Ephraim Vecina
REP

The Canadian government is increasingly reluctant to insure mortgages against default. That may end up giving new life to a nascent bond market in the nation.

For decades, most home loans made in Canada were made by the biggest banks and guaranteed by the government’s housing agency. In late 2016, regulators tightened the requirements for qualifying for that insurance, resulting in more people doing without it: about three-quarters of the mortgages made by federally regulated banks last year didn’t have government backing. Nearly half the nation’s $1.5 trillion of home loans are now uninsured.

For lenders, consumers’ growing demand for loans with no government backing creates a thorny problem: funding. A bank can easily bundle government-insured loans into bonds and sell them to investors. That bond market was $463 billion as of September 30.

Without that backing, banks and other lenders have to rely on deposits, asset-backed commercial paper, and other forms of funding that can be more expensive and less accessible, particularly for smaller firms. That’s why it could make sense for more lenders to package uninsured mortgages into bonds, which over time could become a cheaper and more reliable form of funding, said Moti Jungreis, head of global markets at Toronto-Dominion Bank’s TD Securities. He thinks an RMBS deal could be sold this year.

“The market has to come up with a solution,” he noted, as quoted by Bloomberg. “Otherwise there will be no financing available for mortgages.”

Adding to this trouble, the federal government is worried about rising household debt levels for Canadians and nosebleed prices for homes. And regulators introduced rules effective January 1 that make it tougher for home-buyers to get a mortgage without government insurance from a federally regulated bank, further tightening access to home loans.

“I think the first bond sale past the post will have to be attractive to investors given the inherent risk with being close to the top of the market,” said Mark Carpani, a portfolio manager at Ridgewood Capital Asset Management in Toronto.

The biggest commercial banks can still sell securities known as covered bonds, which are backed by a pool of home loans that stay on the lender’s balance sheet. The most likely candidate to experiment with uninsured residential mortgage bonds would be smaller banks and finance companies known as “alternative mortgage lenders,” according to Jamie Feehely, a structured finance analyst with DBRS Ltd.

If prime mortgage rates rise another half or full percentage point from their current level of around 3.5%, which seems like a real possibility given expectations for central bank rate hikes, the securities would likely yield enough to entice investors, Feehely added.

Growth in the market for bonds backed by Canadian home loans without government insurance will likely take time as issuers and investors learn about the securities, said TD’s Jungreis.

“There’ll be a couple of deals and people will figure out what they want to get paid,” Jungreis said. “We think there’s an opportunity for us and the market, but it will have to evolve.”

Copyright © 2018 Key Media Pty Ltd

Neil Sharma
REP

Coming off a strong showing in 2017, luxury real estate markets in Canada’s three largest cities will remain robust this year, according to Sotheby’s International Realty Canada’s Top-Tier Real Estate Report.

Sotheby’s President and CEO Brad Henderson says that with strong projected GDP growth in Toronto and Vancouver, there will be strong absorption of luxury properties.

“Luxury properties in great locations will always be in demand,” Henderson told REP. “There were strong, stable prices over the last year and I expect that will continue over the coming year. GDP growth in Vancouver and Toronto is expected to be well over 2.5%, so it should continue strong in both markets.”

Activity in the GTA’s top-tier condominiums market last year outpaced all other Canadian markets, both in percentage gains and volume. Sales in the region’s million-plus category were up a whopping 59% year-over-year, and even more impressively, sales for $4mln-plus homes were up 91%.

“When we saw the actual statistics, what we were surprised at is how resilient condos were in Toronto in the face of the Fair Housing Plan,” said Henderson.

Sales in Vancouver’s luxury condo market weren’t up quite as high, although the 27% year-over-year increase in 2017 was still robust.

Montreal has been riding a high the last couple of years, and there’s nary a reason to believe that won’t continue in 2018, according to the report. While activity has been overshadowed by Toronto and Vancouver, where growth is beginning to taper, the Quebecois metropolis is enjoying an ascendance it hasn’t seen in years.

