Key professions in the BC real estate sector gave recommendations on money laundering

BCREA

Organizations representing key professions in the BC real estate sector submitted joint recommendations to the provincial and federal governments today to help protect BC’s housing market from money laundering.   The participating organizations include the British Columbia Real Estate Association, the Appraisal Institute of Canada – BC Association, BC Notaries Association, Canadian Mortgage Brokers Association – British Columbia, and the Real Estate Board of Greater Vancouver.   In their submission, these organizations also commit to shared best practices to help keep the proceeds of organized crime out of the economy. Their efforts focus on helping protect the real estate market from unscrupulous operators and ensuring the public can have full confidence in BC’s real estate market. All of the organizations have fully supported and participated in the government’s investigations into money laundering and real estate.   A real estate transaction involves multiple professionals. It will take a coordinated effort by all involved, working in collaboration with government, to stop money laundering. The joint recommendations and best practices submitted by these organizations reflect their commitment to the professionals and consumers they serve.

Real Estate Sector Anti-Money Laundering Statement

                                    As a group of real estate organizations representing industry professionals, we are committed to a transparent real estate market and to ensuring that the public can continue to have full confidence in the real estate industry. Illegal funds have no place in BC’s real estate market. We are supportive of the government’s investigations into money laundering and real estate, having actively participated in Peter German’s review and the Expert Panel on Money Laundering. As an industry, we have come together to commit to shared best practices and make recommendations to government. By aligning as an industry and working in collaboration with government, we can help facilitate an environment in which consumers are well-served and industry professionals can thrive.
Anti-money laundering recommendations Our collaboration has resulted in a commitment from the undersigned organizations to pursue the following shared best practices and recommendations for government:

1. Accept only verified funds – For sectors of real estate that are not already required to do so, we recommend that they accept funds only in forms that are verifiable through Canadian financial institutions.  
2. Mandatory anti-money laundering education – We recommend the introduction of mandatory anti-money laundering education for all real estate professionals subject to the reporting requirements administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to ensure that those professionals are trained in recognizing and reporting suspicious transactions. FINTRAC should work with sector organizations, regulators and the provincial government to improve existing resources so that they better reflect real-world situations and improve compliance.  
3. Smart regulation – We recommend that the federal government amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to allow FINTRAC intelligence to be made available to additional regulatory authorities, including the BC Securities Commission and the Financial Institutions Commission (FICOM). Optimally, the federal and provincial governments, as well as their respective agencies, should coordinate their actions, share information, such as the provincial assignment registry, and create a comprehensive, efficient enforcement regime.  
4. Ongoing engagement – We recommend governments and regulatory agencies, including FINTRAC, better utilize on-the-ground experience of real estate professionals to develop compliance resources and test policy ideas. This will result in well-crafted, practical regulation and foster a culture of compliance to protect consumers and the economy.  
5. Timely and transparent reporting – We recommend that FINTRAC implement a framework to identify and report trends on a regular basis and in language that is consistent and understandable to professionals, the public and media. This reporting system should also include consistency in examinations with immediate feedback designed to help industry professionals improve their compliance systems.

Copyright ©2019 BCREA

March sales were down 27% from March 2018

BCREA

The British Columbia Real Estate Association (BCREA) reports that a total of 5,707 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in March, a decline of 23 per cent from the same month last year. The average MLS® residential price in the province was $687,720, a decline of 5.4 per cent from March 2018. Total sales dollar volume was $3.9 billion, a 27.1 per cent decline from the same month last year.

“BC home sales continue to be adversely impacted by federal mortgage policy,” said BCREA Chief Economist Cameron Muir. “The erosion of affordability caused by the B20 stress test has created near recession level housing demand despite the province boasting the lowest unemployment rates in a decade.”

“The sharp erosion of affordability caused by the B20 stress test is now creating pent-up demand, as many would-be home buyers are forced to wait on the sidelines,” added Muir. “Unfortunately, new home construction is slowing as well, which will likely lead to another housing supply crunch down the road.”

Total MLS® residential active listings increased 36.2 per cent to 34,295 units compared to the same month last year. The ratio of sales to active residential listings declined from 29.4 per cent to 16.6 per cent over the same period.

Copyright ©2019 BCREA

Office vacancies running out

Ephraim Vecina
Mortgage Broker News

Office vacancy and availability supply have fallen further in downtown Vancouver since Q3 2018, according to research by Avison Young.

