Improved conditions have reduced housing market to moderate

Steve Randall
Canadian Real Estate Wealth

Canada’s housing market has been rated as “highly vulnerable” for 10 consecutive quarters but the risk is easing.

The latest quarterly assessment from the CMHC says improved conditions – mostly easing price acceleration – have reduced the vulnerability to moderate.

“Even though moderate evidence of overvaluation continues for Canada as a whole, there has been improved alignment overall between house prices and housing market fundamentals in 2018 in comparison to the previous year,” said Bob Dugan, Chief Economist, Canada Mortgage and Housing Corporation.

Regional risk varies But while the national picture appears rosier, some local markets still pose a risk.

Vancouver, Victoria, Toronto, and Hamilton are still considered highly vulnerable even as prices ease back to levels that CMHC believes can be supported by housing market fundamentals including population, personal disposable income and interest rates.

Vancouver’s evidence of overvaluation has reduced from high to moderate and evidence of overheating is also lower. Toronto’s overvaluation evidence is also now moderate rather than high.

There is evidence of a moderate degree of vulnerability in Edmonton, Calgary, Saskatoon, Regina and Winnipeg, mainly due to continued evidence of overbuilding.

Montreal and Moncton are showing evidence of overheating as the markets tighten.

Ottawa, Montréal, Québec City, Moncton, Halifax and St. John’s all have low degrees of vulnerability.

The report is based on data as of the end of December 2018 and market intelligence up to the end of March 2019.

Copyright © 2019 Key Media Pty Ltd

All of those sold below asking price, averaging 16 per cent off list, as the region?s high-end homes fail to sell

Joannah Connolly
Western Investor

The Metro Vancouver real estate market is clearly cooling down, and nowhere is this happening faster than in the high-end detached home sector, an analysis of MLS data reveals.

Since May 1, 2018, only 43 detached homes in the Metro Vancouver region – stretching from Mission and Delta to the Sunshine Coast and Whistler – have sold above $7 million.

All 43 of those houses sold for below asking, averaging a discount of 16 per cent off the list price.

This compares with 94 Metro Vancouver home sales above $7 million during the previous 12-month period of May 1, 2017 to April 30 2018 – 89 of which sold under asking. In the 12 months before that – May 1, 2016 to April 30, 2017 – there were 97 sales above $7 million, 86 of which went for lower than their list price.

The highest-priced detached sale over the past 12 months was a grand, six-bedroom mansion (pictured above) in Vancouver’s priciest enclave of Shaughnessy, which sold for $26 million in May 2018 after six months on the market. That price may seem like a lot, but the house was listed in 2017 at $35 million, then reduced to $29,980,000.

After it was built, this home was listed by a different agent in April 2016 at an even higher price — $38.9 million — but did not sell at that time. Records also reveal that the property, which originally had a Tudor-style home, sold back in 2000 for $1.8 million.

However, the biggest price drop seen in the region’s $7 million-plus sector over the past year was the sale of this stunning West Vancouver house (see our listing photo gallery article here), which sold for $10.8 million, more than $6 million below the $16.88 million asking price.

Listing price reductions

With high-end detached homes failing to sell, owners are turning to price reductions to shift their properties. Of the 209 detached houses currently listed above $7 million on Metro Vancouver’s MLS (as of May 3, 2019), a relatively few 28 have reduced their price since the home was listed.

But this does not include homes that failed to sell, were taken off the market and then quietly given a new listing at a lower price, which are much harder to quantify but seem to be numerous. Examples include this contemporary West Vancouver mansion, which was listed at $16.58 million back in July 2018 but now has a new listing at $13.6 million, and this “James Bond-style” oceanfront home, which also recently came back on the market at a $3 million discount. Even West Vancouver’s historic Kew House has yet to sell at its discounted price of $13.75 million.

However, other sellers are sticking to their desired price – such as the owner of an uber-cool Modernist waterfront home that was listed in February 2018 for $22.88 million. The listing expired after a year when it didn’t sell but it was listed again on January 31, 2019 at the exact same price.

Of Metro Vancouver’s 209 detached houses currently listed above $7 million, the average number of days on the market is a whopping 141 – a far cry from the heady days of a few years ago.

