‘This is just the beginning’: First Nations’ real estate mega projects game-changing for Metro Vancouver

Dan Fumano
The Vancouver Sun

Indigenous developers to build 25,000 new homes in Metro Vancouver

 Wilson Williams is an elected councillor with the Squamish First Nation, photographed at the site of the planned Sen̓áḵw development. Photo by Francis Georgian /PNG

Standing between a pair of gleaming apartment buildings, a condo tower, a park, a future grocery store, and massive holes in the ground that will soon provide a daycare, community centre and hundreds of additional homes, Musqueam Chief Wayne Sparrow said: “This is the future.”

After many years and steep legal bills, the Musqueam First Nation reached a landmark settlement with the B.C. government in 2008, for the return of some of its traditional territory. Now the Musqueam are using some of those lands near the University of B.C. to provide badly needed housing for the broader community and generate economic prosperity for their Nation.

Sparrow welcomed a group of elders to visit Leləm̓, the village their Nation has built in partnership with Polygon. The housing includes market and below-market rentals and leasehold stratas on 99-year leases.

That leasehold structure is crucial, emphasized Sparrow. It could have been more profitable in the short term, he said, to develop the land and sell condos outright. But that was never really a consideration.

“We’re never selling the land,” Sparrow said. “It took us 100-some-odd years to get it back. We ain’t gonna sell it after going to court to fight to get it back.” 

 

Musqueam Chief Wayne Sparrow with Polygon Homes CEO Neil Chrystal. Photo by Francis Georgian /PNG

The Leləm̓ community is just one of several major real estate developments in the pipeline from Vancouver-area First Nations, who have emerged as powerhouse developers in a region desperate for solutions to a housing shortage.

Postmedia analyzed eight major projects involving the Musqueam, Squamish and Tsleil-Waututh Nations, both individually and together under their MST Development Corporation joint venture. Their plans cover nearly 1.1 square kilometres of property in Vancouver, Burnaby and the North Shore, promising more than 25,500 homes.

That’s more than the total number of homes that exist today in the city of Port Coquitlam.

These megaprojects, which include social housing, market rentals, condos and townhouses, plus schools, retail, cultural amenities and commercial spaces, are in various stages. Residents started moving into Leləm̓ last year. Sen̓áḵw in Vancouver is scheduled to be done in five years. Others are a decade or more away from completion.

Like Leləm̓, all these major projects feature rental homes and leasehold stratas, meaning the First Nations retain ownership of the land underneath. The importance of this fact comes up repeatedly in conversations with local Indigenous leaders: the Nations will always own the land.

This is not new. For decades, the Musqueam Nation has generated revenue through rental and leasehold housing on their reserve on Vancouver’s southern edge. The Tsleil-Waututh Nation has built and sold more than 1,000 leasehold condos and townhomes on reserve land.

But the MST Nations’ real estate activity today is on a completely different scale than in the past, and observers say it is beyond what other Indigenous developers are doing elsewhere in Canada. Today, the joint venture’s portfolio of developable prime urban real estate, and the number of units in the pipeline, make it one of B.C.’s largest developers.

MST Development’s CEO, David Negrin, recently put it in perspective while speaking to business and Indigenous leaders from across Canada at a meeting in Vancouver. Negrin, a three-decade industry veteran who was previously president of Aquilini Development, said in May that MST’s land holdings are valued at around $5 billion, which will be closer to $7.5 billion after their planned acquisition of another 0.75 of a square kilometre. By the time those properties are developed, Negrin estimated, the value of the portfolio will be closer to $30 billion.

 

“I’d say this: The most powerful developer in North America right now is MST, the three Nations coming together,” Negrin told the panel.

That “coming together” is a key point for many inside and outside the three First Nations. 

 

Tsleil-Waututh Nation Coun. Dennis Thomas. Photo by Francis Georgian /PNG

Historically, the three Nations shared land, resources and family ties going back several generations, coexisting harmoniously, said Tsleil-Waututh Nation Coun. Dennis Thomas. “But as soon as colonization came and the Indian Act, we started fighting, because it’s like divide and conquer. … So for 100-plus years, we’ve wanted to get back to that harmonious and holistic table.”

Thomas and others have credited the 2010 Vancouver Olympics as bringing the Nations together. In the years following the Olympics, the Nations’ leaders worked together to reach a protocol agreement, which was signed in 2014, creating the MST Development Corporation.

Thomas recalled a past Tsleil-Waututh leader telling him: “You can have 33 per cent of something or 100 per cent of nothing.”

Now, the Nations are collaborating on what could become the first Indigenous-led bid in Olympic history, eyeing the 2030 Winter Games. The official Games concept, released last month by the Nations and the Canadian Olympic Committee, envisions using MST developments — it’s expected that could be the Heather or Jericho Lands properties — for an athletes’ village for athletes and team officials during the 2030 Olympics and then provide housing, including a non-market component, after the Games.

Other First Nations across Canada could learn from the MST story, said Ginger Gosnell-Myers, a fellow with SFU’s Morris J. Wosk Centre for Dialogue, who focuses on decolonization and urban Indigenous planning.

 

“In other cities, (other First Nations) have overlapping land claims, and until they come together and agree to work in partnership as a family, they will continue to compete with one another and continue to miss opportunities,” she said.

“They will only succeed if they come together, and MST is demonstrating the success of that. Other communities haven’t caught up, but we’ll see how much things change in the next few years.”

