Sales volume below 10 year average

Ephraim Vecina
Canadian Real Estate Wealth

The latest numbers from the Real Estate Board of Greater Vancouver showed that sales volume now stood considerably below the 10-year average – but those who are anticipating a subsequent increase in the availability of affordable homes in the market are bound to be disappointed.

The REBGV data also pointed at the fact that the most significant price declines over the past half year were concentrated to the most expensive neighbourhoods, most notably the West Side of Vancouver and West Vancouver (both with decreases of around 4%).

This is because the lower end of the market is disproportionately affected by the current regulatory regime and the ever-increasing interest rates, according to REBGV president Phil Moore.

As an example, Moore stated that a couple with an annual income of $120,000 is limited by the stress test to homes valued at up to $750,000 only. This is roughly the price range of Vancouver’s already highly desired apartments and townhouses.

 “First time buyers are so frustrated,” Moore told CBC News, adding that the scarcity of affordable homes in the immigrant-rich region is exacerbating the problem.

“The selection of homes for sale in Metro Vancouver has risen to the highest levels we’ve seen in the last two years, yet supply is still below our long-term historical averages.”

B.C. Real Estate Association chief economist Cameron Muir noted that cooling is expected more in the upper end, considering the impact of the new school tax and the added property transfer tax in successful transactions involving multi-million-dollar homes.

“Only 3% cent of homes sell for over $3 million,” Muir stated as a reason for the muted effect of the new tax on the mid- and lower-end housing markets.

Copyright © 2018 Key Media Pty Ltd

Display space at 1555 West Eighth uses colourful artwork and bright fabrics to give the look of a well-loved home

Mary Frances Hill
The Province

1555 West Eighth, Vancouver

Project Address: 1555 West 8^th Ave., Vancouver. Fifteen of the 20 completed homes in two concrete buildings of four and eight storeys were pre-sold with the remaining five now offered for sale

Residence sizes and prices: 20 three-bedroom homes ranging from1,682 and 1,855 sq. ft., from $2.74 million

Developer and builder: Kenstone Properties

Sales Centre: 1555 West 8^th Ave.

Hours: By appointment only

Sales phone: 604-828-3998

At the 1555 West Eighth residential project, a display space is more than a display space: it takes on the look of a lived-in home.

Lived-in, that is, in the best sense of the word.

Where many designers might furnish an open-concept dining and living room in light neutrals and an accent colour, the team behind 1555 West Eighth holds nothing back, as far as luxurious colour, texture and taste are concerned. The Kenstone Properties’ space will no doubt appeal to any buyer with a penchant for contemporary art and design and a worldly outlook, thanks to the addition of bold artwork from a local artist, a velvet chaise from Paris and a Corbusier wood and cane bench crafted in India, among other pieces.

“It was important to us that the space showcased an accumulation of objects over time, so we approached the staging like an art collection across time and place,” says Kenstone director Edwin Liang. McFarlane Biggar was the project architect and designer.

“Our buyers are well-travelled design aficionados, so we wanted our interior decorating to reflect their lifestyle. If you entered our display home and felt like you were entering somebody’s home, then we think we have accomplished our job,” Liang adds.

The bold, large-scale abstract artwork is a hand-dyeing and stitching of vintage fabrics, an original creation by local artist Colleen Heslin. It’s a standout in the room, perpendicular to a large expanse of a wall papered in a delicate Chinoiserie pattern.

“We wanted the focus to be on Colleen’s work with her large swaths of colour and movement. It needed to be a big gesture to anchor all the individual collectibles on display, and we think we achieve this by having the colours and the geometric strong lines of the space personified in this artwork.”

While not every homeowner may be able to decorate with finds from international travels, Liang suggests that anyone can mimic the sensual look by setting hard edges of some furnishings against other pieces defined by gentler curves.

Contemporary chairs at the kitchen island and in the living space have curved backs, while the round side tables, nesting tables and dining table set softness against the harder angles of the full-length mirror large windows and white sofa.

“Having too many straight angular lines can make spaces feel too minimal and unapproachable,” Liang says. “Our structured and boxy white sofa is complemented by the pillowy softness of our velvet chaise, the round rosewood coffee table, and the round Tom Dixon floor lamp.”

Liang also notes that the buildings boast a high exterior-to-interior building ratio. This allows for a generous amount of exterior perimeter around every home, so homeowners can optimize the building’s natural light and ventilation. No homeowner will share a wall with a neighbour, he says.

