‘Alleged agreement’ to buy Vancouver home not legally binding, court rules

Ian Holliday
other

 A Vancouver man who sued the would-be buyer of his home for $600,000, claiming he was owed a deposit for that amount despite the deal falling through, has had his claims dismissed by the B.C. Supreme Court.

In a decision issued Tuesday and published online Wednesday, Justice Andrew P. A. Mayer found that an agreement signed by homeowner Mark Angus and prospective buyer John Williams is not an enforceable contract. 

Mayer’s decision details several months of negotiations in 2019 and 2020 between Angus, Williams and CDRW Holdings Ltd. – a property holding company owned by Williams’ wife – for the sale of a home on East 5th Avenue in Vancouver.

The court decision does not share the exact address of the property, which was first listed for sale in early 2019 for $7.7 million. In June of that year, Williams’ wife Donna made an offer on the property, which was rejected.

Angus and Williams continued to discuss the property after that time, eventually meeting on July 22, 2020, to discuss moving forward with the sale in two transactions totalling $6.8 million, according to Mayer.

At that meeting, the decision indicates, Williams drafted the agreement and both men signed it. The agreement laid out plans for the sale of the property for $6.4 million, as well as a subsequent purchase of $400,000 for various other items, including furniture and art.

In his decision, Mayer refers to the agreement as a “term sheet,” and notes that it is a one-page document with no title that does not refer to the property or its address. It does, however, include a bullet point indicating that Williams or CDRW would make a $600,000 deposit into a “lawyer’s trust account by July 24, 2020.”

Despite the purported deadline, no such deposit was ever paid, according to the court decision.

Instead, Mayer writes, after an inspection of the property that revealed issues with the building envelope, the Williams family decided it no longer wished to buy the property.

Angus had his lawyer create a formal purchase and sale agreement, which was sent to Williams on July 29 with a deadline of July 30. When Williams did not respond, Angus’ lawyer sent follow-up emails that were also ignored.

According to Mayer, none of this correspondence referred to the term sheet. The first reference to the alleged agreement came in an email to Williams from Angus’ lawyer on Aug. 12, 2020, which “set out Mr. Angus’ position that he considered the alleged agreement for purchase and sale of the Property to have been repudiated.”

Angus eventually sued Williams and CDRW for $600,000, arguing that the signed term sheet constituted a legal obligation for the man or the company to pay the deposit.

Mayer rejected this argument, concluding that a “reasonable objective bystander” would not view the agreement as legally binding, given the circumstances surrounding it and the lack of detail within it.

“The term sheet does not refer to the property,” the judge writes in his decision.

“Although it is a virtual certainty that the property was the subject of the ‘first transaction’ in the term sheet, the lack of even a cursory reference to the property suggests a casualness which is not consistent with an intention to formally bound to a contract to purchase an expensive piece of real estate.”

That casualness, coupled with multiple written references – including within the term sheet itself – to having a lawyer or real estate agent complete paperwork, would lead a reasonable objective bystander to conclude that “the understanding or intention of the parties was that their legal obligations were to be deferred until a formal contract had been approved and executed,” Mayer writes.

For these reasons, the judge dismissed Angus’ lawsuit, noting that the usual order would be that the defendants are entitled to payment of their court costs, and inviting the parties to make submissions on that matter if they wish. 

 

© 2022  All rights reserved.

PTT thresholds: REBGV makes housing affordability recommendations to province

REBGV Staff
REBGV

The Real Estate Board of Greater Vancouver (REBGV) made three recommendations on how to make home ownership more affordable during consultations with the provincial government in June 2022.

Each year, the Select Standing Committee on Finance and Government Services holds a public consultation to hear recommendations on how to spend next year’s provincial budget.

For more than 35 years, REBGV has contributed to these discussions by advocating for greater housing affordability through reducing the property transfer tax. In recent years, recommendations to increase housing supply have also been added. 

This year, REBGV urged the provincial government to: 

Mandate inclusionary zoning by amending the Local Government Act and the Vancouver Charter to require local governments to:

• Pre-zone land and infrastructure for missing middle market homes including smaller-lot townhouses, row houses with basement suites, laneway homes, duplexes, triplexes and fourplexes. Newly created supply coming onto the market increases the number of resale listings and moderates the sales-to-active listings ratio, ultimately reducing price pressure when new and existing home owners buy new homes.
• Encourage local governments to amend zoning bylaws to allow stratification of coach houses, laneway houses, small backyard cottages, accessory dwelling units and secondary suites. The current practice among Lower Mainland local governments is that these units can only be rented out. The ability to stratify or outright sell the units would make these investments more attractive to the property owners to create more homes in their neighbourhoods

 

 

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Cloverdale 8,476-square-foot mixed-use centre sells for $4.12 million

Re/Max Commercial Advantage
Western Investor

The downtown building on a 11,878 square foot lot contains eight commercial units and one residential rental in the suburban Surrey, B.C., community.

