Victoria fully-leased office building sells for full list price

Colliers Canada
Western Investor

Leased to government tenants, the 29,363-square-foot building on 0.34 acres in downtown Victoria sold for $10.1 million.

Property type: Office building

Location: 836 Yates Street, Victoria, B.C.

Size of property: 29,363 square feet

Land size, in acres: 0.34 acres

Zoning: CBD-2

List price: $10.1 million

Sale price: $10.1 million

Date of sale: January 28, 2022

Buyer: Starlight Acquisitions Ltd., Toronto

Brokerage: Colliers Canada, Victoria, B.C.

Brokers: Ken Cloak and Tristan Spark

 

© 2022 Western Investor

79 room Columbia Hotel SRO sells for 16 Million dollar

Corbel Commercial Inc.
Western Investor

Off-market deal with non-profit in Vancouver’s Downtown East Side sells property for $5.9 million over assessed value at $202,500 per room.

Type of property: Single-room occupancy hotel 

Location: 303 Columbia Street, Vancouver

Number of units: 79 units Year complete: 1920

Property size: 6,100 square feet

Land size, in acres: 0.14 acres

Zoning: HA-2 (Heritage Area).

Retail: Pub at ground level.

BC Assessment value (2022): $10.15 million.

Sale price: $16 million.

Type of transaction: Off-market deal

Buyer: Atira Women’s Resource Society (non-profit).

Date of sale: January 31, 2022

Brokerage:  Corbel Commercial Inc., Vancouver

Brokers: Willow King, Marc Saul and Robert Tham.

 

© 2022 Western Investor

Banking watchdog warns housing prices could plunge 20 percent when speculative fever breaks

Financial Post Staff
The Vancouver Sun

Office of the Superintendent of Financial Institutions chief describes the pandemic housing surge as the perfect storm

 Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said that housing markets that saw a rapid increase in prices could see falls as much as 20 per cent. Photo by Bloomberg

Canada’s federal banking regulator described the housing market as being in the late stages of a “speculative fever,” and warned that prices could plunge by as much as 20 per cent in some markets.

 

“There is a speculative fever that takes over private markets and that’s what’s playing out,” in housing, Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said on the latest edition of political consultant David Herle’s weekly podcast, The Herle Burly. “Looking ahead, it feels like we’re at the later stages of that phase. My expectation is that as rates go up, assuming they do, some of that fever is going to abate a little and you’ll see a slowdown in prices.”

Routledge, a former analyst at National Bank who was running Canada Deposit Insurance Corp. when he was tapped to lead the OSFI last year, described the surprising surge in home prices during the pandemic as a perfect storm: Many households were sitting on lots of equity thanks to the rising home prices of the past decade; delinquency rates in Canada are low, which lowers the risk for lenders; a “herd mentality” kicked in as prices steadily rose; and the Bank of Canada dropped its benchmark lending rate to effectively zero.

 

As those forces recede, housing markets will cool, and some might even correct, Routledge said.

“In some markets where you had a really rapid increase in prices, you could see a fall of 10 (per cent), 20 per cent, even,” Routledge said. “But that will just be a return back to a little bit more sanity after a sudden buildup in prices.”

The Superintendent of Financial Institutions, however, does not think the steep price drops he expects in some cities are likely to pose a broader threat to the country’s financial system.

Toronto and Vancouver, the country’s priciest markets, have weathered similar declines before.

“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.”

Canada’s housing market has been setting records for the better part of a decade, led by Vancouver and Toronto. The frenzy has spread to other cities during the pandemic, as demand for bigger houses, or cheaper ones than can be found in major centres, caused Toronto-like price increases in places such as Ottawa, Montreal, and Moncton, New Brunswick.

Investors took note and jumped on the opportunity to turn a profit. Routledge said a “speculative boom” in housing has added extra heat to the market. Typically, investors account for about 15 per cent of home sales, but currently they are responsible for about 22 per cent of sales, he said.

“Even though that seems like a little bit, it’s quite significant incremental demand into the system,” Routledge said.

