Realtor and lawyer found mostly liable for failure to advise client of foreign buyer’s tax

Keith Fraser
The Vancouver Sun

 The B.C. Supreme Court in Vancouver. Photo by NICK PROCAYLO /PNG

A realtor and a lawyer in Kelowna have been found mostly responsible for failing to advise a couple from Britain that they would need to pay B.C.’s foreign buyer’s tax upon the purchase of a home in Kelowna.

 

Robert Edward Shave and Kelly Jane Ashford immigrated to Canada in January 2018, settled in the Okanagan community and hired a real estate agent and later a lawyer to purchase the new home.

Before February 2018, the 20 per cent foreign buyer’s tax only applied to homes purchased in Metro Vancouver. Afterward, purchases in other regional districts, including the Central Okanagan, were subject to the tax.

On Feb. 15, 2018, the pair met with Dean Desrosiers, a realtor with Century 21, and hired him to help them buy a new home.

At the time Desrosiers was aware that the couple had recently arrived in Canada and did not advise them about the existence or applicability of the tax, according to a B.C. Supreme Court ruling on the case.

 

In May 2018, the couple completed a contract of purchase and sale for a residential property in Kelowna which had them declaring that they were not Canadian citizens nor permanent residents.

They also retained Roy Sommerey, a lawyer with Doak Shirreff Lawyers, to assist them with the purchase of the home and told him that they were new to Canada. Sommerey responded with an email saying, ‘Welcome to Canada!”

The purchase didn’t go through, however, and the pair continued their search for a new home.

On June 27, 2018 they purchased a residential property in Kelowna for $862,000.

For the new sales contract sent to them, Desrosiers had indicated they should initial a clause to indicate they were citizens or permanent residents of Canada. He had misunderstood a statement made earlier by the two buyers.

 

The pair signed the contract and then hired Sommerey to help them finalize the purchase.

In his ruling in the case, Justice Alan Ross noted that Sommerey conceded that at the time he was first retained, he was aware the plaintiffs were new immigrants and that added taxes were applicable to non-resident Canadians.

Sommerey also conceded that he didn’t notice when he reviewed the contract for the first home that the plaintiffs had indicated they were non-residents. The sale on the second home completed on July 25, 2018.

The judge noted that neither Shave, who had secured a teaching job at the University of British Columbia, Okanagan, nor his wife had closely read any of the documents that Sommerey presented them to sign, including the property purchase tax form on which they indicated they were permanent residents.

 

In January 2020, the couple received a notice of assessment issued by the provincial government in the amount of $172,400 for the unpaid foreign buyer’s tax on the purchase of their new home.

They hired a lawyer and tried to have the assessment set aside but were unsuccessful after which they decided to file a lawsuit against the defendants.

The judge concluded that the realtor had a “clear and obvious” duty to advise the plaintiffs of the tax.

“Having determined that a duty existed, it is clear that, by failing to advise the plaintiffs, Mr. Desrosiers’ conduct fell below the standard expected of reasonably competent realtors.”

Any reasonable realtor would understand that the risk of paying an added 20 per cent tax for a family home would be an extremely important piece of information for prospective buyers, he said.

Regarding Sommerey, the judge concluded that his conduct did not meet the standard of care of a reasonably competent solicitor.

The judge found the realtor and the real estate agency 75 per cent liable, the lawyer and his law firm 20 per cent liable. The couple were five per cent liable for contributory negligence. The defendants will be responsible to pay their proportionate share of the $172,400 plus interest.

 

© 2022 Vancouver Sun

A new hallmark of luxury living – Landmark on Robson

Michelle Hopkins
REW

 In the heart of Vancouver, on Robson Street and within easy walking distance of world-class theatres, art galleries, museums, luxury boutiques and gourmet restaurants, the city’s newest landmark is taking shape.

