A tech company/real estate brokerage simplifies the buying process

Clayton Jarvis
REP

Launched in 2018 and steadily gaining traction in Ottawa and Calgary, Properly is a tech company/real estate brokerage that promises to simplify the homebuying process. It’s a nifty enough business model: If a user agrees with the company’s valuation of their home, Properly will buy it and then sell it for them; if the final sale price is higher than what the company paid, the net profit is split 50-50. The process greatly decreases complexity, uncertainty and, potentially, costs, making it highly attractive to Canadian consumers.

Properly’s relationship to realtors is a little more complicated.

By providing valuations the company says are 99 percent accurate and eliminating the need for staging, renos and waiting for offers to come in, the company has already targeted the most obvious pain points experienced by homebuyers who sell their homes in the traditional manner. The implication – trust the tech, ditch the human – seems obvious.

But company CEO and co-founder Anshul Ruparell insists the company is no enemy to flesh-and-bone agents.

“The role of the realtor might be changing, but it will never go away,” Ruparell says. “We actually have a number of realtors on our team.”

In Ruparell’s eyes, Properly is a solution to a growing demand among consumers for increased convenience and certainty. “It’s our role, as members of this industry, to adapt to these changing needs and to provide the type of services our customers expect,” he says.

Rather than comment on the potentially negative impact Properly will have on agents’ livelihoods, Ruparell prefers to talk about how the company actually supports its competitors.

“Ultimately, realtors are entrepreneurs just like us, so we like to find ways to work together,” he says. Properly does indeed refer customers to realtors in cases where the company can’t make an offer. It also accepts client referrals from (and pays industry standard referral fees to) agents whose clients don’t have the luxury of waiting for an offer. Properly also enlists other company’s realtors to act as listing agents for many of the homes they’re selling.

“There are a number of ways in which we’ve built up the capability to work together,” says Ruparell. We view ourselves as being highly complementary to the existing capabilities and toolkits of traditional agents.”

Unintended consequences The problem with tech is that the possible collateral damage left in its wake is rarely explored until it’s too late. Funny how that happens when millions of dollars are at stake.

As an early investor in Airbnb, Ruparell has already had a hand in unleashing one piece of real estate tech that is doing untold harm to many cities’ real estate markets by turning housing into little more than another bloodless commodity. When asked if the team behind Properly had thought critically about any long-term or hidden risks the platform might pose to the Canadian real estate industry, his answers were, to be kind, Zuckerberg-ian in their robotic optimism and inability to deviate from script.

Q: You were an early investor in Airbnb, which is taking a lot of heat, especially in Toronto, because of the part it seems to be playing in the housing crisis. Do you think Properly poses any unintended risks to the industry?

A: Properly is creating a process for Canadian homeowners that’s empowering and certain and convenient. By eliminating a lot of the friction associated with the move, we hope to actually increase mobility and to enable our customers to more easily take advantage of any opportunity that comes into their life.

1. Okay. So that’s a no?
2. We see it, quite candidly, as only positive for Canadian homeowners.
3. And for realtors?
4. I think we’re offering new and innovative ways for homeowners to go through the process of buying and selling their home. And, as mentioned before, we found a number of ways to work very closely with realtors to provide our services to their customers.  

Make of that what you will.

Copyright © 2020 Key Media Pty Ltd

Toronto?s luxury housing market is great demand

Ephraim Vecina
Mortgage Broker News

The Toronto luxury housing market is seeing an intense four-way battle between boomers, young executives, property investors, and foreign buyers.

Royal LePage Partners Realty sales representative Steven Green noted that this pitched competition is driving the low-supply environment evident across all residential asset classes.

“Some of the city’s most desirable pockets have a very low inventory of listings, which is unfortunate for sellers who want to move up in the same neighbourhood,” Green explained.

According to Royal LePage’s just released Luxury Property Report, the median price of a high-end residence in Toronto grew by 1.2% over the past year, reaching $3,629,916.

