Vancouver home prices up and down over the years

Brent Jang
The Globe and Mail

Globe and Mail

Updated April 7, 2018 Reprinted January 31, 2019

If you’re fortunate to have a decent job today in Vancouver and had the foresight to buy a home in the mid-1980s, before real estate prices soared, then life looks pretty fine these days in Lotus Land.

The broader B.C. economy has been severely bruised over the past three years, but in Canada’s third-largest metropolitan area, residential home prices have held up relatively well.

The mild climate, the gorgeous mountain setting of Vancouver and the relaxed West Coast lifestyle are strong selling points. So, despite the reams of disappointing economic data for British Columbia as a whole, Vancouver has managed to escape some of the pain that’s most keenly felt in rural areas.

It’s prudent to have a buyer-beware attitude whenever the real estate industry goes on its sales pitch to urge potential buyers to act soon before prices go through the roof. Nevertheless, in Vancouver’s case, those warnings rang true for a long time.

Real estate prices, which surged after the Expo 86 world’s fair in Vancouver, continued to climb through 1994.

However, the market started flattening out in 1995 in some neighbourhoods and dropping slightly in others.

By 1998, house prices fell across the board, defying the forecasts of optimists who thought that Vancouver could somehow be insulated from bad news such as the Asian economic flu that began in late 1997 and lingered through 1998.

Still, the recent slump in the real estate market hasn’t been anything like the early 1980s, when Vancouver got clobbered by the recession and stiff mortgage rates.

On the city’s affluent west side, for instance, the average price of a three-bedroom bungalow plunged 22 per cent to $160,000 in 1982 from $204,000 in 1981, according to data compiled by Royal LePage.

The average price on Vancouver’s west side climbed slowly back to $200,000 in 1985 and then rocketed up over the next decade to hit $520,000 in 1995. Prices this year are hovering around $490,000, down an average of 6 per cent from five years ago.

The suburbs have weathered the economic storm reasonably well. Average prices in Burnaby — which is the closest Vancouver suburb on the SkyTrain commuter system — have dipped 12 per cent over the past five years to $265,000.

It’s difficult to generalize in Greater Vancouver, since some sellers in certain neighbourhoods have fetched roughly 15 per cent less than they would have in 1995, while others have seen their house values rise somewhat.

Joy Chao, a real estate agent with Dexter Associates Realty’s office in Vancouver’s upscale Kerrisdale district, figures that buyers won’t face a huge downdraft in the short term. Longer term, there could be some capital appreciation since Vancouver’s property is hemmed in by the ocean and mountains.

East of Vancouver there’s the picturesque Fraser Valley, but to actually live in Vancouver, well, there’s only so much land.

That bit of geographical reality means that home shoppers waiting for the market to crash from current levels won’t get their wish, unless 20-per-cent mortgage rates again raise their ugly head.

Hong Kong buyers are much less of a force today in the Vancouver market than in the years prior to the handover of the former British colony to China in 1997.

But Ms. Chao, 31, has found that her Mandarin language skills have come in handy with buyers from Taiwan, although they’re arriving in much smaller numbers than the influx during the late 1980s and early 1990s from Hong Kong, where Cantonese is the dominant language.

Another change compared with a decade ago is that there are fewer buyers from the rest of Canada because baby boomers from Alberta and Ontario are no longer pouring into Vancouver. However, Ms. Chao said numerous long-time Vancouver residents are taking advantage of the dip in home prices to get into the market.

While it remains to be seen whether the local real estate market has bottomed yet, some listings on Vancouver’s west side look like bargains compared with five years ago.

A fixer-upper on a busy street in Point Grey is listed at $369,000, a starter home in Kitsilano has a price tag of $459,000 and the asking price for a bungalow on a quiet street in Kerrisdale is $739,000.

Many newcomers to Vancouver will undoubtedly get sticker shock from those so-called deals. Even with real estate cooling off, there’s still a steep admission price to become a homeowner in a city where it is possible to live the cliché and go golfing in the morning, sailing in the afternoon and skiing at night

© Copyright 2019 The Globe and Mail Inc.

