A lack of housing supply causing a seller?s market

Gerv Tacadena
Canadian Real Estate Wealth

The lack of housing supply is expected to remain a pressing concern this year as Canada moves further to a seller’s market, market watchers say.

The sales-to-new-listings ratio in November was at 66.3%, representing a 2.7% annual decline in the new housing stock. This came while prices have rebounded steadily over the past year.

At the same time, the total months of inventory, which refers to how long it would take to sell off all available homes, hit its lowest level since 2007 at 4.7 months.

Zoocasa market watcher Penelope Graham said the lack of supply is a “far more acute issue”, particularly in the Greater Toronto Area.

Citing figures from the Toronto Real Estate Board (TREB), Graham said the sales-to-new-listings ratio in the region was 81%, indicating that only around one in five newly-listed homes were sold in November.

“Analysts are raising concerns that should undersupply persist, it could set the stage for the type of unsustainable price growth seen in the 2016 market, which was what prompted new regulatory change in the first place,” she said.

TREB chief market analyst Jason Mercer said the influx of people in GTA and the declining negotiated mortgage rates resulted in sales accounting for a greater share of listings during the second half of 2019.

“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,” he said.

Copyright © 2020 Key Media Pty Ltd

Commercial real estate vacancy in Vancouver is second lowest in Canada

Frank O’Brien
Western Investor

The bulls have spoken on the outlook for Metro Vancouver commercial real estate – but some inconvenient data points to disruptions in its unprecedented 10-year run to become Canada’s premier commercial and industrial market.

Vancouver has the second-lowest office vacancy rate and the highest lease rates in the country. The industrial market is setting new records for demand and prices, and the retail sector has nearly four million square feet of new bricks-and-mortar stores under development. 

The Metro population is expanding with about 45,000 immigrants and 8,000 people from less-blessed provinces expected to arrive this year.

Even with total commercial and industrial sales down 45 per cent through the first three quarters of last year and dollar volume off 43 per cent, to $6.92 billion, compared to a year earlier, confidence remains unshaken.

“Higher employment levels in the services and manufacturing sectors are anticipated to bring an increased number of professionals to [Metro Vancouver] in 2020, ultimately supporting commercial real estate development,” said Keith Reading, director of research at Morguard. “Vancouver’s economy is forecasted to expand at an above-average rate in 2020.”

“There are many reasons for optimism heading into 2020,” Jason Kiselbach, senior vice-president and managing director for CBRE, told an outlook panel at the October 29 Vancouver Real Estate Strategy & Leasing Conference. At 2.4 per cent, Vancouver’s downtown office vacancy rate is the second lowest in North America. Metro Vancouver office vacancies are 3.8 per cent, the lowest in Canada, which has an average vacancy of 11 per cent. 

Industrial space availability has plunged to 2.5 per cent, a near-record low. New supply is being snapped up quickly and declining vacancy is causing rental rates to rise steadily in both the office and industrial sectors, Kiselbach told the panel.

“Rising rents might not be great news for tenants, but it makes new construction more viable in the face of rising costs. New supply is the key to alleviating space constraints and rising costs,” he said. 

“The challenge for Vancouver is the lack of product, not purchasers,” stated a December report on Metro Vancouver real estate from Altus Group. The commercial and investment markets are forecast to match the pace of 2019, Altus concluded, “with some upside potential for new home sales.”

Residential plays a huge part in Metro Vancouver’s economy and, with housing sales up 88 per cent in December compared with a year earlier, sales in some areas – and prices across the board – were higher than during the peak of 2015, despite aggressive government attempts to crush housing demand.

Office space

There is six million square feet of new office space under construction in Metro Vancouver, three-quarters of it in the downtown, but development still lags demand, Altus noted. In the first half of 2019, $2.1 billion worth of office space was sold.  a near record high. The billion-dollar sale of the Bentall Centre office complex in downtown Vancouver was soon followed by an announcement from its U.S. buyers that it will expand with a 500,000-square-foot commercial tower.

Downtown Vancouver office lease rates for Class A offices are now $55 to $95 per square foot gross, compared to $50 to $90 in downtown Toronto and a maximum of $45 per square foot in central Montreal. Avison Young said much of the new Vancouver office space is already pre-leased before spec construction reaches the halfway point, such as the Post makeover of the old Vancouver post office, where Amazon has leased all 1.6 million square feet.