On the site of the former Empire Landmark hotel, multiple award-winning Asia Standard Americas’ Landmark on Robson will be home to two elegant, luminous twin towers, mosaics of glass and concrete, that’s redefining luxury in Vancouver’s downtown core and promising to become iconic urban buildings  

 

As Robson Street’s newest signature luxury address, Landmark on Robson offers a sophisticated collection of 236 magnificent condominium residences, where each moment is filled with a higher degree of comfort. Conceived by award-winning Vancouver-based MCM Architects, high craftsmanship and a passion for perfection define the living spaces. The goal is to take the experience of being in a classic European-inspired home and offer it to buyers in an understated yet elegant design. 

The interiors are conceived by an internationally acclaimed Japanese interior designer, Koichiro Ikebuchi, who brings an uncommon degree of elegance to every home with engineered hardwood flooring, Zen-inspired ensuites and bespoke Minotti Cucine kitchens and closets that will dazzle – The attention to detail is nothing short of magnificent.

 

“My inspiration comes from the stones, the woods in nature, of course, their texture and colours, however, I also obtain inspiration from people’s behaviours, gestures and habits,” says Ikebuchi. 

Your floor-to-ceiling windows will boast unparalleled views of English Bay, Coal Harbour to Stanley Park and the North Shore Mountains, while generous-sized cantilevered balconies are designed to further open up to those jaw-dropping vistas while providing shade and shelter. 

 

 

“We are bringing a new standard of opulence to Vancouver,” says Henry Mok, Vice President, Asia Standard Americas. “We have projects in China, Hong Kong and this is the first time we are bringing our expertise in ultra-luxury towers to the city.” 

The towers flagship will surely be the Six Stars Club Robson, an exclusive private residents club featuring 18,000-square-feet of urban amenities, including a state-of-the-art fitness centre with a yoga studio, ozone lap pool, social lounges, a fully equipped business centre, music and tutor rooms. It doesn’t stop there; there will be a couture salon, multimedia room with billiards, a lounge and a wet bar. If you are hosting a soiree, you need only place a call to the 24/7 concierge  to book the refined private dining room’s catering kitchen.

 

As one of the world’s premier developers of international upscale residences, Asia Standard Americas is renowned for exceptional vision, design excellence, attention to detail and unmatched amenities. 

Landmark on Robson will truly stand as an unparalleled new development in one of Canada’s most vibrant cities. The presentation centre is open by appointment just down the street from the site at 1400 Robson. For more information, visit landmarkonrobson.com or call 604.566.2288 to book a private viewing. Completion is set for Fall 2023.

 

© 2022 REW.

Toronto’s home prices are now more expensive than Vancouver’s: report

Laura Hanrahan
other

Toronto home prices have been skyrocketing over the past year, but as astronomically high as they got, they were no match for Vancouver’s ultra-expensive prices. Until now, that is.

A new report from RBC found that Toronto’s composite MLS HPI benchmark price reached $1.260 million in January, finally edging out Vancouver’s $1.255 million and making it the most expensive market in Canada for the first time in decades.

“It’s a stunning development though not entirely surprising considering how hot the Toronto-area market has become, especially since the fall. Toronto’s benchmark price soared over the past five months, including a mind-blowing 4.3% monthly increase—or nearly $52,000—in January alone,” the report reads. “Vancouver prices have accelerated as well, just not to the same extent.”

Despite pandemic restrictions and a major snow storm, Toronto’s real estate market remained strong in January as limited inventory continued to bolster fierce competition. Active listings were at near-historical lows at the end of the month, the report says, down 44% year-over-year.

Single-family homes have seen some of the biggest gains in the market, with prices up 36% year-over-year. Condos aren’t too far behind with a 26% annual increase in prices.

“We see little that will materially alter these trends in the near term though expect that higher interest rates will gradually cool things down later this year,” the report says.

• You might also like:
• This Toronto house just sold more than $2 million over the asking price
• Average GTA home price reaches $1,242,793 as sales drop 18%

The same low inventory levels have also plagued Vancouver’s market with active listings barely increasing from a decades-low last month.

