Canada Mortgage and Housing Corporation is forecasting a stable housing market for British Columbia with light upticks in sales numbers, average prices and housing starts in 2013.

“Factors in 2013 driving the housing market are expected to be a little bit stronger,” Carol Frketich, B.C. regional economist for CMHC said. “There is expected to be a bit of a pick up in job growth next year, economic growth and demographic growth as well.”

Housing starts will increase to 28,500 homes for this year in B.C., from 26,400 starts in 2011, and then rise to 30,100 homes in 2013, CMHC said.

Most of the growth in housing starts for 2012 has been in multiple-family housing, but in 2013, multiple-family housing starts will level off, while single-detached homes start to rise, Frketich said.

“We tend to see more single-detached home starts when resale market conditions are stronger, so that’s why we’ve got that stable level of single-detached this year,” Frketich said. People who are looking to buy can find homes on the resale market.”

She said CMHC expects 9,900 single-detached housing starts in 2013, up from 8,900 this year. That compares to 11,500 in 2010.

Average prices, which are down about five per cent in Vancouver this year from last year, are expected to climb about 2.6 per cent by 2013, both in Vancouver and across B.C., Frketich said.

The average MLS price in B.C. is forecast to be $522,200 for 2012, down 7 per cent from 2011, but should increase to $537,700 as resale activity picks up next year, CMHC forecast. The resale market in B.C. will maintain balanced supply and demand conditions through 2013, CMHC said. The number of sales will continue to moderate through 2012, but should also pick up in 2013, Frketich said.

Vancouver renters will be looking at lower vacancy rates and higher rents for the fall, Frketich said. The vacancy rate is projected to fall to 1.1 per cent in October from 1.4 per cent in October 2011, while the average rent for a one-bedroom apartment will climb to $1,005 from $964 in the same time period.

Nationally, the CMHC is forecasting a moderate slowdown in new-home construction starts as well as sales of existing houses.

The CMHC national forecast suggests next year will be somewhat softer than estimates the federal agency issued in June, while 2012 may be somewhat stronger nationally than previously expected.

Nationally, CMHC estimates there will be between 196,800 and 217,000 units of housing started in 2012. In 2013, CMHC now estimates national housing starts will be in the range of 173,000 to 207,400 units.

The national average price for property sales through CREA members is forecast to be between $351,300 and $378,400 in 2012 and between $358,000 and $395,800 in 2013, CMHC said Tuesday.

Source: Tracy Sherlock, Vancouver Sun

The Real Estate Board of Greater Vancouver (REBGV) is heralding a buyer’s market in Vancouver, but if prices are still going up, how can this be true?

The following is part of an article written by Harvey Enchin for the Vancouver Sun:

A buyer’s market is loosely defined as a market condition in which supply exceeds demand.

So, the REBGV was technically correct in declaring Vancouver a buyer’s market this week. Sales of houses, townhomes and apartments dropped 27.6 per cent last month to 2,362, units from 3,262 in June 2011.

While it may be true that buyers were presented with more choice and faced fewer rival bidders than a year ago, the fact that sales volumes were down is meaningless without an accompanying downward adjustment in price. And that hasn’t happened.

Metro Vancouver prices were up on average by 2.6 per cent from January to June, while West Vancouver and Whistler were up 7.1 per cent. In fact, the benchmark price for a detached home in Vancouver is up 3.3 per cent from a year ago to $961,600, or roughly 14 times the annual median household income. The average ratio of house prices to median income in Canada at the start of 2012 was 4.6 times.

Just because the real estate industry has heralded a buyer’s market, doesn’t mean it’s time to buy.

CREA’s forecast earlier this year called for a slight dip in property prices in 2012 — which is looking increasingly unlikely — and a rebound in 2013. However, TD Bank sees a price decline of up to 15 per cent over the next two to three years.

Academics who specialize in real estate finance — namely Tsur Somerville at the University of British Columbia and Andrey Pavlov at Simon Fraser University — are on record saying price changes won’t happen overnight. It might take six months for sellers to lower their expectations. Neither deigned to declare the current state of affairs a buyer’s market.

Eventually, tighter mortgage rules, high household debt, rising interest rates, overbuilding of condominiums and townhomes, and a slowdown in offshore investment will begin to bite and prices should start to decline.

The economic model of supply and demand is supposed to be a determinant of price, so unless practitioners of the dismal science have got it all wrong, the price of real estate — even in Vancouver — should soften sooner or later. Probably later.

