Steve Randall
Canadian Real Estate Wealth

Home sales in 2015 and 2016 surged in Metro Vancouver but last year saw a return to more historically normal levels.

The Real Estate Board of Greater Vancouver says that there were 35,993 sales of homes through its MLS in 2017, down almost 10% from a year earlier but almost 10% above the 10-year average.

“It was a steady year for home sales across the region, led by condominium and townhome activity, and a quieter year for home listings,” Jill Oudil, REBGV president said. “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.”

The year ended strong with a 17.6% rise in home sales year-over-year to 2,016 in December, 28% higher than November.

The market remains pressured by low inventory with listings for the whole of 2017 down 5.1% from the previous year to 54,655. That is 4.4% below the 10-year average. Although December brought a 44.5% year-over-year rise in new listings to 1,891.

The benchmark price for all property types was up 15.9 across the region in 2017 to $1,050,030. The benchmark price of condos increased 25.9%, with townhomes up 18.5% and detached homes up 7.9%.

Copyright © 2018 Key Media Pty Ltd

Ephraim Vecina
Mortgage Broker News

Amid growing household debt and the possibility of more increases in interest rates, settling debts remains the top financial priority for Canadian consumers in 2018, according to the latest poll conducted by CIBC.

This represented the eighth consecutive year that paying off existing debts has topped the list in the annual survey. The CIBC study also found that other priorities are increasing in importance over more immediate financial concerns.

“While debt repayment is still the number one priority, Canadians recognize that it’s just as important to focus on building savings and growing your nest egg,” CIBC managing director for financial planning and advice Jennifer Hubbard said.

“With inflation outpacing average earnings and the risk of outliving our assets, it’s essential to set out your short- and long-term financial goals in a comprehensive financial plan that strikes the right balance between paying down debt and growing savings,” Hubbard added.

25% of the survey respondents said that paying down debt is their top financial priority for this year, while others said that they will aim to grow their wealth (13%) or save for retirement (7%).

67% admitted that they need to get “a better handle” on their finances in 2018. Fully half of Canadians (51%) expressed regret at not paying down more debt while interest rates were low. To meet their financial goals last year, 46% of Canadians said they reduced their spending on non-essential items, and 31% set a household budget.

In 2018, 55% are planning to cut down on non-essential spending, while 27% will be establishing emergency funds. Meanwhile, 23% will be prioritizing savings by setting up automatic transfers into savings or investment accounts.

Copyright © 2018 Key Media

2018 forecast: Will the housing market crash by year’s end?

Neil Sharma
Mortgage Broker News

James Loewen believes the government has catalyzed the very thing it is trying to prevent with the recent B-20 changes, and the irony isn’t lost on him.

Loewen says that most borrowers will be stuck in the private channel, and will have to walk away from their homes. The resulting supply surge in tandem with diminished demand—the result of a reduction in buying power, estimated to be around 20%—will bring the housing market crashing down.

“It’s ironic because the government purports that they’re trying to prevent an economic crash, people walking away from their houses, but if you can’t qualify under these guidelines, which, definitively more people can’t, there will be more people walking away and selling their house,” said Loewen, broker and owner of Loewen Group Mortgages.

He added that B lenders got hit particularly hard because borrowers now have to qualify 2% above the prime rate. However, most won’t and will be forced into the private channel—a traditionally temporal solution that could have no end in sight for many borrowers.

“They will be inciting the very thing they’re trying to avoid, which is a collapse,” said Loewen. “If I couldn’t qualify at TD or Scotia, I’d go to Home Trust or Equitable for a slightly higher rate than the best rate, but now I probably won’t qualify for that mortgage, so I‘ll have to go private. The risk private lenders are taking is much lower than even six months ago, and we can’t bundle up to 85% loan-to-value inside these government guidelines, so there might not be a solution at all for the client and they might be forced to sell.”

Regarding increased regulation, Loewen doesn’t think that the industry will be subjected to any more in 2018—but, he added, that could change depending on Q1 real estate numbers. For that reason, he hasn’t ruled out an interest rate hike, either.