Property type: Mixed-use commercial

Location: 5780 176A Street, Surrey B.C.

Number of leased units: 9 (8 commercial; 1 residential)

Property size: 8,476 square feet

Land size: 11,878.35 square feet

Zoning: C-15 commercial (Heritage designation)

Sale price: $4.12 million

Brokerage: Re/Max Commercial Advantage, Surrey, B.C.

Brokers: Rebecca MacLeod and George Richmond.

 © 2022 Western Investor

Okanagan Falls 8.7-acre industrial site sells for $4 million

Re/Max Penticton Realty
Western Investor

Income-producing commercial/industrial property has access to Highway 97, with 6,950-square-foot commercial building, RV and boat storage and clean waste transfer station.

Property type: Industrial

Location: 4850 Weyerhauser Road, Okanagan Falls, B.C.

Land size: 382,456.8 square feet.

Land size in acres: 8.78 acres

Zoning: IL (industrial)

List price: $4.29 million

Sale price: $4 million

Date of sale: March 4, 2022

Brokerage: Re/Max Penticton Realty, Penticton, B.C.

Brokers: John Green and Keith Jakes.

© 2022 Western Investor

What will influence the Bank of Canada’s next rate decision?

Fergal McAlinden
other

The central bank seems to be weighing up an even larger increase than we’ve seen this year to date

 Some observers have sounded the alarm about the possible risk posed by rate hikes to Canada’s housing market – but the Bank of Canada doesn’t appear in any mood to step back from its current rising-rate trajectory, if comments last week from Governor Tiff Macklem are anything to go by.

Speaking after the central bank released its annual Financial System Review, Macklem said it may take a benchmark interest rate of 3% or above to tame inflation, and indicated even larger rate increases than the last two half-point hikes could be coming down the line.

In addition to making further moves to return inflation to its target level, the Bank may also need to “take a larger step,” Macklem said, appearing to dismiss the possibility that a housing market downturn could change its thinking on further hikes.

“The housing market is an important part of the economy,” he said. “We are watching it closely, but our focus ultimately is on the whole economy and in getting inflation back to target.”

The Bank finds itself in something of a tight spot where inflation and rate hikes are concerned, Daryl Hosein, vice president at Coast Capital Savings, told Canadian Mortgage Professional.

Supply and demand complications are colliding in the current environment, with the economy in excess demand while supply chain snarls continue to pose a challenge.

Those factors, coupled with tightness in the labour market, are helping worsen the inflation crisis – and the Bank’s task in getting the situation under control is no easy one, Hosein said.

Read next: Canada home prices – why they’re falling

“Of course [the Bank] don’t control directly what’s happening in Russia or Ukraine or supply chain issues coming out of the other side of the world, but the piece of the equation that they can influence is on the demand side,” he said.

“They are trying to eliminate excess demand in the economy – and that’s a really tricky thing to do. They’re moving rates to try to bring in that demand. Their expectation, or what they’re targeting, is to reduce this demand, but certainly not at this point to take us to a situation that would cause a recession.”

The Bank’s efforts to find a so-called “soft landing” for the economy are based around finding the neutral rate – a rate that’s neither stimulating nor constraining demand. “That, of course, is a delicate balance,” Hosein said.

In its April 13 announcement, the Bank adjusted that neutral rate upwards by 25 basis points, a move that CIBC World Markets deputy chief economist Benjamin Tal told CMP had “given them the green light to be a bit more aggressive than otherwise” on rate hikes.

The Bank’s actions in rising rates are set to have a significant impact on aggregate demand, Hosein said, with the consequences for the housing market already becoming apparent as sales across most markets continue to fall.

“I think rate increases will definitely have an effect on people looking to purchase housing. Effectively your dollars will not go as far in that environment, and you likely will be qualifying for a smaller mortgage overall,” he said.

Read next: Bank of Canada announces another oversized rate hike

“This is going to have a cooling effect on housing. I think that’s expected with the rate increases – the Bank of Canada has highlighted the indebtedness in the economy, especially the focus on housing.”

