Lower sales higher inventory for next two years

Neil Sharma
Mortgage Broker News

The Canada Mortgage and Housing Corporation forecasts a balanced market in the GTA through 2020, with fewer sales expected because of rising interest rates.

“As much as sales are going to come down slightly, we’ll see house price growth be more or less in line with inflation, not the double-digit kind we were accustomed to a few months ago,” said CMHC’s Manager of Market Analysis (Toronto) Dana Senagama. “We’ll likely see higher price growth in the downtown cores of some major GTA areas, like Toronto, Markham and Mississauga, where there are higher concentrations of condominiums.”

Resales will also dip through the end of 2020, added Senagama, due to rising mortgage rates.

The region’s low-rise housing market is forecasted to see a downturn primarily because of land scarcity. However, in suburban areas, like Peel, Durham and York Regions, there will be higher concentrations of single-family detached sales and listings, and that will slow price appreciation.

“There’s not enough serviceable land out there for low-rise homes for singles and townhomes,” said Senagama. “The vast majority of units under construction—about 55,000 of 71,000 units—are high-rise, and that means there are only a finite number of resources, both in terms of machinery and skilled labour. That’s going to affect delivery; the logistics won’t allow it.

“In terms of new construction, the story is going to be more and more condos, and that seems to be where the push is both in terms of policy shift in government and higher house prices dictating demand towards high-rise construction because low-rise is out of reach for first-time buyers, and when the average price is over $1 million, it’s not an easy entry point for any buyer.”

Through this year, Vancouver has born witness to softening home prices across all market segments, and that trend is expected to continue, according to CMHC.

“Over the next two years, we expect the resale market will be characterized by lower sales, higher inventories of homes for sale, and lower home prices compared with the recent market highs in the last two years,” said Eric Bond, CMHC’s principal market analyst for Vancouver. “With the resale market,

expect housing starts to decline in the Vancouver CMA over the next two years, and the majority of the decline will be in the multi-family segment, and specifically in high-rise.”

Copyright © 2018 Key Media

Two Class A office properties in Gastown and Yaletown have been purchased by Toronto-based Allied Properties Real Estate Investment Trust

Tanya Commisso
Western Investor

Two Class A office buildings in downtown Vancouver have been acquired by a Toronto-based real estate manager and developer for $57.5 million. 

Allied Properties Real Estate Investment Trust has entered into an agreement to purchase 151 West Hastings in Gastown and 1220 Homer Street in Yaletown. 

The West Hastings property includes 38,511 square feet of gross leasable area, currently leased to co-work company Spaces until 2033. The Homer Street property is comprised of 21,708 square feet, fully leased to Perkins + Will Canada Architects until 2023. 

“We’re increasing our penetration in urban Vancouver just as [Allied] is transitioning to a primary Canadian office market,” said Michael Emory, president and CEO for Allied Real Estate. 

Yaletown sale has already closed, while the Gastown sale is expected to close on November 30.

Copyright © 2018 Western Investor

Empty homes tax goes to affordable housing

Canadian Real Estate Wealth

The City of Vancouver says it has collected $18 million from the first year of its empty homes tax and another $12 million could still flow into its coffers.

The city says in a news release that it expects to generate a total of $30 million from the first year of the tax which is applied to vacant residential properties in a bid to ease Vancouver’s near-zero vacancy rate.

The city says $8 million raised by the tax in 2017 has already been earmarked by council for specific affordable housing initiatives.

More details of the first year of the empty homes tax are due to be released Dec. 1 in the city’s first annual report on the levy.

Owners of residential properties are also being advised they must submit a property status declaration by Feb. 4, 2019, in order to meet the provisions of the tax for 2018.

Owners who don’t declare that status will be taxed, which amounts to one per cent of a property’s assessed value, and owners who miss the due date by even a day will also face a $250 penalty.

Mayor Kennedy Stewart says the tax is an important strategy in managing Vancouver’s unaffordable housing market.

“Housing affordability is the most important issue in our city, and the empty homes tax is helping to free up more potential rental units that should be available as homes for Vancouver residents,” Stewart says in the release.

The tax does not apply to principal residences, properties rented for at least six months of the year, or properties that are eligible for one of eight exemptions.

Copyright © 2018 Key Media Pty Ltd

A condo and strata assignment registry implemented

Steve Randall
Canadian Real Estate Wealth

British Columbia is taking further action against unfair and illegal practices involving real estate.