“The next logical step is for the government to impose or impede on private lending, but they’ve already indirectly affected private lending guidelines,” said Loewen. “The B market lit up over the last two or three years, but that’s hard now, so the private market is lighting up. There is more demand for private lending but there will come a period of time when people realize they can’t afford private money anymore.”

Copyright © 2018 Key Media

Clayton Walk design speaks to townhomes’ eventual occupants

Mary Frances Hill
The Province

Clayton Walk

Project Address: 18505 Laurensen Place (185th and Fraser Highway) Surrey

What: 143 townhomes within walking distance to schools, parks, shopping and future proposed Surrey-Langley light rail transit

Residences sizes and prices: Two-bedroom units, at 1,223 sq. ft; three-bedrooms 1,462 sq. ft; four bedrooms at 1,615 sq. ft.

Price: From $604,900

Developer and builder: Anthem Properties

Sales centre address: 18505 Laurensen Place (185th and Fraser Highway), Surrey

Hours: noon — 5 p.m., Sat — Thurs

After more than a decade in interior design, The Mill Design principal Janine Wilson has an intimate knowledge of how homeowners live and thrive in a space that reflects personality and taste, and which meets their needs for restful escape.

Her work on the three homes at Clayton Walk, Anthem Properties’ new townhome community in Surrey, runs the style gamut from traditional to bold contemporary and minimalist Scandinavian, illustrating both the homes’ potential and her sophisticated taste and expertise.

In the more traditional suite, the open-concept kitchen and dining area takes on a country feel, with a dining set that Wilson knew would appeal to the homeowners in The Mill team’s vision: “A married couple with grown children in college — we wanted a mature high-end look that was still comfortable and livable.

 “[These homeowners] would ideally love shopping at Peridot and The Cross,” she adds, referring to popular retail decor boutiques in Langley and Yaletown, respectively — specialists in interiors that convey warmth and traditional design.

In Clayton Walk’s contemporary display home, Wilson imagines a younger family, led by a couple that loves energetic, edgy looks that make an impact to visitors the minute they walk in. The deep blue of the dining chairs, surrounding a ’60s-inspired round kitchen table and a sputnik chandelier set against three oversized paintings creates a striking tableau reminiscent of a set in Metropolitan Home magazine. Wilson admits The Mill Design team went beyond its own limits in the contemporary bold suite.

 “We used a lot stronger colours than we would typically use. A dramatic cross-section agate style wallpaper was used in the main living area. I would normally not recommend such a strong pattern on a primary wall, but with this furnishing style, it works perfectly.

“Also the art is larger scale and more dramatic than you might use typically.”

For the third suite, decorated in a Scandinavian flair with its familiar minimalist style, Wilson imagined a young couple with small children who can live comfortably in surroundings that are “desert-inspired with soft tones, cactus artwork and furniture and accessories that were more minimal in style.”

The homes are spacious, and many of their features are designed to attract those who would love to live in a single-family home, such as double-wide garages to fit cars parked in tandem, side-by-side washer-dryers, and a powder room on the main floor.

The size and layouts impress Wilson and her team as much as they would any curious homebuyer. “The kitchens in these units are just as large as you would see in most single-family homes. The end units with the extra wall of windows really feel a lot like single family homes.”

© 2018 Postmedia Network Inc.

Properties assessed below $1.65 million will receive full rebate, up from $1.6 million

Derrick Penner
The Province

The ink was barely dry on British Columbia’s 2018 property assessments before the province announced a three-per-cent increase to its homeowner grant threshold, a key property-tax break for the majority of property owners.

The B.C. Ministry of Finance on Wednesday announced it would raise the threshold to receive the full grant to $1.65 million in 2018 from $1.6 million in 2017, while property assessments climbed anywhere from one to 30 per cent, according to B.C. Assessment.

The grant has been a way to shelter older homeowners who bought homes on modest incomes decades ago who have seen their property values and subsequent property tax bills soar beyond their means.

