Olivia D’Orazio
Other

Don’t count your chickens just yet, Albertans! The western province’s real estate association says it, too, will be eagerly awaiting the outcome of a Quebec lawsuit against a major FSBO.
 
“We’ve definitely been watching but I’m anxious to see how it all unfolds,” Brad Kopp, the president of the Alberta Real Estate Association, tells REP. “I think it’s something we’re keeping an eye on and watching with interest, and will evaluate as we see what unfolds. We’re just watching it as opposed to jumping directly in or keeping right out.”
 
Earlier this month, the Quebec Federation of Real Estate Boards (QFREB) announced its plans to sue DuProprio, a major FSBO in the province, for its misleading advertising, unfair competition and unenforceable guarantees, the board said.
 
“All we are seeking is for the court to order that misleading ads put up by DuProprio be withdrawn,” said lawyer Éric Vallières of the Montreal law firm McMillan, which is representing the QFREB. “We’re not saying they shouldn’t be in business. We’re just saying they shouldn’t run this ad campaign.”
 
However, DuProprio claims the lawsuit is more than a shot at its advertising campaigns. In a press release, the company said the QFREB’s lawsuit is “another attempt orchestrated by the real estate brokerage industry … to deprive consumers of the freedom to choose the service that best suits them when it comes to selling their property.”
 
In Alberta, Kopp said FSBOs haven’t become a big enough issue to warrant such drastic action. But agents on the ground seem to disagree.
 
“I hope the lawsuit is successful and that CREA and all the boards are watching carefully,” Michael Gouchie, a broker in Lacombe, Alta., wrote in the REP forum. “Here in Alberta, we have a FSBO company doing pretty much the same thing. I would love to see a class action lawsuit launched against them.”
 
Unfortunately, filing a lawsuit is easier said than done. Despite the frustration faced by agents and clients alike, different business models – including FSBOs – are perfectly legal.
 
“I can see the where they’re coming from, but at the end of the day, you live in the world where there are a million different business models and as a professional association it’s tough to jump out and say that’s right or that’s wrong,” Kopp says. “Within Alberta, there are members who have differing business models and not everyone follows the traditional structures. We do represent realtors but that encompasses a big field of business models.”

Copyright © 2015 Key Media Pty Ltd

Jennifer Paterson
Other

Most economists agree that interest rates will rise in 2015 – possibly as early as May – but property experts say the ups and downs of interest rates should never be the ‘be all, end all’ for your buyer clients.
 
Eddy Boudiwan, head of real estate investments at Real Estate Rangers & Taft Forward Management Joint Venture, said: “As long as you have a decent fixed rate and controls over your debt (the mortgage on the building), buy in growth markets and manage your assets impeccably, you should do very well over the long term.”
 
A recent poll on a REP sister site asked readers whether a rise in interest rates in 2015 will be good or bad for buyers, and found that the vast majority (84 per cent) consider it a positive – especially for investor clients.
 
Real estate investor Ken Davidson agreed. “It should allow for a strengthening in the rental market,” he said. ”New homebuyers will find it harder to purchase their own home and, generally, that is who most of the landlords are catering to in the rental market.”
 
However, Davidson does admit that there are scenarios where a rise in interest rates would be bad for landlords.
 
“It could be bad for a landlord if they are leveraged and they are in a community with slow turnover and not able to increase rents due to provincial rules,” he said.
 
But for landlords who have invested in growth markets, the scenario is a good one.
 
“When interest rates rise, the demand for rentals increases because fewer Canadians will convert to home ownership,” added Boudiwan.
 
“The rental supply is, in essence, fixed because very little rental buildings are constructed – a great scenario for landlords in growth markets. The above factors will push rents up and therefore increase the value of the assets.”

Copyright © 2015 Key Media Pty Ltd

Jamie Henry
Other

With more people wanting to live nearer the city core there is a growing interest in micro-condos. For those who put location above space they make an ideal choice with prices starting below $200,000. Smart House Ottawa and Reliance Properties are two firms that have seen an uptick in the sector. John Stovell from Reliance told The Huffington Post that people are realising that the lifestyle they want doesn’t have to be within their own four walls and that their social status isn’t about the size of their home. It’s an interesting shift in the mindset of young urbanites. The only hurdle is more limited mortgage options; some lenders will not even consider smaller properties, while others will do so but at less favourable terms than for a regular condo.

