Recreation property bought by millennials used as main home

Steve Randall
Canadian Real Estate Wealth

Recreational homes are attracting strong interest from millennials but for many they are not second homes but the only ones they can afford.

A report from RE/MAX shows that 56% of millennials are in the market to buy a recreational property, up from 42% in 2018; and across all buyers 61% said their interest is driven by affordability, followed by liveability.

“We are finally witnessing the long-anticipated generational shift of purchasing power from Baby Boomers to Millennials,” says Christopher Alexander, Executive Vice President, RE/MAX of Ontario-Atlantic Canada. “With the high cost of urban living taking many young homebuyers out of those markets, more Millennials are turning to recreational properties as a viable option for home ownership.”

Of the wider survey population, 40% said they were interested in buying a recreational property with 64% citing it as a place to relax, 58% calling it their getaway home, 43% saying they can do activities there that they cannot at their main home, and 30% focused on investment (33% among millennials).

What are buyers looking for?

The Leger survey shows that the younger demographic is still focused on some traditional elements for their recreational home but also have some modern ‘must-haves’.

That means that reasonable maintenance costs, waterfront access, and proximity to town are important; but so are internet access and being close to recreational activities and urban conveniences.

“Owning a recreational property is all about liveability – those crucial criteria, such as the great outdoors, access to water, mountains and community that improve our overall quality of life,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “It’s not surprising to see more Millennials pushing into the recreational property markets. Recreational living is very much aligned with this generation’s quest for work-life balance and is representative of a growing trend of Millennials choosing to make recreational properties their primary residence.”

Key ‘wants’ list:

• Affordable purchase price = 61%
• Reasonable maintenance costs = 46%
• Waterfront access = 45%
• Proximity to town = 44%
• Reasonable distance from primary residence = 35%
• Relative seclusion = 28%
• Land access = 24%
• Proximity to sports/recreation = 24%
• Nearby neighbouring properties = 12%
• Island property = 7%
• Other = 1%
• None, don’t mind which features my recreational property has = 7%
• Don’t know/prefer not to answer = 7%

Copyright © 2019 Key Media Pty Ltd

Developers launched more condo projects in May

Josh Sherman
Livabl

Lower Mainland developers launched more condo projects across the Vancouver area and the Fraser Valley in May following a slower April, MLA Advisory reports.

MLA Advisory, the research branch of condo marketers MLA Canada, says 10 condo projects started selling units last month, compared to seven in April.

While more projects launched in May, the overall number of units was lower. May’s projects contain 539 homes, versus April’s 779.

Suzana Goncalves, an MLA partner and executive vice president of sales and marketing, notes that developers in the Lower Mainland are taking their time before bringing projects to market, suggesting some of the planned April launches were held back to May.

“It is becoming increasingly common for developers to hold longer preview periods and postpone writing contracts until public interest in the project is more certain,” she says in a statement within MLA’s May 2019 Pre-Sale Real Estate Insights report.

“Developments offering unique product offerings and carefully curated purchaser incentives that truly reflect their buyers are seeing greater sales activity and foot traffic. Avocado toast took over the airways and continues to show success with copycats now looking to get more creative and follow suit,” she continues, referring to a recent viral campaign.

The developer of a West Coquitlam condo recently offered to serve up a year of free avocado toast to buyers, playing off the common criticism that millennials could afford real estate if they’d just forego avocado toast and lattes (see how that theory checks out with this millennial mortgage calculator).

Since then, another developer has tried to entice buyers with libations.

While it’s unclear how, exactly, these campaigns have contributed to sales, about 22 percent of the units launched in May have sold so far, according to MLA.

Analysts forecast there are another nine project launches in the pipeline for this month, bringing 737 units to market.

By the end of the second quarter, MLA expects 2,000 units will have been launched, with a vast majority of them within wood-framed mid-rise buildings. Just 140 of these units are in concrete buildings (typically high-rise) and these have already been released.

“June will likely have no new concrete high-rise launches as developers wait to launch during the busier fall season,” the MLA report reads. “Many high-profile projects will postpone their launch timelines as developers continue to monitor the market and purchaser trends.”

© 2019 BuzzBuzzHome Corp.

New Burnaby and Coquitlam projects were unable to pre-sell 50 per cent of their units

Joanne Lee-Young
The Province

Vancouver developer Ledingham McAllister is putting on hold the launch of pre-sales for three high-rise, transit-hub condo towers in Burnaby and Coquitlam, and is considering a pause on a fourth.