Ashley Smith, president of the Real Estate Board of Greater Vancouver, told Glacier Media, “We’ve certainly there has been a slowdown in the higher end of the market, particularly detached homes on the West Side and West Vancouver. Key to this is that we did see significant increases over the past several years. And this year has been a reflection of change. A variety of things are impacting that, such as government policy that has been implemented. There’s the foreign buyer’s tax, the speculation tax, the school tax, the increased property transfer tax – buyers in the high-end sector have been impacted by that.”

Smith added, “Sellers of luxury homes often have different reasons and motivations for moving or selling their asset. They might not be under the same kind of pressure to sell that a family might have. So the strategy of holding to a price can work for some people – but the high expectations from the prices of the past few years might also be playing into that.”

Vancouver realtor Faith Wilson, who was the listing agent on the Shaughnessy home sold for $26 million, told Glacier Media, “There’s still an appetite for luxury real estate, but there’s very little inventory on the West Side at the moment, and a lot more in West Vancouver. Sellers have to get into the slipstream of reality. And even if the market is adjusting, how much do you have to adjust. Sellers will be successful if they have a realtor who is fully engaged in the market, and if they are price-adjusting to find that middle ground. And buyers also have to be reasonable in their offers.”

Copyright © Western Investor

REBGV Monthly Market Report For April 2019

REBGV
other

Decreased demand continues to allow the supply of homes for sale to accumulate across the Metro Vancouver* housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,829 in April 2019, a 29.1 per cent decrease from the 2,579 sales recorded in April 2018, and a 5.9 per cent increase from the 1,727 homes sold in March 2019.

Last month’s sales were 43.1 per cent below the 10-year April sales average.

“Government policy continues to hinder home sale activity. The federal government’s mortgage stress test has reduced buyers’ purchasing power by about 20 per cent, which is causing people at the entry-level side of the market to struggle to secure financing,” Ashley Smith, REBGV president said. “Suppressing housing activity through government policy not only reduces home sales, it harms the job market, economic growth and creates pent-up demand.”

There were 5,742 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in April 2019. This represents a 1.3 per cent decrease compared to the 5,820 homes listed in April 2018 and a 16 per cent increase compared to March 2019 when 4,949 homes were listed.

The total number of homes currently listed for sale on the MLS® in Metro Vancouver is 14,357, a 46.2 per cent increase compared to April 2018 (9,822) and a 12.4 per cent increase compared to March 2019 (12,774).

“There are more homes for sale in our market today than we’ve seen since October 2014. This trend is more about reduced demand than increased supply,” Smith said. “The number of new listings coming on the market each month are consistent with our long-term averages. It’s the reduced sales activity that’s allowing listings to accumulate.”

The overall sales-to-active listings ratio for April 2019 is 12.7 per cent. By property type, the ratio is 9.4 per cent for detached homes, 15.4 per cent for townhomes, and 15.3 per cent for apartments.

Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,008,400. This represents an 8.5 per cent decrease over April 2018, and a 0.3 per cent decrease compared to March 2019.

Detached home sales totalled 586 in April 2019, a 27.4 per cent decrease from the 807 detached sales in April 2018. The benchmark price for a detached home is $1,425,200. This represents an 11.1 per cent decrease from April 2018, a 0.8 per cent decrease compared to March 2019.

Apartment home sales totalled 885 in April 2019, a 32.3 per cent decrease compared to the 1,308 sales in April 2018. The benchmark price of an apartment is $656,900 in the region. This represents a 6.9 per cent decrease from April 2018 and is unchanged from March 2019.

Attached home sales totalled 358 in April 2019, a 22.8 per cent decrease compared to the 464 sales in April 2018. The benchmark price of an attached home is $783,300. This represents a 7.5 per cent decrease from April 2018 and is unchanged from March 2019.