In its Tenant Profile Report Q1 2019, Avison Young stated that all tenant sizes are running out of options in the city, contributing to a steady increase in rents – a trend that will, in turn, continue the vicious cycle of price growth.

“Rising rental rates and highly limited availability may start forcing tenants to consider locating outside of Downtown Vancouver in order to fulfill their office requirements. With limited relief until at least 2021 in terms of new development and vacancy expected to remain historically low through 2019 and 2020, upward pressure on rents is likely to continue for all tenant sizes,” Avison Young stated.

In particular, small tenants (those with size requirements of 1,500 -2,500 square feet) are faring the worst in this environment, with total availability falling from 1.3% in Q3 2018 to 0.59% in Q1 2019.

Tenants looking for space sizes of 10,000 – 15,000 sf are also having trouble, as the availability of such spaces fell by more than 80 basis points to 0.2%.

Moreover, large-scale tenants (those looking for spaces exceeding 30,000 sf) are facing similarly tight availability rates, with the nature of their requirements compelling them to take several other factors into account.

“Large tenants will have to plan much farther ahead than typical and explore future opportunities through preleasing or backfilling space that may become available in the future,” Avison Young explained. “They will need to be proactive and flexible well in advance of their lease expiry simply to find an option that suits their existing needs, let alone improve on their current office space.”

“Location, amenities, eco-friendly standards, access to public transit, floorplate size, IT infrastructure and building security along with lease costs are important considerations for tenants reviewing their real estate requirements. However, various combinations of these variables can limit the amount of options available to tenants and may have significant implications for overall cost and deal structure.”

Copyright © 2019 Key Media

The right to adequate housing for all

Steve Randall
Canadian Real Estate Wealth

The federal government announced Thursday that it is adding more strength to the National Housing Strategy.

The right to adequate housing for all Canadians will be supported by several key initiatives:

• Requiring the adoption and maintenance of a National Housing Strategy (NHS), that prioritizes the housing needs of the most vulnerable and requires regular reporting to Parliament on progress toward the Strategy’s goals and outcomes.
• Establishing a National Housing Council with diverse representation, including persons with lived experience of housing need and homelessness. The Council, supported by CMHC, will provide advice to the Minister on questions related to the NHS with the aim of improving housing outcomes.
• Creating a Federal Housing Advocate, supported by the Canadian Human Rights Commission, to identify systemic housing issues facing individuals and households belonging to vulnerable groups, and provide an annual report to the Minister with recommended measures, which will be tabled in Parliament.

“Through the National Housing Strategy, more middle-class Canadians – and people working hard to join it – will find safe, accessible and affordable homes. Our proposed human rights-based approach to housing, as well as the resource centre, will help strengthen the National Housing Strategy, ensuring that it delivers concrete results for the benefit of all Canadians,” said Jean-Yves Duclos, Minister of Families, Children and Social Development and Minister Responsible for Canada Mortgage and Housing Corporation.

Resource centre Also announced, is a new resource centre from CMHC which will be managed by the Community Housing Transformation Centre to build a strong and resilient community housing sector.

CHTC will receive $68.6 million for administering the resource centre and two important initiatives under the NHS:

• A Sector Transformation Fund to provide non-repayable contributions that support building a strong and resilient community housing sector.
• A Community-Based Tenant Initiative to provide contributions to local organizations whose purpose is to assist people in housing need, support tenants in accessing information on housing options, and encourage better participation in housing decisions that affect them.

“When CMHC held public consultations to develop the Strategy, we heard that Canadians believe everyone deserves to have the dignity of a home. The most promising way to sustain this approach for future generations is to protect it through legislation. Enshrining the need for a National Housing Strategy in law inherently acknowledges the value of a coordinated approach, a shared vision and real accountability. It is a way to bring housing and “rights” closer together. This idea really is central to our thinking at CMHC: housing matters,” said Evan Siddall, President and Chief Executive Officer Canada Mortgage and Housing Corporation.

Copyright © 2019 Key Media Pty Ltd

Squamish Nation project to spark debate

Joanne Lee-Young
The Vancouver Sun

The Squamish Nation’s plan for a housing project with some 3,000 units on land adjacent to the Burrard Bridge and Vanier Park is destined to be one of the most interesting examples in the debate over the needs of future residents and that of existing residents.

“I think there is going to be an important conversation about what kind of housing we are going to build for the city,” said Khelselim, a Squamish council member. “What do local residents need against the future of people who need homes, young people and young families?”

