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April 2010 Market Update
Why Now's a Good Time
If you're considering buying a home, now may be a better time than in several months.
That's because, right now, three key factors are working in the buyer's favour: the HST, interest rates, and product selection.
The HST, which comes into effect on July 1, won't have a dramatic effect on the real estate market as a whole; however, there are some areas where buyers and sellers will immediately notice its impact.
Firstly, only new housing (or substantial renovation) will have HST imposed on it, which means that existing resale properties (90% of the market) will remain exempt from this tax. That said, new homes will immediately become 7% more expensive, which will inevitably result in some upward pressure on prices for resale units.
Secondly, real estate commissions will now be subjected to 7% higher tax, as the currently exempt PST portion expires and the GST merges into the HST. Fortunately for consumers, commissions in BC are among the lowest in any jurisdiction in North America, averaging roughly 3% in this province as compared to 5.1% in the US and 5% in Ontario.
To beat these changes, transactions should be completed by July 1st.
With interest rates at an all-time low, now's the best time to get pre-approved and lock into an attractive rate. And with TD and RBC recently announcing that they are increasing their 5-year benchmark rates by 60 basis points, there's renewed urgency to get pre-approved immediately.
Remember: with a pre-approval, you will generally get a guaranteed rate for up to 120-days. You DO NOT need to exercise this right, which means that you only need to borrow the money if you find the right property.
With the onset of spring, an abundance of new product is set to hit the market, meaning that now is a great time to find a property that fits more of your criteria. While the winter months may prove to be a good opportunity to negotiate with a seller, the spring is the best time to find your dream home. Act quickly though, good product doesn't stay around forever!