Ventura at the heart of Abbotsford?s evolving City Centre

ROBIN BRUNET
The Province

Abbotsford has evolved to accommodate a steady stream of new residents eager to live in a place that effortlessly balances affordable urban living with the vast green vistas the region is famous for. To manage that growth to its best advantage, a plan known as 200K has been developed that will upgrade the City Centre as the focal point “of Abbotsford’s public, economic and cultural life” in order to boost its population to 200,000 people. Spearheading this growth is Ventura, a new series of condominiums with a commanding street presence located in the heart of City Centre. Laying claim to the moniker that “the 200K plan starts here,” Ventura gives residents direct access to all that is exciting and evolving in this vibrant neighbourhood – as well as the opportunity to enjoy every outdoor activity imaginable in the nearby picturesque landscapes. Lauren Hamilton, project manager for Fifth Avenue Real Estate Marketing Ltd., says: “Ventura is being developed as the future of Abbotsford’s City Centre at today’s prices – which are notably lower than one could find in Greater Vancouver. For example, Ventura features two bedroom homes starting from only $439 per square foot.”

This is noteworthy, considering the care and attention the developer, RDC Group (whose roots are firmly entrenched in Abbotsford and the surrounding Fraser Valley), has applied in creating beautifully appointed homes with elements that promote activity and a sense of community.

For starters, each one- to three-bedroom home has a spacious and efficient floor plan, with enhancements available upon request. The kitchens are equipped with gas ranges, storage is abundant throughout and there is thoughtfully designed personal outdoor space.

As for colour schemes, `Ash’ offers rich tone-on-tone grey cabinetry with light ash wood flooring to create a subtle, but dramatic contrast. `Classic’ features honey hued wood flooring with creamy-white cabinetry and taupe accents — a timeless combination. Ventura also consists of an in-building wellness facility, an indoor/ outdoor dining and recreation space called The Social Club, and a private green space with a covered lounge area, gas fire pit and sports lawn – with all of these elements having a southwestern exposure. Other attractive features include secure parking, bicycle storage and a dog-washing station. Abbotsford’s 200K plan has generated considerable excitement with investors and business leaders, who have already played a significant role in growing City Centre’s residential, commercial, recreational and gastronomic offerings. “Accordingly, Ventura is attracting considerable interest from people who seek all the amenities of a big urban destination without the big prices, as well as easy access to Vancouver and the Okanagan,” says Hamilton. Prospective buyers who want to see their equity in Ventura grow as Abbotsford’s city centre evolves should register today; a grand opening is scheduled for May 11, and a full two bedroom display suite is available for viewing. The presentation centre is open daily from noon to 5 p.m. (closed Fridays) and is located at 32838 Ventura Avenue in Abbotsford. For more information visit venturaabbotsford.com, call 604 859-6196 or email [email protected].

© 2019 Postmedia Network Inc.

Harrison Highlands takes a picturesque Fraser Valley location

Kathleen Freimond
The Province

Harrison Highlands

What: 59 homes (second phase); one to five bedrooms

Where: Highlands Boulevard, Agassiz

Residence size and price: 1,421 – 4,073 square feet; $618,000 – $945,000

Developer: Odessa Group Sales centre: 1489 Osprey

Place, Agassiz

 Hours: Wednesday to Saturday 11 a.m. – 5 p.m.

Phone: 1-888-758-0850

 

The Harrison Highlands development in Agassiz’s Mount Woodside neighbourhood offers single-family homebuyers a quiet and picturesque location away from the hustle and bustle of Metro Vancouver.

The 90-acre subdivision will be completed in six phases, says Odessa Group managing partner Nathan Stone. The second phase, now on the market, comprises 59 homes. When the development is complete, it will include about 350 homes.

“People enjoy the peace and quiet away from the density and congestion, but close enough for frequent visits from children and grandchildren,” Stone says.

A home at Harrison Highlands will allow for a lifestyle where one can ski, golf or take a sunset cruise, all within 15 or 20 minutes of the subdivision.

Harrison Highlands is sited on a knoll overlooking the convergence of the Harrison and Fraser rivers with views to the west.

The lot sizes vary, but average around 7,500 square feet and the infrastructure takes into account the natural setting: retaining walls are built from natural boulders rather than concrete blocks and instead of curbs, gravel swales collect water and minimize run-off, he says.

“Our typical buyer is a young, active retiree,” says Stone, adding for those who sell a home in the city, buying in Mount Woodside often enables them to put some money in the bank and perhaps retire a little earlier.

While buyers have a choice of five elevations, the home designs all have a Craftsman influence.

