOC press release here  http://bit.ly/As8lb5 ).

Canadian debt levels didn’t escape comment by the Bank of Canada. The Bank is becoming increasingly concerned with consumers taking on more debt due to rates being so low. We continue to hear rumblings from our lender partners that OSFI (Office of the Superintendent of Financial Institutions Canada), are continuing to review Mortgage underwriting standards and are recommending prudence in ensuring consumers do not burden themselves with high debt levels in our record low rate environment. We expect lending guidelines will remain conservative. This is why Canada is a strong economic environment and is the envy of the world.

With last week’s European debt sale pushing sovereign debt interest rates to new highs in Europe, bond yields continue to hover at record lows. Investors fear the increased debt servicing costs of the bailout auction will hamper growth and keep Europe in recession longer than originally planned. The drop in bond yields has prompted several drops in interest rates this week. The Canadian yield curve is now flat! Prime remains at 3%, with some “no frill” mortgages now offered for as low as 2.99% for a 5 year term OAC. The drop in interest rates and flat yield curve are attracting a lot of consumer attention! Buyer inquires are at high levels. This will hopefully be positive for sales this year.

Karim Virani, Founder of Virani Real Estate Advisors feels the best plan of action to benefit from these rates is to look at mortgage options for all financing. He also advises that consumers should have a long term plan for holding property. Many consumers buy without planning their long term goals. For a free consultation, please contact one of our advisors at 604-913-1000

Black Friday sales set a new record with analysts keenly watching retail trends until Christmas. Increased holiday spending and a rise in US consumer confidence have been well received by investors and stock markets. Long term bond yields have increased this week after steadily dropping last week due to worsening economic data in Europe.

 Finance ministers from the 17 member European monetary union met in Brussels last week to figure out next steps in strengthening their bailout fund. On their agenda was how to increase the bailout fund to 1 trillion Euros, involving the IMF, European Central Bank, and insulating Spain and Italy from worsening the debt crisis. President Obama is quoted as saying “Solving the European crisis is of Huge Importance to the US.” On the heels of yesterday’s meeting the European Central Bank, US Federal Reserve, Bank of Canada, Bank of Japan, and the Swiss National Bank announced their coordinated effort to provide liquidity support to global markets.  China also cut reserve requirements for its own banks. This is the first time since 2008 that China has made a move to support continued economic activity.    

 Prior to these Central Bank actions, we have been witnessing a flattening in our mortgage yield curve. Inter-bank lending rates (Libor rates) have continued to rise on European debt woes, while long term bond yields drop keeping fixed rates at record lows. The best 5 year discounted rate of 3.14% remains available on a 45 day quick close OAC (On Approval of Credit). The best 5 year variable rate remains at Prime minus .35% (2.65%) OAC, the Prime minus .35% is an outlier and we expect this offer will end soon. The majority of lenders offer Prime to Prime minus 0.20%. Karim Virani, Founder of Virani Real Estate Advisors feels that with less than 1/2% separation between variable and 5 year fixed, choosing the right mortgage term requires careful planning. Feel free to call one of our real estate advisors at 604.913.1000.

Haneef & Karim Virani wish you all the very best for the coming season. Happy Holidays!

Global markets are reeling after Greece’s announcement yesterday of a referendum vote on the recent hard fought bailout package.  European leaders are shocked by this new hurdle and very concerned about the renewed uncertainty a referendum creates.  Greek Premier Papandreou’s popularity has plunged as austerity measures have been introduced, and a referendum is his way of dealing with the reality of the situation.  He said “Democracy is alive and well and Greeks are being called to rise to a national duty beyond the regular electoral processes.”      

Reaction in Canada has been swift with 5 year bond yields dropping from 1.64% to 1.40%.  Recent upward pressure on fixed interest rates has reversed on renewed European uncertainty, and we expect short term interbank rates to climb so variable rates will continue to have a significant risk premium applied as the threat of Greek default persists in Europe.   Variable rates with discounts below Prime continue to erode with widely available rates now between Prime and Prime -0.30.

Bubble Trouble?  Recently the Vancouver Board of Trade and CMHC held an event concerning the health of Vancouver’s market. Karim Virani, Founder of Virani Real Estate Advisors is pleased to report Vancouver Real Estate continues to perform well despite global headlines.  September’s Median Prices show a year over year increase of 17.5% on Westside Single Family Homes, and 15% on the East Side.  Condo and Townhomes are up 3% and 11% respectively.  

