\ & . . ‘ ‘ 0 ‘ . 3 a t ‘ , > _ . ’ ~ : . 77 . . , , woe \ ‘ , . ' 8 ae f : ’ ‘ , on . . , . at 62 ~-Priday, ‘June 30,-1989 — Worth’ Slord News” a ee PROPERTY PURCHASE TAX REAL ESTATE Rising interest rates burden home buyers WHEN THE Property Purchase Tax was intrecuced in B.C. . in 1987, concern about its financial impact on buyers led a Committee from the Real Estate Board of Greater Van- couver to analyze the effect of this tax measure on a home buyer’s down payment. At that time mortgage interest rates wer2 generally 10 per cent on @ one-year term of a 25-year mortage. Based on a purchase price of $150,000, the Property Pur- chase Tax of one per cent of full mar%ez value would require an extra payment of $1,500 over and adove all other closing costs. If the purchaser had a down esyment of $40,000, the Purchase Tax actually represents a ta". of 3.75 per cent on the down payment — a virtual penaJt; on the potential buyer's savings. Most buyers find it necessary to withhold this sum from the down payment available, resulting in decreased equity * and a larger mortgage, to be amortized at current interest rates over the life of the mortgage. As interest rates began an upward climb in 1988 and the early part of 1989 and high demand pushed prices upward, the same committee undrsiook further analysis to. determine the impact of this addiizonal market force on the down payment and price of » bome a local buyer could afford. StatsCan reports the # erage family income in the Greater Vancouver Regional Fistrict as $45,000 per annum, so this is the figure used throughout the study. Based on the sar:« $150,000 home, the same $40,000 down payment, $110,0:0 mortgage, taxes of $1,200 annually and a 32 per cent Gross Debt Ratio, the following picture emerged: (Figures rounde? to the nearest dollar) 1042% mortgage rate Per Month Per Annum P&l $1,022.00 $12,264.00 Taxes 100.00 1,200.00 $1,122.00 $13,464.00 (@ 32% GDR, approximately $42,000 gross annual income required to qualify for mortgage) JOYCE WILSON 922-4751, 925-1111 sie ei ie A TRUE FAMILY HOME — 2456 CARNATION, NORTH VAN — DESIRABLE BLUERIDGE xClose to schools . Close to shopping & much more. rd *xOpen House Sunday 1-4 p.m. f #3 bedrooms & den * Approx. 2300 sq.ft. %*2¥2 bathrooms * Beautiful ya ATTENTION WORKING SINGLES, COUPLES, RETIREES #12-2236 FOLKESTONE WAY, WN. * Sweeping views % Open house Sat. & Mon. 1-4:30 p.m. with solarium Bcory 1 bedroom condo sutton Gg 925-1111 - entinel realty SE BER BROKER 114%2% mortgage rate P&I $1,097.00 $13,164.00 Taxes . 100.00 1;200.00 $1,197.00 $14,364.00 (@ 32% GDR, approximately $45,000 gross annual income fequired to qualify for mortgage) 12%4% mortgage rate P&! $3,174.00 $14,088.00 Taxes 100.00 1,200.00 $1,274.00 $15,288.00 @ 32% GDR, approximately $47,800 gross annual income’ required to qualify for mortgage — about 6.2% above the StatsCan average) 13%2% mortgage rate P&l $1,252.00 $15,024.00 Taxes 100.00 1,200.00 $1,352.00 $16,224.00 @ 32% GDR, approximately $50,700 gross annual income required to qualify for mortgage —- about 12.7% higher than StatsCan average) 144% mortgage rate P&I - $1,331.00 $15,972.00 Taxes 100.00 1,200.00 $1,431.00 $17,172.00 @ 32% GDR, approximately $53,700 gross annual income required to qualify for mortgage — about 19.3% higher than StatsCan average) 925-1111. ¥% Owner has relocated ” 925-1114 & Cozy and immaculate 2 bdrm. home. Updated kit- chen and near-new carpet. Very private setting and lovely garden. Good view potential. Parking | in rear. 6455 Welilngton, West Vancouver. ‘ “sutton As interest rates rise, the value of a home that can be pur- chased by our ‘‘average’”’ GVRD income earner is reduced. The $45,000 earner who has a 75 per cent mortgage and taxes of $1,200 annually, calculated on the same 32 per cent Gross Debt Ratio would be able to afford the following home values, based on increasing interest rates. $45,000 times 32 per cent equals $14,400 annually, or divided by 12, to $1,200 per month with principal, interest and taxes, or $1,100 per month for principal and interest. 15% . Mortgage Value of Home 104% - $1,100 P &1 $115,492 $357,990 15 14% - $1,100 P &1 $110,000 $147,000 . 15 (7% decrease in value) 124% - $1,100 P&I $103,000 $137,000 "75 (13% decrease in value) 13%2% - $1,100 P & I $97,000 $128,000 75 (19% decrease in value) 144% - $1,100 P&I $91,000 $121,000 15 (24% decrease in value) Current home owners are similarly affected when renegotiating a current mortgage at a higher interest rate, without compensatory increase in income to cover additional costs, ; The models used clearly indicate the financial impact of rising mortgage interest rates on the purchasing power of the housing consumer in the Greater Vancouver Regional District, even without taking into consideration rises in property taxes and all other costs of living. Coupled with the Property Purchase Tax imposed by the provincial government and the potential of the Goods and Seryices Tax proposed by the federal government for January 1, 1991, it will become more and more difficult for low and even middle income buyers to purchase housing in ‘uture. THE CHESTERS The feel of a townhouse with an apartment price! 1 bedroom ground levet corner unit with large sunny private patio, great central location, secured U/G parking. 7 year old hidg. Lots of storage. Excel. assumable mortgage. - #107155) Chesterfield, N. Van. TE NT A 25 minute drive from Powell River brings you to the lush greenery and blue waters of Okeover Arm. Build your retreat. Deep water moorage, 200 ft. of beachfront, power and tel. avail., valuable timber. 1.7 acre. _ Sutton group - sentinel realty aN INDERENGENT MEMBLA ERO ER JEANNETTE WRIGHT NEW HOMES ON BOWEN ISLAND! 4. Exciting 2200 sq.ft. new home (under constnuc- | tion). Completion by mid-summer. This home of- fers 2 or 3 bedrooms, family room, skylights & spiral staircase. Lovely view and sunsets. Close to beach. $174,900 2. Custom 1500 sq.ft. cedar home to § be built on .8 of an acre. Very private and peaceful setting. Fabulous plans with a spiral staircase, skylights and a huge verandah that wraps around the renee SE 925-1411 house. $144,900. Call to view plans. & . iT : 4 5 x d EAE TE EN. ca ens i |