New B.C. law to target source of luxury wealth in money laundering crackdown

Gordon Hoekstra
The Vancouver Sun

Instead of a presumption of innocence, under an unexplained wealth order, the onus falls on the alleged perpetrator to explain where money came from to purchase their assets.

B.C. Premier David Eby has announced a new law to crack down on money laundering. Instead of a presumption of innocence, under an unexplained wealth order, the onus falls on the alleged perpetrator to explain where money came from to purchase their assets. Photo by Jason Payne /PNG

British Columbia plans to introduce a new law that will allow authorities to seize houses and luxury cars if the owners cannot explain the source of the money to pay for them.

New Premier David Eby announced on the weekend legislation will be introduced this spring to create unexplained wealth orders, which are meant to target the proceeds of crime.

Such measures have been in place in a few jurisdictions such as the United Kingdom since 2017.

The unexplained wealth order is a tool recommended by B.C.’s Cullen Commission on money laundering that delivered its findings this summer and a 2019 B.C.-government commissioned report on money laundering in real estate.

James Cohen, executive director of Transparency International Canada, a global anticorruption advocacy group, said the effectiveness of unexplained wealth orders will depend on how the new legislation is crafted.

Taking into consideration concerns on privacy and personal intrusion, targeting higher-level crime and making it a civil rather than criminal measure would be helpful, he noted.

“There’s definitely guidance from the Cullen Commission on how to go forward with this. So let’s see what the B.C. government does,” said Cohen, whose organization has been an advocate of unexplained wealth orders.

Instead of a presumption of innocence, under an unexplained wealth order, the onus falls on the alleged perpetrator to explain where money came from to purchase their assets.

If the alleged perpetrator fails to produce the information and does not rebut the presumption the property was purchased with illicit funds, the property will be forfeited.

 

James Cohen, executive director of Transparency International Canada, a global anticorruption advocacy group, said the effectiveness of unexplained wealth orders will depend on how the new legislation is crafted. PNG

The Cullen commission recommended that unexplained wealth orders will only be used in civil proceedings for the forfeiture of property. The information provided in response to an unexplained wealth order cannot be used in a criminal prosecution.

 

The B.C. Civil Liberties Association (BCCLA), of which Eby was the head before he turned to politics, opposes unexplained wealth orders.

The BCCLA said it’s not in favour of taking a tough-on-crime approach to money laundering with the introduction of unexplained wealth orders, the aggressive pursuit of civil forfeiture, increased policing, and broad information collection and sharing. “These invasive measures undermine constitutional rights, have not been adequately tested, and would be expensive to implement,” wrote the BCCLA’s Stephen Chin and Jessica Magonet.

On Sunday, Eby said the introduction of unexplained wealth orders are meant to remove the profit incentive for organized crime.

He acknowledged the proposal is a departure from existing civil forfeiture rules in B.C. and Canada and said he had no doubt the new law would be challenged in court.

 

But he said he does not want British Columbia to be a place where organized crime is welcome, money laundering is tolerated and people flaunt luxury goods earned through the misery of exploiting people on the streets. “We want to send a strong message,” said Eby.

Unexplained wealth orders have had limited success in the U.K. Several efforts failed to seize luxury London properties owned by residents of central Asian countries that were formerly part of the Soviet Union.

A settlement was reached in one case in which a Leeds businessman, who had links to a convicted murderer, agreed to surrender 45 properties and other assets totalling $15 million.

In a forum on unexplained wealth orders on Tuesday hosted by the University of B.C.’s anticorruption law program, panelists also noted that how the unexplained wealth orders are constructed is important and they can’t stand on their own in combating money laundering.

 

“If you pass an (unexplained wealth order law) and you don’t resource law enforcement, it will fail and it will fail spectacularly,” said Jeffrey Simser, one of the panelists and a former legal director of the Ontario Ministry of the Attorney General.

 

© 2022 Vancouver Sun

ow much income do buyers need to afford a home in Canada’s major cities?

Mika Pangilinan
CMP

Buyers now need less income to qualify for the average home than they did over the summer as prices across Canada’s major cities declined in the month of October.

This is according to a new report from mortgage brokerage Ratehub.ca, which analysed real estate data on 10 different cities and compared it with figures from June and August.