Gosnell-Myers is happy the MST Nations have started to get “the visibility and respect they deserve, and an opportunity to really mark their stamp on their own land.”

But, she added, “these early projects, as impressive as they are, we’re still seeing some shortfalls that I think future projects will hopefully be able to address.”

The shortfalls, Gosnell-Myers said, include concerns she hears from some MST members that there aren’t more affordable homes in these megaprojects designated for members of the Nations.

“One concern I hear from MST members on the ground is: ‘Who is this even for? People are getting rich and it’s not us,’” Gosnell-Myers said. 

 

Ginger Gosnell-Myers, with SFU’s Morris J. Wosk Centre for Dialogue. Photo by Francis Georgian /PNG

MST Development Corporation is directed by a board of elected councillors from the three nations. But the lack of MST members in the corporation’s senior management roles is something the current, non-Indigenous executives themselves want to change, said Brennan Cook, MST Development’s vice-president of development and acquisition.

The goal is for the CEO and other top jobs to one day be filled by MST members, Cook said.

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“I’d like to see that day sooner rather than later,” Cook said. “I really love working with the Nations, but if David (Negrin, the CEO) and I do a really good job, we’ll be out of a job. And I would sleep well knowing that MSTDC is in good hands.”

For many of these megaprojects, the MST Nations have been partnering with some of B.C.’s largest developers: Polygon, Westbank, Aquilini.

A relatively small townhouse project planned in West Vancouver will be the first project MST Development handles on its own, and that is the eventual goal for all projects, Cook said. “In the future, development partners won’t be needed.”

Leaders from the Nations, including Sparrow and Thomas, say another part of the vision includes having more band members working on projects.

Thomas, who is completing his MBA at Simon Fraser University, said there is already a surge of interest among young Nation members in careers spinning off from these megaprojects: engineering, property management, architecture, electrical, plumbing, construction, interior design, real estate development, marketing.

“The careers are endless,” Thomas said. “Before, we were hunters and gatherers. Today, we’re modern-day hunters: We get degrees, we get MBAs to help provide for our Nations.”

The MST Nations’ real estate ventures have been applauded by local political leaders, and garnered positive international attention from the likes of The Economist and New York Times.

But not everyone is happy. Neighbours near some of the proposed developments have raised concerns about their size.

After concepts for MST’s plans at Jericho Lands were released earlier this year, including towers up to 38 storeys, a group of West Point Grey residents organized in opposition, hiring a well-known lobbyist and communications professional, and now city council candidate, Bill Tieleman, who told CTV News the fight against MST building tall towers at Jericho was part of “a battle for the soul of Vancouver.”

Last week, the Kits Point Residents Association issued a press release that said while they support the Squamish Nation’s ability to develop its own lands, they consider the high-density Sen̓áḵw proposal for Kits Point — of 11 towers of up to 57 storeys — “shockingly outside the boundaries” of existing city plans, resources and zoning.

This particular debate highlights the complexities of developing on reserve land, such as the 10-acre parcel near the south end of the Burrard Bridge where the Squamish Nation is planning Sen̓áḵw.

Half of the projects analyzed by Postmedia are MST joint ventures on “fee-simple” properties, which were acquired from the provincial and federal governments and must go through the same municipal rezoning processes as other major projects from private-sector and non-profit developers.

The Heather Lands, for example, received a rezoning approval in May from Vancouver council, the first MST joint venture to reach this stage, but still requires additional permits from city hall before construction can begin, which likely won’t be until 2024, almost a decade after planning began on the project.

In the other half of the projects, one of the Nations has individually partnered with a developer. If property is being developed is reserve land, as is the case with Sen̓ákw, municipal governments do not have the same authority. This has allowed the Squamish Nation to pursue far greater density for Sen̓ákw than the neighbouring area — and move far faster.

The Squamish Nation membership voted in 2019 with 87 per cent in favour of pursuing the project, with partner Westbank. Only three years later, they expect they could break ground on the project this year, a speed that would be unheard of for a 6,000-unit development going through city hall.

At a panel talk last month hosted by The Vancouver Sun, Bernd Christmas, CEO of the Squamish Nation’s economic development arm Nch’ḵay̓, said Sen̓ákw is not some kind of “Wild West” development. He insisted it is heavily regulated and rigorously planned, with environmental assessments, high architectural standards, and the rest.

“But we’ve just learned the secret of making it go quicker, by about five to 10 years,” Christmas told the panel, which included some of the biggest names in B.C.’s development industry. “If you have developments that are facing six-year, 10-year delays, come see us. Let’s move.”

The Tsleil-Waututh Nation has been trying for years to develop a large mixed-use community combining residential, commercial, educational, retail and community uses just off the Dollarton Highway, in partnership with Darwin Construction. But they faced “roadblocks” with the District of North Vancouver, “including three rejections of our rezoning application” in 2018 and 2019, the Tsleil-Waututh chief and council wrote last year in an op-ed in The North Shore News.

So, in 2019 the Tsleil-Waututh Nation decided to apply to the federal government to add the property to its reserve lands.

That “addition to reserve” application is under review by the federal government. If Ottawa approves it, that means the district council will lose any power to determine how the land is used or collect tax revenue on it.

The Kits Point Residents Association said this week that city leaders saying they “effectively have no jurisdiction” over Sen̓ákw is “an abdication” of their authority, arguing the municipality should have the power to negotiate plans for the site because it will rely on city services like water and sewer.

Vancouver Mayor Kennedy Stewart said those residents are not wrong about reserves relying on municipal services. But he disagrees with their point.

