Richmond Real Estate Report August 28, 2016

Blog by Arnold Shuchat | August 28th, 2016

I am just now reviewing the statistics compiled on my last post of August 26 and the following data highlights the problem with making hasty predictions based on data which is "too early" and incomplete.

As I wrote, Realtors are required by the Board to file their sales reports within 5 days of the transaction going "firm", i.e. subject removal.  Looking over the last 26 days since the new property transfer tax was implemented, I can report the following:

Of the 50 (single family homes (this number may change if deals get cancelled etc...)) reportedly sold between August 2-August 26:

1 was sold in May
4 were sold in June
21 were sold in July
24 were sold in August

Therefore, while the last 4 days of sales in July could be reported by August in compliance with the rules, 26 out of the 50 sales were reported late!  As such, it would be reasonable to assume that what was reported was only around 50% of what was actually sold in August.  That would bring the number up to about 48 single family homes which is down substantially from last August for the same period when 143 homes sold for an average price of $1,556,539. For the same period in 2016, the average price of the single family homes that sold was $1,963,156 or about 20.71% higher than the average last year. Doesn't it make sense that the demand will slack off at prices 21% higher? 

Since last year, Property Transfer Tax has increased by 1% for all properties about $3,000,000 and the Foreign Buyer's Tax was also applicable at the rate of 15% on top of the latter increase and the standard historical rates.  I cannot discern from the data whether the buyers subsequent to August 2, 2016 were "foreign" or if they paid the new 15% tax.  But one thing is clear, at the present pricing point, demand will mitigate and barring some kind of windfall from the new 15% tax, provincial revenues will deteriorate as a consequence.  

We need to remember that the bulk of any provincial surplus which has kept BC in the black has been attributable in a  large part to the $1.5 Billion in PTT revenues which could decline by about 52% without consideration of any fiscal benefits from the collection of the new 15% tax, should the market remain as it has been this August.