Vancouver will slow down in new home sales

Ephraim Vecina
Canadian Real Estate Wealth

Demand for Canada’s residential property is definitely not slowing down any time soon, but this hunger will be less apparent in Vancouver this year, a new analysis from Altus Group warned.

Last year proved to be less than stellar for Vancouver as it experienced a “remarkably constrained” supply of new homes. This trend will most likely last well into 2019, as the market is “exhibiting the most potential for downside risk,” Altus stated.

Taking into account increasing borrowing costs and higher construction costs, Vancouver will likely slow down in terms of sales this year.

“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 said.

Meanwhile, Toronto will enjoy a major boost from increased immigration numbers along with healthy population growth rates.

“Markets in the Greater Golden Horseshoe, including the GTA, have the most upside potential for an increase in sales activity in 2019 given the depth of the decline in 2018 and building off of the sales recovery noted in the back half of 2018,” Altus explained in its outlook for this year.

Ontario’s markets outside the GTA, particularly Kitchener-Waterloo, will also continue to see housing strength. Condo affordability will carry over from last year, which will help attract more hopeful home owners.

All of these are expected to offset Ontario’s relatively subdued 2018, in which the market cooled noticeably due to B-20 and new development charges.

Copyright © 2019 Key Media Pty Ltd

Akimbo, a 40-storey residential tower, aims to embody sense of confidence and boldness

Kathleen Freimond
The Vancouver Sun

Akimbo

Project address: Dawson Street and Madison Avenue, Burnaby

Developer: Imani Development

Architect: IBI Group Architects

Interior designer: Area3 Design

Project size: 40 storeys; 350 units

Bedrooms: one, two and three bedrooms

Unit size: 460 to ,2050 square feet

Price: From $529,980

Construction: Estimated completion 2022

Sales centre: 2152 Douglas Road, Burnaby

Sales centre hours: Now previewing; Open noon — 5 p.m., Sat — Thurs

Phone: 604-359-7728

Website: akimboliving.com

Standing akimbo — with hands on hips and elbows turned outward — exudes a sense of confidence and boldness, said Payam Imani, founder and CEO of Imani Development, adding that the firm’s new 40-storey residential tower Akimbo will epitomize those same 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,” notes Imani, who says the decision was made three years ago to create an architecturally significant building in the neighbourhood.

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

“It will be a beautiful addition to the Burnaby skyline,” Imani says. “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. A boardroom – useful for residents who may want to hold business meetings – is also planned for the ground level.

Residents will be able to enjoy a range of other amenities on the fourth floor. These include a fully equipped gym, a guest suite for residents’ visitors, and indoor and outdoor social areas. The sophisticated design of the lounge is a favourite for interior designer Lisa Hansen, principal with Area3 Design.

“It’s going to be reminiscent of a boutique hotel, inspired by having a cocktail in a nice lounge,” she says.

Outdoor amenities include a dining area and kitchen, kids’ play space, gardening beds and natural grass areas.

Akimbo is designed to attract a range of buyers, says Imani, who believes a variety of buyer demographics results in a healthy building. To achieve that mix, there needs to be an array of floor plans and unit sizes and the building needs to function well, he adds.

“We [Imani Developments] have always attracted a large percentage of end users and investors. The end users are a mix of first-time homebuyers, downsizers, and everyone in between.”

For the interiors of the one-, two- and three-bedroom homes, Hansen 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. I aim for a design with longevity,” she says.

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.”

However, both schemes provide neutral backdrops that will enable buyers to easily personalize the space without contradicting the design esthetic, she adds.

Both palettes are on display in the sales centre at 2152 Douglas Road in Burnaby. A kitchen showcases the Dark scheme, while a two-bedroom-and-den condo presents the Light option. In both schemes, Hansen used quartz for the kitchen countertops and backsplash.

“The fewer changes in material, the easier it is on the eye,” she explains.

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.

“Using the same countertop and backsplash in each scheme makes it luxurious and elegant and the waterfall gables [on the islands] are a feature that is very refined,” Hansen says.

The European-inspired 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, she 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.