The government announced Monday that it will implement a condo and strata assignment register designed to crack down on tax evasion and increase transparency and fairness for British Columbians.

Currently those flipping pre-sale condo assignments sometimes avoid paying the appropriate taxes but the new register will collect comprehensive information about condo and strata assignments.

“We will not allow real estate speculators and tax frauds to take advantage of loopholes in the system any longer, and this register sends a clear message. The days of avoiding taxes through condo flipping are over,” said Carole James, Minister of Finance. “This register will help bring fairness and integrity back to B.C.’s real estate market, so that people can afford homes in the communities where they live and work.”

The rules from January 1, 2019 Effective Jan. 1, 2019, developers who sell strata lots in development properties must:

• include terms and a notice in their contracts to inform buyers of the new collection and reporting requirements;
• collect information, including the terms of the assignment and the name and social insurance number or business information of the parties to the assignment; and
• report this information in the online register.

 

Information will be shared with the CRA so that transactions can be linked with tax returns.

The BC government says the information will ensure that the final purchase prices of condos – including assignment amounts – are recorded and the appropriate property transfer tax paid.

It will also use the data to inform future housing and tax policy.

Compliance for developers The Land Title and Survey Authority of British Columbia will manage the online register system.

In order to comply with the new assignment reporting requirements, developers must update their contracts by Jan. 1, 2019, and must have a myLTSA Enterprise account by March 31, 2019.

The first assignment reporting period ends March 31, 2019, and the report is due on April 30, 2019.

Copyright © 2018 Key Media Pty Ltd

Huge multi-phased development close to B.C. Legislature in capital’s downtown will have offices, commercial and residential uses

Carla Wilson
Western Investor

Construction is starting on the new Capital Park Residences at a six-acre, mixed-use James Bay project.

“It’s the last piece of the puzzle,” said Brian McCauley, president and chief executive of Concert Properties, which is partnering with Jawl Properties in developing the $250-million multi-phased project behind the legislature.

A total of 113 homes are expected to be finished in late 2020 or early 2021, McCauley said. Condominiums will be developed in five-storey and four-storey buildings, and seven townhouses are also planned.

Condominium prices range from $499,900 to $1.09 million. They will be 485 square feet to 1,759 square feet. Townhomes start at $1.489 million, and range from 1,451 to 1,757 square feet.

A presentation centre is set up at 665 Douglas St. Vancouver-based Concert and Jawl Properties of Victoria bought the site, bordered by Superior, Menzies and Michigan streets, in 2014 for $34 million when the province was selling land to balance its books.

At that time, the property was used for parking lots and held some older buildings, including out-dated provincial offices.

The Victoria Accord planning agreement developed for the area just over 20 years ago visualized a mixed-use approach.

Goals of the accord included the development fitting in with the James Bay neigbourhood and with the nearby legislature building, opening up the area with public access and amenities and to preserve views. Today, that vision is becoming a reality as workers are putting up a second office building of 120,000 square feet, to be finished late next year. That space is 40 per cent pre-leased to the province, McCauley said.

The first office complex, at 127,000 square feet, is finished and filled with provincial staff. A Red Barn Market is open, as is a new library branch. Tenants have moved into 53 new rental apartments. A trio of heritage houses hold 13 rental apartments.

Much of the large public plaza is complete. Still to come is a piece of public art by artist Adam Kuby, to be installed next year, McCauley said. The plaza is the “central unifying element to the entire development,” he said.

The Good Earth Coffeehouse will be opening at the south end of the plaza. Tenant improvements are underway now.

Capital Park “very much does execute on the vision from the Victoria Accord 25 years ago. And the ability for this site to really reconnect parts of James Bay back through to the legislature and the waterfront is, I think, what we are most excited about, and it is emerging well,” McCauley said.

The development has followed through on plans for a network of plazas, courtyards and pathways. The project’s primary architect is Endall Elliot Associates. HDR/CEI Architecture Associates worked with Endall Elliot on phase one.

A commitment to sustainability will see the office buildings reach the platinum level in Leadership in Energy and Environmental Design and the other buildings will be at the gold standard, McCauley said.

Capital Park’s development has made an economic mark on the community.

Including land costs, the overall investment in the project is excess of $250 million, McCauley said.