But Vancouver’s high-flying office sector will face an elephant-sized challenge this year: the 678,000 square feet of office space booked to WeWork, the troubled co-working lease leader.

WeWork filed paperwork in August to hold an initial public offering, based on a valuation that was in the US$47 billion range. That value plummeted to less than US$10 billion a month later. The New York Times quoted respected hedge fund manager Bill Ackman, who said the company’s value “has a high probability of being zero.” 

The largest of the B.C. sites that WeWork had announced plans to occupy comprises 170,000 square feet at BentallGreenOak’s future B6 tower, at 1090 West Pender Street, to be completed in the second quarter of 2023.

“Vancouver is one of the top-performing markets out of all the cities that they operate in within North America,” said Kiselbach. “Our understanding is that anything [WeWork] has committed to in Vancouver they will move ahead with.”

Colliers International’s senior managing director for Vancouver, Maury Dubuque, added that Vancouver’s office real estate market is so tight that losing a large tenant in an under-construction project would likely not cause much anxiety.

One of WeWork’s competitors may want to snap up the space, he said.

Colliers represents national co-working space provider Spaces, and Dubuque said that company is looking to add to its 560,000 square feet of office space in the Vancouver region. One of Spaces’ sites is 68,000 square feet at the former Tom Lee Music location on Granville Street. 

Retail trends

In December, San Francisco-based international retail research firm Leanplum declared that “retail is dead,” noting that “consumers are shunning bricks-and-mortar this holiday season with over 95 per cent choosing to buy half or more of their gifts online.”

“Not in Vancouver,” quipped Neil McAllister, senior vice-president and strategist with commercial real estate firm Lee & Associates.

Metro Vancouver has a relative shortage of shopping venues, he noted, though the region posted an average of $3.3 billion in monthly retail sales in 2019, third highest in Canada.

Metro Vancouver has 11.6 square feet of shopping centre retail space per capita, according to a 2018 Altus Group study, compared to 18 square feet per capita in Calgary, 19.5 square feet per capita in Edmonton and a national average of 13.1 square feet per capita. 

Nearly four million square feet of new retail development is being built or planned in Metro Vancouver, including a 150,000-square-foot addition to the McArthurGlen Designer Outlet mall in Richmond, 1.4 million square feet underway at the City of Lougheed on the Burnaby-Coquitlam border that is expected to complete in the first quarter of 2020, and an 80,000-square-foot shopping mall being wedged beneath the Vancouver House condo tower at the north end of the Granville Street bridge. This Westbank project, which opens this spring, includes Vancouver’s first Fresh St. Market, a grocery outlet, and the first Momofuku Noodle Bar, all clustered below a $4.8 million chandelier spinning from the bridge deck.

As well, 105 retail properties changed hands in the first nine months of last year, worth $454 million, Lee & Associates reports. These included a Chilliwack shopping mall that sold for $87.4 million and an 11,000-square-foot retail site on South Granville that sold for $1,265 per square foot. 

Market headwinds 

But both retail and office sales are slowing rapidly, according to the Commercial Edge, a survey from the Real Estate Board of Greater Vancouver that tracks commercial transactions through the Land Title and Survey Authority of British Columbia.

Recent data shows a sharp slowdown in both retail and office investment.

In the first nine months of 2019, 484 properties, compared to 630 sales in the same period a year earlier, and the dollar volume plunged 71 per cent to $1.19 billion from the $4.2 billion in the first three quarters of 2018.

The value of commercial land sales, a harbinger of future development, nosedived to $1.36 billion through the first nine months of 2019, down 78 per cent compared to the $6.35 billion tallied a year earlier, the real estate board reports. Just 304 land parcels had sold by the end of the third quarter, compared with 1,360 transactions in the same period a year earlier.

In the latest BC Assessment roll, Metro commercial properties have seen gut-wrenching value swings of minus 15 per cent to plus 15 per cent.

“We first saw signs of moderation during the 2019 property assessments,” said assessor Tina Ireland, adding that a “ripple effect” of moderating prices is expanding across the province.

“Commercial properties [evaluations] have stabilized within the Lower Mainland,” she said.

Industrial shortage

“[Metro] Vancouver is one of the tightest industrial markets in the world and space is in short supply,” noted Jeff Miller, head of industrial at Oxford Properties, adding the industrial shortage demands “bold solutions.”