Finance Minister Carole James wasn’t available for an interview, but in a written statement, a ministry spokesperson said the province reviews the grant threshold every year.

The 2018 homeowner grant program will cost the province $825 million, according to the ministry. The province reimburses municipalities for the grant’s full value to maintain municipal revenue.

Recently, in some corners, the grant has been criticized as a subsidy to existing homeowners that helps keep property prices elevated while new buyers struggle to get into the market.

“I’m not sure (raising the threshold) was really necessary,” considering the slowdown in appreciation for detached homes, said Tom Davidoff, director of the UBC Centre for Urban Economics and Real Estate.

Davidoff said the areas that saw greater appreciation in assessed values were in suburbs where property prices fell below the new threshold.

Some west-side Vancouver, detached-home neighbourhoods saw typical house values slide five to 10 per cent as the market for less affordable houses slowed, but condominium values soared 15 to 30 per cent across Metro Vancouver for the relatively more affordable properties.

“Generally, I think it’s a bad idea to reduce property tax burdens,” Davidoff said. “I think we should be raising property taxes and cutting other taxes.”

Davidoff was one of the economists to advocate for a provincial housing affordability fund, which would see B.C. homeowners who don’t pay income taxes in Canada pay a 1.5-per-cent property surtax targeting owners of properties left vacant or those with limited economic ties to the country.

Money raised by such a tax could be used to finance local housing initiatives or other public services or cut other taxes, Davidoff said.

However, Davidoff acknowledged that the homeowner grant is a popular tax break since most voters are also property owners.

The full grant is worth $570 to homeowners under the age of 65 in the Lower Mainland and Victoria’s capital region and $770 to homeowners in northern or rural areas who own homes valued below the threshold.

For homeowners over 65, or who have a disability, the grant amounts will be $845 in urban areas and $1,045 in northern or rural areas.

The goal in increasing the threshold, according to the finance ministry, was to make sure that it remained consistent with 2017 with 91 per cent of properties falling below the $1.65 million threshold.

© 2018 Postmedia Network Inc.

The Capital region is roaring into 2018 with multi-billion-dollar developments starting or expanding

Andrew Duffy/Richard Watts
Western Investor

Victoria will accelerate into 2018 as B.C.’s second-busiest city for real estate development with existing major retail and residential projects surging forward and new ones firing up. The booming industrial sector is clamouring for space as the vacancy rate has fallen to near-record lows.

At the end of the third quarter of last year, the Victoria region had issued $117 billion in total building permits, up 1.1 per cent from the same time a year earlier. It appears that 2018 will be even higher.

Bosa Development, which bought Victoria’s Empress Hotel four years ago, has added Dockside Green to its Victoria portfolio as it plans to build out the mixed-use property.

Construction on residential towers will start this year, allowing people to move in two years later, said Ryan Bosa, president of Vancouver-based Bosa Development.

In December, Vancity credit union, through Dockside Green Ltd., sold Bosa the 10 acres of the 15-acre site that are still to be completed. The purchase price is not being released.

Provided the market remains relatively healthy, “I think eight to 10 years is a decent goal” for full build-out of the site, Bosa said.

The current plan is to design three towers at once. Two would be market condominiums, with a total of about 200 units. The other would be rentals, with possibly 125 units, Bosa said.

Dockside’s reworked master plan was approved by city hall this year. So far, about 300,000 square feet of space, with 266 residential units, has been built out.

Bosa is buying the right to build the remaining one million square feet allowed. Of that, more than 900,000 square feet is targeted for residential use, with the remainder for retail and office space, said Norman Shearing, president of Dockside Green Ltd.

Vancity Enterprisesand Windmill Developments started Dockside Green 15 years ago on a former city-owned industrial site, but development stalled following the 2008 economic downturn.

“The market is pretty strong right now in Victoria, so we are ambitious,” Bosa said.

Another large Victoria West project, the ongoing Bayview and Roundhouse development by Focus Equities, will kick into a higher gear in 2018. Its 20 acres is framed by Esquimalt Road on the north, Kimta Road and Victoria harbour to the south, Tyee Road on the east and Catherine Street on the west.