The total value of the projects — Sydney, Highpoint, Azure and possibly another — is around $1.2 billion, according to company president and CEO Ward McAllister. The buildings range from 20 to over 50 storeys and include market, non-market and rental units.

McAllister pointed to a dramatic slow-down in general pre-sales, beginning last October, and estimates sales volumes have dropped by about 70 per cent.

There has been evidence that smaller, newer developers are throwing in the towel and selling land instead of riding out an increasingly tough market. And the development industry has been vocal about bureaucratic delays getting in the way of building units that will be much needed once buyers return.

Ledingham McAllister, which is an experienced and prolific builder of multi-family homes going back to the mid-1980s, is pulling back on pre-sales for projects that all “have zoning and building permits. There are brochures printed and display centres that have been built for them,” said McAllister.

The projects need to be about 50 per cent pre-sold in order to get bank financing, said McAllister, citing a threshold that is already slightly lower than the more commonly cited 75 to 80 per cent level.

And there is a clock that starts ticking as soon as pre-sales for a project open, said Jon Stovell, who is board chair of the Urban Development Institute, which represents developers.

By law, according to the provincial Real Estate Development Marketing Act, developers have to complete pre-sales within nine months. After that, they must cease marketing.

“So, developers are considering, ‘Maybe I shouldn’t launch now, if buyers are sitting on the sidelines,’” said Stovell.

Matthew Boukall, a vice president at Altus Group, has been tracking over 12 projects across the Vancouver market that “we anticipated launching either late in 2018 or early 2019 that have either delayed their opening date or shifted their marketing message to be coming soon. Out of the 12 projects, at least four have development permit approval or conditional approval, which represents over 4,000 units that we were expecting to come to market, with about 4,300 of them launching between January 1 and June 1, 2019.”

To compare, about 8,700 units were brought to market in the same period in 2018.

“It’s not like it’s never happened before,” said Hani Lammam, executive vice-president at Vancouver-based Cressey Development, citing past downturns such as in 2008. “It’s happening. We went from being an overheated market to, suddenly, a market where demand evaporated.”

“It’s simply that the average buyer is very, very concerned. There’s so much uncertainty,” said McAllister. “They’re not interested. If they buy a unit for $500,000 to $600,000 and it’s worth less later, and they are borrowing from mom and dad, or grandparents, to put down the deposit, they can’t afford to lose it.”

Pre-sales involve convincing a “significant number of people to buy, two or three years out. For the end user, someone who wants to live in it, they don’t know where they will be so far away (in time),” said Lammam. “We’ve relied on investors, who have an easier bet. A condo is a good investment. They can sell or rent it. It’s more a business decision, not a life one.”

Investors bridged the gap and made money by taking on risk, said Lammam.

The flip side is that investors were making a lot of money as prices skyrocketed. But prices were becoming unaffordable for end users, prompting various levels of government to bring in measures that have stifled demand.

On the other hand, McAllister said, “underlying things is that there is so much stimulus in the market. There are 50,000 people projected to move here. Jobs have grown. Interest rates are low. This is a beautiful place to live. There is very little finished inventory.”

© 2019 Postmedia Network Inc.

Toppen Ridge to make its home in North Vancouver’s Moodyville

Kathleen Freimond
The Province

Toppen Ridge

What: 24 two- and three-bedroom townhomes

Where: 237 Ridgeway Avenue, North Vancouver

Residence size and prices: 1,137 – 1,576 square feet; low $900,000s to $1.3 million’s

Developer: Formwerks Boutique Properties

Sales centre: 549 East 3rd Street, North Vancouver

Sales centre hours: Saturday and Sunday from 1 – 4 p.m. and by appointment

Phone: 778-724-0495

To meet the City of North Vancouver’s contemporary design guidelines for the Moodyville neighbourhood while also incorporating features that echo the area’s industrial past and meet homebuyers’ demand for a simpler design esthetic, Formwerks Boutique Properties came up with its own style for its Toppen Ridge development: ‘contemporanian.’

Toppen Ridge, a 24-townhome development, will be part of the transformation of the suburb that traces its industrial roots to the establishment of the Moodyville Sawmill in the 1860s.

Following the 2016 rezoning of the land east of St. Patrick’s Avenue to Queensbury Avenue and south of East 4th Street, the area is being redeveloped and when complete, will include about 1,500 homes, a renewed Moodyville Park and improved greenways.

