Why this rundown Vancouver bungalow is listed for $11 million

Jaonne Lee-Young
The Vancouver Sun

The property is just one block from the corner of West 41st and Cambie — an inner street where developers are looking to build condos
The house at 481 West 40th Ave. in Vancouver is assessed at $3.9 million, but is being listed for sale at $11 million. Photo by NICK PROCAYLO /PNG
A new real estate listing for a rundown Vancouver bungalow has some observers chattering over its dizzying asking price of $11 million.
The four-bedroom, two-bathroom old-timer is currently assessed at $3.866 million.
The property is not on a busy arterial, but is just one block from the corner of West 41st Avenue and Cambie Street, across from the Oakridge Centre redevelopment.
These “inner streets” are a new frontier of sorts, and there may be more of these asking prices as sellers target developers who have long-term plans to build condos, say experts.
“Developers are looking to land bank,” or buy and hold properties for future use in prime areas, said real estate agent Abraham Yung, who has the $11-million listing on West 40th.
A potential buyer could also later purchase the two adjacent single-family lots with the goal of applying to rezone and use the entire site for a low-rise or even taller apartment building.
Investors did the same in previous phases of developing the Cambie Corridor, when single-family homes along Cambie Street and King Edward were sometimes sold for more than double their assessed value.
Intersection at Cambie and 40th Ave in front of the house assessed at $3.9 million which is for sale at $11 million. Photo by NICK PROCAYLO /PNG
“For anyone in the real estate industry, it’s not surprising,” said Jacky Chan, president of BakerWest Real Estate, which markets pre-construction property developments.
The 2018 Cambie Corridor Phase 3 Plan indicates that “the overall concept plan” includes building heights of 13-storeys or higher for this location. Another more detailed document that was described as a proposed plan in March 2018 gave specific housing options, showing that 15-storey and 18-storey towers could be possible for the area if they are 100-per-cent secured rental with 20 per cent below market rental units.
Chan said there is currently an active development on Manson Street, west of Cambie, that is also on an “inner street” north of West 41st Avenue where there had been six single-family lots.
A rezoning application was submitted last November, proposing two 18-storey buildings with 392 rental units where 20 per cent of them are below market, plus a childcare facility.
“That is what this ($11 million) listing is fishing for,” said Chan. “That would be the best comparison.”

 

© 2022 Vancouver Sun

Housing affordability likely to get worse before it gets better as listings hit all-time low

Stephanie Hughes
The Vancouver Sun

‘There are currently fewer properties listed for sale in Canada than at any point on record’

 The number of newly listed properties fell about three per cent from November to December. Photo by National Post

Canadian home prices rose by more than 17 per cent in 2021 but listings ended the year at an all-time low, according to December data released by the Canadian Real Estate Association on Monday.

CREA said sales in December were up by 0.2 per cent month-over-month, but down 9.9 per cent from a record level posted in December 2020. The number of newly listed properties fell about three per cent from November to December.

“There are currently fewer properties listed for sale in Canada than at any point on record,” said CREA’s senior economist Shaun Cathcart in the release. “So unfortunately, the housing affordability problem facing the country is likely to get worse before it gets better.”

The national average home price stood at $713,500 in December, coming off a record $720,000 in November. That marked an increase of 17.7 per cent over December 2020. The MLS® Home Price Index, CREA’s tool for assessing home prices and trends, saw an even bigger jump, up a record 26.6 per cent year-over-year as a lack of supply continued to put upward pressure on housing. CREA’s benchmark home price hit a record high of $811,700 in December.

 

 

“With the housing supply issues facing the country having only gotten worse to start 2022, take any decline in sales early in the year with a grain of salt because the demand hasn’t gone away, there just won’t be much to buy until a little later in this spring,” CREA chair Cliff Stevenson said in the release. “But when those listings eventually start to show up, the spring market this year will almost certainly be another headline grabber.”

While the winter months usually see a lull in market activity, the real estate industry has been experiencing a heated market.

