Canadian Real Estate Wealth

Toronto and Vancouver’s real estate markets have responded to surging prices and a growing demand for homes with a supply of new housing that is “significantly weaker than other Canadian metropolitan areas.”

The disparity between supply and demand has been largest in the two cities, but “we do not fully know why this is the case,” said the Canadian Mortgage and Housing Corporation, in a report it released Wednesday on escalating house prices in the country’s large metropolitan centres between 2010 and 2016.

Data gaps are keeping CMHC from developing a full picture of why Montreal, Calgary, and Edmonton don’t have as big of an inconsistency between supply and demand as Toronto and Vancouver do, but CMHC’s deputy chief economist Aled ab Iorwerth said he has noticed Calgary and Edmonton responding to demand with “horizontal sprawl.”

As for Montreal, he said “they already have a large rental sector, there is perhaps an acceptance of living in denser housing there and they seem to be more ready to convert industrial land into housing.”

Helping housing supply catch up to demand in any of the country’s major cities will involve combating urban sprawl and increasing densification, while dealing with affordability, infrastructure and environmental issues, said CMHC’s report.

It also noted that a lack of supply in Vancouver and Toronto had buyers gravitating towards condos — which were more plentiful and have seen a spike in investor demand — as well as high-end homes. Almost all the growth that CMHC saw in prices came from expensive, single-detached homes.

“While Toronto and Vancouver showed large and persistent increases in prices, there was only modest price growth in Montreal,” the report said. “Home prices in oil-dependent Calgary and Edmonton ended the period slightly higher.”

Between 2010 and 2016, CMHC found house prices jumped by 40% in Toronto, with 40% of that rise attributable to growth in jobs, population, disposable income and previously low mortgage rates.

Those factors contributed to 75% of the 48% increase Vancouver saw in the same time frame.

Understanding major Canadian markets posed a “persistent challenge” for CMHC because of the impact many realtors and economists believe foreign investors are having on the market.

CMHC has previously said 52% of the buyers who purchased a home recently in Toronto or Vancouver believe foreign buyers are having an influence on home prices in those centres.

The latest data from Statistics Canada shows 4.9% of Vancouver residential properties are owned by non-residents and 3.4% of Toronto residential properties are owned by non-residents.

CMHC said, “Even though official data on non-resident owners appears low, it is possible that the perceived impact of their presence could alter expectations of domestic homebuyers on the price they should pay to secure the purchase of a home.”

Copyright © 2018 Key Media Pty Ltd

Paolo Taruc
REP

Vancouver has logged a total of 183,911 declarations for its empty home tax for 2017, the city government announced on Wednesday. The number accounts for nearly all (98.85%) property owners in the coastal city.

There were 8,481 unoccupied or underutilised properties in 2017, most of which were condominiums (60.6%). Single-family residential properties accounted for 33.55% and multi-family/other properties for 5.95%.

The neighbourhoods of West End (735) and Shaughnessy (213) tied for the highest percentage of unoccupied or underutilised properties at 8% each.

The government introduced the measure last year as it sought to boost rental supply and encourage proper use of housing. The declaration deadline was originally set for 2 February, but was later pushed to 5 March.

“Vancouver housing needs to be for homes first, not just treated as a commodity,” said Mayor Gregor Robertson. “We brought in an Empty Homes Tax because Vancouver has a near-zero vacancy rate and many people are struggling to find a place to rent.

Those who failed to declare will have their properties deemed vacant and will be subject to the tax at a rate of 1% of the property’s 2017 assessed taxable value. The owners will also be fined $250 for the non-declaration.

Copyright © 2018 Key Media Pty Ltd

Ephraim Vecina
Canadian Real Estate Wealth

Latest data from international property listing portal Juwai.com showed that in 2017, Canada continued to be a favoured property investment destination for Chinese home buyers despite higher foreign buyer taxes in B.C. and Ontario.

In the first half of 2017, Chinese buyer interest in Canadian real estate grew 30% year-over-year.

“While some Chinese buyers gravitated towards the U.S. — especially nearby Seattle — Chinese demand for Canada held steady over the past 12 months, likely thanks to its top-notch education and lifestyle appeal,” the Juwai report stated.

According to the same Juwai data, Canada was the third most-viewed country for Chinese investors buying foreign properties, after the U.S. and Australia.

By metropolitan market, Toronto had the most views in Juwai’s catalogue in 2017, defying expectations that the introduction of a 15% non-resident speculation in the Greater Golden Horseshoe region will lead to lower Chinese interest.

Vancouver was the second-most viewed, followed by Montreal and Calgary.

And despite the spectre of further interest rate hikes along with a new national mortgage stress test that came into effect on January 1, Juwai noted that overseas investors are expected to continue gravitating towards Canadian real estate.

“After all, with home prices predicted to cool significantly this year due to this combo of stricter mortgage rules and raised interest rates, aspiring homebuyers who have been sitting on the sidelines could possibly be tempted to get back into the fray, including the Chinese,” the report explained.