“Homes are becoming more affordable across the country,” said James Laird, co-CEO of Ratehub.ca and president of mortgage lender Canwise. “With the Bank of Canada suggesting that rate hikes are nearing an end and the continued softening of home prices, affordability should continue to improve in the coming months.”

Average home prices dropped across all 10 cities included in the Ratehub.ca report. With prices down, the income required to afford a home in these cities also declined.

Victoria saw the largest drop in required income and average home prices. With a stress test rate of 7.44% and a mortgage rate of 5.44%, Victoria homebuyers would need to make $178,890 to afford an average-priced home of $915,300. This is $4,810 below the income required in August.

Required income also dropped significantly in Halifax. Homebuyers there would need an annual income of $101,750 to afford the average home price of $484,000, down $3,780 from August.

Vancouver remained the most expensive city in the list, with homebuyers needing an income of $220,700 to afford an average home worth $1.15 million. Despite the steep price, this is still $3,150 below the income required last August.

Winnipeg, meanwhile, had the most affordable homes, with homebuyers needing to make $75,300 to afford the average home price of $337,400.

“It is likely that June 2022 will prove to be the low point for affordability, since mortgage rates were up while home prices had not yet softened significantly,” added Laird. “As affordability continues to improve, we will likely see homebuyers resume their search in the new year. We will have to see if sellers are interested in listing their homes at values that are significantly lower than their peak.”

 

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Abbotsford 140-acre industrial park given greenlight

Western Investor Staff
Western Investor

The new Xchange Business Park will be developed along Mt. Lehman Road, Abbotsford. | QuadReal Property Group

A new 140-acre industrial development in Abbotsford should help meet demand in one of the tightest industrial markets in British Columbia.

With no new space under construction this year, Abbotsford has a 0.2 per cent vacancy rate – or about 17,000 square feet available – within its 9.4 million square feet of industrial real estate, according to a third-quarter report from Colliers.

QuadReal Property Group and Hungerford Properties announced November 17 that the developers had received regulatory approval to begin construction of the first two buildings within the Xchange Business Park on Mt Lehman Rd in Abbotsford.

The large business park is slated to include 11 buildings and 1.3 million square feet of purpose-built light industrial space.

The 140 acres is part of the land approved for exclusion by the Agricultural Land Commission in 2005. The Xchange project will also dedicate about 40 acres to green space and will include an amenity building that recognizes the nearby Matsqui First Nation, according to a press release.

The facilities are designed to alleviate strains to the supply chain through such features as dock loading, high ceilings and immediate access to the Trans-Canada Highway, the release stated.

“The new Xchange Business Park not only substantially increases premium industrial space in Abbotsford, it will also add much needed jobs in our growing community,” said Abbotsford Mayor, Ross Siemens. “Key economic projects like this help further cement Abbotsford as the regional economic and cultural hub of the Fraser Valley.”

From a jobs perspective, Abbotsford is already a leader in the logistics sector. While total employment in the area increased by 10 per cent between 2015 and 2019, employment in transportation and warehousing grew three times as quickly. The Xchange project is expected to generate an estimated 1,000 direct jobs in Abbotsford and $23.6 million in provincial taxes, according to the developers.

“We’ve all heard of the challenges posed by a lack of industrial space close to metropolitan centres,” said Jeff Rank, senior vice-president, leasing for QuadReal Property Group. “The demand in Metro Vancouver is largely driven by e-commerce and logistics requirements. And for almost a decade, demand has outstripped supply, so Xchange is filling a very definite need in the local supply chain.”

Michael Hungerford, a partner in Hungerford Properties, said the Xchange project could have space available in the first two buildings as early as 2024.

 

© 2022 Western Investor

Residential land still seeing eye-popping prices

Frank O’Brien
Western Investor

 Even as B.C. home prices decline, Metro Vancouver and Vancouver Island developers appear willing to pay millions of dollars per acre for residential assemblies

A 1.2-acre residential development site (the ‘Cut’) in East Vancouver sold In October for $23.8 million. | Colliers

While benchmark prices for homes in British Columbia have been declining since a peak level this spring, developers still appear willing to pay eye-popping prices for residential land, based on recent transactions.