A third residential tower – at 17 storeys – completes this year and is already sold out. Future condo buildings are planned for as high as 26 storeys.

Excavation is underway for a $75 million seniors residence on the site. Vancouver-based Element Lifestyle Retirement is behind the 153,000-square-foot facility that will have five storeys and feature 155 units to purchase or rent, and includes 35 licensed care units.

Developer Kenneth Mariash expects another six structures will be built, including a hotel and a heritage-style retail village.

At completion, the entire development is expected to be worth more than $1 billion.

Sidney

The $35 million Sidney Crossing retail project is expected to break ground this spring.

Work could start at the site — 10 acres located on airport land at Patricia Bay Highway and Beacon Avenue in March or April according to Omicron vice-president Peter Laughlin.

The Vancouver Airport Authority supports the development, and Omicron received rezoning and approval from the Town of Sidney in September 2016.

The 100,000-square-foot centre will include 10 buildings, with plans for anchor grocery and major appliance and electronics stores. Omicron has proposed a mix of retailers on site.

Industrial

All sectors of Greater Victoria’s real estate look strong for 2018 but the industrial market is seeing a seismic shift.

More than 281,000 square feet was taken up in the first half of 2017, the highest level in five years.

The region’s vacancy rate is sub-2 per cent, lowest in a decade; the average least rate is $12.50 per square foot, up from $12 a year ago and higher than in most of Metro Vancouver; and 75,000 square feet is under construction, and that is expected to reach 100,000 square feet this year.

Serviced industrial land prices have soared to more than $1.2 million per acre.

North Saanich/Sidney, with a 1.6 per cent vacancy rate and land available, and the Westshore, where Victoria Shipyards is expanding, are expected to lead the industrial action in 2018.

The new Sean Heights Business Park in Central Saanich has recently seen 20,000 square feet leased up and will complete a further 17,000 square feet this spring.

But experts warn that more new industrial space is needed.

“We are at a critical point where businesses don’t have any growth options. The lack of supply is limiting their ability to grow with our strong economy,” said Ty Whittaker, an industrial specialist and senior vice-president with Colliers International, Victoria.

Copyright © 2018 Western Investor

Ephraim Vecina
REP

Amid a scarcity of viable financing choices, a growing number of Canadians are moving towards private unregulated lenders, even as the federal government is trying to rein in a home-price surge that has driven household debt levels to record highs.

But like a giant game of Whac-A-Mole, the risk to the financial system from tapped out borrowers is merely shifting – this time to a market where there’s no oversight from the country’s national bank regulator and new stress-test rules don’t apply.

“We’re transferring risk from the regulated segment to the unregulated segment of the market,” Canadian Imperial Bank of Commerce deputy chief economist Benjamin Tal told Bloomberg. “If we have a significant correction, clearly the unregulated markets will suffer even more because that’s where the first casualties would be. And then you will see it elsewhere.”

Mortgage broker Samantha Brookes agreed with the observation, saying that more than 90% of her business since November has been lining up funding from non-bank and private sources, or shadow banks, versus a 50-50 mix previously.

“People aren’t going to stop buying, they’ll just find different ways of doing it,” Brookes said.

For the government, it may be a case of careful what you wish for. Anxious to prevent a repeat of the kind of taxpayer-funded bank bailouts that occurred in the U.S. after its housing crash a decade ago, the federal government has been moving to reduce its exposure to the mortgage-insurance market.

Rules last year added a stress test for insured loans backed by the government. That sent more buyers to the uninsured space, where a 20% down payment is required. As of January 1, these borrowers will also need to qualify at a rate two percentage points higher than their offered rate, a move which could lower mortgage creation by as much as 15%, Canada’s bank regulator has said.

The rules, along with other measures such as a foreign-purchase tax, have had an initial bite, with Toronto house prices falling 8.8% from May to November and the average price of a home posting the first annual drop since 2009. Vancouver prices have reclaimed new heights after cooling earlier this year.