“There will be no unwanted sight lines and plenty of wall space for bookshelves, TVs and artwork.”

© 2018 Postmedia Network Inc.

Consumer indebtedness a concern for BoC

Craig Wong
Canadian Real Estate Wealth

OTTAWA _ Canada’s housing market and high levels of consumer indebtedness remain the top vulnerabilities for the financial system, but both have shown signs of easing, according to the Bank of Canada.

The central bank said in a report Thursday that worries about the amount Canadians owe have begun to pull back, but it remains a concern.

“Because the total amount of debt carried by Canadian households is so large, we know that it will be with us for a long time,” Bank of Canada governor Stephen Poloz told a news conference.

The assessment came in the Bank of Canada’s latest financial system review, which assesses key vulnerabilities that could amplify or propagate economic shocks.

Key risks associated with the vulnerabilities include a severe recession, a house price correction in overheated markets and a sharp spike in long-term interest rates.

Federal mortgage lending rules have been tightening in recent years with the application of stress tests on borrowers. New rules implemented at the start of this year introduced a test for borrowers who do not require mortgage insurance and had not previously been subject to stress testing.

The central bank said it will monitor the extent to which borrowers seek out alternative lenders, such as credit unions and private lenders, who are not always subject to the federal rules.

“It’s still too soon to fully assess the impact of the newest changes to mortgage lending guidelines,” said Poloz, who added the bank is scrutinizing the housing and mortgage data as it becomes available.

The tighter lending rules, and higher mortgage rates from lenders, have helped to cool the housing market in recent months from its red-hot pace it set at the start of last year.

The central bank has raised its key interest rate three times since last summer and it is expected to raise it again later this year, perhaps as soon as July. The increases have prompted the big Canadian banks to raise their prime rates which are used to set the rates charged for variable-rate mortgages and other floating-rate loans. The cost of new fixed-rate mortgages has also climbed in recent months as bond yields have risen.

In assessing the housing market risk, the report noted that housing price growth has slowed, led by a drop in the Greater Toronto Area. However, it said the condominium markets in Toronto and Vancouver remain strong with some evidence of speculative activity.

In addition to household debt and the housing market, the report also identified cyberattacks as a key area of concern.

“Even as defensive capacity improves across the financial system, some attacks will inevitability succeed,” the report said. “Having strong recovery plans can help to quickly restore financial system functioning and prevent a loss in confidence.”

Last week, two of Canada’s biggest banks warned that personal and financial information of up to 90,000 customers may have been accessed by “faudsters.”

The Bank of Canada report comes as fears of a trade war have increased with the U.S. implementing new tariffs on steel and aluminum imports and Canada replying with its own tariffs on U.S. goods.

Poloz said the impact of the tariffs will be part of the Bank of Canada’s next monetary policy report, but added that the overall economic backdrop has improved over the past six months and that’s good for the financial stability.

The Bank of Canada also announced Thursday that it will no longer publish its financial system review report twice a year.

The report will become an annual review published in June and a member of the bank’s governing council will make a speech in the fall to update its assessment of the vulnerabilities and risks to the financial system.

It will also create a new financial system hub on its website that will publish research and analysis throughout the year.

The Bank of Canada’s quarterly monetary policy report will also include a more in-depth discussion of the relevant issues as warranted. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

By October recreational homes in BC expected to drop 2.8 per cent

Canadian Real Estate Wealth

British Columbia’s new speculation tax on out-of-province buyers will likely convince a wave of owners to sell their vacation properties, pushing down home prices, said a forecast from Royal LePage.

By the end of September, the real estate company is expecting the average price of a recreational home in B.C. to reach $531,333, a 2.8 per cent drop from last year’s average of $546,444.

Under B.C.’s speculation regulations, owners outside the province will be taxed 0.5 per cent this year, but next year will see the rate climb to 2 per cent for foreign investors and 1 per cent for Canadian citizens and permanent residents not living in B.C. but owning properties in the province.

Royal LePage concluded the tax would spark a price dip in B.C.’s recreational housing sector after surveying 200 real estate advisors who specialize in such properties between May 15 and June 1.

About 55 per cent of B.C. respondents said they think the tax will “weaken momentum within the region and keep sales activity from reaching its true potential,” while 40 per cent thought it would impact prices.