It has also been a local job generator. In the first phase of the project, more than 250 workers were on site, followed by 175 workers in the second stage, and the residential construction will require about 125 workers, he said.

Copyright © 2018 Western Investor

Housing market in 2019 and 2020 will be characterized by slower sales and more home inventory, says CMHC

Joannah Connolly
Western Investor

The next two years in B.C. residential real estate will continue to see lower sales and higher inventories of homes available for purchase than in recent years, according to a forecast released November 6 by the Canada Mortgage and Housing Corporation (CMHC).

This will cause average home prices across the province to “hold steady” over the next two years, said the federal housing agency.

The CMHC said in its report, “Shifting market conditions across B.C.’s large urban centres is resulting in movement back towards balanced or even buyers’ market conditions in some cases, which is beginning to flatten price growth or, in some areas [such as Metro Vancouver, see below], result in price declines.

“Overall, we anticipate MLS® sales to trough in 2018 and see some recovery in 2019-20 while MLS® average prices will see a relatively flat growth profile with some risk of decline as demand and supply find a new balance.”

CMHC expects MLS resales across B.C. to drop from 103,759 units in 2017 to between 76,600 and 83,400 sales this year. Sales are then expect to increase somewhat in 2019 to between 79,100 and 87,900 units, and then in 2020 to range between 81,500 and 92,500 sales. They are not expected to return to the 100,000 mark seen in 2016 and 2017.

The agency is forecasting the average B.C. MLS home sale price to be between $683K and $749K this year (2017 average sale price was $709,597). It is then expected to range from between $681,800 and $756,200 in 2019, and then hit somewhere between $675,400 and $758,600 in 2020.

The CMHC added in its report, “Housing starts activity in British Columbia should moderate as economic and population growth slows.”

The agency also predicted the next two years for the rental market in the province. It said, “Rental market conditions across B.C. are anticipated to loosen as a result of slower growth in demand and a significant amount of new rental units set to enter the market. However, demand for rental is anticipated to remain fairly robust and result in the apartment vacancy rate for the province increasing gradually through to 2020. Meanwhile, average rents for purpose built apartments are anticipated to continue to see increases stronger than inflation in both 2019 and 2020.”

Metro Vancouver outlook

Metro Vancouver real estate will continue to see a steeper drop in sales than the rest of the province, said the CMHC. This will cause average home prices across the region to keep “softening” over the next few years, said the federal housing agency.

CMHC said in its report, “While existing home sales are expected to rebound in 2019 from the trough in 2018 in order to be more in line with the region’s growing population, resales will remain below the levels seen in 2015-2017.”

CMHC expects MLS resales to drop from 50,033 units in 2017 to 35,500-37,400 sales this year. Sales are then expect to recover somewhat in 2019 and 2020 to somewhere in the early to mid 40,000s range.

Home prices, however, are expected to head in the opposite direction. The agency is forecasting the average Metro Vancouver MLS home sale price to be between $940K and $980K this year (up from 2017’s $934,977). It is then expected to drop in 2019 to between $847 and $939K, and then slide to somewhere between $800,000 and $918,000 in 2020.

The CMHC said that a major factor in falling prices is rising interest rates making mortgage payments less affordable. It said, “Rising mortgage rates since May 2017 and stricter borrowing requirements are also having an impact on potential home buyers through two channels; 1) rising rates increase the carrying cost of holding a mortgage and; 2) rising rates have an impact on borrowing capacity.” 

On the region’s rental market, the report said, “The rental market is expected to remain tight across the region, average rents will continue increasing faster than inflation. The vacancy rate is expected to rise slightly; however, it will remain low in absolute terms, reflecting the strong demand for rental housing in the region.”

Greater Victoria outlook

Greater Victoria is also expecting to see slower resale activity over the next two years, with the market facing “headwinds,” according to the CMHC. This, it said, will lead to a deceleration in average price growth but it will not necessarily bring overall resale prices down.

The CMHC said of Greater Victoria, “While price growth in 2018 slowed, it remains above inflation and continues to outpace what would be expected given fundamental factors. Our outlook is for the pace of price growth to slow over the forecast horizon. Partially, this slowing in average price growth will come from a shift to more condo sales as opposed to single detached sales. It is likely that condo prices will continue to rise, albeit at a slower pace, until more supply is introduced into the market over the next two years.”

