Ephraim Vecina
REP

The end-of-August results of the Bloomberg Nanos Canadian Confidence Index revealed that Canadian consumers are apparently starting to become nervous about the fundamental stability of the country’s housing markets.

In last week’s release of the poll results, Bloomberg said that worries of a decline in housing prices increased among respondents, spiking up from 12 per cent to 20.5 per cent in the week ending August 26. The survey was conducted via telephone polling (with a rolling 4-week average) of 1,000 individuals, and is considered statistically accurate within 3.1 percentage points, 19 times out of 20.

“The reading marks a change from almost unbridled consumer optimism in a housing market that has carried the Canadian economy since the 2008 global financial crisis, even as policy makers warn price gains in some cities are unsustainable,” Bloomberg noted. “Preliminary data this month from the Real Estate Board of Greater Vancouver show recent government measures to cool the market may be taking effect.”

Meanwhile, the proportion of respondents saying that their personal finances are better when compared to last year went up by 6 points to 25.8 per cent, the largest such jump since the beginning of the weekly polling.

“Canadians are cross pressured – on the one hand taking the newly changed Child Benefit but increasing concern about the value of real estate,” Nanos Research Group Chairman Nik Nanos stated.

The results came a few weeks after the B.C. government implemented a new 15 per cent tax on foreign home buyers in a bid to improve housing affordability—a move that might lead instead to increased consumer uncertainty and a mass exodus of investors to other markets, observers warned.

Copyright © 2016 Key Media Pty Ltd

Justin da Rosa
REP

Two major GTA cities may crack down on this popular investment option.

“I think the city has the right to regulate land use, and those type of zoning bylaws are in place especially to make sure that everyone is aware that when you purchase a property, this is what you get to do with it,” Toronto Coun. Kristyn Wong-Tam told Metro Morning Tuesday.

Airbnb is becoming an increasingly popular investment strategy for homeowners in Toronto to make some extra cash; a quick search of the site returned 300+ listings. Many homebuyers are surely considering the potential for making money through Airbnb and that could be made more difficult and, indeed, less lucrative if the government steps in.

For their part, agents will want to advise clients who may consider using their homes as an Airbnb rental that possible regulation could be in the offing.

Still, there have been many complaints, according to Wong-Tam, who argues Airbnb units should be licensed and inspected in a similar way rooming houses are.

“It seems that Airbnb units are popping up everywhere,” she told Metro Morning. “We need to build a regulatory framework so everybody knows how they are supposed to be operating.”

And Toronto isn’t the only city considering implementing new rules and regulations.

Mississauga Coun. Karen Ras was also on the CBC program Tuesday morning. She said that although a ban of Airbnb rentals is currently under consideration, that move may not be “doable.”
 Copyright © 2016 Key Media Pty Ltd

BCREA
other

The Bank of Canada announced this morning that it is holding its target for the overnight interest rate at 0.5 per cent. In the press release accompanying the decision, the Bank noted that weaker than expected growth in the global economy, and in particular in the US economy, has hurt Canadian exports and business investment in the first half of the year. On inflation, the Bank noted that total CPI inflation is below its 2 per cent target mainly due to temporary effects of low energy prices while core measures of inflation remain on target. Overall, the Bank judges risks to the economy and the profile for inflation as somewhat tilted to the downside, pointing out a possible moderation in the Vancouver housing market and financial vulnerabilities associated with high household debt. 

A second quarter contraction in GDP resulting from disruptions caused by Alberta wildfires should give way to a strong recovery in the second half of the year. We expect Canadian economic growth will rebound sharply as oil production normalizes and the federal government’s uptick in expenditures and tax credits impacts the economy. With growth recovering and core inflation trending at or above the Bank’s 2 per cent target, the Bank of Canada will very likely leave its policy rate unchanged for the foreseeable future. That said, even absent a change in the Bank’s stance on monetary policy, mortgage rates may be moved modestly higher if the US Federal Reserve, as it recently signaled,  raises its own policy rate this fall.  

Copyright ©2016 BCREA

Target rate held at ?% on Wednesday

Justin da Rosa
Canadian Real Estate Wealth

 

The Bank of Canada held the target for the overnight rate at ½% Wednesday.

Canada’s economy shrank in Q2, according to the BoC; however it’s still predicting a bounce back by the end of the year.

“Second-quarter GDP was pulled down by the Alberta wildfires in May and by a drop in exports that was larger and more broad-based than expected,” the Bank of Canada said in its announcement. “Exports disappointed even after accounting for weaker business and residential investment in the United States, adjustments in the resource sector, and cutbacks in auto production.”

Oil production is expected to rebound and rebuilding within Alberta is predicted to start in Q3

“As federal infrastructure spending starts to have more impact, growth in the fourth quarter is projected to remain above potential,” the Bank said. “While the strength in exports during July was encouraging, the ground lost over previous months raises the possibility that the profile for economic activity will be somewhat lower than anticipated in July.”

Financial vulnerabilities still exist, however, with household imbalances continuing to worry the Central Bank.