For Oxford this solution is a Canada’s first multi-storey heavy industrial project planned for Burnaby’s Riverbend Business Park. The second storey, which is accessible to full-size transport trailers via a ramp, consists of 270,000 square feet, with 28-foot clear heights and a 130-foot truck court.

Light industrial stacked space is common in Vancouver, where three- and-four-storey buildings were selling out at up to $1,000 per square foot during much of last year. 

In the third quarter of 2019, 124 industrial land sales were reported, with the total dollar volume at $415 million, up  41.7 per cent from the same period in 2018, reports the Commercial Edge.

Vancouver’s industrial demand is being driven by last-mile logistics as online retailers such as Amazon, Walmart and IKEA build and buy up warehouse space, accounting for at least 2.5 million square feet last year, according to Avison Young, and lately by a surging film and TV industry.

Martini Film Studios, as an example, is building a new 600,000-square-foot production facility in Langley, the largest film and television production studio in Canada.

Industrial demand has driven prime land values to more than $20 million an acre amidst consistent warnings that the region is running out of industrial real estate. A mid-year report by Metro Vancouver’s Industrial Lands Strategy Task Force came to a stark conclusion: all of the undeveloped industrial land will be gone within 22 to 28 years, “assuming 100 per cent of the undeveloped inventory is available for industrial development,” which seems unlikely due to parallel demand for residential and other commercial space.

The BC Real Estate Association (BCREA) cautioned that the commercial real estate market is cooling in step with the B.C. economy.

“Provincial economic activity continued to slow in the third quarter of 2019, with declines in retail and manufacturing sales offsetting a gain in wholesale trade,” the BCREA reported.

The BCREA’s commercial leading indicator – an index which has seen a hockey-stick-style upward trajectory since 2019 – fell to 135.3 in the third quarter of last year, unchanged from a year earlier.

© Copyright 2020 Western Investor

Average house prices in Canada grew by 8.4 per cent

Gerv Tacadena
Canadian Real Estate Wealth

While there are claims that the Canadian housing market cooled last year, industry figures seem to point to the opposite.

Recent industry data showed that the average house price in Canada grew by 8.4% over the year to November. This is despite the 4.6% fall in the once red-hot market of Greater Vancouver.

The strong growth in annual dwelling values was due to the gains recorded in the Greater Toronto and Nova Scotia, where prices jumped by 6.8% and 19%, respectively.

“There are claims that 2020 will be the year when Canada’s housing bubble will finally burst,” market watcher Matt Smith said in a think piece in The Motley Fool.

Smith said that growing uncertainty of the outlook for the global economy and the fears of a recession fuel the assumptions of a burst, especially given the high levels of household debt in Canada.

“The fear is that an economic slump will cause rising unemployment and already stagnant wage growth to worsen, placing ever greater pressure on heavily indebted households,” he said.

And as housing costs continue skyrocket, particularly in Greater Toronto, sales will likely fall.

Smith said this series of events could trigger an uptick in mortgage defaults as financially stretched households struggle to meet their repayments.

“Higher mortgage defaults would lead to an increase in housing supply in an environment where sales are softening, placing greater pressure on prices,” he said.

Copyright © 2020 Key Media Pty Ltd

Experts differ on year ahead for B.C. property market, as real estate analyst predicts ‘rough year’ for Metro Vancouver’s single-family homes

Tyler Orton
Western Investor

If real estate investors were to make some resolutions for the new year, analyst Dane Eitel might suggest exercising wariness amid forecasts painting an optimistic picture of the B.C. market.

After all, some organizations may not have a vested interest in sounding an alarm over bleakness ahead, he said.

“When you never offer a negative forecast it’s a little tougher to believe,” the founder of Eitel Insights told Business in Vancouver.

A 2020 forecast from the BC Real Estate Association predicts the Multiple Listing Service average price will rise 3.6 per cent to $723,000, with sales growing 10.9 per cent to 85,500 units across the province. Growth is expected to be even more robust in Greater Vancouver, with sales up 18.2 per cent to 30,100 units this year.

And Royal LePage expects the aggregate price of a home in the region to rise 1.5 per cent to $1,125,200.

In a statement, Royal LePage Sterling Realty managing broker Randy Ryalls cited a significant pickup in fall sales creating momentum in the market, which he expects to put pressure on available inventory.