The Bank’s balancing act is exemplified by the fact that moving too fast on rate hikes could drive the country into a recession, while going too slowly risks allowing inflation to run amok and eventually become entrenched.

Macklem’s forceful language on the Bank’s future rate trajectory led to some speculation that it could be set to introduce a three-quarter-point increase at its next policy rate announcement, scheduled for mid-July.

A variety of factors are likely to influence the central bank’s decision on whether its next hike is 0.5% or 0.75%, Hosein said, including how much inflation continues to rise both at home and abroad.

“I think both [a half-point and three-quarter-point increase] are probably on the table for discussion,” he said. “Even today, we’re seeing higher inflation prints out of the US as well, and that may impact their decisions.

“Whether it’s 0.5% or 0.75%, it’s really a function of the Bank of Canada continuing to highlight that they’re taking this seriously and they do need to provide some inflation control over the medium term. They’ll need to be reactive and be able to show the markets that they are doing what they can to bring this under control.”

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Canada house prices – CREA reports the latest

Ephraim Vecina
other

There has been a significant change…

The national home price index fell by 0.8% to $822,900 on a seasonally adjusted basis in May, according to the latest data from the Canadian Real Estate Association.

The most significant price drops were registered in the nation’s hottest markets – in particular, southern Ontario and Chilliwack, British Columbia.

Resales also decreased by 8.6% from April to May, which moved activity levels back to their pre-pandemic strength, CREA said.

May marked the second straight month of declines in both price levels and sales activity, a trend that CREA attributed to much higher borrowing costs in the wake of the Bank of Canada’s two 0.5% rate hikes.

Read more: Analyst: Housing activity deceleration key to market balance

However, while multiple observers expected the housing market to moderate following the central bank’s rate hikes, the speed at which mortgage costs increased defied even CREA’s most pessimistic early predictions.

“What is surprising is how fast we got here,” said Shaun Cathcart, senior economist at CREA. “That cooling off of sales and prices seems to have mostly played out over the last two months.”

Robert Kavcic, senior economist at the Bank of Montreal, said that consumers have now awakened to the reality of this outsized-rate-hike environment.

“A correction in Canadian housing is well underway across a number of markets, and a long, cold summer likely lies ahead,” Kavcic said.  

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Glass price increase adds to construction cost pressures

Peter Mitham
Western Investor

Contractors pushed to the brink as insolvencies loom
Glass is a defining feature of highrise towers, and prices are poised to reach new heights in BC with a 40 per cent increase this month.
Glass suppliers hit the B.C. construction sector with a 40 per cent increase in the price of glass this week, adding to what many builders say are unsustainable cost increases that could lead to a wave of insolvencies.
Guardian Glass gave notice to customers on June 14 that it was raising the price of clear glass 40 per cent effective June 20. Tinted glass will increase 25 per cent.
Other suppliers quickly followed suit.
Guardian declined comment on the increase, which contractors say is impossible to absorb. Combined with cost increases for other materials, it puts the entire production chain at risk, said Craig Enns, vice-president and area manager with EllisDon Corp. in Vancouver.
“The scale of the increases now is such that no matter how good or honourable a trade you are, you can’t absorb a 20 per cent glass increase overnight and still honour your price. Those margins just don’t exist,” Enns said during a June 16 panel discussion regarding construction costs hosted by commercial real estate association NAIOP.
Glass isn’t the only cost that’s increasing. Statistics Canada’s Industrial Product Price Index reports that lumber costs remain 87 per cent higher than in January 2020, while the prices for fabricated metal products and other construction materials have increased 43 per cent.
Drywall is up 55 per cent versus pre-pandemic levels, NAIOP was told.
Delivery timelines for almost all materials have doubled since the start of the pandemic, adding to cost pressures – if they even arrive.
Enns related how a supplier diverted reinforcing steel for one project mid-Pacific and told the subtrade a new, higher price would be available when the new shipment was en route. The work was being done on a fixed-price basis and was 50 per cent complete by cost.
“He’s now facing, at these cost increases, insolvency, to be frank, to honour his low price,” said Enns.
While the number of contractors in the province is 11 per cent above the five-year average at 26,262, Enns expects the number to drop as soaring costs overtake locked-in project costs.
“We see insolvencies on the verge already,” he said.
Statistics compiled by the federal Office of the Superintendent of Bankruptcy show insolvencies among construction companies nationwide have increased dramatically in recent months. The first quarter saw insolvencies rise 20 per cent to 118. An additional 45 insolvencies in April pushed the total in the latest 12 months to 416, a 42 per cent increase from a year ago.
“There needs to be an understanding that contractors can’t just be a good guy and make it work,” said Bryan Reid, president of Kindred Construction Ltd. in Vancouver.
Kindred is working hard to stay ahead of cost increases and supply chain delays, building extra time into contracts and keeping clients updated as issues arise, but that isn’t always enough.
“I’m getting really good at apologizing,” he quipped. “If there’s a level of relationship with the client group, that conversation is easy to have.”