There is “a long-held colonial practice” of Canadian municipalities withholding services from First Nations reserves in urban and suburban areas, Stewart said. “We have an obligation to provide services as a good neighbour. To use that as a tool for blackmail really isn’t in the spirit of reconciliation.”

“That is a colonial approach, and you’ve got to get a different mayor if that’s what you want, because that’s not what I’m about,” Stewart added.

A services agreement between the Squamish Nation and the city is nearly finalized, and the mayor predicted it will not generate many complaints from Vancouverites when it’s released publicly.

“I think it could be used as a template for the rest of the province,” Stewart said. “We’ll be talking to other municipalities about it once it’s fully released.” 

 

Wilson Williams is an elected councillor with the Squamish First Nation. Photo by Francis Georgian /PNG

Sen̓ákw has been described as groundbreaking — by both supporters and detractors — but it could be just the beginning. The Squamish Nation alone has dozens of parcels of reserve land, including along the North Shore, up the Howe Sound to Whistler, and on the Sunshine Coast. And that is just one First Nation.

Squamish First Nation Coun. Wilson Williams wouldn’t disclose details, but confirmed the Nation is discussing “a list of potential land developments.”

“We’re listening to our people and our ancestors who helped us get here,” Williams said. “There’s a lot of potential … but we want to do it the right way.

“We’re thinking seven generations down the road.”

At the housing panel last month, the Nch’ḵay̓ CEO responded to a question about how B.C. municipalities can try to meet the desperate need for rental housing.

“Really, to me, it’s very simple,” Christmas said. “There’s over 200 First Nations in this province. Why aren’t developers going to the First Nations? Why go to municipalities?”

At that point, Christmas’s fellow panelist, Joy MacPhail, the former B.C. deputy premier who chaired an expert panel last year set up by the B.C. and federal governments to make recommendations on housing affordability and supply, leaned toward Christmas and, over audible laughs from the audience, asked him with a smile: “Did you bring business cards?”

Later in the evening, Christmas told the crowd: “I’d suggest that any developers that want to do stuff here in the traditional territory of Squamish — 6,700 square kilometres — yes, we’re open for business.”

Johnna Sparrow, the Aboriginal relations adviser for Aquilini Development who previously worked for the Musqueam, said these projects will always face some detractors. But she added people should remember that local First Nations had vast tracts of land that provided abundant resources for them to live, until it was violently taken away from them.

Those traditional ways of life — fish, hunting, vegetation — are now depleted, so instead the Nations are looking to generate other economic opportunities from the land.

“This is just the beginning,” Sparrow said. “It’s a long road ahead of us, but it’s one that we have to create in order to break the mould of dependence on the government and criticism from the general public about we get everything for nothing, when everything’s been taken away from us. We’re still here. And we’re not going anywhere.”

Eight big projects

Eight of the major Indigenous-led developments in Metro Vancouver:

• Sen̓ákw in Vancouver: From the Squamish Nation and Westbank, it promises 6,000 new homes, mostly rentals, near the Burrard Bridge. It is expected to be completed by 2027, and will include 250 affordable units for Squamish Nation families. 

Aerial illustration of the proposed Sen̓áḵw development in Kitsilano, near the Burrard Bridge. Photo by Senakw website

• Jericho Lands on a third of a square kilometre site in West Point Grey is a project by MST and the Canada Lands Company, which is to build some 10,000 new homes for up to 18,000 residents.

Handout rendering of Jericho Lands Concept. Photo by Hariri Pontarini Architects with Urban Strategies Inc.

• The Heather Lands, a 15-year project to build 2,600 homes in South Cambie, is by MST and Canada Lands Company. It would also include shops, parks, a daycare, a cultural centre and a forest trail.

 Handout out concept illustration for Heather Lands in Vancouver. Photo by Matthew Thomson

• Willingdon Lands is a joint venture by the Musqueam and Tsleil-Waututh Nations, and Aquilini Investment Group, to build 5,239 units of housing that includes leasehold strata, market rental, and affordable rental. It is also to include a daycare and two large parks with a network of trails.

Artist rendering of part of the 40-acre Willingdon Lands project to be located in Burnaby, being planned by the Musqueam and Tsleil-Waututh, and Aquilini Development. Photo by aquilinidevelopment.com

• Marine Drive Lands is to produce 150 townhouses on five acres in West Vancouver by MST with no outside developer. The project is to support the “missing middle,” seniors and young families. 

Artist rendering of 150 new townhouses to be built at 4195 Marine Drive in West Vancouver. This proposal includes three townhouse buildings, at three storeys in height. Photo by MST Development

• Leləm̓ is a joint venture by Musqueam and Polygon, Townline and other development partners, to build a 21-acre community near UBC that, within 10 years, is to have approximately 1,250 homes. Residents started moving into homes in the first completed buildings last year, and future phases will build  additional homes, a community centre, daycare and retail.

An artist rendering of the West Wind building, part of the Leləm̓ development near UBC. jpg

• The Tsleil-Waututh, in partnership with Darwin Construction, hopes to build the large Statləw̓ District project in North Vancouver, to include work, school and retail services, and homes. It is under review by the federal government.

The Tsleil-Waututh, in conjunction with Darwin Construction, hopes to build a big development  in North Vancouver, to include work, school and retail services, and up to 275 housing units. It is under review by the federal government. jpg

• MST and Aquilini also plan to develop the former B.C. Liquor Distribution Centre in Vancouver. Few details are known yet, although developers told city hall the project would include “residential, light industrial and commercial uses”.

