Interest rate to remain at 1.75%

Kimberly Greene
Mortgage Broker News

The Bank of Canada (BoC) announced today that it would keep the overnight rate at 1.75%.

The Bank Rate is correspondingly 2% and the deposit rate is 1.5%. The BoC has maintained the current overnight rate since last October, when it was raised from 1.5%.

No one really expected the central bank to raise rates, but there was speculation that the rate would drop back to 1.5%, even though a recent survey indicated a “near certainty” of a rate hold, This lack of movement makes Canada somewhat of a holdout among other central banks around the world that are dropping rates to help their local economies in an uncertain global economic climate.

“There is nascent evidence that the global economy is stabilizing, with growth still expected to edge higher over the next couple of years. Financial markets have been supported by central bank actions and waning recession concerns, while being buffeted by news on the trade front. Indeed, ongoing trade conflicts and related uncertainty are still weighing on global economic activity, and remain the biggest source of risk to the outlook,” the central bank wrote.

Growth in Canada slowed as expected in the third quarter of 2019 to 1.3 percent, and stronger wage growth led consumer spending to a moderate expansion. Housing investment was also a source of strength, supported by population growth and low mortgage rates. Consumer spending and housing activity are important sources of resilience in the Canadian economy, and the BoC indicated that it would continue to be on alert for any financial vulnerabilities that may affect the household sector.

“Future interest rate decisions will be guided by the Bank’s continuing assessment of the adverse impact of trade conflicts against the sources of resilience in the Canadian economy – notably consumer spending and housing activity. Fiscal policy developments will also figure into the Bank’s updated outlook in January,” the BoC wrote.

The overnight rate is the interest rate at which major financial institutions borrow and lend one-day (or “overnight”) funds among themselves; the Bank sets a target level for that rate. This target for the overnight rate is often referred to as the Bank’s policy interest rate.

Changes in the target for the overnight rate influence other interest rates, such as those for consumer loans and mortgages. They can also affect the exchange rate of the Canadian dollar.

The next interest rate announcement is January 22nd.

Copyright © 2019 Key Media

The Greater Toronto Area real estate market continues to experience robust activity

other

The Greater Toronto Area real estate market continued to experience robust activity throughout the late autumn, as the latest numbers reveal the strongest annual sales and price growth year to date across all home types in November.

According to the latest data from the Toronto Real Estate Board, home sales in the GTA soared 14.2% from the same month in 2018, with a total of 7,090 transactions. The average home price also saw an aggressive uptick, increasing 7.1% to $843,637 across the region, while the MLS Home Price Index – a measure of the value of homes changing hands – increased 6.8%. For both measures, it was the largest increase in the pace of growth experienced in 2019. Part of this is due to the increased volume in high-priced detached home sales, which led the market in terms of activity.

Meanwhile, the number of new listings continued to drop by -17.9%, putting increased pressure on a growing supply and demand gap. That’s resulting in a faster pace of price growth, as well as hotter competition among home buyers, leading to more instances of bidding wars and aggressive offer making. It’s a trend that TREB’s analysts expect to deepen, should new supply not come to market in the near term.

GTA Real Estate Now a Steep Sellers’ Market

Real estate conditions for the GTA as a whole can be classified as a steep sellers’ market with a sales-to-new-listings ratio of 81%, indicating just under 20% of all new listed homes remained on the market by the end of the month. This ratio, which measures the level of competition among buyers, is calculated by dividing the number of sales by the number of new listings over the course of the month. A ratio between 40- 60% indicates a balanced market, while below and above that threshold indicate buyers’ and sellers’ markets, respectively.

Conditions were similarly steep within the City of Toronto, which experienced a 6.6% increase in sales with 2,718 transactions, while new listings fell 15% at 3,308. That pushed the city’s SNLR to 82%, while the average home price now approaches the $1-million-mark, rising 8.3% to $910,419. Sold house prices in Toronto are now well above that threshold, increasing 12.7% y-o-y to an average of $1,360,246.

The 905, which includes the Mississauga, Brampton, and Oakville real estate markets, saw the greatest increase in sales with a total of 4,372 homes trading hands, up a whopping 19.5%. Meanwhile, new listings plunged by the same percentage, pushing the SNLR to 81%, and the average home price by 6.8% to $802,120.

“Strong population growth in the GTA coupled with declining negotiated mortgage rates resulted in sales accounting for a greater share of listings in November and throughout the second half of 2019,” says Jason Mercer, TREB’s chief market analyst. “Increased competition between buyers has resulted in an acceleration in price growth. Expect the rate of price growth to increase further if we see no relief on the listings supply front.”

