Okanagan Real Estate News from Bo Skapski December 2018   
  Real Estate News




Bo Skapski
Bo Knows Homes Real Estate Team

Assurance Realty Ltd.
251 Harvey Avenue
Kelowna, BC
250-808-5508 or 1-888-301-2121
www.BoKnowsHomes.com


 
A new year brings new ideas on how we can be happier and healthier but it’s also a great time to set goals for our home. This month's article offers some advice to help you get your home in order.

There are also a few ideas that will help you reduce your carbon footprint this holiday season as well as a delicious recipe for candied pecans that will have everyone coming back for more!

Thanks so much for checking out this month's newsletter. Please get in touch if you have any questions or comments regarding the articles, or real estate in general -- it'd be great to hear from you!

Bo Skapski

In this issue...
Okanagan Real Estate Market Report 
Homes sales down compared to same time last year.

November saw residential sales posted to the Multiple Listing Service (MLS®) drop to 459 for the Peachland to Revelstoke region.

This was a 28% decline from the previous month and 24% fewer sales than this time last year reports the Okanagan Mainline Real Estate Board (OMREB).

“Last month, we waited to see how the market would react to the Bank of Canada’s latest interest rate hike and the BC government’s tabling of their speculation tax and while the market traditionally slows this time of year, we are also likely seeing the effects of these actions,” comments OMREB President Marv Beer.

Influencing market demand can be tricky and with two levels of government continuing to tinker independent of each other. Outcomes could quickly shift from balanced conditions that favour both buyers and sellers to a situation that could precipitate a market slide, which would benefit no one.

“While one might anticipate that a sharp shift towards a strong buyers’ market might be positive, the reality is that the BC economy is so tied to real estate values that these conditions could result in job losses, mortgage foreclosures, and the like,” contends Beer, asserting “It’s never ideal when markets take steep shifts in either direction and government can do a lot to lessen the peaks and valleys, including a focus on not just dampening demand, but also fostering development of housing that reflects the needs and wants of those wishing to buy.”

* Note: My personal opinion is that Mr Beer's comments, however well intentioned, do not necessarily reflect the opinions of all real estate professionals in the Okanagan.  While I personally agree that governent intervention often has unintended consequences, I feel that there are some very strong fundamentals that exist in the Central Okanagan that may help mitigate declines in real estate demand.  The most important of these is the emergence of High Tech as a driving force in the Central Okanagan's economy, as well as a major supplier of well paid jobs for younger residents.  The continuing expansion of UBC Okanagan and Okanagan College, as well as Kelowna General Hospital are also factors at play in the Okanagan's economic strength.

With the continuing decentralization of the work force, many people are also selecting the Okanagan as a base for their work.  Another factor that continues to create demand for Okanagan real estate is the emergence of Kelowna and the Okanagan, in the cosciousness of people not living in BC and the Prairies.  In short, the area has been discovered by the world.  The Okanagan will continue to be a desirable place for both working people and retirees to live.

A much-needed supply of homes for sale was bolstered by a 20% increase in new listings, boosting inventory to 34% over November last year. Average price stayed consistent with the previous month and this time last year, at just 2% and 3% respectively. Average days on market, another key market indicator, rose to 91 in November as compared to 81 in October and 87 this time last year.

The Shuswap/Revelstoke area bucked the trend towards more days on market recorded for the region as a whole with a 13% drop from 187 days this time last year to 163 in November. “Even within a local real estate market, conditions can differ by region or by housing type, which is why the public is advised to consult a Realtor familiar with the area or product of interest for more in-depth market data and professional analysis and interpretation of that information,” says Beer.

Contrary to public perception, foreign and out-of-province individuals continue to be a small percentage of those purchasing homes in the region at 1-3% of the buying population. Buyers from Alberta continue to hold at about 11-12% and those from elsewhere in Canada at less than 1%. The largest buying group by far continues to be those who already live in the area at around 55-60% any given month.

BC Speculation Tax and Foreign Buyers' Tax 
How to the BC Speculation Tax and Foreign Home Buyers' Taxes affect Okanagan Real Estate and Where Do They Apply? 