“Successful bidders had to be more aggressive on offered prices,” the report says. “This drove up the area’s composite MLS HPI benchmark 18.5% y/y to a new high of $1.255 million.”

Single-family homes are up 22.7% annually and condos are up 14% year-over-year. These tight demand-supply conditions are expected to continue putting pressure on housing prices in the near term.

 

Copyright Ⓒ 2022 Buzz Connected Media Inc.

RBC reveals Canada’s most expensive housing market right now

Ephraim Vecina
other

The market has seen the sustained influence of outsized demand and scarcity

While Vancouver stood as the priciest market in Canada for decades, the pendulum shifted to Toronto as of last month, according to a new analysis by RBC Economics.

Preliminary data from local real estate boards indicated that Toronto’s composite benchmark price ($1.26 million) has pulled ahead of Vancouver’s ($1.255 million) in January – a change that RBC described as “a stunning development, though not entirely surprising.”

The surge was impelled by a five-month streak of increases in Toronto’s benchmark price, including a 4.3% monthly increase in January alone. The current trend is showing no signs of abating, RBC said.

“It’ll take more than a spike of COVID-19 cases and a major snowstorm to meaningfully slow down the market,” RBC said. “Active listings ended the month still near historical lows (down 44% y/y). Competition between buyers is as fierce as ever.”

Read more: Canada house prices – what will be the pace of growth this year?

Intensified bidding wars made a major contribution to the 33.3% annual increase in Toronto’s benchmark home price, RBC said.

“Buyers are especially fond of single-family homes (prices are up an astounding 36% y/y, with gains exceeding 40% in Durham and Peel regions) but also increasingly interested in condos (prices up 26% y/y),” RBC said. “We see little that will materially alter these trends in the near term though expect that higher interest rates will gradually cool things down later this year.”

 

 

Copyright © 1996-2022 Key Media, Inc.

The CMHC wants its market share back, but some observers wonder if the timing is right

Stephanie Hughes
The Vancouver Sun

Agency has set target of 40 to 50 per cent of mortgage insurance market, CEO told Parliamentary committee

The Canada Mortgage and Housing Corporation has already acknowledged it needs to claw back business it ceded in the mortgage insurance market. Now, it’s getting more specific about its targets.

Once the dominant player in the country, the CMHC’s share of new mortgage insurance originations fell to 26 per cent in the third quarter of 2021, down from 49 per cent in the second quarter of 2020. It’s a major comedown that has eroded the Crown Corporation’s influence, leaving it in third place behind private players Sagen and Canada Guaranty.

In late January, however, CEO Romy Bowers went before the standing committee on finance to discuss inflation in the Canadian economy, where she was asked about market share by Adam Chambers, the Conservative MP representing Simcoe North.

“Since the last financial crisis, we have been deliberately decreasing our market share, because we feel it’s good to have competition from our private sector competitors in the mortgage insurance space,” Bowers said. “Having said that, we’re very aware of the importance that mortgage insurance plays in financial stability. We have a target that’s approved by our board to strive for about 40 per cent to 50 per cent of the market.”

The CMHC, she said, will work hard to compete with private sector players to reach that target, which would require at least a fifty per cent increase to current levels. Some market watchers, though, wonder if the agency is picking the right time to onboard risk that is ultimately backstopped by taxpayers.

“I think it’s reasonable a question to ask: Is now the time that CMHC needs to be gaining market share?” Chambers told the Financial Post in an interview. “Are we growing this balance sheet at the wrong time?”

Is now the time that CMHC needs to be gaining market share?

Adam Chambers

Chambers argued that as Canada ranks among the world’s frothiest real estate markets (standing behind only New Zealand, according to Bloomberg Economics), it makes little sense for the government housing agency to take on more risk. That Canadians went on a mortgage binge during the pandemic, tacking on $193 billion in mortgage debt only raises the stakes.