An early artist rendering of the development at 3200 East Broadway by the MST Development Corporation and Aquilini Development. This project is still in the early stages of planning. Photo by aquilinidevelopment.com

 

© 2022 Vancouver Sun

Rules are different when buying your second home

Shawn Conner
The Vancouver Sun

What buyers should know before financing a recreational property
It’s important to know the local short-term rental bylaws when purchasing a recreation property to rent out. Photo by Stephen Bridger /Getty Images/iStockphoto
Vernon-based mortgage specialist Deb White sees many people buying secondary properties in her area. Many of these buyers are from the sprawling city and hoping for a bit of peace, quiet and wide-open spaces. But the rules are a little different when purchasing a second mortgage.
For one thing, a secondary property requires a minimum down payment of 20 per cent, not five, as for a first home.
“Buyers have to qualify for both their primary and secondary residences at two per cent over the posted rate, without any rental income,” White said.
After spending so much time at home the last two years, it’s no surprise that people are looking for relief from the density and noise of the city.
“They want to be close to the lakes and away from the busy-ness of Vancouver, so they’re buying second homes,” White said. Most aren’t straying too far from towns.
“Out in the country, it’s a little bit harder for them. Then it’s too far from the mainstream. We don’t have a lot of people buying secondary homes in Williams Lake and Prince George area. It’s more from Salmon Arm down to Osoyoos.”
People looking to build on bare land face an even steeper obstacle. Bare land requires 50 per cent down.
“It’s super, super hard,” White said. “Five years ago, I was able to get bare land, depending on location, with 25 per cent down. Now the lenders want a building plan in place. They want to see a contract with the builder; they want to see the finished project.”
The more stringent requirements are due to risk, she says.
“With building costs, sometimes it’s cheaper to buy an already-built home than to build a home.”
White also notes that some types of homes are tricky to finance.
“A lot of people think that all they can afford is a mobile home, or a manufactured or modular home. But what happens is that, in our area, in the Interior and up north, CMHC will give a modular or manufactured home a life span of 40 years. As the age of the mobile goes up, your amortization and payments will increase.”
Buyers need to look at the bylaws in the area they’re considering.
“People come up here thinking they are going to renovate their new home and put a suite in the basement and Airbnb it. But then they find out that the bylaws don’t allow for that. I have found in realtor’s documents that they’re adding that as a condition, confirming the bylaws in the area.”
Lenders are hesitant to finance Airbnb dreams. “They are not looking at those favourably. We don’t have a lot of lenders who will use Airbnb income.”
Most of her clients for secondary properties are between 40 to 60 years old and looking for a no-muss, no-fuss investment.
“When they’re buying a second home up here, they want to not have to worry about it. Nine times out of 10, we’re finding people buying in complexes so they can come here, do what they want to do and have some fun and not have to worry about taking care of the yard or hiring someone to take care of the yard.”
White recommends doing due diligence and finding a realtor who knows the area well.
“We had a realtor help clients buy a property up here, and it went for way over asking,” she warned. “Make sure you know the area and talk to the locals. That’s my biggest advice.”

© 2022 Vancouver Sun

Bank of Canada issues shock rate hike in effort to crush inflation

Kevin Carmichael
other

 Bank of Canada Governor Tiff Macklem takes part in a news conference in Ottawa

The Bank of Canada delivered a jolt to Bay Street, raising its benchmark interest rate a full percentage point, the biggest one-time increase since August 1998, when the central bank was fighting to protect the value of the currency during the Asian financial crisis.

Canada’s benchmark borrowing rate is now 2.5 per cent, compared with 1.75 per cent ahead of the COVID-19 recession. The aggressive move is all about inflation, which the Bank of Canada predicts will accelerate to around eight per cent this summer, way too fast for policymakers whose job it is to keep the consumer price index advancing at an annual rate of about two per cent.

“Surveys indicate more consumers and businesses are expecting inflation to be higher for longer, raising the risk that elevated inflation becomes entrenched in price- and wage-setting,” the Bank of Canada said in a statement. “If that occurs, the economic cost of restoring price stability will be higher.” 

 

Here’s what you need to know:

Panic move

Governor Tiff Macklem’s crew of policymakers barely tried to conceal their alarm over recent data that suggests companies and households are starting to see inflation as permanent.

“With the economy clearly in excess demand, inflation high and broadening, and more consumers expecting high inflation to persist for longer, the Governing Council decided to front-load the path to higher interest rates by raising the policy rate by 100 basis points today,” the Bank of Canada said in a statement.

Central bankers have nightmares about the public losing faith in their ability to keep inflation low and stable. Most think one of the lessons of the 1970s and early 1980s is that suppliers and workers won’t overreact to temporary surges in commodity prices if they think the central bank will keep a lid on inflation.

It’s been four decades, however, since Canadians have seen inflation like they’ve seen in 2022. Macklem came of age as an economist while former United States Federal Reserve chair Paul Volcker was winning his war on inflation by jacking up interest rates to double digits. The Canadian decided a demonstration of his own resolve was necessary to avoid a repeat of the painful recession Volker’s strategy caused.

“It’s a little bit of a `wow’ moment,” said Tom O’Gorman, director of fixed income at Franklin Templeton Canada, the Canadian unit of Franklin Templeton Investments Corp. “They’re nervous.”

