Steve Randall
Other

The Royal Bank of Canada says it will increase rates on some mortgages from Friday. Fixed mortgages of between 2 and 5 years will rise by 10 basis points while 5-year loans will rise by 15 per cent. While the federal regulations on mortgage lending have tightened conditions for the banks RBC’s Sean Amato-Gauci said that the increases were due to a number of market conditions. Although RBC is the only lender to have announced the move so far it is expected that others will follow.

Copyright © 2016 Key Media Pty Ltd

 

Other

With millennials comprising about 25 per cent of Canada’s population, this segment is poised to outstrip their baby boomer parents in the real estate market as they start moving into their family-rearing years and purchase homes.

A large part of this population lives in major job growth hubs like Toronto and Vancouver, driving sales of single-family homes and starter condos in these areas. Experts said that affordability plays a central role in millennials’ purchasing decisions, even as the sector is willing to pay an average of $1,800 per month to rent condos close to their workplaces. This is because the average resale price of a Toronto condo is now approaching half a million dollars.

The demographic shift has forced developers to focus on the development of rental structures, with the expectation that a significant proportion of millennials would prefer to rent for life.

These projections line up with expert observations that millennials are more attracted to a job and a lifestyle, as opposed to owning cars or homes.

“Many of them, especially in the United States, have become skeptical of this notion of a house as an investment,” York University director of real estate and infrastructure program James McKellar told the Toronto Star.

“Millennials and the subset before them, the late 30-somethings, are probably the first generation of people who are living their early adult life in urban centres. For them, home has more to do with being part of a complete community than it did in their parents’ generation, when it was about having a backyard, a picket fence and a two-car garage,” Tas DesignBuild president and CEO Mazyar Mortazavi agreed.

Copyright © 2016 Key Media Pty Ltd

Following release of BC Assessment figures revealing skyrocketing home values, province moves to help with rising property taxes

REW
Other

With Vancouver home values up 17 per cent over the past year, and the benchmark price for a single-family home in Greater Vancouver now at $1,248,600, the BC government took steps January 5 to help out with rising property taxes.

The Home Owner Grant, which offers up to $570 a year to home owners who are the primary residents of their property, is now available to owners of homes worth up to $1.2 million. This is a rise of 9.1 per cent from the $1.1 million threshold last year.

For properties assessed above the threshold, home owners can still apply for the grant, but the amount is reduced by $5 for every $1,000 of assessed value over $1.2 million.

Finance Minister Mike de Jong said that under the 2016 assessments, more than 91 per cent of homes in BC are below the $1.2 million threshold and that, last year, the program gave back nearly $800 million to BC residents.

An additional grant up to $275 is available for homeowners who are aged 65 or over, who qualify under the persons with disabilities category, or who are eligible to receive certain war-veteran allowances. The northern and rural home owner benefit provides an additional $200 in property tax relief to households outside the Greater Vancouver, Fraser Valley and Capital Regional Districts.

Low-income homeowners who would have received the additional home owner grant except for the high value of their home can apply for a low-income grant supplement.

The announcement came as BC property assessments arrive in the mail this week, many of which, especially single-family homes in Greater Vancouver, reveal sharp rises in property values.

The highest valued home in BC is a 30,600-square-foot waterfront contemporary mansion in Kitsilano belonging to Lululemon co-founder Chip Wilson, valued at nearly $64 million. 

© Copyright 2016 Real Estate Weekly

If you?re hoping to buy a Vancouver home this year, you may have to adjust your aspirations ? but it?s worth it, says local agent Barry Magee

Barry Magee
Other

Being realistic is often difficult for people looking to buy a home in Vancouver. I often joke with my clients about building a time machine for them, but I’m not too sure I’d be willing to share it if I could. If you look at the history of Vancouver’s house prices, as an example, they have almost tripled in the last 10-12 years. A very limited supply plus an incredibly high demand has pushed the single-family home out of reality for most real estate buyers, unless the Bank of Mom and Dad steps in. The condo market isn’t far behind, but it is quite a bit more reasonable for the average person. In short, if you bought in Vancouver a decade ago you are pretty much set up for life. If not, you need to be realistic.