Former CMHC chair Bob Kelly echoed the concern in an interview, noting that there had been deliberate cuts to the market share in recent years — until now.

“I just don’t see why it’s necessary, particularly at this point in the cycle and particularly for first-time borrowers, which tends to be the majority of the customers of CMHC,” Kelly said. “Private markets tend to be more efficient and better at sorting risks.”

The CMHC’s course correction is the latest twist for an agency founded in 1946 to provide housing for returning war veterans, and a significant reversal from the vision of late Finance Minister Jim Flaherty, who regretted the size and scale the CMHC had taken on over the years, particularly in the wake of the 2008 financial crisis.

In the years leading up to the crisis, a handful of experts watched the build-up in mortgage risk south of the border with concern. Former Bank of Canada governor David Dodge was among them, and he criticized the CMHC in 2006 for introducing new products, such as interest-only loans and 35-year amortizations on mortgages, arguing they would add inflationary pressures.

It was not until the financial crisis was well underway that the housing agency moved to tighten underwriting rules with a slew of new measures, such as imposing down payment minimums and shortening maximum amortization periods.

After seeing the U.S. housing market inflated by government-backed mortgage loan companies like Freddie Mac before the market collapsed, financial stability became a part of Evan Siddall’s mission in 2013 when he was appointed as the organization’s CEO.

In the summer of 2020, as the pandemic raged on, Siddall tightened underwriting practices to reduce risk exposure.

“There is no doubt that we have willingly chosen to forgo some profitable business that our competitors would find appealing,” he wrote.

There is no doubt that we have willingly chosen to forgo some profitable business that our competitors would find appealing

Evan Siddall

At the time Siddall cautioned other mortgage lenders and banks about high-risk lending, noting that there was a “dark economic underbelly to this business that I want to expose.”

But the CMHC’s competitors swooped in anyway.

The precipitous decline in market share that has also led to a waning influence on the broader mortgage insurance market, and that’s one of the reasons that Benjamin Tal, CIBC’s deputy chief economist, believes that the CMHC needs to bulk back up.

“I think that you need to be at least as large as the private (companies), not smaller than them,” Tal told the Financial Post. “And I think that we needed all sorts of policy vehicles, though the effectiveness of policy on the insured market is diminishing because the insured market is shrinking target. You need the policy, this agency should be tough enough to impact the market…. We need to really achieve this balance in which you can make a difference.”

Getting back to market share balance will be no easy feat as clients who have turned to the private players may have a newfound loyalty to them.

“I think that clearly we have a data deficit when it comes to the (housing market) and the CMHC is extremely well-equipped to close this gap,” Tal said. “So, I think that in order to establish their brand, they have to invest more in marketing. But then also market research and data as a data provider to the market to increase the reliance of the market on them. They are well-equipped to do so more than any other player in this space.”

But the hurdles along the way make Tal skeptical that the CMHC will be able to get back to its 50 per cent levels.

The agency itself told the Financial Post it was still in the “early stages of developing its refreshed commercial strategy”.

“We will engage with our industry partners as this work continues to progress,” it said in a statement to the post.

Chambers, who had been a senior advisor to Flaherty, told the Financial Post the “mission creep” of the pre-crisis era needed to be avoided.

“As a taxpayer-backed insurance company, whose risks ultimately lie with the taxpayer…. transparency is very important,” he said. “The taxpayers are effectively on the hook.”

• Email: [email protected] | Twitter: StephHughes95

 

© 2022 Vancouver Sun

Canadians deepening their faith in red-hot housing market even as rate hikes loom

Erik Hertzberg
The Vancouver Sun

Optimism about the nation’s housing market rose to near record levels last week, poll finds

Some 64 per cent of Canadians expect the value of real estate in their neighbourhoods to increase over the next six months. Photo by Gavin Young/Postmedia

Real-estate-addicted Canadians aren’t being scared off by the threat of higher interest rates, polling suggests.