The city’s luxury condo units also had a significant 7% price increase during the same time frame, ending up at a median level of $2,402,650.

“Luxury condominiums in Toronto saw significant price appreciation as the region’s international reputation continues to grow,” Royal LePage Real Estate Services Ltd. CEO Kevin Somers stated. “Demand has remained healthy for luxury houses in Toronto and Ottawa.”

A steady upward movement in average prices will characterize the market for this year, with Toronto’s luxury houses seeing 2.5% price growth to $3,721,000. Luxury condominiums will also likely increase by 6.0% to $2,547,000.

Data from Sotheby’s International Realty Canada showed that these forecasts are a natural continuation of trends already well established in 2019.

Across the GTA, total sales of residential real estate valued higher than $1 million went up by 23% annually. The City of Toronto saw sales activity in this bracket increasing by 20% during that period.

Copyright © 2020 Key Media

Prime light industrial site sold for $2.75 million, $210K above its assessed value

Stuart Wright Nick Goulet
Western Investor

Breakdown:

Property type: Light industrial

Location: 275 West 6^th Avenue, Vancouver

Property size: 1,947 square feet

Lot size: 2,662.52 square feet

Zoning: I-1 (light industrial)

Floor space ratio: FSR 3

BC Assessment value: $2.54 million

List price: $2.85 million

Sale price: $2.75 million

Date of sale: February 14, 2020

Brokerage: Macdonald Commercial

Brokers: Stuart Wright and Nick Goulet

Copyright © Western Investor

First Nation’s deal on bankrupt Sechelt resort site ‘too good to pass up’

Frank O’Brien
Western Investor

A company controlled by the shíshálh (Sechelt) Nation outbid other suitors by approximately $400,000 to purchase the 396.9-acre site of a failed mixed-use waterfront development on the Sunshine Coast north of Vancouver. 

The development had fallen into foreclosure in 2018 when the owner, SSC Properties Ltd., failed to get to public hearing at Sechelt council two years ago this month. SSC had planned to develop about 1,600 homes and retail-resort facilities on the Porpoise Bay lands on Sechelt Inlet. 

When the permit bid died, SSC put the site up for sale for $23.8 million, but there were no takers.

In June 2018, Eagles Edge Capital Corp. started foreclosure proceedings against the company, claiming SSC had defaulted on a $10.75 million mortgage.

J-D Murray, a senior associate with NAI Commercial in Vancouver, who brokered the sale with fellow NAI agent Gary Haukeland and Chris Moore, president of Crosby Moore Real Estate, listed the property under the client’s order for conduct of sale at $13.98 million.

At the court-ordered sale in January a bid of $9.8 million had already been presented. Then a second bid arrived, at $14.6 million, but the potential buyer did not have the necessary deposit to close the deal, Murray explained.

“But that became a moot point when the Sechelt Nation bid $15 million,” Murray said, adding his “vendor was doing cartwheels” at the final sale price.

Shíshálh Chief Warren Paull said the 396.9-acre property “was too good to pass up,” as the community needs land for housing, and the parcel has three water licences which could support a fish hatchery. 

The property’s zoning remains CD-13, a comprehensive zoning put in place about 10 years ago to allow the proposed Silverback development, which included a golf course and 1,600 homes.

The Nation, which purchased the land through Tsain-ko Run of River LP, has also identified industrial and recreational opportunities on the waterfront, gravel resources, potential for subdividing the land and partnership potential for a hotel, said the band’s press release announcing the purchase.

The land borders Sechelt Nation land, the release said.

The release also noted that the Nation has been working with the province to identify 197 acres of Crown land that could be transferred to the shíshálh for residential use.

“The Foundation Agreement [a 2018 agreement between B.C. and the shíshálh] states that if the Nation and B.C. cannot identify Crown land suitable for residential lands they can work together to identify alternate private lands. Council will continue to work with the province to complete this work,” the release said.

In 2018 the province provided about $36 million to pay for the transfer of three parcels of Crown land to the 1,380-member shíshálh Nation. 

