Diane Friesen

What and where is the Stewart Farm?

The Stewart Farm was settled in the 1880's along the Nicomekl River on what is now Crescent Road in Surrey (on your way to Crescent Beach from the highway) in the Elgin Heritage Park. It was operated for 60 years as a hay farm and the farmhouse is a wonderful example of Victorian rural architecture. It has be completely restored and furnished to offer its' visitors a glimpse back in time to the days of horse drawn farm tools, hand churned butter and wood stove cooking. Guided tours are offered by staff and volunteers dressed in Victorian costume of the furnished farmhouse, pole barn with agricultural tools and machinery, boathouse, threshing shed, root cellar, and heritage gardens and orchard.

Apple Day - September 25th, 2010

If you have never been to the Stewart Farm then September 25th would be a great time to visit and celebrate the fall harvest. Tour the farm's orchard and learn about heritage varieties of apples, taste samples, and watch cider press demonstrations. Bring your questions to Master Gardeners, learn about grafting, and purchase fruit trees and fresh honey.

From 12 noon - 4:00 pm
With Suggested admission of:
Adults: $5, Seniors & Students: $3.75
Child & Youth: $2.50, 5 and Under: Free

Tax is a big subject in BC right now with the iimplementation of HST. Most buyers were already confused by the amount of taxes adjusted on a Statement of Adjustments even before our Provincial Government was taking a bigger slice of the pie.

You must ensure that you have sufficient funds to close including all the taxes that will be adjusted. As an example if you are buying a new home for $450,000.00 you will now be charged HST comprised of 5% GST - Federal Government and 7% Provincial Harmonized Tax for a total of 12%, You will also be charged the Property Transfer Tax (1% of the first $200,000.00 of the purchase price and 2% on the balance - again, to the Provincial Government), and there will be an adjustment for Property Taxes (payable to the City of Municipality).

So in order to close on your purchase of $450,000.000 you will also need:

12% - $22,500.45 grant (Provincial New Homeowner grant only) = $31,499.55

PTT - $7,000.00

Municipal tax adjustment will depend on whether the Seller has already paid the yearly taxes. It will be prorated either in your favour if you are to pay, or in favour of the Seller if they have already paid. Even though our property taxes are due in July they are for the calender year in which they are paid. A lot of first time homebuyers make the mistake of thinking that taxes run July to July and think they have a full year before they are due. Not true, so be prepared for an adjustment based on the calender year.

That means when you are saying to your Realtor that you want to purchase a new home for around $450,000.00 you will need approx. $490,000.00 to close.

The following rebates/grants are available in British Columbia:

GST REBATE: If you are buying new then be aware that a Federal New Homeowner grant is available on new homes priced below $350,000.00 based on 36% of 5% of the purchase price or on a graduating scale from $350,000.00 to $450,000.00 (you or a relative must be moving to the property to qualify). The Seller MAY credit this to the Buyer at the time of purchase and the Buyer would assign the rebate to the Seller.

HST REBATE: The grant available on the Provincial portion of the HST (being 7% of the purchase price) is based on a straight calculation of 71.43 percent of the 7% to a maximum of $26,250.00. There is no ceiling for claiming this grant (you or a relative must be moving to the property to qualify). The Seller MAY credit this to the Buyer at the time of purchase and the Buyer would assign the rebate to the Seller. The Seller MAY credit this to the Buyer at the time of purchase and the Buyer would assign the rebate to the Seller.

TRANSITIONAL REBATE: This is a temporary rebate available to compensate for any homes built, or partially built prior to the implementation date of the HST that are deemed to have PST embedded in the purchase price. There is no other qualifying factor and is therefore available regardless of the intent for the purchase of the property. It is not available on condos or townhouses. There are two methods of calculation by either price or square footage and the amount of the grant is the greater of the two. (see my previous writeup on HST for the formula's) http://activerain.com/blogsview/1801467/british-columbia-s-hst-on-new-housing-made-simple- The Seller MAY credit this to the Buyer at the time of purchase and the Buyer would assign the rebate to the Seller.

PROPERTY TRANSFER TAX EXEMPTION FOR FIRST TIME HOMEOWNERS: If you are a first time homebuyer and qualify for the first time homebuyers exemption of the Property Transfer Tax the ceiling price of your purchase before taxes must be below $425,000.00 for the full exemption and between $425,000.00 and $450,000.00 for a prorated exemption. There is no exemption available if the purchase price is over $450,000.00 and this exemption cannot be carried forward. It must be used on the first home registered in your name and you must live there for at least one year. If you have previously owned investment property but never lived there you would still qualify for the exemption but be prepared to provide proof since every application is followed up on and the fine is to double the exemption amount claimed. If you do move before the one year the amount of the exemption is prorated and you are billed for the portion of the year remaining at the time of your sale.

PROPERTY TAX HOMEOWNER GRANT: This is the annual Homeowner Grant available on your property taxes. In 2010 the amounts were $570.00 for those under 65 or $865.00 if you are a senior. This grant can be claimed only once in a calender year on a home in which you live and only once on any given property. When buying after the deadline for payment of taxes this grant has likely already been claimed on the property purchased. If not, and you have not claimed the grant on any previously owned property in the calender year and the property qualifies (assessment must contain a value for improvements) then you can make an application to the City or Municipality for the grant to be credited to the tax account.

When buying a new home be sure to review the taxes involved with your Real Estate Professional or your Mortgage Broker to ensure that you understand what your closing costs will be taking all the taxes into account before signing your offer.

It would be so nice if the only concern that our clients had was whether or not they wanted to move. If they could buy their home with confidence that the property would appreciate over time with the cost of living and if they could know that their mortgage payment would remain the same for many years to come.

