New housing construction to contract this year – report

Ephraim Vecina
Mortgage Broker News

In a new report released earlier this week, The Conference Board of Canada predicted that housing starts will decline by 2.9% in 2018, a development that will be spurred by considerable drops of 4.3% in Toronto and 6.5% in Vancouver.

The report also forecast that as homeowners become more cautious under new mortgage rules and rate hikes, real expenditures on new housing will slow down to 3.4% this year, from 5.8% in 2017. This will further decrease by 3.0% in 2019.

“Spending on new housing and renovations will likely slow this year as Canadians become more cautious under new mortgage rules and interest rate increases. This will put downward pressure on new residential construction,” according to Michael Burt, Director of Industrial Economic Trends, The Conference Board of Canada.

Residential segment pre-tax profits are expected to drop to $4.2 billion in 2018, although it will recover some strength in subsequent years.

On the other hand, non-residential construction will experience a modest turnaround in 2018 after 2 years of contractions. Growth in this segment is projected to be at 1.9% this year, amid an increase of 15% in the value of new non-residential building permits in 2017 (reaching $35 billion).

“However, business investment levels are expected to remain below their 2014 peaks, which will lower growth opportunities for non-residential construction going forward,” Burt warned.

“Growth in e-commerce continues to drive demand for more warehouse space. In combination with several new mining projects and planned plant expansions, this will support growth in the industrial segment,” the Board’s report explained.

“Meanwhile, the institutional segment will be supported by federal government infrastructure spending on new community centres and recreation facilities. Additionally, provincial infrastructure spending on schools and hospitals will continue to support the industry.”

Industry pre-tax profits are expected to grow by 8.0% to reach $2.3 billion this year, and then rise at an annual rate of around 6% over the next 4 years.

Copyright © 2018 Key Media

Albertans carry the heaviest debt loads

Neil Sharma
Mortgage Broker News

In light of RBC reporting claiming Alberta will be hit hardest by rising interest rates, not everybody believes the sky will fall.

“Our research shows that Albertans would see the biggest increase in debt-service payments in Canada—more than $1,200 a year, on average—if interest rates rose by one percentage point,” reads the report. “Households in B.C. and Ontario are also more indebted than the national average, but Albertans carry the heaviest debt loads.”

But Croft Axsen, owner of DLC Jencor Mortgage Corporation disputes the impact, believing that, on a granular level, the increase is insignificant.

“They’re suggesting that the total debt in Alberta is higher but it amounts to $16 a month, and I’m not sure $16 a month is worthy of the headline,” said Axsen. “The other thing about the report is it deals with total debt and it doesn’t bring up income at all.”

He does concede, however, that unemployment in Alberta is higher than in other provinces, but furthermore adds that, compared to Ontario and British Columbia, RBC’s estimates aren’t off by much.

“When you look at the actual difference in the yearly debt payments, it’s $200 a year between Alberta, B.C. and Ontario,” said Axsen. “I recognize house prices have been rising significantly more in Toronto and Vancouver, so there’s a bigger asset cushion, but they’re not really talking about that. They’re talking about the debt load and how horrific an $8 difference between B.C. and Alberta, and a $16 month difference between Alberta and Ontario, is, and somehow that’s a devastating number.”

He added that mortgage arrears ratios aren’t higher in Alberta than most other provinces.

Alberta’s economy is in recovery and rate hikes could impede progress. Axsen believes the federal government has an opportunity to ameliorate the province’s fortunes by building oil pipelines.

“The overall economic activity is difficult but the bigger problem is the federal government’s regulatory policy is reducing mortgage liquidity so people who want to turn 16% charge card debt into 3% mortgage debt can’t, and I’m not sure what the logic behind that is,” he said. “I’m not sure how preventing people from buying houses helps the economy in general. I understand the fear of bubbles in our two major cities, but house prices in Calgary haven’t really changed much in the last six or seven years.”

Copyright © 2018 Key Media

Neil Sharma
Canadian Real Estate Wealth

While still a novel idea, selling properties for Bitcoin is being touted as a way to reach more international buyers, many of whom are constrained by caps on capital outflow.

Derryn Shrosbree, who last month sold a Mississauga condo for Bitcoin—the first transaction of its kind in Canada—is at it again, this time selling a 2,550-square foot single-family detached home in Halifax. He has four more properties he intends to flip for Bitcoin over the next few months.

