BCREA shows a 16.8 per cent decrease from April last year

BCREA

The British Columbia Real Estate Association (BCREA) reports that a total of 8,203 residential unit sales were recorded by the Multiple Listing Service® (MLS®) across the province in April, a 16.8 per cent decrease from the same month last year. The average MLS® residential pricein BC was $730,507, up 0.2 per cent from the previous year. Total sales dollar volume was $5.99 billion, a 16.7 per cent decline from April 2017. 

“BC home sales were essentially unchanged in April compared to March, albeit up nearly 1 per cent on a seasonally adjusted basis,” said Cameron Muir, BCREA’s Chief Economist. “The impact of more burdensome mortgage qualifications for conventional borrowers is expected to soften over the next several months as potential buyers adjust both their finances and expectations.” 

The supply of homes for sale in April increased 4 per cent from the previous month. However, total active listings on the market continue to remain low from a historical perspective. Most regions of the province have begun trending toward more balance between supply and demand, causing less upward pressure on home prices. 

Year-to-date, BC residential sales dollar volume was down 6.7per cent to $19.9 billion, compared with the same period in 2017. Residential unit sales decreased 11.8 per cent to 27,135 units, while the average MLS® residential price was up 5.7 per cent to $731,661.

Copyright ©2018 BCREA

Eocomists say home resales will be weaker in 2018

Steve Randall
Canadian Real Estate Wealth

The national rate of home price appreciation has averaged more than 10% in the past 2 years but that’s set to change significantly.

In its latest housing market forecast, RBC Economics predicts a rise in home prices of just 1.8% for 2018 as policy actions and interest rates conspire to cool the market.

Economists are also expecting that home resales will be weaker in 2018 than 2017 (down 4.5% following a 4.3% drop in 2017) making the second year of annual declines, something not seen in Canada since the mid-90s.

But while price appreciation is to soften, RBC Economics does not see a significant correction nationwide; this risk, it says, is contained.

Supply-demand balance is expected to be seen in most major markets including Ontario and British Columbia, with steady support coming from economic fundamentals.

The mortgage stress test’s long-term impact
The tighter lending rules created by the new mortgage stress tests introduced by OSFI at the start of 2018 “will ultimately dampen homebuyer demand in Canada” RBC Economics senior economist Robert Hogue believes.

He adds in the report that the stress test will impact homebuyers’ budgets leading to growth for the lower-priced housing types at the expense of pricier units. This, he notes, is already being seen in Toronto and Vancouver and is expected to extend to other cities.

Interest rates will also continue to impact the market, with four more hikes forecast through to mid-2019 taking the rate to 2.25%. Hogue says that this will start to have more pronounced impact later in 2018.

Healthy correction
Overall, the RBC Economics’ forecast is for Canada’s housing market to face significant headwinds in 2018 but that the easing of markets represents a “healthy correction” over the past two years from 2016’s “unsustainably strong” conditions.

Copyright © 2018 Key Media Pty Ltd

other

Real Estate BC Announcement

Our real estate brokerage industry in the province of British Columbia is being forced into a regime of regulation that in general terms will have far reaching effects. Much of which is causing a great amount of uncertainty with all licensees.

The Regional office has been and will continue to voice concerns with the BC Real Estate Council, the Office of the Superintendent of Real Estate, all MLAs, the Finance Minister and the Premier of BC. However, it will require the direct involvement of all licensees to ensure a logical solution is applied to ensure British Columbia consumers receive the protection they justly deserve.

One method beyond individual activism is in the establishment of a group to ensure a single vision is communicated. Naturally BCREA as our provincial association has a leadership role in the lobbying of government bureaucrats and policy makers. In addition, the Real Estate Brokers Association (REBA) can be an effective voice. Given those two existing organizations a group of like minded brokers and agents have formed the Real Estate Alliance of BC to also provide a voice and lobbying effort to ensure government and regulator hear the concerns of all licensees, as well as consumers concerns about the new regulatory regime.

Real Estate Alliance of BC (REAL BC) is a grassroots movement of REALTORS® from BC that was formed to advocate on behalf of real estate practitioners, consumers and the communities in which they live. Their members live, work and contribute to communities throughout BC. They intend to ensure that our collective voices are heard while we engage government on the significance and consequences of the public policy changes proposed in the months ahead. They’ve allocated significant time & resources, on behalf of REALTORS® and the thousands of consumers you represent. They’ve heard the grave concerns from within the profession of the impacts and unintended consequences the elimination of dual agency, recusal and other changes will cause.