However, investors’ interest in the housing market likely is about to decline. “With rates going up, with the general recognition that, ‘Boy, housing is pretty fully valued,’ I’m not sure your expected return in the housing sector … I think a smart investor would think twice and maybe look at other outlets,” he said.

 

© 2022 Vancouver Sun

Greater Vancouver home price tops $1.25 million as listings plunge

Emma Crawford
Western Investor

Tight supply pushed Metro Vancouver detached home prices up almost 23 per cent year-over-year in January, says real estate board

Because of low supply, total unit sales in January were down for both detached and attached homes, while apartment sales inched upward | Darren Stone, Times Colonist
Tight supply pushed Metro Vancouver detached home prices up almost 23 per cent year-over-year in January, says real estate board
The number of Greater Vancouver homes listed for sale in January was 31.8 per cent lower than what was seen in January 2021, and this is nudging home prices ever higher, according to a Real Estate Board of Greater Vancouver (REBGV) report released February 2. 
The benchmark price for all home types was $1,255,200 in January, which is 18.5 per cent higher than the benchmark average in January 2021. For detached homes, the benchmark price reached $1,953,000 – 22.7 per cent higher than one year ago. The price for attached homes increased 24.3 per cent over the year, reaching $1,029,500, and for apartments grew 14 per cent to $775,700.
The biggest year-over-year increases in benchmark home prices across the region were seen in Maple Ridge (up 35.9 per cent to $1,134,900) and Pitt Meadows (up 37.7 per cent to $1,035,000).
A total of 5,663 homes are currently listed for sale, compared with 8,306 in the same period last year.
Keith Stewart, REBGV economist, said inventory is “less than half of what would be optimal to begin the year.”
“As a result, hopeful home buyers have limited choice in the market today,” he said. “This trend is causing fierce competition for a scarce number of homes for sale, which, in turn, increases prices.”
Because of the low supply, total unit sales in the month were down 15.9 per cent for detached homes (622 units sold) and 23.3 per cent for attached homes (348). As prices for those more expensive home types kept climbing, more buyers turned to condo apartment sales, with 1,315 units changing hands in the month – an increase of 10 per cent, year-over-year.
REBGV data includes sales and prices for Vancouver, West Vancouver, North Vancouver, Burnaby, New Westminster, Coquitlam, Port Coquitlam, Richmond, Port Moody, the Sunshine Coast, Whistler, Squamish, Pitt Meadows, Maple Ridge and South Delta. It does not include Langley or Surrey.

© 2022 Western Investor

Canada could see lowest jobless rate in more than 50 years

Nelson Bennett
Western Investor

There are about one million job vacancies and slightly more than one million people unemployed as country heads towards a potentially record -low jobless rate

 Economic forecasting is a complex business at the best of times, but trying to read the portents of a global economy in recovery from a pandemic has made it even more complicated.

“This is one of the more complex economic environments certainly encountered in my career as an economist,” Douglas Porter, chief economist for BMO Financial Group, said Feb. 1 during a session on financial and commodity markets at the Association of Mineral (AME) Roundup conference in Vancouver.

Generally, the signs are good, though the signals may be complicated somewhat by things economists have not had to factor in for decades, like high inflation and high employment.

One of the biggest stories of 2022 for the economy is going to be employment – high employment, that is, Porter said

“We have a very serious imbalance on the labour market front,” he said. “Right now in the U.S. we’ve got almost 11 million open jobs, whereas the amount of people counted as officially unemployed are less than 7 million.

“So we’ve got way more open jobs than we do have people unemployed. Historically, that kind of imbalance points due north for wages, and we are starting to see wage pressures mount in the U.S.”

In Canada, there are about 1 million job vacancies, though slightly more than 1 million people unemployed.

“We are starting to see wage pressures begin to build in Canada as well,” Porter said.

“We think that, by later this year, we could be looking at the lowest jobless rate that we’ve seen in more than 50 years in both Canada and the U.S.,” Porter said.