The Bank of Canada estimates the “neutral” rate — a theoretical setting at which the central bank’s benchmark rate neither helps nor hinders economic growth — is between two per cent and three per cent. The policy rate is now in that zone, but policymakers made it clear they aren’t finished.

“The Governing Council continues to judge that interest rates will need to rise further, and the pace of increases will be guided by the bank’s ongoing assessment of the economy and inflation,” the statement said. “The Governing Council is resolute in its commitment to price stability and will continue to take action as required to achieve the two-per-cent target.”

The Governing Council continues to judge that interest rates will need to rise further

Macklem previously said he might have to push the benchmark rate above three per cent to get inflation under control. With prices accelerating into the second half of the year, rather than slowing, it’s become more likely that policymakers will have to push interest rates to a level that hinders economic growth.

The decision to “front-load” the shift to higher interest rates was based on an that would have startled Macklem and his deputies when staff economists presented it. Here are the highlights:

The central bank sees year-over-year increases in the consumer price index averaging eight per cent in the third quarter, and ending the year 7.5 per cent higher than at the end of 2021, compared with a previous estimate of 4.5 per cent. The Bank of Canada now assumes the consumer price index will still be above three per cent at the end of 2023 (compared with a previous estimate of 2.4 per cent). The central bank’s projection has inflation returning to target in 2024.

Higher interest rates and costs are starting to bite. The Bank of Canada predicts gross domestic product will expand 3.5 per cent in 2022, compared with an April estimate of 4.2 per cent, and then slowing to 1.8 per cent in 2023, compared to 3.2 per cent forecasted previously. That would be what economists call a “soft landing” from the shock of higher interest rates, and Macklem will have orchestrated an impressive manoeuvre if he can pull it off. In the past, sharp increases in borrowing costs have tended to cause recessions.

Few, if anyone, on Bay Street saw a full one-point increase coming. Most reckoned the Bank of Canada would follow the Fed and lift the benchmark rate by three-quarters of a point.

Macklem and his deputies had an incentive to outdo the Fed. Typically, higher oil prices cause the value of the Canadian dollar to rise. But for whatever reason, the exchange rate has been roughly stable even as international oil prices surged above US$100 per barrel. That has contributed to inflation because a weaker currency makes imports more expensive.

An important factor in determining exchange rates is interest-rate differentials between various central banks. By going bigger than the Fed and other major central banks, the Bank of Canada will jolt traders into rethinking the values they assign to various currencies. The loonie should get a lift, which would lean against inflation — at least until the next Fed policy meeting, when chair Jerome Powell will have to confront his own inflation threat.

Ahead of the Bank of Canada’s announcement, markets learned the U.S. consumer price index increased 9.1 per cent in June from a year earlier. “The Fed will probably do 100 now,” O’Gorman said. “It’s the new arms race.”

The Canadian dollar traded as high as about 77.3 cents against the U.S. dollar, compared with about 77.8 cents ahead of the interest-rate increase. The exchange rate drifted back towards 77 cents as the day wore on.

“A sharp slowdown in the housing market is underway,” the Bank of Canada said in its new quarterly economic outlook.

is perhaps the industry most sensitive to interest rates. Demand and prices skyrocketed when the Bank of Canada dropped the benchmark rate to almost zero, and now the froth in markets such as Toronto is quickly dispersing as borrowing costs rise.

The biggest change in the Bank of Canada’s forecast for economic growth is its outlook for the contribution from housing, which it now sees subtracting 0.7 percentage points from gross domestic product in 2022 and an additional 0.6 percentage points from its 2023 GDP calculation. (The April estimate had housing subtracting 0.2 percentage points from GDP in 2023.)

Five-year fixed mortgage rates are now at their highest in more than a decade.

Central banks have spent the past decade thinking about the extent to which they test old relationships between employment and inflation, because there was plenty of evidence that they could probably run their economies hotter than they thought. Still, price stability remained the primary mission, and since it is now clear that inflation isn’t slowing on its own, the Bank of Canada decided to go with a shock-and-awe increase to show the public it’s serious about getting price pressures under control.

Recent data showed that companies and households are starting to bake expectations of higher inflation into what they charge for goods and services and what they expect to be paid for their labour. That risks an inflation spiral that would require a recession to stop. By moving aggressively now, policymakers hope they are pre-empting a bad outcome.

 

© 2022 Yahoo. All rights reserved.

Veteran Vancouver property management firm sold

Tribe Property Technologies Inc.
Western Investor

Martello Property Services Inc., founded in 1988, purchased by Tribe for $720,000