Well it’s action time…

They want and need our support. The more members they can gather, the stronger the voice, which will be imperative moving forward. REAL BC has conducted professional polling research, contacted all BC MLAs and are planning to launch a media campaign to help ensure the message is heard. The objective will be to secure a commitment from Government to amend, review or delay the proposed changes until the best interest of consumers in BC is achieved and ensure the right to individual choice is preserved, unintended consequences are avoided and BC home buyers and sellers can continue to engage their REALTOR® as an informed and empowered participant.

This is a personal request to all RE/MAX REALTORS® to make sure you become a member. You can sign up on the home page of their website: www.therealbc.ca (There is no cost to becoming a member and it takes under a minute to join), we are also asking you to enlist the help of your office staff, colleagues, friends, relatives and clients who understand the issue and care about being shown the respect to make their own choices. Their submission to the Superintendent is at https://therealbc.ca/wp-content/uploads/2018/04/REAL-BC-Submission-to-the-OSRE-April-20-2018.pdf

Members will be provided with updates, engagement opportunities, and resources to help in the advocacy efforts, for those who wish to actively participate.

We thank you in advance for your commitment & showing your support as we advocate on behalf of the public and our profession and ask you to please join the Real Estate Alliance of BC today!

For more information please visit the website www.therealbc.ca or contact either Charlie Parker at [email protected] or Ian Thompson at [email protected].

Two beautifully outfitted display homes showcase the possibilities at Solterra?s Bordeaux

Kathleen Freimond
The Vancouver Sun

Bordeaux

Project address: 4488 Juneau Street (corner Willingdon Avenue)

Project City: Burnaby

Developer: Solterra Group of Companies

Architect: GBL Architects

Interior designer: Solterra Group of Companies

Project size: 140 one-, two- and three-bedroom homes in a 23-storey building

Unit size: 457 square feet to 2,424 square feet

Construction: Completion 2021

Sales centre: 4247 Lougheed Hwy, Burnaby

Sales centre hours: By appointment

Phone: 604-294-8989

Website: bordeauxliving.ca

While the world-famous wine region in south-western France is the inspiration behind the name Bordeaux, Solterra Group of Companies’ planned residential highrise in Burnaby, the developer’s creative team also took its cues from iconic French designers Pierre Balmain, Madeleine Vionnet and Olivia Putman.

The one- and two-bedroom apartments in the 23-storey building slated for the site at 4488 Juneau Street (corner Willingdon Avenue) will have either the Pierre (black and light-oak) or Olivia (warm grey) colour palettes, while the Madeleine scheme (blue grey and brushed gold) is exclusive to the two- and-three-bedroom “private collection” residences, mostly above the 17th level.

GBL Architects designed the concrete-and-glass tower in the burgeoning Brentwood neighbourhood, close to restaurants, shopping, schools, transit and major transportation routes.

The development will comprise 140 one-, two- and three-bedroom homes ranging in size from 457 square feet for the one-bedrooms to 2,424 square feet for the three-bedroom apartments.

GBL Architects’ Cian McGarvey says Bordeaux is being planned on a 37,029-square-foot site.

“The tower was conceived to have two contrasting massing expressions with the upper levels having a more vertical expression, which is emphasized up the side of the building to the lobby entrance, and the typical floors having a more horizontal expression,” he says.

McGarvey adds that “the relationship with the street level is particularly strong in this project.”

“The activated Willingdon façade that houses the amenity portion of the building,responds appropriately to the dynamic, transportation-focused Willingdon Street, while the entrance lobby is strategically located at the focal point at the corner of Willingdon and Juneau Street. The slower-paced Juneau Street is fronted with townhomes,” he says.

In another nod to one of the most celebrated wine regions in the world, a fritted glass architectural detail on the exterior of the building will be a plum/burgundy colour.

“Taking our cue from that, our interior designer also incorporated this colour in the lobby with a rich wall covering and used it as an accent colour throughout the other common spaces,” says Laura Rizzo, Solterra Group’s vice-president of marketing.

Along with the double-height lobby with a grand three-sided fireplace, Bordeaux’s 19,000 square feet of amenities will include a gym and yoga studio, a social lounge with gourmet kitchen and dining table plus a big screen TV and seating area. Outside, the rooftop podium with a courtyard garden, barbecue area, community garden plots and a children’s play area will be popular with residents looking to enjoy the outdoors.