One can understand the real estate industry’s hope for a buyer’s market — its members need sales to earn a living. But existing conditions in Vancouver, and other places in B.C., constitute a buyer’s market only if money is no object.

Source: Harvey Enchin, Vancouver Sun

The number of residential property sales has hit a 10-year low in Metro Vancouver leading the Real Estate Board of Greater Vancouver to declare a buyer’s market.

The announcement is significant since the board has in recent months been calling the market “balanced.”

According to the board’s June report, sales of houses and apartments dropped to 2,362 last month, a 27.6 per cent decline compared with 3,262 sales in June 2011, and a 17.2 per cent drop over the previous month of May.

“Overall conditions have trended in favour of buyers in our marketplace in recent months,” said Eugene Klein, the board’s president, in a news release today.

“This means buyers are facing less competition and have more selection to choose from compared to earlier in the year.”

June sales were the lowest total for the month in the region since 2000 and 32.2 per cent below the 10-year June sales average of 3,484, the report shows.

New listings for detached, attached and apartment properties totaled 5,617 in June, a three per cent drop from the year before and an 18.9 per cent decline compared with the 6,927 new listings reported in May 2012.

“Today, our sales-to-active-listings ratio sits at 13 per cent, which puts us in the lower end of a balanced market,” said Klein.

He said the ratio has been declining in the market since March when it was 19 per cent.

The benchmark price for detached properties increased 3.3 per cent from June 2011 to $961,600, while apartments increased 0.3 per cent to $376,200.

Source: Tiffany Crawford, Vancouver Sun

This 2,441-square-foot 4-bedroom/3-bathroom home is just steps from White Rock’s prestigious East Beach.

Previously listed at $842,000, the property has now been reduced to $799,000.

The house allows you to enjoy wonderful ocean views all year round. The interior features a bright open floor plan, a spacious living area and floor-to-ceiling windows to maximize those views.

This immaculately-kept home has updates throughout including hardwood flooring, a gas fireplace in kitchen, vaulted ceilings, skylights, updated bathrooms, a huge kitchen with new counters and large island, a pantry and lots of storage. The kitchen opens out to large entertainment-sized sundeck with a sunny South West exposure.

The spacious master bedroom has a large walk-in closet, and the fully-finished basement offers 2 bedrooms, bathroom, kitchen, living room and kitchen with a separate entrance – perfect for summer guests!

Additional goodies include a fully-fenced back yard, a spacious patio, and a storage shed. Steps from beach, restaurants, schoolbus, boat launch, and USA border!

For further information and to contact the listing realtor, Joanne Taylor of Sutton Group – West Coast (White Rock) directly, please see http://www.besthomesbc.com/wdird1004765136.

My real estate column in the Vancouver Sun featured property sales in Kelowna, and Sun Peaks.

Vancouver Sun May 26th, 2012

15-5040 Valley Drive, Sun Peaks

Type: Four-bedroom, four-bathroom half duplex
Size: 2,515 sq. ft.
B.C. Assessment, 2012: $618,000
Listed for: $649,000
Sold for: $635,000
Sold on: March 31
Days on market: 295
Listing agent: Liz Forster at Sotheby’s International Realty Canada
Buyer’s agent: Jill Cavanagh at Sotheby’s International Realty Canada

The big sell: At the same time the B.C. government increased the new housing rebate threshold to $850,000, it introduced the same limit for purchasers of new secondary vacation or recreational homes outside the Greater Vancouver and Capital Regional districts. This means buyers of new homes priced up to $850,000 will be eligible to claim a provincial grant of up to $42,500. This has injected new-found enthusiasm into B.C.’s new recreational properties in areas such as Sun Peaks. This newly built ski in/ski out half duplex comes fully furnished and features a bright open living area with rock-faced fireplace, hardwood floors, granite countertops and stainless-steel Viking appliances. There is a family room, a master suite with walk-in closet and a spa-like ensuite with soaker tub, rain shower and double sinks. There is a large double garage and three private patios. The home can also be rented out on a nightly basis.

