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Danny Kucharsky
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The Greater Montreal Real Estate Board is leading an initiative among Quebec boards to present CREA with a common list of demands for changes.

At stake is the future membership of the Quebec boards in the national association.  If they decide to leave, the Quebec boards have until the end of September to inform CREA that their membership will not be renewed next year.

“We don’t wish to leave CREA,” says Patrick Juaneda, president of the Montreal board.  “It’s our desire to work with everybody, but they need to respond to our needs.”

Several working groups comprised of presidents and directors from the Quebec boards will come up with recommendations to present to CREA.

Quebec has rules that are different than elsewhere and “we have to respond to those needs directly,” Juaneda says.

For example, Quebec members are paying for WEBForms despite the fact the service can not be used in Quebec because of the province’s different regulations.  The solution, he says, is more a la carte services. “If a product is worthwhile, members will use it and buy it.”

He says CREA currently operates like it’s a big company and there’s a strong need for the association to review its spending practices. “The range of services offered to members is enormously expensive and action hasn’t been taken to resolve that situation.”

As an example of wasteful spending, Juaneda cites an alleged trip by a few CREA board members or members of its advertising committee to Mexico to oversee the shooting of an ad. “I find that totally ridiculous and unacceptable.”

Juaneda adds that while CREA has promised improvements to Realtor.ca, Quebec’s online listing service Centris.ca has become “enormously valuable” and is responding to customers’ needs. “Centris is doing the job extremely well in Quebec and performing better than Realtor.ca. We say, ‘why not allow us to use that platform and stop spending on the other?'”

There is a lot of duplication in what CREA does and adding services and stuffing them down members’ throats “is not the way to do things in 2013.”

Juaneda insists that the Montreal board doesn’t want to leave CREA at any price and notes that CREA offers a common national vision and government representation required by the industry. CREA also offers services that smaller boards can not provide to members.

At its annual meeting in March, CREA approved a motion that allows Quebec members to continue to receive a dues credit for advertising for the next three years. The credit reflects the fact that French-language TV and radio advertising promoting real estate in Quebec is no longer produced by CREA.

Aside from that positive step, discussions with CREA are currently moving at a snail’s pace, Juaneda says. Still, there seems to be an openness among members of the CREA board to listen to the demands of the Quebec boards, which augurs well, he says.

Recently two smaller boards that had previously opted out of CREA decided to rejoin the national association.

Last September, the GMREB board of directors decided to remain in CREA despite a vote by members that rejected the status quo.

Members were given three choices in the vote: leave CREA on January 1, 2013; postpone the decision until after the spring meeting; or remain a CREA member. The highest number (40.4 per cent) opted to leave CREA, while 31.5 per cent voted to postpone leaving CREA and 28.2 per cent chose to remain with the national association.

Garry Marr
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Valuations are getting so high in Vancouver’s commercial market it is starting to affect deal flow, says a new report.

RealNet Canada Inc. says capitalization rates – the implied rate of return on a property – in British Columbia have gone so low that a 13% decline in sales in the first quarter can be attributed to the drop. The lower the cap rate, the more a property is worth.

“Transaction volumes experienced declines as the general market adjusts to changing value expectations in a record low cap rate environment,” said Paul Richter, director of research with RealNet, in the report. “Investment activity experienced a decline, however, demand for quality assets and development sites remains high.”

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RealNet said there was 217 transactions of more than $1-million in the Vancouver market in the first quarter which amounted to $1.06-billion in activity. That was sharply down from the more than $1.2-billion in activity in the fourth quarter of 2012 but still 10% above the long-term quarterly average.

The only asset classes showing improved activity were office and hotel. Office sales volumes were up 114% from the previous quarter. Land investment dropped 11% from the fourth quarter.

The big deal in the first quarter was British Columbia Investment Management Corp.’s purchase of 349 West Georgia Street, an entire downtown Vancouver block taking up 2,984 acres of land. The property was purchased from Canada Post for $166-million.

© Copyright (c) National Post

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A significant correction in the Canadian housing market in the short term is unlikely, says a new report.

Housing affordability is largely unchanged in first three months of 2013 along with mortgage rates, home prices and household incomes, says Royal Bank of Canada’s Economics Research department.

Home resale volumes have fallen 13% on last year, although much of the decline took place after last July’s changes to government-insured mortgage insurance rules.