“The winter so far has been boisterous,” Phil Soper, chief executive officer at Royal LePage, told Financial Post’s Larysa Harapyn last week. “Volumes have been higher than typical at this time of year. It looks a lot like the winter of 2020 … and I think that is the theme that’s going to carry right through the spring market.”

 

 

Christopher Alexander, president of RE/MAX Canada, told the Financial Post that listings tend to be lower during the holiday season, but he was taken aback how few listings there were.

“Typically, it’s a normal time of the year for listings to be low,” Alexander said. “But I am surprised to see even a lower amount of listings than previous years, and previous normal years … because prices are have gone up so much. So, it’s a big challenge.”

Alexander pointed to the supply crisis, which is putting further pressure on affordability.

“It’s becoming clearer and clearer that we haven’t planned properly enough for our population growth,” Alexander said, adding that Canada has high immigration targets without a plan to house the newcomers. “We’ve got a serious challenge here. I think a lot of the hype that we’re hearing recently about investors and taxes like the home equity tax is all a big distraction, in my opinion, from the real issue and that is we don’t have a solution to our supply challenge.”

Supply shortages have become a critical issue for the Canadian housing market. A report by the Bank of Nova Scotia found that Ontario, Alberta and Manitoba have the lowest housing stock per capita, exacerbating affordability issues.

“Policymakers are starting to say the right things, but now they have to act to change this course we’re on,” CREA’s Cathcart said. “An aggressive national push to build more homes is what will address the issue, but it will probably have to be a greater amount of building than anything we’ve ever undertaken. A touch over the status quo won’t cut it.”

 

2022 Vancouver Sun

Canada can’t just tax its way out of its housing conundrum

Murtaza Haidef
other

 The surtax would disproportionately target those living in detached homes in Toronto and Vancouver

A real estate sign that reads ‘For Sale’ and ‘Sold Above Asking’ stands in front of housing in Vaughan. Photo by REUTERS/Mark Blinch/File Photo

The idea of an annual surtax on properties valued at more than $1 million has been revived by a recent report whose authors believe the tax will lower housing prices, and the funds generated can be invested to improve housing affordability.

 

The Canada Mortgage Housing Corp. (CMHC) funded the report by Vancouver-based Generation Squeeze, a group advocating for intergenerational fairness and led by Paul Kershaw, a professor at the University of British Columbia.

The report recommends an annual progressive surtax be applied to the value of a dwelling that exceeds the $1-million threshold. For example, if a property’s assessed value is $1.25 million, a 0.5 percent annual surtax will be applied to $250,000, thereby generating $1,250 annually. The surtax rate rises to one per cent on the amount exceeding $2 million.

The surtax is expected to annually raise $4.5 to $5.8 billion that could be directed to fund projects to improve housing affordability. Despite being an annual tax, the report recommends the amount be deferred until the property is sold.

 

The owner of a dwelling with an average valuation of $1.72 million over 10 years would be required to pay an estimated $36,000 in surtax at the time of sale, barring any interest charges. The deferred amount accumulates to $162,000 for a dwelling with an average value of $3.1 million over a 10-year period. If the owner dies, the accrued tax will be owed by the deceased’s state.

The report argues the surtax would affect only nine per cent of Canadian households whose dwelling values are estimated to be more than a million dollars.

The report’s surtax was recommended by a tax policy workgroup mainly comprising academics from Alberta and B.C., but it’s essentially the brainchild of Kershaw. He first introduced the idea in an article in the Canadian Tax Journal in 2018, and estimated the tax would annually generate $16 billion.

 

The proposed surtax is essentially an additional property tax, which is likely to irk municipalities that are already revenue starved because they are entitled to only 10 cents of each dollar paid in taxes in Canada.

The report indicates the same surtax rate would be applied on all properties irrespective of location. That ignores the differences in property taxes paid by residents of different municipalities. The 2018 article noted a dwelling valued at $1.25 million in Vancouver would have paid $3,085 in property taxes. A one per cent surtax (as recommended in Kershaw’s 2018 article) would have added $2,500 to the property tax bill.