These realizations don’t do a heck of a lot for those looking to buy in Vancouver now, especially if you are buying for the first time. The desire to live in Kitsilano two blocks from the beach is a strong one in Vancouver, as is living in Yaletown walking distance from work, or living on the Drive within your East Van community. But these prime locations come with a prime price tag these days. You can’t expect to buy in Vancouver with a Maple Ridge budget. Don’t even expect to buy on the West Side with an East Side budget – it just doesn’t happen. Being realistic requires patience in searching for the right home and a true understanding of the market.

It’s always a good idea to remember that some neighbourhoods might not seem all that attractive now, but will likely be developed over time to become great areas. Look at Main Street. Fifteen years ago it wasn’t on anyone’s radar; it was a prime area for drug crime and prostitution. Now it’s a buzzing neighbourhood and a very popular area for real estate buyers, and long gone are those dark days. Is Hastings the new Main Street? Many people think so. Generally the West Side of the city is already very much established, but there could very well be other areas on the east and south sides of the city that will experience a renaissance as buyers increasingly get priced out of the prime areas. Now is your chance to get in on the ground floor in those areas. Your money will go much further, and you’ll have the chance to watch your neighbourhood grow and your home value rise.

Owning real estate is almost always a better financial decision than renting, so it should always be explored if you are capable of doing so. While it’s more expensive to begin with, leading up to the end of your 25-year mortgage your monthly bill drops dramatically with the mortgage payment going all the way down to $0. If you kept renting, you’d still be paying increasing rent costs every month. Add to this the fact that you also now have an asset worth hundreds of thousands of dollars, in case any sort of emergency hits your family, and it is very much worth the expense you incur during the life of the mortgage.

The only time buying real estate isn’t such a good idea is when there is the possibility of a bust in prices. Even though the local market is often seen as a bubble by many, the fundamentals are actually very strong and look to continue that way as long as there are no large changes in the local economy, immigration patterns or your employment. Buying real estate is almost always a good idea.

The Vancouver market comes with a lot of cache but also a lot of very real concerns. When you are looking at purchasing a property, do you want to avoid over paying? Do you want to ensure you are buying a home that will hold its value as long as possible? Do you want to get the best mortgage rate? Do you want to know if you are buying into a building that has a history of problems? If the answer is yes to these questions, be realistic and use a qualified real estate agent and team of professionals to help you.

© 2015 Real Estate Weekly

Highest total of residential property sales for one year on record, says board, and benchmark prices up 33.6 per cent year over year

Joannah Connolly
Other

2015 was a record-breaking year for Greater Vancouver real estate, with sales totalling the most ever recorded, according to Real Estate Board of Greater Vancouver (REBGV) data released January 5.

Sales of residential properties across the year rose 27.8 per cent when compared with the total sales recorded in 2014.

However, the number of homes listed for sale in Greater Vancouver last year increased by just 2.1 per cent year over year. With sales-to-listings ratios of more than 25 per cent for 11 out of 12 months in 2015, it was a strong sellers’ market for much of the year, said the board.

“Home buyers were active and motivated throughout 2015 despite the pressure on supply of homes on the market,” said Darcy McLeod, REBGV president. “Housing markets typically experience quieter periods within a calendar year, but that wasn’t the case in Metro Vancouver last year.”

The board also released sales and price index figures for the month of December 2015, which saw an increase in home sales of 33.6 per cent compared with December 2014, and a benchmark price rise of 18.9 per cent year over year to $760,900.

New listings in Greater Vancouver in December rose seven per cent compared with the new listings in December 2014. (see graph)

Sales and Listings

Greater Vancouver home sales across the year totalled 42,326, a 27.8 per cent increase from the 33,116 sales recorded in 2014.

