Canadian, Australian, and Chinese (mainland and Taiwan) buyers are flocking to Seattle and Washington state generally for purchases of vacation or second homes. Washington state properties have never been so affordable with a combination of the weak US dollar and the housing price crash since 2006. Housing prices in most markets have fallen 40% back to 2003 levels. Shown below are examples of houses available for sale at this time of writing at a variety of price levels:

Seattle Waterfront Estate

$2.5M Seattle Waterfront Estate

$2,495,000 / 3 bedrooms / 2.5 bathrooms / 376 square meters living space / 2,437 square meters lot

This house sits on a high bluff above Puget Sound, looking out towards the water, Olympic Mountains, and sunsets. The owner have made some expensive upgrades, including a gigantic, sturdy stair and deck structure down to the private beach, wrapping the entire cliff side in gunite concrete to eliminate erosion, a new roof with thick cedar tiles, and Buderus heating system. The style of the house is a Tudor fantasy comprising a Great Hall with exposed timbers and a sword mounted over the fireplace along with other period features.

See photo album and complete details of the $2.5M Seattle Waterfront Estate

$550K Renton Luxury Home on 1/2 Acre

Renton Luxury Home

$549,999 / 4 bedrooms / 2.5 bathrooms / 285 square meters living space / 2,023 square meters lot

This is a big, luxurious house on a grassy half acre built in the mid 1990s.  The owners remodeled the kitchen and added a deck off the master bedroom to catch the wintertime views of Mount Rainier.  Attractive, stable neighborhood where nobody has sold in 10 years – they must like the place.

See photo album and complete details of the $550K Renton Luxury Home

$400K Olympia Waterfront House

South Puget Sound View and Sandy Beach

$400,000 / 3 bedrooms / 1.5 bathrooms / 134 square meters living space / 6,799 square meters lot

This is a rare opportunity to find a jaw-dropping view, great sandy beach, and house in good condition anywhere on Puget Sound at $400,000.  It’s hard to find this combination below $500,000 and I’ve looked all over: Whidbey Island, Hansville, Seabeck, Camano Island, and more.  Remote location and a country feel to the neighborhood, but you’re just a 10 minute drive from the freeway, shopping, services, and the state capital of Olympia.

See photo album and complete details of this Puget Sound Waterfront Vacation Home.

Skagit Valley Roosevelt Elk

$299K Skagit Riverside Vacation Home

$299,000 / 3 bedrooms / 3.5 bathrooms / 230 square meters living space / 1,373 square meters lot

This is a beautiful, riverside (but safe from flooding) home in the Skagit Valley.  The home features soaring ceilings, beautiful woodwork, a great covered patio for year round entertaining, guest quarters over the garage, and a Roosevelt Elk over the fireplace (we’ll put the elk in the contract).  There’s a big grassy back yard set among the trees and a short trail down the river bank to some rocks the kids can play among.

See photo album and complete details of the Skagit River Bank Home.

Check out live listings of:

• King County Puget Sound Waterfront Homes
• Lake Washington and Sammamish Waterfront Homes
• King County Estate Homes on 3+ Acres

One of the greatest obstacles for sellers currently is the reluctance of buyers to make that purchase as they believe that prices will come down. Who can blame them? Depending on the day or news source, there are wide ranging forecasts – from the housing market is in good shape, to a possible slight correction in price, to a “housing bubble” that will mean a dramatic price reduction. So, many buyers are just waiting…Sellers in the meanwhile will have to choose between withdrawing their home from the market or reducing the price.

What if we could take some of this fear away? Well, this is where the Buyer Protection Plan comes in.

The program is designed to reimburse the purchaser a preset amount should the property value drops by 5% or more a year after the purchase. It is almost like a “partial price guarantee”.

For sellers, this program makes their property a bit more attractive and differentiates it in the marketplace. For buyers, it provides them with a level of confidence that if they buy and prices do go down they will get some of the money back.