A similarly valued property in a suburban municipality in the Greater Toronto Area (GTA) pays more than $10,000 in property taxes, over three times the tax in Vancouver. Yet these properties would be subject to the same additional surtax, ignoring the glaring difference in base property taxes.

 

The surtax would also disproportionately target those living in detached homes in Toronto and Vancouver. Consider that 75 per cent of the 54,757 detached dwellings sold in the GTA in 2021 exceeded the $1-million threshold. It is not hard to imagine the proposed tax net would catch three out of four detached dwellings in the GTA.

Furthermore, the $1-million club does not have a sizable presence in less populous provinces, though affordability concerns are no less acute. Besides, how would one justify spending taxes raised primarily from detached dwellings in Toronto and Vancouver in other jurisdictions?

 

Generation Squeeze, despite being well meaning, is pitching millennials against seniors, or children against parents. Their definition of intergenerational fairness implies we should reduce income taxes on the young and increase wealth and property taxes on seniors.

Kershaw’s 2018 paper minces no words in drawing the boundary lines between the young and the old as he argued that “the cohort retiring today expects more in taxation from its children than it paid for its parents’ generation when elderly.”

Creating false and unwise binaries in society by pitching one cohort against another is not our definition of fairness. Nor do we find wisdom in making urban living even more expensive by targeting owners of detached homes in Toronto and Vancouver or by depriving municipal governments of the ability to regulate realty taxes.

 

Working from the assumption that “$1 million remains a sign of substantial affluence by recent historical standards,” ignores that family-friendly housing in Toronto and Vancouver is beyond this arbitrary threshold. Furthermore, such dwellings are equally likely to be occupied by middle-class families.

Any proposal to deflate values of the most significant asset owned by middle-class families will struggle to gain mass acceptance. No wonder half the participants who contributed to the report did not agree with the “premise that housing prices need to stall or fall to restore affordability.”

 

© 2022 Financial Post

Surrey 0.8-acre land assembly sells for nearly three times assessment

Re/Max 2000 Realty
Western Investor

Five-lots assembled in Guildford area with potential for high-density residential development sold for $12 million.

Property type: Land assembly

Location: 14076,14066,14056,14046 and 14036 103A Avenue, Surrey, B.C.

Number of lots: 5

Land size: 39,175 square feet

Land size in acres: 0.899 acres

Zoning: RF

Potential: Multi-family development of 2.5 to 3 FSR (floor space ratio), under OCP.

BC Assessment value: $4.53 million

Sale price: $12 million

Date of sale: November 11, 2021

Brokerage: Re/Max 2000 Realty, Surrey, B.C.

Broker: Sonia Khari

© 2022 Western Investor

East Vancouver 0.4-acre industrial site trades for $10.6 million

Macdonald Commercial
Western Investor

The East Pender Street property includes a vacant 16,368-square-foot industrial building.

Property type: Industrial

Location: 1250 East Pender Street, Vancouver

Size of building: 16,368 square feet

Size of land: 19,506 square feet

Land size in acre: 0.448 acres

List price: $10.9 million

Sale price: $10.6 million

Date of sale: January 25, 2022

Brokerage: Macdonald Commercial, Vancouver, B.C.

Broker: Nick Goulet
 

© 2022 Western Investor

Calgary downtown office space hits new vacancy milestone

Josh Aldrich
The Vancouver Sun

It is the first time in 30 years of reporting by CBRE that a major Canadian metropolitan centre has hit the troubling milestone, now sitting at 33.2 per cent

A cyclist crosses the Centre Street Bridge with downtown Calgary office towers as a backdrop on Wednesday, November 24, 2021. Photo by Gavin Young/Postmedia

One-third of downtown Calgary office space is vacant.

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It is the first time in 30 years of reporting by CBRE that a major Canadian metropolitan centre has hit the troubling milestone, now at 33.2 per cent in the core.

This is not a new issue for Calgary, but the continuation of a multi-year struggle driven by an oil and gas bust cycle and 22 months of pandemic.