When Haneef and Karim Virani were asked why our region is doing so well in light of global issues, they responded with the following:

• Population based demand continues to grow in Greater Vancouver with 20,000 new households created this year.
• Strong Migration.  17% of migrants buy a home in their first 12 months, 50% buy within 4 years of arrival.  52,000 people are arriving in BC this year, with 60,000 forecast for next year.  There are 300,000 immigration applications in the pipeline.
• Quality of Employment. The Lower Mainland’s unemployment rate is lower than the rest of the Province and offers better quality full time jobs.
• Low interest rates continue to stimulate First Time, Move Up, and Investment purchases.
• Vancouver continues to be the lifestyle capital of the world

In uncertain markets, it is always prudent to talk to your Real Estate Advisor before embarking on real estate transactions. Feel free to call one of our real estate advisors at 604.913.1000

After reports of better than expected US payrolls, corporate earnings, and Canadian employment gains, bond yields increased 0.30% last week.  This rapid uptick in fixed costs caused the Bank of Canada to increase their benchmark qualifying rate to 5.29%.  Lenders reacted by reducing discounts on their 3 year and longer term fixed rates.  While it’s too early to tell, we feel last week’s increase was merely a blip.  While the “Trifecta” of good payroll, employment and earnings is encouraging, we feel global economic issues are far from over.  Karim and Haneef Virani expect continued volatility in the bond markets with interest rates remaining low for the foreseeable future.

Of primary concern to the global economy is Europe’s establishment of a debt plan.  Canadian Finance Minister, Flaherty, has been openly critical of the lack of action taken by European leaders.  Ironically, the Greek philosopher Aesop is quoted as saying “After all is said & done, there is more said than done” which captures the current climate in Europe.  While investors seek certainty, European sovereign and political self-interest continue to cause delays in establishing a workable plan.  With continued financial risk in Europe, Variable Rate mortgages are increasing as lenders price in default risk.  Most lenders now offer Prime to Prime minus .25% with some outliers still at Prime minus .40% to .50%.

Circling back to Vancouver, our team continues to see a healthy level of activity.  Listing inventory has increased with prices leveling in most areas.  With borrowing rates near record lows, we are seeing a new wave of investors, move-up, and first time buyers.  Included in this activity are parents purchasing with their children as an alternative to renting.  With flexible co-signing policies, and high-ratio insurers offering “family plans” we at Virani Real Estate Advisors are seeing a new generation of buyer’s develop credit worthiness and home ownership with assistance of their parents or windfall monies. Karim Virani, Founder of Virani Real Estate Advisors says, “It is always good practice to consult with one of our advisors before embarking on a decision to do with real estate. Timing can be crucial. Please contact us at 604.913.1000

Our environment is majestic, the climate is outstanding, and the views spectacular. There is a very special flavor here. Call it the crisp mountain air, the sweeping, wide-open spaces, the fresh ocean spray, balmy sunsets, golf in February and wine in September. This is the best place in the world to be, where you can enjoy that truly balanced life.

People come here from all parts of the world (inward migration is at a high), bringing their individuality, their experiences and their business know-how.

To work here is a privilege. To live here is a true blessing. To study here is a benefit. To worship here is a natural. In the whole world there is no place like it. It is paradise.

Here is why Karim Virani thinks this province will continue to be a great real estate investment: 

1. Values grow where people go. When employment rises, occupancy of apartments, houses and offices rises – and employment in B.C. will continue to rise.

2. Real estate prices in Vancouver have risen from $16,500 in 1965 to more than $1 million today.

3. The world is discovering us. As cash (printed out of thin air) swirls around the world, it is more and more looking for a safe haven and B.C offers just that. Add to that Vancouver’s 400,000-strong Asian population and downtown Vancouver and other prime areas will continue to be hot.

4. We believe that timing (cycles) and trend identification remains vitally important. Your entry point in any real estate – or any market – is very important. Don’t fight the trend.

5. A worldwide expectation that our dollar will continue to rise means a built-in return on investment. We have large capital inflows into bonds but also into real estate markets.

6. We are one of the few truly international cities where you can talk to Europe and Asia on the same day – during business hours.