“They are reminiscent of the 1950s Craftsman style with a modern twist. Maybe they are not the colours of a traditional Craftsman, but the architecture — gabled roof lines, shutters and stonework — make them pretty similar to the homes our typical buyers grew up in,” Stone says.

Buyers can choose from five standard floor plans, with elevation options and choice of either crawl space or walkout basement (finished or unfinished), which doubles the options to 10, Stone explains.

Once the plan is selected, buyers choose an exterior colour — red, blue, yellow, green or brown — and an interior design scheme.

There are three interior design schemes exemplified in the kitchens’ colours and materials. Rendezvous (as seen in the show home at 1489 Osprey Place) has dark ebony-coffee coloured cabinetry that contrasts with the glossy white-tiled backsplash and grey and white countertop. Fireside presents warm wood tones, a light ivory countertop and a taupe tile backsplash, and Veranda evokes a light and airy ambience with its white cabinetry, grey countertop and marble-look tiled backsplash.

The standard countertop on the island and perimeter cupboards is a laminate, with an upgrade to quartz on offer.

All three schemes feature Shaker-style cabinetry, chrome finish faucets, Whirlpool appliances, laminate flooring (an upgrade to engineered hardwood is available) and carpet in the bedrooms, says interior designer Leah Holmes, principal with Your Designer.

© 2019 Postmedia Network Inc.

The number of Canadians living all alone has more than doubled in a generation and is now the most common and least affordable form of habitation

Frank O’Brien
Western Investor

In Vancouver, the most expensive rental housing market in Canada and one of the least affordable for homebuyers on the planet, about one-third of the homes have just one resident. 

The same economics apply whether it is a car or a home: one person travelling alone in a vehicle represents a much costlier per capita commute than 30 people sharing a bus.

When it comes to housing, the affordability factor is simply much more pronounced. A single person attempting to rent a home will have a harder time affording it than if he or she is sharing the cost with at least one other person. 

For homebuyers, it means coming up with the entire down payment, qualifying for the mortgage payments, plus paying condo fees or maintenance costs, all from one pocket.

While Vancouver is exceptional due to its home prices, the home-alone trend is hampering housing affordability right across the country.

The number of Canadians living alone has more than doubled in the past 35 years, making single-person households the most common type, a new report by Statistics Canada confirms.

This group is now larger than the one composed of couples with kids, as well as the category of couples living alone – and the trend toward solo living is accelerating. 

Vancouver, with an estimated 31 per cent of home-alone households, has one of the highest rates in Canada.

Young adults are the hardest hit by social isolation in Metro Vancouver, according to the Vancouver Foundation’s Connections and Engagement report, released in December 2017.

This April, Joyce Murray, MP for Vancouver Quadra, hosted an event on how to reduce loneliness in Vancouver and make the city a friendlier place.

It is no longer your elderly widowed aunt who is living solo, poor dear. It is just as likely to be your buddy or your niece. The fastest-growing age group living alone is those aged 35 to 64, according to Statistics Canada’s demography division. 

It also reports that one-third of those aged 20to 34 were in a relationship, but each partner lived in his or her own place. Among those in the middle-adulthood years of 35 to 64, the proportion of those living alone but attached is 20 per cent.

No surprise that StatsCan also discovered that a substantial number of single adults were paying more than 30 per cent of their income for shelter, considered unaffordable.

So what’s the solution? 

Buddy up. Find a lover. Make amends with your family. Swap your social media network for real people in real life. Learn to share your life and your roof. We suspect housing affordability, and Canadian society, would be the better for it.

© Copyright 2019 Western Investor

Board reports sales down 29 per cent from a year ago, causing housing inventory to accumulate

Joannah Connolly
Western Investor

Home prices across Metro Vancouver are continuing to slide, reported the Real Estate Board of Greater Vancouver (REBGV) May 2.

The board said that the composite benchmark home price across Metro Vancouver dipped to $1,008,400 in April, very close to edging back down over the million-dollar mark. This is 8.5 per cent decrease over April 2018’s price, and a 0.3 per cent decline from March 2019.

Home inventory is piling up as the number of new listings met usual market levels but sales dropped on an annual basis. The number of Metro Vancouver homes to exchange hands on the MLS in April was 1,829, a 29.1 per cent drop from April 2018. However, this was a 5.9 per cent increase from the 1,727 homes sold in March this year.