While industry has been touting a recent bump in sales (up 88.1 per cent year-over-year in December, according to the Real Estate Board of Greater Vancouver), “the purchasing that has been going on here the last two quarters or so is largely stress test mitigation-based,” Eitel said, referring to government rules on the mortgage stress test that eased up over the summer.

“All the folks that had been sidelined are now out purchasing.”

Instead, he said, 2020 will be a “rough year” for detached homes, which will not begin to turn around until 2021.

“You’ll see some foreclosures come onto the market,” Eitel said. “And inevitably when you see foreclosures actually taking place in Greater Vancouver, you do see the investors dip their toes back in.”

Meanwhile, Central 1 Credit Union’s own forecast sees low mortgage rates, modest economic growth in the province and pent-up demand bolstering sales across B.C. in 2020.

It forecasts an 11 per cent bump for all types of residential transactions in the province, rising to 99,760 units in 2020 compared with 89,860 in 2019.

“There’s also still a lot of construction occurring on the residential front despite the fact we’ve seen a softening of the resale market in recent years,” Central 1 deputy chief economist Bryan Yu told BIV, referring to how transactions in the resale market fell as much as 20.3 per cent to 78,192 units in 2018 compared with a year earlier.

“The levels of new home construction are still quite strong.”

Copyright © Western Investor

Moderate home prices reflective in lower grant threshold

Steve Randall
Canadian Real Estate Wealth

Most homeowners in British Columbia will remain eligible for the B.C Home Owner Grant according to the provincial government.

The 2020 threshold for the grant has been set at $1.525 million, meaning that 92% of homeowners will remain eligible for the basic grant despite the reduction from $1.65 million in 2019.

The lower threshold reflects moderating home prices in British Columbia and reduces the amount of property tax payable to a municipality, or to the province for rural homeowners.

The homeowner grant amounts are:

• up to $570 for the basic homeowner grant.
• up to $770 if the home is located in a northern or rural area. A “northern or rural area” means outside the Metro Vancouver, Fraser Valley and Capital Regional districts.
• up to $845 for homeowners who are 65 years or older, or if the homeowner is a person with a disability or lives with a relative who has a disability.
• up to $1,045 for homes in northern or rural areas where the homeowner is 65 years or older, or the homeowner is a person with a disability.

The grant is reduced by $5 for every $1000 above the threshold that a home is assessed to be worth, although some low income earners may be able to claim a supplement to replace the amount lost.

Homeowners may also be eligible for property tax deferment if they are 55 years or older or are financially supporting a dependent child.

Copyright © 2020 Key Media Pty Ltd

Sense of space maximized at The Holland

Michael Bernard
The Vancouver Sun

As condos shrink in size, Metro Vancouver developers are challenged to find ways to give homebuyers the biggest bang for their buck in new projects. That means making sure that no square foot of space is wasted, from medicine cabinets to showers.

An analysis of Statistics Canada data by real estate blogger Better Dwelling found that the median size of a Metro Vancouver condo built between 2016 and 2017 — the latest figures available — was 769 square feet. That is down 3.5 per cent from those built between 2011 and 2015, and 16 per cent smaller than the median of condo sizes built between 1971 and 1990.

At its 25-storey concrete highrise project in Surrey, The Holland, Townline is offering 250 one- and two-bedroom homes ranging from 453 to 828 square feet. It takes pride in being able to offer well-thought-through spaces that are much more functional than some larger spaces built in the past.

“The nice thing about our homes is we don’t have wasted square footage,” says Chris Colbeck, Townline’s vice-president of sales and marketing. “You just can’t afford to waste space anymore. People are paying a lot for these homes. They don’t want to be paying a lot for things like wasted corridor space.”

Years ago, a developer might build a 750-square-foot one-bedroom suite, but it would have a lot of inefficient space that one would never use, Colbeck said. “Nowdays, you get the same utility from a 550 square-foot home because we build a lot more functionality into a smaller space. We pride ourselves on attention to detail.

 “We focus first on our floor plans and their efficiency and liveability. We don’t let the architecture dictate the floor plan. What is the best floor plan for the market? It is about the homes that work for the demographic we are after.”

He said maximizing space means reviewing seemingly mundane enhancements in spaces — for instance, making efficient use of medicine cabinets in bathrooms or building a niche in the shower wall, rather than using precious space for storing toiletries in the bottom drawer of a vanity. Colbeck says Townline thrives in today’s less-harried market because it encourages buyers to use their time to ask questions about how Townline maximizes suite space, even including considerations about how the way a door swings could reduce usable space.