Though a global pandemic hasn’t been officially declared over yet, financial markets are operating as though it has., he added.

“Even with the ripple that we’ve seen in equity markets since the start of the year, largely speaking financial markets are still pointing towards relatively robust growth as we go through this year,” Porter said.

Commodities have been on fire since mid-2021, with everything from oil to lumber soaring. High oil prices in particular are helping drive up the consumer price index, and home prices that spiked roughly 20 per cent in the past year in Canada and the U.S. will also feed the inflationary fires.

“This is not just a North American story,” Porter said. “We are seeing strong gains in consumer prices almost across the emerging market and most of the advanced world. Even Japan, which has been looking at deflation, arguably, for about 30 years, is actually seeing inflation of almost 1 per cent, which is relatively high for Japan.”

U.S. inflation rates are among the highest, at 7 per cent.

Benchmark oil prices are well above US$85 per barrel. Porter said he thinks crude oil prices will settle around the US$75 to US$80 per barrel range. Even so, BMO expects inflation to linger longer than some economists initially predicted.

“Even with more moderate oil prices, with an improved supply chain situation, we are still looking at inflation in the range of 2.5 per cent to 3 per cent in Canada and the U.S. by late 2023, well above the sub 2 per cent trend that we were seeing before the pandemic began.

Housing prices will likely continue to add to inflationary pressure, Porter said.

 “Even if some of the reopening pressures do fade over the next year, even if oil pressures do stabilize, and even if the supply issues do improve, there is still some sting in the tail from wages and housing that could lead to firmer inflation lasting for some time.”

 

© 2022 Western Investor

Benchmark for a detached home in Metro Vancouver hit $1,953,000 in January

Ryan Garner
Livabl

Low housing inventory across Metro Vancouver resulted in decreased sales and increased prices during the first month of 2022.

According to the Real Estate Board of Greater Vancouver (REBGV), the region saw 2,285 residential home sales in January, a 15 per cent drop from the previous month and 4.4 per cent decrease from the 2,389 sales recorded in January 2021.

While last month’s sales were 25.3 per cent higher than the 10-year January sales average, reduced supply has resulted in a lack of options for prospective home buyers, putting upward pressure on prices.

Metro Vancouver had 4,170 new listings across all property types on its Multiple Listing Service (MLS) last month. While that represents a 114.4 per cent increase from December 2021, it’s also a 6.9 per cent decrease year-over-year.

A total of 5,663 homes are currently listed on the region’s MLS system, up 8.2 per cent from December but a 31.8 per cent decrease compared to January 2021 (8,306).

“Our listing inventory on MLS is less than half of what would be optimal to begin the year. As a result, hopeful home buyers have limited choice in the market today,” Keith Stewart, REBGV economist said. “This trend is causing fierce competition for a scarce number of homes for sale, which, in turn, increases prices.”

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The benchmark price for all residential properties in Metro Vancouver reached $1,255,200 in January, an 18.5 per cent increase from January 2021 and a two per cent bump month-over-month.

Detached home prices keep hitting new heights, with a benchmark price of $1,953,000 representing a 2.2 increase from December and 22.7 per cent rise year-over-year.

Benchmark prices for attached homes and apartment properties saw month-over-month increases of 2.5 per cent and 1.8 per cent, respectively, hitting $1,029,500 and $775,7000.

“With home prices reaching new highs in recent months, the need has never been greater for government to collaborate with the building community to expedite the creation of housing supply and provide more choice for those struggling to buy a home today,” Stewart said.

Seller’s market conditions prevail in Metro Vancouver, with the 40.3 per cent sales-to-active listings ratio for all property types. The ratio is 28 per cent for detached homes, 51.6 per cent for townhomes, and 49.7 per cent for apartments.

“As we approach spring, we’ll keep a close eye on the impact of rising interest rates on buyers’ willingness to buy and on whether more home owners will opt to become sellers in what’s traditionally the busiest season of the year,” Stewart said.

 

© 2020 BuzzBuzzHome Corp.

