New council members are heavily weighted against real estate industry professionals in order to “increase accountability and objectivity, and protect public interest”

Joannah Connolly
REW

The BC Government has appointed nine new members of the Real Estate Council of BC – a group that is heavily weighted against real estate industry professionals, the provincial government announced October 12.

These public-interest members will “increase [the council’s] accountability and objectivity in fulfilling its role of protecting the public interest,” stated a provincial press release.

The new appointments follow news in June that the BC government was ending the industry’s right to self-regulate, following a series of media reports alleging malpractice. 

The new council chair is Robert Holmes, a lawyer at Holmes & King and former president of the BC Civil Liberties Association and Trial Lawyers Association of BC

Of the eight other new members, only three are linked to the real estate and development industry. The new members are:

• John Daly, a former journalist at Global BC;
• Rob Gialloreto, president and CEO of Consumer Protection BC;
• Sandra Heath, president of HTD Inc, a consulting company;
• Gerald Martin, managing broker of B.C. Farm and Ranch Realty Corp. and council member between 2006 and 2012;
• Elana Mignosa, CFO of British Columbia Clinical and Support Services, and a council member since 2015;
• Sukh Sidhu, a real estate agent with RE/MAX Little Oak Realty;
• W. Tom Styffe, a construction project management expert; and
• Maili Wong, VP at CIBC Wood Gundy.

BC finance minister Mike de Jong said, “As consumers, we expect to be treated fairly and with integrity, especially when making the important decision to purchase a home. These changes are part of government’s broader efforts to restore public confidence and trust in the system.”

The BC government statement added, “Self-regulation of the industry is ended with these appointments. A second set of government-appointed members will follow.”

© 2016 Real Estate Weekly

Expectations of people buying real estate in Vancouver are often ?youthful and na?ve? compared with other global cities, says co-host of HGTV Canada’s Love It or List It Vancouver

Joannah Connolly
REW

Speaking in a Q&A session with REW.ca ahead of the Vancouver Home + Design Show, at which he is presenting two sessions, the co-host of HGTV Canada’s hit show Love It or List It Vancouver offered his advice to buyers and his thoughts on the current market and recent regulatory changes.

REW: What are your recommendations to first-time buyers trying to get into the market?

Todd Talbot: First-time buyers, especially those who have grown up in a detached home in Vancouver, often have grandiose ideas about how their first home will look. The idea of sacrifice, and of short-term pain for long-term gain, applies to real estate. We don’t have to have everything right off the bat. I mean, I’m 43 and I only had my first ensuite six months ago – and I’m in the industry and do well for myself!

It’s very interesting when you see how people in other cities view real estate, compared with here in Vancouver. Here it feels like everyone wants a 33-by-122-foot lot and a back yard, five to 10 minutes from downtown. The reality of being able to get that has changed, but many people in the community haven’t fully come to terms with that yet.

There’s a shift in how we need to think about the spaces that we live in. In Vancouver we haven’t yet embraced that, whereas in places like London, this reality is totally accepted. If you live a 40-minute drive outside of London, you’re thrilled.

You come back to Vancouver, and listen to the conversation, and it’s not so much about entitlement, necessarily, but more that it is a very youthful, naïve way of thinking – it’s how we used to think – because Vancouver is such a young city. We’re going through an evolution of how we look at real estate in this region.

REW: Many buyers with limited finances – especially with the new mortgage qualification rules in place – will have to adjust their expectations. Should they prioritize buying a central but smaller or less luxurious home, or a larger home further out of town?

TT: Generally I’d advise first-time buyers to stay as close as possible to the core – wherever that may be – and adjust the space and the creature comforts of what they want to buy. That’s my preference over recommending people look further out of town. Generally, if there’s a price adjustment, it happens from the outside inwards.

The way to look at it is in two ways. You are both the landlord and the tenant – that’s how you have to think about it. So, as the landlord, adjust your mentality to buy something that you think will increase in value in the long term, so therefore, it’s better to be closer to the urban core.

You don’t need in-suite laundry and granite countertops. Prioritize location, dial back on the wish list and put in some sweat equity if you need to make improvements.

REW: What’s your recommendation to people who are unsure of whether to buy a home, or what to buy?