The Homebuilders Association of Vancouver released a report January 31, 2022, that estimated that land values account for 38.1 per cent of the average cost of a new Metro Vancouver detached house, which sold at the time for $1.75 million.

Land prices have continued to increase since then.

According to Altus Group, residential land was the primary investment in Metro Vancouver during the first half of 2022 with $2.94 billion in dollar volume, representing 52 per cent of all land transactions. A first-half example includes a 0.6-acre site in the Metrotown area of Burnaby, zoned for high-density residential, that sold June 22 for $21.8 million.

Here are some recent examples culled from done deals posted in Western Investor in the third quarter of this year, which include Metro Vancouver and Vancouver Island transactions:

• A 1.23-acre land assembly in East Vancouver near Trout Lake sold in mid-October for $23.8 million, equating to close to $20 million per acre. The land is zoned for a townhouse development at a floor space ratio (FSR) 1.45. This means the 53,664 square-foot site could accommodate total residential space of 77,812 square feet, requiring more than $305 per square foot in the final townhouse price before construction even starts.

• In Surrey, less than acre (0.97-acre) in the Fleetwood area and close to a planned station for the Surrey-Langley Skytrain extension sold October 12 for $6.5 million.

• A 1.05-acre residential infill site in Langley’s Willoughby area, zoned for compact detached homes, sold October 6 for $2.95 million. A one-acre residential site in the same neighbourhood transacted September 20 for $2.9 million.

• In Greater Victoria, a 1.4-acre residential development site ihn Colwood sold September 23 for $2 million over its assessed value at $2.85 million. In Nanaimo, a 0.4-acre lot sold September 29 for $1.69 million, equal to around $4 million per acre.

The current prices being paid for residential land suggest that both new strata and rental prices may need to increase in the future as developers attempt to capture high land values.

 

© 2022 Western Investor

Drought, dwindling number of farms cut into Christmas tree supply

Darron Kloster
Times Colonist

Christmas tree farms are vanishing — from 500 a decade ago to about 400 now — as owners retire and sell off their land, while supplies are also being hit hard by extreme weather

It’s more than a month until Christmas, but Jingle Bells are turning to alarm bells as fresh Christmas trees are expected to be in short supply this year.

“I would say buy sooner rather than later,” says Larry Whitehead, a Surrey commercial grower and a member of the B.C. Christmas Tree Association. “It looks like we’re going to be tight on supply again this year.”

The irony is that Canada’s most treed province simply can’t meet the demand for fresh-cut Christmas trees and has to import the conifers from Washington, Oregon, Quebec and Nova Scotia, says Whitehead.

The problem is Christmas tree farms are vanishing — from 500 a decade ago to about 400 now — as owners retire and sell off their land.

B.C. supplies are also being hit hard by extreme weather. A crushing heat dome in 2021 killed off seedlings and damaged maturing trees. That was compounded by a record drought this past summer that could affect quality and supplies this year and into the future.

The average Christmas tree grows about a foot a year, and trees are harvested between the ages of four and seven.

Whitehead said the industry has reached out to the Ministry of Agriculture to help encourage young farmers to get into the tree business by designating underutilized land for growing. “You can grow a tree on just about any kind of land and there’s lot of land in B.C. not being used,” he says.

Robert Russell, 84, who operates the 25-acre Sahtlam Tree Farm near Duncan, has brought in a new partner to help him continue a Christmas tree farm tradition that’s lasted 50 years. Down the road from his property, he says two similar farms recently stopped growing trees because the owners retired.

“The problem is we’re all getting a little older, and the number of farmers are getting fewer and fewer,” says Russell.

Despite losing all his seedlings to the heat dome in 2021 and about 75% of his new stock this past summer, Russell started harvesting about 3,000 trees this week. They will go Root Cellar stores in Victoria, West Shore Canadian Tire and the Boys Scouts of Canada, which sells them to raise funds.

Russell, who has a degree in forestry and lives in a cabin he built at his farm near Duncan, said there will likely be fewer trees next year and in coming seasons because the survival rate for seedlings has dipped. “It will bite you down the line,” he says.

Paige Wheaton, owner of potted Evergrow Christmas Trees in the Lower Mainland, said the weather is taking a toll on supplies in the province.

“I’ve been in constant contact with farmers across the Lower Mainland and on Vancouver Island for the past two months, and everyone is telling me this is going to be a crazy season with huge demand and significantly reduced supply due to the summer heat wave,” Wheaton said, adding many farms and lots are planning to open for only one or two weekends in November because they know they will sell out fast.

Kim Frocklage, who sourced and sold trees at Braefoot Park for decades, is moving her operation to West Shore Parks and Recreation in Colwood this year, the result of a facility-use spat between the District of Saanich and Braefoot Athletic Association.

She normally stocks about 2,000 trees a year, but is scrambling to come up with about 1,300 from several sources, including the Sahtlam Farm, and growers in Invermere and Oregon.

She plans to open sales in the lacrosse box at West Shore Parks and Rec on Nov. 25. “People are calling me now to reserve because they didn’t know where I was going to be or if there would be trees,” said Frocklage. “There will be shortages because everybody’s playing catch-up from the last two or three years of fires, floods and the heat dome.”

Tim Hale, who operates a seedling nursery in the Cowichan Valley, says Christmas tree farmers now have to irrigate if they have any hope of making it in the business. “We went through 24 weeks of drought, and the seedlings just can’t take that,” he says. “Even with the recent rains we’ve had, you can dig down a foot and it’s dry. The big rains just run off. We need that steady rain to really soak in.”

Hale’s Cairn Park Nursery has six greenhouses, but only dedicates parts of one to Christmas tree seedlings, producing about 30,000 seedlings for next year. “A big part of the problem on the south Island is the big growers are getting out or on the verge of retiring — and no one’s coming in to fill the void,” he says.

Hale said the fresh-cut Christmas tree industry has ebbed and flowed over the years in the battle of fresh versus artificial trees, but started to see a resurgence during the pandemic.

“People were stuck at home and it was an opportunity for families to get out and do something together, like find and cut down a Christmas tree,” says Hale. “We saw a huge increase. But it may go the other way now.”

At Saanichton Christmas Farms, owner Joan Fleming is opening her Christmas tree sales this Friday at 8231 East Saanich Road.

She’s been harvesting about 3,000 trees from her farm on the Peninsula and a 50-acre plot near Shawnigan Lake, as well as importing another 1,000 trees from the East Kootenays. The Fleming family has also provided the evergreen in the legislature rotunda since the early 1980s, and plans to deliver a big conifer on Nov. 29.

“I worked at a dentist for 25 years, so you’re often dealing with people who aren’t happy to be there,” says Fleming. “But selling Christmas trees … well, people are happy, whole families are happy. It’s like night and day.”

 

© 2022 Victoria Times Colonist

Port Coquitlam industrial strata sells for twice its assessed value

Western Investor Staff
Western Investor

The 1,630-square-foot unit attracted multiple offers and sold for $1.24 million on October 31, 2022

 

NAI Commercial, Vancouver, for Western Investor

 

Property type: Industrial

Location: 1833 Coast Meridien Road, Port Coquitlam, B.C.

Property size: 1,630 square feet

Zoning: M-1 (industrial)

BC Assessment value: $600,700.

List price: $1.248 million

Sale price: $1.242 million

Date of sale: October 31, 2022

Brokerage: NAI Commercial, Vancouver

Broker: Brian MacKenzie

 

© 2022 Western Investor

Ontario Cities Ranked: Most and Least Competitive Real Estate Markets in 2022

Daniel Crook
ZOOCASA

Housing prices in Canada have steadily declined this year since the Bank of Canada began introducing interest rate hikes. The record price highs of last winter are long gone, and many markets in Ontario have experienced fluctuations in average prices, levels of inventory, and transactions.