2525 Selkirk Drive, Kelowna

Type: Four-bedroom, three-bathroom detached
Size: 3,190 sq. ft.
B.C. Assessment, 2012: $594,000
Listed for: $619,900
Sold for: $612,500
Sold on: April 18
Days on market: 27
Listing agent: Krista Suchar at Macdonald Realty Kelowna
Buyer’s agent: Tim Stanfield at RE/MAX Kelowna

The big sell: This home was built in 2007 in Kelowna’s Dilworth Mountain neighbourhood. Among its selling features: the unobstructed dramatic views of the Glenmore Valley below. The custom-designed rancher sits on almost a quarter-acre property and has detailed finishings throughout that include granite countertops, hardwood and slate floors, recessed and pendant lighting, stainless-steel appliances and vaulted ceilings. The open-concept floor plan has two bedrooms on the main floor — including the master with full ensuite bathroom — alongside the living room and kitchen. The basement has two further bedrooms, a spacious family room, a den area and an additional bathroom. There is an extensive bank of floor-to-ceiling windows and a large balcony to maximize the panoramic vistas. The landscaped garden contains an underground sprinkler system and a covered patio area that provides shade.

For the full story, please click on Real estate sales in Sun Peaks and Kelowna.

Compiled by Nicola Way of BestHomesBC.com and AssignmentsCanada.ca.

Realtors – send your recent sales to nicola@besthomesbc.com
© Copyright (c) The Vancouver Sun

Existing home sales in Canada’s most expensive city dropped in April, according to the Real Estate Board of Greater Vancouver.

The board described home sale and listing activity as maintaining a “consistent pace” leading to balanced market conditions but its April statistic shows total sales across the Multiple Listing Service in April were 2,799, a 12.3% decline from a year ago. It also represented a 2.6% decline from March 2012.

REBGV said April sales were the lowest for the month in the region since 2001 and 16.9% below the 10-year average for the month of 3.369.

“Although April sales were below what’s typical for the month, we continue to see, with a sales-to-active listing ratio of nearly 17%, a balanced relationship between buyer demand and seller supply in our marketplace,” said Eugen Klein, president of the board.

The board’s so-called benchmark price for all residential properties in Greater Vancouver was up 3.7% in April from a year ago to $683,800. Prices are up 2.8% over the last three months. In the Lower Mainland prices were up 3.4% in April from a year ago to $612,000.

“Recent activity has had a stabilizing effect on home prices at the regional level, although pricing can vary depending on area and property type,” said Mr. Klein said.

Supply has been increasing in the Greater Vancouver area with the total new listings in April up to 6,056, a 3.6% jump from just a month earlier. However, new listings are also only up 3.6% from a year earlier. April new listings were 6.7% above the 10-year average for Greater Vancouver in April.

Overall, the board had 16,538 homes listed for sale on the MLS which is up 8.5% compared to March, 2012 and 16% from a year ago.

Source: Garry Marr, Financial Post

When it comes down to it, many British Columbia home buyers just aren’t willing to battle for their dream home, according to a BMO Home Buying Report released today.

The report said Canadian respondents in the Prairies, Ontario and Alberta are more willing to enter into a bidding war than those in B.C., Quebec and Atlantic Canada.

In the survey, 22 per cent of Canadians said they were willing to enter into a bidding war when making an offer on a home.

“Of those prepared to fight, half would pay up to 110 per cent of the asking price, while a quarter would be willing to bid up to 120 per cent,” the report said.

Those surveyed in Manitoba/Saskatchewan ranked first in eagerness to enter into a mortgage bidding war (32 per cent). They were followed by respondents in: Ontario (28 per cent), Alberta (25 per cent), B.C. (23 per cent), Atlantic Canada (13 per cent) and Quebec (10 per cent).

The study also noted that 52 per cent of Canadians surveyed said they’re willing to pay between 100 and 110 per cent of the asking price, with Quebec ranking first at 62 per cent. It was followed by: Alberta and B.C. (53 per cent), Ontario (51 per cent), Manitoba/Saskatchewan (48 per cent) and Atlantic Canada (44 per cent).

Meanwhile, 27 per cent of Canadians said they would pay between 100 to 120 per cent, with the highest in Atlantic Canada (33 per cent), then Ontario and B.C. (30 per cent), Quebec (25 per cent), Manitoba/Saskatchewan (22 per cent) and Alberta (17 per cent).

John Pasalis, broker owner of Realosophy Realty Inc., a Toronto-area real estate brokerage, cautioned that the bidding wars may not be as lucrative as they seem.

“One thing to keep in mind is the houses that are getting pretty crazy bidding wars are underpriced anywhere from five to 10 per cent,” he said. “The list prices aren’t always an indication of what they’re actually worth.”

Pasalis said his company has seen “multiple offers almost non-stop for years now,” including as much as 10 or more buyers bidding on a house.

