As another year ends, we say goodbye to the memories made and lessons learned, and we also say goodbye to the milestones that were reached throughout the year in our real estate market.
This past year, we have experienced the highs and lows of our market such as high inventory, low interest rates, price verses patience when selling, mortgage rule adjustments and implementation of the next to step to the PST transition.
Progressively throughout 2012, we have also continued to experience lower and lower interest rates.
Bank of Canada Governor Mark Carney quoted that elevated consumer debt levels represent the biggest domestic risk to the financial system. This is why it has been in our favour to keep interest rates low to maintain the economic recovery, but it’s also those same low rates that have caused consumers to take on more debt.
Looking back to July, Finance Minister Jim Flaherty announced major changes with our mortgages rules, in hopes of attempting to slow down the accumulation of debt of Canadian households by reducing the maximum amortization for a government-insured mortgage to 25 years from 30 years and reducing the amount of equity homeowners can take out of their homes in a refinancing to 80 per cent from 85 per cent.
By September, Canadians began to feel the effects of Flaherty’s new mortgage rules. The country was experiencing the start of the real estate cool down that would extend to the end of 2012.
For instance, it was reported that only 116 single family homes sold in Kelowna for September 2012—that number is lower than the number of single family homes sold back in 2007 when the Okanagan faced what was then called a recession.
B.C. successfully voted to abolish the Harmonized Sales Tax and revert back to the provinces previous ways of having two taxes, the GST and PST.
This month, the temporary housing transition tax was implemented, allowing for a tax of only two per cent on the sale price for any newly built homes, where at least 10 per cent of construction has occurred before April 1, 2013.
Looking back at 2012, it has been evident that Canada has experienced some major trends in our real estate market and will continue to experience the highs, the lows of the market well into 2013.
I wish you all a happy and prosperous new year.