The British Columbia government has revealed further details about its proposed house flipping tax, set to be introduced in spring with an effective date of January 1, 2025. The tax targets homes resold within two years of purchase, with exemptions for certain life events like death, divorce, or job relocation. Initial sales within the first year without exemptions would incur a 20% tax on profits, gradually decreasing to zero over the second year. The aim is to address housing affordability issues and ensure properties are occupied rather than flipped for profit.

Additionally, the government announced expansions to existing programs and new incentives in last week’s budget. First-time homebuyers will benefit from increased property transfer tax exemptions for homes valued up to $835,000, potentially saving up to $8,000. Moreover, there’s a new exemption for newly built homes valued up to $1.1 million and a property transfer tax exemption for purpose-built rental buildings of four or more units to stimulate rental home construction, effective from 2025 until 2030. These measures collectively aim to boost housing availability and affordability across British Columbia.

Published by Steve Huebl

https://www.canadianmortgagetrends.com/2024/02/the-latest-in-mortgage-news-bc-government-unveils-details-of-its-proposed-home-flipping-tax/

Despite January’s unexpected drop in inflation, economists believe the Bank of Canada will likely delay its first rate cut until mid-year. Headline inflation in January came in at 2.9%, below expectations of 3.3%, attributed to lower energy and grocery prices. The Bank’s preferred core inflation measures also trended downward, with CPI-median easing to 3.3% and CPI-trim falling to 3.4%. However, shelter costs continued to exert upward inflation pressure, particularly on rent prices due to housing supply-demand imbalances.

Economists note that despite the inflation slowdown, the Bank of Canada may hold off on rate cuts due to strong wage gains and firm service prices. While the possibility of rate cuts in the coming months has increased, the Bank is expected to remain cautious until further signs of easing inflation pressures emerge. Additionally, stronger-than-expected job gains in January provide the Bank with leeway to delay rate cuts for now. Bank of Canada Governor Tiff Macklem emphasized the importance of ensuring a clear path toward achieving the 2% inflation target before considering rate cuts.

Following the release of the latest inflation data, bond markets have slightly increased the odds of rate cuts, with a 29% chance of a quarter-point cut in March and an 11% chance of 50 basis points worth of easing by June. Overall, while the possibility of rate cuts has become more plausible, the Bank of Canada is expected to maintain a cautious approach, closely monitoring inflation trends and economic indicators before making any significant policy changes.

Published by: Steve Huebl

https://www.canadianmortgagetrends.com/2024/02/unexpected-inflation-drop-wont-hasten-bank-of-canadas-rate-cut-plans-economists-say/

In the latest update from the Canadian Real Estate Association, the housing market continues its path to recovery, with a notable surge in home sales between December 2023 and January 2024. This upward trend, amounting to a 3.7% increase nationwide, reflects a growing confidence among buyers despite lingering uncertainties. However, it’s important to note that while sales have shown improvement, they still fall short of the ten-year average by 9%, indicating that the market is still navigating its way out of the challenges experienced over the past couple of years.

Leading this surge in sales are key regions such as the Greater Toronto Area, Hamilton-Burlington, Montreal, and Greater Vancouver, among others. These areas have witnessed a significant uptick in transactions, with January 2024 recording a remarkable 22% increase compared to the same period last year. Despite this positive momentum, the market is not without its complexities. Prices have experienced a modest decline, particularly in Ontario markets like the Greater Golden Horseshoe, albeit with variations across different regions.

Amidst these dynamics, there’s a palpable sense of anticipation fueled by the prospect of interest rate cuts, prompting a resurgence in buyer activity. This renewed interest, coupled with pent-up demand, has led to an increase in new listings, albeit modest, signaling a potential shift in market dynamics. However, challenges persist, with inventory levels remaining tight at 3.7 months nationally. Looking ahead, there’s cautious optimism for further market stabilization, especially as interest rates are expected to decline, potentially stimulating both demand and supply in the housing sector.

In summary, while the Canadian housing market shows promising signs of recovery with an increase in sales activity, the landscape remains nuanced, characterized by shifting prices and evolving buyer sentiments. As the market adjusts to these changes, stakeholders are closely monitoring developments, particularly the anticipated impact of future interest rate adjustments on housing dynamics.

Published by: Dr. Sherry Cooper

https://mailchi.mp/dominionlending/canadian-home-sales-continued-to-rise-in-january-as-markets-tightened?e=d20e214ea7