TT: It’s tricky when you’re trying to predict the market, especially if you’re a first-time buyer who doesn’t have much experience. It’s important to build a team around you who you can trust, including a recommended REALTOR® and a mortgage broker, as they are the ones who have a deep knowledge and understanding and can advise you. Although they should also have the humility to know that they can’t predict the future.

The other side of it is about taking responsibility for your decisions. A lot of people, if they don’t know much about real estate, will almost defer all responsibility to their agent or broker. It’s really important that buyers gather as much information as they can and keep asking questions until they’re absolutely clear on what’s happening and can make an educated decision that they can stand behind, responsibly. And part of that is not rushing a decision. Be in the process long enough so that your instincts are strong.

REW: What about buyers who are trying to get as large a mortgage as possible, in order to afford a liveable home in Vancouver?

TT: Don’t get into a position where you are so heavily leveraged that any shift in the mortgage rate is going to significantly affect your monthly budget. There are safeguards you should put in place, it’s important to have an out. Yes, it’s always a stretch when you first buy a home, and that’s OK, because we grow into that responsibility – but you will probably have to make sacrifices in the short term to make it work.

REW: What are your thoughts on the likely effects of the recent regulatory and taxation changes on the market?

TT: In the space of around 10 weeks, we’ve had three massive announcements thrown at our housing market [the foreign buyer tax, City of Vancouver’s empty homes tax proposal and new federal mortgage rules], so it’ll be fascinating to monitor. Many won’t have the intended effect. With the new mortgage qualification rules, you’re squeezing out the lower end of the market. I’m not sure everyone’s clear on the full effect of such a move. This has the potential to be a significant double-edged sword. I understand that it’s intended to protect buyers, but what will it do to the market?

And then with the foreign buyer tax – a lot of people didn’t realize that the market was already slowing, and people assume that the turning point was the introduction of the foreign buyer tax, but that’s not true. Sure, the foreign buyer tax is also affecting sales now, but there’s no way of knowing to what extent. I also think this should be a national policy, not just for Vancouver – I think it’s not fair. And it should be the action – speculation – being targeted, rather than the nationality of speculators. I know speculators who are Canadian.

REW: What do you think about the way the real estate market is portrayed in local media, and the quality of the information that local people are receiving?

TT: Well, there’s a lot of use of fear-based words. And there are many comments that, although true, don’t apply everywhere. The condo market, for example, is still very strong. We have a responsibility to be more measured in our commentary. I try to be an advisor, a coach, and get people thinking.

There’s also a lot of talk about the “housing market bubble.” But the local conversation about housing market bubbles has been happening since I bought my very first place 15 years ago.

REW: How should buyers approach investing in a home in today’s market?

TT: We’ve had a tendency in Vancouver to think of our homes as a short-term commodity rather than a lifestyle choice, and we’ve seen such massive price growth, that it has lulled us into a false sense that this will continue. So when we’re not seeing that huge growth happening, it makes us really question the market. Buyers get caught up in that – they don’t want to be the ones to get burned. So lots of buyers are in a holding pattern right now, waiting to see what the market will do.

And that’s not a bad thing – it’s good to have your Spidey-senses aware of what’s going on in the market, and be cautious. If you are still subscribing to the idea that you’re going to realize double- or triple-digit gains over the next 12 months, you’re going to be disappointed.

If you’re looking at real estate how I look at it, from a long-term perspective, then I think you’re in a good position. I’m still a big believer in the fundamentals of the Greater Vancouver market and I like to take a big-picture view. I’m sitting here looking at this incredible view right now. Our political system is strong, our banking system is strong. In the long run, if you’re looking at buying a home to live in, there are now opportunities to capitalize on that.

Some buyers are now drifting back into the market, as it’s not as crazy as it was before. There’s now room to take your time when buying, to put subjects down, which should always be there – it gives buyers a chance to catch their breath.

And in 10 years from now, unless there’s a catastrophic turn of events, I guarantee you that Greater Vancouver will be even more sought-after than it is right now. People need to understand how much money there is in the world, and how many people are out there who want to buy real estate in places like Vancouver.