April’s sales total was 43.1 per cent below the 10-year April sales average (see interactive graph, below), which is a slight improvement over the dire figures seen the previous month.

The REBGV continued its stance in placing the blame for reduced home sales at the federal government’s door. Ashley Smith, REBGV president, said, “Government policy continues to hinder home sale activity. The federal government’s mortgage stress test has reduced buyers’ purchasing power by about 20 per cent, which is causing people at the entry-level side of the market to struggle to secure financing.”

She added, “Suppressing housing activity through government policy not only reduces home sales, it harms the job market, economic growth and creates pent-up demand.”

The board said that new home listing activity was normal for the spring season. There were 5,742 homes listed for sale on MLS in Metro Vancouver in April 2019. This is 1.3 per cent lower than in April 2018 but up 16 per cent increase compared with March 2019.

However, the sluggish sales meant that total inventory is accumulating. The total number of Metro Vancouver homes listed for sale is 14,357, which is a 46.2 per cent increase compared with April 2018 and a 12.4 per cent increase compared to March 2019.

“There are more homes for sale in our market today than we’ve seen since October 2014. This trend is more about reduced demand than increased supply,” Smith said. “The number of new listings coming on the market each month are consistent with our long-term averages. It’s the reduced sales activity that’s allowing listings to accumulate.”

Across all property types combined, the sales-to-active listings ratio for April 2019 is 12.7 per cent, which is the low end of a balanced market, edging closer to a buyer’s market. By property type, the ratio is 9.4 per cent for detached homes (firmly a buyer’s market), 15.4 per cent for townhomes and 15.3 per cent for condos (both balanced markets).

Sales and prices by property type and area

Just 586 Metro Vancouver detached homes traded hands in April, which is a 27.4 per cent year over year decline, but a 10.8 per cent rise compared with March this year.

The benchmark price for a detached home in the region is $1,425,200, which is 11.1 per cent lower than April 2018, and a 0.8 per cent decrease from March 2019.

As has been the recent trend, West Vancouver saw the steepest year-over-year declines in benchmark detached home prices, down 15.7 per cent, followed by Vancouver West (-13.4 per cent), Burnaby North (-12.8 per cent) and Richmond (-12.3 per cent).

All 20 MLS areas in the board’s jurisdiction posted an annual slide in detached benchmark prices, including Bowen Island and the Sunshine Coast, which had resisted the market downturn but in April posted slight price drops of 0.2 and 0.5 per cent respectively.

Sales of Metro Vancouver attached homes such as townhouses, duplexes and rowhomes totalled 358 in April, down 22.8 per cent year over year but up 10.2 per cent month over month.

A typical attached home price is now pegged at $783,300, which is the same as last month and 6.9 per cent lower than in April 2018.

Once again, benchmark attached home prices fell by the largest percentage on an annual basis in Vancouver East (East Side and Downtown East), 12.5 per cent lower than a year ago, followed by Tsawwassen (-12.9 per cent), Port Coquitlam (-10.5 per cent) and Vancouver West (-10.3 per cent). Like detached homes,  attached home prices fell in all Metro Vancouver areas, but saw the least-steep declines in Port Moody (-0.2 per cent) and New Westminster (-4.1 per cent).

Sales of condos across the region totalled 885 in April 2019, a 32.3 per cent decrease compared with April 2018 and just 13 units more than in March this year (up 1.3 per cent).

The benchmark price of a Metro Vancouver condo is now pegged at $656,900. This is a 6.9 per cent decrease from April 2018 and, like townhouses, is unchanged from March.

Yet again, West Vancouver condos fell by the highest proportion, with a typical condo in the municipality pegged at 12.9 per cent less than the same month last year. The two other areas to see a double-digit condo price drop were Whistler, down 10.9 per cent year over year, and Pitt Meadows, down (10.4 per cent). As with the other home types, all areas in the REBGV region saw condo prices lower than one year ago, with the least-steep declines seen in Burnaby North (-4.5 per cent) and Vancouver East (-4.7 per cent).

