New tax cools our Red Hot Real Estate Market!

House sales bore the brunt of drop"

As it turns out, the Government did find a way to cool a Red Hot Real Estate market – When in doubt, TAX!

That's just what the province did with the sudden and somewhat shocking introduction (Aug 2) of a 15% sales tax on offshore buyers of Greater Vancouver Real Estate.

While we may never know the real importance foreign buyers play in our Real Estate market recent sales stats has left us with at least some indication. One month after the introduction of the tax, the market has experienced a 26 % drop in sales compared with August 2015 putting us back in line with the historical 10 year sales average.

It's no surprise that House sales bore the brunt of the drop down 44.6%! It's the market that was 'the focus' with most foreign buyers. At the same time condo and townhouse sales dropped 10% & 25% respectively supported by steady local demand due to the relative affordability of these categories.

It's clear that both local and foreign buyers stepped away from the market during August waiting to see the affect of the new tax on the market. We are likely to see continued volatility for the remainder of the year while some industry experts are predicting prices to resume steady, manageable increases during 2017.

One thing is for certain that fundamentals of a strong market remain intact (rising migration, low interest rates, improving employment) and all things remaining equal, it's more than likely this market hiatus will be brief.

So while many foreign buyers stand back looking for any weakness in the market to strike, many local buyers will certainly follow their lead. However, for the more sophisticated, long-term thinkers, now is perhaps the time to act. This is a more buyer friendly, balanced market, unless of course one prefers to wait until those crazy multiple-offers re-appear!

"Whenever you find yourself on the side of majority, it is time to pause and reflect"
Mark Twain

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