Optimism about the nation’s housing market rose to near record levels last week, despite warnings from central bank and regulatory officials that borrowing costs are poised to increase and could hit the real estate market.

Some 64 per cent of Canadians expect the value of real estate in their neighbourhoods to increase over the next six months, according to the latest weekly survey by Nanos Research Group for Bloomberg News. That’s up from 60 per cent last week, making it one of the fastest 7-day increases in confidence on record.

It’s a surprising result, coming a week after the Bank of Canada warned it plans to start raising lending rates as early as next month. It also suggests the central bank and other officials have a long way to go to quell speculative expectations in the nation’s housing market, which has seen prices surge more than 40 per cent since the start of the pandemic.

Canada is behind only New Zealand in Bloomberg’s global measure of frothy housing markets.

Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security and their outlook for both the economy and real estate prices. The results are compiled from a rolling four-week average of about 1,000 responses.

The question on housing prices has moved above 64 per cent only once, when it hit multiple weekly records in April last year. The historical average is about 40 per cent. Only 5.6 per cent of respondents said they expect prices to fall, also one of the lowest on record.

At its last policy decision on Jan. 26, the Bank of Canada held interest rates steady but said it would be raising borrowing costs soon to cool inflation — prompting the nation’s bank regulator to warn that some markets could face a correction.

Peter Routledge, the head of the Office of the Superintendent of Financial Institutions, said on the Herle Burly podcast last week that some regions could see home-price declines of up to 20 per cent.

Still, the central bank’s decision to wait until at least March to start its hiking cycle may actually be fuelling the housing market, economists say.

“There’s a chance that the decision to wait five weeks to start pushing policy rates higher could provide further fuel to the already raging inferno that is Canadian housing,” Benjamin Reitzes, rates and macro strategist with Bank of Montreal, said via email. “There’s little doubt that based on housing alone, rates need to be higher.”

bloomberg.com

 

© 2022 Vancouver Sun

Housing market in a ‘speculative fever,’ Canadian regulator says

Natalie Obiko Pearson
The Vancouver Sun

Higher rates are set to dampen that fever and lead to a slowdown in prices.

Property prices in Canada are set to fall as rising interest rates bring an end to a “speculative fever” in the housing market, the country’s banking regulator said on a podcast.

An extended run-up in home prices, readily available mortgages, and a propensity among Canadians to buy and flip homes have all fueled the buying frenzy, Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said on The Herle Burly podcast this week.

Higher rates are set to dampen that fever and lead to a slowdown in prices, he said.

“In some markets, where you had really rapid increases in prices, you could see a fall of 10 per cent, 20 per cent,” Routledge said.

Canada has emerged as one of the world’s frothiest property markets — for 12 consecutive years, the housing market has soared to record heights. As fears of a housing bubble have grown, Ottawa has imposed an added layer of protection in the form of a stress test, ensuring new borrowers have enough income to handle higher interest payments.

In Toronto, Canada’s largest city, home prices jumped 18 per cent last year — taking the average price to nearly C$1.1 million — as buyers competed for a dwindling number of available properties.

Routledge indicated, however, that sharp declines in certain housing markets are unlikely to pose a broader threat to the country’s financial system, pointing to the way in which Vancouver and Toronto — the country’s two most expensive markets — have weathered similar declines in recent years.

“You’re talking peak-to-trough declines of 20 per cent,” in those cities between 2015 and 2017, he said. “So we can absorb that volatility.”

Bloomberg.com

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© 2022 Vancouver Sun

B.C. providing $71.3 million for new tourism projects

Glen Korstrom
Western Investor

Latest round of ‘recovery’ cheques worth more than $21 million now being sent to 50 groups

A skier enjoys a day at Hudson Bay Mountain Resort, where new funding will help build a winter events centre | submitted

Latest round of ‘recovery’ cheques worth more than $21 million now being sent to 50 groups

The B.C. government is sending out cheques for a combined total of $21.3 million, to help fund 50 new tourism projects.