Todd Talbot will be speaking at the Vancouver Home +Design Show, running October 27-30 at the Vancouver Convention Centre West (info here). He will also be guesting live on the Real Estate Therapist radio show on Saturday October 29, 9-10am, on Roundhouse Radio 98.3FM and streaming on roundhouseradio.com. If you have any market questions or need home buying advice, Todd will respond on air – please email questions and issues to [email protected] or call the show live on 604-449-8983.

© 2016 Real Estate Weekly

Housing prices were up in 30 ? out of the 45 ? housing markets that have published housing statistics so far.

Juwai
other

We break down our latest GPI report, based on inflation-adjusted figures, and take a look at where the strongest and weakest housing markets are for the second quarter of the year.

Global housing markets remain polarised – while housing markets in Europe, most of North America, and New Zealand are cresting on a strong rally, those in the Middle East and the majority of Asia have slowed dramatically.

Over in North America, the US and Canadian markets stay robust and buoyant, as both momentum and real estate demands remain unaffected by the slow economic recovery in the US, nor by the property cooling measures imposed in Canada.

Europe, home to seven out of the ten strongest housing markets, remains dominant – 17 out of its 22 European housing markets charted price increases in Q2 2016.

Nevertheless, New Zealand has overtaken Europe to take the lead as the strongest performer this quarter with a 10.43% increase. In contrast, the Australian market underwent a gradual slowdown.

Here in Asia, we see a sharp polarisation. Nine Asian markets were upbeat and either charted housing price gains or performed better than the previous quarter, while the remaining Asian markets continued their declining streak.

Elsewhere, most housing markets in the Middle East are cooling down and losing momentum, paling in comparison to the record highs charted a year ago.

Regional snapshots

 

North American markets remain buoyant

• US real estate market still strong amidst slow economic recovery – bolstered by sharp upsurge in housing demand, the S&P/Case-Shiller seasonally adjusted national home pricing grew 3.99%, a 1.89% increase y-o-y.
• Canadian market stays robust despite repeated cooling measures and market regulations – housing prices in 11 major cities still grew 4.41% q-o-q and 8.40% y-o-y from the 4.0% charted in Q2 2015, the biggest annual increase since Q2 2010.

 

Pacific Ocean/Oceania markets head opposite directions

• New Zealand housing market accelerates – nationwide median housing prices surged as much as 10.43%, a 5.19% y-o-y increase from the year before.
• Australian market downtrend continues – housing prices in its eight major cities rose and then slowed down, charting a property price growth of merely 3.0% y-o-y, its lowest increase in nearly three years since Q3 2013.

 

Most European markets heat up

• Romanian market charts surprising growth of 10.10% – this is thanks to its relatively robust economic growth of 3.7%, which ranks as one of the highest economic growth rate within the EU, and is a stark contrast from its sluggish economy between 2009 and 2014.
• Germany’s housing market leapt 9.89%– a combination of strong economic fundamentals, ultra-low interest rate policy, and housing supply shortages were driving factors that saw housing prices in Germany remaining strong.
• Turkey housing market rally continues – strong foreign investment and population growth has led to a 9.67% increase, defying Turkey’s sharp currency devaluations, public dissatisfaction with the Turkish government, and geopolitical tensions.
• Maltese real estate market on the rise – driven by government initiatives, including waiving stamp-duty fees for first-time homebuyers, property demand in Malta surged and saw its housing prices soar 7.63%.
• Iceland housing price upsurge continues – a robust demand for property, coupled with limited housing supply (particularly in its capital city of Reykjavik), has fuelled a y-o-y growth of 6.34% this quarter.
• Ireland market still charting gains, albeit at a slower pace – Irish housing prices grew 6.27%, thanks to its healthy economic growth rate, which is still ranked first in the EU. The Irish economy is projected to achieve a healthy growth of 5% this year, along with an additional 3.6% increase expected for 2017.
• Other European countries showing strong performances – Latvia (+5.61%), Slovakia (+5.46%), the Netherlands (+5.41%), Lithuania (+5.28%), and the UK (+4.82%).
• Other European countries showing slight growth – Portugal (+2.87%), Estonia (+2.75%), Spain (+2.22%), Norway (+2.04%), Finland (+0.92%), and Macedonia (+0.72%).

