CREA reported a 1.9% increase in home sales

Steve Randall
REP

There was a further increase in home sales nationwide in May, finally returning sales to 10-year average levels for the month.

The Canadian Real Estate Association reported a 1.9% month-over-month increase while actual seasonal activity gained 6.7% year-over-year; the largest annual gain in three years.

Sales only increased in half of local markets in May but were led by gains in Greater Vancouver and Greater Toronto areas. Year-over-year, around two-thirds of local markets gained but close to half of the overall increase was down to increased sales in the GTA.

“The mortgage stress-test continues to present challenges for home buyers in housing markets where they have plenty of homes to choose from but are forced by the test to save up a bigger down payment,” said Gregory Klump, CREA’s Chief Economist. “Hopefully the stress-test can be fine tuned to enable home buyers to qualify for mortgage financing sooner without causing prices to shoot up.”

Listings down slightly

The number of new homes listed in May was slightly lower than in April with a 1.2% decrease and with the rising sales that took the national sales-to-new listings ratio to 57.4% from 55.7% in April.

Based on a comparison of the sales-to-new listings ratio with the long-term average (53.5%), almost three-quarters of all local markets were in balanced market territory in May 2019.

There were 5.1 months of supply in May, down from 5.3 in April.

The actual (not seasonally adjusted) Aggregate Composite MLS® Home Price Index (MLS® HPI) edged down by -0.6% y-o-y in May 2019, the largest decline in almost a decade.

Regional price data

Trends continue to vary widely among the 18 housing markets tracked by the MLS® HPI.

Results remain mixed in British Columbia, with prices down on a y-o-y basis in the GVA (-8.9%), the Fraser Valley (-5.9%) and the Okanagan Valley (-0.7%). Meanwhile, prices edged up 1% in Victoria and climbed 4.7% elsewhere on Vancouver Island.

Among Greater Golden Horseshoe housing markets tracked by the index, MLS® HPI benchmark home prices were up from year-ago levels in Guelph (+5.7%), the Niagara Region (+5.4%), Hamilton-Burlington (+3.4%), Oakville-Milton (+3.4%) and the GTA (+3.1%). By contrast, home prices in Barrie and District held below year-ago levels (-6.1%).

Across the Prairies, supply remains historically elevated relative to sales and home prices remain below year-ago levels. Benchmark prices were down by 4.3% in Calgary, 3.6% in Edmonton, 3.9% in Regina and 1.3% in Saskatoon. The home pricing environment will likely remain weak in these cities until demand and supply return to better balance.

Home prices rose 8% y-o-y in Ottawa (led by a 12.2% increase in townhouse/row unit prices), 6.3% in Greater Montreal(led by a 7.6% increase in apartment unit prices), and 2% in Greater Moncton (led by a 15.9% increase in apartment unit prices).

The MLS® HPI provides the best way to gauge price trends, as averages are strongly distorted by changes in the mix of sales activity from one month to the next.

The actual (not seasonally adjusted) national average price for homes sold in May 2019 was close to $508,000, up 1.8% from the same month in 2018.

The national average price is heavily skewed by sales in the GVA and GTA, two of Canada’s most active and expensive housing markets. Excluding these two markets from calculations cuts almost $111,000 from the national average price, trimming it to just under $397,000.

Copyright © 2019 Key Media Pty Ltd

The government?s First-Time Home Buyer Incentive will launch on September 2

Bryan Mullan and Mercedes Stephenson
other

WATCH: Minister Duclos reveals new details about federal First-Time Home Buyer Incentive

Global News has learned the government’s First-Time Home Buyer Incentive will launch on September 2, days before an expected fall election call.

The new program was announced in the federal budget last March, but some of the key details about how the program would work were left out.

Under the plan, the government would help some first-time buyers by advancing an interest-free loan of up to five per cent of the purchase price of an existing home, and up to 10 per cent of the cost of a new home. This would allow the homebuyers to take out a smaller mortgage and keep their monthly payments lower.

Buyers must repay the incentive after 25 years or if the property is sold, and they can repay it at any time without any penalty.

Global has learned that if the house price goes up, the government will get a percentage of the price increase. And if the house price decreases, Ottawa will shoulder a percentage of the loss.

For example, a new house that is purchased for $100,000 could qualify for a 10 per cent interest-free loan worth $10,000. If the home was later sold for $110,000, the home buyer would need to repay $11,000.