“Montreal is going to continue to be a very healthy market,” said Henderson. “When you compared it to Toronto and Vancouver in the past, it always looked like a comparatively slow-growing market. But that was always comparing a relatively healthy market with markets experiencing hyper growth. Toronto and Vancouver are retrenching, but Montreal’s standing out as a strong performer. Expect it to continue on over the next couple of years with upward pressure on price.”

Henderson says 2018 will be a strong year in Calgary, where GDP growth is expected to surpass 3%, suggesting the worst is behind the city. Henderson

“I would think that’s most people’s views, and what we’ve seen, is better quality properties in better quality neighbourhoods have responded first and fastest, and that will have allow other properties to come along with them,” he added.

Copyright © 2018 Key Media Pty Ltd

REP

North America’s top real estate coach says realtors live on three separate planets. Which one you live on will be determined by how you market yourself.

For Craig Proctor, and the thousands of agents who have enlisted his coaching services over more than two decades, the difference between starvation and domination can often be boiled down to a single aspect of their business: lead generation.

Lead generation is about more than just finding as many clients as possible. It’s about finding the right clients for the right agent, allowing them to determine who they want to work with – the buyers and sellers most likely to cooperate and act, resulting in a successful outcome for both client and realtor.

Once a proven lead generation system is in place, the process generates its own momentum, becoming easier, more automatic and more profitable in a stunningly short period of time.

But Proctor says most agents fail to generate an abundance of leads because they are living on the wrong planet. According to Proctor, there are three distinct planets that realtors live on, with the first two being frustratingly familiar to most agents.

“When I got into real estate, I only knew about one planet: the planet of manual labour, cold calling, networking and door knocking,” he says. “It was a horrible planet. But that was the only planet I knew.” Proctor’s year on Planet One was a miserable one. “I wanted to get out. The problem was I had nowhere else to go – except Planet Two.”

For Proctor, Planet Two is the slick and well-lit world of brand and image advertising.

“I didn’t know anything about brand or image marketing, so I looked around at how other agents were marketing themselves – glamour shots air-brushed to make 50-year olds look like they were 30; everyone’s number one, everyone’s leaning on a Mercedes with a cellphone pressed to their face.

“I jumped off the first planet onto the second. I’m blowing money from my parents just so I can copy those ads. Six months later, I still had no business, but it was costing me extra money to fail at the same rate.”

It was then that Proctor bought a ticket to Planet Three, which at the time was a distant, largely unexplored sphere where direct response marketing ruled. Proctor set up shop on Planet Three and quickly became RE/MAX’s number one agent worldwide.

“You’ll never make a cold call again,” Proctor says of life on Planet Three. “No more begging, no more resistance, no more knocking on doors, no more chasing. No more wasting money on dumb advertising that doesn’t pay for itself. Instead, you can have a steady stream of buyers and sellers contacting you of their own volition.”

Proctor makes no bones about the impact direct response marketing had on his life as an agent.

“Had I not stumbled onto that third planet, I have no problem saying I would have been a statistic. I would have quit.”

Proctor will be providing maps to – and a detailed tour of – Planet Three at each of his upcoming free, half-day seminars in January:

• January 9 – Vancouver, BC
•  January 10 –Calgary, AB
• January 22 – Toronto, ON
• January 25 – Montreal, QC

For more details, visit www.ProctorRealEstateSystem.com

Copyright © 2018 Key Media Pty Ltd

Ephraim Vecina
Canadian Real Estate Wealth

An upward trend in housing prices isn’t expected to significantly change in British Columbia despite an anticipated slowdown in sales this year, economists said.

The B.C. Real Estate Association’s chief economist said earlier last week that new housing stock, slightly higher interest rates, and tighter mortgage regulations will result in about a 10% decline in sales compared with 2017.

But demand continues to outpace supply in most markets from Vancouver Island to the Okanagan, which spurs rising prices, Cameron Muir said.

“We would need a combination of a pretty substantial decline in demand as well as significant increases in overall residential supply in order to get to the point in which prices would decline,” Muir told The Canadian Press.

Nationally, the Canadian Real Estate Association has said tighter mortgage regulations imposed at the start of the year, including a stress test for uninsured mortgages, would result in fewer sales and reduced prices by about 1.4% to an average selling price of $503,100 this year.

