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The Vancouver Island Real Estate Board (VIREB) prepares a Buyer Profile at the end of each year and releases the report the following July or August. The 2012 Profile (see: “Most Recent - 2012 Buyer Profile") is currently available for download on the Market Statistics page of the VIREB website and its .pdf link is to the right of the thumbnail image. The 2011 Buyer Profile is also available via a News Release in the Media Centre and I have made that title into a direct link to that webpage (scroll to bottom of page for the document link).

Prior to 2011, these ‘Buyer Profiles’ were available only to Realtors; however, I have managed to track down all save one for the years 2005 - 2012 and have created the table below with what I think is the most interesting information regarding buyers in the VIREB region (2008 is missing - the info there was pulled from the VIREB news release which highlighted some of the data). The Profiles also offer buyer data for each individual zone; however, a look at the region as a whole will work for this purpose.

Generally, the VIREB mails out about 6,000 of these simple eight-question surveys and divvies the mail outs amongst buyers in all the zones. As you can see in the table the response rates has averaged around 25% which I think is quite good.

One question asked is ‘Where did you move from?” and the responses head the chart below. I have condensed some of the results to those answers. With regards to ‘Vancouver Island’, the survey breaks this down into: within same area, elsewhere on Vancouver Island, Gulf Islands and Victoria. The greatest response here has been from within the same area. For the ‘Rest of BC’, the survey separates this into Fraser Valley, Vancouver, and other BC with the latter and Vancouver showing similar results. All the other categories in the chart mirror the survey. As you can see, the largest group of buyers coming from outside the province do so from Alberta (which has been accredited to direct flights from Alberta to the Island beginning in 2001). The number of Alberta buyers peaks in 2007 which doesn’t surprise me as the same occurred on the Sunshine Coast (for reasons I hope to explain in a future post).

The ‘Miscellaneous’ section of the table has some very interesting information. The majority of respondents have bought for principal residence purposes and have on the whole been retirees. While the results for recreational and investment purposes seem small, if you extrapolate the results against all sales in the VIREB region then those numbers start to add up (and this applies to all the results in this ‘Misc’ section).

What caught my eye in these survey results was the percentage of first time buyers (‘First Time Purchase of a Principal Residence’) and how many of those first time buyers either cashed out or borrowed from their RRSP to enable the purchase (‘Used RRSP for Downpayment’) and likely in the majority of cases these first time buyers were taking advantage for the federal government’s “Home Buyer’s Plan.” I will have a bit more to say about this following the table.

Below the table, I thought it would make sense to give the numbers behind those percentages for the first time buyer and RRSP questions. For example, in 2005, the 17% results from 320 saying ‘yes’ out of 1937 responses and so on.

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Two days ago (July 18, 2013), a report released by Canso Investment Counsel Ltd, a specialty corporate bond manager based in Richmond Hill, Ontario, made the news (Globe & Mail) and drew comments in the RE blogsphere. The report, titled ‘The Canadian Housing Market’ (.pdf), takes a “well-researched” (Globe & Mail) and critical view of the real estate situation here in Canada. It is definitely worth the read.

The report lists a substantial number of reasons why the company is warning it’s clients to take a sober look at what is unfolding here and one of its concerns listed deals with those first time buyers who have taken advantage of that “Home Buyer’s Plan” and borrowed against their RRSP to finance their downpayment (and we can see how many have done so just within the VIREB region over the last seven years above). Here what Canso has to say on this issue:

Quote:A Tax on Your Down Payment

A good gauge of the financial health of the Canadian homeowner might be the current state of the Federal government’s Home Buyer’s Plan. This allows home purchasers to fund their down payments by taking money out of their RRSPs. This plan seemed like a very good idea at the time but now it’s a bit of a nightmare for many of the people who used it. A maximum of $25,000 could be taken out of an RRSP untaxed to fund a house purchase. This was to be fully repaid over fifteen years or taxes had to be paid on the scheduled repayment amounts. Now 35% of the participants are not making the scheduled repayments and are paying taxes. This means they are paying 43% tax on the scheduled payment instead of making the payment which is not financially sound. This is not a very good comment on the financial capacity of these people. Considering that these people are savers who actually made a contribution to their RRSP, it does not auger well for their less prudent peers!”

In that last sentence above, Canso draws attention to the fact that those who used their RRSP were proven “savers” (since they actually had an RRSP to borrow on), but if they are now unable cope with their RRSP repayments then how well will those who aren’t proven “savers” be able to meet future mortgage obligations and homeowner expenses - especially if interest rates continue to creep up. As the report concludes we may be in for frightening times ahead as issues affecting the Canadian real estate market continue unfolding.

Finally, this interesting image below appeared in an August, 2006 Landcor Data Corporation release titled “The Longest Sustained Real Estate Boom in the History of British Columbia” (.pdf). It shows the location of detached homes and condominium sales in the southwest region. If vacant land sales were added, those pins would have formed a dense, solid line along the whole east coast of Vancouver Island.

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