People are hearing and reading horror stories in the media and naturally thinking the worst possible scenario is going to happen after watching what has happened to our neighbours to the south. I had a client yesterday asking be if I thought the "bubble" was going to burst. I answered NO! and proceeded to explain to him that the situation in the States is much different than anything we will experience.

My reasons for thinking this are really simple.

1. In the States when individuals were faced with a situation of their mortgage being higher than the value of their home they can simply walk away and forfeit their property. At that point they were off the hook. In Canada our mortgages do not release the borrower from any balance owing after sale of the property and the only way to be "off the hook" is to declare personal bankruptcy. People will fight harder not to have to do that.
2. Our Court System does not allow Lenders to foreclose and sell the property quickly just to get the mortgage off the books. Instead a duty is imposed on the Lender to sell the property for as close to Market Value as possible given the situation that they must sell. A bargain sale will not be approved by the Courts unless it can be argued by condition of the home to be necessary. Therefore the market will not be flooded by foreclosure bargains which affect the values of surrounding properties as they have in the States.

3. Finally we have the CMHC mortgage insurance program in Canada which eliminates the risk to lenders, allowing them to offer borrowers mortgage funding at a much lower interest rate with a smaller down payment. This qualifies a much larger number of buyers and provides a necessary safety net to the financial system, helping to ensure the availability of mortgage funding during times of recession and economic downturns. More qualified buyers equals a healthier market.

So while we may be experiencing a market adjustment I do not think that it will escalate to be the drastic "bubble popping" event that everyone fears. I tell my clients that it is not a good time to think about selling investment properties but it is a really good time to purchase your home or an investment to hold on to for a period of time allowing the rental income to pay the mortgage. Prices are slightly depressed, and if you find a motivated Seller then you can find a very nice property for a good price. History teaches us that the "cycle" of real estate values will continue and over time the home purchased now will go up in value so don't stress over the dips along the way. Current interest rates allow you to lock in your payments for up to 10 years so you can purchase with the assurance that your payments will remain the same for whatever term of mortgage chosen. Sounds pretty stable to me.

Our current market is a result of many factors, not the least of which is fear. There have been many articles written in our major newspapers about the bubble about to burst, or other such forecasts of doom and gloom that people just don't know what to do. The occasional assurance is offered in print or on the news that "most real estate analysts don't think we are going to experience a crash".

I have watched the values of real estate go up, go down, go up, go down over the last 30 years. People are playing the wait and see game. So values may go down a bit - maybe more than a bit. In 1980 my husband and I purchased a piece of property for $110,000.00. Within two years the value fell to $85,000.00 but we had not over extended ourselves so we just kept paying our mortgage and got on with our lives. That property today is worth over a million dollars (no longer owned by me - too bad).

So, what am I trying to say? It's simple math. Prices will continue to go up in the long run. There may be some ups and downs along the way but there is a steady climb in the long run.

The best advice for buyers is to give up trying to time the ups and downs of the housing market. Buy a home when you can afford it and you find one you like. That means you should not be trying to figure out the highs and the lows.

What you should be looking at is what happens to your cost of borrowing if you put off your purchase over the fear of a short-term decline in prices.

Currently interest rates are at historic lows, the cost of borrowing will almost certainly go up within the next year. For people who put off buying a home now because they fear real estate prices will fall, there is a really good chance that the increase in borrowing costs will be much more costly over their mortgage term than any dip in prices and may prevent them from qualifying for the type of home they want to buy.

Just as an example. If someone borrows $400,000 with a rate of three per cent, the monthly payment over a 5 year term with a 25-year amortization would be approximately $1,893.00. If the rate increases to six per cent, the monthly payment would be approximately $2,560.00 - a loss over the five year term of close to $40,000.00.

I had a client who came to my open house yesterday who actually understood the current market conditions. So many people are afraid of listing now because the market is slow and prices are down slightly. What they fail to realize is that the conditions are perfect under certain conditions.

1. You are considering trading up in real estate. This is the time you should be selling and buying your new home. If you wait you may get the additional 10% (used as an example percentage only) more for your $300,000.00 condo that you are selling but you will also be paying the 10% more for the $500,000.00 house you want to buy. You will gain $30,000.00 on your sale but pay an additional $50,000.00 on your purchase. Or worse yet, perhaps the 10% increase prices the home that you could have had out of reach.
   
2. Buying investment property - what are you waiting for? There are some really good deals available now from modivated sellers. Ask your Real Estate professional to be sending you emails of the current listings. Just last week I heard of two competing offers - that only happens when the properties are priced right and don't wait for the best deals to make it to the MLS public site - they are already sold to a buyer who used the services of a Realtor to forward them the listings as soon as they are posted on the Realtor MLS site - 3 days before.
   
3. First time homebuyers - this is your market. You really don't want to wait. There are a lot of buyers trading up who are very motivated to sell. Get pre-approval on your mortgage so that you know your budget and take your pick of properties available.
   

And of course, the icing, the thing that makes this time the right time, the current interest rates. One determining factor (in addition to the Prime Rate and the increase in bond yield) of determining the interest rates offered is supply and demand. The demand is down right now. I received an email from an associate of mine who is a broker for a major bank offering a 5 year term for 3.64% if your deal closes within 60 days. Another broker proved me with a quote of 3.65% for a 30 day close or 3.85% for a 120 day commitment. Variable rates are available at Prime minus .65% (Prime is currently 2.75%). It does not get any better. Anyone looking to purchase in the next 4 months would be wise to get pre-approved in order to take advantage of these great rates!!!

***Next Bank of Canada Meeting is Wednesday, September 8, 2010*** don't wait - call me and I will set up an appointment with a mortgage broker to secure your rate. You may regret it if you don't. For every 1% increase on $100,000.00 you are paying $1,000.00 more for every year of your term.