Garry Marr
The Vancouver Sun

It will probably look like a real offer for your home. You might see your name and address on what seems like a contract, complete with a purchase price — even though you’re not thinking about selling.

With listings in short supply and real estate agents dealing with clients trying to break into the market, the number of unsolicited offers is probably going to just keep growing in hot markets like Toronto and Vancouver.

Think of the unsolicited offer as the ultimate bully bid: You don’t even have a for sale sign up but someone out there is trying to move you out of house and home.

“People in the trade of real estate on a full-time basis, this is one of the ways they mine for leads. They solicit high desired, high demand neighbourhoods,” says Kelvin Kucey, deputy registrar of regulatory compliance with the Real Estate Council of Ontario, which regulates the industry in this province.

There is nothing illegal about realtors directly approaching you to sell your home privately, he says. But that doesn’t mean all homeowners appreciate the attention: Kucey says his agency handles about 25 to 30 calls a month from people complaining about the practice.

Personal declaration here: I get requests, including private offers, every week where I live in Toronto. Sabrina Kaufman, vice-president and saleswoman with Slavens & Associates, sent me an unsolicited expression of interest this week — a tactic she says is driving about 40 per cent of her business today. Her pitch didn’t offer a price, just a “Dear Homeowner” letter, advising my wife and I that a client wants to buy a property in the neighbourhood.

“I have found sellers (say yes to the offer) because they have a price in mind that they are comfortable with and, if they can avoid the process of selling, they will,” Kaufman says.

With prices up about 16 per cent in Toronto and 32 per cent Vancouver on a year-over-year basis, it’s easy to be overwhelmed by any offer. New home builders in the Toronto area said Friday that prices hit record levels at the end of June. If ever there was a seller’s market, this is it — meaning you could be leaving money on the table by not exposing your home to more than one bidder.

Kaufman doesn’t want to reveal the other strategies she uses to find product off the Multiple Listings Service system for competitive reasons, but she clearly feels going outside the established system is the only way to move forward in this tight real estate market. Toronto builders said across the the entire region they only had a 1,000 new detached homes for sale left at the end of June, compared with more than 10,000 homes for sale a decade ago.

“I’m not someone who is going to sit around and wait for product to come to me. My buyer list will just continue to grow,” Kaufman says. “Buyers are frustrated and want results. More and more agents have to go off market. You go into an offer presentation and five other people are there.”

While unsolicited offers may pay off for buyers, the real problem, as a seller, is it’s incumbent on you to determine fair market value for you property. The agent making the offer is just not on your side. Some provinces, like Ontario, still allow dual agency deals, where an agent represents both parties on a deal as long as the conflict is disclosed.

For her part, Kaufman says she doesn’t believe in dual agency agreements. Although she may present an offer, she says the sellers must represent themselves in the transaction.

“There’s a convenience and privacy thing,” she says.

Risks aside, there are some advantages to selling directly and bypassing the MLS, which usually requires posting pictures of the inside and outside of your house online, which can lead to privacy concerns for some.

“You don’t have to worry about an open house, the neighbours having a look and all the disruption,” Kucey says of the benefits of a private sale.

On the financial front, agents soliciting business usually promise a break on commission, about five per cent of the purchase price in Ontario. The seller traditionally pays, and on a million-dollar home — an increasingly common price point in the market in and around Toronto — that’s $50,000.

The flip side to selling privately and saving that commission is access to the MLS system and potential buyers who are likely to drive the up the price. Canadian real estate employs a blind bidding process where multiple buyers have no idea what anybody else is willing to pay, and that creates bidding wars and inflated prices.

A side issue to accepting an unsolicited offer is someone buying your home privately and assigning the contract to a third party — at a profit — before your deal closes. But should that really matter, if you got fair market value?

National real estate prices went up 2.3 per cent in June from May, according to the Teranet and National Bank of Canada House Price Index. In this market, it’s not hard to imagine a property that sold for $1 million being worth $1.1 million six months down the road, but if someone flips that same property for $1.5 million that’s a pretty clear sign the vendor sold for less than market value — prices are not generally rising 50 per cent every six months in any submarkets.

Peter Norman, chief economist with Altus Group, says that during a shortage of listings realtors get a little more aggressive trying to seek out sellers.