© 2022 Western Investor

Langley’s first towers rise in billion-dollar mixed-use development

Western Investor Staff
Western Investor

Latimer Village new condo towers nearly sold out before construction even started

The first residential high rises in the Township of Langley broke ground this morning, June 15, in the billion-dollar, 74-acre Latimer Heights master-planned community by Vesta Properties.
The two towers will be 26 and 34 storeys tall, with 500  condos units between the two buildings and the adjacent 16 townhouses.
The entire complex is nearly completely pre-sold, according to Vesta marketing manager Christine Turner.
“We only have a few of the city townhomes left at the base of the towers and we will be releasing the penthouses for sale in July,” she said in an email.
Latimer Heights, at 20049 82nd Avenue, also includes a retail village with 36,000 square feet of commercial space, where some shops have already opened. The site also includes 17 acres of green space.
The towers at Latimer Heights are Langley’s first concrete residential high rises, with studio, one, two, and three-bedroom condo units ranging from 354 to 1,212 square feet, penthouse condos and three-bedroom city townhomes.
Langley-based Vesta has applied to the Township for an additional 45-storey tower at Latimer Heights, to replace planned low-rise residential buildings, but it has yet to be approved.
“We have worked extremely hard over the past several years to get to this moment,” said Kent Sillars, president Vesta Properties in an earlier statement to Western Investor. “Latimer Heights is unlike any other community in the Township of Langley and it has truly been a rewarding experience to contribute to such an innovative concept that will provide new housing opportunities in the heart of our region.”

© 2022 Western Investor

May home sales down 22% since last year, 9% from April

Tara Deschamps
The Vancouver Sun

The Canadian Real Estate Association (CREA) said Wednesday that on a year-over-year and non-seasonally-adjusted basis, sales amounted to 53,720, a fall from 68,598 in May 2021.

 A realtor’s for sale sign stands outside a house that had been sold in Toronto, May 20, 2021. Photo by Chris Helgren / Files /REUTERS

Canada’s housing market continued to cool last month with the country’s real estate association finding home sales dropped by nearly 22 per cent since last year and almost nine per cent between April and May.

The Canadian Real Estate Association (CREA) said Wednesday that on a year-over-year and non-seasonally adjusted basis, sales amounted to 53,720, a fall from 68,598 in May 2021. Seasonally adjusted sales for the month totalled 42,649, down from 46,644 in April.

“Ultimately this has been expected and forecast for some time — a slowdown to more normal levels of sales activity and a flattening out of prices,” said Shaun Cathcart, CREA’s senior economist, in a release.

“What is surprising is how fast we got here.”

The moderation came after the country rang in the new year with soaring prices and a torrid pace of sales that prompted provinces and the federal government to eye a suite of cooling measures.

Ontario, for example, increased a tax on non-resident homebuyers to 20 per cent from 15 per cent in March and broadened the policy to the entire province instead of just the Greater Golden Horseshoe.

But even more impactful than the patchwork of policies has been rising interest and mortgage rates, which economists attribute much of the cooling to.

“Canadians widely expected home prices to keep rising, which pulled in investors and multiple-property buyers, while also causing many households to stretch in fear of missing out,” said BMO Capital Markets senior economist Robert Kavcic.

“But, beginning with the (Bank of Canada)’s first nudge in interest rates, those market expectations began crumbling.”

Realtors now notice prospective buyers negotiating more than they were able to in previous months, while sellers are still coming to terms with how the market has shifted and some are even holding back on listing their homes.

When Sara Rowshanbin, a Chestnut Park Real Estate Ltd. broker in the Greater Toronto Area, tells her clients they can request a home inspection, their eyes light up because most buyers had to drop the condition when the market was heated previously. Now about 50 per cent of the bids she helps place have the condition again.

However, how sellers are reacting to offers made with the cooling market in mind is “all over the place.”

“Some are receiving them with open arms and saying ‘let’s work together on this’ and others are saying ‘is that a typo?’ so you can tell ⦠the market shifted very quickly,” she said.

