Canada Home Sales

[Mike Riley]

Canada's market is quite different, and until late last year, was doing well. Now, thanks in large part to the HST (Harmonized Sales Tax: supposedly making it easier to collect and distribute taxes by combing provincial and federal).

Many business sectors and professionals are taking a huge hit, because the HST has actually expanded the range and levels of taxes available to be taken. A professional writer, for example, must charge HST for a job, and that raises his price to the customer. Then, when he goes home, he now pays a higher tax bill on his Shaw Direct TV, thanks to the HST.

[Mainecoons]

Interesting but not sure how that would have a serious impact on home sales.

[Mike Riley]

If you consider the average price of a home in Canada being over $330,000, and for example Ontario's HST at 13%, there's $42,900 in taxes applied to your price. There was a time not long ago when houses weren't taxed like that at time of purchase. At the moment, I'm unsure how the new HST affects an owner's yearly property tax.

Then there are associated service costs that are charged HST:

* Legal fees (buyers and sellers)

* Moving costs (buyers and sellers)

* Real estate commission (sellers)

* Chattels (IE appliances) (buyers)

* High ratio insurance premiums (buyers)

* Fire insurance premiums (buyers)

* Home inspection fees (buyers)

* Appraisal fees (buyers)

* Surveys (buyers)

[TWolf]

That's a big chunk of extra expenses in buying a home. I can understand why it's a problem. Buyers don't want to pay that extra amount, and sellers obviously aren't interested in taking a 13% hit on what they get, considering they've already dickered on the price, and probably lowered it.

And the way it appears, it's a continuous flow of higher taxes on all phases of the process, which adds additional costs. Very costly!

[gimpychimp]

HST applies only to new homes, doesn't it? I think resale homes are free of it, and that's the majority of sales..

[Jeannie]

HST applies only to new homes, doesn't it? I think resale homes are free of it, and that's the majority of sales..

The bubble has burst in Canada mostly due to high home values that have resulted in them being unaffordable to most buyers. This is nothing more than a normal market correction and paves the way to a buyers market. The prices of a year ago were not sustainable.

Another factor was new rules put into place that all homeowners had to qualify as if they were taking a 5 year term. It didn't matter if you were going with a variable rate, you still had to qualify for the 5 year term. This made it harder for some buyers looking to purchase to qualify and also has made it difficult for homeowners to renew their existing mortgages when their term was up.

The HST only applies to services used in "purchasing and selling an existing home", such as real estate commission, not to the actual sale price.

The drop in home sales was expected as many purchased before new rules came into place so the current drop in sales figures can not be compared to last year with a degree of accuracy.

[senor vivo]

and weren't those associated costs already attracting GST of 5% anyway? So I think the difference is that 8% PST is now also in the mix, with the intro of HST.

[Mike Riley]

Here's a quote from The National Post in June:

"The tax will apply to new homes costing over $400,000 in Ontario and those over $525,000 in B.C. New home buyers in Ontario will receive rebates up to $24,000 to lessen the impact of the HST.

Read more: http://news.nationalpost.com/2010/06/30/hst-arriving-tomorrow-here-is-what-you-can-expect-in-ontario-and-b-c/#ixzz0yV8M0jI4"

So I guess it's half-and-half: I would say $400,000 is an expensive home, but since $330,000 is the "average", who's zoomin' who?

[lorilee]

Here's a quote from The National Post in June:

"The tax will apply to new homes costing over $400,000 in Ontario and those over $525,000 in B.C. New home buyers in Ontario will receive rebates up to $24,000 to lessen the impact of the HST.

Read more: http://news.nationalpost.com/2010/06/30/hst-arriving-tomorrow-here-is-what-you-can-expect-in-ontario-and-b-c/#ixzz0yV8M0jI4"

So I guess it's half-and-half: I would say $400,000 is an expensive home, but since $330,000 is the "average", who's zoomin' who?

Yes but HST only applies to NEW HOMES, NOT RESALES.

[bjdephillips]

anyone interested in the canadian housing market should read this blog daily:

http://www.greaterfool.ca/