 “I would think people at that stage, willing to sell their house, will take the effort to find an agent and get it listed. You might be able to short circuit the system a little bit,” says Norman, referring to a private transaction.

Brad Henderson, chief executive of Sotheby’s International Canada, says agents in Toronto and Vancouver are now taking real signed offers to houses, subject to conditions.

“I’d say it’s more the exception than the rule,” Henderson says, adding that nobody is making unsolicited offers at his firm. “I just don’t think it’s an optimal strategy for the seller.”

Sellers really need to do their homework before agreeing to a private transaction — don’t get tricked into a quick timeline, warns real estate lawyer Barry Fish. He also suggests sellers request a large deposit of as much as 10 per cent.

His advice, after 43 years as a lawyer is clear: “If it’s not MLS, you are rolling the dice.”

© 2016 Postmedia Network Inc.

Home sales fell in Metro Vancouver for a fourth straight month in June, but aspiring homeowners shouldn?t celebrate yet ? it?s still a seller?s market

The Vancouver Sun

A new report from the Conference Board of Canada says sales fell in 15 of 28 markets nationally, including Toronto and Montreal.

The annual rate of sales in Metro Vancouver reached 44,688 homes last month, a 5.3 per cent drop from the previous month but a 5.1 per cent increase from a year before.

Prices remained flat around the $1-million mark, but are still up 12 per cent from June 2015.

Still, the report says sellers’ conditions prevail in Vancouver, as well as in Victoria and all southern Ontario markets.

The Fraser Valley led price growth in the country with a year-over-year gain of 24 per cent, while price growth is slowing in the Lower Mainland.

Listings rose in 17 areas, including a second straight monthly gain in Toronto and a year-over-year rise in Metro Vancouver.

The ratio of sales to new listings dropped to 73 per cent after peaking at 90 per cent in February.

Robin Wiebe, the senior economist who wrote the report, says a 73 per cent sales to new listings ratio is still very high and consistent with a seller’s market.

“It does look like the market may be easing just a little bit. There’s hints that supply is starting to move up a little bit.”

© 2016 Postmedia Network Inc.

In red-hot market, focus aimed at non-compliance

Jamie.Golombek
The Vancouver Sun

With the red-hot residential real estate markets of Toronto and Vancouver showing no signs of cooling down, taxpayers need to be aware that the Canada Revenue Agency is paying even closer attention to tax compliance in this sector.

While transactions in the Greater Toronto Area have so far been the subject of greater scrutiny, including audits, the CRA has recently been actively monitoring and auditing real estate transactions in British Columbia.

In the year ending March 31, 2016, the CRA audited about 1,864 Ontario real estate files and recovered nearly $18 million in income tax and $32 million of GST/HST. In B.C., audits of 339 files resulted in $4.2 million in recovered income tax and $10 million in recovered GST/HST.

The CRA issued nearly $10 million of penalties in 447 of these cases, with the highest penalty being almost $2.5 million.

In a recent release, the CRA explained how it addresses noncompliance in the real estate sector using a combination of advanced risk-assessment tools, analytics, leads and third-party data to detect and address what is essentially tax evasion.

The CRA identified a number of areas of compliance risk in the real estate sector, including:

Questionable source of funds: The first concern identified by the CRA is taxpayers who buy a property with funds that may never have been taxed, whether in Canada or abroad. For example, a large down payment on a home may indicate that the purchaser has unreported income, either earned from legal or illegal sources. This is particularly an issue when the lifestyle of the buyer is incompatible with the income reported on their tax returns.

Property flipping: The second common area of concern is flipping, an activity by which some Canadians, including real estate agents, buy and resell homes in a short period for a profit. These could be professional contractors or renovators who rapidly buy and sell real estate for profit (sometimes demolishing or renovating the property), speculators or “shadow flippers.” While real estate flipping isn’t illegal, the money made on real estate flips, including any real estate commissions and appreciation in value, must be reported to the CRA. The profits from flipping real estate are generally considered to be fully taxable as business income, as opposed to a capital gain (which is only half taxable).

Unreported GST/HST on the sale of a new or substantially-renovated home:

While the sale of used housing is generally exempt from GST/HST, the builder of a new or “substantially-renovated home” must charge and collect GST/ HST when the home is sold. The CRA says it uses “various analytical techniques to identify builders who are not complying.”

