What are the thoughts: are people waiting for HST to be repealed? I'd say, given the target market for these properties, the high price level, and the commensurate 7% costs, yes there must be some impact.

Prediction: "We pay the HST" will start popping up in ads.

Oh, and look at the construction permits issued in the City of Vancouver. I summarized them here. Summary: detached dwelling permits granted in July and August are the highest in recent memory. These are houses that are currently being built and likely won't be completed until 2012. There are lots of new detached properties being built right now; how many do you think are spec builds?

@900kCrackHouse:

"that brings us to a very affordable $1,270k."

Wow, $1.27 million is very affordable?

@patriotz,

"People are paying absurd prices for RE precisely because they think it’s immune to the downswings seen in the stock market."

while that may be correct, I can't imagine people's confidence about future prospect (job security, abitlity to sustain current income level etc.) not being affected by the declining markets. That is – if I have a huge mortgage, while I may not be concerned about the declining asset value, I would be very concerned about my ability to continue servicing the loan.

Deflation is at hand and all money is running for safety. I really wonder if Europe and the US are out of bullets because if they fire off another stimulus and it does nothing the jig is up.

take care of your money and keep liquid. Van is toast and day old now.

@jesse:

What are the thoughts: are people waiting for HST to be repealed? I’d say, given the target market for these properties, the high price level, and the commensurate 7% costs, yes there must be some impact.

It is interesting. The thing that I find funny about this is that the "target market" is one that is apparently concerned over $140k of tax on a $2M house, yet at the same time, this "target market" is willing to get into bidding wars on properties and pay $200k plus over list on houses. Strange indeed.

@Not much of a name…: In all fairness to the theory, human behavior on pricing is no logical.

For example, a 3% credit card fee on top of the purchase, makes people angry, but set the price 3% higher and give a discount for cash and people (even those using a CC) are happy.

Hey, there is a post over the weekend about the Richmond development Quintet paying $50/hr to fake buyers to line up and fake interest in the development. Just curious, where do they find these people and how do I sign up? $50/hr is more than my current hourly rate as a senior software engineer!

@Vansanity: "would buyers really be that concerned over 7% savings while having to then wait for 2 more years for it to kick in?"

I think they would. Look at it this way: if expected inflation is right around zero and "everyone" is crowding into risk-free low-yielding assets like USTs and Vancouver housing (!) — flying to so-called stores of wealth — then current nominal prices should reflect expected future nominal prices. If you suddenly add in 7% tax, that's an immediate 7% loss. No wonder speculative buyers are balking.

Now if the "store of wealth" argument starts showing weakness, the 7% tax will be the least of buyers' (and sellers') concerns.

@Vansanity: “would buyers really be that concerned over 7% savings while having to then wait for 2 more years for it to kick in?”

I think they would. Look at it this way: if expected inflation is right around zero and “everyone” is crowding into risk-free low-yielding assets like USTs and Vancouver housing (!) — flying to so-called stores of wealth — then current nominal prices should reflect expected future nominal prices. If you suddenly add in 7% tax, that’s an immediate 7% loss. No wonder speculative buyers are balking.

Now if the “store of wealth” argument starts showing weakness, the 7% tax will be the least of buyers’ (and sellers’) concerns.

@AG Sage: I know what you mean, however, consumers have a right to be angry if a vendor adds a 3% charge for accepting credit cards. That goes against the agreement the vendor has with credit card processing company. But that's another topic for another day.