That land is also adjacent to shíshálh territory. 

Copyright © Western Investor

Credit risk to banks may be affected by stress test changes

Steve Randall
Canadian Real Estate Wealth

The proposed change to the federal mortgage guidelines that would reduce the stress test requirement for borrowers could adversely affect the credit risk of Canada’s big banks.

That’s according to Fitch Ratings which says that the lower threshold for lending along with the potential for further interest rate cuts amid concerns of economic slowdown, could spark activity in the housing market and raise the overall risk for lenders.

Currently, the stress tests require that home buyers demonstrate their ability to afford a mortgage at a benchmark rate based on the “posted” median of 5-year fixed rates at large banks, which is roughly 5.19%, or 250bps (basis points) higher than current market rates.

The proposed stress test would replace this posted rate with a more market-based benchmark, plus a buffer of 200bps, or approximately 4.8% based on current rates.

Fitch warns that if borrowers take on larger mortgages and, while the change to the B-20 mortgage guideline alone will not “significantly increase borrower purchasing power” it could ignite the market – especially in Toronto – supporting the current surge in prices.

Along with other household debt levels, the risk to the banks’ credit losses would come from an escalating of household debt coupled with an economic downturn.

Copyright © 2020 Key Media Pty Ltd

BCREA & The Commission of Inquiry Into Money Laundering

Trevor Hargreaves
BCREA

This morning, the British Columbia Real Estate Association (BCREA) makes our opening statement to the Cullen Commission of Inquiry into Money Laundering in British Columbia. As this process gets underway you should expect to see increased amounts of media coverage in coming days.  

To this end I wanted to provide you with an update of the steps we are taking here at BCREA.

We will be engaging with press over the next few days on the subject. As part of this process we are balancing partaking in this inquiry, with taking the opportunity to question common assumptions around money laundering and real estate. We query the model used to indicate size and scale of the issue, and make a public call for increased governmental collaboration at the provincial and federal level. We will also be re-asserting our desire for government to review the five recommendations we issued this past April. I’ve listed these below for your reference:

1. Accept only verified funds – For sectors of real estate that are not already required to do so, we recommend that they accept funds only in forms that are verifiable through Canadian financial institutions.
2. Mandatory anti-money laundering education – We recommend the introduction of mandatory anti-money laundering education for all real estate professionals subject to the reporting requirements administered by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to ensure that those professionals are trained in recognizing and reporting suspicious transactions. As a first step, we were pleased to see the Real Estate Council of British Columbia introduce mandatory training for real estate professionals in January. FINTRAC should work with sector organizations, regulators and the provincial government to improve existing resources so that they better reflect real-world situations and improve compliance.
3. Smart regulation – We recommend that the federal government amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to allow FINTRAC intelligence to be made available to additional regulatory authorities, including the BC Securities Commission and the BC Financial Services Authority. Optimally, the federal and provincial governments, as well as their respective agencies, should coordinate their actions, share information, such as the provincial assignment registry, and create a comprehensive, efficient enforcement regime.
4. Ongoing engagement – We recommend governments and regulatory agencies, including FINTRAC, better utilize on-the-ground experience of real estate professionals to develop compliance resources and test policy ideas. This will result in well-crafted, practical regulation and foster a culture of compliance to protect consumers and the economy.
5. Timely and transparent reporting – We recommend that FINTRAC implement a framework to identify and report trends on a regular basis and in language that is consistent and understandable to professionals, the public and media. This reporting system should also include consistency in examinations with immediate feedback designed to help industry professionals improve their compliance systems.

Vancouver, BC – April 15, 2019. Organizations representing key professions in the BC real estate sector submitted joint recommendations to the provincial and federal governments today to help protect BC’s housing market from money laundering.

The participating organizations include the British Columbia Real Estate Association, the Appraisal Institute of Canada – BC Association, BC Notaries Association, Canadian Mortgage Brokers Association – British Columbia, and the Real Estate Board of Greater Vancouver.

