Down payment needed for Metro Vancouver apartments and houses

Penelope Graham
other

How is the Metro Vancouver housing market faring as the Spring 2020 season sets in? It has been a tumultuous few years for west coast home buyers and sellers as they have struggled to absorb a plethora of regional real estate taxes and the federal mortgage stress test, all while contending with the highest home prices in the nation.

After these new changes were put in place throughout the tail end of 2017 and start of 2018, the market underwent a notable shift, as both buyers and sellers became skittish about searching for, or listing, homes for sale. That led to considerable market chill, with sales plunging by upwards of 30% year over year until well into 2019, accompanied by softening prices.

In fact, while the narrative for the early 2020 housing market has been that activity is starting to pick back up, Metro Vancouver home prices are still subdued from their early 2018 peak; the Real Estate Board of Greater Vancouver (REBGV) reports that the benchmark home price for the region was $1,020,600 in February, down -4.7% from two years ago despite a 44.9% year-over-year uptick in sales. Cheaper home prices appear to be the norm across the board; the average benchmark detached property can be purchased today for -10.4% less than in 2018 at $1,433,900, while condo apartment prices have remained fairly flat, down -0.8% to $682,800.

But has this lower price environment really given home buyers a substantial break? To find out, Zoocasa calculated the difference in the required down payment a buyer would need to purchase a benchmark-priced detached house or apartment in 18 municipalities across Metro Vancouver in February 2020 vs. the same time frame in 2018, when home prices were approaching their peak.

Benchmark home prices were sourced from REBGV and the Fraser Valley Real Estate Board. Minimum down payment amounts were calculated based on 5% of the purchase price for homes valued at $500,000 and under, 10% for the portions of home prices between $500,001 – $999,999, and 20% for homes priced at $1 million and over.

House Buyers Benefitting from Smaller Down Payments This Year

According to the data, the benchmark price for detached houses for sale in Vancouver declined in every municipality between February 2018 – 2020, requiring a smaller down payment today. The largest declines of over $100,000 were noted in three of the highest-priced areas, as a result of the luxury home market being hard hit by both a 20% municipal foreign buyers’ tax, as well as a provincial speculation tax for homeowners who don’t pay income tax in British Columbia. An additional five municipalities saw required down payments shrink between $15,000 – $50,000, while the remaining 10 declined by under $25,000.

The municipality that has seen the largest decline in required down payments is Surrey, where benchmark house prices have dropped by -1% to $997,900 from $1,009,400 in 2018. However, despite this relatively small change, the price dipping below the $1-million mark means buyers can put considerably less down than the previously required 20%; the minimum down payment in the area is now $74,790, -63% (-$127,090) less than the $201,880 required in 2018.

Next is the upscale neighbourhood of West Vancouver, which has seen house prices plunge -19% in the last two years to $2,544,400, from $3,141,900. That now requires a down payment of $508,880, a difference of -$119,500. Vancouver West rounds out the top three largest declines with an average price of $2,914,000 and a required down payment of $582,800 – down -17% and $117,320, respectively.

Check out the infographic below to see how minimum down payment amounts have changed for benchmark detached houses between February 2018 -2020.

Vancouver Apartment Prices Rise Despite Slump

While overall home prices have dipped over the past two years, buyers are still clamouring over the most affordable entry points to the market – aka Vancouver condos – leading to price increases for units within the upper $300,000 – $500,000 range in municipalities within a commutable distance to the Vancouver core. As a result, the required down payment actually increased in four of the 17 markets studied (Bowen Island was excluded due to lack of apartment inventory). In municipalities where prices did decline, they did so by a smaller extent than in the detached segment; 12 municipalities experienced drops under $25,000 for benchmark apartment down payments, with only one falling between $25,000 to $50,000.

Maple Ridge saw the largest price increase for benchmark apartment units in Metro Vancouver, up 16% to $355,900, and requiring a down payment of $17,795 (+$2,405). That’s followed by Pitt Meadows, with a benchmark price of $494,300 (+9%), and a down payment of $24,715 (+$22,605), and Vancouver East with a price of $579,800 (+3%), and a minimum down payment amount of $32,980 (+$1,450). Benchmark prices also increased in Coquitlam to $539,000 this February (+3%), requiring a down payment of $28,900 (+$1,370).