Of the rental market in the capital, CMHC said that vacancies will rise over the one per cent mark. It said, “The primary driver of the increase will come from the introduction of new supply. Units already under construction will expand the universe of purpose built rental significantly.”

Average rents in the Victoria CMA are expected to increase, which will be partly due to the turnover of tenants in older apartments. The CMHC said, “The average rent paid in Metro Victoria is currently well below the price paid by new entrants to the market. As older units turn over, their rents will be increased to reflect the new price level. As such, the average rent will increase, in part, as the lower end of the price distribution catches up to current market prices.”

Copyright © 2018 Western Investor

Inventory up, prices up in Fraser Valley

Steve Randall
REP

There was an 11.6% rise in home sales in the Fraser Valley in October compared to September.

Year-over-year sales remained subdued with the 1,155 sales through the MLS system of the Fraser Valley Real Estate Board representing a 35.8% decrease from October 2017.

But the monthly gain is a positive note for the market says FVREB president John Barbisan.

“While slight, this is the first time since May that sales here have been on the upswing.” He noted. “We’re beneath typical activity levels for this time of year but it’s good to see that buyers and sellers are still finding success this season.”

Of the 1,155 sales, 438 were residential detached homes, 306 were townhouses, and 292 were apartments.

Inventory surged in the past year Meanwhile, active inventory was up 1.3% month-over-month – and 41.3% year-over-year – to 7,746. New listings increased 12% year-over-year to 2,776, a decline of 5.8% from September 2018.

“We’re in a much better spot in terms of overall inventory compared to this time last year, and now closer to a more balanced market,” added Barbisan. “Attached inventory in particular has seen notable gains, doubling year-over-year for townhouses and nearly tripling for apartments.”

Prices up year-over-year FVREB’s HPI figures show that the benchmark prices for a single-family detached home was $986,700, down 0.2% compared to September 2018 but up 1.1 per cent compared to October 2017

For townhomes, at $538,400, the benchmark price decreased 1.4% compared to September 2018 and increased 7.1% compared to October 2017.

And for apartments/condos, there was a month-over-month decrease of 1.3% while the annual rise was 17.2%, taking the benchmark price to  $432,800.

Copyright © 2018 Key Media Pty Ltd

REBGV reports sales down 34.9%

Steve Randall
Canadian Real Estate Wealth

Home sales in Metro Vancouver continued to run well below their long-term historical averages in October.

The Real Estate Board of Greater Vancouver reported sales of 1,966 homes, down 34.9% year-over-year but up 23.3% compared to September 2017’s 1,595. October’s sales were 26.8% below the 10-year average.

New listings reached a 4-year-high in October with a total 4,873 detached, apartment, and attached homes listed for sale on the MLS, a rise of 7.4% year-over-year and 7.7% month-over-month.

Total inventory increased 42.1% year-over-year to 12,984, a 0.8% decrease compared to September.

“The supply of homes for sale today is beginning to return to levels that we haven’t seen in our market in about four years,” Phil Moore, REBGV president said. “For home buyers, this means you have more selection to choose from. For sellers, it means your home may face more competition, from other listings, in the marketplace.”

For all property types, the sales-to-active listings ratio for October 2018 is 15.1%. By property type, the ratio is 10.3% for detached homes, 17.3% for townhomes, and 20.6% for condominiums.

Prices have slipped over the last 3 months The MLS HPI benchmark price for all home types was up 1% year-over-year in October to $1,062,100, That’s a decrease of 3.3% since June.

“Home prices have edged down between three and five per cent, depending on housing type, in our region since June,” said Moore. “This is providing a little relief for those looking to buy compared to the all-time highs we’ve experienced over the last year.”

Sales, prices, inventory by property type Sales of detached homes in October 2018 reached 637, a 32.2% decrease from the 940 detached sales recorded in October 2017. The benchmark price for detached properties is $1,524,000, a 5.1% decrease from October 2017 and a 3.9% decrease over the last three months.

Sales of apartments reached 985 in October 2018, a 35.7% decrease compared to the 1,532 sales in October 2017. The benchmark price of an apartment property is $683,500, a 5.8% increase from October 2017 and a 3.1% decrease over the last three months.

Attached homes sales in October 2018 totalled 344, a 37.5% decrease compared to the 550 sales in October 2017. The benchmark price of an attached home is $829,200, a 4.4% increase from October 2017 and a 2.8% decrease over the last three months.

