The week’s top stories focus primarily on government taxes and fees adding to the costs of Vancouver homes. A new report suggests more than 26 per cent of a new condo’s sale price is made up of taxes and fees. Amenities fees also include electric car chargers in condo buildings. Meanwhile, Vancouver’s sky-high land prices expand beyond commercial real estate and homes, and into the afterlife.
Here is Western Investor’s pick of the most buzz-worthy real estate stories published this week.
“Governments at all levels are addicted to real estate taxes and fees,” according to housing appraisal expert.
Ever wondered how much of the cost of a new condo is made up of government fees and taxes? According to a new analysis by a housing appraisal and tax expert, if you're talking about a new Vancouver apartment, it's more than 26 per cent.
Paul Sullivan, a senior partner at Burgess, Cawley, Sullivan and Associates Ltd., one of the largest commercial real estate appraisal and property tax consulting groups in Canada, modelled the costs for a typical new one-bed-and-den, $840,000 condo on the Cambie Corridor. The scenario used was a land assembly and new development that takes three years to get approved and two years to build. Over the course of the unit's construction, from the moment the land is purchased to the unit's occupancy, $220,256 would be paid in real estate taxes and fees to all three levels of government, which Sullivan said would get passed on to the buyer.
These payments include: City of Vancouver fees and taxes, which include community amenity contributions, development cost levies, permit fees, vacant home tax (payable by the developer until the unit is occupied), and property taxes paid by the developer; Metro Vancouver’s regional water and sewer charges; TransLink’s new regional development cost charge for transit; new provincial taxes including the speculation tax, which may have to be paid on land by the developer (pending legislation); and provincial Property Transfer Tax plus federal GST on the sale (paid by the buyer). Payroll taxes on labour and taxes on materials were not included.
Sullivan said that the 26.22 per cent figure is the same for larger and smaller homes, from a studio to a three-bedroom apartment.
Sullivan was commissioned to carry out the analysis and present it at the Greater Vancouver Board of Trade (GVBOT) Housing Forum 2018, which took place May 25.
“Governments at all levels are increasingly addicted to real estate fees and taxes,” said Sullivan at the event. “At a time when all governments are purportedly concerned about housing affordability, all of these increased taxes and fees are just making housing even more expensive. When expressing their deep concerns over housing affordability, why haven’t governments taken a long hard look in the mirror?”
Amenity fee for new condo buyers include mandatory EV plug-ins as the latest in myriad of new home taxes and fees.
Three hundred dollars isn’t much but the mandatory cost for an electric vehicle (EV) charging station is the latest ding in government fees and regulations that now add more than $220,000 to the cost of a typical new Vancouver condominium, according to industry studies.
Last year electric vehicle represented 0.9 per cent of total vehicle sales in British Columbia and they make up just 0.2 per cent of vehicles on B.C. roads, according to Statistics Canada and Fleetcarma data. Yet, starting in 2019, 100 per cent of new condo buyers in Vancouver will pay to have an electric car charging station installed in their parking garage.
Anne McMullin, president and CEO of the Urban Development Institute Pacific Region wonders why condo buyers should pay for something that benefits a utility, and electric vehicle manufacturers.
The answer is apparently blowing in the hurricane of add-on costs buffeting buyers in Canada’s most expensive housing market.
Western Investor reported that government taxes and fees now total more than 26 per cent, or $220,256 of the total $840,000 cost of a typical new 700-square-foot-Vancouver condo apartment, according to appraisal and tax expert Paul Sullivan, a senior partner at Burgess, Cawley, Sullivan and Associates Ltd.
Sullivan presented his analysis to the Greater Vancouver Board of Trade’s Housing Forum 2018, held May 25.
Sullivan’s analysis includes City of Vancouver municipal fees, charges and taxes, the new and increased provincial tax measures on home sales, Metro Vancouver’s increased regional water and sewer charges, TransLink’s new regional development cost charge for transit, delays in getting permit approvals and the federal GST.
Fees and charges can range depending on where a project is located, with downtown Vancouver projects facing even higher charges. For the purpose of the analysis, the announced provincial Speculation Tax was included, pending details of the specific legislation expected later in 2018.
Traditional burials remain popular despite rising real estate price pressure on cemeteries, BIV reports.
If you thought being six feet under might free you from Metro Vancouver’s stratospheric real estate market costs, you would be mistaken.
The business of the dead is booming, and Metro Vancouver is home to a number of memorial companies that are subject to the same pressures of rising prices and disappearing space faced by property developers in the region.
This could lead to rapidly rising burial costs in an industry whose clients are already struggling with the emotions of losing loved ones and the complications of religious commitments.
According to research done on behalf of Arbor Memorial Inc., the value of cemetery property at Valley View Funeral Home and Cemetery in Surrey, which is owned by Arbor, has increased 5% to 7% annually over the past few years.
Arbor is a family-owned Canadian company established in 1947 that provides internment rights, cremations, funerals and associated services to families across the country. It is headquartered in Ontario.
The company owns 41 cemeteries, 28 crematoria and 92 funeral homes in provinces across Canada. Within the Vancouver area, Arbor operates one funeral home in Richmond, two in Surrey and one in Ladner.
“As one of Canada’s largest cemetery and funeral home providers, we know most Canadian families prefer some form of memorial property when considering their final arrangements,” said Dustin Wright, the company’s director of marketing communications.
“In many large Canadian cities, increases in sales of homes, rapid development and population growth have resulted in a diminishing availability of burial property.”
Burial prices at Valley View can range from roughly $5,000 to $22,500 for traditional ground plots. Traditional burial plots are still hotly desired, with 43% of families choosing traditional ground burials and 57% opting for various cremation interment options, according to Arbor.
Weakening home sales show signs of Vancouver’s market regulating, according to BIV’s Bryan Yu.
Weaker home sales continued through April but the slide in sales showed signs of moderating. B.C. Multiple Listing Service (MLS) sales fell for the fourth straight month in April to 6,590 seasonally adjusted units, down 1.8% from March, compared with a 6% drop the previous month. Since a fourth-quarter peak, sales have fallen 30% largely due to federal mortgage stress tests.
Declines were concentrated in the Lower Mainland, Vancouver Island and Okanagan Mainline real estate board regions, which, incidentally, are home to the highest-priced markets in the province. In contrast, sales rebounded in Kamloops, the South Okanagan and northern regions.
Weaker sales are pushing most markets back into a more moderate balanced state. Listings are staying on the market for longer, and active listings are on the rise, particularly in the Lower Mainland and Victoria. That said, there is no flood of new listings with owners opting to remain patient given strength in the labour market and economy.
After four successive declines, the average MLS value edged higher by 0.2% to $698,150. More substantial sales declines in higher-priced regions and sales softness for higher-priced properties contributed to recent weakness. Since December, the average price has declined about 5.5%, with roughly half accounted for by geographic composition. Benchmark price indexes available for the Lower Mainland and Island markets continued to appreciate at a 1% to 2% monthly pace.
A mild sales rebound is expected in the second half, but demand will continue to be constrained by federal lending restrictions and amplified by rising mortgage rates. A mild price correction is possible if supply ramps up, but a more likely scenario is a lower-growth or flat-price environment given low inventory and solid economic growth.