“On balance, risks to the profile for inflation have tilted somewhat to the downside since July. At the same time, while there are preliminary signs of a possible moderation in the Vancouver housing market, financial vulnerabilities associated with household imbalances remain elevated and continue to rise,” the Bank said. “The Bank’s Governing Council judges that the overall balance of risks remains within the zone for which the current stance of monetary policy is appropriate.”

The global economy, meanwhile, grew at a slower clip than the Bank had predicted in July.

However, it is expected to show signs of strength in Q3 and beyond.

“The US economy was weaker than expected in the second quarter, notably reflecting a contraction in business and residential investment,” it said. “While a healthy labour market and solid consumption should remain supportive of growth in the rest of the year, the outlook for business investment has become less certain. Meanwhile, global financial conditions have become even more accommodative since July.”

Copyright © 2016 Key Media Pty Ltd

Hot market fuels rise of Abbotsford’s tallest tower

Evan Duggan
The Vancouver Sun

Abbotsford is experiencing a surge in development in its residential, industrial and agricultural sectors and work is beginning on what developers say will be the tallest residential tower between Surrey and Calgary.  

Abbotsford-based Quantum Properties is putting up the 26-storey mixed-use tower, named Mahogany at Mill Lake, at Gladwin Road and Bevan Avenue. The condo tower will also have 30,000 square feet of commercial space on the first three floors, including a medical clinic, pharmacy and restaurant, said Diane Delves, the firm’s president and CEO.

“Our buyers are basically the down-sizers,” she said in an interview last week. “The boomers who are cashing out of their valuable houses … so they can free up some time to travel.”

She said the tower will stand 80 metres tall, making it the tallest residential building between Surrey and Calgary. In Kelowna, the Landmark VI office tower stands 81 metres, and the Sky at Waterscapes residential tower reaches 78 metres, according to SkyscaperPage.com.

More people are coming to Abbotsford seeking lower land costs and business opportunities, she said. “Abbotsford is not a bedroom community,” Delves said. “About 70 per cent of the people live and work here.”

She said her company operates about 150 other residential units in the city. “We count our vacancies at like, one day a month,” she said. “It’s an incredibly tight market here.”

The tower is expected to be completed in 2018. “We’re starting to go up,” she said. “The crane just arrived so we’ll start pouring concrete imminently.”

Abbotsford is experiencing significant increases in development projects as well as inquiries by developers, said Wendy Dupley, Abbotsford’s director of economic development.

“Our numbers are showing significant increases,” she said. “Really starting from fall of last year.”

Construction value in Abbotsford in the first quarter of this year totalled $52.8 million across all types — agricultural, commercial, industrial and residential. That’s up $12.4 million dollars from the same period last year, according to the city’s first-quarter development report.

The number of building permits issued also increased, to 359 in the first quarter of this year from 302 across all types in the first quarter of 2015. The biggest gains came in industrial, single-family residential, multi-family residential and agricultural permits, while commercial permits retreated.

“General inquiries (from developers) are up 54 per cent over the same quarter of last year,” Dupley said. “That’s quite significant.”

Projects like Quantum Properties’ tower are part of the city’s strategy to grow up, rather than out, she said. 

“Historically Abbotsford has been a very sprawling city,” she said. “We’re intending to deal with a population of 200,000 (by 2035) by densifying within our current footprint, within the urban footprint.”

She said young people priced out of Metro Vancouver’s residential and commercial markets should consider Abbotsford.

“There’s a tightness of land across the Lower Mainland and we’ve seen a lot of businesses that have been unable to expand in their current location looking at Abbotsford because of the availability and the affordability of the land here,” she said.

Dupley said “it’s a bit too early to tell,” whether or not the province’s new 15 per cent tax on foreign buyers of Metro Vancouver residential properties is stoking the Abbotsford market. But some realtors are using the tax as a marketing tool, she said. “You’re seeing some of that happening in the residential sector.”

It’s likely that Abbotsford is benefiting from migrants from Metro Vancouver, said Don Campbell, an analyst and founding member of the Real Estate Investment Network. “They’re cashing out there, taking some chips off the table, and coming out here,” he said.

He said Abbotsford is developing similarly to the way that Calgary grew up, with migrants arriving in the city who were already accustomed to the apartment or condo lifestyle.

There are 19 multi-family projects under construction in Abbotsford, six of which are mixed-use, for a total of 1,239 units, Campbell said. “That’s a bit of a newer trend for the city of Abbotsford, and an indication of the type of migration coming in.”

Abbotsford is a big city, geographically, he said. “They’re trying to densify walkable centres to attract millennials. That’s why we’re seeing an increasing building boom of the mixed-use properties.”

He said the strongest demand is for multi-family, followed by light industrial and agriculture.

“They are open for business,” he said. “I think with the airport, the river and the highways and the borders, it’s positioned to do incredibly well, and as long as this momentum continues, I think they’ll be OK.”

© 2016 Postmedia Network Inc.

