Richmond Real Estate Report-Post New PTT

Blog by Arnold Shuchat | August 14th, 2016

The rules for members of the Real Estate Board of Greater Vancouver, require that contracts of purchase and sale that have had all subject conditions removed must be posted as "sold" within 5 days of the removal of those subject conditions.

This makes sense.  Nobody likes Craiglist or real estate ads that still run even though the property has been sold.  It also ensures that Realtors and the public who use them have access to the latest market information.  

A quick review of the total number of sales from 2015 from the period of August 2-13 and comparing it to the same period in 2016 which coincides with the period during which the new Foreign Property Tax Rules (the 15% rule) now apply, should help us determine the effect of the new tax, provided of course, the rreporting ule is adhered to. After looking at the numbers from this comparison, I am hoping that the difference reflects a lack of adherence to the reporting rule as opposed to a change in the market.

In that period in 2015 there were 71 sales of single family homes in Richmond. The average sold price was $1,555,536. The average property transfer tax collected using this number would have been $29,110,72 for a total estimated provincial revenue of $2,066,861 for those 11 days, or about $188,000/day.  

For the 2 sales that have been reported in 2016 from the same period (and I know that there has to be significant reporting lag here) the average of those sales is $1,665,000 yielding estimated PTT revenue to the provincial government of: $62,600 compared to the $2,066,861 estmated for 2015.  

I have no idea as to whether either of the 2 sales reported thus far would have triggered the new 15% tax and if the buyers were foreigners.  However, on the face of things, one thing is for sure:  The Minister of finance has got to be awake at nights watching these numbers as well.  Because, a drop from about $188,000 per day to about $5,636 per day (and this is just for Richmond!) would result in a major budget deficit on account of lost property transfer taxes!

I will review these number in a couple of weeks which should help somewhat in alleviating the ramifications of this mini-study in the event that late reporting is the major reason for the numbers being so skewed.  Stay tuned. I am not so sure it will.