HST and House Prices

Poor Helmut Pastrick is at it again, (HT Raize on Realestatetalks) providing insight into how markets will react with BC voters laying the smack down on a harmonized sales tax. So let’s assume for a moment what’s done is done and look again at how the HST affects house prices. According to Pastrick:

According to Pastrick—chief economist for Central 1 Credit Union, the association of credit unions in B.C. and Ontario—some buyers, especially of new homes, may delay purchases and save themselves some extra money.
“Will it hurt?” Pastrick asked in a phone interview with the Georgia Straight. “I think that impact will be temporary. The activity would be made up under the new system shortly, and indeed under the new system, the demand for housing is somewhat improved given the lower costs that will be in effect. So that would provide some lift to the housing market.”
A housing-market analyst with the Canada Mortgage and Housing Corporation in B.C. before joining Central 1 in 1997, Pastrick said that the changeover period will also likely see postponements in the planned construction of new homes.
“It depends on the transition rules, but in general I would expect to see some delay into the new tax system for some new construction,” he said.

Ah so demand will improve under the new system. Well that’s good news. But let’s remember a few things about the housing market:

  • Most housing stock is not taxed and often competes directly with new stock.
  • A large part of total costs are associated with land prices.
  • Developers want to make money.
  • Rational investors have other competing investment choices.
  • It is true that Realtor and other transaction fees will be taxed less under the new regime.

I do not pretend to be a professional economist, but I’m trying real hard to figure out how, as an investor, I would hold off a purchase solely due to the repealing of the HST. After all, I can factor the tax into my ROI calculations. Please help me out, readers!

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bubba
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bubba

Good scoop jesse.

Basically, we are entering the 2nd peak buying season, the Fall.

They are getting desperate,and if this quarter ends up bad (which all indications are it will) then no more wiggle room.

Rennie's OV package stunt is sheer desperation "cute" but stupid.

terminalcitygirl
Guest
terminalcitygirl

To the shills, owning = lifestyle. And as we see in Rennie's campaign, that is what he is selling. Buy an OV condo and become a world class BBQ'er, kayaker, runner, biker, traveller, shopper, etc… and look good in those yoga pants!

bubba
Guest
bubba

To be a fly on the Wall

Rennie is in a conflict of interest, which in my view costs the COV citizens.

The COV is a one time client, while the private developers truly butter his bread.

The obvious message a year after they came on the market in mid 2010 is they are dogs, fire sale them.

The developers can and will undercut OV. Rennie can feed them insider info which they can counter. What is the OV's end game, to prop up prices, the OV is the straw man to achieve the aforementioned ?

pricedoutfornow
Guest
pricedoutfornow
According to people in Vancouver, living = owning. Although if I were to buy the same place I live in today (I rent, obviously), my quality of life would remain the same. Actually, I could even argue that my quality of life would go down. For one, the amount I pay on a monthly basis would increase by more than $1000 over the cost of renting. And I would have zero savings, having used them all for a measly 10% downpayment. And I would feel pretty ripped off at having bought such a poorly-designed condo, where it sounds like Niagara Falls in the bedroom every time the people upstairs flush. Sure, I would have "stability" (or not, because I suspect there may be a special assessment one day down the road) and "pride of ownership" but thanks, I think I'll… Read more »
paradox
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paradox
Patiently Waiting
Member
Patiently Waiting

In a just world, the CCRA would flag their parents for audits:

http://www.theprovince.com/cars/Young+drivers+lux

Best place on meth
Member
Active Member
Best place on meth

@Patiently Waiting:

There is a poll at the bottom of the story:

"What should happen to the drivers caught racing on highway 99?"

Sadly, deportation is not on the list which would be my first choice.

Eddie
Guest
Eddie

Any idea where these under 20 youths are getting this kind of money? HELOCS? HAM?

http://www.driving.ca/vancouversun/sports+cars+va

people observer
Guest
people observer

@ Eddy – what is so difficult to understand. Under 20 kids, rich parents. Rich kids travel with rich kids… As I have said before, people in Vancouver cannot fathom the amount of wealth in this region, and house prices and vehicle prices here are peanuts. Those cars are paid for in cash and gifts from parents.

VanRant
Guest
VanRant

@people observer: In the ideal world, their cars taken away, their pictures published and driver license taken away for life.