The government says the incentive means that a home that is purchased for $485,000 would save $3,327 a year on mortgage payments.

WATCH: (March 26, 2019) What federal budget changes mean for first-time homebuyers

There are a number of caveats to the program. Buyers must have a household income below $120,000 a year. The amount of the insured mortgage plus the CMHC incentive would be capped at four times the homebuyers’ annual incomes, or up to $480,000. That means the most expensive home you can hope to buy under the plan would be worth somewhere between $500,000 and $600,000, depending on the size of your down payment.

The government has allocated $1.25 billion over three years for the First-Time Home Buyer Incentive. Social Development Minister Jean-Yves Duclos will announce the new details Monday morning in Mississauga.

Critics say this program will not do much to help buyers in Vancouver and Toronto, where average home prices sit at $925,000 and $765,000, respectively. But the government is confident it will help homebuyers even in Canada’s biggest cities.

Having a sharp income cutoff also means that homebuyers with incomes just under $120,000 would have a significant advantage over those just above the threshold, who would not qualify for the CMHC incentive.

After the budget was announced, TD economists estimated the new mortgage incentive could actually help push up home sales and prices by between two and five per cent by 2020. But their calculation also included the expected effect of another budget measure that would allow first-time homebuyers to use up to $35,000 — rather than $25,000 — of their funds held in a registered retirement savings plan (RRSP) for a home purchase without tax consequences.

© 2019 Global News, a division of Corus Entertainment Inc.

BC home sales increased 9 per cent in May compared to April

REBGV

The British Columbia Real Estate Association (BCREA) reports that a total of 8,221residential unit sales were recorded by the Multiple Listing Service® (MLS®) in May, a decline of 7per cent from the same month last year. The average MLS® residential price in the province was $707,829,adecline of 4.3per cent from May2018. Total sales dollar volume was $5.8 billion, an11per cent decline fromthe same month last year.

“BC home sales increased 9 per cent in May compared to April, on a seasonally adjusted basis,” said BCREA Chief Economist Cameron Muir. “However, consumers continue to struggle with the negative shock to affordability that stringent mortgage lending policies have created.

”Total MLS®residentialactive listings were up 23.2per cent to 41,519units compared to the same month last year. However, total active listings were down 2 per cent from April, on a seasonally adjusted basis, the first monthly decline since the B20 Stress test was introduced in January 2018.

 Year-to-date, BC residential sales dollar volume was down 25.1per cent to $19.8billion, compared with the same period in 2018. Residential unit sales decreased 20.2per cent to 28,711units, while the average MLS® residential price was down 6.2per cent to $688,339.

© BCREA

Chinese cartel drug boss used law firm to launder money

Ephraim Vecina
Mortgage Broker News

An alleged Chinese cartel drug boss used Liberal MP Joe Peschisolido’s law firm to launder money through a Metro Vancouver project, according to an in-depth investigation by Global News.

The deal for the condo development was a “bare trust” joint venture with a company directed by Kwok Chung Tam, who reportedly holds a position of authority in the major cartel called Big Circle Boys, according to the Canada Border Services Agency.

Said venture gave Tam an instrument that masked his direct involvement in the acquisition of a 3.7-acre property in Coquitlam, BC. The purchase was valued at $7.75-million, and it was sold for $14.8 million in 2015.

Per court documents, Tam was still serving a conditional sentence for a 2010 drug trafficking conviction at the time of the transaction’s completion.

Tam has maintained that he is a legitimate businessman, but his source of wealth has been in question ever since his arrival in Vancouver over 30 years ago.

“I am not now nor have I ever been a member of a gang, triad or criminal organization,” Tam asserted in a July 2016 court affidavit. His Vancouver immigration lawyer also insisted to Global News that the allegations have never been proven in court or in an immigration hearing.

Law enforcement and immigration records from 1991 to 2014 indicated otherwise: accumulated evidence strongly suggested that Tam was most likely a casino loan shark, drug facility operator, and heroin importer who has repeatedly and “brazenly” flouted Canadian law.

Another damning piece of information is that the numbered company used by Tam in the aforementioned bare trust deal has been associated with several Richmond properties investigated by the RCMP for possible drug links back in 2006.

The situation also puts into the spotlight the verification procedures that law firms offering such services use, and whether Peschisolido’s firm did its part properly before undertaking a transaction with a notorious personality.