“The concern is not necessarily the height of that vacancy at 33 to 34 per cent,” said Greg Kwong, executive vice-president and regional director for CBRE. “There are two concerns: Where do we go from here, and the second concern is how rapidly we went from a low single-digit vacancy rate 10 years ago to where we are today.”

The 2021 fourth-quarter report is not a drastic spike from third-quarter numbers released in October, when the vacancy rate stood at 32.9 per cent. Calgary, however, is the only major Canadian centre to see its office space vacancy actually increase, losing 169,584 square feet of rented space in the past quarter.

The rate is more than double the national average of 15.7 per cent.

Southern Ontario centres Waterloo Region (27.1 per cent) and London (26.1 per cent) were second and third on the list, while Edmonton had the fourth highest at 21.1 per cent. Edmonton is in a bit of a unique situation compared to Calgary, with four new office buildings coming on the market in the past couple of years, while government offices play a much bigger role in that city’s marketplace.

The problem is whether these rates will be sustained long term for Calgary. U.S. cities such as Denver and Pittsburgh managed to rebound from similar scenarios, while Detroit remains the cautionary tale of a city that could not. Calgary is a long way from that status, but Kwong said the effects are already being felt after more than 12 months above 30 per cent.

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“It’s the precipitous drop in property value that results in lower tax revenue, which results in lower income to run the city of Calgary,” said Kwong.

He said the second significant issue is the signal of long-term unemployment, which can result in the younger generation moving away from the city in search of jobs. This further spins off into lower participation in the arts, entertainment and recreation.

“The whole thing starts crumbling,” he said.

 

Greg Kwong, the Executive VP and regional manager of CBRE looks over downtown from his office building on Wednesday, January 12, 2022. Photo by Darren Makowichuk/Postmedia

However, there is hope on the horizon for the downtown. 

Neo Financial is moving into 110,000 square feet of downtown office space combined between the Hudson’s Bay building on 8th Avenue S.W. and the Edison office tower on 9th Avenue S.W.

Meanwhile, the Paramount Building has been taken off the market after being converted. There have also been a few other recent announcements of smaller tech firms and startups coming to Calgary.

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This has helped buffer the numbers from being worse, but the downtown is still a long way from righting the ship. Kwong said tech still only makes up about five to six per cent of downtown office space, while the real catalyst for change will be the energy sector.

The recovery of oil and gas will continue to be important, said Kwong, especially as it pertains to potential mergers and investment in staff. But where the game can change is when it comes to the development of the clean energy sector and changing the discussion around it for Albertans.

“The narrative when you say environment to the average Albertan, it means layoffs,” said Kwong. “It shouldn’t be that narrative, it should be we’re going to try to support companies that focus on the environment and hire people in Calgary and Alberta. That should be the narrative, not what we’re hearing from city hall right now.”

[email protected]

Twitter: @JoshAldrich03

© 2022 Vancouver Sun

Sales surge 240 percent in Canada’s hottest market

Ari Altstedter
other

Transactions include the highest-price ever paid in the area

Even the ultra-wealthy are finding they’re not immune to Canada’s housing shortage, and nowhere is that truer than in the country’s most expensive major market, Vancouver.

Luxury real estate in the city broke local records last year, with sales of mansions priced over CA$10 million growing 240%, faster than anywhere else in Canada, according to a report Wednesday by Sotheby’s International. Toronto wasn’t far behind with 238% growth.

Those transactions included the highest price ever paid for a single-family Vancouver home. Sotheby’s wouldn’t say how much the property, known as Belmont Estate, went for, but CTV News cited a price of CA$42 million.

High-end real estate has been buoyed by the same pandemic-led forces that have made Canada’s overall housing market one of the hottest in the world: low interest rates and high interest in living spaces. Demand for luxury housing has been juiced even further by the surging stock market, making many rich Canadians richer.

But Canada hasn’t built enough houses, big or small, in recent years to keep up with this surging demand or with population growth. The number of properties listed for sale nationally has plunged to a record low. In Vancouver, about 5,000 homes were for sale at the end of last year, the fewest in data going back 30 years.