Scheduled for completion in 2021, Bordeaux is currently in preview with two show suites at the presentation centre at 4247 Lougheed Highway in Burnaby.

The one-bedroom suite features the Pierre colour scheme, while the two-bedroom apartment is finished in the tones and materials from the Olivia palette.

Bold contrasts define the one-bedroom show suite. The black upper cabinets in the kitchen contrast against the light oak lower cabinets and the white quartz countertops. The generous 34-by-51-inch island provides plenty of storage space and hosts a slide-out dining table for two. When the meal is over, the table easily slides back into the island freeing up space in the living area.

Another innovative space-planning feature is the sliding frosted glass panel bedroom door that can be closed or left open to enhance the feeling of spaciousness in the unit.

There’s plenty of design drama in the bathroom where black marble-look 12-by-24-inch floor tiles are a standout against the over-sized 30-by-10-inch white and grey marble-look porcelain wall tiles while the polished chrome rain shower head and faucets add some sparkle.

In the two-bedroom home showcasing the Olivia palette, the grey quartz countertops and matching single-slab backsplash complement the sleek design of the kitchen that features dual tone Italian cabinetry.

The upper cabinets doors are a horizontal wood grain laminate while the lower cabinets have a high-gloss finish. All doors and drawers feature soft close hardware and the upper cabinet doors easily fold up to facilitate access to the storage space. Under cabinet lighting will provide ambient and task lighting.

This kitchen also features an innovative dining table that folds out from the island when in use – and when not needed, nestles against the 72-by-27-inch island to free up space in the living area.

Major appliances in the kitchen include an Italian-designed Fulgor Milano five-burner gas cooktop and 30-inch wall oven and the refrigerator and freezer drawers and the dishwasher are integrated to enhance the sleek design of the kitchen, says Jade Kwok, Solterra’s vice-president of interior design.

In the ensuite bathroom, the large framed mirror alongside the medicine cabinet contributes to the spa-like ambience, while a 36-inch-wide trough sink set in the high-gloss floating vanity adds a style injection.

All homes in Bordeaux will have air conditioning, out-of-suite storage, at least one parking stall and optional electric car charging stalls will be available.

The homes are also equipped for the latest technology with high-capacity CA-5 wiring to maximize internet and digital entertainment and there are conveniently located USB outlets in the bedrooms.

© 2018 Postmedia Network Inc.

Despite recent market softening, prices for condos, townhomes and houses for sale in Toronto remain exorbitantly expensive

Penelope Graham
REM

The plight of the millennial Toronto home buyer has been a turbulent one; for this generation, the search for the perfect abode has been defined by downsized expectations, sky-high prices and steep competition. While some chalk up millennial financial misfortune to spendthrift lifestyles and expensive taste, the fact is, according to Statistics Canada, two-thirds of Canadians within this age group still live within the family home.

Despite recent market softening, prices for condos, townhomes and houses for sale in Toronto remain exorbitantly expensive, presenting a hurdle to homeownership. According to the latest numbers from the Toronto Real Estate Board, the average home in the 416 fetched an average of $804,642. That’s factoring in a 12.4-per-cent year-over-year drop yet is still outside the realm of affordability for many.

However, long-term market observers can be less than sympathetic. Today’s home buyer enjoys some of the lowest borrowing costs in history, they point out, and earnings that are certainly higher than their ’80s counterparts. Boomers had to contend with interest rates in the high teens, after all, while Generation X faced a recession and dwindling employment prospects.

So, which generation has had the toughest time in Toronto’s housing market? To find out, Zoocasa did the math, assessing how the average home price, wage growth, rate of inflation and debt-servicing costs have changed. Check out how affordability has evolved over the decades in this infographic.

The numbers paint a revealing picture. While the cost of borrowing was indeed in the high teens throughout the ’80s and ’90s, the relationship between median income and average home prices far outstrip any savings resulting from lower mortgage rates.

For starters, there’s the sheer increase in home prices over a 30-year period; in 1980, the average home could be had for $101,626, according to TREB numbers. Factoring in the era’s average mortgage rate of 12.8 per cent, and assuming a five-per-cent down payment and 25-year amortization, the average monthly mortgage payment in 1980 would be $1,698. That rose by a mere $79 (4.6 per cent) over the course of the next decade, with the average carrying cost hitting $1,777 in 1990. By the new millennium, that number had increased by $379 (21.3 per cent) to $2,156, before jumping $1,459 – a whopping 67 per cent – to $3,615 today.