“Lawyers need to be asking their clients, how did you make your money?” RCMP International Organized Crime Investigation Unit former commander Kim Marsh stated.

“Anybody doing basic due diligence, even basic Google searches, would determine there is huge red flags, that these individuals are involved in illicit activities,” he added. “So anyone doing business with them is either doing nothing, or it’s a case of willful blindness.”

Copyright © 2019 Key Media

Generation Squeeze says that in many cities there would have to be a major drop in home prices

Steve Randall
REP

Despite some lower prices recently, many young Canadians are still far from able to afford to buy a home according to a new report.

Generation Squeeze says that in many cities there would have to be a major drop in home prices or a significant rise in wages to enable millennials to enter the housing market.

For example, Vancouverites would need their typical full-time wages to increase to $200,400 or four times their current level; or house prices would need to fall by three-quarters (a $795K drop) to make homes affordable (based on CMHC’s measure of households spending no more than 30% of their pre-tax earnings on housing.)

Across Canada, a wage increase to $93,400 a year, almost double current levels; or a home price drop of around half ($223,000) would be required.

“Despite recent nominal declines in housing prices compared to previous years, the gap between the cost of owning a home and the ability of younger Canadians to afford it is at critical levels. If housing markets are levelling out, they remain untenably high,” said Dr. Paul Kershaw, lead author of ‘Straddling the Gap: A troubling portrait of home prices, earnings and affordability for younger Canadians’, and founder of Generation Squeeze.

The report says it now takes a typical young person 13 years to save a 20% down payment on an averaged priced home in Canada, compared to the five years it took when today’s aging population started out as young adults around 1976.

NHS needs extending

Generation Squeeze is calling on the federal government to expand the National Housing Strategy from the current pledge to support 530,000 of the most vulnerable Canadians, to an estimated 1.2 million who are in core housing need.

“A second phase of the National Housing Strategy must be launched to ensure all Canadians can afford a good home — whether renting or owning — by addressing failures in the broader housing market,” said Kershaw.

Generation Squeeze is also calling for the government to embrace “Homes First” as a guiding principle, with policy targets that would ensure that home prices don’t grow faster than local earnings.

Copyright © 2019 Key Media Pty Ltd

Ministers discussed the importance of prosecuting money launderers

Canadian Press
Canadian Real Estate Wealth

The federal government has announced $10 million to help the RCMP prosecute money laundering after a special meeting in Vancouver of Canada’s finance and justice ministers to discuss the pervasive problem.

Finance Minister Bill Morneau says the ministers discussed the importance of prosecuting money launderers and the new funds will help co-ordinate information and hold criminals accountable.

Morneau says the ministers discussed making corporate ownership of real estate more transparent through beneficial ownership registries, though there was no final commitment from provinces on the topic.

He says Ottawa cannot simply create a framework for such registries, because there are issues around privacy and regulation, but he heard around the table that everyone was willing to take the next steps.

The federal government promised $160 million to help fight money laundering in the federal budget and Organized Crime Minister Bill Blair says Canada is building a new capacity to respond, investigate and prosecute the problem.

Ontario has requested federal funding on par with British Columbia to fight money laundering, but Blair says they didn’t discuss specific allocations of resources at the meeting.

Copyright © 2019 Key Media Pty Ltd

Website features the sold prices of homes and condos, property history

Mario Toneguzzi
REM

HonestDoor founder and CEO Dan Belostotsky says he is launching a new era in real estate transparency with a website in Edmonton that features the sold prices of homes and condos, property history and future growth projections for most city properties.

HonestDoor.com features the following free information for each property:

• last sold price of a property (residential and commercial);
• daily updated price estimates appear for each property using a proprietary machine learning valuation model called HonestDoor Price;
• neighbourhood growth rate;
• annual property taxes on the property;
• permit data; and
• transaction history.

“It was born out of my own frustration. I felt like there’s only a few people – kind of one per cent of people – who had all the information. I’m not saying they were taking advantage of the situation but if one per cent of the people have it, I believe that the other 99 per cent of the people should have it,” says Belostotsky.

““Whatever the consumers choose to do with it is up to them but I just thought I would perhaps level the playing field. I just didn’t like it that one group had info and the other didn’t.”

Belostotsky says the data on each individual property is curated from a variety of sources.