Bryan Yu, economist with Central 1 Credit Union, said the changes may slow the pace of first-time buyers entering the market or lead to adjustments in what people choose to buy.

While this may slow sales, particularly in the first quarter of this year, he said B.C.’s growing economy and jobs will maintain a strong demand.

“I think the overall economic drivers are still there to support rising prices through 2018,” Yu said.

The Real Estate Board of Greater Vancouver said last week that the benchmark price for all residential properties was $1,050,300, in 2017, a 15.9% jump from December 2016.

Sales of detached homes, townhomes, and apartments reached 35,993 last year, the third highest total in a decade.

The board considers the sales total more “historically normal,” marking a 9.9% decrease from 2016 and down 15% from the sizzling pace of 2015.

A key aspect of last year’s housing market was a decline in the number of available listings, a trend the board has said can put upward pressure on prices.

Board president Jill Oudill said 54,655 properties were listed for sale in 2017, a dip of 5.1% from the year earlier.

She also said market activity across the Vancouver region differed considerably in 2017 based on property type.

“Competition was intense in the condominium and townhome markets, with multiple offer situations becoming commonplace,” Oudill said in a news release.

Copyright © 2018 Key Media Pty Ltd

Neil Sharma
Canadian Real Estate Wealth

Affordability and new mortgage rules may not only result in a pronounced exodus from Vancouver into its surrounding municipalities this year, they could drive people into smaller abodes, too.

Alture Properties CEO Peter Cheung has noticed Vancouverites bolting for the suburbs out of necessity rather than choice, and the metropolis’s outskirts, like Langley and Abbotsford, are seeing a surge in preconstruction condo activity.

That’s where Cheung says micro-suites—which are currently prohibited in Vancouver, but not in Burnaby or Victoria—could prove to be sound investments.

“Micro-suites are all based on affordability—that’s the attraction—and the trend has been going smaller and smaller in terms of size, so those products are economically attractive,” said Cheung. “If it’s well-designed, it could be a good investment.”

Stringent mortgage stress testing has also come into effect this year, and it could further exacerbate migration to the suburbs.

“The people who need the most help in terms of mortgage, they’ll be hit the hardest,” said Jason Turcotte, Vice President of Development at Cressey Development Group. “The people stretching to get into the bottom end of the marketplace will be pushed out. They may need to look at a suburb or two out of Vancouver, and it will further complicate the demand for sub-markets.

“The demand is still there, but it’s just going to get moved around.”

Vancouver’s condo market is expected to remain robust through 2018. That’s good news for renters because the city’s vacancy rate is under 1% and condos are helping keep inventory afloat, albeit just barely.

“We’re already seeing strong activity in the first week in terms of acquisition of condos,” said Cheung. “I think there’s going to be continuous demand with condos over single-family detached, similarly carrying from the last two quarters of 2017, when the single-family sector softened and multi-family condos have been quite in demand.”

Two events to watch this year are the municipal election and the new provincial NDP government’s housing strategy, but Cheung thinks the market will remain stable.

“Nothing has dramatically changed to shift the landscape of construction or building,” he said. “Cost is going up, and because of that you’ll see the impact of prices going up potentially.”

Copyright © 2018 Key Media Pty Ltd

From hoodies to suits: Blockchain companies ready to come out of the shadows and go public

Claire Brownell
The Vancouver Sun

Deepak Kaushal, director of research at GMP Securities LP, had a word of caution for the business crowd assembled under the Fairmont Royal York’s crystal chandeliers in Toronto Thursday.

GMP was hosting a conference on blockchain, the technological innovation that makes cryptocurrencies like Bitcoin possible. In a testament to the explosion of interest from the finance community as the price of a single bitcoin surges past US$15,000, the vast majority of people in attendance were wearing suits and ties, not jeans and hoodies.

After the previous speaker had colourfully described the cryptocurrency community’s attitude as “zero f—s given,” Kaushal issued a retrospective heads up to anyone used to a different tone.

“I just wanted to warn you,” he said. “You can’t get through a blockchain conference without hearing an f-bomb.”