The Buyer Protection Program is only offered via approved mortgage brokers and approved realtors.

For more information and details visit Buyer Protection Plan.

What are your thoughts on this new program? As always, I would like to hear from you.

Wayne Mah, Senior Mortgage Planner, The Mortgage Centre 604.880.1899 / mah.w@mortgagecentre.com

I subsequently wrote an update post on May 19, 2010 advising that the decisions by the mortgage insurers had been reversed and all was okay again. Read more here.

During that time frame, most lenders I spoke to had no issues providing that financing for those types of properties on a conventional basis (equity of 20% or more).Therefore, I thought the issue had died since the insurers were again okaying them. All was good.

Well, apparently not. I was just sent an email by a reader of my blog and was told of a potentially serious problem that he had with a lender. I have his permission to publish what he sent me but he wanted to remain anonymous. This is what happened to him.

“Hello Wayne,

We are now working through this issue with our agent and broker but I wanted to let you know what my wife and I recently encountered with Coast Capital and encourage you to publish more articles on this issue because there appears to be a lack of understanding about this issue amongst agents, brokers, and lenders.”

This was the first time since early spring of 2010 that this issue has creeped up again. I have sinced spoke with a handful of lenders and have been advised that there are no changes to their guidelines and are okay with these types of properties.

I was informed by the writer that he did manage to obtain financing elsewhere and it appeared that all turned out okay. I wish to thank him for writing me and telling me his story.

Aside from the potential problems with properties of these types, I would also like add an additional caution. NEVER, EVER remove the subjects on a property unless you are 100% certain that the financing is in place. Even if you are pre-approved make sure you have a firm commitment from the lender before doing so. The type and condition of the property may be the problem and not you.

As always, I want to hear from you.

Wayne Mah, Senior Mortgage Planner, The Mortgage Centre 604.880.1899 / mah.w@mortgagecentre.com

West Vancouver is a suburb of Vancouver located just 10 minutes from the Downtown core, across from the Lions Gate Bridge. The city spans from the bridge (which I see as the border of West Vancouver and North Vancouver) all the way to the Coast, and continues for a short while up north.

With very little commercial zoning and zero industrial zoning, West Vancouver is a primarily residential city. As a result the city is very quiet, and there is even a by-law prohibiting business to stay open for 24 hours a day (the 7-Eleven in Ambleside closes up for an hour).

Most of the shopping in West Vancouver is located on Marine Drive, a main thoroughfare which runs just a couple of streets up from the beaches. There are also small restaurants, ice cream shops and retail stores on Bellevue Avenue, just a block south of Marine Drive.

West Vancouver is home to the most popular beach on the North Shore, Ambleside Beach, as well as Dundurave Beach. They are both very family friendly sandy beaches, with children’s playgrounds available as well as fishing at the pier. Ambleside Beach also offers a par 3 golf course and a dog park. The West Vancouver Centennial Seawall runs approximately 3 km between the two beaches, and offers fantastic views of Stanley Park and the Vancouver Westside.

Known as Canada’s most affluent city, West Vancouver, surrounded by mountains and the ocean, is one of the most desirable areas to live around Vancouver. The school district here is the best in the province; class sizes are smaller and the equipment is superior compared to other districts. Sentinel High School is West Vancouver’s French Immersion school.

Click here to view the embedded video.

No announcements by the other lenders at this time but they will surely follow.

Based on current bond yields, we can anticipate futher rate decreases in the near future. No other lenders have followed RBC’s lead thus far but we can expect them to match in the coming days.

Wayne Mah, AMP / Senior Mortgage Planner / mah.w@mortgagecentre.com / 604.880.1899

So if you qualify, why not take advantage of this?

Most certainly if you had to, this is a good new option in what are still hard economic times for many B.C. families. However, I do want to caution you and ensure you take a few things into account before doing so.

