June Buzz

Hi All,

Welcome June

As we step into a June, it’s evident how the change in seasons and energy go hand in hand, rippling through everything around us - moods and environment. The recent display of Northern Lights has added a vibrant twist to the season. It’s been a chilly and wet spring in the Okanagan, which has been refreshing and positive for the upcoming fire season. Even though I prefer and thrive in the heat, the rain has been a good thing—for all the reasons Luke Bryan sings about. Wildfire Clauses, Force Majeure, Insurance were all topics we took a deep dive into at our brokerage meeting yesterday to equip our Agents to best serve their clients when navigating wildfire season. There are many nuances and best practices that can be navigated with buyers and sellers to ensure a successful real estate outcome if they happen to encounter a wildfire situation.

June is sure to bring more sunny days which will set a solid foundation for good moods and soil. Let's let our gardens flourish and in my case, hope our new cedars survive this year—or remove them, as they are apparently quite flammable. Insurance topic for another day.

Short-Term Rentals/Airbnbs

It's been quite the season in Real Estate here in BC and Canada. We've been navigating many changes with rules and regulations, coupled with horrible affordability. As of May 1st, short-term rentals have been banned and only permitted in principal residences and there is no grandfathering. There are few exemptions to this and hefty fines for non-compliance. And further changes have been made to ensure enforceability, such as business licenses added to STR sites, like Airbnb to even be published on the site. Hefty fines for the owners and short-term rental advertising agencies who do not follow. Risky business.

In real estate, regardless of the market and economy, there is always people and companies who need to sell or buy and I believe there are opportunities in all cycles.

Tough Economic Times and Limited Affordability - Where are the Real Estate Opportunities

In a challenging economic environment, finding real estate opportunities requires a strategic approach and creative thinking.

Here are five ways people can uncover real estate opportunities in a bad economy:

1. Seek Out Distressed Properties

Distressed properties, including foreclosures, short sales, and REOs (Real Estate Owned by banks), often sell below market value. These properties can present significant investment opportunities, especially if they are located in areas with potential for economic recovery. Working with real estate agents and leveraging online platforms that list distressed properties can help identify these opportunities.

2. Leverage Networking and Professional Connections

Building a strong network of real estate professionals, including brokers, investors, property managers, and contractors, can lead to discovering off-market deals and insider information about potential investment opportunities. Joining real estate investment groups and attending industry events can provide valuable connections and insights.

3. Focus on Cash Flow Properties

In a bad economy, rental demand often increases as more people opt to rent rather than buy homes. Look for properties that can generate positive cash flow through rental income. This includes multi-family properties, single-family homes in high-demand rental areas, and commercial properties with stable tenants. Analyzing the local rental market and understanding tenant needs are crucial for finding these opportunities.

4. Consider Geographic Diversification

Economic downturns can affect regions differently. Look beyond your local market to identify areas that may be less impacted by the economic downturn or are poised for quicker recovery. Research emerging markets, cities with strong job growth, and regions benefiting from infrastructure developments. Geographic diversification can help mitigate risks and uncover promising investment opportunities.

5. Utilize Creative Financing Solutions

Explore alternative financing options that can make it easier to acquire properties during a bad economy. These options include seller financing, lease options, hard money loans, and partnerships with other investors. Creative financing can provide the flexibility needed to secure deals that might not be possible through traditional financing methods.

"The best time to buy real estate is always five years ago." — Ray Brown        

Bank of Canada Announcement - June 5, 2024

BOC cut the Benchmark Interest Rate for the first time in 4 years.

From 5.00% to 4.75%

?? Navigating the BC Home Flipping Tax: What Every Homeowner Should Know

As residents of British Columbia, staying informed about changes in housing regulations is crucial, whether you're a homeowner, potential buyer, or involved in the real estate industry. Today, I want to highlight the upcoming BC Home Flipping Tax and provide insights for everyone, including homeowners and real estate professionals.

Understanding the BC Home Flipping Tax:

In response to the housing affordability challenge, the BC government has introduced the Short-term Holding Profit Tax Act. This legislation aims to discourage speculative property flipping by imposing a tax on profits earned from reselling residential properties within a short timeframe.

Key points to note:

- Application: Income generated from residential property sales within two years will be subject to tax, with some exceptions.

- Tax Rates: Properties sold within the first year will incur a tax rate of 20% of the profit, gradually reducing to zero over the subsequent 365 days.

- Exemptions: Certain life events, such as death, divorce, or relocation for work, are exempt from the tax. Builders contributing to housing supply expansion may also qualify for exemptions.

- Implementation: The tax is set to take effect on January 1, 2025, with retroactive application to properties purchased in 2023 and 2024 if resold within the specified timeframe.

For a comprehensive overview, I recommend referring to the official government release: (https://news.gov.bc.ca/releases/2024FIN0019-000462).

What You Need to Know:

Whether you're a homeowner or considering buying or selling property, understanding the implications of the BC Home Flipping Tax is essential:

- Impact on Transactions: If you're planning to sell your property within a short timeframe, be aware of the tax implications and consult with legal and financial advisors for guidance.

- Compliance: Ensure you're aware of the tax exemptions and make accurate declarations to avoid potential issues during property transactions.

- Government Initiatives: Alongside the Home Flipping Tax, the government has implemented various measures to address housing affordability, including expanding existing programs and launching new initiatives.

As always, wishing you a successful new month. Stay progressive and open-minded. When market conditions seem unfavorable, remember the value in long term-thinking and taking action; keeping the floodgates open for creative foresight is essential in recognizing opportunities in tough times.

I do hope we can, across all sectors become more collaborative in looking at real solutions that support the conflicting dynamics in the real estate industry here in Canada and finding that balance between housing prices and affordability that support our aging population and young citizens.

I know there are solutions.

Chantal

PS. Here are a couple highlights of the 2024 Dave McAnerney Ride for Autism, presented by Unison - where we raised $205,942. The Stober Foundation generously matched all donations. What a community!