Housing affordability is a constant issue that will never disappear. A segment of our society will always struggle with the issue and councils around the country will debate and attempt to come up with creative solutions.

In the early 1990’s I had the privilege of serving as a Councillor in the Town of Canmore and prior to that had sat on many of the planning committees to understand the issues at hand. Twenty kilometers away was the Town of Banff, struggling with similar issues and planning strategies to create an affordability in the housing market that would ensure the town’s businesses could function by the ability to hire local staff who lived and worked in the town.

An analysis of the situation showed that some communities had spent some time trying to address the issue and other communities such as Vail and Aspen in the US had not been concerned about the issue directly since outlying towns of trailer parks allowed employees to own homes and commute.

One important topic to understand is that affordability does not have to do solely with ownership, rental affordability is a key concern also. But the ability to manage housing values in some way will assist in the market values of rent.

Banff had some success with a project called Middle Springs which limited the ability of the homeowner to benefit from market value gains. While providing a scenario that allowed homes to be sold for below market value, the project also ensured that homes could not increase in value at a similar rate to other homes in the area. Did the Town of Banff assist people to “get into the market” or ensure that they constantly fell behind the market? Whatever you think the answer is, the project and a subsequent project was quite successful.

What we often fail to understand however, is that a developer cannot provide the solution. The one and only area a developer can assist with is “initial” affordability. They can do this by downgrading the specifications in the home, reducing the size of the home or increasing the density of the project. The challenge comes with the subsequent homeowner benefitting from the free market hence the affordability is only for the first homeowner. As an example, in Canmore, I organized an auction of a new subdivision for a developer I was working for. In one evening I believe we sold $4.5 million of lots and homes in the subdivision back in 1997. A very successful evening at that time. Families came up to me in tears afterwards because we had helped them stay in Canmore and I believe they were able to buy a single family home in Canmore starting at around $140,000. As a developer, we were able to do that with the assistance of the Town of Canmore by designing a subdivision of 20’ to 26’ wide lots. Today, those homes sell for around $600,000 each! The families who made the decision to purchase then have benefitted from the free market.

What is the solution?

In the Kelowna region, we need to understand that creative planning can be a very important part of finding a solution to housing affordability and I would like to compliment the District of West Kelowna for looking at the feasibility of allowing all homes to be suited. This is one of the most important ways to improve affordability in a market place and still let the free market operate. There are a few distinct benefits from this approach:

Providing home owners with the ability to generate income legally to assist with lending ratios.

Allow an increased supply of rental housing and lowering the pressure on rental rates.

Legalizing suites, thus ensuring that suites comply with building codes and tenants will be safe rather than exposed to poor suite design and increased fire hazard.

More communities could learn a lesson from West Kelowna in this example I believe.

In the meantime, the discussions will continue, the debate will rage, and we will continue to search for the perfect solution. In the meantime, this is one of the best solutions municipalities can look to.

When it comes to staging a home for sale, it's important that sellers create an inviting atmosphere that will appeal to as many potential buyers as possible. Today, due to historically low interest rates and government incentives such as raising the Home Buyer Plan maximum to $25,000, first-time buyers account for a substantial portion of Canada’s home buying prospects. The good news is, sellers looking to attract this coveted demographic group don’t need to do a complete design overhaul. Staging a home for first-time home buyers is easier than you may think.

Below are seven simple staging tips from Coldwell Banker to help boost a home’s appeal and give owners the competitive edge necessary when selling a home.

Stage rooms with one purpose. Extra rooms that have a jumble of mixed uses can confuse and even deter first-time home buyers. Staging rooms with one purpose is vital. Keep in mind that these buyers are generally young couples with few or no children, so rooms should be presented as areas well equipped to meet their current needs. So turn those playrooms into dens, storage rooms into a home office or the second kids’ bedroom into a guest room.

Tackle the easy “do-it-yourself” projects. In a recent Coldwell Banker survey, 81 percent of brokers said today's first-time home buyers consider move-in conditions to be very important when searching for homes. To ensure that a home is in tip top shape, make sure to replace outdated kitchen and bathroom fixtures, apply a fresh coat of paint to a worn wall and refinish the kitchen cabinets. Providing a sleek and modern look wherever possible can make a huge difference in the eyes of first-time home buyers.

Be informed about current style trends. Ask your local REALTOR about the styles seen in homes that are selling in the area, and purchase a current interior design magazine for ideas.

Focus on the living areas. A living room is an area in which potential first-time buyers should be able to envision themselves entertaining friends or gathering with their family. With that in mind, homeowners should make the area appear as large and functional as possible by removing any unnecessary furniture and decorations.

Make sure the master bedroom appeals to both sexes. The master bedroom of a couple’s first home is often the first bedroom they will share. When staging this room, make sure that it appeals to buyers of both sexes. Remove any feature that seems too gender-specific and paint the walls a neutral colour.