 

European markets still in decline

• Russia remains the worst-performing housing market – beset by myriad problems, including its most severe economic crisis since 2009, the Russian government has adopted a prudent monetary policy and stabilised overall inflation rates. However, Russian housing prices continued its decline to fall -12.46% y-o-y in Q2 2016.
• Montenegro property market deceleration continues – despite an economic growth rate that is expected to be 4.7% healthier this year, housing prices still dropped -10.15% y-o-y.
• Other European countries with slight declines – Ukraine (-2.95%), Greece (-1.95%), and Switzerland (-1.15%).

 

Asian markets continue to polarise

• Japan housing market continues its ascent – despite being in the doldrums with an economy downturn, housing prices rose 5.70% y-o-y thanks to growing housing demand, government stimulus, and the appreciation of the Japanese Yen that increased the value of Japanese property as assets.
• Other Asian countries showing modest growth – Thailand (+4.38%), Vietnam (+3.58%), and South Korea (+1.07%).
• Singapore private apartment market continues to bottom – Singapore’s economy grew 2.2% in Q2 2016, and while housing prices continued its twelfth consecutive quarterly decline to fall -2.94%, housing demand and supply has picked up.
• Hong Kong market remains in decline – despite an economy growth of 1.7% in Q2, property prices still fell -10.73% y-o-y in Hong Kong, a sharp contrast from the 16.88% y-o-y rise the year before.
• Mongolia market slump prevails – a severe economic recession and weak GDP growth of only 0.4% caused by high foreign debt and fiscal revenue decline has led housing prices to dive -10.55% y-o-y.
• Philippine housing prices chart weaker growth – although housing prices of 3-bedroom apartments in the Makati CBD grew 2.89% on average in Q2 2016, its y-o-y figure still dropped -3.9% compared to the previous year. Philippines’s robust economic growth of 7% last year is expected to continue at a slightly slower rate of 6% for 2016 and 6.2% for 2017.
• Indonesia market displays feeble performance – housing prices dipped -0.35% y-o-y, as housing demand continues to weaken substantially. Overall housing supply growth rate is projected to slowdown gradually in the coming years. Nevertheless, the government’s decision to fully liberalise restrictions on foreign buyers for luxury property in Indonesia, coupled with its expected economic growth rate of 4.9% may turn things around in future.

  

Middle East markets generally losing momentum

• Israeli housing market flags – emulating its economic slowdown and weakening housing demand, property prices merely rose 3.9% this quarter, its lowest y-o-y growth since Q1 2014 and a far cry from the 7.66% y-o-y growth charted before.
• Qatar property market slows down – weakened by an economic downtrend, Qatar housing prices only grew 1.29% y-o-y, a dramatic contrast from the 21.47% growth in Q2 2015. However, property demand remained strong in 1H 2016, thanks to its sustainable economic growth, population growth, and the construction boom due to the 2022 FIFA World Cup.
• Dubai housing market stays volatile – property prices fell -5.79% y-o-y, even as investor sentiment weakens amidst a subdued economy brought on by lower oil prices, an economic slowdown, China’s economic deceleration, and expected regional government spending cuts.
• Egypt market slumps – Egypt’s real estate index slipped -11.2%. However, with an improved economic decline of only 1.2% expected this year – its best level in seven years – and with the lifting of restrictions on foreign property and land ownership in Egypt, we may soon see the winds of change in Egypt.

 

Other housing markets of note

• Mexican housing market remains strong – property prices grew 5.32% y-o-y, thanks to overseas buyer demands for Mexican tourism property, which has remained robust.
• Brazilian market still sluggish – mired in its longest economic crisis since 2014, which has been worsened by prolonged political uncertainty and corruption scandals, property prices in Sao Paulo fell -7.59%.
• Chilean property market declines – a new 19% property sales tax implemented in 2016 saw average housing prices of new apartments in the Greater Santiago dropping -1.36%.

 

Conclusion

Overall, the Q2 research shows that while cooling measures imposed by certain governments – such as Singapore – has been effective, some housing markets around the world are still defying property restrictions to continue heating up.