Royal LePage chief executive Phil Soper said the tax has already weakened demand for B.C. vacation homes from Albertans, which he considers “the biggest buying cohort outside of the province.”

“You’d think with a strong economy and so much availability, you would see a stronger recreational property market in B.C., but it has been balanced by the recent regulations,” he said.

He and his company also predicted a 0.9 per cent dip in recreational home prices in Manitoba and a 7.5 per cent fall in prices in Atlantic Canada, bringing the average price in the region to $228,754.

Soper said he attributes Manitoba’s expected decrease to an increase in supply, but said he expects it to be a “short-term blip” because Winnipeg has been one of the most stable recreational markets over the last few years.

He said Atlantic Canada’s predicted drop stems from a lot of young graduates _ a group that tends to buy homes more fervently _ moving out of the province and a boom in people choosing to renovate instead of move.

The country as a whole was expected to fare much better, said Soper and Royal LePage, which is forecasting a 5.8 per cent increase in national recreational home prices. That would bring the average up to $467,764 from $442,239 previously.

Ontario and Alberta could also experience sharp spikes in recreational pricing.

Royal LePage said Ontario recreational home prices will average $535,885, up 10.4 per cent from last year, while Alberta’s will hit $770,100, a 8.9 per cent increase.

Alberta, said Soper, will benefit from an “exodus” of people looking away from B.C. for recreational properties and will see price increases because of improved employment opportunities and strong oil prices that drive activity in the market.

He said that Ontario’s recreational market will be driven by large numbers of people moving into the province and by an expected decrease in inventory levels and an increase in sales activity.

Plus, he said Gen Xers and retiring Baby Boomers, who are increasingly turning to recreational properties as “a reasonable alternative” to their current homes, will also spark a price hike in the market. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

Vancouver property Tax half that of Toronto

Ephraim Vecina
REP

With Vancouver having the lowest property tax rates nationwide, it’s high time for the provincial government to impose higher real estate taxes to offset outsized price growth, according to a markets observer.

In a recent thought piece for the Vancouver Sun, CCPA-BC public finance policy analyst Alex Hemingway noted that not even the recently implemented provincial school tax on high-end properties worth over $3 million is sufficient to offset the negative effects of the currently lax regime.

“The annual residential property tax rate in Vancouver — including municipal, regional and provincial portions — is a quarter of 1% of assessed value. That’s less than half the rate in Toronto and the eight other major Canadian cities compared in a recent report by Altus Group. Rates in Vancouver suburbs are also lower than in these cities,” Hemingway wrote.

“In concrete terms, property taxes on a $1-million property in Toronto were approximately $4,673 in 2017, while in Vancouver they were $2,555. After you factor in B.C.’s generous Home Owner Grant, the bill in Vancouver falls to $1,985.”

An expanded tax is an untapped war chest that the provincial government is still sitting on, Hemingway argued.

“With additional revenue, the city or province could budget for the creation of hundreds or even thousands of new social and co-op housing units each year. Adding more affordable units would put downward pressure on the price of other units in the broader market,” the economist stated.

More importantly, such a tax would lead to “a mix of additional government revenue and lower property prices because the increased carrying cost would make real estate a less attractive investment, decreasing demand. These are both desirable outcomes and would ensure a larger share of the ‘land wealth rush’ is captured for the public good, something that hasn’t happened to date in Vancouver.”

To soften the blow to the market that such a tax expansion would inflict, Hemingway suggested implementation by gradations.

“Property tax rates should be structured progressively so that those at the highest end of the market pay the highest rate as the Canadian Centre for Policy Alternatives has recommended,” he explained. “The additional provincial school tax on properties over $3 million is an important step in this direction, but the B.C. government should also allow cities to use progressive rate structures as the City of Vancouver has requested.”

Copyright © 2018 Key Media Pty Ltd

Inventory up and sales are down

Steve Randall
Canadian Real Estate Wealth

Homebuyers in the Fraser Valley region are able to shop for their dream home a little more comfortably as inventory rises.

But the increased choice comes as sales continue to decline with Fraser Valley Real Estate Board reporting a 35.1% decrease in May compared to a year earlier.

There were 1,758 sales processed through the board’s MLS system, up 2.9% from April. More than half of sales were townhouses (417) or apartments (516).

There were 6,736 homes available to buy last month, up 18.9% from April and up 29.5% from May 2017.