At the same time, all the suites in The Holland can accommodate a queen-sized bed, with some of the larger suites allowing for placement of a king, he said.

The same thoughtfulness is extended to planning of amenities available to all residents, he said. The Holland has more than 13,000 square feet of amenities inside and outside the tower. The design strives to curate social spaces where residents are encouraged to interact with other residents. Inside, there is a social lounge with TVs, foosball and a billiards table, a full chef’s kitchen and a harvest-style table. Outdoors, there is a social gathering bar with barbecue, a fireside lounge, another harvest dining table, a children’s play structure and green lawn space.

Even co-work space is considered: there are two meeting rooms with whiteboards, individual work stations, a coffee bar area and printer and copier spaces. Also included are a fitness studio with cardio and strength-training equipment and a designated yoga and stretch area.

Inside the homes, Vancouver-based BYU Design has created a choice of two colours: a warm grey and a sandy tone. Wide-plank laminate flooring is offered throughout each suite and there is air conditioning in every home. All closets have solid wood shelves and chrome rods while each home has contemporary roller blinds for control of natural light and UV protection.

On offer in the kitchen is a Samsung stainless steel appliance package, including a 24-inch refrigerator with bottom freezer, a 24-inch four burner gas cooktop, a slide-out AEG hood fan, a 24-inch wall oven, an integrated dishwasher and a Panasonic built-in microwave with trim kit. The cabinetry is contemporary two-toned upper and lower cabinets with under-cabinet LED lighting, soft close doors and drawers and a solid 1¼ inch stone countertop and full-height backsplash.

The bathroom offers the same level of detail with mirrored medicine cabinets for additional storage in the ensuite and main bathrooms, a contemporary deep soak tub and shower with a niche for toiletries. There are large-format porcelain tiles on the vanity wall, feature wall and floors. All homes come with a Samsung front-load washer and dryer in a laundry closet.

Even though The Holland could be considered a “boutique-style highrise, says Colbeck, it comes with services common to larger towers: a state-of-the-art concierge service with electronic cold and hot storage for packages opened with combination codes, a dog-wash area and a fenced dog run.

The Holland, which is expected to be ready for occupancy in the spring 2022, is less than a five-minute walk from Surrey City Centre’s 150 shops and services and SkyTrain and close to the SFU campus and Kwantlen Polytechnic.

The Holland

Project location: 133 Street & Old Yale Road, Surrey

Project Scope: A total of 250 homes, including one- and two-bedroom condominiums and townhomes, in a 25-storey concrete highrise overlooking the green space at Holland Park. More than 13,000 square feet of indoor and outdoor amenities in the development. Close to SkyTrain, Simon Fraser University and Kwantlen Polytechnic, plus shops and services at Central City shopping centre

Prices: Starting at $375,900 for homes ranging from 453 to 828 square feet

Developer: Townline

 Architect: GBL Architects Inc.

Interior designer: BYU Design

 Sales centre: 13260 Old Yale Road, Surrey

Sales phone: 604-951-8111

Centre hours: noon to 6 p.m. or by appointment (closed Fridays)

Email: [email protected]

Website: Townline.ca

Occupancy: Spring 2022

© 2020 Postmedia Network Inc.

Vancouver House Luxury for the Elite

Jen St. Denis
other

For $11,800 a month, the luxury three-bedroom, three-bathroom apartment in Vancouver House could be yours.

Several units in the newly-completed condo tower, which was designed by internationally-renowned architect Bjarke Ingels, have recently been listed on Craigslist. The listings promise would-be renters access to the building’s luxurious amenities – including a fleet of brand-new BMWs.

The 49-storey building with a distinctive top-heavy design rising over the Granville Bridge was developed by Vancouver real estate company Westbank. As the project neared completion in 2019, many pre-sale buyers attempted to flip their contracts to buy a completed unit before the building was finished and they were stuck having to pay GST and get financing for a mortgage.

Just two units are currently for sale: a two-bedroom, three-bathroom penthouse for $8.9 million, and a three-bedroom, five-bathroom unit for $6.8 million.

The developer recently unveiled the public art contribution for the project, a $4.8 million chandelier under the Granville Bridge that intermittently spins and lights up.

The Craigslist rental listings show rents for apartments in Vancouver House are on the high side – but something of a bargain when compared with another high-profile luxury tower.