Nevertheless, with many other markets showing falling property prices, this is music to the ears for Chinese buyers who are now more adventurous and looking further afield for their real estate investments. So for agents and brokers who on top of global trends, this is an opportunity for you to woo Chinese buyers who are eyeing less traditional markets.

Download the full GPI Report in Chinese here.

2016 © Juwai.

Justin da Rosa
REP

The impact of Vancouver’s foreign sales tax; impressive growth among Canada’s largest markets; and the impact of Morneau’s housing measures – those and everything else industry players need to know about the comprehensive report

Canada’s real estate market grew during Q3, according to Royal LePage’s report, entitled Canada’s Housing Market Continues to Expand in Third Quarter in the Face of Regulatory Headwinds, released Thursday morning.

According to the agency’s proprietary National House Price Composite, comprised of data in 53 of the country’s largest markets, the average Canadian home price increased 12% to $545,414 during the quarter.

The average two-storey home price increased 13.7% to $649,635, and the average condo increased 5.8% to $360,679.

Vancouver’s price growth contributed to that but that trend is expected to end, according to Royal LePage.

“In what may be a final hurrah for this expansionary cycle, Greater Vancouver posted another quarter of unsustainably high price appreciation,” Phil Soper, president and chief executive officer, at Royal LePage said. “Our widely followed house price composite showed that the median value of homes in the tiny West Vancouver suburb increased by nearly forty percent – or an astonishing million dollars – year-over-year.

“That said, relief appears to be on the way. For months, the number of homes trading hands has been slowing on eroding affordability. And, slower sales volumes lead to moderating prices.”

Concerning the recent mortgage rule changes, Royal LePage said consumer sentiment took a hit.

However, it also argues lender fears may be overblown.

“Consumer confidence suffered a direct hit when the federal government introduced new, more restrictive regulations in early October,” said Soper. “While it is too early to say definitively, it appears Canadian homebuyers are adjusting quickly, and that fears of a hard correction were unwarranted. While the changes are significant, major lenders may already be using similar criteria when writing mortgages in sensitive regions like Alberta and B.C., so the additional drag on the market resulting from the new legislation won’t be as great as it appears on the surface.”

Copyright © 2016 Key Media Pty Ltd

Housing economics are very complicated, so it?s easy ? to imagine that we?re playing a role.

CLAIRE BROWNELL
The Vancouver Sun

Don’t blame Airbnb Inc. for soaring housing prices in Vancouver and Toronto.

In an interview Wednesday, Airbnb’s Canadian policy lead Alex Dagg and head of North American public affairs Christopher Nulty laid out their case against scape-goating the short-term rental service for high rents and low vacancies in Canada’s big cities. According to reports based on Airbnb’s internal data, the number of hosts making more money by renting houses and condos through the platform than they could by renting them out the traditional way is minuscule: Just 320 in Vancouver, or 0.11 per cent of the city’s 300,000 housing units.

“Vacancy rates are really low in Vancouver. People are nervous about housing,” Nulty said. “Housing economics are very complicated, so it’s easy for people to imagine that we’re playing a role.”

Not everyone agrees, however. Housing affordability advocates have argued Airbnb listings are putting tourists in houses and apartments that should be occupied long-term by locals, squeezing supply and driving up rental rates.

The City of Vancouver announced plans to regulate short-term home rentals such as those facilitated by Airbnb two weeks ago. Vancouver plans to require homeowners renting properties short-term to obtain business licences and prove what they’re renting are their principal residences.

The proposed regulations are aimed at people who buy houses and condos as investment properties to rent through Airbnb. Studies conducted by Simon Fraser University master’s student Karen Sawatzky and the Canadian Centre for Policy Alternatives have questioned Airbnb’s assertion that such properties make up a tiny minority of listings, finding high percentages of entire homes and apartments for rent through the service in Toronto and Vancouver.

Nulty said there’s an explanation for the discrepancy between Airbnb’s figures and those from outside reports. Airbnb looks at bookings, not just the number of days a unit is listed as available, and recognizes many listings for entire apartments are made by hosts listing their principal residences while they’re away from home.

Why not release the internal data so outside researchers can check the company’s work? As a private company, Nulty said there’s a limit to how much Airbnb will disclose.

