Lots of things swirling in our industry at the moment. Here is a summary of the latest happenings:
INTEREST RATES ON THE RISE
The Bank of Canada recently increased its overnight policy rate by 25 basis points to 0.50 per cent, and on April 13, you can bet there is another hike coming. Want to know how to prepare for rising rates? Check out this short video that provides a great explanation:
“COOLING OFF PERIOD”
The NDP is going to legislate what it calls a “cooling off” period for homebuyers under the Property Law Act so they can walk away from the contract for any reason. It remains to be seen if this measure will actually address the heated market & help to bring prices down.
How will this impact YOU?
There is a recission period in the purchase of new Construction in BC. It has been in place for many years; the intention was to protect Buyers in a situation where the other side is a more sophisticated party to the sale – a large Developer, with their own sales staff, their own contracts, and no physical property to show. Clearly in this case there is more of a chance the Buyer is at a disadvantage.
In a typical residential real estate transaction, both sides are generally represented by real estate professionals, and there is more of a level playing field.
The notion of a Homebuyer’s Protection Period is good. Buyers DO need time for professional due diligence. Prices are at an all time high; this is not an insignificant decision.
For Sellers –
At this point, with the limited information we have, we can presume there is going to be some uncertainty for you – until this recission period is over, you are not going to make any solid plans.
For All –
There are many details missing at this point. How long is the cooling-off period? Will there be a penalty if you walk away & how much – and will this legislation change as the market shifts? EG. Would it be necessary in a market that ultimately favors Buyers, for example?.
Our BC Real Estate Association offered what we feel is a healthier solution. A five-business-day delay in accepting bids following a listing. This would adjust the process of homebuying, be of benefit to both buyers and sellers, and create less uncertainty.
More importantly for the consumer, our industry’s proposal has a better chance of ensuring due diligence is actually performed by the Buyer so that they can be protected, rather than just having the ability to walk away.
And a note on the timing of this legislation. We are in a time of increasing inflation. We are seeing interest rates rising, and inventory increasing. That is beginning to temper demand. It is likely that by year end that this policy may be unnecessary.
THE FEDERAL BUDGET
The Federal Budget 2022 was housing-focused, with a significant amount of funding going towards quickly creating new, and diverse housing.
The government plans to restrict foreign buyers and add a flipping tax on homes sold within 12 months of purchase.
First-time buyers will also get tax credit and access to a new, tax-free First Home Savings Account.
Check out the budget online: 2022 Federal Budget