“It’s a lot of work. It’s a lot of manual work. It’s a lot of people involved. Some of it we have to pay for, some of it we don’t, some of it’s on open data. We can’t really reveal how or who we go to but we kind of mesh it all together,” he says.

Belostotsky says the company is also experimenting with an ibuyer model, in which they use technology to come up with an offer to buy a home, then resell it. It’s similar to what companies such as Zillow are doing in the United States.

“We’ve already purchased about 15 homes in Edmonton under our model. So, we’re really experimenting with the math, the calculations there, if we can make it work. We’re not heading in that direction just yet but we’re definitely exploring that possibility and we needed to transact on some homes to really kind of prove out our model.”

Belostotsky is an entrepreneur based in Edmonton. In his early 20s, he co-founded a digital billboard and media company that was acquired by The Jim Pattison Group, one of Canada’s largest companies. He later partnered with Cieslok Media, which was acquired by Bell Media.  He continues to invest in businesses and real estate through his private investment company, Otto Capital. Belostotsky is a venture partner with Panache Ventures, Canada’s most active seed-stage venture capital fund and he is a mentor with Venture Mentoring Service of Alberta, helping entrepreneurs across Alberta.

Expansion plans for HonestDoor include Calgary, Winnipeg, Vancouver, Toronto and other cities across Canada.

“We already have a lot of data in a lot of different cities . . . If we can get a little momentum here in Alberta and Western Canada we’ll definitely go to Toronto. We want to expand as fast as we can. If that means partnering with someone to get there sooner, we will. Things take time and it’s a lot of work to make it right but our definite goal is to be a Canada-wide website.”

HonestDoor is part of a growing wave of real estate technology companies in Canada, often referred to as “proptech” companies.

“Technology is changing real estate and HonestDoor is the next stage in the proptech revolution, allowing people to take charge of their own data and make buying and selling decisions based on the best data available,” said Kyle Campbell in a news release. He’s an advisor to HonestDoor and co-founder of Retsly, which was acquired by Zillow in 2014.

“HonestDoor is a prime example of Edmonton’s growing expertise in machine learning and artificial intelligence (AI) and I am pleased to help the company expand its offerings to consumers and businesses,” said Ashif Mawji, an advisor to HonestDoor, venture partner at Rising Tide and entrepreneur, investor and community builder, in a statement.

Belostotsky says HonestDoor will add new tools and information over the coming months. He also said more transparency for consumers should help transactions move faster, which could be good for the real estate industry.

© 2019 REM Real Estate Magazine

Surrey, Burnaby properties will combine veteran facilities with market housing

Frank O’Brien
Western Investor

As D-Day ceremonies captured attention June 6, veteran members at two of the 28 Royal Canadian Legion branches in Metro Vancouver were celebrating joint venture real estate deals that will improve facilities and provide a mix of affordable and market housing.

In Surrey, Whalley Legion Branch 229 and the Lark Group broke ground May 23 on the Legion Veterans Village, Canada’s first centre for excellence for veterans and first responders.

The two-phase, $312 million project includes a 20-storey mixed-use building inspired by the forms of the Canadian National Vimy Memorial in France honouring the lives and sacrifices Canadians made during the First World War.

The village will offer clinical rehabilitation services, research and delivery of health-care programs, services and trauma counselling, including for veterans and first responders suffering from post-traumatic stress disorder. It will also feature a new 10,500-square-foot, state-of-the-art facility for legion members, 148 market-housing units and more than 48 affordable-housing units. 

Transitional and crisis housing facilities available to veterans, their families and the community are also part of the project.

Its second phase is a new 26-storey building with 325 condominiums. The value generated by the condo sales is expected to help cover the cost of the new veterans housing and treatment facility.

The City of Surrey fast-tracked the project’s application process by deeming it a NEXUS project. Construction on the first phase is expected to reach completion within two years.

The Whalley Legion has moved to temporary premises on King George Highway while the new facility is being built.

Meanwhile, North Burnaby Legion 148 and Beedie are proceeding with a redevelopment that will deliver a new 2,400-square-foot legion facility on the ground floor beneath 39 units of rental housing in a five-storey, mixed-use project.

Beedie is awaiting rezoning for the East Hastings site. Project manager Ali Sarpoushan said that if the rezoning is approved, Beedie plans to start construction later this year on the $30 million development.

