A quarter of new homes are social and supportive homes

Steve Randall
Canadian Real Estate Wealth

There have been 15,404 new homes created in Vancouver in the last two years according to official figures.

The City of Vancouver says it is a record number of homes created and that it is making steady progress towards its target to create 72,000 homes by 2027.

Of the new homes over the past two years, 3,640 are social and supportive homes, 1,300 are laneway homes, 1,851 are purpose-built rental homes, 8,338 are condominiums, and 275 are townhouses.

More than 930 social and supportive homes and over 1,400 purpose-built market rental homes were built in 2018 alone, well above the 2017 number of 750 for those two types combined.

“I’m pleased to see that solid progress is being made less than two years into the housing strategy,” said Mayor Kennedy Stewart. “The report shows approvals for several types of housing are at an all-time high but are also where we need to work harder to create more affordable options – especially for minimum and low-wage households.”

Of the homes approved in 2018, more than half were family-sized (2-3 bedrooms) as part of a scheme to provide larger family-orientated apartments and townhouses.

“Overall we’re moving towards the 10-year Housing Vancouver targets, with approvals and completions for social and supportive housing, family housing, laneways and market condominiums well above the annual targets,” said Gil Kelley, General Manager of Planning, Urban Design, and Sustainability.

Homes for those earning less than $50K The latest Housing Vancouver Annual Progress Report highlights that more homes are needed for those earning less than $50,000 a year and the Council is looking at several ways to do this.

“Options we’re pursuing include continuing to enhance our rental incentive programs, looking at how and where to introduce rental-only zoning, and continuing to work with other levels of government to encourage rental homes that are affordable to residents earning less than $50,000 per year, including those with very low incomes,” said Kelley.

Copyright © 2019 Key Media Pty Ltd

Metro Vancouver, Greater Toronto and Calgary are highly vulnerable real estate markets, according to global report

Joannah Connolly
Western Investor

Canada’s biggest real estate markets are still at high risk of a sudden home price drop, according to a new global report by the International Monetary Fund, published this week.

The risk of a major price correction has increased over the past few years to a level not seen since the 2008 financial crisis that caused the U.S. sub-prime housing crash.

While the States bore the brunt of that housing bubble bursting in 2008, it’s now Canadian cities that are much more vulnerable to a correction, including Vancouver, Toronto, Hamilton and Calgary, said the report.

The report authors wrote that U.S. home prices currently seem less overpriced than they did just before the 2008 recession, as U.S. prices have not escalated dramatically since that crash. They then compared this with the current Canadian real estate market.

“In contrast, the housing market in Canada headed in the opposite direction, especially in cities such as Hamilton, Toronto and Vancouver, where valuations look overstated, much as [U.S. prices did] in 2008,” said the report.

The IMF said that “the dynamics of housing markets in global cities are partially driven by capital flows… Capital flows [that are] generally attributed to foreign bank transactions are found to amplify downside risks to house prices in such cities as Las Vegas, Miami, Los Angeles, Toronto, Vancouver, and Calgary. In Canada, the effects are most pronounced for the major cities in Alberta, a province sensitive to oil fluctuations and where real house prices almost tripled over the past four decades but have recently seen a correction.”

The report also said there were medium-term risks of vulnerabilities in real estate markets in other countries, such as China. It added, “This may be a cause for concern for financial stability and for the global macroeconomic outlook over the medium term.”

Read the IMF’s full report here.

Copyright © Western Investor

More housing supply is needed

Neil Sharma
REP

Vancouver’s housing market has slowed considerably, but that doesn’t mean finding housing is any easier for its citizens.

“Just because the market is slowing, it doesn’t mean this market is not in need of more housing supply,” Matthew Boukall, Altus Group’s vice president of product management, told MortgageBrokerNews.ca. “It takes 24 to 36 months to get a typical project through approval, and a lot of the projects coming to market today were proposed in a different market cycle where they may have been designed, or positioned, for what people could afford back in 2016 or 2017, not today with new OSFI rules and other qualification challenges to buy a unit.

“From a permit perspective, it’s one of most challenging markets to get approvals to market in a timely way.”

Even the 20% levy on foreign buyers, designed to curb speculation and succour affordability for locals, has, perhaps perplexingly, made it difficult for Vancouverites to find housing.

“The tax won’t have a direct impact on Vancouver residents, but it does have an impact on how many units are being sold in Vancouver because foreign buyers are a big part of the market,” continued Boukall. “The speculative component of foreign buyers caused risk and concern in the market, but if you’re a foreign buyer who intended to buy and rent out that unit, you might not buy anymore, which means we might see a drop in units available for rental.