In December 2015, Greater Vancouver home sales rose 33.6 per cent year over year to 2,827 units, compared with the 2,116 sales recorded in December 2014. This is an anticipated seasonal decline of 19.8 per cent decrease compared with the 3,524 sales in November 2015.

Broken down by housing type, detached home sales increased 36.4 per cent year over year. Unlike the previous few months, this increase was the fastest growth rate of the three property types. There were 1.136 single-family home sales in December, compared with the 833 sales in December 2014. This was a decline of 14.9 per cent month over month.

Townhomes and other attached properties saw a slightly slowing rate of annual sales growth in December. The 466 units sold represented a 25.6 per cent increase over the 371 units in December 2014, and a 26.7 per cent drop from November.

Sales of condominium-apartments totalled 1,225 in December, an increase of 34.3 per cent compared with December 2014 and once more the property type with the highest total sales. However this was a seasonal drop of 21.1 per cent compared with the previous month.

What’s Up, What’s Down – At a Glance
	Dec/Nov 2015	Dec 2015/Dec 2014
Overall Sales	-19.8%	+33.6%
– Detached	-14.9%	+36.4%
– Attached	-26.7%	+25.6%
– Apartment	-21.1%	+34.3%
New Listings	-40.4%	+7.0%
Current Listings	-25.6%	-41.6%

 

The shortage of property listings unsurprisingly continued in December. The total number of properties listed for sale as of December 2015 in Greater Vancouver stands at 6,024, a 41.6 per cent decline compared with December 2014 and a 25.6 per cent decrease over the previous month.

The total number of Greater Vancouver homes listed for sale last year increased by just 2.1 per cent year over year to 57,249, compared withthe 56,066 properties listed in 2014.

December was the 10th consecutive month that the sales-to-active-listings ratio has been above 30 per cent in Metro Vancouver, meaning that the strong sellers’ market conditions continue to strengthen further.

Benchmark Prices

Metro Vancouver’s combined residential property type benchmark price yet again set a new record in December, now at $760,900. This is an 18.9 per cent increase compared with December 2014 and a 1.1 per cent rise over the price recorded in November 2015.

The price of a Metro Vancouver single-family home increased 24.3 per cent over December 2014 to $1,248,600. This was once again the fastest annual price growth of all the home types.

The benchmark price of a townhome or other attached unit increased 13.6 per cent between December 2014 and 2015 to $543,700.

Continuing the price surge seen in October and November, condo-apartment benchmark prices rose 14 per cent year over year again, to $436,200, reflecting the increase in demand from buyers pushed out of the detached home and townhouse market, and the dramatically rising cost of land for new condominium development.

 

Greater Vancouver MLS® Benchmark Prices % Change
	Dec 2015	Nov 2015	Dec 2014
Detached	$1,248,600	+x%	+24.3%
Townhome	$543,700	+x%	+13.6%
Apartment	$436,200	+x%	+14.0%

 

Home prices vary widely throughout the REBGV region. To get a good idea of home prices in a specific location, check the detailed MLS® Home Price Index in the REBGV full statistics package.

To see the monthly infographic with prices broken down by area, city and property type, click here.

© 2015 Real Estate Weekly

Other

1. Homebuyers will have to put 10% down on the portion of the price over $500,000 

*If client purchases a home for $750,000, they would have to put down 5% on $500,000 ($25,000) and 10% on the additional $250,000 ($25,000) for a total down payment of $50,000. This would be 6.66% of the purchase price. 

2. Goes into effect: February 15, 2016 

** If your clients’ mortgage approval is before February 15, 2016, they will be allowed to purchase with 5% down up to $1M; This is if the purchase date is after February 15, 2016. This also works for long-term rate holds for builder/developer files.