According to his Halifax-based sales agent, Shrosbree has opened himself up to a larger pool of buyers, as evidenced by his Mississauga condo selling in four business days.

“Some people think we’re limiting our market, but we’re broadening our market because we find that, in Canada, there are a lot of foreign investors, or prospective ones, but they can’t get their money out of the country easily,” said Angie Bryant of Bryant Realty Atlantic. “So this gives them another opportunity to purchase real estate in Halifax.”

Shrosbree’s Toronto-based agent Brett Starke looked for a forward-thinking sales agent in Halifax and found Bryant, who said she jumped at the opportunity to become involved with such a unique opportunity. However, listing the transaction for Bitcoin hasn’t been without its hiccups.
The Nova Scotia Association of Realtors took down the listing, even though it had been approved by the Nova Scotia Real Estate Commission, which has authority over the former. The property is listed for $495,000, but the Bitocin price is updated daily (it’s listed at 58Bitocin at the time of this writing).

Shrosbree and Bryant aren’t taking a confrontational approach, though.

“We’re in the business of changing things for the better, and it’s not like we haven’t done this before—we’re not novices,” Shrosbree told CREW. “Everyone including the CRA and FSCO knows about it. The commission said we were allowed to list it. You’re allowed to sell real estate for anything—sparkling water, lemons, gold bars—and the federal government says that when you sell real estate, the seller can choose anything.

“We’re trying to educate the real estate board. Everyone gets paid, taxes get paid, and federally it’s legal. Realtors are a little scared, but it’s the way of the future, and it’s a good thing. Selling for cryptocurrency is a good thing because it opens up a new buyer’s market, specifically for people looking to liquidate a cryptocurrency into a hard asset, whether it’s real estate, cars or whatever it may be. We proved it legally in Ontario and now we’re trying to show in Halifax how it’s done.”

Copyright © 2018 Key Media Pty Ltd

Neil Sharma
REP

Over the last few years, walk, transit, and even bike, scores have influenced real estate values, but another online platform is proving even more impactful.

MarketScore is a tool that determines property values by using complex algorithms. Whether users are looking to buy, sell or rent, by entering an address, square footage, postal code and price, a property’s value will instantly be provided.

In addition to proffering consumers with arguably the most accurate valuation on the market, MarketScore has proven useful among real estate sales agents. Kevin Gaston owned 10 Propertyguys.com franchises and used MarketScore religiously.

And in a market like Toronto’s, where sales have slowed and uncertainty has crept, Gaston says it’s become even more expedient.

“Right now in Toronto, it’s very difficult for people to put a price on their home,” he said. “There’s been a 40% decrease in home sales [year-over-year in March, according to TREB], and that’s a big part of the reason people’s homes aren’t worth what they were three years ago. Being able to look at your home in a different light, as opposed to just pricing in a good or bad neighbourhood, that’s what MarketScore does.

“It’s going to be really, really important in the future of real estate in Toronto, especially with mortgage rates going up again.”

As with most things technological, MarketScore’s users skew younger. According to the company’s chairman, one reason MarketScore has grown in popularity among millennial-aged users—especially those living in Toronto—is because buyer fatigue has set it.

“These buyers are tired of being out-bid and have given up—they look at the price of a home, servicing it and say ‘To hell with it,’” said Roman Fedchyshyn. “In any market, what’s useful to me is when I’m looking at a number of properties and I’m doing a comparison and where they’re priced, I can use this score to get an objective review. At MarketScore, we don’t care if you’re buying or not; we don’t make money on the sale, so we’re not biased in any way, shape or form. We’ll give you a lot of information on a whole lot of data we’ve accumulated and say this property is fairly priced, or a little low, or a little high.”

As markets like Toronto’s experience major swings, determining market value for properties can sometimes be a guessing game. Gaston says that doesn’t have to be the case.

“I used it for my buyers,” he said. “When I was with PropertyGuys, I used it thousands of times.”

Copyright © 2018 Key Media Pty Ltd

March home sales slide in Toronto, Vancouver

Tiffany Crawford
The Vancouver Sun

Home sales were down nearly 30 per cent in March in Metro Vancouver, as the region marked its lowest first-quarter sales volume in five years.

