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Unit transactions across province to fall 6.3 per cent, but prices will continue to rise, up another 6.4 per cent this year, according to forecast

Joannah Connolly
Other

After a near-record-setting year for BC real estate sales in 2015, in which more than 100,000 homes were sold, the number of transactions this year is expected to drop by 6.3 per cent to a still-high 96,100 units, according to a British Columbia Real Estate Association (BCREA) forecast released January 28.

The association added that it expected provincial economic conditions to “remain robust” and support high levels of housing demand.

It added, “Strengthening economic conditions at home and abroad are expected to bolster housing consumption activity in 2017. BC Multiple Listing Service® (MLS®) residential sales are forecast to increase two per cent to 98,000 units next year.”

The report said that the significant rise of new construction activity and an anticipated boost in new listings in the spring are “expected to ease some of the upward pressure on home prices.”

It said, “After rising 12 per cent in 2015, the average MLS® residential price in the province is forecast to increase 6.4 per cent to $677,200 this year and a further 4.2 per cent to $705,300 in 2017.”

A price rise of 6.4 per cent, coupled with a fall in transactions of 6.3 per cent, would result in a total sales dollar volume drop of just 0.3 per cent compared with 2015, predicted the report.

For Greater Vancouver, the association predicted a drop in total sales of 8.2 per cent in 2016, but a rise in average prices of 8.6 per cent compared with last year – a figure that is consistent with a recent forecast by Royal LePage.

The report observed that the BC economy as a whole has yet to be negatively affected by economic concerns elsewhere in Canada, and that this will continue to support the housing market.

“The BC economy proving resilient to the collapse in oil prices and weak commodity demand. Consumer spending through retail sales is growing at its fastest rate in a decade, while employment in the province increased by over two per cent during the latter half of 2015, with a marked increase in full-time jobs. Tighter labour market conditions have also led to a four per cent rise in average wages.

“While BC exports have yet to fully realize the competitive advantage of the lower dollar, tourism has experienced significant gains.”

However, the BCREA added that there were significant variances between different parts of the province.

The report said, “Market conditions are not consistent around the province. Regional economies with a heavy reliance on commodities have demonstrated weaker housing market conditions, while larger urban areas have experienced declining inventories and strong sellers’ market conditions. Indeed, Vancouver and the Fraser Valley are exhibiting accelerating market conditions.”

© 2016 Real Estate Weekly

Steve Randall
Other

One of western Canada’s top property brokerages is to become part of JLL Canada. Bill Goold Realty has been operating for a quarter of a century and has sold more than $1.2 billion in commercial and rental properties across the Lower Mainland and British Columbia, including North Vancouver, Burnaby, New Westminster and Victoria. The deal expands JLL’s multifamily investment sales platform and expands its client services in Vancouver.

Bill Goold will lead JLL’s multifamily investment sales practice in Vancouver, and Bill Goold Realty’s Ray Townsend will lead day-to-day operations.  “Joining JLL is a natural evolution for our firm, partnering our local expertise with a global network of resources, cutting-edge tools and broad-reaching connections to investors across the globe,” Goold said.

Copyright © 2016 Key Media Pty Ltd

The Vancouver Sun

Some believe that a surtax on foreign investors would cool Metro Vancouver?s housing market. GERRY KAHRMANN/PNG FILES

I read Gordon Clark’s column, Property tax surcharge won’t bring down prices. The line “The scheme would thus target foreigners with vacant properties, who would be forced to pay the proposed, ridiculously excessive tax” comes across as imbalanced and is not supported by hard data in other markets.

If the tax really is “ridiculously excessive,” it would undoubtedly restrain the market. This is Economics 101. Prices might still go up, but all the more reason to have disincentivised speculative buyers.

Having lived in Hong Kong, where realestate values increased up to five times in just over a decade from the low in 2003, it can be seen how cooling measures are unpopular with real-estate owners but welcomed by first-time buyers. The measures targeted at speculators both in Hong Kong and also seen in Singapore did restrain price growth.

This issue is the biggest challenge to the long-term health of Vancouver as a vibrant, livable and desirable community. I worry that those invested in our community cannot see this.