More Buyers Are Returning to Housing Market

As well, the number of qualified buyers entering the market has increased as the effects of recent market-cooling policies are receding; home buyers who were previously sidelined by tougher taxes and mortgage rules are now bouncing back, putting additional pressure on the scant supply of available homes.

Stated TREB President Michael Collins, “An increasing number of home buyers impacted by demand-side policies over the past three years, including the 2017 Ontario Fair Housing Plan and the OSFI mortgage stress test, have moved back into the market for ownership housing. Based on affordability and strict mortgage qualification standards, many buyers may have likely adjusted their preferences, changing the type and / or location of home they ultimately chose to purchase.”

© 2015-2017 Zoocasa Realty Inc.,

New park at the northeast corner of the intersection of Richards Street and Smithe Street

Kenneth Chan
other

If all goes as planned, construction on a new major urban public park in downtown Vancouver could begin early next year.

Next week, both municipal bodies are slated to vote on the construction contract award for the new park at the northeast corner of the intersection of Richards Street and Smithe Street, with the park board voting on December 9 and city council voting on December 10.

The 0.8-acre public park will replace a vacant lot, currently leased to EasyPark as a parking lot and used as a major carshare hub.

Following a bidding process, city and park board staff have selected construction company Smith Bros. and Wilson Ltd. to build the new park. Not including designing and planning costs, the estimated contract value over two years is $14.5 million (including GST), funded by the park board’s existing capital budget.

In an email to Daily Hive, the park board confirmed that construction is slated to begin in January 2020, with construction expected to take about 12 months. The development and building permits have already been obtained.

This timeline is dependent on both bodies approving the contract during their meetings. Following the recommendations of staff, both bodies are expected to approve the contract.

However, the project has faced about three years of delays; construction was set to begin in 2016, but a review of the construction drawings and specifications was necessary to bring the construction costs in line with the available project budget, which was exceeded by all bids received.

According to a staff report, the value-engineering process — without changing the overall design, functionality, and durability of the park — resulted in construction cost savings of about $2.1 million.

The relatively high cost for the park is due to its unique, intensive, amenity-packed design — far from just another ordinary, cookie-cutter green lawn park, promising to be far different from any other park in Metro Vancouver.

Local architectural firm DIALOG was selected to design the park in 2015, and the resulting urban contemporary park design was approved by the park board in Spring 2016.

The most striking visual and physical feature is the park’s elevated pedestrian walkway, meandering across the whole park site with multiple access points. Hammocks and interactive installations will be installed or suspended on the underside of this structure, and a cantilevered lookout over Smithe Street will hover high above the sidewalk.

“The primary function is as a pedestrian route or journey that bridges over the park spaces and civic plaza, offering a dynamic and varied experience and vantage points to the park activities or events occurring below,” reads the architect’s design rationale.

“This walkway is also designed to provide a number of fun and unique moments to pause and hang out upon the bridge structure, sometimes close to the tree canopies or looking directly over to the climbing structure in the adjacent play area or at the southern terminus of the bridge.”

So-called skyframes — overhead metal frames that align with the park’s spine — will support nighttime lighting and installations for public art and banners.

On the Smithe Street end of the park, the design calls for a cafe pavilion with universal public washrooms within an angular wedge-shaped building.

The café will help animate the space and create “eyes” for the park, effectively providing a level of public safety based on Crime Prevention Through Environmental Design principles.

A community plaza, suitable as a venue for small events and festivities, with a decorative water feature will front the cafe.

New trees, shrubs, and perennials will be planted, particularly along the park’s edge with the laneway, effectively providing the park with a green backdrop that blocks ground-level laneway and building views.

Various types of seating, both movable and fixed, will be scattered across the park, and a children’s playground will be built near the north end.

According to BC Assessment, the property has an assessed value of $80.8 million — up from its 2017 assessment of $58.3 million.

Daily Hive is a Canadian-born online news source, established in 2008

Revenue slows but still grows in tourism-heavy B.C., while oil-hit Alberta struggles to fill rooms

Peter Mitham
Western Investor

Hotel activity in Canada may have flattened over the past year, but a key takeaway from the Western Canadian Lodging Conference at the JW Marriott Parq Vancouver last week was that B.C. can thank an active conference and tourist trade for another good year.

B.C. hotels saw growth of revenue per available room (RevPAR) drop from a lofty 10 per cent to just 3 per cent over the past year, which sounds like a disaster except for the fact that growth across the country has fallen from about 5.5 per cent last year to near zero. Nationally, the slowdown could last two years, said Carrie Russell, managing director of HVS Canada, but B.C. is poised to continue enjoying good times for the foreseeable future.