Check out the infographic below to see how minimum down payment amounts have changed for benchmark apartments between February 2018 -2020.

© 2015 – 2020 Zoocasa Realty Inc., Brokerage

BoC rate cut to relieve pent-up demand in housing market

Duffie Osental
Mortgage Broker News

With the Bank of Canada’s recent rate cut potentially acting as a “relief valve” for overheated housing market, Phil Soper, the chief executive officer of Royal LePage, said that Canada’s housing sector is in good shape to weather the economic downturn caused by the global COVID-19 pandemic.

In a recent interview with the Financial Post, Soper said that while cut was made as a response to “broad challenges” to the economy, the move can relieve the housing market of “pent-up” demand built over the last decade.

 “I think the first thing we should realize when we look at a substantial cut like that was that it is in response to broad challenges to the economy,” Soper said. “Predominantly, the move was made because of the coronavirus. Tangentially, because of rail blockades, and now of course we have the drag on the Canadian economy of sharply lower energy prices. So, there are dark clouds that are causing policymakers to make these big moves.

“That said,” he continued, “there is a silver lining for this… for the housing market. And [that is] this horribly unsettled economic period that we’re going through may actually act as a something of a relief valve for that overheated market.”

Soper said that before the rate cut, several issues caused demand to “pent-up” over the last decade – including a “very constrained” housing supply and adjustments to the federal stress test two years ago, which reduced activity levels throughout the country.

But with news of the sector reacting positively to the BoC’s rate cut, Soper insisted that he’s confident that the housing sector can weather a potential economic slowdown.

“Overall, this pent-up demand over the last couple of years came flooding into the market and we’re seeing a lot of activity in the market,” he said. “Will that help the economy overall? Absolutely. Housing has been one of the key sectors of the economy that has provided the high employment, and the relative economic strength over the last decade.”

Copyright © 2020 Key Media

Ontario Real Estate Association reports 83% of millennials looking for detached homes

Clayton Jarvis
Canadian Real Estate Wealth

According to research conducted by Ipsos for the Ontario Real Estate Association’s first annual Buyer and Sellers Research Report, real estate investors hoping to target millennial buyers on the resale of their properties would do well to avoid condo properties.

According to the report, which was released on March 5, only one in ten respondents are actively looking for properties in high-rise condos. Of the 19 percent of Ontarians who are currently looking for a home, 83 percent of those falling into the millennial cohort said they are looking for detached, semi-detached or townhouse properties. 51 percent of first-time buyers said they are hoping to buy a detached home, with 22 percent opting for a townhouse.  

The data is hard to reconcile with the thousands of condo units currently being built in Toronto.

“Ontario needs to address the missing middle of housing supply by exploring innovative solutions like laneway housing and multi-unit homes, such as townhouses, stacked flats or mid-rise buildings, especially in downtown and urban areas,” said OREA president Sean Morrison in a statement accompanying the report.

As it stands, millennial buyers are trapped in the airless space between their desires and reality: They may be most interested in landing spacious detached properties, but the survey also found that  millennials’ overwhelming concern when purchasing a home is price — two priorities that will forever be in conflict with one another. Most millennials also said they prefer to live in downtown, urban or suburban locations, which are generally the most expensive areas of any major population center.

The question for investors is just how seriously to take these conflicting desires. Millennials may want space, but few have the buying power to secure financing on a $800,000 semi, let alone a $1 million detached home. Even getting into a $600,000 condo will be tricky for most.

What the OREA report ignores is that the majority of millennials wanting to live in large Ontario cities will be renting for years before they scrimp and save their way to a five percent down payment. With declining inventory forcing prices upward, those down payments will almost certainly grow faster than the wages of Ontario’s millennial buyers.

Despite what they say they want, millennials are, and will largely remain, a generation of renters. Targeting them as tenants will be a wiser move than targeting them as buyers. 