In their submission, these organizations also commit to shared best practices to help keep the proceeds of organized crime out of the economy. Their efforts focus on helping protect the real estate market from unscrupulous operators and ensuring the public can have full confidence in BC’s real estate market. All of the organizations have fully supported and participated in the government’s investigations into money laundering and real estate.

A real estate transaction involves multiple professionals. It will take a coordinated effort by all involved, working in collaboration with government, to stop money laundering. The joint recommendations and best practices submitted by these organizations reflect their commitment to the professionals and consumers they serve.

Copyright © 2020 British Columbia Real Estate Association

Market uncertainty slowed condo units being built

Sean MacKay
Livabl

Demand for new condos plunged in 2019 in Metro Vancouver and the region’s developers responded accordingly, cutting the number of condo units launched by 60 percent when compared to 2018’s total.

Vancouver-based new condo market research firm Urban Analytics found that 7,588 units launched in the region during 2019, a far cry from the 18,998 that hit the pre-construction market just a year prior.

It was the region’s weakest result for condo launches in years and follows three consecutive years that saw units hitting the market number in the 17,000 to 19,000 range. Annual totals dating back to 2012 showed it was also a low-point even with an expanded time horizon as condo launches have numbered in the five-digit figures each year, with 2019 now being the sole exception.

Set against the backdrop of a broader real estate market that spent the entire year ailing, the steep drop in Metro Vancouver condo launches should not come as a surprise. Not only did condo launches and new condo buying slow down considerably last year, 2019 also saw sales in the resale market drop off a cliff and luxury home buying dry up almost entirely.

In comments made to The Vancouver Sun, Urban Analytics President Michael Ferreira noted that the drop in launches was hardest felt in the high-rise condo segment of the market. Developers concerned with their prospects of selling enough units in the pre-sale stage to obtain their bank financing stepped to the sidelines.

Ferreira also told the Sun that condo market investors that had previously played an outsized role in the new construction market were no longer the driving force they once had been. Developers are noticing their absence and scaling back their efforts until demand ramps back up.

According to BuzzBuzzHome data, there are 5,753 new construction units currently under construction in the City of Vancouver market. If the pullback in new launches continues into the early 2020s, there may be more housing supply challenges in the region’s future.

© 2019 BuzzBuzzHome Corp

Luxury home price not rising like condo prices

Joannah Connolly
Western Investor

Although Metro Vancouver’s MLS home sales and prices have been recovering from their recent downturn since last summer, it’s a different story when looking at the luxury sector in isolation, according to a new report by Royal LePage.

The national brokerage issued a forecast February 25, reporting that the median price of a luxury house in Metro Vancouver at the end of January 2020 was $5,394,594, which is 6.7 per cent year-over-year decline. Luxury condos in the region dropped 4.4 per cent to $2,411,773 over the same period, it added.

However, Royal LePage said that recent signs of recovery in the market will eventually trickle up to push up prices in the luxury sector, albeit at a slower pace than the lower end of the market.

The report said, “While luxury real estate in Greater Vancouver is showing year-over-year declines in median prices for both houses and condominiums over the twelve-month period, a significant boost in luxury unit sales since October 2019 is moving the market towards stabilization. From October 1, 2019 to January 31, 2020, the median price of a luxury house in Greater Vancouver decreased 1.3 per cent year-over-year, while the median price of a condominium was relatively flat, posting a 0.2 per cent year-over-year increase.”

Jason Soprovich, a West Vancouver realtor with Royal LePage Sussex, said, “Metro Vancouver’s residential real estate market is shifting towards a balanced market and this trend has been moving upward through the luxury market. There is healthy demand for homes priced between $3 million and $5 million, and this segment is starting to stabilize. It will take more time for the upper-end segment to move into a balanced market, but it is expected.”

The report added that luxury home prices in the region were expected to continue their decline, but with relatively “modest” drops, over the coming year.