One-bedrooms in Vancouver House range from $2,300 to $3,500 a month, while two-bedrooms are listed from $3,500 to $4,800. One-bedrooms are 606 to 750 square feet, while two-bedrooms range from 848 to 1185 square feet.

Rental listings at the Trump Tower at West Georgia and Bute, completed in 2016, are much pricier, but also offer more square footage. Currently available one-bedrooms range from $2,900 for a 635-square foot unit, to $4,980 a month for an 845-square-foot unit.

A 1,113-square-foot, two-bedroom unit at Trump Tower is listed at $5,800 a month, while one three-bedroom unit at Trump Tower is currently listed on Craigslist for just under $8,000 a month.

Renters at Trump Tower also get access to “Rolls Royce hotel car services” and “private jet experiences,” according to one listing for a $4,600-a-month two-bedroom.

Meanwhile at The Arc, a condo building at Expo Boulevard and Nelson Street, one-bedrooms are listed for rent at $2,300 a month (525 square feet), while two-bedrooms are $3,000 a month (762 square feet).

If you want the cachet of living near a luxury tower, but don’t want to pay big bucks, one current listing titled “WATERFRONT 1 bedroom in the new Vancouver House” could be the home of your dreams. The Craigslist listing offers a 771-square-foot one-bedroom for $900 a month.

The apartment isn’t actually in Vancouver House,but right next door, in an older condo tower completed in 1989 at 1500 Howe Street. The listing describes the building as being located in “the Vancouver House neighbourhood,” an “up and coming vibrant location” that is “going through a massive development.”

© 2020 BellMedia

Metro Vancouver assessments down: Forces slowly lowering property values for most homeowners

Douglas Todd
The Province

Headlines highlighting how the values of almost one million homes in the Lower Mainland have dropped in the past year will likely hand worrying news to those who just bought a place, a mixed message to longtime homeowners and good tidings to the many desperate to purchase a dwelling for the first time.

This second downward year in a row in Metro Vancouver prices — after more than two decades of fast-rising values — suggests new B.C. government taxes aimed at limiting foreign and domestic property speculation are having an impact, even while the Lower Mainland’s population continues to grow through in-migration.

The B.C. Assessment Authority will send out notices to Greater Vancouver households in the next few days informing them that the estimated values of their detached houses have dropped significantly, especially in high-end neighbourhoods like Vancouver’s Shaughnessy and West Vancouver’s British Properties.

The 2020 assessments, which reflect market values based on July 1 of last year, are down about 11 per cent overall in Vancouver, which means the average value of a detached house is now $1.7 million and a condo runs around $686,000.

Values have also dipped by about 11 per cent in Burnaby, Port Moody, the City of North Vancouver and Coquitlam, as well as by 14 per cent in Richmond and by 16 per cent across posh West Van, where the average price still hovers at a king-sized $2.4 million. This year, unlike last year, values also declined in many Fraser Valley cities, with Abbotsford dipping by four per cent.

Meanwhile, condo prices in each region generally depreciated by a few percentage points less than detached homes.

The only Lower Mainland municipalities that saw a rise in prices were the international ski resort of Whistler and the neighbouring village of Pemberton, where values jumped by five per cent. The price of a typical detached dwelling in fashionable Whistler has now climbed to $2.03 million.

Unlike the rest of the Lower Mainland, neither Whistler nor Pemberton is subject to the B.C. government’s foreign-buyers tax or new speculation and vacancy taxes. Many other places in B.C. that aren’t subject to the taxes, like Port Alberni, Kamloops and tiny Alert Bay, also saw valuation hikes this year.

While many global and local factors are at play in housing, the B.C. government and Municipal Affairs and Housing Minister Selina Robinson take justifiable credit for having at least a partial role in diminishing prices in real estate hot spots like Metro and parts of the Fraser Valley.

“This is a positive sign that our government’s efforts to make housing more affordable for more British Columbians are having a real impact. For too long, the previous government sat back and watched housing prices climb well out of the reach of average people,” Robinson said. “We are encouraged by signs that property values are continuing to stabilize.”

Even though the decline in assessed values in Metro and most of the Fraser Valley is hard news for people who took out mortgages to buy new homes in the past two years, the B.C. government is using taxation to decrease demand in an effort to achieve what many call a “soft landing” in prices. That’s after spectacular increases, especially since 2014.