Clear the room of family portraits. First-time home buyers are looking for a home they can picture their family living in, not the previous owners. Many people recommend taking down family portraits, personal collections and knickknacks. Removing these items will also eliminate clutter and ensure that people are looking at the house for sale, not at the photos from the last family vacation.

Don’t forget to spruce up the yard. First impressions often play a role in a consumer’s decision-making process. In fact, 21 percent of participants in a recent Coldwell Banker survey knew their home was the one for them before even walking inside. Make sure the home’s exterior is inviting by trimming the bushes, mowing the lawn and painting faded window trim. Couples looking for their first home often have less yard work under their belts and will appreciate the seller’s attention to detail.

Recently I scanned the Central Okanagan listings for single family homes under $300,000 and came up with over 60 listings that would be make interesting reading for any first time home buyer.

One of the most important things for any new buyer to understand is the amount of information available from a qualified REALTOR. As professionals in the industry, we are expected to have available for our clients a broad range of knowledge and information to ensure competency we are required to complete educational upgrade courses designed to ensure that we are on the leading edge of knowledge in the complex world of real estate.

Rent-To-Own

One of the questions that I receive from time to time is whether a first time home buyer should look at Rent to Own scenarios. Whilst every situation may vary, in general a Buyer looking at Rent to Own will usually find that a straight purchase option can give them more benefits. In its simplest sense, a Rent to Own option is simply a lease agreement with an "Option to Purchase" for the renter that comes at a cost and with penalties if not acted on in a particular time frame.... in other words there is risk involved for the renter.

Looking at the number of listings sub $300,000 and the amount it might cost to borrow that money, it is difficult to rationalize why a buyer in today's market might spend a lot of time and legal expense to structure a rental agreement with an option to purchase. A scan of mortgage rates today showed that the best posted 5 year rate was 3.99% which would yield a mortgage payment of less than $1,500 per month on a 25 year amortization with 10% down. Fair consideration for a first time home buyer I think.

Incentives

First Time Home Buyers Plan

As part of the various economic stimulus packages, tangible incentives are still available to first time home buyers also. Firstly, the Federal Home Buyers Plan which will allow a buyer to withdraw $25,000 from their RRSP without penalty to assist with the purchase, details can be found at:

Home Buyer's Plan

First Time Home Buyers Plan Tax Credit

For people who qualify for this tax credit, it can create an additional $750 incentive to assist with the costs of purchasing your first home, details can be found at:

Home Buyer's Amount

GST/HST information

The most important fact here is to get advice that is qualified. An accountant is the correct person to talk to about legitimate GST/HST questions. Firstly and most importantly, it is not obvious whether the house you are purchasing will attract a GST payment and in many instances, you may not find out until you have written the offer and at closing, the Sellers lawyer requests additional funds to close. The most expensive advice in the world is often the free advice!

Of course, we have a change in BC coming up later this year with the implementation of HST. In my humble opinion, and there are various opinions available, this will have a negative impact on housing, despite the various rebates that will be available and the fact that a developer is supposed to supply less expensive housing because he can claim input tax credits for the PST portion of his construction which never used to be the case.

Let me take you outside of the small box that we view this situation from and look at the free market. Let us assume that a builder has been building and selling houses for $100,000 plus GST and the market place has seen resales for $110,000. Now, later in the year, the builder/developer is able to collect input tax credits, and he is selling his properties in a market place where appraisals and the free market determines a value to be $110,000. Do you foresee prices reducing because of input tax credits collected in the building process? I don't. What determines value is a point where a Buyer is willing to pay what a Seller is asking, it has very little to do with the input tax credits a builder/developer has collected along the way.

If I have not made my point clearly enough, let's look at two different buyers. First Time Freddie and Recreational Ron. They both buy new homes in the same subdivision. First Time Freddie is as you might imagine a First Time Home Buyer and lives in the Province so he can claim a fair basket of benefits from GST/HST partial rebates to Federal Tax Incentives if he qualifies with the type of house he is buying. Recreational Ron has a different set of criteria. He wants to come and visit in Kelowna from time to time and has family here. Recreational Ron would not qualify for GST/HST rebates because he is not claiming the home as a principal residence. He has to pay the full Property Transfer Tax with no rebates.

Let us assume that both Ron and Freddie paid $100,000 for their homes and they purchased them later this year in July. If we analyze Freddie's net costs it may look like this (as I understand them):

Cost of home: $300,000
GST/HST: $ 14,640 +/- after rebates
PTT: $ 0
FTHB Tax Credit: $ -750 (approximately)
TOTAL: $313,890

Lets look at Recreational Ron's numbers:

Cost of home: $300,000
GST/HST: $ 36,000
PTT: $ 4,000
TOTAL $340,000


So let's assume that Recreational Ron lists his home for $350,000 and is successful, does that mean that you can get First Time Freddie's home for $320,000 because he does not need to recover any more costs? Do you see my point? Housing will cost more in BC and largely because a very significant component of our market is out of town 2nd home buyers who do not qualify for rebates. It is very simple math that the Provincial government is overlooking. In this example alone, it is possible to see an almost 10% increase in the cost of housing in BC.