Ed Lupton, West Vancouver

© Copyright (c) The Province

Ephraim Vecina
Other

The continuous weakening of both the renminbi and the loonie can make real estate in Canadian soil—especially in high-volume areas like Vancouver—quite an attractive prospect for Chinese investors, according to an analyst.

Investment advisor Ludovic Siouffi predicted that the massive selloff in the Chinese stock market might prove to be the spark that ignites greater foreign volume in Canada’s already red-hot housing market.

Siouffi pointed to the Chinese state media’s relentless pushing of stocks as one of the main culprits of the current chaos, which has made nerve-racked Chinese investors look for “safer options” elsewhere.

“The resulting growth was explosive but unstainable. As the demand for stocks increased, so too did stock prices,” Siouffi wrote in his analysis, as quoted by BC Business.

“Meanwhile, the overall Chinese economy had actually been slowing down, and debt was skyrocketing. This led to a sudden mass loss in confidence, and a shocking drop in the Chinese stock market,” Siouffi elaborated.

Coupled with an investor exodus due to a need for diversification, Siouffi argued that this chain of events could pave the way for further increases in Canadian real estate prices due to greater demand.

Siouffi advised caution on the part of domestic investors at this point, however, as no signs of an increased supply in available housing currently exist, which would only fuel even more intense price wars and fiercer competition between local and foreign buyers.

Copyright © 2016 Key Media Pty Ltd

Owners ?just don?t have the money? for proper contingency funds

Barbara Yaffe
The Vancouver Sun

Real estate appraiser and consultant Jeremy Bramwell says condo board reserve funds are seriously underfunded across B.C. Photograph by: Arlen Redekop , Vancouver Sun

Strata depreciation reports have unearthed an alarming situation for B.C. condo owners: The overwhelming majority of strata units are carrying monthly maintenance fees that are nowhere near adequate to keep up their buildings.

“This is really a scary situation,” says Jeremy Bramwell, of Bramwell & Associates Realty Advisors. “We are going to have a lot of special assessments being levied (on condo unit owners) in coming years.”

Special assessments are the dreaded lump-sum levies imposed on owners by strata corporations when they need extra cash to cover supposedly unexpected expenses.

The requirement for depreciation reports was introduced by the B.C. government in 2011, and were supposed to give strata councils an advance understanding of the timing and costs involved in maintaining and repairing assets over a 30-year period.

Bramwell’s company carries out the comprehensive reviews required to produce the depreciation reports.

He recalls one of his client-strata corporations had a reserve fund with “less than 2 per cent of the money needed” to address the looming upgrades outlined in its report.

And such dire underfunding is not at all uncommon. Bramwell estimates that fewer than two per cent of his clients meet even a basic standard of having a reserve or contingency fund that is deemed just 35 per cent adequate. Which means 98 per have reserve funds that are less adequate than that.

“According to international standards, that would mean all of them are in a ‘critical state’.”

Commenting on strata reserve funds across B.C., Bramwell declared: “This whole province is in a critical financial position.”

The Condominium Homeowners Association of B.C. did not respond to repeated calls for comment.

Bramwell bases his analysis on U.S.-based National Reserve Study Standards. He notes that in Toronto, monthly fees for condos typically run between $600 and $900. In Vancouver, “if maintenance fees are more than $300 a month, it’s surprising.”

Fees are kept low in Vancouver because of housing affordability challenges. Once a buyer pays a big price for a strata unit, there is not much left for monthly maintenance.

“I’ve been at council meetings where people are upset to see the numbers. They say that they just don’t have the money.”

Condo owners also want to keep monthly fees low to ensure their units remain marketable.

As bad as the financial situation of many B.C. strata corporations is, another concern has been raised by the requirement for depreciation reports.

The deadline to acquire the reports was December 2013. But some 40 to 50 per cent of strata corporations are opting to annually defer, temporarily or indefinitely, the commissioning of such documents.

They can do so because the Strata Property Act provision for depreciation reports has a couple of loopholes. First, it applies only to corporations with five or more units. Second, a three-quarter vote of strata members can nullify the requirement.

Some condo boards don’t want to pay the $2,500 to $5,500 fee to hire companies like Bramwell & Associates, or Campbell & Pound.

Dan Jones, president of Campbell & Pound, notes that condo owners “in their senior years are looking at their own personal finances rather than the community picture.”