Home prices vary widely in different areas throughout the region. To get a good idea of home prices in a specific location and by property type, check the detailed MLS® Home Price Index in the full REBGV stats package.

Copyright © Western Investor

Canada’s economy brings both good and bad news for the housing market

Steve Randall
REP

The latest reading of Canada’s economy brings both good and bad news for the housing market.

While growth slowed in February – to just 0.1% following a 0.3% rise in January – the weakness will almost certainly rule out any interest rate increases this year.

Statistics Canada’s GDP figures released Tuesday show a near-even split between gains and losses among the 20 main industrial sectors. Among the declining sectors were mining, quarrying, and oil & gas extraction; and the manufacturing sector.

“After roaring out of the gate at the start of the year, growth in the Canadian economy slipped in February. With economic growth remaining subdued, so too will price pressures and this will keep the Bank of Canada on the sidelines into next year,” commented Conference Board of Canada’s Principal Economist Alicia Macdonald.

He added that the data was in line with the Conference Board’s most recent forecast that expects economic growth to remain soft in the first quarter.

The winners and losers Finance and insurance declined 0.6%, offsetting increases in the previous two months.

Construction was up 0.2%, marking a second gain following seven consecutive decreases. This was driven by increases in residential and industrial building activities.

Real estate, rental and leasing declined 0.2%, the first decrease since February 2018.

This was impacted by activity at offices of real estate agents and brokers which was down 6.6%, the fourth decline in five months due to lower housing resale activity in Ontario, Quebec, and British Columbia.

Retail sales were also up in February, posting their largest gain since last May although the increase was not enough to offset the sectors large decline in January, suggesting that growth in consumer purchases of goods will remain soft in the first quarter.

Copyright © 2019 Key Media Pty Ltd

Lifelines for self-employed borrowers

Neil Sharma
Mortgage Broker News

Private lenders have been busy the last few years, and among their best customers are self-employed borrowers.

“As COO of one of the country’s top private lending brokerages, I see a lot of self-employed borrowers in the same set of circumstances,” said Matrix Mortgage Global’s Laura Martin. “Any savvy business owner/operator will want to write off as much of their businesses expenses as possible, thereby presenting a less-than-representative annual income on their T1 General tax returns. A contractor, for example, might bring in $200,000 in revenues but expense $150,000 of it between the cost of building materials, sub-contractors, truck payments, etc. They would put $50,000 down on their line 150 of the T1 General and save quite a bit of tax by doing so.”

However, only declaring $50,000 of income puts them at a decided disadvantage when qualifying for a mortgage.

“Thus significantly decreasing their borrowing and purchasing capacity,” continued Martin. “The B-20 stress test has made it such that Schedule A banks and trust companies have had to turn away 20% more borrowers because they don’t fit the guidelines.”

Ergo, private lenders have watched their market share billow from 3% in 2015 ago to 12% last year. While borrowers with bruised credit comprise a substantial portion of private lenders’ clientele, non-traditional income earners like the self-employed feature prominently, too.

“[Private lenders] are much more willing to view borrowers eligibility from a big picture perspective, in terms of actual affordability, and do not have set cut-off guidelines for income and credit,” said Martin. “Private lenders and MICs [mortgage investment corporations] prioritize the asset above all else, like credit and income.”

According to Statistics Canada, anywhere from 15-20% of Canadians are self-employed, but Martin reckons the actual number is higher.

“If you include those who have a side hustle, such as the ever popular and growing ride sharing and food delivery service companies, you’re looking at something closer to 35%.”

Matrix funded over 400 private mortgages last year, at least half of which were for self-employed borrowers. While rates are higher and as much as 3% in fees are paid, there is some equilibrium.

“In the end, it tends to balance out if one considers the income taxes they saved,” she said.

Private lenders are preponderantly stopgap measures for borrowers, even the self-employed, and private lender Wasah Malik of King Lending Capital says that he redirects clients to B lenders within 12 months.

“Most of my deals are exited after one year, but we guide them through the whole process and eventually send them to B lenders because they don’t have to declare a line 150—they just have to provide six to 12 months of bank statements to show business cash flow,” said Malik, adding that 80% of his clients are self-employed.

“On the B side, they can still get qualified based on the cash flow of their business.”

Copyright © 2019 Key Media