Anonymouse
Guest
Anonymouse

So they get charged with "driving without due consideration for others". Is that really the best they could come up with for turning a public road into a race track in the middle of the afternoon?

specialfx3000
Member
specialfx3000
If HAM is purchasing these NEW homes, I think the sales tax change will have some impact their decision. I posted before that these HAM will hoard 69 cent boxes of tissue paper on Sunday morning at SDM then head to Kirin for over-priced dim sum. They will spend hundreds on shark-fin soup but suggest paying by cash to avoid paying tax on it. Why do you think the Richmond Night market is so busy? No Tax. It's not about total cost, it's perceived value for what they paid. They will keep pumping up the house prices here if they think it will continue it's march to the moon. So, my guess is that some will shift from buying 'new' homes to 'existing' homes if it means a break in the tax. Builders will be forced to make some concessions… Read more »
people observer
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people observer

no issue with taking away the license. forfeiture of the vehicle will not mean much, I am sure another car will be available in the showroom if necessary

"So they get charged with “driving without due consideration for others”. Is that really the best they could come up with for turning a public road into a race track in the middle of the afternoon?"

The cops can't prove the exact speed (I suspect there was no radar) and by the time they caught them, they were not hitting 200 clicks, but were probably above the speed limit by 40. I think this is the best they could do without hard evidence

Anon
Guest
Anon

If interest rates don't go up are we expecting a market like the one described here:

http://www.theatlantic.com/business/archive/2011/

bubba
Guest
bubba

200km/h?

Confiscate them and sell them..turned a car into a dangerous weapon.

Why no info on the backgrounds?

Odds HAM latchkey kids?

davers
Guest
davers

I think the reason so many people are outraged about this street racing story is because of the fancy cars. This probably wouldnt even make the news if they had been driving cars that only cost $30K (and yes, most cars that cost $30K can do 200km/h).

People speed all the time. I was doing 140 on the cocquahalia a while ago and people were blowing by me like I was standing still. Just regular jeeps and subarus probably doing 180-200 on the straight stretches.

No news story, no outrage, just people going fast.

Everyone automatically assumes these kids come from super rich immigrant families and calls for them to be deported, even though the story makes no mention of their race.

people observer
Guest
people observer

actually pictures suggest the owners are asian, interviews also noted that they were cabbed back to richmond as a group (pretty good indicator), and the lambo owner was flying to LA tomorrow for a trip *unrelated).

painted turtle
Guest
painted turtle

A Chinese investor is trying to buy 300 square km of Iceland (strategic position).

I learned that Iceland, like other countries, forbids the sale of land to foreigners (the Chinese investor is trying to buy pass the law).

This brought me to find this (regulations in Canada):
http://evpowerhomes.com/resources/ForiegnOwnershi
Does this mean HAM speculators must pay 25% tax on house appreciation?

davers
Guest
davers

There is a very good chance they are Asian, I dont doubt it at all. I just find it interesting that most people seem to believe that it is a concrete fact, which it isnt.

Was what they did dumb? Hell yes. Are the kids spoiled brats (regardless of their race)? Yep. Is it fair to call for deportation when you have absolutly no idea where these kids were born? Of course not.

davers
Guest
davers

@painted turtle: "the Chinese investor is trying to buy pass the law"

Hahaha good pun.

Balda
Member
Balda

two car's blocked the traffic to create racing zone… there is nothing wrong with that, it's free country and you are free not to drive – close your ayes and pretend it is not happening.

What is the other choice you have ? None! Because if you go and beat the shit out of any of them – you will be sued for 'racism'. And be sure, everybody will know their background (and cute children photos) then.

registered
Member
registered

21 davers Says: "Was what they did dumb?"

I was thinking more along the lines of laughably timid. Armed with some of the most rarefied automotive weapons in history they blew their loads doing taxi+ speeds in the Massey tunnel? Really? Those cars would been sleeping, it's almost cute. High school pals did better in big-block Beaumonts.

Anonymouse
Guest
Anonymouse

@davers:

"Everyone automatically assumes these kids come from super rich immigrant families and calls for them to be deported, even though the story makes no mention of their race."

.. and even if they're of Asian ethnicity, then it doesn't mean they're not born Canadian citizens. In which case there's nowhere for them to be deported to.

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