Copyright © 2018 Key Media Pty Ltd

Canadian Real Estate Wealth

The Bank of Canada kept its key interest rate target on hold as it pointed to a climate of broadening, important unknowns around trade.

In explaining its decision to maintain its benchmark rate at 1.25 per cent, the central bank notes that recent trade policy developments are a key source of uncertainty for the Canadian and global outlooks.

U.S. President Donald Trump recently added threats of steel and aluminum tariffs to an already uncertain context for Canada that includes concerns over NAFTA’s renegotiation and competitiveness following tax-cut announcements south of the border.

The Bank of Canada notes fourth-quarter growth was weaker than expected, largely due to higher imports, and that it’s still assessing impacts on housing markets from new policies, including mortgage rules.

But it says global growth continues to be solid and broad-based, the economy is running near capacity, inflation is close to target and wage growth has improved, although still remains below where many expect it should be.

Governor Stephen Poloz was widely expected to hold off moving the rate because of weaker economic numbers in recent weeks and the expanding trade uncertainty.

Poloz has introduced three rate hikes since last summer, including an increase in January. The moves came in response to an impressive economic run for Canada that began in late 2016.

In the statement Wednesday, the bank reiterated it expects more hikes to be necessary over time, but that the governing council will remain cautious when considering future decisions.

They will continue to be guided by incoming data, such as the economy’s sensitivity to higher rates, the evolution of economic capacity and changes to wage growth and inflation, it said.

Copyright © 2018 Key Media Pty Ltd

Joannah Connolly
Vancouver Courier

Following the extended deadline for Vancouver’s Empty Homes Tax ending March 5, the owners of nearly 99 per cent of the city’s homes filed declarations, the City of Vancouver announced March 7.

There were 183,911 property status declarations submitted, out of the stated 186,043 homes in the city.

Of the total number of homes, 177,562 – or 95.6 per cent – were declared as occupied (either a principal residence or long-term tenanted).

Another 6,349 were declared as unoccupied or under-used residential properties. However, that number includes all homes that are exempt from the tax – such as properties undergoing renovation or redevelopment, the title was transferred during the year, or the owner was in a hospital, or a long-term or care facility. When asked how many of homes were declared, the City of Vancouver told the Courier, “The number of exempt declarations will not be confirmed until audits have been conducted and complaints for 2017 have been submitted. These specific declaration numbers will be released, along with the revenue raised by the tax, in an Annual Report… in fall of 2018.”

The 2,132 residential properties in the city that remain undeclared are deemed empty and will be subject to the tax, as well as an additional $250 fine for non-declaration.

Empty and deemed-empty properties will be sent a tax bill in mid-March with payment due by April 16. The bill is one per cent of the home’s assessed value as of July 2017.

Most of the 8,481 empty, underused or undeclared properties are condos, at 60.6 per cent. Single-family homes made up 33.5 per cent of this figure and other properties 5.9 per cent.

The City also issued a map showing the density of empty homes per neighbourhood. The largest number of unoccupied or underused homes was in Downtown Vancouver, but this was not the highest percentage because of the large number of homes in the area. The West End and Shaughnessy recorded the highest percentages of unoccupied, underused or undeclared properties, both more than 8 per cent of the total homes in the neighbourhood.

Mayor Gregor Robertson said, “Vancouver housing needs to be for homes first, not just treated as a commodity. We brought in an Empty Homes Tax because Vancouver has a near-zero vacancy rate and many people are struggling to find a place to rent. Thank you to the 183,911 Vancouver homeowners who submitted their declarations on time.”

Glacier Community Media © Copyright ® 2013 – 2018

Over 2,100 undeclared empty homes face tax

Stephanie Ip
The Vancouver Sun

More than 2,000 residential properties went undeclared, have been deemed unoccupied and will be taxed under Vancouver’s empty homes tax.

Assuming that each property is worth about $1 million — many of them are condos — that would raise about $21 million in tax revenue for the city.

The city had extended its declaration deadline to March 5, to allow homeowners extra time to declare whether their property was occupied or unoccupied during 2017.

According to the results provided on Wednesday, a total of 183,911 property status declarations were submitted, representing more than 98 per cent of the city’s homeowners.

Of those, a total of 177,562 were occupied either by an owner or a tenant. A total of 6,349 were either declared vacant by the owner or claimed an exemption — and many of them could also end up being taxed. The city did not indicate how many of those would end up being subject to the tax and did not offer a breakdown of the two categories. 

The 2,132 homes that were undeclared and deemed vacant will be issued a tax bill this month, with a payment deadline of April 16. Homes that were declared vacant will also be issued a tax bill.

The empty homes tax is one per cent of the property’s assessed taxable value.

“Specific declaration numbers, such as the number of exempt or vacant declarations, are subject to change as the Empty Homes Tax audit program progresses,” according to a statement from the city.

“The number of exempt declarations, therefore, will not be confirmed until audits have been conducted and complaints for 2017 have been submitted. These specific declaration numbers will be released, along with the revenue raised by the tax, in an Annual Report to Council which will be distributed in fall of 2018.”