Housing now to make municipally-owned properties available for development

Steve Randall
Canadian Real Estate Wealth

The City of Toronto approved a signature initiative of Mayor John Tory which will increase the supply of affordable homes in the city.

The council’s decision to adopt the Housing Now initiative means it will increase the supply of new affordable rental housing within mixed-income communities by making municipally-owned properties available to non-profit and private organizations.

“Housing Now will fast track new housing developments at 11 surplus city properties to create 10,000 new residential units,” said Mayor John Tory. “I’m proud that City Council has taken swift and bold action on housing today to get shovels in the ground as quickly as possible. This is a direct and significant response to the issue Torontonians place at the top of their lists – affordable housing – and it is a common sense initiative we can take now with our city-owned land.”

The 10,000 homes will include 3,700 affordable rental units which must have average rents of no more than 80% of Toronto’s average market rent.

The City says this will benefit families with incomes of between $21,000 and $52,000 per year.

The sites for development will be close to employment areas and transit hubs and developers will need to create complete communities including schools, child care, community centres, and parks.

Financial incentives
Housing Now will provide up to $280 million in financial incentives in support of the 3,700 affordable homes including relief from development charges, building permit fees, planning application fees and parkland dedication fees as well as property taxes for the 99-year term during which the rents will remain affordable.

“Housing Now brings forward new City resources to work in partnership with the private, non-profit and co-op sectors to build new rental and affordable housing for all Torontonians. It will achieve the highest possible public benefits, while providing the deepest amount of affordability without waiting on funding from other levels of governments.”
said Deputy Mayor Ana Bailão, Planning and Housing Committee Chair.

A new Housing Secretariat will facilitate the planning and development of the sites and, oversee the public market offering process.

Copyright © 2019 Key Media Pty Ltd

Burnaby?s Akimbo to showcase a striking exterior design

Kathleen Freimond
The Province

Akimbo

What: A 40-storey highrise with 350 units

Where: Dawson Street and Madison Avenue, Burnaby

Residence size and prices: 460 — 2,050 square feet; from $529,980

Developer: Imani Development

Sales centre: 2152 Douglas Road, Burnaby

Hours: noon — 5 p.m., Sat — Thurs

Phone: 604-359-7728

Standing akimbo – with hands on hips and elbows turned outward – exudes a sense of confidence and boldness, says Payam Imani, founder and CEO of Imani Development, adding that the firm’s new 40-storey residential tower, Akimbo, will epitomize those qualities.

The development site on the corner of Madison Avenue and Dawson Street in Burnaby’s booming Brentwood neighbourhood benefits from its proximity to several shopping malls and the Gilmore SkyTrain station without being “on top of them,” Imani notes.

“We wanted a recognizable building to set us apart from other developers in the area,” he says, adding that the architectural firm, IBI Group, achieved that objective.

“The interesting design of the building is sculpted by the uniquely shaped and angled balconies that are vertically connected; when you stand at street level and look up, it [will be] a completely different perspective to the horizontal elevation one sees on the model [at the sales centre]. Creating that design also achieved expansive balconies and those are an important aspect of outdoor living and condo lifestyle.”

The concrete building will have a porte cochere with a drop-off and pickup area next to the front door that opens into an 1,800-square-foot, double-height grand lobby.

Fourth-floor amenities will include a fully equipped gym, guest suite and indoor and outdoor social areas. Outdoor amenities include a dining area and kitchen, kids’ play space and gardening beds.

For the interiors of the homes, designer Lisa Hansen of Area3 Design was inspired to create a modern, but neutral design.

“I’m always cognizant when designing for a tower, that it’s going to be a few years before it’s built out. I don’t want to include anything trendy that, by the time people move in, looks dated.”

Hansen created two colour and material palettes for Akimbo: Light and Dark.

“The Light scheme is more airy, serene and calm – while being minimalist and modern,” she says, describing the Dark option with its grey and black hues as “sexy, moody and masculine.”