Exceptionally low mortgage rates have been the chief factor in keeping homeownership costs relatively affordable, according to the Housing Trends and Affordability Report.

 
Craig Wright, senior vice-president and chief economist, RBC, says, “The Canadian housing market cooled significantly in the past year; however, there is mounting evidence that activity is no longer weakening.

“A significant nationwide price correction does not appear to be imminent so long as affordability remains outside of the danger zone.”

The RBC report calculates the proportion of pre-tax household income needed to service the costs of owning a specified category of home at going market values. A rise represents lower affordability.

From January to March the measure for detached bungalows climbed 0.3% to 42.5%, still under the 44.5% reached in previous Canadian market downturns when prices fell by more than 5% across the market.

The standard two-storey home index was at 48% and condominium apartment at 28.1% – both unchanged.

“While affordability levels are manageable at this point, we’d be humming a very different tune if interest rates were to suddenly rise substantially. Fortunately, the likelihood of a surge in rates is slim at this stage.

“We believe that the more probable scenario in Canada is one of low interest rates over the next two years; we expect the Bank of Canada to begin gradually raising the overnight rate in mid-2014.”

When interest rates eventually rise, it will be because the Canadian economy is on stronger footing, with rises in household income to offset any negative impact on affordability.

Home prices have generally held up so far in 2013, thanks to predominantly balanced markets in Canada.

RBC expects market activity to remain subdued this year, but there may be a “mild strengthening” as the effects of the government changes decline.
 
Vancouver continues to be the least affordable market in the country by far, with Toronto and Montreal showing signs of affordability issues, particularly with single-family homes.

RBC’s housing affordability measure for the benchmark detached bungalow in Canada’s largest cities is Vancouver 82.3% (up 0.1% from the previous quarter); Toronto 53.8% (up 0.8%); Montreal (pictured) 40.1% (up 0.6%); Ottawa 39.1% (up 0.1%); Calgary 38.7% (up 0.8%); Edmonton 30.4% (down 0.2%).

Affordability across British Columbia improved slightly and fell 0.4% for bungalows and by 1.3% for two-storey homes, but is still the highest in Canada.

In Alberta, the affordability index rose 0.2%, but was offset by high household incomes.

Following a big all in the fourth quarter of 2012, Saskatchewan’s affordability saw the largest improvement with measures falling 1.7% for two-storey homes, 1% for bungalows and 0.3% for condominiums.

Manitoba’s affordability levels rose slightly, up 0.8% for bungalows, 0.4% for condominiums and 0.2% for two-storey homes.

In Ontario, measures for both bungalows and two-storey homes rose by 0.4%, while the measure for condominiums remained unchanged.

Quebec bungalow affordability also rose 0.4%, with two-storey homes up 0.1% and condos falling 0.6%.

The index for Atlantic Canada rose between 0.4% and 0.6%.

The RBC Housing Affordability Measure, which has been compiled since 1985, is based on the costs of owning a detached bungalow (a reasonable property benchmark for the housing market in Canada) at market value.

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Home inspections have traditionally been for the benefit of the purchaser. Pre-inspected listings benefit all parties – purchasers, vendors and Realtors.

Deals Won’t Fall Through.

Home inspections, performed as a condition of the offer, can kill deals. Sometimes this is because the purchaser gets cold feet; sometimes there’s a big problem no one knew about. Sometimes it is because the house has been misrepresented; sometimes it is because the home inspector scared the purchasers by not explaining that minor and typical problems are just that – minor and typical.

If the home inspection is performed prior to the house being listed, all parties will be aware of the physical condition of the house before an offer is drawn. There will be no surprises after the fact.

Deals will not fall through.

Pre-inspected Listings Avoid Renegotiation

In a buyers’ market, most houses have to be sold twice. It takes a lot of work to get a signed Agreement of Purchase and Sale. Then the home inspection is done and the purchaser wants to renegotiate. If all parties know the condition of the house prior to the offer, there is no need for renegotiation.

As most real estate agents know, renegotiation is very difficult. Vendors have already mentally sold the house; purchasers are suffering buyers’ remorse. Egos, pride and frustration can muddy the already emotional waters. A vendor who pays for a home inspection will be further ahead than one who has to renegotiate. He or she may even sell the house faster.