Copyright © 2020 Key Media Pty Ltd

Mortgage applications jumped 300%

Duffie Osental
other

Tech firm Figure Technologies reported that loan applications through its Provenance blockchain platform increased by a whopping 300% since the Federal Reserve cut interest rates by half a percentage point last Tuesday.

Last week’s rate cut was meant to prop up the US economy in the face of a potential worldwide economic slump and the global COVID-19 outbreak. Consumers took advantage of the lower rates by applying for loans such as mortgages – and in Figure’s case, the increase in applications pushed the amount of loans it has funded to over $1 billion.

“The 300% increase in applications suggests consumers are eager to take advantage of unprecedented lower rates across mortgages, HELOCs, and student-loan refinancing,” said Mike Cagney, co-founder and chief executive officer of Figure. “Consumers will benefit through lower debt costs and, for cash-out refi and HELOCs, more cash on hand. I believe this is the fastest a de novo fintech has exceeded $1 billion in funded loans. We couldn’t have supported this type of growth and innovation without the platform we built on Provenance. Look for even more innovative solutions tied to these lower rates in the near future.”

Copyright © 2020 Key Media Pty Ltd

Oei Hong Leong claims damages in alleged conspiracy to tie up prime Vancouver waterfront site in litigation and hamper development

Darryl Greer
Western Investor

Singaporean billionaire tycoon Oei Hong Leong is suing Concord Pacific president Terry Hui over an alleged conspiracy to tie up valuable downtown waterfront property in litigation to hamper efforts to develop the lands with other Canadian or international developers

Oei and his companies, Hong Kong Expo Holdings Ltd. and Canadian Metropolitan Properties Corp., filed a notice of civil claim in BC Supreme Court on March 3, naming Hui Chi Yan aka Terry Hui, Concord Pacific Acquisitions Inc., One West Holdings Ltd. and Charles Chan Kwok-Keung aka Charles Chan as defendants.

In May 2015, Oei claimed, he made a deal with Concord to sell a 50 per cent stake in Hong Kong Expo Holdings Ltd., “which owned a large section of waterfront property in downtown Vancouver set on the eastern part of False Creek.”

Before the deal was finalized, the claim states, the defendants made a “good faith” deposit of $40 million into a law firm’s trust account, only to “surreptitiously” transfer the funds out two days later “without informing Oei.”

According to the claim, the defendants’ actions “were intended to induce Oei into continuing to negotiate with the defendants instead of interested third parties, such as the Aquilini Group and Asia-Pacific Strategic Investments Ltd., all to the plaintiff’s economic detriment.”

When negotiations broke down, Concord sued Oei for specific performance in BC Supreme Court, but the action was dismissed in July 2019.

While the litigation was underway, a Concord Group employee threatened to “drag out the litigation” for five years, the claim states.

“These threats were clearly made in furtherance of the objective of the baseless Canadian Action; specifically to pressure Oei into accepting an unsatisfactory deal with the defendants instead of a better deal with a third party,” Oei claims.  “[T]he defendants through their unlawful conduct conspired in concert with one another, deliberately, with actual knowledge of the falsity of the claims advanced for the purpose of seeking to  constrain the ability of the plaintiffs to deal with the Plaza Lands deal or to develop the Plaza Lands deal by means of a partnership or joint venture with other Canadian or international developers.”

Oei claims the defendants knew the litigation made the project unattractive to other developers, and caused him to “lose out” on a potential $800 million deal with Asia-Pacific Strategic Investment Ltd. Group. He claims he was “forced” to sell a portion of the lands based on a reduced valuation due to “significant litigation risks” and “adverse market conditions and a tightening economy” after Concord’s lawsuit was dismissed.

The plaintiffs claim they have suffered more than $245 million in damages. The allegations have not been tested or proven in court and the defendants had not responded to the claim by press time.

Copyright © Western Investor

Private amenities and a neighbouring park on offer at Polygon?s Union Park in Langley

Simon Briault
The Province

UNION PARK

Project location: 20712 82nd Avenue, Langley, B.C. Project size: 590 homes with between one and three bedrooms ranging in size from 540 to 1,080 square feet. One bedrooms priced from $339,900 and Twobedroom homes priced from $399,900.