Both palettes are on display in the Burnaby sales centre. A kitchen showcases the Dark scheme, while a two-bedroom-and-den condo presents the Light option.

In the Dark scheme, the Caesarstone countertop and backsplash anchor the kitchen vignette, while a light countertop and backsplash in a matte finish show a completely different option in the two-bedroom show suite.

Kitchens feature Italian flat-panel cabinet doors with no visible handles, opting instead for J-pulls for easy opening and closing. The Fisher & Paykel appliances are integrated, giving the appearance of being part of the cabinetry and making the room feel larger, Hansen adds.

The Italian porcelain wall and floor tiles in the ensuite bathrooms give buyers the look and feel of stone, but without the maintenance requirements. Other special features include a medicine cabinet with a ‘floating’ shelf, a decorative pendant light and a spacious niche in the shower. The main bathroom has a soaker-style tub and an accent wall featuring textured European porcelain tiles.

© 2019 Postmedia Network Inc

Protect yourself and your clients ? know the laws

Mark Weisleder
REM

I have been practicing law for over 35 years, but it seems I learn something new every day. Laws change and you need to be up to date in order to practice in a manner that protects both agents and clients. Here are five tips to assist you with what I hope will be a successful 2019.

1. Get everything in writing:

Whenever I assist a real estate agent with a claim made against them by a client, or from the regulator, a common request is to see all the signed documents –

especially written instructions from a buyer or seller whenever you are asked to make any changes on a listing, presentation of offers in a bidding war or the agreement of purchase and sale. Do yourself a favour this year to always document instructions you receive from a client, whether by a signed agreement, email or text, to make sure there is always a written record of every action you are taking, especially when prior instructions are being changed.

2. Rent control:

In Ontario, as a result of changes made on Nov.15, 2018, every new rental unit created on or after that date is no longer subject to rent controls. This means the landlord will be able to increase the rent more than the government increase in 12 months. If you act for a tenant in a new unit, you may want to consider adding a provision to the lease making it clear that any future increase will not be more than a specific amount, say five per cent, to protect your tenant.

3. Non-resident sellers:

If a seller is a non-resident, 25 per cent of the entire purchase price needs to be held back until the seller satisfies their income tax obligations relating to the sale. In some cases, this 25 per cent holdback can result in there not being sufficient funds available on closing to pay the mortgage on the property and the real estate commission. This is one of the reasons to always do the FINTRAC identification as soon as possible. By asking for a driver’s licence, you can usually determine right away that the seller will be here for closing. When the seller signing the agreement is out of the country, make sure you ask about residency as soon as possible.

4. Be extra careful with assignments:

I expect there to be more assignment deals this year, especially if buyers who purchased two to three years ago are now having difficulty closing. Make sure to make the deal conditional on lawyer approval as there are HST and other issues relating to when the original deposits and the profit are to be made payable. Also, you need to be careful to make sure that your own commission on any assignment agreement is paid as soon as the builder consents to the deal, or else you may have to wait an extra year before you get paid.

5. Get everyone to sign the buyer representation agreement:

Too many times I have seen situations where, for example, one spouse signs the buyer representation agreement and then the other spouse or an adult child goes out and buys a property, to try and avoid paying the agent their commission. Or they buy in a company name to try and hide their identity.

Make sure you always get everyone to sign your agreement, even if it means going more than once to sign, especially if one of the spouses is out of town.

© 2017 REM Real Estate Magazine

Pre-construction condo purchases in trouble

Josh Sherman
other

If prices for new condos in Vancouver keep dropping, some homeowner hopefuls who signed contracts to purchase pre-construction units may be left in lurch and unable to ultimately close on units, a local realtor warns.

When someone buys a condo pre-construction, what they are really doing is entering into an agreement to purchase the unit at a later closing date. They’ll typically need to get pre-construction mortgage approval from a lender, even though they won’t actually begin making mortgage payments until the closing date, which falls around the time the unit is completed.