Just a few years ago, Bitcoin was best known as a curiosity, of principal interest to geeks, hackers and drug dealers on the dark web. Today, institutional investors are looking for ways to get a piece of the sector’s massive gains, in the hopes of getting in early on a technological innovation some predict will be as transformative as the internet.

GMP’s chief executive Harris Fricker wants to help match those investors with blockchain companies looking to raise capital. Fricker said he sees an opportunity to help such companies go public using a mechanism familiar to Canada’s mining and oil industries, using reverse takeovers to list blockchain firms on the TSX Venture exchange.

“The real opportunity has been to do what we always do,” Fricker said. “And that connects really good entrepreneurs with good management teams and good boards with really smart people who want to invest money in them.”

The strategy comes with some big risks. Governments are still grappling with how to regulate blockchain and cryptocurrencies, which make it possible to anonymously transfer value across borders without involving currency issued by central banks.

To stay on the right side of the regulatory enforcement, Fricker said GMP does rigorous due diligence on every blockchain deal it underwrites. Ultimately, however, he said his firm is looking for the same qualities that make any startup a good bet.

“It all starts with, do you have a good management team? Do they have a logical and compelling idea? And do they have, in their structure, good governance?” Fricker said. “We pass, probably, on eight out of 10 opportunities.”

To some blockchain companies, going public through a reverse takeover on a junior stock exchange represents the old fashioned way of raising money. The past year has seen unproven companies with little more than a website and an idea raise hundreds of millions of dollars through initial coin offerings, where founders sell units of cryptocurrency to the public representing shares in the company.

Fricker said he thinks the ICO market will eventually calm down and become a permanent fixture, with founders able to use the mechanism if they comply with the same regulations as anyone else selling a security. However, he said companies will still need the services of investment banks like GMP if they want access to big-name institutional investors.

“We’re dealing with large institutional money managers, pension funds, endowments, trusts,” Fricker said. “They want to know the due diligence has been done, they want to know there’s a top-tier auditing firm in the mix, a top-tier legal firm in the mix.”

There’s also a risk governments will one day decide they don’t like the idea of a stateless digital value transfer system and attempt to ban cryptocurrencies outright. Regulatory decisions that are unfavourable to the sector have caused wild swings in the value of bitcoin in the past, with more and more capital at risk as the mainstream financial community enters the space.

Speaking on a panel, Mat Cybula, chief executive of the cryptocurrency wallet software company Cryptiv Inc., said he thinks governments would have a tough time making a move that drastic now.

“At this point, if you try to kill Bitcoin, it will just make it stronger,” he said. “There’s no going back at this point.”

© 2018 Financial Post

The Morrison?s 40 boutique townhouses and condos offer a true sense of community

MICHAEL BERNARD
The Vancouver Sun

The Morrison

Project Address: 649 E. 3rd Street, North Vancouver

Project Scope: A total of 40 units, ranging from one-bedroom suites to two-, three- and four-bedroom townhouses, some with lock-off suites. Several homes have rooftop decks with city views. Located adjacent to Moodyville Park and on the Spirit Trail, within walking and cycling distance to Lonsdale Quay

Prices: One-bedroom homes from 640 to 699 sq. ft., from $568,000; two-bedroom homes between 1,083 and 1,755 sq. ft., from $898,000; three and four-bedroom homes between 1,817 and 2,309 sq. ft., from $1,498,000

Developer: CREO Developments Ltd.

Builder: Haebler Group

Architect: SHAPE Architecture

Interior Designer: Annaliesse Kelly Design

Sales Centre: 378 Esplanade E (at St. Patrick’s Ave.)

Telephone: 778-822-0600

Hours: By appointment only

Website:  www.themorrison.ca

Completion: Summer 2019

Architect Alec Smith took an immediate shine to the site for The Morrison, where he has designed a boutique collection of 40 townhouses and condos in the fast-developing Moodyville area of North Vancouver.

“I was really excited,” said Smith, whose firm SHAPE Architecture was commissioned to design the group of buildings on the contoured property.