Mortgage carrying costs have also more than doubled that of wage growth over the same period. According to Statistics Canada 2016 Canadian Census numbers, the median household income grew just 33 per cent from the 1980s to the 2010s, from $58,700 to $78,280.

Perhaps most telling is the proportion of debt mortgages now account for in the typical household expenditure. The average debt-to-income ratio, which can be used to determine how much debt is owed in relation to what is earned, has spiked alongside home prices. In 1980, mortgage-specific debt accounted for 32 per cent of this ratio. This increased marginally to 35 per cent in the ’90s, and to 38 per cent in the 2000s. However, following 2010, this ratio shoots up to 59 per cent, a strong indicator that debt loads have bloomed alongside home prices.

To put this in perspective, industry studies find a ratio over 49 per cent signals a struggle to pay down mortgage payments.

© 2017 REM Real Estate Magazine

Luxury homes sales down, prices up

Steve Randall
Canadian Real Estate Wealth

Canada’s luxury homes market is brushing off the headwinds of changes to housing and mortgage lending policies that have been introduced over the past year.

Most Canadian housing markets are showing rising values at the top end, despite falling sales in the Greater Vancouver and Greater Toronto areas.

An analysis by real estate brokerage Royal Le Page has found that the new mortgage stress test rules; and the taxes on foreign buyers, and BC’s additional property transfer and schools taxes for $3m+ homes; have dented sales.

But prices have held up well.

“Home prices in Canada’s luxury real estate market have remained remarkably resilient when you consider the economic headwinds that serial government interventions have created,” said Phil Soper, president and CEO, Royal LePage. “The resilience of home values reflects the strong aspirations of luxury buyers to reside and work in cities that are consistently ranked among the most desirable on the planet.”

These home types are the best performers
In Greater Vancouver and Greater Toronto, it is the luxury condo market that is showing the largest increase in value; median condo prices gained 7% year-over-year in Greater Vancouver during the first four months of 2018; in the GTA these homes gained 10.4%

Luxury condos also saw gains in the Greater Montreal Area (3.9%) and Ottawa (4.0%) while Calgary posted the only decline (6.1%).

For the detached sector, there were gains for the Greater Montreal Area (9.1%), Ottawa (6.3%) and Greater Vancouver (5.2%). Detached home values in Calgary (0.6%) and the Greater Toronto Area (-0.2%) remained flat.

“Somewhat unusual in historical terms, and reflecting an important demographic shift happening across North America, appreciation in the luxury condominium market is outpacing the traditional target for large value residential property investment, the detached house,” said Soper. “Baby Boomers are finally exiting their large family homes, and luxury condos, with their low maintenance lifestyles, are the favoured destination.

What’s ahead over the next year?
Royal Le Page sees continued growth for luxury real estate theough to spring 2019, with Calgary the laggard.

When broken out by region, the median price of a luxury condominium in the GTA is forecast to post the largest price gain, rising 8.0% to $1,847,194 in the first four months of 2019 when compared to the same period in 2018.

Luxury condos in both Ottawa and the Greater Montreal Area are forecast to increase 3.0% over the next year.

Calgary is the only city surveyed that is expected to see the median price of a luxury condominium dip in spring 2019 when compared to 2018, decreasing 4.0% year-over-year.

For detached luxury homes, Greater Vancouver is forecast to decline in the first four months of 2019 by 3% year-over-year to $5,619,153, while properties in this segment in the GTA are estimated to remain flat (0.0%) over the same period.

The Greater Montreal Area and Ottawa are both forecast to increase 5% year-over-year, and detached luxury homes in Calgary are expected to rise 2% during the same period.

Copyright © 2018 Key Media Pty Ltd

Luxury home prices have dropped

Canadian Real Estate Wealth

The party’s over for now for those sitting on Vancouver’s most expensive properties.

Prices at the top end of the market plunged 7.6% in the six months to March, making it the world’s second-worst performer during that period, according to the latest global survey of prime properties by Knight Frank. Only Stockholm did worse, falling 9%, while Toronto rose 6% and the top gainer was Seoul.

The findings – based on the top 5% of the housing market in each city – lend support to anecdotal evidence of a slowdown in Vancouver’s luxury segment after the hike of a tax on foreign buyers to 20% from 15% in February, the introduction of a speculation tax, and rising interest rates.

Vancouver Mayor Gregor Robertson called the decline “a necessary step” to restoring stability in the local housing market.