“This is the most inventory we’ve had in over two years,” said John Barbisan, Board President. “Now that the pace of our market has begun to settle, we’re seeing more opportunities for buyers and less pressure to make fast decisions.”

Listings increased by 3,965, a 15.6% increase from April and up 6.8% compared to May 2017.

Price growth remains strong
Homes continued to increase in value, hampering affordability for would-be buyers.

The benchmark price for a single family detached home increased 1.1% month-over-month and 11.6% year-over-year.

For townhomes, the $555,500 benchmark was 1% up from April 2018, and 20.6% above that of May 2017.

At $452,900, the benchmark price for apartments/condos increased 1.2% month-over-month and 42.4% year-over-year.

Copyright © 2018 Key Media Pty Ltd

Real estate market continues to cool in GTA and Vancouver

other

680 NEWS senior business editor Mike Eppel with the day’s top business headlines.

© 1996-2018 Rogers Media.

Home sales across Greater Vancouver slow down in May

Stephanie Ip
The Province

If you like having options, now’s the time to browse some real estate.

Home sales in May across Greater Vancouver dropped by 35.1 per cent compared to the same period last year, according to the latest figures from the Real Estate Board of Greater Vancouver. While sales have dropped, the number of homes for sale remains high.

“With fewer homes selling today compared to recent years, the number of homes available for sale is rising,” said Phil Moore, president of the REBGV.

“The selection of homes for sale in Metro Vancouver has risen to the highest levels we’ve seen in the last two years, yet supply is still below our long-term historical averages.”

A total of 2,833 homes were sold in May 2018, compared to 2,579 in April 2018 – a 9.8 per cent increase – and 4,364 in May 2017 – a 35.1 per cent decrease. Last month’s sales were also 19.3 per cent below the 10-year May sales average.

Meanwhile, the number of homes being listed continues to grow.

Last month, there were 6,375 properties newly listed for sale, a 5.5 per cent increase compared to the same period last year and 9.5 per cent increase compared to April 2018.

According to analysts, home prices begin to fall when the sales-to-active listings ratio falls below 12 per cent for a sustained period; prices tend to increase when that ratio surpasses 20 per cent over several months.

For May 2018, the sales-to-active listings ratio is 25.1 per cent. When broken down into property types, the ratio is 14.7 for detached homes, 30.8 per cent for townhomes and 41.7 per cent for condominiums.

The benchmark price for a detached home is currently $1.6 million, a 2.4 per cent increase from May 2017 and 0.1 per cent increase from April 2018. Meanwhile, the benchmark price for an apartment is $701,700; the benchmark price for an attached property is $859,500.

© 2018 Postmedia Network Inc.

Metro Vancouver sales down from last year

REP

Home sales across Metro Vancouver tumbled last month, when compared with May 2017 and the Real Estate Board of Greater Vancouver says that raises the potential of lower prices for some types of homes.

The board says 2,833 properties sold in its region in May, a 35.1 per cent plunge from sales recorded in the same time last year, although May’s sales were up nearly 10 per cent over transactions in April.

A news release from the real estate board says sales in May were 19.3 per cent below the 10-year average for the month.

Board president Phil Moore says low sales and a nearly 10 per cent jump in the number of newly listed properties between April and May has pushed selection to its highest level in two years.

Moore says supply is still below the 10-year average but when the total number of single detached home sales is divided by total listings for that type of property, the ratio is 14.7, nearing the indicator where downward pressure on prices can occur.

The sales-to-active listings ratios for townhomes and condominiums are higher, at 30.8 per cent for townhomes and 41.7 per cent for condominiums, well above the 20 per cent mark that the board says can trigger upward pressure on prices.

“For home sellers to be successful in today’s market, it’s important to price your property competitively given the shifting dynamics we’re experiencing,” Moore says in the release.

The composite benchmark price for all residential properties in Metro Vancouver is $1,094,000, an 11.5 per cent increase over May 2017.

Sales of detached properties across Metro Vancouver fell 40.2 per cent in May, compared with May 2017, while the benchmark price was set at $1,608,000, a 2.4 per cent increase year-over-year.

Sales of condominiums and townhomes also dropped last month when compared with the year before, down 29.3 per cent for condos and 39.8 per cent for townhomes.

The benchmark price for condos was up 20 per cent to $701,700 and townhomes jumped 16 per cent to $859,500 over the same period, but the board says price increases for both types of properties have remained under one per cent since April. 

The Canadian Press