 

Steve Randall
Other

Millennials are set to drive growth in Canada’s housing market, perhaps to a greater extent than their parents did. That’s according to the Canada Mortgage and Housing Corporation’s Dana Senagama who told the Toronto Star: “They’re going to be a force to be reckoned with over the next decade, especially as they move into their prime child-rearing years and will need more space.” However, the impact that the generation has on the market may mean fewer choosing to buy homes in favour of the convenience and flexibility of renting. Community is also far more important to millennials with compromises on the home type and premium prices being paid in order to be close to amenities and a walkable ‘commute’.

Copyright © 2016 Key Media Pty Ltd

With price gaps between different property types and market segments widening, buyers will turn to condos even more than this year

Joannah Connolly
Other

BC and Lower Mainland Market

After a year in which home sales across BC rose more than 21 per cent compared with 2014, according to Canadian Real Estate Association (CREA) projections issued mid-December, the province’s housing market activity is forecast by the association to moderate in 2016. This is largely based on the British Columbia Real Estate Association (BCREA) predictions that sales across the province will fall by around seven per cent, from more than 100,000 in 2015 to 93,700 units in 2016 – a level described as “remaining elevated” by the BCREA.This could be caused by a cooling-off in demand but more likely by a lack of available homes for sale, with Greater Vancouver and Fraser Valley listings down 35 per cent year over year. 

Despite the predicted slowing in sales, prices in Greater Vancouver and across BC are expected to increase further in 2016 – albeit at a reduced pace than last year. CREA expects the annual price increase across BC for all of 2016 to be just two per cent, compared with 11.5 per cent in 2015. A forecast by RE/MAX issued in December was more bullish, expecting average prices to rise seven per cent in Greater Vancouver, three per cent in the Fraser Valley, 2.7 per cent in Victoria and two per cent in some slower areas, including Kelowna. 

The BCREA also predicted that capacity constraints and what it describes as “easing-off consumer demand” will mean a decline of BC housing starts to 28,800 units in 2016. This is slightly at odds with CMHC predictions for Vancouver alone, which forecast a modest increase in housing starts in 2016, followed by a slowdown in 2017.

However, REW.ca notes that, this time last year, forecasts were similarly timid and, ultimately, far off the eventual outcome for 2015 – and there’s no discernable sign of this activity slowing significantly. The possibility of rising interest rates and the new increased minimum down payment to be implemented in February may have a minor impact on some segments of the market. But continued high demand and diminishing supply of single-family homes suggests that, while overall unit sales growth may slow, total transaction dollar volumes will likely continue to soar through 2016.

Demand from Overseas

There’s no sign that demand for Lower Mainland real estate from overseas buyers will cool in 2016, and as large detached houses in desirable neighbourhoods get snapped up as homes or investments, foreign money will likely further spill over into commercial and recreational real estate. Evidence suggests that overseas buyers have increasingly looked to resorts, vineyards, commercial properties, multi-family buildings and the like as alternative methods of safeguarding their cash in 2015. However, this increasing trend is unlikely to redirect any money away from single-family homes in Greater Vancouver, which remain the number one choice of property as many families choose to relocate to the region.

At the other end of the market, the much-anticipated arrival of 1,500 Syrian refugees, mostly in family units, to Vancouver may put some pressure on the rental market – and will certainly put pressure on the city to provide affordable housing options for these families.

The Year of the Condo?

With demand for the increasingly rare single-family home continuing to push many buyers out of that market segment, it is likely that more and more buyers – from first-timers to families – will turn to condominium living in 2016.

As of January 2016, New Westminster is the first municipality to demand a minimum of 30 per cent of new condos to have two or more bedrooms, and a minimum of 10 per cent to be three or more bedrooms. This is a move that has troubled developers but the city hopes will ultimately provide more affordable options for family living. (See our story on the increasing sizes of condos here.)

The new minimum down payment rules being implemented in mid-February could result in an uncharacteristic January rush on smaller homes, as first-time and lower-income buyers attempt to find and buy their homes ahead of the new rules to save money. 

