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PRESIDENT, THE SOCIETY OF NOTARIES PUBLIC OF BC
PRESIDENT, THE SOCIETY OF NOTARIES PUBLIC OF BC
The Focus is on Real Estate!
These are my last musings to you as President of The Society of Notaries Public of BC because the final year of my term finished at the end of September.
How fitting that this edition features the Real Estate Institute of BC and the work they do in identifying issues and looking at real estate trends in the industry.
Much of the news in the past 2 to 3 years has been dominated by “Real Estate.” There have been changes in regulations, interest rate changes, and surprises in the real estate industry. It seemed that not a week went by without another prediction about the real estate market and its state, the announcements of a new “green” housing proposal, new taxes, and new programs all relating to real estate.
Let’s take a look.
Spurred on by ever-increasing prices in the housing markets across Canada and increasing consumer debt, in January of 2018 the federal agency Canada Mortgage and Housing Corporation introduced a “stress test” for home buyers looking for mortgages.
Despite the low mortgage rates, borrowers had to qualify for their loan at a much higher rate of interest.
The effect was immediate. Housing sales slowed across the country. In BC the bottom dropped out of sales but the hoped-for price drop was slow to materialize. Prices did finally dip in 2018 but, for many buyers, a single-family home was still out of reach.
This year, prices have levelled and it is expected they will rise again in 2020.
Has anything happened to address this situation?
The BC government began to feel the pressure of unaffordable housing and lack of affordable rental units in the Lower Mainland. New legislation was introduced in the form of the Speculation and Vacancy Tax Act. The Act is directed at persons or corporations who own residential real estate and let it sit empty.
The tax applies only in certain designated areas of the province that are feeling the housing pressure. Property owners residing in those areas must complete an annual declaration to claim an exemption from paying the tax. The City of Vancouver has also implemented a similar tax with its “Vacancy Tax Bylaw.” It is hoped that many vacant properties will become available for rental. It’s not clear yet if that has happened . . . and affordability remains an issue.
The final shoe-drop was the introduction of new legislation called the Land Owner Transparency Act, given royal asset in May of this year.
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It is not yet in effect as the regulations are not in place but, once enacted, it will require further disclosure of the details of the principals of corporate entities who are owners of property. Other reports yet to come include the report of the public inquiry into money laundering, the Cullen Commission of Inquiry into Money Laundering. Real estate is believed to be a favourite parking spot for money launderers. The government hopes the inquiry will shed some light on the magnitude of the problem and see if there is a link between increasing prices and money laundering activities.
As we enter the fourth quarter of 2019, it is hard to predict where all this will lead. There have been some changes in the market but people continue to move to BC, increasing demand for housing. • Housing prices and rental rates in the Lower Mainland do not appear to be dropping and are either holding steady or rising in other regions of BC. • New housing starts and construction of affordable rental units seem unable to keep pace with the growth in population. • New ideas about housing options and green housing projects are still in a beginning stage and not yet having an effect on the market.
One thing we do know is that as real estate professionals, our jobs are not going to be static or boring. Something new will always be on the horizon. s