SPECULATION TAX: 
The "Speculation Tax" which was introduced into law in late November is not what the somewhat precarious BC Governemt claims.  It is not based on speculation but investment, and is haphazardly and unevenly applied.  It is, purely and simply, a punitive tax.

Outside of the Lower Mainland (Greater Vancouver area) and Lower Vancouver Island (Victoria/Nanaimo) it only applies to two other cities in BC, Kelowna and West Kelowna, creating an uneven playing field for different locations in the BC Interior and creating an unnecessary level of taxation on second home owners, who have traditionally been contributors to the Okanagan's economy.  It may also just result in buyers choosing areas where the tax doesn't apply for their second home purchases.  The government decided not to apply it to the Gulf Islands, because of the reliance of the area on second home owners, but did not do the same for the Okanagan.


It was also supposed to help alleviate the shortage of rental accommodations in the Kelowna and West Kelowna, as the tax would not apply to properties that were rented out on a full time basis, at least 6 months of the year.  There were at least three main flaws with this presumption: (There are many more flaws, but I won't go into them all here.
1. At the time the tax was implementsed in the area, there were a significant number of new apartments and townhouses under construction or recently compoleted that would bring enough housing units on the market to significantly moderate the rental housing shortages. Zoning regulations were also being modified to allow for the addition of more rental housing.
2. Much of the properties subject to the "Speculation Tax" were high end lakefront properties or other expensive second homes.  Making these available for rental would do nothing to combat the shortage of economically priced rental properties. 
3. Prior to introducing the "Speculation Tax", the BC Government had modified the Residential Tenancy Act to disallow fixed term rental contracts.  This means that, even though the regulation says properties need only to be rented for 6 months of the year to avoid the "Speculation Tax", landlords would not be able to rent properties for a 6 month term.  Therein lies another "Catch 22".


Here is how the speculation tax will or won't affect home and property owners in the Okanagan.
1. If you  own a home in the Kelowna/West Kelowna area, and it is your Primary Residence, you do not have to pay the Speculation Tax.  You will also qualify for the BC Homeowner's Grant, which will reduce your taxes by $770-$1,045 annually, depending on age.
2. If you own a secondary residence in Kelowna/West Kelowna, and you rent it for 6 months or more a year (this cannot be for short-term nightly/weekly rentals) you do not have to pay the Speculation Tax.
3. If you own a home in any other part of the Central Okanagan or Kootenays, no Speculation Tax applies, no matter what the use.  This includes areas of the Central Okanagan, adjacent to Kelowna/West Kelowna, including the Westbank First Nation, Peachland, Lake Country, Big White and all areas north and south of the Central Okanagan.

How much is the Speculation Tax?

1; For all residents of Canada who own a second home in Kelowna/West Kelowna (or any other part of BC where the tax applies), that is not exempt, the annual tax rate is equivalent to 0.5 of 1 percent of the home's assessed value for 2018 and beyond. For instance, the average assessed value of a single family home is $682,000 for 2018, so the homeowner would have to pay an annual Speculation Tax of $3410.00.  This percentage does not change in future years.
2; All non-Canadian residents would have to pay thesame amount for 2018, as Canadian residents, increasing to 2% of the assessed valu, per year, in 2019.  For the same example as above, this would amont to $13,640.00 per year.

FOREIGN BUYERS' TAX
Another tax the NDP/Green government introduced to buyers in the Central Okanagan is the Foreign Buyers' Tax.  This is a tax paid by all non-Canadian residents on the purchase of a property.  This tax is in addition to the BC Property Transfer Tax and increases the price of property purchased in the Central Okanagan (but not other areas of the Okanagan) by 20%.  This only applies to new purchases and is not retroactive before its date of inception, 

It is important to note that the geographic area this tax applies to is different than thhe area in which the Speculation Tax applies.  It includes Kelowna, West Kelowna and Peachland & Lake Country.  
It does not apply to Big White as Big White is located in the Kootenay Boundary area.  It also does not apply to Summerland, Penticton or areas to the south, or Vernon, Coldstream or areas to the north.  It also doesn't apply to the  Westbank First Nation, as the real estate in WFN lands is Leasehold.   