Unreported capital gains on the sale of property:

If you sell your home at a profit, in most cases you won’t have to pay any capital gains tax because of the principal residence exemption. If the home doesn’t qualify as a principal residence — a rental property or cottage, for example — then selling the property for proceeds greater than its cost generally results in a capital gain, half of which is taxable at your marginal tax rate.

© 2016 Postmedia Network Inc.

Sugar baron opened doors of 17,000-square-foot home in 1901

JOHN MACKIE
The Vancouver Sun

On July 23, 1901, Mr. and Mrs. B.T. Rogers gave a housewarming party at their new house at 1531 Davie.

The guests were probably quite impressed. Benjamin Tingley Rogers was the founder of the B.C. Sugar Refinery, and had spared no expense for his 17,000-square-foot mansion, which took up an entire block between Nicola and Cardero.

It was designed by Samuel MacLure, one of British Columbia’s top architects, and was named Gabriola, after the island that supplied the “greenish gray” stone on its exterior.

An anonymous Vancouver World reporter raved that the house marked “an important advance in domestic architecture as hitherto practiced on the mainland, insomuch that it is substantially the first distinct endeavor at home building in the monumental and lasting sense in which the word is understood in the old world.”

This may sound a bit over the top, but Vancouver was still quite small in 1901, with a population of only 24,000. When Rogers built his mansion the West End was still being constructed — the city was only 15 years old.

His home was perched on a hill overlooking English Bay, and came with an impressive Porte Cochere (a covered entrance) where you could drive your horse and buggy.

The exterior was so grand they made a postcard out of it.

There was a lot of attention to detail — the brass doorknobs were inscribed with Rogers’ initials, BTR, and the giant pink Arizona sandstone chimney in the main hall was a jaw-dropper.

The World reporter described it as “rather heavily ornamented, displaying in the upper panel the monogram of the owner amidst foliation of Byzantine acanthus.”

Acanthus is a Mediterranean plant that had inspired decorative forms for centuries. In this case, the stonemason (who was named Bruce) sculpted acanthus that twirled into intricate designs that went from the floor to the ceiling.

The landing between the first and second floor featured a trio of eight-foot tall stained glass windows by Henry Bloomfield, the top stained glass artist in town.

“Against a backdrop of native flowers ornamentally treated are three (female) figures,” noted the World.

“The centre (figure), against a halo-like swirl of blue wave, snowy crest and drifting weed, extends her hands wide in welcome. Those on either side, with book and classic hydria, distaff and spinning wheel, typify each the arts of life.”

Each room had its own unique design. The dining room featured eight-foot high red bean and Australian tallow wood wainscotting and a ceiling done in a “Jacobean model of intersecting bands.” The drawing room was done in cream and white, with a “richly coppered ceiling in moulded plaster.” The showpiece was the library. “The library is possibly the best room in the house,” said the World.

“Wainscoted to shoulder height, simply paneled and molded, with window casings, heavily beamed ceiling and mantel with side cabinets whose glass is set in silver bars, and lockers of the same material, over a dark hardwood floor, it has a quiet solidity of design and soberness of colour … that renders it a pleasant environment for personal retirement and reflection.”

B.T. Rogers and his wife Mary would raise seven children in the home. Unfortunately, Rogers died from a cerebral hemorrhage on June 17, 1918, at the age of 53.

His wife stayed in Gabriola for several years, but in 1926 it was converted to the Angus apartments. It was designated a heritage building in 1974, and in 1978 restaurateur Hay Aisenstat converted it into Hy’s Mansion, a high-end steak house.

In 1994 it went downscale as the Macaroni Grill, but it had been vacant for several years when it was put up for sale in 2014 for $10 million. It was eventually sold for $6.2 million to Nevin Sangha, who plans to convert it back to rental apartments.

Gabriola is the only mansion left from the days the West End was Vancouver’s elite residential neighbourhood.

© 2016 Postmedia Network Inc.

Justin da Rosa
REP

While most eyes are on Toronto and Vancouver, this often overlooked market is quietly putting together one of its best years – and agents are benefitting.