© 2015 Real Estate Weekly

Naoibh O?Connor
Van. Courier

Assessed values of both Vancouver east and west side single-family properties climbed dramatically over the previous year, according to B.C. Assessment.

It released its annual assessment figures Jan. 4 and it provided a few examples of some individual assessments including one for an East Side, single-family, 33-foot lot, which jumped by 28 per cent from $993,000 last year to $1,267,000 this year, and one for a West Side, single-family, 33-foot lot that rose by 23 per cent from $1,575,000 to $1,940,000.

Assessed values for strata properties didn’t grow nearly as significantly. In one example provided by B.C. Assessment, a West Side low-rise strata unit increased by eight per cent from $615,000 to $662,000, while the value of an East Side high-rise strata increased six per cent from $381,000 to $405,000.

“The real standout [in Vancouver] this year would be the market movement for single-family properties. You would probably have to go back — if you went back to 1980, there’s probably only two or three other times when single-family properties in Vancouver have moved by this much this quickly,” Jason Grant, regional assessor for B.C. Assessment, told the Courier.

“What really contrasts this year as well is the strata market would really be down in that five to 10 per cent range, so it’s not moving the same amount. It’s a significant contrast this year.”

Grant added that in any given year there might be extreme pockets of movement, but what’s notable this year is that the assessed value of the majority of single-family properties across Vancouver climbed by between 15 and 25 per cent — and some in excess of that figure.

The fact many East Side residential properties, on a percentage basis, outperformed West Side ones also doesn’t happen very often, he said.

Property owners should note that the assessment roll reflects market values as of July 2015 and the value of many single-family properties have grown — in some cases significantly — since then.

“So the other big difference this year is people might open their assessment and it’s reflecting July values and their values might have risen fairly dramatically since then depending on whereabouts they’re located. That also doesn’t happen very often to that degree,” Grant said.

B.C. Assessment sent 37,000 warning letters, in a province of more than 2,000,000 property owners, advising of extreme changes in assessments — that is, if a property’s assessed value was going up more than 15 per cent above the typical for the taxation jurisdiction.

Grant said 22,000 of those letters went to property owners in the Greater Vancouver region.

“If the typical was 25 per cent in a particular jurisdiction, we would send letters to people who went up 40 per cent or above,” he explained. “… You probably wouldn’t get a letter in Vancouver unless you were going up more than about 40 per cent. If you’re in the 20 to 30 per cent range or the 25 to 35 per cent range that, believe it or not, is fairly typical.”

Assessments for single-family properties in many Lower Mainland communities including North Vancouver, West Vancouver, Burnaby, Tri-cities, New Westminster and Squamish also saw large assessment increases in the 15 to 25 per cent range, but assessed values of single-family and strata properties outside the Lower Mainland didn’t grow as much. They ranged from zero to 10 per cent.

Overall, the Greater Vancouver region’s total assessments increased from $546.7 billion in 2015 to $636.2 billion this year.

Assessments are in the mail this week, but they can be found online already. B.C. Assessments’ e-valueBC service went live Jan. 1.

It’s been overhauled since last year. Now it’s map-based, so you don’t have to know the address of a property — you can simply click on it. The site allows users to check other properties’ assessed values and compare them to their own.

Typically, only one to two per cent of property owners ask for a review of their assessment, a figure that usually doesn’t change even in years where assessment values rise significantly. A notice of appeal must be filed by Feb. 1.

Grant said changes in assessments don’t automatically translate into a corresponding change in taxes.

“It’s going to depend on where you are relative to the average,” he said.

So, what should property owners expect next year?

“We are already, believe it or not, six months in towards our next valuation cut off of July 2016 and the market has moved significantly already since July. So if it keeps on this trajectory, there will be an increase again next year for 2017,” Grant said.

© 2016 Vancouver Courier