“That would be like asking Apple, ‘Can you tell us where you sold every iPhone you sold, at which store?’ ” he said. “We continue to share and want to share more, but we have to share within the confines of what we can do as a private company.”

Municipalities have struggled with how and whether to regulate the service, which challenges how policy-makers think about everything from zoning bylaws to taxation. Airbnb is suing two California cities for imposing regulations the company argues violate a U.S. federal law against holding digital publishers liable for content created by users.

Dagg, Airbnb’s head of Canadian policy, said the company doesn’t file such lawsuits lightly. In fact, she said the company welcomes Vancouver’s decision to regulate, if it’s done the right way.

“We want to be regulated. To be regulated is to be recognized,” she said. “We think there are a lot of good things in their proposal.”

© 2016 Postmedia Network Inc

Vancouver home prices may have seen ‘final hurrah,’ Royal LePage says

Alexandra Posadzki
The Province

TORONTO – Royal LePage CEO Phil Soper says house prices in Greater Vancouver grew 30.6 per cent year-over-year in the third quarter of the year, marking what may have been the real estate market’s “final hurrah.”

The real estate agency says the average house price in the region soared to $1.19 million in the three-month period that ended Sept. 30, up from $914,705 during the same quarter last year.

The average price of a home in Greater Toronto rose to $693,154 over the third quarter, up 13.6 per cent compared to last year, when the average home price was $610,308.

In Edmonton, where the decline in oil prices has hurt the real estate market, the average cost of a home was down 3.1 per cent to $374,712 from $386,829 a year ago.

Royal LePage says its national house price composite — a figure based on 53 of the country’s largest real estate markets — showed that the average price of a home climbed 12 per cent from a year ago to $545,414 in the third quarter.

Soper says he expects that price growth in Vancouver will slow or even reverse in the months ahead as the effects of recent federal and provincial government rule changes begin to be felt.

In August, the B.C. government introduced a 15 per cent tax on foreigners purchasing homes in Vancouver.

Home sales in the city have been falling since then — with recently released figures indicating a 32.6 per cent drop in September compared to the same month last year — but prices have continued to rise.

“It often takes about six months … for prices to catch up with a change in demand, either on the upside or the downside,” says Soper.

However, he adds that the trend of declining home sales started long before the introduction of the foreign buyer tax. Many would-be buyers have simply moved to the sidelines as prices have spiralled out of their reach, he says.

Soper says the new tax can’t be blamed as the sole cause if home prices begin to drop in the coming quarters — but it certainly may be the catalyst.

“You take a lineman in professional football — a great, big human being — and they’re sort of teetering on their heels,” he says.

“A child comes along and pushes them on their chest and they topple over. The tax impacted a very small group of people in a very narrow geographic and house price range in one city, yet it came at a time when the market was already cooling. It represents that push in the chest to something that was already ready to change.”

As for new mortgage rules introduced by Ottawa earlier this month, Soper says fears associated with those changes have been exaggerated.

He predicts that prices in Ontario and many other parts of the country will continue to rise, in spite of new measures including a requirement that lenders apply stress tests to all mortgage borrowers.

“There will be some transactions taken out of play with the new regulations,” says Soper. “It’s just a mathematical certainty. But I don’t think it will be enough to reverse the positive trend that we see across the country.”

Writing about the mortgage changes, chief economist Helmut Pastrick of Vancouver-based Central 1 Credit Union predicts the reaction of the market across the country will be felt quickly with monthly sales declining for about six months, estimating a drop in sales of 10 to 20 per cent. He also forecasts that national housing prices could slip by five to 10 per cent.

© 2016 Postmedia Network Inc.

Some landlords forcing tenants out, then re-signing them at high rates

ROB SHAW
The Vancouver Sun

B.C.’s housing minister says he’s prepared to plug a loophole that has allowed some landlords to hit tenants with higher-than-legal rent hikes, but the legislation won’t be ready until the spring.

Rich Coleman brushed aside attacks Tuesday from the Opposition NDP that the fixed-term rental increase problem could be solved now, if only the Liberal government hadn’t chosen to skip the scheduled fall session of the legislature.

“It’s never as simple as some people think it is, but certainly the work is being done,” said Coleman, who added he should have solutions ready by the spring session that begins February 2017.