Toppen Ridge’s contemporanian style is the result of considerations of many of the features that existed within Moodyville, says James McKenny, sales and marketing manager, Formwerks Boutique Properties. “At the port, there’s a lot of black metal, concrete and different hard materials, but the area also has a beautiful natural landscape and the [North Shore] mountains.”

These local influences are seen in the architectural design of the development with the peaked roofs showing the visual influence of the mountains, while the industrial gooseneck lighting and black metal awnings recall the industrial heritage of the area.

The development includes ground-level courtyard homes with townhouses stacked above them. The courtyard homes have a double-wide floor plan and open to a central courtyard.

There are several different types of townhouses, McKenny adds, noting a special zoning allows for live-work homes. Inside the live-work townhouses, sliding frosted glass doors easily close off part of the living area to create a space for a home-based business.

Two of the courtyard homes also have a feature that broadens their appeal: lock-off studios with their own entrance. The space can be used as a third bedroom, a nanny suite or rented to generate income, McKenny says.

Interior designer Natalia Kwasnicki, partner at Portico Design Group, says Formwerks retained its single-family home boutique-builder creative philosophy for the development, an approach that resulted in more character and distinctive features for Toppen Ridge than is typical in most multi-family developments.

“We pushed the boundaries a little. Most multi-family offerings have a more neutral palette, whereas Toppen Ridge will have a more boutique feel with more personality and character in the materials selections,” she says, pointing to choices like the hexagon-tile floor in the ensuite bathroom and a darker-than-usual marble-look porcelain backsplash in the kitchen.

Buyers can choose from two colour palettes: Freya, the lighter scheme, and Finn, with its darker floors and cabinetry.

In the kitchens, both palettes feature the same marble-look backsplash, white countertops and white upper cabinets. For homebuyers who select the Freya palette, lighter wood-tone lower cabinets and lighter laminate floors will distinguish their homes from the darker hues that differentiate the Finn option.

Cabinetry is flat panel in keeping with the contemporary style, while the white uppers make the space light and fresh, she says.

In the main ensuite bathroom, the colour palette is more subdued: the white marble-look countertop and white cabinets allow the hexagon-tile floor to attract all the attention.

Each floor tile has its own marble-look variation that will collectively fill the space with character, Kwasnicki adds.

Toppen Ridge

What: 24 two- and three-bedroom townhomes

Where: 237 Ridgeway Avenue, North Vancouver

Residence size and prices: 1,137 – 1,576 square feet; low $900,000s to $1.3 million’s

Developer: Formwerks Boutique Properties

Sales centre: 549 East 3rd Street, North Vancouver

Sales centre hours: Saturday and Sunday from 1 – 4 p.m. and by appointment

Phone: 778-724-0495

© 2019 Postmedia Network Inc.

Toronto home sales last month shot up and supply remained static

Ephraim Vecina
Mortgage Broker News

Toronto is in a gradual trajectory towards being a sellers’ market, with home sales last month shooting up and supply remaining virtually static.

According to latest figures from the Toronto Real Estate Board, the city saw 9,989 home sales through the Board’s MLS System in May. This represented an 18.9% increase from the 15-year low for the month, which was seen last year.

TREB president Garry Bhaura emphasized, however, that last month’s numbers are still markedly below the long-term May average of 10,300, despite the tangible improvements from the glacial pace at the beginning of 2019.

“Sales activity continues to be below the longer-term norm, as potential home buyers come to terms with the OSFI mortgage stress test and the fact that listings continue to be constrained relative to sales,” Bhaura explained.

On the whole, the market is still seeing a positive trend, the Board head assured.

“After a sluggish start to 2019, the second quarter appears to be reflecting a positive shift in consumer sentiment toward ownership housing. Households continue to see ownership housing in the GTA as a quality long-term investment as population growth from immigration remains strong and the regional economy continues to create jobs across diversity of sectors.”

In comparison, listings ticked up by a mere 0.8%, ending up at 19,386 properties for sale. Intensified market competition pushed sales prices up by 3.6% annually, up to an average of $838,540. Said increases in value considerably outpaced the year-over-year gains seen in April (1.9%) and March (0.5%).

TREB warned that while the market can absorb single-digit annual price increases, continued scarcity in housing supply could aggravate price growth to unsustainable levels.