Please use this option only if necessary as you will just be increasing your debt load. Deferring the taxes means you will have to pay it back at some point. Interest is being charged (currently at Bank Prime, which is very low but is expected to increase) and accumulating on it. Plan on paying it back as soon as you can.

If you cannot pay it back and defer it each year it will be very easy to accumulate thousands, if not tens of thousands, dollars of additional debt. Some of you may be thinking…I will just pay it all back when I sell the home, whenever that is. Partially true. You may have to pay it back sooner than you think.

Let me explain.

If and when your mortgage comes up for renewal you may want to shop around and see if you can get a better deal somewhere else. This may pose a problem. Most lenders will want to ensure that the property taxes are up to date before approving you. Therefore, if you have deferred the property taxes you will need to bring them up to date at that point. What will you do if this occured? You would have to find the money to pay it or add it to the mortgage (and increase what you owe).

What happens if the equity in your home has decreased due to a drop in market values at that time? Remember, one criteria in this new deferment program is that you only need 15% equity in your home currently. What happens if values dropped when your mortgage came up for renewal? It would not take much of a drop in the market combined with the amount you deferred over more than a few years to create a possible situation where you would have insufficient equity to be able to increase the mortgage to pay the taxes. Each time you apply for a mortgage, the new lender will re-qualify you and an appraisal is one requirement.

Should this happen you will be unable to take advantage of any better deals out there. It may leave you stuck with your existing lender regardless of what they offered you.

And even if you had sufficient equity to add it to the mortgage, think of all the additional interest you would be paying over time.

In the long run you may pay more for the tax deferral than you may have anticipated.

I encourage you to give it a good deal of consideration before jumping in and deferring your property taxes. It is not something to take lightly.

So are you going to do it? Do you like the new program? I would love to hear from you.

Wayne Mah, AMP / Senior Mortgage Planner / mah.w@mortgagecentre.com / 604.880.1899

Now I am not getting into the debate over pot use but wanted to detail the steps required to purchase a property that was a former grow-op. In B.C. there seems to be a huge number of homes that are used for the illegal cultivation of marijuana. Once these places are shut down by the authorities or are known to have contained a former grow-op, selling and buying becomes much more complicated.

To start, the “stigma” of the property being a former grow-op stays with the property FOREVER in B.C. It must be disclosed on the Property Disclosure Statement by the seller regardless of how much time has past.

Now when it comes time to finance such a property there are many lenders that will not provide mortgages on them knowing what they were previously. Also, of the two major mortgage insurers (CMHC, Genworth) Genworth will not insure a mortgage on former grow-ops. They will only if the dwelling is bull-dozed and rebuilt from the ground up.

Luckily, there are still lenders and CMHC that will finance these properties. Here is what is generally needed:

1. If the property was shut down by the authorities, a new occupancy permit must be issued by the city/municipality. Normally this would require that the property be brought back up to building code.
2. An Environmental Phase 1 Assessment, which is an air quality test to ensure that there are no toxic mould or other harmful contaminents in the property.

The above two items are generally what are required. However, some lenders and also in some cases, an Enviromental Phase 2 assessment may be required. This is a much more extensive review of the property and would involve taking drywall samples, flooring samples, etc. Again to ensure no toxic mould or other harmful contaminents are present in the property.

Obviously properties of this type require a lot more work and documentation in order to obtain financing but it is still quite possible.

If you would like to discuss this further or have a comment I would love to hear from you.

Wayne Mah, Senior Mortgage Planner, The Mortgage Centre 604.880.1899 / mah.w@mortgagecentre.com

With this rise I expect all major lending institutions to rate their Prime Rates by an equivalent amount – from 2.25% to 2.50%. This means that if you are in a variable rate mortgage or have a line of credit, you will be paying more.

This is most likely a start of a series of rate increases by the Canadian central bank over the foreseeable future as the economy continues to improve. For some this may be a time to re-evaluate your debt and adjust accordingly.

The next Bank of Canada meeting is July 20, 2010.