7. Social stability, excellent health services, low crime rates, lowest provincial personal income tax in Canada. No general corporation capital tax, no employer payroll taxes, no franchise tax and no machinery sales tax. We have Canada’s highest overall education levels and highest life expectancy.

8. An innovative and skilled workforce, world-leading universities, rich abundant natural resources.

9. Vancouver is one of the most livable cities in the world and B.C. is home to other vibrant cities and welcoming communities with booming tech sectors, such as Victoria, Kelowna, and Prince George – each with its own distinctive characteristics, charm and beauty.

Karim Virani believes that certain principles remain: No matter where or what you buy, you make the most money in real estate on the day you buy. Nevertheless, buy cautiously – don’t fall in love with the deal, because when investing – any investing – there is a new train (as in gravy) every 10 minutes. But with B.C. on your side, you can’t go wrong.

Call us today to buy, sell or invest in your real estate portfolio! 604-695-1000

Stock markets reacted badly last week to the announcement that the US Federal Reserve were trying “operation twist” where they will buy long dated bonds and sell short dated bonds to try and reduce longer term interest rates even more. Investors don’t seem to think that small reductions in interest rates will have much effect on the struggling US economy and were hoping instead for another big round of quantitative easing to inject more money into financial markets. Tangible action to boost consumer and corporate confidence along with steps to reduce unemployment are what investors are looking for south of the border.

The latest downdraft in the stock market is getting all the headlines but all that money moving out of stocks has to go somewhere, and one place it is going is into bonds. That has bond prices up which drives yields down.

This means our low rates should be sustainable throughout our fall market which will benefit mortgage borrowers. The recent drop in the 5 year posted rate has the Bank of Canada reducing the Benchmark making it a little easier to qualify on insured variable and shorter term mortgages. This is good timing as Real Estate Boards are starting to advise that the we’re moving back into a buyer’s market in Vancouver. The combination of low rates and increased selection of homes make this an ideal time to buy for First Time and Move Up buyers.  

There is still a risk premium being applied on shorter term money as global banks hedge their bets on potential losses in Europe. The show of solidarity by G-20 nations has given a lift and boosted investor confidence, but Variable rates still remain higher than in August.Most lenders were in a range of Prime minus -0.50% to Prime minus 0.90% in August. The range of available variables is now Prime minus 0.25% to Prime minus 0.70%.  As a result, we are seeing an increasing desire for fixed rates as the spread between variables and fixed rates narrow.

Fall is starting off stronger than expected! According to Davis & Henderson’s August mortgage broker submission report, August mortgage volumes were higher than forecast due to record low rates which helped boost overall activity. Purchasing activity in August increased by 8% year over year in the GVRD  but remained lower than historical norms. Buying activity is expected to suffciently keep real estate values stable in many areas.  The exception to price stability is noted in areas of oversupply in the Northern and Eastern Fraser Valley.  Since labour day we are pleased to see an increase in purchasing activity as new listings hit MLS after summer holidays.

 On the interest rate front we are seeing an interesting shift in “perceived” risk by our lenders. As economic conditions worsen in Europe, Canadian lenders are reducing their maximum discounts to hedge their bets against rising  debt swap spreads.  What this means in simple English is Canadian  lenders are being less aggressive and are looking for more yield between their cost of funds and what borrowers pay.  

The potential of Greece defaulting in Europe and associated stress this would have on European Banks remains the primary economic concern in Europe. Canadian lenders are pricing more of this “potential risk” in their mortgage offerings. The net result to Canadian borrowers is an incremental increase in Variable Rate mortgages, and a reduction in some of the deep discounts on fixed rate specials. While overall best rates show little change, there are a number of lenders who have pulled back. If perceived risk on the global banking system continues, we may see further increases in variable rates and fixed rates in the near future.

 Karim Virani, Founder of Virani Real Estate Advisors suggests that anyone planning a renewal, purchase or refinance secure a pre-approval within 120 days of completion to hedge their own cost of funds in case risk premiums by lenders continue to increase and be passed on the consumer.

Why do clients renew at Posted Rates? In a recent survey the #1 reason clients signed their mortgage renewal without shopping rate was because clients were unsure if they would qualify.  During the term of the mortgage, many clients experience job changes, periods of unemployment, or increased debt loads and the fear of not qualifying drives them in increasing numbers to just sign their renewal.