Vancouver home values have risen by 206 per cent since 2000, according to The Economist’s Global Cities House Price Index. That’s the most dramatic two-decade real estate market increase among 40 of the world’s most sought-after cities, most of which offer locals much higher median wages than Metro.

© 2020 Postmedia Network Inc

Residents of a condo complex in Langley are reeling over massive insurance hike

Simon Little
other

Residents of a condo complex in Langley are reeling over what they say is an inexplicable massive hike in the cost of their strata insurance.

Kevin Froese and Jacklynn Loewy bought their unit brand new in 2015 but had to stretch their budget to make it work.

“We did our homework,” Froese told Global News. “We were shocked.”

“We felt very assured that we had purchased in a brand new building and would not encounter any massive disasters or huge unforeseen expenditures in the foreseeable future.”

Fast forward to December 2019 when the 181-unit strata got word that their strata insurance deductible would climb from $5,000 to $250,000 for water damage, with owners required to carry their own personal policies up to that amount to cover the gap.

Froese said the couple struggled to even find an insurer that would sell that policy.

The strata’s insurance premium also skyrocketed from $97,000 to $371,000.

“Keep in mind this is a now three-year-old building with zero claims,” Froese said.

Strata council president Adrian Kroll said residents are also getting reduced coverage under their new policy.

“A lot of insurance companies have left the condo market, we don’t know why, our broker doesn’t really know why,” he said.

“Nobody’s willing to tender offers to insure, a lot of companies are reducing the amount they have exposed to in the insurance field, so it becomes a battle for the broker to try and find an insurance company that’s willing to take on a project this big.”

Froese and Loewy aren’t alone in facing sticker shock.

In November, the Condominium Home Owners Association (CHOA) warned owners that they could see rates climb anywhere between 50 and 300 per cent in the new year.

CHOA executive director Tony Gioventu said one-factor insurers are dealing with is a massive spike in the value of appraisal for construction replacement.

“We’re seeing buildings that were constructed five years ago that had an appraised value for construction and renewal at about $60 million,” said Gioventu.

“Today we’re seeing that those same construction-insured appraised values for full replacement value are somewhere around $120 million to $150 million.”

Under B.C. law, insurers are required to cover the full replacement value for a building, Gioventu said, meaning insurance companies are on the hook for tens of millions in the case of a catastrophic fire, flood or earthquake.

He said with the limited number of insurers active in the market, companies are looking for ways to limit their higher risk.

“It’s going to be about supply, demand. It’s going to be about capacity to insure in the event of some sort of major catastrophic event, is it possible for the industry to actually sustain that?”

Rob de Pruis, director of consumer and industry relations with the Insurance Bureau of Canada said there are tens of thousands of strata unit owners in B.C., most of whom are not seeing hikes like Froese and Loewy’s building.

He said in other cases, insurance hikes for some owners could be linked to underlying risks, such as claims history or the repair and maintenance history of the building.

Even location could play a factor, for example, in the case of earthquake or flood risk, he said.

“The biggest piece of advice that we can offer is to make sure that they’re having a conversation with their insurance representative, to understand what some of the reasons are behind some of these increases, and to let them know that they do have options,” he said.

De Pruis said it’s also incumbent for owners to shop around, noting that not all insurance brokers have access to the same products and insurance markets.

Gioventu said growing insurance costs could leave owners struggling to renew their mortgage if they can’t find coverage they can afford in time.

He also said it could suck up money a strata would normally put aside to cover contingencies or for proactive maintenance — a situation he said could actually contribute to larger insurance woes in the future, if building upkeep and upgrades aren’t attended to.

Gioventu said owners looking to keep insurance costs down should look at bylaw changes (such as those banning gas barbeques) and dedicated maintenance programs to keep their risk down.

But those kinds of tips are cold comfort to Froese and Loewey.

“Everybody knew there was going to be some insurance stuff, some change, but everything I read said a 300 per cent increase was going to be the worst-case scenario,” said Froese.

“But we’re a brand new building. We’re three years old and we’ve never had a claim. So how did we become the worst-case scenario? And what happens to people who’ve had claims? Or next year?”

© 2020 Global News

The dollar figure on your provincial property assessment notice should not be taken as your home?s market value

Dustan Woodhouse
REW

BC Assessment notices have arrived in the mail, giving some homeowners a big smile and a bit more spring in their step (increased property taxes aside), while others wilt and lament at a modest gain or decrease in assessed value.