Property type: Property management firm

Location: Vancouver

Assets: 1,500 strata properties managed in Greater Vancouver

Sale price: $720,000

Date of sale: July 12, 2022

Closing date: July 31, 2022

Vendor: Martello Property Services Inc., Vancouver

Buyer: Tribe Property Technologies Inc., Vancouver

© 2022 Western Investor

Bank of Canada announces huge rate hike

Fergal McAlinden
other

The central bank’s rate increase is even higher than had been widely anticipated

The Bank of Canada has announced a supersized rate hike, increasing its policy rate by 1% in a bid to stave off rampant inflation and curb sharp increases in consumer price growth.
The move marked a larger increase than had been anticipated, with most economists and observers having expected a three-quarter-point hike, and brought its trendsetting interest rate to 2.5% – well above its pre-pandemic level.
Expectations of a significant increase to the Bank’s policy rate had grown after Canada’s inflation rate recently hit a 39-year high, and following an oversized hike by the US Federal Reserve in June.
Inflation has been steadily creeping upward for the best part of a year, continuing to surge in recent months and recently hitting 7.7% despite the Bank’s earlier confidence that it would be a “transitory” phenomenon.
Having long indicated that rates needed to start rising – and signalled its intention to act “aggressively” on the issue – the central bank has now increased its policy rate by a total of 2.25% in 2022, with a quarter-point hike in March followed by consecutive half-point increases in April and June before its latest announcement.
Read next: Bank of Canada rate hikes could cause recession, says economist
The move is likely to apply further downward pressure to home sales and prices that have already cooled significantly in recent months in the country’s busiest housing markets.
In Toronto and Vancouver, which both witnessed record activity and huge price growth during the pandemic, house prices have begun to slide since March, while Greater Toronto Area (GTA) sales have plunged 41% year over year and Greater Vancouver posted a 35% decline.
Further central bank rate hikes appear inevitable despite that housing market slowdown. The Bank will attempt to bring inflation expectations back to 2% “come hell or high water,” according to David Macdonald, senior economist at the Canadian Centre for Policy Alternatives.
The housing market will be the “first casualty” of rate hikes, he told Canadian Mortgage Professional in recent weeks, with the central bank “not terrifically concerned” about house prices.
In a note to clients last week, Bank of Montreal chief economist Doug Porter said while the housing market was showing signs of strain, and recession calls were increasing, those risks “simply cannot and will not sway the Bank from soldiering on.
“The risk of recession has to be a secondary consideration to the reality of red-hot inflation,” he added.
The Bank is scheduled to make its next policy rate announcement on September 07.

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Bank of Canada announces huge rate hike

Fergal McAlinden
other

Will there be a Canada housing market crash?

Fergal McAlinden
other

TD economist outlines what the future holds
TD’s latest Provincial Housing Market Outlook, released at the end of June, projected that home prices in Canada are set for a further fall in the current rising-rates environment, with a 19% peak-to-trough decline anticipated between the first quarter of this year and Q1 2023.
That report indicated little prospect of an overall housing market meltdown, noting that home prices are likely to grow modestly after 2023’s first quarter with “some recovery” expected in national housing demand.
Indeed, far from a crash, what’s in store for Canada’s housing market is best described as a “recalibration,” the author’s report, economist Rishi Sondhi (pictured top) told Canadian Mortgage Professional.
While home prices across the country will continue to moderate, they’re still set to remain significantly higher than they were at the beginning of the COVID-19 pandemic in March 2020, he pointed out.
“There’s a 19% peak-to-trough decline baked into the forecast – that only partially retraces the near-50% increases that we saw over the course of the pandemic,” he said. “So, it’s more of a recalibration.”
Perhaps inevitably, home sales and price deterioration are likely to be most pronounced in the British Columbia and Ontario markets, traditionally the country’s two hottest regions for real estate.
Alberta is expected to see a significant cooling-off from the record housing market highs of recent times – although it probably won’t rival BC and Ontario in terms of the extent of price and activity declines, Sondhi said.
Read next: Residential mortgage debt continues to surge, says CMHC
“It could surprise a few people that prices are falling there given that affordability is still quite good and that market was experiencing falling prices for several years,” he said. “You’d expect it to be one of those markets that could absorb fires and still do OK from a price perspective. But the level of activity got so far ahead of itself in 2021 – it’s correcting from extremely elevated levels of activity.
“That’s kind of behind the price decline there. But again, markets are quite a bit tighter in Alberta than they are in BC and Ontario for sure. So even if there is a price drop, we don’t think that it’s going to be as severe as the other two jurisdictions.”
Another noteworthy housing market trend this year has been that prices did not fall in Quebec between February and May, Sondhi said – something of a surprise, considering that affordability deteriorated there to a significant degree (although not as much as in Ontario and BC).
“One would expect downward pressure on prices in that market, which to a large degree hasn’t really materialized yet,” he said. “But that doesn’t mean that it won’t.”
Rising interest rates have been some of the main reasons for the overall slowdown in Canada’s housing market this year, and the Bank of Canada looks set to pour further cold water on sales activity in its decision today (Wednesday, July 12) on its benchmark rate.
An oversized rate increase, which would mark the central bank’s fourth consecutive rate hike of 2022, is widely anticipated, with a consensus emerging among leading economists that a three-quarter-basis-point raise is in the cards.
Read next: Bank of Canada – could it pause rate hikes as market slows?
To date, the Bank has increased its benchmark rate by 0.25% and in two half-point hikes in its previous three announcements. A three-quarter-point hike would replicate the last decision made by the US’s Federal Reserve, which increased its own policy rate by 0.75% in response to surging inflation.
A housing market slowdown almost certainly won’t cause the Bank to change its approach on its rate-hiking trajectory, Sondhi said, although higher rates and monthly mortgage payments will have an impact on other sections of the economy.
“Canadians [who are] highly indebted are probably more sensitive to rising interest rates,” he said. “What that has to do with the housing market is that they’re carrying a lot of mortgage debt. That’s another channel through which the housing market could flow through to other [areas], and slow economic growth.
“Our base case is that inflation is going to remain elevated. It’s inflation that [the Bank is] worried about. Not only would it take a downturn in the housing market, but it would take significant spillover to other parts of the economy, and slower than anticipated overall economic growth, for them to sort of change course.”