“You just get these spikes and valleys in the market where things get a little bit more heated and demand starts outstripping supply as things get faster,” he explained.

However, the mortgage wars may backfire on owners if the bank’s appraisal of the home is lower than what a buyer pays for the home, he said.

To avoid this, Pasalis cautioned that homeowners need to know the actual market value of the property they want to buy as opposed to its listing price.

Nationally, the average home sale price is $369,677, the report said. The average home prices across Canada are “rising modestly,” it said, except in Toronto ($504,117) and Vancouver ($761,742).

“Toronto prices have risen 11 per cent over the past year, while Vancouver’s have fallen 3 per cent,” said Doug Porter, deputy chief economist for BMO Capital Markets.

Source: Sheila Dabu Nonato, Postmedia News

Recent conversation around the Kitsilano dinner table turned to – as it almost always seems to do – real estate and the role of foreign buyers in Vancouver.

The older guests decried the runup in prices that makes it almost impossible for their children to buy on the West Side, while the kids (also at the table), looked to their parents as the lender of first resort to help them get into the market.

But what to do about the oft-discussed “foreign buyer” typically tagged as a leading contributor to the pressures that make housing unaffordable? Charge a special tax on offshore buyers, asked one person? Charge a surtax on properties above a certain value, asked another? Or, as this writer chimed in, erhaps we want to introduce the equivalent of a head-tax on foreign investors simply because they’re coming to invest in properties. (Dirty looks all ‘round ensued.)

Or just suck it up?

Land ownership angst Tsur Somerville, associate professor with the UBC Centre for Urban Economics and Real Estate, noted that upward pressure on the price of local properties is a standard problem in desirable places to live – especially places that attract short-term residents, such as vacationers. Just ask the folks in Whistler, the Gulf Islands and other areas. “This is historically our biggest issue in places that are resorts: vacation homes drive up prices,” Somerville said.

The truth is, Canada is a nation of immigrants and each wave of newcomers has raised anxieties and concerns about land ownership. First Nations land claims are one example; restrictions the Islands Trust enforces on land uses in the sensitive Gulf Islands are another. Indeed, the fight for domestic control of land is as fundamental to Canada’s history as the story of settlement. Opposition to absentee landlords drove Prince Edward Island to join Canada in 1873, and provincial law still prevents non-residents from owning “in excess of five acres or having a shore frontage in excess of 165 feet unless he/she first receives permission to do so from the Lieutenant Governor in Council.”

Most of the Prairie provinces, where rights to real property are rooted in homesteading and distrust of bankers, also have restrictions on non-resident ownership of land. Canada isn’t alone in restricting foreign ownership: Iceland, Denmark and Australia, all members of the Organization for Economic Cooperation and Development, limit ownership of real estate to those resident in the country and prohibit renting by foreign owners.

Switzerland, a traditional haven for foreign capital, limits transactions by foreign buyers to a set
amount per year, and cities such as Zurich and Geneva are off-limits.

Poland and Greece have restrictions on land purchases; in Mexico – a popular vacation destination – a local bank holds property in trust for foreign owners. The foreigner has all the privileges and obligations of ownership, but not ownership itself. But globalization, and the international flow of capital that’s followed, has put the issue of foreign ownership on the front burner in many countries. The tide of capital seeking a safe haven following the September 11, 2001, terrorist attacks on New York and Washington, D.C., made countries take a hard look at how much cash they wanted in their jurisdictions and how much ownership they were willing to give away. Concern accelerated only after the real estate boom – and bust – that followed. Iceland has linked control of local assets to national sovereignty.

And even Prime Minister Stephen Harper has begged comparisons by moving to block foreign ownership of strategic assets. Australia recognized the challenges following a loosening of foreign ownership restrictions in late 2008. The following year saw a wave of foreign investment 30% above historical norms. The dramatic shift in a country where first-time homebuyers were already finding some cities unaffordable called for action. A six-month consultation period culminated in changes to Australia’s investment regulations in April 2010. All purchases by temporary residents and foreign non-residents became subject to approval by Australia’s Foreign Investment Review Board; temporary residents are limited to properties for their own use or development sites that would increase the housing stock.

Vacant land must be developed within two years, and foreign owners of residential properties must sell the properties when they leave the country or the government will confiscate and sell them instead. Australia’s introduction of tougher criteria for foreign real estate investment had an immediate effect. Approvals for purchases of residential real estate, typically the primary target of foreign investment applications, dropped from 2,450 to 647 – a 75% decline. Foreign restriction complications.