But hold on a sec. Neither this assessment document, nor either parties’ emotions, are tied to a current true market value. In fact, provincial property assessments can be significantly too high or too low. Values are determined in July of the previous year, and properties are rarely visited in person by provincial appraisers.

For this reason, provincial property assessments should never be solely relied upon as any sort of relevant indicator of true market value for the purposes of purchase, sale or financing.

Think of the assessed value instead as something akin to a weather forecast, spanning far larger and more diverse areas than the unique ecosystem that is your neighbourhood, your specific street, or your specific property. A weather forecast made the previous July, not the previous week. As this is when assessed values are locked in, a full six months prior to the notices being mailed out.

The BC Assessment Authority does offer some useful tools for a high-level view of the market. Go to http://evaluebc.bcassessment.ca/ and start typing an address. You’ll get a drop-down window where you can click on the address you want. Here’s what you can find out:

Details on single address: These come up on the first screen and include: current and last year’s assessed value; size and rooms; legal description; sales history, and further details if property is a manufactured home or multi-family building. There’s also an interactive map as well as links to information on neighbouring properties and sample comparative sold properties.

Neighbouring properties: Here you can compare the assessed value of houses in the immediate neighbourhood. Clicking on any property brings up further details.

Sample sold properties: Find comparable properties and see what they sold for and how their sold price compares to their assessed value. This is a great research tool for owners, sellers and buyers.

These tools can be a starting point, but if you’re looking to set a selling price on your own property, always enlist a professional. Valuing your property is not a do-it-yourself project. In a buying/selling transaction, it is best to order an appraisal, which is a much more accurate reflection of current market value. It is timely and reflects value for zoning, renovations and/or other features unique to the property. An appraiser is an educated, licensed, and heavily regulated third party offering an unbiased valuation of the property in question.

What’s My Home Really Worth?

Usually, market value is determined by what a buyer is willing to pay for a home, and what the seller is willing to accept.

A quick survey of recent sales and their relation to assessed values will often demonstrate no clear relationship between sale price and assessed value. It’s often all over the map. Some properties selling well below assessment, and others well above.

You also want an experienced and local REALTOR® to help you determine the selling price of your home. A (busy, local) agent will have a far better handle on what is happening in your area for prices than does a government document, and in many instances will save you from yourself.

In theory, a comprehensive current market review completed by a real estate agent should not differ radically from the value determined by a professional appraiser.

Professional appraisers spend all day every day appraising properties, and their reports are often seen as less biased. Imagine your reaction, as a buyer, to the following statements…

1. The seller says their house is worth $500,000.
2. The sellers’ listing agent says it’s worth $500,000.
3. This house is listed at $500,000 based on a professional (marketing) appraisal.

Most buyers would consider #3 the most reliable of the above statements. And most buyers requiring financing will have the benefit of the lender ordering their own independent appraisal to confirm fair market value. Sellers rarely order an appraisal in advance, which can create some interesting situations.

In practice, agents are relied upon for listing price estimates. Most buyers don’t care much about what anybody else thinks the house is worth. Buyers care what they think it is worth. This is why we say that market value is ultimately determined by what a buyer is willing to pay for the home, aligned with what is acceptable to the seller.

The Two Kinds of Appraisals

It is important to note that there are two kinds of professional appraisals. There is the marketing appraisal, such as one ordered by a seller. And there is the financing appraisal, which is done so the bank is satisfied the house is worth what the buyer and seller have agreed it’s worth. The financing appraisal is a less in depth review and more a matter of answering the question: Is this property worth the agreed-upon purchase/sale price?

A marketing appraisal goes deeper (and costs more), but a lender is not concerned with the actual market value over and above the purchase/sale price. A lender just wants the simple question answered. It is a rare day that the appraisal for financing has a value that differs significantly, if it all, from the sale price. Therefore one should not be surprised if, when buying a home, they find that the appraisal comes in bang on at the purchase price. As they do 99 per cent of the time. The one per cent of the time that the value is off, it is almost always a private transaction where the seller has had no professional guidance at all and has inadvertently set their price below market, by relying on something as inaccurate as their BC Assessment document.

In summary, rather than relying on your out-of-date BC Assessment for your home’s value, you should gather professional opinions from real estate agent(s) and an appraiser – these are the people with their feet on the ground and their heads in the game.

© 2020 REW. A Division of Glacier Media