With 2023 just around the corner, we analyzed market competition across 34 cities and regions in Ontario by comparing sales and new listing data for each city for October. This data was then used to determine the sales-to-new-listings ratio (SNLR) for the month, calculated by dividing the total sales by the number of new listings in each region. The SNLR is used to effectively show the level of demand and supply in each area, and help identify how much competition local buyers face with regard to supply. The SNLR can be broken down into three percentage parameters:

• An SNLR under 40% suggests a buyer’s market: where new listings outweigh and buyers have more options
• An SNLR between 40% and 60% is a balanced market: where demand and supply are balanced
• AN SNLR over 60% means a seller’s market: where demand outpaces supply, benefiting sellers

Our findings show that of the 34 markets, just six are currently not in balanced territory, with only one favouring buyers, and the remaining five markets favouring sellers, meaning demand outweighed the supply in the area. The balanced markets are widespread across Ontario, reflecting the stalemate seen between buyers and sellers with interest rate hikes taking priority over financial decisions.

 

Each GTA Market is Currently in a Balanced State

Housing competition has cooled across the entire GTA, and each market is currently in a balanced state. The area as a whole saw 4,961 sales last month with 10,390 new homes coming to market, leading to an SNLR of 53.2%. With talks of another rate hike in December, it may be a while before the area begins favouring sellers again. 

• Read: Ontario Cities with the Highest and Lowest Property Tax Rates in 2022

Some cities in the GTA have seen sharper declines than others. Burlington’s SNLR, for example, has fallen by 39% year-over-year to 44%, as sales have dipped by 32% to 163.  New listings in Burlington have picked up by 26% to 331. However, markets in the last few months of the year do have a tendency to drop off and this may have some effect on these markets.

There Are Still Some Markets that Favour Sellers

Of the five Ontario markets that do benefit sellers, four of them are in cities where homes are well below the average Canadian home price of $644,643. They are Sault Ste. Marie, Thunder Bay, North Bay, and Sudbury. Of those four, Sudbury has the highest average price of $436,000. 

• Read: Fixed-Rate vs. Variable-Rate Mortgages: Which is Right for You?

With greater affordability comes more buyers – while interest rates are high, buying somewhere like Thunder Bay, where the average home price is $309,310, is far less costly than trying to buy a home in Markham, where the average price is $1,282,561.,  Whereas cities like Toronto have seen drops in sales of almost 50% from last year, Thunder Bay has seen a much more modest decline of 4.7%. Sellers still have some luck because the cost of borrowing isn’t as high as it is in larger cities with greater home prices.

 

 

• Read: Buying or Selling in 2023? Here’s How to Prepare Now

Niagara Falls is currently the only buyer’s market. It has experienced a mild improvement in new listings year-over-year, up to 214 from 199. . However, sales have declined from 163 to 62, with properties now spending 37 days on the market, up 106% from last year. With 214 new listings coming to market, buyers have more inventory to choose from. The SNLR here declined by 53% to 29%, the steepest drop across every area we covered alongside Kingston.

Methodology

The sales-to-new-listings ratio is calculated as the number of sales divided by new listings.

Home prices, sales and new listings were sourced from the Toronto Regional Real Estate Board, London St. Thomas Association of Realtors, Barrie & District Association of REALTORS, Waterloo Region Association Of REALTORS, REALTORS Association Of Hamilton-Burlington, Niagara Association of REALTORS, and the Canadian Real Estate Association. All prices are average prices, except for Thunder Bay where benchmark prices were used.

 

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Canadian housing sales ‘popped up’ in October: CREA

Western Investor Staff
Western Investor

Latest data from the Canadian Real Estate Association shows sales downturn may be ending early, though composite home price is down nearly 10 per cent from 2021

October sales were up 6 per cent month-over-month in Greater Vancouver to lead the national increase. | Chung Chow

National home sales edged a bit higher in October from a month early, according to the Canadian Real Estate Association (CREA), suggesting the downturn that started this spring may be coming to an early end.

About 60 per cent of all local markets saw sales rise in October, although both gains and declines were generally small across the board. The largest gain, a 6 per cent increase in Greater Vancouver, was offset by a 2.4 per cent decrease in activity in Montreal.

The number of transactions in October 2022 came in 36 per cent below that same month last year, and about 15 per cent below the pre-COVID-19 10-year average for the month.

“October provided another month’s worth of data suggesting the slowdown in Canadian housing markets is winding up,” said Shaun Cathcart, CREA’s senior economist. “Sales actually popped up from September to October, and the decline in prices on a month-to-month basis got smaller for the fourth month in a row.”