The money is part of its previously announced Community Economic Recovery Infrastructure Program, which doled out $20 million for 54 projects last year. 

Victoria plans to spend an additional $30 million in the next two years to help fund more tourism projects, bringing the program’s total investment to $71.3 million.

B.C. had previously said that it would spend up to $90 million on the program. 

Examples of approved projects include an Indigenous campground development, trail upgrades to accommodate adapted mountain bikes and wheelchairs, arts and culture event space, and beautification and signage projects.

Projects were approved based on what the government deemed to be demonstrated tourism benefits to communities and residents, and the money will help employers pay workers.

One of the grants, for example, is going to the Smithers Ski and Snowboard Club.

That club’s president, Cormac Hikisch, said the money will help “establish a winter sports events centre at Hudson Bay Mountain Resort for alpine ski and snowboard competitions.”

Over at the Red Mountain Racers Society, president Jane Paterson said funding from the program will help it “construct a new race office and timing facility, International Ski Federation-level T-bar lighting and the expansion of snowmaking to our ski cross course.”

© 2022 Western Investor

TRREB Predicts Strong Demand To Persist Through 2022

Rachel Rehkopk
other

 Active listings in the Toronto Region are down at their lowest levels in more than two decades according to the latest numbers from the Toronto Regional Real Estate Board (TRREB).

In their January 2022 release, we can see that despite being in a new calendar year, not much has changed in terms of GTA market conditions from last month. There are still too few homes listed for sale compared to the total number of buyers who are searching, creating an incredibly competitive marketplace with strong price pressure.

Despite record-low inventory levels, January of 2022 still saw 5,636 transactions, the second-highest on record (second to last year’s 6,888 sales, down 18.2%). New listings also fell in relative lockstep, down 15.5% when compared to last year, leading to only 4,140 active listings on the market. 

Like we saw throughout 2021, these tight market conditions are contributing to price growth within the GTA. The average price for a home in the region climbed to $1,242,793 in January, up  28.6% year-over-year. In many regions, tight market conditions have led to strong price growth when compared to more recent months. On average across the region, the price of a  detached, semi-detached, and condo-townhouse grew approximately 10% from last month alone, up 9%, 11%, and 11% respectively.

Related read: Why this might be the best time in 2022 to sell your home.

According to TRREB’s 2022 Market Outlook, the trends we’re already seeing in January are predicted to continue playing out through the rest of the year: including strong consumer demand, and low inventory leading to a competitive landscape for buyers.

 

TRREB Predicts 2022 Will See Strong Price Growth, But Won’t Beat Sales Records Set In 2021

TRREB suggests in their 2022 Market Outlook that total sales volume in the GTA will reach 110,000 in 2022, which is a decline from last year’s record-setting peak, but still a strong year by any historical standards. If their prediction rings true, it will be the third-highest year in recent history, just behind 2016 with 113,040 transactions.

Despite slowing sales numbers, TRREB doesn’t think that prices are set to fall in the Region. They suggest we’ll see an approximate 12% year-over-year price increase, bringing the average price of a home in the region to $1,225,000 by the end of the year.

Factors Contributing to Growing Real Estate Prices in 2022

When it comes to why TRREB is forecasting continued price growth into the new year, it all comes down to persistent demand for housing in the Region. TRREB President, Kevin Crigger explains:

“Immigration into Canada and the GTA is expected to be at or near record levels in 2022. All of these people will require a place to live. On top of this, job creation in average to above-average income sectors is expected to remain strong, further buoying consumer confidence to make a large-ticket purchase of a home. Unfortunately, the supply of listings will remain  constrained, sustaining strong competition between buyers and double-digit growth in selling prices.”