In the luxury segment, houses worth CA$10 million or more are staying on the market for a shorter time, weeks rather than months, said Kevin O’Toole, managing broker at Sotheby’s in Vancouver.

One factor holding down inventories is that luxury home buyers, seizing on record-low mortgage rates, are holding onto their old properties longer. Rather than put their homes up for sale in tandem with their search for a new one, these buyers are holding onto their old ones, too, and slowing down the turnover process, O’Toole said.

“A luxury homeowner does not want to leave their luxury home because they don’t know where else they would go,” O’Toole said. “They don’t want to sell their place and not have a home to go to.”

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Victoria councillor floats idea of tying rent increases to property tax hikes

Roxanne Egan-Elliott
The Vancouver Sun

David Hutniak, CEO of LandlordBC, said the proposal sounds “a little complicated,” but he’d like to see the city pursue the idea, because property taxes are one of the main factors driving costs for landlords.

Photo by Getty Images /PNG

VICTORIA — City Coun. Geoff Young is proposing a change to rules governing rent increases that would see them go up directly as a result of rising municipal property taxes.

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In a motion going to councillors on Thursday, Young recommends that council advocate for a change to provincial rules governing annual rent increases that would allow landlords to tie a portion of a tenant’s rent to property taxes, increasing that portion directly as municipal taxes change.

 

 

 

Victoria city councillor Geoff Young. Photo by City of Victoria /PNG

Young said he’s motivated by a concern about the level of spending being proposed by council as the city moves through the 2022 budget process. Property owners tend to show more of an interest in municipal elections and budget decisions, and he sees the proposal as a way to encourage renters to participate in municipal decisions and elections, in turn increasing the overall number of residents engaging with the city’s budget process, he said.

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“People do want to participate when they see it impacts them, and I think it’s better if those impacts are clear and visible to people,” Young said.

When Victoria held an online budget engagement survey for 2022, 41 per cent of respondents identified as renters. That was down from 57 per cent the previous year but up from 35 per cent two years earlier.

Young is suggesting that the province determine an average percentage of rent that represents the costs of a landlord’s property taxes for the unit and that portion would increase according to municipal property tax changes, while the rest would remain governed by the province’s annual allowable rent increase. The maximum increase in 2022 is capped at 1.5 per cent, following a rent freeze in 2021 as a result of COVID-19, but has been as high as four per cent in 2018.

The proposal likely wouldn’t affect rents by a significant amount, but would show renters the direct impact of property tax increases, Young said.

David Hutniak, CEO of Landlord B.C., said the proposal sounds “a little complicated” but he would like to see the city pursue the idea, because property taxes are one of the main factors driving costs for landlords.

“If there was a mechanism for rents to more accurately reflect our costs specific to the property taxes, in terms of rent increases, etc., I think that would be a conversation worth having,” he said.

Tenant and affordable housing advocates, however, see problems with the proposal.

“It’s about as misunderstood a policy as you can possibly put in terms of affordability in housing,” said Douglas King, executive director of Together Against Poverty Society.

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Landlords have options to apply for loans and grants to pay for property tax increases, and they sit on the value of their asset, while tenants rarely have options if they can’t afford rent, King said: “I just don’t understand how you could possibly push forward a motion that would increase rent at a time like this. It makes no sense.”

Jeremy Schmidt, a contributor to Homes for Living, a group of homeowners and renters dedicated to making Victoria housing more affordable, said the proposal seems like “an absurd way” to increase civic engagement among renters.

Renters are already indirectly paying property taxes through their rents, he said, and there are better ways to engage renters in municipal decisions, such as a more scientific budget engagement survey, rather than a self-selecting survey.

“From a housing policy perspective, it doesn’t really solve a problem. It exacerbates an existing problem,” Schmidt said.