Copyright © 2014 Key Media Pty Ltd

Other

If you dub your development The Amazing Brentwood, you gotta be able to back it up. Shape Properties EVP Darren Kwiatowski assures us his firm’s transformation of Burnaby’s old Brentwood Mall—a “mixed-use project on steroids”—justifies its new handle.

The mega-project entails the total redevelopment of Brentwood Mall into a 28-acre transit-oriented, mixed-use city centre, with 1.3M SF of retail, 4M SF of residential via 11 towers, and two office buildings. All of it will be serviced by Brentwood Town Centre SkyTrain station. The mall dates back to 1961 and was acquired by Vancouver-based Shape in 2010.

The Amazing Brentwood is being rolled out in several phases, with the bulk of the new commercial space—500k SF added to the existing 550k SF mall—coming in the initial phase. The first wave also includes twin 63-storey residential towers designed by architect James K.M. Cheng, of Living Shangri-La and Fairmont Pacific Rim fame. Half of the first residential tower is dedicated to rental. Shape will own and manage the rental units and the commercial space below. “That’s been a big selling point,” Darren says. “With a typical residential project the developer is gone once they sell off the units.”

With Burnaby having focused growth in Brentwood over the years, Darren says the area now has the population density and infrastructure in place—including the SkyTrain—to support Shape’s redevelopment of the mall into a pedestrian-friendly city centre where people can work, play and live. “We’ll be creating a truly complete community,” says Darren. “This is not your typical convenience store at the base of a residential tower.”

© 2014, Bisnow LLC

Jamie Henry
Other

Construction of condos in the Greater Toronto Area has ended the year on a high. Following some tough conditions at the start of 2014, not least from the freezing conditions, the market has grown sharply. Although the analysts don’t agree on an exact number they all put it around 20,000 with an increase of almost a third year-over-year. Urbanation, which estimates 21,500 units were completed this year, says that’s around 5,000 higher than average and with almost 500 projects currently underway across the GTA there should be plenty of supply in 2015 too. One of the factors driving condo demand in the GTA is positioning of developments in close proximity to transit links, popular especially with young professionals and families. Average prices have been rising of course with TREB figures showing a year-over-year increase of 12 per cent across the whole GTA to $310,220.
 
Canadians less optimistic of growing house prices
The latest figures from the Bloomberg Nanos Canadian Confidence Index show growing pessimism over property prices. The index is based on weekly telephone polling and the latest data, for last week, shows that 34.7 per cent of respondents believe home prices will be higher in six months, that’s down from 37.8 per cent in the week earlier. Those who felt prices would go down increased to 13.9 per cent, a rise of 0.6 per cent from the previous week. When asked about the economy overall 29.9 per cent felt that it would not be stronger in six months, up from 26.4 per cent a week earlier. The low oil price is the main factor in falling optimism with a slowdown in the energy sector and lower oil revenues for government among the concerns.

Copyright © 2014 Key Media Pty Ltd

Jennifer Paterson
Other

As the B.C. government approves the construction of the Site C dam on the Peace River, experts suggest that investors in the area will feel a positive impact as early at the beginning of 2015.

“[Anyone] opening up a service business that will support the many who will be moving to the area to build this project, or providing rental housing to them, or even hotels or furnished suites, which are already in high demand, is about to really feel the positive impact beginning in 2015,” said Don R. Campbell, senior analyst at the Real Estate Investment Network (REIN).

The largest municipalities in the area are Dawson Creek and Fort St. John, already both popular with investors.

But Campbell advised investors to ensure they consider all the moving parts of this massive project, which is estimated to cost almost $8.8 billion, and not to be persuaded by negative press.

“One of the key ‘moving parts’ is the new philosophy that anyone who is ‘against’ an issue will be paraded across front pages, blog posts and electronic media,” he adds. “It is a theme that has played out on projects across the country with increasing frequency.

“As the negative news keeps many more emotional investors out of the market, you can quietly make your strategic moves. This project is not slated to be completed until 2024 – that’s a nine-year run of GDP and job growth to the area and, if you position yourself properly, with proper budgeting, cash flow and a management plan, this could prove to set you up financially for a long time.

“However you wish to use this large infrastructure project, it is important to remember that this is not a straight line project – there will be ebbs and flows,” continues Campbell. “Secondly, because the region has such a small population, those ebbs and flows will be more dramatic than in larger centres, so budget and prepare for these changes.”