Office vacancy in New Westminster falls to ‘all-time low’: report

Chris Campbell
Western Investor

Report blames a lack of supply

 The Save-On-Foods at the Brewery District is one of three New Westminster locations of the grocery chain; all the stores have been reduced to 50% capacity in the face of the Omicron wave.Julie MacLellan

A new report on office vacancies in Metro Vancouver says that New Westminster has the lowest vacancy rate in the region due to a lack of supply that is “hindering activity.”

The report by Avison Young says office vacancy in the city “fell to an all-time low” of 4.3% at year-end 2021 from 5.4% a year ago. By contrast, Burnaby has a rate of 7% while Richmond sits at more than 10%.

“Avison Young has tracked the market since 1998,” says the report. “Vacancy has been steadily tightening since year-end 2017 with leasing velocity remaining stable during that time – despite the arrival of COVID-19 in early 2020 – due to the completion of several significant lease deals that saw tenants occupying improved space. A lack of new supply has also contributed to vacancy reaching record lows in 2021. Vacant sublease space is not available; however, sublease opportunities are possible in spaces that remain partially occupied.”

There was no vacant space in class C properties at year-end 2021 and vacancy in class A buildings was at a “miniscule” 2.5%, the report said.

“Annual absorption of 18,623 sf in 2021 marked the fifth year of positive absorption recorded in New Westminster after three years of historically strong levels of leasing activity,” said the report. “Despite a slow start in the first half of 2021, tenants subsequently occupied a majority of office space in the back half of the year.”

Video game developer Offworld Industries occupied 14,500 sf at 713 Columbia Street and was one of the primary drivers of positive absorption in New Westminster in 2021.

“New office construction in New Westminster is currently limited to Wesgroup’s Brewery District,” the report said.

“Rental rates were relatively flat in 2021 despite tightening vacancy and limited options for tenants. Lingering uncertainty around COVID-19 along with a lack of availability will likely hinder leasing activity into 2022, which may work to offset the upward pressure on rates that would typically emerge when vacancy is at a record low and the delivery of new office supply is more than 18 months out. Vacancy is forecasted to tighten further in 2022.”

 

© 2022 Western Investor

South Surrey strip mall on .58 acres trades over ask at $5.3 million

Western Investor Staff
Western Investor

A potential development site, the four-unit King George Plaza retail strip of 6,900 square feet sold for $100,000 above its list price.

Property type: Retail

Location: 2336 King George Highway, Surrey, B.C.

Number of units: 4

Property size: 6,900 square feet

Land size: 25,500 square feet

Land size in acres: .58 acres

Zoning: CHI (Highway commercial industrial)

List price:$5.2 million

Sale price: $5.3 million

Capitalization rate: 3 per cent

Brokerage: Macdonald Commercial Realty, Vancouver.

Broker: Dean Bauman and Razi Mohamed.

 

© 2022 Western Investor

More B.C. homeowners deferring property taxes may signal distress, says appraiser

Derrick Penner
The Vancouver Sun

Rising numbers over the last five years looks like a warning sign to some, but is less worrying to others who have watched new applications slow down.

Property appraiser Paul Sullivan said he talks to a lot of homeowners who are already heavily mortgaged and don’t have the cash to cover added taxes when their property values soar “by no fault of their own.” Photo by RICHARD LAM /PNG

The number of British Columbia homeowners deferring property taxes has soared over the past five years inviting differing interpretations of what that means in the province’s overheated property markets.

To property appraiser Paul Sullivan, principal with the firm Ryan Law, the rising number suggests more homeowners are under stress due to high property taxes, particularly the province’s vacancy tax.

The number of homeowners deferring taxes hit 73,000 in 2021, according to Sullivan’s research, compared with 69,757 a year ago.

And that top number is up 76 per cent from 41,488 in 2016, with the aggregate amount those homeowners owed to the program up to $1.6 billion from $815 million over the same period.

“The frightening part is the amount, so sort of an ability pay thing by one measure,” Sullivan said, which speaks to the “house rich, cash poor” nature of Vancouver housing in particular.