“It’s nice to give the same sense of luxury, but in a material that sets [the units] apart. The tagline for Akimbo is ‘Stand Apart’ – we didn’t want to look like every other development,” says Hansen.

Other special features in the ensuite bathroom include a medicine cabinet with a practical ‘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. All bathrooms have polished chrome Grohe faucets and showerheads.

Each unit at Akimbo has parking and storage space. Transport-related amenities include a car wash, bicycle repair stations, access to care-share vehicles and a fast charger for electrical cars.

Construction is expected to begin in 2019 with completion scheduled for 2022.

© 2019 Postmedia Network Inc.

The principal residence exemption has some limitations

Jamie Golombek
The Vancouver Sun

One of the most valuable tax breaks Canadians have is the ability to claim the principal residence exemption (PRE) on the sale of a home. The PRE provides homeowners with an exemption from tax on the capital gain realized when you sell the property that you have designated as your principal residence.

Recent changes to the Canada Revenue Agency’s requirements now require you to report the sale of your principal residence on your tax return. The designation of your principal residence is reported on Schedule 3 of your return and you must also complete the appropriate sections of Form T2091(IND), Designation of a Property as a Principal Residence by an Individual.

Under the Income Tax Act, in order for a property to qualify as your principal residence for a particular tax year, four criteria must be satisfied: the property must be a housing unit; you must own the property (either alone or jointly with someone else); you or your spouse or kids must “ordinarily inhabit” the property; and you must “designate” the property as a principal residence.

Note that a seasonal residence, such as a cottage, cabin, lake house or even ski chalet can be considered to be “ordinarily inhabited in the year” even if you only use it during vacation periods “provided that the main reason for owning the property is not to gain or produce income.”

The statutory definition of “principal residence” limits the amount of land that qualifies for the exemption to half a hectare (one hectare contains 2.47 acres) unless the taxpayer can show that the excess land was necessary for the use and enjoyment of the housing unit. This “half-hectare rule” was the subject of a recent tax case in which the taxpayer attempted to claim the PRE on the 2012 sale of a portion of her property. The CRA denied the PRE and assessed capital gains tax, which is why the matter wound up in court.

Between 1985 and 1991, the taxpayer purchased four adjacent pieces of land in rural Quebec, in four separate real estate transactions, amassing a total of approximately 4.17 acres. Her housing unit was located on the land acquired in the first transaction. The other three pieces of land, ultimately merged to form a second lot, were used to build a pool, a barn, a garage, a septic field and a sugar shack.

In July 2012, the taxpayer sold 1.47 acres of the property to the local municipality for the expansion of the municipal aqueduct. The property sold was a woodlot representing 33 per cent of the second lot. She received $100,000 for this piece of land which she had acquired in 1986 for $500. Needless to say, she did not report the capital gain on her return, maintaining that the PRE should apply. She argued that the woodlot sold was “the main source of wood used to heat (her) house” and thus was integral to her use and enjoyment of the property.

The CRA disagreed and reassessed the taxpayer, adding a taxable capital gain of nearly $50,000 to her income for 2012, maintaining that the “disposition of 1.47 acres of land immediately contiguous to the housing unit was in excess of half a hectare and that excess did not contribute to the use and enjoyment of the housing unit as a residence,” as required by the statute.

Thus, the only issue before the court was whether the piece of land sold was actually necessary for the use and enjoyment of the housing unit as a residence.

The judge reviewed the usual criteria which sometimes can allow a piece of property greater than a half hectare to qualify for the PRE. In this case, the lot sold did not include the house or any other buildings which would have contributed to the use and enjoyment of the housing unit by the taxpayer. The three subsequent land purchases after the initial transaction “were not made by necessity for the use and enjoyment of her housing unit but rather as a choice of lifestyle.” The land sold was not required in order to provide the taxpayer with access to and from a public road and the local municipality does not have any regulation requiring that a housing unit residence must be built on a lot that exceeds a half hectare.

In her defence, the taxpayer argued that her housing unit is equipped with a wood heating system, an electrical system and a gas fireplace and that hardwood cut on her property is normally sufficient to heat her house during the winter. She said that occasionally, she had to purchase supplementary wood to heat her house which was poorly insulated when she acquired it.