“Our sales are at a record pace this year in Winnipeg; we’re tracking really well for this year,” Peter Squire, director of public affairs with the Winnipeg Realtors Association, told REP. “June was our best June ever. Second-best month ever. The only one to beat that was May 2007 … and 2007 was our best year on record.”

Agents in Winnipeg helped facilitate the sale of 1,638 homes in June, which represented a 9% year-over-year jump.

Those sales were led by single-family homes, which accounted for 1,252 sales. That’s a whopping 76% of total sales.

And while agents may be drawn to some of the hotter markets in a bid to cash in on record-breaking home sale prices, Squire argues Winnipeg-based agents aren’t doing so poorly themselves.

“[Agents] may be able to do better in other markets, but we have a more affordable lifestyle. We are the most affordable average house price in the country of any major centre,” he said. “Single-family homes are coveted everywhere and in the case of Manitoba, Winnipeg, and beyond, single-family homes are a lot closer to reality than an other cities.

“We’re not hitting home runs, but we’re getting on base.”

According to Squire, July is also trending to be a solid month.

And that’s expected to continue, as the strong Manitoba economy is safeguarded from some of the turmoil experienced in other parts of the country.

“Manitoba, we always say, we ignored the recession in 2008 and 2009. We tend to have a stable and diverse economy; not overly exciting but very well diversified which helps it play out any rough spots,” Squire said. “It’s kind of like we’re able to ride out a tough spot in the national economy when it seems like things are difficult. We aren’t so dependent on one industry, such as oil and gas. We have strong manufacturing. It just really helps having a mix.”

Copyright © 2016 Key Media Pty Ltd

Canadian Real Estate Wealth

The Bank of Nova Scotia recently calculated that approximately $200 billion in housing wealth has been generated in Canada over the past 12 months alone, a development that is sure to make home owners (especially on Vancouver and Toronto) pleased with their well-timed investments.

However, in his report for The Globe and Mail, market observer and long-time industry writer Michael Babad noted that the potential risks of these huge sums seemingly outweigh the upsides such as generous investment returns.

Probably the chief consequence of this trend is the increased fear of a potential bubble.

“This is the biggest threat to the economy, and one that has caught the eye of the Bank of Canada and the regulator of commercial banks,” Babad wrote.

“Rising household debt … has gone hand-in-hand with large increases in the cost of housing,” Capital Economics global economist Michael Pearce recently said in reference to inflamed housing markets in Canada, Australia, Sweden, and the Netherlands. “The risk is that, if house prices begin to fall, households will be forced to cut back spending to repay debt and that defaults will rise as households fall into negative equity.”

“The risks are perhaps greatest in Canada where there is evidence that looser lending practices, including issuing mortgages with very long amortization periods and with high loan-to-income ratios, are driving recent increases in housing demand,” Pearce added.

The impact of out-of-control price growth on younger generations merits serious consideration as well.

“The number of months required to accumulate a down payment on a representative home at a savings rate of 10 per cent was 34.9, versus 32.6 months a year earlier,” Matthieu Arseneau and Kyle Dahms of the National Bank said. “[In] Vancouver, for a non-condo dwelling, it reached 403 months, which is almost 34 years.”

No signs of eventual cooling down are evident in the most active markets, and for now, both the dangers and the possibilities in Canadian housing remain on a precarious balance.

“Realtors are getting richer by the day. I have no problem with that – I wish I could get rich, and I guess I am because I own a house in Toronto – but, please, not on the backs of people who God-knows-when will ever be able to buy their first homes,” Babad wrote.

Copyright © 2016 Key Media Pty Ltd

REW

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New housing construction investment in BC was led by a year-over-year leap of 53 per cent for apartment-condo buildings, statistics agency reports

Christina Newberry
REW

New housing construction investment in BC was up 31.9 per cent year over year, Statistics Canada reported July 21, led by a leap of 53 per cent for apartment-condo buildings. Apartment-condos overtook detached homes as the housing type with the most investment in the province in May, up 4.3 per cent from April of this year to $419 million.

May’s total new housing construction investment in BC of $937 million was just shy of April’s record-breaking $945 million, but still well above the previous record of $874 million from October 2015.

The 0.9 per cent monthly dip was primarily caused by a 7.3 per cent decrease in single-family home construction from April’s high of $430 million to $399 million in May, although investment in this home type was still up 17.4 per cent year over year.