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Bank of Canada interest rate hike turns up heat on Metro Vancouver rental market

Derrick Penner
The Vancouver Sun

“The Vancouver market was already in crisis. This (rate increase) just heightens it even more.” – Paul Danison, content director Rentals.ca.

“The Vancouver market was already in crisis. This (rate increase) just heightens it even more.” — Paul Danison, content director Rentals.ca. Photo by Jason Payne /PNG
The Bank of Canada’s surprisingly steep interest rate increase Wednesday has the potential to turn up the heat on Metro Vancouver’s already stressed rental market, analysts agree.
Bank governor Tiff Macklem raised the institution’s key overnight lending rate by a whole percentage point, the biggest single increase since 1998, putting it at 2.5 per cent, as an inflation-fighting measure.
The expectation is that the higher rate will push up mortgage rates, making it harder for households to make the jump from renting into home ownership. And it will keep a lot of households in rental accommodations in Metro Vancouver’s already tight market.
“It’s hard to imagine anything more competitive than the rental market right now, and this (rate increase) obviously adds more stress to the market,” said Paul Danison, content director for the market website Rentals.ca.
Rentals.ca just published its latest rental report, which found that Vancouver posted the highest average asking rents in Canada, $2,412 a month for a one-bedroom apartment — up 19.17 per cent from the same month a year ago and $3,597 per month for a two-bedroom on average, which is up 26.5 per cent.

“The Vancouver market was already in crisis,” Danison said, with vacancy rates in the one per cent range for many communities and inflation depleting consumers’ pocketbooks. “This (rate increase) just heightens it even more.”
Wednesday’s rate increase won’t make “a huge difference” for buyers trying to qualify for mortgages now, said Deb White, president of the Mortgage Brokers Association of B.C., though her members are definitely seeing more buyers sitting on the sidelines.
Property sales in the Greater Vancouver Real Estate Board in June fell 35 per cent from the same month a year ago. In the Fraser Valley, they were down 43 per cent.

“The next rate hike will definitely hurt,” White said.
Bank of Canada rate increases are usually an effective way to tamp down inflation, said Sauder School of Business economist Tsur Somerville.
As home sales slow down, so do housing starts, renovations on existing homes and the purchase of household appliances.
“So it’s a very effective mechanism for slowing the economy,” said Somerville, a senior fellow in the Sauder School’s centre for urban economics and real estate at UBC.
“Historically, we haven’t read about what that meant for renters because usually there’s enough slack in the rental market, like normal levels of vacancy,” that would still leave space for people who can’t move into ownership as well as new tenants moving into the rental market.

Somerville added that a slowdown in housing sales typically triggers a slowdown in the rate of household formation that creates rental demand. Even if that happens now, it will be offset by Canada’s high rates of immigration.
“What it suggests is that this could actually worsen rental-price inflation,” Somerville said.
Metro Vancouver did add a net 1,500 new purpose-built apartments to its market in 2021, and a welcome increase in their numbers over the last five years, said Eric Bond, an economist and senior specialist with the Canada Mortgage and Housing Corp.
“That was quite an important increase when you consider, say, 10 years ago that we were losing rental units on a year-by-year basis,” Bond said.
“But we do need more in order to address higher rental demand that we’re seeing in the market,” Bond said. “Home ownership is becoming less accessible (which) contributes to rental demand as well, so more supply will help address that imbalance.”

© 2022 Vancouver Sun

Peter McCartney: Millions of new homes could make or break response to climate crisis

Peter McCartney
The Vancouver Sun

Opinion: Regulators need to be willing to set strict green building codes that come into effect now, not after these millions of new homes already exist

Construction cranes tower above condos under construction near southeast False Creek in Vancouver. Photo by DARRYL DYCK /THE CANADIAN PRESS
Canada’s foremost authority on housing has thrown down a gauntlet that will shape this country for decades to come. How it plays out could also have an enormous impact on the planet.
There are just over 16 million homes in Canada. By 2030, building at current rates, we’ll reach 18.59 million. According to the Canada Mortgage and Housing Corporation, to achieve any level of affordability we’ll need an additional 3.5 million by then. That’s a total of six million new homes.
Whether these homes come in the form of sprawling subdivisions or compact communities will determine if Canada succeeds in meeting its climate goals and safeguarding the natural world.
If all this new construction paves over wetlands, forests and fields to build endless cul-de-sacs that force everyone to drive a car, it will lock people into a polluting lifestyle.
A better path involves a total rethink of our communities to include more new neighbours, more green space and more public transit so all this new housing can actually help fight climate change. A recent U.S. study found that doubling the population density of an urban area cuts carbon pollution from household travel almost in half.

Transportation is second only to the fossil fuel industry in terms of Canada’s carbon pollution. Buildings, mostly due to gas furnaces and boilers, come up a distant third. While electric vehicles are better for the climate, they still take up valuable resources, space and money. Our best solution to reducing transportation emissions is to make it possible for most Canadians to take public transit, walk, roll or bike to work, instead.
Frequent transit service requires significant ridership. Meanwhile, we have millions of new homes to build. Putting them in existing neighbourhoods would enable both current and future residents to ride the bus instead of driving. Unfortunately, even in bustling cities like Vancouver and Toronto, the vast majority of the land is still reserved for single-family homes.