“This potential outcome underpins calls from TREB and other housing industry stakeholders to address roadblocks preventing a more sustainable and diverse supply of housing reaching the market,” the Board’s chief market analyst Jason Mercer stated.

“Many households are not comfortable listing their homes for sale because they feel that there are no housing options available to better meet their needs.”

Copyright © 2019 Key Media

Starting a brokerage has a unique set of challenges

Neil Sharma
Mortgage Broker News

Starting a brokerage isn’t without its unique set of challenges—for one, expect production to dip.

“When you start hitting a certain volume in your production, a franchise will approach you to become an independent,” said Julie Brenneman, principal broker at The Mortgage Centre Hometown Financial. “Because I was producing at a high level, I thought I’d get status right away, but, unfortunately, it didn’t happen because I didn’t have much leverage since it was only my assistant and I. The first four or five months were difficult because I wasn’t getting my volume bonuses and access to low rates, so I basically took a pay cut to become independent.”

Brenneman merged her franchise with her old Mortgage Centre office and runs it in tandem with Penny Wrightly, the original owner, with whom she’s struck the kind of balance that allows them each to focus on their strengths. It’s turned Hometown Financial into a local juggernaut.

“A lot of agents don’t understand how much behind-the-scenes work there is running a brokerage, and I didn’t understand either,” said Brenneman. “I thought I’d be on my own doing mortgages and that my assistants would do the administration, but there’s more to it than that. Even to get signed up with a lender is a huge task, and not at all as easy as everyone thinks.”

There are other trials, like keeping newer agents’ spirits high, but principals like Brenneman relish moulding their careers.

“I think it’s really rewarding in the sense that I like the team we built and I like feeling like I’ve helped people by giving them pieces of information I got when I started in the industry,” she said. “A lot of principal brokers aren’t involved in agents’ day-to-day production, but we’re very hands-on.”

Frances Hinojosa, a managing partner at Tribe Financial, says that one of the most crucial elements of running a brokerage is consistently nurturing existing relationships, and perhaps most importantly, being diligent with time.

“Create a schedule and plan a time in your day to do certain things,” she said. “We all have the same amount of time in the day and it’s up to you to decide how you’re going to use, whether or not you use it wisely. Where can I carve out my schedule to be hyper-focused on running the brokerage and where can I carve out time to devote solely to mortgages? You can also cover your weaknesses with other people’s strengths. If you don’t like paperwork, you can hire an assistant, but you have to spend wisely.”

Copyright © 2019 Key Media

FVREB reported a 10% increase in May Sales

Steve Randall
Canadian Real Estate Wealth

There was a slight rise in home sales in the Fraser Valley in May but sales remain 18% below the 10-year average.

The Fraser Valley Real Estate Board reported a 9.7% month-over-month increase (13.7% year-over-year decrease) to 1,517 sales, driven by the single-family detached sector which took a 41.2% share of the market, up from 39.4% in April.

“Buyers are recognizing that in the last three months, home prices have stopped declining and that in order to take advantage of the improvement in prices over the past year, now is a great time to consider making the purchase they held off on in the previous months,” said Darin Germyn, president of the board. “We’re seeing buyers who have been waiting on the sidelines, act, because of better price opportunities and more selection. It’s been four years since buyers had this much choice in the Fraser Valley.”

Active listings were up 26.3% year-over-year to 8,506 with 3,542 new listings during the month, a 10.7% decrease year-over-year but up 4.5% from April 2019.

Prices hold steady

HPI Benchmark Price activity for the Fraser Valley in May was:

• Single Family Detached: At $964,200, the Benchmark price for a single family detached home remained unchanged compared to April 2019 and decreased 5.9% compared to May 2018.
• Townhomes: At $522,500, the Benchmark price for a townhome increased 0.1% compared to April 2019 and decreased 5.9% compared to May 2018.
• Apartments: At $416,800, the Benchmark price for apartments/condos decreased 0.9% compared to April 2019 and decreased 8% compared to May 2018.

“Key to this market is pricing,” continued Germyn. “We empathize with our clients on the challenges they face today to qualify to buy a home and we work with them to find the right property at a realistic price they can afford.”

Copyright © 2019 Key Media Pty Ltd

The Commercial Leading Indicator rose 1.3 points in Q1 2019

BCREA

The BCREA Commercial Leading Indicator (CLI) roseby 1.3points to 135.2in the first quarter of 2019.Compared to this time oneyear ago, the index is 1.1per cent higher.