Some people prefer to behave like ostriches, says Bramwell, choosing not to know how onerous their financial obligations really are.

The reports, often dozens of pages in length, are controversial because condo boards are damned if they have a depreciation report, and damned if they do not.

That’s because the reports can scare off potential buyers.

Then again, if no report has been done, a potential buyer may wonder what the strata is trying to hide. Without the reports, condo buyers can be thwarted in obtaining bank mortgages.

Bramwell also cites a lack of standardization in the preparation of depreciation reports. Because each appraiser carries out work differently, it is difficult for buyers to compare and contrast depreciation reports from different buildings.

© Copyright (c) The Vancouver Sun

Justin da Rosa
Other

“Inflation in Canada is evolving broadly as expected. Total CPI inflation remains near the bottom of the Bank’s target range as the disinflationary effects of economic slack and low consumer energy prices are only partially offset by the inflationary impact of the lower Canadian dollar on the prices of imported goods,” the Bank of Canada said in a release. “As all of these factors dissipate, the Bank expects inflation will rise to about 2 per cent by early 2017. Measures of core inflation should remain close to 2 per cent.”

The bank did acknowledge that commodities and oil prices continue to take a hit and negatively impact the economy. It suspects the economy stalled in Q4 2015. It also expects growth to be delayed.

“The Bank now expects the economy’s return to above-potential growth to be delayed until the second quarter of 2016,” the BoC said. “The protracted process of reorientation towards non-resource activity is underway, helped by stronger U.S. demand, the lower Canadian dollar, and accommodative monetary and financial conditions.”

On a bright now, however, employment and household spending remains strong.

“The Bank projects Canada’s economy will grow by about 1 1/2 per cent in 2016 and 2 1/2 per cent in 2017. The complex nature of the ongoing structural adjustment makes the outlook for demand and potential output highly uncertain,” the bank said. “The Bank’s current base case projection shows the output gap closing later than was anticipated in October, around the end of 2017. However, the Bank has not yet incorporated the positive impact of fiscal measures expected in the next federal budget.”  

Copyright © 2016 Key Media Pty Ltd

Allison McNeely
Other

The Bank of Canada will cut its key interest rate to at least zero this year and could move toward negative rates to offset the crude oil price slump, according to Barclays Plc.

The London-based bank expects the Bank of Canada to cut its overnight target rate 25-basis points to 0.25 percent at its announcement on Wednesday, and a total of at least 50 basis points in 2016, Juan Prada and Andres Jaime Martinez wrote in a research note.

“In our view, risks are tilted toward further easing, which would imply negative rates,” the strategists said. “The experience of countries like Switzerland, Sweden, Denmark and the euro area has taught central banks that zero is not the lower bound.”

Persistent weakness in the price of crude oil, softer than expected economic data and concerns about the Chinese economy are weighing on the Canadian economy, the strategists wrote. Western Canadian Select, an Alberta oil-sands benchmark, has declined by half since the central bank’s October policy update while the Canadian dollar has depreciated by about 10 percent.

The Bank of Canada last cut interest rates in July to 0.5 percent. Swaps traders are currently pricing in a 56 percent chance that the central bank will cut interest rates this week. In his October update, bank governor Stephen Poloz said the effective lower bound for Canada was about minus 0.5 percent, raising the possibility of negative interest rates.

Copyright © 2016 Key Media Pty Ltd

The Fraser Valley real estate market is heating up, with detached sales up 50 per cent in December. Here?s what you can buy at typical prices in five areas

Vashti Singh
Other

Last year was the strongest in a decade for Fraser Valley real estate, according to the latest stats issued by the Fraser Valley Real Estate Board (FVREB).

The benchmark price of a single-family home in the Fraser Valley in December was $672,400, a rise of 17.3 per cent compared with December 2014’s price. With detached house sales up 50 per cent year-over-year in December, we wanted to see what the benchmark price for a home will buy you in five Fraser Valley neighbourhoods.

We’ve found some of the best values in the Fraser Valley detached house market. Also check out our handy infographic for the benchmark prices of condos and townhouses – as well as single-family houses – in areas throughout the Valley

© 2016 Real Estate Weekly