Yet, in court, the taxpayer could not provide any detailed information concerning the heating system now in place in her house nor the type and quantity of wood cut every year from her property to heat her house and the sugar shack.

The judge therefore concluded that the taxpayer could not establish “on a balance of probabilities” that the land sold, which represented 33 per cent of the total area of the property, was necessary for the use and enjoyment of her housing unit as a residence. In fact, she still kept 2.7 acres with a woodlot on it.

The judge felt that the land sold was not necessary to fulfill its function as a residence. As the judge wrote, “A simple statement that wood was cut on the piece of land sold, to heat her house, is not sufficient to allow the (taxpayer) to meet her burden of proof that the piece of land was necessary for the use and enjoyment of her housing unit as a residence.”

As a result, the CRA’s assessment was confirmed and the taxpayer was required to include the taxable capital gain in her 2012 income.

© 2019 Financial Post

Victory saw the highest level of housing construction in 2018

Josh Sherman
other

Downsizing Baby Boomers and local job growth were among the major factors that spurred the highest level of housing construction in Victoria, BC, since 1976.

In December alone, contractors broke ground for 775 homes, up from 204 housing starts observed during the same month in 2017, according to the Canada Mortgage and Housing Corporation (CMHC), which tracks homebuilding activity each month through surveys and site visits.

Total 2018 starts in Metro Victoria numbered 4,273 units, up from 3,862 units in 2017.

“Rental units were half of all housing starts in 2018 in response to heightened rental demand and low vacancy rates,” writes CMHC in its December 2018 housing starts report.

Part of that demand stems from demographic trends, suggests Peter Gabey, a partner at DFH Real Estate, a Greater Victoria-based real estate firm. “Now we’re seeing the effect of Baby Boomers retiring,” he tells Livabl.

Not only are downsizing Boomers creating demand for condos in Victoria, they are also behind some of the increased interest in rental accomodations. “Our vacancy rate is super low, like we’re around 1 percent,” Gabey adds.

At the same time, low interest rates have favoured developers as they financed construction over the past year, Gabey notes.

There are other factors that have supported Victoria’s homebuilding boom. One of them has to do with a burgeoning local tech industry, says Bryan Yu, deputy chief economist for Central 1, a BC-based credit union.

“The region itself has benefitted from a very low unemployment rate [and] a strong labour market in recent years,” Yu tells Livabl.

“We’re actually hearing a lot of noise about more technology workers and technology companies setting up shop in Victoria because it’s cheaper,” he continues.

The same is true for the cost of owning a home. The average price of a single-family home in Victoria last month was $850,562, while the benchmark price of a detached home in Greater Vancouver was $1,479,000.

It should be no surprise then that Victoria’s relative affordability compared to Vancouver has been attracting homebuyers from the Lower Mainland.

“Some individuals who are looking for affordability can’t afford that [cost of housing] in the Lower Mainland, so they’re spreading their wings a little bit and going into other smaller cities,” Yu explains.

As demand has increased for ownership housing, prices have increased, pushing some local would-be buyers to the rental market, which has fed into that segment’s exuberant rate of construction for new apartments.

So will the homebuilding boom continue in 2019? Yu sees a calmer year ahead.

Province-wide Central 1 anticipates housing starts will drop by about 20 percent this year, due largely to mortgage stress testing and the weakened resale market, and Yu doesn’t expect Victoria will be spared from the effects of this either.

“I think it’s going to peter off. We don’t anticipate that this December bounce [in starts] is going to continue,” says Yu.

© 2019 BuzzBuzzHome Corp.

Canadian municipalities saw building permits increase in November

Steve Randall
REP

Building permits issued by Canadian municipalities saw an increase in November, the latest month of data available.

But new homes are not the intention with residential permits declining 2.5% to $5.0 billion, while non-residential permits increased 3.3% to $3.3 billion.

The decline for home building intentions was seen across five provinces led by Ontario which posted an 8.1% decrease in single-family permits to $930 million – the lowest since January 2016 – and a $232 million decline in multifamily intentions.

Quebec saw the largest rise overall, including a $204 million gain for multifamily permits.