Royal LePage expects the median price of a Metro Vancovuer luxury house to fall another two per cent year-over-year to $5,287,000, while the median price of a luxury condo is predicted to slip 1.5 per cent to $2,376,000.

National picture 

Across Canada, the national report said that the Greater Montreal Area had posted highest appreciation in Canada over the year, for both luxury houses (up 8.5 per cent) and condos (up 8.3 per cent). This was followed by Greater Toronto Area luxury condos, which were seven per cent higher than one year previously.

Royal LePage said of the two metropolitan regions, “Limited inventory and high demand will continue to fuel luxury home price growth, and Royal LePage forecasts continued price appreciation across GMA and GTA luxury markets.”

The report said that Greater Ottawa’s luxury housing market has seen a balanced market for luxury houses (prices up 2.7 per cent) and condos (up 2.2 per cent) “as new-build prices push demand for resale listings,” it added.

Greater Calgary’s luxury home market told a similar story to Metro Vancouver, with prime real estate prices softening, but signs of renewed market activity leading to optimism.

Royal LePage’s report said, “Calgary’s luxury house prices are expected to be relatively flat [over the coming year]. The median price of a luxury house is expected to decrease by 0.5 per cent to $1,941,000 while the median price of luxury condominium is forecast to decrease 3.0 per cent to $860,000.”

Read the full Royal LePage national luxury home forecast here.

Copyright © Western Investor

Majority of Torontonians thinks city has inflated housing prices

Gerv Tacadena
Canadian Real Estate Wealth

Around four in five Canadians in Toronto perceive the city to be in a housing bubble, according to the latest study by Zillow and Ipsos.

Eighty percent of Canadians living in Toronto think the city has inflated housing prices and is at risk for a correction. Due to this reason, 77% of buyers doubt their ability to own a home.

Canadians in Toronto cited several barriers to homeownership, the biggest of which is coming up with a down payment. Other challenges include high mortgage repayments, home-loan qualifications, debt, and lack of job security.

Despite these challenges, the majority of Canadians in Toronto still believe homeownership is a good investment. In fact, the proportion of city residents who still think homeownership as a viable investment rose from 79% in 2018 to 83%.

Toronto’s house prices are expected to remain on an uptrend due to a supply crunch. According to the Toronto Regional Real Estate Board (TRREB), the average selling price in Toronto is forecast to increase by 10% to $900,000 this year.

“The end result will be an acceleration in price growth over the next year, as an increasing number of homebuyers compete for a pool of listings that could be the same size or smaller than in 2019,” TRREB said.

Copyright © 2020 Key Media Pty Ltd

StatsCan says residential construction increased in 2019

Gerv Tacadena
Canadian Real Estate Wealth

The investment in residential construction increased last year, with a stronger focus on apartments and row homes, according to the latest figures from Statistics Canada (StatsCan).

Over the year, the value of investment toward residential construction went up by 2.3% to $123.9bn, mainly attributed to the 11.8% growth in the multi-unit segment to $62.6bn.

On the other hand, investment for single units declined for the second year in a row, down by 5.9% to $61.3bn.

Ontario, British Columbia, and Quebec helped multi-unit investments surpass single-unit construction on an annual basis for the first time.

Investment in apartments and row houses increased by 12.7% to $50.2m and 9.8% to $8.2bn, respectively. On the other hand, investment in single homes declined by 6.5% to $57.5bn. StatsCan said these trends reflected “a national shift toward the intensification of urban areas.”

The total value of investments in building construction, including the non-residential segment, grew by 3.4% to $181.8bn over the year, with six provinces reporting gains.

Prince Edward Island registered the highest growth rate, with investments in the province inflating by 50.9% to $851.7m, brought about by significant gains in the residential sector.

Quebec and British Columbia also witnessed strong increases in building investments, striking respective growths of 10.7% to $38.6bn and 10.3% to $32.6bn.

In terms of investment value, Ontario took the lion’s share at $71.7bn, which was 1.8% higher than last year.

Copyright © 2020 Key Media Pty Ltd