 

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© 2022 Vancouver Sun

Three-tower complex pitched for downtown Kelowna

Wayne Moore
Western Investor

Mission Group and the University of British Columbia Okanagan present proposals for a massive mixed-use complex that still requires city approvals

Mission Group and the University of British Columbia Okanagan present proposals for a massive mixed-use complex that still requires city approvals

Kelowna’s Mission Group has unveiled plans for its portion of a large three-tower downtown development on Doyle Avenue in the downtown.

The development, in partnership with University of British Columbia Okanagan (UBCO) includes a 34-storey university campus and student housing building, along with the two new towers to be developed by Mission Group.

The towers, to the north of the university campus building, are proposed to include a 16-story commercial building and 30-storey residential tower.

They would be constructed above a shared underground and above grade parkade consisting of 461 stalls.

Along with residential and commercial space, the buildings would also be comprised of street level office and retail space.

The project is conceived as a “truly mixed-use live, work, play and shop development, combined with the rare contribution of learning and studying with the UBC component,” according to Mission Group.

In order to proceed, council will be required to approve a number of variances including one for height.

The property is presently zoned for heights of 12 storeys.

In late December 2021, UBCO submitted an application to the city to rezone the Doyle Avenue property from the current C7 zone to a Comprehensive Development Zone. They are also seeking a development permit for the mixed-use tower.

Overall design of the 34 storey tower will include approximately 390,000 square feet of space, featuring a medical clinic, commercial retail units, eight storeys for academic use, two storeys of office space and 24 storeys of student housing with 324 units.

The application is expected to reach city council in the coming months. UBCO has stated previously it hopes to begin construction by mid-2022.

© 2022 Western Investor

U-Haul: Canadians looked to Alberta for housing in 2021

Ryan Garner
Livabl

Attracting newcomers with affordable housing and employment initiatives, Alberta saw increased inter-provincial migration last year, while Calgary strengthened its status as one of Western Canada’s top move-in destinations.

According to the annual U-Haul Growth Index, Alberta led the country in one-way customers during 2021, followed by British Columbia and Ontario.

The province saw a 33 per cent year-over-year increase in one-way U-Haul truck arrivals last year, while departures rose just 29 per cent. More than 50.8 per cent of all U-Haul traffic in Alberta was inflow.

“There are initiatives in Alberta that are creating more job opportunities and attracting residents,” said Naga Chennamsetty, U-Haul area district vice-president of Western Canada, in the report. “In the last year, we have seen lot of movement into Alberta. More communities are developing in and around major cities.”

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Calgary was the province’s top destination for do-it-yourself movers. After failing to place among the top 25 Canadian cities in U-Haul’s move-in rankings in 2020, Calgary vaulted to fifth last year.

Ontario markets — North Bay, Belleville and Greater Sudbury — held the top three spots, reflecting a shift away from major urban centres to more affordable outlying areas. Quebec City (fourth) and Kelowna-West Kelowna (sixth) were the top growth cities in Quebec and British Columbia.

Kingston claimed seventh place, while Red Deer-Lacombe, Owen Sound-Port Elgin and North Vancouver rounded out the top 10. Medicine Hat-Redcliff (15) and Airdrie (19) were the only other Alberta markets to rank in the top 25.

The migration data coincides with a record-setting year for Calgary home sales. According to the Calgary Real Estate Board (CREB), transactions through its Multiple Listing Service totalled 27,585 in 2021, an increase of 71.5 per cent from the previous year.

Besting the previous record (27,193) set in 2006, annual sales exceeded 20,000 for the first time since 2014. The numbers also represent a significant increase from pre-pandemic activity levels. Calgary posted a total of 16,344 transactions during 2019.

Housing affordability could be one reason for the influx of new residents. The CREB reports Calgary’s benchmark price was $451,467 by the end of 2021.

In its Canadian Housing Market Outlook for 2022, RE/MAX Canada noted that Calgary shifted from balanced conditions to a seller’s market in 2021, and expects the city’s MLS sales to increase four per cent year-over-year, with prices rising 2.5 per cent.

“This is attributed to heightened demand prompted by the inter-provincial migration trend that took place throughout 2021, which saw many homebuyers from Ontario and British Columbia driving demand high, while supply remained low,” the report said.

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