“Number one is that it is a sloping site that offers incredible views towards the city (of Vancouver) and also past Stanley Park to Lions Gate Bridge. A sloped site like that allows you to step the massing of the buildings and open up views for a number of different units around the complex.”

He also noted that the property, part of a community plan that envisions the construction of about 2,000 multi-family homes stretched along several blocks of Third Street, provided apartment zoning that permitted generously sized townhomes averaging between 1,900 and 2,100 square feet.

Smith said he and his partner’s time in London, England, played a major influence on the final design of The Morrison. His West London neighbourhood featured “mews”— rows or streets of houses or apartments that have been converted from stables or built to look like former stables, typically with rooms above and built along an alley or courtyard. The Morrison’s layout features inner courtyards with front doors opening on to the interior space on some homes, while others have front doors with stoops like the brownstones of New York City. The final result is an pleasing blend of the traditional whitewashed brick and front stairs and simple modern lines.

“We are using a kind of townhouse model where people can sit on their stoops and meet their neighbours,” he said. “It’s that kind of notion, a kind of social glue that holds this thing together that I’m most excited about.”

The slope of the site also allowed Smith to incorporate another design element — the light well — to address the classic problem of the lack of light available for townhomes in the middle of a building with no windows on each side.

Some of the units also have what Smith described as an inverted plan: the ground-level entry leads into a foyer between bedrooms on the first level up stairs to the kitchen, dining and living spaces above, maximizing the potential views of the city. It also drew a stronger connection between those second-level amenities and the rooftop patio.

Andrea Sinow, who, with husband Harald established CREO Developments to build their first multi-family development, said their goal was to create something in which homeowners would be encouraged by design to socialize with each other.

“We really wanted to create a community space where people get to know their neighbours,” she said. “With condos you go up the elevator and into your place and you sometimes don’t even know who is on either side of you.”

“With everybody [in the townhomes] having a front door when you come in off the courtyard, you are going to get to know your neighbours. I think that is very special. Everyone has their own personal front door, creating that sense of home and that lends itself to meeting your neighbours.”

The site also represented an opportunity to increase the inventory of townhomes, which are filling a need for affordable, but flexible housing.

“I personally believe the townhomes are a great addition at a time we don’t have enough of them,” she said. “People can’t quite afford a single-family home, but they don’t want a condo, so this is middle ground.”

The Morrison, named after a North Shore builder who constructed homes from Deep Cove to Horseshoe Bay, is being built to LEED (gold) standards, a green rating system that measures a building’s overall sustainability performance in eight categories.

For instance, its in-floor heating, guided by efficient Nest learning thermostats, will be fed by the Lonsdale Energy Corp.’s district energy utility, which supplies hot water circulated through underground piping and mini-plants and optional air conditioning.

The Morrison also provides another district-mandated amenity, put in place because of low local vacancy rates. Built into some of the townhomes are “lock-off suites” with separate entrances, which can either be legally rented out or used as additional family spaces.

The spacious floor plans feature over-height ceilings on the main levels and wide-plank engineered white-oak flooring. The bedrooms and flex rooms have wool blend broadloom carpeting.

In the kitchen are premium Bosch stainless steel appliances, including a gas cooktop, built-in dishwasher and a 36-inch french door fridge. Also included is a stainless steel built-in microwave and LG washer and dryer, with side-by-side models in many homes.

Dominating the kitchen is an eight- or nine-foot-long quartz island counter that comfortably seats four people. Overhead is pendant lighting or recessed pot lighting. Cabinetry is sleek flat-panel style in dark oak or white with soft-close doors and drawers. Pantry storage is provided in some select units and USB charging outlets are available in all units.

In the bathroom are large-format porcelain tiles in marble and matte grey finishes with Nu Heat in-floor heating, while countertops are crafted in quartz. The floating vanity has flat-panel cabinet doors and porcelain undermount sinks. Master bathroom showers are the frameless glass variety, complemented by a soaker tub and a water-efficient toilet.

The rooftop gardens, a feature in 25 of the 40 homes, are plumbed for water and gas and equipped with electrical outlets, said Sinow. The parking below has a dog-wash station and a bicycle-repair bench, which are conveniences that fit well with the nearby Moodyville Park and the Spirit Trail, which leads to Lonsdale Quay shopping and the 12-minute SeaBus ride to downtown Vancouver.