“We welcome a more stable period now,” he said in an interview at Bloomberg News headquarters in New York Tuesday. “There’s some concern if values drop and impact homeowners’ equity, but the gains have been so massive for so many years that some softening was to be expected.”

The Pacific Coast city’s slower rate of growth is likely the outcome of British Columbia province’s “macro prudential measures” and the rising borrowing costs for investors, Kate Everett-Allen, Knight Frank’s head of international residential research, said in an emailed response to questions. In Vancouver, the study looked at properties starting at about $3.5m, she said.

Just two years earlier, Vancouver had topped global rankings in the same survey after surging 26% over a 12-month period and before the provincial government first imposed a foreign buyers’ tax in August 2016.

At the height of the market, foreign money had flowed mostly into the million-dollar-plus segment of detached homes, according to Adil Dinani, a realtor with Royal LePage, a unit of Brookfield Real Estate Services Inc.

“Those capital flows have shifted now,” Dinani said. “It’s actually refreshing – you have some time to breathe, to negotiate like a regular transaction.” 

Copyright Bloomberg News

Copyright © 2018 Key Media Pty Ltd

Another blow for borrowers

Steve Randall
REP

An important number that affects the ability of millions of Canadians to qualify for a mortgage has changed.

The Bank of Canada has raised its conventional five-year mortgage rate from 5.14% to 5.34%.

The rate is the one used for stress tests under the B-20 mortgage lending guideline so any borrower with less than a 20% down payment seeking mortgage insurance must be able to afford payments.

For those who do not require mortgage insurance, the rate is one of the two stress test benchmarks used, the other being the contractual mortgage rate plus two percentage points.

The Canadian Press says that the rate increase coincides with an estimated 47% of mortgages that are due for refinancing in 2018, based on a CIBC Capital Markets report.

The big five banks have also recently increased their 5-year FRM rates. When Toronto Dominion increased its rate is was called the “biggest move in years”.

Copyright © 2018 Key Media Pty Ltd

Another blow for borrowers

Armina Ligaya
REP

The bar is now higher for homebuyers to qualify for mortgages in Canada after the central bank raised a key metric used in stress tests that determine borrowers’ eligibility.

The Bank of Canada raised the conventional five-year mortgage rate from 5.14 per cent to 5.34 per cent after all Big Six banks raised their posted five-year fixed mortgage rates in recent weeks.

The central bank qualifying rate is separate from the actual mortgage rates offered by banks to borrowers, but is used to assess homebuyers who are seeking loans.

Homebuyers with less than a 20 per cent down payment seeking an insured mortgage must qualify at the central bank’s benchmark five-year mortgage rate.

And as of Jan. 1, buyers who don’t need mortgage insurance are required to prove they can handle payments at a qualifying rate of the greater of the central bank’s five-year benchmark rate or two percentage points higher than the contractual mortgage rate.

“Mortgage borrowers will be qualifying for less than they were able to earlier this year,” mortgage broker Samantha Brookes said in an email. “With all the new rule changes, we’ve definitely noticed the effect on the market with home purchases, renewals and refinances.”

The higher rates come as an estimated 47 per cent of all existing mortgages will need to be refinanced in 2018, up from the 25 to 35 per cent range in a typical year, according to a recent CIBC Capital Markets report.

The increase is an unintended consequence of various rounds of regulatory changes in the past few years aimed at reducing risk coupled with rising house prices that made it harder for homebuyers to qualify.

Borrowers who find the bar too high for the home they want can make some adjustments in order to make a purchase, she said. Those options include purchasing a smaller home and taking on less mortgage, or purchasing where prices are lower, added Brookes, who is founder of Mortgages of Canada.

The jump in the mortgage qualifying rate comes after Canada’s largest lenders raised their benchmark posted five-year fixed mortgage rates in recent weeks as the cost of borrowing rises.

In late April, TD Bank was the first of the Big Five lenders to raise the benchmark rate, increasing it from 5.14 per cent to 5.59 per cent, due to factors including the “competitive landscape, the cost of lending and managing risk.” Royal Bank of Canada, Canadian Imperial Bank of Commerce, National Bank of Canada, Bank of Montreal and the Bank of Nova Scotia followed suit, but with smaller increases.

The slew of bank moves was preceded by a rise in government bond yields. The yield on the Government of Canada benchmark five-year bond was 2.16 per cent on Tuesday, compared to 1.01 per cent a year earlier. Fixed-rate mortgages tend to move with government bond yields of a similar term, reflecting the change in borrowing costs. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd