Condo Smarts: Tony Gioventu pens 1,000th column on strata life

Tony Gioventu
The Vancouver Sun

Weekly Homes columnist began helping readers with strata-living issues in November, 2002
Tony Gioventu, executive director for the Condominium Home Owners’ Association in action in Vancouver, BC., April 3, 2013. Photo by Nick Procaylo /PNG
With over 34,000 strata corporations across British Columbia, it is no surprise to reach 1,000 columns on the topic of strata living.
B.C. was one of the earliest adopters of strata-titled legislation in the mid-1960’s with townhouses in Point Grey and Port Moody being the first.
Since then, strata property designations have been granted to every type of use. From duplexes to multi-building sites of 1,100 units, residential to commercial, and industrial, hotel, vacation, recreational, golf courses, marinas, land strips, riding stables, storage units, parking facilities, and mixed variations of all configurations, strata-titled property has become the broadest form of development.
Strata developments enable higher density, collective use of energy systems, added facilities such as elevators, gyms, pools, guest rooms, meeting rooms and common shared expenses. These provide safe, affordable benefits to investors and residents when administered effectively.

The challenge strata/condo corporations worldwide face is that decision-making rests on the shoulders of the volunteer owners and councils/boards.
Strata/condo corporations in Canada are deemed to be non-taxable corporations. Its strata fees, special levies, interest and general user fees are non-taxable; however, to the surprise of many strata corporations, when commercial ventures are implemented — such as leases for communications towers, signage, billboards, and commercial activities such as the operation of a business or facility for profit of the corporation — the rules change, and taxation regulations apply.
A strata corporation needs to identify that it’s a business, often with employees, and operate and negotiate as a business complying with all enactments of law. After all, this is a fundamental requirement of any bylaws adopted by a strata corporation. It must comply with the B.C. Human Rights Code and any enactment of law.

I have seen many strata corporations end up in deep financial and operational crises, mostly due to volunteer council members or inexperienced managers in control of the finances and decision-making, unqualified to administer the scope of routine maintenance, major projects, and long-term planning.
No one is expecting a strata council to be a corporate administrator. Yet, we place the operations of strata corporations, often exceeding hundreds of millions in value, on the shoulders of the volunteers and often without the budget resources necessary to retain qualified professionals.
Property owners must properly equip our councils and managers with the funding and tools they require to operate effectively, and strata councils must be honest, fair, and act in the best interests of all owners.

After 1,000 columns, here are common issues that prevail in the industry.
1. No single council member has any special authority. Decisions on construction, operations, bylaw enforcement and legal matters are made by council majority at a council meetings.
2. “Your home is not your castle!” This is a classic phrase to describe strata living. Regardless of the type of strata corporation you live in, what you do in your strata lot, will affect other strata lots. This is the reason for bylaws that regulate the use and enjoyment of all property.
3. “Keep strata fees low to make your strata lots easy to sell.” This statement is deadly for strata corporations as it results in a lack of maintenance, planning and funding for annual and long-term repairs, neglected property, emergency repairs, court actions, failed special levies, and court intervention for administration and repairs.

© 2022 Vancouver Sun

Gastown-area 3,050-square-foot retail site sells for $2.7 million

Re/Max Commercial Advantage
Western Investor

East Cordova Street, Vancouver, site purchased as strategic acquisition for future land assembly.

Property type: Retail

Location: 88 East Cordova Street, Vancouver

Property size: 3,050 square feet

Lot size in acres: 0.7 acres

Zoning: HA – 2 (Heritage area)

BC Assessment value: $2.82 million

List price: $2.78 million

Sale price: $2.7 million

Date of sale: June 30, 2022

Brokerage: Re/Max Commercial Advantage, Vancouver

Broker: Steve Da Cruz

© 2022 Western Investor

Penticton 5.27 acres with mini storage sells at full price

Western Investor Staff
Western Investor

The industrial parcel, which includes 244 storage units and 13,000 square feet of commercial rental units, sold for $12.6 million.

Green Real Estate Group, Penticton, B.C., for Western Investor

 

Property type: Industrial

Location: 270, 290 and 360 Waterloo Avenue, Penticton, B.C.

Property size: 229,561 square feet

Land size in acres: 5.27 acresZoning: M1

List price: $12.6 million

Sale price: $12.6 million

Date of sale; June 30, 2022
Brokerage: Green Real Estate Group, Penticton, B.C.

Brokers: John Green and Keith Jakes.

 

 

© 2022 Western Investor

Could lumber prices fall even further?

Fergal McAlinden
other

Residential mortgage debt continues to surge, says CMHC Residential mortgage debt in Canada climbed by 9% in 2021 over the previous year | CMHC

Fergal McAlinden
other

The government body has published its latest report on mortgage industry trends
Residential mortgage debt in Canada climbed by 9% in 2021 over the previous year, Canada Mortgage and Housing Corporation (CMHC) has revealed, with outstanding mortgages totalling $1.77 trillion in the third quarter.
The crown corporation released the news in its biannual Residential Mortgage Industry Report, published on Thursday, which details its research on recent and emerging trends across Canada’s mortgage industry.
Unsurprisingly, CMHC said that borrowers’ interest in variable rate mortgages continued to rise due to the increasing spread between those options and fixed rates: a majority of Canadians (53%) preferred variable-rate terms in the second half of 2021, it revealed, up from 34% in the first two quarters.
Still, the current rising-rate environment may impact those preferences, CMHC indicated. “While this trend has continued into the first couple of months of 2022, it seems to have plateaued in response to the recent increases in mortgage interest rates,” it said.
Read next: CMHC: Millions of additional housing units needed to ensure affordability
New uninsured mortgages for purchases and refinances contributed significantly to the country’s overall growth in mortgage debt, while mortgage arrears across all lender types posted a small decline.
Among alternative mortgage holders, a clear majority (72%) had an effective exit strategy in place, CMHC said, with borrowers able to secure a conventional loan or sell their property without defaulting at the term of their alternative arrangement.
The report also shone a light on homeownership and wealth disparities by race. Black, Arab and Latin American populations in Canada have “significantly lower” homeownership rates than the national average, according to CMHC, while there are also stark differences between homeownership levels among recent and established immigrants.
Immigrants who arrived more than seven years ago are more likely to own a home than those who arrived less than seven years ago – and the fact that Black, Arab, and West Asian populations show the largest differences between recent and established immigrants suggests that “these populations have trouble accessing the financial system in the early years after their arrival in Canada,” CMHC said.
CMHC is a government crown corporation whose mandate is to make housing affordable for Canadians. It has outlined its goal to ensure that by 2030, all people living in Canada have access to a home they can 
afford, with shelter costs below 30% of before-tax household income.

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Toronto home sales plunge 41% amid glut

Ari Altstedter
Bloomberg

 Toronto home prices dropped for a fourth straight month and sales tumbled as rising bor­row­ing costs rap­idly cool demand for prop­er­ties in Canada’s fin­an­cial cap­ital.

The aver­age price of a home in the city fell three per cent in June to $1.14 mil­lion on a sea­son­ally-adjus­ted basis, bring­ing the total decline to more than 11 per cent since Feb­ru­ary, accord­ing to data released Wed­nes­day by the Toronto Regional Real Estate Board.

Fewer than 6,500 homes were sold dur­ing the month, down nearly five per cent from the pre­vi­ous month — and 41 per cent lower than a year ago. The num­ber of homes lis­ted for sale has soared.

This abrupt slide in Toronto’s hous­ing mar­ket has coin­cided with the Bank of Canada embark­ing on one of the most aggress­ive efforts to raise bor­row­ing costs in the insti­tu­tion’s his­tory. To get infla­tion under con­trol, gov­ernor Tiff Macklem has raised the bench­mark rate from 0.25 per cent to 1.5 per cent since March, and traders are bet­ting the cent­ral bank will lift it to 2.25 per cent next week.

“Home sales have been impacted by both the afford­ab­il­ity chal­lenge presen­ted by mort­gage-rate hikes and the psy­cho­lo­gical effect wherein home buy­ers who can afford higher bor­row­ing costs have put their decision on hold to see where home prices end up,” Kevin Crig­ger, the Toronto real estate board pres­id­ent, said in a state­ment accom­pa­ny­ing the data. “Expect cur­rent mar­ket con­di­tions to remain in place dur­ing the slower sum­mer months.”

“Home sales have been impacted by both the afford­ab­il­ity chal­lenge presen­ted by mort­gage-rate hikes and the psy­cho­lo­gical effect wherein home buy­ers who can afford higher bor­row­ing costs have put their decision on hold to see where home prices end up,” Kevin Crig­ger, the Toronto real estate board pres­id­ent, said in a state­ment accom­pa­ny­ing the data. “Expect cur­rent mar­ket con­di­tions to remain in place dur­ing the slower sum­mer months.”

With buy­ers flee­ing the mar­ket while new list­ings con­tinue apace, prop­er­ties are start­ing to pile up.

The num­ber of homes for sale in Toronto soared 43 per cent in June from the same month last year, to more than 16,000, while prop­er­ties are now stay­ing on the mar­ket an aver­age of seven days longer, the report shows.

As the epi­centre of a national hous­ing boom that saw bench­mark prices rise more than 50 per cent in two years, Toronto and its sur­round­ing com­munit­ies have now found them­selves lead­ing on the way down, too.

 

 

©2022 Bloomberg

Bank of Canada rate hikes could cause recession, says economist

Fergal McAlinden
other

Central bank “using a very blunt instrument to attempt to bring prices down”

 The risk of the Bank of Canada triggering a recession through interest rate hikes is “high,” according to a prominent economist who says the central bank’s policies could be missing their intended mark.

David Macdonald (pictured top), senior economist at the Canadian Centre for Policy Alternatives, told Canadian Mortgage Professional that price growth across multiple categories could remain elevated despite the Bank’s aggressive stance on its benchmark rate – because rate increases have little to no impact on those measures.

“One of the big problems in attempting to control inflation with interest rates is that some of the big drivers of inflation having nothing to do with what’s happening in Canada, and so the interest rates are going to have little effect on them,” he said.

“The rising price of gas in particular, which is determined largely by international markets, [and] the rising price of food are not going to be brought down just because interest rates are higher in Canada.”

Some parts of the inflation index are rate sensitive and will be affected by the Bank of Canada’s decisions on its benchmark rate – namely residential real estate, with the country’s housing market having seen prices fall and interest cool since the central bank embarked on its rising-rate trajectory.

Still, others are impervious to rate hikes – and that could have significant consequences for the Canadian economy, according to Macdonald.

“The real challenge the Bank has is they’re using a very blunt instrument to attempt to bring prices down in areas that are not interest rate sensitive,” he said. “What that may mean is that we don’t end up with a soft landing, but with a recession.”

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

That’s not to say the Bank has a variety of tools at its disposal to tackle inflation in Canada, which recently hit 7.7% – its highest level for nearly four decades. The central bank is largely a “one-trick pony” when it comes to that issue, Macdonald said, with its major instrument being the overnight rate.

The federal government, by contrast, has several ways of impacting the inflation index – notably in the housing market, where regulatory changes could pour further cold water on some of the skyrocketing price growth seen in recent years.

“It’s certainly within the federal government’s power to change regulations that would affect house prices, particularly mortgage underwriting rules or the rules to get mortgage insurance,” Macdonald said.

That could mean measures aimed at subsections that have been significant drivers of home price appreciation – for instance, targeting investors with stipulations that they be required to put down 50% rather than 20% to qualify for mortgage insurance.

The Bank of Canada slashed its benchmark lending rate to a rock-bottom 0.25% at the onset of the COVID-19 pandemic in March 2020, keeping that trendsetting rate resolutely low over a stretch of nearly two years.

Inflation has surged in 2022 to date, belying the central bank’s earlier confidence that it was a “transitory” phenomenon and heralding a flurry of rate hikes: the first of a quarter point, followed by 0.5% increases in its two most recent policy rate announcements.

Another so-called oversized rate hike appears inevitable in the Bank’s next announcement, scheduled for mid-July, with Dominion Lending Centres (DLC) chief economist Dr. Sherry Cooper noting that persistent levels of inflation meant the central bank will “undoubtedly” introduce a three-quarter-point increase then.

Read next: Canada housing crash – mortgage professionals on how likely it is

That would mirror the last rate decision by the US Federal Reserve, which hiked its own benchmark rate by 0.75% in mid-July in a bid to curb inflation.

Despite the mounting inflation crisis, Canada’s economy appears to be purring along, with unemployment recently hitting its lowest level (5.1%) since comparable data became available in 1976. The Bank of Canada projected “solid” growth in 2022’s second quarter and noted the economy’s resilience in its last rate announcement in early June.

That means the only prospect of a significant economic downturn is if the Bank of Canada raises interest rates too quickly, according to Macdonald.

“There are some segments of the CPI [consumer price index] that will absolutely come out with higher interest rates. But the other parts – it’s going to be hard to bring them down without a recession. I think that’s the real danger we’re in,” he said.

“We’re not in a recession. In fact, the economy is going relatively well and the unemployment rate’s very low. We’re not going to be in a recession – except if the Bank causes one by increasing interest rates too quickly.”

 

Copyright © 1996-2022 Key Media, Inc.

Home sales plummet in Metro Vancouver as buyers adjust to interest rate hikes

Joanne Lee-Young
The Vancouver Sun

Prospective buyers are now being forced to weigh the positive impact of falling prices against the negative impact of rising interest rates

 Sales across much of Canada have slowed dramatically after the Bank of Canadas interest-rate hike forced banks to also move theirs up. Photo by Postmedia, file

The residential real estate market swung another notch down from its pandemic boom highs with prices softening and properties sitting unsold for longer, new figures show.

Prospective buyers are now being forced to weigh the positive impact of falling prices against the negative impact of rising interest rates.

Median prices have been dropping consistently and considerably since the Bank of Canada started hiking interest rates earlier this year, said Hao Li, a Vancouver-based broker with HouseSigma.

In February, the median price for all housing types in all of Metro Vancouver was $1.028 million, but fell by 13.5 per cent to $889,000 in June, according to HouseSigma analysis.

In some areas, the change in median prices was greater, falling by 28 per cent in Delta (to $1.165 million from $1.625 million), by 23 per cent in Surrey (to $843,000 from $1.1 million), and by 23 per cent in Maple Ridge (to $960,000 from $1.25 million), according to HouseSigma.

Still, the MLS benchmark price for all residential properties in Greater Vancouver is $1.235 million, which remains 12.4 per cent higher than it was in June 2021. Greater Vancouver, for the MLS, includes Metro communities north of the Fraser River with a handful of exceptions.

In Greater Vancouver, from Whistler to Maple Ridge to Tsawwassen, the number of home sales for the month of June dropped by 35 per cent. In the Fraser Valley, which in the real estate sector includes North Delta, Surrey, White Rock, Langley, Abbotsford and Mission, it fell by 43 per cent from a year earlier.

Price drops and rising rates can cancel each other out, leaving the buyer in the same financial spot, but this isn’t always the case and there are some nuances, said real estate agent and analyst Dane Eitel.

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Depending on the exact area and housing type, affordability has worsened even though prices have dropped because interest rates have risen.

He took the average selling price for a detached home in Greater Vancouver and calculated a rise in monthly payments due to higher interest rates even with the drop in sale price in the last few months.

A $2.32 million property with a two per cent mortgage rate and monthly payments of $7,840 in April has now fallen to a current sale price of $2.098 million, but it now comes with a five per cent mortgage rate for monthly payments that are $9,810.

“The payments are cheaper at two per cent even with an over $200,000 decrease in price,” he said. He was assuming a five-year fixed mortgage, 25-year amortization and a 20 per cent down payment.

When interest rates first start rising, there is an initial phase when sales volumes and prices tend to hold as some buyers jump into the market before they are priced out. It continues until buyers can no longer afford the higher rates, said Eitel.

“In the 1980s, when interest rates went from 11 per cent to 21 per cent, it wasn’t until they were about 16 to 17 per cent that home sales volumes and prices started to curtail,” said Eitel.

He thinks we are hitting that point now with interest rates having doubled.

“This is a very real shift in the market,” said One Flat Fee agent Mayur Arora who has clients in Metro Vancouver and the Fraser Valley.

He feels buyers will want to see where the interest rate hikes level off before they return to the market.

 

The Real Estate Board of Greater Vancouver’s total of 2,444 sales in June 2022 is a 16.2 per cent decrease from the 2,918 homes sold in May 2022. It is a 23.3 per cent decrease below the 10-year-June sales average.

The Fraser Valley Real Estate Board reported the number of sales in June fell 5.8 per cent compared to May.

With inflation at a near four-decade high, the Bank of Canada is aiming to bring it down from the 7.7 per cent posted in May 2022 back to two per cent by increasing interest rates.

 

© 2022 Vancouver Sun

Vancouver proposes huge housing development at north end of Granville Bridge

Susan Lazaruk
The Vancouver Sun

New West 20-unit mixed-use strata rental sells for $5.6 million

Avison Young
Western Investor

Geordie Place includes 16 residential strata units and four commercial strata units on a corner lot in New Westminster, B.C.

Avison Young, Vancouver, for Western Investor

 

Property type: Mixed-use strata

Location: 723 12th Street, New Westminster

Number of rental units: 16 residential; 4 commercial units

Size of land: 9,108 square feet

Sale price: $5.6 million

Brokerage: Avison Young, Vancouver

Brokers: Carey Buntain, Robert Greer and Chris Wieser with associate Bijan Lalji

 

© 2022 Western Investor