Steady growth in demand and a lacklustre increase of just 240 rooms, or 0.4 per cent of the total stock, mean stiff competition for existing rooms. This will put upward pressure on nightly rates and room revenue.

“There’s certainly potential for more traffic, more tourism, to come into Vancouver,” Russell said. “[But] we’re starting to max out our occupancy levels and get some rate sensitivity there.”

The situation in B.C. is quite the opposite from that of Alberta, which continues to wince from oilpatch woes.

“Tourism, as much as it’s strong in B.C., it’s still a smaller component in Alberta,” said Greg Kwong, executive vice-president and regional managing director of CBRE Hotels in Calgary. “What’s going to stimulate Western Canada … is capital investment into the energy sector, and that in turn will filter down to the lodging industry.”

Participants in last week’s conference didn’t see the hard times ending any time soon, with the supply of rooms in Alberta growing at 3 per cent (a whopping 3,000 rooms) while a lack of business travel keeps many properties underperforming. RevPAR shrank 2 per cent last year.

“[It’s] a lot of supply being absorbed in an environment where we haven’t seen a ton of demand growth,” Russell observed.

Big Picture Conferences, organizer of the Western Canadian Lodging Conference, did announce that it would do its part to correct the matter, however. The 2020 edition of the conference will be held in Calgary, kicking off a tradition of moving between venues in B.C. and Alberta to make the conference that much more western Canadian.

Shifting values

While participants in the Western Canadian Lodging Conference last week railed against the hit Alberta’s oilpatch is taking, participants in an Urban Land Institute (ULI) discussion of emerging trends facing real estate in 2020 focused on the need to address climate change.

While the threat registers in Alberta — “I’ve not met an Albertan who denies climate change; we all get it,” CBRE Hotels’ Kwong told the lodging conference — PricewaterhouseCoopers real estate research director Andy Warren flashed a Washington Post headline at ULI members declaring, “Canada’s election results are a victory for the planet.” This leaves one to conclude that Alberta’s results were a disaster for the planet, at least in the eyes of Sweden’s central bank, which recently divested itself of bonds issued by the province.

It’s the kind of shift ULI panellists see putting real estate assets at risk, too.

“I do think over time that there’s going to be a valuation, a cap rate impact,” said Tim Grant, vice-president of development with PCI Group.

Wendy Waters, vice-president of research services and strategy at GWL Realty Advisors Inc., agreed, saying lenders and investors are already asking for a statement of the vulnerability of assets to natural disasters. It’s voluntary today but could eventually become mandatory, eroding the value of some assets.

“The market sentiment could change on certain assets in certain locations,” she said. “One of the things that makes me nervous as well is we could be seeing a change along those lines, in addition to the actual risks from the environmental change itself.”

Copyright © Western Investor

Senior citizens owning houses will flood the market in the next 20 years

by Ryan Smith
Mortgage Magazine

More than 20 million homes will hit the market over the next 20 years as aging baby boomers die or vacate their houses, according to a new report from Zillow.

Housing inventory has been tight for a decade, largely because builders have faced rising costs for labor and materials. However, about a third of America’s homes are currently owned by people aged 60 or older.

“The Silver Tsunami is estimated to hit in earnest as the number of seniors aged 60 or older who pass away each year rises during the 2020s and 2030s,” Zillow said in a news release.

Between 2007 and 2017, about 730,000 homes were released into the US market by people aged 60 and older, according to Zillow. Between 2017 and 2027, that number is expected to spike to 920,000 per year. Between 2027 and 2037, it’s expected to rise to 1.17 million per year.

“This means more than 27% of today’s owner-occupied homes will become available by 2037,” Zillow said.

The wave of homes becoming available will be so large that it will impact the economy in traditional retirement areas, Zillow predicted.

“Retirement hubs like Florida and Arizona are likely to feel the sharpest impact,” Zillow said. “If demand erodes because fewer people choose to retire there in the coming years, those areas might end up with excess housing. Also heavily impacted will be regions like the Rust Belt, which saw younger people move away in recent decades, leaving older generations to make up a larger share of the populations.”

Copyright © 2020 Key Media Pty Ltd

CMHC market report showed an increase in insured rental homes

Ephraim Vecina
Mortgage Broker News

In its latest market report, Canada Mortgage and Housing Corporation stated that the number of rental housing units it insured grew by 35% annually during the quarter ending September 30, 2019.

