STRONG HOME SALES AND HST

Posted by: dan

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By Tony Dhami

Verico Designer Mortgages

I don’t know if anyone has noticed, but there are a lot of "For Sale" and "Sold" signs out right now. We have a very active real estate market in the Greater Hamilton-Burlington area. Statistics from the REALTORS® Association of Hamilton-Burlington Multiple Listing Service® (MLS®) are showing that March was a record-breaking month for the number of new listings taken and we were close to a new record for the number of sales in the month of March.

Spring is typically a busy time for REALTORS®. It’s the time when a lot of corporate transfers come through and homeowners find themselves selling their homes and looking for new ones in new cities. It’s also the time when families wanting to up-size think about looking for new homes so their kids can settle into a new school before the end of the current school term, or at least make sure they are in their new home for the start of the next term. Before they buy a new house, they also want to make sure theirs is sold or at least on the market.

This year has been busier than most springs, and there are two additional factors at play – low interest rates and the coming Harmonized Sales Tax, or HST. Earlier this year, the Canadian Real Estate Association updated their forecast for 2010 and 2011 to indicate that the market in Ontario will be stronger than usual because of these two factors.

Low interest rates have been with us since last year, and it is generally accepted they can’t last. We’ve already seen, in the last week or two, increases in some mortgage rates from the big banks. While the new rates don’t look as attractive as what we’ve been seeing for the past few months, they are still very good rates, and they shouldn’t be deterring anyone from purchasing a home. The current wisdom is that rates will go up again in the fall, and advice from many quarters is that now is still the best time to be buying a home.

And then there’s the HST. The new Harmonized Sales Tax will apply to most services buyers and sellers use in their housing transactions. Right now sellers and buyers pay only 5% GST on their real estate commissions, legal fees, appraisal fees, home inspections and myriad other services connected to a real estate transaction. After July 1 they will pay 13%. It’s not a huge amount for any one transaction, but taken together could add around $1500 to the average real estate transaction. For those knowing they will be purchasing a home this year, it only makes sense – and saves dollars – to make the purchase before the new tax comes into effect.

It’s no wonder that this spring market is strong – there’s all the usual spring market activity, plus the added incentives of low interest rates and beating the start of the HST.

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