Townhouse and row house construction was up 35.5 per cent year over year to $90 million, a 5.1 per cent increase from April. Year-over-year duplex investment dropped again, down 6.3 per cent to $27.8 million, although this was up 3.8 per cent month over month.

BC’s new housing construction investment was second only to that of Ontario, which spent $1.7 billion in May. However, the year-over-year percentage increase was larger for BC, with Ontario seeing 24.3 per cent growth.

In contrast to the strong yearly gains in BC and Ontario, investment in new housing construction fell in more than half of Canada’s provinces and territories: Newfoundland and Labrador, Nova Scotia, Quebec, Manitoba, Saskatchewan, Alberta and Nunavut all saw year-over-year declines. Alberta’s 31.4 per cent drop was its 11th consecutive year-over-year decline.

The gains in Ontario and BC pushed national new housing construction up five per cent year over year to $4.2 billion in May, although this was a dip of 2.3 per cent from April. Most of the yearly gain came from higher investment in apartment-condominium construction, which rose 17.2 per cent year over year to $1.5 billion nationwide. Row house construction also increased nationally, rising 13.4 per cent to $454 million.

Like the previous month, year-over-year investment in duplexes was down nationally, dropping 10.7 per cent to $206 million. Investment in single-family homes was also down year over year for the first time since February, dipping 2.6 per cent to $2 billion for the country as a whole.

To see Statistics Canada’s interactive chart, click here.  

© 2016 Real Estate Weekly

Display suites at Guildhouse have that lived-in look

? Mary Frances Hill
The Province

Guildhouse

Where: 14975 101A Avenue, Surrey

What: 221 apartments and townhomes in the Guildford neighbourhood

Residence sizes and prices: Homes with between two and four bedrooms, 799 — 1,400 square feet; from the low $300,000s

Developer: Mosaic Avenue Developments Ltd.

Sales centre: 14975 101A Ave.

Hours: noon — 6 p.m., daily

As every designer knows, there’s a lot to be said for being on the same wave length as colleagues and clients.

Insight Design designer Allisa Karvonen worked with Mosaic Avenue Developments to create a display suite for Guildhouse, Mosaic’s new community of apartments and townhomes in Surrey, giving the developer much credit for its unique staging and modern look.

Mosaic’s photos of Guildhouse’s display suites show they’re staged as tableaus of everyday life; there’s a busy-ness, a selection of accessories of work and play of everyday life: shoes on the floor, light clutter on desks and tabletops. It’s a popular marketing trend that aims to mirror how people live every day.

“I think [the full coffee tables, desk and countertops] help people visualize how their life could ‘fit’ into these homes and they’re far more realistic than a stark but beautifully accessorized and furnished home. After all, how many of our places actually look like that every day?” says Karvonen.
Visitors will likely stop to admire some of the suite’s quirky touches, such as mismatched island chairs, the collage of framed prints on the kitchen wall, and assortment of live plants—an uncommon feature in display homes.

Insight chose the artwork for a kitchen wall gallery arrangement from scouting trips at print galleries and through the work of digital artists who promote their work on the art marketplace Etsy.com.
The kitchen is unique, as it makes the most of the suite’s vertical space with two levels of upper cabinets, with matte grey vinyl-wrapped doors that mimic a more expensive lacquer finish; the designers amped up the visual interest with black grout on the white tile backsplash. Vinyl was chosen again for the herringbone-patterned flooring, since it’s such a durable material, Karvonen says.

“Mosaic really wanted Guildhouse to stand out from other developments so they really wanted to push the design envelope within their budget. We were thrilled with the final look.”
Insight Design worked with an overall Scandinavian modern theme, so many of the pieces, such as the coffee tables and bar stools from Muuto, a favourite of Insight Design team, are decidedly non-traditional. To mirror this look, homeowners might want to layer natural fabrics and textures, as Insight does, to keep the home from looking too bold or stark, suggests Karvonen.

The suite is also inviting because of Mosaic’s use of plants—yet another feature of everyday life, adds Karvonen.

“I love the contrast between the bold graphic art and accessories with the natural colour and organic shapes of the plants.”

© 2016 Postmedia Network Inc.