“We’ve seen increased demand in rental housing, which remains an important housing solution for many Canadians. We have continued to provide support for this option through our commercial activities and National Housing Strategy initiatives,” CMHC chief financial officer Lisa Williams said.

“Our Q3 results also indicate that we are continuing to contribute to the stability of Canada’s financial system with the prudent management of our resources.”

During this quarter, CMHC provided mortgage insurance for more than 69,000 homes nationwide, across more than 38,000 rental units and over 31,000 home buyers. The average home purchase price in Q3 was $294,689.

The overall arrears rate was 0.30%, while the average CMHC-insured borrower had approximately 7.6% in equity, along with a credit score of 756.

As of the end of Q3, total insurance-in-force was measured at $433 billion, while total guarantees-in-force stood at $488 billion.

Most recently, the Crown corporation took the next step in fulfilling key National Housing Strategy objectives with the inking of bilateral agreements with Nova Scotia and Nunavut under the new Housing Partnership Framework.

Copyright © 2020 Key Media

New home inventory down in Vancouver

Ephraim Vecina
Mortgage Broker News

Attesting to sustained feverish demand for the market’s residential property, new home inventory in Greater Vancouver fell by 72.24% year-over-year in October, according to MLA Canada.

New inventory declined by 31.39% from September, despite a slight drop in overall sales. Pre-sales launched in October also suffered a 14.2% month-over-month and 69.52% annual drop.

“Falling new unit launches, follows soft sales leading up to [October],” real estate information portal Better Dwelling stated in its analysis of the MLA figures. “In response, developers have been delaying and cancelling new units, helping to improve absorption.”

Third-quarter data from Statistics Canada showed that the region’s average condo prices went down by 3.49% annually, but up by 17.9% from Q1 2017. New build condos were up 1.05% year-over-year and up 15.63% from Q1 2017.

Fluctuating conditions in the resale apartment segment largely drove these results, Better Dwelling added. Resale condo prices shrunk by 5.87% annually during Q3 2019, but were still 18.87% higher than the levels seen at the start of 2017.

Meanwhile, single-family home price growth has entered a prolonged period of relative slowdown. During Q3 2019, the average price of this housing type fell by 5.95% from a year before.

Compared to Q1 2017, single-detached prices are 5.74% higher, roughly just one-third of the growth exhibited by the condo market during the same time frame.

Copyright © 2020 Key Media

Feds launch National Housing Strategy

Steve Randall
Mortgage Broker News

Officials and stakeholders from the Vancouver region met with a federal government minister last week to discuss issues relating to the National Housing Strategy.

Ahmed Hussen, Minister of Families, Children and Social Development met with Selina Robinson, Minister of Municipal Affairs and Housing, Burnaby mayor Mike Hurley, and non-profit housing stakeholders.

They talked about affordability issues in the region and how they can build on existing relationships.

“Every Canadian deserves a safe and affordable place to call home. That’s why our government launched Canada’s very first National Housing Strategy, to lead the fight against homelessness and improve access to affordable housing in all corners of the country. Much of this work is well underway, and I’m pleased to sit down with partners in government, non-profits and the affordable housing community to listen to their experiences, and bring their voices to Ottawa,” said Mr Hussen.

The Government of Canada continues to roll out its National Housing Strategy (NHS), a 10-year, $55 billion plan that will create 125,000 new housing units and lift 530,000 families out of housing need, as well as repair and renew more than 300,000 housing units. It aims to reduce chronic homelessness by 50%.

Copyright © 2020 Key Media

Canadian housing market will be more stable in 2020

Steve Randall
Mortgage Broker News

The highs and lows that have defined the Canadian housing market in recent years will be replaced by a more stable environment in 2020 according to a new report.

RE/MAX says that increased consumer confidence could be a key factor affecting the housing market next year, with more Canadians adapting to the mortgage stress tests and millennials reaching peak homebuying age.

The firm’s housing outlook calls for a 3.7% increase in the national average home price.

However, there will be stronger-than-average price growth in several markets including London (+10.7%), Windsor (+11%), Ottawa (+11.7%) and Niagara (+12.9%).

Market challenges

Several key markets will begin the year with the challenges of 2019 remaining.

In BC, weak sales volume in 2019 is forecasted to mean a whole-year 3% price drop compared with 2018.

In Alberta, Calgary should see more demand from people moving to the city from elsewhere in the province, although the market has elevated unemployment relative to elsewhere in Canada. Winnipeg should see continued demand with rising prices.

RE/MAX is forecasting a strong 2020 for Ontario with the economy, labour market, and improved affordability helping to boost sales. Toronto supply still lags demand and Ottawa and Windsor are set for further gains.