Bank of Canada Press Release

Wayne Mah, Senior Mortgage Planner, The Mortgage Centre 604.880.1899 / mah.w@mortgagecentre.com

The Rebate

At this point those of us who have been paying attention to the new HST regulations would know that it is only new homes to which the HST will apply. I repeat, resale homes are NOT subject to the HST. However, there is a rebate of up to $26,250 available for new home purchases. See below for the eligible purchases:

• New homes with land
• New homes with leased land
• New mobile homes or float homes
• New home purchased through shares in housing co-op
• Homes newly constructed, or substantially renovated (90% or more) by owner/builder.

For these purchases, a rebate of 71.43%, or 7% of the 12%, of HST paid on the purchase is available up to a maximum amount of $26,250. NOTE: THESE ONLY APPLY TO PRIMARY RESIDENCES. If this is a vacation property or second home the eligibility does not apply.

Presales

The two key dates for presales are 11/18/2009 and 7/1/2010.

• If your agreement was signed before 11/18, and if you take possession either before or after 7/1, you will not be required to pay the HST. You also won’t be eligible for the HST rebate. You may, however, be eligible for the GST rebate offered.
• If your agreement was signed after 11/18, and if you take possession after 7/1, you are required to pay the HST. You may also be eligible for the HST rebate.

Leased Land

• If you have purchased your primary home or duplex together with leased land from a builder, you may be eligible for a rebate of up to $26,250.

Vacant Land

• If you have purchased from an individual that is not a builder, who has never used it for business purposes, you are exempt from the HST.
• If you have purchased a lot that has been subdivided into 3 or more lots, you are subject to the 5% GST if your possession date is before July 1st, even if the title transfers on or after July 1st. If you take possession on or after July 1st, you are subject to the HST.

Building?

This is where things get really complicated…

• If the majority of your construction (that is, again, 90% or more) on or after July 1st, you will be subject to the HST.
• If you newly construct or substantially renovate a residential property to rent it out, you may be eligible for the rebate of 71.43% of the provincial portion of the HST to a maximum of $26,250 per unit priced up to $525,000. If the unit is worth more than $525,000, there will be a flat rebate of $26,250.
  (To qualify for this rebate, the first use of the housing would be occupancy/use by renter or by builder as primary residence for a minimum of 1 year)

–> Eligible units:

1. Detached, attached or condo with or without legal secondary suite
2. Mobile or float home
3. Units in a multi-unit building (this includes long-term care residential facilities)
4. Land component of a single-unit or multi-unit building where the land is leased or is a co-op.

New Rental Apartment Buildings

• If you’ve bought a new rental building and have rented out all of the units, you would be eligible for a rebate of up to $26,250 per unit.
• If you’ve renovated or built a rental property, you must self-assess the value and pay the GST before July 1st, and HST on or after July 1st.

Rental of Land

Rebates are also available for landlords who make an exempt rental of land for residential use (ex. rent out a residential lot, or site in a mobile home park).

• You must self-assess the land and pay HST under the self-supply or change-in-use rules. Rebate is 71.43% of the provincial component of the HST paid up to a maximum of $8,663 (33% x 26,250) for each lot/site.

Residential Landlords

As a general rule of thumb, if you pay GST now, the HST will apply.

• Maintenance costs, including electricity, TV and other services provided to tenants.
• You will not be able to claim input tax credits
• You will not be allowed to recover the HST from tenants; owning residential rentals is an exempt activity and landlords cannot register for GST/HST.

Parking Spaces

• If you rent one…yep, HST applies.

How the HST will affect the buying/renovating process

• Applies to home renovations
• Appliances, insulation, windows and doors
• Residential utility costs, such as hydro, cable, telephone, electricity…but EXCLUDING natural gas.
• Closing costs including appraisals and inspections
• Moving costs
• REALTOR fees or commissions

Questions? Get in touch. amy@vancouverpowersearch.com