But the risks to the financial system haven’t gone away. In the uninsured space, mortgages are increasingly going to highly indebted households and for amortizations for longer than 25 years, the central bank said. And like Brookes’s clients drowning in house debt, more borrowers are turning to lenders whose activities fall outside federal regulatory scope.

These include credit unions and mortgage-investment corporations, pools of money from individual shareholders, which aren’t subject to the new rules, Tal said. Credit unions hold about 17% of uninsured mortgages, according to the Bank of Canada.

Copyright © 2018 Key Media Pty Ltd

Ephraim Vecina
Canadian Real Estate Wealth

A recent study from Engel & Völkers has found that Vancouver plays host to Canada’s highest-priced luxury properties, mirroring trends in the city’s mid-range residential as well as commercial segments.

The main motivator for this development is limited inventory, according to the Engel & Völkers analysis, which covered 6 leading luxury markets in the period January to September 2017.

“The residential property market in Canada’s major cities and second home markets is enjoying a high level of demand, both nationally and internationally,” the report stated. “Specifically in the luxury segment, there is a clear surplus in demand in many places that is resulting in a significant rise in prices.”

“The most expensive neighbourhood in [Vancouver] is Shaughnessy, with its mix of historic and modern buildings. Asking prices for detached homes reached $35.8 million in the first three quarters of 2017. This marks the highest price registered out of all the markets analysed,” Engel & Völkers said in its report, adding that the asking price for freehold condominiums in Vancouver’s most desired locations has reached $1,800 per square foot.

Foreign nationals comprise a majority of buyers in the city’s luxury property market, representing 85% of transactions in the period covered by the study.

“Chinese citizens make up the largest buyer group here, followed by French and German buyers. Real estate in East Vancouver is witnessing an upward trend at the moment, with millennials particularly keen to secure small-scale lofts in the area,” according to the report.
 
“2018 will continue to see strong growth in the luxury condo segment,” the study concluded. “There’s a shift in luxury consumer demand from traditional design features to modernist aesthetics that prioritize clean lines, quality materials and smart-home technology… Entrepreneurs, developers and a new segment of affluent residents are starting to move into Vancouver’s downtown East Side at an accelerated rate.”

Copyright © 2018 Key Media Pty Ltd

2018 commercial property values will rise up to 20 per cent higher than last year’s 30 per cent increase

Tanya Commisso
Western Investor

Property owners across Greater Vancouver can expect 2018 assessment notices reflecting a 5 to 50 per cent increase on last year’s values, according to BC Assessment. 

BC Assessment announced January 2 has mailed its 2018 residential and commercial property assessments, reflecting market values as of July 1, 2017. 

“Overall, the Greater Vancouver region’s total assessments increased from $825.2 billion in 2017 to $907.1 billion this year,” a press release states. “A total of almost $13.2 billion of the region’s updated assessments is from new construction, subdivisions and rezoning of properties.”

The press release estimates commercial real estate values in urban areas of Greater Vancouver have rose anywhere between 5 and 50 per cent, while rural areas saw a more modest change of -5 per cent to 20 per cent. 

Fraser Valley commercial property values have an expected increase in value of between 5 to 35 per cent. Thompson Okanagan region values have increased between 0 to 25 per cent, while Kooteney Columbia property values have changed anywhere between -5 and 15 per cent. Vancouver Island commercial will see an increase of between 0 and 20 per cent. 

Northern B.C. posted the slightest property value change: between 0 to 10 per cent increase in both rural and urban area. 

Light industrial properties in urban areas of Greater Vancouver have increased up to 45 per cent, while rural industrial properties have an estimated increase of up to 10 per cent. Fraser Valley industrial values in both urban and rural areas have risen between 5 and 30 per cent. 

Property owners can expect to receive their assessments within the next few days. 2018 property taxes will be based on these assessment values. Owners can dispute assessment values by submitting a Notice of Complaint by January 31. 

Copyright © 2018 Western Investor