“It isn’t the intention that leases should be used to, for lack of a better description, circumvent the law. So I’m going to look at how I can put some strength back into it, that they can’t do that.”

B.C.’s Residential Tenancy Act only allows a landlord to increases a tenant’s rent once a year, at a rate of two per cent above inflation — set at 2.9 per cent this year and 3.7 per cent in 2017.

But some landlords are trying to skirt the limit, using the pressure of Metro Vancouver’s near zero rental vacancy rate to force tenants to sign one-year leases with clauses that require them to move out at the end of the term. As the contract expires, the landlords offer the tenant the choice of leaving or signing an entirely new one-year contract with a significantly higher rent — a move that effectively bypasses the rate cap under the illusion it’s a new tenancy.

Tenant groups say they’ve seen rate hikes of up to 30 per cent in a single year. Coleman said his ministry has yet to determine how widespread the practice has become.

NDP leader John Horgan said the government should be striking back against these “unscrupulous landlords” by reconvening MLAs to pass changes.

“I think it’s time we get into the legislature and start addressing those issues,” Horgan told reporters. “Tenancy advocates have been talking about this issue for over a decade.”

The organizations representing both tenants and landlords agree the act should be changed to make clear the rental rate cap.

“It’s not the professional landlords and property managers, they all know how it works,” said David Hutniak, CEO of LandlordBC. “But there’s a small group here who think it’s a license to charge whatever they want.”

Hutniak said his organization has “vigorously” denounced the practice, and welcomed clarity.

“It’s these small guys new to the industry who are messing it up for the rest of us. I’ll be honest with you, it’s extremely frustrating,” he said.

“It’d be really unfortunate if the minster did some sort of knee-jerk reaction on this because we do not need anything to discourage folks from developing new rental property here.”

With low vacancy rates causing bidding wars over properties, tenants have little bargaining power to fight back, said Andrew Sakamoto, executive director of the Tenant Resource & Advisory Centre.

“It is a loophole and it does need to be closed,” he said. “I’m glad the minster has acknowledged that and is planning to make some legislative amendments.”

© 2016 Postmedia Network Inc.

U.K. and Australia held up as models for Canadian policy

Bethany Lindsay
The Vancouver Sun

The impact of Vancouver’s infamously high real estate prices on the home-ownership dreams of young people could affect the Canadian economy for decades, according to one policy expert.

Scottish economist Duncan McLennan will be one of the international panelists participating in the City of Vancouver’s ReAddress conference on housing affordability later this month. He told The Sun that housing is about more than human rights.

“We’ve got to stop thinking of housing simply as some kind of

social service, but recognize that it’s a key thing to get right for any metropolitan area that wants to be a great city — and that’s what Vancouver is,” he said.

He said Vancouver’s skyrocketing real estate prices have allowed longtime homeowners to get rich while everyone else struggles. That’s created a growing wealth gap, and a divide between younger and older generations.

That could have consequences down the line. People in their 50s and 60s have had decades to pay off mortgages, freeing up income to put into their children’s education and retirement planning. Canadians in their 20s and 30s won’t be as fortunate.

“If they don’t become homeowners until they’re 40, the point at which they can pay for these other things really gets pushed further into the distance, so that I think it will have a potentially negative effect on savings by Canadian households in that time, and also on consumption,” he said. “I think the economic effects are not good from that process.”

To McLennan, that suggests governments may have a role in helping the younger generation become homeowners sooner rather than later.

“The first measures that have been undertaken recently to cool the housing market in Vancouver and Toronto by being more restrictive in the ability to take out mortgages, I think actually they act against the interest of younger people and make it more difficult for them to take out a mortgage while interest rates are still low,” he said.

Part of the issue in Canada, according to McLennan, is the federal government has the most flexible tax base while cities take the brunt of a lack of affordable housing.

“The governments that have the problems don’t have the resources,” he said. “That’s what Canada’s problem is: realigning the resources that accrue to the federal government back to deal with the problems.”

One way to do that might be to follow the examples of the U.K. and Australia, where the federal governments partner with municipalities to create city-specific deals for investing public funds into new housing developments.