Many of B.C.’s 147 Royal Canadian Legion branches are suffering from declining enrolment and falling revenue as the medical and housing needs of their members increase, noted Brian Lutz, a spokesman for the Royal Canadian Legion of BC/Yukon. Some of the legions, however, own land that could be used for development.

“Quite a few [in Metro Vancouver] are in talks with developers,” Lutz said.

Since 1956, the legion in B.C. has provided affordable housing to thousands of veterans and seniors. Today, it operates more than 4,500 units in 70 B.C. facilities with a community investment of approximately $94 million. 

© Copyright 2019 Western Investor

This cheaper option for home ownership may be tempting, but it also comes with risks. Find out before you buy

Atrina Kouroshnia
REW

Don’t know what a leasehold property is? Don’t worry. Here’s a basic introduction with some finer talking points.

What Exactly is a Leasehold Property?

A leasehold property means that the owner owns the house/townhouse/condo itself but not the land it is built on. That land is leased to the home owner by the land owner. Leasehold land is basically a plot of land that has been rented out to a developer, who then builds on the land and rents the property for a certain sum of money (or a portion of it as with an apartment building or condo). The leases on the plots of land are typically for extended periods of time (think up to 100 years or more), very often pre-paid up front (see section below), and often belong to either the City, or in many cases a corporation, a University or are First Nations Reserve lands.

On REW.ca (just add ‘leasehold’ to your filter), you can find some great examples of leasehold lands in Vancouver and Toronto. The land on south False Creek close to Granville Island, for example, as well as in south-east Vancouver along the Fraser River, are leaseholds owned by the City of Vancouver, whereas various corporations own much of the leasehold land in Vancouver’s West End.

 

How Long Can I Own a Leasehold Property?

If you decide to buy a leasehold property, you are essentially purchasing the right to possess that property until the end of the lease, or until you sell it to someone else – whichever comes first. If the lease expires and you are still in the home, you will have to renegotiate your terms for leasing the land your home is standing on – often at considerable expense. Or, in instances where the property was passed down from one person to another (throughout a family from parent to child say) and the lease is about to expire, whomever is the current owner would have to renegotiate.

With a leasehold property it is extremely important to find out these details before you make a purchase. All leasehold land will have a lease agreement outlining details such as the terms of the lease, and what happens at the end of the lease. If you own property on non-pre-paid leasehold land (ie, you are making monthly lease payments), the lease agreement will also tell you whether the owner can raise your lease payments and, if so, at what intervals of time.

 

More About Pre-Paid Leases

In addition to your strata fees and taxes, you may or may not be required to pay a monthly lease payment on your leasehold property. The only way to find out is by carefully reviewing the lease agreement.

A pre-paid lease means that the developer has paid the lease payments ahead of time, so you will not have an extra bill; although most likely the owner has combined these fees into the overall value of the property itself. Non-pre-paid leases, as are often found on First Nations Land, will see you ponying up one more expense every month. On the other hand, it might mean that your home’s overall value was or is lower upon purchase.

 

Can I Get a Mortgage on a Leasehold Property?

Unfortunately there is no easy answer to this question. Generally speaking, however, leaseholds are more challenging. To begin with, most lenders will not approve a mortgage for a term or an amortization that is longer than the lease itself, which, depending on the lease’s expiration date can be problematic.

Any time the property is not a freehold strata there will be limits, but some lenders will be more open to the possibility. Your options will be reduced for a First Nations reserve leasehold, and private leaseholds are the most challenging. In many cases the only option may be a private lender but even that is not a guarantee.

When looking for mortgage on a leasehold property, the lender will look at everything: income, credit score, down payment, and of course the property itself. Clients of mine purchased a 1,200 square foot town-home in east Vancouver for $490,000. Their lease is a little over 60 years; but they were extremely happy with their choice. It is in a gentrifying neighbourhood with lots of amenities, and they were able to obtain a mortgage through a big bank with getting their best rate. Also, because leasehold land is much cheaper than freehold land for similar properties, they would not have been able to find anything similar at that same price point.

If you choose a leasehold property, you will be limited as to the lenders and mortgage rates. But to put things into perspective, as with any home that you buy there will be lenders that like it and lenders that won’t.

Read the fine print, make sure you know what you’re getting yourself into, and seek out advice from someone with experience.

© 2020 REW. A Division of Glacier Media.