The Real Estate Board of Greater Vancouver says home sales in the region totalled 2,517 in March 2018, a 29.7-per-cent decrease from the 3,579 sales recorded in the same month last year.

The board says last month’s sales were 23 per cent below the 10-year March sales average.

Vancouver home sales also slid over the first quarter, with the board reporting a 13.1-per-cent decrease over the first three months of 2018, compared with the same period last year.

Board president Phil Moore says this represents the region’s lowest first-quarter sales total since 2013.

“We saw less demand from buyers and fewer homes listed for sale in our region in the first quarter of the year,” he said in a statement Wednesday.

Moore cited high prices, new tax announcements, rising interest rates and stricter mortgage requirements among the factors affecting home buyer and seller activity.

New listings were also down in March. The board says there were 4,450 detached, attached and apartment properties for sale in Metro Vancouver last month, a 6.6 per cent decrease compared to the 4,762 homes listed in March 2017.

“Even with lower demand, upward pressure on prices will continue as long as the supply of homes for sale remains low,” said Moore, adding that inventory, particularly in the condo and townhome segments, of homes for sale remains “well below historical norms.”

The composite benchmark price for all residential properties in Metro Vancouver is currently $1,084,000, a 16.1 per cent increase over March 2017 and a 1.1 per cent increase compared to February 2018.

Sales of detached properties in March 2018 reached 722, a decrease of 37 per cent from the 1,150 detached sales recorded in the same month last year. The benchmark price for detached properties is $1,608,500, a 7.4 per cent year over year increase.

Condo sales and townhouses were also down in March 26.7 and 24.1 per cent, respectively.

The benchmark price of an apartment property is $693,500, a 26.2 per cent increase from March 2017, while the average price of a townhouse increased 17.7 per cent to $835,300.

© 2018 Postmedia Network Inc.

Lower Mainland condo prices may soon hit a peak

Joanne Lee-Young
The Vancouver Sun

Prices for condos are on a tear across the Lower Mainland but there are signs of an emerging peak at the top end of the market.

The $1 million figure has earned a place in Vancouver real estate vernacular for being when observers give up on any semblance of prices being affordable. It’s been mostly reserved for describing detached homes, but that’s changing.

A few weeks ago, an analysis by David Taylor, senior vice-president at Colliers International, of inventory on the Multiple Listing Service put the median asking price of apartments and condos in the City of Vancouver at $962,500, popping eyeballs for how close that comes to the $1 million mark.

This week, condo sale prices from the Real Estate Board of Greater Vancouver show a strong upswing. The price for what the board considers a typical condo rose 26 per cent in Great Vancouver in March 2018, compared to a year ago. The Lower Mainland as a whole clocked in with a 30 per cent gain. There were even higher increases in some communities. In Maple Ridge, a typical condo sold for $316,100 in March, a gain of 46 per cent gain in one year and 83 per cent in the three years.

And to be clear, these numbers are for resales of existing condos, not presales of units that haven’t yet been built.

In Burnaby, a condo near Government Road recently sold for $526,500, according to Sutton Group West Coast Realty agent Solomon Yasin. It’s a two-bedroom, one-and-a-half bathroom unit built in the 1990s that would have gone for about $350,000 to $400,000 two years ago, he estimates.

“There were seven offers on it. When you have a lot of multiple offers, after the sale you have six other buyers waiting and wanting to buy, and the backlog keeps adding up,” he says. “Buildings that allow rentals, like this one, bring out a pool of investors too, which means more buyers.”
So, why have prices continued to climb?

“Essentially, it proves that supply is an issue even in resales (of condos),” says Michael Ferreira of Vancouver-based Urban Analytics, which provides data about new condos for developers, planners and bankers. “Listings are still down and we’re in a situation here where people are not forced to sell, so they’re going to hold on.”

When it comes to presales, which are not captured in the real estate board’s statistics and are not subject to the foreign-buyers tax, the price gains have been significant too, according to Ferreira. Between 2015 and 2017, the per square foot presale condo price went up by 57 per cent in Burnaby, by 60 per cent in Port Coquitlam, by 61 per cent in Richmond and by 66 per cent in Surrey. Recently, Ferreira updated these figures to include presales made in 2018, showing the price increases for Burnaby and the west side of Vancouver are  between 70 and 80 per cent.