“Southern Ontario is witnessing some incredibly strong price appreciation, with many regions still seeing double-digit gains,” says Christopher Alexander, Executive Vice President and Regional Director, RE/MAX of Ontario-Atlantic Canada. “Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.”  

Affordability will attract more buyers in Atlantic Canada with Halifax and Saint John among those seeing gains, although the report notes that the aging population of Saint John is expected to have an impact on the housing market at some point.

Copyright © 2019 Key Media

Regional startups like Fisherly are emerging as other boards change rules

Mortgage Broker News

When Chris Pollard wanted to list his Toronto condo, he decided to try a private sale in his neighbourhood first.

And thanks to a Supreme Court decision last year against the Toronto Real Estate Board (TREB), he and his wife were able to look up how much similar units had sold for in the area to better price the home themselves.

Private listings and other alternative sales models are still outliers in Canada’s real estate market, despite an opening up of data on sale prices and listing history.

Still, last year’s ruling has ushered more information for consumers into the market and spurred innovation opportunities, said Anthony Durocher, deputy commissioner for the Competition Promotion Branch of the bureau.

“For the average consumer, they’re able to benefit from greater choice of online tools to enable them to make an informed decision,” he said of the change, which came after seven years of “hard-fought” litigation.

“That’s really a great outcome for competition and innovation.”

The additions to the online real estate landscape have taken a variety of forms, including international companies like Redfin that promise low commissions.

Meanwhile, Canadian players like Zoocasa and HouseSigma are expanding their data-driven models, regional startups like Fisherly are emerging as other boards change rules and realtors are setting up their own data sites.

Stephen Glaysher, who’s worked as a downtown Toronto realtor for 18 years, set up a site called MLS Sold Data as a resource for current and potential clients to boost transparency and trust.

He said he’s long been an advocate of more disclosure on sale prices, in part to keep his own industry in check.

“I see a lot of unethical business practices with real estate agents,” said Glaysher.

He said it’s been too easy in the past for realtors to fudge numbers when determining bid and sale prices, where they could manipulate comparables up or down by as much as $200,000 to make sure they win a bidding war.

“You can doctor it to make it look how you want it to look.”

He said clients can double-check data themselves now that sale prices can be made available online, though he worries some people could make wrong decisions by not analyzing the data properly.

TREB, which fought the release of data largely over privacy concerns, said the ruling has started to dilute the MLS system, because some consumers aren’t providing information or not even listing on the system over privacy concerns.

John DiMichele, president of TREB, said in a statement that he’s concerned how people both in and outside of the industry are using the data. He said the board, which has restrictions including no scraping, mining, or monetizing of the data, is looking to protect its intellectual property and defend personal information.

“We are currently in the process of auditing and protecting confidential information in TREB’s database, which is what our members and consumers expect and what the law demands.”

Aware of privacy concerns, real estate site Zoocasa has taken down some price history information on request, generally a couple a month, said CEO Lauren Haw.

Overall though, the data has allowed the company to provide more information and will play into a range of better tools and valuation features it plans to unveil in the coming months to help people better predict price changes.

“This does allow us to better innovate, in terms of the data interpretation that we’re providing,” she said.

And despite privacy concerns, the Supreme Court ruling has prompted real estate boards in other major cities including Vancouver, Calgary and Ottawa to open up their data online, while Quebec’s amalgamated board is considering the issue.

The competition bureau said it has been generally pleased with how other boards have reacted, and that “most” have implemented new rules, but did not provide specific numbers.

But even as the openness of information increases and new companies enter the market, the overall market does not look to have changed all that much, said Queen’s University real estate professor John Andrew.

“Most people aren’t accessing the data that is available, so I don’t see really that it’s had a very profound impact on the market,” he said.

“I kind of made the prediction that this might be kind of the next step of several in the general trend towards the liberalization of data, and that really hasn’t happened, to my surprise.”

He had expected more Canadians would follow the growth in the U.S. of flat-rate listings and other ways to reduce commissions, where the cost savings are “simply staggering,” but the vast majority are sticking with the standard model.

“I think it’s just about the consumers’ confidence level. They’re dealing with their home, and by far their largest investment.”

Pollard, who had listed his condo privately, decided after a quick test of the option to go with a realtor. He said one of the big trade-offs in paying a commission was the greater potential for multiple bidders.

“There’s definitely benefits of having a realtor, and I’m seeing that right now actually, the fact they know how to price it, they have the network. It’s a marketing campaign.”

Copyright © 2019 Key Media