Copyright © 2014 Key Media Pty Ltd

Other

The Canadian Real Estate Association has secured the rights to the .mls top-level domain with a winning bid of US $3.359 million.

The association out-bid Afilias, a global registry company based in Dublin, Ireland.

Earlier CREA attempted to avoid having the rights go to auction by applying for a Legal Rights Objection, a process open to parties that have a legal right to the term under dispute. When this was not successful, CREA proceeded with a Community Priority Application for .mls, which can be made by organizations that have some sort of association with the domain name at play. The rules require that at least 14 of 16 evaluation points must be met in order to be successful, but it was determined that CREA only met 11 evaluation points.

The auction was held on Dec. 17.

CREA has registered Canadian certification marks for the letters MLS and the term “multiple listing service” in Canada and is the exclusive licensee of the Realtor trademark in Canada.

“This win is a great example of how CREA and NAR (National Association of Realtors) are working together for the benefit of our members. MLS systems are widely recognized by consumers as a go-to resource when they want to buy or sell real estate,” says CREA president Beth Crosbie in a news release. “Owning the .mls domain protects the integrity of what the MLS trademark signifies to Realtors, consumers and real estate boards and associations.”

“It was important to keep the .mls domain in the Realtor family, and NAR was happy to work with our Canadian cousins in this effort,” says NAR president Chris Polychron in the release. “As Realtors on both sides of the border, we all stand together to create order for real estate information on the Internet and give our members the online advantages they need to best serve their clients and customers.”

NAR also holds the rights to the .realtor and .realestate top-level domains. NAR has a marketing partnership with CREA that allows CREA members to use the .realtor domain.

NAR worked with CREA to secure the .mls domain through its wholly owned subsidiary, the Realtors Information Network. The MLS Domains Association, a non-profit group of 55 U.S. multiple listing services, was also in support of CREA’s application, says NAR.

CREA applied for the .mls top-level domain through the Internet Corporation for Assigned Names and Numbers, the entity that co-ordinates domains and IP addresses for the Internet.

Copyright © REM 2014. All rights reserved.

A rise in interest rates and a ‘healthy’ fall in prices could save debt-strapped Canadians, bank CEO says.

Other

Canadian housing prices could fall as much as 15 per cent should interest rates climb, which would be “healthy” for the country’s economy, Royal Bank of Canada Chief Executive Officer David McKay said.

“There could be some price correction, particularly in a rising rate environment,” McKay said Thursday in an interview at the bank’s Toronto headquarters. “I don’t see it to the extent that the Bank of Canada does, but I do think you could have a 10 to 15 per cent price correction.”

Canada’s central bank said Dec. 10 that housing prices are overvalued by as much as 30 per cent. Bank of Canada Governor Stephen Poloz warned this month that indebted households and high housing prices pose a risk to the financial system even as the country isn’t in a housing bubble.

Royal Bank and other large Canadian lenders have posted record profits in recent years as homeowners took advantage of the lowest mortgage rates in decades, fuelling housing prices and an expanding real estate market.

Bank of Canada’s policy interest rate has been at 1 per cent since September 2010. The central bank may start raising its overnight lending rate in the fourth quarter of 2015, according to a Bloomberg survey of economists.

“The catalyst is very low rates, ultra low rates, strong demand and lack of supply creation,” said McKay, who led the bank’s consumer-lending business before becoming CEO on Aug. 1. “Demand is there, supply’s not, and low interest rates stimulate price wars still.”

The borrowing has left Canadians with record levels of debt, prompting warnings from policy-makers and the central bank about over indebted consumers and elevated housing prices. Canada’s ratio of household debt to disposable income rose to a record between July and September.

“I do not believe it will end badly,” McKay said. “A slowing market is absolutely a healthy thing right now, so we’re not concerned.”

© Copyright Toronto Star Newspapers Ltd. 1996-2014

BC set to post a 14.5 per cent annual increase in activity in 2014 – and it could keep going up, predicts Canadian Real Estate Association

Joannah Connolly
Other

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service^® (MLS^®) Systems of Canadian real estate Boards and Associations for 2014 and 2015.

With mortgage rates remaining at historic lows since the summer, activity has remained stronger for longer than previously expected and has yet to show clear signs of fading.

