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Vancouver sellers to take a hit with new foreign buyers tax: RE/MAX

(NEWS 1130 File Photo)
Summary

The real estate agency says five per cent of home sales could fall through

The tax was implemented on August 2nd to help cool the local housing market

VANCOUVER (NEWS 1130) – RE/MAX realtors predict dozens of Vancouver home sellers will be directly affected by the city’s new foreign buyers’ tax.

Western Canada Vice-President Elton Ash says he surveyed all his realtors in the City of Vancouver and found they believe around five per cent of home sales could either fall through or not happen at all because of the 15 per cent tax. He says that likely amounts to more than 30 Vancouver homes per month with his company alone and many more within the entire Metro region.

“What does that mean for the domino effect? What’s that seller doing? Have they bought another home — larger, smaller, retiring, and how’s that affect them? That to me is the greatest effect because that takes that number of 30 and blows it up from there.”

Ash says some people can afford the additional tax, but he believes the majority of home sales that will be affected are the $500,000 to $750,000 condos, and the foreigners who buy them are typically middle-class recent immigrants working in Vancouver.

“They’re the people who can least afford (the tax) and will likely be forced in a default situation,” Ash says. “The banks won’t lend on tax.” Ash believes the chance of home prices dropping sharply in the long run is strong, but he admits these are uncharted waters and anything could still happen.

Dan Morrison with the Real Estate Board of Greater Vancouver said on Monday that his agents predict up to 427 sales could fall through because of the tax. Earlier this month, the board released numbers which showed last month home sales in Vancouver fell to their lowest level since January, but it didn’t dampen prices.