But could similar measures succeed in Vancouver?

During last fall’s civic election, independent council candidate Sandy Garossino called for restrictions on foreign ownership to address affordability. Affordability was being eroded by the foreign buyers. RBC Economics reported that a standard two-storey home in Vancouver required approximately 95.5% of the average household’s monthly income, while a detached bungalow required 92.5%. (A residence is considered affordable when it requires just 32% of household income.)

Modest declines in recent months have done little to bring home prices within the reach of locals. The bank’s most recent analysis declared, “unaffordability has long been a fact of life in the Vancouver housing market and this will continue to drive local buyers away.” Vancouver is a seller’s market relative to the rest of the country; RBC all but confirms that it’s a nonresident’s buyer’s market.

Garossino – who didn’t respond to a request to comment for this article – suggested that Vancouver address the situation by adopting a model similar to Singapore, where investors are limited to select areas of the city, leaving the rest of town to locals. But other observers are less confident such restrictions would work; they point out that, with no way of determining the extent of foreign investment in the local market, it’s difficult to impose restrictions.

Nicola Way, owner of upscale listings site BestHomesBC.com, said the lack of clear evidence for a foreign buying binge makes it hard to argue for investment restrictions. (See “Seeking paper trails in Asian property buying spree” – BIV issue 1168; March 13-19.)

“Until Canada can produce figures that definitively state the volume of properties bought by non-residents, I can’t see any restrictions placed on foreign ownership,” said Way.

Moreover, housing affordability is more than a function of who is buying properties. Basic land economics are at play, as well as financing regimes. “There are other factors at play when it comes to Canada’s rising house prices, namely consistently low interest rates that have served to underpin housing demand,” she said. “For the City of Vancouver itself, there is also the question of land supply. We are hemmed in by geography, so when supply becomes limited, demand – and therefore prices – increase.”

Somerville goes even further. He noted that without consensus on what a foreign buyer is, it’s tough to target the restrictions. And if the flow of cash can’t be tracked, what gets taxed? “How many people are we actually talking about who are truly non-resident, non-immigrant buyers? How many people are not renting their units out but keeping them vacant?” Somerville asked. “Before we have policies to address a problem, it’d be really good to know how big a problem it actually is.”

Unfortunately, there’s no way of knowing. The statistics being thrown around are nice, but none of them have conclusively answered the question. “We don’t have the mechanisms to be really accurate,” he said. “Realtors telling me that their buyers are from China doesn’t answer it. And certainly where the appraisal chits are sent doesn’t answer it.” While non-resident purchasers could be subject to a different property tax rate, as happens in Florida, Somerville said it would have to be a province-wide measure rather than targeted to a specific city such as Vancouver or a specific part of the city. “You could always do it,” he said, “but if you put in a sub-area then you just spread the issue to other areas.”

And, hinting at his own skepticism, Somerville said developing a different tax structure or other restriction might not even be worth it relative to the scope of the problem. “Fundamentally, I don’t want to restrict the market and develop policies to address a critical problem without knowing what the problem is.”

See the original article here: BIV – Combating uncontrolled offshore ownership.

Source: Peter Mitham, Business in Vancouver

B.C. home prices are headed south this year before rising slightly in 2013, according to a quarterly forecast by the Canadian Real Estate Association.

The forecast average drop of four per cent – the biggest decline in the country and far steeper than the 1.1-per-cent forecast drop nationally – will bring the average price of a residential B.C. property down to $539,100 from $561,300 in 2011.

However, the average price is expected to rise 0.5 per cent to $541,800 in 2013.

Gregory Klump, CREA’s chief economist, said the main reason for B.C.’s forecast price decline is because multi-million-dollar sales activity in West Vancouver, Vancouver’s westside and Richmond in early 2011 caused both the provincial and national average prices to temporarily spike, a phenomenon that’s not expected to repeat itself this year.

“It reflects what happened by way of the average price increase in Vancouver,” he said. “There was a spike in high-end activity [and] it skewed the average price higher temporarily.

“We don’t expect it to happen this year.”

As a result, the report said, while prices will likely hold steady near current levels, the national average price is forecast to dip by 1.1 per cent in 2012 to $359,100. Prices are expected to rise modestly in 2013, with the national average inching upward 0.9 per cent to $362,300 at the national level.

According to the report, home resales are expected to rise by 0.3 per cent this year in Canada, with low interest rates continuing to support the market.

For B.C., home resales are expected to drop by 1.9 per cent, before rising slightly in 2013.