The number of newly listed homes was up 2.2 per cent on a month-over-month basis in October, with gains in the Greater Toronto Area and the B.C. Lower Mainland offsetting declines in Montreal and Halifax-Dartmouth, according to CREA.

With sales up by a little less than new listings in October, the sales-to-new listings ratio eased back to 51.6 per cent, compared to 52 per cent in September. The long-term average for this measure is 55.1 per cent.

The composite home price in Canada in October edged down 1.2 per cent month-to-month, to $644,643. This was lowest monthly decline since June 2022, but was 9.9 per cent lower than in October 2021.

 

 

© 2022 Western Investor

Canada home sales rise in October

Fergal McAlinden
CMP

The news marks their first increase in eight months

Home sales across Canada rose by 1.3% in October, the first time that they have increased on a monthly basis since February.

The Canadian Real Estate Association (CREA) revealed on Tuesday that 60% of all local markets had seen a jump in sales, with the Greater Vancouver Area (GVA) – one of the country’s hottest markets before cooling in recent months – posting a 6% increase.

The number of newly listed homes also saw an increase over the previous month, rising by 2.2% over October, as the actual national average home price came in at $644,643. That was a drop of nearly 10% from the same time last year – and sales were also down significantly over October 2021, plummeting by 36% on a yearly basis.

CREA’s chair Jill Oudil indicated in remarks accompanying the release that sellers and buyers were likely to continue “coming off the sidelines” in 2023, although she emphasized that the market remained “very different” to that which prevailed last year.

The association’s senior economist Shaun Cathcart, meanwhile, suggested that a further uptick could be on the way.

“October provided another month’s worth of data suggesting the slowdown in Canadian housing markets is winding up,” he said. “Sales actually popped up from September to October, and the decline in prices on a month-to-month basis got smaller for the fourth time in a row.”

 

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Cooling trend continues in B.C.’s residential real estate market

Lisa Steacy
CTV News

High interest rates are continuing to have a cooling effect on B.C.’s residential real estate market, as sales slump, active listings plateau and average prices dip.

The BC Real Estate Association’s October report shows a 45.5 per cent decline in the number of sales, a 47.2 per cent drop in sales volume and a 3.1 per cent decline in average price compared to the same time last year.

“It’s pretty much a continuation of the trends that we’ve been seeing since rates started rising, and rising rapidly,” Brendon Ogmundson, the association’s chief economist says.

“We have rates at their highest levels since 2007 and going up at the fastest pace since the early 1990s. That’s having a major impact on sales activity.”

The current state of the market means buyers will have more time and more choice than they did amid the frenzied activity of 2021 when low inventory triggered bidding wars and quick sales on many listings.

“Buyers probably have a bit of an upper hand but generally what we’re seeing is a market that’s kind of finding some balance,” Ogmundson says.

“As long as we have rates at these levels, we’re going to see pretty slow activity. On the supply side it looks like things are kind of plateauing. We’re just getting back to pre-pandemic levels of active listings in the last month or so.”

Sellers will have to adjust, he adds, to the reality that their listings will sit on the market for longer and that process may have to be reduced.

“Whenever you have a market that transitions this quickly, buyers and sellers, their expectations – especially on price – are pretty far apart,” Ogmundson explains, saying sellers are slower to adjust to the changes.

A regional breakdown shows that drops in both price and activity are most pronounced in the Fraser Valley, which includes Surrey and Langley, and farther east in Chilliwack. In the former, the average price is down 8.3 per cent while sales are down 53.9 per cent. In the latter, the price has dropped by 11.9 per cent while sales have dropped by 60.9 per cent.

Ogmundson says this is largely due to a pull back on demand in those markets, where a desire for extra space and a transition to working form home drove demand and prices up in the earlier days of the pandemic. With people returning to in-person offices and high gas prices, commuters are generally shifting their focus on properties closer to the city centre.

In Greater Vancouver, year-over-year prices were up 0.7 per cent compared to 2021, with the average sitting at $1,231,805. Ogmundson says the relatively modest fluctuation reflects the fact that demand in this area did not see the same kind of rapid rise as in other markets.

 

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