Rodika Tchi
other

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Lower prices in Vancouver could hurt major banks

Ephraim Vecina
Mortgage Broker News

In its latest set of data released on September 2, the Real Estate Board of Greater Vancouver announced that August sales in the city have plummeted to a four-year low, right as B.C.’s housing market was grappling with the newly implemented 15 per cent tax on foreign home buyers.

Vancouver’s sales volume for the previous month dropped by 26 per cent on a year-over-year basis, down to 2,489 detached homes, condo units, and townhomes sold in August. The most significant decline has been observed in the detached sector, which saw 44.6 per cent less sales (for a total of only 715 properties) last month, The Globe and Mail reported.

According to the Board, a leading driver of this development is the noticeable slowdown in multi-million-dollar transactions, which stemmed from increased uncertainty among foreign and local would-be buyers.

The data added that a 0.3 per cent drop in the average sale value of detached homes in the city to $1.47 million was observed last month. To compare, the benchmark price of homes in the Greater Vancouver area stood at $1.58 million in August—up 35.8 per cent year-over-year, but down 0.1 per cent from July.

“The foreign buyers are re-evaluating, and so are local buyers,” Board president Dan Morrison said. “But remember that August last year was one of highest for sales for that month.”

However, while the declines might be seen as troubling, the actual numbers were actually far less than the dire predictions of 60 per cent crashes made last month in the wake of the new tax, which was implemented on August 2.

But Royal LePage agent Adil Dinani warned that the slowdown is unsustainable in the long term, noting that the levy has drained significant demand by scaring off foreign nationals and speculators. Plenty of listed detached properties in the city are now taking far longer to get sold off, and many of these are getting offers way below their asking prices.

In addition, overseas investors—Chinese, in particular—have become far more cautious about spending on Canada’s hottest housing market, and instead have taken to haggling for discounted sales and tacking on extra pre-purchase conditions like free inspections, Dinani added.

Copyright © 2016 Key Media Pty Ltd

August was hit hard with low home sales

Steve Randall
REP

Vancouver home sales took a tumble in August to become “more historically normal” levels of activity.

Greater Vancouver Real Estate Board reported sales of 2,489 homes in the month, down 26 per cent from a year earlier and down 22.8 per cent from July 2016.

“The record-breaking sales we saw earlier this year were replaced by more historically normal activity throughout July and August,” Dan Morrison, REBGV president said. “Sales have been trending downward in Metro Vancouver for a few months. The new foreign buyer tax appears to have added to this trend by reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers.”

While some may be keen to point to the new 15 per cent tax for foreign buyers of the city’s homes, Morrison is not committing to that opinion: “It’ll take some months before we can really understand the impact of the new tax. We’ll be interested to see the government’s next round of foreign buyer data,” he said.

While sales may be down, prices continued to rise with the benchmark at $933,100, up 31.4 per cent year-over-year. Average sales prices are trending lower as sales of higher-priced detached homes have eased.

Copyright © 2016 Key Media Pty Ltd

Is Vancouver’s housing market losing its sizzle? Some facts on August home sales

Canadian Press
The Province

Some facts on home sale figures for August released Friday by the Real Estate Board of Greater Vancouver, the first month of data available since the B.C. government brought in a tax on foreign buyers:

SALES DOWN, PRICES UP: Sales dropped by 26 per cent in August compared to the same month last year, but the composite benchmark price for all residential properties in Metro Vancouver was $933,100, a 31.4 per cent jump compared to August 2015.

TOTAL SALES: The total number of homes sold in August was 2,489, down from 3,362 sales in August 2015, and 10.2 per cent less than the 2,771 sales in August 2014. Last month’s sales were 3.5 per cent below the 10-year sales average for the month.

MONTH-TO-MONTH DROP: Sales were down in August by 22.8 per cent compared to July.

THREE-MONTH PRICES: Prices were up 4.9 per cent over the last three months.

NEW LISTINGS FLAT, YEAR-TO-YEAR: New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,293 in August, a slight increase of 0.3 per cent compared with the same month in 2015.

LISTINGS DOWN MONTH-TO-MONTH: The total number of new listings was down 18.1 per cent from July.

TOTAL LISTINGS DOWN YEAR-TO-YEAR: The total number of properties listed on the centralized listing service MLS in Metro Vancouver in August was 8,506, down 21.9 per cent from a year earlier and up by 1.9 per cent from July.

DETACHED SALES SLIDE: Sales of detached properties in August dropped by 44.6 per cent from August 2015.

DETACHED PRICES SOAR: The benchmark price for detached properties increased 35.8 per cent from August 2015 to $1,577,300. The figure represents a 4.2 per cent increase over the last three months.

CONDOS SALES SLIP: Sales of apartment properties reached 1,343 last month, a decrease of 10.1 per cent compared to August 2015.

CONDO PRICES CLIMB: The benchmark price of an apartment property increased 26.9 per cent since August 2015 to $514,300. The figure represents a 6.1 per cent increase over the last three months.

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