McLennan added that governments in Canada could also do more to support non-profit housing societies.

The ReAddress conference, designed to explore ideas on improving housing affordability from cities such as New York, London and Sydney, Australia, runs Oct. 24 to 29. About 500 international and local experts on housing are expected to attend.

© 2016 Postmedia Network Inc

New mortgage rules may cool construction, economists say

Garry Marr
The Vancouver Sun

New home construction in September topped the expectations of economists, but changes to federal rules regulating the housing market could slow the market down in the coming months.

On a seasonally adjusted annualized basis, Canada Mortgage and Housing Corp. said Tuesday there were 200,617 starts in September, which topped market expectations of 191,000.

“The pace of housing construction is likely to ease through the rest of 2016. For one, the new mortgage and tax regulation introduced by the federal government last week is likely to shave up to 10 per cent off home sales over the remainder the year, and homebuilding activity will likely follow suit,” said Diana Petramala, an economist with Toronto-Dominion Bank, in a note Tuesday.

Among the key measures approved by Ottawa, which take effect on Oct. 17, are rules that force all consumers with loans backed by the federal government to qualify based on the posted fixed five-year rate, now set at 4.6 per cent. Previously, some consumers could borrow based on the rate on their contract, often 200 basis points lower than the posted rate, which allowed for a larger mortgage. Critics of the changes have suggested they will squeeze some buyers out of the market.

“From a regional perspective, most markets are likely to see a moderation in construction activity. In addition, the normalization in housing activity in Vancouver is likely to temper new home construction in the city. Housing starts in B.C. were near a record high in August, while existing home sales dipped below their 10-year average,” said Petramala, who expects annual starts to drop to a pace of 180,000 by early next year.

The economist noted that since August 2015, starts have hovered between 195,000 and 205,000, a pace considered too hot relative to household formation. But record immigration in 2016 and a three per cent gain in the population aged 25 to 34 resulted in a faster pace of household formation in 2015 and 2016.

“Low inventory, sharp home price gains and a relatively balanced housing market suggest that the pace of new home construction over the last year might be just right,” Petramala said.

CMHC noted its six-month trend for housing starts was 199,503 in September, close to the six-month trend for the period ending in August, when the number was 196,465.

“Housing starts were on an upward trend in September, as residential construction increased across the country with the exception of Ontario, where the multiple segments softened to levels that are more consistent with household formation,” said Bob Dugan, chief economist with CMHC, in a release. “Quebec saw the largest gain in housing starts due to the development of new rental apartments intended for seniors. That said, Quebec’s growing apartment stock emphasizes the importance of inventory management.”

Josh Nye, an economist with Royal Bank of Canada, said the unexpected increase in September pushed the third quarter to the strongest pace this year,

“However, with much of the increase recorded late in the quarter, today’s report will likely have a greater impact on (fourth quarter) homebuilding activity,” Nye wrote in a note. “Our forecast assumes residential investment will remain a modest drag on growth going forward, although the increase in September starts hints that any slowdown could be delayed until next year.”

© 2016 National Post

Justin da Rosa
REP

A recent lender commentary hints at what sort of impact new mortgage rules will have on home buyers.

Agents can glean some insight into just how much the new mortgage rules will impact buyers, based on a recent lender’s commentary on how it will affect their own bottom line.

According to First National, the new rules will result in decreased single-family market activity, but most of the impact will be mitigated.

The lender, which typically originates $22 million in mortgages each year, with $13 billion of that coming from new single-family residential lending.

It anticipates a drop of about 8-10% in that lending category and approximately -2-3% of its overall originations.

“First National’s business model and diversified mortgage lending activities and sources of funding provide all the strength and flexibility we need to respond effectively in the coming months to the Federal Government’s new policy directions,” Stephen Smith, chairman and CEO at First National said. “First National will assimilate these changes and continue to provide the same highly competitive, service-first value proposition that has made us Canada’s largest non-bank mortgage lender.
Our very clear message to our partners in the mortgage broker channel is that we are open for business and are looking forward to another year of good performance.”

The lender also said it will review its product offering in light of the new rule changes, which include changes to low ratio mortgages.

First National has already suspended its rental program as well as its alternative-A business-for-self program.

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