National sales are forecast to reach 458,800 units in 2012, while in B.C. sales are expected to total 75,300.

“Rising demand in Alberta, Saskatchewan and Nova Scotia is expected to offset softer activity in British Columbia, Ontario, and New Brunswick,” CREA said.

In 2013, CREA said, sales are expected to ease back to 457,200 units, with modest gains in all provinces except Ontario “as economic and job growth picks up later this year and builds into 2013.”

“Risks to the Canadian economic outlook remain elevated owing to the European sovereign debt quagmire, but the continuation of low interest rates is the silver lining,” added Klump.

“So long as the European debt crisis is contained and a global economic recession avoided, low interest rates will support Canadian home sales and prices. Recent trends are reassuring, but interest rates remaining low for longer will doubtless keep the Canadian housing market under scrutiny for signs of overheating.”

Source: Brian Morton, Vancouver Sun

A new tax break for first-time buyers of new homes will help stimulate the construction industry and create plenty of new jobs, an industry executive said of Tuesday’s 2012 provincial budget.

“This is welcome,” Greater Vancouver Home Builders’ Association president and chief executive officer Peter Simpson said of a temporary bonus for first-time homebuyers that will be effective until March 31, 2013, and is worth up to $10,000.

“They have a difficult time getting into the market and typically get assistance from the bank of Mom and Dad. So this helps property virgins get on the first rung of home ownership and helps stimulate construction.

“For every home start, there are approximately three full-time jobs each year.”

The bonus, a one-time refundable personal tax credit, is equal to five per cent of the purchase price of the home to a maximum of $10,000.

The bonus will be reduced based on a buyer’s or couple’s net income. For single people, the bonus is reduced by 20 cents for every dollar in net income over $150,000 (it’s reduced to zero at $200,000 net income). For couples, the bonus is reduced by 10 cents for every dollar in family net income over $150,000 (it’s zero at $250,000 family net income).

The bonus, which includes detached houses, duplexes, townhouses, condos, mobile homes, floating homes and cooperative housing units, is based on homes where the HST is now payable.

In a budget briefing, Finance Minister Kevin Falcon said the incentive will help people get into the market.

“We hear from people that talk about the challenge their children or their grandchildren are having getting into their first home,” Falcon said.

“And the biggest hurdle is usually the down payment you’re required to come up with. We believe a $10,000 contribution towards those first-time purchasers of new homes is a great contribution, a great way we can help your children or your grandchildren get into their first home and at the same time receive the dual benefit of supporting the new home construction industry over the next 12 months when it’s forecast across the country to be slowing.”

Urban Development Institute executive-director Maureen Enser agreed, saying the homebuyer bonus was an added bit of good news for the home construction industry on top of the government’s announcement last week raising the HST-rebate threshold to $850,000.

“In the Lower Mainland in particular, where housing is very expensive, both measures together make it easier for people to consider a new home [purchase] for a family,” Enser said.

She added that the maximum $10,000 bonus for first-time buyers with net income under $150,000 should stimulate some potential buyers to move off the sidelines and look for homes, particularly in the Lower Mainland.

“[About] 13 per cent of new housing is priced below $525,000, and 50 per cent is between the $525,000 and $850,000 range,” Enser said, so the measures combined help bring down the cost of new housing at both ends.

However, Simpson was less happy about the budget’s lack of any significant tax relief for the home renovation industry, noting that B.C. homeowners will spend more than $7.6 billion in home renovation, improvement and repair this year.

“We’re still left with the issue of the underground economy, with people delaying their decision to renovate their home by waiting for the HST to disappear [on April 1, 2013],” said Simpson, who added that the home renovation tax credit of up to $1,000 a year for seniors to help them remain in their homes longer will not have a big impact on renovators.

Vancouver-based home renovator Todd Senft agreed with Simpson, saying he’d hoped for new relief but now believes the lack of tax breaks in Tuesday’s budget will force many people to put off renovations and go to the underground economy — where renovators with less credentials undercut legitimate contractors.

“That’s disappointing,” Senft, owner of reVISION Custom Home Renovations Inc., said.

“I’m glad they paid attention to new-home builders, but that doesn’t help us. People will wait a few months and save a few thousand dollars.

“It [the home renovation industry] is steady right now and the year has started moderately. But it will be a tough grind this year. I’m hoping more [homeowners] don’t head to the underground economy to save money. The savings by doing it under the table are massive.”

Source: Brian Morton, Vancouver Sun