Thursday, October 4, 2007


Surprise, surprise. VREB wants the provincial government to increase the thresholds for first time buyers to skip paying the property transfer tax. I've written about this before. Reductions in consumption taxes lead to price increases, not decreases. This isn't about the FTB being priced out forever, this is about a cooling RE market due to unsustainable market forces.
First-time buyers "save and save," Bev McIvor said in an interview yesterday -- and "to find out they are going to have to pay some kind of property-purchase tax really makes a difference."
Sorry, Bev. Some FTBs "save and save" but many FTBs "borrow and borrow" from their parents, banks and credit cards just to come up with a down payment. And now that you don't need a down payment, many FTBs are getting into the market when they otherwise couldn't have, and when some economists would argue, that they shouldn't have. Dropping $7,000-$10,000 on a house priced between $430,000-$480,000 will not make a lick of difference for affordability.
"Government can argue that the threshold still nicely applies to the condominium market but we believe the intent of the program was not to restrict assistance to only buyers of condominiums."
I haven't heard that argument from government. And guess what? FTBs can leave Victoria and Vancouver and buy a really nice house and qualify for the exemption. Which, it seems, many are considering, and actually doing.


Anonymous said...

If the agent's are truly concerned about affordability - how about lowering their commissions.

Yeah right, I get tired of the con game. Profess that you want to give young couples a helping hand -while your other hand is digging into their pockets.

Roger said...

I agree with most folks that the property transfer tax is a ripoff.

However, the agents are just trying to come up with another way to convince FTBs to mortgage their soul... These recent mortgage changes, "courtesy" of CMHC and the banks, have just about run out of steam for FTBs.

1. Raised the amortization term from 25 years to 40/50 years.

2. Reduced the requirement for a down payment to nothing down.

3. Use a variable rate instead of fixed rate mortgage.

4. Loans or gifts from parents for a down payment are now allowed.

5. Use the funds from your RRSP as a downpayment (20K max.)

6. Using a credit card for a down payment.

7. Limited verification of applicant's income

So if a gift from their folks, a variable rate mortgage for 50 years, depletion of their RRSP and misrepresenting income still puts the FTB out of the game due to high prices lets get some relief from the government.

These guys will do anything to keep the ball rolling!!

Anonymous said...

FTBs haven't been in this market for a long time.

It has been riding on people already in houses moving up or in using the equity to buy an investment property.

They can try to sell this c__p to FTBS but they really aren't even in the running anymore.

Anonymous said...

Excellent! And I'll come over to your job/ company and ask you to lower your pay when I purchase your services. We can all do don't really have much of a clue

Roger said...

anon 6:49 wrote

And I'll come over to your job/ company and ask you to lower your pay when I purchase your services.We can all do don't really have much of a clue

Aaah - spoken like a true, greedy real estate agent!!

Let's take a closer look at commissions. The standard rate is 6-7% on the first 100k and 3% on the balance. So three years ago a seller paid about 15K + GST if the house sold for 400K. Today, that house might sell for 600K and the commission would be 21K + GST.

This is an increase of 6K or 40%!!

Are the agents spending that much more time on the sale and have their expenses gone up by 40%?

No but there are more of them fighting over the same pie. MLS is a monopoly and the property transfer tax is law so the homeseller just gets ripped off by this rigged percentage game.

olives said...

"Excellent! And I'll come over to your job/ company and ask you to lower your pay when I purchase your services. We can all do don't really have much of a clue"

I thought the commissions were negotiable? When I purchased my first home years ago I also negotiated with the agent to pay some of the closing costs out of his commission. I have worked on commission in the past and as long as it is acceptable to both parties, then what is the problem?