Single-family permits nationwide totaled $2.2 billion in November, a 5.5% decrease after increasing 4.7% the previous month. Multifamily permits totaled $2.9 billion, down 0.1% from October.

Municipalities approved the construction of 19,378 new dwellings (-3.1%), consisting of 4,725 single-family units (-7.0%) and 14,653 multi-family units (-1.8%).

Commercial buildings led the gains In the non-residential sector, it was commercial properties that led the rise in permits.

This segment posted a 16.8% increase to $2.1 billion, the highest level since May 2007. Office buildings in the Vancouver and Quebec CMAs were the largest driver of this rise.

The value of industrial building permits rose 21.9% to $527 million in November, snapping three monthly declines. The increase was mainly attributable to permits for new agricultural buildings.

Copyright © 2019 Key Media Pty Ltd

Reverse mortgages sought by more seniors

Steve Randall
REP

Continued interest by Canadian seniors in reverse mortgages has helped boost originations at HomeEquity Bank.

The company says it originated $767 million reverse mortgages in 2018, up 26% from the previous year with its mortgage broker and bank referral business showing significant growth.

“We are extremely proud of our results achieved in 2018, with our fifth consecutive year of 20 per cent plus year over year growth,” shared Steven Ranson, HomeEquity Bank President and Chief Executive Officer.

The firm also rebranded to focus on helping Canadians in retirement, demonstrated by its ad campaign which gives a humorous treatment to the issues Canadians face in retirement.

Canadians are living longer and more fulfilled lives in retirement and they consistently share with us their desire to age in place,” added Ranson. “We are privileged to help Canadians access their home equity through our product offerings and help them retire in the home they love. We look forward to continuing our growth in 2019 and beyond.”

New product launch HomeEquity Bank also launched a new product in 2018 – CHIP Max – which gives extra access to home equity for select clients.

As well as reverse mortgages the company provides home equity loans and GICs.

“We are extremely proud of our results achieved in 2018, with our fifth consecutive year of 20% plus year over year growth,” shared Steven Ranson, HomeEquity Bank President and Chief Executive Officer. “Canadians are living longer and more fulfilled lives in retirement and they consistently share with us their desire to age in place. We are privileged to help Canadians access their home equity through our product offerings and help them retire in the home they love. We look forward to continuing our growth in 2019 and beyond.”

Copyright © 2019 Key Media Pty Ltd

Greater Golden Horseshoe to show significant growth

Steve Randall
REP

Sales of new homes should be positive in 2019 despite the challenges of affordability and interest rates.

A report from the Altus Group points to elevated immigration levels as a key driver of sales, along with demand from first-time homebuyers and tight rental markets.

Among the downsides to the market, higher construction costs and economic growth issues may dampen sales in some markets.

The Greater Golden Horseshoe including the GTA is expected to show significant growth, given the slump in 2018 and signs of improvement for the market in the second half of last year.

The economy in Calgary and Edmonton is expected to weaken new home sales but the report does not expect a decline based on current activity levels.

However, Montreal and Vancouver are forecast to see a downturn in new home sales.

For Montreal, that is due to the exceptional performance in 2018 which is set to be fall back to more normal levels.

For Vancouver, Altus says the decline in sales due to higher costs for both developers and borrowers. The easing of sales is still predicted to remain at or close to the 10-year average for the market.

Copyright © 2019 Key Media Pty Ltd

BoC holds rate at 1.75 percent

Steve Randall
REP

The Bank of Canada’s decision to hold interest rates at 1.75% was not unexpected; neither is its tone on the road ahead.

Governor Stephen Poloz reiterated the central bank’s position that rates will need to rise to a more neutral range to keep inflation in check, but with some economic concerns remaining it seems likely that this will be a gradual process.

Growth for the Canadian economy was downgraded in the BoC’s report Wednesday, from the 2.1% forecast for 2019 it released in October, to 1.7%.

The three things that are key for future rate decisions are consumer spending, the oil market, and… the housing market.

“Consumption spending and housing investment have been weaker than expected as housing markets adjust to municipal and provincial measures, changes to mortgage guidelines, and higher interest rates. Household spending will be dampened further by slow growth in oil-producing provinces. The Bank will continue to monitor these adjustments,” the BoC said in a statement.