Ferreira says it will be interesting to see if there will be an easing of prices in areas such as the Burquitlam / North Road corridor and Brentwood in Burnaby, where several new projects will hit the market.

Ferreira says it’s still early days in terms of seeing how the more recently unveiled set of taxes (including a widened foreign-buyers tax and a surtax on higher value properties) will impact the condo market, but he says the speculation tax on empty or lightly-used properties will not address the speculation linked to prices gains in presale condos. “True speculation is when buyers assign a unit (to another buyer for a higher price) before it’s even completed and the deal isn’t closed.”
Despite a feeling of ever rising price gains, there are signs that some buyers are reaching “a cause for pause when looking at some of the prices,” especially at the top end of the market, says Ferreira.

According to independent March figures produced by SnapStats Publishing Company, the average condo price in West Vancouver dropped 33 per cent in the past two months from $1.492 million to $938,000. 

It’s a sign that while clamouring will continue and prices will keep rising for buyers of condos in the $700,000 to $800,000 range and lower, more established, savvy buyers could be starting to step back.

“The average prices of condos in downtown Vancouver dropped from $950,000 to $840,000 in the last two months because of the change in high end condo prices,” says Ian Watt of Sotheby’s International Realty.

© 2018 Postmedia Network Inc.

Landmark on Robson towers designed with natural settings in mind

Mary Frances Hill
The Province

Landmark on Robson

What: At total of 237 suites in two concrete highrise towers of 34 and 32 storeys joined by a podium that houses the amenities, with views of Coal Harbour and English Bay
Where: 1400 Robson Street

Residence sizes and prices: One-bedroom and flex: 584 – 597 sq.ft.; two-bedroom and flex: 1,028 – 1,115 sq. ft.; three-bedroom and flex: 1,576 – 1,623 sq. ft., including balconies that measure a minimum of 182 square feet. Prices upon request.

Developer and builder: ASNA Robson Landmark Holdings Ltd.

Sales centre address: 740 Nicola Street

Centre hours: By appointment only

Telephone: 604-566-2288

Enjoying the fresh outdoor air usually involves leaving home altogether. But at the Landmark on Robson towers planned for the site of the now-closed Empire Landmark Hotel in the West End, homeowners will be able to walk from indoors to out without ever leaving the comfort of their living space.

The transition from each condominium’s living room to the balcony is built so smoothly it feels like an extension of the indoor space and is just one example of the minimalist, ‘barely-there’ approach to design that is a hallmark of Koichiro Ikebuchi, the renowned principal of Atelier Ikebuchi.

Under warm wood balcony ceilings and the shelter from the spacious balcony above, homeowners will be able to enjoy 270-degree views of the city and mountains.

 “We think that the connection with the outdoors is a very important element for interior design,” says Ikebuchi, who is based in Singapore. Atelier Ikebuchi’s hotel, retail and restaurant design work is recognized worldwide for its restraint and elegance, characteristics that define the interiors of ASNA Robson Landmark Holdings’ planned towers.

Ikebuchi says there are no guidelines for choosing decor that’s suitable for either indoors or out. Rather, he focuses on sensual experiences for the homeowner.

“There is no rule, because each lifestyle is uniquely individual. The important thing is how you want to enjoy the fresh air. [Feeling] the air and the wind directly is the real enjoyment here.”

Ikebuchi is accustomed to working in spectacular settings in luxury residences, commercial spaces and hotels in Singapore, Bangkok, Hong Kong, the Maldives and Bali, to name a few. Since the interior designer launched Atelier Ikebuchi in 2004, he’s been known and respected worldwide for his precision and artistry, his Japanese-design influence and architectural training. He is devoted to neutrals and accents inspired by natural settings that surround each project: for the Uma Ubud hotel in Bali, for instance, he used the aged wood from that area. In Vancouver, his respect for surroundings extends to his embrace of the view.

“The materials are as important as the beautiful design. We choose carefully the quality of natural materials mainly because they give a real quality to the space [that will last] for the long term.

“We believe that high end doesn’t necessarily means high cost,” he continues. “It’s more of high quality and high sense. We understand that the quality is materialized from paying close attention to the detailing and material selection.”