The Morrison turned out to be the perfect living formula for digital web marketer Samantha Ellis and her fiancé, Eddy Gudewill, a financial analyst with a downtown Vancouver firm.

They currently live in a 700-square-foot apartment in Kitsilano and look forward to moving up to a 1,200-square-foot two-bedroom townhome with a rooftop garden when the development is completed in 2019.

“I spend a lot of time on the North Shore for work. I run a digital marketing agency and so I am always heading over there to see clients. I became more familiar with the Lonsdale community and fell in love with it.

“It’s neighbourly, and it’s a little quieter than being on the outskirts of downtown Vancouver.”

The couple want to start a family and face the same dilemma a lot of people their age encounter: do they move out to places such White Rock or Langley to find space enough for raising a family or stay closer to the city?

They chose the North Shore, Ellis said, because it has good schools, excellent workout facilities and great restaurants, and is close to nature with the wilderness trails nearby for their pet Labrador.

© 2018 Postmedia Network Inc.

50 temporary modular homes planned near Olympic Village Station

Scott Brown
The Vancouver Sun

An empty lot near the Olympic Village SkyTrain Station has been identified as the future site of a 50unit temporary modular-housing project.

In October, Vancouver Mayor Gregor Robertson promised to build 1,000 new social and supportive housing units before the end of 2018 to address the immediate needs of Vancouver’s growing homeless population.

The new homes, which will be managed and staffed by a nonprofit housing operator selected by B.C. Housing, would be funded through the B.C. government’s $66-million commitment to build temporary modular housing in Vancouver. The West 2nd project is the fifth to be announced, with 260 units of temporary modular housing currently in the development process. The City of Vancouver says the site, at 595 and 599 West 2nd Ave., will be subject to a development-permit application process and the city has begun to connect with local residents about the proposed plans.

City council approved its first modular-housing project in November when it gave the go-ahead to construct 78 units in Marpole. The temporary housing project, planned for the Pearson-Dogwood location at 650 West 57th Ave., was met with spirited opposition from critics who argued the process was rushed and expressed concern about its proximity to a trio of schools: Sir Winston Churchill Secondary, Sir Wilfrid Laurier Elementary and Ideal Mini School are all within a block of the project.

Vancouver previously built a temporary modular-housing development containing 40 units on city-owned land near the Downtown Eastside. The $3-million pilot project, which was co-funded by the federal government, opened last February at Main and Terminal streets.

Vancouver plans to add 72,000 new housing units over the next 10 years, including 12,000 supportive and social-housing units.

The latest count pegged Vancouver’s homeless population at around 2,100, with 600 living on the street and the rest in shelters.

© 2018 Postmedia Network Inc.

New Mortgage Rules Now in Effect

other

Borrowers of new low-ratio mortgages (those who pay 20 per cent or more on their down payments), now face tougher qualification requirements as new guidelines for federally-regulated lenders took effect on January 1.

Called Guideline B-20, and introduced by Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, the new rules now require borrowers to pass a stress test when applying for home financing, either at the Bank of Canada’s (BoC) qualification rate (currently 4.99 per cent), or at their contract rate plus 2 per cent – whichever is higher.

The new rules are designed to reduce risky borrowing practices and to prevent mortgage applicants from biting off more home debt than they can chew; the average Canadian now owes $1.71 for every dollar they earn, a vulnerability that poses risk to the overall economy, according to the BoC.

The stress test is expected to reduce the average home buying budget by 20 per cent, which some experts say could knock as many as 10 per cent of prospective borrowers out of the market. Those who do pass may have to downsize their home buying ambitions as a result, for example, choosing a townhome or condo rather than a detached house, or moving to a community further from the downtown core.

However, these rules are only targeted at borrowers of brand new mortgages, or those refinancing their current ones; if you already have a mortgage, you will not be stress tested if you remain with your existing lender upon renewal. The rules also only apply to federally regulated lenders, meaning provincially-regulated credit unions, or non-regulated alternative lenders are exempt.