There are some exemptions, the most significant of which is that the tax doesn't apply to Farm land, although it does apply to any house on the property and a small area around the house. As the percentage of foreign buyers in the Okanagan has always been relatively small, this tax is not expected to have a great impact on the Okanagan but, like the Speculation Tax, it is also unevenly applied and treats all foregners equally, even those with whom Canada has trade agreements.


New Year's Resolutions for Your Home 
Think outside the box this year by setting resolutions for your home!

January opens up new possibilities for our health and wellbeing but have you ever thought about making resolutions for your home? Here are a few ideas to consider:

  1. Just Do It! - Tackle a major item on your to-do list such as cleaning out the basement or painting the bathroom.


  2. Cut Back - Seal and insulate your ductwork then set goals to reduce bills such as turning off lights and reducing water consumption.


  3. Plant It - There are many ways to improve the quality of your indoor air but start off by adding plants to naturally filter the air you breathe.

  4. Basket Case - Purchase baskets to organize everyday items such as remotes and controllers so they don’t just get tossed around the room.

  5. Keep it Clean - Take just 10 minutes each day to walk through and put everything back in its home. Get the entire family involved!


  6. Safety First - Make sure your carbon monoxide and smoke detectors are in good working order and that you have a family escape plan in place.


  7. The Purge - Go through your home one room at a time each month and purge any items you no longer have interest in and instead, fill your home with things that make you feel good.

In addition to the above tips, you can also introduce a new resolution for your home each month to help break up the year. For example, in January you can declutter, in February you can brush painting off your list and so on. Home is where the heart is, so it makes sense that a harmonious home will lend itself to a happier overall life.

Enjoy an Eco-Friendly Holiday Season 
A few small changes will have you dreaming of a green Christmas!

The holiday season is a magical time of year but it can also be a time of great waste. It’s easy though to enjoy Christmas cheer and still cut your carbon footprint. Here are a few ideas:

  1. Decorate Naturally - Bring the scent of nature into your home with evergreens, fir cones and cranberries.

  2. Think Outside the Box - All those gift bags, ribbons and bows account for an incredible amount of waste so try and reuse old wrapping paper.

  3. Light Up Mindfully - Everyone loves the twinkle of holiday lights but for the sake of the environment, use LED lights and remember to turn them off before going to bed.

  4. One, Two, Tree - Real trees take in carbon dioxide and release oxygen all while sustaining the local economy. Artificial trees, on the other hand, can't be recycled and may contain toxins.

The holiday season is a great opportunity to start eco-friendly family traditions that will hopefully be passed down for many generations to come. Better still, these methods are as easy on your wallet as they are on the environment!

Wildly Addictive Candied Pecan Recipe 
Not only are they delicious, but your home will smell amazing too!

Candied pecans are delicious! They’re so good that they’ll likely disappear before they make it to the salad, cake, gift jar or dessert they were intended for. Here’s how you make them:

  • 1 cup white sugar
  • 1 tsp ground cinnamon
  • 1 tsp salt
  • 1 egg white
  • 1 tbsp water (or substitute vanilla extract)
  • 1 pound of pecan halves

Preheat oven to 250°F and mix the sugar, cinnamon and salt together in a bowl. Whisk the egg white and water together in another bowl until frothy. Next, toss the pecans in the egg white mixture then coat the pecans with the sugar mixture. Finally, spread the coated pecans onto a baking sheet lined with parchment paper and bake for an hour, making sure to stir every 15 minutes. Enjoy!

Merry Christmas, Happy Holidays and Happy New Year! 
Best wishes to all for a Joyous and Merry Christmas and Holiday Season and a Happy, Healthy and Prosperous year in 2019.
I and my team of Sandra Ciolfi, Dave Goertz and Marco Molinari would like to wish all those who celebrate Christmas a Merry Christmas, and Happy Holidays to all our other firends and clients.  Best wises to all for a memorable and successful year for you and your families in 2019.



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