In many cases, however, a borrower will need to re-qualify for a mortgage as closing time approaches. This could create problems for buyers who inked deals near the high-rise market’s peak, especially the longer a downturn persists and the lower prices fall from previous peaks.

“The banks appraise the unit — if they feel the values are down 15 percent or 20 percent since you bought it, you’re not going to get the full loan that you were hoping for,” Steve Saretsky, a Vancouver realtor and founder of the Vancity Condo Guide, tells Livabl.

A buyer could be left to make up the difference on their own. If they can’t, they’ll be out their deposit and may face legal action from the developer. Buyers running into this situation in the near future might face even greater challenges due to previous pricing trends in the new-construction sphere.

Saretsky notes that in a hot Vancouver market, “most of the developments have been charging above market value” on the expectation of where prices would be two years down the road, when the building would be completed. But in the current climate, lofty price gains are a thing of the past. In fact, prices are going down.

Last month, the benchmark price of a Vancouver area condo apartment was $664,100, up 0.6 percent from a year ago but down 0.6 percent from the previous month, according to the Real Estate Board of Greater Vancouver.

If the pre-construction pricing was already above market, further cooling will only make the spread between what a buyer qualifies for and what they agreed to purchase a unit for even wider.

If, as Saretsky suggests, an increasing number of pre-construction buyers may find themselves unable to afford the units they have agreed to purchase, it wouldn’t be the first time this trend has played out in a major Canadian housing market.

Ben Myers, founder of Bullpen Consulting, a boutique firm that advises condo developers, says it has happened in Toronto in the past. “It happened a lot in the ‘80s,” he tells Livabl.

In some cases, buyers have been able to work out arrangements with developers. Other times, the outcome was very different. “Because no one could close, the developer couldn’t get the money to pay back the bank [which financed the project], and then they just defaulted on the project,” Myers says. “The entire project went to the bank, and the bank had to deal with it.”

The risk of a scenario like that creates a balancing act for developers. “You always want to sell at the highest price, obviously, but if you go too high, there’s always this potential that prices go down and then there’s closing risks,” Myers explains.

© 2019 BuzzBuzzHome Corp.

Affordability – not in Vancouver’s dictionary

Ephraim Vecina
Canadian Real Estate Wealth

Vancouver’s affordability saga continues unimpeded as the city’s single-family homes are now priced considerably above the median household income, according to a recent study by the National Bank.

The analysis uncovered that the average monthly mortgage payment for a median-price single-detached residence in the Vancouver CMA was around 101.5% of the region’s average household income.

National Bank stated that this was an unprecedented high, representing increases of 2.7% quarterly and 6.4% annually, Business in Vancouver reported.

Falling salary growth combined with recent increases in interest rates were cited by the study as the main contributors to the trend, despite the fact that the median price of Vancouver’s single-family homes during Q4 2018 went down by 0.7% quarter-over-quarter, and had only a modest 1.8% year-over-year uptick.

Condos experienced a similar cooling, with the mortgage for an average-priced unit in the Vancouver CMA accounting for 49.2% of household income during the fourth quarter, increasing by 1.3% from Q3 2018 and 6.3% year-over-year.

A January report from Altus Group warned that there seems to be no relief in sight for would-be home buyers in Vancouver, as the market is “exhibiting the most potential for downside risk,” Altus stated.

Aside from pricing issues, growing construction and borrowing costs will likely stagger sales levels in 2019.

“A key challenge that has become more apparent as of late in Vancouver has been the price sensitivity of consumers, with higher priced projects, or those priced above the competition, experiencing below average sales rates,” Altus explained.

Copyright © 2019 Key Media Pty Ltd

Housing investment growth down -0.1% in 2019

Ephraim Vecina
Mortgage Broker News

The Bank of Canada recently forecast that the portion of residential real estate investment in the Canadian economy will actually go negative this year, suggesting that strict mortgage regulations, local housing restrictions, and the upward trend in interest rates have made a more dramatic impact than anticipated.

The bank has revised housing investment’s contribution to average annual real economic growth down to -0.1% in 2019, from the +0.1% during the BoC’s prior projections last October.