“While economic activity remained tepid at the start of 2019,a rebound in financial markets pushed the CLI higher,” says BCREA Deputy Chief Economist Brendon Ogmundson. “That signals a lower risk environment, but a slowing economy may impact future commercial real estate activity.” Following several years of robust growth, the BC economy continues to slow in the early part of 2019. The economic activity component of the CLI posted a third consecutive quarterly decline. Employment in key commercial real estate sectors was mixed. The CLI measure of office employment now sits at an all-time high, which signals strong future demand for office space.Volatile financial markets led to recent swings in the underlying CLI index, but the trend remains flat, pointing to stable commercial activity in 2019.

© BCREA

GTA May Home Sales Up by Nearly 20%, Though Still Below Average: TREB

Penelope Graham
other

May ushered in more promising data for the Greater Toronto Area real estate market, with robust double-digit growth in sales recorded for the second month in a row. A total of 9,989 homes traded hands, up 18.9% from the same time period last year, and an increase of roughly 10% from April’s activity.

However, while the uptick in sales could indicate the policy-induced correction that has plagued the market over the last two years could be coming to a close, the Toronto Real Estate Board’s report emphasizes they’re still below the 10-year trend for the month, which typically sees over 10,000 homes sold.

A Lack of Listings Keeps Market Competitive for Buyers

The GTA also continues to struggle with a supply and demand imbalance, as the number of homes brought to market in May remained roughly flat on a yearly basis at 19,386 listings. That supply remains on par with 2018 levels, when the market slumped at a 15-year-low, indicates sellers are less motivated to list than they have been in the past.

As a result, prices have experienced a steady year-over-year increase of 3.6% to an average of $838,540 – a pace TREB deems to be sustainable. The Home Price Index, which measures the overall value of homes sold, rose by 3.1%.

In the City of Toronto proper, sales rose by 13% with 3,715 transactions, well outpacing the 6,648 new listings brought to market and marking a 4% increase year over year. That’s put upward pressure of 7.8% on the average price in the 416, which rose to $937,804.

Similar price growth was experienced throughout the Greater Golden Horseshoe with values for Burlington homes for sale clocking in at $770,151, and Oakville real estate at $994,736.

Seller Gridlock Could Heat Prices

TREB President Garry Bhaura says that the market continues to be supported by the region’s strong economic foundation, and that the impacts from the Fair Housing Plan and federal stress test are likely being absorbed. 

“After a sluggish start to 2019, the second quarter appears to be reflecting a positive shift in consumer sentiment toward ownership housing. Households continue to see ownership housing in the GTA as a quality long-term investment as population growth from immigration remains strong and the regional economy continues to create jobs across a diversity of sectors,” he states.

“However, sales activity continues to be below the longer-term norm as potential home buyers come to terms with the OSFI mortgage stress test and the fact that listings continue to be constrained relative to sales.” 

The main risks to the market continue to be a lack of supply, according to TREB’s Chief Analyst Jason Mercer. While price growth is currently stable, he points out that should supply and demand imbalances persist, that will contribute to heating prices. It also causes buyer gridlock, as sellers fear being able to move up at a reasonable price point after selling their existing home – a trend observed in the build-up to the market’s peak in 2016 and early 2017.

“We are experiencing annual rates of price growth that are largely sustainable right now in the GTA – above the rate of inflation, but in the single digits,” he states. “If, however, we continue to see growth in sales outstrip growth in new listings, price growth will accelerate. Many households are not comfortable listings their homes for sale because they feel that there are no housing options available to better meet their needs.”

The pace of sales growth was strongest for detached and semi-detached houses, which rose 25% to 3,469 transactions and 27.9% to 1,019, respectively. Demand for townhouses rose 22.8% with 1,656 sold in May, while condo sales increased by 6.4% with 2,542 sold. 

Condos See Strongest Price Growth

However, price growth was strongest for multi-family housing, indicating the affordability gap is closing as demand persists for the most affordable home types in the GTA. The average condo price rose 4.9% to $590,876, while townhouse prices rose 3.2% to $665,969. Detached and semi-detached houses were up by a more moderate 1.1% and 1.9% to averages of $1,042,218 and $827,250, respectively.

Check out the infographics below to see how sales and price trends have changed year over year in both the City of Toronto and total TREB area in May:

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