© 2018 Postmedia Network Inc

Numbers for Toronto?s luxury market released

Jacqueline Thorpe
REP

The high-end of Toronto’s housing market is bearing the brunt of declines from last year’s dizzying growth, with prices falling and unit sales slumping by almost half.

Sales of detached homes in and around Canada’s biggest city fell 46 percent in March from the same month a year ago, while the average price fell 17 percent to C$1.01 million ($786,871), according to data released Wednesday by the Toronto Real Estate Board. That dragged down the average selling prices for all housing types by 14 percent from a year earlier to C$784,558, the biggest drop since 1991.

“Detached home sales, which generally represent the highest price points in a given area, declined much more than other home types,” the board said in its monthly report. “In addition, the share of high-end detached homes selling for over C$2 million in March 2018 was half of what was reported in March 2017, further impacting the average selling price.”

Still, prices continued their stabilization of the past few months as home owners get ready for the traditionally hectic spring season. Benchmark prices rose 1.2 percent in March from February, including a 1.1 percent gain for detached homes and a 1.8 percent increase in condos. Average prices also rose month on month.

Benchmark prices fell 1.5 percent year-over-year, the first decline since 2009, led by a 6.7 percent drop for detached homes. Benchmark prices compare essentially the same set of houses from one period to the next, removing distortions from big swings in one category or another.

Sales for the market as a whole, including condos, townhouses, and semi-detached homes, fell 40 percent to 7,228 units in March from a year ago but were up from February. That’s the lowest sales figure for March since 2009.

Canada’s biggest housing market has been adjusting to new rules that make it harder for buyers to qualify for a mortgage, curbs on foreign purchases and rising interest rates. Federal and provincial governments have been gradually tightening market conditions to tame prices that skyrocketed last year.

“Right now, when we are comparing home prices, we are comparing two starkly different periods of time: last year, when we had less than a month of inventory versus this year with inventory levels ranging between two and three months,” Jason Mercer, director of market analysis, said in the report. “It makes sense that we haven’t seen prices climb back to last year’s peak.”

The second half of the year should see the annual rate of price growth improve as sales increase relative to the below-average level of listings, Mercer said.

New listings fell 12 percent to 14,866 from March 2017 and were down 3 percent compared to the average for the previous 10 years.

Copyright Bloomberg News

Copyright © 2018 Key Media Pty Ltd

Negative aspects of new housing policies in BC

Kerrisa Wilson
other

The implementation of new housing policies in BC aimed at cooling skyrocketing prices could spell trouble for households and the economy.

In fact,  a relatively minor 10 per cent dip in prices could mean an average home equity loss of $70,000 for households, according to a new report by the British Columbia Real Estate Association (BCREA), published today.

“While some may see this as a paper loss, it will have a significant impact on the economy, as declining household wealth reins in consumer spending,” reads the report.

BCREA’s report highlights what impact a 10 per cent, 20 per cent and 35 per cent decline in home prices will have on British Columbians and the economy, including higher unemployment rates and fewer housing starts. The data was collected based on simulations using BCREA’s econometric model of the BC economy.

After a housing shock, in the first year following home price declines of 20 per cent and 35 per cent, BC households would lose an average of $140,000 and $245,000 in equity, respectively.

Along with a drop in equity, a negative home price shock could slow growth across BC’s economy.

A year following a 10 per cent drop in home prices, a total of 26,000 jobs would be forfeited, resulting in the unemployment rate rising to 6 per cent from the baseline of 4.9 per cent. Meantime, the economy would lose over $3 billion and real GDP growth would fall to 1.5 per cent from 2.7 per cent.

If home prices were to experience a further decline of 35 per cent, the economy would face even more worrisome declines.

Within a year, 64,000 jobs would be lost causing the unemployment rate to climb to 7.5 per cent. In addition, the economy would lose over $8 billion and real GDP growth would plummet into negative territory at -0.5 per cent.

“If home prices fell 35 per cent, a level some activists are championing, the BC economy would collapse into recession,” reads the report.

BCREA says a negative shock to home prices would also cause home construction activity to plummet. A 10 per cent home price shock would result in 10,000 fewer housing starts while drops of 20 per cent and 35 per cent would result in 14,000 and 19,000 fewer starts, respectively.

“A negative price shock would markedly slow the expansion of the housing stock, creating even more critical housing supply problems down the road,” reads the report.

© 2017 BuzzBuzzHome Corp.