Check out our recent BNN appearance for more info on how B-20 may impact the housing market!

GTA Real Estate Sales Down 18% in 2017: TREB

The Toronto Real Estate Board has released its final monthly data analysis for 2017, and it reveals government policies have taken their toll on annual sales.

According the TREB, which included a total-year recap within its December report, overall 2017 GTA sales via the MLS fell 18.3 per cent from record-breaking 2016 – and the board isn’t shy to point the finger at the cause.

“Much of the sales volatility in 2017 was brought about by government policy decisions,” said TREB President Tim Syrianos. “Research from TREB, the provincial government and Statistics Canada showed that foreign home buying was not a major driver of sales in the GTA. However, the Ontario Fair Housing Plan, which included a foreign buyer tax, had a marked psychological impact on the marketplace. Looking forward, government policy could continue to influence consumer behavior in 2018, as changes to federal mortgage lending guidelines come into effect.”

Average home values still rose 12.7 per cent to $822,681 year over year, though much of that growth occurred during “extremely tight” conditions in the first quarter, prior to the FHP. Price growth then cooled throughout the remainder of 2017 as an influx of inventory and fewer sales tilted the GTA toward balance rather than the frantic seller’s market that had become the norm.

December, however, experienced a sharp – though seasonal – downturn in activity, with sales in the total TREB area falling 33.1 per cent from November, and the average price softening 11.1 per cent month over month to $735,021. Year over year, prices rose a scant 0.7 per cent.

Check out our infographic for the full story>

Newly-Built Houses Too Expensive for Most Buyers

There was a dramatic 82-per-cent-drop in sales for freshly-built single-family homes in November – but it’s not due to a lack of demand, reports the Building Industry and Land Development Association (BILD) in its November report.

The latest numbers, which were released at the end of December, reveal single-family homes (including detached and semi-detached houses) accounted for just 9 per cent of all new build sales; of the 3,473 sold in November, 91 per cent were condos. It’s the lowest level of single-family segment activity since BILD started tracking the data in 2000.

As of the end of November, houses account for only 17.3 per cent of the 42,992 lots sold in the Greater Toronto Area. The average price, however, continues to rise due to lack of buildable land and tight inventory, and now sits at $1,223,610, up 25.1 per cent from last year.

Bryan Tuckey, BILD’s president and CEO, says lack of affordability is far and away the steepest hurdle for house ownership, and the main contributor behind the shift in buyer behaviour.

“The November data should not be interpreted as a sign of diminished demand for single-family housing in the GTA, in fact, quite the opposite,” he stated. “A big reason single-family homes represent a decreasing portion of new home sales is that people simply cannot afford them.” He adds that while the new build industry wishes to create product within home buyer budgets, they’re hamstringed by “provincial policies such as the Places to Grow Act, which mandates intensification.”

Patricia Arsenault, executive vice president of Research Consulting Services at Altus Group, BILD’s data partner, alludes that more buyers are exploring their resale options, the prices of which have softened in comparison to their newly-built counterparts.

“The decline in new single-family home sales in the GTA relative to last year in large part reflects low inventories of new homes available to purchase,” she stated. “As well, with more resale single-family homes available to purchase compared to last year, many potential new home buyers now feel they can take the time to explore their range of options more carefully.”

BILD reveals existing inventory is in a range “well below” what’s considered healthy, at just three to four months compared to the usual nine to 12.

Newly-built condos, which include low-, medium- and high-rise units, stacked townhomes and lofts, saw prices surge 42.6 per cent year over year to an average of $702,992.

Vancouver’s Priciest Home Valued at $78.8 Million

The latest valuations from BC Assessment were released this week, and they reveal Vancouver’s most expensive home rose a whopping $3,016,000 over the course of a year.

It’s also the fifth year in a row that the 15,694-square-foot waterfront Kitsilano property, which belongs to Lululemon Athletica founder Chip Wilson, has been crowned the priciest abode in the region, reports the Globe and Mail.