“For a developer, you may take a slower approach so you don’t rush projects to market. You’re looking for, not just sales signals, but price signals before you bring a project to market.”

Housing demand hasn’t tapered enough to diminish the impact of near record levels of under-construction in Canada’s third-largest city, added Boukall.

Toronto, the country’s most populous city, is similarly hampered by painstakingly slow approvals. The Residential Construction Council of Ontario has repeatedly expressed consternation over the persistent problem, and the organization’s president, Richard Lyall, believes it could even compromise investment in the city if left unchecked.

“Representing Canada, Toronto is 54th out of 190 countries assessed by World Bank in terms of the efficiency of its approvals process for routine building project,” Lyall said last year. “This ranking isn’t for an 80-storey mixed-development high-rise—it’s for the most basic of buildings such as a warehouse. We are a G7 nation—54th for Toronto, Ontario and Canada isn’t acceptable.”

Copyright © 2019 Key Media Pty Ltd

Royal LePage’s House Price Survey shows a sluggish start

Duffie Osental
Canadian Real Estate Wealth

The price of an average home in Canada increased by just 2.7% year-over-year in the first quarter of 2019 – a sign that the housing market may experience significant slowdown in the months ahead.

According to Royal LePage’s House Price Survey, which compiled property data in 63 of Canada’s largest real estate markets, the sluggish increase in home prices was well below the long-term norm of approximately 5%. Broken down by housing type, the median price of a two-storey home rose by only 2.6% year-over-year to $729,553, while the median price of a bungalow rose 1.1% to $513,497. Meanwhile, condominiums remained the fastest growing housing type on a national basis, rising 5.4% year-over-year to $447,260.

The study predicted that home prices will remain flat throughout the spring market, with several large markets showing signs of slowdown. Home prices in the Greater Vancouver area are expected to fall 1.4% over the next quarter, and economic activity in Alberta is forecasted to remain sluggish, with the aggregate price of a home in Calgary, Edmonton, and Fort McMurray falling marginally by 1.5%, 1.0%, and 0.8% to $468,974, $371,782 and $576,211, respectively.

On the other hand, the market is expected to be slightly better in Ontario. Ottawa is expected to post the highest price appreciation during the spring market and is forecasted to rise 2.8% to $482,459 during the second quarter. In fact, the aggerate price of a home in Ottawa has now surpassed that of Calgary for the first time.

In Toronto, median home prices 5.8% year-over-year in the first quarter of 2019. Two-storey home prices and bungalow home prices rose 4.8% and 2.5% year-over-year, respectively, while condominium prices rose 9.3% year-over-year.

“We are expecting this to be a sluggish year overall in Canada’s residential real estate market, with the hangover from the 2018 market correction and weaker economic growth acting as a drag on home price appreciation, balanced by lower for longer interest rates,” said Phil Soper, president and CEO, Royal LePage. “There is a silver lining here. This slowdown gives buyers, and first-time buyers in particular, an opportunity to buy real estate in our country’s largest cities.”

Copyright © 2019 Key Media Pty Ltd

More housing supply is needed in BC housing market

Neil Sharma
Mortgage Broker News

Vancouver’s soft real estate market has done little to relieve the squeeze constrained housing supply is putting on locals.

“Just because the market is slowing, it doesn’t mean this market is not in need of more housing supply,” Matthew Boukall, Altus Group’s vice president of product management, told MortgageBrokerNews.ca. “It takes 24 to 36 months to get a typical project through approval, and a lot of the projects coming to market today were proposed in a different market cycle where they may have been designed, or positioned, for what people could afford back in 2016 or 2017, not today with new OSFI rules and other qualification challenges to buy a unit.

“From a permit perspective, it’s one of most challenging markets to get approvals to market in timely way.”

While it may seem counterintuitive, the 20% foreign buyer tax is having an unwelcome effect on Vancouverites’ ability to find housing.

“The tax won’t have a direct impact on Vancouver residents, but it does have an impact on how many units are being sold in Vancouver because foreign buyers are a big part of the market,” continued Boukall. “The speculative component of foreign buyers caused risk and concern in the market, but if you’re a foreign buyer who intended to buy and rent out that unit, you might not buy anymore, which means we might see a drop in units available for rental.

“For a developer, you may take a slower approach so you don’t rush projects to market. You’re looking for, not just sales signals, but price signals before you bring a project to market.”

On Wednesday, Boukall and Altus colleague Jason Lo spoke at length to a Vancouver audience, providing both forecasts and risk assessments of the city’s housing market.