However, while Sullivan looks at deferrals as a sign of financial stress in his argument that B.C.’s high-end property taxes should be rescinded, seniors advocate Isobel Mackenzie is less concerned.

Mackenzie said that while the overall number of deferrals is up, the number of new applicants to the program has declined over the last two years, 9,000 in 2020-21 and 10,670 in 2019-20 compared with 13,719 in 2017-18, the highest number in the last five years.

The debt homeowners have built up also isn’t a concern to Mackenzie because those amounts pale in comparison to the rate property values have risen and the low interest rates the program charges. She believes more homeowners should take advantage of deferral.

“So there’s $285 million that is in the hands of seniors (for 2020-21) because of property tax deferral that they otherwise would have to find in their bank accounts,” Mackenzie said.

B.C.’s property tax deferral program has been in place since 1974. Homeowners over the age of 55, surviving spouses, the disabled or families supporting children are eligible to apply, provided they meet equity requirements.

 

The province grants homeowners low-interest loans (the rate is 0.45 per cent for the regular program, 2.45 per cent for families with children), which is charged only on the principal, not at a compounding rate and which doesn’t have to be repaid until an owner sells their home.

Mackenzie said that the program works out to be a good financial decision for owners who can afford to pay their taxes because they can earn more by investing deferred amounts than they pay in interest.

“I’m more interested in encouraging seniors who are struggling financially — who aren’t deferring their taxes — to do so,” Mackenzie said.

And she argues the program should be expanded to cover other home-ownership costs such as strata fees and municipal utility charges.

Aside from the tax-deferrals, Sullivan said he talks to a lot of homeowners who are already heavily mortgaged and don’t have the cash to cover added taxes when their property values soar “by no fault of their own.”

Sullivan argued that the speculation and vacancy tax, launched to curb foreign speculation in B.C. real estate, is now charged to more British Columbians than foreign owners and has failed to lower property prices.

“So why don’t they rescind these taxes and get on with strategies to build homes,” Sullivan said. “That’s how we’re going to solve a housing crisis.”

[email protected]

twitter.com/derrickpenner

© 2022 Vancouver Sun

Fraser Valley home listings surged in January: Real estate board

Tiffany Crawford
The Vancouver Sun

There were 2,135 new listings last month, an increase of 67.1 per cent compared with December.

New home listings were significantly up last month in the Fraser Valley. Photo by Gerry Kahrmann /PNG

Homebuyers with an eye on the Fraser Valley may be in luck as real estate experts say home listings in the region surged in January.

While the valley’s overall property sales cooled compared with December, the volume of new listings “improved significantly,” according to a report Wednesday by the Fraser Valley Real Estate Board.

The board says 1,310 homes sold in January, down 23.7 per cent compared with the year previous and 27.5 per cent lower than December. However, there were 2,135 new listings last month, an increase of 67.1 per cent compared with December.

Total active listings for the month were 2,332, down 44.6 per cent compared with the same month last year, and an increase of 19.2 per over December, according to the board.

In a statement, board president Larry Anderson called the surge in home listings a positive, early trend for 2022. He didn’t say whether a surge in listings could be linked to the catastrophic flooding in the Fraser Valley in November.

“It’s early days yet, but if this trend continues into spring, we could see an easing of the supply demand dynamic in our region. We have a long way to go to replenish our housing stock and bring much-needed balance to the market, but this is a step in the right direction,” Anderson said in a statement Wednesday.

Baldev Gill, the board’s CEO, said a seasonal influx of new homes on the market could start to ease price growth this year.

The benchmark price for a detached home in the Fraser Valley last month was $1,569,300, up 4.6 per cent from December, and up 41.8 per cent from last January.

For a townhome, it was $796,500, up four per cent compared with December and up 37.2 per cent compared with the same month last year. And for apartments, the benchmark price was $574,300, an increase of 4.6 per cent from the month previous, up 30.6 per cent year-over-year.

More to come …

[email protected]

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