However, while its annual appreciation may be eye-popping, it actually reflects a slowing trend in price growth among high-end Vancouver real estate, with an increase of only 4 per cent compared to last year’s 18 per cent, though the property’s value has jumped a massive 45 per cent since 2013.

According to the overall assessment for the region, detached home values in Vancouver rose only 15 per cent, compared to 50 in 2017. Conditions have been slower for higher-priced homes following the introduction of a foreign buyer tax in 2016, though prices have since recovered to hit record highs.

Lack of Supply Pushes Vancouver Prices Higher

And speaking of Canada’s most expensive market, it continues to be grapple with a good old-fashioned supply-and-demand imbalance, as a lack of new listings and rampant buyer activity drove December home prices ever higher, to an average benchmark of $1,050,300.

This is contributing to increasingly tighter market conditions even as sales slow to more “historically normal” levels.

“It was a steady year for home sales across the region, led by condominium and townhome activity, and a quieter year for home listings,” said Jill Oudil, president of the Real Estate Board of Greater Vancouver. “Metro Vancouver home sales were the third highest we’ve seen in the past ten years while the home listings total was the second lowest on record for the same period.”

Home listings in Metro Vancouver reached 54,655 in 2017. This is a 5.1 per cent decrease compared to the 57,596 homes listed in 2016 and a 4.5 per cent decrease compared to the 57,249 homes listed in 2015.

“Market activity differed considerably this year based on property type,” Oudil said. “Competition was intense in the condominium and townhome markets, with multiple offer situations becoming commonplace. The detached home market operated in a more balanced state, giving home buyers more selection to choose from and more time to make decisions.”

According to REBGV a total of 35,993 homes exchanged hands over the course of 2017, a 9.9-per-cent decline from 2016, and down 15 per cent from 2015 levels. December sales, however, surged 17.6 per cent from the same time last year at 2,016 units, though a 27.9 per cent decrease compared to November 2017 when 2,795 homes sold.

Condo activity continues to outpace all other housing segments, with 1,028 sales in November, at an average price of $655,400, In comparison, there were 371 townhouse sales, at an average of $803,700, and 617 detached sales, at $1,605,800.

© 2015-2017 Zoocasa Realty Inc.

Ephraim Vecina
REP

By all indications, 2017 has proven to be a tumultuous period in the mortgage and real estate spheres, but a markets observer argued that this year will offer a measure of respite to these beleaguered sectors as well as to a consumer base labouring under an ever-increasing debt burden.

In a recent analysis, James Laird – co-founder of RateHub Inc. and president of CanWise Financial – predicted that no new federal-level mortgage regulation will be introduced in 2018.

“Over the past several years there has been a steady flow of new regulation imposed on the mortgage industry. Maximum amortizations have been reduced, minimum down payments have increased and stress tests have been added. Some are worried that current regulation has gone too far, which is why the federal regulators will take a break in 2018,” Laird stated.

He also projected that variable and fixed rates will experience a modest rise, at best. “The Bank of Canada will increase the key overnight night rate by 0.5% causing all variable rates to rise. This will put upward pressure on bond yields which will cause fixed rates to rise as well.”

“In 2017 the Bank of Canada moved the key overnight rate twice, but it still remains historically low. The Canadian economy is doing well, so the Bank of Canada will choose a modest strategy of two rate increases, with a few months in between each move,” Laird added.

In addition, home prices are expected to remain relatively steady, neither increasing nor decreasing drastically.

“The macroeconomic factors that have been driving price appreciation will persist in 2018. Net new immigration, scarcity of housing supply, economic growth and first time home buyers entering the market will put upward pressure on housing prices,” Laird explained. “However, the new stress test that comes into place on January 1, 2018, combined with rising interest rates, and recently introduced foreign buyers taxes will act as an effective counter-balance, causing no net-change.”

Unfortunately, the number of Canadians that will be forced to borrow from unregulated lenders will only increase this year, Laird warned.

“All of the recently added regulation combined with the [OSFI stress test] will cause more Canadians to borrow from unregulated lenders at higher rates. Canadians who need to refinance and no longer qualify will be forced this way, while some who are looking to purchase and no longer qualify with a regulated lender will choose to go this way.”

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