He was commenting on protests by some Kitsilano residents against a rezoning application to build a much more modest density in the neighbourhood: a five-storey apartment with 63 units, described by some as a “monstrosity.”

The Squamish Nation project on the eastern edge of the Kitsilano neighbourhood will be unique in that, considering the scale and location, City Hall will have no power to regulate what is built because it is on reserve lands.

The nearest neighbours include the Molson brewery, a highrise apartment building at the corner of Burrard Street and Cornwall Avenue, and a series of condo buildings that average about 10 storeys in height between the bridge and Granville Island.

“This is what reconciliation looks like,” Vancouver Mayor Kennedy Stewart said. “The prospect of new rental units in our city is exciting, as is the opportunity for the Squamish Nation to further strengthen their community. I’m looking forward to talking government to government as this plan moves forward.”

There are two other major real estate projects in Vancouver in planning that involve First Nation groups: the 90-acre Jericho Lands in West Point Grey and a plan for 2,500 homes on 21 acres at the Heather Land in the Cambie Corridor.

This much smaller Squamish Nation site is located south of Kits Point in a t-shape that touches Arbutus Street, includes the area around the south end of the Burrard Bridge and stretches down with land in from the south False Creek waterfront, west of Granville Bridge.

“It’s been a very important place for our people for thousands of years,” Khelsilem said of the Burrard Bridge property. He said Squamish elders talk about having a much more land here before forced buyouts and expropriations.

The Squamish council is not naming the developer partner yet. Aside from the approximate number of units, it’s not known the extent to which other details, such as the total number, size and exact location of buildings, commercial spaces and public areas, have been proposed for nation members to consider.

Khelsilem said the response from nation members has been “quite positive and supportive in terms of the project and for the Squamish Nation as a regional player and what we need to do for our people.”

The next step is to seek approval in a referendum. Further details will not be disclosed until business arrangements and other terms are settled in a process that will take around six months, according to Khelsilem.

To imagine 3,000 dwellings compressed onto this T-shaped space, Aaron Licker, a geospatial consultant, used census data to compare its size to the lower density areas of Kitsilano holding 3,000 dwellings. It’s a large rectangular chunk compared to the Squamish Nation’s tiny sliver and suggests that much higher heights will be required under the Squamish proposal.

Licker said: “Good or bad, it’s not for me to say, but it’s interesting to ask: ‘Is it that we are housing so inefficiently now? Or is this just crazy density right by Burrard Bridge? Kits is super-duper topical right now.”

 © 2019 Postmedia Network Inc.

First Nation could add up to 3,000 housing units on its land in Kitsilano

other

The Squamish Nation is planning a massive housing development that could change the face of Kitsilano and False Creek.

The project could see as many as 3,000 units built on Squamish Nation land at the south end of the Burrard Bridge, according to Squamish council member Khelsilem, 

“Given its proximity and location, the nation has always identified it for economic development,” Khilselim told On The Coast host Gloria Macarenko, adding the money generated by the housing could fund social, education, health and housing programs for the nation’s members.

“It’s an opportunity to provide housing for the City of Vancouver but also to change the dynamic of the Squamish Nation and perhaps the history for the next 150 years.”

According to a statement from the City of Vancouver, Squamish Nation does not need approval from city council to redevelop the area. 

Khilselim said the site is federal land owned by the Squamish Nation.

“The Squamish Nation Council is actually the government in charge of these lands.”

The irregularly shaped parcel of land stretches north from Chestnut Street along the the west side of the Burrard Bridge to the edge of False Creek, and eastward toward 1st Avenue along the south side of Pennyfarthing Drive. 

Once constructed, the project could lead to changes in the neighbourhood, but Khilselim said the goal is to work with the community as the project moves ahead.

“We’ll be engaging our own members as well as members of the public in that process to really create something that I think everybody can be excited about,” he said.

Khilselim said the project will create badly needed rental housing in the region and he hopes it could connect to the transit system — possibly through light rail.

“I think the Squamish people very much understand what it means to have densification happen within our home communities,” he said.

“There’s been an abundance of wealth created within Vancouver … and so we want to get into that as well and create those opportunities for ourselves.”

He said the next step would be to request proposals from developers.

©2019 CBC/Radio-Canada

Limited inventory driving commercial real estate

Steve Randall
Canadian Real Estate Wealth

Vancouver’s industrial real estate sector is seeing some overinflated values as limited inventory is in demand from developers and investors.

The market conditions mean that traditional owner-occupiers in the sector are being left on the sidelines for freestanding buildings and were mainly buying strata units in 2018.

