HST will hit condo maintenance fees

IN MY OPINION: The HST presents some real threats to our industry, however like all legislation that is incomplete and unpublished, the extreme risk/reward is still unclear. Without the luxury of knowing exactly what details are included in the new legislation, one cannot help but expect that the cost incurred by property management companies will be passed on to the strata home owners… Roland Kym
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British Columbia’s condominium owners can expect their building maintenance fees to rise up to seven per cent when the Harmonized Sales Tax (HST) takes effect next July, according to groups that represent them.

Monthly maintenance fees cover the common costs of looking after a condominium complex, from landscaping and janitorial to heating systems and elevator maintenance.
All services now subject only to the five-per-cent GST will be subject to the full 12-per-cent HST after next July 1.

“The potential here is that strata corporation budgets and fees are going to be raised anywhere from three to seven per cent to cover costs,” Tony Gioventu, executive director of the Condominium Homeowners Association of B.C., said in an interview.

“The consumer is going to pay those bills.”
Gioventu said the strata-corporations’ tax picture is still a little unclear since the province has not yet brought forward its legislation to harmonize the GST with the provincial sales tax.

His organization is in discussions with the provincial Ministry of Finance and Canada Revenue Agency to find out exactly what the HST will apply to.
He said the added tax burden will vary from condominium complex to complex, depending on how much the governing strata corporations rely on contractors to provide services.

Gioventu said some smaller strata corporations manage their own affairs among the condominium owners, and have few needs for outside services.
Most, however, hire property management firms, and even those companies’ fees will go from being subject only to the GST to being subject to the additional amount of the HST.

“Strata corporations are end users, so they have no input tax credit system or GST rebate at the present time,” said Kevin Thom, executive director of the Strata Property Agents of B.C., an organization that represents about 90 of B.C.’s 289 registered strata property managers.

Thom said bigger complexes, such as highrises with underground parking, elevators, swimming pools and extensive mechanical systems can require a lot of services.
Anybody providing services to strata corporations “would obviously have to increase their fees, including management companies,” he said.

Thom said it is also debatable whether strata corporations would want to press the provincial Ministry of Finance and the Canada Revenue Agency to give them some sort of tax credit or HST exemption to claim back the tax if it means a re-examination of their non-taxable status.

Most condominium owners are unaware of how the HST will hit their fees right now, Thom said, but the picture will become clearer once management firms start giving strata corporations their budgets for the coming year.

Gioventu said that how much the HST hits condominium owners will also depend on how much service suppliers can accommodate the impact of the tax in their fees.
“The service providers will be the ones that get [HST credits], so will they accommodate those increases in their pricing to offset [the tax]?” Gioventu asked. “That’s the really big question.”

Source: depenner@vancouversun.com

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Real estate markets race to record July home sales

Metro Vancouver charts increase of 89-per-cent over same time last yearHome sales in the Lower Mainland burst out of their long slump in July as first-time homebuyers, lured by lower prices and rock-bottom interest rates, flooded into the market.
Both Metro Vancouver and Fraser Valley real estate boards reported record home sales for the month of July.

Metro realtors racked up 4,114 sales through the Multiple Listing Service in July, the Real Estate Board of Greater Vancouver said Wednesday. That's an 89-per-cent increase from July 2008, when sales were just headed into the doldrums.
The price of the typical single-family home in Metro hit $711,702 in July, down 5.5 per cent from the same month last year but 10-per-cent higher than at the beginning of this year.

It was a similar story in the Fraser Valley, where the real estate board saw 2,089 MLS sales in July, a 62-per-cent increase from the 1,284 sold in July 2008, and a little higher than the previous record of 2,051 in July 2005.
The price of a typical detached home in the Valley reached $477,420 in July, down almost six per cent from a year ago, but up almost four per cent over the last three months.

Paul Penner, president of the Fraser Valley board, said 37 per cent of buyers in the July market were first-timers, compared with 33 per cent in June.
"That volume creates a significant ripple effect as the sellers of those homes move up," Penner said in a news release.

Jake Moldown, president-elect of the Vancouver real estate board, concurred.
He said first-time buyers who entered the market during the boom a couple of years ago now feel comfortable moving up the property ladder.
"They understand what a mortgage is and they're comfortable with their payments, and now they're looking to step up," Moldown said.

Vanessa Brown, a library technician at Langara College, is one of those buyers.
She traded a one-bedroom condo at 56th Avenue and Fraser Street in Vancouver, which she bought five years ago for $123,500 and recently sold for $196,000, for a $365,000 two-bedroom unit at Seventh Avenue and Main Street.
"I figured when the market dipped a bit, even though I would be sacrificing a bit of money on the sale of my apartment, I would have more to gain as I moved up the market," she said.

Moldown said the strength of sales in recent months has been surprising, but he believes the overall market is stabilizing.
Tsur Somerville, a real estate expert in the Sauder School of Business at the University of B.C., said there are signs of more stability in the overall economy, but it is difficult to see the pace of sales continuing at peak levels.
"This is a very, very high level, and [long-term mortgage] interest rates have already started creeping up," Somerville said.
"It's a wonderful, positive statement about people's outlook for where things are going," he said, "but it's hard to put together the set of circumstances where sales of this level are sustainable and persistent."

However, Somerville said there are few signs that the market will collapse again "without some substantial shift in [mortgage] rates."
B.C.'s employment picture, especially in Vancouver, has shown signs of stabilizing with the addition of more full-time jobs in recent months after a period of losses, said Carol Frketich, regional economist for Canada Mortgage and Housing Corp..
The big question is whether high sales levels are sustainable, Frketich said. "That's yet to be seen until we see that labour market more solid."
Frketich it's now a seller's market in some areas, with inventories falling as sales rise.

In Vancouver, the number of active listings is down 34 per cent from the same month a year ago, and now stands at 12,482 units.
Sellers put 5,041 new listings on the market in July, a 17-per-cent decline from July 2008.
The inventory of unsold homes also shrank in the Fraser Valley, declining almost 23 per cent from record levels a year ago to 9,510 active listings in July.

Source: By Derrick Penner, Vancouver SunAugust 6, 2009depenner@vancouversun.com

U.S. pending home sales rise 3.6% in June

U.S. pending home sales rise 3.6% in June

Pending sales of previously owned U.S. homes rose at a faster-than-expected pace in June, advancing for the fifth straight month for the first time in six years, a real estate trade group said on Tuesday.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in June, rose 3.6 percent to 94.6. May's index was revised upwards to 91.3 from 90.7, while the percentage increase was bumped up to 0.8 percent from 0.1 percent.

Analysts polled by Reuters had forecast pending home sales to rise 0.6 percent in June. Pending sales were up 6.7 percent in June compared to the same period last year.

Source: Reuters August 04, 2009