Is it only new homes that you pay GST or HST for?

NO, NO, NO!! Please seek an accountant's advice. There are already several articles that I have seen about the fact that these taxes are only payable on new homes and that is plainly not true and has never been true.

There are many complex circumstances that dictate whether a Seller should pay GST or in the future HST on the home they sold. Here is the important part of the story. CRA's (Canada's taxation authority) has first recourse against the Seller, in other words they will ask the Seller to pay. However, and more importantly, second recourse is to the Buyer who may have had no knowledge at all that the Seller was required to collect and submit HST/GST and is now lumped with an additional invoice unexpectedly.

As the HST is implemented, the rules and regulations are not absolutely clear, so the above examples are from the best information I can get my hands on at the moment. My advice would be to tread carefully and as always engage the services of a professional to assist particularly during this transition phase. Timing in the market may save you several thousand dollars at the moment prior to the implementation of HST.

According to national and provincial industry forecasts, the upward trajectory of the BC real estate market is expected to continue through 2010 and that has some consumers wondering why. The underlying reasons include a more diverse consumer appeal than seen in other Canadian markets, says a national real estate leader. John Geha, president of Coldwell Banker Canada says the BC market, particularly Vancouver and Victoria, will be fueled by demand from a unique combination of buyer groups. "Homebuyers all across Canada are moving to take advantage of historically low mortgage rates and pent up demand from the recent downturn," explains Geha, "but BC is also attracting interest from niche markets, which will help to fuel growth in 2010."

According to Geha, the province enjoys a number of advantages that will support an elevated demand for homes. "BC is at the forefront of many emerging trends in real estate," Geha confirms, "including single women, move-up buyers and the growing retiree market."

"Vancouver is already the strongest seller's market in the province," says Geha, "with the Canadian Real Estate Association reporting an incredible 124% year-over-year sales increase in September. We've seen renewed consumer confidence deliver sales levels not seen in years. This kind of growth cannot be achieved solely by first time buyers entering the market to take advantage of low interest rates."

As an example of move-up buyer demand, Geha points to the Coldwell Banker Home Price Comparison Index (HPCI), which identified Vancouver as the Canadian leader and one of North America's top ten most expensive markets for the type of "aspirational" home favoured by corporate transferees and move-up buyers. "These are the kind of homes that appeal to individuals in their prime home-buying years," Geha explains.

According the Coldwell Banker HPCI, Vancouver's price for the studied 4-bedroom, 2200 sq. ft. home ranked as the tenth most expensive in North America at $1.26 million CDN ($1,174,241 US). The Vancouver price was well behind front-runner La Jolla, California and its neighbouring community Beverly Hills, both coming in at around the $2 million mark. Meanwhile, Burnaby and Victoria BC both had prices for the studied home just above the mid $650,000s CDN ($615,000 US). "Despite record-breaking prices, the demand is there not only for first time buyers, but for upscale homes too," continues Geha. "The move-up buyer is a critical component of BC's resurgent market."

Geha also points to positive in-migration as another factor in the BC market's projected growth in 2010. "BC has seen some of the strongest population growth in Canada, second only to Alberta," he says. "But while Alberta's population growth was fueled by Oil Sands jobs that tend to be male-dominated, BC's diverse economy is also attracting single women professionals, which is another emerging real estate growth market."

According to Geha, Canada's changing demographics and BC's milder climate will also drive demand from retirees looking to relocate from other provinces in increasing numbers over the next few years. "Nearly 13 million Canadians were over 45 at the last census," he says. "Almost a third of the population - 32% of all Canadians - was age 55 or older in 2007, and this percentage should rise to 38% by 2017. This growing demographic group will be experiencing lifestyle changes that will include changes in their real estate needs, both for their primary residence and for secondary homes in resort locations such as Whistler."

The reference to Whistler also brings to mind the increased interest in BC which will result from extensive coverage of the 2010 Olympics. "The Olympics is the 'wild card' when it comes to BC real estate," says Geha. "We know that it will have a big impact on people who are visiting BC for the event or seeing its unparalleled beauty and amazing attributes on television and online. The Olympics will deliver an estimated television audience of over 3 billion people with an additional half-billion per day from unaccredited media, such as bloggers," says Geha. "This unprecedented media coverage is sure to spur more visitors and relocaters to the area, which will in turn have a 'snowball' effect on the entire BC market. Just how much of an impact, we won't know until it arrives."