As a result, CREA found May’s sales resembled the levels of activity seen in the second half of 2019, before the COVID-19 pandemic began, but noted sales decreases were steeper in April.

May sales were down in three-quarters of all local markets, led by regions like the Lower Mainland in British Columbia, Calgary, Edmonton, the Greater Toronto Area (GTA) and Ottawa.

The association now expects 568,288 properties to change hands this year, a 14.7 per cent decline from the 2021 record but still the second-highest annual figure ever. It predicted sales will edge back a further 2.8 per cent to 552,403 homes in 2023.

However, there will be little relief in prices.

CREA forecast the national average home price will rise by 10.8 per cent on an annual basis to $762,386 in 2022 and expects the largest gains to come from the Maritime provinces, Ontario and Quebec. Then, the national average home will rise by another 3.1 per cent to $786,282 in 2023.

The average seasonally adjusted price in May sat at $700,438, down nearly four per cent from $728,171 in April.

The average non-seasonally adjusted price was $711,316, up roughly three per cent from $687,595 the year before.

Rishi Sondhi, an economist with TD Economics, interpreted the figures to mean activity is “retrenching especially hard” in the GTA, where investors have played a large role in the past year.

“It’s also likely the case that some GTA buyers purchased their homes before selling their old ones (thinking the market would remain hot) and are now being forced to accept lower prices to complete their transactions,” Sondhi wrote, in a note to investors.

“We would, however, expect this dynamic to run its course in relatively short order.”

New listings climbed 4.5 per cent on a seasonally adjusted basis from 70,971 in April to 74,145 in May, as Montreal saw an increase in new supply.

On a non-seasonally adjusted basis, new listings totalled 100,643 last month, up more than six per cent from 94,704 in May 2021.

 

© 2022 Vancouver Sun

Fed announces huge rate hike

Fergal McAlinden
other

It’s the US central bank’s largest single rate increase for 28 years

The Federal Reserve has made its most aggressive move on interest rates in 28 years, hiking its benchmark rate by 0.75% in a bid to tackle the mounting inflation crisis in the US.
That brings the short-term rate to a range of 1.5% to 1.75% and marks the first time the Fed has introduced a three-quarter-point increase since 1994, a sign that inflation is proving more difficult to control than anticipated.
Expectations of a supersized hike ramped up in the days before the Fed’s announcement as new government data showed prices rocketed at their fastest pace since 1981 in the US in May, rising by 8.6% on a year-over-year basis.
That grim news on inflation coincided with consumer confidence plummeting in early June to its lowest level on record, according to the University of Michigan, and appears to have prompted the Fed to up the ante on its plan for interest rates.
Last month, Fed Chairman Jerome Powell said a 0.75% increase was “not something the committee is actively considering” – but markets began to price in an aggressive hike because of the gloomier overall outlook on inflation and consumer sentiment.
Read next: How borrowers can manage the squeeze of rate increases
US mortgage rates have already surged during the past week ahead of the Fed decision with the average rate on a 30-year fixed mortgage climbing to 6.28%, up from 5.55% seven days prior.
That rate, which stood at 3.11% at the end of 2021, has been on an upward trajectory throughout the year to date following the record lows of the COVID-19 pandemic. It’s risen sharply as the Fed ends its support for mortgage-backed bonds, leading to a cooldown in the housing market with demand tailing off.

The US’s 30-year fixed mortgage rate up to 2020 (Source: Macrotrends)
A combination of inflation and rising rates appears to be causing many would-be-homebuyers to think again on entering the market, according to Freddie Mac’s chief economist Sam Khater – although the Mortgage Bankers Association’s latest survey showed that mortgage applications have rebounded quickly after recently hitting a 22-year low.
Read next: Cost-of-living crisis: What do mortgage holders need to keep in mind?
Consumer price index (CPI) inflation has swelled across the world in recent months due to supply chain snarls and upward pressure on energy prices caused by Russia’s invasion of Ukraine. However, the US’s May inflation data surprised those observers who believed it had already peaked in the country.

Annual inflation and yearly change in the US, 1960-2020 (Source: Macrotrends)
The central bank could follow up today’s decision with another supersized rate hike, according to Goldman Sachs, which expects a further 75-basis-point increase in July followed by a 0.5% hike in September.
That benchmark rate remained near zero throughout nearly two years of the COVID-19 pandemic before the Fed announced a 25-basis-point increase in March this year, following that up with a 0.5% hike in May.
The Fed is set to meet again on July 26-27, with further meetings scheduled for September, November and December.

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