Here’s an overview of the key market factors TRREB suggests will have a positive impact on the market:

Labour Market Recovery

TRREB cites that the overall economic outlook for high-quality job creation will remain high in 2022, giving many residents of the GTA increased confidence in their ability to gain or retain employment in the long term that will help them afford the ongoing costs of a home purchase.

Simply put, people who feel confident in their employment are more comfortable with undertaking the commitment of buying a home. TRREB sees this economic optimism as a strong indicator that housing demand will continue into the new year.

Near-Record Levels of Immigration

After nearly two years of global border closures and related public health measures, TRREB notes that the federal government’s pandemic recovery plan puts increasing immigration into renewed focus. Record, or near-record levels of immigration are expected in the coming years in the Toronto Region – and with this comes increased demand for all types of housing, both to purchase or rent.  This increase in demand will continue to create competitive conditions for buyers, ultimately leading to price growth.

Persistent Low Inventory

As the real estate board cited throughout 2021, the available supply of homes in the market isn’t keeping pace with record levels of demand, leading to rapid price appreciation in the most competitive markets.

The above-mentioned economic optimism as it pertains to the labour market for high-earners, coupled with increasing immigration levels, sets the scene for strong demand to persist into the new year.

Factors Contributing to Lower Sales Volumes in 2022

Despite a strong demand for real estate into the new year, TRREB still predicts that we will see fewer sales this year than we did last – although, they’ll be at a higher price point. To explain this perspective, TRREB’s Chief Market Analyst Jason Mercer explains,

“While home sales will remain strong historically, there are a few key factors that will see transactions slightly off last year’s record pace. First, higher borrowing costs in 2022 will see some households on the margin of affordability temporarily put their purchase on hold. Second, after above-average per capita home sales in 2021, there will be some give-back in 2022, simply because the pool of ready buyers will be smaller. Finally, the perpetual lack of inventory in the GTA will preclude some willing buyers from getting a deal done – simply put: you can’t buy what’s not available for sale.”

Low Inventory Continues to Constrain the Market

While low inventory is playing a role in driving up real estate prices, it’s also playing a role in reducing the total number of potential sales. TRREB’s research also suggests that intentions to list will likely remain flat from 2021, or decrease slightly, meaning we’re unlikely to see significant changes to this low-inventory environment in the upcoming year.

Normalization in Per-Capita Home Sales 

During the pandemic, many households experienced higher than usual savings rates, as commuting, taking vacations, and going out to bars and restaurants were largely put on pause. This factor, coupled with historically low borrowing costs, led to record levels of home purchases in 2020 and 2021, well above the per-capita norm in the GTA.

TRREB suggests that these conditions may have contributed to many households purchasing sooner than they otherwise would have, so we may experience some “giveback” of these sales in 2022 and 2023 – meaning a slightly reduced consumer demand from this group of buyers. However, TRREB cautions that the extent of this “giveback” will likely be mitigated through the increase of demand expected from immigrations.

Higher Borrowing Costs

The Bank of Canada made it clear in their last announcement that higher interest rates are coming in the near future. And, generally speaking, higher borrowing costs tend to lead to fewer home sales – helping to explain why we likely won’t see 2022’s sales volumes beat the records set last year.

When it comes to how higher borrowing costs may impact pricing, TRREB cites that due to the stress test buyers already need to qualify higher than their current contract rate,  so we will likely see the qualification standard that buyers are eligible to borrow remain the same for most of 2022. This means that despite rate increases, the amount a buyer can qualify for is anticipated to remain constant.  

How Does This Compare to Other 2022 Predictions?

The Toronto Regional Board isn’t the only group forecasting a strong, but moderated, 2022 market. The Canadian Real Estate Association called for a very similar 11% price growth across Ontario, also citing that lower sales volumes are to be expected. 

To find out more about what Zoocasa’s team is predicting for the 2022 market, read our 2022 Market Trend Report here.