As a result, the forecast for annual sales in 2014 and 2015 has been upwardly revised. Almost all of the upward revision to national activity in both years stems from the current strength and momentum of sales across most of British Columbia and much of Ontario, particularly in the Greater Golden Horseshoe region.

In British Columbia, historically low mortgage interest rates have helped fuel a broadly based increase in the number of homes changing hands this year, although activity has only recently risen above its 10-year average. In Ontario, strong demand has been met with a rise in listings, which in recent years had been in shorter supply. The recent momentum for sales in both cases has endured for longer than expected and has shown few signs of diminishing. These two provinces together account for more than half of national activity and are responsible for much of the upward revision to projected and forecast national sales.

Sales are now projected to reach 481,300 units in 2014, representing an annual increase of 5.1 per cent. While this places annual activity eight per cent below the record set in 2007, it marks the strongest annual sales since then.

It also places activity in 2014 slightly above, but still broadly in line with its 10-year average. Despite periods of monthly volatility since the recession of 2008-09, annual sales have held steady within a narrow range around its 10-year average. This stability contrasts sharply with the rapid growth in sales seen in the early 2000s prior to the recession.

British Columbia is projected to post the largest annual increase in activity (14.5 per cent) followed closely by Alberta (9.3 per cent). Demand in both of these provinces is currently running at multi-year highs. Annual activity in Ontario is also expected to come in 3.6 per cent above 2013 levels.

Sales in Saskatchewan (+1.8 per cent), Manitoba (+0.8 per cent), Quebec (-0.1 per cent), New Brunswick (-0.8 per cent), and Prince Edward Island (no change) are expected to hold near 2013 levels. Activity in Nova Scotia and in Newfoundland and Labrador is projected to decline this year by 3.9 per cent and 4.7 per cent respectively.

In 2015, Canadian exports, job growth and incomes are expected to improve with mortgage interest rates edging only slightly higher. These opposing factors should benefit sales activity in housing markets where demand has been softer and prices have remained more affordable. Sales in relatively less affordable housing markets are expected to be more sensitive to higher mortgage interest rates.

National activity is now forecast to reach 485,200 units in 2015, representing a year-over-year increase of 0.8 per cent. While sales nationally are still expected to peak this year and trend lower throughout 2015, they are not expected to return to weakened levels recorded in the first quarter of 2014.

Sales activity is forecast to grow fastest in Nova Scotia (+2.6 per cent), followed by New Brunswick (+2.9 per cent). Quebec (+1.2 per cent), Ontario (1.1 per cent), British Columbia (0.5 per cent), and Alberta (0.1 per cent) are forecast to see little change on an annual basis, reflecting a rising trend in 2014 mirrored by a softening trend in 2015.

There are a number of upside and downside risks to the forecast. In British Columbia and Ontario, activity is still expected to be held in check by eroding affordability for single family homes. However, with sales in British Columbia now only at average levels, they may climb further before rising interest rates begins to materially reduce affordability. Sales in Ontario may also remain stronger than expected should new listings continue to come onto the market at higher levels in places and in market segments where a lack of supply in recent years has led to pent-up demand.

Additionally, consumer confidence and job growth in the Prairies may come under downward pressure depending on how far oil and non-energy commodity prices decline and on how long they remain low.

Saskatchewan and Manitoba sales are forecast to post declines of seven-tenths of one per cent and nine-tenths of one per cent respectively in 2015. Both provinces are experiencing higher than normal levels of supply while sales have shown recent signs of moderating.

The national average price has evolved largely as expected since the spring, resulting in little change to CREA’s previous two forecasts.

The national average home price is now projected to rise by six per cent to $405,500 in 2014, with similar percentage price gains in British Columbia, Alberta, and Ontario. Saskatchewan and Manitoba are expected to post increases of close to three per cent. Newfoundland and Labrador and Prince Edward Island are forecast to see average home prices rise by a little over one per cent this year, while Quebec is forecast to see an increase of slightly below one per cent. Prices are forecast to recede by about half a per cent in New Brunswick and Nova Scotia.

The national average price is forecast to edge higher by 0.9 per cent in 2015 to $409,300. Alberta and Manitoba are forecast to post average price gains of almost two per cent in 2015, followed closely by Ontario at 1.3 per cent. Average prices in other provinces are forecast to remain stable, edging up by less than one percentage point.

© 2014 Real Estate Weekly