Next rate rises There were some bright spots in the policy statement though, with non-energy investment and exports looking solid; and most of the economy operating close to capacity.

The Conference Board of Canada says that if economic growth hits expectations, there could be two interest rate hikes this year.

“Expecting the slowdown to be temporary, the Bank noted that many parts of the economy are doing well and that interest rates will need to increase to a neutral range. This supports our view that further interest rate increases are in store this year,” said Alicia Macdonald, Principal Economist, The Conference Board of Canada.

However Helmut Pastrick, chief economist at Central 1 Credit Union says that rate rises will be seen “within the next two years” but is less optimistic than the BoC on future growth.

Looking to 2020, the BoC is calling for growth to rise to 2.1% but Pastrick believes it will be 1.7%, the current BoC expectation for 2019.

“The bottom line is that rate will remain low and below the neutral range into the foreseeable future,” he says.

Copyright © 2019 Key Media Pty Ltd

Heinrichs Developments project takes a location in the heart of downtown Abbotsford

Simon Briault
The Province

Court

What: 153 homes

Where: 2814 Gladwin Road

Residence size and prices: approximately 600 to 1,750 square feet. Prices start at the low $300,000s for one-bedroom homes and the low $400,000s for two-bedroom plans and loft homes

Developer: Heinrichs Developments

Sales centre: 33323 South Fraser Way

Hours: noon — 5 p.m., Sat — Thurs

Telephone: 604-621-5888

The builders responsible for Court, a new condo project in the heart of Abbotsford, are quite happy being small players in the residential development market. In fact, the website for Heinrichs Developments highlights how the small team helps the company to be “approachable, efficient and cost effective” in the way that it operates.

“Gerald Heinrichs, my uncle, has been in the industry for about 25 years, building both in the Okanagan area and also in the Fraser Valley,” said Andrew Heinrichs, the company’s development manager.

“The owners who buy our homes are looked after by Heinrichs representatives, who know everything about the product. We’re physically building the home and then handing you the keys as well, rather than keeping buyers at arm’s length by bringing in multiple third parties.”

The result, according to Heinrichs, is a superior end product and a higher level of customer service than you might expect from a homebuilder.

With an address of 2814 Gladwin Road – right in the heart of Abbotsford’s rapidly growing downtown – Court comprises two six-storey condo buildings and 153 homes.

Kitchens feature flat-panel cabinetry with soft-close doors and drawers, recessed pot lighting and polished quartz countertops accented by stacked vertical porcelain tile backsplashes. The stainless-steel appliance packages are by Whirlpool.

Bathrooms have flat-panel cabinetry with soft-close doors and drawers, polished quartz countertops with undermount porcelain sinks and oversized geometric floor tiles in matte porcelain.

Along the Gladwin Road and Landeau Place sides of the development will be multi-level units with big loft spaces inspired by a Scandinavian, industrial feel. These will include exposed brickwork and glass railings overlooking the spaces below.

“We’re right near the main shopping corridor in Abbotsford,” Heinrichs said. “We’re just off South Fraser Way, which the City of Abbotsford has determined in its community plan to be the central corridor. It’s in a very central, interconnected, walkable and transit-friendly location.”

The brochure for Court lists no fewer than 43 amenities in the local area – everything from restaurants, shopping and schools to health and wellness outlets. The development is within easy reach of Mill Lake Park, which includes an outdoor pool, a water park, three separate playgrounds, several picnic areas and rest stops, as well as a small dock.

“The homes are definitely at an affordable price point for many people,” said Heinrichs. “We’re trying to cater to both entry-level homebuyers and the investor market, as well.”

Sandy Chang, who has bought a two-bathroom home on the third floor, fits the bill perfectly.

“I was born and raised in Vancouver and me and my best friend bought this place as an investment because we know that the market is heading out east,” she said. “We plan to rent it out, probably to students. We knew that Abbotsford is a growing city and there could be a lot of new development coming to the area so we wanted to get in early.”

© 2019 Postmedia Network Inc.