Copyright © 2018 Key Media Pty Ltd

Interest rate to increase ? buy now

Neil Sharma
REP

The latest interest rate hike might not preclude more buyers—especially first-timers—from the market, it might signal a rush to get into the market while they still can.

“I think it’s already started,” said REMAX INTEGRA’s Christopher Alexander, vice president and regional director for Ontario-Atlantic Region. “Condos are moving pretty quickly, and that’s where a lot of first-time homebuyers are looking to because homes are expensive, but the rest of the province won’t have a dramatic effect. In Toronto, the 905, Kitchener-Waterloo and London, I think we’ll see an uptick in action.”

The most recent rate hike is the fourth one in the last 18 months, and Alexander says the worst of the market turbulence is in the rearview mirror. Sales and pricing have been up since June, and it’s having a positive effect up the chain.

“Prices have increased and sales have too, year-over-year,” he said. “It took a while for buyers to catch up, but first-time homebuyers are back and it’s helping move-up buyers and having a good ripple effect all the way up. I think the difference now, compared to six months ago and the last rate hike, is the federal government has lifted its promise to move slowly hiking the interest rate. I still don’t believe it wants to cripple the market or have a dramatic effect on the economy, but I’m predicting buyers will want to come out and get ahead of the curve.”

Stephen Poloz, governor of the Bank of Canada, says that policy rates need to reach neutral levels, which is estimated to be 2.5-3.5%, and much of that will be contingent upon global trade policy developments, which have been turbulent in recent times.

“The Canadian economy has solid momentum and continues to operate near its capacity,” said Poloz. “The policy rate will need to rise to neutral to achieve our inflation target.”

Copyright © 2018 Key Media Pty Ltd

Belle Isle offers residents a ‘beautiful new neighbourhood’ in convenient North Vancouver location

Simon Briault
The Vancouver Sun

Belle Isle

WHAT: Belle Isle is a collection of 88 stacked townhomes at Lions Gate Village, a new master-planned community on the corner of Marine Drive and Capilano Road in North Vancouver.

WHERE: 2060 Curling Road

WHEN: The developers expect Belle Isle phases 1 and 2 to be completed by the winter of 2020.

Residence size and price: Homes have one, two or three bedrooms and there are also three-bedroom plus den options available. Suites range in size from 534 to 2,182 square feet and prices are between $533,000 and $1,988,000.

Architect: Integra Architecture Inc.

Interior designer: Cristina Oberti Interior Design Inc.

Telephone: 604-788-2728

Website: livebelleisle.ca

The big appeal

In a region like Metro Vancouver, where there’s a growing population, land is hard to come by and getting around can be a challenge, it makes sense to leave the car at home whenever possible. The District of North Vancouver has got this message loud and clear. As a result, its official community plan envisages a network of connected town and village centres where residents will be able to walk, ride a bike or take transit to get to pretty much anywhere.

One of these centres is Lions Gate Village, a master-planned community that will eventually include about 1,800 homes, new retail outlets, a new community centre, a daycare and two parks plus a third just outside the development called Belle Isle Park, which has a dogs’ play area, children’s play area and a sports court. Belle Isle, a collection of stacked townhomes by developer Citimark, is only the second project to go on sale in Lions Gate Village and one of the only pre-sale projects available. The benefits of its location are not lost on Emily Kaplun, who has bought one of the homes with her fiancé.

“It was really important to us for our next home to be close to transit because we don’t want to be in our car the whole time,” said Kaplun. “When we stumbled across Belle Isle the stars just aligned – we’ll be super close to the bridge so we can just hop on the bus and be downtown for work super quick. We’ll probably also bike a lot over the bridge in the summer time. It will be a nice way to stay active.”

The inside buzz

Kaplun is typical of the type of move-up buyers that have been showing interest in Belle Isle. This is according to Lisa McDonald, the sales director at Pacesetter Marketing, which is organizing the sales at Belle Isle on behalf of the developers.

“One of the nice things about the village is that it will have a really great mix of different homes – new rentals and high-rise condos as well as townhomes and stacked townhomes,” McDonald added. “It really will feel like a beautiful new neighbourhood. It will be pretty self-sustaining on its own but at the same time it will only be a 12-minute walk along the river to get to Park Royal with the world of amenities that are there.”

© 2018 Postmedia Network Inc.