Avison Young says that despite recording the second-fewest deals (47) completed in a year since 2010, Vancouver industrial dollar volume hit a new record of $295.6 million in 2018 – far surpassing the previous dollar volume record of $201 million set in 2017.

“This year we are seeing many examples of hugely inflated assessed values exceeding current market value, creating some unrealistic vendor expectations,” comments Avison Young Principal Russ Bougie who focuses on industrial sales and leasing transactions.

Three key deals made up a significant portion of the dollar volume in 2018: the sales of Main Industrial Park ($43.17 million), 8351& 8365 Ontario Street ($29.25 million) and 1691 West 75th Avenue ($23 million), all of which were acquired by private investors/developers for a total consideration of $95.42 million (or 32% of the total).

Leasing activity to remain subdued “Industrial leasing activity has slowed with vacancy at 1.4% at year-end 2018 and there is limited new space for lease in the development pipeline,” says Avison Young Principal Kevin Kassautzki who focuses on industrial sales and leasing in Vancouver. “Rising rental rates combined with few available options in older buildings will continue to limit leasing activity in 2019.”

Copyright © 2019 Key Media Pty Ltd

International Monetary Fund concerned about Canadian housing market

Canadian Real Estate Wealth

The International Monetary Fund has expressed concern about rising risk in the Canadian housing market.

The IMF’s Global Financial Stability Report says that the risk has grown over the past two years and is near to levels seen during the financial crisis of the last decade.

However, there’s a major difference between then and now; the action taken by Canadian regulators to ensure that the financial system is robust and able to withstand another crisis.

While the B-20 mortgage guidelines – and the stress test in particular – has many critics, the IMF says that tougher mortgage policy and measures such as foreign buyers’ taxes, are the correct ones to protect the financial system from downside risks from the housing market.

Canada up, USA down While Canada’s housing market has become riskier, the report says that the US risk is lower than it was due to declining levels of household debt and prices more in line with income.

But it says that Canadian markets have become riskier, especially Hamilton, Toronto, and Vancouver.

Copyright © 2019 Key Media Pty Ltd

Canadian residential real estate slow through first quarter

Neil Sharma
Mortgage Broker News

Residential real estate in Canada slowed through the first quarter compared to the same time last year.

The Royal LePage House Price Survey revealed that, early last year, Canada went through the most pointed housing correction since the Great Recession in 2008, and while signs of recovery manifested in late 2018, they have since receded.

Year-over-year in the first quarter of 2019, national home price growth decelerated considerably to 2.7%, and prices in western Canada are slated to henceforth decline. The Greater Toronto Area, the largest regional housing market in the country, is showing signs of stability, much of which is propelled by low inventory. Additionally buoyed by an ameliorating job market, Ontario carried the national average, which would have been 0.4% without it. Toronto’s median home prices increased 5.8% year-over-year during Q1 2019.

“The City of Toronto is still one of Canada’s fastest appreciating real estate markets,” said Phil Soper, Royal LePage’s president CEO. “Detached home prices are still rising in line with inflation, but condominium prices are increasing at nearly double-digit levels as vertical living has become the primary new-build option in this growing, world-class city.”

Although British Columbia’s economy is robust, its housing market’s well-documented struggles persist. During the first quarter of this year, Greater Vancouver home prices declined year-over-year for the first time in seven years, with the aggregate price declining 1.5% to $1,239,306.

“The Greater Vancouver area remains one of the most desirable places to live in the world,” said Soper. “Population growth is driving household formation and employment levels are high. Yet policy intervention has induced a drop in home sales to levels not seen in three decades. Hammering consumer confidence and artificially choking off demand with a series of new taxes and restrictive regulations doesn’t eliminate the need for new housing, it simply sidelines families in the short-term and fuels a disruptive boom-bust cycle.”

Tellingly, some of Greater Vancouver’s most desirable regions have witnessed dipping housing prices. High-end submarkets, like West Vancouver, North Vancouver, Burnaby, and the City of Vancouver, are all declining, and that has, in effect, produced a rare opportunity for luxury homebuyers.

Montreal is, however, enjoying a prosperous housing market the likes of which Toronto and Vancouver enjoyed in recent years. Aggregate home prices in Greater Montreal rose 5.5% year-over-year to reach $406,332. In fact, the rate of home price appreciation outpaced the national average, as well as rates in the GTA and Greater Vancouver.

Copyright © 2019 Key Media