“The key risk we see today is, while the market is slowing down from a demand perspective with slow sales and price moderation, we’re still at near record levels of under-construction activity, so all the condos that have been sold in the last three years are still under construction, which means developers continue to face cost pressures.

“The second risk in the market is interest rates and qualification for consumers. The challenge is that there may be housing demand within the market, but it’s finding housing you can qualify for, be it new or resale. When we looked at some of our data from an intentions perspective, intentions were up modestly in Vancouver, year-over-year, but among first-time homebuyers it’s dropped.”

First-time homebuyers have typically bought into the market for fear of being priced out, however, today fear of the unknown is dissuading them from taking the plunge. Nevertheless, the federal budget’s incentives for first-time buyers, the full details of which have yet to be released, will inform much of what’s to come in the next year.

“Over the next 12 months, we think there’s going to be more supply in the market, which will keep sales at a reasonably strong pace, but we think it will be a slower year overall, with volumes dropping below last year’s levels. The big unknown is the impact of the federal budget and the election later this year. The specifics and timing of the budget incentives are uncertain, and if it’s truly going to help first-time buyers get into the market, it could contribute to a stronger spring and fall going into 2020.”

Copyright © 2019 Key Media

GTA home sales were flat in March

Steve Randall
Mortgage Broker News

GTA home sales were flat in March compared to a year ago with 7,187 units sold by Greater Toronto Area Realtors, just 1 sale short of last March’s total.

Sales for the first quarter of 2019 were down 1% year-over-year.

“The OSFI stress test continues to impact home buyers’ ability to qualify for a mortgage. TREB is still arguing that the stress test provisions and mortgage lending guidelines generally, including allowable amortization periods for insured mortgages, should be reviewed,” said TREB president Garry Bhaura.

New listings in March were down by 5.1% year-over-year and Q1 new listings were down by 1.5%, adding to the supply issues for the area.

“Bringing a greater diversity of ownership and rental housing online, including ‘missing middle’ home types, should be a priority of all levels of government,” added Bhuara. “TREB is happy to be taking part in the City of Toronto’s consultations for the Housing TO – 2020- 2030 Action Plan and will certainly be raising the supply issue during these discussions.”

The MLS Home Price Index Composite Benchmark was up by 2.6% cent year-over-year in March, while the average sales price was up by 0.5% year-over-year to $788,335. The average selling price for Q1 2019 was up by 1.1% year-over-year.

 “Market conditions have remained tight enough to support a moderate pace of price growth. Despite sales being markedly lower than the record levels of 2016 and early 2017, the supply of listings has also receded. This means that in many neighbourhoods throughout the GTA, we continue to see competition between buyers for available listings, which provides a level of support for home prices,” said Jason Mercer, TREB’s Chief Market Analyst.

Land tax opposition
TREB has reiterated its opposition to any increase to the Municipal Land Transfer Tax, which has been proposed by the City of Toronto.

“As the recent City budget process showed, the MLTT is not a sustainable revenue source from which to fund municipal programs. On top of this, additional MLTT on higher priced homes could have a trickle-down effect on the supply of homes throughout the housing price continuum,” said TREB CEO John Di Michele.

Copyright © 2019 Key Media

Decline in home prices in B.C. and slowing price growth across Canada provides opportunity to get into market, says real estate brokerage

Joannah Connolly
Western Investor

In recent years, it has been the home sellers who had the upper hand – and now it’s the turn of the buyer, according to national real estate brokerage Royal LePage

Falling home prices in major cities are the “silver lining” to the real estate market slowdown, creating an opportunity for first-time buyers to get into the housing market, said the brokerage’s president and CEO in its quarterly National House Price Composite, issued April 4.

Royal LePage found that the aggregate (weighted average of medians) home sale price in Greater Vancouver was $1,239,306, a 1.5 per cent drop compared with 2018’s first quarter. When broken out by housing type, the median sale price of two-storey homes and bungalows declined by 1.6 per cent and 3.3 per cent respectively, to $1,538,523 and $1,378,988.

The brokerage found that median price of a condo increased 1.4 per cent year-over-year to $679,393 – “a significant contrast to the double-digit price increases seen in the condominium segment in the first half of 2018,” said the report.

Royal LePage’s median prices show less significant declines than those reported by the Real Estate Board of Greater Vancouver on April 2, which looks at the benchmark price of typical homes. REBGV said the composite benchmark home price was down 7.7 per cent year over year to $1,011,200, while detached home prices were down 10.5 per cent year over year and condo prices had slid 5.9 per cent since March 2018.

