Market slowdown means the foreign buyers tax could be working, Realtor says

Could the controversial foreign buyers tax in Metro Vancouver finally be working?

The provincial government introduced the tax — which requires foreign nationals buying real estate within the Metro Vancouver area to add a 15 per cent property transfer tax — as a measure to address high real estate prices in the Lower Mainland.

But ever since the tax came in to effect on August 2, the market has been in a tizzy.

Some foreign buyers were forced to consider abandoning their bids and face legal action; some lost thousands; others scrambled to find enough money to cover the shortfall.

On the other side, Canadian citizens who had sold their houses to foreign buyers were faced with lost deals from buyers who could not or would not pay the 15 per cent surplus. 

Lawyers declared that thousands of locals could end up in litigation over reneged contracts.

As for the real estate market, Vancouver realtor Steve Saretsky says that sales have taken a nosedive.

"The market has been slowing down since April ... Since the tax came, it's pretty much put a screeching halt on things."

'The market was totally out of hand'

But Saretsky says that's not a bad thing.

During the peak period, he says sales offers would come in without conditions and thousands of dollars above the asking price.

"The market was totally out of hand. You ask any other Realtor, and they'll tell you the same thing. To adequately protect clients, there needs to be subjects on there, whether that's financing or building inspection or so forth."

Now that the market has slowed down, he has more time to do his job.

"As a Realtor, it comforts me that I can advise my client, guide them and protect them properly," he said.

Saretsky says this cool-down period has changed peoples' mentality, reducing fears they would miss out on getting into the real estate market.

Govt. should compensate locals who lost out

Still, Charles Wiebe, president of the Fraser Valley Real Estate Board, says he'd like to see compensation for clients who were blindsided by the tax.

"We feel like that's absolutely not fair to the sellers of this province who are British Columbians," he told CBC's The Early Edition.

"A lot of those people were not only expecting to have the sale complete, but they had also made other arrangements to buy other properties from other British Columbians in B.C."

Wiebe says the province should immediately grandfather any contract that was entered into prior to August 2 and compensate people who lost their deposits.

"Let's not wait until we assess all the carnage that has happened because of this tax," he said. "Let's be fair."

With files from The Early Edition

To listen to the interview, click on the link labelled Vancouver's foreign buyer tax — is it doing what it's supposed to do?