 

© 2015 – 2021 Zoocasa Realty Inc., Brokerage

How “chronic undersupply” is affecting Vancouver’s housing market

Ryan Garner
Livabl

 While pandemic-driven demand remains high, lack of supply remains the biggest issue facing Vancouver’s housing market, changing both buyer expectations and the way realtors advise their clients.

There are currently less than 5,700 active listings across Metro Vancouver, according to recent figures from the Real Estate Board of Greater Vancouver. The lack of available inventory has caused bidding wars to intensify, raising the benchmark price for a detached home to more than $1.9 million.

“Single-family houses are no longer an option for most people in the City of Vancouver,” said Mike Stewart, a Vancouver-based realtor. “We’re seeing most of the sales activity and demand in the suburbs, and even more demand as you get further from the downtown core.”

Affordable Vancouver condos in scarce supply

The supply crunch has trickled down to Metro Vancouver’s condo market, which has seen its benchmark price increase 14 per cent during the last year, hitting $775,700, with a current sales-to-active listing ratio of 49.7 per cent.

Additionally, condo pre-sales in downtown Vancouver have been hampered by a lack of new projects due to government red tape and high construction costs.

“In terms of pre-sale condos, you’re not seeing a lot happen in the core of the city because the City of Vancouver is so slow to allow new supply to be built,” said Stewart. “And anything that is being built is super high-end because it’s the only way a developer can benefit from a financial perspective.”

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Despite rising prices, Vancouver hasn’t had trouble attracting high-end buyers. According to Sotheby’s International Realty Canada, the city’s luxury condo market saw sales over $4 million increase 137  per cent during 2021, while there were more than 1,600 sales over $1 million, up 171 per cent from the previous year.

However, those who simply can’t afford the high price point of luxury properties have been forced to search for alternatives outside the city. Statistics Canada estimates that Vancouver’s population decreased for the first time in 45 years during 2021, dropping by 6,780 for a total of 693,325.

Meanwhile, Surrey led B.C. in population growth last year, adding 13,004 new residents for a total population of 614,600. Nearby Langley welcomed 4,702 newcomers to reach 166,400 as people venture further from Metro Vancouver and into the Fraser Valley.

“A one-bedroom resale in Burnaby is probably going to be priced in the high $700,000s, so that’s not affordable for many people,” Stewart said. “But out in Surrey and Langley people are getting options that start at $400,000, which might sound extremely high for the rest of the country but out here it’s pretty affordable.”

Vancouver housing inventory prone to politics

Stewart notes that new housing supply has become a politicized issue in Vancouver, with the tug-of-war between NIMBYs and environmentalists contributing to lengthy project delays and “chronic undersupply.”

“You’re starting to see people like [B.C. Housing Minister and Attorney General] David Eby believe that more supply equals less expensive housing, and it would be nice to see that from city government,” said Stewart.

Eby spoke out against calls for additional taxes as a means to curb demand last month, claiming that a massive increase in housing supply is the best way to meet the needs of a growing population and improve affordability.

However, one bright spot to help alleviate the supply crunch has come from First Nations groups which own large tracts of land that are being used to construct new housing.

One example is the Squamish First Nation development Senákw, which aims to construct 6,000 homes on 11.7 acres of reserve land near the south end of the Burrard Street Bridge in Kitsilano. The project is expected to be Canada’s largest development on First Nation lands.

“The First Nations, quite frankly, are the only level of government that are actually stepping up to the plate and supplying housing in the numbers that are required across the city, and it’s wonderful to see,” Stewart said. “That’s the most exciting thing happening in the next five to 10 years in the City of Vancouver.”

For the time being, low inventory will continue to impact both realtors and their clients. And although the issue may be most prominent in Vancouver, it extends across the province.

“There just aren’t enough options out there for our clients,” said Stewart. “We did about 500 transactions last year and I have about 19 realtors across British Columbia that I send business to, and each one of them says lack of supply is the biggest issue.”

 

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