Developer: Polygon Union Park

Architect: Ciccozzi Architecture

Interior designer: Polygon Interior Design Inc.

Sales centre: 20712 82nd Avenue, Langley, B.C.

Sales centre hours: noon to 5 p.m. daily, except Fridays

Sales phone: 604 8820098

Website: polyhomes.com

When you buy an apartment in a new development in the Lower Mainland, you typically get some smart new appliances in a modern kitchen, a shiny new bathroom or two and perhaps a small deck or patio and not much else. But Polygon is offering a whole lot more than that at its 590-home Union Park development in Langley.

The big draw here is Union Park’s 12,000-square-foot clubhouse and the 85,000-square-foot park it stands in (more on that later). Homes will be arranged in four low-rise apartment buildings around this central amenity.

“We’re right next to Yorkson Community Park in Langley’s Willoughby neighbourhood,” said Goldie Alam, Polygon’s senior vice-president of marketing. “The park is being expanded right now. When it’s finished it will provide 52 acres of park space and there will be playing fields, baseball

diamonds, off-leash areas for dogs, a water park, a playground and a picnic area. The park plan includes tennis courts and a skate park too.”

“I would say that Willoughby is the fastest-growing neighbourhood in Langley and there are lots of amenities in the area,” Alam added. “It’s packed with young homebuyers — singles, couples and young families.”

Riley Schmidt is one of those young homebuyers. He bought a two-bedroom, two-bathroom apartment at Union Park.

“I live in Port Coquitlam and I’m getting married this summer. My wife and I will be moving into the apartment when it’s ready in March,” Schmidt said.

“We both went to school in Langley at Trinity Western so we’re familiar with the area and love it out there. You’ve got everything you could need close by. I work in Port

Coquitlam and my wife will be working in Langley, so the location really works for us.”

Union Park homes have between one and three bedrooms and range in size from 540 to 1,080 square feet. The new building is scheduled to be move-in ready by the fall of 2021.

“Every home has a kitchen island or extended countertop, so the kitchens are very spacious and designed for hosting friends and family,” Alam said. “It’s unusual in one-bedroom homes these days to have space for a dining room and a kitchen island. All the homes with ensuite bathrooms have spa-style showers with benches in them and most of them have dual sinks as well.”

Other kitchen features include flat-panelled cabinetry, soft-close doors, stainless-steel fixtures and dual rollout recycling bin stations. Bathrooms have porcelain tile flooring and custom cabinetry with polished chrome pulls, engineered stone countertops and high-efficiency dualflush toilets.

Elsewhere in the home, residents will find laminate wood flooring, carpets in the bedrooms, covered decks or ground-floor patios, horizontal blinds, and hardwired smoke detectors, carbon monoxide monitors and fire sprinklers.

© 2020 Postmedia Network Inc.

Ontario millennials want detached homes

Gerv Tacadena
REP

Around four in five millennial homebuyers in Ontario are looking for detached and semi-detached homes, something the city has a limited supply of, according to the latest study by the Ontario Real Estate Association (OREA).

The study said that these group of homebuyers are more interested with detached, semi-detached, and townhomes housing options instead of the more affordable option, condominiums.

However, OREA President Sean Morrison said the province needs to address its supply issues to help boost the accessibility of the housing market for first-home buyers.

Morrison said the lack of available properties in the market is not helping the impact of high demand on home prices.

“Ontario needs to address the missing middle of housing supply by exploring innovative solutions like laneway housing and multi-unit homes, such as townhouses, stacked flats or mid-rise buildings, especially in downtown and urban areas,” Morrison said.

According to the study, millennials are more likely than baby boomers to consider living in urban and suburban areas. They typically watch out for these factors when looking for a home: affordability, safe and quality neighbourhood, and proximity to work.

Their baby-boomer counterparts, on the other hand, prefer properties in small towns and rural areas.