“Staff analysis suggests that the combined effect of tighter mortgage guidelines and higher interest rates has been larger than previously estimated,” the BOC noted in a statement earlier this month, as quoted by Business in Vancouver.

This is exacerbated by the fact that consumer spending and housing investment “have been weaker than expected” as housing markets nationwide are still in the process of adjusting “to municipal and provincial measures, changes to mortgage guidelines and higher interest rates,” the central bank added.

The statement echoed market observer David Doyle’s warning late last week. The Macquarie Group Canadian market strategist and NA economist cautioned that the housing sector’s enduring affordability issues, along with other economic risks, would likely make themselves felt in the country’s long-term GDP growth.

“Canada’s economy, we think, is at this critical juncture, and it’s confronting several headwinds – that includes challenged demographics, low productivity, structural imbalances like the housing situation and our trade deficit,” Doyle said in an interview with BNN Bloomberg. “And we see a real absence of growth drivers.”

Late last year, BoC governor Stephen Poloz assured that 2019 will not represent a downward spiral towards recession as “fundamentals are good.”

“We’re certainly not expecting a recession in 2019 but I do think that everybody needs to be prepared for volatility,” Poloz said in an interview with CTV News.

“We are in a volatile world and so there are risks … but I think the Canadian economy begins this new year in a pretty good place.”

Copyright © 2019 Key Media

Healthy job market and B-20 favours rentals

Neil Sharma
Mortgage Broker News

A confluence of factors, including rising interest rates, will result in fewer Canadians seeking homeownership than rental accommodations this year.

That’s according to Marcus & Millichap’s 2019 Multifamily Investment Forecast Report, which further states a healthy job market and B-20 will conspire to favour rentals.

“New mortgage rules also boosted renter demand, delaying homeownership for many potential homeowners as they now need more time to save up,” read the report. “Little was done to encourage an increase in rental stock, though, exacerbating the demand/supply mismatch as developers must already contend with policies and high costs that have been prohibitive. With detached housing prices nearly doubling over the past 10 years and a wave of young professionals and international migrants seeking housing, rental rates have been climbing steadily.”

Rents have also surged in Toronto and Vancouver, and that has made apartment projects more financially viable, as evidenced by a Canada-wide pipeline brimming with about 60,000 units. However, there’s also a pronounced dearth of vacant rental units that secondary markets are relieving with supply, albeit barely.

“The number of occupied units grew by 50,000 last year, outpacing supply growth nationally just as 37,000 new apartments came online,” continued the report. “The national vacancy rate declined to 2.4%, the lowest reading since 2002. A shortage of construction workers, a long approval process and higher development and financing costs are slowing the delivery schedule this year, curbing completions by roughly 2,000 units from last year’s total.

“Historically, Canada has been heavily reliant on condominium owners to supply the rental market, filling the void that purpose-built rentals have not been able to close. Prices have climbed substantially for condo investors, though, slowing this practice… and pushing more residents in search of housing to the apartment market.”

Toronto has cemented its reputation as a leading North American tech hub, but the sector’s growth is putting even more downward pressure on the city’s rental vacancy rate.

“Microsoft, Intel, Uber and other companies have plans to increase operations in the city and bring on new workers,” read the report. “Amid its solid reputation as a top innovator in tech and a mature ecosystem that supports the industry, the GTA will attract young professionals in greater numbers this year. Many new residents choose to rent, not only due to barriers to homeownership, but for greater mobility and to be near local employers, restaurants and nightlife.”

Another emergent technology hub, Vancouver is saddled with Canada’s most expensive real estate market and that, unsurprisingly, drivers more people to rent. However, the average rent is forecasted to hit $1,480 per month by the end of 2019.

“The benchmark price [of a detached home in metro Vancouver] exceeded $1.5 million at the end of 2018, despite a downturn in pricing last summer, well beyond the means of many residents. Renting remains the preferred choice as single-family affordability continues to be a major concern, holding the market vacancy near historical lows.”

Copyright © 2019 Key Media