ARE MORTGAGE RULES AND TAX REGULATIONS WORKING THE WAY WE WERE EXPECTING?2018-03-23 11:20:55 Posted By Amir Hamzehali
It has been almost two years since the government has relentlessly tried to control the housing market by constantly tightening mortgage rules and increasing taxes for home purchasers. A quick glimpse at the Greater Vancouver Real Estate market shows that the number of sales are down in comparison to the same time last year, and the housing benchmark prices are lower in many areas in comparison to a few months ago.
In fact, when we look at the stats in more detail, we find that it has only been the luxury single family housing market that has been hit the hardest in terms of declines in both the number of sales and prices! In some cities like West Vancouver, the sales-to-active listing ratio for properties over $5 million dollar is at 2%. For example, only 3 out of 160 single family homes listed and priced at $5 million dollars and higher have been sold in month of February in West Vancouver. The situation is a bit better in Vancouver Westside where this ratio is sitting at 3%. The extent of the negative effects these policies have had on our luxury housing market is clearer when we compare these numbers to February of 2016, when 26 homes priced over $5 million dollars were sold in that month in West Vancouver.
Comparing these numbers in luxury market with the average sales-to-active listing ratios of condominiums being currently at 80% and higher, and the prices of less expensive properties still holding tight or even rising, shows that we have done a great job in slowing down our luxury market and making it more affordable for rich people if it was the plan!!!
In this situation where the housing affordability has not been improved for average people, we should be hopeful that the government has at least been successful in terms of raising more tax money from rich and using it towards helping those in need. The reality of government being able to raise more taxes by increasing taxes is another area of debate, especially considering the sharp decline of sales in luxury market and a sharp drop of total dollar volume of sales as a result!