Copyright © 2020 Key Media Pty Ltd

FinTRAC found many real estate companies not complying with anti-money laundering rules

Gerv Tacadena
REP

An assessment from the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) showed that many real estate companies are failing to comply with anti-money laundering rules.

Citing the FinTRAC 2017-2018 assessment, the Organized Crime and Corruption Reporting Project (OCCRP) said that the real estate sector has yet to fully understand how money launderers can take advantage of the sector.

While the real estate sector showed improved anti-money laundering compliance since the previous audit, the FinTRAC report acknowledged that it “still has one of the lowest reporting levels.”

Of the 500 companies audited by FinTRAC, 172 are real estate groups, which include developers, brokers, and sales representatives. The assessment found that agents were not equipped with the proper training to identify potential money laundering.

OCCRP said real estate-linked money laundering cases were common in cities like Toronto, Vancouver, and Montreal. This could be one of the reasons why the prices of properties in these cities increased significantly.

A 2019 report by an expert panel in British Columbia found that of the $7bn that was laundered in the province in 2018, $5bn went through real estate. This contributed to the 5% spike in property prices in BC.

As part of the efforts to combat dirty money in the province, the Real Estate Council of BC (RECBC) has launched a mandatory course on anti-money laundering for local agents.

“Protecting consumers so that they can feel confident about their real estate transaction is our first priority, and that’s why we’ve decided to make this new course on anti-money laundering mandatory for all real estate professionals,” RECBC CEO Erin Seeley said.

Copyright © 2020 Key Media Pty Ltd

REBGV has added an insurance clause on contracts

Clayton Jarvis
REP

Realtors, condominium owners and prospective condo buyers in British Columbia have slowly had the rug pulled out from under them since autumn 2019, when word first started seeping out that the province’s strata corporations – essentially the owners of multi-family projects like condo towers and townhouse complexes – were facing enormous increases to their insurance premiums.

As more news outlets have latched onto the story, anxiety among condo owners has only intensified. Those with mortgages coming up for renewal are facing the prospect of having their financing pulled – no lender will fund the purchase of an uninsured building – while others are seeing their monthly strata fees increase by hundreds of dollars.

The situation remains fluid, with no course of action having been laid out by the provincial government or the Canadian Council of Insurance Brokers. That means realtors in the province will be facing a flurry of questions from their clients.

In an attempt to prepare BC’s realtors for the looming crisis, the British Columbia Real Estate Association has added a clause to its contract of purchase and sale that will help clients determine the insurance status of the condo they’re looking to buy.

“It’s really protecting prospective buyers, so [a building’s insurance history] is not a mystery, so that they don’t sign on the dotted line before they know, full disclosure, what the situation is around insurance,” says BCREA CEO Darlene Hyde.

Hyde, who bought her own condo ten years ago without even considering her strata’s insurance situation, says the information available to consumers has never been as available or as transparent as it now desperately needs to be.

“[This new legislation] brings it to the front,” she says, adding that realtors need to make their clients aware that if they’re considering the purchase of a condo, they have the right to view two years’ worth of strata corporation meeting minutes.

“There’s lots of data. There’s lots of paperwork.”

Hyde says the BCREA has lobbied the province’s Ministry of Municipal Affairs and Housing to adopt the Association’s bylaw as a provincial statute, making a strata corporation’s claims history and insurance packages visible to the buying public.

“Those are specific things we are doing to make more transparent to prospective buyers what the situation is with respect to insurance,” says Hyde. “We’re trying to give [our members] tools to be able to protect and inform their own clients. We are collateral damage to this insurance problem. I know the insurance industry and the condo world are at the heart of this in terms of what practices they might have to change. That’s not really in our bailiwick, but it is something we’re keenly watching.”

Although BC’s real estate industry has come under fire for the unethical behavior of a number of its agents over the past several years, Hyde is confident that a deflated condo market won’t lead to a rise in desperate, potentially illegal conduct.

“I don’t see that,” she says. “Realtors have had ebbs and flows before in markets, whether it’s single-family or commercial or whatever. I don’t see this as an impetus for bad conduct at all.”

Copyright © 2020 Key Media Pty Ltd