In Greater Victoria, Royal LePage found that the aggregate sale price of a two-storey home was $923,480, up 6.9 per cent in Q1 2019 compared with Q1 2018. Again, this contrasts with the latest board-reported statistics on benchmark prices in the capital region, which pegged the price for a typical single-family house in the region at $741,000 in March, down 0.7 per cent from March 2018.

According to the price survey, the aggregate price of a home in Canada rose 2.7 per cent year-over-year to $621,575 in 2019’s first quarter, which Royal LePage describes as “well below the long-term norm of approximately five per cent.” The median sale price of a two-storey home in Canada in Q1 rose 2.6 per cent year-over-year to $729,553, and the median price of a bungalow increased 1.1 per cent year-over-year to $513,497. On a national level, condos saw the strongest price growth, rising 5.4 per cent over the past year to $447,260.

Phil Soper, president and CEO, Royal LePage, stated, “We are expecting this to be a sluggish year overall in Canada’s residential real estate market, with the hangover from the 2018 market correction and weaker economic growth acting as a drag on home price appreciation, balanced by lower-for-longer interest rates.”

He added, “There is a silver lining here. This slowdown gives buyers, and first-time buyers in particular, an opportunity to buy real estate in our country’s largest cities.”

Second-quarter forecasts

The brokerage predicted the national aggregate price of a home would rise just one per cent in the second quarter’s spring market. However, Royal LePage said it is expecting home prices in Greater Vancouver to fall 1.4 per cent between early April and the end of June. 

The report said interventionist government policy such as the mortgage stress test has dampened the market – and that the announcement of the First Time Home Buyer Incentive in the recent Federal Budget could further influence the cycle.

Soper said, “Without a healthy influx of first-time buyers, the entire cycle of real estate activity can stall. There is the chance, however, that activity levels in the spring of 2019 will be reduced as some delay purchases, waiting for the First-Time Home Buyer Incentive to kick in.”

You can check out Royal LePage’s city-by-city breakdown of Q1 home prices here. 

Copyright © Western Investor

Despite lower prices, Vancouver housing remains out of reach

Neil Sharma
Mortgage Broker News

Vancouver’s soft real estate market has done little to relieve the squeeze constrained housing supply is putting on locals.

“Just because the market is slowing, it doesn’t mean this market is not in need of more housing supply,” Matthew Boukall, Altus Group’s vice president of product management, told MortgageBrokerNews.ca. “It takes 24 to 36 months to get a typical project through approval, and a lot of the projects coming to market today were proposed in a different market cycle where they may have been designed, or positioned, for what people could afford back in 2016 or 2017, not today with new OSFI rules and other qualification challenges to buy a unit.

“From a permit perspective, it’s one of most challenging markets to get approvals to market in timely way.”

While it may seem counterintuitive, the 20% foreign buyer tax is having an unwelcome effect on Vancouverites’ ability to find housing.

“The tax won’t have a direct impact on Vancouver residents, but it does have an impact on how many units are being sold in Vancouver because foreign buyers are a big part of the market,” continued Boukall. “The speculative component of foreign buyers caused risk and concern in the market, but if you’re a foreign buyer who intended to buy and rent out that unit, you might not buy anymore, which means we might see a drop in units available for rental.

“For a developer, you may take a slower approach so you don’t rush projects to market. You’re looking for, not just sales signals, but price signals before you bring a project to market.”

On Wednesday, Boukall and Altus colleague Jason Lo spoke at length to a Vancouver audience, providing both forecasts and risk assessments of the city’s housing market.

“The key risk we see today is, while the market is slowing down from a demand perspective with slow sales and price moderation, we’re still at near record levels of under-construction activity, so all the condos that have been sold in the last three years are still under construction, which means developers continue to face cost pressures.

“The second risk in the market is interest rates and qualification for consumers. The challenge is that there may be housing demand within the market, but it’s finding housing you can qualify for, be it new or resale. When we looked at some of our data from an intentions perspective, intentions were up modestly in Vancouver, year-over-year, but among first-time homebuyers it’s dropped.”

First-time homebuyers have typically bought into the market for fear of being priced out, however, today fear of the unknown is dissuading them from taking the plunge. Nevertheless, the federal budget’s incentives for first-time buyers, the full details of which have yet to be released, will inform much of what’s to come in the next year.

“Over the next 12 months, we think there’s going to be more supply in the market, which will keep sales at a reasonably strong pace, but we think it will be a slower year overall, with volumes dropping below last year’s levels. The big unknown is the impact of the federal budget and the election later this year. The specifics and timing of the budget incentives are uncertain, and if it’s truly going to help first-time buyers get into the market, it could contribute to a stronger spring and fall going into 2020.”

Copyright © 2019 Key Media