Of the nearly 8,500 homes that were declared vacant, condos accounted for 60.6 per cent while single-family homes made up 33.5 per cent. Multi-family properties and other types of housing accounted for just 5.9 per cent.

The city will now conduct audits to verify declarations. Those who receive a vacancy tax bill and believe they are being incorrectly taxed can file a notice of complaint with the city to have their case reviewed.

The city is expected to provide figures on how much tax is raised through the empty homes tax in the fall.

© 2018 Postmedia Network Inc.

Mark Weisleder
REM

We were all horrified to learn that a serial killer in Toronto was allegedly a landscaper who disposed of human body parts in planters at properties and may have buried remains in the gardens of homes he worked at. One of the owners said they would not sell their property because they still love their home. A key issue to me is, will the sellers have to disclose this gruesome discovery should they decide to sell their home in the future? Here are five lessons to remember when it comes to property stigmas.

1. Murders or suicides will affect a home’s value.

Most appraisers will tell you that if home has had a murder or suicide in it, it will likely affect the home’s market value, whether it occurred in the past year or even up to 20 years earlier. People still disclose what occurred many years ago when selling the old Paul Bernardo home in St. Catharines, Ont., even though the home where the murders took place was demolished and a new home built. Interestingly, it is also noted that stigmas such as these do not “travel”, meaning that it should not affect the other homes on the same street.

2. Does a murder or suicide in a home need to be disclosed by a seller?

Although the law is evolving, sellers do not have to disclose whether there has been a murder or suicide on the property or adjoining property or whether a pedophile lives on the same street.

In an interesting case a few years ago in Bracebridge, Ont., buyers refused to move in when they learned that the neighbour across the street had been convicted of possessing child pornography. The buyers sued the sellers for not disclosing this. In a preliminary motion, the sellers tried to have the case dismissed because there was no precedent for this to be disclosed. Judge Alexandra Hoy decided to let the case proceed and said, the “buyers’ claim is novel. It raises policy issues regarding the protection of children and the effect this may have on the re-integration of people convicted of certain crimes into society.”

The buyers later sold the property and did not move in and the case settled, so we do not know how a judge might have ruled. In my opinion, the garden pot body-part sellers would not have to disclose this when selling their home.

3. Does a real estate agent need to disclose a murder or a suicide if they know about it?

A real estate agent needs to tell the truth if they are asked a question. They should thus discuss this issue with any seller and get explicit instructions, preferably from the seller’s lawyer, as to how they should respond to any inquiry about these subjects. Agents should remember that sellers who tell them not to disclose something that the seller knows will devalue their property should already be treated as suspicious.

4. What about a haunted house? Does this need to be disclosed?

While most people would laugh at this, there was actually a case in New York in 1990 on this point. Helen Ackley claimed that her home in the town of Nyack, N.Y., was haunted. For a decade between 1977 and 1987 she was in the news off and on, describing paranormal incidents in her house including such things as the bed being shaken each morning by a poltergeist. Her notoriety was such that Reader’s Digest paid her $3,000 for an article, Our Haunted House on the Hudson, which was published in May 1977.

In 1990, she sold the home but did not mention anything to do with the paranormal to the buyer. The buyer sued when he later found out. The judge found that since Ackley had spoken and even made money off claims her house was haunted, she should have disclosed it. This case occurred around the time of the movie Ghostbusters. One of the judges hearing the case said, “Who you gonna call” if you find out. In my opinion, this does not have to be disclosed.

5. How can a buyer protect themselves?

In the Greater Toronto Area, we have more languages spoken and more cultures and communities than anywhere in the world. No matter what the law says, these kinds of stigmas are going to affect people. As such, buyers should Google the property address they are interested in to see if any murder, suicide or other stigma was reported. Visit the neighbours and ask about the house you are interested in and consider putting a clause right in the offer whereby the seller represents and warrants that to the best of their knowledge, there has been no murder or suicide on the property. Sellers must respond truthfully to this statement and can be sued later if they lie.

© 2017 REM Real Estate Magazine

Vancouver rental development offers energy-conscious living

Ephraim Vecina
Canadian Real Estate Wealth

Spire Development has announced its new 95-unit energy-friendly apartment, slated for Fall of 2018 in Fraser Street, Vancouver.

Spire Landing is expected to be Canada’s largest multi-unit Passive House development to date.

“[Passive House technology] came to be by exploring the construction of old European castles, which have very thick stone walls. In the summer, the interior is quite cool compared to the outside temperature. While in the winter, the interior is pleasantly warm, as heat is retained by the thick exterior walls,” Spire Development co-founder Lawrence Green explained.

And despite the cost of Passive House construction being more expensive than using traditional methods, “the final product is much superior in terms of air quality, noise reduction, and carbon footprint. With the City’s support, we now have the perfect opportunity to revolutionize the rental experience for Vancouverites, especially given our current housing crunch,” co-founder Pete Rackow added.

Copyright © 2018 Key Media Pty Ltd