In these places, the solutions seem obvious if not inevitable. Build towers on top of subway lines and upzone the rest of the city for mid-rise apartments. That would create a whole lot more homes close to where there’s already pretty effective transit.
But what about communities built since the advent of the cul-de-sac? How does a place like Calgary or Kitchener or Abbotsford make taking the bus a viable option?
Picture a typical neighbourhood built around a modern strip mall. There’s usually a grocery store, a pharmacy, a bank, a dentist’s office, and often a chain restaurant or a local pub. In larger centres, you’ll also find a movie theatre, a few big box retailers and some fast food restaurants. But look on a map, and most of what you’ll see is parking. Much of the prime real estate in our cities is currently used to store people’s vehicles.

If you want to encourage transit use and build more homes, replace these spacious parking lots with apartments. They don’t necessarily need to be highrise towers, although some certainly should be, but even six storeys on top of ground-level retail shops would add thousands of new neighbours, customers and transit-riders to an area. Allow the surrounding single-family homes to slowly convert to multiplexes or townhomes, and you’ve got yourself a vibrant community and enough people within walking distance to justify a new major rapid transit station.
Regulators also need to be willing to set strict green building codes that come into effect now, not after these millions of new homes already exist. This means banning gas connections, requiring less polluting materials, designing for passive heat and cooling, and ensuring far better insulation. Having these measures come online in the 2030s, once we’ve already built millions of new polluting buildings, would be a catastrophic failure of climate policy.

Given the urgency of the many crises we’re facing, we cannot afford to tackle them one at a time. Our solutions to the housing crisis must also help us respond to the climate crisis. If we just keep building polluting homes and neighbourhoods, they will only wind up underwater or up in flames eventually.

© 2022 Vancouver Sun

What the Bank of Canadas’ full percentage point hike means for the housing market and your mortgage

Stephanie Hughes
The Vancouver Sun

Surprise 100-basis-point increase will likely put the squeeze on homeowners’ budget
The Bank of Canada has hiked its benchmark lending rate to 2.5 per cent from 1.5%. It’s expected an increase of this size will turn up the pressure on Canada’s cooling housing market. Photo by Cole Burston/Bloomberg
The Bank of Canada’s surprise move to hike its policy rate by a full percentage point — with no indication it will stop there — will add to the financial squeeze faced by indebted homeowners and likely push more buyers to the sidelines of already cooling real estate sector, market watchers said Wednesday.
The move, which sent a statement about the central bank’s resolve in combatting inflation, brought the policy rate to 2.5 per cent and came in higher than the 75-basis point hike most had expected.
Industry experts expressed shock at the size of the move.
James Laird, Co-CEO of Toronto-based mortgage brokerage Ratehub.ca, said he was initially taken aback by the move until he considered the Bank’s language leading up to the decision, reiterating the need to “act more forcefully” to bring inflation down.

Laird said the oversized hike could put further downward pressure on cooling real estate markets across the country and push balanced markets across many regions to move toward buyer’s market territory.
Housing markets have been cooling off rapidly since the prospect of a rate hike cycle pulled demand forward into the latter parts of 2021 and the first months of 2022, ahead of the Bank’s first hike in March.
Laird said that with a hike this large, some Canadians who have purchased at the height of the pandemic may be underwater, but Canadian families are viewing their properties more as a home rather than an investment vehicle.
“There’s not as much regret as you might think,” he said. “People are generally happy to be in a place and be able to focus on other parts of their lives because the first-time homebuyer journey (is) so challenging.”
Ron Butler, mortgage broker and owner of Toronto-based brokerage Butler Mortgage, wrote in a tweet that prime rates and the cost of home equity lines of credit are moving up in a big way.
“Huge 100 bps increase … means bank prime is now 4.70 (per cent) and most HELOC rates are 5.20 (per cent),” Butler tweeted moments after the announcement. “The purchase of a rental property accessing a HELOC on an existing property for down payment is simply becoming unmanageable.”

Butler added that he expects home prices to decline steadily as a result, but that the Bank’s hawkish language means there could be more to come.
“Now our attention switches to the September prime rate announcement. Yep … this can and likely will gets worse in six weeks.”
The Bank of Canada has already delivered three rate hikes since March: one 25-basis point increase followed by two 50-point hikes. The increases, coupled with strong messaging from central bank Governor Tiff Macklem telling Canadians to expect interest rates to rise further this year, have been working to cool housing markets across Canada —particularly in major cities.   

Toronto home sales plunged just over 41 per cent in June compared to the same month a year ago while Vancouver saw its sales slip 35 per cent in the same timeframe. Home prices have been declining at a slower pace in both markets since early in the year. The market slow-down has been largely taken as a sign that prospective home buyers are treading more cautiously.
For Canadians who have already pulled the trigger on buying a home, rate hikes have been making mortgages more expensive and a full percentage increase will further weigh on household balance sheets. Canadians with a fixed-rate mortgage will not see changes to their payments until their mortgages comes up for renewal.
However, variable-rate mortgage holders can expect to feel the pinch within a few months. A recent report from the Canada Mortgage and Housing Corporation found that more Canadians have been piling into these kinds of mortgages during the pandemic, driving variables’ share of the market above 50 per cent.

A Canadian with a mortgage loan amount of $500,000 with a current variable rate of 2.85 per that amortizes over 20 years would have a monthly payment of around $2,735.
After a full percentage point hike brings that variable rate up to 3.85 per cent, the monthly payment would jump to $2,990. This means a Canadian in this situation could be paying $255 more a month or approximately $3,060 more each year.
Assuming an average variable rate of 1.60 at the start of the year, the combined cost of this year’s rate hikes would be approximately $554 more per month or $6,648 per year.

© 2022 Financial Post